Petroleum Service News - Spring 2016

SP RI NG 201 6

PSAC meets with Prime Minister Justin Trudeau The Energy IQ Program brings oil and gas literacy to classrooms T H E O F F I C I A L V O I C E O F T H E P E T R O L E U M S E R V I C E S A S S O C I AT I O N O F C A N A D A

What you need to know about expanding your business overseas

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2016 Drilling Activity Forecast

Stay in the game, know your options.

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Contact us Rhys Renouf Managing Director KPMG Corporate Finance T: 403-691-8426 E: rrenouf@kpmg.ca

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CONTENTS SPRING 2016

Departments MESSAGE FROM THE PRESIDENT 5 IN THE FIELD

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News, notes and events from the industry

MEMBER PROFILE

16

Katch Kan

BUSINESS MATTERS

17

Tenaris shows how international expansion brings success to services companies

PSAC IN ACTION

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Features ALL ABROAD

COVER

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22

Advocacy and outreach

2016 DRILLING ACTIVITY FORECAST

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Tips and tricks for expanding your business internationally, from some of Canada’s seasoned experts

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ON THE ROAD Through industry partnership, the Energy IQ program brings energy literacy to classrooms across Canada

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STARS & SPURS The oil and gas services industry opened their wallets and hearts at the 22nd annual STARS & SPURS Gala

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WWW.PSAC.CA

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3

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MESSAGE FROM THE PRESIDENT It was a whirlwind tour, but the one consistent takeaway was that India wants to do business with Canada. Oil and gas is of significant interest to business leaders from India, and they would prefer to work with PSAC member companies because they regard them as the best in the industry.

In the Doldrums BUT THERE’S HOPE ON THE HORIZON

I

T’S A BRAND NEW YEAR AND THERE’S NO

end in sight for the economic doldrums we’re experiencing. I say doldrums, because the term refers to a “belt of calm between trade winds.”

There’s no doubt this current economic downturn is being felt worldwide, but from my perspective the effect is not equally dispersed.

I just returned from a trip to India on behalf of Global Affairs Canada, a department of the Government of Canada. While there I visited three cities: New Delhi, Ahmadabad and Mumbai. I participated on a Society of Petroleum Engineers Oil and Gas India Conference panel, and presented at Pandit Deendayal Petroleum University and the Indo-Canadian Business Chamber. I participated in 16 meetings, ranging from appointments at the Ministry of Power (formerly Ministry of Energy sources), oilfield services companies onshore and offshore, exploration and production (State-Owned Enterprises and private) and manufacturing and logistics companies.

IN FEBRUARY, OUR TRAVELS CONTINUED. PSAC JOINED THE GOVERNMENT OF ALBERTA’S trade delegation to Mexico and Colombia, to encourage trade for Canadian oilfield services, supply and manufacturing companies.

PSAC supports members interested in seeking out opportunities that may help their businesses grow or at the very least help offset the doldrums and lost revenues we are experiencing at home and keep people employed for when domestic operations begin to pick up. And pick up they will – we just don’t know when.

PSAC has been working diligently on a number of fronts, not only to establish good relationships with new governments on behalf of our members, but also to gain the trust of the new provincial and federal ministers as a solid and trusted resource so we can be at the table during policy-making discussions. And we are there: PSAC has submitted papers and presented on the Government of Alberta’s climate change review and Alberta’s Royalty Review Panel 2015, while pre-budget discussions and meetings are still ongoing. This is just a peek at our provincial initiatives.

I would be remiss if I did not touch on another of PSAC’s mandates – to provide knowledge and awareness of what is over the horizon to the best of our ability. The changing opportunities are countless but the one that is on the forefront of everyone’s minds is climate change and the growing movement to shift away from fossil fuels for energy and look to renewables and alternatives.

The trend toward renewables and alternatives is not new but it does provide future opportunities for our members. PSAC members are on the front lines of delivering top-quality services as well as ever-advancing services that meet or exceed the demand and expectations of the public, their families and customers. We are a long way from moving away from fossil fuels in our daily lives. PSAC provides great information on our website to help connect the dots between all the jobs our members provide in responsibly developing oil and gas resources on through to the products we use in our everyday lives.

And, as dangerous as this may be for me to admit, during the Christmas break I test drove a 2016 Tesla, an amazing vehicle – or should I say a computer on wheels. We may be going towards electric cars, but they won’t be manufactured without oil and gas, and therefore PSAC member companies will be in high demand, if not at home then around the world where the doldrums are not as bad as what we are experiencing here.

All the very best, and rest assured PSAC is there for you and will continue to be there in good times and bad.

Mark Salkeld, President and CEO, PSAC

WWW.PSAC.CA

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SPRING 2016 VOL 15 • No.4 The Petroleum Services Association of Canada (PSAC) is the national trade association representing 200 leading services, supply and manufacturing companies with 60,000 employees. PSAC is “Working Energy” and as the voice of this sector, PSAC advocates for its members to enable the continued innovation, technological advancement and in-the-field experience they supply to Canada’s energy explorers and producers.

PETROLEUM SERVICES ASSOCIATION OF CANADA 1150 734 7TH AVENUE SW CALGARY, AB T2P 3P8 TEL: 403.264.4195 FAX: 403.263.7174 EMAIL: info@psac.ca PRESIDENT AND CEO: MARK SALKELD SENIOR MANAGER, COMMUNICATIONS: MAGGIE TAYLOR

Emergency Response Assistance Canada (ERAC) Assistance d’intervention d’urgence du Canada (AIUC) Emergency Response Assistance Canada (ERAC) is built by industry for industry.

