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2016 Drilling Activity Forecast Weathering the storm at the Industry Insights Forum T H E O F F I C I A L V O I C E O F T H E P E T R O L E U M S E R V I C E S A S S O C I AT I O N O F C A N A D A
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CONTENTS WINTER 2015
Departments MESSAGE FROM THE CHAIR IN THE FIELD
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News, notes and events from the industry
MEMBER PROFILE BUSINESS MATTERS
15 17
How STEP Energy expanded operations into the U.S.
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Features FEAR OF MISSING OUT What’s holding Canada’s energy industy back?
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23 26
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COVER
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PSAC IN ACTION 2016 DRILLING ACTIVITY FORECAST
BACK TO THE FUTURE At PSAC’s Industry Insights Forum, attendees look ahead to brighter times in 2016
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OWNING THE MESSAGE “Without natural resources, we’d be naked.”
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23 WWW.PSAC.CA
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MESSAGE FROM THE CHAIR
Shifting Grounds
R
EFLECTING ON THE PAST YEAR, THE GROUND
seemed to shift under us at every mile. As I assume the board chair position of the Petroleum Services Association of Canada, there are numerous public policy and public perception issues to be addressed on the road ahead. Regulatory delays, long negotiations with stakeholders, public opposition, rising costs, low commodity prices and a crippling squeeze on the bottom line have all left the sector battered. And ongoing market access issues and an environment of policy and regulatory uncertainty means Canada’s energy sector hasn’t been able to make anything better out of an already bad situation. We’re resilient, but as a country we need to get on with addressing the issues that are limiting our resource sectors, and in the case of our energy resources, blocking us from contributing to the country’s success and to contributing to the world’s demand for energy. Canada has the third-largest oil reserves in the world, and yet we contribute less than four per cent of the global market share for energy demand. How can that be, when we’re a leader in responsible development and regulatory excellence? This issue of Petroleum Services News asks the question: is Canada in danger of missing out? We look at how opposition to fossil fuel development, and in particular the lack of market access for our Canadian energy products, are hampering Canada’s ability to develop our energy resources and are contributing to a reputation as a country that can’t get resource projects done. I look forward to working with the board and leadership of PSAC to play an active role as we advocate strongly on behalf of our members and push to remove the barriers that are preventing Canada from seeing its full resource potential. Over the year ahead, I will work with PSAC leadership on collaborating with our industry association peers in building coalitions to ensure we collectively respond effectively and efficiently to rapid public policy formulation and industry public perception issues. Now more than ever PSAC’s voice will be an important contributor to those conversations as we work to ensure that policy makers are well informed. We have a lot of work to do. Our association is more relevant today than ever in supporting members and advocating on their behalf in a single strong voice.
Trevor Haynes, PSAC Chair
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WINTER 2015 VOL 15 • No.3 The Petroleum Services Association of Canada is the national trade association representing the service, supply and manufacturing sectors within the upstream petroleum industry. PSAC represents a diverse range of nearly 230 member companies, employing close to 70,000 people and contracting almost exclusively to oil and gas exploration and production companies. PETROLEUM SERVICES ASSOCIATION OF CANADA 1150 800 6TH AVENUE SW CALGARY, AB T2P 3G3 TEL: 403.264.4195 FAX: 403.263.7174 EMAIL: info@psac.ca PRESIDENT AND CEO: MARK SALKELD DIRECTOR, COMMUNICATIONS: EILEEN KAHLER
PETROLEUM SERVICES NEWS IS PUBLISHED FOR PSAC BY VENTURE PUBLISHING INC. 10259-105 STREET, EDMONTON, AB T5J 1E3 TEL: 780.990.0839 FAX: 780.425.4921 TOLL-FREE: 1.866.227.4276 CIRCULATION@VENTUREPUBLISHING.CA PUBLISHER: RUTH KELLY MANAGING EDITOR: LYNDSIE BOURGON CONTRIBUTING WRITERS: LISA CATTERALL, RYAN VAN HORNE ART DIRECTOR: CHARLES BURKE GRAPHIC DESIGNER: ANDREW WEDMAN PRODUCTION MANAGER: BETTY FENIAK PRODUCTION TECHNICIANS: BRENT FELZIEN, BRANDON HOOVER DISTRIBUTION: KAREN REILLY ACCOUNT EXECUTIVES: PEGGY BOGDAN, KATHY KELLEY, DENNIS McCORMACK
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PETROLEUM SERVICES NEWS
IN THE FIELD
News, events and activities in the industry
PSAC Recognizes 2014-2015 Distinguished our Long Standing Service Awards Members CONGRATULATIONS TO THE WINNERS OF 30 YEARS Sanjel Canada Ltd.
