Pipeline News North

Northern British Columbia and Alberta's Oil and Gas Industry Vol. 1 Issue 5 • dist: 20,275

may 27 • 2011

h t r No

in this issue:

• making it natural - a new age in tranport fuel • energy - creating a national strategy • fraccing water - debolt water treatment Aerial view of the construction site for Spectra Energy’s new Dawson Processing Plant. Photo courtesy of Spectra Energy

www.inland-group-fsj.com

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2 • PIPELINE NEWS NORTH I May 2011

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May 2011 I pipeline news north •

industry news

3

under the gun

- Apache and Devon pass FPB audit

james waterman Pipeline News North

British Columbia’s Forest Practices Board announced on April 27 that the first two oil and gas companies in the province to undergo a forestry audit both passed with flying colours.

The operations of Apache Canada and Devon Canada in the Fort Nelson Forest District of northeast B.C. were audited to ensure their forestry practices met the standards of the province’s Forest and Ranges Practices Act. The audit examined how the companies clear trees during construction of well sites, pipelines and other facilities, as well as their approach to building and maintaining access roads.

“In this case, things that our auditors found on the ground demonstrated that they were undertaking sound practices,” said Al Gorley, Chair of the Forest Practices Board. “They were doing things to avoid undue damage to the environment. That’s why they got a pass.”

Gorley gave the companies additional praise for building their roads during the winter and taking advantage of existing access corridors when possible.

“What we look for is [if] there’s basic compliance,” he explained. “And if they appear to be taking some extra measures – some extra diligence – we like to give them some credit for that. And so, in this case, sometimes the shortest route is a straight line, but if there’s already a road or an access available there that’s been put in by a company that was on the area before, or perhaps

Barber emphasized that much of the credit for Devon’s performance goes to their Surface Land team that has developed new practices, such as building wood mulch access roads. Mulch is deposited on top of the ground without disturbing the existing root system or causing harm to the neighbouring trees. So, after the wood mulch is taken to another site, the site can restore itself naturally.

(Photo courtesy of Devon Canada)

by a logging company or something, and they use that, the net result is less impact on timber supply, less impact on the environment. So, we would consider that to be a good practice.

“By doing the work when the ground is frozen solid, there’s much less likelihood that they’ll cause damage to the soil, cause erosion, damage watercourses and so on. So, where they have choices, and they choose to do it when the ground is frozen, there may be all kinds of practical, operational advantages to them, but it’s also

better for the environment. And so those kinds of things are [what] we like to see.”

Devon spokesperson Nadine Barber was elated by the results of the Forest Practices Board’s review.

“It’s not always fun to be chosen like that, because the spotlight’s on you,” said Barber, noting that it is a good review of the industry as a whole that two randomly chosen companies did so well on the audit. continued pg 28

Traverse LandGroup opens Grande Prairie office james waterman Pipeline News North

Traverse LandGroup has added a Grande Prairie office to its operations, which includes an office in Sedgewick, Alberta.

Traverse, a Calgary-based land acquisition and administration company, has undertaken this expansion into northwest Alberta in order to meet the demand of existing oil and gas industry clients, as well as attract new clients in the northwest Alberta and northeast British

Columbia region.

It is a good sign for a firm that experienced its share of difficulties during the recent economic downturn.

“Traverse has been in business since 2003,” said President Devon Hall, noting that the company evolved from LandPro Land Consultants, which had been operating since 1991.

“Rapid growth from 2003 to 2006 [or] 2007,” he continued. “Then we had to cut back probably fifty per cent when the downturn hit. And that was work, staff, everything. And starting to have a little bit of a slow recovery now.”

“But, you know, being predominantly

gas has really hurt us,” Hall added, citing low natural gas prices as the problem.

“Now, just with expansion in the last couple of years to Sedgewick and Grande Prairie, it’s just a diversification to get some more oil properties in the portfolio and oil clients.”

Shane Peters, who has been with LandPro and Traverse in their Calgary office for the past twelve years, is taking the reins of the new Grande Prairie location. “And that’s another reason for the move,” said Hall, “was clients that know Shane, and just their desire to have his experience up north.”

Hall believes this move could be an

important step forward for Traverse as it continues to recover from the economic downturn.

“I think just the ability for us to basically appeal to a broader base of clients,” he said, discussing the value of the expansion. “With being able to offer the same quality service we offer in Calgary, being able to offer that up north. And I think that will go a long way for us in expanding our business and our base, and the ability to offer more employment for individuals in northern Alberta.”

Traverse has been in a temporary office in its new northwest Alberta location since the beginning of March, 2011. •

www.pimms.ca

4 • PIPELINE NEWS NORTH I May 2011 special features 8 Energy - creating a national

strategy 18 Goin’ to the show - 2011 Fort Nelson Trade Show

opinion

industry news

in the pipe

– Spectra’s latest projects

6 Columnist: Don Thompson

community 7 A breathe of air - Huron helps

Farmington community

industry news 3 Under the gun - Apache &

Devon pass FPB audit

3

Traverse LandGroup opens Grande Prairie office

10 Fraccing water - Debolt

water treatment plant 12 Making it natural - a new age

in transportation fuel 24 Quicksilver begins

midstream program in Horn

River Basin 28

29

Don’t be nervous - counterfeit certificates Leader Energy - horizontal drilling makes a difference

environment 14 Gone fishin’ - industry

support for Trout Unlimited

careers & training 16 NLC courses for June-July

technology 24

26

Bird’s eye view - Vieworx offers something new IC02N - a strategic plan for carbon capture and storage

profiles 25 Colour me - Arctech’s got a

new paint shop

safety 22 Just rewards - CAODC safety

awards

Driving pilings into the ground for Spectra Energy’s new Dawson Processing Plant.

james waterman Pipeline News North

Spectra Energy is responding to impressive production growth in the Montney natural gas formation with a pair of new projects in the Dawson Creek area of northeast British Columbia.

The new Bissette Pipeline began to flow on April 6 of this year, connecting raw natural gas production in the South Peace to the South Peace Pipeline – which itself was only built in 2009 and brought into service in 2010 – on its way to Spectra’s McMahon Gas Plant in Taylor, B.C. The Bissette Pipeline will also be tied into the gathering system for the new Dawson Processing Plant upon completion of that facility’s first phase of construction, which should be in the fall of 2011.

“The plant is being located in the Montney region, which is a very prolific play,” said Rosemary Silva, Team Leader for External Relations and Public Affairs with Spectra, discussing the need for the Dawson Processing Plant. “So, the area’s

seen a lot of growth in production.

A processing plant was required to ensure that the gas isn’t locked in to the area and it can be processed and shipped to the market. We were responding really to customer demand. The plant is fully contracted.

We don’t build plants on spec. We build to meet firm contracts. So, that’s the impetus behind the construction of the plant.”

The plant – which was approved by the National Energy Board (NEB) on January 31, 2011 – is being constructed in two phases. Each phase will have a capacity of 100 million cubic feet (mmcf) per day of raw natural gas. Phase two construction will begin after the completion of phase one later this year and then should be in-service in the first quarter of 2013.

“It will be 200 [mmcf] in total,” said Silva. “And just to kind of give you a sense of what that translates to, the plant will produce enough gas to supply an average of 2000 homes per day. So, in a year, it’s about enough for 700,000 homes.”

The plant is being constructed on agricultural land owned by Spectra, which minimizes the impact on the forest and resident wildlife. There was some opposition to the site that was proposed initially. So, Spec-

Photo courtesy of Spectra Energy.

tra chose to move the plant seven kilometres south of that original site in response to the concerns of local landowners and other stakeholders.

“We definitely take land stewardship really seriously in all of our projects, right from siting a new project through to decommissioning a project,” said Silva. “We try to minimize any disturbances and environmental footprint.”

An element of that initiative is eliminating redundancies in their operations.

“We really try to build where we have existing infrastructure, to minimize our environmental footprint,” she added. “We take our environmental performance very seriously. We actually have a really good record on that front. And that is paramount in all of our operations.”

The new Dawson plant will process raw natural gas, extracting CO2, H2S and natural gas liquids from the methane, which will subsequently be transported to the NGTL Groundbirch Pipeline. The CO2 and H2S that is extracted at the plant will be blended with raw gas and sent to the McMahon Gas Plant via the South Peace Pipeline so the new facility doesn’t require its own sulphur recovery and injection facilities. continued pg 5

May 2011 I pipeline news north •

cont’d from pg 4 Peak construction should require approximately 300 workers.

“We do very much strive to involve local contractors and suppliers in our activities, assuming that they’re safe, competent and competitive,” said Silva, addressing how Spectra intends to satisfy their construction and staffing requirements. “So, we do have a very robust program for local content.”

That commitment to local content includes hiring from First Nations communities. During February and March of this year, construction of that plant included 2160 man-hours from First Nations workforce and 1092 man-hours from First Nations contractors.

After it comes online, Spectra will be staffing the facility 24/7 with 18 to 20 full-time employees.

It will contribute about $350,000 per year in property taxes to the Peace River Regional District.

This is likely just the beginning for expansions to Spectra’s operations in northeast B.C. Indeed, Spectra is currently building a new processing facility in Fort Nelson in addition to new facilities that are planned for the Fort St. John area.

As Silva explained, the Montney play has played a significant role in these expansions, as it contains an estimated 450 trillion cubic feet (tcf) of natural gas resources. Also, production in 2006 was just 50 mmcf per day, while

current production has eclipsed 700 mmcf per day.

“I think the growth in the Montney area and even the Horn River has been phenomenal in the last while,” said Silva. “But, as I said before, we build not on spec, but to meet customer demand. So, all of our facilities are in response to open seasons that we had with customers and as a result of contracts.

“From that perspective, we’re building to meet demand that we know of. One of the advantages of our facilities is we can grow organically and we can grow in increments, as opposed to having to do new developments all the time.

We can just tie into the existing infrastructure based on increased demands from customers.”

According to Silva, Spectra has had no difficulty managing that demand or the pace of development in the Northeast.

“The development of the Montney has really allowed Spectra Energy to expand our Fort St. John area business,” she continued. “In 2009 and 2010, we added about 300 [mmcf] a day of capacity to our processing assets, about 155 [mmcf] a day in pipeline capacity. Further development in the Montney obviously led to the development of our Dawson Plant and the Bissette Pipeline. We fully expect further gathering and processing expansions in the area to unlock that potential there, meet customer demand, and get that gas to market.” •

5

left: Aerial view of the construction site for Spectra Energy’s new Dawson Processing Plant.

below: A Spectra Energy crew looks over plans for the new Dawson Processing Plant.

Photos courtesy of Spectra Energy

6 • PIPELINE NEWS NORTH I

May 2011

h t r o N William Julian Regional Manager 250-785-5631 wjulian@ pipelinenewsnorth.ca

Wendy Webb Managing Editor 250-785-5631 editor@ pipelinenewsnorth.ca

James Waterman Reporter 250-785-5631 cell:250-263-1878 jwaterman@ pipelinenewsnorth.ca

Dan Przybylski Sales 250-782-4888 ext 101 cell: 250-784-4319

opinion OSDG’s Aboriginal Committee

Linking Aboriginal communities with economic development resources is an important matter in our region.

The participation of Aboriginal business in the oil and gas industry has increased over the past decade; and the energy industry, as a whole, is becoming increasingly aware of the value Aboriginal communities bring to the table. At the Oil Sands Developers Group, it has been a long standing priority to work and communicate with the Aboriginal community on a regular basis.

For the OSDG, we have an Aboriginal Affairs Committee dedicated to issues related to the impacts of resource development on Aboriginal Peoples living within the Regional Municipality of Wood Buffalo. The committee works to share best practices, provide a forum for open discussion and address issues where appropriate.

We have identified the Aboriginal community as a key stakeholder for our industry and know that when we work together to increase Aboriginal involvement, the economic benefits of the development can be shared.

Along with working with the Aboriginal communities on issues, the OSDG member companies are also involved in a number of community initiatives which include school and youth programs, cultural retention, addictions, health and wellness, childcare, employment and training, literacy training, elders programs, parenting programs, residential school healing, conferences, community recreation programs and community infrastructure. In 2009, $10.6 million was provided by OSDG member companies to support community programs.

If we want the Aboriginal community to understand the interests of the energy industry, it is important for us to understand what’s important to them.

Support for training and education, employment, and business opportunities contributes to a mutually beneficial relationship. The funding of scholarships and training programs at local post-secondary institutes including Keyano College, NAIT, SAIT and other schools in Alberta has directly contributed to the growth in Aboriginal employment in the region.

A direct result of collaboration between the two parties can be seen in the numbers. Between 1998 and 2009, the value of contracts for Aboriginal companies in the region was $3.7 billion, with $711 million alone in contracts in 2009. This represents an approximate tenfold increase since the Oil Sands Developers Group’s first Aboriginal business survey in 1998.

Guest Column don thompson President of Oil Sands Development Group (OSDG)

The industry employed more than 1,600 Aboriginal employees in permanent jobs in the industry in 2009, representing real and measurable progress from the 800 Aboriginal employees that were employed during the first survey in 1998.

The numbers show that the relationship is working, and with the help from groups such as the Northeastern Alberta Aboriginal Business Association (NAABA) both parties assist in the development of Aboriginal businesses and Aboriginal workforce.

If you have any questions for me, please contact info@ oilsandsdevelopers.ca or if you want to learn more about NAABA, please visit its website as www.naaba.ca.

supporting the community

dcsales@ pipelinenewsnorth.ca

Ryan Wallace Sales 250-785-5631 cell:250-261-1143 rw.fsjsales@ pipelinenewsnorth.ca

Tom Kirschner Sales 250-785-5631 cell:250-785-3522 tk.fsjsales@ pipelinenewsnorth.ca

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Talisman Energy presented Upper Halfway School with a generous donation of $4,500 to purchase musical instruments for a new music program at the elementary.

The funds will also provide for the purchase of protective sports equipment for the school – which doesn’t have a gymnasium, but will be used on the school’s outdoor rink. Representatives of the elementary said they couldn’t

thank Talisman enough. (from left to right) Paul Perkins (Senior Community Engagement Advisor - Talisman Energy), Dave Burridge (Principal at Upper Halfway School) and Kris Chenier (Head Teacher at Upper Halfway School). submitted photo

We want to hear from you. Do you have a good story to tell, industry history to remember, some great photos to share, or opinions to voice in a letter to the editor? Then email us at: editor@pipelinenewsnorth.ca or go to our website at: www.pipelinenewsnorth.ca

community

May 2011 I pipeline news north •

7

a breath of air

- Huron helps Farmington community james waterman Pipeline News North

Lois Hill has long been concerned about air quality in the northeast British Columbia community of Farmington, B.C. that has been her home for many years.

A few years ago, a junior energy company’s compressor site – that sat on the hill above the valley where the Farmington community hall and Parkland Elementary School are located – was causing a lot of worry about gas fumes and public health.

“The fumes from that – the H2S smell – would go down into the valley where the school is and where the hall is,” Hill recalled. “And it was really bad.”

The local landowners voiced their concerns, but nothing Vice President of Technical Services and Business Development Brad Turner, President Todd Guy and Byron Eddy, Technical Sales, stand next to the air monitor that their company, Independent Electric and Controls, installed at the changed at a time.

