Pipeline December 2019 by Pipeline News

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SASKATCHEWAN’S PETROLEUM MONTHLY Canada Post Publication No. 40069240

December 2019

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THE SERVICE RIGS ARE HIRING

Key Well Servicing has been working in the Weyburn Unit for 37 years this November. And Nov. 12 marked 65th anniversary of spudding the discovery well in the field. In the background is the Whitecap Resources-operated Weyburn Unit’s central battery. Most service rig companies Pipeline News spoke to this month could use a few more workers. See related story on Page 18. Photo by Brian Zinchuk

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PIPELINE NEWS December 2019

Crescent Point sells Saskatchewan gas infrastructure to Steel Reef for half billion By Brian Zinchuk Calgary – In a move that will shake up the natural gas processing sector in Saskatchewan, Steel Reef Infrastructure Corp. bought Crescent Point Energy Corp.’s gas infrastructure assets within Saskatchewan for $500 on Nov. 14. Each of the companies made the announcement after the closure of the markets that afternoon. The move is significant in that Crescent Point had largely developed its own organic gas processing infrastructure as it grew to be the largest producer in both southeast and southwest Saskatchewan. Now their gas production will be handled by Steel Reef. This sale will contribute substantially to Crescent Point’s efforts to reduce its debt load. The acquisition is a major one for Steel Reef, substantially increasing its footprint and processing capacity. “Through the sale of these gas infrastructure assets, we will unlock value for our shareholders and further strengthen our financial position. We have now entered into agreements to sell, or have sold, in aggregate approximately $1.45 billion of assets in 2019,” said Crescent Point president and CEO Craig Bryksa in a release. “This sale is also aligned with our strategy, as it allows us to further focus on our core competencies to strengthen our corporate returns.” “This attractive investment is in line with Steel Reef ’s responsible growth model and secures longterm benefits for our valued shareholders and customers,” said Scott Southward, president and CEO of Steel Reef. “We are pleased to further strengthen our relationship with Crescent Point in a best-in-class resource base.” Steel Reef said in a release the purchase price will be satisfied by their existing investors and financers. Through the sale of the assets, Crescent Point will monetize nine natural gas gathering and processing facilities and two gas sales pipelines currently in operation within Saskatchewan.

These gas processing facilities and associated sales gas lines have a total throughput capacity of more than 90 million cubic feet per day (MMcf/d). The assets do not include any oil-related infrastructure. The impending sale was alluded to in Crescent Point’s third quarter financial report, released on Oct. 31. Under the terms of the agreement, Crescent Point will enter into certain longterm take-or-pay commitments with Steel Reef in exchange for Steel Reef granting Crescent Point processing rights at the facilities. The expected annual cash flow to Steel Reef is estimated at approximately $47 million, excluding cash flow from third parties. Steel Reef will operate the assets. Within Saskatchewan, Steel Reef already owns and operates facilities at North Portal, Alameda, Steelman, Nottingham, Kisbey, Glen Ewen, and Coleville and the Plato pipeline. It also has the Lignite, North Dakota gas plant just across the international border from its North Portal plant, the Gordondale clean products terminal and a sweet oil battery at Kaybob, Alberta. As part of the agreement, Steel Reef has committed to fund an upcoming 12 MMcf/d expansion of one of the gas processing facilities, reducing the need for capital that would otherwise be required by Crescent Point. Steel Reef ’s cost to construct this expansion is estimated to be approximately $30 million, which will be in addition to the purchase price of $500 million. This facility expansion is expected to begin in 2020 and be completed within approximately 12 to 18 months following closing of the asset sale. The expansion is expected to further enhance sales volumes while also reducing the facility’s emissions intensity. RBC Capital Markets acted as exclusive financial advisor to Crescent Point on this sale. GMP FirstEnergy represented Crescent Point as its strategic advisor. The transaction is expected to

Crescent Point’s Viewfield gas plants, basically everything behind the large tanks in the foreground, will soon become part of Steel Reef Infrastructure Corp. Photo by Brian Zinchuk close in first quarter 2020, subject to customary closing conditions and regulatory approvals. Crescent Point also reported that it continues to advance negotiations for third party development of a new sales oil pipeline. This pipeline is expected to enhance the company’s market access and realized pricing for its southeast Saskatchewan oil production. Crescent Point’s management expects that the new sales oil pipeline will take approximately

12 months to construct and bring in service, once an agreement is finalized. Where Crescent Point is putting the money Crescent Point said its “disciplined capital allocation is centered on returns with a priority on continued balance sheet strength.” Upon closing of the sale of the assets, Crescent Point expects that its net debt will be reduced from approximately $2.8 billion at yearend 2019 to approximately $2.3 billion while also re-

ducing Crescent Point’s net debt to adjusted funds flow ratio by approximately 0.3 times. Crescent Point said it continues to retain significant liquidity and unutilized credit capacity with no material near-term debt maturities. Crescent Point currently expects to allocate approximately $50 million of proceeds from this disposition for additional share repurchases subsequent to closing and subject to market conditions. Given

the anticipated timing for closing of the sale of the assets in first quarter 2020, the company’s 2019 budget continues to assume a total of approximately $125 million of share repurchases. Crescent Point continues to be active in achieving this 2019 target and has repurchased, for cancellation, approximately 16.3 million shares year-to-date 2019 for total consideration of approximately $83 million, up to and including November 13, 2019.

By Brian Zinchuk Calgary – While the name of the Canadian Association of Oilwell Drilling Contractors seems to imply just drilling rigs, it does, in fact, include the service rig side of the business. And they’ve heard some anecdotes of labour shortages on the service rigs. “Service rig activity hasn’t necessarily been a ray of sunshine, but you can kind of see the sun through the clouds,” said John Bayko, vice president, communications, of the CAODC, on Nov. 7. “I know the challenge is, when you’re looking to bring guys back, you can’t guarantee them any kind of long-term work. I know that all sorts of the of parts and pieces of the industry have been looking at ways of tackling some of the abandonment issues out there, or just looking at different

strategies for longer term guarantees so you can bring guys back into the workforce,” he said. When told that almost every service rig company in Saskatchewan is looking for workers, Bayko said, “That’s great, if people are looking for four to five hands per company. In some ways, I would say that’s a barometer that things are looking up. But at the same time, I don’t know how long their looking for guys for. I would suggest one of the reasons they’re having those issues is they don’t have longer term work for them.” That’s pretty much exactly what most of Saskatchewan’s service rig companies that Pipeline News has spoken to in the past month have said. The CAODC puts out recommended wage schedule, which is not binding

on members. “We haven’t raised our wages in four or five years now,” he said. High wages have long been the incentive to work in the industry, he noted, as there are some factors that aren’t as desirable. “The money was always a nice incentive. But in Alberta, we saw an increase in minimum wage, couple that with pay that has not gone up in five years, and work that’s not steady, and people are leaving the industry and they’re not coming back.” There are also far fewer farm boys, traditionally one of the major labour pools, to draw from. “In my mind, if things ever do turn around to some degree, I don’t know of too many (careers) that have such low barriers to entry, but such high ceilings in terms of where you can take a career. I think a lot of

young people are frustrated, and looking towards the trades, when they see how competitive some of the software developing opportunities are, or careers that are more focused to new technology. There are a lot of people trying to get a finite number of jobs.” He noted that working on the rigs is a way to get rid of high student debt and perhaps earn enough to travel. “If I had known the opportunities on the rigs when I graduated university, I would have done it for sure. You can work three, four months, make a ton of money, and it’s seasonal work. If you’re young, footloose and fancy-free, you can do some travelling, come back and fill up the bank account again.” If the industry could offer a better wage, he thinks another labour pool could be developed.

You can see some sun through the clouds: CAODC

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PIPELINE NEWS December 2019

New refinery proposal near Kerrobert in its early stages RM OF OAKDALE DISCRETIONARY USE DEVELOPMENT PERMIT CONSIDERATION SCHEDULED NOV. 25 By Brian Zinchuk Kerrobert – A new “micro-refinery” appears to be in the works for the Kerrobert district. An advertisement in the West Central Crossroads newspaper on Nov. 15 indicated that the council for the Rural Municipality of Oakdale No. 320 would be considering an application for a discretionary use development permit from Independent Energy Inc. The hearing was scheduled to take place at the Coleville Community Hall on Nov. 25 at 9 a.m. “The application proposes to develop a crude oil processing facility for the production of saleable ultra-low sulphur diesel fuel at Ptn. SW-27-3322-W3M,” said the public notice. That location is within close proximity to major oil pipeline, rail and power facilities. At SW-27-3322-W3, it would be south of the Enbridge Kerrobert terminal, and with it, the Enbridge mainline pipeline system. Inter Pipeline also has a terminal at Ker-

robert which handles heavy and light sweet crude. This location is also close to the Plains Midstream Canada crudeby-rail terminal, which is, itself, southeast of the Enbridge terminal. That facility, at NE-23-3322-W3, with its loop track, is capable of handling unit trains. In this manner, the proposed refinery location would mirror other major refineries in Alberta and Saskatchewan, with immediate access to major pipelines and rail facilities. The proposed site would be nearly immediately adjacent to SaskPower’s Ermine Power Station and its accompanying substation. Additionally, it is close to light oil production in the Viking field. Pipeline News spoke to Glen Weisbrod, vicepresident of environmental and regulatory compliance with Independent Energy on Nov. 15 by phone. Weisbrod is a professional engineer whose LinkedIn profile notes senior environmental managerial positions with GFL

Environmental, Pinter & Associates Ltd. and SNCLavalin over the course of the last 15 years before joining Independent Energy. He noted he has over 25 years experience in processing and regulatory compliance. “We’ve been running below the radar. You won’t see too much. There’s been no press releases. There won’t be any press releases. We are pretty, extra low key organization at this time,” he said. “Like the public hearing noted, we are proposing a refinery in the Kerrobert area to process crude oil into diesel fuel.” “It’ll be around 15,000 barrels per day. It would be a light, sweet oil that we’re using.” Asked if it would be a topping plant, he said, “Essentially, correct.” (The U.S. Energy Information Administration’s website explains “The simplest refineries have a distillation column and nothing else. These refineries are often referred to as topping refineries.”)