20 YEARS Arresting You Ltd. Engenium Chemicals Corp. Fire Power Oilfield FireFighting Ltd.
15 YEARS Abandonrite, a Division of Nabors Production Services Ltd. Columbia Oilfield Supply Newalta Corporation Precision Camp Services Precision Drilling Corporation Rostel Industries Shallow Well Enterprises Ltd. Snubco Pressure Control Ltd. Wesco Testing and Wireline Inc. Windward Resources Ltd.
the 2014-2015 Distinguished Service Awards Karoline Beninger Clyde Bonnell Lee Emond Brian Farmer Joshua Kane Garry Lane Blake Lawrence Graham Maglio Brett Noble Marty Price Travis Strube Renee Vanderwolf Michael Van Olm Glenn Walker
Mark Salkeld poses with Robert Montgomery, vice president of Sanjel’s Canadian business unit.
10 YEARS Canyon Technical Services Ltd. CWC Energy Services Corp. Iron Horse Energy Services Northern Snubbing Inc. Piston Well Services Inc. Powerstroke Well Control Ltd. Raybo Well Control Ltd. Smithbrook Mud Services Ltd. Stinger Wellhead Protection (Canada) Inc. Strike Energy Services Inc. Summit Wireline Inc. Team Snubbing Services Inc.
Winners of PSAC’s Distinguished Service Award pose after the ceremony.
5 YEARS Black Diamond Group Limited Blackstone Drilling Fluids Limited Capstan Hauling Ltd. Environmental Refuelling Systems Inc. NOV Elmar Rockwater Energy Solutions Canada Inc. Smart Completions Ltd. Strad Energy Services Ltd. Strad Manufacturing Inc. Strad Oilfield Rentals Ltd.
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PSAC’s long-standing members are recognized at the annual Industry Insights Forum.
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PHOTO: TOMA ICZKOVITS, CP PHOTO
10 WINTER 2015
PETROLEUM SERVICES NEWS
What’s holding Canada’s energy industry back? BY RYAN VAN HORNE
C
ANADA IS FORTUNATE
to have one of the largest energy resources in the world, but doesn’t seem to be able to capitalize on it. To borrow a hockey analogy, Canada’s generous energy resources should mean we are always on the power play, but in reality we’re perpetually short-handed because of a lack of market access. “We’re the one major energy producer that doesn’t have access to tidewater,” says Perrin Beatty, the president and CEO of the Canadian Chamber of Commerce. “As a result we are selling our resources at a discount to our only customer, the United States, and it’s a customer who needs less and less. It is urgent for us to put into place the infrastructure to get our energy resources to market.” The problem was summed up by Jean Charest in March 2015, when the former premier of Quebec and the chair of the Partnership for Resource Trade told a conference in Halifax that “Canada has developed an international reputation as a country that cannot get resource projects done.” The Partnership for Resource Trade is a Canadian organization that is working to pave the way for Canada’s natural resources to be developed in a way that is economically, environmentally and socially beneficial. After returning from GasTech in Singapore last October, Charest says the impression was strong
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among many of the 22,000 delegates at the largest natural gas conference in the world. “They told me: ‘We know you have the natural gas, but can you actually get the projects done?’ ” That was even before U.S. President Barack Obama nixed the Keystone XL pipeline, which for many years acted as a symbol in the fight against climate change, because it would open up markets for Canada’s oil sands projects. “If you look at the headlines about Canada in the last five years, at least 60 per cent of the stories are about Keystone and how it’s being held up,” Charest says. “It gave the tone for everything else.”
