PLANT WEST November/December 2012

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Volume 7, No. 04 November/December 2012

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NORTHERN GATEWAY:

IT’S MORE THAN OIL How it will boost manufacturing while diversifying exports

NEW TECHNOLOGY SECTION

PM 40069240

HIGHLIGHTS

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Oil sands: Sharing the wealth Syncrude plan turns mine pits into habitats UBC R&D turns on wireless EV charger Sysco gets tough on energy costs 12-12-06 7:40 AM

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Editorial

Random drug and alcohol testing: too random

COVER IMAGE: THINKSTOCK

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uncor Energy has been dealing with drug and alcohol use on work sites by applying random tests, but it has been prevented from continuing with its program after an Alberta Court of Appeal dismissed the company’s efforts to overturn an injunction won by the Communications, Energy and Paperworkers union.

Random testing is also being challenged in a Supreme Court of Canada case involving the Irving Pulp & Paper Ltd. and the same union, one that could have implications for employers across Canada.

The union sees this as a human rights issue, and two of the three judges in the Suncor case agreed privacy was a concern. In their decision, the judges called the testing “a significant breach of worker’s rights.”

But Suncor is framing this as an important safety issue, insisting random testing is essential because of the dangers impaired workers present to themselves and others.

The central issue is, does safety trump privacy? The answer hinges on whether or not random testing is sufficiently preventive to warrant such a personal intrusion.

The Canadian Human Rights Act prohibits random and pre-employment alcohol and drug tests except when “incapacity due to drug or alcohol impairment could result in direct and significant risk of injury to the employee, others or the environment.”

As the dissenting judge noted, Suncor’s oil sands site presents such a hazardous environment, so safety concerns should trump privacy rights. After all, it only took one intoxicated man to cause the Exxon Valdez incident, he noted.

For Suncor, the matter is straightforward. As reported in a Globe and Mail article, there have been numerous incidents involving illegal drugs and alcohol at its sites: 100 from 2010 to 2012. It cited evidence that included cocaine use among heavy-equipment operators; marijuana found on a person, in a locker room and in the maintenance room of an upgrader; crack-cocaine found on site; and a bottle of vodka found at a mine.

Suncor’s plan would involve roughly 1,445 tests each year. The company, which employs 3,400 unionized oil sands workers, has performed tests on individuals prior to hiring and after involvement in a safety incident. The score since 2009? So far 413 postincident tests, 36 employees caught.

See the problem here? These are “post incident” catches. Is random testing the empty public relations gesture some critics are calling it?

Not necessarily. It will make some think twice about getting loaded on the job, but not the hardcore user, like a heavy equipment operator who is not randomly tested the day he knocks something big over that crushes a bystander.

Preventing the drug or alcohol use is a more effective focus. Mandatory training and education for workers and supervisors is key. Remind everyone regularly of the dangers posed by drug and alcohol impairment on the worksite.

Workers feel their privacy is being violated when they are asked to pee in a cup, but they likely know the people who are violating the rules. A culture of safety must include no tolerance for impairment. Everyone on the job site should be aware of signs and symptoms and encouraged to report them to supervisors.

The courts will determine the validity of the privacy issue, but all industrial employers would be wise to reinforce their safety programs with substance use and abuse measures that aim to prevent calamities, rather than banking too heavily on the randomness of random testing.

Joe Terrett, Editor Comments? E-mail jterrett@plant.ca.

Vol. 7, No. 04, November/December 2012 A supplement to PLANT Executive Publisher: Tim Dimopoulos 416-510-5100 tdimopoulos@bizinfogroup.ca Publisher: Michael King 416-510-5107 mking@plant.ca, mking@cienmagazine.com

District Sales Managers: Amanda Bottomley 416-859-4527 abottomley@canadianmanufacturing.com Catherine Martineau (Quebec) 647-988-5559 cmartineau@bizinfogroup.ca Deborah St. Lawrence 416-510-6844 dstLawrence@canadianmanufacturing.com Derek Morrison 416-510-5224 dmorrison@canadianmanufacturing.com Ilana Fawcett 416-510-5202 ifawcett@canadianmanufacturing.com

Group Editorial Director: Lisa Wichmann 416-510-5101 lwichmann@canadianmanufacturing.com

Market Production: Barb Vowles 416-510-5103 vowlesb@bizinfogroup.ca

Editor: Joe Terrett 416-442-5600 ext. 3219 jterrett@plant.ca

Circulation Manager: Diane Rakoff 416-510-5216 drakoff@bizinfogroup.ca

Assistant Editor: Matt Powell 416-510-5145 mpowell@plant.ca

Editorial Advisory Board: Robert Hattin, Hattin Holdings • Ron Harper, Cogent Power • Greg MacDonald, Wentworth International Services • Roy Verstraete, Anchor Danly

Contributing Editors: Ron Richardson, Steve Gahbauer Art Director: Kathy Smith 416-442-5600 ext. 3215 ksmith@plant.ca

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BIG MAGAZINES LP Vice-President of Canadian Publishing: Alex Papanou President of Business Information Group: Bruce Creighton

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Features

>> TRENDS 6

ENERGY There’s more to the Northern Gateway project than oil. It will provide a boost to energy exports and give manufacturers a lift.

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OIL SANDS DEVELOPMENT A Conference Board of Canada report shows oil sands investment impacts provincial and national economies – in a good way.

EXPORTING A Fraser Institute report says governments need to cut red tape tying up BC’s LNG exports.

>> SUSTAINABILITY 9

RECLAMATION When mining pits reach maturity, Syncrude is betting its End Pit project will return them to natural state.

>> INNOVATION

10 ELECTRIC VEHICLES UBC is testing a wireless battery charger that it hopes will make electric vehicle power easier to replenish.

FUEL CELLS Nokia Siemens Networks and Ballard Power Systems are developing mobile power networks that will operate during power blackouts.

>> OPERATIONS

11 MAINTENANCE Define a maintenance strategy based on corporate objectives to ensure production capacity.

ENERGY MANAGEMENT Sysco’s aggressive program at 17 of its facilities across Canada is yielding significant savings.

>> MANAGEMENT

12 BANKRUPTCY When a customer or supplier gets into financial trouble, there are steps you can take to deal with the impact on your business.

>> TECHNOLOGY

13 PRODUCTS AND EQUIPMENT What’s new in industrial products, machinery and equipment.

Departments 4 Industry View PLANT Pulse

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5 Events Careers 14 Postscript

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publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. Publications Mail Agreement #40069240. Performance claims for products listed in this issue are made by contributing manufacturers and agencies.

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Departments

>> Industry View

>> Western Pulse MANUFACTURING SALES

$ billions 1 56 54 52 50 48 46 44 42 40 38 36 34 32 30 S J J 2007 2008

1. seasonally adjusted

Current dollars 2002 constant dollars 2009

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A gain of 0.4% brought sales to $49.8 billion.

MORE SOLD IN SEPTEMBER Manufacturing sales advanced overall 0.4% to $49.8 billion in September and were up in three provinces, according to Statistics Canada.

Quebec sales grew 4.2% to $11.6 billion thanks to a strong performance by aerospace products and parts. However, without the aerospace component, total Canadian sales would be down 0.7%.

Alberta recorded an increase of 1.9% to $6.4 billion, thanks to gains in the petroleum and coal product industry, although lower sales in the machinery and food industries offset a portion of that growth.

Manufacturers in Manitoba reported a 3.7% advance to $1.3 billion, reflecting higher sales in the durable goods industries.

BC’s sales were down 1.2% followed by Saskatchewan, which saw a decline of 0.5%.

Sales rose in eight of 21 industries. Durable goods were up 1.1% to $25.8 billion, while nondurable goods sales decreased 0.4% to $24 billion.

UNFILLED JOBS ROSE IN Q2 The percentage of unfilled private sector jobs has increased slightly from 2.3% to 2.4% in the July-to-September period, equivalent to approximately 275,900 full- and part-time jobs, according to data compiled by the Canadian Federation of Independent Business (CFIB).

Overall, the vacancy rate has risen from 1.7% at the end of 2009, although it’s still down from where it was before the recession.

Provincially, Alberta and Saskatchewan have the highest vacancy rates (3.6% each), while Newfoundland and Labrador (2.8%) is also above the national average. Quebec (2.4%), PEI (2.2%), Ontario (2.1%), Manitoba (2.1%), BC (2.1), Nova Scotia (1.9%) and New Brunswick (1.8%) match, or fall short of the overall rate.

