Pipeline news February 2017

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

February 2017

Canada Post Publication No. 40069240

FREE

Volume 9 Issue 9

CARNDUFF starts to see a rebound

Trump revives Keystone XL > Page A3

Stoughton refinery update

Mains Welding A2

A15

Spill on Ocean Man First Nation

A10

Carnduff Horizontal Directional Drilling and Carnduff Electric, owned by Susan and Rick McKennitt, have seen the ups and the downs of the oilpatch in recent years. Here, Dallas Hall operates a 100,000 pound horizontal directional drill. See story Page A6.

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PIPELINE NEWS February 2017

Public meeting held for proposed Stoughton refinery  By Brian Zinchuk Stoughton – Work continues on plans for a proposed refinery near Stoughton, as Dominion Energy Processsing Group Inc. (DEPGI) held a public meeting in the town on Jan. 19.

Approximately 200 people attended the three-hour long meeting, according to Keith Stemler, CEO of DEPGI. “The hall was full,” he said on the phone the following day, after meetings in Regina.

The company is the Canadian subsidiary of Tempe, Az.-based Quantum Energy Inc. In December 2016 they announced their intention of building a 40,000 bpd refinery southwest of Stoughton, adjacent Crescent Point Energy Corp.’s Viewfield gas plant.

“We’re getting to the nuts and bolts of it now,” Stemler said, adding it was “a hell of a good trip.”

The meeting began with a half-hour presentation of the proposed plan, followed by an hour of questions, then one-onone interaction.

Stemler said questions included topics of emergency response, firefighting, potential disasters and the like. Issues like public notification in case of an emergency and what an alarm means were also discussed.

One-on-one questioners asked about what type of training they would need to get work at the completed refinery, and how they could get that training.

Overall he said there was “overwhelming support from all except one.”

That person had “legitimate concerns,” and they will be run through DEPGI’s engineering team.

Stemler noted their risk assessment will exceed regulatory standards.

The open area, to the left, is the planned site for a proposed refinery near Stoughton. On the right is Crescent Point Energy Corp.’s Viewfield gas plant. Photo by Brian Zinchuk

“I think the town hall was very successful,” he said, adding the meeting was an important public consultation, part of the regulatory approval protocol. It was “a box they needed to check off,” he noted.

The meeting was documented and an action plan from issues raised at the town hall will go to their engineering group.

The refinery is still in the proposal stage right

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now. Once they have permits in place, they will work on the details.

Asked about their current timelines, Stemler said, “Right now we’re pushing hard to get engineering started in January.”

He would like to have their permit submission ready in 90 days from then, and expects it would take 60 days to get it back.

If all goes well, that could mean getting their permit approval by June to the end of July.

“We would like to start rough dirt work before freeze up,” he said.

Key to the final completion will be the

October 2019.

They are looking at Saskatchewan vendors for those modules, and he said they were in “heavy” discussions with two of them.

There is a contractors awareness meeting planned for early February, although as of press time, the date and location had not yet been settled.

“We’re going to reach out to all of them.”

As for their feedstock, he said they were still in negotiations, but hoped to close that by the end of January.

“Things are starting to progress,” Stemler said.

purchase of long-lead time items, Stemler explained. While the industry is slow right now, and there’s ample capacity, things could tighten up if oil picks up. “It’s the long lead items that can get us in trouble – transformers, boilers. We want to get that in front.

“If industry comes back in a big way, we could be sitting with a beautiful graded site.”

The design is all modular fabrication. He expects it would take about 18 months to build the refinery. Stemler would like to see commissioning begin in

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5. SE-29-04-06-W2 RM #34; FVA 71,300, 2016 Taxes $410.58, 2016 125 Acres Canola, 137.3 Titled Acres, Existing Surface Leases Not Included In Sale (Sub-Divided Yard Site Does Not Sell!)

6. SW-29-04-05-W2 RM #34; FVA 61,700, 2016 Taxes $355.30, 2016 132 Acres Soy Beans, 132.11 Titled Acres, $2725.00 Surface Lease Revenue

7. SE-29-04-05-W2 RM #34; FVA 61,600, 2016 Taxes $354.72, 2016 120 Acres Soy Beans, 160 Titled Acres, $3050.00 Surface Lease Revenue 8. NE-28-04-05-W2 RM #34; FVA 79,300, 2016 Taxes $456.65, 2016 135 Acres Yellow Mustard, 160 Titled Acres, $5775.00 Surface Lease Revenue 9. SE-28-04-05-W2 RM #34; FVA 69,800, 2016 Taxes $401.94, 2016 135 Acres Yellow Mustard, 159 Titled Acres, $7175.00 Surface Lease Revenue 10. SE-18-04-05-W2 RM #34; FVA 73,500, 2016 Taxes $423.25, 2016 139 Acres Wheat, 140.24 Titled Acres $8450.00 Surface Lease Revenue (Sub-Divided Yard Site Does Not Sell!)

11. SW-17-04-05-W2 RM #34; FVA 82,100, 2016 Taxes $472.77, 2016 140 Acres Wheat, 159 Titled Acres, $6650.00 Surface Lease Revenue 12. SE-06-04-05-W2 RM #34; FVA 76,500, 2016 Taxes $440.52, 2016 135 Acres Wheat, 159 Titled Acres

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PIPELINE NEWS February 2017

A3

Trump approves Keystone XL, subject to renegotiation ■ By Brian Zinchuk Washington – True to his word, newly elected U.S. President Donald Trump approved the TransCanada Keystone XL pipeline, subject to new negotiations. He did it on Jan. 24, his fourth day in office.

