well construction journal - july/august 2014

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  • The official publication of the Canadian Association of Drilling Engineers

    JULY / AUGUST 2014

    PM#40020055

    After a drastic downgrade in estimated reserves, the Sunshine States notorious play remains stuck in limbo

    PLUSTo frac and not to frack How the language around fracture stimulation turned sour

    Well see you on the green Gearing up for CADEs annual golf tournament

    Monterey ShaleTapping the

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  • www.cadecanada.com july/august 3

    The official publication of the Canadian Association of Drilling Engineers

    DEPARTMENTS

    4 VICE PRESIDENTS MESSAGE

    6 THE DRAWING BOARD Editors note, members corner, news and notes, technical luncheons

    10 STUDENT PROFILES11 HELP WANTED19 MEMBER PROFILE

    24 BY THE NUMBERS26 DRILLING DEEPER

    FEATURES

    12 THE MONTEREY SHALE What does a radical downgrade mean for this once stellar formation?

    16 THE F WORD The language around fracture stimulation has turned industry technique into a dirty word

    20 CRACKING THE CODE The Monterey Shales geology presents a huge technical challenge

    22 TEMPERING THE FLAMES The AERs new gas flaring regulations set Canada apart as a leader in conservation

    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 SWCalgary, AB T2P 0M2Phone: 403-532-0220Fax: 403-263-2722

    www.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: 780-990-0839Fax: 780-425-4921

    Toll Free: [email protected]

    PUBLISHER: Ruth KellyDIRECTOR OF CONTRACT PUBLISHING: Mifi Purvis

    MANAGING EDITOR: Lyndsie BourgonART DIRECTOR: Charles Burke

    ASSOCIATE ART DIRECTOR: Andrea deBoerASSOCIATE ART DIRECTOR: Colin SpencePRODUCTION MANAGER: Betty Feniak Smith

    PRODUCTION TECHNICIANS: Brent Felzien, Brandon HooverCIRCULATION COORDINATOR: Karen Reilly

    ACCOUNT EXECUTIVE: Anita McGillis

    CONTRIBUTING WRITERS: Robin Brunet, Robbie Jeffrey, Noemi LoPinto, Seamus Smyth

    JULY/AUGUST 2014

    10

    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 2014 CADE. NOT TO BE REPRINTED OR

    REPRODUCED WITHOUT PERMISSION. 16

    12

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  • Well Construction Journal 4 july/august 2014

    HERES A HOT COMMODITY THESE DAYS, AND its not just oil and gas. Were talking about university and technical college graduates from across Canada. As demand for oil and

    gas continues to increase, our industry is looking ahead to the next generation of engineers, technol-ogists and geoscientists to bring a new perspective to our energy innovations today and into the future.

    There are many reasons why the need for new talent and innovation is so great at the moment. The demand for oil and gas is increasing, along with our growing economies and populations. Our energy demand is projected to rise by about 35 per cent from 2014 to 2040. Our industry is also expe-riencing natural attrition of senior level employees through retirement. These baby boomers, in their 50s or older, make up the 50,000 workers who are expected to retire from the industry by 2020. And oil and gas isnt as readily accessible today as it was in past generations. New technologies and continual improvements in recoverable reserve developments have pushed our downstream facilities to update and expand in order to increase our processing ca-pabilities and meet the worlds rising demand.

    Thus, oil and gas companies are working hard to secure the future of our industry by promoting dy-namic recruiting initiatives, implementing exten-sive internship programs, developing high-level training curriculum, and fostering mentorship. On-campus career fairs and campaigns have proven to be very successful recruiting methods. Other hiring strategies include informational sessions, sponsorship, interviews and networking opportunities, such as CADEs annual student industry night, held every spring in conjunction with SAIT and the University of Calgary.

    Internships are an integral part of recruiting the next generation of oil and gas employees, and a way to educate students about the industry in general. They provide companies with hiring pools, a popular way for senior staff to mentor students. Hiring directly out of these pools after students graduate allows a company to determine which students fit best within their team. Many internships provide defined career paths that include exposure to multiple disciplines and offer movement in and out of the field for hands-on experiences.

    T

    MESSAGEVice Presidents

    Education is key to solving workplace woes

    Dan Schlosser CADE Vice President

    University of Calgary graduates mingle at CADEs student industry night this spring.

    WCJ_July-Aug_14_p04-09.indd 4 2014-06-26 7:49 AM

  • Directional Drilling

    Pacesetter is a technical leader in the directional drilling industry. Our inventory of advanced drilling tools includes the newest

    generation of MWD tools that was custom designed by Pacesetter team members. Our equipment oers

    greater funtionality and reliability than the older technology being used by our competitors.

    Education is key to solving workplace woes

    MD-2DUAL-DECK SHALE SHAKER WITH

    DURAFLO COMPOSITE SCREEN TECHNOLOGY

    One unbeatable combination.The MD-2 dual-motion fl at-deck shale shaker with patented DURAFLO full-contact composite screen technology ensures fl uid quality, protects wellbore integrity, and preserves equipment life.This unique package recently enabled a South Texas operator to process drilling fl uid at 658 gallons per minute (GPM), more than twice the combined capacity of two rig-owned shakers. The MD-2 shaker consistently handled 100% of the fl uid returns, maximizing fl ow rate and ROP.For throughput and effi ciency the MD-2 shale shaker using DURAFLO composite screens makes one unbeatable combination.

    Mark of M-I L.L.C.

    www.miswaco.com/MD2

    350813_CAE_Sponsorship_MD-2_Ad_7.0625x4.625_Af.indd 1 13/06/2014 10:47

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  • Well Construction Journal 6 july/august 2014

    BOARDThe Drawing

    President Jeff Arvidson 403 232-7100Vice President Dan Schlosser 403 531-5284Past President Bob Jackson 403 615-9504Secretary Tammy Todd 403 613-8844Treasurer Cecil Conaghan 403 667-9812Technical Chair Ryan Richardson 403 984-6644Membership Chair Andy Newsome 403 532-0220Education Chair Linden Achen 403 539-9338Social Chair Kristy Hysert 403 863-4787Sponsorship Chair, Administrator Kali Charron 403 532-0220WCJ Editor Christian Gillis 403 265-4973Sponsorship and Marketing Craig Joyce 403 510-4989IT Chairperson Matt Stuart 403 605-3790

    CADE Executive Team 2013/2014

    E X E C U T I V E T E AM

    E D I T O R S N O T E

    Lets Keep the Momentum GoingHIS TIME LAST YEAR WE WERE IN THE MIDDLE OF THE worst natural disaster to ever hit southern Alberta and parts of southern Saskatchewan. While the weather this June was less than enjoyable, its hard to complain

    when remembering what it was like just one year ago. The inclement weather this year put a damper on projects getting off the ground, but as the end of the month nears, we are seeing more sunshine and more rigs moving down the highways. Lets hope the weather continues to improve and the industry builds off the momentum that it had going in April and May.

