Well Construction Journal - Mar/Apr 2014

The official publication of the Canadian Association of Drilling Engineers

MARCH / APRIL • 2014

PM#40020055

Discovery Channel Canada portrays life in the patch in a positive light

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

PLUSUtica ShaleUnconventional resources abound in the play south of the border

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WCJ_Mar-Apr_14_p28-01.indd 1 2014-03-10 12:11 PM

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www.cadecanada.com march/april 2014 �

The official publication of the Canadian Association of Drilling Engineers

DEPARTMENTS

4 President’s Message

6 tHe draWing BOard Editor’s note, member’s corner, news and notes, technical luncheons

10 stUdent PrOFiLes

17 MeMBer PrOFiLe

24 BY tHe nUMBers

26 driLLing deePer

FEATURES

12 tHe Utica sHaLe PLaY With a fracturing moratorium in Quebec, it’s an all-American action

18 Less dOWntiMe, MOre saFetY The latest in rig advances boost operational efficiency, upgrading to meet the challenges of today’s industry

20 POetic Licence Discovery Channel Canada dips into drill site operations for a fourth season

22 OiL is WeLL Making the shift from natural gas to conventional oil makes sense – for now

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 engineers1100, 540 - 5 Avenue SW

Calgary, AB T2P 0M2Phone: 403-532-0220

Fax: 403-263-2722www.cadecanada.com

President: Jeff ArvidsonPast President: Robert Jackson

WeLL cOnstrUctiOn JOUrnaL editOr: Christian Gillis

WeLL cOnstrUctiOn JOUrnaL is PUBLisHed FOr CADE BY VentUre PUBLisHing inc.

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MARCH/APRIL • 2014

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cOVer: Kelly Pelsma stars in Discovery Channel’s Licence to Drill Photo courtesy of Pixcom

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Well Construction Journal � march/april 2014

Am writing this just As the winter Olympics are coming to a close, and Canada has taken home four gold medals in hockey and curling. These victories got me thinking

about some of the ways Canada is not only the best place in the world to live, but also such a great place to be in the oil and gas industry.

First, opportunity abounds. One thing I’ve always loved about the Canadian well construc-tion industry is that is doesn’t matter who you are or where you came from. If you are trustworthy, conscientious and hardworking, you will be well paid and have many opportunities for advance-ment, regardless of your background. Of course the reverse is also true, if you prove yourself to be dishonest, or risk the safety of others, you will find yourself shown the door in relatively rapid fashion.

Second, it’s a level playing field. The regulations and laws are well-defined and publicly available, and they are the same for everyone. In some coun-tries, as we all know, this is not the case. In those places, connections and side deals are the only real route to timely development.

Additionally, all stakeholders have input on the approval process. The Canadian regulators do an amazing job of ensuring that the concerns of local communities, landowners and residents are heard and considered in the project approval decisions. Also, the regulators must consider the potential impact on the environment, and weigh all of these against the economic drivers for both

the project applicant and the owners of the re-source (the public). It’s an incredibly difficult job with many priorities that must be balanced. We have a truly world-class system and group of pro-fessionals that are shaping development to protect the environment and stakeholder interests.

Third, workers are protected. The Occupational Health and Safety Code ensures we all are provided with the tools, processes and equipment to carry out our duties safely. Worker safety is not optional. I’m sure we have all seen the pictures of rigs work-ing in third world countries – iron that should be in the scrap heap, no protective equipment, fluid releases, and so on. If you’re like me, one look at those pictures is enough to make you shudder. I’m thankful that we have clear codes and standards that we, as professionals, can point to and utilize to ensure our work sites are safe.

Fourth, the securities market, banking system and private investors are open to entrepreneurs looking to launch a business, whether that is in oil and gas exploration, materials or services. A solid track record and a good business plan are often enough for a talented individual to get a start. This is so important for innovation, as many of the dis-ruptive technologies of the past have come from small- and medium-sized businesses.

Canada is truly among the best in the world at all of these categories, and when one also consid-ers the freedom and security we enjoy, there is no other way to look at it than to say that we are truly fortunate to be in this industry in this country.

I

MESSAGEPresident’s

World-Class Standing Canada leads the pack in the oil and gas industry for so many reasons

Jeff Arvidson CADE President


If you have products or services that demand the attention of the drilling industry and want to reach this key market, Well Construction Journal provides a unique forum to access almost 100% of the drilling industry’s key decision makers. For the first time, Well Construction Journal is accepting external advertising – a new development that offers suppliers unprecedented access to this target market.

To receive a media kit or to book your advertising, contact: Kathy Kelley, Venture Publishing Telephone: 780.990.0839 (265)Email: [email protected]

Connect with Canada’s Drilling Industry

World-Class Standing Canada leads the pack in the oil and gas industry for so many reasons


Well Construction Journal 6 march/april 2014

BOARDThe Drawing

President Jeff Arvidson 403 232-7100Past President Bob Jackson 403 615-9504Secretary Tammy Todd 403 613-8844Technical Chair Ryan Richardson 403 984-6644Membership Chair Andy Newsome 403 532-0220Education Chair Linden Achen 403 539-9338Social Chair Dan Schlosser 403 531-5284WCJ Editor Christian Gillis 403 265-4973Sponsorship & Marketing Christy Delaney 403 828-0844IT Chairperson Matt Stuart 403 605-3790Administrator Kali Charron 403 532-0220

CADE Executive Team 2013/2014

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

E D I T O R ’ S N O T E

There’s Still Work To Be DoneT SEEMS LIKE WE WERE JUST TALKING ABOUT THE BUSY winter ahead of us and all the work that needed to be done to get through our busy season. Although, the wind chill temperatures had dipped below the -50˚C

mark in some areas in early March, by the time this jour-nal has arrived on your desk, we will be into breakup and everyone can let their hair down and take a well-deserved rest. Although peak levels have not been as high as they had been six or seven years ago, the industry ran pretty close to flat out from southeast Saskatchewan to northeastern B.C.

Even now going into breakup, there are still the companies trying to squeeze in those last minute projects and wells. It is this time of year however, when we have to be aware that even though it was a long and cold winter we still must be diligent until the job is done. It seems that at this time of year, we start to lose our focus, as the job is almost done and people are thinking of spring getaways with the family or that round of golf with the guys. We have to realize that until the equipment is shut down and everyone has gone home safe and sound we must keep our focus and make sure that everyone does get home safe and sound.

Our 2014 Technical Luncheon presentations are continuing through the spring. Please watch for email announcements and check the website for upcoming topics and dates.

IPlease don’t hesitate to contact us if you have any

ideas for upcoming topics or issues you’d like to see presented at the luncheons or in print. We are also looking for topics that tie into our journal focus for each month. We hope to see more of this during the course of the year. We hope you, the membership, will participate and continue to make these events interest-ing and successful. If you have any issues you’d like to see covered, please email me and we will do our best to get the story.

