SPRING 2013
B.C. SWITCHES BACK TO THE PST
SERVICES
PSAC’S MISSION FOR MISSING CHILDREN STARS & SPURS GALA RAISES RECORD FUNDS
SETTING BEST PRACTICES AS STANDARDS Industry recommended practices ensure drilling and completions operations are performed in a safe and responsible manner
PM#40020055
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CONTENTS
SPRING 2013
Departments 4 7
MESSAGE FROM THE PRESIDENT IN THE FIELD News, notes and events from the industry
DRILLING ACTIVITY FORECAST UPDATE
9
A slight uptick expected in the Western Canadian Sedimentary Basin
21
PSAC IN ACTION
11
COVER
The impact B.C.’s reversal back to the PST will have on the services sector
THAT’S FRACKING RIGHT Self-regulation helps the industry keep standards up to date as new technology comes along
18
25
MEMBER PROFILE Sanjel Corp. has a new trick up its sleeve
26
A LOOK AT LEADERSHIP
22
A HELPING HAND PSAC forms a partnership to help find missing children
19
22
BUSINESS MATTERS
Features 11
Advocacy initiatives from PSAC spread far and wide
STARS & SPURS
Up close and personal with PSAC board members Donna Garbutt and Lloyd Stewart
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The 19th annual fundraising gala has a record year
25
WWW.PSAC.CA
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MESSAGE FROM THE PRESIDENT
Telling Our Story at Home
I
NNOVATION AND TECHNOLOGY ARE THE
cornerstones of continuous improvement in the operations of Canada’s oil and gas industry, and have positioned Canada’s petroleum services sector as a global leader. PSAC member companies bring home-grown technologies and unparalleled expertise wherever they operate in the world. Perhaps it is good Canadian manners that we are not overly boastful about the dedicated efforts made daily towards responsible and sustainable development of Canada’s vast deposits of oil and natural gas. What’s clear is that a bridge needs to be built between our industry and the public if we are to strengthen our ability to operate, and to help build a greater level of pride here at home about how we do what we do. Mark Salkeld, President & CEO We need to further engage in meaningful conversations with the public to demystify the operations of Canada’s oil and gas industry. More specifically, we need to do a better job communicating the industry’s world-class regulatory environment which is the most stringent in the world, and also do a better job communicating the incredible progress we have made in improving our performance over our short history. Enhancing public outreach is not new for PSAC. In 2010, PSAC launched the Community Partners program. The program was developed to address concerns related to oil and gas activity – such as dust, garbage, noise, driving safety and traffic – that were revealed in a PSAC survey of community members and PSAC member company employees across Western Canada. PSAC developed Community Partners as the industry-wide “in the field” courtesy initiative, which is supported by Canada’s seven major oil and gas industry trade associations. PSAC’s peer associations have also developed programs dedicated to disseminating factual information about Canada’s oil and gas industry. However, debate persists about our performance. A lot of the debate today focuses on technologies like hydraulic fracturing, which has been in use for more than 60 years. The technology development in our industry is fascinating, but can be difficult to understand especially for the general public who do not necessarily see a direct link between our activities and themselves. Our operations are highly complex and technical, so explaining what we do and how we do it poses an interesting challenge – how do we communicate fully the very technical and complex nature of what we do to make it understandable without simplifying it to a point that people think we are not being open enough? Our industry needs to to find that balance to increase the transparency of our operations so that people have a better view of how the interplay between regulation and technology mitigates the risk associated with what we do. To do this, PSAC will hold Canada’s Energy Technology Blueprint Summit on March 26, 2013 in Calgary. This program is designed to showcase the technologies, processes and regulations involved across the upstream oil and gas value chain. Expert speakers and an exhibition will explain how these technologies drive operational, environmental and safety performance in more layman terms in an attempt to make the complexities of what we do easier to understand. Learn more about this event on page 7. PSAC has also launched the Working Energy Commitment which is a statement of principles that has been adopted by nine of Canada’s leading pumping services companies, which are those companies that do hydraulic fracturing. The statement of principles will set the framework for a series of productive and meaningful conversations with local community leaders about a code of conduct for hydraulic fracturing. PSAC’s member employees are many of the residents in the communities impacted by our operations. Our collective voice needs to be a larger part of the dialogue around hydraulic fracturing. After all, our members are so many of the on-the-ground familiar faces whose work is so paramount to the safety of our industry’s operations. I look forward to this year of further advances in technology and innovation in our industry, and to improving the understanding of Canada’s oil and gas sector, where it matters most, at home.