“CANADA HAS DEVELOPED AN INTERNATIONAL REPUTATION AS A COUNTRY THAT CANNOT GET RESOURCE PROJECTS DONE.” –JEAN CHAREST, FORMER PREMIER OF QUEBEC AND CHAIR OF THE PARTNERSHIP FOR RESOURCE TRADE Brenda Kenny, the recent past president and CEO of the Canadian Energy Pipeline Association, was somewhat bemused by all the fuss, as were many others in the energy industry. “When the Keystone question came to the fore, it was quite a surprise to any of the folks who are involved with energy security and efficiency markets, particularly when Canadian crude oils are really not materially different in emissions from U.S. production sites, let alone the rather opaque performance on the environmental front of imported crude oil.” Charest described the Keystone decision as a very important message from the American government: “Don’t count on us. Not as much as we count on you.” So, after Canada signed NAFTA and gave the United States – “our neighbours and our friend” – guaranteed access to our natural resources, it’s disappointing to see them turn around and refer to Canada’s “dirty oil”
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in rejecting Keystone, Charest says. But instead of dwelling on that, Canada should move forward and look at other projects, such as Energy East. “This should make it much more compelling for us to look at external markets and make that case to Canadians,” he says. “Energy East is fundamentally right. This is a good project for our energy security and our economy.” Beatty says that with the amount of energy resources that we are blessed to have in Canada, “We have both an opportunity and an obligation to share our resources with the rest of the world, and we can do that in a way that protects the environment and community needs and treats aboriginal Canadians as full partners.” Charest says First Nations communities are the key to getting the social licence to move projects ahead. “Canada has to get that right if we’re going to be successful,” he says. “We have to enter into discussions as partners in a meaningful way.” It’s important to be responsive to their concerns and ensure that the projects are acceptable, but it’s the way that it’s done that is so important. There are no countries that get it right all the time, but some projects do, and as an example of that, he cited Quebec’s Northern Plan, an $80-billion initiative to develop northern Quebec’s natural resources. The promoters of some projects have generally underestimated how much work needs to be done and in what order that work
12 WINTER 2015
needs to be completed, Charest says. For instance, he started consultations with the Cree and other First Nations communities two years ahead of time. “Before we even put the idea out there publicly, we consult with the communities in northern Quebec,” Charest says. “We say, ‘We have this idea and we’d like to know what you think of it.’ ”
revenue to government coffers. “What’s paramount is the Canadian public deserves the best possible value for its resources,” she says. “These resources are the inheritance of the people and getting the highest value is fundamental. You get highest value by going to a variety of markets.” By having to sell at a discount to the U.S.,
“WE HAVE BOTH AN OPPORTUNITY AND AN OBLIGATION TO SHARE OUR RESOURCES WITH THE REST OF THE WORLD, AND WE CAN DO THAT IN A WAY THAT PROTECTS THE ENVIRONMENT AND COMMUNITY NEEDS AND TREATS ABORIGINAL CANADIANS AS FULL PARTNERS.” –PERRIN BEATTY, PRESIDENT AND CEO OF THE CANADIAN CHAMBER OF COMMERCE
Although there’s a sincere belief among project promoters that they’re doing as much as they should do or as much as they can do, “It’s still not good enough for the standards that people have established,” he says. And even if the work starts early like it should, the conversation doesn’t stop once the project is announced. “You have to maintain those relationships,” Charest says. Kenny suggests another way for all-Canadian projects like Energy East, Gateway and Kinder Morgan to gain greater acceptance is by granting Canada better access to markets and increasing
the Canadian government was taking a hit to the tune of $5 billion a year when things were at their worst. “Imagine what we could have done [with] $5 billion to invest in clean energy technology or education,” Kenny says. “It’s unbelievable waste, and that’s what these pipelines are fundamentally about.” She cited a poll last fall that said 50 per cent of Canadians want to wean themselves off fossil fuels in the next decade, and they don’t want to pay more for alternative energy while maintaining the same level of energy use. “If half of those people genuinely believe they will
PETROLEUM SERVICES NEWS
not be using oil and gas in 10 years’ time, then logically you would assume that you don’t really need another pipeline,” Kenny says. But if there was a more sophisticated understanding of the infrastructure needed to provide the energy we use in our daily lives, many would realize that migrating away from fossil fuels at such a fast rate would require not only major adjustments and investment – but much more time. That’s the key, Kenny says. By building pipelines to boost revenue for Canadians, that can be invested into helping the country make the transition to cleaner energy systems more rapidly. THERE’S ANOTHER COMPELLING REASON TO BUILD PIPELINES AND IMPROVE THE FLOW of oil to markets. Beatty says developing energy resources will also benefit the rest of the economy. Pipelines not only move oil from region to region and towards other markets, but they also boost the manufacturing sector. “If we’re not having economic activity in our energy sector, our manufacturing sector that’s supplying the energy sector doesn’t get the orders,” Beatty says. “It has impact right across the country by increasing the taxes government collects. Bringing our resources to market is something that benefits every single region of the country.” Beatty thinks it’s “bizarre” that a country with as much energy resources as Canada is still importing oil. “Our goal should be to ensure that, wherever possible, we’re using Canadian-sourced resources,” he says.