Farmington Store in Farmington, British Columbia for Huron Energy.

Photo by James Waterman Today, another junior company, Huron Energy, has a compressor site of their own in the same locaand cooperation. contributions of his wife, who has a biological sciences backtion. Their arrival on the scene Huron has installed a pair of air monitors in the ground. “So, the first one I built was to protect my own family. has been a breath of fresh air community – one at the Farmington Store and the And then I thought, ‘There’s a market here.’” for the people of Farmington, other at Parkland Elementary – that check for hydroJane Parsons, another concerned Farmington resident, ushering in a new age of caring gen sulphide (H2S) and sulphur dioxide (SO2). Now believes that Huron and Independent were able to follow residents can call a pair of toll free telephone numbers through on this initiative because they are small companies where an automated voice informs them about with staff who really try to experience and understand the the amounts of H2S and SO2 in communities in which they work. the air at those locations “They do have a humanitarian approach, that’s for sure,” and lets them know if she said, describing Kevin Carroll, the operations manager there is genuine cause for with Huron who oversees their activity in the Farmington concern. area, as a “family man.”

“I got into it about ten “And I expect that is why he’s considering, ‘What if it was years ago as a landownme living here?’” Parsons added. er myself in Rocky Moun“I think the thing about Huron is the fact that they’re such a tain House, where I live,” small company, that when you’re talking to Kevin, you’re talksaid Brad Turner, Vice ing to someone who can make it happen,” said Hill, suggestPresident of Technical ing that doesn’t always seem to be the case with some of the Services and Business major oil and gas companies.

Development for Inde“Huron has gone ahead and installed these air monitors pendent Electric and over and above what’s legally required of them,” she continControls, the company ued. “And they seem to have a sense of community, of wantthat built, installed and ing things to be the way they would want in their backyard, maintains the air monicompared to other companies.” tors in Farmington.

“Kevin pointed us to Brad,” Hill concluded, “and said, “The first air monitor ‘Here’s a guy that’s not a salesman. He’s sincerely trying to I built, I was a resident find a solution.’ He developed it because of his own backyard. and had a sour gas And those are the kinds of people that should be out here.” well by my house,” he continued, noting the continued pg 29

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8 • PIPELINE NEWS NORTH I

May 2011

special energy - creating a national strategy james waterman Pipeline News North

When Canada’s provincial energy ministers meet in Kananaskis, Alberta this July, the topic of conversation will be the idea of a national energy strategy.

Frequently discussed across the country in recent months, it is a concept that has gained considerable support from government, industry and environmental groups as a necessary step for a petroleum producing nation with a diverse array of energy generation options. With an aim to reducing greenhouse gas (GHG) emissions – not to mention a goal to secure access to new markets for its oil and gas products – it also appears that developing a national strategy is becoming an increasingly urgent necessity.

That is why Alberta Minister of Energy Ron Liepert was determined to make it the focus of the conference in July.

“We had my first energy ministers’ meeting in Montreal last September,” he said. “And, quite frankly, it was two days of get nothing done. A bunch of presentations and whatnot. And I sort of say it tongue in cheek – but I’m not so sure it’s all that far from being right – but it seemed like about a month before the event was to be held, some folks put their heads together and said, ‘Well, how can we fill up two days?’ And that’s kind of what it was. And I say, if we’re going to bring everybody together, let’s have a focus to it.”

Liepert noted that a number of nongovernmental groups (NGOs) – including the Canada West Foundation and the Canadian Council of Chief Executives (CCCE) – have been clamouring for the creation of a national energy strategy, but that it is up to the provincial and territorial governments, along with the federal government, to take the lead role in developing that strategy.

“It really has to be led at the governmental level,” he continued. “We can put forward at least some agreement on some basic principles, some goals, some objectives of what this should look like, then we involve industry and environmental groups, and a whole other cast of people who are interested, and say, ‘Okay, now work with us on this as we move forward.’”

It seems that there will be no shortage of interest from other parties when it comes to doing that work. Among the most vocal of proponents and possible participants in the development of a national energy strategy are the Canadian Association of Petroleum Producers (CAPP) and the Pembina Institute.

“We’re very supportive,” said CAPP spokesperson Travis Davies. “And I think it is actually important to look at the fact that there is common ground here between a lot of the different stakeholder groups. From our position, a national energy strategy is a key to smart use of Canada’s energy resources, both hydrocarbons and renewables.”

“I think we clearly have a continued pg 9

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May 2011 I pipeline news north •

cont’d from pg 8 leadership role to play [in developing a national energy strategy],” he added. “We are the country’s largest economic sector by a long shot.”

Indeed, according to Industry Canada, the oil and gas industry brought in $100 billion in revenue in 2010, beating the next largest single product industry, the automotive manufacturing sector, by almost $40 billion.

In 2011, the upstream oil and gas industry is expected to account for $115 billion in revenue, $44 billion reinvested in Canada, and $20 billion dollars worth of public revenue in the form of royalties and taxes. The industry is expected to reinvest an average of $40 billion per year in the Canadian economy over the next ten years, while the automotive sector is expected to only reinvest $3.5 billion per year during the same period.

“We work on energy and environment issues,” said Ed Whittingham, Executive Director of the Pembina Institute, discussing that organization’s support for a national energy strategy. “And, essentially, a national energy strategy is a proxy for greater intergovernmental cooperation on energy between the feds and the provinces, and between the provinces themselves.”

“We’ve got interests,” he added. “We promote sustainable energy solutions. And by that we’re talking about low carbon, low impact energy. And I think a group like ours brings to the table credibility. It brings to the table a long track record of not just policy analysis, like a lot of other groups, but given that Pembina does a lot of consulting to the energy industry and to industry in general, we’ve got a lot of technical heft as well. And so we want to be part of the necessary consultation that’s going to happen. And this is not a short process, by the way. This is a multi-year process.”

It is also a process that government, industry and NGOs seem to agree shouldn’t only be about either economics or the environment, just as it shouldn’t only be about the oil and gas industry, Western Canada, or the roles they play in the economic and environmental issues of the day.

“That’s part of the challenge of arriving at a consensus around a national energy strategy,” Liepert admitted. “It can’t be an oil and gas strategy. It has to be an energy strategy. And we in the West have to recognize that we have to acknowledge that the province of Quebec, as an example, is a strong hydro producer.

So, what is it that we can build into a national energy strategy that recognizes that? Now, that being said, we also have to accept that if we’re going to get a strategy, we can’t have it all our own way.”

Canada’s blessing and curse is that it has become such a diverse energy producer, with petroleum resources, hydroelectric and nuclear power generation facilities and surging investments in renewable energy and alternative fuels.

“And that’s the challenge as we work through this,” he added. “But I think, at the end of the day, we say, ‘Look. We’re not trying to find winners and losers here.

We’re trying to find a strategy where everyone can succeed.’”

Davies suggests that the nation’s energy diversity could be an opportunity rather than an obstacle, particularly in terms of establishing a game plan for reducing GHG emissions.

“A lot of our member companies are also involved in wind projects and other renewable energy, be it biofuels or whatever,” said Davies, indicating that energy companies are becoming as diverse as the nation in which they operate. “So, there’s clearly a lot of integration with successful energy companies. And, oftentimes, oil and gas being a big part of that portfolio. There are a lot of opportunities to look at expansion of – for example – expansion of natural gas to consumers in eastern Canada. Just simply by using natural gas instead of coal or a bunker fuel to heat your homes, you’re looking at – as compared to coal – you’re looking at a fifty per cent reduction in GHGs right away.

“So, when you look at what we’re going to be using for electricity, clearly renewables are going to grow.

Right now, they represent a very small part of the energy mix, but they’re going to grow, and we’ve got to find ways for other energy sources to work together ...

I’d also point out that natural gas works very well with solar and wind.

“I mean, obviously, the wind doesn’t blow all the time, nor does the sun shine all the time. In terms of a cleaner source of base load fuel, natural gas is a pretty important step in terms of addressing GHG emissions.

And also using an affordable domestic resource in the best way possible. I think those are all things that we can look at in a national energy strategy that will have

net benefits in terms of economy and net benefits for the environment.”

With that diversity in mind, Liepert is largely concerned with how energy will be regulated from sector to sector and region to region.

“I think we have to, first of all, ensure that we have a relatively common platform when it comes to things like regulation,” he said. “So, whether it’s shale gas development in Quebec or shale gas development in northeast British Columbia, it’s going to be operating from somewhat the same base when it comes to a regulatory environment. You can’t have one part of the country not have any rules in place and the other part of the country have significant control in place, because it makes it an uneven investment ... It has to be a relatively common platform for investment.”

“Secondly,” he added, “I think a national energy strategy would have to recognize that diversity when it comes to providing energy sources. As I said earlier, it’s not an oil and gas strategy. It’s an energy strategy. So, we have to take into account everything from hydro to other renewables. And we, as an example, in the West may have to acknowledge that nuclear plays a big role in a national energy strategy. It may not in Alberta, but it does on a national scene.”

Among Liepert’s chief concerns is establishing national GHG emissions controls, rather than climate change policies that differ from province to province. He noted that Alberta instituted a $15 per ton carbon tax a couple of years ago, believing that it would dovetail with a national plan that was about to become reality. That didn’t happen. So, Liepert is hopeful that situation can be rectified in such a manner that all provinces are on a level playing field.

“We’ve got to be as clean as we can be,” he admitted.

“So, those would be kind of the overarching principles that we’d be trying to achieve as part of this strategy.”

“It is impossible to talk about a national energy strategy without also talking about national climate policy,” echoed Davies. “Or pricing on carbon. They simply need to go together. And that includes having a price that is reflective for all consumers of energy. It doesn’t matter, you know, if you produce a molecule, you pay for that molecule of carbon produced. Otherwise you’re not going to be very successful at getting people to change their behaviours – people or sectors. It certainly needs to be a part of the discussion.”

“The carbon tax is one that’s interesting,” offered Whittingham. “It is in effect a carbon tax, but for such a long time it’s [been] political anathema to actually use that term. Because it is associated with the failed 2008 [Stephane] Dion run [for prime minister]. But it’s a form of carbon pricing. And Pembina advocates for a carbon price across Canada. And we’re not alone in doing that. We find that most within the energy sector now are also advocating for a carbon price. Big transnational companies like Shell and Cenovus and Suncor. And even CAPP has been advocating on a carbon price. Now they might differ on whether it’s cap and trade versus carbon tax. But everyone’s clear, if you want to get a handle on greenhouse gas pollution, put a price on it and allow companies to pass on, if not all of that price, a significant portion of that price to the consumers to give them the market signal.”

Liepert’s view of environmental policies that should be included in a national energy strategy is indicative of his overall view of the purpose of such a framework.

“First of all, I think we need a continental energy strategy,” said Liepert. “[Canada and the United States are] so interdependent on each other. And we need a strategy so we can quit having these back-and-forths every time some project needs approval. And the Keystone XL pipeline is a perfect example. I believe, if we had a continental energy strategy, either it would fit within it or it wouldn’t. It wouldn’t be caught up in this day to day, month to month, year to year. However, before we can get to a continental energy strategy, we better get our house in order.

“So, really, the same kinds of rationale apply for a national energy strategy. I mean, take the [Northern] Gateway proposal of Enbridge. If we had a national energy strategy, well, again, either it would fit within there or it wouldn’t. We wouldn’t be back and forth on environmentalists arguing with industry. I point to the Mackenzie Valley Pipeline and say, there’s a perfect example of what happens when you don’t know what you want the outcome to be. I mean, if we had a national energy strategy in this country, probably the Mackenzie Valley Pipeline would have been approved years ago. Now, some twenty years later, it finally gets an approval – and nobody cares anymore.”

Liepert is also insistent that a national energy strategy should include determined support for the petroleum industry’s efforts to do increased business with new foreign markets.

“I would think that a national energy strategy should,

9

as an example, have as its goal that you maximize the potential market for your products,” said Alberta’s Minister of Energy. “Right now, we’re very much constrained with one customer. And it doesn’t matter what business you’re in, if you’re solely reliant on one customer, you’re setting yourself up for potential catastrophe. We’ve seen that in things like small business in Ontario, where their only customer was the auto industry. Well, when things went to hell in the auto industry, they had no recourse. They basically went broke ...

“Right now, the United States is our only customer when it comes to natural gas ... When they discover all the shale gas in the southern U.S., do they give a damn about Canada anymore? Not a chance. They’ll drop us as quickly as they can replace us with domestic product ... We don’t want to wait until we’re in the same position with oil. We want to have multiple customers for all of our products.”

Judging by Whittingham’s own remarks along those lines, it appears as though Pembina largely agrees with Liepert’s assessment of a need to establish coherent and consistent decision-making policies and facilitate the oil and gas industry’s initiatives to access new markets, but its focus does differ markedly. Specifically, Whittingham is not as concerned with foreign markets for Canada’s petroleum products as he is with energy security at home.

“You’ve got transnational companies that are trying to figure out rules that can differ across the provinces and the federal jurisdictions,” said Whittingham. “That’s ten provinces. And if you’re operating in municipalities, there might be different municipal plans, like energy plans.

“That’s a hell of a lot for companies to have to respond to when there are all sorts of different standards. Now Pembina obviously wouldn’t advocate that we accommodate the lowest common denominator. We would rather like to see the highest standard apply. But we can understand for efficiency’s sake that it’s really difficult for companies to figure this out. It’s not the best use of their resources to figure it out, when they could be putting those resources into better environmental management.”

A national energy strategy should alleviate that strain, according to Whittingham.

“I think it allows for planning to be done at a national level on what kind of energy future Canada wants and how is Canada going to be competitive in an international low carbon economy, in a way that just doesn’t leave it up to individual provinces to do their own thing in an uncoordinated fashion,” he said. “And so, right now, pipelines, for instance. For what purpose are we building pipelines?

How is that contributing to Canada’s long term economic future? None of that planning really happens in any kind of coordinated way … The NEB weighs in.

“There’s a joint review panel. But has anyone taken the time to say, ‘Here’s how shipping bitumen out to the West Coast from Fort Saskatchewan actually aids Canada in transforming itself over the long term to a clean energy economy?’ Where everyone agrees that that’s where we’re going. And when I say clean energy, I’m not ruling out hydrocarbons. Hydrocarbons could fit into that. But everyone in industry says this is where we’re going. We have to clean up our energy. So, none of that is done right now. It’s done in this really ad hoc way. And I think it’s done that way at Canada’s peril.”

“You look at the proposed [Northern] Gateway pipeline as one example,” he continued. “Why aren’t we building more pipelines out to Eastern Canada? There their transport fuel largely comes from oil originating from other countries. Some of them, if not outright hostile, certainly not the United States’ best friend in the world – not Canada’s best friend. And yet we’re taking what we have in the oil sands and producing it and we’re proposing shipping it to all different spots instead of taking care of our own needs. That’s one example. And it’s really tough right now in the absence of any kind of cohesive plan to do that planning. There just isn’t the right forum for it. So, that’s why companies and NGOs and think-tanks have all rallied around this idea of: ‘Let’s have that national conversation and that national plan.’”

Despite the areas of disagreement that may already be apparent, the concerned parties remain confident that a reasonably nation energy strategy can be produced.

