Pipeline News June 2013

June 2013 FREE Volume 6 Issue 1

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Safety Instructor

By Brian ZinchukPipeline News

Regina – Th e big story of the Williston Basin Petroleum Conference over the last fi ve years has been the stupendous growth of North Dakota oil production – a number that has now hit 778,971 barrels per day as of February 2013 before falling back slightly. Th e paramount issue in dealing with that was pipeline construction – they could not build the pipelines fast enough.

All of that has changed with regards to pipe-lines. At the 2013 edition of the WBPC held in Regina May 1-2, something very curious came out. Despite record production, North Dakota’s pipe-lines are no longer running full out. Indeed, as of February, they were running at roughly 60 per cent capacity before the Enbridge Bakken Expansion line, with a capacity of 145,000 bpd, came online. Th ere’s actually room in the pipelines, despite the hockey stick graph of Bakken and Th ree Forks pro-duction. Th at’s because most of the state’s oil is now travelling by rail.

Ron Ness, president of the North Dakota Petroleum Council, said, “Th e biggest surprise on the North Dakota side of the border, is really the emergence of rail. We now have over 700,000 bar-rels of rail capacity on a daily basis. We anticipate that’s going to grow to over a million barrels of rail capacity.

“What this has done is opened up markets for the Bakken. We have historically had signifi cant, deep discounts on our Bakken commodity price. Now, we are able to get our oil to the East Coast and the West Coast and the Gulf Coast. Th e pro-ducers are receiving Brent pricing. So rail has really become economic, and an incredible growth spurt in North Dakota and something we are seeing emerge into the Eagle Ford and other areas across the country.”

How high can it go?“How high can our production go?” Ness posed,

saying the question was on the minds of media and legislators.

“We were at 780,000 barrels a day in February. I know it’s getting harder and harder to push that number up with the decline curves. You have to keep drilling wells.”

“Th ere are numbers all over. We really truly don’t know how high that number will go.”

Asked if they were going to hit a million barrels a day production, Ness said, “I can’t predict that. I do not know. It’s challenging to push that number with a decline curve.”

He noted that production is shut down on a pad site when a frac is occurring, and that had a sig-nifi cant impact on production numbers.

Th e state is currently home to 187 drilling rigs, down from a peak of 218 on May 29, 2012.

“Out of 187, 184 are Bakken-related. We are totally dependent on the Bakken right now,” Ness said. Bakken and Th ree Forks wells are considered the same.

“We don’t diff erentiate the two. We call it all Bakken. In the USGS report, it shows the Th ree Forks as prolifi c, or more prolifi c than the Bakken, but it varies from area to area.”

Th ere are now 8,500 producing wells, of which 5,312 are Bakken. A further 2,000 wells are expect-ed this year, and another 6,000 Bakken wells are pending, waiting for approval, according to Allison Ritter, who spoke on behalf of the North Dakota Department of Mineral Resources.

She noted the state could hit 1.6 million barrels

a day production if they had 225 to 250 rigs work-ing. Th ey can stay at around 760,000 bpd with just 60 rigs working, one-third of the current fl eet.

Over 95 per cent of drilling targets the Bakken and Th ree Forks formations.

USGS doubles estimatesOn the eve of the conference, the United States

Geological Survey released an updated oil and gas resource assessment for the Bakken Formation and a new assessment for the Th ree Forks Formation in North Dakota, South Dakota and Montana. Th e assessments found that the formations contain an estimated mean of 7.4 billion barrels (BBO) of un-discovered, technically recoverable oil. Th e updated assessment for the Bakken and Th ree Forks repre-sents a twofold increase over what has previously been thought.

Th e USGS assessment found that the Bakken Formation has an estimated mean oil resource of 3.65 billion barrels of oil and the Th ree Forks Formation has an estimated mean resource of 3.73 billion bbl., for a total of 7.38 billion bbl., with a range of 4.42 (95 per cent chance) to 11.43 billion bbl. (5 per cent chance). Th is assessment of both formations represents a signifi cant increase over the estimated mean resource of 3.65 billion barrels of undiscovered oil in the Bakken Formation that was estimated in the 2008 assessment.

Ness said, “Industry is learning every day. It’s a big number, it’s double what it was before, but I think industry, and most of North Dakota, thinks we’re probably on the low side. Th e 11 billion bar-rels is more likely what we’ll see when we look at the benches of the Th ree Forks and the technology being deployed.”

“Secondary issues are effi ciency and optimi-zation. How are we going to get more out of the resource? How are we going to reduce our costs?

Truck movement reduction is happening due to pad drilling and water pipelines.

“On the minds of the CEOs I take to, is what’s next? Is it CO2? Is it nitrogen? What’s the second-

ary recovery method? What’s the economic well density?”

Higher peak ahead?Justin Kingstad, director of the North Dakota

Pipeline Authority, told Pipeline News after the conference their most recent production estimates range between 1.4 and 1.6 million barrels per day of production, in a broad peak from roughly 2020 to 2025. Th at includes 100,000 bpd from eastern Montana, which currently produces approximately 70,000 bpd.

Currently North Dakota has 583,000 barrels per day of pipeline capacity, a number that will rise by 50,000 bpd by the end of the year. Th at number was also bolstered by an increase of 145,000 bpd this past spring due to the Enbridge Bakken Ex-pansion project coming online.

However, in numbers prior to the Bakken Ex-pansion project fi ring up, the state was using only approximately 60 per cent of its pipeline capacity. Approximately 50,000 bbl. of that was going to the Tesoro refi nery near Bismarck.

Kringstad said the shift from pipeline to rail was “because of the pricing dynamics. Barrels have been moved onto rail to get to the East Coast, West Coast and Gulf Coast.

“Our pipelines do not reach that premium mar-ket,” he said, noting that oil that reaches the coast is priced on the Brent market.

Indeed, the chart put out by the Pipeline Au-thority in April shows a decline pipeline usage by almost half from a peak near 450,000 bpd in Janu-ary 2012 to around 260,000 bpd in February 2013. Th e impact of the Bakken Expansion pipeline was not yet indicated in their numbers.

In the meantime, roughly two-thirds of North Dakota oil is now going by rail.

By the end of 2012, rail capacity had reached 660,000 bpd, and is expected to rise to 865,000 bpd by the end of 2013. In 2014, that capacity is expect-ed to level off for the next three years, at 1,015,000 bpd. Page A9

Briefs courtesy Nickle’s Daily Oil Bulletin

At Waskada Surge En-ergy Inc. began a pilot water-flood during the first quar-ter and the company expects to see a positive response within six months. Based on successful waterflood imple-mentation, the company estimates potential recover-ies of approximately 20 per cent of the 10 million bbl. of internally estimated discov-ered petroleum initially in place (DPIIP) per section.

During the quarter end-ed March 31, 2013, approxi-mately 90 per cent of Surge’s revenue resulted from oil and natural gas liquids pro-duction, with approximately 10 per cent derived from natural gas.

Surge achieved a 93 per cent success rate during the quarter ended March 31, 2013, drilling 15 (10.95 net) wells. The 15 gross wells drilled during the quarter include five wells in North Dakota, six wells in south-east Alberta, two wells in Valhalla, and two wells in Nipisi.

Twelve of the 15 gross wells drilled in the first quarter were on production at quarter-end, with the re-mainder to be brought on production during the sec-ond quarter. One well en-countered drilling issues and had to be abandoned.

By Geoff LeePipeline News

Edmonton – Crude-by-rail revenues grew by 300 per cent for Canadian National Railway in the first quarter along with larger players entering the market to build terminal facilities in North America served by CN lines.

“We went from initially smaller terminals like small players to origin the crude traffic,” said Claude Mongeau, CN’s chief executive, during a conference call regarding first quarter finan-cial results in late April.

“As of late, the discussions and the dialogue and the agree-ments that we are reaching are with larger scale refiners that are looking at building capabilities to unload at their refineries.

“They are also getting involved in partnerships themselves in creating the loading facility at the origin point. They are in-vesting in a very large number of cars and investing in loading and unloading facilities.

“I would think they are investing in all of this infrastructure to move crude-by-rail for many years to come,” Mongeau said.

CN is shipping about 60,000 carloads a year of crude-by-rail with some growth coming from unit train shipments of crude as well.

Approximately $75 million of CN’s business in the first quarter was generated directly from crude-by-rail.

“Crude is a very long haul business for CN. We are serving single lines to the U.S. Gulf and all of the Eastern Canada,” said Jean-Jacques Ruest, chief marketing officer.

In response to a question on the use of crude-by-rail unit

trains versus non-unit trains, Ruest said most of CN’s rail busi-ness is cargo train business as opposed to unit trains.

“I would think by the time we get to the fourth quarter, probably most of our business will still be merchandise busi-ness,” he said to an investor.

“The unit train business may still be picking up at that point. When you look at CN crude, revenue ton-miles (RTM) will give you the best indicator of how well we’ll be doing as opposed to carloads or barrels.”

CN also had a 20 per cent increase per ton-miles in frac sand as a result of a new frac plant built adjacent to CN’s Barron Subdivision in Poskin, Wisconsin.

Last year, CN invested $35 million in line upgrades to pro-vide rail service to the new plant, moving frac sand from north-ern Wisconsin to shale drilling areas across North America, including Western Canada.

CN expects to see larger players embrace rail solutions as the debate over the proposed Keystone XL pipeline extends.

“That’s the phase we are entering. We have a number of larger scale refineries or integrated producers with which we are having dialogue as we speak,” said Mongeau.

Ruest added that some of the major crude-by-rail terminals are being built in Alberta as the use of rail to ship crude contin-ues to catch on.

“Some of the integrated companies are buying and leasing fleets. You are going to see some of the bigger players backing these capital investments,” he said.

Page A10

Briefs courtesy Nickle’s Daily Oil Bulletin

dvantageAuto & Trailer Sales

Gibson Energy Inc. says it has received committed customer support for an addi-tional 500,000-bbl. crude oil storage tank at the company’s Hardisty terminal.

The new tank will be con-structed on Gibson’s eastern Hardisty lands along with the two 400,000-bbl. tanks an-nounced in September 2012 and the 300,000-bbl. tank (now revised to 400,000 bbl.) announced last month.

Site preparation and civil work on the eastern Hardisty lands is now underway and the first 400,000-bbl. tank is expected to be in service in mid-2014 with a late 2014 in-service date for the second and third 400,000-bbl. tanks. The 500,000-bbl. tank has an expected early 2015 in-service date.

“The addition of 1.7 mil-lion bbl. of new storage ca-pacity announced in the last seven months reaffirms the attractiveness of our Hardisty terminal location for custom-ers as they direct their cur-rent and future production to appropriate markets,” Rick Wise, Gibson's senior vice-president of operations, said in a news release.

The company continues to have positive discussions with several customers re-garding the further build out of strategic land positions at its Hardisty and Edmonton terminals, he said. “Therefore, we expect near-term organic growth to be largely driven by long-term, fee-based con-tracted storage tank con-struction, expanded terminal services and construction of rail infrastructure to facilitate crude oil movements.”

By Brian ZinchukRegina – The pipeline fight is one the province is not going

to give up on. That was one of the key thrusts of a keynote address Min-

ister of Energy and Resources Tim McMillan gave to the Wil-liston Basin Petroleum Conference in Regina on May 2.

He noted the conference started as a horizontal drilling workshop, with 160 attendees. Now over 2,000 people attended.

McMillan said that the first horizontal well drilled in Sas-katchewan was in 1987 at Tangleflags, just 12 miles from his home northeast of Lloydminster.

“Back then, we didn’t realize we were on the cutting edge of technology that 25 years later was going to fundamentally change southeast Saskatchewan and northeast United States.

“It took us six years to drill the first 500 horizontal wells in Saskatchewan. This past year, we drilled over 2,000. This year the predictions are we will break that record again.

The conference’s focus has changed over time, he noted, with an emphasis now on CO2 enhanced oil recovery and hy-draulic fracturing.

Discussions about what works and doesn’t work benefits

everyone involved. “This conference is helping define the energy business,” he

said.Describing a walk through the booths and outdoor dis-

plays, McMillan said, “The perceptions people had about the oil industry are no longer true. People in the past thought the oil business was rough and tumble; it was dirty and dangerous, not necessarily environmentally friendly. Very quickly looking through this conference, the actual oilfield and how it oper-ates, we know it is a technology and science-based industry. The technology is what has unlocked the discoveries and allowed us to produce these fields. The innovation is continually find-ing better ways to do that, to do it more efficiently and more cost-effectively. Always with a mind to safety, and environmen-tal sustainability, knowing that oversight is important and the responsibility of those in this industry are at the highest level.

“The oil and gas industry has a tremendous impact on Sas-katchewan. It’s one of our province’s top industries, attracting billions of dollars of investment. It’s a major reason for our cur-rent economic success, and our enviable quality of life.

Page A11

Publisher: Brant Kersey - EstevanPh: 1.306.634.2654

Editorial Contributions: SOUTHEASTBrian Zinchuk - Estevan 1.306.461.5599

SOUTHWESTSwift Current 1.306.461.5599

NORTHWESTGeoff Lee - Lloydminster 1.780.875.5865

Associate Advertising Consultants:

SOUTHEAST & NORTHWEST• Estevan 1.306.634.2654 Cindy Beaulieu Candace Wheeler Kristen O’Handley Deanna Tarnes Teresa Hrywkiw

• Carlyle 1.306.453.2525 Alison Dunning

CENTRAL Al Guthro 1.306.715.5078 [email protected]

SOUTHWEST• Swift Current 1.306.773.8260 Stacey Powell

MANITOBA• Virden - Dianne Hanson 1.204.748.3931• Estevan - Cindy Beaulieu 1.306.634.2654

CONTRIBUTORS• Estevan - Nadine Elson• Saskatoon - Josh Schaefer• Virden - Harley McCormickTo submit a stories or ideas:Pipelines News is always looking for stories or ideas from our readers. To contribute please contact your local con-tributing reporter.

Subscribing to Pipeline News:Pipeline News is a free distribution newspaper, and is now available online at www.pipelinenews.ca

Advertising in Pipeline News:Advertising in Pipeline News is a newer model created to make it as easy as possible for any business or individual. Pipeline News has a group of experienced staff work-ing throughout Saskatchewan and parts of Manitoba, so please contact the sales representative for your area to as-sist you with your advertising needs.Special thanks to JuneWarren-Nickle’s Energy Group

for their contributions and assistance with Pipeline News.

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

Is the Bakken boom in Saskatchewan over? Are things settling down to a more normal pace?

That may very well be.A story in the Daily Oil Bulletin shows some

hints that the Saskatchewan Bakken play may have stabilized somewhat. In a routine story on PetroBak-ken’s first quarter, it was noted, “In southeast Sas-katchewan, the Bakken business unit averaged 19,029 boe per day of production during the first quarter of 2013, which was relatively flat to fourth quarter 2012 production of 19,741 boe per day. The company remained active in the Bakken throughout the first quarter, resulting in 15 wells drilled and 14 wells brought on production.”

The company’s chief operating officer Rene LaPrade said, “In the Bakken business unit, maturing production along with drilling and well optimization activities has resulted in the stabilization of produc-tion from Q4 2012 to the first quarter of 2013.”

In contrast, the company’s Cardium unit now exceeds its Bakken production, at 20,000 to 21,000 bpd. This is one of the reasons why the company is changing its name to Lightstream Resources Ltd. When it was initially formed, PetroBakken was envisioned as a “pure play” company, hence the name focusing on a particular formation. Apparently plans change.

In the first few years of the boom, Saskatchewan saw its Bakken production grow from a few hundred barrels a day to over 70,000 bpd. It’s still growing several per cent per year, but it’s no longer a hockey stick graph. Put into context, this is a little less than three times the Cenovus-operated Weyburn unit, which has been chugging along with its CO2 flood enhanced oil recovery for years now. It’s also a frac-tion of the production of what the Ministry of the Economy refers to as the “Saskatchewan workhorses,” the Mannville and Mississippian formations.

We’re starting to see the signs of a maturing field. Companies are now talking about secondary production methods. Crescent Point has moved towards waterflood, for instance.

The drilling pace has come off, too. In 2011, after the extensive flooding in the region, nearly every rig that could turn a bit in this province was working. The next year, the pace was busy, but still off from the previ-ous year. This year, a week after road bans came off, only six rigs were working in the whole province, and three of them were working for potash mines. Obviously no one was in a mad rush to get into the field like they were in 2011.

Crown land sales for the past year have been disap-pointing, to put nicely. It must be hard for the minister of Energy and Resources to put a positive spin on it every two months. Will they pick up in 2014, when a mountain of leases obtained in the 2008 land rush expire? If so, we might get a bit of an echo boom. If not, we know this boom is over.

While the Bakken had done well for Saskatchewan, and will continue to do so for decades to come, we will have to come to grips with the idea it has grown up, as it were. Companies that have been on a grow-grow-grow curve might become a little more cautious in their future plans.

This might mean a little more relaxed pace. Perhaps some people will be able to take a holiday this summer, as opposed to working their tails off every day except Christmas holidays and breakup.

What’s the next big play? Will it be the Viking? Expansion of the Shaunavon? Maybe the Birdbear? Or will it be new techniques to squeeze more out of the Bakken?

A decade ago, it was not doubtful that many people would have foreseen the wild ride we’ve had with the Bakken. But that horse is starting to buck a little less, and it might need a bit of a rest.

It’s hard to believe, but fi ve years ago we pub-lished our fi rst edition of Pipeline News.

I should clarify that – Pipeline News is either 5 years old, or nearly 30, depending on how you look at it.

It has two roots. Back in the 1980s, Pipeline was a stand-alone weekly newspaper, published by the Estevan Mercury. It had local stories, but also included a bit of wire copy on things like Hibernia, back in the days before everyone had an Internet connection. Carol Toth, who did typesetting at the time, has been our proofreader this time around.

In the late 80s, when the oilpatch died, so did Pipeline. It got folded into the Estevan Mercury as a quarterly supplement, where it would remain for decades. Norm Park was one of the principle writers over all those years, along with Shaun Harrison and Michelle Fingler.

Skip forward to the 2000s. Pipeline News was an independent publication based in Lloydminster. It was purchased by Glacier Media, which had pur-chased Boundary Publishers (Th e Estevan Mercury) several years before.

Brant Kersey, our publisher, came up with the idea of merging Pipeline and Pipeline News together into a province-wide monthly newspaper servicing the petroleum industry. Pipeline News was (re)born.

We printed our fi rst edition in June 2008, one month before oil peaked at $147/bbl., and just a few months prior to the crash that led to the global fi nancial crisis and recession. We launched in a year that saw century-old major newspapers fold. Th rough the support of our advertisers, we survived and thrived, and now average around 100 pages per month.

Geoff Lee and I, along with a short-term third

reporter, were hired in the spring of 2008. Geoff was initially in Estevan, and I covered Lloydmin-ster from my home in North Battleford. Th rough a somewhat convoluted switcheroo a few months later, I ended up in Estevan as editor, and Geoff moved to Lloydminster, where we have each remained for the duration.

When they hired me, I told the powers that be I wanted Pipeline News to be the Western Producer of the Saskatchewan oilpatch. Five years on, I would say we are pretty much there.

Nearly every farmer has a subscription to the Producer, and they all read it cover to cover. From what I am often told, our readers in the oilpatch generally read Pipeline News cover to cover.

It’s a good model to follow, because one of the fi rst publications Glacier purchased many years ago was the Producer.

I was fl attered the other day at my daughter’s softball practice when a guy I know who owns a business in the patch told me Pipeline News was one of the “most eagerly anticipated rags each month” in the area.

Our formula is pretty simple, really. It’s about the people. We don’t focus on fi nancials or proven, probable and possible reserves. We talk to the people drilling up those reserves.

I like to joke that I talk to the people with dirt under their fi ngernails, the ones who work for a liv-ing. If I can go a month without phoning Calgary, I’m a happy man. Th at always engenders a laugh, because we’re all a little sick of getting orders from headquarters, so to speak.

Our preference is always to highlight Sas-katchewan people and businesses. Th ere are plenty of publications that talk about Alberta, but we’re

the ones who talk about Saskatchewan. We happily consider the Lloydminster area to be an honourary part of Saskatchewan, and since no one else shows southwest Manitoba love, we will do that, too.

We talk to the people who have built their busi-ness, often from scratch, through blood, sweat and tears. Th ey’re the ones that worked 18 hour days when it was busy, kissing their already-sleeping kids each night before crawling into bed, just to get up early to do it all again the next day to keep those kids fed. Th ese are the same people who have sat nervously in front of a banker, seeking another loan to fl oat their business when the patch had ground to a halt and they didn’t know where the next pay-cheque was coming from. Adversity breeds character, and there are plenty of characters in the oilpatch.

We also talk to the workers, the ones who freeze certain parts off in the winter only to sweat those same parts off in the summer. Everyone has a story, you just have to ask.

I used to be one of them – a pipeline oiler, and then an excavator operator. I make a point of tell-ing this to pretty much everyone I meet, because it makes me one of them. I’m not this scary guy with a camera who went to journalism school and never worked a real job a day in his life. I have scuff marks on my boots because I’ve been there, too. It’s amaz-ing how important that is to people.

One last thing: I always tell people, “Everyone’s going to be in Pipeline. Th ey just don’t know it yet.”

Th ank you for a great fi ve years.Brian Zinchuk is editor of Pipeline News. He can be

reached at [email protected].

Summertime brings with it the chance to take out the RV or head to the cabin for the weekend. If you are working quite far from home, you may even be using your trailer as a temporary residence for the warm months. Whether you are from Alberta, Saskatchewan, or Manitoba, the trailer needs to be registered and insured through your auto insurance provider. Th e contents, however, are insured sepa-rately.

If you have a bumper hitch or fi fth-wheel trailer, it is quite easy to have $15,000 or $20,000 contents in the trailer at any time, especially if you are using it as temporary living quarters. So how are the contents insured? Well, they should be extended from the policy on your primary residence. Th e con-tents will likely be defi ned as “contents temporarily away from the dwelling.” As such, the amount of insurance under Section C (contents) of your main policy will include the amount in your trailer. Not all policies will include this coverage, so it is im-perative that you read the policy wording carefully or check with your broker to confi rm coverage.

Th e liability associated with owning a trailer will extend from your vehicle while being towed. Once you have set your trailer up and it is no longer

connected to your truck, your basic vehicle insur-ance will not apply. You may have a small amount of insurance on the trailer’s plate, but will need to buy an extension policy to ensure that the liabilities arising from the trailer are covered.

Cabins can be insured as seasonal homeowner or seasonal dwellings, on a replacement cost or actual cash value basis, and may include coverage ranging from fi re and extended coverage, to a full comprehensive coverage policy.

Th e determining factors in whether an insur-ance company will off er the better coverage can include: year of the building, how far it is from a responding fi re hall, the heat type (if any at all), year round accessibility, how often it is used, and per-haps even your claims history.

A seasonal homeowner policy is the “Cadillac” of cabin policies. Th is policy will only be off ered to insureds that have a well maintained cabin that is accessible year round. Th e cabin must have updated electricity, as well as approved heating and plumb-ing. Most insurers require that a dwelling written on this form be insured to the full replacement cost. Th e policy will be written with comprehensive cov-erage and on a replacement cost basis, with some

companies off ering guaranteed replacement of the cabin. Comprehensive cover will cover all losses other than those that are specifi cally excluded in the wordings of the policy. Replacement cost cover means that your cabin and belongings are insured based on the cost to replace them with something of like kind and quality.

A seasonal dwelling policy is not as compre-hensive as the seasonal homeowner policy. Most of these policies are written with fi re & extended coverage on the cabin and named perils on the con-tents. When written on these form, only the perils specifi cally listed in the policy wordings are insured. Th e coverage for a seasonal dwelling policy can dif-fer between companies and the type and condition of the cabin itself. Some cabins that do not qualify for a seasonal homeowner policy may be off ered more comprehensive coverage on a seasonal dwell-ing policy. Again, it’s best to review and discuss with your broker so that they know your situation and you know how the insurance reacts.

Harley McCormick is a Virden, Man. based insur-ance broker with 10 years in the industry. He can be reached at [email protected].

The recent trend of crude-by-rail shipments due to constrained pipeline capacity and price dif-ferentials looks like it’s here to stay.

Canadian National Railway expects crude oil shipments to reach 60,000 carloads this year as more producers use rail to take advantage of better pricing by shipping to coastal refineries that pay higher prices linked to Brent crude.

CN’s crude by rail revenue jumped 300 per cent in the first quarter, thanks in part to the development of shipping and receiving facilities at Canadian and U.S. refineries – initially by small players and more recently by larger players.

The company reports they are having discus-sions and reaching agreements with larger scale refiners that are looking at building capabilities to unload at their refineries.

Some of those refiners are also involved in partnerships to create the loading facilities at the origin point. They are investing in rail cars and in loading and unloading facilities.

Transloading facilities have sprouted like weeds in the past couple of years as crude-by-rail continues to take hold with about 60 per cent of crude-by-rail shipped by CN being light oil from Western Canada.

Interest in crude-by-rail is also picking up from heavy oil producers given the uncertainty over the proposed Keystone XL pipeline.

“We have a number of larger scale refineries

or integrated producers with which we are hav-ing dialogue as we speak,” said CN president and CEO Claude Mongeau during an April 22 confer-ence call regarding the company’s first quarter financial results.

CN’s chief marketing officer Jean-Jacques Ruest said some of the larger integrated heavy oil companies are buying and leasing rail car fleets and he expects some of the bigger players will back capital investments in new terminals.

“A number of people in the U.S. Gulf on our CN line are investing into receiving facilities,” said Ruest.

“More and more players are going the way of unit trains.”

The company believes the future of crude oil points to rail and pipelines will be complementary to each other.

CN says the trend is pipelines, then rail, and rail and barges to get the oil to the destination refineries.

“Think of crude-by-rail as really becoming an intermodal solution. Many of these terminals can be fed by pipeline and then rail,” said Ruest.

“It’s a combination of more than one mode from origin to destination.”

Mongeau added that CN is seeing a range of new avenues being created with new players get-ting involved in the shipping and receiving of oil by rail.

CN also said it is well positioned to ship more heavy oil by rail from northern Alberta in particu-lar, and from the Peace River and Grande Prairie areas served by a single CN rail line.