The CFIB says Canada’s construction industry has the country’s highest vacancy rate at 3.7%. Manufacturing is 2.1% and other sectors display current levels that are at or beyond their pre-recession highs.

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New NG tanks boost truck engine range Westport tanks run up to 750 kilometres, reduce costs

VANCOUVER: Westport Innovations Inc. has developed an on-board storage system for vehicles powered by liquefied natural gas (LNG).

The LNG Tank System will be available in 545- and 680-litre capacities and is optimized for spark-ignited (SI) engines.

The Vancouver-based manufacturer of natural gas engines for trucks expects to start shipping the systems by mid-2013.

Current industry standard systems require two LNG tanks to operate effectively with larger SI engines and require Cryogenic refuelling connection to an LNG storage tank.

PHOTO: WESTPORT saturated LNG. Westport’s single-tank cold LNG, which increases fuel storage times and system reduces overall fuel system costs improves vehicle range by up to 10%. and weight.

The company says the system will integrate A single 680-litre tank system replaces three with most OEM configurations. standard CNG tanks, lowering fuel storage costs “Our early production systems tested with the and reducing overall vehicle weight by approxiCummins Westport ISX12 G in a Peterbilt 384 mately 270 kilograms. truck have proven to have excellent performance Westport expects the 680-litre tanks to run characteristics and superior operating results on a for up to 750 kilometres on cold (unsaturated) single tank,” said Steve Anderson, vice-president LNG fuel. Those ranges double with dual-tank of business development for Westport. configurations. The system also stores warm and

Buy American would shut out Canadian suppliers Manufacturers of iron and steel products will be hurt: CME OTTAWA: Buy American provisions before US Congress have potential to shut Canadian companies out of $115 billion in supplier opportunities for water infrastructure projects funded by the US government, according to Canadian Manufacturers & Exporters (CME).

“The legislation sets a dangerous precedent applying Buy American restrictions to current as well as future infrastructure funding,” said CME president and CEO, Jayson Myers.

He said legislation would definitely hurt Canadian manufacturers of iron and steel products used in water projects, and also hurt US communities by eliminating critical competitive products at a time when there’s high demand for US water infrastructure rebuilding.

“The legislation sets a dangerous precedent …,” says Jayson Myers. PHOTO: CME

“We are afraid the legislation will set a precedent for other sectors of federally funded infrastructure,” Myers said. “Protectionist measures that restrict

Canadian market access to US infrastructure projects are already leading to demands for similar restrictions in Canada.”

The legislation will weaken manufacturing competitiveness on both sides of the Canada-US border, he adds.

The proposed restrictions on future water and wastewater projects funded by the US federal government would require all iron and steel – including equipment produced from those materials – to be Americanmade.

“We are going in the wrong direction with procurement restrictions at a time when neither country can afford it,” warned Myers. “We should instead be working together towards a joint content rule for procurement spending.”

Titanium patent creates value from tailings

EDMONTON: The Canadian Patent Office has issued a patent to Titanium Corp. Inc. for removal of bitumen from heavy mineral concentrates.

The Edmonton-based oil sands technology company said the patent relates to its Creating Value from Waste technology. Other patents related to the recovery of bitumen and solvents from oil sands froth treatment tailings have passed the review process and are to be issued within the next few months.

Titanium said the technology will lead to diversification of the oil sands through the recovery of heavy minerals and bitumen contained in the waste tailings streams from operations near Fort McMurray, Alta.

The recovered material will have both a commercial and environmental benefit. Titanium said the lost bitumen from tailings streams will increase recovery of the resource by 2% to 3%. Emissions of volatile organic compounds, green house gases and nitrous oxides are also “significantly” reduced.

Recovered minerals offer export possibilities too. For example, Titanium said prices for zircon, a heavy mineral in short supply used in zircon flour, ceramics and chemicals, have been escalating.

The company has completed a highly successful one-year demonstration pilot for three oil sands operators.

It will use two processing facilities in Fort McMurray to treat the recovered material. A hydrocarbon and water recovery plant will produce a heavy mineral concentrate that will be separated at a another plant into final products: ilmenite, leucoxene and zircon.

Any tailings and waste products will be returned to existing tailings ponds.

$1.55B for halfshare of Celtic acquisition CALGARY: Imperial Oil is taking a 50% ownership stake of $1.55 billion with ExxonMobil Canada Ltd. for 100% Celtic Exploration Ltd. The acquisition is conditional on approval by Celtic Exploration’s shareholders and Canadian regulatory authorities.

“This acquisition will allow Imperial to diversify its strong resource base in Canada with an attractive liquids-rich natural gas play” said Bruce March, chairman and CEO of Imperial Oil. The two companies will acquire 545,000 net acres in the liquids-rich Montney shale, 104,000 net acres in the Duvernay shale and additional acreage in other areas of Alberta.

Current production is 72 million cubic feet per day of natural gas and 4,000 barrels per day of condensate and natural gas liquids.

Calgary-based Celtic Exploration estimates the assets include 128 million oil equivalent barrels of proved and probable reserves, of which 24% are condensate and natural gas liquids and 76% natural gas.

Imperial Oil is a petroleum producer and retailer based in Calgary.

20% of employees are depressed WINNIPEG: More than one in five Canadian employees is depressed, according to a national survey by Great-West Life.

The Ipsos Reid survey commissioned by the Great-West Life Centre for Mental Health in the Workplace says 22% of employees report they are suffering from depression, 14% are diagnosed and 16% have experienced depression in the past Managers and supervisors were also surveyed and 84% of them continue to believe it is part of their job to intervene when an employee is showing signs of depression. This is comparable to findings from a 2007 survey.

In 2007, only one in five had received any training on how to intervene with emotionally distressed employees; now one third do.

However, nearly two thirds of managers are still seeking better training to address this type of situation. Great-West Life said managers are asking for more support and flexibility.

The survey results include responses from 4,307 non-management employees and 2,317 managers and supervisors.

November/December 2012

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Industry View << Departments

NAIT launches trades to degrees initiative

Certified tradespeople can enter third year of polytechnic’s program EDMONTON: NAIT is responding to a need in Alberta for tradespeople who have managerial, leadership and entrepreneurial skills with one of the first pathways in North America to allow certified tradespeople to move directly from a certificate to the third year of a degree program.

The Edmonton-based polytechnic’s Trades to Degrees program was launched in September through NAIT’s JR Shaw School of Business, with 22 students comprised mostly of NAIT instructors, who are helping to shape and define the pathway. New applications will be accepted for the fall of 2013.

>> Events The Works 2013 Acklands Grainger Jan. 16-17, Calgary Special annual trade show for Acklands Grainger customers in Canada. Visit www.acklandsgrainger.com.

Automate 2013 Association for Advancing Automation Jan. 21-24, Chicago A showcase of automation technologies presented by the Association for Advancing Automation and its trade associations, the Robotic Industries Association, AIA, the global association for vision and imaging, and the Motion Control Association. Visit http://automate2013.com.

Plant Visit: Black & McDonald Ltd. Innovation Insights/CME Feb. 21, Vancouver Learn about: how Black & McDonald designs and manufactures refrigeration systems; operating and maintaining HVAC and refrigeration systems, process gas equipment, combustion efficiency and building controls; and facility management. Presented

by Innovations Insights and Canadian Manufacturers & Exporters (CME). Visit http://www.tvp-ii.org/ en/events.

LNDT in Canada 2013 CINDE/CANSMART/IZFP October 7-10, Calgary International Workshop on Smart Materials and Structures, SHM and NDT for the Energy Industry, presented by the Canadian Institute for NDE (CINDE), The Cansmart Group (CANSMART), and the Fraunhofer Institute for Nondestructive Testing (IZFP).

Visit http://events.cinde.ca.

Welders can now turn experience into academic credit.

PHOTO: THINKSTOCK/Digital Vision

Previously, people with trades certification had few opportuni-

ties to turn additional education and experience into academic credit.

“By providing a direct pathway from trades certification to a degree, we’re acknowledging the work experience and post-secondary education that led to certification,” said Glenn Feltham, NAIT president and CEO. NAIT offers degree programs in business (BBA), now included in the pathway, and technology (BTech), but it’s also developing a program in construction management.

