petroleum services association of canada news spring 2011

8/7/2019 Petroleum Services Association of Canada News Spring 2011

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NEWS

S P R I N G 2

PSACintroducesa new name and lookforyour magazine

PM#40020055

Collaboration is needed tokeep labour costs down

PLUS: Hot Stuff:Baker Hughes Inc. pioneers an extreme temperature electric submersible pumpProductivity Watch:How to boost the bottom line Arcis Seismic Solutionsdrums up community suppo


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S. Hanelt, CFEI, CVFISCO Fire Investigator/Inspector Safety BOSS Inc.

1-877-807-TANK www.envirofuel.ca


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Features

Departments

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CONTENTSS P R I N G 2 0 1 1

LABOUR SHORTAGE

Communication and collaborationare key to containing costs

FOREIGN AFFAIRSPSAC takes action to help memberstap global business opportunities

STARS & SPURSPhotos and the tally from this yearsgala and fundraiser presented by PSAC

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MESSAGE FROM THE PRESIDENT

2011 CANADIAN DRILLING ACTIVITYFORECAST UPDATEPSAC expects increased activity in the WesternCanadian Sedimentary Basin

IN THE FIELDNews and notes from the industry

SPRING CONFERENCEFind out whats happening at this years event

BUSINESS MATTERSProductivity is the lifeblood of any business,and PSAC members are no exception

PSAC IN ACTIONA rundown of Association initiatives on behalf of members and industry

MEMBER PROFILEBaker Hughes Inc. pioneers an ultra-hightemperature submersible pump for in situ

oilsands projects

COMMUNITY MATTERSArcis Seismic Solutions drums up goodwill at aCalgary school

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PETROLEUM SERVICES NEWS


4/244 SPRING 2011

MESSAGEFROM THEPRESIDENT

T IS PICKING UP AGAIN IN OUR INDUSTRYand I am enthusiastic about thechallenges that lie ahead. In my new position as President of PSAC, I inherited a ThreeYear Strategic Plan developed by the PSAC team and my predecessor Roger Soucy, andIm happy to say that it ts like a glove. The highlights for me are:

Raise the awareness of PSAC and all that we do among our members, government, the1.producers and the communities in which we work and live;Help develop stronger relationships among the industry associations: CAGC, CAODC,2.CAPP, CEPA and SEPAC for the betterment of the Canadian oil and gas industry as a wholeand again for the communities in which we work and live;As the petroleum service sectors leader in advocacy, increase membership so that PSAC3.can deliver a strong voice and presence, to be heard and recognized by policy makers andgovernments, preceding and during any decision making process that directly or indirectly

affects our sector.These are three signi cant priorities that I am passionately pursuing together with an

excellent team of people here at PSAC.PSAC member companies represent more than 80 per cent of the business volume generated

in the Canadian petroleum services sector. Our services sector is so vibrant and diverse thatit easily precludes any misconceived perceptions that the petroleum services sector is anything less than asubstantial force to be reckoned with.

The recent PSAC-initiated studies conducted by the Canadian Energy Research Institute (CERI) andMission Capital Inc. highlight the sectors importance. Oil eld service and supply rms contributed $65billion to the Canadian economy in 2006. I intend to raise the awareness of all of the above and much moreon behalf of our members. Ours is a good news story that needs to be told and retold.

As well, I have met with each of the leaders of our industry partner associations, and I am honoured to

work with these folks toward building upon previous efforts to create one of the most leading-edge, socially responsible and principled oil and gas industries in the world.Collaboration efforts among the industry associations result in a heightened level of positive public

awareness and expectations for our sector to continually deliver safe, reliable and ef cient energy serviceswhich in turn allows all Canadians to acknowledge they live and work in a country recognized globally for astrong commitment to deliver these resources through improving services, systems and processes.

PSAC will continue to initiate and support ongoing collaborative projects between the Canadian energy associations of PSAC, CAGC, CAODC, CAPP, CEPA and SEPAC so that the bene ts for our industry andour communities will be realized now and in the future.

I also look forward to the third of my initial three highlighted goals to increase PSAC membership levels. Iplan to reach out to existing members to ensure PSAC always delivers the quality service theyve come to expect,and to seek out potential new members to make certain they are aware of the 30-year legacy of professionaland committed advocacy efforts PSAC consistently delivers on. A signi cant bene t of membership is that acompany can join the voice of many rather than repeat efforts by trying to advocate on its own.

PSAC member companies representing the petroleum services sector in Canada are some of the mostinnovative, entrepreneurial and technologically advanced that I have ever come across and Im proudto work with a dedicated board and staff that represent our members on many fronts in the oil and gasservices sector.

Cheers,

Mark A. Salkeld

PSAC President

Building Blocks

I

PETROLEUM SERVICES N

Mark A. Salkeld,PSAC President


5/24WWW.PSAC.CA

T 403 264-1197 F 403 264-1584www.pajakeng.com

Suite 300 Iveagh House707, 7th Avenue S.W.Calgary, AB CanadaT2P 3H6

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SPRING 2011 VOL 10 No. 4

PETROLEUM SERVICES ASSOCIATION OF CANADA

1150 800 6TH AVENUE SW

CALGARY, AB T2P 3G3TEL: 403.264.4195FAX: 403.263.7174

SENIOR VICE PRESIDENT:ELIZABETH AQUINEDITOR:HOLLY KERR

PETROLEUM SERVICES NEWS IS PUBLISHED FORPSAC BY

VENTURE PUBLISHING INC.10259-105 STREET,

EDMONTON, AB T5J 1E3TEL: 780.990.0839FAX: 780.425.4921

TOLL-FREE: [email protected]