    As a reminder, the annual CADE golf tournament is booked for a third season at Bearspaw Country Club on September 15, 2014. Look out for an email about hole sponsorships and registration in the next few weeks (you can also read more about it on pg. 8.)

    Our 2014 technical luncheon presentations were wrapped up at the end of June, with a great session: What the Frac Are You Doing for Dir 083 and IRP 24? by Tim Leshchyshyn, P.Eng. Tim was also a source for this months article about the language surrounding fracturing (pg. 16.) I think this was a great article, and encourage our readers to pass it on within your networks. Going forward, please watch for email

    announcements and check the website for the start of our fall luncheon series and upcoming topics and dates. Please dont hesitate to contact us if you have any ideas for upcoming topics or issues youd like to see presented at the luncheons or in print. We are also looking for topics that tie into our journal focus for each month. We hope you, the membership, will participate and continue to make these events interesting and successful. If you have any issues youd like to see covered, please email me (my contact information is below) and we will do our best to get the story.

    Dont forget, we would like to publish any of your information and announcements on new products, new technologies and senior personnel changes in each issue of WCJ. Please forward any announcements to us, as we would be excited to run them.

    We appreciate your continued support and look forward to seeing you at the upcoming luncheons

    CHRISTIAN GILLIS, EditorCanadian Well Construction [email protected]

    T

    WCJ_July-Aug_14_p04-09.indd 6 2014-06-26 7:49 AM

  • july/august 2014 7 www.cadecanada.com

    MEMB E R S C O R N E RWELCOME NEW MEMBERS

    EMEMANDU CHINEDU ABRAHAMONOME STANLEY AKANUSIADELERE ADETAYO AKINKUNMIMUHAMMAD ASLAMSHANE BACHMEIERCHRISTOPHER COLUMB IKECHUKWU KALUBARD LECKIERON MCCOSHRYAN MILLERPETER MOKALOBRADEN MURPHYSAJID SAEED KHAN NAVIDABIODUN OYETAKINJEFF RUSSELLERIC UGBEBOR JAY WILLIAMS

    WHY BECOME A CADE MEMBER?

    As of 2014, the Canadian Association of Drilling Engineers (CADE) has been active for 39 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 Canadi-an petroleum industry. The skills and knowledge obtained by your partici-pation in CADE will benefit you and your employer, with direct applica-tion to your professional career.

    CADE offers various means for members to connect and share their insights. Monthly technical luncheons are held with topical industry presentations. Other mem-bership benefits include our monthly publication Well Construction Journal and a membership directory, which is the whos 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 informa-tion about CADE with all the people in your organization who are inter-ested in the drilling and completions industry.

    CADE MEMBERSHIP RENEWALS

    CADEs membership year is from September to September. During the summer, 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 APEGAs professional development hour, stay-ing abreast of technological and in-dustry advances, drilling conferences and a great opportunity to network. Thank you for your support.

    CADE MEMBERSHIP CHANGES

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

    WCJ_July-Aug_14_p04-09.indd 7 2014-06-26 7:50 AM

  • Well Construction Journal 8 july/august 2014

    BOARDThe Drawing

    N EW S A N D N O T E S

    Oil production to grow steadily through 2030THE CANADIAN ASSOCIATION OF PETROLEUM Producers released its industry growth projections in early June, and the news remains rosy. Canadi-an oil production is expected to grow steadily into 2030, increasing at an average rate of four per cent or 175,000 barrels per day as companies continue to develop the oil sands.

    Published in its 2014 Crude Oil Forecast, Markets and Transportation report, CAPP expects total

    IN MAY, THE FEDERAL GOVERNMENT ANNOUNCED new measures to strengthen tanker safety off Can-adas waters, in advance of pipeline approval deci-sions that could see a sharp increase in the number of tankers along the B.C. coast.

    At an announcement in Saint John, N.B., Transport Minister Lisa Raitt said the new regulations ensure that Canada provides one of the most robust and comprehensive liability and compensation systems

    Canadian crude oil production to increase to 6.4 million barrels per day by 2030, up from about 3.5 million barrels per day in 2013. Throughout the majority of that time period, the oil sands will remain the primary economic driver of the industry, with conventional oil production in Western Canada remaining steady and offshore oil production in Eastern Canada declining to about 90,000 barrels per day.

    for spills from ships anywhere in the world. The new regulations remove the limit under the Ship-Source Oil Pollution Fund, meaning in the case of an accident companies would pay more for a cleanup before the federal government stepped in to pay additional costs.

    At the same announcement, the government also released a new disaster response plan in areas of high traffic.

    Engineers on the greenREGISTRATION IS NOW OPEN FOR CADES ANNUAL golf tournament. Taking place on Monday, Septem-ber 15, at Calgarys Bearspaw Country Club, the tournament is back for its third successful year of fundraising and fun on the course.

    Theres no registration deadline, but there are only 144 spots on the tournament roster and they fill quickly, so teams are encouraged to sign up as soon as possible. The price is $145 per player, and includes dinner on the day of the event.

    A percentage of the funds raised at the tour-nament supports CADEs bursary program, which provides scholarships for students studying in the petroleum engineering industry. The event has proven popular since its inception, and is a full-day tournament with teams spanning various sectors of the petroleum industry. Its a great networking

    opportunity, as well, says Kali Charron, CADEs sponsorship chairman and tournament organizer.

    To register a team, contact: Kali Charron, 403-998-0709, [email protected]

    Charron and her teammates at CADEs 2013 golf tournament

    Ottawa introduces new tanker safety regulations

    WCJ_July-Aug_14_p04-09.indd 8 2014-06-26 7:50 AM

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

    Oil production to grow steadily through 2030

    APPROVED BY:

    CLIENT:

    ACCT MGR:

    PROD MGR:

    ART DR:

    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: September 3, 2014Topic: A Practical Approach to Torque and Drag AnalysisPresenter: Leo Specht, P.Eng

    Leo Specht has been the engineering manager at Pacesetter Directional Drilling Ltd. since 2008, and previously held positions at Talisman Energy Inc., Anadarko Canada Corporation and Baker Hughes Inc. With a degree from the University of Alberta, and as a member of APEGA, SPE and CADE, Specht has over 15 years of experience in the oil and

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

    gas exploration industry. His session will discuss the creation of a drill string model, addressing the relative impact, relevance and importance of a number of inputs. A well-constructed and calibrated model of the drill string and wellbore can yield invaluable insights into downhole conditions, allowing improved drill string designs for more efficient drilling. Using a model that closely mirrors a drill string, participants will examine several scenarios where information can be used to improve drilling performance, including heavyweight placement, trip management and buckling evaluation.

    WCJ_July-Aug_14_p04-09.indd 9 2014-06-26 7:50 AM

  • Well Construction Journal 10 july/august 2014

    INDSAY ATKINSON IS HEADING INTO HER SECOND YEAR OF THE Petroleum Engineering Technology program at SAIT Poly-technic this September. After high school, Atkinson received a Division 1 NCAA hockey scholarship to the College of the

    Holy Cross in Worcester, Massachusetts. She graduated from Holy Cross with a bachelor of arts in chemistry and a minor in math. She knew she wanted to pursue a career in engineering, and chose to enroll at SAIT because of the programs amazing reputation. She currently holds a summer student position with Enerpro Engineer-ing Inc., where she has been given the opportunity to work on a variety of projects in all facets of engineering.

