petroleum services association of canada news winter 2011

Charitable donations and other initiatives help shine a positive light on the services sector and help organizations like STARS position themselves for success

Charitable donations and other initiatives help

GIVING AND

GETTING BACK

W I N T E R 2 0 1 1

PM#40020055

2012 DRILLING ACTIVITY FORECAST

INDUSTRY INSIGHTS

NEGOTIATING REDUCED LIABILITY

PSAC_Winter_2011_p01.indd 1 11/21/11 2:58:17 PM

9

13

FOR MORE INFORMATION:www.rogersoilandgas.ca1 877 336 1333

CANADA’S RELIABLE NETWORK

TMRogers and the Mobius design are trademarks of Rogers Communications Inc. used under license or an affiliate. All other brand names are trademarks of their respective owners. ©2011 Rogers Communications.

Rogers has the industry’s latest productivity tools for the oil and gas industryto keep you connected to your customers, suppliers and to one another.

Your people: SafeYour job site: SecureYour operations costs: Streamlined

Expanded network coverage across Alberta– You’re covered in the field and office.

Minimize fuel, repair and insurancecosts – Fleet Management

Prevent injury to field workers and increaseworker safety – GPS Lone Worker tools

Protect critical data and ensure uninterruptednetwork access – Critical Network Access

Increase data collection accuracy andreduce human error – Well Metering

Prevent theft and secure your jobsites – Security & Asset Management

000PSN.Rogers_FP.indd 1 4/28/11 3:57:48 PMPSAC_Winter_2011_p02-03.indd 2 11/17/11 2:55:54 PM

3

Features

Departments467

18

20

22

COVE

R

CONTENTSW I N T E R 2 0 1 1

THE ART OF GIVINGBeing involved in the community

and supporting various charitable

initiatives provides companies with

advantages in the marketplace

INDUSTRY INSIGHTSThoughts from Alberta’s new Premier

as the services sector looks to 2012

9

13

MESSAGE FROM THE CHAIR


IN THE FIELDNews and notes from the industry

BUSINESS MATTERSA good master service agreement can help

prevent costly problems

PSAC IN ACTIONAdvocacy and outreach initiatives from PSAC

spread far and wide

COMMUNITY MATTERSKUDU Industries Inc. pumps up community

effort when it matters most

13

9

20

WWW.PSAC.CA

18

22

FOR MORE INFORMATION:www.rogersoilandgas.ca1 877 336 1333

CANADA’S RELIABLE NETWORK

TMRogers and the Mobius design are trademarks of Rogers Communications Inc. used under license or an affiliate. All other brand names are trademarks of their respective owners. ©2011 Rogers Communications.

Rogers has the industry’s latest productivity tools for the oil and gas industryto keep you connected to your customers, suppliers and to one another.

Your people: SafeYour job site: SecureYour operations costs: Streamlined

Expanded network coverage across Alberta– You’re covered in the field and office.

Minimize fuel, repair and insurancecosts – Fleet Management

Prevent injury to field workers and increaseworker safety – GPS Lone Worker tools

Protect critical data and ensure uninterruptednetwork access – Critical Network Access

Increase data collection accuracy andreduce human error – Well Metering

Prevent theft and secure your jobsites – Security & Asset Management

000PSN.Rogers_FP.indd 1 4/28/11 3:57:48 PM PSAC_Winter_2011_p02-03.indd 3 11/21/11 2:58:57 PM

4 WINTER 2011

MESSAGE FROM THE CHAIR

T Is WITH gREaT plEasuRE that I write to you as the 2011-2012 Chair of

the Petroleum Services Association of Canada (PSAC). As PSAC celebrates its

30th year and Canada’s oil and gas industry is abuzz with activity, I am certain

the year ahead will be both exciting and demanding. The 2011-12 board of directors

represents the diversity of the upstream petroleum services sector and is stacked with

tremendous expertise that will help guide PSAC forward into the next 30 years.

PSAC is confident the coming year will be a period of growth for the organization,

our members and our industry. The plans in place are measurable and responsible,

and will be used to ensure PSAC continues to focus on the challenges confronting our

members and industry. This year, PSAC has welcomed new talent to its ranks which

will further strengthen the capacity of the team to deliver against expectations that

tend to increase in times of growth and change. We will continue to work hard to

maintain the high quality results that 30 years of standard setting performance have

provided to our member companies and their employees.

The services sector has always been counted on to support our communities by

donating time, effort and, of course, money. Giving back is a value I believe strongly in

and I want to thank each person who has taken the time and made the effort to contribute to the many

technical, educational and charitable endeavours that PSAC leads. These include initiatives like PSAC’s

standing and sectorial committees, the PSAC Education Fund, and of course, the annual STARS

and Spurs Gala presented by PSAC, which has contributed more than $4.6 million to STARS during

the past 17 years. The importance of these efforts has not diminished and I want to thank all PSAC

members for continuing to support them so generously.

We are encouraging a fresh perspective on all PSAC initiatives to find new ways to deliver what

members demand and what our industry expects. For example, new long-term communications

programs are being developed, while at the same time we are working to address pressing issues like

the current labour challenges. PSAC requires agility and steadiness to cushion any bumps in the road,

and that requires a balanced approach to operations and long-range planning. While Canada’s oil and

gas industry showed an unparalleled resilience to the economic downturn that continues to shackle

other industries and world economies, we cannot dismiss the murmurs of a recession 2.0, and as you

would expect, PSAC will continue to operate in a financially prudent manner.