PUBLISHER:RUTH KELLYASSOCIATE PUBLISHER:JOYCE BYRNE

MANAGING EDITOR:JEFF LEWISEDITORIAL INTERN:CAILYNN KLINGBEIL

ART DIRECTOR:CHARLES BURKEASSISTANT ART DIRECTOR:COLIN SPENCE

PRODUCTION COORDINATOR:BETTY-LOU SMITHDISTRIBUTION:JENNIFER KING

ACCOUNT EXECUTIVES:LEAH MAWER, DENNIS MCCORMACK

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

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

The Petroleum Services Association of Canada is the national trade associationrepresenting the service, supply and manufacturing sectors within the upstreampetroleum industry. PSAC represents a diverse range of over 250 member companies,employing more than 52,000 people and contracting almost exclusively tooil and gas exploration and production companies. PSAC member companiesrepresent over 80 per cent of the business volume generated in the petroleumservices industry.


6/246 SPRING 2011 PETROLEUM SERVICES N

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DRILLINGACTIVITYFORECASTUPDATE

N ITS FIRST UPDATE TO THE 2011Canadian Drilling Activity Forecast, released in late January, the Petroleum Services Associationof Canada (PSAC) is forecasting a new total of 12,750 wells drilled (rigreleased) across Canada for 2011. This is an increase of 500 wells or 4

per cent from an earlier forecast released in November 2010. On a provincialbasis for 2011, PSAC estimates 8,390 wells to be drilled in Alberta, athree per cent jump over nal 2010 dril ling levels.

PSAC expects British Columbia to have 700 wells drilled in 2011, upseven per cent from last year. Saskatchewans drilling rate in 2011 willsee an 11 per cent bump over 2010 to 3,075 wells, while drilling levels inManitoba will move up by one per cent to 550 wells. The nal ta lly for

2010 was 12,158 wells drilled across Canada.The 2011 upswing is primarily the result of strengthening prices for crude

oil. PSAC is basing its updated 2011 Forecast on average natural gas prices of CDN$3.85/mcf (AECO) and crude oil prices of US$85.00/barrel (WTI).

Due to strengthening oil prices and innovations in technology, weexpect 2011 to continue to see modest increases in dril ling levels from2010, recognizing shortages in skil led labour that restrict the ability of

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drill ing and petroleum service providers to realize ful l output capacity,said Mark Salkeld, President of PSAC.

The industry is still faced with weak natural gas prices primarily related to oversupply in the market. The burgeoning supply of natural gas despite reduced levels of drilling is a direct result of shale gas productionWe continue to see an escalation in not only the amount of horizontalwells being drilled, but also in the length of these wells. The industry should see north of 5,000 horizontal wells dril led in 2011, indicating thetype of capital being spent in the basin.

CERI 2011 Oil ConferenceShifting Demand in the Future:

The Hydrocarbon Age Continues ...April 4-5, 2011

The Fairmont Palliser, Calgary, AlbertaThe winter of 2008-2009 can be considered the dark days for oilmarkets as prices lingered at the $40 (US) per barrel mark. Sincethat period in time, prices have moved upwards towards the $70level with a couple of incursions above $80. Rumours out of SaudiArabia indicate that the nation will defend an $85 per barrel floorprice. Post-recession recovery should lead to increased demand inNorth America and, to a greater extent, in China. The future looksgood, but in light of the continued attacks on the oil sands environ-

mental persona, coupled with grumblings about the safety of transported product on Canadian pipelines entering the UnitedStates, does it really look that good? Does the average Canadianreally understand what the oil sands means to this country? Do thepeople of the world really understand the environmental relation-ship between producers, regulators, and governments? Is it time toopen up Canadas land locked resources to offshore markets? Canthis be done, should we be doing it, and what are the challenges inmoving forward?

For more information call: (403) 282-1231;visit our website : www.ceri.ca;

or email: [email protected]

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13, 000

12, 000

11, 000

10, 000

9, 000

8, 000

7, 000

6, 0005, 000

4, 000

3, 000

2, 000

1, 000

0

BRITISH COLUMBIA:700

NUMBER OF OIL WELLS

TOTAL IN CANADA: 12,750

2011 DRILLING ACTIVITY FORECAST(NUMBER OF WELLS)

ALBERTA: 8,390

SASKATCHEWAN: 3,075

MANITOBA: 500


8/248 SPRING 2011 PetRoleum SeRvIceS NewS

PSAC iS PleASed to AnnounCethat through its EducationFund, it wil l be awarding six scholarships in 2011. Five $1,000 scholarshipswill be awarded to PSAC regular member company employees or theirchildren, and one recently introduced scholarship worth $2,500 will beawarded or the frst time this year. KPMG is unding this new scholarshipover the next fve years to honour PSACs retired President Roger Soucy.

The Education Fund Committee is making changes to the EducationFund program, and or 2011, only the PSAC Regular Member Scholarshipand Roger Soucy Legacy Scholarship Funded by KPMG wil l be accepting

applications. Scholarship eligibility criteria and application orms can beound under Career Resources at www.psac.ca. The deadline date or

applications is Friday, April 22, 2011.The school grant program has been suspended while the Education Fund

Committee reviews its mandate, as well as the impact and distribution of futurefunds. Changes to the Education Fund program will be posted to www.psac.ca andannounced in an upcoming Petroleum Services News , so stay tuned!

in the field News, events and activities in the industry

Canadas premiere oil and gas safety conference and tradeshow

Leadership:The Evolution of Safety (1951-2011)

May 2 - 6, 2011The Banff CentreBanff, Alberta

Graphics courtesy Diamond and Schmitt.

