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March 2020


Vol. 3/12


MONEY Is there much investment happening in the oil patch? We take a look at money this month. Photo by Brian Zinchuk

Second crude-by-rail derailment A2

Sask. government forms pipeline committee

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Second crude-by-rail derailment within 2 months at Guernsey, on Canadian Pacific mainline

By Brian Zinchuk Geurnsey, Regina, Calgary, Ottawa – A second crude-by-rail derailment on the Canadian Pacific Railway near Guernsey, Saskatchewan on Feb. 6 served as a wake-up call at a time when the rail infrastructure of Canada has been headline news for weeks. The Feb. 6 spill occurred on one of Canadian Pacific’s mainline tracks, and was approximately 10 kilometres east of a similar incident on Dec. 9, 2019. The second incident occurred just east of Guernsey, requiring the temporary evacuation of the community. The Transportation Safety Board (TSB) reported on its webpage that on  Feb. 6, 2020, “A Canadian Pacific Railway (CP) crude oil unit train was proceeding eastward at about 42 mph on the CP Sutherland Subdivision. The train originated at Rosyth, Alberta, and was destined for Stroud, Oklahoma, USA.” That was the same origin and destination as the train in the December incident. These are, roughly speaking, close to the origin and terminus of the proposed Keystone XL pipeline. The TSB continued, “At 6:15 a.m. Central Standard Time, the train experienced a train-initiated emergency brake application at Mile 43.4, about 1 1/2 miles west of Guernsey, Saskatchewan. Subsequent examination identified that 32 tank cars (Lines 32 – 63 inclusive) had derailed. Several tank cars were breached and an undetermined amount of petroleum crude oil product was released. The product ignited and a pool fire ensued involving a number of tank cars. There were no injuries reported. As a precaution, the reeve of the town of Guernsey required the evacuation of about 85 people. The temperature at the time of the accident was about −18°C.” (Railways work in Imperial measurement) The TSB said, “The train crew was composed of a locomotive engineer and a conductor. The train consisted of 2 distributed-power locomotives (1 on the head-

end and 1 on the tail-end), a covered hopper car loaded with sand located in position 2, followed by 104 tank cars loaded with petroleum crude oil (UN1267, Class 3 PG I) and another covered hopper loaded with sand located the 107th position (108 rolling stock in total). The train weighed 14,896 tons and was 6,445 feet long.” (13,513 tonnes; 1,964 metres long) “Buffer cars” are used as a safety measure on crudeby-rail trains, which is why there were hopper cars filled with sand as part of the train. The TSB continued, “The derailed tank cars were all DOT 117J100-W tank cars. The tank cars located from line 32 to 63 (32 cars) derailed. One derailed tank car that remained upright was otherwise unaffected and was subsequently rerailed. Of the remaining 31 derailed cars, about 19 derailed cars were involved in a pool fire from released product west of the crossing, while an estimated 12 cars derailed east of the crossing but were not directly involved in the fire. “To date, there have been no mechanical defects observed that could be considered causal. A review of the locomotive event recorder download determined that the train was handled in accordance with regulatory and company requirements. “The type of petroleum crude oil involved in this occurrence had properties consistent with petroleum crude oil that the TSB has evaluated in previous investigations involving crude oil.” Investigation The investigation is currently in the field phase. Three TSB investigators are working alongside investigators from the US National Transportation Safety Board (NTSB) and the tank car manufacturer (Trinity) to gather information from the occurrence site. Each tank car must be cleaned, purged, and staged prior to inspection. As of Feb. 12, 2020, about 17 of the derailed cars had been examined, with several cars exhibiting breaches. The product appeared to be primarily contained in

Another crude-by-rail train derailed near Guernsey, Sask., on one of Canadian Pacific’s mainlines. Like the previous train, its origin and ultimate destination closely mirrored that of the proposed Keystone XL pipeline. Photo courtesy Canadian Pacific a large ditch between the rail line and Highway 16 to the north of the rail line. It does not appear that any waterways were affected. The Saskatchewan Ministry of Environment reported on Feb. 19 that approximately 10,064 barrels of oil were spilled and Canadian Pacific estimates that approximately 7,548 barrels have been recovered to date. The estimate for the volume spilled increased from initial estimates, because more oil spilled over the course of the emergency. Crews were unable to stop leaks until the fires were extinguished, the ministry said in an emailed statement on Feb. 20. Rail tank cars typically max out at a capacity of approximately 720 barrels, although some can be closer to 600. Calgary-based Canadian Pacific said in an emailed statement on Feb. 20, “Crews continue to work on-site to ensure all equipment is removed and the area fully restored. “CP will work with the Saskatchewan Ministry of Environment on an environmental remedial action plan. The incident remains under investigation.” The Ministry of Environment said it will continue to monitor clean-up efforts to ensure all impacts are addressed. The ministry will also maintain regulatory oversight during the ongoing environmental assessment and remediation efforts until all environmental risks are addressed. The Ministry noted CP

has contracted qualified environmental consultants and contractors to fully assess any environmental impacts to the site, and to develop and implement appropriate remediation plans, including recovering all spilled oil, assessing the soil and water for potential impacts, and managing the risk associated with the contamination. As the responsible party, CP is responsible for all costs associated with the derailment, including the emergency response, environmental assessment and all required remediation. A drilling program was completed at the derailment site to delineate soil impacts and assess whether local groundwater was affected. Results of the assessment are pending, the Ministry said. The next steps include the development of a site remediation plan to address all environmental impacts resulting from the derailment. Remediation and management of the derailment site is expected to take several months to complete. Fortunately, the February and December spills were fully contained to the railway and highway ditches, and impacted relatively small areas.  The frozen ground likely helped reduce the impacts to soil and water.  Deeper look at the cars The TSB noted, “There is significant industry interest in documenting the performance of the DOT 117J100-W tank cars (containment integrity and fire resistance).  Detailed site examination of all of the

derailed tank cars will continue, in challenging conditions, until completed.” This car was adopted as an improved, and believed safer, tank car compared to the DOT-111 cars which ruptured and burned in the Lac-Mégantic disaster of July 6, 2013. The specifications for DOT-117 cars include a minimum plate thickness of 9/16 inch, full-height head shields at least ½ inch thick, a thermal protection system, top fitting protection and electronically controlled pneumatic brakes. Canada’s TC-117 specification is equivalent to the U.S. DOT-117. The TSB said once site work is complete, all available information will be reviewed in order to make a more accurate assessment of the tank car damage sustained and the amount of product released. This work will take some time, it noted. Any tank car and track components of interest that are recovered from the site will be sent to the TSB Engineering Laboratory in Ottawa for detailed analysis. Slowdown ordered, then relieved somewhat Canadian Pacific noted on Feb. 6 “Immediately after the derailment, CP implemented a slow order on its crude trains as a precautionary measure as it gathers facts related to this incident. Since then, Transport Canada has issued a Ministerial Order, effective for thirty days at midnight on Friday, Feb. 7. The order requires a slowdown of “key

