MANITOBA Oil & Gas Review SERVING MANITOBA’S OIL & GAS INDUSTRY PUBLICATION MAIL AGREEMENT #40934510 Training for New Trends in the Industry 2016 Making the Case for New Pipelines Support continues for Energy East, Keystone XL and other projects Managing Tough Economic Times
The Manitoba Oil & Gas Review is your source of information on Manitoba’s oil & gas industry. The 2016 issue includes a Petroleum Branch overview, messages and features on pipeline projects such as Energy East and Keystone XL, a report from the Fraser Institute, articles on managing the economic downturn, new technology and trends, training opportunities, and more.
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MANITOBAOil & Gas Review
SERVING MANITOBA’S OIL & GAS INDUSTRY
PUBL
ICAT
ION
MA
IL A
GRE
EMEN
T #4
0934
510
Training for New Trends in the Industry
2016
Making the Case for New Pipelines Support continues for Energy East, Keystone XL and other projects
Managing Tough Economic Times
In thIs Issue...6 Manitoba Oil Statistics 2015
10 Energy East Deserves Support: A message from Larry Maguire, MP for Brandon-Souris
12 Message from Brandon Mayor Rick Chrest
14 Message from Virden Mayor Jeff McConnell
16 A Time of Opportunity: A message from the Honourable Jim Carr, Minister of Natural Resources
18 Message from Brad Wall, Premier of Saskatchewan
20 Making the Case for Pipelines
22 Manitoba Still Highly Regarded for Petroleum Exploration and Development Investment
26 Hope Thrives Despite a Slow Economy
30 Coping Mechanisms in Troubling Economic Times
32 Williston Basin Petroleum Conference Focuses on Moving the Bakken Forward
36 The 2016 Redvers & District Oil Show is Fast Approaching
38 Brandon: the Perfect Balance
42 The Breakup from Hell 2.0
44 Oil Respect: Let’s Stick to the Facts
45 New Pipelines Can Support Action on Climate Change
46 Enhanced Oil Recovery Can Extend a Reservoir’s Life by Decades
48 Why This Oil Price Collapse Is Different From the 1980s
50 Recent Poll Unveils Canadians’ Anxieties
52 Arguments Remain Heated on Both Sides of the Energy East Debate
54 Reducing Costs and Improving Quality in Heritage Management
56 Field-Portable XRF in Oil and Gas Exploration and Production
60 Oil & Gas HR Report Identifies New Trends and Requirements in Workforce Development
62 Keystone XL Controversy Enters U.S. Court System
64 Gearing up: Keeping Safe, Dry and Warm in the Oilfield
66 How CAPPA Supports Production Accountants and Industry
68 Training Opportunities Prepare Workforce for New Trends
71 Transportation of Dangerous Goods by Ground
72 Pro-Drill Industries Ltd. Moves Forward with Vision and Innovation
74 Livingstone Landscaping: Manitoba-Grown
76 Presidential Election Year 2016 Likely To Be Filled With Surprising Developments
79 Index to Advertisers
80 DRIVING FORCE Delivers new Vehicle Options for Manitobans
82 ABCO is Your One-Stop Shop for Quality Products and Installations
While every effort has been made to ensure the accuracy of the information contained herein and the reliability of the source, the publisher in no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher , its directors , officers or employees.
February .............................................................................................................................................$334.39 ............................. $53.14
March ...................................................................................................................................................$325.81 ............................. $51.77
April .......................................................................................................................................................$370.73 ............................. $58.91
May ........................................................................................................................................................$414.00 ............................. $65.79
June ......................................................................................................................................................$444.47 ............................. $70.63
July .........................................................................................................................................................$392.29 ............................. $62.34
August .................................................................................................................................................$313.59 ............................. $49.83
October ..............................................................................................................................................$353.30 ............................. $56.14
November .........................................................................................................................................$355.82 ............................. $56.54
December .........................................................................................................................................$298.11 ............................. $47.37
February .............................................................................................................................................$227.07 ............................. $33.38
COuRtESy Of thE ManItOBa PEtROLEuM BRanCh
oil prices (manitoba light sour blend)
6 Manitoba Oil & Gas Review 2016
Manitoba Oil & Gas Review 2016 7
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8 Manitoba Oil & Gas Review 2016
Manitoba Oil & Gas Review 2016 9
10 Manitoba Oil & Gas Review 2016
At the beginning of this session of Par-
liament, I urged my fellow MPs to sup-
port the Conservative Caucus’ motion
in the House of Commons calling on
the government to back the Energy East pipeline.
The Energy East project would strengthen Can-
ada’s energy security by decreasing our depen-
dence on authoritarian regimes with poor human
rights records, rampant corruption and deficient
environmental controls.
Approximately 700,000 barrels of oil are im-
ported every day to refineries in Eastern Canada,
coming from countries such as Saudi Arabia, Ven-
ezuela and Nigeria, while at the same time, most
of Western Canada’s oil production is exported to
the United States. In 2013, 97 per cent of our oil
exports went to that country. Energy East will cre-
ate access to higher value international markets
which will further support the Canadian economy.
The project is supported by the governments
of Alberta, Saskatchewan, Ontario and New Bruns-
wick, would dramatically cut the amount of oil
traveling by rail each day, and would scale back
our dependence on foreign oil from authoritarian
regimes.
It makes no sense to import foreign oil while
Canada is blessed with an abundance of natural
resources here at home. Canada ranks third in the
world for proven crude oil reserves, and whether
the Liberals like it or not, the oil and gas sector is
a critical part of our economy. It directly and indi-
rectly employs over 360,000 people in Canada, ac-
counting for almost eight per cent of GDP in 2013.
Energy East alone is expected to generate $10 bil-
lion in taxes for all levels of government.
What’s more, pipelines are by far the safest and
most environmentally responsible way to trans-
port oil, and Energy East will displace the equiva-
lent of over 1,500 rail cars traveling the same route
each day. The reality is that from 2008 to 2013,
more than 99.99 per cent of oil transported by fed-
erally regulated pipelines was done so safely, and
thanks to the previous Conservative government,
companies are liable for up to $1 billion of costs
and damages, irrespective of fault.
I am extremely proud of the thousands of Ca-
nadians who contribute to our economy through
the natural resource sector, particularly right here
in Westman. At a time when our economy is strug-
gling, the Liberal government needs to stand up
for these Canadians and take a clear position in
favour of Energy East. v
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16 Manitoba Oil & Gas Review 2016
On behalf of the Government of Cana-
da, I would like to thank the Manitoba
Oil & Gas Review for the opportunity to
discuss the Canadian energy industry.
Despite the current global downturn in com-
modity prices, the long-term prospects for Cana-
da’s energy industry remain strong. In fact, accord-
ing to the International Energy Agency, the world
will need nearly one third more energy by 2040
than we have now – and almost three-quarters of
that energy will come from fossil fuels.
Key to that future is restoring public trust in the
way Canada reviews and assesses major resource
projects. If we’re going to attract the investments
we need to sustainably develop our resources and
get these to markets, we have to better engage
Canadians, conduct deeper consultations with In-
digenous peoples and base decisions on science,
facts and evidence.
To ensure greater certainty for projects already
in the queue, we introduced an interim approach
based on five key principles:
1. No project proponent will have to start over;
2. The views of the public and affected communi-
ties will be sought and considered;
3. Indigenous peoples will be meaningfully con-
sulted;
4. Direct and upstream greenhouse gas emissions
will be part of the environmental assessment;
and,
5. Decisions will be based on science and tradi-
tional knowledge of Indigenous peoples.
In Budget 2016, we committed $16.5 million
to implement this interim approach. We also pro-
vided $50 million for technologies that will reduce
greenhouse gas emissions in the oil & gas sector.
While this is a challenging time for the energy
industry, it is also a time of opportunity. Canada’s
oil & gas sector has immense potential to achieve
great prosperity, and our government is commit-
ted to ensuring that the conditions are right for this
to occur. Together, we will demonstrate that eco-
nomic growth and environmental protection can
go hand in hand. v
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18 Manitoba Oil & Gas Review 2016
Saskatchewan is among many resource-
based jurisdictions around the world
dealing with the impact of dramatically
lower oil prices.
It’s a time of great uncertainty for the energy in-
dustry and the governments that depend upon it
for employment and revenue. I believe Saskatch-
ewan’s economy is better placed than most to re-
main strong through the downturn, thanks to our
diversified, rich resource base and our competi-
tive environment for investment and business.
More than that, I have confidence in the fu-
ture because our oil & gas sector is composed of
tough, resourceful, resilient entrepreneurs who
are finding ways to ride out the current market
turbulence.
They will need to be resilient because most
analysts believe there will be no meaningful in-
crease in crude oil prices anytime soon, with the
most optimistic forecasts calling for an upturn in
the second half of 2016.
However, I believe when markets rebound,
our industry will be stronger and more competi-
tive than ever. Our government is doing its part
to make sure this comeback story unfolds as it
should.
Our top priority has been to establish a royalty
and tax regime that is competitive and stable.
While other jurisdictions have considered chang-
es to their royalty structure, we understand that
what the industry needs from government now
is certainty. And so we are following the ancient
medical dictum: first, do not harm.
That stability is central to our efforts to maintain
a good business and regulatory environment. It
may explain why our province will account for 50
per cent of Western Canada’s shale and tight oil
output by 2017, according to the National Energy
Board.
We’re grateful the industry continues to invest
in Saskatchewan even in difficult times. For exam-
ple, Crescent Point Energy (Saskatchewan’s largest
oil producer) expects that most of its $950 million
to $1.3 billion in capital spending will take place in
our province; the company is planning to increase
production by five per cent over 2015.
Husky Oil announced a $500 million capital
budget for 2016. Whitecap’s ongoing drilling op-
erations in Saskatchewan include 66 new wells in
2016, an investment of nearly $60 million. Mean-
while, Raging River expects to spend $168 million
in 2016, and has a long-term plan to drill nearly
1,900 wells and invest over $2.8 billion over the
next 17 years.
Our government will maintain its focus on en-
suring we have sensible oil and gas policies and
responsible governance, in Saskatchewan and
across Canada.
To that end, we continue to advocate for in-
creased pipeline capacity for Western Canadian
oil. All oil pipelines are important to Saskatch-
ewan, not just those that carry Saskatchewan oil,
because they can free up space on existing pipe-
lines and open the door for even more invest-
ment.
This is why our government has been so vocal
in our support of pipelines like Energy East that
will help bring western Canadian oil to tidewater
and decrease our reliance on imports from other
countries; this is important not just for Saskatch-
ewan, but for all of Canada.
In addition, we remain steadfastly opposed to
a national carbon tax that would unduly penalize
western Canadian oil & gas producers. In our view,
a carbon tax would result in an unconscionable
and punitive wealth transfer from the west to oth-
er regions. It would add insult to the injury rep-
resented by Canada’s unfair equalization system.
If the objective of a carbon tax is to reduce
greenhouse gas emissions, a far better way to ac-
complish this goal is through an investment in
technology. That’s why the Government of Sas-
the IMpact of oIl prIcesBRaD WaLL, PREMIER Of SaSkatChEWan
MESSAGE
Manitoba Oil & Gas Review 2016 19
katchewan has committed more than $1 billion to the Boundary
Dam 3 project, the first commercial power plant in the world with
a fully integrated post-combustion carbon capture system.
Our advocacy has also included a call for the federal government
to support the industry as it deals with the impact of lower prices.
For instance, we urged Prime Minister Justin Trudeau to commit
$156 million in federal funding to pay for the cleanup of oil and
gas wells no longer capable of production. The Accelerated Well
Cleanup Program (AWCP) would create about 1,200 badly needed
jobs in the decommissioning and reclamation of about 1,000 non-
producing wells in Saskatchewan.
Saskatchewan’s oil production has held up remarkably well de-
spite the turmoil. We produced about 177.6 million barrels in 2015.
This is a 5.6 per cent decrease from 2014, but a less severe drop-off
than what was experienced in Alberta, where conventional pro-
duction declined nearly 10 per cent between November 2014 and
2015.
Our energy sector remains a crucible of innovation.
R.I.I. North America recently commissioned a $60 million en-
hanced oil recovery project near Lloydminster that uses state-of-
the-art downhole steam generation in heavy oil production. The
technology will raise recovery rates significantly while reducing the
energy and water required in the production process and cutting
upstream greenhouse gas emissions.
Meanwhile, applications for steam-assisted gravity drainage
(SAGD) are being examined in projects under construction in the
Lloydminster area – four operated by Husky Energy, two by North-
ern Blizzard and one by Serafina Energy, with more planned.
SAGD is an enhanced oil recovery technology for producing
heavy crude oil. Current recovery rates under primary production
methods are approximately five per cent of oil in place; with these
projects fully implemented, recovery rates are expected to increase
to as much as 50 per cent.
Husky has been investigating the use of carbon dioxide to en-
hance heavy oil recovery with support from Saskatchewan, and
has also been undertaking research to develop new technologies
to provide a source of carbon dioxide. We are optimistic that in
time, these new technologies will benefit other heavy oil produc-
ers. Thanks to the industry’s commitment to innovation, the du-
bious charge that Canada produces “dirty oil” will become more
implausible than ever.
Driving all of this is a simple understanding: it is not enough to
be blessed with the resources the world needs – the world needs
to be able to access these resources. Consequently, we’ve done
our best to create an operating environment that is highly com-
petitive.
We are a low-cost jurisdiction with an approach to red tape ac-
countability described as “on the right track” by the Canadian Fed-
eration of Independent Business. The Fraser Institute Global Petro-
leum Survey, 2015, a survey of petroleum industry executives and
managers, ranks Saskatchewan as the most attractive place to do
business in Canada and the sixth most attractive jurisdiction in the
world among the 66 jurisdictions ranked in the survey.
Our commitment to maintaining a favourable environment for
oil and gas investment will not waver. We know how important en-
ergy is to the economic and social well-being of our province, our
nation and the world. During the last eight years, Saskatchewan
has gone through a remarkable period of growth. Our population
is now at its highest level in our history – over 1.1 million – and
growing faster than it has in generations. Tens of thousands of
people have come to Saskatchewan because there is opportunity
here. And much of that opportunity has been created by the oil &
gas industry and the dynamic businesses that serve it. We’re grate-
ful for this, and we intend to keep a good thing going. v
shipments of crude oil from the Midwest to the Gulf of Mexico
jumped from just 50,000 barrels per day (b/d) in 2008 to over
380,000 b/d in 2013, while shipments from the Gulf to the Midwest
decreased 500,000 b/d.
For producers, inadequate transportation infrastructure creates
bottlenecks that can raise production costs and depress revenue.
The lack of efficient access to markets can lead to lower well-head
values and reduced revenues for royalty owners, as well as local,
state and federal governments. Failure to address these limitations
could discourage production investment – along with the associ-
ated employment and economic advantages that greatly benefit
consumers.
Updating energy infrastructure in the United States could gen-
erate up to $1.15 trillion in new private capital investment and
support 1.1 million new jobs over a 10-year period, according to
a study by IHS. Pipeline investment alone could support up to
830,771 average annual jobs.
Pipeline constraints, on the other hand, can be costly to consum-
ers too. According to the U.S. Energy Information Administration
(EIA), residents of the northeastern U.S. paid up to 68 per cent more
for electricity than the national average in the winter of 2014, while
industrial users paid up to 105 per cent more for electricity than
the national average. Failure to expand natural gas and electricity
infrastructure in the Northeast could cost the region’s households
and businesses an estimated $5.4 billion in higher energy costs and
more than 167,000 private-sector and construction jobs between
2016 and 2020, according to a study from the New England Coali-
tion for Affordable Energy.
Some progress is underway. EIA reports that over the past 10 years
pipeline operators have invested more than $57 billion to complete
more than 400 projects adding about 15,200 miles of pipeline and
approximately 151,300 million cubic feet per day (MMcf/d) of ca-
pacity to transport natural gas to consumers and businesses. At the
same time, according to EIA, operators have announced plans to
invest more than $40 billion on 105 projects to add more than 7,500
miles and more than 72,650 MMcf/d in pipeline capacity.
It’s a good start, but more expansion is needed. With a 99.999
per cent safety rate, pipelines are among the safest, most efficient
methods for transporting energy. To maintain and build upon the
economic benefits of North America’s energy renaissance, addition-
al pipeline investment must be a priority. v
Updating energy infrastructure in the United States could generate up to $1.15 trillion in new private capital investment and support 1.1 million new jobs over a 10-year period.