Since the rst Petroleum Safety Conference was held in 1951, the oil and gasindustry has constantly evolved and so have our standards of leadership and safety.Join safety professionals from across Canada at the 60th annual Enform PetroleumSafety Conference to learn more about the future of the industry and your role in it.

Highlights of the agenda include:

Keynote presentations by General Rick Hillier (Ret), Former Chief of the DefenceStaff for Canadian Forces, and Dr. Aubrey C. Daniels, Ph.D., the worlds foremostauthority on applying the laws of human behavior to the workplace

Preventing human error

Engaging a multi-generational workforce

Felt leadershipand much, much more!

Visit www.psc.ca to register today!

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PSAC AwardingSix MemberScholarships in 2011

CoMinG eVentS

PSAC Spr g C r cApril 12 & 13, 2011Red Deer, Albertawww.psac.ca/events

PSAC M -Y ar l chand Canadian Drilling Activity Forecast UpdateApril 27, 2011, Calgary, Albertawww.psac.ca/events

e rm P r mSa y C r cMay 4-6, 2011Ban , Alberta

www.en orm.ca/events

P r m S rv c si v s m Symp s mJune 16 & 17, 2011Calgary, Albertawww.psac.ca/events

PSAC e ca f G C ass cJuly 21, 2011Calgary Elks Lodge andGol Club, Calgary, Albertawww.psac.ca/events

neW MeMBeRS

R g ar M mb rsCanElson Drilling Inc.EnerMAX Services Inc.Seven Lakes Oilfeld Services

Ass c a M mb rs

Canaccord Genuity Inc.CWI Wireless Inc.Purvin & Gertz Inc.Schenker o Canada LimitedVisser Consulting Ltd.


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Cheape wanted to run a 10-well drillingprogram, but we couldnt get theservices we needed.

Its only November and wealready have more work than crewcapacity.

Industry activity levels could pick up faster if we had moreskilled workers.

These comments may sound like they came straight out of 2005, butthey are actually from late 2010. And according to a new industry survey,sentiments like these could become oil eld slogans between now and2020. The Petroleum Human Resources Council of Canadas 2010-2020labour market information (LMI), set for release this month, explains thatno matter the pace of economic recovery, the petroleum industry will bechallenged to meet its hiring requirements over the next decade. In fact,the industry is already experiencing chronic shortages for a number of occupations, particularly those in the service sector. So even though itmay not appear that activity in the Western Canadian Sedimentary Basin(WCSB) is ramping up signi cantly this year, attention stil l must be paidto a looming labour shortage.

Cheryl Knight, the Councils Executive Director and CEO, says thereare a number of trends affecting the demand for skilled labour in the oiland gas industry, especially on the service side. First, the service sectorsinvolvement in the oil and gas industry is shifting somewhat, as the oilsandsare becoming ever-more reliant on contracted services. Second, in situ andunconventional activities are demanding more of the sophisticated skillsrelated to the new technologies being implemented. This skills demandis creating a chronic labour shortage in related occupations like fraccing

HOW COMMUNICATION CAN HELP CONTAINCOSTS IN A GROWTH ECONOMY

W

Talkand completion operators, heavy equipment operatorsand class one drivers. Finally, over the next 10 years, thewhole petroleum industry will need to replace thousandsof workers who will be ending their careers because of

retirements and other age-related reasons.Knight says that even in a scenario of prolongedlow oil and gas prices, the industry will need to hirea net 40,000 workers over the next 10 years. If oil andgas prices both climb high enough to encourage moreinvestment in activity and infrastructure between nowand 2020, the industrys net hiring needs wil l jump to anastounding 130,000.

Thats a lot of eld workers and supervisors, truckdrivers, dril ling coordinators, heavy equipment operators,millwrights, welders and others. Where are these skilledworkers going to come from? Thats a tough question toanswer because the industrys labour supply is constrictedby a number of factors:

Potential employees may not understand the industrysgrowing need for workers, especially when they hearabout activity slowdowns and layoffs. In short, hiringattracts workers; layoffs turn potential workers away.The industrys ups and downs send mixed messagesabout work and career opportunities that are dif cult forpotential workers to gure out.There are simply not as many workers available.Population growth has slowed, our society is aging andmost immigrants to Canada dont always have the directexperience the oilpatch needs. In addition, companies

CAN BE


13/24WWW.PSAC.CA

having to replace retiring employees are nding that green hands simply cannot take the place of experienced workers on a one-to-one ratio.Even if enough workers were available, the petroleum industry may not beable to attract its share. Many young people, for instance, are not willing tojoin the oil and gas industry, because of negative perceptions, the need to workin hard-to-recruit locations, or strong competition from other industries.

These labour supply issues affect the entire industry. The service sectorfaces even more recruitment and retention challenges:By far, the majority of jobs in the oil and gas industry are and willcontinue to be in the service sector, and upwards of 80 per cent of servicesector jobs are in the eld. Field jobs are dif cult to recruit for because of their challenging working conditions, specialized skills, remote locationsand the need for workers to be away from home for long periods.The service sector is always the hardest hit by an economic downturn.

