Petroleum Services News - Spring 2011

SPRING 2011

NEWS

PSAC introduces a new name and look for your magazine

Collaboration is needed to keep labour costs down

PLUS: Hot Stuff: Baker Hughes Inc. pioneers an extreme temperature electric submersible pump Productivity Watch: How to boost the bottom line • Arcis Seismic Solutions drums up community support PM#40020055

• No workers in hot zone • Low pressure lines • Increased production, decreased HSE risk

ERS has put safety and environment at the top of their list. This system is truly innovative and, quite frankly, is the Best Available Practice I have encountered.

S. Hanelt, CFEI, CVFI SCO Fire Investigator/Inspector Safety BOSS Inc.

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CONTENTS

SPRING 2011

Departments MESSAGE FROM THE PRESIDENT 2011 CANADIAN DRILLING ACTIVITY FORECAST UPDATE

4 7

PSAC expects increased activity in the Western Canadian Sedimentary Basin

IN THE FIELD

8

News and notes from the industry

SPRING CONFERENCE

10

Find out what’s happening at this year’s event

BUSINESS MATTERS

22

PSAC IN ACTION

Communication and collaboration are key to containing costs

17

MEMBER PROFILE

FOREIGN AFFAIRS

26

PSAC takes action to help members tap global business opportunities

18

STARS & SPURS

21

Baker Hughes Inc. pioneers an ultra-high temperature submersible pump for in situ oilsands projects

COVER

LABOUR SHORTAGE

20

A rundown of Association initiatives on behalf of members and industry

Features 12

19

Productivity is the lifeblood of any business, and PSAC members are no exception

COMMUNITY MATTERS

22

Arcis Seismic Solutions drums up goodwill at a Calgary school

18

Photos and the tally from this year’s gala and fundraiser presented by PSAC

PETROLEUM SERVICES NEWS

3

MESSAGE FROM THE PRESIDENT

Building Blocks

I

T IS PICKING UP AGAIN IN OUR INDUSTRY and I am enthusiastic about the

challenges that lie ahead. In my new position as President of PSAC, I inherited a “Three Year Strategic Plan” developed by the PSAC team and my predecessor Roger Soucy, and I’m happy to say that it fits like a glove. The highlights for me are: 1. Raise the awareness of PSAC and all that we do among our members, government, the producers and the communities in which we work and live; 2. Help develop stronger relationships among the industry associations: CAGC, CAODC, CAPP, CEPA and SEPAC for the betterment of the Canadian oil and gas industry as a whole and again for the communities in which we work and live; 3. As the petroleum service sector’s leader in advocacy, increase membership so that PSAC can deliver a strong voice and presence, to be heard and recognized by policy makers and governments, preceding and during any decision making process that directly or indirectly affects our sector.

These are three significant priorities that I am passionately pursuing together with an excellent team of people here at PSAC. Mark A. Salkeld, PSAC President PSAC member companies represent more than 80 per cent of the business volume generated in the Canadian petroleum services sector. Our services sector is so vibrant and diverse that it easily precludes any misconceived perceptions that the petroleum services sector is anything less than a substantial force to be reckoned with.

The recent PSAC-initiated studies conducted by the Canadian Energy Research Institute (CERI) and Mission Capital Inc. highlight the sector’s importance. Oilfield service and supply firms contributed $65 billion to the Canadian economy in 2006. I intend to raise the awareness of all of the above and much more on behalf of our members. Ours is a good news story that needs to be told and retold.

As well, I have met with each of the leaders of our industry partner associations, and I am honoured to work with these folks toward building upon previous efforts to create one of the most leading-edge, socially responsible and principled oil and gas industries in the world.

Collaboration efforts among the industry associations result in a heightened level of positive public awareness and expectations for our sector to continually deliver safe, reliable and efficient energy services which in turn allows all Canadians to acknowledge they live and work in a country recognized globally for a strong commitment to deliver these resources through improving services, systems and processes.

PSAC will continue to initiate and support ongoing collaborative projects between the Canadian energy associations of PSAC, CAGC, CAODC, CAPP, CEPA and SEPAC so that the benefits for our industry and our communities will be realized now and in the future.

I also look forward to the third of my initial three highlighted goals – to increase PSAC membership levels. I plan to reach out to existing members to ensure PSAC always delivers the quality service they’ve come to expect, and to seek out potential new members to make certain they are aware of the 30-year legacy of professional and committed advocacy efforts PSAC consistently delivers on. A significant benefit of membership is that a company can join the voice of many rather than repeat efforts by trying to advocate on its own.

PSAC member companies representing the petroleum services sector in Canada are some of the most innovative, entrepreneurial and technologically advanced that I have ever come across and I’m proud to work with a dedicated board and staff that represent our members on many fronts in the oil and gas services sector.

Cheers,

Mark A. Salkeld PSAC President

4 SPRING 2011

PETROLEUM SERVICES NEWS

ARK DIRECTIONAL SERVICES INC.

SPRING 2011 VOL 10 • 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 over 250 member companies, employing more than 52,000 people and contracting almost exclusively to oil and gas exploration and production companies. PSAC member companies represent over 80 per cent of the business volume generated in the petroleum services industry.

PETROLEUM SERVICES ASSOCIATION OF CANADA 1150 800 6TH AVENUE SW CALGARY, AB T2P 3G3 TEL: 403.264.4195 FAX: 403.263.7174 SENIOR VICE PRESIDENT: ELIZABETH AQUIN EDITOR: HOLLY KERR

HORIZONTAL AND DIRECTIONAL DRILLING COMPLETELY UNMANNED EM & PULSE MWD CAPABILITIES WELL PLANNING ALBERTA – COLORADO 109 – 1010 Railway St., Crossfield, Alberta T0M 0S0 Tel: 403 946-2550 Fax: 403 946-2551 Calgary Technical Sales Tel: 403 946-2550 Mailing Address PO Box 10219, Airdrie, Alberta T4A 0H5

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

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PUBLISHER: RUTH KELLY ASSOCIATE PUBLISHER: JOYCE BYRNE MANAGING EDITOR: JEFF LEWIS EDITORIAL INTERN: CAILYNN KLINGBEIL ART DIRECTOR: CHARLES BURKE ASSISTANT ART DIRECTOR: COLIN SPENCE PRODUCTION COORDINATOR: BETTY-LOU SMITH DISTRIBUTION: JENNIFER KING ACCOUNT EXECUTIVES: LEAH MAWER, DENNIS MCCORMACK

Wellsite Supervision and Project Management • • • • •

PRINTED IN CANADA BY RHINO PRINT SOLUTIONS. RETURN UNDELIVERABLE MAIL TO 10259 105 ST. EDMONTON AB T5J 1E3.

CIRCULATION@VENTUREPUBLISHING.CA • PUBLICATIONS AGREEMENT #40020055 CONTENTS © 2011 PSAC. NOT TO BE REPRINTED OR REPRODUCED WITHOUT PERMISSION.