“We will probably be looking at various crude supply agreements,” Weisbrod said when asked if they would be looking to use locally-produced oil. He declined to say how much the facility would cost at this time. Indeed, he was reluctant to provide much information at all, nothing reinforcing they are seeking first-mover advantage. Weisbrod said, “We’re going through the environmental permitting. We’re in our discussions with the ministry, and we’re doing our due diligence in moving this project ahead.” The company has its head office in Calgary, but Weisbrod said he is based in Saskatoon. “We’re going through the permitting process. We’ve got our discretionary land use public hearing coming up the 25th of November. We’re preparing to start fabrication of some of our key items,” Weisbrod said. For provincial permits, he said, “I’ve met with ► Page A6

A similar refinery was built in North Dakota recently, but it’s now being converted to biodiesel MDU Resources Group, Inc. completed its Dakota Prairie Refinery at Dickinson, N.D. in 2015, commencing operations in May of that year. Dickinson is located just south of the major Bakken oil play in North Dakota. The Dickinson refinery is pegged at 19,000 bpd., slightly larger than the 15,000 bpd facility being proposed for Kerrobert. A press release from MDU on May 4, 2015, noted, “Construction of the facility began on March 26, 2013 on a 318-acre site that is located about four miles west of Dickinson in southwest North Dakota. More than 800 workers were on site at peak construction. Total cost of the plant is estimated to be approximately US$425 million to US$435 million, and the facility employs about 80 people.” In 2016, that refinery, which struggled in the oil downturn, was purchased by Tesoro Refining & Marketing Co. LLC. It is now owned by Marathon Petroleum, which, according to its website, “plans to convert this refinery into a 12,000 bpd, 100 percent renewable diesel facility, which will process refined soy oil and other organically derived feedstocks, by December 2020.” “MPC intends to sell the renewable diesel into the California market to comply with the California Low Carbon Fuel Standard,” its Oct. 31 third quarter results press release stated. “Construction continues on the Dickinson Renewable Diesel project, which remains on-track for planned completion in late 2020.”

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PIPELINE NEWS December 2019

PIPELINE NEWS

EDITORIAL

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Deanna Tarnes - 1.306.634.2654 Editor

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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.

Yes, there are jobs out there. The service rigs are hiring We’ve been hearing about this for a while, and this month, it was time to do something about it. Almost every service rig company we’ve spoken to in the province could use a few more hands. Beyond the companies that are featured in this edition, there were several more we spoke to, but for one reason or another, weren’t able to do a story on. But that doesn’t mean they don’t need people. They do, and in all areas of the province. A lot of service rig companies have billboards along roads, looking for people to come in and apply. For nearly all the service rig outfits we spoke to, they could use two to six hands. Many were running around 75 per cent capacity. If they had enough people, they could possibly crew up another rig and put it to work. That would require another five people. Of the ones that had adequate staff right now, they noted if they could put another rig out to work, they’d need more people in a hurry, and they’d have a hard time finding them. But, and there is definitely a but, having enough work to keep that extra rig working seems to be an issue across the sector. The sporadic nature of the work, especially given its susceptibility to wet weather during the warm months, makes it difficult to attract, and retain workers. Look at the difficulty farmers had with harvest this year. If its too wet to go in the fields, it’s likely too wet to go onto the lease right beside that canola. Some areas in the southeast had eight inches of rain in the fall. That turned leases into soupholes. Only a good, hard freeze-up will make those areas workable. And then, of course, there is spring breakup, which can sometimes take forever to end. As for the sporadic nature, it’s difficult to provide any sort of real schedule for service rig workers. We heard that from almost anyone. Several companies have tried various rotations, like 12 and two, 11 and three, 10 and four or five and two, something approaching a “normal” workweek. But most of the companies had a hard time finding something that worked. A few basically gave up. When a well goes down and it’s a scheduled weekend off, the oil company still wants that well fixed, and pronto. So much for the weekend off. This is one of the prime reasons most of these service rig companies need a handful of people – primarily to fill in the gaps. If someone needs to book time off, or a holiday, or a wedding, the company needs people to make up for those spots.

But if you don’t know, for sure, that you can provide enough work for that additional relief staff, sometimes senior management – field supervisors and even owners – step in and fill shifts. We heard of that quite a bit. In both Lloydminster and Weyburn, we heard of two companies in each of those communities, respectively, working together, essentially sharing a few workers. If company A was short, they would call up company B, and vice versa, trying to keep hands busy and rigs moving. It obviously makes a big difference when these competitors get along. One company suggested it wouldn’t be such a bad idea to have a small pool of workers, maybe a whole crew, that could act as a relief for a few companies. There’s another reason why the numbers of two to six additional hands has been consistent. With five-man crews, you can only bring on so many green hands before you dilute the skillset on an individual rig. That generally means only one new or newer hand per rig at any one time, starting on the rig floor. There were a few words we heard a lot: “good hands” and “experienced hands.” Consistently the owners and managers we spoke to were looking for people that fit both those descriptions. One pointed out the importance of being able to pass a drug test. Marijuana may have been legal in Canada for the past year, but the oil companies want none of it on their sites. If you can’t pass a drug test, you won’t be hired. Another thing we heard is there aren’t that many people from Eastern Canada coming out to Saskatchewan to work on service rigs these days. For some companies, that was a consistent labour pool they used to draw from. But with reduced hours compared to the boom times, and sometimes sporadic work, it makes it a lot less enticing for both the employee to come across a continent for work, and the employer to bring them that far. As a result, local hires are preferred. So yes, there are jobs out there that pay well, but involve hard work outdoors in all sorts of weather. In winter, that means damned cold weather. The hours can be long, but they aren’t as long as they were five years ago. Spring breakup is lean time. It’s generally been a young man’s game, but there’s nothing saying women can’t work on service rigs either. And we heard of one rig hand in his sixties. So if you are looking for work, take your resume to almost any service rig company. There’s a good chance you could be hired.

PIPELINE NEWS December 2019

Quebec sure is one to talk, when it comes to energy

OPINION

FROM THE TOP OF THE PILE

By Brian Zinchuk

I’ve seen a lot of TV clips of late, showing Bloc Québécois leader YvesFrançois Blanchet basically trash talking the West, and Alberta in particular. He would support western separation if they wanted a “green state,” for example, but not an “oil state.” Because oil is bad. He thinks we should stop producing it. He doesn’t think Quebec gets Alberta money. It comes from the feds, he says, conveniently forgetting that money for equalization is almost entirely coming from Alberta, and mostly going to Quebec. Blanchet is not a provincial premier, nor is he in power federally. He’s the leader of a minor party during a minority government, albeit one that has enough seats to hold the balance of power. And he’s driving Alberta Premier Jason Kenney crazy. Indeed, it’s not a stretch to say Blanchet is driving the entire oilpatch crazy. It sure must be nice to have a $4 billion surplus this

year in Quebec. So much so that they’re opening up the wallet for more social program spending and cheaper child care, beyond what is already ridiculously cheap. In the meantime, Alberta public servants are wondering how many of them will have a job in the future, and when, if ever, they will see a decent raise again? The federal equalization formula, which excludes renewable resource revenue but includes non-renewable resource revenue, is very rapidly driving a stake into the beating heart of this confederation. Let’s look at Quebec for a minute, so blessed with renewable hydroelectricity it thinks it walks on water instead of just damming it. Ever hear of the Churchill Falls project? Back in 1969 Newfoundland got into financial trouble building a massive hydro dam project in Labrador at Churchill Falls. Hydro Quebec stepped in and bailed it out, but in doing so, essentially forced the Newfies to sign one of the most

lopsided, predatory contracts in Canadian history. It ensures that Quebec gets an enormous amount of hydro electricity at a fixed rate, $2 per megawatt-hour (0.2 cents per kilowatt-hour). My power bill charges me 14.2 cents per kilowatt hour. Newfoundland is getting 0.2 cents per kilowatt-hour for its Churchill Falls power. I strongly encourage you to look up an article published by Policy Options on Sept. 1, 2010, by James P. Feehan and Melvin Baker, entitled “The Churchill Falls Contract and why Newfoundlanders can’t get over it.” You can find it here: https://policyoptions.irpp.org/magazines/ making-parliament-work/ the-churchill-falls-contractand-why-newfoundlanderscant-get-over-it/ It reads, “Even in the late 1960s, a price of $2 was extraordinarily low and not achievable from any new energy source then available to Hydro-Québec. To put this future price in perspective, in 2004 the average wholesale price of electricity in Ontar-

io was about $52 per MWh, and in 2003 Hydro-Québec received an average of approximately $85 per MWh for its electricity exports. A price of $2 in 2016 with that price fixed until 2041 is barely distinguishable from being free.” How much power does that plant generate? More than all of SaskPower, combined. Churchill Falls produces about 30 million gigawatt-hours of power per year. SaskPower supplies 25.7 gigawatt hours per year, as of 2018-19. That means Churchill Falls produces more power than every single coal, gas, wind, solar, cogen and hydro plant in all of Saskatchewan, combined. And Quebec is getting a very large chunk of it, and profiting immensely from it, for basically free. And despite numerous legal challenges brought forward by Newfoundland, the Supreme Court has allowed this to continue, to 2041. Tell me again why renewable resources aren’t considered in the equalization equation? Especially

given that Newfoundland, in dire shape right now over its follow up to Churchill Falls, the Muskrat Falls project, is paying into equalization and Quebec is withdrawing? And then there’s shale gas. Quebec, apparently, has lots of it. You know, good, clean natural gas with a low carbon footprint? But they haven’t developed any of it. A few years ago, I interviewed the CEO of a company that drilled 15 wells in Quebec. They had a discovery in 2008 which could have been game-changing, if only they could frac. But Quebec brought in a de facto moratorium on fracking. That company had acquired a substantial amount of permits for land, but couldn’t do anything with it. If they could frac, the CEO figured they could supply a substantial amount of Quebec’s domestic natural gas needs. But you see, it’s easier to rely on gas from the northeast U.S., these days, and the money taxed from the gas industry in Alberta which

By Brian Zinchuk Estevan – Performance Pump of Estevan recently bought the machine shop they did much of their machining work with. Universal Machine Shop is now known as Performance Machining. The deal, effective Oct. 15, brings four people into Performance’s operation. This includes previous owners Nick Bourassa and Burke Barnstable, both journeyman machinists, another journeyman and an apprentice. “They all stayed on to work with us,” said Kent Phillips on Nov. 14. He and Cort Barker are the owners of Performance Pump. “All the machining will be there,” he said. This meant moving existing machining operations, and two journeymen machinists, from their Malmgren Drive location on the west side of

Estevan to Universal’s shop on the east side. Performance Pump’s move to Malmgren Drive a few years ago was meant to consolidate into one location, but all that machining equipment won’t fit, thus they will be using both locations. That equipment includes lathes, a boring mill and two CNC lathes. One of those lathes was where Nick Bourassa was working that morning, cutting new threads on drill pipe. A few years ago they built a pipe handling system that is aligned through a porthole in the wall, allowing the pipe to remain on a rack outside and inserting the threaded end into the CNC lathe to recut it. “We were looking at adding to our machine shop,” Barker said. “This added machines, a customer base and employees.”