Today, we collectively find ourselves with the world spotlight shining brightly on Canada and the

story to be told is a positive one for the services sector. Over the coming year, we will work to help

promote PSAC member companies since improvements in the productivity and environmental

performance of the industry are directly tied to the innovation that is happening in the services sector.

The year ahead will also focus on enhancing communications to increase the profile of PSAC and its

members with our industry peers, government and the public. We consider this to be so important

that it has been articulated into a new organizational value for PSAC.

While in many ways PSAC’s 30-year track record has achieved our vision of being the recognized

voice of Canada’s upstream petroleum services sector, there is still work to be done to strengthen

relationships with members and all key stakeholders. Our members’ voice, which is PSAC’s voice, can

always be louder, stronger and more unified. Thank you for 30 years of tremendous support, we are

eager to begin charting the next 30 years ahead!

Sincerely,

Mike Edmonds PSAC Board Chair

Building on a Successful History

I

pETROlEuM sERvIcEs NEWs

Mike Edmonds, psac Board chair

PSAC_Winter_2011_p04-05.indd 4 11/17/11 2:57:25 PM

WWW.PSAC.CA 5

WINTER 2011 VOL 11 • No.3

PETROLEUM SERVICES ASSOCIATION OF CANADA 1150 800 6TH AVENUE SW

CALGARY, AB T2P 3G3TEL: 403.264.4195FAX: 403.263.7174

PRESIDENT AND CEO: MARK SALKELDDIRECTOR OF COMMUNICATIONS: KELLY MORRISONCOMMUNICATIONS COORDINATOR: LINDA ALDRIDGE

PETROLEUM SERVICES NEWS IS PUBLISHED FOR PSAC BY

VENTURE PUBLISHING INC. 10259-105 STREET,

EDMONTON, AB T5J 1E3TEL: 780.990.0839FAX: 780.425.4921

TOLL-FREE: [email protected]

PUBLISHER: RUTH KELLYASSOCIATE PUBLISHER: JOYCE BYRNEMANAGING EDITOR: STEVE MACLEODEDITORIAL INTERN: JESSE SNYDER

CONTRIBUTING WRITERS: MICHELLE LINDSTROM, ERIC ASTLEYART DIRECTOR: CHARLES BURKE

ASSISTANT ART DIRECTOR: COLIN SPENCEGRAPHIC DESIGN INTERN: ANDREA DEBOERPRODUCTION MANAGER: VANLEE ROBBLEE

PRODUCTION COORDINATOR: BETTY-LOU SMITH DISTRIBUTION: JENNIFER KING

ACCOUNT EXECUTIVES: LISA RICHARDS, DENNIS MCCORMACK

PRINTED IN CANADA BY RHINO PRINT SOLUTIONS. RETURN UNDELIVERABLE MAIL TO 10259 105 ST. EDMONTON AB T5J 1E3.

[email protected] • PUBLICATIONS AGREEMENT #40020055 CONTENTS © 2011 PSAC. NOT TO BE REPRINTED OR REPRODUCED WITHOUT PERMISSION.

The Petroleum Services Association of Canada is the national trade association repre-senting the service, supply and manufacturing sectors within the upstream petroleum industry. PSAC represents a diverse range of over 250 member companies, employing more than 58,000 people and contracting almost exclusively to oil and gas exploration and production companies. PSAC member companies represent over 80 per cent of the business volume generated in the petroleum services industry. Better than anyone else!

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6 WINTER 2011 PETROLEUM SERVICES NEWS

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000PSN.Enform_1-2H.indd 1 7/26/11 1:25:11 PM

HE PETROLEUM SERVICES Association of Canada

(PSAC) 2012 Canadian Drilling Activity Forecast predicts a

total of 15,100 wells drilled (rig released) across Canada for

2012. This is 10 per cent more than the expected fi nal tally of 13,700 for 2011.

“Drilling activity levels are increasing,” says Mark Salkeld, president

and CEO of PSAC. “Generally, activity continues to increase across

all major activity areas and we are optimistic that activity is going to

continue to rise in the years ahead.”

PSAC is basing its 2012 Forecast on average natural gas prices of

CDN$3.50/mcf (AECO) and crude oil prices of US$85.00 barrel (WTI).

“We all know that oil and gas activity is predicated on price,” Salkeld

says. “In 2012, oil prices will be adequate to sustain oil drilling related

activity. As a result, we are forecasting an increase in drilling for oil in

regions like central and southern Saskatchewan and northeast Alberta.

Gas pricing, on the other hand, remains relatively low and we are not

expecting any signifi cant gas price turnaround in 2012. Thus we are

expecting to see 80 per cent of wells drilled in the basin be oil and liquids

rich gas wells. This compares to an expected 74 per cent of drilled wells

being focused on oil in 2011.”

Looking Well for the Oilpatch

TPSAC FORECASTS INCREASED DRILLING ACTIVITY IN 2012

“We were being conservative in our forecast for 2012 because of

restrained capacity due to labour and equipment shortages,” Salkeld

adds. “Now more than ever, industry and government have got to come

together to address the pressing issues constraining productivity and the

labour issue is not going away.”