Keeping in mind the maximum volume of oil that can be spilled from one individual derailed rail car is about 600 barrels, unlike a pipeline failure that could spew thousands of barrels of oil, fears about oil spills may also be overstated by critics.

In addition, a derailment is immediately de-tected and reported quickly to emergency response crews who know exactly where the derailment occurred.

Some pipeline leaks occur underground or in remote locations that can make detection and cleanup more complicated.

CN rail routes serve multiple refineries in Eastern Canada and from Chicago down to the U.S. Gulf Coast.

The company expects to become a big player in the long haul crude by rail segment.

Shipments of crude by rail in the U.S. have spiked to an estimated 340,000 barrels per day in 2012, according to data from the Association of American Railroad.

In 2007, the U.S. crude by rail shipments were just 11,000 bpd.

For CN, it looks like nothing will derail the potential growth in crude by rail for months to come.

I have learned a lot about tools since becom-ing a hot shot driver, and not just about the tools relating to the truck I drive and the trailers I haul. Entire businesses in the patch are based on the sup-ply of tools, or the service of tools, and sometimes both.

It’s been fun learning about many of the dif-ferent tools through my membership in the Desk and Derrick Club, touring various businesses of the patch, but I have also learned on my own by asking questions when I am sent to hot shot the various tools out to leases.

Recently, I was introduced to one simple tool. I have to thank SaskPower and Legacy Oil + Gas for this tool. These companies were the major spon-sors of Quota International of Estevan Women of Today Awards held on April 24, which I attended along with members of our Desk and Derrick Club to honour the contributions of women to business and to community.

At this luncheon, Darci Lang was the guest

speaker and her presentation was entitled Focus on the 90 per cent. Appropriately, her business card at each place setting had a tiny magnifying glass at-tached to it. One simple tool to change the way you view your life, the card read.

Her message was simple yet profound. Focus on the 90 per cent that is positive in your life, rather than the 10 per cent that is not. Years before she had a read a book that said, “We hold a magnifying glass out in front of us and we can choose what we focus it on.”

It was her light bulb moment. She started to challenge herself to see the positive 90 per cent. It has since become her life’s work to get others to see the 90 per cent in their lives too.

She’s right. We often don’t have choices in some of the parts of our lives, but “we really do have a choice about the attitude we have towards ourselves, our families, others and our jobs. Let your choice be a positive 90 per cent one,” she writes in her book Focus on the 90 per cent.

I am an optimist, a trait that can be learned if not lucky enough to be born one. I have cultivated this trait consciously over the years by challeng-ing negative self-talk. However, this past year has been difficult on a personal level as I have dealt with changes; death and grief to name some of the negative ones. I had become worn down by the 10 per cent.

I drank in her message like a parched traveller at a cool well. I tucked several of her business cards with the miniature magnifying glass into my purse. I needed that one simple tool.

The next week at our executive meeting of the Desk and Derrick Club, I found out that one wom-an, our past regional director, who had sat opposite me at the luncheon, had been severed from her job of 19 years the day before. She had gone to work as usual that morning, and by mid-morning she had been released as part of a global reduction in the workforce of this international company. She had been given a severance package and was told that it was no reflection on her work. It’s not personal, she was assured, as she was walked to the door, her job of 19 years finished in that moment.

“Seriously? They actually said that?” I asked her after she had relayed the details to us. “It’s not per-sonal? Obviously it’s personal when it is happening to you.” We all shook our heads in disbelief at that.

“But you got a severance, right?” I persisted. She nodded. Smiling, I reached into my wallet and gave her one of the cards with the tiny magnifying glass. “Well now you have no reason not to attend the Fleetwood Mac concert in Saskatoon next week with Gloria and me. You are not working. We are not working. Let’s focus on the 90 per cent and go!” We did.

Focus on the 90 per cent. One simple tool to change the way you view your life. It is an indis-pensable tool for the oilpatch.

Nadine lives in Estevan with her husband and family, and shifted gears a few years ago, becoming a hot shot driver for the oil patch. Her people skills are put to good use in the patch as she delivers the goods quickly and efficiently. Contact her at [email protected] with comments or questions.

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Page A3In the next several years, ad-

ditional pipelines are expected to double pipeline takeaway capacity. At the end of 2013, the total pipeline capacity is expected to hit 633,000 bpd. Projects in the works include Enbridge’s 225,000 bpd Sandpiper project, the 140,000 bpd High Prairie Pipeline, and the beleaguered Key-stone XL, by TransCanada. If all these projects, plus refineries, get built, the total pipeline capacity will rise to 1,288,000 bpd by the end of 2016. At that point, rail and pipeline capacity will reach 2.3 million bpd, roughly 50 per cent greater that the author-ity’s high end production scenario for a further four or five years down the road.

In other words, if it all goes ahead

and rail capacity stays constant, the state’s takeaway capacity will be over-built by half, and perhaps more.

One of the key arguments for the 830,000 bpd Keystone XL pipeline is the addition of an on-ramp to take North Dakota Bakken oil. TransCan-ada’s Keystone XL website keystone-XL.com states “We have dedicated one-quarter of Keystone XL’s capacity to transport light crude oil produced in the U.S. Bakken region of Montana and North Dakota.”

However, North Dakota Pipeline Authority numbers peg Keystone XL capacity for Bakken production at 100,000 bpd, less than half of the 207,500 bpd that would make up one-quarter of the pipeline’s capac-ity. With all the rail capacity already in place and other projects planned,

is the Keystone XL even needed to transport Bakken oil from North Dakota?

“That will be addressed longer term,” Kringstad said. “We expect production levels to grow longer term. We support both Keystone XL and Sandpiper. I think production will continue to rise to a level where we will need them.”

The key factor is how long Brent and WTI prices remain separated. Is it long term?

“That’s what’s going to drive the bus here,” Kringstad said.

He predicted they pipeline system will eventually link up to east.

“Every project is vital to continue to expand our takeaway capacity. Keystone XL already has barrels com-mitted.

“Some barrels are coming back to pipelines. By year end, we’ll see additional barrels come back to the pipeline system,” he said. That will be based on production growth and market conditions.

“Three or four years ago, I don’t think anyone would have anticipated this situation,” Kringstad said. “Here in North Dakota, the big pipeline players are now incorporating rail facilities. We’re seeing this hybrid, with more flexibility, that will work out long term.”

Ness said, “We always thing pipelines are critical to the long-term stability. It’s still the best. But we need to find the markets, and that’s what rail has done. We’ve seen our pipeline throughput has dropped a bit because so much is going on rail.

“I think you’re still going to need (Sandpiper.)

“When you get that type of volume with the rail opportunities there, there’s eventually going to be a normalization of the market on the coasts, I would think.”

With the amount of North Dakota oil going to Brent markets in-creasing every day, Ness said, “There’s more returns for everybody. You get a better price for your barrel.”

Of all the big numbers being thrown around regarding North Dakota’s surging oil production, one point gets little attention. All those numbers – a peak of 778,971 bar-rels per day in Feburary, are based on primary production of the Bakken and Three Forks formations.

When asked about secondary recovery, Ron Ness, president of the North Dakota Petroleum Council, said, “There are some pilots. Con-ventional wisdom is that water is not going to work in the Bakken.”

“It’s too dense. The Bakken’s too dense.

“You’re going to see some CO2 pilot projects. There was a nitrogen pilot project. Someone’s going to try just gas, I think – just injecting gas.

“I don’t know what’s going to work. This is a huge question – what’s going to be the secondary method of recovery? The well density

right now, is really becoming the is-sue. At what point economically, can you put in more spacing units?”

Asked if they were halfway to that point, he said, “Not even close. All the spacing units had one well. Now you have pads with four. Continental is talking about 14, on a stand-up 1280.”

A “stand-up 1,280” is 1,280 acres, two miles north south, one mile east west. Several years ago, the state unitized all land that had not yet been addressed into spacing units this size in order to dramatically sim-plify the process of clearing mineral rights. The result is that most Bakken wells are now drilled two miles deep, and two miles north or south.

In previous years, it was noted they did not yet know how far the Bakken extends. That has changed now. “We have found the outer limits of the Bakken about a year ago.”

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Page A4CN also sees a trend toward more intermodal transport of crude oil with

rail and pipelines complementing each other on the way to market.“The part that’s interesting, it’s not just rail; it’s rail and barges to get to the

destination refineries and use the ship unloading capacity,” Mongeau said.“Think of crude-by-rail as really becoming an intermodal solution. Many

of these terminals can be fed by pipeline and then rail,” said Ruest.“It’s a combination of more than one mode from origin to destination.”Currently, about 60 per cent of CN’s crude-by-rail volume is in light oil,

but the company expects to see more growth in shipments of heavy oil in the future.

“We think we are very well positioned for the heavy oil market because that comes from Canada and from the north of Alberta, in particular,” said Mongeau.

“There are places like the Peace River area and Grande Prairie where we clearly are the one railroad to support the development of that particular group.”

Mongeau added that CN has a strong presence in Edmonton “all the way down to Saskatchewan” and over to the Manitoba border.

“We have a beautiful origination franchise. If anything differentiates us, it’s the combination of that origination franchise with our destination reach,” he said.

“We go all the way to St. John, New Brunswick. We serve every refinery in the east starting from Quebec City, Montreal, in and around Toronto, Chi-cago – down all the way to the Gulf, stopping in Memphis so we are able to go places.

“If people are looking to get the best out of the fleet they’re buying and to also be able to manage their supply chain of crude to feed in the crude in the right sequence for their refineries, we think we have a very great offering.

“And I think as the market evolves we will be a strong player in that seg-ment,” Mongeau said.

Regina – It looked like a small water tower in the parking lot of the Brandt Centre, but it was not. It was a frac sand on-site storage solution, built in Saskatoon.

Quickthree Solutions had a unit in the outdoor display area of the Williston Basin Petroleum Con-ference May 1-2. Carl Dean, Don Stephan and Larry Wortham were on hand at the show. Dean is from Saskatoon, Stephan is from Calgary, and Wortham is from Oklahoma. Dean operated the truck that de-ployed the silo.

“It’s a new technology,” said Wortham. “You take this out on lease and it holds the frac sand. It’s all solar powered, all green energy.”

Indeed, solar panels can be see high up on the unit. They power the scales, he noted.

The version on display could hold 180 tonnes of frac sand. It has two compartments and a common discharge chute which feeds the

blender.The silo has four feet that spread

out for stability. The square base is 12 feet per side.

“That base is massive. There’s a lot of weight in the bottom,” Wortham said. “This is the prototype. Other units are larger.”

The purpose-built trailer can hook up on three of the four sides of the base. When the silo is lowered, the tail end of the trailer lifts up before being lowered.

The vertical silo can store more proppant in less space. Since it uses gravity, no engine or conveyor is needed for unloading. It requires no daily maintenance. There’s a manual gate override, and loadcells and a digital display allow for self-weigh-ing of product.

Multiple silos can be used on one site, feeding a conveyor. This allows up to 1,440 tonnes of proppant to be positioned within a footprint of just 1,900 square feet.

Page A5

“Saskatchewan is the second largest oil producer in Canada, behind Al-berta, and the sixth highest producer in North America,” McMillan said.

“The majority of our exports are to the United States. Our estimates of initial oil in place is 47.8 billion barrels. This isn’t including our oilsands or oil shales, which are yet to be developed. We estimate that about 13 per cent of this oil is currently extractable under current drilling technology. We expect enhanced oil recovery will make that number grow dramatically.

“In 2012, the oil industry contributed 34,000 jobs in Saskatchewan. Our oil production hit a new record of 172 million barrels. That works out to 472,000 barrels a day. On the annual figure, it’s equivalent to 160 barrels for every man, woman and child in our province, with a collective estimate of rev-enue on sales of $12.6 billion,” he said.

All that said, there are challenges with this growth, he noted. The first is a labour shortage. Saskatchewan has the lowest unemployment rate in Canada, and North Dakota has the lowest rate in the United States. “I don’t think this is a coincidence,” McMillan said.

He noted a frustration with having such a low unemployment rate, and yet other areas of the country have a high unemployment rate, and it’s hard to incentivize people to come here and fill those jobs.

With the growing population, at 1,080,000 people, he said “It’s been 80 years since we’ve had the growth in population we do now.”

This puts pressures on schools and hospitals, highways and bridges. “More broadly from an industry perspective and point of view, there are

some real challenges about capacity of getting our product to market. That’s always been a problem, but it’s been acute for a few years on pipeline capac-ity. This is dragging down revenues for the producers, for the governments. A recent report from the CIBC estimated $18 billion a year is being lost because of the West Texas Intermediate/Brent price differential. Saskatchewan alone is estimated to be losing $300 million a year. To our industry in Saskatchewan alone, it’s estimated about $2.5 billion of lost revenue – revenue that would incentivize more drilling, more production, and make their projects more prof-ititable,” McMillan said.

The most significant progress in addressing this is the shift to rail. He noted that currently about 10 per cent of Saskatchewan production now goes by rail, up from zero three years ago. There’s a potential for that number to

rise to 15 and 20 per cent in the coming years. It offers flexibility and speed, McMillan noted.

The shift to rail reflects on the entrepreneurial nature of the industry, he noted, adding, “Rail is a big part of the solution to one of the big problems.”

Referring to constraints on pipeline development, he said, “Some of these problems are more political in nature.”

The phrases of oil differential and bitumen bubble are now on the tip of every tongue in Western Canada, where as not long ago, only those in the industry knew what it meant. “It’s become almost a swear word,” he said.

Keystone XL has had the most attention. McMillan pointed out there are already 109 pipelines that cross the border with the U.S. “Don’t tell Darryl Hanna, though! The last thing we need is protests shutting down the first 109, even though she’s quite fixated on the 110th,” he said.

A single barrel of oil can cross the border three times before reaching a re-finery. Oil from North Dakota can go from there to Saskatchewan, Manitoba, Minnesota, Ontario and Quebec before being refined.

“99.9994 per cent of oil is delivered safely,” he said of pipelines.“It’s important to keep this up,” McMillan said, referring to the pressure

needed to ensure these pipeline projects go through.

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By Brian ZinchukRegina – We’ve long heard of boom towns. North Dakota, particularly

western North Dakota, could be considered a boom state.At the Williston Basin Petroleum Conference on May 1 in Regina,

president of the North Dakota Petroleum Council Ron Ness highlighted the growth. He said a study was done in 2005. At the time it was calculated the stated had experienced a “shocking” $3 billion of economic impact from the oilfield. That has since grown tremendously.

“The economic impact of the industry (in North Dakota) in 2011 was over $30 billion dollars,” Ness said.

“Essentially, agriculture and oil are leading North Dakota. We’re seeing kids back in schools. We’re seeing people return to North Dakota. (The) $2.65 billion in government revenues generated by the oil and gas industry in 2011 is one of the reasons our legislature is having such a struggle. We’ve got so much money, everybody wants more of it. Legislative decisions are more difficult because there’s more money and more demands and everyone wants more of it. Certainly we have a lot of needs in North Dakota.

In the same time frame, there are now 41,000 direct oil and gas jobs com-pared to 5,000 jobs in the state in 2005.

Touching on the high number of hotels being built in western North Da-kota, Ness said it had generally been three decades since hotels were built there prior to the Bakken boom.

There has been a 700 per cent growth across all areas of North Dakota’s oil and gas sector.

North Dakota’s legislature meets every two years. The session that just wrapped up saw 86 bills related to oil, out of approximately 900 bills. Some were to close loopholes, others dealt with incentives. There is now a non-Bak-ken incentive for wells drilled a minimum of 10 miles from the nearest Bakken field, for instance. This will include development of the Spearfish formation, just south of Waskada, Mana.

Ness said there are no shortages of challenges in North Dakota relating to oil, including housing, school, and daycare.

The state will be expanding Highway 85 from Williston to Watford City to four lanes, and eventually carrying on to South Dakota.

Roads are being built to 105,000 pound ratings.“The biggest issue going forward is the flaring,” Ness said, noting a recent

issue of National Geographic about the Bakken had a flare on the cover. “That’s really not the story of the Bakken.”

There is $4 billion slated for gas plant development over a three year period in the state, but approximately 29 per cent of associated gas is still flared. They are looking at ways to incentivize remote on-site well capture technology. The state is looking at a two year tax and royalty holiday if gas that would otherwise be flared is captured at the well site. Electricity generation, liquefied natural gas and anhydrous ammonia production are all being considered as ways of dealing with gas.

“We are doing a good job of connecting new wells, but we have a lot of lingering wells that are hard to get to.”

An “Oil Can” outreach program that was started in 2007 and has seen suc-cess. They’ve held barbecues in small towns, initiated roadside garbage cleanups and held teachers’ seminars. Those seminar brings in 50 teachers for a week to give them a crash course on the oil and gas industry.

Page A13

Page A12

“We’re still only tapping a small portion of the Bakken, and the world is now watching. What we do at this conference, and as an industry, is extreme-ly important, as we continue to evolved and develop technologies that work not only in the Bakken and the Williston Basin, but across North America and across the world.”

Next year’s conference will be held again in Bismarck, N.D. from May 20-22. The 2012 edition sold out in 17 minutes, so they are expanding the exhibit hall, doubling its size.

“Maybe it will take 30 minutes to sell out next year.”

“We’ve got 1,000 new hotel rooms in Bis-marck,” Ness said. A hotel bureau will be used to assist in booking rooms.

Two new, small scale refineries are planned, a 20,000 diesel topping plant, and another facility similar one at Newtown. A further $1.2 billion an-hydrous ammonia plant has been announced using rich natural gas as the feedstock.

By Brian ZinchukRegina – Manitoba keeps breaking records. In

2012, the province broke nearly every record they had when it came to petroleum production.

“2012 was a very busy year. Pretty well every record was broken,” Keith Lowdon, director of the Manitoba Petroleum Branch with Manitoba Inno-vation, Energy and Mines, told the Williston Basin Petroleum Conference in Regina on May 1.

The only spoiler was Crown land sales, which were down to $2 million. However, very little land in Manitoba’s oilpatch is Crown land.

Last year saw 614 wells drilled, and typically 21 rigs at work in the province during the drilling season.

The targets are primarily the Bakken, Three Forks and Lower Amaranth (also known as Spear-fish) formations.

Lowdon, who is originally from Virden, said not a very large area is affected, but the impact has been noticeable. “I can hardly recognized them, and I’m from the rural areas.”

Nearly all wells drilling in Manitoba are hori-zontal now.

Recently some land that had been reserved for potash development has been made available for oil drilling.

Tundra Oil and Gas was the top driller again in Manitoba last year, with 190 wells. That the tenth year in top spot for Tundra. It was followed by EOG Resources with 129, Penn West Exploration with 90, Legacy Oil + Gas with 34, and Fort Cal-gary Resources, also with 34. A further 27 compa-nies participated in the remaining 137 wells.

In 2012, 43 per cent of production was Bakken-based, and a further 41 per cent was from the Lower Amaranth.

In March 2013, production reached a record 55,700 bpd. Lowden said there has since been a decline. He expects the average production for 2013 to be around 50,000 bpd.

Manitoba’s drilling incentive program, intro-duced in 1992 and unchanged since 2004, expires Dec. 31, 2013. The government is reviewing the program. Lowdon said that as it currently exists, it is a very good incentive.

“We want to continue to see high levels of investment,” he said, adding Manitoba wants to remain competitive with neighbouring Saskatch-ewan. They also want to encourage new technology, enhanced oil recovery, and exploratory drilling.

“There’s more than taxes and royalties. We have to look at the economic benefits of the communities involved,” Lowdon said.

In January, the Petroleum Branch put out a discussion paper for industry to review. They hope to have recommendations by June.

Manitoba’s oilpatch covers a small corner of the province, and that’s one of the challenges for the in-dustry. Lowdon said, “If it impacted the whole prov-ince, we wouldn’t see the dichotomy of opinion.”

He said there’s a bit of a war of opinions, with non-governmental organizations on one side and the oil industry on the other. “Public opinion is be-ing jockeyed by both ends. The other side is doing a better job.”

Companies in Manitoba are doing some out-reach, he added.

Regarding controversy about fracking, Lowdon said, “Fracking in Manitoba is absolutely essential. (Without it) we wouldn’t have any drilling, because you couldn’t produce anything.”

The province is considering joining Frac Focus, an online chemical disclosure registry. “We may have to go on there for transparency,” he said.

Water consumption for fracking is another hot button issue, with Lowdon saying,“People are wild about water usage.

“It’s a sore spot for people when things dry up.”An average Manitoba frac job will use 400 to

800 cubic metres of water. Rural Municipalities have become more mili-

tant, with a feeling of being underfinanced. They are seeking licence fees and road maintenance agree-ments.

Jansen, Sask. – Canadian Pacific Rail Ltd. briefly closed a section of its northern mainline track on May 21 due to a five-car derailment near the vil-lage of Jansen that caused one car to leak 575 barrels of crude oil.

The line near Jansen formally reopened that evening following the quick completion of track repair work and mandatory inspections.

“The clean-up process is progressing well at the site with no issues report-ed,” said CP spokesperson Ed Greenberg, the morning of May 22.

In the hours after the accident, Greenberg said train traffic through the region would be re-routed until the cleanup and investigation is complete and the damaged track is repaired.

“We do have re-routing options in place so we can continue to move trains across the region,” he told Pipeline News.

The leaking car was well back in the 64-unit train and remained upright while the four other cars also carrying crude were tipped on their side.

The accident happened in the early morning as the eastbound trainload was rolling along near Jansen, located about 150 kilometres east of Saskatoon.

The train was carrying a mixed load of commodities including crude oil.Emergency response crews rushed to the site and built an earth berm to

contain the oil near the leaking car.There no injuries and no public safety issues and Greenberg said the cause

of the accident was yet to be determined.“A full investigation is being launched to determine what took place and

not only what the cause was, but what led to the cause,” said Greenberg.“So it’s going to be an extensive review as we look into the situation.“Our focus right now is to ensure we are doing appropriate environmental

remediation and full cleanup work.” The CP northern mainline runs from Edmonton to Winnipeg in Western

Canada.

By Brian ZinchukThis edition marks the fifth an-

niversary of Pipeline News in its cur-rent form. It’s been a whirlwind, for sure, a time that has seen the oilpatch grow immensely, not only in produc-tion, but in jobs and importance in the Saskatchewan economy. Looking back, we thought now is a good time to reflect on some of the most impor-tant things we’ve seen over that time. Here, we look out our top five stories

At first, we tried to think of individual stories, but we soon real-ized that these are so much more important than just one story. Indeed, we’ve written countless pages on each of these topics, and will continue to do so:

1. The Bakken Boom – The world’s eyes were opened to the Bakken in 2008, right when we fired up. Saskatchewan had $1.1 billion in land sales that year – its largest Crown land sales by far compared to any year before or since. Nearly all of that was spent in southeast Sas-katchewan, most of it in the Bak-ken. Back then, we were told that for every dollar spent on land sales would result in approximately $7 in invest-ment to develop it. If you look at the capital budgets of companies like Crescent Point, PetroBakken, Ceno-vus, Husky and Legacy over the past five years, plus all the smaller juniors, that seven-times multiple was prob-ably not that far off. It might even be low. Now, five years in, we can prob-ably say the “boom” is over, and that southeast Saskatchewan has finally settled into something that resembles normalcy. That is, if you consider five

years of continual housing shortages in Estevan and area normal. The last year has seen the pace slacken off, however, and dismal Crown land sales over the past year indicate the mad rush is over, despite oil running in the $90/bbl. range.

In the meantime, we have seen the Bakken continue to boom in North Dakota. Since 2009, North Dakota’s production has shot from 90,000 bpd to 780,000 bpd, far surpassing Saskatchewan’s produc-tion. Put another way, in three years, North Dakota has added one-and-a-half-times the amount of produc-tion it took Saskatchewan 60 years to develop.

In the same time, Saskatch-ewan’s production has grown, but at a much more modest pace. For the better part of 10 years, we produced around 425,000 bpd. Now it’s around 475,000 bpd. In the meantime, Mani-toba has seen it’s production shoot up to 50,000 bpd.

The Bakken boom in the Wil-liston Basin has been like a medieval king’s feast. North Dakota is the king, chowing down on racks of lamb and turkey drumsticks. Saskatchewan is like the dogs under the table, eat-ing the scraps that fall off the king’s table. Manitoba is the mouse, picking up what the dogs left behind. All are well-fed, but some have more to eat than others.

We should point out that the Bakken is still largely in the primary production phase. We are just now starting to see a push for secondary production. The Bakken has many, many years in it yet. Page A17

Page A162. Horizontal drilling and multi-stage frack-

ing – This development in technology was many years in the making. Hydraulic fracturing has been around for many decades, and horizontal drilling started over 20 years ago. But it was the combina-tion of the two, and the ability to aim a drill bit through one-or-two metre thick reservoir a mile deep and a mile across that has changed the world. In North Dakota, a typical well is two miles deep and two miles across.

Fracking has developed at a remarkable pace, with ball-set packers, then cemented liners and braser jets in combination with moveable packers. The technology has been advancing so quickly it’s hard to keep up. Who knows what refinement will be next?

The one constant has been a steady increase in frac stages underground. Early Bakken wells saw eight stages. In short order, it was dozens. Then they added another leg to the well, and did dozens more.

These developments have a profound impact on petroleum production. It meant tight reservoirs that were uneconomical soon were producing enough to affect world prices for both oil and gas. The world is just now coming to know the terms “shale oil” and “shale gas.”

While horizontal drilling and multi-stage fracking has opened up oceans of oil, it totally upset the apple cart when it comes to natural gas. This year, the provincial government is expecting only 50 natural gas wells to be drilled in Saskatchewan. In 2008, it was 1,123.

Alberta has seen its provincial finances take a beating from the destruction of gas prices and the associated royalties, and is now in serious financial trouble.

Not all formations benefit from the fracking revolution, but nearly all have benefited from hori-zontal drilling. Five years ago, governments used to make a point of indicating how many wells were drilled horizontally. Horizontal drilling is no longer the exception – it’s the norm.

3. Carbon dioxide capture, storage and enhanced oil recovery – In the spring of 2008, Prime Minister Stephen Harper announced federal backing for the Boundary Dam carbon capture project. That project is now in the back stretch, and soon will be rounding turn four and coming to the finish line. We have probably written more about this project, and the associated Aquistore, than any other publication in this province.