Mark Salkeld President & CEO
4 SPRING 2013
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PETROLEUM SERVICES NEWS
2/19/13 4:50:12 PM
SERVICES SPRING 2013 VOL 12 • No.4 The Petroleum Services Association of Canada is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. PSAC represents a diverse range of nearly 250 member companies, employing more than 65,000 people and contracting almost exclusively to oil and gas exploration and production companies. PETROLEUM SERVICES ASSOCIATION OF CANADA 1150 800 6TH AVENUE SW CALGARY, AB T2P 3G3 TEL: 403.264.4195 FAX: 403.263.7174 PRESIDENT AND CEO: MARK SALKELD VICE PRESIDENT, COMMUNICATIONS: KELLY MORRISON COMMUNICATIONS COORDINATOR: LINDA ALDRIDGE
PETROLEUM SERVICES NEWS IS PUBLISHED FOR PSAC BY VENTURE PUBLISHING INC. 10259-105 STREET, EDMONTON, AB T5J 1E3 TEL: 780.990.0839 FAX: 780.425.4921 TOLL-FREE: 1.866.227.4276 CIRCULATION@VENTUREPUBLISHING.CA PUBLISHER: RUTH KELLY ASSOCIATE PUBLISHER: JOYCE BYRNE MANAGING EDITOR: STEVE MACLEOD CONTRIBUTING WRITERS: MICHELLE LINDSTROM, JORDAN WILKINS ART DIRECTOR: CHARLES BURKE ASSOCIATE ART DIRECTOR: ANDREA DEBOER ASSISTANT ART DIRECTOR: COLIN SPENCE PRODUCTION MANAGER: BETTY-LOU SMITH PRODUCTION TECHNICIAN: BRENT FELZIEN DISTRIBUTION: JENNIFER KING ACCOUNT EXECUTIVES: ELLEN FRASER, DAVID FRAZIER, DENNIS McCORMACK
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WWW.PSAC.CA
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Calgary U Edmonton U fort mCmurray U winnipEg
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It’s a done deal Mergers & Acquisitions Winning the deal is easier when you hold all the cards. At KPMG, our network of mergers and acquisitions professionals possess the experience and forward thinking necessary to help you meet the time constraints of the deal.
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kpmg.ca
© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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in the field
News, events and activities in the industry
PSAC 2013 Scholarships Now Open The Petroleum Services Association of Canada is now accepting online applications for its 2013 Education Fund scholarships. The awards include five $1,000 PSAC Regular Member scholarships and one PSAC Roger Soucy Legacy Scholarship Funded by KPMG in the amount of $2,500. The scholarships are open to PSAC regular member employees and their children. The application deadline is April 19. To apply, visit www.psac.ca/education.
COMING EVENTS FracFocus: On Public Disclosure of Chemicals Used in Hydraulic Fracturing March 25, 2013 TELUS Convention Centre Calgary, Alberta Canada’s Energy Technology Blueprint Summit March 26, 2013 TELUS Convention Centre Calgary, Alberta PSAC Spring Conference April 16 & 17, 2013 Sheraton Red Deer Hotel Red Deer, Alberta
PSAC Launches an Innovative Program Examining Canada’s Energy Future In December 2012, PSAC hosted a full house for the first portion of a two-part series looking at the future role of Canada’s energy sector on the world stage with the launch of Canada’s Energy Technology Blueprint series. Expert panelists included Martin Chamberlain, assistant deputy minister for the Resource Development Policy Division of Alberta Energy; Soheil Asgarpour, president of the Petroleum Technology Alliance of Canada; and Dylan Jones, president and CEO of the Canada West Foundation. The session was moderated by Bruce Edgelow, vice-president of the Energy Group with ATB Corporate Financial Services. Part two of the series will be held on March 26 in Calgary and will examine the technologies, processes and regulations involved across the upstream oil and gas value chain. Expert speakers will demystify technologies used in the field and explain how these technologies drive operational, environmental and safety performance. An exhibition will also give delegates an up close look at the many innovations developed and deployed by the Canadian petroleum services sector. For more information and to register, visit www.psac.ca/events.
s mer su to st !!” C ir ere ome F h “W C
PSAC’s Drilling Activity Forecast Mid-Year Update April 25, 2013 The Westin Hotel Calgary, Alberta PSAC Education Fund Golf Classic July 18, 2013 Calgary Elks Lodge and Golf Club Calgary, Alberta For more information about PSAC events, visit www.psac.ca/events
New Members Regular Members Kayden Industries Inc. Lufkin Industries Canada Ltd. Millennium Stimulation Services Ltd. Oculus Transport Ltd. Resource Well Completion Technologies Inc. Versa-Line Services Inc. Associate Members Dixie Mat & Hardwood
WWW.PSAC.CA
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Positive Outlook for Oilpatch Activity PSAC REVISES ITS DRILLING FORECAST UPWARDS FOR 2013
T
HE FIRST UPDATE TO the Petroleum Services Association
of Canada (PSAC)’s 2013 Canadian Drilling Activity Forecast saw a slight increase in the number of wells drilled during 2013. PSAC added 75 wells to its forecast for an estimated 11,475 wells drilled (rig releases) across Canada for 2013. PSAC is basing its January 2013 update on average natural gas prices of CDN$2.95/GJ (AECO) and crude oil prices of US$90 per barrel (WTI). “Due to continued natural gas development in northeastern British Columbia we’ve adjusted our numbers to reflect that activity. While at the same time we are seeing increased activity in northern Alberta with exploratory wells around the oil sands in situ plays,” says Mark Salkeld, president and CEO of PSAC. “Alternatively, infrastructure bottlenecks in Manitoba, including restricted pipeline capacity, are creating back up and oversupply in the province.” PSAC’s mid-year update will be released at a luncheon on April 25. The Drilling Activity Forecast can be used with the PSAC Well Cost Study to effectively determine potential drilling and completion market sizes, as well as pricing and activity direction. For more information, contact PSAC at info@ psac.ca or 403.264.4195.