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Drilling, Completion, Construction Supervision Production Asset Management / Optimization Drilling, Completion, Production Engineering International and Offshore Supervision Safety Programs and Audits

Suite 300 Iveagh House 707, 7th Avenue S.W. Calgary, AB Canada T2P 3H6

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T 403 264-1197 F 403 264-1584 www.pajakeng.com

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Always the leader

9115 - 52 Street SE Calgary, AB T2C 2R4

Quality Trucks, Parts & Service

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6 SPRING 2011

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7690 Edgar Industrial Court Red Deer, AB T4P 4E2

403-314-1919 2/9/11 3:23:44 PM

PETROLEUM SERVICES NEWS

DRILLING ACTIVITY FORECAST UPDATE PSAC INCREASES 2011 DRILLING FORECAST BY 500 WELLS

I

N ITS FIRST UPDATE TO THE 2011

Canadian Drilling Activity Forecast, released in late January, the Petroleum Services Association of Canada (PSAC) is forecasting a new total of 12,750 wells drilled (rig released) across Canada for 2011. This is an increase of 500 wells or 4 per cent from an earlier forecast released in November 2010. On a provincial basis for 2011, PSAC estimates 8,390 wells to be drilled in Alberta, a three per cent jump over final 2010 drilling levels.

PSAC expects British Columbia to have 700 wells drilled in 2011, up seven per cent from last year. Saskatchewan’s drilling rate in 2011 will see an 11 per cent bump over 2010 to 3,075 wells, while drilling levels in Manitoba will move up by one per cent to 550 wells. The fi nal tally for 2010 was 12,158 wells drilled across Canada.

The 2011 upswing is primarily the result of strengthening prices for crude oil. PSAC is basing its updated 2011 Forecast on average natural gas prices of Alberta: 8,390 CDN$3.85/mcf (AECO) and crude oil prices ofBritish US$85.00/barrel (WTI).

Columbia: 700 Saskatchewan: 3,075 “Due to strengthening oil prices and innovations in technology, we Manitoba: 550 Canadian Total: 12,750 expect 2011 to continue to see modest increases in drilling levels from 2010, recognizing shortages in skilled labour that restrict the ability of

CERI 2011 Oil Conference Shifting Demand in the Future: The Hydrocarbon Age Continues ...

2011 DRILLING ACTIVITY FORECAST (NUMBER OF WELLS)

13, 000 12, 000 11, 000

NUMBER OF OIL WELLS

Rising Tide

drilling and petroleum service providers to realize full output capacity,” said Mark Salkeld, President of PSAC. “The industry is still faced with weak natural gas prices primarily related to oversupply in the market. The burgeoning supply of natural gas – despite reduced levels of drilling – is a direct result of shale gas production.

We continue to see an escalation in not only the amount of horizontal wells being drilled, but also in the length of these wells. The industry should see north of 5,000 horizontal wells drilled in 2011, indicating the type of capital being spent in the basin.”

10, 000 9, 000

ALBERTA: 8,390

8, 000 7, 000 6, 000 5, 000 4, 000

SASKATCHEWAN: 3,075

3, 000 2, 000 1, 000

BRITISH COLUMBIA:700

MANITOBA: 500

0

TOTAL IN CANADA: 12,750

This is what we do.

April 4-5, 2011 The Fairmont Palliser, Calgary, Alberta The winter of 2008-2009 can be considered the dark days for oil markets as prices lingered at the $40 (US) per barrel mark. Since that period in time, prices have moved upwards towards the $70 level with a couple of incursions above $80. Rumours out of Saudi Arabia indicate that the nation will defend an $85 per barrel floor price. Post-recession recovery should lead to increased demand in North America and, to a greater extent, in China. The future looks good, but in light of the continued attacks on the oil sands environmental persona, coupled with grumblings about the safety of transported product on Canadian pipelines entering the United States, does it really look that good? Does the average Canadian really understand what the oil sands means to this country? Do the people of the world really understand the environmental relationship between producers, regulators, and governments? Is it time to open up Canada’s land locked resources to offshore markets? Can this be done, should we be doing it, and what are the challenges in moving forward?

Better than anyone else!

For more information call: (403) 282-1231; visit our website : www.ceri.ca; or email: conference@ceri.ca

WWW.PSAC.CA

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Phone: (403) 279-6615 Fax: (403) 236-4249 Toll free: (800) 708-7453 CompassBending.com Additional Services: • Insulation, taping and coating, including YJ bends • 3D and 5D bends • 10” and 12” bends

Experience, Quality & Service.

7320 30 Street S.E. Calgary, Alberta T2C 1W2

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in the field

News, events and activities in the industry

CoMinG eVentS PSAC Spring Conference

PSAC education fund Golf Classic

April 12 & 13, 2011 Red Deer, Alberta www.psac.ca/events

July 21, 2011 Calgary Elks Lodge and Golf Club, Calgary, Alberta www.psac.ca/events

PSAC Mid-Year luncheon and Canadian Drilling Activity Forecast Update April 27, 2011, Calgary, Alberta www.psac.ca/events

enform Petroleum Safety Conference May 4-6, 2011 Banff, Alberta www.enform.ca/events

Petroleum Services investment Symposium June 16 & 17, 2011 Calgary, Alberta www.psac.ca/events

PSAC Awarding Six Member Scholarships in 2011 PSAC iS PleASed to AnnounCe that through its Education

neW MeMBeRS Regular Members CanElson Drilling Inc. EnerMAX Services Inc. Seven Lakes Oilfield Services

Associate Members Canaccord Genuity Inc. CWI Wireless Inc. Purvin & Gertz Inc. Schenker of Canada Limited Visser Consulting Ltd.

Fund, it will be awarding six scholarships in 2011. Five $1,000 scholarships will be awarded to PSAC regular member company employees or their children, and one recently introduced scholarship worth $2,500 will be awarded for the first time this year. KPMG is funding this new scholarship over the next five years to honour PSAC’s retired President Roger Soucy.

The Education Fund Committee is making changes to the Education Fund program, and for 2011, only the PSAC Regular Member Scholarship and Roger Soucy Legacy Scholarship Funded by KPMG will be accepting applications. Scholarship eligibility criteria and application forms can be found under “Career Resources” at www.psac.ca. The deadline date for applications is Friday, April 22, 2011.

The school grant program has been suspended while the Education Fund Committee reviews its mandate, as well as the impact and distribution of future funds. Changes to the Education Fund program will be posted to www.psac.ca and announced in an upcoming Petroleum Services News, so stay tuned!

Since the first Petroleum Safety Conference was held in 1951, the oil and gas industry has constantly evolved – and so have our standards of leadership and safety.

Join safety professionals from across Canada at the 60th annual Enform Petroleum Safety Conference to learn more about the future of the industry and your role in it.

Highlights of the agenda include: » Keynote presentations by General Rick Hillier (Ret), Former Chief of the Defence Staff for Canadian Forces, and Dr. Aubrey C. Daniels, Ph.D., the world’s foremost authority on applying the laws of human behavior to the workplace

Leadership: The Evolution of Safety (1951-2011)

May 2 - 6, 2011

» Preventing human error » Engaging a multi-generational workforce » Felt leadership…and much, much more!

Visit www.psc.ca to register today!

The Banff Centre Banff, Alberta

Graphics courtesy Diamond and Schmitt.

Canada’s premiere oil and gas safety conference and tradeshow

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8 SPRING 2011

2/16/11 16/02/11 12:56:55 11:36 PM AM

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Response. Results.