    A passionate member of the Student Petroleum Society at SAIT, Atkinson will be serving as treasurer throughout the 2014-2015 academic year. This September, she will also be a returning member of the SAIT Trojans womens fastball team. In her spare time she enjoys spending time with family and being outdoors golfing and hiking. After graduating from SAIT, she wants to pursue a career in reservoir or production engineering. She also plans to complete an engineering degree, after gaining work experience.

    Young TalentHighlighting tomorrows best and brightest

    Student PROFILE

    Lindsay AtkinsonPetroleum Engineering Technology

    SAIT Polytechnic

    L

    Justin HenkeChemical Engineering University of Calgary

    USTIN HENKE HAS COMPLETED HIS THIRD YEAR OF CHEMICAL engineering at the University of Calgary and is currently working as an intern at Penn West in the Peace River Oil Part-nership. His work includes production optimization, primary

    and thermal well monitoring, conducting reserves and production forecasts, and exploiting heavy oil reservoirs through scheduling and planning commercial thermal projects.

    Henke has been involved as a community volunteer in both stu-dent government and other not-for-profit organizations. His past roles include sponsorship commissioner and president of the Chemi-cal Engineering Students Society (CESS) at the University of Calgary, and a student liaison and fundraising committee member with Wellspring Calgary.

    Henke is also interested in investing and finance, and wrote his chartered financial analyst (CFA) Level 1 exam in June. After gradu-ating, he hopes to continue working in the energy industry in a role that will allow him to further his passion in both engineering and finance and eventually obtain an MBA after his P.Eng.

    J

    WCJ_July-Aug_14_p10-11.indd 10 2014-06-26 7:52 AM

  • july/august 2014 11 www.cadecanada.com

    REPORT PROJECTS CREATION OF 98,000 OIL SANDS JOBS

    HELP WANTED: Career Department

    DRILLING SLANG

    LEARNING TO DRILL THROUGH VIRTUAL REALITY

    HANDS-ON DRILLING INSTRUCTION JUST TOOK A FUTURISTIC TURN, thanks to Calgary-based company Icom Productions Inc. Icom has developed a virtual drilling rig that places students out in the field without ever having to leave the classroom.

    The vivid experience sees students outfitted with virtual reality goggles and joysticks, which transport them to a rig on a sunny Prairie landscape. The students can then climb ladders, pick up tools and turn cranks on the rig all without actually being there. Icoms president and owner, Greg Surbey, says the program is the next wave of training for Canadian oil patch companies, a market he has only recently tapped. So far, companies including Shell Canada Ltd. have used his technology to develop safety and online certification courses. Their educational platforms are all developed in consultation with energy sector companies.

    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:

    AIR-CUT MUD: A drilling fluid (mud) that has gas (air or natural gas) bubbles in it, resulting in a lower bulk, unpressurized density compared with a mud not cut by gas.ROLL A TANK: To agitate a tanks contents with gas or air injected through a roll line. The procedure is performed to settle out impuri-ties or obtain a more homogenous mixture of the chemicals added to oil, such as when chemicals are used to break emulsions.

    A NEW REPORT FROM THE PETROLEUM HUMAN RESOURCES Council of Canada estimates that 98,000 new jobs could be gener-ated over the next decade as the oil sands sector continues to play a key role in Canadas economy. Its estimated that in 2014, 72,810 jobs will be generated through oil sands development.

    The Oil Sands Construction, Maintenance and Operations Labour Demand Outlook to 2023 report looked at occupational demands in those sectors, and its findings underscore significant challenges in attracting labour to the provinces workforce.

    There have been some recent initiatives announced in rela-tion to the provinces workforce challenges. This spring, Suncor Energy donated $600,000 to SAIT in support of the institutes blended-learning apprenticeship programs. The programs allow in-demand apprentices to stay on the job longer, while still work-ing towards their degrees.

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    DOGLEG: A particularly crooked place in a wellbore where the trajectory of the wellbore in three-dimensional space changes rap-idly. A dogleg can be created intentionally by directional drillers, but the term more commonly refers to a section of the hole that changes direction faster than anticipated.PICKLE: To use a relatively weak, inhibited acid to remove scale, rust and similar deposits from the internal surfaces of equip-ment such as treating lines, pumping equipment or the tubing string through which an acid or chemical treatment is to be pumped.

    WCJ_July-Aug_14_p10-11.indd 11 2014-06-30 9:24 AM

  • Well Construction Journal 12 july/august 2014

    REPORTSpecial

    CALIFORNIA

    MONTEREY SHALE

    SAN FRANCISCO

    FRESNO

    BAKERSFIELD

    LOS ANGELES

    WCJ_July-Aug_14_p12-15.indd 12 2014-06-26 7:52 AM

  • july/august 2014 13 www.cadecanada.com

    What does a radical downgrade mean for this once stellar formation?

    LOCATION: Underlies the southern half of the San

    Joaquin Valley, with outcrops in parts of the California

    Coast Ranges, Peninsular Ranges and on some of

    Californias offshore islands

    RESOURCE: Oil

    SOURCE ROCK: Middle and Lower Miocene shale

    ESTIMATED RECOVERABLE: 600 million barrels

    PRODUCTION: Early stages

    MAJOR PRODUCERS: Occidental Petroleum Corp.,

    Venoco Inc., Plains Exploration & Production Co.,

    National Fuel Gas Co.

    PROVEN RESERVES IS A SLIPPERY CONCEPT AT BEST ASK ANY geologist. Especially ask those who gathered data suggest-ing that development of Californias Monterey Shale for-mation would create an economic boom for the state and a

    windfall for American gas reserves.The excitement over the Monterey play (a Miocene oil-rich geo-

    logical sedimentary formation covering about 1,750 square miles, with outcrops in parts of the California Coast Ranges, Peninsular Ranges and some offshore islands) began in earnest in 2011. That was when the U.S. Energy Information Administration (EIA) pub-lished a report compiled by INTEK Inc., stating that it contained 15.4 billion barrels of technically recoverable tight oil the equiv-alent of 64 per cent of the U.S.s entire estimated tight oil resource.

    By Robin Brunet

    WCJ_July-Aug_14_p12-15.indd 13 2014-06-26 7:53 AM

  • Well Construction Journal 14 july/august 2014

    REPORTSpecial

    The Monterey quickly became the focus for industry groups intent on development, which in turn raised the ire of the anti-fracing lob-by. Even though the number of barrels was downsized to 14.2 billion in 2012, the play was still gigantic enough to be the basis of a March 2013 University of Southern California economic analysis that predicted as much as a $24.6 billion per year increase in tax revenue and up to 2.8 million additional jobs by 2020.

