The official publication of the Canadian Association of Drilling Engineers

NOVEMBER / DECEMBER • 2013
PM#40020055
Despite rankings as the
most promising province
for oil and gas investment,
it has yet to hit its stride
Fractured Possibilities: Advances in
horizontal drilling and multiple-stage
fracturing are opening up tight plays
PLUS
Crude Awakenings:
Safety of oil by rail still
stirring up debate
Slow and Steady: Drilling incentive
programs and improved takeaway
capacity keep drilling activity level
WCJ_Nov-Dec_13_p28-01.indd 1 10/29/13 11:38:11 AM
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WCJ_Nov-Dec_13_p02-03.indd 2 10/29/13 10:36:38 AM
www.cadecanada.com NOVEMBER/DECEMBER 2013 3
The official publication of the Canadian Association of Drilling Engineers
DEPARTMENTS
4
PRESIDENT’S MESSAGE
6
THE DRAWING BOARD
Editor’s note, member’s
corner, news and notes,
technical luncheons
9 MEMBER PROFILE
10 STUDENT PROFILE
24
BY THE NUMBERS
26 DRILLING DEEPER
FEATURES
12 IN THE FRINGE
Manitoba has yet to hit
the big time by industry
standards
16 KNOW THE DRILL
The future looks bright
given current levels
and new programs
20 THE RIGHT FRACK
Horizontal drilling and multi-
stage fracturing are opening
up tight Manitoba plays
22 OFF THE RAILS
Safety of crude by rail
transport is still a hot-
button issue
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
ASSISTANT ART DIRECTOR: Colin Spence
PRODUCTION MANAGER: Betty-Lou Smith
PRODUCTION TECHNICIANS: Brent Felzien, Brandon Hoover
CIRCULATION COORDINATOR: Karen Reilly
ACCOUNT EXECUTIVE: Anita McGillis
CONTRIBUTING WRITERS: Justin Bell, Graham Chandler
Jacqueline Louie, Séamus Smyth, Ryan Van Horne
NOVEMBER/DECEMBER • 2013
20
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
©
2013 CADE. NOT TO BE REPRINTED OR
REPRODUCED WITHOUT PERMISSION.
22
12
WCJ_Nov-Dec_13_p02-03.indd 3 10/29/13 11:38:58 AM
Well Construction Journal 4 NOVEMBER/DECEMBER 2013
s the glass half full or half empty?
Your answer to this question is often consid-
ered an indicator of whether you are an op-
timist or pessimist at heart. I’ve never really
liked the binary nature of this question, as I prefer
to think of myself as a realist. That being said, I’m
going to put on my optimist hat here, and tell you
why I think we are poised for an upswing in natu-
ral gas activity over the next two to three years.
First, the demand side. Overall, natural gas con-
sumption in North America has grown by about
two per cent per year for the last five years. This
growth has been driven in large part by increases in
power generation demand, which has been grow-
ing closer to six per cent per year. This trend is ex-
pected to continue as governments and consumers
continue to push for cleaner, lower emission pow-
er. As older coal-fired plants reach the end of their
life cycle, and changing regulations add incremen-
tal costs onto coal plants remaining in operation,
new electrical generation will be required. Natural
gas-fired power generation will likely capture a
majority of this demand, as it is not just competi-
tive environmentally, but also from a capital cost,
construction cycle time and operational perspec-
tive. Power generation represents about one-third
of gas consumption in the U.S., so growth in this
sector translates into material volume demands on
our own industry.
Another area where natural gas demand is likely
to increase significantly over the next few years is in
transportation. While a lack of retail natural gas fuel-
ling stations makes a huge short-term surge in pas-
senger vehicle demand improbable, there are many
opportunities to utilize the cost advantage of natu-
ral gas. Municipalities are switching buses, garbage
trucks and many other vehicles with defined routes
to operate on a diesel-natural gas blend (bi-fuel), or
in some cases, pure natural gas. Many short-haul
highway tractors are being retrofitted to run bi-fuel,
and Cummins has recently released a 100 per cent
natural gas engine for highway tractor use.
The same technologies (CNG/LNG) that enable
the use of natural gas for vehicles also allow previ-
ously stranded industrial consumers to utilize gas
for smaller-scale generation and heating. Due to
the relative infancy of CNG/LNG infrastructure in
North America, it will initially only make sense for
larger consumers to consider this option. However,
once a handful of larger consumers in an area have
established a market, the marginal costs to serve
additional consumers will be very low, and the area
market will reach a tipping point. That is a pattern
I would expect to see repeated in various regions,
sectors and demand types in coming years.
On the supply front, gas-directed drilling rigs in
the U.S. hit an 18-year low in June, but are starting
to creep upwards again. While I have been unable
to locate the exact equivalent statistics for Canada,
gas-directed rigs are up year-over-year from about
25 per cent of active rigs to nearly 40 per cent.
However, keeping in mind the rapid decline rates
of newer shale gas wells, a significant number of
these wells are required just to maintain produc-
tion at current levels. Gas projects face stiff com-
petition for the limited resources (people, equip-
ment, materials and financing) from oil projects in
the same regions. Increasing demand for natural
gas for oil sands operations also means that much
of this new gas is spoken for before it ever reaches
AECO or Henry Hub.
Overall, the stable base demand in combination
with a few high-growth demand sectors and flat
production will likely result in higher prices and
thus a larger number of gas-directed rigs in the
coming years. Are we ready?
By the way, I’ve always felt that the right an-
swer to the half-full versus half-empty question
was: I’m an engineer. The glass is twice as big as it
needs to be!
I
MESSAGE
President’s
Natural Gas Activity
Poised For Upswing

Surge buoyed by cost advantages, power generation demand and
increased transportation use of CNG and LNG
Jeff Arvidson
CADE President
WCJ_Nov-Dec_13_p04-09.indd 4 10/29/13 11:39:50 AM
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WCJ_Nov-Dec_13_p04-09.indd 5 10/29/13 10:58:37 AM
Well Construction Journal 6 NOVEMBER/DECEMBER 2013
BOARD
The Drawing
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 Christy Delaney 403 828-0844
IT Chairperson Matt Stuart 403 605-3790
Administrator Kali Charron 403 532-0220
CADE Executive
Team 2013/2014
E X E C U T I V E T E A M
Winter Drilling Season Ahead
t is hard to believe when you look outside a week
before Halloween and there are trees with leaves still
on them and people are out golfing, but here we are.
Equipment is flying off the shelves and rig bookings are
all but finished as companies are preparing for the winter
drilling season. It looks to be another busy winter in the
WCSB. Our final edition of the WCJ this year takes a look
at what is happening in Manitoba. It has been a hotbed
for the last couple of years with small private companies to
large public ones continuing to be very active.
Our 2013 Technical Luncheon Presentations are coming
to a close so check the website and see what is going to be
presented in December, and as always, January will be our
casual luncheon with comedian Paul Myrehaug. As this
event is always a sellout, make sure to get your tickets early.
