Pipeline 20190403

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PIPELINE NEWS SASKATCHEWAN’S PETROLEUM MONTHLY

Get your OILFIELD NEWS on the go at WWW.PIPELINENEWS.CA

Canada Post Publication No. 40069240

April 2019

www.pipelinenews.ca

Vol. 11/12

Research & Development

Ŷ ŝŵƉŽƌƚĂŶƚ ŶĞǁ ƚŽŽů ŝƐ ŶŽǁ ĂǀĂŝůĂďůĞ ƚŽ ůŽŽŬ͕ ƋƵŝƚĞ ůŝƚĞƌĂůůLJ͕ Ăƚ ƚŚĞ ŚĞĂƌƚ ŽĨ ƚŚĞ ƌŽĐŬƐ ǁĞ ŐĞƚ Žŝů ĨƌŽŵ͘ dŚĞ ŶĞǁ ĐŽŵƉƵƚĞƌŝnjĞĚ ƚŽŵŽŐƌĂƉŚLJ ; dͿ ƐĐĂŶŶĞƌ ŝƐ ŶŽǁ ŽƉĞƌĂƟŽŶĂů ǁŝƚŚ the Saskatchewan Research Council in Regina. Dr. Peng (“Mars”) Luo is the lead operator of it. Photo by Brian Zinchuk

Sinopec comes to Sask WR OHDUQ DERXW &2Ȯ EOR A2

Regina Rally Against the Carbon Tax on April 4 A3

CT scanner used by SRC to analyze rock core A9

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PIPELINE NEWS April 2019

>ĂƌŐĞ ĚĞůĞŐĂƟŽŶ ĨƌŽŵ ŚŝŶĂ ƐƉĞŶĚƐ ƚǁŽ ǁĞĞŬƐ ůĞĂƌŶŝŶŐ ĂďŽƵƚ ĐĂƌďŽŶ ĐĂƉƚƵƌĞ ĂŶĚ ƐƚŽƌĂŐĞ By Brian Zinchuk Estevan, Regina – Ever since ground was broken on the Boundary Dam Unit 3 Integrated Carbon Capture and Storage (CCS) Project at Estevan, there’s been significant talk about how it would gain international attention for its world-leading application of CCS at a commercial scale. The implication has been that this would be the first, hopefully of many, such projects around the world. And while there have been tours aplenty in the intervening years, the Regina-based International CCS Knowledge Centre has just landed one of the biggest fish yet – a

two week visit from three Chinese delegations, one of which is one of China’s major national oil companies. On Friday, March 8, the International CCS Knowledge Centre was just wrapping up work with the large Chinese delegation. When asked if this was like landing a 25-pound pickerel, Knowledge Centre president and CEO Mike Monea responded it was more like a 30-pounder. “The bulk was from Sinopec, mid- to uppermanagement,” Monea said. Sinopec, one of China’s major national oil companies, brought a delegation of 24 out to Saskatchewan. At the same

time, Dr. Jinfeng Ma from the National and Local Joint Engineering Research Centre of Carbon Capture and Storage Technology (China CCUS Centre) brought a contingent of four. This inspired China’s Ministry of Science and Technology to send its own fourperson delegation to take in what was going on. This included two people from Ottawa and one from Calgary, a very senior group, Monea added. “We’ve never seen this before,” he said. He noted that China has made efforts to clean up its coal-fired power plants, but has not yet addressed carbon dioxide. But what they were

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/ƚ ǁĂƐ ďŝƩĞƌůLJ ĐŽůĚ͕ ďƵƚ ƚŚŝƐ ŐƌŽƵƉƐ ŽĨ ŚŝŶĞƐĞ ĚĞůĞŐĂƚĞƐ ǁĞƌĞ ĞĂŐĞƌ ƚŽ ŐĞƚ ƵƉ ĐůŽƐĞ ƚŽ ƚŚĞ ƋƵŝƐƚŽƌĞ ŝŶũĞĐƟŽŶ ǁĞůůŚĞĂĚ ŽŶ DĂLJ ϰ͘ WŚŽƚŽ ĐŽƵƌƚĞƐLJ /ŶƚĞƌŶĂƟŽŶĂů ^ <ŶŽǁůĞĚŐĞ ĞŶƚƌĞ really interested in was the other side of CCS – the usage of the carbon dioxide in enhanced oil recovery (EOR). “They are eager to have success in EOR in China,” Monea said. And while there have been plenty of politicians who have toured the CCS projects in southeast Saskatchewan, this was a working group with the presence of high-level support. “It’s a validation and confirmation that Saskatchewan has something no one else has – the complete chain around CCS,” Monea said. The first week focused on the University of Regina, where they heard about reservoir engineering and capture systems.

The Friday of the first week saw the group get a tour of the Weyburn Unit, operated by Whitecap Resources. There, Darcy Cretin, superintendent, was able to show them how CO2 is used in EOR. “They got to see an actual field operation, and were given and excellent tour by Darcy Cretin,” Monea said. “That really set the stage for the application of CCS.” The following Monday saw a daylong tour of the facilities around Estevan. This included the Boundary Dam Unit 3 Carbon Capture and Storage unit – the power plant and the capture plant. Then they drove two kilometres west to see the Aquistore project and its injector well,

where CO2 that does not go to Whitecap ends up being injected. The day was rounded out by a tour of the Carbon Capture Test Facility at the Shand Power Station, which tests various technologies on capturing CO2 from a slipstream of exhaust gas from the smokestack of an operating coal plant. The next day was spent understanding the subsurface – with a presentation by Erik Nickel at the Petroleum Research Centre in the morning followed by a visit at the Saskatchewan Subsurface Geological Laboratory, or core lab, in Regina, where the delegation was able to see pertinent core up close. “I think one of the Ź 3DJH $

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Convoy and Regina Rally Against the Carbon Tax on April 4 DETAILS PROVIDED ON CONVOY TO, AND THROUGH, REGINA

By Brian Zinchuk Weyburn, Regina – The Regina Rally Against the Carbon Tax and its associated convoy are full steam ahead for April 4. The event is expected to see hundreds of vehicles, mostly trucks, coming into Regina. Many will be from southeast Saskatchewan, but organizers have called for participants from throughout the province, not just in the oilpatch, but agriculture, industry, and all walks of life. For Estevan and points east, the plan is to gather on the east side of Estevan at KRJ yard and subdivision, located immediately south of Finning Caterpillar. Be ready to leave Estevan by 7 a.m., when the convoy will head to Weyburn on Highway 39, taking the truck bypass around Estevan. Weyburn area trucks will stage south of Weyburn on 22nd Avenue facing east. They will merge onto Highway 39 by Weyburn Salvage at the southeast corner of the city. Local police will be controlling traffic. Once merged, the convoy will continue northwest on Highway 39 to Highway 6, then continue north towards Regina. The con-

voy will turn east on the grid road on the south side of Rowatt (which will be marked “convoy”). It will continue east for 6 miles then turn north and continue for four miles to Highway 33. There it will turn northwest onto Highway 33 to proceed into the city. Trucks from Regina and surrounding areas will meet at Cara Dawn Transport’s yard at 8 a.m. at 1512 Fleet St N, Regina. That is north of the Regina landfill, and NOT within the residential area on the east side of the city (be careful, as entering this address without indicating N into your GPS could lead you into a residential subdivision). Any trucks from other areas in the province can go to Cara Dawn yard the night before or that morning for staging. This group will then proceed at 9:30 a.m. to the staging area, on new bypass between Highway 1 and Highway 33. The Estevan/Weyburn group will lead the convoy into the city, with the Cara Dawn group joining it from the north. The plan is to merge the Estevan/Weyburn group with the Regina group shortly before 10:45

^ƵƉƉŽƌƚ ĨŽƌ ƚŚĞ ƉůĂŶŶĞĚ ZĞŐŝŶĂ ZĂůůLJ ŐĂŝŶƐƚ ƚŚĞ ĂƌďŽŶ dĂdž ŚĂƐ ďĞĞŶ ŐƌŽǁŝŶŐ͘ KŶ DĂƌĐŚ Ϯϭ͕ ƚŚĞ ĐŽŵŵŝƩĞĞ ƉƵƫŶŐ it together was 25-strong, double what it was the week before. Photo by Brian Zinchuk a.m. The goal is to enter Regina at 11 a.m., heading westbound on Highway 33 (which becomes Arcola Avenue) to Saskatchewan Drive. The convoy will continue through the city to Lewvan Drive. From there the convoy will turn north on Lewvan and procced to the exhibition grounds, entering from the Lewvan entrance. The convoy will then park on the grounds. The rally will take place in the Queensbury Centre. The program is slated to start at 2 p.m. The intention is to

wrap up speeches by 3:30 p.m. and the convoy will exit the city on Lewvan north or south. “That’s the goal,” said Dale Mainil, one of the organizers. Four points of protest The convoy and rally are focusing on four points: 1. Support the fight against the carbon tax 2. Build pipelines 3. Kill Bill C-69, the Impact Assessment Act 4. Kill Bill C-48, which will ban oil tankers off the northern British Columbia coast There are several speakers being lined up for the

rally at the Queensbury Centre, but the lineup has not been formalized by press time. “We want everyone involved. This isn’t just an oil and ag thing, it’s affecting everybody,” said Darcy McCormick with Jerry Mainil Ltd. in Weyburn. Mainil said, “This is important for the next generation, as well as the current. You know how long it takes to build pipelines. If we don’t get this message out and continue to pound out this message, we’re going to be landlocked with our production. “There’s estimates the

carbon tax will cost the ag sector $8 an acre, and that’s just initially, and it’s going to go up every year.” Anyone planning on participating in the convoy should go to https://www. reginarallyagainstthecarbontax.ca/ to register so that organizers can provide Regina police with an accurate number of vehicles. Updates will be posted on the Facebook page at https://www.facebook. com/ReginaRallyAgainstTheCarbonTax/ Watch for a route map to be published on pipelinenews.ca prior to the convoy date.