ERAC is a not-for-profit, national emergency preparedness and response organization.

Our Plan Participants are made up of oil and gas producers, retailers, wholesalers and carriers.

ERAC responds to flammable liquid and liquefied petroleum gas road, rail and stationary tank incidents anywhere in Canada. We are the largest Transport Canada approved Emergency Response Assistance Plan provider in the country.

Assistance d’intervention d’urgence du Canada (AIUC) créé par l’industrie pour l’industrie.

AIUC est un organisme national de préparation et d’intervention en cas d’urgence, sans but lucratif.

Les participants au plan d’intervention d’urgence sont composés des producteurs, fournisseurs, détaillants et transporteurs de produits pétroliers.

AIUC répond à travers le Canada lors des incidents impliquant des gaz de pétrole liquéfié et des liquides inflammables tant sur les routes que sur les rails et les réservoirs fixes. Nous sommes le plus grand centre d’assistance pour les plans d’intervention d'urgence approuvé par Transport Canada.

For more information on ERAC, please contact us at Tel: (587) 349-5880 Fax: (403) 543-6099 Email: info@erac.org Web: www.erac.org Pour plus amples renseignements sur AIUC, s’il vous plaît communiquer avec nous à Tél: (587) 349-5880 Fax: (403) 543-6099 Courriel: info@erac.org Web: www.erac.org/fr

6 SPRING 2016

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 MANAGING EDITOR: LYNDSIE BOURGON CONTRIBUTING WRITERS: ROBIN BRUNET, WILLOW WHITE ART DIRECTOR: CHARLES BURKE GRAPHIC DESIGNER: ANDREW WEDMAN PRODUCTION MANAGER: BETTY FENIAK PRODUCTION TECHNICIANS: BRENT FELZIEN, BRANDON HOOVER DISTRIBUTION: KAREN REILLY ACCOUNT EXECUTIVES: PEGGY BOGDAN, KATHY KELLEY, DENNIS McCORMACK

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PETROLEUM SERVICES NEWS

Tough Times Require the Right Decisions MNP OILFIELD SERVICES To succeed in today’s highly competitive upstream oil and gas industry, oilfield service managers must make the right decisions at the right time. Our team of Oilfield Services professionals understand the complexities of this industry and will provide the insight, analysis and tools you need to optimize the financial efficiency of your operation.

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For information on how MNP can help, contact: David Yager, National leader Oilfield Services, david.yager@mnp.ca Jeremy Rondeau, Business Advisor, jeremy.rondeau@mnp.ca

Photo courtesy of Beaver Drilling Ltd

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8 SPRING 2016

PETROLEUM SERVICES NEWS

IN THE FIELD PSAC Awards Close to $320,000 in Scholarships Since 2001

News, notes and events from the industry

STEP Energy Services: Fastest Growing Company in Alberta

THIS YEAR, PSAC WILL COMMEMORATE THE 15TH ALBERTA VENTURE’S ANNUAL LIST OF FAST GROWTH anniversary of the PSAC Education Fund, and is now accepting online applications for its 2016 Education Fund scholarships. The awards include five $1,500 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 Regular Member employees and their children. The application deadline is April 29, 2016. To apply, visit psac.ca/education.

50 companies has been released and, for the second year running, PSAC member company STEP Energy Services is ranked as the secondfastest growing company in the province.

“To be a part of a list that includes growing companies, let alone a second place ranking among the fastest growing companies in Alberta, is an achievement we are very proud of,” says Regan Davis, President and CEO. Congratulations STEP Energy!

Oil & Gas Services Top Economic Contributor to Canada’s Economy

David Yager, MNP LLP, Barbara Engelbart McKenzie, Leduc-Nisku Economic Development Association and Mark Salkeld, PSAC

PSAC PRESENTED TO A GROUP OF LEDUC-NISKU BUSINESS LEADERS ON FEBRUARY 3, ADDRESSING THE importance of the petroleum services sector to the Canadian economy, a sector now more than ever at risk. David Yager, National Leader Oilfield Services, MNP, and co-author of a July 2015 PSAC economic study, “The Contributions of the Canadian Oil and Gas Services Sector to the Canadian National Economy,” gave the audience insight into how oil and gas services companies can survive and ultimately thrive during this economic downturn. Yager also talked about the huge impact the recent downturn has had on struggling restaurants, gas stations, small businesses, hockey teams and charities in rural communities where oil and gas services companies are located.

WWW.PSAC.CA

COMING EVENTS PSAC DRILLING ACTIVITY FORECAST MID-YEAR UPDATE April 28, 2016 Keynote presentation by Divya Reddy, Practice Head, Global Energy and Natural Resources, Eurasia Group The Westin Calgary Calgary, Alta.

PSAC EDUCATION FUND GOLF CLASSIC July 21, 2016 Carnmoney Golf & Country Club, DeWinton, Alta.

A DAY ON THE HILL Details to be announced.

Edmonton Ottawa

NEW MEMBERS IN THESE STRUGGLING ECONOMIC TIMES, IT’S EVEN more important to renew your membership and ensure PSAC has the resources to advocate for the right policy framework and business conditions in Canada.

But don’t take it from us. Here’s what one of our members has to say about the importance of PSAC membership: Al Huehn, President and CEO of Topco Oilsite Products, says “Topco was one of the founding companies of PSAC. Although I was just starting my career in the industry, I vividly remember the concerns that the services sector had. PSAC was our voice then and it remains our strong voice today. Collectively we can survive this downturn, and PSAC will provide the leadership necessary for the sustainability of the Canadian services sector.”

