Well Construction Journal - Jan/Feb 2014

The official publication of the Canadian Association of Drilling Engineers

JANUARY / FEBRUARY • 2014

PM#40020055

West-central Alberta shale play gives southerly deposits a run for their money

Big BusinessTrinidad prepares to bring its latest mammoth rig to the Liard Basin

PLUSDrilling for DataThe oil and gas industry gets technical as demand for well specifics grows

WCJ_Jan-Feb_14_p28-01.indd 1 1/15/14 3:34:45 PM

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: 780.990.0819 (265)Email: [email protected]

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www.cadecanada.com january/february 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 deePerFEATURES

12 WOrLd CLass sHaLe Alberta’s colossal Duvernay deposits are poised to rival the prolific plays south of the border

18 size Matters Trinidad leads the pack with its latest big rig, destined for drilling natural gas in B.C.’s Liard Basin

20 data driven Oil and gas industry increasingly on the hunt for technical well site details before dropping a drill bit

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.

10259 105 StreetEdmonton, AB T5J 1E3Phone: 780-990-0839

Fax: 780-425-4921Toll Free: 1-866-227-4276

[email protected]

PUBLisHer: Ruth KellyassOCiate PUBLisHer: Joyce Byrne

direCtOr OF COntraCt PUBLisHing: Mifi PurvisManaging editOr: Shelley Williamson

art direCtOr: Charles BurkeassOCiate art direCtOr: Andrea deBoerassOCiate art direCtOr: Colin Spence

PrOdUCtiOn Manager: Betty Feniak SmithPrOdUCtiOn teCHniCians: Brent Felzien, Brandon Hoover

CirCULatiOn COOrdinatOr: Karen ReillyaCCOUnt exeCUtive: Anita McGillis

COntriBUting Writers: Justin Bell, Graham Chandler Jacqueline Louie

JANUARY/FEBRUARY • 2014

20

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. 17

12


Well Construction Journal � january/february 2014

ow hiring: innovators. Must haves: An ability to think out of the

box, great communications skills and an understanding of economics and sciences.

As the Canadian oil and gas industry has matured, the problems we are faced with are becoming more multifaceted and complex with each given year. For example, where drilling a well was once as simple as moving in a rig, getting it TD’d as fast as possible, and tearing out to move again as soon as the pro-duction casing was cemented, we now have a whole host of other important pieces to manage. The ideas of safety management systems, stakeholder engage-ment, groundwater protection, well integrity and mitigating cumulative effects would have been for-eign to the early days of our industry, but we now consider these long before the first bit passes through the table.

I’m not going to cover the many innovations that have been made and steps forward we have taken in the past. What I do want to focus on is our industry’s need to continue to balance the many demands while still providing safe, economical energy to fuel the Canadian economy.

I see a number of issues that may be ready for a fresh approach:1. Demonstrating the value of the inDustry to the general public. I recently read an article (“The Moral Case for Fossil Fuels” by Alex Epstein of the Center for Industrial Progress), which argued we have it all wrong. We should be talking about our values: stories of the challenges we have overcome, the need modern society has for our products, and the role of technology. Then we should be showing the connec-tion between our industry and the personal benefits to each and every individual North America. 2. filling the workforce gap. The discussions of-ten turn to recruitment and retention strategies, find-ing and training new workers, providing great camp accommodations and so on. We spend a great deal of time and energy transporting people and materials from a base to a site to perform one task at a spe-cific time, reversing the process as soon as the job is

complete. What if, instead of constantly mobilizing and de-mobilizing people, we worked towards mak-ing some of these jobs possible to do remotely – or with automation? This is a great example of what I consider a win-win-win scenario. The operator wins through less cost, and less HSE exposure. The service company wins through reduced vehicle cost, the ability have skilled people work on more jobs in a day, and again, reduced HSE exposure.

If this happens on a large scale, society in general wins through less resource consumption, and fewer vehicles on the road make collisions less likely.3. the cyclical nature of the business. There always seems to be an air of nervous excitement this time of year, as we seem to test our limits and race the breakup clock. While a portion of this timing is weather-driven, some of this burst in activity is due to annual planning cycles. As a result, we end up pushing the limits all winter, then having a much lower activity level through the rest of the year. The net effect is that we are over equipped for the major-ity of the year, which is not efficient from a capital standpoint, and extremely hard to manage from the personnel side. A move away from Q1 activity in ar-eas with good summer access areas would be of huge benefit with minimal trade off. I don’t see this as an innovation on its own, but as an alternative solution to “build more, hire more, sign rigs up earlier” race we always find ourselves in.

That is the smaller-scale cycle. The larger is one of commodity prices, particularly in North American natural gas. The many-producer, limited-consumer model leaves us swinging between low prices and low activity, and higher prices and boosted activity. We need to be diversifying our consumer base, not just in terms of LNG exports, but the replacement of coal fired power plants with natural gas, and the substitut-ing of oil demand as well. A more balanced supply-de-mand picture, with LNG acting as a relief valve would benefit the industry tremendously. While the con-struction of LNG and power plants and natural gas fuelling infrastructure is beyond the scope of our day to day work, it may be the cure for what ails us.

N

MESSAGEPresident’s

New Approach Needed Filling workplace gaps, demonstrating energy sector’s value, and cyclical nature among key issues facing industry

Jeff Arvidson CADE President


Connect with Canada’s Drilling Industry

For news, industry information, events, back issues of Well Construction Journal and more,

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@CADE_Can

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New Approach Needed Filling workplace gaps, demonstrating energy sector’s value, and cyclical nature among key issues facing industry



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

New Year and Challengeshope everyone had a great holiday break, with Christmas falling on a Wednesday this year a lot of people took extended time off to be with family and friends. Going into the second week of January had

lots of people bustling after the long break with rigs firing up under new budgets or continuing on from previous programs. I remember when I first started in downtown Calgary and the questions around the office going into the holidays, was always centred on who was going to be on call.

You don’t have to worry about that anymore because the crews won’t work. The big issue now is do you shut down early so you don’t run the risk of having problems and not getting shut down or do you push the envelope and try and have everything wrapped up by the 23rd. The shortage of trained personnel has changed the way our business works and operates. Gone are the days when the tool push said, “We are working Christmas,” and that was that. If you didn’t like it, there were a dozen guys ready to take your place.

Now we have rigs with only two crews that are forced to shut down after 24 days due to labour laws. Our indus-try needs to find ways to bring people into our workforce and keep them.

IOur 2014 technical luncheon presentations have

started again in January with comedian Paul Myrehaug. Please watch for email announcements and check the website for upcoming topics and dates. Please don’t hesitate to contact us if you have any ideas for upcom-ing topics or issues you’d like to see presented at the luncheons or in print. We are also looking for topics that tie into our journal focus for each month. We hope to see more of this of the course of the year. 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 publica-tion each month. Please forward any announcements to us, as we would be excited to run them in our new feature section.