Also true to his word, he followed up on his “wanting a piece.” During the Oval Office signing ceremony, Trump said the pipeline been subject to dispute, and “subject to a renegotiation of terms, by us. We’re going to renegotiate some of the terms. And, if they’d like, we’ll see if we can get that pipeline built. A lot of jobs. Twenty-eight thousand jobs. Great construction jobs.”

With that, he signed the executive order, and held it up for cameras to see. The day before, Trump had met with numerous International Unions, including several, such as the United Association and Laborer’s International Union, whose scope includes mainline pipeline construction.

In Bismarck, N.D. on May 26, 2016, Trump responded to a Pipeline News question about the pipeline by saying, “I’m going to say, “Folk’s, we’re going to let you build a pipeline. But give us a piece.”

TransCanada said in an emailed statement, “We appreciate the President of the United States inviting us to re-apply for KXL. We are currently preparing the application and intend to do so. KXL creates thousands of wellpaying construction jobs and would generate tens of millions of dollars in annual property taxes to counties along the route

as well as more than $3 billion to the U.S. GDP. With best-in-class technology and construction techniques that protect waterways and other sensitive environmental resources, KXL represents the safest, most environmentally sound way to connect the American economy to an abundant energy resource.”

First proposed in 2008, the Keystone XL pipeline was continuously delayed by the previous Barrack Obama administration until, finally on Nov. 6 2015, Obama denied the necessary Presidential Permit for the project to go ahead.

Over these many years the pipeline had become a lightning rod in American politics for the environmental movement.

Small portions of the pipeline were rerouted as a result. Congress repeatedly moved to approve the project, only to be blocked by Obama.

In rejecting the pipeline, Obama said, “Now, for years, the Keystone Pipeline has occupied what I, frankly, consider an overinflated role in our political discourse.

It became a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter. And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others.”

He also referred to its product as “dirtier oil.”

Obama’s denial of the Presidential Permit was a major victory for the environmental anti-oil lobby. That victory now appears to be

Back on July 8, 2011, TransCanada was stockpiling pipe south of Shaunavon for the Keystone XL pipeline. These trucks were seen in Shaunavon on that day. File photo

reversed.

The Keystone XL Pipeline project is a proposed 1,897 km, 36-inch-diameter crude oil pipeline, beginning in Hardisty, Alta., and extending south to Steele City, Neb. The project originally ran right to the Texas Gulf Coast, but it was split several years ago and the southern portion has been built and is in operation.

While often overlooked in other media, the up to 15 per cent of the pipeline’s 830,000 bpd capacity is designated for North Dakota-produced Bakken oil, which would join the pipeline at Baker, Mont.

The right-of-way cuts across the very southwest corner of Saskatchewan, running from Burstall, right past Shaunavon and crosses the American

border at Monchy.

Canada’s National Energy Board approved construction of the Canadian portion in March 2010.

To provide a Saskatchewan perspective, back in July 2011, TransCanada was stockpiling pipe south of Shaunavon.

Premier Brad Wall had twice gone to Washington to lobby for the pipeline’s construction.

Premier Brad Wall, one of Canada’s strongest political advocates for the pipelines, said the following in a statement on Jan. 24: “We welcome President Trump’s approval of the Keystone XL pipeline. This is a win for both our countries’ energy industries, for energy consumers and for energy security.

“I have said before

that if Keystone had been judged on its merits and on the facts – it would have been approved years ago.

“Our government has advocated strongly for Keystone. As the National Post’s Claudia Cattaneo succinctly put it in a column about Keystone, the pipeline ‘meets U.S. criteria, enhances U.S. energy security, feeds Canadian heavy oil to U.S. refineries that want it, is important to Canada’s economy, and is better for the environment than rail.’

“For Canada, it means we can move our oil – safe, secure Canadian oil – to our biggest customer and to tidewater. It will help lower the price differential Canada receives for its oil – that differential costs our governments and producers hundreds of millions

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of dollars each year. It will also help free up capacity on our railways for moving other products.

“For Saskatchewan, there will be about 2,200 jobs building the 530 kilometres of Keystone XL in Alberta and Saskatchewan at a cost of approximately $1.2 billion.

Keystone XL is projected to result in an additional $3.5 million in additional property tax revenues in Alberta per year and $1.3 million in Saskatchewan.

“This is also good news for Evraz in Regina.

The company participated in the Keystone project up to the point that it was shut down by the Obama Administration and are optimistic their company will continue to be involved in the project now that it has been approved to go forward,” Wall concluded.

A4

PIPELINE NEWS February 2017

PIPELINE NEWS

EDITORIAL

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

Editorial Contributions:

PUBLISHER Rick Sadick - Estevan 1.306.634.2654 EDITOR Brian Zinchuk - Estevan 1.306.461.5599 Associate Advertising Consultants:

SASKATCHEWAN & MANITOBA • Estevan 1.306.634.2654

Cindy Beaulieu

Candace Wheeler

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Alison Dunning NORTHWEST SASK. & ALBERTA • 1.306.460.7416

Harland Lesyk Production:

• Estevan 1.306.634.2654

Jihyun Choi

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Carnduff shows the rebound has started, but the pain is still there On Jan. 17, all day the radio talked about people in the civil service worried about the government clamping down on civil service wages, with no raises expected, and layoffs possible.

Pipeline News went to Carnduff that day.

Carnduff is an oilpatch town to the extreme. We spoke to three businesses on Jan. 17. Each had laid off around half of their staff compared to 2014, for a total of about 190 jobs, give or take, in just one small town. (Many of these people lived in other communities, but their jobs were based in Carnduff ) Those that remained saw wage cuts of up to 20 per cent. This does not count the other half dozen oilpatch business who were in a similar boat. Only now have these business started to hire a few people back.

