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MARCH / APRIL • 2014

MARCH / APRIL • 2014 DRILL BITS Discovery Channel Canada portrays life in the patch in

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Utica Shale Unconventional resources abound in the play south of the border

Top Drives Operators get technical as the shift in rigs turns to safety and efficiency

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The official publication of the Canadian Association of Drilling Engineers MARCH/APRIL • 2014
The official publication of the Canadian Association of Drilling Engineers MARCH/APRIL • 2014
The official publication of the Canadian Association of Drilling Engineers MARCH/APRIL • 2014
The official publication of the Canadian Association of Drilling Engineers MARCH/APRIL • 2014

The official publication of the Canadian Association of Drilling Engineers

The official publication of the Canadian Association of Drilling Engineers MARCH/APRIL • 2014

MARCH/APRIL • 2014

The official publication of the Canadian Association of Drilling Engineers MARCH/APRIL • 2014

The mandate of the Canadian Association of Drilling Engineers is to provide high-quality technical meetings and to promote awareness on behalf of the drilling and well servicing industry. With more than 500 members from more than 300 companies, CADE represents a broad spectrum of experience in all areas of operations and technologies. Through CADE, members and the public can learn about the tech- nical challenges and the in-depth experience of our members that continue to drive the industry forward. For drilling and completions specialists, CADE currently offers one of the best networking and knowledge sharing opportunities in the Canadian petroleum industry.

canadian assOciatiOn OF driLLing engineers 1100, 540 - 5 Avenue SW Calgary, AB T2P 0M2 Phone: 403-532-0220 Fax: 403-263-2722 www.cadecanada.com

President: Jeff Arvidson Past President: Robert Jackson WeLL cOnstrUctiOn JOUrnaL editOr: Christian Gillis

WeLL cOnstrUctiOn JOUrnaL is PUBLisHed FOr CADE BY VentUre PUBLisHing inc. 10259 105 Street Edmonton, AB T5J 1E3 Phone: 780-990-0839 Fax: 780-425-4921 Toll Free: 1-866-227-4276 circulation@venturepublishing.ca

PUBLisHer: Ruth Kelly assOciate PUBLisHer: Joyce Byrne directOr OF cOntract PUBLisHing: Mifi Purvis Managing editOr: Shelley Williamson art directOr: Charles Burke assOciate art directOr: Andrea deBoer assOciate art directOr: Colin Spence PrOdUctiOn Manager: Betty Feniak Smith PrOdUctiOn tecHnicians: Brent Felzien, Brandon Hoover circULatiOn cOOrdinatOr: Karen Reilly accOUnt execUtiVe: Anita McGillis

cOntriBUting Writers: Robin Burnet, Graham Chandler, Christy Nich, Ryan Van Horne

Robin Burnet, Graham Chandler, Christy Nich, Ryan Van Horne PRINTED IN CANADA BY ION PRINT SOLUTIONS.
Robin Burnet, Graham Chandler, Christy Nich, Ryan Van Horne PRINTED IN CANADA BY ION PRINT SOLUTIONS.

PRINTED IN CANADA BY ION PRINT SOLUTIONS. RETURN UNDELIVERABLE MAIL TO 10259 105 ST. EDMONTON AB, T5J 1E3 CIRCULATION@VENTUREPUBLISHING.CA PUBLICATION MAIL AGREEMENT #40020055 CONTENTS © 2014 CADE. NOT TO BE REPRINTED OR REPRODUCED WITHOUT PERMISSION.

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12
DEPARTMENTS 4 President’s Message 6 tHe draWing BOard Editor’s note, member’s corner, news and notes,
DEPARTMENTS
4
President’s Message
6
tHe draWing BOard
Editor’s note, member’s
corner, news and notes,
technical luncheons
10
st Udent P rOF iL es
17
M e MB er P r OF i L e
24
BY tHe nUMBers
26
driLLing deePer
20
cOVer: Kelly Pelsma stars in
Discovery Channel’s Licence to Drill
Photo courtesy of Pixcom
18 FEATURES 12 tHe Utica sHaLe PLaY With a fracturing moratorium in Quebec, it’s an
18
FEATURES
12
tHe Utica sHaLe PLaY
With a fracturing
moratorium in Quebec,
it’s an all-American action
18
Less dOW nti M e, M O re s a F et Y
The latest in rig advances
boost operational efficiency,
upgrading to meet the
challenges of today’s industry
20
POetic Licence
Discovery Channel Canada
dips into drill site operations
for a fourth season
22
OiL is WeLL
Making the shift from natural
gas to conventional oil makes
sense – for now

www.cadecanada.com

march/april 2014

President’s MESSAGE World-Class Standing Canada leads the pack in the oil and gas industry for

President’s

MESSAGE

President’s MESSAGE World-Class Standing Canada leads the pack in the oil and gas industry for so
World-Class Standing Canada leads the pack in the oil and gas industry for so many
World-Class Standing
Canada leads the pack in the oil and gas industry for so many reasons
Am writing this just As the winter
I
Olympics are coming to a close, and Canada
has taken home four gold medals in hockey
and curling. These victories got me thinking
Jeff Arvidson
CADE President
about some of the ways Canada is not only the
best place in the world to live, but also such a great
place to be in the oil and gas industry.
First, opportunity abounds. One thing I’ve
always loved about the Canadian well construc-
tion industry is that is doesn’t matter who you are
or where you came from. If you are trustworthy,
conscientious and hardworking, you will be well
paid and have many opportunities for advance-
ment, regardless of your background. Of course
the reverse is also true, if you prove yourself to
be dishonest, or risk the safety of others, you
will find yourself shown the door in relatively
rapid fashion.
Second, it’s a level playing field. The regulations
and laws are well-defined and publicly available,
and they are the same for everyone. In some coun-
tries, as we all know, this is not the case. In those
places, connections and side deals are the only real
route to timely development.
Additionally, all stakeholders have input on
the approval process. The Canadian regulators
do an amazing job of ensuring that the concerns
of local communities, landowners and residents
are heard and considered in the project approval
decisions. Also, the regulators must consider the
potential impact on the environment, and weigh
all of these against the economic drivers for both
the project applicant and the owners of the re-
source (the public). It’s an incredibly difficult job
with many priorities that must be balanced. We
have a truly world-class system and group of pro-
fessionals that are shaping development to protect
the environment and stakeholder interests.
Third, workers are protected. The Occupational
Health and Safety Code ensures we all are provided
with the tools, processes and equipment to carry
out our duties safely. Worker safety is not optional.
I’m sure we have all seen the pictures of rigs work-
ing in third world countries – iron that should be
in the scrap heap, no protective equipment, fluid
releases, and so on. If you’re like me, one look at
those pictures is enough to make you shudder. I’m
thankful that we have clear codes and standards
that we, as professionals, can point to and utilize
to ensure our work sites are safe.
Fourth, the securities market, banking system
and private investors are open to entrepreneurs
looking to launch a business, whether that is in oil
and gas exploration, materials or services. A solid
track record and a good business plan are often
enough for a talented individual to get a start. This
is so important for innovation, as many of the dis-
ruptive technologies of the past have come from
small- and medium-sized businesses.
Canada is truly among the best in the world at
all of these categories, and when one also consid-
ers the freedom and security we enjoy, there is no
other way to look at it than to say that we are truly
fortunate to be in this industry in this country.

