The offcial publication of the Canadian Association of Drilling Engineers

JULY / AUGUST • 2013
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000WCJ-Schlumberger-FP.indd 1 6/14/13 11:46:24 AM WCJ_Jul-Aug_13_p28-01.indd 1 6/27/13 4:11:54 PM
Fracceleration.
Plug-and-porí and ball-aotuatod sloovos aro bruto íoroo
írao motnods tnat bullnoad huids and sand down tno oasing
witn no íoodbaok about íormation rosponso, no rooourso in
tno ovont oí a soroon-out, and no way to manago wator and
onomioals usago. Botn motnods limit tno numbor oí stagos
and usually roquiro post-oomplotion drill-out oí oomposito
plugs or ball soats.
Tno Multistago Unlimitod systom ovoroomos tnoso limitations
and drawbaoks using ooilod tubing as a work string and
oiroulation patn to tno írao zono.
Fast frac isolation, mechanical sleeve shift
Tno work string oporatos tno Multistago Unlimitod rosottablo
írao plug, a dual-íunotion tool tnat 1) isolatos írao zonos and
2) grips and sniíts tno sliding sloovos. Witn no pump-down
plugs and sloovo-sniíting balls, timo botwoon íraos is only
about 5 minutos. Largo-volumo, nign-rato íraos aro pumpod
down tno ooilod tubing/oasing annulus; smallor, low-rato
íraos oan bo pumpod tnrougn tno ooilod tubing.
Circulation path adds capabilities
Tno oiroulation oapability allows oporators to:
º monitor aotual írao-zono prossuro íor bottor oontrol oí sand
plaoomont
º roduoo wator and onomioals roquiromonts up to 50%
º rooovor quiokly írom soroonouts by oiroulating oxooss sand
out oí tno woll
º uso sand-|ot poríorating to add stagos in blank oasing,
witnout tripping out oí tno nolo
ít all adds up to unlimitod stagos and spaoing, stroamlinod
írao oporations, bottor írao oontrol, lowor-oost oomplotions,
loss onvironmontal impaot, and no drillouts. Call, omail, or
visit our wobsito íor moro iníormation.
Resettable frac isolation on coiled tubing + Grip/ShiftTM sliding sleeves
ncsfrac.com US: 281.453.2222 Canada: 404.862.0870 info@ncsfrac.com

©2012, NCS Enorgy Sorvioos, íno. All rignts rosorvod. Multistago Unlimitod, Grip/Sniít and "Loavo notning bonind."aro tradomarks oí NCS Enorgy Sorvioos, íno. Patonts ponding.
The unique resettable frac plug grips and shifts
the sliding sleeve and isolates the frac zone.
Frac ports
000WCJ-NCS-FP.indd 1 2/26/13 1:35:35 PM WCJ_Jul-Aug_13_p02-03.indd 2 6/27/13 3:11:00 PM
www.cadecanada.com july/august 2013
The offcial publication of the Canadian Association of Drilling Engineers
DEPARTMENTS
5
THE DRAWING BOARD
Editor’s note, member’s
corner, news and notes,
technical luncheons
9 MEMBER PROFILE
10 STUDENT PROFILES
24
BY THE NUMBERS
26 DRILLING DEEPER
SAGD activity reaches
new heights
FEATURES
12 EAGLE FORD
Shale oil and gas is
revitalizing drilling activity
in The Lone Star State
17 UNcONvENTIONAL THINkING
LNG is put to the test in the
Eagle Ford as an alternative
to diesel
20 DUE SOUTH
Canadian companies are
taking advantage of an oil
renaissance in Texas
22 OPPORTUNITY’S cHALLENGE
Production hotspots, as much
as low prices, are redrawing
distribution networks
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: Robert Jackson
PAST PRESIDENT: Eric Schmelzl
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: Mif Purvis
MANAGING EDITOR: Steve Macleod
ART DIREcTOR: Charles Burke
ASSOcIATE ART DIREcTOR: Andrea deBoer
ASSISTANT ART DIREcTOR: Colin Spence
PRODUcTION MANAGER: Betty-Lou Smith
PRODUcTION TEcHNIcIANS: Brent Felzien, Brandon Hoover
cIRcULATION cOORDINATOR: Karen Crane
AccOUNT ExEcUTIvE: Anita McGillis
cONTRIBUTING WRITERS: Matt Hirji, Lisa Ricciotti,
Ryan Van Horne
JULY/AUGUST • 2013
22
PRINTED IN CANADA BY ION PRINT SOLUTIONS.
RETURN UNDELIVERABLE MAIL TO 10259 105 ST.
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PUBLICATION MAIL AGREEMENT #40020055
CONTENTS
©
2013 CADE. NOT TO BE REPRINTED OR
REPRODUCED WITHOUT PERMISSION.
20
17
12
Fracceleration.
Plug-and-porí and ball-aotuatod sloovos aro bruto íoroo
írao motnods tnat bullnoad huids and sand down tno oasing
witn no íoodbaok about íormation rosponso, no rooourso in
tno ovont oí a soroon-out, and no way to manago wator and
onomioals usago. Botn motnods limit tno numbor oí stagos
and usually roquiro post-oomplotion drill-out oí oomposito
plugs or ball soats.
Tno Multistago Unlimitod systom ovoroomos tnoso limitations
and drawbaoks using ooilod tubing as a work string and
oiroulation patn to tno írao zono.
Fast frac isolation, mechanical sleeve shift
Tno work string oporatos tno Multistago Unlimitod rosottablo
írao plug, a dual-íunotion tool tnat 1) isolatos írao zonos and
2) grips and sniíts tno sliding sloovos. Witn no pump-down
plugs and sloovo-sniíting balls, timo botwoon íraos is only
about 5 minutos. Largo-volumo, nign-rato íraos aro pumpod
down tno ooilod tubing/oasing annulus; smallor, low-rato
íraos oan bo pumpod tnrougn tno ooilod tubing.
Circulation path adds capabilities
Tno oiroulation oapability allows oporators to:
º monitor aotual írao-zono prossuro íor bottor oontrol oí sand
plaoomont
º roduoo wator and onomioals roquiromonts up to 50%
º rooovor quiokly írom soroonouts by oiroulating oxooss sand
out oí tno woll
º uso sand-|ot poríorating to add stagos in blank oasing,
witnout tripping out oí tno nolo
ít all adds up to unlimitod stagos and spaoing, stroamlinod
írao oporations, bottor írao oontrol, lowor-oost oomplotions,
loss onvironmontal impaot, and no drillouts. Call, omail, or
visit our wobsito íor moro iníormation.
Resettable frac isolation on coiled tubing + Grip/ShiftTM sliding sleeves
ncsfrac.com US: 281.453.2222 Canada: 404.862.0870 info@ncsfrac.com

©2012, NCS Enorgy Sorvioos, íno. All rignts rosorvod. Multistago Unlimitod, Grip/Sniít and "Loavo notning bonind."aro tradomarks oí NCS Enorgy Sorvioos, íno. Patonts ponding.
The unique resettable frac plug grips and shifts
the sliding sleeve and isolates the frac zone.
Frac ports
000WCJ-NCS-FP.indd 1 2/26/13 1:35:35 PM WCJ_Jul-Aug_13_p02-03.indd 3 6/27/13 4:10:53 PM
“We Commit, We Deliver, No Excuses”
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100 000 to 400 000+ lbs.
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WCJ_Jul-Aug_13_p04-09.indd 4 6/27/13 3:10:05 PM
july/august 2013 www.cadecanada.com
BOARD
The Drawing
Global Experts
UR 4TH EDITION OF THE WELL CONsTRUCTION JOURNaL
this year takes a look at the Eagle Ford and
Permian basins in Texas. Again we are looking
at what Canadian companies and personnel
are doing outside of the Western Canadian Sedimen-
tary Basin.
It continues to amaze me when we are looking for
candidates for our stories exactly how much we do
outside of our own backyard. Everywhere you turn, you
come across another company or person not just work-
ing in a new and different environment, but leading
the way. Canadian expertise is everywhere.
Here at home, CADE’s 2013 Technical Luncheon
Presentations are over for the summer and will resume
in the fall. Please watch for announcements with the
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 of the course of the year. We hope you – the CADE
membership – will participate and continue to make
these events interesting 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.