Don’t forget, we would like to publish any of your information and announcements on new products, new technologies and senior personnel changes for publication each month. Please forward any announce-ments to us, as we would be excited to run them in our new feature section.

We appreciate your continued support and look for-ward to seeing you at the upcoming luncheons.

CHRISTIAN GILLIS, EditorCanadian Well Construction [email protected]


march/april 2014 � www.cadecanada.com

M E M B E R ’ S C O R N E RWelcome NeW members

Gary aGuilarFrank antolovichraid attir douG BoBroskynicholas vanden Brandkailash chhetricamillo cortesByron caldwellmansour djaroucache doolaeGedavid Fordkristen Freundreda Gayedjohn johncraiG joneskan kouamerohit karmakarreGinald larBiZuhal mahammadjohn macdouGalltrent marxlynn nGuyencharles naBorsnoni naBorsadetona owolawijohn Pahlsean Parkervijay rathodsean reardonZhanG sandramitch schinnourmahasin shaikhkatherine stasiukwan tinG tanGPaBlo toyahmed tunnishroBert turleymark wessleyimran yousaFdean yuillZonG shuanG ZanG

Why become a caDe member?

As of 2013, the Canadian Association of Drilling Engineers (CADE) has been active for 38 years. With more than 500 members from more than 300 companies, CADE represents a large spectrum of experience in all areas of operations and technologies.

For drilling and completions spe-cialists, CADE currently offers one of the best networking and knowledge sharing opportunities in the Cana-dian petroleum industry. The skills and knowledge obtained by your participa-tion in CADE will benefit you and your employer, with direct application to your professional career.

CADE offers various means for members to connect and share their insights. Monthly technical luncheons are held with topical industry presentations. Other mem-bership benefits include our monthly publication Well Construction Journal and a membership directory, which is the who’s who of the Canadian drilling industry.

Our website – cadecanada.com – is an excellent focal point for industry events, blogs and other news. We are also active on LinkedIn and Twitter.

Who caN become a caDe member?

CADE members can be anyone em-ployed in the drilling and completions industry or anyone who is interested in the industry.

Typical members include drilling and completions engineers, geologists, technical personnel, sales personnel and students. Student memberships

are available to any post-secondary student interested in learning more about drilling and completions.

Please feel free to share information about CADE with all the people in your organization who are interested in the drilling and completions industry.

caDe membership reNeWals

CADE’s membership year is from September to September. During the summer, CADE members will receive an email and link for the renewal pro-cess on our website.

Please remember the benefits of be-ing a CADE member include APEGA’s professional development hour, stay-ing abreast of technological and in-dustry advances, drilling conferences and a great opportunity to network. Thank you for your support.

caDe membership chaNges

Log on to cadecanada.com to be-come a member or to update your contact information.

WCJ_Mar-Apr_14_p04-09.indd 7 3/5/14 2:30:47 PM

Well Construction Journal � march/april 2014

BOARDThe Drawing

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

TransCanada Corp’s Keystone XL project hits a hurdle in Nebraska

While it looked as though transCanada Corporation’s proposed Keystone XL pipeline might gain some momentum early this year, a judge in Nebraska has placed another hurdle in the way of the much-anticipated cross-border project.

Nebraska Governor Dave Heinman had passed a law in early 2013 that would have allowed the pipeline to traverse that state’s private land without the permission of landowners, but in recent weeks, a district judge has quashed that legislation on con-stitutional grounds.

Lancaster County Judge Stephanie Stacy said the move to strike down the law was not based on the merits of the pipeline, but instead the state’s con-stitution. Now Calgary-based TransCanada Corp. might have to seek permission from each affected landowner in Nebraska – unless a higher court steps in to reverse the ruling.

TransCanada has settled with landowners in five of six U.S. states through which the pipeline is to pass – including two-thirds of Nebraska’s affected landowners – offering up to six times the property’s original price.

The result of the latest setback is that Keystone XL could be up in the air indefinitely, even with the go-ahead for the pipeline to cross the border from U.S. President Barack Obama, which had been expected to come as early as this spring or summer.

This comes on the heels of a U.S. State Depart-ment environmental impact statement (EIS) in Jan-uary that seemed to lean in favour of the proposed

1,897-kilometre crude oil pipeline stretching from Hardisty, Alberta, south to Steele City, Nebraska. Following the January 31 report, which concluded the project would result in no significant increase in carbon emissions, the State Department has 90 days to review before making the final ruling on Keystone XL.

In the wake of the EIA, TransCanada president and chief executive officer Russ Girling said the key focus would be making the pipeline as safe and technologically advanced as possible.

“No other company has agreed to operate with all the additional safety and operating procedures that TransCanada has,” he said. “That speaks volumes to our commitment to minimizing the impact of our pipeline, and ultimately to the environment and communities it will operate through.”

If greenlit, the pipeline will have capacity to move 830,000 barrels of oil per day to Gulf Coast and Midwest refineries, reducing American de-pendence on oil from Venezuela and the Middle East by up to 40 per cent. It is also touted to have the ability to support 42,100 direct, indirect and induced jobs and up to $2 billion in U.S. earnings, and contribute an estimated $3.4 billion to the U.S. gross domestic product.

The pipeline’s southern leg is already up and running, but requires oil to be shipped by rail from Alberta through the northern U.S. before in can travel by pipeline to Gulf of Mexico refineries.


march/april 2014 � www.cadecanada.com

Save the DateN E W S A N D N O T E S

TransCanada Corp’s Keystone XL project hits a hurdle in Nebraska

Brion Energy and Fort McKay First Nations reach deal on Dover projectCalgary-based brion energy has reaChed a deal with Fort McKay First Nation that will allow a 250,000-barrel-a-day oil sands project to go ahead.

The deal was announced February 21 in a joint release from Brion and Fort McKay, which also stated the band would drop its court appeal of the Dover Commercial Project that was filed in response to a regulatory approval by the Alberta Energy Regulator (AER).

Few details were given as to the nature of the agreement between the two parties, which was signed in the Fort McMurray area by Zhiming Li, Brion president and chief executive, and Chief Jim Boucher of Fort McKay.

“As good neighbours, Brion is committed to developing the lease in an environmentally sound manner, while delivering social and economic benefits for the local community,” said Li in the news release.

“Reaching this agreement with Brion shows it’s possible to protect our traditional territory while partnering with those who work in the area,” said Boucher in the same disclosure.

Brion’s in situ project, which has the potential to produce 4.1 bil-lion barrels of bitumen, was approved by the AER last August after rejecting the band’s request for a 20-kilometre no-development zone near its Moose Lake reserve lands, and is awaiting Order in Council.

The McKay First Nation then filed an appeal, saying the AER had failed to consider its constitutional treaty rights in its decision, which Alberta Court of Appeal had agreed to hear this March. The AER approval went to cabinet for endorsement, but has remained stagnant as yet.

