Pipeline News Tabloid February 2015

Page 1

PIPELINE NEWS Saskatchewan’s Petroleum Monthly

February 2015

Canada Post Publication No. 40069240

FREE

Volume 7 Issue 9

Fracking

A3 Upheaval In Fracking

A4 Crescent Point Keeps Drilling

B1 Lloydminster Soldiers On

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PIPELINE NEWS February 2015

INSIDE SECTION A 4

Crescent Point keeps drilling alive

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PIPELINE NEWS Saskatchewan’s Petroleum Monthly

March 2015 Focus Contact your Sales Rep to be a part of the focus edition

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PIPELINE NEWS February 2015

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TOP NEWS

Element Technical Services of Carlyle entered the hydraulic fracturing business in southeast Saskatchewan a few years ago and has grown to several spreads. In the past year, two companies, aker ,ughes and Calfrac, have pulled out of the region enƟrely.

Upheaval in fracking industry throughout 2014 By Brian Zinchuk Pipeline News Estevan – If there was one word to describe the hydraulic fracturing business in Saskatchewan in 2014, that word would be “upheaval.” The changes are most pronounced in southeast Saskatchewan. In late 2013 there were seven companies with bases in southeast Saskatchewan offering fracking services. They were Trican Well Service, Baker Hughes, Halliburton, Calfrac Well Services (Bienfait), Canyon Technical Services, Element Technical Services (Carylye) and Millennium Stimulation. All had bases in Estevan except for those noted in parenthesis. Now we have four and a half, depending on how you consider Haliburton. Stepping back several years, Baker Hughes acquired BJ Services. Canyon set up shop in Estevan. Halliburton came back to Estevan (cementing their reputation of coming when times are good, and leaving when things slow down, as many people told us at the time). Millennium, a totally new firm, launched in Estevan, while Element, another startup, did the same in Carlyle. Trican set up a new base in Brandon, Man. two years ago to take advantage of an untapped labor market and a housing market that wasn’t under nearly as much pressure as Estevan. That base was a supplement to the Estevan Trican base. Many of these changes were in the works or took place well before the precipitous decline in oil prices since June 2014. Things started to go off the rails in the spring of 2014. Baker Hughes, which was in the process of building a “super centre,” a multi-million-dollar campus to consolidate all their Estevan operations, suddenly stopped work on it before they even closed in the first building. The “coming soon” sign was replaced with a real estate sign. (A similar super centre was completed in Lloydminster. It opened in the fall of 2014). Baker pulled out of the pressure pumping business in Estevan and Medicine Hat (a base of many pressure services which service much of western Saskatchewan), with numerous layoffs. Millennium, which had just relocated

one of its two frac spreads from Estevan to Medicine Hat, jumped on that and offered a career fair in Medicine Hat shortly after the layoffs. They picked up many former-Baker workers. Canyon did the same. The summer of 2014 saw Halliburton take a page out of the Trican playbook. Whereas Trican moved part of its operations to Brandon to be closer to its Manitoba operations, Halliburton set up shop in Regina, to take advantage of a larger workforce and better housing options. However, Regina is not closer to any oilfields. While they still have a shop in Estevan, as well as some iron, at Christmas time, most of their trucks were parked at their Regina base just off Ring Road on McDonald Street. It’s not uncommon to see Halliburton trucks staying in Melita, Man. Late in 2014, Halliburton announced a merger with Baker Hughes. Calls to both companies have not been returned as of press time. Calfrac Well Services has pulled out of Bienfait some time in mid-2014. They are reportedly active in the Kindersley area, but also have not returned our calls. In mid-2014, the ATCO Logistics camp in Estevan, which serviced at lot of frac crews, closed its doors. It is still there, however, and has not been removed. Civeo, formerly PTI, set up a new camp in Melita, Man., replacing its Waskada facility. It also has a camp with room for approximately 350 people near Estevan. Millennium purchased ENFRAC in August 2014, prompting it to develop a liquified natural-gas based frac service in the future. The company is also in the process of going public and raising capital. Millennium opened its new frac sand facility in Estevan, located on the Long Creek Railroad, just off the CPR Soo Line. Source Energy Services, which has a frac sand facility in Lampman, is currently undertaking a substantial expansion. Element, in the meantime, has been growing its fleet, adding additional spreads and coil tubing units. A merger with an Alberta company went nowhere, however.

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PIPELINE NEWS FEBRUARY 2015

BRIEFS Husky to spend $3.4 billion

Husky Energy’s capital budget for 2015 will be $3.4 billion with the spending focus on its Liwan Gas project in Asia and the Sunrise bitumen project in northern Alberta. “We continue to steer a steady ship through stormy waters,� said CEO Asim Ghosh in a Dec. 17 budget statement. “Our strong financial position and resilient portfolio are helping weatherproof our business against current market conditions.� The capital budget expects production growth in 2015 to occur near the end of the year with volumes averaging 325,000 to 355,000 barrels of oil equivalent per day. The forecast reflects natural production declines as well as several planned turnarounds that are expected to impact production by about 8,000 boepd. Approximately 40,000 barrels per day in new production is expected to come onstream in the second half of 2015. This includes production from the Sunrise project, the Rush Lake thermal project in the Lloydminster region and the South White Rose and the Hibernia-formation well beneath the North Amethyst field in the Atlantic region. “With a focus on business fundamentals and capital efficiency, we have a clear line of sight to continued production and reserves growth while maintaining financial strength and providing for our strong dividend,� said Ghosh.

Briefs courtesy Nickle’s Daily Oil Bulletin

Crescent Woint lined up four rigs and spudded them all close to the same Ć&#x;me a few miles northeast of Stoughton at the beginning of the year. Photo by Brian Zinchuk

If not for Crescent Point, SE and SW Sask drilling activity would be near a standstill Company tells vendors to cut prices, because they will remember those who do, and who does not „ By Brian Zinchuk Estevan – Despite having sent out a letter to its vendors saying it expected price cuts, Crescent Point has done one thing many other companies have pulled back on – it has kept drilling. As of Jan. 9, the company led all of Canada in its drilling activity, with 26 active drilling rigs. That’s even higher than what the company had last fall, when it led the nation with 25. The difference in early January is that there is a lot more distance between first and second place. Progress Energy had 19 rigs, while Canadian Natural Resources Ltd., Cenovus Energy and Tourmaline Oil all had 17 each, according to Rig Locator (riglocator.ca), a sister publication of Pipeline News. Perhaps more importantly for this province, all but two of those 26 rigs were drilling in Saskatchewan, further cementing the company’s significance in the Saskatchewan oilpatch. With 24 of 67 active rigs in the province, Crescent Point made up 35.8 per cent of all drilling activity that day. Their contractors (and number of rigs) included Alliance Drilling and Oilfield Service (3), CanElson Drilling (6) Crusader Drilling (1), CWC Ironhand Drilling (1, in Alberta), Ensign Drilling (1), Horizon Drilling (2), Precision Drilling (5, of with 1 was in Manitoba), Savanna Drilling (3), Trinidad Drilling (1).

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The lone Alberta rig was working in the Swan Hills area. On the Saskatchewan side, another singular rig could be found just four miles north of Kindersley. Five rigs could be found in the Shaunavon area in a northsouth string running 32 miles north and south along the Shaunavon trend. One rig was working north of Elkhorn, Manitoba in the Manson area. The remainder, and bulk, of the activity, was in southeast Saskatchewan, concentrated in two areas – the Viewfield Bakken area near Stoughton and the Torquay play within sight of the U.S. border, south of Oungre. There, four rigs could be found drilling. Two outliers could be found, one at Tatagawa and another northeast of Bienfait. In the Viewfield, almost all the nine rigs were working east of Highway 47, with just one exception. Five miles east and three miles north of Stoughton, in the community pasture, the company did one of those things Crescent Point does from time to time – line up several rigs side-by-side and spud them at the same time. In this case the horse race included Alliance Rig 5, Horizon Rig 34, Precision Rig 380 and Crusader Rig 2. It was an impressive sight, with three of the four rigs lined up in a perfect line (the fourth was offset to the north), all within a mile. f Page A8

PIPELINE NEWS February 2015

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BRIEFS TSX may bump Southern 3DFLĂ€F

Tundra Oil and Gas Partnership, and to a lesser extent, Corex Resources, have been keeping the Manitoba’s oilpatch going with steady drilling acĆ&#x;vity near Cromer, Man. Photo by Brian Zinchuk

Manitoba drilling up a storm, at least in one area „ By Brian Zinchuk Cromer, Man. – If you took a drive down Manitoba Highway 256 between Sinclair and Cromer on Jan. 9, you could be forgiven if you thought oil was still at US$100 a barrel, instead of the $48 it closed at that day. Manitoba had 13 rigs drilling that day, with a further nine down. That’s down quite a bit from the near 20 it was running during the heady days of the second Waskada boom, but that boom is now well and truly over. Only one rig, Panther Rig 2, was drilling for NAL Resources in the Waskada area. It was the only rig drilling south of Highway 2. Instead, the concentration is now, as it has been for years, the Sinclair-Daly field between Highways 1 and 2, mostly along Highway 256. Rigs could be seen up and down Highway 256, working both sides of the road and in close proximity. Privately held and Winnipeg-based Tundra Oil and Gas, by

far Manitoba’s largest driller and producer, had seven rigs working in the Sinclair-Daly field. Corex Resource, a distant second, had two rigs in the same field and a third rig working just off the TransCanada Highway southeast of Virden. Elcano Exploration had a lone rig working just south of the Assiniboine River, positioned six miles south of Miniota on Highway 83. Crescent Point Energy had lone Manitoba rig (of 26 rigs working throughout Canada) about 12 miles to the northwest, in the Manson area. On Dec. 8, Daily Oil Bulletin (www.dailyoilbulletin.com) reported that Tundra Oil and Gas Partnership and Canadian Natural Resources Ltd. had purchased EOG Resources, Inc.’s remaining Manitoba assets, which lie in the Waskada field. However, as of Jan. 9, neither company was drilling in that area. Tundra had already been active there with a subsidiary company, Red Beds Resources.

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The TSX is currently reviewing the eligibility of Southern Pacific Resource Corp. for continued listing of its common shares. The news comes from Southern Pacific itself on Jan. 16 as it struggles to right its financial ship as it undergoes a previously strategic review process. The Calgary-based company notes the TSX is reviewing listing requirements such as their financial condition and operating results and the need for adequate working capital and an appropriate capital structure. Other listing factors looked at include public distribution, price or if trading activity is too low to warrant continued listing. Southern Pacific currently trades under the symbol STP. The company is engaged in the exploration, development and production of insitu thermal heavy oil and bitumen production in the Athabasca oilsands of Alberta and in Senlac, Saskatchewan. The TSX has asked the company to provide information related to the delisting review within 120 days to demonstrate compliance with the TSX requirements. If Southern Pacific is unable to demonstrate on or before May 14, that it meets the TSX requirements, its securities will be delisted 30 days from such date. If that happens the company said other listing alternatives exist for reporting issuers in Canada. Briefs courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS February 2015

PIPELINE NEWS

EDITORIAL

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

Publisher: Brant Kersey - Estevan Ph: 1.306.634.2654 Editorial Contributions: SOUTHEAST Brian Zinchuk - Estevan 1.306.461.5599 SOUTHWEST Swift Current 1.306.461.5599 NORTHWEST Geoff Lee - Lloydminster 1.780.875.5865 Associate Advertising Consultants: SASKATCHEWAN & MANITOBA R5 -. 0 (5g8ifl8lij8hlkj Cindy Beaulieu Candace Wheeler Kristen O’Handley Deanna Tarnes Teresa Hrywkiw R5 ,&3& 5g8ifl8jki8hkhk Alison Dunning NORTHWEST SASK. & ALBERTA R5 &)3 '#(-. ,5g8mnf8nfn8imfl Krista Thiessen CENTRAL Al Guthro 1.306.715.5078 To submit a stories or ideas: Pipelines News is always looking for stories or ideas from our readers. To contribute please contact your local contributing reporter. Subscribing to Pipeline News: Pipeline News is a free distribution newspaper, and is now available online at www.pipelinenews.ca Advertising in Pipeline News: Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual. Pipeline News has a group of experienced staff working throughout Saskatchewan and parts of Manitoba, so please contact the sales representative for your area to assist you with your advertising needs. Special thanks to JuneWarren-Nickle’s Energy Group for their contributions and assistance with Pipeline News.

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

Wish we had more good news‌ If last month saw a lot of doom and gloom in the oilpatch, this month it was amplified. We saw oil drop to the $45 range in January. It seemed that level, below $50, is when things started “getting real,â€? so to speak. The largest oilfield service providers started hacking and slashing. First it was Schlumberger, dropping 9,000 people worldwide. Then Baker Hughes announced it will lay off 7,000 in the coming months, which equates to a higher percentage of its workforce than Schlumberger. Halliburton, which is in the process of buying Baker, is looking at 1,000 job cuts worldwide. Within southeast Saskatchewan, most of the people we spoke to were still relatively busy, but things were slowing down. Rigs were getting racked as companies dramatically curtailed their drilling programs. Legacy Oil + Gas, for instance, was down to two rigs in southeast Saskatchewan and one in Alberta by Jan. 20. Crescent Point was the only substantial driller who kept nearly all their rigs going. As of Jan. 20, they still had 25 rigs, the most in all of Canada. They outpaced second-place Progress Energy Canada Ltd. by 5 rigs on that day. Of those 25 rigs, all but two were working in Saskatchewan. One was just across the Manitoba border near Elkhorn, and the other was close to the B.C. border in northwest Alberta. How long Crescent Point will keep up the pace is anyone’s guess. If it wasn’t for that company, southwest and

southeast Saskatchewan would have nearly ground to a halt, drilling-wise. Of those 25 rigs working for Crescent Point, six belonged to CanElson Drilling. On Jan. 19, CanElson announced on Jan. 19 it had slashed its 2015 capital spending program by 80 per cent from $63.9 million to just $12.9 million over the realization that low oil prices will reduce drilling activity. The decision includes a deferral of the completion of three new rigs which had been contracted out. Many companies told us they did not expect things to pick up until much later in the year. That’s going to make for a pretty lean year. They might have to cut wages, and they are going to try their best not to cut jobs. One company noted that during the last downturn, they had to use job-sharing, bolstered by a government program, to keep their staff. CNRL cut its capital budget by $2.41 billion. That may just seem like a nebulous number until you put it into context: it’s equal to roughly 20 per cent of the Saskatchewan provincial budget for a year. Suncor Energy said it would lop off 1,000 employees and contractors off their payroll, freeze hiring and slash a billion from its capital spending plan. We wish there were better news to report, but until oil prices turn around, our industry still got a long row to hoe. With all the layoffs taking place, there may be plenty of time for gardening with that hoe.

PIPELINE NEWS February 2015

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A7

OPINION

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Could re-entries for additional laterals be an option? One of the best things about this job is I get to talk to some very interesting and innovative people, some who have shaped our industry and indeed may be playing a small part in shaping the world. This month I got to speak to Dan Themig, president, CEO and co-founder of Packers Plus. It’s been several years since I’ve spoken to him, but I knew that this was one company we wanted to include in this edition focusing on fracking. They are always innovating, always coming up with new technologies. Once again, they didn’t disappoint. I asked him about the fact several years ago the larger oil companies in southeast Saskatchewan used to specifically mention the use of Packers Plus technologies when doing their corporate presentations, but those name-drops don’t occur these days. Acknowledging they “did kinda get the boot” in Saskatchewan, he replied that they were the team that won the regionals then went onto the Olympics. In other words, they’re playing on the global scale now. “We got beat up in Saskatchewan a little bit, but trust me, we’re far from done there, delivering technology that will really move the industry forward,” he said. We discussed at length three of their new technologies that are being launched right now. They have another four that they aren’t ready to talk about yet, but are in the works. One system, the Diffus or, is designed to add “complexity” to fracs. Instead of one, big fracture, it’s

supposed to make many smaller fractures with each stage, thereby increasing pathways into the wellbore. It’s activated by balls dropped into the system. The second is the Quadrant System, which allows up to four frac ports to be fracked at the same time, dramatically reducing the amount of time it takes to frac an entire well. The third is their QuickFRAC IV is also a ball-activated system, but one that will allow up to 100 stages in a well with a singular technology. You read that correctly – 100 stages. Wow. When I first started doing this job nearly seven years ago, 16 stages seemed like a big number. But the most interesting part of our discussion was that of adding additional laterals, or legs, to existing wells. He feels that almost any well in Saskatchewan is a candidate for re-entry and the addition of another horizontal leg. Re-entry can be a dirty word, depending on who you talk to. One person I spoke to several years ago talked about how their firm had a rig dedicated to re-entries, and it was the most accursed thing he had ever dealt with. But Themig said they can deal with casings down to 4.5 inches. In this region, PetroBakken had been drilling a substantial number of multi-lateral wells. But that company, now Lightstream, is only operating one rig in this region for the foreseeable future, and Themig says not many people are doing multi-laterals these days.

If you can have a successful re-entry program, think of the tremendous savings that can be had. The lease is already built. The pipeline and battery are probably already in place. Your associated gas likely has infrastructure to take care of it. The vertical well portion, including casing and cement, are done and (hopefully) paid for. If the first leg was a decent producer, presumably the second, with newer technologies, should do well too. Those technologies could include more frac stages, and maybe this complexity thing he spoke of. Maybe it will perform better than the first? I don’t know. When oil producers start looking at falling production due to natural decline curves (quite steep in Bakken wells, I might add), maybe adding a second leg might not be such a bad idea. It keeps you drilling, and adding production, at a substantial savings. In my editorial last month I wrote about how OPEC driving prices down will not kill off the shale oil industry, it will simply cause it to find new ways to produce more oil with less money. Perhaps one of those ways will be re-entries of existing wells. Let’s hope some companies give it a shot, because it sure beats racked rigs on the side of the road. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net

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Heavy oil under the microscope

This could be a benchmark year for future heavy oil development in Western Canada despite lower than expected prices during the peak first quarter for drilling. SPE Canada just wrapped up its Vision 20/20 workshop in Lloydminster Jan. 27-28 that was all about exploring the future of heavy oil. That workshop focused on proactive discussions to deal with the inevitable challenges the industry will face by 2020. Those challenges include questions on how to retain an experienced workforce and how much the heavy oil industry has to increase recovery rates to stay economical. In Lloydminster, Husky Energy aims to produce 80,000 barrels of oil a day by thermal technology by the end of 2016 from the 45,000 bpd benchmark at the start of 2015. An updated resource assessment in late 2014 significantly increased the overall best estimate contingent resources in the region from 107 million barrels to 1.9 billion barrels, of which 54 per cent has the potential to be recovered using thermal technology. Total heavy oil initially in place is now estimated to be 17 billion barrels, of which 16 billion barrels are previously discovered heavy oil initially in place. New technology will be the key to meeting the increased need for better recovery rates to stay economical as companies like Husky are driven by

shareholders to be profitable. The January workshop led to a follow-up course on Jan. 29 in Lloydminster on in-situ recovery methods and steam assisted gravity drainage or SAGD with eye to emerging technology. The most popular commercial methods include cold heavy oil production with sand (CHOPS) cyclic steam stimulation (CSS), steamflood, and SAGD. Lesser known and emerging recovery methods include steam solvent hybrid, cross-SAGD, fast SAGD, wedge wells and a list of alphabet acronyms such as VAPEX, N-SOLV, THAI, COGD, ETDSP and ESEIEH. All of these methods, covered in the one day course aim to reduce capital costs, operating costs and environmental footprints while boosting recovery. Recovery methods will also be discussed during the 2015 World Heavy Oil Congress in Edmonton March 24-26 that will attract over 1,000 delegates from 31 countries. The event features a conference, networking opportunities and exhibits on cutting edge technology in heavy oil recovery. This will be followed by the 2015 Bonnyville & District Oil and Gas Show June 17-18 when regional heavy oil and gas companies exhibit their safety, environment and production services and technology products and services. Of course, 2015 will be the year a decision will be made by U.S. President Barack Obama to issue

or deny a permit for TransCanada Corp. to build the Keystone XL. The Keystone XL can potentially transport approximately 830,000 barrels a day of predominantly heavy oil produced from bitumen in the Alberta oilsands to U.S. Gulf Coast refineries. Advances will also be made in 2015 on TransCanada’s proposed Energy East pipeline that would also carry some heavy oil produced in Western Canada to refineries in Quebec and New Brunswick. Meanwhile, Canadian Pacific Railway Ltd. confirmed plans in late 2014 to increase crude carloads to 200,000 in 2015 from as many as 120,000 at the end of 2014 despite lower prices for light and heavy oil. Producers and pipeline companies continue to build new terminals as pipeline construction gets bogged down by politics and environmental concerns. This summer, Altex Energy Ltd. will hold a grand opening of its expanded transloading facility in Lashburn with a current capacity to load 44,000 barrels a day from the Lloydminster region. Unfortunately, this year of heavy oil could also mean reduced workloads or layoffs at worse for some well service companies and contractors unless prices rebound quickly. The production slowdown will inevitably lead to a price increase and kick start the next cycle of growth in the industry that might come sooner than later with fingers crossed.

