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SASKATCHEWAN’S PETROLEUM MONTHLY Canada Post Publication No. 40069240

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Diversification helped through downturn Crescent Point CEO on Brad Wall departure A3

Enbridge Line 3 Replacement Program begins A8

60 years for Fast Trucking A14

Rob and Christine Pratt, owners of Pratt Transport in Radville, increased their emphasis on construction to make up for the downturn in trucking. See story Page A23

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PIPELINE NEWS September 2017

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PIPELINE NEWS September 2017

TOP NEWS Crescent Point CEO on Brad Wall’s impact on the oilpatch CRESCENT POINT GREW MORE THAN ANY OTHER COMPANY DURING BRAD WALL’S TENURE AS PREMIER

By Brian Zinchuk Calgary – Crescent Point Energy has grown more than any other company in the province over the last 10 years, from an intermediate producer to one of the largest oil companies in Canada, and the most active driller in the country for the last several years. That growth had largely coincided with Premier Brad Wall’s term in office. Wall announced his pending retirement from politics in early August. Pipeline News spoke to Crescent Point president and CEO Scott Saxberg on Aug. 25 about Wall’s impact on that company’s growth. Pipeline News: Crescent Point has grown phenomenally over the last 10 years while Brad Wall was premier, probably moreso than any other company in Saskatchewan. Ten years ago the

company invested over $700 million in land purchases, spawning the biggest land sale this province has ever seen. Was there any linkage to the political climate under Wall and your confidence to invest in a province under his leadership? Scott Saxberg: He brought a lot of consistency to the province, in what I would describe over the last 10 years has been a rocky road for oil and gas in B.C. and Alberta, and in Canada in general, with a lot of the policy changes. Energy trusts, taxation changes, corporate structure, all that kind of stuff happened over the last 10 years. I think his government, where they excelled, was providing that consistency and sticking with it. You know, Saskatchewan had a great system in place that was there

obviously before Brad and his group, and that’s one of the things I always keep pointing to. The group underneath, the day-to-day bureaucrats and that are, I think, some of the best in Canada, and understand business, oil and gas regulations, and how to provide that environment for strong growth and meeting all the challenges that industry has faced over the last 10 years. P.N.: Especially during his first term, Minister of Energy and Resources Bill Boyd made abundantly clear there would be no change in the royalty regime, a regime which had been established under the Calvert NDP. Wall spoke many times about “no changes in royalties.” What did that mean for the growth of Crescent Point? Saxberg: It allowed us the consistency to go

Premier Brad Wall, second from the left, presented Scott Saxberg, second from right, with the Oilman of the Year award in 2011. File photo

then, to capital markets, to raise equity and funds to develop these large, large resource plays. That was a key, I think, moment in time that created that consistency in the business community and investment community to then invest in Crescent Point and allow us to invest in these large as-

sets. They’re multi-billion dollar, multi-year, longterm projects that needed that consistency. They still need that consistency today. P.N.: Could you have grown this much in an uncertain political climate? Saxberg: Although we were sheltered, to

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some extent (by) Saskatchewan’s consistency, we were obviously exposed to the Canadian changes and Keystone XL, and royalty changes in Alberta. We still had to battle through all these changes over the last 10 years. It’s been a consistent stream of it, for 10 ► Page A4

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PIPELINE NEWS September 2017

Consistency from Sask. Government was key ▲

Page A3 years, I would say, between the royalty trust changes in 2006, all the way through royalty changes in Alberta, Keystone, pipeline issues, carbon tax, all that stuff that continuously changes the landscape. It’s obviously been very, very helpful to have that consistency in Saskatchewan, but as a company, and all the energy companies in Canada, are still fighting those changes. P.N.: I didn’t think Keystone would be that much of a factor for you. Saxberg: None of our production goes into Keystone, but inadvertently, or indirectly, a lot of investors, specifically European investors, stayed away from Canada when that Keystone announcement was made. When you look back, all companies in Canada, U.S. ownership, foreign ownership in all the companies diminished

dramatically through that time period, of the first delays of Keystone. It wasn’t until the Canadian dollar really, really weakened that you got increased investment into Canada from the U.S. and foreigners back maybe three years later. P.N.: Have you maintained a relationship with Premier Wall over this past decade? How has that relationship grown or changed? Ever put in a round of golf with him? Saxberg: (laughs) I think I golfed with him maybe 10 years ago, when we first started. We talk maybe a couple of times per year, through the premier’s dinner and so forth. Our relationships, as a company, are deep within Saskatchewan, throughout the communities and people that we work with day-to-day and the different varying governments and government agencies that over

17 years (we’ve been) developing. I think that’s been the real strength, for us in Saskatchewan. P.N.: How many times has Brad Wall invited you to move head office to Regina? Saxberg: (laughs) I think we’ve had maybe two conversations on it. It’s something that really, the question is more a statement to say they’re open for business and competitive with their counterparts, be it states in the U.S. or Alberta or Manitoba. It’s really more of a statement towards that, which I think has made him a strong leader relative to his peers, understanding the competitive nature of attracting capital into the province. I think that’s really where I’ve always taken that question, as what that means. In our office, alone, I don’t know what the percentage is. I haven’t done a survey, but probably 25 to 30 per cent

of office in Calgary are from Saskatchewan, and many of them would like to go back to Saskatchewan, but obviously this is where a lot of the business is done, unfortunately on the oil industry side, for Saskatchewan. We have two big, strong head offices already in Saskatchewan, in Shaunavon and Weyburn. We’ve really grown and developed those offices, to develop the resources there and to be mindful of how that works. We’ve put a lot of money through STARS air ambulance, the Weyburn hospital, all though the different communities, and put that money to work in lieu of the head office being there. P.N.: How has Wall’s advocacy for the energy industry, and, in particular, pipelines like Keystone XL, made a difference, from your perspective? Saxberg: I think

it’s the recognition that Canada has to be competitive, and attract capital. He, early on, understood that, and was really a proponent of that and waking Canada up to the fact this is a competitive industry. We used to be a one-stop shop for the U.S. for energy. Now that they’re more self-sufficient, we have to compete with their own energy development. I think that, to me, that was where he brought in that strength, to understand that competitive nature; and then really promote that in Canada and wake people up to that. P.N.: What would you hope to see from a successor, from Crescent Point’s standpoint? Saxberg: I think that business consistency, the consistency of the passion for development of the province. We had very strong relationships with the NDP and Lorne Calvert, prior to

Brad, and we’ll continue to have those strong relationships within the different government components. We’ll always be there as a company. Obviously, our main assets are within Saskatchewan, so it’s a strong growth area for us and a strong focus. So we’ll work with whoever does step into his position and go from there. P.N.: Is there anything you would like to add? I hope that he continues his strong statesman view with Canada and is always there to keep pushing these things. We wish him the best in his endeavours. It’s not an easy job, and he’s done a great job doing it. I think one of the key things that is one of his legacies is that he built a super strong team around him, and I’m encouraged that anyone who does step up will be very strong because of that.

Steelworkers union greatly appreciative Enbridge chose EVRAZ for Line 3 Replacement Program L3RP GAVE REGINA STEELWORKERS 23 MONTHS OF WORK By Brian Zinchuk Regina – With construction having begun on Enbridge’s Line 3 Replacement Program (L3RP), there’s one group that is mighty happy to have already contributed most of their part. That group would be the steelworkers of the Regina EVRAZ plant which made much of the pipe going into the project. Indeed, in the coming weeks, production for this massive project should be just about wrapped up. That’s according to Courtland Klein, recording secretary with United Steelworkers Local 5890 in Regina. “We represent close to 1,000 men and women of USW 5890. We’re the employees at EVRAZ,” he said by phone on Aug. 15.

As of the end of August, there were some labour issues between the union and EVRAZ with regards to a new contract, but Klein wanted to focus on the larger issue, which was their appreciation of Enbridge choosing Regina-made pipe. Klein said they want to get ahead of any negativity that might come up with this project. “We made the pipe for the DAPL (Dakota Access Pipeline) in North Dakota, and we got very frustrated, as manufacturers of that pipeline, that it got such a bad rep and such negative attention around it. We thought, if that’s going to happen in Saskatchewan, we want to get some facts out there about what it means that Enbridge bought their pipe from a Canadian manufacturer.

They didn’t have to. “We are under attack by cheaper, offshore imports from other countries that don’t have to follow the same environmental standards we do in Canada. Enbridge could have sourced their pipe from offshore, and they didn’t. They chose to use the latest and greatest technology we have here at EVRAZ. We’re the leading edge of pipeline technology,” Klein said. “We feel we’re making them a really good product. “Hats off to Enbridge in realizing this pipeline needs to be replaced. We think that’s good environmental stewardship right there.” Klein noted EVRAZ is in the final stages of over $200 million in upgrades to its Regina facilities, including a new

fifth large-diameter pipe mill. “We made 1,310 kilometres of pipe for this project, using just over 400,000 tonnes of recycled steel. “We’re one of the largest recyclers of a product in North America, just by taking scrap steel, electric arcing it down into molten metal and rolling it into slabs and coils.” While some people might think the pipe for this project is just being made now, in fact, it’s nearly all complete and stockpiled. “We’re just in the final stages. We’re hoping to wrap up the L3R Project in the next couple months,” he said. “This project gave us 23 months of work. We’ve been working on ► Page A11

An alloy tossed into the liquid steel produces a flurry of sparks at the EVRAZ Regina melt shop, as seen in this 2009 file photo.

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PIPELINE NEWS September 2017

Steel Reef planning on short international gas pipeline As the pipeline crosses an international border, it requires approval from both the Canadian and U.S. governments, including the same “Presidential Permit” that eluded Keystone XL for the better part of a decade. It will also require approval from the National Energy Board (NEB) in Canada. The NEB process is expected to take six months, while the U.S. Federal Energy Regulatory Commission (FERC) could take up to a year. Cross border pipelines have been issues in recent years. In May 2016, when thenpresidential candidate Donald Trump was asked by Pipeline News in Bismarck, N.D., about another proposed international pipeline, TransCanada’s Upland Pipeline, Trump said he was not familiar with it, but his bias would be to approve. (The Upland proposal actually runs relatively close to Steel Reef ’s project.)

Shortly after he was inaugurated, Trump invited TransCanada to resubmit its application for Keystone XL. He subsequently approved it, which might bode well for other projects. Steel Reef ’s proposed pipeline would have a capacity of 900,000 cubic meters of natural gas per day, gathered from existing oil wells in the Burke County region of North Dakota. The solution gas would be sour, up to three per cent hydrogen sulphide. The North Dakota gas is liquids-rich, according to Chris Anderson, Steel Reef facilities engineer and project manager. It’s of a very similar nature to what they are processing on the Saskatchewan side of the border. In recent years, the North Dakota government has clamped down on gas conservation, requiring that oil companies submit a plan for gas collection before a well permit is even issued. The

result has been a substantial increase in the percentage of gas that is captured in the state, as opposed to flared. Anderson said they had heard from producers in North Dakota who were concerned they wouldn’t be able to produce oil without getting an egress for gas capture. As part of the approval process, Steel Reef held a public meeting in North Portal on Aug. 28. Austin Voss, chief operating officer with Steel Reef, said on Aug. 24, “If approved, it could potentially, but not necessarily, lead to expansion,” of the North Portal plant. He added, “We will always be willing to expand if the gas is there.” Processing North Dakota gas wasn’t part of the initial impetus behind the North Portal gas plant, however. In recent years Steel Reef has become prominent in gas plant operations in southeast Saskatchewan, building plants at North Portal

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It’s just a short pipeline, but because it crosses an ) " international border, there’s a lot of process hoops that Steel Reef Infrastructure Corp. has to go through. Map courtesy Steel Reef. FIGURE 1

Project Extent

Estevan

164 -91

SASKATCHEWAN

164 -91

Facility

Road

Proposed South Saskatchewan Access Pipeline

Canada/US Boundary

REGIONAL LOCATION

Waterbody

Steel Reef Plant

SCALE: 1:14,500

NORTH DAKOTA

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and Alameda, as well as acquiring 50 per cent ownership in the Nottingham and Kisbey gas plants. The company also

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300

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PROPOSED SOUTH SASKATCHEWAN ACCESS PIPELINE PROJECT STEEL REEF INFRASTRUCTURE CORP.