Phillips noted that there was a benefit to getting qualified employees to join them. “If we added a machine or two here, we would have had to find someone to run it,” he said, noting it can be hard to find skilled labour. Universal’s work has been mostly oilfield, with some additional work in the mining, agriculture and power generation sectors. While Performance Pump used to split their machining work between Universal and another shop, they can now do all that work in-house. “We don’t have to send anything to outside sources for machining anymore,” Phillips said. That reduces costs and deliveries. “Now we can do everything inhouse. We don’t have to farm it out. We can pick our own schedule to get machining. The addition brings the total workforce to 20 people. Barker said there was a lot of number crunching to get to where both parties were satisfied. Barnstable said, “Our companies have been working hand-in-hand over the years on numerous projects, making the transition of ownership a seamless one. “Doing work for Performance Pump over the years has allowed us to develop a great business rela-

Nick Bourassa of Performance Machining watches a CNC lathe cut new threads on drill pipe. Photo by Brian Zinchuk tionship, which I feel will since 1999, and Burke has ing rig repair. We do a lot benefit all parties moving been machining since 2000.” of casing repair, and we also forward.” “We have a lot of good do tubing as well,” Bourassa Bourassa said, “I think machines here and good said. it’s a good fit between the equipment. It’s going to “It hasn’t been slow. two businesses, as far as provide good service for our We’ve been busy. It’s mostly pump work and us add- customers.” oil. We’re probably 80 per ing the drill pipe, and casBarnstable said, “With cent oil, and 10, 15 per cent ing and tubing repair. Their all employees staying on, power.” mechanics go hand-in-hand customers can expect the Barnstable said, “Uniwith the machining side of same quality of work and versal was a locally owned things.” craftsmanship they have re- and operated business with “We were busy doing ceived over the years.” my wife Jamie handling all drill pipe and all that, but When Pipeline News the bookkeeping for the it’s more job security for ev- visited, Bourassa was moni- business. We would like to eryone. It’s a benefit to their toring the CNC lathe re- thank our customers for company, supplying their threading drill pipe. “This is their support over the years stock,” he said. a premium connection. It’s and their continued support “We’re sticking around. a DS-40 thread. Right now, through this transition.” We’re not going anywhere. I’m taking off about an inch. Bourassa’s originally We’re pretty young. We’ve It’s worked hard, and we’re from Bienfait, now Esteowned Universal for 13 repairing it so it’s like new.” van, and Barnstable’s from years. I’ve been machining “We do a lot of drill- Estevan.

Performance Pump buys Universal Machine Shop

This is what recut threads look like on drill pipe, once Performance Machining is done with them.

goes to support equalization. Why develop your own resources when you get the money without effort, or risk? Yes, Alberta, Saskatchewan, British Columbia, Newfoundland and, to a much lesser extent, Manitoba, are blessed with oil and gas. But other jurisdictions, like Quebec, Manitoba and British Columbia, are blessed with hydropower. In a world where green energy is considered the ultimate goal, shouldn’t they now be considered the have provinces? Quebec took advantage of Newfoundland in a way that is unconscionable. And with $4 billion surpluses, their “have not” status is a total farce. Let’s see Quebec have to pay their way in the world, and maybe we’ll see some drilling in the St. Lawrence Valley. Then we’ll see whose resources are socially unacceptable. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@ sasktel.net.

PIPELINE NEWS December 2019

Technical proposal expected to be submitted to the ministry soon ◄ Page A3 them. We’re going to be submitting the technical proposal in a week-and-ahalf to 14 days.” As for timelines, the next step is the municipal approval process, then filing their technical proposal and permits for constructing an industrial waste works and hazardous storage for dangerous goods. Beyond that, Weisbrod did not provide any further timelines for planned construction. “We’ve got our project timeliness prepared. We’ve been in communication with the RM on that,” he said. “It’s up to the municipal process to get the required approvals.” “Our business model is we are going to comply with absolutely every municipal, provincial regulatory, environmental compliance regulatory requirement that there is out there. We are real. But our business model is for us to be first to market, and for us to be first to market, especially considering the number of projects that I have seen that were pie in the sky,” he said, referencing the series of stories Pipeline News ran in May 2018 about the defunct proposal by another

The red square indicates SW-27-33-22-W3, the advertised proposed location for a “micro-refinery” by Independent Energy Inc. This Google Earth image’s imagery does not reflect the presence of the Plains Midstream train loading facility, which is to the southeast, along the north side of the rail line. Image by Google Earth company to build a 40,000 bpd refinery at Stoughton. “We have also done all of our research. We have our timelines. We have our schedules. We have our plans for when we want to be up, running construction. But our plan is to be compliant with the regulations, with no fanfare.” The public hearing with the RM of Oakdale is for the application that has been submitted to the R.M. It’s not an information session. The notice went out to the residents in a one-kilometre residence. Independent Energy’s website, independentener-

y r r e Mhristmas! C

gy.ca, as of yet is quite spartan. It states, “Independent Energy Corp. is a privately funded corporation focused on the development of economical, environmentally friendly micro-refineries utilizing proprietary technology and high standards. Our senior management team has nearly 100 years of experience in all facets of upstream oil and gas production, transportation and refining experience including facility conception and design, construction, operation and regulatory compliance. “Independent Energy is committed to developing projects that bring economical value to the local communities while remaining in strict compliance

with all applicable municipal, provincial and federal regulations and industry best practices. Our success is built on the relationships we develop and maintain with all stakeholders throughout our projects.” As for projects, its website says, “Our projects consist of developing micro-refineries within Saskatchewan utilizing locally produced light sweet crude oil feedstock. Our facilities encompass a small footprint and are located where we have direct access to existing utilities and infrastructure including rail services, power and natural gas and crude oil. “Our facilities are constructed of modular components built within Canada and range in capacity from 10,000 barrels per day (bpd) up to 50,000 bpd with expansion capabilities based on market demands. The primary product produced is an ultra-low Sulphur (less than 15 parts per million sulphur) diesel for the transportation and stationary engine markets across Western Canada. Other byproducts produced from the facility include naphtha and heavier hydrocarbon chain products.” At this point no management, board members or, indeed, any individuals are listed on the website,

nor is an address. Weisbrod said they have teams in Saskatchewan and Alberta. The

phone number listed on the website is a Saskatoon number.

Saskatchewan’s oil and gas processing incentive This past August, Gibson Energy Inc. was the first company to take advantage of the Saskatchewan Oil and Gas Processing Investment Incentive (OGPII). Gibson used it for an expansion of its Moose Jaw Refinery, which increased its throughput capacity by approximately 30 per cent—from 17,000 barrels per day to 22,000 barrels per day. That expansion was completed June 29, 2019. If Independent Energy Inc. does build a refinery southeast of Kerrobert, it would likely qualify for this incentive. The province became serious about an oil processing incentive a few years ago when Husky Energy had proposed an additional refinery at Lloydminster, which has since been put on the back burner. Another refinery at Stoughton, initially proposed at roughly the same time in early 2017 by Dominion Energy Processing Group and its parent, Quantum Energy Inc., went nowhere. The incentive, which became open for applications April 1, 2019, offers transferable royalty/freehold production tax credits for qualified greenfield or brownfield value-added projects at a rate of 15 per cent of eligible project costs. Applications will be accepted until March 31, 2024. OGPII is open to value-added processing projects as well as gas, byproduct, or waste product commercialization projects across all segments of Saskatchewan’s oil and gas sector. Eligible projects may include, but are not limited to refineries/upgrading facilities, gas commercialization projects; regional gas-gathering projects and projects with multiple phases may also be considered under a single project application, petrochemical facilities, helium processing and liquefaction facilities, oil and gas production byproduct and waste commercialization, and enabling infrastructure, that is directly linked and dedicated to an eligible project, may also be considered.

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PIPELINE NEWS December 2019

PSAC forecasts 500 fewer wells next year Calgary – The Petroleum Services Association of Canada (PSAC) released its 2020 Canadian Oilfield Services Activity Forecast on Oct. 31. PSAC expects a total of 4,500 wells (rig releases) to be drilled in Canada in 2020. For 2019, the association’s final revised forecast predicts a yearly total of 5,000 wells. PSAC bases its 2020 forecast on average natural gas prices of $1.60 CDN/ mcf (AECO), crude oil prices of US$58/barrel (WTI), and the Canadian dollar averaging $0.76USD. PSAC president and CEO Gary Mar said, “Following a very disappointing 2019 that saw activity plunge to 2015/2016

levels with about 2,000 fewer wells drilled than forecast, the outlook for 2020 is even worse with exploration and production (E&P) companies choosing to buy back their own under-valued shares, pay dividends and pay down debt rather than reinvest in Canada. It’s hard to justify spending or attract new capital investment when market access constraints remain and policy uncertainty persists. “With the unrelenting focus on climate action during the recent federal election campaign and the resulting minority government that is expected to be supported by parties that have no interest in the global GHG reductions that Can-

ada’s oil and gas industry can deliver nor the economic benefits that Canada’s most prolific industry and largest exporter provides, PSAC is forecasting a further five per cent decline in activity to 4,500 wells.” On a provincial basis for 2020, PSAC estimates 2,155 wells to be drilled in Alberta, and 1,795 wells for Saskatchewan, representing year-over-year decreases of 235 and 200 wells, respectively. At 190 wells, drilling activity in Manitoba is expected to drop by 20 wells year-over-year, whilst activity in British Columbia is projected to decrease from 390 wells in 2019 to 345 wells in 2020. At 15 wells for both 2019 and 2020, ac-

tivity in Eastern Canada is expected to remain flat yearover-year. Mar continued, “The only bright spot for oilfield services companies is the spending on production optimization, maintenance and repair work (MRO) that continues along with new decommissioning and closure activity. With additional funding in place for the Alberta Orphan Well Association and the introduction of the Alberta Energy Regulator’s Area Based Closure program, work in these areas has increased. This MRO and closure work has helped some companies survive while sadly, others have been forced to relocate, however reluctantly, to the US or

other international locations or close their doors entirely.” Mar said, “It’s time our country had a vision for energy, a vision that could inspire Canadians to join together in support of our responsible energy development that benefits the lives of all Canadians. We are reducing our environmental footprint and GHG emissions through new technologies. Let’s find a way to work together for Canada to be the global leader and producer of choice rather than let countries with lower human rights, environment, and regulatory standards meet the needs of growing populations and under-developed nations. Let’s stop penalizing ourselves while

PSAC president and CEO Gary Mar spoke to the SIMSA Oil and Gas Supply Chain Forum in Regina on Oct. 3. Photo by Brian Zinchuk other countries reap the benefits that should be ours.”