Carbon capture is the future of the energy industry. It’s the only way to continue to use coal-fired power generation and address the greenhouse gas issue. In areas like Saskatchewan with petro-leum production, it also means enhanced oil recov-ery. When it comes time to advance the Bakken to tertiary recovery, it may also be time to put a few more capture plants on Boundary Dam and Shand Power Stations.

What should not be forgotten is that Saskatch-ewan is an absolute world leader on this front. This is no small fact, either. If greenhouse gas emissions are one of the most important issues facing the planet, we may have a large part of the solution right here, south of Estevan.

Page A18

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Page A174. Push to thermal heavy oil

production – This area doesn’t get nearly the press carbon capture or the Bakken play do, but it’s incredibly im-portant. In Saskatchewan’s heavy oil region around Lloydminster, as Husky goes, so goes the industry. Husky has indicated an increasing trend towards thermal oil recovery.

This development has the poten-tial to change the heavy oil industry in the way horizontal drilling and multi-stage fracking has revolution-ized light oil recovery. It’s not going to be an overnight change, but it’s the way of the future. In the 1980s, pro-gressing cavity pumps pushed heavy oil to the next level. We will see the same happen with thermal recovery. It will eventually become the norm.

Let no one forget, while Sas-katchewan has a fair amount of Bakken oil, it has many, many billions more barrels of heavy oil just waiting for an effective way to recovery it. Our future is in heavy oil, and it’s future appears to be thermal.

5. Pipelines and rail – Pipelines are the circulatory system of the oil-patch. If the oil and gas stops flowing, the patient dies.

In 2008, construction began on the Alberta Clipper. We soon saw the conversion of an old TransCanada gas line to oil service, becoming the origi-nal Keystone pipeline. Who would have thought then that it’s follow-on project, Keystone XL, would become

one of the most important issues in Washington, or that it would be divi-sive across the continent?

While pipelines have had their share of controversy ever since the St. Laurent days, the debate has reached a fever pitch. It’s hard to turn on the TV news or read a national news website today without seeing a story about Keystone XL, Northern Gate-way, TransMountain Expansion, or most recently, TransCanada’s Energy East conversion of another gas pipe-line to oil service.

Our industry hangs in the bal-ance. If several pipelines aren’t built in the next three years, we are going to be in very serious trouble.

In the meantime the pipeline troubles, combined with burgeoning production in the Bakken and oil-sands has meant the clock has been turned back many decades, with the industry turning to rail. Five years ago, almost no crude oil traveled by rail. Now crude-by-rail is skyrocket-ing. Every few months, another rail loading site pops up. The oil industry has decided it can’t wait for the pipe-lines to be built, and rail is the answer. In North Dakota, the majority of oil production now goes by rail, and pipelines are running at little more than half capacity.

Interestingly enough, the St. Laurent-era debates were about the TransCanada pipeline. That so-hotly contested pipe would eventually be converted to oil service to become the first Keystone pipeline.

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By Geoff Lee

Lloydminster – Pipeline News is celebrating its fifth anniversary this month with a variety of Top 5 picks in various categories.

Reporter Geoff Lee picked his Top 5 favourite story of the year for each year dating back to 2009 which was his first year covering the heavy oil industry from Lloydminster.

All of the stories are available to read in full from past issues available from our www.pipelinenews.ca website.

May 2009: Profile on the town of Provost Alberta

My pick for the recession year of 2009 was a profile about town of Provost, Alta, focused on an interview with economic development officer Bert Roach.

Roach and the story took inspiration from a meteorite that lit up the night sky in late 2008, along with the town’s hopes for 2009.

Most of the projects that Roach talked about back then including fundraising for the new Crescent Point Place hockey arena, have come to fruition.

A giant fireball from outer space also lit up the night sky around Provost in November 2008 sprinkling the area with some valuable meteorite fragments and a sense of optimism.

“We are hoping that means we have a really bright future ahead,” remarked Roach.

So far, so good in 2009. Despite the recent economic turndown, the unemployment rate for Provost has risen only marginally from three per cent last November to 3.2 per cent in April.

“Because of the balance in the local economy, we have been insulated from a lot of layoffs,” said Roach. “We know there are some excellent op-portunities here and the community has been well managed.”

The historically strong oil and gas sector in the area also prompted the municipal district to contribute $5.4 toward the $12.1 total cost of the Provost Regional Activity Centre that is under construction and will house a hockey rink and six lane outdoor pool.

A fundraising committee is hoping to raise $2.5 million from the sale of naming rights and sponsor-ships to companies in the oilpatch.

October 2010: Lloydminster heavy oil show and symposium: 2010

The combined heavy oil show and symposium in 2010 was the first oil show that I covered for Pipeline News and was an eye-opener in terms of how innovative heavy oil companies were in the Lloydminster region.

Alberta’s energy minister was Ron Liepert, one of several guest speakers at the event banquet.

The keynote speaker was Murray L. Cobbe, ex-ecutive chairman of Trican Well Service Ltd., who spoke about how his company continued to grow and prosper through innovation and opportunity during booms and busts.

At the time, horizontal drilling and multi-stage fracturing were relatively new to the industry and to Trican.

In 2008, Trican had fracked just five different formations horizontally, and more than 30 forma-tions by the time the show rolled around.

“This technique is being used more and more to test our other formations,” said Cobbe.

“Everyone knows that worn oilfields are look-ing to be part of the future for what we are going to be able to produce for oil such as the Viking and the Bakken.

“We are going to continue to look at how these fields are going to react to this type of completion.”

October 2011: Kindersley housing shortageThis story gets on my list simply because of

the strong demand to accommodate the influx of oilfield workers in communities such as Kindersley.

Housing was a common theme in communities throughout Western Canada as the oil boom kicked into gear.

A boom in the Viking play in the Kindersley area had the town scrambling to figure out how to provide affordable housing for new workers and families moving into the area.

“It’s just the activity in the oilpatch. It’s ramp-ing up. A lot of the horizontal drilling is spilling off into service industry businesses in Kindersley. We don’t expect it to stop any time soon,” said town councillor Tom Geiger.

“The demand for lots is from service industries and the spinoffs from the oil industry. We are kind of the service centre hub of the region.

“In the last five years, we have had a steady increase in building permits. It’s almost skyrocketed

to what we had four or five years ago. “With the province growing as fast as it is, we

expect to be part of that growth for the next num-ber of years,” said Geiger.

January 2012: Bill Boyd interview and fore-cast

Former Energy and Resources minister Bill Boyd could always be counted on to provide Pipe-line News with an outlook for the industry at the start of a new year.

At the start of 2012, Boyd was bang-on with his prediction of where the industry was headed that year.

“I think you will see continued investment in Saskatchewan through the land sale process and through properties that oil companies have acquired in the past. I think we will see continued strength in terms of drilling,” said Boyd.

Page A23

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Regina – The 21st Williston Basin Petroleum Conference in Regina May 1-2 was a resounding success, setting yet another record for attendance in the Regina edition of the show.

Saskatchewan and North Dakota alternate as hosts each year. While last year’s Bismarck edition eclipsed Saskatchewan’s, due in large part to the boom North Dakota has been going through, Saskatchewan’s edition has grown by leaps and bounds in recent years. This year it hit 2,197. All the exhibition space was sold.

Beyond the main event May 1-2, there were also core workshops on April 30 and May 3. These were in keeping with the conference’s roots as a geology

confab.The speaker list included representation from each of the states and prov-

inces in the Williston Basin – Saskatchewan, Manitoba, North Dakota, South Dakota and Montana. Economist Jeff Rubin and Minister of Energy and Re-sources Tim McMillan provided keynote addresses.

The technical side saw a heavy focus on secondary and tertiary recovery techniques, especially carbon dioxide-based enhanced oil recovery. There were also presentations on emerging technologies, exploration and development.

Asked how it went, conference chair Melinda Yurkowski said, “Awesome, it was a fantastic show.

“The booth people were happy. There were fantastic talks.”The 2014 edition will be held in Bismarck May 20-22.

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Page A19“There’s more and more horizontal wells being drilled all of the time which

are expensive wells to drill, but have higher recovery rates which are very good for our economy.

“We will see more people being employed in the industry and continued growth in our communities that are close by the oil industry.”

February 2013: Hockey in the oilpatchAlthough the City of Lloydminster postponed hosting CBC’s Hockey Day

in Canada event until 2014, Pipeline News jumped on the bandwagon to talk about the strong connections between the oil and gas industry and community hockey in Western Canada.

The topic opened the doors to interview a host of oilfield companies and employees about their involvement and support of our national game – in men’s and women’s hockey – at the local level.

The importance of CBC coming to broadcast Hockey Day in Canada event from Lloydminster is not lost on Mayor Jeff Mulligan.

“The stories we take for granted – things we drive by every day – it’s become part of the background noise as what we see as being Lloydminster. When they come, everything is through a fresh set of eyes,” said Mulligan.

“They’ll want to look at everything from the Barr Colonists to the oilfield. They will want to tell the story of the oilfield technical society.

“They’ll want to tell the story of how we are the heavy oil capital of the world. They will want to expand on Lloydminster’s value to Canada and to Alberta and Lloydminster as a destination.

“I really believe they can do a better job than we can of telling the story. I think they will absolutely film at the upgrader.

“I think they will absolutely film at some well sites. I think they want to see everything from the off-loading (rail) facilities.”

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By Brian ZinchukWho have been the most infl uential people in Saskatchewan’s oilpatch over

the last fi ve years? Whose decisions have had the most impact? Pipeline News looks back and lays out our Top 5, with a few honourable mentions to boot.

1. Premier Brad Wall – Ironically, Wall’s most important policy decision when it comes to oil and gas development in Saskatchewan is to leave well enough alone. He, and his long-time minister of Energy and Resources and now Minister of the Economy Bill Boyd have repeatedly, doggedly, never-endingly said they are not going to touch resource royalties. Th eir speeches on this front may have sounded like a broken record, but the tune was one that sounded sweet to an oilpatch weary of former-Alberta premier Ed Stelmach’s tinkering.

Indeed, for the duration of Stelmach’s tenure, this paper wrote a continual string of stories about what we jokingly called “refugees from Stelmach.” We couldn’t go a month without running into another individual, or indeed whole company, that had come to Saskatchewan because there was work here, and little back home. Th is fuelled the return of many Saskatchewan boys who had gone off to the “promised land” out west.

While the royalty structure may have been a situation where it was best to ice the puck, when it came to the growing pipeline debate, Wall has gone into the corners with his elbows up. Our April edition was fi ttingly headlined by “Mr. Wall goes to Washington.” Th e premier spent the better part of a week knocking on every door he could in the capital of the free world to get the stalled Keystone XL pipeline project going. Wall has gone to bat for our indus-try in a way that few politicians these days will.

An honourable mention has to go to former premier Lorne Calvert. He was already voted out of offi ce before we fi rst went to press in our current form. But it was expressly the policies of his government, brought in during the latter part of his administration, that laid the foundations for the tremendous growth we have seen over the past fi ve years. It took courage for an NDP premier to make Saskatchewan more attractive to invest in than Conservative Alberta, but it worked. Page A25

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2. Minister of the Economy (formerly minister of Energy and Resources) Bill Boyd – There’s a common phrase that you heard in almost every Boyd speech to the oil-patch – “Thank you.”

Every time the farmer from Kindersley would rise to speak, he made a point of thanking the oil-patch for its investment, for providing good-paying jobs for our people, and for providing the royalties that paid for things like schools and hospitals.

Boyd was entrusted by Premier

Brad Wall with one of the most important ministries in government, one that would indeed pay for those schools and hospitals. Boyd would also often recount his specific instruc-tions from Wall when handed the job: “Don’t screw it up!”

When the Saskatchewan Party reorganized several ministries, Boyd was given a new super-ministry, the Ministry of the Economy, which now includes the Ministry of Energy and Resources under its wing. In some ways he could be considered the Sas-katchewan equivalent of the “Minister of Everything” C.D. Howe. So far, he has succeeded in his mission, and hasn’t screwed up either ministry yet.

Honourable mention should go to Deputy Minister Kent Campbell. While the politicians get all the glory, it is the deputy minister who has his hand on the tiller and runs the show. The affable Campbell has been Boyd’s deputy minister both in Energy and Resources, and now in Economy.

3. Husky Energy Inc. CEO Asim Ghosh – Husky Energy Inc. is Saskatchewan’s largest oil producer, and that’s not by accident. If it weren’t for Husky’s investment in Lloyd-minster and area, the Border City would be a shadow of its current self. Instead, it has been one of the fastest growing communities in the country.

Husky’s upgrader on the Sas-katchewan side of the border is the foundation upon which our heavy oil industry is built. Husky is consistently one of the top drillers in the province.

To say it has poured billions into this province would be an understatement. It’s most recent investment, a new office building to house its operations, is a testament to its longstanding commitment to Lloydminster.

The major producer has been innovative, too, building an ethanol plant at its upgrader site. Five years ago we first got wind that Husky was working on a test carbon dioxide flood near Mervin. Only in the past year has that become common knowl-edge, with the company announcing it will be capturing CO2 at its upgrader facility and using it in northwest Sas-katchewan for enhanced oil recovery.

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Page A25Husky is also one of the driving forces in the

push to thermal enhanced oil recovery. In the Lloy-dminster region, where Husky goes, the industry will soon follow.

On May 8, Daily Oil Bulletin noted, “Since the 1940s the company has produced about 800 million bbls of heavy oil from the Lloydminster area ‘and we’re confident, with the known technologies that we have in place now, that we can recover about that much yet again,’ Ghosh told shareholders.”

4. Crescent Point Energy Corp. CEO Scott Saxberg – If Husky is the biggest player on the

west side of Saskatchewan, then Crescent Point is its counterpart to the south. In a few short years it has grown from a small junior to an intermediate producer, recently topping 100,000 bpd production, and most of that is in Saskatchewan.

It was at the 2011 Saskatchewan Oil and Gas Show in Weyburn that we realized how truly important Saxberg and Crescent Point have been to Saskatchewan’s oilpatch. In 2008, when Saskatch-ewan sold approximately $1.1 billion in Crown land sales, about $850 million of that was in southeast Saskatchewan. In his acceptance speech as oilman of the year, Saxberg revealed they had gone to the market and raised $700 million to purchase land in the Bakken play. While he didn’t reveal how much of that was Crown and how much was freehold land, it was like a veil was lifted. One of the key reasons Saskatchewan had it biggest surplus ever, that year, was because of Crescent Point’s action.

Crescent Point has consistently been one of the most active drillers in the province for the last five years. When they shut down nearly all their rigs for a few months last summer, the industry noticed, and felt it.

The company has also been a strong corpo-rate citizen, buying the naming rights to not one, but two rinks in Saskatchewan, Weyburn and Shaunavon, and a third in Provost, Alta.

They have since grown to become Saskatch-ewan’s second-largest oil producer, after Husky.

What is not well known is that as important as Crescent Point is in the Bakken, it is doubly so in the smaller Lower Shaunavon play. The company has all but locked up that play, driving a revival in one of Saskatchewan’s oldest oil towns.

Crescent Point has been stung by the lack of pipeline capacity, so it has become one of the lead-

ing companies in the crude-by-rail movement. Its Stoughton rail loading facility now has the capabil-ity of shipping almost all of the company’s crude production from southeast Saskatchewan if they chose to. A trip along Highway 33 between Regina and Stoughton shows almost continuas rail traffic moving just one thing – crude oil, and all of it for Crescent Point.

Finally, Crescent Point was the lead donor and one of the key instigators behind the STARS air ambulance finally being established in Saskatch-ewan. That service saves lives every day.

Page A28

Page A275. Dr. Malcolm Wilson – the CEO of the Pe-

troleum Technology Research Centre, Dr. Malcolm Wilson, should really go by another handle: Mr. CO2. He has been Saskatchewan’s front man on this subject since first being recruited by the former NDP government. That government recognized Saskatchewan has a huge amount of oil, especially heavy oil, that was not economically recoverable with current technology. Wilson’s job has been to push the boundaries of what’s possible for enhanced oil recovery. Along the way, he has been key in making Saskatchewan a world leader on CO2. He has been instrumental in setting up the PTRC, International Performance Assessment Centre for CO2 (IPAC-CO2), International Test Centre for CO2 Capture and the now-defunct University of

Regina Office of Energy and the Environment. While there has been some kerfuffle regarding IPAC-CO2 recently, let nothing take away from his pivotal role in making Saskatchewan a force to be reckoned with on the CO2 front.

We should note he’s the only person from Sas-katchewan that we know of that is a recipient of the Nobel Peace Prize. Wilson was one of the scien-tists belonging to the Intergovernmental Panel on Climate Change to receive the honour along with former U.S. Vice-President Al Gore. The Nobel Peace Prize is considered by many to be the highest honour on the planet.

Honorable Mention: Minister of Energy and Resources Tim Mc-

Millan – McMillan is a rare breed in Saskatchewan politics – the Lloydminster MLA actually worked

in the field in the oilpatch. Since this list considers the last five years, and McMillan has been minister for just one year, his legacy is still being established.

With the reorganization of the provincial ministries last year, Energy and Resources was subsumed by the new super-ministry known as the Ministry of the Economy. This means that Energy and Resources has its own minister, but it is no longer completely its own department the same way the Ministries of Health or Highways and Infra-structure are. While the reorganization means that McMillan does not have the same clout Boyd had in this position and, to an extent, still has as min-ister of the Economy, McMillan is still very much the man in charge of ensuring our industry keeps rolling, especially from a regulator perspective.

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Regina – With the industry now looking beyond primary production for the Saskatchewan Bakken, what’s next?

Peng (Mars) Luo of the Saskatchewan Research Council spoke of the geo-chemical and geophysical implications of CO2 flooding for Bakken reservoirs on May 2 at the Williston Basin Petroleum Conference in Regina.

Noting the rapid decline curve of Bakken wells, Luo said all their EOR coreflooding tests in the lab started with promising results.

The work included a waterflood, surfactant flood, immiscible gas flood and miscible gas flood.

“CO2 flooding is the best choice in terms of improving oil recovery factor but might trigger other issues,” he said.

The Bakken unit looked at is a sandstone member sandwiched between shale members. It’s a complicated geology, with many different lithologies.

“It’s challenging to do any injection tests,” Luo said. “It may cause forma-tion damage once you inject into the reservoir. You have CO2, oil, and rock.”

CO2 forms carbonic acid in the reservoir, he said. The salinity of Bakken brine is another issue, causing additional challenges

when injecting CO2.“When you inject CO2 into the reservoir, it will react right away,” he said,

noting the carbon dioxide can dissolve feldspar and will react with calcite. In carbonate rocks, the rocks will dissolve, and there is a substantive increase of Fe2+, Ca2+ and Mg2+.

In sandstone rocks, feldspars will be leached, followed by the precipitation of clay, carbonates and quartzes. Kaolinite is formed with intense leaching. Il-lite, chlorite or albite precipitate with less leaching.

The increase of permeability from carbonate dissolution was offset by a reduction caused by the migration of clay.

Crescent Point tested waterflooding several years ago, and natural gas flood work has been done by PetroBakken. Luo noted it is a more reasonable and economic option for gas flooding now.

Luo finished by saying extensive laboratory tests need to be done to evalu-ate geophysical and geochemical effects of CO2 flooding, and that at present, it cannot be confirmed whether CO2 causes positive or negative effects.

story and photodby Brian Zinchuk

Regina – Recessions are tied to oil shocks, according to economist Jeff Rubin.

Rubin was one of the keynote speakers at the Williston Basin Petro-leum Conference in Regina. He spoke on May 1. He is author of The End of Growth and Why Your World Is About to Get a Whole Lot Smaller.

When the oil shock hit America, President Richard Nixon cut the speed limit across the nation.

“Ever since the first oil shock, we’ve been trying to wean ourselves off the stuff,” he said. Furnaces used to run on oil. Most were replaced with natural gas units. The petrochemical industry shifted to natural gas as a feedstock, too, he said.

But oil’s prime use is as a trans-portation fuel, by air, boat, truck or rail. “You’re burning one fuel, and one fuel only – oil. And that’s not an accident, because oil packs four times the energy density of natural gas.”

“That’s why oil remains so critically important. It’s still the No. 1 energy source for the global the economy.

“That’s why every major recession in the last 40 years has oil’s finger-prints all over it,” Rubin stated.

He noted the first was in the 1973 OPEC oil shock. Then there was the 1979 Iranian revolution that

led to two recessions, a double dip. In 1991, Kuwait was invaded, followed by the first Gulf War.

“The 2009 global recession, the deepest on record, followed on the heels of a $147 barrel of oil,” he said.

Rubin said the media says the recession was about financial markets and subprime mortgages.

“No one has to remind me how devastating subprime mortgages were to financial institutions. Why the hell do you think I’m an author?”

The bank he worked for wrote down $700 million in financial instru-ments, wrapped in fancy AAA wrap-ping paper.

“Banks lost sight of how ratings agencies got paid – by the entities they rate.”

That’s a moral hazard, he noted, “In investment banking, we call it s--- happens.”

“Inflation was non-existent. In in two years, it went from one per cent to six per cent,” he said, based on one component. The energy component saw oil go from $30 to $70 to $147/bbl.

That made it no different than 1973, 1979 and 1991.

“Every oil shock has led to a re-cession, through one mechanism. It’s inflationary, and it creates growth in interest rates,” he said.

There was one big difference be-tween the previous recessions and the most recent. Page A32

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Page A31“In ’73, ’70, ’91, someone turned off the tap, or

invaded an oil-producing country. In ’06, ’07, ’08, no one turned off the tap. In fact, more oil flowed the tap than ever, but no one could afford the oil that’s flowing,” Rubin said. “That’s because we’re getting oil from very different places.”

The new sources of world oil supply aren’t the Middle East, but the oilsands in Alberta. Venezuela has almost twice as much oil as Fort McMurray.

“The only problem with those sources is oil doesn’t flow at the prices you want to fill up at.”

When oil plummeted to $40/bbl., $50 billion of capital expenditures at Fort McMurray were canned because it didn’t make sense.

“The peak oil people are forever wrong because they think oil is only conventional. It may be true conventional oil peaked years ago, but who cares if it’s conventional or not. If it combusts, it works,” Rubin said.

He spoke of the downward sloping demand curve, a fundamental law of economics. He ex-plained, “The higher the price of something, the less we can consume. What governs how much oil we consume is how much our economies can grow. Unfortunately, our economies aren’t doing too well at the kind of prices we have today.”

It didn’t take too long for oil prices to snap back “like a jack-in-the-box” from $40 to triple dig-its in January 2011. But China doesn’t do very well with Brent oil at $105. It’s growth rate has dropped from 10 per cent to seven, and soon it will be four, he forecast.

Now economists look at growth rates for Canada and the U.S. at 1.5 to two per cent.

“Everywhere you look, economies have slowed down to a slower rate of growth.”

Politicians call on their economic managers to step on the gas to create jobs lest they be voted out of office. The result is interest rates down to zero and trillion dollar deficits in the U. S.

“Free month is not a substitute for $20 a barrel oil,” he said.

As for stimulus packages, he said, “Yesterday’s bailout becomes tomorrow’s cutback.”

Zero interest rates are a once in a lifetime opportunity, but by the second and third year, you don’t get the same results, he said.

“The fundamental tools we use to stimulate economic growth, fiscal policy and monetary policy, are not really the solutions to the problems we face.”

U.S. oil production has increased over the past decade. In 20 years, America may be energy inde-pendent.

“But is energy independence really the issue? Last year, retail gas prices in the United States were the highest ever. Last year, Brent, the world oil price, averaged $112, more than in 2008. The prob-lem is not where the oil comes from. The problem is what the oil costs. That essentially is the challenge that we face.

“I don’t have to tell a room full of geologists the world will never run out of oil. That’s not really the question. The economic question – are we going to be able to produce oil we can afford to burn, and grow at the growth rate we’ve become accustomed to? I’m suggesting we’re not going to be able to do that.”

“What we regard as normal economic growth rates are benchmarked to the last four years. They are not the norm, but the exception,” Rubin said. Cheap oil and coal are the reasons for that growth.

Page A33

Page A32Indeed, for China, the price of coal may be a

bigger impediment than the price of oil.“In a world with triple-digit oil prices, and

remember, no matter how we move it around the world, we’re burning oil, one way or the other, all of a sudden distance costs money. In a world of $20 oil, transport costs are incidental.”

The result has been “globalization,” moving factories to the cheapest available labour. Over the last 10 years, that has been China.

“When oil costs $100 a barrel, importing everything you consume from someplace halfway around the world, just because the labour is so much cheaper, can quickly become penny-wise and pound-foolish,” he said.

As an example, he noted that in 2007, U.S. steel production rose because for the first time in 20 years, it was cheaper to make steel in the United States than to import it from China.

Labour costs may be cheaper in China, but all the transport costs to get the raw products there, produce it, and then ship it to the U.S. nullify the advantages.

“How much labour time do you think there is in making a ton of steel these days? About an hour-and-a-half,” Rubin said.

“The silver lining here is that the industries we thought were gone forever – manufacturing, agri-culture, may have a bit of a renaissance in a world of triple-digit oil prices.”

“In a curious way, the transport costs that fall out of triple digit oil prices will make tomorrow’s economy resemble a lot more the economy of 30 or 40 years ago than the global economy that we have become accustomed to.”

“Here lies the real challenge we face today. That triple digit oil price is a time of great opportunity and a time when new technology will be developed.

“The resources we’re going to access for energy

are going to be increasingly problematic, and will require new technology. What will allow that tech-nology to develop is oil prices are going to continue to rise, because of the shape of the cost curves for the very places we’re going to be relying on for oil in the future – the Bakken, the oilsands in Alberta, the Orinoco (Venezuela) oilsands, by far the world’s largest oil reserves, is going to affect world supply.

“The issue of independence can lead us astray. I think the issue is security of supply.

“Who cares what Saudi Arabia produces – you only care about what they can export,” Rubin said, noting Saudi Arabia has been consuming a lot of its oil production, and that consumption is grow-ing. The country uses one million barrels per day powering desalination plants, and will use more in the future.

“When the car owner is filling up his tank, do they really care where the oil comes from, or do they care what it costs?” he concluded.

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Editor’s note: Questions from the audience are paraphrased for brevity.

Is WTI going to normalize to Brent or Bakken prices?