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trains (which contain 20 or more cars carrying dangerous goods). In metropolitan areas, these trains will be limited to 20 mph. Outside these areas, trains will be limited to 25 mph.” The railway said it fully supported and implemented the reduction in speed. On Feb. 16, Transport Canada amended the ministerial order from Minister of Transport Marc Garneau. The amendment relieved the speed reduction somewhat. A news release from Transport Canada stated, “The speed limit for key trains is now limited to 35 mph in metropolitan areas. Outside of metropolitan areas where there are no track signals, the speed is limited to 40 mph. “Higher risk key trains are unit trains where tank cars are loaded with a single dangerous goods commodity moving to the same point of destination; or trains that include any combination of 80 or more tank cars containing dangerous goods. “The speed limit for higher risk key trains is now limited to 25 mph where there are no track signals. For metropolitan areas, the speed limit is 30 mph unless the metropolitan area is in a non-signal territory where the speed limit will be maintain at a maximum 25 mph. The new Ministerial Order will enter into effect immediately and will remain in place until April 1, 2020. The Dec. 9 derailment had no injuries but spilled approximately 9,435 bbl. oil, The train was traveling eastbound at 45 miles per hour.



In depth: Saskatchewan gov’t forms cabinet committee to look at pipeline proposals By Brian Zinchuk Regina – Taking a page from the federal government’s involvement with the Trans Mountain Pipeline Expansion, the government of Saskatchewan is going to seriously look at investing in pipeline project to increase takeaway capacity for this province’s energy industry. On Feb. 4 Premier Scott Moe announced the establishment of the Pipeline Projects Assessment Committee (PPAC), a cabinet committee focused on evaluating potential pipeline projects in Saskatchewan. That committee was formed to review and assess the viability of pipeline projects in Saskatchewan and possible government involvement in investing, stimulating, or generally advancing these projects, the government said in a release. The government said the decision to establish the PPAC stems from a number of proposals from businesses, indigenous groups, and communities

that are looking at pipeline projects to advance access for Saskatchewan’s energy products to market. This includes projects expanding access south through the United States, and projects that would create access through the port of Churchill. The PPAC will be comprised of Minister of Finance Donna Harpauer, Minister of Trade and Export Development Jeremy Harrison, Minister of Energy and Resources Bronwyn Eyre and Minister of Environment Dustin Duncan. On Feb. 4, Harrison spoke to Pipeline News in depth about what this committee is seeking to accomplish. Newfoundland stipulates an ownership stake in offshore oil projects in its jurisdiction, but Harrison said this is not along those lines. “What we’re looking at, in terms of the committee being established, is a mechanism and process to review, to examine, to consider proposals on pipelines,” he said on Feb.


As for the motivation for this, he said, “We’re constantly meeting with proponents and listening to different proposals and thoughts. We’ve been doing that for a lengthy period of time. Political risk “What’s really become apparent, though, in the last couple of years, particularly, has been the reluctance of financial institutions to finance pipeline projects because of political risk. We’ve got to the point where, I think you would find for proponents, the actual process of going through the financing of a potential pipeline is next to impossible. The reality is financial institutions will not finance them. “Our provincial interest, very much, is that we need to have additional access to market, to tidewater, for our energy products. That is a provincial imperative. And the number one way of doing that is by pipeline. We’ve made no secret of our support for the pipeline

Minister of Trade and Export Development Jeremy Harrison, left, and Minister of Environment Dustin Duncan, beside him, are two of the four ministers on a new Saskatchewan government cabinet committee tasked with looking at pipeline proposals. Harrison described their purpose, in depth, on Feb. 4. File photo industry, for the energy sector in a broader context, and for the construction of new energy infrastructure,” Harrison said. “What is new, what we announced today, is our willingness to look at, from advocacy to other elements along the way, to along the spectrum to equity ownership, and

points in between. We are prepared, as a government, to have the discussions with proponents in order to have these pipelines constructed and to have this energy infrastructure built. “That is something that is different, and we are going to continue to have discussions with

proponent companies. This wasn’t done with a particular project in mind, but we have been talking with a number of different proponents on a number of different projects.” “In an ideal world, we wouldn’t have to do this. But the reality is, at this point, because of ► Page A6

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Could Teck Frontier withdrawal lead to Wexit? When TransCanada withdrew its application for the Energy East Pipeline, you could have been forgiven for thinking that was a one-off. Surely, it won’t become the norm. But we’ve seen counts ranging from $100 billion to $120 billion in cancelled projects over the last five years, with the $20.6 billion Teck Frontier oilsands mine being the most recent, and perhaps the deadliest, when it comes to confederation. After striking out so many times, the economy and morale of Western Canada desperately needed a win. We needed to kick the ball, but the metaphorical Lucy, the current federal Liberal government, took it away again at the last second. As usually, many years and over a billion dollars had been spent on developing the now defunct project. Remember, that $120 billion was just capital expenditure – to build the various projects. The economic output of them, combined, would have been many, many times, that. As in, it would have been more than the entire gross domestic product of some smaller nations. What could Canada have done with that sort of money? Would the federal government be running deficits today, even with its profligate spending habits? Would the Alberta government be in deficit? Would inboxes start overflowing with invitations to join some form of western separation movement, as they did again the day after the Teck Frontier project was killed? If Northern Gateway and Energy East had been built by now, as they were both supposed to be in service before December 2018, would the horrendous differentials on heavy oil prices in late 2018 have cost Alberta billions, and Saskatchewan hundreds of millions, in that period? And would both provinces have seen their balance sheets buoyed by a dramatic reduction in that differential since then, as tidewater access on both coasts made its impact? How many hospitals could have been built in Western Canada? How many weeks or months could have been taken off of surgical wait times? How many hours taken off emergency room wait times? How many teachers, like the ones in Saskatchewan considering job action as this is being written, been placated with salary increases and additional staff ? How many kilometres of roads could have been repaired? How much more could have been twinned, instead of had passing lanes added? How many bridges built? These are not idle questions. The losses to Saskatchewan in 2018 alone on the WCS to WTI differential could have paid the entire cost of the Jim Pattison Children’s Hospital in Saskatoon. Tim McMillan, president and CEO, of the Canadian