August 2017

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Mapped By: SL

Checked By: AP

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By Brian Zinchuk North Portal – As far as cross border pipelines go, there are large ones, controversial ones like the still-delayed Keystone XL project, and then there are smaller ones that, if they didn’t cross a border, would probably never get noticed. Steel Reef Infrastructure Corp. is proposing one of the latter – a 10.75-inch pipeline that would run just across the border from just south of the border, near Portal, N.D., to its North Portal gas plant. The project is being called the South Saskatchewan Access Pipeline. The total distance for the proposed pipeline is seven kilometres (4.35 miles), but as the crow flies, the actual distance between the origin and terminus of the pipeline is much shorter than that. The pipeline takes a zig to the east, crosses the border, then zags to the west, towards the gas plant.

Tel: +1 410-267-9771

PIPELINE NEWS September 2017

PIPELINE NEWS

EDITORIAL

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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 your local contributing reporter. Subscribing to Pipeline News: Pipeline News is a free distribution newspaper, and is now available online at www.pipelinenews.ca Advertising in Pipeline News: Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual. Pipeline News has a group of experienced staff working throughout Saskatchewan and parts of Manitoba, so please contact the sales representative for your area to assist you with your advertising needs. Special thanks to JuneWarren-Nickle’s Energy Group for their contributions and assistance with Pipeline News.

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.

The new premier should start a sovereign wealth fund MODEL IT ON NORWAY'S If you read this paper, you’re probably in the oilpatch. If you’re in the oilpatch, you’re probably a right-wing sort of guy or gal, but most likely a guy. And if you’re a right wing guy or gal in Saskatchewan, Brad Wall is probably your hero. And now your hero is retiring. The pain you feel is probably as pronounced, if not moreso, than the pain you felt when Wayne Gretzky was traded by the Oilers. The difference is, the Gretzky trade didn’t affect your pocketbook, but the departure of Brad Wall most definitely could. As noted on the opposite page, the oilpatch, and in particular, Crescent Point Energy Corp., boomed during much of the 10 Brad Wall years. Much of that was as a result of Wall’s government not touching a blessed thing when it came to royalties on oil. Those royalties may have been established under the Lorne Calvert NDP administration, but no matter. The key thing is they didn’t change for over a decade. On the eastern side of the Lloydminster border markers, we in Saskatchewan collectively watched Alberta play around with its royalty structure time and again under Conservative Premier Ed Stelmach, then NDP Premier Rachel Notley. Each time coincided with a downturn in the market – Stelmach’s downturn was brief, but his continual royalty changes prolonged Alberta’s pain. Notley’s insistence on changes eventually came to naught, as their

review came to the conclusion it was best to leave well enough alone. And that’s the danger to your pocketbook as Wall leaves. Whoever ends up replacing him, with the Sask. Party for the next few years, and possibly a change in government after that, could feel the temptation to rock the boat on royalties and jack them up. We can safely assume any government that does change royalties is going to raise them, not lower them. The arguments made will be the same as Stelmach and Notley. You know, we’re not getting our fair share, cost of services is increasing, the sky is blue and the sun rose in the east. With ballooning deficits, extracting more royalties is an “easy” source of revenue. That’s doubly so if you are the union-supported NDP whose friends and allies are the Saskatchewan Government Employees Union. Don’t cut jobs in Regina! Bring back STC! Make the oilpatch pay! It didn’t work out too well for Alberta under Stelmach. The industry, and Alberta’s revenues, suffered tremendously as capital flew the coop. Some of it landed here, thankfully. It’s also very instructive how Notley is now very supportive of the oilpatch, especially when it comes to pipelines. No more talk of royalty changes, either. The problem comes in the interim, when new administrations feel they MUST make some sort of change. Capital flees, and when it does, you, the reader, will feel it in

the pocketbook. That doesn’t mean nothing should change, however. Leave royalties as they are, thank you, but the new premier should seriously consider a sovereign wealth fund henceforth and forevermore. If we consider now to be the low point of commodity prices in most of our resource sectors (potash and uranium have had just as rough a ride as oil), then we should consider any additional revenue above this level to be a blessing. As resource revenue rebounds, and eventually, inevitably, it will, perhaps one-third of those revenues should go to a sovereign wealth fund. It should be modelled after Norway’s, by far the largest in the world, which was in turn modelled on Alberta’s. The failing of Alberta’s is that it ended up being too juicy for politicians to keep their hands off, and is a shadow of what it should be. Norway’s sovereign wealth fund is prohibited from investing in the country, which removes much of that issue, as well as removing inflationary pressures which devalues the entire economy. We don’t want our fund paying for a Spudco. This can be done. We even had one once, the Saskatchewan Heritage Fund, which was born in 1978 and died in 1992. Peter MacKinnons’ 2013 paper, A Futures Fund for Saskatchewan – A Report to Premier Brad Wall on the Saskatchewan Heritage Initiative, would well be worth a read by whoever becomes the next premier.

PIPELINE NEWS September 2017

Brad Wall didn’t change a thing, and the oilpatch grew as a result Back in 2007, when I was working with the Battlefords News-Optimist and before Pipeline News fired up a year later in its current form, I kept hearing rumblings from some of the business-type, right-wing folks I knew. “You just wait until Brad Wall gets elected. Things are going to bust open,” was the general thread of multiple conversations. Later that year, he was elected. And the following year, things did indeed bust open, especially when it came to the oilpatch. In the spring of 2008, Pipeline News was reborn as a provincial oilpatch newspaper. I was recruited for its reporting staff, and later in the year, was appointed editor. Oil was on its way to the dizzying heights of US$147 per barrel for WTI oil. And that year, Saskatchewan had its record land Crown land sales, over $1 billion. In 2011, Scott Sax-

berg, president and CEO of Crescent Point Energy Corp., was awarded the honour of being Saskatchewan’s Oilman of the Year. Premier Brad Wall was on hand to present him with the trophy. It’s interesting to think back to that moment, because those two men were both key in the tremendous boom Saskatchewan enjoyed. From my 2011 story, I wrote that Saxberg noted a conversation he had with Premier Brad Wall on the subject (royalties) a few years ago. Saxberg touched on Wall’s, “consistency on approach to business and maintaining the line on royalties, right at that specific time when Alberta was going through their changes. We got hit in 2006 with the forced conversion of trusts to corporations. We were limited in the amount of equity we could raise to pursue things here. And so we started a company called

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Shelter Bay. We went out to New York, Houston, Boston, all over, and we raised $900 million, to develop the Bakken here. We spent that $900 million almost exclusively in land sales. The one year when Saskatchewan had one of its largest land sale revenue streams, it was us. We spent, like $700 million here on land, purely from the fact Alberta changed their royalties and changed their business conditions there. You were able to stay consistent and we raised that money and spent it here.” Thus, the big year that really made the biggest impact on Wall’s government – paying down a huge chunk of debt and cementing his reputation as someone who took on debt head on (not so much in later years), was financed in large part by

OPINION

FROM THE TOP OF THE PILE

By Brian Zinchuk

Crescent Point, led by Scott Saxberg. It was with this in mind that I contacted Crescent Point and put forward a query to talk to the CEO about Wall’s impact on the oilpatch. After all, Crescent Point, to my knowledge, had grown more than any other company in Saskatchewan, in any sector, in the last decade. It went from one of a number of similar-sized intermediate producers to the largest oil producer in the province, by far, and the most active driller in the country, again, by far. Before this downturn hit three years ago, Saxberg told me they were a $20 billion company on the way to becoming a $30 or $40 billion company. The downturn may have put a large crimp on those market capitalizations, but

the fact remains Crescent Point blossomed more than any other company during the Wall years. So what magic did Brad Wall, and his longtime Minister of Energy and Resources/Economy Bill Boyd impart on the oilpatch to make it grow? Nothing. Really. Nothing. As in there will be no changes to Saskatchewan’s royalty regime. Not-a-thing. This was repeated time and again in each of Boyd spoke at events I attended. Wall said the same thing when he spoke. It was so repetitive that eventually I stopped reporting on much of the content of Boyd’s speeches, because they were exactly the same. They went along the lines of, “Premier Wall has instructed me to say thank you to the oilpatch for the jobs and taxes you

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provide, and we’re not changing royalties.” This was key, because in the early Wall years, Alberta’s then-premier Ed Stelmach mucked around with royalties four times. During this time, I wrote numerous “refugee from Stelmach” stories. I must point out, as Saxberg did in our Page 3 story, that these royalties were established under the Lorne Calvert NDP government, prior to Wall taking command. So fundamentally, with the blessing of many years of US$100 oil, the oilpatch, and Crescent Point, grew tremendously under the Brad Wall government, in large part because it didn’t change a thing. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net.

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Enbridge Line 3 work begins

MOST SASKATCHEWAN WORK ON THE WESTERN SIDE OF PROVINCE IN 2017

By Brian Zinchuk Calgary - Enbridge’s Line 3 Replacement Program (L3RP) announced construction started in the first week of August. Most of the work is taking place on the western side of province and in Alberta this year. This includes Spread 1 from Hardisty, Alta. to Loreburn, and Spread 3 and 4 from Rosetown to west of Regina. The remaining spreads have not been finalized for contractors and start dates, but the project is aiming for an in-service date of late 2019, according to spokesperson Suzanne Wilton on Aug. 21. There are nine spreads in total in Canada, the last three of which are in Manitoba. Manitoba’s mainline work has not yet been announced but will not take place in 2017. Early civil work including earthmoving and piling has begun at several pumping stations and terminals, including Hardisty and Metiskow in Alberta, Cactus Lake, Loreburn, Craik, Bethune and Langbank in Saskatchewan, and Cromer and West Souris in Manitoba. The L3RP will replace the existing 34-inch-diameter pipeline with new 36-inch-diameter pipe, using the latest available high-strength steel and coating technology, while the existing segments will be removed from operation, the company said on its website. Much of the pipe originates from Regina’s EVRAZ steel mill. Line 3 is the third of five pipelines in the Enbridge mainline system which runs from Hardisty, Alta. to Superior, Wi. Those five pipelines, collectively referred to as the “mainline,” cut across southern Saskatchewan from west to east. The first four actually pass through the north end of Regina, running into the Regina terminal and alongside the Regina Refinery Complex. The most recent addition to the mainline was a project referred to as “Alberta Clipper,” which was eventually

named Line 67. It was built in 2008-2009. As the principal mainline right-of-way simply ran out of room for additional pipes in places like Regina, White City and Kipling, Alberta Clipper resulted in some new right-ofway going around these communities. L3RP will follow this new route in those areas. The L3RP project is also, by far, the largest pipeline project in Saskatchewan since Alberta Clipper. Should the TransCanada Keystone XL project ever go ahead, it will be of similar scale, but only run across a short portion of southwest Saskatchewan. L3RP, Alberta Clipper and Keystone XL are all 36-inch pipe. While Lines 1 and 2 are older than Line 3, Line 3 has been problematic over the years since it was constructed in the early 1970s, thus requiring its replacement. The pipeline has been running at a reduced pressure, and thus capacity, for several years as a result. The new line will bring the capacity back up to 760,000 bpd from the current 390,000 bpd. On the Canadian side of the border, the L3RP will cost approximately $5.3-billion for most of its Line 3 pipeline running between Hardisty and Gretna, Man. The American portion is estimated to cost US$2.9 billion. While work stated in Wisconsin around the same time it started in Saskatchewan and Alberta, there are still portions of the project in Minnesota that are under regulatory review. In that state, a substantial detour away from the principal right of way through much of Minnesota, from Clearbrook to Carlton. A short portion of L3RP near Cromer, Man. has already been completed. When the project was first proposed several years ago, Enbridge intended on only replacing substantial portions, but not all, of Line 3. That changed and the company decided to replace the entire pipeline. During that time, the portion around Cromer simply couldn’t wait, and it was done several years ago. Another portion, crossing the United States border near