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

Christian Gillis, EditorCanadian Well Construction [email protected]


january/february 2014 � www.cadecanada.com

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

Chinenye AmorhAmike AttrellPhil BeslerBriAn BiCkerton Chris Brown Curtis BoulAngerJoy ChidinmA mokAloerion CoBAJrushton dAvis-hAllPAtriCk gushueniCholAs hAgenmiChelle hArdingdrew herAufPAtriCk hindslABiB hogAriBrennAn holowAtyBryson JonesJustin kilBtrent kostenukgrAhAm mCgillivrAyBrAndon millermohAmmAd moghAddAmromAn murshudovAlex nAzArovwilhelm neisslogAn olerglenn osmAklArissA PAttersonwAyne rutherford roger shAwAustin sloBodiAnmAtthew stuArtAlexAnder stetskonAthAn ulAszoneklAurA weedenruodong xiA

Why become a caDe member?

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

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

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

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

Who caN become a caDe member?

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

Typical members include drilling

and completions engineers, geologists, technical personnel, sales personnel and students. Student memberships are available to any post-secondary student interested in learning more about drilling and completions.

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

caDe membership reNeWals

CADE’s membership year is from Sep-tember to September. During the sum-mer, CADE members will receive an email and link for the renewal process on our website.

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

caDe membership chaNges

Log on to cadecanada.com to become a member or to update your contact information.



BOARDThe Drawing

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

Encana to cut 20 per cent of its workforce and close the Dallas officeEncana corp. has announcEd it is cutting its workforce by 20 per cent, slashing its dividend and spinning off some of its Alberta land holdings into a new public company as part of a strategy unveiled by its new CEO.

Doug Suttles, formerly an executive at BP, had previously alluded to huge changes for Encana, which has long struggled with low commodity prices. He’s also said Encana would become leaner and more profitable. “We need to align our orga-nization with our strategy, both in terms of scale and in structure,” Suttles said on a conference call in November.

As a result, Encana will be closing its Dallas area office, which has 400 employees, and consolidat-ing work in Calgary and Denver. As of late 2012, Encana employed roughly 4,000 full-time employ-ees and 900 contractors.

The layoffs, which included 200 job cuts in Calgary in late November, were expected to be mostly complete by the end of 2013, Suttles said, noting: “It will include technical skills such as

engineers and geologists all the way through to our administrative support staff and some of our financial staff.”

Encana also announced that its quarterly dividend will be cut to seven cents from 20 cents per share and said it plans to spin off five million acres of land in the Clearwater formation into a new publicly traded company in which Encana will hold a majority stake.

Suttles did not divulge many of the details on the Clearwater plans, as Encana is preparing to take that company public in mid-2014.

Encana also announced plans to put non-core natural gas assets up for sale. The company expects 2014’s capital spending to be around $2.5 billion – slightly lower than its spending in 2013.

About 75 per cent of that will be on five resource regions, including the Montney area in northeastern British Columbia and the Duver-nay area in Alberta. The others are the DJ Basin, San Juan Basin and Tuscaloosa Marine Shale in the U.S.

U.S. billionaire raises his oil sands stakesBillionairE WarrEn BuffEtt has addEd to his oil sands holdings, with a recent investment to the tune of 40.1 million shares of major oil producer Exxon Mobil.

Among Exxon Mobil’s key oil sands projects is the Kearl – which is projected to contain 4.6 billion barrels of bitumen and which is already producing at a rate of 80,000 barrels per day.

Buffett had already invested $500 million in Suncor Energy Inc. through his company, Berkshire Hathaway, back in June of last year.

As Exxon Mobil also has a 70-per-cent stake in Imperial Oil, the largest oil sands producer, the investment also gives Buffett ownership in that company.


january/february 2014 � www.cadecanada.com

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

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)

SAVE THE DATE: FEBRUARY 12, 2014Topic: Automated Racking Board Pipe Handling System Eliminates the Hazards of Tripping Operations, with Victor Ogoke, Shell Canada Energy, and Adham Jaber, Weatherford Canada Partnership

Engineering out workplace hazards should be a key consider-ation for Canadian drilling engineers. The most dangerous and physically-demanding jobs on the rigs are tubular handling, which accounts for most recordable and lost time incidents in our operation. Engineering out this workplace hazard will simply be the full mechanization and automation of the pipe handling process.

The Shell rig fleet are using the hydraulic catwalk and with a step further, have eliminated the derrickman or infamous “monkeyman” working at heights in harsh weather conditions and associated risks with the Weatherford automatic racking

GST REGISTRATION #R123175036Visit www.cadecanada.com for all ticket purchases

board and Iron Derrickman system on Nabors 97, drilling in the Groundbirch area of northeastern B.C.Reception: 11:30 a.m.Luncheon: 12 p.m.Presentation: 12:30 p.m.

Encana to cut 20 per cent of its workforce and close the Dallas office

Northern Gateway review panel gives its nod with conditionsA federAl review pAnel hAs given approval for Enbridge’s proposed $7.9-billion Northern Gateway pipeline to go ahead, as long as 209 conditions are met.

The joint National Energy Board review panel released its report into the proposed project on December 19, after months of public hearings in which it heard submissions from more than 1,450 participants from 21 communities.

The nearly 1,200-kilometre pipeline would carry Alberta oil from Bruderheim, Alberta to a port in Kitimat, B.C., to be loaded onto tankers and shipped to markets in Asia. The pipeline would carry 525,000 barrels of oil a day from Alberta to B.C. The report also estimates the pipeline’s revised cost at $7.9 billion – up from an earlier projection of $6.5 billion.

The panel’s conditions include: the development of a marine mammal protection plan; preparation of a caribou habitat restoration plan; the development of a training and education monitoring plan; a marine spill trajectory and fate modelling plan; a research program on the behaviour and cleanup of heavy oils; as well as pre-operations emergency response exercises and the development of an emergency preparedness and response exercise and training program.

The federal government has the final say on whether the pipe-line gets the green light – cabinet has 180 days to decide whether

to give it final approval.With regards to the panel’s condi-

tions, NEB communications officer Sarah Kiley says the federal government has three options: accept or reject the panel’s recommendations, or ask the NEB to reconsider any of the condi-tions included in the report. In turn, the NEB can reject the request outright,

modify the conditions the government has flagged or replace the conditions in question.

Natural Resources Minister Joe Oliver said in a statement that “no project will be approved unless it is safe for Canadians and safe for the environment.”

“Now that we have received the report, we will thoroughly review it, consult with affected Aboriginal groups and then make our deci-sion. We also encourage everyone with an interest to take the time and review the report,” Oliver wrote.