    WHAT A DIFFERENCE A REASSESSMENT MAKES. In May of this year, the EIA revealed that its latest estimates of the reserves are 96 per cent lower than it previous-ly claimed, meaning only four per cent of the original estimate is now thought to be technical-ly recoverable at todays prices.

    Not all reserves are created equal, Adam Sieminski, an EIA Administrator, told the Financial Times and Energy Intelligence Oil & Gas Strategies Summit on May 21. It just turned out its harder to frac that re-serve and get it out of the ground. For the

    record, the shale is 1,000 to 3,000 feet thick, at depths ranging from 8,000 to 14,000 feet.

    Well Construction Journal caught up with Ste-phen Trammel, an expert on U.S. oil and gas activity with IHS Energy, while news of the Monterey downgrade was still unfolding. Not to make light of the situation, but thank good-ness we didnt put any numbers into our Mon-terey report, he says. We thought it was way too early to do so.

    Trammel is not surprised the EIA scaled back its estimates, nor is he disappointed that only 600 million barrels of shale oil are said to be recoverable from the region. The fact remains

    that Monterey is still rich in hydrocarbons. But to mis-quote Churchill, the entire zone is a mystery wrapped in an enigma, totally unique in its geology.

    Monterey oil in natural fractures was discovered at the Orcutt Oilfields in Santa Barbara in 1901. Soon after came other discoveries, including the Cat Canyon and offshore oilfields, such as South Ellwood in the Santa Barbara Channel and Point Arguello in the Santa Maria Basin.

    Its just too costly to get all of it at this point in time. Even at 600 million barrels, there will still be substantial

    economic benefits. Timothy Considine

    High oil prices, combined with technological advancements in fracing, have triggered aggressive bidding on Monterey leases.

    WCJ_July-Aug_14_p12-15.indd 14 2014-06-26 7:53 AM

  • www.cadecanada.com july/august 2014 15

    The 2011 EIA report was the first em-pirical analysis of oil production data from the Monterey, and it discussed some of its fundamental characteristics compared to other tight oil plays. The re-port concluded that 28,032 tight oil wells could be drilled over 1,750 square miles (16 wells per square mile) and that each well would recover 550,000 barrels of oil. To date, over a billion barrels of oil and four tcf of gas have been produced from Monterey since 1977 but largely from conventional reservoirs.

    Economic researcher Chris Martenson (who forecasted the housing market col-lapse and stock market correction long before they occurred) says, Over the years weve covered the reasons why the Monterey was likely to be a bust com-pared to other formations. Those reasons are mainly centred on the fact that un-derground geology is complex, that each shale formation has its own sets of sur-prises and that the geologically molested Monterey formation was very unlikely to yield its treasures as willingly as, say, the Bakken or Eagle Ford. Martenson adds, But even I was surprised by the extent of the downgrade.

    The latest interest in developing tight oil (enthusiasm for Monterey seems to come in waves, with the last peak occur-ring about 20 years ago) was sparked by the success of tight oil production in the Bakken and the Eagle Ford plays of North Dakota/Montana and southern Texas, respectively. Monterey shale is organi-cally rich, widespread in and around the play area, and easily recognized: when its cored, the nodules are readily visible. Despite intense efforts, there has been little success in actually obtaining shale oil from the Monterey. Thats because, unlike tight oil plays such as Bakken and Eagle Ford that usually produce directly from widely dispersed source rocks or adjacent reservoirs, most production in Monterey has come from localized con-ventional reservoirs filled with oil that has migrated from source rock. Of the 1,363 wells that have been drilled in shale reservoirs, less than half (only 557) were still in production as of 2013. Oil

    production peaked in 2002, with yields being on average only a half to a quar-ter of the estimates predicted in the EIA report.

    Even when the EIA was writing its glowing report, analysts were warned that Monterey could not be compared to Bakken or Eagle Ford: the latter two plays are spread over productive areas of

    20,000 and 8,000 square miles, respec-tively, while the Monterey encompasses less than 2,000 square miles. Moreover, Bakken and Eagle Ford are 360 and 90 million years old, while the Monterey is younger, a relatively spry formation fall-ing between six and 16 million years old, and deposited in an active tectonic region.

    Still, the Monterey is very productive where its naturally fractured, leading to the growing contention that the play would be feasible over wide areas if frac-ture stimulation were used. Some hori-zontal wells were drilled in the Rose Field in the early 2000s, with 2,500-foot lat-eral lengths and single-stage open-hole fracs producing results that were an im-provement over vertical wells.

    The oil hasnt gone anywhere, says the University of Wyomings School of Energy Resources economics professor Timothy Considine, a Monterey ana-lyst. Its just too difficult and costly to get all of it at this point in time. Even at 600 million barrels, there will still be substantial economic benefits for anyone involved in Montereys development.

    High oil prices combined with advances in fracturing technology trig-gered aggressive bidding by oil compa-nies for Monterey leases, with Occidental Petroleum and Venoco Inc. being the major players. Occidental is using acid-izing to stimulate production; other companies are experimenting with hy-drochloric and hydrofluoric acid mixes in the hope this could replace fracing as the main method of extraction. Carbon

    dioxide injection has also been tested, but with mixed results.

    Another method being aggressively pursued in the region is cyclic steam: es-sentially, a steam frac that creates chan-nels and allows oil to flow into the well and back to the surface. Santa Maria En-ergy proposed 136 wells in Monterey that would use cyclic steam, but last year the Santa Barbara county planning commis-sion declined its staffs recommendation to approve the project, pending more en-vironmental study.

    Moving forward, the biggest challenge facing developers apart from deal-ing with government regulations is that unlike some shales, the Monterey doesnt present a highly consistent pic-ture. Instead, it varies dramatically and extraction methods such as horizontal drilling require an extensive knowl-edge of the stratigraphy. A lot of people are trying to unlock the puzzle, says Trammel.

    For his part, Considine has long be-lieved the most promising strategy would be to drill for offshore oil while on-shore, on a slant: theres a minimum of 1.5 billion barrels off Santa Barbara alone. My hope is that the downsizing of Monterey will bring a renewed focus to Californias offshore reserves. That said, he stresses that even at a lowly 600 million barrels, Monterey will still cre-ate a few thousand jobs. Its not a loss by any means.

    Its not a total loss, but Trammel still half-jokingly remarks that oil and gas companies shouldnt put all their eggs in the California basket, though theyre not prone to do so anyway. Theres all kinds of well designs and pad drilling thats coming down the turnpike in the Monterey, he says. [It] still holds a lot of promise as drilling technology de-velops. The region is so young that oil is still being generated from its organic material. To those who doubt that well figure out the sweet spots for horizontal drilling in the play, I would point out that theyve been found in other chal-lenging regions. Monterey will be figured out, too.