Kenny says a recent court decision that favoured the federal government in a dispute with the municipality of Burnaby over the Kinder Morgan pipeline, should not be used as a hammer to rush ahead on projects, simply because a confrontational approach is dysfunctional. While it does help to know that the national interest will trump local interests when push comes to shove, that can’t be used to justify moving ahead at a rapid pace because it can backfire. “On the one hand there’s an extreme urgency for market access and competitiveness, but sometimes we have to resist the tyranny of the urgent and we have to remind ourselves that meaningful engagement can take a little bit of time.” Charest called on Canada’s new federal government to lay strong ground rules in terms of how we address the issues of First Nations and their concerns in the implementation of these projects. “If First Nations issues are addressed, it trumps to a large degree the environment concerns,” Charest says. “It’s very much in the centre of the major projects that we’re dealing with now.” With a positive approach, the industry can prime itself for a more lucrative future when the cyclical nature turns positive. “One of the things we need to be careful about is taking a short-term view,” he says. “We also know from experience it will go up. We should just be mature enough and act accordingly. When the markets return, Canada will be in a great position to take advantage of it.”
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Tough Decisions, Stronger Future To stay competitive in the volatile energy industry, it’s important to make the right business decisions at the right time. Our team of Oilfield Services professionals understand the complexities of the industry and provide the insight you need to make strategic business decisions in today’s high-risk business environment. By optimizing the financial efficiency of your operation, we help strengthen your margins and keep you in the game. For information about our 2016 forecasting and planning webinar contact: David Yager, MNP’s National Oilfield Services Leader, at david.yager@mnp.ca Jeremy Rondeau, Business Advisor, at Jeremy.rondeau@mnp.ca or visit ofs.mnpevents.ca/ofs-outlook-webinar/ Photo courtesy of Beaver Drilling Ltd
MEMBER PROFILE
A Closer Look at Community
Azaria Botta, Researcher and University of British Columbia student
D
ETERMINED TO LEAD THE OIL
and gas industry in aboriginal relations, CalFrac Well Services has thrown its weight behind innovative research that enables it to better understand and support the communities where the company operates. Specializing in the development of unconventional oil and gas reserves across North America allows CalFrac to explore non-traditional and potentially lucrative settings, but also presents challenges in terms of community and stakeholder relations in remote areas. So to better understand and improve relationships in these communities, particularly with First Nations stakeholders, CalFrac provided funding for research at the Pacific Institute for the Mathematical Science (PIMS). CalFrac’s goal is to promote research, particularly in resource-rich communities. “This largely came from our CEO, Fernando Aguilar. He recognized that we needed to support communities where we are looking at large scale developments,” says Wally Kozak, director of industry and government relations at CalFrac. “These developments require a lot of people, and we’ve been faced with having to import large numbers of our workforce. But we know that there is a local population, and we want them to participate.”
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CalFrac works to improve community relationships through academic research BY LISA CATTERALL
In providing funds to PIMS, CalFrac created an open opportunity for researchers to examine relations between community stakeholders and the oil and gas industry. Though CalFrac did not directly guide the research, its funding made the project possible. Upon completion of the research, outcomes will be distributed in the communities that took part and, following this, CalFrac will review the results and create a strategic plan to address any issues that were identified in the study. “We didn’t want to prescribe to them what the study or outcome needed to be. We structured the project so that our money was funding it, but we were not steering it in any way,” says Kozak. The funding facilitated University of British Columbia student Azaria Botta’s studies in education preparedness in First Nations and regional communities where natural resource development is prevalent. Working with Dawn Mills, adjunct professor for mining and communities in the Department of Mining Engineering, Botta engaged with First Nations groups and regional school boards to better understand their needs and challenges in supporting skills development in remote communities. By identifying gaps in current educational programs, Botta and Mills hope to promote the development of more thorough educational programs that will better prepare First Nations community members to be employed by oil and gas producers.