Gretna, has also been completed. Two contractors have been announced. O.J. Pipelines Canada is doing Spread 1, while SA Energy Group Joint Venture is doing Spreads 3 and 4. SA Energy Group Venture is a joint venture between Robert B. Somerville and Aecon, not to be confused with AECOM, which does similar pipeline work. A July 27 press release from Aecon noted, “Two large diameter pipeline awards to our SA Energy Group Joint Venture totalling $289 million of which Aecon’s share is $145 million. Work is expected to begin in August 2017 and reach completion in the third quarter of 2018.” Guy Jarvis, president, liquids pipelines with Enbridge, said in a release, “We’re pleased that this important project to improve the system’s safety and reliability is getting underway. Replacing the existing Line 3 with the newest and most advanced pipeline technology will provide much needed incremental capacity to support Canadian crude oil production growth and U.S. and Canadian refinery demand. “Enbridge is committed to ensuring that communities along the pipeline route, including Indigenous communities, realize the significant economic benefits that will come with the project, including jobs, business opportunities and training programs,” he added. “Launching construction is an important milestone and we’re grateful for the strong support along the route, including from Indigenous communities,” continued Jarvis. Premier Brad Wall posted on Facebook on Aug. 3, “Congratulations to Enbridge on the beginning of construction on the Line 3 pipeline project! This is great news for over 1,000 EVRAZ steelworkers’ families in Regina, and thousands of other Saskatchewan workers involved in the construction and servicing of this pipeline. ► Page A10

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The Enbridge Line 3 Replacement Program runs clear across Saskatchewan and is Quick Facts expected to be in service in 2019. Map courtesy Enbridge.

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“The Saskatchewan portion of the Line 3 project means replacing a 50-year old line with • This project represents one of North America’ s largest pipeline infrastructure new, majority Saskatchprograms and in total, includes ewan-made and builtof existing replacement 1,660 kilometers pipe with modern pipe materials utilizing pipeline that willmethods double modern construction spanning from Hardisty, Alberta to Gretna, theManitoba maximum capacand south from the border intooil Northto Dakota, ity U.S.-Canada for Canadian • The Line 3 Replacement Program represents Enbridge’s ongoing commitment to safety and efficient pipeline maintenance, and will restore Line 3 to its full operating capacity.

Minnesota, and Wisconsin.

• Replacing Line 3 is also the most timely and reliable solution for transporting western Canadian crude oil to the Chicago, U.S. Gulf Coast, Eastern U.S. and Canadian refinery markets.

get to market, Project Economicsupport Benefits thousands of local jobs, • 24,493 temporary full-time equivalent positions in Canada and contribute over $1 • 9,223 direct and indirect jobs in Alberta, billion to our provincial 7,833 direct and indirect jobs in Saskatchewan, and 3,274 direct economy. and indirect jobs in Manitoba “From the beginning, • $2.8B contribution to Canada’s Gross Domestic Product Saskatchewan has been • $1.8B generated in labour income strongly in support of • $514.3M in tax revenue to Canadian this project. As Canadifederal and provincial governments during construction schools, of ans, we can be(forproud transportation, community projects and other services that sustain our quality of life)

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energy production, even as we commit to ensuring it is safer and more sustainable. If we are to Project Need be international energy The purpose of the Project is to: leaders, we need to sup• Improve safety and reliability and restore port safe ways to access historical operating capacity. pipelines,” • markets Reduce future like repair activities and resulting said. disruptions to landowners and Wall the environment. • Most extensive engagement program in Enbridge history: executed agreements with 100% of ROW landowners and negotiated agreements covering 70 Indigenous communities or groups.

Project Cost • $5.3 billion in Canada and US$2.9 billion

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Steelworkers to start on Kinder Morgan pipe

A11

here, with the other 25 per cent under review.” On May 2, Kinder Morgan announced EVRAZ North America would supply about 250,000 metric tons of pipe, equal to about 800 kilometres of pipeline construction. That pipe would come from Regina. At the time, Kinder Morgan said in a release, “The

remainder of the pipe needed, as well as other procurement contracts, will be announced as project planning proceeds.” Swear words Klein asked, “Why have pipelines become a swear word in recent years? People need to understand the impact of the jobs in the economy that come around with

these pipelines. Our close to 1,000 employees have take home wages of over $112 million annually, that gets spent locally in the Regina economy. EVRAZ itself benefits the Regina economy to the tune of $600 million every year that gets put back into the local economy. “So if these compa-

nies aren’t able to start the approval process for new projects or pipeline replacement projects, this is a big hit on our economy, right here, in Regina, and Saskatchewan locally,” Klein said. He noted the steelworkers have been pushing within Saskatchewan Federation of Labour for support of pipelines and

saw a backlash from it. Klein noted he works on building the pipe, and members of his family work on supplying the oil for it, and his father expected to work on it. The Enbridge mainline is also a neighbour. “We live in the Odessa area, and that pipeline runs right by our farm,” Klein said.

Regina – The Saskatchewan Industrial and Mining Suppliers Association (SIMSA) will be holding its third annual Saskatchewan Oil and Gas Supply Chain Forum on Oct. 5 at the Delta Regina Hotel in Regina. It is an opportunity to hear from, and talk face-to-face with, procurement staff from companies including

Crescent Point Energy, TransCanada, Enbridge, Plains Midstream, Torc, and more. This year’s theme will be “Our Low Carbon World” and features a new small trade show area. The trade show area will be at the back of the main presentation hall. The event focuses on bringing buyers and sellers together, by having

oil producer and pipeline companies present on what they are planning to do in the near future and what they will potentially require from the supply chain to do it. There will be speed networking events between the supply chain and the buyers and informal networking sessions.

Also, the forum will see presentations from industry associations and industry analysts, which will provide updated background information. Attendees will “Find out how Saskatchewan stacks up on well costs” by receiving and hearing about a new assessment from the CanOils

group of JWN Energy on Saskatchewan well costs – by product – over the past winter in comparison to the rest of Western Canada. This forum is focused on Saskatchewan-based industrial supply and service companies supporting or wishing to support the oil and gas industry

activities in the province and elsewhere, and on oil and gas industry procurement or other representatives. The one-day forum will update local suppliers on the state of the industry, upcoming activities, and means to enhance their participation. More information can be found at simsa.ca.

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Page A4 this project for a year and three-quarters. When we’re done wrapping this L3R Project, we’re moving onto the Kinder Morgan project,” Klein explained. “Kinder Morgan just announced a few months ago they’re going to source 75 per cent of their pipe for that project from the Regina location,

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PIPELINE NEWS September 2017

Crescent Point’s Scott Saxberg talks rig levels and efficiency By Brian Zinchuk Estevan – The level of drilling activity going on in Saskatchewan right now for Crescent Point Energy Corp will not vary much for the remainder of the year, according to president and CEO Scott Saxberg. When asked about oilfield service companies’ ability to adjust rates that they charge, he spoke about efficiency and technology. Saxberg spoke to Pipeline News via phone on Aug. 25. For most of the past several years, Crescent Point has been leading all of Canada for the number of active drilling rigs it employs – often in the mid-20s. However, as of Aug. 25 that number was 13 for all of Canada. All but one were in Saskatchewan, the last one in the Swan Hills area of Alberta. The company has more active rigs, but they’re across the border, in its active Uinta play in Utah. Saxberg said, “We have a very strong business plan and budget. We’re ahead of our targets. We revised up our average production for the year. We’ve got a strong development program exiting the year. We’re just setting up for 2018. I would say 2017 is probably one of our best operation new play discovery years we’ve ever had as a company. We’re excited about our future

and where that development is heading – super strong results in our Uinta play that we’re excited about and will come out as the year unfolds.” The Uinta play in Utah has been growing in prominence in Crescent Point’s quarterly statements over recent years, and was front-and-centre in the July 27 statement. There have been times when Crescent Point had more rigs working than the number two and three oil companies combined, but now Tourmaline Oil Corp. leads with 17 rigs in Canada. Regardin, their reduced numbers, Saxberg said, “We’ve got more capital moving into our Uinta Basin. A lot of that capital is moving into Utah. I think we have 18 rigs working right now, 13 in Canada, so there’s a bit of a shift of capital into Utah, and just a balancing out of our drilling program into Q4. So I think it’s more of a balancing from Q2 to to Q3 to Q4.” Asked if 13 is the new normal for Canada, he said, “No, I think we had 27 in Q1. It’s just really how our capital is broken out through the quarters, so we’re going to have a more consistent Q3, Q4 program, and then ramp it up into Q1 a little bit more. It’s more of a normal sort of spread, with a little more capital spread into the U.S.” “I think we’ll be in this range consistently

through the end of the year, then a ramp up into Q1, plus or minus three or four rigs,” he noted. Saxberg wouldn’t comment on the Cenovus Weyburn being up for sale, but did reply, “We’re not looking at any acquisitions at this time.” Is there a magic number? Last month CEOs from both Corex Resources Ltd. and Tundra Oil and Gas Limited told Pipeline News that US$50 dollars per barrel for WTI oil is an important number, when it comes to their expenditures. Asked if that applied to Crescent Point, Saxberg said, “We’re an obviously larger company, and longer term viewpoints. We’re managing our inflow, outflow for cash flow and growth rates. We manage, between our hedge book and oil prices, with our future cash flows, stay in and around 100 per cent. That’s kind of how we manage that growth rate. “Obviously, the higher the oil prices are, the more excess cashflow we have. We’ll put that excess cashflow to paying down debt, increasing our capex program – basically the two prongs, where that goes. At higher oil prices, we’ll spend a little bit more capital to grow at higher levels.” Does Crescent Point have a magic number? Saxberg replied, “We’re sort of just manag-

Crescent Point Energy Corp president and CEO Scott Saxberg. File photo

ing between US$45 and US$55 oil. We’re trying to improve our efficiencies at the US$45 level to increase our drilling and growth rates and again to increase our excess cash flow as prices go up. We’re really trying to drive costs down in the US$45 price environment effectively so that we build that same efficiencies and costs at those lower prices levels and not worry if it is US$45, US$50 or US$55.” Will there be relief on rates? Asked if there was any relief in sight for oilfield services who have been working with sharply reduced rates for several years now, Saxberg said, “Technology has really improved over the last several years. We’re continually improving that technology. And so, although day rates and those kinds of

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things may be stagnant, we feel efficiency gains will improve and will widen those margins for service companies and companies like ourselves. So we’re focusing on using the equipment less, and becoming more efficient with that equipment, to drive costs, and not necessarily drive their margins lower. “So we’re kind of working from that perspective. We’ve really worked along with our service providers to make sure they have consistent programs that we can give them and consistency in our drilling programs so they can then improve their efficiencies as well and increase their margins. We look to work together with those groups so that everybody is successful,” he said. With regards to the pronounced lack of

recapitalization by oilfield services companies during this downturn, especially when it comes to their not buying new equipment, Saxberg said, “Again, it’s more around the technology and doing things differently. We’re looking at field automation, data collection, and access through WIFI across all our fields, creating an ability so that those companies can become more efficient, which provides them with a bigger margin, which provides them with the ability to reinvest and grow their business. “Really, there’s going to be a large shift here with some new technology we’ve been working on, that hopefully works, that really changes how oilfields are managed and how services are provided. Sort of the lag from the iPads and the use of applications and how they are being used today. I think there’s been a lag in the oil industry from that and the hands-on, driver-truck approach versus technology and data capture and artificial intelligence that are starting to happen. We think things are going to get more efficient, which will provide that. “The silver lining in this drop in price environment, and the length of this drop in price environment, I think is where that creates a lot of this new knowledge and different approaches to business,” Saxberg concluded.