Please watch for announcements with the upcoming top-
ics and dates and 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 issue.
We hope to see more of this of the course of the year.
We hope you, the membership, will participate and con-
tinue to make these events interesting and successful. If
I
E D I T O R ’ S N O T E
you have any issues you’d like to see covered, please
email me and we will do our best to get the story.
The second-annual CADE golf tournament was held
at Bearspaw Golf Club on September 16. The weather
was great – outside of a slight 60km/hr breeze – and
everyone had lots of fun. The group of Mike Charron,
Morley Frank, Greg Rolfe and Mike Weir took home the
honours. I would like to thank all of our participants,
as well as our sponsors and the companies who kept us
fed and hydrated.
Don’t forget, we would like to publish any of your in-
formation and announcements on new products, new
technologies and senior personnel changes for publica-
tion each month. Please forward any announcements
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
WCJ_Nov-Dec_13_p04-09.indd 6 10/29/13 11:40:06 AM
NOVEMBER/DECEMBER 2013 7 www.cadecanada.com
WELCOME NEW MEMBERS
Chayne Bradley
Christy delaney
tim davies
Brad horne
henry Jiao
steve matthews
Fiona mueller-thode
Bill Piers
stu ross
liliia soroka
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 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 lun-
cheons are held with topical industry
presentations. Other membership
benefits include our monthly publi-
cation 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.
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
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 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 become
a member or to update your contact
information.
ME MB E R ’ S C O R N E R
WCJ_Nov-Dec_13_p04-09.indd 7 10/29/13 11:40:32 AM
Well Construction Journal 8 NOVEMBER/DECEMBER 2013
BOARD
The Drawing
Save the Date
N E WS A N D N O T E S
TransCanada’s Energy East
Application Delayed
TransCanada has delayed iTs appliCaTion for iTs energy easT
Pipeline with the National Energy Board until next year because
environmental work is still needed, a company spokesman said.
Steve Pohlod, vice-president of eastern business development
for TransCanada, told an energy conference in Saint John, N.B. on
October 3 there is too much work to do to be able to meet its initial
filing goal of the end of 2013. “There is work that is required as a
result of the changes in scope and the changes in route that we are
still contemplating,” he said.
The proposal involves converting a portion of TransCanada’s
natural gas mainline to oil service and building 1,400 kilometres of
new pipeline to Saint John. The 4,500-kilometre Energy East Pipeline
would ship up to 1.1 million barrels per day of oil from Hardisty,
Alberta to refineries and export terminals in Quebec and N.B.
Enbridge also plans to spend $110 million to reverse one of its
pipelines to carry western crude to meet Quebec’s refining needs. The
National Energy Board conducted hearings in October on that matter,
with a decision expected in 2014. Enbridge CEO Al Monaco said both
pipelines will be needed to move oil from West to the East.
Claims have also been made about the prospect of building
pipelines across Canada, with TransCanada CEO Russ Girling touting
Energy East as infrastructure with the potential to make the country
stronger.
The president of Irving Oil also said on October 4 that plans for
a proposed new marine terminal for oil exports would have to be
expanded because of the pipeline’s increased capacity.
Irving announced in August that it planned to partner with
TransCanada to build a $300-million marine terminal at its Canaport
facility near its refinery in Saint John to export crude from the
pipeline to foreign markets. But Paul Browning said that was based
on an original estimate of the pipeline – about 850,000 barrels per
day – which has since been increased to 1.1 million barrels.
“There’s enough crude coming our way now that we’ve decided
we need to expand it to be a two-berth jetty,” Browning said.
T E C H N I C A L L U N C H E O N S
Luncheon Tickets
MEMBERS: $47.50 (plus GST)
NON-MEMBERS: $55 (plus GST)
FULL TABLES OF 10: $475 (plus GST)
STUDENT: $20 (plus GST)
SAVE THE DATE: NOVEMBER 20
Working more efficiently: How to use your SR & ED
program to turbocharge your R & D, with Graham Smith,
vice-president of business development for TSGI-Chartered
Accountants
Most companies recognize that performance that was
considered good enough last year will be viewed as out of date
only a few years from now. What is less well known is that the
SR&ED program is one of the most important sources of funding
available to corporations looking to improve their technologies
and enhance their capabilities. In this presentation, Graham
Smith of TSGI-Chartered Accountants, one of western Canada’s
top SR&ED consultancies, will explain how companies are using
SR&ED to fund key advancements in technology that give them
a competitive edge. He will also discuss how the SR&ED program
is evolving and how companies can adapt themselves to the
GST REGISTRATION #R123175036
Visit www.cadecanada.com for all ticket purchases
changes that have been implemented in the past 18-24 months.
Wednesday, November 20, 2013
Reception: 11:30 a.m.
Luncheon: 12 p.m.
Presentation: 12:30 p.m.
WCJ_Nov-Dec_13_p04-09.indd 8 10/29/13 11:40:55 AM
NOVEMBER/DECEMBER 2013 9 www.cadecanada.com
PROFILE
Member
By Séamus Smyth
Stefanie Nuxoll
A
Knowledge Is Power
n astute student of the engineering world,
Canadian Association of Drilling Engineers’ lat-
est arrival Stefanie Nuxoll believes knowledge
is essential when it comes to succeeding in the
constantly-evolving oil and gas industry.
The Calgary newcomer – and Apex Oil Field Ser-
vices & Well Site Accommodations’ marketing and
sales advisor – joined CADE two months ago and
hopes to one day move from tenacious enthusiast to
master of the engineering domain. Originally from
Ontario, she has embraced the quality of life the City
of Calgary provides over its counterpart in Toronto.
“People’s lives are much more consumed [with their
employment] over there,” she says. “People’s heads in
Toronto are down, and a 60- to 70-hour work week is
quite common there because the market is quite com-
petitive. The work-life balance that exists in Calgary
does not exist in Toronto.”
Upon arriving to the home of the Stampede, she
knew it was vital to competitive spirit to immerse her-
self in the hub of the Calgary business world – specifi-
cally oil and gas.
Working with Apex, she has helped develop strong
client relationships by strategizing positions in the
market where the company can improve business.
She takes particular pride in the branding and over-
all company image, an area she continually strives
to improve to ensure the engineering world is well
acquainted with what Apex brings to the table.
Apex, a western Canadian-based company that
provides engineering equipment and services, is an
operation Nuxoll believes in with a fierce passion
and is one she is keen to continue to improve by
portraying the brand as one that is honest and supe-
rior to its peers in the industry.
She says one of the pillars of Apex’s success is that
it is a fully-operational facility, meaning it has the
capacity for full maintenance, with a full workshop,
etc. This hybrid designation means countless techni-
cal conundrums and queries from within the indus-
try – all tasks that Nuxoll says she looks forward to
answering to.
The ambitious western newcomer says de-
spite a wealth of experience in the engineer-
ing world in Ontario, it is time for her to dis-
cover how things operate on Mountain Time.