BOTTA AND MILLS HOPE THAT OIL AND GAS COMPANIES WILL BE ABLE TO SUPPORT COMMUNITIES IN BECOMING COMPETITIVE SOURCES OF PROFESSIONAL WORKFORCES, REDUCING DEPENDENCE ON FLY-IN-FLY-OUT LABOUR. “I was interested in looking at how to improve education in north eastern B.C. in relation to the expanding liquid natural gas (LNG) industry,” says Botta. “The projected boom in the region will have a high employment demand, the largest estimate being 100,000 new jobs. The LNG sector requires specialized skills involving higher education and training.” Botta hopes to support the development of an education strategy that will prepare the local population, including First Nations groups, to be active participants in the LNG industry. Mills has dedicated her career to liaising between First Nations groups and companies in the natural resource sector, addressing issues like profit-sharing, land titles and aboriginal and Treaty rights. “Typically, relationships between oil and gas and First Nations groups have been difficult to navigate,” says Mills. “There are a lot of issues at play, especially in some communities that are less friendly to oil and gas exploration, or development.” Botta and Mills hope that oil and gas companies will be able to support communities in becoming competitive sources of professional workforces, reducing dependence on fly-infly-out labour. “First Nation communities have historically been excluded from high-skill industry operations,” says Botta. “We found that a lot of these communities had a hard time keeping math and science teachers, leaving students in a non-competitive position at graduation,” Mills adds. Once Botta’s findings are made available, CalFrac hopes to be able to use this research as a basis to create stronger relationships with the First Nations groups it interacts with. “This work is a good starting point for others to consider,” says Kozak, “I think as time goes on, we’ll all be pushing this kind of collaboration and consideration further and further.”
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BUSINESS MATTERS
Broader Horizons Expanding operations into the U.S. market comes down to careful planning
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BY MARTIN DOVER
HE INHERENT RISKS FACED BY A
Canadian coil tubing services company attempting to edge into the U.S. market might seem steep, but it was nothing that four year-old Calgary-based STEP Energy Services couldn’t handle in stride. Petroleum Services News sat down with two of STEP’s top executives, who shared tips on how to branch out into the American market, as well as advice for expanding into the fracturing market in Western Canada.
expanding the company’s tried-and-true business in Western Canada into south Texas’ Eagle Ford shale play, the company had to learn the market. “Patience is very important,” says Glanville. “The first thing that we really focused on was understanding what the client’s needs are in the U.S., versus in Canada. We operated similar wells, but they had different operating procedures and a different frame of mind in execution.
Patience is a virtue. Steve Glanville, vicepresident of operations and chief operating officer at STEP Energy Services, says before
“The second thing is geographic location. The United States is a big country and there are lots of opportunities, so it’s important to really
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Calgary’s STEP Energy Services successfully expanded their services into the United States in the fall of 2015.
focus on the areas in which you want to get your business kicked off with. Texas, for example, is a very big state, so we have been looking at localizing our services. The reason why we chose the Eagle Ford is that it’s a challenging resource play similar to the Montney or Duvernay and requires a coiled tubing service provider with a high level of technical proficiency. It really fits well in our business model.” Running a successful company is a top-down initiative. When it comes to having the best people for the job, it starts with the leadership team and trickles down from there. “The first thing we did was find the proper U.S. management team,” explains Glanville. “That took quite a bit of time. We didn’t run out and hire the first people we came across, so there were a lot of discussions and getting to know the team before we made the decision. That was almost a year-long process.” The client is always right. In Canada, STEP counts household names like Chevron, Progress Energy and Shell Canada among its clients. Glanville says the reason it has been possible for STEP to acquire the big players as clients is having similar mindsets and ways of doing business. In moving a portion of its business to the Eagle Ford, STEP has approached potential clients in the same manner. “The very first thing for us is aligning our values with our clients. Safety is extremely important to us, and so is
18 WINTER 2015
picking the clients that value the key things that we do. Having an engaged workforce is another thing that sets us apart,” he says.
successful in acquiring those assets and have since built a conventional fracturing fleet with that equipment.”