WWW.PSAC.CA
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Fracking Right
BY JORDAN WILKINS
SELF-REGULATION HELPS THE INDUSTRY KEEP STANDARDS UP TO DATE AS NEW TECHNOLOGY COMES ALONG
J
EFF SAPONJA HAS SEEN
first-hand the efficiency of self-regulating industry recommended practices (IRPs). Not only does the chief executive of TriAxon Oil Corp. rely heavily on advanced technology to develop light oil assets in Western Canada, he also helped develop two IRPs. Enform, the upstream oil and gas industry’s safety association, coordinates IRP development. Saponja served as co-chair of two committees tasked with developing IRPs. In 2011, he helped develop IRP 22, deal-
WWW.PSAC.CA
PSAC_Spring_2013_p10-15.indd 11
ing with underbalanced and managed pressure drilling operations using jointed pipe. The next year he helped create IRP 24, which deals with inter-wellbore communication during fracture stimulation. In an industry as complex as the oil and gas sector, it’s vital that companies follow best practices to ensure the safety of their employees and that environmental responsibilities are being met, while using the most efficient operating methods. Although government legislation still regulates the industry, by establishing these IRPs the oil and gas sector is able to keep up with evolving technologies that are integral to the industry’s growth and development. Implementing and updating government legislation can often be
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a lengthy process, whereas establishing new IRPs can often be relatively years, is a new step that is moving even further in the right direction. quick. They are also put together by industry experts. “Self-regulation puts the accountability where it needs to be and it’s The ability to keep up with evolving technology and ensuring procedures a very effective system,” he says. “But for the system to work the most are safe, environmentally friendly and done efficiently, has put Canada’s effectively there has to be a risk awareness aspect involved when creating petroleum companies in an the IRPs. What IRPs do best advantageous situation. Part of is make everyone aware of the reason local producers and the risks involved in a cerservices companies are held in tain situation. Once they are such high regard around the developed no one can ever world is because IRPs are cresay ‘I didn’t know.’ That puts ated by the people who know the accountability where you the industry best. want it to be.” – JEFF SAPONJA, CEO OF TRIAXON OIL CORP. “It makes sense to have the The first IRP dates back to experts, who are the people 1987. It was actually Alberta who are on the ground and actually doing the work, be the ones to develop Recommended Practice (ARP) 1 Critical Sour Well Drilling, created in the best practices,” Saponja says. “Government officials, generally, are not response to a blowout that occurred near Lodgepole, Alberta, in 1982. experts in all of the fields of our industry, so for them to write the how-to The ARP was reviewed twice: once in 1993, with no changes being made, statement, doesn’t make as much sense as having the experts do it, in my and then again in 1999. The 1999 review committee decided the scope opinion.” of the industry had evolved to the point where ARP 1 was no longer IRPs are designed to establish best practices in emerging aspects of up-to-date with current methods, so amendments were made and ARP 1 operations, as well as meet and exceed existing regulatory requirements. became known as IRP 1. >> CONTINUED ON PAGE 16 This allows companies to comply with IRPs that are up-to-date and alleviate any discrepancies in regards to legislation. Saponja says that what makes IRPs successful is that the committee for every individual IRP hearing is comprised of experts from a cross-section of different sectors within the oil and gas industry. Currently, IRPs are developed when the industry’s Drilling and Completions Committee (DACC) is presented with an issue that either has become a concern or has seen substantial technological changes in recent years. The DACC will then look to the industry and decide whether or not an IRP committee should be formed. If the committee comes up with an IRP and votes to pass it, it then becomes sanctioned by the DACC. But, the sanctioning of an IRP is just the beginning of the process. Every IRP is part of a five-year review cycle, which ensures best practices are still in tune with the ever-evolving technology of the petroleum industry. IRP 24 had a little more attention on it than previous IRPs because it was formulated after a well blowout in central Alberta in 2011, Saponja says. It is defi ned as a risk-based IRP, which means it is structured around a hazard-management process that logs industry-known hazards related to inter-wellbore communication from hydraulic fracturing. The IRP document and supporting hazard register, offers a process and mechanism for operators to identify and document suitable controls for scenarios at the planning stages to be carried through at execution. “Our main goal for that IRP was to identify all the areas of risk and look at the well-integrity aspect involved with fracking,” Saponja says. “It was designed to avoid these issues of uncontrolled releases. I think everyone involved did an outstanding job in generating, by far, the best IRP for selfregulation that can be generated. I’m very pleased with the outcome and I strongly believe that having this will reduce the risk in our industry.” In general, Saponja believes IRPs are the best method for self-regulation, but the recent shift toward risk awareness-based IRPs in the last couple of
“NOTHING WE DO IS PERFECT AND EVERYTHING WE DO INVOLVES SOME FORM OF RISK. THIS SYSTEM IS ALL ABOUT CONTINUALLY LOOKING TO REDUCE THAT RISK, AND REDUCE THE COST, WHILE AT THE SAME TIME INCREASING EFFICIENCY.”