march/april 2014

Well Construction Journal

say that we are truly fortunate to be in this industry in this country.  march
Connect with Canada’s Drilling Industry If you have products or services that demand the attention
Connect with Canada’s Drilling Industry If you have products or services that demand the attention
Connect with Canada’s Drilling Industry If you have products or services that demand the attention
Connect with Canada’s Drilling Industry
If you have products or services that demand the
attention of the drilling industry and want to reach this
key market, Well Construction Journal provides a unique
forum to access almost 100% of the drilling industry’s
key decision makers. For the first time, Well Construction
Journal is accepting external advertising – a new
development that offers suppliers unprecedented access
to this target market.
To receive a media kit or to book your advertising, contact:
Kathy Kelley, Venture Publishing
Telephone: 780.990.0839 (265)
Email: kkelley@venturepublishing.ca
The Drawing BOARD EDITOR’S NOTE There’s Still Work To Be Done T SEEMS LIKE WE
The Drawing
BOARD
EDITOR’S
NOTE
There’s Still Work To Be Done
T SEEMS LIKE WE WERE JUST TALKING ABOUT THE BUSY
I
winter ahead of us and all the work that needed to be
done to get through our busy season. Although, the
wind chill temperatures had dipped below the -50˚C
mark in some areas in early March, by the time this jour-
nal has arrived on your desk, we will be into breakup and
everyone can let their hair down and take a well-deserved
rest. Although peak levels have not been as high as they had
been six or seven years ago, the industry ran pretty close to
flat out from southeast Saskatchewan to northeastern B.C.
Even now going into breakup, there are still the companies
trying to squeeze in those last minute projects and wells. It
is this time of year however, when we have to be aware that
even though it was a long and cold winter we still must be
diligent until the job is done. It seems that at this time of
year, we start to lose our focus, as the job is almost done
and people are thinking of spring getaways with the family
or that round of golf with the guys. We have to realize that
until the equipment is shut down and everyone has gone
home safe and sound we must keep our focus and make sure
that everyone does get home safe and sound.
Our 2014 Technical Luncheon presentations are continuing
through the spring. Please watch for email announcements
and check the website for upcoming topics and dates.
Please don’t hesitate to contact us if you have any
ideas for upcoming topics or issues you’d like to see
presented at the luncheons or in print. We are also
looking for topics that tie into our journal focus for
each month. We hope to see more of this during the
course of the year. We hope you, the membership, will
participate and continue to make these events interest-
ing and successful. If you have any issues you’d like to
see covered, please email me and we will do our best to
get the story.
Don’t forget, we would like to publish any of your
information and announcements on new products,
new technologies and senior personnel changes for
publication each month. Please forward any announce-
ments to us, as we would be excited to run them in our
new feature section.
We appreciate your continued support and look for-
ward to seeing you at the upcoming luncheons.
CHRISTIAN GILLIS, Editor
Canadian Well Construction Journal
christiang@hawkeyeengineering.ca
403-265-4973
EXECUTIVE
TEAM
CADE Executive
Team 2013/2014
President
Jeff Arvidson
403 232-7100
Past President
Bob Jackson
403 615-9504
Secretary
Tammy Todd
403 613-8844
Technical Chair
Ryan Richardson 403 984-6644
Membership Chair
Andy Newsome
403 532-0220
Education Chair
Linden Achen
403 539-9338
Social Chair
Dan Schlosser
403 531-5284
WCJ Editor
Christian Gillis
403 265-4973
Sponsorship & Marketing
IT Chairperson
Christy Delaney 403 828-0844
Matt Stuart
403 605-3790
Administrator
Kali Charron
403 532-0220

6 march/april 2014

Well Construction Journal

Matt Stuart 403 605-3790 Administrator Kali Charron 403 532-0220 6 march / april 2014 Well Construction
MEMBER’S CORNER Welcome NeW members Why become a caDe member? Gary aGuilar Frank antolovich raid
MEMBER’S
CORNER
Welcome NeW members
Why become a caDe member?
Gary aGuilar
Frank antolovich
raid attir
douG BoBrosky
nicholas vanden Brand
kailash chhetri
camillo cortes
Byron caldwell
mansour djarou
cache doolaeGe
david Ford
kristen Freund
reda Gayed
john john
craiG jones
kan kouame
rohit karmakar
reGinald larBi
Zuhal mahammad
john macdouGall
trent marx
lynn nGuyen
charles naBors
noni naBors
adetona owolawi
john Pahl
sean Parker
vijay rathod
sean reardon
ZhanG sandra
mitch schinnour
mahasin shaikh
katherine stasiuk
wan tinG tanG
PaBlo toy
ahmed tunnish
roBert turley
mark wessley
imran yousaF
dean yuill
ZonG shuanG ZanG
As of 2013, the Canadian Association
of Drilling Engineers (CADE) has been
active for 38 years. With more than
500 members from more than 300
companies, CADE represents a large
spectrum of experience in all areas of
operations and technologies.
For drilling and completions spe-
cialists, CADE currently offers one of
the best networking and knowledge
sharing opportunities in the Cana-
dian petroleum industry. The skills and
knowledge obtained by your participa-
tion in CADE will benefit you and your
employer, with direct application to
your professional career.
CADE offers various means for
members to connect and share
their insights. Monthly technical
luncheons are held with topical
industry presentations. Other mem-
bership benefits include our monthly
publication Well Construction Journal
and a membership directory, which
is the who’s who of the Canadian
drilling industry.
Our website – cadecanada.com –
is an excellent focal point for industry
events, blogs and other news. We are
also active on LinkedIn and Twitter.
are available to any post-secondary
student interested in learning more
about drilling and completions.
Please feel free to share information
about CADE with all the people in your
organization who are interested in the
drilling and completions industry.
caDe membership reNeWals
CADE’s membership year is from
September to September. During the
summer, CADE members will receive
an email and link for the renewal pro-
cess on our website.
Please remember the benefits of be-
ing a CADE member include APEGA’s
professional development hour, stay-
ing abreast of technological and in-
dustry advances, drilling conferences
and a great opportunity to network.
Thank you for your support.
caDe membership chaNges
Log on to cadecanada.com to be-
come a member or to update your
contact information.
Who caN become a caDe member?
CADE members can be anyone em-
ployed in the drilling and completions
industry or anyone who is interested
in the industry.
Typical members include drilling
and completions engineers, geologists,
technical personnel, sales personnel
and students. Student memberships

www.cadecanada.com

march/april 2014

The Drawing BOARD NEWS AND NOTES TransCanada Corp’s Keystone XL project hits a hurdle in
The Drawing
BOARD
NEWS
AND
NOTES
TransCanada Corp’s Keystone XL
project hits a hurdle in Nebraska
While
it
looked
as
though
transCanada
Corporation’s proposed Keystone XL pipeline might
gain some momentum early this year, a judge in
Nebraska has placed another hurdle in the way of
the
much-anticipated cross-border project.
Nebraska Governor Dave Heinman had passed
a
law in early 2013 that would have allowed the
pipeline to traverse that state’s private land without
the
permission of landowners, but in recent weeks,
district judge has quashed that legislation on con-
stitutional grounds.
Lancaster County Judge Stephanie Stacy said the
move to strike down the law was not based on the
a
merits of the pipeline, but instead the state’s con-
stitution. Now Calgary-based TransCanada Corp.
might have to seek permission from each affected
landowner in Nebraska – unless a higher court steps
in to reverse the ruling.
TransCanada has settled with landowners in five
of six U.S. states through which the pipeline is to
pass – including two-thirds of Nebraska’s affected
landowners – offering up to six times the property’s
original price.
The result of the latest setback is that Keystone
XL
could be up in the air indefinitely, even with
the
go-ahead for the pipeline to cross the border
from U.S. President Barack Obama, which had been
expected to come as early as this spring or summer.
This comes on the heels of a U.S. State Depart-
ment environmental impact statement (EIS) in Jan-
uary that seemed to lean in favour of the proposed
1,897-kilometre crude oil pipeline stretching from
Hardisty, Alberta, south to Steele City, Nebraska.
Following the January 31 report, which concluded
the project would result in no significant increase
in carbon emissions, the State Department has 90
days to review before making the final ruling on
Keystone XL.
In the wake of the EIA, TransCanada president
and chief executive officer Russ Girling said the
key focus would be making the pipeline as safe
and technologically advanced as possible.
“No other company has agreed to operate with
all the additional safety and operating procedures
that TransCanada has,” he said. “That speaks
volumes to our commitment to minimizing the
impact of our pipeline, and ultimately to the
environment and communities it will operate
through.”
If greenlit, the pipeline will have capacity to
move 830,000 barrels of oil per day to Gulf Coast
and Midwest refineries, reducing American de-
pendence on oil from Venezuela and the Middle
East by up to 40 per cent. It is also touted to have
the ability to support 42,100 direct, indirect and
induced jobs and up to $2 billion in U.S. earnings,
and contribute an estimated $3.4 billion to the
U.S. gross domestic product.
The pipeline’s southern leg is already up and
running, but requires oil to be shipped by rail from
Alberta through the northern U.S. before in can
travel by pipeline to Gulf of Mexico refineries.

march/april 2014

Well Construction Journal

U.S. before in can travel by pipeline to Gulf of Mexico refineries.  march / april
NEWS AND NOTES
NEWS
AND
NOTES

Nations reach deal on Dover project

Calgary-based brion energy has reaChed a deal with Fort

McKay First Nation that will allow a 250,000-barrel-a-day oil sands project to go ahead. The deal was announced February 21 in a joint release from Brion and Fort McKay, which also stated the band would drop its court appeal of the Dover Commercial Project that was filed in response to a regulatory approval by the Alberta Energy Regulator (AER). Few details were given as to the nature of the agreement between the two parties, which was signed in the Fort McMurray area by Zhiming Li, Brion president and chief executive, and Chief Jim Boucher of Fort McKay. “As good neighbours, Brion is committed to developing the lease in an environmentally sound manner, while delivering social and economic benefits for the local community,” said Li in the news release. “Reaching this agreement with Brion shows it’s possible to protect our traditional territory while partnering with those who work in the area,” said Boucher in the same disclosure. Brion’s in situ project, which has the potential to produce 4.1 bil- lion barrels of bitumen, was approved by the AER last August after rejecting the band’s request for a 20-kilometre no-development zone near its Moose Lake reserve lands, and is awaiting Order in Council. The McKay First Nation then filed an appeal, saying the AER had failed to consider its constitutional treaty rights in its decision, which Alberta Court of Appeal had agreed to hear this March. The AER approval went to cabinet for endorsement, but has remained stagnant as yet.