Unlike exploration and production (E&P) companies, service companieshave no production-generated cash ow to get them through lean times.When service companies dont have enough work, they cant pay theiremployees salaries and wages, so they have to downsize much sooner and much more signi cantly than their E&P customers in t imes of economic hardship. Then when the economy recovers and activity beginsto climb, service companies have to increase their bench strength quickly,in order to take advantage of the upswing.Seasonality and cyclicality lead to service sector turnover rates that canreach 30 to 50 per cent and even higher. Although companies may strive torecruit appropriately and institute successful retention programs, they stillmay need to hire four or ve people to ll one posit ion because of extreme

turnover. As a result, the service sector spends exponentially more timeand money on hiring and training than the industrys other sectors do.Much of the work done in the service sector demands niche expertise,on-the-job experience and problem-solving skills. For service companies,building capacity like this takes time and a solid investment in theirpeople. But service companies arent the only ones recognizing thesevaluable skills. E&P companies often hire away good people from servicecompanies, which can result in a signi cant loss of intellectual capital within a service company, andwithin the sector as a whole. When their key teammembers are lured away, service companies haveto rebuild their teams, while continuing to providehigh-quality, low-cost, just-in-time services to theirE&P customers. And because E&P companiestraditionally pay more, service companies end upcompeting with their customers for good people,which adds to spiraling labour costs.

The service sector is already the preferred laboursupply for both the E&P and oilsands sectors.As oilsands companies increase their reliance oncontractors for in situ drilling and well services, as wellas some maintenance and operations work, servicecompanies are nding their skills, experience andtechnologies in demand right across the industry.

The oil and gas service sector is no longer just focused on the conventional induscon rmed Mark Salkeld, PSAC President. PSAC member companies are workinmore and more in unconventional areas, and they are adding great value.

The service sector adds value with expertise, timeliness, ingenuity andinnovation, but that value could be multiplied many times over with proactivecommunication and collaboration between service companies and their E&Pcustomers. Calgary-based Ziff Energy Groups June 2010 report, titledCanadianConventional Gas at a Crossroads , explains that communication and collaboratiwould go a long way to reducing uncertainty and increasing productivity.

For service companies, there is a value to predictability and sustainability,the report says. Instead of setting annual budgets for programs, some E&Pcompanies are looking at project life cycles of three, ve or seven years, Ziff sAs a result, both operating and service companies are better able to respond tochanges in capital spending and commodity-price swings. With multi-yearcontracts, as opposed to bidding every winter drilling season, there could be

better planning and everyone could work toward a steadier program, the Calgconsulting house says.

If E&P companies discussed upcoming plans with their contractors, theservice companies involved could prepare themselves to be where they neededto be, with the right people and equipment, when they were needed. Proactivecollaboration could also reduce costs, which will become more important goinforward as commodity prices rise and activity levels increase.

The petroleum industry has been able to increase its activity in the lowecommodity price environment because of decreased costs for labour, materiand equipment, the Petroleum HR Council says. However, the easing of costs, including labour costs, will be short-lived. The industry will need totake action to prevent cost escalation to the point of making new projects an

expansion uneconomical.After Trican Well Service Ltd. signed a two-year deal to supply a newfracturing crew for a U.S. producer, Mike Baldwin, the rms Vice-PresidenFinance and Chief Financial Of cer said, A long-term contract gives us theopportunity to allocate our resources in a given region more ef ciently. It algives us a measure of job certainty, which bene ts our current employees anattractive to those considering Trican as an employer.

SERVICES SECTOR WORKFORCE EXPANSION SCENA(TOP 7 OCCUPATI

Truck Drivers

upervisors, Oil & Gas Drilling and Services

il & Gas Drilling and Services Field Workers

eavy Equipment Operators

rilling Coordinators/Production Managers

Welders

illwrights and Machinists

0 2 000 4 000 8 000 10 000 12 000 14 000

Growth Scenario rowth Oil/Low Gas Scenario

Employment is projected in three scenarios: Growth (high oil and gas prices), Low (low oil and gas prices) and Growprice). No matter what scenario arises, the service sector will need to hire thousands of workers over the next 10 yea


14/2414 SPRING 2011 PETROLEUM SERVPETROLEUM SERV

Collaboration and communication are positiveactions that can be taken to bring down costs by increasing certainty; load levelling is another.Load levelling smoothing the activity cycle sodrilling and completion operations take place

in different locations throughout the year is aproven strategy for boosting oilpatch productivityand ef ciency. The WCSB lends itself well to loadlevelling because of its diversity of geology andgeography. However, uptake on load levelling hasbeen limited to date.

We really only saw load levelling in the WCSBduring the boom years of 2005 and 2006, whenwell activity truly did continue throughout all12 months, says PSACs Salkeld. Since then, ascommodity prices and overall activity levels haveslowed, drilling and well completion programs

have slowly shrunk back to the winter months.This compressed activity schedule makes it really tough for service companies to maintain their coreexpertise and keep their costs down.

When service companies remain in thedark about their customers plans, they haveto operate on a day-by-day basis, keeping only the staff they currently need and of oadingthe rest. Conversely, when service companiesknow whats coming up, their abil ity to meettheir customers needs rises exponentially. Key employees can be retained over the long termand companies can commit to having theirteams ready for deployment as needed, seasonafter season, year after year.

Collaboration and communication between theE&P and service sectors can make the entire oiland gas industry more predictable, and thereforemore ef cient. By planning the work and workingthe plan, the industry can maintain a strong,steady and skilled workforce. Service companiescan focus less on the familiar cycle of recruiting,training and downsizing staff, and focus moreon getting their customers job done safely andef ciently just as planned.