Association of Petroleum Producers, said on Feb. 24, “This is not the first major project to be abandoned, nor is it likely to be the last. This is the result of a system where – after nearly a decade of work in the permitting space, unprecedented consultation, support and agreements with Indigenous communities, and recommendations to approve from a joint review panel – a company feels it has no choice but to withdraw its application. “This is bigger than one project; it is a pattern of projects. The decision speaks to the ongoing inability of major Canadian projects to succeed. Aside from yet another blow to Canada’s oil and natural gas sector, we must ask ourselves about the implications for Canadian industries as a whole. This time it was an energy project, but the next time it could affect a manufacturing, aviation, forestry or agriculture project.” How many more blows can a nation’s economy take? How many multibillion-dollar projects have to strike out before no one will even consider investing in Canada – and that includes Canadian companies? It’s not lost on us that TransCanada is now TC Energy, and Encana is Ovintiv. Both Canadian champions, both of whom now do more business in the U.S. Encana even moved there. Will TC Energy, and perhaps Enbridge, be next? Who will be left? Who will build our projects, develop and literally fuel our economy, when they all leave? The reality now is the loss of Teck Frontier could be the final straw that breaks the camels’ back. The tolerance of rail blockades for weeks on end, in solidarity with the unelected Wet’suwet’en chiefs, had seriously bent that back already. The cohesion of the nation is at stake. Expect several more dates to sign the Wexit petition. A Feb. 11 political cartoon by our favourite cartoonist, Malcom Mayes, referred to rejection of Teck Frontier leads to Alberta ‘Texit’, as in Teck-exit. He perhaps prophetically posted that 12 days before the project was pulled. Calgary MP Michelle Rempel Garner, one of the signatories to the “Buffalo Declaration” posted within hours of the announcement, “This can’t continue. Our country is broken. This decision, to me, says our country is closed for business, and the fault of that lies at the feet of our federal government, led by Justin Trudeau.” “This is a fault line decision that will need to be addressed,” she added. “Enough is enough. The time for politeness is over. The time for sitting back, and taking it, is over,” she concluded. That’s a conclusion being reached widely across Western Canada now.


If court injunctions can be ignored with impunity, can I ignore my speeding ticket? A few weeks ago, I was accelerating as I pulled out of town. I exceeded the 60 kilometre speed limit, I guess because once you are out of town, the natural tendency is to speed up, even in a speed zone that is artificially low. There was an Estevan cop going the other direction. She nailed me on radar, and I immediately pulled over before she even turned around or put her lights on. I knew my goose was cooked, and I got a ticket. But it has since struck me that I could have done something different instead of speeding. Instead I could have taken my SUV a mile south of where I got the ticket, parked it on the Canadian Pacific rail line passing through Estevan, and gathered a dozen or so other people to join me with a few signs saying I supported the Wet’suwet’en’s fight against the Coastal GasLink pipeline. I highly doubt the police would have touched me. And if I had done so, I would have shut down

Western Canada’s mainline rail connection to the American Midwest, causing a huge portion of the Canadian economy to grind to a halt. Just me, a dozen people, and few signs and maybe a flag. And no real consequences. This is what has been happening across the country. On Feb. 13 CN announced they were shutting down large portions of its network. Via Rail was shutting down entirely, across the country, except for Churchill. “Law enforcement should enforce the law,” said Conservative leader Andrew Scheer said in Ottawa on Feb. 14, the day I write this. He was saying what almost every other elected leader has said in the first half of February. But the same words were heard, almost wordfor-word, with regards to the Regina Co-op Refinery Complex lockout and subsequent blockade. The

premier of Saskatchewan called on the Regina Police to enforce the law, and yet the blockade stayed up for weeks, in direct defiance of two court injunctions. The Coastal GasLink and Co-op blockades are different in focus, but similar in operation. More significantly, both have proven the utter impotence of police to react and enforce clearly defined court injunctions. The difference between the two is that there’s still a very small amount of intestinal fortitude for police to enforce court orders against union protestors. But there’s next to none if the protest/ blockade/barricade/whathave-you has any sort of Indigenous element. This is continued fallout from the Oka crisis of 1990 led to the Ipperwash crisis of 1995, both of which saw someone die. This led to the Caledonia crisis of 2006, in which police inaction was so grievous that protestors issued “passports” to people to go to their own homes. The recently de-




By Brian Zinchuk

ceased Christie Blanchford even wrote a book about it called Helpless: Caledonia’s Nightmare of Fear and Anarchy, and How the Law Failed All of Us. For 30 years, we’ve suffered Oka paralysis. Here’s the pattern – someone feels wronged, so they set up a barricade. A court injunction orders the removal of the barricade. And the police do… nothing, for days, weeks, or, sometimes, ever. If it’s Indigenous, lean towards never. It reminds me of the quote widely attributed to Mark Twain saying, “Everyone talks about the weather, but nobody does anything about it.” The politicians have all been talking about “the rule of law,” and that “police should enforce the law.” But the feds say the provinces should be dealing with the rail blockades, Quebec says the feds should, the provincial ministers (and Regina mayor) are saying they can’t specifically direct police, and the police do … nothing.

Indeed, in the Regina Co-op situation, the Regina police chief went so far as to issue a public statement basically telling the premier to buzz off, saying, “For the effective function of a democracy, police must be independent of elected officials.” Okay, you’re independent, so long as you enforce the law, including the specifics of court injunctions handed down from the bench. Do your job. And if they’re not going to do that, the police commission should fire the police chief. Oh, eventually the Regina Police got around to removing the barricades, and the effective camps at the refinery. It only took the better part of two months to limit the nearly impenetrable picket lines and the total barricades. And eventually the RCMP got around to opening access down a logging road in the B.C. interior. But the whole of Canada cannot wait for “eventually” when there will be layoffs in the thousands, or tens of thousands, or even more,

with CN shut down where it counts. If the court issues an injunction, it needs to be dealt with, now. If the police are not going to do this, the situation is going to get much worse as frustrations boil over and people start doing what the police will not. In recent days I saw a video of a pickup blowing through a blockade. Another shows a man arrested for removing one. (It didn’t help he had a mask on, however.) You get some good ole boys who can’t get to work mad enough, and the fur is going to fly. Then the police are really going to have a problem on their hands. If the police aren’t going to enforce these court injunctions and clear all the blockades across the country, should I pay my ticket? Do I get to ignore the police and the judge, too? Or do only some laws count? Brian Zinchuk is editor of Pipeline News. He can be reached at brian.zinchuk@ sasktel.net.

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Political risk is hampering pipeline financing, so Saskatchewan might step in ◄ Page A3 litigation, because of targeted measures taken by activist groups, largely from the left, who are seeking to shut down the energy sector in a lot of cases. “In addition to that, we have federal government policies and rules like C-69 which have created a great deal of regulatory uncertainty. Because of that political risk, proponents aren’t able to actually get projects financed, so government has to be involved, and we are announcing, through this committee and through what we said today, we’re prepared to have those discussions,” Harrison said. There have been no decisions on how this would look like, such as being going through the Crown Investment Corporation (holding company for the province’s Crown corporations), as there have been no decisions on any deals, he explained. “Those will be considerations the committee will look at,” he said. The differential is the imperative Asked if this would be exclusively for projects that pass through Saskatchewan or whether it could include the Trans Mountain Expansion (which the federal government has said it wants to sell), or the

