Pipeline News september 2016

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

September 2016

Canada Post Publication No. 40069240

FREE

Volume 9 Issue 4

National Trucking Week Sept. 4-10

New Energy & Resources minister

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Sterling Chemicals

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North Battleford's spill response

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Hutt’s Trucking Ltd. picker operator Cody Lischka lifts a tank in the Eagle Oilfield Services Ltd. yard in Arcola on Aug. 18. Swamper Jamie Wanner assists on the ground. September 4-10 is National Trucking Week. Photo by Brian Zinchuk Agricultural Equipment Technician

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PIPELINE NEWS September 2016

Saskatchewan’s new Energy and Resource Minister: Dustin Duncan

On Aug. 22 Weyburn MLA Dustin Duncan was sworn in as the new Energy and Resources minister. From left, Paul Crozier, clerk of the Executive Council; Premier Brad Wall; Environment Minister Scott Moe and Energy and Resources Minister Duncan. Photo courtesy Government of Saskatchewan

say, building a refinery, that would be seen more as an economic opportunity for the province.

Jeremy would have a role in that, and I would have a role in that.

In the terms of the actual functions, of the old ministries, aside from being within the same ministries and sharing a deputy minister, we are distinct ministers. We have distinct lines of authority, and that’s how we’ll be going forward.

P.N.: What are the top three things on your agenda as Minister of Energy and Resources?

Duncan: I think immediately of the response to the Husky spill. We’re taking part in a thorough examination to not only examine what happened, but also look at the measures what we might have to take in the future to reduce the risk of this happening again. That’s really top of mind in terms

of work the ministry is doing. That’s going to be my priority.

I think longer term, though, as the new minister, I think first and foremost is market access. On the oil and gas side, obviously pipelines is front and centre on market access. That’s the message Premier Wall has been pushing provincially, nationally and internationally, and it’s something I will continue with.

On the forestry side, it’s softwood lumber. We’re coming to the end of the softwood lumber agreement. It’s an election year in the United States, and that tends to have things not move quickly. That could have implications for the forestry industry in Saskatchewan. That’s something we’re turning attention to.

I think of the competitiveness for capital.

Obviously, right now, we’re in a soft market

for a number of different resources prices, which has affected the amount of investment. There is still a significant amount of investment being made in Saskatchewan.

We need to ensure we are still competitive and that we remain competitive so that when prices do return, and capital moves from the sidelines to the field, that capital is finding its way here in Saskatchewan.

I think, third, that we have a modern regulatory environment – that companies know we’re predictable, that it’s workable for companies. It’s not only workable for the major exploration and production companies, but the junior companies that are very important to Saskatchewan’s oil and gas industry.

Saskatchewan’s industry is unique. We have the Huskys and Crescent Points of the world. But even if you

look at the history of Crescent Point, it started by building its production through the acquisition of a number of small junior companies.

That’s traditionally how the industry in Saskatchewan has functioned for many years.

We have to ensure we have a climate in Saskatchewan that’s not only going to be conducive to major companies investing in Saskatchewan, but also to ensure that we still do have a strong junior industry.

P.N.: Are you going to consult with SHOP (Saskatchewan Headquartered Oil Producers) on a regular basis?

Duncan: One of my main priorities is I get the opportunity to consult widely across the industry. That’s going to be SHOP, it’s going to be CAPP, it’s going to be a number of different individuals and companies.

While not being directly involved with it,

coming from southeast Saskatchewan and from a community where the oil industry plays a large role, those are some relationships I already do have. But there’s big parts of this file that I’m not as familiar with – potash and uranium and forestry, that I’m going to have to do a lot of consulting with.

P.N.: The Husky oil spill into the North Saskatchewan River was the most significant event of its type in Saskatchewan in, at least, a decade. How is this going to impact what you do as the new minister?

Duncan: Obviously we’re investigating the cause. I’m not going to speculate on how it happened. Even though we don’t have the results of all of that yet, I don’t think that stops us from being proactive as the regulator and being responsive to the concerns of the public.

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■ By Brian Zinchuk Regina – Dustin Duncan, MLA for Weyburn-Big Muddy, is Saskatchewan’s new minister for Energy and Resources, having been appointed on Aug. 22.

Previously, he had been minister of Health, the largest expenditure portfolio in government.

Pipeline News spoke to Duncan on Aug. 26 about the challenges in the new posting during down times.

Pipeline News: This is a reactivation of the role of an Energy and Resources minister inside the Ministry of the Economy. Can you explain how that works?

Will it be any different than when Tim McMillan held a similar role?

Dustin Duncan: We are going to share a ministry. There will be just one deputy minister that will report to both (Minister of Economy) Jeremy Harrison and myself. We will have very distinct roles. Minister Harrison will be responsible for the traditional role as economic development, trade, immigration – those types of files. Energy and Resources will be my responsibility. But we will be distinct ministers. So if I have something going to cabinet, for example, that is Energy and Resources related, I don’t need Jeremy Harrison’s sign off, just the same as if he’s bringing something forward on the economic development file, he doesn’t need my sign off for it to move forward.

So we are distinct ministers. We have distinct lines of authority. What we’ll have to work out is where there’s crossover of that. If there’s an energy company that’s looking at,

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PIPELINE NEWS September 2016

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TOP NEWS

Rig moves pick up with drilling activity Carnduff – With drilling picking up somewhat, so is rig moving. While Saskatchewan’s drilling fleet had a really slow June and July this year, activity started to improve noticeably in mid-August.

“We’ve had a few rigs move,” said Dennis Day, general manager of Fast Trucking Service Ltd. in Carnduff.

He spoke to Pipeline News on Aug. 23 on his way to the combine to harvest.

“In July we had 32 rig moves. Already this month we’ve had 34,” Day said.

A convoy of Fast Trucking Service Ltd. trucks could be seen moving a Trinidad Drilling rig along Highway 47, north of Estevan, on Aug. 18.

That corresponds with the number of rigs working. On July 25, there were 19 rigs

working in Saskatchewan, according to Rig Locator (www.riglocator.ca). On Aug. 23,

that number was 47.

“Fifty was what we’d move in a week,” Day said of the busier

times.

A few years ago, Fast Trucking could move seven or even

eight rigs in one day.”

Now,” he said, “we can still move four rigs a day.”

He’s hoping things will get busy. “Maybe it will,” Day said.

“I don’t think it’s going to be much different than what it is for a year, probably. I don’t see oil going up. I think we’ll see US$40 to US$50 oil.”

Rates have dropped to the point where they can’t go any lower. “Nobody’s got any room to move anymore,” he said. “The majority of people are doing it just to break even and survive.”

Lloydminster Heavy Oil Show Sept. 14-15 ■ By Brian Zinchuk Lloydminster – The Lloydminster Heavy Oil Show takes place Sept.

14-15 at the border city’s agricultural exhibition grounds.