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PIPELINE NEWS April 2019

PIPELINE NEWS

EDITORIAL

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To submit a stories or ideas: Pipelines News is always looking for stories or ideas from our readers. To contribute please contact Brian Zinchuk at 306-461-5599. Subscribing to Pipeline News: Pipeline News is a free distribution newspaper, and is now available online at www.pipelinenews.ca Advertising in Pipeline News: Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual. Pipeline News has a group of experienced staff working throughout Saskatchewan, Manitoba and parts of Alberta, so please contact the sales representative for your area to assist you with your advertising needs.

Published monthly by the Prairie Newspaper Group, a division of Glacier Ventures International Corporation, Central Office, Estevan, Saskatchewan. Advertising rates are available upon request and are subject to change without notice. Conditions of editorial and advertising content: Pipeline News attempts to be accurate, however, no guarantee is given or implied. Pipeline News reserves the right to revise or reject any or all editorial and advertising content as the newspapers’ principles see fit. Pipeline News will not be responsible for more than one incorrect insertion of an advertisement, and is not responsible for errors in advertisements except for the space occupied by such errors. Pipeline News will not be responsible for manuscripts, photographs, negatives and other material that may be submitted for possible publication. All of Pipeline News content is protected by Canadian Copyright laws. Reviews and similar mention of material in this newspaper is granted on the provision that Pipeline News receives credit. Otherwise, any reproduction without permission of the publisher is prohibited. Advertisers purchase space and circulation only. Rights to the advertisement produced by Pipeline News, including artwork, typography, and photos, etc., remain property of this newspaper. Advertisements or parts thereof may be not reproduced or assigned without the consent of the publisher. The Glacier group of companies collects personal information from our customers in the normal course of business transactions. We use that information to provide you with our products and services you request. On occasion we may contact you for purposes of research, surveys and other such matters. To provide you with better service we may share your information with our sister companies and also outside, selected third parties who perform work for us as suppliers, agents, service providers and information gatherers.

CO2 is the future of the oilpatch, so don’t get rid of our CO2 sources In recent months, our sales staff have asked, “What is the focus this month?” To which the reply has been, “I don’t know! All the protests?” One of the genius ideas former publisher Brant Kersey came up with when Pipeline News was reborn nearly 11 years ago was to have a monthly focus. It gives us a reason to go talk to people, and for them to talk to us. Over those years, we’ve covered almost every area of the oilpatch with few exceptions. Some we revisit, although we try not to do it more frequently than once every three years. There’s a reason for that. Usually there’s been enough change in whatever the topic is that there’s something new to report. It might be new processes, or changes in ownership, or new companies. After months of editions focusing on protests, this month we get back to normal, at least until next month, when you can expect another raft of protest stories. This month’s focus is on research and development, one we’ve done about every three years since 2009. Most of these pages are filled with stories from two sister organizations: the Petroleum Technology Research Centre (PTRC), based in Regina, and the Saskatchewan Research Council (SRC). They work cheek by jowl on trying to get as much oil as possible out of our ground. We have a lot, about 56 billion barrels of original oil in place, but we can only produce a small fraction of it. Fundamentally, the PTRC generates the funding for the toys and projects and the SRC gets to play with most of them, including a new CT scanner that’s going to make a big difference in core analysis. They share a building on the University of Regina’s Innovation Place campus, as the university is also in the mix. Just down the hall from the PTRC office are the offices of most of the U of R petroleum engineering faculty’s offices.

This cozy arrangement came around in part from Liberal Regina Wascana MP (and pertetual cabinet minister) Ralph Goodale and thenNDP MLA Eldon Lautermilch having a smoke in Kirghizstan in 1998. At the time, Lautermilch was Saskatchewan Minister of Energy and Mines and Goodale was federal Minister of Natural Resources. Over cigarettes, they decided on the need to push for petroleum research in Saskatchewan. Thus, a little over 20 years ago, the PTRC was born. An awful lot of the focus over the years has been in the usage of carbon dioxide in enhanced oil recovery (CO2-EOR). The Weyburn-Midale project has been hugely beneficial in developing the core of knowledge around this, but it doesn’t end there. For more than a decade, CO2-EOR has been studied in northwest Saskatchewan for heavy oil. The reality is that CO2-EOR is the future of the oilpatch in much of Saskatchewan. As Weyburn-Midale have proven, oilfields that were initially thought to be near depletion years ago may end up producing for the better part of a century. The Weyburn oilfield is over 60 years old, and still going strong. We don’t hear a lot of references to when it might be in its twilight, because CO2 has extended its life so much. It has become a multigenerational field. The key is having more sources of CO2, so we can extend this fountain of youth to more of our older oilfields such as the Steelman field. And one of the best ways to do that is post-combustion capture on coal-fired power plants, like the Boundary Dam 3 Integrated Carbon Capture and Storage Project (BD3). The Shand Power Station, the most likely candidate for a second carbon capture project, is so close to the Steelman field that if you scaled its smokestack, with binoculars you could see the Steelman field on a clear day. You might even be able to do it

with the naked eye. We won’t be able to do that, however, if we shut down all our coal-fired power plants, as the current federal Liberal government is striving to do. Just a few weeks ago, Prime Minister Justin Trudeau spoke again about phasing out coal. You might notice that the interviews in these research and development stories are mostly in early February and even late January. Why are they only seeing the press now? Because there have been so many protests against the federal government’s energy policies, that they’ve displaced these worthy stories for a whole month. Those protests are solidifying around four points: fight the carbon tax, build pipelines, and kill Bills C-69 and C-48. Those are, by far, the most important points for the oilpatch right now. However, the future of long-term oil development in Saskatchewan is, in fact, carbon dioxide, collected, compressed, and pumped into miscible floods (in light oil) and immiscible floods (in heavy oil). We need that CO2 to extend the life of our oilfields by generations. It can be done, if the CO2 is available. A year ago, North Dakota’s governor told the Williston Basin Conference in Bismarck that his state was on its way to producing 2 million barrels per day (bpd). At the time, it was producing 1.2 million bpd. Today, they are producing 1.4 million bpd – adding the equivalent of about 40 per cent of Saskatchewan’s total production in just one year. But to get to 2 million, they’re going to need CO2, and lots of it for CO2-EOR. If North Dakota can have such a vision, so should we. This year the Williston Basin Conference will be held in Regina on May 28-29. It should be worth attending. And maybe, just maybe, we might see some of that vision here. BD3 was a start. Let’s make sure it’s not an end.

PIPELINE NEWS April 2019

The yellow vest moniker is so tainted now, no one wants anything to do with it When oilfield protests swept across oil country in December, there was immediately a symbol associated with them, the high visibility yellow vest. The connection to the oil patch was immediately evident – everyone who works in the field has either a yellow high visibility vest in their truck or high visibility stripes on their coveralls. Around the same time France was, and still is, in an uproar against its government. In France, it is now a requirement to keep a yellow vest in your vehicle, to be worn when changing a tire or what not, as a sign of distress. They are mad at their government, so it was their sign of distress. But France’s issues were not the Canadian oilfield’s, and the prevalence of violence at yellow vest protests in France was not something people wanted to replicate here. Here, the yellow vest also became its own rallying point – a uniform, as it were, of those upset with the

federal Liberal government. But right from the get go, there have been issues. For most, if not all, wearing the yellow vests, key issues have been the federal government’s killing of the Northern Gateway and Energy East Pipelines, as well as their flubbing of the Trans Mountain Expansion. Then there’s the carbon tax. For many in southeast Saskatchewan, the government’s planned phase out of coal-fired power generation is huge. But even at the earliest protests, some people started carrying signs and talking about issues that just didn’t fit with all the energy concerns. They were concerned about migrants, and many were quick to point out – illegal migrants. They were carrying signs decrying the United Nations. Some people seemed to think the United Nations is going to take over Canada, as part of some sort of “one-world government.” And it is on these migration issues, I knew right

away, the yellow vest brand would be heading to the dustbin of history. I pointed out to many of those involved that talking energy and migration isn’t like they’re talking apples and oranges, they’re talking apples and sausages. They’re not even the same food group. And any talk about migration was going to take away from the energy message, because no matter what you say, people are going to associate this talk with racism. I first said that on Dec. 15. I wasn’t wrong. And from what I saw on multiple Facebook pages associated with the Yellow Vest movement, I absolutely was not wrong. I don’t know if the toxic content was 40 per cent, 10 per cent, 1 per cent or 0.1 per cent, but there was enough of it, and people cheering it on, to paint the yellow vest with a black brush. And, as I suspected would happen, other media picked up on that and ran with it. After a flurry of pro-

