Pipeline News January 2015

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January 2015

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Volume 7 Issue 8

FINANCE

in tougher times

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PIPELINE NEWS January 2015

INSIDE SECTION A Ď°

>Ĺ?Ĺ?ŚƚĆ?ĆšĆŒÄžÄ‚Ĺľ Ć?ĞĞŏĹ?ĹśĹ? ƚŽ Ć?Ğůů Žč Bakken business unit

5

Boyd year end Q&A

6

Editorial

7

Opinion

12 Alberta accountants divide by three 15 Final land sale of 2014 19 Bonnyville development ĎŽĎŽ EĞdžƚ Ĺ?ÄžĹśÄžĆŒÄ‚Ć&#x; ŽŜ ^Ç‡ĹśÄžĆŒĹ?LJ ĆŒÄžÄšĹ?Ćš hĹśĹ?ŽŜ 24 Bonnyville Oil Show gets refreshed

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SECTION B 1

Aquistore ready to roll

10 What 2015 might look like: MNP

3

Aquistore science building to a crescendo

13 Dealing with declining prices and less work

6

Westcap launches management buyout fund

20 RBC exec talks about banking in ĆšŽƾĹ?Ĺš Ć&#x; žĞĆ?

8

PFM Capital is not closing its wallets

24 Son's death leads to safety crusade 26 Nissan year of Titans

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PIPELINE NEWS January 2015

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TOP NEWS

Moving goalposts on pipeline developments frustrates Wall “I do think, by the way, there’s a trust issue here. I also think there’s a comfort issue. I think certain interests in Central Canada aren’t comfortable with the fact we’re an energy power. And that’s driven a lot by oil, and that we have oilsands, and I think it’s important that Canadians understand this is a huge asset. That oil, the energy economy, is helping to provide quality of life in this country, like equalization, and I think we need to have a complete discussion.” - Premier Brad Wall

By Brian Zinchuk Pipeline News Regina – He didn’t say it outright, but it was clear from his statements to the media on Nov. 24 that Premier Brad Wall felt a little bushwhacked by the premiers of Ontario and Quebec releasing their “seven conditions” on approval of the proposed TransCanada Energy East pipeline. That line would run from Hardisty, Alta, through Saskatchewan, to refineries and export terminals in Quebec and New Brunswick. A significant terminal at Moosomin would allow southeast Saskatchewan and southwest Manitoba oil to join the pipeline via a lateral to Cromer, Man. Since this scrum, Ontario Premier Kathleen Wynne has softened slightly on what would be considered under greenhouse gas emissions, but the matter is still outstanding as of mid-December. On his Facebook page, Wall called it “A welcome development on Energy East.” Here are Premier Wall’s comments as part of a scrum on Nov. 24, right after he got back from a trade mission to India: Brad Wall: I did want to express some concerns this morning with respect from what we saw from Ontario and Quebec with regards to the Energy East pipeline. Let’s just start with the pipeline project itself. The Energy East pipeline is basically a conversion of an existing line. At least two-thirds of it is already in the ground. The Energy East pipeline will take Saskatchewan and Alberta oil, if it’s approved and built, to Eastern Canada, to Altantic Canada, where they are still, today, importing Middle Eastern oil. It’ll replace that Iraqi oil and Algerian oil with Canadian oil. It will be processed. It will be further refined, creating value-added jobs, sustaining some value added jobs that exist here

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today. Deloitte has done an assessment of the Energy East Pipeline that highlights that Quebec and Ontario will get more than 50 per cent of the new tax revenue from the pipeline, which is fine, that’s the way it should be. But also more than 50 per cent of the economic activity as a result of both the construction and operation, about 55 per cent when you combine the two, with Ontario benefitting more than Quebec. What’s happening now is a National Energy Board process to approve the pipeline, or to not approve it, potentially. What we’ve heard from Quebec and Ontario is they want to overlay on top of that their own processes. In and of itself, perhaps, that’s not a deal breaker. They can ask for standing at the NEB. But I am concerned about barriers for the pipeline. This one has Saskatchewan oil at play. This one has a major investment at Moosomin at play for us, if it’s ever approved. I’m also very concerned with an additional item they’ve added to this list of seven whatever they are, conditions or demands. It includes a GHG (greenhouse gas) measure of the pipeline. Here’s the concern there: what do they want to measure? The oil that will be in the pipeline? The life cycle of the oil that’s in the pipeline? Does the steel of the pipeline count the GHG cycle of the steel? And what kind of precedent are we setting here in our country for the transportation of goods and services across Canada? Here we have a couple of provinces that are the greatest benefactors from equalization , as it should be. They qualify. It’s the formula everyone’s basically agreed to. The equalization money we have in Canada is provided by a federal government on the basis of a tax base that in recent years has been driven a lot by Western

Canadian economies; by our oil. I’m surprised. This is a straightforward pipeline project. There should be a rigorous NEB process to make sure it passes all the environmental muster, all the safety muster, but that should be the only process involved. These two provinces are putting in the way of the project some unnecessary barriers. Bruce Johnstone (Leader Post): What you’re saying basically is the same issue as Keystone XL. Basically, will these projects increase incrementally GHG emissions? That’s, I think, the issue Quebec and Ontario are looking to get out of this. If we build this, is it going to increase our GHG emissions which are already out of whack with our Copenhagen commitments? Wall: Fair enough. But that’s not part of the National Energy Board process, and I’m not sure that it should be. If it is to be part of the National Energy Board process, what about the fact that 85 per cent of the GHGs in Canada come from you and I, from consumers, from people who drive cars, that are made in Ontario, that are subsidized by the federal and provincial governments. If you want to get serious about GHGs in Canada, we all stop driving cars, because that’s the No. 1 culprit. This is an industry that’s only in Ontario and significantly benefits that province. I make one other point on greenhouse gases. I don’t think it particularly deserves to have standing in the process as it has been laid out. If it were to do that, we would point out what the (U.S.) State Department has found with Keystone is that if you move oil by rail, your greenhouse gas emissions are greater. And that’s what will happen. The tragedy at Lac-Mégantic was light oil, light oil on a rail. Never mind greenhouse gasses, I think you have greater safety concerns. ɸ Page A8

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PIPELINE NEWS JANUARY 2015

BRIEFS Lightstream seeking to sell CWC posts record Q3 revenue CWC Energy Services Corp. posted record revenue of $38.8 million for the third quarter ending Sept. 30. This is an increase of $10.3 million or 36 percent compared to $28.6 million in the prior year quarter. A total of $15.3 million of the Q3 revenue came from CWC’s newly acquired Contract Drilling segment which offset a decline of $5 million in revenue from their production services segment. CWC attributes the revenue decline in the Production Services segment primarily to abnormally wet weather conditions during the quarter. The decline is also due to reduced activity levels as a result of certain internal operational issues with three of CWC’s top five senior exploration and production customers. In addition, CWC sold its snubbing division in September which contributed to the reduced revenue in the production services segment. With the release of its Q3 result on Nov. 12, CWC announced that its board of directors has declared a quarterly dividend of $.0175 per common share. The dividend will be paid on Jan. 15, 2015 to shareholders of record on Dec. 31, 2014. This dividend is an eligible dividend for Canadian income tax purposes.

off Bakken business unit

Calgary – Back in 2011 when it was still PetroBakken Energy Ltd., the company now known as Lightstream Resources Ltd. drilled 293 (205 net) wells and in January the following year, planned a $700 million capital budget. How things have changed. On Dec. 15, Lightstream put out a press release announcing, “a 62.5 per cent dividend reduction and plans to monetize all or a portion of our Bakken business unit, with the goal of maximizing our financial flexibility during this current environment of low oil prices and optimizing the long term value of the Company’s assets.� In other words, the company that was spun off from PetroBank to be a “pure play� Bakken company called PetroBakken will soon have little, if any, Bakken left in it. Over the past year, they have already sold chunks of southeast Saskatchewan production to Crescent Point. The release stated, “In recent weeks, oil prices have dropped to five year lows, recently hitting US$55.91/bbl (WTI), a 48 per cent drop from the peak price earlier this year. At Lightstream, we are managing our business on the basis that we could be operating in this low price environment for an extended period of time. “Our goal is the preservation of our long-term value by maintaining our inventory of opportunities and our financial viability. Lightstream’s extensive drilling inventory is characterized by wells which exhibit high initial oil production rates (coupled with high initial decline rates) that typically have generated rapid

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capital return, followed by a long life, low rate, low decline production profile. On average, our new wells produce up to 30 per cent of their ultimate reserves during the first 12 months on-stream. We are seeking to preserve this initial economic value until we are in an environment with higher oil prices and/or lower capital costs. With this perspective in mind, our strategy for 2015 is to adopt a conservative capital

and dividend program with the objective of ensuring that our expenditures will be funded through cash flow, without an increase in debt levels. “In addition, we also have a strategy to monetize, at an appropriate valuation, all or part of our Bakken business unit in the next 24 months. If achieved, we would unlock unrecognized value and significantly restructure our balance sheet.�

Their capital program for 2015 is now pegged at $190 to $210 million, “funded through internally- generated cash flow, focused on capital efficiencies, recoveries and profitability.â€? The will only operate two rigs, one in the Cardium play, and one in the Bakken. Just 30 net wells are planned for southeast Saskatchewan, another 20 in the Cardium, and one in their Swan Hills unit. ɸ Page A9

Briefs courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS January 2015

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BRIEFS Traverse (QHUJ\ À QGV buyer

Bill Boyd, Minister of the Economy and MLA for Kindersley. WŚŽƚŽ Ć?ĆľÄ?ĹľĹ?ĆŠ ĞĚ

%R\G WLPH WUDYHOV RQ RLO DQG JDV IRUWXQHV „ By Geoff Lee Pipeline News It’s time once again to look ahead at the prospects for the oil and gas industry in Saskatchewan with the arrival of 2015 and review some of the outstanding highlights of the year gone by. Pipeline News spoke with Bill Boyd, Minister of the Economy and Minister Responsible for Energy and Resources in Regina via telephone on Dec. 2.to accomplish both tasks. Pipeline News: Where do you see the industry headed in 2015 with lower prices for oil and a reduction forecasted drilling? Boyd: Well I think what you’re going to see is somewhat of a challenging year no doubt. Prices have been dropping. I think it’s going to be a year where there’s a lot of real strong focus on the cost of drilling for companies. I think they will be really watching their dollars that way. Drilling programs may be curtailed. It’s difficult to say at this point in time. I think that our cost structures here in Western Canada, specifically in Saskatchewan are pretty good so I think there will be a continued interest. P.N.: How would describe the investment climate for the oil and gas sector heading into 2015? Boyd: Well I think the investment climate is still good here in Saskatchewan. We have been consulting with a number of

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companies – oil companies that operate in Saskatchewan in the last little while. They indicate that Saskatchewan’s still a very good place to do business. They are continuing to have strong programs going forward and we’re optimistic about 2015. P.N.: What is the state of Saskatchewan’s economy heading into 2015? Boyd: Our economy is still very strong. We have quite a diverse economy in Saskatchewan now with agriculture being strong – mining prospects are pretty good going forward. The manufacturing sector is doing well in Saskatchewan these days. Even though we’re seeing a pullback in the oil industry in prices right now, other areas of our economy are performing strongly and we still expect to be on track in terms of our budget. P.N.: 2015 should come with a decision on Keystone XL. What type of economic impact will that have on Saskatchewan during the construction and operational phases? Boyd: It would be very important to us here in Saskatchewan if we see activity on the Keystone project. This is one that will create a great deal of activity for Saskatchewan. It certainly would in terms of jobs and investment. It would also certainly upon completion would result in a lot of oil being shipped, and that will, I think, strengthen prices or at least bring them closer to West Texas Intermediate prices and the Brent oil prices. ɸ Page A10

780-875-6535

Traverse Energy Ltd. intends to complete a nonbrokered private sale to a single investor of 1.3 million common shares of the Calgary-based company announced on Nov. 25. The shares will be issued on a flow through basis eligible for the renunciation of Canadian exploration expenses at $1.15 per share for total gross proceeds of $1,495,000. Traverse intends to use the proceeds from the private placement to fund a portion of its exploration and drilling activities in the province of Alberta. Traverse is a junior oil and natural gas exploration and production company. Flow-through shares offer Canadian investors an opportunity to invest in the natural resource sector at a significantly reduced aftertax cost. The federal government allows Canadian resource companies that invest in the oil and gas, mining and renewable energy sectors to fully deduct certain exploration expenses, Canadian Exploration Expenses (CEE). To raise capital for exploration, those companies often issue flow-through shares and renounce the CEE to the purchasers of those shares. The shareholders are able to deduct the CEE against their own income. Upon the completion of the private placement, there will be approximately 70.53 million shares issued and outstanding. Briefs courtesy Nickle’s Daily Oil Bulletin

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PIPELINE NEWS January 2015

PIPELINE NEWS

EDITORIAL

Mission Statement: Pipeline News’ mission is to illuminate importance of Saskatchewan oil as an integral part of the province’s sense of community and to show the general public the strength and character of the industry’s people.

Publisher: Brant Kersey - Estevan Ph: 1.306.634.2654 Editorial Contributions: SOUTHEAST Brian Zinchuk - Estevan 1.306.461.5599 SOUTHWEST Swift Current 1.306.461.5599 NORTHWEST Geoff Lee - Lloydminster 1.780.875.5865 Associate Advertising Consultants: SASKATCHEWAN & MANITOBA R5 -. 0 (5g8ifl8lij8hlkj Cindy Beaulieu Candace Wheeler Kristen O’Handley Deanna Tarnes Teresa Hrywkiw R5 ,&3& 5g8ifl8jki8hkhk Alison Dunning NORTHWEST SASK. & ALBERTA R5 &)3 '#(-. ,5g8mnf8nfn8imfl Krista Thiessen CENTRAL Al Guthro 1.306.715.5078 To submit a stories or ideas: Pipelines News is always looking for stories or ideas from our readers. To contribute please contact your local contributing 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 working throughout Saskatchewan and parts of Manitoba, so please contact the sales representative for your area to assist 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 division 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 submitted 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 permission 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 information 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.

The genie is out of the bottle Instead of getting more for your product now as well as later, let’s sell it at firesale prices just to screw the other guy. That seems to be the attitude taken by whichever Saudi princes are in control of their oil output. They would rather produce more, and get paid half as much as they were a year ago, than cut back a little bit and get paid twice much as what they are getting now by producing a little less. In doing so, they would also be stretching out their resource, and cash flow, for years to come. So why aren’t they doing it? Some people, including those of us here in the cheap seats in prairie chicken land, think they’re trying to put the screws to North American shale production. Drop the price until it’s uneconomic, and the Bakken and Eagle Ford shale dry up, right? Wrong. It’s ironic to use an Arabic metaphor, but the genie is well and truly out of the bottle. The U.S., and with it, Canada, are never going to cut back production if they can help it. Every new North Dakota Bakken well, every crude-by-rail train from Stoughton, every incremental barrel from the oilsands displaces a barrel produced by people who would just as well see us dead. The words of Harold Hamm, multi-billionaire CEO and majority owner of Continental Resources, ring loudly in our ears. Speaking at the Williston Basin Petroleum Conference several years ago, he said, “A reporter asked me the other day, what’s the

big deal about energy independence? It means you don’t have to send your kid over there to get killed!� OPEC is not going to be able to stifle shale production, which is to say, horizontal drilling combined with multi-stage fracking. Indeed, it’s more likely this technology will be adopted in more basins, if it is not already. Places like Poland and Ukraine might seriously shift to this so they can produce their own gas instead of relying on Russia, which has been carving off a chunk of Ukraine at a time. North America may never be free of imported oil. But we are much freer now, and would like to be more so. The unpalatable concept of giving huge amounts of money to people like Venezuela and pretty much all of the Middle East, to have them use it to spite us, is something we’re able to reduce a bit with each new well. Maybe new Bakken wells near Williston might be uneconomic at $75 a barrel today. But a lower-priced environment becomes a huge incentive to find ways to make those wells economic at lower prices. Maybe a year from now the threshold will be $58. Once someone figures out a way to lower those costs, how much leverage will the Saudis have then? Maybe if those in the Middle East didn’t hate us so much, we’d be more inclined to buy their product. But with every “Death to America!� chant, every threat to Canada, every bullet hole in Parliament inspired by ISIS, and every body bag flown home over the past several decades, is it any wonder we’d rather produce our own oil, thank you very much?

PIPELINE NEWS January 2015

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OPINION

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Doom and gloom all around How’s this for depressing you: while going over my notes to write my stories this month, I noted early in almost every interview, the price of oil. One conversation with a venture capital expert earlier in the month started with a discussion about oil hitting $64 a barrel that morning. Not long after, I spoke to a banker. That day, oil was now under $60. Sitting in an office waiting for an appointment the following week I overheard a lady saying her significant other had just been laid off with no notice from his oilfield maintenance job. Later the same day I got a press release from Lightstream. I posted the following on our Pipeline News Facebook page, “The company once known as PetroBakken, now Lightstream, is now seeking to “monetize all or a portion of our Bakken business unit.” In other words, there will soon no longer be any Bakken left in what was PetroBakken. They announced their capital program for 2015 on Dec. 16 and it includes only two rigs, of which only one will be working in Saskatchewan. They used to have several. Only 30 net wells are planned for southeast Saskatchewan. They are also slashing their dividend. Any bets as to who might end up buying up what’s left?” Most of those who responded figured Crescent Point would be buying what they haven’t bought up already. What was more interesting was the fact several people wouldn’t comment, but rather posted people’s names so they would read it. In a short time in went very mildly viral. I suspect those forwarding names

were passing it on to others who worked in some capacity for Lightstream. It’s been well over a year since I looked up realty listings in Estevan on Realtor.ca, but at that time, there were around 90 listings. Currently there are 151 (which admittedly includes a substantial number of new condos and modular homes.) A few weeks ago I got a call from a real estate developer wondering what was going on in Estevan. I asked him if he was watching the price of oil, because if he did, he’d have his answer. There’s no question: with oil down more than 40 per cent since June, we are in a slump. There was not one person I spoke to this month who was bright and cheery and full of optimism about the situation. My discussions with bankers centred, in part, around the fact that oil companies, for years, have stretched out paying their invoices to service providers way beyond what the rest of the business community accepts as normal. It is common for oil companies to wait beyond 90 days, to almost 120 days (one third of a year) before paying for services that have already been provided for them. I anticipate we will see that play out more and more often as oil companies are either short on money, or short on caring for their suppliers. I liken it to an abusive relationship. The service provider has no power in the relationship, and the oil company takes advantage of them, financing their operations on the backs of the companies that work for them. What are those service providers going to do? Go try to find another company to work for?

What if there is no one else to work for? And if they try to get tough, the oil company can simply say they’ll get someone else. I predict this practice is going to sink some companies in this downturn, and that’s a crying shame. From numerous interviews with old-timers in the patch, I found there had been a noticeable pattern. 1987 was a bad year. So was 1998. The next bad one was 2009 – a very consistent, unexplainably consistent, eleven year pattern. I have told this to many people, joking, “In 2020, watch out.” Looks like I was off by five years. From those aforementioned old-timer stories, I found out a few things. Those who survive are often those who “pulled in their horns.” This was a phrase used by almost all. They also found the experience toughened them up, made them more cautious in anticipation of the next time around. I suspect the reason I heard that so much was because those who weren’t cautious soon left the industry with their tail between their legs. Also, things tend to rectify themselves within a year, maybe 18 months. There is light at the end of the tunnel, you just have to wait for it, and hope your invoices don’t take 120 days (or more) to get paid in the meantime. Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@sasktel.net.

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Keystone veto looms in 2015

The Republicans vow to vote again on the Keystone XL when their new majority Congress convenes in January. Let’s hope the Senate will be able to garner 67 votes needed to override a veto by U.S. President Barack Obama as he has hinted his plans to do that or to stall Keystone indefinitely. In November, the Senate fell one vote short of 60 needed to pass a bill to fast track the construction of the Keystone with 59 in favour and 41 against. A few days earlier, the Republican- dominated House of Representatives approved Keystone in a 252-151 vote. Obama spoke to reporters in Myanmar that day about his displeasure for what he perceived to be an end run by Congress to approve Keystone. “My position hasn’t changed, that this is a process that is supposed to be followed,” Obama said. “Right now you have a case pending in Nebraska, where the pipeline would run through, in which a state court judge has questioned the plan. “And until we know what the route is, it’s very hard to finish that evaluation and I don’t think we should short-circuit that process.” A court ruling could be issued in advance of the next Congressional vote. Obama’s negative comments seem to deliberately downplay the job creation aspects of pipeline con-

struction and its impact on gas prices. Oil shipped by Keystone XL from Western Canada and Montana would be sent to refineries on the U.S. Gulf Coast and turned into byproducts such as gasoline for Americans. “I have to constantly push back against this idea that somehow the Keystone pipeline is either this massive jobs bill for the United States, or is somehow lowering gas prices,” said Obama. “Understand what this project is. It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else. That doesn’t have an impact on U.S. gas prices.” Obama’s misinformation campaign won’t alter the fact the U.S. continues to import over seven million barrels of oil a day from the Middle East and Venezuela. Instead it could have 830,000 barrels of oil a day from its friendly Canadian ally via Keystone XL. Up to 15 per cent of that oil would even originate from North Dakota. TransCanada Corp.’s $8 billion Keystone XL is now in the seventh year of the U.S. regulatory process and it needs to be approved in response to market demand and not as a political football. As TransCanada’s president Russ Girling said in November, “The regulatory process itself has been hijacked by those who believe if they can delay or

prevent the Keystone XL pipeline, oil production and refining will be controlled and global GHG emissions will be reduced.” Canadian oil production has increased by one million barrels per day and U.S production has grown by 1.5 million barrels per day or two and half times the capacity of Keystone XL since 2008. That when the project application was submitted to U.S. regulators. The environmental argument against Keystone XL has clearly backfired with increased rail transport of crude oil and increased global GHG emissions since 2008. The pipeline would create jobs for more than 9,000 Americans and increase the energy security of the United State as well. Canadian Prime Minister Stephen Harper once said the Keystone XL is a “no brainer” but politics is not always rational. A veto by Obama would be a blow to CanadaU.S. relations in the short term until TransCanada gets the go ahead in Canada to build its Energy East pipeline to carry crude from Western Canada to ports in the Maritimes. That would lessen the need for Keystone and when the U.S. wakes up and realizes they really do need our oil, it will be flowing in other directions to other countries. That’s a no brainer in itself.