Alberta: 8,390British Columbia: 700Saskatchewan: 3,075Manitoba: 550Canadian Total: 12,750

13, 000

12, 000

11, 000

10, 000

9, 000

8, 000

7, 000

6, 000

5, 000

4, 000

3, 000

2, 000

1, 000

0

BRITISH COLUMBIA: 554

NUM

BER

OF O

IL W

ELLS

TOTAL IN CANADA: 12,950

2011 DRILLING ACTIVITY FORECAST(NUMBER OF WELLS)

ALBERTA: 8,732

SASKATCHEWAN: 3,043

MANITOBA: 587

GRAPHHed: 2011 Drilling Activity Forecast (number of wells)

British Columbia: 554Alberta: 8,732Saskatchewan: 3,043Manitoba: 587

Total in Canada: 12,950

BRITISH COLUMBIA: 640

ALBERTA: 9,255

SASKATCHEWAN: 4,650

MANITOBA: 525

TOTAL IN CANADA: 15,100



WWW.PSAC.CA 7

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The emPloyeeS of CCS CorPorATion banded together to

raise $50,000 in support of the rebuild effort underway in Slave Lake

and surrounding communities. The funds were generously matched

with a corporate grant from CCS’s community investment fund.

The money raised will be used to help complete the construction of

Slave Lake’s new hockey arena, as funding for the project had been

redirected in the immediate aftermath of the fires that ravaged the

town in May.

in The field News, events and activities in the industry

PSAC Members Helping to Build Vibrant CommunitiesDoug JourneAy JoinS the Petroleum Services Association of Canada

(PSAC) as the new Executive Assistant. Doug will provide day-to-day

administrative support and office management to the Association. Doug

comes to PSAC from the financial services industry after 15 years, where he

was responsible for office management and network support.

Linda Aldridge also recently joined PSAC as the new Communications

Coordinator. Linda has several years experience in marketing and

communications, supporting major events and campaigns. Her primary

responsibilities include developing marketing and communications materials

supporting events, and stakeholder relations with a focus on member relations.

The PSAC Team is Growing

COMinG eVenTS

STARS & Spurs Gala presented by PSACJanuary 21, 2012

BMO Centre, Stampede Park ,

Calgary, Alberta

PSAC 2012 Spring ConferenceApril 17 & 18, 2012

Capri Hotel & Convention Centre

Red Deer, Alberta

PSAC Mid-Year luncheonApril 2012

Calgary, Alberta

For more information on all PSAC events,

visit www.psac.ca/events

neW MeMBeRS

Regular MembersBig Eagle Services

Enerbuilt Technologies Inc.

Entrec Transportation Services Ltd.

Sabre Well Servicing Inc.

Stimsol Canada Inc.

Summit Liability Solutions Inc.

Warrior Manufacturing Services Ltd.

Wrangler Rentals Ltd.

Associate MembersDCO Risk

Deloitte

FPI Marketing

Grant Thornton LLP

Patching Associates Acoustical Engineering Ltd.

Vada Capital


1817 10th Avenue SW Calgary, AB T3C 0K2 Telephone (403) 266-4094 Fax (403) 269-1140

Docket: 33656 Due Date: Nov.10.10 Client: ATB Description: Corporate Financial Services Ad: SanjelSize: 8.25"x10.75" (8.75" x 11.25" bleed) Insertion Date: Winter Issue Publication: PSCA News Colour: cmykAccount Ex: N.Moe Designer: S.Shymko Production: B.Pfleger

COMPANIES THAT RESPOND NEED COMPANIES THAT RESPONDLike Sanjel, more and more of Alberta’s top companies want ATB as their financial partner. ATBresponds.com

Response. Results.

®ATB Corporate Financial Services is a registered trademark of Alberta Treasury Branches.

000PSN1.ATB_FP_wBL.indd 1 11/10/10 2:38:20 PMPSAC_Winter_2011_p08-11.indd 8 11/17/11 2:58:51 PM

9WWW.PSAC.CA

Givingnon-profi t, charitable organization, STARS has been providing helicopter emergency medical transport for more than 25 years. Since its fi rst mission in 1985, STARS has carried out over 21,000 missions and now provides coverage to 94 per cent of Alberta’s

population. After 26 years of service in Alberta, STARS is broadening its horizons to offer services in Saskatchewan and Alberta. A new base in Regina is expected to open in April 2012, followed by Saskatoon in the late fall of 2012. STARS is also currently on a contract extension with the Manitoba government stemming from the fl ood response in the spring and is working with the government toward a long-term agreement.

Over the next few years, STARS plans to add two new AugustaWestland

139 (AW139) helicopters to its fl eet in Alberta. The new helicopters fl y

faster and further than the organization’s current helicopters and have the

COMMUNITIES BENEFIT FROM THE SUPPORT OF CANADA’S SERVICES SECTOR AND MORE CORPORATIONS ARE FINDING THOSE CHARITABLE ACTS HELP SUPPORT THEIR BUSINESS

A

Gift

space to care for two patients at a time. Each new AW139

helicopter has a $15 million price tag attached to it, this

includes the highly specialized medical interior required to

provide critical care to patients. As there are also signifi cant

costs associated with mission operations, fundraising

is an essential activity of the organization. “We have a

need for both operational and capital funding,” says Dr.