Janet Holder, leader of the Northern Gateway project for Enbridge, said following the announcement that her team “will work to meet” the panel’s conditions, as well as B.C.’s five conditions which were recently set and agreed upon.

In addition to environmental and First Nations groups in oppo-sition to the pipeline, the federal NDP strongly opposes Northern Gateway over concerns about B.C.’s waterways.


Well Construction Journal 10 january/february 2014

liver DesCoteaux is in his fourth anD final year as a mechanical engineering stu-dent at the University of Calgary. He began his experience in the oil and gas industry

in 2012 working as a plant operator and has since then explored other disciplines such as reservoir and exploitation engineering. Alongside his work experience, he has learned vastly through at-tending events such as the SPE Annual Technical Conference and Exhibition in New Orleans, the Alberta Student Energy Conference in Calgary and numerous “lunch-and-learns.” From continu-ing to participate in events like these, he hopes to increase his wealth of knowledge and lessen

Young TalentHighlighting tomorrow’s best and brightest

Student PROFILE

Oliver DesCoteauxMechanical Engineering

University of Calgary

HELP WANTED: Career Department

interviewing tips for inDustry jobs

types of interviewsPhone interviews: These are generally screening interviews to

determine whether a company wants to bring you in for an in-person

interview. To prepare, ensure you have a good phone connection and

a quiet place to conduct the interview. Since the interviewer can’t

see you, it’s important to speak clearly and to verbally communicate

you are interested in a position with the company. For a workshop on

phone interviews, visit ccse.umn.edu

On-campus interviews: Sometimes employers will visit campuses to

interview multiple candidates for their company or organization over

a short period of time, such as a day or week.

Group/board interviews: Some companies will have a group or

panel of people interviewing a candidate for a job. If this is the case,

make sure you introduce yourself to each person. Regardless of who

is asking, make eye contact with each interviewer when answering

each question. Bring multiple copies of your resume for each person

if you know beforehand it will be a group interview.

On-site interviews: These are interviews that take place at the

company or organization, and, especially if it is not the first

interview, these can last several hours and may involve lunch,

meeting possible future coworkers, and interviews with more than

one staff member.

the gap between being a student and being in the workplace.

DesCoteaux is president of the Mechanical En-gineering Students Society and vice-president of marketing and growth for the Petroleum and En-ergy Society. From his involvement in these societ-ies he hopes to reach out to others and help them achieve their full potential, he says.

DesCoteaux’s interests lie primarily in drilling, completions and production engineering. After graduation he hopes to pursue a career within a leading-edge, value-driven company, allowing him to hone his skills and become a well-rounded engineer.

O

Kyle McAllisterPetroleum Engineering Technology

SAIT Polytechnic

Kyle MCallister began his Career in the oil industry in 2006 as a lease hand for Chinook Drill-ing. Quickly developing a passion for the dynamic nature of the drilling rig, he was promoted and held a driller position. McAllister led a drilling crew for two years, primarily drilling horizontal wells in west-central Alberta. McAllister then moved to SAIT and is currently completing his final semester in the Petroleum Engineering Technology program.

With a Petroleum Technology diploma and an industry background, McAllister intends to work as

a technologist for Calgary-based project manage-ment firm, NBC Technologies. NBC Technologies specializes in exploitation and design of special projects, lease preparation, drilling, completion, work-over and production project management as well as on-site project supervision. McAllister cred-its his field experience with his practical knowledge and work ethic, and he credits his SAIT education for gaining the necessary tools to contribute to a technologically-advanced, fast-paced and growth-oriented energy industry.


january/february 2014 11 www.cadecanada.com

IntervIewIng tIps for Industry jobs

dress for success: Suit up: A suit is recommended if you have one, otherwise wear a button-

up shirt and dress pants for men or a blouse and dress pants or a skirt, for

women. If wearing a skirt, ensure it is at least knee length.

Press to impress: Make sure your clothes are clean and wrinkle-free.

Be a shoe in: Wear comfortable dress shoes and matching socks, or

pantyhose with an absence of runs.

Tie one on: For men, if you have a tie, wear it. For women, keep jewelry

simple or understated.

Keep it simple: Keep hair in a simple style and for men, facial hair

groomed or your face clean shaven.

before the IntervIew:Do your research: Check out the organization so you can best articulate

why you are a good fit for it, and so you can also prepare questions to ask

of your interviewers. At the very least, find out how big the company is,

what their mission statement is, and the structure of the company. Also

check to see if they have received accolades or any recent news coverage.

Interview them: Likely after they have finished interviewing you, the

employer will ask if you have questions. This is your chance to ask them

questions that can help determine your suitability for the company or

position. Make sure questions are thoughtful and can’t be answered

through research, and use the information you glean from your

questions to ask follow-up questions. Don’t bring up money.

Be prepared: Understand and be able to speak to your values, interests,

skills, strengths, weaknesses, transferable skills, related experience and

career goals.

Sell yourself: Be able to tell them why they should hire you.

Know your audience: Know who your interviewers are (whether it’s

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HELP WANTED: Career Department

engineers, managers, human resources representatives) if possible, so you

can prepare for the right level of technical answers.

Know the job: Before the interview, write down some examples of skills

you have that fit the job skill set and practise telling the anecdotes. This

will help you to deliver your answers with confidence.

how to answer common questIons:Tell me about yourself. Employers ask this to get to know more about

you, but what they’re looking for is information about your education

and employment background, related to the position and company.

Include in your answer any related internships, student organization par-

ticipation, research and work experience, course projects, and leadership

posts you have held. Also articulate any skills and qualities you have that

make you a good fit for the position and company or organization.

What are your strengths? Use the job description as a guide for what

skills and qualities the interviewer might be looking for, then identify

those which are your personal strengths.

What are your weaknesses? Employers look for honesty. Tell them one

weakness but follow up with how you are working on this weakness. Be

specific about steps you have taken to improve on it.

Why do you want to work here? State why you want to work for the

organization, using this as an opportunity to show what you know about

the company. Stress how your experience and skills make you a good fit

for the company and job.

Why should we hire you? This gives you the chance to sum up why

you’re the best candidate for the job and what sets you apart from other

candidates. This question gives you a chance to reiterate your strengths,

skills, and experience relevant to the job and company, to leave them

with a lasting and positive impression.

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.

ATTITUDE: The orientation of a planar or linear feature in three-dimensional space. Planar features that are not horizontal, such as tilted strata, are described by their strike, or the azimuth of the in-tersection of the plane with a horizontal surface, and the dip, or the magnitude of its inclination from a horizontal reference. The trend and plunge of linear features, such as the axis of a fold, describe the azimuth of the line and its deviation from horizontal.

BAREFOOT: Referring to openhole or without casing, as in bare-foot completion or barefoot drillstem test.