WWW.PSAC.CA
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2/20/13 11:01:40 AM
PETROLEUM SERVICES ASSOCIATION OF CANADA
2013
Spring Conference DELEGATE NETWORKING RECEPTION AND DINNER
ENGAGE. EDUCATE. EXCEL.
Tuesday, April 16, 2013
Red Deer, Alberta
Featuring Keynote presentation “Explosion Man The Man Who Lived” by David Dyck
The PSAC Spring Conference is the only professional development conference offering practical solutions on transportation, human capital management and leadership development for frontline managers, operations and field staff working in Canada’s oilpatch. With over 20 seminars to choose from this conference offers information and practical advice for everyone from managers to field staff.
Hear David recount the powerful story of how he survived a violent explosion that occurred while he was performing a routine maintenance procedure while working for an oilfield service company. He attributes the fact he was wearing personal protective equipment (PPE) as the reason he is here today to share his story. His incredible story demonstrates the importance of wearing the appropriate PPE. David’s wife Jamie joins in his presentation to illustrate that the incident didn’t just happen to David. Here’s what delegates said about the 2012 PSAC Spring Conference: “One of the best conferences I have attended, good topics and speakers.” “First time I attended, thought it was a great conference!” “Excellent speakers and a good mix of high level information and basic information.” “I had a great time and the information was very valuable…returning home with renewed attitude, refreshed ideas and change.”
April 16 - April 17, 2013
EARLY BIRD RATES ARE AVAILABLE! REGISTER TODAY! Register by March 15, 2013 and save $100 on fees. To register or for more information, contact PSAC: E: info@psac.ca T: 403.264.4195 www.psac.ca/events
THANKS TO OUR SPONSORS
Major Sponsors
To register visit www.psac.ca/events PSAC_Spring_2013_p10-17.indd 14
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PETROLEUM SERVICES ASSOCIATION OF CANADA
2013
Spring Conference WHO SHOULD ATTEND? Petroleum Services Companies Benefits Administrator Derrickhands Dispatchers Drillers Driver Trainers Field Technicians and Engineers Fleet Managers Floorhands General Managers Head Mechanics HSE Supervisors
Human Resource Generalists Labourers Lead Hands Operations Managers Order Desk Clerk Parts Person Payroll Administrators Plant Managers Procurement Managers Production Superintendents Project Managers
Procurement Pesonnel QHSE Managers and Specialists Quality Control Managers Recruiters Scheduler/Production Planners Shippers/Receivers Shop Foremen Store Managers
Supply Chain Managers Swamper Training Coordinator Truck Drivers Training Managers Warehouse Managers Well Testers Winch Tractor Operators
Senior Management Human Resource Practitioners
A SELECTION OF 2013 SPRING CONFERENCE SEMINARS • • • • • •
Boundaries of Social Media Advancing Aboriginal Inclusion in the Workplace Protect Your Fleet: Reducing Driver and Driving Hazards Tailgates to the Boardroom: Manage Meetings Effectively Successful Interviews: Get it Right the First Time Taking the Leap? Supervisory Boot Camp
• Accelerate Your Workforce: Career Path Development • Coach or Mentor: What’s the Difference? • Merger Ahead: Blending Corporate Cultures
For a complete listing and full descriptions of workshops and seminars visit www.psac.ca/events
Certified by the Board of Registered Safety Professionals (BCRSP)
Conference Sponsors
To register visit www.psac.ca/events PSAC_Spring_2013_p10-17.indd 15
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Mike Read, vice-president of operations for Ramshorn Canada Investments, was chair of the committee that created the first IRP. He says that as successful as ARP 1 was for the industry, changes needed to be made in order to keep up with industry standards. “I think the fact that there has never been a blowout on any well that followed ARP 1 speaks volumes,” Read says. “That being said, when we reviewed it we went through every chapter line-by-line, and decided what needed to be updated. As the technology changes, so does
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the expectations of the public and the regulators, so we revised it as we saw fit and sent it out to the industry before it was sanctioned by DACC.” Even though Read hasn’t directly participated in an IRP since 2003, he has followed recent decisions and says that they’ve evolved even further in the right direction in the last 10 years. He agrees with Saponja that a risk-based practice is better for the industry than the previous specification-based IRPs. Duane Mather spent nearly 40 years in the petroleum industry. He retired after serving most recently as the president and CEO of Nabors Drilling and remains involved in the industry as the current chairman of Enform. Over the years, Mather has witnessed how quickly the industry changes and recognizes the importance of having an efficient self-regulatory system, as opposed to just the government legislation. “Government regulation, while written with
good intent, can often miss where the industry is in regards to technology,” Mather says. “There is no industry that is full of more innovation than ours. And it comes from every facet, whether it’s the professional engineers or out in the field. The faster this evolution gets into our guidance documents, the better it is for everyone. It helps with efficacy, cost and safety. Having industry control regulation allows any change to be dealt with effectively.” Drawing on his experience from helping to create two IRPs, Saponja agrees that dealing with changes in the industry is one of the most important facets of self-regulation and he says that continuing to develop a risk awarenessrelated system will help ensure operations are performed as safely as possible. “Nothing we do is perfect and everything we do involves some form of risk,” Saponja says. “This system is all about continually looking to reduce that risk, and reduce the cost, while at the same time increasing efficiency.”