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4:15 pm 5:00 pm

3:00 pm 3:15 pm

2:00 pm 2:15 pm

11:45 am 1:00 pm

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Time 8:00 am 9:00 am 9:30 am

April 12 & 13, 2011, Capri Hotel & Convention Centre, Red Deer, Alberta

2:00 pm 2:15 pm

11:45 am 1:00 pm

10:45 am 11:00 am

Conclusion of Sessions Reception and Dinner – Delegate Lounge

This WorkSafeBC presentation will focus on expectations for safe road use at the Contractor/Employer level.

Labour Services Manager, WorkSafeBC

Every day thousands of Line Locators across Canada work with complex underground infrastructures which present significant obstacles and challenges that negatively impact the quality of locates. Safe excavation projects require accuracy and planning and Line Locators require crucial skills and knowledge for expert locates. Find out about best practices for Line Locators and how you or your employees can keep abreast of the latest in skills and training enhancement.

Break 3:00 pm 3:15 pm WorkSafeBC: Resource Roads Don Dahr, Compliance Manager and Industry and

Southern Alberta Institute of Technology (SAIT)

Paul Richard, Subject Matter Expert,

Elements of a “Good” Locate

Break

The Industry Training Best Practices (ITBP) framework is an industry initiative that will assist in addressing health and safety risks by managing the acceptance and availability of specific competency-based training materials and courses.

This presentation will provide an update on the status of the ITBP pilot project.

& Distance Education, Enform

Dr. Bryan Green, Manager, Program Development

Industry Training Best Practices

Lunch

Adam Blackman M.D., F.R.C.P.C., D.ABSM President, MedSleep Implementing a fatigue management program can bring significant benefits to your organization, including improved worker productivity, enhanced quality of life for employees, and a reduction in absenteeism, accidents, and liability. Attend this session to learn about tips for success from regulatory issues to safety to cost savings.

Fatigue Management

Break

The Hours of Service Regulations pose a significant issue for oilfield service and supply companies. Attend this presentation on the Hours of Service Regulations to learn how they might impact your business.

Alberta Transportation

Wendy Carriere, Director, Carrier Services,

Social Media: Getting Noticed in the Virtual World

9:30 am

2:00 pm 2:15 pm

12:00 pm 1:00 pm

The Alberta government’s recently passed distracted driving legislation – Bill 16 – restricts the use of hand-held cell phones and distracting activities, and puts restrictions on using other electronic devices while driving. Find out more about the development and impact of this legislation and how to strike a balance between the research, enforceability, and public will to ensure the law is practical, effective and enforceable.

Break 3:00 pm 3:15 pm The Successful Supervisor Todd Reed, Instructor, Red Deer College Have you just been promoted to supervisor? Or, is becoming a supervisor a career goal? Supervising employees requires a specific set of skills. Come and learn about the best way to transition to supervisor and how to build trust amongst your staff. Information will also be provided on the four functions of a successful supervisor.

Alberta Transportation

Jeanette Espie, Executive Director, Office Traffic Safety,

Eyes on the Road: The Impact of Distracted Driving Legislation

David Glassman M.A., President, Glassman and Associates While most agree that listening is an important work and life skill we are generally perplexed about how to improve the effectiveness of our own communication. The focus of this presentation will be on understanding what we ‘do’ with language and how to diagnose and correct common problems in communicating, and distinguish basic listening attitudes and how these frame the ‘what’ and ‘how’ of listening.

Break

Simple Principles for Effective Listening

Lunch

Nick Kooman, Instructor, Red Deer College ‘Teamwork’ is a word many of us use and a behaviour we expect from our employees, but how can you help your team work more effectively as a group? Find out how building relationships and evaluating your team development will result in better goals and a clear description of roles to help your employees form a cohesive and successful team.

1981 - 2011

Current projections for Alberta’s labour market, especially in technical fields, indicate the need for skilled employees will increase significantly. Engaging employees and understanding engagement enhancement strategies is going to be critical for most employers.

Learn about the individual nature of engagement, common factors that organizations should be aware of, how team dynamics affect engagement, training as motivation, and the strategies that will prepare your organization for the recovering economy.

Robert Craddock, Partner, Key Consulting Group Inc.

Employee Engagement: Strategies for a Recovering Economy

Break

Ian Hamilton, Vice President, Human Resources, HSE Integrated Ltd. There is significant overlap between your HR and Safety departments and the positions within those departments. How do you manage these relationships so they operate effectively and efficiently? This session will look at handling claims management as a team by working closely together, respecting the values of each role, setting out to ready expectations, and keeping the lines of communication open.

Hand in Hand: The Relationship between HR & Safety

Succession planning is a process that allows an organization to grow from within. Benefits of succession planning include retaining the best talent, corporate visioning to endure through changes, and creating a comprehensive pool of competencies within the organization. This presentation will focus on how competency modeling can facilitate the development of an effective succession planning program.

Break

Gabriel E. Ayala, M.Ed., HR Advisor, Training and Development, Flint Energy Services Ltd.

Succession Planning

Does your company really see a return on employee training? This session will delve into the cost of training and losing staff versus the cost of retaining staff through cost-effective methods of engagement. It will also weigh the cost and long-term effects of layoffs and offer marketing ideas to attract employee talent from new potential labour pools.

Lunch

Executive Education, Alberta School of Business

Brent A. Collingwood, Senior Director, Client Development,

What’s the ROI on Employee Training?

Break

Trevor Thomas, VP, Digital Strategy, TMP Worldwide Social media is changing the way employers are getting noticed in an increasingly competitive and undifferentiated market. Come find out the impact of social influence on target audiences and how to leverage that into managing the employer brand. Adding digital recruitment to your HR strategy will also be addressed.

HUMAN CAPITAL MANAGEMENT

Time

Steve Eichler, Partner, Field Law New to your HR role or need a quick refresher on what’s important to know about human resources legislation? Attend this session to get a quick overview of employment law versus common law versus contract law, hiring, firing, human rights processes, Bill C-45 and more.

Break 10:15 am 10:30 am Team Development

Time TRANSPORTATION MANAGEMENT PERSONAL DEVELOPMENT Registration and Continental Breakfast Sponsored by Flint Energy Services Ltd. Opening Remarks, Mark Salkeld, President, PSAC; Industry Updates: Transportation Issues and Human Resources Committee Chairs Hours of Service 9:30 am HR 101: What You Need to Know Now

Tuesday April 12, 2011

2011 PSAC Spring Conference Schedule

Workplace alcohol and drug testing programs are proactive health and safety tools that are valuable components of corporate health and safety programs around the world. Benefitting employers and workers alike, new testing technologies and expanded drug testing panels continue to identify risks and offer opportunities for treatment and rehabilitation pathways, including successful return-to-duty strategies. Learn about program structures and benefits, the legal and regulatory issues relating to testing, innovations in testing, and what lies ahead for testing in the future.

Conclusion of Conference and Delegate Draw

Chief Medical Review Officer, DriverCheck Inc.