Saskatchewan aims for 600,000 bpd production by 2030 By Brian Zinchuk Regina – On Nov. 14, Premier Scott Moe released “Saskatchewan’s Growth Plan,” which sets out 30 specif ic targets for growth by 2030. One of those listed was growing oil production to 600,000 barrels per day. On Nov. 15, Pipeline News asked Energy and

Resources Minister Bronwyn Eyre by email about that target, and what it means for Saskatchewan. Here are her responses: Pipeline News: The Saskatchewan Party’s plan for 2030 included a very specific number—600,000 barrels per day (bpd) of oil produc-

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tion by 2030. We are currently producing approximately 468,000 barrels per day, so t his would be a 28.2 per cent increase. How did you come up with that number? Bronwyn Eyre: The development of the Growth Plan involved extensive stakeholder consultations. We spent several months during the spring and summer of 2019 speaking with constituents and industry stakeholders, as well as in-depth analysis and research. We feel this barrels per day goal is a realistic one.

The government also took into consideration the wide range of new technologies and expanded production practices, from polymer flood to SAGD (steam assisted gravity drainage), which we think can be deployed over the next ten years to substantially increase Saskatchewan production. P.N.: Is that just a nice, aspirational number, or do you have specific targets for certain areas—say northwest Saskatchewan via SAGD development, or the Torquay and Bakken devel-

opment in the southeast? Eyre: It’s definitely an aggressive growth target, but one we think is attainable, if we take a thoughtful approach to sector development across the province’s many different plays and types of oil production.

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PIPELINE NEWS December 2019

Takeaway capacity constraints are the single greatest barrier to growth, says minister ◄ Page A7 construction phases, so we look forward to seeing them come to fruition over the next decade. There is also a major opportunity in the rest of the province, and in the Weyburn/Estevan area in particular, to do a lot more waterflooding, which will create more annual production. Enhanced oil recovery projects, specifically CO2 flooding, are also a key focus area in the Growth Plan. The Growth Plan also highlights some new incentives to boost investment in the sector, such as the Oil and Gas Processing Investment Incentive (OGPII) and the Saskatchewan Petroleum Innovation Incentive (SPII). The Growth Plan also includes objectives for Saskatchewan when it comes to new and expanded export pipelines and other strategic natural resource development and infrastructure projects. Let’s not forget that we have some of North America’s most competitive plays, which will continue to bring in development capital. These plays have continued to receive strong rankings in various industry competitiveness publications, such as the prestigious ScotiaBank Playbook, and the Fraser Institute’s Canada-US Energy Sector Competitiveness Survey, which show we are on investors’ radar across the continent as a leading investment capital destination.

P.N.: Some skeptics might say 600,000 barrels per day is unattainable, but North Dakota went from 1,247,700 in May 2018 to 1,393,947 in October the same year. That’s an increase of 146,247 barrels per day in five months. Now, their geology is substantially better, but doesn’t that show these sort of things can be done, with the right level of investment? Eyre: Let’s not forget that five or six years ago, Canada was approving pipelines, while the United States (under President Barack Obama) was holding them back. Here we are, in 2019, and the roles have largely reversed. In Canada, Bills C-69 and 48 pose existential threats to the Canadian energy industry, while in the US, federal red tape is being slashed and major projects are being approved. We have to do everything we can, provincially, despite being a landlocked province, to advance projects and generate investment. Global demand for oil is widely forecast to continue to increase year-over-year to 2040, and we expect Saskatchewan producers to deliver some of the most sustainably-produced oil in the world to meet that growing global demand. P.N.: What about pipeline capacity? Do we do it by rail? There is enough crude-by-rail loading capacity in west central

and northwest Saskatchewan to handle those additional volumes. Is that the answer? Or would some of that (from northwest Saskatchewan) end up in the Keystone XL, if it ever gets built? Eyre: Takeaway capacity constraints are the single greatest barrier to growth in the entire Western Canadian Sedimentary Basin. This must be addressed, as we continue to hold the federal government accountable to deliver on TMX and remove harmful policies such as Bill C-69 and Bill C-48. The goal of the Government of Saskatchewan is to upgrade and refine as much of our crude oil production as possible. We all know that pipelines are the best way to move oil, but transportation by rail will also, always, be part of the mix in Western Canada—particularly as long as agricultural, mining, forestry, and manufacturing sectors are also obliged to rely on the rails and don’t have alternative options to export their products via pipelines. P.N.: In a broader context, what would an increase of 28 per cent in oil production mean to the Saskatchewan economy? How many jobs? Additional businesses? Drilling activity? Eyre: An increase in oil production from the Growth Plan baseline of 480,000 bpd to 600,000 bpd per day in 2030 will,

we hope, have significant positive impacts on the provincial economy, as well as drilling activity, jobs (both direct and indirect), and new revenues to RMs and the provincial government. P.N.: What would it mean to communities such as Lloydminster, Kindersley, Shaunavon, Weyburn, Estevan, Carnduff and Carlyle? Eyre: Obviously, the communities in our four major oil and gas producing regions benefit from wealth generation flowing from the oil and gas sector, in terms of direct and indirect jobs—over 34,000 full-time equivalent jobs in our province. However, there are over 100 RMs in the province, with oil and gas production, which also benefit from revenues from the sector for local priorities. The oil and gas sector generates well over a $1 billion annually directly in provincial government revenues that support quality of life services across our province, from highways to hospitals, social services to schools. P.N.: Many oilfield services companies dramatically reduced their staffing when the downturn hit. A common number we heard from most oilfield services was they

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have to be creative. We don’t want to curtail, and haven’t, as Alberta did. We want to go in the opposite direction. As long as federal anti-energy policies are in place, we have to look at infrastructure and leave no stone unturned when it comes to increasing production and transportation, through royalty, incentive and infrastructure strategies. I plan to reach out to my counterpart in Manitoba in the next few days to talk about potential CCS/EOR corridor partnerships and an update on projects that involve the port of Churchilll. Yes, there are federal headwinds, but we must continue to do everything we can to embrace positive Western Canadian energy.

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cut their staff by about half, from 2014 to 2017. Do you think we would be able to bring the people back, needed to accommodate such growth? Is that a bad problem to have? Eyre: I understand the sector was spooked by the last downturn, and people need to feel confident again. A healthy and growing sector will drive all kinds of direct and indirect employment opportunities for the people of our province, as well as serve as a magnet for people and companies from other jurisdictions wanting to benefit from opportunities in Saskatchewan. P.N.: Is there anything you would like to add? Eyre: As a province, we

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PIPELINE NEWS December 2019

CAODC issues a flat drilling forecast, but 48 fewer rigs next year, dropping to 497 Calgary – Following the Canadian federal election in October, the sentiment toward Canadian oil and gas is nearing all-time lows, said the Canadian Association of Oilwell Drilling Contractors (CAODC) in releasing their drilling forecast for 2020 on Nov. 13. “Since 2017 the industry has lost an estimated $30 billion in foreign capital, and companies continue layoffs and relocation efforts. CAODC members have moved 29 high-spec drilling rigs, several service rigs, and associated personnel to the United States in order to find work and generate cash flow,” the organization said in a press release. As such, it’s projected 2020 wells drilled to be essentially flat at 4,905—an increase of just nine from 2019 (4,896 forecast and actual). Similarly, projected 2020 operating days come in at 46,599—an increase of 88 from 2019 (46,511 forecast and actual). Perhaps the one of the biggest news items is an ex-

pected 8.8 per cent reduction in the drilling rig fleet. The rig fleet is expected to decrease by 48 (545 drilling rigs to 497 drilling rigs). Six years ago, that number was over 800. And when it comes to jobs, the total jobs expected is 22,313; flat year over year and a loss of 13,731 jobs compared to 2018. Punitive regulations in the form of bills C-48 and C-69, delays in Enbridge’s Line 3 pipeline and the Trans Mountain Expansion project have, among other things, left Canadian oil and gas workers with little to be optimistic about, the organization noted. “It has been another extremely difficult year for our members,” said CAODC president and CEO, Mark Scholz. “The attacks from foreign funded, radical environmental groups, and punitive policy measures from our own federal government have caused Canadian oil and gas families to suffer unnecessarily.” Canada’s oil and gas industry is at a critical turning point, said the CAODC. “It

The CAODC is expecting another 48 drilling rigs to disappear off its rolls next year. This is Horizon Drilling Rig 27, working south of Torquay on Nov. 8, one of the fortunate ones. Photo by Brian Zinchuk would appear the only place Canada’s exceptional reputation for technologically driven environmental best practices isn’t recognized is in Ottawa,” explained Scholz. “If we do not create an environment where the oil and gas industry can compete internationally, we won’t have an industry left

in this country.” In order to stabilize the industry and restore confidence, CAODC calls upon the federal government to: • Accept Alberta’s climate plan as a federal equivalent program. • Repeal bills C-48 and C-69. • Guarantee the com-

pletion of the Trans Mountain Expansion project using all available tools and resources. • Include and prioritize the responsible development and export of Canadian oil and gas as an effective and timely means of reducing global greenhouse gas emissions.

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“It’s time for the federal government to recognize what the rest of the world already knows: the Canadian oil and gas industry is a supplier of choice, good for the environment and the economy, and should be given every opportunity to compete internationally,” Scholz concluded.

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PIPELINE NEWS December 2019

It’s a challenge ensuring you have enough workers for service rigs: Independent Well Servicing By Brian Zinchuk Estevan – Making sure you have enough workers can be a challenge when you’re running a service rig company. Tim Huber, Jerry Mehler and Brian Crossman are three of the partners that own and operate Estevan-based Independent Well Servicing. Huber and Crossman spoke to Pipeline News on Oct. 25. “What work there is, we’re far from being swamped,” Huber said. That being said, he has spoken to a number of other contractors and found, “Everybody is majorly in a bind for finding people.” “Good people,” Crossman added. “And you have a combination of several different reasons for that,” Huber said. “We have 10 rigs. We have crews for six. For the most part, we’ve been running six rigs, but they don’t run every day.”