O
E D I T O R ’ S N O T E
CADE Executive
Team 2012/2013
President Robert Jackson 403-615-9504
Past President Eric Schmelzl 403-862-0870
Secretary Tammy Todd 403 613-8844
Treasurer Cecil Conaghan 403-667-9812
Membership Chairman John Burnell 403-265-4973
Education Chairman Jeff Arvidson 403-232-7100
Social Chairman Dan Schlosser 403-531-5284
WCJ Editor Christian Gillis 403-265-4973
IT Chairman Matthew Stuart 403-605-3790
Communications Chairman Andy Newsome 403-532-0220
Member At-large John Garden 403-265-4973
Sponsorship & Marketing Kyle Klam 403-532-0220
Administrator Kali Charron 403-532-0220
E X E C U T I V E T E A M
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 an-
nouncements to us, as we would be excited to run
them in our new feature section.
We appreciate your continued support and look
forward to seeing you at the upcoming luncheons.
Christian Gillis, Editor
Well Construction Journal
christiang@hawkeyeengineering.ca
403-265-4973
WCJ_Jul-Aug_13_p04-09.indd 5 6/27/13 4:13:03 PM
Well Construction Journal july/august 2013
Welcome NeW members
Kathryn BerKson
Martin rejMan
shaun rousseau
onoMe Clifford ovadje
rooBin ZaMir
Brad sMeaton
MiChelle BalKo
Mehdi noorMohaMMadi
ruturraj Paatil
adeBayo oluwatosin eMManuel
osondu harrison ChuKwueMeKe
Kelvin efeturi oBuKofe
sCott sherMan
Paxton livingston
oluwatosin adeBayo
linden aChen
allan Bouwers
Kevin Playfair
MiKe haZelton
tyler stePhenson
Christian toanChina
siavash MorteZaee fard
augustine oMoBhude
Brent KawalilaK
ross ClanCy
tien dang
Why become a caDe member?
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 beneft 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 lun-
cheons are held with topical industry
presentations. Other membership
benefts include our monthly pub-
lication Well Construction Journal
and a membership directory, which
is the who’s who of the Canadian
drilling industry. Our website – www.
cadecanada.com – is an excellent
focal point for industry events, blogs
and other news. We are also active on
LinkedIn and Twitter.
Who caN become a caDe member?
CADE members can be anyone em-
ployed in the drilling and completions
industry or with merely an interest in
the industry.
Typical members include drilling
and completions engineers, geologists,
technical personnel, sales personnel
and students. Student memberships
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 Sep-
tember to September. During the sum-
mer, CADE members will receive an
email and link for the renewal process
on our website.
Please remember the benefts 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 www.cadecanada.com to
become a member or to update your
contact information.
ME MB E R ’ S C O R N E R
boarD
The Drawing
WCJ_Jul-Aug_13_p04-09.indd 6 6/27/13 4:13:42 PM
july/august 2013 www.cadecanada.com
N E WS A N D N O T E S
Regulatory Reformers
The AlberTA energy regulATor (Aer) found iTs leAding men
and is set to begin its oversight of oil, natural gas and coal
projects in the province. The new regulator took over duties
from the Energy Resources Conservation Board, and Alberta
Environment and Sustainable Resource Development in June.
After the provincial government hosted public consultations
in 19 communities across the province during February and
March, the AER was tasked with balancing industry develop-
ment and landowner rights. The arms-length government body
is headed up by Jim Ellis and Gerry Protti.
Jim ellis
Aer role: Chief exeCutive OffiCer
yeArs of Public secTor exPerience: 30
Ellis served 23 years in the Canadian
Army, retiring as a Colonel in 2006, before
joining the provincial government as the
executive director of the Alberta Environ-
ment Support and Emergency Response
Team (ASERT). He became the Deputy
Minister of Environment in 2008 and the Deputy Minister of
Energy in 2011. During his time with the province, Ellis has
also been president of the Alberta Water Council, chair of the
Alberta Petroleum Marketing Commission, and chair of the
Steering Committee of the Regulatory Framework Assessment
for Carbon Capture and Storage.
gerry ProTTi
Aer role: BOard Chair
yeArs of indusTry exPerience: 35
Protti spent 15 years as an executive with
Encana Corp. and one of its predecessor
companies, PanCanadian Energy Corp. He
was also the founding president of the Ca-
nadian Association of Petroleum Producers
(CAPP) and was executive director of the
Independent Petroleum Association of Canada. Protti also spent
time as assistant deputy minister with Alberta’s Energy Depart-
ment, and he held senior positions with the Alberta Treasury
Department and the Canadian Energy Research Institute.
Revised Drilling Expectations
However, the organization revised its anticipated feet size down-
ward. The CAODC says that new equipment likely will not become
available until later in the year, so it has downsized the annual feet
average from 830 rigs to 823 rigs.
The PeTroleum services AssociATion of cAnAdA (PsAc) And
the Canadian Association of Oilwell Drilling Contractors (CAODC)
revised their drilling activity forecasts for 2013 to indicate a slight
uptick in expected rig activity.
The second update to PSAC’s 2013 Canadian Drilling Activity
Forecast added 600 wells to the original estimate for a total of 12,000
wells expected to be drilled (rig released) across Canada during
the year.
“Drilling activity is keeping on a steady pace this year, and we an-
ticipate another pickup in activity in Q3 and Q4,” said Mark Salkeld,
president and CEO of PSAC. “Even with steady levels of activity
this year, continued low gas prices and the impact of infrastructure
bottlenecks that are squeezing access to new markets are certainly
having an impact.”
The CAODC also recently revised its original 2013 forecast from
10,409 wells to 10,649 new wells expected in Canada during 2013.
The forecast for operating days has also been increased from a pre-
dicted 118,401 days to 121,126 days.
The association also anticipates a pickup in activity levels during
the third quarter and has adjusted its rig utilization rate for the quar-
ter from 35 per cent to 40 per cent, or 330 rigs working.
WCJ_Jul-Aug_13_p04-09.indd 7 6/27/13 4:14:14 PM
Well Construction Journal july/august 2013
BOARD
The Drawing
T E C H N I C A L L U N C H E O N S
Save the Date
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)
N E WS A N D N O T E S
ERCB Releases Hydraulic Fracturing Directive
The energy resources conservaTion Board (ERCB) has is-
sued a new directive for hydraulic fracturing, which includes
new requirements for wellbore integrity.
Directive 083: Hydraulic Fracturing - Subsurface Integrity
was released following a two-month stakeholder consulta-
tion period.
The board says the new directive, “represents a notable
enhancement to existing regulatory oversight and monitor-
ing as resources development continues and technology
adapts.” The ERCB’s review identifed three specifc areas
that required further regulatory response: maintaining well
integrity, inter-wellbore communication and hydraulic frac-
turing operations at shallow depths. The regulatory changes
and additions will come into effect in August 2013.
MainTaining Well inTegriTy
The ERCB observed that, for hydraulic fracturing operations,
there is an emerging trend toward the use of single-barrier
wellbore construction, rather than dual-barrier construction,
to provide a secure pathway for fuid injection and recovery
from the reservoir. While the ERCB has had no reports of
single-barrier well systems losing integrity, the introduction
of enhanced regulations will provide an added measure of
protection.
The board believes the risks to well integrity associated with
single-barrier well systems can be effectively managed by an
operator. The new directive requires licensees to demonstrate
that operational risks have been considered in the selection
and design of the wellbore construction, and to monitor
and test to ensure that well integrity is maintained.
inTer-WellBore coMMunicaTion
To address the risks associated with inter-wellbore commu-
nication, the proposed directive requires licensees to carry
out a risk assessment and prepare a well control plan to
manage unintended inter-wellbore communications, and
reduce the impacts if a communication event occurs.
The ERCB believes prevention and mitigation through
proper planning and execution will enable licensees to ef-
fectively manage risks associated with inter-wellbore com-
munication.
FracTuring operaTions aT shalloW depThs
Current regulatory requirements for shallow fracturing op-
erations, outlined in Directive 027, focus on shallow zones
up to 200 metres below the surface. Given a favourable
economic environment, zones between 200 and 600 metres
(depths above the base of groundwater protection in many
areas) may also be subject to future development.
Under the new directive, all licensees carrying out hy-
draulic fracturing operations in this zone must:
• conduct a risk assessment,
• observe prescribed setbacks for water wells and top of
bedrock, and
• use environmentally-friendly chemical additives or fuid
compositions above the base of groundwater protection.