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

Chief Jim Boucher of Fort McKay

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

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)

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

GST REGISTRATION #R123175036Visit 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



man Gill is in his last year at the University of Calgary, majoring in Chemical Engineering with a minor in Petroleum En-gineering. He has 16 months of field experi-

ence as an engineering intern at Nexen’s Long Lake Project, where he was involved in the process safety, turnaround and operations teams.

Currently he is the president of the U of C’s Petroleum and Energy Society (PES), a student orga-nization with 300-plus members. The PES strives to connect students to the energy industry through in-dustry tours and professional development events.

Young TalentHighlighting tomorrow’s best and brightest

Student PROFILE

Aman GillChemical EngineeringUniversity of Calgary

HELP WANTED: Career Department

What it’s Worth

as of late 2013, the Canadian assoCiation of oilWell drillinG ContraCtors (CAODC) recommends the following minimum wage schedule for hourly paid drilling crews.

All figures represent hourly pay rates. This wage schedule was developed on the basis of survey material and is intended to apply to both eight- and 12-hour shifts.

It is also recommended workers receive a per diem of $50/person/day when in a camp situation, and $140/person/day for those not in a camp ($17.50 of which is non-taxable for payroll purposes if the employee maintains a principle place of residence and works 80 kilometres from his or her principle residence, for at least 36 hours).

Position Base WaGe

riG teCh Premium

driller $44.80 +$2.00

assistant driller $40.00 +$1.50

derrickhand $38.00 +$1.50

motorhand $33.00 +$1.00

floorhand $30.70 n/a

leasehand $28.00 n/a

Recently PES partnered with CADE to run the fourth-annual CADE Student Industry night, where students had the opportunity to learn about the drilling industry and network with professionals.

Gill is also the chair of the 2014 EnergyBowl, which is a University of Calgary student event comprised of Jeopardy-style questions, a case study competition and networking opportunities. He is excited about the energy potential of Alberta and is continuously seeking ways of motivating the younger generation of students to connect with the industry.

A

Erion CobajPetroleum Engineering Technology

SAIT Polytechnic

erion CoBaj first BeCome interested in a career in the oil and gas industry when he began working as a service technician in Grande Prai-rie. He gained valuable knowledge and experi-ence about plumbing and hydraulic systems while working on various drilling lease and camp loca-tions across northwestern Alberta.

In September 2012 Cobaj enrolled in the Petro-leum Engineering Technology program at SAIT and is currently completing his final semester. During the summer of 2013 he worked as a relief operator with Canadian Natural Resources Limited (CNRL) in northeastern B.C. This experience not only

expanded his knowledge on oil and gas operations, but it added valuable hands-on experience in using pump jacks, ESPs, plunger lift and PC pumps.

Cobaj’s interests lie primarily in completions and production engineering. After he gradu-ates, he plans to work as an operator in the field for the first few years. He hopes to gain valuable experience that will create and indispensable foundation for a position as a petroleum tech-nologist. Cobaj credits his parents for introduc-ing him to the oil and gas industry and SAIT for providing the technical hands-on learning environment.


march/april 2014 11 www.cadecanada.com

Bright DecaDe aheaD

accorDing to the DecaDe aheaD: LaBour Market outLook to 2022 for Canada’s Oil and Gas Industry, over the next decade activity levels are expected to sustain an average of 894,000 to 1,036,100 jobs in the oil and gas industry – 80 per cent of which will be in Western Canada.

The Petroleum Human Resources Council and Enform report predicts that about 21 per cent of those will be in direct jobs in exploration and production, oil and gas services and pipeline operations. Another 49 per cent will include indirect jobs in con-struction, manufacturing, transportation and warehousing, while the remaining 30 per cent are expected to be “induced” jobs, meaning they will be driven by an increase in consumer spending by both direct and indirect workers.

The report gives both low-growth and expansion scenarios for industry job activity, the former of which predicts an extra 18,300 jobs in oil and gas, while the latter would see 38,700 jobs added, with the diversification of the market.

Attrition is cited as one reason for additional job opportuni-ties, as 23 per cent of the industry’s workforce will be eligible for retirement, leaving between 44,200 and 45,300 job vacancies over the next decade. Additional job openings will be created by the “intense competition for talent within and outside the industry”

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HELP WANTED: Career Department

in the next 10 years, increasing the number of positions the oil and gas industry will need to fill to 62,600 to 65,600, depending on the low-growth or expansion scenarios.

In Alberta, technology is expected to influence the province’s oil and gas production potential, creating between 53,800 and 72,700 job openings. Meanwhile, Saskatchewan job growth over the next decade is expected to total between 2,600 and 3,400 job openings, and the rest of Canada (including work in Manitoba’s Bakken shale oil formation, Newfoundland’s Hebron and Nova Scotia’s Deep Panuke) will see between 2,900 and 3,750 job open-ings in oil and gas.

Between 2013 and 2022, the industry will sustain an average of 213,000 to 224,400 direct jobs in exploration and production, oil and gas and pipeline operations, as well as from 413,400 to 505,300 indirect positions. Indirect jobs include those in construction; manufacturing; transportation and warehousing; professional, scientific and technical services; waste management and remediation services; and financial, insurance, real estate and rental and leasing. The report also predicts between 267,700 and 306,400 sustained jobs each year in the next decade that fall into the “induced” range, created by an increase in consumer spending by those in direct and indirect posts.

DriLLing SLang

If you want to walk the walk on a drill site, it helps to talk the talk. Here are some terms and phrases often heard out in the field.

Bottoms-up: 1. n. The sample obtained at the bottoms-up time or a volume of fluid to pump, as in “pump bottoms-up before drilling ahead.”2. adj. Pertaining to the mud and cuttings that are calculated or measured to come from the bottom of the hole since the start of circulation. Circulation may be initiated after a static period, such as a trip, or from a given depth while drilling. This latter type is particularly useful to mud loggers and others trying to discern the lithology being drilled, so mud loggers or mud engineers often retrieve what is referred to as a “bottoms-up sample” of the cut-tings or the drilling fluid.

Dope: Pipe dope, a specially formulated blend of lubricating grease and fine metallic particles that prevents thread galling (a particular form of metal-to-metal damage) and seals the roots or void spaces of threads. The American Petroleum Institute (API)

specifies properties of pipe dope, including its coefficient of fric-tion. The rig crew applies copious amounts of pipe dope to the drillpipe tool joints every time a connection is made.

Kelly BusHIng: An adapter that connects the rotary table to the kelly. The kelly bushing has an inside diameter profile that matches the kelly’s, usually square or hexagonal. It is connected to the rotary table by four large steel pins that fit into mating holes in the rotary table. The rotary motion from the rotary table is transmitted to the bushing through the pins, and then to the kelly through the square or hexagonal flat surfaces between the kelly and the kelly bushing. The kelly then turns the entire drillstring because it is screwed into the top of the drillstring itself.