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22 Manitoba Oil & Gas Review 2016
ManItoba contInues to be hIghly regarDeD for petroleuM exploratIon anD DevelopMent InvestMentfRaSER InStItutE 2015 GLOBaL PEtROLEuM SuRvEy fInDInGS
By Gerry angevine
As in 2013 and 2014, the 2015
Fraser Institute Global Petroleum
Survey of explorers and devel-
opers indicates that Manitoba
is the second most favourable jurisdiction
in Canada, behind only Saskatchewan, for
upstream petroleum exploration and de-
velopment. Moreover, the province has
now placed first or second in Canada, and
achieved a very high rating when com-
pared with jurisdictions in the United States
and other countries according to the sur-
vey’s all-inclusive Policy Perception Index
scoring methodology, for seven straight
years.
The Fraser Institute’s ninth annual survey
was conducted during the summer of 2015,
and the results were published on Decem-
ber 1st. The findings are based on respons-
es from 439 petroleum industry executives,
managers, and experts to questions regard-
ing barriers to investment in petroleum ex-
ploration and production development in
126 provinces, states, regions and countries.
As in previous years, the survey questions
targeted 16 important factors impacting
investment in upstream petroleum explo-
ration and development. These include
fiscal terms; taxation and other factors af-
fecting the commercial environment, such
as the availability of skilled labour; quality of
and access to essential infrastructure; the
regulatory climate which investors face
including the cost of regulatory compli-
ance, duplication, inconsistent interpreta-
tion, and enforcement of regulations; and a
number of other important issues such as
land claims disputes and uncertainty with
regard to how environmental regulations
may be changed.
The survey scores assigned to the various
jurisdictions are based on the percentage
of responses that indicate that a given fac-
tor is considered to be “a mild or strong de-
terrent to investment” or is so onerous that
respondents “would not invest” in the juris-
diction in question due to that policy factor.
Because of the focus on negative percep-
tions, jurisdictions with the lowest scores
are considered to pose lower or fewer bar-
riers to investment and, therefore, to be the
most attractive for investment.
It is important to note that the “Policy Per-
ception Index” rankings referred to above
(with regard to Manitoba and Saskatch-
ewan), in which all 126 of the jurisdictions
rated in the survey are included, do not
reflect the extent of the various jurisdic-
tions’ crude oil and natural gas resources
or reserves. When jurisdictions’ proved pe-
troleum reserves are considered, the rank-
ings are much different. For example, when
grouped with 14 jurisdictions each holding
at least one per cent of total proved pe-
troleum reserves (of the 118 jurisdictions
ranked in the 2015 survey which have at
least some proved reserves), Alberta – the
only Canadian jurisdiction with “large” re-
serves – ranks as the third most attractive
jurisdiction for investment (down from sec-
ond in the 2014 survey when there were 26
jurisdictions in the group), behind only Tex-
as and the United Arab Emirates but ahead
of Iran, Russia, Venezuela, Qatar, Iraq, Kuwait
and five other jurisdictions in the group of
14 large reserve holders.
Among 38 jurisdictions holding at least
0.1 per cent of total proved reserves, but
less than one per cent, British Colum-
bia (the only Canadian jurisdiction in this
group) ranks as the 17th most attractive for
investment. This compares with 19th (of 44)
in the 2014 survey and 14th (of 40) in 2013.
Oklahoma, North Dakota, Norway-North
Sea, West Virginia and Louisiana are the five
top-ranked jurisdictions in the group of me-
dium reserve holders.
All of the other Canadian jurisdictions
with proved reserves fall in a group of 66
jurisdictions with relatively small reserves.
As in 2014, Manitoba ranks just below Sas-
katchewan in this group, lying in seventh
position compared with third place a year
earlier. The only jurisdictions of the 66 that
ranked more highly than Manitoba were
the Netherlands-Offshore, Alabama, Mis-
Manitoba Oil & Gas Review 2016 23
sissippi, Kansas, Arkansas and Saskatch-
ewan. The high rankings awarded to these
seven jurisdictions, and eighth-place South
Australia, reflects their generally positive
attributes with regard to most of the in-
vestment drivers addressed in the survey.
Newfoundland & Labrador, Yukon and the
Northwest Territories’ fairly attractive scores
placed them in 16th, 22nd, and 23rd place
(of 66), respectively. Nova Scotia ranked
33rd and New Brunswick, 38th.
On the basis of the Policy Perception In-
dex rankings obtained when all of the juris-
dictions for which sufficient survey respons-
es were obtained are included, regardless
of the extent of their petroleum resources,
Table 1 demonstrates that Manitoba and
Saskatchewan were ranked higher by sur-
vey participants in 2015 than Canada’s five
other significant oil- and gas-producing
jurisdictions in terms of attractiveness for
upstream investment – repeating the rec-
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Table 1
24 Manitoba Oil & Gas Review 2016
ognition that the two provinces have had
for many years. But the fact that both prov-
inces’ survey scores were somewhat higher
in 2015 than a year earlier reflects some slip-
page as to how they are regarded by sur-
vey participants. This is because the higher
scores reflect higher percentagers of nega-
tive responses with regard to a number of
the investment drivers captured by the sur-
vey questions.
Of the seven jurisdictions compared in
Table 1, the Northwest Territories demon-
strated the most improvement in 2015, ris-
ing to 4th place from 7th position in each
of the previous four years as the result of a
lower (i.e. more positive) score. Newfound-
land & Labrador moved up to third place,
from fourth. Nova Scotia dropped to last
place from fifth in spite of a slightly im-
proved score.
During 2012 through 2014, as Alberta
backtracked from the royalty hikes embed-
ded in the so-called “New Royalty Frame-
work”, it achieved relatively attractive survey
scores and ranked third among the group
of seven Canadian petroleum jurisdictions
included in Table 1. However, Alberta’s score
was worse in 2015 than at any time since
2010, causing the province to slip from 3rd
place to 5th.
With respect to Manitoba, the cost of
regulatory compliance was indicated to be
of much less concern in the 2015 survey
than in 2014. Regulatory duplication was
also less of an issue. However, rather large
increases in the percentages of negative re-
sponses to the survey questions pertaining
to land claims disputes, uncertainty regard-
ing protected areas, taxation in general,
and infrastructure were observed. As well,
although more modest, there were indica-
tions of greater concern than in 2014 with
regard to other investment drivers includ-
ing environmental regulation, regulatory
uncertainty, and fiscal terms. As a conse-
quence, Manitoba’s score increased (i.e. de-
teriorated) by 6.7 points from 2014.
In the case of Saskatchewan, although
the fiscal terms, regulatory uncertainty,
and infrastructure factors were indicated
to be of less concern than during the pre-
vious year, respondents indicated that, as
in Manitoba, land claims disputes had be-
come much more worrisome. In addition,
labor availability, uncertainties in relation to
protected areas, the cost of regulatory com-
pliance, taxation in general, and a number
of other regulatory issues were of greater
concern than in 2014. The less positive in-
dications with respect to some of the sur-
vey questions were sufficient to more than
offset reduced levels of concern within rela-
tion to others, thus increasing (worsening)
Saskatchewan’s score by 3.6 points com-
pared with 2014. But because this was less
than the increase in Manitoba’s score, the
gap between the two jurisdictions is now
more apparent.
Newfoundland and Labrador’s improve-
ment from 2014 is attributable to signifi-
cantly lower negative score percentages
on the survey questions pertaining to labor
regulations and agreements, labor avail-
ability, land claims disputes and regulatory
duplication. This, as well as more positive
perspectives in relation to fiscal terms,
more than offset a rather large increase in
the extent of concern pertaining to the cost
of regulatory compliance and regulatory
uncertainty and somewhat greater worries
with regard to taxation in general and envi-
ronmental regulation than indicated in the
preceding survey.
The Northwest Territories achieved a
remarkably improved score in the 2015
survey compared with the preceding year
(Table 1) because of lower percentages of
negative perspectives over a wide range of
survey questions but, especially, regulatory
duplication (which had been a major issue
there for some time), labor regulations and
agreements, uncertainties in relation to pro-
tected areas, the cost of regulatory compli-
ance, regulatory uncertainty, and quality of
infrastructure. More concern was expressed
than a year earlier in relation to environmen-
tal regulation but this was more than offset
by the widepstead reduction in negative
sentiment in relation to other issues.
Alberta’s less attractive score than a year
earlier and drop in the rankings is mainly at-
tributable to a significant increase in negative
perceptions in relation to fiscal terms. How-
ever, increased concern was also indicated
by the survey respondents with reference to
a number of other issues, especially taxation
in general, environmental regulation, regula-
tory uncertainty, and uncertainties pertain-
ing to protected areas. The worries in rela-
tion to fiscal terms undoubtedly reflect the
new provincial government’s commitment
to launch a review of oil and natural gas roy-
alties. The rise in the percentage of negative
responses with regard to taxation in general
is most likely a consequence of both the
increase in the corporate income tax rate
and increased tax rates applicable to high
income earners. The greater level of con-
cern pertaining to various regulatory issues
suggests that respondents were fearful that
the new government would advance costly
new regulations on the upsream petroleum
industry. That concern over labor availability
was much less than a year earlier appears to
reflect the marked weakening of the Alberta
economy because of the drop in oil prices.
British Columbia’s score improved as the
result of lower percentages of negative re-
sponses over a broad range of survey ques-
tions. The improvement was most apparent
with regard to fiscal terms, taxation in gen-
eral and labor regulations and agreements.
The findings are based on responses from 439 petroleum industry executives, managers, and experts to questions regarding barriers to investment in petroleum exploration and production development in 126 provinces, states, regions and countries.
Manitoba Oil & Gas Review 2016 25
Referring again to Policy Perception In-
dex results for all jurisdictions regardless
of the extent of their petroleum resources,
Table 2 shows that Manitoba, which has
been among the top 10 jurisdictions sur-
veyed by the Fraser Institute for four con-
secutive years, dropped from 5th place to
10th. Eighth place Saskatchewan (com-
pared with 3rd place in both 2013 and
2014) ranked among the top 10 jurisdic-
tions worldwide in terms of attractiveness
for upstream investment for the third year
in a row. Alberta fell from 16th (of 156) to
38th place (of 126) globally. British Colum-
bia improved its global standing from 62th
place to 50th place. No doubt that this re-
flects that province’s improved score. But
one needs to be mindful of the fact that
had the number of jurisdictions ranked in
the 2015 survey remained the same as in
2014 at least some of the changes in rank-
ing might have been less significant or
even in the opposite direction.
In order to maintain its position as one
the two most attractive attractive jurisdic-
tions for investment in petroleum explo-
ration and production development in
Canada, one of the most attractive jurisdic-
tions in the group of small reserve holders,
and a top-ten ranked jurisdiction globally,
Manitoba must ensure that royalties and
adequate infrastructure continue to con-
tribute to a competitive commercial envi-
ronment. It is also important that the cost
of regulatory compliance not be allowed
to escalate relative to competing jurisdic-
tions. Further, in view of the findings from
the 2015 Petroleum Survey, Manitoba
must strive to address stakeholders’ con-
cerns with regard to land claims disputes,
uncertainties surrounding protected lands,
taxation (in general), and several other is-
sues so that they don’t gradually erode the
province’s attractiveness for investment.
Dr. Gerry Angevine is a Senior Fellow at the
Fraser Institute, a non-profit research and
education organization. The full report on the
results of the 2015 Global Petroleum Survey
may be downloaded free-of-charge at:
http://www.fraserinstitute.org/sites/default/
files/global-petroleum-survey-2015-rev.pdf
The 2016 survey will be launched during the
summer and results will be available in the
fall. v
1 Since the 2015 survey was completed the Alberta Royalty Review Panel has recommended that the Province hold the line on oil and gas royalties and the Alberta Government has accepted those recommendations. As a consequence, participants in the 2016 survey are likely to view Alberta somewhat more favorably.
Table 2
With claim reporting, return to work and online services available 24/7
wcb.mb.ca
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here to help
Here to Help Since 1916
YEARS
26 Manitoba Oil & Gas Review 2016
oIl Downturn slows econoMy but hope stIll thrIves
By Melanie franner
There is no doubt that the im-
pact of the oil & gas industry
downturn has spread far and
wide throughout the province
of Manitoba. But that impact has been less-
ened by several factors, namely a diversified
economy, a resilient attitude, and an ongo-
ing hope that better times are on their way.
the numbers have itAccording to the Government of Manito-
ba, Jobs and the Economy, employment in
all primary industries in Canada decreased
by six per cent between 2014 and 2015. The
number for Manitoba was three per cent.
Statistics from the Statistics Canada Labour
Force Survey (LFS) show that employment
in occupations related to all primary indus-
tries was 1.4 per cent lower in Manitoba
in 2015 compared to 2011, while employ-
ment in the sector decreased 1.6 per cent
Canada wide.
And Manitoba’s Labour Market Occupa-
tional Forecast predicts further job contrac-
tion in the oil & gas sector for 2016. In fact,
the trend is expected to continue – albeit
slower – through 2017 and 2018 before re-
versing in the following two years, when a
small number of new jobs is expected to be
created.
The Government of Manitoba, Mineral
Resources Department, states that the
number of oil & gas licenses issued over the
last few years has also been on the decline
– falling from 537 in 2013 to 533 in 2014
to 235 in 2015. Similar trends can be seen
in the number of wells drilled and metres
drilled (1,000 metres). The number of wells
has decreased from 530 in 2013 to 464
in 2014 to 205 in 2015, while the metres
drilled has fallen from 1,017 to 848 to 364.
Estimates for 2016 show that there may
be only 100 licenses issued and drilled dur-
ing the year.
municipalities tough it outThe Town of Virden is one municipality
that has really felt the oil & gas bust.
“The oil fields are a huge part of our econ-
omy,” says Mayor Jeff McConnell. “But I don’t
think it has been as substantial a hit as in
some Alberta and Saskatchewan communi-
ties. Our activity had dropped a bit but there
hasn’t been a significant impact on families
as of yet. For those families who may be af-
fected, we as a community will try to band
together to help where we can. There is a
lot of nervousness, but businesses are trying
very hard to keep things going.”
Manitoba Oil & Gas Review 2016 27
At the same time, McConnell is quick to
point out that Virden is home to some sub-
stantial employers that are not part of the
oil industry.
“We call ourselves the oil capital of Mani-
toba, but the fact is that oil is not our only
industry,” he says. “Our community is so
much more than oil, particularly at times
like this when the oil industry is slow.”
The Town of Virden has managed to keep
momentum going on economic develop-
ment, with some businesses continuing to
develop plans in the town’s industrial park.
“Development may not be occurring as
quickly as it would have in the past, but it
is continuing,” says McConnell, adding that
the town will take advantage of this current
slowdown to ponder strategic planning go-
ing forward. “We will take the time to reflect
and see where the community fell short
on needs during the boom. Municipalities
aren’t in the position to respond in a heart-
beat to the needs of industry. I think we and
every other municipality around here will
take a breather and identify what needs to
be done in the future.”
A similar story comes from the Rural Mu-
nicipality of Pipestone, which encompasses
the communities of Reston, Pipestone,
Sinclair and Cromer and is home to about
1,500 people.
“The oil within our municipality is mainly
surrounding the communities of Sinclair
and Cromer,” says Tanis Chalmers, Economic
Development. “Enbridge has a large facility
in that area and Tundra has a large presence
as well. There is also a variety of other oil-
related companies.”
According to Chalmers, the communities
began to feel the effects of the downturn
about 10 months ago. Although she admits
that some of the “underemployed” individu-
als are looking at opportunities outside of
the municipality, she says that most are
looking for answers closer to home. And
there seem to be plenty of opportunities
available.
“During the oil boom, we noticed that it
would have been beneficial to have some
more service-oriented businesses here, like
convenience stores and rental properties,”
says Chalmers. “This is still something we
want to pursue. We also have some busi-
nesses for sale on our main streets, not
due to the downturn in the oil industry but
more related to retirement and succession.
Therefore, there are new opportunities in
the area of entrepreneurship as well.”
Chalmers admits that having the two
major employers of Enbridge and Tundra
puts the municipality in pretty good staid.
She also says that the focus on develop-
ment and growth will continue.
“This is an opportunity for us to prepare
for the future,” she says. “We’re still offering
commercial and residential cash incentives.