Our popular Technical Luncheons have wrapped for the
2012/13 year. We are in the process of planning an exciting
new series for 2013/14. What topics would you like to see
covered in the upcoming year? Membership input is valu-
able to us and we want to make sure we are covering the
topics that are important to you.
GST REGISTRATION #R123175036
Visit www.cadecanada.com
for all ticket purchases
Please call or email with your great ideas:
Christian Gillis, Managing Editor,
Canadian Well Construction Journal
christiang@hawkeyeengineering.ca
(403) 265-4973
WCJ_Jul-Aug_13_p04-09.indd 8 6/27/13 4:14:43 PM
july/august 2013 www.cadecanada.com
PROFILE
Member
By Mif Purvis
R
Small Footprints
andy Hawkings Has spent 22 of His
34

years in the oil and gas business as a drilling
engineer on the exploration side, at home
and abroad. Hawkings also spent 12 years
as a drilling contractor, specializing in new rig con-
struction and footage drilling. He was a principal
at Enercon International and Enercon Engineering,
providing drilling project management services
for a host of clients in North and South America.
He left a position as vice-president and general
manager of Lakota Drilling Division for Savanna
Energy Services in 2007 to consult in Texas, and
then went on to form CanElson Drilling Inc. in
2008. With colleagues, he used his industry experi-
ence working in challenging conditions to create
rig packages that would produce great results.
“We knew they’d be useful,” he says about
CanElson’s rigs. “They’re a small footprint, plug-
and-play, ultra-heavy telescop-
ing double rig. And they’re
very fexible to meet a maxi-
mum number of conditions.
They are the Swiss Army Knife of rigs.”
Hawkings says the rigs CanElson brings to the
Permian Basin operate at depths of between 2,000
and 5,500 metres, but they are small enough to en-
sure maximum portability and minimum fat time.
Where a triple rig could take three days or more to
prep, CanElson’s svelte double rigs take a half day
to assemble.
“We can take them up long roads to tight loca-
tions and they’re effective in any kind of weather,”
Hawkings says. “We operate in adverse conditions
with maximum effciency.” A typical CanElson
rig at work in the Permian Basin would have (for
example), a 4,000-metre/14,500-foot telescop-
ic double, with two 1,000 HP mud pumps and
4 ½-inch G105 drill pipe.
The rigs are just part of the picture. They are
powerful but, in a smaller package, they generate
more productive time, and each dollar saved goes
into the next well. It adds up to portability, not just
of the rigs, but of CanElson’s and Hawkings’ exper-
tise and track record.
When CanElson moved into the Permian Basin
in Texas, it brought in a 100-per-cent Canadian
crew and managers. “Local workers had never been
exposed to this kind of rig,”
Hawkings explains. His team
set to work training the Texans
on the specifcs of the rig, and
on its safety and maintenance. Today, just 30 per
cent of the team is Canadian.
“We are proud to transfer the tech. Happy
to train locals. We’ve hired vets returning from
Afghanistan and Iraq, and they have proven very
successful,” Hawkings says.
“Our rigs are clean and well maintained. We
train the local people on our rigs to think of safe-
ty, performance and maintenance,” he continues.
“We didn’t set out to change work cultures, but it
has been very rewarding to see the guys on our rigs
improve and take pride in their work. We are proud,
but not arrogant.” CanElson has seen similar
success in training local crews to high standards on
well sites in Mexico, too.
When Hawkings struck out to partner in
CanElson, it was to get back into the nuts-and-bolts
of working with a group of colleagues, and provid-
ing lean, effective solutions. “For me, the thrill is in
fnding and showing the effciencies,” he says.
Randy Hawkings brings the
Swiss Army Knife of rigs to the
Permian Basin, along with big
gains in efciency
Hawkings says he didn’t set out
to change work cultures.
WCJ_Jul-Aug_13_p04-09.indd 9 6/27/13 4:15:12 PM
Well Construction Journal 10 july/august 2013
M
ariana Murillo has coMpleted her third year of
chemical engineering at the University of Calgary and is
currently an engineering intern with TransCanada Pipe-
Lines Ltd. She will be in the intern position for 16 months
in the company’s Pipeline Integrity Department.
Murillo has been an active member of the Petroleum and Energy
Society (PES) student chapter at the university for the past two years.
As this year’s Internship Representative, she is looking forward to
planning many events and collaborating with industry luncheons,
so students can increase their exposure to current topics and their
interaction with experienced professionals in the oil and gas sector.
After graduating from university, Murillo plans to travel to Europe
and South America with her family.
Young Talent
Highlighting tomorrow’s best and brightest
Student
PROFILES
Mariana Murillo
Chemical Engineering
University of Calgary
hilip Gunn is halfway throuGh the petroleuM
Engineering Technology program at SAIT Polytechnic,
having just fnished his frst year. Gunn chose to focus his
career in the oil and gas industry after a brief stint working
with bitumen at a core analysis lab in Calgary.
Gunn is spending the summer working in the oil patch as a Stu-
dent Field Operator with Pengrowth Energy Corp. at a site just north
of Sundre, Alberta. He has not decided yet if he will join the industry
full-time after completing the SAIT program or if he will continue
his education at the university level. However, Gunn is excited to get
involved with the industry and aspires to work internationally later
in his career, just as his father has.
P
Philip Gunn
Petroleum Engineering Technology
SAIT Polytechnic
HELP WANTED: Career Department
oil and Gas opportunities across canada
continued developMent of canada’s oil and Gas industry
could sustain between 900,000 and one million jobs across the
country in the next 10 years.
The Petroleum Human Resources Council of Canada estimates
in a recent report – titled, The Decade Ahead: Labour Market Outlook
to 2022 for Canada’s Oil and Gas Industry – that only 20 per cent
of those jobs will be direct jobs in the sector. Almost half of
the jobs will be indirect jobs in industries like construction,
manufacturing, transportation and warehousing; and the rest will
be “induced” jobs driven by the spending and service needs of
direct and indirect industry workers.
“For every job created in our industry, three more are created in
other areas of the economy,” said Cheryl Knight, executive director
of the council, which is now part of Enform. “But to achieve this
workforce growth, the industry will actually need to fnd between
125,000 and 150,000 new workers by 2022.”
The report analyzed two potential industry activity scenarios:
a low growth scenario, in which market diversifcation does not
occur; and an expansion scenario, in which Canadian suppliers
succeed in gaining access to a range of international markets.
WCJ_Jul-Aug_13_p10-11.indd 10 6/27/13 4:17:32 PM
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Direct industry employment in 2012 is estimated at more than 195,000
people, which is up 10 per cent from 2009. Depending on the industry
activity scenario, direct employment over the next decade will increase
between nine and 20 per cent, with employment levels somewhere
between 213,500 and 233,900 by 2022.
“As many as 38,700 new positions may need to be flled, or as few as
18,300,” said Knight in a news release. “While the industry is growing, it
will also be losing workers to retirements and turnover.”
The labour market outlook estimates approximately 45,000 workers
will be lost to age-related attrition. With a large workforce of approxi-
mately 200,000 people, three per cent annual turnover results in an
additional 6,000 hires a year.
“The result is that labour shortages will persist throughout the coming
decade, in either scenario,” said Knight. “Skill shortages are critical and
every sector will be affected.”
The oil and gas services sector will have the largest requirement, need-
ing between 37,700 and 47,900 new employees. The oil sands sector will
need between 14,900 and 22,200 new workers, conventional producers
will need between 6,850 and 10,700 people, and the pipeline sector will
need from 3,000 to 3,250 employees.
HELP WANTED: Career Department
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 feld.
Coke: an insoluble organic deposit that has low hydro-
gen content. It is also known as pyrobitumen. Coke is
formed by thermal cracking and distillation during in
situ combustion.
Trip pill: a volume of mud that is denser than the mud in
the drillpipe and wellbore annulus. Also called a slug, it is
used to displace mud out of the upper part of the drillpipe
before pulling pipe out of the hole.
Bullhead: to forcibly pump fuids into a formation. If
the formation fuids contain hydrogen sulfde gas, bull-
heading prevents the toxic gas from reaching the surface.
Bullheading is also performed if normal circulation can not
occur, such as after a borehole collapse.
S
o
u
r
c
e
:

S
c
h
l
u
m
b
e
r
g
e
r

O
i
l
f
e
l
d

G
l
o
s
s
a
r
y
Continued...