“I want a handle on what engineers do in this city,”
Nuxoll says of Calgary.
CADE, an organization that welcomes newcom-
ers of all facets of industry, was intriguing to Nux-
oll because of the technical aptitude the organiza-
tion could add to her resumé. She points out that
not only will membership with CADE improve her
personal knowledge, but it will also help her stimu-
late even more ingenuity within her current team
at Apex.
In particular, she hopes to improve her level of
communication, while learning techniques to im-
prove her company image and ensure it is consis-
tently veering in a positive direction.
When asked who would benefit from CADE mem-
bership, Nuxoll says: “For those people that enjoy
the evolution of helping an industry, they would
enjoy something like this.”
In particular, she urges students and other indus-
trious young minds to become involved, as these
are the future men and women who will be mak-
ing the decisions that affect the industry on a global
spectrum one day. “If we can provoke different or
interesting thought that are just outside of their
technical realm, it will give CADE an even greater
purpose,” she says. “This mentality will contribute
to more than just the technical aspect.”
To learn more about a potential CADE member-
ship, visit cadecanada.com.
CADE newcomer wants to learn
the engineering world inside
and out
WCJ_Nov-Dec_13_p04-09.indd 9 10/29/13 11:41:10 AM
Well Construction Journal 10 NOVEMBER/DECEMBER 2013
ike Hazelton Has been involved
since 2003 in the service sector of the
oil and gas industry. He has gained
more than 10 years of progressively se-
nior oilfield experience providing technical solu-
tions to the energy industry. Initially employed
by a large oilfield service company, Sanjel Cor-
poration, Hazelton gained experience in primary
and remedial cementing solutions, acid stimula-
tion, nitrogen services, coiled tubing and hydrau-
lic fracturing.
Hazelton interrupted his full-time career in
2005 to pursue a degree in engineering physics
at the University of Alberta, while continuing to
work with Sanjel during the summer.
Young Talent
Highlighting tomorrow’s best and brightest
Student
PROFILE
Mike Hazelton
Chemical and Materials Engineering
University of Alberta
HELP WANTED: Career Department
skilled WoRkeRs soUGHt
accoRdinG to its HR tRends and insiGHts sURvey, tHe
Petroleum Human Resources Council of Canada has found
uncertainty over market access and continued low natural gas
prices have not dampened need for a skilled workforce.
The poll of 41 petroleum companies in Canada representing
more than 50,000 employees within the upstream and midstream
sectors of the industry was completed between December 2012
and January 2013. The survey found three things: the industry
needs workers – with demand driven by growth in the oil sands
in situ sector; the skill shortages have become a key business issue;
and companies are shifting business and workforce strategies to
respond to market conditions.
What’s more, oil and gas investment in Saskatchewan and Manitoba
has reached record-breaking levels in the past few years, driven by
double-digit growth in expenditures in Canada’s Bakken oil play.
This has created a difficult recruiting and retention environment.
Despite a more gradual growth outlook, petroleum companies
in the region continue to face workforce issues, but they are
addressing these problems through a diverse set of best practices
to increase retention, more effectively recruit workers to the region
and reduce labour costs. Oil and gas employers in the Bakken
region are recruiting for the following:
E&P companies are focused on recruiting engineers and
geologists, technicians, plant operators, steam-ticketed
stationary power engineers and other office workers.
Oil and gas service companies are currently hiring service
supervisors, experienced hydraulic fracturing and tubing
technologists, experienced drilling crew workers including
managers, supervisors and skilled trades workers, recording
crew helpers, mineral land administrators and agents, surface
land administrators and agents, business development
managers and representatives, and sales professionals.
Pipeline companies are hiring trades workers, engineers,
professional office workers and pipeline maintenance staff.



At the conclusion of his degree in 2009,
Hazelton began work as an academic researcher
in Chemical and Materials Engineering, under
the supervision of Professor David Mitlin. He
explored aspects of corrosion and fouling in
refining/upgrading and was additionally part of
a joint industry-academic effort studying micro-
electro-mechanical sensor design for application
to downhole logging tools.
Hazelton eventually returned to Sanjel to join
its engineering division, where he spent two years
prior to returning to the University of Alberta.
He is currently doing post-graduate work that
focuses on corrosion and fouling in the oil and
gas industry.
M
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WCJ_Nov-Dec_13_p10-11.indd 10 10/29/13 11:54:58 AM
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.
BED WRAP: The first layer of coiled tubing, slickline or wireline to
be wound on the core of a reel drum or spool. The bed wrap helps
secure the tubing string or slickline to the reel core and provides the
foundation upon which subsequent wraps are laid as the drum is
filled. A neat and secure bed wrap is necessary for proper spooling
that will allow the drum to hold the maximum capacity without
damaging the string.
DOODLEBUGGER: Slang term used to describe a seismologist who
is performing seismic field work.
TOOLPUSHER: The location supervisor for the drilling contractor.
The toolpusher is usually a senior, experienced individual who
S
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:

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y
HELP WANTED: Career Department
Alberta’s original
oilfield rental company.
Since 1953
Drill pipe, H.W.D.P, BOPs, pipe tubs, accumulators, and more.
has worked his way up through the ranks of the drilling crew
positions. His job is largely administrative, including ensuring that
the rig has sufficient materials, spare parts and skilled personnel to
continue efficient operations. The toolpusher also serves as a trusted
advisor to many personnel on the rigsite, including the operator’s
representative, the company man.
GUNNING THE PITS: The act of strongly agitating the mud pits,
particularly on the bottom and in corners, with the mud guns.
Gunning the pits lifts settled barite, which can result in a sudden
and perhaps undesirable increase in mud density in the pits.
HOSTILE ENVIRONMENT: A particularly difficult set of well con-
ditions that may detrimentally affect steel, elastomers, mud addi-
tives, electronics, or tools and tool components. Such conditions
typically include excessive temperatures, the presence of acid gases
(H2S, CO2), chlorides, high pressures and, more recently, extreme
measured depths.
WCJ_Nov-Dec_13_p10-11.indd 11 10/29/13 11:41:49 AM
Well Construction Journal 12 NOVEMBER/DECEMBER 2013
REPORT
Special
CANADA
U.S.A.
MANITOBA
BAKKEN FORMATION
Waskada Field
Virden Field
Daly Sinclair Field
Pierson Field
WCJ_Nov-Dec_13_p12-15.indd 12 10/29/13 11:42:29 AM
NOVEMBER/DECEMBER 2013 13 www.cadecanada.com
Location: Southwestern Manitoba
ResouRce: Light sour blend crude and natural gas in
four major felds of Williston Basin (Virden, Waskada,
Daly Sinclair, and Pierson).
souRce Rock: Historically, most oil has come from the
Mississippian Lodgepole, but the Bakken’s Three Forks
and Lower Amaranth formations have overtaken it.
estimated RecoveRabLe ResouRces: N/A
PRoduction: 18.46 million barrels in 2012;
315 million barrels since 1951.
majoR PRoduceRs: EOG Resources Inc., Penn West
Exploration, Tundra Oil & Gas, Nordic Oil & Gas
Company, Canadian Natural Resources Ltd.
b
Despite activity in its southwest pocket, Manitoba has yet
to hit the big time by industry standards, thanks to logistical
challenges, surface rights and labour shortages
y oiL industRy standaRds, theRe’s a foLksy chaRm to
the way companies have explored for and produced oil in
Manitoba. Yes, it has comparatively modest hydrocarbon
reserves next to its Prairie neighbours, but what really sets
Manitoba apart is the way that resource rights are allocated.