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By Brian Zinchuk tests and convoys under the yellow vest banner in December, by January, people were being expressly asked to not wear yellow vests at rallies. This first occurred in Saskatchewan at the one in early January, where Premier Scott Moe joined a number of other speakers on the steps of the Legislature in a -30 C wind chill. It happened again in Moosomin a month later, when Moe was joined by New Brunswick Premier Blaine Higgs and federal Conservative Leader Andrew Scheer at a rally in Moosomin. Other groups in Alberta also distanced themselves from the yellow vests. Canada Action was involved in both of these prominent Saskatchewan rallies, and they cancelled their planned convoy to Ottawa because they didn’t want to be affiliated with the yellow vest. The remaining Yellow Vest convoy to Ottawa became the United We Roll! Convoy to Ottawa. While those who chose to wear yellow vests were not told

to stay home, any talk about the United Nations and migration was definitely at the periphery. Now I am catching wind of a third wave of protests – and there is one thing that has been emphasized – NO YELLOW VESTS. There’s no equivocation on this point. This is not rebranding. These people do not want to be associated at all with any of the negative connotations, specifically regarding immigration, that have been associated with the yellow vests. But they want their voices heard. Why? For exactly the reason I said in mid-December. They’re not even the same food group. Energy and migration have nothing to do with each other. For those of us in the energy industry, we’re in the fight of our lives. While the United States is setting production records each month and now setting export records, we’ve been so hamstrung by the federal Liberals, we worry if our jobs and businesses

can survive. Many haven’t. We worry because our only client for our oil may soon not need us much longer. Their production is rising so quickly, they might decide they don’t want, or need, all our oil anymore. And without Energy East, Northern Gateway and Trans Mountain, we have no way of selling out oil to anyone else. That’s what we’re worried about. Our only client has now become our biggest competitor. When you add the ever-increasing carbon tax on everything, and the phaseout of coal, you know that this government not only does not care about our industry, but is doing all it can to hurt it. And us. That’s why there will be a third wave of protests, and a fourth, and a fifth. But the yellow vest will fade to the background, as the real issues come to the fore. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@ sasktel.net

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Sinopec among three groups from China learning about ^ĂƐŬ ĐĂƌďŽŶ ĐĂƉƚƵƌĞ ĂŶĚ ƐƚŽƌĂŐĞ ŝŵƉůĞŵĞŶƚĂƟŽŶ Ż 3DJH $ best parts of the two weeks was following the visit of the capture plant with a tour of the core lab tour,” Monea said. He noted the Chinese don’t think they have very good reservoirs, but he pointed out that Saskatchewan has been able to make the best of ours. In particular, he said they got to see core from the Bakken that is similar to reservoirs in China. Further tours included Saskatchewan Research Council facilities. Monea noted that Sinopec could choose to use the SRC’s facilities in the future. A webinar with the Shell Quest Carbon Capture and Storage Project allowed participants to get a feel for what is happening in the Edmonton area on CO2. The last day in Regina included a presentation from the provincial gov-

ernment about regulation and policy with regards to CO2. Monea said there was also interest to learn more about the drilling processes used, particularly in the Weyburn Unit. He noted that Saskatchewan is about two decades ahead of China in EOR. It was in the late 20th century that PanCanadian implemented is CO2-EOR project at Weyburn, and Shell had done initial, and then subsequent work, at Midale. “They really don’t have the capacity we have in the west to drill and set up an EOR program,” Monea said. He noted some field engineers could possibly be heading to China in the future. “It’s almost where we were in the 1980s. We went down to Texas to learn about how they used reservoir CO2,” he said. “We didn’t know if EOR worked.”

/Ŷ ƚŚĞ ĐŽŶƚƌŽů ƌŽŽŵ ŽĨ ƚŚĞ ĂƌďŽŶ ĂƉƚƵƌĞ dĞƐƚ &ĂĐŝůŝƚLJ Ăƚ ƚŚĞ ^ŚĂŶĚ WŽǁĞƌ ^ƚĂƟŽŶ͕ ŚŝŶĞƐĞ ĚĞůĞŐĂƚĞƐ ǁĞƌĞ ĂďůĞ ƚŽ ůĞĂƌŶ ŚŽǁ ƚŚŝƐ ůĂƌŐĞ ƐĐĂůĞ ůĂďŽƌĂƚŽƌLJ ŽƉĞƌĂƚĞƐ͘ WŚŽƚŽ ĐŽƵƌƚĞƐLJ /ŶƚĞƌŶĂƟŽŶĂů ^ <ŶŽǁůĞĚŐĞ ĞŶƚƌĞ Sinopec has the size to do almost everything involved in the CO2 chain internally, he noted. So how does all this benefit Saskatchewan? If

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Shand Power Station could be substantially cheaper. “The cost savings are dramatic,” Monea said of the proposed secondgeneration CCS at Shand. “What happens if we get 100 plants?” And this is where the sharing of knowledge benefits all. “When they build a big capture plant, they’ve got to do it right,” he said. China can gain from Saskatchewan’s experience.

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PIPELINE NEWS April 2019

A7

Williston Basin Conference to be reinvigorated this year, says Petroleum Technology Research Centre president By Brian Zinchuk Regina – Dan MacLean was just a few days into his new job as president and CEO of the Petroleum Technology Research Centre (PTRC) when he attended the 2017 Williston Basin Petroleum Conference in Regina, put on by that organization. The former CEO of Tundra Oil and Gas, Manitoba’s largest oil producer, was somewhat disappointed, and small wonder why. The show took place when the oilpatch was several years into a harsh downturn, and there was little light on the horizon at the time. Pipeline News was reporting around that time how the mood of the industry was near its lowest point. The following year, MacLean attended the Williston Basin Petroleum Conference (WBPC) in Bismarck, N.D., and was impressed with the vibrancy and energy he saw there. That was an energy he wanted to bring back, and in 2019, his mission is to reinvigorate the conference in Saskatchewan. It will be held in Regina at the Delta Hotels Marriott on May 28-29. The speakers include Premier Scott Moe at a VIP dinner the night before the main event. During the conference speakers and panelists will include former Premier Brad Wall, Petroleum Services Association of Canada president Gary Mar, former Manitoba Premier and Canada’s former ambassador the to the United States Gary Doer, Allan Fogwell of the Canadian Energy Research Institute, Martha Hall Findlay of the Canada West Foundation, Craig Lothian of Keystone Group, among many others. The main conference reception on the night of May 28th, in addition to food and entertainment at the Regina Casino Show Lounge, will feature a silent auction to raise funds for STARS air ambulance Mike Marsh, president and CEO of SaskPower will talk about the changing energy mix for Saskatchewan. Ken From, president and CEO of SaskEnergy will talk about natural gas issues. There will be a panel on investment, and two panels on technology. “The people we are targeting to come to this are business leaders,� Mac-

Lean said. “The industry has changed dramatically. The issues and concerns from ten years ago are not going to be the same issues and concerns for the next ten years. The emphasis on things is going to amplify environmentally related issues. The regulations the industry is going to be operating under are going to tighten up and be more intrusive. They’re going to be more expensive. They’re going to be technically challenging to implement. And these are things around emissions management, be it surface or air emissions. Methane regs, emissions from single well batteries, reportable spills, all those things, they’re going to tighten up, and that’s going to be a challenge from an operating perspective. “Saskatchewan is, from the oil and gas perspective, a very good place to invest,� he said, noting an Oilweek report from 2017 that said 10 of the top 25 oil producing companies in Canada operate in Saskatchewan, and 11 of the top 25 companies on a netback-basis are Saskatchewan companies. “It means you get a better netback from your production, here in Saskatchewan, than you would in Alberta or other jurisdictions. This is a really good place,� MacLean said. He added Saskatchewan has quicker turnarounds for well licensing, supportive fiscal terms and good infrastructure. A significant portion of our oil production is light oil, it’s not subject to the same differentials that heavy oil has seen of late. “Saskatchewan produces about 485,000 barrels of oil a day. Of that, Husky produces 100,000, and Crescent Point produces 100,000. Fortythree per cent of our production comes two companies. The top 20 producing companies in Saskatchewan produce 90 per cent of the oil. There are about 185 oil producing companies. That means there are 165 companies producing that last 10 per cent.� In North Dakota, MacLean said, “I was inspired by the Bismarck conference. You had the governor stand up and say, ‘You know what, the oil and gas industry is good for the state of North Dakota. We’re at 1.2 million barrels a day, we’re going to two million barrels of oil a day, and we’re going

In 2017, then-Energy and Resources Minister ĆľĆ?Ć&#x;Ĺś ƾŜÄ?Ä‚Ĺś addressed the Williston Basin Petroleum Conference. File photo to do it with CO2-EOR. And I envision that in the near future we’re going to be a net-importer of CO2.’ “And then the Secretary of the Interior stood up and said, ‘You know what? The oil and gas industry is good for North Dakota and it’s good for the country as a whole.’ “I’m listening to this message. They have a supportive tax environment, 45Q, that will give tax incentives to companies that go to CO2 storage or EOR. All of these things are supporting that industry. They have removed barriers for approvals for flowlines and pipelines. They had just started up six new gas plants. And I’m sitting there going, wow, okay, we need a positive message for our industry here, in Saskatchewan and in Canada, so I took that as kind of marching orders to do something more for our industry.â€? Reflecting on the previous Regina WBPC, he felt something’s got to change from the conference perspective but also the overall message of the

industry. “I’ve basically revamped it. And I did it, not from a home-grown perspective, I’ve hired a professional conference planning company, EventWorx, to help,� MacLean said. In the past the Regina version of the conference has largely been planned by the team of geologists within the Saskatchewan Geologic Survey, stemming from the conference’s roots as a geology conference, with the PTRC assisting them. “PTRC actually owns the conference, which has been established as a notfor-profit� he said. With the ongoing support of the Saskatchewan Geological Survey,

he said they are changing it up. Whereas before WBPC focused almost exclusively on the Williston Basin, which includes most of North Dakota, the southwest corner of Manitoba and the southeast corner of Saskatchewan, and an occasional presentation representing other areas of the province, now the conference will become provincewide in scope. “Our conference this year is not limited to the Williston Basin. We have opened it up to the three pillars of the research that PTRC is involved in. So you will see papers on heavy oil. You will see papers on tight and light oil, and you will see papers on CO2, enhanced oil recov-

ery and CO2 sequestration, and a bunch of other stuff,â€? MacLean said. “Let’s show people what we’re doing here,â€? he said. One of the recent taglines for the Bismarck edition of the conference was “Bakken Now.â€? MacLean said, “Well, I liked that, so I borrowed it. The tagline for us is ‘Saskatchewan Now.’ This is going to be about doing business in Saskatchewan. The proxy is the oil and gas industry. I want to show people, through the lens of the oil and gas industry, this is a great place to do business. You’ve got all those things – a supportive government, fiscal terms, the infrastructure, Ĺš 3DJH $