“Big projects like this are never easy,” said Davies.

“There’s obviously a lot of divergent views. But what it comes down to is, Canada has an opportunity to be a leader, both in supplying energy to the world and in arriving at innovative solutions for a host of challenges – be they environmental or energy supply or whatever they are. So, I think the onus is there. I think the drive is there. It certainly is on industry’s part. And it’s a matter of engaging in the right way and moving with a common goal, and that will probably have to be pretty high level to begin, to make sure everyone’s on the same page. But given the right first steps, I’m pretty confident that we can get there.” •

10 • PIPELINE NEWS NORTH I

May 2011

industry news

fraccing water

- Debolt water treatment plant

The Debolt Water Plant, a joint venture between Apache Canada and Encana, became fully operational in June, 2010. The facility processes saline water from the Debolt formation in northeast British Columbia for use in the energy companies’ hydraulic fracturing operations.

PHOTOS COURTESY OF ENCANA

james waterman Pipeline News North

Shortly after Encana and Apache Canada began purchasing their first parcels of land in the Horn River Basin in 2005 – which led them to establish a partnership in that natural gas play – they began to think long and hard about water.

“Fairly early in the development ... we started to identify that finding enough alternate source of frac water other than fresh surface water was a challenge that we

really needed to address,” said Mark Taylor, Team Lead of Horn River Development with Encana. “Just to be able to show that we had a sustainable gas play that we could continue to develop. And so, basically, the teams from both companies got together and started to look at what the potential was for water out of the subsurface.”

Consequently, the Horn River Basin Producers Group, a group of ten energy sector companies working in that region that includes both Encana and Apache, began working with Geoscience BC to compile all available information about subsurface water in the area and produce a water resource map for the basin.

“One of the things you have to do is make sure the water you’re going to use for fraccing, whether it’s fresh

or saline, isn’t going to have a negative effect once you put it down into the shale,” said Taylor, discussing the use of water for hydraulic fracturing.

“So, when it mixes with the water that’s naturally in the shale, or you take it to that kind of pressure and temperature that you have down at 2500 metres below the ground, you don’t end up essentially plugging things up and not be able to get any gas out. That was one of the things we identified very early, that the Debolt water was completely compatible with what we had in the Muskwa and Otter Park shales in the Horn River.”

Water from the Debolt formation, north of Fort Nelson, is saline – but that fact doesn’t change the way Encana and Apache carry out their hydraulic fracturing operations. Actually, the water that naturally occurs in the shale formation where Encana and Apache are producing their gas is saltier than Debolt water. However, using Debolt water did necessitate the construction of a water treatment plant – an Encana-Apache joint venture – to remove small amounts of natural gas from that water.

“The only challenge with the Debolt is that the Debolt is a gas formation,” Taylor explained. “In the case of where we are in Horn River, it would be the kind of formation we wouldn’t have liked when we were looking for gas, because you have very little gas, and you get a lot of water. In our case, that was very good, because we wanted the water, but we had to build a plant in order to get rid of the trace amounts of gas that we were finding with the water. And those we couldn’t send to the frac crews. We had to get rid of the methane and the trace amounts of H2S that were coming up with the water.”

Pilot tests that began in the spring of 2009 finally led to the Debolt Water Plant becoming fully operational in June, 2010.

“As far as we’ve been able to find, nobody’s built a plant like this anywhere in the world,” said Taylor.

“The capacity of the plant right now is about 16,000 cubic metres of water per day,” he continued. “And that lines up nicely with the amount of water that we can typically pump when we have a frac spread running on one of our pads. The amount of water they are typically able to pump in a twenty-four hour period. The design wasn’t accidental. That’s what we were aiming for.

“The goal that we’ve stated, and that we’re trying to make sure we beat all the time, is that if we look at a calendar year now that we’ve got the plant running, in any one calendar year, the goal would be that we’re going to supply at least ninety per cent of all our frac water in the Two Island Lake area from the Debolt.

continued pg 11

The capacity of the plant is approximately 16,000 cubic metres of water per day. The plant should produce ninety per cent of the water that Apache and Encana require for hydraulic fracturing in the region.

May 2011 I pipeline news north •

cont’d from pg 10 “And the reason it’s not a hundred is because, like any operational plant, there’s going to be days where it just doesn’t want to run properly. And so we always have a need for some freshwater backup.”

“When it came up in June,” Taylor added, referring to the water plant, “we were kind of halfway done fraccing a pad. So, we used it for the last half of that pad and got very good results. We fracced a pad starting in January of this year and finished it off about three weeks ago. And over ninety-six per cent of all the water we pumped on that pad was from the Debolt plant. Very happy with how it’s running so far.”

The efforts of Encana and Apache to establish a cost effective and environmental friendly way of meeting their hydraulic fracturing needs in the Horn River Basin without using large amounts of freshwater has not gone unnoticed by the oil and gas industry or the general public. After all, the Canadian Association of Petroleum Producers (CAPP) presented Encana and Apache with a 2011 Responsible Canadian Energy Environmental Performance Award in March in recognition of their Debolt Water Treatment Project.

“We were extremely pleased when we found out that – first of all – that we’d been nominated,” said Taylor. “And, secondly, the team was ecstatic when we actually found out that we’d won.”

“Things that we’re doing,” he continued, “that help minimize our footprint either on the environment or the communities we’re operating in – basically, trying to reduce the impact of us devel-

oping our gas resources – tend to be projects that also help the economics of those plays. So, from an Encana point of view, that’s one of the things we are kind of taking for granted now, is that we’ll look for those opportunities to reduce our impact on the environment, because more often than not those are also the opportunities that are going to help improve the economics of the play. And this Debolt [Water Plant] is a prime example of that.

“The team was very proud of the project to start with. But then to have a group of non-industry people – that basically is the committee that CAPP uses to pick these awards – recognize that same thing, that’s kind of the extra recognition that you go, ‘Okay, well, it’s not just us thinking that we’re doing a good job. There’s people out here who are more on the environmental side of the spectrum and they’re agreeing with us, that it was a good project.’ So, it was very rewarding.”

The project and the award both follow close on the heels of Apache assuming control of the unique and environmentally friendly Noel Major Project, also in northeast British Columbia, and which has been similarly recognized by CAPP. “The Noel project has been well recognized around the world, being that was one of our properties that we took over from BP,” said Apache spokesperson Paul Wyke. We saw a wonderful opportunity in that project from the beginning.

So, it’s great to have under our stewardship as well. And to be recognized for projects like this and Debolt, going forward, it certainly does set a benchmark for industry across the board.” •

11

DeBolt Water Treatment Project In 2007, Apache and Encana formed a partnership to take advantage of a unique opportunity to begin drilling operations in the Horn River Basin. Given the low permeability of the Horn River shale, hydraulic fracturing of the target formation is required to recover natural gas from this play.

Apache and Encana had the innovative idea to tap into the Debolt reservoir, a deep sub-surface, non-potable aquifer for their water needs in this area. Over the course of only two years, we have decreased our use of surface water, securing access to an integrated water treatment and distribution system, which allows for the full recovery and re-use of fracture stimulation fluids, allowing for development and growth with low environmental costs.

• A full scale water treatment plant went into operation in June 2010 • The plant is the first of its kind • The Debolt acquifer is a deep sub-surface, non-potable aquifer capable of supplying water for fracturing operations and for disposal of spent fracturing fluids or produced water.

• The Debolt aquifer occurs at depths of approximately 500 to 1,100 metres and holds saline water with total dissolved solids content ranging from 15,000 to 40,000 mg/L, and an H2S concentration of 65mg/L • The extremely saline water from the

Debolt reservoir is unfit for most common uses • The Debolt Water Plant functions as a closed system. The flowback water management system allowing for reuse of the water over time by reinjection in the Debolt formation is far more advanced than the current practices in the area • The H2S scavenging method chosen does not require heat treatment and is therefore more energy efficient while avoiding the emission of more than 100,000 tons of CO2e per year that would have otherwise been required • This method eliminates the need for routine flaring or venting of gas compound, allowing for another reduction of the project’s total emissions • The water extracted from the Debolt formation is naturally warm (35°C), no heating is required prior to fracturing, further minimizing greenhouse gas emissions by close to 7,000 tons of CO2e per year • In 2011, the plant is expected to produce 90% of the water required for hydraulic fracturing operations in this play • We are currently working on adding a water recycle line which would allow for flowback water reuse in ensuing fracture stages

12 • PIPELINE NEWS NORTH I

May 2011

industry news

making it natural

- a new age in transportation fuel james waterman Pipeline News North

It has been recognized as the first instance of a major oil and gas company converting any part of its supply chain to natural gas as their transportation fuel.

When Encana announced in early April that they would be supplying liquefied natural gas (LNG) to Heckmann Water Resources’ new fleet of LNG heavy-duty trucks through their new mobile LNG fueling stations, it was seen by many as an important step forward for a movement that appears to be gathering steam in North America – not to mention one that could be vitally important to natural gas producers in northeast British Columbia.

It is a move toward using more natural gas as transportation fuel, particularly for heavy-duty transport trucks, as well as for large return-to-base fleet vehicles such as public transit buses and garbage trucks.

At the time they announced their agreement with Heckmann, Encana was almost two years into a campaign to reposition natural gas as a transportation fuel in North America. As part of that initiative, they had begun work to convert their Canadian light truck fleet to compressed natural gas (CNG) with plans to build five new CNG fueling stations, including one in Fort Nelson, B.C. Also, Heckmann had just ordered 200 new LNG trucks from Peterbilt Motors – all equipped with LNG engines courtesy of Vancouver-based Westport Innovations – to haul water for Encana and other producers in Lousiana’s Haynesville natural gas play, just like their diesel predecessors. It was the single largest order of LNG trucks by a company based in the United States to date. Most importantly, it was the first instance of a major oil and gas company converting any part of its supply chain to natural gas as their transportation fuel.

“What we’re trying to do with natural gas for transportation is look at all segments of transportation,” said Wayne Geis, Vice President of Natural Gas Economy Strategic Planning with Encana. “And the segment that we really want to focus on is really our supply chain and vendors. And Heckmann is one of our water haulers down in the Haynesville play in Louisiana. So, it’s a natural fit to have some of those supply chain vendors convert their fuelling requirements to natural gas. And he’s a very high volume fuel user. So, the economics for him are really, really attractive.”

Darren Seed, Vice President of Investor Relations and Communications with Westport, has seen that potential for cost savings firsthand. At about the same time that Encana and Heckmann were hammering out their deal, he was spotting diesel prices of $4.50 per gallon in California, a huge number compared to the $1.89 per gallon for LNG and $1.29 per gallon for CNG at a fueling station in Salt Lake City, Utah during that period. Seed noted that LNG offers an average savings of $1.50 to $2.00 per gallon over diesel.

“For highway trucking,” said Seed, “for

The FortisBC refueling station at Waste Management’s site in Coquitlam, British Columbia. FortisBC has teamed up with Waste Management to put 20 new compressed natural gas (CNG) waste disposal trucks on the road in the Lower Mainland and Vancouver as part of a long-term plan to convert 100 trucks to CNG. The trucks are fuelled overnight at that facility.

Photo courtesy of FortisBC.

trucks that are driving in excess of 95,000 miles [per year], which is approximately twenty per cent of the Class 8 market in North America, that represents, at 5.5 miles per gallon – which is, believe it or not, about the average for those guys – about 18,000 to 20,000 gallons a year of fuel. And if you’re saving $1.50 – conservatively $1.50 – [that] is $27,000 a year of fuel per truck. So, it starts to make a lot of sense.”

“The producers, in some cases, are paying a hefty amount for fuel in light of having to haul in diesel fuel [to remote locations] to provide fuel for service providers,” he added. “Which is typically a far greater premium on top of traditional diesel prices, which are already at, I would argue, damn near all time high. So, being able to provide fuel at a reasonable price in remote locations is something that, if you look at this on the surface, it just makes sense.”

Westport’s heavy-duty truck engines also offer similar efficiency, torque and power to conventional diesel engines.

“So, in terms of fuel efficiency, it’s apples to apples,” said Seed.

However, despite those advantages, there are obstacles to expanding the use of natural gas for transportation fuel, especially the initial cost of a new LNG truck.

“I suppose the biggest thing is the cost to flip over to the engines,” said Carl Rosenau, President of Edmonton-based Rosenau Transport, discussing the viability of converting his fleet of 300 trucks that operate throughout northwest Alberta and northeast B.C. to LNG. “I mean, we’re quoted like $75,000 more just for the engine that will burn LNG.” Seed noted that a new LNG truck can cost $50,000 to $60,000 more than a comparable truck with a diesel engine, but that it is also possible to recoup that

money in two years through fuel cost savings.

“We also offer a lease,” he said. “And that same person doing 100,000 miles a year, he can save $650 a month [starting] in the first month on the lease. Because what we’re doing, obviously, is amortizing the incremental cost. But with the huge fuel price and fuel bill saving, he gets the payback monthly, as opposed to after the payback period.”

A pair of companies operating in B.C. have also taken advantage of other methods of managing the cost of converting to natural gas.

In February of this year, Waste Management announced the deployment of twenty new CNG trucks for garbage and recycling collection in Vancouver and the Lower Mainland as part of a plan to ultimately convert its entire 100-vehicle fleet in that region to natural gas.

FortisBC built a CNG fueling station at Waste Management’s Coquitlam location to refuel their return-to-base fleet. Last December, Vedder Transport purchased fifty new LNG trucks for use in the area of their Abbotsford, B.C. base of operations.

In both cases, funding from FortisBC’s Energy Efficiency and Conservation program through the British Columbia Utilities Commission (BCUC) was used to offset the cost of converting to natural gas engines.

“We think, initially, we’ll need to do those things to get the ball rolling,” said Doug Stout, Vice President of Energy Solutions and External Relations with FortisBC. “Once volume starts to build up in the business, the incentive is there economically for them. But as they see more mainstream stuff and the volume of these trucks go up, the cost is coming down … even on a garbage truck. A few years ago – even a couple of years ago – we were looking at probably a $50,000 to

$60,000 incremental cost, gas to diesel.

It’s come down to about $30,000 [to] $35,000. That range. And it’s higher on a large tractor-trailer unit. But as we’re getting more uptake across North America, then, like everything, that price comes down, and we’re not going to have to offer the same kind of incentives.”

Transport companies can also tackle the transition in stages.

“Vedder, for example, we’re looking at fifty trucks to start with,” Stout added.

“They run about 300 trucks in Alberta [and] B.C. in their whole operations. But the trucks they’re starting with are ones that run down in the Fraser Valley or in Lower Mainland, and collecting – you know, they’re dairy collection trucks and agricultural product trucks. But they all come back to the same fueling station.

So, it makes a lot of sense for them.

They start there and then go from there.”

Quebec-based Robert Transport has been able to begin its conversion to natural gas by similar means.

“With the Robert project in Quebec, they’re buying 180 LNG trucks over three years,” said Alicia Milner, President of the Canadian Natural Gas Vehicle Alliance, a not-for-profit trade association that has approximately twenty-five corporate members, including Encana.

The majority of Robert Transport’s LNG trucks – which have a 1000-kilometre range – will run between Montreal, Quebec and Mississauga, Ontario, where the company owns private fueling stations.

