February 2010 Volume 11, Number 1

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Contents
5 The Tide is Turning
Publication Mail Agreement No. : 40039458
PUBLISHER

February 2010 Volume 11, Number 1

6 CERI 2010 Natural Gas Conference Marketing Note 7 PSAC’s Public Outreach Program 8 “Intelligent Optimization” for your Gas and Oil Field

John Robertsen

Development and Planning
EDITORIAL ASSOCIATES

8 PFC Energy 50 Ranking of World’s Top Energy Companies 9 Better Times Ahead in 2010 10 Purpose Built Disposable Motors 12 PSAC’s Fundraiser Nets $458,000 for STARS 14 Customized Isolation Solution Smoothes Path for Safe

David Coll Seema D Dhawan Joni Evans Elizabeth Hak Joe Perraton

DESIGN & LAYOUT

Repair of Damaged Riser in North Sea
14 R&M Energy Systems Improves Down-hole Drilling with

millstonecommunications.ca amanda@oilgas.net

Even Rubber Thickness Stator
15 IHS CERA: Falling Costs for Upstream Oil and Gas

ADVERTISING SALES

Facilities Appear to be Bottoming Out
16 Ziff Energy Commences 1st International FPSO

John Robertsen 403.503.0460 jrr@oilgas.net

Operations Benchmarking Study to Assist Operations Enhance Efficiency
16 Enventure Successfully Installs New High-Performance

OIL & GAS NETWORK Suite 300, 840 6th Ave SW Calgary AB T2P 3E5 Phone: 403 503 0460

Expandable System
17 Future to bring continued price disparity between

Canadian oil and natural gas
18 Pipeline Protection: Preserving the Petroleum Lifeline 20 R&D Partnerships: Connect, Collaborate, Prosper 21 Moyno® Gear Drivehead (MGD™) Easily and Effectively

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Oil & Gas Network, February 2010 3

The Tide is Turning
Canada’s oilsands may be starting to win the battle of public opinion
By David Coll

Coll’s

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hen gazing into the crystal ball to determine what lies ahead for the Canadian oilpatch in 2010 and beyond, it comes as little surprise that the sector’s bright spot remains the oilsands and, to a much lesser extent, shale gas. From this point forward, if it wasn’t already abundantly clear, ‘unconventional’ is now the norm. In November, the Paris-based International Energy Agency (IEA) predicts a gradual revival for Canada’s oilsands sector, which it dubs “one of the few growth areas” among non-OPEC countries. “Providing that current challenges can be overcome, Canadian oilsands have the potential to make a significantly greater contribution to global energy security for decades ahead by increasing the diversity of supply,” the IEA says. “However, as an industry whose profitability currently relies on oil prices of $75 to $80 US per barrel, the outlook for the medium term is less certain.” Surely, the “challenges” referred to by the IEA relate not only to technical production issues but also to the continuing strident, worldwide opposition to oilsands development. If the oilsands industry is to make a full recovery, it will not only have to resolve complex technical issues like how to reduce greenhouse gas emissions but it will also have to win the battle of public opinion. Perhaps it’s blind optimism on my part associated with the turning of another calendar year, but I do get a sense that the industry may have weathered the worst of the environmental storm. I sense that, as the irrefutable numbers become better known, that maybe (just maybe) the public is starting to doubt what they’ve been hearing from the likes of Eco Justice, the New Democrats, et al. On the other hand, the attacks have been relentless and the recent protests of Greenpeace are indicative of a new level of frustration and desperation with what they view as government inaction on climate change. Many expected damaging oilsands headlines out of December’s UN Conference on Climate Change in Copenhagen, but other than embarrassing internecine fighting among the provinces, these didn’t really materialize. I think also that the media may also be tiring of the same shopworn story from those who earn a living by opposing the industry. Instead of merely trumpeting opposition viewpoints that are lacking in completeness or simply inaccurate, more and more articles of late appear to also be presenting a balanced point of view. But some feel the damage is already done – how do you change the negative perceptions about oilsands development and all the misinformation floating around out there? How do you correct all the mythmaking? There’s only one way – by continuing to supply the facts, one stakeholder at a time. Here are some key ones, courtesy of the Oil Sands Developers Group and the Alberta Chamber of Resources – memorize them! 0.1 per cent or 500 sq. km, area of surface disturbance to Canada’s boreal forest created by oilsands mines 0.1 per cent, Canadian oilsands’ share of total global greenhouse gas emissions 2.6 million tonnes of GHG reductions achieved thusfar, equivalent to removing 550,000 cars from the road 4 billion, amount set aside by Alberta for climate change initiatives, including public transit and carbon capture and storage

Corner

4.5 per cent, area of Canada’s total boreal forest in which oilsands are located below the surface 5 per cent, oilsands’ share of Canada’s total GHG emissions

20 per cent, reduction in surface disturbance since 2001 through cooperative initiatives such as Integrated Landscape Management 27 per cent, per-barrel reduction in oilsands industry emissions since 1990 80 per cent, amount of total water currently recycled by oilsands mines 80 per cent, oilsands projects that will be developed using in-situ technologies

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Oil & Gas Network, February 2010 5

CERI 2010 Natural Gas Conference Marketing Note
ne minute you are playing checkers; a nice predictable game. The next minute you are being handed a new set of game pieces but the game rules are TBA. That is what the current North American natural gas sector feels like. The 2010 CERI Natural Gas Conference will try to make sense of the new game prices and maybe, just maybe, offer some insight into how the new rules governing play will unfold. Since one of the biggest game changers is shale gas the Conference will open with an address from Alex Ferguson of the BC Oil and Gas Commission on BC’s gas management plan. From there delegates will hear two well respected experts, Chris Theal and Paul Ziff, present their respective views on how the North American gas market will unfold over the next 24 months. The Conference will look at all aspects of natural gas supply; from shale to syn and everything in-between. Of course what is a market with-

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out demand? The Conference will take a hard look at what the prospects for demand growth are, and what policy and regulatory factors will assist in shaping it.These discussion will be lead by Mike Cleland of the CGA, Michael Harcourt of QUEST, Gary Holden of ENMAX, Anthony Damiano of Wood Mackenzie, and Wayne Geis of EnCana. CERI has saved the best for the last. The Conference ends with a CEO Panel discussion on the challenges that the industry will face in the near future. Moderated by Deborah Yedlin this session promises to be the highlight of the Conference and one that all delegates will not want to miss. In addition to the outstanding program there is not better opportunity for networking with colleagues in the natural gas industry than that offered to delegates at the CERI Conference. To register for, or obtain more information on, the Conference please contact Capri Gardener at 403-220-2365 or cgardener@ceri.ca.