Eventually the pathway will be expanded to include the other degree programs.

Profitability edges up for wood products: Conference Board Index shows other industries lagging OTTAWA: The outlook for profits is improving for one segment of the manufacturing sector but sagging for others, according to a Conference Board of Canada index for September.

The Ottawa think tank’s Leading Indicator of Industry Profitability rose by 0.2% to 103.2, only the third gain in the past 16 months bringing the overall index to its highest level in 11 months, but below where it was one year earlier.

The Conference Board says profit performance is in line with a stalling Canadian economy weighed down by the recession in much of Europe, a weak economic recovery in the US and slowing growth in China.

However, there is “considerable variation” in performance among various industries.

An improving US housing market and China’s appetite for wood has meant gains in five of the past six months for wood products manufacturers. In July, the value of Canadian exports to all countries increased 20% from 2011 to $800 million. The Confer-

ence Board said exports to the US surged 41% compared with the same month last year.

Analyst Lin Ai says wood product prices have also increased, reaching their highest level since February 2007. Tighter supplies because of the mountain pine beetle infestation in BC and provincial restrictions in the annual allowable cuts in Ontario and Quebec should lead to even higher prices later this fall and into next year.

Agriculture and forestry, gas extraction, chemical manufacturing, computer and electronic product manufacturing, food and beverage stores, telecommunications and other financial services are below where they stood a year ago.

Ai notes gas extraction has been dealing with tough market conditions; and chemical manufacturing has lost considerable ground recently because of a slowing global economy.

Exports of chemical products to the US have declined by 12% since April.

>> Careers Jeff Morton has joined the Technology and Intellectual Property Practice groups of Clark Wilson LLP. The Vancouverbased law firm said Morton worked for several years as a lawyer and registered trademark agent for a leading national IP boutique.

Blair Rosquist has been appointed to the boards of directors and appointed to the audit committees of FNR Energy Limited Partnerships, an energy development group based in Saskatoon. He is currently vice-president of geology and geophysics with Conserve Oil Corp., a private oil and gas company. Rowquist replaces Bradley Munro.

Redtail Metals Corp., a precious metals developer based in Vancouver, has appointed Natasha Tsai CFO. She comes from Arriba Resources Inc. and was previously the corporate controller of Dejour Energy Inc., a junior oil and gas company.

Ståle Tungesvik has taken over as president of Statoil ASA’s Canadian operations in Calgary, replacing Lars Christian Bacher who has been appointed executive vice-president for Statoil’s Development and Production International. Tungesvik, previously a senior vice-president of the Norwegian energy company, is responsible for development and production activities both within Alberta’s oil sands and offshore.

International Forest Products Ltd. (Interfor) in Vancouver has appointed Andrew Mittag and Scott Thomson to its board of directors. Mittag is senior vice-president of fertilizer producer Agrium Inc. and president of Agrium Advanced Technologies. Thomson is executive vice-president, finance and CFO of Talisman Energy Inc. Imara Energy Corp. has appointed Samuel Jonah chairman of its board. He is currently executive chairman of Jonah Capital (Pty) Ltd., an investment holding company in South Africa. Imara is a Vancouver-based developer of upstream oil and gas resources.

Athabasca Minerals Inc., an Edmonton-based resource company, has appointed David McAlpine vice-president of operations. He will be responsible for activities related to the development of frac sand and aggregate operations. Chris Hale is manager of regulatory affairs, responsible for the coordination and management of resource development applications and reclamation. McAlpine was previously a senior executive at Sil Industrial Minerals. Hale was a senior environmental specialist with the Alberta Energy Resources Conservation Board.

$1.7M for aero tech centre

WINNIPEG: Red River College in Winnipeg is getting almost $1.7 million through the federal CCI Program to establish the A2I2: Advanced Aerospace Innovation Initiative.

The new technology access centre will help aerospace companies improve their products. Businesses will be provided with research expertise, White training support, and access to the latest technologies, plus access to the college’s state-of-the-art equipment.

The CCI Program is managed by the Natural Sciences and Engineering Research Council of Canada (NSERC), in collaboration with the Canadian Institutes of Health Research and the Social Sciences and Humanities Research Council of Canada.

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Trends

>> Energy

Building the pipeline will diversify Canada’s energy markets and give the GDP a considerable boost.

BY MATT POWELL, ASSISTANT EDITOR

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s the economic engine powering Canada’s economy shifts from manufacturing in Ontario to energy in the West, the Harper government is placing a much greater emphasis on diversifying exports of Alberta’s oil sands production.

Despite critics from all over the world who call Alberta’s resource “dirty oil,” there is a thirst for energy in emerging economies such as China and India.

And the need for Canada to diversify its markets is becoming even more acute with the resistance to the Keystone XL pipeline in the US and the likelihood demand for Canadian energy there will decline as the country develops its own energy resources.

The Harper government is betting on Enbridge’s $5.5 billion Northern Gateway to help Canada bust out to far eastern markets, but the Calgary company has to wade through political and environmental obstacles as thick and gooey as the heavy crude and condensate the pipeline would carry. There is much work to do before oil sands production flows to the BC coast and is shipped by super tanker to Asia.

The project has been in approval purgatory since May 2010 with envirocritics citing concerns about the fragile forests of BC’s interior and the hard-tomanoeuvre seaway from Kitimat, BC’s marine terminal. First Nations oppose a pipeline crossing their lands, and BC premier Christy Clark is manoeuvring for a bigger share of the profits. Add to that a recent 10-week extension tacked onto the project’s National Energy Board.

Looking beyond all the huffing and puffing from politicians and other interested groups, what’s in it for Canadian manufacturers, particularly those closely placed in the West?

To start, there would be millions of dollars worth of contracts for manufactured inputs, such as valves and pipes, and boosted demand for heavy equipment, trucks and other vehicles during the building and throughout the pipeline’s 30year lifetime. Enbridge claims the pipeline would require $35 million in manufactured goods, such as tubular pipe, pressure vessels and pumps, just in central BC. Jean Michel Laurin says manufacturers here won’t be left out of the mix.

“I have no doubt it’s going to be a fairly open market to provide companies bidding on contracts a level playing field,” says Laurin, president of global policy at Canadian Manufacturers & Exporters (CME).

Indeed, Alberta is a place Canada’s manufacturers need to be.

“The resources sector has been driving growth in manufacturing, it’s what kept a lot of those companies afloat since the recession,” says Laurin. “Companies are asking ‘where’s the growth?’ It’s in the natural resources and energy sector.”

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Opening the

NORTHERN GATEWAY WHAT’S IN IT FOR MANUFACTURING? Ontario, in particular, would benefit significantly according to Robert Mansell, an economist at the University of Calgary.

“When there’s expansion in the Canadian economy, a lot of that goes back to Ontario because there’s a lot made there.

Increased sales of cars, trucks and heavy equipment are the result of expansion in the resource sector.”

Enbridge’s twin-pipeline project would carry up to 525,000 barrels oil sands heavy crude and condensate 1,177 kilometres from Bruderheim, Alta. to a marine terminal in Kitimat, BC each day.

The proposed terminal includes two ship berths and 14 reserve tanks for excess oil and condensate supplies. Enbridge, pending approval, hopes to have the pipeline online by 2016.

Should the project be approved by 2013, it would create more than 1,000 jobs and generate upwards of $80 billion in tax revenues throughout its 30-year lifetime.

The project may even be gathering support from unexpected allies; provinces looking for a boost from the oil sands.

Ontario’s premier Dalton McGuinty has blamed natural resource development for stifling the manufacturing sector, but the province is in the process of adding more staff at its Alberta trade office to facilitate opportunities in Canada’s wealthiest province.

“Ontario sending someone to Alberta sends a pretty strong message that more companies and politicians are getting on board with Alberta,” says Laurin.

In fact, there’s $63 billion worth of opportunities for Ontario-based compa-

nies over the next 25 years, according to the Canadian Energy Research Institute (CERI). The project would also boost Ontario GDP by 11.4% and earn the province more than $4 billion in tax revenues.

In the West, BC would see the smallest slice of the revenue pie – a point of contention between BC premier Christy Clark and Alberta’s Alison Redford. BC would earn tax revenues of more than $1.2 billion, while GDP would jump by 5.1%, according to CERI. But Enbridge says the project will also need more than $830 million of local BC goods and services.