Going above and beyond. In the current market, it’s not enough to deliver a service you’ve promised. Instead it’s about giving clients what they don’t expect. “Number one, it comes down to providing a superior level of service,” says Glanville. “Basically our tagline is ‘exceeding clients’ expectations.’ So not only do we do what we say we’re going to do, but we’re going to execute at a higher level than what they expect. It’s also about having equipment that can last through the rigorous process and having a team of the best, most engaged professionals in the sector working for us.”
Safety first and foremost. One thing that’s true of STEP’s coil tubing operations in Eagle Ford, and fracturing services in the WCSB, is that they employ people known for safetymindedness every step of the way. Burvill says what sets STEP apart is an “excellent safety culture, flawless execution and trust. We have a great client base and the reason we have been able to hold on to that client base through this economic downturn is flawless execution and a safety culture that’s second to none. When I say safety culture, I truly mean a culture that our team believes passionately in. We hire people who are like-minded and treat safety with the same level of respect at home as they do at work. That helps drive our great safety record.”
Stick to what you know. In addition to expanding to the U.S., STEP recently added to its coil tubing services and now offers hydraulic fracturing services to its clients in Western Canada. Mike Burvill, vice-president of fracturing services for STEP, says it was a logical move at the right time, and one that benefits STEP’s customer base. “Coil tubing and fracturing complement each other,” he notes. “It’s a like-service, and it allows our clients the ability to bundle services as a single entity, which can ultimately reduce the risks and increase efficiencies at the wellhead. The opportunity came up in March 2015, when the assets became available for auction. We were
Be up for a challenge. Obviously, operating in a market where oil is priced below $50 is not without its trials, but Burvill says the key to thriving in the face of change is to know your company’s strengths. “With $45 oil, it’s not allowing an easy entry, specifically into the fracturing world, however we’ve got a great asset base and we have been able to create the business model in a very short period of time. In the last six months we’ve become a traditional fracturing service company that now can work in the unconventional horizontal market.”
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INDUSTRY INSIGHTS
Back to the Future AT PSAC’S INDUSTRY INSIGHTS FORUM, ATTENDEES LOOK AHEAD TO BRIGHTER TIMES IN 2016
P
RESENTED TO A PACKED CROWD IN DOWNTOWN CALGARY,
PSAC’s Industry Insights Forum and the PSAC 2016 Canadian Drilling Activity Forecast Session provided a look at what’s ahead for a nervous oil and gas industry this fall. Speaking at the Forecast event, David Yager, national lead of energy services at MNP, started with some reassuring words: “As an old guy I have seen this movie before, and it will end when you least expect it.” The overall consensus from the speakers was a slight return in the market from the back half of 2016 through 2017. Adam Gill, who works in institutional equity research at CIBC World Markets, provided the E&P outlook and predicted improving prices into summer 2016 in the Gas Price Outlook. And while the winter of 2015-2016 is still expected to be soft, Gill says that CIBC expects investors to look to deploy capital in a recovery trend. In all, the “supply and demand balance will look better in the second half of 2016,” he says. Also speaking as part of the Drilling Activity Forecast Session was Greg Colman, managing director of research at National Bank Financial.
Considering the oilfield services outlook, Colman predicted a tough winter for service companies, with some upside coming after break up. “I remain more optimistic,” he says, while also noting that an unstable geopolitical situation leaves the base of many predictions uncertain. Presenting the outlook from the Canadian Association of Petroleum Producers, Ben Brunnen noted that the association sees “no real significant expectation for upside in 2016.” He outlined political concerns for the industry as well, including Alberta’s royalty review, changing climate policies in Alberta, British Columbia and Ontario, and a new federal government leaving lots up in the air. At the end of the Forecast session, PSAC’s Mark Salkeld presented the association’s prediction for drilling heading into 2016. In 2015, he says, “Damage was done right across board.” Still, he noted that there is always another side to the downturn, and that the industry’s cost-cutting measures are what’s going to carry it through this uncertain period. He also called for industry to work harder at public outreach across Canada: “This will help Canadians realize the value of, and support, the industry across Canada.”
David Yager hosts a panel discussion with Adam Gill, CIBC World Markets; Greg Colman, National Bank Financial; Ben Brunnen, CAPP; and Mark Salkeld, PSAC.