CSA Standards Announces North America’s First Oil & Gas Pipeline Security Standard

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SA Standards today officially announces a new, comprehensive publication designed to help manage the security of land-based pipeline systems and assets from vandalism, sabotage and other security threats. Transnational pipelines connect across much of the Canada-U.S. border with more than 540,000 km of pipelines in Canada and nearly 805,000 km of oil and gas pipelines in the U.S. The first standard of its kind in North America, Security Management for Petroleum & Natural Gas Industry Systems is designed to help protect and secure industry systems located in Canada. Canadians recognize the importance of a safe, secure and reliable energy supply and that any prolonged interruption in the supply of energy due to sabotage or vandalism, would undoubtedly harm the economy. Even more important is protecting the wellbeing of workers, families and surrounding communities. With six bomb attacks on pipelines in B.C. occurring last year alone, vandalism, sabotage and attacks on oil and gas assets here in Canada have illustrated the need for a national security management standard.The new CSA standard takes all of these factors into account and applies specific security risk reduction measures to help reduce potential harm. “The CSA Security Management for Petroleum and Natural Gas Industry Systems standard is designed to help ensure the safety and security of Canadians,” says Suzanne Kiraly, President, CSA Standards. “Together with the National Energy Board and leading security experts, CSA developed this innovative standard to help mitigate threats to the energy supply systems. Organizations that implement this standard can confidently say that they are on the forefront of workplace health, safety, and security management.” The development of the standard was initiated when the National Energy Board Act was expanded to include “security” within the Board’s mandate.The NEB then approached CSA to develop a consensusbased standard which would outline the requirements of a security program. “The NEB is proud to be partnering with CSA Standards in developing a security standard that is comprehensive, thorough and incorporates established best practices in the pipeline industry,” said NEB Chair and CEO Gaétan Caron. “Having said that, I think it’s important to remember that at the heart of this standard is our shared commitment to protecting what Canadians value most: our families, our homes and our businesses,” he said. CSA’s Security Management for Petroleum & Natural Gas Systems standard uses a risk management and performance-based approach to help identify and reduce threats to oil and gas industry assets. It assists in enabling owners and operators to establish governance, conduct planning, implement security operations (including detection and mitigation practices), and refine the security program through change management and audit processes. The standard applies to land-based pipeline systems for oil and gas, as well as liquefied gas production, storage and handling facilities, underground hydrocarbons storage, petrochemical installations, oil and gas treatment, production processing, storage operations and related assets. To help introduce this new approach to industry, CSA Standards is offering seminars that will provide users with a solid foundation of the full range of security and risk management considerations. Further information on training is available at https://learningcentre.csa.ca/

6 Oil & Gas Network, February 2010

PSAC’s Public Outreach Program
hen oilpatch activity slows, all companies – particularly those in the service sector – tighten their belts. Programs seen as “extra and “nice to have” are cut, as companies keep a firm eye on the bottom line. But in some cases, what might be considered as an “extra” by some is seen as a critical part of doing business by others. Case in point: PSAC’s Public Outreach Program (POP). The POP is PSAC’s contribution to strengthening industry’s social license to operate. That may seem like a low priority when companies are struggling to keep their people employed, but when the industry swings upwards again, as it is bound – and perhaps starting – to do, negative public opinion could impede industry activity and growth. This is why the PSAC Board of Directors recognizes the POP’s value over the longer term and has directed PSAC to press ahead with the program this year. In fact, the Board recognizes this temporary economic slowdown as a golden opportunity for our industry to win over Canadians, many of whom may now be more open to recognizing the benefits our industry provides. Further, the slowdown allows PSAC the time to create and implement a top-notch program, in advance of the industry’s next boom. PSAC President Roger Soucy commented: “In the last upswing, when we were drilling and completing more than 20,000 wells each year, our industry was focused on meeting the world’s demand for oil and gas. Then the Alberta Royalty Review gave us a wake up call, telling us that we didn’t have quite the level of public support we thought we had. It’s clear now that going forward, we need to pay much closer attention to the people who live in our areas of activity. That’s what our POP is all about.” A public survey conducted by PSAC last year uncovered a number of ways the oil and gas industry can build community support for its activities. From that data, PSAC is building a program based on two key elements: knowledge and behaviour. PSAC’s member companies employ approximately 60,000 people, each with the opportunity of influencing the views of their families, friends and community members. To be effective spokespersons however, workers need to know the basic facts about the industry, how it operates and what it provides to Canadians. PSAC is currently developing the information workers need to be good ambassadors for the industry and will soon be sharing that information directly and regularly with its member company employees. On the behaviour front, PSAC has identified a number of “nuisance issues” that cause friction between industry and communities, such as leaving gates open and letting garbage fly out the back of a truck. PSAC is creating materials to remind workers to avoid these types of actions and to encourage workers to treat our community partners with respect. Mr. Soucy summarized: “This combination of knowledge and behaviour materials will make our POP a complete package. By launching our program this year, we will be well prepared for when our industry ramps up again.” PSAC’s POP information and materials will be launched throughout 2010. For more on the POP, go to www.psac.ca.

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Oil & Gas Network, February 2010 7

“Intelligent Optimization” for your Gas and Oil Field Development and Planning

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ORGAS 10.1 has many new enhanced capabilities for integrated reservoir to sales line forecasting. FORGAS now allows users to optimize the entire system by defining certain criteria which are specified as plant constraints. For each plant constraint, the user defines an action or series of actions that FORGAS may perform to satisfy that constraint. For example, the user can tell FORGAS to limit the maximum CO2 mole fraction at the plant inlet to 10% by adding the well which will have the most benefit relative to this constraint and/or choking the most offending well. Other plant constraints might include setting a minimum sales gas rate or meeting a minimum gross heating value at the plant outlet which can be enforced by either adding compression, adding

zones, shutting in wells, etc. FORGAS implements these actions as required to meet the constraint, ensuring that the actions done for lower priority constraints do not interfere with satisfying higher priority constraints. Any constraint and the resulting actions can be changed over the forecast. Another significant workflow enhancement in FORGAS is the capability to import GIS pipeline and well data. FORGAS reads this information, automatically connects the pipeline endpoints, and removes redundant elevation points. Using the UTM coordinate data to define the entire network means that the gathering system—wells and pipelines (including detailed elevation profiles)—can be constructed in FORGAS in mere minutes.

Also new in FORGAS is the extension of the dynamic linkages with the reservoir simulators ECLIPSE (from Schlumberger) and IMEX and GEM (from the Computer Modelling Group) to model oil fields. For more information please contact info@ NEOTEC.COM or visit www.Neotec.com.

PFC Energy 50 Ranking of World's Top Energy Companies
he combined value of the 50 largest publicly traded energy companies increased 35% in 2009 to $3.9 trillion, according to energy consultants PFC Energy. That value remains 26% below its $5.2 trillion high at the end of 2007. The 35% gain compares with increases of 71% in oil prices and 20% in the S&P 500 over the same period. “Many long term trends that were underway before the financial crisis have reasserted themselves,” said J. Robinson West, Chairman and CEO of PFC Energy. “We are witnessing the continuing transformation of the industry. Investors see more potential in companies with growing end-user markets and preferential access to resources, and they have soured on the refining business in mature markets.” One year ago, five of the top six positions on the PFC Energy 50 were occupied by ExxonMobil, Royal Dutch Shell, Chevron, BP and TOTAL. ExxonMobil had also reclaimed its long-standing leadership of the PFC Energy 50 list from PetroChina. This year, PetroChina tops the list again, with a market capitalization of $353.1 billion, 9% larger than ExxonMobil’s $323.7 billion and Brazilian company Petrobras at #4 with a value of $199.2 billion that was larger than either Royal Dutch Shell or BP. In the past twelve months, the combined value of the list’s nine traded national oil companies (NOCs) rose by 66%, while the six SuperMajors, ExxonMobil, Royal Dutch Shell, BP, Chevron, TOTAL and ConocoPhillips increased their combined value by less than 1% and OECDbased integrated companies gained only 6% in value. 2009 was a turnaround year for countries as well as companies. Russian companies, last year’s worst performers, posted a combined 88% value gain and the value of the Chinese companies grew 52%. Also visible this year are early signs of industry restructuring and consolidation. After spinning off its integrated oil sands operations as Cenovus, a smaller Encana fell from #22 to #44, the list’s largest drop. The Petro-Canada merger helped Suncor increase its market capitalization by 91% to climb from #37 to #22. ExxonMobil’s acquisition of XTO was not completed at year end, but the combined value of the two companies fell short of displacing PetroChina from the list’s #1 position. Consolidation will also affect values in the service sector: Cameron’s value reflects its $1 bn acquisition of Natco and Baker Hughes’ pending acquisition of BJ Services will create an $18 bn company that would be in third place on the Top 15 Oilfield Service companies list.

