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7/28/2019 Well Construction Journal - July/August 2013
1/28
The ofcial publication o the Canadian Association o Drilling Engineers
JULY / AUGUST 2013
PM#40020055
The shale revolution has
reversed decades of decliningoil and gas activity in Texas
Snow Birds:Canadian companies
are capitalizing on a Texas-sized
opportunity
Migration Trouble: Is increased oil
output in Texas blocking Canadian
access to Gul Coast refneries?
PLUS
Put to the Test:LNG takes a run
at replacing diesel to power on-siteequipment
7/28/2019 Well Construction Journal - July/August 2013
2/28
Fracceleration.
1MVHBOEQFSGBOECBMMBDUVBUFETMFFWFTBSFCSVUFGPSDFGSBDNFUIPETUIBUCVMMIFBEnVJETBOETBOEEPXOUIFDBTJOH
XJUIOPGFFECBDLBCPVUGPSNBUJPOSFTQPOTFOPSFDPVSTFJO
UIFFWFOUPGBTDSFFOPVUBOEOPXBZUPNBOBHFXBUFSBOE
DIFNJDBMTVTBHF#PUINFUIPETMJNJUUIFOVNCFSPGTUBHFT
BOEVTVBMMZSFRVJSFQPTUDPNQMFUJPOESJMMPVUPGDPNQPTJUF
QMVHTPSCBMMTFBUT
5IF.VMUJTUBHF6OMJNJUFETZTUFNPWFSDPNFTUIPTFMJNJUBUJPOT
BOEESBXCBDLTVTJOHDPJMFEUVCJOHBTBXPSLTUSJOHBOE
DJSDVMBUJPOQBUIUPUIFGSBD[POF
Fast frac isolation, mechanical sleeve shift
5IFXPSLTUSJOHPQFSBUFTUIF.VMUJTUBHF6OMJNJUFESFTFUUBCMF
GSBDQMVHBEVBMGVODUJPOUPPMUIBUJTPMBUFTGSBD[POFTBOEHSJQTBOETIJGUTUIFTMJEJOHTMFFWFT8JUIOPQVNQEPXO
QMVHTBOETMFFWFTIJGUJOHCBMMTUJNFCFUXFFOGSBDTJTPOMZ
BCPVUNJOVUFT-BSHFWPMVNFIJHISBUFGSBDTBSFQVNQFE
EPXOUIFDPJMFEUVCJOHDBTJOHBOOVMVTTNBMMFSMPXSBUFGSBDTDBOCFQVNQFEUISPVHIUIFDPJMFEUVCJOH
Circulation path adds capabilities
5IFDJSDVMBUJPODBQBCJMJUZBMMPXTPQFSBUPSTUP
tNPOJUPSBDUVBMGSBD[POFQSFTTVSFGPSCFUUFSDPOUSPMPGTBOE
QMBDFNFOU
tSFEVDFXBUFSBOEDIFNJDBMTSFRVJSFNFOUTVQUP
tSFDPWFSRVJDLMZGSPNTDSFFOPVUTCZDJSDVMBUJOHFYDFTTTBOE
PVUPGUIFXFMM
tVTFTBOEKFUQFSGPSBUJOHUPBEETUBHFTJOCMBOLDBTJOH
XJUIPVUUSJQQJOHPVUPGUIFIPMF
*UBMMBEETVQUPVOMJNJUFETUBHFTBOETQBDJOHTUSFBNMJOFEGSBDPQFSBUJPOTCFUUFSGSBDDPOUSPMMPXFSDPTUDPNQMFUJPOT
MFTTFOWJSPONFOUBMJNQBDUBOEOPESJMMPVUT$BMMFNBJMPS
WJTJUPVSXFCTJUFGPSNPSFJOGPSNBUJPO
5HVHWWDEOHIUDFLVRODWLRQRQFRLOHGWXELQJ*ULS6KLIWTMVOLGLQJVOHHYHV
ncsfrac.com US: 281.453.2222 Canada: 404.862.0870 info@ncsfrac.com
/$4&OFSHZ4FSWJDFT*OD"MMSJHIUTSFTFSWFE.VMUJTUBHF6OMJNJUFE(SJQ4IJGUBOEi-FBWFOPUIJOHCFIJOEwBSFUSBEFNBSLTPG/$4&OFSHZ4FSWJDFT*OD1BUFOUTQFOEJOH
The unique resettable frac plug grips and shiftsthe sliding sleeve and isolates the frac zone.
Frac ports
7/28/2019 Well Construction Journal - July/August 2013
3/28www.cadecanada.com july/august2013
The ofcial publication o the Canadian Association o Drilling Engineers
DEPARTMENTS
5 THE DRAWING BOARDEditors note, members
corner, news and notes,
technical luncheons
9 MEMBER PROFILE10 STUDENT PROFILES24BY THE NUMBERS
26DRILLING DEEPERSAGD activity reaches
new heights
FEATURES
12 EAGLE FORDShale oil and gas is
revitalizing drilling activity
in The Lone Star State
17 UNcONvENTIONAL THINkINGLNG is put to the test in the
Eagle Ford as an alternative
to diesel
20 DUE SOUTHCanadian companies aretaking advantage of an oil
renaissance in Texas
22 OPPORTUNITYS cHALLENGEProduction hotspots, as much
as low prices, are redrawing
distribution networks
The mandate of the Canadian Association of Drilling Engineers is to
provide high-quality technical meetings and to promote awareness on
behalf of the drilling and well servicing industry. With more than 500
members from more than 300 companies, CADE represents a broad
spectrum of experience in all areas of operations and technologies.
Through CADE, members and the public can learn about the tech-
nical challenges and the in-depth experience of our members that
continue to drive the industry forward. For drilling and completions
specialists, CADE currently offers one of the best networking and
knowledge sharing opportunities in the Canadian petroleum industry.
cANADIAN ASSOcIATION OF DRILLING ENGINEERS
1100, 540 - 5 Avenue SW
Calgary, AB T2P 0M2
Phone: 403-532-0220
Fax: 403-263-2722
www.cadecanada.com
PRESIDENT: Robert Jackson
PAST PRESIDENT: Eric Schmelzl
WELL cONSTRUcTION JOURNAL EDITOR: Christian Gillis
WELL cONSTRUcTION JOURNAL IS PUBLISHED FOR CADE
BY vENTURE PUBLISHING INc.
10259 105 Street
Edmonton, AB T5J 1E3
Phone: 780-990-0839
Fax: 780-425-4921
Toll Free: 1-866-227-4276
circulation@venturepublishing.ca
PUBLISHER: Ruth Kelly
ASSOcIATE PUBLISHER: Joyce ByrneDIREcTOR OF cONTRAcT PUBLISHING: Mi Purvis
MANAGING EDITOR: Steve Macleod
ART DIREcTOR: Charles Burke
ASSOcIATE ART DIREcTOR: Andrea deBoer
ASSISTANT ART DIREcTOR: Colin Spence
PRODUcTION MANAGER: Betty-Lou Smith
PRODUcTION TEcHNIcIANS: Brent Felzien, Brandon Hoover
cIRcULATION cOORDINATOR: Karen Crane
AccOUNT ExEcUTIvE: Anita McGillis
cONTRIBUTING WRITERS: Matt Hirji, Lisa Ricciotti,
Ryan Van Horne
JULY/AUGUST 2013
22
PRINTED IN CANADA BY ION PRINT SOLUTIONS.
RETURN UNDELIVERABLE MAIL TO 10259 105 ST.
EDMONTON AB, T5J 1E3
CIRCULATION@VENTUREPUBLISHING.CA
PUBLICATION MAIL AGREEMENT #40020055
CONTENTS 2013 CADE. NOT TO BE REPRINTED OR
REPRODUCED WITHOUT PERMISSION.