We also have some developed property
available for interested candidates. With
spring coming up, this is the perfect time
for us to do some research in business de-
velopment.”
that Was then, this is noWLocated in the southwest corner of the
province, the municipality of Deloraine-
Winchester has a population of about 1,500
and recently went through a forced amal-
gamation.
“This slowdown in the oil industry pro-
vides us with a great opportunity for the
new amalgamated councils to get together
for strategic economic development,” says
Liza Park, Economic Development Officer
and Recreation Director.
According to Park, the municipality is
more of a bedroom community to the oil
fields.
“We felt some growth during the boom,”
she explains. “For example, it allowed out
farmers to diversify during the off season by
hauling water and things like that. The slow-
down has definitely had an impact on our
economy, but oil was never the number-
one driver for us; agriculture is. We reaped
the benefits of the oil boom off our neigh-
bours, but the downturn hasn’t created a
crisis for us. We’ve just gone back to the way
it was before the boom.”
Park calls the boom a “good eye-opener”
for the municipality. And one that they
hope they will make them better prepared
for the future.
As the second-largest city in the prov-
ince, Brandon is more susceptible to expe-
riencing economic trends on a larger scale.
“Brandon is very fortunate to have a di-
versified economy,” says Sandy Trudel, Di-
rector of Economic Development. “Though
the oil sector is an important part of the
economy, it’s not the dominant economic
sector. The downturn in this sector has
28 Manitoba Oil & Gas Review 2016
positively impacted labour and negatively
impacted businesses that are directly tied
to the oil sector and others that are a step
removed but still do a lot of business with
oil-related companies. Admittedly, there
is less disposable income in the region,
which in turn is felt in the local retail and
hospitality sectors.”
According to Trudel, the city of Brandon
is “on par” economically with a year ago.
She cites a recent Chamber of Commerce
survey of Brandon business leaders that
shows close to half of them expect that
their company will perform better finan-
cially in a year’s time. Some 62 per cent
anticipate that they will employ the same
number of people, while 30 per cent ex-
pect to employ more.
“The unemployment rate has crept
upward over the past year as a result of
the downturn in the oil sector, which in
turn is helping local businesses that have
historically found it challenging to hire
for hard-to-fill positions,” says Trudel, who
cites that 36 per cent of the respondents
in 2012 cited labour shortages as the
greatest challenge for businesses while
only 28.8 per cent cited it in the most re-
cent survey. “Having access to additional
labour has helped those industries that
chronically ran short-staffed, which al-
lows them to capitalize on business op-
portunities, positively impacting the local
economy.”
Brandon is also home to a couple of
what Economic Development refers to
as “base industries”, which helps grow the
economy. Further to this, Trudel confirms
that Greenstone Structure Solutions is ex-
pecting to become operational in the first
half of 2016 with a new 26,000-square-
foot facility and Federated Cooperatives
Limited is in the permitting stage for the
construction of a new bulk granular-fertil-
izer storage facility.
“The North American retail sector con-
tinues to evolve as well, resulting in a few
retail closures and opening the door for
new opportunities,” says Trudel, who adds
that the city’s housing rental market has
softened but remains healthy, with an
overall vacancy rate of 2.2 per cent. “De-
velopers continue to plan and construct
new rental units, with several large, multi-
family projects either underway or in the
development application stage. Residen-
tial sales have also remained steady.”
in the pipelineWith the province of Manitoba repre-
senting close to 90 per cent of its total busi-
ness, Tundra Oil & Gas knows firsthand the
impact of the recent downturn in the oil in-
dustry. The privately owned company is the
province’s largest producer of crude oil and
currently produces an impressive 30,000
barrels a day, which is up from the 24,000
barrels a year ago.
“We have made a number of strategic
acquisitions over the last 15 months,” says
Tundra Oil & Gas President Ken Neufeld.
“However, we are definitely slowing down
activity in some areas of the business, like
exploration and development drilling. Our
capital programs are less than half of what
they were two years ago. But we have 3,500
active wells in the province, which we con-
tinue to actively operate.”
According to Neufeld, the company’s cur-
rent strategy is focused primarily on looking
at ways to manage its cost structure.
PHO
TO C
OU
RTES
Y O
F TH
E RM
OF
PIPE
STO
NE
Manitoba Oil & Gas Review 2016 29
“Those activities that we’re involved in,
we’re trying to do less expensively,” he says.
“We’re trying to work with our suppliers and
partners to keep our operations going so
that all parties benefit.”
Neufeld reports that the company, in his
opinion, has done fairly well in weathering
out the current downturn. He admits that
he doesn’t have a crystal ball but hopes that
things will begin to turn around in 2016. “In
the meantime, we’re trying to do the things
that will help us manage in this difficult en-
vironment.”
In the near term, Neufeld anticipates
that the company will continue to focus
on operating strategies, such as replacing
its primary drilling activities with workovers
designed to improve production from ex-
isting wells and by focusing on enhanced
oil recovery projects aimed at recovering
more barrels from its existing fields.
“I think we will be fairly well positioned
when things ramp up again,” he says, add-
ing that to date, the company has been
able to keep most of its staff. “We’re very
pleased with being able to keep everyone
on board. There is no guarantee that we can
do this indefinitely, but we’re all working to-
gether to try to make it happen.”
the bigger pictureLike the province itself, many businesses
within Manitoba have a diversified prod-
uct line. Ron Koslowsky, Manitoba Vice
President of Canadian Manufacturers & Ex-
porters (CME), reports that it is this diversi-
fication that has limited the impact of the
downturn for his organization’s members.
“Companies tend to have more than one
area of focus,” he says. “In many cases, the
companies have two, three or more prod-
ucts. One of these may be oil & gas related
and the company is clearly experiencing a
downturn in that one area of its business.
But on the other hand, that same company
is spending more energy focusing on its
other product areas. So, in the end, it may
end up increasing its sales of a certain prod-
uct to the U.S., especially now with the low
Canadian dollar. Or it may increase its sales
within Canada but in a product line not
related to oil & gas. Businesses are getting
creative with their marketing and are find-
ing new customers as a result.”
Koslowsky cites an old adage: Never
waste a good recession because it gives
you a chance to grow your market share.
“This is one of the key strategies that a lot
of companies are now adopting,” he adds.
That being said, the CME Manitoba re-
mains actively involved in helping its mem-
bers.
“We have about 18 people who are com-
mitted solely to helping manufacturers in a
variety of different ways, like how to grow
the business or how to better use technolo-
gy,” he says. “This help is often at a very high
executive level.”
The CME Manitoba also facilitates ex-
ecutive council meetings with seasoned
individuals at the helm in order to provide
shared learning experiences and to make
new connections.
“We are certainly seeing more interest in
this area of our offerings,” says Koslowsky,
who adds that the organization also has
another six or seven individuals supporting
companies on LEAN methodologies.
a stronger tomorroW
Although the downturn in the oil & gas
industry has certainly impacted almost all
within the province, it would appear that
for the most part, the municipalities, busi-
nesses and people of Manitoba have man-
aged to weather the current cycle – for the
time being at least. Innovative marketing,
strategic thinking and the unerring drive
to survive have come together to create
a tough and resilient population. And let’s
not forget that the downturn has, in turn,
created some positives.
“Companies are taking advantage of the
lull to explore business opportunities that
in the past have been ignored, as they were
simply too busy,” concludes Brandon’s Di-
rector of Economic Development’s Trudel.
“Companies are also committing human
and financial resources to improving effi-
ciencies, professional development for their
employees and undertaking strategic plan-
ning – positioning themselves favourably
for the time when the sector returns to its
new norm.” v
Ron Koslowsky, VP of Canadian Manufacturers and Exporters .
Ken Neufeld, President, Tundra Oil & Gas.
30 Manitoba Oil & Gas Review 2016
By Melanie franner
Despite the low oil prices and
its impact on the economy,
the province of Saskatchewan
is poised for an upturn in em-
ployment. In their February 2016 Monthly
Economic Indicators Report, Saskatchewan’s
Ministry of Economy cites the Conference
Board of Canada (CBOC) August 2015 Pro-
vincial Outlook which states the labour mar-
ket is expected to “revive over the next two
years, with employment rising 0.6 per cent
in 2016 and 1.2 per cent in 2017.”
Unfortunately, the numbers aren’t quite
as uplifting when it comes to employment
levels in the forestry, fishing, oil & gas sec-
tors. The province’s Ministry of Economy
cites a year-to-date decline of 6.9 per cent
in employment levels from January 2016
over January 2015. The largest job losses
in 2015 took place in educational services
(-4,700), public administration (-2,600), and
construction (-2,200).
These are significant job losses, many
of which will have professional and per-
sonal repercussions on individuals for an
extensive period of time. And while other
provinces, including Manitoba, have been
impacted to different degrees by the recent
economic downturn, there are processes
and coping mechanisms available to help
lessen the anxiety and stress inherent in
these life-altering events.
instructional insight“Losing your job can be exceptionally
stressful,” says Therese Lardner, registered
psychologist and careers specialist with
Mining Family Matters, an online support
network empowering Canadian families in
mining, oil and gas. “Research shows that it’s
one of the top 10 most stressful life events
that you can experience, similar to reconcil-
ing a marriage or experiencing poor health
of a loved one.”
According to Lardner, it is important for
people who have recently lost their job to
“remember that it is a process – there will
certainly be good days and bad days, but
you’ve got to hang on for the ride.”
The decision to get out and start to seek
employment immediately or to take some
time is an individual one.
“How quickly to begin job searching will
be different for everybody,” she says. “Some
people need time and space to grieve for
what has happened and process their
thoughts and feelings. Others get started
right away. How quickly you can start can
be determined by how able you feel to
carry out an effective job search.”
Lardner admits that market conditions,
such as a downturn in the oil & gas sector,
can have a huge impact on a person’s job-
searching experience. But the trick is to not
focus on the fact that the market is flat but
to ensure one gets creative about how one
markets one’s skills and experience. She also
adds that networking is key to finding suc-
cess – and that the job loss itself can turn
into a positive.
“I can’t tell you how many people I have
worked who wish they had the ‘push’ to
a new toMorrow
COPInG MEChanISMS In tROuBLInG ECOnOMIC tIMES
Manitoba Oil & Gas Review 2016 31
find a new role sooner,” she says. “Active job
seeking following a job loss will force you to
really think about what you want to do so
job choices are often aligned with an over-
all career plan. It gives you the opportunity
to reflect on your skills, achievements, and
how far you’ve come over your career.”
stressful timesJob loss can be a very significant source
of stress for both the individual in question
and for the spouse.
“Even small demonstrations of daily sup-
port are vital,” says Lardner, in speaking of
ways in which a spouse may help. “This
is a time when the individual can lean on
the spouse, friends, and family. Spouses
or partners should try hard not to enquire
about what the individual is doing all day,
as comments like this may cause them to
shut down and get defensive. Instead, they
can assist with things like proofreading, if
that’s a strength. They should also be clear
on what sort of job the individual is looking
for so they can help with networking.”
Lardner cites symptoms such as disrupt-
ed sleep patterns (sleeping more/less than
usual, trouble going to/staying asleep), in-
creased or decreased appetite, and the use
of coping mechanisms like alcohol or rec-
reational drugs as signs that the individual
may be going through depression or anxi-
ety.
“You need to talk to the person to un-
derstand what’s going on with them,” she
says. “If you don’t feel equipped to have this
discussion, then you need to talk to your
doctor or local mental health professional
for some ideas on how you could approach
the situation. A simple ‘Are you okay?’ is a
great place to start.”
Stress and anxiety may also impact one’s
family, including children. The impact of
such is often dependent upon their ages.
“A very young child may only have the
capacity to understand that mummy or
daddy isn’t leaving the house and return-
ing as normal,” says Lardner. “An older child
may grasp the concept of the job that you
do and may understand that you’re looking
for another place to do that job. A teenager
may be more sensitive to the impact of the
job loss. The main thing is to keep the mes-
sage age appropriate and invite questions.
Try to be honest about any of the negatives
so that the child understands but, at the
same time, highlight the positives – such as
having more time to play with them.”
According to Lardner, there are ways that
one can help alleviate child stress.
“Try to be a positive role model for cop-
ing and talk them through why you’re ap-
proaching stress the way you are – like ‘I’m
getting really frustrated now so I am going
to take a break and come back to this later,’”
she advises. “Job loss can often upset the
normal household rhythm so try to create a
‘new normal’ to provide some structure and
certainty in their lives. Ask if they have any
questions or would like to talk about what’s
going on, and also try to make the most of
job search downtime by doing things that
raise your energy levels and nurture your
relationship with your kids.”
a neW tomorroWAlthough landing a new job is certainly
cause for celebration – Lardner suggests
that one celebrate in a way that’s meaning-
ful – it doesn’t necessarily mark the end of
the anxiety.
“Change can be daunting even if we
choose it,” she advises. “To reduce some of
the stress, you should think through your
short- and medium-term goals of your new
role. What will you need to learn? Who will
you need to get to know? How can you
build your reputation and career through
this role? What could be some of the new
challenges? How will you overcome them?”
By learning how to manage stress, an in-
dividual can better cope with job loss and
job seeking. This will also have an impact on
an individual’s spouse, family and friends.
Lardner advises that people maintain mo-
tivation and engagement throughout the
job loss/job find process. And to help keep
stress in check by taking care of oneself
through diet and exercise.
“Keeping your motivation up and stress
down is a sure-fire way to get through
tough organizational change or tough
career situations,” she concludes, adding
change in itself may be frightening but, in
the case of job loss, one is often rewarded
with a richer and more fulfilling career. v
24th wbpc focuses on the technologIes anD technIques that wIll Move the bakken forwarD
“ The one unchangeable certainty is that nothing is unchangeable or certain.”
– John F. Kennedy
PHO
TO C
RED
IT R
ENA
E M
ITCH
ELL
32 Manitoba Oil & Gas Review 2016
Certainty is something that all businesses strive for, but it is also elusive. This is especially true in commodities, where so many external influences from politics to weather can change the outcome of operations overnight.
Yet, as uncertain as certainty may be, it does breed innovation
and efficiency. While politics, weather and even economics can’t be
changed, individual operations of companies can, and we’ve wit-
nessed that over the course of the past year as the oil industry and
related businesses have done what they can to change and adapt
to market conditions.
And the change has been remarkable. Just two years ago, we lauded the fact that companies were becoming better at what they do, making it economic to produce oil and a “mere” $70 per barrel. Today, we see production continue as the barrels hovers at $35.
It has not come without its pains, but industry is rising to the challenge. Slowdowns afford the opportunity to evaluate opera-tions, cultivate ingenuity, embrace efficiency, and deploy the tech-nologies that will take the Bakken forward.
Although the mainstream media is concentrating primarily on the price collapse and lay-offs, industry publications are focused on
SAVE THE DATE
For more information please visit www.wbpc.ca
WILLISTONBASINPETROLEUM CONFERENCE
2 5 THMay 2 - 4, 2017
Regina, Saskatchewan, Canada
• Technical Talks
• Exhibitor Booths
• Workshops
• Activity Updates “Hot Plays”
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Manitoba Oil & Gas Review 2016 33
what it this period could be: the opportu-
nity to be better.
“This makes the phase that we’re in very
exciting. It’s not the best financial time
for any of us, for sure, but it’s a great time
of learning and reflecting,” Don Conkle of
Carbo Ceramics told E&P Magazine. Ryan
Hummer of NCS Multistage echoed those
sentiments: “We’ve probably learned more
as an industry in the last 15 to 18 months
than we have in the previous several years
where the activity was so high there wasn’t
as much focus on costs. Now everyone is la-
ser-focused on making every improvement
we can make, whether it’s on the comple-tion side, on the drilling side or reducing operating costs. It’s actually an exciting time for the industry as we go through this, even though it’s painful certainly for the services industry and painful for our customers as well.”
In fact, the Williston Basin Petroleum Conference was borne from very similar conditions that we face today. The resource was there but the ability to harvest it was not quite ready, and so began the Williston Basin Horizontal Drilling Symposium. This symposium brought together industry leaders to explore the technologies that have since unlocked the Lodgepole Field under Dickinson, the Cedar Hills Field in Bowman County, and of course eventually the Bakken, defining our region as a top energy producer in the world. This is a feat that just a little more than a decade ago may not have seemed plausible because, at that time, the Bakken was still consid-ered uneconomic to produce. The relent-less work of industry pioneers, however, led to the innovation and combinations of technologies that have since made the Bakken shale play a world-class resource. The conference has since evolved into the Williston Basin Petroleum Conference, but its focus is still on making the technology, technical and regulatory improvements needed to move our industry and this re-source play forward.