Eagle Spirit project, or a project entirely in Manitoba to Churchill, he said, “I wouldn’t limit necessarily options around that. The reality is, if we get additional energy into a pipe, that’s going to impact on the differential. That’s going to make a major difference if we can close the differential gap to taxpayers in Saskatchewan, who own the resources, who are not getting world price, because we can’t get that energy to market. Whether it be through the Trans Mountain Pipeline or other energy infrastructure projects, either proposed or actually underway, we wouldn’t put a box around what we would consider. There are not specific terms of reference for the committee as far as what projects we would talk about and not talk about.” That differential he referred to is the price difference between Western Canadian Select, the benchmark price for heavy oil produced in Canada, and West Texas Intermediate, the North American benchmark. Saskatchewan’s heavy oil accounts for 211,000 bpd of our current production of 501,000 bpd, as of November 2019. From November to February differential has varied between US$18 and US$22 per barrel. At an average of US$20 per barrel, that’s a loss to the Saskatchewan

economy of US$4.2 million per day. While there is a natural differential due to the quality of oil, this calculation also does not include the differential to the Brent price of oil, which has been consistently US$5 per barrel higher than the WTI price over the same period. The Brent price is considered the benchmark for oil shipped by tanker, once it has reached tidewater; in other words, the world price. Harrison said, “The policy objective, in all of this, at the end of the day, is that Saskatchewan taxpayers maximize the value of the resource, and that means we need to get as close to world prices as we can possibly get for the resource, and that means we need energy infrastructure in order to get it to market. “Whether that’s a particular project, and a particular location, we’d be prepared to look at different options.” He pointed to one example: before Christmas the government sat down with the Project Reconciliation group, a group of Indigenous leaders looking to have an equity position in the Trans Mountain project. It’s a Saskatchewan-based group. Asked how much of this effort is driven by the fact that the Energy East

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project, now defunct, was supposed to be in service by the end of 2018, he said, “The reality is there is not sufficient capacity on the pipes to get the resources from Western Canadian jurisdictions, where it’s produced, to market. So we don’t have enough pipeline capacity. The projects the industry felt would be able to have the takeaway capacity to accommodate the production we have here haven’t come online for a variety of reasons.” Not ideal Harrison continued, “This is such an essential component of our economic future, we need to be involved. It’s not ideal. In a perfect world, we would absolutely not want to be involved in this way. But the reality is, if we’re not going to be involved in this way, these projects are not going to happen. And we need them to happen.” He said the government’s approach is “All the above,” be it a pipeline to the West Coast, to the East Coast, northeast to Churchill, Manitoba, or south to the U.S. Gulf Coast. “We need to have capacity, because that’s going to ensure the future of the energy sector in Western Canada, which we know will be an important part of our economic base, and which we believe needs to be an essential part of our

economic base.” They’re not limiting involvement to projects which reach tidewater. “Our guiding principle will be, is this in the interest of the people of Saskatchewan?” he said. With a recently balanced provincial budget, where will the money come from? Harrison said, “We have no project in front of us, that we’re considering, as far as a dollar value. There would be several mechanisms we would be looking at, potentially, as far as funding, financing, other sort of participatory vehicles where governments can be involved. The primary thing is the political derisking. That’s the most important component for this for proponent companies.” In late January and early February, several court processes have finally cleared, both in Canada with regards to the Trans Mountain Expansion and the Enbridge Line 3 project in Minnesota. But Harrison doesn’t think that means the courts have finally sorted out the derisking he referred to. “There still is uncertainty in the regulatory process around Bill C-69. The Federal Court ruling was very welcome on TMX. I would say that without equivocation. It was a very welcome ruling,” he said, noting he

still has to look at it in greater depth. “What I saw was a pretty clear statement about how consultation doesn’t constitute a veto. I think there had been a developing narrative with at least some elements that there was a veto that was implied in a number of different things,” he said. 50 per cent decline in direct energy-related jobs With regards to the dramatic decline in the size of the Canadian drilling rig fleet over the last five years, from 811 in October 2014 to 515 today, Harrison said, “That’s a reflection of what we’ve been seeing in the labour force numbers. There has been a 50 per cent decline in employment in direct energy-related jobs in this province in the last 18 months,” he said. “Fifty per cent! Can you imagine if this was Ontario, and there was 50 per cent decline in the auto industry? You know what the answer to that is. It’s a rhetorical question. It’s just unbelievable, and it’s very, very frustrating. So we’re going to keep fighting the fight, and we’re going to continue to be a strong proponent and advocate for the industry as we can.” He said those number came from a recent Statistics Canada labour force survey.

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Canada’s leading drilling E&P talks about dramatic changes in the drilling rig fleet By Brian Zinchuk Calgary – For the last several years, Crescent Point Energy Corp. has almost continuously been at the top of the leaderboard when it comes to the number of drilling rigs they employed in Canada. At times, their rig count exceeded the Number 2 and 3 spots combined. As a result, they have a unique perspective on the dramatic reduction in the drilling rig fleet in Canada since late 2014, from 811 rigs to 515 in Western Canada today. Ryan Gritzfeldt is Crescent Point’s chief operating officer. He responded to our questions by email on Feb. 20. Pipeline News: We’ve seen the drilling rig fleet in Canada drop from 800 about five years ago to 515 today. The Petroleum Services Association of Canada recently forecast a 10 per cent reduction in wells for 2020, from 5,000 to 4,500. But are rig counts and wells drilled the metrics we

should be using today? Ryan Gritzfeldt: A lot has changed in the last five years. In previous years, Western Canada ran over 90 per cent of the rigs that were registered. That probably won’t be the case any time soon as commodity prices have been low for quite some time. You could say wells and metres drilled are more indicative metrics used today. P.N.: For the last several years, Crescent Point has been leading the nation in the number of rigs working. A few years ago, you were running around 24-26 rigs in Canada at times. Now that number is closer to 16, yet you are still leading. How much of that reduction is due to reduced capital expenditures, and how much is due to higher rig efficiencies? Gritzfeldt: In my opinion, it is a bit of both.  For Crescent Point in particular,

In January 2018, Crescent Point saturated the area south of Torquay with drilling rigs. While employing fewer rigs today, for the last several years the company has almost continuously led Canada in the number of rigs it has employed. Photo by Brian Zinchuk it’s a mix of reduced capital spending and a shift to longer lateral wells which results in fewer wells drilled to access the same amount of resource below surface. P.N.: Your Oct. 31 conference call noted that Crescent Point is drilling more and more two-mile long laterals in the Flat Lake area. Can you explain your progression to this

point, and how that reflects on the larger numbers like well and rig counts? Gritzfeldt: Technology advancements have enabled us to extend our laterals and optimize hydraulic fracturing over a greater reservoir distance. Our shift to twomile wells has resulted in significant cost savings and has allowed us to minimize our surface footprint, as we

can reach a larger amount of resource from one surface well bore. P.N.: Are you drilling multilaterals? If so, does that still count as “one well,” or multiple?