“And, in Quebec, the provincial government introduced a measure last year in their budget – a demonstration measure – that basically allowed a rapid write-off of a low emission truck,” Milner added. “And so that was, again, enough to get the fleets to move. continued pg 13

May 2011 I pipeline news north •

13

cont’d from pg 12 “We don’t think there’s a need for any kind of permanent subsidy or anything like that. But there’s certainly a need for a short-term measure to create some certainty so fleets that look at this have something to work with. And that’s that upfront cost area that needs to be addressed.”

Rosenau, a good friend of Robert Transport’s President, Claude Robert, is well aware of the opportunities that exist in provinces such as Quebec. He is hopeful that the federal government will follow suit, considering the urge for companies like his to shrug off the burden of high cost diesel.

“If our federal government got on the bandwagon and started doing it with LNG instead of going biodiesel,” he grumbled.

“I mean, people are starving around the world and we’re burning food for our trucks.”

“If we had tax breaks,” Rosenau added.

“Like there was supposed to be a couple of western Canada carriers also ordering LNG engines, and they backed off. Until we get some government incentives – and, like I say, they’re spending millions on this biodiesel, which, when it comes down to the short strokes, doesn’t make a hill of beans difference. Why not give us tax incentives – you know, that money you were going to spend on biodiesel, give that money to start converting to LNG.” Rosenau’s other major concern is the other obstacle to expanding the use of natural gas for transportation throughout Canada. That is the problem of infrastructure – natural gas fueling stations.

“Right now,” he continued, “I think they’ve said they only have about five fuel stops in Alberta.”

Rosenau’s trucks regularly travel between Edmonton and Fort Nelson and are unable to carry enough LNG to cover that distance, according to Rosenau. For his company to make a successful switch to natural gas, he insists there would need to be fueling stations in Prince George, Fort St. John and Fort Nelson, not to mention Edmonton. That could be in the works, however. Stout noted that FortisBC is hopeful about a long-term goal to develop a triangle of fueling stations connecting Vancouver, Calgary and Edmonton, which would at least include a station in Prince George.

Regardless, the environmental benefits of replacing traditional transportation fuels with natural gas, along with the fact that Canada has a plentiful supply of the resource that is far from traditional markets, should let the movement conquer its hurdles.

“Natural gas is about twenty-seven per cent less carbon than diesel, for example,” said Milner, discussing the emissions reduction benefits of natural gas. “So, when you use it in a vehicle like a tractor-trailer, the per year benefit is about a 50 tonne reduction in carbon. So, pretty significant.”

Seed noted that Westport’s own sci-

Encana’s new mobile liquefied natural gas (LNG) fueling stations.

entific research shows a twenty-one to twenty-seven per cent reduction in greenhouse gas (GHG) emissions when using natural gas instead of diesel fuel.

“Right now, in transportation, natural gas use is less than 1.0 billion cubic feet (bcf) per year,” Milner continued. “It’s pretty much zero, right? Very, very low.

But this is something that could actually ramp up fairly quickly. And just as fleets take their old vehicles off the road – their old trucks and buses – as they replace those vehicles, it’s just five per cent more natural gas. Within five years, that would be 40 bcf of gas. It’s still pretty small in the big picture when it comes to natural gas. But it’s just indicative. And five per cent is a pretty modest and … very achievable kind of goal. And on the medium truck and bus side, these are all factory built vehicles. So, a fleet can go to their Peterbilt dealer and buy a natural gas truck. That’s another important difference to understand. And it’s part of the reason we’re targeting the high fuel consumption vehicles. Not only is there a really strong business case, but you can also get the vehicles from the dealers, built in a factory, with warranties, etc. The other kind of example, just to give you

an idea of their consumption, a highway tractor will burn about 30 times as much natural gas in a year [than] your home will use, for home heating, for instance. So, when you start to look at it that way, this is a pretty significant market, particularly targeting these high fuel use vehicles that primarily return to base or operate within a kind of regional corridor area.”

That could be very significant for natural gas producers in northeast B.C. “It’s probably a piece of the puzzle,” said B.C. Minister of Energy and Mines Rich Coleman.

“The reality is we want to have more use of natural gas for non-conventional uses than making electricity or heating homes. Because the bigger the market we can make, the better it is for the price.

The price is what drives investment. And we’ve got this massive oil and gas deposit in northern British Columbia – in northeastern British Columbia – that’s way bigger than anybody probably thought when we started doing fraccing in the shale gas. And now we have this huge resource, and the price is a bit depressed at this point in time. So, it’s a piece of the puzzle as far as having another market for the product.”

Photo courtesy of Encana

Coleman can see the potential for natural gas vehicles too. He actually had a car that ran on natural gas a number of years ago, but the technology has improved considerably since that time.

“The vessels are much better today,” he commented. “And we can put more gas into a compressed vessel than we probably could fifteen, twenty years ago, when I actually had a car with tanks in the trunk that were natural gas.”

“There used to be natural gas filling stations all over the Lower Mainland,” Coleman continued. “There were enough of them that I could get natural gas pretty much anywhere in the Lower Mainland in those days. But just the range was very poor because you couldn’t get enough in the compressed tanks. The vessels just weren’t handling it. And probably the way we compressed the natural gas back then was a bit less technology driven than it is today.”

Milner remarked that Canada actually invented the technology, but currently lags behind a number of other countries when it comes to using natural gas for transportation. continued pg 30

14 • PIPELINE NEWS NORTH I

May 2011

environment

gone fishin’

- industry support for Trout Unlimited

LEFT: Oil and gas industry support of Trout Unlimited has contributed to projects such as this stream restoration in Nile Creek on Vancouver Island. The goal of that restoration project was to build structures that would appear natural in the ecosystem.

The jumble of rocks on the right side of the stream was added to the site to hold back a bit of water and create wintering habitat for the fish. The stack of logs on the left side of the stream serves a variety of purposes, including reducing erosion and diverting current from one location to another. It also provides cover for fish to hide from predators and habitat for fish of different age classes.

The logs are actually lashed together and suspended in the creek in order to provide those advantages, as well as offering winter habitat for juvenile fish in this specific case.

The logs are used as more natural and visually attractive alternative to rip rap, which doesn’t provide fish habitat.

Additionally, logs catch debris and offer habitat for plants, bugs and mammals such as mice and weasels.

james waterman Pipeline News North

If you spend enough time in the oil patch of Alberta and British Columbia, the chances are that you will meet a few avid fishermen.

So, it should come as no surprise that the oil and gas industry has long been supporting the cause of protecting local trout and their coldwater habitats in Canada’s West through partnerships with Trout Unlimited Canada (TUC).

Most recently, Encana Corporation announced a new partnership with TUC in late March, pledging $150,000 over the next year in support of the conservation group’s Yellow Fish Road Program.

“This really will help to expand the program,” said Encana spokesperson Carol Howes, noting that their sponsorship is part of the natural gas company’s Community Investment Program, which contributes funds to programs in the areas of environment, education, community enhancement, and sports and recreation.

“It’s in a number of neighbourhoods across Canada,” she added about the Yellow Fish Road Program. “And this is to help expand the program into additional neighbourhoods.”

The Yellow Fish Road Program - which began in 1991 – educates young people across Canada about protecting their local waterways from hazardous wastes, many of which are carelessly introduced into rivers and lakes through storm drains on residential streets. As part of the initiative, young people also get involved in painting bright yellow fish on the roads near storm drains and distributing fish-shaped pam-

phlets door-to-door to remind members of their communities of the dangers of improperly disposing of contaminants such as household chemicals.

Sponsoring the program was an easy – and important – choice for Encana, as their Executive Vice President and CFO, Sherri Brillon, is one of those avid fishermen who work in the industry. Brillon chaired TUC’s 27th Annual Conservation Dinner and Auction on March 24, 2011, when Encana announced their partnership with the organization.

“She was the first woman to hold that position,” said Howes. “And she is an avid fly fisher. So, she certainly was well aware of Trout Unlimited.”

According to Howes, Brillon shares her love of fly fishing with many of the leaders in the oil and gas industry.

“It’s a big sport in Alberta and B.C.,” she continued, discussing the company’s fly fishing connections to coldwater conservation. “So, there certainly is a real acknowledgement of the kind of the work that Trout Unlimited does.”

Brillon takes Encana’s environmental stewardship commitments very seriously.

“When you produce a resource, you are also consuming resources, and it’s very important to show this is being done in an environmentally responsible way,” she said. “Companies can’t just talk about it – they have to show it.”

Contributions from energy sector companies have helped TUC carry out a number of conservation programs in Western Canada, including work at Drywood Creek in Alberta and in the area of Nile Creek and Qualicum Bay on Vancouver Island in B.C. “The Drywood Creek initiative in southern Alberta is a really unique process where there’s a population [of native bull

trout] above a couple of barriers on the river,” said Brian Meagher, a provincial biologist with TUC who works from B.C. to Saskatchewan. “But there’s also non-native brook trout that have been introduced to the system. And so what we’re doing is working with local ranchers and school kids and other like-minded conservation groups to develop a process of going in and educating people about how they can take better steps – because they’re already doing great things.

“But they wanted us to help them develop other protocols or best practices of how to operate to retain the habitat along the river, the riparian area, their area of influence, so that they could still operate on it, but it’s still there for their kids and the next generation. Because the ranching families in that area have deep roots and they really want to have something there for their children.

“And so we work with the ranchers, as well as their families and the kids, and we bring up the school kids from the local community. What we’ve been doing for the last couple of years on that one is trying to fund off-site watering systems and fencing.

And we put in the cost for that. And then the landowners or the ranchers, they go and they install it. They pay the cost of installation. And we work together with the off-site watering, with other groups as well, to try to benefit these ecosystems so that they can work.”

“What we’ve done also is a variety of different monitoring for fisheries,” he continued. “We’ve been repeating electro-fishing to look at what’s in the river in certain locations, with [local] groups, as well as [students] from the Lethbridge Community College, their students in the environment program, to try and get them experience – hands on experience. So, from that we’re collecting data on what’s in these rivers

and comparing it to locations that have been completed in the past.”

“There’s a [graduate] student from the University of Lethbridge … who’s doing a [doctorate degree] on some of the problems around the interactions between brook trout and bull trout, which the brook trout are the non-native and the bull trout are the native. So, we’re getting some interesting cooperation from this research to sort of guide what steps we could take potentially to improve the habitat and improve the situation for the native species.

Some of the landowners are really keen on trying to drive this process forward. So, it’s really fun to be involved with that.”

TUC’s work in the Qualicum Bay area on Vancouver Island has also been driven by the interest of local landowners and other individuals who have been concerned about the survival of the coastal cutthroat trout population.

“There’s a lot of really interesting, unique issues that we don’t see out here in the prairies,” said Meagher. “Because they’re dealing with the ocean out there, they have a lot of tidal issues. And so when the tides drop, the conductivity between the rivers where the fish spawn or grow up or reside, that connection between those rivers and the ocean become isolated.

“There’s projects out there where they’ve rebuilt the tributaries so that they’re connected permanently to the ocean, as well as they’re having great success with regrowing kelp and reed beds off the shore to try and dissipate some of the wave action that’s happening in that straight.

“So, they’re really keen on keeping the population of coastal cutthroat trout up.

And so they’re really doing a lot of work.

We’ve done some other work in there with monitoring populations and watching continued pg 15

May 2011 I pipeline news north •

cont’d from pg 14

movements and seeing how the fish are moving through there to try and better understand what their requirements are.”

Meagher believes that the biggest issue facing the preservation of trout and their habitat really boils down to education and awareness on a local level.

“A lot of people are doing things on the landscape,” said Meagher. “Everybody has a footprint on the landscape. Some people don’t realize that their actions are actually negative towards retaining these populations. So, the education of it is really important.”

The involvement of the oil and gas industry is valuable, according to Meagher, because they spend so much time in the field in areas where these conservation issues are front and centre, including problems of sedimentation and hanging culverts that stop fish from traveling upstream, causing local extinctions of fish species.

“They’re the ones who are often able to point out that there are issues,” said Meagher. “And if they have the knowledge that this is an issue and what the impact is, than that’s hugely valuable for us. And the partnerships with the companies that help fund our projects is valuable because

15

we’re a non-profit … Less than five per cent of our annual budget’s derived from government organizations … The majority of our funding is either done by funding requests … so the support from people out there in the field is really critical for us to drive forward.”

Meagher agreed that fishing – and the number of people in the industry who do fish – does play a role in the energy sector getting involved in these initiatives.

“I think it’s definitely a major player in that anybody who went out fishing with their dad or grandpa … wants to have that same experience with the next generation,” he said. “So, they often are really valuable in trying to put together a reason.

You can’t conserve something if you don’t know what it is, and if you don’t have any value for it. It’s not that you don’t know. It’s just you might not be aware … If you’re not aware, than it’s harder to put a value on something.”

Meagher suggested that workers in the field are often able to see changes to fish habitats along the roads they travel, which isn’t something that he is able to do as regularly.

“Having them as eyes and ears in the field is really valuable, especially when it comes to issues such as hanging culverts,” he added. “And if you have

Junior high school students participate in a day of educational activities put together by Trout Unlimited Canada. Trout Unlimited is able to offer these programs thanks in part to support from oil and gas industry companies.

Photos courtesy of Trout Unlimited Canada

A major challenge facing the migratory coastal cutthroat trout in the Nile Creek area of Vancouver Island is the alteration of the mouths of tributaries along the coast due to the wave action of the ocean. Trout Unlimited is working to improve these naturally important migration areas so that they are less prone to alteration by rebuilding kelp beds that limit the impact of the ocean. This tranquil scene is the result of that work.

a partnership with somebody instead of saying, ‘You’re a jerk. You’re a jerk.’

You know, if you have a partnership with them, saying, ‘Maybe, if you’re designing a culvert, maybe you can try this design or try that design. And maybe it will work a little bit better to allow for fish passage.’

And we really appreciate being able to

have our experience mix with their experience, because it makes it a much more well-rounded project when they’re trying to develop those things.”

Enbridge and Shell Canada are also among the energy sector companies that have contributed to TUC in the past.

Enbridge began their support of TUC

as part of their Natural Legacy program in 2005, contributing over $200,000 to date.

The company pledged $50,000 to TUC’s Cold Water Conservation Fund in 2006, when President and CEO Pat Daniel was Honourary Chair of the Calgary National Conservation Dinner Committee. TUC’s Annual Conservation Dinner and Auction raised $1.3 million that year, a record that remains intact. Enbridge has also contributed $25,000 every year since 2006.

“Our Natural Legacy program [is] a partnership that provides Enbridge with an opportunity to demonstrate our ongoing commitment to environmental stewardship, habitat remediation and protection,” said Enbridge spokesperson Jennifer Varey.

“We do this through initiatives such as elementary educational programs, and the planting and care of native trees and plants throughout urban and rural areas along Enbridge rights-of-way.”

“Environmental performance is a key indicator of success for Enbridge,” she continued. “We actively pursue ways to minimize our impact on the environment, and support initiatives that help us protect

our air, land and water sources. We also invest in programs that promote conservation and awareness of environmental issues, and organizations that develop new technologies, including alternative and renewable energy sources, to reduce environmental impact.”