PETROLEUM SERVICES NEWS
2/19/13 4:48:27 PM
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A Helping
Hand
PSAC MAKES COMMITMENT TO SAFER CANADIAN COMMUNITIES
T
HE PETROLEUM SERVICES ASSOCIATION of Canada
has joined forces with the Missing Children Society of Canada (MCSC) to launch CodeSearch, a program designed to reunite families with their children faster than ever before. CodeSearch is a corporate volunteer program, which combines technology and a unique partnership between non-profit, corporations, industry and law enforcement to unite a variety of resources together in one cause – finding missing children. “PSAC and its members are committed to serving the communities where we operate. We want to engage our members and their employees in a cause that is important to all Canadians, and to be able to access their resources and help find children when they go missing,” says Mark Salkeld, president and CEO of PSAC. “Our member companies and their employees are very much the front line of our industry workforce, and can provide the
extra eyes and ears that are so critical when a child goes missing.” The composition of PSAC’s membership with a widespread presence across Western Canada in urban and rural communities is a perfect fit for CodeSearch. With nearly 250 members representing nearly 65,000 employees, PSAC member companies will be a valuable resource in helping to find missing children because so many employees are residents of outlying communities that may not have the breadth of resources to mobilize when a child goes missing. “CodeSearch is changing the face of Corporate Volunteering and PSAC is leading the charge,” explains Amanda Pick, executive director of MCSC. “When we use the skills and vast resources Canada’s petroleum services sector already possesses to bring missing children home, we will make a difference in our communities. We are truly appreciative of PSAC’s commitment to making Canada safer.”
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PETROLEUM SERVICES NEWS
2/14/13 3:51:40 PM
Stars &
Spurs GALA REACHES NEW HEIGHTS
T
HE 19TH ANNUAL STARS & SPURS GALA presented
by the Petroleum Services Association of Canada (PSAC) brought the association’s total amount raised for the Shock Trauma Air Rescue Society (STARS) to more $9 million with a stunning one-night total of over $1.1 million. PSAC credits all sectors of the oil and gas industry for working together to make the gala such a long-term success. “This year’s turnout and the ongoing support speak volumes about the value our entire industry places on STARS and the critical work they do,” says Mark Salkeld, president and CEO of PSAC. “Our event helps ensure that STARS’ emergency medical response services remain available to oil patch workers, their families and communities across Western Canada.” More than 1,100 guests attended the gala held on January 19, 2013 at the BMO Centre at Stampede Park in Calgary. The event included a moving speech from STARS Very Important Patient for 2013, Michelle Salt. STARS airlifted Salt in June 2011 to the Foothills Medical Centre in Calgary immediately following a motorcycle accident. Doctors later told her that had she arrived just one minute later her outcome would have been different. “I am grateful every day to STARS for saving my life,” says Salt. The evening included a toast to the gala’s 2013 Honourary Patron, Ken King. In June 2012, King made STARS history by becoming STARS’ first paramedic to fly 1,000 missions. King currently serves as vice-president of patient access, safety and quality management with STARS, but also continues to take shifts as a flight paramedic. “I enjoy the opportunity to make a difference. It’s thrill-of-a-lifetime work,” King says. Gala guests enjoyed dinner, a performance by Canadian Country Music Award winning musician Gord Bamford, raffles, auctions, dancing and the chance to network, all with the help of guest emcee Dave Rutherford of QR77. “The support we receive from PSAC is tremendous,” says Andrea Robertson, president and CEO of STARS. “This event always exceeds expectations. The results from this year are astonishing and STARS is forever grateful for everything PSAC has done to help critically ill and injured patients.”
2
3
The 2013 gala raised a record-breaking $1.1 million for STARS. From left to right, Doug Ramsay, director with STARS; Andrea Robertson, president and CEO of STARS; and Mark Salkeld, president and CEO of PSAC.
2 Canadian Country Music Award winner Gord Bamford performs at the gala. 3 From left to right, 2013 STARS & Spurs Honourary Patron Ken King, Very Important Patient Michelle Salt and STARS pilot Fraser Gamble. 4 Donors were honoured at the Gala’s VIP reception, from left to right, Ray Mills, Kudu Industries Inc.; Neil Harrop, Baker Hughes Canada Company; Andrea Robertson, president and CEO of STARS; Mark Salkeld, president and CEO of PSAC; Scott Hauck, National Oilwell Varco – Distribution Services; John Gorman, 2013 Gala Chairman; Deborah Close, Tervita Corporation; David Browne, Trican Well Service Ltd.; and Jomo Green, Weatherford Canada Partnership.
