Well Construction Journal - July/August 2013

7/28/2019 Well Construction Journal - July/August 2013

1/28

The ofcial publication o the Canadian Association o Drilling Engineers

JULY / AUGUST 2013

PM#40020055

The shale revolution has

reversed decades of decliningoil and gas activity in Texas

Snow Birds:Canadian companies

are capitalizing on a Texas-sized

opportunity

Migration Trouble: Is increased oil

output in Texas blocking Canadian

access to Gul Coast refneries?

PLUS

Put to the Test:LNG takes a run

at replacing diesel to power on-siteequipment


2/28

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3/28www.cadecanada.com july/august2013

The ofcial publication o the Canadian Association o Drilling Engineers

DEPARTMENTS

5 THE DRAWING BOARDEditors note, members

corner, news and notes,

technical luncheons

9 MEMBER PROFILE10 STUDENT PROFILES24BY THE NUMBERS

26DRILLING DEEPERSAGD activity reaches

new heights

FEATURES

12 EAGLE FORDShale oil and gas is

revitalizing drilling activity

in The Lone Star State

17 UNcONvENTIONAL THINkINGLNG is put to the test in the

Eagle Ford as an alternative

to diesel

20 DUE SOUTHCanadian companies aretaking advantage of an oil

renaissance in Texas

22 OPPORTUNITYS cHALLENGEProduction hotspots, as much

as low prices, are redrawing

distribution networks

The mandate of the Canadian Association of Drilling Engineers is to

provide high-quality technical meetings and to promote awareness on

behalf of the drilling and well servicing industry. With more than 500

members from more than 300 companies, CADE represents a broad

spectrum of experience in all areas of operations and technologies.

Through CADE, members and the public can learn about the tech-

nical challenges and the in-depth experience of our members that

continue to drive the industry forward. For drilling and completions

specialists, CADE currently offers one of the best networking and

knowledge sharing opportunities in the Canadian petroleum industry.

cANADIAN ASSOcIATION OF DRILLING ENGINEERS

1100, 540 - 5 Avenue SW

Calgary, AB T2P 0M2

Phone: 403-532-0220

Fax: 403-263-2722

www.cadecanada.com

PRESIDENT: Robert Jackson

PAST PRESIDENT: Eric Schmelzl

WELL cONSTRUcTION JOURNAL EDITOR: Christian Gillis

WELL cONSTRUcTION JOURNAL IS PUBLISHED FOR CADE

BY vENTURE PUBLISHING INc.

10259 105 Street

Edmonton, AB T5J 1E3

Phone: 780-990-0839

Fax: 780-425-4921

Toll Free: 1-866-227-4276

[email protected]

PUBLISHER: Ruth Kelly

ASSOcIATE PUBLISHER: Joyce ByrneDIREcTOR OF cONTRAcT PUBLISHING: Mi Purvis

MANAGING EDITOR: Steve Macleod

ART DIREcTOR: Charles Burke

ASSOcIATE ART DIREcTOR: Andrea deBoer

ASSISTANT ART DIREcTOR: Colin Spence

PRODUcTION MANAGER: Betty-Lou Smith

PRODUcTION TEcHNIcIANS: Brent Felzien, Brandon Hoover

cIRcULATION cOORDINATOR: Karen Crane

AccOUNT ExEcUTIvE: Anita McGillis

cONTRIBUTING WRITERS: Matt Hirji, Lisa Ricciotti,

Ryan Van Horne

JULY/AUGUST 2013

22

PRINTED IN CANADA BY ION PRINT SOLUTIONS.

RETURN UNDELIVERABLE MAIL TO 10259 105 ST.

EDMONTON AB, T5J 1E3

[email protected]

PUBLICATION MAIL AGREEMENT #40020055

CONTENTS 2013 CADE. NOT TO BE REPRINTED OR

REPRODUCED WITHOUT PERMISSION.

20

17

12


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5/28july/august2013www.cadecanada.com

BOARDThe Drawing

Global ExpertsUR 4TH EDITION OF THE WELL CONsTRUCTION JOURNaL

this year takes a look at the Eagle Ford and

Permian basins in Texas. Again we are looking

at what Canadian companies and personnel

are doing outside of the Western Canadian Sedimen-

tary Basin.

It continues to amaze me when we are looking for

candidates for our stories exactly how much we do

outside of our own backyard. Everywhere you turn, you

come across another company or person not just work-

ing in a new and different environment, but leadingthe way. Canadian expertise is everywhere.

Here at home, CADEs 2013 Technical Luncheon

Presentations are over for the summer and will resume

in the fall. Please watch for announcements with the

upcoming topics and dates. Please dont hesitate to

contact us if you have any ideas for upcoming topics

or issues youd like to see presented at the luncheons or

in print. We are also looking for topics that tie into our

journal focus for each month. We hope to see more of

this of the course of the year. We hope you the CADE

membership will participate and continue to make

these events interesting and successful. If you have anyissues youd like to see covered, please email me and we

will do our best to get the story.

O

E D I T O R S N O T E

CADE ExecutiveTeam 2012/2013President Robert Jackson 403-615-9504

Past President Eric Schmelzl 403-862-0870

Secretary Tammy Todd 403 613-8844

Treasurer Cecil Conaghan 403-667-9812

Membership Chairman John Burnell 403-265-4973

Education Chairman Jeff Arvidson 403-232-7100

Social Chairman Dan Schlosser 403-531-5284

WCJ Editor Christian Gillis 403-265-4973

IT Chairman Matthew Stuart 403-605-3790

Communications Chairman Andy Newsome 403-532-0220

Member At-large John Garden 403-265-4973

Sponsorship & Marketing Kyle Klam 403-532-0220

Administrator Kali Charron 403-532-0220

E X E C U T I V E T E A M

Dont forget, we would like to publish any of your

information and announcements on new products,

new technologies and senior personnel changes for

publication each month. Please forward any an-

nouncements to us, as we would be excited to run

them in our new feature section.

We appreciate your continued support and look

forward to seeing you at the upcoming luncheons.

Christian Gillis, Editor

Well Construction [email protected]

403-265-4973


6/28Well Construction Journal july/august2013

Welcome NeW members

Kathryn BerKson

Martin rejMan

shaun rousseau

onoMe Clifford ovadje

rooBin ZaMir

Brad sMeaton

MiChelle BalKo

Mehdi noorMohaMMadi

ruturraj Paatil

adeBayo oluwatosin eMManuel

osondu harrison ChuKwueMeKe

Kelvin efeturi oBuKofesCott sherMan

Paxton livingston

oluwatosin adeBayo

linden aChen

allan Bouwers

Kevin Playfair

MiKe haZelton

tyler stePhenson

Christian toanChina

siavash MorteZaee fard

augustine oMoBhude

Brent KawalilaKross ClanCy

tien dang

Why become a caDe member?

As o 2013, the Canadian Association

o Drilling Engineers (CADE) has been

active or 38 years. With more than

500 members rom more than 300

companies, CADE represents a large

spectrum o experience in all areas o

operations and technologies.