CEMENT HEAD: A device fitted to the top joint of a casing string to hold a cement plug before it is pumped down the casing dur-ing the cementing operation. In most operations, a bottom plug is launched before the spacer or cement slurry. The top plug is released from the cement head after the spacer fluid. Most cement heads can hold both the top and bottom plugs. A manifold in-corporated into the cement head assembly allows connection of a fluid circulation line.

DOGHOUSE: The steel-sided room adjacent to the rig floor, usually having an access door close to the driller’s controls. This general-purpose shelter is a combination tool shed, office, communications center, coffee room, lunchroom and general meeting place for the driller and his crew. It is at the same elevation as the rig floor, usually cantilevered out from the main substructure supporting the rig.

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REPORTSpecial

CALGARY

RED DEER

EDMONTON

GRANDE PRAIRIE

FORT MCMURRAY



Location: West-central Alberta

ResouRce: Light oil, natural gas, condensates,

propane, pentane, butane

souRce Rock: Fine-grained, organic, silica-rich bitumi-

nous and calcareous shale and argillaceous limestone

estimated RecoveRabLe ResouRces: 443 tcf gas,

11.3 billion barrels liquids, 61.7 billion barrels oil

PRoduction: Very early stages; per well up to 7.5

mmcf/d gas, 1,300 bpd condensate, 2,000 bpd oil

majoR PRoduceRs: Athabasca Oil Corp, Shell Canada,

XTO Energy, Chevron Canada, Encana Corp.,

Husky Energy

b

alberta’s colossal duvernay deposits are poised to rival the prolific plays south of the border

Rian mcLachLan is undeRstandabLy buLLish on the Duvernay play of central Alberta. “Historically we were a dry gas-producing company and, in 2008-2009 when gas went from about 10 bucks to a buck fifty, we had to go

through that painful transition and look for some higher liquids,” says the president and CEO of Yoho Resources. “And the Duvernay certainly has that – in spades.”

It was a chancy move at the time, he recalls. McLachlan and his team had their eyes south, where shale plays like Eagle Ford and Bakken with the new technologies of horizontal drilling with multistage hydraulic fracturing were already fast transforming the energy scene. Canadian shale exploitation was lagging by a good five years, he estimates.

By Graham Chandler



REPORTSpecial

“Most of our lessons come out of the U.S.; that’s how we got going very early in the Duver-nay, and got our land position so inexpensively.” They studied those south-of-the-border plays intensively and did their homework on both sides of the border. “We did a lot of rock work, studying cores and chip samples, and we did a comparative analysis to U.S. shale basins and re-ally liked what we saw,” he says. “So we started buying land in [the Duvernay] for $20,000 a section.” It was a prescient move: “The going rate now is over $3 million,” he says.

Yoho hasn’t looked back. “We actually drilled the very first horizon-tal well into the Duver-nay. Ourselves and Celtic [now part of XTO Ener-gy] in 2010,” McLachlan says. “Trilogy Energy was our partner in that one. Celtic was the operator. We took the play to Trilogy and to Celtic and said, ‘We’ll show you the play if you guys will pool your lands.’ ” Trilogy and Celtic were indeed interested – they pooled about 30 sections with Yoho and each took a one-third working interest. “We were the original players in there,” McLachlan says. That first horizontal well was a success: drilled to 5,080 metres total depth with a 1,700-metre lateral, and fractured using the Packers Plus as-sembly with about 90 tons of sand, it has now

been producing for two-and-a-half years.The legendary organic-rich Duvernay Shale

of central and western Alberta is famously the source rock for oil and gas in the prolific Leduc reefs just to the east. It’s what launched and un-derpinned the development of Alberta’s oil and gas industry, starting in 1947. Simply defined in geology-speak, the formation consists of lami-nated bituminous shale, calcareous shale and dense argillaceous limestone, with some cal-carenite and coral rich mudstones. It is mostly fine-grained and silica-rich, which bodes well

for high adsorbed gas and brittleness for more effective fracturing. There are more positives for producers: good pressure gradients, high po-rosity and a broad areal ex-tent – about 130,000 square

kilometres, 20,000 of which is the tempting wet gas window where pay thickness averages 65 me-tres (Kaybob and Pembina areas). And the play holds rich long-term promise: a re-evaluation by the then-Energy Resources Conservation Board and the Alberta Geological Survey released in November last year estimated gas resources of the Duvernay at 443 trillion cubic feet of gas in place, with 11.3 billion barrels of natural gas liq-uids and 61.7 billion barrels of oil.

Early production numbers look promising, too. “The wells that we’ve drilled so far are show-

The Duvernay has sourced nearly seven billion barrels of conventional

production since the 1940s. It is an established source rock within

a proven trend.

Encana Corp., whose Duvernay play is shown, was among the first to amass land in the region.


www.cadecanada.com january/february 2014 15

ing anywhere from 100 to 160 barrels a million of liquids with 65 per cent of those liquids being condensate,” McLachlan says. Propane, pentane and butane are also reported as significant.

The lure of numbers like those quickly at-tracted big names. Activity took off after that first Celtic/Yoho/Trilogy well of 2010. Today the bulk of activity has been taken over by majors like Shell, XTO Energy, Chevron and Encana – from those pioneering juniors. And, like the juniors, they are bullish. Chevron, which has amassed 325,000 net acres in the Duvernay, an-nounced in late October it had concluded its ini-tial 12-well exploration drilling program (alone) in the liquids-rich Kaybob portion. Chevron has completed five wells which have been tied into production facilities already. To supplement those, an additional four wells are waiting com-pletion and tie-in. The company certainly feels well-positioned. Chevron Canada spokesperson Leif Sollid says they are into the appraisal phase now, planning eight wells on two pads for the second half of 2014.

Encana spotted Duvernay’s potential early, too. The company started acquiring substantial acreage in 2009. “Prior to the signing of our joint venture with PetroChina, we had amassed over 460,000 acres in the play which we now jointly own with our partner,” says Encana spokesper-son Doug McIntyre. “The favourable geological qualities of the reservoir are what first attracted us to the Duvernay. Another key attribute that we look for in shale reservoirs is whether or not

they have generated hydrocarbons and sourced conventional pools. The Duvernay has sourced nearly seven billion barrels of conventional production since the 1940s. It is an established source rock within a proven trend.”

Typical well depths and horizontal lengths are similar for most operators in the liquids-rich Kaybob area. McIntyre says Encana’s ver-ticals range from 3,000 to 4,000 metres with laterals from 1,500 to 2,500 metres. “Fracture techniques are continually changing as early well results come in but high-density slickwater and hybrid fracks seem to be the new norm,” he says.