Gritzfeldt: Crescent Point does not typically drill multilateral wells. However, it would generally count as one well. P.N.: There’s been a ► Page A10

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Weyburn OTS Bonspiel attracts 22 teams Weyburn – The Weyburn Oilfield Technical Society held its annual bonspiel on Feb. 7-8 at the Weyburn Curling Club. Jerry Mainil Ltd. came in top spot with the A-event final. The team featured Monte Arnott, Darcey Ward, Mark Schneider and Larry Paterson. In the B-event, Me-

layne Borys, Calli Benko, Kristopher Hagen and Terrill Bloor were the winners. Clariant won the C-event. The team was made up of Danette Tracey, Charla Moore, Darren Woodard and Steven Hansen. There were 88 curlers across 22 teams in the skins format bonspiel. Two

teams had to drop out at the last minute, otherwise it would have been full. “The real story of what saved this bonspiel is the oilwomen,” said Rob Somerville, one of the organizers. They gathered sponsorships and were highly effective at marketing. Registrations happened a lot quicker than usual.

Jeremy Maurer pensively watched his rock glide down the ice

You could definitely hear Calli Benko as she belted out instructions to her sweepers. Todd Bedore, left, Bruce Miller and Kerwin Mondor curled on behalf of Miller Well Servicing.

Aaron Mack glides out of the hack.

Kayla Cugnet, left, and Abby Kradovill are two of the oilwomen who, as a group, “saved this bonspiel” in the words of one of the other organizers.

Community Futures Sunrise an option for lending By Brian Zinchuk Weyburn – In a time when capital can be hard to find for oilfield services, Community Futures Sunrise is an option that some might have not considered. Verna O’Neill is general manager of the Weyburn-based, federallyfunded organization, one of 13 in throughout the province. Asked what they can do for the oilpatch, after five years of downturn, she replied, “We’ve always had our core services of loans, advice and sup-

port for small business for potential entrepreneurs. That’s always been our focus, to help potential entrepreneurs that are thinking of starting up flush out the business plan, look for areas of opportunity, to help them be potentially bankable, or support them through our business loans, as well.” The maximum loan is $150,000 for a startup, but they can also be used for purchasing an existing business or expansion within the region. She said they’ve fo-

cused their efforts recently in business advisory and training, specifically in marketing and financial analysis. “As business becomes more complex, and the economy changes, entrepreneurs need to be equipped with the information they need to make good decisions,” she said. “Over the last few years, people are a little more cautious in investing,” she noted. Recently they’ve seen smaller scale loans from people seeking to “test it out.” The organization

works with local banks and credit unions to support entrepreneurs. Entrepreneurs must first attempt to raise capital or financing from banks and credit unions before Community Futures will support them. “We don’t compete with them. We are here to supplement those efforts, and to make sure we’re here if there’s a decline at the bank or credit union, and to help them with their business plan and to help them with our loan program,” she said. Marketing is a lot eas-

ier today with the advent of social media, something they work with their entrepreneurs on. They have specialists within the region they can contract to assist. Entrepreneurs really want to know how to be profitable, she noted. “Gone are the days of where you just hurried to supply the demand. That was in the heyday. Now it’s a thoughtful approach, being strategic, on which way I want my business model to move.” Attendance at their

events has picked up in recent years. “We’ve been able to add an additional staff member due to the coal transition funding,” she said, bringing the organization up to four. If their lending services are not large enough for a firm, they can work together with other lenders, such as provincial or federal government programs to access more capital. One of their sister organizations is the Business Development Bank of Canada.



Hurry, hurry hard to the Estevan OTS Open Bonspiel By Brian Zinchuk Estevan – The Estevan Oilfield Technical Society 61st Annual Open Bonspiel will take place at the Power Dodge Curling Centre on

March 20-21. Entries are limited to the first 32 paid rinks. The entry fee is $320 per rink, which includes buffet tickets. Additional tickets for

the buffet can be purchased for $30. Registration is online at estavanots.com/ curling. The supper will be at the rink. The event is co-ed.

Tony Sernick, one of the organizers, said on Feb. 20, “Every oilfield person is welcome. There’s plenty to do, plenty of free stuff, lots of stuff to win.”

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Darrell Duce was curling with Nalco Champion last year.

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Crescent Point employs more drilling rigs than anyone else, and has done so for years ◄ Page A7 continual increase in frac stages over the past decade and a bit. How has that affected both well performance and these metrics? How many stages might you do in a two-mile long Flat Lake well? Gritzfeldt: A one-mile lateral will typically have 25 frac stages and a two-mile lateral will have approximately twice that at 50. We continually assess and adapt our frac designs to meet the specific conditions of the well and the geological formations we are targeting.

P.N.: North Dakota used to run around 180 rigs before the downturn hit. Now that number is closer 52 to 65, yet they are setting production records each month. Their Department of Mineral Resources told us in 2018 that North Dakota rigs are now roughly two times as efficient as they used to be, drilling three wells in a month instead of one. Crescent Point is still active there. Can you describe your experience? Are you seeing similar improvements in rig efficiencies?

Gritzfeldt: Yes. North Dakota used to drill wells in 20 days on average back in 2014. The average with the newer triple drilling rigs has been averaging just under 12 days. On the Saskatchewan side we’ve also seen improvements in recent years with average drilling days dropping from 18 to 12 as a result of new efficiencies and optimized processes. P.N.: What are the key factors in increased rig efficiency? Polycrystalline diamond cutter bits? Different muds? Solids control? Higher horsepower

mud pumps? Pad drilling with walking rigs? Or is it something else? Gritzfeldt: Yes, there are many factors: • Many rigs now have three mud pumps instead of two which is more efficient as the rig can run the same liner sizes for power in the intermediate and lateral hole sections. This saves considerable time for the rig crews. • Larger pads (4 to 8 well pads vs mainly single well pads back in 2014/2015) have significantly cut down on the

number of rig moves and kept the operations more efficient overall. • Continued improvement in bit cutter technology has increased bit effectiveness and durability. P.N.: There are hundreds of racked rigs, many of which have been that way over five years. Do you expect any of those rigs to work again? Gritzfeldt: It is hard to say, obviously it is an entirely different mindset in a $50 to $55/bbl WTI world where there is a lack of market access (no pipelines being

built), disabling producers from realizing competitive pricing. These factors obviously directly impact investment decisions of producers.   P.N.: What metrics should we be using, going forward? Is metres drilled now king, over well count or rigs working? Gritzfeldt: If you’re asking about what metrics to look at to measure the health of the industry, sure you could use metres drilled as there have been recent advancements in pad drilling and longer laterals. 