NEW REGULAR MEMBERS ATK Oilfield Transportation Inc. CORE Linepipe Inc. COSL Canada Ltd. NEW ASSOCIATE MEMBERS CalgaRIG Corporation Payload Technologies Inc.

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TOUGH TIMES DON’T LAST. TOUGH BUSINESSES DO. BDC can help you with financing and consulting services designed to improve your business resilience and set the stage for growth.

Scott Billingsley Director, Corporate Finance Oil and Gas Service Sector 403-292-5192 BDC IS THE ONLY BANK DEDICATED EXCLUSIVELY TO ENTREPRENEURS.

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1:18NEWS PM PETROLEUM2015-10-26 SERVICES

ALL ABROAD Tips and tricks for expanding your business internationally, from some of Canada’s seasoned experts

E

NTERING THE INTERNATIONAL MARKET

is not a step to be taken lightly. From forming your business strategy and targeting the right countries, to researching and preparing your pitch, it takes a company-wide commitment.

And then, of course, there’s the move itself.

Petroleum Services News sat down with some of Canada’s most knowledgeable minds in the international market and asked them what you need to know when it comes to expanding abroad.

WWW.PSAC.CA

11

PLANNING

MAKE CONNECTIONS FIND THE INFLUENCERS: When the EIA

DECIDE WHERE YOU WANT TO GO:

174

Cities with Canadian Trade Commissioner Service offices worldwide

“We maintain that oil and gas is a key sector for Alberta, and there is a lot of international activity there,” says Ryan Radke, Senior Director – Middle East & India, International and Intergovernmental Relations – Alberta Government

12 SPRING 2016

“Talk to companies and colleagues that have experience abroad, though perhaps not your direct competitors,” says Johane Séguin, Sector Vice-President, Extractive and Resources, Export Development Canada. “I wouldn’t go with too many markets at once. Pick a few, or ideally just one, and focus on those to begin with. This approach will give you the best chance at success, and help ensure you don’t spread yourself too thin.”

PATIENCE: Once you decide on your market, you have to perform your due diligence. “Don’t go too quickly,” says Séguin. “Managing expectations is not easy. You are lucky if you get business in the same year that you approach them, so be patient and settle in for the long term. It will pay off in the end.”

determined that China, with its $30 billion of investment in Alberta, was a key market, “We would analyze all the carriers that fly into Asia and approach them,” Richard says. “Then it’s really similar to other businesses: you need to find the influencers, the decision makers and start building relationships with them.”

JOIN MATCHMAKING EVENTS, trade missions and attend trade shows. “I think this is an extremely effective and affordable way for smaller players to make connections and be introduced to international buyers,” says Séguin.

“It’s also important to participate in trade missions that bring business people to Canada like the Global Petroleum Show. You can also check for weekly networking events at local embassies.”

DO YOUR HOMEWORK: If your business case isn’t well-rounded, you’re likely not going to get very far. “Understand your business and your customers’ interests,” says Norm Richard, Director of Air Service Development (Cargo) at Edmonton International Airport, which recently undertook a large international expansion through a partnership with airlines Air China Cargo and KLM. “There must be value for the customer, and anytime there isn’t, you put yourself in jeopardy.”

DON’T OVERCOMPLICATE: Champion Petfoods has seen its Orijen and Acana brands experience a rapid expansion in recent years, and the company credits part of that success to keeping it simple. “Build real relationships and stay personally involved,” says Frank Burdzy, President and CEO of Champion Petfoods.

“Don’t outsource your growth.”

UNDERSTAND YOUR PRODUCT: This will

CONSIDER HIRING SOMEONE who works

help in finding the right international customer match. “Determine possible solutions and connections of value to customers,” says Richard. “It all comes from the data and your business case.”

directly for your company that would be based in the country you want to enter. This cuts down on time zone confusion and provides a local contact that can meet face-to-face with potential clients.

PETROLEUM SERVICES NEWS

GO TO MARKET PLAN IT OUT: When Champion Petfoods first

SPEAK WITH YOUR BANK OR LENDER,

began expanding internationally, the company didn’t have a step-by-step plan to follow.

Today, Champion has a full-fledged plan for both existing and future expansion markets.

“This approach has brought us new and more measurable success,” says Burdzy.

about freeing up cash for more international deals. And if you are exporting a product, arrange insurance to cover receivables.

“AN ACTION PLAN will help you approach international business so that it’s not reactionary or overwhelming,” echoes Ryan Radke, Senior Director – Middle East & India, International and Intergovernmental Relations – Alberta Government.

BE AWARE: Business can dry up when you’re doing international deals, even when you think it’s a done deal – something Doug McNeill, Chief Strategic Officer, Stream-Flo Industries Ltd., knows all too well. “Your home office really needs to trust the person they’re sending overseas,” he says. “It might look like the dog ate their homework, but it’s true.”

“You start running into people in airports that you know. It’s shocking how close-knit the Canadian oil and gas industry is,” says Doug McNeill, Chief Strategic Officer, Stream-Flo Industries Ltd.

TOP 7

sources of international revenue for Canadianheadquartered oil and gas services companies

DETERMINE YOUR VALUE: Once you’ve determined your product is of value in a particular market, you should be prepared to talk in-depth about the channels of distribution.

“It’s very important that you understand the supply chain,” says Richard from EIA. “You have to know the costs, the end-to-end process, and where you can provide deals.”