Located on the TransCanada Highway & the CP Rail mainlineIndustrial Lots for SaleFull RTAC access to the Industrial ParkIndustrial Land� ll Services
John Gerdes Lou Holtz
At this year’s WBPC in Bismarck, North Dakota, we are pleased to welcome many prominent industry and company leaders to discuss the technologies and efficiencies that are changing the way we develop our vast natural resources. Among them will be CEOs Jim Volker of Whiting Petroleum, Rick Muncrief of WPX Energy, and Jay Ottoson of SM Energy, who will share their experience in the industry and how their companies are deploying technology, people and re-sources to protect and enhance their assets in the Bakken. Also joining them will be Ger-bert Schoonman, Vice President for Hess Corporation’s Bakken Asset, to talk about the company’s use of lean manufacturing to reduce well costs and optimize well pro-ductivity.
Attendees will also hear a keynote ad-dress from Don Hrap, the president of Lower 48 for ConocoPhillips. Hrap leads the development, operations and services related to the company’s exploration and production business in the Lower 48 region of the United States and will offer valuable insight into the future of the Bakken and
ConocoPhillips’ involvement as one of the largest producers in North Dakota.
Market Research Analyst John Gerdes of KLR Group will be present to add some insight into how and when prices may re-bound and what we can expect from the “new normal”, while other speaker panels will focus on optimization, technology and artificial lift to maximize production from existing wells. Neel Kashkari, the newly hired president of the Minneapolis Fed-eral Reserve Bank, will discuss the regional economy and widespread economic pull of the Bakken.
Encouraging our industry’s best and brightest to find these new opportunities
Manitoba Oil & Gas Review 2016 35
will require leadership, especially during these more difficult times. To inspire current and future leaders, legendary coach Lou Holtz will provide the keynote address the final day of the conference. Deemed “the master of the turnaround,” Holtz’s experi-ences and lessons learned as a coach can be applied outside of sports, especially when and where leadership is needed most.
A few years back, the motto for the WBPC was “The best is yet to come.” We still believe that’s true. We look forward to the discus-sions that will grow out of the 24th Annual WBPC and see the investments that can – and will – move the Bakken and our indus-try forward. v
36 Manitoba Oil & Gas Review 2016
the 2016 reDvers & DIstrIct oIl show Is fast approachIng
By Sandy trudel, Director of Economic Development, City of Brandon
Brandon’s proximity to southwest
Manitoba’s oil fields makes us close
enough to be home, especially
with WestJet’s daily direct flights to
and from Calgary. Trican Well Service, Evolve
Surface Strategies, and Hydrodig recog-
nized Brandon’s locational advantages and
set up operations in the city. Today they
continue to benefit from close proximity
to the oil fields while their employees and
families enjoy the amenities and the quality
of life available in an urban centre of nearly
50,000 people.
Brandon benefits from many positive lo-
cational factors including:
• Aone-hourdrivetothefield
• Fullserviceurbancentre
• A skilled and semi-skilled workforce of
32,000
• AssiniboineCommunityCollege’soilfield
safety certification training
• Excellenttransportationinfrastructurefor
ground and rail movement of materials
east-west and north-south
• Reliable supply of affordable electricity
and natural gas
• Available industrial land, both serviced
and unserviced
• Astate-of-the-artwastewater treatment
facility and potable water supply
Thanks to a diversified economy, the pro-
longed oil sector downturn – though cer-
tainly being felt in Brandon – has not had
the devastating effects found in many oil
sector-dominant communities. Local com-
panies directly serving the oil field are, for
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the most part, in what would be classified
as a stable holding pattern. Work continues
but growth plans remain on hold. With less
disposable income in the region, consumer
demand has slowed, but not sufficiently to
deter the retail and hospitality sector from
expanding. The local labour market has
benefited from the relocation of many indi-
viduals who were working in the Alberta oil
sector, providing existing businesses with
access to an expanded skilled labour force.
Located only an hour’s drive from the
Bakken, the oil & gas sector continues to be
an important economic driver within Bran-
don’s economy. Local consulting firms, con-
tractors, manufacturers, and trucking firms
have adapted their business model to meet
the needs of the nearby oil industry. Assini-
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the breakup froM hell 2.0By Mark Salkeld, President and CEO, Petroleum Services association of Canada (PSaC)
Under normal circumstances, we
in the Canadian oilfield services
sector refer to the first quarter
of every year as the “100 Days
of Hell.” That’s when we go the hardest to
get the jobs done for our customers; lo-
gistically intense, fast, safe, and efficient. It
is one of our many claims to fame in the
Canadian oilfield services sector – on top of
a hard work ethic, pride in work well done,
and teamwork. This is all good when the
patch is performing. But last year and this
year have been anything but good. Instead,
spring breakup came around way too soon
last year and this year the same – but more
for economic reasons than environmental.
We stopped work sooner, and we’re bring-
ing our equipment home where we service,
repair, inspect, and rack it against the fence
so it’s ready for the next round.
And the next round didn’t come last
year, and it’s highly unlikely to come this
year. More and more of our folks are out of
work, out of luck, and out of income. Other
industries have gone through the same
bad circumstances, maybe even worse. For
example, think of fishing out east, the auto-
motive sector, and now manufacturing. But
what seems almost like adding insult to in-
jury is all the noise in the media and online
from so-called experts about how the oil &
gas industry is ruining Canada.
Tell me: how would we be better off leav-
ing these resources in the ground? I mean,
really? How ill-informed is that? Did those
same detractors write their opinions on
computers or papyrus paper? I don’t recall
reading anything about leaving the fish in
the sea, fruit on the trees, or parking all the
cars. And yet, how would all those opinion-
ated Canadian detractors find their way to
their computers, fresh fruit, and seafood if it
wasn’t for oil and gas.
Oil and natural gas products are found in
electronics, sports equipment, and in your
yard, closet, kitchen, car, bathroom, and
local hospital. There are petroleum prod-
ucts in the clothing and accessories you
wear every day – shades, clothing, shoes,
pantyhose, raincoats, and more. Petroleum
Services Association of Canada (PSAC)
produced a series of PSAC Product Videos
that everyone should check out to see
how many products in our world today are
made from petroleum products. Find out
more and watch the videos at: oilandgas-
info.ca/oil-gas-you/products/.
It’s like our detractors can’t see the forest
for the trees – all good in their world as long
as they are warm at night, have hardwork-
ing oilpatch workers to pick on from the
comfort of their natural gas heated homes
and synthetic bath robes, made in China
and flown to Canada on planes using oil
and gas derivatives.
And how do we get the industry detrac-
tors their natural gas? With hydraulic frac-
turing no less. A very old and proven tech-
nology perfected over the years by those
now unemployed oilfield services workers.
It seems there is a whole generation that
doesn’t appreciate the fact that Canada is
not an overly hospitable place to live if we
didn’t have heat for our homes, garages,
and places of work. Oil & gas provides a
means to bring food in when we can’t shop
for or grow food within walking distance of
our nice warm or cool houses. So industry
detractors pick on something they are not
educated about.
Fracking just sounds good to say in a neg-
ative way.
From the perspective of the hardworking
oilpatch worker, it’s like they’re telling our
world they are fools, and uninformed people
listen to these same fools because the word
fracking strikes an emotional chord. Just
how the detractors like it. Let’s play up emo-
tion and throw out facts, good old-fashioned
Canadian ingenuity, and entrepreneurialism
out the window. I find it interesting that quite
a few universities across Canada and the U.S.
teach hydraulic fracturing to their engineer-
ing students and have done so for years.
Hydraulic fracturing has been researched,
tested, improved, taken to such a high level
of sophistication and success that other
countries are banging on Alberta’s oilpatch
door asking for help on how to develop their
own natural resources in environmentally re-
sponsible manner.
And how does the oilpatch fare through
all of this? Like the other industries hit with
tough circumstances beyond their control,
we tough it out, find work elsewhere, ask for
help as a last resort and do the best we can.
So hats off to the Canadian Association of
Oilwell Drilling Contractors (CAODC) for their
Oil Respect campaign. I hope it begins to
resonate with the generation that thinks gas
for their cars comes from gasoline pumps
connected to convenience stores, just like
carrots and fresh fruit comes from grocery
stores, and their snow boards and bindings
come from the same sporting goods stores
that supply them with their down-filled
ski jackets flown in from somewhere other
than Canada for the most part. Oil Respect is
about connecting the dots between a high
quality of life our industry detractors take for
Mark Salkeld
Manitoba Oil & Gas Review 2016 43
granted and the oilpatch worker that just
wants to work for a living. So get your bum-
per stickers and T-shirts and sign CAODC’s
online petitions at oilrespect.ca. Retweet and
share their posts on social media.
PSAC is also working hard on initiatives to
raise awareness of this industry: who we are,
how good we are, and how highly respected
this industry is by folks from other countries
that want what we have. I travelled to India
last fall and discovered that many compa-
nies from India want to do business with
Canadian oil & gas services companies, es-
pecially PSAC members, because they hold
to high standards and are highly respected
in the industry. I also just came back from
Mexico and Colombia, where I participated
in trade missions to build connections with
Canadian oilfield services companies inter-
ested in doing business internationally. It’s
a good idea to diversify your markets in this
economic downturn.
At home, PSAC is working hard to edu-
cate, build relationships with, and influence
policy with provincial and federal govern-
ments and educating thought-leaders and
communities about how safe and technical-
ly sound hydraulic fracturing is to produce
our resources, as all of the pressure pumping
companies in Canada are PSAC members.
We are working hard on behalf of our mem-
bers to pave the way for them to go back to
work and stay working.
I am extremely proud of this industry, the
people, the work ethic, the ingenuity and
camaraderie. We are successful because we
communicate between each other, the ser-
vice providers, the customers, the regulators,
and the governments. We are transparent.
We are open. We want success for ourselves,
our families, and our friends. It’s too bad that
our industry detractors also benefit from the
hard work that we do. Sometimes I wish they
couldn’t so they could see the value the oil
& gas sector brings to their lives. Imagine if
those that think we should leave the oil and
gas in the ground have all that comes from
oil and gas taken away from them, from their
families and their like-minded friends. How
would they get dressed in the morning,
drive their cars to work or use their com-
puters without petroleum products? As
long as they live in Canada in comfort, our
detractors are truly exposing themselves as
ill-informed folks that take everything they
have for granted.
At the end of the day, we in the Canadian
oilfield services sector will survive. We will
go back to work, we will hire new people,
and we will continue to develop our natu-
ral resources better than anyone else in the
world. And because of our efforts, people
around the world with less than us will ben-
efit – maybe even to the point where they
can take an exceptional quality of life for
granted. v
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44 Manitoba Oil & Gas Review 2016
let’s stIck to the factsBy Mark a. Scholz, President of the Canadian association of Oilwell Drilling Contractors
Oil Respect was launched a few weeks ago, and public support has been overwhelming. One of the campaign’s objectives is
to provide regular Canadians with an op-portunity to stand up for Canada’s oil & gas industry and the workers who make it run. It’s a goal that has attracted supporters from Victoria to St. John’s, which isn’t surprising.
Oil workers and oil families matter. The industry employs over 500,000 people, and everyone in the industry knows people who have lost jobs; a friend, a father, a daughter – more than 100,000 people unemployed because of the recent downturn. But oil workers aren’t just losing their jobs; families are losing their homes. It’s the worst slump since the 1980s, and soft oil prices aren’t the only problem.
Radical environmentalists, foreign celebri-ties and grandstanding politicians continue to distort the record of Canada’s oil & gas industry further imperiling job prospects for oil workers. Oil Respect is also about correct-ing the record against these exaggerations, half-truths and fabrications. If we don’t push back with the facts, bizarre ideas can take root in the media and among people in po-sitions of influence.
For instance many opponents of Canada’s oil and gas industry would have you be-lieve that if Canada quit producing oil, the world’s greenhouse gas emissions would go down. This of course is untrue. Other nations would immediately step in to make up the
extra production. In fact, the current swoon in oil prices has been caused by increased production from countries like Saudi Arabia, Iran, Russia and Venezuela. Unfortunately, none of those countries meets the same strict carbon emission standards as Canada, not to mention Canada’s far higher labour, safety and human rights standards. Despite this, imports of Saudi, Nigerian and U.S. oil are on the rise in Canada. We believe Cana-da would be better off in every way if east-ern refineries were taking oil from Alberta instead of Algeria, but we need pipelines to do that. To put the argument the other way around the world would be better off in many ways if a bigger share of the world’s oil production came from Canada.
Furthermore, the International Energy Agency projects that the world demand for oil will grow in the decades ahead. If so, doesn’t it make sense for that oil to come from a country like Canada? In the mean-time, many companies are developing new ways to produce clean and renewable en-ergy. In Canada, the leaders in the produc-tion of wind and solar energy are also some of Canada’s largest oil and gas companies such as Enbridge, Suncor, Shell and Trans Canada. Profits from oil and gas develop-ment and transport make that possible. Again, these are facts.
But the revenues from oil and gas de-velopment, transport and processing help in other ways too. Not only do they come back to us in the form of profits in our RRSPs
and to the Canada Pension Plan, they also provide billions of dollars in revenues to Ca-nadian governments. On average, $17 bil-lion dollars a year comes from oil & gas to fund nurses, teachers, firefighters and police officers. These are the facts of life in Canada, and if we ignore them we risk basic govern-ment services.
Finally, it is a fact that the safest and most efficient way to transport oil, or any petro-leum liquids, is by pipeline. Building pipe-lines also ensures that we can move Cana-dian oil to market, meaning better profits for companies, more revenues for governments and more jobs for workers. The proposed Energy East pipeline would mean a $14 bil-lion shot in the arm for the Canadian econ-omy. Trans Mountain would inject $9 billion, and all of that $23 billion dollars would be private money. Tens of thousands of workers would be employed without asking taxpay-ers to pony up. The much discussed “middle class” would benefit as soon as approvals were received. Again, these are facts.
Oil Respect ensures that regular Canadi-ans, and the hard facts, are at the forefront in the sometimes emotional but entirely legiti-mate discussion about Canada’s use of our oil & gas resources. Help us get the attention of governments by signing the petitions at www.oilrespect.ca and by liking our Face-book page. Let’s fight together to protect and promote an industry that has done so much to make Canada the best country in the world. v
Launch of the Oil Respect campaign in Calgary.Mark Scholz with Blake Richards, MP for Banff-Airdrie.
Manitoba Oil & Gas Review 2016 45
new pIpelInes can support actIon on clIMate changeBy Marg McCuaig-Boyd, Minister of Energy for the Province of alberta
Pipelines are the safest and most ef-ficient way to transport our energy resources, but over the last decade Canada has failed to build a major
new pipeline to tidewater.That must change. We have to get a pipe-
line built. For this to happen, governments have to address the concerns Canadians have with pipelines – not with talk, but with real action.
One of the main questions Canadians have is: how can we support the develop-ment of new pipelines while also combat-ing climate change?
It’s a good question, one that for years has lacked a good answer. As a result, the conversation about pipelines has been re-duced to two opposing positions, making it seem contradictory to support new pipe-lines and also support actions to prevent climate change.
Conservative governments in Alberta and federally just didn’t get it. They failed to recognize much of the battle against pipe-lines was a battle against the expansion of the oil sands. The conversation about pipe-lines became a conversation about the oil sands, and conservative governments re-fused to take that conversation seriously.
Turns out, they should have. Their inac-tion hurt our economy along with families in Alberta and across Canada.
Alberta’s single largest energy customer – the United States – blocked the Keystone XL pipeline not because of the safety of the pipeline, but because of the reputa-tion of the product carried in the pipeline. President Obama said our energy products aren’t good enough, that they’re too dirty. While this isn’t true, we need to change our
reputation, and we need to do so in a way that’s meaningful.
Alberta’s Climate Leadership Plan turns the page on that old debate and provides the opportunity to show the world that we can combat climate change while also pro-tecting the good, mortgage-paying jobs of our oil and gas industry. This plan has brought together an alliance never before seen in Alberta, including environmental-ists, oil sands executives, First Nations and the provincial government. These once-unlikely allies support us taking long-over-due, meaningful action to combat climate change, while also demonstrating that Al-berta can be one of the world’s most pro-gressive energy producers.