Chief Jim Boucher of Fort McKay Photo: Patrick Kane
Chief Jim Boucher of Fort McKay
Photo: Patrick Kane

Brion, a joint operating venture of Athabasca Oil Corp. and Phoe- nix Energy Holdings, hopes to produce 400,000 barrels a day from the MacKay River and Dover oil sands assets by 2025.

TECHNICAL LUNCHEONS
TECHNICAL
LUNCHEONS

Luncheon Tickets

MEMBERS:

$47.50 (plus GST)

NON-MEMBERS:

$55 (plus GST)

FULL TABLES OF 10:

$475 (plus GST)

STUDENT:

$20 (plus GST)

WALK-UP:

$55 (plus GST)

Our popular Technical Luncheons are back up and running, but we would like to hear from you, the members. What topics would you like to see covered in the upcoming year? Membership input is valuable to us and we want to make sure we are covering the topics that are important to you.

sure we are covering the topics that are important to you. Please call or email with

Please call or email with your great ideas:

Christian Gillis, Managing Editor, Canadian Well Construction Journal christiang@hawkeyeengineering.ca (403) 265-4973

GST REGISTRATION #R123175036 Visit www.cadecanada.com for all ticket purchases

www.cadecanada.com

march/april 2014

Student PROFILE
Student
PROFILE
Young Talent Highlighting tomorrow’s best and brightest man Gill is in his last year at
Young Talent
Highlighting tomorrow’s best and brightest
man
Gill is
in
his last year at
the
A
University of Calgary, majoring in Chemical
Engineering with a minor in Petroleum En-
gineering. He has 16 months of field experi-
Aman Gill
Chemical Engineering
University of Calgary
ence as an engineering intern at Nexen’s Long Lake
Project, where he was involved in the process safety,
turnaround and operations teams.
Currently he is the president of the U of C’s
Petroleum and Energy Society (PES), a student orga-
nization with 300-plus members. The PES strives to
connect students to the energy industry through in-
dustry tours and professional development events.
Recently PES partnered with CADE to run the
fourth-annual CADE Student Industry night, where
students had the opportunity to learn about the
drilling industry and network with professionals.
Gill is also the chair of the 2014 EnergyBowl,
which is a University of Calgary student event
comprised of Jeopardy-style questions, a case study
competition and networking opportunities. He is
excited about the energy potential of Alberta and
is continuously seeking ways of motivating the
younger generation of students to connect with
the industry.
erion CoBaj first BeCome interested in a
Erion Cobaj
Petroleum Engineering Technology
SAIT Polytechnic
career in the oil and gas industry when he began
working as a service technician in Grande Prai-
rie. He gained valuable knowledge and experi-
ence about plumbing and hydraulic systems while
working on various drilling lease and camp loca-
tions across northwestern Alberta.
In September 2012 Cobaj enrolled in the Petro-
leum Engineering Technology program at SAIT and
is currently completing his final semester. During
the summer of 2013 he worked as a relief operator
with Canadian Natural Resources Limited (CNRL)
in northeastern B.C. This experience not only
expanded his knowledge on oil and gas operations,
but it added valuable hands-on experience in using
pump jacks, ESPs, plunger lift and PC pumps.
Cobaj’s interests lie primarily in completions
and production engineering. After he gradu-
ates, he plans to work as an operator in the field
for the first few years. He hopes to gain valuable
experience that will create and indispensable
foundation for a position as a petroleum tech-
nologist. Cobaj credits his parents for introduc-
ing him to the oil and gas industry and SAIT
for providing the technical hands-on learning
environment.
HELP WANTED: Career Department
What it’s Worth
as of late 2013, the Canadian assoCiation of oilWell drillinG ContraCtors
Base
riG teCh
Position
WaGe
Premium
(CAODC) recommends the following minimum wage schedule for hourly paid
drilling crews.
All figures represent hourly pay rates. This wage schedule was developed on the
basis of survey material and is intended to apply to both eight- and 12-hour shifts.
It is also recommended workers receive a per diem of $50/person/day when in a camp
situation, and $140/person/day for those not in a camp ($17.50 of which is non-taxable
for payroll purposes if the employee maintains a principle place of residence and works
80 kilometres from his or her principle residence, for at least 36 hours).
driller
$44.80
+$2.00
assistant driller
$40.00
+$1.50
derrickhand
$38.00
+$1.50
motorhand
$33.00
+$1.00
floorhand
$30.70
n/a
leasehand
$28.00
n/a

10 march/april 2014

Well Construction Journal

$33.00 +$1.00 floorhand $30.70 n/a leasehand $28.00 n/a 10 march / april 2014 Well Construction Journal
HELP WANTED: Career Department Bright DecaDe aheaD accorDing to the DecaDe aheaD: LaBour Market outLook
HELP WANTED: Career Department
Bright DecaDe aheaD
accorDing to the DecaDe aheaD: LaBour Market outLook
to 2022 for Canada’s Oil and Gas Industry, over the next decade
activity levels are expected to sustain an average of 894,000 to
1,036,100 jobs in the oil and gas industry – 80 per cent of which
will be in Western Canada.
The Petroleum Human Resources Council and Enform report
predicts that about 21 per cent of those will be in direct jobs in
exploration and production, oil and gas services and pipeline
operations. Another 49 per cent will include indirect jobs in con-
struction, manufacturing, transportation and warehousing, while
the remaining 30 per cent are expected to be “induced” jobs,
meaning they will be driven by an increase in consumer spending
by both direct and indirect workers.
The report gives both low-growth and expansion scenarios for
industry job activity, the former of which predicts an extra 18,300
jobs in oil and gas, while the latter would see 38,700 jobs added,
with the diversification of the market.
Attrition is cited as one reason for additional job opportuni-
ties, as 23 per cent of the industry’s workforce will be eligible for
retirement, leaving between 44,200 and 45,300 job vacancies over
the next decade. Additional job openings will be created by the
“intense competition for talent within and outside the industry”
in the next 10 years, increasing the number of positions the oil
and gas industry will need to fill to 62,600 to 65,600, depending
on the low-growth or expansion scenarios.
In Alberta, technology is expected to influence the province’s
oil and gas production potential, creating between 53,800 and
72,700 job openings. Meanwhile, Saskatchewan job growth over
the next decade is expected to total between 2,600 and 3,400 job
openings, and the rest of Canada (including work in Manitoba’s
Bakken shale oil formation, Newfoundland’s Hebron and Nova
Scotia’s Deep Panuke) will see between 2,900 and 3,750 job open-
ings in oil and gas.
Between 2013 and 2022, the industry will sustain an average
of 213,000 to 224,400 direct jobs in exploration and production,
oil and gas and pipeline operations, as well as from 413,400
to 505,300 indirect positions. Indirect jobs include those in
construction; manufacturing; transportation and warehousing;
professional, scientific and technical services; waste management
and remediation services; and financial, insurance, real estate and
rental and leasing. The report also predicts between 267,700 and
306,400 sustained jobs each year in the next decade that fall into
the “induced” range, created by an increase in consumer spending
by those in direct and indirect posts.
DriLLing SLang
If you want to walk the walk on a drill site, it helps
to talk the talk. Here are some terms and phrases often
heard out in the field.
specifies properties of pipe dope, including its coefficient of fric-
tion. The rig crew applies copious amounts of pipe dope to the
drillpipe tool joints every time a connection is made.
Bottoms-up:
1.
n. The sample obtained at the bottoms-up time or a volume of
fluid to pump, as in “pump bottoms-up before drilling ahead.”
2.
adj. Pertaining to the mud and cuttings that are calculated or
measured to come from the bottom of the hole since the start of
circulation. Circulation may be initiated after a static period, such
as a trip, or from a given depth while drilling. This latter type is
particularly useful to mud loggers and others trying to discern the
lithology being drilled, so mud loggers or mud engineers often
retrieve what is referred to as a “bottoms-up sample” of the cut-
tings or the drilling fluid.
Kelly BusHIng: An adapter that connects the rotary table to
the kelly. The kelly bushing has an inside diameter profile that
matches the kelly’s, usually square or hexagonal. It is connected to
the rotary table by four large steel pins that fit into mating holes
in the rotary table. The rotary motion from the rotary table is
transmitted to the bushing through the pins, and then to the kelly
through the square or hexagonal flat surfaces between the kelly
and the kelly bushing. The kelly then turns the entire drillstring
because it is screwed into the top of the drillstring itself.
Dope: Pipe dope, a specially formulated blend of lubricating
grease and fine metallic particles that prevents thread galling (a
particular form of metal-to-metal damage) and seals the roots or
void spaces of threads. The American Petroleum Institute (API)
RatHole: A storage place for the kelly, consisting of an open-
ing in the rig floor fitted with a piece of casing with an internal
diameter larger than the outside diameter of the kelly, but less
than that of the upper kelly valve so that the kelly may be lowered
into the rathole until the upper kelly valve rests on the top of the
piece of casing.
Source: Schlumberger Oilfield Glossary
Special REPORT NEW YORK PENNSYLVANIA OHIO WEST VIRGINA 12 march / april 2014 Well Construction
Special REPORT NEW YORK PENNSYLVANIA OHIO WEST VIRGINA 12 march / april 2014 Well Construction
Special REPORT NEW YORK PENNSYLVANIA OHIO WEST VIRGINA
Special
REPORT
NEW YORK
PENNSYLVANIA
OHIO
WEST VIRGINA