RatHole: A storage place for the kelly, consisting of an open-ing in the rig floor fitted with a piece of casing with an internal diameter larger than the outside diameter of the kelly, but less than that of the upper kelly valve so that the kelly may be lowered into the rathole until the upper kelly valve rests on the top of the piece of casing.



REPORTSpecial

PENNSYLVANIA

NEW YORK

OHIO

WEST VIRGINA



LOCATION: Underlies Quebec, Ohio, Pennsylvania, West Virginia, New YorkRESOURCE: Dry gas, oil, liquids-rich wet gasSOURCE ROCK: Organic black shaleESTIMATED RECOVERABLE RESOURCES: 38 tcf natural gas, 940 million barrels oil, 208 million barrels NGLs (USGS)PRODUCTION: Very early stagesMAJOR PRODUCERS: Chesapeake Energy, Chevron, Anadarko Petroleum, Devon Energy, Range Resources

M

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

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

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

By Graham Chandler



REPORTSpecial

Questerre Energy, one of the earlier Quebec players, describes the Utica Shale as a member of the Ordovician Trenton Group; its highly organic black shale has been identified as the source rock for oil and gas accumulations in the area. The Utica Shale was deposited on top of the Trenton Black River over steeply dipping faults created when the St. Lawrence rift valley was emerging. After that deposition was complete, the Appala-chian Mountain front encroached to contain it in an arc forming the southeast limit of the Low-lands. South into the US the Utica deepens and underlies the Marcellus Shale – more on that later. Quebec Utica shales are up to 200 metres thick in parts and reach maximum depths of 2,800 metres. The formation boundary to the north parallels the St. Lawrence River, where the shales can be seen to outcrop. To the south and southeast, the shales become discon-tinuous with the Appalachian Mountains.

Questerre Energy acquired its interest in the Utica play through its parent company, Terrenex, in early 2000. “Initially, the Utica was a second-ary target to our main targets of the Trenton Black River (hydrothermal dolomite) and deeper plays,” Jason D’Silva, Questerre’s chief financial officer, said in an earlier interview. “Since mod-ern fracturing technology had not yet advanced

and natural gas prices were low, in early 2000 we were targeting areas of the Utica shale where the rock was naturally fractured.”

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

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

1,000 horizontally. Typical fracks were slickwa-ter and run eight stages per well – which were expected to increase over time – with production rates per contributing stage estimated between 0.25 mmcf/d to about one mmcf/d.

Even when – or if – the moratorium is lifted, servicing will remain a challenge for this part of the Utica, as the service industry in Quebec is virtually non-existent. Equipment would have to be mobilized from Western Canada, resulting in higher well costs, likely $10 to $15 million per well initially.

“As we started to drill more there, we saw the potential in the Marcellus and as the Marcellus play emerged around

us, we transitioned from the Utica wells into more of the Marcellus.”

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


www.cadecanada.com march/april 2014 15

That number would probably drop significant-ly once a more robust industry is established.

In those pre-moratorium years, Talisman Energy was pretty excited about Utica’s poten-tial in Quebec. “We’ve had interest in the Utica going back four years but we haven’t actually been drilling there, given the moratorium,” says Brent Anderson, Talisman’s manager of external relations.

The moratorium has all but suspended activi-ty for acreage holders in the Quebec Utica, and at least for Talisman, it has placed it on back burner while priorities shift to other available plays. “I don’t know that the Utica shale would be help-ing now even if the moratorium were lifted,” says Anderson. “We wouldn’t go in with guns a-blazing. Talisman is seeking opportunities to reduce its capital spending and focus in its core areas and I just don’t think the Utica shale would fit in that profile. I don’t think the Utica in Que-bec would compete for capital.” Talisman still has a reasonably sizeable holding there and pre-moratorium they drilled about nine wells in a pilot program, “and got fairly limited data on the play particularly one that was new and emerg-ing,” says Anderson. So there is much more work required before any estimates can be made, he says. “I would equate it in some ways to where we are at in the Duvernay – everyone realizes there is some potential there but it is still quite early in the development of that play. So to say [Utica] is going to compare to some of the more mature shale plays, it’s just too early.”

“Clearly from a geological perspective we thought there was some potential there, and that’s why we invested money in retaining some land and doing the pilot project,” continues Anderson. “But now we’ve had some time away from that particular play with the moratorium we’ve decided that we would like to direct our capital in other areas.”

Anderson says Talisman’s initial perspective on the Utica came in the Pennsylvania area where it earlier drilled more traditional conventional Uti-ca wells. “As we started to drill more there we saw the potential in the Marcellus and as the Marcel-lus play emerged around us we transitioned from the Utica wells into more of the Marcellus.” He says Talisman still has some production from conventional Utica wells in Pennsylvania but the vast majority of their production in Pennsylva-nia is from conventional Marcellus.

And across that border the Marcellus has be-

come the opening act of the Utica play which sits a few thousand feet below it; under large parts of Ohio, Pennsylvania, West Virginia, New York and other bits of eastern North America. As pro-duction ramps up in the Marcellus, operators are now looking below it. The biggest players there, in order of holdings (as of November 2013), are Chesapeake Energy, Chevron, Anadarko Petro-leum, Devon Energy, Range Resources, Hess Cor-poration, EV Energy and Gulfport Energy.

The Utica Shale isn’t a new discovery. Geol-ogists have long considered it to be an oil and natural gas source rock – supplying oil and gas to reservoirs by migrating to overlying rock units that have now been producing for many decades, especially Pennsylvania, for example. But there’s considerably more in place trapped in the Utica Shale. The United States Geological Survey’s mean estimates of undiscovered, tech-nically recoverable unconventional resources peg it at about 38 tcf of natural gas, 940 million barrels of oil, and 208 million barrels of natural gas liquids.

But it wasn’t developed earlier because of its considerable aerial extent and depth, both of which are much greater than the overlying Marcellus Shale. Moreover, its low permeability made it less attractive. But with the advent of horizontal drilling and multistage fracking, that has become much less of a hurdle. These meth-ods were not extensively used in the Utica Shale before 2010.

The same can be said of the low-permeability Marcellus Shale until 2003 when Range Resourc-es stepped in, followed by the first Utica well. “We pioneered the Marcellus and drilled the in-dustry’s first horizontal Utica/Point Pleasant well in 2005,” says Matt Pitzarella, Range Resources’ director of corporate communications and pub-lic affairs. The Marcellus has since become one of the world’s largest natural gas fields.

Compared with the Marcellus, much less is known of the underlying Utica. It is more geo-graphically extensive and thicker than the Mar-cellus. It has three hydrocarbon windows: light and black oil happens toward the west of Ohio, liquids-rich wet gas and condensate-rich source rock from northeastern Ohio to south-central Ohio, and dry gas through southeastern Ohio and into western Pennsylvania. In its core area, depths range from 1,800 to 2,400 metres with thicknesses of 24 to 37 metres.