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8 Oil & Gas Network, February 2010

Better Times Ahead in 2010

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etter times are ahead for the energy industry, but it won’t be a speedy recovery. “The year ahead is still going to be tough,” says Greg Stringham,Vice President, Markets and Oilsands, for the Canadian Association of Petroleum Producers.“We hope at the end of 2010, things will balance.” Technology has unlocked supplies of shale gas across North America, so that sector may see more action in the coming months, according to CAPP. “The development of new technology is a bright spot for the new shale gas supply. Alberta and B.C. will have to be competitive with the U.S. It looks like shale gas is primed to be one of the first back in. We need to ensure we’re ready for it when things do come back around,” Stringham says. In December 2009, Nexen Inc. announced it will spend $200 million on its Horn River shale gas play in British Columbia over the next year. The company plans to drill eight 1,800-metre horizontal wells this winter. Nexen’s objective is to produce 150 to 200 million cubic feet of gas per day (mmcf/d) at Horn River by September 2011, up from the current 15 mmcf/d, CEO Marvin Romanow says. The unconventional oil and gas sectors will have an easier time in 2010 than conventional plays, which will take longer to rebound. “The conventional gas side is still significantly challenged,” Stringham says, mainly due to an abundant supply. The Petroleum Services Association of Canada (PSAC) forecasts low drilling activity in 2010, with it picking up and peaking in the last quarter of the year. In Alberta, PSAC estimates 5,095 wells will be drilled, a five per cent drop from 2009. The Canadian Association of Oilwell Drilling Contractors (CAODC) anticipates a slight improvement in 2010 over 2009. During the first quarter of 2010, only 40 per cent of the fleet is expected to be employed, followed by a significant decrease during spring breakup. A utilization rate of 27 per cent is expected in 2010, the CAODC forecast states, up from 23 per cent in the first three quarters of 2009.

The oilsands will fare the best of all the energy sectors in the upcoming year, says David McColl, research director of the Canadian Energy Research Institute (CERI). “Conventional gas within Alberta and Canada in general is in rough shape. The oilsands industry is poised to recover more quickly and smoothly,” he says. CERI’s recently released Oilsands Supply Cost and Develop- ment Projects Update estimates $16 billion in investment will take place in the oilsands in the next two years. The CERI study says that rising oil prices will combine with lower costs to put some cancelled oilsands projects back on the agenda. CERI forecasts oilsands spending will increase from $3.9 billion this year to about $8 billion in 2010, largely due to spending on the planning and construction of Imperial Oil’s Kearl oilsands mine. “We’re really not going to see any major growth in the oilsands in the next couple of years, however we will see lots of investment,” says McColl.“It’s going back to historically where we’ve been.” Since oilsands companies need to plan so far into the future, an economic slowdown doesn’t affect their long term planning as significantly, McColl explains.“Imperial Oil is looking 30 to 40 years into the future, so for them, it’s not an issue of the recession getting in the way of their spending. In fact, it can be taken as a huge opportunity.” Suncor Energy has also put its Firebag expansion back on the books. The company has approved $5.5 billion in capital spending plans for 2010, with $1.5 billion allocated for growth spending. The majority of growth spending will be directed toward the Firebag Stage 3 in-situ expansion, which was roughly 50 per cent complete before being deferred in early 2009. Suncor now expects the project to begin production in the second quarter of 2011. “We’ve said that sequencing of our growth projects would be based on highest expected return on capital, near-term cash flow and lowest risk,” says Rick George, Suncor President and CEO. “Expansion work at Firebag clearly fits all the criteria to be first out of the gate.”

Oil & Gas Network, February 2010 9

Purpose Built Disposable Motors
Positive Displacement Motors have a long and varied history in the Canadian Oilpatch. They are used for a number of purposes including directional drilling, performance drilling, river crossings, completions and utilities installations.
n recent years the “Disposable Motor” has become more and more commonplace, particularly in applications with high cost day rates, ie: offshore. In the offshore industry we see operators running “Disposable” motors on the end of their production string to ensure they get the casing to bottom. The motor allows the operator to drill or circulate through tight spots and bridges thus eliminating the need to trip casing and perform cleanout trips. In such applications where day rates are high, the cost of running a motor is very economical insurance. Historically, utilization of “Disposable” motors has been very limited in Alberta due to cost. In past situations where an operator did require a “Disposable” motor for whatever purpose the vendor would send out a used, usually worn out motor. The thinking behind this development was to offer the client an affordable alternative in situations where a motor would be the practical solution. Where we see the most practical utilization in our local market is in the area of liner installations. In problematic areas and also to allow further/extended horizontal reach a “Disposable” motor on the end of the liner provides a viable and economical solution.The ability to run these motors with slotted liners is also available. Excerpt from a major Canadian Exploration firm drilling in NE British Columbia with a TMC “Disposable” motor: “Operator had drilled and landed 7' intermediate casing at 2582m (90 degrees). 6 1/8" hole was drilled to 3900m. Problems were incurred open hole logging the well due to cuttings bed settling and deteriorating hole conditions. Decision was made to run a mud motor on the end of the liner string to allow us to circulate the liner into place to ensure the liner made it to bottom. Operations were successful as the mud motor was used to circulate the liner to bottom right from outside the intermediate casing to liner TD. It is our opinion that the liner would have not made it to bottom without the assistance of the mud motor.” In this case a 5”“Disposable” motor was run.The operator was impressed with the results and the costs and maintains that this well would have been lost without the use of the motor. In addition to conventional drilling hole sizes, “Disposable” motors are also available in smaller sizes, usually 2-7/8” or 3-1/8”. These are most commonly used in snubbing operations

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where the operator wishes to drill out plugs and drop the motor on bottom thereby eliminating the need for additional snubbing in and out of the wellbore. Small motors have a history of being used for sacrificial purposes. Where we differentiate ourselves is by offering “Main Hole” size “Disposable” motors to the market. The “Disposable” motor is a proprietary tool purpose built for these applications. It can be provided in most sizes. Many components have been redesigned to lower the total cost thus making it an affordable alternative. Although these motors are labeled “Disposable” they have gone through rigorous testing and are built with only new components. In testing these motors easily drilled in excess of 100 hours. For further information please contact: Todd Brown or Dan Gretener @ (403) 230-3055 www.themotorcompany.ca

10 Oil & Gas Network, February 2010

PSAC’s Fundraiser Nets $458,000 for STARS
lmost 1,000 enthusiastic guests, representing all sectors of the oil and gas industry, attended PSAC’s 16th annual STARS & SPURS Gala in Calgary in January. This year’s event raised a whopping $458,451, an astounding amount, particularly given the current economic slowdown. Over the past 16 years, PSAC has raised a cumulative total of over $4.1 million for STARS.