12 march/april 2014

Well Construction Journal

Special REPORT NEW YORK PENNSYLVANIA OHIO WEST VIRGINA 12 march / april 2014 Well Construction Journal
By Graham Chandler With a fracturing moratorium in Quebec, it’s an all-American action LOCATION: Underlies
By Graham Chandler With a fracturing moratorium in Quebec, it’s an all-American action LOCATION: Underlies

By Graham Chandler

By Graham Chandler With a fracturing moratorium in Quebec, it’s an all-American action LOCATION: Underlies Quebec,
By Graham Chandler With a fracturing moratorium in Quebec, it’s an all-American action LOCATION: Underlies Quebec,

With a fracturing moratorium in Quebec, it’s an all-American action

moratorium in Quebec, it’s an all-American action LOCATION: Underlies Quebec, Ohio, Pennsylvania, West
moratorium in Quebec, it’s an all-American action LOCATION: Underlies Quebec, Ohio, Pennsylvania, West

LOCATION: Underlies Quebec, Ohio, Pennsylvania, West Virginia, New York

RESOURCE: Dry gas, oil, liquids-rich wet gas

SOURCE ROCK: Organic black shale

ESTIMATED RECOVERABLE RESOURCES: 38 tcf natural gas, 940 million barrels oil, 208 million barrels NGLs (USGS)

PRODUCTION: Very early stages

MAJOR PRODUCERS: Chesapeake Energy, Chevron, Anadarko Petroleum, Devon Energy, Range Resources

M OST CANADIANS VIEW THE UTICA SHALE AS A Quebec play – where it seems the only news is the province’s moratorium on fracking, which is holding up activity. Here, it lies

mostly beneath the bucolic St. Lawrence River Low- lands between Quebec City and Montreal, which de- fine its northern extent. The play extends both sides of the St. Lawrence where the river has long since eroded the flat Palaeozoic sedimentary sandstones, carbonates and shales.

Special REPORT
Special
REPORT
Special REPORT 14 march / april 2014 Questerre Energy, one of the earlier Quebec players, describes

14 march/april 2014

Questerre Energy, one of the earlier Quebec players, describes the Utica Shale as a member of

the Ordovician Trenton Group; its highly organic black shale has been identified as the source rock for oil and gas accumulations in the area. The Utica Shale was deposited on top of the Trenton Black River over steeply dipping faults created when the St. Lawrence rift valley was emerging. After that deposition was complete, the Appala- chian Mountain front encroached to contain it in an arc forming the southeast limit of the Low- lands. South into the US the Utica deepens and underlies the Marcellus

Shale – more on that later. Quebec Utica shales are up to 200 metres thick in parts and reach maximum depths of 2,800 metres.

The formation boundary to the north parallels the St. Lawrence River, where the shales can be seen to outcrop. To the south and southeast, the shales become discon- tinuous with the Appalachian Mountains. Questerre Energy acquired its interest in the Utica play through its parent company, Terrenex, in early 2000. “Initially, the Utica was a second- ary target to our main targets of the Trenton Black River (hydrothermal dolomite) and deeper plays,” Jason D’Silva, Questerre’s chief financial officer, said in an earlier interview. “Since mod- ern fracturing technology had not yet advanced

and natural gas prices were low, in early 2000 we were targeting areas of the Utica shale where the rock was naturally fractured.” Several factors contributed to the play’s at-

tractiveness for Questerre. “It is pipeline quality natural gas requiring minimal dehydration and compression,” said D’Silva. “And proximity to one of the largest natural gas markets onshore North America with an established distribution network in place.” He adds that there are 18 tcf discovered on their lands, of which the company has retained about 4 tcf to its interest. In total Questerre drilled

about 25 to 30 wells with around 10 horizontals, the majority on their own acre- age. D’Silva said well depths ranged from 1,500 to 3,000

metres vertically with up to 1,000 horizontally. Typical fracks were slickwa- ter and run eight stages per well – which were expected to increase over time – with production rates per contributing stage estimated between 0.25 mmcf/d to about one mmcf/d. Even when – or if – the moratorium is lifted, servicing will remain a challenge for this part of the Utica, as the service industry in Quebec is virtually non-existent. Equipment would have to be mobilized from Western Canada, resulting in higher well costs, likely $10 to $15 million per well initially.

“As we started to drill more there, we saw the potential in the Marcellus and as the Marcellus play emerged around us, we transitioned from the Utica wells into more of the Marcellus.”

The Utica play, seen here in Pennsylvania, is still in its early stages of development.
The Utica play, seen here in
Pennsylvania, is still in its early
stages of development.

Well Construction Journal

The Utica play, seen here in Pennsylvania, is still in its early stages of development. Well

That number would probably drop significant- ly once a more robust industry is established. In those pre-moratorium years, Talisman Energy was pretty excited about Utica’s poten- tial in Quebec. “We’ve had interest in the Utica going back four years but we haven’t actually been drilling there, given the moratorium,” says Brent Anderson, Talisman’s manager of external relations. The moratorium has all but suspended activi- ty for acreage holders in the Quebec Utica, and at least for Talisman, it has placed it on back burner while priorities shift to other available plays. “I don’t know that the Utica shale would be help- ing now even if the moratorium were lifted,” says Anderson. “We wouldn’t go in with guns a-blazing. Talisman is seeking opportunities to reduce its capital spending and focus in its core areas and I just don’t think the Utica shale would fit in that profile. I don’t think the Utica in Que- bec would compete for capital.” Talisman still has a reasonably sizeable holding there and pre- moratorium they drilled about nine wells in a pilot program, “and got fairly limited data on the play particularly one that was new and emerg- ing,” says Anderson. So there is much more work required before any estimates can be made, he says. “I would equate it in some ways to where we are at in the Duvernay – everyone realizes there is some potential there but it is still quite early in the development of that play. So to say [Utica] is going to compare to some of the more mature shale plays, it’s just too early.” “Clearly from a geological perspective we thought there was some potential there, and that’s why we invested money in retaining some land and doing the pilot project,” continues Anderson. “But now we’ve had some time away from that particular play with the moratorium we’ve decided that we would like to direct our capital in other areas.” Anderson says Talisman’s initial perspective on the Utica came in the Pennsylvania area where it earlier drilled more traditional conventional Uti- ca wells. “As we started to drill more there we saw the potential in the Marcellus and as the Marcel- lus play emerged around us we transitioned from the Utica wells into more of the Marcellus.” He says Talisman still has some production from conventional Utica wells in Pennsylvania but the vast majority of their production in Pennsylva- nia is from conventional Marcellus. And across that border the Marcellus has be-