PIPELINE NEWS INVITES OPPOSING VIEW POINTS. EDITORIALS AND LETTERS TO THE EDITOR ARE WELCOME. Email to: brian.zinchuk@sasktel.net

A8

PIPELINE NEWS January 2015

No warning to Saskatchewan before Ontario and Quebec announce Energy East conditions ɺ Page A3 Johnstone: Mr. Prentice from Alberta has already indicated he will phone and talk to Ontario and Quebec and talk about these issues. He seems to be willing to accept the idea that greenhouse gas emissions can be an issue in this thing, not necessarily at the NEB. Of course, as you mentioned, they could have standing at the NEB to raise some of these issues. Are you differing from Mr. Prentice on this? Wall: I talked to Jim (Prentice) this morning on the telephone and I think he’s really concerned about the greenhouse gas piece here, especially that it’s somehow going to attach to the National Energy Board process either formally or informally. I also talked to Premier Couillard and TransCanada and have a call in to Premier Wynne, before I met with all of you. In the case of Premier Couillard, I think we have someone whose committed to the country, someone who understands the fundamentals of how you get an economy going, the importance of trade and removing interprovincial barriers. He’s basically in a debate with some environmental groups. That’s all fair. I think what I’ve said in the case of Keystone is we can do a better job in arming folks in decision-making positions with information; with the facts. We’re going to work to do that. We’re going to provide our assessment, including the environmental assessment, that we can offer. And also we’ll be able to point to in our province we have a lot of experience with pipeline capacity issues. When

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we reach pipeline capacity, the oil goes on a rail. That’s what’s happening today in Saskatchewan. When that happens, your greenhouse gas emissions increase and the intensity of spills and potential accidents are greater. Pipeline is preferred. It’s not perfect, but it’s the preferred mode of transportation. I just see extra hurdles. Some of them seem to be a bit of an audible that are being put in front of this project. If there’s ever a straightforward, important Canadian energy project, here’s one of them. Let it go through a rigorous NEB process. Let’s make sure the company is consulting with First Nations. I think they actually have 55 First Nations agreements, actually, TransCanada has on this project. Let them do the work they should. Let it meet the test of safety and environmental rigor. But if it does those things, let’s not add to it. Let’s build the pipeline. Murray Mandryk (Leader Post): It seems to be an issue of trust here. Eastern Canada and some Eastern leaders, honestly I don’t think really trust to make the argument about GHGs as rigorously as them. It seems to be, as logical as it may be to you and me, they want to make this point. It seems that could be fixed with dialog, and this doesn’t seem to be the best way to have that. Wall: Well, I had the dialog first before coming here. We need Canadians to understand what’s at stake here, we really do. We’ve done the dialog thing on a number of other pipeline projects, and I think you need all the above - the discussion, providing them with the information they need, and making the case publicly. That’s what the premiers did, by the way. They did not call. They did not contact my office in advance of their setting out seven additional conditions. So we can have a partly public discussion, and work behind the scenes. We’re prepared to do both. I do think, by the way, there’s a trust issue here. I also think there’s a comfort issue. I think certain interests in Central Canada aren’t comfortable with the fact we’re an energy power. And that’s driven a lot by oil, and that we have oil sands, and I think it’s important that Canadians understand this is a huge asset. That oil, the energy economy, is helping to provide quality of life in this country, like equalization, and I think we need to have a complete discussion. Johnstone: I take your point on the GHG emissions issue not being part of the NEB process, but given what’s happened with Keystone XL and as you mentioned yourself, the State Department thus far does not feel it increases incrementally GHG emissions, why should there be a different standard, a lower standard for GHG emissions for a pipeline project in Canada? They are very similar, proposed by the same company, here in Canada. Wall: I don’t think we’re talking about a lower standard. For example, you can almost take it as a given. All but 15 per cent of the oil in Keystone will be oilsands. If that’s not going to increase greenhouse gases, according to the State Department thenwhy would a pipeline full of conventional oil do that, increase GHGs? ɸ Page A9

PIPELINE NEWS January 2015 Éş Page A8 It’s not part of the NEB process, and I’m hoping it does not have standing. It’s not a fair measure. If that’s now the measure for transporting goods across the country, or perhaps the bar will move to some other measurement, how are we actually going to move goods across the country? Mandryk: Moving the other way, it’s going to cost more energy and more GHG. It seems to me it is part of the dialog, sir, that as messy and as uncomfortable as it is, it’s the dialog. Wall: How do you measure it? Is it the production? The life cycle? And would a pipeline be built then, ever? Mandryk: I don’t disagree with you. But if you’re moving it by rail, by rubber, there is a price to be paid with that. You make that argument with them. Wall: I think this is very dangerous. It’s debilitating to the western economy, because any additional oil development will have some additional greenhouse gas emissions. It just is. If this is now the test for a project that moves energy across the country, then Western Canada is going to have a hard time moving any of its energy, have a hard time developing any industry. Mandryk: What do you say to those who say “I don’t think it’s danger-

A9

ous,� because the argument can be made. There are people on the other side taking your argument saying this is more efficient for greenhouse gas. I just don’t see it as more than a messy political debate that often happens. Wall: I think it is more. We have a political and regulatory process in place in the country today. I think it serves the country well. There’s a triple bottom line assessment that’s fairly rigorous by the National Energy Board. That should be the standing for this particular project. What we’ve not also heard from Ontario and Quebec is what are they measuring exactly. Again, this is an important question. Is it the life cycle of the oil production? When I heard the comments, I didn’t hear a lot of understanding that frankly it’s light oil we’re talking about here. It’s mostly light oil that we’re moving to places to refine it and create jobs. Mandryk: I think that’s an easy argument to make, sir. Wall: If it was an easy argument, we’d have pipeline approvals. But no pipelines are getting built. No pipelines are getting approved, because the goalposts keep changing and this argument apparently cannot be made to the satisfaction of those who simply may not be comfortable with the development of oil, period.

Company once known as PetroBakken abandoning the Bakken Éş Page A4 The release noted, “In the Bakken business unit, we plan to drill up to 18 Bakken formation wells utilizing optimized drilling methods and recently tested next-generation completion designs to improve capital efficiencies. We are also planning to drill 2 additional gas injection wells in 2015 to advance the development of the gas flood in our proposed 13 section Creelman EOR Unit. We continue to develop our Mississippian play where we will drill 10 net wells in 2015.â€? Their average production back in December 2011 was 50,000 barrels of oil equivalent per day. The company forecast its 2015 average and exit production of 30,000 to 32,000 boepd, 77 per cent oil and liquids-weighted. And if they can’t get rid of their Bakken unit, they will hang onto it, but the company’s focus has clearly left Saskatchewan. The release concluded, “We have been successful in the past in unlocking unrecognized value through asset

dispositions and we will endeavor to repeat it through the potential disposition of our Bakken business unit over the next 12 to 24 months. In the event that we are unable to achieve appropriate valuation for this transaction, we will retain our Bakken business unit and continue to operate and invest in it to maintain and enhance its long-term cash flow generating capacity, while preserving our optionality to execute a similar transformative transaction in the future. A successful transaction will allow us to significantly restructure our balance sheet with an Alberta Cardium and Swan Hills focused company. “In the event of further material changes in the oil price environment, we will adjust our capital plans and dividend policies accordingly. We can further taper our drilling program in the face of even lower oil prices and we can also increase activity if there is sustained improvement in the industry’s economic environment. We will continue to maintain the maximum flexibility in our plans.�

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A10

PIPELINE NEWS January 2015

Viking has been hottest play: Boyd ɺ Page A5 So this is an important project for Saskatchewan and that’s why we’ve spent a great deal of activity – certainly the premier. A lot activity has been advanced by him on this project. It’s important for Saskatchewan and we certainly want to see it move forward as soon as possible. P.N.: What is the top energy highlight for you in 2014? Boyd: I would say the big thing that happened in Saskatchewan as far as energy is concerned was the open-

ing of SaskPower’s integrated carbon capture facility at Boundary Dam. That was an important milestone for SaskPower and certainly a big project that has captured interest from around the world. P.N.: Is there any investment interest or deals from foreign parties in the CO2 capture technology used at Boundary Dam? Boyd: There is a great deal of interest from foreign parties. We’ve had governments and companies from around the world being here to take a

look at the facility. There’s really nothing concrete at the moment. I think everyone’s sort of waiting for governments to make decisions around any kind of carbon emissions standards before they start moving. I don’t think you will see companies do it voluntarily. They will likely have to be forced essentially to move down that road. But I think there is answer to this now that’s important I think here in Saskatchewan that has application around the world. P.N.: What will the government do in 2015 to reduce GHG emissions from industry? Boyd: The Ministry of Environment is certainly continuing to work in that area. We are as well. We’ll see the first full year of operation of Boundary Dam. There will be extensive evaluations done on it to see if it’s meeting that mark. Early indications are very positive so we are optimistic about that. P.N.: Will there be any flood mitigation or control projects in 2015 in the southeast? Boyd: That would be a little bit outside of my purview but nevertheless there’s a lot of work in terms of mitigation going on for flooding – different types of projects that are taking place. I don’ t know if they’d be specifically focused on areas where there’s oil interests but there is certainly is work that is being done in that area. P.N.: Are you planning to continue to run the energy portfolio by yourself in 2015? Boyd: Well that’s something that’s really not up to me specifically. That’s a decision that the premier would make with respect to cabinet appointments. I think there is a view certainly within the premier’s office that maintaining the Ministry of Economy with the energy portfolio makes sense. P.N.: What has been the hottest oil play in 2014 in your mind? Boyd: It’s been right in my backyard at Kindersley in my constituency. The Viking formation has been the most active in terms of drilling.

A lot of activity has happened this year with 37 percent of the wells drilled in the province so far have been drilled in the Viking formation in the Kindersley area. P.N.: Do you see that continuing in the Viking in 2015? Boyd: I think it could. There’s strong drilling activity being forecast and planned. Prices will have some impact I’m sure, but the netbacks in that area are pretty good and I think that’s why we are seeing that kind of activity. P.N.: Do you see any emerging plays developing in 2015? If so what would that be? Boyd: There are two that are emerging. The Bakken Three Forks which is right along the Saskatchewan/Manitoba border seems to be attracting a fair bit of interest. There’s been some strong land sale activity in that area and also in the Bakken in the Torquay area. There is some strong activity happening there as well. P.N.: What does the rebound in land sales in 2014 say about where industry activity is headed? Boyd: Land sales are typically a good barometer of where the industry is headed. When you see strong land sales, it certainly is a strong indicator that we’re going to see a lot of activity in those areas. I would hasten to add with the prices (oil) that may level off activity or even see activity drop but at the moment activity is strong. It indicates future activity. It’s where we’re likely to see drilling activity in the future. P.N.: Will there be any regulatory changes to oil and gas regulations in 2015? Boyd: We are looking at some changes possibly to the surface rights legislation. We’ve been talking to the industry and talking to land owners for some time about that. We’re looking at wanting to make sure we get it right. We’ve had broad based consultation. We just finished another round of consultations and we’re looking at making some changes. We want to get it right so that’s been pushed off a little further out just yet.

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PIPELINE NEWS January 2015

A11

Husky could lift 1 billion barrels by thermal

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Calgary – Husky Energy heads into 2015 with far more heavy oil initially in place and a more potentially recoverable oil than previously assessed on its working interests in the Lloydminster region. The Lloydminster block spans approximately 37,000 square kilometres, with more than two million net acres to Husky and more than 4,000 producing wells. An independent assessment of Husky’s heavy oil resources by Sproule Unconventional Ltd. has significantly boosted the company’s heavy oil initially in place estimate to 17 billion barrels. Of that total, 16 billion barrels are discovered heavy oil initially in place or the amount of oil that is potentially in a reservoir. The assessment also estimates Husky’s working interest of best estimate contingent or technically recoverable resources to be 1.9 billion barrels. Fifty four percent of that total or 1 billion barrels of heavy oil has the potential to be recovered by thermal technology. “Our heavy oil business has undergone a complete transformation and this assessment confirms we have more room to run,� said CEO Asim Ghosh in a Dec. 10 news release. “We have recovered approximately 950 million barrels of oil from the Lloydminster region over almost 70 years and current technologies, such as our thermal developments, are allowing us to extract even greater value from this vast resource.� Husky’ thermal projects in the Lloydminster were producing at an average rate of 45,400 barrels per day at the end of the third quarter in 2014. The 1.9 billion barrels of best estimate contingent resources represent a nearly 1,800 percent increase from the 107 million barrels of oil Husky booked at the end of 2013. The previous assessment took into account only projects that were well advanced toward development.

Heavy oil initially in place and resource estimates noted in the new release have an effective date of Dec. 31, 2013. Husky continues to build on the success of its heavy oil thermal developments, with a number of plants coming online in the next two years: The 10,000 barrels per day Rush Lake thermal development that is now more than 70 percent complete and on schedule for first production in the third quarter of 2015. The 10,000 bpd Edam East thermal project is

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A12

PIPELINE NEWS January 2015

Alberta accountants divide by three By Geoff Lee The proposed Chartered Professional Accountants aims to merge Alberta’s three self regulating accounting associations into one body to improve business practices in Alberta. The Bill received first reading in the Legislature on Nov. 25. The Certified General Accountants Association of Alberta, the Certified Management Accountants of Alberta and the Institute of Chartered Accountants of Alberta will merge into a new designation, the Chartered Professional Accountant. This will allow professional accountants in Alberta using CGA, CA or CMA

designations to use the single CPA designation being adopted across Canada for business. Unification in Alberta is led by John Carpenter CEO of the Alberta Accountants Unification Agency (AAUA). Carpenter, who is a Fellow or FCGA, spoke with Pipeline News about the changes and how they may affect professional accountants in the oil and gas industry. PN: What is the Alberta Accountants Unification Agency or the AAUA for short? Carpenter: We are the body created by the three merging bodies to manage the merger process. It’s quite complex because they are three regulatory organizations.

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We are the body that has supported government in the creation of the Chartered Professional Accountants Act. PN: When will the approximately 24,000 professional accountants in Alberta be able to use the Chartered Professional Accountant (CPA) designation? Carpenter: We will not be able to use the CPA designation in Alberta until such time the new CPA Act is proclaimed. Note: CPA is the new Canadian business and accounting designation, bringing together the best of the Certified General Accountants of Alberta (CGA), the Certified Management Accountants of Alberta (CMA) and the Institute of Chartered Accountants of Alberta (ICAA). PN: Do all three accounting bodies in the merger share the same qualifications? Carpenter: Yes they do, but they are three different accounting organizations that we want to turn into one obviously creating efficiency for the stakeholders the consumers of our services. but also for the organization of its members. And of course, it’s consistent with what’s going on across the country. Note: Saskatchewan and New Brunswick recently proclaimed their unified CPA designation along with Quebec, Ontario, British Columbia and Prince Edward Island. PN: Is there a strong demand for oil and gas industry accountants in Alberta? Carpenter: I can’t give you a mathematical number, but it’s very significant across the whole industry and various stages of the industry – very significant. PN: What kind of work do accountants perform in the oil and gas industry? Carpenter: Accountants would do all those types of services you’d expect from an accountant in terms of compiling financial records, providing advice on those and running various large financial functions Accountants will be working in areas of finance. Accountants are working in production accounting. There’s a very significant number employed in the industry. As the industry goes so will the demand and supply of accountants. That’s historically been the case. PN: Is there a lot of jobs for professional accountants especially in the oilfield? Carpenter: There is a lot of demand for it and a lot of opportunities. It has changed over the years in terms of an increasing number of opportunities. We’re hoping that this merger helps facilitate the continuation of that. It can be a very rewarding job. There’s more to those rewards than just money. ɸ Page A13

PIPELINE NEWS January 2015

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professional accountants or one of those designations. The industry should not see any impact in the supply of accountants. In Certainly it’s economically rewarding, but I think it provides people with a fact, we are developing a certificate project to help in education of accounting support people where such a certificate doesn’t exist now. lot of opportunities to a diverse and an exciting career. That’s early days on that. People who are professional accounPN: Will the new CPA designation tants have a great deal to offer. attract more accountants to Alberta’s PN: What are the main benefits for oilpatch? professional accountants to unify under Carpenter: I sure hope so. I think CPA? what it does in terms of merging across Carpenter: We think that as a conthe profession and merging the three solidated organization we’re going to be bodies is, it standardizes what both the able to provide a better range of services to stakeholders can expect from accountants them. and what accountants can do right across I think there are issues of synergies the country. that any organization would realize as a PN: Does it make it easier to move consequence of a merger. I think members from one province to another? can expect a higher level of service. Carpenter: That’s a big issue with I think the infrastructure cost associatall governments these days is issues of ed with the delivery of that service should labour mobility and labour mobility see some rationalization eventually. internationally too. PN: What has been the reaction of I think that as the Canadian orprofessional accountants to the merger ganization grows within the national plan? framework, then I think that makes a big Carpenter: These are self regulating difference in accountants in terms of our professional organizations, so we had to ability to do business outside the country. have a member vote in all of these groups PN: Is the pending passage of new and there was significant support in each of these groups. - Ric McIver, Alberta Minister of Jobs, CPA Act timed for the tax season? Carpenter: No not at all. This has The government wouldn’t have gone Skills, Training and Labour – Nov. 25 been under way for approximately three forward, and we wouldn’t have gone foryears across the country very intensively ward with the merger without the support. in Alberta for about two and a half years. Note: The Alberta government has It happens to be the time when it’s been working with the three accounting bodies on the merger since June 2013. ready to go. PN: Has not having CPA designation deterred people from wanting to PN: When will the CPA Act be passed? be an accountant in Alberta? Carpenter: I guess that’s going to be up to the government. We anticipate Carpenter: A professional accountant is a CGA, CA or CMA. If you it will be passed in this session (December). It may be early next year before it wanted to be a professional accountant, you had to apply to one of those bodis actually proclaimed. ies. The three will now be replaced by one. The reason for that delay is we need to get all the rules of the profession in There are people serving functions in companies that are called accountants place before we can proclaim it and then have the new CPA organization take now. This does not impact that. over those functions. This only impacts professional accountants, people that call themselves

“Currently, more than half of Canada’s professional accountants are using the CPA designation. This proposed legislation will help our province attract the best and brightest to the accounting profession and make it easier for accountants to transfer their skills from outside of the province.�

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PIPELINE NEWS January 2015

PIPELINE NEWS January 2015

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Final land sale good, oil not 2014 Year End Savings so good Regina – The $18.3 million in revenue generated for Saskatchewan by the Dec. 1 sale of petroleum and natural gas rights was a measure of good news while the sky falls on oil prices. The final land sale of the year took place as oil dipped below $60 a barrel from highs of over $100 in June for West Texas Intermediate. The sale pushed the total revenue for the calendar year to $197.6 million compared to just $67.4 million in 2013. Economy Minister Bill Boyd found comfort in signs that the investment climate is steady with no mention of falling oil prices in his official statement. “Saskatchewan has worked hard to develop a positive investment climate for the oil and gas industry, so it was reassuring when the recently released Fraser Institute’s annual Global Petroleum Survey once again ranked Saskatchewan as the number one place in Canada and third globally for oil and gas investment,” said Boyd “Record drilling and impressive land sale revenues over the past few years suggest that industry is pleased with our policies and regulatory regime, and given that we are competing on a global level for investment, the Institute’s report is something we take very seriously.” The average of $988 per hectare for land sales in 2014 ranks third highest all-time, behind the $1,461 average in 2008 and the $1,029 average in 2010. The Weyburn-Estevan area received the most bids with sales of $11.9 million. The Kindersley-Kerrobert area was next at $4.5 million, followed by the Lloydminster area at $973,220 and the Swift Current area at $864,218. The highest price paid for a single parcel was $1.3 million by Ranger Land Services Ltd. that acquired a 1,165-hectare exploration licence north of Arcola. The highest price on a per-hectare basis was $9,319 by Northend Resources Ltd. that bid $603,404 for a 64.75-hectare lease southeast of Estevan. The next sale of Crown petroleum and natural gas rights will be held on Feb. 2. Weyburn-Estevan area (numbers rounded up) The top purchaser of acreage in this area was Prairie Land & Investment Services Ltd. who spent $3.9 million to acquire nine lease parcels. The top price paid for a single lease in this area was $1.2 million by Prairie Land & Investment Services Ltd. for a 259 hectare parcel situated partially within the Steelman Midale and Frobisher Beds Oil Pools, 26 kilometres east of Estevan. The top price paid for a single licence in this area was $1.3 million by Ranger Land Services Ltd. for a 1,165 hectare block located adjacent to the Bennet Lake Alida Beds Oil Pool, six kilometres north of Arcola. The highest dollar per hectare in this area was received from Northend Resources Ltd. who paid $9,319 per hectare for a 64.75 hectare parcel located within the Pinto Frobisher Beds Oil Pool, 28 kilometres southeast of Estevan. Kindersley-Kerrobert area The top purchaser of acreage in this area was Contiguous Resources Ltd. that spent $1.1 to acquire six lease parcels. The top price paid for a single lease in this area was $391,036, by Contiguous Resources Ltd. for a 259 hectare parcel situated adjacent to the Verendrye Viking Sand Oil Pool, 11 kilometres southeast of Kindersley. The highest dollar per hectare in this area was received from Contiguous Resources Ltd. who paid $2,163.44 per hectare for a 129.50 hectare parcel located partially within the Verendrye Viking Sand Oil Pool, 8 kilometres southeast of Kindersley. Lloydminster area The top purchaser of acreage in this area was Silver Hawk Resources Ltd. who spent $454,822 to acquire one lease parcel. The top price paid for a single lease in this area was $454,822 by Silver Hawk Resources Ltd. for a 129.50 hectare parcel situated adjacent to the Spruce Lake Mannville Sand Gas Pool, 12 kilometres south of St.Walburg. This is the highest dollar per hectare in this area at $3,512 per hectare. Swift Current area The top purchaser of acreage in this area was Vital Energy Inc. who spent $415,069 to acquire one lease parcel. This was the top price paid for a single lease in this area. The 513.14 hectare parcel is situated within the Battrum Roseray Sand Oil Pool, adjacent to Cabri. This was also the highest dollar per hectare in this area at $808.88 per hectare.