Greg Powell, founder and CEO of STARS. “Corporate

support, particularly from the oil and gas industry, has

been important for both, and has signifi cantly funded the

capital portion which is mainly our helicopters.”

Providing emergency medical services in remote

areas has earned STARS the support of the Petroleum

Services Association of Canada (PSAC). Many

worksites in the oil and gas industry are in remote

areas and not easily accessible by road or hours away

from local emergency personnel. STARS has become

an important safety net for the services sector.

GivingGivingGivingGivingGivingGivingGivingGivingTHE

THATKEEPS ON

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IE

1817 10th Avenue SW Calgary, AB T3C 0K2 Telephone (403) 266-4094 Fax (403) 269-1140

Docket: 33656 Due Date: Nov.10.10 Client: ATB Description: Corporate Financial Services Ad: SanjelSize: 8.25"x10.75" (8.75" x 11.25" bleed) Insertion Date: Winter Issue Publication: PSCA News Colour: cmykAccount Ex: N.Moe Designer: S.Shymko Production: B.Pfleger

COMPANIES THAT RESPOND NEED COMPANIES THAT RESPONDLike Sanjel, more and more of Alberta’s top companies want ATB as their financial partner. ATBresponds.com

Response. Results.

®ATB Corporate Financial Services is a registered trademark of Alberta Treasury Branches.

000PSN1.ATB_FP_wBL.indd 1 11/10/10 2:38:20 PM PSAC_Winter_2011_p08-11.indd 9 11/17/11 2:59:11 PM


PSAC and STARS put together their fi rst fundraising

event in support of STARS 18 years ago. During

the ensuing years, the annual STARS & Spurs Gala

presented by PSAC has become the most attended

fundraising event in STARS’s history, averaging about

1,000 people each year and raising $4.6 million during

the nearly two decades of collaboration between the

two organizations. As a result of the ongoing support,

a decal of PSAC’s logo is emblazoned on the side of the

STARS helicopters, alongside other substantial donors.

STARS also supports donors by visiting communities to

participate in company safety exercises.

While PSAC supports STARS because of the important

emergency medical services it provides, being able to

promote the collaboration and getting recognized for the

support is important for PSAC and its member companies.

“We are privileged to partner with community-minded

organizations like PSAC and its members who are

committed to the health and well-being of their employees

and the communities where they operate,” Powell says.

With more than 2,000 employees in about 80

communities across Canada and the U.S., Newalta has

to balance the personal and family priorities of a lot

of people. The Calgary-based waste management and

recovery business focuses much of their community

initiatives on wellness and education. “All of it is

about building a better world and building a better

future,” says Terry Donaleshen, Senior Vice President

of Organization Development with Newalta. “From

there it depends on charities and areas of need.”

Whether it’s local, national or international, Newalta

has broken down its corporate social responsibility

initiatives into four key areas: supporting the United

Way and UNICEF, community health and well-being,

environment and recreation, and arts and culture.

“We want to be respectable citizens and a respectable

company in the community,” says Donaleshen. “It helps create a healthy

community employees are proud of and want to live in; and it makes us

viewed as a good company to have in the community.”

For many years, Newalta kept these initiatives to themselves. Then, two

years ago the company began documenting all their community initiatives

as part of their Sustainability Report. “We had quietly done our thing

without a lot of fanfare,” Donaleshen says. “Our take was to begin talking

about it as one of our core values. This is a way to communicate, reinforce

and support what we do for our shareholders, employees, regulators and

clients. It’s about getting the Newalta story into the marketplace.”

The written report provides stakeholders with a “statement of

accountability” and is a good resource to understand what the company

is doing in different markets. The Sustainability Report has also played

a role in helping Newalta expand its investor base. “It has allowed us

to be included in green or environmental funds, which is important in

Europe,” Donaleshen says.

As well as allowing Newalta to attract investment, community

involvement allows the company to engage with the residents who live

where the company operates and Donaleshen says, “When reaching out to

communities we can talk about our business, our plans and why we’re a

different kind of company.”

Companies that embrace community investment and develop

employee giving programs develop a long-term competitive advantage

in attracting talent – these programs strengthen brand positioning and

provide additional value, which are a big factor in retention of employees.

In 2008, PwC Global polled more than 4,000 university graduates from

40 different countries as part of PwC’s Millenials at Work Survey. The

results showed 88 per cent of respondents would choose an employer

with corporate social responsibility values that refl ected their own.

Alternatively, 86 per cent of respondents said they would consider leaving

an employer whose corporate social responsibility values didn’t match

their own. The reality is that in a few short years, this generation will

form the bulk of the workers and available labour pool.

Cheryl Knight, Executive Director of the Petroleum Human Resources

Council of Canada, says that as the industry continues to be involved in

more small communities, corporate social responsibility has become a

signifi cant business driver.

“Employees make choices about what companies and communities they join

based on personal and family values,” Knight says. “Employers just simply need

to broaden their approach and look at it as a more holistic way to attract people.

Employees are more than the person coming to work. They have personal and

family interests, and employers need to engage all of those things.”

