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PIPELINE NEWS February 2018
Dan Comiskey told the auditorium of service rig hands, “This room is your team!” Photo by Brian Zinchuk
IWS Safety Stand Down hears about safety habits By Brian Zinchuk Estevan – Roughly 190 service rig personnel and wellsite supervisors who work for Crescent Point attended the third annual Independent Well Servicing Safety Stand Down at the Estevan campus of Southeast College on Jan. 10. Brian Crossman of Independent Well Servicing said, “This is an event we’ve become very passionate about, as safety is the most important part of what we do every day. There is nothing, absolutely nothing, more important than arriving home safe, physically and mentally intact, to our loved ones. “You are the reason we make this investment into safety, and a commitment to your health and wellbeing.” Curtis Swain, completions team lead with Crescent Point, said the company had up to 38 service rigs working for them at the time. Swain said, “2017 was a good year for us. I believe it could have been better. I believe it will get better. 2018 is here. It’s going to be extremely busy for us in (the first quarter) and throughout the year.
Every time I come out to the field, I’m always seeing new faces. There’s new people coming into our industry. Lots of people have left. Some aren’t coming back. So this is the time, I feel it’s most important. All of you who are experienced, you now need to train and take care of all the new people that are coming into our industry and make sure they go home safely every day.” He noted two safety initiatives underway for 2018 – stop and think, and hazard identification. “We’re going to have a busy year. It’s going to be a good year. Stay safe,” Swain said. The speaker for the event was former Saskatchewan Roughrider Dan Comiskey. He was drafted by the Riders in the 1997 CFL draft, and played 13 seasons for the Roughriders, Hamilton Tiger-Cats, Edmonton Eskimos and Calgary Stampeders, retiring in 2010. With the Eskimos he was a part of two Grey Cup championships. He spoke of his coach in Edmonton standing on a chair in the locker room before a big game, saying, “I’m Bill Mac-
Former Saskatchewan Roughrider Dan Comiskey was the speaker at the third annual Independent Well Servicing Safety Stand Down. Photo by Brian Zinchuk Dermott. You can count on me.” Each member of the coaching staff and the team then stood on that chair, saying the same thing about themselves. “I knew I just became part of the machine,” Chomiskey said. “We pulled it off. We won the Grey Cup. That moment changed me.” He noted one should do the things that work, over and over again. Doing so creates habits, account-
ability and leadership. “Sometimes you have to lose to win. Learn form your failures,” he said. Later in his career Comiskey suffered from numerous concussions, the final one of which ended his career. He was done. “What I didn’t learn from football was you gotta know when to change. One of the biggest things we do as human beings is adapt,” he said. He became a safety
advisor, working for Shell for six years, learning more about people and leadership. Comiskey spoke of the “butterfly effect,” and how one little change may prevent bad things from happening. As concrete examples, he spoke of his father-in-law getting hit in the head by a piece of rock, on his first hitch on a new job in a mine in the Northwest Territories. His brother was electrocuted
and killed as an electrical lineman in 2001 because he had the wrong glove on. By his calculations, there were 600,000 chances for his brother, Ogden, to not have been killed, by having done something differently. But it happened. Safety is all habits, he said. “We’ve got to create a habit of safety.” “This room is your team,” he concluded.
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Zero to 250 employees in one year, and more to come By Brian Zinchuk Carlyle – Dale Ziegler’s day on Jan. 11 started at 7 a.m. by speaking to 125 employees of Canadian Plains Energy in Carlyle. It was “fresh start” meeting, intended to start the year off right with zero incidents, zero motor vehicle accidents, zero recordables, zero everything. “We’d love to get through the year and still show zeros across the board,” he said. “I started on Monday in Lloydminster. I did a fresh start on Monday evening with about 80 employees there. From there, I did a site visit and fresh start in Kerrobert. Then at North Battleford, yesterday. Today, 125 people in Carlyle for a fresh start meeting, with great participation from everybody. Tomorrow, we go to Virden. We’ll talk to every single employee,” he said. The Carlyle meeting included roughly 40 from the company’s Alida shop. The total number of employees he’ll have talked to is now 250, with an additional 100 expected to be added in short order as a substantial pipeline job gets underway north of Maidstone. It’s a considerable number, given that on Jan. 5, 2017, Ziegler, president of Canadian Plains, hired his first two employees for the new venture. ► Page A9
Kelly Fleck ran the excavator while Mark Schoff drove the dozer for a Canadian Plains Energy pipeline project near Frobisher. Photo by Brian Zinchuk
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73 rigs today are probably more efficient than 105 rigs several years ago On Jan. 22 there were 73 drilling rigs working in Saskatchewan. That number is up quite a bit compared to the last three years, according to sister publication Rig Locator. It’s just below the highest number of rigs at any point in 2015-2018, and higher than any other point during those years except for that brief peak, 76, on March 1, 2017. So far, it’s a pretty good start for the year. But there’s a nagging feeling that it's just not what it used to be, what we had become accustomed to during the boom years. Back then, we usually saw 100 rigs, or as many as 110, working in Saskatchewan the first quarter of the year. Today there are still a lot of rigs racked throughout the southeast, around Estevan, Carlyle, Stoughton and Carnduff that haven’t moved. And there’s a nagging feeling that, despite the improvement, it’s not good enough. We want to see all those rigs working. But maybe there’s a reason we’re not at 100 rigs, compared a decade ago, and it’s not strictly the price of oil. What if the drilling industry has collectively worked part of itself out of a job? This is a notion that we’ve discussed with many people over the recent months and years. Rigs have become so much more efficient, they’ve reduced drilling times by more than half, compared to a decade ago. Our story this month with Millennium Directional Services Ltd. noted, “Whereas a Bakken well in the Stoughton area might have taken 12 to 14 days in 2008, that’s now a five- or six-day well. Wells along the U.S. border that used to take a month are now accomplished in 10 to 11 days. Advancements in drilling efficiency, from drill bits, mud motors, drilling fluids and mud pump horsepower have made a huge difference. On top of that, there’s a lot more experience on all levels in drilling these wells. “‘It’s faster, harder, quicker. Back in the day, a tri-cone bit, you were lucky to see an ROP (rate of penetration) of 50 metres per hour in a real good pay zone. Now, with a PDC (polycrystalline diamond cutter) bit and a high-performance mud motor, it’s 150 to 200 metres per hour. It’s a lot quicker now. You don’t have as much time to second guess yourself,’ Wade Robertson, of Millennium, said.” Let’s put that into perspective. Instead of drilling rigs,