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A8

PIPELINE NEWS April 2019

Sask. budget based on US$59.75 WTI oil By Brian Zinchuk Regina – The Saskatchewan budget isn’t betting on an improvement in oil prices for this year. In its key assumptions, the March 20 budget projects the benchmark West Texas Intermediate (WTI) oil price at US$59.75 per barrel, with total oil and natural gas royalties at $691.1 million. Potash is pegged at US$221 per

KCL tonne with total potash royalties of $618,6 million. The exchange rate is set at 77.19 U.S. cents to the Canadian dollar. On March 20, Daily Oil Bulletin reported a WTI price for April at US$59.03 per barrel for April, US$59.29 for May, US$59.58 for June and US$59.88 for July contracts. A year ago, that same contract was going for US$62.06 per barrel. The light to heavy oil

differential, as a percentage of WTI, is set at 24.8 per cent. The wellhead oil price is set at C$55.46, with oil production forecast at 173.1 million barrels for 2019-2020. That wellhead price is based on an average price per barrel of Saskatchewan light, medium and heavy oil. Each US$1 change in the price of oil has a C$15 million impact on revenue. Every cent change in

the dollar exchange rate will have a C$28 million difference. “Real GDP is expected to grow by 1.2 per cent in 2019 and 2.4 per cent in 2020, or 3.6 per cent over the next two years, which aligns closely with an average of private sector forecast of 3.5 per cent GDP growth for the two years combined,� stated the budget document. The government is forecasting a 5.5 per cent

increase in revenue this year, an increase of $782 million. That equates to a $15.03 billion in revenue and $14.99 billion in expenses. Expenses are expected to go up 2.6 per cent, or $382 million. A hint of where some of that that additional revenue is coming from was noted in the secondlast paragraph of the government’s press release, which stated, “The base

payment component of the Potash Production Tax is intended to provide a simple flat payment per tonne of potash sales,â€? Finance Minister Donna Harpauer said. â€œHowever, it has gradually been eroded by currently allowable deductions. To address this, effective April 1, the calculation of the Potash Production Tax will be simplified by eliminating these deductions.â€?

Focus on all of Saskatchewan, not just Williston Basin Ĺť 3DJH $ and the technical skillsets here. All of these things align themselves to say, ‘You know what? Everything you need is here.’â€? He noted that real estate and labour costs are also affordable in Saskatchewan. MacLean pointed out that lithium is a byproduct of oil produced water, and there will be a presentation on that. Helium is another area that will be discussed. The tradeshow over the last decade grew from a small one to a large one, but has shrunken substantially since the downturn hit. So that’s another area that’s getting a shakeup.

“What are the technologies we should be investing in over the next 10 to 20 years to be successful in this industry? Pumps? Valves and things, yes, they’re important. But we’ll let Lloydminster and Weyburn trade shows show those things off,� he said. “What do we want to showcase here? The latest and greatest in new technologies – AI – I’ve asked to have a bunch of artificial intelligence people like IBM. Those folks need to be there. What kind of blockchain, big-data technologies should the oil industry be looking at to automate and improve their processes and drive their costs

down, to make them more efficient? Those are the things I want to see. Pipeline integrity, flowline integrity.� He added, “I’ve got Chris Bloomer, who is the president of the pipeline association, he’s on one of our panels. We’re going to talk about that. We’re going to talk about reducing surface footprint and our freshwater usage. Those are the types of technologies I want to see. I don’t want to see a pump. I don’t want to see a compressor,� MacLean said. As for panelists and speakers, he said there will be government people and c-suite people. “I’ve got investors who will talk

about doing business here.� MacLean spoke of how in the last 20 years the United States has gone from 4 million barrels per day of oil production to 12 million. “They are producing more than Saudi Arabia and more than the former Soviet Union. And here we are. What’s different? The price is the same. It’s the restrictions associated with our federal and some provincial governments that are holding us back. We produced 4.2 million barrels per day in 2017, we’ll be lucky to do that today. We’ve flattened out. What’s wrong with this picture? “Am I getting you excited?� he said.

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PIPELINE NEWS April 2019

A9

New CT scanner opens up a new realm of core analysis in Saskatchewan By Brian Zinchuk Regina – One of the most significant new diagnostic tools in oilpatch research and development is a new computerized tomography (CT) scanner put in place at the Saskatchewan Research Council (SRC) facilities in Regina. The Petroleum Technology Research Centre (PTRC) provided much of the funding for the CT scanner, and SRC is the organization employing it. “The acquisition of this unit was a joint collaboration between Western Economic Diversification Canada, SRC, PTRC, and the University of Regina. All of those parties put funds into it,” said Mike Crabtree, Saskatchewan Research Council’s vice president for their energy division. “When we’re looking at enhanced oil recovery, whether its bitumen or in the Bakken, what the CT scanner allows us to do is look inside the rock at very, very high resolution, and understand what is actually going on during these processes,” he added. An operator might cut a four-inch core several metres long. “We would take a section of that core and inject some water and surfactant. Before the CT scanner, we would inject at one end, and see what comes out at the other end. And we might tap the core along the top for pressure, but you would characterize the performance of it by looking at what goes in and what comes out, and maybe when you’re finished, you might excavate the core, to have a look inside to see what changes may have occurred.” “What the CT scanner allows us to do is visualize the rock and the fluid as it is moving through the core. We can see things like how is the actual water and surfactant interacting with the oil at various points in

the core. Is there any fingering? How that fingering works? We can then look at different temperatures and pressures and how that performs in realtime. It’s a really big step forward. It’s the only one of its type used in this application in Canada. There’s only two or three machines of this power and scale in Canada, and probably only about a half dozen across all of North America. We’re only one of two used in this area.” “It will be very important in looking at postCHOPS technologies.” Dr. Peng (“Mars”) Luo is a professional engineer with the SRC. He is the lead of four people who operate the CT scanner. He works on the reconstruction and image analysis. The $1.6 million scanner is a large metal box, which encloses the apparatus with thick walls. There’s a heavy, shielded door on one side. At the end are the multiple screens for the computer controls. Luo explained that other labs have medical CT scanners. They are fast, but have coarse resolution. This one is industrial-grade. “The advantage of this is higher penetration, because it has much higher energy than a medical scanner. So, it can penetrate steel,” he said. Inside the box is a rotating stage which can be positioned and rotated as needed. The scanner has two X-ray tubes, one 225 kilovolt (kV) micro-focus tube with higher resolution and less penetration power, and the other 450 kV mini-focus tube with lower resolution and more penetration power. The tube with a matching detector on the opposite side can move up and down for scanning long objects. In a medical scanner, the object (usually a person) is stationary and the X-ray tube rotates.

The large lead box behind the computers encloses the new industrial-grade CT scanner at the Saskatchewan Research Council. Dr. Peng (“Mars”) Luo is the lead operator of it. Photo by Brian Zinchuk This setup has a stationary tube and detector while the object rotates 360 degrees. The higher resolution tube can scan down

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PIPELINE NEWS April 2019

ϯ ƐĐĂŶƐ ƐŚŽǁ ƚŚĞ ŝŶŶĞƌ ŶĂƚƵƌĞ ŽĨ ƌŽĐŬ ĐŽƌĞ Ăƚ ŚŝŐŚ ƌĞƐŽůƵƟŽŶ Ż 3DJH $ One of the uses is creating a “digital rock” of the core. He pulled up an example of core from the Viking formation in west central Saskatchewan. At a resolution of 40 micrometres, it was possible to see the natural fractures within the core, as well as tell the clays from the sandy zones. The darker the colour in the image, the lower the density. “This is the way we determine the mineralogy of the rock, as well as the

porosity and fractures of the rock,” Luo said. Looking at core under a microscope or scanning electron microscope (SEM) allows essentially only two dimensions of analysis. These CT scans allow a third dimension of the entire core. “Once we scan this core plug, I can slice this core plug from any angle I like at resolution of scores of micrometres.” Another Viking core showed horizontal fractures. “You can see lamina-

tions and sedimentations this way,” he said, showing the horizontal plane. They are able to work with core plugs and fullsized 3.5-inch core. A synthetic diamond that was 850 microns in size was scanned at a six micron resolution. A scanning electron microscope can get much higher resolution, but can only see the surface. Core plugs of 1.5-inch diameter are usually scanned at a 30 to 40 micron resolution. “To petroleum en-

While most of the usage of the CT scanner is for geomaterial, like the core plug held by Dr. Peng (“Mars”) Luo͕ ŝƚ ĐĂŶ ĂůƐŽ ďĞ ƵƐĞĚ ĨŽƌ ŵĂŶƵĨĂĐƚƵƌŝŶŐ ĂŶĂůLJƐŝƐ ĂƉƉůŝĐĂƟŽŶƐ͘

gineers, the things they want to know first are the rock structures and mineralogies. You can know the distribution or proportions of different minerals like quartz or clays, which are very important from the production process,” Luo said. “The second important thing for petroleum engineers is you are able to determine the fluid distribution within the pore space, with some manipulation in image analysis,” he said.