For drilling and completions spe-

cialists, CADE currently oers one o

the best networking and knowledge

sharing opportunities in the Cana-

dian petroleum industry. The skills andknowledge obtained by your participa-

tion in CADE will beneft you and your

employer, with direct application to

your proessional career.

CADE oers various means or

members to connect and share their

insights. Monthly technical lun-

cheons are held with topical industry

presentations. Other membership

benefts include our monthly pub-

lication Well Construction Journal

and a membership directory, whichis the whos who o the Canadian

drilling industry. Our website www.

cadecanada.com is an excellent

ocal point or industry events, blogs

and other news. We are also active on

LinkedIn and Twitter.

Who caN become a caDe member?

CADE members can be anyone em-

ployed in the drilling and completions

industry or with merely an interest in

the industry.

Typical members include drilling

and completions engineers, geologists,

technical personnel, sales personnel

and students. Student memberships

are available to any post-secondary

student interested in learning more

about drilling and completions.

Please eel ree to share inormation

about CADE with all the people in your

organization who are interested in the

drilling and completions industry.

caDe membership reNeWals

CADEs membership year is rom Sep-tember to September. During the sum-

mer, CADE members will receive an

email and link or the renewal process

on our website.

Please remember the benefts o be-

ing a CADE member include APEGAs

proessional development hour, stay-

ing abreast o technological and in-

dustry advances, drilling conerences

and a great opportunity to network.

Thank you or your support.

caDe membership chaNges

Log on to www.cadecanada.com to

become a member or to update your

contact inormation.

M E M B E R S C O R N E R

boarDThe Drawing



N E W S A N D N O T E S

Regulatory ReformersThe AlberTA energy regulATor (Aer) found iTs leAding men

and is set to begin its oversight of oil, natural gas and coal

projects in the province. The new regulator took over duties

from the Energy Resources Conservation Board, and Alberta

Environment and Sustainable Resource Development in June.

After the provincial government hosted public consultations

in 19 communities across the province during February and

March, the AER was tasked with balancing industry develop-

ment and landowner rights. The arms-length government body

is headed up by Jim Ellis and Gerry Protti.

Jim ellis

Aer role: Chief exeCutive OffiCer

yeArs of Public secTor exPerience: 30

Ellis served 23 years in the Canadian

Army, retiring as a Colonel in 2006, before

joining the provincial government as the

executive director of the Alberta Environ-

ment Support and Emergency Response

Team (ASERT). He became the Deputy

Minister of Environment in 2008 and the Deputy Minister o

Energy in 2011. During his time with the province, Ellis ha

also been president of the Alberta Water Council, chair of th

Alberta Petroleum Marketing Commission, and chair of th

Steering Committee of the Regulatory Framework Assessmen

for Carbon Capture and Storage.

gerry ProTTi

Aer role: BOard Chair

yeArs of indusTry exPerience: 35

Protti spent 15 years as an executive withEncana Corp. and one of its predecesso

companies, PanCanadian Energy Corp. H

was also the founding president of the Ca

nadian Association of Petroleum Producer

(CAPP) and was executive director of th

Independent Petroleum Association of Canada. Protti also spen

time as assistant deputy minister with Albertas Energy Depart

ment, and he held senior positions with the Alberta Treasur

Department and the Canadian Energy Research Institute.

Revised Drilling Expectations

However, the organization revised its anticipated feet size down

ward. The CAODC says that new equipment likely will not becom

available until later in the year, so it has downsized the annual fee

average rom 830 rigs to 823 rigs.

The PeTroleum services AssociATion of cAnAdA (PsAc) And

the Canadian Association o Oilwell Drilling Contractors (CAODC)

revised their drilling activity orecasts or 2013 to indicate a slight

uptick in expected rig activity.

The second update to PSACs 2013 Canadian Drilling Activity

Forecast added 600 wells to the original estimate or a total o 12,000

wells expected to be drilled (rig released) across Canada during

the year.

Drilling activity is keeping on a steady pace this year, and we an-

ticipate another pickup in activity in Q3 and Q4, said Mark Salkeld,

president and CEO o PSAC. Even with steady levels o activity

this year, continued low gas prices and the impact o inrastructure

bottlenecks that are squeezing access to new markets are certainly

having an impact.

The CAODC also recently revised its original 2013 orecast rom

10,409 wells to 10,649 new wells expected in Canada during 2013.

The orecast or operating days has also been increased rom a pre-

dicted 118,401 days to 121,126 days.

The association also anticipates a pickup in activity levels during

the third quarter and has adjusted its rig utilization rate or the quar-

ter rom 35 per cent to 40 per cent, or 330 rigs working.


8/28Well Construction Journal july/august2013

BOARDThe Drawing

T E C H N I C A L L U N C H E O N S

Save the Date

Luncheon TicketsMEMBERS: $47.50 (plus GST)NON-MEMBERS: $55 (plus GST)

FULL TABLES OF 10: $475 (plus GST)

STUDENT: $20 (plus GST)

WALK-UP: $55 (plus GST)

N E W S A N D N O T E S

ERCB Releases Hydraulic Fracturing DirectiveThe energy resources conservaTion Board (ERCB) has is-

sued a new directive or hydraulic racturing, which includes

new requirements or wellbore integrity.

Directive 083: Hydraulic Fracturing - Subsurface Integrity

was released ollowing a two-month stakeholder consulta-

tion period.

The board says the new directive, represents a notable

enhancement to existing regulatory oversight and monitor-

ing as resources development continues and technology

adapts. The ERCBs review identied three specic areasthat required urther regulatory response: maintaining well

integrity, inter-wellbore communication and hydraulic rac-

turing operations at shallow depths. The regulatory changes

and additions will come into eect in August 2013.

MainTaining Well inTegriTy

The ERCB observed that, or hydraulic racturing operations,

there is an emerging trend toward the use o single-barrier

wellbore construction, rather than dual-barrier construction,

to provide a secure pathway or fuid injection and recovery

rom the reservoir. While the ERCB has had no reports o

single-barrier well systems losing integrity, the introductiono enhanced regulations will provide an added measure o

protection.

The board believes the risks to well integrity associated with

single-barrier well systems can be eectively managed by an

operator. The new directive requires licensees to demonstrate

that operational risks have been considered in the selection

and design o the wellbore construction, and to monitor

and test to ensure that well integrity is maintained.

inTer-WellBore coMMunicaTion

To address the risks associated with inter-wellbore commu-

nication, the proposed directive requires licensees to carry

out a risk assessment and prepare a well control plan to

manage unintended inter-wellbore communications, and

reduce the impacts i a communication event occurs.

The ERCB believes prevention and mitigation throughproper planning and execution will enable licensees to e-

ectively manage risks associated with inter-wellbore com-

munication.

FracTuring operaTions aT shalloW depThs

Current regulatory requirements or shallow racturing op-

erations, outlined in Directive 027, ocus on shallow zones

up to 200 metres below the surace. Given a avourable

economic environment, zones between 200 and 600 metres

(depths above the base o groundwater protection in many

areas) may also be subject to uture development.