let’s talk pickup trucks. If your 2008 pickup got 20 miles per gallon back then, you should now be getting 40 to 50 miles per gallon. That would be one hell of a pickup, especially if that pickup was eight years old. Imagine if that truck got more and more efficient each year. That’s precisely what’s happening with the drilling fleet. Many of those rigs were built four to 10 year ago, and yet they’re drilling holes faster now than the day they were new. The improvements in drill bits, mud motors, drilling fluids and much higher pressure pumps have all played key roles in this development. The simple fact is that the current drilling fleet now, with 73 working, using their dual 1,350 horsepower (or larger) pumps and other advancements can get more holes drilled in the same amount of time than 105 rigs could in, say, 2010. As we’ve discussed before, there are hard limits to how much faster the rigs can get. Cementing time is a big one, and there’s no getting around it. We’re seeing some of the impacts of these efficiency improvements. Since the drilling fleet has not all gone back to work and there’s still lots of capacity racked, we haven’t seen an increase in the day rates they charge. The drillers are still very much price-takers from the oil companies, and that price is not high enough for those drillers to recapitalize their fleets any time soon. Last year, many hoped they would see that change in 2018. Well, 2018 is here and, so far, little has changed. Fewer rigs working means a smaller labour pool, and less employment dollars going into the economy. It means few gloves and boots, pickups and groceries sold to rig hands. In one way, this might be a blessing, as everyone is telling us it’s going to be hard to crew up additional rigs, should work be found for them. For the owners of these rigs, lower day rates and high numbers of idle rigs means poor returns on their investment. In many ways, they may have worked themselves out of a job. Some reward for getting really good at what you do, huh?
PIPELINE NEWS February 2018
Trump’s big move towards energy independence is offshore George Strait sang about “Ocean front property in Arizona.” I don’t know about Arizona, but I’m pretty sure about most of southeast Saskatchewan. At several points over the last half billion years or so, pretty much any given point in the southeast was once ocean front property. In one of my nerd questions to Saskatchewan assistant chief geologist Melinda Yurkowski, I asked her last year how much of our sedimentary column at Estevan was from being at the bottom of an ocean. That sedimentary column is 3,400 metres thick near Boundary Dam Power Station. She said, “I’d say at least 95 per cent of our preserved column is oceanic.” She went on, “For 3,400 metres of sediment in Estevan, if I take out the Ashern and the Watrous, and the Red Beds, it would have had roughly 3,250 metres of the 3,400 metres deposited under oceanic environments
(and that’s being generous to the continental). In terms of time, very roughly, it would have been subaerially exposed, i.e., continental, for around 200 - 215 million years out of the roughly 510 million years of sedimentation.” In other words, this area was ocean bottom for more time than it was land, and that’s pretty much why we have oil here today. All those millions of years of phytoplankton dying at the bottom of those oceans collected, rotted under heat and pressure buried by hundreds of metres of sediment, and viola, we got oil and gas. Ergo, where you have oceans, and continental shelves, you have the potential for oil and gas. That means that much of the United States Lower 48 is probably ringed with hydrocarbons, waiting to be extracted. Speaking as a layman, I wouldn’t be surprised if there’s even more oil offshore than there is on-
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shore. It’s no small coincidence that some of the most substantial oilfields in the world – Saudi Arabia, much of Texas, are in close proximity to an existing ocean. It was once ocean bottom before. Yet curiously, the not-in-my-backyard (NIMBY ) crowd has succeeded in limiting offshore work almost exclusively to the Gulf of Mexico coast off of Louisiana and Texas. Offshore development was pretty much halted nearly 50 years ago off the coast of California. It turns out the Gold Coasters didn’t want to see production platforms (beyond the existing ones) when hanging 10 on a big wave. Never mind that one of America’s first really prolific oilfields, the now-fully depleted Los Angeles city oilfield, runs right under the heart of downtown L.A. If there’s oil there, it’s not hard to imagine even more oil just a few miles offshore. That’s why there’s production platforms there
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now. Imagine what they could do with modern directional drilling techniques, and maybe fracking? The same argument follows for the east coast, devoid of offshore production despite a considerable continental shelf, one much larger than that on the west coast of the United States. Surely there are giant oilfields waiting to be discovered and developed. What if east coast refineries were fed by offshore production a few hundred miles away, instead of by supertanker from the Middle East? What if a field analogous to the North Sea field, the one that is still the world benchmark for oil prices, is just lying off Delaware? What if a 2 million barrel per day field could be developed there? How would that change the world energy dynamic? What if similar fields are lying off Florida, Georgia and the Carolinas? Look at what
offshore oil did to Newfoundland’s economy! If you want an inkling, look at what the shale revolution and fracking in the northeast United States did to the gas market continentally. We’re going to find out. In early January, U.S. President Donald Trump opened up nearly all of America’s coastline to oil development. (There was since some backtracking on Florida.) I keep being reminded by what Continental Resources CEO (and confidant of Donald Trump) Harold Hamm said at the Williston Basin Petroleum Conference in Bismarck, N.D., several years ago. “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!” That’s what energy independence means to America. How many Americans would have
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traded offshore drilling for not getting into the Iraq war? Would it have been worth it? If you put it in that context, who would have said no? How many future wars in the Middle East could it avoid if it really didn’t need Saudi oil anymore? The question for Canada is how do we fit into this energy independence plan? I’m hoping Trump will be at the Williston Basin Petroleum Conference again this year. And if he is, I hope to ask him that very question. We have to realize the United States is no longer just our market for oil. It’s now our largest competitor. If they find enough oil offshore, they might not even need Canadian oil. Put that in your pipeline and smoke it, Mr. Trudeau.