If you did a core flood, you can see what is happening within the core without opening it up. They acquired an aluminum core holder that can conduct a coreflood at reservoir conditions and can scan on the go. In addition to reservoir cores, other items such as metal tools, diamonds, fossils and potash have been scanned. Around 60 to 70 per cent of the scanner time is dedicated to reservoir rocks. After almost a year

of technique development and optimization, SRC has recently released a price list for its usage, as they are now ready for commercial operation. While geomaterial is a key focus, the CT scanner is not limited to that. It is a non-destructive testing technique and therefore can be used for many areas such as defect analysis or weld scans and manufacturing. SRC intends on offering this service to various Saskatchewan manufacturers.

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PIPELINE NEWS April 2019

A11

Always trying out new ideas to develop our petroleum resource: PTRC president and CEO Dan MacLean By Brian Zinchuk Regina – The key organization that backs much of the petroleum research in this province is the aptly-named Petroleum Technology Research Centre, located in Innovation Place on the University of Regina campus. The PTRC has been working in close contact with the Saskatchewan Research Council, University of Regina, and numerous other agencies for over two decades now. The PTRC was founded with one principle motivation – to find ways to get more oil out of Saskatchewan large, but challenging, original oil in place. Dan MacLean took over as the president and CEO of the PTRC two years ago. Asked on Feb. 28 where are we right now, and were do we need to go, MacLean said, “Saskatchewan is the leader in research in CO2 sequestration into deep saline reservoirs.” In the last week of February and first week of March, three Chinese delegations came together to visit Saskatchewan and learn about the implementation of CO2 for enhanced oil recovery. The PTRC was part of a reception by the University of Regina for that mission, and also offered workshops on its areas of expertise, in coor-

dination with the Reginabased International Carbon Capture and Storage Knowledge Centre. The bulk of the Chinese contingent came from Sinopec, one of China’s major nationally-owned oil companies. “Sinopec is here to talk about that. They’re working closely with the University of Regina and the Knowledge Centre. We’re providing color, in particular, on Aquistore. The Knowledge Centre’s mandate is to share the CCUS (carbon capture utilization and storage) message around the world. Primarily, they seem to be focusing on the Chinese. They’ve had numerous conversations with them over the years, and it’s a natural extension for them to come here,” MacLean said. Asked if China could, in the upcoming years, use CO2 for enhanced oil recovery like southeast Saskatchewan has, he responded, “There’s a continuum of work being done on two fronts – on the carbon capture side of it, and, on a broader side, what do you do with the CO2? The natural thing, the thing historically we’ve done with CO2, is to try to use it to improve oil recovery. Weyburn is the example here. We’ve been doing it for 20 years, injecting CO2, storing it – it is a sequestra-

tion mechanism – and one of the byproducts happens to be you improve oil and gas recovery from it. “The second thing is Aquistore. If you can’t use it in an EOR (enhanced oil recovery) scheme, then you store it. You put it away. It’s not really storage. It’s disposal. Aquistore, in particular, you’re putting it into a saline reservoir. If you were to turn that around and try to re-produce it out of the saline formation, you probably wouldn’t be able to. It’s locked into the rock. “But what else can you do with CO2? That’s where we’re going with this. I’ve talked to PTAC – the Petroleum Technology Alliance of Canada – they’re located in Alberta, they’re the equivalent of us.” MacLean said he regularly confers with the president of PTAC to ensure they’re not duplicating efforts. “If there’s something happening in Alberta, let’s try it here. I’m not married to a madein-Saskatchewan solution, if there’s an opportunity to apply a technology that we can use to apply here to improve oil and gas recovery.” Recent conversations have included converting CO2 into other products like methanol. In British Columbia, the Gates Foundation and Canadian Natural Resources Lim-

Using the synchrotron to analyze foamy heavy oil By Brian Zinchuk Regina – When the Canadian Light Source, or “synchrotron” opened at the University of Saskatchewan in 2004, it was hailed as having applications across a wide range of scientific endeavours. One of those current endeavours is being used for oil recovery, by way of foamy oil.

The Petroleum Technology Research Centre (PTRC), based in Regina, is involved in the project. “The project is a collaboration of the Canadian Light Source in Saskatoon, us, and a researcher in Calgary, Dr. Ian Gates,” said Erik Nickel, director of operations with the PTRC. He spoke to Pipeline News

on Feb. 8. If you’ve heard that name before, it’s because Gates is the engineering professor who came up with the idea for shipping bitumen in solid form. “He came to us with the idea of doing a very basic investigation of foamy oil and how it forms. And Ź 3DJH $

ited are working on other applications for CO2, he noted. “There’s no reason we couldn’t look at that sort of stuff here.” Beyond CO2 “We sit on 56 billion of barrels of oil in this province. Under current recovery mechanisms, we may only get 10 to 12 per cent of that out of the ground. So there’s this huge target, sitting out there. On the heavy oil side, with our industry partners we’re working with, they’re saying there’s probably a billion barrels of incremental oil that could be unlocked using technologies PTRC, with their support, are looking at. We’re looking at various types of vapour and solvent injection into our cold flow production here. “So what’s the next big thing in that? That’s what we’re trying to find out. Our challenge here is you do these things in the lab, but you can’t just do one

or two. You’ve got to do a lot of them. This is almost classic oilfield exploration, but it’s exploring for new recovery mechanisms. In the exploration world, a one-in-ten risk is kinda normal, so I’m looking at that for us, one-in-ten. So every year, we fund up to about ten projects, between the U of R, and SRC, and our industry partners in the Heavy Oil Research Network (HORNET). We’d like to hope that one out of ten of those projects could be applied in the field. So you do the bench analysis here, you identify the one or two that might work, and get industry partners to use one or two of their wells to try it out in the field. “And that’s another story. It still might not work in the field. But it’s all about building confidence, so that one-in-ten in the lab, okay, I’ve got confidence. Then you put that

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one project in the field, and still those field results don’t look right. Reality in the field versus the lab just don’t line up. So you do another one, and another one, and this is a continuum. We do this every year. There’s ten more funded projects, and then ten more, and then ten more, and then ten more, with the hope that one or two along the line are going to click and we’ll pull the trigger on something really important.” A few years ago, one project involved trying to send tiny sensors between wells via the wormholes (void spaces) that are characteristic of heavy oil fields. But that project’s initial promise proved not to garner results in the field, and is now dead. This is the way bench scale moves to the field – hit and miss – and PTRC along with its researchers at different organizations keep working on other ideas.

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A12

PIPELINE NEWS April 2019

The Canadian Light Source, or “synchrotron,” is located at the University of Saskatchewan in Saskatoon. Photo courtesy Canadian Light Source

Canadian Light Source analyzing foamy oil Ż 3DJH $ what is foamy oil? Foamy oil is the result of the degassing of a heavy oil reservoir during production. Imagine if you have bottle of pop that you pop the lid off and it foams a bit. Now imagine if that bottle of pop was instead a bottle

of carbonated maple syrup, and what would that look like? It would be much slower and have this shaving cream effect coming out the top. That’s essentially what a lot of the heavy oil production in the Lloydminster area is like. “Wherever there is

cold production, not in the SAGD areas, and where the reservoirs are a little bit thinner, what they try to rely on, to a large degree, is foamy oil. Why we like foamy oil and why it helps in production is there is an increase in volume and an increase in pressure. If

you can maintain this foamy oil coming out of the well, you get a larger recovery factor from the reservoir.” “Eventually the gas drive gives out and you’re trying to suck out ‘flat pop.’ You try to maintain foamy oil as long as you can, or regenerate foamy

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oil by the injection of gasses of various mixtures,” Nickel said. “What this research was designed to do was to very fundamentally look at the nature of how foamy oil generates itself at the very start of production, because no small part of this is how it also pulls sand out of the reservoir. Foamy oil is what mobilizes sand. The way these bubbles start to form, under what pressure regime, and how they start to go away is something that was previously unknown. “Ian Gates’ idea was to essentially have a pressurized physical reservoir model. Essentially this is a vessel full of sand, pressurized with heavy oil and methane under reservoir conditions, then depressurized, and look at it under a CT scanner at various stages in the progression of the bubbles,” he added. About the time the PTRC received Gates’ proposal, the Canadian Light Source (CLS) contacted the PTRC with information about its biomedical imaging beamline. Instead of a series of pictures with a CT scan, the synchrotron can basically create a movie of the formation of foamy oil in the reservoir. “What we were able to do is put together a project with the University of Calgary and CLS, funded by Innovation Saskatchewan.” “We’re looking at foamy oil formation not only in real-time, but microscopically. So we’re seeing where and how a bubble nucleates in relation to a grain of sand. And then, from there, how that bubbles progress to coalescing into bigger bubbles into what we know as foam,” Nickel explained. The initial tests looked at what rates are best to depressurize a reservoir to maintain the foamy oil as long as possible. Further work on this will look at differ-

ent mixtures of solvents that could potentially be re-injected to regenerate foamy oil, and the consequent production. Carbon dioxide, methane and propane in various blends are being worked with. The way these solvents work with heavy oil is a large part of the PTRC’s other research projects. “Looking at it in this microscopic, realtime way with this X-ray invisible core holder is really novel,” Nickel said. This is one of the Canadian Light Source’s first forays into working with oil and gas, he noted. Two tests had taken place in the summer of 2018. The first involved glass beads and a glycerin-like substance to approximate heavy oil, as it took some time to get approvals to use actual methane-charged heavy oil. The second test was with real methane and heavy oil in a sandpack. An eventual goal will be to use real core in a subsequent test. The funding for the project came from HORNET, the Heavy Oil Research Network, and was topped up with additional funds from Innovation Saskatchewan So what did PTRC find out so far? “The way the bubbles coalesced happened in an unexpected way,” Nickel said. “The researchers were quite excited about it. It allowed them to form a kinetic model. Now they can apply it to a reservoir simulator. That’s where the real reservoir rocks come in, in a computer sense, and a computer is used to model the optimal rate to depressurize a heavy oil field.” Commercialization of this knowledge would come from presenting this to the heavy oil producers in the area, most of which are members of the Heavy Oil Research Network (HORNET). It will be up to those companies to decide when and how to implement these findings into the field.