About 80 per cent of the mineral rights in Manitoba are owned by
private individuals who got them with their farms.
The province has what is called a “split-tenure system” where
mineral and surface rights are divided. That picture gets more
complex with every generation, says Keith Lowdon, director of the
Petroleum Branch for the Manitoba Department of Innovation,
Energy and Mines. “What’s happened is that the mineral picture
is fractured like crazy,” Lowdon says. “They’ve been handed down
from the parents to the children and it’s very difficult to put a land
picture together.”
By Ryan Van Horne
WCJ_Nov-Dec_13_p12-15.indd 13 10/29/13 11:42:46 AM
Well Construction Journal 14 NOVEMBER/DECEMBER 2013
REPORT
Special
Chevron has been the only major oil company
to work in the province and that’s probably because
any major project would force an oil company to
deal with many different owners – even on the same
parcel of land – and so that has curtailed some large-
scale development. The province has a surface rights
board that helps deal with issues when the owner of
the surface rights is not the same person who owns
the mineral rights. In cases like this the developer
pays a fee to the surface rights holder and a royalty
to the mineral rights holder.
There are more than 400 land owners in
Manitoba that have at least one well on their prop-
erty. They receive a first-time payment of $7,000
and about $3,000 a well
for every subsequent year.
Royalty payments to people
who still hold mineral rights
have been a boon to many
rural families and even some
municipalities, who picked up some land abandoned
by farmers during the dust bowl of the 1930s. They left
land they thought was worthless because it couldn’t
grow crops.
“They walked away from the surface of the land,
unaware there was anything of value below it,” Lar-
ry Maguire, Arthur-Virden MLA, told the Winnipeg
Free Press.
The province has been producing oil since 1951,
but compared to its western neighbours, it has yielded
modest quantities. The most productive field has his-
torically been the Virden field, which has produced
49 per cent of the province’s 315 million barrels of
oil. “The Virden field, that’s the big baby,” Lowdon
says. “That’s been declining, though, and the Virden
is no longer the biggest producer in the province.”
There is still a lot of oil to get out of the field
and some new technologies such as infill horizontal
drilling and water flooding have been used to maxi-
mize production.
Most production now comes from three newer
fields. The Pierson and Waskada fields, discovered in
1980, combined to yield 41 per cent of 2012 output.
The Daly Sinclair, discovered in 2004, accounted for
40 per cent of production in 2012.
Manitoba faces some logistical challenges being on
the fringe of a major oil-producing region. Compa-
nies often face equipment or labour shortages. In its
April 2013 quarterly update on Manitoba’s employ-
ment picture, Human Resources Development Can-
ada says Manitoba’s southwest region saw the most
significant rise in employment, with 3,300 jobs add-
ed this year mainly in construction and agriculture.
“Oil fields in the region have generated ongo-
ing labour shortages, as workers migrate to higher-
paying oil-related fields,” the report says. “Virden has
begun hosting job fairs in an attempt to attract new-
comers to the area.”
Lowdon says some companies rent homes to
put up workers because there aren’t enough apart-
ments to handle all the transient workers and some
companies fly in truck drivers from Ontario to do all
the hauling.
Flooding and poor road conditions have some-
times hampered the movement of drilling rigs
in Manitoba, says Reeve Ross Tycoles of the Rural
Municipality of Pipestone.
“There is less activity than
there was and a lot of them
are waiting until later because
of the spring road condi-
tions,” Tycoles told the Win-
nipeg Free Press earlier this year.
“We’ve heard that some rigs have withdrawn for a
number of reasons and one of them is the ability to
get around.”
To entice development, the province of Manitoba
set up an attractive royalty incentive program and
will soon implement a new program to replace
the current five-year deal that expires at the end
of 2013.
Lowdon says the province’s incentive program
has been “very generous” and that generosity
has been reflected in the ratings that province has
received from the Fraser institute.”
In three of the last four years, the
Fraser Institute has ranked Manitoba
as the most welcoming province in
Canada for oil and gas investment.
An attractive incentive program to draw
development in Manitoba will expire in
late 2013 but a replacement is expected.
WCJ_Nov-Dec_13_p12-15.indd 14 10/29/13 3:09:59 PM
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ON TAP: MANITOBA OIL FACTS
• The majority of the approximately 8,500 wells drilled in Manitoba
have only been drilled to Triassic, Mississippian or to the Bakken;
this represents approximately half of the potential hydrocarbon
bearing formations.
• Production in 2012 was a record 18.46 million barrels. The month of
March 2012 had the highest production on record – 1.7 million Bbls
or 54,724 Bbls per day.
• All pre-1980 oil production originated from Mississippian Lodgepole
and Mission Canyon formations, at depths that range from 600 to
1,050 metres.
• Oil was discovered in 1980 above the Mississippian in the Triassic
Amaranth Formation. About 41 per cent of Manitoba’s 2012 production
originates from the Amaranth Formation in the Pierson-Waskada area.
• In 1985, oil was discovered in the Bakken Formation in the Daly area.
Production from the Bakken made up 3.7 per cent of the 2012
production.
• In 1993, oil was discovered in the Jurassic Melita Formation in the
St. Lazare area.
• In 2004, oil was discovered in the Devonian Three Forks Formation in
the Daly feld, marking Manitoba’s frst pre Mississippian production.
In 2012, it accounted for 40 per cent of Manitoba’s oil production.
In three of the last four years, the Fraser Institute has ranked
Manitoba as the most welcoming province in Canada for oil and gas
investment. It ranked second to Saskatchewan in the other year.
“That’s been a big tool for us,” Lowdon says. “The hidden picture
is that Manitoba does their calculation of royalties and taxes on
spacing units and not on well production, so companies are taxed
at lower rate.”
It’s a pretty good program, he says, but there are downsides. It
doesn’t generate a lot of revenue for government coffers – and roy-
alty revenue has been declining.
That – and the fact that 80 per cent of mineral rights are privately
owned so the royalty cheques go to private citizens or municipali-
ties – forces government to assess the benefits of oil and gas devel-
opment in a different way.
The government carried out a study and estimated that, in a year
when $1.2 billion was invested in the oil and gas industry, about
$170 million was returned back into the economy.
EOG Resources Inc. has been active in the Waskada field and the
Pierson, where it has been joined by Penn West Exploration Ltd.
and Red Beds Resources Limited, an offshoot of Tundra Oil & Gas
Ltd. All of these companies were asked to speak about their recent
work in the new fields and all declined the opportunity to do an
interview.