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PIPELINE NEWS February 2018
Carlyle is one of two key field offices for Crescent Point in Southeast Saskatchewan By Brian Zinchuk Carlyle – Coming into Carlyle from the north or west, it’s hard to miss the Crescent Point Energy Corp. field office, located on the northwest corner of town. The 22,000-square foot facility saw construction start in 2014, and the company moved into it in June 2015. That field office is now home base for 53 Crescent Point employees, four more than the company’s two combined offices in Weyburn, according to Tim Lequyer, who is the superintendent of southeast Saskatchewan operations. He spoke to Pipeline News on Jan. 16. In Weyburn they actually operate out of two buildings, having acquired the former Legacy Oil + Gas office. Lequyer explained that Carlyle and Weyburn both look after southeast Saskatchewan, as opposed to one office looking specifically after one region, and the other looking after a second region. The Carlyle office
Crescent Point Energy Corp.’s Carlyle field office is on par with their Weyburn field offices. Photo by Brian Zinchuk was built with growth in mind, as it has room for 80 people. When they tore down their old office, they
gave the lot back to the town. The company has about 5,200 producing
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Carlyle and Weyburn offices equally share responsibility for the Southeast region
◄ Page A6 region they have about 170 batteries/facilities, and four gas plants (Viewfield, Glen Ewen, Flat Lake and the Saskatchewan Ethane Extraction Plant (SEEP)). They also have a rail loading facility at Stoughton, which has been dormant for about eight months, with most of its staff redeployed. Crescent Point is the largest oil producer in Saskatchewan, having surpassed Husky Energy several years ago. For the past several years it has almost always been the most active drilling company in Canada, and as of mid-January it had 26 rigs working in Canada, of which 25 were in Saskatchewan and 16 were in southeast Saskatchewan, according to sister publication Rig Locator (riglocator.ca). Lequyer lives south of Carlyle, and splits his time between Carlyle and Weyburn offices. He started working for Talisman in 1995, and moved to Alberta in 2003, and then came back for Crescent Point in 2008. “There was about 15 employees
in the southeast, and some contract operators,” he recalled. “We acquired Talisman in 2009. When we bought Talisman, they had the office in Carlyle. At that time, we did not have an office in Weyburn,” he said. “We ended up with a small office in Carlyle, a small office in Estevan, and we were kind of working out of a back shop in Weyburn. They had already plans to build in Weyburn at that time. We chose to keep the Carlyle office open because of the proximity of properties, and subsequently close the Estevan office once Weyburn was open.” “We treat the operation as southeast. We don’t treat it as Carlyle, or east or west. “The properties may be based out of the offices, but the people cross over a fair amount,” he said. “We’ve got operations engineers, who are responsible for production, facilities engineers responsible for facilities. “There’s 53 employees that call Carlyle home, and 49 that call Weyburn home,” Lequyer said.
Some are foremen, which only spend a day or two in the office, as most of their time is in the field. Those staff counts don’t count a number of consultants in various capacities, from wellsite supervisors to completion consultants, geologists or others. “All-in-all, we have about 320 people who work for production operations,” he said, referring to the southeast. Right now there’s close to a 50/50 split between the two offices. As the company develops its newly announced Lodgepole play, south and southwest of Weyburn, that may lead to something of a shift in that direction. However, it will take some time for that play to develop. While many oilpatch operations, like fracking and drilling, are in constant contact with Calgary offices, there’s still very much a need for field offices like that in Carlyle.
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Lequyer thinks it’s still pretty important. “Things can be lost in translation, electronically communicated. Face-to-face meetings will never be completely replaced,” he said. “There’s still a need for that.” He spoke of Crescent Point’s culture, one he described as “familyoriented.” “It does keep a bit of a small company atmosphere,” he said, despite the fact Crescent Point has been Saskatchewan’s largest oil producer, and the most active driller in Canada, for several years now. “It’s a balance. We’re trying to keep it. But it gets tougher as you get larger,” Lequyer said. Asked about the rates oil companies are willing to pay their vendors, given that oil prices have come up from much lower levels in the last few years, he responded, “We want to be fair and create some eq-
uitable approaches for the businesses to make money when times are better. Does that mean it’s going happen right away? I don’t know. One thing is, the prices didn’t drop when the price of oil did immediately, either. There was a bit of a delayed reaction in requesting price reductions, by most producers. Now we’re starting to go the other way, hopefully, and seeing a price increase. Hopefully we’ll be able to get everybody back so the pressure’s off everyone. It’s not a position we want to be in, either.” The company’s rig count in the Torquay area (known as Flat Lake) is running around nine drilling rigs. “Definitely, we’re interested in the Torquay area. We do have Torquay Bakken wells there and Ratcliffe Oungre wells, which we really started to build into last year. As well, the recent land sale was publicized as Lodgepole.”