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PIPELINE NEWS January 2015

Eureka! Couple thinks digital ticketing „ By Geoff Lee Lashburn – Chasing and dealing with lost,

damaged or unreadable truck hauling tickets can cost companies a

lot of time, labour and revenue. Silverline Tracking

Systems is a new Lashburn business that aims to digitize the entire

field ticketing process from loading to unloading to improve customer

website. “Silver Tickets is based on an existing

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billing. The company is the brainchild of Trevor Williams and his wife Lana who chased many tickets running their own Silver Chain Holdings Ltd. pressure and vac truck business in Lashburn. “Lana and I were basically sitting at the kitchen table realizing that there has to be something better than all of these tickets,� said Trevor at the 2014 Lloydminster Heavy Oil Show. The Williams partnered with Stealth Interactive, a growing Saskatoon-based website design and marketing company through its partner and software programmer Jared Fedorchuk. Fedorchuk led the development of the Silver Tickets software and the Silvertickets.ca

framework that we developed at Stealth Interactive,â€? said Fedorchuk. “We developed this framework specifically for other sources of web applications. So when Lana and Trevor approached us with this idea, we said we already had a start on what they needed.â€? Over the past year, Stealth has been working specifically with Lana, a bookkeeper, on how to cater the software to the oil and gas industry. “We stumbled upon the best people we probably could,â€? said Trevor who handles customer relations at Silverline Tracking. Together, both companies launched Silver Tickets software and the website during the oil show held Sept. 10-11. ɸ Page A17

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PIPELINE NEWS January 2015 Éş Page A16 “Everyone’s loved it so far. We haven’t had a single company say no,â€? said Fedorchuk in a follow up interview on Nov. 14. “We’ve showed it to a lot of different companies since the oil show.â€? “The software is actually done. We are in the process of talking with a lot of companies about getting them on board. “No one has said no, but they’re all ‘like we’re going to need the software to do this’ and then we are ready to go.â€? “We haven’t actually signed up anyone yet. They’ve kind of all had their own unique set of conditions that need to be met before they can use it for production.â€? The Silver Tickets software will be sold as a service to company on a cost per user basis plus a cost for administration. Growing the business has become a new focus for Trevor who started out in 2000 driving pressure trucks, then ended up owning pressure trucks and some vac trucks and fluid hauling trucks. “I do a little bit of fabrication,â€? he said while he and Lana transition into running Silverline Tracking on a full time basis.

“I build some pressure trucks once in a while here in my shop – and then ‘more so’ focusing on getting the ticketing going here,� he said at the oil show. “This is such a needed thing. It’s going to be so accurate and cost saving. It’s green to the environment because we are getting rid of paper.� The first couple of pending sales are awaiting the integration of the cloud database that Silver Tickets is based on with the back office accounting system of their clients. “We are kind of jumping through the hoops with that right now,� said Fedorchuk in November. Initially Silver Tickets software will be accessible from iPads and Samsung tablets with plans to expand it to any mobile device including the BlackBerry. “What we’ve developed is for the trucking industry, but the framework itself can be used for any industry,� said Fedorchuk. “We’ve talked a couple of people in different industries that were asking about it.� At the oil show Fedorchuk said, “For the oil and gas industry everything’s that out there now is pretty crude. It’s not a live system that ties into a database instantly.

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“We’re looking to get rid of paper entirely, so our system is all live and online.� Usually in fluid hauling there is one paper copy each for loading and unloading, one for the driver and two for the trucking company or whoever he is hauling for. Silver Tickets software does away with the need for a truck driver to fill out five carbon paper copies. “It’s digital invoicing for virtually anything that’s moved whether it’s oil being hauled or gravel that’s being hauled,� said Trevor during the oil show. “Anything that needs invoicing can be done digitally now. There is no

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more need for paper tickets being lost or misfiled or rained on – that kind of thing.â€? Using an online Silver Tickets forms, an oil hauler can enter the company is hauling for, where he is taking it to, how much fluid he is hauling, the temperature of the fluid and what tank he took it from. “All that information would be typically on a paper invoice will now be on a digital invoice,â€? said Trevor. The forms are customizable for flushy operators, for example, who may want to log the torque on a well or the number of people on lease as a safety hazard. ɸ Page A18

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PIPELINE NEWS January 2015

Getting paid quicker with digital invoicing ɺ Page A17 Another advantage of digital invoicing he said is everybody gets paid quicker. “Invoicing doesn’t have to go from the trucking company to the oil company to the person who does the paying all on paper. It will all be done digitally now,” said Trevor. Since the oil show, Trevor and Lana have also pitched it to crude-by-rail companies like Altex Energy in Lashburn that are fed by crude hauling trucks. They estimate a company with 30 trucks spends about $12,000 a month chasing and processing tickets manually. Trevor said one similar size trucking company they are working with employs two guys full time chasing tickets and gathering tickets. “Then it’s the cost of the people in the office doing the administration,” he said. “One thing about the pumpers – the operators that are checking the wells every day – they have to go and pick up of all of the tickets. “Hopefully, they haven’t been rained on or blown out of the ticket jar – they have to take them back to a laptop and they have to enter them.” Trevor said by using Silver Tickets software, this is all done for them. “They can spend a lot more time out there optimizing their wells versus realizing they have to quickly go around and pick up the tickets and go back to the office for four hours,” he said. “They don’t have to do that anymore. It’s already on their system.” Trevor said he was “just moments away,” from completing a deal with the first of two potential adopters of Silver Tickets when he last spoke to

Pipeline News. “It’s just been some technical gaps that they’ve had to work through referring to the integration of software developed by Stealth Interactive and the client’s billing system. “Instead of having a whole bunch of people at the door, we just want these couple of companies up and running. “If we get overwhelmed right off the bat – if we had 20 companies come all onboard all at once it could be a little overwhelming for the programming side of it. “It takes time to get out the door. It takes time for someone to get committed to it. It’s a new thing.” The digital Silver Tickets have also generated interest from companies doing service work like picker services and companies that use Cats to build leases and roads. “People like to have that piece of paper, but they sure see the advantages of not having that piece of paper – having that information in their offices on their desktops instantly,” said Trevor. “The accuracy of it is the other thing we focus on too. We have that invoice in the office that moment.” With paper tickets he said there so many times the tickets are filled out and you can’t quite read the fourth or fifth copy. “It’s just a carbon copy .There’s a lot of phone calls and a lot of stuff goes on to chase tickets,” he said. Trevor Williams and his wife Lana invented the idea for Ă ĚŝŐŝƚĂů Į ĞůĚ Ɵ ĐŬĞƟ ŶŐ ƉƌŽĐĞƐƐ ŝŶŝƟ ĂůůLJ ĨŽĐƵƐĞĚ ŽŶ ŽŝůͲ Į ĞůĚ ƚƌƵĐŬŝŶŐ͘ ^ŝůǀĞƌ dŝĐŬĞƚƐ ƐŽŌ ǁĂƌĞ ĨŽƌŵƐ ĂƌĞ ĐƵƐƚŽŵͲ ŝnjĂďůĞ ĂŶĚ ĂĐĐĞƐƐŝďůĞ ĨƌŽŵ ĂŶ ŝWĂĚ Žƌ ^ĂŵƐƵŶŐ ƚĂďůĞƚ͘ /ƚ ĞůŝŵŝŶĂƚĞƐ ƚŚĞ ŶĞĞĚ ĨŽƌ ƉĂƉĞƌ ŝŶǀŽŝĐĞ ĐŽƉŝĞƐ ĂŶĚ ĨƌĞĞƐ ƵƉ ƐƚĂī ĨŽƌ ŽƉĞƌĂƟ ŽŶĂů ŐƌŽǁƚŚ͘

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PIPELINE NEWS January 2015

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Bonnyville lowers $ risk for developers „ By Geoff Lee Bonnyville, Alta. – The town of Bonnyville is using local improvement taxes to stimulate growth of commercial and industrial development to its advantage. Mark Power, the town’s chief financial official said the program applies to land development, and has put construction into overdrive the past two years in pace with the regional oil and gas economy. “It’s picked up exponentially in the town of Bonnyville,� said Power. “We’ve seen multi-million dollars worth of growth over the past two years, in fact, over $100 million in building permits over two years. “It’s just really taken off and almost all of the growth is the commercial end of it and it’s all re-

lated to the oil and gas sectors.� Building permits have gone from $8.3 million in 2009 to over $69 million at the end of October 2014 with another $89 million in development permits issued to people who plan to build. Local improvement taxes have lowered the risks for developers who don’t have to pay upfront costs for underground services to start development projects. “Since about 2008, the town has been working with developers on developing infrastructure under the ground – the deep infrastructure on a local improvement basis,� explained Power. “So instead of having to go the bank and borrow money, they borrow money against the land through their taxes.

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“We charge them on a local improvement basis annually for the cost of water and sewer and storm sewers in the subdivision.â€? As a result, commercial development has gone from 26 percent of the town’s total taxes, the provincial average, to 37 percent. “Commercial pays a higher mill rate and they pay more taxes. That really helps the bottom line when it comes to delivering services to the community,â€? said Power. “You can’t always burden the residents with the taxes.â€? Local improvement taxation attracted development on the first phase construction of the $13 million Eastgate commercial and residential project. ɸ Page A20

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PIPELINE NEWS January 2015

Bonnyville growing

Two 55-unit apartment buildings are part of the $13 million Eastgate project. Bonnyville Mayor Gene Sobolewski pictured at the entrance to one building said Eastgate ǁĂƐ ƐƟŵƵůĂƚĞĚ ďLJ Ă Ψϱ ŵŝůůŝŽŶ ůŽĐĂů ŝŵƉƌŽǀĞŵĞŶƚ ĚĞǀĞůopment tax by the town. WŚŽƚŽƐ ďLJ 'ĞŽī >ĞĞ

ɺ Page A19 The town contributed about $5 million for underground services to kickstart the project with the developer charged annually on a local improvement basis for the water, sewer and storm sewer costs. “For Eastgate the $5 million is a debenture. The town borrows at much more favourable rates too, so it’s advantageous for the developer,” said Power. “He’s going to pay that off on a frontage basis, but it’s about $340,000 to $350,000 a year for the $5 million over 20 years which is way less than you would be paying to the bank if you had to finance it.” Construction is under way on a new Comfort Inn and a Mictrotel Inn & Suites by Wyndham in the booming Eastgate project bounded by highways 569 and 28 at the east end of town. A new McDonald’s restaurant opened at Eastgate in December and a Boston Pizza will be added to mix when construction starts this spring. Northern Properties REIT is also constructing two 55 unit apartments at the site. Development permits for six residential houses have also been taken out recently for Eastgate. The town’s local improvement tax plan for growth has also spurred development at the Gateway, Hammons and Matichuk industrial parks where lots are sale. “With the Gateway subdivision, we did it in two phases. It’s almost completely sold out,” said Power. The town invested $2.5 million on underground services for the first phase fronting Highway 28 in town and $2.5 million on second phase with back lots selling for $169,000 an acre by developer Reid Keebaugh. Typically, the town borrows funds from the province for the cost of underground services as a debenture applied to their operating budget with no cost to residential taxpayers. “We’ve made the investment in terms of debenture borrowing to be able to facilitate the growth so that capital remains,” said Mayor Gene Sobolewski. “We can do it very efficiently so we can develop these industrial areas. “We can develop areas for residential and develop areas for commercial and retail. That’s exactly the direction we’ve taken. “The other key with the borrowing is the town of Bonnyville isn’t subsidizing growth. We are just using a different model in terms of the repayment. “It’s been repaid over 15 or 20 years. The town taxpayer is not subsidizing development. “It’s creating an atmosphere to lower the overall risk for developers versus other communities and areas in this region to make it very favourable. “That’s the uniqueness that Bonnyville has done.” ɸ Page A21

PIPELINE NEWS January 2015 Éş Page A20 With a traditional development model, a developer has to put down a security normally equaling the amount needed to undertake construction. It’s factored into to the cost of the lots. “So what we’re doing is – it’s a cash flow opportunity for the developer. By putting in on taxes the town isn’t paying,â€? said Sobolewski. “The residents and businesses aren’t paying for that development. “One hundred per cent of those funds are still recoverable in the taxes on those lots that are being developed. “They are building on them right away. That’s almost instantaneous assessment for the town. The developer is able to channel funds and provide enough cash flow to continue on other phases.â€? A previous resource grant from the province enabled the town to rebuild the west side of 54th Avenue to allow heavy oilfield trucks to bypass Highway 28 coming downtown. “There must be 10 new buildings contracted along 54th said Power.â€? That’s split between the Matichuk and the Hammons subdivisions. A Co-op Cardlock is the latest commercial business to open along 54th. “We put the infrastructure under the ground and charge it back to them on a local improvement basis. Gateway, Hammons, Matichuk and Eastgate have been the big drivers,â€? said Power. “We’ve only put the money into nonresidential so far. The government puts a limit on the amount we can borrow.â€? Westcorp plans to build a new hotel and conference centre on a 150 acre parcel of land it purchased for commercial development across from its existing Neighborhood Inn on Highway 28. The town will provide $2.5 million for underground services for Phase 1 and recover the costs on the local improvement tax basis. The use of the local improvement program is the brainchild of Power

who said it’s not new, but it works. “It’s the way it was done 40 or 50 years ago. The municipalities did all the development, put all the roads in and the sidewalks and streets and water and sewer,� he said. “Then they just charged it back to the residents on a local improvement basis. “Then, private developers have come along, and I happen to be one in Cold Lake, and municipalities, because of the cost of the borrowing got away from it. They said the developer has to do it.� “We’re doing again what municipalities used to do 30 to 40 years ago which is stimulating growth. “Hopefully, it’s good for everyone. All these commercial buildings are going to create taxes for the town.� Another new hotel is in the works in 2015 in the Gateway subdivision that is also the site of a new Canada North work camp, one of three camps in town. Clean Harbors recently moved all residents from its two oilfield camps into its location at the North Point subdivision at the beginning of December. “The camp arrangements are such that hotels are finding it viable to construct because the camps are here on a temporary basis,� said Sobolewski. “The arrangements we’ve got is we don’t want them directly competing with the hotels. They only have one year agreements. “We’re managing growth and managing the demand in the area without artificially stimulating.� Sobolewski said over the past three years in particular, town council has been taking an active part in being able to provide the need for the growth in the area. “Geographically, Bonnyville is located in the centre of the activity in this entire region. We’re a natural growth to the service industries – the supporting industries to the oil and gas,� he said. “With the growth opportunities and the amount of pressures in the area, we don’t want to get into some of the

pitfalls of say that Fort McMurray or Grande Prairie has encountered. “We’re moving forward and managing our growth a little bit differently.� The town’s long term priorities include building a regional water line from Cold Lake and to funds upgrades at the Bonnyville Regional Airport that is attracting more oilfield flights. New deicing facilities allow Cenovus to land its Dash 8 that brings in up to 40 passengers per flight throughout the winter. “We’ve got a number of projects trying to update some infrastructure. We’ve got a lot of development pressure,� said Sobolewski. The town’s new approved budget is $23.7 million. The town expects to apply the successful local improvement program to stimulate more housing. “The residential development was slow for awhile. The price of lots and the availability of lots just became harder to find,� said Sobolewski. “We’ve got a couple of developers that are aggressively moving forward now in town and putting lots on inventory but that takes time. Resland Development Group from Edmonton currently has about 30 lots for sale in

the BeauVista subdivision. There are some new lots available in Phase 6 of Lakeview Estates “We’re trying to encourage more of the multi family and the higher density residential,� said Sobolewski. “We’ve got some areas that will be developed with the water and sewer at the sites ready probably by next summer.�

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PIPELINE NEWS January 2015

Next gen Synergy Credit Union in Lloyd By Geoff Lee Lloydminster – Synergy Credit Union’s new building under construction in Lloydminster is designed for the reality that nothing stays the same for technology and its members’ needs. The 60,000 sq. ft. building located at the corner of 50th Avenue and 43rd Street is designed to create a full retail banking experience for Synergy’s 28,000 members in 11 communities. The $23.5 million project will consolidate Synergy’s core banking, business banking and wealth services into one facility with the ability to change with the times. Pat Horton, Synergy’s chief innovation and people officer, described the concept best in a previous press release on the flexible design aspects of the building with the future in mind. “When you look at the speed at which new technologies are coming out, there is a potential that consumers will demand new ways to

conduct their financial services,” said Horton in November 2012. “We want to make sure that when we build this building, it will be as flexible as it can be so that if members’ needs change, we can change with them.” Structurally that means the main floor will be raised 16 inches off the concrete for easy access to wiring, ducting and plumbing for possible changes or upgrades down the road. “We wanted to build a building that’s flexible as possible so that we can rearrange it and meet future needs,” said Horton in a Dec. 2 project update and outside tour. General contractor EllisDon began construction on April 2013 with an expected finish sometime this summer. The design by aodbt architecture + interior design calls for the use of modular DIRTT (doing it right this time) interior walls that are engineered and premanufactured. The moveable walls also incorporate modu-

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lar plug and play electrical systems. “It reduces future costs for renovations. It gives us the ability to change with the environment. Technology is changing banking significantly,” said Horton. Fixed walls and floors are a thing of the past for Synergy that is poised to provide different methods of service delivery such as mobile

services demanded by customers on the go. “I think that specifically in the oilpatch and other places now with shift work and people that can’t make it in quite as often, that we are able to go by way of mobile services out to them,” said Gord Thiel, branch manager. “So we can do a lot more banking when they need to right from

their truck if they are out in the field. We are really trying to expand on being able to provide services in a less traditional manner.” The building design emphasis on adapting to new service deliveries will also apply to how Synergy’s business relationship managers will work less traditionally with tablets. “Nobody is going to

have an office. They can use any of the offices in the new building,” said Alan Wells, manager of the business banking centre. “You’ll be picking up your portable device and plugging it into a stand that’s on the desk. You can move anywhere to any of the meeting rooms, any of the offices – it’s much more mobile.” ɸ Page A23

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PIPELINE NEWS January 2015 ɺ Page A22 The new four-storey building will also be more comfortable for employees and Synergy’s members while conducting business thanks to a higher standard of building construction being targeted. “We are hoping achieve silver LEED certification,” said Horton referring to Leadership in Energy and Environmental Design building status. The silver LEED standard takes into account sustainable site development, water and energy efficiency, material selection and indoor environmental quality. “With the LEED standard, things that you try to achieve are comfort for your employees and your customers or members,” said Horton. The exterior of the building fronting 43rd St. is most notable for the extensive use of glass from the ground up. “That’s part of the LEED standard to get natural light, so there is a lot of glass. The other thing unique about the glass is that it’s a fritted glass,” said Horton. “There are little ceramic dots in the glass. What we’ve used is a 50 percent coverage ratio so it’s a little bit like looking through a screen when you look out. The ceramic dots will prevent the heat gain. “It makes it a better work place environmentally for our staff.” The new building will initially house between 70 and 85 employees with the top two floors to be leased. What looks like a fifth floor roof penthouse encloses the rooftop mechanicals. “The third and fourth floor will be rented out which is 20,000 sq. ft. That’s going to have some additional economic spinoff,” said Brent Bergen, chief operating officer. “We’re not sure yet today who is going to end up occupying that space. “We’ve had some inquiries. It’s probably going to be someone related to people working in the office environment that maybe have outgrown their

space and are looking at bringing their team together.” The building will also house a café for members and visitors and an education centre to promote some of the LEED features built into the design. Another component of LEED is reduced electrical consumption. “The very first energy modeling that was done on the building suggests a 49 per cent savings,” added Horton about the design. The best decision to date might have been the building location close to the intersection of high-

way 16 and 17 or 50th Ave. as it’s called in town. “It is a very prominent location. We believe it will provide good access to all the residents of Lloydminster and surrounding area especially when the city completes the couplet project,” said Horton. That North-South Corridor project will eventually convert 50th Ave. to a one way southbound route and 49th Ave to a one way northbound route with access to the credit union from both directions. Synergy Credit also plans to build a drive through bank on the south side of 43rd St. facing the main building to reduce traffic in the parking lot.