Jeff Rubin: “There is another price spread we should talk about – Western Canadian Select and WTI. Western Canadian Select comes out of the oilsands. It’s ironically one of the cheapest oils in the world right now has the highest cost structures.

“We don’t have to find new markets, to sell to China or Europe. We just need to get our oil to the coast, any coast, and we can send it to any U.S. refinery along the coast, Atlantic, Pacific, or Gulf of Mexico and we will get Brent prices. Getting to the coast is no small feat.

“For most of my working life, Brent and WTI were interchangeable, a dollar or two off. I wouldn’t even say WTI is the American price. It’s the price of landlocked oil in the States. Oil you get to the coast, you’re getting Brent. Will this differential eventually disappear?

“What is the real benchmark, WTI or Brent? Where is oil demand growing, and where will de-mand shrink? U.S. oil consumption peaked four or five years ago at 21 million barrels per day. It’s now 18.5 million barrels, and will probably be 15 million barrels per day in seven or eight years.

“World oil demand is not coming from the OECD. It’s coming from the developing world. If WTI does not adjust to Brent, then notwithstand-ing American energy independence, I would predict American oil producers will assume their own market and send their oil to where they get the top dollar. If enough of that happens, WTI will convert to Brent.”

There’s a lot of talk but not a lot of action of natu-ral gas as a transport fuel, and the B.C. government is looking at lining the coast with LNG plants. Can you discuss this?

JR: “When I was the chief economist with CIBC, we were going to be financing an LNG ter-minal in Quebec that would be receive LNG from Russia. How things have changed.

“Water does not flow uphill, and gas does not go from somewhere where it is $11 to $4, which is what Henry Hub is.

“We’re going to be an major exporter of gas, assuming the shale revolution remains an North American phenomena. I’m sure an audience like this knows, shale formations are everywhere in the world, but only in North America are they being developed. Gas is $13 in Asia, $10 in Europe. That’s going to make a lot of sense, and that’s where we’re going to see our export development.

“On the use of natural gas as a transit fuel, there’s a lot of talk. Unfortunately, that’s about it. There are about 240 million vehicles on the road in the United States, less than one million are powered by anything other than diesel or gasoline.

“That’s not an accident. Again, energy density. There may be some natural gas in large trucking vehicles. But do you have the distribution system for it? In the foreseeable future, oil remains unchal-lenged as a transport fuel.

“As for gas and oil arbitrage, from my back-ground in investment banking, traders would arbi-trage that BTU price spread in a nanosecond. Not only would they arbitrage it, they’d fancy it up in a security. What’s holding them back? We’re talking apples and oranges. If we could substitute natural

gas for oil, you wouldn’t see Henry Hub at $4 and Brent at $105. The point is you can’t arbitrage it, and the reason you can’t is what’s driving oil de-mand. It’s not the demand as a feedstock, or a home heating fuel or power generation. What’s driving it is the demand for oil as a transit fuel.

“Notwithstanding the talk, so far natural gas has done very little to make inroads into oil’s reign as a transport fuel.”

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Regina – How big can the Bakken grow?Jason Braunberger from the Energy & En-

vironmental Research Center (EERC), in Grand Forks, N.D., spoke of their CO2 Enhanced Bakken Research Program, its summary, status, and future. He was one of the presenters at the Williston Basin Petroleum Conference in Regina May 1-2.

“How much bigger can the Bakken get?” He asked. “The USGS (United States Geological Survey) recently said it is up to 7.4 billion barrels of recoverable oil. We know that’s probably on the low end.”

“Of the billions of barrels out there, we have a recovery factor of 10 per cent at the most right now, more typically the average is around three per cent. With this low recovery factor, a small improvement of just one or two per cent would mean an addi-tional billion barrels of oil,” he noted.

The personnel at the EERC has been studying conventional CO2 recovery for the last 10 years, and they are building a consortium to study if CO2 can be used in the Bakken.

They have had two attempts at a CO2 “huff ’n puff ” in North Dakota, one in the Parshall field, and one in the Elm Coulee field in Montana. Braunberger said, “These were marginal success, at best.”

“We want to take that data, learn from that data, and really understand. Is huff ’n puff the right way? Do we need to go farther with injection pairs? What is the best way to do this? We’re looking at all those scenarios with this consortium project.”

The study is looking at mature and immature areas of the Bakken on the U.S. side of the border.

They are looking at how CO2 interacts with the reservoir. As the Bakken is a very complicated reservoir, they need to understand the rock matrix and nature of fractures.

Their team approach working with industry included looking at matrix porosity, grain morphol-ogy, mineral phase, microfractures and depositional environment.

At one site in a 10,000 foot well, they used various high power microscopes, electron and oth-erwise, on the core. Regarding the facture analysis, he said, “All models are wrong. Some are useful, but all are wrong.

“A model is only as good as your input data.”Getting out of the model world, he said in the

real world you are putting CO2 into a really tight matrix.

Reiterating that huff ’n puffs have had marginal success, Braunberger posed, “Do we move forward with more huff ’n puff or injector producer pairs, or more traditional one injector and six producers? Do we inject into the middle Bakken or the shale?”

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By Brian ZinchukEstevan – Another fire-engine red rig has

joined the Saskatchewan drilling fleet, with Red Dog 4 going to work early in June.

The nine-year-old Estevan-based company has added a new rig every few years, the most recent being in February 2009. Rig 1 started work in February 2005 and Rig 2 did the same in February 2007.

Rig 3 had the challenge of being ready just as the global financial crisis and recession was in its darkest days. Thankfully, they were able to find potash work for it at the time.

Red Dog Drilling is a privately held company with 33 shareholders. Husband and wife, Wayne and Caroline Zandee, are the largest shareholders, with Wayne acting as president and Caroline as business manager.

Both Wayne and Caroline have strong fam-ily histories in the oilpatch. Wayne grew up in a drilling family, and both he and his brother, Ken, worked on the rigs. Wayne started on the rigs in 1979 (See related story Page B4)

Both of Caroline’s brothers, Rob and James Grandy worked on the rigs as well. Her sister, Cathy Bukatka, and her ex-husband founded JaCAR, an oilfield trucking company.

Rob Grandy and Wayne worked together on the rigs. Caroline and Wayne were both working in Estevan and met through friends of friends in 1987 (Rob also put in a good word for Wayne). They were married Aug. 11, 1990.

Caroline was a social worker with Social Ser-vices and in the school system. The first four years of their marriage, Wayne went back to school, getting a technologist diploma from Kelsey in Saskatoon. They came back to Estevan and Wayne worked as a field superintendent for Ensign Drill-ing until it came time to set up their own com-pany. Red Dog was incorporated in 2004.

“It’s the sharpest learning curve either of us have been on,” Caroline said of the challenge of starting a drilling outfit.

“We put everything we owned into this company to get it started in 2004. There’s a lot of blood, sweat and tears. ”

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The decision to go ahead with another rig was made by the company’s board of directors in late summer 2012.

Rig 4 is similar to their other rigs, but has new-er technology, and a few additions. For instance, it has more pumping capacity.

“It’ll have two 1,000 horsepower pumps,” Wayne said.

The telescopic double is rated for 3,800 metre depth.

“It was a complete package,” Caroline said. Do-All Industries was the contractor providing the build and design of the major components of the rig. Do-All also provided in-house hydraulic and electrical system work.

As part of the package, engine systems were provided by Rouse Industries/Southern Industrial and Truck in Weyburn. That includes a Cummins QSK19 800 horsepower engine with Allison 6620 transmission on the drawworks. The pumps each have Cummins QSK23 1,000 horsepower engines with Rouse MPD-2.1 two-speed transmission. For a generator, it’s a Cummins 500DFEK 455K. There are provisions for two gen sets, but just one is installed.

Rig 4 has a standard hydraulic catwalk. The drilling pipe came from Complete Tubu-

lars; the shack came from AltaFab. Some supplies like the BOPS came for API Valve, and McKinney Machine supplied the block and hook.

Mustang Controls did the control system installation.

“It’s got an airless control panel, a Generation 2 airless drawworks panel

This system was pioneered on another lo-cal drilling contractor's recent rigs, and has been improved upon by Mustang, hence the Genera-

tion 2 moniker. “It’s electronic, wireless,” Wayne said. “The pump can be operated by wireless radio control or PLC cable control. It communicates with an antenna.”

There is a PLC cord for backup, just in case. The control system monitors engine speed,

temperatures, pressures, and gearbox temperature, all from the driller’s console.

A first for a Red Dog rig, there is a roof over the mud tank. Wayne noted, “On invert wells, you can’t have rainwater in the invert.”

A roof also makes a difference in the winter.

When enclosed, a steam heater and suck fan pro-vide air circulation.

The doghouse design is a conventional one, without the slide-out some companies in the region have chosen. There’s one close-circuit camera over the shaker table, with a screen in the doghouse.

This doghouse will be hydraulically raised and lowered, as opposed to winch driven.

Asked about the decision process to go ahead with another rig, Wayne said, “It takes a long time from when you start, to when it’s built.

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Page B2 “You look at the market situation. You talk to leaders in the industry and

look for trends, and hope for the best. There’s a bit of a gamble in it.”Some of their first have contracts running until breakup, but not all. All

four, however, are expected to go to work in late May or early June. Rig 4 is contracted out.

“If you have a good track record and maintain your equipment well, treat your men well you build a solid reputation,” Wayne said. “We’ve been here for about nine years now.”

The company’s utilization rate has been approximately 70 per cent, from breakup of 2012 to breakup of 2013.

Human resources A large portion of Caroline’s duties deal with human resources. It can be

a challenge. “Staffing is a huge issue. It’s not too bad, but everyone will tell you man-

power is the No. 1 concern,” Caroline said.In August 2011, Saskatchewan hit an active drilling rig record at 122

rigs. That meant there were enough people at the time to staff all those rigs. The rig count has dropped substantially since then, barely broaching 100 over the past year. That’s still a very high number, but it begs the question – where did all those extra hands go? Shouldn’t there be a surplus?

“There is no surplus of experienced rig hands right now.”Green hands are not difficult to find, but good hands are. To staff a new

rig, it’s not as hard as finding people for an existing one. There’s some attrac-tion to working on new iron.

“Manpower continues to be an issue across the board in the industry,” she said. They have hired people from Russia and Ireland. There was a time when Rig 3 was jokingly referred to as the rig of four flags.

For the new rig, there are some internal promotions, and some new people recruited. “We’ll probably be working eights (eight hour shifts) on all four. Once we’re fully staffed, we’ll be over 100 people,” Wayne said.

Housing is also key factor. “Housing is an issue. The cost of housing is a huge issue,” Caroline said.

In the summer, there is some relief as many workers will use their camp-ers for housing.

With the addition of a fourth rig, office space is getting tight around the Red Dog office and shop in Estevan. They are now looking for a new location around in the vicinity of the city.

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By Brian ZinchukEstevan – When Al Zandee started roughneck-

ing, Diefenbaker was still early in his term as prime minister and the southeast Saskatchewan oilpatch was still in its early days.

He spent years working with one rig, General Petroleum Drilling Rig 2, and had the unfortunate experience of seeing it burn near Brooks, Alta.

“I went from roughneck to toolpush for Gen-eral Petroleum Drilling. I started in the spring of 1959,” Zandee said, sitting with his wife Doris in the office of his son, Wayne Zandee. Drilling is in the family blood, and Wayne is president of Red Dog Drilling Inc. The company’s newest rig, Rig 4, is expected to go to work in early June.

The son of Johan Zandee, a soldier in the free Dutch Army during the Second World War, Al was a Saskatchewan farm boy. He grew up on a farm north of Langenburg. “I drove gravel truck one summer,” he said. This was followed by a sum-mer pipelining in 1958, doing tie-ins near Maple Creek.

Al and Doris married Dec. 20, 1958. Drilling is often a family affair, and so it would

be with Al and Doris. “Her two brothers were on the rigs. They got me on,” Al said. Page B5

Page B4 Doris said of her brothers, Dan and Joe DePape,“They got a phone call to go

on the rigs, and never looked back.”As for Al, she added, “He started at a wage of $1.85 per hour.”Doris’ third brother, Jim, who recently passed away, also briefly worked on

the rigs. “I went to work for Joe,” Al said. “There were a lot of people from Langen-

burg on the rigs.”Dan is 15 years older than Al. “He started pushing shortly after I started. I

worked quite a few years for Joe. He was drilling. Then I drilled for him when he was pushing.”

GP Rig 2 was a jackknife double. The mud pump had no building. “We had wood and plywood over it in the winter. In the summer, it was open,” he said.

A typical vertical well was 10 days. They did some rudimentary directional drilling – “Whipstock, they called them,” Al said.

At one point it was attempted to drill under Kenosee Lake, but it got stuck. “The oil company got scared and pulled out,” Al said. “Everybody was green at it.”

Most of the work was in southern Saskatchewan. Back then it was typically a 48-hour work week, working eight-hour shifts, Al said.

Home was a trailer. “That’s what we lived in – eight by 35 feet, with the hitch,” Al said.

“That was our house,” Doris added.Al said, “We followed the rig.” In 1958 they were in Langenburg. In ’61, it was Manor and Carlyle. A year

later, Carievale was home. In ’63 it was Midale and Carlyle. Finally they settled down in Manor in ’64. Al and Doris would remain their until they moved to Moose Mountain Provincial Park in 1998.

“I remember a lot of summers on the rig in a shack smaller than that,” Wayne said. Page B6

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Page B5 “We had no water, no shower, no bathroom,” Al said.They had four kids. The first three spent their early years living in that

trailer, moving as need be. Most of them haven’t gone far from the patch. Linda, the eldest, is a banker and is married to Doug Reddick, who works with PureChem in Carlyle. Wayne and his wife, Caroline, run Red Dog Drilling. Daughter JoAnn Goerzen is a teacher in Kelowna and her husband, Doug, is a mechanic. Ken Zandee, the youngest, is involved in the ownership of Canadian Energy Services, a mud company, and one of the partners involved in Red Dog Drilling. His wife, Lisa, is a speech pathologist.

The kids were with them, living in the trailer, until it was time to start school. Then the family settled down in Manor.

The fireFlipping through the Zandee family scrapbook, one comes across a promi-

nent spread – the rig fire of GP Rig 2 in 1972. “I was pushing it then,” said Al. Page B7

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Page B6 The fire happened about 18 miles south of

Brooks, Alta. Doris was home in Manor at the time.

They were drilling shallow gas wells. The com-pany's consultant told them to drill with water.

“We were drilling for King Resources,” Al said."We drilled into the Milk River formation, and

it came at us like crazy.”They were not drilling with mud, in the hopes

of being able to drill faster. The blowout was the consequence.

“Our generator quit about the same time as it blew,” Al said. The derrickman had just come down.

“I was in my shack, having a shave, when I heard it.”

No one got hurt. “The derrickman was up. He came down to put the kelly on so we could circu-late mud, otherwise, he wouldn’t be here today.

“You could hear the shale coming out of that hole. You couldn’t get close to it.”

A newspaper report in the scrapbook noted, “The derrick toppled 23 minutes after the flames shrouded it.”

The four crew members and the geologist sought shelter in the light plant building about 75 feet from the rig, the paper reported (The clipping did not identify the paper). A minute after the well came in, it caught fire.

Adair was known world-wide for putting out well fires. Al said, “This was nothing for him. He said, ‘I put out bigger fires on the barbecue.’”

Doris said, “I don’t think I got a phone call. I heard about it on the radio.”

“I would think it probably was the scariest experience of my life,” Al said.

Rig workers at the time had steel-toed boots and hard hats, but fire retardant coveralls were not common.

ArcticIn 1974 he delivered rigs to Craig, Colo.

“We took rigs down there. We had no work visas, though,” he said.

Starting in 1975, five winters were spent in the

Arctic. The base came was on Melville Island. “We were drilling on ice platforms. There was a lot of gas, but I don’t think we ever hit oil,” he recounted.

“It was very different. It was nothing to have a windchill of 100 below,” Al said.

The initial camp was flown in by helicopter, and was therefore very lightweight. The walls had 2x2 construction, hardly worthy of an Arctic envi-ronment. Their pillows would freeze to the wall at night.

Store“We bought a store in 1975,” Doris said. She

ran it for several years. After the store, she worked for 20 years at the nursing home in Carlyle, doing everything from cooking to housekeeping and laundry.

In the meantime, their children were grow-ing up. Wayne and Ken both worked on the rigs. Wayne started in 1979 with Simmons Rig 2. Ken

started in the late ’80s, also working with Simmons. Al gave up rig work around 1980, and turned

to trucking for the second half of his career. For his entire drilling career, he only worked for one company.

He hauled water to the Esterhazy K2 mine during their major flooding problems. From 1988 to 2002, he hauled crude for Three Star Trucking of Alida. Retirement came in 2002.

“There’s no days off when you retire,” Al said. Wayne piped up, “I tried to get him to rough-

neck on one of our rigs, but he wouldn’t go.”“The rigs are too soft for me now,” Al replied. Asked about how, as a long-time rig hand, he

feels about having a son run a drilling company, Al said, “I’m pretty proud of him doing it. It’s a big undertaking – a lot of long hours, I think. Of all the years I put in on a rig, I never thought of own-ing my own drilling company.”

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Regina – One of the largest camp providers in the U.S. has set its sights on the Canadian market.

Target Logistics, which has saturated the North Dakota Bakken play with a dozen facilities, was one of the prominent displayers at the Williston Basin Petroleum Conference in Regina May 1-2.

Troy Schrenk is senior vice-president of business development.

“Our plans in Canada are to replicate, scale and mobilize the same business model as in the U.S. – full turn-key housing for the energy and resources (sector),” Schrenk said.

”Th at will be done organically,” he added, mean-ing they intended to grow on their own, without relying on acquisitions to get into the Canadian market.

Th eir products will be developed with the end user in mind. Th ose users include oil and gas, min-ing, and alternative energy producers.

“Canada is a natural fi t for our model. It’s sec-ond only to Russia in land mass, and has the second lowest density of population.”

Target Logistics services geographically remote and climatically constrained areas.

In North Dakota, their 12 facilities have ap-proximately 4,000 beds under their ownership and control. Th e company has 16 facilities in North America overall.

Th is past February, Target Logistics was acquired for $625 million by Algeco Scotsman, based out of Baltimore. Together they are the No. 1 or 2 provider in their market in 38 countries worldwide, Schrenk said. Th ey are No. 1 in the U.S., based on bed count.

William Scotsman has nine branches located throughout Canada, providing them an instant base of operations to build on in this market. Th e com-pany has provided space rentals, such as temporary construction offi ces, school offi ces and medical of-fi ces.

Canada already has a couple of big, home grown players in the camp market, including ATCO and PTI Group. Schrenk said, “We realize Canada is a very mature market. We have a compelling value proposition for our customer, what we brand as the ‘economics of comfort.’

“We look at solving a people issue, not a housing issue.”

Th is includes looking at the demand for skilled labour in a harsh job market. “How can our custom-ers recruit and retain the most qualifi ed workforce for their projects?” he asked.

Answering, he said the economics of comfort include specifi c features and benefi ts of their lodges. Th at means a quality night’s sleep. Th e quality of life includes health and wellness through a recreation centre. Food must be well beyond the quality of normal catering. Page B9

Page B8 A workforce that is well rested, well fed and has recreation is a more produc-

tive and safer workforce, he offered. They’ve even produced a white paper on it.“We’re talking about reducing lost days on a customer’s job,” he said.In some ways, it starts with the bed – a pillowtop mattress with 300 thread

count sheets. There’s soundproofing between units. Each individual space has its own climate control.

“It comes down to the intangibles,” Schrenk said, in referent to how one measures the highest level of service.

In the U.S., they have retained close to 90 per cent of their customer base.“It’s very difficult to differentiate yourself on accommodations, but it is easy

on service,” he said.Asked where they are targeting their service, Schrenk said, “The total market

size in Canada is significantly larger than the U.S. Our focus varies by province. All-in-all, our focus will be on the energy and natural resource sectors.”

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Regina – With the changes in oil transportation occurring, the North American oil market is seeing its largest upheavals in years. Trisha Curtis with the Energy Policy Research Foundation, Inc. spoke of these changes in her presentation, How the Game has Changed: Infrastructure Challenges and the North American Petroleum Renaissance, at the Williston Basin Petroleum Conference.

Speaking on May 1, Curtis said there has been an increase of millions of barrels of production per day. This was expected in Canada, but not in the Unit-ed States, where North Dakota and Texas production has “risen dramatically.”

There’s a lot of potential growth, but, she said, “We have to do something with this crude.”

The pipeline system has become tighter. Since Canadian consumption is steady, every additional barrel of production must be exported, primarily to the United States.

“Our imports have declined rapidly,” she said. Nearly three million barrels per day are imported from Canada, and that number is continuing to rise. The result is water-borne imports have decreased rapidly.

“We have to remember to be humble,” she said of rising domestic produc-tion, reminding the crowd that not long ago, the U.S. was looking at importing liquefied natural gas (LNG).

Both the North Dakota and Texas rig counts have plateaued, she noted. As for the curve of when the Bakken will start declining, she said, “We don’t really know.

“The Bakken has a lot of potential well beyond the 7.3 billion barrels the USGS says is there.”

The south Texas Permian Basin is the “gift that keeps on giving,” she said. That, combined with Canadian production, is knocking out imports from Mexico and Venezuela.

Chokepoints on pipeline system include Clearbrook, Minn. and Cushing, Okla. Canadian crude did fight for capacity with Bakken crude long the Enbridge line, she noted. As Bakken crude has moved to rail, Canadian price discounts have eased slightly, but this correction may be overdone.

Permian crude will soon be redirected to the Gulf Coast, away from Cushing, she noted.

“The places you need to put Canadian crude is the coasts,” Curtis said. Currently Canadian crude is going to the Rockies, PADD IV, and the Mid-west, PADD II. There is a lot of room to push out imports on the Gulf. Page B11

Crude Oil & Saltwater Transfers

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Curtis noted that it is very difficult to build new pipelines. That’s why the Keystone XL project has had so much trouble. Many of the projects in the works are either along existing pipeline routes, or gas line conversion.

Canadian pipeline options include the Kinder Morgan TransMountain Expansion.

“Enbridge’s Northern Gateway is a tough situation right now. If it gets approved, it will be awhile,” she said.

Spectra is full. Enbridge’s mainline system is getting tight, but they’re working on it. The original Keystone pipeline is full.

“Where does Canadian crude need to go? Canadian crude really needs to go the Gulf.

“PADD III (Gulf Coast) is one of the most sophisticated refinery com-plexes in the entire world,” Curtis said. “The Gulf Coast is well suited to this crude. It wants this crude. Its refineries can take it. Our imports from Mexico and Venezuela are declining, and it really needs Canadian crude to supplant it.”

PADD V (West Coast) has one refinery taking Canadian crude oil, but can take more light sweet crude as well.

The East Coast (PADD I) is taking very little Canadian crude, but could take more Bakken oil. The Gulf Coast currently gets almost now Canadian crude.

Regarding refineries, she said Midwest refineries are installing upgrading capabilities to process heavy crude. Bakken oil shipped to East Coast refiner-ies has stemmed additional refinery closures, using advantage-priced crude.

Alaskan crude headed for California is declining. As a result, West Coast refineries are set up for water-borne delivery and barge shipment.

Canadian crude is getting a lot less per barrel than the Mexican or Ven-ezuelan crude, she noted. The Rockies and Midwest refineries have enjoyed healthy cracking margins with considerably discounted crude.

Crude-by-railEven though the spreads between Brent, Western Texas Intermediate and

Western Canadian Select have narrowed, rail won’t be going away any time soon as a shipping option, Curtis said.

“We are seeing over 600,000 barrels per day out of the Williston Basin (by rail), she said. There’s around 300,000 bpd of spare pipeline capacity.

Major companies are grabbing rail cars, and many refiners are gearing up to take crude-by-rail. Initial shipments are by manifest trains, but that will be changing to unit trains. Small Canadian producers are looking to ship all their production by rail now. For Canadian crude, 150,000 bpd are now going by rail, and in the U.S., that number is 725,000 bpd. Over 600,000 bpd is out

of the Williston Basin. Enbridge’s lines are not full. “This is unprecedented,” she said.“Canada is a little bit slower to this game,” she said. “You will see a lot

more Canadian crude moving by rail.Rail is nimble and quickly adjustable. You can move NGLs as well. The

barrels are “neat,” not batched. Curtis said, “Rail is getting to places where pipelines can’t, or won’t.

There are issues around crude-by-rail, including more spills. Oil spills are a huge issue for pipelines, catching everyone’s attention in Washington.

Concluding, Curtis said, “This is an energy renaissance. We’ve been in-creasing production for several years. The U.S. is now the largest producer of natural gas in the world. We are becoming one of the lowest market energy producers in the world. Pipelines are being built, but there is tightness in the system. Rail is an option for U. S. producers.

“Rail is going to be here for the long term.”

Weyburn – DSI Thru-Tubing Inc. established a presence in Weyburn last year, and is now gearing up for a busy summer season.

“We provide downhole tools for completions and workovers,” said Brent Bjorndal, district manager.

The company set up its Weyburn operations during the summer of 2012. “I started in September,” Bjorndal said.

Currently, two people work out of Weyburn, Bjorndal and a local field hand. Bjorndal is managing all aspects of the move into the Saskatchewan market. His current focus is business development, but he also runs tools. Additional field staff is drawn from Red Deer as needed. Last summer, they had up to five field hands working, primarily in the Waskada area of Manitoba. As business picks up now that breakup is over, he expects their staffing to expand.

“We will be hiring local guys. I’m hoping for five or six,” Bjorndal said.Much of their operations in southeast Saskatchewan have been for one of

the larger operators. Similarly, they’ve done extensive work for another large

operator in the Waskada area. Much of their work in the area revolves around monobore wells with ce-

mented liners. “We provide milling equipment for coiled tubing applications. When it gets

turned over to the completion group, we’ll first go in with coiled tubing, one of our mud motors and a mill, ensuring the well is clean to TD (total depth).

“We go in and run a motor and mill, and circulate to the bottom, clean out the hole, pull out, and get ready for the completion. We’re done the cleanout at that point.”

In addition to the cemented liner work, DSI mills out drop ball systems regularly and sees this as a growth area in southeast Saskatchewan.