Deciding to become involved in the community is the fi rst step, but

a company also needs to fi gure out how to focus their efforts. Knight

says many companies survey their employees to get a feel for how they

would like to participate in the community, but some common initiatives

are: sponsoring sports teams, athletic programs or recreation facilities;

initiatives helping families; cultural organizations; and charitable

organizations that provide funding for different initiatives.

But Knight says companies do need to be careful not to force their

values or participation onto employees. “The more employees can make

choices, the happier they are,” she says. “You have to be careful not to

steer too much towards company choices. You have to respect that people

have personal and family priorities.”

JAQ

UE

LIN

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EA

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the nearly two decades of collaboration between the

two organizations. As a result of the ongoing support,

a decal of PSAC’s logo is emblazoned on the side of the

DROP-IN CENTRE: Newalta employees are always cooking up ways to support the community.


WWW.PSAC.CA 11000PSN.Nexus_1-2H.indd 1 10/25/11 1:45:47 PM

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WWW.PSAC.CA 13

THE 2011 ANNUAL GENERAL MEETING OF THE PETROLEUM SERVICES ASSOCIATION OF CANADA SERVED AS AN OCCASION TO CELEBRATE THE PAST AND SET THE COURSE FOR FUTURE ACCOMPLISHMENTS

HE 2011 AGM marked PSAC’s 30th year with many

accomplishments to celebrate over its three decades

representing the interests of the petroleum services sector.

Highlights included the introduction of incoming Chair for

2011-2012, Mike Edmonds, and the presentation of Distinguished Service

Awards and Long-standing Member Awards to more than 80 individuals

and companies for their enthusiastic commitment and participation in PSAC

initiatives. Outgoing Chair, Brian Coston, discussed the many outstanding

accomplishments PSAC achieved during his tenure and members reviewed

fi nancial statements and elected new PSAC board members.

2012 CANADIAN DRILLING ACTIVITY FORECAST AND INDUSTRY OUTLOOKIndustry experts presented PSAC’s 2012 Canadian Drilling Activity Forecast

to a full house at the TELUS Convention Centre on November 3, 2011. PSAC

President Mark Salkeld notes, “Our forecast is positive but conservative

because of restrained capacity due to labour and equipment shortages.”

See page 6 for more details.

INDUSTRY INSIGHTS DINNER Premier Alison Redford and industry leaders marked PSAC’s 30th

anniversary at its annual Industry Insights Dinner – Moving Towards

New Horizons. With many accomplishments achieved over PSAC’s three

decades and with the release of an optimistic 2012 Drilling Activity

Forecast, there was much to be celebrated at this year’s event.

Premier Redford honoured the industry in her address and touched

upon the importance of the petroleum services sector to the Albertan

and Canadian economies. “I am committed to work in partnership with

industry,” commented Premier Redford. “Alberta has much to be proud

of, and that message needs to be heard.” Redford says. The Premier also

noted that the Government of Alberta has made it a priority to work with

the petroleum services industry to tackle issues related to competitiveness,

productivity and labour.

“We are pleased that the Premier has committed to working together with

PSAC and the industry as a whole,” says Mark Salkeld, president of PSAC.

“As Canada moves towards mapping a national energy strategy, it will be

imperative that government and industry work alongside one another. We

30 YEARSCELEBRATING

T

feel strongly about the leadership role that the

Province of Alberta will take in that dialogue, and

we look forward to seeing what changes the new

Premier will usher in supporting the leadership

position of the province.”

Highlights of the evening included the

introduction of PSAC’s new Board of Directors,

including Board Chair Mike Edmonds, President

of Import Tools Corp. Ltd. “It is an honour to be

taking on the position as Board Chair for PSAC

this year,” explains Edmonds. “In 30 years, PSAC

has accomplished a great deal and I strongly

support the organization and the value it delivers

to its members.”

DRILLING FORECAST: PSAC estimates a total of 15,100 wells drilled (rig released) across Canada in 2012.

AARON PARKER

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Another highlight included the presentation of the PSAC Chairman’s

Award to Ray Frehlick, President of Prairie Mud Services. A long-time

PSAC supporter, Ray has actively promoted PSAC in Saskatchewan giving

PSAC the opportunity to connect with current and prospective members.

Keynote speaker Robert Johnston, director of the Global Energy and

Natural Resources Practice at Eurasia Group, highlighted some of the

emerging global trends and risks, including an outlook for the Keystone

XL pipeline approval process and the impact of unconventional gas

drilling on global markets. “The story of unconventional gas is not just a

Canadian story, but a global one which was created by the expertise and

leadership here in this room,” explains Johnston.

To read more about PSAC’s year in review, please access the 2011

Annual Report at www.psac.ca.

Not yet a PSAC Member? Join today by visiting www.psac.ca.