20
17
12
7/28/2019 Well Construction Journal - July/August 2013
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7/28/2019 Well Construction Journal - July/August 2013
5/28july/august2013www.cadecanada.com
BOARDThe Drawing
Global ExpertsUR 4TH EDITION OF THE WELL CONsTRUCTION JOURNaL
this year takes a look at the Eagle Ford and
Permian basins in Texas. Again we are looking
at what Canadian companies and personnel
are doing outside of the Western Canadian Sedimen-
tary Basin.
It continues to amaze me when we are looking for
candidates for our stories exactly how much we do
outside of our own backyard. Everywhere you turn, you
come across another company or person not just work-
ing in a new and different environment, but leadingthe way. Canadian expertise is everywhere.
Here at home, CADEs 2013 Technical Luncheon
Presentations are over for the summer and will resume
in the fall. Please watch for announcements with the
upcoming topics and dates. Please dont hesitate to
contact us if you have any ideas for upcoming topics
or issues youd like to see presented at the luncheons or
in print. We are also looking for topics that tie into our
journal focus for each month. We hope to see more of
this of the course of the year. We hope you the CADE
membership will participate and continue to make
these events interesting and successful. If you have anyissues youd like to see covered, please email me and we
will do our best to get the story.
O
E D I T O R S N O T E
CADE ExecutiveTeam 2012/2013President Robert Jackson 403-615-9504
Past President Eric Schmelzl 403-862-0870
Secretary Tammy Todd 403 613-8844
Treasurer Cecil Conaghan 403-667-9812
Membership Chairman John Burnell 403-265-4973
Education Chairman Jeff Arvidson 403-232-7100
Social Chairman Dan Schlosser 403-531-5284
WCJ Editor Christian Gillis 403-265-4973
IT Chairman Matthew Stuart 403-605-3790
Communications Chairman Andy Newsome 403-532-0220
Member At-large John Garden 403-265-4973
Sponsorship & Marketing Kyle Klam 403-532-0220
Administrator Kali Charron 403-532-0220
E X E C U T I V E T E A M
Dont forget, we would like to publish any of your
information and announcements on new products,
new technologies and senior personnel changes for
publication each month. Please forward any an-
nouncements to us, as we would be excited to run
them in our new feature section.
We appreciate your continued support and look
forward to seeing you at the upcoming luncheons.
Christian Gillis, Editor
Well Construction Journalchristiang@hawkeyeengineering.ca
403-265-4973
7/28/2019 Well Construction Journal - July/August 2013
6/28Well Construction Journal july/august2013
Welcome NeW members
Kathryn BerKson
Martin rejMan
shaun rousseau
onoMe Clifford ovadje
rooBin ZaMir
Brad sMeaton
MiChelle BalKo
Mehdi noorMohaMMadi
ruturraj Paatil
adeBayo oluwatosin eMManuel
osondu harrison ChuKwueMeKe
Kelvin efeturi oBuKofesCott sherMan
Paxton livingston
oluwatosin adeBayo
linden aChen
allan Bouwers
Kevin Playfair
MiKe haZelton
tyler stePhenson
Christian toanChina
siavash MorteZaee fard
augustine oMoBhude
Brent KawalilaKross ClanCy
tien dang
Why become a caDe member?
As o 2013, the Canadian Association
o Drilling Engineers (CADE) has been
active or 38 years. With more than
500 members rom more than 300
companies, CADE represents a large
spectrum o experience in all areas o
operations and technologies.
For drilling and completions spe-
cialists, CADE currently oers one o
the best networking and knowledge
sharing opportunities in the Cana-
dian petroleum industry. The skills andknowledge obtained by your participa-
tion in CADE will beneft you and your
employer, with direct application to
your proessional career.
CADE oers various means or
members to connect and share their
insights. Monthly technical lun-
cheons are held with topical industry
presentations. Other membership
benefts include our monthly pub-
lication Well Construction Journal
and a membership directory, whichis the whos who o the Canadian
drilling industry. Our website www.
cadecanada.com is an excellent
ocal point or industry events, blogs
and other news. We are also active on
LinkedIn and Twitter.
Who caN become a caDe member?
CADE members can be anyone em-
ployed in the drilling and completions
industry or with merely an interest in
the industry.
Typical members include drilling
and completions engineers, geologists,
technical personnel, sales personnel
and students. Student memberships
are available to any post-secondary
student interested in learning more
about drilling and completions.
Please eel ree to share inormation
about CADE with all the people in your
organization who are interested in the
drilling and completions industry.
caDe membership reNeWals
CADEs membership year is rom Sep-tember to September. During the sum-
mer, CADE members will receive an
email and link or the renewal process
on our website.
Please remember the benefts o be-
ing a CADE member include APEGAs
proessional development hour, stay-
ing abreast o technological and in-
dustry advances, drilling conerences
and a great opportunity to network.
Thank you or your support.
caDe membership chaNges
Log on to www.cadecanada.com to
become a member or to update your
contact inormation.
M E M B E R S C O R N E R
boarDThe Drawing
7/28/2019 Well Construction Journal - July/August 2013
7/28july/august2013www.cadecanada.com
N E W S A N D N O T E S
Regulatory ReformersThe AlberTA energy regulATor (Aer) found iTs leAding men
and is set to begin its oversight of oil, natural gas and coal
projects in the province. The new regulator took over duties
from the Energy Resources Conservation Board, and Alberta
Environment and Sustainable Resource Development in June.
After the provincial government hosted public consultations
in 19 communities across the province during February and
March, the AER was tasked with balancing industry develop-
ment and landowner rights. The arms-length government body
is headed up by Jim Ellis and Gerry Protti.
Jim ellis
Aer role: Chief exeCutive OffiCer
yeArs of Public secTor exPerience: 30
Ellis served 23 years in the Canadian
Army, retiring as a Colonel in 2006, before
joining the provincial government as the
executive director of the Alberta Environ-
ment Support and Emergency Response
Team (ASERT). He became the Deputy
Minister of Environment in 2008 and the Deputy Minister o
Energy in 2011. During his time with the province, Ellis ha
also been president of the Alberta Water Council, chair of th
Alberta Petroleum Marketing Commission, and chair of th
Steering Committee of the Regulatory Framework Assessmen
for Carbon Capture and Storage.
gerry ProTTi
Aer role: BOard Chair
yeArs of indusTry exPerience: 35
Protti spent 15 years as an executive withEncana Corp. and one of its predecesso
companies, PanCanadian Energy Corp. H
was also the founding president of the Ca
nadian Association of Petroleum Producer
(CAPP) and was executive director of th
Independent Petroleum Association of Canada. Protti also spen
time as assistant deputy minister with Albertas Energy Depart
ment, and he held senior positions with the Alberta Treasur
Department and the Canadian Energy Research Institute.
Revised Drilling Expectations
However, the organization revised its anticipated feet size down
ward. The CAODC says that new equipment likely will not becom
available until later in the year, so it has downsized the annual fee
average rom 830 rigs to 823 rigs.
The PeTroleum services AssociATion of cAnAdA (PsAc) And
the Canadian Association o Oilwell Drilling Contractors (CAODC)
revised their drilling activity orecasts or 2013 to indicate a slight
uptick in expected rig activity.
The second update to PSACs 2013 Canadian Drilling Activity
Forecast added 600 wells to the original estimate or a total o 12,000
wells expected to be drilled (rig released) across Canada during
the year.