Source: “International Revenue of Canadian Oil and Gas Services Sector Companies”, July 2015 PSAC Study

INTERNATIONAL REVENUE

$42.5

billion

Manufacturing

These 42 companies earned $42.5 billion in international revenue in 2014

Contract drillers

attracted business from an international customer, the company may want to come and inspect your product and operation immediately. “If it’s not presented properly, disappointment sets in,” says Richard. “Then you’re recovering from that disappointment, rather than proactively delivering.”

total

Oil and gas services

BE READY TO DO BUSINESS: Once you’ve

Pipeline infrastructure processing

contributions, by sector for Canadian-headquartered oil and gas services companies

22 MILLION

What Business Development Bank of Canada clients generate in export revenue

Source: “International Revenue of Canadian Oil and Gas Services Sector Companies”, July 2015 PSAC Study

WWW.PSAC.CA

13

KNOW WHERE YOU’RE AT

7,200 Canadian companies (77 per cent of which are SMEs) served by Export Development Canada

BE MINDFUL OF CULTURAL SENSITIVITY.

CANADIANS ARE VERY WELL-RESPECTED,

Do your research before arranging meetings and contact Trade Commissioners in your province that can meet with you and inform you of any cultural nuances you may need to know about. “There’s a common bond of business people who travel that deal with this stuff,” says McNeill.

says Radke, from Alberta’s International and Intergovernmental Relations office. “Take advantage of that. We want stuff fast, but internationally, things don’t always happen quickly.”

IF OFFERED, sit down and have a cup of RESEARCH LOCAL TAXI PRICES, hotel locations and directions before you land in a new country. Be aware that local infrastructure, like roads and telecommunications, could present a challenge.

“If you don’t speak the language, get a card from the hotel to give to a cab driver. I’ve done that more than once,” says Doug McNeill.

tea before you do business. Many countries take a slower approach to business deals than in North America. “The sense of time and appointments is very different between here and many international locations. I’ve sat outside someone’s office for six hours [waiting for an appointment] before,” says McNeill.

PAY ATTENTION TO SALUTATIONS and use basic versions at meet-and-greets. Research standard working hours and public holidays beforehand, and try to learn a few words in your host country’s language. Contact the Canadian Embassy for assistance.

IF YOU’RE INVITED to someone’s home while in another country doing business, it’s a sign you’re making progress.

“A SMILE GOES A LONG WAY,” says Burdzy, from Champion Petfoods.

14 SPRING 2016

PETROLEUM SERVICES NEWS

GANG’S ALL HERE WHO TO INVOLVE IN YOUR INTERNATIONAL BID:

MARKETING: From the analytical, preparation and targeting stage through to approaching possible partners, your marketing department should be involved – you need to be able to communicate your product. “Our marketing group takes the lead in sending the right food to the right place at the right time,” says Champion’s Burdzy.

GOT QUESTIONS? “How will I enter that market?”

“Do I work with a local partner when we talk about exporting?”

“Do I sign my contracts directly with the large producers?”

“Should I use a local consultant?”

“Am I export-ready?”

You can answer almost all of your questions through federal and provincial programs and organizations, such as:

ALBERTA’S INTERNATIONAL OFFICES operate in 11 countries, including China, India and Mexico. This is where you can get insider advice, as these offices act as a touchpoint for businesses interested in investing and exporting abroad. international.alberta.ca

THE TRADE COMMISSIONER SERVICE CROSS OVER

into including operations, infrastructure and finance. “By the time there’s an acquisition of a new customer, we’re throughout all departments and it’s all hands on deck,” says Richard.

is operated by the federal government, is free of charge and can provide market research, preparation advice, and troubleshooting as well as set up introductions and in-depth meetings with key contacts in your expansion country. The Canadian Trade Commissioner Service has a reputation for being Canada’s “best-kept secret” in international business. tradecommissioner.gc.ca

CANEXPORT IS RUN BY GLOBAL AFFAIRS KNOW THE RIPPLE EFFECT: For the Edmonton International Airport, this meant looking to the local community in the area where they plan to expand. The airport presented local suppliers and customers in the region as a selling point. “In some cases we’ll do joint conference calls or even visits with key people from the community, like economic development agencies,” says Richard.

WWW.PSAC.CA

Canada and The Canadian Trade Commissioner Service. CanExport has a program with total funding of $50 million over five years targeted to small-and medium-sized enterprises planning to take advantage of global export opportunities. international.gc.ca/canexport

EXPORT DEVELOPMENT CANADA is Canada’s trade finance agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. edc.ca

42.5 BILLION

International revenue earned by Canadianheadquartered oil and gas services companies in 2014, according to a July 2015 PSAC study, “International Revenue of Canadian Oil and Gas Services Sector Companies”

“By the time there’s an acquisition of a new customer, we’re throughout all departments and it’s all-hands on deck,” says Norm Richard.

65% Increase in international revenue of Canadian-headquartered oil and gas services companies from 2013 to 2014 (PSAC’s July 2015 export study)

15

MEMBER PROFILE

Defying Limits

Katch Kan earns honours for its commitment to safety and growth

BY WILLOW WHITE

Katch Kan’s safety system features equipment with innovative traction supports.

G In a third party study of their client Pemex, conducted over five months in 2004, Katch Kan’s innovations: • Saved a total of USD$78,540 in labour and resources.

• Saved USD$483,740 in recovered fluids, including USD$562,260 on a single rig.

16 SPRING 2016

ROWING UP IN SOUTHERN

Saskatchewan, Quinn Holtby’s mother didn’t want him to join the oil and gas industry. She ran a restaurant and saw men coming in regularly with injuries from working on the rigs. But it didn’t stop Holtby from leaving home at the age of 18 and taking his first job on a drilling rig.

Inspired by his mother’s concern and his own rig experience, Holtby founded Katch Kan in 1994. Twenty-two years later, the company provides safety and environmental solutions for the oil and gas industry at over 60 locations worldwide.