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Petroleum services news
2/14/13 3:55:13 PM
PSAC IN ACTION THE PETROLEUM SERVICES ASSOCIATION OF CANADA (PSAC) CONTINUES TO KEEP THE SERVICES SECTOR FRONT AND CENTRE THROUGH ADVOCACY AND OUTREACH PSAC PROVIDES TESTIMONY TO THE HOUSE OF COMMONS Late in 2012, PSAC and representatives from PSAC regular member companies Cathedral Energy Services Ltd. and Calfrac Well Services Ltd., provided testimony to Natural Resources Canada on the importance of technology and innovation to the petroleum services sector. PSAC WORKS WITH ALBERTA GOVERNMENT ON KEY ISSUES FACING THE SERVICES SECTOR PSAC continues its dialogue with representatives from Alberta Energy, including Deputy Minister Jim Ellis, to discuss issues that are top of mind for PSAC members. Some of the issues covered include hydraulic fracturing, labour issues, energy literacy and the New West Partnership. Conversations also included issues related to lease sizes. PSAC REPRESENTS MEMBERS IN SASKATCHEWAN PSAC BUILDS RELATIONSHIPS IN SASKATCHEWAN PSAC held several meetings in the last quarter of 2012 with the Saskatchewan Ministry of the Economy to introduce PSAC and the work the petroleum services sector does in developing the supply chain for oil and gas, and explore opportunities for collaboration.
BRITISH COLUMBIA As a part of the B.C. Resources Natural Gas Workforce Strategy Group, PSAC recently met to review research looking into natural gas labour demand requirements and supply opportunities. This data will be used to develop a multi-pronged strategy for attracting, retaining and training workers for the demands associated with natural gas development in the province over the next 10 years. CANADA PSAC has been working with Human Resources and Skills Development Canada to address foreign worker issues related to National Occupation Classification (NOC) codes, which limit entry into Canada for workers who are skilled but do not possess education or trade credentials.
PSAC ATTENDS 2012 CANADIAN ENERGY SUMMIT In mid-November 2012, PSAC represented members and joined energy association colleagues, Canadian and U.S. government representatives in a roundtable discussion at the Energy Council of Canadaâ&#x20AC;&#x2122;s 2012 Canadian Energy Summit in Vancouver. The central question of the summit was: National Energy Strategy For Canada - What Should It Include? Various perspectives on the challenges and opportunities facing Canadaâ&#x20AC;&#x2122;s oil and gas industry were presented and discussed.
Two is stronger than one.
PSAC CONNECTS MEMBER COMPANIES AND ABORIGINAL LEADERS As Canadaâ&#x20AC;&#x2122;s First Nations represent an important future source of labour, PSAC recently organized meetings between regular member companies and two Saskatchewan Tribal Councils. The purpose of the meeting was to explain the array of service lines the companies offer, the various employment opportunities available within the petroleum services sector and the training that would be required for these positions. SASKATCHEWAN SEEKING PSAC MEMBER INPUT ON PST-13 BULLETIN REVISION PSAC has been reaching out to members with operations in Saskatchewan to assist the Government of Saskatchewan to write an informed revision of the provinceâ&#x20AC;&#x2122;s PST-13 Bulletin. PSAC CONTINUES TO WORK ON LABOUR ISSUES WITH PROVINCIAL AND FEDERAL GOVERNMENTS ALBERTA PSAC has continued its efforts to address worker issues with other energy associations and representatives from Alberta Enterprise and Advanced Education. Meetings have included Assistant Deputy Minister Maryann Everett; Percy Cummings, executive director of Immigration Policy and Programs; and Danielle Comeau, executive director of Strategic Marketing and Labour Attraction Branch. PSAC recently met with representatives from Alberta Education to discuss the redesign of the curriculum for Albertan students from kindergarten to Grade 12 to ensure education provides the necessary elements for student success in the world after school.
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BUSINESS MATTERS
The Three Rs (and One S) for Dealing with B.C.’s New Tax BRITISH COLUMBIA IS RETURNING TO THE PST AND SERVICE COMPANIES WILL NEED TO PREPARE IN ADVANCE FOR THE CHANGE BY STEVE MACLEOD
A
FTER A THREE YEAR ex-
periment, British Columbia is re-implementing its provincial sales tax on April 1 and the new tax regime will have a significant impact on oilfield services companies operating in the province. In July 2010, B.C. combined its PST with the federal goods and services tax to create a 12 per cent harmonized sales tax (HST). Under the single tax system, businesses would be able to recoup their portion of the HST through rebates. A Globe and Mail report in 2009 estimated the HST would reduce tax paid by businesses in the province by $1.9 billion each year and reduce administrative costs by $150 million. A public backlash soon developed over the PST consumer tax exemptions eliminated under the HST. In August 2011, 55 per cent of voters in a referendum were in favour of scrapping the HST. B.C. Finance Minister Kevin Falcon estimates that reinstating the dual tax regime will cost the province more than $3 billion. The provincial government is expected to put all of the exemptions from the old PST regime back in place when it finalizes the details of the new PST system in mid-February. “Under the old PST and under this new one, there’s going to be tax applied on businesses for a lot of their inputs. There are some exemptions in the oil and gas industry and manufacturing industries, but it doesn’t remove the tax completely,” says David Crawford, Calgary tax leader with Grant Thornton LLP. “If they properly charge for it, it’s going to be a new cost for the oil and gas producer. If they don’t get it right, as a service company it’s a risk for not having charged correctly.”