Enbridge Gas Distribution has also been providing funding for TUC since 2008, acting as presenting sponsor of the Annual Dinner and Auction in 2008 and 2009 and contributing $27,000 in that role. They pledged an additional $12,000 in 2010, including support for the Annual Dinner and Auction, and another $200,000 in 2011 for restoration projects.

Shell Canada celebrated twenty years of investing in environmental stewardship in 2010 by awarding $400,000 in one-time grants from its Shell Environmental Fund to TUC, Ducks Unlimited, Yellowstone to Yukon and Building Environmental Aboriginal Human Resources. Each organization received $100,000 for their projects.

Shell contributed $15 million to environmental protection projects over those twenty years. •

16 • PIPELINE NEWS NORTH I

May 2011

careers & training

May 2011 I pipeline news north •

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18 • PIPELINE NEWS NORTH I

May 2011

special feature

goin’ to the show - 2011 in Fort Nelson

james waterman Pipeline News North

The 2011 Fort Nelson & District Chamber of Commerce Trade Show held on April 30 and May 1 was a great success, according to Chamber of Commerce Executive Director Bev Vandersteen.

Approximately 3000 visitors passed through the doors on Saturday and Sunday to meet with exhibitors ranging from oil and gas industry companies and service providers to local artists and perennial favourite, Harley Davidson. A number of exhibitors were brand new to the trade show, including a few of those energy sector service providers that have just established their presence in Fort Nelson in the past year. For example, Action Health and Safety is quite new to the community.

“I think it went really well,” said Vandersteen. “Overall, we got really, really positive responses. I mean, we know there were a few issues like parking and traffic, but some of those will resolve themselves when the rec centre is completed and we’re not in a construction zone anymore. Overall, exhibitors seemed really happy.”

Vandersteen noted that there were very few complaints about minor issues, such as limited parking arising from the fact that Fort Nelson’s new recreation centre is being built at the location where

the trade show is held every year.

“People seemed to overall understand that,” she remarked. “I mean, there’s only so much you can do about that. And most of them are just looking forward to seeing the new layout so they can make decisions for next year.”

The trade show may be able to expand next year given the facilities that will be available with the new rec centre, but Vandersteen is cautious about saying too much about those plans now. Regardless, she admitted that the trade show can only get better after construction is complete.

“Traffic flow will improve,” she said.

“We’ll have more loading doors. We’ll have more space to spread out in and we can have more places for people to sit. So, if they get through the trade show and want to sit and have a bite to eat and let the kids just kind of scatter for a bit, they can do that.”

One possibility is bringing the outdoor exhibitors indoors next year, which will eliminate concerns about weather at a time of year when that can be unpredictable. However, the trade show had a weekend of great weather for outdoor exhibitors this year.

“We had a beautiful weekend,” said Vandersteen. “So, everything was really good for the exhibitors outside.”

Vandersteen is already looking forward to the show in 2012.

“Pre-registrations will go out probably in October for the next show,” she said.

“And, of course, I have pre-registrations in already for people who were in this show.” •

Dave Forcier, Debbie Wheeler and Greg McDonald from FMC Technologies.

ABOVE: Fort Nelson resident Leanne Sandau, Tom Gnass, Elizabeth Oldfield and Sandi Morrisseau represented Nexen at the the trade show.

BELOW: Bob Batchelor and Greg Hammond from Greensmart Manufacturing in Fort St. John.

ABOVE: Lynne Prudence and David Fogarty from Action Health & Safety, a relatively new player on the Fort Nelson scene.

BELOW: Brian Warren, Outside Sales Rep for the Cat Rental Store in Fort Nelson.

BELOW: Jaime Lawrence, the Community and Aboriginal Relations Representative with Quicksilver Resources in Fort Nelson attended the trade show to talk to visitors about the Horn River Basin Producers Group.

May 2011 I pipeline news north •

ABOVE: Jerry Mullin, Vice President of Vector Geomatics Land Surveying.

ABOVE: Jarett Petrar, Solids Technician from Peak Energy Services.

below: Mitch Small, Area Manager for Northern Mat & Bridge in Fort Nelson.

BELOW: Greg Neely and Greg Patterson from Strad Energy Services.

19

james waterman photos

Justin Butts, Sales Rep and Operations Coordinator for HSE Integrated in Fort Nelson.

-HSE Integrated

james waterman Pipeline News North

HSE Integrated used the Fort Nelson & District Chamber of Commerce Trade Show as an opportunity to exhibit a new piece of safety equipment.

Their Wireless Air Surveillance Protection unit – also known as WASP – was designed and built by individuals working with HSE in Sylvan Lake, Alberta, and oil and gas companies have been using it in the areas around Fort St. John and Fort Nelson, B.C. and Fort McMurray, A.B. for just over a year now.

“It is our system,” said Mark Brush (pictured above), an HSE shop foreman based in Fort St. John, but who also works out of Fort Nelson. “Nobody else has this system.

It is capable of taking up to 32 sensors at once. It is capable of having LEL sensors, benzene sensors, H2S sensors. It’s an all wireless system.”

Brush explained that other units that don’t operate wirelessly will sound an alarm when a sensor gets wet.

“This one here,” he said, “it’s a smart sensor. It will sense the moisture and put it into a fault mode and let you know that something’s going on. So, therefore, you don’t have people … wondering if there’s gas.”

The unit is satellite capable so that a consultant can monitor the system remotely via computer. “So, it’s an all around great system,” said Brush.

Brush – who was attending his third trade show in Fort Nelson – remarked that events such as the one in Fort Nelson are a great opportunity for HSE to show the industry and the public their services and equipment.

Although HSE is the largest safety company in Canada, offering everything from environmental monitoring to gas detection and their own paramedic personnel and ambulances, they don’t lose sight of the value of attending these trade shows. It gets us out there and lets people know that we’re here,” said Brush. “And that we have the equipment and the ability to do what it is they need done in their safety end of things. “We take pride in our work,” he concluded. “We have really good equipment.

And there’s nothing that we can’t do when it comes to the safety side of things.” •

www.goodon.com

20 • PIPELINE NEWS NORTH I

May 2011

special feature

goin’ to the show -ARCHER CRM Partnership james waterman Pipeline News North

One might not expect to see African stone arrowheads at an industry trade show, but that was exactly what ARCHER CRM Partnership had on display at their exhibit.

However, it makes sense that ARCHER would bring such items to the the Fort Nelson & District Chamber of Commerce Trade Show, even if they are only replicas. After all, they are a cultural resource management firm that does archaeological assessments for government departments – such as the Ministry of Transportation when they are building roads or bridges – and various industry companies, including those from the energy sector.

“We do a lot of oil and gas work up here,” said Julie Cowie, a Project Manager with ARCHER in Fort St. John.

“What we do is we have, say, our linear developments. So, we’re doing a pipeline up to a well or something like that [and] assessing that for areas of archaeological potential. So, that can be areas along creeks and river crossings, small knolls [or] little bumps above the muskeg …

Especially as you get toward Kotcho, there’s a lot of those kinds of features.”

“And we shovel test,” she added. “If we do find anything, how big is the site? So, we just test enough to give the extent of the site and we mitigate for that with our client.”

Cowie noted that the Fort Nelson trade show is an important tool for developing and maintaining valuable contacts in the Fort Nelson area, where their business has been up and down despite the surge

in natural gas development in the Horn River Basin.

“There’s a lot of industry here,” she remarked, “but we also work with small contractors. So, [the trade show] just lets us keep that network going. And for people we don’t know, it’s a chance to know us just face-to-face. It’s the face-to-face stuff and knowing people from that initial contact that really keeps you getting your foot in the door when you’re in a small community like Fort Nelson.”

Trade shows do make a significant contribution to that aspect of their business, but those efforts don’t begin and end with these events.

“A lot of these are personal contacts too,” said Cowie. “And word of mouth.

So, once people know that you’re good at what you do, and you have a good relationship with the bands, and you do a good job, but you’re still maintaining quality and not cutting corners. And giving the client what they need in terms of you’re on budget, you’re on time, you’re doing good work.”

“I do a lot of cold calling,” she added, noting that trade shows can help turn those cold calls into new contacts and clients.

“I’ve been to the ones where it’s been just pretty much all industry,” said Cowie.

“So, you pick up a couple of cards. And the people that are at the trade show aren’t necessarily the ones you normally talk to anyhow. So, you grab a card and say, ‘Oh yeah, you know, I saw so-and-so at the trade show. They recommended that I give you a shout ... and we might have some service that we can provide for you.’ And you kind of go off from there.”

“In terms of our existing clients,” she continued, “I keep up with them quite a lot. Give them a call, go for a coffee, whatever. It’s all about personal relation-

Project Manager Julie Cowie from cultural resource management firm ARCHER CRM Partnership.

james waterman photos

ships. So, if those guys know you on a personal basis, and they can put a face to the person they’re talking to on the phone or the report they see, it goes a long way.

So, it’s the face-to-face contact, for sure.”

Apart from the northeast British Columbia weather, the biggest challenge for ARCHER is interacting with clients and the industry, particularly considering the new regulations in the Oil and Gas Activities Act. “Working with clients and keeping up with industry and just making sure that your clients [are] happy, that’s always a challenge,” said Cowie. “And with the new OGAA coming in – with the new regula-

tions that are coming in – everyone’s still kind of feeling out what those are. So, that’s our biggest challenge right now, just trying to fit [our work] into OGAA. Because it’s still kind of baby steps.”

Ultimately, Cowie enjoys any opportunity to make her way back to Fort Nelson.

“I love coming up here,” she said.

“I’ve been working up here for almost two years now, on and off, when I get a chance to come up. And I’ve lived in lots of small towns. So, I’m kind of used to the dynamics. But people here are very open and they want to share their knowledge of the area. And they have a real passion for where they live.” •

-Rosenau’s Oilfield Freight Solutions

james waterman Pipeline News North

The trip to the Fort Nelson & District Chamber of Commerce Trade Show is something of a homecoming for Darren Smith, Director of Operations with Rosenau Transport’s new Oilfield Freight Solutions division.

“People are friendly,” said a grinning Smith, reveling in his return to his old stomping grounds of two years from his new home in Lethbridge, Alberta. “Everywhere you go, people talk to you. And it’s just such a great community here.”

That Fort Nelson vibe is part of what he enjoys so much about the trade show.

“Nice and casual,” he remarked. “You know, the suit and the tie just don’t take praise in this part of the world, which is good. You can put on a set of jeans and cowboy boots and you fit right in. It’s laid back and casual and easygoing. And it’s great. It’s a great atmosphere.”

Rosenau began working in the Fort

Nelson area about five years ago when they first started expanding into northern British Columbia from their Alberta base.

Smith said that the trade show is an important aspect of creating awareness of the business in Fort Nelson.

“It just gives us a chance to shake hands with people,” he said. “We’re Alberta born and bred, and we’re four provinces wide with terminals, with twenty locations. But here we weren’t so well known. So, obviously, it took time to get going. But now I’m certain that our market share is there with our company. We’ve achieved that just through doing good business with people. And I think people recognize that. So, it’s a chance for us just to shake hands with people, say thanks for their support, find out if there’s anything that we can do better, and look at improving on that.”

The Oilfield Freight Solutions division is one example of how Rosenau recognized that they could improve their service in northeast B.C. “What we’ve recognized with a lot of the bigger companies that are involved in the field is that they need help with their freighting,” said Smith. “Their logistics. continued pg 21

Darren Smith, Director of Operations with Roseanua Transport’s new Oilfield Freight Solutions division.

May 2011 I pipeline news north •

21

-Snake River Energy Services james waterman Pipeline News North

Among the most popular exhibits at the Fort Nelson & District Chamber of Commerce Trade Show this year was the one belonging to Snake River Energy Services.

Of course, they did have a few secret weapons for attracting visitors to their booth: beef kabobs, Manhattan clam chowder, and a chocolate fountain with fresh strawberries.

“It provides an opportunity for people attending the trade show to sample some of our food,” said Lisa Girard, Operations Manager, discussing the event.

“We bring our chef and staff from camp, have them working at the trade show so they have the opportunity to taste some of the food that our chefs make. It’s a great opportunity, I think, to showcase ourselves and to create awareness to clients, employees, local businesses of who we are.”

“It’s a smashing hit,” Girard continued. “People come back several times throughout the day to get some free samples. And they are delicious.

Very tasty. And it’s become commonplace. People know, ‘Okay, Snake River, you provide free samples and there’s good food.’ And we try to change it up each year as to what kind of food we’re providing.”

It is just a small taste of what

Snake River does in terms of providing and catering camps for oil and gas companies operating in the Fort Nelson area. It is also an important part of demythologizing the camp experience for the Fort Nelson public.

“If people aren’t familiar with camps or have a previous picture, they can see how modern camps are now and how much they’ve changed,” said Girard, describing their reasons for participating in the trade show.

“We have a DVD playing of our camps and showing our staff, showing our facilities. And creating awareness that they may be in a partially remote location, but you have internet access, cell phones, you have fitness centres, you have rec rooms, big screen TV, satellite TV. So, they’re all modern. You have all the amenities.

“You may be working out in camp for, say, 21 days, and then seven days off, but you’re not out of touch with the world. You can still be in touch with your family or friends and not at some remote location where no one hears from you forever.”

By using the trade show as a way to rob the camps of their mystery, it can also be a good way to recruit new employees who are interested in the careers that Snake River offers, but have been nervous about working in camp.

“It allows us to present what it’s actually like,” said Girard. “You can see the facilities. You can see the opportunities available … This solves that grey area. They can have a clearer picture of what it is about.”

cont’d from pg 20 Their transportation needs. All these companies seem like they’re so busy nobody has the time to look at their overall freighting needs and put a system together. So, what we do is we meet with these companies, we look at their overall freight and how they freight things into the different towns and directly to site. We’ll go in, we’ll look at it, and then we’ll come back to them with solutions, and solutions that generally will give them better service at a lower rate. So, that’s something that we might do at a corporate level.”

As part of this initiative, Rosenau has formed a Horn River Freight Partnership in Fort Nelson that includes a number of the energy sector companies operating in the region.

“We’re running this freight out from Fort Nelson out to site,” Smith explained. “And we’re simply splitting cost. So, tradition-

Chef Richard Lief, Shyla Pickering, Saynia Pickering and Andrina Mayes were offering free samples of Snake River Energy Services’ culinary fare to visitors to the trade show.

According to Girard, the trade show is also an opportunity to show people that Snake River is a “grassroots company” that works together like a family.

“Everybody’s contribution makes a difference in the big picture,” she said. “So, you’re not just a number. You know, you’re not just another cog in the wheel. You’re somebody. It creates a family atmosphere. You build a camaraderie and it’s like a second family.”

That family atmosphere makes the trade show an enjoyable experience for the staff, both in terms of how they get to interact with each other and how they get to interact with visitors to the event.

“You get to visit with a lot of people and share information with a lot of people,” said Girard.

“And we also get a lot of guests who stay at our

ally, these companies … they’d be paying, say, $1000 each for a hot shot. And they’re all grouped together in a similar place. So, it’s strength in numbers. The more people into this partnership, now we can divide cost and offer a big cost saving to these companies. So, that’s a weekly run [with a 53 foot van] that we’ve started as well with this partnership.”