Canadian Natural Resources Ltd. (CNRL) and Tundra have been
active in the Daly Sinclair field. “Over the last number of years Tun-
dra, EOG, and Penn West have been the drivers for most of the
drilling,” Lowdon says.
Despite the attractive royalty regime in Manitoba, and all the
drilling, some companies have scaled back operations.
PennWest recently announced that it will shift $87 million in
capital spending earmarked for the Waskada play to its Cardium
and Viking oil plays in Alberta to go after higher profit margins,
likely in an effort to stoke the company’s sagging stock price.
“We will move additional dollars into Viking and Cardium, and
need to start building on Cardium as the core of the company,”
PennWest chief executive officer Dave Roberts told a conference in
New York in September. “I cannot imagine the company without
Cardium. There’s no other asset I can imagine being so necessary to
the success of the enterprise.”
He says the geology of the Cardium was far less complex than
the Spearfish formation in which Waskada is situated. Penn West
shifted $47 million to the Viking, which also stretches into Sas-
katchewan, and $40 million to the Cardium.
One promising development in Manitoba has been the construc-
tion of pipelines to handle natural gas. CNRL has stopped flaring its
gas and entered into a joint venture to get it to market. EOG built
a gas plant in Waskada to handle solution gas, and Penn West has
also built a gas plant that went into production in April.
Most of the oil in Manitoba leaves via pipeline – either the
Enbridge line or one co-owned by Penn West and Tundra. There
has been some speculation that the port of Churchill could handle
oil from Alberta’s oil sands, but the port is only ice-free for about
three months of the year.
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WCJ_Nov-Dec_13_p12-15.indd 15 10/29/13 11:43:54 AM
16 NOVEMBER/DECEMBER 2013 Well Construction Journal
H
Know the Drill

The future looks bright for Manitoba well activity,
given current levels and new programs on the horizon
REPORT
Market
By Graham Chandler
ow will Manitoba’s drilling picture
evolve into 2014? Will 2012’s total of 614
wells be challenged?
“What we projected for 2013 was 640
wells and this year we are somewhere around
the 500 mark – we still have October to Decem-
ber, which usually has good activity,” says Keith
Lowdon, director of Innovation, Energy and Mines
at the province’s Petroleum Branch. “I think the
following year [2014] we are going to see a drop-
off – it depends on a lot of things.” He considers
the main companies active in Manitoba: “Tundra
Oil & Gas have been consistent around that 200
or so wells per year, and I can see that continuing
considering their land picture. EOG [Resources]
have been pretty busy developing the Waskada
and Pierson areas; they may continue.” He says
he’s not yet sure of Penn West’s plans, who were
contributing about one-third of drilling.
One positive factor he sees contributing will be
improved production takeaway capacity. “There is
a transloading structure now at Wood North and
WCJ_Nov-Dec_13_p16-19.indd 16 10/29/13 11:44:26 AM
NOVEMBER/DECEMBER 2013 17 www.cadecanada.com
“There are always people
looking at Hudson Bay. But
Manitoba doesn’t own the water
portion, and the onshore portion
has a lot of challenges.”
another one that just opened,” he says. The latter
refers to the Cromer facility constructed by CN
and Tundra Energy Marketing, which will have the
potential to accommodate unit trains of 100 tank
cars, each train carrying approximately 60,000 bar-
rels of crude per day.
Helping supply those will be a
priority upgrade for the highway
to Cromer, currently being pur-
sued by the Oil Industry Joint Task
Force with representatives from
Manitoba Infrastructure and Trans-
portation, Lowdon’s department, as well as Manitoba
producers, pipeline operators, trucking companies
and oilfield service and supply companies.
Probably the biggest factor which will impact
drilling into 2014 and beyond is the future structure
of the Manitoba Drilling Incentive Program (MDIP)
which has been an integral part of the government’s
oil and gas fiscal regime since 1992. It was renewed
for a five-year period in 2008, and in its current
form is set to expire on December 31.
As a result, MDIP has been a closely watched
topic this year and the subject of numerous meet-
ings and consultations with industry and industry
organizations. “We have had
three meetings with CAPP
(Canadian Association of
Petroleum Producers) and CA-
ODC (Canadian Association of
Oilwell Drilling Contractors)
and we have gone through
what we perceive are the goals of the government
to keep activity going and trying to offset and raise
the amount of direct income without negatively
impacting the other portion,” says Lowdon. “And
that’s a trade-off.” He thinks after three meetings
they are close to a final position – but there is still
more feedback due. The target date for release of
the new MDIP is December 6.
WCJ_Nov-Dec_13_p16-19.indd 17 10/29/13 11:44:42 AM
18 NOVEMBER/DECEMBER 2013 Well Construction Journal
REPORT
Market
An important consideration supporting continua-
tion of incentives is the economic impact of drilling
expenditures on Manitoba’s economy. A Manitoba
Bureau of Statistics study based on 2011 numbers
showed that total as $1.39 billion; clearly the prov-
ince would like to see that continue.
That was amply in evidence when Trican Well
Service, very active in the province, planned a new
base in Brandon last year. “As soon as the Manitoba
government got wind of the fact that we might be
moving into Brandon, they were all over us with their
support,” recalls Rob Cox, Trican’s vice-president, Ca-
nadian Geographic Region. “The Mineral Resources
Division came to us and said, ‘hey we heard you were
setting up shop and what can we do to help?’”
Trican expects Manitoba drilling activity to re-
main fairly level into next year. “It is still an oil play
and prices are still buoyant and the forecast is they
should stay steady through 2013 and 2014,” says
Cox. He echoes industry and government concerns
with low takeaway capacity in the province but says
“There will be improvements in infrastructure and
pipeline capacity and also more efficiencies in rail,
so the bottleneck will see some slight improvements
for 2014.”
Industry organizations’ official forecasts are
underway: The Petroleum Services Association of
Canada (PSAC)’s should be out by the end of October;
a May update had forecast an 11 per cent drop. The
CAODC generally issues its upcoming forecast during
November of each year.
Mark Scholz, president of CAODC, says they’ve
seen fairly steady growth in industry activity in
Manitoba for some time. “We have always had 20
rigs or so in Manitoba drilling quite consistently
for the past three years or so,” he says. “That will
probably increase.”
But the wild card is still the MDIP, which Scholz
hopes will continue as a positive incentive. CAODC
has been playing an active part, along with other
industry groups, in meeting with Manitoba cabinet
ministers and other senior officials on drafting
the new MDIP. “Manitoba has now a very good
competitive fiscal regime for investors and opera-
tors to consider,” he says. He hopes that can carry
on, citing other instances of the consequences of
changing fiscal regimes. “You saw what happened
in Alberta when they changed royalties. All of a
sudden we saw much of the industry pack up and
move to other jurisdictions where they felt they
could get a better return.” He says that competitive
environment is even more important considering
that in Manitoba operators have to shell out more
dollars in order to bring their product to market.