Paul Klaassen of PWM Steel is chair of the Lloydminster Heavy Oil Show. He noted 5,000 to 6,000 people usually attend. The event is open to the public.

Normally, the show sells out its booths in April. But these are not normal times, and as of the end of August, there were still booths and banquet tickets available.

“Every time oil goes up, we get inquiries,”

The Lloydminster Heavy Oil Show usually attracts 5,000 to 6,000 people. File photo

he said, adding that if you’re still in business,

the Lloydminster Heavy Oil Show is the best

bang for your marketing buck. As of Aug. 29,

there were still booths available, at $1,250 for

an inside booth and $625 for and outside booth.

Klaassen said you only need one or two customers to make that investment pay off.

Unlike the Calgary or Fort McMurray shows, the Lloydminster show is very focused, specifically on heavy oil, he noted.

“It’s great for networking. It’s educational,” Klaassen said.

The Canadian Association of Oilwell Drilling Contractors is bringing its Oil Respect campaign to Lloydminster, including speaking to a grade 9 class on the Wednesday morning.

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PIPELINE NEWS September 2016

PIPELINE NEWS

EDITORIAL

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

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How much can they really recover?

The response to the July 20-21 Husky oil spill on the North Saskatchewan River has had some encouraging numbers of late.

From the Aug. 25 media teleconference, we found that 73 per cent of the spilled oil has been recovered. That’s an astonishingly high number when one realizes the spill spread down over more than 400 kilometres of the river. In the highest priority area, “Division 1,” the first 20 kilometres of the affected area, 84 per cent had been cleaned.

Approximately 800 people were working on the cleanup in various capacities.

The amount of oil and diluent released was also firmed up. Instead of saying 200 to 250 cubic metres, government officials are now using the number 225 cubic metres.

Unfortunately, another number was also updated. So far 93 wildlife and 51 aquatic animals have perished as a result of the spill.

The water sample testing has been coming back almost all clear, but there have been a few exceedences. It’s troubling the one exceedance reported was picked up near the inlet for North Battleford’s surface water treatment plant. They’ve also found detectable amounts of some hydrocarbons in some sediment samples. Thus, it might take a little more time before the all clear can be given to start drawing water from the river again.

It’s quite remarkable that 73 per cent has been recovered. If that number is indeed true, it’s probably close to the maximum they are going to be able to recover.

When the spill occurred on July 20-21, the water flow was quite high, around 710 cubic metres of water per second. The river in that region normally runs around 220 cubic metres per second. Due to rain events in Alberta, the river was forecast to flow up to 1,200 cubic metres per day and rise a further two metres for the last weekend in August. The rise meant a lot of recovery efforts had to be suspended and equipment pulled from

the river until things settled down.

One of the techniques used for cleanup is using hoses to wash oil off affected areas, and then recovering the oil. If the shoreline was inundated with two metres of very fast moving water, this will likely have a lot more effect than any water hose. How much oil will remain after the river drops will remain to be seen. Essentially, it will be a tremendous flushing action.

More likely, this high flow will flush a large portion of what was remaining downstream. Will it spread it out from Maidstone to the Codette Reservoir, formed by the dam at Nipawin? Will it collect at the Codette Reservoir? Or is it simply going to be so diluted that much of it will simply disappear?

Certainly, they will never be able to collect all of the oil that spilled. So how much is enough?

How much is possible? And how much is gone, somewhere between Maidstone and Hudson Bay? Wes Kotyk, executive director of the Environmental Protection Branch with the Saskatchewan Ministry of Environment said on Aug. 25, “It is difficult to say what will be mobilized and what wouldn’t. The important thing to note is of the priority-one areas, where there has been the bulk of oil that has been pooled and able to be recovered, 84 per cent of that has been recovered already. The material that’s still on the shore is attached to vegetation. It has already gone through a month of weathering on the shoreline. It has been exposed to rainfall events and things like that. What we’re seeing is that, the big oil hasn’t been mobilizing just on its own, with rainfall events and other activities. It’s only with actual physical removal of cleaning up the shorelines, removing it from the vegetation, using pressure washing and actual excavation of the shore that they’ve been able to recover it.”

One way or another, we’re going to find out in the coming months.

PIPELINE NEWS September 2016

OPINION

Could crude-by-rail have saved Churchill?

The closure of the Port of Churchill, at Churchill, Manitoba was shocking, but not unexpected, nor unlikely. Canada’s sole northern port has limped along, basically, forever.

Yet that does not mean it should closed for good and be abandoned.

Back in 2013, when the oil boom was in full swing and the price of oil traded between US$110 and US$91 a barrel (mostly in the US$90s), production was growing everywhere and pipelines were full. Crude-by-rail facilities were popping up all over the prairies especially in North Dakota, where the majority of their oil, for a time, would find its way to rail.

Crude-by-rail, while substantially more expensive, had one major benefit – it dramatically opened up markets for oil producers. Instead of being limited to just where the limited pipeline network allowed, a shipment could go anywhere the tracks led, meaning almost anywhere on the continent. This meant American Bakken crude started finding its way to places like Saint John, N.B., and the U.S. eastern seaboard refineries, displacing crude from places like Saudi Arabia.

Now consider the Port of Churchill which was sold by the federal government in 1997 to U.S.-based Omnitrax, in combination with the CN rail line leading to Churchill. As is evident with its closure now, Churchill hasn’t been doing too well since the end of the Canadian

Wheat Board monopoly.

There were some noises a few years ago out of Churchill that they were looking at shipping oil from our sole Hudson Bay port. The port was initially looking to ship a pilot shipment in late 2013 or, failing that, in 2014. They were aiming for 10 tankers per year servicing the port if it should work out.

That oil would leave via Hudson Bay, a water body nearly the size of the Gulf of Mexico, then travel through the Hudson Strait and along the icebergstrewn Labrador coast to points overseas.

Whereas the Gulf of Mexico is teaming with all sorts of traffic, a tanker floating in the middle of Hudson Bay would almost certainly be the only vessel of significant size in the entire bay. Perhaps one grain bulker might pass by. That’s it.

Churchill is, by far, the closest deepwater port to the phenomenally successful North Dakota oilfields. North Dakota went from 90,000 barrels per day around 2009 to 1.2 million barrels per day by 2015. Quite literally, it’s all downhill from North Dakota to Churchill, with no mountains to cross. That means loaded trains get the benefit of gravity, and running uphill on the return trip, the trains are empty. From a rail perspective, it’s much easier than crossing the Rockies or the Appalachians.

Churchill, formerly a major military installation during the Cold War, had a substantial 250,000-barrel tank farm, of

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FROM THE TOP OF THE PILE

By Brian Zinchuk

which 200,000 could be used for exports. Eighty car unit trains would ship approximately 48,000 barrels each to the port for eventual export.

Proponents began doing community consultations, and were very quickly shot down. This was in the immediate aftermath of the Lac-Mégantic tragedy and the height of anti-Keystone XL rhetoric.