So to determine the more precise size of the



REPORTSpecial

Utica Shale resource, operators need more than the so far limited drilling in western Pennsylva-nia and in the above-noted St. Lawrence Low-lands. Central Pennsylvania is virtually untested by horizontal drilling and hydraulic fracturing. The play remains in the early stages of develop-ment, still needing delineation of its northern and southern extents. That was recently helped however with a February announcement from Magnum Hunter Resources of a commercial pro-duction well in Ohio’s Monroe County, drilled and cased to a true vertical depth of 10,653 feet with a 5,050-foot horizontal lateral, and success-fully fracked with 20 stages. It was placed on production and recently tested at a peak rate of 32.5 mmcf of natural gas per day.

As activity ramps up, there’s still plenty to learn about the Utica, as companies zero in on parts of the play. “I haven’t seen too much prog-ress in the western oil window,” says Hsulin Peng, senior analyst – E&P at Robert W. Baird & Co. “Most of what I’ve heard is very much focused on the wet gas window and several pending dry gas wells coming up.” Peng says in the core wet gas windows – Guernsey, Belmont, Noble – results from companies like Antero Resources continue to be solid, though many producers are moving further south, testing Monroe and Washington County, which is less understood. “We are await-ing more data,” she says.

Peng authored a 2013 summary report on the Utica, entitled “Deep Dive into the Utica: Finally a Play Ohio Fans Can Cheer For” where

she reported wet gas window results at 27 percent IRR (Internal Rate of Return) and an NPV of $3.5 million per well. So producers are making progress in the Utica, her report summa-rized, “… the jury is still out. Certain parts of the play are better understood but there is still work to be done.” More will be forthcoming “once producers shift into development mode, which is likely still a few years off as E&Ps remain fo-cused on delineation.”

Progress picks up. “There have been some re-cent announcements on Utica acreage acquisi-tion (American Energy Partners by Aubrey) and additional midstream projects so the industry remains excited about this play,” says Peng.

One of the more excited must be Chesa-peake Energy, the largest and most experienced operator in the Utica, with daily average net production in December 2013 of 35 mboe/d. They drilled a total of 195 wells in the play dur-ing 2013. The company plans to spend about 15 per cent of its total E&P capital expenditures on Utica this year.

As action on the American side of the Utica takes off, will Quebec’s moratorium fracture? On February 14, Quebec’s government announced it would usher in a new era of petroleum riches for the province, with plans to launch joint ventures aimed at exploiting mostly shale fields in the Gulf of St. Lawrence and Anticosti Island – which lie atop an extension of the Utica Shale, the very source of the fracking concerns. No mention was made of the moratorium status.

As action continues in the U.S. on Utica Shale, players in Quebec await news on the fracking moratorium.



PROFILEMember

By Shelley Williamson

Craig Joyce

T

Problem Solver

hey say most people will have three careers in their lifetime. If that’s the case, XI Technologies account manager Craig Joyce is right on schedule.

The University of Calgary kinesiology grad-uate says he first got into the drilling side of the industry out of a desire to be around like-minded people. As an account manager with XI Technologies, Joyce works with operators in the Western Canadian Sedimentary Basin in a posi-tion that he says has its roots firmly planted in problem-solving.

He says his role allows him to apply his people skills, which he honed in six years as an exercise therapist, every day while work-ing closely with his oil patch clientele. “I like the interaction with the clients and being able to work with drilling engineers and people who are looking to find easier ways to accom-plish their work,” says Joyce, who is originally from Ontario.

Joyce cut his teeth in the oil and gas indus-try selling advertising for an Alberta oil and gas magazine, before making the move to a sales position at a company that provides modular accommodations and office structures for camps in the oil patch.

From there, he joined the XI Technologies team, where he has been for the past two years. Among the products he is able to offer his clients are the web-based Offset Analyst, which provides instant drilling data for the more than 100,000 wells drilled across the WCSB, and TourXchange, which gives operators details on their competitors’ drilling practices and previously-drilled wells.

Prior to the software, operators would have to order the information on wells and other operators from the Alberta Energy Regulator (previously the ERCB), and wait for them to arrive.

“I like being able to help industry clients find a solution to some of their challenges with the

drilling data that we offer,” Joyce says. “I help them with a few aspects of the regulatory side of drilling a well, as well as research, performance optimization – everything needed for drilling a well.”

XI Technologies serves about 350 clients in the WCSB as a data provider to operators and service companies, giving industry professionals the information they need faster, says Joyce. “With regards to our regulatory suite of products, we are able to help companies and individuals become compliant, but also on the benchmarking side of things, drill more efficient, cost-effective wells.”

He says he likes helping his oil patch sub-scribers save time that they would previously have spent trying to acquire well and drilling details themselves, by providing them a web-based solution that does the leg work for them. He describes the format in which well and drill-ing data is normally available as “not conducive to efficiency.”

Joining the Canadian Association of Drilling Engineers was a step he took because of the organization’s reputation, especially in Calgary and across the Basin, Joyce says. “I wanted to be a part of what they were doing and help them achieve the goals that they’re striving to meet with regard to scholarships and different initiatives they have that help students.”

Joyce, who is a new member, says he welcomes the networking opportunities a CADE member-ship brings, not just from a business perspective, but also for personal growth.

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



B

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

REPORTTech

By Robin Brunet

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

produce 1,000 horsepower. “They eclipsed the duplexes, which were built in the 1930s and which were operated by my father, who started this company,” he says. “Horizontal drilling, of course, changed everything.”

Companies such as Beaver Drilling, Canada’s largest privately owned drilling firm, have under-

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

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

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Lisa Ottman, vice-president of investor relations at Trinidad Drilling, agrees that horizontal drilling was a game changer. “The industry as a whole has changed fairly quickly in a filter-down way since horizontal came into the fore,” Ottman says. “But technological advancements haven’t always come easy. When we performed horizontal drilling in Texas we saw the emergence of the boom and knew it would spread into Canada, so we started building rigs appropriate for the job – and a lot of people thought we were wasting our time.”

Trinidad lays claim to being the first company in Canada to supply high-performance rigs, and many customers who lease these rigs (which operate for about $22,000 per day) are the very same people who initially thought Trinidad was wasting its time.

Savanna Drilling Canada, which represents the third-largest drilling fleet in Canada, has been providing energy companies worldwide with equipment since 2001, and its rigs have operated in the Williston Basin; Horn River Shale; Utica Shale; Viking play; Lower Shaunavon play; Doig/Mont-ney Formation; the Alberta oil sands; and the WCSB. Additionally, in 2011 Savanna embarked on operations in Australia in support of Coal Seam Gas programs.