PIPELINE NEWS April 2019

A13

What’s the future of CO2-EOR?

By Brian Zinchuk Regina – At times, it has looked like Saskatchewan’s leading stance in the geologic storage of carbon dioxide, as well as its implementation in enhanced oil recovery (EOR), wasn’t gaining much traction worldwide. But that may be changing. In late February-early March, Sinopec, one of China’s national oil companies, sent a large delegation to Saskatchewan for two weeks to learn about what we are doing here (see related story Page A2). But south of border, there may be some impetus to pursue this strategy as well. And if similar strategies were adopted here, it could have impacts in southeast Saskatchewan. Erik Nickel and Norm Sacuta of the Petroleum Technology Research Centre (PTRC) in Regina spoke to Pipeline News on Feb. 8. Sacuta, who handles communications with the PTRC, noted that recent changes in American law, specifically one called 45Q, are having significant implications south of the border. Those changes, brought in under President Donald Trump’s major tax reform, involve credits of $30 per tonne for carbon dioxide used in enhanced oil recovery. As such, there’s a new term being used these days. Carbon capture and storage (CCS) is now being referred to in some circles as carbon capture, utilization and storage (CCUS). Those tax changes may have profound impact on the viability of using carbon dioxide in EOR schemes, and could revive projects that have stalled.

Erik Nickel has been working with CO2 for two decades. Photo by Brian Zinchuk So what’s the future of CO2-EOR? “The future is very much up to government and government policy,” said Erik Nickel, director of operations, with the Regina-based Petroleum Technology Research Centre. He’s been working with CO2 since 1999, when he worked on characterizing the Weyburn Unit. He did his masters degree on it. “If CO2 is deemed an effective mitigation strategy for greenhouse gases, the sky’s the limit. Personally, from a research standpoint, I think we’ve done a lot of work to prove that it is a viable mitigation technique. What we are looking for is uptake from governments to put in place things like 45Q or other incentives to utilize CO2.” If something like 45Q was implemented in Canada, Nickel thinks we could see the implantation of CCS on the Shand Power Station and other coalfired power plants, and the building of a CO2 trunk line throughout southeast Saskatchewan, with a ramp-up of CO2 injection in a lot of the Mississippian oilfields in the region. “As it stands, Weyburn has proven it is an effective technique, not only for

EOR, but for mitigation,” he said. Much of those Mississippian oilfields can literally be seen from the top of the Shand smokestack, that’s how close they are to the potential CO2 source. Nickel, who is a professional geologist by trade, said that the Steelman field is an obvious candidate, but it could be used along that trend into the Pinto field. The Bakken, with known low recovery rates, could also potentially benefit. Waterflood and methane re-injections are being used in the Bakken. Based on preliminary studies, CO2 looks promising. As a producing field, Nickel noted, “The Bakken didn’t even exist when Weyburn was first coming online in 2000. Nobody was talking about the Bakken at that time. “What can’t be understated is the amount of preparation it would take. It’s not like you could take CO2 out of Shand and then boom! There’s pipelines and boom! Everybody’s using it. There’s a lead time. What these companies have to do to de-risk it is pilot studies, to ensure the CO2 will work. They’re not going to spend $2 billion on something that will probably work. They’ve got to know that it’s going to work. “What the PTRC can do is help them de-risk those assets, with planning and pilot studies. “It’s not something that would happen overnight, but when we look back 20 years from now, it could be huge,” Nickel said. At the 2018 Williston Basin Conference, North Dakota’s governor boldly predicted that his state would reach 2 million barrels per day of oil produc-

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tion, up from the 1.2 million bpd at the time (a year later, the state has now reached 1.4 million bpd). He said they would reach 2 million bpd that by utilizing every CO2 source possible from lignite coal production in the state, and North Dakota could even become a CO2 importer. Nickel said, “Once they start having to write the cheques to put the capture on these plants, that’s where the rubber meets the road.

Saskatchewan is one of the few jurisdictions that had the guts to actually do it. To me, that’s incredibly impressive that we were able to complete this. Of course, there’s going to be controversy and naysayers over what is one of the first of its kind in the world – a lignite coal plant with post-combustion capture. They just don’t exist. If it was to happen on Shand, we could very well see a CO2 economy in Saskatchewan develop. Not

overnight, but whereby CO2 is priced at a rate where oil production makes sense and mutually beneficial.” He noted that coal, in Saskatchewan, is very low cost, and while natural gas may be cheap right now, it may not always be that way. “I think we have a really ideal setup, in southeast Saskatchewan, where we can build this out as an example of larger scale CCS,” Nickel said.

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PIPELINE NEWS April 2019

Break it early: fast-to-fail is important in research and development By Brian Zinchuk Saskatoon – When developing a new concept or process, finding its flaws sooner than later is a key concept, and one that the Saskatchewan Research Council (SRC) takes to heart. Mike Crabtree is the Saskatchewan Research Council’s vice president for their energy division. He’s based in Saskatoon. He spoke to Pipeline News on Jan. 15 about the organization’s broad efforts. “SRC has a number of industrial divisions that represent, reflect and match the resource industries of Saskatchewan. So we have a mining and minerals division that looks at everything from potash through uranium, diamonds, gold and rare earths, looking at research and development and commercialization in those areas, working with the major mining companies in Saskatchewan and beyond. “We have an environmental and ag-bio division that looks at everything from air quality monitoring, right through to plant genomics. “Then we have my division, the energy division, and our responsibilities look at everything from bitumen to Bakken. We look at bitumen enhanced oil recovery, looking at new SAGD (steam assisted gravity

drainage) techniques right through to looking at light and tight shale gas and shale oil. Alberta and Saskatchewan have those full range of products. “The Saskatchewan Research Council, as the name implies, is heavily focused on Saskatchewan, but we have clients across Canada. We have many of clients across Canada, and some 1,500 clients across the world,” Crabtree said. “We’re an international research and development and commercialization facility.” They have annual revenue in the range of $70 to $80 million and have in the region of about 360 employees. “The majority of those employees are scientists, engineers and technicians, so we’ve very heavily technically focused,” he said. There are about 40 people in the energy division, largely based in Regina, “We work on enhanced oil recovery, from light oil to bitumen, everything from sub-surface enhanced oil recovery through completion issues to surface production problems,” he said. They also have a pipe flow unit in Saskatoon, which has pipe test loops ranging from 1 inch to 20 inches in pipe diameter, capable of testing pipeline flow regimes at real commercial scale. “We work in some cases, on joint industry projects with a number of opera-

tors, funded sometimes by government, both federally and provincially. Common issues are around the development of new EOR techniques, through to new pipeline technologies and testing them, right through to highly-confidential bilateral work with oil and gas operators,” Crabtree said. In Regina they have numerous laboratories and testing apparatus. One is a large-scale three-dimensional reservoir testing simulator, the TSVX. It looks something like a giant R2D2. “A lot of organizations, public and private, focus on small-scale experiments, maybe one-inch diameter and maybe a foot long. We do that work, absolutely, but can scale up to those very large vessels. “For example, a core flood an inch in diameter and 12 inches long is a million times in scale away from a small reservoir. By the time we get to the large simulator, we’re 1,000 times away from the reservoir. So that scale-up is a lot of derisking and comfort for the operators. If they test a new process, at that scale, they’ve got a lot more comfort that it’s going to be able to work at field scale. So that’s a lot of our work, in the scale-up of technologies,” Crabtree said. Developing “early stage” ideas into proof of

concepts that are actually going to work is key. The technology readiness level (TRL) scale describes where a technology is between its concept and its readiness for commercialization. Crabtree said, “TRL 1 is where somebody’s come up with a concept. They’ve done perhaps an engineering study and they say if we put this together with this, under these conditions, it could significantly improve the process. But it’s totally unproven. It’s a concept. “And you move through a quite-rigorous testing and validation regime, when you get toward TRL 8 and 9, where it’s piloted and ready for commercial uptake. What we do, as a research and development laboratory, is work with our clients to take it through that technology readiness scale.” He went on, “The other thing we work on is stagegated fast-to-fail. “If you’re going to fail with this concept, you want to fail fast, and you want to fail early. Why? Because that’s going to cost you the least amount of money to get to that important information that it’s not going to work. Also, it often allows you to cycle back and improve the failure mechanism at an early stage. It also keeps the cost down.” As an example, two years of early testing might

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PIPELINE NEWS April 2019

A15

Current projects for the Saskatchewan Research Council By Brian Zinchuk Saskatoon – In subsurface enhanced oil recovery, the big headline themes at the moment are reduction of energy, reduction of water use, and the reduction of CO2 emissions from these processes, according to Mike Crabtree, vice president of the energy division at the Saskatchewan Research Council (SRC). “We probably have about three or four projects on the go at the moment, major projects at a significant technology readiness level, for a number of operators,� he said. A number of those look at water, energy and CO2. Referring to SAGD (steam assisted gravity drainage) he said, “When you look at energy reduction, you are de facto looking at less CO2 emissions. “Water use is often linked to energy as well, because what you basically do in SAGD is boil the water, send the steam downhole, and then the steam reduces the viscosity of the oil and you pump it to the surface. So, if you have processes that use less water, then typically you’re using less energy to

boil that water. The three are linked.� He noted that Husky has taken a process designed and commercialized for bitumen and applied it very successfully to heavy oil. The fundamental difference is viscosity – bitumen is like boot polish, while heavy oil is like maple syrup to molasses. There are about 26 billion barrels of original heavy oil in place in the Lloydminster-Kindersley arch, he noted, of which we will only recover three billion barrels before the cold heavy oil production with sand (CHOPS) process is exhausted. CHOPS can recover about seven per cent of the original oil in place, leaving 93 per cent in the ground. “It’s one of our core themes – how do we address post-CHOPS enhanced oil recovery. We’ve got major programs underway to address that, both in terms of modelling what the needs are of these types of reservoirs, to get them productive, and also identifying and working with technology companies who are coming up with technologies that can address that,� he said.