One of the key commitments of our climate leadership strategy is to limit emissions from our oil sands. Finding less carbon-intensive ways for our oil sands to produce, while also protecting and creat-ing more energy jobs, means investment in new technology. It won’t happen any other way.
For Alberta to make the kind of invest-ments necessary to transition away from a carbon emission intensive economy, we need to get full value for our resource ex-ports. Right now, we don’t. Almost all of our energy resources are sold to the United States, who as a result of the shale oil and shale gas revolutions, have in a few short years transformed from our best customer to our biggest competitor. As a result, we are selling our energy products to our only customer at a discount.
This discount means that Albertans and Canadians get less value from our natu-ral resources, with lower royalties and less
economic benefit. This in turn deprives us of critical public funds necessary to invest in the kind of technology that will be required to transition our economy toward a more prosperous, low-emission future.
Building pipelines to tidewater and to new markets, while at the same time taking action to curb emissions, are the two essen-tial components required to transition away from carbon intensive energy production and assert ourselves as one of the world’s most progressive, responsible and forward-looking energy producers.
But pipelines aren’t just good for Alberta. They are good for all of Canada. Canada currently imports almost a million barrels a day of oil from other countries. It makes no sense to finance the economies of other countries in this way, when it would be both more economically and more envi-ronmentally responsible for Canada to rely on its own abundant energy resources.
There was a time when discussions around pipelines would see new propos-als judged on their merit – public safety, job creation, market access. We want to re-turn to those discussions. Doing so will take hard work, an unprecedented commitment from our partners in the oil industry, envi-ronmental groups and First Nations, and a long-term commitment from the govern-ment of Alberta. The good news? Our cli-mate leadership plan has established the unprecedented coalition needed to get this work done.
Together, we can develop the technol-ogy to take the carbon out of the barrel. Together, by showing we’re serious about climate change, we can take the politics out of pipelines. v
46 Manitoba Oil & Gas Review 2016
long horIzonEnhanCED OIL RECOvERy Can ExtEnD thE LIfE Of a RESERvOIR By DECaDES
Working in a low oil price environment has Tundra Oil & Gas focusing on long-term production, including
how to recover a higher percentage of oil contained in its existing reserves base. The key to this is enhanced oil recovery (EOR), which usually involves injecting water or gas into the reservoir to add energy in order to sweep more oil to the producing wells and improve ultimate recovery.
Primary recovery, which relies on the natural energy of the reservoir, typically re-covers up to 10 per cent of the original oil in place. Secondary and tertiary EOR methods, including waterflooding and CO2
injection, can increase ultimate oil recovery up to 35 per cent. When you consider a play that consists of over a billion barrels of oil, such as Tundra has discovered in the Bakken res-ervoir, even a small increase in ultimate oil recovery can have a tremendous effect.
“Compared to the price of drilling new wells, it can be relatively low-cost to re-charge a reservoir by injecting water,” explains Jane Mactaggart, Tundra’s Vice-President of Reservoir/Exploitation. “In this
environment of low oil prices, using exist-ing infrastructure is a good strategy; we in-ject water in to increase the pressure and, hopefully, will see an improved production response in the future.”
Tundra was one of the first companies to apply EOR technology in the Bakken reser-voir and remains a leader in the region. With the company’s 2014 acquisition of over 840 wells from EOG Resources and 550 wells from Penn West in 2015, it looks forward to expanding its EOR applications.
“The purchase of the EOG and Penn West assets gives us an opportunity to apply what we’ve learned over the years as we continue to expand our enhanced oil re-covery processes,” says Raj Sharma, Tundra’s EOR Manager.
That’s not to say that implementation won’t be without its challenges, as the pre-vious operators’ focus was mainly on pri-mary recovery. But there are some things working in Tundra’s favour, including the fact that the wells are already drilled and that unitization (mineral owners must agree to EOR in exchange for a share of the oil that comes out of a larger project area rather
than from individual wells) on much of the land is already in place, which would oth-erwise be a lengthy process to undertake.
“While not all of the wells may prove to be ideal for secondary recovery methods, we look forward to leveraging what we’ve learned from similar reservoirs to keep this field producing for a long time,” Sharma says. “We believe if anyone can do it, it’s Tundra.”
the future of the fieldThe Midale Field is a 42-square-mile oil
patch located in the Williston Basin west of Virden. Vertical wells were first drilled on the land in 1952, and thanks to EOR methods, not only is the field still producing 60 years later, but many of its wells are expected to produce oil beyond the century mark.
“The Midale Field is an example of a ma-ture pool that should have another 30 to 40 years of life ahead of it,” Mactaggart says. “Tundra has similar assets in Manitoba, in-cluding a waterflood that’s really working well for us in the Sinclair-Daly Field. It’s really exciting to know that we’re part of a differ-ent kind of business now, one with a long range, 30- to 40-year viewpoint.”
Tundra was the first company to endeavour to apply EOR methods in the Bakken reservoir. This graphic shows Sinclair Unit 1 - Lyleton, an original vertical development of 16 producing vertical wells featuring 400m interwell spacing (2007).
Sinclair Unit 1 - Lyleton, waterflooded with open-hole horizontal injector wells, featuring 200m interwell spacing and a custom designed injector (2011).
Manitoba Oil & Gas Review 2016 47
Proudly investing in Manitoba since 1980.
Sharma explains that back in the day, oil companies would come in, purchase land, drill wells and move on quickly if they didn’t yield the expected results.
“Things have changed significantly in the last few years. It’s no longer a matter of getting in there, making a quick buck and getting out without worrying about what’s going to happen down the road because that’s ‘someone else’s problem,’” he says. “Our vision from day one has been to keep assets producing for a long time, to reinvest wisely and to do what’s right for the envi-ronment. That’s why with everything we develop, we always keep our ultimate goal of maximizing recovery in our mind.”
Making long horizon decisions means that Tundra must envision future socioeco-nomic changes.
“Realistically, if we have an asset that’s go-ing to produce for the next 50 or 60 years, we need to consider how world attitudes will change around carbon, as that’s defi-nitely going to be part of the commercial and environmental world we’re operating in,” says Mactaggart.
“We’re particularly intrigued by the poten-tial for CO2
, as we see a greater number of projects for carbon sequestration (the long-term storage of carbon dioxide to either mitigate or defer global warming and avoid dangerous climate change) in Canada and more discussions about carbon taxes as a way to encourage innovation,” she says.
Tundra implemented a CO2 pilot project
in 2008, which it has been continuously monitoring and modifying to evaluate its potential in commercial production. While there have been some short-term chal-lenges in containing the injected gas in the reservoir in order to keep pressure up, it has improved production quality.
“Any other company might say that in a low oil price environment, you should shut down the tertiary pilot if you’re merely spending money to learn, but that’s not the case with Tundra,” Sharma says.
“We believe CO2 fits into a longer-term re-
covery strategy and are committed to that focus,” Mactaggart adds. “We may not have all of the answers now, but in the coming years, we will continue to innovate as tech-
nology improves and we find ways to work with environmental changes that come at us. Although we’re producing carbon-based fuel, we can mitigate some of those poten-tial issues by injecting CO
2 back into the
ground and sequestering it in the reservoir. We’re excited to see how we can become part of the carbon solution.”
The low price environment has caused Tundra to shift its focus and innovation to-ward enhanced oil recovery, and according to Mactaggart, that’s not a bad thing.
“I think that there is a lot of innovation happening within Tundra, and we’ve con-tinued to build a team of innovative people who are continuously looking at ways to op-timize these secondary processes,” she says.
“Part of Tundra’s strength is that we have such a big base of opportunity that allows us to try new things in the field. Our team has struck a good balance between recog-nizing when its best to leave things alone when they’re working well and knowing when it’s time to roll up our sleeves and get innovative in order to make things even better.” v
48 Manitoba Oil & Gas Review 2016
why thIs oIl prIce collapse Is DIfferent froM the 1980s By David yager
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52 Manitoba Oil & Gas Review 2016
hIgh stakesaRGuMEntS REMaIn hEatED On BOth SIDES Of thE EnERGy EaSt PIPELInE DEBatE
By Leonard Melman
One look at an atlas clearly il-
lustrates a serious problem
for Alberta and Saskatchewan
petroleum producers and de-
velopers. The simple fact remains that both
provinces are located some distance from
sizeable markets and, therefore, reliable
means of transporting huge quantities of
petroleum – both Alberta and Saskatch-
ewan light, as well as Alberta’s diluted bi-
tumen recovered from oil sands projects
– must be developed.
For various reasons, many producers be-
lieve that transportation via pipelines repre-
sents the only workable option since there
are no navigable waters available and using
lengthy trains of rail tanker cars has been in-
tensely discouraged since the Lac Megantic
tragedy of July 2013, which saw 47 people
killed in a fiery inferno.
Three important pipeline projects have
been proposed: various suggested pipe-
lines to Pacific ports which are presently
tied up in regulatory and legal knots; the
Keystone XL pipeline, which would carry
Western Canadian petroleum through the
U.S. to refineries and ocean ports located
inside that country but which is presently
likewise engulfed in time-consuming con-
troversy; and the Energy East Pipeline Proj-
ect, which would be located entirely within
Canada.
The proposed Energy East pipeline, to be
built by TransCanada Corp., would extend
about 4,500 kilometres from a new tank ter-
minal planned for Hardisty, Alberta across
the prairies, Ontario, Quebec, and New
Brunswick to marine shipment facilities on
the Bay of Fundy in the port city of St John.
Ocean-going oil tankers would then trans-
port the petroleum to major world markets.
As planned, the capacity of the pipeline
would be slightly more than 1 million bar-
rels of crude per day.
Underlying economic fundamentals
relating to the petroleum market are an
important consideration. As matters now
stand, Alberta produces far more petro-
leum than is required for domestic markets
within that province – and this is also true
for Saskatchewan production. Because of
the existing difficulties in storing, transport-
ing and marketing excess production, the
petroleum industry has inflicted a “negative
premium” on Western Canadian produc-
tion.
According to a December 22, 2015, ar-
ticle in Canada’s National Post newspaper,
while world commodity markets were pric-
ing crude oil near US$35 per barrel, the arti-
cle stated that, “…In Western Canada, some
producers are selling for less than US$22
per barrel.” Pro-pipeline commentators sug-
gest that a completed Energy East project
would allow for efficient transport of all pro-
duction, eliminating current storage costs,
and therefore would allow Alberta and
Saskatchewan production to sell at prices
much closer to world quotes.
TransCanada has planned for the project
to be developed in three sections. These
include converting an existing natural gas
pipeline into an oil transportation pipeline;
construction of new pipelines where none
presently exist or where necessary to link
up with the reconstructed sections; and
construction of associated facilities such as
pump stations, tank facilities in Saskatch-
ewan and St. John, and construction of ma-
rine facilities in St. John.
Consultation work began on the project
in the first half of 2013, and regulatory appli-
cations were filed in mid-2014, with a Regu-
latory Application Amendment being filed
in late 2015. A proposed future timeline
includes construction beginning in mid-
MBAB
BC
YT
SK
NT NU
ON
QC
PENB
NS
Existing Pipeline Conversion
New Pipeline Construction Terminals
Hardisty
Moosomin
Montréal
Saint JohnLévis
Manitoba Oil & Gas Review 2016 53
2017, and final commissioning and actual
service starting in 2020.
Passions are indeed heated on both
sides of the project approval debates, with
proponents pointing toward significant
economic benefits while opponents are
strenuously objecting to potentially nega-
tive environmental impacts.
Not surprisingly, the Alberta petroleum
industry itself remains one of the most
consistent supporters of Energy East. They
note that not only Alberta, but also the rest
of Canada, gains from a healthy oil sands
development industry, as more than 2,000
companies outside Alberta benefit from
the industry’s activities. They claim that as
of 2014 the industry provided more than
500,000 jobs for Canadians and, therefore,
they support the Energy East pipeline as a
project which will further economic prog-
ress.
TransCanada Corp. itself also provides
additional arguments in favour of the proj-
ect, noting, “Energy East alone will support
more than 14,000 direct and indirect jobs
annually during its design and construction
stages. This means employment opportuni-
ties for welders, truck drivers, crane opera-
tors, engineers and environmental special-
ists as well as other spin-off benefits…”
In addition, the company also notes it
is working toward a high level of environ-
mental stewardship and the pipeline will
be making a contribution toward energy
independence as “building Energy East will
reduce the need for higher-priced foreign
oil imports.”
Other voices being raised in support of
the project include Saskatchewan’s Premier,
Brad Wall, who was quoted in a February
2, 2016 Canadian Press article as declaring
that newly-elected Prime Minister Justin
Trudeau should take a stand and support
the Energy East pipeline. In the article, Wall
countered environmentalists’ arguments by
stating, “If you sift through some of the rhet-
oric, they just don’t like oil, and I don’t think
that is a good enough reason to hold up a
pipeline that will benefit all of the country.”
He was referring to objections filed by
environmental groups with the National
Energy Board (NEB), which is presently eval-
uating remaining portions of the applica-
tion approval process.
Environmental movement arguments
against the pipeline are numerous and
varied. One that has shown up with some
consistency is the declaration that oil sands
petroleum production is a significant pro-
ducer of greenhouse gases and construc-
tion of the pipeline would ultimately result
in greater oil sands production and, there-
fore, greater pollution. The Pembina Insti-
tute states filling the Energy East pipeline
would help spur 650,000 to 750,000 barrels
of additional production per day from the
oil sands.
Other objections found listed in literature
provided by The Council of Canadians – an
organization that describes itself as “acting
for social justice” – itemizes several argu-
ments against the pipeline:
• Thepipelinewouldnotresultinastron-
ger Canadian refining industry, but the
oil would be “shipped, unrefined, to
places like India, Europe, and possibly the
United States.”
• Company assurances that the regula-
tory processes ensure pipeline safety
are wrong as “The Harper government’s
2012 omnibus budget bill almost entirely
wiped out environmental regulations in
Canada.” They also stated that the NEB
was “industry-friendly.”
• Convertingtheexistingnaturalgaspipe-
line to petroleum transport would incur
safety risks such as “Pre-1970s pipelines
are predisposed to cracking corrosion
along lengthwise seams.”
• Company claims regarding economic
stimulation are wrong and that “Trans-
Canada has a bad record of over-estimat-
ing potential jobs.” They would rather see
advancement of renewable energy proj-
ects which would “outpace jobs in oil and
gas by as much as six to eight times.”
Passions on both sides of this project re-
main intense, and many wait to get a clear-
er picture regarding the future influence of
the new Trudeau government in Ottawa on
the application process.
The stakes are indeed high. v
scottland.caCalgary Edmonton Grande Prairie Fort St. John Lloydminster Regina Ph. 403 261 1000
Proud leader in land servicesin Manitoba for over 25 years.
Underlying economic fundamentals relating
to the petroleum market are an important
consideration.
54 Manitoba Oil & Gas Review 2016
reDucIng costs anD IMprovIng qualIty In herItage ManageMent
It’s no secret that resource development
industries – and oil & gas in particular –
continue to transition toward a future
defined by lower commodity prices. Low
commodity prices have had a wide range
of effects on Canadian firms, but in every
cloud, there is a silver lining. Suppliers are
doing everything they can to both lower
costs and raise productivity in order to
improve profitability and provide value to
their clients and partners.
Western Heritage provides heritage man-
agement and geomatics services across
western Canada. One of our key goals
across all levels of the oil & gas supply chain
has been reducing costs while improving
quality. We have successfully reduced our
costs and improved our response time,
while meeting or exceeding regulatory
and CSR goals. We don’t believe that you
can only pick two out of “speed, quality and
cost.” We allow you to pick all three.
To achieve this, over the past 15 months,
we have continued to innovate our service
delivery model.
task-based billingMost professional service firms charge
for a professional’s time at the same rate
whether they are delivering a high level
professional service or sending you a report.
Western Heritage thought this was unrea-
sonable and has adopted task-based billing.
This means that customers pay a set rate for
the task being completed, regardless of the
seniority of the person completing it. For
example, clerical work is charged at a single
rate, even if senior management performs it.
