Pipeline 20181205

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Line 3 Replacement ďĞŶĞĮƚƐ DŽŽƐŽŵŝŶ The workers on this main gang welding crew will primarily be staying in Moosomin by now, having worked their way eastwards from Regina. The Enbridge Line 3 Replacement Program will see a peak of about 800 workers staying in and around Moosomin during the end of 2018. ^ĞĞ ŽƵƌ ƉŚŽƚŽ ĞƐƐĂLJ ŽŶ ƚŚĞ ĐŽŶƐƚƌƵĐƟŽŶ ŽĨ ƚŚĞ ƉŝƉĞůŝŶĞ͕ Pages A14 to A16. Photo by Brian Zinchuk

DEEP starts drilling geothermal power project A2

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PIPELINE NEWS December 2018

ĞĞƉ ĂƌƚŚ ŶĞƌŐLJ WƌŽĚƵĐƟŽŶ ĐŽŵŵĞŶĐĞƐ ĚƌŝůůŝŶŐ ŽŶ ŐĞŽƚŚĞƌŵĂů ƉŽǁĞƌ ƉƌŽũĞĐƚ ƐŽƵƚŚ ŽĨ dŽƌƋƵĂLJ

By Brian Zinchuk Estevan – After nearly a decade working on developing the concept of geothermal-sourced electrical power, Saskatchewan’s Deep Earth Energy Production (DEEP) Corp. is finally drilling its first hole south of Torquay, within sight of the American border. A successful project will establish the first geothermal power facility in Canada.

On Nov. 8, the company, headed by CEO Kirsten Marcia, drilled its conductor pipe and rathole, in anticipation of full-blown drilling the following week.

By Nov. 13 the drilling rig was moved in, and the well was spudded on Nov. 14.

That hole is going to be a significant one, aiming to be the deepest in Saskatchewan. It will surpass the two Aquistore wells by 100 metres, to a total vertical depth of approximately 3,500 metres.

Marcia spoke to Pipeline News on Nov. 9.

DEEP was formed in 2010. It’s had “wonderful spurts” she noted, where they would move a huge distance, then be slowed down by funding. But in recent weeks, they received $4 million in new equity funding that allowed the company to commence drilling. They’ve hired a drilling rig that has been working nearby, but will have a window of opportunity.

The well is expected to take 25 days to drill, much

longer than a typical well in that area. That’s in part because they plan on cutting 200 metres of core at the very bottom of it, including cutting core into the PreCambrian basement, which underlies the sedimentary beds.

“Hopefully we’ll catch some core in the basement,” she said. They’re aiming to go up to 20 metres into the basement, as that will provide the necessary depth for the logging tools which follow to scan the entire sedimentary column.

While Marcia, herself, is a geologist who used to sit on wells, DEEP has hired John Lake, a prominent Saskatchewan geologist who once graced the cover of Pipeline News, to sit on this well.

This hole is to be the first of six, paving the way for three production wells and two injection wells.

The wells are to be placed 300 to 500 metres apart.

This initial well will be somewhat smaller in diameter, at 7 inches, right to the bottom. The subsequent production wells will be 9-5/8 inches across.

That’s to handle the sizeable electric submersible pumps (ESPs) that will be moving a tremendous amount of water, drawing it from the Winnipeg and Deadwood formations which make up the last 200 metres of the hole. The Icebox formation, overlaying the Winnipeg formation, acts as a caprock, as it does at the Aquistore project,

ĞĞƉ ĂƌƚŚ ŶĞƌŐLJ WƌŽĚƵĐƟŽŶ ƌŝŐŐĞĚ ŝŶ ,ŽƌŝnjŽŶ ƌŝůůŝŶŐ ZŝŐ ϯϰ ŽŶ EŽǀ͘ ϭϯ͕ ƐƉƵĚĚŝŶŐ ƚŚĞŝƌ ĮƌƐƚ ǁĞůů ƚŚĞ ŶĞdžƚ ĚĂLJ͘ dŚĞ ůŽĐĂƟŽŶ ŝƐ ƐŽƵƚŚ ŽĨ dŽƌƋƵĂLJ͕ ǁŝƚŚ ƚŚĞ ŵĞƌŝĐĂŶ ďŽƌĚĞƌ ĐůŽƐĞ ĞŶŽƵŐŚ ƚŚĂƚ ŽŶĞ ĐĂŶ ƐĞĞ ƚŚĞ h͘^͘ ĨƌŽŵ ƚŚĞ Ěƌŝůů ŇŽŽƌ͘ WŚŽƚŽ ďLJ ƌŝĂŶ ŝŶĐŚƵŬ approximately 29 kilometres east.

Aquistore injects carbon dioxide from the Boundary Dam Unit 3 Carbon Capture and Storage Project into a deep saline aquifer, 3,400 metres deep, and two kilometres west of the power station.

SaskPower, which has already contributed $1 million to DEEP’s project, shared data with DEEP that it had from Aquistore.

Marcia noted that in this case, the Icebox acts as heat insulation for their purposes.

This well is a preliminary test of the resource, needed to refine assumptions, she explained.

Marcia said this well is “about a mile” from a similar-depth well drilled

by Canadian Natural Re-

KŶ EŽǀ͘ ϭϴ͕ ,ŽƌŝnjŽŶ ƌŝůůŝŶŐ ZŝŐ ϯϰ ǁĂƐ ǁŽƌŬŝŶŐ ŽŶ ǁŚĂƚ ǁŝůů ŚŽƉĞĨƵůůLJ ďĞ ƚŚĞ ĚĞĞƉĞƐƚ ǁĞůů ŝŶ ^ĂƐŬĂƚĐŚĞǁĂŶ͘

sources Limited in the 1980s. That well was logged with a temperature of 95 C, but three days later, it registered 126 C. And that is why the area is so attractive, and why they are drilling so deep. Marcia noted this is not a volcanic geothermal project, but rather one in a sedimentary basin. “The deeper you go, the hotter it gets,” she said, as the heat comes from the centre of the earth.

“This is heat mining.

Heat is the resource. Water is the medium to move the resource.”

The plan is to drill this first well, and then complete it three weeks later to find its true temperature. They will flow the well for seven days, using it to model full production wells. They are also going to test the injectivity of the Mannville formation for the future injection wells.

By the end of March the testing is expected to have been fully reviewed.

“If the first well provides enough data to convince a lender for production wells, we go for it,” Marcia said.

Then after spring breakup of 2019, the plan is to proceed with the production and injection wells, drilling them as “doublets.”

The injection wells, however, would not go all the way to the same depth as the production wells, but rather to the much shallower Mannville forma-

tion, which is commonly used for disposal wells in the region. There is a possibility this initial well may be used as an injection well, too. That may be needed for pressure maintenance in the reservoir.

Each production well will use an ESP that draws one megawatt, approximately 1,340 horsepower, of power. The total power produced by this project is expected to be 10 megawatts, but after the power usage from the pumps and

installation facility is considered, the net power production will be five megawatts. It will be tied into a substation at Bromhead.

Power production The long-lead portion of the project is the power production facility itself.

The above-ground installation uses the organic Rankine cycle. Using a working fluid with a low boiling point, the hot water drawn from the production wells transfers its heat via a Ź 3DJH $

'ĞŽůŽŐŝƐƚ John Lake ĐůĞĂŶƐ Ěƌŝůů ĐƵƫŶŐƐ ďĞĨŽƌĞ ůŽŽŬŝŶŐ ƵŶĚĞƌ ƚŚĞ ŵŝĐƌŽƐĐŽƉĞ͘

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Sharing The Energy

PIPELINE NEWS December 2018

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Montana federal judge orders halt to Keystone XL EVERYTHING FROM BATS AND WHOOPING CRANES TO PIPELINE DEMAND BROUGHT UP BY PLAINTIFFS

By Brian Zinchuk Great Falls, Montana. – A federal judge in Montana has put the brakes on the Keystone XL pipeline. U.S. Federal Court Brian Morris quashed the Presidential Permit for the Keystone XL pipeline project on Nov. 8, throwing the massive onagain, off-again project into a quandary, yet again.

The lawsuit was brought on by the Indigenous Environmental Network, North Coast Rivers Alliance and Northern Plains Resource Council.

They take issue with the State Department, alleging TransCanada violated National Environmental Policy Act (NEPA).

The ruling puts the kybosh on further work until the government more fully reviews the pipeline’s environmental impact, and gives reason to why it changed its mind with regards to climate change.

This comes as TransCanada had been gearing up for full-on construction of the pipeline in the second half of 2019 after a decade of delay. In July the corporation started inspecting and,

as needed, refurbishing its massive stockpiles of pipe that have been sitting since 2011, in preparation for usage in the project.

This decision comes after TransCanada had spent the better part of a year sorting out its right-of-way in Nebraska, which had to be altered from its original route before being approved.

TransCanada said in an emailed statement, “We have received the judge’s ruling and continue to review it. We remain committed to building this important energy infrastructure project.”

Keystone XL had been all but dead when thenPresident Barrack Obama denied a presidential permit in 2015. That changed with the election of President Donald Trump in November 2016. In one of his first acts after being sworn in, Trump invited TransCanada to resubmit its application, which he then approved a few months later in the spring of 2017 (referred to in the case as a record of decision, or ROD). His reversal of the 2015 decision by former president Barack Obama on the pipeline, in

particular with regards to the consideration of climate change as a reason to kill the project, factored into the judgement, without directly referring to either president.

President Trump told reporters on Nov. 9, “It was a political decision made by a judge. I think it’s a disgrace — 48,000 jobs. I approved it. It’s ready to start.”

Saskatchewan Minister of Energy and Resources Bronwyn Eyre said in an emailed statement, “We are very disappointed in the ruling today that delays, once again, this much-needed pipeline.

“Without new pipeline capacity, demand for rail transportation will continue to increase, which will inflate transportation and other costs for Western Canadian oil producers, as well as other rail-dependent industries such as mining and agriculture. Additional pipeline capacity is also necessary to address the additional supply expected following the completion of several oil sands projects in Alberta over the next few years.

“We are pleased that TransCanada Corporation

remains committed to the Keystone XL project, and we continue to advocate for pipeline access to Canadian tidewater, so that producers aren’t forced to export into an increasingly glutted US market, which discounts the price of Canadian oil.”

Premier Scott Moe posted on Facebook, “Today’s news around the Keystone XL Pipeline being blocked is disappointing for Western Canadian producers who need market access for energy.

“And for Saskatchewan, as the oil differential stays near record highs, it impacts everyone in this province.

“We need to get these pipelines built.”

The 36-inch pipeline is to run from Hardisty, Alta., Canada’s principal crude oil hub, to Steele City, Neb. The southern phase of the project, which runs from Nebraska to the Gulf Coast, has been competed and in operation for several years.

The project’s website notes, “Keystone XL still requires federal Bureau of Land Management permits and authorizations in Montana.”

In 2016, seen here, Donald Trump said he would approve Keystone XL. He did. Now a Montana federal judge has thrown out that approval, in part because the decision didn’t jive with the reasons Obama decided against it. File photo Judgment details The case’s plaintiffs took a wide approach in opposition to the pipeline, citing items from archeology to the northern long-eared bat, to recent oil spills as reasons to quash the project.

They also suggested that the United States should have studied these impacts in Canada.

The plaintiffs argued that the greenhouse gas emissions from not only TransCanada Keystone XL,

but the expansion in capacity of the Alberta Clipper pipeline, an Enbridge project, should be considered.

(The judgement makes no reference to the fact the pipelines are from different companies. Nor does it refer to pipeline projects solely within the United States, such as the Dakota Access Pipeline (DAPL) that was competed and put into service during this time frame, or its emissions.) Ź 3DJH $

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PIPELINE NEWS December 2018

PIPELINE NEWS

EDITORIAL

Publisher Rick Sadick - 1.306.634.2654 Editor Brian Zinchuk - 1.306.461.5599 Advertising Sales: 1.306.634.2654 Deanna Tarnes - Advertising Manager Teresa Hrywkiw Kimberlee Pushie Production: Fay Bonthoux

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

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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.

If Energy East ever happens, Moosomin is a key factor Moosomin has a unique place in the Saskatchewan oilpatch.

On the edge of oil production, there’s long be a few pumpjacks running north of town. But the number of directly-related oilpatch businesses has diminished over time. Now there are just a few left. But that doesn’t mean the oil and gas business isn’t relevant in the community. Far from it.

Moosomin is the only sizeable community in the region within relatively short driving distance of both the Enbridge mainline, which goes from west to east along Highway 48, south of Moosomin, and the TransCanada mainline, which passes north of the community. It has a compressor station near the Manitoba border. Thus, whenever big-inch pipeline projects have been built across the prairies, the crews are based in Regina (or White City, same difference), and then Moosomin, as construction progresses. There’s really no other community in the region that can handle the influx of such large crews.

Moosomin can do this, in part because of its large campground north of town, built by the federal government many years ago as part of a string of campgrounds along the TransCanada Highway. But it was privatized many years ago now, and its utility is somewhat limited now that major National Energy Board-regulated projects almost never start before mid-August, due to concern over migratory birds. As a result, by the time most of the crews get out of Regina and move to Moosomin, it’s time to blow the water out of the pipes in the campground.

By that time, it’s getting pretty cold to stay in a camper, anyhow, so hotel space is desirable. And if there’s one thing Moosomin has, its hotels and motels, due to its location, again, on the TransCanada Highway.

Moosomin has long had a string of older motels along the old highway route, but when the province completed twinning and relocating the highway a little further north of town, that led to the construction of three brand new, large hotels. Those hotels were especially crucial for the workforce that had been employed on the multi-billion potash mine expansion at Rocanville, north of Moosomin. The big potash work is over now, but the hotels remain.

Every decade or so, since the 1950s, TransCanada and

Enbridge have each added another pipeline to their mainline.

Right now, Enbridge is building its Line 3 Replacement program, after having built the Alberta Clipper project in 20082009. A decade before that, it was the Terrace B project along the same right of way.

About 20 years ago, TransCanada put in a 42-inch pipeline on its right-of-way, past Moosomin. You might have heard of it. A number of years ago, the company proposed converting that larger natural gas line to an oil pipeline, Energy East, running all the way to St John, New Brunswick.

And this is where Moosomin comes to the fore again, and not just as a place for crews to stay for a few months during construction. Moosomin also featured prominently in plans for the now defunct Energy East Pipeline.

If that project had gone through, it would have entailed the construction of a tank terminal northeast of the community, on the TransCanada mainline near that aforementioned compressor station near the Manitoba border. That tank farm would have included three 350,000-bbl. tanks.