Dr. Barry D. Kurtzer, B.Sc., M.D., M.R.O. (AAMRO)

Break Drug & Alcohol Technologies and Techniques

Kevin MacDonald, Vice President, GEOTrac International Inc. With the recent government legislated use of log books, many companies in the oil and gas industry want more information, especially about electronic log books. This workshop will discuss the benefits of log books, such as how drivers can add jobs and still remain compliant through accurate recording of driving status, and how to discover increased flexibility through use of electronic log books over manual log books.

Lunch Electronic Log Books & ROI

Kay Devine, Instructor Faculty of Business, Athabasca University Progressive discipline is a process for dealing with job-related behaviour that does not meet expected performance standards. With a goal to improve performance, it can help an employee understand that an opportunity to improve upon a problem is available to them. This session will offer tools for performance record-keeping, and insight into planning before layoffs.

Break Performance Management

1:45 pm 2:00 pm

11:45 am

10:45 am

9:00 am

Time

Delegate Sponsors:

Do you need to optimize operating costs by 25% in 12 months? Or shift safety KPIs from bottom quartile to top quartile in 18 months? These are real examples of practical cultural change, and this session will introduce you to J.P. Kotter’s 8 Step Model for Leading Major Cultural Change.

Leveraging employee engagement to create and sustain change begins and ends with the behavioural question “What do you want me to do differently?”

Break

Dean Carton, CHRP, President, Certified Executive Coach, Catalytic HR Solutions

Herman Van Reekum, President, VRV Global Ltd. Regularly setting aside time to map the strengths, needs and improvement opportunities for your organization's human assets can help guarantee your organization's top talent is getting the attention, rotational assignments and other developmental opportunities necessary to keep them engaged and committed. Come and gather ideas for talent mapping that will ensure your best employees stay engaged and remain with your company!

Lunch Stimulating Productivity Through Alignment

Break Talent Mapping

Randy Parkin, Partner, Key Consulting Group Leading people through coaching is relevant whether employees are strategically being developed as part of an organizational succession plan, or have plans to develop as part of their own career path. Managing performance and career development opportunities are top engagement drivers, so they need to be well-managed and offered frequently. This presentation will cover the tools, processes and philosophies of coaching.

Leadership Through Coaching

HUMAN CAPITAL MANAGEMENT

Dinner Co-Sponsor:

Program Sponsors:

REGISTRATION AND MORE INFORMATION E: info@psac.ca W: www. psac.ca T: 403.264.4195 Toll Free: 1.800.818.PSAC

What stops us from being effective and completing the tasks on our "to-do” lists? This session will explore the activities and behaviors that “pirate” our time, offering strategies to eliminate them. Learn about the productivity formula and how to use it to manage your commitments and activities. Manage stress by identifying your priorities and defining what is within your realm of control so that every day will have a strategic focus.

• Abacus Datagraphics • Athabasca University • Enform • Partners In Compliance • Province and State Permitting • Red Deer College • Roadata Services Ltd. • VRV Global Ltd. • Waterous Power Systems

Delegate Lounge Sponsors:

Industry Sponsor:

11:45 am

10:45 am

9:00 am

Time

Break 1:45 pm A Better Way to Work: Eliminating Productivity Pirates Don Smythe, Principal Associate and Kurt Sigfusson, Principal Associate, Priority Management

Coach, role model, counsellor, supporter, guide…do these words sound familiar? Coaching involves each of these roles, and is based on a partnership that offers both support and challenges to employees. This workshop will offer tips on the essential skill of knowing how and when to coach, and how to improve or further develop coaching skills.

Lunch Mentoring & Coaching James Fries, M.A., ACC, CHRP, Partner, Cenera

As the economy recovers, our industry may be facing another potential labour shortage. Securing and retaining quality talent is critical for business success and is often a limiting factor of growth. Attend this session to hear about recruitment preparation, sourcing candidates, screening and selection, employment offers, due diligence, legal implications, and employee orientations.

Shayleen Stringer, Director of Recruitment, BOWEN Workforce Solutions

Break Recruiting 101: Are You Prepared for the Next Labour Shortage?

David A. Beatty, Consultant, Chrysalis Learning Systems Clear and meaningful communication is a critical skill that can be enhanced to improve our work and personal relationships.

Come learn 11 easy yet powerful verbal skills to enhance your communication style, and how to do away with "communication clutter and confusion" to communicate in an effective and meaningful way.

Communication Building Blocks for a Twenty-First Century Workforce

PERSONAL DEVELOPMENT

CONFERENCE SPONSORSHIP On behalf of conference participants, PSAC would like to thank these conference sponsors:

3:15 pm

1:45 pm 2:00 pm

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10:30 am 10:45 am

Driver Performance

9:00 am

Dr. Mike Boyes, Ph.D., Managing Partner Group, Driver Performance Group.

With the increasing use of in-vehicle communication tools and technologies, coupled with the pervasive influence of social networking habits, drivers are increasingly forced to deal with ongoing distractions that pose direct negative consequences to driving performance and risk levels. This session will present the risks of managing fleet operations, and offer strategies to effectively address the challenges.

TRANSPORTATION MANAGEMENT

Time

Wednesday April 13, 2011

Talk Cheap CAN BE

HOW COMMUNICATION CAN HELP CONTAIN COSTS IN A GROWTH ECONOMY

“W

e wanted to run a 10-well drilling program, but we couldn’t get the services we needed.”

“It’s only November and we already have more work than crew capacity.”

“Industry activity levels could pick up faster if we had more skilled workers.”

These comments may sound like they came straight out of 2005, but they are actually from late 2010. And according to a new industry survey, sentiments like these could become oilfield slogans between now and 2020. The Petroleum Human Resources Council of Canada’s 2010-2020 labour market information (LMI), set for release this month, explains that no matter the pace of economic recovery, the petroleum industry will be challenged to meet its hiring requirements over the next decade. In fact, the industry is already experiencing chronic shortages for a number of occupations, particularly those in the service sector. So even though it may not appear that activity in the Western Canadian Sedimentary Basin (WCSB) is ramping up significantly this year, attention still must be paid to a looming labour shortage.

Cheryl Knight, the Council’s Executive Director and CEO, says there are a number of trends affecting the demand for skilled labour in the oil and gas industry, especially on the service side. “First, the service sector’s involvement in the oil and gas industry is shifting somewhat, as the oilsands are becoming ever-more reliant on contracted services. Second, in situ and unconventional activities are demanding more of the sophisticated skills related to the new technologies being implemented. This skills demand is creating a chronic labour shortage in related occupations like fraccing

12 SPRING 2011

and completion operators, heavy equipment operators and class one drivers. Finally, over the next 10 years, the whole petroleum industry will need to replace thousands of workers who will be ending their careers because of retirements and other age-related reasons.”

Knight says that even in a scenario of prolonged low oil and gas prices, the industry will need to hire a net 40,000 workers over the next 10 years. If oil and gas prices both climb high enough to encourage more investment in activity and infrastructure between now and 2020, the industry’s net hiring needs will jump to an astounding 130,000.

That’s a lot of field workers and supervisors, truck drivers, drilling coordinators, heavy equipment operators, millwrights, welders and others. Where are these skilled workers going to come from? That’s a tough question to answer because the industry’s labour supply is constricted by a number of factors: • Potential employees may not understand the industry’s growing need for workers, especially when they hear about activity slowdowns and layoffs. In short, hiring attracts workers; layoffs turn potential workers away.