RENEGOTIATE CONTRACTS Contracts between service companies and producers during the past few years were likely
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written under the assumption that the HST was going to stick around for a while. Service companies should enter discussions with oil and gas companies to renegotiate contracts. “If there’s going to be tax applied on the contractor and their materials now, well their pricing is all wrong and they’re going to want to find a way to get out of it or adjust it,” Crawford says. “Rewriting contracts and having those discussions with the customer are paramount.” Companies will likely have to work collaboratively with clients to analyze the details of a contract and figure out what items will have the new tax applied to them, which items are exempt and which party is responsible for paying the tax. “You can probably just take the existing contract, adjust the pricing and make sure the PST clause gets inserted,” Crawford says. REFORMAT INVOICES While services companies should receive PST exemptions on large equipment – such as drilling rigs and truck-mounted service rigs – passenger vehicles and materials will likely have PST applied to them. By default, if a company purchases consumables and materials to perform work, it is that company’s responsibility to pay the PST. “If you’re going to engage in that sort of a contract, you need to specify in your contract with the oil and gas producer if you’re going to charge
PETROLEUM SERVICES NEWS
2/15/13 9:04:39 AM
COURSES FOR THE PETROLEUM INDUSTRY Spring, 2013
separately for these line items of consumables and materials,” Crawford says. “It has to state that it will be charged separately on the invoice or broken out on the invoice.” RETRAIN EMPLOYEES Even accounts payable and receivable employees who were around in the pre-HST days will likely need a refresher on PST rules. “They’re going to need processes in place to train people so they know when to and when not to apply the tax,” Crawford says. “The same with the accounts receivable billing staff, they need to know when to charge and when not to charge.” Crawford says. He says most companies’ accounting systems should be able to process invoices under the new system, but labour and administration costs under the PST system could be four to six times higher because it is more time intensive to navigate. SPEND MONEY Crawford knows that April 1 is a short timeframe in which companies can accelerate capital purchases, but if there is an opportunity to buy out a lease or spend capital on big ticket items, now is the time to do it. “If you have the money to purchase capital equipment, do it now,” he says. “If you do it later, it’s going to cost you seven per cent more for that capital equipment.”
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MEMBER PROFILE
Retrieving Innovation SOME FORETHOUGHT AND AN ACQUISITION ENABLE SANJEL TO OFFER CUSTOMERS THE INDUSTRY’S FIRST RETRIEVABLE BALL AND SEAT SYSTEM BY MICHELLE LINDSTROM
D
URING THE PAST DECADE, completing wells in
multiple stages has helped horizontal wells become economic when targeting difficult to access oil and gas formations. But Sanjel Corp., a pressure pumping and completions company, noticed a problem. After sending a series of balls of incrementally larger sizes downhole to isolate sections of the wellbore and focus the completion job, the balls weren’t always easy to bring back out of the well. Operators using these ball and sleeve systems were faced with two choices: drill and mill out the ball seats in the wellbore or leave the balls downhole, which would restrict flow and have potential long-term workover limitations. Sanjel’s solution was to acquire Suretech Completions Ltd. (formerly Sure Tech Tool Services Inc.) in December 2011, along with the small company’s SUREstack technology. “We are always on the lookout for, or working on, additional products that are good additions to our current suite of services,” says Ron Gusek, Sanjel’s vice-president of corporate engineering and technology. “When we looked at Suretech, Sanjel was a provider of pressure pumping services – frack coil tubing and cementing – and SUREstack gave us an opportunity to offer one more piece to a puzzle that we were already pretty heavily involved in.” SUREstack, according to Sanjel, is the first retrievable ball and seat system. The multi-stage completion system is deployed with coiled tubing or jointed pipe and leaves a full-diameter wellbore with repeatable access without any milling or drilling required, and no leftover debris. Sanjel ran the system on a few trial wells in early 2012 and began small-scale public sales soon after. That summer at the 2012 Global Petroleum Show, Sanjel launched the technology as a significant company offering. Gusek says more than 1,000 stages have been installed so far and the feedback since the show has been very positive. Sanjel also has a robust in-house “technology roadmap,” Gusek says. A list of potential and ongoing projects is continually evaluated to determine where the company’s priorities should lie. Within the engineering and technology department, Gusek leads an R&D team in Calgary with roughly 25 employees. The Calgary-based company has approximately 3,500 employees in total, who are spread throughout 30 global field districts. R&D teams like Gusek’s produce most of Sanjel’s own equipment in-house. Within six months, one team created a flexible cement blend with industry acceptable compressive strength. Another team
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“SANJEL WAS A PROVIDER OF PRESSURE PUMPING SERVICES – FRACK COIL TUBING AND CEMENTING – AND SURESTACK GAVE US AN OPPORTUNITY TO OFFER ONE MORE PIECE TO A PUZZLE” – RON GUSEK, SANJEL’S VICE-PRESIDENT OF CORPORATE ENGINEERING AND TECHNOLOGY
is already working on the next generation of SUREstack, which Gusek expects will be released later this year. Being a private company, Gusek says, encourages innovation at Sanjel more than being publicly-owned would because there isn’t the need to report to shareholders each quarter. “We’ve really grown over the last five to seven years to not only become a presence in North America, but also overseas,” Gusek says. “We have a whole resource of information and intellectual capital working together to take Sanjel to the next level, to be a significant presence on the global oilfields services market.”