The service sector is the largest employer in the oil and gas industry. In an environment of high oil and low gas prices (a logicalscenario from a 2011 perspective), service sector employment grows in tandem with oil sands employment and activity.

Source: Petroleum Human Resources Council of Canada, Labour Market Projections 2010-2020 (From Labour Market

Projections & Analysis 2010 report to be released March 2011)

INDUSTRY EXPERIENCES LABOUR SHORTAGES REGARDLESS OF SCENARIO

10

4

1

Number of Workers

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

rowth Scenario Growth Oi l Low Gas Scenar io Low Scenar io Balanced Unemployment Rate

INDUSTRYS PROJECTED UNEMPLOYMENT RATE

CTUAL PROJECTED

SERVICES SECTOR EMPLOYMENT PROJECTIONS - 3 SCENARIOSSERVICES SECTOR EMPLOYMENT FLUCTUATES WITH OIL AND GAS PRICES

140, 000

120,000

100,000

0,000

0,000

40,000

0,000

Number of Workers

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Growth Scenario rowth Oil /Low Gas Scenario Low Scenar io

ACTUAL ROJECTED


15/24

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HOW PSAC PLANS TO HELP ITS MEMBERS TAP GLOBAL MARKETS

WIDE

Petroleum Services News: How did this relationshipwith the Department of Foreign Affairs(DFAIT) and International Trade come about?Mark Salkeld: They approached us in the fourthquarter of last year. It was an initiative on the

part of the federal government. We agreedand met with them and they explained whatthey were up to and we explained our previousexperience and it just seemed like a nice t. Itwas an opportunity for us to make sure thatthe federal government got a real good look atwhats going on in the oil and gas services sector.

PSN: Does this relationship represent a newdirection for PSAC on the international level asfar as attracting foreign investment and openingdoors abroad for your members?MS: Its a little of both. Its de nitely an opportunity for PSAC to help the portion of our membershipthats interested to capitalize on internationalopportunities and also to use David McGregorsextensive network [DFAIT] to say Hey, look whatCanadas got. Its reciprocal. Hes got extensivecontacts throughout the world.

PSN: Are you looking to build relationships withspeci c countries?MS: There are lots of interested investors. Brazilis very interested in what our service sector canprovide for their country. In China, there are lots of

businessmen who have money invested in the U.S.

who think they might get a better return for theirdollar in Canada and are looking to invest notbuy, take over and operate but just to invest.

PSN: Do you anticipate more PSAC membersscoring international business as a result of thispartnership with DFAIT?MS: Were simply providing an opportunity forPSACs membership those that are interested to take advantage of this arrangement withDFAIT and their global network of tradecommissioners. Its too early in the game to

know if our members are interested. Someof them are already there; but the smallermom-and-pop operations and independentcontractors probably arent interested. Theyrehappy doing what they do here in westernCanada. I believe theres a segment in themiddle that has developed expertise in Canadathat they think will work in other areas of theworld. They may want this opportunity. So itstoo early to tell, but were de nitely going to putit on the table for our membership and let themknow that we have this service available and seehow it goes over the next three years.

PSN: Global E&P capital spending is expected tonear $500 billion in 2011. Will this connection helpthe PSAC membership tap into that business?MS: Yes. Thats what David and DFAIT arebringing to the table. Thats what hes here for to get out in front of the membership and theother sector associations and let them knowwhats available. There could be companiesthat are interested but dont have thewherewithal, the connections or the fundingto take advantage of it and thats what Davids

role is for, to look into that and provide ourmembership with possible opportunities.

PSN: How will this relationship work in practicalterms?MS: Were going to make sure our membershipis aware of David and what he has to offer. Ivealready had some discussions with David. It

just seems like a huge advantage. Members cancome to him with a product or service and hecan reach out to his contacts around the worldand say, Would this service or product be of interest in your area? and get feedback and starmaking those connections. A lot of that is justhelping our members save time and travel.

PSN: The service supply sector is a $65-billionindustry, but it doesnt get a lot of recognition. Is thian opportunity for PSAC to tell its story to the federgovernment and the international community?MS:You bet. Its a big opportunity, and thats oneof the things were really focusing on developingour government relations plan. And those numberscoming through our [Canadian Energy ResearchInstitute] study were putting this information inthe hands of just about everybody we possibly canat the federal, provincial and municipal level. Itsvery, very important that we get it out there. I donagree with this perception that were the poor cousof the industry. That view has gone by the waysidea long time ago. Ive got 30 years in industry andthe role that our sector plays is signi cant. We playsecond- ddle to no one.

International interest in Canadas energy sector

is growing. That spells opportunity for service and supply companies. PSAC President Mark Salkeld sat down with PSN to talk about a new partnership with the Department of Foreign Affairs and International Trade, represented by David McGregor, trade commissioner, oil and gas.

HorizonsMark Salkeld , PSAC President


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PSACS ANNUAL FUNDRAISER FOR STARS AIRAMBULANCE RAISES MORE THAN $500,000

Emcee Dave Rutherford of QR77 Radio, and PSAC President Mark Salkeld draw a lucky winner.

Veteran Gala Committee member Rod McBride of M-I SWACO is in the thick of the live auct ion bidding.

L-R PSAC Board Chairman Brian Coston, PSAC President Mark Salkeld, and Gala Chairman MikeEdmonds present cheque for $544,096 to STARS CEO Dr. Greg Powell.