Under the new directive, all licensees carrying out hy-draulic racturing operations in this zone must:

conduct a risk assessment,

observe prescribed setbacks or water wells and top o

bedrock, and

use environmentally-riendly chemical additives or fuid

compositions above the base o groundwater protection.

Our popular Technical Luncheons have wrapped or the

2012/13 year. We are in the process o planning an exciting

new series or 2013/14. What topics would you like to see

covered in the upcoming year? Membership input is valu-

able to us and we want to make sure we are covering the

topics that are important to you.

GST REGISTRATION #R123175036

Visit www.cadecanada.com

for all ticket purchases

Please call or email with your great ideas:

Christian Gillis, Managing Editor,

Canadian Well Construction Journal

[email protected]

(403) 265-4973



PROFILEMember

By Mif Purv

R

Small Footprints

andy Hawkings Has spent22 of His 34years in the oil and gas business as a drilling

engineer on the exploration side, at home

and abroad. Hawkings also spent 12 years

as a drilling contractor, specializing in new rig con-

struction and ootage drilling. He was a principalat Enercon International and Enercon Engineering,

providing drilling project management services

or a host o clients in North and South America.

He let a position as vice-president and general

manager o Lakota Drilling Division or Savanna

Energy Services in 2007 to consult in Texas, and

then went on to orm CanElson Drilling Inc. in

2008. With colleagues, he used his industry experi-

ence working in challenging conditions to create

rig packages that would produce great results.

We knew theyd be useul, he says about

CanElsons rigs. Theyre a small ootprint, plug-and-play, ultra-heavy telescop-

ing double rig. And theyre

very exible to meet a maxi-

mum number o conditions.

They are the Swiss Army Knie o rigs.

Hawkings says the rigs CanElson brings to the

Permian Basin operate at depths o between 2,000

and 5,500 metres, but they are small enough to en-

sure maximum portability and minimum at time.

Where a triple rig could take three days or more to

prep, CanElsons svelte double rigs take a hal day

to assemble.

We can take them up long roads to tight loca-

tions and theyre eective in any kind o weather,

Hawkings says. We operate in adverse conditions

with maximum efciency. A typical CanElson

rig at work in the Permian Basin would have (or

example), a 4,000-metre/14,500-oot telescop-

ic double, with two 1,000 HP mud pumps and

4 -inch G105 drill pipe.

The rigs are just part o the picture. They are

powerul but, in a smaller package, they generate

more productive time, and each dollar saved goes

into the next well. It adds up to portability, not just

o the rigs, but o CanElsons and Hawkings exp

tise and track record.

When CanElson moved into the Permian Bas

in Texas, it brought in a 100-per-cent Canadi

crew and managers. Local workers had never beexposed to this kind o rig

Hawkings explains. His tea

set to work training the Texa

on the specifcs o the rig, an

on its saety and maintenance. Today, just 30 p

cent o the team is Canadian.

We are proud to transer the tech. Hap

to train locals. Weve hired vets returning ro

Aghanistan and Iraq, and they have proven ve

successul, Hawkings says.

Our rigs are clean and well maintained. W

train the local people on our rigs to think o sa

ty, perormance and maintenance, he continu

We didnt set out to change work cultures, but

has been very rewarding to see the guys on our ri

improve and take pride in their work. We are prou

but not arrogant. CanElson has seen simi

success in training local crews to high standards o

well sites in Mexico, too.

When Hawkings struck out to partner

CanElson, it was to get back into the nuts-and-bo

o working with a group o colleagues, and provi

ing lean, eective solutions. For me, the thrill is

fnding and showing the efciencies, he says.

Randy Hawkings brings theSwiss Army Knie o rigs to the

Permian Basin, along with big

gains in efciency

Hawkings says he didnt set out

to change work cultures.


10/28Well Construction Journal10 july/august2013

Mariana Murillo has coMpleted her third year of

chemical engineering at the University o Calgary and is

currently an engineering intern with TransCanada Pipe-

Lines Ltd. She will be in the intern position or 16 months

in the companys Pipeline Integrity Department.

Murillo has been an active member o the Petroleum and Energy

Society (PES) student chapter at the university or the past two years.

As this years Internship Representative, she is looking orward to

planning many events and collaborating with industry luncheons,

so students can increase their exposure to current topics and theirinteraction with experienced proessionals in the oil and gas sector.

Ater graduating rom university, Murillo plans to travel to Europe

and South America with her amily.

Young TalentHighlighting tomorrows best and brightest

StudentPROFILES

Mariana Murillo

Chemical EngineeringUniversity of Calgary

hilip Gunn is halfway throuGh the petroleuM

Engineering Technology program at SAIT Polytechnic,

having just fnished his frst year. Gunn chose to ocus his

career in the oil and gas industry ater a brie stint working

with bitumen at a core analysis lab in Calgary.

Gunn is spending the summer working in the oil patch as a Stu-

dent Field Operator with Pengrowth Energy Corp. at a site just northo Sundre, Alberta. He has not decided yet i he will join the industry

ull-time ater completing the SAIT program or i he will continue

his education at the university level. However, Gunn is excited to get

involved with the industry and aspires to work internationally later

in his career, just as his ather has.

P

Philip Gunn

Petroleum Engineering TechnologySAIT Polytechnic

HELP WANTED: Career Department

oil and Gas opportunities across canada

continued developMent of canadas oil and Gas industry

could sustain between 900,000 and one million jobs across the

country in the next 10 years.

The Petroleum Human Resources Council o Canada estimates

in a recent report titled, The Decade Ahead: Labour Market Outlook

to 2022 for Canadas Oil and Gas Industry that only 20 per cent

o those jobs will be direct jobs in the sector. Almost hal o

the jobs will be indirect jobs in industries like construction,

manuacturing, transportation and warehousing; and the rest will

be induced jobs driven by the spending and service needs o

direct and indirect industry workers.

For every job created in our industry, three more are created in

other areas o the economy, said Cheryl Knight, executive director

o the council, which is now part o Enorm. But to achieve this

workorce growth, the industry will actually need to fnd between

125,000 and 150,000 new workers by 2022.

The report analyzed two potential industry activity scenarios

a low growth scenario, in which market diversifcation does not

occur; and an expansion scenario, in which Canadian suppliers

succeed in gaining access to a range o international markets.


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Direct industry employment in 2012 is estimated at more than 195,000

people, which is up 10 per cent rom 2009. Depending on the industry

activity scenario, direct employment over the next decade will increase

between nine and 20 per cent, with employment levels somewhere

between 213,500 and 233,900 by 2022.

As many as 38,700 new positions may need to be lled, or as ew as

18,300, said Knight in a news release. While the industry is growing, it

will also be losing workers to retirements and turnover.

The labour market outlook estimates approximately 45,000 workers

will be lost to age-related attrition. With a large workorce o approxi-

mately 200,000 people, three per cent annual turnover results in an

additional 6,000 hires a year.