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PSAC credits all sectors of the industry – producers, services, drilling and pipelines – for working together to make the gala such a longtime success.The event’s live auction showcased the strong collaboration between producers and service companies. Two major producers bought the cement job donated by Trican Well Service and set of bridge plugs donated by Halliburton. Darian Resources and KOS Oilfield Transportation joined together to donate a golf trip for two for Fox Harb’r Resort and a service company snapped up a wine cellar dinner for 12 at the Calgary Petroleum Club, donated by Advantage Oil & Gas. Then in a stunning, last-minute deal, Ken McCagherty, CEO of West Energy, having been outbid on the cement job, asked Stream-Flo Industries to donate a sour gas wellhead assembly. Doug McNeill, Stream-Flo’s Executive Vice President, Business Development, agreed. West Energy bought it on the spot, as a final, unplanned auction item. All together, the live auction generated an astounding $246,200 – a STARS & SPURS Gala record!

Above: Gala guests checked one of the five STARS helicopters, all of which display the PSAC logo. Right: Jessie Farrell put on an energetic

performance.

“This level of support from all sectors demonstrates how our industry can work together to achieve shared goals and underscores the value the entire oil and gas industry places on STARS,” said Brian Coston, Chair of the gala organizing committee and PSAC First Vice Chair.“The STARS & SPURS Gala gives everyone a chance to network and helps ensure that STARS’ emergency medical response services remain available to oilpatch workers across Alberta and beyond.”

The 16th annual gala also celebrated STARS’ 25th anniversary, toasting the 12 Founding Directors of STARS. Gala guests enjoyed dinner with birthday cake, a performance by rising country music star Jessie Farrell, raffles, a silent auction, dancing and the chance to network, all with the help of guest emcee Dave Rutherford of QR77. Special guests included the Hon. Ronald Liepert, Alberta’s Minister of Energy. One of the STARS helicopters was also on site, along with crew members who showed guests the tight but efficient space in which the medical team works on board. Because of its annual contributions to STARS, PSAC has its logo proudly displayed on all five of the STARS helicopters. PSAC President Roger Soucy commended all sectors of the industry for their unwavering support of STARS and the gala. “We could never have generated over $4 million for STARS without the collaborative efforts of the entire oil and gas industry. On behalf of PSAC, I would like to thank the sponsors, guests and volunteers who have worked so hard over the past 16 years to make the STARS & SPURS Gala such an enduring success.”

PSAC presented a cheque for $458,451 to STARS. From left to right: Dr. Greg Powell, STARS CEO; Roger Soucy, PSAC President; Brian Coston, Gala Committee Chair and PSAC First Vice Chair; and Al Buchignani, STARS Chair

12 Oil & Gas Network, February 2010

Customized Isolation Solution Smoothes Path for Safe Repair of Damaged Riser in North Sea
TDW Offshore Services AS has successfully completed an innovative low pressure isolation operation on an export pipeline riser in the North Sea.
n 2007, a passing vessel collided with the southeast face of a satellite platform jacket, damaging the 12-inch export riser. Production from the platform was immediately shut-in via the emergency shutdown valves, leaving the pressure in the pipeline at approximately 4 barg.

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Monitoring Pressure During a Low Pressure Isolation
Before production could resume, the operator needed to repair the riser. The objective was to cut and remove the damaged riser section, and replace it with a new one. To facilitate the repair process, TDW Offshore Services (TDW) was retained to formulate a low pressure isolation solution in order to isolate the damaged section of the pipeline riser from the export pipeline gas inventory. By doing so, the damaged riser section and associated topside pipework production system could be replaced, safely and efficiently. Following intensive analysis, engineering and testing, TDW developed a solution using its range of specialist pipeline pigging, pig tracking and remote communications technology. The unique approach involved using multiple high friction pigs in order to seal off and replace the damaged riser section and pipework. The solution consisted of the following elements: • A custom-designed TDW pig trap and pigging spread. • A high friction pig train furnished with the SmartTrack™ remote tracking and pressuremonitoring system. • A SmartTrack subsea remote tracking and pressure-monitoring system. • A SmartTrack topside tracking and monitoring system with radio link to the dive support vessel. • A pipeline isolation ball valve. During August 2009,TDW used its remotecontrolled SmartTrack technology to successfully isolate the damaged riser section from the gas inventory in the export pipeline without venting or flooding the pipeline, or displacing the pipeline inventory. A threemodule high friction pig train created an isolation against the gas pressure in the pipeline. The first step was to verify and record the pipeline inventory gas pressure, and close and isolate the Emergency Shut Down Valve (ESDV) 050. The redundant topside pipework located upstream of the ESDV was removed, and a temporary spool and 12- A pipeline of this type is not traditionally pigged. inch valve were installed upstream of the As a result, the low pressure isolation solution had ESDV. Leakage over the ESDV was monitored to be pigged through non-standard construction closely, with a view to minimising pressure pipework fittings. build-up in the spool. “Through Pipe Wall” Communications Technology Plays Key Role Using the pig trap and pigging pump, the high friction isolation pig train (HFIPT) was launched and pigged with water to the predetermined isolation position within as straight spool section of the vertical riser. Using TDW’s remote tracking technology, technicians onboard the dive support vessel (DSV) tracked the position of each pig to verify that the HFIPT was located below the damaged section of riser that was designated for replacement. Communication skids were positioned over the three pigs and connected to the pig monitoring system. By doing so, TDW was able to monitor the downstream pressure of each isolation pig continuously throughout the operation using its innovative “through pipe wall” communications technology that makes it possible to send isolation integrity data by radio link to a dive support vessel. The existing topside pipework was removed and replaced with new pipework. Divers were deployed from the DSV.The section was successfully cut and removed using a crane onboard the DSV. A mechanical connector was locked onto the existing riser. The new riser was attached to a crane on the platform and lowered down to rope access workers who installed it on the topThe non-standard construction pipepwork side pipework closing spool and to the existfittings consisted of two 1.5 D bends and a ing riser located above the HFIPT. narrow 45 degree traverse. 14 Oil & Gas Network, February 2010

Following installation of the new riser section, TDW verified that the ESDV and new 12-inch valve were operating properly and fully open. After purging the riser and topside pipework,TDW used its pigging pump to slowly increase the water pressure to begin pigging the HFIPT downstream away from the platform to the launcher. The ESDV and 12inch valve were then closed, and the pipeline gas inventory pressure was increased to keep the HFIPT moving forward. After all pigs were recovered in the temporary pig trap, the ESDV and new valve were closed. Using the platform crane and remotely-operated vehicle ROV, all pigging equipment was removed and the TDW crew demobilized. All offshore operations were carried out in about 10 weeks, from May 20 – August 2, 2009. By using its remote tracking and pressure monitoring technology, TDW made it possible for repairs to the damaged riser to be made while maintaining a continuous flow throughout the duration of the operation. “Not only did TDW isolate the affected riser section effectively and efficiently, the innovative solution meant that the operator experienced reduced downtime,” said Rune Haddeland, General Manager of TDW Offshore Services. “The fact that this was achieved in an environmentally safe manner, in keeping with our high level of environmental standards makes it all the more impressive,” he added.

R&M Energy Systems Improves Down-hole Drilling with Even Rubber Thickness Stator
n even rubber thickness stator, the Moyno® ERT™ Power Section from R&M Energy Systems significantly improves the overall performance of power sections used in down-hole drilling applications. R&M Energy Systems’ extensive experience in stator engineering, manufacturing, and product application enabled the Company to develop stators with internal contours that are precision-machined, rather than hydraulically formed. The resulting tubes feature excellent durability and tolerancing that optimizes the benefits of even rubber thickness technology. Applying an even thickness of rubber to the stator contour and supporting each lobe with steel minimizes the rubber’s degree of dimensional change during use due to temperature, chemical attack and loading. This design allows Moyno ERT Power Sections to reliably produce up to 100% more power output compared to conventional stators. For the user, this higher power density and improved reliability translate to higher ROPs. An additional benefit of the ERT’s high power density is the ability to use shorter power sections with performance outputs comparable to that of longer conventional product. This can improve the motor’s directional response as well as MWD and LWD measurement quality by placing their sensors closer to the bit. Moyno ERT Power Sections are also a perfect choice to drive RSTs.