“So, yes, MDIP changes will have an impact,” says
Scholz, “but what that impact is, is hard to tell.”
CAPP has been enthusiastic about MDIP too,
and hopes it can continue as a positive force.
“MDIP helped to provide a fiscal regime that’s
competitive with other jurisdictions and allowed
industry to attract investment dollars,” says Tricia
Donnelly, manager, member and government
liaison with CAPP. “Thus it stands to reason that
programs that positively influence a company’s
rate of return generally have a positive influence
on drilling decisions.
“As Manitoba re-evaluates the MDIP, we encour-
age the government to maintain the competitiveness
of the province’s oil and natural gas fiscal regime
with other western Canadian provinces, primarily
Saskatchewan and Alberta,” she says. “Investment
capital is mobile and flows to jurisdictions where it
can expect to earn a competitive return.”
All 2014 activity will continue to be in the
southwest. In the hydrocarbon-prone Hudson Bay
lowlands to the northeast, very little is expected. No
exploration has been conducted there since 1970,
when the last of three wells was drilled offshore.
“There are always people looking at Hudson Bay,”
says Lowdon. “But Manitoba doesn’t own the water
portion, and the onshore portion has a lot of chal-
lenges – Wildlife Management Areas, a federal park,
First Nations interests; it would be a difficult area for
a company to get into now.”
WCJ_Nov-Dec_13_p16-19.indd 18 10/29/13 11:44:58 AM
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Well Construction Journal 20 NOVEMBER/DECEMBER 2013
C
The Right Frack

On the thin eastern edge of the Williston Basin, horizontal drilling and
multi-stage fracturing are opening up Manitoba’s tight plays
REPORT
Tech
By Graham Chandler
urrent drilling and production activity
in Manitoba centres on the Williston Basin,
the eastern extent of which tapers off into
the southwestern corner of the province.
Oil shows here include the Lower Amaranth,
Melita, Mission Canyon, Lodgepole, Bakken and
Three Forks. The Hudson Bay region – offshore and
lowlands – is known to contain oil, but apart from
some offshore exploration wells drilled from 1967-
70, there has been little activity.
One of the hotter plays of late is the Lower
Amaranth, known as the Lower Watrous in
Saskatchewan and the Spearfish in North Dakota. A
section of shallow, low-permeability sandstone and
siltstone on top of an early Triassic erosional surface,
it is often misnamed the Manitoba Spearfish. The
play had been only marginally economic until the
recent advances in horizontal drilling and multiple-
stage fracturing opened up the zones between
vertical holes. Producers are attracted by its sweet,
low-GOR (gas-to-oil ratio) light oil.
This shallowing of the Williston Basin zones
characterizes much of Manitoba’s hydrocarbon
geology for drillers. “It creates more of a challenge
for the drillers as the zones get thinner,” says Rob
Cox, vice-president, Canadian Geographic Region,
WCJ_Nov-Dec_13_p20-21.indd 20 10/29/13 11:31:28 AM
www.cadecanada.com NOVEMBER/DECEMBER 2013 21
for Trican Well Service Ltd. “The controls over
directional drilling that you need are a little tighter.
But once a well is drilled and we go in to do the
completions, these completions are the same as
others. The formation is pretty much going to be
the same if they have placed the well properly.”
Cox says the majority of these wells are
horizontal with multi-stage completions using
the ball drop type of system such as Packers Plus.
“It’s very high-efficiency work,” he says. “You are
able to go in and do a whole bunch of fracks in
a day and get back,” he says, adding it’s much
like other jurisdictions in the formation. Trican
has completed close to 100 wells with more than
2,100 stages of fracturing with an average of 23
stages per well in the play between southeastern
Saskatchewan and western Manitoba. Cox says
well fracture designs are typically five tonnes per
stage of linear gelled water, but average closer to
six. Vertical depths are mostly 900 to 1,100 metres
with a group at around 2,200 metres; horizontal
lengths are typically 1,200 to 1,500 metres, with
some more than 2,000. Over those lengths,
spacing between stages ranges broadly from 40 to
100 metres with an average of 67.
Microseismic – often used in conjunction with
fracking to “listen to” activity below the surface –
hasn’t proven useful in the area. “It’s typically
not a good formation for this technology,” says
Cox. “The rock is too soft.” He explains that when
the rock is very hard, when you fracture it there
is quite a seismic event like a bigger crack, “but
when it’s soft, it doesn’t make as much noise
when you break it.” Also, he adds, the rate that
you usually pump in the Bakken and Spearfish –
one to three “cubes” (cubic metres) a minute –
aren’t big enough to create big seismic events.
“We have looked at one data set but there was
really no value from the information.”
Trican is enthusiastic about Manitoba, having
opened a Brandon base of operations in January
2012. “We have since built a new shop there and
are now fully transitioned,” says Cox.
Apart from quipping that “We didn’t get our
fair share,” Keith Lowdon, director of Innovation,
Energy and Mines at the province’s Petroleum
Branch, doesn’t think the thinner zones create
particular trouble for drillers either. “I mean we have
some special problems that are prevalent elsewhere,
too,” he says. “If we look at gas migration issues,
quite often when you are drilling surface holes you
will get some small gas migration. Which is not
always a big deal, but what it will do is after you
set the service casing and cement it in place, that
gas can create little channels that could have some
surface gas coming back.”
Lowdon says other typical challenges facing
Manitoba drillers include mud design. “If you
don’t maintain your mud density it can flow
back on you, or if you are drilling through and
it is sandy, it can slough in on you and create
problems if you are not handling your muds
properly or if you run your pressure too high.” He
points out some areas in the Lodgepole formation
where loss of circulation has occurred, “as well
as a few rigs where pipe stuck in the hole created
some issues.” He adds that swelling clays in the
Lower Amaranth have been suspected in causing
production problems.
All challenges aren’t directly technical,
however. Mark Scholz, president of the Canadian
Association of Oilwell Drilling Contractors
(CAODC), says one of the biggest challenges facing
drillers in Manitoba is infrastructure, starting
with lack of production takeaway capacity which
can back up drilling activity. “A lot of it is hauled
by trucks and that is not very efficient in terms
of getting product to market,” he says. “And not
only that, the road infrastructure, the bridge
infrastructure is poor – floods in the past several
years have decimated bridge infrastructure.” He
says this creates challenges bringing in certain
types of equipment because of weight and
dimension restrictions. “A lot of the bridges are
timber and you just cannot transport heavy loads
over them.” These factors hurt industry growth in
Manitoba, he reckons.
The industry and the size of the equipment
needed are relatively new to Manitoba, which
creates a need for public communication and
education, adds Scholz. “Certainly when you
see the size of the equipment that comes out
of Saskatchewan into Manitoba, people have a
tendency to say ‘Wow, what’s going on?’ ” That
results in the need for ongoing extra advocacy
and communication, reaching out to landowners
and sharing knowledge of the business and how
the industry develops resources responsibly. “So
I think, yes, it is certainly new but I haven’t
heard anything that there are a lot of issues and
problems arising with landowners,” he says. “I
think in most cases it is seen in a positive light
because there are so many opportunities that
come along with it: jobs, crews staying in hotels,
buying groceries, staying in the communities. I
think people see that as well.”