There was an adjoining pipeline planned, the Cromer Latera, from Cromer, Man., where both Enbridge and TEML have major terminals. The lateral would have allowed southeast Saskatchewan and southwest Manitoba oil onto Energy East. Additionally, another proposed pipeline, the Upland Pipeline, would have allowed up to 300,000 bpd to be shipped from Williston, N.D. onto Energy East, via Moosomin, either directly or via Cromer.

TransCanada literally put Moosomin on the map, its map, for Energy East. It would have been Saskatchewan’s key, and crucial, connection with the pipeline, opening up totally new markets for our oil.

All of this would have led to a lot of business for Moosomin during the Cromer Lateral and Moosomin terminal construction. There would have been several permanent jobs at the terminal on an ongoing basis.

It is for these reasons getting Energy East back in action is a highlight of concern with many of the people we have spoken to in Moosomin. It should be a concern for all of Saskatchewan, and Canada.

They want Energy East to happen, to be resurrected from the dead. Moosomin is ready for it, and we should be too.

PIPELINE NEWS December 2018

OPINION

“You have to be lucky all ƚŚĞ Ć&#x;ĹľÄžÍ˜ tÄž ŽŜůLJ ŚĂǀĞ ƚŽ Ä?Äž ĹŻĆľÄ?ŏLJ ŽŜÄ?Ğ͘Í&#x; In 1984, the Irish Republican Army tried to kill British Prime Minister Margaret Thatcher with a bomb. They did not succeed, but they did send a message. “You have to be lucky all the time. We only have to be lucky once.â€?

The same can be said for pipeline opponents. The pipeline company has to be lucky all the time, but the opponents only have to be lucky once.

We saw that, yet again, on Nov. 8, when Montana federal Judge Brian Morris quashed the presidential permit for the Keystone XL pipeline.

This came as things were finally coming together for what might be the most beleaguered project in North America right now.

Pipeline News ran two stories recently which, for the first time in many years, showed a glimmer of hope. One highlighted the fact that the company was inspecting its pipe, which had been sitting on the ground since 2011, to make sure its coating was still good.

This case comes just a few months after another federal court, this one in British Columbia, quashed a permit for another pipeline, the Trans Mountain Expansion.

The pipeline opponents are following the same strategy – flood the courts with every single legal argument under the sun, and you only need one to stick to kill the project.

Judge Morris found a few things that stuck.

Morris apparently came to the conclusion that governments can’t change their mind. That was one of the issues in the 54page ruling I spent the better part of an hour

reading through. Particular attention in the judgment was paid to the fact that climate change was cited as a reason to deny the Presidential Permit in 2015, but that the new 2017 record of decision (ROD) does not talk about climate change.

What the judgment does not discuss, however, is that there was a change in administration during that time, and that this was a campaign item. In particular, I just happened to be the guy to ask Trump if he would approve the Keystone XL project. He said he would, and upon election, he did, and granted a permit for it. And the people, by electing him, had in fact changed their mind.

But that’s not good enough for the judge.

He ruled that the National Environmental Policy Act and Administrative Procedure Act “require a detailed justification for reversing course and adopting a policy that ‘rests upon factual findings that contradict those which underlay its prior policy.’� “The Department must give “a reasoned explanation for disregarding facts and circumstances that underlay or were engendered by the prior policy,� he ruled, adding, “The Court vacates the 2017 ROD and remands with instructions to provide a reasoned explanation for the 2017 ROD’s change in course.�

Apparently getting elected saying “I’m going to change that decision� is not a good enough reason. When the administration makes a decision, even if it’s the wrong decision, then it’s set in stone unless you provide a “reasoned explanation� to change course, and

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FROM THE TOP OF THE PILE

By Brian Zinchuk

that reasoned explanation is not made in the ballot box.

The clearest evidence that this judgment is bogus is its finding that the State Department should have considered increased flow on the Alberta Clipper pipeline, when it was considering the greenhouse gas impacts of Keystone XL. Let me be clear on this: Alberta Clipper was an Enbridge, not TransCanada, pipeline. It, too, was a 36-inch export pipeline built from Canada to the U.S. After it went into service, they cranked up the pumps a few years later and its capacity went from 450,000 bpd to 880,000 bpd.

The judge found that the cumulative climate impacts of Keystone XL and Alberta Clipper should be considered. But nowhere does he bring up the cumulative climate impacts of North Dakota adding 1 million barrels per day in production since the time Alberta Clipper went into service, or Texas adding 1.9 million barrels per day in the same time frame. Nor does the judgment include mention of any of the pipelines, like Dakota Access Pipeline (DAPL), that haul this oil.

It’s only Canadian oil production, and these two new Canadian pipelines, that need to be considered.

Some other items in the judgment Morris, quite fairly, ignored. The plaintiffs threw everything but the kitchen sink into this lawsuit. Of particular note are endangered species. Not only did they want the State Department to consider those species south of the 49th parallel, but north of it as well.

Wishing Everyone a Happy & Safe Holiday Season

“Plaintiffs next argue that the Department violated NEPA by failing to consider sufficiently potential environmental impacts in Canada,� he noted.

Thankfully, we get to be our own country. He ruled, “The Court will defer to the government of Canada’s environmental review of Keystone’s impacts within its own jurisdiction.�

With regards to endangered species, Morris wrote, “Plaintiffs allege that the Department failed to use the best available science to assess harm to whooping cranes, interior least terns, and piping plovers. Plaintiffs allege that the Department failed to address oil spills and extraterritorial impacts.

Plaintiffs allege finally that the Department failed to analyze reasonably impacts to the black-footed ferret, rufa red knot, northern longeared bat, and western prairie fringed orchid.�

Here’s a nice nugget: “FWS (U.S. Fish and Wildlife Services) identified the American burying beetle as the only listed species likely to be affected adversely by Keystone after it was proposed again in 2017.�

All told, he did not make any orders on the endangered species front.

Maybe this decision will be good for the American burying beetle, after all. The beetle in question requires carrion to breed. With all these dying pipeline projects, surely there’s got to be a body lying around, somewhere.

Brian Zinchuk is editor of Pipeline News.

He can be reached at brian.zinchuk@sasktel.net.

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A6

PIPELINE NEWS December 2018

'ÄžĹ˝ĆšĹšÄžĆŒĹľÄ‚ĹŻ Ć‰ĆŒĹ˝ĹŠÄžÄ?Ćš ĆľĆ?ÄžĆ? ĞdžĹ?Ć?Ć&#x;ĹśĹ? Ĺ˝Ĺ?ůĎĞůĚ ƚĞÄ?ŚŜŽůŽĹ?LJ ĂŜĚ Ć‰ĆŒĹ˝Ä?ÄžĆ?Ć?ÄžĆ? Ĺť 3DJH $ heat exchanger, causing the working fluid to flash into a gas (i.e. boil) and drive the turbine. A cooling tower cools the working fluid back to the liquid phase for reuse. The water is then pumped down the injection wells.

This system is nearly identical in concept and in scale to what is already

being done at the compressor stations on the Alliance Pipeline, which runs through Saskatchewan.

Those heat-recovery power plants were installed at Kerrobert, Loreburn, Estlin and Alameda in 2008, and each produce a net five megawatts of power.

Indeed, the reality that DEEP’s geothermal concept is using technologies

that are well-established and already in existence – drilling production and injection wells, using heat to operate an organic Rankine cycle power plant – have made it somewhat problematic in attracting funding, according to Marcia. There was nothing new, per se. But it was a new application of this technology in a sedimentary basin, and

in particular, the Williston Basin, that makes it unique The project can double in size, she noted, but at some point, it could make more sense to replicate the project as opposed to adding onto it. It’s scalable and repeatable.

The system will cool the water from 120 C to approximately 65 C, but that still means there is a lot of

usable heat in it. While her goal is to produce electricity, not cucumbers, she feels there may be possibilities down the road to use the waste heat for greenhouses or other applications All told, if things go well, in two-and-a-half years, Marcia said they could have power to the grid, renewable, baseload power running approxi-

mately 95 per cent of the time. She called it “The most attractive of all renewables,� and said that it can offset coal.

Marcia noted they are using oilfield data, technology and processes to establish a renewable resources and that without that industry, no one would even know that a geothermal resource exists here.

John Lake is one of the most prominent geologists in Saskatchewan. On Nov. 18 he was checking out drill Ä?ƾƍŜĹ?Ć? ĆľĹśÄšÄžĆŒ ƚŚĞ ĹľĹ?Ä?ĆŒĹ˝Ć?Ä?Ĺ˝Ć‰ÄžÍ˜

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A7

Judge talks about an Enbridge Pipeline in Trans Canada decision Ż 3DJH $ The judge noted regarding Alberta Clipper (built in 2008-2009, with its capacity expanded in later years), “The Department failed, however, to analyze the cumulative greenhouse gas emissions impacts of both pipelines,” and later on says, “The Department should have considered the cumulative impacts of both projects.”

Oil spills from pipelines since 2014 should also be reviewed, he noted, saying, “These new spills and the informa-

tion provided by them warrant an update.”

The judge took umbrage from the State Department’s change in its climate changes stance on the project, from its 2015 record of decision to its similar 2017 record of decision (e.g. the decision on the Presidential Permit). The judge noted that in 2015, “United States’ climate change leadership provided a significant basis for denying the permit.”

“The Department further recognized the scientific evidence that

human activity represents a dominant cause of climate change. The Department cited transboundary impacts including storm surges and intense droughts.”

The interval between the two reports included the change from the Barrack Obama to Donald Trump administrations, but that is not referenced in the judgment.

Morris cited case law in that, “An agency cannot simply disregard contrary or inconvenient factual determinations that it made in the past, any

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items. In each case, the judge deferred to Canadian jurisdiction and evaluation on these matters, stating, “The Court will defer to the government of Canada’s environmental review of Keystone’s impacts within its own jurisdiction.”

His ruling found that the State Department fell short of a “hard look” on several items and it must do supplementary work to comply with its obligations under the National Environmental Policy Act. These areas include

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more than it can ignore inconvenient facts when it writes on a blank slate.”

Therefore, Morris noted, “The Department instead simply discarded prior factual findings related to climate change to support its course reversal.”

Several of the arguments made by the plaintiffs focused on whether the State Department should have considered what happens in Canada.

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A8

PIPELINE NEWS December 2018

Nalco Champion’s charge dismissed in death of Michael Bunz from hydrogen sulphide

By Brian Zinchuk Estevan – Nalco Champion, an Ecolab Company, has had a third and final Occupational Health and Safety (OH&S) charge under the Saskatchewan Employment Act dismissed in connection with the death of one of its workers, Michael Bunz. Bunz died on May 22, 2014, due to exposure to hydrogen sulphide (H2S) at an oilfield separator site near Kipling, owned and operated by Harvest Energy Corporation.

A ball valve had failed while Bunz was preparing to take a fluid sample, causing a release of high, and lethal, levels of H2S, killing him.

The dismissal on Nov. 2 was the conclusion of a long and drawn-out court process which began with the filing of three different charges against Nalco on Dec. 9, 2015, nearly three years ago, and a year-anda-half after the fatal incident. Halfway through this trial process, two counts were dismissed. One was

a charge of failing to ensure a worker was provided with and used an approved atmosphere-supplying respirator, and the second was a charge of failing to ensure a second worker, suitably equipped and trained, was present and in communication with the worker at all times.

The remaining charge was dismissed by Judge Lane Wiegers in Estevan Provincial Court. That charge was that Nalco, being an employer, failed to take all practicable steps to prevent exposure of a worker to an extent that it is likely to be harmful to the worker to a chemical substance or biological substance that may be hazardous.

Wiegers took over an hour to read out his 29page written decision to a nearly empty courtroom.

There were roughly a halfdozen people in the gallery, including members of the Bunz family, in attendance, as was the Crown prosecutor, Buffy Rodgers. The defence attorney, David Myrol, and several repre-

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sentatives of Nalco Champion, took party by way of a conference call from Edmonton.

In his conclusion, Wiegers said, â€œâ€Ś Nalco was required to take all practical steps to prevent Mr. Bunz from being exposed to H2S levels beyond the contamination limit.

Although the use of a respirator may have spared Mr. Bunz, the nature of the H2S release that took Mr. Bunz’s life was not reasonably expected. Much smaller, short-term H2S exposures were reasonably foreseeable and Nalco had appropriate equipment and procedures in place to ensure such exposures would not exceed the contamination limit. Having regard to the whole of the evidence, I am satisfied on a balance of probabilities there was no better practical means than was used by Nalco to prevent and H2S exposure beyond the contamination limit. As a result, I dismiss the charge.�

Fatal day Wiegers began by explaining what had happened. Bunz, 38 years old, was a sales representative for Nalco. He said, “That morning, Mr. Bunz was working alone inside a building at an oilfield facility when he was exposed to

Estevan Court House. File photo an uncontrolled, pressurized released of fluid and gases. The emitted gases included lethal amounts of hydrogen sulphide and Mr. Bunz quickly fell unconscious and died. “The task Mr. Bunz had been engaged in was one he had performed successfully on thousands of occasions.�

The separator building Bunz was working in was a gathering point for produced water piped in from several oil wells. The piping is subject to corrosion, and Nalco’s business was to seize and analyze samples of produced water from the pipelines and piping sys-

tems with a view of recommending blends of chemical additives that would inhibit corrosion, Wiegers noted. They provided the service to as many as 50 oilfield companies in the region. Bunz was Nalco’s sales representative assigned to Harvest.

The sample point Bunz was working on was inside a one-story metal building approximately 600 square feet in size. The procedure involved using a crescent wrench to remove a pressure gauge connected to a header, and replace it with a spigot to draw a sample into a container which would be sealed

(a small amount of fluid would flow first). “Minor amounts of fluid sample can be safely drawn because of the presence of a small metal ball in the sampling valve that restrains the produced water behind it and a retaining ring that ensures the ball remains in place,� the judge noted. Then the procedure would be reversed after the sample was drawn. Doing so would normally take an experienced sampler like Bunz no more than five minutes.

An herein lies the cause of the release, according to expert witness Ĺš 3DJH $

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A9

Ball valve failed, and Bunz was trapped between header and wall Ĺť 3DJH $ testimony as provided by Walter Tersmette, a civil engineer with extensive experience in oilfield equipment design. He appeared for the defence, Nalco.

While he noted there were no witnesses to the incident, Wiegers said, “Tragically the ball valve failed in two stages described below. “First, as Mr. Bunz removed the pressure gauge, he unwittingly removed the retainer ring that held the ball inside the ball valve. Mr. Bunz did not notice he had removed the retainer ring because it and the pressure gauge fastener were well worn and were difficult to distinguish from each other without close inspection.