Big pay day Alberta is in for the biggest pay day. Provincial GDP is expected to rise by 352.3% over the pipeline’s 30-year lifetime, and it will earn more than $70 billion in tax revenues.

Enbridge says Northern Gateway would boost overall Canadian GDP by more than $270 billion and create more than $400 million in employment and contracts for aboriginal communities and businesses.

There’s also the impact the project would have on prices for Canadian crude. A 2009 forecast by the Canadian Association of Petroleum Producers (CAPP) says 10 years after project startup, synthetic crude pricing would rise by $2.04 per barrel. Athabasca dillbit would jump by $3 per barrel, resulting in an annual net producer revenue increase of $4.47 billion by 2025.

NDP leader Thomas Mulcair, among others, complains the focus on energy will lead to Dutch Disease, the economic malady that caused a downturn in the Netherlands’ economy during the 1970s when natural gas prices peaked. It was blamed

Energy shift

US energy self-sufficient by 2035: IEA

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anada better get a move on in approving major oil projects that would open new export markets – it’s biggest customer is set to takeover.

A new report by the Paris-based International Energy Agency says the US will be energy selfsufficient by 2035. Canada currently sends more than 2.45 million barrels of crude a day south of the border.

The agency’s World Energy Outlook says extraordinary growth in US oil and natural gas output will mean a sea-change in global energy flows, thanks partly to technological advances that have unlocked major oil supplies in shale rock formations in Montana and North Dakota.

The report suggests the US will become the world’s largest oil producer by 2020, overtaking Saudi Arabia, and will become a net oil exporter. This will accelerate the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035.

The IEA expects global energy demand to jump by 33%, with China, India and the Middle East accounting for 60% of that growth.

Dowload a copy of the IEA’s World Energy Outlook report at www.worldenergyoutlook.org.

November/December 2012

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Uptime, all the time Alberta and BC will spend more than $1.2 billion on goods and services to build Northern Gateway, which means manufacturers are in for a big pay day.

®

SKINTOP cable glands can stop electrical failures before they stop your production lines.

PHOTO: THINKSTOCK

for driving up inflation while pushing down export demand for manufactured goods.

Mansell, who was involved in the National Energy Board’s Gateway hearings and spoke about the potential of Dutch Disease, says the pipeline is unlikely to cause such a phenomenon.

Dutch diagnosis “People have latched onto this notion that if one part of the economy is doing well, it’s bad for the rest of the economy,” he says. “Northern Gateway wouldn’t drive the growth of the entire resource sector to the degree necessary to create Dutch Disease.”

He says the oil and gas sector is usually cited for the “disease,” but manufacturing could also cause it because both sectors affect the exchange rate.

“If oil and gas is doing well, yes it’s going to drive up the exchange rate a bit, but it’s not just in the oil and gas sector,” he says. “When some part of the economy is doing well, there’s going to be other parts that struggle. It’s hard to say ‘well this sector’s doing well, so we better shut them down so others don’t get hurt’ – you just can’t do it.”

Mansell cites former Bank of Canada governor Mark Carney, who has said Canada’s declining export performance and resulting economic drag is due to an absence of adequate export markets.

Eighty-five per cent of Canada’s exports are still going to the slowest growing economies in the world, while only 8% go to high-growth markets.

That’s especially so in the oil industry, which currently has one customer: the US, a market that is destined to contract.

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“With the development of non-conventional oil and renewable energy sources in the US, they’re not going to need our stuff,” says Mansell. “That market is static.”

The Paris-based International Energy Agency (IEA) forecasts the US will be energy self-sufficient by 2035, led by a surge in production thanks to technological advances that have unlocked opportunities in oil supplies from shale rock formations, such as the Bakken, which stretches through parts of North Dakota, Montana and Saskatchewan.

The agency’s World Energy Outlook suggests increased US output means imports will fade so much that North America will become a net oil exporter by 2030.

The push in Canada to diversify its oil export markets includes looking closer to home. Both Enbridge and rival TransCanada Corp. are exploring plans to send Alberta crude eastward to markets in Ontario and Quebec by updating existing pipelines. Those plans also include exporting crude from locations in the Atlantic basin.

But opportunities abroad will reign supreme.

Kinder Morgan, another Alberta energy-giant, is also looking to capitalize on major demand in Asia. It’s trying to get approval to build a 900-kilometre, $1.4 billion expansion of its TransMountain pipeline, which currently ships oil from Edmonton to BC’s lower mainland, to increase capacity and have it shipped off to Asia.

Over the next 25 years, the Canadian petroleum industry is expected to add $3.6 trillion to Canadian GDP, 25 million person years of employment and $1.1 trillion in net revenues for federal, provincial and municipal governments.

Indeed, global energy needs are forecast to increase by up to 33% by 2035, with 60% of additional demand coming from China, India and the Middle East, according to IEA. Manufacturers are certainly on-board with expansion plans.

In an open letter published in February, CME president and CEO Jayson Myers says they would benefit most from the development of new markets created by the energy and resources sector.

“Canada is in a unique position – we can directly benefit from the production of a mix of different sources of energy, including nuclear, hydro-electric, coal, natural gas and renewable as well as high-value, high-paying jobs in the supply of manufactured goods and services in the construction of these energy projects.”

But the Northern Gateway project is more than a pipeline to Mansell.

“This isn’t just about oil, it’s not just about the pipeline, it’s about Canada’s industrial base in general – we have to diversify our markets, and Northern Gateway helps us along that path.”

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PLANT WEST 7

12-12-03 7:02 AM

Trends

>> Oil Sands Development Alberta will take the biggest slice of the oil sands benefits, but BC, Ontario and Quebec will see significant revenues too.

PHOTO: SUNCOR CANADA

Spreading the

WEALTH WHO BENEFITS FROM OIL SANDS INVESTMENT A Conference Board of Canada report tallies how oil sands money impacts provincial and national economies.

BY PLANT STAFF

I

f the engine that’s powering Canada’s economy is shifting from Ontario, it’s only fitting that it should wind up in Alberta where the fuel is so plentiful.

Turns out energy from the oil sands will spread out one-third of the economic benefits from an estimated $364 billion in investment to provinces outside Alberta, according to a Conference Board of Canada report.

The Ottawa think tank unveiled the comprehensive 84-page report, Fuel for Thought: The Economic Benefit of Oil Sands Investment for Canada’s Regions, at the National Buyers and Sellers Forum in Edmonton in October before an audience of stakeholders and potential suppliers interested in getting in on the action.

“The development of Canada’s oil sands deposits constitutes one of the largest development projects in the country’s history,” said Michael Burt, director of industrial economic trends for the Conference Board.

Burt cited strong demand from China, other Asian countries and the Middle East for energy that is increasingly difficult to reach. “With tight global supply expect prices to remain high going forward.”

There are also risks. High prices and greenhouse gas emission regulations may curb demand, while technological advances will make “marginal” sources of supply feasible. If environmental concerns are not addressed, investment could be affected. Pipeline capacity must also be developed. “If it’s not built, we’ll need to figure out other ways to get the oil out,” he said.

Not surprisingly, most of the benefit (70%) will go to Alberta through conventional oil and gas, and oil sands development and production. About 80% of the inputs come from manufacturing, he said.

Ontario’s 14.8% share of the bounty will be felt most by steel forging and stamping companies, which will account for up to 70% of the inputs. Services account for 30%. Oil sands business will deliver about 20% of the manufacturing employment effects.

BC with its 6.7% share will see few benefits from manufacturing. Most will accrue to its goods sector, such as plastic, paper, and wood products; scientific, legal, accounting and computer services; and transportation/travel-related industries.

Quebec’s share (3.9%) is tied to large businesses, such

8 PLANT WEST

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as CGI (computer services) and CN (rail).

The Prairies have a 3.7% share that comes from its role as a transportation hub between Eastern and Western Canada. Steel mills, metal tanks, steel pipes and tubes, printing, and medical equipment and supplies also benefit.

Benefits across the board Much of Atlantic Canada’s 0.8% benefit goes to ornamental and architectural metal products; construction machinery; navigational, measuring, medical, and control instruments; and tire manufacturing.

The report says direct supply chain effects should generate up to $172 billion in wages and salaries. When the money is spent, an additional 880,000 person-years of employment will be supported. Combining the employment effects, the oil sands will support 3.2 million person-years of employment. That translates into 8,000 for every $1 billion in investment.