The result is that labour shortages will persist throughout the coming

decade, in either scenario, said Knight. Skill shortages are critical andevery sector will be aected.

The oil and gas services sector will have the largest requirement, need-

ing between 37,700 and 47,900 new employees. The oil sands sector will

need between 14,900 and 22,200 new workers, conventional producers

will need between 6,850 and 10,700 people, and the pipeline sector will

need rom 3,000 to 3,250 employees.

HELP WANTED: Career Department

DRILLING SLANG

I you want to walk the walk on a drill site,

it helps to talk the talk. Here are some terms and

phrases oten heard out in the feld.

Coke: an insoluble organic deposit that has low hydro-

gen content. It is also known as pyrobitumen. Coke is

ormed by thermal cracking and distillation during in

situ combustion.

Trip pill:a volume o mud that is denser than the mud in

the drillpipe and wellbore annulus. Also called a slug, it is

used to displace mud out o the upper part o the drillpipe

beore pulling pipe out o the hole.

Bullhead: to orcibly pump fuids into a ormation. I

the ormation fuids contain hydrogen sulde gas, bull-

heading prevents the toxic gas rom reaching the surace.

Bullheading is also perormed i normal circulation can not

occur, such as ater a borehole collapse.

Continued...



REPORTSpecial


13/28july/august2013 1www.cadecanada.com

inal numbers are still unknown, but the u.s.

Geological Survey (USGS) estimates the Eagle Ford

holds between seven billion and 10 billion barrels

o recoverable reserves, which is roughly double

that o the prolifc Bakken Shale to the north. That would

make Eagle Ford the largest onshore oil reserve ever dis-

covered in the Lower 48.

Those reserve numbers are attracting development.

A report rom the Railroad Commission o Texas, the

states oil and gas regulator, anticipates capital investment

in the play to nudge $30 billion in 2013 alone, a fgure

o oil sands proportions. Citing a 2012 Wood Mackenzie

study, the commissions analysis predicts that between

2013 and 2015, the Eagle Ford Shale will become the

largest standalone energy project in the world as measured

by capital expenditures.

location: South and east Texas

resource: Light oil, natural gas,

natural gas liquids

GeoloGy: Shale

Depth: 1,200 to 3,600 metres

estimateD recoverable reserves:

7 10 billion barrels

proDuction: 609,407 barrels per day of oil and

condensate,* 1.9 billion cubic feet per day*

major proDucers: EOG Resources Inc., BHP

Billiton, Chesapeake Energy Corp., ConocoPhillips,

SM Energy Co., Marathon Oil Co., CNOOC Ltd.

*Average for rst quarter of 2013 according to theRailroad Commission of Texas

F

By Steve MacLe



Everything isBigger in Texas

he eagle Ford Shale haS the potential

to be the single most signicant economic

development in our states history, stated

David Porter, commissioner o the Railroad

Commission o Texas the states oil and gas

regulator in its March 2013Eagle Ford Shale Task

Force Report.

The play is named ater the town o Eagle Ford,

which is about 10 kilometres west o Dallas. Petro-

hawk Energy Corp. drilled the rst Eagle Ford well

in 2008 and had immediate

success. Gas fowed rom thecompanys discovery well,

which was a 975-metre lat-

eral with 10 racture stages,

at a rate o 7.6 million cubic

eet per day.

That same year the state issued 26 permits or

Eagle Ford developments, but it rapidly bloomed

as the enormity o the opportunities sunk in with

operators. Over the ensuing our years, a total o

8,075 new permits were approved. There were

4,145 issued in 2012 alone.

Anadarko Petroleum Corp. drilled almost 700

wells as the ormations top gas operator during

2012. EOG Resources Inc. was the top operator

or oil wells in 2012 with more than 800 wells,

according to a March 2013 University o Texas

at San Antonio economic study o the Eagle Ford.

The Railroad Commission reported there were 875

producing gas wells and 1,262 producing oil wells

on schedule in the region during 2012.

The Eagle Ford is particularly notable and suc-

cessul because o its high oil production levels

compared with other shale plays, so its been

highly economic even in times o low natural gas

prices. According to a report rom Platts in Mar

2013, Eagle Ford production quality is high an

variable API gravity ranges rom 38 to 60.

Talisman Energy Inc. holds about 74,000 n

acres in the southern part o the Eagle Ford. Alo

with its joint venture partner Statoil, Talisman

strategy in Eagle Ford is ocused on developin

areas with higher liquid yields. The Calgary-bas

company nished 2012 with production rom t

ormation at 20,000 barrels o oil equivalent p

day, which was a our-old i

crease rom 2011.The carbonate shale p

centage can be up to 70 p

cent in the south Texas part

the ormation, so it takes w

to hydraulic racturing.

the play stretches rom the Mexican border alo

the Gul Coast into east Texas, it measures abo

80 kilometres wide, has an average thickness o

metres and sits at depths ranging rom 1,200

3,600 metres.

The cretaceous-age rock can be tricky to nav

gate. It can be complex, says Matt Graham

senior completions engineer at Talisman in t

Eagle Ford, whose role is to design completio

and hydraulic racturing treatments there.

We have no real issues getting racks in t

ground; were nding that, based on productio

logs, there might be actual sweet spots in the ro

that might be surprising, he says. I think t

biggest challenge is understanding the rock an

understanding where we should land laterals.

Graham came to the Eagle Ford about a year a

rom the Marcellus Shale in Pennsylvania. Beo

that, he spent three years working in Weste

T

REPORTSpecial

Shale oil and gas is revitalizing drilling activity in The Lone Star

State and the Eagle Ford is leading the way

ByGraham Chandler

t e F S s

b s mssfc cmc vm

u ss sy. David Porter, commissioner of the

Railroad Commission of Texas



Canada with Talisman. Our acreage there stretches rom near

Calgary to Edmonton and we have ve dierent phase windows, so

each phase window has its own operational challenges like rom

black oil to dry gas, Graham says. I think anywhere you go you

try to gure out where the phase windows are within the shale; it

is always a challenge. You have to drill wells and produce them to

actually gure it out.

Theres depth, theres distance, theres the

variability and the phases, he adds, which re-

sults in varying lateral lengths. Graham notes

that the laterals average about 16 rack stages.

The land is also one o the big dierences

working down in Texas compared with Western Canada. Lease

constraints, thats one thing that really surprised me down here, Gra-

ham says. You have pretty much a patchwork o land, which could

be ideal or not. With your multiple mineral holders, it seems dicult

in some areas compared to the nice township system in Alberta.

The mixture o oil and natural gas liquids production in the Eagle

Ford has also created several new aspects or Graham to deal with,

setting it apart rom rom his time producing dry gas in the Marcel-

lus. In the Eagle Ford there are all types o issues you have to deal

with: downhole issues, producing issues, surace handling o the pro-

duced liquids, he says. Whereas in the Marcellus, you are worri

about the water you produce back and the gas that you produce.