WCJ_Jul-Aug_13_p10-11.indd 11 6/27/13 4:17:50 PM
Well Construction Journal 12 july/august 2013
REPORT
Special
WCJ_Jul-Aug_13_p12-16.indd 12 6/27/13 4:18:42 PM
july/august 2013 13 www.cadecanada.com
inal numbers are still unknown, but the u.s.
Geological Survey (USGS) estimates the Eagle Ford
holds between seven billion and 10 billion barrels
of recoverable reserves, which is roughly double
that of the prolifc Bakken Shale to the north. That would
make Eagle Ford the largest onshore oil reserve ever dis-
covered in the Lower 48.
Those reserve numbers are attracting development.
A report from the Railroad Commission of Texas, the
state’s oil and gas regulator, anticipates capital investment
in the play to nudge $30 billion in 2013 alone, a fgure
of oil sands proportions. Citing a 2012 Wood Mackenzie
study, the commission’s analysis predicts that between
2013 and 2015, the Eagle Ford Shale will become the
largest standalone energy project in the world as measured
by capital expenditures.
location: South and east Texas
resource: Light oil, natural gas,
natural gas liquids
GeoloGy: Shale
Depth: 1,200 to 3,600 metres
estimateD recoverable reserves:
7 – 10 billion barrels
proDuction: 609,407 barrels per day of oil and
condensate,* 1.9 billion cubic feet per day*
major proDucers: EOG Resources Inc., BHP
Billiton, Chesapeake Energy Corp., ConocoPhillips,
SM Energy Co., Marathon Oil Co., CNOOC Ltd.
*Average for frst quarter of 2013 according to the
Railroad Commission of Texas
F
By Steve MacLeod
WCJ_Jul-Aug_13_p12-16.indd 13 6/27/13 4:20:10 PM
Well Construction Journal 14 july/august 2013
Everything is
Bigger in Texas
he eagle Ford Shale haS the potential
to be the single most signifcant economic
development in our state’s history,” stated
David Porter, commissioner of the Railroad
Commission of Texas – the state’s oil and gas
regulator – in its March 2013 Eagle Ford Shale Task
Force Report.
The play is named after the town of Eagle Ford,
which is about 10 kilometres west of Dallas. Petro-
hawk Energy Corp. drilled the frst Eagle Ford well
in 2008 and had immediate
success. Gas fowed from the
company’s discovery well,
which was a 975-metre lat-
eral with 10 fracture stages,
at a rate of 7.6 million cubic
feet per day.
That same year the state issued 26 permits for
Eagle Ford developments, but it rapidly bloomed
as the enormity of the opportunities sunk in with
operators. Over the ensuing four years, a total of
8,075 new permits were approved. There were
4,145 issued in 2012 alone.
Anadarko Petroleum Corp. drilled almost 700
wells as the formation’s top gas operator during
2012. EOG Resources Inc. was the top operator
for oil wells in 2012 with more than 800 wells,
according to a March 2013 University of Texas
at San Antonio economic study of the Eagle Ford.
The Railroad Commission reported there were 875
producing gas wells and 1,262 producing oil wells
on schedule in the region during 2012.
The Eagle Ford is particularly notable and suc-
cessful because of its high oil production levels
compared with other shale plays, so it’s been
highly economic even in times of low natural gas
prices. According to a report from Platts in March
2013, Eagle Ford production quality is high and
variable – API gravity ranges from 38 to 60.
Talisman Energy Inc. holds about 74,000 net
acres in the southern part of the Eagle Ford. Along
with its joint venture partner Statoil, Talisman’s
strategy in Eagle Ford is focused on developing
areas with higher liquid yields. The Calgary-based
company fnished 2012 with production from the
formation at 20,000 barrels of oil equivalent per
day, which was a four-fold in-
crease from 2011.
The carbonate shale per-
centage can be up to 70 per
cent in the south Texas part of
the formation, so it takes well
to hydraulic fracturing. As
the play stretches from the Mexican border along
the Gulf Coast into east Texas, it measures about
80 kilometres wide, has an average thickness of 75
metres and sits at depths ranging from 1,200 to
3,600 metres.
The cretaceous-age rock can be tricky to navi-
gate. “It can be complex,” says Matt Graham,
senior completions engineer at Talisman in the
Eagle Ford, whose role is to design completions
and hydraulic fracturing treatments there.
“We have no real issues getting fracks in the
ground; we’re fnding that, based on production
logs, there might be actual sweet spots in the rock
that might be surprising,” he says. “I think the
biggest challenge is understanding the rock and
understanding where we should land laterals.”
Graham came to the Eagle Ford about a year ago
from the Marcellus Shale in Pennsylvania. Before
that, he spent three years working in Western
T
REPORT
Special
Shale oil and gas is revitalizing drilling activity in The Lone Star
State and the Eagle Ford is leading the way
By Graham Chandler
“the eagle Ford Shale has the
potential to be the single most
signifcant economic development
in our state’s history.”
– David Porter, commissioner of the
Railroad Commission of Texas
WCJ_Jul-Aug_13_p12-16.indd 14 6/27/13 4:20:36 PM
july/august 2013 15 www.cadecanada.com
Everything is
Bigger in Texas
Canada with Talisman. “Our acreage there stretches from near
Calgary to Edmonton and we have fve different phase windows, so
each phase window has its own operational challenges – like from
black oil to dry gas,” Graham says. “I think anywhere you go you
try to fgure out where the phase windows are within the shale; it
is always a challenge. You have to drill wells and produce them to
actually fgure it out.”
“There’s depth, there’s distance, there’s the
variability and the phases,” he adds, which re-
sults in varying lateral lengths. Graham notes
that the laterals average about 16 frack stages.
The land is also one of the big differences
working down in Texas compared with Western Canada. “Lease
constraints, that’s one thing that really surprised me down here,” Gra-
ham says. “You have pretty much a patchwork of land, which could
be ideal or not. With your multiple mineral holders, it seems diffcult
in some areas compared to the nice township system in Alberta.”
The mixture of oil and natural gas liquids production in the Eagle
Ford has also created several new aspects for Graham to deal with,
setting it apart from from his time producing dry gas in the Marcel-
lus. “In the Eagle Ford there are all types of issues you have to deal
with: downhole issues, producing issues, surface handling of the pro-
duced liquids,” he says. “Whereas in the Marcellus, you are worried
about the water you produce back and the gas that you produce.”
As with many areas with limited lakes and rivers, water availabil-
ity in the Eagle Ford Shale is a factor in drilling activity growth. Cur-
rently, almost 90 per cent of the new (not reused or recycled) water
used for hydraulic fracturing is groundwater. To further encourage
reuse and recycling of fowback and produced
water, the Railroad Commission is currently
amending its water recycling rules.
The frenzied growth is impacting more than
just water use. “Our centre of activity is in Three
Rivers,” says Graham. “It’s crazy the hotels that
are popping up. We saw that in Pennsylvania as well; I think it’s a
normal course of oil booms everywhere.”
Community colleges are ramping up oil and gas training courses.
And the limited number of pipelines to markets has helped propel
unprecedented increases in truck traffc, up to 86 per cent according
to a recent state government study.
The Eagle Ford enjoys a distinct advantage over other shale plays:
it sits just 200 kilometres or so from the Texas Gulf Coast refning
hub, which accounts for nearly half of the total 15.3 million bpd
refning capacity in the U.S.
“Lease constraints, that’s one thing
that really surprised me down here.”
– Matt Graham, senior completions
engineer with Talisman Energy in the
Eagle Ford
WCJ_Jul-Aug_13_p12-16.indd 15 6/27/13 4:21:01 PM
Well Construction Journal 16 july/august 2013
REPORT
Special
While pipeline infrastructure
is falling behind the skyrocketing
production, producers are still
fnding ways to get pro-
duction to the coast.
Dozens of small diam-
eter gathering lines are
under construction to
feed transmission lines
into the Houston and Cor-
pus Christi areas. Construction
on more of the larger, mostly
20-inch pipelines is underway too,
such as the Double Eagle Pipeline
and the Sand Hills
Pipeline. Kinder Mor-
gan also announced
in May it will expand
its 300,000 bpd crude
and condensate pipe-
line from the Eagle
Ford play to the Houston Ship
Channel.
Suffcient capacity overall is not
expected until 2014-2015. Until
then, much Eagle Ford production
will move on trucks and rail. To
handle that, the overloaded Port of
Corpus Christi is quickly upgrad-
ing. Some Eagle Ford production is
absorbed by refneries close by, in-
cluding Valero’s Three Rivers refn-
ery, which processes 100,000 bpd
and the Nixon refnery at nearly
15,000 bpd.