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across that border the Marcellus has be- www.cadecanada.com come the opening act of the Utica play

come the opening act of the Utica play which sits a few thousand feet below it; under large parts of Ohio, Pennsylvania, West Virginia, New York and other bits of eastern North America. As pro- duction ramps up in the Marcellus, operators are now looking below it. The biggest players there, in order of holdings (as of November 2013), are Chesapeake Energy, Chevron, Anadarko Petro- leum, Devon Energy, Range Resources, Hess Cor- poration, EV Energy and Gulfport Energy. The Utica Shale isn’t a new discovery. Geol- ogists have long considered it to be an oil and natural gas source rock – supplying oil and gas to reservoirs by migrating to overlying rock units that have now been producing for many decades, especially Pennsylvania, for example. But there’s considerably more in place trapped in the Utica Shale. The United States Geological Survey’s mean estimates of undiscovered, tech- nically recoverable unconventional resources peg it at about 38 tcf of natural gas, 940 million barrels of oil, and 208 million barrels of natural gas liquids. But it wasn’t developed earlier because of its considerable aerial extent and depth, both of which are much greater than the overlying Marcellus Shale. Moreover, its low permeability made it less attractive. But with the advent of horizontal drilling and multistage fracking, that has become much less of a hurdle. These meth- ods were not extensively used in the Utica Shale before 2010. The same can be said of the low-permeability Marcellus Shale until 2003 when Range Resourc- es stepped in, followed by the first Utica well. “We pioneered the Marcellus and drilled the in- dustry’s first horizontal Utica/Point Pleasant well in 2005,” says Matt Pitzarella, Range Resources’ director of corporate communications and pub- lic affairs. The Marcellus has since become one of the world’s largest natural gas fields. Compared with the Marcellus, much less is known of the underlying Utica. It is more geo- graphically extensive and thicker than the Mar- cellus. It has three hydrocarbon windows: light and black oil happens toward the west of Ohio, liquids-rich wet gas and condensate-rich source rock from northeastern Ohio to south-central Ohio, and dry gas through southeastern Ohio and into western Pennsylvania. In its core area, depths range from 1,800 to 2,400 metres with thicknesses of 24 to 37 metres. So to determine the more precise size of the

to 2,400 metres with thicknesses of 24 to 37 metres. So to determine the more precise

march/april 2014 15

Special REPORT
Special
REPORT
Special REPORT 16 march / april 2014 Utica Shale resource, operators need more than the so

16 march/april 2014

Utica Shale resource, operators need more than the so far limited drilling in western Pennsylva- nia and in the above-noted St. Lawrence Low- lands. Central Pennsylvania is virtually untested by horizontal drilling and hydraulic fracturing. The play remains in the early stages of develop- ment, still needing delineation of its northern and southern extents. That was recently helped however with a February announcement from Magnum Hunter Resources of a commercial pro- duction well in Ohio’s Monroe County, drilled and cased to a true vertical depth of 10,653 feet with a 5,050-foot horizontal lateral, and success- fully fracked with 20 stages. It was placed on production and recently tested at a peak rate of 32.5 mmcf of natural gas per day. As activity ramps up, there’s still plenty to learn about the Utica, as companies zero in on parts of the play. “I haven’t seen too much prog- ress in the western oil window,” says Hsulin Peng, senior analyst – E&P at Robert W. Baird & Co. “Most of what I’ve heard is very much focused on the wet gas window and several pending dry gas wells coming up.” Peng says in the core wet gas windows – Guernsey, Belmont, Noble – results from companies like Antero Resources continue to be solid, though many producers are moving further south, testing Monroe and Washington County, which is less understood. “We are await- ing more data,” she says. Peng authored a 2013 summary report on the Utica, entitled “Deep Dive into the Utica:

Finally a Play Ohio Fans Can Cheer For” where

she reported wet gas window results at 27 percent IRR (Internal Rate of Return) and an NPV of $3.5 million per well. So producers are making progress in the Utica, her report summa- rized, “… the jury is still out. Certain parts of the play are better understood but there is still work to be done.” More will be forthcoming “once producers shift into development mode, which is likely still a few years off as E&Ps remain fo- cused on delineation.” Progress picks up. “There have been some re- cent announcements on Utica acreage acquisi- tion (American Energy Partners by Aubrey) and additional midstream projects so the industry remains excited about this play,” says Peng. One of the more excited must be Chesa- peake Energy, the largest and most experienced operator in the Utica, with daily average net production in December 2013 of 35 mboe/d. They drilled a total of 195 wells in the play dur- ing 2013. The company plans to spend about 15 per cent of its total E&P capital expenditures on Utica this year. As action on the American side of the Utica takes off, will Quebec’s moratorium fracture? On February 14, Quebec’s government announced it would usher in a new era of petroleum riches for the province, with plans to launch joint ventures aimed at exploiting mostly shale fields in the Gulf of St. Lawrence and Anticosti Island – which lie atop an extension of the Utica Shale, the very source of the fracking concerns. No mention was made of the moratorium status.

concerns. No mention was made of the moratorium status. As action continues in the U.S. on
As action continues in the U.S. on Utica Shale, players in Quebec await news on
As action continues in the U.S. on Utica
Shale, players in Quebec await news on
the fracking moratorium.

Well Construction Journal

continues in the U.S. on Utica Shale, players in Quebec await news on the fracking moratorium.
Member PROFILE
Member
PROFILE
Member PROFILE www.cadecanada.com By Shelley Williamson Problem Solver After shifting from sports therapy to drilling

www.cadecanada.com

Member PROFILE www.cadecanada.com By Shelley Williamson Problem Solver After shifting from sports therapy to drilling

By Shelley Williamson

Problem Solver

After shifting from sports therapy to drilling data systems, Craig Joyce is all about finding solutions

T hey say most people will have three careers in their lifetime. If that’s the case, XI Technologies account manager Craig Joyce is right on schedule.

The University of Calgary kinesiology grad- uate says he first got into the drilling side of the industry out of a desire to be around like- minded people. As an account manager with XI Technologies, Joyce works with operators in the Western Canadian Sedimentary Basin in a posi- tion that he says has its roots firmly planted in problem-solving. He says his role allows him to apply his people skills, which he honed in six years as an exercise therapist, every day while work- ing closely with his oil patch clientele. “I like the interaction with the clients and being able to work with drilling engineers and people who are looking to find easier ways to accom- plish their work,” says Joyce, who is originally from Ontario. Joyce cut his teeth in the oil and gas indus- try selling advertising for an Alberta oil and gas magazine, before making the move to a sales position at a company that provides modular accommodations and office structures for camps in the oil patch. From there, he joined the XI Technologies team, where he has been for the past two years. Among the products he is able to offer his clients are the web-based Offset Analyst, which provides instant drilling data for the more than 100,000 wells drilled across the WCSB, and TourXchange, which gives operators details on their competitors’ drilling practices and previously-drilled wells. Prior to the software, operators would have to order the information on wells and other operators from the Alberta Energy Regulator (previously the ERCB), and wait for them to arrive. “I like being able to help industry clients find a solution to some of their challenges with the

Craig Joyce
Craig Joyce

drilling data that we offer,” Joyce says. “I help them with a few aspects of the regulatory side of drilling a well, as well as research, performance optimization – everything needed for drilling a well.” XI Technologies serves about 350 clients in the WCSB as a data provider to operators and service companies, giving industry professionals the information they need faster, says Joyce. “With regards to our regulatory suite of products, we are able to help companies and individuals become compliant, but also on the benchmarking side of things, drill more efficient, cost-effective wells.” He says he likes helping his oil patch sub- scribers save time that they would previously have spent trying to acquire well and drilling details themselves, by providing them a web- based solution that does the leg work for them. He describes the format in which well and drill- ing data is normally available as “not conducive to efficiency.” Joining the Canadian Association of Drilling Engineers was a step he took because of the organization’s reputation, especially in Calgary and across the Basin, Joyce says. “I wanted to be a part of what they were doing and help them achieve the goals that they’re striving to meet with regard to scholarships and different initiatives they have that help students.” Joyce, who is a new member, says he welcomes the networking opportunities a CADE member- ship brings, not just from a business perspective, but also for personal growth.