Drilling activity is keeping on a steady pace this year, and we an-
ticipate another pickup in activity in Q3 and Q4, said Mark Salkeld,
president and CEO o PSAC. Even with steady levels o activity
this year, continued low gas prices and the impact o inrastructure
bottlenecks that are squeezing access to new markets are certainly
having an impact.
The CAODC also recently revised its original 2013 orecast rom
10,409 wells to 10,649 new wells expected in Canada during 2013.
The orecast or operating days has also been increased rom a pre-
dicted 118,401 days to 121,126 days.
The association also anticipates a pickup in activity levels during
the third quarter and has adjusted its rig utilization rate or the quar-
ter rom 35 per cent to 40 per cent, or 330 rigs working.
7/28/2019 Well Construction Journal - July/August 2013
8/28Well Construction Journal july/august2013
BOARDThe Drawing
T E C H N I C A L L U N C H E O N S
Save the Date
Luncheon TicketsMEMBERS: $47.50 (plus GST)NON-MEMBERS: $55 (plus GST)
FULL TABLES OF 10: $475 (plus GST)
STUDENT: $20 (plus GST)
WALK-UP: $55 (plus GST)
N E W S A N D N O T E S
ERCB Releases Hydraulic Fracturing DirectiveThe energy resources conservaTion Board (ERCB) has is-
sued a new directive or hydraulic racturing, which includes
new requirements or wellbore integrity.
Directive 083: Hydraulic Fracturing - Subsurface Integrity
was released ollowing a two-month stakeholder consulta-
tion period.
The board says the new directive, represents a notable
enhancement to existing regulatory oversight and monitor-
ing as resources development continues and technology
adapts. The ERCBs review identied three specic areasthat required urther regulatory response: maintaining well
integrity, inter-wellbore communication and hydraulic rac-
turing operations at shallow depths. The regulatory changes
and additions will come into eect in August 2013.
MainTaining Well inTegriTy
The ERCB observed that, or hydraulic racturing operations,
there is an emerging trend toward the use o single-barrier
wellbore construction, rather than dual-barrier construction,
to provide a secure pathway or fuid injection and recovery
rom the reservoir. While the ERCB has had no reports o
single-barrier well systems losing integrity, the introductiono enhanced regulations will provide an added measure o
protection.
The board believes the risks to well integrity associated with
single-barrier well systems can be eectively managed by an
operator. The new directive requires licensees to demonstrate
that operational risks have been considered in the selection
and design o the wellbore construction, and to monitor
and test to ensure that well integrity is maintained.
inTer-WellBore coMMunicaTion
To address the risks associated with inter-wellbore commu-
nication, the proposed directive requires licensees to carry
out a risk assessment and prepare a well control plan to
manage unintended inter-wellbore communications, and
reduce the impacts i a communication event occurs.
The ERCB believes prevention and mitigation throughproper planning and execution will enable licensees to e-
ectively manage risks associated with inter-wellbore com-
munication.
FracTuring operaTions aT shalloW depThs
Current regulatory requirements or shallow racturing op-
erations, outlined in Directive 027, ocus on shallow zones
up to 200 metres below the surace. Given a avourable
economic environment, zones between 200 and 600 metres
(depths above the base o groundwater protection in many
areas) may also be subject to uture development.
Under the new directive, all licensees carrying out hy-draulic racturing operations in this zone must:
conduct a risk assessment,
observe prescribed setbacks or water wells and top o
bedrock, and
use environmentally-riendly chemical additives or fuid
compositions above the base o groundwater protection.
Our popular Technical Luncheons have wrapped or the
2012/13 year. We are in the process o planning an exciting
new series or 2013/14. What topics would you like to see
covered in the upcoming year? Membership input is valu-
able to us and we want to make sure we are covering the
topics that are important to you.
GST REGISTRATION #R123175036
Visit www.cadecanada.com
for all ticket purchases
Please call or email with your great ideas:
Christian Gillis, Managing Editor,
Canadian Well Construction Journal
christiang@hawkeyeengineering.ca
(403) 265-4973
7/28/2019 Well Construction Journal - July/August 2013
9/28july/august2013www.cadecanada.com
PROFILEMember
By Mif Purv
R
Small Footprints
andy Hawkings Has spent22 of His 34years in the oil and gas business as a drilling
engineer on the exploration side, at home
and abroad. Hawkings also spent 12 years
as a drilling contractor, specializing in new rig con-
struction and ootage drilling. He was a principalat Enercon International and Enercon Engineering,
providing drilling project management services
or a host o clients in North and South America.
He let a position as vice-president and general
manager o Lakota Drilling Division or Savanna
Energy Services in 2007 to consult in Texas, and
then went on to orm CanElson Drilling Inc. in
2008. With colleagues, he used his industry experi-
ence working in challenging conditions to create
rig packages that would produce great results.
We knew theyd be useul, he says about
CanElsons rigs. Theyre a small ootprint, plug-and-play, ultra-heavy telescop-
ing double rig. And theyre
very exible to meet a maxi-
mum number o conditions.
They are the Swiss Army Knie o rigs.
Hawkings says the rigs CanElson brings to the
Permian Basin operate at depths o between 2,000
and 5,500 metres, but they are small enough to en-
sure maximum portability and minimum at time.
Where a triple rig could take three days or more to
prep, CanElsons svelte double rigs take a hal day
to assemble.
We can take them up long roads to tight loca-
tions and theyre eective in any kind o weather,
Hawkings says. We operate in adverse conditions
with maximum efciency. A typical CanElson
rig at work in the Permian Basin would have (or
example), a 4,000-metre/14,500-oot telescop-
ic double, with two 1,000 HP mud pumps and
4 -inch G105 drill pipe.
The rigs are just part o the picture. They are
powerul but, in a smaller package, they generate
more productive time, and each dollar saved goes
into the next well. It adds up to portability, not just
o the rigs, but o CanElsons and Hawkings exp
tise and track record.
When CanElson moved into the Permian Bas
in Texas, it brought in a 100-per-cent Canadi
crew and managers. Local workers had never beexposed to this kind o rig
Hawkings explains. His tea
set to work training the Texa
on the specifcs o the rig, an
on its saety and maintenance. Today, just 30 p
cent o the team is Canadian.
We are proud to transer the tech. Hap
to train locals. Weve hired vets returning ro
Aghanistan and Iraq, and they have proven ve
successul, Hawkings says.
Our rigs are clean and well maintained. W
train the local people on our rigs to think o sa
ty, perormance and maintenance, he continu
We didnt set out to change work cultures, but
has been very rewarding to see the guys on our ri
improve and take pride in their work. We are prou
but not arrogant. CanElson has seen simi
success in training local crews to high standards o
well sites in Mexico, too.
When Hawkings struck out to partner
CanElson, it was to get back into the nuts-and-bo
o working with a group o colleagues, and provi
ing lean, eective solutions. For me, the thrill is
fnding and showing the efciencies, he says.
Randy Hawkings brings theSwiss Army Knie o rigs to the
Permian Basin, along with big
gains in efciency
Hawkings says he didnt set out
to change work cultures.
7/28/2019 Well Construction Journal - July/August 2013
10/28Well Construction Journal10 july/august2013
Mariana Murillo has coMpleted her third year of
chemical engineering at the University o Calgary and is
currently an engineering intern with TransCanada Pipe-
Lines Ltd. She will be in the intern position or 16 months
in the companys Pipeline Integrity Department.
Murillo has been an active member o the Petroleum and Energy
Society (PES) student chapter at the university or the past two years.
As this years Internship Representative, she is looking orward to
planning many events and collaborating with industry luncheons,
so students can increase their exposure to current topics and theirinteraction with experienced proessionals in the oil and gas sector.
Ater graduating rom university, Murillo plans to travel to Europe
and South America with her amily.