PSAC THANKS OUR SPONSORS FOR THEIR GENEROUS AND ENTHUSIASTIC SUPPORT OF OUR EVENTS:

Canadian Drilling Activity Forecast Session Sponsor: Probity Capital (include logo)

Industry Sponsor: JuneWarren-Nickle’s Energy Group (include logo)

tMNP LLP (include logo),

SAIT Polytechnic (include logo)

DISTINGUISHED SERVICE AWARD RECIPIENTS

Gail Purdy, NOV - Distribution Services GroupBrian Coston, Canamara United SupplyRhys Renouf, KPMG LLPLucas Mezzano, DYNAenergetics Canada Inc.Fred Farmer, Halliburton Group CanadaLee Emond, Import Tool Corp. Ltd.Clyde Bonnell, National Oilwell Varco - Distribution ServicesRon Logan, Strike Energy Services Inc.David McHattie, Tenaris Global Services (Canada) Inc.Travis Strube, Topco Oilsite Products Ltd.Brian Farmer, Trojan Safety ServicesGarry Lane, retired Renee Vanderwolf, National Oilwell Varco - Varco Canada Ltd.Kevin Crumly, Trican Well Services Ltd.Ross Whelan, High Arctic Energy Services

Canadian Drilling Activity Forecast Session Sponsor:

PSAC THANKS OUR SPONSORS FOR THEIR GENEROUS AND ENTHUSIASTIC SUPPORT OF OUR EVENTS:

Industry Sponsor:

Industry Insights Dinner Co-Sponsors:

Premier Alison Redford

Outgoing Chair Brian Coston presents the PSAC Chairman’s Award to Ray Frehlick, President of Prairie Mud Services.

Robert Johnston, Director of Global Energy and Natural Resources Practice at Eurasia Group

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Calmena Energy Services Inc.Cathedral Energy Services Ltd.CIMARRON Engineering Ltd.Dresser-Rand Canada Inc.Enersul Inc.Essential Energy Services Ltd.Lorick Corrosion Inc.Premier Integrated

Technologies Ltd.PROMORE, a Division of Core

Laboratories Canada Ltd.

Recon Petrotechnologies Ltd.Redline Well Control Inc.Select Energy Systems Inc.Silverline Oil Tools (668961

AB Ltd.)Tesla Exploration Ltd.Trojan Safety ServicesWelltec Canada Inc.Withers LP

PSAC 2011 LONG-STANDING MEMBERS

5 YEARS

BJ Tool Services Ltd.C-Tech Oilwell Technologies Inc.Grant Production Testing

Services Ltd.Innicor Perforating Systems

Inc.Ketek Group Inc.Premay Equipment LP

Prodrill Fluids TechnologiesPulse Seismic Inc.Pure Energy Services Ltd.Savanna DrillingSavanna Energy Services

Corp.Savanna Well ServicingTestAlta

10 YEARS

6607063 Canada Inc./Winalta Transport

Cameron Canada CorporationCCS CorporationKatch Kan LimitedKudu Industries Inc.

MRC Midfi eldNabors CanadaPeak Energy Services TrustRyan Energy TechnologiesXL Perforating Partnership

15 YEARS

Hollimex Products (Division of Diversity Technologies Corp.)Swanberg Bros. Trucking L.P.Tucker Wireline Services Canada Inc.

20 YEARS

Trican Well Service Ltd.25 YEARS

Argus Machine Co. Ltd.BJ Services Company CanadaCanamara United Supply

(Division of Diversity Technologies Corp.)

CE Franklin Ltd.Guardian, A ShawCor CompanyHalliburton Group CanadaImport Tool Corp. Ltd.M-I SWACO, A Schlumberger

Company

National Oilwell Varco - Distribution Services Group

Newpark Canada Inc.Pajak Engineering Ltd.Rig Service Tools Ltd.Schlumberger Canada LimitedShaw Pipe Protection Limited,

A ShawCor CompanyTopco Oilsite Products Ltd.Weatherford Canada

Partnership

30 YEARS

5 YEARS

10 YEARS

15 YEARS

20 YEARS

25 YEARS

30 YEARS



Risky Business

I

ADVICE TO KEEP YOU FROM CRUMBLING UNDER THE WEIGHT OF ONE-SIDED MASTER SERVICE AGREEMENTS

N THE GRAND OLD DANCE between oil patch operators and

petroleum services providers, master service agreements (MSAs) can

present signifi cant risks to providers. Brian Davison, Partner with

Calgary law fi rm Davison Worden Mather LLP, points out that signing

an MSA can mean betting the farm – or perhaps, the drilling rig. “MSAs are put

together by oil companies on terms and conditions they want, and they’re very

one-sided,” says Davison, who authored an MSA document for the Petroleum

Services Association of Canada (PSAC). MSAs put forward by operators can

contain clauses that place potentially ruinous responsibility on service providers

for things like environmental cleanup and various kinds of negligence. “Our

service companies are chasing work, and they’re afraid that if they don’t agree

to what the operator wants then they’re never, ever going to work again,” says

Davison. “The reality is that if they accept a one-sided master service agreement

and something goes wrong, they’re never, ever going to work again anyway,

because they’re going to be bankrupt.”

Strategizing and negotiating MSAs is even more of a pressing issue

as, according to Davison, unbalanced agreements are on the rise in the

petroleum services industry. “The biggest problem I have is the shifting

contract landscape,” he says. “What we are seeing now is a shift or

resurgence by the operators to push liability for things that should remain

on their plate over to the service providers.”

The status of the labour market can colour negotiations with operators.

