Well Construction Journal - November/December 2014

The official publication of the Canadian Association of Drilling Engineers
NOVEMBER / DECEMBER 2014

PM#40020055
PLUS
Ditch the Diesel
Developing LNG in the North
eases reliance on diesel
Devolution 101
What the NWTs devolution
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000WCJ-PhoenixTech-FP.indd 1 2014-08-20 8:38 AM
From Canol to the Liard
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WCJ_Nov-Dec_14_p28-01.indd 1 2014-10-27 11:26 AM
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www.cadecanada.com NOVEMBER/DECEMBER 2014 3
DEPARTMENTS
4
PRESIDENTS MESSAGE
6
THE DRAWING BOARD
Editors note, members
corner, news and notes,
technical luncheons
10 STUDENT PROFILES
11 HELP WANTED
19 MEMBER PROFILE
24
BY THE NUMBERS
26 DRILLING DEEPER
FEATURES
12 STALLED AT THE CANOL
Has bureaucracy stied
development in the
Northwest Territories?
16 SCRATCH THE SURFACE
Uncertainty in the Liard
Basin leaves a vast, untapped
resource hanging
20 CRACKING THE NORTHERN NUT
The latest step in devolution
gives the Northwest
Territories major traction
in its own backyard.
Will it make a difference?
22 COLD CASE FILES
Drilling in cold climates
requires specialized
knowledge, equipment and
drilling engineers
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: Dan Schlosser
PAST PRESIDENT: Jeff Arvidson
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
DIRECTOR OF CONTRACT PUBLISHING: Mifi Purvis
MANAGING EDITOR: Lyndsie Bourgon
ART DIRECTOR: Charles Burke
ASSOCIATE ART DIRECTOR: Andrea deBoer
ASSOCIATE ART DIRECTOR: Colin Spence
PRODUCTION MANAGER: Betty Feniak Smith
PRODUCTION TECHNICIANS: Brent Felzien, Brandon Hoover
CIRCULATION COORDINATOR: Karen Reilly
ACCOUNT EXECUTIVE: Kathy Kelley
CONTRIBUTING WRITERS:
Robin Brunet, Robbie Jeffrey,
Jacqueline Louie, Samus Smyth
NOVEMBER/DECEMBER 2014
20
PRINTED IN CANADA BY ION PRINT SOLUTIONS.
RETURN UNDELIVERABLE MAIL TO 10259 105 ST.
EDMONTON AB, T5J 1E3
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PUBLICATION MAIL AGREEMENT #40020055
CONTENTS
2014 CADE. NOT TO BE REPRINTED OR

REPRODUCED WITHOUT PERMISSION.
10
12
WCJ_Nov-Dec_14_p02-03.indd 3 2014-10-29 2:56 PM
Well Construction Journal 4 NOVEMBER/DECEMBER 2014
HE CANADIAN NORTH REMAINS A FRONTIER ON
many levels. We are still learning about the
vast opportunity for resource development
across the region, and still working out
adventurous ways to get there. Its not an easy
place to work cold weather and harsh condi-
tions make it hard to even get there. But as we see
in this issue, theres plenty of opportunity to be
had for those who go looking for it.
The region is also a hotspot for environmental
policy and debate. The North is where industry
most often faces environmental and regulatory
concerns, making it a challenging place to work.
But in some cases, technological advancement
and environmental stewardship have worked to
advance industry. Over time, the environmental
concerns of oil and gas production have slowly
swiveled away from air quality towards the
amount of freshwater available to us for hydrau-
lic fracturing purposes. In places where fracing
has taken off, and where drought or extreme
conditions have made access to freshwater dif-
cult, some companies have been working to
foster alternative methods in the fracing process.
A lot of the time these alternatives still include
recycled or wastewater, but there are also some
methods being developed that use propane-based
gels and acid-mine drainage solutions.
Though we often want to get to work doing
our jobs, and we know the traditional way that
has so far worked best, these new technologies
are a great thing for engineers to get behind. We
should be concerned with nding alternatives to
freshwater when it comes to fracing, because as
fears for freshwater access grow, alternatives will
keep us in operation.