DUSTIN DUNCAN, MLA Weyburn - Big Muddy 28 4th Street NE, Weyburn, SK S4H 0X7 (Tel) 306-842-4810 (Fax) 306-842-4811 (Toll Free) 1-877-842-4810

PIPELINE NEWS September 2017

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THANK YOU To our customers, past and present, thank you. We appreciate your support over the last 60 years and are honoured to serve you. To our employees, past and present, thank you. We wouldnâ&#x20AC;&#x2122;t be where we are today without you.

Box 700 Carnduff, SK 306-482-3244 www.fasttruckingservice.com MOVING THE OIL & GAS INDUSTRY IN SASKATCHEWAN

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PIPELINE NEWS September 2017

FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Fast Trucking Service Ltd. has been moving rigs for 60 years. Here, they reassembled Panther Drilling Rig 4 on July 27, near North Portal. Photo by Brian Zinchuk

60 years for Fast Trucking Service Ltd. By Brian Zinchuk Carnduff – This year Fast Trucking Service Ltd. celebrates its 60th year in business, an accomplishment that few

companies in the oilpatch achieve, and even fewer still do so under the same ownership. The company is a fixture in Carnduff, located

on the community’s west side with yards on both sides of Highway 18. The skyline is punctuated by a wind turbine installed in 1997 (long before it was

fashionable) beside the large shop. In the yards, one finds numerous drilling rigs racked. Some are for sale. Others are waiting for their next job.

When it’s time for them to move, it’s a pretty good bet it will be on very large, green trucks with white stripes. Fast didn’t start out

with such mammoth units, however. The beginnings were much more humble. The story of Tony and Vi Day, and ► Page A15

Congratulations Fast Trucking on your milestone of 60 years in the Oil & Gas Industry

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FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Tony and Vi lived at the rig for the first four years ▲

Page A14 eventually their children, is closely tied to that of Fast Trucking. Originally from southwest Saskatchewan, Tony Day had started to work on drilling rigs in 1952. He began as a roughneck and eventually became a derrickhand. He was also the rig’s mechanic. Paul Guthrie Oil was the first company he worked with. “He came here in 1956 with the rigs, from Gull Lake,” said Vi on July 27. She was sitting with Tony at the kitchen table of their house, across the road from the main shop and yard. That table was Fast Trucking’s principle office for decades, and many people have told Pipeline News over the years how they got their paycheque, signed on the kitchen table. “I didn’t need anything fancy,” Vi said,

asked about her long time “office,” the kitchen table. Tony’s work on drilling rigs were very much the early days of the southeast Saskatchewan oilfield. Tony had originally worked with Charter Drilling in those days, and then they turned into Antelope Drilling. “Tony worked with them for 18 years as their mechanic,” Vi said. Started with a ’54 Chevy Tony started Fast Trucking at the age of 25 with a 1954 Chevy 5-tonne truck. That truck had two purposes. He would haul water with it, then remove the water tank and move the rig when it was move day. Then he’d suck on the water tank again. They still have that truck, and it gets taken out for special occasions. That tank had a 50-bbl. capacity, and the

Tony and Vi Day have owned Fast Trucking for 60 years. Photo by Brian Zinchuk

truck earned $30 for a 24-hour day. The next unit, a winch truck, could be charged out at $7 an hour. It, too, had a water tank that could be sucked onto the bed as needed. Tony said of rigs back then, “They weren’t as heavy, so they were easy to move.” Soon he bought a half-tonne truck with a

welder on the back, too. Asked where he grew up, Tony replied, “Vi says I haven’t.” Tony’s originally from Admiral, Sask. Tony met Vi Bayliss in 1957. “The first time I saw him, my brothers worked on the rig with him,” Vi said. “They brought him to our place. We had a

WHAT AN ACCOMPLISHMENT

60 Years

picnic in our yard.” Tony said, “We drilled a well on her land. It was a dry well.” After dating a few years, Tony and Vi were married Dec. 14, 1960. The rig was home During the 1960s the Day family lived and worked at the rigs, in a house trailer that was pretty primitive compared to today’s. They tell of one trailer that would give them an electrical zap every so often from a bad ground. “We used to have a little porch on the side of our trailer, when we lived in a yard that was permanent for more than a month. He had a barrel cut in one-third. He filled it with water and put his bit in there, and that’s where he re-tipped his bits,” Vi said. That meant welding tungsten onto the bits. “In the 60s, we mainly lived at the oil

rig. Tony had his water truck and his winch truck he converted for a fast hole. We always used that truck on that rig. We didn’t go anywhere else to move rigs. He was their welder and he re-tipped bits for them,” Vi said. They lived at the rig, wherever that rig might be, for the first four years of their marriage. “I used to drive water trucks and winch trucks for Tony,” she added. “I drove a gin pole truck or winch truck. Tony and I would go start moving the rig the day before it was going to move, so we could make a little more money. We’d each take a truck and go haul.” The winch truck had gin poles on it. When they finished moving the rig, the gin poles came off and the water tank went on. Farm and family In 1963 they started ► Page A18

Congratulations to Fast Trucking on 60 Years!

CONGRATULATIONS FAST TRUCKING!

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As the children of Tony & Vi, we wish to thank our parents for instilling the value of hard work. To always be mindful of the needs of our customers and employees. To always treat everyone with care and respect. To give yourself to your community and others in their time of need. Thank You Mom and Dad for your Love and Guidance, Linda, Teresa, Dennis, Larry

MOVING THE OIL & GAS INDUSTRY IN SASKATCHEWAN Box 700 Carnduff, SK

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A16

PIPELINE NEWS September 2017

FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

The last decade: boom and bust, and still truckin’ By Brian Zinchuk Carnduff – The last decade has seen Saskatchewan go through one of its largest booms, and a pretty significant bust. Through it all, Fast Trucking Service Ltd. of Carnduff has grown and shrunk with the times. A happy coincidence occurred on Aug. 19, 2011, when Pipeline News did a profile on Fast Trucking for our focus on rig moving that month. It just happened to be the day that Saskatchewan had 122 active drilling rigs, a record number. On that day, Fast had nine moves scheduled, and six crews at work. In at least one case, the second move was completed before most people would go for afternoon coffee. During much of the boom years, it was common to see around 100, or more, drilling rigs working throughout Saskatchewan during the winter season, and a number close to that during the summer. But the last three years have been hard, to say the least. During the summer, rig number generally stayed below 50 for the whole province, and was lucky to hit in the 60s during the winter. At some points, especially during the summer of 2016, rig activity almost ground to a halt. According to Rig Locator, on July 12, 2016, there were only 15 rigs working in the whole province, from north of Lloydminster to Gainsborough. These numbers are to provide context to the ups and downs Fast has gone through. The closer to the

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ON 60 YEARS OF SERVICE

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drill bit you are, the harder the busts hit, and you don’t get much closer to the drill bit than rig moving. Their activity level is a direct barometer of the health of the industry. Dennis Day is the general manager of Fast Trucking, and he spoke to Pipeline News at their shop in Carnduff on July 27. He said in the last 10 years, it’s been, “the biggest boom we’ve ever had.” Ten years ago, the Bakken was one of the hottest plays in North America. In 2008, Saskatchewan had over $1 billion in Crown land sales. Dennis said, “It was just busy. More people started rigs up. Drilling was getting activity. At one time, our shop ran 24 hours a day. There were people coming and going, and we were moving rigs steady. We were moving up to 15 rigs a day, some days and 1,300 a year. “We were averaging around 150 a month.” “When you’re that busy, and if you want to make money and be successful, you have to be at work,” he said, talking about how it’s sometimes necessary to get hands on with things. Asked about the recent change to earlier move times, Dennis said, “It changed after the slowdown. People are trying to get moved as quick as they can and get spudded.” “We used to leave here, the earliest was four in

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the morning, so the guys would be here at three. Now, we’re starting at 1:30 in the morning, because the oil company wants to get the rig moved sooner.” But in the wintertime, they go back to starting with the daylight. Hours of service are much more in play now and more strictly enforced than in times past. Among the things that have changed are the usage of pickers. There might be five pickers parked along the truck row, but they will sometimes call in a third party picker and operator for a move. “We’ve only got three picker operators,” Dennis said. “We don’t use pickers as much. A lot of rigs don’t even use a picker anymore, so it’s getting harder to keep picker operators.” One example is the centrifuges are now built on tanks and use hydraulics to go up and down, instead of using a picker. Loaders on the rigs will often load the matting and pipes on pipe tubs, reducing the usage of pickers as well. “At one time, we would send two or three pickers on the same move,” he said. The loads are getting bigger, too, particularly when it comes to pumps. Whereas 800-horsepower pumps were once the norm, now heavier 1,300-horsepower pumps are becoming more common, he noted.

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FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Oil companies' purse strings are much tighter now ◄ Page A16 When the price of oil was high, rigs moved whether it was muddy or not. Dennis said, “Ten years ago, there wasn’t much matting. You know what the demand for rigs was. Back then, if the oil company didn’t move the rig, they got charged for it, or they took it to work for someone else. The

drilling guys really made sure the rigs were working. “Over the years, it’s gotten to be more and more matting. Now, if it’s bad, they mat it. It costs a lot of money to get matting, but it costs a lot to get into a shitty lease and drill the well and then get it out of there.” Oil companies’ purse

Fast Trucking general manager Dennis Day. Photo by Brian Zinchuk

strings are much tighter now. “Before, it was ‘at all costs, just go ahead.’ Now it’s pretty tight.” As oil prices plummeted in December 2014, oil companies sent out letters demanding their vendors cut their rates. Since then, many sectors in the industry have seen several rounds of cuts to their rates, and thus their revenue, in addition to a sharply reduced volume of work. Dennis said, “It was the biggest hit we’ve had in 30 years, because in ’86 we had to work pretty cheap, too.” When rig activity was near its lowest levels in the summer of 2016, Fast Trucking made changes to wages and staffing levels. “I let quite a few people go. I had to let people go,” he said. He consulted his father, Tony, president of the company. Tony told him, “Everybody will have to do more for less, and that’s all there is to it.

The derrick of Panther Drilling Rig 4, being moved by Fast Trucking on July 28. Photo by Brian Zinchuk

It is what it is.” Still driving “You don’t find many people who run the number of companies we do and will still go out and drive trucks,” Dennis said. “There’s a few things. You get out and you’re working with your guys. You get to see how the day-to-day operations go. You get to meet with your customers. “I told Tony, ‘Before,

I used to go out to the rig and talk to the guy, ask him how it’s going. Now, I’m driving a truck out there, I’m moving the rig, helping him out, and those guys like seeing that. Then, on top of it, I’m getting paid by the hour, so I’m actually getting paid to talk to the guy!” He’ll even fill in on a service rig from time to time, even on a Saturday,

something that happened a few weeks ago. Someone pointed out to him that you might see the owners of other companies come out, and you probably wouldn’t see them work. You sure wouldn’t see them work on a Saturday. The day after the interview, Dennis was driving again, to a rig near Oungre, on the road well before 5 a.m.