Savanna’s fleet of patented hybrid and tele-scopic double rigs is renowned in Western Canada and the U.S. for delivering the kind of results only state-of-the-art systems can achieve. Top drives, automated pipe-handling (Iron Derrickman), mobile designs (which account for fewer loads and faster rig-up times), larger pumps and AC electric technology are some of the components of Savanna’s fleet; the telescopic double rigs can reach depths of up to 4,000 metres, while its two triples can reach 5,000 metres. Its next generation of hybrids has the capacity to operate with coiled tubing or a conventional top drive off of the same rig, and the conversion is done in the field without any measurably cost or downtime.

While Trinidad has augmented its technological advances with improvements such as catwalks that pull pipe up the ramp (eliminating manual rope and pulley labour) and PLC computer systems that enable cab operators to monitor downhole activ-ity, the company’s biggest rig improvement has been the built-in moving systems that make each rig self-propelled. “No more downtime waiting for tow trucks, and much less stress and wear on the

rig since it’s no longer being pulled from one site to another,” says Ottman.

What does all this amount to in terms of per-formance? “Drilling times have been reduced from

about 60 to 40 days, and at the Eagle Ford Shale opera-tions our rig was drilling for just nine days,” says Ottman. “All of this means we get a

higher day rate for our machines; plus, the automa-tion also means increased safety for workers.”

Kausert stresses that comprehensive maintenance programs have been the key to his company’s suc-cess. “The burn rate in horizontal operations can easily be $100,000 per day, so downtime is unac-ceptable,” he says.

What’s coming down the turnpike? “Improve-ments in the future will focus heavily on safety,” says Kausert. “There will be more unitization of rigs and fewer pinch points.”

Ottman says further developments will be less spectacular than in the past. “We’re now using biofuel in some cases rather than diesel, and we have one rig running on natural gas,” she says. “The latter taps into the gas drilled at one well in order to drill the next well. Biofuel is actually an easier proposition than gas because it doesn’t require big-ger engines or higher maintenance costs. We also recently, in Texas, tapped into high line electricity as a source of power.” Additionally, Trinidad recently built a rig with a moving system that transports buildings and tanks as well as the rig.

Ottman concludes, “Some people assume that technological advances mean downsizing of labour, but that’s not the case in our experience. In addi-tion to increased efficiency, the changes we’ve made have resulted in increased safety and enabled work crews to focus on other areas of the operation.”

“The industry as a whole has changed fairly quickly in a

filter-down way since horizontal came into the fore.”

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

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20 march/april 2014 Well Construction Journal

Poetic Licence Discovery Channel Canada dips into drill site operations for a fourth season

REPORTMarket

By Ryan Van Horne

icence to Drill Does a great job at telling people what oil and gas companies do, but isn’t so good at telling them how they do it, says an industry veteran.

Bruce Fraser, an 18-year oil services veteran, thinks that in order to make the show more entertain-ing, its creators give a dramatized and condensed version of events.

“It’s certainly hyped and it’s certainly edited for dramatic value. I think there’s a lot of contrived tension,” Fraser says. “If a camera crew followed me around, it would make for a pretty boring show.”

The show, which embarks on its fourth season on Discovery Channel Canada on March 18, has earned a loyal following, especially among the families of people who work in the industry. There’s no such thing as “take your daughter to work day” on a drill site and that’s one of the reasons why the show is popular. For many people, it provides a glimpse into the jobs of their loved ones – jobs that are often performed in remote locations.

Emmanuelle Wiecha is the show runner for Licence to Drill and the producer and head of factual at Pixcom, the Montreal-based company that co- produces the show with Discovery Channel Canada. She says the show gets a lot of feedback from the families of people who work in the industry.

“The wives call us to thank us and say: ‘I had no idea what my husband did when he was gone’ and ‘My kids love the show; they see what their dad does.’ ”

Fraser has watched the show since its inception. He works for an oil services company, but was only willing to offer his personal opinion – not speak on behalf of his company – when he agreed to be interviewed for this story. “It’s definitely an entertaining show, and it provides a really good overview of the activities on a drill site and some of the challenges, particularly in some of the remote areas,” Fraser says. He also says Licence to Drill accurately portrays the roles and responsibilities of the people on a drill site, so it is educational.

Industry experts say Licence to Drill accurately portrays drill site operations.

L



For many people, it provides a glimpse into the jobs of their

loved ones – jobs that are often performed in remote locations.

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

Fraser says he’ll sometimes be on the couch next to his wife watching the show and he’ll often say to her, “That’s not the way it happens,” or “That guy would get fired for doing that.”

Fraser says eliminating risks – not taking them for the sake of getting the job done quickly – is the ethos of projects he’s worked on. “Speed is important for drilling crews, but safety is by far the most important thing in the industry,” he says. “You do see sort of a cavalier attitude toward that on the program – sometimes.”

Fraser says anybody who gives workplace safety short shrift and puts him or herself or others in harm’s way would be disciplined or fired.

When asked if the characters – real employees, not actors – are playing it up for the camera, Fraser says he thinks there might be some of that.

But Wiecha disagrees with this assessment. “After a while, they just forget about us,” Wiecha says. “They see them the first three days, then they don’t notice them. If anything, they probably do (their jobs) a bit better.”

Ken MacDonald, the vice-president of programming at Discovery Channel Canada, says “authenticity is very important” to his network, which is “all about experiencing different things in the world.”

In that regard, Licence to Drill gets the job done and MacDonald is proud to point out that viewership of Licence to Drill is highest in Alberta, which has Canada’s most well-entrenched oil and gas industry and offers the show’s most discerning audience. “We have tough critics who know what they’re talking about,” he says. “We do look at that feedback.”

But, as much as MacDonald stresses accuracy and education, he read-ily admits that he wants the shows on Discovery to be entertaining. He also points out that the show is not vetted by the oil companies that are portrayed. “We don’t surrender editorial control to anyone,” he says.

There is fact-checking – especially when complex issues need to be explained in plain language or in a graphic – so it’s important to get information right. MacDonald says Pixcom does “a ton of research when they embed themselves with the people they’re following.”

Wiecha says it was a challenge at first to get oil companies to co-operate because an American show highlighted some cowboy-like behaviour at drill sites. “There were drunk guys and it was not a nice portrayal of the industry,” Wiecha says.

Dan Hoffarth, the CEO of Citadel Drilling Ltd. in Calgary, says Licence to Drill is the best of the lot on TV these days, surpassing some other offerings such as Black Gold. He, too, thinks Licence to Drill is over-dramatized, but gives it full marks for its animations.

“They do a great job of putting those together and showing where the bit is going and with their 3-D renderings,” Hoffarth says.

Hoffarth thinks shows like this – where oil and gas companies try to educate people – will do wonders for the industry’s reputation. For too long, oil companies have not responded well to criticism – some

of it justified, and some not. “We’ve hidden behind the no comment shroud for way too many years,” Hoffarth says.