a CADE member- ship brings, not just from a business perspective, but also for personal growth.

march/april 2014 17

Tech REPORT
Tech
REPORT
Tech REPORT 18 march / april 2014 By Robin Brunet Inside the driller’s cabin of Trinidad’s

18 march/april 2014

By Robin Brunet

Inside the driller’s cabin of Trinidad’s Rig 56 in Horn River, safety and efficiency are
Inside the driller’s cabin of Trinidad’s Rig 56 in
Horn River, safety and efficiency are key.
Photo courtesy of Trinidad Drilling

Less Downtime, More Safety

The latest rig advances boost operational efficiency, upgrading to meet the challenges of today’s industry

rian Kausert, president of Beaver

Drilling Ltd., recalls a time not too long ago when advanced technology came in the form of triplex pumps that could

produce 1,000 horsepower. “They eclipsed the duplexes, which were built in the 1930s and which were operated by my father, who started this company,” he says. “Horizontal drilling, of course, changed everything.” Companies such as Beaver Drilling, Canada’s largest privately owned drilling firm, have under-

B

gone radical upgrading to meet the challenges of today’s industry. The shift began when people like Kausert began adding top drives to their rigs; now, about 10 per cent of his rigs are electrically powered (and located mainly up north). Beaver’s diverse inventory – from high horsepower/high-pressure mud pumps to high-torque top drives – is indica- tive of the range of equipment needed to prevail in long-reach horizontal operations of the Western Canadian Sedimentary Basin (WCSB), where Beaver focuses its attention.

Well Construction Journal

operations of the Western Canadian Sedimentary Basin (WCSB), where Beaver focuses its attention. Well Construction Journal

Lisa Ottman, vice-president of investor relations

at Trinidad Drilling, agrees that horizontal drilling was a game changer. “The industry as a whole has changed fairly quickly in a filter-down way since horizontal came into the fore,” Ottman says. “But technological advancements haven’t always come easy. When we performed horizontal drilling in Texas we saw the emergence of the boom and knew it would spread into Canada, so we started building rigs appropriate for the job – and a lot of people thought we were wasting our time.” Trinidad lays claim to being the first company in Canada to supply high-performance rigs, and many customers who lease these rigs (which operate for about $22,000 per day) are the very same people who initially thought Trinidad was wasting its time. Savanna Drilling Canada, which represents the third-largest drilling fleet in Canada, has been

providing energy companies worldwide with equipment since 2001, and its rigs have operated in the Williston Basin;

Horn River Shale; Utica Shale; Viking play; Lower Shaunavon play; Doig/Mont- ney Formation; the Alberta oil sands; and the WCSB. Additionally, in 2011 Savanna embarked on operations in Australia in support of Coal Seam Gas programs. Savanna’s fleet of patented hybrid and tele- scopic double rigs is renowned in Western Canada and the U.S. for delivering the kind of results only state-of-the-art systems can achieve. Top drives, automated pipe-handling (Iron Derrickman), mobile designs (which account for fewer loads and faster rig-up times), larger pumps and AC electric technology are some of the components of Savanna’s fleet; the telescopic double rigs can reach depths of up to 4,000 metres, while its two triples can reach 5,000 metres. Its next generation of hybrids has the capacity to operate with coiled tubing or a conventional top drive off of the same rig, and the conversion is done in the field without any measurably cost or downtime. While Trinidad has augmented its technological advances with improvements such as catwalks that pull pipe up the ramp (eliminating manual rope and pulley labour) and PLC computer systems that enable cab operators to monitor downhole activ- ity, the company’s biggest rig improvement has been the built-in moving systems that make each rig self-propelled. “No more downtime waiting for tow trucks, and much less stress and wear on the

Stefan Polgny operates a fully automated driller’s console on Beaver’s Rig 15AC.
Stefan Polgny operates a fully automated
driller’s console on Beaver’s Rig 15AC.

rig since it’s no longer being pulled from one site to another,” says Ottman. What does all this amount to in terms of per- formance? “Drilling times have been reduced from

about 60 to 40 days, and at the Eagle Ford Shale opera- tions our rig was drilling for just nine days,” says Ottman.

“All of this means we get a higher day rate for our machines; plus, the automa- tion also means increased safety for workers.” Kausert stresses that comprehensive maintenance programs have been the key to his company’s suc- cess. “The burn rate in horizontal operations can easily be $100,000 per day, so downtime is unac- ceptable,” he says. What’s coming down the turnpike? “Improve- ments in the future will focus heavily on safety,” says Kausert. “There will be more unitization of rigs and fewer pinch points.” Ottman says further developments will be less spectacular than in the past. “We’re now using biofuel in some cases rather than diesel, and we have one rig running on natural gas,” she says. “The latter taps into the gas drilled at one well in order to drill the next well. Biofuel is actually an easier proposition than gas because it doesn’t require big- ger engines or higher maintenance costs. We also recently, in Texas, tapped into high line electricity as a source of power.” Additionally, Trinidad recently built a rig with a moving system that transports buildings and tanks as well as the rig. Ottman concludes, “Some people assume that technological advances mean downsizing of labour, but that’s not the case in our experience. In addi-

tion to increased efficiency, the changes we’ve made have resulted in increased safety and enabled work crews to focus on other areas of the operation.”

work crews to focus on other areas of the operation.” “The industry as a whole has

“The industry as a whole has changed fairly quickly in a filter-down way since horizontal came into the fore.”

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way since horizontal came into the fore.” www.cadecanada.com Photo courtesy of Beaver Drilling march / april
Photo courtesy of Beaver Drilling
Photo courtesy of Beaver Drilling

march/april 2014

19

Market REPORT
Market
REPORT

By Ryan Van Horne

Industry experts say Licence to Drill accurately portrays drill site operations. Poetic Licence Discovery Channel
Industry experts say Licence to Drill
accurately portrays drill site operations.
Poetic Licence
Discovery Channel Canada dips into drill site operations for a fourth season
icence to Drill Does a great job at
L
telling people what oil and gas companies
do, but isn’t so good at telling them how
they do it, says an industry veteran.
Bruce Fraser, an 18-year oil services veteran, thinks
that in order to make the show more entertain-
ing, its creators give a dramatized and condensed
version of events.
“It’s certainly hyped and it’s certainly edited for
dramatic value. I think there’s a lot of contrived
tension,” Fraser says. “If a camera crew followed me
around, it would make for a pretty boring show.”
The show, which embarks on its fourth season on
Discovery Channel Canada on March 18, has earned
a loyal following, especially among the families of
people who work in the industry. There’s no such
thing as “take your daughter to work day” on a drill
site and that’s one of the reasons why the show is
popular. For many people, it provides a glimpse into
the jobs of their loved ones – jobs that are often
performed in remote locations.
Emmanuelle Wiecha is the show runner for
Licence to Drill and the producer and head of factual
at Pixcom, the Montreal-based company that co-
produces the show with Discovery Channel Canada.
She says the show gets a lot of feedback from the
families of people who work in the industry.
“The wives call us to thank us and say: ‘I had
no idea what my husband did when he was gone’
and ‘My kids love the show; they see what their
dad does.’”
Fraser has watched the show since its inception.
He works for an oil services company, but was
only willing to offer his personal opinion – not
speak on behalf of his company – when he agreed
to be interviewed for this story. “It’s definitely an
entertaining show, and it provides a really good
overview of the activities on a drill site and some of
the challenges, particularly in some of the remote
areas,” Fraser says. He also says Licence to Drill
accurately portrays the roles and responsibilities of
the people on a drill site, so it is educational.

20 march/april 2014

Well Construction Journal

responsibilities of the people on a drill site, so it is educational. 20 march / april

There are some interesting personalities and intense people in the industry, but heated arguments are rare and physical confrontations rarer still. “I’ve seen guys under really intense circumstances and they’re the coolest cucumbers I’ve ever met,” Fraser says. “You don’t want guys losing their cool.”