“We have a freight specialist in place through this division,” he continued. “And what we’re offering to these companies is a 1-800 number where their people anywhere in Canada can simply call into this 1-800 number, at this [Oilfield] Freight Solutions division, and our people will take all the information, do the rate quotes, handle all the logistics of the freight anywhere it might be in North America, right out to site here in the Horn River Basin, or anywhere else for that matter. So, basically, it’s one-stop shopping. You’re deal-

camps come in and visit and we get to chat. We have that socialization out at camp, but here’s a different atmosphere. So, it’s a great opportunity.

And meet new people. There’s tons of exhibitors here. Lots of repeat exhibitors. It’s a good opportunity to network, meet other people, and learn about other local businesses as well.”

“If they’re unfamiliar with us, at least now they know the name,” she continued. “Now they know what we do. So, it creates awareness for people who didn’t know what Snake River is.

“And it gives opportunity for guests who do come out at camp and are here with their families to say, ‘Okay, well, here’s the food. And here’s some of the staff.’ So, we get to meet other people’s families that you might hear about. And now we can actually put a face to the person. And they can sample our food too.” •

ing with the same person all the time. Any specialty requirements you have, we take care of. Here in Fort Nelson … we’ve got yard space that’s fenced. So, we’re offering the companies storage solutions and warehousing free of charge. So, if these companies are signing up and doing business with us, we’re giving them all their own staging area with their own sign. We have a person that inventories their freight and manages it. They keep in touch with their head offices as well as their people in the field.”

The buzzword for Rosenau is consolidation, as that improves efficiency for both the oil and gas companies and their own company. After all, it is far better for their bottom line to be running just one van into the oil patch every week, instead of doing multiple hot shots with partial loads.

“Transportation, in the grand scheme of things, is a small part, but it’s still in the

millions and millions of dollars,” said Smith, discussing the cost savings that the new division offers the industry and Rosenau.

“So, you start cutting down and consolidating. And the more people we have in this partnership, the more cost savings there is for everybody. So, if we’ve got ten people in this partnership, and there are ten people shipping their freight, and we’re warehousing and storing it for them, and we have a person coordinating with their people in the field, rather than just running out to site on demand … all of a sudden, we’re filling a 53 foot trailer, and we’re running it out there for $1000, just hypothetically speaking, and we’re splitting that ten ways. Then, yeah, there’s a huge cost savings. So, that’s kind of what we’re doing. We’re trying to manage, coordinate, consolidate, and bring partners into this partnership. And, again, it’s strength in numbers.” •

www.trojansafety.com

22 • PIPELINE NEWS NORTH I

May 2011

safety just rewards - CAODC Safety Awards james waterman Pipeline News North

The Canadian Association of Oilwell Drilling Contractors (CAODC) held its annual service rig safety awards banquet in Edmonton on April 9 this year.

Grimes Well Servicing, Roll’n Oilfield Industries, Precision Well Servicing and Global Well Servicing were all recipients of major awards at the function. The performances of those companies in the past year are indicative of the progress that the industry had made in terms of health and safety.

“The safety record of the industry is very good,” said Don Herring, CAODC President. “Our total recordable injury frequency (TRIF) for the last quarter of 2010 was 4.12, which is stable. We’ve been around the 4.0 level since the third quarter of 2009 … Just for perspective, when we switched over to the new measurement standard in the first quarter of 2001, the number was 15.76. So, prior to 2009, for two or three years it was at a 5.0 and then a 6.0. And so it’s been coming down. It seems to be we’re kind of at a 4.0 right now, more or less.”

The CAODC presented Safety Leadership awards to three service rig contractors whose TRIF was above that of other companies in their peer group.

The Class C award for contractors who worked up to 100,00 man-hours in 2010 went to Grimes Well Servicing, with honourable mention going to Rezone Well Servicing.

“It’s a nice reflection on the performance of our employees,” said Kirk Grimes, Operations Manager for Grimes Well Servicing in Fort St. John, adding that the award is a good “measurement of how our safety program stacks up against [the rest of the] industry.”

The Class B award for contractors who worked between 100,001 and 250,000 man-hours in 2010 was presented to Roll’n Oilfield Industries. The honourable mention went to Global Well Servicing.

“We here at Roll’n Oilfield Industries have always strived for the best safety record possible,” said Safety Manager Jeremy Hein.

“As such, we were very happy to accept the CAODC Class B Safety Leadership Award. Receiving this award speaks volumes to the hard work put in by the people in the field all dedicated to safe work. Also, having strong leaders committed to everyone going home to their families is a cornerstone of a company that cares for their employees.”

The Class A award for contractors who worked over 250,001 or more man-hours in 2010 went to Precision Well Servicing.

Concord Well Servicing received the honourable mention in that category. continued pg 23

Operations Manager Kirk Grimes of Class C Safety Leadership Award winner Grimes Well Servicing with the Chairman of CAODC’s Service Rig Division, Ken Hudgeon.

Photos courtesy of CAODC

Safety Manager Jeremy Hein of Class B Safety Leadership Award winner Roll’n Oilfield Industries with the Chairman of CAODC’s Service Rig Division, Ken Hudgeon.

Safety Advisor Brendan Eaglesham of Chairman of the Board’s Shielf winner Global Well Servicing with the Chairman of CAODC’s Service Rig Division, Ken Hudgeon.

May 2011 I pipeline news north •

Staff from Class A Safety Leadership Award winner Precision Well Servicing with the Chairman of CAODC’s Service Rig Division, Ken Hudgeon (second from right).

Photos courtesy of CAODC

cont’d from pg 22 “Obviously, when you’re recognized by your peers in industry as having the best overall safety performance in any given year, it’s something that we’re extremely proud of,” said Marty Packard, Operations Manager at Precision Well Servicing. “It’s not the first time that we’ve won the award. But it’s something that’s extremely hard to accomplish. To have an overall safety performance better than your industry peers, it takes a lot of hard work and a lot of man-hours. I mean, we ran a lot of different rigs last year. And it’s just something that we never take lightly, and we’re extremely proud of the fact that we were chosen as having the best performance last year, in the Class A anyway.”

Packard insisted that “there’s no secret formula” to achieving that sort of safety record.

“It’s just a lot of hard work,” he added, noting that there is a continual effort to build a culture of safety within the company.

“The safety of our people always takes priority over anything else that’s going on in the field,” Packard continued. “So, as long as we use that as a standard and an expectation for the guys in the field, it’s given us some pretty strong results and just built that safety culture within our company. And that’s the bottom line for any company that’s had some success or has turned things around. You build that safety culture from the top down. Everybody believes that we can go out and make a dollar, put a dollar in our guys’ and gals’ jeans, and do it safely.”

Precision Well Servicing operates across the three western provinces.

Much of their business is in the Bakken

formation in southeast Saskatchewan and the Cardium in Alberta, but they also do a bit of work in the Montney formation in northeast British Columbia.

“We’re kind of strategically spread out so that we’re able to support any one of our rigs in any one of those areas with a management team that’s not too far away,” said Packard, explaining how the company can maintain their safety performance when they operate across such a large area. “And at the same time, we’re able to take advantage of all the opportunities with our customers, too, in all these active plays that are coming around these days.”

In addition to receiving the honourable mention in Class B, Global Well Servicing also earned the Chairman of the Board’s Shield, which goes to the service rig contractor with an above average TRIF and the most improved TRIF over their 2009 performance.

Sandy Ross Well Servicing received the honourable mention for that award.

“It’s a step in the right direction,” said Brendan Eaglesham, Safety Advisor with Global Well Servicing. “It was a great improvement over the previous year. But we’re not satisfied with the status quo and we’re always striving to continually improve our safety performance.”

The CAODC introduced a new category called the Safety Excellence Award this year.

“Each contractor was asked, of their fleet of rigs, even though all of them or many of them may have very good records, find one that stands out and bring the rig manager and the driller and a couple other people, and introduce them and explain to the group why it is you picked that rig,” Herring explained. “That was a little different.” •

www.enformbc.ca

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24 • PIPELINE NEWS NORTH I

May 2011

technology

bird’s eye view

- Vieworx offers something new

Screenshot of Vieworx’ geo-referenced planning tool that provides clients with a 360 degree view of their project area.

Courtesy of Vieworx

james waterman Pipeline News North

One might say that Mike Head is a visionary. After all, his company, Vieworx, is literally changing the way energy sector companies see the land where they work.

Over the past two years, Head and his young company – based in Grande Prairie, Alberta – have been developing a hi-tech planning tool that he believes can bring a new level of efficiency to the industry.

“We basically go out and collect footage,” said Head, discussing the process whereby his company captures geo-referenced, high-resolution images of the oil patch, either from the air or on the ground. Clients can then see those images with a full 360 degree view as though they are right there on the ground or in the helicopter. If they can establish a cell phone connection between the crew and the client, they can even view the images live.”

“And then we come back,” Head continued, “and we overlay any associated planning tools that need to be put in place so that we can share everything with our clients.”

“Making this was probably a good year and a half,”

he added. “It will be two years this summer. We’ve been trying to get something so that it’s basically you go out, you collect the raw data, you come back, and we built a tool there that we can upload the raw data into a viewer that basically will then display the map and our findings and our waypoints all in an email.”

Vieworx uses PatchMap to add features such as pipelines and other data to the images so that their clients have a fairly complete picture of the area in which they intend to work. As Head explained, it is a big improvement over the old days of conventional photographs attached to conventional maps and information about the site relayed to management from crews that were sent out in the bush on their behalf.

“Standing in the office, when you go through it all on paper, it’s very tough to get that across,” said Head. “There’s always so many questions.”

As far as improving efficiency, Head noted that the main benefit is simply “saving a lot of ground work.”

“There’s still groundwork that absolutely has to be done at the end of the day,” he said, “but it’s pretty well organized right from the beginning. And the savings and the efficiencies of it really show up at the end of the job.”

“I know it seems like a lot better tool to keep everybody focused to the end product,” Head continued. “In our area here, you deal with so many different groups. The surveying people. The facility people. The completions and the drilling. And if everybody gets to be part of that, put input into something that they can actually see and help plan, it’s just a real positive atmosphere for everybody, which, at the end of the day, keeps the jobs on schedule and keeps everybody safe and efficient. That’s where we see our dollar savings.”

Because the tool allows all of those involved in a project to see such a complete picture of remote work sites without even setting foot on the ground, it is also a valuable tool in terms of worker safety and environmental stewardship. “You go out and you collect the data and you share it with everybody,” said Head. “I might see two or three things that I know will get us [into trouble]. And the next guy that’s doing his part will see a couple things. So, we just go through it, and we get everybody to share their input.”

“Everybody gets to share their ideas before the project,” he added, “which, at the end of the day takes, not always all the risk out, but it sure minimizes your risk and your safety problems.” •

Quicksilver begins midstream program in Horn River Basin james waterman Pipeline News North

Quicksilver Resources announced on April 14 that they are set to begin developing midstream operations to complement its 130,000 acre project in the Horn River Basin of northeast British Columbia.

Quicksilver has completed four natural gas wells in the Horn River Basin that are capable of producing over 30 million cubic feet (Mmcf) per day, but have been limited to an output of 20 Mmcf per day due to the capacity of a third party line connecting to the Spectra Energy system. The company had already constructed its own gathering line to tie into the Spectra system as of April 14. That line was expected to be operational in May. The new line will

eliminate those restrictions on production from those wells and allow gas to flow through new compression facilities that are also in the works.

An April 11 agreement with TransCanada Pipelines subsidiary Nova Gas Transmission will see TransCanada build a Horn River pipeline extension and the new Fortune Creek Meter Station within Quicksilver’s Horn River Basin acreage.

“Quicksilver has committed to deliver its gas to receipt points on the Horn River extension pipeline,” the company stated in an April 14 news release. “The TransCanada Fortune Creek receipt point will provide a low-cost transportation solution to move gas to the AECO hub. Access to the AECO hub, at favorable rates, is consistent with the company’s strategy to ensure multiple markets for each of its developments.”

Quicksilver is also planning a treatment facility at Fortune Creek to remove CO2 from the natural gas stream, a process that has long been a key compo-

nent of Quicksilver’s operations. Initially, the treatment plant is expected to be capable of delivering 125 Mmcf of natural gas to the TransCanada line on a daily basis beginning in the middle of 2014.

Anticipating strong production growth in the region, Quicksilver has designed the facility so that they can increase its capacity in the future.

“Between what Quicksilver has drilled, and what others in the industry that surround our acreage [have drilled], that gives us a high degree of confidence that that 130,000 acre block will have very consistent results from our drilling activities,” explained company spokesperson Rick Buterbaugh during an interview.

“And therefore the resource potential exceeds 10.0 tcf (trillion cubic feet).

“With that 10.0 tcf, as that’s developed, it’s going to require an outlet to markets. And not only to a market, but give us optionality to move our product, on our time, to the optimal highest value markets. So, similar to what the company

has done in the development of Michigan, Horseshoe Canyon and the Barnett acreage that we had. Once we have proven the resource, we focus on the midstream, build out, to ensure that as we develop the resource, we have a way to move our gas to market.”

Quicksilver began acquiring acreage in the Horn River Basin in late 2007 and early 2008. According to Buterbaugh, the timeline from acquiring acreage to initiating midstream operations in that play has been “very similar” to the timelines they had followed in there other natural gas developments.

“We entered the Barnett – the Fort Worth Basin Barnett – in 2003 from an acreage acquisition standpoint,” said Buterbaugh. “And in four years, really, it had not only begun, but it had gone through a lot of the backbone of the build out of our midstream operations, and was really ramping up development. So, this is on a very similar timeframe, within a three to five year period.” •

May 2011 I pipeline news north •

profiles

25

colour me

- Arctech’s got a new paint shop

james waterman Pipeline News North

Last year, Arctech Welding & Machining was facing a dilemma.

The company had won a number of contracts during the spring and summer months, but their existing painting facility – which was only 2000 square feet in size – just wasn’t big enough for them to do both the steelwork that has always been the core of their business and also paint that steel.

“So, we then had to subcontract it out to other companies in town, which were far more expensive to our clients,” said Dean Thom of Quality Control and Quality Assurance with Arctech. “And we got comments from them because of that.

So, that was the point that we decided, ‘Let’s do it. With everything that’s happening in the area, let’s do it.’”

“We wanted to give our clients better value,” he added.

Consequently, Arctech built a new shop at their Fort St. John office with a painting area of 6000 square feet. It represents a shift in their business model.

“Painting has always been a part of the business,” Thom explained, “but it was mainly to complement what we’ve been doing in the shop … That [new facility] was built for the sole purpose of targeting outside work.”

In April, that work included painting 120,000 pounds of structural steel in a four to five week period for Ferus’ new liquid nitrogen plant in Dawson Creek.

Other oil and gas industry companies that operate in the region are starting to take notice of Arctech’s expanded painting service as well.

“We’re getting more calls,” said Thom.

“More inquiries. One thing that we do want to target is offering the companies in the area another outlet to paint process piping. Because in town there’s really only one, maybe two, companies in town that do it. And we want to offer them the third facility with a better cost option and be able to handle more volume.”

The two sides of the company are starting to feed business to one another, too.

“That’s already happening with welding and then the painting,” said Thom.