If they had enough people for seven or eight rigs, could they put them out? “Sometimes,” Huber replied. “Sometimes we could have seven or more rigs running. But, the fact is, trying to find enough people to keep six people running right now is a challenge…” Crossman said, “Between accommodating guys wanting days off and people who try for a while and they quit, and go somewhere else. It’s an ongoing thing. And everyone has the same story, from the people I’ve talked to.” Huber said, “Part of it, of course, is a combination of reasons. One is wages aren’t what they were. Even more critical is the fact that you can’t offer anyone steady work. And what I think is playing into this is the combination that most young people, now, have

been indoctrinated from pretty well Kindergarten that we (the oil industry) are the worst thing since the devil. “Why would you go work for something that you’ve been taught, from Day 1, is worse than the devil?” Huber said in exasperation. “They’re being indoctrinated into this, and I do believe that is part of the reason,” Huber said. He added that trades don’t get a lot of promotion in school. Crossman said, “If they say we’re not going to need oil pretty soon, so I’m going to look at another direction. And none of them have the sense to realize that we still need oil, even if we go electric tomorrow, which is an impossibility.” Asked what demographic they usually hire, Crossman said, “Our workforce is actually get-

Independent Well Servicing could put more rigs like this in the field, if there were more people available to crew them. Photo by Brian Zinchuk ting older. We do get some young guys come in, but not as many as we used to, by far.” Huber said they’re getting people in their 30s and 40s. “Service rigs, normally, have been a young man’s game. To give you a

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also guys in their 30s and 40s.” “Before, you wouldn’t even have someone coming in that age, because you would have so many young people coming in,” Huber said. “They’d already have a career going, too, but what they’ve been doing has fallen ► Page A12

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Wishing everyone a very Merry Christmas. Thank you for your support this year!

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PIPELINE NEWS December 2019

Hours can be long, and the work at times sporadic, but there is work to be had on the service rigs ◄ Page A10 apart due to whatever circumstances. Some of them have experience, some of them don’t,” Crossman said. “If their job disappeared, whether on a service rig, or oil related, so many of these people basically left, and they aren’t going to come back. Even if they’re working for $5 or $10 an hour less, or whatever the situation is, but it is steady work, and they can put food on the table. They’re not going to come back to not have steady work,” Huber said. IWS does keep people around during spring break-up, but they’re not working in the field and they’re making less money during that annual slowdown. “Out of 52 weeks, you figure the six to eight week road ban, give or take, a week at Christmas, and off and on for weather, so you’re give or take 10 weeks a year that you don’t work that are unavoidable,” Huber said of the time not in the field. Crossman added, “And then you get lots of

rain, like we had this fall, and all of a sudden your rig is sitting for a week.” “But that’s unusual,” Huber said. It also depends on which company individual rigs are working on. That can mean 35 to 40 weeks of work in a year if a particular oil company is not as active. Some years can see less than 30 weeks. That can make retention difficult. “You do everything you can to hold them, because you know you’re going to need them at some point,” Crossman said. “You try all sorts of things like work sharing. Every week you put this guy here, and that guy there, and switch people around to get some hours for some people. And we’ve been in the mode of that for five years now,” Huber said. “Years ago, you had the same crew for a year or more, quite often. If you started the year with the same group of guys, you’d finish with them. You might lose a guy, or someone would get promoted

to another rig,” Crossman said. “Now, it’s not quite the same.” Huber gave an example where one worker was on four different rigs within the same week. That’s the sort of juggling the labour shortage had meant. “It’s a hassle for the guys, too, because they’re always bringing their clothes in … because you don’t know where you’re going to be the next day,” he said. The usual practice would be to leave your work clothes in the doghouse of the rig at the end of the day. Asked about the possibility of reducing the number of active rigs to correspond with the available labour, they both explained that doing so doesn’t address the fixed costs of running the business. Reducing rigs would mean reducing other staff, like management and mechanics, something they wouldn’t want to do. And it would be very difficult to ramp back up when things do pick up. Independent Well Servicing has 42 people,

Merry Christmas

Tim Huber, left, and Brian Crossman, of Independent Well Servicing spoke of how they could use more rig hands. Photo by Brian Zinchuk total, including office staff, supervision and mechanics. Asked how many people they’d hire right now, Crossman said, “If 12 guys walked in the door, and they’re all green, you can’t hire them.” That’s because they can only put a limited amount of inexperienced people on each crew, until they are up to speed. “You try to have at least

three to four spare guys to cover days off. That’s the other thing. Even if guys aren’t working steady, they always need days off for something. And obviously, their days off aren’t like a normal work schedule. Rigs don’t work a normal work schedule. So you have to deal with that, and sick people,” Huber said. Their oil companies work different rotations.

One works 12 on, two off. Earlier this year, they were 10 on and four off. Another is six and one. “Other companies work until they want to stop,” Crossman said. “There’s different scheduling for different guys. The average is four to seven days a week. This last month has been a bit better. But we’ve had months ► Page A13

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PIPELINE NEWS December 2019

A13

Whitecap has plenty of plans should they get additional CO2 for the Weyburn Unit By Brian Zinchuk Weyburn – If and when additional carbon dioxide comes available,

Whitecap Resources Inc. is ready to use it. But in the meantime, they are continuing at a measured

◄ Page A12 like September, where we were four days a week,” Huber said. But now, there’s more of a push on.” “That’s why you want to carry at least four to five extra guys, if you can, on a normal basis, just to accommodate people,” Huber said. As for how many hours per day, Huber said, “On the rig itself, it’s an average 10-hour day, but you’re on the road, usually most of our rigs are working give or take an hour from town. So that’s a 12-hour day, from the time you’re picked up,

to the time you’re dropped off, minimum.” It actually is a bit longer, when you factor in the time to pick up the whole crew, stop at a convenience store, fuel up, and stop at the shop. They typically pick up their workers at home, and go out as a crew. “If we could get six experienced rig hands walking in the door, we could crew up another rig,” Crossman said, “But good luck.” Huber, “If two guys walked in the door today, willing to work, we would hire them in a second.”

Extra hands needed

pace with capital expenditures in the Weyburn Unit, of which Whitecap is the operator and majority owner. Joel Armstrong is vice president of production and operations for Whitecap. He was down at the Weyburn Unit on Nov. 13 with much of the executive team to celebrate the 65th anniversary of the discovery of the field. Armstrong told Pipeline News, “We’re looking to spend 19 per cent of

our overall budget of $370 million, which equates to about $70 million, for Weyburn. It’s going to be a combination of rollouts to parts of the field that don’t have CO2 currently, and a number of drilling locations.” The company is currently in the midst of drilling six wells, and has a further 10 wells planned for 2020. Capital expenditures also includes the purchase of carbon dioxide from

both SaskPower and Dakota Gasification, the two sources of CO2 used in the Weyburn Unit enhanced oil recovery. “Overall, capital deployment for CO2 is pretty steady,” he said. His presentation to the staff indicated the company is essentially in a steady-state program. “We’re essentially staying flat with a slight bit of growth but we’re very hopeful we can add capital and grow it substantially

Wishing You a Merry Christmas Dustin Duncan, MLA

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If you’re willing to work, Independent Well Servicing would probably give you a chance. Photo by Brian Zinchuk

when the market dictates, but the market is not favourable for that right now,” Armstrong said. Overall stability in the sector and commodity prices have a big role in that, he noted. “We budgeted for US$55 (for WTI). We can manage quite comfortably down to US$50,” he said. This past fall Whitecap president and CEO Grant Fagerheim was in Regina, speaking with ► Page A14

Weyburn – Big Muddy

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PIPELINE NEWS December 2019

Whitecap will resume drilling in the Viking in the new year ◄ Page A13 SaskPower about their desire to acquire more carbon dioxide. “(SaskPower) hasn’t really provided any estimated date or committed to any further projects. It’s really in their court. I wouldn’t expect delivery for several years as it’s probably a four or five year project,” Armstrong said. Asked how much time it would take for them to mobilize to take advantage of additional CO2, Armstrong said, “Obviously we need a certain volume as our primary source. We

have lots of plans, though. We’re looking at alternative formations for vertical expansion that would require a pilot program to validate as well as the possibility to grow the unit horizontally.” If they go ahead, it would mean primarily new wells, as opposed to repurposing old wells. “I’m not exaggerating. There’s lots of work here to be done, yet,” Armstrong said. “It’s trying to methodically pace that over a reasonable period of time. If we see government sta-

bility, good commodity prices, we can accelerate our program on a dime. We could accelerate tomorrow.” The company is strong financially, he said. Asked about where the funds for an expansion like that would come from, Armstrong replied, “At some point, we’d like to see the capital market come back, with outside money coming back into the sector. It’s not currently there. We can fund a lot of projects internally, though. Between our organic pro-

gram and the dividend we pay, we still manage a considerable amount of free cash.” In western Saskatchewan, Armstrong said, “We’re very active, and always have been in the west central and southwest Saskatchewan business units. We have two rigs in Swift Current right now, and we’re done our 2019 program in west central. We had three rigs going until about four weeks ago, but

we’re all done now.” In the new year, Whitecap will resume drilling in west central Saskatchewan. “Weyburn provides us with that steady, low-decline base production. The Viking is very much high return economics, low reserve life. It’s a treadmill. You have to be very careful, how deeply you step on it. That’s why the aggregation of these assets works so well,” Armstrong.

A year ago, where there were large differentials on heavy oil, the company was bringing heavy oil by truck to blend at Weyburn. They haven’t been doing that of late, Armstrong explained, because the economics aren’t there at the moment. “When the differentials were blowing out we did a quite a bit. If we can make a few points on blending our base product with other products, we’ll do that, for sure,” he concluded.