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IHS CERA: Falling Costs for Upstream Oil and Gas Facilities Appear to be Bottoming Out
Operating costs rise slightly and descent of capital costs’ slows, according to IHS CERA indexes

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he costs of building and operating upstream oil and gas facilities—which fell drastically in Q1 2009 after a prolonged period of escalation—appear to be bottoming out, according to two cost indexes developed by IHS Cambridge Energy Research Associates (IHS CERA). The IHS CERA Upstream Capital Costs Index (UCCI), which tracks costs associated with the construction of new oil and gas facilities continued to decline, down 4 percent over the past six months, though costs are approaching their bottom, the report finds. Its index score is now 202. The UCCI’s counterpart, the IHS CERA Upstream Operating Costs Index (UOCI), which measures operating costs for those facilities rose by 1 percent in the past six months after falling 8 percent during the prior year.The UOCI index score is now 168. The indexes are proprietary measures of cost changes similar in concept to the Consumer Price Index (CPI) and draw upon proprietary IHS and IHS CERA tools to provide a benchmark for comparing costs around the world. Values are indexed to the year 2000, meaning that capital costs of $1 billion in 2000 would now be $2.02 billion. Likewise, the annual operating costs of a field would now be up from $100 million in 2000 to $168 million. “The IHS CERA upstream cost analyses show that some confidence has returned to the industry as oil prices have recovered and expectations rise for a strong economic recovery in 2010,” said Daniel Yergin, IHS CERA Chairman.“However, uncertainty related to present low oil demand and large spare capacity continues to hinder many projects.” OPEC spare capacity has tripled in the past 12 months to 6.4 million barrels per day (mbd). The reduction in capital costs was driven by sustained lower levels of upstream oil and gas activities, which resulted in a sharp decline in the costs of drilling rigs and yards and fabrication. Upstream steel costs continued to fall through 2009, dropping 12 percent from Q1 to Q3 2009 on top of the 25.2 percent over the previous six months but in the past quarter it now appears to have stabilized around the cost floor.

Costs associated with land rigs declined 7 percent owing primarily to softening activity levels in the United States (28 percent reduction) and the Middle East (10 percent reduction). Costs for offshore rigs fell 3.1 percent, respectively, due to continued weak demand for jackup rigs. Yards and fabrication, impacted by the sharp drop in general shipping construction saw costs decline 13 percent over the past six months.A decline in new orders compounded with higher fund-

ing costs for equipment operators and difficulties obtaining financing fueled the drop. Contrary to the decline seen in construction costs, the Upstream Operating Costs Index increased one percent since Q1 2009.This was driven primarily by a rise in personnel costs and increases in the consumables market. Operating personnel costs rose 6 percent in the past six months. But this is a somewhat confusing picture as the increase was driven largely by foreign exchange fluctuation when converting local manpower rates into a weakened U.S. dollar. However, the personnel market, always resilient to recessions, is expected to continue to increase as hiring freezes begin to thaw out. Consumables costs rose, driven by the rebound in feedstock prices and recovery in the global demand for chemicals. Fuel costs—which registered an increase of 9 percent—were the largest factor in the rise in consumables costs. “Upstream capital costs continued to fall due to lower oil demand easing pressure on rigs and oil field related equipment and services,” said Pritesh Patel, director for the IHS CERA Capital Costs Analysis Forum. “But the slowing pace of the decline in index suggests that costs are poised for a turnaround as commodity prices begin to recover and labor costs rise.” “Looking at upstream operating costs over the last 6 months, a focus by operators on reducing rates for services continues to be a pervasive theme,” said Jeff Kelly, associate director for the IHS CERA Operating Cost Analysis Forum.“But that was somewhat disguised by higher manpower costs from a weaker U.S. Dollar and rising fuel and chemical prices.” Overall, the indexes project an increase in costs in the near term, with relatively stable oil prices in and recovering gross domestic product growth driving capital costs; and rising demand for services and vessels, along with rising materials and feedstock prices escalating operating costs.

Oil & Gas Network, February 2010 15

Ziff Energy Commences 1st International FPSO Operations Benchmarking Study to Assist Operations Enhance Efficiency
iff Energy Group, the leading upstream operations benchmarking firm, announces the commencement of its first International FPSO Operations Efficiency study, evaluating operating costs and uptime reliability for FPSOs in various regions of the world. FPSOs (which stands for ‘Floating, Producing, Storage, Offloading’) are a principal method for International oil production in areas where no pipeline is located (in contrast to Offshore Platforms for Shelf-depth offshore waters around the world, and floating Deepwater Structures that connect to fixed pipelines, such as in the US Gulf of Mexico and Brazil). The world ‘nameplate’ capacity for FPSOs is an impressive 15 million Bbl/d, and will grow significantly in the coming years. Moored offshore, the FPSO vessel gathers oil production from Platforms or Sub-Sea well for fields in either Shelf or Deepwater water depth, and then stores the crude oil for loading onto tankers for delivery to refineries for processing. Some FPSOs are ‘purpose-built’ (especially in the harsh North Sea environment, or Petrobras’s recent large orders for the Tupe sub-salt play), while traditionally many FPSOs are converted oil tankers. The first FPSO was Shell’s Castellon, dating back to 1977, over 3 decades ago. Like other production systems, there is a wide variety of FPSOs. Some of the major variances are: • capacity: from as small as 15-40 MBbl/d to as large as 200+ MBbl/d) • vintage (several decades old to new) • complexity of processing (amount of water handling, degree of liquids stripping, natural gas re-injection) • mooring system (internal or external turret, some disconnectable, or spread mooring).

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As usual, Ziff Energy will be benchmarking the FPSOs within groups of ‘like kind’ of comparable (peer) assets. Ziff Energy has assessed FPSO’s operating in a number of countries in Asia and South America during the last couple of years. The new Ziff Energy multi-client study will include: • 2 dozen vessels • operated by 9 operators, a diverse mix (Super-Majors; leading Independents; Contract Operators) • located offshore 11 countries in a variety of regions globally including the Atlantic Margin (Brazil & West Africa) as well as the North Sea and Asia. The ‘water’ breaking Ziff Energy study will assist the study participating operators enhance efficiency and counter the effects of rapid production decline, which has a big impact on unit operating costs. This will be Ziff Energy’s 182nd Upstream benchmarking study, which together have examined Operations Performance for over 3,750 oil and gas assets in 29 countries. Since the early 1990’s, Ziff Energy has delivered a series of offshore operations benchmarking studies, including: • a dozen multi-client Gulf of Mexico studies 7 Deepwater 5 Shelf • a major multi-client study in Asia Pacific, completed in 2008, covering 7 countries (Australia, China, India Indonesia, Malaysia, Thailand and Vietnam) • plus custom offshore projects for operators in Brazil, India, and Trinidad & Tobago. The FPSO study will focus on both Operating Costs and Production Uptime Reliability and Operating Efficiency in 2009.The reliability metrics were first developed as part of Ziff Energy’s Offshore Deepwater study, and enhanced with input from our Super-Major clients. These new metrics include the value of lost oil production, the Mean Time Between Incidents (MTBI), and the Mean Time To Recover (MTTR). Uptime is a prime driver of upstream ‘value add’. In the Deepwater study, the value of the unplanned deferment far exceeded the total OpEx of the participants. Study participants will obtain “best in class” production uptime targets that could help validate the value associated with specific investments for improved reliability. In the graph below, from an earlier Ziff Energy benchmarking study, it is apparent that the Uptime Reliability ‘Best in Class’ target for one type of asset (in this case, Onshore Oil) differs from the target for another type of asset (Offshore Oil). The Technical Project team includes veteran offshore operators based in Scotland and Houston, with backgrounds with Major producers, together with Ziff Energy’s Upstream “Center for Benchmarking Excellence” (CBE), based in Calgary. Key members of Ziff Energy’s Offshore team include: • David Richmond, former Offshore Installation Manager for a Major, with an extensive background knowledge in all aspects of FPSO Operations, from wells to market • Tom Gray, an Offshore Operations specialist, who joined Ziff after a long and impressive career at a Major where he served last as Director, Gulf of Mexico Deepwater Operations. • Joe Kilchrist, Ziff Energy’s Director, Offshore Operations, who is an accomplished E&P Management professional with hands-on oil and gas field operations experience encompassing all phases of drilling and production operations.