PIPELINE NEWS INVITES OPPOSING VIEW POINTS. EDITORIALS AND LETTERS TO THE EDITOR ARE WELCOME. Email to: brian.zinchuk@sasktel.net

A8

PIPELINE NEWS February 2015

While others are racking, CPEC is drilling

Green indicates Crescent Point Rigs.

e Page A4 The map of southeast Saskatchewan rigs truly told the tale. All but

three rigs east of Highway 9 were idled. A cluster of 10 rigs within a 12-mile radius of Carnduff was all racked. Another five spread out north

of Highway 13 between the Manitoba border and Carlyle were also idle. Other significant areas of activity in the southeast that were not Crescent Point-related was included a string running northwest to southeast from east of Lampman to north of Northgate, with Legacy Oil + Gas and Vermillion Energy doing the drilling, and a cluster of rigs working near Oungre. Those rigs were working for Arc Resources, Enerplus, Torc Oil & Gas were all drilling with one rig each. If it were not for the Crescent Point activity, Southeast Saskatchewan drilling activity would be all but dead. Things aren’t much different in the southwest, either, with only Federated Co-op and Surge Energy

operating one rig each. The letter Pipeline News has spoken to a number of vendors who work with Crescent Point. All the companies who do significant business with the company got “the letter.” That letter, dated Dec. 16, and signed by CEO Scott Saxberg and COO Neil Smith, starts out by talking about how the company values their suppliers, but with oil dropping from US$100 WTI to $55 (at that time), margins and cost structures of $100 oil “are no longer sustainable.” Their “capital budget and capital activities for 2015 are expected to be cut dramatically.” “Our objective is to maintain a certain activity level keeping crews busy and supplies moving and effectively doing more with lower costs,” the letter stated. “We can only do that with our vendors cutting their cost structure dramatically at this stage in the price cycle. The alternative is no activity and idle crews. When commodity prices recover we will continue to work with those suppliers that valued our relationship during the low cycle and we will work with them to adjust cost structure upwards when appropriate. We look forward to working with in for the long term.” The letter concludes with a request for updated prices, and asks for prices and then new pricing with a percentage change. They also ask if there are any other services the vendors can provide and the reduced costs for these services. The letter was in keeping with Saxberg’s comments to investors late in 2014. All of the vendors Pipeline News spoke to said they intended to comply with the request for reduced pricing.

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PIPELINE NEWS February 2015

A9

“When you look at all the wells in Saskatchewan, I would view every single wellbore, regardless of the casing size, as a potential candidate for re-entry and drilling, adding additional laterals.”

Dan Themig,

president, CEO and co-founder of Packers Plus

Addressing low oil prices with new technologies: Packers Plus CEO By Brian Zinchuk Calgary – Packers Plus has been one of the key players in the development of hydraulic fracturing in the Bakken play, as well as around the world. While their ball-set frac system fell somewhat out of favour in some areas of Saskatchewan a few years ago when cemented liners became all the rage, the company has continued its long-standing strategy of innovation, and has some solutions could be just the right fit for oil producers seeking to reduce costs in a world where oil prices have dropped by more than half. To that end, Packers Plus now has products that are used in cemented liner applications, and yes, they are still very much using balls to activate their systems, having found ways to dramatically overcome what was once a limitation due to sizing. On Jan. 14, Dan Themig, president, CEO and one of the founders of Packers Plus spoke to Pipeline News about three of their new products that are just being deployed in the field now or in coming weeks. A further four are in development, but it’s a little too early

to discuss those at this time. “We’re getting ready to distribute information on three new

technologies we’re in the process of releasing,” Themig said. Diffusor system The first is the

Diffusor system, composed of cemented ports activated with actuation balls. f Page A10

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PIPELINE NEWS February 2015

Developing complexity in fracs length we determine is optimal. The pressure can affect the rock not just at the e Page A9 port, but perhaps for 100 feet along the port, so that you can have more than “What makes this system unique is that it’s the only cemented system we one entry point into the rock or formation. It’s a cemented port, but it’s not like know of in the world that can be set up to induce ‘complexity,’” Themig said. any cemented port currently being used, “What complexity is, if you frac out for example in the Bakken or anywhere of a perforation or cemented port in else we know of.” most company’s systems, the fluid “With the standard Diffusor, we can moves out of a single port and makes do roughly 40 to 45 stages.” a single crack in the rock to drain It is a ball-size limitation. They fluid. can go up to 40+ stages with balls now, “Some people will think that’s much more than just a few years ago. good, but the evidence is otherwise. Themig explained, “We have continued There’s something of a newer conto develop ball manufacturing technolcept that’s been around for about five ogy that allows us to get finer and finer years. What it says is if you can create with our sizing. Then we’ve developed a complex network of fracks instead technology that prevents the fracturing of a single fracture or single crack, sand from causing abrasion on the ports, then the oil can drain much more efso we have been able to get to some very ficiently. It would be like bringing all small increments that will still effecthe traffic to downtown in a city on a tively shift ports and deflect the frac to single street. Instead you are bringing the next stage. So we actually can get to the traffic in on 49 different streets to do those numbers. We weren’t able to downtown. Which one delivers more probably four years ago, but now a lot cars efficiently? Clearly it’s is one that of the systems we use utilize these very has 49 different streets headed down meticulously designed port sizes so that at the same time. we’re at what most people call ultrahigh “So the technology is very unique. density fracturing or high frac intensity.” It does allow an operator to cement, There are some methods using but when they cement, there is a sysMiles Haukeness, design engineer with Packers Plus in Estevan, holds up a ball in one coiled tubing that may take 30 or 40 tem set up that that makes sure there hand and a wiper plug for a cemenƟng line. Photo by Brian Zinchuk hours to frac the well, he noted. “The are some areas that are not cemented Diffusor system utilizes cement, but in the well, so the fracture fluids can can reduce that time down to probably less than 24 hours, in the Bakken and find different pathways to create fracs. It creates what’s been determined to be the most efficient drainage network that we’ve found in unconventional plays.” Shaunavon. It’s a lot more time efficient and cost effective as well.” Instead of a frac job taking two days, it could be done in a day, resulting in “This cemented liner also has typical ball-activated ports. The unique thing a large savings. about it is that even though the port creates only one exit out of the pipe, once f Page A11 the fluid gets outside the pipe, it is free to move along the liner to whatever

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PIPELINE NEWS February 2015 e Page A10 It will be most applicable to the Bakken, Themig noted. “It’s huge because if you’re looking at drilling numbers that say (a larger oil company) does, you spent a lot of time on location with a coiled tubing unit trying to execute something that can be done a lot more efficiently. “It will save a lot of money and a lot of human resources.� “We’ve had some of the operators in Saskatchewan say that when the technology is released and available, they are ready to go in and run it.� “The unique thing about the Diffusor is it allows the development of fracture complexity, which is a more efficient drainage mechanism to recover reserves. “The bottom line on what we have seen production wise is that fracs with complexity will often recover almost double the total reserve per well as ones with a single frack extending from the well.� Asked if the Torquay is different from the Bakken, he said, “The Torquay is primarily utilizing coiled tubing fracking and most of the Bakken is typically utilizing coiled tubing fracking as well.� “While we haven’t applied the technology and the crew currently in the Torquay, I think you can expect to see a lot of very similar gains

in efficiency and reduction in time and cost. The fracturing methodology is very similar in both formations.� Quadrant Coiled Tubing System The second new technology being introduced is the Quadrant coiled tubing system, which is a coiled tubing conveyed frac system. Themig said, “What makes a Quadrant system so unique is typically fracturing operations that are done with coiled tubing they’ll go open a single port and then pump a single frac and then move to the next zone and repeat the process. That’s how they end up getting to the 25 stages or 20 stages they are running per well and is also how to get their 40 hours per well. “The unique thing about the Quadrant system is we’re actually able to shift open two to three, maybe even four ports at a single time and then pump one fracturing operation that effectively distributes the fluid in all three or four seg-

A11

John Taylor, a shop technician with Packers Plus, loads a downhole tool onto a pickup in their Estevan shop. Photo by Brian Zinchuk

ments at the same time. Again, if you’re looking at a well that might take 30 hours to frac using single-port entry methods, this can reduce your timeframe by approximately two thirds. So it might take you 10 hours to complete all of your stages by utilizing the Quadrant system. “It’s got a specialized port that allows you to distribute your fluids. I guess the best analogy to what most people would understand is if you have a garden hose, one of those sprinkler types, what this does is something similar. It has ports that are cemented in place and then shifted open. When the ports are moved to the open position, there is a regulating device inside the port that limits how much fluid can go out at one time. f Page A12

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A12

PIPELINE NEWS February 2015

Fracking up to four ports at the same time

The iÄŤosor frac port is designed to introduce ÍžcomplexityÍ&#x; to fracs. Graphic courtesy Packers Plus

The Yuadrant system allows mulĆ&#x;ple stages to be fracked at the same Ć&#x;me, dramaĆ&#x;cally cuĆŤng down on how much Ć&#x;me a frac ĹŠob takes. Graphic courtesy Packers Plus

e Page A11 “So if you were pumping in a Bakken scenario, half a cube per min-

each port, but combined you could pump two cubes per minute and do four stages at the same time, but it will distribute the fluid equally.� Quadrant ports can be used either as single-port entry or multiple ports at the same time. Typically, the spacing between ports would be 20 or 30 metres. When the fluid is injected, it is distributed evenly to all of the ports that are open. Thus the system can do 120 metres at a time. Based on 40 hours doing a singleport entry, using this system should allow the same operation to be done in approximately 10 hours, according to Themig. “You pretty much go out and finish a well in a single day.� He noted it might be a little more “family friendly� to get these jobs

ute out of the single port, you would set up your ports to regulate so that half a cube per minute comes through

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done during the day instead of running 24 hours. Asked if the reduction in fracking time would also result in less work for the frac operators, he noted, “Oil just fell from $100 to down to $45 a barrel, so dad might not be making any money if we can’t be more efficient.� “We also have the ability to develop complex fractures by combining some of the features of the Diffusor with the Quadrant system. One of the main features of the Quadrant system is we can be more efficient, and combined with the ability to develop complexity it should enhance ultimate recovery for the reservoir. QuickFRAC IV System The third new technology is the fourth iteration of the QuickFRAC system, known as QuickFRAC IV. f Page A13

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PIPELINE NEWS February 2015

It wasn’t that long ago 16 frac stages were considered a lot. The QuickFRAC IV is designed to do up to 100 stages. Graphic courtesy Packers Plus

e Page A12 “It is a multiport system that can be run either cemented or uncemented. This is the first technology that gets us to where we can truly pump 100 stages with a single technology.” “QuickFRAC IV is a ball-activated system, but the ball will shift open anywhere from 2 to 5 ports and allow you to simultaneously treat all five ports equally with a single pumping operation. You’re not getting a lot of requests for 100-stage systems currently in the Saskatchewan side of the Bakken, but if you went down to North Dakota, where the wells are a little bit deeper and the reservoirs a little bit more complex, you will see a lot of people requesting 100 stages to be performed with a single technology.” Those North Dakota wells are typically two miles long and two miles deep, while a Saskatchewan Bakken well in the Viewfield area is more typically a mile long and a mile deep. “Where is the future of other reservoirs, even in Saskatchewan, we’re not exactly sure where that is. Every time we think we reach an understanding of a reservoir, we’ll find another reservoir that is less prolific or is more challenging to drill or is deeper. If you hit the south end of Saskatchewan, there are some deeper segments of the Bakken that will act more like the North Dakota Bakken. Maybe we will be doing two mile-long laterals. “Another thing you have is what they call the Alberta Bakken, an extension of the Bakken further west. There are companies that are drilling there that have been quite successful, but we think this technology will allow them to be more efficient in this

cost-sensitive environment. The fact that you can do this either cemented or open hole gives you the option to build into your well construction whatever technologies are most effective from a producing standpoint.” The trend has continually been more and more stages. Asked when was the last time they did an eight-stage frac, Themig laughed. “It probably was somewhere international where they haven’t caught up with the technology trend. It’s been a very long time in Canada since we’ve done an eightstage job. We’re typically 20 to 45 stages now on most wells were doing.” Multi-lateral wells Asked about multileg wells, he said that took off in really good areas of the Bakken. In Saskatchewan, a lot of the best Bakken reservoir is drilled up. That technology began to move to other areas like northern Alberta in the Slave Point. In North Dakota where there’s a lot of existing wellbores in the Bakken, he said, “You’re going to see a lot of those wellbores now twinned and drilled as a multi-lateral well perhaps into the Three Forks or infield drilling in the Bakken.” “Currently there aren’t a lot of active areas with multi-lateral wells, but we think the future holds a lot of that,” Themig said. He’s had recent meetings in Texas where companies are planning wells such that their initial drilling is planned in such a way for additional laterals to be added later. “I think the future is going to have a lot of re-entry drilling.” Re-entries are a way for companies to dramatically reduce expenditures on new drilling, according to Themig. “In some areas of

Saskatchewan, you will definitely see that, and in some areas of North Dakota. It saves you the cost of building a location, setting surface casing and a conductor pipe, drilling and setting intermediate… in some cases it may save you as much as maybe 50 per cent or 60 per cent of the cost of constructing a new well.” The company has a lot of experience with dual laterals, he noted. “Packers Plus, as far as dual-lateral wells with fracturing systems, has done more of that type of work as the rest of the industry worldwide has done combined, as far as I can tell. It’s very reliable. It’s very repeatable. We can do slim-hole systems out of four-andhalf inch, five-and-ahalf inch and seven-inch casing. The capabilities are outstanding. The repeatability is close to 100 per cent, so no one should cross it off as an unreliable technology, nor should they cross it off because casing sizes are small,” Themig said. “When you look at all the wells in Saskatchewan, I would view every single wellbore, regardless of the casing size, as a potential candidate for re-entry and drilling, adding additional laterals.” Using technologies to address $50 oil Asked about life at $50 (or less) per barrel, he responded, “There are dozens of ways to become more efficient, no

matter where we’re at in our current technology and field practices. “What I’ve been telling people, and I’ve been giving this talk before prices dropped … is the Holy Grail we should be looking for is how do we reduce total well costs by 10 per cent? The other part of that is how do you increase production and ultimate recovery by 25 per cent? Maybe by 50 per cent? I’ve got one operator that is using our technology that has increased productivity and ultimate recovery of their wells by more than 100 per cent by using

these technologies and using them in a costeffective manner.” “The industry gets pretty used to working at a certain price. When the price changes, we’re a pretty innovative industry. We always find a way to survive and operate in different cost environments fairly quick. You look at our industry when we were at $100 WTI price, and you thought of it dropping to $80, everybody thought, ‘How could we ever survive?’ “Now that prices are $45, $80 sounds really good, and I think we’d be all glad to recover to

A13

that factor. We’ll adjust our efficiencies and cost structures and our methodologies now to work in this environment. Granted, $45 is going to be very difficult, but you’re going to see operators find new, more efficient methods. Our timing is really good in launching these technologies.” The Diffusor system is ready to go to the field immediately, and the Quadrant system is expected to be in the ground in late January. The QuickFRAC IV system is expected to be launched by midFebruary.

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A14

PIPELINE NEWS February 2015

Could North Dakota have peaked its production already? „ By Brian Zinchuk Bismarck, N.D. – Shale oil production in North Dakota and Texas has changed the world, increasing domestic oil production and crowding out OPEC-sourced oil. With supply now exceeding demand by an estimated two million barrels per day (according to Qatar), OPEC is refusing to cut production to allow prices to increase. Oil prices have dropped by more than half, and the impacts are being felt across the border, right at the source of the matter. North Dakota rig counts have fallen precipitously. According to North Dakota Department of Mineral Resources (DMR), they dropped to 156 rigs by Jan. 12. They had been closer to 180-190 for most of 2013-2014. There were 183 rigs working on Dec. 12, 2014. f Page A15

North Dakota’s rig count dropped by 27 in less than a month, to 156 as of Jan. 12. The price of oil is now around the point where there may not be enough rigs working to keep producĆ&#x;on increasing. File photo

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PIPELINE NEWS February 2015 e Page A14 As of Jan. 7, North Dakota was producing 1.2 million barrels of oil per day. In 2009, that number was closer to 100,000 bpd. A presentation by the DMR to the state’s House Appropriations Committee on Jan. 8 laid out what pricing and activity levels mean for oil production. Current oil prices, which as of Jan. 12 were touching US$45 per barrel WTI, have now cross the threshold where the state which has seen the most phenomenal growth in production in recent memory could soon begin declining. In a grid laying out the price per barrel, number of rigs projected would be working at that price, and new wells expected, the DMR laid out the case showing the state could soon

start seeing declines. This comes on the heels of a Williston Basin Petroleum Conference in Bismarck last May that announced they were just shy of a million barrels a day production (a number surpassed a few weeks later). Projections at the time saw the state possibly increasing that by another 500,000 to 1.5 million bpd in the coming years. At US$55 per barrel, the DMR projects there would be 140 rigs working, producing 3,800 new wells in a year. Production would stay flat at 1.2 million bpd in January 2015 to January, 2016, and drop slightly to 1,150,000 bpd by January 2017. At US$85 per barrel they would see 190 rigs working, producing 5,000 new wells per year. Production would increase from 1.25 million bpd in January 2015 to 1.4 million bpd in

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A15

bpd in January 2017. Breakeven prices, reflecting a price at which new drilling will cease, ranged from US$77 per barrel to $29 per barrel, depending on the county. McLean County is at the high end, at US$77. Dunn County, at $29 per barrel, and McKenzie County, at $30 per barrel, are the lowest. They also had the most rigs working, at 26 in Dunn and 59 in McKenzie, as of Jan. 7, 2015.

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If oil prices don’t recover, North Dakota may soon go into producĆ&#x;on decline. Graphic courtesy North Dakota Department of Mineral Resources

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A16

PIPELINE NEWS February 2015

Trican sees growth opportunity MaĆŠ romley is a second year heavy duty mechanic apprenĆ&#x;ce with Trican. Here he’s looking for leakings on a large frac pumper while the unit is in the Estevan yard. Photo by Brian Zinchuk

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„ By Brian Zinchuk Calgary – Founded in 1996, Trican has only laid off workers once, and they’re going to do their best to keep their staff through this downturn. That’s according to Rob Cox, vice president of the Canadian geographic region, who spoke to Pipeline News by phone from Calgary on Jan. 14. With a whirlwind of change in the hydraulic fracturing business in Saskatchewan and Manitoba over the past few years, Trican has been the most stable of the larger pressure service companies that operate in the region. It has maintained its Estevan location and roughly two years ago added a base in Brandon, Man. In the past few years there have been two new startup entrants in the region, another company expanded, two major pressure pumpers pulled out entirely and another relocated to Regina. “There certainly has been some changes. Some I can’t explain,� Cox said. “I can’t comment on what our competition is doing, but I don’t understand the business logic of some of it.� As for Trican, he said “We see good growth opportunity.� That wouldn’t mean moving from two crews in the region to ten, but there is room for growth in cementing and fracturing. Are their fewer frac jobs in the area? “I don’t think so,� he said. “I don’t see the job count dropping in that area.� If Trican did expect that, they would not have set up a Brandon location, he noted. Instead he expects good, stable operations when oil prices come back. Setting up a Brandon base was a strategic decision to be in an untapped labour market. He noted it’s a nice place to live and there are lots of people with Class 1 driver’s licences. It was also a challenge to attract people to Estevan. f Page A17

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PIPELINE NEWS February 2015 We manage costs, we offer time off. We take a look at other salary reductions to hang onto people, but we don’t jump to layoffs like other companies do.� A lot of service companies hire in the summer, work the fall and winter and layoff in the spring. That’s not Trican’s way, according to Cox. “We’ve never done them or will get into a cycle like that, and we

never will get into that, because it’s not good business practice. But we are going to respond to the environment. We’re going to respond to activity levels. We’re going to do everything we can to avoid layoffs,� Cox said. Trican has been through upturns and downturns. “It’s going to change. It’s in a low point. We know it’s going to come back.� Worldwide, Trican

A17

is seeing similar reaction to low prices as they are in Canada. “Russia is probably the least affected,� Cox said, explaining that work is mostly contractbased. Their work offshore of Norway is also usually planned one- to two-years in advances, so that’s ongoing. Trican also operates in the U.S., Saudi Arabia, Kazakhstan, Colombia and Australia.