Sky falls on oil, budget safe Regina – Saskatchewan is talking about the importance of not putting all of its eggs in one industry basket with its budget projections as the sky falls on the price of oil. “Amid falling oil prices it’s important to remember our diversified Saskatchewan economy features potash, uranium, an amazing agriculture sector, manufacturing and technology” commented Premier Brad Wall on facebook a day after the release of a mid fiscal year report on Nov. 27. The report from Finance Minister Ken Krawetz projects a balanced budget in 2014-15 and a yearend surplus of $70.9 million. “While the price of oil has fallen in recent weeks, it remained high for the first few months of the fiscal year, so overall, resource revenues are still projected to be ahead of budget this year,” said Ken Krawetz “However, it now looks like we will start the 2015-16 budget year with a lower oil price, which means our government will need to carefully manage spending.” Krawetz said the Saskatchewan economy remains strong despite the impact of falling oil prices on government revenues. “Right now, Saskatchewan has the strongest job

growth and lowest unemployment rate in Canada,” Krawetz said. “Most of the new jobs are not in the resource sector. They are in other areas, which show the importance of a strong, diversified economy.” Total revenue for 2014-15 is now projected at $14.199 billion, up $126.4 million from budget. Projected revenue from non-renewable resources is up $59.5 million from budget. Higher potash revenue and Crown land sales more than offset the projected revenue decrease in oil. Net income from Crown Corporations and other Government Business Enterprises including the insurance sector is up $183.8 million from budget, while revenue from taxation, personal income tax, corporate income tax and tobacco is $145.3 million lower than expected at budget. Total expense for 2014-15 is now projected at $14.129 billion, up $126.9 million from budget. Much of this increase, about $107 million, is attributable to projected costs related to disaster assistance for those affected by recent flooding. “Our government will continue working hard to keep Saskatchewan’s economy and its finances strong,” Krawetz said.

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PIPELINE NEWS January 2015

Bonnyville Oil Show gets refreshed By Geoff Lee

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Bonnyville – Organizers of the 2015 Bonnyville and District Oil and Gas Show have opted to simply apply some cosmetic touches to give the event a fresher look. The touched-up show will take place June 17-18 at the Bonnyville and District Centennial Centre or C2 for short. Megan Naylor, show director and Robyn Ducharme, show chair refer to the improve-

ments as tweaks to further improve networking opportunities for exhibitors. They realized there is no need for a major facelift based on feedback from the past two shows. “Right now, this is our third biennial show and we have worked at streamlining our show since 2011,” said Naylor who is the executive director at the Chamber. “We have upgraded and streamlined our registration process. We have hired the company

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Conexsys again. “There will be onsite check-in for visitors who have already registered to attend. They can go up to the computer and print their badge themselves without waiting in line.” “Registration for both exhibitors and attendees has become much easier and more user friendly.” The mascara and lipstick approach for 2015 also applies to reducing wrinkles from the popular oilmen’s room reverse trade show, marketing programs and the show banquet. “Our committee is working hard at tweaking it. This worked really well last time – how can we make it even better? That’s what we really focus on now with all our committees,” added Ducharme. Ducharme and Naylor teamed up at the Chamber office at Shaw House to provide a show update for Pipeline News during the last week of November. “It’s been going great so far. Planning is in full speed and all the committees have been meeting,” said Naylor. “Registrations are coming in daily and we are about 71 percent sold out already.” “We currently have 14 out of 22 confirmed returning sponsors from our 2013 show. Overall everything is coming together great and we are excited its only seven

months away.” The 2013 show was sold out with 173 exhibitors purchasing 182 booths inside the C2 and 62 outside during clear sunny skies. That show also attracted 2,559 registered visitors, a number that Ducharme expects to bump up to over 3,000 this year with targeted marketing to conventional and social media. “All of our marketing dollars go towards driving attendance to the show. We are working with custom invites again,” said Ducharme.tr “We are exploring a lot of different avenues for getting the attendance. Being our third show we’ve seen an increase just from word of mouth. “We’re hoping to see good numbers here in June again.” New this year, is a series of scaled marketing packages that exhibitors can purchase to broaden the basic advertising coverage provided with their booth fees. “With a radio tag they can have their business name added to our radio advertisements,” said Ducharme. “That helps us in our marketing budget and helps them to get the word out that that particular exhibitor is going to be at the show.” The show website has also been revamped by ABWeb.ca with a cheerier look. ɸ Page A25

PIPELINE NEWS January 2015 Page A24 “It’s more appealing. It’s brighter and easier to read,� said Naylor. Feedback from the last show convinced organizers not to mess too much with the popular oilmen’s room that works as a reverse trade show. It’s an opportunity to connect companies with procurement representatives and decision makers from the major oil producers in the region. “We are just doing a couple of little tweaks to it that will hopefully make the oilmen’s even better than it was last time,� said Ducharme who noted there would be at least 10 producers but hopefully 12 in 2015. “We are approaching some different companies as well to see what the interest might be out there. “We are looking to add a few more producing companies or maybe some pipeline companies in the mix.� The lower price for barrel oil recently has had little effect on show registrations or on the pace of the oil and gas activity in the region either. “We haven’t had anyone say they can’t come because of economics or anything like that. Going forward, things look pretty strong for this year,� said Ducharme who is on maternity leave as the manager of Edward Jones until Jan. 2. Construction is underway on a new Microtel Inn & Suites by Wyndham and a Comfort Inn in the same Eastgate project site as the C2 show venue. The 150 acre development phase also supports a new McDonalds res-

taurant that opened in December and construction will begin this spring on a Boston Pizza. Also under construction are two 55-unit apartment buildings by Northern Property REIT. “None of these businesses or these new hotels would be happening without the engine of oil out here in our area,� said Ducharme. “We definitely have that to thank for all these new businesses coming to town.� “Optimizing Growth� is the theme of the 2015 show that the Chamber sees as an economic generator on its own. “We see the show as a great opportunity to promote local businesses in the area in the form of accommodations, retail and restaurants,� said Naylor. “Many of our exhibitors and attendees are from out of town. We use it as well to showcase our area to potential new companies who may be looking to relocate here.� The Chamber plans to conduct an economic impact study during a future oil and gas show with early feedback from the first two shows pointing towards a positive outcome. The show has become a catalyst for attracting long time investment by oil and gas companies. “I know from the oilmen’s room we’ve had feedback of people being actually able to sign up contracts that they never would have been able to without the oilmen’s room,� said Ducharme.

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A25

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“We’ve had companies actually move into the area because of the success that they had making contacts at the show. “We are definitely seeing additional companies coming in because of the work that happened at the show.� Out of town exhibitors can digest the merits of investing or moving to Bonnyville by buying a ticket to the oil and gas banquet. This marks a change from past show when exhibitors were given two tickets, but were not always able to attend because they were taking a custom out to supper. “They are actually going to be able to purchase a ticket and bring that customer of theirs to the banquet

instead," said Ducharme. The committee is introducing a Surf'N'Turf banquet theme this year with a steak and seafood menu and changing the post banquet casino type entertainment to something yet to be determined. Organizers are still mulling over whether or not to invite a guest speaker. “We are still kicking tires on that,� said Ducharme. They are also dropping the educational sessions during the show due to lack of interest. “They just weren’t utilized and we just figured that our time was better spent on other areas of the show,� Ducharme added.

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PIPELINE NEWS January 2015

CAODC forecast weights B.C. Drilling activity in 2015 is forecasted to decrease 10 percent from 2014 levels according to the Canadian Association of Oilwelll Contractors. CAODC’s 2015 Drilling Activity Forecast released on Nov. 19 expects Canadian land-based drilling rigs will drill 10,354 wells in 2015. That lower level of activity from 2014 will generate 119,578 operating days for its member companies. The limiting factors in 2015 are the inability of producers to access overseas markets due to uncertainty

over tidewater pipeline s and LNG investment in B.C. “The B.C. government is weighing decisions that will have significant impact on industry activity,� said Mark Scholz, president of the CAODC. B.C. reduced its initially proposed tax on LNG facilities in October from 7 per cent to 3.5 percent after capital costs are recovered but that may not be enough to entice investment. To date, not one LNG project has been built in B.C.

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“The current uncertainty has weather returns. been factored into this forecast,� said The CAODC registered fleet will Scholz including uncertainty over begin 2015 with 809 rigs. It is estinew source to port pipelines in B.C. mated that the registered land-based Enbridge Inc.’s Northern Gatedrilling fleet will grow slightly and way pipeline and Kinder Morgan’s finish 2015 with 813 rigs. expanded Trans Mountain pipelines CAODC is a trade association both face approval delays over a that represents the contract drillmyriad of issues in B.C. ing and service rig industry across TransCanada’s Keystone XL and Canada. Energy East pipelines have also yet to The membership includes 44 be approved. land-based drilling contractors, two “If a direction is established reoffshore drilling contractors, 83 sergarding pipeline construction or LNG vice rig contractors and 217associate terminals, then we will definitely members. revisit these projections,� said Scholz. CAODC calculates each active rig generates between 135 and 200 direct and indirect jobs with growth restrained by uncertainty focused in B.C. Drilling activity in 2015 will follow the normal annual cycle with peak rig utilization in the first quarter of the year expected to average 61 percent. The rate will fall to just 19 percent in the second quarter during spring break-up then strength to 41 per cent in the third quarter over the summer. CAODC expects the utilization Mark Scholz, president of COADC, forecasts less drillrate will climb to 46 ing in 2015 than in 2014 due mainly to uncertainty over percent in the fourth pipeline access to overseas markets and lagging LNG inquarter when colder vestment in B.C. File photo

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A27

Diversity hiring needs a strategy Calgary – Diversity groups, namely women, youth, Aboriginal people, immigrants and persons with disabilities are underrepresented in the oil and gas industry. Strategies to recruit and retain key diversity groups for jobs the sector will grow in importance as the demand for new labour continues to increase. These are some of the findings of a new labour market report released on Nov. 20 by the Petroleum Human Resources Council, a division of Enform Canada. The report, HR Trends and Insights: Diversity in Canada’s Oil and Gas Workforce, examines the challenges and opportunities industry faces around workforce diversity. It also provides insight into the drivers, trends and practices for diversity and inclusion. “The business drivers for diversity and inclusion may vary from company to company,� said Claudine Vidallo, project manager of the Council’s Labour Market Information team. “Regardless of the reason, it’s clear a diverse set of experi-

ences, perspectives and backgrounds is crucial to innovation and the development of new ideas in our industry.� Many resources are available to support diversity strategies; however, time and effort are required to plan, measure and achieve results from diversity and inclusion programs. Despite many examples of diversity in the oil and gas industry, very few companies use measurement and data collection to set benchmarks for diversity and inclusion programs. “It is critical to monitor and measure the impact and success of diversity initiatives and programs in the oil and gas industry,� says Vidallo. “Companies need to devote time to collecting this type of data to create a workplace that is truly diverse.� Demographic data of key diversity groups within the oil and gas workforce suggests progress has been made in some areas and less so in others. From 2006 to 2011, the representation of women, Aboriginal people,

immigrants and persons with disabilities increased slightly within the oil and gas workforce. Compared to Canada’s total labour force however, these key diversity groups are relatively under-represented in oil and gas. Women, for example, make up almost half of Canada’s total labour force, but they account for approximately 21 per cent

of the workforce in natural resource sectors including oil and gas. When it comes to occupations in core oil and gas industry operations, the representation of immigrants, women and persons with disabilities is even lower compared to these same occupations across other industries in Canada. For example, the representation of immigrants in core

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A28

PIPELINE NEWS January 2015

Synergy CU helps with DOO ÀQDQFLDO F\FOHV By Geoff Lee Lloydminster – The days of Synergy Credit Union business in Saskatchewan being a mystery in the minds of the uninformed are numbered. A clear picture of dŚĞ ƉĞƌƐŽŶĂů ďĂŶŬŝŶŐ ĐĞŶƚƌĞ ŽŶ ƚŚĞ ŵĂŝŶ ŇŽŽƌ ŽĨ ƚŚĞ ĞdžŝƐƟŶŐ ^LJŶĞƌŐLJ ƌĞĚŝƚ hŶŝŽŶ ŽŶ th th 50 ^ƚƌĞĞƚ ĚŽǁŶƚŽǁŶ ĂŶĚ ƚŚĞ Ϯϵ ^ƚƌĞĞƚ ůŽĐĂƟŽŶ ǁŝůů ŵŽǀĞ ƚŽ ƚŚĞ ŶĞǁ ŇĂŐƐŚŝƉ ďƵŝůĚ- the scope of their comŝŶŐ ďĞŝŶŐ ĐŽŶƐƚƌƵĐƚĞĚ Ăƚ ϱϬth ǀĞŶƵĞ ĂŶĚ ϰϯƌĚ ^ƚƌĞĞƚ ŝŶ >ůŽLJĚŵŝŶƐƚĞƌ͘ WŚŽƚŽ ďLJ 'ĞŽī >ĞĞ munity retail, business

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banking and wealth management services is coming into focus as the opening of their flagship building in Lloydminster draws nearer. The $28.5 million project under construction at the corner of 50th Ave. and 43rd St. is expected to be ready sometime this summer and will act as a marketing tool. “The building is an opportunity to launch and tell our story. It’s a great opportunity to create that awareness that’s maybe been lacking in the past,” said Brent Bergen, Synergy’s chief operating officer. “I think traditionally with banks, people know what they do and they don’t always associate with what credit unions are. “We’re beyond just gathering deposits and making loans. We’re there to help people from startup through all cycles of their lives including multiple payment systems that provide convenience and flexibility. “Probably one of the big pieces people miss is our wealth management platform which includes brokerage, equity, retirement planning and group retirement planning and benefits to businesses.” Synergy Credit Union also helps small business with employee retention program and succession planning. Bergen hopes the new building will broaden the all too common perception

of the credit union as a provider of basic personal and business banking. “We’ve got other products and services that we think are really beneficial to the business industry. Things like the payment systems, card systems and wealth management,” he said. “We’ve probably got the best form of marketing with our new building. It’s going to be our billboard into the future.” Synergy Credit Union currently has more than 28,000 members in 11 communities in northwestern Saskatchewan. The new 60,000 sq. ft. flagship building in Lloydminster is the result of growth in sync with the oil and gas and agriculture sectors. “Within the community itself it’s such a resource rich area, not only oil and gas but agriculture, and these industries reflect our portfolio,” said Bergen on Dec. 2. “When we look back to where we were in 2007, we were just on the cusp of about $600 million in assets. “Last year, we exceeded S1.2 billion and likely we will finish 2014 close to $1.3 billion.” Synergy was able to reward its members in 2013 with $4.7 million in ProfitShares and donate over $400,000 to charities in its network communities. ɸ Page A29

PIPELINE NEWS January 2015 in the oil industry, things go well for us as well.â€? Oil has plummeted from over $100 a barrel this past summer to well under $70 a barrel by early December when Bergen thought back to the last downturn. “If you think back to 2008 and 2009 it was a situation where people >ÄžĹŒ ƚŽ ĆŒĹ?Ĺ?Śƚ Ä‚ĆŒÄž ^Ç‡ĹśÄžĆŒĹ?LJ ĆŒÄžÄšĹ?Ćš hĹśĹ?ŽŜÍ›Ć? WÄ‚Ćš ,Ĺ˝ĆŒĆšŽŜÍ• Ä?ĹšĹ?ÄžĨ Ĺ?ŜŜŽÇ€Ä‚Ć&#x; ŽŜ ĂŜĚ ƉĞŽƉůĞ ŽĨͲ were not really sure ÄŽ Ä?ÄžĆŒÍ• ĹŻÄ‚Ĺś tĞůůĆ?Í• žĂŜĂĹ?ÄžĆŒ ŽĨ Ä?ĆľĆ?Ĺ?ŜĞĆ?Ć? Ä?Ä‚ŜŏĹ?ĹśĹ?Í• 'Ĺ˝ĆŒÄš dĹšĹ?Ğů͕ Ä?ĆŒÄ‚ĹśÄ?Ĺš žĂŜĂĹ?ÄžĆŒ ĂŜĚ ĆŒÄžĹśĆš what was on the hori ÄžĆŒĹ?ĞŜ͕ Ä?ĹšĹ?ÄžĨ Ĺ˝Ć‰ÄžĆŒÄ‚Ć&#x; ĹśĹ? Žĸ Ä?ÄžĆŒ Ä‚Ćš ƚŚĞ Ä?ŽŜĆ?ĆšĆŒĆľÄ?Ć&#x; ŽŜ Ć?Ĺ?ƚĞ ŽĨ ^Ç‡ĹśÄžĆŒĹ?LJ͛Ć? ĹśÄžÇ Ä?ĆľĹ?ĹŻÄšĹ?ĹśĹ? Ĺ?Ĺś zon,â€? he said. >ůŽLJĚžĹ?ĹśĆ?ĆšÄžĆŒÍ˜ WŚŽƚŽ Ä?LJ 'ÄžŽč >ĞĞ “What we’d like to pride ourselves in is we’re in it for the long than some of the other community. Éş Page A28 term. federal institutions “We think about If Saskatchewan “We’ll work with might be able to do.â€? education, health care follows Ottawa’s ongopeople and we’ll find soLloydminster and recreation. Those ing phase out of the branch manager Gorare all big pieces that special federal tax rate don Thiel has little credit unions give back for credit unions over 758&.,1* doubt the regional oil to.â€? the next four years, ‡ 3LFNHUV and gas industry has Synergy Credit member profit sharing ‡ %HG 7UXFNV played a big part in the Union is the fourth and donations would ‡ :LQFK 7UDFWRUV growth of Synergy’s aslargest credit union suffer a big hit. ‡ 7H[DV %HGV sets the past few years. in the province that’s “We’re back to a “Lloydminster has a benefited by being able grassroots level tolot of dependence on oil to react quickly to local day where we’re really and gas, so we deal with starting to lobby at the circumstances. “That’s important to a lot of members who provincial and federal level to see if we can get us today to reflect advice are either business owners within the oilpatch them to put us to where and the service levels or people that work in that are important in we were a couple of the oilpatch,â€? he said. today’s business world. years ago,â€? said Bergen. “As things go well People are looking for “Today, the credit decisions in a timely union system is a big manner,â€? said Bergen. component of supporting not only through “Because we are local, we are able to our ProfitShare but address some of those through donations and concerns much quicker volunteerism in the

lutions, and it fared out well if you think what’s happened in 2012-13 and up to this point in 2014 – it’s been pretty lucrative. “We’re not sure what the future beholds, but we’re going to be there for the long term. “If we start to see a bit of a pullback and maybe a slowdown, that’s still a great opportunity for us to assist the business community including the oil and gas sector.� Most of Synergy Credit Union’s oil and gas business customers are service companies as

A29

opposed to oil producers with huge capital projects. “We provide lending, we provide advice mainly with regards to how to start up your operations, how to grow it depending on what stage that you’re in,â€? said Alan Wells, manger of business banking. “We also offer referrals to our investment people, to our credential asset management people. They look after your life insurance needs. They look after your high dollar investment needs as well.â€? ɸ Page A30

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PIPELINE NEWS January 2015

Technology through collaboration ɺ Page A29 Synergy’s new four storey building will consolidate their core banking services, business banking service and wealth services into one full service retail location. The space is designed to adapt to ever changing technology and processes to quickly serve the current and future needs of its

members. Synergy Credit Union offers members online banking in addition to their Canadawide ATM network, online banking, automated phone banking, and mobile web banking services. Banking is also provided through their Member Contact Centre, by SMS texting and by new iPhone and Android phone apps.

“We want to continue to evolve them to have more functionality,� said Pat Horton, chief innovation and people officer. “I think they are pretty good already, but we know that every time something new is introduced to the retail environment, it’s expected that banking has it too.� Keeping up with the Joneses or big

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chartered banks with technology is expensive but costs and systems can be shared. “That’s always a tough conundrum when think about technology and how quickly it’s changing,� said Bergen. “One of the pieces for us that we feel will help us, is the investment into technology through collaboration. “Can we work with other credit unions and potentially even other industry within the community itself whether it is the city, education or health

care? “We think there are opportunities there – we can all leverage around the technology piece to alleviate some of those costs.� Synergy Credit Union will also save some money with plans to lease the top two floors to a complementary tenant and have it available for future expansion. There’s enough room on the first two levels to house the 70 to 85 employees who will move to the new location. There will also be

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some surprise features thought up by the CEO Glenn Stang. “He’d like our building to be a bit of a destination not just traditionally where you come in and make bill payments and gather some cash,â€? said Bergen. “We’re going to have our cafĂŠ where people can come in and maybe grab a coffee and a bit of a bite to eat. “Also we’re going to have an innovation showcase area where we’re going to talk and show a little bit about technology and get people comfortable around what technology brings.â€? There will also be space for “pop-up retailâ€? where local businesses can showcase what they have to offer in the community and create awareness of they do. “What a great way to showcase what a new business may have to offer in the community,â€? said Bergen.