The possibility of an oil spill in the tundra of northern Manitoba, where the tracks ran across muskeg territory, was unnerving. They heard a resounding “NO!” and the plan was killed.

While crude-by-rail was a major concern, I pointed out in a column that the vast Hudson Bay and Hudson Strait has essentially no other boats or ships floating in it, except for maybe one or two grain freighters at any one time. There’s no ability or infrastructure whatsoever to respond to any sort of spill. When the Deepwater Horizon spill occurred, hundreds of boats and ships could be rallied.

If something happened in Hudson Bay, there is nothing that could respond except for the two tugs based in Churchill (my stepdad used to be a deckhand on one back in the 1970s).

Now the port has closed due to declining grain shipments. Macleans did an exceptionally good story on the port and its history titled “How Canada abandoned our only Arctic port,” but they missed the role crude-by-rail and oil exports could have played. By adding

another 10 ships per year, it would have nearly doubled the usage of the port, which shipped principally grain. Obviously, that would have made a huge difference in the viability of the port and its associated rail line. Perhaps, if oil exports via Churchill had been allowed, the port would not be closed today.

The opportunity may have passed.

Crude-by-rail makes economic sense at US$90 per barrel, but absolutely no sense when oil was in the US$30s earlier. So even if Churchill was exporting oil, it would not have made economic sense for much of the past year. It might, however, make sense if oil surpasses US$60 this fall, during the Churchill shipping season.

Some people are calling on the federal government to take back the port.

It may have to, so we don’t lose a strategic asset forever. But if it does, for the port to be viable, it will need to handle more than grain. I don’t know why it never became a potash export point, but maybe that’s a possibility. It will likely have to export oil, too.

I wonder if those opposed to oil exports two years ago would have thought otherwise if they realized then that Churchill would be closed today. Perhaps they might reconsider their opposition, if it means Churchill is to survive.

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

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PIPELINE NEWS September 2016

Response to Husky oil spill top on the agenda ▲

Page A2 We will undergo a process of not only looking at the regulatory function of the ministry, looking at the role the industry plays in this, but also looking at risks that are still out there. We have to get a handle on what those risks are.

I think this is a big part of the job: that the public can have confidence that government has been responsive to this, that, in this case, Husky has been responsive, and we’re going to do anything we can to mitigate the risks of this type of event happening again.

P.N.: The oil downturn is now over two years old. Thousands of jobs have disappeared, oilfield communities are hurting, and many people have been out of work for a very long time. As a new minister, where do you go with this? What, if anything, can you do?

Duncan: We just need to be at the top of our game when it comes to investment attraction.

There is still money out there being invested into the oil and gas sector.

Certainly, we’re seeing Crescent Point making significant investments into this province. Raging River just made a pretty significant investment. Their longer term plans are for western Saskatchewan investment.

So we just need to ensure we’re still raising

the profile of Saskatchewan. Long term, this is a great place to do business. We have a good resource base. We have good infrastructure in place, and we have people who know what they’re doing in the sector. That’s going to be a big part of it.

I would say, even though the prices are relatively low, and we haven’t seen the investment we have had in previous years, even with the most recent oil and gas right sale - $10 million – that was the highest perhectare price in Western Canada this year. We are still attracting our share, and more than our share, of investment and we’re going to have to continue to do that.

I’ll be out in Calgary in the next two weeks, speaking at a conference in Calgary. That’s going to be part of the message – Saskatchewan’s a great place to invest.

Part of this, is we need to be ready for when prices do recover.

This is about creating a favourable environment, and waiting for the market to catch up to us, not necessarily the other way around. We don’t want to be in a positon where we’re trying to play catch-up once prices do return and then try to chase those dollars.

P.N.: Saskatchewan politicians have often pointed out that when one resource sector is down, others are up. But that’s not the case now.

Gas has been down for nearly a decade. Now oil is down, potash mines are laying off staff, the Jansen mine might get mothballed and a uranium mine is shuttered.

How are you going to deal with these tough times in the resource sector?

Duncan: Again, I think it’s playing up the advantages we do have in Saskatchewan. We’ve been fairly fortunate, despite the downturn in our resource sectors, we’re still seeing fairly strong job growth in 2016. We’re expecting a pretty good crop this year. We’re seeing promising growth in other parts of the economy. Our building permits, our retail sales, our manufacturing sales, numbers are all really helping to keep Saskatchewan in a better position relative to other provinces. Look at Alberta next door, and the problems they’re having.

Not saying we don’t have our own challenges. I think we’re in a better spot than most.

On Energy and Resources, it's again reminding the markets, reminding the companies, that we are a preferred place for investment because of the resource base, because of the infrastructure, because of the people that know what they’re doing in this industry. We have to continue to be an attractive investment climate.

Capital can go wher-

ever it wants to in the world. We want to ensure that we’re getting those capital dollars coming here in Saskatchewan.

We still have Mosaic K3 expansion underway.

Our oil and gas sales are strong compared to everywhere else in Western Canada. The long-range prospects remain strong in the potash sector, and they do for the oil sector as well.

We’ve been through these. In the resource sector we’ve seen high prices, we’ve seen low prices. We’ve been through this before.

Again, being positioned for when prices pick up, so we’re not playing catch-up. We’ll be ready for when that happens.

P.N.: Have you personally worked in the oilpatch when you were younger? If so, what did you do? How might that experience impact your job now?

Duncan: I grew up in Halbrite. My parents worked for a trucking company, Dempsey Laird. So we were an oil family. I have lots of family members that work in the oil sector.

The year I turned 16, I worked at Newalta. That was my summer job. So I think that, growing up in the oilpatch, I was an oilpatch kid. That gives me a lot of perspective about how important the industry is to the province and to the people that aren’t just directly employed, but indirectly, because of oil.

Growing up, both of my parents’ paycheques came from the oil sector. I understand, from that perspective, how important the oil industry is to a lot of families in this province.

I also understand, from other roles in government, most recently being the health minister, we spend $600,000 an hour in the health care system, 24 hours a day. A lot of the revenue for the government is generated by the energy sector. Now, I’ll get a better look at how those dollars come in.

P.N.: Premier Wall has been, arguably, the most ardent supporter of the oil industry and pipelines the Canadian political system for several years now. Has he given you any marching orders with regards to what message you should convey?

Duncan: The message I’m going to convey is the exact same message he’s been delivering all across this country.

We need to get access to tidewater for our Canadian oil. It’s not just a matter of getting oil down east. If we can’t get it to the ports and out of Canada, that doesn’t help getting a better price for Saskatchewan oil.

Access to tidewater is going to be really important for Saskatchewan. We need to get the infrastructure in place now. Why wait for business to return? We know what the scramble is like

when oil hits a certain price, and infrastructure gets really tight. Prices start going up when trying to get that infrastructure in the ground.

Let’s get the infrastructure in place now.

For some of these project, some of the infrastructure is already there.

We know shipping oil by rail is expensive.