WCJ_Nov-Dec_13_p20-21.indd 21 10/29/13 11:31:51 AM
Well Construction Journal 22 NOVEMBER/DECEMBER 2013
Out in the field is an obvious place for natural gas
operators to look for cost savings, but rationalizing
office operations can also help contain costs.
T
Off the Rails

Safety of crude by rail transport is still a hot-button
issue months after the tragic Quebec crash
REPORT
Health & Safety
By Jacqueline Louie
ransporting crude oil by rail is a hotly
debated topic – in Manitoba, and across the
country.
But any heightened debate around the safety
of transporting crude oil by rail, “would be a misdirec-
tion from the radical environmental movement that
would like to see the Alberta oil sands shut down,”
says professional statistician Malcolm Cairns, formerly
director of business research at CPR and a former
president of the Canadian Transportation Research
Forum, an independent non-profit organization that
publishes and encourages research into policy issues.
Cairns notes there is a strong push from the more
radical elements of the environmental movement
to stop the oil sands from being further developed
in North America. “That’s why the Keystone XL and
Northern Gateway pipelines have been encounter-
ing so many difficulties,” Cairn says. “Focusing on
the safety of rail, which is a pipeline alternative,
would simply be another attempt to eventually run
our economy without fossil fuels.”
Both rail and pipelines are safe modes of trans-
portation, says Cairns, noting that the Lac-Megantic
rail disaster was “an extraordinary tragedy: the worst
rail accident in North America in some 100 years. It
was such a rare event that policy-makers should be
wary of making any radical decisions based on this
tragic accident, because it was so extraordinary.”
OmniTRAX Canada, which operates the Hudson
Bay Railway and the Port of Churchill in northern
Manitoba, is facing a barrage of safety concerns, as
the private railroad and transportation manage-
ment company explores an opportunity to ship
light sweet crude from The Pas to Churchill by rail,
and from Churchill to markets on North America’s
east coast and the west coast of Europe.
Historically, OmniTRAX’s business has centred on
transporting grain and fuel, but with recent changes
in the grain market, the company says it can’t
solely rely on shipping grain to support its business.
“Shipping light sweet crude presents a significant
opportunity to achieve diversification and protect
OmniTRAX jobs and access for northern communi-
ties, as well as opening up new opportunities,” states
OmniTRAX Canada president Merv Tweed.
“OmniTRAX Canada is committed to safe opera-
tions and to minimizing our impact on the envi-
ronment. We meet, and in many cases exceed, all
government regulations and will continue to do so.
Our company has significant experience transport-
ing petroleum products using leading rail safety
procedures that we regularly review.”
In Canada, transporting crude oil by rail will
continue, according to Cairns. It will occur to a
varying degree, depending on what happens with
the proposed new pipelines. “If there are no new
pipelines, there will be more rail transport; if there
are some pipelines, there will be still be some rail,”
he says. “That’s how it will likely work.”
“However, moving oil to Churchill on Omni-
TRAX would be a risky venture,” Cairns says.” The
idea of OmniTRAX receiving huge unit trains of
oil is unlikely. The tracks to Churchill have a hard
enough time carrying a few grain trains. The idea
of moving multiple unit trains of oil that are heavy,
on permafrost subject to occasional sinkholes, is
frankly troublesome.”
Furthermore, “Manitoba has always liked the idea
of having a sea port at Churchill, but it’s a sea port
WCJ_Nov-Dec_13_p22-23.indd 22 10/29/13 11:33:36 AM
like few others – it’s ice locked for most of the year,” Cairn says. “Even
if you did get oil on the railway and to the port, you would have the
problem of having to ship it out by marine tanker. The port is only
open a few months of the year, and going through Arctic waters to get
a tanker to markets … it’s a possibility that I don’t think is going to
happen in the medium term.
“As for the southern half of Manitoba, it seems by and large to be a
transit area for oil – it’s had these commodities transiting by pipelines
for decades.” Now shale oil, which is coming out of North Dakota – and
perhaps soon from southern Saskatchewan – is going east through Mani-
toba on railways. It is a product in transit, and the issue for Manitoba
is rail safety, Cairns says. However, rail has been improving safety over
many years and has an excellent safety record, as indicated in a recent
report from the Canadian Senate: while noting that no activity is risk
free, the report affirms that railcars move dangerous goods in Canada
99.9 per cent of the time without any spills. Transporting bitumen from
the Alberta oil sands by rail could also start to grow soon, “and some of
it also will likely simply transit southern Manitoba.’’
Barry Prentice, professor of Supply Chain Management at the
University of Manitoba’s I.H. Asper School of Business, notes that
historically, all oil was moved by rail.
When pipelines were built, oil shifted to pipelines. “It shifted to
pipelines because it was basically more economic. But if we have
people who are protesting and delaying the building of pipelines,
they are by definition forcing the oil back onto the railways. The risks
are not necessarily greater with a train versus a pipeline. With a train,
you may have more spills, but they are small, whereas in a pipeline
you have one spill and it’s going to be pretty big.”
Prentice describes the rail line to Hudson Bay as “terribly underuti-
lized,” and he notes that “if we can start to put more trains on that
line, it helps that line be more viable.”
He thinks the greatest problem facing the OmniTRAX proposal, is
economic – running a seasonal port. “Are the economics workable?
You have to build all of the infrastructure to load this equipment, but
you only get to utilize it four months a year.”
In terms of the proposed project’s safety, Prentice adds: “there are
a lot of people who are very vocal, protesting the possible risk of
environmental damage. But neither the actual risk nor the extent of
damage can be quantified.”
Ultimately, in the bigger picture, “unless we change our consump-
tion patterns, unless we’re going to switch and not use oil, we are
going to consume more oil. So it has to be transported in some way,”
Prentice says. “People who protest against rail cars are really saying,
‘build pipelines’ – or vice versa. If they say don’t build pipelines,
they’re really saying ‘use railways.’
“Unless we are going to stop consuming oil, we have to be prepared
to transport it. We shouldn’t allow a few very well publicized disasters
to overwhelm us, in terms of common sense.”