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FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Vi drove winch and water trucks, too ▲

Page A15 farming, and the family farm continues to this day. Children started arriving around that time, too, with Linda (Apperley) in 1963, Teresa (Kyle) in 1964, Dennis in 1966 and Larry in 1970. Linda has been in the office since 1985, handling accounts payable and payroll. Teresa is a nurse’s aid, but she’s been the gopher and used to drive pilot car at times. Dennis is general manager and still gets into the trucks as needed. “I still wash trucks,” he said. Larry heads up the dispatch, with a map behind his desk punctuated by pins for each rig. The boys both swamped and drove, working their way up. Larry’s wife, Lori, works in the office as well. “When Linda had babies, she brought her

babies to work all the time. After they were born, she just brought them here,” Vi said. Those kids are now growing up, and many of the grandkids, the third generation of Days, are now also involved, driving pilot trucks, working in shop and office. In 1974 Antelope wanted Tony to move to Nisku in 1974 to be their head mechanic, but the Days declined, choosing instead to continue with their water trucks and farming. Love those auctions “We bought all our water trucks new. A lot of our rig moving trucks, Tony bought at Ritchie (Brothers) auction sales. We didn’t have a lot of new trucks until Dennis started,” Vi said. “Tony likes their auctions. I think he went to their first auction in 1972 and bought a trailer. That was his first

purchase, I think. He went all the time. Even as busy as we were, he’d move a rig, drive there all night, go to the sale, turn around and come home,” she added. “He had a buddy, Harvey Murray, that would go with him quite often. He would haul the equipment home that Tony bought.” Asked what the best part of an auction is for him, Tony replied, “When I hear ‘Sold!’” Vi said, “Tony likes to buy the first item at a sale, no matter what it is. It’s a good sale.” Other ventures “Tony never, ever turned down any type of a job, that I recall,” Vi said. “He hauled bales when things were tough.” “We’re still hauling bales,” Dennis interjected. The first shop was a Quonset moved onto their acreage. It saw three additions. “We built the shop in 1995,” said Den-

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nis of their current shop. “That was a big deal.” That shop was relocated from Coronach. Over the years the Day family’s business grew beyond Fast Trucking to a substantial group of companies. In 1979, Day Construction, an earth-moving outfit, was started. Tony’s oil company, TDL Petroleums, was formed in 1986. In 1996, Competition Environmental Land Spreading Ltd. fired up. Service rig company General Well Servicing started the next year. In 2001, Dennis started his own oil company, Runcible Oil Corp. In 2005, Estevanbased Sam’s Trucking was purchased. Virden, Man.based Fontana’s Trucking was acquired in 2006. In 2010, Forsyth Trucking was added. Ups and downs Vi ran the administration of the company

until roughly 10 years ago. “I still do books, but I don’t do dispatching. I used to do all the dispatching at one time,” she said. “I did all the invoicing, all the permits, all the payroll.” Vi noted they dealt with some other company’s bankruptcies that were hard on her nerves. Tony noted that one of the most prominent was Williston Hunter, saying, “$800,000, they owed us.” “We had lots of ups and downs, but we survived,” Vi said. “It was with the help of all the men and our good customers, and the people we owed money to that we made it.” Busy days Long-time truck push Kelly Krupka said a rig move these days will involve 10 to 20 trucks, depending on how far it is. “Tomorrow will be 14,” he said.

The most moves the company had in one day was 15 rigs, around 2008. At their peak, they could have seven spreads going at once. Today, with reduced manpower due to the downturn, that’s down to four. Vi said, “In 1985, it was extremely busy, and we didn’t have a lot of equipment at that time. We were moving on our own and they would move up to three rigs, with the same fleet of trucks, in a day. I don’t know if we made four, but we made lots of threes. Not much sleep in those days.” Hours of service regulations weren’t as stringent back then. Kelly said, “We’d move rigs for 20 hours a day, then we’d send the stuff home so Tony could fix it at night.” “Then he’d be in the shop most of the night, ► Page A19

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FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Tony just went ahead and did it ▲

Page A18 fixing, and come to bed around 3 and be up at 5 and go again,” Vi continued. “When we first started, all we really needed was a licence plate, insurance and compensation,” Vi said. Now they need ISNetworld, Complyworks and COR. All loads were smaller, and lighter, Vi, said about their early days. A heavy load might have been 35,000 pounds for a 250-horsepower pump with a bank of Jimmies.

“Now they’re 1,300-horsepower that weigh over 100,000 pounds,” Dennis said. Oilman of Year In 1999, Tony was honoured with the Southeast Oilman of the Year award. In 2009 he was inducted into the Saskatchewan Petroleum Industry Hall of Fame. The Hall of Fame citation noted, in addition to his other work, “He also had the distinction of having designed and built the first free-standing double-triple service rig.”

People tend to stick around Linda explained that Fast Trucking has seven employees with more than 30 years in, 12 with 20 years plus, and there are around 90 people working with Fast. Jamie Jones is the longest-term employee, followed by Kelly, who joined in November 1985, “for a year or two.” That’s not uncommon with this outfit. A month before, while doing a story on Fontana’s Trucking, Bruce Bailey told Pipeline News

that he intended to stick around six months after he sold the company to the Day siblings. Eleven years later, he’s still there. (Fontana’s is run as a separate entity.) Asked what the secret is for working in a family business, Linda said, “Everybody has their own job and does their own job.” Tony said, “Always say, ‘Yes.’ When your wife wants something, or your kids want something, you always say, ‘Yes,’ whether you give them the chocolate bar or not.” He thinks it's pretty

special, having worked with his family all these years. Asked if he would have done anything differently, Tony mentioned when he fell through the ice on a river seven years ago. Some cows fell through the ice, then the excavator that went to rescue them fell through, too. They were trying to winch it out, and Tony fell through, too. It was just south of Glen Ewen. “You should have seen the ice fly when I kicked it, though!” Tony said.

As for the business, he said, “I don’t think I could have done anything different.” Dennis said, “If someone told Tony, ‘You can’t do it,’ he just went ahead and did it.” Tony added, “I pride myself on the one thing I did for the oilpatch. I built the first free-standing service rig, and that saved the oil companies thousands of dollars.” Vi said, “We were lucky to have good customers and good hired men, and a hardworking family.”

A ballet, with big trucks and a truck push as conductor By Brian Zinchuk Carnduff, Frobisher – Watching a rig move is like watching a highly choreographed ballet, but with very heavy equipment. This day in late July is probably the sixth or seventh rig move Pipeline News has seen Fast Trucking Service Ltd. perform, and each time it’s still a wonder to see how slickly the men and their iron move such massive equipment. Conducting this ballet, right in the thick of things, is the truck push, the foreman on the site whose radio is often clipped close to his collar, ready to give

direction and hear responses from his drivers and swampers. He’s constantly directing various units in and out of the lease. The truck pushes are usually the most-experienced workers on the job, often with decades of experience. Before the rig itself moves, often the “shacks,” skid-mounted mobile offices and accommodations for the rig personnel who live on the lease, are moved first. This will happen generally before the rig is moved. The new location requires rig mats

around the wellhead. If it’s a wet lease, sometimes the oil company will have most of the lease matted as well. If it’s wet, that’s when the heavy equipment, like “sows,” heavily adapted, custom builtrock trucks, come out. But this summer has been incredibly dry, and there would be no playing in the mud on this day. There are different style of rigs in the region. A “single” is a rig that can pull out one joint of pipe at a time, a “double” can do two joints, and a “triple” can handle three. As you move up the scale, the rig becomes much larger, and moves become

more complex. The smaller “super singles” are particularly popular in Manitoba. There is a push by some of the larger drilling companies towards “advanced drilling rigs,” or ADRs, which are of this variety. With top drives and robotic pipe handling, there’s a much lower labour component. They also are easier, and therefore cheaper, to move. When the rig count hit its lowest numbers in the summer of 2016, it seemed the super single ADRs were the ones that kept working.

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PIPELINE NEWS September 2017

FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Full gin pole truck treatment ▲

Page A19 Then there’s the common telescopic doubles, also known as “teledoubles.” Many of those were built locally, in Estevan, at Do-All Industries before that company went out of business. These rigs have the derrick telescope down and then fold using hydraulics. The derrick remains attached to its drawworks and engine skid when the rig is moved. A “Jackknife” rig is one where the derrick is

detached from the rest of the rig, and moved on its own. You don’t see a lot of triples in the region, but there are a few that are built with a derrick the size of a triple, but pull two longer joints of pipe known as Range 3 pipe. These larger rigs are of the jackknife variety. Removing the derrick requires highly skilled and coordinated use of gin pole trucks to remove the derrick from the rig and attach it to a truck and

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dolly for road movement. The reverse happens when the rig is assembled. On this day, Panther Drilling Rig 4 is the rig in question. It’s one of the largest rigs in the region – with the derrick the size of a triple, but pulling double joints of Range 3 pipe. It requires the full gin pole truck treatment to remove its derrick. The move starts near Frobisher, relatively close to Fast Trucking’s home base of Carnduff. It’s heading about 20 miles southwest, give or take. But unlike the pickups, the rig moving semis can’t take a direct route due to bridge restrictions. They end up heading out to Highway 9, crossing the Souris River on that

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bridge before coming west to their destination. The result is they’ve probably travelled twice the distance compared to a direct-line route. Pipeline News arrived at 5:30 a.m. “You almost missed it!” said truck push Mark Shier. The shacks had been moved the night before, many of the outer units of the rig, like pipe tubs, had loaded up and left. The rig move might have been schedule to start at 5 a.m., but for Fast Trucking, that really means they’re going to be there much earlier. The drawworks skid was being slid onto the back of a bed truck which backed onto a steep steel ramp to reach it. ► Page A21

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FAST TRUCKING SERVICE 60 YEAR ANNIVERSARY

Rig move is complete before morning coffee

Truck push Kelly Krupka is one of Fast Trucking’s longest-serving employees. Photo by Brian Zinchuk

◄ Page 20 The gin pole trucks arranged themselves on each side of the derrick near where it met the substructure. Rig hands arranged the numerous lines below the derrick while two rig hands, in fall-arrest harnesses, moved back and forth along the horizontal derrick. The lower part of the derrick is placed on a dolly with more wheels than you can shake a stick at, using the gin pole trucks. They then move to the crown end of the derrick, lifting it off the stand it has been resting on and lowering it onto the fifth wheel of the truck that will pull it. With the derrick out of the way and headed down the road, the massive substructure is the last key component removed from the now-finished oil well. As it is the backbone for the rest of the rig, re-assembly at the new wellsite can’t begin until it arrives and is spotted above the cellar for the new well.

At the new site, everything happens in reverse of the rig-out. The substructure is spotted, then those gin pole trucks lift the derrick into its place. After that, the water tank/dog house goes to one side of the substructure, while the mud tank and two-part pump shack go on the other. The combo building, which includes electrical generators, goes near the water tank. Shale bins and the centrifuge are placed near the mud tank. Rig personnel scurry to hook up fuel hoses, mud pipes and electrical connections between the various components. The derrick is raised and pinned into place. By the time most people are breaking for morning coffee, the rig move is nearly complete. The green trucks with white stripes head for home and to get ready for the next day. See additional coverage on the Sept. 6 Estevan Mercury Energy page and on pipelinenews.ca

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PIPELINE NEWS September 2017

Phil’s Oilfield added vac trucks By Brian Zinchuk Radville – Phil’s Oilfield Contracting Inc. of Radville has endured the downturn thus far, and done so without diversifying outside of the oilfield, but rather within the oilfield. “It’s going alright. It’s definitely different,” said Phil Thompson, owner. “We’ve kind of diversified, again. We got into vac trucks. We got them at auction, and just got that going this last year-and-a-half.” Phil’s now has two vac trucks, one tri-axle and one tandem. They are both combo units, which have wash and vac capabilities. They’re not hydrovacs, but Phil’s does use them a bit for exposing lines. The company has stuck with oilfield work, as opposed to diversifying into other fields. They have eight people on staff. “We only got up to 12 guys,” Thompson said. “We could have went right at it and done 15 to 20 guys, but didn’t. I’m glad we didn’t.”