He thinks people need to know more about the new breed of rig hand working at drill sites. The stereotypical crude-covered “rig-pig” with a cigarette hanging out of his mouth is a thing of the past, he notes. “The day-to-day life of a well-run drill site is very professional and very boring – and it should be,” Hoffarth says.

It took a while for Pixcom to convince companies such as PennWest, MGM, Bonanza and Nabors to come on board and, after the first season, it became easier to approach companies.

“It’s like in life, you’re building a relationship on trust,” Wiecha says.She says many industry veterans are accustomed to what goes on

and she understands how they might think the drama is contrived, but she says the show is geared to somebody learning about the industry.

“For someone who’s been in the industry for 15 years, drilling 1,500 metres underground is some-thing he does for a living,” she says. “But for us, it’s a big deal. As an outsider who sees a rig floor for

the first time, it is massive and dramatic.”Fraser, though, says people in the industry do have a sense of awe at

what they’re doing, which is why safety is so important.“You’re dealing with some equipment on the drilling floor that can

tear you in half,” Fraser says. “It’s nothing to be trifled with. This is not a young industry. This is a very old industry and these lessons have been learned the hard way.”

Characters on the show, like driller Cody Wilson, are real employees, not actors.



A

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

REPORTIndustry

By Christy Nich

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

levels of last fall, and as a result many producers have switched to drilling for more conventional oil.

But that could change again by the end of 2014, say industry experts.

At the start of the millennium, we saw the advent of unconventional or shale gas production in terms of how producers were scouting out developments made possible through new technologies – such as horizontal drilling and multistage fracturing. The

prices spiked, prompting energy companies to go after natural gas in the WCSB, which in turn drove the prices down from a peak in 2005 of $15/mcf to last year’s low of $2.50/mcf, according to Duncan Au, president and CEO of CWC Well Services Corp.

Then the recession hit, and bottom lines started to suffer as gas producers were finding they couldn’t get a very good price for their natural gas as compared to conventional oil. Currently the price for natural gas is three to four times lower than that for conven-tional oil. “Our basin now in Western Canada, on the conventional side (outside of oil sands) is primarily 85 to 90 per cent oil wells, not gas,” says Au.



It makes the reality of the higher cost to drill for oil over natural gas – due to maintenance cost over a rig’s lifetime – not as important an issue. It will take seven or eight work overs per oil well to clean out the sand and wax build up, as compared to once or twice with a natural gas rig, but it still works out to a better return on investment.

Even with the better gas prices this year due to cold temperatures throughout Canada and U.S., it still makes more sense to drill for oil. It all rests on the price for natural gas in North America. There are no export facilities anywhere on the continent to take advantage of the high price globally for natural gas, despite plans to build a liquefied natural gas program in B.C. Add to that an oversupply, and the price drops further down.

Bill Gwozd, senior vice-president of gas services at Ziff Energy, says that reserves may be 13 bcf today, but LNG applications may approach 30 bcf by 2025, when exporting to Asia begins – more than double. He predicts a huge amount of activity for LNG and says it will be the dominant supply source out of Western Canada. While he agrees the price is a key factor in deciding drilling activity in the short term, he doesn’t see it for the long term – when he predicts Canada exporting globally, for example, to Asia.

Regulatory approval is still needed to build the planned LNG facilities for export and there is no shortage of projects on the table. “2014 could be a very big year for those plans and those projects. One or two of these LNG plans should come to an investment decision,” says Au. “From an overall industry perspective, as natural gas prices firm up and increase the ability to ship our gas and take advantage of the differential between the North American price for gas and the rest of the world’s prices ... those oil and gas companies that are ca-pable, and have a strategy for drilling for natural gas, will end up doing so and make a profit,” says Au, noting industry has to go through due process in Canada, however, and that involves consulta-tions with stakeholders from First Nations groups to landowners to various levels of government.

Gwozd sees that as a small stumbling block for the future success of Canada’s LNG and its export potential. He notes that it is a matter of simple economics – where the price has to be more than the cost. Cost refers to the expenditures to take a product, such as gas, to market. In Western Canada, for example, full cycle costs for gas include explora-

tion, drilling, operations, seismic and royalties and it would equal $6. If the price of gas today is $5.50, a month ago it was $4.50 and a year ago it was only $2, then it’s easy to see that the price isn’t always aligned with the cost. When you look at exporting to Asia, the full cycle costs are covered, along with transportation costs. “As long as the price they pay covers the costs, it makes more economic sense to move it to Asia.”

Gwozd adds that there is dwindling supply of conventional oil as reserves are verging on empty. “Some of the individual basins in Western Canada have been partially drained,” he says.

He would advise producers in the long term to shift from pure natural gas to liquids-rich natural

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

Grand Prairie area, containing up to 15 per cent oil, which demands a higher price.

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

“Our basin now in Western Canada, on the conventional side

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

says Duncan Au.

Natural Gas Prices$US/mmBtu

2008 2013

January $7.98 $3.33

February $8.55 $3.34

March $9.44 $3.82

April $10.13 $4.17

May $11.26 $4.04

June $12.69 $3.82

July $11.06 $3.63

August $8.25 $3.43

September $7.67 $3.62

October $6.73 $3.66

November $6.69 $3.62

December $5.81 $4.24

Average $8.86 $3.73Source: US Federal Reserve



Canadian Rig Counts February 13, 2014

Drilling Down Total Utilization

Alberta 416 156 572 72.7%

B.C. 64 11 75 85.3%

Manitoba 13 8 21 61.9%

New Brunswick 0 0 0 –

Newfoundland 0 0 0 –

Northwest Territories 1 0 1 0%

Quebec 0 1 1 0%

Saskatchewan 102 39 141 72.3%

Totals 596 215 811 73.5%Source: Divestco

NUMBERSBy the

Stats at a Glance

Alberta Rig Counts February 13, 2014


Northern Alberta 122 49 171 71.3

Central Alberta 255 93 348 73.3

Southern Alberta 39 14 53 73.6

Totals 416 156 572 72.7Source: Divestco

Top 5 Most Active OperatorsFebruary 13, 2014

Active Rigs

Canadian Natural Resources Ltd. 34

Husky Energy 28

Progress Energy 26

Crescent Point Energy 24

Cenovus 18Source: FirstEnergy Capital

Top 5 Most Active Drillers in Western CanadaFebruary 13, 2014

Active Total

Precision Drilling Corp. 140 189

Ensign Energy Services Inc. 71 101

Savanna Energy Services Corp. 64 71

Nabors Industries Ltd. 48 64

Trinidad Drilling Ltd. 50 61Source: FirstEnergy Capital



Canadian Rig Counts February 13, 2014


Alberta 416 156 572 72.7%

B.C. 64 11 75 85.3%

Manitoba 13 8 21 61.9%

New Brunswick 0 0 0 –

Newfoundland 0 0 0 –

Northwest Territories 1 0 1 0%

Quebec 0 1 1 0%

Saskatchewan 102 39 141 72.3%

Totals 596 215 811 73.5%Source: Divestco

Alberta Well LicencesApproval issued by the Alberta Energy Resources Conservation Board