NDP not impressed with cabinet pipeline committee announcement By Brian Zinchuk Regina – Saskatchewan NDP MLA Trent Wotherspoon wasn’t terribly impressed with a Feb. 4 announcement that the Saskatchewan government would be forming a fourmember cabinet committee to look at pipeline proposals, and the possibility of investing in them. Wotherspoon said to reporters in Regina, “Market access and pipelines are important to Saskatchewan. I have to say, though,

I looked at the news release, and I sort of questioned what was newsworthy here, and I was a little surprised, as well. It was like you had woken up, put on your pants and showed up for work. This is really, what the focus of a cabinet should be. It should be integrating into the work of government. Maybe it speaks to the failings of government on this front. But I was a bit surprised this sort of work wasn’t fully integrated as part of

cabinet, already. “That being said, market access, for Saskatchewan, is important.” Asked if the NDP would support putting government money into a pipeline project in order to provide it certainty, Wotherspoon said, “I think you have to look at a project on a project-by-project basis, and we would be openminded to what the options would look like. But we shouldn’t be racing to place public dollars on that

front. We hope that market conditions are such that projects can be advanced with private sector capital. “Then anytime you’re looking at a public dollar, you have to be really certain of the value for money, the certainty of advancing a project, and a whole lot of detail. Of course, we have none of that today,” he said. As for choosing which sound project to invest in, Wotherspoon said, “I think governments should not be racing to place public

dollars. I saw the mention of that in the news release today. I didn’t see details on any project here today, in fact, so I don’t see a whole lot of newsworthy components of what was announced today. I was, in fact, rather surprised that the efforts that are described haven’t been part of the considerations of cabinet, of government, for a long period of time, because market access is incredibly important to Saskatchewan people.”

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Focus on staying profitable: MNP By Brian Zinchuk Estevan – Keep your focus on profits, not just revenue. That was part of the message from David Hammermeister, a partner with MNP in Estevan, focusing on oilfield services. Michelle Avery is a senior manager in the same office. They spoke to Pipeline News on Feb. 13. A substantial influence on the money situation in the Canadian oilpatch comes from the perception of this nation’s investment environment. “The federal government has an opportunity to set a direction with the big Teck Frontier mine, whether they give that the go-ahead or not,” Hammermeister said, noting they want to spend billions in Canada. “Things are starting to look like they’re going south in a hurry in Texas. There’s lots of bankruptcies in production companies. There’s lots of debt that’s coming up. They’re spending money like crazy and generating oil, but they’re not making any money for their investors,” he said. “Perhaps some big money would drop into northern Alberta if we had the right regulatory environment for it.”

Five years into this downturn, what strategies have helped companies succeed? “The ones that are still out there, and successful, it’s usually some kind of product or service differentiation. They’ve got some sort of product that is unique that maybe isn’t available to everybody else, and they’re able to market the advantage of using their product or their system. The oil companies are all worried about how they can do things cheaper or cost them less,” he said. Automation of artificial lift systems is one example, he explained. Avery said, “I think just knowing their margins and knowing what their costs are, keeping a better eye on discretionary spending, the advertising, the insurance, wages to themselves. That’s still going on, now, five years in. The ones off the bat who didn’t want to make any changes, kept everything the same as what it was, or didn’t know what their gross margin was, those are the ones that tanked.” Hammermeister added, “Those guys are the ones that got in trouble. They wanted to keep busy, not realizing what their costs were.

The more work they did, the more money they lost. “There has been some improvement there. Some guys looked at that. They didn’t know what their costs are as well as they should, but they know they are losing money and have to do things differently, and I think are doing a better job negotiating vendor rate increases with their customers. It’s not significant, but there definitely are rate increases.” He’s hopeful that some recent land transactions will lead to more opportunity for oilfield service companies and the chance for some rate increases. In the third quarter of 2018, when prices got a little better, the drive in demand improved rates a bit. Hammermeister said some of the business is still relationship-driven, but the relationship part of it usually goes along with superior service, as well. “It’s the guys that have a really good product, and they stand behind it,” he said. Asked if we’ve reached the bottom, or there’s some ways to go yet, Hammermeister said, “I think there still needs to be some more consolidation happen, whether you call that con-

solidation or businesses that need to close up, there’s still more supply than demand.” He noted a recent series of stories Pipeline News did on the dramatic reduction of the drilling rig fleet, and that utilization rates are still low. There’s been lots of talk about the difficulty throughout the oilpatch in finding capital. Asked where the oilfield services are going for money now, with oil again around US$50 per barrel, Hammermeister said, “I think on the service side, they can always borrow money for equipment, if they’ve got profitable work to do. But the bigger issue is the bad investment climate.

David Hammermeister. File photo The public companies aren’t raising money. Nobody’s starting E&P companies, making really big raises (of funds) like they used to.”

He noted that during the boom times, one company regularly raised $500 million at a time from the ► Page A12




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Free cashflow is key, and driving efficient companies built to last instead of exit By Brian Zinchuk Regina – These days, free cashflow is a lot more important, according to Jason Moser. PFM Capital has been investing in the Saskatchewan oilpatch for many years. Moser is a partner and director of investment. He spoke to Pipeline News on Feb. 7. The investment firm has had put money into numerous firms over the years, from exploring and producing (E&P) companies to drilling to natural gas processing. Asked about the state of investment capital in Canada, Moser said, “It’s pretty anemic in Canada, and it’s been pretty anemic in the U.S. as well. There’s some small green shoots, if you looked in the last quarter or two. It’s not sectorwide, but there’s been a little bit of capital deployed.” He pointed to a few recent recapitalizations or capital raised in the E&P area. Steel Reef Infrastructure Corp. recently made a half-billion dollar acquisi-

tion of natural gas plants from Crescent Point Energy Corp., and funds managed by PFM have been a significant investor in Steel Reef from that company’s early days. “There’s been a few select instances or assets where people have been able to raise capital, but it’s certainly not a sector-wide phenomena or anything,” Moser said. “If you’re looking to be a glass-half-full person, there have been a few, niches, particular cases where people have been able to raise capital, but there’s still a dearth of capital, for sure, both debt and equity capital.” Where’s that money coming from? It’s not a universal source, he replied. In one case, it was U.S. private equity. Another was existing investors contributing. “There’s not as much energy-focused private equity in Canada as there was four years ago. There’s some in Canada, but it’s diminished from what it used to

be. You will continue to see a few Canadian-focused private equity firms, that are energy focused. There are some generalists, like ourselves. And there are some family offices, and some high net-worth sources of capital as well. Even outside of energy, that’s probably a theme. There’s increasingly more capital in family offices and high net-worth individuals.” But there’s no one source he can point to. “There’s less of it than there used to be that’s dedicated to energy, it’s fair to say.” U.S. money is coming in, but it’s more of a trickle, he noted. “Producers in Canada have become used to not spending in excess of cashflow. Typically it’s a per-

centage of cashflow,” he said. Capital budgets move with commodity prices. Share buybacks and dividends are being demanded by the investor base, he pointed out. Canada’s investment base has been focused on free cashflow, but the U.S. had previously been more focused on growth, he noted. “Canada has had an inability to grow, so they’ve been forced to become more efficient producers,” he said. Moser said the E&P universe in Canada is much more healthy than a few years ago, based on conservative capital spending, reduced leverage, and moderating decline rates. He said they’ve seen more viable business plans

Jason Moser in recent years from companies seeking investment. To a certain extent, they’ve been putting more investment into firms they’re already involved with and a few new energy investments outside of the province. Broadly speaking, there’s been more of a fo-

cus on returning capital to shareholders. While in most cases there used to be a reliance on returning capital through a liquidity event, Moser said, “Companies are being built to last a long time and aiming to return capital throughout the duration of the company.”