There’s more to frac pumping units than just big engines and pumps. Arun Mariappan of Medicine Hat is an electronics technician with Trican. In this, his laptop is plugged into the large pump to test its pump control. This is his second year with Trican. Photo by Brian Zinchuk

e Page A16 Some of the work, especially in Manitoba, is closer to Brandon than Estevan. “They spend more time at home than a lot of our bases do,� he said, referring to the fact frac workers spend a lot of time on the road. Since fracking often means 24-hour operations, due to hours of service regulations, workers often stay in hotels or other accommodations near the job. That’s a change in the business, he noted. It means not being home every night. Another area of change is the construction of new sand handling facilities. Millennium Stimulation recently opened its own facility in Estevan, and Source Energy Services of Lampman is currently constructing an expansion. “We’ve got a lot of irons in the fire,� Cox said. Trican is looking at it, but he wouldn’t offer specifics just yet. “It’s an area we know we need to expand on. We need local storage. We’re quite active in sand logistics.� However, given the current low oil prices, companies need to be cautious with their capital expenditures.

The company is also active in the Shaunavon and Kindersley areas, although they don’t have bases there. Those areas are typically serviced out of Medicine Hat or Red Deer, although the Estevan crew has been called in if needed. The question of the month is how are they dealing with a world of $50 (or less) oil. Cox said in the near term you have to be cautious on capital expenditures and costs. The business will be very competitive. “It’s going to be a significant impact on our business,� he said. He expects the first quarter to remain quite busy, but the second and even third quarters to be slow. Cox noted some forecasts are saying the low prices could last through 2015 into 2016. “Our guys are paid a combination of a job bonus and a base salary. If they’re not working, there is a base salary that is intended to carry them over, but they do get a job bonus for every job they go on. Our approach is layoffs are the absolute last thing we want to do, because when things turn around, we want to be well-structured and well equipped and wellstaffed to take advantage of an uptick and jump

on it.� Some companies in the industry hire in the summer and layoff come spring breakup. Trican doesn’t do that. “We’ve only done layoffs once in hour history. We’re a 1996 company. We did layoffs once, in 2009. I can’t say right now that we are not going to do any layoffs, but it’s the absolute last thing that we do.

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PIPELINE NEWS February 2015

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PIPELINE NEWS February 2015

A19

Previous slowdowns provide insight for what’s to come: Captive Rentals Estevan – Like nearly every other service company Pipeline News has spoken to this month, Captive Oilfield Rentals of Estevan has been receiving letters from oil companies, seeking price concessions for their services. Having lived through numerous commodity price cycles, Chad Farr, of Captive Rentals, has dealt with this before. “She crashed hard in 1998. That’s when I got into the oilfield,� he said. “I’ve been through enough cycles. It is what it is,� he said on Jan. 6 “You see a correction, the oil price gets adjusted, and you go back to work.� Asked about the requests from oil producers for their vendors to lower prices, he said, “We were more proactive. “We’ve been here since ‘day 1’ too. As you grow, we grow,� Farr said.

They lowered their prices in advance. His response letter included the following, “We understand in these trying times of lower oil prices that we all need to do our part.� He added that their biggest competition comes from smaller companies and rig hands that have no fulltime staff or safety coordinators. Farr hopes that’s taken into consideration as oil companies make choices as to who they keep working with. “Many toolpushes have their own rentals,� he said. “This is a correction on the whole market. I like that Calgary’s involved. It does correct the whole industry across the board.� As of Jan. 6 there were 44 drilling rigs working in southeast Saskatchewan and southwest Manitoba were in the area of the Estevan stock point. Farr said there is a

potential of 58 rigs becoming idle in that area, including Manitoba and potash rigs. “After breakup, the price of oil dictates everything,� he said. “Last year, last summer we had about 62 rigs working. It was closer to 40 this summer. A lot won’t go (now) until the third quarter.� Ever since the flood year of 2011, the region has dealt with saturated ground conditions that have caused headaches during the summer drilling season. In 2011, companies worked anyhow, using mats to contend with conditions and setting an active drilling rig record of 122 rigs in this province on Aug. 22 of that year. However, since then, there’s been a growing reluctance to put out the extra money to deal with sloppy conditions. Now Farr expects there will be essentially zero inclination to pay for work in muddy condi-

tions. “If it’s muddy or rain, we’re done. If road bans happen early, or there’s a warmer February, we’ll be done in the first week of March,� he said. Drilling in the region often is pushed right up until road bans start in mid-March. Farr noted Captive is small, with just five employees. “We’ve purposely kept it that way. � From previous experience, Farr forecasts

CapĆ&#x;ve Rentals, like many other companies, has received leĆŠers asking them to lower their prices. CapĆ&#x;ve provides rental eĆ‹uipment for drilling, as seen here.

a slow return to work. “After a slowdown, we always see 30 per cent of our maximum work level return. That translates into 30 rigs this summer,� he said, referring to the southeast Saskatchewan region.

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PIPELINE NEWS February 2015

PIPELINE NEWS February 2015

The pastÍ— repairs and renovaĆ&#x;ons to the Royal Canadian >egion in teyburn will beneÄŽt from Ψϰ0,000 donated by Crescent Point Energy Corp. in memory of <en Cugnet. From rightÍ— Dale Rinas and Tim >eĆ‹ueyer, Crescent PointÍ– rian Gloss, Royal Canadian >egion ranch No. Ď°7Í– JoAnne CugnetÍ– the children and grandchildren of <en and JoAnne Cugnet.

The presentÍ— Campers at Nickle >ake Regional Park will beneÄŽt from Ψ120,000 donated by Crescent Point in memory of <en Cugnet. From rightÍ— Dale Rinas and Tim >eĆ‹ueyer, Crescent PointÍ– rian Glass, Royal Canadian >egion ranch No. Ď°7Í– JoAnne CugnetÍ– the children and grandchildren of <en and JoAnne Cugnet.

The futureÍ— Crescent Point donated a Ψ25,000 bursary in memory of <en Cugnet. Valued at Ψ2,000 a year, it will be made available for students pursuing geology or petroleum engineering From rightÍ— Dale Rinas and Tim >eĆ‹ueyer, Crescent PointÍ– Joanne Jensen, teyburn Comprehensive SchoolÍ– JoAnne CugnetÍ– the children and grandchildren of <en and JoAnne Cugnet.

Crescent Point makes donations on behalf of Ken Cugnet „ By Brian Zinchuk Weyburn – Crescent Point Energy Corp made several donations in memory of the late Ken Cugnet, a long time board member who passed away in October. Those donations were made just prior to Christmas to three organizations near and dear to Cugnet’s heart. The presentations took place at the Crescent Point field office in Weyburn on Dec. 22. There was a theme to the donations, highlighting the past, present and future. The Royal Canadian Legion Branch No. 47 Weyburn received $40,000 for roof repair and renovations. Legion president Brian Glass said work on those repairs starts in the spring.

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Nickle Lake Regional Park received $120,000 for future development of the park. Terry Benning, president of the park board, was there to accept the donation. The donation will assist in the development of new campsites. A further $25,000 was donated for a bursary in memory of Ken Cugnet. The $2,000 per year bursary will be available to students going into geology or petroleum engineering, according to Joanne Jensen, guidance councillor with Weyburn Comprehensive School JoAnne Cugnet, Ken’s wife, said, “Our whole family was just entirely touched that they would choose to do this, and the fact that they gave the choice of charities to our family.� Crescent Point field manager for southeastern Saskatchewan Dale Rinas said, “For us to be able to have these donations today in the memory of Ken is really gratifying.�

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PIPELINE NEWS February 2015

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PIPELINE NEWS February 2015

A23

>eŌ͗ y adding its own sand storage, Millennium SƟmulaƟon eliminates logisƟcs headaches as a threat to their business. Other Įrms will be able to use the sand facility as well.

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PIPELINE NEWS February 2015

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A25

Frank talk from CEO Millennium Stimulation „ By Brian Zinchuk Toronto – Mike Heier has been on a mission in recent weeks. The president and CEO of Millennium Stimulation, which has operations in Estevan and Medicine Hat, is in the midst of taking his company public in a world where the price of oil has been dropping like a stone. Pipeline News spoke to him on Dec. 5 via phone from Toronto, where he was out drumming up investment interest. Dealing with investors is nothing new for Heier, whose official biography notes he “is the founder of Trinidad Drilling Ltd. and has been chair of the board of the company and its predecessor since June of 1998. Heier also held the position of chief executive officer from May 2000 to January 2008 and principal of Trinidad since its inception in 1996. He has been involved in the oil and gas industry in western Canada since 1976. Heier also served as chief executive officer and chair of Trinity Energy from 1987 to 2002.� A year ago, southeast Saskatchewan had seven fracking companies. Now there are five, or four, depending on how you consider Halliburton since it moved its base of operations to Regina, but still has a presence in Estevan. These changes occurred before oil began its plummet in price. Asked what has brought about such a dramatic change in the business, Heier said, “I think one of the biggest problems everyone’s had, including us, is that Estevan, for whatever reason, just doesn’t seem to be able to, as a city, to get its act together in creating enough accommodation and making a home for people to move.� Heier was born and raised in Estevan, and “loves the place to death,� he said, but he has struggled to get people to move there or to locals to join. “We tried to put

local people in Estevan. Other people have tried to do the same. Most people struggle to do that. It’s a very costly proposition to operate in southeast Saskatchewan and southwest Manitoba. Trican created a shop in Brandon, and Halliburton did so in Regina to get more localized labour and, I don’t know, if you want to call it, break the cult. You get of the community of frackers that live in Medicine Hat and another community in Red Deer, and they’re bound and determined they’re not moving anywhere. If anyone wants to operate, most of your experienced people come out of those two communities. To operate in Saskatchewan, there are very few local people either are capable or want to be there. “There isn’t enough accommodation for those people on a fulltime basis. People are expected to come in and basically live in camps, and it doesn’t work very well.� Are accommodations the biggest reason these companies pulled back, or are there other reasons? “It’s just too darned costly to operate. The work is you’re either in and out. A number of clients have their favourites. These are the ones we’re going to use and that’s the end of that. So for whatever reason they’ve picked their favourites, if you’re left on the outside, looking in, they just leave. There’s better, more lucrative places to work. There’s the cost of doing business, and the business itself. They generally try to reduce their risk,� Heier said. “There’s been a lot of capacity brought on in the last two to three years. We’re certainly part of that. If you look at all incremental frac spreads – small, ‘plainsstyle’ frac spreads, as we call them, that have come into play, in the last three years, it’s quite a few. Ironhorse added three. There’s our two that got added, Element added two or three.

Halliburton came back into the mix. Halliburton had really exited the area. They came back with two. All of a sudden you’re in an overpopulation. “As soon as you have any sort of oversupply, it became ultracompetitive. Some guys just can’t make money.� Crowding has something to do with it, but so does some companies’ favourites. They bid some larger companies and were successful in some cases and not in others, even when they were the low bid. Asked about the increasing concentration of ownership in the Saskatchewan oilpatch, he replied it doesn’t bode well for smaller companies. “There are very few very large service companies, and very few large E & P companies. You end up with a stagnant kind of environment where your costs get ground down to where there’s not a lot of incremental dollars to go for advanced equipment, creating anything new, expand the company, those kinds of things. That’s kind of what’s going around right now.� f Page A26

Dean Hillenga, leĹŒ, is chief operaĆ&#x;ng oĸcer of Millennium SĆ&#x;mulaĆ&#x;on, while Mike Heier is president and CEO. File photo

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PIPELINE NEWS February 2015

New Estevan sand facility explained

Mike Heier

nadian Pacific mainline. There are two large silos, each with their own loading lane and weigh scale. The sand is delivered by rail and enters the facility by conveyor. If need be, trucks can also unload sand into the facility by using a unloading area next to the rail line. While setting up Millennium, Heier did a SWOT analysis – strengths, weaknesses, opportunities and threats. He said, “One of the things that came basically shooting to the surface was ‘you better get better control of the products you have to sell routinely, and those products are well over half your invoice to the client.’ “If you don’t have any control over those, you can get into situations where they can cost you more than you can sell them for, at times. That’s a company killer. So we looked at the sand side. For considerably less than

e Page A25 He noted that one of the frac companies was virtually 100 per cent occupied with a certain producer, and they packed up and left. New Estevan sand facility Millennium Stimulation opened its new frac sand facility on the eastern edge of Estevan, (technically in the RM of Estevan) in November. It’s located on the Long Creek Railroad, just a few hundred metres off the Ca-

what we’d invest in one frac spread, having control over our destiny, we chose to create a sand storage facility. “In the U.S., over the last three to five years, almost every type of pumping service has been putting expenditures into those types of facilities. Before, there wasn’t a lot of activity. Most people would rely on rail cars for storage.” That meant putting a facility in that’s larger than what exists at Lampman (which is now currently being expanded). By putting it on just off the Canadian Pacific line, it’s on a more direct route to sand mines. “CP is as straight as an arrow from Wisconsin (where the mines are) to Estevan,” Heier noted. Having inventory provides protection from rail strikes and demand spikes and related shortages.

They had to put in piles for geotechnical stability. That delayed the project somewhat. The facility can hold 7,000 tonnes of sand, or 70 rail cars. “It will be agnostic,” he said, meaning other companies will be able to make use of it. Several other companies have already approached them. With more fracking happening west of Estevan, it’s closer to that action than some of the other sand facilities, Heier noted. Housing costs hurting business Millennium first started operations in Estevan. In early 2014, they set up shop in Medicine Hat. “The work is east and west of Estevan. We have a lot of activity we’re doing in Manitoba and activity we’re doing in southwest Saskatchewan and southeast Manitoba. f Page A27

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PIPELINE NEWS February 2015 e Page A26 “I hoped it wouldn’t, but Estevan has proved to be a challenge for recruiting people, or getting people to move there.� “Everything gets stupid. You’ve got hotels that are half-full and people are booking rooms to keep them empty. Because of that, everyone has to book all month long. You got way over-built on hotels in Estevan, and people want to build more, because of the stupidity of some of the competitors. They’ll book to hold rooms in two, sometimes three hotels for a single crew. So you have empty rooms booked all over the place. If you’re a hotelier or manager, you look and say, ‘Oh my gosh, full utilization, let’s build more.’ “It’s insanity. That’s all I can tell you. The experience of working down there; trying to get people to move; looking into camps ourselves; I don’t know what to tell you. It’s a tough one. Nobody likes it, because of it. Nobody wants to live in a camp.� Asked about all the additional rooms and camp space built in recent years, he responded, “It appears people got diamond-studded glasses on. Rosecoloured doesn’t cover it. What can I tell you? They made it one incredibly expensive place to operate. Nobody’s making any money down there. And to operate for any length of time, you need to have profitability, and the cost of everything has gone through the roof. If you think you’ve been through the worst of it, think again. You’ve got companies that were 100 per cent utilized exit the room. People should take notice of that. No sane person would do that. They’re not stupid companies,� Heier said. Oil prices When this interview took place, oil was still around $60 a barrel. Regarding the decline in prices, Heier said, “It’s impacting everybody. First and foremost, they have to live within their means. Canadian companies are more conservative than Canadian companies. Most E & P companies spend a multiple of their cashflow. If their cashflow drops, the work budget can drop precipitously, more so in the U.S. than Canada. The decline in the Canadian dollar also helps a bit. “We’re caught in right now a bit of a chicken fight between Russians, Saudis, North Americans and some very wealthy individuals,� he said. He noted some interests don’t want to see new pipelines, because that would take away from their crude-by-rail business. The Saudis, he noted, are “deathly afraid of the U.S. and it becoming sort of self-dependent. The U.S. has added five million barrels per day. That’s impressive, to the expense of everyone else.� How does this impact that fracking business here? “Programs are going to come off. It’s not going to be as severe as what some of the American guys’ experience. The U.S. oil and gas companies spend more as a multiple of their cashflow. The Canadian dollar is a little lower, so it insulates us a little bit. You’ll see carnage across the border, and you’ll see a little less carnage here, but you will see something,� Heier said. “I think we’re alright. We’ll see what happens in the New Year.� Heier said the price of oil is going to keep dropping until a bottom is found. His prediction, in early December, was still sound by mid-January. (Editor's Note: On Jan.9 Millennium Stimulation representatives contacted us to let us know they are actively hiring staff as of that day.)

A27

Eric McKenize hails from Lethbridge and works out the Millennium SĆ&#x;mulaĆ&#x;on Medicine Hat shop. He runs iron and sand trucks.

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A29

The Millennium SƟmulaƟon frac job near Cromer, Manitoba started with a safety meeƟng before any pumping took place. Photo by Brian Zinchuk

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Using LNG in energized fracs By Brian Zinchuk Toronto – Millennium Stimulation purchased ENFRAC Inc. in August 2014 and is now in the process of seeking investment to take advantage of ENFRAC’s frac technology. “We have a new incremental business, using LNG for energized natural gas fracs. A lot of fracs are done either energized or foam fracs with nitrogen. We acquired a company that gave us patented technology, called ENFRAC, and we closed that acquisition in August. That technology takes us to the point where we’re using natural gas as the expansion gas in an energized frac or foam frac instead of nitrogen,” said Mike Heier, president and CEO of Millennium Stimulation. “We bring it to the lease in the form of liquid. Just as you have cryogenic liquid nitrogen, we have cryogenic liquefied natural gas, basically as a fluid replacement.” Whereas the fuel industry uses LNG to replace a tank of gasoline or diesel, they are going to pump it like it’s water. “It’s an entirely different volume structure, an entirely different cost structure. It’s more competitive, cost-wise, than liquid nitrogen. I can make LNG for less than you can make liquid nitrogen. I’m replacing N2 with methane, putting something

in the formation what belongs there in the first place instead of something odd, like nitrogen. “There’s two critical issues, three, if you include doing something better for your client. The reason clients do something like that in the first place is for better wells. Putting water into especially clastic reservoirs – sandstones, siltstones, shales – always damages the reservoirs. Sometimes it’s a little, sometimes it’s a lot, but it always damages them. Some of those slickwater fracs are massive, where they pump 30,000 barrels of water and leave 20,000 behind. That stays in the formation as damage. “A lot of companies use foam frac,” he said. By using LNG, they are able to replace large volumes of water. As fracs grew over the years, hydrocarbon fracs became expensive, so water was used, resulting in massive-volume fracs, especially in northwest Alberta and northeast B.C. Water consumption related to fracking, and flowback water are sensitive environmental topics these days, he noted, as is flaring. Completion flaring is done to remove the nitrogen that was used in fracking. It’s too much nitrogen to put into a sales line. While it might be 90 per cent nitrogen, saleable hydrocarbons like methane and natural gas liquids get burned off as well.

For some larger wells, up to half a million dollars in product can be flared in less than two weeks. “The interesting thing is the equipment we would use to pump it with is the same equipment you would use to pump liquid nitrogen. It’s a cryogenic liquid,” said Heier. The LNG is run through a vapourizer and warmed up from -160 C to 50 C, added with sand and a foaming agent, and down the well it goes. f Page A30

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PIPELINE NEWS February 2015

Millennium Stimulation looks to shake up the frac business e Page A29 Originally they were targeting the nitrogen market for completions. “Once we got going, our clients started chasing us. We’ve got to get going with this stuff,” explained Heier. There’s pressure to do better jobs on fracs. “You want to give the client a better well, in terms of more reserves, less money, or a combination thereof,” he added. “Secondly, a lot of people are losing their social licence. As an industry, we look at these protests –

‘Fracs suck!’ If you want to get people to stop eating a Big Mac, call it a Frac Mac, and people will quit eating it. It’s actually gotten that bad. As an industry, we do a lousy job responding that. “Our response about using all this fresh water for fracking wells is, ‘Why don’t you turn your lights off. Don’t use your car.’ That’s not what they want to hear. As an industry, for too many years, we’ve been too damned arrogant. As an industry we started to do better job. They’ve got a long ways to go. Bottom line, in a lot of areas, the industry has lost its social

licence. For local people, they may not care about that. But if you rely on people in the northeast or eastern Canada to buy your stock, good luck.” Small LNG plant The purpose of his December road trip raising capital was to come up with money for a small 80,000 U.S. gallon a day semi-portable LNG plant just to get going. “In the fuel world, that’s a big plant. For what we’re doing, it’s just a toy,” he said. “But it’s a place to start.” As for where they are going to put it, he said, “The surprise was our local clients saying, ‘Don’t go dark on us, Mike. We want to use the stuff here.’ “It’s early days for us. We’re trying to identify where all the demand can be.” Where nitrogen has heavily used is a likely market. f Page A31

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Dan talchuk is a mechanic from Redcliī, Alta., near Medicine Hat. He grew up west of Lloydminster and has been in the service industry for approximately 2ϯ years. He worked overseas for a half a year. ͞zou had to try it. It wasn’t for me,͟ he said, noƟng condiƟons in the Middle East were unseƩling. The state of the world made him nervous. He spent 22 years with another frac company before coming over to Millennium.