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A LOOK AT LEADERSHIP PETROLEUM SERVICES NEWS TALKS WITH PSAC’S BOARD OF DIRECTORS AND TAKES A PERSONAL LOOK AT LEADERS IN THE SERVICES SECTOR DONNA GARBUTT President Schlumberger Canada Limited Years in Services Sector: 29 LLOYD STEWART Vice President Doran Stewart Oilfield Services Years in Services Sector: 30 DONNA GARBUTT IF YOU COULD DO ANY OTHER JOB/OCCUPATION, WHAT WOULD THAT BE? DG: I started out in university in fine arts with a vision of becoming a concert pianist. It became apparent after a couple years I just didn’t have what it takes. I would still love to play at the National Arts Centre in Ottawa. LS: If skill were not a factor, I would like to be a professional golfer. WHAT IS YOUR FAVOURITE BOOK OF ALL TIME? DG: Three Cups of Tea by Greg Mortenson [and David Oliver Relin]. Although tangled in controversy lately, it remains an inspirational tale of how an individual can make a difference in the world. LS: No time for books. WHAT ABOUT MOVIE? DG: I’m a romantic/comedy fan – the classic “chick flick” version. I usually forget them the minute I walk out the door, but they are great escapism and fun. LS: The Godfather, Part 1 and 2, and The Bourne Identity series.
LLOYD STEWART
WHAT WOULD YOU SAY IS YOUR BIGGEST ACCOMPLISHMENT TO DATE? DG: Top of the list is definitely my two children and my marriage of over 32 years. Second to that would be my return to Calgary in August 2010 as the president of Schlumberger Canada. LS: Outside of raising of three wonderful sons, being VP of operations for an international oilfield services company. IF YOU COULD TRAVEL TO ANYWHERE IN THE WORLD, WHERE WOULD YOU GO? DG: I have had the wonderful opportunity to visit, live and/or work in 44 different countries, but I have two destinations at the top of my “bucket list.” I’ve never been to Australia, and I want to hike to Everest Base Camp. LS: I have traveled a fair amount but have yet to see southern Europe. WHICH TALENT WOULD YOU MOST LIKE TO HAVE? DG: I would love to be a better golfer. LS: If you asked my friends, it would be golf.
IF YOU COULD INVITE THREE FAMOUS PEOPLE (DEAD OR ALIVE) TO DINNER, WHO WOULD THEY BE AND WHAT WOULD YOU SERVE? DG: Gardiner Greene Hubbard, the first president of the National Geographic Society; Anita Roddick, the founder of the Body Shop; and Angela Hewitt, Canada’s most recognized pianist. I would contract the dinner out and spend my time talking with my guests. LS: Fred Couples, James Taylor and Warren Buffet. Good old Alberta Beef (tri-tip).
IF YOU COULD CHANGE ONE THING ABOUT YOURSELF, WHAT WOULD IT BE? DG: I wish I was more athletic. I am very competitive and enjoy sports. LS: Outside of improving my golfing talent, I would like to do a better job of recognizing people for their attributes and teamwork.
WHAT DO YOU THINK IS THE BIGGEST CHALLENGE FACING CANADA’S ENERGY INDUSTRY AT THIS TIME? DG: Access to markets. We need to find alternative customers and provide means to deliver our products to those customers. LS: As activity picks up labour shortages will result. Skilled workers will be in higher demand.
WHO ARE YOUR HEROES IN REAL LIFE? DG: The people who have succeeded in life despite monumental challenges and adversity. LS: My wife of 30 years.
WHAT MOTTO OR PHRASE DO YOU LIVE BY? DG: Never say “can’t.” I remember first saying this to my sister when I was around 12-years-old, and I have lived by it my whole life. LS: Treat people as you wish to be treated.
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WHAT IS YOUR MOST TREASURED POSSESSION? DG: The photographs of our new grandson, our children and their families. LS: Family.
PSAC’s Board of Directors represents the diversity of Canada’s upstream petroleum services, supply and manufacturing sectors. With more than 150 years of collective experience, PSAC’s board brings unparalleled breadth and depth of expertise to the strategic direction of PSAC and the issue of the day. Visit www.psac.ca to find out more about PSAC’s Board of Directors.
PETROLEUM SERVICES NEWS
2/15/13 9:05:33 AM
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