He feels their presence in Carlyle has been important for the community. “I think it’s been a positive spinoff, for the local businesses and people,” he said. “I think it probably helps attract businesses. I think it has to, not unlike it has to in Weyburn, as well. Another part is there’s a fair amount of activity that’s in southeastern Saskatchewan and in Manitoba that you can service from Carlyle. Asked of the future of Crescent Point in Carlyle, Lequyer said, “I think it’s going to continue to support Crescent Point growth in southeast Saskatchewan. Every year we’ve added regulatory folks, pipeline intergrity people, measurement people. We’ve got land people based in the southeast now. Lequyer expects 2018 will be a good, busy year, with lots of development.
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PIPELINE NEWS February 2018
Trinidad Drilling has five rigs working out of Carlyle By Brian Zinchuk Carlyle – Trinidad Drilling Ltd., through predecessor companies, has had many years of operation out of Carlyle. Lloyd Bendtsen is the senior field supervisor for Trinidad Drilling in Carlyle. He’s been there a long time, dating back to when the operation was CanElson Drilling, and prior to that, Eagle Drilling. He spoke to Pipeline News on Jan. 11. The rigs based out of Carlyle were originally built for Eagle Drilling and Totem Drilling, which were brought together under the CanElson name. Bendtsen said there are 13 rigs in inventory, with five drilling, as of Jan. 11. “We’ve got bids out, nothing confirmed, on two more,” he said. The company has seen a lot of its activity in the Torquay area, but Rig 428 has been drilling in the Lampman area. They have five working in the Carlyle office. They have two rigs with full crews of 21, and they’re “filling holes” on the other three. Asked if it is hard to
find hands these days, he said, “It is, and it’s especially hard to find experienced hands.” A lot of people have left the industry, he noted. “They’ve left and this downturn has been so sustained that they’ve realized they can work Monday to Friday, 8 to 5, maybe at a lesser wage, but have basically adjusted their budgets and are content with the hours they work now.” “You can’t line these guys up on speculation or a promise. You have to know that you have the work,” he said. “That makes recruitment even harder.” With the short window during the winter months, he said, “We still have a few farmers that are content to work the winter, but it’s a Band-Aid, at best. In a perfect world, we’d like to get these guys, retain them for the longhaul, for the year-round. Hopefully, the work is there.” He noted it's “first come, first serve,” when it comes to attracting employees right now. The sooner you can get
Trinidad Drilling Ltd. would like to see these rigs, racked for a long time at their Carlyle office, go back to work. In mid-January, they had five rigs working in southeast Saskatchewan. Photo by Brian Zinchuk someone’s papers current and have them orientated, the better, but you have to hope no one else found them before you can put them to work. Trinidad never
dropped its wages below Canadian Association of Oilwell Drilling Contractors (CAODC) rates, and that’s what they’re at now. The orange rigs, formerly Totem, came
to CanElson with iron roughnecks. Those were promptly removed, which Bendtsen said was a good decision, as rigs still have to perform, and the iron roughnecks were slower
than manual, human roughnecks. However, in recent years the company has upgraded two of its yellow rigs in the area, former Eagle units, by adding top drives.
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PIPELINE NEWS February 2018
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Canadian Plains is off to a ‘fresh start’ ◄ Page A3 Pipeline News spoke to Ziegler on Feb. 8 last year, shortly after they fired up in January. At that time, he said, “We’ve got 30 employees. By early spring, we’ll be double. By fall, I hope we’ll be peaking at 150 employees. The morale is like I’ve haven’t seen in years – nothing but positive.” You could say they exceeded that, by far. Canadian Plains is affiliated with another recognized oilfield service and construction company, Strike Group LP. “We initially opened up in Carlyle and in Regina. Since then we’ve opened up locations in Alida, Virden, Manitoba, Lloydminster – we did a small acquisition there of Quakes Oilfield. They
are now operating as Canadian Plains, a facility division that does lots of fabrication. On Jan. 1, we added the location that Strike had in North Battleford. It is now Canadian Plains as well,” he said. That pipeline project north of Maidstone is 30 kilometres of 20-inch steel pipeline. “It was a big stepping stone for the company,” Ziegler said, adding that the employment numbers will fluctuate as pipeline projects come and go. But a major oil producer in northwest Saskatchewan has work planned for the next three-to-five years; steady work and big projects. Canadian Plains is targeting that work. “That’s a big reason we focused on Lloydminster,” he said.
“We’re opening up a new fabrication shop in early spring at White City, a shop with overhead cranes and office space,” he said. The location is on the north side of Highway 1. Ron Carson is building it for them. It’ll be about 15,000 square feet. The White City facility will see lots of spooling, and small skids, as it will be rigged up to do in-house fabrication. While Canadian Plains is using several former Carson Energy shops, including Carlyle and Alida, there are no plans at this time to move into Lampman or Halbrite. “We’re really trying to stay focused on what we’ve got. We grew really fast. We want to focus on doing quality, safe work, and go to the next step
after that,” Ziegler said. “We don’t want to go too far, and lose focus on safety and quality.” Ziegler was one of the first to make a big effort on growth, at a time when the oil downturn was still very much at it’s lower depths. Asked if he was crazy like a fox, or just crazy, he responded, “I don’t think so. I think I listened to my gut, and thought it was the right time. I wouldn’t want to start when things are booming. It’s very difficult.” The current environment looks like things are picking up. Clients are welcoming them to continue. “There’s lots coming up. There’s no question about that. There’s a fair bit of work coming up,” he said.