Since its inception, Katch Kan has seen major international growth. In March 2015, the company opened a new site in Bahrain, a nation in the Persian Gulf, adding to its permanent offices in Edmonton and across the U.S. “The leadership in other parts of the world is very much focused on how you stop these accidents, or repetitive injuries as I call them, and the non-productive time related to drilling wells. They are well aware of the challenges,” says Holtby. And, of course, Katch Kan is providing the solutions.

“Repetitive injuries and fatalities were, and are still, a major challenge,” Holtby says, referring

to the kind of accidents that occur regularly on rigs, like falls, sprains, scratches and pinches. Katch Kan has helped to reduce these incidents, both in Canada and internationally, by developing a rig safety system. The system offers innovative equipment with increased traction and safety features that protect workers from common injuries – innovations that, in the long term, save lives and save companies money. Furthermore, Katch Kan’s zero-spill system helps to reduce the environmental impact of drilling. “I invested two years in studying how plastics could be modified to withstand these extreme weather conditions and heavy loads, yet still be lightweight and durable,” Holtby says. The fruit of this labour is “extremely strong, durable, non-corrosive, non-rusting materials that you can install without tools.”

KATCH KAN HAS HELPED TO REDUCE INCIDENTS, BOTH IN CANADA AND INTERNATIONALLY, BY DEVELOPING A RIG SAFETY SYSTEM. In 2015, Katch Kan was awarded the Alberta Export Award for Manufacturing, and Holtby is quick to acknowledge the role his employees played in winning the award. “It’s all due to the team and how much hard work it takes to deliver products around the world. Working in time zones that are a 10- to 12-hour difference is a challenge,” Holtby says. Of course, Katch Kan is no stranger to recognition. In fact, between Holtby and Katch Kan, the company has received over 20 awards, including a 2013 Governor General’s Visit Medallion for work completed in Mexico.

Holtby brings the same level of passion to the business side of Katch Kan as he does to the research and development side: “My goal is to grow this organization 25 per cent a year,” he says. “Some people say that’s impossible. But the only limitations are in your mind.”

PETROLEUM SERVICES NEWS

BUSINESS MATTERS

Beyond Borders

TENARIS’ EXPERIENCE ABROAD IS A PRIME EXAMPLE OF INTERNATIONAL EXPANSION BRINGING SUCCESS TO SERVICES COMPANIES

BY ROBIN BRUNET

A

T A TIME WHEN LOGISTICAL INNOVATION HAS

transformed global business, any company can now compete on the global stage.

A good example of this is Tenaris. The manufacturer and supplier of steel pipe products has more than 100 years of industrial history, with manufacturing facilities throughout North and South America, Europe and Asia, and distribution and sales centres in more than 30 countries – with annual net sales of $10.3 billion (2014). For 15 years, Tenaris has provided the Canadian oil and gas market with domestic manufacturing of seamless and electric resistance welded (ERW) steel pipes, as well as premium connection and accessory threading services, field services and logistics through its network of service centres.

WWW.PSAC.CA

17

The Tenaris story suggests any expansion is possible with the right mindset. Advice from professionals, like international counselors, exporters and trade associations are a great source for business leads and new contacts.

No one could agree more strongly with this sentiment than David McHattie, Institutional Relations Director for Tenaris in Canada as well as Chair of the Canadian Manufacturers & Exporters (CME) association. “Petroleum services companies now more than ever need to work with their associations,” he says. “They are a fantastic resource for building relationships that ensure our government makes policy decisions that are beneficial to us in improving our competitiveness and expanding our markets.” McHattie is also a Director of PSAC. International expansion has become a vital part of Tenaris’ long-term prosperity.

“Petroleum services companies now more than ever need to work with their associations. They are a fantastic resource for building relationships that ensure our government makes policy decisions that are beneficial to us in improving our competitiveness and expanding our markets,” says David McHattie, Institutional Relations Director for Tenaris, Chair of CME and a Director of PSAC. In his role as CME Chair, McHattie urges oil and gas service providers to “think more about government policy tools, which trade associations have an intimate knowledge of. Among the many issues going forward in 2016 is the need to modernize our trade remedy system as the former Harper government committed to, and we hope the Trudeau government will follow through on. Specifically, we need to ensure transparency in all our international dealings as well as prevent ALBERTA EXPORT AWARDS the illegal dumping of product into Canada.”

McHattie adds: “We also need ALONG WITH HIS ROLE AT CME, MCHATTIE IS ALSO to send a message, via our trade active in the Alberta Export Awards. The associations, of the importance 2015 awards were handed out in December, of eliminating barriers in a wide and showcased export excellence across range of sectors and which I think industries. PSAC members were among the the oil and gas sector cannot afwinners below: ford to pass up.”

Expanding internationally is • Manufacturing: Katch Kan Ltd. a challenge to say the least, but (for more on Katch Kan, see pg. 16) entirely within the realm of pos• Oil & Gas Service/Supply: Absolute sibility even for small players.

Completions Technologies Trade associations play a vital role • Clean Technology: Nelson Environmental in giving members access to Remediation Ltd. important data as well as busi• Consumer Products: Champion Petfoods ness leads. And as part of a (for insight on international expansion sector in which global trade from Champion Petfoods pg. 11) plays such an integral role, it’s • Professional Services: Streamline in the best interests of oil and Automation gas companies to be aware of • Advanced Technology & Innovation: the resources their associations CoolIT Systems boast – and support lobbying • Emerging Exporter: Nanalysis Corp efforts on their behalf.