STARS Pilot James Roach is flanked by Calgary Stampede royalty as they check out one of the STARS helicopters.

Canadian Country Music Awards winner Gord Bamford performs for the high-stepping sold-out crowd.

L-R: Stampede Princess Whitney Wilkie, Indian Princess Eva Meguinis, PSAC Board Chairman BrianCoston, Honourary Patron Roger Soucy, STARS President & CEO Dr. Greg Powell, Stampede QueenJenna Lambert, and Stampede Princess Stephanie Gray celebrate Rogers Honourary Patron award.

EVERAL RECORDS WERE BROKEN THIS YEARat the 17thAnnual STARS & SPURS Gala presented by the Petroleum ServicesAssociation of Canada (PSAC) in support of the Alberta ShockTrauma Air Rescue Society (STARS).

Sponsorship revenue, silent auction revenue, and table centerpiece revenuewere higher than ever before. In addition, more than 1,100 people attendedthe event, making it the second-best turnout in the galas 17-year history.

In that time, the PSAC-sponsored event has helped raise more than $4.6million for STARS. This years gala, held on January 22, brought in a net total of $544,000, an incredible amount given the economys sluggish emergence out of the recent economic downturn.

PSAC credits all sectors of the industry producers, services, drilling andpipelines for working together to make the fundraiser such a long-time success.

This years turnout and the ongoing support by the oil and gas industry speaks volumes about the value our entire industry places on STARS and thecritical work they do, said Mike Edmonds, Chair of the STARS & SPURS Gala

organizing committee. Our event helps ensure that STARS emergency medicalresponse services remain available to oilpatch workers, their families andcommunities across Alberta, northeastern and southeastern B.C.

This partnership between PSAC and STARS has been well nurtured overthe past 17 years, added Mark Salkeld, PSAC President. The STARS & SPURSGala is a very special, one-of-a-kind industry event and the money raised by ourcollective efforts is more important than ever. Giving back to the communitiesin which we work, and helping to provide better access to healthcare areimportant priorities for this event. As long as STARS increases our ability to access emergency medical services, PSAC will work alongside them. Wecongratulate STARS on another year of critical work in our community, andlook forward to many more years working together.

S

6

7 The Hon. Lindsay Blackett, Alberta Minister of Culture and Community Spirit (right) brought greetingsfrom the government and shared a laugh wi th STARS VP Finance and Admin, Jeff Quick.

PHOTOS

: TORIN SEGSTRO


19/24WWW.PSAC.CA

year-over-year revenues rom the rms oil eld business slid by 47 per cent to $2million. The drop in revenue rom other industrial clients was only 13 per cent.

Diversi cation has been crucial to the rms continued growth, HSE chie operating o cer Glenn Roberts says. In all honesty I dont believe HSE would here today without that strategy having been implemented, the service chie say

The lesson, Baker says, is to not wait or bad times to make drastic changesBusinesses looking to extend their markets should rst get a handle on theircapacity to compete in new sectors.

Productivity in Action

Jim Rakievich knows rsthand the value o adopting productivity measureThe CEO and president o McCoy Corporation is a lean-thinking guru.

We decided in mid-2004 that our North American manu acturing stylewas not going to carry us through another 40 years, because o our lowerproductivity than other parts o the world, Rakievich recalls.

McCoy brought in outside experts and made a big nancial commitment toimplement new processes starting in 2005. Waste and duplication were fagged

along the way. Product quality and worker sa ety quickly improved.Implementing productivity measures was initially met with resistance,

especially rom middle management. But Rakievich wasnt deterred. In his viewi the company did not make changes it would soon be out o business. As tangiresults began to materialize, those who were initially reluctant shi ted their stanc

Says Rakievich, It took awhile but Ill tell you, theres no one in the plantwho would ever want to go back to the way we did things in the past.

_

roduCtivity iS the lifeblood o a business. In theeast-or- amine hunt or black gold and natural gas, companies

rise and all on their ability to respond quickly to the vagaries o commodity-price swings, market orecasts and government policies.

Productivity is important or the oil and gas service sector just as it is orany other sector o the economy, says Je Baker, manager o education andawareness at Productivity Alberta, an industry-guided service that connectsbusinesses and organizations with the resources they need to succeed.

Here are three areas that demand resh attention:

Energy Ef ciency

Dont be intimidated by this green-speak. Energy e ciency is the low-hangingruit o productivity gains, Baker says.As costs or space heating and energy in general increase, tweaking

everyday practices can translate to incremental savings to the bottom line.Take stock o old in rastructure and machinery. Replace aging componentswith more e cient technology.

Even simple changes like switching lights o and reducing heat overnightcan put a big dent in operating costs. E ciency tweaks can also extend theli e o existing in rastructure and plant equipment, reducing wear and tear.Consider a lighting retro t to reduce costs and improve worker morale.

Not sure where to begin? Productivity Alberta provides a handy Energy E ciency Toolkit on its website www.productivityalberta.ca. The agency also hosts workshops in conjunction with Natural Resources Canada to helpcompanies achieve those incremental green gains, putting the low-hanging

ruit within reach o even the oiliest o companies.

Market Extension

Adapting your product or use in a new market may sound like a dauntingtask. But creating new services or eatures to support existing customers, andnot being a raid to nd new ones, is what market extension is all about.

Baker says companies should examine their current market niche whether its uel delivery systems, well site services or straight-up

abrication as a starting point to exploring whether current services areapplicable in a related eld.