Right now, they are about 60 per cent facility and maintenance work, and 40 per cent pipeline, he said. Oil at US$55 to US$65 per barrel for WTI seemed to be the tipping point for most clients, he explained. With oil around US$64 per barrel in midJanuary, he said, “It’s a very positive trend. Things are turning around. It’s going to take a long time to get things back where they used to be, because everybody’s been cutting each other’s throats to survive. To get back to where everybody can make a dollar, it’s a tough road.” As for the fresh start message, Ziegler said, “We talked about the importance of looking after new
workers, and how you never get done learning. I learn every day, and everybody does. We need to learn from each other, and look out for each other. You can’t ever drop your guard for a minute. You have to be fit for duty. Your mind has to be on task. “You just have to be fit for duty in every way, all the time. You can’t lose focus on that for a second, because the minute you do, that’s when you have an incident, and somebody gets hurt,” Ziegler said. For their first year in operation, he said, “We had a great year, and we thanked everybody for that. “I truly care that every person goes home safe, every day.”
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PIPELINE NEWS February 2018
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consisting of the issuance of 6,666,660 common shares of MATRRIX at a deemed price of $0.45 per share, and a cash payment of $530,000 equal to D2’s working capital at the time of closing. The company noted in its press release all seven rigs were purchased for between $2 million and $3 million per rig. D2 Shareholders will receive, for each D2 Share, 1.20992 MATRRIX shares and a cash amount equal to .09624, assuming D2’s working capital, as contemplated in the share purchase agreement, is $530,000 at the time of closing. The deal will result in MATRRIX acquiring one heavy telescopic double with strong historic utilization, Stampede will market the D2 rig alongside the six rigs currently within Stampede’s fleet as Rig 7. ► Page A11
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By Brian Zinchuk Calgary, Estevan – MATRRIX Energy Technologies Inc. is adding another colour to it’s multi-coloured fleet of drilling rigs in southeast Saskatchewan, with the announcement on Jan. 17 of the purchase of D2 Drilling Inc., which owns one heavy telescopic double drilling rig in the Weyburn/Estevan area of southeast Saskatchewan. That brings MATRRIX’s fleet of heavy telescopic rigs to seven, operating under the Stampede Drilling name. MATRRIX purchased the assets of Vortex Drilling (three rigs) and the entire company of Stampede Drilling (three rigs) in the end of October 2017. The agreement will see MATRRIX acquire all the issued and outstanding shares of D2 Drilling Inc., a private corporation for total consideration of approximately $3.53 million,
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PIPELINE NEWS February 2018
Stampede Rig 7 ◄ Page A10 The D2 rig is essentially a sister rig to the existing Stampede rigs, allowing Stampede management to share equipment and crews, maximizing efficiency, field performance, and cost control. These rigs typically operate with a crew of 16, and 21 if they have a swing crew. All seven of these modern telescopic double rigs where manufactured since 2011. All were manufactured in Estevan by the now-defunct Do-All Industries. MATRRIX also announced it has entered into an asset purchase agreement with Derek Simpson, the chief executive officer of D2, pursuant
to which MATRRIX will acquire additional drilling rig components from Simpson for aggregate consideration of $130,000 in cash. The purchase of these assets is anticipated to occur concurrent with closing of the acquisition. MATRRIX president and CEO Richard Ryan stated, “We’re very pleased to welcome the D2 shareholders to MATRRIX as shareholders in this exciting consolidation opportunity. With essentially a $3.0 million purchase price, this single rig operation fits our existing rig fleet from a price, operational capability, utilization, and performance standpoint. We’re pleased to market this
fully crewed, warm rig, with a solid reputation for performance, to our clients in the southeast Saskatchewan area.” The deal closed on Jan. 19, 2018.
D2 Drilling’s singular rig could be seen near Alameda in November 2016, in this file photo.