With regard to rates and decline parameters, he says they are similar to other North Ameri-can shale plays “with strong initial productions, steep first-year declines and stable terminal declines.” Free condensate yields are strong, he adds. “With a range of 45 to 300 barrels per mil-lion mcf, future wells are expected to fall within that range.”

And, despite well costs of $10-12 million (down from about $15 million earlier), at cur-rent condensate prices those kinds of produc-tion rates can pay out a well in short order. “We did economics on a look-back basis and looked at the first few wells we drilled and we are see-ing economics of 1.2 to 2.4 years payout,” says Yoho’s McLachlan. “And that’s on the first wells in the play; so they are getting better as we go.”

Figures like those keep operators looking ahead. The Duvernay is one of five high-return



REPORTSpecial

oil and liquids-rich plays on which Encana will focus 75 per cent of its capital funding in 2014, says McIntyre. “In 2014, in the northern end of the play we intend to initiate development and pad drilling, while in the southern part we will continue to work on unlocking its potential through an appraisal program (potential for 20 rigs by 2017),” he says. “Expected investment in 2014 will be approximately $250-$350 mil-lion ($500-$600 million with carry capital from joint venture partners).”

The inaugural juniors haven’t backed off either. In its Q3 report this year, Trilogy an-nounced a large portion of its capital expendi-tures will be allocated to the Duvernay play, de-spite its expected minor addition to near term cash flow. “Management believes the allocation of capital to the Duvernay will facilitate Trilo-gy’s long-term growth objectives and is a pru-dent investment of capital at this time,” quotes the report. Trilogy is planning a 2014 capital budget of $375 million, of which approximately $150 million will be allocated to the Duvernay to drill approximately 11 net wells.

Although it produces oil too, it’s mainly the liquids that the producers are craving, and even though the real economic sweet spots are yet to be defined, keeps them spending in the Duver-nay – gas sales alone would struggle to pay drill-ing costs. The long-term looks good: the market for liquids is expected to last well into the fu-ture, as oil sands expansion projected to the end

of the decade should create a ready market for condensate use as a bitumen diluent for pipeline transport. TD Canada Trust recently estimated diluent demand in Western Canada will grow to more than 900,000 bpd by 2022. With current Al-berta condensate production running at around 125,000 – less than half of present demand – there’s clearly a market for Duvernay output going forward. With supply/demand ratios like that, prices should hold and stay above crude. Drilling continues apace. In its August 2013 Du-vernay Activity Update, Peters & Co. reported that the first eight months of 2013 saw a 30 per cent increase in wells over the entire year of 2012; about 80 per cent of which were in the rich Kaybob portion. The report maintains that in order to maintain this sort of momentum to production, infrastructure challenges may come into play, however, signalling an alarm on the horizon.

Some industry players agree. “The infrastruc-ture is starting to sort itself out but it’s not ideal in there,” says McLachlan. And from Encana’s viewpoint, “Infrastructure constraints are typical obstacles when developing new plays,” McIntyre says. “Having said that, there is basic legacy infrastructure already in place across the fairway and established centres close by such as Red Deer, Fox Creek and Edson.

Apart from that, the enthusiasm for the Du-vernay seems to have no bounds. “We liken it to the Eagle Ford,” says Chevron Canada’s Sollid.

Encana will focus 75 per cent of its 2014 capital funding on the Duvernay.



PROFILEMember

By Shelley Williamson

Glenn Osmak

G

He Knows the Drill

lenn Osmak’s career path cOuld have just as easily led him down the road to practising law as becoming an engineer.

“I think the turning point was look-ing at my marks and abilities in high school and realizing that I was probably a little more technically inclined than the social sciences or the arts – or business for that matter. I was torn between the business/law school route or technical engineering,” says Osmak, who is manager of drilling and completions at Vermilion Energy.

The career choice brought the Calmar, Alberta na-tive to the University of Alberta, where he studied mechanical engineering, graduating in 1989. Then Osmak jumped at the chance to go to work for Petro-Canada – which was then a Crown corporation – in an engineer-in-training position.

“I worked in facilities engineering, production and reservoir engineering in the first two years of my ca-reer, gaining valuable experience and diverse expo-sure to three functional areas,” he explains.

In his 15 years with Petro-Canada, Osmak held various positions in areas ranging from supply chain management to offshore development and operations, at times taking him to Newfoundland and Norway before he settled into the company’s oil sands development group. After a stint there in which he helped complete Petro-Canada’s first com-mercial SAGD project in MacKay River, he moved on to Apache Canada in 2004 as a senior drilling su-perintendent, then eventually drilling manager. He spent eight years at Apache.

“Then basically there was an opportunity with Vermilion to take on a more expanded role,” Osmak says. His current position, which he started in De-cember 2012, involves surface land, road and lease construction, drilling, completions and well servic-ing activities.

“Our main operating area is in the Cynthia/Pem-bina area south and west of Edmonton,” he says, not-ing the company also has some interests in northern and south-central Alberta as well.

Vermilion is also about to embark on its first

Duvernay horizontal well, he says. “The Duvernay is quite new for us, but we do have a significant land position. We have over 300 net sections of Duvernay rights and we’re hoping it’s a big part of our organic growth in Western Canada,” he explains.

Osmak is not surprised how his career has played out. “Growing up in an area like I did, I was very close to the Leduc-Woodbend Oilfield, which is one of the biggest discoveries in Alberta,” he says. “My father worked in the energy industry and a lot of my friends’ parents worked in the energy industry, and I realized that with a mechanical engineering degree I would probably end up in the energy industry.”

He says he would recommend others with an inter-est pursue a similar technical background. “Whether it’s technical, operational, environmental or com-mercial, as engineers, we’re problem-solvers. I like the fact that even in a managerial role I still get ex-posed to operational issues every day,” Osmak says.

Now, with 25 years under his belt, he feels com-fortable giving advice to young engineers, whom he urges to gain experience in a variety of areas rather than specializing. “I would really recommend for young technical professionals now to get diverse experience because the people that have the basket with the most marketable skills are going to be the ones that are sought after.”

He also suggests joining organizations like the Canadian Association of Drilling Engineers (CADE) for chances to learn from peers and to network. “There was an opportunity to network, to attend some of the technical programs and conferences. I presented twice at CADE conferences. I’ve got some lifelong friends that I’ve met through the organiza-tion,” says Osmak, a past president of CADE.

Glenn Osmak has 25 years of experience, primarily in well construction and completions


18 january/february 2014 Well Construction Journal

C

Size Matters Trinidad leads the pack with its latest big rig, destined for drilling natural gas in B.C.’s Liard Basin

REPORTMarket

By Jacqueline Louie

algary-based drilling contractor Trinidad Drilling – whose niche is in drill-ing deep, technical wells – is designing, building and operating one of the largest,

most technically advanced land rigs in Canada. The 3,000-horsepower AC rig, which has a depth

capacity of approximately 8,000 metres, or eight kilometres under the ground, will be put to work in B.C.’s Liard Basin, drilling for natural gas that’s destined for a proposed liquefied natural gas (LNG) plant on B.C.’s west coast.