Alberta benefits most from the employment benefits (74.2%), followed by Ontario (11.7%), BC (6.9%), Quebec

(3.4%), the Prairies (3.1%), and Atlantic Canada (0.7%).

The report notes many people who work in the oil sands region don’t reside there. The Conference Board estimates there were 5,200 out-of-province workers in Wood Buffalo-Cold Lake in 2011, earning $280 million in wages. Most of them come from Newfoundland and Labrador, BC and Saskatchewan.

Governments also benefit from oil sands investment.

Between 2012 and 2035 the federal government will collect $45.3 billion and provincial governments $34.1 billion from personal income, corporate profit, and indirect taxes. Alberta is the big winner, taking $26.3 billion (77%) of the provincial total, but the Conference Board calculates – based on federal transfers – that the provinces would accrue additional benefits. For example, Ontario would get $17.6 billion of the federal fiscal benefits and $3.8 billion in direct provincial revenues.

The oil sands are attracting significant investment from abroad. International imports will exceed those from the provinces outside of Alberta, much of it manufactured goods from the US, which will support about 192,000 person-years of manufacturing employment there.

Over the past three years, 32% of investment in the oil and gas sector has been foreign. It’s part of a trend that is seeing money coming from Asia – and to a lesser degree Europe – playing a greater role, while the US becomes less important.

The Conference Board says oil sands development has implications for policy-makers, who will need to consider issues such as sustainable development, infrastructure, workforce training, labour force mobility, fiscal effects, and what role foreign investment will play. The report concludes, “how we respond to these challenges will determine whether or not the economic potential of the oil sands is fully realized.”

Information for this article was obtained during the National Buyers and Sellers Forum, presented by the JuneWarren-Nickel’s Energy Group, part of the Glacier Media Group (publisher of PLANT and PLANT West), in partnership with the Alberta Government and Canadian Manufacturers & Exporters.

Comments? E-mail jterrett@plant.ca.

>> Exporting

Red tape ties up BC LNG exports More streamlining needed: Fraser Institute

I

nvestment and jobs from exporting liquefied natural gas (LNG) to Asia could be at risk unless the cumbersome and overlapping regulatory process and environmental reviews are further streamlined, concludes a study by the Fraser Institute.

The Vancouver-based think tank’s Laying the Groundwork for BC LNG Exports to Asia” report estimates LNG exports from BC to Asia could generate $134 billion for gas producers from 2014 to 2035 than if the same volume of gas were sent to the US. LNG use has grown in Taiwan, Japan, and Korea, which accounted for 86% of Asia-Pacific LNG trade in 2009, while China represented 13% of that market. Prices are 90% of the oil price, which is considerably higher than North American prices.

Canadian gas producers have been exporting to the US via pipeline but gas production there has dramatically increased as new technologies make tight gas and shale gas resources commercially viable, which is lowering prices.

The report makes several policy recommendations, including: • Restricting the scope of the National Energy Board’s mandate to construction, operational standards and efficiency, property rights and claims, and environmental impacts.

• Having the National Energy Board conduct a ‘generic’ hearing on issues in common to anticipated BC LNG export applications.

• Placing shorter, clearly defined limits on the time regulators and elected officials may take to review energy project applications and reach decisions.

• Having federal and provincial governments, First Nations and industry work together to identify and approve transportation corridors for infrastructure development.

• Requiring a single construction application where an export terminal, facilities and new pipeline are proposed by the same investors.

• Establishing joint federal-provincial environmental reviews for projects, or substitute provincial environmental assessments that meet the requirements of the Canadian Environmental Assessment Act in place of a federal review.

November/December 2012

12-12-03 6:33 AM

Mine Reclamation << Sustainability

Mine pit

RECLAMATION LAKES FILLED WITH FISH, WILDLIFE OR TOXIC RESERVOIRS? Syncrude is betting R&D will lead to a sustainable solution, but critics say lakes lined with tailings shouldn’t be part of the plan.

BY MATT POWELL, ASSISTANT EDITOR

T

hirty years from now, when Alberta’s major oil sands deposits are played out and producers move on, what will become of the northern landscape, scarred by expansive, deep mine pits?

More stringent environmental regulations have forced producers to be more creative with their reclamation activities, and the solution underway is a network of lakes with flourishing animal and plant habitats. In fact, Syncrude Canada Ltd. is putting 25 years of research to use at the bottom of its 800 square-kilometre Base End Lake in the Athabasca oil sands, north of Fort McMurray, Alta.

As oil deposits dry up, oil sands developers intend to line the bottoms of their oil mine pits with tailings, which contain a mixture of dirt, sand and clay contaminated with hydrocarbons, acids, and other toxins leftover from the extraction process, then capping them with fresh water to dilute toxins and effluents. Natural processes will take over and restore the lake back to health, creating environments that sustain aquatic and plant life.

Critics aren’t so sure end pit lakes will be anything more than bubbly, toxic resevoirs – a reminder of an experiment gone wrong.

Besides, it could take up to a century to see how it all turns out. Who will be around to take the heat if the reclamation fails?

Some suggest it’s a gamble that highlights how far the Alberta government will go to encourage a perception that oil sands producers are cleaning-up after

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themselves. Thirty lakes have received the necessary regulatory go-ahead, but critics contend there’s no solid evidence that these reclamation efforts will work.

David Schindler is one of those critics.

The professor of ecology at the University of Alberta doubts the lakes will ever be clean enough for fish and plants to survive, or for people to swim in.

“It’s just madness that [the government] rubber-stamped 30 of these things without the companies demonstrating they can safely follow one through,” he says. “They rub all these engineeringtype models, suggesting the tailings will stratify, but there’s no actual proof.”

A recent report by the Alberta industryfunded Cumulative Environmental Management Association (CEMA) outlines the size and scale of the proposed lakes. It suggests they could serve as permanent alternatives to temporary tailings ponds that currently store oil extraction by-products.

CEMA describes those with tailings storage and those without. Tailings lakes will be fed water through surface run-off, precipitation, ground water seepage and consolidation waters from tailings deposits. It says tailings become denser over time by releasing pore water to the water cap. Those without tailings will fill with surface run-off and groundwater once mining stops.

Syncrude’s massive End Base Lake will act as a demonstration site and test wetlands for other companies. The association will keep an eye on progress using its own in-lake dynamics and water quality modeling, and geotechnical stability analysis activities.

But the report notes uncertainties at-

tached to the plans and neither supports or opposes the creation of End Pit Lakes.

There’s also a water issue. There will have to be enough to fill 30 lakes. Where would it come from? The Athabasca River is an obvious source, but the Alberta government restricts how much water is drawn from it.

Still, Syncrude is moving ahead with the plan, confident its Base Mine Lake will work.

“We’ve been researching this technology for 25 years. We’ve built a series of test ponds and small lakes and researched them, and all that work has shown promising results. The research has provided us with the basis to go ahead with the large-scale end pit lake we’ll commission this winter,” says Warren Zubot, a senior engineering associate at Syncrude.

Messy business The Athabasca mine will be filled with fine tails, a clay-like material. Zubot says it’s a challenge to remove these clay particles because they become electrically charged in the extraction process and turn into a yogurt-like material that can’t be reintroduced to dry environments.

Syncrude’s plan is to dump the yogurty by-product into the bottom of a 50-metre deep lake and cap them with five metres of fresh water from its Beaver Creek Resevoir. Its network of small ponds has shown that the clays harden over time, leaving effluents in the bottom of the lake while the fresh water pulls H20 molecules out of the clay.

“The organic compounds in the water will break down over time. Once they do, the water becomes high quality enough to support ecology and life,” he says. “It won’t happen in a year, but it’ll happen eventually. Understanding those

Oil producers are hopeful a network of 30 End Pit Lakes will clean up the oil sands when the plays dry up.

PHOTO: SYNCRUDE CANADA LTD.

timelines is just as much as part of this project as the lake itself.”

Zubot says Syncrude will essentially lead other energy producers and provide guidance for those considering the technology.

As far as Schindler is concerned, Syncrude’s demonstration lake should have been used first to prove the technology will actually work rather than taking a gamble on 30 lakes.

“I can’t imagine they can prove this without a long-term trial,” he says. “If they’d done this when they started producing from the oil sands, they’d be a lot closer to proving the technology works and would be able to show that at least some things grew.”