While this provides significant cost savings
to the customer (up to 30 per cent), it allows
us to improve response time, as all available
staff can be conscripted in order to meet
our customer’s deadlines. This innovation
has significantly reduced time required to
invoice and has effectively reduced our al-
ready low error rate to near zero.
field officesWestern Heritage has been experiment-
ing with the delivery of services from field
offices. In most cases these offices are only
open during peak seasonal demand, but
customers can book services from them
throughout the year, even if the staff needs
to be brought in from another office at
our cost. Currently our field offices include
Grande Prairie and Winnipeg. We will be
opening a field office in Swift Current in
2016. To serve the Weyburn area, we main-
tain an office in Regina year-round.
centralized coordinationWestern Heritage uses a centralized proj-
ect coordinator to handle coordinating our
team across Canada and the world. This
ensures a fast response time and the ability
to easily handle multiple jurisdictions for a
single client or partner. There is no need to
try to manage multiple service providers;
with licensed staff and offices across much
of Canada, we can provide service for all of
your projects.
discounts for repeat businessThis is our way of showing appreciation for
our repeat customers. Discounts start at the
second development in a single project year
and range from five per cent to 25 per cent
New Geophysics and Geo-archaeology tools (such as OSL profiling) increase accuracy and reduce costs.
Field offices and centralized coordination allow Western Heritage to provide fast response time across multiple jurisdictions, reducing administrative and management costs for our customers.
Manitoba Oil & Gas Review 2016 55
depending on the product or service. We
will apply the discounts even if the projects
are distributed across multiple jurisdictions.
ongoing innovation
Whether it is reforming internal processes
or finding a better way to characterize heri-
tage sites, research and innovation have al-
ways been part of our DNA (we were origi-
nally spun out of a research council). In 2015,
for example, we have been developing a
new geophysics tool for archaeologists to in-
crease accuracy. Another of our innovations
is using satellite imagery to minimize the
costs of monitoring environmental change
in reclamation sites and project footprints.
Satellite imagery provides more comprehen-
sive change measurements at a lower cost
and higher density that ground based-mea-
sures. This is the basis of our Environmental
Footprint Monitoring Platform.
Also, a subsidiary of Western Heritage de-
velops software to help manage travel costs
for health care practitioners. Over the past
few years, they have been developing an
advanced scheduling module that reduces
travel costs even further. Why should the
health care industry be the only ones to ben-
efit from these cost savings?
Wh fleet manager
WHFleet Manager is a scheduling/mile-
age determination app which determines
the optimum routing and mileage for your
service fleet. It reduces travel time and fuel
costs, and if operators are paid by the mile,
the software also generates mileage payroll
records. These products have reduced travel
expenditures by more than 30 per cent for
existing customers.
We believe that trying times build strong
companies. Looking forward, we are com-
mitted to doing all we can to reduce costs
while improving quality. Contact any West-
ern Heritage office to discuss your service
needs, and together we will continue to
create value for Canadian resource develop-
ment. v
Optimizing schedules and routes can reduce travel expenditures significantly.
56 Manitoba Oil & Gas Review 2016
applIcatIon of fIelD-portable xrf In oIl anD gas exploratIon anD proDuctIonBy a. Somarin, PhD, PGeo, Department of Geology, Brandon university
Fig. 1. Examples of FPXRF (left from Oxford, right from ThermoFisher).
Field-portable x-ray fluorescence (FPXRF) is a technique
that is gaining momentum and acceptance in addressing
applications in various fields in geology and mining includ-
ing oil and gas exploration and production. These instru-
ments are capable of measuring elements from Mg to U including
light elements (Mg, Al, Si, P, S) in an adjustable assay time from 30
seconds to a few minutes depending on the accuracy and preci-
sion requirements (Fig. 1).
FPXRF can analyze a variety of common sample types in the oil
and gas upstream exploration and production industry includ-
ing drill cuttings, oil and gas cores, outcrops, and piston cored
sediments. The geochemical data from these analyses can easily
be used in mud logging as well as chemo-stratigraphy. Although
FPXRF analyzers cannot analyze hydrocarbons, they can be used to
characterize reservoir properties that influence porosity (cements),
permeability (clays, cement type), fracture population (Si content),
and productivity (e.g. V, Cr, Mo content).
FPXRF is used on-site to determine elemental composition of a
sample in real time. Then mineralogy of the sample can be often in-
ferred from this geochemical composition. The mineralogy is sub-
sequently used to identify rock type and infer physical properties of
the rock unit using a geochemical strip log (Fig. 2). Bulk chemistry
is used to infer sample mineralogy and thus identify silicates, alu-
mino-silicates (e.g., clay and feldspar), carbonates, and sulfides. For
example, a low Si/Al ratio indicates greater alumino-silicate content
in a rock unit because these minerals have high Al content. In addi-
tion, clay types and their volume can be inferred from geochemical
data.
In conclusion, FPXRF analyzers can provide fast and reliable geo-
chemical data at the drill site, in the field, and in the core lab. This
Manitoba Oil & Gas Review 2016 57
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 1 2 3 4 5 6 7 8 9 10 11
100*Mg/Ca
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 1 2 3
Si/Ca
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 5 10
Si/Al
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 10 20 30 40
Th/U
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 0.25 0.5
Fe/Al
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 25 50 75 100
U (ppm)
536 536.5 537
537.5 538
538.5 539
539.5 540
540.5 541
541.5 542
542.5 543
543.5 544
544.5 545
545.5 546
546.5 547
547.5 548
548.5 549
549.5
0 1 2
Mo (ppm)
536
536.5
537
537.5
538
538.5
539
539.5
540
540.5
541
541.5
542
542.5
543
543.5
544
544.5
545
545.5
546
546.5
547
547.5
548
548.5
549
549.5
0 5 10
Meters
Al%
Fig. 2. (above and below) An example of geochemical strip logs for a well from eastern Saskatchewan (as part of a Geology Honors Thesis at Brandon University, Manitoba).
1000 18th StreetBrandon
Western Canada’s largest independent supplier of cylinder and bulk gases,
allows geologists to predict where the oil and gas is in the rock for-
mation, what factors affect the porosity, and predict the volume of
oil and gas present. It also allows geologists to determine how the
permeability of the rock can affect the flow of oil and gas from the
rock to the well bore, and how a rock formation can be engineered
to produce more by fracturing and well treatments. This can help
operators to maximize the potential of each well and avoid waste
related to ineffective fracture treatments. v
Mark Klapheke, 4th Year Honours B.Sc. Geology Student, University of BrandonI am looking at the Lower Amaranth Formation which is primarily a silty to shaley Jurassic redbed with some very fine sand units at its base. Because shale is a very homogeneous looking rock, it is often difficult to notice changes in it by regular examination. However, shale has many more trace elements that are not generally found in sandstone or carbonates for example. As the PXRF can detect these elements very quickly, it can be used to suss out information that may not be as apparent. Changes in these trace elements as well as differences in ratios of more common elements allow me
to build a more complete story of what was happening in the past and to see things that cannot be seen otherwise. It allows me to build strip logs of individual elements quickly and to compare them which can reveal relationships and patterns. Although I have been scanning a core at Brandon University, because of its portable nature, it is possible to take the PXRF to a well site and even use it on the well cuttings to make decisions on the fly with minimal disruption to drilling. As you know, time is the driller’s enemy. However, used with traditional well site knowledge it can be an extremely useful tool in getting more accurate information to the drillers quickly saving both time and money while making decisions with better information.
lookIng forwarD: research applIcatIons of xrf technology
Maxwell Rogowski, 4th Year Honours B.Sc. Geology Student, University of BrandonPortable x-ray fluorescence is a useful tool for detecting geochemical proxies that help show productive hydrocarbon intervals. Accurate stratigraphic correlations are augmented by chemostratigraphic techniques, utilizing common mineral forming elements and trace element ratios and abundances. Lab data obtained from six Lower Amaranth cores, one Lodgepole core and one Three Forks/Bakken core located within the Northeastern part of the Williston basin provides a wealth of analytical and stratigraphic information. Visual
analysis alone of the three slabbed formations reveals minor color variations but fails to show the subtle geochemical components required for understanding the mineralogical controls of hydrocarbon traps in the carbonate rich Amaranth and Lodgepole reservoirs. The core study also provides additional information about the controls over source rock hydrocarbon potential in the Three Forks and Bakken Formations. Major elements such as Si, Ca and Al were analyzed for rapid rock categorization into specific lithologies at every ten centimeter interval. Minor elements such as Mg, Fe, S, K20 and TiO2 were used to further define lithologies and provide insight into the diagenetic and detrital processes.
58 Manitoba Oil & Gas Review 2016
Figure 3.19: Strip log of the 16-22-12-27W1 hole. Known oil saturation is shown in grey.
Figure 3.20: Strip log of the 16-22-12-27W1 hole. Known oil saturation is shown in grey, EF- Enrichment Factor of concentrations. All other concentrations are in ppm unless otherwise stated.
Figure 3.21: Fe/S correlation analysis, Si/Zr correlation analysis. Bulk lithology of the Bakken and Three Forks Formations.
Manitoba Oil & Gas Review 2016 59
Figure 3.1: Strip log of the 16-01-13-27W1 hole. Known oil saturation is shown in grey.
Figure 3.2 Strip log of the 16-01-13-27W1 hole. Known oil saturation is shown in grey, all concentrations are in ppm unless otherwise stated.
Further analysis of detrital input in carbonates was indicated by Zr abundance and Th/U ratios. The trace elements utilized in this study provided information into hydrocarbon saturation potentials of prospective units, such as Mo, Zn and U serving as proxies for organic content. U, Mo, Fe and S being utilized as proxies for anoxia. Other comparisons were made to determine silica type (terrestrial, biogenic or authigenic) through Si/Zr correlation analysis. Analysis of micro-fracture populations (Si wt% vs Zr ppm) provided possible target zones suitable for fracking. Fe/S correlation analysis was used to rapidly distinguish sulfides from microscopic evaporites and ferric oxides/silicates. Permeability was analyzed using Al/Si ratios to determine if detrital clays were affecting the hydrocarbon saturation in prospective units. Ca/S ratios were used to define the reservoir characteristics of the Amaranth Formation due to extensive anhydritization.
process of analysisEach core was rinsed with distilled water and wiped down with
paper towel to remove excess drilling mud from the surface of the 1/3 split core. The slab was marked using a measuring tape and permanent marker and analyzed using a Thermo Scientific Niton X3lt GOLDD+ portable XRF analyzer. The measurement was done at every 10-centimetre interval from the end of the core or a known depth, carried out for accurate depth confirmation. Analysis of the flat 1/3 cut core samples was accomplished using the attachable lead shield that served to stabilize the PXRF in place on the sample, and to minimize backscatter emissions. Cores with zones of brittle rock intervals that may have been mixed in the core boxes were carefully
organized and closely monitored for significant chemical changes. Intervals of core that were made up of shattered brittle rock were set into a fixing tray within a lead box that held the sample and minimized the distance from the analyzer to the sample. Brittle intervals and mixed rock types underwent batch analysis and averaging to improve the accuracy of the data collected. The instrument set to “Mining Mode” which had four filters. In each filter, a set of elements were analyzed and timing for each filter was adjustable. The overall analysis time was set to three minutes (30 seconds on Main, Low, High filters each, and 90 seconds on Light filter) to acquire the targeted elements in accurate quantities. Sample data (such as name, date, etc.) were entered and then the samples were analyzed. Once completed, the results were downloaded to a computer and saved as Excel file. Then the raw data were readjusted using certified standards that were previously analyzed by the same analyzer under the same conditions. Elemental abundances were plotted against depth into binary graphs. Major rock-forming elements were converted to pseudo-elements and used in ternary diagrams to determine the bulk lithology of each interval.
I should also mention that no one study will be applicable to all regions containing similar formations. For example, other studies completed on the Bakken utilized elemental abundances like V, Cr, and Ni to determine paleoredox conditions successfully. I was unable to use these proxies due to the high Fe content that had diminished V and Cr values in my samples.
Examples of the binary graphs, correlation analysis and bulk lithology are below and on opposite page.
(This study was completed for an Honours Thesis in Geology). v
60 Manitoba Oil & Gas Review 2016
people neeDsOIL & GaS hR REPORt IDEntIfIES nEW tREnDS anD REquIREMEntS In WORkfORCE DEvELOPMEnt
By Lisa fattori
A new report by the Petroleum La-
bour Market Information (PetroL-
MI) Division of Enform highlights
HR trends in Canada’s oil & gas
industry. Released in September 2015, Shift-
ing Priorities and a Shifting Workforce exam-
ines business shifts within the industry in
recent years and identifies drivers that are
changing workforce needs. The report of-
fers insights into emerging occupations,
corporate priorities, and current skills gaps,
which will help industry, educators, and
government stakeholders to implement
new workforce training and development
strategies. Grooming the next generation
of workers to meet future needs will ensure
that Canada’s oil & gas industry remains
robust and competitive within the global
market.
The findings within Shifting Priorities and
a Shifting Workforce are based on interviews
with 28 industry representatives, as well as
a broad array of secondary research. The
report identified three industry priorities
that are prompting changes in workforce
requirements: accessing technically com-
plex unconventional reserves; balancing
performance and cost management to
achieve profitability; and achieving market
diversification to grow the business.
Advances in the application of horizon-
tal drilling and hydraulic fracturing have
increased activity in unconventional oil
plays, as producers now have the ability
to tap into these reserves. The use of so-
phisticated technologies has, in turn, ne-
cessitated a more technologically savvy
workforce. Automated procedures and
computer-based tools for enhanced com-
munication throughout the supply chain
requires workers who are highly skilled at
reading, numeracy, communicating and
problem solving. Sophisticated tools that
improve drilling accuracy and microseismic
monitoring of the fracking process, which
has the potential to optimize production in
fewer wells, are state-of-the-art technolo-
gies that will become mainstream. As use
of these technologies ramps up, the indus-
try will require a higher level of expertise in
field operations, geophysics, geology, and
reservoir and completions engineering.
“The most significant change in the oil
& gas industry from 10 years ago has been
the advances in technology,” says Carol
Howes, vice-president of communications
at PetroLMI, Enform. “This has provided ac-
cessibility to tight reserves, but it has also
made operations more technologically
complex, with much more automated and
computerized equipment. Even for entry-
level positions, the expectations are much
higher. Rigs are more technical than they
were before, and we’re seeing new applica-
tions being used in the field, such as docu-
mentation and communications on tablets
and phones.”
Another significant business priority is
the need to cut costs and improve efficien-
cy for greater profitability. While companies
have always been motivated by the bottom
line, the current economic downturn in the
sector amplifies the need to get more bang
for your buck and to implement cost saving
practices throughout all facets of a com-
pany’s operations. Eliminating redundan-
cies, minimizing down time, scheduling the
timely delivery of supplies and equipment,
and organizing work crews to maximize
productivity is the new corporate culture
that requires commitment by all members of
an organization. Supply chain management
professionals, occupations that deal with or-
ganizing rotational workers and those with
expertise in asset management, equipment
reliability, and preventative maintenance are
playing a key role in helping companies to
achieve both performance and profitability.
“Oil & gas companies are in a very com-
petitive environment,” says Howes. “With the
ramp up of activity comes increased costs,
and the focus on efficiency and cost man-
agement has been driven further down in
the organization, broadening out to field
workers. The amount of services required at
the well site has grown significantly and you
now need expertise in logistics to get large
scale equipment and materials to those
sites. Many companies are streamlining pro-
cesses, such as sourcing out supplies and
services from their head offices.”
The breadth of services required in un-
conventional oil plays is evidenced in a 2014
Petroleum Services Association of Canada
study that reported the need for 45 or more
suppliers and up to 300 workers per well,
compared to 75 workers for a conventional
well. Horizontal drilling and hydraulic frack-
ing activity has increased demand for frack
operators; Class 1 and Class 3 drivers to haul
equipment and materials; and plant opera-
tors in charge of facilities that recycle water
used in drilling operations. Multiple well
pads and more technically advanced drill-
ing rigs require mechanical engineers and
technologists, instrumentation engineers
and technologists, and skilled tradespeople,
including welders, electricians, heavy duty
technicians and electronics/instrumenta-
tion technicians.
Manitoba Oil & Gas Review 2016 61
The surge in the U.S.’s domestic supply
of oil & gas has reduced demand for Ca-
nadian petroleum resources, prompting a
shift among Canadian producers to access
new offshore markets. The opportunities
afforded by Canada’s burgeoning liquefied
natural gas (LNG) industry also benefits the
midstream sector, which is experiencing
heavy investment in pipeline and facility
construction. New and retrofitted process-
ing plants will increase the need to hire
and train plant operators, and these mega
projects require the expertise of project and
construction managers, design and project
engineers, and supply chain and materials
management professionals. In addition,
given the pipeline sector’s aging infrastruc-
ture, there has been a growing demand for
pipeline integrity specialists.