The rig – which Trinidad is building at its in-house design and manufacturing facility in Nisku, south of Edmonton – will be equipped with high-perfor-

mance drilling technology, an automated rig mov-ing system, and master controls that will be handled by a computer, instead of manually.

Above ground, the rig will stand about 56 metres tall, equivalent to a 17-storey building. It will feature a 1.25-million-pound hook load and three 2,300-horsepower pumps.

Building big rigs is “definitely a direction we see the industry going in. It’s a very important part of our business model,” says Trinidad CEO Lyle Whitmarsh.

Several years ago, Trinidad’s plan was to become a leader, he explains – not only in building and constructing, but also in operating rigs of this nature

Trinidad Drilling’s big rig Trinidad 37, at work in Alberta’s Duvernay Shale formation



“One of the reasons we believe that Trinidad was successful in being awarded the contract to build this rig was because of our history of

building this style of asset.”

– rigs that are high mobility and highly technical.Now, “people are starting to realize our model was

designed to fit this style of rig. We’re very excited that we’ve positioned the company so well in response to what we see as an evolving market in the future.”

Because this rig will be so large and so technically advanced, nothing like it currently exists, so it’s being manufactured new in order to meet the customer’s requirements. It’s the rig’s depth capability, in com-bination with its automated walking system and the controls used to operate the rig, which will make it one of the most unique, techno-logically advanced rigs in North America, Whitmarsh says.

And he believes that market demand for this type of rig can only continue to grow. “It’s an important part of the future for a lot of service companies in Canada, and Trinidad is positioned extremely well to be able to expand on that.”

Equally important are the people who will be operating the rig, Whitmarsh adds. “You have to ensure you have the right people as well. When you’re talking a rig of this magnitude, it’s really, re-ally important.”

The rig is scheduled to be completed and operating in the field by fall 2014. Trinidad – which operates approximately 130 rigs across Canada, the U.S. and Mexico – has not disclosed the rig’s cost.

The 3,000-horsepower rig “is double the size we would normally be building,” says Lisa Ciulka, Trini-dad Drilling’s vice-president of investor relations, noting that the normal type of rig that Trinidad has been building for U.S. and Canadian markets is 1,500 horsepower. “That’s the size of rig you need to drill in plays like the Duvernay and the Eagle Ford,” she explains. The rigs that Trinidad has built and put to work in the Duvernay and Eagle Ford forma-tions have an approximately 750,000-pound hook load and the ability to drill to depths of about 5,500 metres.

“One of the reasons we believe that Trinidad was successful in being awarded the contract to build this rig was because of our history of building this style of asset,” Ciulka says.

The big rig that Trinidad is drilling “is the largest rig in Canada as far as we know on land.”

The customer that has contracted Trinidad to build it is a large E&P producer, and a partner in a consortium involved in one of several potential LNG plants being proposed for development on B.C.’s west coast.

“Gas prices in North America are low, and so activity in gas drilling has been really low in the past few years,” Ciulka says. In Asia, gas prices are significantly higher, and many E&P companies in Canada are looking to drill for natural gas to ship to B.C.’s coast, where it would be liquefied and then sent on to Asia, in order to capitalize on that pricing differential.

Trinidad’s client, the E&P company, needs to start drilling for gas and start proving up its reserves, even though the plant has not yet been

approved. Once the Kitimat LNG plant is approved and built, they will need to get production onstream quickly – no small feat, since the area they’ll be drilling in is very deep, requiring anywhere

from 90 to 150 days to drill a well. This is why the customer has committed to building the big rig now, even though they don’t know if they will receive approval – because they have to start the entire process early, Ciulka says.

Under a five-year contract with the customer, Trinidad will operate the rig, which will run a mini-mum of 350 days per year – “which is pretty much unheard of in Canada,” Ciulka says, noting that a typical contract is for approximately 250 days a year. One of the reasons that Trinidad has been able to extend the drilling season with the big rig, is its moving system that will allow it to automatically skid itself from one location to the next. Trinidad expects the rig will be completed and out in the field in B.C.’s Liard Basin shale gas formation by the fall of 2014.

In addition to the rig Trinidad is building, the same customer has contracted Calgary-based oil and gas drilling contractor, Akita Drilling, to build an ultra-deep capacity pad rig and provide drilling services in Western Canada.

Assuming that Trinidad’s rig is performing well, “We have a fairly good chance of adding additional rigs,” Ciulka says. A number of compa-nies are looking at other plays in the Horn River, Duvernay and Montney, mostly driven by LNG development – and could require similar rigs to be built.

Once Trinidad’s big rig has finished its five- year contract, “It’s not going to be beached in Canada – we’ll find somewhere else to put it to work,” Ciulka says, pointing to Trinidad’s recently signed joint venture with Halliburton, which will involve moving rigs to Saudi Arabia.



D

Data Driven The oil and gas industry is increasingly on the hunt for technical well site details before dropping a drill bit

REPORTTech

By Justin Bell

ata management, using the best information for decision-making purposes, has always been important in the oil and gas industry. It should come as no surprise

that, in an increasingly data-driven world, the industry has moved in the same direction.

Wireline operators used to track the progress of wells on paper and discuss results with head office days or weeks later. Ali Khan started in the industry at a time when this was the norm. In the mid-1980s, he was a doing wireline logging

for Schlumberger in Indonesia and Australia. “Technology has since moved leaps and bounds,”

says Khan. “We used to take actual logs on paper and then process it. Those logs would be taken on a film and we would process it to make logs. Sit down with the company man and interpret those logs.”

Now Khan helps companies maximize efficiencies, often using data management, as the vice-president of sales and head of communications in energy and utilities for iGate. The company



opened an office in Calgary last January, looking to work with an oil and gas industry that increasingly seeks out technological efficiencies.

iGate, which has been in talks with both major oil and gas producers as well as smaller companies in the industry, is only one of the players in the data game.

With an expected 12,000 new wells to be drilled this year, there’s a push to use data to manage growth and predict the best place to drill. The industry as a whole is expanding and companies like iGate are pushing for a bigger part of the pie.

Pulse Seismic Inc. is buying data in order to produce seismic maps, and licensing out the information for exploration. Last year, it spent $52 million gathering data in the Duvernay play in central Alberta.

Even telecommunications giant Rogers has expanded its operations in Alberta. It will open a new, 80,000-square foot facility in Calgary in early 2014 and recently expanded its Edmonton facility. It’s all part of a $700-million, four-year expansion in Alberta to extend its cellular network into the northern reaches of the province and the oil and gas exploration it holds.