Shortages of skilled labour favour service providers, while surpluses

favour operators. “The playing fi eld, whether it fl ips to the operator side

or to the contractor side, is all governed by the state of the industry,”

Davison says. He estimates the market is roughly balanced at present,

but expresses hope a busy winter will create better conditions for service

providers. Of course, if the global economy continues to wobble in such

alarming fashion, it might depress overall demand for oil, strengthening

the side of operators in MSA agreements. “Things look really good in

Alberta,” says Davison, “but they don’t look very good in the rest of the

country.” To help maintain the balance, Davison offers some advice.

A LITTLE INSURANCEInvestigate insuring the risks mentioned in the agreement. “All of

these risks that our people are being asked to assume, you’ve got to fi nd

out whether or not you can get insurance for those,” Davison says. “See

if the risks that they’re asking you to assume can be covered by your

insurance, and if so, what the cost is.”

THE RIGHT LEVELIt is important to assess the risks themselves to determine their

potential penalties. “If it’s high-risk work fraught with responsibility or

unknowns, why should we accept those risks?”

asks Davison. “If it’s low-risk, maybe you’re

prepared to accept those responsibilities.”

A SHARED MODELOne way to work towards an equitable

distribution of risk in an MSA is a “knock for

knock” provision. “Some of the risks you’re

being asked to assume, it would be fair that the

operator also assumes those,” explains Davison.

This can involve each party listing the other on

their respective insurance policies.

WALK THE WALKService providers should keep in mind that

breaking off negotiations is always an option if

they’re uncomfortable with the risks involved

in an MSA. “Consider if you’re prepared to bet

the farm or bet your kid’s college education on

doing the work,” Davison says. This strategy

does run the risk of burning bridges, alienating

operators and eliminating future work, but

according to Davison, if an operator isn’t willing

to negotiate it will likely be to their disadvantage

in the long-term. “To say, ‘It’s our way or you

never work for us,’ is probably not a very mature

attitude,” Davison says. “It’s not something that’s

going to stand them in good stead for very long.”

LAWYER UPFinally, the single best tip, according to Davison,

is to run any prospective MSA by the assiduous

eyeballs of some trusted legal counsel. “The old

adage is when you get these MSAs, run them past

your friendly lawyer and get some advice,” he says.

“I remember the Fram Oil commercials when I

was a kid that said, ‘You can pay me now, or pay

me later.’ That adage rings true when you’re dealing

with master service agreements.”

BY ERIC ASTLEY

BUSINESS MATTERS

Trusted Advisers to Canada’s Energy Services Sector

© 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

kpmg.ca

Michael McKerracherNational Energy Leader(403) 691 [email protected]

Rhys RenoufNational Leader, Energy Services(403) 691 [email protected]

Dan AdamsKPMG Enterprise Leader, Calgary(403) 691 [email protected]

000PSN.KPMG_FP.indd 1 10/25/11 1:42:25 PMPSAC_Winter_2011_p18-19.indd 18 11/21/11 3:03:32 PM

WWW.PSAC.CA 19

Trusted Advisers to Canada’s Energy Services Sector

© 2011 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

kpmg.ca

Michael McKerracherNational Energy Leader(403) 691 [email protected]

Rhys RenoufNational Leader, Energy Services(403) 691 [email protected]

Dan AdamsKPMG Enterprise Leader, Calgary(403) 691 [email protected]

000PSN.KPMG_FP.indd 1 10/25/11 1:42:25 PMPSAC_Winter_2011_p18-19.indd 19 11/17/11 3:03:30 PM


PSAC MEETS WITH NEW FEDERAL MINISTER OF NATURAL RESOURCES CANADAPSAC met with federal Minister of Natural Resources Joe Oliver to

present the fi ndings from the PSAC commissioned CERI and Mission

Capital studies showing the economic contributions of the upstream

petroleum industry. The meeting provided the opportunity for PSAC to

provide Minister Oliver with critical information for understanding the

size and diversity of the services sector, and the current issues creating

challenges for PSAC members. PSAC also met with Tim Norris who is the

Director of Policy in the Minister’s offi ce.

PSAC MEETS WITH MINISTER OF INTERNATIONAL TRADE AND ASIA-PACIFIC GATEWAYPSAC staff and CEOs from several Canadian oil and gas service and

manufacturing companies were invited to a closed roundtable meeting

with Ed Fast, Canada’s Minister of International Trade and Minister

for the Asia-Pacifi c Gateway, to discuss current challenges, issues and

opportunities for Canadian fi rms to expand and compete in foreign

markets. Follow-up meetings will be organized to further the discussions

around issues impacting PSAC member companies and to continue

developing resources to help companies access key foreign markets.

PSAC PARTICIPATES IN THE DEVELOPMENT OF AN ALBERTA NATURAL GAS STRATEGYIn July and August, PSAC participated in workshops regarding a future

Alberta Natural Gas Strategy. The workshops were hosted by the

Government of Alberta and attended by a broad-based group of industry

representatives. The government will be compiling an initial report that

will take account of the issues facing the industry and recommendations

to deal with key issues that were discussed at the workshops. An offi cial

report of the fi ndings from the roundtable discussions will be provided to

the general public.

PSAC MEETS WITH MINISTER SNELGROVE ABOUT THE ELIMINATION OF TEFU/PROPPSAC, together with two PSAC member companies and representatives

of the Canadian Association of Oilwell Drilling Contractors(CAODC),

met with Lloyd Snelgrove, the then Alberta Minister of Finance and

Enterprise regarding the elimination of TEFU/PROP rebates in the

Alberta government’s 2011 spring Budget.