20 WINTER 2015
PETROLEUM SERVICES NEWS
Mark Salkeld presents PSAC’s 2016 Drilling Forecast during the annual Industry Insights Forum.
WWW.PSAC.CA
21
ENERGY ADVOCACY
Owning the Message “Without natural resources, we’d be naked.”
B
EST KNOWN FOR HER WORK SHINING A SPOTLIGHT ON
narrative and their values,” he says. “Until the industry is able to adopt that approach, it can’t hope to compete by giving the simple facts.” He uses his organization’s Natural Runners project as an example. Resource Works took some runners and enrolled them in the Sun Run in Vancouver, North America’s second-largest public run. The runners were clad in flesh-toned suits and boasting the tagline “Without natural resources, we’d be naked.” “It was a runaway hit,” he says. “People immediately understood what we were saying. Why don’t we do more of that in the industry? Having the runners allows us to take those serious subjects and increase the chances that people will spend time with the material.” Krause drives home the point that the energy industry has a job to do, and that’s address their critics and provide solid, good advice to the Canadian public. “I am constantly amazed that people know so little about pipelines,” she says. “What the industry needs to do is demystify. They need to respectfully but firmly refute erroneous information. Thinking you won’t dignify things with a response is music to the ears of activists.”
PHOTO: RESOURCE WORKS
the forces behind the anti-oilsands campaign, Vivian Krause believes that the oil and gas industry is falling short in their energy advocacy duties. Krause says that environmentalists and anti-oilsands NGOs have managed to outperform and out-compete the oil industry, especially in terms of “earned” media. “The way they use earned media is very methodical, very systematic and very sophisticated,” she says. “They don’t just put out an ad, they’ve timed it and primed the pumps, and it’s part of a much larger effort. The fundamental difference is that industry is still trying to stay out of the media.” A huge part of energy advocacy entails getting your message out in an effective way – in this sense, “the battle for public opinion is being fought on the ice, but you have to be on the ice to score,” says Krause. “Industry would much rather be sitting on the bench, but they have to get out there more.” This is something that Stewart Muir, executive director of Resource Works, pushes as well. “Where we see the success on the other side is where they have based their points on story-telling, the power of
Resource Works’ ‘Natural Runners’ turned heads and were a public relations success.
22 WINTER 2015
PETROLEUM SERVICES NEWS
PSAC IN ACTION THE PETROLEUM SERVICES ASSOCIATION OF CANADA CONTINUES TO KEEP THE SERVICE, SUPPLY AND MANUFACTURING SECTORS FRONT AND CENTRE THROUGH ADVOCACY AND OUTREACH PSAC CONNECTS WITH CANADIAN LEADERS be the last time the province undertakes a review. Employees, friends ALBERTA: • PSAC participated in Alberta’s 2015-2016 provincial budget consul- and family are encouraged to visit the website www.letstalkroyalties.ca tation roundtable, with Hon. Joe Ceci, Minister of Finance and presi- to provide comments and suggestions for the panel. dent of the Treasury Board, and Hon. Marg McCuaig-Boyd, Minister of • The Alberta Coalition for Action on Labour Shortages (ACALS) was Energy, along with a dozen other oil and gas industry associations and formed several years ago to advocate for changes to immigration and member representatives. Key messages from all associations including foreign worker programs. PSAC met with Hon. Lori Sigurdson, MinisPSAC were consistent: the need for market access and energy infra- ter of Innovation and Advanced Education and Minister of Jobs, Skills, structure (pipelines), and a competitive, stable and predictable fiscal Training and Labour, to introduce ACALS, discuss the current labour regime to attract capital investment that will create jobs and consistent situation in Alberta and to learn of the department’s mandate. PSAC is and progressive regulations and processes. seeking a private meeting with the Minister to introduce the sector and • PSAC hosted a free speaker event on October 5, 2015, for its members learn of department plans to review labour legislation. and other industry groups to hear Dave Mowat, chair of the Alberta • PSAC met with Calgary Mayor Naheed Nenshi to provide the mayor Royalty Review Panel, speak about the Panel’s process and consider with information and data on the oil and natural gas services sector ways for energy workers to get engaged with the subject. The session and its contribution to the economy and jobs as he had indicated an was attended by almost 200 people, who heard Mowat emphasize the interest to enhance his knowledge for his trips to eastern Canada to importance of getting Alberta’s royalty structure right so that this may promote the sector.