Brisk Eagle Ford production is
even changing U.S. oil shipping pat-
terns. Corpus Christi-loaded Eagle
Ford crude barges are now regularly
delivering to Louisiana, and tank-
ers routinely move Eagle Ford crude
to the U.S. Atlantic coast, displac-
ing some imports. Corpus Christi’s
crude loadings jumped to 280,000
bpd in late 2012 from almost none
three years before.
Those trends will likely continue
as production is expected to rise in
the coming years and will need a
destination. Oil produced from the
Eagle Ford averaged 129,000 bpd
during 2011 and jumped to more
than 512,000 bpd by March 2013.
At Bentek’s May symposium in Houston earlier this year, one
presenter said he expected production from the region to exceed
1.4 million by 2016.
As with other oil and gas regions of North America, this kind
of booming activity – with the availability of modern frack-
ing technology – has brought renewed attention to more ma-
ture conventional felds. The Permian Basin of West Texas is no
exception.
The Permian Basin has produced close to 29 billion barrels
since its frst well in 1921. The formation accounted for 57 per
cent of Texas crude production in November 2012 – around
1.3 million bpd – and has long been the production centre for
the benchmark West Texas Intermediate (WTI). It adjoins south-
eastern New Mexico and extends about 400 by 480 kilometres.
Several formations produce oil and
gas from depths ranging from a few
hundred metres to 8,000 metres.
Growing unconventional production
is expected to boost Permian output
past 1.7 million bpd by 2016.
It certainly attracted full-service
drilling fuids provider Q’Max Solutions, which serviced its frst
Permian Basin well in 2008. “We were operating in the Barnett
shale gas play and, as gas prices declined, so did drilling activity,”
recalls Tony Davis, founding partner and executive vice-presi-
dent with the Calgary-based company. “We looked for alterna-
tive markets for our Mudstripper water conservation technology
and quickly found one in the Permian Basin.”
Using the fracking techniques of shale plays, multiple intervals
within a well are now being perforated in the Permian, allow-
ing for multiple contributing zones from 2,100 to 3,600 metres.
Davis says the biggest challenge for drillers in the region are also
regarding water usage because most operators use water-based
drilling fuid systems.
“Each one can consume over 30,000 barrels of fresh or brine
water,” he says, while pointing out that the Q’Max system recy-
cles the majority of that water. “Our MudStripper Unit removes
the solids from the active system while drilling, returning 99 per
cent solids-free water for reuse.”
Despite offering innovative technology, being an outsider
in the Texas oil patch is not for the faint of heart, Davis says.
“The biggest difference is we are considered the new kid on the
block,” he says. “In Canada we have the luxury of having been
in business for 20 years and have built a reputation. Not so in
the Permian. We have to prove ourselves every day. Texas is
similar to Western Canada in that the industry is very much
relationship driven.”
The new shale developments like Eagle Ford and Bakken, and
other plays including revitalized conventional felds like the
Permian, are expected to boost U.S. crude production to levels
not seen since Alaska North Slope production peaked. The Eagle
Ford, the Permian Basin and the Bakken alone could reach over
fve million bpd by 2016 – with Eagle Ford leading the way.
“Texas is similar to Western Canada
in that the industry is very much
relationship driven.”
– Tony Davis, Q’Max Solutions founding
partner and executive vice-president
WCJ_Jul-Aug_13_p12-16.indd 16 6/27/13 4:21:27 PM
july/august 2013 17 www.cadecanada.com
F
Unconventional
Thinking

A Calgary company helped turn the booming Eagle Ford into a
proving ground for using liquefed natural gas to power hydraulic
fracturing operations
REPORT
Health & Safety
By Ryan Van Horne
erus Inc. Is a cryogenIc company at
heart. It was only natural that the Calgary-
based company started looking at liquefed
natural gas (LNG) opportunities four years
ago, because the technology to make it and move
it is fairly similar to the company’s established
liquid nitrogen and carbon dioxide business. The
opportunity to develop a low-emission solution for
hydraulic fracturing operations led Ferus to south
Texas.
The liquefed natural gas division of Ferus LP
teamed up with Baker Hughes Oilfeld Operations
to run a pilot project in the Eagle Ford Shale that
used LNG as the fuel source to stimulate well per-
formance. The pilot had six 2,250-horsepower units
using LNG in their dual-fuel engines.
The job was completed in October 2012 at a site
near Pearsall, Texas, and shortly after the Baker
Hughes business unit announced it was converting
a feet of Rhino-brand fracking units to run the
dual-fuel engines for Cheyenne Petroleum Co.
Jed Tallman, manager of market development for
Ferus’s U.S. operations in Denver, says the industry
is embracing the new technology for two main
reasons: lower emissions and lower costs.
“The emissions are reduced signifcantly because
natural gas burns so much cleaner than diesel,” Tall-
man says, and notes that using natural gas instead
of diesel can lower carbon dioxide emissions by 30
per cent, nitrous oxide emissions by 75 per cent,
particulate emissions by 90 per cent, and sulphur
dioxide emissions by 99 per cent.
While cost is another factor to the interest in us-
ing LNG as a fuel to power equipment out in the
feld, the savings vary. “You can get a 20 to 40 per
cent cost reduction compared to diesel, but that
depends on location,” Tallman says.
About a month before the successful pilot,
Baker Hughes unveiled the technology at a
high horsepower summit in Houston, so other
companies were aware of it – and watching with
interest. “It’s being more widely used throughout
WCJ_Jul-Aug_13_p17-19.indd 17 6/27/13 4:26:53 PM
Well Construction Journal 18 july/august 2013
the industry,” Tallman says. “The largest service
companies, such as Halliburton and Schlumberger,
have started doing it.”
The technology has also made its way north of
the border. “It has been used several times in the
Montney play,” Tallman adds.
Ferus began supplying cryogenic fuids for well
completions in the oil and gas industry back in
2004. The company operates 11 plants at eight
locations across North America and launched its
LNG operations in late 2011.
The dual-fuel engines still used diesel, but are
converted so they can also burn LNG. Tallman says
the amount of LNG used varies between 10 to 70
per cent, but the average is 50 per cent. “Those
engines can revert at any time back to 100 per
cent diesel,” he says. “You don’t need to replace
engines; you just need to add some components
to them.”
Operators will also have
to add equipment to store
LNG and vapourize it before
feeding it into the engines,
but Travis Balaski, manager
of market development for
Ferus in Canada, says that’s
creating opportunities for several companies across
North America.
Companies such as American Power Group Inc.,
Caterpillar and ComAp have developed dual-fuel
engines, while Ferus worked with suppliers to
design the equipment that is necessary to get the
LNG to the well site.
“We do not manufacture our own equipment,
but we do assist in the design and engineering of
the equipment,” Balaski says. “This way we get the
type of equipment that best meets our customers’
needs.”
The company spent about two years performing
technical research and development before
partnering with Baker Hughes. Ferus then brought
in other resources from across North America,
including some third-party products, to make sure
the pilot was successful. Now that the technology
is proven, Ferus anticipates of a network of LNG
plants will develop in energy hotspots.
The temperature of LNG increases over time and
the colder the fuel is, the more energy it provides
per litre. Because of the perishable nature of
LNG, and the cost of transporting it, Balaski says
the delivery model will be different than the oil
industry which uses large centralized oil refneries.
Out in the feld is an obvious place for natural gas
operators to look for cost savings, but rationalizing
offce operations can also help contain costs.
REPORT
Health & Safety
“We’ll build smaller scale plants and try to
locate them close to the demand,” Balaski says.
Ferus recently partnered with Encana to
construct a liquefaction facility in the Grande
Prairie region of Alberta. The LNG plant will have
a capacity of 190,000 litres per day.
“Encana has large operations in the region and
Ferus has a substantial trucking feet,” Balaski
says. “The two of us bring base load, the two of
us bring experience in natural gas and cryogenic
processing. It was a good, natural ft for the two
of us to partner on that project.”
Construction started earlier this year and Balaski
expects the plant to be operational early in 2014.
Encana is eager to start the transformation to
natural gas as a fuel source in the oil industry, but is
eyeing a bigger market. “These are signifcant early
steps to demonstrate the viability of natural gas as a
transportation fuel,” says David Hill, vice-president
of operations for Encana
Natural Gas Inc.