Study participants receive confidential, blinded, asset-level comparisons versus comparable assets. There will be a detailed diagnostic report on each asset, compared on a ‘like kind’ basis with peer assets and identifying potential savings in each cost category, as well as detailed cost driver analysis. Historically, Ziff Energy’s studies have helped Operators pinpoint areas to achieve significant savings on operating costs.After the study is completed, Ziff Energy will meet privately with each FPSO client regarding areas for future action plans to assist them achieve the identified efficiency savings, as well as to enhance reliability and gain production. There is still time, if an operator acts quickly, to have their FPSOs benchmarked as part of the study. For more information or to discuss participation, please contact or e-mail Richard M. Tucker, VP Marketing & Client Relations, Houston Office: (713) 985-5183; richard.tucker@ziffenergy.com.

Enventure Successfully Installs New High-Performance Expandable System

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nventure Global Technology, a pioneer in solid expandable technology, announced two significant milestones: the successful installation of one million feet of expandable liner with a new Cased-hole 3-½ x 4-½ in. high-performance expandable system. The 30-ft (pre-expansion length) SET® System was installed in a North Dakota well as part of a threewell remediation project for a major North American operator. The operator planned-in Enventure’s high-performance SET System to repair a failed frac sleeve. By utilizing a high-performance expandable system, the operator was able to finish the planned completion technique. “Expanding our one millionth foot of liner on the first commercial installation of a new expandable system is significant on many levels,” said Ray Ballantyne, Enventure’s chief executive officer. “It not only continues the company’s record-setting history, but it also proves our technology’s reliability and the industry’s acceptance of expandables as a costeffective, high-performance solution compared with alternatives. We are extremely proud of our accomplishment and look forward to helping the industry continue to achieve objectives previously unimaginable 10 years ago.” Enventure’s new, single-joint, high-performance system was designed to facilitate completion and production applications. It provides a 3-¼ in. pass-through and has been tested to withstand up to 10,000 lbs per square inch (psi) at 325 degrees Fahrenheit. “The growing breadth of expandable applications continues to demonstrate the diversity of the technology and proves its value to the operator in each stage of the well’s lifecycle,” said Kevin Waddell, Enventure’s technology and marketing vice president.“We expect this latest application to springboard our efforts in bringing expandable technology to unconventional and fracture enhancement projects.”

16 Oil & Gas Network, February 2010

Future to bring continued price disparity between Canadian oil and natural gas
n its most recent Canadian domestic oil and gas price forecast, Calgary-based AJM Petroleum Consultants documents a continuing divergence of crude oil and natural gas pricing in the Canadian energy industry. Meanwhile, in his international forecast, AJM economist and Vice President Operations Ralph Glass indicates the US-based West Texas Intermediate (WTI), which is strongly influenced by US dollar activity, may be losing its dominance as the world’s benchmark for crude oil trading, citing as evidence a recent decision by Saudi Aramco to adopt the Argus Sour Crude Index (ASCI) as the new benchmark for all grades of crude oil sold to US customers. “In the Canadian Domestic market,” says Mr. Glass,“crude oil pricing seems to have stabilized in the mid seventies (CDN$ Edmonton Posted), while natural gas hovers around $4.50/mcf (CDN$ AECO).This equates to a 16:1 oil-to-gas ratio compared to the prior five-year average ratio of 10:1. The futures market shows a price increase to the US$8.00/Mcf range by 2019, reflecting future demand growth.” Mr. Glass calls the pricing disparity “a tale of two commodities”. While the crude oil story is one of limited supply and growing demand – driven by such factors as the anticipation of an ongoing world economic recovery, US demand recovery and the unyielding growth of China – the natural gas story is quite different. Thanks to new technologies, North America appears to have an adequate supply of natural gas, resulting in lower natural gas futures pricing. On the international scene, Mr. Glass says the decision by Saudi Aramco (the national oil company of Saudi Arabia) to drop the West Texas Intermediate (WTI) benchmark in favour of the Argus Sour Crude Index (ASCI) is “a harbinger of change”. “The London-based Intercontinental Exchange (ICE) and the US-based NYMEX CME Group began trading futures contracts for the Argus-based sour crudes on December 7, 2009,” notes Mr. Glass.“Mexico’s Pemex has indicated it is studying the possibility of moving to the ASCI benchmark. Venezuela has also shown signs it will consider moving to the new index. Rest assured, our future will be shaped by oil-consuming nations other than the United States.”

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Oil & Gas Network, February 2010 17

Pipeline Protection: Preserving the Petroleum Lifeline
New Dynatel locator designed to help oil and gas companies find underground assets quickly and easily.

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elow the earth’s surface lies a vast network of pipelines and other essential utilities. Though hidden from sight, these transportation vehicles can be found virtually everywhere, from oil fields to city centres, moving the industry’s most valuable materials: the crude needed for refining, and refined products, such as natural gas. Accurate location, damage prevention, and damage avoidance of these utilities is critical when conducting maintenance or infrastructure expansion projects to ensure the safety and integrity of the system and the people working on and around them. Damage often occurs due to direct hits to the pipeline by onsite workers or equipment. It is important that buried pipes, cables and wires are clearly marked and delineated prior to excavation. Failure to do so can lead to injury, death, loss of service and require costly repair. Several technologies enable companies to accurately identify and mark existing infrastructure prior to construction, excavation or maintenance. Many companies use locating devices that detect electro-magnetic fields to find buried utilities. As a worldwide leader, Dynatel is known for its rugged, versatile and user-friend locating and marking solutions. Recognizing the diversity of locating techniques in the utility industry, 3M works closely with its customers to learn more about their needs and develop customized solutions. Looking Deeper In 2008, 3M Canada approached the oil and gas industry in Western Canada to better understand the challenges and realities that are faced when locating buried assets such as pipes, cables and wires. These valuable voice of customer discussions revealed extensive insight. Due to a variety of factors, including the large amount of buried infrastructure and the natural landscape, locators used a combination of techniques to find and identify buried assets. In many cases, locators rely heavily on inductive locating, a technique of indirectly applying an electromagnetic signal onto a buried metallic conductor. Although industry best practices indicate direct connections to utilities or conductors is the preferred method of applying a signal to a buried utility, feedback indicated a suitable method of direct connect or application of a locating signal is not always possible. In these situations, inductive locating is used which involves sending signal into the ground directly from the transmitter to detect and mark buried cables and pipes from the surface. This inductive method, commonly used on pipeline right-of-ways and oil battery sites, can be highly effective under the right conditions with equipment designed for inductive-type locates. This is typically completed using a two-person team or a single individual “blind sweeping” of the area. Although products are available that specialize in direct connect or inductive locating, input from the industry indicated locate professionals would benefit from a single, costeffective device that could perform both effectively. The industry wanted a solution that could meet the advanced features, functionality, accuracy and performance requirements of professionals who locate diverse utilities both conductively and inductively.