PIPELINE NEWS January 2015

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PIPELINE NEWS

SECTION B January 2015

ƌ͘ ZŝĐŬ ŚĂůĂƚƵƌŶLJŬ ƉŽŝŶƚĞĚ ŽƵƚ ƐŽŵĞ ŽĨ ƚŚĞ ƟůƚŵĞƚĞƌ ƌĞƐƵůƚƐ ĨƌŽŵ ƚŚĞ ůĂƐƚ ƚǁŽ LJĞĂƌƐ ŽĨ ŵŽŶŝƚŽƌŝŶŐ͘ tŝƚŚ ƚŚŽƐĞ͕ ĂŶĚ ŽƚŚĞƌ͕ ŝŶƐƚƌƵŵĞŶƚƐ͕ ƚŚĞLJ ŚĂǀĞ ďĞĞŶ ĂďůĞ ƚŽ ŵĞĂƐƵƌĞ ŐůĂĐŝĂů ƌĞďŽƵŶĚ ƉƌŝŽƌ ƚŽ ĂŶLJ KϮ ŝŶũĞĐƟŽŶ͘

Aquistore ready to roll this spring By Brian Zinchuk Estevan – In early December, the New Horizons probe to the dwarf planet Pluto woke up, ready for its big day when it swings by what was once considered the ninth planet. It took many years to get to this stage, but the big day is about to arrive, and a flood of science is going to take place in a short time. That’s actually not too far off describing what’s about to take place just west of the SaskPower Boundary Dam Power Station, south of Estevan, with the Aquistore project. It is one of the “integrated” parts of the Boundary Dam Integrated Carbon Capture and Storage project. SaskPower now owns and will operate the Aquistore wells. Normally the carbon dioxide produced by the Boundary Dam ICCS flows down a 70 kilometre pipeline for use in the Cenovus-operate Weyburn unit for enhanced oil recovery. However, there will be times when Cenovus may not be able to take all, or any, of its CO2 due to things like facility maintenance. That is when Aquistore will be used to pump the CO2 into the second deepest well in Saskatchewan, the Aquistore injection well, at 3,396 metres. Right next to it, 150 metres to the north, is the Aquistore observation well. It’s the deepest well in Saskatchewan, at 3,400 metres vertical depth. The interaction between the two very deep, very expensive wells is a huge portion of the science. The carbon dioxide itself will be pumped into a deep saline aquifer, in this case, the Deadwood formation. There it should stay; hopefully forever. At least, that’s the intent. The science component is designed to see if that does indeed

look like that will take place. This is the whole “storage” concept, one that used to use the term “carbon sequestration.” On Dec. 11, the Petroleum Technology Research Centre held its third open house in Estevan regarding the project. The auditorium at the Saskatchewan Energy Training Institute was full of displays and scientists with PhDs from as far as Edmonton present to explain them, but attendance was almost negligible. Apparently not too many people in Estevan were concerned enough about the project to attend. One notable person who did attend was Mayor Roy Ludwig, who stopped at each booth. One of the land owners in the study area did attend, and was presented with water testing result from their well by the water specialist, Dr. Ben Rostron, from the University of Alberta. The open house was part of a commitment to a public discourse, and was meant to answer any questions the public might have had before the imminent inject of carbon dioxide, which is expected to happen early this spring. Ken From, CEO of the PTRC, said, “We are having an open house for the public to come and understand all the monitoring that has been done on the Aquistore site over the last several years, to note there is a baseline, and also to see what we are monitoring such as ground water, soil gas, seismic activity. The intent of all that for people come here and ask questions – how did you monitor it so far, have you found anything unusual in our area, and how will you know, over time, if something has gone awry with the CO2 injection?” The monitoring will be ongoing, he noted. There will be additional open houses in the future when they have something to report. ɸ Page B2

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B2

PIPELINE NEWS January 2015 Dr. Chris Hawkes, in blue, is a geological engineering professor from the University of Saskatchewan.

Ken From is CEO of the Petroleum Technology Research Centre, which has fostered the Aquistore project.

Everybody’s getting VHULRXV ZLWK Ă€UVW &22 expected soon Éş Page B1 One of the key things that will be monitored is how quickly the carbon dioxide plume underground travels from the injector well to the observation well. “We’ve had different models done, both by Schlumberger, and EERC out of Grand Forks, North Dakota. Depending on assumptions, we could see CO2 in the observation well as early as three weeks after we start to as long as two months. It just depends,â€? said From. The observation shack can draw reservoir fluid through thin, quarterinch capillary tubes, for continuous sampling, on a 24-hour basis. It is automated, to a certain degree, but there will be people there as needed. “We will be able to see, as they analyze the chemistry of the fluids, when we see the influx of CO2. When the isotopes start changing, we can say, ‘Yes, we’ve seen this plume come by,’â€? From said. There are multiple sensors and items being studied now, prior to injection, those items will be followed throughout the project (see related story, page B3) The total cost of the project comes close to the $31 to $32 million range. It has been funded up to 2017. About $25 million has already been spent. The bulk of that went into the drilling of the two wells, which took

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place during the second half of 2012. Is there much anticipation? “Right now, everyone’s getting serious,� From replied. “When we were talking to their guys today at the well, looking at their instruments they are very cognizant of the horse race. When the bell goes, everyone has to be there, doing their thing. The bell’s going to go and everyone will be ready, doing their monitoring and coordinating. There’s the data collection, and data analysis. “There will be over a dozen top researchers, and their students and auxiliary people,� he said. For instance, four are dedicated to just fluid sampling. “This is a big operation. “I’m not sure everyone realizes this is the world’s first commercial scale project like this,� he said, adding it’s groundbreaking, the best “laboratory� in the world to study CO2 injection into a deep formation. “It’s going to take years to disseminate this information. There’s so much stuff here. “We’re going to see dozens of papers published.� That knowledge will be transferred to government and industry decision-makers, so that they can make decisions based “This is big. It’s important. It’s very relevant, the research we’re doing,� he concluded.

PIPELINE NEWS January 2015

B3

Aquistore science building to a crescendo „ By Brian Zinchuk Estevan – A tremendous amount of scientific research is underway and even more data collection will take place with regards to the Aquistore project. A number of the researchers involved were present at the Aquistore open house on Dec. 11, held at the Saskatchewan Energy Training Institute in Estevan. Dr. Ben Rostron is a professor of hydrogeology with the University of Alberta. Dr. Rick Chalaturnyk is also a U of A professor, in this case, of geotechnical engineering. Dr. Chris Hawkes hails from the University of Saskatchewan where he’s a professor of geological engineering. All have been part of the International Energy Agency Greenhouse Gas research consortium that spent many years studying the Weyburn-Midale carbon dioxide enhanced oil recovery projects. Indeed, they “cut their teeth� on CO2 storage at Weyburn. All three were involved in the Kerr investigation. All currently sit on the SERC – science and engineering research committee – for Aquistore. Missing from their group was Dr. Don White from the Geological Survey of Canada and Jim Sorenson from EERC. Kyle Worth, project manager of Aquistore for the Petroleum Technology Research Centre (PTRC) joined in on the conversation with Pipeline News. With first carbon dioxide arrives in early spring, they will be ready for action, having spent months gearing up. But it’s been a

long road to get there, many years in fact. That includes initial baseline monitoring that began nearly three years ago, in early 2012. That’s when a large 3D seismic survey was done of a five by five kilometre area centred on the planned injection site. A smaller 2.5 by 2.5 kilometre permanent 3D array was installed, and multiple surveys have been done since then using the permanent array. Repeating the same seismic survey over the same area over time is sometimes referred to as 4D, the fourth dimension being time. The permanent seismic array has 630 geophones buried 20 metres deep. “We were out this morning visiting the injection well and monitoring wells. The CO2 pipeline is there. The injection and monitoring facilities are ready to go,â€? said Rostron. Crews are working on gathering some of the last of the baseline testing prior to carbon dioxide injection, expected to being this spring, doing baseline geophysical logging of the wells and downhole monitoring equipment. “We will turn our monitoring equipment on, just before we start injecting CO2, and then we will have CO2 injection, and hopefully all of our experiments we waited seven years for ‌â€? he said. Having a well-established baseline is absolutely critical for this project, because you won’t know if something changed unless you know what it was like before. ɸ Page B4

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Baseline monitoring of water, soil gas, and seismic Éş Page B3 Chalaturnyk said, “What’s important here is baseline. This whole world of baseline measurements is extremely important so you can measure changes against the baseline.â€? Certain areas, like ground water and seismic, have been studied for a while now, while other areas, that data is now or will soon be collected. “The baseline data is extremely important. People purport changes without knowing what it was initially,â€? he said, when asked about how it factored into the Kerr investigation. That investigation was spawned when a family near the Wey-

burn unit Goodwater plant suspected CO2 was leaking from the enhanced oil recovery project in the area. Three investigations took place as a result, and all came back negative. “We can always look back and do better,� Chalaturnyk said. He noted that the Weyburn-Midale wasn’t so much looking at monitoring, but looking at technologies that allow monitoring to take place. How much can it take? When first CO2 arrives is dependent upon SaskPower’s schedule, according to Worth. How much CO2 can go into the formation is one area that will be studied. While the

carbon capture plant was designed to deliver roughly 3,200 tonnes of carbon dioxide per day, Chalaturnyk noted the limiting factor on the injection well is the tubing, which has a maximum capacity of 2,000 tonnes per day. Rostron noted there’s another safe operating limit at play, that being how much the confining layer can take. “We can’t go above a certain limit, then we risk damaging the confining layers,� he said. “The second part of that is a time thing. Even if you have injectivity, you can put a high amount for a low period of time, or a slow amount with the pressures lower for a longer time.�

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Worth noted, “We’re looking for a constant rate of injection over a month period. “The volume can be negotiated, but we need a fairly constant rate over a month’s time. As long as it’s fairly constant and not starting and stopping, it will be adequate for us to do the evaluations.� Chalaturnyk said his portion of the study includes the downhole instrumentation design and fluid recovery system, similar areas to what Hawkes is working on, that being reservoir geomechanics. That’s how the reservoir and cap rocks behave when CO2 is injected. Some of this study will be done using the multiple fibre optic sensors strapped to the outside of the casings of both wells.

Water monitoring There are four parts of the groundwater monitoring program. One includes identifying nearby landowners. Six of the closest landowners have had their wells tested at least three times, tested for “almost everything you could reasonably test for,â€? according to Rostron. The second focus was with SaskPower, which has a whole regional set of monitoring wells in the Tableland aquifer to the west of the power station. This resulted in water samples up to 50 metres deep. The nearby ash lagoon, between the Aquistore site and the power station, has about a half dozen monitoring wells, making that the third area of monitoring. ɸ Page B5

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PIPELINE NEWS January 2015 ɺ Page B4 Fourthly, and most importantly, there are 20 piezometers installed up to 30 metres deep in a criss-cross pattern within a few kilometres around the site. Several of these locations have multiple sensors, monitoring water chemistry, pressure and temperature. There are approximately 48 different wells that have been measured, and have done each at least three times, gathering two years of background data. Soil gas monitoring The soil gas monitoring program is similar to the water monitoring. “This is the Kerr issue that bit us,” Rostron said. “There are natural levels of CO2 associated with biological activity in the soils. Plants cycle CO2 as part of photosynthesis.” “In the Kerr case, it was very clear the Kerrs had someone came in, measured the CO2, and they purported that this is associated with the Weyburn injection of EOR. It’s very clear from the data that it isn’t. That I can say with pretty good confidence,” Rostron said. “Our work on the Weyburn research project had measured soil gases. We know both isotopically and based on fluxes and concentrations, that that’s what the natural range was. We had seen that before. So we wrote that in our reply to their allegations, from PTRC. “Subsequent to that a consultant went out from Cenovus and did more testing, using more isotopes, carbon isotopes. There was a third study done by researchers from University of Texas for IPAC-CO2. They did an investigation and basically all of them said the same thing. It’s natural CO2.” When it came to Aquistore, there has been extensive baseline study on soil gases. They are measuring point concentrations of CO2 using 49 soil gas probes. Some measure continuously, and have done so for 24 hours a day for two years. Flux measurements are done to see how much is coming across the soil surface. They use a big cone, put it on the ground for a set period of time, and it captures all the CO2 into the cone over time. Finally, they have an ATV-mounted sensor with a sniffer that measures concentrations, with which they have done four surveys already. If that wasn’t enough, when they drilled the two wells, they got samples of gas coming up in the drilling mud, at the shaker table. “We have a profile, vertically, of the isotopes of the deepest well in Saskatchewan. We just published that at a conference in Texas in September,” Rostron said. Similarly, they have sought out samples from produced fluid from nearby deep oil and gas wells, to establish the baseline formation-water chemistry of deeper aquifers (up to 2030 metres deep).

B5

Earth movement Five tiltmeters have been installed. They are used for monitoring movement of the earth at the surface. Similar in concept to a carpenter’s spirit level, they are extremely sensitive. Chalaturnyk said, “If there’s uplift, you can measure that.” What many people may not realize is that the ground in much of Western Canada is still slowly rebounding from having the weight of the glaciers on them for roughly 60,000 years over the last ice age, which ended in this area around 15,000 years ago. Using tiltmeters, GPS, and sensors that rely on radar from satellites, the scientists can measure uplift to an accuracy of millimetres. They are measuring glacial-related uplift now. Their first maps show uplift in the area prior to CO2 injection, to the tune of millimetres per year. “Exactly for that reason (glacial-related uplift), there are measurements occurring without any CO2 injection,” Chalaturnyk said. This monitoring will continue as the project goes forward. Big days ahead The big days, however, will be when carbon dioxide is first injected, and when it is first detected at the observation well. They have an informal pool going as to when that might be, but the reality is it is a very serious matter. The strategic placement of that multi-million dollar observation well took a lot of consideration. Eventually it was decided it would be placed 150 metres to the north of the injection well. Originally they wanted to do two observation wells, but at $8 to $10 million apiece, they only did one. Rostron said, “If we put it far away, it will last longer. We’ll be able to make more measurements as the CO2 comes towards us. But you increase the risk of the CO2 plume moving in a different direction. So we chose to put it closer to increase our chances of usable data for the project.” Carbon dioxide reaching that observation well will be the climax of the project, much like the New Horizons probe that will soon sail past the dwarf planet of Pluto. “Once the CO2 passes the observation well, the monitoring part will tell us, yeah, there’s CO2 there. It won’t tell us anything new. But if we can understand the movement of CO2 to our observation well, it gives us increased confidence in the ability to predict its behavior beyond our observation well. It will allow us to tune our models, test our equipment, all those important factors,” Rostron said. Log, core, structural and seismic data went into a numeric model to predict the path of the plume. The researchers think the plume will indeed reach the observation well. And then the heavy-duty analysis begins.

B6

PIPELINE NEWS January 2015

Management buyout fund launched by Westcap Mgt. Ltd. „ By Brian Zinchuk Saskatoon – When a company owner decides it’s time to retire and step back from the

business they may have spent decades building, it’s not a decision taken lightly. Nor is it necessarily an easy endeavour, either. Who

Tyler Bradley of Westcap Mgt. Ltd. highlighted a new management buyout fund they ŚĂǀĞ ĹŠĆľĆ?Ćš Ä?ŽžĆ‰ĹŻÄžĆšÄžÄš ƚŚĞ ĎŜĂŜÄ?Ĺ?ĹśĹ? ĨŽĆŒÍ˜ EĹ˝Ç Ĺ?ƚ͛Ć? Ć&#x;žĞ ƚŽ ĎŜĚ Ä?ŽžĆ‰Ä‚ĹśĹ?ÄžĆ? ƚŽ Ĺ?ŜǀĞĆ?Ćš Ĺ?ĹśÍ˜ WŚŽƚŽ Ć?ĆľÄ?ĹľĹ?ƊĞĚ

will run this business and care for it as much as I have? Will it be in good hands? Management buyouts are one transition

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strategy, one which Saskatoon-based Westcap Mgt. Ltd. has been working on for years. Westcap expects that over the next 10 years, two out of three small businesses will transfer ownership. That massive transition is what they are targeting with a new fund, the Westcap MBO Investment LP. “It’s a private equity fund that Westcap completed the raise on in the fall of this year,� said Tyler Bradley, vice-president of Westcap. “We raised $57 million from roughly 40 of Saskatchewan’s top business leaders.� A few are in other Western provinces, but all have Saskatchewan ties. The fund initially opened in the spring of 2014 and was only

offered to close friends and business associates. “There was a lot of demand, with the volatility in the public markets. There was a lot of demand for private-income oriented investment vehicles. It’s not easy raising capital in turbulent markets. But for our investment base, the concept of management buyouts resonated. A lot of our investors are owners of large businesses themselves,â€? Bradley said. No investments have been made with this fund yet. “One of the reasons we founded this fund was to partner with Golden Opportunities Fund. It’s one of the largest retail venture capital funds, and the largest fund under management by Westcap,â€? said Bradley. ɸ Page B7

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PIPELINE NEWS January 2015 Éş Page B6 “Golden, over the past 15 years, has been investing in management buyouts. One of the things we’ve found is Golden today is a $246 million fund, and under mutual fund law, we can invest up to 10 per cent in any one company. We have a limit in how much equity we can commit to one company. By launching this new fund, we broaden our network into good, private Saskatchewan businesses and we broaden our capital base so we can invest in more and larger businesses. “Between those two funds, we’ll be investing in Saskatchewan-based companies with enterprise values of up to $100 million. Staple industry businesses; it could be agriculture, oilfield services, industrials, manufacturing. Saskatchewan has a lot of companies. “We’re humble people in Saskatchewan. A lot of these companies aren’t flashy. They fly under the radar. But they’re good businesses.â€? Right now, at $246 million, the largest “biteâ€? Golden can take is $24.6 million. By partnering with the new MBO fund, which is at $57 million, they can top-up their combined “bite.â€? The enterprise value of companies invested in could be from $10 million to $100 million, but he expects the bulk of the activity will be with companies worth $35 million to $75 million. The goal with the MBO fund is to have five to six companies in which to invest. Since it is not a mutual fund, they can invest more than 10 per cent of the fund into an individual company. Of those approximately 40 investors into the fund, he noted, “We have a number of investors from the oilpatch.â€? Bradley added they are excited about the opportunities in oilfield services, given the magnitude and importance of the industry in Saskatchewan. That includes sub-segments like drilling, drilling services, production services and manufacturing. “We typically syndicate with other like-minded investors of the fund,â€? he noted. Combined with other investment partners, the total capital they can bring to a deal is considerable. Between Golden Opportunities and Westcap MBO and its LP investors, there’s an equity check of $25 million to $50 million they can cut internally.. Either singly or combined, the funds would be willing to buy more than 50 per cent of an entity. But they would not buy 100 per cent, due to one of their fundamental principles. “The whole underlying theme behind the

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management buyout fund and management buyout sector within Golden Opportunities Fund is to partner with a good management team. We always want them to have skin in the game,� said Bradley. There’s no hard minimum percentage of “skin in the game.� “We’re looking for a meaningful level of alignment,� he said, offering as an example a younger team in their mid-thirties, who have proven their ability to run this business, but don’t have a million dollars cash sitting in the bank account. It can be an individual or team buying out the business, but it’s usually a team. “You might have a lead ownership group of say five people and then an employee ownership plan that offers even lower level employees a form of ownership in the business,� Bradley said. Employee stock option plans are pretty common in these sort of transitions. In aggregate, Westcap has $560 million in capital under management. It’s been around since 1991, and has a staff of more than 20, headquartered in Saskatoon. Asked if there was something in play coming up soon, he noted Golden has been investing in this space for the last 15 years. They always have transactions in the pipeline. They take time and even if sell-

B7

ers are not ready we will follow the company until they are ready. “We might invest in one in every 10 companies we look at,� he said. A lot of transactions happen in turbulent times. “People exit their businesses in a variety of different ways and for a variety of different reasons,� he said. In some cases, the business owners don’t want to retire, but they want to take a little money off the table and diversify their interests. In other cases, it’s a 65-year-old business owner who just wants to retire. “We’ve done transactions in strong markets, in weak markets, growing markets, declining markets. Overall, it’s a very personal matter (for business owners). They get very attached to their companies, but every business owner will, at some time, have to sell.� One of the attractions of selling to private equity is that it is their company, built up over the years, is less likely to disappear as a brand than if it were purchased by a larger public company. “You’re preserving a legacy, you’re preserving a brand that you built. And the people that helped you build the business are just going to continue that legacy,� Bradley said. “That’s one thing we’ve found resonates with business owners we’ve done transactions with.�

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B8

PIPELINE NEWS January 2015

PFM Capital is not closing its wallets

The Steel Reef Infrastructure Corp. new gas plant near North Portal was ĹśÄžÄ‚ĆŒĹ?ĹśĹ? Ä?ŽžĆ‰ĹŻÄžĆ&#x; ŽŜ Ĺ?Ĺś ÄžÄ‚ĆŒͲ ly December. Four of funds managed by PFM Capital have investments in Steel Reef. Photo by Brian Zinchuk

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Regina – At the start of the conversation, WTI oil was at $64. Five minutes in, it was $63. Two weeks later, the price was $56 a barrel. It makes for interesting times when speaking to private equity firms about finance in the oilpatch. Pipeline News

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Jason Moser, senior investment manager with PFM ĂƉĹ?ƚĂů /ĹśÄ?͕͘ Ć?ĂLJĆ? ƚŚĞLJ Ä‚ĆŒÄž Ć?Ć&#x; ĹŻĹŻ žĂŏĹ?ĹśĹ? Ĺ?ŜǀĞĆ?ƚžĞŜƚĆ?͘ File photo

spoke to Jason Moser, senior investment manager with PFM Capital Inc., based in Regina, on Nov. 26. Funds managed by PFM Capital including the SaskWorks Venture Fund (Diversified and Resources share class), APEX I and APEX II Investment Funds have substantial investments in the Saskatchewan oilfield, from junior producers to drilling and service rig companies. “Despite the volatility, we try not to change our philosophy too much,� Moser said. “We’ll have a reasonably active December in terms of follow-on activity.� The elephant in the room, at least over the phone, is oil dropping like a stone. How much exposure to oil and gas do they have? “It’s roughly about 40 per cent of our investment portfolio, in excess of $100 million, at cost,� he said. “It’s not insignificant, so we’re attuned to it, but we try not to get too fixated on day-to-day gyrations as we do have a long time

horizon for most of our investments. In the same breath, you want to make sure the existing portfolio companies are reacting accordingly. Capital programs are going to be pared down. You live within your means, generally.â€? He noted the dip in oil prices has a general impact, as opposed to flooding, which would have a localized impact. The Funds’ oilfield weighting is roughly two-thirds producers, and the remaining third being service companies. Moser sits on several boards, as does PFM CEO Randy Beattie and VP of Investments Rob Duguid. “We won’t necessarily be closing our wallets during this period. We’ll be applying the same high degree of scrutiny we provide to our investments, in a $60 environment or a $100 environment. If we see things we still think are economic and can offer an appropriate return, we’ll still be placing money. We’ve done that in December.â€? ɸ Page B9

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PIPELINE NEWS January 2015 Éş Page B8 Looking to their analysis on past returns, commodities are a factor, but not necessarily the largest factor. It magnifies returns, but generally speaking, a low-cost, efficient producer with good growth will translate into positive returns. It’s easier to grow in a higher-priced environment, but can still be accomplished in a lower one with the right assets and management team. “One of the things we see, not just amongst our E&P producers, but across the sector is they are intuitively looking for price concessions from their service providers. In turn some of these service providers will attempt to absorb some of it and possible gain concessions from some of their vendors. When you see a 30-40 per cent decline in your commodity price, you’re going to look for concessions. No matter how you slice it, it’s not as profitable for producers now as it was three or four months ago, and they’ll look for things to be adjusted accordingly. The balancing act is that service companies still need to operate profitably or to generate some return or else they can’t provide the service. “Overall it’s fair to say everyone will be par-

ing down their programs,� he said, with increasing focus on optimization and efficiencies, areas that are less capital intensive and with a quick payback. Producers may back off some drilling, Moser added. Areas that might be explored at $90 oil may have to be deferred until we see a higher-priced environment. The funds PFM manages are considered “patient capital,� and now is the time to be patient. “We’re not jumping out of the window,� Moser said, noting their investments are fairly long term. If they see investments that are economic and offer a good risk adjusted return, they will still place money. “You always want to have a high degree of confidence, but especially so in this market, because there’s less room for error, especially amongst service companies.� When times are better, there may be more organic growth. But now in some cases it might be more economic for producers or service companies to buy existing assets for less than they otherwise could do internally. It may be a business combination or an acquisition of a division.