CHOPS, which uses progressing cavity pumps, improved the recovery factor from two-three per cent to that seven per cent range mentioned above. CHOPS had been the primary method of developing new wells in the Lloydminster region, but in recent years, very few CHOPS wells have been drilled, and most new production in the region is coming from thermal projects. CHOPS wells tend to water out quickly for a number of reasons. The production of sand which results in the formation of wormholes, which acts as “super perforations� around the well. The problem is that when wormholes hit a water source, they will rapidly water out that well. It can happen as quickly as 36 hours. Additionally, the areas around the wells that don’t see wormholes develop end up leaving large “pizza slices� with the original oil still in place. “The challenge is, how do we address those pizza slices?� Crabtree said. “How do we either mitigate wormholes in post-CHOPS recovery, or how do we actually use those wormholes to

more effectively produce oil that is stranded around these wellbores? “That’s probably the biggest challenge we at the Saskatchewan Research Council energy division have. It’s a very significant amount of our focus, both in terms of research and development, and in terms of identification of technologies we can commercialize rapidly in that space.� A good CHOPS well will produce a sand cut around 25 per cent, but that also comes back to bite you in using that well for enhanced oil recovery. Those wormholes can extend 150 metres beyond the well, and bypass large areas. SAGD For operators in Alberta, hybrid SAGD technologies replaces or augments steam with chemical surfactants or solvents, which reduces energy and water utilization. Some of these technologies being developed by SRC and others are reducing the steam:oil ratio below one. “The classic reasonable performance of a SAGD well might have a steam:oil ratio of 2.5 to 3.5,� he said.

“The new technologies being developed now, which will come into the market in the next few years, will have a steam:oil ratio of below one. That’s going to be very important for the industry in terms of cost efficiency and carbon efficiency as well.� While water itself may be inexpensive, by the time you’ve processed it, converted it into steam and pumped it downhole, it’s a hugely expensive process. Reducing or eliminating it can save lots of money. “The vast majority of the capital and operating costs of a SAGD plant are around the preparation and heating of water to steam,� Crabtree said. Greenhouse gases There are a lot of dynamics in play with CO2, including federally-mandated greenhouse gas emissions reductions. Provinces are developing their own equivalency regulations, and they come into force at the beginning of next year. It ranged right across from bitumen to Bakken, he noted. SRC has created a business line called CEDER, the Centre for Demonstration

>Ĺ?Ĺ?Śƚ ĂŜĚ Ć&#x;Ĺ?Śƚ Ĺ˝Ĺ?ĹŻ ĞŜŚĂŜÄ?ĞĚ Ĺ˝Ĺ?ĹŻ ĆŒÄžÄ?Ĺ˝Ç€ÄžĆŒÇ‡ By Brian Zinchuk Regina – While much of the Saskatchewan Research Council’s (SRC) efforts have been on enhanced oil recovery (EOR) of heavy oil, they also do work in “light and tightâ€? oil. Petro Nakutnyy is a

business unit manager with SRC focusing on enhanced oil recovery. He spoke to Pipeline News on Feb. 7. With regards to light and tight, Nakutnyy said there had been a consortium for Bakken research, but consolidation of Bakken operators has resulted

in its demise. “We do have a Viking consortium that is going quite well,� Nakutnyy said. “The Viking formation is shallow, it’s cheap to drill. The oil is light and nice, and the formation has fairly high permeability, as light and tight reservoirs

go. It’s 1 to 2 millidarcies, which is quite a bit higher than Bakken. So, there’s a lot we can do there. It’s not as big in terms of oil in place, but it’s very prolific.� “It has a very high clay content, and a high decline rate. After one or two years of production, your well

reduces to 10 per cent of initial production rate. You have to keep on drilling to maintain production. You can do infill, but there’s Ś 3DJH $

of Emissions Reduction. “We’ve built out a series of highly instrumented trailers which are designed to be able to go and test new methane abatement and measurement technologies in the operators’ fields, which is where we want these things tested.� This includes new types of flares or combustors, new types of ways of reducing methane emissions from tanks or completions. Testing and validating these technologies as quickly as possible is a big theme. Monitoring and mitigation are two aspects of this. Leak detection and repair is where the industry is focusing on first. The smartest thing is to repair leaks first, because it has an immediate impact. Then focusing on fugitive emissions that are not leaks. Tank emissions are not high, but there are thousands and thousands of tanks out there. “The challenge is to come up with technologies that can be applied to tanks that the unit cost is very low, to come up with something that can be put on the side of the tank, or inside it, that can mitigate those emissions that costs no more than $10,000.� Vapour recovery units cost much more than that, are not affordable to deploy on every single tank, he noted. “It’s an area of technology development that will become very important over the next few years,� Crabtree forecast.

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PIPELINE NEWS April 2019

Kerrobert, Dodsland and Elrose areas being studied Ż 3DJH $ only so many places to drill.” “You can also do waterflooding, and companies are currently doing waterflooding in the Viking. But there are problems. The Viking formation is tight, so it’s difficult to inject into. And it also has a very high clay content, 30 to 40 per cent clay, so you must be careful what type of water you inject. “We are in Phase 6 of our Viking program. It

started with looking into characterizing the reservoir and understanding it better. The Viking is very variable. You drill one well, and the well next to it can have very different properties,” Nakutnyy said. “There are a lot of internal faults in it. It’s a very complex formation.” “In order to for us to understand what’s next, after primary production, we need to know what the formation is, and characterize it.”

The Viking has been developed over many decades, but there are still things that are unknown. While core analysis is part of it, so is water analysis. If you inject certain water in one pool, it might be fine, but in another pool, it could have a negative interaction with clays. The area being looked at is Kerrobert, Dodsland and Elrose. It changes depending on who is involved, as membership in the con-

sortium has changed over the years as the operating companies have been bought and sold. “Waterflood is one thing. We still need to understand it. But we already have hundreds of data points. What we are also trying to understand is what’s next, because waterflood doesn’t take you past 20, 30 per cent (of the original oil in place). You still leave a lot behind. We’re looking at ways to enhance

waterflooding, be it salinity change, or the addition of surfactants. What about gas flooding? CO2 flooding? What about some thermal processes? It can have effects beyond viscosity,” Nakutnyy said. Kelly Knorr, operations manager with SRC’s energy division, said that enhanced oil recovery is not a quick way to save money or make additional revenues. “It’s a long-term investment,” Knorr said.

Petro Nakutnyy works on enhanced oil recovery with the Saskatchewan Research Council. Photo by Brian Zinchuk

ŐƌŝĐƵůƚƵƌĞ ƉƌŽĚƵĐĞƌƐ ŚĂǀĞ Ă ƐƚĂŬĞ ŝŶ ƚŚĞ ĮŐŚƚ ĂŐĂŝŶƐƚ ƚŚĞ carbon tax, too, and will rally in Regina April 4 Weyburn – The Regina Rally Against the Carbon Tax, and its associated convoy, might seem at first to be primarily an oilpatch concern. If you thought that, you would be wrong. Agriculture has a big concern when it comes to the carbon tax. Terry Benning of Weyburn took part in the recent convoy to Ottawa, where his semi was parked on Parliament Hill. Now, he’s one of the organizers for the April 4 Regina Rally Against the Carbon Tax. Benning said on March 21, “I’m an agricultural producer and I run a large family grain farm. I’m doing this because the carbon tax is just going to handcuff producers. As it goes up over time, it will add more and more

and more to our expense. You’ve got to stand up and do something about it. “I’ve got friends in the oilfield who are unemployed, whose families are interrupted, because of C-69 and C-48 bills. It’s total destruction.” Asked if farming is exempt from the carbon tax, Benning replied, “The fuel only. When we send a load of lentils to a processor, they’re going to give you less, because they have to ship it somewhere. The railway has to pay the carbon tax, so there will be more freight on the grain when you deliver it to the elevator. We don’t deliver all the products ourselves. So we’ll hire Grain Belt Transport, which is a friend of mine. And he has to charge us more, because he’s paying the carbon tax on the fuel.

“Everything that you do is going to be charged the carbon tax. The fuel is the small portion, on the farm, compared to everything else,” Benning said. Asked if there will be an impact on farm inputs, such as fertilizer, he said, “Sure it will, because they’re going to charge a carbon tax on the natural gas to build anhydrous ammonia which we used to build urea and liquid fertilizer. The freight to bring that fertilizer is going to be more. The freight to bring farm chemicals to your distributor is going to be more. Everything is going to go up all along the way.” On April 4, he said, “I’m going to be participating in the Rally in Regina. We’re probably going to send two or three trucks.”