From left to right: Elizabeth Aquin; Scott Kent, Yukon Energy Minister; Mark Salkeld and George Ross, Deputy Energy Minister.
WWW.PSAC.CA
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PSAC CONNECTS WITH CANADIAN LEADERS FEDERAL: • Energy & Mines Ministers’ Conference: PSAC sponsored and attended the Energy & Mines Ministers’ Conference held in Halifax, Nova Scotia, where PSAC President, Mark Salkeld, made an outstanding presentation to the audience of energy ministers, deputy and assistant deputy ministers from across Canada. The presentation gave PSAC excellent profile, triggering many conversations from PSAC’s comments on the imperative for market access, the importance of the sector to the Canadian economy, and the suggestion that Canada could be and should be supplying much of the rest of the world’s energy demands with our responsible brand of Canadian energy. Mark’s opening remarks are available on the PSAC website. • The PSAC Health and Safety Committee is working on developing strategies to help members reduce the “top five” lost time claims. In 2014, these claims accounted for 675 injury claims, 2,400 days lost and an estimated $8.2 million in claims costs. These claims arose from injuries to workers caused by: bodily reaction and exertion, bodily reaction and exertion (over-exertion), contact with objects and equipment (struck by), contact with objects and equipment (caught in or compressed by equipment or object) and falls.
Mark Salkeld spoke at the Energy & Mines Ministers’ Conference in Halifax.
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PETROLEUM2015-11-05 SERVICES NEWS 12:00 PM
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7/31/15 10:58 AM
DRILLING ACTIVITY FORECAST UPDATE
Holding Steady PSAC forecasts 5,150 wells drilled in 2016 2016 CANADIAN DRILLING ACTIVITY FORECAST (NUMBER OF WELLS)
5,000
4,000 ALBERTA: 2,733
3,000
2,000
1,000
SASKATCHEWAN: 1,789
BRITISH COLUMBIA: 344 MANITOBA: 282
0
TOTAL IN CANADA: 5,150
Note: Total includes activity in Northern and Eastern Canada.
I
N 2016, THE PETROLEUM SERVICES ASSOCIATION
of Canada (PSAC) expects a total of 5,150 wells (rig releases) to be drilled. PSAC’s forecast suggests next year will see the same slumped activity that hit the sector hard in 2015, but indicates the bottom has levelled-off, as 2015 finishes out with a total forecast of 5,340 wells drilled, in comparison. PSAC bases its 2016 forecast on average natural gas prices of $2.75 CDN/mcf (AECO), crude oil prices of US$53/barrel (WTI) and the Canadian dollar averaging $0.75 USD. “Low commodity prices, oversupply and low cash flows obviously impacted us significantly in 2015, resulting in an over 50 per cent loss of activity from previous year averages. With those same factors continuing we can’t expect anything better for 2016,” says Mark Salkeld, PSAC’s president and CEO. On a provincial basis for 2016, PSAC estimates 2,733 wells will be drilled in Alberta, and 1,789 wells in Saskatchewan, holding with the 2015 year-end totals estimated for those two provinces. Manitoba sees a
26 WINTER 2015
slight improvement in activity, forecasting an increase of 31 wells (or up 12.4 per cent) over last year. Offsetting the gain in Manitoba’s rig counts, British Columbia’s estimate drops by 28 per cent from 2015, to a forecast of 344 wells drilled next year. For the country as a whole, the 2015 year-end estimate of 5,340 wells drilled and next year’s forecast of 5,150 wells, represents drops in activity of more than 50 per cent from a five-year average of 11,670 wells per year being drilled before the oil prices collapsed at the beginning of 2015. “Ongoing market access issues, and an environment of regulatory and policy uncertainty, has meant Canada’s energy sector hasn’t been able to make anything better out of a bad situation that began in 2015,” says Salkeld. “We have the third-largest oil reserves in the world, but have less than four per cent of the global market share. We’re resilient, yes, but as a country we need to get on with addressing the issues that are limiting our resource sectors, especially our energy resources, from contributing to the country’s prosperity and its reputation as a responsible developer of natural resources.”
PETROLEUM SERVICES NEWS
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