The retainer ring was later found attached to the pressure gauge fastener. “As he removed the pressure gauge, Mr. Bunz detected a small leak. Mr. Bunz perceived the leak as a small problem and being a diligent, dedicated employee, his first instinct was to solve the problem. What Mr. Bunz did not realize was that he was in peril; the only barrier between him and the full force of the production stream was a small metal ball that – absent its retainer ring – was held in place temporarily by a thin, hard waxy substance that over time had built up in the throat of the ball valve.

“In an attempt to stop the leak, Mr. Bunz decided to turn off the inlet valve at the rear of the header apparatus. To do so, he had to insert himself in the small opening between the header apparatus and an interior wall. As he did, the firm waxy substance surrendered to the pressure of the production stream and the ball was ejected from the ball valve. A deadly, uncontrolled high-pressure stream followed the ball to the building’s ceiling. Mr. Bunz was quickly overwhelmed,� Wiegers said.

Bunz’s last interaction with the Harvest facility operator of the site was at 7:30 a.m. with Dave Dovell via a phone call or text. At about 10:15 a.m., Dowell came to the site, and saw Bunz’s truck parked there, running, and he was not in it.

The facility’s functional H2S alarms were going off and lights flashing (although its messaging function of an alarm was nonfictional at the time). Dowell went to the door and smelled H2S. He looked inside and “saw liquid streaming upward and careening off the ceiling. Visibility was poor; he could not see Mr. Bunz.�

Dovell did not have an air pack with him. About 20 minutes later, a colleague arrived and they entered the building with respirators.

The found Bunz “wedged in a 10-inch wide open-

ing between the back of the header apparatus and the interior building wall.�

They were unsuccessful in retrieving Bunz. It took the arrival of a six-person emergency team to finally extricate him.

Bunz’s functional personal H2S monitor was found inside his truck. “Observations of Mr. Bunz’s truck and items around it offer some support for a conclusion Mr. Bunz may have left the building at the first stage of the ball valve failure and returned before the second, catastrophic ball valve failure,� Wiegers wrote, saying that he found Bunz was inside the building for both stages of the ball failure, and the second occurred soon after the first.�

While the ball valve manufacturer was not identifiable, the judge noted, “I do accept (Tersmette’s) opinion, however, that if the retainer ring was properly installed and maintained, then Mr. Bunz would have lacked the strength necessary to remove it with a crescent wrench.�

The site dealt with 99.6 per cent fluid and 0.4 per cent gas. It had an H2S level in the gas of 2.5 per cent, or 25,000 parts per million (ppm). The facility’s detection equipment was set to go off at 10 ppm.

Legal issues • To prove the charge, the

Crown put forward eight different particulars, alleging: • Nalco failed to ensure the worker was provided with and used an approved atmosphere supplying respirator, • Nalco failed to ensure a second worker, suitably equipped and trained was present and in communication with the worker at all times, • Nalco failed to ensure a worker was wearing his personal H2S monitor when taking samples, • Nalco failed to ensure a worker did not work alone in a remote location with limited to nonexistent communications access when tasked with taking samples from a pressurized piping system with known concentrations of H2S in excess of one per cent or 10,000 ppm., • Nalco failed to ensure a worker conducted a hazard assessment prior to commencing the task of obtaining residual chemical samples, • Nalco failed to ensure a worker followed the Nalco and/or Harvest codes

of practice, • Nalco failed to ensure the worker followed Nalco and/or Harvest’s personal protective equipment procedures, practices and policies, • Nalco failed to ensure the worker followed Nalco and/or Harvest’s personal procedures, policies and practices intended to address hazards, risks and controls.

The Crown must prove actus reus (the guilty act) beyond a reasonable doubt, and if it does that, “The accused must prove on a balance of probabilities it took all reasonable care to prevent the occurrence of the incident or that it held an honest, reasonable belief in a set of fact that if true would render its act or omission innocent,� the judge wrote, referring to it as the defence of due diligence.

In other words, if the Crown proved Nalco had failed, the defence had to prove Nalco had done all they could have to prevent it.

The judge found that the Crown must have proof of one of those particular points, and proof of the omission was “causally con-

nected� to Bunz’s death.

To that end, Wiegers went point-by-point through those eight particulars.

He found that Bunz had training in the usage of a respirator, and that Nalco provided them when the client insisted on it for sampling, however, “In the vast majority of cases, the client, including Harvest, did not.�

Nalco argued that even if he had a respirator, he would not have survived because he had become stuck between the header and the wall. The judge said, “It’ is also impossible to know for certain he would be alive today if he had been wearing a respirator.�

But he added that Bunz would have done all he could to leave the building immediately, and that he would have had perhaps as much as 30 minutes to defend himself if he had a respirator. Thus on the first point, the Crown had proven actus reus.

On the second point, since Bunz was working alone with Nalco’s approval. But as to whether a second worker would have been able to rescue Bunz, who did not have a respirator on, the Crown didn’t Ś 3DJH $

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PIPELINE NEWS December 2018

Respirator and personal H2S monitor not worn Ż 3DJH $ prove this was the cause of Bunz’s demise, as two well-equipped workers still couldn’t get him out later. Thus, a single worker couldn’t have saved him.

Regarding wearing a personal H2S monitor, while Nalco employees, including Bunz, wore them regularly, it was proven he did not wear it inside the building. However, “The absence of the personal monitor, however, would not have affected the tragic result.”

He noted the building had a fixed monitor, which did not sound after the first valve failure, but did after the second. If it had detected H2S, it would have gone off and Bunz would have evacuated after the first failure. Even if he had a monitor on him, and it sounded along with the

fixed monitor, “Unfortunately, both alarms would have sounded too late to assist Mr. Bunz who was overcome almost immediately after the second ball valve failure,” Wiegers said.

When it came to communications, while cell coverage was limited without at booster, Bunz’s truck had a booster, and thus the judge did not find issue with communications.

A software app was discussed at length at trial which would sound an alarm if a timer was not reset, but Wiegers said it would have been unlikely to have assisted.

As for a job hazard assessment, Bunz had not prepared a written one before his last task, but the judge found it would be impossible to conclude he had not done it in some other manner. In particu-

larly, he noted that such a written assessment may be done to cover an entire week if the job to be done was the same.

Tersmette, the expert engineer witness, warned that having workers do assessments for frequent, highly repetitive task might prove counterproductive.

Even so, a job hazard assessment would not have affected the outcome.

The judge found Nalco’s and Harvest’s codes of practice were almost identical, except that Harvest’s required personal H2S monitors be worn even if fixed monitors are present. As Nalco did not ensure Bunz wore his, this was a breach of Harvest’s requirements. Even so, it would not have affected the outcome in the end.

He was not satisfied that Nalco failed to abide

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by its self-imposed respiratory requirements, and came to the same conclusion with Harvest’s requirements, as each code was “less than clear.”

With respect to protective personal equipment, procedures and policies, Nalco’s “H2S code of practice did not clearly require respiratory protection for workers engaged in liquid sampling.”

As for Harvest’s code, which requires workers to walk away if H2S exceeded 10 ppm, that stated did not exist until the ball valve failed.

The eighth point, addressing hazards, saw the judge come to same conclusion as the risk assessments.

Due diligence “Following Mr. Bunz’s death, Nalco requires all of its sales representatives

to wear oxygen supplying respirators when drawing liquid samples. Clearly, the provision of a respirator is a measure both practicable and reasonably practicable within the meaning … of the Act,” Wiegers said.

But whether Nalco had done its due diligence came down to whether the exposure was “reasonably foreseeable.”

“The exact mechanism that caused the release is not significant. The question is simply whether the type of H2S release that overwhelmed Mr. Bunz was reasonably foreseeable,” the judge said.

He cited case law where “‘Foreseeable’ is not the equivalent of ‘imaginable.’”

He noted releases over 10 ppm were rare when liquid sampling.

“Only one of Nalco’s

clients insisted that Nalco’s sales representatives wear respirators when liquid sampling at their facilities. Of occurs, this does not mean that the 49 or so other companies were correct in not requiring respirators, but it does support the inference that lethal exposures to liquid samplers was extremely rare if not unprecedented,” Wiegers said.

“Having weighed all this evidence carefully, I conclude that the potential danger that became a tragic reality in this case was imaginable, but not reasonably foreseeable,” Wiegers said.

Family reaction Outside of the courtroom, Bunz’s father, Al Bunz, said, “OH&S has policies, and I thought they were law. But according to Ź 3DJH $

Wishing you a Merry Christmas and all the best in 2019 Dustin Duncan, MLA Weyburn – Big Muddy 306-842-4810

PIPELINE NEWS December 2018

A11

^ƚĂƌƟŶŐ Ăƚ ƚŚĞ ƌŽĐŬ͕ Ăůů ƚŚĞ ǁĂLJ ƚŽ ƚŚĞ ƉŝƉĞůŝŶĞ͗ ^ĐŚůƵŵďĞƌŐĞƌ

By Brian Zinchuk Regina – “We start at the rock, and go all the way to the pipeline,” said Celine Gerson, president of Schlumberger Canada.

She was speaking at the 4th Annual Saskatchewan Oil & Gas Supply Chain Forum, hosted by the Saskatchewan Industrial & Mining Suppliers Association Inc. in Regina on Oct. 4. She was talking about how they manage their supply chain and suppliers.

Schlumberger is the largest oil and gas service company in the world.

It was founded by two

brothers in France who invented wirelines technology.

“We’re located in over 85 countries, so pretty much, wherever there is oil and gas, we have operations,” she said, adding Schlumberger has over 100,000 employees and over 145 nationalities working for them, and that gives them diversity of thinking.

“We’ve been here for 90 years, and Canada is the place to invest,” she said.

“We are challenged right now, but this is a huge market.”

Celine Gerson, president of Schlumberger Canada, spoke at the 4th Annual Saskatchewan Oil & Gas Supply Chain Forum, hosted by the Saskatchewan Industrial & Mining ^ƵƉƉůŝĞƌƐ ƐƐŽĐŝĂƟŽŶ /ŶĐ͘ ŝŶ ZĞŐŝŶĂ ŽŶ KĐƚ͘ ϰ͘ WŚŽƚŽ ďLJ Brian Zinchuk

Gerson said Schlumberger has 84 locations in Canada, with seven core locations. They operate approximately 2,200 units in their Canadian fleet.

The company recently integrated Cameron International Corporation.

Their Canadian workforce is currently 15.7 per cent women, and 2.3 per cent Indigenous.

She said their respective targets for those two demographics are 25 per cent and five per cent, respectively, by 2020.

Schlumberger is working with a “hybrid model” for its supply, with central sourcing and supply centres around the world, but also boots on the ground with local intelligence.

“The key message here is the digitalization.

Everything from clicking the one click, which triggers a demand, all the way to delivery, is tracked with very complex digital systems. So we know where everything is. We know when some products have been sitting in distribution centres for more than 90 days, and will need to be redistributed where in the world. Everything is tracked,” she noted.

Any supplier they partner with will be required to have some sort of digital platform.

Three corporate goals are cost reduction, service level and working capital. On service levels, total lead time, request from final delivery, is to be reduced to less than 90 days, and their on-time delivery target is above 90 per cent.

“Anything sitting on the shelf is carefully tracked,” she noted. If something is not available in Canada, it can be brought in from around the world.

Free cash flow is another leading point.

“We’re looking at models, such as consignment, better-managed inventories, and payment terms are of course very important,” Gerson said.

“How can you differentiate yourself by providing a best-in-class customer experience?” she posed. This goes for internal customers and external suppliers.

In Canada, last year, Schlumberger spent $276 million, of which $160 million was in chemicals.

Logistics accounted for $49 million, $28 million

in drilling and evaluation and $16 million in facilities.

In 2014, she pointed out, Schlumberger had three times the current spend it has today.

She just signed a new policy mandating their local indigenous spend in Canada, a number that will increase each year.

During the downturn, that focus had di-

minished, as best price was the most important.

“It was survival mode, more than ever before,” she noted. By 2015, Schlumberger’s reported spend was “pretty pathetic,” she said bluntly. “$27,000, nothing to gloat over, that’s for sure.”

One of the things Schlumberger has done to address this focus is to Ź 3DJH $

“OH&S means nothing, as far as I’m concerned,” says Bunz’s father Ż 3DJH $ what happened today, it means nothing, because it all goes onto the oil company, depending on what they want. OH&S means nothing, as far as I’m concerned.

“It just blows me away. It blows me away.

I worked in the oilpatch many, many years. And we had OH&S policies we had to follow strictly.

And today we found out,

because Nalco figured their men don’t need respirators, in that type of situation, they don’t have to wear them. It doesn’t matter what OH&S says.”

Crown prosecutor Buffy Rodgers said, “We have to review the judge’s decision before we take any other steps.”

The defence attorney, being in Edmonton, was not available for comment.

A12

PIPELINE NEWS December 2018

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PIPELINE NEWS December 2018

A13

ůƵĞǁĂǀĞ ŶĞƌŐLJ ŽůĞǀŝůůĞ ůŽĐĂƟŽŶ ůĂƵŶĐŚĞĚ Lloydminster – Coleville is the next site for Bluewave Energy, a division of Parkland Fuels.

Robin Tomm looks after eastern Alberta and western Saskatchewan for Bluewave for their commercial fuels – gasoline, diesel, propane and lubricants. In that area, Bluewave has locations in Bonnyville and Lloydminster, and a new branch coming up quickly at Coleville, servicing the Kindersley and Kerrobert area.

At Coleville he said, “We will be employing three people plus a branch manager.”

They have already hired a branch manager.

It will be a propane facility initially, then add fuel down the road. Tomm said they will hopefully add a cardlock in Kindersley eventually.

A recent acquisition between two competitors means there is less competition now in propane market in the area. In that, Bluewave sees an opportu-

Schlumberger wants Indigenous engagement Ż 3DJH $ create standardized support tools to further enhance visibility. They are going to incorporate Indigenous engagement qualifiers in all candidate packages. Their digital tracking will allow the company to be much more proactive and purposeful when it comes to their spend with Indigenous communities.

By 2017, their spend in this regard was $7 million, and in 2018, it will be close to $15 million.

To become a supplier, she said they have global procurement centres. They also have local boots on the ground, with a whole team of procurement and sourcing people in Canada, focusing on

local sourcing for local needs. Recent tariffs, for instance, has Schlumberger looking for local suppliers in Canada.

Chemicals, transportation and logistics are key.

“We love thinking outside the box,” Gerson said.