Still hardly any recapitalization is going on

◄ Page A11 markets, but that’s not happening now. (That company spent most of its money in Saskatchewan.) Asked if there are many businesses expand-

ing, Avery said, “We’ve got a couple that have added a few pieces of equipment, here and there, but not any major expansions.” Hammermeister pointed to some opportu-



nistic expansions where one business has asked another to take over their operations and staff. As for equipment replacement, there’s been little in the ways of recapitalization. Avery said some companies are replacing a unit or two, but it’s replacement of units that became simply worn out and it costs too much to do anymore repair. “Guys that have driven trucks and trailers into the ground, they don’t have much choice to replace it, but they’re not replacing it with new,” Hammermeister said.

Avery added, “No, they’re going to the auctions to get these good deals, if they can.” “But there’s getting to be a lot less good used equipment out there,” Hammermeister said. He said if looking to expand, be sure to manage your risk. “If they are looking to expand, make sure you don’t get in too deep. Know who you’re working for and with.” “Have a good product, stand being behind it, do good work” Avery said. “The big one is profitability, not just revenue,” Hammermeister said.

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A strong balance sheet has overtaken growth at all costs: Synergy Credit Union By Brian Zinchuk Lloydminster – Synergy Credit Union, based in Lloydminster, had long been part of the financial landscape in heavy oil country, as well as in the Viking. As such, they have a finger on the pulse of what is happening, moneywise, in the region’s oilpatch. Brent Bergen is the chief operating officer. Noting how they see the world, he said on Feb. 14, “From a macro perspective, it really feels like a wait-and-see approach for many people right now. We know that many international and domestic investors have left Canada, or have at least paused on making any further meaningful investment in Canada. When you have that type of uncertainty surrounding Canada’s commit-

ment to the energy sector, it’s challenging. It’s hard to restore investor confidence into that sector. “What we’re finding is stakeholders continue to find, and need to find, a balance between the economic advantages of getting our Canadian resources to market, but also that fine line in trying to balance between what climate change goals and expectations. You’re seeing that all over the news today, and it’s so unfortunate that we can’t all come together and find resolution.” He referred to the ongoing protests that have shut down large parts of CN’s network, as well as Via Rail. They are protesting construction of the Coastal GasLink Pipeline. “All that uncertainty,

it’s tough for people to make investments into Canada,” Bergen said. Regarding financing for oil and gas service companies, he said, “Borrowers are looking to secure financing – at the servicing end, welding shops and what not. “This won’t come as a surprise. Ones with healthy balance sheets are going to have an easier time obtaining credit. What would I define characteristics of healthy balance sheets? Individuals or companies that carry lower levels of debt, higher levels of capital and positive cashflow. So really, just the fundamentals, making sure that people are managing their balance sheets appropriately. He continued, “Growth at all cost, like we saw when

the patch was really happening, from 2010 to 2014, has been pushed to the sidelines.” Strong, healthy financial performance is much more favourable. “That’s really been a shift,” he said. “In the past, I think people were really focused on the top line, and generating as much revenue as possible. Some of that came at the expense of profitability. You’ve really seen a shift, from what we’re seeing, anyway, in terms of what people are now trying to achieve from a financial perspective. “For some companies, what that has meant is an increase of capital may come from a sale of assets. We definitely have seen some that said, ‘To repair our balances sheet, we’re going to

move some assets that are no longer needed.’ They cut back on some of their divisions. Or, they’ve gone to the marketspace and maybe brought in other potential investors through some time of ownership investment opportunity. Whether it’s going to employees, or maybe bringing in people on the sidelines with some additional capital to bring it, that’s the big part. We’re really seeing individuals and companies focusing on the balance sheet,” he said. “There’s definitely much more caution in people’s approach. We don’t see, in terms of equipment replacement, the way it was. We know people are definitely stretching longevity in terms of those assets, whether its trucks and trailers and

units. In the past, they may have had replacements every three to five years. They’re definitely stretching those things out. So we’re seeing those types of trends. “We’re seeing some people hanging in a little bit longer, in terms of refinance and restructuring, trying to see if they can put their balance sheets back to where it needs to be to hang in there. “People need to find institutions they can deal with, that understand what’s happening in the energy sector … that have some patience to work through some bad years and couple that with a couple good years,” Bergen said. “It’s hard to make capital investment, whether expanding their shops, or ► Page A14

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Things have slowed down, but there’s still opportunity ◄ Page A13 looking at putting on a few extra trucks. It’s difficult when there’s so much uncertainty out there.” They’ve seen some business come over from the big banks. He stressed strong management teams. “That’s critical when credit can be a little more difficult to obtain. Surround yourself with great people, right from the workers that are out there to the people that are in the office. What we found in the past, a lot of business owners who are really good at what they do, but maybe don’t pay as much attention to the intan-

gible areas, like the accounting side of what they do, or the financial performance.” To that end, Bergen said finding great advisors, including accountants and lawyers. “People need to spend more time with that group, asking more questions, listening to what’s being shared. We’re still finding that a lot of individuals, when they don’t like what they hear, run to somewhere else, trying to find the answer they’re looking for.” Maintaining a strong reputation, high quality work, timeliness, fairness, and being able to execute on commitments are all impor-

tant. When there’s lots of competition, decisions are often made on reputation. “Another consideration that’s growing is CSR – corporate social responsibility,” he said. This includes ESG – the environment, social and governance side. These are front and centre in considerations. Recapitalization Is recapitalization an issue? Bergen said companies with strong balance sheets, who weren’t highly leveraged due to “growth at all costs” are better situated now to take advantage of opportunities. Some companies were harmed when

ownership continued to take large salaries or dividends out of the company, really harming the company when it needed to recapitalize its assets. He said, “We’re not seeing the growth, like we used to, from the lending perspective, but we haven’t had any fall-off in terms of a significant reduction in the loans that we’re doing. It’s just steady. And you really have to peel through, and look and find those opportunities.” The Lloydminster region has seen a significant change with regards to investment in thermal oil op-

erations, but decline in cold heavy oil production with sand (CHOPS), which had been the standard way of producing oil in the region since the 1980s. “Like any industry, including the energy side, advances in technology are creating efficiencies everywhere, for all types of business. You’re seeing it in agriculture and the oilpatch. The general reason for it is people having to reduce operating costs. And once operating costs are lowered, you become much more competitive and you’re seeing profitability, and it’s back to the balance sheet,” he

said. He noted this has had impact on the workforce. That can lead to less jobs, and a trickle-down effect on housing, vehicle sales and groceries. “In Lloydminster, we’ve noticed we just don’t have the same growth of what we once did,” he said. There’s still projects being worked on, new homes going up, and local development companies partnering on accommodations. In some areas of the oil sector, there’s great opportunity to buy out other businesses from someone who wants to retire, he concluded.