    Theres all kinds of well designs and pad drilling thats coming down

    the turnpike in Monterey. Stephen Trammel

    WCJ_July-Aug_14_p12-15.indd 15 2014-06-26 7:53 AM

  • 16 july/august 2014 Well Construction Journal

    The F word The language surrounding fracture stimulation has turned industry technique into a dirty word

    REPORTPublic Relations

    By Martin Dover

    A

    SIDE FROM A DRASTIC DOWNGRADE IN RESERVE projections, discussion surrounding the Mon-terey Shale has been shrouded in a cloud of debate and controversy. Most of that debate

    revolves around the use of fracture stimulation on the play, and protesters used the Monterey in their bid to ban the process in California.

    Turns out fracture stimulation has at least one thing in common with Battlestar Galactica. The sci-fi television show with a cult-like following popular-ized the word frak to replace a certain sensitive four-letter word, and though its first use was long be-

    fore hydraulic and other fracturing methods became mainstream knowledge, the faux-curses sentiment has stuck around.

    Whether its frack or frac, fracc or frak, the word carries baggage no matter if youre watching TV or reading it in reports about the oil and gas industry. In his Powell Shale Digest newsletter, Will Brackett wrote that he takes exception to the fact that drilling oppo-nents have taken to using frack as a euphemism for a curse word I cant print in this family newsletter. What was once a little-known industry abbreviation for various methods of fracture stimulation has very

    WCJ_July-Aug_14_p16-19.indd 16 2014-06-26 11:41 AM

  • july/august 2014 17 www.cadecanada.com

    quickly curried poor public favour and controversy. The word, and how we spell it, has taken on a life outside oil and gas activity itself.

    The root of the problem is how to shorten and spell the abbreviated and active forms of fracture stimulation. Here are some of the options: the in-dustry-maligned (but Oxford dictionary-approved) fracking; short and similar fracing, which makes sense but could come off sounding like tracing; the geologically preferred fraccing; and even keeping the T silent but included: fracting.

    You should never spell frac with a K says Tim Leshchyshyn, president of FracKnowledge, a Cal-gary-based frac consulting group. There is no K in the word fracture. Industry has, in most cases, decided to stick to either spelling out the process or adopting this single C in frac. Here at Well Construction Journal, we go with frac and include an apostrophe for fracing.

    My view is that its an uphill struggle, says Mark Cameron, deputy energy practice leader at Hill+ Knowlton Canada, a public relations consultancy. Its only natural to want to end that word with a K.

    The issue is about more than just nitpicky grammar, science fiction and semantics. (Theres a negative connotation with Battlestar Galactica, certainly, but I think that can also be considered cool, says Cameron.) Not unlike the language war between tar sands and oil sands, words are powerful beyond what we simply read and hear. How we spell frac is important because language

    plays a key role in how the greater public under-stands and accepts the process itself. In an age of environmental protest, where misinformation abounds, seemingly little things (like the letter K) take on a bigger meaning.

    In a blog post for the CTRM Center, energy expert Patrick Reames writes that, to be told by jour-nalists (most of whom only just became aware of the term) that the people who originated the word are spelling it wrong is more than a bit irritating.

    Leshchyshyn puts a finer point on it: You have people who arent in the industry being negative about the industry, putting the K on the end, he says. The minute I read a story where they spell

    it f-r-a-c-k-i-n-g, I know they dont know what theyre talking about.

    Reames and Leshchyshyn are right to worry. In the summer of 2012, Louisiana

    State University released findings into perceptions surrounding the language of fracture stimulation. In particular, they wondered what effect the word fracking itself had on the perception of fracture stimulation safety and its potential economic benefits. What they found probably wont surprise you: respondents perceived the process of frack-ing as more dangerous than hydraulic fracturing. The researchers hypothesized that the harsh sound of the word had in part been contributing to nega-tive public reaction. And while they didnt exactly prove why the sound of the word has such a neg-ative association, they proved that the association

    You have people who arent in the industry being negative about the industry, putting the K on the end.

    Tim Leshchyshyn

    WCJ_July-Aug_14_p16-19.indd 17 2014-06-26 11:41 AM

  • exists, at least in their state. And frack has certainly taken on a life of its

    own since entering the public lexicon a few years ago. After the 2010 documentary Gasland scored an Academy Award nomination, the term became a catch-all word for fracturing, often used in a negative light and without context. Newspaper headlines have proclaimed everything from What the frack! to Frack, baby, frack, with even the tamer of business stories using the word frequently.

    Admittedly, hydraulic fracturing and other terms are a technical mouthful that not everyone understands. It can also be argued that it doesnt matter how the word is spelled when we hear it on the radio or television. But when industry is vying for the publics support and understanding, these things become important.

    Leshychyshyn has taken his consulting work around the world, and says that hes noted a social shift between countries. From Canada to Poland

    to Australia, the word has vastly different mean-ings. In Australia, they said we have to change our company name because we have the word frac in it, he says. But if I call it Cotton Candy Enter-

    prises, its harder to do our marketing.

    The industry also thinks a prejudice-free spelling makes a world of difference in forging a balanced public perception.

    Cameron says that his advice is to focus less on spelling and more on getting a balanced message into the public realm. Its probably best to invest energy in explaining what the technology is, he says. With [the language debate between] tar sands and oil sands, its a much more even playing field. [Here] there are bigger issues, including explaining to the public what it is, why its safe and how the technology has been around for decades. No matter how you spell it, its just a nickname. And Id en-courage the media to just use the full term instead of frac at all.

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    There are bigger issues, including explaining to the public what it is,

    why its safe and how the technology has been around for decades.

    Mark Cameron

    WCJ_July-Aug_14_p16-19.indd 18 2014-06-26 11:41 AM

  • july/august 2014 19 www.cadecanada.com

    PROFILEMember

    By Robbie Jeffrey

    Kristy Hysert

    G

    A Positive Impact

    ROWING UP WITH A TWIN BROTHER, KRISTY Hysert was always the quiet one. But her silence may have also been a sign of big plans. At some point, I found

    my way, she says. After graduating with a degree in biolog-

    ical sciences from the University of Alber-ta, Hysert began a career in pharmaceutical sales. But the novelty of life on the road eventually wore off and she decided to use her expertise in sales as a jumping-off point into the oil and gas industry, where she applied for a job with Core Laboratories in Calgary.

    I was with Core Laboratories for about three years, Hysert says, learning the ins-and-outs of the industry. She later gained experience in sales and marketing from Peak Completions Canada. In 2007, she stumbled upon a small group called Calgary Women in Energy, with around 15 members and a small online presence. She joined the group and, after holding the positions of treasurer, membership director and director of com-munity involvement, eventually became president of the organization.

    Calgary Women in Energy, whose mem-bership has since blossomed to more than 100 members, now hosts technical sessions and networking functions and is a regular participant in community events. Each year, the group holds a charity golf tournament, each time raising between $30,000 and $50,000 for community charities that help women in need, including the YWCA and Discovery House. Its more than just a col-lection of professional women, Hysert says. We all have shared aspirations and the de-sire to make positive impact on the indus-try and the community through charitable work, mentorship and education.