As with many areas with limited lakes and rivers, water availab

ity in the Eagle Ford Shale is a actor in drilling activity growth. Cu

rently, almost 90 per cent o the new (not reused or recycled) wat

used or hydraulic racturing is groundwater. To urther encoura

reuse and recycling o fowback and produc

water, the Railroad Commission is current

amending its water recycling rules.

The renzied growth is impacting more th

just water use. Our centre o activity is in Thr

Rivers, says Graham. Its crazy the hotels th

are popping up. We saw that in Pennsylvania as well; I think its

normal course o oil booms everywhere.

Community colleges are ramping up oil and gas training cours

And the limited number o pipelines to markets has helped prop

unprecedented increases in truck trac, up to 86 per cent accordi

to a recent state government study.

The Eagle Ford enjoys a distinct advantage over other shale play

it sits just 200 kilometres or so rom the Texas Gul Coast renin

hub, which accounts or nearly hal o the total 15.3 million bp

rening capacity in the U.S.

Lease constraints, thats one thing

that really surprised me down here. Matt Graham, senior completions

engineer with Talisman Energy in theEagle Ford



REPORTSpecial

While pipeline inrastructure

is alling behind the skyrocketing

production, producers are still

nding ways to get pro-

duction to the coast.

Dozens o small diam-

eter gathering lines are

under construction to

eed transmission lines

into the Houston and Cor-

pus Christi areas. Construction

on more o the larger, mostly

20-inch pipelines is underway too,

such as the Double Eagle Pipeline

and the Sand Hills

Pipeline. Kinder Mor-

gan also announcedin May it will expand

its 300,000 bpd crude

and condensate pipe-

line rom the Eagle

Ford play to the Houston Ship

Channel.

Sucient capacity overall is not

expected until 2014-2015. Until

then, much Eagle Ford production

will move on trucks and rail. To

handle that, the overloaded Port o

Corpus Christi is quickly upgrad-ing. Some Eagle Ford production is

absorbed by reneries close by, in-

cluding Valeros Three Rivers ren-

ery, which processes 100,000 bpd

and the Nixon renery at nearly

15,000 bpd.

Brisk Eagle Ford production is

even changing U.S. oil shipping pat-

terns. Corpus Christi-loaded Eagle

Ford crude barges are now regularly

delivering to Louisiana, and tank-

ers routinely move Eagle Ford crude

to the U.S. Atlantic coast, displac-

ing some imports. Corpus Christis

crude loadings jumped to 280,000

bpd in late 2012 rom almost none

three years beore.

Those trends will likely continue

as production is expected to rise in

the coming years and will need a

destination. Oil produced rom the

Eagle Ford averaged 129,000 bpd

during 2011 and jumped to more

than 512,000 bpd by March 2013.

At Benteks May symposium in Houston earlier this year, on

presenter said he expected production rom the region to exce

1.4 million by 2016.

As with other oil and gas regions o North America, this kin

o booming activity with the availability o modern rac

ing technology has brought renewed attention to more m

ture conventional elds. The Permian Basin o West Texas is n

exception.

The Permian Basin has produced close to 29 billion barr

since its rst well in 1921. The ormation accounted or 57 p

cent o Texas crude production in November 2012 aroun

1.3 million bpd and has long been the production centre

the benchmark West Texas Intermediate (WTI). It adjoins sout

eastern New Mexico and extends about 400 by 480 kilometre

Several ormations produce oil an

gas rom depths ranging rom a e

hundred metres to 8,000 metrGrowing unconventional productio

is expected to boost Permian outp

past 1.7 million bpd by 2016.

It certainly attracted ull-servi

drilling fuids provider QMax Solutions, which serviced its

Permian Basin well in 2008. We were operating in the Barne

shale gas play and, as gas prices declined, so did drilling activity

recalls Tony Davis, ounding partner and executive vice-pre

dent with the Calgary-based company. We looked or altern

tive markets or our Mudstripper water conservation technolo

and quickly ound one in the Permian Basin.

Using the racking techniques o shale plays, multiple intervwithin a well are now being perorated in the Permian, allow

ing or multiple contributing zones rom 2,100 to 3,600 metr

Davis says the biggest challenge or drillers in the region are al

regarding water usage because most operators use water-bas

drilling fuid systems.

Each one can consume over 30,000 barrels o resh or bri

water, he says, while pointing out that the QMax system rec

cles the majority o that water. Our MudStripper Unit remov

the solids rom the active system while drilling, returning 99 p

cent solids-ree water or reuse.

Despite oering innovative technology, being an outsid

in the Texas oil patch is not or the aint o heart, Davis say

The biggest dierence is we are considered the new kid on t

block, he says. In Canada we have the luxury o having bee

in business or 20 years and have built a reputation. Not so

the Permian. We have to prove ourselves every day. Texas

similar to Western Canada in that the industry is very muc

relationship driven.

The new shale developments like Eagle Ford and Bakken, an

other plays including revitalized conventional elds like t

Permian, are expected to boost U.S. crude production to leve

not seen since Alaska North Slope production peaked. The Eag

Ford, the Permian Basin and the Bakken alone could reach ov

ve million bpd by 2016 with Eagle Ford leading the way.

Texas is similar to Western Canada

in that the industry is very muchrelationship driven.

Tony Davis, QMax Solutions founding

partner and executive vice-president



F

UnconventionalThinkingA Calgary company helped turn the booming Eagle Ford into a

proving ground for using liqueed natural gas to power hydraulicfracturing operations

REPORTHealth & Safety

By Ryan Van Hor

erus Inc. Is a cryogenIc company at

heart. It was only natural that the Calgary-

based company started looking at liqueed

natural gas (LNG) opportunities our years

ago, because the technology to make it and move

it is airly similar to the companys established

liquid nitrogen and carbon dioxide business. The

opportunity to develop a low-emission solution or

hydraulic racturing operations led Ferus to south

Texas.

The liqueed natural gas division o Ferus LP

teamed up with Baker Hughes Oileld Operations

to run a pilot project in the Eagle Ford Shale that

used LNG as the uel source to stimulate well per-

ormance. The pilot had six 2,250-horsepower units

using LNG in their dual-uel engines.

The job was completed in October 2012 at a site

near Pearsall, Texas, and shortly ater the Baker

Hughes business unit announced it was converting

a feet o Rhino-brand racking units to run the

dual-uel engines or Cheyenne Petroleum Co.

Jed Tallman, manager o market development

Feruss U.S. operations in Denver, says the indus

is embracing the new technology or two m

reasons: lower emissions and lower costs.

The emissions are reduced signicantly becau

natural gas burns so much cleaner than diesel, T

man says, and notes that using natural gas inste

o diesel can lower carbon dioxide emissions by

per cent, nitrous oxide emissions by 75 per ce

particulate emissions by 90 per cent, and sulph

dioxide emissions by 99 per cent.

While cost is another actor to the interest in

ing LNG as a uel to power equipment out in t

eld, the savings vary. You can get a 20 to 40 p

cent cost reduction compared to diesel, but th

depends on location, Tallman says.