We wonder what the people affected by these cuts think about civil servants worried about not getting a raise next year, or small levels of cutbacks. The very reason the civil service is seeing “transformational change” is that the people in the oilpatch, who quite literally paid for those civil servants, have been out of work for some time now. The billion dollar provincial deficit is almost entirely attributable to the decline in oil revenues, never mind potash and uranium. We’ve checked the budget documents.

The pity train for civil servants has left the station.

Yet there is some serious cause for hope.

While setting up appointments the week before, three calls to three businesses came up with the same response. They were too busy for us to visit the next day.

It’s been at least two years since we’ve heard

things like that.

Indeed, several, but not all, of Carnduff ’s business have begun to hire back staff, albeit at a measured pace. There’s a general reluctance to bring on people until there is enough consistent work for them to keep going. One company noted they want to bring their current staff back up to their previous pay levels (having undergone pay cuts during the downturn) before they bring on more people. In some cases, management are filling in for those times when they need another hand for the day.

The most positive things we heard was that a few were having a hard time finding qualified people. The thick stack of resumés is now pretty thin, as many people had left the oilpatch, or are reluctant to take on work that will last only until breakup. That these businesses are looking at all for workers is wonderful.

In the case of Betts Drilling, they suffered the loss of their office and shop due to a fire on Dec. 30, but they also saw all four of their rigs back at work. It’s been two years since they’ve seen 100 per cent utilization. Very few drilling companies in the past year have seen that. Indeed, many have seen zero per cent utilization at times.

Carnduff is a bellwether community for Saskatchewan’s oilpatch. As the southeast’s capital for rig moving, its activity level is a direct barometer for activity in the patch. If the rigs are moving, they’re drilling.

In the U.S., it used to be said that, “As goes General Motors, so goes the nation.”

As goes Carnduff, so goes the Saskatchewan oilpatch.

PIPELINE NEWS February 2017

A deeper look into the decline of CHOPS A few years ago I wrote a column about how CHOPS, cold heavy oil production with sand, was on its way out. In December, listening to the Husky Energy’s new CEO, Rob Peabody, during the year end conference call, this notion became much more evident.

In a story that ran in last month’s edition, and available at www.pipelinenews.ca, Peabody used CHOPS as an example of how they cut costs during the downturn. Asked about how they will keep their costs low if activity levels across the basin pick up next year, Peabody said, “The most extremely good example of that is in heavy oil, where the majority of our production used to come from CHOPS, or cold heavy oil production with sand, and we’ve moved that to thermal. In doing that, we’ve moved our F&D, or finding and development costs. Where they were sitting in the range of the upper $20 a barrel in F&D costs, we’ve moved that down to about $12 a barrel in terms of F&D costs.

“And our operating costs that were approaching $20 a barrel. We’ve moved that to under $10 a barrel. In both cases, we’ve done kind of a 50 per cent-plus cost reduction.

That has nothing to do with procurement. That has to do with the technology we’re deploying in developing that oil.”

Peabody’s words have already been playing out for quite some time. A look at Rig Locator’s (www.riglocator.ca) map of active drilling rigs on Jan. 23 was quite telling. The rig count in Saskatchewan had hit 59, near its highest point in the last two years, though still quite a ways off 2014’s pace. Rigs had fired up after Christmas all over the province. Things were positively hopping in the Kindersley area.

Shaunavon had six rigs, a few higher than usual. Southeast Saskatchewan was active too, especially in the Torquay play along the U.S. border. But what of the Lloydminster area?

It was as if a giant no-drilling halo had descended upon Lloyd. The hub of the heavy oilpatch, where wells can be seen from the edge of town, didn’t have a rig working within 50 kilometres of it in any direction, according to Rig Locator’s map. It was like a dead zone.

This area is the heart of CHOPS territory, and dominated by Husky. A drive down Highway 17 shows lease sign after lease sign with Husky’s dog logo on it.

So where were Husky’s Saskatchewan rigs? One was north of Paradise Hill, one was southeast of Saint Walburg, near Spruce Lake, an area identified for a thermal play. and a third was north of Maidstone. The company also had seven rigs in Alberta – one north and one south of Cold Lake,

R.FRENCH TRANSPORT

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By Brian Zinchuk

two in north central Alberta, one near Grande Prairie and another two near Ansell.

The Saskatchewan rigs were more than likely pursuing the company’s thermal plays.

So what does this mean, for Lloydminster in particular?

If your business is dependent on CHOPS, as many, if not most are in Lloydminster, I would strongly suggest you consider diversification.

On the ground, around Lloydminster, it means less drilling. However, considering Husky has done hardly any CHOPS drilling in the region in the last two years, it’s hard to get less than the zero we sometimes see.

Husky’s template for these thermal projects is 10,000 bpd facilities. How many CHOPS wells, with their operators, artificial lift, tanks, trucking, and maintenance and road repair, does it take to make 10,000 barrels of oil per day?

Without further CHOPS development, it means natural declines come into play. Every oil well produces less today, on average, than it did yesterday. Let’s throw a number out and say the decline rate is five per cent. It could be a lot more, but let’s say five. That means, quite literally, five per cent less oil trucked from single well batteries. If you are a trucker hauling from CHOPS, have you seen this in your numbers over the last few years? Do you expect that decline to go away, or will it accelerate?

That means for every trucker out there hauling fluids, there’s going to be less work overall, and price pressures in relation to that, even as the price of oil increases. That’s going to mean less truckers, less trucks sold, less trucks repaired.

As production declines, sand handling will likely decline, too. As wells are retired, the vac and pressure trucks that clean out tanks will be in less demand, unless they find equivalent work at SAGD facilities.