There’s risks that come with it. Frankly, it takes away from our ability to ship other products, our ag products. We expect a pretty good crop this year. We don’t want to lose the ability to move other products that can be moved by rail.

I’ll be saying the same message Premier Wall has been delivering – the importance of delivering western oil across the country.

P.N.: Is there anything you’d like to add?

Duncan: I’m really looking forward to this.

I’m an oilpatch kid. I grew up in Halbrite, in a trucking family. This was a big part of my life, growing up. Now, to be Minister of Energy and Resources, I’m really grateful for the opportunity. The oil industry is one I’ve grown up around. I’ve followed it.

I respect the people that work in it. The innovation and the technology has allowed the industry not just to survive, but thrive. Those are things I really respect about the industry. To be the minister, it’s really a thrill for me.

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Saturn Minerals grabs four exploratory blocks Company says oil it found comes from nearby source rock ■ By Brian Zinchuk

Kamsack, Rama, Humboldt – After problems with an earlier well they had drilled, in March Saturn Minerals Inc. was finally successful in drilling and coring a well southwest of Hudson Bay, Sask. That well was on a property they call Bannock Creek.

The company said they had found oil, but promptly enacted its rights to keep details private under “tight hole” allowances. But the company moved pretty quickly after that.

By June it put in bids for four blocks of land, roughly 10,000 hectares each, for the August Crown lands sale. They were successful in that sale, and announced the details of those special exploration permits on Aug. 16.

The acquisition includes 158 sections (41,000 hectares or 410 square kilometres of oil and gas special exploration permits. The four blocks, in addition to the Bannock Creek property, map out what Saturn is calling the “oil triangle.”

Each block is roughly the size of a township, with the extreme southeast one being somewhat irregular. The new blocks run in a line running in a north-by-northwest line from south of Kamsack to north of Humbolt, each closely hugging the potash restriction zone. That zone, established by the provincial government, reserved a broad band of central Saskatchewan for potash development only. It does not allow oil development, since wells penetrating underground mines can be disastrous.

The oil triangle Saturn has staked out is roughly the same size as the oil-producing area of southeast Saskatchewan, which falls south of the potash restriction zone.

In the southeast corner, two blocks lie adjacent to each other, south and southeast of Kamsack. (Kamsack had operational natural gas wells in the early 1900s).

The middle block is close to Rama. The westernmost block is northeast of Humboldt and south

of St. Brieux.

Stan Szary, president and CEO of Saturn, spoke to Pipeline News on Aug. 17 about the developments.

While it is still too soon to talk about the details of what was found at Bannock Creek, he did point out something mentioned in their press release the day before – what he considers the biggest news – the oil they found is sourced locally. In other words, the source rock for the oil they found is produced in the region, as opposed to the well-known “kitchen” in the Williston area of northwest North Dakota.

“It’s locally sourced,” he said.

A geological “kitchen” generally has to be deep enough and hot enough to produce oil.

The depths in that area aren’t anywhere close to what is in North Dakota, but Szary said there is “a strange amount of geothermal.” Thus, Saturn thinks there could be source rock close enough that it is trapped locally.

Saturn’s exploration model hinges on Ordovician Red River source rock with large structural traps north of the Potash Restriction Zone, in their oil triangle.

“That is what we are basing our model on,” he said. “We now know the source rock is local.”

This was identified by the level of total organic carbon, which he explained tells you how good your source rock is.

Those numbers, he said, are really high.

This would be a conventional play, Szary added, not requiring fracking.

The primary target formation of Saturn Minerals exploration program continues to be the Red River Formation, a stratigraphic unit of Upper Ordovician age in the Williston Basin well known for economic pools of oil south of the Potash Restriction Zone, and unexplored north of the Potash Restriction Zone. The analogous oil pool model to the south that Saturn is targeting is the Red River Tyvan pool which contains an estimated 60 million

barrels in place with 15 million recoverable barrels of light crude 31 API oil.

It’s no coincidence their exploration blocks are adjacent to the potash zone. Szary thinks there’s oil in that area, too, if only it could be developed. He pointed out that if the potash zone extended into southwest Manitoba, it would include areas that currently have light oil development. An example would be as Crescent Point Energy Corp.’s field near Kirkella, Man. “If the government were to open parts of the potash restriction zone, you’d see a massive stampede (of oil exploration) in there,” he said, adding there’s “no question” of oil in the restriction zone.

Their Bannock Creek property was the highest risk area of their

These are the blocks of exploration land Saturn Minerals has picked up. Map courtesy Saturn Minerals.

oil triangle, he noted. In Szary’s opinion, there’s as much oil north of the zone as there is south, it just has to be proven.

To that end, Saturn

will be conducting aerial surveys of their blocks to identify areas for seismic surveys. They intend on drilling on at least two of the new blocks, hope-

fully between Christmas this year and the end of March 2017. They are also looking at another well on the Bannock Creek property.

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PIPELINE NEWS September 2016

Business has picked up for picker firm past June.

Son Damon, 18, just graduated high school. Travis said, “He’s swamping and helping out for now, until he decides what he wants to do for school.”

Daughter Katelyn, 16, helps in the office and with the home front.

Travis’ father, Clem, helped the first few years when they got going. The company fired up in 2009.

Travis worked 13 years with Carson Energy Services and then six years with Grimes Sales and Service. He took a year off and set up Total Oilfield’s Carlyle yard before setting out on his own. He gave himself a year before buying his first iron, 45-ton picker with a cab and 100-foot stick.

The year they started was a down year for much of the oilpatch, but not so much in southeast Saskatch-

ewan. That year, Travis said, “We never did slow down.”

“I like buying knew.

You know what you have,” he said. “With my first truck, a good friend, Todd Cowan from Gainsborough, helped me out. He helped me get going with my first truck. I owe him a lot of credit.”

The most recent unit was picked up in 2015.

“We have five boom trucks. We have five Texas bed winch trucks,” he said. They also have two hotshot units, but those are primarily used within their operation. There’s also one “straight” semi tractor.

While Texas beds, with their winch, bed, live roll and fifth wheel cost more as opposed to a straight truck, they are also a lot more flexible.

“We use them for multipurpose. That’s why we go with Texas beds,” said Travis. It’s easier to

move a test tank, for example, and yet still use it as a normal semi.

“You can still use it as a straight truck,” he said.

Hutt’s Trucking is keeping relatively active now. “We’re probably running 75 per cent now. Some days it’s 100 per cent, some days it’s 50. The last two months, we’ve been steady,” Travis said.

Last year they did all right, better than some. “We were just happy to break even,” he said.

They did have to lay off four people in January of this year, but they were brought back

by June.

“That was the first time we’ve laid people off,” he said.

“We couldn’t work shop hours anymore. We were caught up already for road ban. Everything was fixed.”

The company has Page A11 ▲

■ By Brian Zinchuk Lampman – Business has picked up in recent months for Hutt’s Trucking Ltd. of Lampman, and workers who were laid off earlier in the year have been brought back.