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PIPELINE NEWS December 2019

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The Weyburn Unit could collect a pension cheque now, at 65 years old By Brian Zinchuk Weyburn – If the Weyburn Unit were a person, it could now collect its first pension cheque. However, it is still a long, long ways from retirement. Whitecap Resources Inc. gathered its staff together on Nov. 13 for a small celebration of the 65th anniversary of spudding of the Weyburn Unit discovery well. That took place Nov. 12, 1954. Much of the Whitecap executive team came out for the occasion, as did three people whose careers were intimately tied to the early days of the Unit – Wilf Skjonsby, who was superintendent from 1974 to 1992, Harvey Gall, who worked under Skjonsby much of that time and retired as a senior maintenance foreman, and Jerry Mainil, who made his career there as a contractor. Both Skjonsby and Gall worked on the “bull gang” right from the very beginning, mixing cement and hauling rocks, by hand. Mainil recalled having to go to the one, singular phone in the area in a little 10x10 field office. It was the only one Mainil recalls using at the time, a far cry from today with individual wells equipped with SCADA systems and everyone car-

rying a cellphone in their pocket. “I hauled oil from the first well out here,” Mainil said. “We hauled oil with a 3-ton truck to the Weyburn airport. They had a rail siding there to the load oil on rail cars.” Darcy Cretin, the current long-time superintendent, noted the discovery well, at 14-67-13-W2, ended up being at the very northwest corner of what would become the Weyburn field. It was drilled by Central Del Rio, which would later merge with Central Leduc (a company which was founded after Imperial Oil discovered oil at Leduc in 1947). The landowner was Karl Dorsch. It was drilled by Central Leduc Drilling. They rigged up on Nov. 8, and it took 30 days to drill the Weyburn discovery well. Cretin said that first well went 5,124 feet. “We just drilled a well last week and we were at that depth in about three days,” he said. The discovery well was “not exactly the Hollywood picture of oil spraying over the derrick,” Cretin said, bringing in 10 barrels per hour with a 60 per cent water cut. That made for 45 cubic metres per day of fluid. Interest in the area

came after a recent discovery in North Dakota. Central Del Rio had a land reservation from Weyburn to the U.S. border, but it was too big for them to handle, so they farmed out some land to Mobil. Mobil drilled one well it the Ratcliffe area, discovering the Ratcliffe zone. But it was busy in the Pembina field, so it agreed to split its acreage with Central Del Rio. “They were fracking wells here 65 years ago,” Cretin pointed out. As they moved south from the discovery well, they got better wells. “Eventually it turned into a big discovery,” Cretin said. Mobil, Shell and Central Del Rio were all active in the area. By September 1955, the Weyburn field was designated by the provincial government. By the end of 1956, it had 67 wells producing about 3,000 barrels per day. In 1957, it had become the largest field in Saskatchewan. At that time there was an estimated 300 million barrels of original oil in place. Cretin said it was originally thought to be a mediocre oil pool, at best, with modest pumpers on the northeast edge of the field. By 1963, waterflood was implemented, and it was the largest waterflood

From left, Jerry Mainil, Harvey Gall and Wilf Skjonsby were the invited guests at the celebration of the 65th anniversary of the Weyburn Unit’s discovery well. All three got their start working there. Photo by Brian Zinchuk operation in the world at Whitecap Resources dioxide miscible flood the time. They predicted purchased the operating around the turn of the water would be injected stake in the unit two years century attracted global for 40 years, which, if ac- ago this month, being the attention. The Intergovcurate, would have ended first company outside the ernmental Panel on Cliin 2003. Obviously, that direct succession of com- mate Change was one of was way off. panies to take majority the very first tours, and Production peaked ownership. those tours are still ongoaround 1966 around But in the late 1980s, ing. A group from Kuwait 47,000 barrels per day. PanCanadian, Shell and came in September with Central Del Rio Oils Mobil each had a 25 per a group from Abu Dubai was purchased by Cana- cent stake, Cretin said. scheduled to visit in Dedian Pacific Oil and Gas There was some compe- cember. in 1969, which changed tition for who should be The original pumpits name to PanCanadian the operator, but PanCa- jack for the discovery well Petroleum Limited in nadian eventually bought can be found in Wey1971. In 2002, PanCa- out Mobil’s stake, settling burn’s River Park. nadian became EnCana, that discussion. “There’s been a lot which split into EnCana Over time, imple- of spinoff from one little and Cenovus in 2009. mentation of the carbon well,” Cretin said.

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A16

PIPELINE NEWS December 2019

Miller Well Servicing recently crewed up a sixth rig By Brian Zinchuk Weyburn – Bruce Miller’s company, Miller Well Servicing of Weyburn, is part of a consistent trend of service rig companies that could, at times, use just a few more hands. When asked if they were looking for workers, Miller said on Oct. 30, “We were. It kind of comes and goes. We go on a hiring spree that have a couple new employees that stay on full-time, with the rest finding out that oilfield workers work hard for the money. Then we start the hiring process again. “It seemed like earlier this summer, there was nobody around. You couldn’t even find someone to put

in a resumé. But it’s been a little bit better this last little while. “We have six crews, and only work for six rigs. We did manage to put together another crew to put the sixth rig back to work. It’s a struggle, some days, but we try to keep about 32, maybe 33 guys on to keep six rigs running, because there’s always a day off somewhere or holidays booked,” he said. Miller Well Servicing has eight rigs in total, but six are active. “There’s a little bit of extra work out there, but it’s hard to keep a crew. You get a call for a rig for two days, and then you might not get another call for it for two weeks, so you can’t really blame the guys for moving

on if that’s all the work you can provide for them,” he said. This is very similar to what other service rig companies have told Pipeline News. Miller said they’re doing a pretty wide variety of work. “There isn’t a whole bunch of completions now, as it seems there isn’t a lot of drilling rigs working now,” he said. They’ve been doing some water injection conversions, which are nice, because they take four or five days instead of one or two. The company recently reactivated a sixth rig. “We promoted the top end jobs from within, but we had to go out and get two or three

new green guys to the oilfield. We managed to find other guys who were done their harvest or construction stuff that finished in October.” The trend for service rig companies needing a few more hands is consistent across the industry, according to Miller. “That’s exactly it. If we’ve got all our stuff running, ideally it would be nice to have a couple more guys, but it’s hard to maintain them if you don’t have the work. As a general rule, all summer, if we had two or three extra full-time guys, it would have been a lot easier on my men, and me, for scheduling Indeed, they’ve been sharing staff with another

Weyburn service rig company, Southern Range Well Servicing Ltd. Miller said, “We were actually sharing a couple

guys. If you don’t have work for them today, I do, we’ll use them. If you need them back, you can. We just try to work through it.”

By Brian Zinchuk Lloydminster – Garrison Oilwell Servicing out of Lloydminster is experiencing a similar labour situation that other service rig outfits around Saskatchewan have – that they could use a few more hands. Bev Garrison, who

owns the company with her husband Darryl, spoke to Pipeline News on Nov. 7. She said, “It depends what day you ask me. I kind of am right now. We’ve been doing not too bad, then all of a sudden you lose a couple guys, then you gain a couple, then you lose one.

We’re just kind of hovering. It’s like I need to gain a few more, extra.” The company has five service rigs. “Today we have three working. We were at four. For a few days, we were at five, but that was making us very lean. We’re good with four,” she said.

It’s a family-owned and operated business, and has been for around 42 years now. Like several other of the companies Pipeline News has spoken to, management has had to fill in at times when they are short hands. Sheldon Garrison, their field supervisor, does

that on occasion, as an example. Most of the family still works with the outfit, but, she said, “This downturn has been hard on that, too. Two of our family members are now working in different places, their choice. We got really slim for a few

years.” “It’s definitely been slower, but this last year we’ve actually perked up quite a bit. July and August were really slow for us. A lot of that was the rain. We couldn’t get permits to move.” ► Page A17

Miller Well Servicing near Ocean Man. Photo by Brian Zinchuk

If Bev Garrison could snap her fingers, five additional workers would show up

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A17

Do you want modern conveniences, or a sod hot? ◄ Page A16 When that happens, the workers sit, just as the company sits. However, she added, “We’re really good at keeping our equipment up, but there’s only so much shop time we can do. We encourage them, on those days, anything that needs to be done on your equipment, get it done. Do your shop time. But if it goes on too long, once you have everything tip top, there’s really not a lot more you can do. “If you can’t get permits to move, you don’t want to be doing stuff where you’re laying in the mud, either.” Bev does the hiring. Asked if she could snap her fingers, how many people would show up, looking for work, she replied, “I’d probably get five, a whole crew.”

A lot of their recruitment is by word of mouth, and they do some advertising as well. “Pretty much everywhere has felt the effects of this bad environment, to say the least, and its gone on for quite a while,” she said. “We follow the CAODC recommended wage schedule,” she said. Bev appreciates the fact that the Canadian Association of Oilwell Drilling Contractors (CAODC), of which they are a member, has been standing up for the industry. “It’s been a great organization for us, and I like the fact they’ve gotten more politically out there,” she said. “People are so silly,” she said, noting that simply brushing her teeth, she no-

ticed of everything on her vanity. “How many products that the petroleum industry had touched?” She pointed to a TV commercial where everything made out of petroleum disappeared from a man’s life. “It’s like, everything. It’s too bad that isn’t taken more to heart. These kids that are protesting – you know what? Parents, take your kids phones and all their electronics from them. Put them in a sod hut in the back yard, because that’s what they’re preaching they want the country to be, on their phones, sitting in their heated or air conditioned homes, trying to cram this down everyone’s throats. “You know what? You live in a house with no running water. You don’t like it. Experiences we for-

get. We moved forward for a reason. I don’t think the pioneers loved their sod houses. Between this life-

style, and the lifestyle back then, I think we know what the choice would be,” Bev said.

Quite a few of Garrison’s people took part in the convoy that went down the main drag of Lloydminster.

Garrison Oilwell Servicing, seen here in 2008, has five rigs based in Lloydminster. File photo

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A18

PIPELINE NEWS December 2019

Key Well Servicing, in the Weyburn Unit since 1982 By Brian Zinchuk Weyburn – The Weyburn Unit’s discovery hole was spudded 65 years ago, and for 37 of those years, Key Well Servicing has been working in that field. Key is currently owned by Kelsey Gerle and Gabe Runge, who purchased the company from Lyman Sargent and Toby Towne in November 2007. Gerle pointed out it has always been a locally-owned and operated company. Key is a four-service rig outfit, primarily composed to two singles and two doubles. Recently, the doubles have been seeing more work, as they have been preferred by the oil companies. But that has changed over the history of the company, with singles in favour some years, and doubles in other years. Their shop is on the Laurier Road, west of the Unit, and they have an office in Weyburn. The shop’s location places it relatively close to the Unit, but more importantly, as it is in the same rural municipality as the Unit, road permits are less of an issue. Runge started working with Key in Decem-

ber 2000. Gerle had been working on drilling rigs for many years, but his rig went to work in northern Alberta, so he found work with Key on the service rigs. Gerle is originally from Ceylon and Runge is originally from Trossachs. Now they and their families call Weyburn home. They bought Key in 2007, just in time to ride the roller coaster of oil prices, from a record high to a harsh low. “It was a record high to a record low within the first year,” said Gerle. They had the two singles initially. They bought the two doubletriples (double joint, triple rod capable) in 2013, and also added a flushby and a pressure truck. “We had two flushbys for a while, then it slowed down, so we ended up selling one,” Gerle said. “It went to Mexico, and we should have went with it,” he said with a laugh. To work or for a holiday? “Both!” they exclaimed together. “We should have sold the rigs and bought a resort,” Runge said, smiling.