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PIPELINE NEWS February 2015 impact. It’s going to spread a bit of a shockwave throughout the entire market. Nobody is going to be unscathed by it. You’re going to see it down to the local level, to places like Estevan, Virden, whatever. Nobody’s going to be untouched by it. “How long will it last? It won’t be the first time, nor the last time, we’ve gone through this.�

The goal is a broadbased capital raise, including the “retail individual,� who are close to his heart. Millennium has over 600 investors, and when they are finished, he expects that number to be over 800 when he’s done. “We’re going through a go-public exercise. It’s not an IPO. They’re too separate events. We’re trying to raise money separately

A31

from becoming public. We want to control the timing of that. In the current market, we might push that out an extra month or two. The plan was to be public (on the stock exchange) by the end of January.� Starting a company is always tough, he noted, touching on his experience with Trinidad Drilling, which he founded and was president and CEO.

Prairie Mud Service “Serving Western Canada With 24 Hour Drilling Mud Serviceâ€? Kevin Van den Brink from Medicine Hat has spent three years fracking. The 25-year-old took training in payroll accounĆ&#x;ng, but found no one was interested in hiring a young guy to do their books. So now he’s running the chem van with Millennium SĆ&#x;mulaĆ&#x;on. He’s also worked on the hydraĆ&#x;on unit, pumps and has done Ć‹uality control for another company.

e Page A30 Natural gas has other benefits. Being fully miscible in oil, it helps clean out the near-wellbore permeability. The first plant is being targeted for northwest Alberta. He sees a potential for three-tofive plants in Western Canada. LNG is easier to store than propane, since it’s stored at atmospheric pressure. It’s stored in an insulted tank. “We’re ready to put stuff on order. Our engineering is done on the plant. They cryro pumpers would be building would very similar to nitrogen pumpers, but bigger. The cryro pumpers would be twin units

run by a single, large frac engine. We’re trying to virtually double the capacity on a per-trailer basis,� said Heier. “Anything that gives our client better results means more work. So we see ourselves changing the game, for Millennium quite dramatically, going forward, so much so that when we start building the plants, people will start seeing this as a midstream utility, not a pumping service. Most of our revenue five years out will come from selling LNG.� There’s a series of four patents involved covering the process, which he refers to as “incredibly sharp bear traps.� The cryro equipment would work onsite

alongside frac equipment during a job. They will hopefully have some equipment in place within the first quarter of 2015. As for raising funds (and remember, this interview was done in early December) he replied, “It’s a very difficult, choppy market right now. We’ll probably get to the minimum that we want so we can put our cryro pumpers in order. In the nearterm we’ll probably have to use one or two existing people out there for smaller volumes of LNG.� “No matter where you go, there’s a sky’s falling mentality definitely taking a hold. That will have an

Head OfďŹ ce: Estevan, SK Tel: 306-634-3411 Fax: 306-634-7310 Ray Frehlick, President Cell: 306-421-1880

Calgary Sales OfďŹ ce: Tel: 403-237-7323 Fax: 403-263-7355 Chuck Haines, Technical Sales Cell: 403-860-4660 Environmental Division: Tel: 306-634-3411 Fax: 306-634-1951 Darwin Frehlick, Manager Cell: 306-421-0491

Mud Technicians: Gerald Smith Cell: 306-421-2408 Ian Scott Cell: 306-421-6662

Owned and Operated Warehouses: Own Estevan: Jay Burback - Cell: 306-421-0101 Swift Current: Evan Myers - Cell: 306-741-2447 Kindersley: John Calkins - Cell: 306-430-7116 Lacombe: Darcy Dayday - Cell: 403-597-6694

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A32

PIPELINE NEWS February 2015

In September of last year Canyon Technical Services did a mock disaster at its Estevan locaĆ&#x;on. As a result, some of its Ňeet was parked across the street, seen here. File photo

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Experienced frac workers are important to hold onto „ By Brian Zinchuk Calgary – It takes a long time to train frac workers to be proficient, so you hold onto them. That’s according to Joe Peskunowicz. He’s is executive vicepresident, corporate, of Canyon Services Group, the publicly-traded parent company of Canyon Technical Services Ltd. and Fraction Energy Services Ltd. The latter was purchased last July, and specializes in highvolume fluid management operations in the Grande Prairie, Alta., and Fort St. John, B.C., areas. Canyon Technical Services is one of the larger hydraulic fracturing companies in the Canada. Approximately three years ago Canyon set up a base in Estevan. Its other bases are

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in Medicine Hat, Red Deer and Grande Prairie, with corporate head office and research and development in Calgary. When competitor Baker Hughes pulled out of pressure pumping services in Medicine Hat and Estevan in the spring of 2014, Canyon was one of the beneficiaries, picking up experienced staff. “In this industry, staffing is the most difficult. For the last three years, Western Canada has run at basically zero unemployment. It’s only the people who didn’t want jobs that weren’t working. In that type of labour market, an experienced, well-known competitor changing their business plan is just an opportunity to acquire experienced, seasoned guys who know the industry and know how to work in in and how to do a good job. “While we never wish bad luck on a competitor, when a situation like that occurs, it was absolutely a win for us from a staffing point of view,� said Peskunowicz. “It helped staffing both in Medicine Hat and Estevan greatly.� Medicine Hat services western Sas-

15

katchewan, including the Shaunavon play. “We know that Estevan is a better place to be than Regina, because when we considered setting up in the region we looked at every possible opportunity and situation and scenario – where we thought the work was, where we thought the labour was, where we should go, shouldn’t go, and at the end of the day Estevan made the most sense, from being central to the work. “The only downside is the housing and labour market. Labour’s tight and housing is expensive for the workers. “Our goal is to have 15 per cent of our revenue come from southern Saskatchewan. That’s our corporate goal. Every year we’re getting closer to that. “That may sound like a small number, but when you think of the number of (frac) jobs, the jobs are smaller than the Duvernay or Montney, and the cost to frac a well in Saskatchewan is 15 to 20 per cent of a big Montney or Duvernay frac. So 15 per cent of corporate revenue from there (Saskatchewan), that’s a lot of wells. f Page A33 Ĺ— Ĺ— Ĺ— Ĺ—

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PIPELINE NEWS February 2015

As part of its September mock disaster at its Estevan base, Canyon Technical Services had local emergency services out to contend with numerous supposed crises. File photo

e Page A32 “Every year we’re getting closer. This year is the anomaly. Nobody is quite sure when oil is going to bottom, what the bottom is going to be, and when it starts coming back. We have a business to run. We have employees to ensure that they are employed in and make a good living. We have customers that need servicing. What’s just as important is the messaging to the community through media, through everything, that we’re a long-term player. Canyon is the third largest fracturing company in Canada. We have 255,000 horsepower. “ The first and second largest companies are around 400,000 horsepower each, and the fourth is around 240,000, according to Peskunowicz. The Canyon executive has seen his share of downturns. Peskunowicz is a chemical engineer who graduated university during the throes of the National Energy Program in the mid 1980s. At the time, there were no jobs available. He had gone to high school in Drayton Valley, Alta., and when the NEP hit, they were “just about rolling up the sidewalks� in his home town and laying people off at a local drive-thru restaurant. Things look more stable to Peskunowicz during the current downturn of 2015. “We traditionally have not done spring layoffs.

A33

Our view is there’s not even enough visibility on oil prices into the summer to even think about it. One of the things about the fracturing business is the amount of training and skill level you need to be able to physically do it takes months and months of training to get to the entry level job, let alone move to the more complex jobs on a frac crew right up to frac supervisor. Fracking companies tend to not lay off as much as other service companies just because of the technical nature of the job,� he said. He made it clear that keeping their staff in the downturn is “absolutely our plan� as long as oil prices stay steady. “If oil goes to $22 and is going to stay there, that’s a different story. Based on what we know today, and what we see from the economists, the banking sectors, what our customers are telling us and their long term plans, nobody’s sure what going to happen. There are predictions of everything from September being $32 oil to $75 oil. “We’ve all been through cycles before, and come through them a little smarter and a little more experienced. With this one, because it’s the geopolitical economic issues someplace else in the world causing this, our crystal ball is foggy as to when it corrects itself, and by how much.� f Page A35

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A34

PIPELINE NEWS February 2015

Thank you! The 2014 Lloydminster & District Charitable Campaign was a huge success. This year we have exceeded our goal of

$120,000.

All proceeds will help support local charities and be used for the benefit of our community. Husky Energy would like to pay tribute to all the generous sponsors who helped make this year so successful. They include:

Amec Environmental & Infrastructure Apex Oilfield Services 2000 Inc. Armour Valve Ltd. Bantrel Bar Engineering Braiker Oilfield Services Ltd. Bry-Tan Trucking Ltd. CCI Solutions Cleartech Industries Inc. Complexions Skin Therpy Inc. Crimtech Services Ltd. CSTL Continental Steel Corporation Double D Truck Wash Ltd. Denmax Energy Service Ltd. D.W. Rourke & Associates Ltd. Edmonton Exchanger Enhanced Engineering (E2) Ensign Rockwell Servicing Flexsteel Pipeline Technologies Ltd. Force Pile Driving Ltd. GCS Energy Services Ltd. GLM Oilfield Construction 2005 Gremur Industries Ltd. Granite Oilfield Services Inc. Guest Controls (2001) Ltd. Heavy Crude Hauling LP

Home Hardware Hunting Energy Service Ltd. Hurricane Industries Ltd. Hydro Scotford Inc. IRISNDT Corp. John Crane Canada Inc. L & L Oilfield Construction (1990) Ltd. Lloydminster & District Co-op Ltd. Mammoet Crane Inc. Matrix Solutions Inc. Melloy Industrial MRC Midfield M & Z Industrial Supply Ltd. Nabors Production Services Nalco Champion Nine Energy Canada Inc Nor-Chief Consulting Services Ltd. NOV Tuboscope Pentair Pipemaster Oilfield Services Inc. Powell Canada Prodahl Environmental Services. Ltd. Pro-Lift Crane Services Ltd. Quinn Pumps Canada Ltd. Raider Well Servicing Ltd.

RGO Office Products Ramada Hotel Downtown Calgary Rattray Reclamation Ltd. Rick Sim Trucking Inc. Rosen Canada Ltd. Royal Well Servicing Ltd. Sask Energy SaskTel Scott Land & Lease Ltd. Severs Oilfield Services Inc. Sherwood Bros. Skyline Refrigeration Ltd. Southern Spur Enterprises Ltd. Spartan Controls Sure Flow Consulting Services Tarpon Energy Services Ltd. TM Vending Accelerated Hotshots & Picker Service Tranter Heat Exchangers Canada URS Vallen Viterra Inc. Weatherford Production Systems Westcan Bulk Transport Ltd. Wika Instruments Y’s Marketing

And all those that have supported this campaign with their generosity.

huskyenergy.com

PIPELINE NEWS February 2015

A35

Doing a job right the Ă€UVW WLPH LV ZRUWK LW e Page A33 Regarding the reduction in stimulation companies working in Saskatchewan, he said, “I think some larger companies were working at pricing that wasn’t profitable for them. Once they figured that out, they made a decision to take the equipment elsewhere where they could make profit. “Every company looks at its business model and figures out how to make the best return on invested capital. Is that by going to northeast B.C.? Is it staying just in southeast Saskatchewan? Is it strategically placed at several locations and consciously crafting your market share to fit an overall business model? “We understand our costs intimately. We model and look at and think through what’s the best use of our investors’ proceeds. When we look at the model that works best for Canyon, that includes Estevan,â€? Peskunowicz said. Many of these changes in the Saskatchewan fracking industry took place before oil took a nosedive. Peskunowicz said, “It comes down to quality of execution and cost effectiveness. “One of the things I try to explain to analysts and investors is (the significance of ) companies that run good operations. Say a frac job from Canyon is $300,000, and a competitor comes in and bids $250,000. If they go out there and take two extra days, have problems, and don’t do a good job executing, that extra $50,000 gets eaten up in other costs, to a point where suddenly it costs more using them. That company that’s not operating well ends up losing money on that job. If a good, solid company like Canyon does it, in 36 hours without a problem, without any equipment problems, without any human error problems, logistics and efficiency, it actually comes in cheaper for the client overall, and we can be profitable. “When you understand things from that point of view, and clients who use you see that, and understand that, it makes it easier to displace companies doing a lesser quality service,â€? said Peskunowicz Other companies have been developing sand handling facilities, but that’s not something Canyon’s looking at for this region. Their use of capital is better used building pumping equipment and contracting with sand suppliers to take care of building their own (sand supplier) facilities. “They can build it cheaper than we can, and they can run it cheaper than we can. They can be more profitable, and we can have a secure source of sand,â€? Peskunowicz said. Right now their plan is to keep operations, with staffing and equipment, where it is. Having multiple bases allows the company to pull crews from different areas as needed. If Grande Prairie needs help, they might pull from Medicine Hat, and Medicine Hat would then pull from Estevan as needed. Regarding Fraction Services, their large fluid handling capacities, with frac rings up to 6,600 cubic metres in capacity, don’t have much application in southern Saskatchewan, where fracs use much less water. However, larger slickwater fracs in the Torquay could end up with requirements for such capabilities, if jobs become larger. Canyon had a fleet of 11 deep and four shallow coil tubing units. “There’s a lot of frac work involving coil tubing in Saskatchewan,â€? he said. “We do remedial cementing and chemical stimulation out of Estevan as well, what some people call acidizing.â€? Dealing with $50 oil There have been major changes in their customers’ plans even in recent weeks, Peskunowicz noted. But he added, “We are still extremely busy. It’s the cycle where fracturing follows after the drilling. We’re functioning okay. Our customers don’t know what the summer is going to be like. They keep redoing their budgets, rethinking, trying to figure out where prices are going to be. “Canyon is doing great this quarter, but our customers don’t have visibility on where things are going, and won’t until this spring when prices hopefully settle out. “We have about seven different budges depending on where oil is and we act accordingly, up or down.â€? Peskunowicz closed by saying “Estevan operations are an integral part of our long-term plans.â€?

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A36

PIPELINE NEWS February 2015

Ideal Water adding second permanent location at Arcola Arcola – One of the key ingredients in hydraulic fracturing is water, and Ideal Water Inc. of Arcola is expanding its capacity to do just that. With numerous shallow source water wells between Forget and Kisbey, Ideal has made a number of strategic moves in the last two years. They’ve parted company with

a former partner firm, added a fleet of water trucks, and are in the process of developing a second permanent location. Terry Johnston, who heads up Ideal, said, “The changing times have caused us to look at running our own tanker trucks. Oone of our goals is to have the trucks situated at the water well so that

they can load hot or cold water and be ready to roll in just a few minutes. We believe this would save time on each job, especially on service jobs that require a few loads at a time.� The trucking side is a sister company called 1010 Energy Services Ltd., which fired up in March 2014. “We provide frac tanks, trucking, tanker

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trucking, winch trucks,� Johnston said. “To date the company has managed to operate over 40 frac tanks and three winch trucks. With the help of lease operators the company also runs a fleet of 15 fresh water tankers. “1010 Energy Servces Ltd. is pleased to have acquired Carl Boettcher to manage the company. He has previously worked with Three Star Trucking and has ten years of experience in the oilpatch. James Ottenbreit will be helping Carl take care of field operations,� Johnston added. He noted they want to be able to provide “one call� services to their customers. They have three boilers in place. The first is an Astroboiler 21 million BTU heater at the water loading plant northeast of Forget. That plant was featured on the front page of Pipeline News’ July 2013 edition. It’s a permanent installation. The second is a

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seven million BTU Gentec trailer-mounted heater for on-location heating. The third is another Astroboiler. It was purchased in the spring of 2014, and since it is a little more efficient, it has a rating of 25 million BTU. The third one is in a seacan. Currently it is just south of Highway 13 about midway between Kisbey and Arcola, at a temporary water loading facility. There it’s tied into five shallow freshwater wells, each with a 239,000 cubic metre per year licensed capacity, or well over a million cubic metres per year. The reason it’s temporary is that Ideal is in the process of setting up a second, permanent loading facility. The first was on the western edge of a shallow but plentiful aquifer between Forget and Arcola. The second will be on the eastern edge. However, the permanent building won’t be at the wells, but rather on the eastern edged of Arcola, along the north side of Highway 13. “We have to finish bringing our eight-inch water line to town from our wells out there. We plan for a new hot water facility in Arcola,� Johnston said. The pipeline will be eight kilometres long, and 6.4 kilometres are already in the ground. The highway crossing remains. The new building is

expected to have multiple loading stations. It will be situation along a new service road to be built, across the road and to the east of the CleanHarbors location. With strategic placement of facilities on both sides of the aquifer, he expects water from the Forget facility to primarily head towards Stoughton and the Viewfield area, while the Arcola plant will likely serve fields to the south and east. Asked about the wisdom of doing this expansion in the realm of $50 oil (the price at the time of the interview), he said, “We’re going to have to run a tight ship, along with everyone else – do a little belt tightening and try to survive.� Johnston added they’re committed to the project, since it’s 50 per cent complete already. Like other vendors, they’ve been asked by oil companies to reduce prices. “Yeah we’ve seen some companies asking for prices to be reduced,� he said. Will they? “Absolutely. You can’t say ‘No.’ “We want to be here for the long haul. We’ll work with them through the hard times and recapture some of it when prices improve. We’re more than willing to do our part to keep the industry going.�

PIPELINE NEWS February 2015

A37

Santa pulled over by Estevan’s Finest Santa works in the oilpatch and drives a Hog „ By Brian Zinchuk Estevan – Santa got off with a warning. Every year for the last six or seven years, Santa Claus takes his Harley Davidson motorcycle for a ride around Estevan as close to Christmas as possible, spreading some Christmas cheer. After all, everyone expects to see Santa on a sled behind eight tiny reindeer, not on a Hog. This year Santa was driving through the centre of Estevan at noon on Christmas Eve. Young and old alike inside McDonalds pointed with glee as he drove by, going north. It wasn’t too long, however before Estevan’s Finest had some red lights flashing of their own, and it wasn’t Rudolf ’s shiny nose, either. Turns out Santa, also known as Jay Jones, didn’t have a helmet on. Santa also works in the oilpatch. “I work for Site Energy. I’m a project supervisor for Site,� he said by phone on New Years’ Eve. He lives in Lampman, not the North Pole. He’s gone for a Santa ride all these years with the hope of bringing some Christmas cheer to all those who see him. That was evident via the smiles on the faces of those who saw

him from McDonalds. “I do it for the young and old,� Jones said. “They wait for me every year. Some years I drive two or three hours. It depends on the weather.� “I get a kick out of doing it,� he added. “I just show up. That’s the best part – the surprise.� And what was the officer writing up? “I got a warning in the end – put a helmet on or load it up,� Jones said. While this was taking place, the Pipeline News mobile was driving north, and intrepid cub reporter Katrina Zinchuk got a photo with an iPhone from the back seat. Pulling over at the north end of town to post it on the Pipeline News Facebook page (www.facebook.com/PipelineNews), the picture soon went viral. In the next couple days, from noon on Christmas Eve until Boxing Day, the view count quickly climbed to over 40,000 people. Approximately 20,000 people saw it before Santa had to take flight at midnight. It was shared 327 times and liked 804 times. The photo quadrupled the number of people following the Pipeline News page. Out of the 196 comments, one person offered to make a Santa hat for Jones, who was quickly identified, that would fit over his helmet.

Estevan’s ÄŽnest pulled over Santa on Christmas Eve in front of the Days Inn. Turns out Santa might drive a Hog and not a sled aĹŒer all. Santa was waving to passersby while the oĸcer appeared to be wriĆ&#x;ng a Ć&#x;cket. Photo by Katrina Zinchuk

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PIPELINE NEWS February 2015

From leŌ to right are James Langford, Cody Doud, Orry Doud and Jesse Doud work on pulling rods on well near teyburn.