Linking those far-flung wells to major data centres gives companies like Pason a better connection to remote well sites. They provide specialized data management solutions for drilling rigs, which include data acquisition and remote communications. At its most basic level, it connects the well site to the main office.

“Satellite is ubiquitous in North America,” says Dean Tremaine, the vice-president of product development and chief technology officer for Pason. “We have augmented that with cellular where we can. I think we have got the communications piece, the link handled. The challenge comes in to how to manage technology on remote nomadic rig sites. This is where Pason’s service model shines.”

Pason deploys a number of products and solutions that link the producers and consumers of drilling data regardless of location. These solutions support collaboration by the well construction team throughout the construction of a well.

It’s an increasingly data-driven industry, with ever-increasing data points coming into the equation. Estimates from software developer and professional services firm SAP says an oil or gas well can produce upwards of a terabyte of data

every week, enough to fill up a new consumer-grade computer. But Tremaine say it really depends on where in the lifecycle you collect the data. “If you are talking about drilling data, it would be less than that. If you are starting to talk about completion data, putting fibre optics in the well bore or micro-seismic, the number is probably a lot closer to that terabyte number.”

Even with an increasingly strong data connection to northern camps, oil and gas companies need to run enterprise software and need server support on site. Bulldog Containers has been working to gain a competitive edge in the oil and gas sector with their custom-built server units, designed especially for rugged conditions in remote areas.

Built out of old shipping containers, the units are self-contained data storage and management sites, complete with their own power and air handling units and built for the rugged use at well sites. The units are skid-mounted for ease of transport and can be dropped off on site and moved quickly if the need arises.

“There’s always going to be critical infrastructure on your site that’s not network dependent,” says Doug Neetz, co-owner of Bulldog Containers. “Whatever it is, you’re going to have to have some local equipment. That goes to size of data. If the volume and quantity of data is high, you are also dependent on your network uplink.”

That sort of information can include everything from print and file servers to critical phone and radio systems. Most of its business has been in the mining industry so far, but Neetz and co-owner Vern Kasdorf are pushing into the oil and gas industry; they are already in talks with a few mid-to-large oil companies.

“The sites, especially oil and gas sites, they grow organically,” says Neetz. ”The sites get bigger and bigger. Suddenly they realize they have 20 small wiring closets. They aren’t purpose built for that.”

Bulldog Containers start at about $250,000 and run up to a million dollars, and each is built to the customer’s specifications. They can put them together in 12 weeks, but the entire process of designing a container and construction takes about a year.

It’s a big investment, but one that can centralize a company’s wellsite data management. And with ever-increasing data demands in the industry, not one that will be phased out for some time.



W

It’s Only Natural The surge in natural gas prices and emergency draws from storage are no cause for alarm, say energy experts

REPORTEnvironmental


hile North AmericAN NAturAl gAs producers experienced slight relief in higher natural gas prices thanks to a “polar vortex” that blanketed the eastern

U.S. and Canada in January, energy experts question whether the recent surge in demand may threaten the resource’s storage levels long-term.

“I think what people are looking at is that storage is much lower than what we saw last year at this time and, on average, I think we’re under the five-year average for the U.S,” says Martin King, vice-president of institutional research for Calgary’s FirstEnergy Capital Corp. “I think a lot of people are

doing the math and saying we have the potential to outstrip supply growth next year, and ultimately it all translates to higher prices. If the refill season is going to be more challenging, which it is looking like it is, prices are going to have to react to that.”

And short-term prices have certainly reacted. By early January, the AECO spot price was up to $4.35 per million cubic feet, well surpassing the average price forecast of $3.92 for 2014. A bright spot for Canadian natural gas producers, King estimates that net gas exports to the U.S. reached their highest level in three years during the first week of January, at almost 8.5 billion cubic feet a day.



But it is far from dire straits for storage levels of natural gas, which have been bolstered in both Canada and the U.S. in recent years by a flat market and shale extraction success. “I don’t think we’re ever going to reach a crisis situation,” says King. “It would have to be polar vortex euphoria for another four or five weeks yet, and that’s not going to happen.”

Bill Gwozd, senior vice-president of gas services for Ziff Energy, says natural gas storage levels are always something worth watching. “There has to be inventory in the ground to provide a certain level of withdrawal capability. If the inventory is too small, the ability of the storage fields to deliver a large amount of gas on a short-term basis doesn’t exist,” Gwozd says.

And this winter’s surge in cold – during which the Midwest and the eastern U.S. marked their chilliest temperatures in 20 years – is just the type of situation that affects short-term price, says Gwozd. “When storage levels get low, traders who buy and sell gas on the nanosecond would look to the market as an indicator of ‘is this a good thing or a bad thing?’ From their point of view, when storage dips below the normal levels, they think this is a good thing that’s going to push prices up. So as a consequence, gas prices would nudge upwards, all things being equal. How much would they nudge? It could be a penny, it could be 50 cents, it could be a dollar. In some cases it could spiral up out of control where we’ve seen prices hit double digits in very short-term operational matters.”

Paul Mortensen, director of the National Energy Board’s Energy Supply Group, likens this winter to that of 2010-2011. If the trend continues, he says to expect storage levels for North American natural gas to dip down by 15 to 20 per cent. But, Mortensen adds, things in the market have a way of working themselves out. “When we get these extreme cold spells, it’s usual that you would get the spike in prices and what that’s really doing is providing the incentive for some users to reduce their demand and that tends to be industrial users, say a fertilizer plant that uses natural gas as a feed stock,” he explains. “They would have the option to scale back production and either sell their gas at a higher price into the market or just not buy gas at a high price.”

Cold also affects natural gas coffers if the areas targeted are in producing areas, says Mortensen.

This year we have seen some of that in the Marcellus (about 500 kilometres from New York markets), but because the lion’s share of natural gas is produced in warmer climes, the “freeze-offs” have not amounted to much. “It hasn’t been that cold in Texas and the southern states, where the majority of the gas in the U.S. comes from so there hasn’t been a big disruption in supply,” he says.

Mortensen says a drop in the mercury in spring would be worse than in January in terms of effects on natural gas levels, because the system is built with colder temperatures this time of year in mind. “If you get some real cold weather late in the winter, say in March, when they’ve drawn it down to what they were expecting, then it can spike

quite dramatically there, too. That’s where it would affect storage more – either earlier than expected or later than it’s expected, and January, it’s expected,” he says.

But any spikes in price are temporary, and expected every heating season (November through March), say the experts. In fact, natural gas prices have actually dropped “by a factor of two or three over the last decade,” due to better efficiencies in drilling, points out Gwozd.