Staying smaller has made it a little easier to weather the downturn in oil prices which has been over three years. Phil’s is one of the few oilfield services companies to report they did not reduce wages, although there were reductions in hours. “I didn’t think it was fair to them. It was not their fault,” Thompson said about wage cuts that hit most oilfield services companies, but not his. “We’re currently working less. There’s no doubt about it. I think the price of oil is going to stay like this for years.” The current price of oil, floating under US$50 per barrel WTI for several months now, has an impact on activity. “US$50 is big. It is. We need US$50 as the bottom Low US$40s is really not good,” Thompson noted. That being said, he added most oil companies have a plan and are sticking to it. “There’s a lot of belt tightening,” he said, pointing out that contractors have been hit by the cuts.

Phil’s is on the production side of the business, which hasn’t been hit as hard as the exploration side, he noted. “The spraying, mowing and grading they have to do every year,” he said. Phil’s operates batteries on a contract basis. Their work also includes lease maintenance like spraying and grass cutting. They have two graders going for lease roads. “We did quite a bit of steaming and snowblowing. “Last winter wasn’t too bad. We were busy, but the rates – we were right back to the 1990s for rates – at least 15 years.” Asked when he expected oilfield services companies can start charging more for their services, he replied, “I think oil would have to stay in the US$50s for quite a while.” The Radville area has been hit hard by drought. Thompson said during a recent project nearby they dug four feet deep and didn’t find any moisture at all in the

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ground. That’s resulted in less mowing as well as less grading, as dry roads don’t rut up like wet ones. A few years ago they added a water truck, and they’re keeping it full in case the local fire department needs them. “We’ve been out to three fires this year,” Thompson said. The downturn has mean increased competition on lease spraying. “Spraying’s been crazy. Everyone wants to spray weeds. They think it’s easy to get into.” As a result, he said they lost some of their spraying work over the last three years. But they’re also into a lot of other things. Phil’s has two backhoes and two tracked skidsteer loaders. “We do quite a bit of cleanups,” Thompson said. That, in turn, spurred the vac truck purchases. They also have a 12ton Deer excavator. Phil’s installs a lot of well fence as well. Their work area run from east of Radville, between Radville and Colgate, down to the Oungre

Phil Thompson is owner of Phil’s Oilfield Contracting Inc. Photo by Brian Zinchuk

area south of Highway 18, east to Torquay and west to Gladmar. It’s about a 45 minute drive to Oungre, which is home the Flat Lake play, one of the more active regions in Saskatchewan. Thompson built a new shop in the fall of 2016 for cold storage and is still bringing in fill for the inside floor. For the remainder of 2017 Thompson expects it will be pretty slow, especially if there’s no rain by November. In early August Premier Brad Wall announced he was retiring

from politics. Thompson is going to miss him. “I don’t think Phil’s Oilfield would be where it is without Brad Wall, with the expansions we’ve done in the last six to eight years.” He doesn’t think oil companies would have invested as much in Saskatchewan as they have over the last ten years under a different administration. “I don’t think it would have happened, to the degree it die. That’s what kept us going is Crescent Point kept going,” Thompson said.

PIPELINE NEWS September 2017

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Diversification has made a big difference for Pratt Transport By Brian Zinchuk Radville – When Pipeline News last profiled Pratt Transport Ltd. of Radville in our April 2010 edition, the story focused on their unique business strategy of building “glider” trucks using, older, pre-tiered emissions controls engines. That strategy has paid off in the intervening years, and they’ve built a total of ten such gliders, the core of their fleet. Asked about the gliders, Rob Pratt said, “The only reason I’m still in business is because I had those trucks.” Rob owns and operates the business with his wife Christine. They spoke to Pipeline News in the recent addition to their shop in Radville

on Aug. 17. The term ‘glider’ is a reference to an aircraft without an engine. In this case, it’s a truck without a drive train. “It shows up at the dealership without any power train,” he explained in our original 2010 story. All their gliders have been Peterbilts, and the engines are pre-1999. “No tier,” is how he described them. Surprisingly, the supply of engines has not run out, 18 years after the cutoff, but glider packages are harder to get now, he said. Because they’ve lasted so well, the most recent glider he built in 2015. “The price of trucks has gone up so much,

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and the trucks I built are so reliable, I don’t need any new trucks. Those trucks have 2.4 million kilometres, 40,000 hours without any no engine repairs. Half of my other trucks have 1.6 million on them, and they run every day. “I work with guys who went broke because they had brand new trucks in the shop all the time. In 2009, 2011, 2012, people were struggling.”

Pratt Transport specializes in fluid and natural gas liquids (NGLs) hauling as well as construction. “There’s more construction right now, because it’s slow in the fluid-hauling industry,” he said. They’re running three to four power units on a good day. August slowed down, but they expect things to get busier in the winter, when they would run six or seven.

The products include more NGLS now than fluids. Noting the seasonal work, Rob said that’s why they’re doing more construction in the summer. This includes scrapers, grader, loader, gravel, topsoil for oil site reclamation. They do aluminum welding and have a gravel pit, too. This summer they completed a sewage lagoon for the town of Radville. “It was four

hectares, 150,000 cubic yards of dirt,” he said. It took all summer. Christine said they have around 10 and 12 people, between ownership, drivers and construction. Their peak was this past spring, at 15. Rob noted they work together with their buddies who have other businesses. “We kind of share guys,” he said. Rob said, “We’ve diversified a lot, doing ► Page A24

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PIPELINE NEWS September 2017

Construction filled in the gaps raw gas to a gas plant for processing, or caverns.” The trips can be from 20 minutes to 10 hours. Weather, crops that need drying, are just some of the factors affecting their hauls. The glider idea shows Rob’s contrarian streak. When they do dugouts for farmers, for instance, they’ll use scrapers instead of excavators. “Basically, what everyone else is doing, I try to do the opposite,” Rob said as Christine laughed. “If you can find more efficient ways to make money…

By Brian Zinchuk Radville – When pipe inspection outfits mark a pipe with a red band, it’s done. It can no longer go downhole. But Schindel Ironworks of Radville brings it back to life, not in oilfield applications, but as cattle wind breaks, feeders and bale rails. The company is a family affair, with father Mel Schindel, son Dan Schindel and son-in-law

Chris Johnston. Kevin Hoey is the one person not part of the family. Dan said of Mel, “He’s 77 years old this year, and he’s still working with us. Still going, can’t stop him from going. I call him an Ironman.” “He works all day here. He has an acre and a half of lawn at home, he cuts his grass, plants a few potatoes, and comes out here and

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Page A3 water and sewer, building this lagoon, farming. “Otherwise, we would be about half the size we were, because at one time we had probably 12 drivers, but now we’re struggling to keep seven busy,” Christine said. Thus, their construction work has made up for the shortfall in oilfield work. Their NGL hauls can go from Saskatchewan to Ontario, Montana, South Dakota, North Dakota or Minnesota. “There are still some in-field NGLs,

“Everyone uses rock trucks and hoes to move dirt. I use scrapers. It’s more efficient.” Three years into this oil downturn, they’ve survived. Rob said, “It’s been good, being diverse.” Christine said to Rob, “I used to think you were crazy, trying new things.” The Pratts have four children, ages 10, 12, 15 and 17, and they’re starting to help out with the business when they’re not active in their various activities. The youngest clean the shop, and the oldest will run equipment.

The savings of building “glider” trucks kept Pratt Transport in business. Photo by Brian Zinchuk

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does his day then plays ball with the kids on the lawn at five o’clock, with my little guy.” “The wealth of knowledge he brings here, holy, when we get into big projects, it’s nice to have him,” Dan said. “We’re still creeping along with the cattle stuff. Prices are down a little. We’re still get ting the oilfield used ► Page A25

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A25

Radville’s R-Bar is going to shake things up Service Rig Level IV Re-Certification By Brian Zinchuk Radville – What started as an office building eventually turned into a bar, accommodations and aesthetics shop on the Main Street of Radville. It took a long time, but recently it appears a lightbulb has turned on, and the accommodations portion has become very busy. That’s according to Lana Tatarliov, owner. The last time Pipeline News spoke to her was seven years ago, not long after she had set up the accommodations portion of the business, known as R-Bar Accommodations. “I’ve been here 10

years,” she said on Aug. 17, in the R-Bar and Restaurant. That bar took a long time to get going. This December will mark three years for it. The lounge has just been finished, and the video lottery terminals have been moved. Now she’s ready to shake it up. “I want to make it more fine dining. It’s going to be fine dining, but it will still be a bar,” she said. Her goal it to make it more of a destination restaurant, where people are willing to go out of their way to drive to and have an evening out. “I’ve listened over the last three years to

what everyone told me what I should do. I’m not doing that anymore. I want to be able to do what I want to do.” Indeed, she sat down with her staff the day before, telling them of her plans, and asking her two chefs to come up with impressive menu items. “These are chefs in my kitchen, not students,” she said. But while she’s making plans for revamping the restaurant and bar (which allows minors until 8 p.m.), she’s busy organizing rooms. That night, another three men were expected. “I have oil crews, construction crews, road

construction crews for seven years in a row,” Tatarliov said. She’s recent built onto the suite. The accommodations are in the style of a boarding house, with a capacity of 31 guests. There’s a rec room for clients, and the menu isn’t simply what’s offered at the restaurant. “We make home-made roast beef,” she said as example. “We do lunches and breakfast. Our chef is up at 3:30 a.m.” The oilfield accounts for about 20 per cent of her business, Tatarliov estimates. The downturn in the oil sector didn’t affect her that much, because it was never a

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Lana Tatarliov wants to change the R-Bar and Restaurant in Radville into a fine dining establishment. It also offers accommodations for up to 31 people. Photo by Brian Zinchuk

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ull team of engineers, machinists, welders and millwrights provide solutions and repa than that, we serve the as a firefighter than as a cattle which uses allalso use surplus oilfield margins. Page A24 The downturn in farmers and the ranchbusinessman,” he said. steel instead of wood. metal. tubing. We’vereliability done a proved and safety That surplus tubing the oilpatch has affected ers.” Schindels has a “We use tubing for the few projects in the last little while – the Ceylon plant update, where they changed things over. Usually we get one or two decent-sized jobs a year, and that keeps us rocking,” he said. “Other

They also do minor work in the oilpatch with a local oil company. The region around Radville has been incredibly dry all summer. “I’ve been busier

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PIPELINE NEWS September 2017

Downturn claims Vortex Drilling By Brian Zinchuk Carlyle, Saskatoon – On July 24 three-year oil downturn claimed a victim in the drilling industry, taking down Vortex Drilling Ltd. The company was placed into receivership by its lender, Affinity Credit Union 2013. The credit union was owed in excess of $8,350,000 and applied for the appointment of a receiver in Saskatoon Court of Queens Bench. The judgment by Justice Brian J. Sherman was handed down July 24. Court documents are available on the Deloitte Insolvency website. Vortex, a three-rig drilling company created in November of 2010, had applied for protection under the Companies’ Creditors Arrangement Act in order to pursue a reorganization, but this was not granted. The judgment stated that Affinity had accommodated financial difficulties faced by Vortex since early 2015, and had made various agreements to accept interest-only payments in return for various undertakings by