There’s not much market for singles these days in the southeast. “Smaller companies that have shallower wells and quick pump changes, but they’re just waiting,” Gerle said. If they were to sell the two singles, they would get another double, but they don’t expect that to happen any time soon. “You would need a huge turn in the economy, too,” said Runge. “There’s so many rigs sitting.” They’re fully staffed right now. “If we were to have Rig 1 go out tomorrow, we’d be short five guys. We have one extra guy right now. But if Rig 1 went out, we’d need a full crew.” They also have a parttimer come in as needed. “There’s no schedule. It could be 21 days on, or four days a week. There’s no set schedule. If a big well goes down, you’re working the weekend. If not, you have the weekend off. Maybe a long weekend. Just whatever comes along, I guess,” Gerle said. “We try to do a 10 and four, but we’ve tried so many schedules that didn’t work.” “It depends on the

price of oil,” Runge added. “As soon as we’d have the four days off, a well would go down, and it just didn’t work,” Gerle said. “We tell the right away, there’s no set schedule.” If a worker has something important coming up, they need to book the time off so someone else can fill in, because they can’t count on having the weekend off. They pay par or a little better than the Canadian Association of Oilwell Drilling Contractors’ recommended wage scale. Key has 17 employees, including the two owners. “We have a lot of older guys, a lot of longterm,” Gerle said. One is in his 60s. “We have had some turnover, for sure,” Gerle said. “But we still employ great, long-term employees. We’re a family oriented business. On one rig, we have an uncle and a nephew. On another rig, we have a father and son.” “Nothing like it was in 2012-13,” Runge added. “It was really new faces then. It’s stable now.” “A few guys that had worked went back to

school. We had a couple guys from Ontario take off and are not even around anymore,” Gerle said. The flushby generally works Monday to Friday. “It’s steady,” Gerle said. While flushby units are common in northwest Saskatchewan, they are not common in the southeast. “Ours isn’t really for pump changes. We do more unseat, and pump chemical, to deal with the wax in this field,” Runge said. Gerle added the flushby is also used for high rod breaks. “We only work in this field right now,” Runge said. “We have, in the past, ventured out for other companies.” The work has been steady. Asked if two people walked in tomorrow, looking for work, would they take them, Gerle responded, “If we had the work, we definitely would. It’s such a hard thing to say. If we had a phone call and an oil company said we wanted Rig 1, and we’re hoping it’s going to go out, we’d be gathering every resumé we can.” “You get us those two guys, and we’ll let you

know!” Runge said with a laugh. Gerle likes the idea of having a pool of three men who are oriented to three service rig companies, for example, who could be called up to work around between those three companies. “If, as a service rig company, we could keep three good guys busy, if they wanted to move around… We have one guy who would rather move around for us and keep busy, than stick with one particular rig. He likes change. If we had three of them that could move to different companies, and have all their tickets and orientated, it would be easier. “We all get along,” he said of his local competitors. Offering an idea, Gerle said, “If you had a five guys, a full crew, that work well together, then you could have it where if that rig goes to work, and shuts down, they go to the next one. And if they are sitting, and nobody has work, then each company has to throw in a little bit. “Each takes one,” Runge said.

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Having two rigs, working steady, makes it easier to crew them: Jmax CLASSIC SENT A TANK TO WORK ON A PROJECT IN QUEBEC IN NOVEMBER

By Brian Zinchuk Lloydminster – Jmax Well Service is one of the few service rig companies working in Saskatchewan that hasn’t had much turnover, being the exception that proves the rule. Adam Johnstone is president of Classic Oilfield Service Ltd., parent company of Jmax Well Service Ltd. They’ve had service rigs since 1984. Currently Jmax is operating two service rigs. “We’ve been lucky that way. We’re small enough that we only operate the two service rigs. We keep one spare guy and let him work in the shop when he’s not on the rig. It seems to work well, when someone needs a day off. We never cut wages when it slowed down, even when CAODC did. We left them where they were at. That seemed to help the morale as well,” Johnstone said. “I’m sure that we’re a little above CAODC rates.” The Canadian Association of Oilwell Drilling Contractors (CAODC) puts out recommended pay scales each year. “It’s a problem to find experienced guys that want to work on them. We’ve managed to keep our guys.

The odd time we are short, we look to another company right across the street here. They’re trying to run three rigs, and it’s hit and miss, so generally we can get one of their hands to come over if we need them for a day or two,” he said. Daniela Tobler, who does sales with Classic, said, “I think it helps that we’re locally-owned and owneroperated, because that way the employees feel closer to the organization, rather than just a number.” “We don’t have much of a turnover rate, at all, even with Classic. It stays pretty steady. We have lots of guys that have been with us 15, 20 years. We have turned over a few people, but not to any extent,” Johnstone said. Tobler said, “The rigs being fortunate enough to have regular, steady work helps. A lot of companies are doing a couple weeks here, and a couple weeks there for a company, and then their employees don’t know when they’re going back to work, or if this is going to be their last job. “Even minimum wage is higher than what it used to be. You can go get a steady paycheck somewhere else,

and not have to be working in -30 C, long hard hours. So it’s hard to entice these guys to work on the rigs now. It used to be that their compensation for that would being able to make good money. But if you only get to make good money for two weeks out of every couple months, is it really worth it?” she said, referring to the broader service rig industry and the sometimes sporadic nature of the work. “They’re leaving the house at 5 a.m., get home at 7, 8 at night at times, working in extreme weather. You don’t know if you’re going to have a day off or when you’re going to have a day off. If you’ve got a family, that’s pretty tough to deal with, too,” Tobler said. Johnstone said one of their rigs works 11 days on, three days off. But the other rig’s schedule isn’t as steady. Rain can be an issue, for instance. “They’ve been averaging 200 hourss a month, which helps, I guess. Even through the worst of the slowdown, we had one rig that was hit and miss for a year. We kept the toolpush, driller and the derrickhand with the option to work in the shop to get some hours

Jmax’s parent company, Classic Oilfield Service, had one of their service rig tanks working in Quebec in November, as seen here. Photo submitted. if they wanted. They seemed to appreciate that.” That was around 20162017. They did rig maintenance or worked on the Classic side of the business. “We found years ago, trying to run four or five rigs, it’s just the nature of the business, you’re going to be short guys. We dropped down to one rig in 1998. We sold to a different company and we just bought one rig,” Johnstone said. A second rig was added

in 2008. “There’s lots of rigs sitting in Lloyd. I would assume it’s tough to find experienced guys.” One of their rigs has been working on abandonments and production. The second rig is working on production. One curious thing they’ve done recently was dispatching a service rig tank to work on a well in Quebec in November. They didn’t have any personnel

out east, though. Asked how iron from Lloydminster ended up in Quebec instead of something a little closer, they replied the outfit working in Quebec was from the Lloydminster area and familiar with the equipment. “I think it’s a small oilfield, and people from the Lloydminster area end up working all over the world, so we do have that network. That person is familiar with our equipment,” Tobler said.

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Red Hawk doesn’t take down it’s help wanted sign anymore By Brian Zinchuk Oxbow – Driving past Red Hawk Well Servicing Inc.’s Oxbow location, you can’t miss the help wanted billboard along the highway. And that’s kind of the point. “We’ve been trying to hire. That sign’s been there for a year. We don’t take it down anymore,” said Terry Gunderman, owner, on Nov. 14. “If a good guy walked in the door, we’d hire him, just to have him on hand for relief duty. “It’s a severe labour shortage of good people. Getting good people that can pass the drug test is a real challenge. They’re get-

ting to be fewer and further between,” he said. Marijuana might have been decriminalized a year ago, but that doesn’t mean much if you want to work service rigs. If you were smoking dope on Sunday, don’t expect a job on Monday. “Most of our customers say they don’t want any drugs in the system on their location. They don’t care what the law is, on their sites, they don’t want anything in your system. The majority of them, anyways,” Gunderman said. “If we had four good people walk in the door, we’d hire them. Four good

people, who could pass the drug test and have a license, we’d hire them on the spot,” he said. It’s not just enough to have a proper license, but to be insurable. If you have too many points against your license, you aren’t insurable. “I think everybody is in the same boat. Most of my competitors, they have rigs sitting because they don’t have people for them. It’s as frustrating as hell,” he said. Red Hawk has about 70 people, between the shop and on the rigs. They have 10 rigs, but eight were working on that day. The others work on occasion, but it’s hit and miss.

They barely have enough people to man all ten rigs. “If all ten were working, we’d be scrambling,” he said. It’s always a challenge to have relief help. “I don’t think the drilling rigs are all that different. I think they’re in the same situation,” Gunderman added. This winter is looking like more of the same. “We were all looking for a better outcome, come October, and that didn’t happen. I think reality is setting that this is the new norm, and we’re going to figure out how it’s going to work. Their fleet of ten rings is made up of five singles

and five doubles. While other companies have reported difficulties in finding work for singles these days, four of Red Hawk’s singles have been working. “We’ve been lucky with our singles. They move pretty fast and rig up pretty fast. They’ve got to

be in the right place, right customer. I think there’s still a place for them. It kind of changes, the flavour of the day, once in a while. Two years ago, we couldn’t get singles out the door fast enough. Now it kind of went the other way.”

By Brian Zinchuk Estevan – Sun Country Well Servicing workers were busy in the shop getting another rig ready to go out into the field. But like pretty much every other service rig company Pipeline News has spoken to recently, the company could use a few more hands. It’s a sign things are picking up a bit, as that had been parked for quite a while. Phil Amosah is area manager at Sun Country Well Servicing in Estevan.

On Oct. 24 he noted, “We’re doing well. As a company, we’ve been pretty fortunate over the past year. We’ve been doing okay. But as for finding good, quality people, yeah, it’s limited. People are kind of afraid to get back in the oil and gas industry. The Estevan-based company has 11 service rigs. They should have ten operational, he said, but they have enough staff for eight. “We had a few pieces of equipment sitting around we couldn’t crew up,” he explained.

They’ve been advertising via different channels, including letting people know they are hiring during Estevan Bruins game intermissions. “That’s our ad. It’s all about hiring.” “It’s still the entry-level people that we need, it’s the derrickhands and floorhands. And even some of the more experience people have turned. Maybe they’re going trucking, or something they can consistently count on, so they’re not coming back. They’re not coming back to service rigs, in general.”