Hutt’s is a family outfit, with wife Jody running the office.

“She’s the boss,” said husband Travis, who heads up the company.

Jody went to school at SIAST in Regina for office education-legal procedures. She worked at a law firm in Estevan as a legal secretary for seven years. She then took time off to be a stay-athome mom to their two children. She worked a maternity leave with Rocky Mountain Energy Services and was at Confidential Business Services part-time for four years before and during the startup of their own company.

The pair have been married 20 years this

This is the view from a GoPro camera attached to a tank as its lifted by a Hutt’s Trucking picker. Cody Lischka is the operator in the cab. Photo by Brian Zinchuk

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PIPELINE NEWS September 2016

New ministers for Energy and Resouces, Economy ■ By Brian Zinchuk Regina – Since the Brad Wall Saskatchewan Party formed government in 2007, there has been very little change in the ministry that has been responsible for the oil and gas sector. That is, until now.

On Aug. 22 there was a change in the ultimate minister responsible for the first time since the Saskatchewan Party was elected to government.

Meadow Lake Jeremy Harrison becomes minister of the Economy, while Weyburn-Big Muddy MLA Dustin Duncan, who had been the long-serving min-

ister of Health, became minister of Energy and Resources as well as the minister responsible for SaskTel and SaskEnergy.

Duncan was first appointed to cabinet in May 2009 as minister of Tourism, Parks, Culture and Sport in 2009, and was later minister of Environment, and minister responsible for SaskEnergy and SaskWater before taking on Health in 2012.

Harrison had been a member of parliament, elected as an MP in 2004 before being elected and an MLA for Meadow Lake in 2007. His prior postings include legislative secretary to the Minister of Energy and

Resources, Northern Resources and Oil Sands Development, government house leader, and in various cabinet positions including minister of Municipal Affairs and Minister of Enterprise Saskatchewan. He was deputy house leader; associate minister of the Economy responsible for Trade, Tourism, Innovation and Immigration; and a member of the Board of Internal Economy.

Bill Boyd had been minister of Energy and Resources from 2007 until 2012, when his role was expanded to become the new minister of Economy, which included

Energy and Resources under Economy’s wing.

At the time Lloydminster MLA Tim McMillan became minister responsible for Energy and Resources under Boyd, but that only lasted a few years. McMillan resigned in 2014 to become the head of the Canadian Association of Petroleum Producers (CAPP).

His position as minister lapsed until the Aug. 22 cabinet shuffle. Boyd had decided to leave cabinet, thus his post needed to be filled.

Now the ministry of Economy will have two ministers again – but a little differently this time.

The roles are more split

now, with Duncan looking after Energy and Resources items specifically and Harrison looking after all the other items within Economy.

Duncan had held the health portfolio for four years and was eight months shy of being the province’s longest-serving health minister. That ministry is responsible for the largest expenditures of government, by far.

Now his responsibility falls more on the revenue side, with a ministry that brings money into government coffers, even though royalties have decline substantially with the decline in the oil and potash sectors.

A9

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PIPELINE NEWS September 2016

Sterling Chemicals sees tremendous growth despite down times ■ By Brian Zinchuk Estevan – A focus on customer service and a change in the marketplace has created sales numbers for Sterling Chemicals over the past few years that most companies in the oilpatch, or anywhere for that matter, can only dream of.

Sterling Chemicals Ltd. is located in Estevan, with a satellite in Carnduff. Its parent company is Camber Resource Services Ltd., and its sister company is Camber Technology Corporation (CTC), based in Edmonton.

Sterling had been a long-established but small operation in Estevan, operating since 1986, according to Bill Matheson, president and CEO. He’s also one of four co-founders of Camber, which is privately held with about

50 investors. Matheson comes from the exploration and production side of the business, having run two companies of that variety. He spoke to Pipeline News in Estevan on Aug. 2.

Camber was founded in 2011, and bought Sterling in December 2012.

“Sterling’s been part of Estevan since the 1980s. It was started

by Arnold Scott of Estevan,” Matheson said. The company had tried to grow, but with limited success, and had remained a two- to three-man operation.

Matheson and his partners made the offer to purchase in 2012, when the oilpatch was booming.

“That was $110 oil, for sure. The oilpatch was rocking,” he said.

Sterling, in its

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well. Blaine had a great track record. There were formulas that had been developed over 27 years”.

“When we bought the company in 2012, we wanted to establish the why. Why does this work? Only by establishing the why can you scale it up,” he said.

That’s where CTC comes into play. Its business is to provide solutions for Sterling Chemicals. Camber’s head of technology and engineering was familiar with The National Institute for Nanotechnology (NINT) at the

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University of Alberta. In 2013 Camber opened its laboratory at NINT and now employs three full time scientists and 2 technologists, as well as two senior technical managers in the field.

CTC focuses its research and development on solving oilfield problems including treatment and prevention of corrosion, scaling, paraffin, emulsions and polymer applications.

NINT is a joint venture between the National Research Council, Government of Alberta, and University of Al-

berta. It has four floors of labs, with cutting edge equipment. CTC has access to all of it at a “friends and family” rate.

“We also work with different companies on various studies,” Matheson said. At any given time there will be one or two PhDs working with the Camber team as part of a funded study.

“We see Camber Technology Corporation as the future of our company, the place we’re going to bring on better and less expensive products,” Matheson said.

Page A12 ▲

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limited market, was very well-regarded, according to Matheson. Blaine Fallis, general manager, who has been with the company for decades, “has an exceptional reputation,” he added, but the company had stayed small.

Another company in the market, longestablished and local, Prairie Petro Chem, was purchased by Clariant around 2011, adding the weight of a multi-national company behind a company with a great reputation.

Matheson is all for competition, adding, “The one thing little guys must bring to the table over and over is service. Sterling has always been known for service, as well.”

“Little guys like us, we base our business on service. We develop product as well as any of the big guys, just not as much of it. For the first 27 years Sterling was around, they knew how to treat wells to make sure they kept flowing, and exceptionally

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A11

Six journeyman picker operators ▲

Page A8 15, people overall, and with that many people, he couldn’t drive and run the company as well. “I just couldn’t do it anymore,” he said. “So we added a dispatcher to help out.”

During busy times all his trucks plus additional third-party trucks would be at work. But now, they don’t need to bring in third-party units as often.

“Our turnaround of people is very minimal,” he said. They now have six people with boom truck “A” journeyman tickets, two of those recently received their certifications. Each of those six journeymen

can have two apprentices under them.

“Hutt’s Trucking wouldn’t be where we are if it wasn’t for the employees we have today,” Travis said.

Travis started on a picker at age 19. In 1992, he got his "B" ticket, allowing him to operate smaller pickers.

A few years later, he picked up his “A” ticket.

Hutt’s Trucking is set up with SECOR, ISN Networld and Complyworks. They share a safety coordinator with another company.

The company works mostly on the production side of the industry.