    In 2012, Hysert founded KLH Executive Holdings Ltd., her own consulting company. It was a big change for her, but thats exactly what she felt the industry needed. I noticed that there was a need in the industry for business development and marketing pro-fessionals that dont have bad reputations, she says. Theres a need for people who are willing to prove themselves. Hysert also works in business development with Elynx Technologies, an Oklahoma-based company providing web-based monitoring and field automation services to the oil and gas indus-try. The challenge, she says, is leading a U.S. company through the depths of Canadian politics and regulations.

    Everything is constantly changing and evolving, and most of the fun is in learning as you go and trying new things, Hysert says. I really just want to discover my own talents and find my own strengths, and use that to help others in the industry. I want to create dialogue to empower our next gener-ation of leaders. Still, Hyserts actions have spoken louder than words. Shes the quiet one, after all.

    Kristy Hysert brings dedication and mentorship to the energy sector

    WCJ_July-Aug_14_p16-19.indd 19 2014-06-26 11:41 AM

  • Well Construction Journal 20 july/august 20144

    E

    Cracking the Code Monterey Shale geology presents a huge technical challenge. No matter how much oil is actually there, can we even get to it?

    REPORTGeology

    By Noemi LoPinto

    VEN TODAY, THE SEARCH FOR PLENTIFUL sources of energy can lead to a Gold Rush-esque bonanza. And until very recently, the Monte-rey Shale formation in California was thought

    to be an untapped source of billions of barrels of oil, the would-be answer to the United States domestic oil demand. Even though the plays recoverable re-source estimates have been drastically downgraded, the Montereys true challenge remains the same: how can we access whatevers there cheaply and quickly when the formation is so unconventional?

    The formation already serves as a rich reserve of resources for oil and gas companies nestled in the San Joaquin Valley, where Black Gold was first discovered at the latter end of the 19th century. In 1899, one such discovery on the west bank of the

    Kern River sparked an oil boom. Within a few years, production in Kern County accounted for 70 per cent of the oil that came out of California. Four years later, the Golden State was the top oil-producing state in the United States. The area is still among the top five largest oil-producing regions in the country. The formation extends south of Menlo Park, north of the communities of San Luis Obispo and Santa Barbara and northwest of the city of Los Angeles.

    Monterey rock varies greatly from other heavily- fraced regions in the United States. Unlike the Bakken and Eagle Ford plays, which are layered like a cake, the Monterey is folded and shattered, with oil found at deeper strata. That strata also varies enormously the shale is very fine-grained, tending to be ductile rock that has very low porosity and is

    Its what lies beneath California that makes the Monterey truly unique.

    WCJ_July-Aug_14_p20-21.indd 20 2014-06-26 11:43 AM

  • www.cadecanada.com

    composed of dark minerals. Organic matter is often found trapped with-in the shale, where the oil or gas, and sometimes both, may be found.

    Geologists have long known the formation was rich with depos-its, but until recently technology hadnt allowed for the reserves to realistically be tapped. With developments in fracing technology and acidization, industry players were hoping to finally break serious ground. Still, the varied ground makes it hard to frac a widespread swath of land in the Monterey. And while theres a lot of oil below the surface, Arthur McGarr, who has clocked-in a 30-year career as a geophysicist with the U.S. Geological Survey, says scientists have studied the Monterey and tend to be skeptical that it is as well-endowed as had previously been reported. Until large-scale production begins in full, we wont know for certain the true potential of the play.

    It still remains to be seen, says McGarr. It may be a huge source of oil and gas but even if that is the case, it wont be an easy produc-tion. There is a lot of structure to the Monterey shale, and it is not nearly as straightforward to exploit, like some of the shales found east of the Rockies in Canada and Alberta.

    The play is also cross-hatched with fault lines, a contentious fact that polarized industry and protestors in recent years. McGarr is also the chief of the Geological Surveys branch on Earthquake Geology and Geophysics. One his main areas of research has been proving, or disproving, a link between fracing and seismic activity. McGarr was around when the possible connection first presented itself at the Rocky Mountain Arsenal well, near Denver, Colorado.

    Until 1969, the RMA manufactured both conventional and chemi-cal weapons, including white phosphorus (M34 grenade), rocket fuel, napalm, mustard, Sarin and chlorine gas. Starting in 1961, the RMA was used as a demilitarization site to destroy and dispose of these same products. The United States Army built a deep injection well, drilled to a depth of 3,671 metres and cased and sealed to a depth of 3,650 metres, with the remaining 21 metres left as an open hole. Over the years the well was injected with approximately 568,000 gallons of municipal water and waste, which triggered over 700 earthquakes in the area. Eventually, the earthquakes became bigger and more severe. By 1966, the well was closed down but the earthquakes continued. In 1967, more than a year after the well had been shut down, three earthquakes within a five-mile radius caused tremendous damage in the Denver area. One, registering as a magnitude 5.0, shattered win-dows and forced the closure of businesses and schools. While it has been established that only a fraction of industrial activity (fracing in particular) does produce earthquakes, McGarr says it is still a cause for concern. The question is: how do you tell the difference between manmade earthquakes and induced earthquakes? Its not easy.

    The Environmental Protection Agency (EPA) requires that Class 1 and 2 injection wells be drilled the deepest, so the most toxic waste is pushed far below water aquifers. Both types should be walled with overlapping layers of steel tubing and cement, and regularly mon-itored for fissures and cracks. But environmental groups say these wells are poorly monitored and repeatedly leak, sending dangerous

    chemicals and waste to the surface or into underground water. They cite a spill that occurred in a Los Angeles dog park in 2010, when contaminants bubbled up from under the ground, and similar unwanted emissions of oil and gas waste and other emissions in Oklahoma, Ohio, Texas, Louisiana and South Florida.

    There is an important distinction between hazard and risk. Risk is a measure of the con-sequences, says McGarr. A large earthquake in Los Angeles will cause billions of dollars of damage, but under the Nevada desert its almost of no consequence.

    The earth and the fluids that pass and flow through it isnt as uniform as we often think. Many areas are more geologically complex, folded, twisted, porous or fractured than previously believed. Most geophysicists believe the future will hold more industry-induced earthquakes, as the gas boom expands. Currently, rather than invest in fracing, many oil companies use acidizing technology in the Monterey to stimulate production. Others are experimenting with chemical combinations of hydrochloric and hydrofluoric acids. While its geologically unconventional, the Monterey continues to be pro-ductive, when and where oil can be found.

    Unlike the Bakken and Eagle Ford plays, which are layered like a cake, the Monterey is folded and shattered,

    with oil found at deeper strata.

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    WCJ_July-Aug_14_p20-21.indd 21 2014-06-26 7:54 AM

  • Well Construction Journal 22 july/august 2014

    I

    Tempering the Flames The AERs new gas flaring regulations set Canada apart as a leader in conservation

    REPORTRegulatory

    By Samus Smyth

    TS NOTHING BUT BURNING MONEY. AND FOR BOTH monetary incentives and health reasons, gas flaring (or the controlled burning of natural gas) has caught the attention of Albertas com-

    munities once again. In return, the Alberta Energy Regulator (AER) has been forced to respond with brand new, environmentally sensitive changes in regulation.