Hill says the Grande
Prairie plant will be in
the middle of an “energy
corridor” with “massive
natural gas potential.”
Encana’s goals for the project are the same as
Ferus envisioned for the use of LNG in the feld:
lower costs and lower emissions. Encana expects
to lower its costs by reducing its dependence
on bringing diesel fuel into the region, and
the company also wants to “lower our carbon
footprint from well to wheels,” Hill says.
Another beneft that Hill sees is an “increased
social licence to operate” by creating local jobs,
using local fuel, and supplying it to others.
With Encana planning to prove that it is
sustainable to use natural gas in high-fuel
consuming applications, such as drilling and
pressure-pumping services – and service companies
gearing up to supply the growing demand – there
is momentum building for using LNG in the feld
as a fuel source.
“In B.C. and Alberta, we’re seeing the market
beginning to open up and be more receptive to
natural gas,” Hill says. “I think we’re going to see
several companies making announcements this
year and into early next year.”
Hill anticipates the opportunity to stretch
beyond oil and gas: rail, marine and trucking
industries could all convert to this technology.
“We’re scratching the surface,” he says.
“We’ll build smaller scale plants
and try to locate them close
to the demand.”
– Travis Balaski, manager of market
development for Ferus in Canada
WCJ_Jul-Aug_13_p17-19.indd 18 6/27/13 4:27:19 PM
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WCJ_Jul-Aug_13_p17-19.indd 19 6/27/13 3:11:55 PM
Well Construction Journal 20 july/august 2013
A
Due South

A handful of Canadian companies are taking advantage
of an oil renaissance in Texas
REPORT
Tech
By Matt Hirji
fter producing nearly 3.5 million barrels
of oil per day during 1972, annual production
steadily declined in Texas for the next 37
years. According to the United States Energy
Information Administration, by 2009 the Lone Star
State was producing just 1.1 million bpd.
In recent years, light oil production from the
Bakken formation in North Dakota has threatened
to displace Texas as the top oil-producing state, but
a rapid rise in production during the past three
years has reestablished Texas as a hotbed of drilling
activity – a tradition that started when a derrick just
outside of Beaumont, Texas, began gushing oil in
January 1901.
The U.S. EIA reported oil production levels from
Texas reached nearly 2.3 million bpd during Febru-
ary. It was the highest daily output the state had
seen since April 1986.
Horizontal drilling and hydraulic fracturing
helped retrieve oil and natural gas from the shale
rock of the Eagle Ford in south Texas to kick-start
the resurgence. Those same technologies are also
bringing increased production from conventional
wells in the Permian Basin in West Texas and in-
creased opportunity for Canadian drilling and well
service companies to offset the slowdown during
spring breakup by keeping operations moving in
Texas year-round.
SAvAnnA EnERgy CORPORATiOn
The Calgary-based company was established in
2001 and offers drilling, well servicing and oilfeld
equipment rental services. The public company has
grown its feet to include more than 100 drilling rigs
and more than 100 well service rigs.
Savanna’s U.S. operations are based in Houston,
Texas, and the American feet includes 27 drilling
rigs and 11 well service rigs. Texas’s Permian Basin
is home to 15 of those drilling rigs, and according
to the company’s frst quarter report this year, con-
struction has begun on three additional service rigs
for the U.S. operations.
During 2012, Savanna undertook a program con-
verting eight of its CT-1500 drilling rigs to deeper
capacity TDS-3000 rigs. The latest generation of the
company’s hybrid rigs – capable of operating coiled
tubing or conventional top drive from the same rig
– has been designed to reach depths of 3,000 metres.
While six of the converted rigs stayed in Alberta, the
other two joined the Texas drilling feet.
WCJ_Jul-Aug_13_p20-21.indd 20 6/27/13 4:28:51 PM
] [
Cathedral Energy Services
operates in some of the
toughest and most challenging
environments. Our relentless
focus on innovative technology
and industry leading service
ensures we provide our clients
with unmatched performance.
Drilling+Completions
CathedralEnergyServices.com
Cathedral energy ServiCeS ltd.
Ten years after launching in Western Canada, Cathedral Energy
Services began providing production testing services in the U.S. in
2008. During the frst quarter of 2013, the Calgary-based company
hit a record level of quarterly revenue from production testing in the
U.S. by bringing in $8.2 million, which eclipsed production testing
revenue in Western Canada for the quarter.
The public company also provides drilling, measurement while
drilling systems and downhole tools to operators. Part of Cathedral’s
capital budget for 2013 included $3 million to augment the
production testing division with three frack fowback units to be
utilized in the Eagle Ford region. The three units were built during
the frst quarter and the “green completion” closed loop units are
now operating in Texas.
CanelSon drilling inC.
Founded in 2008 by current president and chief executive offcer
Randy Hawkings, CanElson is a relatively new upstart, but the Cal-
gary-based company is rapidly emerging as a major player in North
America’s growing oil and gas industry.
The public company expanded into the U.S. early and deployed
its frst American rig in the Permian Basin in late 2009. CanElson
has expanded rapidly since then, recording $229 million in revenue
during 2012 – which represented a 24-per-cent increase from one year
earlier – from a feet of 42 drilling rigs.
CanElson has already added two drilling rigs in Texas to bring the ar-
ea’s feet total to 12 rigs, which marks the company’s most active region
behind Saskatchewan-Manitoba where 14 drilling rigs are located.
enSign energy ServiCeS inC.
In the late 1980s, Ensign Energy had four drilling rigs. Today, the
Calgary-based company has about 340 drilling rigs operating around
the world, with 236 of those rigs scattered across numerous uncon-
ventional plays in North America.
Ensign pulled in revenue during 2012 of $2.2 billion and roughly
43 per cent of that came from business in the U.S. The company has
116 drilling rigs operating south of the border, which last year had a
utilization rate of 57.4 per cent compared to a 38.8 per cent utilization
rate for the company’s Canadian feet.
The cornerstone of Ensign’s drilling operations is its proprietary
Automated Drilling Rig (ADR), which, as the name suggests, is a
completely automated, computer-controlled system that allows the
drilling rig to be taken down, moved and installed faster than a
conventional rig, and can also be equipped to reduce pipe handling
on the drill foor. Eight of the 10 drilling rigs Ensign has currently
running in south and east Texas are ADRs.
WCJ_Jul-Aug_13_p20-21.indd 21 6/27/13 4:30:06 PM
22 july/august 2013 Well Construction Journal
I
Challenge and
Opportunity
As much as low prices, production hotspots are creating opportunities and
redrawing North American distribution networks
REPORT
Market
By Lisa Ricciotti
t’s time to update the list of things that
are bigger in Texas. Along with the Lone Star
state’s big size and its inhabitants’ big hats and
bigger-than-life attitudes, Texas can now reclaim
its top spot in the ranks as the biggest crude oil pro-
ducer in the U.S.
Texas became synonymous with geysers of black
gold when Spindleford’s Lucas No. 1 well blew 100
feet into the air in 1901. But, many decades later, the
state ceded its status as the oil king to new challengers
like Alaska’s North Slope oil felds in the 1980s and,
more recently, to North Dakota’s Bakken shale light
oil reservoir. But if you’ve been living in a cave and
haven’t noticed, Texas is back, thanks to a behemoth
shale formation of its own – the Eagle Ford.
Both the Bakken and the Eagle Ford have become
prolifcally productive in a very short span. So much
so, that an abundance of Bakken light oil is often
blamed for devaluing the price of Alberta bitumen
in the American Midwest, where Bakken barrels now
food into what was one of Canada’s prime markets.
In December 2012, Western Canadian Select (WCS)
prices for a barrel of heavy crude plummeted to a re-
cord low, trading more than US$40 below West Texas
Intermediate (WTI), North America’s benchmark
blend. The Bakken’s negative impact on Canadian
heavy crude prices dominated headlines in late 2012
and early 2013 – and inspired Alberta’s Premier
Alison Redford to coin the now-famous term “bitumen
bubble” to describe the unfavourable gap between
higher WTI prices (and even higher Brent world prices)
versus Alberta’s discounted WCS bitumen.
Meanwhile, as producers scrambled to fnd ways to
move the glut of crude past bottlenecked Midwestern
pipelines, the Eagle Ford play quietly caught, then
surpassed, North Dakota’s impressive production
fgures. By early 2013, the Eagle Ford had doubled its
2010 production levels to more than 500,000 barrels
per day.