Vortex. Affinity said Vortex stopped making even those payments in April 2017 and was in default. Affinity demanded full payment, and Vortex failed to make that. Vortex had initially owed a total of $14.9 million on Aug. 12, 2013, paying out existing loans on its first two rigs and financing the construction of a third rig. Principal and interest payments came in at $325,257 per month. A default would result in a demand of payment of all sums. The credit union was granted any of Vortex’s property as security. Court documents show the company had $240,473 owing to 45 different entities beyond the credit union, the highest values of which were $67,763 to a welding shop and $66,719 to Do-All Industries USA Ltd. The remaining debts listed were generally much smaller in nature. The judgment noted, “With the collapse of oil prices and the resulting downturn in the oil industry Vortex was unable to make

the monthly payments contemplated by the credit agreement and sought accommodations from Affinity. By a series of agreements Affinity provided principal repayment deferrals to Vortex, which resulted in Vortex paying only interest for most of the months of 2016. Vortex failed to fulfil its commitments to make balloon principal payments and to resume principal and interest payments by dates and in amounts contemplated by these accommodations or deferral agreements. “As of January 2017 regular monthly principal and interest payments of $325,257 were again to resume but Vortex failed to make such payments. In March of 2017 Vortex informed Affinity that it could only afford to make monthly payments of $100,000 rather than the $325,257 per month then required by the credit agreement. Affinity prepared an amendment to the credit agreement which would have permitted such reduced payments on condition that Vortex approach its

shareholders to obtain an injection of equity capital to finance its business operations and reduce the indebtedness owing to Affinity. Vortex did not sign that amending agreement, has not made the required monthly payments, nor remedied the defaults that have occurred under the Credit Agreement, as amended from time to time.” At the day rates discussed later in the judgment (approximately $7,000 per day), Vortex would have had to have one rig drill roughly two full weeks per month just to make the $100,000 payment, never mind payroll or other operating expenses. At the full payment value of $325,257 per month, at a day rate of $7,000, Vortex would have required 46.5 operating days a month, year round, between its three rigs just to make its payments to the credit union. At the $16,000 per day rates when the loan was taken out, the company would have needed 20.3 operating days per month to cover that payment. On May 1, Affinity

demanded full payment be made in 30 days, and on June 6 filed court papers applying for appointment of a receiver. It was adjourned until June 23. Negotiations between Affinity and Vortex followed in the next few weeks. The court appointed an interim receiver on June 23 to “investigate, monitor and facilitate Vortex’s continuing operation so as to give Vortex an opportunity to file opposition affidavits and make its CCAA application.” Vortex told the court, “The economic climate in the Western Canadian oil industry is improving and it is expecting a substantial improvement in its cash flow. It says it expects to soon secure additional business and that it is actively pursuing promising refinancing opportunities. Thus it says it is appropriate that it be given an opportunity to pursue such refinancing or a compromise with its creditors so as to avoid the social and economic costs of liquidation. It says that the security that Affinity

holds has a value significantly beyond the debt owed by it, and there will be no real prejudice to Affinity by granting an initial order and granting a stay.” Affinity argued that it had already given Vortex lengthy and significant accommodation, and it had lost trust in Vortex, which, Affinity asserted, had “repeatedly failed to honour contractual commitments made to Affinity in return for the deferrals granted and that the evidence demonstrates that Vortex has not acted in good faith.” The court noted Affinity had accepted deferral on nearly 2.5 years of payments totalling $4.5 million. Despite this, Affinity expressed to the court, “Vortex has been unable to generate cash flow that permitted it to cover its variable operating costs, much less make a contribution to fixed costs. The application made by Vortex does not contain even the germ of a reorganization plan that has any prospect of succeeding. It relies on ► Page A27 info@cpenergy.ca

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A27

USTOMS ROKERS Day rates couldn’t support the company and its debts ▲

Page A26 purported, but unverified, refinancing possibilities. Vortex has had many months’ opportunity to obtain refinancing and has not been able to do so.” The court discounted an affidavit which suggested the oil industry is improving and Vortex was experiencing significant growth. Instead, Justice Scherman wrote, “I conclude it is wrong to say that Vortex is experiencing significant growth. Rather it is limping along drilling wells on a ‘oneoff ’ basis as and when such contracts come available. This work is

done at depressed prices that cover the variable costs of operation, if that, and the bulk of its capacity is unused.” The justice did not accept Vortex’s assertion that its equipment was worth $17.3 million and dismissed the credibility of that appraisal. He also noted that the day rates for drilling rigs had, “declined from in excess of $16,000 per day to under $7,000 per day and that only one out of three of Vortex’s rigs has been operating on any regular basis gives significant basis to be concerned about the reliability of such evidence.”

Similarly, he found that while one rig was working, a second rig had only spent one week drilling one well for one company for the 2017 season, and didn’t find evidence to support the company’s assertion it would find work for the third rig. Justice Scherman found Vortex had operated in bad faith with Affinity, and brought up a questionable accounts payable scheme with Radius Credit Union which came to light from the investigations of the interim receiver. Similarly, a 2016 payment of a financial settlement of $525,000 to the

ousted, original founder of the company, Harvey Turcotte, was supposed to be funded from outside sources and not Vortex’s cash flow. In his findings, Justice Scherman expressed Vortex had not contemplated making any debt repayments to Affinity from July 17 to Sept. 24, 2017, and would not have been able to make its July 7 payroll without the injection of funds by the interim receivers. He wrote, “The prospect of Vortex finding a lender to refinance it, at the level required to satisfy all of the indebtedness to Affinity and other credi-

tors without significant equity injections by the shareholders, is remote or non-existent.” Additionally, Vortex’s shareholders had demonstrated they were not prepared to invest more money into the company over the last 2.5 years, something the credit union had long desired. He dismissed the prospects of refinancing the company. Given the day rates for the last two years, the company was unviable at its current debt levels. Indeed, its revenue barely covered, or not even covered, carriable operating costs for the

rigs, let alone fixed costs. As to whether the rigs’ value is worth more than the debt, Justice Scherman wrote, “given the utilization rates and day rates available to Vortex, that the present value of these rigs is a matter of significant uncertainty.” Keeping the rigs going would continue to depreciate their value. Justice Scherman dismissed Vortex’s application for relief under CCA and appointed Deloitte Restructuring Inc. as receiver, effective immediately.

A sale process is underway, according to Deloitte.

Trican will soon consolidate Estevan locations FRAC FLEET WILL BE BASED OUT OF MEDICINE HAT

By Brian Zinchuk Estevan – With the acquisition of Canyon Technical Services Ltd. by Trican Well Service Ltd. this past June 2, it was inevitable that some efficiencies would be found where there was duplication. In Estevan, both companies had a base. Soon, there will be just one, but which one has yet to be determined. Rob Cox, vice president of operations

with Trican, told Pipeline News on Aug. 16, “We haven’t made the final decisions, but our plan is to trim our operation down to one facility. We don’t have a big enough operation between the two to warrant the two different bases, so we will be deciding which base we will be moving to. But that decision hasn’t been made yet. There’s still a couple of things we’re looking at, as for what is

more efficient for us.” Both facilities have cement facilities. Canyon did not run acid out of Estevan. “Canyon supported the Estevan market out of Medicine Hat. We had some equipment there, but really no infrastructure to speak of,” he said, with reference to a frac fleet. Canyon did have one in Estevan initially, but no longer. Trican has a frac

spread in Estevan, but Cox said, “We are in the midst of moving that to Medicine Hat. Most of the people came from Medicine Hat, and they kind of like to work from home.” Roughly four years ago, there were seven different frac companies with frac spreads in southeast Saskatchewan, principally in Estevan. They included B.J. Services (which became

Baker Hughes), Halliburton, Trican, Millennium Stimulation Services, Canyon Technical Services Calfrac (Bienfait) and Element Technical Services (Carlyle). With the merger of Canyon and Trican, that leaves just Trican and Element left. “I can’t speak to why the other companies

have left. If you’re in the fracturing business today, you know you’re going to be on the road most of the time, so it doesn’t really matter where you’re based out of. Those companies that are focused on cementing, like us, we want to be close to the southeast Saskatchewan market. But we can

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PIPELINE NEWS September 2017

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Page A27 service the southeast Saskatchewan market from Medicine Hat because it’s usually longer duration work,” Cox said. “We re going to work out of southeast Saskatchewan, still,” Cox said. “We’re not moving away from our clients. We’re allowing the people that live in Medicine Hat and work in Estevan to go back and live in Medicine Hat. They’ll be based out of Medicine Hat, so on the days they’re not working, they’ll be at home, but they days they are working, they’ll be in Estevan, just as if they are based in Estevan.” The number of frac workers Trican had based in Estevan was in the high-20s, he explained. “We’ll continue to run cement and acid out of Estevan, just not frac people,” Cox said. “We will continue to operate out of Estevan. It’s a good business for us, in Estevan, and fracking was too, but we want people to be able to work from home.” There is a certain pattern of communities and their specialties. There are a lot of service rigs based in Oxbow, Estevan and Weyburn, for instance. When it comes

One of these sites in Estevan will close soon, but Trican hadn’t decided by mid-August. Photos by Brian Zinchuk

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for Millennium, according to its founder, Mike Heier, when it shut down operations. Trican has some housing rented, and will use that as needed. “But a lot of the work we do is far enough from Estevan that they have to overnight in hotels anyways,” he said. A year ago Trican suspended its Brandon base, consolidating frac operations in the region

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pretty much have to go to the bigger centres. Now, Estevan is not small, by any stretch, but it is also competitive for oilfield, and people who live in Medicine Hat want to live in Medicine Hat. “We’re hiring, and everybody’s hiring. Every division, but also, all our competition is hiring as well. Most of the work is still up in the Montney and Duvernay areas, from Red Deere to Fort St. John, but Grande Prairie is where most of the work is,” Cox said. “There’s

still a fair bit of work out east.” One of the Estevan facilities is leased, the other is owned, but he wouldn’t say which is which. Cox expects them to act on this decision by mid-September. “We’re not abandoning Estevan in any way. We’re allowing people who live in Medicine Hat to spend more time at home. But the Estevan market is still key to us, and we plan on being there 10, 20, 30 years from now,” he concluded.

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PIPELINE NEWS September 2017

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Brent Gedak Welding makes push into automation SINGLE TRUCK TO ROBOTS OVER 10 YEARS

By Brian Zinchuk Estevan – Having started with one welding truck, Brent Gedak Welding Ltd. of Estevan has grown into a manufacturer which has positioned itself for growth by way of substantial technological investments. Sept. 7 marks 10 years for the company. Prior to incorporation, Brent had worked as a welder since 1998, and as a subcontractor for other firms, “I worked at Supreme on and off for nine years,” he said on Aug. 22. That work included pipeline and shop pressure welding. Brent and Janelle got married in 2005, and Janelle looks after much of the administrative side of the business. “I helped him incorporate,” she said. Incorporation became necessary as they moved from a one-man operation to multiple employees. “We started on the Frank Dunford farm, north of town, for two and a half years,” Brent said. “It was fabricating, pressure piping, skid manufacturing, and we did a lot of service and drilling rig maintenance. We did casing bowls. That was my stuff – at two in the morning.” It’s been four or five years now since Brent Gedak Welding (BGW ) has done rig welding, since the nature of their business has changed over the years. Much of the work is making skid packages. They do, however, still maintain four mobile welders. Their first shop was built on the west side of Estevan beginning in 2009, and they moved in in early 2010. While 2009 was a down year for the oilpatch, southeast Saskatchewan was largely spared. “We didn’t really feel it. We grew,” Brent said. Janelle said, “It wasn’t long after that we out grew it.” “With the expansion of the second and third shops, we moved more into a manufacturing direction, to handle large scale projects,” Brent said. In 2012 they started building a second shop on the same site, adding another 15,000 square feet to the 8,600 square feet in the first shop. A third building, used as a certified paint shop, storage, and prefab buildings, added another 3,200 square feet. More recently, a fourth, smaller building was completed in April 2016 for their most recent advancement in technology, a second robotic system. Two years ago BGW put in place its first robot, which does pressure pipe welding. The second robot,

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Janelle and Brent Gedak stand before Brent Gedak Welding’s second robot, a 2D and 3D plasma cutter. Photo by Brian Zinchuk

which required its own building to enclose it, is a CNC beam line plasma cutter which can handle 2D and 3D shapes. While watching the cutter precisely work its way through an I-beam, Brent noted that the same work it could accomplish in minutes would take a skilled welder hours. Those two robots were weighty investments, especially during the downturn, but they were seen as necessary for the future of the company. The first shop is set up for pressure piping. The second one is used for structural steel and assembly. The aforementioned third building is a certified paint shop and storage as well as home to their prefab building operations. The last one is connected by conveyor to the structural steel shop. The prefab buildings and field insulation were added several years ago. Design and drafting came in 2010. “We do small pressure vessels.” Brent added. At peak, BGW was around 30 to 32 people. Now they’re at 21, including the owners.