About a month beore the successul pil

Baker Hughes unveiled the technology at

high horsepower summit in Houston, so oth

companies were aware o it and watching w

interest. Its being more widely used througho



the industry, Tallman says. The largest service

companies, such as Halliburton and Schlumberger,

have started doing it.

The technology has also made its way north o

the border. It has been used several times in the

Montney play, Tallman adds.

Ferus began supplying cryogenic uids or well

completions in the oil and gas industry back in

2004. The company operates 11 plants at eight

locations across North America and launched its

LNG operations in late 2011.

The dual-uel engines still used diesel, but are

converted so they can also burn LNG. Tallman says

the amount o LNG used varies between 10 to 70

per cent, but the average is 50 per cent. Those

engines can revert at any time back to 100 percent diesel, he says. You dont need to replace

engines; you just need to add some components

to them.

Operators will also have

to add equipment to store

LNG and vapourize it beore

eeding it into the engines,

but Travis Balaski, manager

o market development or

Ferus in Canada, says thats

creating opportunities or several companies across

North America.Companies such as American Power Group Inc.,

Caterpillar and ComAp have developed dual-uel

engines, while Ferus worked with suppliers to

design the equipment that is necessary to get the

LNG to the well site.

We do not manuacture our own equipment,

but we do assist in the design and engineering o

the equipment, Balaski says. This way we get the

type o equipment that best meets our customers

needs.

The company spent about two years perorming

technical research and development beore

partnering with Baker Hughes. Ferus then brought

in other resources rom across North America,

including some third-party products, to make sure

the pilot was successul. Now that the technology

is proven, Ferus anticipates o a network o LNG

plants will develop in energy hotspots.

The temperature o LNG increases over time and

the colder the uel is, the more energy it provides

per litre. Because o the perishable nature o

LNG, and the cost o transporting it, Balaski says

the delivery model will be dierent than the oil

industry which uses large centralized oil refneries.

REPORTHealth & Safety

Well build smaller scale plants and try

locate them close to the demand, Balaski says.

Ferus recently partnered with Encana

construct a liqueaction acility in the Gran

Prairie region o Alberta. The LNG plant will ha

a capacity o 190,000 litres per day.

Encana has large operations in the region an

Ferus has a substantial trucking eet, Balas

says. The two o us bring base load, the two

us bring experience in natural gas and cryogen

processing. It was a good, natural ft or the tw

o us to partner on that project.

Construction started earlier this year and Balas

expects the plant to be operational early in 2014

Encana is eager to start the transormation

natural gas as a uel source in the oil industry, buteyeing a bigger market. These are signifcant ear

steps to demonstrate the viability o natural gas a

transportation uel, says David Hill, vice-preside

o operations or Enca

Natural Gas Inc.

Hill says the Gran

Prairie plant will be

the middle o an ener

corridor with massi

natural gas potential.

Encanas goals or the project are the same

Ferus envisioned or the use o LNG in the felower costs and lower emissions. Encana expec

to lower its costs by reducing its dependen

on bringing diesel uel into the region, an

the company also wants to lower our carbo

ootprint rom well to wheels, Hill says.

Another beneft that Hill sees is an increas

social licence to operate by creating local job

using local uel, and supplying it to others.

With Encana planning to prove that it

sustainable to use natural gas in high-u

consuming applications, such as drilling an

pressure-pumping services and service compan

gearing up to supply the growing demand the

is momentum building or using LNG in the fe

as a uel source.

In B.C. and Alberta, were seeing the mark

beginning to open up and be more receptive

natural gas, Hill says. I think were going to s

several companies making announcements th

year and into early next year.

Hill anticipates the opportunity to stret

beyond oil and gas: rail, marine and truckin

industries could all convert to this technolog

Were scratching the surace, he says.

Well build smaller scale plants

and try to locate them close

to the demand. Travis Balaski, manager of market

development for Ferus in Canada


19/28

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A

Due SouthA handful of Canadian companies are taking advantageof an oil renaissance in Texas

REPORTTech

B Matt H

fter producing nearly 3.5 million barrelso oil per day during 1972, annual production

steadily declined in Texas or the next 37

years. According to the United States Energy

Inormation Administration, by 2009 the Lone Star

State was producing just 1.1 million bpd.

In recent years, light oil production rom the

Bakken ormation in North Dakota has threatened

to displace Texas as the top oil-producing state, but

a rapid rise in production during the past three

years has reestablished Texas as a hotbed o drilling

activity a tradition that started when a derrick just

outside o Beaumont, Texas, began gushing oil in

January 1901.

The U.S. EIA reported oil production levels rom

Texas reached nearly 2.3 million bpd during Febru-

ary. It was the highest daily output the state had

seen since April 1986.

Horizontal drilling and hydraulic racturing

helped retrieve oil and natural gas rom the shale

rock o the Eagle Ford in south Texas to kick-start

the resurgence. Those same technologies are also

bringing increased production rom conventional

wells in the Permian Basin in West Texas and in-

creased opportunity or Canadian drilling and well

service companies to oset the slowdown durinspring breakup by keeping operations moving

Texas year-round.

SAvAnnA EnERgy CORPORATiOnThe Calgary-based company was established

2001 and oers drilling, well servicing and oile

equipment rental services. The public company h

grown its feet to include more than 100 drilling ri

and more than 100 well service rigs.

Savannas U.S. operations are based in Housto

Texas, and the American feet includes 27 drillin

rigs and 11 well service rigs. Texass Permian Bas

is home to 15 o those drilling rigs, and accordi

to the companys rst quarter report this year, co

struction has begun on three additional service ri

or the U.S. operations.

During 2012, Savanna undertook a program co

verting eight o its CT-1500 drilling rigs to deep

capacity TDS-3000 rigs. The latest generation o t

companys hybrid rigs capable o operating coil

tubing or conventional top drive rom the same r

has been designed to reach depths o 3,000 metr

While six o the converted rigs stayed in Alberta, t

other two joined the Texas drilling feet.


21/28

][

Cathedral Energy Servicesoperates in some of thetoughest and most challengingenvironments. Our relentlessfocus on innovative technologyand industry leading serviceensures we provide our clientswith unmatched performance.

Drilling+Completions

CathedralEnergyServices.com

Cathedral energy ServiCeS ltd.

Ten years ater launching in Western Canada, Cathedral Energy

Services began providing production testing services in the U.S. in

2008. During the frst quarter o 2013, the Calgary-based company

hit a record level o quarterly revenue rom production testing in the

U.S. by bringing in $8.2 million, which eclipsed production testing

revenue in Western Canada or the quarter.

The public company also provides drilling, measurement while

drilling systems and downhole tools to operators. Part o Cathedrals

capital budget or 2013 included $3 million to augment the

production testing division with three rack fowback units to be

utilized in the Eagle Ford region. The three units were built during

the rst quarter and the green completion closed loop units are

now operating in Texas.