End pit lake technology has been used in base metal mining for years, and according to Schindler, the results have been damning.

Typically, the lakes become very acidic because of ores and sulphur rich materials that contain pyrite, he says. When they’re exposed to oxygen, the sulphide turns into sulphate, which dissolves a number of the metals needed to balance Ph levels.

“You end up with a soup of sulphuric acid with a lot of toxic trace metals.”

But other old base metal mine pit lakes have worked. Snow Lake in Ontario, which used to be an iron ore pit, was once home to a rainbow trout farm.

As the saying goes, “time will tell,” but it will be some time before anyone from either side of the debate will be able to say ‘I told you so.’

Comments? E-mail mpowell@plant.ca.

PLANT WEST 9

12-11-30 2:47 PM

Innovation

>> Electric Vehicles

Fill‘er up –

wirelessly

UBC R&D to boost EV appeal

The University of British Columbia bets convenience will help make electric power more popular.

By Matt Powell, Assistant Editor

L

orne Whitehead and his team of researchers at the University of British Columbia (UBC) believe they’ve found a way to recharge electric vehicles (EV) more simply – one that involves no wires – and are hoping to give the segment a much needed boost.

“It’s a fairly well known concept. It would be nice to not have to plug in electric cars; to drive up instead to a charger and have it happen automatically,” says Whitehead, a professor at UBC’s physics and astronomy faculties.

Making recharging easier might help boost slow EV sales – consumers are still at the tire-kicking stage.

Just ask Chevrolet. The General Motors (GM) brand’s fully electric Volt was introduced two years ago with lofty sales targets of 60,000 units. But a hefty $40,000 price-tag and high profile engine fires wilted consumer confidence and GM eventually cut sales expectations to 35,000 units. The automaker suspended production in the summer because of insufficient demand, and has since lowered sticker prices.

Chevrolet only managed to sell 275 Volts in 2011 out of GM’s total Canadian

sales of almost 250,000, according to DesRosiers Automotive Consultants.

Nissan fared worse, selling only 170 of its electric Leafs out of the almost 85,000 units in Canada, while Mitsubishi sold an insignificant 23 iMiEVs out of sales totaling more than 20,500 units.

But the automakers haven’t given up on electric alternatives. GM is confident it will have more than 500,000 electrified vehicles on the world’s roads by 2017. It has also introduced an electric version of its Chevrolet Spark compact that promises to outdistance rivals with a new range capability. And Nissan has a revamped, lighter Leaf, which includes a streamlined battery system expected to boost single-charge range to up to 228 kilometres (as long as you don’t use the air conditioning).

UBC’s research team is hoping to build consumer confidence in EVs. The Natural Sciences and Engineering Council (NSERC) awarded the project $185,000 to fund the research and it’s part of the university’s Campus as a Living Laboratory initiative, a program designed to offer UBC faculty, students and industry partners use of the university’s physical plant to test and apply new technologies.

Wireless charging was originally developed for medical devices, such as an implanted pacemaker. Although the technology isn’t necessarily new, Whitehead’s team hopes enhancing it will boost the convenience factor of EVs. “The convenience issue is a much bigger deal than you’d think,” he says.

“People don’t want to have to plug-in and

>> Fuel cells

Mobile power in development

Fuel cells and base stations will operate networks

N

okia Siemens Networks is working with Ballard Power Systems Inc. in Vancouver to develop mobile power networks that will operate during power blackouts.

Japanese operator NTT DOCOMO has evaluated the Nokia Siemens Networks Flexi Multiradio base station with integrated fuel cell backup for potential commercial deployment.

The solution has been installed at a DOCOMO R&D Centre test site in Japan’s Yokosuka Research Park (YRP).

“Mobile networks can be vital when a natural disaster strikes, and power outages make other forms of communication difficult,” said Mark Donaldson, head of mobile broadband energy solutions at Nokia Siemens Networks in Mississauga, Ont. “Integrating fuel cells with our base stations can significantly increase the resilience of the mobile networks we provide.”

A fuel cell converts the chemical energy from a fuel into electricity through a reaction with oxygen or another oxidizing agent, such as hydrogen. Hydrocarbons and alcohols are sometimes used. Fuel cells need a constant source of fuel and oxygen to run, but they produce electricity continually for as long as these inputs are supplied.

The fuel cell weight and size are significantly less in comparison to existing lead acid batteries that are typically used in many base stations. The base station and fuel cell combination provides 4.5 kilowatts of power for approximately 40 hours on a single tank of fuel.

The solution has already received the Ministry of Economy, Trade and Industry (METI) statutory approval in Japan.

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Charging occurs across a 4-in. gap between the system and vechicle.

PHOTO: UBC

unplug their vehicle every time they need it – it’s the same reason there’s still fullserve gas stations.”

The UBC solution is expected to be cheaper, efficient and safer than resonant induction charging, which involves transmitting electric power between two copper coils across an air gap.

A copper coil at the bottom of the car is force-fed an alternating current from another copper coil inside a transmitter on the ground that’s powered by the grid.

Addressing safety concerns Whitehead says the resonant solution works, but it requires high frequencies, which creates other issues.

“Operating at higher frequencies requires more expensive electronics,” he says. “The size of the coil is also an issue because it can be quite big.”

He says there are also safety concerns with resonant technology.

“If you’re dealing with a strong current at a high frequency, you’re creating an electric field that will induce currents elsewhere – including people,” he says.

“There’s a worry about those fields radiating in space, which could be harmful.”

UBC’s solution, while very similar, uses a different technique that operates at frequencies 100 times lower. “Remote magnetic gears” or rotating base magnets driven by electricity from the grid power a second gear in the car that eliminates radio waves. The base gear remotely spins the in-car gear to generate the power needed to charge the battery.

“The coil is smaller than those in the induction process because it’s actually the magnet producing a current inside the receiver’s coil,” he says. “The field intensity can be high locally at the coil but there are no fields outside it; they drop off outside the unit.”

The process is essentially the opposite of resonant induction charging because the source of the field that produces the current in the coil is in the distance – in this case, the local magnet. They’re powered only by magnetic interaction.

“The most obvious difference is that we produce frequencies that are up to 300

times less, making the electronics much simpler,” he says. “There are essentially no electric fields because they’re housed inside the machine. It’s a more prudent, safer approach to the technology.”

The system is currently achieving a 4-inch gap, which is comparable to resonant induction options. The school is actively testing the technology on school grounds. Four electric utility vehicles have been outfitted with receivers at the university’s maintenance building, while four transmitters have been installed in parking spots. Whitehead says the tests have proven successful so far.

“At the end of every eight-hour shift, they line the trucks up with a marker – you want to be in that four- to six-inch gap – leave it overnight and its ready to go again the next morning,” he says. “A full charge takes about four hours.”

The onsite testing program is helping to provide the research team with valuable information that’s expected to help bring the technology to market.

“We’ve been able to take a research discovery to an advanced prototype stage, significantly de-risking the opportunity for commercial partners by proving out the technology in a variety of conditions in real-world use,” says Paul Cyr, senior technology transfer officer at UBC’s physical sciences faculty.

There’s no industry partners collaborating on the project yet, but Cyr is confident the university will soon introduce a startup company to lead commercialization efforts. He’s also confident EVs will become a significant portion of the vehicle market as technologies and offerings improve, which is good news for the UBC team.

“We’re providing a convenient, safe and efficient charging solution that we believe will help increase the adoption rate of electric vehicles in both fleet and consumers segments,” says Cyr. Full-serve gas stations beware.

Comments? E-mail mpowell@plant.ca.

November/December 2012

12-12-03 7:05 AM

Maintenance << Operations

Doing it

right

Aligning reliability with business goals

Define a maintenance strategy based on corporate objectives to ensure production capacity.

UF6 cylinders for shipping at the Comeco Conversion Facility.

By Steve Gahbauer

M

aintenance is critical to the success of any manufacturer. Aligning maintenance and reliability assurance with overall business goals is a must during these days of restricted resources, a theme driven home during the 9th Reinventing Maintenance conference, convened by Federated Press earlier this year.