The industry’s ups and downs send mixed messages about work and career opportunities that are difficult for potential workers to figure out.

• There are simply not as many workers available.

Population growth has slowed, our society is aging and most immigrants to Canada don’t always have the direct experience the oilpatch needs. In addition, companies

PETROLEUM SERVICES NEWS

having to replace retiring employees are finding that “green hands” simply cannot take the place of experienced workers on a one-to-one ratio.

• Even if enough workers were available, the petroleum industry may not be able to attract its share. Many young people, for instance, are not willing to join the oil and gas industry, because of negative perceptions, the need to work in “hard-to-recruit” locations, or strong competition from other industries.

“The oil and gas service sector is no longer just focused on the conventional industry,” confirmed Mark Salkeld, PSAC President. “PSAC member companies are working more and more in unconventional areas, and they are adding great value.”

The service sector adds value with expertise, timeliness, ingenuity and innovation, but that value could be multiplied many times over with proactive communication and collaboration between service companies and their E&P customers. Calgary-based Ziff Energy Group’s June 2010 report, titled Canadian Conventional Gas at a Crossroads, explains that communication and collaboration would go a long way to reducing uncertainty and increasing productivity.

“For service companies, there is a value to predictability and sustainability,” the report says. Instead of setting annual budgets for programs, some E&P companies are looking at project life cycles of three, five or seven years, Ziff says.

As a result, both operating and service companies are better able to respond to changes in capital spending and commodity-price swings. “With multi-year contracts, as opposed to bidding every winter drilling season, there could be better planning and everyone could work toward a steadier program,” the Calgary consulting house says.

If E&P companies discussed upcoming plans with their contractors, the service companies involved could prepare themselves to be where they needed to be, with the right people and equipment, when they were needed. Proactive collaboration could also reduce costs, which will become more important going forward as commodity prices rise and activity levels increase.

“The petroleum industry has been able to increase its activity in the lower commodity price environment because of decreased costs for labour, materials and equipment,” the Petroleum HR Council says. “However, the easing of costs, including labour costs, will be short-lived. The industry will need to take action to prevent cost escalation to the point of making new projects and expansion uneconomical.”

After Trican Well Service Ltd. signed a two-year deal to supply a new fracturing crew for a U.S. producer, Mike Baldwin, the firm’s Vice-President, Finance and Chief Financial Officer said, “A long-term contract gives us the opportunity to allocate our resources in a given region more efficiently. It also gives us a measure of job certainty, which benefits our current employees and is attractive to those considering Trican as an employer.”

These labour supply issues affect the entire industry. The service sector faces even more recruitment and retention challenges: • By far, the majority of jobs in the oil and gas industry are – and will continue to be – in the service sector, and upwards of 80 per cent of service sector jobs are in the field. Field jobs are difficult to recruit for because of their challenging working conditions, specialized skills, remote locations and the need for workers to be away from home for long periods.

• The service sector is always the hardest hit by an economic downturn.

Unlike exploration and production (E&P) companies, service companies have no production-generated cash flow to get them through lean times.

When service companies don’t have enough work, they can’t pay their employees’ salaries and wages, so they have to downsize much sooner – and much more significantly – than their E&P customers in times of economic hardship. Then when the economy recovers and activity begins to climb, service companies have to increase their bench strength quickly, in order to take advantage of the upswing.

• Seasonality and cyclicality lead to service sector turnover rates that can reach 30 to 50 per cent and even higher. Although companies may strive to recruit appropriately and institute successful retention programs, they still may need to hire four or five people to fill one position because of extreme turnover. As a result, the service sector spends exponentially more time and money on hiring and training than the industry’s other sectors do.

• Much of the work done in the service sector demands niche expertise, on-the-job experience and problem-solving skills. For service companies, building capacity like this takes time and a solid investment in their people. But service companies aren’t the only ones recognizing these valuable skills. E&P companies often hire away good people from service companies, which can result in a significant loss of intellectual capital within a service company, and SERVICES SECTOR WORKFORCE within the sector as a whole. When their key team Oil & Gas Drilling and Services Field Workers members are lured away, service companies have to rebuild their teams, while continuing to provide Supervisors, Oil & Gas Drilling and Services high-quality, low-cost, just-in-time services to their Truck Drivers E&P customers. And because E&P companies traditionally pay more, service companies end up Drilling Coordinators/Production Managers competing with their customers for good people, Heavy Equipment Operators which adds to spiraling labour costs.

EXPANSION SCENARIOS (TOP 7 OCCUPATIONS)

Millwrights and Machinists

The service sector is already the preferred labour supply for both the E&P and oilsands sectors.

As oilsands companies increase their reliance on contractors for in situ drilling and well services, as well as some maintenance and operations work, service companies are finding their skills, experience and technologies in demand right across the industry.

WWW.PSAC.CA

Welders 0 Growth Scenario

2 000

4 000

8 000

10 000

12 000

14 000

Growth Oil/Low Gas Scenario

Employment is projected in three scenarios: Growth (high oil and gas prices), Low (low oil and gas prices) and Growth Oil/Low Gas (high oil price and low gas price). No matter what scenario arises, the service sector will need to hire thousands of workers over the next 10 years because of age-related attrition.

13

INDUSTRY EXPERIENCES LABOUR SHORTAGES REGARDLESS OF SCENARIO INDUSTRY’S PROJECTED UNEMPLOYMENT RATE 10 ACTUAL

Number of Workers

9

PROJECTED

8 7 6 5 4 3 2 1 0 2006

2007

2008

2009

Growth Scenario

2010

2011

2012

2013

Growth Oil/Low Gas Scenario

2014

2015

2016

Low Scenario

2017

2018

2019

2020

Balanced Unemployment Rate

The service sector is the largest employer in the oil and gas industry. In an environment of high oil and low gas prices (a logical scenario from a 2011 perspective), service sector employment grows in tandem with oil sands employment and activity.

SERVICES SECTOR EMPLOYMENT PROJECTIONS - 3 SCENARIOS SERVICES SECTOR EMPLOYMENT FLUCTUATES WITH OIL AND GAS PRICES 140, 000 ACTUAL

Number of Workers

120,000

PROJECTED

100,000 80,000 60,000 40,000 20,000 0 2006

2007

2008

2009

2010

2011

2012

Growth Scenario

2013

2014

2015

Growth Oil/Low Gas Scenario

2016

2017

2018

2019

Low Scenario

Source: Petroleum Human Resources Council of Canada, Labour Market Projections 2010-2020 (From Labour Market Projections & Analysis 2010 report to be released March 2011)

14 SPRING 2011

2020

Collaboration and communication are positive actions that can be taken to bring down costs by increasing certainty; load levelling is another.

Load levelling – smoothing the activity cycle so drilling and completion operations take place in different locations throughout the year – is a proven strategy for boosting oilpatch productivity and efficiency. The WCSB lends itself well to load levelling because of its diversity of geology and geography. However, uptake on load levelling has been limited to date.

“We really only saw load levelling in the WCSB during the boom years of 2005 and 2006, when well activity truly did continue throughout all 12 months,” says PSAC’s Salkeld. “Since then, as commodity prices and overall activity levels have slowed, drilling and well completion programs have slowly shrunk back to the winter months.