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years, always on service rigs. He grew up on a farm and ranch south of Radville and now lives in Weyburn. Doud owns the business with his wife Courtney, who is also part of the staff. “She’s the backbone. She the errand runner, and does things behind the scenes and gets what we need,” Orry said. His two brothers, Cody and Jesse, have recently come out to help. Both usually work on drilling rigs, but now they’re working as a derrickhand and floorhand respectively. The crew is rounded out by Tyler Phelps, operator, and James Langford, floorhand. Orry fills the rig manager role. “It’s been off and on since we started,” Orry said when asked about how busy things have been. There have been stretches where they’ve worked every day, and then some dry spells. The company primarily works for smaller oil companies, working throughout southeast Saskatchewan. “Most of our work

has been for smaller companies. We haven’t really worked for a huge company,” Orry said. They handle production issues like tubing leaks, rod breaks and rod pump failures. Workover work includes re-stimulation of existing wells and cleanouts. Then there are also completions and abandonments. Asked about life with $50 (or less) oil, he said, “It’s challenging. But at the same time we look forward to the challenges we are put to the test with. These challenges are what makes us stronger as a community, and as a country. As for projections for 2015, he said, “Things will turn around for the industry again. It might take some time, but it could swing back quicker than we think. We will continue to strive to succeed and keep moving forward. These smaller companies that I have been working for have been great to work with and I look forward to working with them in 2015.”

PIPELINE NEWS February 2015

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SECTION B February 2015

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Lloyd soldiers on during price dip „ By Geoff Lee Lloydminster – The boom and bust of heavy oil prices is old hat to the city of Lloydminster that continues to plan ahead based on an average population growth rate of 2.5 per cent. The city’s new 2015 capital budget of $52.7 million targets that long-term steady growth rate with $21 million in spending for new water and sewer lines and $5.4 million to improve transportation. “Our thrust is to get ourselves in a really good position with very strong infrastructure for the long term future of our city,� said Mayor Rob Saunders in advance of a detailed rollout of the city’s strategic plan and vision for 2015-17. The plan’s four keys priorities are defined as strong relationships, vibrant city, sustainable infrastructure and a healthy financial position. Building Canada fund applications are in the works to construct the next phase of the Highway 17 couplet that will ease north south oilfield traffic on the Alberta and Saskatchewan sides of the city.

Lloydminster is also forging ahead with plans to annex 1,793 hectares of land to support the city’s growth needs for the next 30 years led by the oil and gas the oil and gas industry. “The oil and gas sector is a huge piece of the economy and the future growth of the city of Lloydminster,� said Saunders. “We have seen substantial investment of corporate capital dollars spent in Lloydminster. We anticipate we’ll continue to see that.� Lloydminster should also benefit from diversification into other anchor industries like agriculture during the current downturn in the heavy oil sector. “There’s some pretty strong commodity pricing for a change that’s been consistent for the last couple of years,� said Saunders about agriculture. “We hear the projections from the agricultural economists that 2015 will be a strong year which bodes well for the city of Lloydminster.� Saunders said some energy companies will see lower oil prices as an opportunity to expand their shops or purchase new equipment with reduced

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operating costs and expenses. “They could probably get the job done cheaper than at the peak of the activity,� he said. “Usually, the service side of the oil industry is populated by a lot of younger people. “We’ve created a climate for young families and business to invest in Lloydminster. Our growth has doubled in the last 30 years. “We’ve had some low oil price years but we’ve managed to work through them,� said Saunders. His advice to anyone who has been following the downward price of heavy oil is to stay calm and be optimistic. “I think everyone’s watching and listening and wanting to understand more about what’s gone on with the pricing and why it’s happening, and who’s making it happen, and what are the controlling factors,� he said. “You always have to remain optimistic and I think those of us who have worked in the industry for a long time have seen this a few times and worked through it.� f Page B2

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PIPELINE NEWS February 2015

Anchor producers committed for the long haul e Page B1 Saunders has a long work history in the regional heavy oil industry and he can relate a sustained retraction in oil prices to a need for long term thinking. “I guess with our anchor producers here dĹšĹ?Ć? ĹśÄžÇ Ä?ĆľĹ?ĹŻÄšĹ?ĹśĹ? ĨŽĆŒ ŽŽžÄžĆŒ dĆŒÄ‚ĹśĆ?Ć‰Ĺ˝ĆŒĆš Ĺ?Ĺś ƚŚĞ ,Ĺ?ĹŻĹŻ /ŜĚƾĆ?ĆšĆŒĹ?Ä‚ĹŻ WÄ‚ĆŒĹŹ Ĺ?Ć? ĹśÄžÄ‚ĆŒĹ?ĹśĹ? ƚŚĞ ĎŜĂů that have weathered the Ć?ƚĂĹ?Äž ŽĨ Ä?ŽžĆ‰ĹŻÄžĆ&#x;ŽŜ͘ storm, so to speak with fluctuations in pricing, they are inherently committed for the long haul,â€? he said. “They usually make the necessary adjustments to compensate for lower pricing. “They are fairly adEXPOSING IT ALL.....RIGHT BEFORE YOUR EYES! ept at pulling those levers to do those things. I am anticipating we’ll see & $ " & ! " some changes. It’s hard & & # to predict because we & $ ! & % don’t know.â€? Saunders anticipates & ! $ & there will be challenges SERVING SOUTHEAST SASKATCHEWAN and opportunities ahead for many companies Residential, Municipal and Industrial Certified doing business in the market downturn in 2015.

“Well I think it’s a double edge sword for people that maybe new into it, both from the production side and the service sector,� said Saunders. “They could have been leveraged to a point where this could be detrimental with sustained low pricing over time. “On the other side, those that budget long term and plan long term, sometimes it creates opportunities for acquisitions and such. “I think we’ve seen some of those start to happen even in this region.� As for the effect of lower oil prices on city revenue Saunders said, “If the robust economy we’ve seen in the past tapers down somewhat, there could be possible

lower investments in properties – in land and things like that. “But once again, what we’re seeing with the establishment of regional service centres, is that we do have a lot of the largest players in the world investing in Lloydminster. “They realize the long term of our resource here will bode well for their master plans.� The city is expecting a final building permit tally of about $180 million for 2014 with some construction momentum carrying over into 2015. “There’s been substantial investment in building right across the board,� said Saunders on both sides of the border city. f Page B3

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B3

dĹšĹ?Ć? ĹśÄžÇ ĹľĆľĹŻĆ&#x;ͲÄ?ĂLJ Ĺ˝Ĺ?ůĎĞůĚ Ä?ĆľĹ?ĹŻÄšĹ?ĹśĹ? Ć?Ĺ?ĆšĆ? ŜĞdžƚ ƚŽ ƚŚĞ ĹśÄžÇ ĹšŽžÄž ŽĨ LJŜĂžĹ?ƚĞ KĹ?ůĎĞůĚ ^ÄžĆŒÇ€Ĺ?Ä?ÄžĆ? Ĺ?Ĺś ƚŚĞ ÄžÇ€ÄžĆŒ ĞdžƉĂŜĚĹ?ĹśĹ? ,Ĺ?ĹŻĹŻ /ŜĚƾĆ?ĆšĆŒĹ?Ä‚ĹŻ WÄ‚ĆŒĹŹ Ĺ?Ĺś >ůŽLJĚžĹ?ĹśĆ?ĆšÄžĆŒÍ˜ /Ćš Ç Ĺ?ĹŻĹŻ Ä?Äž Ĺ˝Ä?Ä?ƾƉĹ?ĞĚ Ä?LJ ÄžĹŹĹŹÄžĆŒ KĹ?ůĎĞůĚ ^ÄžĆŒÇ€Ĺ?Ä?ÄžĆ?Í• sƾůÄ?Ä‚Ĺś tĞůĚĹ?ĹśĹ? ĂŜĚ KĆŒĹ?ŽŜ DÄ‚Ä?ĹšĹ?ĹśĹ?ĹśĹ? Θ DÄ‚ŜƾĨÄ‚Ä?ĆšĆľĆŒĹ?ĹśĹ?͘

e Page B2 “It’s a good news story because of the fact that over the past years, Alberta has been very strong with our growth especially our housing. “But we’ve also had substantial growth on the Saskatchewan side for residential, commercial and industrial. “There’s been hotels built on the Saskatchewan side, restaurants – huge investments by local corporations.� The Lloydminster and District Co-op celebrated their 100th year of business in 2014 with the expansion of Lloydminster Co-op Marketplace and Pharmacy. Several new oilfield buildings are currently under construction in the Hill Industrial Park in pace with new commercial and retail developments. Construction is proceeding on Phase 2 of the Lloydminster Power Centre on a 140-acre parcel of land fronting Highway 16 at the west side of the city. The site drawings by Brentwood Developments show space for retailers such as Mark’s, Dollar Tree, PetSmart, Michaels, and bulk barn among others.

The new 122 room Hampton Inn By Hilton just opened on the northwest side of Hwy 16 where a second hotel called the Meridian Inn & Suites is set to open any day. Those projects will also support a Browns Socialhouse and a Rock Creek restaurant and a Co-op gas bar that are both under construction in the Hampton Square. “We actually opened over 300 doors of hotels and apartments this past year,� said Saunders. “I did a tally and we had over 600 doors open in this past year which is fairly substantial. That includes condos, houses, townhouses and apartments. “The goes to help our hosting and conference capabilities and goes to support the industry and the economy and people that area moving to Lloydminster.� Lloydminster plans host to a Society of Petroleum Engineers Canada workshop sometime this year on the future challenges of heavy oil. “It just goes to show Lloydminster is a great drawing point and a

hosting facility,� said Saunders. “The plus side to that as well is we have Lakeland College with their new Petroleum centre being ready this year as well.� The grand opening of the $23 million Energy Centre as the facility is officially called is expected to be announced soon. “There’s a lot of expertise here and a lot of people like to share their expertise here because they all fuel of each other and generate new innovative ideas,� said Saunders. “We tend to think that we’re helping to lead the leading edge in new technology around heavy oil development.�

Contractors for Brentwood Developments are working through the winter on the second phase of the Lloydminster Power Centre next to Home Depot on the west end of Lloydminster on the south side of Highway 16. The power centre will house several new retail outlets.

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a down year. But that doesn’t necessarily mean attendance will be down this year. The 2015 Williston Basin Petroleum Conference will be held April 28-30 at Evraz Place in Regina. Melinda Yurkowski, assistant chief geologist with the Ministry of the Economy, noted the 2009 show had similar number to the 2007 show. So event organizers are hoping registration will be on par with the 2013 event. That year close to 2,200 people registered. “It’s really hard to judge,” she said on Jan. 19. With oil currently below US $50 per barrel

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Red Dog Rig 1 retired, Red Dog Rig 5 launched to go for longer legs in deeper zones,� he said. One of the most active drilling areas in southeast Saskatchewan in recent years is right along the North Dakota border – home of the Torquay play. It’s also the deepest part of the basin within this province’s borders. “The rig is versatile enough to do anything from Waskada to deep plays at Oungre,� he said. Rig 5 is a jackknife triple derrick with 500,000 pound hook load capacity. There’s a new engine and gear-

Red Dog Rig 5 is the company’s latest rig. The heart of the rig, the substructure, derrick, pumphouse catwalk and drill pipe are new, while the other components have been repurposed from the now-decommissioned Rig 1. Photo by Brian Zinchuk

ing ratio for the existing drawworks, increasing its horsepower from 700 to 800. There’s a new hydraulic catwalk, replacing the standard catwalk that was used on Rig 1. The rig controls are similar to the system installed on Rig 3, which first went to work in the summer of 2013. Rig 1 had recently been recertified. “We just recertified it,� Zandee said. The plan was to put it to work for a year. Due to its size, its market was limited since it couldn’t tackle some of the

deeper holes. But with a slowdown coming, they decided to take the project now. “If it was going to be down, let’s take it in and speed this process up,� he said. As for Rig 2, now the oldest in the Red Dog fleet, Zandee said something could possibly be in the works, depending on commodity prices. The rebuild of Rig 1 into Rig 5 also diversifies the Red Dog fleet. They now have two telescopic doubles, one jackknife double and one jackknife triple.

)(1&(' /$1' )25 5(17 Estevan – Red Dog Drilling of Estevan sent out its latest rig into the field in mid-January, working near Northgate. Red Dog is still a four-rig drilling company, however, as the new Rig 5 is in some ways a rebirth of Rig 1, the company’s inaugural rig. “We’ve decommissioned Rig 1,� said Wayne Zandee, president of Red Dog. Substantial portions of the previous rig have been re-deployed with Rig 5. “We used the drawworks, one mud pump, water tank/ doghouse and boiler,� he said. There is a new

substructure, derrick, pumphouse, catwalk and drill pipe. These are all in keeping with the substantial change. Rig 5 is a lot bigger than their other rigs, since it is configured to run Range 3 pipe, which is 50 per cent longer than the usual drilling pipe used in this area. “It’s a triple mast, but it will be a super double,� Zandee said. The result is a rig that can make fewer connections compared to a normal double rig. There are less survey times as well. Combined, the design will allow Red Dog to drill more efficiently, which benefits the oil com-

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PIPELINE NEWS February 2015

Busy now, but who knows about later? DĞů dƌŽďĞƌƚ ŚĂƐ ďĞĞŶ ĂďůĞ ƚŽ ŬĞĞƉ ŚŝƐ ƐƚĂī ĂŶĚ ǁĂŐĞƐ ƵƉ ƚŽ ƚŚŝƐ ƉŽŝŶƚ͕ ďƵƚ Žŝů ĐŽŵƉĂŶŝĞƐ ŚĂǀĞ ƐŽƵŐŚƚ ƉƌŝĐĞ ĐŽŶĐĞƐƐŝŽŶƐ ĂůƌĞĂĚLJ͕ ĂŶĚ ƉƌŽƐƉĞĐƚƐ ĨŽƌ ĂŌĞƌ ƐƉƌŝŶŐ ďƌĞĂŬƵƉ ĂƌĞŶ͛ƚ ůŽŽŬŝŶŐ ŐŽŽĚ͘ Photo by Brian Zinchuk

Estevan – The start of the year has been good, but as for later this year, that’s another story. That’s according to Mel Trobert, owner of Estevan-based Prairie Rat Hole, whom Pipeline News visited during the first week of January, when the price of WTI was in the US$50 per barrel range. “It’s good so far. There’s still a lot of rigs going. But for how long, nobody knows. We had

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to cut our price,” he said. Diesel prices, unlike gasoline prices, have not gone down, he noted. “We didn’t cut our guys wages yet. In 2009, we had to job share for the guys. Prairie Rat Hole has 12 people on staff plus management and office workers. In addition to doing prep work for drilling rigs, drilling the main hole, rat hole and mouse hole, they also do pilines, skidsteer and excavator work. The excavator was added last year. “We’re busy. Two rigs are out today until

the weekend,” he said. Asked about his expectations after spring breakup, Trobert said, “It doesn’t look good. It’s not good. Everybody’s got to cut their price. It’s too bad for the guys that were low to begin with, and they have to cut.” Trobert recalled a recent conversation with a consultant who hires others. That consultant’s recommendations was for workers to take a pay cut or sit at home. “If oil doesn’t come back, we’d have to close our doors. It could come to that,” Trobert concluded.

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PIPELINE NEWS February 2015

B7

One rig came back to the Panther yard earlier than usual.

One rig came home for Panther Drilling due to the slowdown Weyburn – Panther Drilling of Weyburn was still going strong through much of January as rigs were being racked across the Western Canada Sedimentary Basin. “So far the people we’ve been working for are still going,� said Jim Kopec, general manager, when asked about life with oil at US$50 (or less). However, one rig had just shut down after over four years of work primarily with one customer. “It’s day-by-day now,� Kopec said. “Most of the people I talk to wonder where is it going to stabilize at - $45, $50? At $45 a barrel, not much is going to be going on. “We’ve been asked to reduce (our prices) and we’ve come to agreements. “You start looking after breakup. You’re always looking for the next job. That’s the name of the game.�

Kopec said for the last four years they’ve worked consistently. That one rig, now racked in the yard, was going on its fifth year with that client. “Everything’s up in the air,� he said. “I can appreciate what they’re going through. I’ve been on there side,� he continued, adding he’s got 33 years of production work under his belt. He still remembers shutting in and turning on wells to contend with the Bill 42 slowdown in the 1970s, when the provincial NDP government caused the local oilpatch to all but grind to a complete halt. He operated 90 wells during those days. “It’s going to be hard on communities – grocery stores, clothing, sports. It’s going to affect everybody,� Kopec said. As for what the summer looks like, he responded with a joke,

“How long is a piece of string?� “I’ve been through five or six of these. You just have to watch what you’re doing.� He recalled ’72, ’81, ’86-’87, ’91-’91, ’98, ’08’09 as slow times, but the last one wasn’t as bad due to the Bakken boom. “We were on a bubble here. We were in our own little world,� he said.

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PIPELINE NEWS February 2015

Fracking since 2010 Cromer, Man. – Jaie Zorzos, 24, has been fracking since 2010. Now he’s running one of the most prominent pieces of equipment on the frac spread, the coil tubing unit. “I started as a floor hand, then operator, lead operator and supervisor with Halliburton,â€? Zorzos said. He’s now spent a year with Millennium Stimulation. Zorzos works out of the Medicine Hat location, however, he lives in Brandon. “I go home once in a while to see my girlfriend. I don’t mind it in the Cromer area,â€? he said when asked about working all over the place. “It’s been busy. It’s been really busy,â€? he added. Zorzos started fracking two years out of high school. “When it’s all going tood, it’s not so challenging. When things go south‌â€? he said, getting back to work as his radio buzzed.

There’s a lot to keep an eye on when you run a coil tubing unit.

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Despite the tremendous drop in the price of crude oil, it’s Ć?Ć&#x;ĹŻĹŻ Ä?ÄžĹ?ĹśĹ? Ć?ĹšĹ?ƉƉĞĚ Ä?LJ ĆŒÄ‚Ĺ?ĹŻ ŽƾĆš ŽĨ ƚŚĞ dƾŜÄšĆŒÄ‚ ĹśÄžĆŒĹ?LJ DÄ‚ĆŒĹŹÄžĆ&#x;ĹśĹ? Ä?ĆŒĆľÄšÄžͲÄ?LJͲĆŒÄ‚Ĺ?ĹŻ ĨÄ‚Ä?Ĺ?ĹŻĹ?ƚLJ ĹśÄžÄ‚ĆŒ ĆŒŽžÄžĆŒÍ• DÄ‚ĹśÍ˜ ^ĹšĹ?ƉƉĹ?ĹśĹ? by rail is more expensive than by pipeline. Photo by Brian Zinchuk

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PIPELINE NEWS February 2015

Working hard for his boy time he’s progressed working through the different roles on a frac crew, including iron truck, pump hand, chem wagon, hydro and blender. “Now I’m on crewcab, the first white hardhat position,� he said. “The supervisor is in charge of the job. The crew-cabber is in charge of the men and equipment. He’s outside with the guys.� The job title comes from the fact that person typically drives a crew-cab truck. It was tough coming back to work after the Christmas break. “You get used to seeing your kid every day,� Chuard said. “I’m doing it (working hard) so hopefully he doesn’t have to.� Chuard works out of Estevan, but has no plans to move there. “My son’s in Ontario. I’ll never move away from him,� he said. The good-paying job out west allows him to pay for hockey for Dominic, as well as put money away for college. “He says he’ll be like Sydney Crosby,

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only tough,� Chuard laughed. “I work, go home, and do what he wants to do – hockey, baseball, soccer. Most of the guys here are just family men, trying to get ahead.� Asked about attitudes towards fracking back home, Chuard responded, “Out east, it’s all negative. They don’t know what it’s about. They think we’re all dumb and drunk. It’s not easy, working your guts out to provide for your family. It’s not easy reading (in the media) all the negative. Talking anything energy-related in Ontario or Quebec that’s not hydro or nuclear, there’s no point.�

Steve Chuard’s Ä?ĞĞŜ ŇLJĹ?ĹśĹ? Ä?Ä‚Ä?ĹŹ and forth to OnĆšÄ‚ĆŒĹ?Ĺ˝ ĨŽĆŒ Ć?ÄžÇ€ÄžĆŒÄ‚ĹŻ Ç‡ÄžÄ‚ĆŒĆ? Ć?Ĺ˝ ƚŚĂƚ ĹšĹ?Ć? Ä?ŽLJ Ä?Ä‚Ĺś ŚĂǀĞ Ä‚ Ä?ÄžĆŠÄžĆŒ ĹŻĹ?ĨĞ͘

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Cromer, Man. – There’s a picture on Facebook that keeps floating around. In it, a stick figure in a toque asks himself why he lives in a place where the air stings his face. That picture seemed very apt, standing atop a sand hog trailer near Cromer, Man., where the wind was making the -29 C temperatures much colder indeed. In less than a minute, any exposed skin on your face was hurting. But if you asked Steve Chuard, the crew-cabber in training on this frac crew, the answer is simple. He’s here for his boy Dominic, and he’s a long ways from home. Chuard hails from Gananoque, Ont., in the Thousand Islands outside of Kingston. “I still live there,� he said. “I’ve been doing this for five years. “Every 15 days the company flies me home, on their dime. In 15, out seven, two weeks on, one off.� He works for Millennium Stimulation. He’s been with them since the frac company fired up two-and-a-half years ago. Over that

B9

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PIPELINE NEWS February 2015

The new manifold and electric pump system are part of the improvements Pongo Holdings made of its water faÄ?Ĺ?ĹŻĹ?Ć&#x;ÄžĆ? Ć?ŽƾƚŚ ŽĨ Ć?ƚĞǀĂŜ ĹŻÄ‚Ć?Ćš Ć?ƾžžÄžĆŒÍ˜ File photo

Pongo improved its frac water facilities in 2014 Estevan – In the summer of 2014 Pongo Holdings of Estevan made some improvements to its frac water facility south of Estevan, electrifying the pumping system and building a new manifold. Pongo supplies water from two surface ponds on reclaimed coal-mining land south of Estevan, just off Highway 47. The company has been in operation for about six years. “It goes up and down,� Pongo president Ken Mehler said, about how the business is going in a world where the price of oil has dropped below $50. Most of their product ends up in frac operations east and west of Estevan. Not much of their water goes north. They don’t offer heated water, as most

of their clients prefer to have it heated on location. The new loading facility can load up to four trucks at a time, but two at a time is quicker. “This fall we had nine trucks in a row, waiting to load. It was crazy,� Mehler said. As for 2015, he said, “I don’t think we’ll see much for the second or third quarters. Hopefully it will pick up in the fourth quarter.� He said the maintenance side of the industry will hurt, but there are so many more new wells since the last downturn that still need to be kept running. As for their own operations, Pongo’s done some dirt work and pumped water from the larger to the smaller pond, which is closer to the highway. In the winter, they only use the small pond.