If you’re a tank manufacturer who specialized in single well batteries, what are your number telling you? Are you supplying these thermal projects? And if so, will that make up for the loss of CHOPS development, where each well has a tank?

If you sell artificial lift equipment, like progressing cavity pumps, how much of your business now is selling pumps for new CHOPS wells, versus simple maintenance or replacement? If you’re not selling SAGD pumps, how many do you expect to sell this year? This carries forward to pump repair shops, too.

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Husky has identified 18 future thermal projects, presumably SAGD in nature, where it intends on putting its money in the region. It’s likely starting on three new ones shortly, after having successful projects of similar scale in the Edam and Vawn areas.

If you’re in the oil business in Lloydminster, you might want to find out how you can service those 18 upcoming projects.

Maybe things will change. Maybe, if oil hits US$85, Husky will start throwing money back into CHOPS. But right now, the trends are not good for those in the CHOPS business.

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

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PIPELINE NEWS February 2017

Carnduff HDD and Carnduff Electric look forward to the rise in oil  By Brian Zinchuk Carnduff – Over the past 25 years or so, horizontal drilling has become the preferred method of minimal disturbance installation for pipe and cables, and that growth has been very important to two Carnduff based firms. Carnduff Horizontal Directional Drilling (CHDD) started as an offshoot of Carnduff Electric, but has since largely outgrown its original parent company and now stands on its own.

The two companies are owned by Susan and Rick McKennitt, whose entrepreneurial endeavours have been wide and varied over the years.

“I’m an entrepreneur because my dad always was,” said Susan on Jan. 17.

“Through the years we’ve been involved in various ventures.”

Rick and Susan’s boys, Bryan and Brett, both journeyman electricians, manage and work in the electric business along with long term employees, Ed Laurent and Cory Scott.

One day they will take over along with their farm operations at Fairlight.

Their daughter, Tasha Skuce, has been involved in several of their other businesses, while her exhusband, Rob Skuce, is field supervisor for CHDD operations.

Rick was originally from Morden, Man. He moved to Arcola at the age of 15. He became a journeyman electrician there. Susan is originally from Ontario, but she was also an Arcola girl. They married in 1976.

She had papers as a journeyperson hairdresser.

They moved to Estevan in 1976, where Rick worked

with Glasser Electric. He joined the International Brotherhood of Electrical Workers in 1976 and worked many years at the power plant and built coal-mining draglines from Coronach to Estevan.

“In 1984 we moved here, to Carnduff, to start our own business. I started a hairdressing shop and he started an electrical business. Then we were approached by Martel Electric to purchase them,” Susan said. She was eventually drafted into doing the books for the electrical business. Now administration of all the companies includes Nara Auguis and Barb Morrow.

They had a hairdressing and electrical shop in downtown Carnduff, and Susan ended up with a retail store.

“We always had a retail business in Carnduff

From left: Spencer Yacyshen, Rob Skuce, Danny Yacyshen, George Hall, Dallas Hall, Jeff Facey, Susan McKennitt and Rick McKennitt are part of the Carnduff HDD team. Photo

by Brian Zinchuk Rick said, “We had contracts with Imperial Oil, POCO Petroleum, NAL Resources. Ninety per cent of our work was oilfield, 10 per cent was residential and farming. Now in this downturn it’s probably 50/50, 50 per cent oil, 50 per cent everything else.”

Carnduff HDD sees a slow start

The electrical business led to getting into a new venture, using horizontal directional drilling, alongside trenching.

“In the early 1990s, we started getting into underground, big time,” said Rick.

This was around the time of the Grant Devine government’s Rural Underground

▲

until last year, not because it made money, but because I loved it, loved the people, loved providing the service to locals and many for miles around,” said the serial entrepreneur.

When they started the electrical business, Carnduff Electric’s business was primarily as a contractor to the oilfield.

Page A7

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PIPELINE NEWS February 2017

A7

▲

Horizontal directional drilling took a while to catch on in Sask.

Page A6

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built the 16-inch Bakken Expansion pipeline through the southeast, nearly all of those wetlands were bored, even ones dry enough to walk across without getting your boots wet.

Carnduff HDD was a contractor boring on that project.

Asked why even dry sloughs are now bored, Rick said, “It’s all to do with the restoration. Then there’s no complaints (after boring).”

“The biggest we ever did was at Belle Plaine, a 24-inch cement line. It took eight D8 sidebooms feeding that pipe.

About 250 metres, it crossed the whole TransCanada pipeline corridor. We did that six times.”

Strong growth, then downturn hit The horizontal directional drilling business grew from Day 1, with 2014 being their largest year ever. That year, Carnduff Electric and CHDD were split into two companies.

“The split was to allow for future planning and eventual retirement from the business, but the downturn that firmly took hold in late2014 sunk those plans. “We are like many others. We have to ride the storm, At this point in time, I’d wished we had more warning of this slow down,” Rick said. “Who knew, two-and-a-half years prior, it would come to this.”

“Our oilfield work is tied to drilling. We’re always down the road. When the drilling rigs shut down, we knew we had to get ready,” Rick said.

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Now that drilling has picked up somewhat, he said, “With the rigs active now, we know we will have a run on pipelining coming up. I always gauged how busy we’d be by how many Fast and B& B Trucks are moving.”

(Fast Trucking Service Ltd. and B & B Oilfield Hauling are Carnduff-based rig moving outfits, just down the road from CHDD and Carnduff Electric’s shops.)

The downturn has been a struggle, he said. Between Carnduff Electric and CHDD, they now have 15 people plus ownership. “At peak, we were at 40,” Rick said. “We can only be as busy as our customers are.”

“We’re diversifying and doing our best to reach out to get different work that isn’t just oilfield related.”