“Schlumberger is a technology company,” she said. It spent $800 million last year in research and development, most of which was in software and digital.

“Think about how you can differentiate yourself to demonstrate efficiencies and visibilities as a supplier. Those are our key messages I want to be sure you come out with,” she concluded.

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

nity to provide an alternative in the market.

There will be a 30,000 gallon propane tank as well as a lubricant shack at Coleville. There will be two propane delivery trucks and one picker for moving tanks.

Tomm said they will largely be going after the oilfield market. That includes tank heating usage and fueling engine skids.

There’s also a market on the agriculture side for grain drying. Residential heating use another area of interest.

“Propane is a growing market,” he said. “Natural gas is my biggest competitor.”

Oil companies in the area can and do run their own natural gas on their facilities, but that gas can be very wet and freeze in

winter, he noted.

In Lloydminster, Bluewave had fuel service and diesel delivery, added this past June. “There’s definitely some interest in the area,” he said of the diesel delivery, in the oilfield, commercial and ag sectors.

They have two units doing diesel delivery in Lloydminster.

“We’re working on building our network. We can supply tanks. A lot of farmers are going with bigger tanks, which we can provide.”

They also have security options for those tanks, using a fob or keypad system.

By using a fob for each unit, a company can track individual unit consumption.

He noted they pull diesel fuel from the Husky refinery in Lloydminster.

Robin Tomm ůŽŽŬƐ ĂŌĞƌ ůƵĞǁĂǀĞ ŶĞƌŐLJ͛Ɛ ŽƉĞƌĂƟŽŶƐ ŝŶ ĞĂƐƚĞƌŶ ůďĞƌƚĂ ĂŶĚ ǁĞƐƚĞƌŶ ^ĂƐŬĂƚĐŚĞǁĂŶ͘

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A14

PIPELINE NEWS December 2018

We support pipelines

One camera, one lens, on

By Brian Zinchuk Montmartre – The Enbridge Line 3 Replacement Project has been in full swing this fall. Much of the work on the western side of the province had been completed, but work from Regina to the Manitoba border was in full tilt.

Banister Pipelines is the prime contractor on the project. This same contractor worked on this same right of way approximately 20 years before, when it was briefly known as BFC Pipelines. That, too, was a 36-inch pipeline.

Spreads 5 and 6 are being run together as one, with work initially based out of White City, and crews eventually moving to Moosomin as the work progressed in that direction.

Ferlin Koma, construction manager for Spreads 5 & 6, with Enbridge, provided an update via email on Nov. 17. He wrote, “In 2017, Enbridge completed pipeline construction in three of the nine Canadian spreads, laying approximately 418 km of new 36-inch pipe in the ground. The focus of work in these spreads (1,3 and 4) is now on restoring the right-of-way to its pre-construction condition.

“This year’s pipeline construction began on Aug. 1 on the six remaining spreads which comprise approximately 600 kilometres in southeastern Saskatchewan and southwestern Manitoba.

“Overall, as of mid-November, the 2018 spreads are ranging from about 60% to 85% complete, with the exception of Spread 6. This is because Spreads 5 and 6 are being managed as one project under the same contractor, Banister Pipelines. Contractors for the other 2018 spreads include O.J. Pipelines, and SA Energy Group.

“Spread 5 is now approaching 80 per cent completion – welding and coating are complete and ditch, lowering-in and backfill are almost done and activity increasingly moving into Spread 6 where welding, coating and borehole drilling have begun.

“We remain on track, along with the rest of the L3RP, to meet our objective of meeting the targeted in-service date of the latter half of 2019.”

On Oct. 25, Pipeline News editor Brian Zinchuk took a drive along Highway 48, which closely parallels the right-of-way, from Peebles to Odessa, taking photos and video of the crews as could be seen from the road and edge of the right-of-way. A former pipeliner, he worked on this same spread 20 years ago with Banister/BFC. Here is his photo essay.

ŵĞĂƐƵƌŝŶŐ ĐƌĞǁ ǁŽƌŬƐ ĞĂƐƚ ŽĨ WĞĞďůĞƐ͕ ǁĞůů ĂŚĞĂĚ ŽĨ ƚŚĞ ŵĂŝŶ ĂĐƟŽŶ͘

dŚĞ ƐĞƚͲŝŶ ƚƌĂĐƚŽƌ ƉŝĐŬƐ ƵƉ ƚŚĞ ŝŶĚŝǀŝĚƵĂů ũŽŝŶƚƐ ƉŝƉĞ ĂŶĚ ƐƚĂďƐ ƚŚĞŵ ŽŶƚŽ ƚŚĞ ĨƌŽŶƚ ŽĨ ƚŚĞ ƉŝƉĞůŝŶĞ͘ ^ŬŝĚ ŚƵƐƚůĞƌƐ ƌĞƉŽƐŝƟŽŶ ƚŚĞ ƐŬŝĚƐ ;ůĂƌŐĞ ƉŝĞĐĞƐ ŽĨ ǁŽŽĚͿ ƚŽ ĐƌĂĚůĞ ƚŚĞ ƉŝƉĞ Ăƚ ƚŚĞ ƉƌŽƉĞƌ ŚĞŝŐŚƚ͘

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PIPELINES

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Proud To Support Pipelines in Saskatchewan

306-634-5555

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,ŝŐŚǁĂLJ ϰϴ ƐĂǁ Ă ĐŽŶƟŶƵĂů ŇŽǁ ŽĨ Ɛ from the pipe yards to

dŚĞ ŵĂŶ ŽŶ ƚŚĞ ƚŽƉ ŽĨ ƚŚĞ ƉŝƉĞ ŝƐ ƚŚĞ ƐƉĂĐĞƌ͕ ƚŚĞ ƉŝƉĞĮƩĞ ne

We support Pipelines and Recognize their Importance in Southeast Saskatchewan

Rural Municipality of Coalfields No. 4 423 Main St., Bienfait, SK • 306-388-2330

PIPELINE NEWS December 2018

A15

ne day along Enbridge Line 3 Replacement

Joints of pipe 36-inch in diameter ĂƌĞ ƐƚƌƵŶŐ ŽƵƚ͕ ǁĂŝƟŶŐ ƚŽ ďĞ welded into a pipeline. dŚŝƐ ǁĂƐ ũƵƐƚ ǁĞƐƚ ŽĨ WĞĞďůĞƐ͘

ƐƚƌŝŶŐŝŶŐ ƚƌƵĐŬƐ ƚĂŬŝŶŐ ƉŝƉĞ ũŽŝŶƚƐ o the right-of-way.

Ğƌ ǁŚŽ ĞŶƐƵƌĞƐ ĞĂĐŚ ũŽŝŶƚ ŽĨ ƉŝƉĞ ŝƐ ƐƋƵĂƌĞůLJ ĂůŝŐŶĞĚ ƚŽ ƚŚĞ ext.

WE SUPPORT PIPELINES

dŚĞ ďĞŶĚŝŶŐ ĐƌĞǁ ǁŽƌŬƐ ŝŶ ĨƌŽŶƚ ŽĨ ŽŶĞ ŽĨ ƚŚĞ ĐŽŵƉƌĞƐƐŽƌ ƐƚĂƟŽŶƐ ĂůŽŶŐ ƚŚĞ ůŝŶĞ͘ dŚĞ ƉŝƉĞ ŵƵƐƚ ďĞ ďĞŶƚ ƚŽ ƉƌĞĐŝƐĞůLJ ĨŽůůŽǁ ƚŚĞ ĐŽŶƚŽƵƌƐ ŽĨ ƚŚĞ ůĂŶĚ͘

ĂĐŚ ŽĨ ƚŚĞ ǁŚŝƚĞ ƐŚĂĐŬƐ ŝƐ ƵƐĞĚ ĨŽƌ Ă ĚŝīĞƌĞŶƚ ǁĞůĚŝŶŐ ƉĂƐƐ͕ ĮůůŝŶŐ ƚŚĞ :ͲƐŚĂƉĞĚ ďĞǀĞůůĞĚ ĞĚŐĞ ďĞƚǁĞĞŶ ƚŚĞ ƚǁŽ ũŽŝŶƚƐ ŽĨ ƉŝƉĞ͘ ŌĞƌ ƚŚĞ ƚĂĐŬ ƌŝŐ ŵĂŬĞƐ ƚŚĞ ŝŶŝƟĂů ŝŶƚĞƌŶĂů ǁĞůĚ͕ ƌŽďŽƟĐ ǁĞůĚŝŶŐ ŵĂĐŚŝŶĞƐ͕ ĐŽŶƚƌŽůůĞĚ ďLJ ƚŚĞ ũŽƵƌŶĞLJŵĂŶ ͲƉƌĞƐƐƵƌĞ ǁĞůĚĞƌƐ͕ ĞĂĐŚ ŵĂŬĞ ĂŶ ĂĚĚŝƟŽŶĂů ƉĂƐƐ͕ Žƌ ůĂLJĞƌ͕ ŽĨ ǁĞůĚƐ͘ dŚĞLJ ŝŶĐůƵĚĞ ŚŽƚ ƉĂƐƐ͕ Įůů͕ Įůů͕ ĂŶĚ ĐĂƉ͘ dŚĞ ĞdžƚƌĂ ƐŚĂĐŬ ĞŝƚŚĞƌ ĚŽĞƐ ĮůůŝŶŐ Žƌ ĐĂƉƉŝŶŐ͘ ĂĐŚ ƐŚĂĐŬ ŝƐ ůŽǁĞƌĞĚ ŽŶƚŽ ƚŚĞ ǁĞůĚƐ ĂƐ ƚŚĞ ŵĂŝŶ ŐĂŶŐ ŵŽǀĞƐ ĂůŽŶŐ͘ Ź 0RUH 3LFWXUHV 3DJH $

We Support Pipelines

WE SUPPORT PIPELINES

Lori Carr, MLA Carnduff, SK ZZZ EDQGLWRLOÀ HOG FD

1-306-482-1030

Estevan Constituency Office

306.634.7311

loricarrmla@sasktel.net

Box 700 Carnduff, SK 306-482-3244 www.fasttruckingservice.com

A16

PIPELINE NEWS December 2018

We support pipelines

^ĂƐŬĂƚĐŚĞǁĂŶ ŵŝŐŚƚ ůŽŽŬ ŇĂƚ͕ ďƵƚ ƚŚĞ ƵŶĚƵůĂƟŽŶƐ ŝŶ ƚŚĞ ǁĞůĚĞĚ ƉŝƉĞ ƐŚŽǁ ŽƚŚĞƌǁŝƐĞ͘ WŚŽƚŽ ďLJ ƌŝĂŶ ŝŶĐŚƵŬ

dŚĞ ĚŝƚĐŚ ĐƌĞǁ ŚĂƐ ƚŽ ĚŝŐ ƉĞƌĨĞĐƚůLJ ƐƚƌĂŝŐŚƚ ĂŶĚ ŇĂƚ ĚŝƚĐŚ ĨŽƌ ƚŚĞ pipe to be lowered into.

dŚĞ ůŽǁĞƌŝŶŐ ŝŶ ĐƌĞǁ ƉŝĐŬƐ ƚŚĞ ƉŝƉĞ Žī ƚŚĞ ƐŬŝĚƐ ĂŶĚ ůŽǁĞƌƐ ŝƚ ŐĞŶƚůLJ ŝŶƚŽ ƚŚĞ ĚŝƚĐŚ͘ ĂĐŚ ƐŝĚĞŵ ŵŽǀĞƐ ƚŚĞ ƉŝƉĞ ŽǀĞƌ Ă ůŝƩůĞ ĨƵƌƚŚĞƌ ƵŶƟů ƚŚĞ ůĂƐƚ ŽŶĞ ƉůĂĐĞƐ ƚŚĞ ƉŝƉĞ ŝŶ ƚŚĞ ďŽƩŽŵ ŽĨ ƚŚĞ ĚŝƚĐŚ͘ dŚĞ ďĂĐŬĮůů ĐƌĞǁ ĨŽůůŽǁƐ ĐůŽƐĞůLJ ďĞŚŝŶĚ ƚŽ ĐŽǀĞƌ ƚŚĞ ƉŝƉĞ ƌŝŐŚƚ ĂǁĂLJ͘

dŚĞ ƐƵŶ ƐĞƚƐ ŽŶ ƚŚĞ ĚĂLJ͕ ĂŶĚ ǁŚŝůĞ ŵŽƐƚ ĐƌĞǁƐ ŚĂǀĞ ŐŽŶĞ ŚŽŵĞ͕ ŶŽƚ Ăůů ŚĂǀĞ ĚŽŶĞ ƐŽ͘

Saturn hits 1,000 bpd dŚĞ ƟĞ ŝŶ ĐƌĞǁ ĐŽŶŶĞĐƚƐ ƚŚĞ ůŽŶŐ ƐĞĐƟŽŶƐ ŽĨ welded pipe to each other and to the pipe bored ƵŶĚĞƌ ƚŚĞ ƌŽĂĚƐ͘ dŚĞLJ ŽŌĞŶ ǁŽƌŬ ŝŶƚŽ ƚŚĞ ŶŝŐŚƚ͕ and are the one crew that brings along its own ůŝŐŚƚ ƚŽǁĞƌƐ͘ ,ĞƌĞ͕ Ă ƟĞ ŝŶ ĐƌĞǁ ǁŽƌŬƐ ŶĞĂƌ <ĞŶĚĂůů͕ ĂŌĞƌ ƚŚĞ ƐƵŶ ǁĞŶƚ ĚŽǁŶ͘ The distance from the ŵĞĂƐƵƌŝŶŐ ĐƌĞǁ ƚŽ ƚŚŝƐ ƟĞ in crew on this day was ƌŽƵŐŚůLJ ϱϬ ŬŝůŽŵĞƚƌĞƐ͘

Saskatoon –Saturn Oil & Gas Inc. announced on Nov. 19 that with the success of the recent drill program the Company has achieved a production rate of 1,000 bpd. Additionally, the company has commenced drilling its Q4 of 2018 Viking horizontal program.

Saturn currently has 16 gross (14 net) producing Viking horizontal wells and anticipates drilling 18 additional 100% working interest Viking horizontal wells through Q4 of 2018 and Q1 of 2019.

Stuart Houle, Saturn’s vice-president of engineering and operations, stated, “We have been impressed with the initial and prolonged production

We Support Pipelines!