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B11

Saskatchewan Oil and Gas Show coming June 3-4

The Saskatchewan Oil and Gas Show in Weyburn is coming up late this spring. File photo

Weyburn – The Saskatchewan Oil and Gas Show, commonly referred to as the Weyburn Oil Show, will take place this year on June 3-4. June 2 will include the exhibitors’ golf tournament as well as steak and lobster supper. But if you wanted to get a booth, you’re out of luck. They were all taken last fall. “We’re full again,� said organizer Tanya Culbert. Ten per cent of the participants from two years ago gave up their

booth space. “We filled them right away,� she said. The oil show typically has a long waiting list of companies wanting to get in. By Sept. 30, it was sold out. There’s only about 10 companies who have not yet paid up. Culbert said that in years when there’s a low oil price, sometimes attendance is better. When oil prices are high, some companies may feel they don’t have to do as much promotion, because there’s lots of work. But when they are low, people may be

looking to make new contacts or put products on display. Six years ago, the 2009 show was well attended, despite oil bottoming out in April of that year. After having kept their fees the same for several years, Culbert said they did increase booth prices this year to keep up with increasing costs. The layout of the show will be the same as previous years, but organizers are looking to change things up a bit for the following event.

“We have formed an expansion committee for 2017,� she said. That doesn’t mean more space so much as reallocating the pavement area north of the rink to more smaller booths. Some of the larger equipment in that area might have to be moved onto the gravel areas. This year sponsors who aren’t exhibitors can golf as well. The golf tournament is highly prized for its networking.

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B12

PIPELINE NEWS February 2015

Cold comfort for sale at Northern Factory

Neal Beznoska who owns Northern Factory Workwear with his wife Pam displays a Ä?ÄžĆ?ĆšĆ?ĞůůĹ?ĹśĹ? DĆľÄ?ĹŹ ĆŒÄ?Ć&#x;Ä? WĆŒĹ˝ Ç Ĺ?ĹśĆšÄžĆŒ Ç Ĺ˝ĆŒĹŹ Ä?ŽŽĆš Ä‚Ćš ƚŚĞ >ůŽLJĚžĹ?ĹśĆ?ĆšÄžĆŒ Ć?ĆšĹ˝ĆŒÄžÍ˜

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„ By Geoff Lee Lloydminster – When the thermometer plunges, sales of warm clothes for work or play heat up at Northern Factory Workwear in Lloydminster and Saskatoon. The two outlets have generated a loyal following of seasonal oilfield and construction clients for their selection of insulated and flame resistant or FR rated work safety clothing and thermal safety boots. The stores owned by Neal Beznoska and his wife Pam also cater to families with leading brands of winter wear for children and adults for outdoor recreation or casual wear. “The cold weather just seems to bring people into the store to get all geared up for their jobs whether it’s the oilpatch or construction or just skidooing,� said Beznoska during a cold, snowy day in Lloydminster on Jan. 2. Earlier in the day, Beznoska shoveled his store walkway wearing some of the products that fly off the shelves when a cold front settles in. “I had a Columbia jacket on with a Watson pair of gloves to keep me warm – with a Carhartt toque. The temperature wasn’t too bad,� he said despite it being -26 C and windy. Cold days and snow are good for business at Northern Factory where the season got underway in mid November with the arrival of the first shock of Arctic air. “We really get stocked up for the cold weather. It happens every year,� said Beznoska. “We’re not sure what part of the year it’s going to happen whether it’s November – October. You never can tell when the weather’s going to get cold.� Cold weather was the reason that Tyler Scott, a manager at Top Gun Energy Ltd. in Lloydminster provided to Pipeline News for his visit to the store that day. He said he spends some of his time working outdoors. “I’m hands-on managing. We do a little bit everything. We check wells, we do some maintenance. We do some snowplowing. “It’s going to get way colder,� he warned. Scott bought two pairs of Merrell casual hikers explaining those are “just good for everyday running around boots,� while adding he wears winter safety boots on the job. His company also buys a quantity of FR work clothing from Northern Factory that is selling a new line of Red Wing FR personal protection clothing this season. “We just got in – first in Canada to get the Red Wing FR underwear – tops and bottoms,� said Beznoska. f Page B13

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PIPELINE NEWS February 2015 Henry Cusi from St. Mary’s School in Lloydminster was shopping at Northern Factory Workwear in Lloydminster for ƚŚŝƐ ĂĸŶ ƚ ǁŝƚŚ ƚŚĞ ďŽĂ ĐůŽƐƵƌĞ ƐLJƐƚĞŵ͘ dŚĞ ƚ ƐLJƐƚĞŵ ŝƐ ŝĚĞĂů ĨŽƌ ƐŶŽǁŵŽďŝůŝŶŐ͘ zŽƵ ĐĂŶ ƟŐŚƚĞŶ Žƌ ůŽŽƐĞŶ ƚŚĞ ƚ ǁŝƚŚŽƵƚ ƚĂŬŝŶŐ LJŽƵƌ ŐůŽǀĞƐ Žī͘

Miles O’Keefe from McAllister Drilling in Lloydminster ďŽƵŐŚƚ ƚŚŝƐ ůĂƌŐĞ ďĂŐ ƚŽ ƐƚŽƌĞ ŚŝƐ drilling rig clothes.

e Page B12 “They have Red Wing rain jackets and bibs. We have some shirts and pants that came in. We’re expecting insulated FR products, parkas and bibs. “Shortly after that, we’ll have some Red Wing uninsulated coveralls.” Northern Factory is the only independent Red Wing Shoes retailer in Canada to carry the new Red Wing FR clothing line. “We helped them kind of develop it a bit. We had the executives come in for product testing and development,” said Beznoska. “We had some product out in the local workforce around Lloyd to test the material and the products in these conditions, so we’ve really helped Red Wing develop it for our market with the reflective striping and all that. “They allowed us to carry their product as the only independent non-branded Red Wing Shoes store.” Another best selling item for oilfield and construction workers are winterized

B13

rubber work boots from Muck Boots Canada. The safety boots combine waterproof, flexible neoprene with 100 per cent virgin natural rubber that won’t crack or split in cold conditions. “Last year they came out with their Arctic Pro Sport steel toe CSA, so now they have about four styles of CSA boots,” said Beznoska. “The warmest one we have is the Arctic Pro which is the really cold weather work boot. We seem to have to order it about every couple of weeks. “It’s been flying off the shelf. It’s the comfort – the quality. They have a really good fit. They are light and they are breathable for a rubber boot.” The demand is also strong for wireless heated insoles with an embedded battery that can be operated by remote control. “That’s been a really good seller. They’re good for skiing, hunting, skidooing and with the oilpatch you can put them in any work boot that has a removable insole,” said Beznoska. The favourite boot for snowmobiling this year is the Baffin Pivot with the boa closure system that uses an aviation grade cable that ratchets the boot on tight so there are no laces required. “Another popular item is the Columbia baselayer,” said Beznoska. “They use the Omni-tech heat technology. It’s a reflective technology that keeps your body heat in. “There’s two different weights a mid weight and a heavy weight and that’s good for working or playing. As you get active it releases heat through vents. “It’s a newer technology for keeping you dry and warm.” Northern Factory also carries industry leading baselayer products by Helly Hansen made from moisture wicking polypropylene. Both outlets also sell a range of Helly Hansen non-FR underwear and FR underwear and accessories such as socks, toques, mitts and glove. When it comes to dressing for the cold, few workers know how to do it better than pipefitter Loren Patenuade from Lloydminster. “I am pretty seasoned, ya,” he said about how to stay warm in winter. “I’ve worked in the oilpatch for about eight years now. I worked oil rigs before and did facility building up in Peace River. “I’ve got nice winter boots. I’ve got Baffin boots and a good pair of Dakotas.” He bought the Baffins at Northern Factory where the early January cold snap brought him in to buy some bibs and warm outwear. Patenaude works for Lincoln County Oilfield Services, a leading provider of pipeline and facilities construction services within northern Alberta and northeastern British Columbia. “We do oilfield construction of SAGD facilities. Right now we are at facilities out of Bonnyville for Pengrowth,” he said. f Page B14

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PIPELINE NEWS February 2015

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e Page B13 He said some of that work is indoors but noted, “We’re usually inside so it’s pretty good.” Fortunately for Northern Factory especially in Lloydminster, the low price of oil and the slowdown in oilfield services have had little effect on store sales so far. “You still see the oilpatch around here going pretty good. We’ve seen this before,” said Beznoska. “It’s not if it’s going to happen; it’s when it’s going to happen – a little bit of a price adjustment but I am sure it’s not going to last too long. “There’s still people who have to work outside whether it’s construction, in the oilpatch or just even skidooing.” Business at the Saskatoon is driven more by construction, potash mining and farming than by the oil sector. “The oilpatch is a good part of

our business, but we’re diversified and we can suit pretty much anybody who needs to be warm,” said Beznoska about the Lloyd market. “We’ve brought in a lot of Columbia casual parkas and down filled jackets for men and ladies and they’ve had a really good response. “They’ve sold really well. That’s one of the lines we’ve expanded over the last year.” Northern Factory has also added a new four headed embroidery machine to its growing promotional and embroidery department in Lloydminster catering to oilfield workers. “We keep the inventory for companies here. Employees will come in and get fitted for coveralls or parkas. They go upstairs and get their name and company logo put on,” explained Beznoska. “It’s a quick turnaround high quality and we have the newest and greatest equipment technology.”

1HZ :HVW SURÀWV from diversity Calgary – Ongoing diversification from service centres in Beaverlodge, Medicine Hat and Slave Lake in Alberta is proving to be profitable for New Energy Services Inc. The Calgary-based drilling, completions and production services company reported a net profit of $25,243 in its second quarter ending Oct. 31, 2014 compared to a loss of $171, 327 for the same period a year ago. The company’s fiscal year runs from May 1 to April 30. Revenue also increased 37 per cent to $6.64 million in the second quarter from $4.83 million in the previous year period. The company attributes its success to the continued build-out of the new diversified service centre in Beaverlodge, Alberta focused on completions and production operations. The new services operated by its subsidiaries include combo and hydrovac trucks used on the completions and production sectors as well as quad wagons and tri trailers used in the hauling of frac water, oil and other

production fluids. New West also provides steamer/ boiler units and environmental services to clients in Western Canada. “The corporation has a solid client base and is looking to leverage this client base to offer its new diversified services,” said the company in a Dec. 30 news release. “Management plans on continuing the diversification growth into the production sector and increasing the plant turnaround and bulk transport service in the future.” New West’s locations in Slave Lake and Medicine Hat support oil and gas drilling operations. The company spent $1.5 million on capital expenditures during its second quarter to purchase additional trucks and equipment. New West also sold approximately five units from the equipment fleet in the quarter which resulted in net proceeds of approximately $300,000. The sold units consisted of older model vacuum and water trucks as well as some underutilized end dump trucks and trailers.

PIPELINE NEWS February 2015

B15

Spartan offers growth budget of $105M Calgary – Spartan Energy Corp. plans to continue to deliver per share growth in 2015 organically with a capital expenditure budget of $105 million. The 2015 budget is expected to generate cash flow of $102 million assuming a West Texas Intermediate oil price of US$65 per barrel in 2015. “In order to preserve our balance sheet flexibility in a low commodity price environment, our 2015 budget primarily targets high rate of return, low risk opportunities,� said the company in a Jan. 6 news release. “Spartan will remain disciplined and flexible with our 2015 capital budget as we monitor commodity prices and results throughout the year.� The company estimates that a US$5 change to commodity prices will affect their cash flow by approximately $14 million or 14 per cent. “With our extensive inventory of drilling loca-

Tuscany defers capex, production up Calgary – Tuscany Energy Ltd. is deferring all but required capital projects in 2015 until oil prices show sustainable gains. The decision announced on Jan. 6 is aimed at managing their balance sheet on a day when oil prices stayed below $49 a barrel. “Tuscany’s management believes that the recent sharp downturn in oil prices will result in a global reduction in drilling activity and by the end of the first half of 2015 North American production levels should decline significantly, resulting in a steady recovery in oil prices,� said the company. Meanwhile, the Calgary-based company reported their overall production increased to more than 1,000 barrels of oil equivalent a day at the beginning of 2015. The boost comes from the completion of two horizontal heavy oil

wells on Tuscany’s north Macklin property and an initial horizontal heavy oil well on their Morgan property in Alberta. All of these wells provide Tuscany with new offsetting development locations, to be drilled when oil prices recover. The first new Macklin well was placed on production in the first week of December and is producing at an estimated rate of 125 barrels of oil equivalent per day as of Jan. 6. The second Macklin well was placed on production mid-December and is producing at an estimated rate of 75 boepd. Tuscany holds a 100 per cent working interest in the Macklin property. The initial well Morgan well was placed on production late in December 2014 at approximately 40 boepd. Tuscany holds an 88 per cent working interest in the Morgan property.

tions in southeast Saskatchewan, we are well positioned to revise our capital plan in the second half of the year should circumstances warrant,� added the company. Drilling and completions activity makes up approximately $88 million of the 2015 budget, with the remaining $17 million allocated to facilities, well-site tie-ins, maintenance capital, capitalized general and administrative expense and land and seismic. The drilling program will be primarily focused on high rate of return, low risk open-hole Mississippian wells in southeast Saskatchewan, with 68.3 net openhole wells currently budgeted. “These wells are highly economic at a variety of commodity prices, with our internal type curve well generating an initial 30 day production rate (IP30) of 93 barrels per day and delivering a rate of return of approximately 100 per cent at an oil price of US$65 WTI,� said Spartan. “Open-hole wells drilled on our asset base in 2014 are currently exceeding this type curve, generating average IP30 rates in excess of 120 barrels of oil equivalent per day.� Spartan has identified over 500 net open-hole drilling locations across its southeast Saskatchewan asset base.

In addition to the open-hole drilling program, the company intends to drill 4.9 net frac Midale wells on its Pinto lands in southeast Saskatchewan. Spartan drilled four (3.7 net) wells at Pinto in 2014, with early results indicating that the wells are outperforming their internal type curve of 120 bpd IP30. They also plan to drill two (1.9 net) vertical Detrital wells on their Alexander property in central Alberta in 2015. Remarkably the company grew production from 625 boepd when it commenced operations in December 2013 to an exit rate in 2014 of over 8,700 boepd. Their December average production was approximately 9,300 boepd, based on field estimates. “Our production growth has been achieved through an active acquisition program early in 2014, which established our extensive southeast Saskatchewan focused asset base, followed by the successful execution of our drilling program in the second half of the year,� said the company. “We also focused on maintaining a strong balance sheet in 2014, with estimated year-end net debt of approximately $92 million, leaving approximately $158 million of available room on our $250 million credit facility.�

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CWC slashes capex as oil dips Calgary – CWC Energy Services Corp. is adjusting to the reality of volatile oil prices with a reduced 2015 capital expenditure budget of just $14.6 million. The Calgary-based contract drilling and well servicing company is also starting 2015 off with an optional dividend reinvestment plan (DRIP) and a stock dividend program (SDP) for investors given the uncertainty in oil markets. “The 2015 capital expenditure budget demonstrates CWCs commitment to maintaining a premier drilling and well servicing rig fleet while ensuring that shareholders continue to generate a return on investment through either a cash or stock dividend,” said the company in a Dec. 23 news release. “CWC will continue to evaluate and expand its operations in a disciplined manner and make any required adjustments to its capital expenditure program as market conditions improve.” The company’s 2014 capital expenditure budget of $45.6 million which included a $17.8 million carryover into 2015 has been amended to the new 2015 capital expenditure budget. The new smaller budget for 2015 will allocate $9.1 million to growth capital and $5.5 million in maintenance capital. Growth capital will primarily be directed at completing two new slant service rigs and supporting equipment to expand CWC’s growth in heavy oil and SAGD wells with delivery expected in the first quarter. The company will also upgrade its drilling Rig 2 to expand its capabilities to depths of 4,500 metres with completion expected in the third quarter of the year. CWC will also continue to the build its new telescopic double drilling rig 10 but at a slower pace than previously announced with a completion date beyond 2015. Maintenance capital will primarily be directed at drilling rig recertification costs and upgrades or additions to field equipment for the service rig and coil tubing divisions and information technology infrastructure. CWC intends to finance its 2015 capital expenditure budget from operating cash flows. The new DRIP allows CWC investors to reinvest their cash dividends

into additional common shares of CWC priced at 95 per cent of the prevailing market price Eligible shareholders may elect to participate in the DRIP or the SDP commencing with the first dividend paid on Jan. 15 to shareholders of record on Dec. 31, 2014. While it is similar to the DRIP, the SDP is expected to have certain favorable income tax attributes for Canadian investors. The SDP provides eligible shareholders the option to receive dividends in the form of common shares at 95 per cent of the prevailing market price with no additional brokerage fees or commissions.

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B18

PIPELINE NEWS February 2015

65& RSHQV QHZ SLSH ÁRZ IDFLOLW\ By Geoff Lee Saskatoon – Finding better ways to pipeline light and heavy oil from the wellhead to process facilities will be under study at the newly expanded Pipe Flow Technology Centre at the Saskatchewan Research Council in Saskatoon. The Shook-Gillies High Pressure, High Temperature Test Facility opened on Jan. 7 with several oil companies already knocking on the door for applied research projects. The new building is equipped to test the flow conditions of volatile materials such as crude oil, in a controlled, high pressure and high temperature (HPHT) physical model. “We do have a few that are interested and we’ve been having discussions,” said Lesley McGilp, manager of the technology centre the day after the opening.