“Last winter we followed a coiled tubing unit for a major operator, doing a cleanout every second day,” Bjorndal said.

Company-wide, DSI has approximately 50 staff members. In addition to the Weyburn shop, head office is in Calgary with district offices in Red Deer, Grande Prairie and Rosharon, Texas, which services Texas and Oklahoma.

Page B13

805 Government Road SWeyburn, SK

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Page B12 Working on both sides of the international border between Canada and the U.S. has the company looking at the North Dakota Bakken play, easily one of the busiest on the continent.

Bjorndal said they already have potential work in the North Dakota market. “It’s a new and growing marketplace,” he noted.“We can do thru-tubing fishing too, and will eventually have a full product

line for fishing here in Saskatchewan,” Bjorndal said when asked about future plans for Weyburn.

Fishing services are currently provided out of Grande Prairie and Red Deer.The company is on a growth curve. “We’re looking at continual growth in the

business over the next several years,” he said of the Canadian-owned and oper-ated firm.

Back in SaskatchewanAt 36-years-old, Bjorndal has followed the path of many a Saskatchewan

boy – and returned home after working in Alberta for many years.“I’m originally from Estevan. We’ve been away for 15 years.“My original downhole background was with Blackmax Downhole Tools.

That’s where I got my start. They provided mud motors for directional equip-ment.

He started working for Blackmax shortly after graduating high school.I got into tools for Baker Oil Tools in ’97,” Bjorndal said.He noted that Baker, at the time, was one of the first focused on thru-tubing

work, milling and using inflatable packers.In a shift from downhole tools, Bjorndal spent five years as a district man-

ager with Kudu Industries Inc. in Brooks before coming to Weyburn last year.DSI was formed in 2011, and Bjorndal had worked with CEO Dave

Griffith while at Baker.DSI Thru-Tubing Inc. has no links to similarly named DSI Contracting, a

construction firm based in Weyburn.

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(Daily Oil Bulletin) Calgary – Petrobank Energy and Resources Ltd. re-ported a net loss of $3.01 million in the first quarter, compared to income of $46.29 million the previous year.

Average production at the Kerrobert THAI project was 205 bbl. of oil per day the first quarter, a decrease from 307 bbl. per day in the fourth quarter of 2012 and a small increase over 193 in Q1 2012. Kerrobert THAI production averaged 200 bbl. per day in April 2013 based on field estimates.

Petrobank reported expenditures on exploration and evaluation assets of $8.4 million in the first quarter compared to $17.51 million during the same period of 2012. This decrease is due to the elimination of expenditures related to the company’s Conklin and May River properties, which were sold on Feb. 28, 2012, and a reduction in capitalized costs related to the Kerrobert project.

Petrobank invested approximately $40 million of cash to purchase debt and equity securities of PetroBakken Energy Ltd., each earning in excess of an eight per cent cash-on-cash yield. The company now holds approximately 3.2 million PetroBakken shares, including shares received through reinvest-ment of dividends.

At the Kerrobert THAI project, the operating focus is to continue to significantly increase air injection and optimize operations for higher produc-tion at lower per-bbl. costs, the company stated. Since beginning to increase air injection in the fourth quarter of 2012, the company has increased the field air injection rate to up to 25 per cent of design capacity.

Although Q1 production at the Kerrobert THAI project has not changed much year-over-year, “the company is still encouraged by the THAI process.

“The fact remains: in all our THAI projects, air injection into the reser-voir results in production of hot, upgraded oil, which proves that the process is working,” the company stated. “We have not observed any irregularities in the quality of our oil or our produced gas or experienced any surface facility issues that would suggest to us that we cannot achieve commercial levels of production.

“As with most extraction processes, there is a period of optimization whereby operational issues must be resolved in order to increase production and lower costs.”

Petrobank said it is in this period of optimization and has not experi-enced any operational issues that cannot be resolved with tested oil produc-tion techniques. Since the beginning of the year, the company has converted two wells from pumps to gas lift which reduces workover costs, allows for more gas production and results in less downtime.

“We are assessing other wells for conversion to gas lift as conditions dictate,” Petrobank stated. “We are also conducting a wet combustion test in our East injection pad through the co-injection of water into several injection wells.”

The purpose of the water injection is to help redirect the air in the res-ervoir to optimize the combustion zone. Petrobank continues to evaluate the implementation of several other strategies designed to increase production.

Petrobank currently has two conventional cold production wells oper-ating on its Kerrobert trend lands. These wells are producing an aggregate of approximately 50 bbl. of oil per day. The conventional cold production initiative was undertaken through low cost re-activations and conversions of existing wells on Petrobank lands. Each well is assessed individually and will continue to operate only if the company believes that it will produce economic amounts of oil.

At Dawson, the company started cold produc-tion operations from both horizontal THAI pro-duction wells in late 2012 and the wells produced at a combined rate of approximately 20 bbl. of oil per day in the first quarter of 2013. These wells

will continue to produce conventional heavy oil, and assist in pre-condition-ing the reservoir until such time as the company begins the start-up of the approved THAI demonstration project.

In early 2013, Petrobank purchased over 30,000 acres of land in two Sas-katchewan Crown land sales for approximately $2 million. At year-end 2012, the company’s lands contained over 500 million bbl. of exploitable oil and bitumen initially in-place and the addition of these new lands will further enhance Petrobank`s inventory of opportunities for new THAI and conven-tional heavy oil projects. The company now owns approximately 85 sections of land in Saskatchewan and 31 sections of land at Dawson, Alta.

At March 31, 2013, Petrobank had cash and cash equivalents of $38.5 million, investments in marketable securities of $47.7 million and a net working capital surplus (including cash and marketable securities) of $79.2 million. The company’s focus in 2013 is to steward its capital to maintain fi-nancial flexibility to pursue future THAI projects and acquisition opportuni-ties while positioning the company to benefit from a strong capital base. The company expects to fund its 2013 expenditures with cash on hand and sales revenue from production.

Regina – When it comes to the Bakken boom, North Dakota got the motherlode, and its neighbouring states essentially got squat. Montana is see-ing a little bit of activity, while South Dakota has essentially missed the boat.

It was perhaps telling in that the person respresenting both states was from neither, but rather from the North Dakota Department of Mineral Resources. On May 1, Stephan Nordegg was the spokesman for both states at the Wil-liston Basin Petroleum Conference in Regina. In all of 2012, South Dakota drilled only 12 wells, based on 18 permits. There have been six permits issued this year, and seven wells drilled to date.

Even so, that put South Dakota’s production at an all-time high, with 1.7 million barrels produced over 2012. That is about two days and a few hours of North Dakota’s output, however.

For the next 15 years, South Dakota expects to drill another 12 wells a year,

keeping just one rig employed.The state is looking at putting together a proppant industry, with hopes of

producing frac sand. So far 107 samples have been looked at. There would be some processing required in order to use South Dakota sand for fracking.

Some tests are being done on Precambrian rock up to 9,700 feet deep.Montana

In Montana, there are now 4,700 producing oil wells, and another 6,300 gas wells. Nordegg said there is quite a bit of activity in the northeast corner now, but activity peaked in 2006 with the development of Elm Coulee.

The state’s natural gas wells are in decline, and controversial coal bed meth-ane development has disappeared off the radar. CBM permits ended in 2008.

Most Montana oil permits are currently adjacent to the North Dakota Bakken, Nordegg said.

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Weyburn – HSE Integrated has been on a continual growth curve since purchasing Prairie Wide Safety in Weyburn close to six years ago. Bursting at the seams, the company needed a new shop. It moved into its new facility on the west side of Weyburn last November.

“We’ve expanded to better facilitate the work we were already doing and to take on more projects,” said Tyler Tollefson, station manager.

Th e new facility has fi ve drive-through bays as opposed to the one bay in their old facility (plus additional rented storage space). It allows them to keep much of the fl eet indoors, including the fi re/shower units.

Th e new site is on roughly three acres, with 4,600 square feet of offi ce space and 10,000 square feet of shop space.

Th ere’s a new, large training room meant to facilitate future fi rst aid, H2SAlive and confi ned space training. Th ey are working on having a confi ned space simulator brought in as needed from other locations.

“We’re getting into more industrial health,” Tollefson said. Th at includes hearing testing and fi t testing. Th ere’s also drug and alcohol testing off ered, using swab-based saliva tests.

“We’ve also recently acquired a special services trailer to do hot/cold tapping. Our hot/cold tap drill enables operators to access potentially pressurized piping or vessels while maintaining pressure control,” Tollefson said, adding process is widely used to facilitate re-entry and /or abandonment, establish bleed-off ports or provide access for well kill procedures.

“It’s going to be very important. It’s a safer way of doing things,” he said. “In most cases, set up takes more (time) than anything.” Page B18

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Page B17 Strengthened venting and flaring

regulations have led to the company providing CARMEN-REACTOR units for air quality data-collection. Communication is done via satellite. They have over 20 units in Saskatch-ewan, mostly at small battery and plant sites. Information collected goes to the oil company.

The Weyburn operation has a satel-lite in Melita, Man. At any given time, about one-third of their fleet for the region works out of Melita. Tollefson is expecting staffing levels between Wey-burn and Melita to reach 75 or higher this summer.

“I think we’re going to be busy. It’s been nothing but growth for the five years we’ve been here. That’s the reason

for the new building.”That fleet includes 15 to 20 mobile

treatment centres (MTCs), three fire/shower truck combination units, three shower units, and 16 air trailers.

“All of our medics are registered in the province of Saskatchewan, emergen-cy medical responders or higher.” HSE’s medical staff is all under the direction of a registered licensed physician.

Company-wide, HSE-Integrated has 23 locations in North America with over 700 employees. But Tollefson noted, “We run it like a local business. We hire as many locals as we can.”

HSE Integrated will have both indoor and outdoor booths at Saskatch-ewan Oil and Gas Show. Equipment will be outside, and recruiting efforts will be inside.

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Teeing up for the 56th Annual OTS Oilmen’s Golf Tournament By Brian Zinchuk

Estevan – The 56th Annual Estevan Oilfield Technical Society Oilmen’s Golf Tournament is being held May 31, June 1-2.

The event is timed to coincide with the Saskatchewan Oil and Gas Show in Weyburn the following week. Participants can spend the weekend golfing, then take in the oil show.

“It’s ready to go,” said OTS presi-dent Brett Campbell of the course, which opened for business in late May, much later than usual. “It’s a little behind with the weather.”

However, the combination of rain and sun in May has resulted in it “looking pretty good,” he said.

After being cancelled in 2011 due to flooding and then held at two courses last year, things are finally back to normal in 2013. The event will take place at the TS&M Woodlawn Golf Course. Players

have an option of 18 or 36 holes. Those playing 18 holes will play either on the Friday or Saturday. Golfers taking in 36 holes with play either on the Friday or Saturday, and again on Sunday.

Tee times will be booked on the first two days, and a shotgun start will be used on the final day.

The cabaret will take place at the Estevan Curling Club at 8 p.m. on June 1, following the steak or lobster supper. Campbell pointed out that the cabaret is open to the public, not just oilmen.

As of May 22, the event was not sold out, but was close to it. The tournament is structured to handle 288 golfers.

There are over $30,000 in prizes and giveaways.

Cabs will be available and a shuttle service will be provided, so no one needs to drink and drive, Campbell stressed.

“It should be a very entertaining week-end,” he said.

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By Brian ZinchukWeyburn – The Saskatchewan market is important enough to Jacques

Tremblay, chairman of the board of tank trailer manufacturer Tremcar, that he tries to get out here every three weeks or so.

Tremcar is a family-owned business based in St-Jean-sur-Richelieu, Québec. It got its start hauling milk. It’s grown substantially.

In recent years, Tremcar has gone a step further, setting up its own sub-sidiary in Western Canada to further support its sales. That entity is known as Tremcar West Inc.

“It started in 2008. I came in October, 2008,” said Suzanna Nostadt. She is a partner with Tremblay in the ownership of the Weyburn location.

“We’re like a pilot project for Western Canada,” she said. Although Nostadt jokes it was “an experiment in terror,” the pilot has

been successful. The company has newly established locations in Saskatoon, and most recently, Sherwood Park, Alta. Darren Williams is the Saskatoon partner, while John Sadaway is the Sherwood Park partner.

“It’s very new,” Nostadt said of the Sherwood Park location. The Saska-toon location opened March 15, 2012.

“We’re a trailer repair shop,” Nostadt said. They also do sales and leasing.“We do repair, steaming, PIVK B620 inspection,” she said. The last item

is a procedure through Transport Canada for portable containers for danger-ous goods. Such containers, like tankers, have to be inspected and certified.

“We do B-trains, tridems, tandems. We even do tank mounts and vac trucks,” she said. There’s also a non-coded water trailer, and acid trucks.

Tank mounts are sometimes referred to as “body jobs” in the field.

Their biggest sellers in Weyburn are 38 and 42 cubic metre crude-haul-ing trailers in both aluminum and stainless steel. They typically have one or

two compartments.A large number of their units are used to haul

crude oil, produced water, and emulsion. The tankers are manufactured in Quebec,

Ontario and Ohio. In other markets, chemical and milk-hauling

are key. “We do a lot of chemical, a lot of milk haulers. Can you imagine a crude hauler of milk chocolate? Thirty-eight cubes?” Nostadt said.

She keeps asking for one, just one, truck of milk chocolate to show up in her shop. So far, no dice.

In Weyburn, Tremcar West started with one building, and one employee. Now they have 18 employees, and two shops under construction in adjacent yards to their current location.

Page B25

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Page B24 The staff includes welders, mechanics, parts people, administrative staff

and general duty workers. They’re constantly adding people.There are plenty of languages floating around the shop, too. “We speak

Romanian, French,” she said. One Romanian worker got his Canadian citi-zenship recently.

“We hire anyone that can work and is a decent worker,” Nostadt said.When choosing an initial location, she said, “This was the only building

available in Weyburn when we moved here five years ago.“I have clients all the way from the Maritimes to Manitoba and B.C. – all

across Canada,” said Nostadt, referring to their service work. “They like our work. They don’t have to come back and get it fixed over and over again.

On the sales side, she said, “I spec a trailer to what the customer wants. A lot of salespeople want to sell their inventories.”

“That’s the key. You have to customize the trailer to the needs of your customer. I think that’s what’s made Tremcar West in Weyburn so successful.

As for items they have in inventory, Tremcar West has the in-house abil-ity to modify their product as the customer requires, right at their own facil-ity. Page B27

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Page B25 There’s been a growing trend to stainless steel

tankers, she noted. “The truck mounts we have are stainless steel. Three years ago, you couldn’t give one away. no one wanted it. Now, they are real-izing, with the type of crude we have in this area, stainless is the way to go. Aluminum with lining seems to corrode so badly.”

If the lining inside an aluminum tanker cracks, a truck can be in the shop for 15 days to allow for recoating. Stainless steel can be used the next day. “They’re realizing it’s saving a ton of money. There’s no downtime for repair,” Nostadt said.

Now roughly a quarter of their new units are stainless steel. She said, “It’s catching on. It’s fairly new.”

Tremcar chairman speaksTremcar was established in 1962 by two

friends making milk-haulers, Tremblay said. “I bought it in ’89-’90.”

At the time they had 28 employees, fabricat-ing mostly milk tankers. He said, “Today we have 750, including Suzanna.”

In addition to the four plants, they have re-cently bought another centre in London, Ontario.

Of the subsidiary service centres out west, in-cluding Weyburn, he said, “So far, we are very, very happy for what we did.”

“Out West, we decided to have service centres to be closer to our customers. Not many compa-nies have service like that in the western part of Canada.”

Getting feedback from clients is also impor-tant, Tremblay noted. “We try to be part of the

western family.”He noted they launched just in time for the

deep recession to hit. But they remained optimis-tic for Saskatchewan, and now 40 per cent of their products are for the oil industry.

The company felt the recession keenly in the American market because many customers could not get financing. “That was a big problem. They wanted a trailer, but could not get a loan.”

Now their chemical trailer business in the U.S. has picked up to where it was six years ago. “That’s a good thing,” Tremblay said.

“We also build all kinds of chemical, cement

powder, petroleum, plastic, flour trailers,” he said, noting their diversified markets.

Tremcar has a dealer in Dickinson, N.D. “It’s a growth market,” he said.

One of the outstanding questions for the in-dustry is the Northern Gateway pipeline, he said, noting they sell a lot of trailers to northern B.C. They entered that market about 16 years ago.

“Oil is a very good product for Canada and is driving the economy.”

Oil and gasoline are very important to Trem-car’s success, including providing trailers for deliv-ering refined products to gas stations.

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Ottawa – In many trades professions, sons often follow in their father’s footsteps. As such, the United Association of Journeyman and Apprentices of the Plumbing and Pipefi tting Industry of the United States and Canada (UA) was once a union where it helped to have family members already in it if you wanted to join. It was not easy to become a UA member.

Th ings have changed with a recognition there is a need to replace the aging baby boomers in its ranks. Th e union launched a national marketing campaign in early May in a bid to recruit 25,000 skilled piping trade professionals over the next fi ve years. Th e high number of workers is needed to fi ll infrastructure jobs now and in the near future. Work sites in areas such as Alberta and northern British Columbia are already seeing a shortage. Similar to other careers, trained workers will also be needed to replace those who are retiring over the next few years.

UA, Canada’s largest union for professional pipefi tters, is recruiting aggressively to meet the need – and it is growing quickly.

“Our clients come to us with work because our workers are the best. We believe our members have everything a professional skilled labourer needs,” says John Telford, UA’s director of Canadian Aff airs. “We are known for our productivity, performance and stellar record of safety. Any pipefi tter out there who is working non-union, we encourage them to check us out. Th ey’ll like what they see.”

Th e recruitment push is primarily in response to a jump in large-scale infrastructure projects in the Western provinces, but there is an anticipated increase in work in areas including the Maritimes, Ontario and Quebec as major infrastructure projects begin.

“For each and every worker who reaches out to UA, we will tell you straight up what we off er and the work we can give you,” says Telford. “UA matches qualifi ed members to jobs where their skills are highly needed.”

Th e recruitment campaign, based on market research and member testing with focus groups, con-sists of billboards and online advertising in targeted locations across the country. Th e ads are designed to attract qualifi ed journeymen and journeywomen who are looking for competitive wages, training, pensions and health benefi ts. Page B29

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Page B28 Pipeline News spoke to Larry Cann, now a

representative for the international union. He lives in Cobourg, Ontario.

“We used to put the “N” in nepotism,” he said with a laugh. “I had to marry the daughter of a steamfitter.”

Cann, himself, is a steamfitter by trade, having worked on the industrial side.

“We’re looking for anyone. The first push, for the immediate short term, is journeypersons.”

There’s work in pipelines, oil and gas, nuclear, refineries, even potash.

In many trade unions, there’s long been an at-titude that for every new member that joins, that’s one more person that could possibly take a job that an established member might otherwise get. Asked when a shift in that attitude came about for UA, Cann said, “We realized the demographics, the baby boom.”

With large numbers of baby boomer workers reaching retirement age, younger people are needed not only to fill their positions, but to ensure pension plans had new workers actively paying into them.

It’s been a “gradual change,” he said.Nationwide, the union has approximately 20 per

cent apprentices. Cann would personally like to see that number rise to 30 per cent.

“We’re looking for talent,” he said. “There’s no problem finding young individuals who want to join the UA.”

Cann cited examples where postings for 20 to 30 positions would get 200 to 300 applications.

When asked if that applied to Western Canada in the oil and gas sector, he noted that the Regina lo-cal has approximately 400 apprentices of its roughly 1,200 members. He’s heard of no problems out West in recruiting young applicants.

“I’m not saying there’s an overabundance of journeymen,” he added.

He noted one of the differences between the union and non-union sectors, saying that “Non-union wants cheap labour. Our goal is we want young people to have a career, and they can put their kids through college.

“We keep them, we train them. If they’re no good, we kick them out.”

UA is one of the few trade unions growing larger, he noted.

On the horizon are three, and potentially four, major pipeline projects in Canada – Keystone XL, TransMountain Expansion, Northern Gateway, and the recently announced Energy East. The last would repurpose an existing TransCanada gas line in its mainline system and use it to deliver oil to Eastern refineries. That one in particular has got Cann inter-ested. He noted it will help out Eastern refineries, like Sarnia and the Irving Refinery in New Bruns-wick.

Union locals are putting on training programs to develop more pipeline workers for these projects.

“We’re gearing up for it. It’s not just important for us, but for Canada.”

(Daily Oil Bulletin) Regina – Mullen Group Ltd. has signed an agree-ment to acquire Jay’s Moving & Storage Ltd. The transaction is expected to close on June 1, subject to the completion of conditions typical for a transac-tion of this nature.

Jay’s is a private corporation owned by Dennis Doehl based in Regina. The company has been in business since 1964 and is a recognized leader in the less-than-truckload transportation business in Saskatchewan, operat-ing 11 full-service terminals and warehouses with over 450 employees and a fleet of over 600 trucks and trailers. In 2010, Jay’s was named Saskatchewan’s Business of the Year by the Saskatchewan Chamber of Commerce.

“We are extremely pleased to add Jay’s to our organization. (Doehl) is a true entrepreneur, starting with just a couple of trucks nearly 50 years ago,” said Murray Mullen, chairman and chief executive officer. “His company has an exceptional reputation for providing outstanding service to its customers and we look forward to working with the management team to enhance the service offerings to Mullen Group’s existing customers and realizing on the potential synergies resulting from this acquisition.

“This is a great company with an established history and a strong man-agement team. As such, we anticipate a quick and smooth transition. I am also extremely pleased to announce that (Doehl) has agreed to remain with Jay’s for the balance of the year to help with the transition.”

Jay’s will be operated as a stand-alone business within Mullen Group and is expected to add annual revenue of approximately $35 million to $40 mil-lion to consolidated results and generate operating margins consistent with other businesses in the trucking/logistics segment. The purchase price will be funded from existing cash reserves.

Calgary – Raging River Exploration Inc. lived up to its name during the first quarter, with recording setting operating and financial results.

The Calgary-based junior oil and gas producer expects to resume its fast early pace in June with the drilling plan of eight to 10 wells in the second quarter in the Viking light oil play near Kindersley.

Production disruptions in April and early May due to spring breakup were kept to a minimum with an average of just five per cent production shut-ins due to wet conditions during that period.

The company anticipated production would be back to full capability by late May as dry conditions took hold and is enthusiastic about the outlook for the balance of 2013.

“Our focus will remain on cost effective execution resulting in mean-ingful per share growth while maintaining balance sheet strength,” said the company in its May 9 quarterly news release.

Raging River spent $37.6 million on development activities in the quar-ter, including the successful drilling of 45 (38.2 net) horizontal Viking oil wells.

The company reported that 36 of the 45 wells were on-stream for at least 65 days, producing at an average rate of 50 barrels per day up to the release of their quarterly report.

Near the hamlet of Beadle, the company drilled six new wells to test six sections of land.

Those wells had been on production for 60 days, producing at average rates of 45 bpd which exceeds the historical average by more than 50 per cent.

The company is very encouraged by the eight wells it has drilled since October 2012 and will be proceeding with a total of 14 wells in the second

and third quarters of 2013.At Lucky Hills, the company reported 60-day average production rates of

60 bpd for each of the 15 wells drilled in the first quarter.In the Plato area of west central Saskatchewan, 12 wells were placed on

production in the first quarter with a 90-day average production rate per well of 42 bpd of oil.

In the Kerrobert area, Raging River drilled nine wells in the quarter that achieved 60-day average production rates per well of 48 bpd of oil.

Raging River achieved a record production of 4,550 barrels of oil equiva-lent in the quarter, an increase of 45 per cent from the previous quarter. Year over year production jumped 226 per cent.

The company attained a record fund flow from operations in the first quarter of $23.4 million, an increase of 55 per cent from the fourth quarter of 2012.

The company also upwardly revised its projected average production guidance to analysts to 4,750 boepd and its year end exit production to 5,600 boepd with a 95 per cent oil weighting.

They also increased their credit facility to $125 million from $100 million in the quarter ending with a net debt of $29.4 million.

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Calgary – TransCanada Corporation has secured the long-term shipping agreements it needs to build, own and operate the proposed Heartland pipeline and terminal projects in Alberta.

The development will include the construction of a 200-kilometre pipeline connecting the Edmonton region to facilities in Hardisty and a terminal facil-ity in the Heartland industrial area north of Edmonton.

“With Alberta oil production projected to increase by almost three mil-lion barrels per day over the next 15 years, it is important to have the right infrastructure in place to move these resources safely and reliably to market at the right time,” said Alex Pourbaix, TransCanada’s president of energy and oil pipelines on May 2.

“These projects will help link Canadian crude oil resources in northern Alberta to markets in Eastern Canada and the United States.”

The pipeline will have the capacity to transport up to 900,000 barrels of

crude oil a day, while the terminal is expected to have storage capacity for up to 1.9 million barrels of crude oil.

The projects have a combined cost estimated at $900 million and are ex-pected to come into service during the second half of 2015.

TransCanada began initial engagement with stakeholders and Aboriginal communities through a feasibility study in the fall of 2012.

The company intends to file a regulatory application for the terminal this spring followed by a separate application for the pipeline in the fall.

These projects will further expand TransCanada’s liquids transportation capabilities and leverage TransCanada’s extensive operating experience in Alberta.

TransCanada recently announced the Grand Rapids project, a 500-kilome-tre pipeline system to transport crude oil and diluent between the producing area northwest of Fort McMurray and the Edmonton/Heartland region.

(Daily Oil Bulletin) Winnipeg – Tundra Energy Marketing Limited has entered into an agreement with Cando to provide railcar loading and switching services at Tundra’s new crude petroleum terminal near Cromer, Man.

The new facility has been designed to handle 30,000 bbl. of crude per day, with plans to grow to 60,000 bpd.

Under a long-term contract with Tundra, Cando will provide locomotives and operational staff to perform all railcar loading and switching duties at the new terminal, with plans to grow with Tundra’s operational requirements. The terminal will have the potential to handle crude oil unit trains of more than 100 cars, which will generate greater efficiencies and market reach for Canadian crude oil.

Cando has extensive experience switching and transloading for the petro-leum products sector. This will be the company’s first Bakken crude loading contract.