In addition to their in-town shop, much of their operation is on an acreage east of Carnduff, just south of Highway 18. Since they outgrew the acreage, the idea was to set up a new location for CHDD. They had bought land

▲

Distribution program, an initiative to replace SaskPower’s overhead powerlines with underground cables.

“We were big into that,” Rick said.

SaskTel was also replacing overhead lines with underground cables. “SaskTel contracts got us also into underground, big time,” he added. Their work included Estevan, Weyburn, Regina, and the southeast.

Carnduff Electric got its first boring machine in the early 1990s. While commonplace now, it was a tough sell back then.

“When we got that first big boring machine, we had to go everywhere – downtown Toronto to Fort Nelson, B.C., everywhere in Alberta. We had one machine working in Alberta for four years,” he said.

It was tough to get horizontal directional drilling accepted in Saskatchewan.

“Then one day, the light turned on. The mentality changed, with the realization of how much safer it is, with less ground disturbance,” Rick said, in comparison to trenching.

At that time they had a 30,000 pound machine, and two 10,000 pound boring machines as well. Now their fleet as grown to six units, including two 100,000 pound machines.

The growth in demand for boring has been substantial. For instance, when Enbridge built a new 36-inch mainline through southeast Saskatchewan in 1997, every wetland was dug with a large excavator (except for one where they used a Sauerman). In 2012, when Enbridge

Page A8

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Page A7

on the opposite side of the highway, beside where Betts Drilling’s operation is, with the intention of building a new facility. “We had everything ready to go. We even had insulation there,” Rick said. But when the downturn hit, that project was put off.

The electrical work involves fixing wells from Midale to Waskada, Man. They’re working on building the business a little further north. This includes shops, homes, renovations and maintenance work.

“The drilling is very specialized work.

You don’t just let guys go and think you’ll find them on Monday morning,” Rick said.

Susan said, “We’re focused, on track and on budget to rebound to where we were. Hopefully it’s sooner than later.”

Looking forward for 2017, Rick said, “There is a lot of optimism out there right now and that has us all very excited about the turnaround. But unless that surplus of oil gets used up, everyone’s playing with dynamite.”

Q1 is quite busy for Site Energy

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CHDD held off on shop ▲

A8

Carnduff – “The oilfield is a cyclical industry. I’m fortunate enough to have been around for quite a few,” said Greg Cousins of Site Energy’s Carnduff location.

“Cycles come and go. Site’s still here.

George Foord and I joined over six years ago, and it’s good,” Cousins said, referring to the sale of Greg Cousins Construction Ltd. to Site after 33 years in business. Macounbased George Foord Construction did the same around the same time.

“The first quarter of 2017 is surprisingly busy in our traditional work we’ve done for years and years,” he said.

Site has been able to pick up some larger contracts, including in the potash sector. “In potash, we’re doing mechanical jobs, a lot of piping work,” he said, adding they’ve been doing civil jobs, too.

Site has been doing some pipeline

work, he noted.

When it comes to staffing, he said, “We’re kind of at capacity right now.”

He’s concerned about hiring more people, as he’s unsure about how much activity there will be after road ban. Their usual working area has been hit with heavy snowfall, which could lead to a long spring breakup.

“We do have a lot of equipment moving snow,” Cousins said, adding that in a lot of places, there’s no frost under the snow.

Reflecting on the Greg Cousins Construction Ltd. merger with Site, he said, “I’m glad with the merger with Site. It got us into other markets.”

The higher level quality control and safety programs in a larger company made it possible to work for larger clients, Cousins noted.

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PIPELINE NEWS February 2017

A9

Competition’s fleet is running full tilt They’re looking for qualified people, too ■ By Brian Zinchuk Carnduff – Competition Environmental Land Spreading Ltd. in Carnduff has seen business pick up in recent months to the point where they’re hiring, and having a hard time finding people.

“We’re busy, actually, right now, but manpower is a struggle,” said Charlie Bayliss, general manager.

“I can’t find qualified men Class 1 drivers with experience,” he said on Jan. 17.

Some of their drivers left, but a few have come back.

At their peak in 2014, Competition had around 40 people. At the low point during this downturn, that number was down to about 20.

“Now we’re about 28 again,” Bayliss said.

“We’ve got our whole fleet working steady, vac wagons and trucks combined. The

Charlie Bayliss, general manager with Competition Environmental, is glad that their shop and yard are largely empty, as their fleet is back at work. Photo by Brian Zinchuk

last time we had that, we had 40 people.”

The days of having a stack of resumés on the desk are over. “We’re getting some resumés, but not near as many.

I’ve had about ten calls in the past two weeks.”

Perhaps unremarkably, there weren’t a lot of calls when it was -40 C wind chill.

It’s also hard to get people to come onboard when spring breakup is coming in two months’ time, and a likely layoff at that time.

He noted their staff are working more, but all had taken pay cuts.

Cutting staff and cutting wages was the toughest part of the downturn, according to Bayliss.

“It’ll hopefully start going the other way now,” he said, referring to wages.

“It went down in a hurry. Now it will take a while to get them back up, but I think it will come up,” he said about the rates oilfield services companies charge their customers. It’s a common refrain that most oilfield businesses Pipeline News spoke to in January expressed.

The cuts in rates and revenue led to increased financial discipline.

“Some of it was good.

You made corrections.

You followed a budget to a ‘T.’ A lot of little things added up to the bottom line.”

In some cases it mean having to pick and choose what charitable causes they could contribute to, whereas before, they’d hardly bat an eye. Those asking for assistance understood, he noted.

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Competition was able to pick up some work in drilling for potash, where salty muds mean it can’t be spread on farmland. “We were doing some work for a potash company. We did two wells near Elbow.