Young TalentHighlighting tomorrows best and brightest
StudentPROFILES
Mariana Murillo
Chemical EngineeringUniversity of Calgary
hilip Gunn is halfway throuGh the petroleuM
Engineering Technology program at SAIT Polytechnic,
having just fnished his frst year. Gunn chose to ocus his
career in the oil and gas industry ater a brie stint working
with bitumen at a core analysis lab in Calgary.
Gunn is spending the summer working in the oil patch as a Stu-
dent Field Operator with Pengrowth Energy Corp. at a site just northo Sundre, Alberta. He has not decided yet i he will join the industry
ull-time ater completing the SAIT program or i he will continue
his education at the university level. However, Gunn is excited to get
involved with the industry and aspires to work internationally later
in his career, just as his ather has.
P
Philip Gunn
Petroleum Engineering TechnologySAIT Polytechnic
HELP WANTED: Career Department
oil and Gas opportunities across canada
continued developMent of canadas oil and Gas industry
could sustain between 900,000 and one million jobs across the
country in the next 10 years.
The Petroleum Human Resources Council o Canada estimates
in a recent report titled, The Decade Ahead: Labour Market Outlook
to 2022 for Canadas Oil and Gas Industry that only 20 per cent
o those jobs will be direct jobs in the sector. Almost hal o
the jobs will be indirect jobs in industries like construction,
manuacturing, transportation and warehousing; and the rest will
be induced jobs driven by the spending and service needs o
direct and indirect industry workers.
For every job created in our industry, three more are created in
other areas o the economy, said Cheryl Knight, executive director
o the council, which is now part o Enorm. But to achieve this
workorce growth, the industry will actually need to fnd between
125,000 and 150,000 new workers by 2022.
The report analyzed two potential industry activity scenarios
a low growth scenario, in which market diversifcation does not
occur; and an expansion scenario, in which Canadian suppliers
succeed in gaining access to a range o international markets.
7/28/2019 Well Construction Journal - July/August 2013
11/28
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Direct industry employment in 2012 is estimated at more than 195,000
people, which is up 10 per cent rom 2009. Depending on the industry
activity scenario, direct employment over the next decade will increase
between nine and 20 per cent, with employment levels somewhere
between 213,500 and 233,900 by 2022.
As many as 38,700 new positions may need to be lled, or as ew as
18,300, said Knight in a news release. While the industry is growing, it
will also be losing workers to retirements and turnover.
The labour market outlook estimates approximately 45,000 workers
will be lost to age-related attrition. With a large workorce o approxi-
mately 200,000 people, three per cent annual turnover results in an
additional 6,000 hires a year.
The result is that labour shortages will persist throughout the coming
decade, in either scenario, said Knight. Skill shortages are critical andevery sector will be aected.
The oil and gas services sector will have the largest requirement, need-
ing between 37,700 and 47,900 new employees. The oil sands sector will
need between 14,900 and 22,200 new workers, conventional producers
will need between 6,850 and 10,700 people, and the pipeline sector will
need rom 3,000 to 3,250 employees.
HELP WANTED: Career Department
DRILLING SLANG
I you want to walk the walk on a drill site,
it helps to talk the talk. Here are some terms and
phrases oten heard out in the feld.
Coke: an insoluble organic deposit that has low hydro-
gen content. It is also known as pyrobitumen. Coke is
ormed by thermal cracking and distillation during in
situ combustion.
Trip pill:a volume o mud that is denser than the mud in
the drillpipe and wellbore annulus. Also called a slug, it is
used to displace mud out o the upper part o the drillpipe
beore pulling pipe out o the hole.
Bullhead: to orcibly pump fuids into a ormation. I
the ormation fuids contain hydrogen sulde gas, bull-
heading prevents the toxic gas rom reaching the surace.
Bullheading is also perormed i normal circulation can not
occur, such as ater a borehole collapse.
Continued...
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REPORTSpecial
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inal numbers are still unknown, but the u.s.
Geological Survey (USGS) estimates the Eagle Ford
holds between seven billion and 10 billion barrels
o recoverable reserves, which is roughly double
that o the prolifc Bakken Shale to the north. That would
make Eagle Ford the largest onshore oil reserve ever dis-
covered in the Lower 48.
Those reserve numbers are attracting development.
A report rom the Railroad Commission o Texas, the
states oil and gas regulator, anticipates capital investment
in the play to nudge $30 billion in 2013 alone, a fgure
o oil sands proportions. Citing a 2012 Wood Mackenzie
study, the commissions analysis predicts that between
2013 and 2015, the Eagle Ford Shale will become the
largest standalone energy project in the world as measured
by capital expenditures.
location: South and east Texas
resource: Light oil, natural gas,
natural gas liquids
GeoloGy: Shale
Depth: 1,200 to 3,600 metres
estimateD recoverable reserves:
7 10 billion barrels
proDuction: 609,407 barrels per day of oil and
condensate,* 1.9 billion cubic feet per day*
major proDucers: EOG Resources Inc., BHP
Billiton, Chesapeake Energy Corp., ConocoPhillips,
SM Energy Co., Marathon Oil Co., CNOOC Ltd.
*Average for rst quarter of 2013 according to theRailroad Commission of Texas
F
By Steve MacLe
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Everything isBigger in Texas
he eagle Ford Shale haS the potential
to be the single most signicant economic
development in our states history, stated
David Porter, commissioner o the Railroad
Commission o Texas the states oil and gas
regulator in its March 2013Eagle Ford Shale Task
Force Report.
The play is named ater the town o Eagle Ford,
which is about 10 kilometres west o Dallas. Petro-
hawk Energy Corp. drilled the rst Eagle Ford well
in 2008 and had immediate
success. Gas fowed rom thecompanys discovery well,
which was a 975-metre lat-
eral with 10 racture stages,
at a rate o 7.6 million cubic
eet per day.
That same year the state issued 26 permits or
Eagle Ford developments, but it rapidly bloomed
as the enormity o the opportunities sunk in with
operators. Over the ensuing our years, a total o
8,075 new permits were approved. There were
4,145 issued in 2012 alone.
Anadarko Petroleum Corp. drilled almost 700
wells as the ormations top gas operator during
2012. EOG Resources Inc. was the top operator
or oil wells in 2012 with more than 800 wells,
according to a March 2013 University o Texas
at San Antonio economic study o the Eagle Ford.
The Railroad Commission reported there were 875
producing gas wells and 1,262 producing oil wells
on schedule in the region during 2012.
The Eagle Ford is particularly notable and suc-
cessul because o its high oil production levels
compared with other shale plays, so its been
highly economic even in times o low natural gas
prices. According to a report rom Platts in Mar
2013, Eagle Ford production quality is high an
variable API gravity ranges rom 38 to 60.
Talisman Energy Inc. holds about 74,000 n
acres in the southern part o the Eagle Ford. Alo
with its joint venture partner Statoil, Talisman
strategy in Eagle Ford is ocused on developin
areas with higher liquid yields. The Calgary-bas
company nished 2012 with production rom t
ormation at 20,000 barrels o oil equivalent p
day, which was a our-old i
crease rom 2011.The carbonate shale p
centage can be up to 70 p
cent in the south Texas part
the ormation, so it takes w
to hydraulic racturing.
the play stretches rom the Mexican border alo
the Gul Coast into east Texas, it measures abo
80 kilometres wide, has an average thickness o
metres and sits at depths ranging rom 1,200
3,600 metres.
The cretaceous-age rock can be tricky to nav
gate. It can be complex, says Matt Graham
senior completions engineer at Talisman in t
Eagle Ford, whose role is to design completio
and hydraulic racturing treatments there.