CanelSon drilling inC.Founded in 2008 by current president and chie executive ofcer

Randy Hawkings, CanElson is a relatively new upstart, but the Cal-

gary-based company is rapidly emerging as a major player in North

Americas growing oil and gas industry.

The public company expanded into the U.S. early and deployed

its rst American rig in the Permian Basin in late 2009. CanElson

has expanded rapidly since then, recording $229 million in revenue

during 2012 which represented a 24-per-cent increase rom one ye

earlier rom a feet o 42 drilling rigs.

CanElson has already added two drilling rigs in Texas to bring the a

eas feet total to 12 rigs, which marks the companys most active regio

behind Saskatchewan-Manitoba where 14 drilling rigs are located.

enSign energy ServiCeS inC.

In the late 1980s, Ensign Energy had our drilling rigs. Today, t

Calgary-based company has about 340 drilling rigs operating aroun

the world, with 236 o those rigs scattered across numerous unco

ventional plays in North America.

Ensign pulled in revenue during 2012 o $2.2 billion and rough

43 per cent o that came rom business in the U.S. The company h

116 drilling rigs operating south o the border, which last year had

utilization rate o 57.4 per cent compared to a 38.8 per cent utilizatio

rate or the companys Canadian feet.The cornerstone o Ensigns drilling operations is its proprieta

Automated Drilling Rig (ADR), which, as the name suggests, is

completely automated, computer-controlled system that allows t

drilling rig to be taken down, moved and installed aster than

conventional rig, and can also be equipped to reduce pipe handlin

on the drill foor. Eight o the 10 drilling rigs Ensign has current

running in south and east Texas are ADRs.


22/2822 july/august2013 Well Construction Journal

I

Challenge and

Opportunity

As much as low prices, production hotspots are creating opportunities andredrawing North American distribution networks

REPORTMarket

By Lisa Riccio

ts time to update the list of things that

are bigger in Texas. Along with the Lone Star

states big size and its inhabitants big hats and

bigger-than-lie attitudes, Texas can now reclaim

its top spot in the ranks as the biggest crude oil pro-

ducer in the U.S.

Texas became synonymous with geysers o blackgold when Spindleords Lucas No. 1 well blew 100

eet into the air in 1901. But, many decades later, the

state ceded its status as the oil king to new challengers

like Alaskas North Slope oil elds in the 1980s and,

more recently, to North Dakotas Bakken shale light

oil reservoir. But i youve been living in a cave and

havent noticed, Texas is back, thanks to a behemoth

shale ormation o its own the Eagle Ford.

Both the Bakken and the Eagle Ford have become

prolically productive in a very short span. So much

so, that an abundance o Bakken light oil is oten

blamed or devaluing the price o Alberta bitumenin the American Midwest, where Bakken barrels now

food into what was one o Canadas prime markets.

In December 2012, Western Canadian Select (WCS)

prices or a barrel o heavy crude plummeted to a re-

cord low, trading more than US$40 below West Texas

Intermediate (WTI), North Americas benchmark

blend. The Bakkens negative impact on Canadian

heavy crude prices dominated headlines in late 20

and early 2013 and inspired Albertas Prem

Alison Redord to coin the now-amous term bitum

bubble to describe the unavourable gap betwe

higher WTI prices (and even higher Brent world pric

versus Albertas discounted WCS bitumen.

Meanwhile, as producers scrambled to nd ways move the glut o crude past bottlenecked Midweste

pipelines, the Eagle Ford play quietly caught, th

surpassed, North Dakotas impressive producti

gures. By early 2013, the Eagle Ford had doubled

2010 production levels to more than 500,000 barr

per day.

It raises a new worry or Canadian producers.

May, the bitumen bubble had defated considerab

thanks in part to increased rail transport o an es

mated 100,000 b/d o Canadian crude to U.S. ma

kets, along with the resolution o 2012s unexpect

pipeline and renery maintenance issues. But nothat the WCS has returned to its historical discoun

a range o US$15 to US$20 below WTI, is Albe

bitumen on the brink o another crash, this time d

to competition rom the Eagle Ford? Will a Bakke

like eect move south, giving Alberta a second, tru

Texas-sized pricing headache, as it competes wi

ramped-up production rom Eagle Ford?



Yes and no, says Greg Stringham, vice president o oil sands and

markets at the Canadian Association o Petroleum Producers (CAPP).

Theres no simple answer, agrees Barry Munro, oil and gas leader at

Ernst & Young Canada in Calgary.

The two energy experts arent dodging the question. Their answers

reect the new reality o North American oil production and pricing

complex, dynamic and in the midst o a undamental transormation.

Production profles have changed substantially in just fve years, mar-

kets are diversiying, and supply chains are shiting. As well, production

has increased rom all bases, not just the Eagle Ford and the Bakken,

putting pressure on the entire distribution network. The time-honoured

supply-and-demand economic model remains relevant to pricing, but

new issues, such as a resolution o inrastructure constraints and pursuit

o a method to move the right type o crude to the right refneries, have

become equally important.

Stringham is resh rom turning a staggering stack o stats, trends and

data into CAPPs annual long-term outlook or Canadian crude oil pro-duction, and hes upbeat. Crude Oil: Forecast, Markets & Transportation, a

45-page report released in June, bullishly predicts that Canada will hit a

record 6.7 million b/d by 2030, up 500,000 b/d rom last years estimate.

Stringham says CAPP is watching developments closely in the Eagle

Ford, but doesnt expect the surge in tight oil rom Texas will negatively

impact Canadian prices as the Bakken has.

Eagle Ford is an entirely dierent situation rom the Bakken because

o its location, says Stringham. The majority o

refneries clustered across the Midwest process

light oil and/or upgraded bitumen. Beore the

Bakken boom, when uture growth was widely

expected to come rom Albertas oil sands, somerefners added cokers to their acilities, repositioning themselves to

take heavy crude. A number o these heavy-oil refnery conversions

were recently completed, but considering the high volumes o light

oil now readily available rom the Bakken, the remainder will likely

remain as light crude acilities. In 2012, Canada supplied 1.7 million

b/d to the Midwest, making it Canadas largest export market, but

Alberta now produces more bitumen than the Midwests limited num-

ber o heavy crude refneries can process. As well, Midwest refneries

are replacing upgraded bitumen rom Alberta with Bakken light. The

result is an oversupply o heavy crude in the Midwest, and lower

prices or Canadian oil.

The Eagle Fords light crude, however, heads to refneries on the

Gul Coast o the United States, which predominantly process heavy

crude. Canada sends very little light crude to Gul refneries, so its not

competing head-to-head with the surging supply rom the Eagle Ford.

Instead, Gul Coast refneries are turning away rom imported light oil

rom Arica and the North Sea, replacing oreign supplies with their

own domestic light crude.

On the other hand, heavy oil refneries on the Gul are hungry or oil

supplies. Gul Coast refneries represent a nine million b/d market, and

fve million o that is heavy crude, Stringham says. Clearly its a big

market or Canada. Venezuela and Mexico currently supply most o its

heavy crude, but the Gul Coast would happily switch rom dwindling

volumes arriving rom these countries subject as they are to the vaga-

ries o shipping to a more stable supply o bitumen rom Canada th

arrives via predictable pipelines.