    Flaring is the practice of burning the excess hy-drocarbon released during crude oil and bitumen production, lighting up the sky like a summertime campfire. It is the exact opposite of a cash-grab, especially when gas prices are low and access to pipelines in rural Alberta sparse. Although once viewed as an eye-pleasing wonder, flaring had irked

    residents and environmentalists to the point where new rulings were in order.

    Beginning August 15, 2014, the AERs new, increasingly stringent standards on flaring will come into place. They will make Canadas regu-lations some of the strictest in opposition to the unproductive, harmful dancing flames.

    AER technical specialist Gerald Palanca says the updated rulebook is all about forcing energy companies to accept the environmental and social responsibilities that jive with the ethos of 2014s business environment. This is what it comes down to: we as a regulator are there to protect the pub-lic. We are doing what is asked of us, and if you want to operate in Alberta, you have to be able to

    WCJ_July-Aug_14_p22-23.indd 22 2014-06-26 7:54 AM

  • www.cadecanada.com july/august 2014 23

    meet that social license to operate, he says. We have the third largest resource in the world so guess what? we want to use this sustainably and responsibly.

    Its not so much that flaring has suddenly been released from its cage again by careless oil com-panies, but more that oil production in Alberta has been on the rise in recent years, thereby pushing the flaring statistics to an uncomfortably high level.

    You can only manage what you measure. We measure flaring really well so its always on the forefront and we can see how we are performing, says Palenca. Our flaring has gone up in the past few years, but its relative to our production. Our production in the province has increased significantly.

    That is why people are talking about it again. Because as our production has increased year over year, unfortunately so has our flaring, he continues.

    The AER estimated that Albertas oil companies conserved about 94.2 per cent of gas in 2012, a statistic slightly down from the provinces all-time high of 96.3 per cent in 2005. When compared with a nation like Nigeria, which flares close to 75 per cent of total production, it might seem like the province should throw a parade.

    And yet that imperfect record, the lingering four to seven per cent, is what residents of Peace River were convinced was making them sick on their morning and evening commutes. After a study was conducted earlier this year, they turned out to be right. The AER forced the companies in question, specifically Baytex Energy Corp., to tighten up its procedures immediately. AERs vice-president of regulatory operations, Carol Crowfoot, laid out recommendations for the area to abide by, and as a result, put Peace River residents at ease. Crowfoots propositions included the obvious as well as the new: increasing gas conservation and reducing overall emissions, and adopting a recent develop-ment called vapour recovery technology.

    Although the issues in Peace River were related to venting rather than flaring, at the core of the matter was the need for tighter regulations. With the provinces reputation at stake, Palenca says that although cracking the whip forces oil and gas companies to spend more money, a strong majori-ty of them have been very supportive of the more acute measures.

    There are a lot of companies that go above and

    beyond, though there are a few that dont. But as these major companies have a vested interest in Alberta, they want their reputation to be good as a whole. Industry benefits, as well, he says.

    It was impeccable timing for North American energy titan Encana, which in 2012 announced a new project aimed at capturing this once wasted energy source, thereby saving millions of dollars at the same time.

    Encana was awarded a grant from the Climate Change and Emissions Management Corporation (CCEMC) of Alberta after two successful pilot proj-ects using the SlipStream valve train. SlipStream captures fuel gas (primarily methane) that is being vented to the atmosphere continuously as part of

    normal operations. The unit then redirects this gas into the compressor engines air intake to help fuel the engine, says Encana spokesperson, Doug McIntyre.

    The successful pilot projects resulted in $2.4 million from CCEMC to fund its Vent Gas Capture for Engine Fuel Use program. Encanas Environmental Innovation Fund will contribute up to another $3 million to fully fund the ambi-tious program. As part of that, southern Alberta will soon be home to SlipStream vent gas capture units at 52 natural gas compressors. The system promises to not only cut out wasteful and archaic methods but will ideally reduce greenhouse gas emissions for the province.

    McIntyre says that by the time the technology is fully installed, its expected to reduce Encanas greenhouse gas emissions by more than 69,000 tonnes of carbon dioxide equivalent annually, and recover around 175 million cubic feet of sales gas per year, generating an additional $1 million per year of carbon offsets.

    Though many communities across the province will likely agree that a higher standard on flaring was years overdue, Canada remains a world leader in restricting this wasteful practice. Recently, del-egates from Brazil and Indonesia visited the AER, eager to listen in on regulation presentations.

    Palenca says the regulators door is always open to nations looking to crack down on the wasteful practice, and that the province will continue to look to be a leader in environmental awareness.

    Being a leader to us is still not good enough, he says. We are still trying to improve, trying to be proactive. We are still trying to improve our performance.

    Oil production in Alberta has been on the rise in recent years, thereby

    pushing flaring statistics to an uncomfortably high level.