18 SPRING 2016

PETROLEUM SERVICES NEWS

WWW.PSAC.CA

19

COMMUNITY MATTERS

On the Road THROUGH INDUSTRY PARTNERSHIP, THE ENERGY IQ PROGRAM BRINGS ENERGY LITERACY TO CLASSROOMS ACROSS CANADA

BY ROBIN BRUNET

I

F THE EDUCATION ROADSHOW IT CONDUCTED LAST YEAR

with the Canadian Association of Petroleum Producers is any indication, The Royal Canadian Geographic Society’s (RCGS) Energy IQ program can expect further collaboration with resourcebased associations well into the future.

At least, that’s the prediction of RCGS Chief Operating Officer and Publisher Gilles Gagnier. “We’ve gotten amazing feedback from the Alberta tour of our giant floor maps, which were displayed in schools in six different communities across the province,” he says. “It proved to be a memorable way for kids to learn about the many forms of energy generation in Canada, and how vital the resource sector is to our daily lifestyle.”

20 SPRING 2016

PETROLEUM SERVICES NEWS

Gagnier is referring to 10 maps that are about 35- by 25-feet in size, which feature outlines of the country’s energy infrastructure. In conjunction with information delivered by RCGS Director of Education Ellen Curtis, school-age children were given an interactive learning experience as a way to counter anti-oil and pipeline protesting dogma that is so often in the public domain. “The children were alert and interested, and they were as equally engaged in our questionand-answer sessions as they were by the maps themselves,” says Curtis.

By the time the tour ended, with the maps being brought to the Legislative Assembly in Edmonton (where they attracted about 300 youths, MLAs and local RCGS fellows), Gagnier foresaw the potential for other tours in other provinces. “We’re already in talks with the Canadian Nuclear Association, and it would be fantastic to stage something with PSAC,” he says. “This delivery system can easily be replicated in other regions.”

The maps are only one facet of Energy IQ that is enjoying vigorous user appreciation: now a fixture in hundreds of schools across the country, the program provides classroom tools encompassing everything from online quizzes to animated videos. “We’re now into our fourth year, and educators tell us our content and methods of delivery are a great aid in facilitating balanced discussions about the issues of energy production,” says Gagnier.

Energy IQ’s success is also a vindication for RCGS, which was accused by activists of colluding with Big Oil to imprint a pro-industry message on impressionable minds. “People now realize we’re merely offering insight about the resource sector,” says Gagnier. Interestingly, Alberta Education said in a recent statement that it’s consulting with a variety of stakeholders and industries – including those in the oil and gas sector – to modernize the province’s kindergarten to Grade 3 curriculum.

While none of this is conclusive proof that a fundamental mindset shift is taking place in the public education system, Curtis notes that the enthusiasm exhibited by the teachers during her tour was remarkable. “Without exception, they said they would recommend our services to other schools,” she recalls.

“They also want to see us expand our presence in the education system, which was tremendously exciting to hear. I’m looking forward to more collaborations and tours.”

IMAGE COURTESY CANADIANGEOGRAPHIC.CA

“WE’VE GOTTEN AMAZING FEEDBACK FROM THE ALBERTA TOUR OF OUR GIANT FLOOR MAPS, WHICH WERE DISPLAYED IN SCHOOLS IN SIX DIFFERENT COMMUNITIES ACROSS THE PROVINCE,” SAYS GILLES GAGNIER.

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21

STARS AND SPURS

PSAC raised over $500,000 for STARS at this year’s STARS & SPURS Gala.

Hard-Hit Oil and Gas Services Sector Continues to Champion STARS The oil and gas services industry opened their wallets and hearts at the 22nd annual STARS & SPURS Gala

D

ESPITE THE “LOWER FOR LONGER” ECONOMIC

forecast amid falling oil prices, Canada’s oil and gas services sector showed overwhelming support for STARS on January 23, through the long-running STARS & SPURS Gala. The association, along with STARS staff and volunteers, helped raise more than $500,000 in one evening.

Over $12 million has been raised over the past 22 years at the annual fundraising gala presented by PSAC. “Once again, the generosity of the oilfield services sector and their customers, the producers, shines through in 2016,” says Mark Salkeld, President and CEO of PSAC. “Even when the energy industry is experiencing tough times, everyone

22 SPRING 2016

comes out for a great night of western fun, entertainment and generosity.”

“The partnership between PSAC and STARS was built on perseverance, teamwork and generosity of spirit,” says Andrea Robertson, President and CEO of STARS. “We are so thankful and humbled by the support we have received from the petroleum services industry during these difficult economic times. When you see a red helicopter in the sky, know that your support has helped STARS continue to fly the emergency room to critically ill and injured people and provide care for workers in the oil and gas industry across Alberta.”

More than 800 guests attended the STARS & SPURS

PETROLEUM SERVICES NEWS

CORPORATE SPONSORS

Thank you to the sponsors of the 2016 STARS and SPURS Gala, presented by PSAC:

RUBY REINS SPONSOR: Black Diamond Group EMERALD LARIAT SPONSOR: Clean Harbors Energy & Industrial Services William Joseph Communications Di-Corp Stream-Flo Industries Ltd. Canyon Technical Services Ltd. Halliburton Group Canada National Oilwell Varco

SILVER SPUR SPONSOR: Newalta Corporation Crescent Point Energy Western Energy Services Corp.

Savanna Energy Services Corp.

Wells Fargo Energy Group Citadel Drilling Grant Production Testing Services Ltd. JuneWarren-Nickle’s Energy Group AgustaWestland Cargill Meat Solutions Nexus Engineering & Machine Inc. Devon Canada Corp.