Number of Licences Issued July 2013 Aug. 2013 Sept. 2013 Oct. 2013 Nov. 2013

Development 459 572 564 586 607

Exploration 58 46 25 52 68Source: Alberta Department of Energy

Alberta Spudded WellsJanuary 2013

Number of Wells Spudded

2012 2013

January 1763 1616

February 2022 1823

March 980 1078

April 276 337

May 374 268

June 518 452

July 702 647

August 785 793

September 784 717

October 781 727

November 707 653

December 670 364Source: Alberta Department of Energy

Top 5 Most Active OperatorsFebruary 13, 2014

Active Rigs

Canadian Natural Resources Ltd. 34

Husky Energy 28

Progress Energy 26

Crescent Point Energy 24

Cenovus 18Source: FirstEnergy Capital

Alberta Completed WellsJanuary 2013

Number of Wells Completed

2012 2013

January 381 381

February 718 640

March 717 812

April 672 701

May 486 343

June 254 272

July 488 373

August 541 474

September 524 458

October 692 753

November 750 671

December 692 530Source: Alberta Department of Energy

Alberta Land SalesFebruary 2014

Dec. 2013 Dec. 2012 YTD 2013 YTD 2012

Oil and Natural Gas

Land Sales $50.2 million $71.3 million $680 million $1.1 billion

Price Per Hectare $407.58 $265.86 $316.91 $360.06

Oil Sands

Land Sales $363,260 N/A $28.2 million $10.7 million

Price Per Hectare $153.40 N/A $192.05 $136.27Source: Alberta Department of Energy



DEEPERDrilling

By Shelley Williamson

They Can Play Nice

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

It’s been two years since the big players in the Alberta oil sands pledged to work together in the spirit of innovation, collaboration and improving environmental performance.

Calling itself the Canadian Oil Sands Innovation Alliance (COSIA), 14 companies including Cenovus, Canadian Natural Resources Limited, Imperial Oil, Suncor, Syncrude, Nexen and Devon Canada have signed on.

Chief executive of COSIA, Dr. Dan Wicklum, says the group’s inaugural years have been dedicated to four environmental areas: water, land, greenhouse gas emissions and tailings ponds.

Participation in COSIA represents 90 to 95 per cent of the oil sands production in Canada, but more than that, it signifies an unprecedented partnership of players who are more accustomed to competition.

So far the alliance has put its collective heads together and come up with 560 technologies that can be shared, equating to upwards of $1 billion in intellectual property, says Wicklum. One initiative of the 185 or so projects on the table by the alliance’s members is “a regional water solution.”

“Some companies, frankly, have a surplus of water often imbedded in a tailings pond and other companies, just by nature of their lease and their access to water, are in a water deficit,” Wicklum says. “So one of the things in a regional collective collaborative model like COSIA is taking wastewater from one company and using it as source water for another company. It’s basically a win-win situation, solving a problem and improving environmental performance: It’s the kind of thing that only becomes possible,” Wicklum says, “when you get companies truly collaborating.”

Collaboration on training and best practises is also among the COSIA initiatives in play, says Wicklum, explaining the single certification model for in situ operator training. “It just makes it easier for com-panies to collaborate and share best practises if the operators are all trained to the same high standard.”

Companies in COSIA have also partnered with Al-berta Innovates-Energy and Environment Solutions, Natural Resources Canada and other groups to take

to task the tailings issue by first developing a road map. “We have evaluated over 500 technologies and they have organized them for action. They’re devel-oping these specific technologies and a system so the technologies will continue to be developed quicker than they have been,” Wicklum says.

While some of the group’s focus has been on en-vironmental improvement, such as restoring caribou habitat by planting native trees in winter (when planters are less likely to disturb the muskeg), other efforts have led to new and innovative technologies.

“There’s one example that companies are calling oxy-fuel combustion, and it’s basically using quite pure oxygen in the combustion process to make steam. It results in a very pure carbon dioxide stream that makes it that much easier to capture and use,” Wicklum says.

While the collective has been criticized as green-washing, Wicklum says the partnership is an impor-tant one that has seen some progress already, despite its fledgling existence.

“We feel that we’ve had pretty darn good success over a short lifespan. We also feel that there is much, much more potential to our model and much more work to do,” Wicklum says. “This is a continuous improvement journey, to get better every year as individual companies, and therefore collectively, in regional environmental performance. I would never see this as a finish line or say that we’re done.”

But will the member companies keep up their alli-ance, despite being in fierce competition?

“They are still competitors, they’re still in full com-pliance of the competition law but, when it comes to environmental performance, what we found is an-other model works better, and the model is a complete paradigm shift and a reconceptualization of how the companies interacted in the past,” Wicklum explains. “Working together and collaborating, even in a sec-tor as large and complex as the oil sands – it’s not just buzzwords, it works. If a goal is to have accelerated environmental performance improvement, you need to walk the talk and work within the model that truly will accelerate it – and that’s why the companies are interested and have bought into COSIA.”

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For drilling and completions specialists, CADE currently offers one of the best networking and knowledge sharing opportunities in the Canadian petroleum industry. As you look to build your business and launch new technologies, new products and services in the drilling industry, a CADE Sponsorship offers you a cost effective way to deliver your message directly to the entire membership of the leading industry association for Well Construction Professionals in Canada.

YOUR SPONSORSHIP INCLUDES:• Ads in Well Construction Journal, full of relevant industry news and

articles, presented in a high quality, well-read magazine• Your logo in the “Thank you to our sponsors” feature on the CADE

website and in every issue of Well Construction Journal• Your logo on the “Thank you to our sponsors” display at every CADE

Technical Luncheon• Authorized use of the CADE logo on your website and in marketing

materials

Connect with Canada’s Drilling IndustryBecome a CADE Sponsor

2014 SPONSORSHIP PACKAGES ARE NOW AVAILABLEContact CADE at 403.532.0220 or by email at [email protected]

www.cadecanada.com

Support CADE by sponsoring our technical lunches, our website and the Well Construction Journal.

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

Platinum SponsorsPhoenix Technologies Services

Gold SponsorsGlobal Steel Ltd.

NCS Energy Services

Schlumberger

XI Technologies Inc.

Pacesetter Directional

Silver SponsorsAkita Drilling Ltd.

Cathedral Energy Services Ltd.

Lory Oilfield Rentals Inc.

Marquis Alliance Energy Group Inc.

Mostar Directional Technologies

Petrosight Inc.

Well Control Group

Peak Completions

Ensign

000WCJ-CADE_Sponsor-FP.indd 1 2/26/14 9:16:21 AMWCJ_Mar-Apr_14_p26-27.indd 27 3/5/14 1:18:24 PM

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