This compressed activity schedule makes it really tough for service companies to maintain their core expertise and keep their costs down.”

When service companies remain in the dark about their customers’ plans, they have to operate on a day-by-day basis, keeping only the staff they currently need and offloading the rest. Conversely, when service companies know what’s coming up, their ability to meet their customers’ needs rises exponentially. Key employees can be retained over the long term and companies can commit to having their teams ready for deployment as needed, season after season, year after year.

Collaboration and communication between the E&P and service sectors can make the entire oil and gas industry more predictable, and therefore more efficient. By planning the work and working the plan, the industry can maintain a strong, steady and skilled workforce. Service companies can focus less on the familiar cycle of recruiting, training and downsizing staff, and focus more on getting their customers’ job done safely and efficiently – just as planned.

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WIDE Horizons HOW PSAC PLANS TO HELP ITS MEMBERS TAP GLOBAL MARKETS International interest in Canada’s energy sector is growing. That spells opportunity for service and supply companies. PSAC President Mark Salkeld sat down with PSN to talk about a new partnership with the Department of Foreign Affairs and International Trade, represented by David McGregor, trade commissioner, oil and gas.

Petroleum Services News: How did this relationship with the Department of Foreign Affairs (DFAIT) and International Trade come about?

Mark Salkeld: They approached us in the fourth quarter of last year. It was an initiative on the part of the federal government. We agreed and met with them and they explained what they were up to and we explained our previous experience and it just seemed like a nice fit. It was an opportunity for us to make sure that the federal government got a real good look at what’s going on in the oil and gas services sector.

PSN: Does this relationship represent a new direction for PSAC on the international level as far as attracting foreign investment and opening doors abroad for your members?

MS: It’s a little of both. It’s definitely an opportunity for PSAC to help the portion of our membership that’s interested to capitalize on international opportunities and also to use David McGregor’s extensive network [DFAIT] to say ‘Hey, look what Canada’s got.’ It’s reciprocal. He’s got extensive contacts throughout the world.

PSN: Are you looking to build relationships with specific countries?

MS: There are lots of interested investors. Brazil is very interested in what our service sector can provide for their country. In China, there are lots of

WWW.PSAC.CA

businessmen who have money invested in the U.S. who think they might get a better return for their dollar in Canada and are looking to invest – not buy, take over and operate – but just to invest.

PSN: Do you anticipate more PSAC members scoring international business as a result of this partnership with DFAIT? MS: We’re simply providing an opportunity for PSAC’s membership – those that are interested – to take advantage of this arrangement with DFAIT and their global network of trade commissioners. It’s too early in the game to know if our members are interested. Some of them are already there; but the smaller mom-and-pop operations and independent contractors probably aren’t interested. They’re happy doing what they do here in western Canada. I believe there’s a segment in the middle that has developed expertise in Canada that they think will work in other areas of the world. They may want this opportunity. So it’s too early to tell, but we’re definitely going to put it on the table for our membership and let them know that we have this service available and see how it goes over the next three years.

PSN: Global E&P capital spending is expected to near $500 billion in 2011. Will this connection help the PSAC membership tap into that business?

MS: Yes. That’s what David and DFAIT are bringing to the table. That’s what he’s here for – to get out in front of the membership and the other sector associations and let them know what’s available. There could be companies that are interested but don’t have the wherewithal, the connections or the funding to take advantage of it and that’s what David’s

Mark Salkeld, PSAC President

role is for, to look into that and provide our membership with possible opportunities.

PSN: How will this relationship work in practical terms?

MS: We’re going to make sure our membership is aware of David and what he has to offer. I’ve already had some discussions with David. It just seems like a huge advantage. Members can come to him with a product or service and he can reach out to his contacts around the world and say, ‘Would this service or product be of interest in your area?’ and get feedback and start making those connections. A lot of that is just helping our members save time and travel.

PSN: The service supply sector is a $65-billion industry, but it doesn’t get a lot of recognition. Is this an opportunity for PSAC to tell its story to the federal government and the international community?

MS: You bet. It’s a big opportunity, and that’s one of the things we’re really focusing on – developing our government relations plan. And those numbers coming through our [Canadian Energy Research Institute] study – we’re putting this information in the hands of just about everybody we possibly can, at the federal, provincial and municipal level. It’s very, very important that we get it out there. I don’t agree with this perception that we’re the poor cousin of the industry. That view has gone by the wayside a long time ago. I’ve got 30 years in industry and the role that our sector plays is significant. We play second-fiddle to no one.

17

Spurs AND

PHOTOS: TORIN SEGSTRO

Stars

PSAC’S ANNUAL FUNDRAISER FOR STARS AIR AMBULANCE RAISES MORE THAN $500,000

S

EVERAL RECORDS WERE BROKEN THIS YEAR

at the 17th Annual STARS & SPURS Gala presented by the Petroleum Services Association of Canada (PSAC) in support of the Alberta Shock Trauma Air Rescue Society (STARS).

Sponsorship revenue, silent auction revenue, and table centerpiece revenue were higher than ever before. In addition, more than 1,100 people attended the event, making it the second-best turnout in the gala’s 17-year history.

In that time, the PSAC-sponsored event has helped raise more than $4.6 million for STARS. This year’s gala, held on January 22, brought in a net total of $544,000, an incredible amount given the economy’s sluggish emergence out of the recent economic downturn.

PSAC credits all sectors of the industry – producers, services, drilling and pipelines – for working together to make the fundraiser such a long-time success.

“This year’s turnout and the ongoing support by the oil and gas industry speaks volumes about the value our entire industry places on STARS and the critical work they do,” said Mike Edmonds, Chair of the STARS & SPURS Gala organizing committee. “Our event helps ensure that STARS’ emergency medical response services remain available to oilpatch workers, their families and communities across Alberta, northeastern and southeastern B.C.” “This partnership between PSAC and STARS has been well nurtured over the past 17 years,” added Mark Salkeld, PSAC President. “The STARS & SPURS Gala is a very special, one-of-a-kind industry event and the money raised by our collective efforts is more important than ever. Giving back to the communities in which we work, and helping to provide better access to healthcare are important priorities for this event. As long as STARS increases our ability to access emergency medical services, PSAC will work alongside them. We congratulate STARS on another year of critical work in our community, and look forward to many more years working together.”

1

2

3

4

1 Emcee Dave Rutherford of QR77 Radio, and PSAC President Mark Salkeld draw a lucky winner.

2 Veteran Gala Committee member Rod McBride of M-I SWACO is in the thick of the live auction bidding.

3 L-R PSAC Board Chairman Brian Coston, PSAC President Mark Salkeld, and Gala Chairman Mike Edmonds present cheque for $544,096 to STARS CEO Dr. Greg Powell.

5

4 STARS Pilot James Roach is flanked by Calgary Stampede royalty as they check out one of the STARS helicopters.

5 Canadian Country Music Awards winner Gord Bamford performs for the high-stepping sold-out crowd.

6 L-R: Stampede Princess Whitney Wilkie, Indian Princess Eva Meguinis, PSAC Board Chairman Brian

Coston, Honourary Patron Roger Soucy, STARS President & CEO Dr. Greg Powell, Stampede Queen Jenna Lambert, and Stampede Princess Stephanie Gray celebrate Roger’s Honourary Patron award.