That helped us. We were often hauling to settling ponds.”

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A10

PIPELINE NEWS February 2017

Oil spill occurs on Ocean Man First Nation land  By Brian Zinchuk Ocean Man First Nation – Tundra Energy Marketing Limited (TEML) confirmed on Monday, Jan. 23 that on Friday, January 20, 2017 a release of oil was discovered approximately 9 kilometres east of the Ocean Man First Nation’s core area. Ocean Man’s core area is 17 kilometres north of Stoughton.

“The source of the oil has not yet been determined, but as TEML owns a pipeline adjacent to the release, it has taken the lead in cleaning up the released oil,” TEML said in a release on Jan. 23.

“TEML ensured that landowners in the area, including Ocean Man First Nation, and local, provincial and federal governmental authorities were notified of the spill. TEML is fully co-operating with those interested parties to ensure that their concerns are addressed appropriately,” the company said.

Clean-up work on the site commenced immediately and involved the removal of surface oil with vacuum trucks. Additional clean-up work and remediation will be conducted to ensure that the affected land is restored appropriately. As the spilled oil was being recovered over the weekend, it was estimated that 200 cubic metres (approximately 1,260 barrels) of oil had been released.

By Jan. 23, approximately 170 cubic metres (approximately 1,070 barrels) had been recovered, according to Bill MacKnight, assistant deputy minister with the Ministry of Environment, on Jan. 23.

“The company is required to remediate and reclaim

that site to its previous state,” MacKnight said.

The source of the released oil and the cause of the release have not been determined as of press time.

TEML said it would be will be working together with the Petroleum and Natural Gas Division of the Saskatchewan Ministry of Economy to determine the source and the cause of the spill.

Cole Goertz, executive director, marketing and communications with the Ministry of Economy, said the spill site is a low-lying area and contains a frozen slough. The spill is fully contained within the spill location and the oil is not entering any creeks or streams.

The actual source of the leak will not be known until the site is excavated and the breach location is confirmed.

Excavation was expected to begin on Wednesday, Jan. 25.

The reason for the ambiguity is the presence of three pipelines in the immediate area, one four-inch steel line belonging to TEML, and two other lines belonging to two other companies. Additionally, according to Ocean Man First Nation Chief Connie Big Eagle, there is an old, apparently abandoned well nearby. TEML shut down their pipeline upon discovery of the breach.

“It was found by one of our band members,” Chief Big Eagle said. “It’s near an old well site. It appears to be a pipeline. There are three companies that have pipelines in the area.”

She added the exact location of the leak had not been located as of the afternoon of Jan. 23, the time when the story broke and she was flooded with calls. She

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was headed out to the site shortly afterward.

“It happened on an abandoned site situated on our land on the Handsworth grid road,” Big Eagle said.

The location is about 1.6 kilometres north of the band’s cemetery.

“I wish it hadn’t happened at all. However there are now houses located near it. It’s in a slough, a natural basin. It’s kind of contained there,” she said.

Big Eagle was in Yorkton when she was told of the incident. By the time she got home, there were already crews working on the cleanup, she said.

“Right now, all of our concern is there to be minimal impact on the environment,” she said.

“We’re working together to address the situation.”

Ocean Man First Nation is a recipient of oil royalties. “We have land where we have mineral rights and some from surface rights,” she said.

The Ministry of Economy said environmental consultants were on location and are investigating impact.

As of Jan. 23, local air quality and wildlife had not been affected. The Petroleum and Natural Gas division of the Ministry of the Economy will be investigating the cause of the spill and will be onsite overseeing clean-up efforts and pipeline repairs. The regulator is signing off on all protocols. Once the line is excavated and removed, it will be sent away for testing. The Ministry of the Economy is Provincial lead; Indigenous and Northern Affairs Canada (INAC) is the Federal Lead as the spill occurred on First Nation land.

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PIPELINE NEWS February 2017

A11

Heavy snow helps out a bit, but still slow for C&N

Charles Armstrong gets ready to paint Tex fence at C&N Oilfield in Carnduff.

Photo by Brian Zinchuk

Their supply store has done, “surprisingly well,” according to Carley.

“Sales were down, but we made some changes, buying carefully, buying better. We actually did more with less.

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“We stayed profitable.

In this day and age, that’s good news.”

But otherwise, things have continued to be quite slow, now well over two years into the downturn.

“We’ve got crew trucks going out daily, but nothing like what it was,” he said. C&N has three crew trucks.

Chemical delivery has taken a big hit. Carley pulled no punches, calling it, “Terrible, literally, terrible. We used to run four or five trucks a day, and now it’s one delivery truck a week.”

They parked five units

and pulled their license plates, and sold six halftons.

Competition in delivering chemicals has been fierce. “There was no meat left on the bone, by the time I paid wages, fuel, insurance. I don’t think I’d make $50 per truck per day.”

“Everything’s going to come back. Everyone’s learned how to work smarter, cheaper, better.

That’s why we kept a lot of the iron. Just put someone in those trucks and we’re ready to go to work again,” he said.

Right now C&N has

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20 people on staff. Carley said, “Two years ago we had 47.”

“Almost two years ago, to the day, we cut rates to appease the oil companies. We haven’t got any of that back. We cut staff, hours, wages, to keep as many people as we can. In 2015 we cut to the 2009 rate sheet, and we’re still on that now, running rates from eight years ago.”

Driving from Estevan to Carnduff on Jan. 10, Pipeline News noted three

drilling rigs working along Highway 18, for the first time in a long time. On that, Carley said, “We’re not tied to drilling, never have been. We follow drilling. We’re a few months behind to pick up. Drilling means they’re spending money, too.”