CES, PureChem grew through much of the downturn By Brian Zinchuk Carlyle – Watching the campus of Canadian Energy Services, south of Carlyle, over the years has been an exercise in watching continual growth. What started with Moose Mountain Mud then added Equal Transport and PureChem Services has grown into a much larger entity, with locations throughout the Western Canadian Sedimentary Basin as well as operations in the United States. The publicly traded parent company, CES Energy Solutions, has grown over the years. The back of their business cards are plastered with logos for their various division. CES itself had changed its name as of June 15, 2017, from Canadian Energy Services & Technology Corp. to CES Energy Solutions Corp. In their corporate literature, the company describes itself as, “a leading provider of technically advanced consumable chemical solutions throughout the lifecycle of the oilfield. This includes solutions at the drill bit, at the point of completion and
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stimulation, at the wellhead and pumpjack, and finally through to the pipeline and midstream market.” Mike Lothian holds the title of controller, but he also acts as the general manager, to some extent, of CES’ efforts in Carlyle. He spoke to Pipeline News on Jan. 10. The names Equal Transport and Moose Mountain Mud are disappearing, however, according to Lothian, with Canadian Energy Services and PureChem absorbing what had been operated under those names. “We’ve basically rebranded Moose Mountain Mud into Canadian Energy Services, to fit with the corporate entity. It still get’s called Moose Mountain Mud by everyone in the field,” he said. “The trucking piece has changed a lot for us. It’s really just there to support the other businesses,” he said of Equal Transport. Equal used to do its own, separate work, like produced fluid hauling. ► Page A14
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PIPELINE NEWS February 2018
You’ve got to have inventory when it comes to work wear: Ron’s The Work Wear Store Carlyle – Ron’s The Work Wear Store Ltd. took it on the chin early in the current oil downturn, closing its Estevan store in September 2016 after nearly three decades in business. Since then they’ve been able to make a go of it with their two other stores, Carlyle and Weyburn. Martin Tourand runs the Carlyle store, a family operation. “That was a hard decision. We were there 27 years. I started that store, and ran it sev-
eral years,” he said of the Estevan closure. As for now, he said on Jan. 11, “We’ve come through it fairly well. The last 14 months, we increased sales every month except December.” He attributed the discrepancy to the fact December 2016 was very cold, and thus had greater sales than December 2017, which was comparatively mild. More recently, he said it’s been a little busier, but he doesn’t expect it to be
much busier until the end of January, and the men going back to work need to get some pay in their pockets. He’s seeing the impact of improving oil prices. That morning, one client came in and bought 25 hardhats for new hires. “I’m cautiously optimistic. It looks and sounds like it’ll be busy. Last night we saw US$63 oil. As long as it stays…” he said. Throughout nearly all sectors, companies
demanded vendors lower their prices as oil prices fell. Now those prices are rebounding slowly. In that regard, Tourand said, “We ended up not raising our prices at all. But we can’t buy in the same volumes anymore. “We’re eating it,” he said of the difference. They’ve had to mind their P’s and Q’s, he noted, watching staffing levels and inventory. But while many sectors in the oilpatch have reduced inventory on hand to next to nothing, that doesn’t work for a store selling gloves and boots. “We have to have inventory. You can’t sell off an empty shelf,” Tourand said.
Martin Tourand runs Ron’s the Work Wear Store in Carlyle. Photo by Brian Zinchuk
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PIPELINE NEWS February 2018
Moose Mountain Mud and Equal Transport names giving way to CES ◄ Page A11 “Basically, the main goal of the trucking piece is getting the customers’ products out to them to locations or just the long-haul trucking, to get products either into or out of Carlyle,” Lothian said. Doing so allows them to have control on how their production chemicals are applied.
Moose Mountain Mud, the drilling fluids division, was the original company in Carlyle. The partners of several drilling fluids companies came together to go public, becoming Canadian Energy Services. The next division born in Carlyle was Equal Transport. Equal Transport started dealing with
semi vans for getting drilling fluids out to site, as well as material to Carlyle. “As PureChem started to build a little bit as well, it created an opportunity to not only haul product back into Carlyle, but to also haul finished goods out west for drilling fluids and production chemical sales into Alberta,” Lothian said.
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a need for some of those tankers for PureChem’s internal needs, like hauling chemicals from the railhead at Estevan to Carlyle. Lothian talked about how they spread out from being at the drill bit to essentially the entire production stream. That incudes items like production chemicals for corrosion inhibition, and those used for stimulation. The PureChem plant went into operation in 2011, CES’ factory for making their
numerous products. One particular division, added in 2013, was Jacam Chemicals LLC, in Kansas. “That provided additional strength,” Lothian said. “Jacam gave us access to some new, proprietary products and additional technical abilities using their lab in Kansas that allowed us to be ready as customers made changes in the downturn, looking for cost savings, those sorts of things. ► Page A15
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Two PhDs, two laboratories in Carlyle ◄ Page A14 PureChem really had built out a team able to help out the customers with both products, technical service and laboratory capabilities to help the customers, not just in southeastern Saskatchewan, but across Western Canada.” PureChem now has two PhDs working in their lab, Dr. John McEwen and Dr. Clinton Lund. McEwen has been with PureChem since the get-go. During the past several years, they have continually expanded, adding an addition or building each year since 2014. PureChem established new lab facilities in a former retail store building in downtown Carlyle in 2016. That lab is now the primarily lab, as the
lab on their main campus is now used for sales support and quality control. The downtown office also now houses their sales group. Last year PureChem’s expanded warehouse facility opened. PureChem built a relatively strong base prior to the downturn set its foundation to grow off of, according to Lothian. Diversifying beyond drilling fluids, with drilling fluids as a backbone, was extremely helpful. PureChem is where the majority of their 180 employees in the region are, as well as a lot of the revenue, but it still requires everybody working together to makes things work, he said. It’s hard not to notice the number of totes in the PureChem yard, extend-
ing both front and back, and how that’s grown in recent years. Lothian said, “The growth of PureChem, just from a pure volume perspective, both in southeast Saskatchewan, and in our remote locations in Alberta and Saskatchewan, has been phenomenal. Carlyle is the manufacturing hub for most of PureChem’s products, so the quantity of what you see here is not just for southeast Saskatchewan, but for all our division.” They have about 180 employees out of Carlyle, plus another 35 in the rest of Saskatchewan and southwest Manitoba. They have locations in Midale, Carnduff, Melita and are having a building constructed in Virden which should be ready hopefully before summer.