WE SUPPORT PIPELINES

301 Kensington Ave. Estevan, SK. (306) 634-3616

3902 - 75th Ave. Leduc, AB. (888) 835-0541

>ĂƐƐŽ ƌŝůůŝŶŐ ZŝŐ ϰ ŚĂƐ ďĞĞŶ ƉƵŶĐŚŝŶŐ ŚŽůĞƐ ĨŽƌ ^ĂƚƵƌŶ Kŝů Θ 'ĂƐ /ŶĐ͘ WŚŽƚŽ ĐŽƵƌƚĞƐLJ ^ĂƚƵƌŶ Kŝů Θ 'ĂƐ results from our 2018 Viking horizontal programs.

Saturn has had continued operational success that supports full field development over many of its

land assets. We look forward to executing this upcoming program that should allow us to achieve our 2018 exit production rate goal.”

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PIPELINES Red Deer Office 112 Poplar Street, Red Deer County, Alberta,T4E 1B4 Phone: 403-347-4682 • Fax: 403-346-6006

Estevan Office 326 5th Street, Estevan, Saskatchewan, S4A 0X9 Phone: 306-634-4950 • Fax 306-634-8660

www.apexwfg.com

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• Toll Free 1.866.ANNUGAS

PIPELINE NEWS December 2018

A17

Moosominâ&#x20AC;&#x2122;s IJACK is changing pumpjacks and gas compression

By Brian Zinchuk Moosomin, Wapella â&#x20AC;&#x201C; He was working on designing farm equipment when Dan McCarthy came up with an idea for a new pumping unit to replace the venerable walking beam pumpjack.

Now, his company, IJACK Technologies Inc., has been gaining market share in Manitoba and has since branched into two other products for gas compression. Most of this has happened during the worst oil downturn seen in decades.

IJACK Technologies Inc. is based in Redvers, and is currently working out of a shop just down Highway 1 at Wapella. Thatâ&#x20AC;&#x2122;s going to be changing soon, however, as the company is building a brand new and much larger facility on the north edge of Moosomin.

The company was incorporated in 2010, and started actively selling its hydraulic jack, the UNO, in 2013.

McCarthy said he had two partners out of Virden, Man., Craig Davidson and Darren Bryant. He bought them out last year. â&#x20AC;&#x153;They had connections, they did sales. I did the rest,â&#x20AC;? he said on Nov. 7 in the Wapella shop.

â&#x20AC;&#x153;I was hauling a prototype combine on a trailer near Carnduff back in 2008, watching all the pumpjacks.

The guy I was working for had success adding hydraulics to machines,â&#x20AC;? McCarthy recounted. So he asked himself, â&#x20AC;&#x153;Why couldnâ&#x20AC;&#x2122;t we do that hydraulically?â&#x20AC;?

He talked about it for 2.5 years, during which time he got plenty of warnings about the challenges. For instance, units tried in the 1980s had cylinder seals made of leather.

McCarthy grew up on a mixed grain and cattle farm south of Moosomin. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m from the agriculture world. I didnâ&#x20AC;&#x2122;t know anything about the poor reputation of hydraulic jacks,â&#x20AC;? he said, noting hydraulic jacks have been around for a long time. As such, he came at the concept with a fresh perspective. McCarthy had never worked in oilfield maintenance, either. â&#x20AC;&#x153;I think thatâ&#x20AC;&#x2122;s beneficial. I bring in tech from agriculture,â&#x20AC;? he said.

That might have resulted in him being â&#x20AC;&#x153;super naĂŻveâ&#x20AC;? (his words), but he was also stubborn and didnâ&#x20AC;&#x2122;t give up.

The first prototype went to work with a small company oil company in Manitoba. â&#x20AC;&#x153;Every problem

KĹś Ć&#x161;Ĺ&#x161;Ä&#x17E; ĹŻÄ&#x17E;Ĺ&#x152; Ä&#x201A;Ć&#x152;Ä&#x17E; Ć&#x161;Ç Ĺ˝ /: < hEK ƾŜĹ?Ć&#x161;Ć?Í&#x2022; Ĺ&#x161;Ç&#x2021;Ä&#x161;Ć&#x152;Ä&#x201A;ƾůĹ?Ä? Ć&#x2030;ƾžĆ&#x2030;ĹŠÄ&#x201A;Ä?ĹŹĆ? Ć&#x161;Ĺ&#x161;Ä&#x201A;Ć&#x161; Ä&#x201A;Ć&#x152;Ä&#x17E; Ĺ?Ä&#x201A;Ĺ?ĹśĹ?ĹśĹ? Ć?ĆľÄ?Ć?Ć&#x161;Ä&#x201A;ĹśĆ&#x;Ä&#x201A;ĹŻ ĹľÄ&#x201A;Ć&#x152;ĹŹÄ&#x17E;Ć&#x161; Ć?Ĺ&#x161;Ä&#x201A;Ć&#x152;Ä&#x17E; Ĺ?Ĺś Ć&#x161;Ĺ&#x161;Ä&#x17E; Ĺ˝Ĺ?ĹŻÄŽÄ&#x17E;ĹŻÄ&#x161;Ć? Ä&#x201A;Ć&#x152;ŽƾŜÄ&#x161; Ć&#x152;ŽžÄ&#x17E;Ć&#x152;Í&#x2022; DÄ&#x201A;ĹśĹ?Ć&#x161;Ĺ˝Ä?Ä&#x201A;Í&#x2DC; &Ĺ?ĹŻÄ&#x17E; Ć&#x2030;Ĺ&#x161;Ĺ˝Ć&#x161;Ĺ˝ I encountered, I tried to make possible changes so it wouldnâ&#x20AC;&#x2122;t happen again.,â&#x20AC;? he said. That has meant taking the time to upgrade every machine in the field to current specs. â&#x20AC;&#x153;Software was absolutely huge, and still is,â&#x20AC;? he said, aiming to have software that will â&#x20AC;&#x153;cure itself â&#x20AC;? when the unit has issues.

McCarthy isnâ&#x20AC;&#x2122;t coming at this as a tinkering inventor, but as a professional engineer with a degree in industrial systems engineering from the University of Regina, where he graduated in 2006.

Indeed, he is now part of a family of engineers, as

McCarthyâ&#x20AC;&#x2122;s wife, Olga, is an industrial engineer, as are her two parents and sister. They emigrated from Ukraine when Olga was younger. â&#x20AC;&#x153;She runs our business model,â&#x20AC;? Dan said of Olga.

The two have two young children, and these days Olga focuses on professional photography.

McCarthy worked as an engineer at Bridgeview Manufacturing at Gerald, Sask., developing a patent for them for bale processing.

He also worked with Riteway Manufacturing in Imperial, Sask, working on the design end of heavy harrows and rock pickers.

At the time McCarthy

had his inspiration for his hydraulic pumpjack, he was working for Les Hulisco, the owner of Riteway. He also owns Sweeprite in Regina, which makes commercial street sweepers and pothole patchers. McCarthy worked on refining the design of the pothole patcher. At that point he was headhunted by Brandt Ag Products, where he continued to develop his concept for the hydraulic pumpjack.

Prototypes McCarthy was designing grain carts and heavy harrows when the first prototype was put together, welded by a buddy. That was installed December 2010 at

Cromer, just north of the Enbridge tank farm.

It ran for three-quarters of a year, and had obvious issues, McCarthy said. He was still working at Brandt as he designed the next generation on evenings and weekends when he simply got too busy. In April 2012, he made â&#x20AC;&#x153;a big jump.â&#x20AC;? â&#x20AC;&#x153;At the time, it was a tough decision,â&#x20AC;? he said. â&#x20AC;&#x153;I never paid myself for years and years.â&#x20AC;?

His two partners each made cash investments, and a sizeable sum came from his parents. That money was spent on materials to make something Ĺš 3DJH $

A18

PIPELINE NEWS December 2018

When the downturn hit, new gas compression products saved the day for IJACK Ż 3DJH $ work.

An advantageous move to Moosomin from Regina, when it came to housing prices, made it a lot easier for the McCarthys to be able to afford to live while the company was in its infancy.

The second generation was two units. He explained they didn’t work very well.

“I learned a lot,” he said.

Part of that was learning about 24-hour operations in cold and hot conditions, about things like cylinder seals and pump flows. Simplifying design was another area.

This led to three units in the third generation, and all three are still operating today. The UNO had matured.

It was in 2014 he realized, “This is really going to take off.”

Their most prominent customer told Pipeline News in a previous story printed in August, 2017, that the IJACK UNO’s variability in operating parameters is a

key point for them, as well as its small footprint. The IJack UNO simply bolts onto the wellhead, and does not require a pad or pilings.

McCarthy explained that the UNO can run from 0.2 to six strokes per minute.

“It’s self-adjusting, while the well declines, based on the surface card.

It’s got a huge stroke, and no changing of shivs, and no VFD (variable frequency drive),” said Tim Beals, who recently came onboard to handle sales.

Gas compression The UNO’s adoption, particularly around Cromer, has seen a substantial number of walking beam pumpjacks supplanted by these hydraulic units in recent years.

Unfortunately, the end of 2014 saw the start of the oil downturn that the industry still hasn’t fully recovered from.

At that point, he hadn’t taken a dollar out of the company, and was used to running very lean.

At this time, gas compression was born. A nearby oil company wanted to make more oil from the wells they had. Using gas compression resulted in a two-to-five times increase in production.

This resulted in two different products – first the DGAS, which is a gas compressor piston bolted onto existing walking beam pumpjacks. While there are other manufacturers of similar products, the IJack version does not involve welding, and is adjustable for different sizes of pumpjacks.

“That really carried us through the downturn,” McCarthy said.

Its drawback is that slowing down the pumpjack resulted in less gas compression. This, in turn, led to their second version of gas compression, the EGAS. Instead of being mounted on the pumpjack, it’s a standalone unit with two opposing hydraulic cylinders operating a cen-

Dan McCarthy͕ Ă ƉƌŽĨĞƐƐŝŽŶĂů ĞŶŐŝŶĞĞƌ ĚŝĚŶ͛ƚ ŬŶŽǁ ŵƵĐŚ ĂďŽƵƚ ƚŚĞ ŽŝůĮĞůĚ͕ ďƵƚ ƚŚĂƚ ĚŝĚŶ͛ƚ ƐƚŽƉ Śŝŵ ĨƌŽŵ ƚƌLJŝŶŐ ƚŽ ďƵŝůĚ Ă ďĞƩĞƌ ƉƵŵƉũĂĐŬ͘ ĞŚŝŶĚ Śŝŵ͕ ϭϬ ũĂĐŬƐ ĚŽŶ͛ƚ ƚĂŬĞ ƵƉ ŵƵĐŚ ƌŽŽŵ͕ ŽŶĞ ŽĨ ƚŚĞŝƌ ƐĞůůŝŶŐ ƉŽŝŶƚƐ ǁŚĞŶ ŝƚ ĐŽŵĞƐ ƚŽ ƚŚĞ ĮĞůĚ͘ WŚŽƚŽ ďLJ ƌŝĂŶ ŝŶĐŚƵŬ tral gas piston. The system is mounted on its own stand, about waist height, in a horizontal configuration. EGAS is capable of handing liquids, while the DGAS cannot.

The power units, for both the UNO and EGAS, do not use a variable fre-

quency drive (VFD). Instead, the power unit uses variable displacement pumps.

One power unit can be used to operate an UNO hydraulic pumpjack and an EGAS compressor unit, a configuration they call UNOGAS. An

EGAS gas compressor can also be hooked up to several wells. It is capable of moving twice as much gas as a DGAS unit.

Next edition: Part II will focus on IJack’s manufacturing in Saskatchewan, part of our special on Made in Canada.

D Ed> ůĂƵŶĐŚŝŶŐ ŶĞǁ ƐƵƌĨĂĐĞ ƉƵŵƉ ĨŽƌ ŐĂƐ ŝŶũĞĐƟŽŶ

By Brian Zinchuk Moosomin – Moosomin may be on the fringe of the southeast Saskatchewan oilpatch, but its location was actually quite central to the sales of MANTL Canada, an independent progressing cavity pump

(PCP) manufacturer.

Troy Smith is the Moosomin service centre manager for MANTL, where he works with service tech Ted Brehaut.

Tony Sernick comes up from Estevan, handling business development for

Happy Holidays!

Wishing you and your family a safe and happy holiday season and continued success in the New Year !

the region.

Smith noted the company was formed in 2014, and he came on in 2015 as one of the partners. “It’s an employee-owned company,” he said.

They have five field locations and one manufacturing centre, in Lloydminster. Besides Moosomin, they have a location in Macklin as well Alberta locations Lloydminster, in Peace River, Sedgewick and Taber. Headquarters is

in Calgary.

His background stretched back to working with Grenco, a PCP company. It was bought out by General Electric. “I decided to go in a different direction,” Smith said. “I’ve been in PC for 20-plus years, since 1997. This opportunity came along.”

While not very common in southeast Saskatchewan, progressing cavity pumps are the principal method of artificial lift in

the Lloydminster area, especially when it comes to cold heavy oil production with sand (CHOPS).

Often referred to as “screw pumps,” they use a helical metal rotor that spins within an elastomer stator. That stator is inside a metal barrel.

“We have the whole package. Everything you need to make a PC pump system,” Sernick said.

That includes the anchor and stator on tubing.

ic k e r S e r v ic e Lt P s ¼ y l r d.

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The sucker rods used for PCPs are somewhat different from those used in reciprocating rod pumps. MANTL carries the appropriate sucker rods, which have different pins and centralizers.

These are to contend with the higher revolutions per minute that PC pumps entail, as high as 400 RPMs. “You need it centralized,” Sernick said.

That also means that continuous rods don’t really work in these high-water applications. “Too much banging and clanging for high water cut,” he added.

That can lead to tubing failure.

Sernick said, “Ninety per cent of our pumps are in the Tilston formation.”

That formation is produced in an area around Moosomin, Redvers, Kipling, and Kisbey. They’re also starting to get into Manitoba, as well. That was one of the reasons for setting up in Moosomin, in addition to the fact that’s where Smith is based.

“Our seed has been planted,” Sernick said of Manitoba sales.

“The higher volume, higher water wells are our market,” he added. These are shallower, high-volume wells.

He explained that Tilston formation can see Ź 3DJH $

PIPELINE NEWS December 2018

A19

High water cuts MANTL's specialty Ĺť 3DJH $ volumes of 100 cubic metres per day and up. â&#x20AC;&#x153;Our market is 100 to 300 cubic metres per day,â&#x20AC;? Sernick said.

Dealing with water cuts as high as 98 and 99 per cent, Sernick said, â&#x20AC;&#x153;We kind

of come in on the end of the life cycle of the well, when everything else becomes uneconomical.â&#x20AC;?