“That’s what I’ve always worked,” Travis said.

“We do some construction, too, putting up rafters, etc.,” he said.

Their work area is primarily in southeast Saskatchewan and southwest Manitoba, but they do lots of trips into Alberta as needed, picking up equipment and bringing it back.

That can be anything from compressors to treaters or tanks.

“We’re moving pump jacks, tanks, vessels, buildings, rig matting…” he said. “We do lots of man basket work for turnarounds.”

They have an office on Lampman’s Main

Street, a shop in Lampman and another three miles west of Lampman on their acreage.

Recently Hutts rented two shops on the east side of Estevan.

With oil companies cutting costs, and with five workers coming out of Estevan, it made sense to have some people working out of there. That saves a half our drive each way, and reduces mileage costs for clients.

“We had been looking at Weyburn before.

Right now, it’s not feasible. When things pick up, maybe,” Travis said.

Hutt’s Trucking has been able to recall the people who were laid off earlier this year. Here a Hutt’s picker is offloading tanks in the Eagle Oilfield Services yard in Arcola on Aug. 18. Photo by Brian Zinchuk

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PIPELINE NEWS September 2016

Every well eventually needs chemical intervention year prior to that.”

In 2013, their first full year of operations under the Camber umbrella, revenue grew around 20 per cent. In 2014, that number was 55 per cent. The next year, it was again 55 per cent revenue growth. So far in 2016, the number is approximately 60 per

▲

Page A10 Strong growth in down times The numbers Sterling has posted in recent years would have been envious in boom times, never mind during a downturn.

Matheson said, “We’ve grown more in the past year than any

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cent.

Where is that coming from?

“We’re stealing market share,” he responded.

“From 2012 to 2016, we’ve increased our market share in SE Saskatchewan sevenfold by focusing on service and technical excellence.”

Customer service and better products are two reasons for the growth, he explained.

“Everybody in the specialty production chemical business has corrosion inhibitors, demulsifiers, paraffin inhibitors… We have an infinite number because we develop a product for them (the customers).”

That means Sterling employees aren’t afraid to “get in the mud” with their customers.

“My job, Camber’s job, is to make the field operator’s day easier. If I can make Sterling’s job easier they will make the field operator’s day easier.”

Future expansion There are realistic limits to how much one chemical company can

Brandon Seymour works in the blending plant.

grow in a region like southeast Saskatchewan and southwest Manitoba. They’ve already lined up visas for a couple of their people to work in North Dakota. “Where we can attract the best talent, we’ll go there next,” he said. “After Saskatchewan, Manitoba and North Dakota, we’ll go back into Alberta.”

Matheson doesn’t want to get too large, however.

“I don’t want to have more than 100 people, but I think we can take over the world with 100 people by being scientifically perfect and providing customer service.”

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While sectors like drilling are greatly affected by the downturn, production still needs to be maintained.

“Our sector, production chemicals, is healthy.

Although we’ve had to give up some margin, our ability to do business is better than it’s ever been,” Matheson said, adding that at some time in the life of every well, chemical intervention is needed.

The growth of horizontal wells means more and more access to the reservoir, and therefore a need for more chemicals.

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Marketing differently Sterling and Camber’s marketing strategy is more community focused than what might have been seen in the sector in the past. “We focus on the community and how to help kids in the community,” Matheson said.

In Alberta they run a golf tournament for kids, raising approximately $80,000 in the last two years for children’s charities. They took part here with the Don Narcisse football camp, as well as food hampers for less fortunate citizens of southeast Saskatchewan.

“That’s how we market our company.

Sterling is here to help the community in good times and in bad times.

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A13

North Battleford’s reaction to the Husky oil spill

■ By Brian Zinchuk North Battleford – On July 21, a leak from a 16inch pipeline for Husky Energy adjacent to the North Saskatchewan River north of Maidstone was detected. Approximately 225 cubic meters of heavy oil, diluted with diluent, leaked, and a substantial amount of it found its way into the river.

That river supplies roughly half of the drinking water to the City of North Battleford, all of Prince Albert’s, and, further down the river, a water utility that

supplied Melfort. Additionally, a rural water uility was supplied by Prince Albert. With their source of drinking water contaminated until further notice, these communities had to do something, fast.

Pipeline News spoke to North Battleford city councillor Ryan Bater and city manager Jim Puffalt on Aug. 25 and 24, respectively, roughly one month after the spill. By this point, things had settled down substantially. Alternate, temporary sources of water had been found for each

diately, the first concern was over our water supply, obviously.”

It took four days for the spill to reach North Battleford. They knew the surface water plant had to be shut down before it got there.

“Husky had a great response right after the event occurred,” said Puffalt. “They have been very responsive. We think they have done the things they need to do to clean up the spill and look after people affected by it, and municipalities.

“We knew as soon as they reported it to us to let us know what was happening. Their unified command was up and running shortly afterward.

“We had lots of advance notice,” he said, which gave the city the opportunity to shut inlets to the city’s surface water treatment plant long before the oil spill reached the city.

For many years North Battleford has operated two water treatment plants, one which draws water directly from the North Saskatchewan River, and a second which draws water from a network of wells drilled in close proximity to the river, drawing groundwater from those wells. The surface water plant was shut down before it could pull in an oil slick, contaminating drinking water and fouling the filter media of the plant.

(The Town of Battleford does not draw water from

the river, but rather uses its own wells.)

“It’s fortunate we have two water treatment plants,” Bater said, pointing out that the city hadn’t built either of them. The surface plant had initially been built for the Saskatchewan Hospital complex, which once had over 2,000 patients plus staff. The groundwater plant was built to service the Canadian National station. Both later became property of the city.

“We have had discussions at council, actually over the last year, about the need to have two plants, or whether we should just go with all surface or all well.

Of course, this incident

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of these communities. The provincial government’s daily press briefings had been reduced to once in 10 days. The key issue now was when would the water be clean enough to reactivate water intakes, and would that be possible before winter freeze-up.

Asked about his immediate reaction, Bater said, “We had heard about it from our administration.

My immediate reaction was shock and surprise. The words ‘oil spill’ are scary to see when you first see them in an email. The magnitude of the spill wasn’t immediately known to us. We just knew that it had occurred.

We weren’t made aware of the magnitude of the spill until the next day. Imme-

Page A14

Water testing results on North Saskatchewan River ■ By Brian Zinchuk

Response crews have been dealing with the July 21 spill of heavy oil and diluent into the North Saskatchewan River. By Aug. 25, there were as many as 800 people working on the response. This photo was taken near North Battleford in the early days of the response. Photo by Averil Hall

Numerous booms have been used to combat the oil spill on the North Saskatchewan River. This was near North Battleford on July 28. Photo by Averil Hall

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In the response to the July 21 Husky oil spill on North Saskatchewan River, the Water Security Agency (WSA) has been doing regular water sample testing. On Aug. 25, the WSA released the results for 120 surface water quality samples.