Gala at Calgary’s BMO Centre. Gala guests enjoyed dinner and a performance by Canadian country artist and CCMA Single of the Year winner Jason Blaine.

At the private “You Make A Difference” reception just prior to the event, Trevor Haynes, Gala Co-Chair and Chairman, President and CEO of the Black Diamond Group, says, “All of us in the room know every dollar raised tonight helps keep STARS in the sky, and provides hope for all of us, our employees and our families.” At the reception, Doug McNeill, Gala Co-Chair and Chief Strategic Officer of StreamFlo Industries, says that, “While the petroleum industry is often associated with big business, the STARS & SPURS Gala takes us back to our roots, espousing the western values of entrepreneurship and the triumph of spirit over adversity.”

Among the Gala’s VIPs were Hon. Rona Ambrose, MP for Sturgeon River – Parkland and Interim Leader of the Conservative Party of Canada, and Karen McPherson, Alberta MLA for CalgaryMackay-Nose Hill, and Mrs. Leela Sharon Aheer, Alberta MLA for Chestermere-Rocky View.

The spirited bidding and competition for a range of industry and luxury packages during the live auction raised more than $217,000.

Industry packages were introduced to the live auction a few years ago – members of PSAC donate a large service or product package that one of their producer clients can buy through a donation to STARS. This move increased fundraising efforts by a significant amount, and in spite of the downturn in the economy, industry packages were generous.

Gala guests also toasted the 2016 Honourary Patron Kevin Neveu, President, CEO and Director of Precision Drilling, who was recognized for his contributions to the success of PSAC, STARS and the Gala.

Kevin has 33 years of experience in the oilfield services sector.

In 2004, the teenage daughter of a close friend of Kevin’s suffered a head injury while water-skiing. STARS responded to the emergency and transported her to the Stollery Children’s Hospital where she eventually made a full recovery. That incident really cemented in Kevin’s mind the importance of having a preeminent trauma air service able to respond to emergencies throughout Western Canada.

In addition to representatives from the oil and gas services sector, the event was attended by a number of STARS volunteers and Very Important Patients (VIPs). One of those VIPs,

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BRONZE BUCKLE SPONSOR: Advantage Ford Willow Park Wines & Spirits Schlumberger Canada Ltd. Fluid Energy Group Ltd. Rogers Communications Inc. WILLBROS Canada Arthur J. Gallagher & Co. McCarthy Tetrault LLP Raymond James

Stu Wilson, was injured on the long weekend in 1997 when he ended up in a head-on collision. STARS transported him to Foothills Medical Centre where he spent a long time recovering from his injuries including a collapsed lung, a badly damaged (almost amputated) right foot, many broken ribs and a fractured humerus.

Stu shared his vivid and touching story and was joined on stage by flight nurse Carolyn Vacey.

23

PSAC IN ACTION THE PETROLEUM SERVICES ASSOCIATION OF CANADA CONTINUES TO KEEP THE SERVICES, SUPPLY AND MANUFACTURING SECTORS FRONT AND CENTRE THROUGH ADVOCACY AND OUTREACH PSAC CONNECTS WITH CANADIAN LEADERS

FEDERAL • PSAC Meets With Prime Minister Trudeau and Premier Notley: In February, PSAC and the Board of Directors met with Prime Minister Justin Trudeau, Alberta Premier Rachel Notley, federal Minister of Natural Resources James Carr, Alberta Energy Minister Margaret McCuaig-Boyd and federal Minister of Veterans Affairs and Calgary Centre MP Kent Hehr in Calgary to discuss the current state of affairs in the oil and gas industry, the impacts on PSAC member companies and recommendations to alleviate the situation. The meeting was an important opportunity to raise the profile and significance of the oil and gas services sector in terms of middle-class jobs, innovation, environmental performance and economic contribution. Both Trudeau and Notley committed to helping the industry succeed and to getting our resources to markets.

• International Trade Minister Chrystia Freeland Roundtable on TPP: The federal government invited PSAC and several member companies to provide input on the impacts and opportunities of the Trans Pacific Partnership (TPP) agreement as they considered whether or not to sign this agreement.

• Employment, Workforce Development and Labour Minister MaryAnn Mihychuk Roundtable on Jobs and Training: PSAC participated in a roundtable hosted by Minister MaryAnn Mihychuk, who was interested in hearing ideas and perspectives on federal training programs and what skills Canadians need for good quality jobs.

• Finance Minister Bill Morneau Roundtable on Federal Budget: PSAC participated in a roundtable for the federal budget, providing input on the urgency of access to tidewater for our oil and gas and recommendations that will benefit PSAC members.

24 SPRING 2016

• Natural Resources Canada (NRCan): PSAC also met with NRCan to discuss the Paris climate change conference (COP21) in relation to Canada’s position and action plan, PSAC’s 2016 Drilling Activity Forecast and the current state of the oil and gas services industry.

PROVINCIAL • Participated in Provincial Budget Consultation Roundtable (Alberta).

• Presented and made a formal submission to the Alberta Royalty Review Panel.

• Provided initial feedback on the new climate strategy to Alberta Minister of Energy Margaret McCuaig-Boyd.

• Met with NWT Industry, Tourism and Investment and Yukon’s Energy, Mines and Resources and Economic Development departments.

• Hosted the BC Ministry of Natural Gas Development and the BC Oil and Gas Commission to provide input on their plans to provide information to the public on induced seismicity.

• Submitted a report and met with the New Brunswick Commission on Hydraulic Fracturing , and met with the Newfoundland Panel on Hydraulic Fracturing to present on PSAC’s submission.