One of their competitive advantages is use of their own geometry, he noted, with bigger rotors that can

dĹ&#x161;Ĺ?Ć? Ĺ?Ć? Ä&#x201A; D Ed> Ä&#x161;Ć&#x152;Ĺ?Ç&#x20AC;Ä&#x17E; Ĺ&#x161;Ä&#x17E;Ä&#x201A;Ä&#x161;Í&#x2DC;

take more torque. They use more metal in their stators and have a thicker stator housing. â&#x20AC;&#x153;Our geometry uses less power than a competitive PCP,â&#x20AC;? according to Sernick. â&#x20AC;&#x153;It has more diameters, so it can handle more torque,â&#x20AC;? he said.

For new products, MANTL has a new 73 millimetre insert system and a transfer/disposal pump on surface.

It will be used to dispose of gas through injection instead of flaring. The concept is to replace a triplex surface pump with a progressing cavity pump, on the surface, in a setup thatâ&#x20AC;&#x2122;s similar to how their test bench operates. A triplex pump could become gas-locked, but these pumps can handle a certain amount. The gas is injected just before the suction at the pump.

It would be useful in applications where itâ&#x20AC;&#x2122;s not possible to tie into sales gas lines. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s brand new,â&#x20AC;? Sernick said. The first unit is

Tony SernickÍ&#x2022; ĹŻÄ&#x17E;Ĺ&#x152;Í&#x2022; Ä&#x201A;ĹśÄ&#x161; Troy Smith ŽĨ D Ed> Ć?Ĺ&#x161;Ĺ˝Ç Ĺ˝ÄŤ Ä&#x201A; Ć&#x2030;Ć&#x152;Ĺ˝Ĺ?Ć&#x152;Ä&#x17E;Ć?Ć?Ĺ?ĹśĹ? Ä?Ä&#x201A;Ç&#x20AC;Ĺ?Ć&#x161;Ç&#x2021; Ć&#x2030;ƾžĆ&#x2030; Ä&#x161;Ć&#x152;Ĺ?Ç&#x20AC;Ä&#x17E; Ĺ&#x161;Ä&#x17E;Ä&#x201A;Ä&#x161; Ĺ?Ĺś Ć&#x161;Ĺ&#x161;Ä&#x17E; Ä?ŽžĆ&#x2030;Ä&#x201A;ĹśÇ&#x2021;Í&#x203A;Ć? DŽŽĆ?ŽžĹ?Ĺś ĹŻĹ˝Ä?Ä&#x201A;Ć&#x;ŽŜÍ&#x2DC; /Ĺś Ć&#x161;Ĺ&#x161;Ä&#x17E; ĨŽĆ&#x152;Ä&#x17E;Ĺ?Ć&#x152;ŽƾŜÄ&#x161; Ĺ?Ć? Ä&#x201A; Ć&#x152;Ä&#x201A;Ä?ĹŹ ŽĨ Ć&#x152;Ĺ˝Ć&#x161;Ĺ˝Ć&#x152;Ć?Í&#x2DC; WĹ&#x161;Ĺ˝Ć&#x161;Ĺ˝ Ä?Ç&#x2021; Ć&#x152;Ĺ?Ä&#x201A;Ĺś Ĺ?ĹśÄ?Ĺ&#x161;ƾŏ expected in the region in January 2019. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve had great acceptance for a new startup Canadian company,â&#x20AC;? Smith said. This includes a recent EY Entrepreneur of the Year award. â&#x20AC;&#x153;It says a lot about the group we put together, to survive a downturn in the oilfield. We saw steady

growth through those rough years,â&#x20AC;? he continued.

By having their manufacturing in Lloydminster, it saves on the cost of shipping product. It also means they can get the product to the customer in considerably less time, being that some competitor products come from overseas.

As for overseas, that

works in two directions.

While other companies have been selling overseas products into Canada, MANTL is growing in the overseas market as well, according to Smith. They have equipment operating in 12 countries globally. â&#x20AC;&#x153;Thatâ&#x20AC;&#x2122;s really helped us get through the tough times in Canada.â&#x20AC;?

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D Ed> Ĺ&#x161;Ä&#x201A;Ć? Ä&#x201A; Ć&#x161;Ä&#x17E;Ć?Ć&#x161; Ä?Ä&#x17E;ĹśÄ?Ĺ&#x161; Ĺ?Ĺś Ĺ?Ć&#x161;Ć? DŽŽĆ?ŽžĹ?Ĺś ĹŻĹ˝Ä?Ä&#x201A;Ć&#x;ŽŜÍ&#x2022; Ä&#x201A;Ć? Ć?Ĺ&#x161;Ĺ˝Ç Ĺś Ä?Ç&#x2021; Troy Smith.

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A20

PIPELINE NEWS December 2018

Moosomin hotelier sees hope for Energy East, ďĞŶĞĮƚƐ ĨƌŽŵ >ŝŶĞ ϯ ZĞƉůĂĐĞŵĞŶƚ

By Brian Zinchuk Moosomin – With a pipeline crew numbering in the hundreds in town for several months, it’s a good time to be a hotel operator.

Josef Tesar, Sr., is the CEO and owner of Motel 6 in Moosomin, one of three new hotels built along Highway 1 in recent years after the highway was twinned and relocated a little further north.

Motel 6 opened six years ago. “I built it. I’m the owner,” said Tesar, who is something of a serial entrepreneur. It’s family-owned and operated. He spoke to Pipeline News on Nov.7, just before leaving to get on a plane to Kelowna, where he resides.

“We sold a property, a Ramada, in Prince Albert. We were looking for investment in southeast Saskatchewan due to the growth, especially oil, potash and agriculture, and to be on the TransCanada Highway,” he said.

The planned Energy East project, which

has since been cancelled, would have been of great benefit to the hotel, with hundreds of workers in the community to build a new terminal northeast of Moosomin and a pipeline from Cromer to that terminal. If that project had gone through, it would have entailed the construction of a tank terminal northeast of the community, on the TransCanada mainline near the Manitoba border. That tank farm would have included three 350,000bbl. tanks, and by connection via a lateral pipeline from Cromer, Manitoba., which would have allowed southeast Saskatchewan and southwest Manitoba oil to be shipped via Energy East. Additionally, another proposed pipeline, the Upland Pipeline, would have allowed up to 300,000 bpd to be shipped from Williston, N.D. onto Energy East, via Moosomin. All of this would have led to a lot of business in Moosomin.

That’s all done for now, but Tesar is confident it will come back.

The four-storey Motel 6 has 76 rooms. Tesar noted it’s the only hotel which uses solar power for its water heat.

The hotel’s first three years saw extremely positive economic activity, with a multi-billion potash project at Rocanville, north of Moosomin.

The oil downturn hurt. “Due do the oil economy, business went down. And now it’s back as it was, extremely busy, with over 95 per cent occupancy,” Tesar said.

They keep a few rooms available for walkin business.

Pipeliners started showing up in mid-August.

“In this area, the project has no on-site facilities, so the workers are on their won where they stay,” Tesar said.

While many pipeliners stay in their own campers as much as possible, come late fall, camping season is pretty much over, especially as the bulk of the crew moved to Moosomin.

“It was already cold

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to live in their own trailers,” Tesar noted.

“We also offer an additional five acres that can be used for large projects, but that was not needed,” he said.

By mid-September they were filling up.

“We think it’ll last until March,” Tesar said.

There will still be follow up clean up work on the pipeline project for at least a year, meaning ongoing business.

“It’s the best thing that can happen for the community. We are very thankful for the business and growth. We hired five fulltime employees.

“This project is an excellent group of guys and girls, and the management to work with is a pleasure to do business.

Energy East hopes Tesar said, “We hope there will be more projects like that across Canada, because the economic growth is inevitable. Energy East, we are 100 per cent behind it, and I believe 100 per cent the project will be back on track wine all the pieces

Josef Tesar, Sr. and his family escaped communist Czechoslovakia in 1980.

Now they own a hotel in Moosomin and are considering building another in Terrace, B.C. are back.

“I think it will come back. I think it’s just politics. When everybody gets

a proper piece of the pie, it’ be approved in the future. As soon as we cut off Ź 3DJH $

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Company that started in Moosomin in 1900 again Ĺ?Ĺś ^Ä&#x201A;Ć?ĹŹÄ&#x201A;Ć&#x161;Ä?Ĺ&#x161;Ä&#x17E;Ç Ä&#x201A;ĹśÍ&#x2022; Ć&#x161;Ĺ&#x161;Ĺ?Ć? Ć&#x;ĹľÄ&#x17E; Ĺ?Ĺś ^Ä&#x201A;Ć?ĹŹÄ&#x201A;Ć&#x161;ŽŽŜ Moosomin, Saskatoon â&#x20AC;&#x201C; A company that started in Moosomin 118-years ago had returned to Saskatchewan.

E.B. Horsman & Son is an independent familyowned company, whose history dates back to when this part of the world was known as the Northwest Territories.

The companyâ&#x20AC;&#x2122;s history page on its website notes, â&#x20AC;&#x153;At the turn of the 20th Century, George Dennis Horsman left home in Hamilton, Ontario and bought a CPR rail pass to move west. Not knowing what to expect, his only possessions were a Colt revolver and a knapsack. He stopped in Regina to work at a local hardware store.

Shortly thereafter, a hardware store in Moosomin, Saskatchewan, a village on the CPR main line, became available.

Unfortunately, because he was underage (under 21 years of age), he was unable to proceed with the purchase. Undeterred, George Dennis contacted his father, Edward B. Horsman who agreed to meet his son in Moosomin and in

the early fall days of 1900, the company E.B. Horsman and Son was formed. â&#x20AC;&#x153;In 1907 George Dennis Horsman married a local Saskatchewan girl. Their honeymoon was a trip to Vancouver, B.C. Whatever their reason, it took them only 24 hours to fall in love with Vancouver. In a matter of hours they had cashed in their return tickets and telegraphed E.B. to sell out and join them in paradise.

In the fall of 1907 the company name, E.B. Horsman & Son Retail Hardware Merchants, appeared in Vancouver at 819 Granville Street. â&#x20AC;&#x153;The hardware business prospered. After Thomas Edison invented the incandescent lamp, a whole range of electrical materials swept North America. In 1923 George Dennis decided, with good insight, to open a small electrical supply division.

Within two years and business being so successful, he decided to drop the balance of the hardware business and become an electrical wholesaler. In 1928 the company constructed its

first company-owned 8,400 square foot warehouse at 562 Burrard Street, which

in those days was a residential area.â&#x20AC;?

In 2018, E.B. Hors-

man, now run by fifthgeneration Tim Horsman, purchased Saskatoon-based

Intec Controls, marking the companyâ&#x20AC;&#x2122;s return to Saskatchewan.

Hotelier escaped communism in 1980 Ĺť 3DJH $ Saudi oil coming in, itâ&#x20AC;&#x2122;ll be approved fast. We need someone with the guts to go and say â&#x20AC;&#x2DC;Noâ&#x20AC;&#x2122; to Saudi oil.â&#x20AC;?

Tesar, 63, knows a thing or two about disagreeable governments.

He and his wife, Krista, and son, Joe, escaped Czechoslovakiaâ&#x20AC;&#x2122;s communist rule in 1980, after he had established a prominent career as a national champion Greco-Roman wrestler. The transit from Czechoslovakia to Canada took them a year, from Yugoslavia to Austria and eventually Canada. They ended up being sent by the Canadian government to live in Prince Albert, where he started washing dishes at the Marlboro Inn and worked his way up in the business from there.

Their daughter, Jessica, was born in Canada.

Pipelines factor into another of his other business ventures as well.

Four years ago, Tesar bought three acres at Terrace, B.C. with the plans of building a hotel there.

Thatâ&#x20AC;&#x2122;s close to Kitimat,

which has just recently seen a $40 billion liquified natural gas project approved and sanctioned.

Now heâ&#x20AC;&#x2122;s considered building another Motel 6 there, or possibly selling the property. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s lucra-

tive both ways,â&#x20AC;? he said.

Tesar has been involved in a hotel project in Cabo St. Lucas, Mexico; a restaurant and bar in San Diego, California.

Eventually heâ&#x20AC;&#x2122;d like to own one in Kelowna, B.C.

Moosominâ&#x20AC;&#x2122;s Motel 6 has been running at 95 per cent occupancy due in large part to Enbridgeâ&#x20AC;&#x2122;s Line 3 Replacement Project.

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A22

PIPELINE NEWS December 2018

Moosomin welcomes big projects and big crews

By Brian Zinchuk Moosomin â&#x20AC;&#x201C; Several months ago, Enbridge held an information session with the Moosomin Chamber of Commerce about the impact the upcoming Line 3 Replacement Project would have on the community.

A lot of workers would be coming, and the town would be busy.

That time has now arrived, and Moosomin is hopping.

The project has seen Spread 5 and 6 run as one spread by contractor Banister Pipelines, comprising the Regina to Manitoba portion of the pipeline. As work progressed from west to east, more and more of the hundreds of workers have ended up in Moosomin. The number will peak around 800, in a community whose 2016 census count was 2,548.

Kevin Weedmark and his partner, Kara Kinna, own

and operate the Moosomin World-Spectator, the townâ&#x20AC;&#x2122;s local, and independent, weekly newspaper. Weedmark is also the secretary for the local chamber of commerce. They spoke to Pipeline News at The Red Barn & Danoâ&#x20AC;&#x2122;s Lounge, a prominent local restaurant, on Nov. 7. â&#x20AC;&#x153;This bar will be packed.

Every seat will be taken,â&#x20AC;?

Kinna said at lunch time, referring to the upcoming evening. She added that the grocery stores will be full of pipeliner buying supper as they come off of work.

Weedmark said, â&#x20AC;&#x153;I think itâ&#x20AC;&#x2122;s been a huge impact, probably more of an impact in more areas than people realize,â&#x20AC;? Weedmark said. â&#x20AC;&#x153;The obvious things are the hotels, the restaurants, the retail stores like the food stores that are very full, and very busy. But it even impacts a business like ours, at the newspaper. Weâ&#x20AC;&#x2122;re doing

lot of specialty printing for the crews that are around, for Enbridge and for Banister.

Everything from maps to landowner agreements. All sorts of things.â&#x20AC;? â&#x20AC;&#x153;It impacts just about everyone. Those people who arenâ&#x20AC;&#x2122;t directly impacted, youâ&#x20AC;&#x2122;ve got so many that are renting a basement suite, or renting a couple of rooms.

That money is basically circulating through the community. â&#x20AC;&#x153;We saw that as soon as it was officially announced, that the Spread 6 office would be here, you started to see more activity in town.