Just because a rm has always served sector X, Baker notes, doesnt meanit cant also serve sector Y and Z. Market extension can be the di erencebetween simply surviving and thriving during a downturn.

Consider HSE Integrated Ltd. When the global economic and energy-pricecontraction hit in 2008-09, the Calgary sa ety boutique didnt rest on its laurels.

The company had spent the previous our years securing businessconnections outside o the oil and gas sector, making inroads or its industrialsa ety services in sectors ranging rom mining, utility and manu acturing sitesto orestry, power plant and oil sands operations.

By the time oil prices plummeted from their mid-2008 peak of US$147 perbarrel to $34, HSE was well positioned to weather the storm. In 2009,

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Taking StockProduCtivity gAinS Could be the differenCe betWeenSurviving And thriving When tiMeS turn tough

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PSAC INACtion

PSAC AttendS MiniSterS ForuM on the Future oF AlbertAS WorkForCe

PSAC participated in a orum hosted by Alberta Employment and ImmigrationMinister Thomas Lukaszuk in October. Along with more than 130 o fcialsrepresenting employers, industry associations, labour and pro essionalorganizations, educators and government, PSAC provided input to planAlbertas uture work orce to increase the provinces competitiveness. FederAl red tAPe reduCtion CoMMiSSion

PSAC representatives made a presentation to the ederal Red Tape ReductionCommission and urged the Commission to reduce the regulatory burden onindustry and streamline the process or developing and amending regulations.

PSAC MeetS With AlbertA AdvAnCed eduCAtion And teChnology,

And AlbertA APPrentiCeShiP And induStry trAining boArd

In the all, PSAC participated in several sessions to support the designation

o Cathodic Protection Technician as a Designated Occupation under theApprenticeship and Industry Training Act. Following the sessions, the AlbertaApprenticeship and Industry Training Board confrmed that as a result o commentsby stakeholders such as PSAC, it will stand behind its 2009 recommendation thatCathodic Protection Technician become a designated occupation.

PSAC MeetS With MiniSterS to PreSent reSultS oF StudieS

Since announcing the groundbreaking results in October o two signifcantstudies conducted on behal o PSAC by the Canadian Energy Research Instituteand Mission Capital Inc. (see www.psac.ca or details), PSAC continues to meetwith public o fcials to create a better understanding among governments, thepublic and media o the signifcant fnancial contributions and employment role

the petroleum services sector plays across Canada. In November and December,PSAC presented the results o the studies to Federal Minister o Natural ResourcesChristian Paradis, Alberta Minister o Energy Ron Liepert, and Alberta Ministero Employment and Immigration Thomas Lukaszuk, amongst others.

PSAC ContributeS inForMAtion to induStry CAnAdA For reviSed SeCtor ProFile

PSAC was consulted by Industry Canada or a comprehensive and updatedUpstream Oil and Gas Equipment and Petroleum Services Sector Profle. Thenew profle will include the latest in ormation about the economic contributionthe sector makes; products and services by segment; the supply chain; businesselements including a discussion o domestic and international markets,innovation, people and government policies; an exploration o the sectorscurrent state and a orecast indicating growth drivers and trends. This documentwill be used to assist other government departments with policy decisions.

hourS oF ServiCe exeMPtion APProved

Following several years o negotiations with Transport Canada andtransportation regulators in western Canada, the ederal Minister o Transport has approved PSACs application or exemptions rom some o therequirements o the ederal Hours o Service Standard. These exemptionswill allow the service sector o the oil and gas industry to continue to provideservices in a timely and sa e manner. Complete details o the exemptionand conditions will soon be made available. Alberta Transportation will bemaking a presentation on the exemption at the PSAC Spring Con erence to beheld in Red Deer, April 12-13, 2011.

PSAc coNtINueS to SPReAd the Good woRdthRouGh AdvocAcy ANd outReAch PSAC StrikeS neW SubCoMMittee For internAtionAl eMPloyMent iSSueS

Many PSAC member companies have expanded or are expanding theiremployee base beyond Canada to diversi y their operations and meetcustomer demand. To address some o the unique challenges, PSAC hasestablished a new subcommittee to address international and cross-borderemployment issues, and provide a orum or members to share in ormationon best practices. The frst meeting was held in January, with urthermeetings to ollow on a regular basis. The subcommittees frst priority is toidenti y and develop a ramework to deal with member issues and explore thways PSAC can help. To participate, please contact Heidi Weiss at [email protected] or 403.781.7381.

PSAC lAunCheSCoMMunity PArtnerS ProgrAM in Fort St. John

PSAC launched Community Partners, the new industry-wide in-the-feldcourtesy program, on November 30 in Fort St. John, B.C. For in ormation onthe launch and the companies involved, visit www.communitypartners.ca.

PSAC SignS MeMorAnduM oF underStAnding With dFAitFor the next three years, PSAC will host Department o Foreign A airs andInternational Trades (DFAITs) David McGregor, Trade Commissioner andGlobal Practice Lead Oil and Gas, who is now working out o the PSACo fces. Contact McGregor directly at 403.781.7385 or email [email protected] . For more in ormation, see ull story on page 17.


21/24WWW.PSAC.CA

IL SANDS EXTRACTION ISa rough and tumble business. Highcosts and rugged conditions includinglong winters at remote locations take

a toll on companies, workers and the equipmentthey use.

At the mega-mine complexes north of FortMcMurray, abrasive ore wears enough steel off minehardware to make a new truck every day.