WCJ_Nov-Dec_13_p22-23.indd 23 10/29/13 11:33:56 AM
Well Construction Journal 24 NOVEMBER/DECEMBER 2013
Canadian Rig Counts
October 7, 2013
Drilling Down Total Utilization
Alberta 213 356 587 39%
B.C. 45 24 69 65%
Manitoba 10 13 23 44%
New Brunswick 0 0 0 –
Newfoundland 0 0 0 –
Northwest Territories 0 1 1 0%
Quebec 0 1 1 0%
Saskatchewan 67 75 142 47%
Totals 335 470 823 43%
Source: Divestco
NUMBERS
By the
Stats at a Glance
Alberta Rig Counts
October 7, 2013
Drilling Down Total Utilization
Northern Alberta 41 112 153 27%
Central Alberta 164 194 358 46%
Southern Alberta 26 50 76 34%
Totals 231 356 587 39%
Source: Divestco
Top 5 Most Active Operators
October 7, 2013
Active
Rigs
Husky Energy 24
Canadian Natural Resources Ltd. 22
Progress Energy 19
Crescent Pt. 16
Encana Corp. 16
Source: FirstEnergy Capital
Top 5 Most Active
Drillers in Western Canada
October 4, 2013
Active Total
Precision Drilling Corp. 87 188
Ensign Energy Services Inc. 41 115
Savanna Energy Services Corp. 31 70
Nabors Industries Ltd. 34 66
Trinidad Drilling Ltd. 32 61
Source: FirstEnergy Capital
WCJ_Nov-Dec_13_p24-25.indd 24 10/29/13 11:34:55 AM
www.cadecanada.com NOVEMBER/DECEMBER 2013 25
Canadian Rig Counts
October 7, 2013
Drilling Down Total Utilization
Alberta 213 356 587 39%
B.C. 45 24 69 65%
Manitoba 10 13 23 44%
New Brunswick 0 0 0 –
Newfoundland 0 0 0 –
Northwest Territories 0 1 1 0%
Quebec 0 1 1 0%
Saskatchewan 67 75 142 47%
Totals 335 470 823 43%
Source: Divestco
Alberta Well Licences
Approval issued by the Alberta Energy Resources Conservation Board
Number of Licences Issued March 2013 April 2013 May 2013 June 2013 July 2013
Development 525 265 587 380 459
Exploration 26 14 33 55 58
Source: Alberta Department of Energy
Alberta Spudded Wells
September 2013
Number of Wells Spudded
2011 2012
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
May 374 214
June 518 246
July 812 701
August 784 539
Source: Alberta Department of Energy
Top 5 Most Active Operators
October 7, 2013
Active
Rigs
Husky Energy 24
Canadian Natural Resources Ltd. 22
Progress Energy 19
Crescent Pt. 16
Encana Corp. 16
Source: FirstEnergy Capital
Alberta Completed Wells
September 2013
Number of Wells Completed
2011 2012
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
May 486 343
June 254 272
July 245 373
August 541 474
Source: Alberta Department of Energy
Alberta Land Sales
October 7, 2013
August 2013 August 2012 YTD 2013 YTD 2012
Oil and Natural Gas
Land Sales $43 million $59 million $519 million $799 million
Price Per Hectare $290.06 $194.31 $329.34 $387.15
Oil Sands
Land Sales $128,547 $454,255 $10 million $8.5 million
Price Per Hectare $26.09 $591.48 $95.77 $113.09
Source: Alberta Department of Energy
WCJ_Nov-Dec_13_p24-25.indd 25 10/29/13 11:35:22 AM
Well Construction Journal 26 NOVEMBER/DECEMBER 2013
DEEPER
Drilling
By Justin Bell
Strength in Numbers
Municipalities of Manitoba make inroads
in drilling and infrastructure discussions
W
hen the oil and gas industry started
moving into southwestern Manitoba in
2010, local municipalities weren’t sure
how to deal with the influx of industry
and heavy equipment.
Local roads built for grain trucks were suddenly
being used by heavy industry. Municipalities needed
a mechanism to rebuild the roads so that oil and gas
companies could continue exploration.
That’s when five small municipalities started talk-
ing to one another, meeting to exchange information
and form a cohesive lobbying
unit. That initial five quickly
grew to 15, and now 18 local
governments in the southwest
corner of Manitoba make up
the Oil Producing Municipali-
ties of Manitoba (OPMM).
Since 2011, the group has been lobbying both the
provincial government and industry about issues
facing their region. Heavy use of small local roads
is only one of the problems they have faced. The
18 municipalities form a contiguous block in the
southwest corner of the province. The widespread use
of horizontal drilling made the region enticing for
exploration about five years ago, with incentives from
the provincial government encouraging industry to
take a closer look at Manitoba.
“When we first came together, one of our primary
things to do was to develop a position paper for the
provincial government,” said Debbie McMechan, a
councillor for the Rural Municipality of Edward and
OPMM secretary. “In that, we discussed things we saw
as our primary causes of concern.”
While fixing roads was an issue they faced locally,
the OPMM was working alongside drilling compa-
nies to address concerns over road permits. Drill-
ers had to worry about two very different sets of
regulations when crossing between Saskatchewan –
where most of the equipment comes from – into
Manitoba. The OPMM lobbied the provincial gov-
ernment to re-examine permitting, and Manitoba
adjusted its regulations to work “hand-in-hand with
the Saskatchewan regulations,” says McMechan.
The group has also been instrumental in getting
more money to flow from provincial coffers into
local municipalities. Oil and gas revenues had been
streaming into the provincial government, while
municipalities were being forced to foot the bill for
new road and bridge construction.
McMechan said money to rebuild roads, as well as
put clay caps on small roads, has come at least partially
from money set aside for OPMM municipalities in or-
der to upgrade infrastructure. By the end of this year,
another 16 kilometres of road
will have been clay-capped.
“The provincial govern-
ment, when it determined
there was going to be a surge
in drilling, had instituted a
holiday tax,” said McMechan.
“Essentially, they had invited companies to drill. We
felt they had done a wonderful thing for the economy,
but they had put all of the cost of development on the
shoulders of municipal governments.”
Now with three years of experience under its belt,
the OPMM is working closely with industry to develop
a stronger permit process so municipalities have an
understanding of the drilling in their area.
The model being examined would see drilling
companies fill out online forms once exploration is
complete, outlining what roads they will be using
and what equipment will be on site. McMechan said
it is not an attempt to control development, but for
municipalities to understand and plan for the drilling
happening in their area.
The new system would also streamline road-use
agreements, where companies understand who is
responsible for repairing damage done to roads.
The OPMM has worked with both the province
and industry in order to better understand the
impact of drilling and bring forward the issues the
small municipalities are facing. In the long term,
McMechan said they will continue to lobby govern-
ment in order to return money to the area where
drilling is taking place.
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
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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.
Ryan Directional Services
Silver Sponsors
Akita Drilling Ltd.
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Energy Drilling
000WCJ-CADE_Sponsor-FP.indd 1 6/12/13 11:54:48 AM
“We felt they had done a
wonderful thing for the economy,
but they had put all of the cost of
development on the shoulders of
municipal governments.”
WCJ_Nov-Dec_13_p26-27.indd 26 10/31/13 12:37:08 PM
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
000WCJ-CADE_Sponsor-FP.indd 1 6/12/13 11:54:48 AM WCJ_Nov-Dec_13_p26-27.indd 27 10/29/13 11:36:55 AM
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WCJ_Nov-Dec_13_p28-01.indd 28 10/29/13 11:37:32 AM