It raises a new worry for Canadian producers. By
May, the bitumen bubble had defated considerably,
thanks in part to increased rail transport of an esti-
mated 100,000 b/d of Canadian crude to U.S. mar-
kets, along with the resolution of 2012’s unexpected
pipeline and refnery maintenance issues. But now
that the WCS has returned to its historical discount,
a range of US$15 to US$20 below WTI, is Alberta
bitumen on the brink of another crash, this time due
to competition from the Eagle Ford? Will a Bakken-
like effect move south, giving Alberta a second, truly
Texas-sized pricing headache, as it competes with
ramped-up production from Eagle Ford?
WCJ_Jul-Aug_13_p22-23.indd 22 6/27/13 4:30:42 PM
july/august 2013 23 www.cadecanada.com
“Yes and no,” says Greg Stringham, vice president of oil sands and
markets at the Canadian Association of Petroleum Producers (CAPP).
“There’s no simple answer,” agrees Barry Munro, oil and gas leader at
Ernst & Young Canada in Calgary.
The two energy experts aren’t dodging the question. Their answers
refect the new reality of North American oil production and pricing
– complex, dynamic and in the midst of a fundamental transformation.
Production profles have changed substantially in just fve years, mar-
kets are diversifying, and supply chains are shifting. As well, production
has increased from all bases, not just the Eagle Ford and the Bakken,
putting pressure on the entire distribution network. The time-honoured
supply-and-demand economic model remains relevant to pricing, but
new issues, such as a resolution of infrastructure constraints and pursuit
of a method to move the right type of crude to the right refneries, have
become equally important.
Stringham is fresh from turning a staggering stack of stats, trends and
data into CAPP’s annual long-term outlook for Canadian crude oil pro-
duction, and he’s upbeat. Crude Oil: Forecast, Markets & Transportation, a
45-page report released in June, bullishly predicts that Canada will hit a
record 6.7 million b/d by 2030, up 500,000 b/d from last year’s estimate.
Stringham says CAPP is watching developments closely in the Eagle
Ford, but doesn’t expect the surge in tight oil from Texas will negatively
impact Canadian prices as the Bakken has.
“Eagle Ford is an entirely different situation from the Bakken because
of its location,” says Stringham. The majority of
refneries clustered across the Midwest process
light oil and/or upgraded bitumen. Before the
Bakken boom, when future growth was widely
expected to come from Alberta’s oil sands, some
refners added cokers to their facilities, repositioning themselves to
take heavy crude. A number of these heavy-oil refnery conversions
were recently completed, but considering the high volumes of light
oil now readily available from the Bakken, the remainder will likely
remain as light crude facilities. In 2012, Canada supplied 1.7 million
b/d to the Midwest, making it Canada’s largest export market, but
Alberta now produces more bitumen than the Midwest’s limited num-
ber of heavy crude refneries can process. As well, Midwest refneries
are replacing upgraded bitumen from Alberta with Bakken light. The
result is an oversupply of heavy crude in the Midwest, and lower
prices for Canadian oil.
The Eagle Ford’s light crude, however, heads to refneries on the
Gulf Coast of the United States, which predominantly process heavy
crude. Canada sends very little light crude to Gulf refneries, so it’s not
competing head-to-head with the surging supply from the Eagle Ford.
Instead, Gulf Coast refneries are turning away from imported light oil
from Africa and the North Sea, replacing foreign supplies with their
own domestic light crude.
On the other hand, heavy oil refneries on the Gulf are hungry for oil
supplies. “Gulf Coast refneries represent a nine million b/d market, and
fve million of that is heavy crude,” Stringham says. “Clearly it’s a big
market for Canada.” Venezuela and Mexico currently supply most of its
heavy crude, but the Gulf Coast would happily switch from dwindling
volumes arriving from these countries – subject as they are to the vaga-
ries of shipping – to a more stable supply of bitumen from Canada that
arrives via predictable pipelines.
If those pipelines actually existed, that is.
“Infrastructure is key,” say Munro. “The potential exists to signif-
cantly increase shipments of Canadian heavy crude to Gulf Coast re-
fneries if infrastructure restraints are resolved with additional pipeline
capacity. Approval of the TransCanada Keystone XL pipeline is critically
important to provide market access and relieve distribution bottlenecks
in the Midwest.”
Following his most recent trips to Washington to build support for
Keystone XL, Stringham is feeling optimistic about a positive decision.
He says this time round he noticed a distinct shift in attitudes com-
pared to previous meetings. “Before I’d hear fat-out opposition, just ‘no
pipeline.’ Now they’re talking in hypotheticals, discussing trade-offs.
They’re saying, ‘If Keystone does get approved, here’s what we want to
see.’ So I’m hopeful.”
Stringham notes that although Keystone receives the most media
attention, it’s just one of a number of recently announced pipeline
proposals to the Gulf Coast. Some, like the Enbridge Flanagan South
Pipeline project, (which will be built along the existing Enbridge Spear-
head South Pipeline from Flanagan, Illinois to Cushing, Oklahoma)
and the Enbridge/Enterprise Seaway Pipeline (a new twin line along
the existing Seaway pipeline), are already under construction. As well,
TransCanada Keystone decided to proceed with its Gulf Coast project
(a pipeline from Cushing to Port Arthur and
Houston, Texas) without waiting to see whether
Keystone XL receives regulatory approval. Con-
struction began in 2012 and its target in-service
date is late 2013. Enbridge and Energy Transfer
also hope to convert segments of an existing natural gas pipeline to
crude oil service between Patoka, Illinois and refneries in Tennessee
and Louisiana.
And then there’s always transport by rail, an idea that seemed laugh-
able three years ago but has proven its worth in North Dakota. “Rail
is fourishing where no infrastructure exists,” Munro says. It’s become
a viable alternative that can relieve temporary capacity pressure on
pipelines or buy producers time. “Producers also love rail because it
gives them more optionality,” Munro adds. “It lets them switch mar-
kets depending on price and proft potential, changing destinations
from, say, Louisiana to the East Coast.”
Stringham agrees, pointing out that this year CAPP’s annual fore-
cast includes a special section on rail for the frst time. “Our estimate
of 300,000 b/d by rail from Western Canada by 2014 is quite con-
servative. Capacity could go way up, especially if Keystone XL isn’t
approved.”
It looks like there’s nothing to fear from the surge in light oil
production from Texas. “Eagle Ford’s big impact will be a shifting of
where the markets for light and heavy crude want to be, not lower
prices,” Stringham summarizes.
Munro shares his optimism. “It’s an amazing time for the oil busi-
ness, with massive opportunity and an equal number of challenges.
We’re redrawing what oil distribution networks look like in North
America.”
Production profles have changed,
markets are diversifying, and
supply chains are shifting.