“Another avenue that we’re working on is getting our certification in line to fabricate process piping. And that’s a fairly drawn out process. And we’re almost there. There’s just a couple of other little hurdles to jump over.

“And I like to think, as companies start bringing their prefabricated pipe now to the shop to get painted, that we can then approach them and say, ‘We offer this service as well. One-stop shop. We can fabricate the pipe for you and we can paint it all at the same time. There’s no freight from your yard or from your site to paint and back again. Just everything can be done here.’”

However, the company still faces an obstacle to its continued success.

“Finding the skilled people and finding the people that want to be in town,” Thom explained, describing the issue.

“From my experience, the mentality is that people want to go out into the patch and make the big bucks. And in a shopbased environment, the money’s not the same. So, finding those type of people that are happy with working in town at [that] amount of money, that’s a challenge.”

In the past, Arctech has tried to work with the welding apprenticeship program at Northern Lights College to meet their staffing needs, but they have reduced their participation in that program recently because it hasn’t proven to be a long term solution to the problem.

“As soon as they could attain their B Pressure ticket,” Thom said of those apprentices who quickly left Arctech for the oil patch, “unless they want to be in town, you can pretty much kiss them goodbye.”

As far as the difference between those who want to stay in town and those who want to head for the oil patch, Thom boils it down to age and family status. Essentially, younger workers without families are likely to go to the oil patch.

“Some of the older people might have worked out there already,” said Thom.

“And they’ve decided that they want to be at home more with their kids and the family and do more things. And then other guys just realize that the townbased life is more what they want than

Dean Thom of Quality Control and Quality Assurance and painter Maurice Savarie inspect the paintjob on a batch of steel in Arctech Welding and Machining’s new paint shop.

Photo by James Waterman

being out there in the camp.”

Clearly, their hope is that by adding the new painting capacity to a company that has been in business for twelve years, they can start to make a bigger dent in the Horn River Basin. Their only activity related to that shale gas play has been limited to heavy steel work for a few large energy sector companies.

“We’ve been able to handle it alright,” Thom said of the increase in business that Arctech has experienced since Horn River Basin development began, “because at the moment we’ve only been associated with the one project up there.

“And it’s been [that] we do one part of the project and then we move into the next part. Then once that’s completed, we move into the next part. The really big projects up there, we haven’t been able to get on board with those because they’re done in the city.”

The new paint shop could be an avenue for changing that situation to Arctech’s benefit, according to Thom.

“That was one of the reasons for doing that,” he explained, referring to the paint shop. “So that those pipe modules that the companies are looking at now can be placed in there, can be rolled in there, painted, put on the back of a truck, and straight on the road.”

Beginning as a general fabrication shop, Arctech expanded in 2002 to target fabrication of products such as truck decks before moving into structural steel when Thom joined the team.

“And it’s become the pillar of our business,” he remarked. •

www.arctech-welding.com www.arctech-welding.com

26 • PIPELINE NEWS NORTH I

May 2011

finance

Guaranteed insurability for your child... picture the possibilities

technology

ic02n

- a strategic plan for carbon capture and storage james waterman Pipeline News North

When you listen to Eric Beynon talk about carbon capture and storage (CCS), it almost sounds as though he is plotting a war against climate change.

www.canwestgroup.com

Beynon is the Director of Strategy and Policy for the Integrated CO2 Network (ICO2N), a group of Canadian companies – including several oil and gas industry heavyweights – committed to developing CCS as part of a solution to Canada’s greenhouse gas emissions problem. As he discusses the organization and its mission, one phrase reminiscent of military strategy pops up again and again: early deployment. Just like any war, his is a battle that requires capital, and acquiring those funds appears to be the biggest obstacle to getting CCS projects off the ground – or under it.

“Costs are arguably the biggest challenge,” Beynon admitted. “I mean, it is a large technical engineering endeavor.”

However, Beynon has no such concerns about its viability or its place in the big picture of reducing greenhouse gas emissions in this country.

“It’s not a new technology,” he said. “It’s just a new application of existing technology –and a new scale, if you will. These technologies exist, but have been used on a much smaller scale. So, there’s not a lot of concern that it will work. It’s more the question of, at the end of the day, what will the cost be. And that’s difficult in today’s world to make those major investments. That really is one of the challenges for early deployment.”

“As plants are deployed around the world,” Beynon continued, “we do see costs declining – and quite substantially – like any other technology. It’s happened with computers. It’s happened with flue gas desulphurization, if you want to take an industrial example. As technology improves, costs decline. And we expect that to happen with CCS.” “It’s the early projects that, naturally, are probably the most expensive. And that’s where we need to get over that hump, to get the projects going so we can set the stage for the future.”

The federal government has contributed approximately $1.3 billion to CCS projects. A $2 billion CCS fund established by the government of Alberta will see four plants capable of reducing emissions by as much as five million tonnes of CO2 up and running by the middle of 2015. Industry is also investing in CCS projects.

“There is a role for government in the early deployment of CCS simply because of the large economic gap in getting over the first hurdle,” said Beynon. “And we’re sort of in the early stages where we’re trying to prove up the technology and progress it to a commercial stage where it can be widely deployed, and deployed as part of regular business decisions. But

that’s likely quite a ways out … There’s companies that can do it, but also government has to work with them to help get the first projects off the ground.”

The burning question is whether or not capturing carbon is capturing the national imagination at a time when items such as alternative energy and cap-and-trade programs are being more frequently discussed as solutions to the climate crisis.

“I think there is a lot of awareness of CCS now,” said Beynon, insisting that CCS is gaining traction despite the popularity of other high profile ideas. “I think we’re in a period where there’s a lot of commitments from governments and industry for the first projects.”

“There’s about four to six projects right now that are being worked on fairly extensively,” he continued. “So, there’s a lot of work being done. And, at the same time, I think there is a lot of information out there, and knowledge that those projects are underway. So, I think we’re in a period where we’re working hard on those first projects. Attention always goes up and down, but work hasn’t changed.”

Another difficulty is that CCS can easily be seen largely as a regional interest, especially considering that Alberta is currently at the centre of the initiative, but Beynon noted that interest in the technology is spreading across the nation.

“There’s obviously a natural focus [on] Western Canada as the location for the first projects,” he admitted. “Overall, CCS, we firmly believe, is a national endeavor … The reality is the first projects – the first large scale projects – are moving forward in Western Canada, so there’s more attention there. But there’s also a lot of work underway in, particularly, Eastern Canada. There’s research underway in Nova Scotia and New Brunswick right now on CO2 storage. So there is a broader applicability, but work to be done before the first projects move forward.”

“It’s a big part of Canada’s CO2 reduction future [and] our energy future,” Beynon continued, stressing the potential value and importance of CCS. “As a country, we simply can’t make the CO2 reductions necessary without CCS.” A recent study by the Ottawa-based Delphi Group examined the benefits and the net costs of various means of reducing CO2 emissions, including CCS, vehicle efficiency, and power generating alternatives such as nuclear, solar and wind.

The study identified CCS, nuclear energy, wind energy and vehicle efficiency as the most significant methods of reducing CO2 emissions, accounting for seventyfour per cent of potential CO2 reduction by all methods considered in the study.

The total reduction could be 140 megatonnes in the year 2020. CCS from in situ oil sands operations could account for 30 megatonnes of that total.

“The volumes of CCS are needed, but it’s not at the exclusion of any of the others,” said Beynon, discussing the results continued pg 27

May 2011 I pipeline news north •

27

New Alberta Regulation Enables Carbon Storage Daily Oil Bulletin - www.dailyoilbulletin.ca

cont’d from pg 26

of the study. “We need all the tools right now. And so I think that’s a critical conclusion – the other one being that most of the CO2 reduction options out there, as a society, cost money. The Delphi Group identified [that] vehicle efficiency was one that actually saved some money for society over all. But for most of the others, they all cost money. And CCS, obviously, there’s a cost associated with CCS. But when the Delphi Group broke it all down on a dollar per ton basis, they’re all in the same range. Most of the CO2 reduction options are in the same range.”

In fact, if the cost of in situ oil sands CCS can be reduced by Enhanced Oil Recovery (EOR) revenues as the Delphi Group expects, that cost is the same as wind power and just slightly greater than the cost of both bioethanol and solar power. Coal power generation and other industry CCS cost significantly less than those four options. “We need all of them, so the story doesn’t just end at cost,” Beynon added. “We actually need to go after all of them.”

CCS appears to be a natural fit with industries that produce and use fossil fuels.

“We’re in a carbon constrained world,” Beynon explained. “And we have an economy in Western Canada that’s largely based on fossil fuels right now. And CCS is a way to … continue more sustainable use and production of those fossil fuels. You can look at both coal and the oil and gas industry. Coal is an abundant resource that’s relatively economic compared to a lot of other energy resources. And CCS can enable the continued use of it. Another big thing with coal is it’s stable … It’s a stable fuel supply.

“So there’s a long-term benefit there in terms of a stable and secure energy supply. And then in the oil and gas sector, we well know that as we move into a more [strictly] carbon constrained world, we need to reduce emissions.

“But fossil fuels are going to still play a major role in the next few decades, just because we simply can’t replace them that quickly. And so as the world needs oil and other fossil fuels, CCS is a way to produce them with a smaller footprint. There is a long-term benefit, especially for Western Canada, when you’re looking at that resource production as sort of a strategic investment as well.”

“CCS is potentially a tool for the energy sector,” he continued. “And not just the energy sector, but other

industrial sectors. But it’s tied to energy use. The chemical and fertilizer sector, there’s applications there as well. The same thing with cement or other industrial [sectors].”

“I’ve often spoken about how you can’t capture CO2 off the back of a car. It’s too diffuse. And I don’t even know what you’d do with it, to be honest. But if you have one large individual location, you can capture it. So, that’s where the application is.”

Beynon recognizes that there is some public trepidation about CCS, largely revolving around concerns that the CO2 might escape storage, but he believes that those fears can be allayed.

“There’s been a tremendous amount of work done around the world with hundreds of millions of dollars spent on analyzing storage,” he said. “And I think it’s a great body of work and … it can’t be discounted.

“I think the easiest way to think of it is, proper storage selection is important, without a doubt. And with proper storage selection you’re going down quite deep and you’re selecting a reservoir – a locked formation – that will hold the CO2. So, you’re actually injecting the CO2 into a rock down there. But you’re selecting one that has a different type of rock on top of it – what’s called impermeable cap rock. So, a shale, which will hold it in there.

“And I like to use the analogy that [it’s] the exact same type of reservoir that’s held hydrocarbons underground for millions of years. You know, hydrocarbons will naturally rise to the surface if given their choice, except they get caught in these formations. And when someone finds an oil reservoir, that’s what they’ve found – a place where hydrocarbons have been kept for millions of years.

“Now CO2 is actually different. When you’re injecting down to the depths, CO2 will fall over time to the bottom of the reservoir. Storage becomes more secure over time. It goes through a transition, and it gets more secure over time, and eventually becomes part of the rock itself.”

Beynon also noted that the technological ability exists to monitor the storage sites and quickly address the issue if something were to happen.

Finally, as Beynon was eager to point out, Canada is not alone in pursuing this venture. The International Energy Agency (IEA) has developed a CCS Roadmap and the United States, United Kingdom and the European Union are all investing in CCS programs.

“So, there are projects progressing elsewhere as well,” Beynon concluded. •

A new Alberta regulation establishes the process for companies to seek tenure rights to evaluate potential deep carbon storage sites for storing carbon dioxide.

The regulation for this greenhouse gas reduction technology will guide how large-scale carbon capture and storage projects will proceed in Alberta.

Under the Carbon Sequestration Tenure Regulation, companies will apply for pore space tenure following the same model that is currently in place for petroleum and natural gas rights. Companies will need to continue to work with landowners to obtain surface access and the Energy Resources Conservation Board to obtain necessary approvals required by law.

For example, these projects will need a well license before they can drill an injection well and an additional approval before they can begin commercial scale sequestration. Existing provisions available to landowners to intervene in the application process and to seek compensation remain.

The regulation sets out several administrative details and processes that include: establishing a five-year evaluation permit to determine storage site suitability; establishing a 15-year sequestration lease for longer term commercial needs; requiring permit and lease holders to submit monitoring, measurement and verification plans which must be approved by the minister and updated every three years; outlining the requirements for closure plans and requiring lease holders to submit closure plans which must be approved by the minister and updated every three years; setting annual rental rates of one dollar per hectare and application fees of $625 for both permits and leases; setting the minimum carbon dioxide injection depth at one kilometre; and setting the maximum area for permits and leases at 73,728 hectares (eight townships).

The Carbon Sequestration Tenure Regulation is similar to other regulations under the Mines and Minerals Act that grant tenure for oil, natural gas, oilsands, mines and minerals. •

email: maelco@xplanet.com

28 • PIPELINE NEWS NORTH I

May 2011

industry news

don’t be nervous - counterfeit certificates

james waterman Pipeline News North

There have been some recent cases of fraudulent Enform training certificates popping up at job sites in British Columbia and Alberta.

However, Jeff Safioles, Manager of Health and Safety at Enform, insists that the public shouldn’t be nervous about the health and safety standards of the oil and gas industry.

There have been about ten cases of counterfeit certificates dating back to last year, most of those being the H2S Alive tickets issued by Enform, the safety association for the upstream oil and gas industry.

“It’s kind of the staple of safety training courses that people have to take to be able to work in the industry,” Safioles said of H2S Alive. “So, we train over 100,000 people a year in that.”

“These forged certificates – or fraudulent certificates – they represent a very small number in comparison to the total,” he added.

Safioles chalks these instances up to the fact that many people will try to take shortcuts when possible. The H2S Alive course takes six to eight hours at a cost

of $160 to $180. It is believed that some individuals obtained their fraudulent certificates after only a fifteen minute session for just $150.

“What they’re trying to do is really kind of short circuiting or taking a shortcut to competency,” said Safioles. “I mean, competency … some of it’s training, some of it’s experience, some of it’s feedback from their supervisor. But the training piece is what they’re trying to bypass.”

“The [certificates] in northeast B.C., in particular, those were forged by an individual and being sold to people,” he added. “We also have individuals [forging them] on their own. Somebody they know gives them their valid certificate and they try and modify it to make it look like theirs.

That kind of thing happens as well.”

Lucie Janosek, Acting Manager of the Enform campus in Fort St. John – an area where a number of the counterfeit certificates were discovered – finds the idea that individuals thought they were obtaining legitimate certificates for just fifteen minutes of instruction “tough to swallow.”

“If people are being told they can get a ticket for anything less than [a six to eight hour session and $160 to $180],” said Janosek, “I would be very suspicious and call our office to verify.”

The counterfeit tickets first came to the

attention of Enform when an individual checking credentials at a worksite noticed a certificate that didn’t look quite right. Enform was contacted and able to confirm that it was fraudulent. Counterfeit certificates are fairly easy to spot, as Enform uses thermo-chromic ink and micro-print as security features on their certificates.

“There’s two key messages,” said Safioles. “One is that people in the industry are doing a good job, for the most part, of checking to make sure people have the right credentials to get onto a worksite.

The second important thing here is that people are actually getting training to be able to work in the industry and understand the hazards they’re dealing with and how to deal with those hazards.