B9

On the subject of financial “stress tests,� he noted amongst their E&P portfolio companies, during the last decline in 2008-2009 they didn’t see a lot of revisions by the banks. They hopefully have increased their production or reserve base since the last banking review, which can offset the impact of the commodity decline in some cases. It’s important to work with a bank that knows the sector, he pointed out. Having a senior lender that “knows the space,� and is not prone to a kneejerk reaction to pull out is more important than saving a few basis points on a loan. One of the more perilous areas is when a service company can be hit with a triple whammy – lower utilization, lower margins, and companies taking time to pay their bills. That can make it difficult to be compliant with their own banking obligations or to generate sufficient cash flow to keep operations going.

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APEX II placing money Early in 2014 PFM was working on securing commitments for its new APEX II Investment Fund. They raised commitments of a little under $90 million, within the range of what they were targeting. The fund raising was closed in June 2014. That fund will generally syndicate with SaskWorks. It has several investments in the oilpatch. “We have been placing capital with that fund,� he said. One of those investments is in Steel Reef Infrastruc-

ture Corp. whose gas plant near North Portal is nearly complete. “It’s an impressive looking facility,� Moser

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PIPELINE NEWS January 2015

What might 2015 look like: MNP Estevan – It might have been a small room, but it sure was packed with people who wanted to hear the financial forecasts of David Yager, accounting firm MNP’s national leader on oilfield services, when he spoke in Estevan on Nov. 25. With oil prices falling precipitously in recent months, and even more so in the weeks after the presentation, there was definitely a feeling of concern in the room as 2015 was on the horizon.

It was Yager’s third presentation of this type in Estevan in recent years. Oil companies primarily get their money from the sale of production. The No. 1 source of revenue for oilfield services is capital expenditures, he noted, but operating costs are another source of revenue. Oilfield services ends up being an $85 billion industry, the second-largest business in Canada, behind only the oil companies themselves.

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Canada produces 6.5 million barrel of oil equivalent per day behind the United States, Russia, Saudi Arabia and Iran. The oilsands had grown to over two million barrels per day. Yager noted Canada and the United States are making a big impact in the world thanks to the shale revolution. From 1998 to 2008, the value of all the oil and gas produced in Canada went from $26.5 billion to $145 billion. “If you managed to grow your company during this period, don’t dislocate your shoulder patting yourself on the back,” Yager joked. “It was a wonderful market, you needed a pulse.” Then in 2009 there was a massive correction, but the last four years have been good. The last year, 2014, could be a record-setting year for revenue/cash flow. It hasn’t been challenging to make money during that time.

David Yager spoke to a small but packed room in Estevan on Nov. 26 about how 2015 is shaping up. Photo by Brian Zinchuk

So where are we going now? “We’re suffering though a material correction,” he said. The average price of oil was US$97.43 for WTI in the 24 months prior to the late-November presentation. The price “leaked” $20 a barrel by the time of the presentation (and another $20 a barrel by mid-December, since the presentation). He noted that in 10 years, the Marcellus shale has grown to produce 15 billion cubic

feet a day of gas. It took Canada 50 years to hit 13 billion cubic feet per day production. Still, gas is steady for price. There hasn’t been an economic downturn, however. “To say this is like what we’ve gone through in 2008-2009 is just wrong,” said Yager. Western Canada Select heavy crude pricing was good news to that point. The decline of the Canadian dollar has helped. Oil-by-rail has helped with price differentials.

The PSAC drilling forecast was a month old by Yager’s talk, “So it might be meaningless,” he said, but PSAC was projecting only a seven per cent decline at the time. Touching on penetration rates he said it was staggering that a 3,000 metre measured depth well in Saskatchewan now runs around nine days. When he was a roughneck, a 15,000 foot (4,570 metre) well was a six month job, if everything went well. ɸ Page B11

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PIPELINE NEWS January 2015 Éş Page B10 “The rate they are punching these wells now is just staggering,â€? he said. Rig operating days affect rentals such as lighting, mats, centrifuges and the like. They are expecting to decline, resulting in a contraction of the rental business as a whole. The CAODC expected, when Yager spoke, a 10 per cent decline in the number of rigs, and utilizaMNP’s David Hammermeister touched on how to stay in the black during the decline. Photo by Brian Zinchuk

If you haven’t got a call, expect one David Hammermeister, MNP’s oil and gas lead in Estevan, noted during a Nov. 26 presentation that oil companies were going to be seeking lower prices from their suppliers. “If you haven’t got a phone call from them yet, expect one,� he said. For the service companies in these trying times, he offered the following: First, know what your costs are. Be careful of buying yourself work when you’re not making money on it. Second, if things are slowing down, make sure you have good internal financial statements. External financial statements are also important for securing the lowest cost financing that you can. Third, look at more efficient tax planning. Fourth, look for day-to-day operating efficiencies. This could be efficiencies in the shop, or lower cost suppliers. Fifth, collect on your bills. “It’s your money!� he said. Make sure you collect on your receivables. “A lot of guys are so busy running the business, sales are great, collections can take care of themselves,� is often the thought, he noted. “Does your operations team know how important this is and best practices for fast payment?� Don’t ignore your credit policies and procedures, Hammermeister said. He noted Do-All Industry’s bankruptcy affected a lot of businesses in the community. His eyes were opened to how much credit was extended to Do-All. Finally, Hammermeister touched on “leakage,� such as tools going out the back door, and personal tanks of fuel at the cardlock. Some trucks get 12 miles per gallon, and some get two, based on its fuel usage. That’s something to watch for.

tion off by four per cent. Yager said, “The capital expenditures is a bit disturbing.� This includes drilling and facilities. Oilsands are expected to see a 10 per cent dip. He noted the week prior he saw “for sale� and “for lease� signs on condos in Fort McMurray. CAPP predicted a five per cent decline in capital expenditures in 2015. Manufacturing and fabrication businesses are probably overbuilt, he said, noting the demise of Estevan-based Do-All Industries, a rig manufacturer. “Anything to do with production is on its way up,� he said. Forecasting winners and losers in the coming year, winners include production services, facilities, artificial lift and pipelines. TransCanada Corp., he noted, wants to build $46 billion worth of pipelines. Walking rigs for pad projects will be in demand. Frac sand suppliers are also a winner, and directional drillers “won the lottery,� as he put it. s TON PICKERS s (OUR (OT 3HOT 3ERVICES s 3HORT ,ONG (AULS s -ATTING 2ENTAL s #ATWALK 2ENTAL s 'ENERAL $ELIVERY s KW KW ,IGHT 0LANT 2ENTALS

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Losers include remote housing, oilsands delineation drillers. Vertical well conventional drillers are another. Crescent Point had announced its intentions to drill the same number of wells, but would be looking for concessions from its suppliers, what Yager referred to as “grinding suppliers.� Looking for good news, he said just one liquefied natural gas project for the B.C. coast getting the go-ahead would change attitudes to the positive. Approval of the Keystone XL would be another. The big question was the then-upcoming OPEC meeting in late November which would discuss ongoing production levels. That meeting, which happening shortly after Yager’s presentation, led to a substantial decline in oil prices. “If the price goes down $15 a barrel, revenue will shrink $23 billion,� Yager forecasted ahead of OPEC meeting. In the three weeks following the presentation, it did exactly that, dropping to $55.93 by Dec. 17.

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Dealing with declining prices and less work „ By Brian Zinchuk Estevan – With Affinity Credit Union expanding in the new year to include Shaunavon Credit Union, the financial institution’s exposure to the oilpatch in growing. The only region of the oil industry in Saskatchewan they aren’t in is Lloydminster. On Dec. 12, Pipeline News spoke to Kurt Schmidt, regional manager of business banking for the south region of Affinity Credit Union. Schmidt has been with the credit union and its predecessor, Spectra, since 2008, having previously worked for a large charter bank. The day of the interview, the WTI price of oil dropped below $60 per barrel for the first time in five years, part of a continuing trend since June. Pipeline News: With the price of oil dropping like a stone, having a solid financial footing under you is imperative. How important is it that you, as a company owner, be on good terms with your credit union or bank? Kurt Schmidt: Really it’s not any different for any small business, or large business, for that matter.

You need to have a good contact and great relationship with your bank/creditor, anybody that’s providing you capital in the form of money. The longer that you have that tenure, the easier it is to work through those tough times. It’s like any relationship, the longer you build that trust, the longer you build that relationship and understanding of a person’s business, someone’s management skills, management team, the easier it is for a creditor or credit union to make quick and timely decisions as well as for you to react to the expectations of your creditor. P.N.: What can you, the business owner, do to ensure you have the credit union or bank on your side? Schmidt: With anything, any lending, communication on the business side is key. Every creditor should, and every credit union does, within business lending, whether its ag, oil and gas, there’s going to be time where things don’t work exactly the way the business model was meant to fall out. If you have communication, and any unforeseeable things that are coming

up on your horizon, and you communicate them with your credit union or bank, they’ll be able to work with you and start working through them before it becomes a last second to midnight sort of deal. It’s all that proactivity. Whether you know contracts are falling through, if the number of wells or contracts you’re going to

have is going to be cut in half because Calgary said that, the business owner knows their business the best. They know the ways they can adapt, and then, if they

can communicate with their financing team, their accountant, their lawyer, they can best position themselves to minimize the impact and survive through

that. P.N.: Conversely, what can the credit union or bank do for you in trying times like this? ɸ Page B14

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PIPELINE NEWS January 2015

$IÀQLW\ &UHGLW 8QLRQ JURZLQJ WR LQFOXGH 6KDXQDYRQ ɺ Page B13 Schmidt: I think there’s all sorts of options if the communication is clear and the relationship has always been there, and the understanding of that communication was always fully transparent. If you have a clear relationship, and the member understands their business, and the credit union understands their business, I don’t even need to talk to the member to know. If they phone and say things are tight, if I have that information at hand, if we have a good relationship, if everything’s up to date, I can start looking at the numbers, the assets, and the options off hand. If we’ve had that good relationship, we’ve probably worked with them to position them for this type of scenario. Some may look at is as, oh, they’re being conservative in the good times. But that’s

really the factor of what the credit unions are. Whether it’s the ag industry, the oil and gas industries, or other industries, the banks tend to pull in and out. I’ve worked at a charter bank. Ag’s good, this year, let’s ramp up ag. There’s no margin in giant corporate financing in downtown Toronto, let’s get into small business. Let’s get into oil and gas because there’s no downhill on the horizon, so let’s get in and start leveraging it. Then when today’s numbers start showing up, the banks tend to be knee-jerk. Let’s back away. Let’s not do that. You’ve seen certain financial institutions pull out their bottom 20, 30 per cent of accounts, whether they were in arrears or not. That happened at another institution six or seven years ago. I wasn’t even at the Credit Union then. One of the agrologists said, “We’re getting out of our bottom 40 per cent

ag accounts.” They started calling in loans. We started scooping them up. Most of them were pretty decent accounts. I left the charter bank since then. You see that with the oil and gas. When I worked at a charter, we had guys that always brought that up. I think the credit unions have tried to reach a balance between being overly aggressive on one end and not in the game at all on the other, so when members do get into these times, you have options to worth with them. 2008-2009 is a prime example. Out of our entire oil and gas portfolio, due to the downturn, we really had no losses. We had one account where we couldn’t work out maintaining a relationship. We worked out an exit strategy from us to someone else. I believe they are still in existence today, which is a good story. But there was

ĞĂůŝŶŐ ǁŝƚŚ Žŝů ĐĂŶƉĂŶŝĞƐ ƚŚĂƚ ƚĂŬĞ ƚŚĞŝƌ ƟŵĞ ƚŽ ƉĂLJ ďŝůůƐ ŝƐ ŽŶĞ ĐŽŶĐĞƌŶ ŽĨ ŽŝůĮĞůĚ ƐĞƌǀŝĐĞ ŵĞŵďĞƌƐ͕ ĂĐĐŽƌĚŝŶŐ ƚŽ <Ƶƌƚ ^ĐŚŵŝĚƚ͘

only one account in that trying time we couldn’t work with. Management is your No. 1 key. P.N.: The last time Pipeline News spoke to your institution, it was

a much smaller Spectra Credit Union. Now it’s Affinity Credit Union. What impact, if any, has that had on your servicing the oilpatch? Schmidt: It’s been over a year now since

we’ve merged. The big impact has been aligning processes, aligning credit procedures and stuff like that. Our banking system merger has occurred. There’s an app now. ɸ Page B15

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PIPELINE NEWS January 2015 Éş Page B14 Specific to oil and gas industry, there’s no impact to our involvement. Considerations and the types of products and financing we do remain somewhat unchanged. However, we are looking at refining some to make them more easy and efficient for us internally as well as the ease of use and access for our members. The major impact, and it doesn’t impact a majority of our members, but does affect our members with grown with over time, is that our capital ability to assist them has grown. Whereas 15, 20 years ago, maybe even four years ago, we may have had member with us for 20 years who were now growing in the industry where we had to look at syndicating loans our or working with other partners as well as PFM, Westcap, and other credit unions across Canada. It was exponential growth. When I came to Spectra in 2008, we were limited. We had to go to credit unions that really had no understanding of oil and gas. It was a challenge. Now there are very few Saskatchewan-based companies we couldn’t deal with. If the deal makes sense, there’s few limiting factors of where we could go. We couldn’t deal with one of the largest producers, but some of the larger names that kick around in the oilpatch down here, there’s few we couldn’t deal with. P.N.: You had offered some wisdom regarding the last dip, when people had 2007 debt but 2008 revenue. Can you explain? Schmidt: It really goes back to talking about how the credit union can help get over these dips, and the positioning over time of relationship, to work together to get through these dips. In the oil business, fluctuations are pretty common. You won’t find an economist that won’t tell you oil will go up and oil will go down. If you talk to the old oil boys in the area and they’ll tell ya, “I remember making money at $12 a barrel, then it dropped to $9, and it was pretty tough.â€? The fluctuations are key. I came to Estevan in 2006. I came when oil was maybe $40, maybe less. I remember saying, “Oh! Forty dollar oil. Oh! Fifty dollar oil!â€? And it kept going and going. That’s when we saw a lot of our small business people and farmers say, “I can start hotshotting. I can supplement my farm income. This is going to be great!â€? Businesses started up. And it was growth, and

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growth and growth. The financial term you’ll hear is overtension, or overextending oneself. That’s where you continually grow and your payments continue to support your debt requirements. But if your growth ever slows or stops, you get into a predicament where you can’t make that payment. We had some people in 2007, 2008 where they wanted to continue to grow and lever and lever and their equity position was shrinking as they grew. There were some instances where we said you might need to slow down or for that piece equipment, now might not be the time, and they would go and find higher rates of interest and higher risk financing and get those pieces. Of course they could support that debt with the revenues of 2007, but the problem was when revenues slowed or their contracts fell by 30 per cent or business slowed by 20 per cent, they could only afford a 15 per cent drop. They were running with revenues of 2009, but

B15

they needed the ability to have the revenues of 2007 to meet their expenses. P.N.: In comparison to the 2008 to 2009 crash in prices, where oil went from $147/barrel to $38/ barrel from July or 2008 to April of 2009, how is the current adjustment shaping up? What lessons can your clients take from the previous shakeup and implement today? Schmidt: It goes back to management, and knowing your business. It’s not only, “I have good relationships with 23 guys in the industry and I can get business from them and we have a good working relationship.â€? Knowing your business gets into the financial aspect, and that’s where we get into the trouble in times like this. You need to understand the numbers of your business. You need to understand your margins. You need to understand your cash flow. ɸ Page B17

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PIPELINE NEWS January 2015

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2007 debt with 2008 revenue could be repeated ɺ Page B15 You need to understand where your cash comes from and your uses of cash, whether it’s accounts payable, which can be a source of cash, or especially small companies, your accounts receivable, because it’s your cash tied up in (a big oil company’s) line of credit. They’re using you as financing and it’s not cash you have available. That’s where lines of credit come in as so important. Back to the numbers, understanding your business. You need to do what (that big oil company) is already doing. What can you absorb on your financial income sheet? What are your assets on you balance sheet, and how can you move them from one sheet to another to carry on? Can you cut expenses? What are your employee costs, equipment costs? What’s variable, what’s fixed? What can you control, and what can you not? Then you have to see where you can go. Everyone in small business wants to keep their staff through the downturns. They want to keep them happy because they’re very hard to replace. How can you minimize the impact? It’s understanding your business and understanding your numbers. You have to manage the people, the markets, the materials, and relationships with suppliers, customers and employees. P.N.: With the lowest interest rates possible right now, can small businesses fall into a credit trap by taking on too much credit? Schmidt: I guess your risk is there. It’s not just exclusive to the oil industry. It’s with anyone borrowing money. You have to look at what you can absorb. There’s no doubt at some point in time rate are going to go up. The question is can

you absorb them or not? You can run into the exact same thing. Instead of 2007 debt with 2009 revenues, you could have 2009 revenues, but 1986 interest rates. If you go from a three per cent interest rate, what does that do to your payments? Here’s the keys and away you go. If you know your numbers, and not everyone in the oil industry goes into that in depth. But there are people out there, whether accountants, or you financial partner like your bank or credit union (who can look at it). We do go through and stress test members when we approve them, especially large ones, and we stress test portfolios, to ensure, if rates go up five per cent, how much of a risk is it to this business? How much of a risk are our loans? That’s just pure due diligence. It’s a whole different model for a financial institution or us, but for an individual, it’s not that hard. If you have five loans or six, if this went from four to five, holy cow, I have to make up that much more money to make up for it. P.N.: In other industries, accountants consider outstanding invoices over 90 days as bad debt, yet in the oilpatch, many producers don’t pay until much longer than that. Can you explain the realities of this conundrum, and how you as a credit union deal with this? Schmidt: We brought in the process of going to 120 days on a lot of our oil-related accounts precisely for that reason. There was stipulations. We needed access to their online financial reporting, which with any publicly traded company, you can. Anything that’s publically traded and we have access to their financials monthly or at least quarterly basis, we go in and evaluate that. It allowed

us to work with many of our members that were coming up against that 90 day window. We only excluded on those accounts invoices over 120 days. We won’t exclude the whole account because of $4,800 of $600,000 is over 90 days. In the oil industry, what we found, was you have that all the time. Someone will have $700,000 of good receivables, and then they would have $14,000 at 160 days. That 160 days, 99 per cent of the time was an invoice that got lost on a desk in Calgary, or was never processed properly, or an invoice that had to go back for a signature. It really didn’t contribute to the oil company being bad for their debt. It was just a processing error. We did have a lot flack and feedback from our auditors at the time,

but we worked through that and we haven’t changed our practices to date. It helped our members and it helped us grow our base as a credit union as well. It was the flexibility allotted by being submerged

in the oil community as well. As for the wonderful (electronic) invoicing (one company) brought in, it did help for a while. We have seen some of that stuff at seven, eight months, has

been eliminated, but let’s not fool ourselves. Pick your oil company, they have teams of accountants that know where your greatest source of cash is – in your payables. ɸ Page B18

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PIPELINE NEWS January 2015

What is your most important resource? ɺ Page B17 It’s easier to finance on guys that can’t charge you interest than it is to finance on your bank at times. If you’ve got 300 suppliers that you own $100 million to, and you know they’re not going to charge interest, that’s $100 million you don’t have to pay your financial institution. That’s unfortunate. A lot of these oil companies, it seems, that is their strategy, but I can’t prove it. It seems to be a fact that your payables is a source of cash. It is the only industry we see payment times to this extreme. P.N.: Are most of your oilfield customers in

the services sector? What are their concerns? You’re not financing the oil companies. They’re going to the big banks. Schmidt: Aren’t we? (laughs) That’s why we looked at this, and why this came in, 120 days, and why we need financial statements. There were portions at Spectra, and maybe in this date, if we finance 1,000 people and they all work for (one oil company), and their receivables are with (that company), we are financing big oil companies, right? I would say all of our oilfield customers are in the service sector. We do have limited production loans out there to extremely strong people and long-time standing members. But 99 per cent of

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our oil and gas exposure would be service sector. Drilling companies, service rig companies, hotshot, we even have some pipelining, it’s all service orientated. I don’t think anybody I’ve talked to at this point is saying, “The sky is falling, where can I find a rock to crawl under?� They are definitely concerned. They are starting to do some of the analysis and have discussions with their shareholders, business partners, spouses, whatever the case may be, what the impact will be, and where is the end? P.N.: If there was one thing a business could do to weather this storm a little easier, financially speaking, what would that be? Schmidt: I guess it’s preparation for a drop in revenues; the communication with their financial institution and the analysis that goes with it. What your position is and how they can assist you. Those kinds of conversations are probably things that need to be happening today, and definitely by the time of the publication of this. As this keeps moving forward, if this doesn’t turn around tomorrow, and there’s no indication of that happening, preparation for anything is all you can do. We’re price takers in this industry, just like agriculture, and it trickles all the way through. P.N.: What is your biggest resource as a small business? Is it your equipment? Land? People? Something else? Schmidt: It’s hard to prioritize, but at the end of the day, any organizations biggest resource, and it sounds heartless, but it’s coming from a banker or credit union financial professional, but it’s your cash. Not just any cash, it’s your liquid cash. Cash flow is king is the saying, and it truly is. You can’t underestimate the importance of your equipment, your land, and most definitely your people. Everyone says your most important resource is your people. Yes, they are, they always are, but you can hire the right people if you have enough cash. If you don’t have enough cash to buy equipment, to buy ,and, you know we have a saying – asset rich, cash poor, and that’s what leads a lot of companies into trouble. You can have all the assets in the world, but if you can’t convert them into cash when you need them, your business stops in a hurry. Your financial industry is in the business of lending money, and they want money back. They’re not in the business of finding assets to get the money to cover their loans.