We have no real issues getting racks in t
ground; were nding that, based on productio
logs, there might be actual sweet spots in the ro
that might be surprising, he says. I think t
biggest challenge is understanding the rock an
understanding where we should land laterals.
Graham came to the Eagle Ford about a year a
rom the Marcellus Shale in Pennsylvania. Beo
that, he spent three years working in Weste
T
REPORTSpecial
Shale oil and gas is revitalizing drilling activity in The Lone Star
State and the Eagle Ford is leading the way
ByGraham Chandler
t e F S s
b s mssfc cmc vm
u ss sy. David Porter, commissioner of the
Railroad Commission of Texas
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Canada with Talisman. Our acreage there stretches rom near
Calgary to Edmonton and we have ve dierent phase windows, so
each phase window has its own operational challenges like rom
black oil to dry gas, Graham says. I think anywhere you go you
try to gure out where the phase windows are within the shale; it
is always a challenge. You have to drill wells and produce them to
actually gure it out.
Theres depth, theres distance, theres the
variability and the phases, he adds, which re-
sults in varying lateral lengths. Graham notes
that the laterals average about 16 rack stages.
The land is also one o the big dierences
working down in Texas compared with Western Canada. Lease
constraints, thats one thing that really surprised me down here, Gra-
ham says. You have pretty much a patchwork o land, which could
be ideal or not. With your multiple mineral holders, it seems dicult
in some areas compared to the nice township system in Alberta.
The mixture o oil and natural gas liquids production in the Eagle
Ford has also created several new aspects or Graham to deal with,
setting it apart rom rom his time producing dry gas in the Marcel-
lus. In the Eagle Ford there are all types o issues you have to deal
with: downhole issues, producing issues, surace handling o the pro-
duced liquids, he says. Whereas in the Marcellus, you are worri
about the water you produce back and the gas that you produce.
As with many areas with limited lakes and rivers, water availab
ity in the Eagle Ford Shale is a actor in drilling activity growth. Cu
rently, almost 90 per cent o the new (not reused or recycled) wat
used or hydraulic racturing is groundwater. To urther encoura
reuse and recycling o fowback and produc
water, the Railroad Commission is current
amending its water recycling rules.
The renzied growth is impacting more th
just water use. Our centre o activity is in Thr
Rivers, says Graham. Its crazy the hotels th
are popping up. We saw that in Pennsylvania as well; I think its
normal course o oil booms everywhere.
Community colleges are ramping up oil and gas training cours
And the limited number o pipelines to markets has helped prop
unprecedented increases in truck trac, up to 86 per cent accordi
to a recent state government study.
The Eagle Ford enjoys a distinct advantage over other shale play
it sits just 200 kilometres or so rom the Texas Gul Coast renin
hub, which accounts or nearly hal o the total 15.3 million bp
rening capacity in the U.S.
Lease constraints, thats one thing
that really surprised me down here. Matt Graham, senior completions
engineer with Talisman Energy in theEagle Ford
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REPORTSpecial
While pipeline inrastructure
is alling behind the skyrocketing
production, producers are still
nding ways to get pro-
duction to the coast.
Dozens o small diam-
eter gathering lines are
under construction to
eed transmission lines
into the Houston and Cor-
pus Christi areas. Construction
on more o the larger, mostly
20-inch pipelines is underway too,
such as the Double Eagle Pipeline
and the Sand Hills
Pipeline. Kinder Mor-
gan also announcedin May it will expand
its 300,000 bpd crude
and condensate pipe-
line rom the Eagle
Ford play to the Houston Ship
Channel.
Sucient capacity overall is not
expected until 2014-2015. Until
then, much Eagle Ford production
will move on trucks and rail. To
handle that, the overloaded Port o
Corpus Christi is quickly upgrad-ing. Some Eagle Ford production is
absorbed by reneries close by, in-
cluding Valeros Three Rivers ren-
ery, which processes 100,000 bpd
and the Nixon renery at nearly
15,000 bpd.
Brisk Eagle Ford production is
even changing U.S. oil shipping pat-
terns. Corpus Christi-loaded Eagle
Ford crude barges are now regularly
delivering to Louisiana, and tank-
ers routinely move Eagle Ford crude
to the U.S. Atlantic coast, displac-
ing some imports. Corpus Christis
crude loadings jumped to 280,000
bpd in late 2012 rom almost none
three years beore.
Those trends will likely continue
as production is expected to rise in
the coming years and will need a
destination. Oil produced rom the
Eagle Ford averaged 129,000 bpd
during 2011 and jumped to more
than 512,000 bpd by March 2013.
At Benteks May symposium in Houston earlier this year, on
presenter said he expected production rom the region to exce
1.4 million by 2016.
As with other oil and gas regions o North America, this kin
o booming activity with the availability o modern rac
ing technology has brought renewed attention to more m
ture conventional elds. The Permian Basin o West Texas is n
exception.
The Permian Basin has produced close to 29 billion barr
since its rst well in 1921. The ormation accounted or 57 p
cent o Texas crude production in November 2012 aroun
1.3 million bpd and has long been the production centre
the benchmark West Texas Intermediate (WTI). It adjoins sout
eastern New Mexico and extends about 400 by 480 kilometre
Several ormations produce oil an
gas rom depths ranging rom a e
hundred metres to 8,000 metrGrowing unconventional productio
is expected to boost Permian outp
past 1.7 million bpd by 2016.
It certainly attracted ull-servi
drilling fuids provider QMax Solutions, which serviced its
Permian Basin well in 2008. We were operating in the Barne
shale gas play and, as gas prices declined, so did drilling activity
recalls Tony Davis, ounding partner and executive vice-pre
dent with the Calgary-based company. We looked or altern
tive markets or our Mudstripper water conservation technolo
and quickly ound one in the Permian Basin.
Using the racking techniques o shale plays, multiple intervwithin a well are now being perorated in the Permian, allow
ing or multiple contributing zones rom 2,100 to 3,600 metr
Davis says the biggest challenge or drillers in the region are al
regarding water usage because most operators use water-bas
drilling fuid systems.
Each one can consume over 30,000 barrels o resh or bri
water, he says, while pointing out that the QMax system rec
cles the majority o that water. Our MudStripper Unit remov
the solids rom the active system while drilling, returning 99 p
cent solids-ree water or reuse.
Despite oering innovative technology, being an outsid
in the Texas oil patch is not or the aint o heart, Davis say
The biggest dierence is we are considered the new kid on t
block, he says. In Canada we have the luxury o having bee
in business or 20 years and have built a reputation. Not so
the Permian. We have to prove ourselves every day. Texas
similar to Western Canada in that the industry is very muc
relationship driven.
The new shale developments like Eagle Ford and Bakken, an
other plays including revitalized conventional elds like t
Permian, are expected to boost U.S. crude production to leve
not seen since Alaska North Slope production peaked. The Eag
Ford, the Permian Basin and the Bakken alone could reach ov
ve million bpd by 2016 with Eagle Ford leading the way.
Texas is similar to Western Canada
in that the industry is very muchrelationship driven.
Tony Davis, QMax Solutions founding
partner and executive vice-president
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F
UnconventionalThinkingA Calgary company helped turn the booming Eagle Ford into a
proving ground for using liqueed natural gas to power hydraulicfracturing operations
REPORTHealth & Safety
By Ryan Van Hor
erus Inc. Is a cryogenIc company at
heart. It was only natural that the Calgary-
based company started looking at liqueed
natural gas (LNG) opportunities our years
ago, because the technology to make it and move
it is airly similar to the companys established
liquid nitrogen and carbon dioxide business. The
opportunity to develop a low-emission solution or
hydraulic racturing operations led Ferus to south
Texas.