“LNG is a new industry for Canada and
one that has very specific requirements,”
says Howes. “Other countries, including
Australia, have a lot more experience in LNG
development, and Canada can benefit from
expatriates who can come here and apply
their expertise.”
Issues surrounding the environment,
safety, and the impact of operations on sur-
rounding communities has added to the
growing complexity of oil & gas business.
“In the past, exploration projects were
located in more remote areas, but with
unconventional resources and pipeline de-
velopment, the industry is expanding into
new areas,” says Howes. “The need for more
negotiation and discussion has created
new occupations in regulation and com-
pliance, as well as stakeholder, community
and Aboriginal relations.”
More traditional roles in the oil & gas in-
dustry are giving way to new occupations
and the need to upskill the existing work-
force. Field technologists, for example, are
replacing workers who had a mechanical
aptitude and received on the job train-
ing. Growth in unconventional drilling has
decreased the need for wireline and slick
line services and, with fewer exploration
projects, the demand for seismic work has
decreased. The proliferation of walking
rigs has lessened the demand for workers
to dismantle and truck rigs between loca-
tions and the trend toward on-site water
recycling technologies will decrease the
need for trucked in water. Today’s HR re-
quirements, by contrast, include a greater
emphasis on supply chain management,
project and processing facility manage-
ment, contingent workforce management,
and professionals in regulatory roles and
stakeholder/Aboriginal relations.
“When we look at the labour market,
some of these new occupations are now
included in our forecasting,” says Howes. “In
May, we’ll also be launching an online tool
that will profile these emerging positions
and show people how they can transition
to these new occupations. Our goal is to
support workforce planners within the in-
dustry, but we also want to assist people
who want to develop new careers in oil &
gas.” v
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“ The most significant change in the oil and
gas industry from 10 years ago has been the
advances in technology.”
Carol Howes, Vice-President of Communications at PetroLMI, Enform
62 Manitoba Oil & Gas Review 2016
keystone xl controversy accelerates, enters u.s. court systeMBy Leonard Melman
Few subjects have garnered as much
media ink during the past couple
of years as the unlikely subject of
petroleum pipelines. Not only have
they become a subject of intense concen-
tration within the world of petroleum ex-
ploration, production and transportation,
but they’ve also infiltrated the highest lev-
els of public interest in political matters.
Perhaps the greatest degree of interest
in the subject of pipeline construction has
been the focus on one such endeavor: the
Keystone XL Pipeline project. As we enter
the early part of 2016, important headlines
continue to be made and rapt attention
continues to be paid to the project’s prog-
ress – or lack of same.
Keystone XL is a proposed massive pipe-
line extending almost 2,000 kilometres
(about 1,200 miles) from the prolific oil
sands of Alberta to Steele City, Nebraska,
where it would join up with existing pipe-
lines for transport to major refineries and
Gulf of Mexico shipping ports. The pipeline
would carry about 830,000 barrels of petro-
leum per day and would be constructed by
TransCanada Corp. Financing would be pro-
vided by that corporation, plus refineries
and oil shipping companies, which would
be recipients of the end product.
The matter is of vital importance to two
particular petroleum producing regions,
the economies of each one having pros-
pered mightily through previous petroleum
exploration, development and production.
The two regions are the province of Alberta
and the oil-rich regions of western North
Dakota, particularly including the Bakken
oilfields. In each case, these regions pro-
duce petroleum far in excess of their area’s
domestic consumption and therefore are
heavily dependent on transporting excess
production to various markets.
Few alternatives other than pipelines are
available to accomplish the necessary trans-
portation. Both regions are land-locked, so
marine tankers are unavailable; trucking is
a non-starter considering the quantities
of petroleum which must be transported;
and shipment via lengthy rail tanker trains
has been heavily condemned by environ-
mental and safety experts since the tragic
derailing of a lengthy oil tanker train in Lac
Megantic, Quebec in 2013, when the re-
sultant fire incinerated much of the town’s
downtown and tragically killed 47 people.
Some of the strongest arguments for the
project come from economists and those
politicians who strongly advocate resource
development, given that construction of
Keystone XL would result in 42,000 jobs and
completion of the project would permit
continued expansion of petroleum produc-
tion in both regions.
However, consistently strong opposition
to Keystone XL has arisen among environ-
mentalists, and their voices have strongly
impacted America’s political systems. Be-
cause those environmental voices are not
quite as potent in Canada as in America,
construction permits for the Canadian leg
of the pipeline were granted in 2010; but in
the U.S., much more powerful opposition
emerged. In fact, Keystone XL has even be-
come a major issue in this year’s American
presidential election.
At the same time Canada approved the
northern leg of the pipeline, it was anticipat-
ed America would grant similar approval, but
the Environmental Protection Agency (EPA)
strongly suggested that President Obama
not approve the project. He followed their
advice by verbally discouraging Keystone XL,
and finally in 2015, he took decisive action by
vetoing a Republican-led bill which would
have given the project final authorization.
Just prior to the president’s decision,
TransCanada Corp. asked the U.S. govern-
ment to simply put any review of the project
on hold.
Encouraged by the president’s action, the
environmental community stepped up their
attacks on the project, stressing two points
in particular. First, the route chosen through
Nebraska would pass through what they
regarded as a particularly fragile ecosystem,
which they wanted to protect. Second, they
declared that approval of the project could
be interpreted as tacit approval by the U.S.
government of expansion of production
from the Alberta oil sands, which they regard
as particularly “dirty” oil.
Matters finally came to a head on Novem-
ber 6, 2015, when the Obama Administra-
tion issued a formal declaration rejecting
TransCanada’s application to build Keystone
XL. Many believed the seven-year saga was
finally at an end as the president declared,
with apparent finality, that the pipeline, “…
will not serve the national interests of the
United States of America.” The State Depart-
ment also added that, in its view, the pipe-
line would not make a meaningful contribu-
tion to the U.S. economy.
Manitoba Oil & Gas Review 2016 63
TransCanada president and CEO Ross
Girling quickly replied in a positive manner,
stating simply that he continued to believe
that Keystone XL would be built and that
“TransCanada and its shippers remain abso-
lutely committed to building this important
infrastructure project.”
As reported by the CBC, reaction to
the president’s announcement was quite
predictable. Environmental organizations
were quick to heap glowing praise on the
president, while energy groups blasted the
president, declaring that his decision was
based more on political motivation than on
adherence to scientific fact.
However, one more dynamic develop-
ment remained and that took place on Jan-
uary 6, 2016 when TransCanada filed a $15
billion claim under Chapter 11 of the North
American Free Trade Agreement (NAFTA)
on the basis that the denial was “arbitrary
and unjustified”. The company also filed a
lawsuit in the U.S. Federal Court in Houston,
Texas asserting that the president’s decision
“…exceeded his power under the U.S. Con-
stitution.”
As this article is being prepared in Feb-
ruary 2016, matters are now winding their
way through the U.S. legal system. It’s worth
noting that, for many people, the stakes in
the eventual outcome of TransCanada’s
legal actions are vitally important, and
that several Republican candidates for the
U.S. presidency have staked out positions
strongly supporting of the pipeline’s com-
pletion. v
COURTESY OF TRANSCANADA CORP.
64 Manitoba Oil & Gas Review 2016
gearIng up to keep safe, Dry anD warM In the oIlfIelDBy Lisa fattori
From exposure to hazardous materials to the potential for
impact injuries, personal protective equipment (PPE) is de-
signed to minimize risk and offer another layer of protec-
tion for workers. Compliance with workplace safety regu-
lations extends to the use of PPE. Employers providing work wear
and gear are obliged to outfit employees with the appropriate
equipment for a particular task, and to train workers about the
proper use of the PPE. Employees, in turn, must use the equip-
ment in accordance with manufacturers’ specifications, take
steps to prevent damage to the PPE, and inform employers, if the
equipment becomes defective.
“PPE is seen as the last line of defense in keeping workers safe,”
says Dave Kramer, Portfolio Leader-Production, Manufacturing,
Agriculture, Forestry and Mining, SAFE Work Manitoba. “What
you want to see is a hierarchy of controls that engineer out the
hazards. This could be substituting a hazardous chemical for an-
other, or implementing administrative controls, so that the job is
performed properly within a particular environment. In the oil &
gas sector, PPE is very prevalent, with protective gear in eyewear,
flame-resistant clothing and equipment to protect workers from
contamination.”
Some commonly used PPE in the oil & gas industry include
hard hats, eye/face protection, hearing protection, steel-toe
safety footwear, gloves, flame resistant clothing and high-visibil-
ity clothing. Some work sites will have different procedures and
equipment, and may require specific types of PPE, such as respira-
tors. Manitoba’s Workplace Safety and Health Act may reference
a standard within a regulation, which makes that standard law.
Other standards are considered best practice, but are not legal
requirements.
With safety becoming increasingly important in the last de-
cade, many employers are equipping workers with PPE that goes
above and beyond regulations. “While flame-resistant clothing
is standard for oil & gas work sites, some companies want the
added protection of ARC flash and are ordering dual-approved
products,” says David Finlayson, North American Product Manager
for Helly Hansen Work Wear. “We’re also starting to see requests
for high-visibility clothing and flame-resistant base layers, as an
extra safety precaution. The overall interest in these products has
increased, which leads me to believe that people are adopting
safer practices in the oil patch.”
CAN-CGSB 155.20 Workwear for Protection Against Hydrocarbon
Flash Fire is the Canadian flash fire standard, while NFPA 2112 is the
U.S. standard. “There is no overseeing global body to regulate stan-
dards, but we’re starting to see a movement for North America to
come under one standard,” Finlayson says. “NFPA 70E for ARC Flash
is being accepted across the board, which is much better for larger
companies operating in multiple sites around the world.”
Manitoba Oil & Gas Review 2016 65
Manufacturers of PPE have long known the importance of
designing workwear that is as comfortable as it is protective, to
ensure compliance. Workers that are dry, warm and comfortable
stay focused, which improves personal safety, as well as produc-
tivity. An outer layer that is waterproof, windproof and thermal,
combined with base layers that transport moisture away from
the body to keep skin dry, help to maintain an even, comfortable
body temperature. A layered system offers flexibility, enabling
workers to add on or shed workwear so that they remain com-
fortable throughout a wide range of temperatures and weather
conditions.
“In the last 10 years, we’ve seen many improvements in the de-
sign of flame-resistant clothing, which is a change from the stan-
dard coverall, work shirt and work pant,” says Sara Olsen, Research
Analyst at Mark’s head office in Calgary. “Today’s designs are more
comfortable and look like regular clothing. Looking good and
feeling comfortable are important from a safety standpoint. If
people like what they are wearing, compliance increases consid-
erably.”
Key gear in the oil & gas sector includes self-contained breath-
ing apparatuses, which require clean-shaven faces for the equip-
ment to fit properly. If a worker isn’t prepared, a supervisor can
limit the worker’s access to a worksite. There are some reported
cases of supervisors keeping razors on hand to ensure that work-
ers are compliant. Proper fitting and comfortable gloves is anoth-
er safety regulation that some workers may consider less impor-
tant, but compliance is essential to avoid injury.
“The number one injury in the oil & gas sector is hand and
finger injuries,” Kramer says. “Wearing proper gloves is the one is-
sue that is the most challenging to address. If the gloves are not
comfortable, then workers will take them off. There has to be a
balance between protection and having the dexterity to do the
job. It’s important to have good communication between work-
ers and health and safety coordinators, so that people can try dif-
ferent models and find a pair of gloves that they like.”
A proper fit in protective eyewear is also a top priority, and bet-
ter access to optometry services is also helping to improve com-
pliance. In 2012, the Manitoba Association of Optometrists (MAO)
introduced an Occupational Vision Care (OVC) program that of-
fers company employees eye exams, and the fitting and dispens-
ing of prescription safety eyewear that meets the function and
safety requirements legislated in the workplace.
OVC buying power provides companies with the best value
and lowest product prices, and easy access to participating op-
tometrists throughout the province makes it simple to replace
scratched lenses, or lost or broken eyewear. If glasses aren’t com-
fortable or are scratched, workers are less likely to wear them and
run the risk of impact injuries, including metal foreign bodies and
injury from high-pressure spraying of materials, such as gravel. By
streamlining professional optometry services, the OVC program
helps to increase compliance in wearing protective eyewear.
“Before the OVC program, access to safety eyewear was limited
to maybe one location in a large city, which made it difficult for
workers to get the services that they needed,” says Michelle Geor-
gi, Chair of the OVC program for MAO. “The program is available
to every optometrist in Manitoba and currently about 80 per cent
of optometrists carry the kits. There are approximately 30 samples
of safety frames to choose from, and workers can go to the same
optometrist where they get their dressware glasses. According to
SAFE Work Manitoba, over the last 15 years, reported eye injuries
have gone down 50 per cent. Awareness and the availability of
safe eyewear is making a difference.” v
66 Manitoba Oil & Gas Review 2016
the nuMbers networkhOW CaPPa SuPPORtS PRODuCtIOn aCCOuntantS anD InDuStRy
By kylie Williams
Like so many great ideas, this one started over a pint.
In the early 1950s, two oil & gas production accountants,
Brian E. Smith and Ian Hartley, met for a drink to discuss
some of the issues they both faced in their similar roles.
Their gatherings quickly grew, and by 1955 a strong fellowship
of production accountants had formed to comfortably exchange
ideas and information.
In 1961, a group of eight founders wrote bylaws and applied
to become a society. The Canadian Association of Petroleum Pro-
duction Accounting (CAPPA) was born. Their application included
a vision for CAPPA; to educate its members, to keep its members
informed, and to provide opportunities for its members to network
and develop friendships.
The goals of the association remain similar today. CAPPA mem-
bership has now grown to over 1,000 oil & gas production accoun-
tants (PAs) and royalty accountants, and the professional association
offers an industry-recognized Certificate Program and numerous
opportunities for further education, advocacy and resources.
Gavin Schafer has been chair of the CAPPA board for three years
and in production accounting for 20 years. He explains that the pri-
mary goal of the association is to support its members and their
careers.
“We’re an open network for members to post job opportunities
and benefit from peer support. Current industry austerity measures
have led to job losses, so we’ve been an integral support system
for our members seeking career guidance and workshops,” Schafer
says.
His current role as manager of production accounting at Crew
Energy Inc. puts him at the centre of oil & gas accounting in Canada.
Calgary-based Crew Energy is a dynamic, growth-oriented explorer
and producer focused on development of their sizeable assets in
the Montney Basin in north east British Columbia, as well as some
small heavy oil properties in Alberta and Saskatchewan.
“The current low price environment, specifically on the oil side,
is very challenging for oil & gas companies. Producing at a certain
cost per volume and then selling it on a volatile market impacts
company budgets on a weekly to monthly basis, as opposed to
quarterly to yearly. This poses significant challenges for govern-
ments striving to maintain their budgets, given that industry royal-
ties make up a major part of their revenue,” explains Schafer.
It is oil & gas PAs who keep track of these numbers. They combine
accounting and data analysis skills, and a thorough knowledge of
oil & gas regulations, with the requirements to report revenue and
royalties.
Joe Chan, a CAPPA-certified PA who works as supervisor of pro-
duction accounting at Crescent Point Energy Corp, explains, “A pro-
duction accountant performs monthly tasks of gathering, analyz-
ing, interpreting and reporting production data into a specialized
Manitoba Oil & Gas Review 2016 67
accounting system. We are able to work collaboratively with field
staff and team members to accurately report financial data like rev-
enues, volumes and payment of royalties.”
The information needed to produce these monthly reports
comes from a range of sources, including field sites, land managers,
joint-venture analysts, marketing and financial departments. The
data is critical to company operations, management and financial
reporting, so it’s vital that the people juggling these numbers are
trained and certified.
“The data that’s collected on behalf of government regulators
is generated and submitted by production accountants. There is a
vested interest in making sure those people are well trained and
know what they’re doing,” says Schafer, who has been an instruc-
tor for the CAPPA Oil and Gas Production Accounting Certificate
program for over 10 years.