He noted that oilfield services companies are not ready to hire yet.

As an example, he noted their operations manager and field supervisor Page A12 ▲

■ By Brian Zinchuk Carnduff – The heavy snow that blanketed the Carnduff area, as well as some deep cold has turned out as a benefit to local companies. At C&N Oilfield Ltd., vice president Kris Carley said, “On the maintenance side, the cold has helped. The steamers are busy. We’ve had to do some snow removal.”

They’ve talked about doing snow removal over the years, but with so much snow on the ground, it was time to do a bit. So they’ve deployed a backhoe, skid steer loader and a gravel truck into the effort.

The two steamers have been going hard.

“We’re having trouble keeping up with them,” he said.

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Management filling in Page A11 have been going out to the field to fill in, where needed. Before they start hiring again, they need to be able to bring current staff members’ wages back to where they were before. “We can’t hire any more until current staff are restored to where they were,” he said.

Asked about his outlook for 2017, Carley said, “I have no idea. 2016 was probably the worst year I’ve seen here. I hope 2017 turns around. I don’t think it’s going to be worse than 2016.”

On Carnduff council Carley was elected to Carnduff town council last fall, one of four new members out of six councillors. About serving on council, he said, “It’s good! I enjoy it. It’s ▲

A12

These two snow cats belonging to C&N Oilfield Ltd. are expected to see a lot of use in the expected wet spring around Carnduff.

eye-opening. You find out the inner workings.

You think decisions are easy, then you find out the rules and regulations don’t allow you to do different things.”

The community has a new sewage lagoon expected to go to tender soon. The high-end

estimate is $8.5 million for the comprehensive project. The provincial and federal governments are expected to pay one-third each.

The local skating rink is due for a major overhaul as well, after the exterior walls were done last summer.

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PIPELINE NEWS February 2017

A13

Betts Drilling shop and office burns down, but all 4 rigs are working toba, and hour-and-a-half drive away, at the time.

The primary purpose of the shop was to keep equipment warm and ready to go. With the Christmas drilling shutdown, it had a lot of iron in it.

“All our loaders, spare equipment for the rigs, were in there. All our spare parts, BOPS. That’s what the shop was for, so it’s ready to go. We had a gen set and a quarter-milliondollar floor motor.”

Three loaders were

burnt in the fire, crucial equipment when the rigs are working. And, fortunately enough, the company had three rigs lined up to go to work a few days later on Jan. 4, and their fourth by Jan. 15.

Three of those rigs were

Right after midnight on Dec. 30, a fire consumed Betts Drilling’s shop and office. This photo was taken on Jan. 10. By Jan. 17, all four of their rigs were at work, taking some of the sting out of the fire. Photo by Brian Zinchuk

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14

Celebrating YEARS

racked in the yard at the time of the fire, with a fourth at Stoughton.

As a result, they needed loaders right away.

They were able to rent two off of Red Dog Drilling to tide them over.

Their toolpush shacks were lined up near the shop, plugged in. Betts said, “The fire department did a great job protecting the outbuildings. The push

shacks were 20 feet away, each with a lot of parts.”

With their office burnt down, and work firing up, they needed an office right away. Friends Greg and Paulette Cousins got them set up in their vacant former office for Site Energy/Greg Cousins Construction Ltd., in town. That also provided a small shop, too.

▲

■ By Brian Zinchuk Carnduff – Just after midnight, in the early minutes of Dec. 30, Betts Drilling shop and office on the east side of Carnduff burnt to the ground.

“They’re still doing the investigation,” said Bob Betts, general manager, on Jan. 10, who added indications were it was a gas leak resulting in an explosion.

The fire happened right after midnight – about 12:02 a.m. “Somebody driving by saw it. We found out through social media,” Betts said. “Our daughter contacted us by texting. Someone had called 911. We headed out the door and got there by 2 o’clock.”

Having recently moved from their farm south of Carnduff to their place at the lake, Bob and his wife Anne were at their home in southwest Mani-

Page A14

COMMITTED TO SASKATCHEWAN

We know Saskatchewan - it’s cold, it’s flat, we drive the grid roads, we know what a bunny hug is, and we even cheer for the Rough Riders. Arnett & Burgess Pipeliners (A&B) was founded in 1957, by Les Arnett and Ray Burgess. Les Arnett was a Saskatchewan native and was a proud graduate from the University of Saskatchewan.

A&B has been providing pipeline construction services in Saskatchewan and we support both our clients and our teams by providing local employment.

A&B has two growing offices in Saskatchewan, in Regina and Estevan.

abpipeliners.com Arnett & Burgess builds and maintains pipeline infrastructure based on the principles of quality, safety and integrity.

RS A14

PIPELINE NEWS February 2017

Temporary office, rented loaders, but drilling ▲

Page A13 “They’re good friends of ours,” Betts said of the Cousins. “They knew we needed a shop and office.

They offered it to us right away. We jumped right on it.”

Bob ended up digging up an old behemoth of a laptop to run on his desk.

Anne was making do with a tablet.

“Everything’s insured.

We’re fine, that way,” he said, but they will take a deductible hit. They will likely rebuild in the same place, but it’ll probably be a year before they are in the new building.

The fortunate thing is that for the first time in almost two years, they had work lined up for all four rigs; a hundred-per cent utilization until breakup. That’s a big improvement from the 50 per cent utilization they had been seeing for much of the downturn.

Those four rigs are each working for a different oil companies, three smaller ones and one larger one.

“We’re kind of booked until road bans,” he said.

“I think people are looking for a stable oil price that’s not going to go to US$30. Fifty to US$35 scares a lot of companies

away.”