The liqueed natural gas division o Ferus LP
teamed up with Baker Hughes Oileld Operations
to run a pilot project in the Eagle Ford Shale that
used LNG as the uel source to stimulate well per-
ormance. The pilot had six 2,250-horsepower units
using LNG in their dual-uel engines.
The job was completed in October 2012 at a site
near Pearsall, Texas, and shortly ater the Baker
Hughes business unit announced it was converting
a feet o Rhino-brand racking units to run the
dual-uel engines or Cheyenne Petroleum Co.
Jed Tallman, manager o market development
Feruss U.S. operations in Denver, says the indus
is embracing the new technology or two m
reasons: lower emissions and lower costs.
The emissions are reduced signicantly becau
natural gas burns so much cleaner than diesel, T
man says, and notes that using natural gas inste
o diesel can lower carbon dioxide emissions by
per cent, nitrous oxide emissions by 75 per ce
particulate emissions by 90 per cent, and sulph
dioxide emissions by 99 per cent.
While cost is another actor to the interest in
ing LNG as a uel to power equipment out in t
eld, the savings vary. You can get a 20 to 40 p
cent cost reduction compared to diesel, but th
depends on location, Tallman says.
About a month beore the successul pil
Baker Hughes unveiled the technology at
high horsepower summit in Houston, so oth
companies were aware o it and watching w
interest. Its being more widely used througho
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the industry, Tallman says. The largest service
companies, such as Halliburton and Schlumberger,
have started doing it.
The technology has also made its way north o
the border. It has been used several times in the
Montney play, Tallman adds.
Ferus began supplying cryogenic uids or well
completions in the oil and gas industry back in
2004. The company operates 11 plants at eight
locations across North America and launched its
LNG operations in late 2011.
The dual-uel engines still used diesel, but are
converted so they can also burn LNG. Tallman says
the amount o LNG used varies between 10 to 70
per cent, but the average is 50 per cent. Those
engines can revert at any time back to 100 percent diesel, he says. You dont need to replace
engines; you just need to add some components
to them.
Operators will also have
to add equipment to store
LNG and vapourize it beore
eeding it into the engines,
but Travis Balaski, manager
o market development or
Ferus in Canada, says thats
creating opportunities or several companies across
North America.Companies such as American Power Group Inc.,
Caterpillar and ComAp have developed dual-uel
engines, while Ferus worked with suppliers to
design the equipment that is necessary to get the
LNG to the well site.
We do not manuacture our own equipment,
but we do assist in the design and engineering o
the equipment, Balaski says. This way we get the
type o equipment that best meets our customers
needs.
The company spent about two years perorming
technical research and development beore
partnering with Baker Hughes. Ferus then brought
in other resources rom across North America,
including some third-party products, to make sure
the pilot was successul. Now that the technology
is proven, Ferus anticipates o a network o LNG
plants will develop in energy hotspots.
The temperature o LNG increases over time and
the colder the uel is, the more energy it provides
per litre. Because o the perishable nature o
LNG, and the cost o transporting it, Balaski says
the delivery model will be dierent than the oil
industry which uses large centralized oil refneries.
REPORTHealth & Safety
Well build smaller scale plants and try
locate them close to the demand, Balaski says.
Ferus recently partnered with Encana
construct a liqueaction acility in the Gran
Prairie region o Alberta. The LNG plant will ha
a capacity o 190,000 litres per day.
Encana has large operations in the region an
Ferus has a substantial trucking eet, Balas
says. The two o us bring base load, the two
us bring experience in natural gas and cryogen
processing. It was a good, natural ft or the tw
o us to partner on that project.
Construction started earlier this year and Balas
expects the plant to be operational early in 2014
Encana is eager to start the transormation
natural gas as a uel source in the oil industry, buteyeing a bigger market. These are signifcant ear
steps to demonstrate the viability o natural gas a
transportation uel, says David Hill, vice-preside
o operations or Enca
Natural Gas Inc.
Hill says the Gran
Prairie plant will be
the middle o an ener
corridor with massi
natural gas potential.
Encanas goals or the project are the same
Ferus envisioned or the use o LNG in the felower costs and lower emissions. Encana expec
to lower its costs by reducing its dependen
on bringing diesel uel into the region, an
the company also wants to lower our carbo
ootprint rom well to wheels, Hill says.
Another beneft that Hill sees is an increas
social licence to operate by creating local job
using local uel, and supplying it to others.
With Encana planning to prove that it
sustainable to use natural gas in high-u
consuming applications, such as drilling an
pressure-pumping services and service compan
gearing up to supply the growing demand the
is momentum building or using LNG in the fe
as a uel source.
In B.C. and Alberta, were seeing the mark
beginning to open up and be more receptive
natural gas, Hill says. I think were going to s
several companies making announcements th
year and into early next year.
Hill anticipates the opportunity to stret
beyond oil and gas: rail, marine and truckin
industries could all convert to this technolog
Were scratching the surace, he says.
Well build smaller scale plants
and try to locate them close
to the demand. Travis Balaski, manager of market
development for Ferus in Canada
7/28/2019 Well Construction Journal - July/August 2013
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Challenged?
7/28/2019 Well Construction Journal - July/August 2013
20/28Well Construction Journal20 july/august2013
A
Due SouthA handful of Canadian companies are taking advantageof an oil renaissance in Texas
REPORTTech
B Matt H
fter producing nearly 3.5 million barrelso oil per day during 1972, annual production
steadily declined in Texas or the next 37
years. According to the United States Energy
Inormation Administration, by 2009 the Lone Star
State was producing just 1.1 million bpd.
In recent years, light oil production rom the
Bakken ormation in North Dakota has threatened
to displace Texas as the top oil-producing state, but
a rapid rise in production during the past three
years has reestablished Texas as a hotbed o drilling
activity a tradition that started when a derrick just
outside o Beaumont, Texas, began gushing oil in
January 1901.
The U.S. EIA reported oil production levels rom
Texas reached nearly 2.3 million bpd during Febru-
ary. It was the highest daily output the state had
seen since April 1986.
Horizontal drilling and hydraulic racturing
helped retrieve oil and natural gas rom the shale
rock o the Eagle Ford in south Texas to kick-start
the resurgence. Those same technologies are also
bringing increased production rom conventional
wells in the Permian Basin in West Texas and in-
creased opportunity or Canadian drilling and well
service companies to oset the slowdown durinspring breakup by keeping operations moving
Texas year-round.
SAvAnnA EnERgy CORPORATiOnThe Calgary-based company was established
2001 and oers drilling, well servicing and oile
equipment rental services. The public company h
grown its feet to include more than 100 drilling ri
and more than 100 well service rigs.
Savannas U.S. operations are based in Housto
Texas, and the American feet includes 27 drillin
rigs and 11 well service rigs. Texass Permian Bas
is home to 15 o those drilling rigs, and accordi
to the companys rst quarter report this year, co
struction has begun on three additional service ri
or the U.S. operations.
During 2012, Savanna undertook a program co
verting eight o its CT-1500 drilling rigs to deep
capacity TDS-3000 rigs. The latest generation o t
companys hybrid rigs capable o operating coil
tubing or conventional top drive rom the same r
has been designed to reach depths o 3,000 metr
While six o the converted rigs stayed in Alberta, t
other two joined the Texas drilling feet.
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21/28
][
Cathedral Energy Servicesoperates in some of thetoughest and most challengingenvironments. Our relentlessfocus on innovative technologyand industry leading serviceensures we provide our clientswith unmatched performance.
Drilling+Completions
CathedralEnergyServices.com
Cathedral energy ServiCeS ltd.