Ward Holland, a lab technician with PureChem Services, prepares samples to analyze on an ICS-OES, looking for corrosion residuals. Photo by Brian Zinchuk In western Saskatchewan, Shaunavon, Swift Current, Kindersley, Macklin and Lloydminster also have locations. There are numerous locations in
Alberta and one in British Columbia. Bucking the trend Most oilfield service companies saw declines in their workforce through
the downturn, but CES has largely bucked the trend. While they had a bit of a dip in the start of 2015, they’ve grown since. ► Page A16
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Shift towards production side helped ► Page A15 “We obviously had some reconfigurations and moved staff from one spot to another, decreased the number of people on the trucking side of things. But late in 2014, we were at probably 150 employees in Saskatchewan, and now
were’ at 210 to 220 across all of Saskatchewan and Manitoba,” Lothian said. In all, the dip was 10 per cent or less of total staff members. Some welltimed maternity leaves helped, too, he said. In 2014, as things were booming, the mud
Journeyman welder Phil Flaman TIG welds a collar on a flange in PureChem’s Carlyle shop. Photo by Brian Zinchuk
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shop was reconfigured. The original building had been added onto three times prior to the reconfiguration. “We were obviously impacted as the number of drilling rigs in the area dropped. We were really fortunate, especially on the mud side of things, and had a couple of guys that went off to other careers fairly early, a couple layoffs we were able to avoid. The next downturn, as things were slowing down, we were really fortunate to have all the growth happening over at PureChem. We were able to move people internally from the mud side of things over to PureChem,” Lothian said. Like other companies, they have run their equipment longer, from computers to trucks. Last year was a little busier on the drilling fluids
side, as more rigs went to work. This winter, as that rig count has grown, they’ve had staff willing to put in extra work during the busy drilling season. That includes staff from the office going out to check rigs. As with pretty much every sector in the oilpatch, the rates oil companies were willing to pay saw several rounds of cuts. They saw that as well. While the price of oil has improved, most sectors also have not seen a recovery on their rates. To that end, Lothian said, “We really went into the downturn with our customers wanting (us) to be a partner with them to help them get through those times. We probably made changes sooner than some of the larger companies did to be able to help
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Keegan Ste. Marie, in blue, and Chris Shumanski work on a gauge on a pressure truck in PureChem’s Carlyle shop. Photo by Brian Zinchuk our customers in those times. Because of that, I don’t think we’ll want to be the first ones to go to them and say, ‘Hey, you know we need to put our prices up. The price of oil is obviously not what it was when we set the pricing.’ Noting there’s still
some uncertainty on oil prices, and how that will impact service companies, Lothian said, “I think we have to take our customers’ word that they will work with us on that as we did with them. Hopefully there’s some loyalty for the things you did.”
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PIPELINE NEWS February 2018
A17
Later in 2018, Spearing may be looking to re-invest By Brian Zinchuk Carlyle – Spearing Service Ltd. in Carlyle has seen a good beginning for 2018. “I think 2018 is, so far, going to get off to a good
start, compared to the last couple years. 2017 was better than ’16,” said Ken McClement, who runs things out of Oxbow and Carlyle. He’s vice-president and general manager.
“The number of rigs and the price of oil is on the increase,” he said. Their relationship to the drill bit is a little delayed, until wells are put into production. “We’re going to get some service work as they’re drilling, and service work as they complete, and on the frac side as well. We’ll see quite a bit of work there,” he said. “The long-term work for us is the production.” Because Carlyle is their newest shop, they do send a lot of units from
other terminals to Carlyle for repairs. In Carlyle they have around 18 people working including mechanics and drivers. Dispatch for the area is done out of Oxbow. They also dispatch out of Halbrite and Pipestone, Man. Spearing and Brady Oilfield Services are both owned by the Mullen Group, and Halbrite-based Brady was rolled into Spearing’s operation and name in 2015. “We’re stable on our
numbers. We’re down about half since the crash,” McClement said regarding the number of people they have working for them. Donny Spearing retired from Spearing at the end of 2017, he noted. He and Trevor Spearing ran the company until it was sold to Mullen, having taken it over from their father, Ken. Asked about the rates the oil companies are willing to pay, he said, “There’s been some improvement over the last year. There
had to be some improvement. Are they where they need to be? No. It’s a new reality. The oilfield is a new reality, here in southeast Saskatchewan, and Alberta, anywhere. I don’t believe it’s going to be a boom and bust cycle anymore. I think it’s going to be more of a long-term industry, when they finally establish what the number is. “The industry has typically had to pay more, because they demand ► Page A18
Oxbow (306) 483-2848 Pipestone (204) 854-2231 Waskada (204) 673-2284 Halbrite (306) 458-2344 Some of the people working in Spearing Service’s Carlyle shop include, from left, Chris Niebergall, Alicia Neufeld, Ashish Soobah, Richard Anderson, Dennis Gabrielle and Ken McClement. Photo by Brian Zinchuk
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PIPELINE NEWS February 2018
Betts Drilling moves into replacement shop JUST UNDER A YEAR AFTER FIRE DEVASTATED DRILLING COMPANY, THINGS ARE FALLING INTO PLACE By Brian Zinchuk Carnduff – Less than two weeks shy of a year after their shop burnt to the ground, Betts Drilling moved into their new replacement shop on Dec. 19. “We just walked in the door,” Bob Betts, general manager, said on Dec. 21. “Almost a year to the day. Dec. 30 was when we had the fire, and Dec. 19 was when we moved back in. It took a lot to get it all back up. The place still very much has the new shop smell, with spotless floors in
the main shop area. Except for the colour scheme of some of the interior paint, the place is identical to the previous building. That’s by design, quite literally. “We never changed anything. Everything is all entirely the same,” Betts said. “It was set up perfect for what we were doing before, so we never really changed anything, and the design stayed the same, which made it easier and faster for the build, because we had the original blueprints and everything. It was basically take the blueprints
Bob Betts stands in their new shop, whose floors are gleaming. Photo by Brian Zinchuk
and start building.” The shop is 60x120 feet, and the office is 30x90 feet. “I’ve got three rigs booked for January, and still looking for work for one more, for that time slot. Hopefully we’ll pick up something in the last minute. The first quarter of 2018 is expected to see a substantial uptick in drilling, something that happened in the first quarter of 2017. Asked where they will find employees as more rigs go to work, Betts said, “So far, we’ve been pretty lucky. We’ve had a lot of loyal employees. They stuck with us through the hard times, and hopefully they hang in there with us. It is going to get busier. It is definitely the guys that have more work are going to get all the hands, for sure, because they can keep their guys busy.” With new budgets, Betts said there’s a little bit of a spike. “The phone’s not ringing off the hook yet. There’s work there, but not any new players yet. Still there’s lots of buyouts and guys getting bigger. I think it’ll be a copycat of 2017. It does depend on the oil. The
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The new shop is exactly the same as old shop. This past year has, quite literally, been a rebuilding year for Betts Drilling after their previous building was devastated by fire on Dec. 30, 2016. Photo by Brian Zinchuk oil price did move up, and the activity never really shot right up because of it.