WCJ_Jul-Aug_13_p22-23.indd 23 6/27/13 4:31:00 PM
Well Construction Journal 24 july/august 2013
Canadian Rig Counts
June 5, 2013
Drilling Down Total Utilization
Alberta 106 516 622 17%
B.C. 21 34 55 38%
Manitoba 1 20 21 5%
New Brunswick 0 0 0 –
Newfoundland 0 0 0 –
Northwest Territories 1 1 2 50%
Quebec 0 1 1 –
Saskatchewan 28 92 120 23%
Totals 157 664 821 19%
Source: Divestco
NUMBERS
By the
Stats at a Glance
Alberta Rig Counts
June 5, 2013
Drilling Down Total Utilization
Northern Alberta 36 106 142 25%
Central Alberta 53 348 401 13%
Southern Alberta 17 62 79 22%
Totals 106 516 622 17%
Source: Divestco
Top 5 Most Active Operators
June 5, 2013
Active
Rigs
Canadian Natural Resources Ltd. 10
Cenovus Energy Inc. 9
Encana Corp. 9
Bonavista Energy Corp. 5
Baytex Energy Corp. 5
Shell Canada Ltd. 5
Paramount Resources Ltd. 5
Source: FirstEnergy Capital
Top 5 Most Active
Drillers in Western Canada
June 5, 2013
Active Total
Precision Drilling Corp. 40 188
Ensign Energy Services Inc. 20 116
Trinidad Drilling Ltd. 18 60
Nabors Industries Ltd. 16 65
Savanna Energy Services Corp. 15 70
Source: FirstEnergy Capital
WCJ_Jul-Aug_13_p24-25.indd 24 6/27/13 4:31:52 PM
www.cadecanada.com july/august 2013 25
Canadian Rig Counts
June 5, 2013
Drilling Down Total Utilization
Alberta 106 516 622 17%
B.C. 21 34 55 38%
Manitoba 1 20 21 5%
New Brunswick 0 0 0 –
Newfoundland 0 0 0 –
Northwest Territories 1 1 2 50%
Quebec 0 1 1 –
Saskatchewan 28 92 120 23%
Totals 157 664 821 19%
Source: Divestco
Alberta Well Licences
Approval issued by the Alberta Energy Resources Conservation Board
Number of Licences Issued Nov. 2012 Dec. 2012 Jan. 2013 Feb. 2013 Mar. 2013
Development 636 706 821 591 525
Exploration 91 72 74 66 26
Source: Alberta Department of Energy
Alberta Spudded Wells
April 30, 2013
Number of Wells Spudded
2011 2012
May 334 374
June 525 518
July 812 625
August 964 464
September 1,018 706
October 955 535
November 971 605
December 754 363
2012 2013
January 946 1,756
February 2,021 1,705
March 980 904
April 276 153
Source: Alberta Department of Energy
Top 5 Most Active Operators
June 5, 2013
Active
Rigs
Canadian Natural Resources Ltd. 10
Cenovus Energy Inc. 9
Encana Corp. 9
Bonavista Energy Corp. 5
Baytex Energy Corp. 5
Shell Canada Ltd. 5
Paramount Resources Ltd. 5
Source: FirstEnergy Capital
Alberta Completed Wells
April 30, 2013
Number of Wells Completed
2011 2012
May 958 486
June 433 254
July 245 488
August 728 541
September 1,531 524
October 904 692
November 834 750
December 940 692
2012 2013
January 381 381
February 718 640
March 717 812
April 672 701
Source: Alberta Department of Energy
Alberta Land Sales
April 30, 2013
April 2013 April 2012 YTD 2013 YTD 2012
Oil and Natural Gas
Land Sales $85 million $114 million $311 million $423 million
Price Per Hectare $731.00 $353.27 $410.77 $431.84
Oil Sands
Land Sales $675,000 $1.6 million $5.6 million $3.5 million
Price Per Hectare $390.90 $1,052.00 $90.28 $70.40
Source: Alberta Department of Energy
WCJ_Jul-Aug_13_p24-25.indd 25 6/27/13 4:32:30 PM
Well Construction Journal 26 july/august 2013
DEEPER
Drilling
Heating Up
ompanies with steam-assisted gravity drainage
oil sands assets keep reaching new production heights.
In a recent overview of the in situ oil sands sector,
Calgary investment frm Peters & Co. reported that
SAGD projects reached a new production record in Febru-
ary – 572,000 barrels per day. With new developments and
planned expansions of existing facilities, in situ production
in Alberta’s oil sands is poised to grow.
C
Cenovus energy inc.’s
Foster Creek
produCtion CapaCity: 120,000 bpd
produCtion: 114,400 bpd
utilization rate: 95%
total planned CapaCity: 295,000 bpd
February 2013 bitumen produCtion by projeCt
meg energy Corp.’s
Christina lake
produCtion CapaCity: 25,000 bpd
produCtion: 32,700 bpd
utilization rate: 131%
total planned CapaCity: 210,000 bpd
suncor energy inc.’s
Firebag
produCtion CapaCity: 120,000 bpd
produCtion: 139,000 bpd
utilization rate: 116%
total planned CapaCity: 180,000 bpd
devon Canada’s
jaCkFish
produCtion CapaCity: 70,000 bpd
produCtion: 57,800 bpd
utilization rate: 83%
total planned CapaCity: 105,000 bpd
statoil Canada ltd.’s
leismer
produCtion CapaCity: 18,800 bpd
produCtion: 14,238 bpd
utilization rate: 76%
total planned CapaCity: 40,000 bpd
CnooC nexen’s
long lake
produCtion CapaCity: 72,000 bpd
produCtion: 33,100
utilization rate: 46%
total planned CapaCity: 72,000 bpd
Source: Peters & Co. and FirstEnergy Capital
Thermal production methods are
increasing activity in the oil sands
For drilling and completions specialists, CADE currently offers one of the best networking and knowledge sharing
opportunities in the Canadian petroleum industry. As you look to build your business and launch new technologies,
new products and services in the drilling industry, a CADE Sponsorship offers you a cost effective way to deliver your
message directly to the entire membership of the leading industry association for Well Construction Professionals in
Canada.
YOUR SPONSORSHIP INCLUDES:
• Ads in Well Construction Journal, full of relevant industry news and
articles, presented in a high quality, well-read magazine
• Your logo in the “Thank you to our sponsors” feature on the CADE
website and in every issue of Well Construction Journal
• Your logo on the “Thank you to our sponsors” display at every CADE
Technical Luncheon
• Authorized use of the CADE logo on your website and in marketing
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2013 SPONSORSHIP PACKAGES ARE NOW AVAILABLE
Contact CADE at 403.532.0220 or by email at info@cadecanada.com
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Support CADE by sponsoring our technical lunches, our website and the Well Construction Journal.
Thank You to Our Sponsors
The support of CADE sponsors plays an integral part in our association’s success.
Platinum Sponsors
NCS Energy Services Inc.
Schlumberger
Gold Sponsors
Global Steel Ltd.
Hardbanding Solutions
Pacesetter Directional Drilling Ltd.
Q’Max Solutions Inc.
XI Technologies Inc.
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Silver Sponsors
Akita Drilling Ltd.
Baker Hughes
Cathedral Energy Services Ltd.
Import Tool Corp. Ltd.
Lory Oilfeld Rentals Inc.
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Peak Completions
Tristar Resource Management Ltd.
Savanna Energy Services Corp.
Well Control Group
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000WCJ-CADE_Sponsor-FP.indd 1 6/12/13 11:54:48 AM WCJ_Jul-Aug_13_p26-27.indd 26 6/27/13 4:33:21 PM
MEG Energy Corp.’s
Christina LakE
ProduCtion CaPaCity: 25,000 bpd
ProduCtion: 32,700 bpd
utiLization ratE: 131%
totaL PLannEd CaPaCity: 210,000 bpd
devon Canada’s
JaCkfish
ProduCtion CaPaCity: 70,000 bpd
ProduCtion: 57,800 bpd
utiLization ratE: 83%
totaL PLannEd CaPaCity: 105,000 bpd
CnooC nexen’s
LonG LakE
ProduCtion CaPaCity: 72,000 bpd
ProduCtion: 33,100
utiLization ratE: 46%
totaL PLannEd CaPaCity: 72,000 bpd
For drilling and completions specialists, CADE currently offers one of the best networking and knowledge sharing
opportunities in the Canadian petroleum industry. As you look to build your business and launch new technologies,
new products and services in the drilling industry, a CADE Sponsorship offers you a cost effective way to deliver your
message directly to the entire membership of the leading industry association for Well Construction Professionals in
Canada.
YOUR SPONSORSHIP INCLUDES:
• Ads in Well Construction Journal, full of relevant industry news and
articles, presented in a high quality, well-read magazine
• Your logo in the “Thank you to our sponsors” feature on the CADE
website and in every issue of Well Construction Journal
• Your logo on the “Thank you to our sponsors” display at every CADE
Technical Luncheon
• Authorized use of the CADE logo on your website and in marketing
materials
Connect with Canada’s Drilling Industry
Become a CADE Sponsor
2013 SPONSORSHIP PACKAGES ARE NOW AVAILABLE
Contact CADE at 403.532.0220 or by email at info@cadecanada.com
www.cadecanada.com
Support CADE by sponsoring our technical lunches, our website and the Well Construction Journal.
Thank You to Our Sponsors
The support of CADE sponsors plays an integral part in our association’s success.
Platinum Sponsors
NCS Energy Services Inc.
Schlumberger
Gold Sponsors
Global Steel Ltd.
Hardbanding Solutions
Pacesetter Directional Drilling Ltd.
Q’Max Solutions Inc.
XI Technologies Inc.
Ryan Directional Services
Silver Sponsors
Akita Drilling Ltd.
Baker Hughes
Cathedral Energy Services Ltd.
Import Tool Corp. Ltd.
Lory Oilfeld Rentals Inc.
Packers Plus Energy Services Inc.
Peak Completions
Tristar Resource Management Ltd.
Savanna Energy Services Corp.
Well Control Group
Energy Drilling
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