INTERNATIONAL • PSAC Promotes Oil and Gas Services Companies in India as Part of a Canadian Government Initiative: PSAC was asked by Global Affairs Canada to travel to India and join forces with Canada’s Trade Commissioner Services in New Delhi, Ahmadabad and Mumbai to promote trade and investment between the two countries. There is a high degree of interest from India to do business with Canadian oilfield services companies.

PETROLEUM SERVICES NEWS

HEALTH AND SAFETY • PSAC Members 2014 Lost-Time Claims: The PSAC Health and Safety Committee reviewed 2014’s “Top 5” types of incidents including falls. These resulted in 675 lost-time claims and estimated costs of more than $8 million. Recent data shows if industry could reduce the number of claims resulting from falls by 25 per cent, projected savings could amount to $3.2 million.

The Committee has decided to focus attention on a more detailed review of the causes of falls and to develop strategies to assist members in reducing them.

• Other health and safety initiatives: • Participated in BC Pre-Drilling Season Meeting in Fort St. John.

• Working on updates to Controlling Chemical Hazards Guideline.

• Participated on the Executive Task Force on Safety Culture established by Enform.

• Working on developing an industry standard for the securing of flow piping.

• Developed and submitted a proposal to Enform to review the

industry’s Vacuum Truck Operator Training Course.

• Submitted a request to WorkSafeBC for changes to the sections of the BC OHS regulation dealing with radio frequency precautions and testing of circuits, to make them more reflective of current technology and work practices in perforating operations.

• Holding discussions with the RCMP and rural crime watch agencies to help prevent theft of oilfield equipment and vehicles.

• Became a new member of the TDG General Policy Advisory Council, which is a body of stakeholders established to counsel the federal Minister of Transport on various strategic, safety and social issues relating to the transportation of dangerous goods.

• Requesting Transport Canada to review section 10 of the federal Commercial Drivers’ Hours of Service Regulation regarding how time spent by a commercial vehicle driver travelling as a passenger in a vehicle is treated as “on-duty” or “off-duty”.

• Contributed a presentation to a discussion in Montreal on “Trucks of the Future”, a vision for the future of highway transportation in Canada.

COMMUNITY PARTICIPATION • PSAC participates in the inaugural Grand Challenge Workshop featuring robust exploration of hydraulic fracturing: The November workshop on hydraulic fracturing drew 80 industry leaders, researchers and university professors. The all-day event consisted of presentations from government, industry and academic experts.

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 75,000 people and contracting almost exclusively to oil and gas exploration and production companies.

For further details or to discuss your advertising needs, contact:

Petroleum Service News Account Executive 10259-105 Street, Edmonton, AB T5J 1E3 Tel: (780) 990-0839 ext. 265 • Toll-free: 1-866-227-4276 ext. 265 Email: sales@venturepublishing.ca

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25

DRILLING ACTIVITY FORECAST UPDATE

Into the Woods PSAC expects no improvement to sector activity or market access this year 2016 CANADIAN DRILLING ACTIVITY FORECAST (NUMBER OF WELLS)

5,000

4,000 ALBERTA: 2,718

3,000

2,000

1,000

SASKATCHEWAN: 1,643

BRITISH COLUMBIA: 330 MANITOBA: 205

0

TOTAL IN CANADA: 4,900

Note: Total includes activity in Ontario, Northern and Eastern Canada.

Data provided courtesy of Industry Sponsor JuneWarren-Nickle’s Energy Group

I

N ITS FIRST UPDATE TO THE 2016 CANADIAN

Drilling Activity Forecast, PSAC has revised its forecasted number of wells drilled (rig releases) across Canada to 4,900 wells. This represents a decrease of 250 wells and an approximate five per cent decline from PSAC’s original 2016 drilling forecast, released in early November 2015.

PSAC is basing its updated forecast on average natural gas prices of C$2.50/mcf (AECO), crude oil prices of US$38/barrel (WTI) and the Canada-U.S. exchange rate averaging $0.72.

Mark Salkeld, PSAC’s President and CEO, says, “Factors including oversupply, North American reserves near capacity and low cash flows continue to support the ‘lower for longer’ outlook being echoed around the province and industry. These challenging circumstances are taking their toll on the oilfield services sector just like all other sectors within the energy industry, and the effects ripple across all the supporting industries.

I’m afraid we are not out of the woods yet.”

On a provincial basis, PSAC now estimates 2,718 wells to be drilled in Alberta, down from 2,733 in the original forecast. Approximately four per cent fewer wells are also expected to be drilled in British Columbia, with PSAC’s revised forecast now at 330 wells for the province down from 344

26 SPRING 2016

in the original forecast. The revised forecast for Saskatchewan now sits at 1,643 wells compared to 1,789 wells in the original forecast, and Manitoba is forecasted to see 205 wells or a decline of 75 in well count for 2016.

“The lack of progress on nation-building projects, such as pipelines to tidewater, is counterproductive to Canadian energy resource development,” says Salkeld. “In turn, this is hindering Canada from being a country that can help other countries in need of oil and gas resources...

We have the third largest oil reserves in the world, but we have less than four per cent of the global market share. We’re resilient and we’re extremely good at what we do in the energy sector. We’ll come out of this slump, but we’re getting in the way of our own success. Not moving forward on infrastructure projects, even though we have a solid track record of responsible energy and resource development, is hurting us and areas of the world that would benefit from what we have to share.”

As the voice of Canada’s leading petroleum industry services, supply and manufacturing companies, PSAC advocates for its members to enable their continued innovation, technological advancement and in-the-field experience that helps increase efficiency, improve safety and reduce the environmental impact for Canada’s energy exploration and development.

PETROLEUM SERVICES NEWS

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