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PIPELINE NEWS January 2015

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Chelation can remedy thermal scaling Lloydminster – Chelation-based remediation fluid for scaling and plugging in thermal heavy oil wells was the topic of the Dec. 11 luncheon of the Lloydminster Society of Petroleum Engineers. The presenter was Kenny Adetona, technical services manager of stimulation for Weatherford in Calgary, who spoke to a larger crowd at the Prairie Room in the Lloydminster Exhibition Grounds. He said scaling and plugging of liners is a big issue in thermal wells with bottom hole temperatures over 200 C. Slotted liner plugging and scale restrict the flow of oil and decrease production. “What happens is the pressure drops, your slotted liners are plugged, resulting in production in a high differential pressure,� explained Adetona. Scaling and plugging is caused by everything from fine particulate matter to carbonate and chemically based scaling. The primary causes of liner plugging though said Adetona are calcium carbonate or silicate or formation fines (sand, silt and clay). Calcite also becomes a problem at increase temperatures when its solubility is decreased. “You really want to reduce your differential pressure as much as you can.�

Scaling and plugging can also cause formation damage and liner expansion. Adetona noted traditional remediation methods using hydrochloric acid (HCI) and hydrofluoric acid (HF) have yielded mixed results and have declining effectiveness when performed successively. He went to explain some their limitations, most notable safety issues and corrosion using acid. “There are health and safety issues with regards to corrosivity, the corrosion effect on your tubular and or thermal operations, and they are not effective at temperatures over 80 to 90 degrees Celsius. With hydrofluoric acid, there is a risk of a secondary precipitation reaction brought on as well. There are also combination HCI and HF treatments, but Adetona came to promote the advantages of chelating agent-based stimulation fluid systems. His presentation abstract stated, “The treatment fluid has increased solubility, relative to HCI without solid material formation and marries a low risk of secondary and tertiary reactions that might cause precipitation with simplified logistics.� By definition chelating agents are materials used to control undesirable reactions of metal ions. The chelating agents

also have the ability to form what’s called soluble complexes or chemical compounds. “The chelation process is a process where there are compounds that extract metal ions from the scale or plugging product structure to keep them in solution,� explained Adetona. “So it kind of encapsulates them or sequesters them so they are kept in solution rather than deposited or coming out of solution. “It is one approach to stimulation because they can ‘complex’ many of the metal ions found in sandstone formations.� The complexes remain stable in high temps and thermal operations. One of the newest chelating agents is called SR3895 tested effectively in Lloydminster. “It’s a combination chelation agent fluid system with chemical activators that works really well at dissolving

scale compounds,� said Adetona. It’s effective and stable at 260 C. In the Lloydminster case study the $33,192 cost for chemicals resulted in a payback of 26 days of a $50 per barrel netback “It’s very cost effective. It caused a reduction in high differential pressure across the liner,� he said. “It has a low corrosive rate and a good health and safety and environment footprint.�

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PIPELINE NEWS January 2015

2SSRUWXQLWLHV WR ÂśWXFN LQ¡ VPDOOHU Ă€ UPV „ By Brian Zinchuk Calgary – RBC Royal Bank has been financing oil and gas ventures for over six decades, and in the thick of all of it has been Roger Straathof, managing director of national client group, Alberta, for RBC. He’s been a speaker at the Global Petroleum Show in Calgary, and on Dec. 12, he spoke to Pipeline New via telephone from Calgary. Originally from Holland, Straathof has been with RBC since 1992. Over those 22 years he has always working in the oil and gas sector. He’s been through numerous ups and downs, been overseas, and back in Calgary since 2002. “It’s our largest global business – energy. We have a big business in Canada, Alberta, B.C. and Saskatchewan, and a bit offshore in the Maritimes. We have a big and growing business in the U.S. where we have a growing team in Houston, doing everything from E&P to mid-stream to down-stream. We have a very large business in Europe, in our London office,â€? he said. Here’s the interview: Pipeline News: With the price of oil in sharp decline since June, how have things changed for businesses in the oil and gas service sector when it comes to raising capital? Startup capital? Operating capital? Roger Straathof: Anybody who’s

been in this business for a while should expect volatility in the commodity price. That’s been happening for a long time. Oil was $2 in the 70s for a long time. Then it started to move up. We’ve seen over the last 3040 years oil to going from $40 to $20, from $144 to the mid-$30s not too long ago in 2009. Now we’re seeing $100 oil going to, what, I think it was $57 today? And who knows whether it’s going to go down further. People that go into this industry should be aware the commodity is truly a commodity with volatility, and they should have a business model that looks after that. Never expose yourself to a situation where, if oil drops significantly, suddenly you’re out of business. That is not a good business model. So what does it take? When you’re raising capital, it can be family money, equity or lending. It can be lending from banks, from BDC, there’s a whole bunch of lenders out there. There’s a phenomenal amount of lending available. But in Canada there’s also fairly deep equity markets – on the TSX Venture and the TSX itself, there’s about 80 oilfield service companies. In the last couple of years each year they’ve raised over a billion dollars. That will be affected. With oil going from $100 to $60 to $55, companies don’t want to raise money

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because their stock is down, and investors wouldn’t be all that keen. But there are other sources. There’s a fair amount of private equity investors, both here in Canada, and a lot in the U.S. They really like this industry, and they’re always looking for opportunities. This would actually be a good opportunity, when expectations are a lot lower by the sellers, by people who want to get some equity in their companies. We are working on a few deals where private equity is involved. P.N. What you’re saying is this is an opportunity for people to buy low, then? Straathof: To get into the business at a very realistic level, where there’s a lot of upside. At $100, there’s a lot of downside. When you come in at $60 or below $60, there’s a lot more upside. Not a bad time for somebody that likes the industry to come into the fold. P.N.: Is now a good time to be start up a new venture, or would it be better to hold off a bit? Straathof: I’ll give you a more general answer. It’s all about not being a commodity player, where you offer the same as somebody else and you’re competing on price only. If you’re in the drilling business, you want to come with an experienced management team and a crew, and you want to be able offer more efficient services and innovation that helps the clients drill fewer day, more efficiently in the end with lower cost and better drilling results. Then you can do at $100 oil, but you can also do that today, if you have

Roger Straathof, RBC Royal Bank

those kind of fundamentals, have a good management team, good crew, and something of value to offer. If you can help your clients with reducing cost, and doing things faster, or more innovative‌ There’s still a big spend in this industry. Globally, in this industry for 2014 the spend was $730 billion. Canada was about $70-$75 billion. For 2015, it will shrink, based on the price below $60, but it will still be a significant spend. P.N.: Is this a good time to consider buying out a weaker competitor or perhaps equipment on the cheap? If so, how can the bank help? I imagine this spring Ritchie Bros. auction is going to be pretty busy in April. ɸ Page B21

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PIPELINE NEWS January 2015 Éş Page B20 Straathof: I was reading in Bloomberg. There are already some E&P companies both in Canada and the U.S. and in other parts of the world that were already levered quite a bit, if they took on high-yield bonds, and were really levered up and counted on $80 oil to service that debt, some are throwing in the towel and going into bankruptcy right now. I would say, in oilfield services, there will be opportunities. There’s lots of companies out there with a strong balance sheet, and there may be nice “tuckinsâ€? for them – companies that have some weaknesses. A lot of start up companies have one customer. If that one customer slows down, or stops, than you may have a good business, but you’re going to run out of money. So there may be good opportunities for companies that have a more sustainable business, a bigger business, a more diverse business, to buy up some of these owners. It does make a difference. Right now what will really suffer is the exploration side. The closer you are to the drill bit, the more you will see cutbacks. On the other hand, if you’re on the production side, if your oilfield services is helping companies continue to produce and make gas or oil that’s more efficient, you’re probably going to be okay for a while. We never run away from this business, even in ’08-’09, which was a very tough time, a. because, the oil price came down to the mid-$30s, but b. because of significant financial upheaval. We were still open for business. We were still doing new deals. So we do look. As long as it’s a good management teams, they have good operations, a value-add, something of value to offer, there’s lots of things we can do. We’re in the midst of launching some deals right now, in oilfield services, even with this kind of an oil price. We know there’s a longer-term business here. It’s not going to go away. The world still needs 94 million barrels a day, and every year five to seven million barrels disappear to depletion that need to be replaced. Canada is part of the puzzle here to deliver that oil. P.N.: What options are there for an existing business right now when it comes to capital? Where should they turn to weather what appears to be a gathering storm? Straathof: There’s lots of options. For smaller companies, the public venue is not open. It would not be open anyway right now. You can get private equity. There’s equity from the BDC. They do equity. There’s the big banks, open for business. People are going to be a little more careful, but if you have a good business model, a good team, you can still knock on the banks door and you can borrow money. I’m not concerned about that. P.N.: Is this a time where leasing or rental of equipment might be a better strategy than purchasing? Straathof: The rental business in the whole oilfield services, cranes and so on, there are companies that specialize in rental equipment. I would say in general, rental equipment is good. Sometimes in certain segments, say in projects and construction and so on, you may go from busy to slow down and so on, you

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may want to rent your equipment. For the really busy times, you may be busy and slowing down again, for that extra busy part of your business cycle, you would probably rent a few things, as opposed to buying it. For your sustainable core activity level, you would own the equipment. Banks, we do a lot of leasing. You can lease from us. You own the equipment, but we lease it. We can do some more favourable terms because we like the leasing business. If you’re not sure on needing an asset for more than a couple years or more than a short time, you might be better off to rent. P.N.: Despite the price of oil dropping, and thus with it, overall expenditures by the oil companies and revenues to the service companies, interest rates are at an all time low. Are there ways to take advantage of those rates? Straathof: Companies have been doing that. Debt capital is cheap. If you do equity, you have to count on a return of 20-25 per cent, because that’s money at risk. Senior financing, bank money, then your all in rate may be four to six per cent, so there’s a huge difference. The only thing you want to watch for is you don’t want to take on too much debt. It’s cheap, but there should be a healthy balance between equity you have in the company and debt so you can withstand some of the cyclical things like what is happening right now, with the oil price coming down significantly. Some of your clients are clawing back on the business you get from them, so you have some wherewithal to see that through. Historically, debt financing is very, very low all-in rates for our clients. For larger clients, if they need some more finance, we can do mezzanine finance, that’s based on cashflow lending. That would probably be 12 to 18 per cent, depending on how its structured. That’s getting close to equity financing, but it’s still debt. That would be patient money. Sometimes when owners sell their business and new owners come in, they’ll put in some equity but also new leverage. Sometimes there’s a portion of mezzanine debt in there, but it’s more expensive. We’ve done a few deals with that. P.N.: An unfortunate reality in the oilpatch is many of the larger firms tend to take 90 days or more to settle accounts. How, from a banking perspective, would you suggest companies contend with this? Are they finding already that accounts receivables may be taking longer to come in? Straathof: Fantastic question. We have had that experience. I’ve seen it for 30 years or more. I’ve seen it happen to small companies, that get paid slowly by very large companies that can well afford it. It’s not a question of getting paid, it’s a question of process. Sometimes it’s part of the process, where you’re doing something in a remote area, where an engineer has to approve it. ɸ Page B22

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PIPELINE NEWS January 2015

If you want to get paid quick, be a valued supplier Éş Page B21 But the most important advice we give to our clients that work with big oil companies is you have a robust accounting and receivables system, that you are diligent in following up with your contacts at the oil and gas company. Do not ever let it slip, because if you’re not knocking on their door, they will just kind of forget until you make it painful for them for not paying you. Make it easier for them. There are electronic ways to do billing, like EDI. Some of the bigger companies want you to do electronic billing, so that makes it easier for everybody. Then you need a good receivable person in your accounting group that follows it up. P.N.: I think everyone in the industry knows that oil companies basically take advantage of the service companies. It’s not that they don’t have the money to pay in 20 days, or 10 days. They’re stretching it out and basically parking, say $100 million to pay out, and they have 90 days to do it, that’s $100 million they’re not paying any interest on. Everyone knows they take advantage of it to the extreme. I’ve talked to people who say 120 days is not unheard of, or more. If you were dealing with a conventional business, most banks would say 90 days is bad debt. Straathof: That is an interesting point. It’s usually up to 90 days. We sometimes allow up to 120 days if it’s an investment grade client that they have. But we still encourage our clients to have a very good setup and be dillegent in their bookkeeping and accounting and making sure they knock on the door of their client on a regular basis. Why should they finance these big companies? P.N.: If you’re Joe Service Rig, knocking on (big oil company) and saying “Hey, pay up buddy,â€? (big oil company) can easily say, “We’ll just get Bob’s Service Rig. See ya later! We’ll pay you when we

feel like it.� The service providers have no power in this relationship. Straathof: That’s important. You want to be a valued supplier to your customer. If all you’re doing is your just another guy that has the same kind of equipment as the neighbour, and you’re just getting a job, then you don’t have a lot of leverage. But if you’re doing a really good job, and they pick you for the right reasons, you can do a really good job fast, safe, and save them money, then you have some leverage. That is making sure you go to the right contact at (the big oil company), the person that really cares about you doing a good job, and using you for the next one, they want to have a relationship with you. So you work with those people so they internally make sure you get paid on time. It is more work, but we tell our clients, our oilfield suppliers, you shouldn’t let those oilfield clients lean on you to finance their operations. It doesn’t make any sense. If it is for the right reasons, we do allow it go over 90 days, if the payment is undoubted. The only thing you want to be careful with is it’s not a dispute. If something goes over 90 days, you want to makes sure it’s just because the process is slow versus somebody is saying, “You did a lousy job, or we don’t owe you as much.� The more you offer a specialized, valuable service, the more leverage you will have over the oil and gas companies. They will want make sure you in stay in business. But if you’re a commodity player, you’re just as good as the next guy or next door neighbour, than you do not have a lot of leverage. I can tell you, we have some clients that won’t work for some companies in town. I won’t mention names, but these are some of the biggest companies in Canada. And they will not work for them because

they have a reputation of paying slow, and the refused to work for some of those companies. P.N.: Let’s say you’re a service company, you’ve got a pile of receivables expected, but they’re not coming in. You’ve got a cashflow issue. What do you suggest? Is there anything the bank can do to help? Straathof: That happens. We’ve has some really good clients with us for years, that have had some hiccups. It could be a receivables clerk on holidays for two or three weeks, and nobody bothered to follow it up, and suddenly they go over the limit of the operating line. They’re not paying. We’re not going to go crazy on that. We do follow it closely with the clients. We discuss it with them. If they realize there’s an issue, they fix it. Or we’ve has some clients where we’ve said we’ll be patient, but they temprorarily put some more money into the company to get the operating line within the limit it should be. There’s different solutions. If you have a good client, and they have a good business, and there’s a temporary hiccup, then banks, in general, will work with clients to get them over the hump. That’s the good client relationship thing to do, and everybody once in a while has hiccups. That’s why we’re trusted partners to our clients in the oilfield services. And sometimes, this happens every year, one of the big oil companies will take on a new system, such as SAP (an accounting system) and once these big companies switch over to a big system, sometimes they lose visibility to what they owe to their suppliers. It happened with (a number of very large firms). They’re not paying because they don’t have the money, but because they aren’t sure how much they owe. We usually know because we have lots of different clients, somebody is getting paid slowly. We will help our clients through that.

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PIPELINE NEWS January 2015

B23

Toro acquiring Viking growth base Calgary – With a new name and management team, Toro Oil & Gas Ltd. is out to rebrand itself as a junior oil and gas company that can execute its growth strategy. Toro formerly called Kallisto Energy Corp. has entered into an agreement with an independent oil and gas producer to purchase light oil Viking assets in the Provost Alberta area for about $25 million. The purchase offer includes $22.5 million in cash and approximately $2.5 million in common shares with an expected closing by Dec. 19. “This acquisition is a first critical step to building a leading junior oil and gas company,� commented Barry Olson, Toro’s new chief executive. “In the midst of today’s market volatility we will continue to be vigilant to source prudently-sized transactions, all with the goal of increasing shareholder value.� The current Viking production of the assets is approximately 400 barrels of oil equivalent per day with potential for considerable light oil growth. Toro expects the Viking acquisition will provide the company with the means to develop and add new light oil properties to its asset base in the wake of a recapitalization on Oct. 1. The new Toro company name and a share

consolidation were approved by a special meeting of shareholders on Nov. 21. Toro was in the public eye the following day when the Alberta Energy Regulator responded to the release of sour gas from a Toro well four kilometres south of Airdrie. The release occurred at 6:30 p.m. on Nov. 22. AER staff worked with Toro personnel and well control experts to gain control of the well. Odours detected in the area and on site air monitoring registered low levels of sour gas. At no time was the public at risk. As a precaution, the Airdrie Fire Department evacuated a number of nearby residents shortly after the release. Toro’s operations are focused on light oil properties, targeting oil horizons including the Viking, Gluaconitic, Midale and Bakken in East Central Alberta and southeast Saskatchewan. The Viking acquisition consists of an operated, 100 per cent working interest of largely unitized, low decline, crude oil property in the Provost area. The assets to be acquired contain large oilin-place estimates with high light oil and gas net back production. The purchase also includes more than 60 net sections of land, with more than 78 per cent of the acreage

contributed to a legacy unit. The Viking assets have conventionally produced over 16 million barrels of oil to date and have been conventionally drilled to date on a vertical basis at 320 acre well spacings. Toro has identified over 100 low risk drilling locations on the assets and believes there is significant long term upside using horizontal drilling, multi-stage fracture stimulations and re-activating waterfloods. In an unrelated transaction, Toro acquired 32.5 net sections of Viking prospective acreage from two companies including one company that was controlled by Toro executive Don Sabo.

The value was independently negotiated and assessed at $1.6 million and purchased in cash. The acreage consists

of two separate areas; Esther and Consort near the Alberta/Saskatchewan border. With the closing of the Viking acquisition,

Toro will own 93 net sections of producing and highly prospective Viking acreage targeted as one of its intended core areas.