7 The Hon. Lindsay Blackett, Alberta Minister of Culture and Community Spirit (right) brought greetings from the government and shared a laugh with STARS’ VP Finance and Admin, Jeff Quick.

18 SPRING 2011

6

7 PETROLEUM SERVICES NEWS

BUSINESS MAtterS

Taking Stock

year-over-year revenues from the firm’s oilfield business slid by 47 per cent to $27 million. The drop in revenue from other industrial clients was only 13 per cent.

Diversification has been crucial to the firm’s continued growth, HSE chief operating officer Glenn Roberts says. “In all honesty I don’t believe HSE would be here today without that strategy having been implemented,” the service chief says.

The lesson, Baker says, is to not wait for bad times to make drastic changes.

Businesses looking to extend their markets should first get a handle on their capacity to compete in new sectors.

by CAILYNN KLINGBEIL

ProduCtivity gAinS Could be the differenCe betWeen Surviving And thriving When tiMeS turn tough

P

roduCtivity iS the lifeblood

of a business. In the feast-or-famine hunt for black gold and natural gas, companies rise and fall on their ability to respond quickly to the vagaries of commodity-price swings, market forecasts and government policies.

“Productivity is important for the oil and gas service sector just as it is for any other sector of the economy,” says Jeff Baker, manager of education and awareness at Productivity Alberta, an industry-guided service that connects businesses and organizations with the resources they need to succeed.

Here are three areas that demand fresh attention:

Energy Efficiency Don’t be intimidated by this green-speak. Energy efficiency is the low-hanging fruit of productivity gains, Baker says.

As costs for space heating and energy in general increase, tweaking everyday practices can translate to incremental savings to the bottom line.

Take stock of old infrastructure and machinery. Replace aging components with more efficient technology.

Even simple changes like switching lights off and reducing heat overnight can put a big dent in operating costs. Efficiency tweaks can also extend the life of existing infrastructure and plant equipment, reducing wear and tear.

Consider a lighting retrofit to reduce costs and improve worker morale.

Not sure where to begin? Productivity Alberta provides a handy Energy Efficiency Toolkit on its website www.productivityalberta.ca. The agency also hosts workshops in conjunction with Natural Resources Canada to help companies achieve those incremental green gains, putting the low-hanging fruit within reach of even the oiliest of companies.

Productivity in Action Jim Rakievich knows firsthand the value of adopting productivity measures.

The CEO and president of McCoy Corporation is a lean-thinking guru.

“We decided in mid-2004 that our North American manufacturing style was not going to carry us through another 40 years, because of our lower productivity than other parts of the world,” Rakievich recalls.

McCoy brought in outside experts and made a big financial commitment to implement new processes starting in 2005. Waste and duplication were flagged along the way. Product quality and worker safety quickly improved.

Implementing productivity measures was initially met with resistance, especially from middle management. But Rakievich wasn’t deterred. In his view, if the company did not make changes it would soon be out of business. As tangible results began to materialize, those who were initially reluctant shifted their stance.

Says Rakievich, “It took awhile but I’ll tell you, there’s no one in the plant who would ever want to go back to the way we did things in the past.”

Market Extension Adapting your product for use in a new market may sound like a daunting task. But creating new services or features to support existing customers, and not being afraid to find new ones, is what market extension is all about.

Baker says companies should examine their current market niche – whether it’s fuel delivery systems, well site services or straight-up fabrication – as a starting point to exploring whether current services are applicable in a related field.

Just because a firm has always served sector X, Baker notes, doesn’t mean it can’t also serve sector Y and Z. Market extension can be the difference between simply surviving and thriving during a downturn.

Consider HSE Integrated Ltd. When the global economic and energy-price contraction hit in 2008-09, the Calgary safety boutique didn’t rest on its laurels.

The company had spent the previous four years securing business connections outside of the oil and gas sector, making inroads for its industrial safety services in sectors ranging from mining, utility and manufacturing sites to forestry, power plant and oil sands operations.

By the time oil prices plummeted from their mid-2008 peak of US$147 per barrel to $34, HSE was well positioned to weather the storm. In 2009,

WWW.PSAC.CA

000PSN2.VRVGlobal_1-4V.indd 1

2/9/11 2:09:20 PM

19

PSAC IN ACtion PSAc coNtINueS to SPReAd the Good woRd thRouGh AdvocAcy ANd outReAch

PSAC StrikeS neW SubCoMMittee For internAtionAl eMPloyMent iSSueS Many PSAC member companies have expanded or are expanding their employee base beyond Canada to diversify their operations and meet PSAC AttendS MiniSter’S ForuM on the Future oF AlbertA’S WorkForCe PSAC participated in a forum hosted by Alberta Employment and Immigration customer demand. To address some of the unique challenges, PSAC has established a new subcommittee to address international and cross-border Minister Thomas Lukaszuk in October. Along with more than 130 officials employment issues, and provide a forum for members to share information representing employers, industry associations, labour and professional on best practices. The first meeting was held in January, with further organizations, educators and government, PSAC provided input to plan meetings to follow on a regular basis. The subcommittee’s first priority is to Alberta’s future workforce to increase the province’s competitiveness. identify and develop a framework to deal with member issues and explore the ways PSAC can help. To participate, please contact Heidi Weiss at hweiss@ FederAl red tAPe reduCtion CoMMiSSion psac.ca or 403.781.7381.

PSAC representatives made a presentation to the federal Red Tape Reduction Commission and urged the Commission to reduce the regulatory burden on industry and streamline the process for developing and amending regulations. PSAC lAunCheS CoMMunity PArtnerS ProgrAM in Fort St. John PSAC launched Community Partners, the new industry-wide “in-the-field” courtesy program, on November 30 in Fort St. John, B.C. For information on PSAC MeetS With AlbertA AdvAnCed eduCAtion And teChnology, the launch and the companies involved, visit www.communitypartners.ca.

And AlbertA APPrentiCeShiP And induStry trAining boArd In the fall, PSAC participated in several sessions to support the designation of Cathodic Protection Technician as a “Designated Occupation” under the PSAC SignS MeMorAnduM oF underStAnding With dFAit Apprenticeship and Industry Training Act. Following the sessions, the Alberta For the next three years, PSAC will host Department of Foreign Affairs and Apprenticeship and Industry Training Board confirmed that as a result of comments International Trade’s (DFAIT’s) David McGregor, Trade Commissioner and by stakeholders such as PSAC, it will stand behind its 2009 recommendation that Global Practice Lead – Oil and Gas, who is now working out of the PSAC Cathodic Protection Technician become a designated occupation. offices. Contact McGregor directly at 403.781.7385 or email david.mcgregor@ international.gc.ca . For more information, see full story on page 17.

PSAC MeetS With MiniSterS to PreSent reSultS oF StudieS Since announcing the groundbreaking results in October of two significant studies conducted on behalf of PSAC by the Canadian Energy Research Institute and Mission Capital Inc. (see www.psac.ca for details), PSAC continues to meet with public officials to create a better understanding among governments, the public and media of the significant financial contributions and employment role the petroleum services sector plays across Canada. In November and December, PSAC presented the results of the studies to Federal Minister of Natural Resources Christian Paradis, Alberta Minister of Energy Ron Liepert, and Alberta Minister of Employment and Immigration Thomas Lukaszuk, amongst others.