Suddenly people were renovating that room, getting ready. It has more impact than people realize,â&#x20AC;? he said.

The hotels are full, and are expected to be so for several months. The local housing authority has opened up some units for pipeline workers as well.

Kevin Weedmark and Kara Kinna, owners and operators of the Moosomin World^Ć&#x2030;Ä&#x17E;Ä?Ć&#x161;Ä&#x201A;Ć&#x161;Ĺ˝Ć&#x152;Í&#x2DC; dĹ&#x161;Ä&#x17E;Ç&#x2021;Í&#x203A;Ç&#x20AC;Ä&#x17E; Ć?Ä&#x17E;Ä&#x17E;Ĺś Ć&#x2030;Ĺ˝Ć?Ĺ?Ć&#x;Ç&#x20AC;Ä&#x17E; Ĺ?ĹľĆ&#x2030;Ä&#x201A;Ä?Ć&#x161;Ć? ĨĆ&#x152;Žž Ć&#x161;Ĺ&#x161;Ä&#x17E; ĹśÄ?Ć&#x152;Ĺ?Ä&#x161;Ĺ?Ä&#x17E; >Ĺ?ĹśÄ&#x17E; ĎŻ ZÄ&#x17E;Ć&#x2030;ĹŻÄ&#x201A;Ä?Ä&#x17E;ĹľÄ&#x17E;ĹśĆ&#x161; Project.

Having the restaurants and hotels helps Moosomin play host to projects like this.

In 2009, the Alberta Clipper pipeline project went through. Since then, there has been the significant potash mine work done in recent years at Rocanville, just north of Moosomin. It was a five-year, $3.2 billion project with large crews around.

The chamber of commerce and town rec depart-

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ment hosted a Grey Cup party for the pipeliners.

It started in the Nutrien Sportsplex followed by a free barbecue (but not free beer). The Grey Cup was shown on a 30-foot screen at Connexus MCC centre, the communityâ&#x20AC;&#x2122;s convention centre.

Asked if thereâ&#x20AC;&#x2122;s been any griping in the community about the pipeline project, Weedmark responded with a

laugh, â&#x20AC;&#x153;Not that Iâ&#x20AC;&#x2122;ve heard.

I donâ&#x20AC;&#x2122;t know if that means thereâ&#x20AC;&#x2122;s no griping, or they know I donâ&#x20AC;&#x2122;t want to listen to it.â&#x20AC;? â&#x20AC;&#x153;This town is a littler different that way. People generally are happy to have the extra bodies,â&#x20AC;? Weedmark said.

Kinna added, â&#x20AC;&#x153;Everybody Iâ&#x20AC;&#x2122;ve heard said theyâ&#x20AC;&#x2122;re happy for the boost in the economy.â&#x20AC;?

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A23

With Keystone XL back in the works, TransCanada is looking for supplier diversity

By Brian Zinchuk Regina – TransCanada looked at the way it does business and realized it wants to diversify its supplier base.

That was the message from Andrea Korney, senior manager, supplier diversity and stakeholder relations with TransCanada. She spoke to the Saskatchewan Oil and Gas Supply Chain Forum in Regina on Oct. 4. That was a month before a Montana federal judge quashed the Presidential Permit for the project on Nov. 8. How-

ever, the company has said in a statement on Nov. 9, “We remain committed to building this important energy infrastructure project.”

Back on Oct. 4, diversifying its supplier base was is of particular consideration as the long-delayed Keystone XL pipeline project have been planned to start construction in the second half of 2019.

The project will have 38 pump stations. Eight of those pump stations are in Canada, three of which are in southwest Saskatch-

Rebecca McElhoes͕ ƌŝŐŚƚ͕ ŽĨ dƌĂŶƐ ĂŶĂĚĂ͕ ŚĂĚ Ă ůŽŶŐ ůŝŶĞ ŽĨ ŝŶƚĞƌĞƐƚĞĚ ďƵƐŝŶĞƐƐƉĞŽƉůĞ ǁŝƐŚŝŶŐ ƚŽ ƐƉĞĂŬ ƚŽ ŚĞƌ ĂŶĚ ŽƚŚĞƌ dƌĂŶƐ ĂŶĂĚĂ ƌĞƉƌĞƐĞŶƚĂƟǀĞƐ ĚƵƌŝŶŐ ƚŚĞ ƐƉĞĞĚ ŶĞƚǁŽƌŬŝŶŐ ƐĞƐƐŝŽŶ͘ WŚŽƚŽ ďLJ ƌŝĂŶ ŝŶĐŚƵŬ

ewan at Fox Valley, Piapot and Grassy Creek.

The 36-inch pipeline will run from Hardisty, Alta., connecting to the original Keystone pipeline at Steele City, Nebraska.

It’s almost 2,000 kilometres of new pipeline, of which 529 kilometres are in Canada, and of that, a large portion is in Saskatchewan.

She noted there was some long political history involved, saying “We’ve been trying to build this pipeline for over 10 years.”

In January 2017, newly-elected President Donald Trump invited TransCanada to resubmit its application. (The project’s Presidential Permit application had been denied by previous President Barack Obama.) A few months later, he granted the Presidential Permit.

She noted it was a big move for TransCanada.

The recent approval by the Nebraska Public Services Commission in November 2017 led to the company re-engaging.

“We are in the process, right now, of construction

preparation activities. This is engaging with our prime contractors, understanding what suppliers exist locally across where this project will go ahead. We’re also looking to secure some of the land permits and agreements that we to go; environmental surveys, of course, as well.”

“The anticipated construction for this project is for 2019 and 2020, with an in-service date of 2021.

And of those of you who speculate this might have something to do with U.S. elections, you’re probably not wrong. Our intention is to really get this project going, but it is also very important to TransCanada. This is something we really believe in. Its been in our books for a very long time.”

She noted, prior to the Montana judgment, there are still some regulatory challenges in the U.S. they are keeping a close eye on. “But we’re continuing to proceed as if we’re going to have construction in that 2019-2020 time frame.”

The pipe refurbish-

Greg Cousins͕ ůĞŌ͕ ŽĨ ^ŝƚĞ ZĞƐŽƵƌĐĞƐ 'ƌŽƵƉ /ŶĐ͕͘ ƚŽŽŬ ĨƵůů ĂĚǀĂŶƚĂŐĞ ŽĨ ƚŚĞ ƐƉĞĞĚ ŶĞƚǁŽƌŬŝŶŐ ƐĞƐƐŝŽŶ ŽĨ ƚŚĞ ^ĂƐŬĂƚĐŚĞǁĂŶ Kŝů Θ 'ĂƐ ^ƵƉƉůLJ ŚĂŝŶ &ŽƌƵŵ ŽŶ KĐƚ͘ ϰ͘ ,ĞƌĞ ŚĞ ƐƉŽŬĞ ǁŝƚŚ Ă ƌĞƉƌĞƐĞŶƚĂƟǀĞ ŽĨ dƌĂŶƐ ĂŶĂĚĂ͘ WŚŽƚŽ ďLJ ƌŝĂŶ ŝŶĐŚƵŬ ment program started this past July.

Qualified suppliers Korney spoke of engaging with a broad range of qualified suppliers.

“Qualified suppliers lead to safe projects, lead to reduced opposition, lead to protection of the environment, lead to protection of people. So we really love to engage with the top primes and the top subcontractors with inclusive qualification programs and performance management programs.

“The original Key-

stone line really brought to our attention that we really need to focus on diversification of our supply base,” she said. “What can happen in supply chains is you can get very long-standing relationships with your prime contractors and they tend to know how to bid your projects, you know how to receive their projects.

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PIPELINE NEWS December 2018

ĞĐŽŵŝŶŐ Ă ƋƵĂůŝĮĞĚ ƐƵƉƉůŝĞƌ ŝƐ ŶŽƚ ĞĂƐLJ͕ ďƵƚ dƌĂŶƐ ĂŶĂĚĂ ǁŝůů ŚĞůƉ Ż 3DJH $ not be seeing the most innovative practices and processes. So we really want to continue to make sure we work to diversify that supply base, work with our primes to ensure they’re following the principles TransCanada really values, making sure work stays locally around your communities.”

She noted Bloomberg recently recognized TransCanada on a sustainability index for Indigenous relations, public affairs, community relations and their supplier diversity program.

A lot of that came from these efforts seeking diversity in their supply chain.

“Our contracting strategy is to ensure we are including diverse, lo-

cal, Indigenous suppliers within our overall supply chain, whether, we, with a unionize workforce or non-union. We do that in many ways. Through our major projects, what we do is we look at the scope of the projects. We look at the areas the projects are happening. And we try to align those things with the local goals of some of the associations, ministries, chambers of commerce, any of the unions that happen to be present in the places we’re working.”

Korney noted the use of local hotels and restaurants, as well as educational opportunities.

In operations, she said they have a very intensive pipe integrity program, spending hundreds of mil-

lions of dollars each year on things like integrity digs.

Regarding contracts, she said, “All types of contracts can be used in our contracting strategy. We are a category management shop at TransCanada, so we do have categories of spend, however, that doesn’t limit the opportunity to do things that make sense on a scope by scope basis, and using different forms of contracts and how we do that.”

TransCanada works with Indigenous communities in several ways.

This includes traditional knowledge studies, opportunities in the supply chain, and educational opportunities.

“We’ve been doing

Indigenous relations at TransCanada for a significant number of years.

We’ve extended our diversity program to include other diverse groups across Canada, and into the U.S. as well.”

That also includes Mexico.

Becoming a vendor The online vendor registration portal is where to start. “A lot of suppliers see this as a big black hole.

It isn’t,” Korney said. “This is the first step in identifying yourself to us. If you are a local supplier and you do have a local contact that you’re working with TransCanada, don’t be afraid to ask questions.”

Korney explained that when prime contactors are asked to include and

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A25

/ŶĚŝŐĞŶŽƵƐ ĂŶĚ ůŽĐĂů ƉĂƌƟĐŝƉĂƟŽŶ ĂƌĞ ĐŽŶƐŝĚĞƌĞĚ ŝŶ ĞǀĞƌLJ ďŝĚ Ż 3DJH $ let us make the choice. Oftentimes we do have extra budget that we can kick in, or, in regards to the Indigenous relations effort, we have people that will help negotiate those subcontracts that you receive,

and help get them into the price and it helps you be more competitive,” Korney said.

“The most important message I need to give to you is communicate with us.”

On vendor qualifica-

PSAC forecasts 4.3 per cent decline in Saskatchewan wells drilled in 2019 Calgary – On Nov. 1 the Petroleum Services Association of Canada (PSAC) released its 2019 Canadian Drilling Activity Forecast. PSAC expects a total of 6,600 wells (rig releases) to be drilled in Canada in 2019. That’s down slightly from this year. For 2018, the association’s final revised forecast predicts a yearly total of 6,980 wells.

For Saskatchewan, the forecast is a decline of 4.3 per cent in wells drilled.

PSAC bases its 2019 forecast on average natural gas prices of $1.45 CDN/ mcf (AECO), crude oil prices of US$69/barrel

(WTI), a Western Canadian Select (WCS) vs West Texas Intermediate (WTI) differential of US$24.50/barrel, and the Canadian dollar averaging $0.80USD. Outgoing PSAC president and CEO, Tom Whalen, said in a release, “While we’ve recovered from the very dark days of 2015 and 2016, there really isn’t any cause for celebration in the near term, as drilling activity is in its third year of a plateau, averaging around 6,900 wells per year. The unprecedented, wide heavy oil price Ź 3DJH $

tion, she said, “We do a general qualification that looks at your safety, your quality, your technical and your financial ability to do the work. Ours is riskbased, so high-risked all the way down to low-risk, requiring different things.

“Those of you who worked with TransCanada in the past may think TransCanada’s impossible to get qualified by, and we may have been, at times.

But we’ve been doing a lot of work to make this easier for our suppliers and to help you get through the process.

“Qualification will not be a barrier to you getting work. We will just work with you and help you get those expectations on track to bring you in. So if you do have problems, and again, don’t be afraid to ask. Our goal is to have a very diverse workforce and a large supplier pool to draw from.

It benefits us to help you with your qualification.”

She noted there’s a lot of opportunity for local supply on the operations side, and a lot of it is low risk, too. These low risk opportunities are good for younger businesses.

Talking about the supplier development strategy,

The 36-inch pipeline, indicated by the green line, will run from Hardisty, Alta., ĐŽŶŶĞĐƟŶŐ ƚŽ ƚŚĞ ŽƌŝŐŝŶĂů <ĞLJƐƚŽŶĞ ƉŝƉĞůŝŶĞ Ăƚ ^ƚĞĞůĞ ŝƚLJ͕ EĞďƌĂƐŬĂ͘ /ƚ͛Ɛ ĂůŵŽƐƚ Ϯ͕ϬϬϬ ŬŝůŽŵĞƚƌĞƐ ŽĨ ŶĞǁ ƉŝƉĞůŝŶĞ͕ ŽĨ ǁŚŝĐŚ ϱϮϵ ŬŝůŽŵĞƚƌĞƐ ĂƌĞ ŝŶ ĂŶĂĚĂ͕ ĂŶĚ ŽĨ ƚŚĂƚ͕ Ă ůĂƌŐĞ ƉŽƌƟŽŶ ŝƐ ŝŶ ^ĂƐŬĂƚĐŚĞǁĂŶ͘ DĂƉ ĐŽƵƌƚĞƐLJ dƌĂŶƐ ĂŶĂĚĂ͘ she explained big projects often go to big companies, but they are looking for opportunities to include smaller companies.

“Oftentimes, when you have a company as large as TransCanada, the scope of work is very big. And they typically go to firms that can bid on a severalmillion-dollar scope. What we’re trying to do, with our carve-outs, is even if it’s pipe construction, if you only have the capacity or experience to do a smaller spread, or smaller diameter

pipeline build, that’s okay.

It doesn’t mean we don’t want to include you on the bid, and it doesn’t mean we won’t consider you. We might award smaller sections of work based on capacity. As resources get tighter and tighter, we tend to get more creative in this space,” Korney said.

That could involve joint ventures or partnerships. “We will never tell you you must joint venture, however, we will tell you if we believe there’s an opportunity for you

to joint venture with another company to bid on a larger scope of work. We can make introductions for you. Hopefully, you have a happy marriage. As soon as we make the introduction, that’s where our part stops.”

She noted a big expectation is the Indigenous and local participation components on an ongoing basis.

“Indigenous and local participation is in every bid,” she concluded. And the company tracks these items, too.