Over the years the company has built a lot of platforms and stairs when things were slow. One diversification effort two years ago didn’t go as far as hoped. They bought a few trucks for field construction and brought in someone specializing that, but it didn’t catch and six months later they shut that down, selling all but one truck. “We were trying to develop more welding projects by bringing in field work,” Brent said. They do smaller installations, but otherwise contract with other construction companies for field work. Since then they’ve taken a different direction. “We went back to what we know worked. We decided we needed to catch up, to become more automated and more competitive,” Brent said. Those efforts have allowed BGW to increase its production capability dramatically without adding more people. When things pick up, they have the ability to take on a lot more work because of these investments. ► Page A30

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PIPELINE NEWS September 2017

Labour shortage led to automation implementation ► Page A29 A large part of the impetus to make those investments was the

available of skilled labour. Janelle noted how difficult it had been to find pressure welders.

This pressure welding robot was Brent Gedak Welding’s first foray into automation. Photo by Brian Zinchuk

“That’s the problem, no matter what the price of oil. When oil is high, there’s a labour issue. When it’s low, it’s a work issue,” Janelle said, referring to the volume of work available. “We were faced with a shortage of qualified welders,” Brent said. One of their diversification efforts was to land work with SaskPower, which happened at the end of 2016. BGW has also picked up work from mines. They’ve also done some municipal work, such as a facility plant. But they note that line of business is very competitive. Asked how they survived the downturn, Janelle said, “We worked well with our professional support team – accountant, banker. There was nothing easy about it – lots of hard decisions across the board.” She pointed out that was common across the industry. “Nobody ever thought it would last this long.” Brent said, “We’re in

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These catwalks are designed for a power plant – part of Brent Gedak Welding’s broader focus. Photo by Brian Zinchuk

survival now, but we’re ready to go.” He pointed out they chose not to cut wages. They did sell trucks and try to manage hours. This past year has been a rebound year. Janelle said, “We’ve regrouped and come down to a common vision: quality, teamwork, attitude, process and service to our customers.” Between this all, Brent has made a name for himself as one of the top curlers in the

province, winning the provincial club championship this past spring and going to nationals in November. His rink also won this year’s Estevan Oilman’s Bonspiel. Brent said, “The highlight of this year’s curling career is playing at the Provincial Curling Tankard at home, taking place in Estevan at Affinity Place in February, 2018.” Having reached 10 years in business, Brent said, “Thank you to our customers. Some of our

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customers have been with us from year one, and others from this year. We couldn’t have done it without any of them.” Janelle said, “We have some long-standing staff that are still here, that see the vision of the company even through tough times.” Brent added, to the employees, “Thank you for working with us, even through the ups and downs of the industry.”

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PIPELINE NEWS September 2017

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Crescent Point increases 2017 guidance Calgary – On July 27 Crescent Point Energy Corp. announced its operating and financial results for the quarter ended June 30, 2017. “Our strong operational results have driven one of our best quarters leading to an increased 2017 guidance,” said Scott Saxberg, president and CEO of Crescent Point. “The company’s production outperformance includes the progression of the Uinta Basin’s horizontal drilling program. Recent well results demonstrate new zone potential and initial production rates above our current type curve.” Crescent Point achieved average production of 175,615 boepd, an increase of approximately five percent from second quarter 2016. This represents annualized growth of over 12 percent compared to third quarter 2016 when the company first accelerated its capital program due to its new play development success. In the Williston Basin and southwest Saskatchewan resource plays, the company focused on low-risk, high-return infill development and down-spacing programs. Crescent Point’s 2017 waterflood strategy remains centered on implementing its Injection Control Device (ICD) waterflood systems.

The company currently has 40 ICD waterflood systems in place with approximately 10 additional installations planned for the remainder of 2017. Crescent Point spent $230.2 million on drilling and development activities during second quarter, drilling 85.0 (66.8 net) wells. The company’s Point’s total capital expenditures, including land, seismic and facilities, were $294.6 million and resulted in a total payout ratio, including cash dividends, of 82 percent. As part of its risk management program, the company hedged 736,000 barrels of oil during second quarter 2017. As at July 24, 2017, 39 per cent of Crescent Point’s second half 2017 oil production, net of royalty interest, and 13 percent of its first half 2018 oil production, are both hedged at a weighted average market value price of approximately C$70.00 per barrel. The company also has a significant amount of natural gas production hedged through 2019 at a weighted average price of C$2.85 per gigajoule. Rarely has Crescent Point sold assets, almost always being the acquirer. But the company is currently marketing or in negotiations to dispose of certain non-core assets with an aggregate value of approximately

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$180 million and expects to transact on the majority of these sales during the second half of 2017. The company plans to market an additional asset package of similar value later this year. During second quarter, Crescent Point completed its previously announced disposition for $93.2 million. During second quarter, the company acquired approximately 80,000 net acres of undeveloped land in the western portion of the Uinta Basin. These lands provide Crescent Point the opportunity to transfer its horizontal development expertise to a new operating area with multi-zone potential. In June 2017, the company successfully renewed its covenantbased, unsecured credit facilities totaling $3.6 billion, with a maturity date extension to June 10, 2020. Crescent Point retains a significant amount of liquidity with no material near-term debt maturities. As at June 30, 2017, the company’s unutilized credit capacity was approximately $1.5 billion, not reflecting asset dispositions expected to be completed subsequent to second quarter. Outlook Crescent Point is increasing its 2017 average production guidance to 174,500 boepd, up from 172,000 boepd, based on

strong operating results and better-than-expected spring break-up conditions. The company’s exit guidance remains at 183,000 boepd as it is in the process of disposing additional non-core assets. “We are executing our organic growth strategy and expect to meet or exceed our 2017 exit production guidance,” said Saxberg. “Our team has been successful with cost control initiatives and we remain on track with our budget. Given our strong operating results to date, we do not anticipate the need to change our capital program and expect to achieve per share growth of 10 percent.” Total capital expenditures budgeted for 2017, excluding property and land acquisitions, is unchanged at $1.45 billion. Although pressure pumping and steel costs increased during second quarter, the overall impact to Crescent Point’s budget remains in line with expectations. The company is monitoring its cost assumptions, efficiency improvements and potential cost reductions for the second half of 2017 in light of the current volatile oil price environment. In the Williston Basin and southwest Saskatchewan resource plays, the company’s development strategy continues to include a combination

of low-risk, high-return infill development, stepout drilling to expand economic boundaries and down-spacing to identify new drilling locations. Crescent Point’s 2017 waterflood strategy remains focused on implementing its ICD waterflood systems, which increased water injectivity in an initial pilot. The company currently has 40 ICD waterflood systems in place with encouraging initial results. Approximately 10 additional ICD waterflood systems

are expected to be implemented in 2017. During second quarter, Crescent Point’s Innes Unit became effective within the Viewfield Bakken resource play. This is the company’s second unit to become effective within the play and the sixth unit that Crescent Point has implemented overall. Full unitization allows for accelerated waterflood development and is expected to help manage reservoir pressure in a larger portion of the pool.

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PIPELINE NEWS September 2017

National Trucking Week SEPTEMBER 3 - 9, 2017

Getting good again: G Force Diesel at 20 years By Brian Zinchuk Lloydminster – “We’re getting really busy,” said Greg Schwenk, owner of G Force Diesel in Lloydminster and Estevan, on Aug. 24. “It’s getting good again, after two and a half years,” he added. The heavy truck shop has started hiring people again, particularly in Lloydminster, where they now have 24 people. In Estevan it’s still pretty slow, with just one person there. The 24 is up from 19 six months ago, which had been their lowest point since 2009, the last slowdown. “We’ve been lucky. We’ve picked up where there’s been a couple similar businesses actually shut down,” Schwenk

said. “In Lloyd as a whole, you’re seeing it pick up. There’s a lot more traffic in town, more trucks moving. The stores seem a little bit busier. Baby steps.” The company is celebrating its 20th anniversary this month. They held a celebration on Aug. 29. “We’re back close to max capacity for employees,” he said. “I started by myself with a mobile truck 20 years ago.” About 10 months in, he decided to rent a couple bays to set up a safety inspection station and hire a few employees. “It’s been gaining ever since.” G Force built its own shop in 2003, and it has expanded a couple times since then. They now have 20 bays and 25,000 square

feet at their shop on Highway 16 east, Lloydminster. In 2009, realizing there wasn’t much in the way of independent repair shops in Estevan, he set up a shop there, too, and in a few years bought his own building. Fabricating shows optimism These days, their fabricating operation is a good indication of optimism in the industry, according to Schwenk. “On our fabricating side, it’s a good chunk of our business, 30 per cent. We’re rigging up new trucks right now.” Their fabrication department takes new stock trucks from the dealership and gets them ready for the oilfield. This may mean installing pumps

or custom decking. They work with aluminum, steel and stainless steel. “It really is a one stop heavy truck stop,” Schwenk said. He noted that with oil in the mid-$40s, he’s not sure why they’re busy, but it’s nice. The trucks are being rigged up to haul crude, water, fuel and gravel. “We’re doing three or four a week, constantly, for the past few months.” “People learn to live within their means, maybe? This is their reality check? “You can almost base the level of optimism in the oilfield by our fabricating department,” Schwenk said. “When things are starting to slow down, all of a sudden the rigging

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up of fluid haulers dies. It just drops right off. When things start to pick up, boom, we’re hiring more welders again. We’re rigging up trucks to keep up with demand, and we still are, to this day. For the last 10 months, since October, it’s been climbing every month. I’ve hired more parts people, more welders.” “The service side is what carried us through. That’s what I started with – tractor trailer service. Everything from oil changes to in frames. That’s what kept us surviving the last two and a half, three years. It’s kind of consistent. A new truck, old truck, still has to be serviced and any major problems dealt with. “Guys are optimistic,

they’re going to trade in an old truck that’s causing problems and get a new one, live within their means with a payment plan, and keep going with a new truck,” he said. Husky’s pipeline break and spill at the North Saskatchewan River north of Maidstone in July, 2016 has had an impact. That pipeline is still not back into service. As a result, Husky needed a fleet of trucks to take the place of the pipeline. Schwenk said there was instantly a need for 90 to 100 trucks to haul oil, and that had a direct impact on his customers. He expects the pipeline to be repaired soon. If those trucks are no longer needed, he thinks it will make a huge difference in Lloydminster.

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