Ten years ater launching in Western Canada, Cathedral Energy
Services began providing production testing services in the U.S. in
2008. During the frst quarter o 2013, the Calgary-based company
hit a record level o quarterly revenue rom production testing in the
U.S. by bringing in $8.2 million, which eclipsed production testing
revenue in Western Canada or the quarter.
The public company also provides drilling, measurement while
drilling systems and downhole tools to operators. Part o Cathedrals
capital budget or 2013 included $3 million to augment the
production testing division with three rack fowback units to be
utilized in the Eagle Ford region. The three units were built during
the rst quarter and the green completion closed loop units are
now operating in Texas.
CanelSon drilling inC.Founded in 2008 by current president and chie executive ofcer
Randy Hawkings, CanElson is a relatively new upstart, but the Cal-
gary-based company is rapidly emerging as a major player in North
Americas growing oil and gas industry.
The public company expanded into the U.S. early and deployed
its rst American rig in the Permian Basin in late 2009. CanElson
has expanded rapidly since then, recording $229 million in revenue
during 2012 which represented a 24-per-cent increase rom one ye
earlier rom a feet o 42 drilling rigs.
CanElson has already added two drilling rigs in Texas to bring the a
eas feet total to 12 rigs, which marks the companys most active regio
behind Saskatchewan-Manitoba where 14 drilling rigs are located.
enSign energy ServiCeS inC.
In the late 1980s, Ensign Energy had our drilling rigs. Today, t
Calgary-based company has about 340 drilling rigs operating aroun
the world, with 236 o those rigs scattered across numerous unco
ventional plays in North America.
Ensign pulled in revenue during 2012 o $2.2 billion and rough
43 per cent o that came rom business in the U.S. The company h
116 drilling rigs operating south o the border, which last year had
utilization rate o 57.4 per cent compared to a 38.8 per cent utilizatio
rate or the companys Canadian feet.The cornerstone o Ensigns drilling operations is its proprieta
Automated Drilling Rig (ADR), which, as the name suggests, is
completely automated, computer-controlled system that allows t
drilling rig to be taken down, moved and installed aster than
conventional rig, and can also be equipped to reduce pipe handlin
on the drill foor. Eight o the 10 drilling rigs Ensign has current
running in south and east Texas are ADRs.
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I
Challenge and
Opportunity
As much as low prices, production hotspots are creating opportunities andredrawing North American distribution networks
REPORTMarket
By Lisa Riccio
ts time to update the list of things that
are bigger in Texas. Along with the Lone Star
states big size and its inhabitants big hats and
bigger-than-lie attitudes, Texas can now reclaim
its top spot in the ranks as the biggest crude oil pro-
ducer in the U.S.
Texas became synonymous with geysers o blackgold when Spindleords Lucas No. 1 well blew 100
eet into the air in 1901. But, many decades later, the
state ceded its status as the oil king to new challengers
like Alaskas North Slope oil elds in the 1980s and,
more recently, to North Dakotas Bakken shale light
oil reservoir. But i youve been living in a cave and
havent noticed, Texas is back, thanks to a behemoth
shale ormation o its own the Eagle Ford.
Both the Bakken and the Eagle Ford have become
prolically productive in a very short span. So much
so, that an abundance o Bakken light oil is oten
blamed or devaluing the price o Alberta bitumenin the American Midwest, where Bakken barrels now
food into what was one o Canadas prime markets.
In December 2012, Western Canadian Select (WCS)
prices or a barrel o heavy crude plummeted to a re-
cord low, trading more than US$40 below West Texas
Intermediate (WTI), North Americas benchmark
blend. The Bakkens negative impact on Canadian
heavy crude prices dominated headlines in late 20
and early 2013 and inspired Albertas Prem
Alison Redord to coin the now-amous term bitum
bubble to describe the unavourable gap betwe
higher WTI prices (and even higher Brent world pric
versus Albertas discounted WCS bitumen.
Meanwhile, as producers scrambled to nd ways move the glut o crude past bottlenecked Midweste
pipelines, the Eagle Ford play quietly caught, th
surpassed, North Dakotas impressive producti
gures. By early 2013, the Eagle Ford had doubled
2010 production levels to more than 500,000 barr
per day.
It raises a new worry or Canadian producers.
May, the bitumen bubble had defated considerab
thanks in part to increased rail transport o an es
mated 100,000 b/d o Canadian crude to U.S. ma
kets, along with the resolution o 2012s unexpect
pipeline and renery maintenance issues. But nothat the WCS has returned to its historical discoun
a range o US$15 to US$20 below WTI, is Albe
bitumen on the brink o another crash, this time d
to competition rom the Eagle Ford? Will a Bakke
like eect move south, giving Alberta a second, tru
Texas-sized pricing headache, as it competes wi
ramped-up production rom Eagle Ford?
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Yes and no, says Greg Stringham, vice president o oil sands and
markets at the Canadian Association o Petroleum Producers (CAPP).
Theres no simple answer, agrees Barry Munro, oil and gas leader at
Ernst & Young Canada in Calgary.
The two energy experts arent dodging the question. Their answers
reect the new reality o North American oil production and pricing
complex, dynamic and in the midst o a undamental transormation.
Production profles have changed substantially in just fve years, mar-
kets are diversiying, and supply chains are shiting. As well, production
has increased rom all bases, not just the Eagle Ford and the Bakken,
putting pressure on the entire distribution network. The time-honoured
supply-and-demand economic model remains relevant to pricing, but
new issues, such as a resolution o inrastructure constraints and pursuit
o a method to move the right type o crude to the right refneries, have
become equally important.
Stringham is resh rom turning a staggering stack o stats, trends and
data into CAPPs annual long-term outlook or Canadian crude oil pro-duction, and hes upbeat. Crude Oil: Forecast, Markets & Transportation, a
45-page report released in June, bullishly predicts that Canada will hit a
record 6.7 million b/d by 2030, up 500,000 b/d rom last years estimate.
Stringham says CAPP is watching developments closely in the Eagle
Ford, but doesnt expect the surge in tight oil rom Texas will negatively
impact Canadian prices as the Bakken has.
Eagle Ford is an entirely dierent situation rom the Bakken because
o its location, says Stringham. The majority o
refneries clustered across the Midwest process
light oil and/or upgraded bitumen. Beore the
Bakken boom, when uture growth was widely
expected to come rom Albertas oil sands, somerefners added cokers to their acilities, repositioning themselves to
take heavy crude. A number o these heavy-oil refnery conversions
were recently completed, but considering the high volumes o light
oil now readily available rom the Bakken, the remainder will likely
remain as light crude acilities. In 2012, Canada supplied 1.7 million
b/d to the Midwest, making it Canadas largest export market, but
Alberta now produces more bitumen than the Midwests limited num-
ber o heavy crude refneries can process. As well, Midwest refneries
are replacing upgraded bitumen rom Alberta with Bakken light. The
result is an oversupply o heavy crude in the Midwest, and lower
prices or Canadian oil.
The Eagle Fords light crude, however, heads to refneries on the
Gul Coast o the United States, which predominantly process heavy
crude. Canada sends very little light crude to Gul refneries, so its not
competing head-to-head with the surging supply rom the Eagle Ford.
Instead, Gul Coast refneries are turning away rom imported light oil
rom Arica and the North Sea, replacing oreign supplies with their
own domestic light crude.
On the other hand, heavy oil refneries on the Gul are hungry or oil
supplies. Gul Coast refneries represent a nine million b/d market, and
fve million o that is heavy crude, Stringham says. Clearly its a big
market or Canada. Venezuela and Mexico currently supply most o its
heavy crude, but the Gul Coast would happily switch rom dwindling
volumes arriving rom these countries subject as they are to the vaga-
ries o shipping to a more stable supply o bitumen rom Canada th
arrives via predictable pipelines.