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PIPELINE NEWS December 2018

KŶͲĂŐĂŝŶ͕ ŽīͲĂŐĂŝŶ dƌĂŶƐ DŽƵŶƚĂŝŶ ƉƌŽũĞĐƚ ĂŶŽƚŚĞƌ ďůŽǁ Ż 3DJH $ differentials caused by our chronic pipeline constraints is nothing short of a crisis for Canada. At current differentials, it exceeds a $100 million cost to the industry and Canada. Today, the only near-term line of sight to added pipeline capacity is Enbridge’s Line 3 replacement which isn’t projected to be in service until at least the third quarter of 2019.

“Based on recent industry analysts’ reports, we currently have approximately 165,000 - 225,000 barrels per day of excess oil supply for the existing egress system. Consequently, we project slightly softer drilling activity in the first half of 2019 than we had in 2018. We’ve seen crude by rail volumes increase to over 200,000 barrels per day in recent months and we know there is more rail capac-

ity building in progress.

However, we only see rail providing some limited relief to those operators like Cenovus who are willing to step out and commit to longer-term contracts.”

On a provincial basis for 2019, PSAC estimates 3,532 wells to be drilled in Alberta, and 2,422 wells for Saskatchewan, representing year-overyear decreases of 221 and 110 wells, respectively. At 255 wells, drilling activity in Manitoba is expected to drop by 16 wells yearover-year, whilst activity in British Columbia is projected to decrease from 415 wells in 2018 to 382 wells in 2019.

PSAC noted the projected total year-overyear decrease of 380 wells equates to approximately $1.5 to $1.8 billion less in capital spending by exploration and production companies. This translates into more pain for the

Outgoing PSAC president and CEO Tom Whalen spoke at the 4th Annual Saskatchewan Oil & Gas Supply Chain &ŽƌƵŵ ŝŶ ZĞŐŝŶĂ ŽŶ KĐƚ͘ ϰ͘ WƵƫŶŐ ŽƵƚ ƚŚĞ ϮϬϭϵ ĚƌŝůůŝŶŐ ĨŽƌĞĐĂƐƚ ǁĂƐ ŽŶĞ ŽĨ ŚŝƐ ůĂƐƚ ĂĐƚƐ ŝŶ ƚŚĂƚ ƉŽƐŝƟŽŶ ǁŝƚŚ PSAC. Photo by Brian Zinchuk oilfield services, supply and manufacturers as they are already competing for share of a smaller pie that’s about to get even smaller.

This sector continues to suffer as prices for products and services in Canada are severely depressed.

This ‘lower for longer’ is forcing companies to con-

sider alternatives such as moving more of their operations to other jurisdictions outside of Canada in an effort to survive, as reported in PSAC’s annual Business Issues Survey.

Whalen continued, “The on-again, off-again saga of the Trans Mountain pipeline expansion is

another blow to investor confidence in Canada. It’s not a positive signal to investors that it takes state ownership as a ‘last resort’ means to move national interest projects forward.

While there are numerous barriers to business going forward, if Bill C-69; the new Environmental Impact Assessment Act is passed into law, it is unlikely another major project will ever be proposed or built in this country.

Unfortunately, the biggest casualties in this debacle are the hundreds of thousands of middle-class Canadians who rely on the resource sector directly or indirectly for jobs, indigenous peoples who would benefit from jobs, skills training, and economic opportunities to raise them out of poverty, as well as all levels of government that collects royalties and taxes used to support health care, education, and

other public infrastructure that benefits all Canadians.

“Market access and development of our natural resources would not only help reduce global emissions and help lift third-world countries out of energy poverty, but would continue to benefit all Canadians by providing energy security, LNG for remote and northern communities, great hightech jobs and world prices for our resources so that they can continue to provide economic benefits to communities all across this great country.”

Also on Nov. 1, PSAC announced Gary G. Mar will be the association’s new president and CEO, effective Dec. 1. In the interim period from November 5 until December 1, Elizabeth Aquin, current senior vice president of PSAC, will serve as acting president and CEO.

dƌŝŶŝĚĂĚ ŵĂŝŶƚĂŝŶƐ ƐƵƉƉŽƌƚ ĨŽƌ WƌĞĐŝƐŝŽŶ ŵĞƌŐĞƌ Calgary (Daily Oil Bulletin) – Ensign Energy Services Inc. says it is varying certain terms and conditions of its all-cash offer dated Aug. 30, 2018

to acquire, all of the issued and outstanding common shares of Trinidad Drilling Ltd. to shorten the time period for acceptance of the offer.

Trinidad shareholders now have until 10 a.m.

(Toronto time) Nov. 27, 2018 to accept the offer rather than Dec. 14, 2018 as provided for in the ini-

tial Ensign offer.

Ensign said it is entitled to shorten the time for acceptance of the offer as Trinidad has accepted an alternative offer

from Precision Drilling Corporation in the form of Precision common shares whose value has declined by as much as 30 per cent since Oct. 4,

2018, the day before the Precision offer was announced.

“Notwithstanding the significantly lower Ź 3DJH $

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A27

Will it be Precision, or Ensign? Ĺť 3DJH $ implied value of the Precision consideration for Trinidad shares, we are maintaining our offer price of $1.68 in cash for each common share of Trinidad,â&#x20AC;?  said Bob Geddes, president and  chief operating officer of Ensign. â&#x20AC;&#x153;Ensign is committed to this transaction and to delivering value to Trinidad shareholders.â&#x20AC;?

Precisionâ&#x20AC;&#x2122;s depressed share price means that Trinidad shareholders will not receive full value for their common shares and will be exposed to the continued and increased risks of high debt leverage as part of any new combined Trinidad-Precision entity, according to Ensign.

Trinidad, however, confirmed on Nov. 19 its continued support for a strategic share exchange merger. Following the completion of the Precision transaction, the combined entity will be one of the largest North American land drillers, operating a high-quality fleet of 348 rigs in key United States and Canadian basins, with an expanded international footprint, it said.

â&#x20AC;&#x153;Trinidadâ&#x20AC;&#x2122;s board of directors continues to believe that the Precision transaction is the best available option for Trinidad shareholders, despite a recent market downturn in the oil and gas sector,â&#x20AC;? said Ken Stickland, chair of the Trinidad board. â&#x20AC;&#x153;This belief is supported by the future long-term value creation expected from the combined entity, in which, if approved, Trinidad shareholders would own approximately 29 per cent and further evidenced by consensus analyst price targets.â&#x20AC;?

With the combination of the two companies, Trinidad shareholders have the opportunity to benefit from the future upside created through a highly competitive fleet, growing cash flow generation and improved efficiencies, including significant cost savings, he said. â&#x20AC;&#x153;Those benefits, if achieved, are likely to deliver a superior return compared with either a standalone option or the inadequate Ensign offer.â&#x20AC;?

Trinidad acknowledged that in the short term, the Precision share price has dropped due to

market conditions, reducing the implied value of Trinidad shares under the Precision transaction. Trinidadâ&#x20AC;&#x2122;s board, though, said it continues to manage its business for the long term and encourages investors to consider the long-term benefits this strategic merger with Precision offers.

The Trinidad board continues to unanimously recommend that shareholders reject the Ensign offer and vote for the Precision transaction by proxy or at a Dec. 11, 2018 meeting for Trinidad shareholders.

Precision said Nov. 19 that the waiting period under the Competition Act (Canada) expired Nov. 16, 2018 in relation to the combination with Trinidad and at Precisionâ&#x20AC;&#x2122;s election, the expiration of the waiting period now satisfies the required Competition Act condition under the arrangement agreement between Precision and Trinidad. â&#x20AC;&#x153;Successful termination of the waiting periods for both Canadian and U.S. competition acts marks a

ĹśĆ?Ĺ?Ĺ?Ĺś ĹśÄ&#x17E;Ć&#x152;Ĺ?Ç&#x2021; ^Ä&#x17E;Ć&#x152;Ç&#x20AC;Ĺ?Ä?Ä&#x17E;Ć? Ĺ&#x161;Ä&#x201A;Ć? ŜŽĆ&#x161; Ĺ?Ĺ?Ç&#x20AC;Ä&#x17E;Ĺś ĆľĆ&#x2030; ŽŜ Ĺ?Ć&#x161;Ć? ŽčÄ&#x17E;Ć&#x152; Ć&#x161;Ĺ˝ Ć&#x2030;ĆľĆ&#x152;Ä?Ĺ&#x161;Ä&#x201A;Ć?Ä&#x17E; dĆ&#x152;Ĺ?ĹśĹ?Ä&#x161;Ä&#x201A;Ä&#x161; Ć&#x152;Ĺ?ĹŻĹŻĹ?ĹśĹ? Ĺ?Ĺś Ä&#x201A; Ä?Ä&#x201A;Ć?Ĺ&#x161; Ä&#x161;Ä&#x17E;Ä&#x201A;ĹŻ Ć&#x161;Ĺ&#x161;Ä&#x201A;Ć&#x161;Í&#x2022; Ç Ĺ&#x161;Ĺ?ĹŻÄ&#x17E; WĆ&#x152;Ä&#x17E;Ä?Ĺ?Ć?Ĺ?ŽŜ Ć&#x152;Ĺ?ĹŻĹŻĹ?ĹśĹ? Ä&#x201A;ĹśÄ&#x161; dĆ&#x152;Ĺ?ĹśÄ&#x161;Ä&#x201A;Ä&#x161; Ä&#x201A;Ć&#x152;Ä&#x17E; ůŽŽŏĹ?ĹśĹ? Ä&#x201A;Ć&#x161; Ä&#x201A; ĹľÄ&#x17E;Ć&#x152;Ĺ?Ä&#x17E;Ć&#x152;Í&#x2DC; hĆ&#x2030; ĨŽĆ&#x152; Ĺ?Ć&#x152;Ä&#x201A;Ä?Ć? Ä&#x201A;Ć&#x152;Ä&#x17E; Ĺ˝Ç&#x20AC;Ä&#x17E;Ć&#x152; Ä&#x201A; Ä&#x161;Ĺ˝Ç&#x152;Ä&#x17E;Ĺś Ć&#x152;Ĺ?Ĺ?Ć? Ĺ?Ĺś ^Ä&#x201A;Ć?ĹŹÄ&#x201A;Ć&#x161;Ä?Ĺ&#x161;Ä&#x17E;Ç Ä&#x201A;ĹśÍ&#x2022; Ĺ?ĹśÄ?ĹŻĆľÄ&#x161;Ĺ?ĹśĹ? dĆ&#x152;Ĺ?ĹśĹ?Ä&#x161;Ä&#x201A;Ä&#x161; ZĹ?Ĺ? Ď°ĎŽĎłÍ&#x2022; Ć?Ä&#x17E;Ä&#x17E;Ĺś Ĺ&#x161;Ä&#x17E;Ć&#x152;Ä&#x17E; Ĺ?Ĺś Ć&#x161;Ĺ&#x161;Ĺ?Ć? ÄŽĹŻÄ&#x17E; Ć&#x2030;Ĺ&#x161;Ĺ˝Ć&#x161;Ĺ˝Í&#x2DC; significant milestone in the regulatory review process for the Precision-Trinidad combination,â&#x20AC;? said Kevin Neveu, Precision president and CEO. â&#x20AC;&#x153;We remain committed to the Trinidad board supported acquisition of Trinidad and have had a positive response from both Precision and Trinidad shareholders to our proposed combination,â&#x20AC;? he said. â&#x20AC;&#x153;We understand the

timing of the Ensign cash bid for Trinidad has been opportunistically accelerated as markets have experienced recent volatility,â&#x20AC;?

Neveu added. â&#x20AC;&#x153;The Trinidad board stands by its recommendation to shareholders to reject the inadequate Ensign cash offer and support the PrecisionTrinidad combination in order to realize the benefit of the transaction synergies and participate in the longterm upside in the com-

bined company.â&#x20AC;?

Precision is firm on its offer and will not increase its bid despite recent market volatility, he said. â&#x20AC;&#x153;We stand behind the agreed pro forma ownership split of 29 per cent of Precision shares to the Trinidad shareholders and believe the Precision-Trinidad combination represents a significant value creation opportunity for Trinidad shareholders as outlined in our joint circular.â&#x20AC;?

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PIPELINE NEWS December 2018

Carbon tax imposed on SK, ON, MB and NB Regina – For most of the last two years, Saskatchewan had stood alone against a federally-imposed carbon tax. Then Ontario, New Brunswick and Manitoba joined in. On Oct. 23, they were served their comeuppance, with Prime Minister Justin Trudeau imposing a carbon tax on those four provinces, starting Apr. 1, 2019. These are the provinces who have not come up with their own, federally-approved carbon strategy such as a cap-andtrade system.

Speaking at Humber College in Toronto, Trudeau said, “We are going to place a price on the pollution that causes climate change, from coast to coast to coast.”

“The science is unequivocal: putting a price on pollution is one of the best ways to move forward.”

He went on, “Starting next year, it will no longer be free to pollute anywhere in Canada. And we’re also going to help Canadians adjust to this new reality ...

Every nickel will be invested in Canadians in the prov-

ince or territory where it was raised.”

The carbon tax will start at $20 per tonne, and will escalate $10 per year until 2022, when it reaches $50 per tonne.

There is a long list of fuel charge rates for those four provinces. For gasoline, the tax will be 4.443 centres per litre in 2019, then 6.63 cents in 2020, 8.884 cents in 2021 and 11.05 cents in 2022. The fuels listed run from aviation gasoline to coal. Even “combustible waste” will see a $39.95 tax

per tonne.

Farmers and fishers will not have to pay this on fuel used in their equipment, but Saskatchewan Environment Minister Dustin Duncan noted that exclusion will not cover things like hauling grain or trains hauling the same grain.

Targeted relief of the carbon tax is residents of rural and small communities, users of aviation fuels in the territories, greenhouse operators, power plants that generate electricity for remote communities, and In-

digenous peoples.

The federal government promised rebates to the people of each of these provinces, with a different rate for each. In Saskatchewan, the rate for an average household is set to start at $598 a year, roughly double that of the other three provinces.

Ninety per cent of the tax is expected to be returned to the residents of each of the affected provinces.

The reaction from opponents was swift and harsh.

Saskatchewan Premier Scott Moe told reporters, “Today’s

announcement by the federal government exposes the Trudeau carbon tax for the sham that it is. We already know it’s not good environmental policy. We already know that it’s not good economic policy. And today we learned what it actually is.

It’s a cynical attempt by the Trudeau government to buy your vote with your money,” Moe said.

Two years prior, Moe, then as provincial environment minister, walked out of a meeting discussing the imposition of a carbon tax.