Baker Hughes Inc., a member of PSAC since1994, is no stranger to the industrial realities of the bitumen belt. The rm has become a leader indeveloping electric submersible pumping systems(ESPs) designed to withstand the harsh operatingconditions at in situ oil sands extraction sites.

We basically fast-tracked ourselves into thismarket, says Kelvin Wonitoy, Project Manager,arti cial lift.

Hot Stuff

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The formations lack the natural pressure that drives oil to the surface inconventional vertical wells. Bitumen released in a SAGD, or steam-assistedgravity drainage job requires an extra jolt, or lif t to get it to ground level.

One way to raise the newly thinned bitumen uses natural gas. In this methodknown as gas-lifting, natural gas is injected underground alongside steam.

The gas makes the bitumen frothy and helps raise it up through the wellbore.

Its like blowing bubbles into a bottle of Pepsi, Wonitoy says. But its very inef cient, he adds. Its very expensive.

Cue the bright minds at Baker Hughes. The rm has developed an extremetemperature ESP system it calls Centrilift XP that promises to increase recoverrates four-fold compared to gas-lifting jobs.

We can go anywhere up to 1,200 or 1,300 cubic meters a day on some of the more proli c wells, Wonitoy enthuses. So you have a much better cost onreturn for what youre investing for arti cial lift.

How does it work? Picture a typical in situ reservoir. If you were to look atan end view of the two well bores, it creates a sort of teardrop shape above theinjector and then all the bitumen drops around the outside of that teardropand it oods the lower completion and then your ESP pumps it to the surface,

Wonitoy explains.The Baker Hughes pump is no different than any other application, he adds except that the conditions it operates under are extremely hot.

The Baker Hughes pumps can withstand subsurface temperatures up to250C. The devices are built in-house with tungsten carbide and tested rigorousbefore eld installations at a specially designed hot loop facility that closely mirrors the conditions at underground extraction sites. The regimen of producttesting ensures the equipment is exposed to a lot more abuse than it would orshould see in the eld, Wonitoy says.

Well run it hotter, well cycle it more times and well change parameters onthe test program. We push the equipment right to its maximum capability.

The exacting approach to product development has won businessendorsements from oil sands mainstays like Suncor Energy Inc., MEGEnergy Corp., Connacher Oil and Gas Ltd. and Cenovus Energy Inc.Theyre one of the leaders, Wonitoy says of the Encana Corp. spinoff.They were actual ly one of the rst oil companies to get into the hightemperature production. They have the most exper ience of the producers outhere right now.

To date, Baker Hughes has deployed 130 of its standard ESPs and another 17of its ultra-temperature systems in the eld. The installations represent aboutone-third of the ESP market for submersible wells.

Wonitoy says the rms success boils down to a strong team from engineerthrough to sales staff that has developed a solid product. Its no different thanyou buying a car, he says. The Baker Hughes ESPs are the Cadillac of the sectohe suggests. Its money well invested.

BAKER HUGHES INC. PIONEERS AN ULTRA-TEMPERATURESUBMERSIBLE PUMP FOR IN SITU OIL SANDS SITES

Baker Hughes ultra-temperature electric submersible pump operates in conditions up to 250C

The market is poised to grow. Production fromthe underground extraction method that usessteam to melt and thin bitumen is on track toeclipse output from traditional mining by 2016,according to the Canadian Association of PetroleumProducers.

The arti cial lift in Wonitoys title highlightsa Baker Hughes specialty. Getting viscous oilsands ore from the well-bottom to ground level is atricky business. Thats because in situ reservoirs areessentially manmade, Wonitoy points out.

BYALBERT THOMPSON


22/2422 SPRING 2011 PETROLEUM SERVIC

CGrooveIN THE

Sandi Jarrett wit h Arcis Seismic Solutions at Calgarys Radisson Park School

RAIG MELTON IS NO DRUMMING VIRTUOSO.As a highschool student, he got his kicks in the gym, not theconcert band. I was more of an athlete, he says.An aversion to music didnt stop the mapping

specialist with Arcis Seismic Solutions from picking up a djembedrum at Calgarys Radisson Park School this past January, however.As part of a unique company-wide policy that ensures employeestake two days each year away from the of ce to volunteer, Meltonand colleagues joined elementary-aged kids at the inner-city schoolfor an afternoon of music lessons. We were students for the day,Melton says. A lot of companies are just chasing the buck. At Arcis,were also having fun.

The musical outing was just one example among many of ways the70-employee Calgary rm chooses to give back to the community.

Members of the Arcis family, as marketing co-odinatorSandi Jarrett puts it, participate in the lives of local kids in avariety of ways.

Sports days are popular, but simple gestures like reading to kidswho may lack male role models go a long way too. They love it,Jarrett exclaims. The kids are just like glue on you when you go inthere. Theyre just so excited to see a new face.

The seismic specialist s pride themselves on donating time ratherthan money. A charity hike and bike ride for Albertas Easter Sealslast year raised roughly $2,200, while the Arcis men dressed in dragfor the Walk a Mile in Her Shoes fundraiser that netted $15,000 fothe YWCA.

Getting out in the community is really important to us, Jarrettsays. We dont want to just hand over a cheque.

COMMUNITYMATTERS

ARCIS SEISMIC SOLUTIONS IS NO STRANGER TOTHE REWARDS AND RHYTHMS OF GIVING BACK

BYALBERT THOMPSON


23/24

2011 KPMG LLP, a Canadian limited liability par tnership and a member fi rm of the KPMG network of indepe ndent memberfirms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

Trusted advisers toCanadas EnergyServices Sector

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