“We haven’t had the opportunity to have as much equipment moving as we’ve had this past year. This past year, we’ve had the most strenuous portion because the opportunities are rising which oil companies who are settling in, knowing what they’re doing with oil prices. They know their lifting costs. So now they’re going to get into the portion where we’re going to do this amount of work.” Their fleet is spread out between five different companies. “That’s why I think

we’ve been a little more successful than some of the other guys who put all their eggs in one basket,” he said. If one company shuts down for a while, there can be opportunities with the other clients, as an example. Drilling has been sporadic with the weather this past year, but they have been doing completions. As for workovers, he said, “If it makes sense, economically. I think the procurement groups are pretty good at figuring that out.” “We’re hoping it freez-

es, and it freezes hard. We can’t get on half of these locations, still.” Some areas had eight inches of rain. “It’s out of commission. You can’t get there. One of our major customers has a huge, huge amount of locations under water. You can’t get on there with a one-ton truck and a four-wheel drive. You can’t expect a service rig or a tank truck to get on there. They were shutting wells in, not being able to haul fluid. “In November, we’ll ► Page A21

A Red Hawk service rig was working north of Lampman on Aug. 17. Photo by Brian Zinchuk

Sun Country puts another rig in the field

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“If we had half a dozen, we’d be in great shape” ◄ Page A20 “I think a lot of our customers have a lot of wells they couldn’t get to. That’s going to cause a lot of urgency to get these wells online,” he said. The downturn hit most oilfield service companies hard, with a substantial hit on the rates the charge the oil companies. Amosah said their vendor rates are coming back, a bit at a time, but they’re still down quite a bit. What gains they do get, they pass on to the workers’ salaries as they can. You can still make a decent living on a service rig. “Absolutely. If you get on a rig that’s consistent, it’s still a good career. It’s a

good profession.” Typical hours “Since the downturn, the oil companies are very accommodating,” he said. When oil was US$120 per barrel, there was a large push from the oil companies for long days. But now, he said, “It’s a lot more family friendly – 10 hours a day, five days a week, in some cases. Some of our oil companies had a 10 and 4 schedule for the entire summer. They organized that themselves. We got an email saying this rig will be down for this four day period, and they consistently got the other 10 days to go to work. It made it nice for the guys to enjoy their sum-

mer, and go on holidays. “Maybe they’re not going to Hawaii, but they’re tenting with their families.” Young men with good salaries often have eyes for big trucks and fast toys. But Amosah warns them, “Road bans are slow. Please don’t go buy anything fancy. Don’t buy a toy.” It may not be a doctor’s salary, but you can make a nice living, and provide for your family and have a nice house. It might not be a $100,000 truck but you can have a nice vehicle in the driveway, he said. Regarding additional hands, he said, “We probably need another half-dozen.

Nick Rutledge works on a BOPS in the Sun Country Well Servicing Shop. We’re still trying to accommodate guys with the time off. Due to the standard of living people have been accustomed to, with scheduled time off, they want time off. They want time with their

families. So we do try to accommodate that as much as possible. We try to have a sixth hand for every other rig. For us, that’s four extra

guys to rotate through, from experienced guys to relief. “Yeah, if we had half a dozen, we’d be in great shape.”

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Do you bring on a few more guys or go in the field yourself to pick up a shift? Oxbow – Oxbowbased service rig company Mayco Well Servicing is experiencing the same trend most of their compatriots are – they could use a few more hands, but not necessarily at all times. “That’s exactly it. There’s stretches where we’re running short four to five guys, and then you’ll go two or three weeks where you have too many guys around,” said Nick Mayer, one of the partners in the outfit. And that can be something of a conundrum. “I find it hard to hire guys, because I can’t say with conviction I can keep them busy over a period of time. There’s not a lot of local help around, so we’re often bringing guys from Nova Scotia. It’s hard to bring a guy in, with the circumstances. “The rain had played

a role, but it’s the uncertainty. There’s just not a lot going on where companies are picking up a rig for a period of time, and then they’re letting a rig go. It’s hard to bring a guy in from across the country to work for three weeks, then you’re carrying them for a period of time to fill that void. “We’re running six rigs right now. We were up to seven at one time,” he said. Their fleet is made up of seven rigs. He added it’s actually closer to fiveand-a-half rigs working. As other service rig companies have noted, there’s a limit to how many green hands you can bring on before you start diluting your skill pool. Mayer said, “Typically, we try not to have more than one green guy on a rig. With five rigs running, you don’t want to bring any more than that in, at

once, that’s for sure. “There’s a level of comfort after six months. I wouldn’t say it’s experienced after that point, but you can start to feel comfortable after six months, for sure.” “When it slowed down in 2014, we had an abundance of guys when we decided to concede and park a rig. As time has gone on, probably over the last three years, it’s been a bit more of a battle.” Mayer was the first to specifically mention bringing in people from Eastern Canada, but it’s actually been longstanding practice for them. “We’ve been doing it for probably 15 years,” he said. “Nova Scotia has probably been the best for us, some Newfoundland fellows. “Typically, you’ll get a guy or two from out there

and they help recruit guys for you. It’s typically word of mouth,” he said. They use job websites as well. They’ve helped people move to Saskatchewan, to a degree, but “It’s tough right now,” he said. Mayer would say the Saskatchewan labour pool is pretty much tapped out. “In the last two years, of all the guys we’ve hired… I would say we’re only about half have been from Saskatchewan.” Their staff includes 30 rig hands and four in the office. Most live between Alameda, Oxbow and Carnduff. Their operating area is from Stoughton to Pierson, Manitoba As needed, Mayer, his business partner Todd Cooley, and their field supervisor fill in on occasion as needed. “For our situation, at Mayco, it’s the uncertainty to hire guys.” “We’re running as

few guys as we can and we’re trying to pick up that slack, ourselves, until

we can reach that level of comfort to bring people in.”

By Brian Zinchuk Estevan – Rangeview Thru Tubing Tools & Service started in Carnduff in 2008 when Ted Evans, the owner, saw his job evaporate. Evans and Mike Cullen, who handles sales, met with Pipeline News in Estevan on Nov. 14. Evans said, “We’re a downhole intervention company, both on service rigs and coil tubing. We have packers, plugs, frac tools, motors and mills. “We do have some cased hole fishing tools as well. That’s not our primary business.” Evans’ background is agriculture. “I started on the coil tubing rigs, selling coil tubing tools. Then mud motors and whatnot for another company. Then in the 2008-2009

downturn, I got laid off and Rangeview started,” he said. He’s the sole owner. “I’ve got all the stress,” he said with a smile. “I was actually getting ready to go out on my own anyways. It was the gentle push I needed to start Rangeview. I did some consulting for another company that was in Manitoba at the time, on the sales side. With good fortune, we picked up some work with PennWest, and then Tundra, and Legacy. They got us started.” “They were all getting rolling, moving along, and doing a pile of mill-out work.” “Our primary business is downhole milling, cased hole milling, cleanouts of any obstruction.

That’s the bread and butter. And now we’re really moving into the packers and plug business, as well,” Evans said. They also have frac tools and liners available. Sliding sleeve fracs are popular in the area, and they work with that technology. “We predominantly do the coil connectors, but we have sliding sleeve tools as well. We’re working on being a one-stop shop,” Evans said. Cullen is originally from Fort St. John, B.C. He worked in Estevan in the early 1980s, selling drilling bits. He got his start as a rig hand. They have 20 to 25 people working for them, depending on the day. Rangeview has operations based in Carnduff, Red Deer, Calgary and

Grande Prairie. “We’re local to the area, and we work really hard on making sure we have families and employees in the area. We used to have to bring in what I call ex-pats from Alberta, but now we try to keep everything local. I think supporting the local area and the local community, and local employment is absolutely critical,” Evans said. They have four to five people working in southeast Saskatchewan and southwest Manitoba. “We were as high as 10 at one point, but then 2015 came along. “Mike came on a year ago, and we’re working hard on rejuvenating the area with the Baker Hughes corporate alliance. We’re working hard on adding product lines.

Rangeview recently announced they are now carrying Baker Hughes tools. “They approached us,” Evans said. “They saw what they needed in us,” Cullen said. “I think that says a lot for the company that’s been built.” “We buy their product, we sell it, we market it, we run it. It’s my supply chain. That’s good equipment. It’s tested thoroughly,” he added. “It’s exciting stuff,” Evans said. “We’re an independent well intervention company. I would suggest we’re the oldest, Canadian-owned company that does what we do.” “What we’ve talked about a lot, and the message we’d like to get out is we’re Canadians. We’re

family oriented. We support families. We’re not like some of our competitors where all the money goes to the States. We’re here and we’re supporting local and keeping the finances local, keeping the lights turned on.” “We’ve doubled our staff in 2019,” Evans said. “Not many guys can say that.” “And if it continues, we’ll continue to look (for people). And that’s been every branch,” Cullen added. Evans attributes the growth to a “great sales team and great service hands.” While they pride themselves on Canadian operations and ownership, Rangeview is researching possible work in North Dakota.

By Brian Zinchuk Weyburn – Southern Range Well Servicing of Weyburn, like most service rig companies in Saskatchewan, could use a few more hands. Pipeline News asked Ron Newett, the owner of Southern Range, about the labour shortage via email on Nov. 17. Pipeline News: How would you describe the labour market for service rig hands these days? Ron Newett: I would describe it as grim. With all the advertising we do, we end up getting just a couple of resumés, usually.

How active are you right now? How many rigs do you have, and how many are usually working? Newett: I currently have nine rigs and lately have been running six or seven. It’s been a bit busier, but our rates are still low, making my margins tight. P.N.: If you had additional staff, could you put another rig to work? Newett: I believe that there is an opportunity to put another rig to work if we are able to find a crew. P.N.: If a genie could

grant you a wish, how many hands would appear on your doorstep? Newett: I would say the magic number would be seven workers. Enough for the refurbished rig, and we always need a couple extras to fill in on other rigs as guys need days off sometimes. P.N.: I understand you’ve been working with Miller Well Servicing, sharing a few workers as need be. How did that come about? Newett: Bruce Miller and I have known each other for over 30 years.

We used to work together at Woodard Oilwell Servicing. We both know how tough it is to find workers, so if we can help each other out in these tough times it is much appreciated by each other. P.N.: Is there anything you would like to add? Newett: I hope that we could get a couple pipelines, the Canadian economy would improve and have people wanting to invest here. Also, the price of oil getting up to the $75 to $80 mark and stabilizing would be

Mayco Well Servicing has times where they could use a few more hands, but then slower times where there are too many sitting. File photo

Rangeview Thru Tubing doubled their staff this year

The magic number would be seven

If Southern Range Well Servicing could gather up another crew, their owner says. File photo great. If oil companies can make some more then I hope we could raise our rates and with doing that,

increasing our wages and getting more people interested in returning to the oilfield.

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