“We’ll just see what 2018 does, and I think the number for 2018 will be
around US$61 a barrel. We’ll see what oil companies can do with that.”
It's a new industry ◄ Page A17 more. They demand more weekends, more overtime, more services at a given time. I think the oilfield is going to be more of a regular industry, that pays similar wages.” Asked if those who have left the industry will come back, McClement replied, “I think if the wages are there, and there’s some type of commitment, people will come back. I really
do. People like to make money, and they like to get paid what they think they’re worth.” “We hire fairly steadily. With the rates being what they are, we have people who come and go,” he said. Some come back when things are busier, he noted. The company hasn’t been buying new equipment, but there are plans for the second half of this year. The equipment has
still been used over the last three years, and accumulating wear and tear. “You have to reinvest in your business. It’ll depend on the price of oil, the number of rigs, and our customers’ plans,” he said. “I think it’s a new industry, where your numbers and expenses and everything have to be in-line with the industry. You have to re-invest, in line with your revenue and work load,” he said.
PIPELINE NEWS February 2018
A19
Vertex acquires Sonic Oilfield Services By Brian Zinchuk Weyburn, Kindersley – Vertex Resource Group Ltd. announced on Jan. 2 it
had acquired the business of Sonic Oilfield Services Ltd., an environmental services company that provides pres-
sure trucks, fluid hauling, chemical and KCl products in Saskatchewan. Sonic’s fleet is used to serve the
drilling, completions, production and facility needs of clients operating within Kindersley and Weyburn, Saskatchewan. The company formerly had operations in Estevan until a few years ago. This acquisition will add 60 pieces of rolling stock to Vertex’s fleet, strengthening Vertex’s presence in Saskatchewan
and enabling the company to effectively service the resource and potash/mining regions of the province. In addition, Sonic’s Kindersley operation includes a KCl mixing facility which will now be owned and operated by Vertex. This acquisition was completed for the purchase price of $4.5 million with 2.35 million common
shares being issued at $1.00 per common share, and the remaining balance paid in cash. The purchase price is subject to increase if certain valuation metrics of Vertex are not satisfied by Dec. 31, 2019, or earlier following certain corporate events. The maximum increase in purchase price is $1.175 million. Vertex may, ► Page A20
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Sonic Oilfield Services used to have a shop in Estevan, but it closed in recent years. This was in 2012. File photo
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PIPELINE NEWS February 2018
Good time to enter market, says Stephenson ◄ Page A19 subject to approval of the TSX Venture Exchange, elect to satisfy this increase through the issuance of
additional common shares. All Sonic operations began operating as Vertex effective Jan. 1, 2018. Terry Stephenson,
president of Vertex spoke to Pipeline News on Jan. 4. The company became public in October, he noted. “We’re of the size
where we thought it made sense to be in the public space, as versus looking a larger private equity group.” “We thought the stock
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market has been pretty beat up and down, especially if you’re in oil. We thought it would be a good, low entry point to come onto the market,” Stephenson said. It was a reverse takeover, taking over a stranded shell company’s listing. Going public helps facilitate acquisitions, like the Sonic purchase. He said about 28 to 30 full-time employees would be coming over, plus roughly a dozen additional leased operators. The acquisition means that in Saskatchewan, Vertex will have operations in Lloydminster, Kindersley, Regina and Weyburn, plus consultants scattered throughout the province and into Manitoba. In Alberta they have roughly 20 locations. Regarding Sonic’s retreat from Estevan, he said, “The last few years had been fairly challenging, so they wanted to consolidate operations. They thought more of their work is in the Weyburn area, so they thought it was easier to consolidate Estevan operations down to Weyburn and focus on Weyburn and Kindersley.” Asked about their future plans, Stephenson said they now have a location
in Weyburn and another in Regina. “We see this as a good way to further our Saskatchewan presence. We like the Saskatchewan stability in the government, and the economy’s been performing fairly well, in our mind. We think, with the price of oil starting to get up, we think the Viking and Dodsland plays are going to be fairly active. “We see this as an opportunity to strengthen our foothold. We’re not just coming out of Lloydminster and Regina. We’re going to be coming out of, and having equipment based out of Weyburn. And then Kindersley, we can bring equipment back from Alberta to Kindersley. Weyburn is a lot of fluid hauling and production operations and maintenance, whereas Kindersley is more drilling and completions related, with more hauling of KCl. They have a mixed blending plant there, he noted. “We see the Sonic acquisition as a nice acquisition to strengthen our Saskatchewan foothold. It gives us coverage across the province,” he said, adding they plan on moving additional equipment to Weyburn and offering additional services there.
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