Practicing PAs can take the certification course full-time at Mount
Royal University and Southern Alberta Institute of Technology
(SAIT) Polytechnic, or via distance education online.
“The CAPPA course helped me gain the basic framework and
background required to understand my daily work. It led to a bet-
ter understanding of the industry’s standards and assisted in my
daily responsibilities as a production accountant,” says Chan, who
obtained his CAPPA certification from SAIT in 2005.
In response to student and industry feedback and the changing
regulatory front, a three-year project to redesign the course curricu-
lum is currently underway.
“We’re just over one year in and we are excited with the prog-
ress,” explains Sheila McFadyen, who was appointed as CAPPA’s first
CEO in January 2014. “In addition to providing an updated and ex-
panded program, we are structuring our courses to provide a more
dynamic, interactive technology-based style for the students. We
are also providing new, continuous-learning opportunities, includ-
ing webinars for distance students.”
Under McFadyen’s leadership in recent years, CAPPA has rebrand-
ed and rejuvenated their website, logo, offerings and advocacy. The
association has embarked on a new chapter and looks forward to
moving back into better economic times with their membership.
Typically, when there’s a downturn, people will take the time to
upgrade and hone their skills with courses like the CAPPA certifi-
cate. But this time around, observes Schafer, it seems to be a deeper
cut and the uncertainty in the industry is a disincentive to invest in
that training.
Canadian producers have been rocked by falling oil prices and
competition with other countries, including the United States. The
questions surrounding the approval and construction of pipelines
from the land-locked provinces of Alberta and Saskatchewan cre-
ates further uncertainty. During downturns like these, PAs face job
insecurity like all professions in the oil & gas industry.
“When they come to start cutting costs, companies may see
production accounting as something that can be outsourced and
offshored. Production accountants provide too much value being
on site and in the office here, closest to production. They need to
be talking to the field, they need to be engaged with the engineers
in-house. We’re very much the hub of information,” says Schafer.
PAs are the first point of contact for records of the oil & gas vol-
umes and emissions necessary for robust environmental regula-
tion too. In May 2015, the Saskatchewan Ministry of the Economy
(ECON) announced plans to update and modernize oil & gas mea-
surement and reporting requirements to align with the existing
systems in neighbouring Alberta. ECON is rolling out an Enhanced
Production Audit Program (EPAP) in Saskatchewan with the new
requirements coming into effect in April 2016.
“We’ve been executing EPAP on the Alberta side for about four
years and Saskatchewan will have adopted many of the same re-
quirements. Industry should be familiar enough with it to effec-
tively implement on the Saskatchewan side. It definitely should be
seen as a positive thing,” says Schafer, who is confident the transi-
tion will go smoothly.
The value that oil & gas accountants provide to the petroleum
industry cannot be understated, particularly during challenging
times when regulations, oil prices and the industry itself are chang-
ing so rapidly. Many PAs are looking outside the industry as con-
ditions continue to destabilize, but those who remain continue to
support each other, perhaps over a pint, as the founders of CAPPA
envisioned 55 years ago.
For more information, visit www.cappa.org. v
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Gavin Schafer, chair of the CAPPA board
68 Manitoba Oil & Gas Review 2016
traInIng opportunItIes prepare workforce for new trenDs In the oIl & gas sectorBy Lisa fattori
Despite the downturn in the oil & gas industry, Manitoba
is faring better than other oil-producing provinces.
Manitoba’s Labour Market Occupational Forecasts
reports that employment in the resources sector de-
creased by over six per cent in Canada, but by only three per cent
in Manitoba, between 2014 and 2015. In the oil & gas sector, further
job contraction is expected for 2016 – a trend that will slow over
2017 and 2018, and then reverse in the following two years with
the creation of new jobs.
A slower economy provides producers with the opportunity to
improve efficiencies and prepare their workforces for the even-
tual upswing in the market. According to Apprenticeship Mani-
toba, registered apprenticeships have more than doubled in the
last nine years, with a reported 10,971 apprenticeships in March
2015. In oil & gas-related skilled trades, top apprenticeships are for
Steamfitter-Pipefitter; Bas Turbine Repair and Overhaul Technician;
and Boilermaker. Heavy Duty Equipment Technician and Rig Tech-
nician apprenticeships are also available.
Launched in 2013, the Harmonization Initiative is aligning ap-
prenticeship training across Canada by streamlining training re-
quirements in the Red Seal Trades. Work to harmonize 10 trades
is almost completed and another eight are currently undergoing
interprovincial consultation to develop more consistent training
requirements. The goal of harmonization is to support the mobility
of apprentices, foster higher completion rates, and enable employ-
ers to access a larger pool of apprentices.
“With harmonization, technical training is paced the same across
Canada, so that workers can move from province to province and
have met the same standards,” says Jamie Carnegie, Manager of
Corporate Services and Special Projects at Apprenticeship Mani-
toba. “Colleges already update their programing regularly, and the
new curriculum will incorporate the harmonized technical train-
ing.”
A new certified occupations act is also providing better train-
ing and skills development for Manitoba workers. Passed by the
Manitoba legislature in May 2015, the act prepares new entrants
to specialized jobs, enabling them to receive certification in their
occupations from on-the-job training, as well as classroom train-
ing from accredited providers. The first occupation to be certified
under the act is commercial truck drivers, a sector that is key to
servicing the province’s oil & gas industry.
“The certified occupations act applies to professions that don’t
fit the traditional apprenticeship model,” Carnegie says. “Truck driv-
ers do a lot of hauling of dangerous materials. Companies can look
for this qualification and know that they are hiring a driver who
has been validated to a certain level of rigor. Certification benefits
companies using these services and the professionalization of their
occupation makes drivers more marketable.”
Within the oil & gas industry, building and maintaining pipe-
lines is a specialized skill that requires expertise in transportation
logistics, equipment operating, pipe trades and craft labour. On its
website, the Pipeline Contractors Association of Canada (PLCAC)
offers a series of short videos that outline the career opportunities
within the pipeline sector, and the Association helps interested
candidates by directing them to the appropriate training facilities.
“The mainline pipeline sector employs a huge number of work-
ers; a single pipeline spread will require 700 workers, so we have
about 5,000 to 6,000 people working in the field a year,” says Neil
Lane, Executive Director of PLCAC. “People who call in to our office
are showing the most interest in apprenticeships in welding and
operating equipment, which are two of the highest paying trades.”
While PetroSkills has provided oil & gas training for 15 years, the
2014 purchase of Research Development Company expanded
the company’s course offerings to include e-learning products.
Manitoba Oil & Gas Review 2016 69
PetroSkills e-learning programs include ePilot and ePetro libraries,
which enable companies to customize learning curricula to meet
the needs of workers. The ePilot online learning for Operations and
Maintenance is geared to facility operators, offering over 1,000
hours of content and unlimited access to the ePilot library. The pro-
gram provides pre-testing to identify knowledge gaps, and post-
testing to verify learning. Training is self-paced, using web-based
technology, and content can be customized.
“The trend now is to incorporate eLearning, which saves em-
ployers a lot in time and money,” says Lori Koran, Solutions Market-
ing Specialist for PetroSkills/RDC. “You don’t have to pull people off
of the job and reserve class time to train a group of employees.
Recently, we’ve had a lot of interest in blended programs, which
is a mix of online and instructor-led training that is delivered virtu-
ally. With the low price of oil right now, companies are tightening
their belts and don’t have the budgets to send employees away
for public course training. E-learning and virtual instruction can be
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presIDentIal electIon year 2016 lIkely to be fIlleD wIth surprIsIng DevelopMentsBy Leonard Melman
76 Manitoba Oil & Gas Review 2016
Manitoba Oil & Gas Review 2016 77
These are indeed difficult times for the world of petro-leum and natural gas in both Canada and the U.S.A. as the number of problems created by falling prices and declining industry activities is beginning to have a seri-
ous impact on many areas which only recently had been enjoying true boom times.
Alberta and Saskatchewan are excellent examples. It wasn’t too long ago that the corridor from Calgary to Edmonton and up to the rapidly-growing community of Fort McMurray was widely re-garded as one of the most prosperous regions on earth. Then the industry came face-to-face with price collapses for both crude oil and natural gas.
Crude oil plunged in a spectacular manner from a relative peak of US$112 in mid-2013 all the way down to below US$30 per bar-rel in January 2016, while natural gas suffered through declines from above US$6.50 per contract (10 billion British thermal units) in early 2014 to below US$2 per contract in late December 2015.
As a result of these declines, many projects that had been very profitable suddenly found that revenues had fallen below their production costs and, unable or unwilling to sustain losses, they began to reduce or even cease operations. At the same time, many exploration and development projects which had previ-ously been able to attract investment financing suddenly found those sources had dried up – and many such projects were put on care and maintenance or entirely abandoned.
The effects of these pullbacks on previously prosperous areas have been significantly negative.
In Alberta, famous for relentless growth of oil sands recoveries, the news has taken on an ominous overtone. Waves of newcom-ers to the province are now unable to find work and are return-ing home. Apartments and condominiums are being abandoned in cities like Fort McMurray. The Alberta government reported that recent job losses are the worst since the recession of 1980. Moody’s Investors Service recently indicated it was placing many Canadian oil companies under review for downgrading of their debt.
The situation is also turning bleak for those areas of southern Saskatchewan involved in exploration, development and produc-tion of oil within the northern regions of the Bakken deposit. In early February, Saskatchewan Premier Brad Wall reported that a deficit during this fiscal year was very likely and that it would be difficult going forward to maintain the government’s programs. He pointed to “falling resource revenue” as an important source of the province’s fiscal difficulties.
North American problems associated with falling energy com-plex prices are hardly limited to Canada, as several areas within America are also being hit hard with North Dakota – primary home of the Bakken discovery – feeling particular pain. State Governor Jack Dalrymple reported in late January 2016 that state revenues would fall by more than $1 billion this year and state agency budgets would face deep cuts. Williston, the epicentre of Bakken activity, has gone from boom to bust in short order with lengthy lineups each day at the city’s job center. One-bedroom apartments that used to rent for $2,000 per month are now sit-ting empty.
78 Manitoba Oil & Gas Review 2016
In addition to North Dakota, states such as Colorado and Texas, both heavily involved in petroleum recovery via the controversial method known as fracking, have likewise seen prosperity quickly evaporate like water in the hot Texas sun.
Given this difficult situation and the array of problems the in-dustry is facing, some are now turning more than ever toward government action to help provide meaningful assistance; but in fact, many others within the industry believe that government it-self might be a source of new difficulties given the powerful influ-ence of the environmental community.
Despite the evident problems, concerns relating to government policies continue to mount, including taxation; climate change; cap and trade; pipeline non-approvals; water purity; promotion of alternative energy sources; and continued land set-asides.
And now another vital ingredient is in place – the reality that 2016 is a presidential election year for America and the stated energy-related policy preferences of many of the candidates in both parties contain sharp differences. Accordingly, candidate statements on this topic are truly worthy of note.
In the Republican Party, three candidates have emerged from the pack following the initial round of primaries. Those candidates are Senator Ted Cruz, Donald Trump and Ohio Governor John Ka-sich. Each one has issued policy statements regarding petroleum development.
Ted Cruz: Senator Cruz has given several indications that he is a strong supporter of the petroleum industry. He has come out strongly against cap-and-trade legislation, declaring that this measure, which would add considerably to industry and con-sumer costs, would “weaken the nation’s global competitiveness with virtually no impact on global temperatures.” He has argued against government set-asides which would prevent oil explora-tion and development over wide areas.
In addition – and in line with an expressed goal of reducing general government interference in commerce – he has specifi-cally come out against excessive government regulations, stat-ing he would attempt to “stop costly new regulations that would increase unemployment, raise consumer prices and weaken the nation’s global competitiveness...”
On the issue of the Keystone XL pipeline, Cruz has spoken strongly in favor of the pipeline’s completion and co-sponsored Bill S2280, a bill to approve the Keystone XL Pipeline. (The bill sub-sequently passed but was vetoed by the President.) He also co-sponsored Bill S2181, which called for a prohibition on the adop-tion of any new Environmental Protection Agency regulations until a final cost-impact analysis had been completed.
Donald Trump: Candidate Trump has openly questioned the science behind the “human-caused global warming” concept. During a Fox News interview in 2014, he declared the concept to be a “hoax”. He has also stated that many of the suggested rem-edies, such as the widespread use of wind turbines, to actually be “an environmental and aesthetic problem.”
Like Cruz, Trump has also spoken out against cap-and-tax laws, stating that they would force Americans to “face ever-increasing (petroleum) prices.” He heaped scorn on President Obama’s oppo-sition to Keystone XL, calling the President’s rejection “disgraceful.”
In regard to the Keystone XL project, the San Antonio Business
Journal noted that “Trump is in favor of the Keystone XL Pipeline, which would run from the tar sands oil region of Canada to the Houston and Port Arthur areas.”
John Kasich: Kasich also has taken a stand against excessive environmental regulation by voting “no” in 2000 on an amend-ment that would have allowed full implementation of the inter-national Kyoto protocol of 1997. He has also been a strong sup-porter of Keystone XL and sharply criticized President Obama for his decision to terminate the project. However, he has taken some heat from the petroleum industry for favoring a sharp increase in taxation when recoveries take place through the fracking process.
While several candidates dropped out of the race by early spring, some of their industry-related comments show generally strong support among Republicans for petroleum exploration and development.
Senator Marco Rubio has been quoted regarding climate change that he would not do anything which would make “Amer-ica a harder place for people to live, to work or to raise their fami-lies.” He has been quoted by ABC News as declaring that he does not believe humans are responsible for current climate trends but rather believes that climate has always been changing and has never been static. As a result, he is opposed to the complex regu-lations being proposed which would control vast areas of human activity.
Rubio also strongly opposes cap-and-trade schemes. During his 2010 senatorial campaign, he stated, “As a U.S. Senator, I would oppose a national energy tax on American consumers, farmers and business owners. At a time when our economy is struggling, a cap-and-trade scheme would further strain family budgets and destroy jobs.”
Ben Carson declared his antipathy to government domination in general by stating, “I have concluded that the best policy is to get rid of all government subsidies, and get the government out of our lives and let people rise and fall based on how good they are. It goes back to the concept of regulations. Every regulation costs in terms of goods and services.”
Senator Rand Paul of Kentucky would also strive to cut govern-ment down to size. He recommends that “cutting the red tape and encouraging energy freedom, new technologies and discoveries will be a priority in my administration.” He also favors free-market competition, developing mineral and energy resources on public lands and completion of the Keystone XL pipeline.
On the Democratic Party side, only Hillary Rodham Clinton and Vermont Congressman Bernie Sanders remain as viable can-didates for the Democratic Nomination. Both appear to favour strong environmental regulation.
Manitoba Oil & Gas Review 2016 79
Hillary Clinton: During a 2015 broadcast of a CNN debate, Clinton stated her opposition to the Keystone XL pipeline by noting, “I now oppose Keystone, but I withheld opinion at first.” Regarding energy markets, she stated that a Clinton admin-istration would “go after energy traders and speculators.” She would also use government to investigate high gas prices when they occur.
In point of fact, Clinton has made few definitive statements regarding petroleum over the past few years, causing the Na-tional Journal to discuss her energy issue statements in this manner:
“At the same time, there is genuine sense of uncertainty about the front-runner, who has yet to offer detailed energy policy positions.” There was some hope among oil industry leaders that Clinton would be more open to their cause than President Obama, but Clinton recently supported Obama’s Keystone XL decision.
Bernie Sanders: Representative Sanders is the most avowedly leftist of all the important candidates and, in fact, has
described himself as a democratic socialist. As such, it is not sur-prising that he describes his commitment to climate change legislation as “very advanced”. He has issued statements describ-ing climate change as a moral matter, he advocates a tax on car-bon, and he opposes Keystone XL.
Sanders recently made the sharply partisan statement that “the fossil fuel industry is funding the Republican Party”, and he has made no secret of his advocacy of moving away from fossil fuels and toward sustainable energies. In a June 2015 statement, he defined those sustainable energies as wind, solar, geother-mal, and biomass, among others.
Many observers agree that in general, the positions espoused by the Republican candidates appear to be in closer conformity to the goals of petroleum developers and producers than those of the two leading Democrats, who indicate they are in agree-ment with the environmental movement’s goals and with the concept of using government’s regulatory powers to advance those objectives.
It should be fascinating for the world of petroleum to follow the presidential race as it progresses through 2016.v
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