“That’s the training part. That’s part of their becoming competent to work in the industry. So, what we’re really concerned about is people might be out there working that don’t have the correct training.”

The RCMP is conducting a fraud investigation into the counterfeit certificates.

That investigation is currently ongoing.

Apache & Devon pass FPB audit cont’d from pg 3 Barber added, “But I think we were very comfortable that what we were doing was the right thing to do. And so the fact that it’s now out there publicly is great. That it can be shared and, hopefully, others will do as well.”

“And to have that extra quote,” she continued, referring to Gorley’s additional comments about their practices. “They didn’t have to do that. In my mind, that was significant recognition for what the guys on the ground already do everywhere else. The fact that it’s recognized by someone of that caliber is a nice pat on the back to say, ‘You’re doing it right.’

And because it was so public, hopefully other companies will also take a look at those types of techniques. Because we’re more than happy to share that – and we’re doing a lot of that in the Horn River anyway.

“But for other companies to take those techniques and make them better, or use them in a different way and share that – that’s really, really good for industry if we want to be there for a long time. If we want to help the regulators also better understand, the more we do and the more we share that information, the better off I think everyone will be.”

Barber emphasized that much of the credit for Devon’s performance goes to their Surface Land team that has developed new practices, such as building wood mulch access roads.

“They work hand-in-glove with drilling and completions,” she said of Surface Land. “So, whenever drilling is looking at where they might want to set a particular pad or put a particular access road in,

Surface Land is part of that team, and says, ‘Okay, here’s how we can minimize it safely.’”

“It’s really looking at it from a planning point of view, early on, and saying, ‘Here’s what we know we want to drill.

Here’s what kind of impact that may have.

How do we plan early on to ensure that we cut as few trees down as possible and mitigate any type of disturbance?’” Barber added.

The approach not only offers environmental benefits, but economic advantages as well. For example, Devon still had a rig in the Ojay field south of Dawson Creek during the last week of April, which is highly unusual for that time of year. According to Barber, their road building techniques are responsible for the uncommon length of the season.

“It held the frost,” she explained. “So, we would be able to remove that rig quite a bit later than any other company up there as a result of those practices.”

“There’s the environmental benefit, but there’s also the cost benefit,” Barber continued. “If you can get an extra well completed, or if you can get some things done from a cost point of view, that’s a huge win for us as a company. And if you can do it safely, all three things have to go together. If you can do that safely and you can reduce your costs and you can reduce whatever kind of footprint you have, that’s a no-brainer.”

Apache and Devon were chosen for audit through what the Forest Practices Board calls a ‘modified random sample’.

“It’s sort of a layered process,” Gorley explained. “First of all, they’ll randomly pick districts of the province to look at – geographic areas.

“Each year we do about a dozen audits. We randomly pick areas of the province to do the audit in and then within that area, they’ll take a look. If we’ve audited a company in that area within the last five years, we probably won’t audit that company again.

“Or, if we’ve looked at the entire area and looked at a particular set of practices – so, let’s just say, for example, we looked at road building across the entire area – then we probably wouldn’t look at that again right away.

“So, in this case, the location was randomly chosen. And then the auditors took a look and said, ‘Well, what haven’t we looked at before, that might be worth taking a look at?’ We hadn’t previously looked at the forestry activities that the oil and gas companies have been doing.

So, that’s how they got picked.”

The audits were conducted during the summer of 2010. According to Gorley, the entire process takes about a year with all the analysis and the writing of reports, but only requires about two weeks of work in the field.

“Our jurisdiction extends to activities that essentially involve an alteration of the forest,” said Gorley, discussing the process. “And so those activities would all involve some clearing or some construction in the forest. We look at, first of all, was there a proper plan in place and was it followed? A really big one is, did they take adequate measures to protect watercourses and streams and rivers

and so on?

Have they taken the appropriate measures to protect wildlife and wildlife habitat?

If they’re required to do some rehabilitation to prevent erosion, have they done that? Those sorts of things.”

The Forest Practices Board is not able to take direct enforcement action, but it does report any significant noncompliance to the company, the government and the public. It is up to the company to rectify the problem, if possible.

“If they’re following the law and their practices are sound,” Gorley added, “than they’ve essentially passed the audit. That doesn’t mean they’re perfect.

There could be little things that are wrong or things that could be done better, but they still pass.”

Gorley also noted that the audit process serves as a solid deterrent to noncompliance, because companies who perform forestry practices as part of their operations know that there is always the chance of being chosen randomly for an audit. “And since we usually find pretty good compliance,” he said, “it provides the public with a certain amount of confidence that companies are following the law.” •

May 2011 I pipeline news north •

29

leader energy

- horizontal drilling makes a difference

james waterman Pipeline News North

Leader Energy Services announced its impressive financial results for the year ending December 31, 2010 on the tenth anniversary of the company this April.

After experiencing a loss of approximately $4.9 million from its continuing operations in 2009, Leader has reported a substantial turnaround with a net income of almost $1.9 million in 2010.

Focused on coiled tubing and nitrogen pumping services, Leader was able to achieve this growth due to an increase in horizontal drilling activity that requires coiled tubing.

“We’ve always had a profitable situation with the coil tubing side of our business,” said Jason Kreuger, Director of Investor Relations with Leader. “So it’s the amount of horizontal drilling activity that’s driving the demand for our services. For all of our services.”

According to Kreuger, the financial improvement was something that the company saw coming at the end of 2009.

“In December of 2009,” he explained, “that month we beat our own internal expectations by a reasonable amount as far as activity levels were concerned.

That actually continued all through 2010. So, our own belief was that probably by about June of 2010 we were of the mindset that the business had turned quite positive. We didn’t realize how positive it had turned by then, but we just knew it had gotten a heck of a lot better.

And so that really is evidenced by a doubling of our revenue between the two years. It was ninety-nine per cent year over year. And we’ve seen it continue into 2011 as well.”

“Revenue is approximating $10 million during the first three months of this year,” Kreuger added. “So, that is roughly twenty per cent higher than for the same period last year.”

Kreuger admits that the growth may be partly a function of the energy sector’s recovery from the recent economic downturn, but he mostly attributes Leader’s performance over the past year to the services they offer and their horizontal drilling applications.

“I think the companies that are involved only in servicing vertical wells or natural gas wells are having a very tough time still,” he opined. “I think any company that has an involvement in horizontal drilling or servicing will definitely be having a much better time now than they were a year or two ago.”

At a time when there is a lot of talk that the service sector in Western Canada isn’t large enough to meet the demand of the oil and gas industry, Kreuger feels that Leader is well positioned to maintain this level of success moving forward.

“The issue of manpower is one that does get spoken about in media and by the companies themselves in press releases,” he explained. “And we’ve been fortunate to have a number of our senior people at the field level that have worked with us for three, four or five plus years. So, we’re not struggling when it comes to senior field personnel.”

However, Kreuger admits that Leader does face challenges in terms of manpower.

“I think the place where we struggle would be similar to all other service companies in getting entry level people to come in the door,” he said. “Because you’re competing with Fort McMurray.

You’re competing with the trucking industry.”

“I think every service company – ourselves included – is encouraging these people to join your company,” Kreuger continued.

“And then if they’re doing a good job and they’re satisfied with what they’re learning, what they’re doing, and what the upside is for their careers, they’re going to turn into a good employee. I think that, by and large, if you have an employee stick with you through all four seasons in one year, they’re going to turn into a long term employee.

And so the entry level type posi-

Leader Energy has seen an increase in demand for its coiled tubing services with the recent reason in horizontal drilling technology. photo courtesy of leader energy

tions probably represent about twenty-five to thirty per cent of our workforce. We have about 84 employees right now, of which about 70 are at the field level.”

Kreuger admits that money is a factor when it comes to attracting and retaining employees, but also suggests that certain intangibles play a key role.

“The reality is that money serves to motivate a lot, if not all, people,” he said. “So, I think one of the ways that industry combats that is obviously by paying higher wages. If you can provide additional benefits to your employees, such as a group RSP plan, which we do, or various health and dental benefits, these are all really important things. And I think that, like I said, money is important.

“And security in a position is important. Knowing that you’re not going through a round of layoffs every time spring break-up rolls around says a lot. I think, too, if guys enjoy the company that they work for, they enjoy working with the other people, they’re going to be long term employees.

So, you know, money only gets you so far.

“There’s no doubt that, in the course of the last twelve months, that your wage rates may be going up that you’re paying guys, and likely are going to continue to head upwards over the course of the next year,” Kreuger continued. “But I don’t think that the industry is yet in a position where things are out of control.

“I can remember back in 2005 and 2006 where

things almost were out of control and you would be competing to hire senior operators or senior sales staff and it seemed like the only thing that would convince them to move from companies is by paying them more money. And at times ridiculous money. And so the bad part about that, if you get into that cycle, is your customers end up having to pay more for the services.

“And it’s not necessarily healthy. So, I think that just on a go-forward basis, our guys really like working for this company. We’re not a small company and we’re sure not a big company. But I see it myself every time that I go up to Grande Prairie or another member of the executive goes up to Grande Prairie, it’s a bit like a family reunion, if you will.

You can see the guys enjoy working for the company and what they’re doing. They take pride in the job that they do. They take pride in keeping their trucks clean and operating efficiently. And the net result from that is you provide an outstanding service to your customer and you also can maximize the profits for the shareholders as well.”

Being a company with ten years under their belt and a wealth of senior field personnel, Leader has built a reputation that Kreuger believes has made them a first choice in many cases as oil and gas companies emerged from the economic downturn and began to increase horizontal drilling activity.

www.aspenindustrial.net

continued pg 30

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Farminton... cont’d from pg 7 According to Turner, Huron and Independent were simply reacting to the concerns they had heard from local landowners, although he does describe Carroll and his company as being “proactive.”

“They’ve been absolutely fantastic,” Turner said of his relationship with Huron. “They’re very proactive – and always looking at different opportunities. Kevin always said, ‘If you find some different technology out there that can help us, please let me know.’ So, we do as much as we can. As much as we can help out and give them different ideas to help them with their clients or with their possible landowner issues. Or be proactive so there are no issues.”

The monitors have been in place for about a year and a half already. They only took two days to install. Originally measuring in parts per million, the monitors now measure in parts per billion, and are sensitive enough to register elevated levels of toxic gases from nearby diesel trucks and idling school buses.

The monitors are also designed to have a minimal environmental impact.

“Everything we build is solar power,” said Turner. “So, it has a green footprint to it. We have solar panels charge the batteries, and the batteries are the heart of the system, that in turn keeps the system running.”

“They’re a voice-based alarm,” he continued.

“So, it will generate an alarm out to them, call out if there’s a problem from high emissions.”

The toll free numbers received hundreds of calls per month when the monitors were first installed. Now a busy month is about fifty calls and a slow month is still at least twenty. Independent experienced some early issues with the digitized voice on the system, but those have since been corrected.

According to Turner, Hill probably calls the numbers most often. Ultimately, this is exactly the type of work that Turner wants to be doing with his life and career.

“I love it,” he said. “A great thing to be involved with it. I was involved with it in central Alberta before … We started a lot of this in Alberta. Previously, I was the second guy in Alberta to start doing it. And I really like it, especially in areas where you can help landowners and oil companies seek common ground.

“That’s probably the best part.” •

Natural Gas... cont’d from pg 13 “We built the first natural gas transit bus in the world in Hamilton, [Ontario],” said Milner. “That was back in the late eighties. And that had a lot of good government support. And the reason they did it in Hamilton was they had some of the worst air quality in the country. But we also had a lot of early adopters in Canada. And so it’s getting people to take a second look at something where maybe the early experience was challenging.”

“I think, also, in North America, it’s just been a challenge in terms of government engagement,” she continued. “There’s sort of been some high level interests. But now we really see the work is to kind of drill down and get serious about, okay, everybody understands the benefits and there’s a good business case. So, how do we work together to get it into the market ? [U.S.] President [Barack] Obama made that speech about a month or so ago about … a blueprint for energy security. And he flagged this as one of the many things they need to do to improve energy security. And in Canada, of course, we have huge resources, and we’re a net exporter of oil, but we do rely on imported oil for refineries in Quebec and the Maritimes.

That’s about half of the oil use in Canada to create finished products. So, we don’t tend to lead.

In Canada, we don’t tend to first think about that energy security argument. But just diversifying energy use, too – in this sector, it is the only part of our economy that relies on one energy source. And biodiesel and ethanol, they’ve changed that a bit – but not too, too much. And natural gas is certainly well-positioned to also bring those energy diversification benefits to Canada.”

Additionally, Seed, Stout and Milner all agree that it is important that Encana, one of the largest natural gas producers in North America, is assuming a lead role in this movement through its recent initiatives. Milner is particularly encouraged by Encana’s efforts, noting that their CNG stations can provide a model for other oil and gas companies.

“That’s a really interesting model,” she added, referring to the mobile fueling stations, “because what it does is cross that great divide of either no information or old information. And so the fleets can find out this is how it all works, and it’s really not all that mysterious. It’s just a bit different because it is natural gas … I think it helps demystify it. So, it’s really progressive to see Encana doing that sort of thing. It’s a revolutionary approach to a natural gas value chain,” Seed added. •

Leader Energy... cont’d from pg 29 “We have been established now in Grande Prairie for ten years,” said Kreuger. “Grande Prairie’s not an easy market to break into. It’s very tough for new companies to get going up there.”

Leader started in Grande Prairie, where, as Kreuger explained, it is difficult for a new company – particularly a small company – to gain a foothold in a landscape of large companies with deep pockets and long histories in the industry. “You’ve got to cut your teeth in the market,” he added. “And we’ve done that. So, I think when it comes to coil tubing companies, everybody really knows who the players are up there. And I think that a lot of customers do like the idea of working with the smaller, independent companies up there. The local companies.”

Grande Prairie is also a good fit for Leader because of its advantageous proximity to oil plays that are the main focus of their business, as well as the liquids-rich gas play of the Montney formation.

“We’ve always referred to Grande Prairie as the ‘gateway to the North’,” said Kreuger. “Not to say that everybody’s pushing northwards to the North Pole or anything. But, that being said, we started off in Grande Prairie for a reason. There is a need for Class 3 coil tubing services up there.”

Kreuger emphasized that the strength of Leader is its people, particularly those who have been with the company for a number of years.

“The reality is that your Calgary-based or Edmontonbased sales force – you know, the downtown sales force – they’re good at winning you the first couple of jobs with the new client, but the reality is that it’s the field workers – the guys doing the job – that win you repeat business,” he explained. “If you’re not doing a good job, doesn’t matter how good your sales people are, you’re not going to get to go back to work for them. So, it’s the guys at the field level that are absolutely critical and we’re fortunate to have some really awesome people working at field level.”

“The industry’s gone through tough times,” Kreuger continued. “We went through tough times back in 2008 and 2009. And for us to say that we’re grateful for everybody in this company, it’s absolutely true. To say their efforts are reflected in our customer satisfaction and in our financial performance, that’s not paying lip service to our employees or just making a statement that a lot of companies seem to make. It’s absolutely true. “We’ve got some excellent people at this company and they are the reason that we were able to get through the downturn. They’re the reason that we’re going to continue to be successful this year and in the future as well.” •

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