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PIPELINE NEWS April 2019

The 60th Estevan OTS bonspiel was a hit with teams By David Willberg and Brian Zinchuk Estevan – The Estevan Oilfield Technical Society’s (OTS) 60th annual open bonspiel resulted in plenty of action at the Power Dodge Curling Centre. Twenty-four teams entered the bonspiel, which started Friday afternoon and ended Saturday evening. The Thirsty Bird Pumpjack Sales and Service rink, with skip Duane Lamontagne, third Ryan Hansen, second Lawrence Hansen and lead Jeremy

Carlson, won the A final, defeating Dart Services 6-3. After the game, Lamontagne said they were playing a really good team, but the Thirsty Bird rink was able to get a jump on Dart Services from the start, which played a key role in their victory.  “We were in trouble the one end, he picked a few points up on us. He made his draw to tie it up, but we managed to sneak one in there once in a while.� In the last end, they ran the Dart Services rink

Darrell Duce Ç Ä‚Ć? Ä?ĆľĆŒĹŻĹ?ĹśĹ? Ç Ĺ?ƚŚ EÄ‚ĹŻÄ?Ĺ˝ ŚĂžƉĹ?ŽŜ͘

out of rocks. The games at the bonspiel went six ends for the first time this year instead of the traditional eight, in an effort to attract more teams. Lamontagne pointed out the game with Dart Services was the first time Thirsty Bird went more than four ends during the bonspiel. “I’m an old-time curler, so I prefer eight ends of curling than six ends of curl-

ing,� said Lamontagne, who added that he’d be willing to play 10 ends if he could. In the B final, the Tarpon Energy rink, with skip Tyler Greenwald, third Jody Vatamaniuck, second Jason Clauson and lead Justin Pearce, defeated TSB; while in the C final, Nalco Champion, with skip Devon Fornwald, third Darryll Duce, second Tyler Forbin and lead Dave Dayman, defeated Mid-West Surveys.

Kevin Daae ĆšĹšĆŒÄžÇ ĹšĹ?Ć? ĆŒĹ˝Ä?ĹŹ Ĺ?Ĺś ƚŚĞ ŽƉĞŜĹ?ĹśĹ? ĞŜĚ ŽĨ ƚŚĞ ÄŽĆŒĆ?Ćš ÄšĆŒÄ‚Ç Í• Ä‚Ć? Ć?ĞĞŜ ĹšÄžĆŒÄžÍ˜

Lead Jeremy CarlsonÍ• ĹŻÄžĹŒ ĂŜĚ Ć?ÄžÄ?ŽŜÄš Lawrence Hansen Ç ÄžĆŒÄž Ć‰Ä‚ĆŒĆš ŽĨ ƚŚĞ Ͳ ǀĞŜƚ Ç Ĺ?ŜŜĹ?ĹśĹ? ƚĞĂž͕ dĹšĹ?ĆŒĆ?ƚLJ Ĺ?ĆŒÄš WƾžĆ‰ĹŠÄ‚Ä?ĹŹ ^Ä‚ĹŻÄžĆ? ĂŜĚ ^ÄžĆŒÇ€Ĺ?Ä?Ğ͘ dŚĞ ƚĞĂž Ç Ä‚Ć? ĆŒŽƾŜĚĞĚ ŽƾĆš Ä?LJ ƚŚĹ?ĆŒÄš Ryan Hansen ĂŜĚ Ć?ĹŹĹ?Ɖ Duane Lamontagne. WŚŽƚŽ Ä?LJ ĆŒĹ?Ä‚Ĺś Ĺ?ĹśÄ?Ĺšƾŏ

Scores for those two games were not available. The bonspiel also

featured a banquet in the curling rink’s lounge on Friday night.Â

KĹš Ä?ŽLJ͕ Adrian Fraser ŽĨ ĂƉĆ&#x;ǀĞ KĹ?ůĎĞůĚ ZĞŜƚĂůĆ? žƾĆ?Ćš ŚĂǀĞ ƚŚŽƾĹ?Śƚ Ç Ĺ?ƚŚ ƚŚĂƚ ÄžÇ†Ć‰ĆŒÄžĆ?Ć?Ĺ?ŽŜ ŽŜ ĹšĹ?Ć? ĨÄ‚Ä?Ğ͘

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PIPELINE NEWS April 2019

A19

dĞƐƟŶŐ K2 ŵŝƐĐŝďŝůŝƚLJ Ăƚ ƚŚĞ ^ĂƐŬĂƚĐŚĞǁĂŶ ZĞƐĞĂƌĐŚ ŽƵŶĐŝů ůĂďƐ ŝŶ ZĞŐŝŶĂ By Brian Zinchuk Regina – Carbon dioxide (CO2) has the potential to greatly increase oil recovery factors, but it is important that the conditions are right. Dr. Peng (“Mars”) Luo is a professional engineer with the Saskatchewan Research Council, and on Feb. 7 he explained some of the methods used in the lab to determine if a reservoir is a good candidate for carbon dioxide-enhanced oil recovery (CO2-EOR). He pointed out that in the 1980s, nobody knew for sure whether CO2 was going to work in the Weyburn field. That field has been using CO2-EOR for almost two decades now. “When you evaluate a field for a CO2 flood, you start with evaluating core plugs and reservoir fluids, to see whether it is suit-

able for the CO2 flood. Factors include if the oil is heavy, medium or light, and whether it can reach minimum miscibility pressure, which is the most important factor for a CO2 flood,” Luo said. He showed examples of Bakken core plugs from southeast Saskatchewan and Viking core plugs from west central Saskatchewan. The Weyburn field is a carbonate reservoir. “Carbonate is a naturally good candidate for CO2 flooding, because CO2 reacts with the carbonate and opens up the pore space.” “When you inject CO2 into the reservoir carbonate, very likely it will react so that the rock dissolves, basically, creating higher permeability so it is easier for the oil to flow,” he said. “That is one of the big addons of CO2 flooding on

carbonate reservoirs.” It’s not as significant as the creation of wormholes in heavy oil production, but it does increase permeability. “Basically, miscible means the injected CO2 can be mixed with the reservoir fluid in any portion, like water and alcohol,” he said. In the laboratory, they need to measure the minimum miscibility pressure. There are three methods to measure this. The first is to inject CO2 into a very long slim tube, a .25-inch diameter and 18-metre long helical coil stainless steel tube with sand in it, saturated with oil. CO2 is injected at different pressures to see how much oil is recovered, and to develop a recovery curve. “We see a recovery factor versus pressure curve. By

the time CO2 reaches miscibility pressure with oil, you are supposed to see the recovery factor higher than 95 per cent. That’s how we determine it with the slim tube method.” The second method is the rising bubble apparatus. The whole high-pressure cell is filled with an oil column in the middle. Then a CO2 bubble is injected from the bottom and rises. “If CO2 is immiscible (not miscible), with the oil, the CO2 will rise all the way from the bottom to the top. The column is 30 centimetres,” Luo said. If the CO2 disappears in the middle, it is miscible. The faster it disappears, the more miscible it is. This method is fast, therefore it can be used to test reservoir fluids as a first step for any CO2 project.

Dr. Peng (“Mars”) Luo shows a helical tube known as a “slim tube.” Carbon dioxide is used as an immiscible flood for heavy oil reservoirs most of the time as the minimum miscibility pressure is just unrealistically high for heavy oils. The third apparatus is the vanishing interfacial tension method. An oil drop is hanging at the tip

of a steel needle and immersed into CO2. Interfacial tension (IFT) of the oil drops and CO2 is measured at increasing CO2 pressure until the IFT becomes extremely low. The method uses the concept that IFT disappears when two contracting fluids become miscible.

“Throughout the company, the effects of these efforts is best illustrated by positive revisions to our proved developed producing reserves,” the company said. Capital Approximately 20 per cent of Cardinal Energy Ltd.’s capital budget is allocated to long-term operating costs reduction initiatives which include reducing its electricity and facility costs. The remainder of the $47 million capital budget is directed to well optimi-

zation, drilling, facility upgrades and continuing the expansion of enhanced oil recovery projects at Midale. The base capital program includes the drilling of six (6.0 net) oil wells in the company’s Bantry, Alberta area to take advantage of a land earning farm-in opportunity. Cardinal also expects to drill two (1.5 net) wells in its Midale, Saskatchewan area where provincially mandated production curtailments are not in place.

Cardinal plans two Midale wells (Daily Oil Bulletin) – Cardinal Energy Ltd., which operates the Midale Unit, focused in 2018 on the improvement and advancement of its core assets through both the drilling of new wells and the continuing optimization of enhanced recovery operations within its existing production base. Cardinal invested $21.4 million in drilling, completing, equipping and tying in 17 (10.6 net) wells on its Alberta and Saskatchewan asset base. In addition, the company drilled 15 stratigraphic test wells which served to further delineate

its Ellerslie and Glauc channel locations in the Bantry area of Alberta. In southern Alberta, Cardinal proved up the economic and operational viability of its horizontal multi-leg, open hole Ellerslie concept with three successful new drills. In aggregate, these three wells are currently producing over 800 barrels of oil equivalent per day (boepd) and have been producing for an average of five months. Cardinal believes that the success of these initial Ellerslie wells proves up a large inventory of locations for future development.

Also in southern Alberta, Cardinal continued with its successful development of Glauc channels via horizontal drilling with three successful wells. In aggregate, these three wells are currently producing more than 550 boepd after seven months of production. “Furthermore, with our modernized wellbore and completion design, Cardinal realized an all-in cost reduction for these three wells of more than 13 per cent, when compared to our costs

for previous Glauc channel wells drilled in this area.” Major oil producing assets under enhanced recovery continued to be optimized, with injection volumes being directed toward areas expected to respond most significantly. At Midale, the company’s initiative to increase injected CO2 volumes, and to direct those volumes to the most appropriate locations within the reservoir have resulted in a distinct shallowing of the production decline.

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