Oilfield service companies dramatically cut their rates when the downturn hit. On that front, Betts said, “I think everybody’s still in survival mode. We’ve lots a lot of people in the oilfield to other jobs. We had to match CAODC wages to stay competitive.”

Their wages had been at a discount to the posted

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Weyburn – The Saskatchewan Oil & Gas Show takes place in Weyburn on June 7-8, and with “Things have really picked up in January,” said Tanya Hulbert, show manager.

“Registrations have gone well. We’ve seen an increase of exhibitors in January. We’ve had sponsorship come forward for events.”

There are still some sponsorship opportunities still available. As of Jan. 23 there were still some exhibitor spaces available for industry-related companies.

“There’s been a really good turnout for renewals,” Hulbert said.

There are some changes planned for the social centre. “We are revamping the oilman of the

year application process,” Hulbert said, referring to the two Southeast Saskatchewan Oilman of the Year awards. A third award, the province-wide Oilman of the Year, is also awarded. In 2015, that went to Neil Roszell of

Raging River Exploration Inc. Several people are also inducted into the Saskatchewan Oil Patch Hall of Fame at each show.

“It sounds like it’s going to be a good show,” Hulbert concluded.

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will be busy, Betts expects it might be a while to get back in the field once the snow is gone, given the high amounts of snow the region has seen this winter.

“I think it’s going to be a long, nasty breakup,” he said, adding there could be some demand for drilling as companies seek to make up for production lost due to natural declines.

Dwight G. Blomander,

HEAD OFFICE

www.percydavis.com Email: info@percydavis.com

rig that has steady work, as opposed to just one or two holes.

“We are really fortunate a lot of our guys are staying pretty loyal,” he said.

However, some workers have gone farming, some have found jobs outside of the oilpatch. Some aren’t coming back.

So while the winter drilling season looks like it

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Canadian Association of Oilwell Drilling Contractor rates.

That said, with four rigs spooled up, they were able to find enough hands to man all the rigs. “I have no idea how it happened. It happened at the last minute.

We found 84 guys to crew four rigs in January.”

Betts noted that rig hands prefer working on a

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PIPELINE NEWS February 2017

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Lots of snow is good for a welder’s business: Mains Welding ■ By Brian Zinchuk Carnduff – When there’s a lot of snow, people break snowplows and snow blowers, and that keeps the welders happy. Brycen Mains of Mains Welding in Carnduff has been quite happy to see that snow.

“This year is crazy busy.

I fixed seven snowblowers in 10 days,” he said on Jan. 10. “I worked Boxing Day.” At least three quarters of that work is tied to clearing leases, he noted.

Whereas last year, there was hardly any snow to clear, this year, there’s plenty. By early January, Carnduff had moutains of it, all around town.

“The fan housing will wear out around the blower and it needs to be replaced.

I bend all new plate to go inside there,” he said of a typical snowblower repair.

One big four wheel drive tractor was in the

shop, requiring repairs to its blade. That was a two-day project.

Overall, Mains said business is good, and he can’t complain. What is especially helpful is that drilling has picked up.

“I’ve got four drilling rigs already,” he said.

One of those rigs had been racked in his yard for five or six months this past year. It’s now working.

“It feels like it’s turning around. You don’t have guys whining or crying like they used to be. For the last six months, guys have been steady,” he said.

“The fall of 2012 was pretty good. Really good, actually.”

It helps they’ve diversified somewhat. Having come off a farm himself, Mains is always cognizant of helping out his farming clients when they need it, especially during busy seed-

G.T.&H Holding Inc.

Chance Bayliss works on cattle-related items at Mains Welding. ing and harvest times.

“We’ve moved into o cattle and ag as well, with portable corral sorting systems, portable panels and feeders. We’ve always made Texas gates.

Mains Welding has five people on staff, including himself. Two are journeyman welders, and three are

apprentices. One of those is currently in school, taking his Level 2 training.

As a journeyman with his pressure ticket, Mains handles nearly all the drilling rig work. He explained each well needs a welder to come out twice; the first trip to weld the bowl, the second to cut intermediate casing.

“In this slowdown, I’ve never had to tell someone to go home because I didn’t have something for them to do,” he said. There’ve been some make-work projects, but not much.

So far, 2017 looks pretty good, Mains noted.

“If right now is how it will be, it’s flat out,” he said.

Like other oilfield services, the rates they can charge still have not climbed from the deep cuts made a few years ago when the downturn hit. “Rates have affected everyone,” he said.

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Brycen Mains has been able to keep his welding shop going without layoffs.

OUR PEOPLE

OUR DIFFERENCE The long term culture at A&B is both distinct and strong, with many 2nd, 3rd and 4th generation employees. This makes A&B a preferred employer and contractor.

Our longevity in the industry has been a direct result of continually practicing our core values of: quality, safety, and integrity.

A&B would like to welcome Tyler Featherstone, Divisional Construction Manager, Sam Nezamloo, Estimator and Dean Nutzhorn, Construction Manager to our Regina team.

Tyler, a local to Prince Albert, SK, has been working with A&B for 15 years.

Beginning his career as a labourer, then moving to lead, to foreman, followed by superintendent, and now Construction Manager, Tyler is a true A&B Pipeliner.

Sam brings with him valuable experience as both a cost estimator and project engineer with a background in construction, integrity, and the maintenance of pipelines and facilities. Sam is also a licensed professional engineer (P.Eng) in Saskatchewan.

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Dean has been in the oil and gas industry for 12 years. He brings valuable facilities experience to A&B. He loves Saskatchewan - Lake Diefenbaker particularly.

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Arnett & Burgess builds and maintains pipeline infrastructure based on the principles of quality, safety and integrity.

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PIPELINE NEWS February 2017

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