Fraser says he’ll sometimes be on the couch next to his wife watching the show and he’ll often say to her, “That’s not the way it happens,” or “That guy would get fired for doing that.” Fraser says eliminating risks – not taking them for the sake of getting the job done quickly – is the ethos of projects he’s worked on. “Speed is important for drilling crews, but safety is by far the most important thing in the industry,” he says. “You do see sort of a cavalier attitude toward that on the program – sometimes.” Fraser says anybody who gives workplace safety

short shrift and puts him or herself or others in harm’s way would be disciplined or fired. When asked if the characters – real employees, not actors – are playing it up for the camera, Fraser

says he thinks there might be some of that. But Wiecha disagrees with this assessment. “After a while, they just forget about us,” Wiecha says. “They see them the first three days, then they don’t notice them. If anything, they probably do (their jobs) a bit better.” Ken MacDonald, the vice-president of programming at Discovery Channel Canada, says “authenticity is very important” to his network, which is “all about experiencing different things in the world.” In that regard, Licence to Drill gets the job done and MacDonald is proud to point out that viewership of Licence to Drill is highest in Alberta, which has Canada’s most well-entrenched oil and gas industry and offers the show’s most discerning audience. “We have tough critics who know what they’re talking about,” he says. “We do look at that feedback.” But, as much as MacDonald stresses accuracy and education, he read- ily admits that he wants the shows on Discovery to be entertaining. He also points out that the show is not vetted by the oil companies that are portrayed. “We don’t surrender editorial control to anyone,” he says. There is fact-checking – especially when complex issues need to be explained in plain language or in a graphic – so it’s important to get information right. MacDonald says Pixcom does “a ton of research when they embed themselves with the people they’re following.” Wiecha says it was a challenge at first to get oil companies to co-operate because an American show highlighted some cowboy-like behaviour at drill sites. “There were drunk guys and it was not a nice portrayal of the industry,” Wiecha says. Dan Hoffarth, the CEO of Citadel Drilling Ltd. in Calgary, says Licence to Drill is the best of the lot on TV these days, surpassing some other offerings such as Black Gold. He, too, thinks Licence to Drill is over-dramatized, but gives it full marks for its animations. “They do a great job of putting those together and showing where the bit is going and with their 3-D renderings,” Hoffarth says. Hoffarth thinks shows like this – where oil and gas companies try to educate people – will do wonders for the industry’s reputation. For too long, oil companies have not responded well to criticism – some

of it justified, and some not. “We’ve hidden behind the no comment shroud for way too many years,” Hoffarth says. He thinks people need to know more about the new breed of rig hand working at drill sites. The stereotypical crude-covered “rig-pig” with a cigarette hanging out of his mouth is a thing of the past, he notes. “The day-to-day life of a well-run drill site is very professional and very boring – and it should be,” Hoffarth says. It took a while for Pixcom to convince companies such as PennWest, MGM, Bonanza and Nabors to come on board and, after the first season, it became easier to approach companies.

“It’s like in life, you’re building a relationship on trust,” Wiecha says. She says many industry veterans are accustomed to what goes on and she understands how they might think the drama is contrived, but she says the show is geared to somebody learning

about the industry. “For someone who’s been in the industry for 15 years, drilling 1,500 metres underground is some- thing he does for a living,” she says. “But for us, it’s

a big deal. As an outsider who sees a rig floor for the first time, it is massive and dramatic.” Fraser, though, says people in the industry do have a sense of awe at what they’re doing, which is why safety is so important. “You’re dealing with some equipment on the drilling floor that can tear you in half,” Fraser says. “It’s nothing to be trifled with. This is not a young industry. This is a very old industry and these lessons have been learned the hard way.”

For many people, it provides a glimpse into the jobs of their loved ones – jobs that are often performed in remote locations.

ones – jobs that are often performed in remote locations. Characters on the show, like driller
Characters on the show, like driller Cody Wilson, are real employees, not actors.
Characters on the show, like driller Cody
Wilson, are real employees, not actors.
Industry REPORT
Industry
REPORT
Industry REPORT 22 march / april 2014 By Christy Nich Oil is Well Making the shift

22 march/april 2014

By Christy Nich

Industry REPORT 22 march / april 2014 By Christy Nich Oil is Well Making the shift

Oil is Well

Making the shift from natural gas to conventional oil makes sense – for now

A

series

of

events

shifted

industry

activity in the Western Canadian Sedimen- tary Basin from 70 per cent gas drilling in the 2000 to 2009 period, to the 25 per cent

levels of last fall, and as a result many producers have switched to drilling for more conventional oil. But that could change again by the end of 2014, say industry experts. At the start of the millennium, we saw the advent of unconventional or shale gas production in terms of how producers were scouting out developments made possible through new technologies – such as horizontal drilling and multistage fracturing. The

prices spiked, prompting energy companies to go after natural gas in the WCSB, which in turn drove the prices down from a peak in 2005 of $15/mcf to last year’s low of $2.50/mcf, according to Duncan Au, president and CEO of CWC Well Services Corp. Then the recession hit, and bottom lines started to suffer as gas producers were finding they couldn’t get a very good price for their natural gas as compared to conventional oil. Currently the price for natural gas is three to four times lower than that for conven- tional oil. “Our basin now in Western Canada, on the conventional side (outside of oil sands) is primarily 85 to 90 per cent oil wells, not gas,” says Au.

Well Construction Journal

side (outside of oil sands) is primarily 85 to 90 per cent oil wells, not gas,”

It makes the reality of the higher cost to drill for oil over natural gas – due to maintenance cost over

a rig’s lifetime – not as important an issue. It will

take seven or eight work overs per oil well to clean out the sand and wax build up, as compared to once or twice with a natural gas rig, but it still works out to a better return on investment. Even with the better gas prices this year due to cold temperatures throughout Canada and U.S., it

still makes more sense to drill for oil. It all rests on the price for natural gas in North America. There are no export facilities anywhere on the continent to take advantage of the high price globally for natural gas, despite plans to build a liquefied natural gas program in B.C. Add to that an oversupply, and the price drops further down.

Bill Gwozd, senior vice- president of gas services at Ziff Energy, says that reserves may be 13 bcf today, but LNG applications may approach 30

bcf by 2025, when exporting to Asia begins – more than double. He predicts a huge amount of activity for LNG and says it will be the dominant supply source out of Western Canada. While he agrees the price is a key factor in deciding drilling activity in the short term, he

doesn’t see it for the long term – when he predicts Canada exporting globally, for example, to Asia. Regulatory approval is still needed to build the planned LNG facilities for export and there is no shortage of projects on the table. “2014 could be

a very big year for those plans and those projects.

One or two of these LNG plans should come to an investment decision,” says Au. “From an overall industry perspective, as natural gas prices firm up and increase the ability to ship our gas and take

advantage of the differential between the North

American price for gas and the rest of the world’s

prices

pable, and have a strategy for drilling for natural gas, will end up doing so and make a profit,” says Au, noting industry has to go through due process in Canada, however, and that involves consulta- tions with stakeholders from First Nations groups to landowners to various levels of government. Gwozd sees that as a small stumbling block for the future success of Canada’s LNG and its export potential. He notes that it is a matter of simple economics – where the price has to be more than the cost. Cost refers to the expenditures to take a product, such as gas, to market. In Western Canada, for example, full cycle costs for gas include explora-

those oil and gas companies that are ca-

tion, drilling, operations, seismic and royalties and

it would equal $6. If the price of gas today is $5.50,

a month ago it was $4.50 and a year ago it was only

$2, then it’s easy to see that the price isn’t always aligned with the cost. When you look at exporting to Asia, the full cycle costs are covered, along with transportation costs. “As long as the price they pay covers the costs, it makes more economic sense to move it to Asia.” Gwozd adds that there is dwindling supply of conventional oil as reserves are verging on empty. “Some of the individual basins in Western Canada have been partially drained,” he says. He would advise producers in the long term to shift from pure natural gas to liquids-rich natural gas streams which contain

propane, butane and conden- sate. In Alberta, that means a geographical shift from Medi- cine Hat basins, which are “dry gas” containing mostly

methane, to those in the Grand Prairie area, containing up to 15 per cent oil, which demands a higher price. In terms of exporting LNG, Au says it’s a global game, a race to see who gets there first – and if other projects on the table for Australia or the U.S. go first, an LNG export facility in Canada may no longer be needed. Au concludes that the verdict should be out on whether these potential facilities get the go-ahead by the end of this year.