I those pipelines actually existed, that is.
Inrastructure is key, say Munro. The potential exists to signi
cantly increase shipments o Canadian heavy crude to Gul Coast
fneries i inrastructure restraints are resolved with additional pipeli
capacity. Approval o the TransCanada Keystone XL pipeline is critica
important to provide market access and relieve distribution bottlenec
in the Midwest.
Following his most recent trips to Washington to build support
Keystone XL, Stringham is eeling optimistic about a positive decisio
He says this time round he noticed a distinct shit in attitudes com
pared to previous meetings. Beore Id hear at-out opposition, just
pipeline. Now theyre talking in hypotheticals, discussing trade-o
Theyre saying, I Keystone does get approved, heres what we want
see. So Im hopeul.
Stringham notes that although Keystone receives the most medattention, its just one o a number o recently announced pipeli
proposals to the Gul Coast. Some, like the Enbridge Flanagan Sou
Pipeline project, (which will be built along the existing Enbridge Spe
head South Pipeline rom Flanagan, Illinois to Cushing, Oklahom
and the Enbridge/Enterprise Seaway Pipeline (a new twin line alon
the existing Seaway pipeline), are already under construction. As we
TransCanada Keystone decided to proceed with its Gul Coast proje
(a pipeline rom Cushing to Port Arthur an
Houston, Texas) without waiting to see wheth
Keystone XL receives regulatory approval. Co
struction began in 2012 and its target in-servi
date is late 2013. Enbridge and Energy Transalso hope to convert segments o an existing natural gas pipeline
crude oil service between Patoka, Illinois and refneries in Tenness
and Louisiana.
And then theres always transport by rail, an idea that seemed laug
able three years ago but has proven its worth in North Dakota. R
is ourishing where no inrastructure exists, Munro says. Its becom
a viable alternative that can relieve temporary capacity pressure o
pipelines or buy producers time. Producers also love rail because
gives them more optionality, Munro adds. It lets them switch ma
kets depending on price and proft potential, changing destinatio
rom, say, Louisiana to the East Coast.
Stringham agrees, pointing out that this year CAPPs annual o
cast includes a special section on rail or the frst time. Our estima
o 300,000 b/d by rail rom Western Canada by 2014 is quite co
servative. Capacity could go way up, especially i Keystone XL isn
approved.
It looks like theres nothing to ear rom the surge in light o
production rom Texas. Eagle Fords big impact will be a shiting
where the markets or light and heavy crude want to be, not low
prices, Stringham summarizes.
Munro shares his optimism. Its an amazing time or the oil bu
ness, with massive opportunity and an equal number o challeng
Were redrawing what oil distribution networks look like in Nor
America.
Production proles have changed,
markets are diversifying, and
supply chains are shifting.
7/28/2019 Well Construction Journal - July/August 2013
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Canadian Rig CountsJune 5, 2013
Drilling Down Total Utilization
Alberta 106 516 622 17%
B.C. 21 34 55 38%
Manitoba 1 20 21 5%
New Brunswick 0 0 0
Newfoundland 0 0 0
Northwest Territories 1 1 2 50%
Quebec 0 1 1
Saskatchewan 28 92 120 23%
Totals 157 664 821 19%
Source: Divestco
NUMBERSBythe
Stats at a Glance
Alberta Rig CountsJune 5, 2013
Drilling Down Total Utilization
Northern Alberta 36 106 142 25%
Central Alberta 53 348 401 13%
Southern Alberta 17 62 79 22%
Totals 106 516 622 17%
Source: Divestco
Top 5 Most Active OperatorsJune 5, 2013
ActiveRigs
Canadian Natural Resources Ltd. 10
Cenovus Energy Inc. 9
Encana Corp. 9
Bonavista Energy Corp. 5
Baytex Energy Corp. 5
Shell Canada Ltd. 5
Paramount Resources Ltd. 5
Source: FirstEnergy Capital
Top 5 Most ActiveDrillers in Western Canada
June 5, 2013Active Total
Precision Drilling Corp. 40 188
Ensign Energy Services Inc. 20 116
Trinidad Drilling Ltd. 18 60
Nabors Industries Ltd. 16 65
Savanna Energy Services Corp. 15 70
Source: FirstEnergy Capital
7/28/2019 Well Construction Journal - July/August 2013
25/28www.cadecanada.com july/august2013 2
Alberta Well LicencesApproval issued by the Alberta Energy Resources Conservation Board
Number of Licences Issued Nov. 2012 Dec. 2012 Jan. 2013 Feb. 2013 Mar. 2013
Development 636 706 821 591 525
Exploration 91 72 74 66 26
Source: Alberta Department of Energy
Alberta Spudded WellsApril 30, 2013
Number of Wells Spudded
2011 2012
May 334 374
June 525 518
July 812 625
August 964 464
September 1,018 706October 955 535
November 971 605
December 754 363
2012 2013
January 946 1,756
February 2,021 1,705
March 980 904
April 276 153
Source: Alberta Department of Energy
Alberta Completed WellsApril 30, 2013
Number of Wells Completed
2011 2012
May 958 486
June 433 254
July 245 488
August 728 541
September 1,531 524October 904 692
November 834 750
December 940 692
2012 2013
January 381 381
February 718 640
March 717 812
April 672 701
Source: Alberta Department of Energy
Alberta Land SalesApril 30, 2013
April 2013 April 2012 YTD 2013 YTD 2012
Oil and Natural Gas
Land Sales $85 million $114 million $311 million $423 million
Price Per Hectare $731.00 $353.27 $410.77 $431.84
Oil Sands
Land Sales $675,000 $1.6 million $5.6 million $3.5 million
Price Per Hectare $390.90 $1,052.00 $90.28 $70.40
Source: Alberta Department of Energy
7/28/2019 Well Construction Journal - July/August 2013
26/28Well Construction Journal26 july/august2013
DEEPERDrilling
Heating Up
ompanies with steam-assisted gravity drainage
oil sands assets keep reaching new production heights.
In a recent overview o the in situ oil sands sector,
Calgary investment frm Peters & Co. reported that
SAGD projects reached a new production record in Febru-
ary 572,000 barrels per day. With new developments andplanned expansions o existing acilities, in situ production
in Albertas oil sands is poised to grow.
C
Cv e ic.Foster CreekproduCtion CapaCity: 120,000 bpd
produCtion: 114,400 bpd
utilization rate: 95%total planned CapaCity: 295,000 bpd
February 2013 bitumen produCtion by projeCt
meg e C.Christina lakeproduCtion CapaCity: 25,000 bpd
produCtion: 32,700 bpd
utilization rate: 131%total planned CapaCity: 210,000 bpd
sc e ic.FirebagproduCtion CapaCity: 120,000 bpd
produCtion: 139,000 bpd
utilization rate: 116%
total planned CapaCity: 180,000 bpd
dv CjaCkFishproduCtion CapaCity: 70,000 bpd
produCtion: 57,800 bpd
utilization rate: 83%
total planned CapaCity: 105,000 bpd
s C l.leismerproduCtion CapaCity: 18,800 bpd
produCtion: 14,238 bpd
utilization rate: 76%
total planned CapaCity: 40,000 bpd
CnooC nxlong lakeproduCtion CapaCity: 72,000 bpd
produCtion: 33,100
utilization rate: 46%
total planned CapaCity: 72,000 bpd
Source: Peters & Co. and FirstEnergy Capital
Thermal production methods are
increasing activity in the oil sands
7/28/2019 Well Construction Journal - July/August 2013
27/28
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