Samples were tested for a comprehensive suite of parameters (substances) including petroleum hydrocarbon F1 to F4 fractions, the BTEX compounds (Benzene, Toluene, Ethylbenzene and Xylene) and a set of 20 different compounds known as polycyclic aromatic hydrocarbons (PAH) in each of the 120 samples.

The WSA reported they had seen one exceedance in raw water for any treated

drinking water quality standards, guidelines or screening values. A press release stated, “ This exceedance was for Benzo(a)pyrene at North Battleford along the northeast bank of the river and was just above the current drinking water quality guideline value of 0.01 microgram per litre and measured 0.02 micrograms per litre (parts per billion).”

Additionally, “There are 16 samples that have shown exceedances for the guidelines for protection of aquatic life, 11 were for Toluene, three for Pyrene, one for benzo(a)pyrene and one for fluoranthene. There were 43 ‘detections’ which were below any guideline values for various petroleum constituents.”

WSA has also been

collecting sediment samples (mud, silt and sand) from the river bottom, from the point of entry all the way down the river system.

WSA found detectable amounts of F3 and/or F4 hydrocarbons in the five sites monitored but not at each location on a river transect site were monitoring was carried out across the width of the river. There were F2 hydrocarbons at the upper sites (near the point of entry and near Highway 21 bridge).

There was also some PAH compounds present near the point of entry and Highway 21 bridge in the sediments. Since the F2, F3 and F4 and PAH compounds tend to attach to organic materials found in the sediments and are

essentially non-soluble in water, these are expected to be found in the sediments and less so in water. There were a total of 6 exceedances of the Canadian Council of the Ministers of the Environment (CCME) Interim Sediment Quality Guidelines at two of the stations (four exceedances at the sites near the Point of Entry and two exceedances at Highway 21).

The CCME interim sediment quality guidelines are intended to protect organisms that live in or on the bottom sediments and thereby the aquatic food chain, but are not of direct concern for people.

WSA continues to sample water and sediment quality in the area.

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PIPELINE NEWS September 2016

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Water solution needed before freeze-up Page A13

makes it pretty clear having those wells is pretty important if something happens to the surface plant.”

It struck Bater that the initial reports where in cubic metres, and not barrels, as oil is usually discussed in barrels. Thus, the volume struck him as a very big number. “The details surfaced later,” he said.

He was concerned if the leak had occurred under the river, or on the surface. It turned out to be onshore, roughly 300 metres from the water’s edge.

The rush was on to prepare for the spill’s arrival, Bater said. Husky was being a good partner, so the city wasn’t on its own. The Water Security Agency was an active partner as well.

“We had all the partners we needed together.

It was just a matter of addressing the situation.

This was happening in the middle of summer, during the peak use of water. The concern was to have enough water for the residents of the city,” Bater said.

“We had to restrict the use of non-essential use of water. Residents could use water for food preparation and laundry, but we had to

restrict outdoor watering and car washes,” Water tests are showing the water has cleared up and does not exceed drinking water standards for hydrocarbons (but did exceed standards for aquatic life), Puffalt noted, “While the tests are showing the surface water seems to be clear, with no contaminants, nobody is sure what’s at the bottom of the river. That’s the concern right now.”

Disturbing the river bottom is a concern particularly because the city was just about to embark on a dredging program around their water inlet. Changes in the river had caused the area around the inlet to silt up. That program was put on hold with the spill and won’t be happening this year.

“The issue for us is if something comes into the plant, that could take the plant right out,” Puffalt said.

Normally the surface plant would provide roughly 40 per cent of the city’s water needs. With it out of commission, substantial restrictions were put on water usage in the city. Outdoor watering, car washes and laundromats were all shut down.

Parks went unwatered. Car

washes had to use tankers for a water supply to keep operating.

The assistance of the Town of Battleford by mid-August was able to relieve much of those restrictions. An overland six-inch water line running from the town of Battleford, across two old, semi-retired bridges and Finlayson Island, has allowed water to be pumped into surface treatment plant, at least until freeze-up this fall.

Thus in late August most of those restrictions have come off. Puffalt said the city’s halting of watering its own parks and sports fields would be able to allow other water usage.

The city drilled an additional two wells and was nearing completion on two more, allowing the groundwater plant to produce more water.

The largest concern during the water restriction was the possibility of a large fire which could rapidly drain the city’s water tower.

“We were never in danger of losing all of our supply. But if we had a major fire, we would have been. There’s no question.

And you can’t predict fires.

We had a major fire last summer, right downtown, and our water supply was

in threat because of that.

So we had to make those major decisions that affected a lot of people and a lot of businesses,” Bater said.

Asked if the groundwater plant would be enough for the winter, Puffalt said, “No. We’re working with the unified command and GE Electric has a water filtration division. We’re working with them to find a solution so that we can use the surface plant again. Really, it comes to some filtration of the water coming into the plant, just to take out the big stuff again.”

“We would want it in place before we can’t use the Town of Battleford line, this fall,” he said, noting they had been working with Husky on it.

On Aug. 15, Sam Ferris, executive director of environmental and municipal management services with the Saskatchewan Water Security Agency said, “I think it will be in the weeks category and not the months,” with regards to when North Battleford and Prince Albert would be able to reactivate their water intakes.

Expenditures to date

for the city have been around $3.5 to $4 million. On Aug. 15 the city received an interim payment from Husky to cover expenses. (Prince Albert received a similar cheque for $5 million from Husky at the same time.)

Husky has had adjusters working with those who have been affected by the spill, including businesses, Puffalt noted.

“We basically spent two weeks, looking at the issues, coming up with a good, measured response,” Puffalt said of the immediate response. Fortunately, North Battleford did not have to issue a boil water advisory, and had the ground water plant.

Prince Albert, he noted, did not have an alternative plant. (Prince Albert set up alternative water supply lines from the South Saskatchewan River and Little Red River as an interim measure.)

Asked about people’s reactions, Bater said, “There was immediate concern; confusion over how this could happen.

Pipelines, as everybody knows, are sensitive, politically. People on different sides of the debate would

make their views known. I don’t think there was widespread alarm. I didn’t hear that. There was obviously concern. I think, once the issue was made known, the communications strategy was very strong. I think the public felt very informed.”

“People could see the work in the river valley.

They could see the helicopters overhead, the booms set up. The presence of the responders was visible.

I think people just accepted it was happening. They were obviously concerned about the supply of water, but felt somewhat encouraged there was a very strong effort to clean this up,” Bater said.

Puffalt said of Husky, “They have responded the way a good corporate citizen would. They took responsibility for their actions and what happened and they’re doing work to rectify it and clean it up. Their own words are they’re trying to make people whole. You can’t ask for more than that.”

“It’s an unfortunate situation. For sure, it’s impacted a lot of people, but it’s been looked after as well as you could expect,” Puffalt concluded.