Exploration and Development Over an 18-month period, 3M Canada and its distribution partners joined a project team from the United States and worked closely with customers in Western Canada.Together, they developed and field trialled the Dynatel Advanced Pipe Locator 2220M-PL (2220M-PL). After receiving extensive feedback, the team modified the locator to include advanced features and functionality, such as improved sensitivity, increased precision and enhanced power output, the industry needed while combining the inductive and conductive capabilities the industry demanded. Since all utilities are different, locators require equipment that locate conductors of different sizes and material types, and at different depths. The 2220M-PL provides the option to select the best frequency (8 kHz, 33 kHz, and 82 kHz) and power output for the utility being located. It also provides enhanced inductive capability when performing induction or “blind sweep” locates. Additionally, the receiver can detect passive power (50/60 kHz), cathodic protection signals (120hz), and radio (15k-30 kHz) for damage avoidance, as well as remote transmitters such as sonde and pipeline inspection cameras. This helps provide the operator the flexibility to choose the frequency best suited for the situation, and allows maximum performance in direct connection or inductive locate applications. The 2220M-PL’s new 12-Watt transmitter provides the maximum allowed inductive power for locating deep, large diameter, or tracer wired lines with confidence and accuracy in even the most demanding locate environments. “By listening to our customers and combining their field input with our time-tested technology, 3M created a locator designed with the customer in mind,” said Drew McCallum, sales and marketing manager, 3M Canada Dynatel locating and marking solutions.“Not only is the locator exceptionally simple and intuitive for new users, but it also provides the power and sensitivity needed for the most demanding applications.” The 2220M-PL’s receiver provides a bar graph, signal strength and direction indication to the utility which help the operator distinguish the target, even in congested areas. A push-button digital depth readout, in inches, feet or centimetres, helps provide quick, easy depth measurement in active, passive and sonde modes.

Continues on page 20
18 Oil & Gas Network, February 2010

Continued from page 18

R&D Partnerships: Connect, Collaborate, Prosper

Additionally, the new induction peak mode allows users to get closer to their transmitters knowing the signal detected by the receiver is focused on the electromagnetic field coming from the buried conductor rather than through the air from the transmitter which could cause false positives or inaccurate readings. Refining Technology Leveraging knowledge gained while developing the 2220M-PL, 3M integrated the new features into existing Dynatel products. Ideal for professionals who locate diverse utilities, the broader product family includes features like the ability to efficiently locate conductor or sheath (earth return) faults, trace the path of underground cables and pipes or sondes, and are available with various power output options and expanded frequency ranges.

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anada is home to advanced research communities with worldclass infrastructure and an excellent base of highly trained people. Connecting to the right opportunities for partnerships can help R&D-performing businesses capitalize on this tremendous base to make Canadian firms more innovative, productive and competitive. The Natural Sciences and Engineering Research Council of Canada (NSERC), is one of the country’s leading providers of grants for public-private R&D partnerships. In December 2009, we launched the Strategy for Partnerships and Innovation (SPI) with a mandate that will see industry and academia connect, collaborate and prosper. This plan builds on existing initiatives and introduces new government programs designed to bring together Canadian businesses with university researchers to heighten their R&D. NSERC has a long history of funding public-private collaborations. It currently invests over $310 million annually to support R&D partnerships and works with over 1,400 Canadian companies every year, including 65 of the top 100 R&D investment firms. Our Industrial Research Chair and Collaborative Research & Development Grant programs have been very well received by companies that wanted to expand upon their potential and bring new innovations and intellect to their industry. Among the most sought-after academic resources by businesses are highly-skilled researchers and students who bring specialized expertise to advance company technologies and help find novel business solutions. These programs have given businesses a pipeline to the highly qualified personnel being produced by our post-secondary institutions. With SPI, NSERC is increasing its reach with a particular focus on small and medium sized enterprises. To qualify, companies must operate from a Canadian base, be engaged in R&D, actively participate in the collaboration and exploit the results within Canada.The Interaction Grant provides up to $5,000 in funding to cover travel expenses and meeting costs for business and academic parties to convene and explore the potential for a partnership. When a partnership opportunity is agreed upon, the collaboration can apply for an Engage Grant. To help companies proceed with new developments quickly, NSERC is promising a decision on applications for the Engage program within six weeks of receiving them. Through this program, the Council provides up to $25,000 for new research collaborations that will identify potential solutions to company-specific, short-term R&D challenges. As with all NSERC programs, this funding supports the academic researcher’s direct project costs. After this initial R&D partnership, businesses have a choice of subsequent cost-sharing initiatives that can provide amounts in excess of $500,000 for multi-year projects. SPI is an initiative with ambitious, but achievable, goals. Canada has a great research engine and the means to up its innovation output and productivity. It is time for us to step up our game. The aim of SPI is to more than double the number of NSERC-supported partnerships from 1,400 to approximately 3,000 by 2014. By continuously gauging the response to the partnerships that are being formed and introducing new elements to make it easier for industry to connect with academia, we will reach our target. The oil and gas industries are fine examples of successes that can be achieved through partnerships.The Alberta oil sands have been the beneficiary of many technological innovations that have helped establish those resources as the powerful

energy producers they are today. In the 1980s, University of Calgary researcher Roger Butler, funded by NSERC, developed a groundbreaking process to extract oil from the sands, the Steam Assisted Gravity Drainage (SAGD). At the time, only 10 percent of the bitumen in the sands was accessible through open-pit mining techniques. The SAGD is now the most widely used technology by the oil extraction operations in Alberta and is considered an industry standard. Dr. Butler’s breakthrough made 100 percent of the reserves accessible, and turned the Alberta oil sands into an unrivaled energy resource. Potentially, 300 billion barrels of oil in the Alberta oil sands can be recovered using today’s technology, generating well over $100 billion in revenue. However, finding a balance between minimizing environmental impact and maximizing the economic benefits of the oil sands is the key to Canada’s oil industry maintaining credibility in the eyes of the world. In 2007, the Imperial Oil-Alberta Ingenuity Centre for Oil Sands Innovation (COSI), located at the University of Alberta, was launched with funding from Imperial Oil,Alberta Ingenuity, Alberta Energy Research Institute, NSERC and the National Institute for Nanotechnology. Its mandate is to find and develop efficient oil production practices that are environmentally and economically responsible. COSI represents leading-edge collaboration between government, industry and the research community in pioneering practical solutions for challenges in oil recovery. Cross-discipline collaboration has brought oil sands research to the cusp of other major breakthroughs. Successful collaborations depend on partners sharing information, expertise and developments to achieve results that improve industry and academic knowledge and practices. For example, Shell, in collaboration with scientists from Natural Resource Canada’s CANMET Energy Technology Centre in Alberta, have further refined an earlier process that currently uses smaller machinery and reduces energy and water consumption by an additional 10 percent, reducing greenhouse gas emissions by 40,000 tonnes per year. The work being conducted by COSI and researchers across the country will ensure that a further decline in extraction costs and CO2 emissions remains a viable goal. These are examples of major partnerships that have been very successful. Partners share information, expertise and developments to achieve results that improve industry and academic knowledge and practices. A commitment to keeping Canadian industries progressive will have a great impact on our country’s economy and make our industries world leaders. The Strategy for Partnerships and Innovation is only just underway, but NSERC has already received very positive support from industry leaders across the country and the first applications are under review.We have launched a website that gives an overview of the opportunities available to businesses through programs for building collaborative relationships, advancing R&D and finding highly qualified people.We are also publishing a newsletter to keep companies informed of success stories, program updates and topics relevant to businesses that want to expand their R&D. For more information on the Strategy for Partnerships and Innovation and the opportunities it can provide, please visit www.nsercpartnerships.ca.