“The applications range from looking at fracture stimulation fluids to new instrumentation testing and looking at horizontal well flow conditions. “I am sure as more people become aware of the system more inquiries will continue to come in. I’ve already had two or three inquiries since the launch event yesterday.” The facility is equipped with a 100 millimeter diameter pipe flow loop that is designed to simulate industrial conditions. The loop will be used to research the flow of complex mixtures including slurries in pipes under HPHT conditions. “This is a new expansion with new capabilities. With our existing loops, we can only test at low temperatures and pressures and we can’t test volatile materials,” said McGilp. “The new system

dŚĞ WŝƉĞ &ůŽǁ dĞĐŚŶŽůŽŐLJ ĞŶƚƌĞ Ăƚ ƚŚĞ ^ĂƐŬĂƚĐŚĞǁĂŶ ZĞƐĞĂƌĐŚ ŽƵŶĐŝů ŚĂƐ ŽƉĞŶĞĚ Ă ŶĞǁ ǀŽůĂƟůĞ ŵĂƚĞƌŝĂůƐ ĨĂĐŝůŝƚLJ ƚŽ ƚĞƐƚ ŵĂƚĞƌŝĂůƐ ƐƵĐŚ ĂƐ ĐƌƵĚĞ Žŝů ŝŶ ƉŝƉĞƐ ƵŶĚĞƌ ŚŝŐŚ ƉƌĞƐƐƵƌĞ ĂŶĚ ŚŝŐŚ ƚĞŵƉĞƌĂƚƵƌĞ ĐŽŶĚŝƟŽŶƐ͘ WŚŽƚŽ ƐƵďŵŝƩĞĚ

can do all those things so we can test up to 250 Celsius and 1,300 psi in the new loop. “And we can test out volatile materials because we’ve located the loop in a newly expanded class one building which means it’s rated for the testing of flammable materials.” The centre can now test a wider range of

substances and help the provincial, and national, oil and gas industry enhance oil recovery, reduce operating costs and improve processes. “SRC is committed to benefiting Saskatchewan through its products and services and this project is no different,” said Jeremy Harrison, Minister of Innovation and Minis-

ter Responsible for SRC in a statement. “We expect the expansion will facilitate several research projects to improve efficiency and business productivity for oil, gas and mining companies in our province and around the world.” Industry will fund the projects with the research conducted by

SRC following a fee for service model. Pipe flow research typically could be triggered by an operator that is having some design challenges or operational challenges. “They would come to us with a research project, something they want to understand better,” said McGilp. f Page B19

PIPELINE NEWS February 2015 e Page B18 “We would run tests in our flow loop to mimic industrial conditions and that would give them information that they could use to design a pipeline or better understand horizontal well flow or better under the properties of fracture stimulation fluids.” The conditions that can be tested include those experienced in steam or solvent related enhanced recovery methods so SAGD technology could be tested. “Because there is really nowhere else to test the conditions associated with steam assisted gravity drainage I do think that is a large market for us,” said McGilp. “There is a lot of activity in that area. I also think enhanced recovery methods in heavy oil and medium crudes is an area where we can help – that’s a technology that’s growing as oil fields mature in Canada.”

The Shook-Gillies facility can also test the pipe flow of gas and slurries that are a mixture of liquid and solids and very common in all processes of bitumen mining in the oilsands industry. Slurries also occur in the production of heavy oil with sand and water. “Our research would help you determine what size of pipe to use, how big your pumps might need to be and to better understand what’s going on inside the pipe and what the flow regime looks like,” said McGilp. “That can be important for processability when the fluid gets to a point in the operation where you want to separate the oil and the water and if there’s sand in the system to separate the sand out. “Whether you can transport sand at the conditions that you are flowing at – we can test those things in our loop in a very controlled environment. It’s very accurate instrumentation.” Another benefit of

pipe flow research said McGilp is that a well designed pipeline operates efficiently. “There is less downtime, you’ve put in the right pumps so it runs more efficiently,” she noted. “What does tend to happen in the engineering profession, when you don’t know for sure, because you don’t have

good information, is you tend to err on the side of caution and build things bigger.” “This research takes the guesswork out of the equation and allows you to design the system properly. That reduces your capital costs and will definitely improve efficiencies. “Particularly with slurries, building it too

big is not a good thing. It will lead to operational challenges. It’s that much more important to get it right.” The Shook-Gillies facility is named in honour of scientists Clifton Shook and Randall Gillies, two pioneers in the area of slurry testing and research at SRC’s Pipe Flow Technology Centre that has been

B19

operating for the past 55 years. Funding for the facility included a $1.73 million joint investment from the federal and provincial government and $1.46 million from SRC. SRC provides services and products to its 1,400 clients in 20 countries around the world.

This is a new steam generator installed at the newly expanded Pipe Flow Technology Centre at the Saskatchewan ZĞƐĞĂƌĐŚ ŽƵŶĐŝů͘ dŚĞ ĞƋƵŝƉŵĞŶƚ ŝŶĐůƵĚĞƐ Ă ϭϬϬ ŵŝůůŝŵĞƚƌĞ ĚŝĂŵĞƚĞƌ ƉŝƉĞ ŇŽǁ ůŽŽƉ ĚĞƐŝŐŶĞĚ ƚŽ ƐŝŵƵůĂƚĞ ŝŶĚƵƐƚƌŝĂů ĐŽŶĚŝƟŽŶƐ͘ dŚĞ ůŽŽƉ ǁŝůů ƌĞƐĞĂƌĐŚ ƚŚĞ ŇŽǁ ŽĨ ĐŽŵƉůĞdž ŵŝdžƚƵƌĞƐ ŝŶĐůƵĚŝŶŐ ƐůƵƌƌŝĞƐ ŝŶ ƉŝƉĞƐ ƵŶĚĞƌ ŚŝŐŚ ƉƌĞƐƐƵƌĞ ĂŶĚ high temperatures. WŚŽƚŽ ƐƵďŵŝƩĞĚ

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The part of the NuWave innovation we’re most proud of is the dramatic increase in safety. For starters, you’re not putting a man down a pit— that eliminates all kinds of potential injuries right there. There’s no exposure to harmful gases or chemicals.

NuWave’s technology is mobile and portable. It can be used on any terrain, in any temperature. The system is ideal for use in wet muskeg conditions that would otherwise require a hydrovac to dry out the well hole. Saving on time, manpower, and resources all translates to saving big money!

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PIPELINE NEWS February 2015

Failure not an option at Agat labs By Geoff Lee Lloydminster – An ounce of prevention is worth a pound of cure. Keep that adage in mind when expensive oilfield equipment or components break down during this current low oil price environment. A cost-effective solution is to send the failed part to the lubricant testing division of Agat Laboratories in Calgary for scanning electron microscopy (SEM) analysis. SEM can assist maintenance and DŝŬĞ DĐ/ŶƚŽƐŚ͕ >ůŽLJĚŵŝŶƐƚĞƌ ^W ƉƌŽŐƌĂŵ ĐŚĂŝƌƉĞƌƐŽŶ͕ ůĞŌ͕ ƉƌĞƐĞŶƚƐ >ůŽLJĚ >ĞƵŐŶĞƌ ĨƌŽŵ ŐĂƚ >ĂďŽƌĂƚŽƌŝĞƐ ŝŶ ĂůŐĂƌLJ ǁŝƚŚ Ă ĐŽŵƉůĞŵĞŶƚĂƌLJ ŐŝŌ ĨŽƌ ŚŝƐ ƚĞĐŚŶŝĐĂů ůƵŶĐŚ engineering personnel in determining the root ƉƌĞƐĞŶƚĂƟŽŶ ŽŶ ƐĐĂŶŶŝŶŐ ĞůĞĐƚƌŽŶ ŵŝĐƌŽƐĐŽƉLJ ŝŶ :ĂŶƵĂƌLJ͘

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cause of failure in oilfield plant and mobile machinery. Testing is free to lubricant testing members and about $1,500 for non members and it can prevent costly repairs and downtime for oil and gas companies. “A failure might cause $800,000 of damage so if that failure recurs then there’s another $800,000 worth of failure,” said Lloyd Leugner Agat’s director of equipment reliability and lubricant testing services. “So they should definitely be prepared to analyze every failure they have so that they can prevent a recurrence of that failure.” The advantages of SEM and how it works were covered in Leugner’s presentation and handouts at the January technical lunch of the Lloydminster Society of Petroleum Engineers. He told the audience that the diagnosis of machinery failure starts with analyzing a small sample of the failed component under the scanning electron microscope. Samples could include a cut out piece of a sleeve bearing, a piston ring or a rotating element bearing. “We’re testing any machine failure,” said Leugner. Any mechanical component that uses grease or oil to lubricate it can be analyzed with SEM. The SEM scans the surface of the sample at

high magnification to determine failure types such as abrasions, adhesion, erosion, corrosion and cavitation. SEM provides a 3D image of the sample through the use of secondary electrons that are generated by the sample after being bombarded with electrons. An elemental analysis can also be performed using an X-ray Energy Spectroscopy attachment. X-ray diffraction can be used to support conclusions such as foreign deposits on pistons, mechanical seals, gears or components to be evaluated for the elements identified within. “We are testing for the elements; we are testing for the cause of the failure; and we’re analyzing how the elemental analyses actually created the failure of the component itself,” explained Leugner who noted each case is different. “‘They’re not all the same. It depends on the elemental analysis. It depends on the causes of the failure. It depends on the type of contaminants and so on that actually created the failure.” He said a preventive maintenance combined with a predictive maintenance is essential in providing initial information on the potential causes of failure or the beginnings of the cause of those failures. f Page B21

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PIPELINE NEWS February 2015 e Page B20 “That way you can do something about it before the machine actually fails,� he said. Leugner was introduced as a former military tank and heavy truck mechanic in the Royal Canadian Electrical Mechanical Engineers with over 50 years of experience with lubricants and equipment. He ran his own company called Maintenance Technology International for over 30 years up until 2007. “I retired for five years and found retirement much to my disliking, so I went back to work for Agat two years ago,� he said with his 74th birthday coming up in March. Leugner also listed as a co-author of The Practical Handbook of Machinery Lubrication who knows what kinds of things cause failures. “Seventy per cent of lubrication failures in industrial machinery are caused by contaminated oil,� he said. “That’s an amazing percentage, but that’s what generally are the causes of failures.� He also said operational actions will cause failures as well as overloading and running machinery at excessive speeds. “But primarily they are caused by operational conditions such as contamination – excessive amounts of water and so on,� he said. There are several examples of that in the handout material. Leugner said there is no time like the present for SEM test-

ing especially during a downturn when companies are looking at cost efficiencies. “They might pay more attention now to their failures than they might have six or eight months ago. If they can prevent those things from occurring, $40 oil is not that bad,� he said. “If they are not paying attention to those failures and they’re still having them, then $40 oil is a problem.� Lloydminster companies with failed machinery can take the parts to Agat’s local environmental lab that will ship them to Calgary for a SEM analysis. Mark White, a district business development rep from Edmonton was on hand to explain his role at Agat in Lloydminster. “I am usually here once every couple of weeks. My focus is oil and gas so I provide petrochemical analysis of hydrocarbons,� he said noting they are busy. “Companies are mandated to have their oil tested to see what’s in it and to grade it. Pipelines want to know if it’s corrosive before it’s piped through the pipelines or by rail or by truck. “Some companies also want MSDS sheets done up for what they’re carrying, so we do that as well, but it’s a full scale of hydrocarbon analysis of heavy crude oil that’s coming out of this area or gas as well.� The Agat environmental lab in Lloydminster also provides air testing services.

B21

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B22

PIPELINE NEWS February 2015

Hampton Inn set to put on the ritz Lloydminster – An official “Hamptonality moment” will take place in Lloydminster during the grand opening of the new Hampton Inn by Hilton in Lloydminster on March 12. Come prepared for handshakes, smiles and good cheer hosted by Clare Janitz, the general manager and her management team and staff. The experience promises to be just like on those Hamptonality commercials the hotel chain runs to show how it celebrates the moments that matter to their guests. “For the grand opening we’ll be doing tours of the hotel and

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of course, we will have some nice h’orderves and cocktails for visitors,” said Janitz who can’t wait for the big day. “It’s my first hotel opening. It’s nice to open a hotel that’s really so beautiful. The finishes and the quality are really a high standard, so I’m very proud to be part of it.” A ribbon cutting with Lloydminster Mayor Rob Saunders is expected to be part of opening ceremonies that should be well attended as word travels. “We’re expecting a good turnout. We’re going to have a large invite list. We’ll be going out

and inviting people in person as well as emails,” said Janitz. The guest list will include representatives from the APX Hotels Group that operates the five storey, 112 room hotel and property. The franchise is owned by a group of investors that also owns the Holiday Inn & Suites in Lloydminster. The Hampton franchise was built by Aspen Developments Corp in Red Deer for approximately $16 million. APX Hotels operates a growing chain of hotels in Alberta including the local APX Holiday Inn that Janitz

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managed briefly while construction of the Hampton wrapped up.

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The doors opened at the new hotel on Dec. 22 with Santa Clause being one of the first visitors to feel the Hamptonality. “It was a very soft opening three days before Christmas, but we still had guests coming in,” said Janitz. “It was a nice surprise and good for the staff to get used to their roles and for us to get our service down pat.” “For the guests coming in, they are very impressed. It’s been said it’s one of the nicest Hamptons. Our company went beyond the standards to create a more upscale beautiful atmosphere.” The oil and gas business traveler is their main target market along with weekend wedding parties and a leisure groups who love the free self serve breakfast concept. The breakfast bar is next to a huge common area on the ground floor with lots of tables

and chairs for breakfast gatherings and socializing. “The families just love it,” said Janitz. The Hampton Inn is only Hilton brand in Lloydminster that interested APX Hotels. “I think it was APX contacting Hilton when they were deciding what way they wanted to go and what hotel brand to bring to Lloyd,” said Janitz. “Lloyd doesn’t have any Hilton properties so it’s a great opportunity to bring a new brand into the area.” Janitz noted that a lot of guests are Hilton “Hhonors” reward points members who prefer to stay overnight at other Hilton branded hotels. “This is a great opportunity for them, so now people who come to Lloyd for business who are Hilton Hhonors members can use it at the Hampton,” she said. f Page B23

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PIPELINE NEWS February 2015 e Page B22 “It’s a different concept having the breakfast whereas the Holiday Inn has a restaurant but they are both great hotels.” Most of the rooms come with a standard king or two queen beds with a few Jacuzzi suites for special occasions. Some of the rooms are specially made for wheelchair guests with mobility features such as entry or passage doors with 32 inches of clear width. Included with every stay at the Hampton is the free hot breakfast, free Wi-Fi in every room and use of the pool and the fitness room. “With having the breakfast bar, people don’t really need a kitchenette, but every room has a microwave and a fridge,” said Janitz. For business functions there are two boardrooms with builtin audio visual equipment and use of a free 24-hour business centre with printer, fax and photo copying services. There is also a 24-hour convenience mart for snacks, drinks and travel essentials and it’s just short hop from the Hampton to other nearby shops and restaurants. The Hampton Inn is part the Hampton Square retail and commercial development that APX started in 2012 at the west side of the city just off Highway 16. “It’s a great location. It’s the first thing you see coming into town from Edmonton,” said Janitz. “The location is very good for travelers and business people. It’s not hard to find.” Construction is underway in front of the

Hampton on a Cop-op gas bar and two restaurants namely a Browns Socialhouse and a Rock Creek diner. There is also a new Meridian Inn & Suites hotel under construction at the busy Hampton Square project site. “Any other business brings in more business. It will create more of a destination at this end of the city,” said Janitz. “More people will come because there’s businesses and restaurants and hotels. “Being on the main throughfare with lots of businesses popping up around us and lots of restaurants and shopping and things like that, there will be lots of choices for the people who stay here.” It is too early to tell yet if the current low price of oil will lower their expected average occupancy rate of 80 per cent by the end of the year. “As of yet it’s hard to tell because over Christmas everything is slow, but this week things are already ramped up quite a bit in the local hotels,” said Janitz referring a mayor crossfit sports competition in town Jan. 15-17. She said the Hampton will get busier too as their sales and management team rolls out their advertising and marketing campaign “We have been buying a lot of advertising through newspapers and the media with signage and things like that. We’re blitzing the local businesses to let them know we’re here,” said Janitz. “So our sales team is out and actually physically going and greeting people and talking with people.” The city of Lloydminster’s strategy to host major events also works in favour of the

dŚĞ ĮǀĞ ƐƚŽƌLJ ϭϮϮ ,ĂŵƉƚŽŶ /ŶŶ ďLJ ,ŝůƚŽŶ ŝƐ ŽƉĞƌĂƚĞĚ ďLJ Wy ,ŽƚĞůƐ 'ƌŽƵƉ ƚŚĂƚ ŽƉĞƌĂƚĞƐ Ă ĐŚĂŝŶ ŽĨ ŚŽƚĞůƐ ŝŶ ůďĞƌƚĂ ŝŶĐůƵĚŝŶŐ ƚŚĞ >ůŽLJĚŵŝŶƐƚĞƌ ,ŽůŝĚĂLJ /ŶŶ Θ ^ƵŝƚĞƐ͘

local hospitality industry. “They refer events to us and then we try to allocate inventory of rooms for them so that they can bring those events in like the oil show or large tournaments,” said Janitz. “They won’t bring events like that to the city unless they know there is accommodation. We have also been hosting events from outside in places like Vermilion.” Janitz previously worked in Ontario where she said the pace of the hotel industry is a lot slower than it is in Lloydminster even in this downturn. “Things are quite different there – slower and more challenging whereas Lloyd is just a booming place, so it’s very exciting. Everything’s growing,” she said. “I recently attended the Lloydminster Chamber of Commerce where they talked about being the number one city in Canada for doing business so it’s a very exciting place to be. “It’s really nice to open a new hotel in such a vibrant market.”

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PIPELINE NEWS February 2015

Calroc’s new lift saves money, jobs „ By Geoff Lee Lloydminster – Calroc Industries Inc. is launching a new linear artificial lift that is easy to install, operate and maintain in this current low oil price environment. The new Fox 1-120-10 hydraulic pumpjack is being manufactured by Calroc and marketed as a simple, cost effective improvement to existing linear lifts for light and heavy oil. A sample of the Fox lift was rolled out in front of Calroc’s Lloydminster shop on Jan. 13 with Conway Vidal, the shop manager and design consultant Perry St. Denis on hand to explain it. “It’s a hydraulic pumpjack to replace the traditional style pumpjack you see in the field,� said Vidal who worked closely with St. Denis during the design and build. The finished prod-

uct is simple, streamlined and aesthetically clean with a rugged industrial design built to handle the stress of handling, installation and operation. With linear lifts, a linear actuator replaces the pumpjack on traditional beam pumping units to drive the reciprocating pump to lift oil to surface. “It’s just a basic hydraulic cylinder lifting a rod up and down. There are so many ways to build that,� said Vidal about the new linear lifts on the market. “We’ve taken that same concept and just cleaned it up a bit – got rid of some safety concerns and made it very user friendly both for installing it and for operation.� The research and development of the Fox lift was led by St. Denis who does work for Calroc out of his Blue Fox Motion Inc. company. He is the also the former owner and head

Ä‚ĹŻĆŒĹ˝Ä? /ŜĚƾĆ?ĆšĆŒĹ?ÄžĆ?Í› Ĺ˝ĹśÇ Ä‚Ç‡ sĹ?ĚĂů͕ ĹŻÄžĹŒÍ• Ç Ĺ˝ĆŒĹŹĆ? Ç Ĺ?ƚŚ Ä‚ĆŒĆ&#x;ÄŽÄ?Ĺ?Ä‚ĹŻ ĹŻĹ?ĹŒ ĚĞĆ?Ĺ?Ĺ?Ĺś Ä?ŽŜĆ?ƾůƚĂŜƚ WÄžĆŒĆŒÇ‡ ^ĆšÍ˜ ĞŜĹ?Ć? ƚŽ Ć?ƚĂŜĚ ƾƉ ƚŚĹ?Ć? ĹśÄžÇ &Ždž ƉƾžĆ‰ĹŠÄ‚Ä?ĹŹ Ä‚Ćš ƚŚĞ >ůŽLJĚžĹ?ĹśĆ?ĆšÄžĆŒ Ć?ŚŽƉ ĨŽĆŒ Ä‚ ƉŚŽƚŽ Ĺ˝Ć‰Í˜ WŚŽƚŽĆ? Ä?LJ 'ÄžŽč >ĞĞ

of ICI Artificial Lift in Lloydminster and called the sleek style and functions of the Fox pump jack an improvement to existing technology. “I looked at other hydraulic units that

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were having issues and decided to make it a little bit simpler,� he explained. “There’s always the next step of building something better. That’s what we did.�

The new lift was introduced during the Lloydminster heavy oil show last fall to what St. Denis described as a “highly energetic� market reaction. He listed safety, en-

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vironmental and access for slant well applications as some of the issues plaguing existing lifts that he and Vidal sought to correct with the design of the Fox. f Page B25