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PIPELINE NEWS September 2016

A15

USTOMS ROKERS Rig accident takes life

■ By Brian Zinchuk Alameda – On Aug. 22 an oilfield workplace accident took the life of Dustin Barry Pratt, 27, of Estevan.

Pratt was a derrickhand working on Weyburn-based Panther Drilling Rig 4, approximately 12 kilometers northwest of Alameda.

STARS air ambulance’s Twitter feed noted a unit had been dispatched to a scene call for an emergency in the Alameda area.

The tweet was posted at 1:41 p.m.

The rig was working on a Spartan Energy Corp. site.

The Office of the Chief Coro-

ner is investigating the incident. A statement from the coroner’s office said, “There is no indication of foul play.”

An autopsy had been ordered. Investigations typically take between four and six months to complete.

Saskatchewan’s Occupational Health and Safety is reviewing the matter, according to spokesperson Laura McKnight.

Panther Drilling president and chairman Cory Hicks said in an emailed statement, “On Aug. 22, 2016, a wonderful young man lost his life. Our thoughts and prayers

right now are with his family. The entire Panther Drilling family is devastated by this tragedy.

“We have no further comments at this time.”

Pratt is survived by his parents, Shane and Roxane; brothers, Derian and Dylan; the love of his life Christine Meszaros.

The funeral service is scheduled for Friday, Aug. 23 at St. John the Baptist Roman Catholic Church in Estevan. In lieu of flowers, those so wishing may make donations in Dustin's memory to the Bienfait Coalers hockey team.

Dustin Pratt. Photo submitted

That other natural gas: Helium plant opens near Mankota in August Mankota –While most people think of methane when talking about “natural gas,” there’s another natural gas that’s being sought in Saskatchewan. This summer, a new processing plant opened to

produce helium.

Weil Group Resources, LLC and Linde Engineering hosted a grand opening of Weil’s new helium processing facility just southeast of Mankota on Aug. 3.

The first-of-its-kind

helium purification facility uses a hybrid process of membrane and PSA (pressure swing adsorption) technology.

Weil and Linde say the technology promises to revitalize the Canadian helium resource indus-

try. Provincial government officials, as well as company and contractor personnel, staged a ribbon-cutting and flag-raising ceremony at the facility to celebrate the formal opening.

Helium tube-trailer deliveries to customers began in July from the Linde designed and engineered plant, owned and operated by Weil Resources Group, which uses a unique process to enrich wellhead gas with a 1-2 per cent helium concentration to high grade, industrial quality product. The project has been recog-

nized by the Saskatchewan government as bringing new life to the helium industry in Saskatchewan, where the element was discovered in the early 1960s, but has been dormant ever since.

Linde Engineering executive vice president Tobias Keller stated, “Linde is proud and excited to play a role in

providing its industrial gas purification expertise and technology to this important project.

We appreciate the collaboration with Weil Group as pioneers in this field. It has required new and innovative design and process elements. It is always rewarding to see new Page A16 ▲

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DI Networking The new helium processing facility near Mankota owned by Weil Group Resources held its grand opening on Aug. 3. Photo courtesy Weil Group

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A16

PIPELINE NEWS September 2016

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Revitalizing Saskatchewan's helium industry Page A15

concepts come to life with good success.”

Weil CEO, Jeff Vogt, said, “Weil has revitalized a 60-year-old industry in Saskatch-

ewan by our commissioning of the first high-quality helium purification facility in Canada. The $12 million facility will process 10 million standard cubic feet of feed gas

to high quality, purified helium (99.999 per cent) for industrial customers in Canada and the western U.S. We are grateful for our alliance with Linde Engineering and appreciate their

quality, technological leadership and reliability in this unique arena.

The plant is an impressive result of collaboration between our teams, and we have appreciated the experience. We look

to replicate that soon in our neighboring projects.”

In addition to Weil’s new facility, at least one other company has been pursuing helium prospects in Saskatchewan.

As of Aug. 22, North American Helium Inc. had been drilling for helium in the extreme southwest corner of the province near Consul, south of Cypress Hills Provincial Park.

and expected downtime.

Crude oil prices having improved markedly plus low cash costs of $18.96 per boe resulted in $54 million of free funds flow (after capital expenditures and dividend payments) in second quarter of2016 or a total payout ratio of 42 per cent for the three months ended June 30, 2016. Total payout ratio was 78 per cent for the six months ended June 30, 2016.

At the end of the second quarter, Whitecap closed the acquisition of premium oil assets in southwest Saskatchewan from Husky Energy for cash consideration of $596 million.

Mark Young, with

Evaluate Energy, called the deal No. 5 of the top five upstream mergers and acquisitions deals in Canada in 2016 so far in the Aug. 16 edition of Daily Oil Bulletin.

The acquisition included 11,600 boepd of low decline production (< 5 per cent historically), 660 (483 net) high quality drilling locations and extensive infrastructure to support continued low cost production growth. In addition, the company disposed of 100 boepd of non-core production and undeveloped lands in Saskatchewan for $25 million further strengthening our balance sheet. The disposition allowed Whitecap to realize value on assets

that were unlikely to be developed by the company as they ranked low within its portfolio of opportunities.

Whitecap is gearing up for an active second half of 2016 capital program, with total budgeted spending of $114 million which will be more weighted towards fourth quarter 2016. The company plans to drill 67 gross wells of which 30 are expected to be extended reach horizontal (“ERH”) wells.

Whitecap has been utilizing ERH technology for the past two years across their core areas and have continued to improve upon the design and methods for their ERH wells which now includes drilling 2

mile long lateral horizontal sections in their Wapiti Cardium core area. This will significantly reduce surface costs and footprint to develop core assets.

“In west central Saskatchewan, we continue to make significant strides on our horizontal Viking wells, reducing all in costs by another 10 per cent to $620,000 per standard length well and increasing the IP(30) rate by 14 per cent to 148 boepd. This has resulted in a 21 per cent improvement in our IP(30) capital efficiencies. These improvements will also be realized on our ERH drills. We anticipate drilling 38 horizontal Viking wells in second

half of 2016 of which 16 will be ERH wells,” the company said in a release Integration of our newly acquired southwest Saskatchewan assets has been seamless and the assets are performing at or above the expectations established at the time the acquisition was announced.

Whitecap anticipates drilling 12 horizontal oil wells on these assets in the fourth quarter of 2016. Initial indications are that well costs will be lower than what was originally forecast through a combination of further service cost reductions and efficiency improvements identified by their technical staff.

Whitecap integrates Husky purchase ■ By Brian Zinchuk Calgary – Whitecap Resources saw an increase in its average production, according to its second quarter results announced on Aug. 4.

Second quarter 2016 production averaged 40,388 boepd, 5 per cent higher than their forecast of 38,500 boepd on a limited capital program of $16.2 million which was at the low end of Whitecap’s $15 to $20 million anticipated spending.

The better than forecasted production in the quarter was primarily due to operational efficiencies in the field and better base production performance which mitigated the impact of scheduled maintenance

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