Recognizing the industry’s continual focus on advancements in technology related to enhanced utility locating, mapping and asset management, this family of locators can also detect all standard electronic markers, and write, read and lock programmed information onto 3M Electronic Marker System iD Markers. Also, many locators and fault finders are compatible with select GPS/GIS field mapping instruments for real-time mapping of electronic markers or pipe and cable facilities. In the Pipeline As populations grow, the demand for essential services, such as oil and gas, water, sanitation, power and telephone, will increase. These changes will greatly expand the existing underground network providing new challenges for locators and utility owners. They will be looking for devices that accurately locate, map and protect the system people depend on. Fostering collaborative relationships between customers and technology providers will help ensure a healthy pipeline of solutions that evolve with the ever-changing needs of the industry.

20 Oil & Gas Network, February 2010

Moyno® Gear Drivehead (MGD™) Easily and Effectively Controls Pump Speed

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illis,Texas — The Moyno® Gear Drivehead (MGD™) uses an adjustable hydraulic gear drive to quickly and easily control the downhole progressing cavity pump (PCP) speed at the wellsite to maximize production without pumping off the well.

The MGD provides cost-effective operating efficiency as well as safe and reliable operation throughout its long service life.This hydraulic drivehead features effective backspin control that has been field-proven for operational safety.

Features and benefits of the MGD include: • Rated to 70 HP at 1,200 PRM input speed • High strength alloy shafts for rugged durability • Accepts standard “C” mount 80 or 90 cc hydraulic motors for ready access to costeffective components • Handles system pressures to 4,000 PSI for application versatility • Eliminates external moving parts such as belts and sheaves • Allows you to optimize production by easily matching pump speed to well conditions • Easy maintenance The integrated variable speed control and broad selection of speed and torque combinations that are available make the MGD the ideal choice for an extensive range of downhole PCP applications. R&M Energy Systems, part of the Fluid Management Group of Robbins & Myers, Inc., manufactures and markets a wide variety of products for use in the discovery and recovery segments of the oil and gas industry. R&M Energy Systems’ products include the following: Hamer® Line Blinds; Hercules® Wellheads,Valves, Stuffing Boxes, and artificial lift accessories; Magnum® Needle Valves; standard and customized Moyno® Down-Hole Pumps; Moyno® Guardian™ Variable Speed Drives; Moyno® Surface Pumps, Moyno® Tri-Phaze Systems; Moyno® and Moyno® ERT™ Power Sections; Moyno® HTD™ High Temperature Down-Hole Pumps; New Era® Rod Guides; Resun® Plug Valves; RODEC™ Tubing Rotators, artificial lift accessories and down-hole tools; StayTite® Swing Joints; Yale® Closures and Hammer Unions; and SENTRY® Closures. With facilities in the U.S., Belgium, Venezuela, Australia and Canada, R&M Energy Systems readily serves customers worldwide.

Oil & Gas Network, February 2010 21

Artificial Lift RIGLESS ESP System Achieves Successful Commercialization from ConocoPhillips
he Artificial Lift Company Ltd. (ALC), a leading artificial lift service company, announced that its RIGLESS ESP solution developed in cooperation with ConocoPhillips had been approved by the operator for commercialization. ALC has been working closely with ConocoPhillips for more than five years to develop its groundbreaking artificial lift solution for the oil and gas industry. The ALC RIGLESS ESP technology met the commercial terms of the contract with ConocoPhillips and passed the final acceptance test in September 2009. The fully commercialized RIGLESS ESP system will undergo additional testing with ConocoPhillips in Q1 2010 in West Texas, and the first commercial installation for ConocoPhillips is scheduled for Q2/Q3 2010 in Alaska. “Artificial Lift Company has been flexible and responsive to our specific needs, and provided us complete access in the technical development process,” said John Patterson, ConocoPhillips Production Engineering advisor. “We believe ALC’s RIGLESS ESP technology is a cost-effective solution for companies facing challenging ESP applications with high intervention costs and in areas where securing a rig can require a long downtime. Our main driver for Alaska was to have a RIGLESS ESP system to allow replacement of sanded pumps and to clean out sand bridges in the casing below the ESP without using a rig.” ALC’s RIGLESS ESP system significantly extends the life of a well and reduces maintenance costs. “ConocoPhillips has been great to work with in helping Artificial Lift to develop and commercialize the RIGLESS ESP artificial lift technology,” said ALC President Geoff KimberSmith. “The commercialization of this technology will allow us to introduce the product to markets where there is real demand for alternative ESP solutions, especially in areas where work-over costs consume a large part of the budget. We believe that there will be many worldwide opportunities in key global regions as this system will radically change the costs incurred in deploying ESPs.”

Yale® SafeGuard Figure 500™ Lugless Closures Provide Safe,Secure Sealing of Pipelines and Vessels

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&M Energy Systems now offers the Yale® SafeGuard Figure 500 lugless closure for safe, simple and reliable sealing of pipeline and vessel applications.The Yale SafeGuard lugless closure utilizes the field-proven threaded closure cap with O-ring pressure seal design. The lugless feature of the SafeGuard closure prevents in-field safety risks associated with hammering on the closure cap lugs as well as the potential for damage to the closure that could hinder its sealing capability and shorten the service life of the closure. The Yale SafeGuard closure can be easily operated with a standard 24-inch or 36-inch pipe wrench. The SafeGuard closure provides significant benefits to end users that include an overall low total cost of ownership. Other benefits include: - Safety for the operators - Secure sealing without leakage - Quick and easy operation that saves time and effort on the part of the operators - Long service life to optimize the return on your investment Yale Figure 500 SafeGuard Lugless Closures provide productivity, durability and safety for the most critical installations. R&M Energy Systems, part of the Fluid Management Group of Robbins & Myers, Inc., manufactures and markets a wide variety of products for use in the discovery and recovery segments of the oil and gas industry. R&M Energy Systems’ products include the following: Hamer® Line Blinds; Hercules® Wellheads, Valves, Stuffing Boxes, and artificial lift accessories; Magnum® Needle Valves; standard and customized Moyno® Down-Hole Pumps; Moyno® Guardian™ Variable Speed Drives; Moyno® Surface Pumps, Moyno® Tri-Phaze Systems; Moyno® and Moyno® ERT™ Power Sections; Moyno® HTD™ High Temperature Down-Hole Pumps; New Era® Rod Guides; Resun® Plug Valves; RODEC™ Tubing Rotators, artificial lift accessories and down-hole tools; StayTite® Swing Joints; Yale® Closures and Hammer Unions; and SENTRY® Closures. With facilities in the U.S., Belgium, Venezuela, Australia and Canada, R&M Energy Systems readily serves customers worldwide.

22 Oil & Gas Network, February 2010

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