“We are very excited to be working with Cando on this rail loading oppor-tunity. This project continues Tundra’s commitment to provide infrastructure for producers in Manitoba and Saskatchewan to enhance their options for market-ing and storing their production,” said Dale Clark, vice-president of marketing for Tundra.

Cando will work with Canadian National Railway Company, which hauls crude oil from the Cromer facility over its North American network to key markets.

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Calgary – Whitecap Resources Inc. com-pleted its first ever quarter as dividend paying, oil-weighted company with two thumbs up for its operations and financial highlights.

The Calgary-based company ended the quarter with news on April 29 of a $110 million acquisi-tion of additional Viking light oil property near its core light oil operations near Dodsland, Sask.

“This acquisition further strengthens the sustainability of our dividend-growth strategy by increasing our level of high netback, low decline assets that can provide consistent growth and substantial free cash flow,” said the company on May 6.

The acquisition and financing are expected to close before the end of May 2013.

The company also closed a $60.2 million stock deal in the quarter to acquire Invicta Energy Corp. with its operations offsetting Whitecap’s lands in the Lucky Hills area of west central Sas-katchewan.

The breakdown of that acquisition included $200,000 in cash, the issuing of 4.8 million com-mon shares and the assumption of Invicta’s net debt.

“This complementary acquisition adds a significant amount of longer term, low risk, high netback upside potential in our ever-expanding Viking light oil core area,” said the company.

In the first quarter, the company completed its transition to a dividend growth model paying an initial monthly dividend of five cents per share.

Average production also grew to a record 17,592 barrels of oil equivalent per day from 9,785 boepd in the same period of 2012, an in-

crease of 80 percent.The company drilled 43 (32.2 net) successful

oil wells in the first quarter spending $74.6 mil-lion on field activities.

The busy drilling program included 19 (17.4 net) Viking horizontal oil wells in the Lucky Hills area, 13 (4.9 net) Cardium oil wells at Garrington in west central Alberta including five operated and eight non-operated low working interest wells.

In addition, 8 (7.4 net) Cardium horizontal oil wells were drilled in the greater Pembina area of west central Alberta, and two (2 net) horizontal oil wells at Verlo in southwest Saskatchewan.

The program included one (0.5 net) Montney horizontal well at Valhalla North in the Peace River Arch area of Alberta.

The company continued to focus its efforts on the highest rate of return projects, resulting in an increase in their oil and natural gas liquids weight-ing from 69 per cent in the prior quarter to 71 per cent in the first quarter.

Whitecap achieved a strong operating netback of $44.48 per boe in the first quarter of 2013 due to a seven percent reduction in operating costs to $10.78 per boe and a hedging gain of $1.9 million through a risk management program.

“We were once again able to deliver strong capital efficiencies on our first quarter capital pro-gram as a result of our significant in-house hori-zontal drilling and fracturing expertise as well as the repeatability and predictability of our assets,” said the company.

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Regina – If it’s May, it is traffic safety cone season as highway construction projects in Saskatchewan begin to pop up like daisies.

In Lloydminster, construction started on May 10 to repave of a portion of Highway 16 (also known as 44th Street) on the Saskatch-ewan side of the city.

The scope of the work that started last summer involves the

reconstruction of the north side of the 44th Street thoroughfare from 50 Ave. to 45 Avenue.

Two-way traffic will be available on the south side of 44th Street for the duration of the project that is expected to wrap up by October.

Saskatchewan’s Highways and Infra-structure is budgeting $560 million in the 2013-14 budget year to build, maintain and

operate the provincial highway system.

The budget allocates $280 million for high-way construction proj-ects including the start on the new 12 kilometre, two-lane Estevan Truck Route.

The long awaited truck route will be built from the intersection of Highway 39 and Shand Road to Highway 39 west of the city.

Construction is also

continuing on a new four-lane highway from Dewdney Avenue to Highway 1, known as the West Regina Bypass.

That project will in-clude a new interchange overpass at Highway

1, to support safe and seamless traffic move-ment for TransCanada highway traffic and to the Global Transporta-tion Hub.

Crews will also breaking ground on new passing lanes between Balgonie and Fort Qu’Appelle to safely and cost-efficiently handle heavy traffic volumes.

Also on tap is the completion of the last 13 kilometres of twinning

on Highway 11 between Saskatoon and Prince Albert (at MacDowall) to improve safety and traffic movement on this north-south corridor

“A safe, reliable, efficient transportation

system is vital to our province as our popula-tion continues to grow,” said Highways and Infrastructure Minister Don McMorris on May 16 – the first weekly construction update of the season.

“This year’s con-struction plans build on the momentum of previ-ous construction seasons and include multi-year mega projects designed to handle increasing traffic.

“We’ve invested more than a half a billion dollars per year in trans-portation each year since coming to office – a total of $3.7 billion, and this year is no exception.”

“The Saskatchewan Heavy Construction Association members are ready to go to work building and maintain-ing our highway system and appreciate the government’s commit-ment to their long-term

infrastructure program,” said Saskatchewan Heavy Construction Association president Shantel Lipp.

“Strategic invest-ment into our transpor-tation network creates a

platform to fuel eco-nomic growth - nothing moves until the roads are built.

“Long-term com-mitment means industry will continue to reinvest back into the province through their capital investments and labour.”

There will also be 280 kilometres of repaving work done this season on a variety of provincial highways with construction signs posted.

About 75 kilometres of rural highway will undergo a rebuild this summer as well.

Motorists are re-minded they must slow to 60 km/h in highway work zones. New sim-plified signage will direct drivers exactly when to slow to 60 km/h.

Drivers now face three times the normal fines for speeding and heavier enforcement in work zones.

By Lynda Harrison

(Daily Oil Bulletin) Calgary – BlackPearl Resources Inc. says it will have a financial solution in the next six weeks that will pay for one or both of its planned SAGD proj-ects, and balance both dilution and financial risk.

BlackPearl is faced with two choices: either employ debt equity financing for phase one of the $750 million Blackrod project to be followed by the Onion Lake project – a choice with financial leverage as the risk -- or take on a partner and dilute ownership, John Festi-val, president and chief financial officer, told the company’s annual general meeting.

“We will have a solution in the next six to eight weeks that will be some kind of balance between dilu-tion and financial risk to go forward with the company,” Festival told shareholders May 8.

He said the com-

pany’s cash flow was cut in half to $10.04 million by differentials during the first quarter of 2013 when production sagged five per cent to 9,087 boepd from the same quarter a year prior.

Output fell mainly because of natural pro-duction declines in the Onion Lake area of Sas-katchewan, a conven-tional heavy oil property with the potential for a thermal EOR project.

Profit of $3.57 mil-lion in the first quarter of 2012 turned to a loss of $5.64 million in 2013.

Production costs increased 12 per cent in the first quarter of 2013 to $18.7 million from $16.7 million in the same period in 2012. On a per-boe basis, production costs increased 17 per cent in the first quarter of 2013 to $23.05 per boe from $19.63 per boe in the same period in 2012.

The increase in 2013 is mainly from starting to expense injection and polymer costs associated with the ASP flood at

Mooney. During the initial re-pressurization of the reservoir these costs were capitalized.

The lower output at Onion Lake was par-tially offset by increases from the response of the alkaline surfactant polymer (ASP) flood at Mooney and develop-ment of the non-flood-ed areas at Mooney – a conventional heavy oil property using horizon-tal drilling, the meeting heard.

As a result of re-pressurization of the reservoir at Mooney, volumes rose to 1,846 boepd in the first quar-ter of 2013 compared to 504 boepd in the same period in 2012.

BlackPearl expects the ASP flood will peak at more than 3,000 boepd in the next few months.

On a boe basis, 98 per cent of the com-pany’s oil and natural gas output in the first quarter of 2013 was heavy oil. The Onion Lake area accounted for 48 per cent and the Mooney area accounted

for 43 per cent of total production.Blackrod SAGD pilot

projectAt Blackrod, a

bitumen property in the Athabasca oilsands region using the SAGD recovery process, the company is continuing to monitor and learn from the pilot SAGD well pair it drilled in 2011.

The well reached commercial production rates of 400 bbls of oil per day after 10 months of steam injection with a steam-oil ratio of three.

At that point the company elected to turn its attention to testing alternative operating strategies to better un-derstand operating con-ditions specific to the

Blackrod reservoir and optimize its production techniques as it moves ahead with commercial development.

The Blackrod pilot well has experienced reduced fluid productiv-ity with the sand control process adopted for the first well pair.

BlackPearl imple-mented a less-restrictive sand control program late in the first quar-ter — re-perforating the entire liner which other companies have employed with success — and expects to fully assess the new process during the second quarter but early results indicate production is headed back towards commercial rates, said the company.

During the first

quarter of 2013, Black-Pearl drilled a second pilot well pair at Black-rod, and enhanced the connection between the producer and the resource by using a wire-wrapped screen and more slots, Festival told the meeting.

“We’re trying to remove some of the sand control that was creating some blockage,” he said.

“We’re still fine-tuning this to find out exactly what the optimal solution is with this kind of reservoir. It’s the same thing that other operators have done in the Clearwater forma-tion and in some shore-face McMurrays where the sand is not quite as clean.”

Page B38

Page B37The well was drilled

longer (950 metres) than the first pilot well pair, and slightly deeper in the reservoir.Steam injection will begin this summer with oil production expected

six to 12 months after steam injection.

BlackPearl is work-ing with regulatory au-thorities as they review its application for the first phase of com-mercial development at Blackrod, designed to be

20,000 bpd.Detailed engineer-

ing work on the first phase of the commercial project began in late 2012. The application was filed in May 2012, and regulatory review for these types of proj-

ects typically takes 18 to 24 months, said the company.

In April, BlackPearl acquired 10 sections (6,400 acres) of addi-tional oilsands acreage directly south of its existing Blackrod lands.

The company has not had a third-party evaluation of these leases but has internally estimated that best-estimate contingent resources could range from 50 million to 75 million bbl. of bitumen.

The acreage will be incorporated into its development plans for the Blackrod project.

As at Dec. 31, 2012 the Blackrod leases had proved and prob-able reserves of 182 million bbls of oil and contingent resources (best estimate) of 476 million bbls assigned to them by its independent reservoir evaluators.

Onion LakeThe company has

been working closely with regulators on its 12,000-bbl.-per-day thermal development application at Onion Lake and expects ap-proval in the second quarter.

During the first

quarter of 2013, the company continued primary development of the field, drilling 11 conventional wells, and completed a 2D seismic program over a southern extension to the main pool.

The wells were completed and put on production during the quarter and will be optimized in the second quarter. BlackPearl plans to drill an ad-ditional 10 to 15 wells during the remainder of 2013.

The company is considering financ-ing options that would allow it to accelerate development of the project.

Other operators have been very success-ful with these smaller but very prolific thermal projects in Saskatch-ewan, Festival told the meeting.

Well productivity is generally higher and steam-oil ratios [SORs] lower than typical oil-sands thermal projects due to better reservoir parameters and oil qual-ity, he said.

MooneyBlackPearl contin-

ues to see a favourable response from the ASP flood at Mooney, a project commercialized in 2011, said Festival.

Current production at Mooney is nearly 4,000 bpd, expected to grow to 5,000 bbl. later this year as the pool continues to respond to ASP injection.

The wells in the northern and central portion of the pool have seen the most rapid response from the ASP flood, which was expected due to better oil and reservoir quality in these areas.

The company ex-panded the pool devel-opment at Mooney by drilling 15 horizontal wells last fall.

It had planned to continue development drilling in the first quar-ter; however, due to low prices in the first quar-ter, deferred drilling 15 to 20 horizontal wells until later this year.

BlackPearl now plans to expand the ASP flood to these newly drilled areas in 2014.

The company ex-pects an SOR of 2.5 to three and that recovery will increase to 25 to 35 per cent from the cur-rent four or five per cent per well, said Festival. A pilot well has already recovered close to 25 per cent, he added.

Meanwhile, because the chemical being injected is expensive, operating costs will in-crease to nearly $30 per bbl. from $18 per bbl.

Finding oil with a chemical flood instead of the drill bit means future capital costs will decline by a cor-responding $10 per bbl so the economics are still favourable, he said. “We’re just switching capital costs for operat-ing costs.”

June 2013

Story and photos by Geoff Lee

Lloydminster – Nearly 2,000 high school students from Saskatchewan and Alberta had a chance to experience a future in the hard-hat trades during the fourth annual bi-provincial Try-A-Trade Career Expo in Lloydminster.

Organizers and participants pulled out all stops to excite students about the trades as there were more hands-on demos and exhibitors than ever at the Lloydminster Exhibition Grounds on May 1.

“We’ve got more exhibitors and more students participating,” said lead or-ganizer Dorothy Carson, executive director of the Lloydminster Construction Association who was at her information booth.

“This year, we’ve got a change in some exhibitors and some of the ones that have been in the past shows are getting bigger and better.

“They know what the kids would like to try with the trades.”The career expo featured career path information for students and educa-

tors on 51 designated trades, with trade demos attracting the biggest crowds.Regan Bexson, an iron worker at Bexson Construction, had his hands full

hooking students up to safety harnesses to operate a scissor lift and to simulate a beam walk at a construction site. He also took turns with fellow employees to show students how to put screws through steel.

He also answered questions from the media about the value of the show to youth and industry.

“I think it’s really important. It gives them a little bit of a heads-up experi-

ence of how to do the job and what it entails,” he said.“Of course, you can’t actually do the job, but you can punch a little bit here

and there on everything. Hopefully, they find out what they want to do with the rest of their lives.”

Bexson has its own apprenticeship program, with carpenter and iron work-ers as the priority trades.

“We are really busy this year. We are always looking for new help. We’ve got seven or eight buildings ordered and ready to go,” he said.

“We’re looking for some summer students this year. It would be great to have kids come out and apply.”

Kent Carriere, CEO of Metaltek Machining, set up a machine to punch out dog tags as a way to engage students to talk about the trades as a career option.

“We hope to bring it to their knowledge that there are careers that are available in the Lloydminster area for young people to get into, rather than mainstreaming them into university degrees,” said Carriere.

“This is our third year at the show and there is a lot of interest generated and it’s good to see. I like to see the young faces with interest in what we do.

“You can make up to $35 to $40 an hour in the trade once you have your ticket.”

Carriere got his start as machinist in a pre-employment program, and com-pleted his apprenticeship at SIAST and NAIT.

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Page C1There is no better time than today

to apprentice for a trade in Saskatch-ewan, according to Paul Blankestijn, youth apprenticeship manager with the Saskatchewan Apprenticeship and Trade Certification Commission.

“There is a huge demand. We have a booming economy in Saskatchewan and that drives the demand for skilled trades, but also we have retirements that are happening,” he said.

“Through that process, employers have a huge demand for skilled trades, and that’s where we come in.

“We have many opportunities for our young people to leave high school to register into the trades and start an amazing career working in the trade of their choice.”

John Winter, owner of Cooper Concrete Construction Ltd., set up a concrete floating demo to make students aware of what construction is all about.

“A lot of students have other post-secondary options available to them, but we want them to know that trades and concrete construction is a great way of living, and it’s in very high demand right now,” he said.

Cooper Concrete hires a lot of carpenters for cribbing work along

with concrete finishers for a variety of residential, commercial, industrial and oilfield applications.

Lakeland College had several trade demos at the event, including a hands-on electrical wiring test in automotive trades that caught the attention of Bishop Lloyd student Muhammad Anas.

“I like working with electricity and stuff like electronics and things like that,” he said.

“I am taking electrical at high school. I want to be an engineer, but I’m assuming I will need a little bit of that (soldering) there.”

As for the show itself, Anas said, “It’s cool. “I’ve tried three trades so far.”

Ditto the enthusiasm of Rielle Gagnon, a student of Holy Rosary Lloydminster, who was learning some plumbing skills at demo set up by Guardian Plumbing & Heating Ltd.

“I’ve done about three demos today. I put a door knob on; I named seven tools, and now I am fluxing and soldering. It’s a nice way to spend a morning,” she said with a smile.

Gagnon said she probably won’t go into the trades herself, but added the show is a good way to see what’s out there. Page C3

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Joey Stephan, who owns Guard-ian with his brother Blaine, said his dad is a journeyman plumber who taught them how to work with their hands.

“He said ‘I can’t put you through college, but I can give you a trade.’ My friends went to college – we’re making more money than them,” said Stephan.

“The trades are good especially if you don’t know what you want to do at university. It’s only four years and you’re set for life. You can be taking schooling for anything after that.”

Emily Dombrowski, a first year electric apprentice working for Harris Electric Co. Ltd. in Lloydminster, was on hand to let girls know how she became an apprentice, and that it’s not rocket science.

“When I was in high school, I never considered going into trades. I

always considered it a guys’ kind of thing, but it definitely isn’t,” she said.

“It’s very easy to be an electrician. It’s definitely more of a girls’ thing, and I think more girls should get into it.

“I didn’t think about trades until I was about 20, and then I just stumbled upon the idea. Somebody mentioned it to me and I just thought that was a really good idea.

“It was the first thing when I decided to go to school that I was interested in.”

Dombowski is taking her ap-prentice training at Lakeland College in Vermilion. The college will offer 10 trades apprenticeship programs this fall including heavy equipment technician.

That’s a trade that Frank Trem-mel, the chief executive of Precision Contractors in Lloydminster, came to promote to students for his oilfield lease and road building business.

They took an excavator simula-tor, a grader, and a mechanic’s service truck to the event to attract the atten-tion of students.

“The biggest thing we are doing here is drumming up the interest,”

said Tremmel.He thinks kids might say, “Hey,

you know, I saw that grader. I ran the simulator for a little awhile. I liked it. Maybe that’s something I’d like to get involved with.”

Story and photosby Geoff Lee

Lloydminster – Oil-field companies, church-es and local businesses are working together to help build Battle River Ranch Camp into a one-of-a kind faith-based trades and life skills training facility for men and women.

The concept camp, located 45-kilometres south of Lloydmin-ster on Highway 17, is a long-time dream of its founder Harold Stephan, a journeyman plumber, and his wife Diane.

Harold is also the director of Crossman Ministries that runs the camp as a non-profit registered charity.

The Stephans, representing Guardian Plumbing & Heating Ltd. owned by two of their four sons who all work in the trade, handed out camp brochures at the Try-A-Trade Career Expo in Lloydminster on May 1

“The purpose is to train people in life skills and trades so they

can try all the different trades and find out what they are really good at,” said Diane.

“We’re building ready-to-move houses so they can try all the plumbing, electrical, carpentry, dry walling, roofing – everything that there is to build houses.

“Then when they can see what they really like to do and are gifted at, we help them find a job and get into an ap-prenticeship.”

Harold is tapping into his oilfield con-tacts to let them know that part of the 80-acre property that was donated for the camp will be available to teach trainees how to oper-ate oilfield trucks and equipment.

“We’re going to get them into all trades and also running equipment – how to run trucks and semis,” he said.

“We’ve got several big trucking companies – oil trucking compa-nies – we’re setting up a corner of our ranch where they can learn how to pull in, hook

up their trucks, use the pumps, hook up their lines, reverse their pumps and what not, in a safe environment.

“It will be a little safer than on a job site where we’ve got full pressure and oil and ev-erything and gas. Here, we’re going to do it in a controlled environment where the dangers aren’t there.

“They’re going to learn how to run pay-loaders and backhoes and different equipment just to get a taste of it.

“I’ve found over the

years, if you just a get a taste of a little bit of everything, it makes you a nice rounded worker in the workplace, but it also helps you find what you’re good at.”

The site supports an RTM home con-struction project by Whitefire Homes to help trainees find and develop their interests and skills in the con-struction trades.

There is also a spa-cious work shed filled with donated equip-ment and supplies, along with a mobile

home for temporary housing and some smaller buildings.

Construction is proceeding on a new two-storey lodge that will be a guest house for the Stephans as camp directors and for trainees.

The lodge is a re-placement for the initial wood frame structure that was flattened dur-ing a freak windstorm on July 18, 2011 that tested the couple’s faith in their vision.

“It was framed. The windows and doors

weren’t in it yet,” said Harold.

“In a way, it brought more people in. We often wonder how God plays a role in our lives, eh, but he’s got a pur-pose for all, if we look at the positive of it and not the negative.

“We came out that day and it was hard. It was hard to look at that. Our son, who did most of the building on that was devastated at first, but he looked at it and he said ‘Dad the next one’s going to be bigger.’

Page C5

Page C4“We had people

who drove by for a year and watched us build that, and were now stopping in and helping us and knew nothing about us.”

Diane thinks it was a tornado that struck because nearby windows and picnic tables were unharmed.

“You know God always brings good out of things,” she said.

“Because of that, we’ve had so many people want to help out at the ranch and people are calling to find out about it.”

Most of the work on the lodge gets done on weekends, by volun-teers.

“It’s going great.

We’re working on the tiling now. We’ve got most of the pine up and everything has been donated,” said Diane.

Long-term plans call for a greenhouse to teach horticulture, a coffee and gift shop to teach skills in food preparation and man-agement, and horses to encourage personal development and re-sponsibility.

Scribner Auction Ltd. from Wainwright has volunteered to hold a dispersal auction fundraiser at the camp on June 1.

The camp will also hold another Hope 4 More Celebration of Hope Festival Aug. 23-25 to promote families and community spirit.

By then, the lodge could be nearly ready for a fall intake of up to six trainees.

“We’re so close it’s not even funny, but we’ve got a little bit of work to do in our food services area,” said Harold.

“We’ve got some work to do on the lodge and so on, but it’s com-ing along incredibly well.

“We are a faith-based facility, but what that means is we are controlling the language, no drugs, no smoking and no alcohol.

“You get an oppor-tunity to learn in an area that’s a little safer and a little more comfortable.”

Trainees can be sponsored by individu-

als, churches or busi-nesses, or pay their own way for five months of training.

“We’ve got a young guy coming from Moose Jaw this fall who worked the whole of last year to save up enough money to pay his $1,800 room

and board,” said Harold.“When you’re done

and stay the full five months, we guarantee your safety certificates and we’ll get you into the trade you want to get into.

“We’ll get you all the ins and outs. You’ll know the lingo and how to be a strong helper and an apprentice in that job.

“At the end of the five months, we’ve got employers who will sign you up to complete your apprenticeship.”

The first trainee was Sam Warkentin, who found an angel spon-

sor in British Columbia who helped him turn his life around as an apprentice plumber at Guardian.

“My life was like I just kind of lived on the street until I was 13-years-old and stuff like that,” he said while helping Guardian at their Try-A-Trade booth.

“You know – steal-ing to eat and stuff like that – the mentality of always having to survive and always having to get up and find a place to stay at night and stuff like that.

Page C6

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Page C5“I was in B.C. and the couple I got to know a little bit – they found out

about the ranch. “They found the Battle River Ranch Camp brochure in Abbotsford and

they were ‘kind of like, would you like to try it?’ They sponsored me to come out to it and flew me out and everything.”

Warkentin, who is just 19, completed the program this past February and learned everything from how to tile and apply siding, to framing, drywalling and electrical and plumbing while helping to build a RTM.

“I would pretty much recommend it to anybody, no matter what place you are in your life, or what’s going on,” he said.

“This place is a place where people are genuinely caring. They are loving people. They are Christians.

“They don’t care about your background or what you’ve done or what you did. It’s a place where you can come and you can change.”

Harold and Diane healed their own addictions and bad lifestyle choices years ago through 12-step faith-based programs.

“Even though I am done my apprenticeship time at the ranch, I can still go back there and hang out with Harold and Diane,” said Warkentin.

“They became like a family to me. It’s just a really good environment to be in.”

Edmonton – Alberta has identified a statistical oil bubble from 2012 that no one can burst for at least another year.

An Energy Resources Conservation Board report released on May 8 indi-cates that in 2012, the province experienced its largest increase in conventional crude oil production and reserves in decades.

The ERCB publication ST-98 Alberta’s Energy Reserves 2012 and Supply/Demand Outlook 2013-2022, shows a 14 per cent increase in production and 9.5 per cent increase in reserves over 2011 levels.

In 2012, Alberta’s crude oil production totalled 556 thousand barrels of oil per day with a yearly total of 204 million barrels.

The ERCB attributes the increase to the higher production rates of hori-zontal wells.

Alberta produced 1.9 million bpd of raw crude bitumen from the oilsands in 2012 for a yearly total of 704 million barrels or a 10 per cent increase over 2011 crude bitumen production.

The ERCB forecasts Alberta’s annual raw crude bitumen production will total 3.8 million barrels per day for a total 1.39 billion barrels per year in 2022.

The report noted that since 1967, Alberta has produced about 8.8 billion barrels of raw crude bitumen from the oilsands and about 16.7 billion barrels of crude oil since 1914.

Alberta’s total remaining established crude bitumen and crude oil reserves totaled 169.6 billion barrels, consisting of 167.9 billion barrels of crude bitu-men and 1.7 billion barrels of crude oil.

The province’s remaining established marketable conventional gas reserves stood at 33 trillion cubic feet, a decrease of three per cent from 2011.

The remaining established reserves of natural gas liquids stood at 1.6 bil-lion barrels, down one per cent from 2011.

By Geoff Lee

Lloydminster – Reliability analysis is not rocket science – it’s harder!

Those were the concluding words of a presen-tation on progressing cavity pump systems failure analysis and pitfalls to avoid that was made at the April technical luncheon of the Lloydminster Soci-ety of Petroleum Engineers.

“There are so many different factors that can affect reliability and how they all interact with each other,” said Paul Skoczlyas, manager of engineering services at C-Fer Technologies in Edmonton.

For more than 10 years, C-Fer has been lead-

ing an industry-funded joint industry project to identify ways to significantly improve the average run life of PC pumps.

Skoczylas did his best to present failure analy-sis in a “rocket science for dummies” talk, begin-ning with the easy to understand rationale for well operators to conduct an analysis of individual and system failures.

“You can save millions of dollars by improv-ing the run life of pumps. That’s the goal of failure analysis,” said Skocyzlas.

“We don’t just want to know what happened before the failure, but we want to use that informa-tion to stop it from happening again.

“You want to improve your run life over time, so if you can figure why these failures are happen-ing and try to mitigate them, you will be able to improve your run life overall.

“It’s economics. The less time you spend work-ing over wells, the more oil you are producing,” added Skoczylas.

Using his presentation example of an operator with 200 wells and five days for a typical workover, the failure cost is $40,000 per workover plus lost production. With heavy oil fetching $60 per barrel, that gets costly.