“The reason for that, the price drop, is our own geophysicists, geologists and engineers have developed this horizontal fracture technique, multi-stage fracturing, multi-legs within a well, so our technology through our own ingenuity and creativity has found ways to get more gas from individual wells and so we are not as reliant on imported LNG from other countries,” says Gwozd.

“We have more gas supply available and prices have dropped, so the lower-priced gas we have now – and it may bop around a bit, which is good and bad – but it should be bopping around at a lower level than in the past and as a consequence gas price volatility will be much smaller than in the past. So you won’t have as much price shock as in the past,” Gwozd adds.

That would be good news for Canadian gas producers, who have experienced a flat market for several years. “2014 is looking better than ’13 and ’13 was looking better than ’12, which was absolutely abysmal,” says King. “And there’s definitely going to be some more comfort with looking for a forward price curve for both NYMEX and AECO probably north of $4 for 2014. Gas producers out there are going to get some greater help out there in terms of repairing balance sheets.”

“There’s definitely going to be some more comfort with looking for a forward price curve for both NYMEX and AECO probably north

of $4 for 2014.”



Canadian Rig Counts November 19, 2013

Drilling Down Total Utilization

Alberta 222 347 569 39%

B.C. 53 20 73 73%

Manitoba 7 13 20 35%

New Brunswick 0 0 0 –

Newfoundland 0 0 0 –

Northwest Territories 0 1 1 0%

Quebec 0 1 1 0%

Saskatchewan 85 68 153 56%

Totals 367 450 817 45%Source: Divestco

NUMBERSBy the

Stats at a Glance

Alberta Rig Counts November 19, 2013


Northern Alberta 41 106 147 28%

Central Alberta 159 192 351 45%

Southern Alberta 22 48 70 31%


Top 5 Most Active OperatorsNovember 19, 2013

Active Rigs

Canadian Natural Resources Ltd. 26

Progress Energy 23

Husky Energy 21

Crescent Pt. 17

Encana Corp. 14Source: Divestco

Top 5 Most Active Drillers in Western CanadaNovember 14, 2013

Active Total

Precision Drilling Corp. 91 188

Ensign Energy Services Inc. 48 113

Western Energy Services Corp. 38 46

Savanna Energy Services Corp. 35 70

Nabors Industries Ltd. 33 64Source: FirstEnergy Capital



Canadian Rig Counts November 19, 2013


Alberta 222 347 569 39%

B.C. 53 20 73 73%

Manitoba 7 13 20 35%

New Brunswick 0 0 0 –

Newfoundland 0 0 0 –

Northwest Territories 0 1 1 0%

Quebec 0 1 1 0%

Saskatchewan 85 68 153 56%


Alberta Well LicencesApproval issued by the Alberta Energy Resources Conservation Board

Number of Licences Issued April 2013 May 2013 June 2013 July 2013 Aug. 2013

Development 265 587 380 459 572

Exploration 14 33 55 58 46Source: Alberta Department of Energy

Alberta Spudded WellsSeptember 2013

Number of Wells Spudded

2011 2012

November 971 605

December 754 363

2012 2013

January 946 1,756

February 2,021 1,705

March 980 904

April 276 153

May 374 214

June 518 246

July 702 635

August 785 773

September 784 694

October 781 605Source: Alberta Department of Energy

Top 5 Most Active OperatorsNovember 19, 2013

Active Rigs

Canadian Natural Resources Ltd. 26

Progress Energy 23

Husky Energy 21

Crescent Pt. 17

Encana Corp. 14Source: Divestco

Alberta Completed WellsOctober 2013

Number of Wells Completed

2011 2012

November 834 750

December 940 692

2012 2013

January 381 381

February 718 640

March 717 812

April 672 701

May 486 343

June 254 272

July 245 373

August 541 474

September 524 458

October 692 753Source: Alberta Department of Energy

Alberta Land SalesOctober 2013

Sept. 2013 Sept. 2012 YTD 2013 YTD 2012

Oil and Natural Gas

Land Sales $50 million $64 million $569 million $863 million

Price Per Hectare $453.46 $213.77 $337.42 $365.04

Oil Sands

Land Sales $2.3 million $1.3 million $12.3 million $9.8 million

Price Per Hectare $276.53 $551.10 $109.10 $126.55Source: Alberta Department of Energy



DEEPERDrilling


Slow and Steady

Drilling activity to remain strong in 2014, say industry experts

Early predictions are out for drilling numbers across Canada in 2014.

The Canadian Association of Oilwell Drilling Contractors (CAODC) released its

forecast at a member breakfast on November 13, projecting 124,701 operating days for contractors, based on drilling 10,604 wells in 2014. While that is 45 wells lower than the total count expected by the end of 2013, the CAODC predicts stronger activity this year, which it credits with a longer average time taken to drill a well – at 11.7 days on average – due to increasing complexity in drill-ing programs.

“Horizontal drilling has brought a new dynamic to this industry,” said CAODC president Mark Scholtz in a press release. “The Canadian rig fleet offers more deep drilling rigs than ever before.”

The CAODC predicts rig utilization will be 62 per cent (or 508 rigs) for the first quarter, 19 per cent (or 156 rigs) in the second quarter, 41 per cent (339 rigs in the third quarter and 44 per cent in the fourth (or 365 rigs). It predicts starting the year with 820 rigs, with CAODC members adding another nine throughout 2014.

Meanwhile, the Petroleum Services Association of Canada (PSAC) also released its 2014 forecast in late October, predicting a total of 10,800 wells drilled across Canada for the coming year. This assessment represents a 1.5 per cent decrease compared to PSAC’s final tally of 10,960 wells drilled for 2013.

In Alberta, PSAC predicts 6,555 wells will be drilled in Alberta, marking a less than one per cent de-crease over 2013. According to its Canadian Activity Drill-ing Forecast, PSAC estimates Manitoba’s wells to decrease by 7.7 per cent, with 480 wells in 2014, and B.C. to increase its activity by 2.2. per cent with 550 wells this year. Saskatchewan’s activity is expected to see a decline of 3.5 per cent, according to PSAC’s

prediction of 3,196 wells in 2014.Mark Salkeld, PSAC president, said he credits the

2014 drilling activity with factors including increased confidence in the market, ac-cess to capital, foreign invest-ing, and increases in skilled labourers.

Both PSAC and the CAODC predict a ramp up first quarter followed by a slower spring due to break up and steady activity throughout the remaining two quarters of 2014.

Horizontal drilling has brought a new dynamic to this industry.

the canadian rig fleet offers more deep drilling rigs than ever before.

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

Gold SponsorsGlobal Steel Ltd.

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Silver SponsorsAkita Drilling Ltd.

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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.

Gold SponsorsGlobal Steel Ltd.

NCS Energy Services

Schlumberger

XI Technologies Inc.

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

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Documents

Well Construction Journal - Jan/Feb 2014