PSAC ATTENDS ROUNDTABLE WITH FEDERAL MINISTER GOODYEARPSAC attended a roundtable discussion with Gary Goodyear, Minister

of State (Science and Technology), Industry Canada. PSAC provided an

overview of the petroleum services sector and highlighted the research

and development (R&D) being done by PSAC members. In addition, the

group discussed ways of increasing the levels of R&D in Canada and how

to improve access to current incentive and funding programs for R&D.

PSAC MEETS WITH FEDERAL MINISTERS TO DISCUSS THE EMERGING LABOUR CRISIS FACING INDUSTRYPSAC met with federal Minister of Citizenship, Immigration and

Multiculturalism Jason Kenney and federal Minister of Public Works

Rona Ambrose to discuss Canada’s services sector and key issues

related to labour and immigration. Another meeting between industry

associations, Minister Kenney and federal Minister of Human Resources

and Skills Development Diane Finley took place in October to further

discuss policy alternatives and other solutions for the increasing shortage

of skilled labour.

PRE-DRILLING SEASON MEETINGApproximately 40 member company representatives attended PSAC’s

12th annual Pre-Drilling Season Meeting in Fort St. John, B.C. this fall.

Presentations were made by WorkSafeBC, the local RCMP detachment,

Commercial Vehicle Safety and Enforcement and the B.C. Safety

Authority.

PSAC LAUNCHES PRESIDENT’S ROUNDTABLE SERIESThe fi rst PSAC President’s Roundtable took place in Ft. St. John, B.C.

in September. Hosted by Mark Salkeld, president and CEO of PSAC,

member company representatives joined Mark for an open discussion

about PSAC’s advocacy efforts. Roundtable events are being organized

throughout 2011-2012 in communities across B.C., Alberta and

Saskatchewan.

ALBERTA IS ENERGY PRESENTATION IN DRAYTON VALLEYIn order to support the Alberta is Energy initiative, PSAC President

Mark Salkeld made a presentation to the Drayton Valley Chamber

of Commerce. Facts about Canada’s energy industry were discussed

in order to further residents’ knowledge of the positive impacts of

the industry. Read more about Alberta is Energy and the important

contributions the oil and gas industry makes in the lives of Albertans at

www.albertaisenergy.ca.

PSAC IN ACTIONTHE PETROLEUM SERVICES ASSOCIATION OF CANADA CONTINUES TO KEEP THE SERVICES SECTOR FRONT AND CENTRE THROUGH ADVOCACY AND OUTREACH

Elizabeth Aquin, Senior Vice President of PSAC and federal Minister of International Trade Ed Fast.


WWW.PSAC.CA 21

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S

KUDUKUDOS FOR

Kudu CEO Ray Mills travelled to Slave Lake to present employees with money raised by the rest of the company. From left are Jesse Potvin, Josh Boissonneault, Joel Blanchette, Ray Mills and Darin Busk. Another Kudu Slave Lake service centre employee, Joseph Mentzelopoulos, is missing from the picture.

LAVE LAKE’S MID-MAY WILDFIRE was

an unexpected disaster, but the tragedy brought

people and organizations together to support the

northern Alberta town’s 7,000 residents. Kudu

Industries Inc., a progressing cavity pump manufacturer,

was one of those supportive organizations that raised

money and community spirit, while helping their five Slave

Lake-based employees.

Kudu undertook three initiatives. The fi rst was to donate

$5,000 to the Red Cross immediately after news spread of

the fi res. They urged other companies to donate as well. Alex

Damnjanovic, Kudu’s COO, says the company’s thinking

was, “Let’s challenge our peers and create a bit of a contest

out of this.”

Secondly, Kudu created a “donation bucket” in its Calgary

offi ce. Employees dropped whatever they could in the bucket

for roughly a month and then the company matched the

donations dollar for dollar. The total came just shy of $27,000.

“For the size of the company that we are, it was a very generous

donation by everyone,” says Damnjanovic. Approximately fi ve

weeks after the wildfi res, Kudu’s CEO Ray Mills presented the

money raised to the fi ve Slave Lake service centre employees in

their hometown.

Thirdly, Kudu’s Slave Lake employees were told not to

worry about their paycheques. Many of them are paid

hourly and therefore, time missed at work directly affects

their income. They were told, “Right now just focus on that

you’re in a safe place and get some information so you know

what’s going on,” Damnjanovic says. “To take one thing off

their minds, it was a small thing that we could do.” And it’s

the small things, especially in times of need, that count.

Damnjanovic says, “It was just a combination of all those

little things that encouraged people and kept people positive

at a time when things were quite bad.”

COMMUNITY MATTERS

CALGARY-BASED SERVICES COMPANY STEPS UP FOR A SMALL TOWN AND EMPLOYEES IN NEED

BY MICHELLE LINDSTROM

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Looking to relocate or expand your operation?Consider Balzac – home of the world-class CrossIron Mills shopping centre, and one of Alberta’s most dynamic areas of commercial and industrial development.

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Sowing the Seeds of Success

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petroleum services association of canada news winter 2011

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