Fracing is a challenge, not least because of
public perception and misinformation around
what it means for surrounding water supply
and its effect on freshwater. When considering
the opportunities presented to us in the North,
we should embrace environmental stewardship
in pump and frac water. These new technol-
ogies will make it easier for us to continue our
work and will help us keep opening up new
opportunities.
T
MESSAGE
Presidents
Embracing
New Technologies
Dan Schlosser
CADE President
Apache Corp.s Debolt Water Treatment Plant
allows for the reuse of water over time, and is
the first of its kind in North America.
Embracing
New Technologies
Find out more at
slb.com/TelePacer
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The TelePacer platform allows you to address varying levels of risk, with modular services
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BOARD
The Drawing
E D I T O R S N O T E
Carrying On During Uncertain Times
HE END OF AUGUST SAW THE INDUSTRY HUMMING
along, rigs and equipment being booked for the
fourth quarter and the start of the 2015 winter
drilling season. Now all of a sudden it is the end of
October and oil has plummeted due to policy practices in
Saudi Arabia, and natural gas is off due to storage levels on
the East Coast reaching capacity.
Doom and gloom hasnt hit the industry yet, but there
are rumblings of projects being cut and rigs being let go.
The major companies say they are staying the course,
and economists feel the price drop shouldnt last and
shouldnt hurt the economy. I, for one, would be glad to
see some push back against some of the services that have
been dictating price and how companies go about doing
their business.
I want to send out a thank you to our sponsors, members
and golfers that came out for the third annual CADE golf
tournament at Bearspaw Country Club on September 15.
We had a fantastic day with some of the best weather you
can get in Calgary in September. It was our largest turnout
ever, and a great mix of operators and service reps.
Our 2014 Technical Luncheon presentations kicked off
in September, with the Practical Approach to Torque and
Drag Analysis presentation from Leo Specht, P.Eng.
The November luncheon has been postponed until
early-December (you can read more about it on pg. 9),
and tickets will be available on the website.
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
announcements 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
Canadian Well Construction Journal
christiang@hawkeyeengineering.ca
403-265-4973
T
President Dan Schlosser dschlosser@ncsfrac.com
Education Chair Linden Achen lachen@westpetro.com
Technical Chair Ryan Richardson rrichardson@secure-energy.ca
Membership Chair Andy Newsome andyn@xitechnologies.com
Social Chair Kristy Hysert kristy.hysert@shaw.ca
Treasurer Cecil Conaghan conaghan.concepts@gmail.com
WCJ Editor Christian Gillis christiang@hawkeyeengineering.ca
Sponsorship & Marketing Craig Joyce craigj@xitechnologies.com
IT Chairman Matt Stuart matt.stuart@surgeinc.com
Secretary Tammy Todd tammy.todd@taqa.ca
Member at Large Kali Charron kali.charron@cadecanada.com
CADE Executive
Team 2014/2015
E X E C U T I V E T E A M
NOVEMBER/DECEMBER 2014 7 www.cadecanada.com
ME MB E R S C O R N E R
WELCOME NEW MEMBERS
REDHWAN ALAKBARI
MICHAEL BRIGGS
JASON BROWN
RICHARD BULINSKI
DORIN CIOROGARIU-IVAN
DAVID CORMIER
MARK COTE
LES CRAIGUE
DAVID CRAMER
MORGAN DE WIT
AKIN FADARE
DOUGLAS FLETCHER
RHYS FLETCHER
LESLEY FURLAN
SHUBHAM GARG
DONNY HALL
GARETT HEATH
BEN HOCKIN
TAUQEER JAVAID
RANVEER KANDOLA
ADEDEJI KUYE
BLAKE LAWRENCE
COREY MCNAIR
ERIC MOIGNY
CHRISTOPHER MURRAY
LEE ONSLOW
NICOLE PINCHES
SHELDON SCHMIDT
NOLAN SPERLE
ANDRE TOKARZ
KYLE ULVELAND
COLIN WILLIAMSON
PETER WISZNIAK
WHY BECOME A CADE MEMBER?