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B24

PIPELINE NEWS January 2015

Son’s death leads to safety crusade „ By Brian Zinchuk Goodwater – Mark Moroney was incredibly proud that his eldest son Jason followed him into the trades. But he was devastated when he was killed on the job. Now Moroney does presentations to groups to get them to shake up their way of thinking, so it doesn’t happen again. Mark was the guest speaker at the Cenovus safety meeting on Nov. 26 at their Goodwater plant, at the centre of the Weyburn field. When Cenovus holds their bi-monthly meetings, they go all out. Not only are their staff brought in, but

representatives from most of the companies they work with attend as well. Trucking firms, pipeliners, you name it, they all fill the room over the course of two sessions. Mark spoke to each session for nearly two hours. He outlined how Jason, was killed in 2007 at Foster Creek, an EnCana, now Cenovus, site. Mark focused on building an injury-free culture, where it’s a focus not just a year out, but 24/7, ensuring everyone has their ducks in a row, follows processes, and reflects back to learn lessons. That’s why reporting a

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near miss is so valuable, he said. Mark had been a long time welder, including spending 17 years with Imperial Oil at Cold Lake. He had moved up in the ranks to project management with another large oil company. It was with Imperial where he was first exposed to the zero-injury concept. “If you couldn’t get your mind around that, go work somewhere else,� he recalled. Jason followed somewhat in his Mark’s footsteps, first as a welder, but shifting to pipefitting, where he became a journeyman. The incident that

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took his son’s life changed his world, and that of his family and friends. “Everything changed, not much of it for the good,� he said. “I’m one of you folk. I earned my living on the ground, in the mud, in the cold, on the pipe racks.� He also saw the management side, too, and that was a real eye-opener. Jason was killed on the job Dec. 12, 2007, 11 days after his wedding. He had a bright future, and was known for his big grin. The job was literally the last thing to be done before the Christmas shutdown. It was low light, snow, frost, -12 C, in other words, typical winter conditions. They were doing general site cleanup. Jason and his helper were attempting to hot bolt a pipe on a rack at Foster Creek. It was 4:42 p.m., the last hour of construction scheduled for that year. Foster Creek was “injury tolerant� at the time, Mark noted. “A lot of people believed being hurt at work was just part of the job. It was a dangerous damn place, and some people are going to get killed, darn it. That’s a load of crap. “Cost and sched-

ule were top priorities at that time. Let’s go. We’re going to get this done by this day, or we’re going to fire people,� he said. Workers were challenged to reduce times on safety programs, and too much time, it was felt, was being spent on paperwork. Incident reporting “went underground,� he said, with 80 per cent of incidents not reported. Mark had personally worked at the same site four years prior. The job in question involved hotbolting a 14-inch steel pipe on a 59 metre section. Numerous hoardings were left up, obstructing the view of the whole pipe, which had been installed by a previous crew. Two come-alongs had been used to pulled the pipe over to allow for workspace, but due to the hoarding, a person couldn’t see how much deflection there was in the pipe. One support shoe was the wrong size, and had been meant to be replaced later. Documented tack welds had been removed, but their removal was undocumented. There was no written record of communications between Jason’s crew and the previous one. Jason had 10 years on the tools under his belt by that time. He wasn’t a rookie, Mark noted. They took off one come-along. No problem. But Jason put himself in the path of that pipe, and when they took off the second three-tonne comealong, it released. “He put himself in

that line of fire. That line moved under its own energy,â€? he said. “And it caught Jason right here.â€? Mark pointed to his head. Jason’s head was crushed between pipe spools. Snow shook off the whole rack. The medic later told Mark there was nothing he could do for Jason. “It was over in a flash,â€? Mark said. “Here’s where I struggle. The author of this document classified it as an accident,â€? Mark said, noting it was an incident that could have easily bene prevented. “If Jason had talked to someone who had done the install, he’d still be here.â€? Showing a slide on the screen, he said, “I want this image of my son in his coffin to burn into your consciousness. “If you don’t change attitudes, it’s not a question of if, but when,â€? said Mark. Think again, use procedure, and save lives and families, he stressed. “When a person is seriously injured at work, they tend to want to kill themselves to release the survivors of their pain. “The only person that can change this is us. At the end of the day, it comes down to the individual.â€? However, there is a definitive role for corporations to play. Shortly after this, Mark quit his job with a different major oil company because they weren’t willing to take a zero-injury mentality to their operations. ɸ Page B25

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PIPELINE NEWS January 2015 Éş Page B24 An injury-free culture has an inherit belief that injuries and accidents are preventable and unacceptable, he said. Injury prevention will provide a return on investment with increased productivity and employee retention. “We’re never ever going to get there completely 100 per cent, but that’s okay, because we can be successful today. Tomorrow we’ll try a little harder,â€? he said. John Brannan was an executive vice-president of the integrated oil division with EnCana at the time of Jason’s death. He met with Mark on Dec. 20, 2007, eight days after the incident. Tired, exhausted, angry as hell, part of him wanted to take something back. Mark phoned EnCana, said he was going to Foster Creek, no matter what, to see where it happened. There was no stopping him. Brannan phoned back a half hour later, wanting to help. He arranged for a bus to pick up the Moroney family and take them to Foster Creek, where they visited the site. The trip was wrought with open weeping and a struggle for words. Mark took Brannan’s hand, looked in his weeping eyes and demanded an answer to a question: What are you going to do that is different, so that it’s not going to happen again? His wording wasn’t as pleasant as that, he noted “This is what he told me: He

said, ‘Mark, before this happened, I honestly believed, I was convinced Foster was a safe place to work. I felt good one of my boys could come here to work. I don’t have that feeling anymore.’ “He went on to say ‘I will do everything possible, everything I possibly can, while I have anything to do with this organization.’ “He made a promise, man-toman, father-to-father, not only to me, but to everyone that was ever going to work on a that-time EnCana site, today Cenovus,� Mark said. A few months after the incident, Mark was brought in to help reform that culture. Over the next several years, things changed with EnCana/ Cenovus. They did anonymous surveys to determine what was broken, and those surveys made a difference. Eight safety commitments were made, lining up with the health and safety act. Much of 2008 was spend developing those safety commitments and initiatives. By June 2009, a significant increase of incident reporting was recognized, leading to a subsequent reduction of injury incident severity and frequency. Incident reporting went from almost nothing to an explosion, a trend that continues to this day, because of the workers. “The days of challenging authority and losing your job are over at Cenovus,� Mark said. “Better to shut things down than call 911 or STARS.�

B25

Mark Moroney spoke to Cenovus workers and contractors on Nov. 26 at the Goodwater plant. Photo by Brian Zinchuk

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PIPELINE NEWS January 2015

Nissan heralds the year of the Titans „ By Geoff Lee Lloydminster – Keeping the redesigned 2016 Nissan Titan under wraps until its debut at the North

American International Auto Show in Detroit in January is a great marketing strategy for dealers like Nissan Lloydminster. The mystery and

the pent-up demand are good for business in Lloyd’s competitive truck market Dealership sales of Titans and other Nissan vehicles have

Early morning sun began to shine some light on this Titan PRO-4X crew cab on display at the entrance to Nissan Lloydminster. Gordon Fitzpatrick, senior sales rep was happy ƚŽ Ä?Äž ƉŚŽƚŽĹ?ĆŒÄ‚Ć‰ĹšÄžÄš Ç Ĺ?ƚŚ ƚŚĹ?Ć? Žč ĆšÄžĆŒĆŒÄ‚Ĺ?Ĺś ĆšĆŒĆľÄ?ĹŹÍ˜

been driven primarily by growth in the regional heavy oil and gas industry. “The last couple of years have been very good to us,� said Shawn Young, majority owner and general manager “There was a bit of

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a downturn in 2008, but we’ve been pretty stable and fortunate being here in Lloydminster. “Truck sales have been brisk and I can say that I am really happy with what we’ve done.� In fact, Young said Nissan Lloydminster is the top market share import dealer in the Midwest and is currently outselling every import dealer in their trading area. “Our sales have gone from roughly 100 new units a year to 400 new units a year in the space of under three years,� he said.

“The truck component is a big piece of that. Once the new Titan launches, the sky’s the limit.â€? Heck, the 2015 Titans have yet to arrive at the dealership in what could be the year of the Titan featuring the next generation model for 2016. “There’s definitely a lot of excitement. There are people through the door on an almost daily basis asking about it,â€? said Young who hasn’t been given all the specifics about it either until the launch. ɸ Page B27

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PIPELINE NEWS January 2015 Éş Page B26 “From what I understand and I can’t say a lot, they’re pretty confident about what they’re launching. The dealers are very excited to have it,â€? he said. He did say that the 2016 Titan would be Nissan’s first Heavy Duty truck “somewhere slotted in that niche between the half-ton and the three-quarter ton,â€? adding it may not be marketed as such. Nissan has confirmed that Titan will be equipped with an optional Cummins 5.0 Litre Turbo Diesel V8 with torque expected upwards of 550 lb-ft. “Cummins has added a lot of value and credibility to the Nissan brand,â€? said Young. “Once again most of these details are held back by Nissan, but from what I understand it will be just in the three-quarter ton crew cab model.â€? Nissan will also provide an updated version of the existing 5.6 L V-8 with more horsepower for the crew cab and king cab configurations. Long and short beds should still be offered along with rear and four-wheel drive versions with all levels of luxury packages. “I understand they are coming out with a whole variety. I do know there’s a half-ton and a three-quarter ton being launched,â€? said Young, who notes new model releases spike sales during the year. “The industry does downturn slightly in the last quarter and it builds back up steam in January, February and March,â€? he said. “Nissan is smart enough to stagger new models throughout the year so its gives us more showroom traffic throughout the year.â€? The arrival of the 2015 Titan and the all-new 2016 truck this year should also lessen the impact of slumping oil prices on consumer confidence. “You do have to worry, but I think anyone who lives in Lloydminster understands that these things do happen,â€? said Young on Dec. 9 when oil fell to about $63 a barrel. “We just have to work through it. Will business being as good as it was last year? Maybe not, but I don’t think it’s going to be that bad. “We just need to do things a little bit better then work a little harder.â€? Leasing could be the best solution for high mileage oilfield workers who can’t pay cash or find themselves in a negative equity situation during a trade in. “A lot of my friends work out in the oilpatch, and I quite often see them come in with these vehicles that have 150,000 kilometres and they owe $5,000 to $10,000 more than what it’s worth,â€? he said. “Then they are in a position where either they can’t get financed or they can’t afford to get out of that vehicle and they end up with very high repair bills.â€? ɸ Page B28

B27

Shawn Young, majority owner and general manager of Nissan Lloydminster checks out some specs on the 2015 Titan that is due to arrive at the dealership in the coming days. The totally redesigned 2016 Titan will make it into the showroom in the fall. WŚŽƚŽ Ä?LJ 'ÄžŽč >ĞĞ

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PIPELINE NEWS January 2015

Leasing can be a great option Éş Page B27 “One of the ways to get away from that is if you were to move to a lease contract on the vehicle. What you are doing is paying more of a monthly payment up front. “By doing that you are minimizing your risk later on.â€? Too many people Young said are buying and using trucks for work based on a retail financing methodology without allowing for extra kilometers or opt-

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ing for shorter payment terms. “They are always backward on their trade owing more than it is worth,� as he put it. “Leasing is definitely a great option for that. There’s lot of tax implications that maybe a bonus for you. That’s something that best to talk with your accountant.� Young hopes that word of mouth from customers about the toughness of the Titan as an oilfield work truck will lead to more fleet leases. “We see a lot of them being used for checking wells and things like that. A lot of consultants use them as well,� he said adding its main selling point is that it’s tough as nails. “The truck lasts. It’s got a really good track record. People speak highly of it. Typically, they like the look of it. “It was years ahead of its time when it was launched (2004). “Nissan’s done a great job of adding extra features over the years to keep it current with technology such as standard navigation and back up camera and hands-free Bluetooth. “Some of our own customers are working very diligently behind the scenes to try to get our Titan in front of their buyers to get it out there. “We’re not that big into fleet leasing yet. We would hope to change that when the new Titan comes out in the fall.� The arrival of the 2016 Titan could also fit in with dealership renovation and expansion plans at its location on 25th Street near 50th Avenue. “We’re adding four dedicated truck bays hopefully next fall on the back of the building,� said Young. “We’re adding a drive through with a pit we can service people with an actual quick lube. “We’re also adding a service drive as well and expanding the dealership to handle this influx in sales that we see.�

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B29

Third quarter crude oil exports by rail up 47 per cent year-over-year the NEB. Third quarter 2014 volumes soared to 182,059 bpd from 123,765 bpd in JulySeptember 2013 and 57,257 bpd in Q3 2012, says the board. In the first quarter of 2012 ( JanuaryMarch), Â the first period for which NEB data is publicly available, 15,980 bpd were exported by rail and that figure nearly doubled to 31,907 bpd in the second quarter of 2012. The volumes have continued to rise steadily ever since, except for drops

(Daily Oil Bulletin) Calgary – Figures released by the National Energy Board Dec. 3 have confirmed the massive growth over the past two years in the volumes of crude oil leaving Canada by rail as producers work to circumvent pipeline apportionment. Canadian crude oil exports by rail were up 47 per cent in the third quarter of 2014 over the third quarter of 2013 and 128 per cent over the third quarter two years ago, according to

in the third quarter of 2013 and the second quarter of 2014 due to production declines around spring breakup. Rail exports topped 100,000 bpd (at 105,632 bpd) in the first quarter of 2013 and have exceeded that number ever since. This year, rail exports were 165,254 bpd in the first quarter, dropping slightly to 163,063 bpd in the second quarter before recovering to 182,059 bpd in the third quarter.

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PIPELINE NEWS January 2015

(GJH GHĂ€ HV RLO SULFH JUDYLW\ Calgary – Edge Resources Inc. defied gravity and recorded a profit of $170,000 for the first half (H1 2015) of its fiscal year from April 1 to Sept. 30 when oil fell to $91 per barrel. The 169 percent profit gain compares to a loss of $246,000 for the same period a year ago according to Edge’s operating and financial results for Q2 and H1 released on Nov. 27. “We are very pleased with our half-yearly results, as we held our

own despite a falling oil price – which started the quarter at $105 per barrel and ended the quarter at $91 per barrel – and a temporary production issue that occurred and was resolved during the second quarter,� said CEO Brad Nichol. “Even with these challenges, we exited the first half of our financial year with a netback above $40/bbl and with more cash and a higher production rate than when we started

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the quarter.� Edge’s H1 operating costs for oil decreased to $18.52/bbl from $20.42/ bbl and netbacks increased to $45.37/ bbl from $44.42/bbl. In addition the wells drilled last year at Edge’s Eye Hill heavy oil properties near Macklin continue to produce at roughly the same rate or better than almost a year ago. Nichols said their results were helped by a much-improved heavy oil discount to WTI and a weaker Canadian dollar which should carry over into the foreseeable future. “In hindsight, we made excellent capital choices, having chosen to con-

serve cash in the midst of deteriorating oil prices and take a ‘wait and see’ approach to our capital plan, added Nichols. Oil and natural gas sales for H1 2015 amounted to about $5.8 million versus $4.8 million for the same period last year, a 19 percent increase.  Cash generated from operating activities increased to about $1.2 million for H1 compared to $850,000 one year ago. Continued focus on controlling costs resulted in a five percent and nine percent decrease in general and administrative costs for the quarter and half year periods, respectively.Â

(GJH H\HV GULOOLQJ DW (\H +LOO Calgary – Despite low oil prices Edge Resources Inc. hopes to drill additional wells in its prime Eye Hill East property near Macklin before the end of its financial year on March 31, 2015 within cash flow. That’s what CEO Brad Nichols told investors in a letter on Dec. 2 following the release of the company’s first half year (H1) and second quarter results on Nov. 27. “Bottom line is that we’re planning for the near and long-term future of Eye Hill,â€? he said noting opportunity knocks when oil prices drop. “As usual, we will continue to keep our eyes and ears open for acquisitions. â€œIt is times like

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these in our cyclical industry that opportunistic and aggressive operators can take full advantage of others’ struggles. “We’re not shy about spending precious capital on value-enhancing opportunities, only if the metrics - and prices - are just right.� Nichol was pleased to report the company just cashed their latest monthly revenue cheque for $1.1 million when the average WTI price of oil was $84/bbl. He said the cheque was cashed around the same time they released their financial statements. “Compared to the first half of last year, sales were up 19 percent, cash generated from operating activities was up 46 percent and net income was up 169 percent - and it was in the black, versus a loss last year for the same period,� said Nichol about the half yearly

results. “Our costs of operating our oil properties decreased and our oil netbacks increased by 23 percent. “All of this was accomplished in an environment of an oil price that opened the quarter ( July 1) at $105/bbl and closed the quarter at $91/bbl (Sept. 30). Nichols noted the summer production hiccup with two wells was quickly rectified and “turned what could have been amazing results into what I would call just great results.â€? The company did not provide production numbers with its operating results but noted the wells drilled last year are still producing at roughly the same or better levels than almost a year ago. Now said Nichol, “Thanks to OPEC, we’re now living in the scenario we hoped wouldn’t happen.â€? ɸ Page B31

PIPELINE NEWS January 2015

B31

Onion Lake seeks $50M in damages Edmonton – Heavy oil producing Onion Lake Cree Nation has filed a $50 million lawsuit against Ottawa claiming they would be harmed by complying with the First Nation Financial Transparency Act. The federal law requires all First Nations to post online their audited financial statements for the last fiscal year, including the salaries and expenses of their chiefs and councilors. The deadline for posting was Nov. 27 with Onion Lake, Thunderchild and Cold Lake First Nations bands among the 49 bands posted on the Aboriginal Affairs website by Dec. 1 as failing to comply.

“It is not about chief and council salaries, we have disclosed that to our people,� said Onion Lake Chief Wallace Fox at a press conference in Edmonton on Nov. 26 when the lawsuit was filed in Federal Court of Canada. “That whole issue is about jurisdiction, that we have a right and sovereign relationship under treaty.� The suit names the Governor General of Canada, the Queen, represented by the Minister of Aboriginal Affairs and Northern Development, and the Attorney General of Canada as defendants. In its statement of claim the band states the

Additional drilling Éş Page B30 He told investors the company would do all it could to maximized shareholder value by controlling operating costs and general and administrative costs. “On that vein, we’re being extremely careful with capital,â€? he said. Edge is currently constructing a water disposal facility, which will reduce the cost of handling water from $3.35/bbl to $0.15/bbl. “The new facility will be operated at a fixed cost; thus, the more water we produce (and as pools get older they produce more water), the lower our cost per barrel is to handle that

water,â€? explained Nichol.  â€œWe’re currently producing about 600 barrels of water per day and the facility we’re designing should handle up to 1,500 barrels of water per day, so we’ve built in the scalability to grow with the planned development of Eye Hill East. â€œ In addition Edge is currently constructing a gas-gathering system to capture the natural gas that is naturally produced alongside the oil. â€œThis will generate additional ‘bonus’ revenue and with gas prices still above $4/mcf, it just adds to the highly positive economics,â€? said Nichol.

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transparency act or Bill- C-27 that passed in March 2013 by the Harper government has no force on the Onion Lake Cree Nation. The Onion Lake First Nation of about 4,000 people is located 50 kilometres north of Lloydminster Saskatchewan and is a signatory to Treaty 6. Their court action seeks damages over alleged “punitive measuresâ€? imposed that the Ministry of Aboriginal Affairs on bands that miss the filing deadline. Those actions include withholding funding for non-essential programs, services and activities; withholding new or proposal-based non-essential program funding by Dec. 12. ɸ Page B32

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Onion Lake battles Ottawa It cites other alleged damaging actions by Aboriginal Affairs no-

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The band’s statement of claim notes that requirement of the law to publish corporate audited financial statements on a website will harm the band “by way of losses and damages.� It describes money earned from its own sources such as bandowned business as being “Indian Money� that is private information. “Indian Moneys are generated from the sale of surrendered land, interest, and revenues from the plaintiff ’s owned and operated commerce, there, as a result, Indian Moneys derived from capital moneys and revenue moneys is private property of the plaintiff,� stated the court action. The statement of claim also accuses the Crown of breaching its fudiciiary duty by treating the band’s “private Trust interests as public property and misleading the public,� exposing them to potential losses and damages. A fiduciary duty is a legal or ethical relationship of trust between two or more parties. Onion Lake believes the impact of publicly disclosing its band earned money puts them in a disadvantageous position when negotiating future business “where other Canadian are not forced to disclose person

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or private property interests or rights‌.â€? The band has business partnerships with several oil companies including CNRL and BlackPearl Resources that is developing a first phase 6,000 barrel day thermal project at Onion Lake. Black Pearl reported on Nov. 6 that the project is on budget and on schedule to commence steam injection in mid2015. The company’s production at Onion was over 4,200 barrels of day at the end of the third quarter of 2014. BlackPearl provides Onion Lake with a specific percent royalty on each extracted barrel of oil, with a portion of the money directed into a trust fund to back capital projects. The remaining proceeds are re-invested into business development. With its 50/50 joint partnership with Fogo

Energy formed in 2011 Onion Lake receives 50 percent of the money from each barrel of oil sold. Onion Lake also retains the option to buy out the company. Oil and gas operations at Onion Lake are run by Onion Lake Energy Ltd. The band also generates income from its own businesses operated by the Onion Lake Business Development Corporation. These include All Nations Building Supplies, Askiy Apoy Hauling GP Ltd., Beretta Pipeline Construction Pipeline Ltd., Makaoo Mall Development GP Ltd., Onion Lake Enterprises Ltd. and Onion Lake Gas Co-op Ltd. All Onion Lake operating businesses use a calendar year fiscal, and audited financials are presented at the OLBDC annual general meeting in the second quarter.

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PIPELINE NEWS January 2015

B33

Feds vs. non compliant bands in court Ottawa – The federal government plans to take court against First Nations bands including Onion Lake that have indicated their intention not to comply with the First Nations Financial Transparency Act. The legal deadline for First Nations to file audited consolidation financial statements and schedule of remuneration and expenses for their chief and councils on the Internet was Nov. 27. The government is seeking a Federal Court order for band governments from the Council of First Nations of Thunderchild, Ochapowace and Onion Lake in Saskatchewan; and Sawridge, Athabasca Chipewyan and Cold Lake in Alberta to comply online.

“First Nations, like all Canadians, deserve transparency and accountability from their elected leaders,� said Bernard Valcourt, Minister of Aboriginal Affairs and Northern Development on Dec. 8 “That is why we passed the First Nations Financial Transparency Act which empowers First Nation members to ensure band revenues are used for the benefit of the entire community. “Effective immediately, we are taking court action as provided by the Act against band governments who have indicated their intention not to comply with the Act. “We will continue to withhold funding for non-essential programs for all non-compliant

First Nations.� Onion Lake filed a Federal Court action against the federal government on Nov. 26 seeking $50 million in damages they believe the Act will cause them if they comply. By Dec. 12, the names of 44 First Nations that had yet to post their financial documents online were listed on the website of Aboriginal Affairs and Northern Development. “With this Act, our Government has made financial information more accessible to First Nation members, which leads to more effective, transparent and accountable governance as well as stronger, more self-sufficient and prosperous communities,� added Valcourt.

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PIPELINE NEWS January 2015

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Canyon Technical Services is a leader in the oilfield service industry, providing customized fracturing and pressure pumping solutions to oil and gas producers across the Western Canadian Sedimentary Basin. At Canyon, our employees are ‘Champions’, dedicated to fulfilling our Vision of “improving the industry one job at a time� - our ‘Champions’ have made Canyon one of the most sought-after providers in our industry. If you are looking for a career within a leading organization that promotes Integrity, Relationships, Innovation and Success, then Canyon is looking for you!

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PIPELINE NEWS January 2015

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PIPELINE NEWS January 2015

Strategies Produced for Today and Tomorrow From volatile commodity prices to changing client spending plans to erratic weather, Oilfield Service companies face ongoing challenges. To increase profits in dynamic market conditions, MNP’s industry specialists help OFS business owners and management teams focus on the factors within your control. By optimizing the financial efficiency of your operation, we help raise profits and keep your opportunities flowing. Contact your local MNP Oil & Gas consultant or visit www.mnp.ca SWIFT CURRENT Jeremy Rondeau, CA T: 306.770.3679 E: jeremy.rondeau@mnp.ca ESTEVAN David Hammermeister, CA T: 306.637.2310 E: david.hammermeister@mnp.ca WEYBURN Melissa Swayze, CA T: 306.842.8915 E: melissa.swayze@mnp.ca

Pipeline News

SECTION C January 2015

Pipeline News was 2 sections this month. Stay tuned for next month focus:

Fracking/Well Stimulation

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