I those pipelines actually existed, that is.

Inrastructure is key, say Munro. The potential exists to signi

cantly increase shipments o Canadian heavy crude to Gul Coast

fneries i inrastructure restraints are resolved with additional pipeli

capacity. Approval o the TransCanada Keystone XL pipeline is critica

important to provide market access and relieve distribution bottlenec

in the Midwest.

Following his most recent trips to Washington to build support

Keystone XL, Stringham is eeling optimistic about a positive decisio

He says this time round he noticed a distinct shit in attitudes com

pared to previous meetings. Beore Id hear at-out opposition, just

pipeline. Now theyre talking in hypotheticals, discussing trade-o

Theyre saying, I Keystone does get approved, heres what we want

see. So Im hopeul.

Stringham notes that although Keystone receives the most medattention, its just one o a number o recently announced pipeli

proposals to the Gul Coast. Some, like the Enbridge Flanagan Sou

Pipeline project, (which will be built along the existing Enbridge Spe

head South Pipeline rom Flanagan, Illinois to Cushing, Oklahom

and the Enbridge/Enterprise Seaway Pipeline (a new twin line alon

the existing Seaway pipeline), are already under construction. As we

TransCanada Keystone decided to proceed with its Gul Coast proje

(a pipeline rom Cushing to Port Arthur an

Houston, Texas) without waiting to see wheth

Keystone XL receives regulatory approval. Co

struction began in 2012 and its target in-servi

date is late 2013. Enbridge and Energy Transalso hope to convert segments o an existing natural gas pipeline

crude oil service between Patoka, Illinois and refneries in Tenness

and Louisiana.

And then theres always transport by rail, an idea that seemed laug

able three years ago but has proven its worth in North Dakota. R

is ourishing where no inrastructure exists, Munro says. Its becom

a viable alternative that can relieve temporary capacity pressure o

pipelines or buy producers time. Producers also love rail because

gives them more optionality, Munro adds. It lets them switch ma

kets depending on price and proft potential, changing destinatio

rom, say, Louisiana to the East Coast.

Stringham agrees, pointing out that this year CAPPs annual o

cast includes a special section on rail or the frst time. Our estima

o 300,000 b/d by rail rom Western Canada by 2014 is quite co

servative. Capacity could go way up, especially i Keystone XL isn

approved.

It looks like theres nothing to ear rom the surge in light o

production rom Texas. Eagle Fords big impact will be a shiting

where the markets or light and heavy crude want to be, not low

prices, Stringham summarizes.

Munro shares his optimism. Its an amazing time or the oil bu

ness, with massive opportunity and an equal number o challeng

Were redrawing what oil distribution networks look like in Nor

America.

Production proles have changed,

markets are diversifying, and

supply chains are shifting.



Canadian Rig CountsJune 5, 2013

Drilling Down Total Utilization

Alberta 106 516 622 17%

B.C. 21 34 55 38%

Manitoba 1 20 21 5%

New Brunswick 0 0 0

Newfoundland 0 0 0

Northwest Territories 1 1 2 50%

Quebec 0 1 1

Saskatchewan 28 92 120 23%

Totals 157 664 821 19%

Source: Divestco

NUMBERSBythe

Stats at a Glance

Alberta Rig CountsJune 5, 2013

Drilling Down Total Utilization

Northern Alberta 36 106 142 25%

Central Alberta 53 348 401 13%

Southern Alberta 17 62 79 22%

Totals 106 516 622 17%

Source: Divestco

Top 5 Most Active OperatorsJune 5, 2013

ActiveRigs

Canadian Natural Resources Ltd. 10

Cenovus Energy Inc. 9

Encana Corp. 9

Bonavista Energy Corp. 5

Baytex Energy Corp. 5

Shell Canada Ltd. 5

Paramount Resources Ltd. 5

Source: FirstEnergy Capital

Top 5 Most ActiveDrillers in Western Canada

June 5, 2013Active Total

Precision Drilling Corp. 40 188

Ensign Energy Services Inc. 20 116

Trinidad Drilling Ltd. 18 60

Nabors Industries Ltd. 16 65

Savanna Energy Services Corp. 15 70

Source: FirstEnergy Capital


25/28www.cadecanada.com july/august2013 2

Alberta Well LicencesApproval issued by the Alberta Energy Resources Conservation Board

Number of Licences Issued Nov. 2012 Dec. 2012 Jan. 2013 Feb. 2013 Mar. 2013

Development 636 706 821 591 525

Exploration 91 72 74 66 26

Source: Alberta Department of Energy

Alberta Spudded WellsApril 30, 2013

Number of Wells Spudded

2011 2012

May 334 374

June 525 518

July 812 625

August 964 464

September 1,018 706October 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


Alberta Completed WellsApril 30, 2013

Number of Wells Completed

2011 2012

May 958 486

June 433 254

July 245 488

August 728 541

September 1,531 524October 904 692

November 834 750

December 940 692

2012 2013

January 381 381

February 718 640

March 717 812

April 672 701


Alberta Land SalesApril 30, 2013

April 2013 April 2012 YTD 2013 YTD 2012

Oil and Natural Gas

Land Sales $85 million $114 million $311 million $423 million

Price Per Hectare $731.00 $353.27 $410.77 $431.84

Oil Sands

Land Sales $675,000 $1.6 million $5.6 million $3.5 million

Price Per Hectare $390.90 $1,052.00 $90.28 $70.40




DEEPERDrilling

Heating Up

ompanies with steam-assisted gravity drainage

oil sands assets keep reaching new production heights.

In a recent overview o the in situ oil sands sector,

Calgary investment frm Peters & Co. reported that

SAGD projects reached a new production record in Febru-

ary 572,000 barrels per day. With new developments andplanned expansions o existing acilities, in situ production

in Albertas oil sands is poised to grow.

C

Cv e ic.Foster CreekproduCtion CapaCity: 120,000 bpd

produCtion: 114,400 bpd

utilization rate: 95%total planned CapaCity: 295,000 bpd

February 2013 bitumen produCtion by projeCt

meg e C.Christina lakeproduCtion CapaCity: 25,000 bpd


utilization rate: 131%total planned CapaCity: 210,000 bpd

sc e ic.FirebagproduCtion CapaCity: 120,000 bpd


utilization rate: 116%

total planned CapaCity: 180,000 bpd

dv CjaCkFishproduCtion CapaCity: 70,000 bpd




s C l.leismerproduCtion CapaCity: 18,800 bpd




CnooC nxlong lakeproduCtion CapaCity: 72,000 bpd

produCtion: 33,100



Source: Peters & Co. and FirstEnergy Capital

Thermal production methods are

increasing activity in the oil sands


27/28

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Thank You to Our SponsorsThe support of CADE sponsors plays an integral part in our associations success.

Platinum Sponsors

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28/28

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