It’s important to determine the type of maintenance that suits the business, to define a strategy based on corporate objectives, and to manage change by moving toward prevention, prediction and condition-based maintenance (CBM). Because maintenance provides capacity, reliability strategies and technology alignment along with risk-based inspections (RBI) are quickly becoming a priority, according to presenters at the conference, including Randy Grant, the senior maintenance and reliability specialist at the of Cameco Corp.

Conversion Facility in Port Hope, Ont., one of four uranium conversion facilities in the western world, and Don Fitzgerald, engagement manager of Ivara, an asset

performance software company in Burlington, Ont. The cost of not doing the right work is high; so is the cost of not doing the work right. Current industry averages show that 60% of maintenance work is too little too late, 20% is too much too early, and only 20% is the right work done at the right time.

Optimize performance In a workshop following the conference, Grant emphasized that to optimize maintenance performance it’s necessary to understand why machines and systems fail. One needs to look at operating context, equipment history (such as mean time between failures), duty cycle (how often equipment is used), machine function, failure mechanisms (when a unit is likely to fail), criticality (how much it matters), and at how failure occurrence can be predicted.

The price ultimately paid for the consequences of failure is almost always substantially higher than the cost of failure prevention.

Reactive maintenance after failure is six to eight times as costly as preventive maintenance before. However,

while preventive maintenance is good and has its place, it’s not perfect. Preventive maintenance done on time-based intervals still risks missed random failures, and you will often spend more time and money than necessary. This is why condition-based maintenance, combined with risk-based inspections, is a real boon.

Just because a pump is running doesn’t necessarily mean that it’s functioning.

Also, if there are no real consequences to a failure, any predictive maintenance done on a piece of equipment is wasted.

And it’s useful to recall that age-related failures account for only 11% of equipment or system failures, whereas 89% of failures are not age-related. Thus, it’s not wise to rely on time-based overhauls; CBM is the better way.

PHOTO: COMECO But prediction tools can be cost-prohibitive. So when money and resources are limited, what should you focus on? The answer is safety, environmental compliance, quality and uptime; those are the main things. A risk grid provides direction for assessing which equipment or system carries the greatest risk to the business. Know when and where to apply predictive tools. Adopt tools that work for you in your particular business. Set reasonable targets and get everyone involved. Perform an asset importance (criticality) assessment to identify the business consequences of failure. And switch to condition-based maintenance as much as possible.

This will improve overall maintenance effectiveness by reducing costs, downtime and labour needs. Keep honing the blades, track progress and celebrate success.

Your business will be the better for it.

Steve Gahbauer is an engineer and Toronto-based freelance writer, the former engineering editor of PLANT and a regular contributing editor. E-mail gahbauer@ rogers.com.

Comments? E-mail jterrett@plant.ca.

>> Energy Management

Savings at low or no costs Sysco’s aggressive program yields significant results Company-wide consumption is down 28% over the 2005 baseline.

M

aintenance is more than just fixing machinery. In the drive to save costs, efficient energy management has become a major part of the maintenance function. Sysco Corp.’s experience illustrates why and shows how much money can be saved.

“We were looking for low- or no-cost options,” notes Peter Richter, corporate energy manager at Sysco, a supplier of “meals prepared away from home” to the food service industry.

He says the company’s aggressive energy management program was implemented over a number of years at its facilities, and yielded significant savings with exceptional payback periods. After just two and a half years, Sysco’s company-wide energy consumption

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was reduced by almost 28% over the 2005 baseline, with gross savings estimated to exceed $3 million.

The energy management program has been implemented in all 17 of its facilities across Canada (seven of which are in the West). Before that time, Sysco facilities consumed approximately 65 million kilowatt hours of electricity annually, at a cost of about $6.5 million. The goal was to reduce energy intensity at all sites by 25% in three years with a first-year target of 10%. To help achieve this goal, Cascade Energy Engineering Inc. was contracted to design, implement and administer a three-pronged energy management program.

Identify savings “First, we mined three years of energy consumption data at each facility to determine where we’ve been,” says Richter, as he describes the web-based energy management system that was developed to track monthly

utility bills. The system also provides “pulse meters” that allow near real-time metering for the entire organization and benchmarks every facility with normalized efficiency factors, allowing them to be compared directly.

“If you make a change, you can see it right away,” notes Richter.

Second, a commissioning engineer and a technician spent three days at each site reviewing and fine-tuning systems such as refrigeration, lighting and HVAC. Richter explains that “90% of our efforts went towards improvement in the refrigeration systems, which account for 60% of energy use.” After the no-cost and low-cost energy saving projects – accounting for more than half of the total savings – were implemented, other opportunities were explored. The installation of variable frequency drives on refrigeration system components (evaporators, condensers and compressors) as well as warehouse lighting upgrades have contributed significantly to additional electricity

savings. Easy gains in efficiency resulted from installing occupancy and daylight sensors and set-back thermostats.

Finally, third-party experts have reviewed the corporate bid specifications for equipment and building materials. A standard suite of energy efficiency alternatives is now requested for all expansion and new construction projects. This practice ensures implementation of the best and most cost-effective technology at new and existing facilities.

Each site has its own energy champion who is responsible for monitoring facility energy consumption and driving energy saving efforts. The energy champion also identifies backsliding.

“It’s our goal to eliminate backsliding and to increase energy savings by 3% annually. In today’s economic conditions, saving energy has a direct impact on the bottom line,” says Richter.

Comments? E-mail jterrett@plant.ca.

PLANT WEST 11

12-11-30 3:00 PM

Management

>> Insolvency

When the chips are

down

Keep your eyes open for opportunities to acquire a competitor, but understand the process and what questions to ask. PHOTO: THINKSTOCK

There are positives to insolvency and bankruptcy issues but you need to stay on top of the situation and avoid problems by exercising due diligence.

What to do when a supplier or customer runs into trouble

By Mark Borkowski

E

ven the strongest companies will encounter a situation where one of their customers or a supplier gets into trouble. Jeffrey Carhart, a partner with the law firm Miller Thomson and an expert in corporate bankruptcy and insolvency, offers the following insights when someone else’s red ink threatens to stain your balance sheet: Seek security. If a really important customer is in trouble, obtain security in unpaid inventory or equipment whenever possible. There are rules under Personal Property Security Act legislation that allow a supplier to do so relatively easily and on the basis that it will “slot into first place” in terms of the specific inventory provided. Although rare, it may be possible under the Companies’ Creditors Arrangement Act (CCAA) for the debtor to designate a supplier as being “critical” and that may pave the way to getting prefiling accounts receivables paid.

Stay on top of the situation. Most CCAA proceedings are based around a sale process rather than reorganization. The debtor may try to assign your supply contract without your consent or participation so be prepared to assert your rights.

Canada has a remedy that allows unpaid suppliers to try to recover “30- day goods” in a receivership or a bankruptcy situation, but not in a CCAA situation – and a number of picky requirements must be met.

There are positives. Be alert to opportunities that involve acquiring a competitor or market share, but understand the process. You’ll be asked to buy the assets “as is/where is” and there won’t be long lists of representations and warranties; therefore, take out all of your concerns through the price agreement.

Usually the process is competitive. Make your offer look the best while not giving away something that’s critical for your protection.

Exercise due diligence. If you take on employees, know exactly what is owing to them, and how those arrangements will be moved over to a new entity.

Manufacturers must deal with companies that are in financial trouble. Stay on top of the insolvency and bankruptcy process to avoid being hurt by it.

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corp., which specializes in the sale of privately held companies. Visit mercantilemergersacquisitions.com. Jeffrey Carhart is a bankruptcy and insolvency Partner of Miller Thomson. Visit www.millerthomson.com.

Comments? E-mail jterrett@plant.ca.

12 PLANT WEST November/December 2012

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Products and Equipment << Technology

ADHESIVES

wide range of application requirements are met and inventory requirements are minimized. It eliminates measuring errors and ensures reliable surface contact without slip thanks to continuously adjustable contact pressure.

The MA20 measures 200 mm in circumference, and is available in a variety of rubber hardnesses to optimize conveyor adhesion. A pivoting, height-adjustable arm bracket eases installation.

INSPECTION

Removes nonferrous metalics.

Ensures clamping pressure.

MAGNETS BOOST METAL SEPARATION

sure with every clamping cycle.

The pump weighs 19 lb. making it easy to move from one clamping station to another.

An internal load limiting valve protects against overload. An air exhaust muffler is extra quiet, while filters protect the system from environmental contaminants.