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PIPELINE NEWS February 2015 e Page B24 “The safety features are no moving crank arms and no moving weights. You don’t have bridle cables – no cables, no straps to fray or break,� said St. Denis. “The large and accessible lifting lugs on the mast assembly are very robust.� It has built-in feet for transport and storage in the horizontal position. The safe working load is 10,000 to 20,000 lbs., depending on the model. “The environmental footprint is the size of the wellhead,� noted St. Denis. The Fox hydraulic pumpjack works with any existing hydraulic control units which reduces costs when replacing existing pumping units. It can be purchased in a maximum stroke length of 144 inches and is designed for universal applications and all well types. All of the parts for the Fox pumpjack are

locally built by different companies and assembled at Calroc’s shop for shipment worldwide. “We’re looking at 50 plus units in the first six months,� said Vidal. The new Fox pumpjack will further diversify Calroc’s equipment and service offerings in a low oil price market from its field locations in Lloydminster and Medicine Hat. Company president Dan Echino is confident the new Fox pumpjack will help overall sales in this market downturn. “I am very excited by this new product line because it’s sexy,� he said. “Sometimes in this oilfield market you have to have something sexy, not just bricks and cement.� He said simplicity is the main selling point of the new pumpjack with its one piece assembly for easy installation. The rod sticks out

the top making an easy connection for a flushby to service the well. “I used to be an operator myself so I know it’s nice to have something that’s simple to set up, simple to maintain and simple to operate because when you’re in the field you have a lot of wells to look after,â€? said Echino “You don’t have time to spend too much at each well.â€? Echino said the advantages of the new pumpjack should make it a good seller internationally and domestically too. “There’s no reason why we don’t sell a lot of these in Canada. Typically, the U.S. Australia overseas and Mexico are where we’re focusing on,â€? he said. “Your lifting costs per barrel are going to decrease slightly if you have no maintenance to do on your equipment.â€? “That definitely benefits companies Ä‚ĹŻĆŒĹ˝Ä? /ŜĚƾĆ?ĆšĆŒĹ?ÄžĆ?Í› Ć?ŚŽƉ žĂŜĂĹ?ÄžĆŒ Ĺ˝ĹśÇ Ä‚Ç‡ sĹ?ĚĂů͕ ĹŻÄžĹŒÍ• because now they are Ç Ĺ˝ĆŒĹŹÄžÄš Ç Ĺ?ƚŚ Ä‚ĆŒĆ&#x;ÄŽÄ?Ĺ?Ä‚ĹŻ ĹŻĹ?ĹŒ ĚĞĆ?Ĺ?Ĺ?ĹśÄžĆŒ WÄžĆŒĆŒÇ‡ ^ĆšÍ˜ ĞŜĹ?Ć? ƚŽ Ä?ĆŒÄžmaking less money, so ate this simple to install and operate hydraulic pumpjack ĨŽĆŒ ƚŚĞ Ĺ?ĹśĆšÄžĆŒĹśÄ‚Ć&#x;ŽŜÄ‚ĹŻ ĹľÄ‚ĆŒĹŹÄžĆšÍ˜ they have to do every-

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thing to cut costs. “Plus we offer rentto-own and leasing equipment so now the oil companies instead of making one big capital purchase can make little payments every month.� Echino said the new pumpjack fits Calroc’s diversified business profile which keeps employees busy if one part of the business slows down. “Diversification is very important – different product lines, different services – the trucks even. I move people around all the time, and this way we want to keep people working,� he said. “The less we can layoff in this slowdown in the industry the better, so I am trying to keep everybody working. “I don’t say we are busy, we are steady, but we are keeping the people working. We’ll keep going limping along until the economy and the oil prices stabilize.�

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PIPELINE NEWS February 2015

Oil price effect hedged at Unity spiel „ By Geoff Lee Unity – Low oil prices might help or hinder the turnout, sponsorships and donations at this year’s 14th annual Oil Persons Bonspiel in Unity. Dustin Brown

the event chair and an operator at Northern Blizzard expects the full impact will be know well before curling gets underway from Feb. 26 to March 1. “I don’t really know yet,� said Brown when

asked about it on Jan. 8 when oil dipped below $49 a barrel. “We’ve got our second meeting coming up in two weeks. We’ll have a pretty good idea of who’ve we got for teams and sponsorships.

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“I think it should be alright. It would be nice to have ‘20 some’ again.� Brown said parts of his company in the Unity area are busy, notably their waterflood field, while other segments are slow as oil prices fell for the seventh week in a row. Attending the bonspiel he advised all oil company employees is “a nice way to get away and take your mind off everything else.� The stressor for Grant Huber’s team is not oil prices, but how to stay alive as the defending A-Event champs with a target on their backs that they’ve attached themselves. “We’re putting a bounty on our backs. It won’t take much to get rid of us,� joked Huber who senses his team’s early fate at the Unity curling rink. “If anyone does beat him, I’m sure they’ll let him know,� chimed Brown. Last year, was the

D&D OILFIELD RENTALS

Sweeping is hard work. These two curlers took a break ÄšĆľĆŒĹ?ĹśĹ? ŽŜ Ĺ?Ä?Äž Ä‚Ä?Ć&#x;ŽŜ Ä‚Ćš ƚŚĞ ĎŽĎŹĎ­ĎŻ hĹśĹ?ƚLJ KĹ?ĹŻ WÄžĆŒĆ?ŽŜĆ? ŽŜĆ?ƉĹ?ÄžĹŻÍ˜ dĹšĹ?Ć? Ç‡ÄžÄ‚ĆŒÍ›Ć? ĞǀĞŜƚ Ĺ?Ć? ĞdžƉĞÄ?ƚĞĚ ƚŽ ÄšĆŒÄ‚Ç ĹľĹ˝ĆŒÄž ƚŚĂŜ ĎŽĎŹ ƚĞĂžĆ? Ä?ƾƚ ĹŻĹ˝Ç Ĺ˝Ĺ?ĹŻ Ć‰ĆŒĹ?Ä?ÄžĆ? Ä?ŽƾůÄš ĆŒÄ‚Ĺ?Ć?Äž Ĺ˝ĆŒ ĹŻĹ˝Ç ÄžĆŒ ƚŚĂƚ ĆšĆľĆŒŜŽƾĆšÍ˜ dŚĞ ĞǀĞŜƚ Ç Ĺ?ĹŻĹŻ Ä?Äž ƉůĂLJĞĚ &ÄžÄ?͘ ώϲ ƚŽ DÄ‚ĆŒÄ?Ĺš Ď­Í˜ File photo

first time in 13 tries that Huber skipped a team to glory when everything clicked. “I think we just all curled as a unit. As a team we curled pretty good, so that helped. It

was lucky 13,� he explained with faint hopes of a repeat this year. “We’re going out there to have fun – that’s the main thing. We’ll see what happens. f Page B27

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PIPELINE NEWS February 2015

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TV. I think we’ll have a couple of beer fridges to raffle off,” said Brown. This will be Brown’s first full year as bonspiel chair and he has been curling once a week to hone his game and erase the memory of his team’s performance in 2014. “We didn’t win a single game,” he said noting he was too busy as the chair. “We weren’t that good either,” he admitted. This time around, he’ll be playing third with the same group of guys he played with a couple of years ago from Southern Pacific Resource Ltd. when they won the B-Event title. “So hopefully we can find some magic again,” said Brown.

POWDER COATING Curlers will once again pour into the Unity Curling Club inside the community centre for the 14th annual Oil Persons Bonspiel Feb. 26 to March 1. File photo

e Page B26 “We’re just happy to be able to participate. We’re getting old. I’m 52 this year.” Huber, who owns Huber Machining, also offered his take on the possible effect of low oil prices on the turnout of companies knowing there were 22 teams registered last year during busy boom times. “We’re hoping that may have a better turnout, but who knows, it’s hard to say. Maybe then they’ll be watching their dollars then too,” he hedged. He said the buzz in Unity on the impact of oil on activities levels is that it’s too early to tell in the second week of January. “Everyone’s kind of hanging in there waiting to see what the first quarter does. Into the second quarter it will tell the tale of what’s happening,” he said “I know some of the companies that have hedged in at better prices – they’re still busy.” Huber reported business is steady at his shop with all types of jobs. “It’s been steady. It comes and goes. It’s everything here. There a lot of service rigs in the area so I do some work for them,” he said. “There’s some welders around that do lots of oilfield welding and I do work for them - pipeline guys – they works for Plains – people like that.” He added there is also a strong agriculture industry in the area that also supports the community and the bonspiel with prizes, donations and sponsorships. This year’s major oilfield sponsor is Tervita backed by various platinum, gold, silver and bronze sponsors from all sectors of the local economy. The $280 team registration fee includes a minimum of four games, entry to the banquet and sponsored breakfast and lunch and a free cab ride home if needed. Players who show up will discover their money has been well spent on improvements made to the Unity Curling Club during the off season. “At the beginning of the season, we sanded the rocks so they curl quite a bit more and we redid the bathrooms,” said Huber. “We gave them a makeover so they really turned out well.” The deadline to register is Feb. 15 to have a shot at winning some of the curling and banquet prizes that always pour in regardless of the price of oil. “We’ll have a good selection to choose from this year. We’ll be putting for a

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PIPELINE NEWS February 2015 dŽž tŚĂůĞŜ͕ Ć‰ĆŒÄžĆ?Ĺ?ĚĞŜƚ ŽĨ Ä‚ĹŹÄžĆŒ ,ĆľĹ?ŚĞĆ? Ä?Ä‚Ć?ĞĚ Ĺ?Ĺś Ä‚ĹŻĹ?Ä‚ĆŒÇ‡ ŽĸÄ?Ĺ?ĂƚĞĚ Ä‚Ćš ƚŚĞ Ĺ?ĆŒÄ‚ĹśÄš ŽƉĞŜĹ?ĹśĹ? ŽĨ ƚŚĞ Ä?ŽžĆ‰Ä‚ŜLJ͛Ć? >ůŽLJĚžĹ?ĹśĆ?ĆšÄžĆŒ Ć‰Ĺ˝Ç ÄžĆŒ Ä?ÄžĹśĆšĆŒÄž ŽŜ ^ÄžĆ‰ĆšÍ˜ ĎŽĎŹĎ­Ď°Í˜ dŚĞ Ä?ŽžĆ‰Ä‚ŜLJ Ĺ?Ć? Ä?ÄžĹ?ĹśĹ? Ä‚Ä?Ć‹ĆľĹ?ĆŒÄžÄš Ĺ?Ĺś ĎŽĎŹĎ­Ďą Ä?LJ ,Ä‚ĹŻĹ?Ä?ĆľĆŒĆšŽŜ Ĺ˝Í˜ Ç Ĺ?ƚŚ ůĂLJŽčĆ? Ä‚ŜŜŽƾŜÄ?ĞĚ Ä?LJ Ä?ŽƚŚ Ä?ŽžĆ‰Ä‚ĹśĹ?ÄžĆ? Ç Ĺ˝ĆŒĹŻÄšÇ Ĺ?ĚĞ ŽŜ :Ä‚ĹśÍ˜ ĎŽĎŹÍ˜ File photo

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Layoff bug spreads to Baker Hughes

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Calgary –It’s pink slip time for oilfield service provider Baker Hughes Inc. which is cutting 7,000 jobs worldwide due to a sharp decline in crude oil prices. The company to be acquired by Halliburton Co. later in 2015 for approximately $35 billion may also close some

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facilities Baker Hughes reported on Jan. 20 that most of the job cuts will come in the current first quarter of 2015. The company won’t say how many workers Baker Hughes employs in Canada or what number will be affected by the cuts. Baker Hughes employed 61,100 employees worldwide as of Sept. 30, 2014. The company opened its new power centre in Lloydminster on Sept. 18 just weeks ahead of the announced takeover by Haliburton. Halliburton announced in December that it would cut 1,000 workers or about 1 per cent of its 80,000 employees worldwide. A Halliburton spokesperson reported in November that the company employed 1,800 people in Canada. These cuts follow on the heels of news just days earlier that industry leader Schlumberger is cutting 9000 jobs or eight per cent of its global workforce that numbers about 123,000. The company didn’t say how many jobs in Canada would be affected either. Schlumberger

employed over 3,700 employees in Canada as of last March according to Industry Canada. Suncor Energy earlier announced plans to cut 1,000 workers from its Canadian oilsands projects. Baker Hughes posted record revenue of $6.6 billion for the fourth quarter ending Dec. 31, 2014. Meanwhile, Halliburton reported its fourth-quarter revenue rose 14.8 per cent to nearly 8.8 billion from $7.6 billion from the fourth quarter of 2014. Halliburton and Baker Hughes generate about half of their revenue from North America where the oil slowdown is expected to have more impact on operations than the rest of the world. Baker Hughes expects to incur a onetime severance charge of $160 million to $185 million US in the first quarter when the bulk of the layoffs will take place. Halliburton reported that it took a $129 million restructuring charge in the fourth quarter to lessen the impact of a reduction of activity expected in 2015.

PIPELINE NEWS February 2015

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Wainwright spiel to take place Jan.30 to Feb.1 Wainwright – The annual Wainwright and District Oilmen’s Bonspiel will take place from Jan. 30 to Feb. 1. It will be the 37thannual version of the bonspiel. It’s also safe to speculate event chair Mitch Wahlberg’s Caradan Chemicals team is not likely to be lead story in our next edition when the results are known, based on what happened a year ago. “We didn’t even win a game,� said Wahlberg in advance of the tournament to be held at the Wainwright Curling Club – with his fingers crossed. “Hopefully, I can get a set of ringers to come on my team with me this year or something.�

Our Wainwright reporting crew will break the news of the actual outcome in the March edition. Prior to the event Wahlberg told Pipeline News he was confident his committee would draw at least 20 teams. Last year, a hockey tournament held during the bonspiel robbed four teams of curlers so that wasn’t going to happen again on Wahlberg’s watch in 2015. It was ironic since the event moved from its previous slot in November to late January a few years ago as families were too busy with hockey before Christmas and other sports that their kids played. “Hopefully we can

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get up to 20. There are no conflicting events this year. We’re expecting better numbers,� said Wahlberg on Jan. 12. His committee allows teams to register right up to a few days before the action takes place. “We take as many teams as we can get. The more the merrier,� he said adding it could be more if the low of price of oil idles workers. “We were talking about that in our meeting. You can go either way,� said Wahlberg. “Either everybody’s going to be thinking that they have to work as much as possible before it shuts down or there might be lots of guys with some free time.� The bonspiel could have been marketed as an escape from reality for oilfield workers in

Last year Mitch Wahlberg’s claim to fame as the event chair was being the guy on the right side of this photo who presented the A-Event champs from the Ron’s Vac crew of Ty Murray, Wade Grunow, Mike Smith, and Steve Smith with a plaque. This year we all ŚĂǀĞ ƚŽ Ç Ä‚Ĺ?Ćš ƾŜĆ&#x;ĹŻ ƚŚĞ ŜĞdžƚ WĹ?ƉĞůĹ?ŜĞ EÄžÇ Ć? ƚŽ ĹŻÄžÄ‚ĆŒĹś Ç ĹšĹ˝ Ç Ĺ˝Ĺś Ç ĹšÄ‚Ćš Ä‚Ć? ƚŚĞ ĞǀĞŜƚ ĞŜĚĞĚ &ÄžÄ?͘ Ď­ Ç ĹšÄžĹś ƚŚĹ?Ć? ĞĚĹ?Ć&#x;ŽŜ Ç ÄžĹśĆš ŽŜůĹ?ĹśÄžÍ˜ File photo

Wainwright as prices dive to lows not seen since the recession of 2008 and 09. “People are just concerned,� said Wahlberg in his region. “They’re hoping it comes up a little bit. Everyone’s liking the low gas prices, but at the same time they’re worried about job security.� Wahlberg is a technical sales rep for Caradan that sells production treating chemicals from light oil

to heavy oil. He sells a lot of corrosion and scale inhibitors and de-waxing chemicals in the area that has been busy with oilfield activity up until the last two months. He recalls in the latter part 2014 “seeing more drilling rigs around than I’ve seen in a few years around the local Wainwright area.� Wahlberg noted there have also been a lot of new oilfield related businesses pop up in the

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past year. What doesn’t change he said is strong oilfield support for the bonspiel with sponsorships and prizes. “We always get lot of support from the surrounding oil companies and stuff. Every year we get good prizes. It’s never a problem with that,� said Wahlberg. The event includes a banquet and dance and a silent auction of donated items. The top raffle prize is usually a TV or a tablet – something electronic according to Wahlberg. “It seems to go over the best. We used to do a trip, but there’s not too many travel agents to do that anymore because everyone just books online,� he said. Wahlberg also had nothing but praise for his committee members and those who have kept the bonspiel alive and fresh over 37 editions. “It’s an oilfield town and everybody’s supporting us. That’s the biggest thing,� he reasoned.

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PIPELINE NEWS February 2015

CAPP urges NB to restart fracs Calgary – The Canadian Association of Petroleum Producers is lobbying the New Brunswick government to hold off its proposed moratorium on hydraulic fracturing and to work with industry and communities to keep the door open for future natural gas development in the province. “The natural gas industry shares Premier Gallant’s values and commitment for the safe, responsible and sustainable development of New Brunswick’s natural resources,� said CAPP president Tim McMillan on Dec. 18. McMillan, former minister responsible for Energy and Resources for Saskatchewan, left politics last year to head up CAPP. McMillan said industry believes it can work with the New Brunswick government to achieve the province’s five conditions and legislation is therefore unnecessary.

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“New Brunswickers have worked hard and invested in their province to develop this industry with the trusted oversight of the province to ensure the health and safety of communities,� McMillan said. “But if the government wants to grow the economy, create jobs and encourage investment, it is now at risk of doing the opposite through legislation.� McMillan said Canada is recognized as a leader in developing natural gas from shale. Hydraulic fracturing has been used safely for more than 60 years in Western Canada, according to regulators in British Columbia, Alberta and Saskatchewan. He said this “exemplary track record� is the result of comprehensive government regulations and industry operating practices designed to ensure public safety and the protection of the environment. “We encourage the government of New Brunswick to learn from experiences in other jurisdictions

HYDROVAC OPERATORS

Due to an increased work volume

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currently requires Technicians at their Estevan location. Journeyman technician will be given preference but willing to train the right candidate.

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Crew curtails new drilling in Lloyd area Calgary – Crew Energy plans to maintain its recompletion and workover program in the Lloydminster area in 2015, but will defer new drilling until commodity prices recover. In fact, Crew has shut-in wells producing about 600 barrels per day near Lloydminster. In total, the company has shut-in about 1,000 barrels of oil equivalent per day of heavy oil and natural gas production announced on Jan. 6. The company has

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that are benefitting from hydraulic fracturing and help create at home the same economic opportunities natural gas development has created across Canada,� McMillan said. “A moratorium will deprive New Brunswick of secure, reliable and affordable domestic natural gas at a time when demand for this resource is growing and offshore natural gas supplies are projected to decline. “This means New Brunswick may have to import natural gas from jurisdictions that are benefitting from hydraulic fracturing.�

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Life takes energy At Enbridge, one of Canada’s top 100 employers, we’re extremely proud of the work we do. We safely and reliably transport oil and gas through our pipelines, deliver natural gas to over two million customers and generate renewable energy, including solar, wind and geothermal. In all our work, we’re guided by our core values of integrity, safety and respect. We are looking to add individuals who share these same values for the below roles:

Mechanical Technician- Loreburn (job # 25541) Electrical Technicians – Kerrobert and Loreburn (job# 25215 & 26083) Measurement Technician- Estevan (job# 26075) $ FRPSUHKHQVLYH UHORFDWLRQ SURJUDP PD\ EH RIIHUHG IRU TXDOLÀHG candidates. For detailed job descriptions and info on how to apply for these- and all of our many opportunities, visit our website jobs.enbridge.com. Contact Christy at 780-371-5045 with inquiries.

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also hedged 39 per cent of its natural gas and 27 per cent of its oil for 2015 “to maintain financial strength during this period of volatility.â€? The news came with the release of Crew’s 2015 capital budget of up to $185 million that will target growth of their core Montney liquids-rich gas play in northeastern British Columbia. “This capital budget is designed to generate growth from our highquality asset base, retain our financial flexibility, and target a 13 per cent year-over-year increase in our fourth quarter average production volumes,â€? said the company on Jan 6. Crew expects to produce an average of 20,000 to 22,000 boepd in 2015 with a fourth quarter output of between 24,000 to 25,000 boepd. During the first half of 2015, Crew plans to complete the second 60 million cubic feet per day gas processing facility at West Septimus in the Montney area. That will double Crew’s natural gas and liquids handling capacity in the area, and enable them to complete 12 wells which are planned to be tied-in to this facility during the second half of the year. Plans also calls for the drilling of eight new well pads at Septimus in 2015. At its light oil play at Tower B.C. Crew plans to drill two new wells and complete two wells.

PIPELINE NEWS February 2015

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PIPELINE NEWS February 2015

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Pipeline News

SECTION C February 2015

Pipeline News was 2 sections this month. Stay tuned for next month focus:

Security

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