PSAC ContributeS inForMAtion to induStry CAnAdA For reviSed SeCtor ProFile PSAC was consulted by Industry Canada for a comprehensive and updated Upstream Oil and Gas Equipment and Petroleum Services Sector Profile. The new profile will include the latest information about the economic contribution the sector makes; products and services by segment; the supply chain; business elements including a discussion of domestic and international markets, innovation, people and government policies; an exploration of the sector’s current state and a forecast indicating growth drivers and trends. This document will be used to assist other government departments with policy decisions. hourS oF ServiCe exeMPtion APProved Following several years of negotiations with Transport Canada and transportation regulators in western Canada, the federal Minister of Transport has approved PSAC’s application for exemptions from some of the requirements of the federal Hours of Service Standard. These exemptions will allow the service sector of the oil and gas industry to continue to provide services in a timely and safe manner. Complete details of the exemption and conditions will soon be made available. Alberta Transportation will be making a presentation on the exemption at the PSAC Spring Conference to be held in Red Deer, April 12-13, 2011.

20 SPRING 2011

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Hot Stuff

BY ALBERT THOMPSON

BAKER HUGHES INC. PIONEERS AN ULTRA-TEMPERATURE SUBMERSIBLE PUMP FOR IN SITU OIL SANDS SITES

O

IL SANDS EXTRACTION IS

a rough and tumble business. High costs and rugged conditions including long winters at remote locations take a toll on companies, workers and the equipment they use.

At the mega-mine complexes north of Fort McMurray, abrasive ore wears enough steel off mine hardware to make a new truck every day.

Baker Hughes Inc., a member of PSAC since 1994, is no stranger to the industrial realities of the bitumen belt. The firm has become a leader in developing electric submersible pumping systems (ESPs) designed to withstand the harsh operating conditions at in situ oil sands extraction sites.

“We basically fast-tracked ourselves into this market,” says Kelvin Wonitoy, Project Manager, artificial lift.

Baker Hughes’ ultra-temperature electric submersible pump operates in conditions up to 250°C

The market is poised to grow. Production from the underground extraction method that uses steam to melt and thin bitumen is on track to eclipse output from traditional mining by 2016, according to the Canadian Association of Petroleum Producers.

The “artificial lift” in Wonitoy’s title highlights a Baker Hughes specialty. Getting viscous oil sands ore from the well-bottom to ground level is a tricky business. That’s because in situ reservoirs are essentially manmade, Wonitoy points out.

WWW.PSAC.CA

The formations lack the natural pressure that drives oil to the surface in conventional vertical wells. Bitumen released in a SAGD, or steam-assisted gravity drainage job requires an extra jolt, or “lift” to get it to ground level.

One way to raise the newly thinned bitumen uses natural gas. In this method, known as gas-lifting, natural gas is injected underground alongside steam.

The gas makes the bitumen frothy and helps raise it up through the wellbore.

“It’s like blowing bubbles into a bottle of Pepsi,” Wonitoy says. “But it’s very inefficient,” he adds. “It’s very expensive.”

Cue the bright minds at Baker Hughes. The firm has developed an extreme temperature ESP system it calls Centrilift XP that promises to increase recovery rates four-fold compared to gas-lifting jobs.

“We can go anywhere up to 1,200 or 1,300 cubic meters a day on some of the more prolific wells,” Wonitoy enthuses. “So you have a much better cost on return for what you’re investing for artificial lift.”

How does it work? Picture a typical in situ reservoir. “If you were to look at an end view of the two well bores, it creates a sort of teardrop shape above the injector and then all the bitumen drops around the outside of that teardrop and it floods the lower completion and then your ESP pumps it to the surface,” Wonitoy explains.

The Baker Hughes pump is no different than any other application, he adds – except that the conditions it operates under are “extremely hot.”

The Baker Hughes pumps can withstand subsurface temperatures up to 250°C. The devices are built in-house with tungsten carbide and tested rigorously before field installations at a specially designed “hot loop” facility that closely mirrors the conditions at underground extraction sites. The regimen of product testing ensures the equipment is exposed to “a lot more abuse than it would or should see in the field,” Wonitoy says.

“We’ll run it hotter, we’ll cycle it more times and we’ll change parameters on the test program. We push the equipment right to its maximum capability.”

The exacting approach to product development has won business endorsements from oil sands mainstays like Suncor Energy Inc., MEG Energy Corp., Connacher Oil and Gas Ltd. and Cenovus Energy Inc. “They’re one of the leaders,” Wonitoy says of the Encana Corp. spinoff.

“They were actually one of the first oil companies to get into the high temperature production. They have the most experience of the producers out there right now.”

To date, Baker Hughes has deployed 130 of its standard ESPs and another 17 of its ultra-temperature systems in the field. The installations represent about one-third of the ESP market for submersible wells.

Wonitoy says the firm’s success boils down to a strong team – from engineers through to sales staff – that has developed a solid product. “It’s no different than you buying a car,” he says. The Baker Hughes ESPs are the Cadillac of the sector, he suggests. “It’s money well invested.”

21

COMMUNITY MATTERS Sandi Jarrett with Arcis Seismic Solutions at Calgary’s Radisson Park School

Groove IN THE

ARCIS SEISMIC SOLUTIONS IS NO STRANGER TO THE REWARDS – AND RHYTHMS – OF GIVING BACK

C

RAIG MELTON IS NO DRUMMING VIRTUOSO. As a high school student, he got his kicks in the gym, not the concert band. “I was more of an athlete,” he says.

An aversion to music didn’t stop the mapping specialist with Arcis Seismic Solutions from picking up a djembe drum at Calgary’s Radisson Park School this past January, however.

As part of a unique company-wide policy that ensures employees take two days each year away from the office to volunteer, Melton and colleagues joined elementary-aged kids at the inner-city school for an afternoon of music lessons. “We were students for the day,” Melton says. “A lot of companies are just chasing the buck. At Arcis, we’re also having fun.”

The musical outing was just one example among many of ways the 70-employee Calgary firm chooses to give back to the community.

22 SPRING 2011

BY ALBERT THOMPSON

Members of the “Arcis family,” as marketing co-odinator Sandi Jarrett puts it, participate in the lives of local kids in a variety of ways.

Sports days are popular, but simple gestures like reading to kids who may lack male role models go a long way too. “They love it,” Jarrett exclaims. The kids are “just like glue on you when you go in there. They’re just so excited to see a new face.”

The seismic specialists pride themselves on donating time rather than money. A charity hike and bike ride for Alberta’s Easter Seals last year raised roughly $2,200, while the Arcis men dressed in drag for the ‘Walk a Mile in Her Shoes’ fundraiser that netted $15,000 for the YWCA. Getting out in the community “is really important to us,” Jarrett says. “We don’t want to just hand over a cheque.”

PETROLEUM SERVICES NEWS

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• Oil & gas well metering services • Fleet management (LSD mapping) • GPS technology for remote worker safety • Connectivity where wired networks are not feasible • Machine-to-machine applications • Critical network access solutions

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