Skoczylas said when you look at an individual pump system failure, the key factor is why it failed and to avoid the pitfall of recording how the failure happened as the cause.

“That’s probably the biggest thing – not just understanding how it failed such as a stuck pump but why did it fail, and what can you do to prevent that,” he said.

Failure causes should be assigned to categories such as system design or selection, manufacturing and quality control, storage or transportation, and installation and operations.

The focus of failure analysis should not be to assign blame, but only to identify what went wrong to avoid it from happening again.

“Most of the time you can probably find something you could have done differently,” said Skoczylas.

In complex systems, there are usually multiple causes of pump failures, so it’s important to re-cord all failure causes in order to conduct a proper analysis.

“I think the two main issues are to understand why your failures are happening and what can you do differently to prevent them,” said Skoczylas.

“The other one is, if you are doing a comparison analysis between operations, you need to be using the same measures for comparison.”

Right off the bat, it’s important to choose how to define run life and failures and be consistent over a long period of time.

A common measure of run life is mean time to workover, or MTTF. MTTF is the total time all the systems have been running including pulled systems, divided by the number of failures in the field.

Run time could be defined in several ways; from when a pump is in the ground until it’s pulled; from its first start to its last stop, or the total time it’s actually running.

Page C9

Page C8

It’s also important to have a consistent definition of a failure since differences in counting failures may have a big impact on comparing reli-ability or run life.

“You need the same measures when you are comparing different operations,” said Skoczylas in refer-ence to the context of apples versus oranges.

A monkey wrench can get thrown into the analysis, with variables such as depth, temperature, viscosity, solids, water cut, and harsh fluids for differ-ent applications.

“Here in Lloydminster, we’ve got heavy oil with sand. In other parts of the world they might have a lot more gas or higher temperatures – they’re just different applications and the variables affecting them are different” said Skoczylas.

“If you are doing this analysis, you need a lot of data. The more data you have, the better, so that’s years of operation before you can start getting some good analysis on that data.

“You can’t calculate the average time to failure is you only have a very small field and a very small number of failures.”

Those fields in C-Fer’s web-based reliability and failure tracking data-base with more than 50 failures have an MTTF ranging from under 300 days to over 3,600 days.

C-Fer is a not-for-profit company that continues to develop its database and analysis tools for industry users.

“It’s all contract work that keeps us afloat,” said Skoczylas.

“We do a lot of work for the oil and gas industry, of course, both on the upstream side in production but also in pipeline systems as well. We also have a full-scale test lab.”

Canadian Natural Resources Limited drilled the most metres and wells during the three months ended March 31, 2013.

The company rig released 359 wells during the first three months of the year and sank 441,189 metres of hole.

In second place was Husky Energy Inc., which drilled 420,142 metres of hole during the first quar-ter and rig released 335 wells.

Crescent Point Energy Corp.’s 368,750 metres was third best for metres drilled during the quarter, followed by Encana Corporation (319,519 metres) and Cenovus Energy Inc. (300,380 metres).

Based on rig releases, the top operators follow-ing Canadian Natural and Husky were Cenovus (161), Crescent Point (133) and Penn West Petro-leum Ltd. (127).

The next two positions – both above 100 rig releases – were held by Encana (126) and Devon Canada Corporation (108).

In Alberta, Canadian Natural (307), Husky (198), Cenovus (146), Encana (111) and Devon (96) were the top operators.

Heading the list in Saskatchewan were Husky (133), Crescent Point (111), Northern Blizzard Resources Inc. (73), Baytex Energy Corp. (54) and Teine Energy Ltd. (39).

British Columbia’s top operator in the first three months of 2013 was Harvest Operations Corp. with 26 wells. Progress Energy Canada Ltd. was second with 25 wells, followed by Royal Dutch Shell plc with 17.

Penn West topped the list in Manitoba with 59 wells drilled in the first three months of 2013,

followed by Tundra Oil & Gas Partnership (50) and EOG Resources Canada Inc. (48).

Crescent Point was the busiest explorer in Sas-katchewan with 51,214 metres drilled. Progress was the top explorer in B.C., drilling 52,666 metres of exploratory hole, while Royal Dutch Shell was the busiest explorer in Alberta with 61,856 metres.

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By Geoff Lee

Vermilion – Lake-land College is hiring new faculty for its grow-ing trades and energy programs at the same time as more than 40 permanent positions are being eliminated through budget cuts over the next two years.

The cuts to ad-ministration, faculty and union positions at Lakeland announced in April came after the Alberta government sliced the basic grant to post-secondary institu-tions by 7.3 per cent in its 2013-14 budget.

Colleges were previously promised a

two per cent increase for three years, put-ting a total 9.3 per cent squeeze on available base funding.

However, Lake-land president Glenn Charlesworth said new specialized instructors will be hired to teach a projected enrolment in-crease in apprenticeship programs at the Vermil-ion campus and energy programs in Lloydmin-ster for the 2013-14 academic year.

“In our current year, 1,131 apprentices have taken training at Lake-land, and next year our projection is for 1,368. That’s a big increase,” said Charlesworth.

“Industry demand is out there. Student demand is out there. We have an economy that’s firing on all cylinders and the trades have been really taking over for the past two or three years.

“We’ve had ups and down in the trades cycle before, but we are really on an up cycle now. All of the trades seem to be showing growth.”

Lakeland added a new gas fitter program

to its list of apprentice-ship programs in March followed by a third year of instrumentation in April.

A one-year certifi-cate in street rod tech-nologies is due to begin this fall in Vermilion.

So far, 46 stu-dents are registered for fall pre-employment training in the popular electrical, instrument technician and welding programs compared to 44 last year.

Construction is also

due to begin this spring on the new $17.5 mil-lion Petroleum Centre in Lloydminster that will house new heavy oil technician and heavy oil power engineering programming.

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Page C11“We’re just waiting for the final pricing. I

would expect we would be digging holes in the ground in May,” said Charlesworth on April 26.

A sod-turning ceremony for the new wing took place last September in Lloydminster.

“Once we get that new wing, we are going to have an explosion of population,” said Charles-worth.

“We’re full up for next year and we’ve got a waiting list of about 100 students. We’re full for two years, so that’s why it’s so critical to get that building up.

“We’re still targeting September 2014. Once that building opens up, that increases our capacity.”

The new wing will feature a large power engi-neering and heavy oil lab with three steam boilers, water treatment equipment, a turbine generator and breakout training spaces.

In March, Lakeland received $948,450 from Western Economic Diversification Canada to ac-quire specialized simulators and equipment for the heavy oil operations technician and heavy oil power engineer processing programs.

Cenovus Energy donated $1.5 million in Janu-ary towards the construction cost of the Petroleum Centre and to fund new scholarships for students.

Additional funds will be needed this year to complete the new Petroleum Centre as construction costs continue to rise.

“We’re still trying to raise some money. We’re not all the way there yet,” said Charlesworth.

“We certainly have enough in the kitty to get going here. We’ll start and then I am hoping the fundraising will continue to be fruitful.”

The demand for skilled workers continues to grow, especially in the heavy oil regions of Sas-katchewan and Alberta that Lakeland College serves.

“Our energy sector is just booming. We’ve got more demand than we can currently handle, so we’re going to be really busy,” said Charlesworth.

“We are increasing our faculty as well because all these students are going to need faculty to teach them, so we’re looking at expanding that as well.”

Page C13

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Page C12Lakeland is also

looking for more corpo-rate training down the road to keep up with the evolving needs of indus-try for skilled workers.

“We’re looking for corporate partnerships in terms of curriculum development that is relevant to industry that we can help deliver to people through differ-ent methods too,” said Charlesworth.

Those methods could be delivered by online learning or through blended or short courses, weekend courses and traditional face-to-face instruction.

“We are working with industry to see how we best deliver that kind of curriculum,” said Charlesworth.

“We want to work with industry to see how we can expand our output of skilled quali-fied workers and keep the economy going.”

Charlesworth said Lakeland has always

connected with industry through advisory com-mittees, but by design their relationships with industry have grown closer lately.

“We have need of true industrial partners to do the things we are doing. There are a lot of examples of that – the new power engineering wing,” he said.

“All of our research is done with corporate partners and we are seeing more and more of that.”

Industry support of Lakeland’s trades, energy, environmental sciences and agriculture programs made it easier for the college to protect these core programs and the applied research that supports them from budget cuts.

“We wanted to make sure that in ad-justing our budget, in order to balance it, that we protect those core elements that Lakeland College is all about,” said Charlesworth.

“Those programs aren’t seeing any reduc-tion in quality or any reduction in budget.”

Expenses are being pared through program intake suspensions, em-ployee layoffs, admin-istrative group salary rollbacks and cuts to travel, maintenance and professional develop-ment budgets.

The college also had its infrastructure maintenance grant cut by about 50 per cent in the provincial budget to $773,000.

Additional revenue is expected to be gener-ated by some subsid-iary services and from increased international and trades enrolment starting this fall.

By Geoff LeeCalgary – Husky Energy Inc. pulled a rabbit out of its hat in the first quar-

ter with a focused integration strategy that limited the impact of wide heavy oil differentials on their bottom line.

Net earnings for the three months ending March 31 were $535 million, a decline of nine per cent from $591 million in the same year-ago period due to reduced crude oil prices.

The average benchmark prices for Lloydminster heavy oil, for example, fell 22 per cent from the fourth quarter of 2012.

“Despite the very significant price differentials we’ve been seeing for heavy crude in Western Canada – that speaks to the strength of our focused integra-tion strategy,” said Husky CEO Asim Ghosh during a quarterly conference call from Calgary on May 7.

“Production is 71 per cent weighted to oil and liquids compared to 69 per cent a year ago. Implicit in that was oil production was up 4.5 per cent year over year.

“There has been some tightening in terms of pricing discounts, but our integrated business model continues to provide a safe harbour,” said Ghosh.

“In effect, we are capturing world pricing for our Western Canada oil production.”

Upstream production in the quarter was 321,000 barrels of oil equivalent per day, up a tick from 320,000 boepd in first quarter of 2012.

Husky’s average realized pricing for its crude oil, natural gas liquids and bitumen in the quarter was $68.32, a 27 per cent decline from $87.11 per bar-rel a year ago.

“That reflects the lower WTI (West Texas Intermediate) and Brent pricing quarter over quarter,” said chief financial officer Alister Cowan.

“It also takes into account the wide product and location differentials we’ve seen in Western Canada.

“I will remind you at this point that the caps (captured margins) of the Western Canadian location differentials for upstream production show up in the infrastructure and marketing business unit, where net earnings in the quar-ter increased to $134 million from $56 million in the first quarter of 2012.

“We’ve further captured margins from the increased differentials in the downstream business in the upgrader and the refinery.”

Husky’s refineries in North America and the upgrader in Lloydminster had average throughputs of 327,000 bpd during the first quarter.

Page C15

Page C14Cowan noted that the Lloydminster upgrader

will be offline this September for a major 45-day maintenance turnaround following a successful 25-day turnaround at the Lloydminster asphalt refin-ery completed in April.

Total production from heavy oil and thermal projects focused in the Lloydminster area over the quarter was about 122,000 bpd compared to 106,000 bpd in the same period in 2012.

Husky’s growing list of thermal developments including its Tucker Lake project near Cold Lake produced about 48,000 bpd in the quarter, up from 30,000 bpd a year ago.

“Heavy oil continues to be the pack leader for oil production in Western Canada,” said Ghosh.

“We have two new thermal projects at Pikes Peak South and Paradise Hill which started last year and continue to perform well over the quarter.”

Combined average volumes of approximately 18,000 boepd were maintained at the Pikes Peak South and Paradise Hill thermal projects in the Lloydminster area ahead of their 11,500 bpd total planned design.

“They are paving the way for our next suite of thermal projects,” said Ghosh.

Construction of the 3,500 bpd thermal proj-ect at Sandall is now 55 per cent complete. Initial drilling is underway with first production expected in 2014.

Chief operating officer Rob Peabody reported work conducted at the 10,000 bpd commercial thermal project at Rush Lake in the first quarter is advancing with first oil expected in 2015.

“Based on results from our first well pilot pair, we’re planning to start up a second pilot later this year,” he said.

“Also in heavy oil, we’ve had an active quar-ter on the drilling front with 38 horizontal wells drilled out of a planned 140 well program for the year.

“We also drilled 55 chops wells and we’re look-ing at another 145 wells over the balance of the year.”

A total of 45 horizontal wells were drilled on five oil resources plays in the Bakken, Lower Shaunavon, Viking, Cardium and Rainbow Musk-wa in the first quarter.

Two vertical wells were completed last winter at Husky’s emerging Slater River Canol play in the Northwest Territories and consultations are underway in the community for the next stages of activity.

The first phase of the Sunrise oilsands project in Alberta is also advancing towards first produc-tion and is approximately two-thirds complete.

Husky also filed a regulatory application for a 3,000 bpd bitumen carbonate pilot at Saleski, which is located about 100 kilometres southwest of Fort McMurray.

The company is also continuing its shift to oil and liquids-rich natural gas resource plays in West-ern Canada and at Ansell in Alberta, in particular.

“The Ansell project is shaping up to be a ‘real needle mover’ for us in Western Canada,” said Peabody.

“We brought our well costs down about 40 per cent over the last year and production has also been on the rise.

“We are now producing about 14,500 boepd and have recently shifted more of our budgeted capital to the area from other plays.”

At the end of 2012, Husky had approximately 88 million boe of proved reserves, 19 million of probable and 398 million of contingence resources booked at Ansell.

In the first quarter, the company drilled four horizontal wells and six appraisal wells on the play as well as completing another 12 wells.

Husky also drilled its first four well pad in the Kaybob/Duvernay liquids rich play in Alberta in the quarter following some good results from the first production well.

Husky told the conference it has no plans to divert any of its resources to the exploration and production of dry natural gas despite some im-provement in Alberta pricing to approximately $3.40 per gigajoule in early May.

“We have not been spending any money in dry gas for the last couple of years,” said Ghosh in response to an investor question.

“We are spending money as we speak on liq-

uids rich gas and that speaks to the fact that Ansell, which is running about 4,000 boepd a year ago, is now running at 14,500 boepd.

“It’s because of measured investments we’ve been making in that area.

“At the level at which the prices are today, or any of the strips (futures pricing) we are seeing over the next couple of years, we still wouldn’t at those levels, be spending money on dry gas.

“The final point that I should remind you of is that we are a substantial consumer of gas with our thermal plays that is increasing in heavy oil. As our Sunrise project comes on-stream and ramps up, it will increase even more.

“At the end of the day, we are kind of neutral to it. We have an internal hedge, and on our present plans by 2020, we will pretty well consume four out of every five million cubic feet that we produce.”

Peabody told a media caller that dry natural gas would have to be $5 to $6 on any available price benchmark before Husky got excited about spend-ing more money on it.

“The big question is when you redeploy capital from something that’s quite profitable into dry gas which at the moment isn’t?” he replied.

The company also noted work is progressing on its Liwan gas project in Asia with development drilling underway at the South Rose extension in the Atlantic region.

Maidstone – A sponge mop could be an optional club in the bag for players taking part in this year’s Maidstone Heavy Crude Men’s Golf Tournament on June 7.

The course at the Silver Lake Golf Club may not be totally dry by then in the wake of a state of emergency that Maidstone declared on April 29 due to spring flooding.

In fact, the course was not open and was partly submerged when lead organiz-er Jeff Watt was contacted to talk about early course conditions on May 8.

“With the high snowfall this winter, the lake water is really high. Number 4 is just an island green and number 3 has water halfway across it,” said Watt who hopes the golf gods will create dry, play-able conditions for the tee-off.

“Hopefully, the water has receded at the park by then. We should be good to go.”

The 24th version of the tournament is fully subscribed, with 72 players regis-tered and several names on a waiting list.

Once again, there will be 18 flights with two nine-hole match play formats for competitive and recreational golfers.

The $125 entry fee buys each golfer a shot at being selected for the chip for $500 event on the 9th hole to kick off the action.

The popular event will wrap up with a steak barbecue when all event prizes, hole prizes and door prizes will be handed out.

Watt said not much will have changed from last year’s event other than some new sponsors.

“Other than that everything will run pretty much the same as it normally

does,” he said.“The sponsorships are going over well. We’ve got a few new companies and

few of the bigger companies too. It should be good.”Oilfield activity in the area is picking up

with the construction of Husky’s Rush Lake thermal project bringing more business and potential golfers to the area.

“We have a couple of guys from that project. Mostly, it’s just local guys working out there,” said Watt.

“There are a few from Husky and some Champion guys with the chemicals and whatnot working at that project too.

“The oilfield activity makes it easier, but it makes it busier as well.

“Usually there are quite a few dropouts right at the last minute because of the busy oilfield.”

As for getting rid of that water quickly, Watt joked, “We need to hire some of the vac truck companies to give us a hand.”

Watt is a field supervisor for TWB Con-struction Ltd., who could call in some company dozers or backhoes to help repair any major water damage to the roads leading to the course if need be.

“We are in gravel and lease construction. We do maintenance and whatnot,” said Watt.

This is Watt’s second year as president of the Maidstone Oilmen’s Golf Association, and like last year, he will be touring the course in a golf cart, but not as a player.

“I think this year again I am going to back off. It allows room for one more player. It gives me a chance to help out. There’s always lots to

do,” he said.“That’s what I did for the first time last year and it worked out quite well.

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Saskatchewan’s drilling rig fleet had one of its deepest and longest breakup lulls in recent years this year, according to numbers posted by Rig Locator.

The graph on Riglocator.ca for Saskatchewan active drilling rigs was es-sentially flatlined through to mid-May, in sharp contrast to 2012 or even the “flood of the century” 2011.

Road bans may have come off in early May, but activity did not pick up immediately thereafter. Following the winter that never seemed to end, on May 17 only six rigs out of a total 127 were at work. That number was consistent with those that worked throughout breakup. In other words, a week after road

bans came off, almost no drilling rigs had returned to work, despite the fact very little rain was seen in southeast Saskatchewan since the snow melted.

One small contractor told Pipeline News they expected all their rigs to return to work in late May or the first week of June. Another contractor of similar size also expected to see their fleet back at work in June.

While service rigs showed 102 of 210 in Saskatchewan working on May 17, a drive from Estevan to Alida, Carlyle, Stoughton and back to Estevan saw only two rigs in the field that day. Typically 10 to 15 service rigs will be seen working near those highways during good weather in the summer.

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Vermilion – Workboots are the order of the day during the annual Lakeland Regional Skills Com-petition held for the fifth consecutive year at the Vermilion campus of Lakeland College.

More than 70 students from regional high schools in Alberta competed in eight trades dur-ing the event, with the electrical, carpentry, cabinet making, auto mechanics and welding challengers wearing the bulk of the safety gear.

Those who finished at least first in each trade got to move on the provincials that were held May 15-16 in Edmonton, but getting past the regional competition is getting tougher every year.

“Every year is exciting to see the schools come in … and the competitors,” said Jordan Kalczak, head of the carpentry program and chair the skills committee.

“Seeing what their skill sets are blows me away, and they haven’t even graduated from high school yet.”

The challenge for welders was to duplicate a metal model of a computer laptop with the pressure of a five hour time limit.

“There’s going to be stick welding and there’s going to be mig welding. They have to run roots and they do fill and caps in different positions – verti-cal, and all of the flats,” explained instructor Lyle Kragnes.

“They’ll be judged on the finished product. Each weld will be judged individually, based on the quality and the usability. These guys have got to be ready for the real world.”

Canada’s oilsands sector alone needs to add an-other 16,000 direct new skilled jobs between 2013 and 2022 to meet growing production according to labour market projections at Enform.

“The regional skills competition is a way to introduce high school students to the trades. It’s one of several activities that we do,” said Lakeland president, Glenn Charlesworth.

“We also have something we call CTS training or career technology studies.

“What it allows, is for students to learn about trades to get involved, and to actually compete and get an interest. So it creates interest in the whole area of apprenticeship and trades programming.

“More importantly, it helps to solve the labour shortage of skilled tradespersons.”

Lakeland delivers the CTS program to stu-dents in partnership with the Buffalo Trail Public School Division and St. Jerome’s Catholic School in Vermilion.

Students spend up to 25 hours a week at Lake-

land’s labs to help define their interests and hone their skills in various trades in preparation for the regionals.

Calum Grech, a Grade 12 student from Man-nville School, came to the welding competition with his game face on, ready to answer questions about how he acquired an interest in welding and got picked for the event.

“I weld a lot at the farm,” he said. “We do cattle and sheep, but we tend to weld the front-end loader a lot because Grandpa tends to break it a lot. You learn a lot when you have a Grandpa like that.

“I started welding a smoker at school. It’s kind of a barbecue. My teacher thought my welds were really good and decided to put me in the competi-tion. This is my first year here.”

The top two spots went to Tristan Mills and Colby Christie from Holy Rosary High School in Lloydminster. The school is a participant in the Alberta Registered Apprenticeship Program (RAP).

Under the watchful eye of welding and carpen-try instructor Kevin Bender, RAP allows students to earn a salary and high school credits as well as accumulating hours toward their first year appren-ticeship.

“The interest in trades has grown a lot in the last couple of years, mostly because of the oppor-tunities with the RAP program in Alberta,” said Bender who was in Vermilion during the competi-tion.

“Students are seeing all the opportunities and the funding related to going into the trades.

“A lot of students who would normally go into an academic stream are seeing the advantages of going into a trade first, and pursuing another career after, if they still chose to do that.

“In Lloydminster, there is huge interest in weld-ing just with the oilfield related manufacturing. We have a waiting list of kids to get into the welding program.

“They see the opportunity, and they see the money in Lloyd and the success in Lloyd,” Bender said.

That’s the case for Grade 12 student Devon Bielech, representing Lloydminster Composite, who finished third in welding

Bielech is following in the footsteps of his dad who is a tradesman at Foremost Industries.

“My dad’s a welder and, in Grade 9, I went to his shop on a Take Your Kid to Work Day, ” said Bielech.

“Ever since then, I just started to really like it. Through high school, I’ve been taking it and it’s re-ally fun and I like it.

“I am planning on coming to Lakeland next

year if I can get in, and go from there.”The good life available in the trades has driven

up fall enrolment numbers for the next academic year to 1,368 from 1,131 this year.

Ironically, the regionals are held the same day as another batch of apprenticeship students at Lake-land write their final exams.

One of those students was 20 year-old welder Ethan O’Neill who moseyed over to the welding event, having just punched his journeyman ticket.

In 2011, O’Neill won the welding regionals as a high school RAP student from Kitscoty who went to work for Automated Tank Manufacturing Inc. as a first year welding apprentice.

He worked at the Kitscoty company until last July when he started his own company.

“I’m contracting through PPCL (Process Plant Constructors Ltd.) at Husky’s Sandall thermal site. I’m running my welding truck now,” he said with a smile.

“There are a lot of RAP students in Kitscoty now, seeing what I had done. There are a couple of guys doing the welding program too, through high school.

“I’m really happy with the way it’s turned out. There’s no shortage of work for a welder out there.”

Dale Howland, a career counsellor at Holy Rosary in Lloydminster, is tasked with the job of making his students aware of the trades and the op-portunities available to them.

“Being in the Lloydminster area, the opportu-nity to apprentice in the trades in both the Alberta and the Saskatchewan side is amazing – the oppor-tunities are there for our young students to start a career that is well respected and gives them a great future,” he said.

The doors are also open in the trades to more women including Breanna Harrison, a Grade 12 student at Lloydminster Composite who was stok-ing her interest in auto mechanics at the regionals.

“It’s just kind of something that I’ve had an interest – for like – working hands-on with things,” she said during a break.

As for the competition she said, “It’s good. I’m learning new stuff. It’s been a good learning experi-ence.

“This morning, I had to look at diffs (differen-tials) and electrical boards and diagnostics. You have to figure out what the problem is.”

Harrison added that she has received lots of encouragement from her female friends, but for now she is thinking auto mechanics might become more of a hobby than a career.

“I’m not exactly sure what I want to be yet. It could be a potential career,” she said.

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Lloydminster – It could be called Beauty of the Beast.

A $1,500 cash prize will be awarded to the owner of the best looking work truck at a new show and shine event at the 4th annual Tony Rossi’s Convoy for Hope to fight cancer on June 8.

“Different dealerships and businesses have stepped up and we have over $20,000 in prizes up for grabs,” said convoy founder and trucker Tom Jack.

Jack hauls fluid for W-K Trucking, an event sponsor based in Mundare, Alta.

He thinks the show and shine will help the event surpass a unique target this year to raise at least $18,027.92 plus $1.

“If we raise that much, plus the $1, that will put us over $100,000 raised to date,” explained Jack.

“The last couple of years, we’ve raised over $30,000 each year.”

Convoy for Hope truckers and donors have contributed exactly $81,972.08 over the years for patient care and research at the Cross Cancer Insti-tute in Edmonton.

The new show and shine for trucks will be held at the Lloydminster Exhibition Grounds where the cancer fundraiser ends.

“Guys who want to enter their work trucks in the show and shine will make a donation of $100 or more. That’s just money that will go toward the Cross,” said Jack.

“These are working trucks, not show trucks. They’ll be judged accordingly on how they are kept up.

“We’re getting lots of trucks registered in that. We are thinking and hop-ing this will be our biggest event yet.

“I always want to hit that 50 mark. We haven’t hit it yet. The most we’ve ever had is 35. We want 50. We are hoping the show and shine will help pull that off.” Page C23

www.kelro.com

By Richard Macedo(Daily Oil Bulletin) Winnipeg – The Manitoba

government attracted $436,648 in bonus bids at its second land sale of the year, but continues to trail behind last year’s pace for total revenue by a wide margin.

The government sold 1,312 hectares at its May 15 sale, which produced an average price of $332.81. So far this year, the province has col-lected $1.16 million in bonus bids on 2,607.62 hectares at an average price of $444.99 per hect-are. To the same point of 2012, the government had collected $10.56 million in bonus revenue on 15,310.85 hectares at an average price of $689.93.

Estevan-based Fire Sky Energy Inc. paid the highest price per-hectare for a parcel located in the Daly Sinclair area. The firm paid $1,388.89 per hectare for the 96-hectare lease. The bonus of $133,333 paid for the parcel was also the auction high. It included legal subdivisions three and four and the southeast quarter of section 28 at 08-27W1.