And it operates with ordinary shop air at 90 to 145 psi input pressure.

Kurt Workholding is a Minneapolis manufacturer of pumps. www.kurtworkholding.com

Remove nonferrous metallics from plastics, glass, and electronic scrap with Eriez’ ECS nonferrous metal separator.

The separators come in four different rotor designs and use permanent rare earth magnets to induce eddy currents into nonferrous metals. They repel forces that separate non-metallics for further processing and removal of nonferrous materials is selective to minimize product loss.

Rotors are made with Kevlar/ceramic tile surface shells and grease retainer chambers that are balanced to operate at 3,000 rpm.

Eriez is a manufacturer of magnetic, vibratory and inspection technologies based in Erie, Pa. www.eriez.com

Boosts abrasion resistance.

EPOXY EASES PIPE REPAIRS KALPOXY NS non-sagging epoxy from Abresist Kalenborn Corp. eases pipe and pump repairs. The two-component compound contains more than 70% fine grain silicon carbide (SiC) particles combined with DuPont Kevlar fibres to boost abrasion resistance, toughness and adhesive properties.

The epoxy is non-hazardous, noncorrosive and resists crystallization in cool weather. It handles temperatures of up to 110 degrees C, and can be used in corrosive situations with a pH range of 3.8 to 10.0.

Abresist Kalenborn Corp., based in Urbana, Ind., manufactures wear resistant linings for hydraulic and pneumatic conveyor components and pipes. www.abresist.com

ENCODERS

Optimizes conveyor adhesion.

The encoder operates at supply voltages between 4.75 and 30 VDC thanks to an 8-pin M12 connector. An IP64 rating and temperature range of -20 to 85 degrees C makes it suitable for harsh environments.

The Baumer Group manufactures sensors and system solutions for factory and process automation. It has a Canadian office in Burlington, Ont. www.baumer.com

PUMPS

ENCODERS SPEED CONVEYOR FEEDBACK

HYDRAULIC PUMP FOR CLAMPING APPS

MA20 measuring wheel encoders from Baumer provides speed feedback for conveyor systems. This two-in-one device combines a high-resolution optical incremental encoder and measuring wheel capable of resolutions as high as 25,000 ppr, even measuring results at low conveyor speeds.

A HEX switch selects from 16 predefined resolutions between 100 and 25,000 ppr. Pre-set resolutions ensure a

Kurt Workholding’s 5,000 psi KHP5000PF hydraulic pump provides constant hydraulic pressure and holding power for a wide range of precision clamping applications.

It’s driven by a high efficiency pneumatic motor and operates with an easy-to-use foot pedal. Pressure is constant when the foot pedal is depressed regardless of system pressure, ensuring accurate and repeatable clamping pres-

MOTORS UBER EFFICIENT MOTORS USE FERRITE MAGNETS PremiumPlus+ electronically commutated permanent magnet (ECPM) motors from NovaTorque employ ferrite magnets VFD in a flux-focusing design to deliver uber-efficiency from rarecompatible. earth permanent magnet motors that’s comparable to induction motors.

Driven by variable frequency drives, the motors boast rated point efficiencies of 92% for 3-hp and 5-hp versions.

PremiumPlus+ motors are packaged in standard NEMA frame sizes and mounting dimensions for easy substitution. The high power density makes them compatible with induction motors and variable frequency drive mounting sizes.

NovaTorque, based in Fremont, Calif., is a producer of brushless permanent magnet electric motors. www.novatorque.com

www.plant.ca

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VALVES

Boost uptime by 18%.

AIRLOCK VALVES REDUCE CYCLE TIMES Cast iron rotary airlock valves deliver the same benefits typically associated with high-end, specialty application valves. ACS Valves’, its RotorRail enables tool-less access to the rotor and all internal surfaces of the housing without taking it apart.

The Caledonia, Ont.-based manufacturer of rotary valves says it reduces cycle times up to 78% and increases process uptime by 18%. The valves ensure accurate re-alignment during re-assembly to eliminate axial movement, bearing wear, seal leakage and premature rotor vane wear. www.acsvalves.com

wired to the circuit protection device for easy installation.

The 20- or 30-A fuseholder-equipped models use DSN Decontactor switchrated plugs and receptables in applications where higher fault currents are not already protected. Circuit breakerequipped models provide overload protection, and include Eaton WMZT miniature circuit breakers (UL489). The 60 A models use Eaton WMZS supplementary protectors (UL1077).

All models are available with or without a viewing window in painted NEMA Type 4 and 12 mild steel, or NEMA Type 4, 4X and 12 stainless steel enclosure.

Meltric Corp. is a manufacturer or industrial plugs and receptacles based in Franklin, Wis. www.meltric.com

CIRCUIT PROTECTION RECEPTACLE PROTECTS CIRCUITS Meltric Corp.’s receptacle/wall box combination with integral circuit protection combines the safety of a pre-wired Meltric DSN Series switch rated receptacle with the convenience of local circuit protection.

The horsepower-rated DSN receptacle, which includes a dead front safety shutter for protection from live parts and arc flash, is pre-mounted to the box and

Pre-mounted to ease installation.

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Departments

>> Postscript

Innovation: more than a buzzword

BY TODD HIRSCH

C

orporate boardrooms and MBA programs are breeding grounds for the professional cliché, and like the once-venerable and over-bred cocker spaniel, when concepts and terms such as “synergies” and “strategic plans” are over- or misused, they eventually become distortions of what they were originally meant to be.

Innovation now joins this dubious list, which is especially troubling since it’s so essential to economic progress. It has

Companies all want to be innovative, but there is more to “getting there than announcing it in a mission statement… ” more than one definition, but the one I use is simple: “the application of an existing technology (or technologies) in a new and useful way.”

It’s distinct from invention, which is rare and should be applied only to the creation of something that’s unlike anything seen before, such as the first phonograph, penicillin and the internet.

True inventions tend to be (cliché alert!) game-changers. Innovation is also dis-

tinct from design improvements, which are more common but still very valuable.

Apple’s iPod wasn’t an invention or an innovation, but rather the application of fantastic design to an existing device: the MP3 player.

A great example of innovation is the automobile. It was the application of two existing technologies, the four-wheeled carriage and the combustion engine, into something very useful. The 3M Post-it

note is another example. Nothing was invented (both paper and adhesives had been around for years), but the two were combined in a new and unique way that has revolutionized the way modern offices operate.

Companies all want to be innovative, but there is more to getting there than announcing it in a marketing statement.

A chewing gum company, for example, may want to congratulate itself for its “innovative” new flavour, Wacky Watermelon. It may be creative and clever, and it could even gain the company market share, but it’s not innovation.

True innovation is more difficult than coming up with a new flavour of gum. It requires the company to really look at its world and what it’s doing in a completely different way. A great question to ask is: Is there an entirely new approach to doing this?

The steam-assisted gravity drainage (SAGD) technique in Alberta’s oil sands is a good example of true innovation.

Nothing was invented, but it’s an entirely different way of using existing technologies to extract bitumen.

Standard of living Why should Alberta companies innovate? There are at least three reasons.

The first is, this is how economies progress. Without innovation (and certainly without invention), we’d still be wrapping ourselves in animal hides.

And innovation is not just about creating a bigger GDP or increasing quarterly profits. It’s about improving our standard of living and freeing up time for more useful and interesting pursuits. Does anyone grieve the end of carbon paper?

Who misses rotary dial phones?

The second reason is that the Chinese are innovating. So are the Swedes, the Dutch, the Brazilians, the Americans and everyone else. If our companies are not doing the hard work and looking at their activities in a different way, we will increasingly become irrelevant on the global stage. The economic wealth and prosperity will flow to those who innovate.

Finally, we need to innovate because we can. Canadians are among the most literate and educated people in the world. Being smart and bright are prerequisites for innovation. We’ve invested in K-12 and post-secondary education in Alberta, so we have no excuse. Albertans are every bit as capable at innovating as anyone else on earth – so let’s roll up our sleeves and get busy! Our progress, prosperity and competitive position in the world depend on it.

Todd Hirsch is senior economist with ATB Financial in Edmonton and Alberta business columnist with Calgarybased Troy Media. Visit www.troymedia.com.

Comments? E-mail jterrett@plant.ca.

14 PLANT WEST

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November/December 2012

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Quality – Innovation – Trust

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12-12-03 12:57 PM