    WCJ_July-Aug_14_p22-23.indd 23 2014-06-26 7:54 AM

  • Well Construction Journal 24 july/august 2014

    Canadian Rig Counts June 2, 2014

    Drilling Down Total Utilization

    Alberta 134 432 566 23.7%

    B.C. 26 52 78 33.3%

    Manitoba 0 16 16 0%

    New Brunswick 0 0 0

    Newfoundland 0 0 0

    Northwest Territories 0 1 1 0%

    Quebec 0 1 1 0%

    Saskatchewan 49 96 145 33.8%

    Totals 209 598 807 25.9%Source: Divestco

    NUMBERSBy the

    Stats at a Glance

    Alberta Rig Counts June 2, 2014

    Drilling Down Total Utilization

    Northern Alberta 34 102 136 25%

    Central Alberta 84 285 369 22.8%

    Southern Alberta 16 45 61 26.2%

    Totals 134 432 566 23.7%Source: Divestco

    Top 5 Most Active OperatorsJune 2, 2014

    Active Rigs

    Crescent Pt. 17

    EnCana 12

    CanNat 11

    Tourmaline Oil 9

    Seven Gen 8Source: Divestco

    Top 5 Most Active Drillers in Western CanadaMay 29, 2014

    Active Total

    Precision Drilling Corp. 54 189

    Ensign Energy Services Inc. 30 102

    Savanna Energy Services Corp. 19 71

    Nabors Industries Ltd. 20 64

    Trinidad Drilling Ltd. 13 61Source: FirstEnergy Capital

    WCJ_July-Aug_14_p24-25.indd 24 2014-06-26 11:43 AM

  • www.cadecanada.com july/august 2014 25

    Canadian Rig Counts June 2, 2014

    Drilling Down Total Utilization

    Alberta 134 432 566 23.7%

    B.C. 26 52 78 33.3%

    Manitoba 0 16 16 0%

    New Brunswick 0 0 0

    Newfoundland 0 0 0

    Northwest Territories 0 1 1 0%

    Quebec 0 1 1 0%

    Saskatchewan 49 96 145 33.8%

    Totals 209 598 807 25.9%Source: Divestco

    Alberta Spudded Wells (estimates)April 2014

    Number of Wells Spudded

    2014 2013 2012

    January 1540 1616 1763

    February 1613 1823 2022

    March 765 1078 980

    April 199 337 276

    May 268 374

    June 452 518

    July 647 702

    August 794 785

    September 720 784

    October 741 781

    November 692 707

    December 539 670Source: Alberta Department of Energy

    Top 5 Most Active OperatorsJune 2, 2014

    Active Rigs

    Crescent Pt. 17

    EnCana 12

    CanNat 11

    Tourmaline Oil 9

    Seven Gen 8Source: Divestco

    Alberta Completed WellsApril 2014

    Number of Wells Completed

    2012 2013 2014

    January 381 381 442

    February 718 640 626

    March 717 812 812

    April 672 701 574

    May 486 434 574

    June 254 272

    July 488 373

    August 199 474

    September 524 458

    October 692 753

    November 750 671

    December 692 530Source: Alberta Department of Energy

    Alberta Land SalesMay 2014

    May 2014 Dec. 2013 YTD 2014 YTD 2013

    Oil and Natural Gas

    Land Sales $18.8 million $73.3 million $205.5 million $680 million

    Price Per Hectare $459.13 $264.58 $450.51 $316.91

    Oil Sands

    Land Sales $101,934 $22,625 $3.23 million $28.19 million

    Price Per Hectare $75.84 $14.43 $195.99 $192.05Source: Alberta Department of Energy

    Alberta Well Licences Approval issued by the Alberta Energy RegulatorApril 2014

    Licenced Wells Drilling Type Total Licences

    Natural Gas Horizontal 111

    Vertical/Direct 2

    Coal Bed Methane Horizontal

    Vertical/Direct 9

    Crude Oil Horizontal 157

    Vertical/Direct 25

    Bitumen Horizontal 26

    Vertical/Direct 183

    Evaluation 12

    TOTAL: 525Source: Alberta Energy Regulator

    WCJ_July-Aug_14_p24-25.indd 25 2014-06-26 7:55 AM

  • Well Construction Journal 26 july/august 2014

    DEEPERDrilling

    By Robbie Jeffrey

    Whither the National Energy Strategy? A much-needed energy strategy could evaporate in the heat between provincial and federal interests

    N JULY 2011, MEMBERS OF GOVERNMENT AND industry met in Albertas Kananaskis region for the Energy and Mines Ministers Conference. There, a consensus emerged: Canada needs a

    national energy strategy to guarantee a prosperous and sustainable energy future.

    The strategy was imagined as a way to navigate the complex terrain of Canadas energy future. Rather than a set of guidelines set in stone, a strategy would work as a framework for discussions around energy sustainability, conservation, technology and innovation, infrastructure and regulation.

    Despite palpable anxiety left over from the legacy of Pierre Trudeaus National Energy Program (NEP), the Harper government en-dorsed the idea. Joe Oliver, then minister of natural re-sources, said the strategy was in the interest of all Cana-dians, from coast to coast, to exploit the enormous natural resources we have. It was clear that Canadians wanted a national energy strategy, too. Polls in Alberta Oil magazine found that almost 80 per cent of Canadians surveyed be-lieve we need a strategy, and over 90 per cent ranked the task as important. The international consulting firm PricewaterhouseCoopers warned that, without a strategy, Canada could risk running out of market access in the United States.

    Yet only six months after the conference, Stephen Harper joked on a Calgary radio show that he gets nervous when he hears national and energy in the same sentence.

    The rationale they gave two years ago, says Joseph Arvai, a professor and researcher at the Uni-versity of Calgary, and the rationale that theyre still giving, is that theres so much baggage left over from Trudeaus national energy discussions of the 70s and 80s that theres no appetite for talking about it. Claiming instead that they were focused on implementing Canadas Economic Action Plan,

    the PMO distanced itself from a strategy. When Albertas then premier Alison Redford

    initially took the torch on a national energy strategy in July 2012, she promised a cohesive national energy strategy would be released at the Council of the Federation in Prince Edward Island in summer 2014.

    But the provinces soon found themselves in conflict. B.C. Premier Christy Clark gave Redford a list of conditions for the Northern Gateway pipeline and threatened to boycott a national energy strategy. Ontario Premier Kathleen Wynne expressed interest in a national energy strategy that would move the country toward a low-carbon

    future something Alberta had no interest in discussing. Quebec insisted on holding its own public review of the Line 9 pipeline reversal, citing distrust of the federal process.

    In March Alison Redford resigned, and the national energy strategy lost its biggest proponent. The issue seems to have dropped off the agenda altogether, and weve officially reached the July 2014 deadline for implementation.

    As far as a broader conversation about a national vision for how we think about energy, and develop it and transmit it, were not even close to where we were two years ago, says Arvai. And two years ago we werent very close.

    The global market demands a national energy strategy, and Canadians want one too, for the sake of the economy and for a better grasp on what our economic future will look like. In May, Burnaby Mayor Derek Corrigan objected to the Trans Moun-tain pipeline set to run through his city, claiming that he would oppose any new pipeline develop-ment until a national energy strategy was devised. A laundry list of promises is yet to be fulfilled, and still the question is vital: What does Canadas energy future have in store?

    I

    Stephen Harper joked on a Calgary radio show that he gets nervous when he hears national and energy in the same sentence.

    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 Canadas 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 associations success.

    Platinum SponsorsPhoenix Technologies Services

    Gold SponsorsGlobal Steel Ltd.

    NCS Energy Services

    Pacesetter Directional

    Schlumberger

    XI Technologies Inc.

    Silver SponsorsAkita Drilling Ltd.

    Baker Hughes

    Cathedral Energy Services Ltd.

    Ensign

    Lory Oilfield Rentals Inc.

    Marquis Alliance Energy Group Inc.

    Mostar Directional Technologies

    Peak Completions

    Petrosight Inc.

    Precision Drilling

    Well Control Group

    000WCJ-CADE_Sponsor-FP.indd 1 2014-04-14 10:21 AMWCJ_July-Aug_14_p26-27.indd 26 2014-06-26 7:55 AM

  • 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 Canadas 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 associations success.

    Platinum SponsorsPhoenix Technologies Services

    Gold SponsorsGlobal Steel Ltd.

    NCS Energy Services

    Pacesetter Directional

    Schlumberger

    XI Technologies Inc.

    Silver SponsorsAkita Drilling Ltd.

    Baker Hughes

    Cathedral Energy Services Ltd.

    Ensign

    Lory Oilfield Rentals Inc.

    Marquis Alliance Energy Group Inc.

    Mostar Directional Technologies

    Peak Completions

    Petrosight Inc.

    Precision Drilling

    Well Control Group

    000WCJ-CADE_Sponsor-FP.indd 1 2014-04-14 10:21 AMWCJ_July-Aug_14_p26-27.indd 27 2014-06-26 7:55 AM

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    WCJ_July-Aug_14_p28-01.indd 28 2014-06-26 7:47 AM