This was the second of four sales scheduled for 2013. The next sale will be held on August 14 and the deadline for posting requests was May 17.

“This was a very small sale, but the best results were concentrated in an area northwest of the Virden field,” said Keith Lowdon, director in the Manitoba government’s petroleum branch.

Due to spring road restrictions, he said that not much drilling had occurred by mid-May in the province as companies were unable to move at the time. However, drilling levels are expected to meet or exceed last year’s record total of 614 wells. In Manitoba, oil production was 50,500 bbl. per day in 2012, a new record.

“Runoff did not create any major problems in the oil producing areas,” Lowdon said. “A number of wells in the Assiniboine River Valley north of Virden were temporarily plugged prior to the river plain flooding and the flow has peaked.”

The Souris River has been a concern, but the flood year has turned out to be less dramatic than expected with minimal impacts for the oil and gas industry.

Page C22

Moving the event from its previous date of the third week in July to June should help to boost family attendance at the exhibition grounds.

“We changed the date because the kids are still in school and families will be looking for something to do that weekend,” said Jack.

Families can participate in a live auction at the exhibition grounds, a fundraising barbecue and the driver simulator from Gibson Energy

There will also be a bounce castle for kids, and trucks galore to explore.

“I hope we get of kids down there looking at the trucks and dreaming about becoming a truck driver one day, and then, maybe 15 years from now we won’t have such a shortage of good drivers,” said John Buhnai who owns Action Towing.

He and his wife Jeanette took on the task of organizing the show and shine after coming on-

board as an event sponsor last year and forming a committee with Jack and his wife, Janice.

“I am hoping we get all kinds of trucks, any-thing bigger than a pickup truck,” said Buhnai.

“There will be new trucks, old trucks – we’re hoping to get some antique ones; we’re hoping to get some show trucks and everyday working trucks of every kind.

“It would be nice to get some specialized oil-field guys out there – like picker trucks and flushbys and stuff like that. I’ve been contacting every kind of company that we deal with and inviting them out to this thing.

“We’ve got some prizes for working trucks. One of the repair shops in town, Midwest Truck Centre, has donated $1,500 cash and they want it to go to the best working truck – something that’s been well kept.”

First Truck Centre, Kenworth Lloydminster, Frontier Peterbilt Sales, Fountain Tire, G Force Diesel, Fort Garry Industries, C&J Custom Truck Centre and Tigger’s Truck Parts & Rigging are also sponsors of the show and shine.

There may be other sponsors to follow as the clock ticks down and word spreads.

“They are donating stuff like leather seats, chrome exhaust pipes, and what they call a herd bumper – one of the great big aluminum front bumpers that you see,” said Buhnai.

“There’s LED lights and fenders for the back end of the truck.”

Buhnai also expects to see a lot of decked out oilfield trucks at the show and shine.

“We’ve got some real fancy trucks out there hauling oil,” he said.

Page C24

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Page C23 “It’s not like it was years ago. Years ago, the oil

hauling trucks were always dirty and grubby. Now these guys have got stuff that’s all shined up.

“We’re trying the show and shine thing to see if we can attract more trucks.

“The more trucks we get, the more money we raise for cancer. Hopefully, it works really good,” said Buhnai.

Action Towing makes the largest donation to the cause each year and earns the right to enter their huge Tow Mater truck as the first vehicle in the con-voy behind Jack’s red 2006 Western Star lead vehicle.

The 2013 convoy will include a pink truck from Superior Propane’s Pink Truck program that donated more than $53,000 to the Canadian Breast Cancer

Foundation in 2012.Superior donates a portion of a cent from every

litre of propane delivered by one of its highly visible pink trucks across Canada.

The Tony Rossi Convoy for Hope is named in memory of Jack’s brother-in law, Tony Rossi, who died from cancer in 2010.

Last year, the convoy was joined by Jack’s mother, sister and niece, and an aunt and uncle from Scotland.

This year Jack and Janice will honk the horn for the family.

The convoy will depart from its original staging area at the Vermilion weigh scale on Highway 16 at 9:30 a.m. and head west through Vermilion on the truck route.

The trucks will loop back east on the highway toward Lloydminster where there will be a new route in store at the ring road.

“Instead of going north when we get into Lloyd and around the ring road, we’re going to go south and come straight up Highway 17, so more of the residents in Lloyd can see the convoy,” said Jack.

Anyone who misses the convoy could have a chance to watch the view captured from a truck mounted camera on Jack’s truck.

“A film company has approached us. They want to do a small documentary,” said Jack.

“They want to put it out on YouTube and try to get people involved worldwide and help our cause.

“I just got the call a couple of weeks ago from a new company in Lloyd, B & R film productions.”

Lloydminster – It may seem like Christmas in June for those who participate in the 2013 Lloyd-minster Oilmen’s Golf Tournament June 13-15.

For starters, the evening banquet on June 14 will include a full serving of Milk Fed Turkeys per-forming their classic rock playlist for live entertain-ment.

Golfers can also expect better prizes and prod-ucts in their goody bags since this year’s tournament is the 35th annual and marks another special five-year cycle of golfing.

“The big story is the 35th anniversary. It’s one of the premier oilmen’s events in Alberta and Sas-katchewan,” said lead organizer Kevin Simard.

“Every fifth year we do a bit more for the tournament. This year, we are going to have a Tay-lorMade demo hole and we have a few more little things planned.

“It’s just something we like to give back every five years. We try to get more prizes and we get more sponsors involved.

“We have a better meal and we give a little bit more back to the golfers for their entries.

“We don’t like to advertise what we give out, but we always try to give back a little bit more every fifth year,” said Simard.

Proceeds from the tournament also go toward the upkeep of Lloydminster Golf & Curling Centre and various non-profit community organizations.

The 35th anniversary event is limited to 208 golfers, down from 240 in 2012 on purpose.

“We had to work to get 240 last year. It was a little bit slow. This year there is so much more orga-nizing going on for the anniversary,” said Simard.

“It’s just one less headache to drop the entries and make sure we have enough guys on the wait-

ing list to fill any open spot when it comes to the tournament date and we have guys cancel.”

Those who pay their $250 entry fee will have a shot at the popular hat auction to earn a berth in the million dollar hole-in-one chip-off on the final day.

Other contests include a closest to the pin chal-lenge and a putt off.

As usual, there will be all kinds of hidden hole prizes, refreshment holes and special events during the tournament that offers 36 holes of play with 25 flights.

Throw in Calcutta payouts, door prizes, flight

prizes and auction payouts and every oilman heads home with their own gift for Father’s Day on June 16.

The tournament is also held during the U.S. Open golf championship, which puts oilmen dads and golf in the forefront of weekend activities.

“We don’t golf on Sunday, so everyone gets to spend time with their family,” said Simard.

At one time, the tournament was held in July, but it moved to its current slot in June so guys could spend all of their available hot summer week-ends with their kids.

Despite record snowfall this past winter and fears of spring flooding, the Lloydminster golf course opened for play on May 8 ahead of schedule.

“It looks like it came through the winter really well. The fairways are beautiful right now,” said Simard on May 13.

“It will be in excellent shape by the time we need it that’s for sure. It would be nice if we had a couple of really nice days for once.”

Two years ago, a downpour on the final day forced officials to cancel the tournament for the first time it its history and rain fell again last year but play went on.

“I remember they sold out of umbrellas and stuff like that in the clubhouse,” said Simard. “It rained for an hour or two just enough to soak ev-erybody, then it stopped.”

This year, Simard is hoping there is a run on sunscreen and water bottles in the clubhouse.

Simard, a completions supervisor for Canadian Natural Resources Limited in Lloydminster keeps one eye on the weather as spring breakup draws to a close.

Page C26

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“Right now, it’s a little bit slower. We have a lot of wet leases. Some of the work is delayed due to lease conditions and the ground being still pretty wet,” he said.

“By June, we should be up to pretty busy with full productivity go-ing again.”

As for his golf game, Simard got in some early spring rounds in Phoenix, Arizona with a few of his committee members, but none of them will golf in any official flight at the oilmen’s.

“This way, we can keep focused on the tournament and keep it going,” said Simard.

The oilmen will share some of the extra golf carts and equipment that

the city-owned golf course brings in for their tournament as well as for the Scott Hartnell, Clarke MacArthur, Braden Holtby Celebrity Golf Classic on June 24-25.

This year’s classic will be the third and final celebrity golf tournament for the three NHL players who have hockey roots in the Lloydminster area.

The local golf tournament, spon-sored by Fountain Tire, has raised more than $400,000 for local charities in the past two years.

“These two tournaments are prob-ably the biggest ones they have in the summer,” said Simard.

“I know a lot of our golfers play in that tournament as well. With all the guys participating, it’s a big fund-raiser for the course as well.”

... ON THE MARK WITH TARGET

By Geoff Lee

Edmonton – Cana-dian National Railway will spend an additional $100 million on capital expenditures this year to upgrade the Winnipeg to Edmonton line in the wake of a harsh winter that caused service and operational delays.

“We had extreme adversity to deal with and an issue of resil-iency in our corridor between Edmonton and Winnipeg,” said Claude Mongeau, CN’s chief executive.

CN held its an-nual general meeting in Edmonton in late April, and the need to mitigate the impact of an unusu-ally cold and snowy winter was high on the agenda.

“We are dealing with the issue of resil-iency by adding infra-structure and we dealing with adversity by being even more prepared into next year,” commented Mongeau.

CN’s plan to boost

spending by $100 mil-lion brings its 2013 capital expenditure budget to $2 billion.

Improvements to the 797-mile Winni-peg to Edmonton link

should be completed before next winter and add flexibility and some redundancy to the system.

“The plan is to increase capacity on

the line between Win-nipeg and Saskatoon and upgrade our lines between Saskatoon and Edmonton on our Prai-rie North Line so we ship things away from

the main corridor when required,” said Jim Vena, chief operating officer.

The improvements will include turning the Prairie North Line into an alternative detour

to the main line and installing additional double track and new sidings from the Win-nipeg to Saskatoon segment.

Page C29

Page C27

The yard capacity in Winnipeg will also be increased.

CN has taken other measures to try and deal with a prolonged winter to maintain a high level of service commitments.

“We’ve invested in DP (distributed power) operations, snow clear-ing machinery, central-ized recovery operations and increased pipes on the switch heaters and deployed air repeater cars,” said Vena.

“Even with these investments, winter can be mitigated, but it’s tough to knock out.

“When I was head-ing up the Western region, I still remember shutting down the rail-way completely for two days around Edmonton and Winnipeg because of the cold.”

Despite this year’s brutal winter, which slowed train velocity and reduced utilization, CN managed to move

a record volume over its rail network in the first quarter while also real-

izing a revenue gain of five per cent.

“To be able to

handle peak volumes in a difficult winter period is a very posi-

tive statement on our ability to provide value for our customers and

shareholders, despite the challenges,” said Mongeau.

“Our priority is to restore the high service levels our customers expect of us, and from there everything will work and create value for our customers, and continue to create value for our shareholders.

“The outlier (ex-treme climate) impact this winter is something we don’t want to repeat in the future, so we pre-paring ourselves to have stronger service into next year as we speak.

“We are also deter-mined to take advantage of the strong demand that’s in front of us. We do have a good outlook in intermodal in energy market and in bulk market.

“If the economy stays with us, we should be able to come in with the full year in line with guidance and have the back end of the year very strong,” Mongeau said.

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Lloydminster – Atco Electric provided some shock and awe at an open house and barbecue focused on the importance of preventing injuries and ill-ness in the workplace and at home.

A high voltage demonstration by Atco on what can happen when someone contacts a power line helped organizers to deliver their safety message during North American Occupational Safety and Health Week.

The open house during NAOSH week was held on May 11 at Atco’s new building in the Hill Industrial Park. The open house was co-hosted by the Lloydminster Regional Safety Committee.

“It’s great to promote health and safety especially amongst our commu-nity,” said Chris Eskelson, Atco’s health and safety coordinator and a member of the safety committee.

“We are a bigger corporation and I thought we have the resources available to do something like this.

“We have a lot of great products and services among all of our different vendors.

“We thought it would be a good opportunity for Atco to contribute to the community and to many businesses in Lloyd.”

Atco also wanted to promote the “Where’s the Line Campaign?” to urge oilfield, construction and transport companies and homeowners to contact them for underground power line locates or for high load moves.

SGI, Alberta Health Services, the Alberta Construction Safety Associa-tion, the United Way and the Lloydminster and Area Brain Injury Society were among the organizations on hand with safety displays.

Safety information from the City of Lloydminster, the Thorpe Recovery Centre and Precision Contractors among others was was also on display inside Atco’s truck shop.

Target Safety Services’ barbecue was the most popular gathering point along with their mobile confined space entry simulator.

Page C31

Page C30

“We allow the public to take in some training so they can understand what’s it’s like to be inside a confined space and the required training to do it safely,” said Clint McKinlay, who was at his com-pany’s information booth.

“We also provided our barbecue to keep people fed and happy.”

McKinlay said safety should always be in the back of a person’s mind whether they are barbecu-ing at home or waterskiing or working on the job.

Target Safety came to the event having just completed a safety contract for a major turnaround at the Husky Refinery that began in April.

“Today, we are rigging our last pieces of equip-ment. It all went very well. I think all of the safety initiatives were achieved that Husky set for us,” said McKinlay.

Target has also secured the safety contract for an upcoming 45-day maintenance turnaround at the Lloydminster Husky Upgrader starting in September.

The growing safety company has booked a product and services booth at the Bonnyville & District Oil Show June 19-20.

“Our Bonnyville area is very active and we want to increase that,” said McKinlay.

“We are partaking in that again to not only raise awareness from Target Safety’s perspective, but safety in general.”

In Lloydminster, construction is finally under-way on Target’s new head office that is located in the Robinson Industrial Park to serve their loca-tions in Red Deer and Bonnyville and Edmonton.

The new headquarters will be have over 14,000 sq. ft. of space, nearly double the size of their exist-ing building with a move-in target of November 2013.

Atco’s 63,000 sq. ft. facility opened last October and provides a base for more than 100 employees under one roof. The area provided plenty of inside shop space for the NAOSH exhibitors.

“We’re glad to be a part of what Atco’s ar-ranged here in terms of NAOSH Week and raising the awareness in the community and spreading the message,” said McKinlay.

Bonnyville – The 2013 Bonnyville & District Oil and Gas Show scheduled for June 19-20 could be the right time and the right place for He-lix Oilfield to expand their business contacts with regional oil and gas activity on the uptick.

That’s what they did during the first show in 2011 as a start-up company. Helix has now outgrown its business location on 55th Avenue and is planning to relocate to a new shop this year in the Hammons Industrial Park.

Shawn St. Denis, the principle owner of Helix Oilfield, is counting down the days to this year’s show with slightly different objectives in mind for his growing company.

“Our goal is to do a bit of networking and get the word out here, and maybe pick up some new employees. That’s always been an issue,” he said.

“We’ve got a little display set up and we’ll have some brochures and stuff. The majority of companies around here know our services. Most of what we’ll have would be for newer companies coming into the area.”

Helix is a niche oilfield service company that provides everything from on-site machining and cold cut-

ting of pipe, to flange weld hydro-testing and hy-

draulic torquing.They also have the equipment and the expertise to handle stress relieving

and conduct preheating and post-weld heat treating on pipe welds in the field.“Most of our work is on site. We have a couple of stress relieving units and

we have our crew trucks that we send out with the equipment for doing the mobile pipe cutting,” said St. Denis.

“It’s fairly busy. It’s pretty steady. There’s a lot of oilfield activity in the area.”

Companies such as Cenovus Energy, Imperial Oil Ltd. and Osum Oil Sands Corp. are generating work by developing or expanding heavy oil

thermal projects in the region. “There’s a lot of future work coming up. It’s all steam up here,”

said St. Denis.“The nice thing for us and the bad thing for the oil

companies is the water they use is pretty abrasive stuff. There’s a lot of wear and a lot of replace-

ment happening all the time.”Enbridge is expected to

begin construction this sum-mer on its Athabasca crude oil pipeline twinning project east of Bonnyville, and that could provide some work for Helix.

“We bid on some of the torquing and tensioning on the

line, but for the majority of that type of line, they don’t really use a lot of our services for that,” said St. Denis.

Page C33

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Page C32Preheat and post-

weld heat treatments are the leading services Helix provides for above ground steam pipelines and facilities in the area.

Both functions are performed by Helix’s six to 24-zone portable self-contained preheat and post-weld stress relief units and four two-man crews.

In order to com-ply with welding procedures, the pipe temperature is artifi -cially maintained using ceramic pads.

“Preheating just gives them a more consistent heat on the welds,” explained St. Denis.

“Th e old fashioned way was a guy with a torch warming it up and using a ‘temp stick’ to measure the tempera-ture.

“Th is way, it’s heated up accurately and the customer gets a printout afterwards of the temperatures that the weld reached.”

Th e ceramic pads are wrapped on both sides of the weld and attached to thermo-couples which control and record the tempera-ture of the pipe and the weld.

“When we are stress relieving, it will be any-where from a four to a six- to eight-hour cycle to post heat weld,” said St. Denis.

“A lot of the boilers – when they are replac-ing pipe – we stress relieve the welds after they are welded.

“Th e main purpose is to soften the welds after it’s been welded. When you heat it up to almost melting point, it realigns the molecules in the two metals.”

Helix also has the ability to provide on-site fl ange weld hydro-testing with very little water, and without having to test the whole line.

“Th ere’s just a cup or two of fl uid rather than testing the whole line or the whole sys-tem.

“We can go in and isolate and just fi nd the weld and pressure test the weld and the fi t-ting,” said St. Denis.

“It saves the com-pany a lot of time and money.”

Helix is looking at acquiring equipment that would hydro-test an entire system of lines.

Th ey could lean in that direction depend-ing on customer feed-back from this year’s oil show. It was customer feedback that steered them in the right direc-tion during the 2011 show.

“It was good. It was our fi rst year in business, so we were just start-ing out then,” said St. Denis.

“It was a good way to get our name out in a hurry.”

Th e 2013 oil show will once again feature the Oilmen’s Room Re-verse Tradeshow which off ers exhibitors the opportunity to procure business with major oil and gas companies in the area.

“We were able to attend the meet and greets in 2011 and meet some of the important people in the oil com-panies rather knocking on doors,” said St. Denis who may do the same this year.

“We have four crews and eight employ-ees. Everybody’s chasing the same workers. A lot

of our work is day to day stuff , so if we have some steadier projects, it would be a little easy to hire more guys and keep them on,” he said.

St. Denis started Helix Oilfi eld with two partners in February 2011 after managing a local company that basi-cally did the same thing.

“An opportunity came up for me and it was hard to turn it down. Th ings are going all right,” he said with a smile.

“It’s pretty busy right now and some-times it’s slow depend-ing on the season.”

May to June is busy as are the months of September and Octo-ber when maintenance turnarounds scheduled at thermal oil sites in the region.

“Our slow times are at Christmas and in July and August,” said St. Denis.

Th e Helix brochure that will be available at the oil show points out the company’s commit-ment to service, safety and their ability to solve problems.

Th ey also have some of the best tools in the business, including custom hydro-test plugs with double seals, nut splitters, 24-zone stress units and split frame cold cutters for any diameter pipe.

Th e tool box also includes tensioners, and hydraulic bolt up gear for any size stud or nut along with cold tapping and refacing equipment.

Helix employ-ees will be available to answer questions at their booth in the Cenovus Arena inside the Centennial Centre throughout the oil and gas show.

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It was a busy fi rst quarter for Renegade Pe-troleum Ltd., which drilled and completed 24 net wells, increased production 114 per cent compared to the same time frame last year, and initiated a strategic review to enhance shareholder value.

For the three months ended March 31, 2013, Renegade achieved an average production of 7,816 boepd, which is a 114 per cent improvement from the same three-month period last year. Production consisted of 95 per cent light oil and fi ve per cent natural gas and natural gas liquids.

While the company experienced a fi rst-quarter net loss of $5.38 million in 2013 compared to a net profi t of $236,000 for the same time frame in 2012,

Renegade achieved fi rst-quarter revenue at $56.86 million in 2013, which is 105 per cent higher than during the same three-month period last year.

Th e net loss resulted from increases in non-cash expenses including exploration and evaluation expense, share-based compensation expense, and depletion and depreciation expense.

Renegade’s capital spending totalled $35.13 million during the fi rst quarter of 2013, compared with $59.76 million during the same time frame in 2012. Th e company’s board-approved capital development budget for 2013 is set at approximately $79.6 million, whereas in 2012 the budget was set at $76 million, but was eventually increased to $130 million.

Th e decrease in capital expenditures in 2013 re-sults from a reduction in the company’s 2013 capital program compared to 2012 because of Renegade’s transition to an income-plus-growth dividend-paying corporation.

During the fi rst quarter of 2013, the company brought 22 (22.0 net) Viking wells on stream in west-central Saskatchewan with a 100 per cent suc-cess rate. Of the 22 net wells brought on stream, the average 30-day initial production rate of 17 (17.0 net) wells was 55 bpd, exceeding the company type curve by 12 per cent.

In addition, Renegade has fi ve (5.0 net) wells scheduled for optimization operations post breakup. Th e company drilled four (2.0 net) wells in south-

eastern Saskatchewan in the fi rst quarter, achieving a 75 per cent success rate. Of the wells drilled, one (0.5 net) had a 30-day initial production rate of 130 bpd and a 60-day initial production rate of 127 bpd.

Two (1.0 net) wells were awaiting further stimulation post-breakup and the company expects to abandon one (0.5 net) well. Th e company also disposed of non-core petroleum and natural gas properties during the quarter for net proceeds of ap-proximately $12.8 million.

According to a news release accompanying Renegade’s fi rst quarter fi nancial results for 2013, drilling activity in the quarter demonstrated the company’s ability to successfully delineate and develop high quality, light oil-focused assets, with southeastern Saskatchewan assets acquired in late 2012 performing as anticipated.

With full technical evaluations on over 90 loca-tions, Renegade management believes the company is well positioned to start its drilling program on the acquired southeastern Saskatchewan assets with a stable inventory of low-risk locations, with drilling on those assets to begin post spring breakup.

However, after reviewing the impact of the previously disclosed reduced production from the Redvers area in combination with a potentially long breakup, the company expects 2013 annual pro-duction to average between 7,400 to 7,700 boepd. While weather conditions in Saskatchewan have improved considerably over the early part of May, the company believed it is too early to determine whether breakup conditions will return to historical norms.

Th e company is attempting to minimize poten-tial impacts of spring breakup by strategically plac-ing service rigs throughout the fi eld in southeastern Saskatchewan, ensuring repair and maintenance de-lays are minimized. Additionally, most facilities and infrastructure associated with the assets Renegade acquired in late 2012 are tied into sales pipelines, which management believes should also mitigate production downtime.

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Calgary – There will be no early summer con-struction start this year on TransCanada Corpora-tion’s proposed Keystone XL pipeline that will carry 830,000 barrels of crude oil a day from Western Canada to U.S. Gulf Coast refineries.

Continued delays in U.S. government approval of the pipeline have prompted TransCanada to push back its projected in-service date from late 2014 or early 2015 to mid 2015.

The next step is for the State Department to complete its review of public comments on the Draft Supplemental Environmental Impact State-ment (DSEIS), then publish a Final Environmental Impact Statement (FEIS) on the project.

The FEIS will trigger another round of public comment at the same time as the State Department consults with other agencies to determine if the project is in the U.S. national interest.

Then it’s up to President Barack Obama to issue or deny a permit to build the pipeline from Mon-tana to Nebraska.

The State Department however, only started its review of public comments on the DSEIS on April 22 when the comment window closed.

The approval processes yet to come rule out an early construction season for laying pipe in the ground and sets back TransCanada’s start-up target date.

The company has said it requires two full sum-mer seasons to get the pipe in the ground along the full 1,897-kilometre route from Hardisty, Alta. to Steele City, Neb.

Work on the southern leg of the Gulf Coast pipeline section of the Keystone XL project from Oklahoma to Texas however, is 70 per cent com-plete and is expected to be service by the end of 2013.

TransCanada’s president and chief executive officer Russ Girling commented on the regulatory timeline for Keystone XL during the company’s first quarter conference call from Calgary on April 26.

“We are now into the 67th month of the Key-

stone approval process and unfortunately continued delays in permitting continue to have an impact on both our schedules and our costs,” said Girling.

“Based on our current assessment of the timing of the permit, we currently anticipate the pipeline could become operational in the second half of 2015,” he said.

“The project remains very much in the interest of the U.S. We remain confident that it will receive regulatory approval and be constructed.”

TransCanada previously anticipated a late 2014 or early 2015 start-up based on an expected on re-ceiving regulatory approval in the first half of 2013.

The project delay is also expected to push up the recent $5.4 billion cost estimate, but Girling told reporters that it was too early to determine what that amount actual would be.

TransCanada has ready invested about US$1.8 billion in the project while waiting for U.S. approval to build the Montana to Nebraska link.

Canada’s National Energy Board approved the Canadian portion of the Keystone XL from Hard-isty Alta. to Monchy, Sask. in 2009.

Meanwhile, construction on the US$2.3 billion Gulf Coast pipeline is proceeding well and will have an initial capacity of 700,000 bpd of crude oil.

“Since starting construction last August, we have created jobs for 4,000 Americans who are building this pipeline,” said Girling.

“The demand for this project is clear. U.S. pro-duction has been growing significantly in states such as Oklahoma, Texas, North Dakota and Montana.

“Producers do not have sufficient access to pipe-line capacity to move this production to the large refining market in the U.S. Gulf Coast.

“The Gulf Coast project will address that con-

straint and allow U.S. refineries to access lower cost domestic production.”

Construction of the associated US$300 million Houston lateral to transport crude oil to Houston refineries is expected to begin construction in mid 2013 and be completed by mid 2014.

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Qualifications required:• Valid Class 3 or 1 license with Air endorsement• 2+ years driving experience in an asset• Oilfield experience is an asset

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EXPERIENCED POWER TONG OPERATORS

WANTED4 Star Ventures is currently hiring

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Sandblasters & Painters• Previous blasting experience is preferred.• Preference will be given to candidates with prior experience in applying internal coating.

• Pre-Employment drug testing is mandatory.

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Documents

Pipeline News June 2013