“Our basin now in Western Canada, on the conventional side outside of oil sands is primarily 85 to 90 per cent oil wells, not gas,” says Duncan Au.

85 to 90 per cent oil wells, not gas,” says Duncan Au. Natural Gas Prices  

Natural Gas Prices

 

$US/mmBtu

 

2008

2013

January

$7.98

$3.33

February

$8.55

$3.34

March

$9.44

$3.82

April

$10.13

$4.17

May

$11.26

$4.04

June

$12.69

$3.82

July

$11.06

$3.63

August

$8.25

$3.43

September

$7.67

$3.62

October

$6.73

$3.66

November

$6.69

$3.62

December

$5.81

$4.24

Average

$8.86

$3.73

Source: US Federal Reserve

www.cadecanada.com

$5.81 $4.24 Average $8.86 $3.73 Source: US Federal Reserve www.cadecanada.com march / april 2014 23
$5.81 $4.24 Average $8.86 $3.73 Source: US Federal Reserve www.cadecanada.com march / april 2014 23

march/april 2014

23

By the NUMBERS 24 march / april 2014 Stats at a Glance Canadian Rig Counts

By the

NUMBERS

By the NUMBERS 24 march / april 2014 Stats at a Glance Canadian Rig Counts  
By the NUMBERS 24 march / april 2014 Stats at a Glance Canadian Rig Counts  
By the NUMBERS 24 march / april 2014 Stats at a Glance Canadian Rig Counts  

24 march/april 2014

Stats at a Glance

Canadian Rig Counts

 

February 13, 2014

 

Drilling

 

Down

Total

Utilization

Alberta

416

 

156

572

72.7%

B.C.

64

11

75

85.3%

Manitoba

13

8

21

61.9%

New Brunswick

0

0

0

Newfoundland

0

0

0

Northwest Territories

1

0

1

0%

Quebec

0

1

1

0%

Saskatchewan

102

 

39

141

72.3%

Totals

596

 

215

811

73.5%

Source: Divestco

Alberta Rig Counts

 

February 13, 2014

   

Drilling

 

Down

 

Total

Utilization

Northern Alberta

 

122

 

49

 

171

71.3

Central Alberta

 

255

 

93

 

348

73.3

Southern Alberta

 

39

 

14

 

53

73.6

Totals

 

416

 

156

 

572

72.7

Source: Divestco

Top 5 Most Active Drillers in Western Canada

 

Top 5 Most Active Operators

February 13, 2014

 

February 13, 2014

 

Active

 

Active

Total

Rigs

Precision Drilling Corp.

 

140

189

Canadian Natural Resources Ltd.

34

Ensign Energy Services Inc.

71

101

Husky Energy

 

28

Savanna Energy Services Corp.

64

71

Progress Energy

 

26

Nabors Industries Ltd.

 

48

64

Crescent Point Energy

 

24

Trinidad Drilling Ltd.

 

50

61

Cenovus

 

18

Source: FirstEnergy Capital

 

Source: FirstEnergy Capital

 

Well Construction Journal

  18 Source: FirstEnergy Capital   Source: FirstEnergy Capital   Well Construction Journal

Alberta Land Sales

February 2014

 

Dec. 2013

Dec. 2012

YTD 2013

YTD 2012

Oil and Natural Gas Land Sales Price Per Hectare

$50.2 million

$71.3 million

$680 million

$1.1 billion

$407.58

$265.86

$316.91

 

$360.06

Oil Sands Land Sales Price Per Hectare

$363,260

N/A

$28.2 million

$10.7 million

$153.40

N/A

$192.05

 

$136.27

Source: Alberta Department of Energy

Alberta Well Licences

 

Approval issued by the Alberta Energy Resources Conservation Board

 

Number of Licences Issued

July 2013

Aug. 2013

Sept. 2013

Oct. 2013

Nov. 2013

Development

459

 

572

564

586

607

Exploration

58

 

46

 

25

52

68

Source: Alberta Department of Energy

Alberta Spudded Wells

Alberta Completed Wells

January 2013

January 2013

 

Number of Wells Spudded

 

Number of Wells Completed

2012

2013

2012

2013

January

1763

1616

January

381

381

February

2022

1823

February

718

640

March

980

1078

March

717

812

April

276

337

April

672

701

May

374

268

May

486

343

June

518

452

June

254

272

July

702

647

July

488

373

August

785

793

August

541

474

September

784

717

September

524

458

October

781

727

October

692

753

November

707

653

November

750

671

December

670

364

December

692

530

Source: Alberta Department of Energy

Source: Alberta Department of Energy

Source: Alberta Department of Energy Source: Alberta Department of Energy www.cadecanada.com march / april 2014 25
Drilling DEEPER
Drilling
DEEPER
Drilling DEEPER 26 march / april 2014 By Shelley Williamson They Can Play Nice Collaboration among

26 march/april 2014

By Shelley Williamson

They Can Play Nice

Collaboration among competitors in the name of environmental innovation is why COSIA was created

I t’s been two years since the big players

in the Alberta oil sands pledged to work together

in the spirit of innovation, collaboration and

improving environmental performance.

Calling itself the Canadian Oil Sands Innovation Alliance (COSIA), 14 companies including Cenovus, Canadian Natural Resources Limited, Imperial Oil, Suncor, Syncrude, Nexen and Devon Canada have signed on. Chief executive of COSIA, Dr. Dan Wicklum, says the group’s inaugural years have been dedicated to four environmental areas: water, land, greenhouse gas emissions and tailings ponds. Participation in COSIA represents 90 to 95 per cent of the oil sands production in Canada, but more than that, it signifies an unprecedented partnership of players who are more accustomed to competition. So far the alliance has put its collective heads together and come up with 560 technologies that can be shared, equating to upwards of $1 billion in intellectual property, says Wicklum. One initiative of the 185 or so projects on the table by the alliance’s members is “a regional water solution.” “Some companies, frankly, have a surplus of water often imbedded in a tailings pond and other companies, just by nature of their lease and their access to water, are in a water deficit,” Wicklum says. “So one of the things in a regional collective collaborative model like COSIA is taking wastewater from one company and using it as source water for another company. It’s basically a win-win situation, solving a problem and improving environmental performance: It’s the kind of thing that only becomes possible,” Wicklum says, “when you get companies truly collaborating.” Collaboration on training and best practises is also among the COSIA initiatives in play, says Wicklum, explaining the single certification model for in situ operator training. “It just makes it easier for com- panies to collaborate and share best practises if the operators are all trained to the same high standard.” Companies in COSIA have also partnered with Al- berta Innovates-Energy and Environment Solutions, Natural Resources Canada and other groups to take

to task the tailings issue by first developing a road map. “We have evaluated over 500 technologies and they have organized them for action. They’re devel- oping these specific technologies and a system so the technologies will continue to be developed quicker than they have been,” Wicklum says. While some of the group’s focus has been on en- vironmental improvement, such as restoring caribou habitat by planting native trees in winter (when planters are less likely to disturb the muskeg), other efforts have led to new and innovative technologies. “There’s one example that companies are calling oxy-fuel combustion, and it’s basically using quite pure oxygen in the combustion process to make steam. It results in a very pure carbon dioxide stream that makes it that much easier to capture and use,” Wicklum says. While the collective has been criticized as green- washing, Wicklum says the partnership is an impor- tant one that has seen some progress already, despite its fledgling existence. “We feel that we’ve had pretty darn good success over a short lifespan. We also feel that there is much, much more potential to our model and much more work to do,” Wicklum says. “This is a continuous improvement journey, to get better every year as individual companies, and therefore collectively, in regional environmental performance. I would never see this as a finish line or say that we’re done.” But will the member companies keep up their alli- ance, despite being in fierce competition? “They are still competitors, they’re still in full com- pliance of the competition law but, when it comes to environmental performance, what we found is an- other model works better, and the model is a complete paradigm shift and a reconceptualization of how the companies interacted in the past,” Wicklum explains. “Working together and collaborating, even in a sec- tor as large and complex as the oil sands – it’s not just buzzwords, it works. If a goal is to have accelerated environmental performance improvement, you need to walk the talk and work within the model that truly will accelerate it – and that’s why the companies are interested and have bought into COSIA.”

accelerate it – and that’s why the companies are interested and have bought into COSIA.” Well

Well Construction Journal

accelerate it – and that’s why the companies are interested and have bought into COSIA.” Well

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