Weyburn Industrial TransLoad rail facility announced By Brian Zinchuk Weyburn – There once was a time where you could load and unload rail cars at almost any siding and in every town on the Canadian prairie. Not these days. The days of plentiful local loading sites are long gone. That even includes Weyburn, a community so synonymous with rail, it used to have a roundhouse on the Soo Line (now the Canadian Pacific mainline which connects Western Canada to the American Midwest).

And that’s why a group of partners from southeast Saskatchewan has come together with the intention of building the Weyburn Industrial TransLoad. They intend on building a rail transloading facility on the south edge of Weyburn. In a way, it’s back to the future. Those partners include Blair Stewart and Carter Stewart, (president and general manager of operations and business development, respectively), Dale Mainil, Calvin Tracey and Jason LeBlanc.

If those names sound familiar, it’s because all but Carter Stewart were the key organizers of last year’s truck convoy to Regina. The convoy and subsequent rally protested the federal government’s policies on energy, carbon tax, as well how they affect agriculture. Now, they’ve come together to do something they see as a strong positive – local, Saskatchewan investors wanting to build local infrastructure. The Stewart name is also synonymous with rail,

having built up Stewart Southern Railway, a shortline from Stoughton to just outside of Regina. While still shareholders, as of last summer for Blair, and Jan. 1 for Carter, they are no longer involved it in its operation. They bring with them insight for markets they’ve identified for their new facility, as well as deep operational experience. LeBlanc joins the team with substantial networking experience in a global market, coming from his decades of experience as an

auctioneer with his own firm then Ritchie Bros. That facility is on land owned by Mainil on the south side of Weyburn. The existing Canadian Pacific Radville subdivision splits off the mainline near Weyburn’s McDonalds restaurant. That line, which sees little use these days other than rail car storage, is key. The new facility would be on that line, south of the ethanol plant. The investment is substantial, but the partners declined to say how much.

The initial plan is for two “ladder tracks” parallel to the existing line of 3,000 feet (914 metres) each (railways use Imperial measurement). That’s room for approximately 30 cars per track, 60 in total, depending on the length of the cars. But from there, their plans have multiple possible configurations. Some include multiple spurs. Another option includes a loop track, or multiple loop tracks. Expansion would be driven by market demand, ► Page A15





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New transload facility has energy products in mind ◄ Page A4 but Mainil noted they have lots of room available. Carter Stewart emphasized the importance of freight rates. Due to its proximity to the mainline, WIT, as they are calling it, qualifies for mainline rates. That is a significant savings for clients. Asked what products they wish to handle, Carter Stewart explained they intend on starting with aggregates – sand, rock and gravel, to be trucked in from within

the region. Petroleum products are next, with Stewart referring to “refined products.” However, crude-byrail is also being considered. Agricultural products are also on the list. But their eyes are to the horizon, literally, on what can be done. “We are in the market to bring in wind turbines,” Carter Stewart said. The project was initiated last July. Mainil said an open house was held last year for their zoning application. The projects’ regulatory

approvals, from zoning to Transport Canada, are each at advanced stages. Dale Mainil, who, with his brother-in-law Tracey and other brother Dennis, own and operate Jerry Mainil Ltd., is planning to start scratching dirt in May, if things come together. And as one of the largest dirtmoving outfits in the region, they have the iron and manpower to do it, especially during spring breakup, when activity in the oilpatch slows. Carter Stewart noted

there is pent up demand for the scrapping of old rail cars. He pointed out that there’s only one other company doing it in Western Canada, and it’s in Manitoba. There’s a need to scrap 15,000 rail cars in North America, he noted. The obvious destination for the steel would be EVRAZ Regina, where much of the steel is turned into pipeline pipe. He noted that it’s hard to get track space in Regina. Weyburn ► Page A16

From left, Carter Stewart, Calvin Tracey, Jason LeBlanc, Dale Mainil, Davin Mainil and Blair Stewart announced the Weyburn Industrial TransLoad project on Feb. 19. Photo by Brian Zinchuk






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Steel Reef and Crescent Point close $500 million deal on 9 gas plants

Calgary – Steel Reef Infrastructure Corp. and Crescent Point Energy Corp. announced on Jan. 20 the closure of their previously announced transaction where Steel Reef purchased certain associated natural gas gathering, processing and sales infrastructure assets in Saskatchewan from Crescent Point for total cash consideration of $500 million. Crescent Point noted the assets sold as part of this transaction include nine natural gas gathering and

processing facilities and two gas sales pipelines with total throughput capacity of more than 90 MMcf/d. “Acquiring key natural gas infrastructure assets in leading resource plays provides Steel Reef with the opportunity to enhance and integrate its full-service gas processing offerings,” said Scott Southward, Steel Reef president and CEO in a press release. “This acquisition demonstrates our resolve to provide infrastructure solutions for our customers, while providing

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value for our shareholders. We thank our customers and investors for their continued support as Steel Reef executes its growth strategy.” The deal essentially doubles the size of Steel Reef, which started in 2012, initially by building its own facilities in southeast Saskatchewan and then buying

or building other facilities in the region, as well as a few outliers in west central Saskatchewan and Alberta. With this acquisition, Steel Reef adds to its portfolio nine natural gas processing facilities, the associated gathering systems and sales gas pipelines. These processing facilities are comprised

of four Viewfield gas plants located near Stoughton; the Flat Lake gas plant south of Oungre; Glen Ewen gas plant, and in southwest Saskatchewan near Shaunavon, the Rapdan gas plant, Leitchville gas plant and Dollard gas plant. Steel Reef raised equity proceeds of $175 million

from InstarAGF, an existing shareholder, and expanded its credit facilities through National Bank of Canada, Bank of Nova Scotia and ATB Financial to fund the transaction and its future growth. National Bank Financial acted as Steel Reef ’s debt advisor on the transaction.

◄ Page A15 is a good alternative for a scrapping operation. They also could provide a site for minor repairs of rail cars. Those that can’t be repaired economically could then be scrapped. As for crude-by-rail,

Blair Stewart said, “We’re interested. We’re in the heart of oil country.” There are lots of opportunities. LeBlanc pointed out that products that you couldn’t do be rail, locally, before, could get onto rail with the completion of their

facility. They could even bring in pumpjacks or cement bases for pumpjacks, Carter offered. Blair Stewart said grain is on the “lower end of the scale” right now for WIT. “Today our focus is not to compete against the elevators,” he said. Indeed, the whole project is intended to work in

partnership with Canadian Pacific. As for employment, it would start with one person, but Blair Stewart said three to four would likely be employed in the near future, and as many as 25 down the road, if things play out. “If anyone is interested in transloading opportunities, call Carter,” said Blair Stewart.

Interested in crude-by-rail

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