As of 2014, the Canadian Association
of Drilling Engineers (CADE) has been
active for 39 years. With more than
500 members from more than 300
companies, CADE represents a large
spectrum of experience in all areas of
operations and technologies.
For drilling and completions spe-
cialists, CADE currently offers one of
the best networking and knowledge
sharing opportunities in the Canadi-
an petroleum industry. The skills and
knowledge obtained by your partici-
pation in CADE will benet you and
your employer, with direct applica-
tion to your professional career.
CADE offers various means for
members to connect and share
their insights. Monthly technical
luncheons are held with topical
industry presentations. Other mem-
bership benets include our monthly
publication Well Construction Journal
and a membership directory, which
is the whos who of the Canadian
drilling industry.
Our website cadecanada.com is
an excellent focal point for industry
events, blogs and other news. We are
also active on LinkedIn and Twitter.
WHO CAN BECOME A CADE MEMBER?
CADE members can be anyone em-
ployed in the drilling and completions
industry or anyone who is interested
in the industry.
Typical members include drilling
and completions engineers, geologists,
technical personnel, sales personnel
and students. Student memberships
are available to any post-secondary
student interested in learning more
about drilling and completions.
Please feel free to share informa-
tion about CADE with all the people
in your organization who are inter-
ested in the drilling and completions
industry.
CADE MEMBERSHIP RENEWALS
CADEs membership year is from
September to September. During the
summer, CADE members will receive
an email and link for the renewal
process on our website.
Please remember the benets of be-
ing a CADE member include APEGAs
professional development hour, stay-
ing abreast of technological and in-
dustry advances, drilling conferences
and a great opportunity to network.
Thank you for your support.
CADE MEMBERSHIP CHANGES
Log on to cadecanada.com to be-
come a member or to update your
contact information.
President Dan Schlosser dschlosser@ncsfrac.com
Education Chair Linden Achen lachen@westpetro.com
Technical Chair Ryan Richardson rrichardson@secure-energy.ca
Membership Chair Andy Newsome andyn@xitechnologies.com
Social Chair Kristy Hysert kristy.hysert@shaw.ca
Treasurer Cecil Conaghan conaghan.concepts@gmail.com
WCJ Editor Christian Gillis christiang@hawkeyeengineering.ca
Sponsorship & Marketing Craig Joyce craigj@xitechnologies.com
IT Chairman Matt Stuart matt.stuart@surgeinc.com
Secretary Tammy Todd tammy.todd@taqa.ca
Member at Large Kali Charron kali.charron@cadecanada.com
BOARD
The Drawing
N E WS A N D N O T E S
Suncor sends rst shipment of
western crude to Europe
IN SEPTEMBER, SUNCOR ENERGY ANNOUNCED ITS
rst shipment of crude from Alberta to Europe.
The ocean tanker is loaded with western Canadian
heavy crude, but there remains a lot of mystery
surrounding the shipment for one, it hasnt been
made public where its going or who the buyer is.
A Suncor spokesperson told the media that the
shipment wont become a regular occurrence, and
is part of a marketing strategy to nd new custom-
ers and promote product overseas. The crude was
shipped from the west by rail to Quebec, where it
THE DRAMATIC REALITY SHOW HIGHWAY THRU HELL
follows the treacherous roads and harrowing
crashes that happen along the Coquihalla High-
way in British Columbia. The show centres on the
crew of northern B.C.s Jamie Davis Heavy Rescue
towing company, which responds to accidents
along the highway.
But this September, the company branched
out, and the program is now shooting along the
dangerous highways near Albertas oil sands.
The program runs on Discovery Channel, and is
entering its third season, which will follow the
company as it expands its operations out over
two provinces. Jamie Davis, owner of the towing
company, says his companys work lends itself to
was loaded onto ships at the port of Sorel-Tracy on
the St. Lawrence River.
The spokesperson noted that the company has
been exporting East Coast production for quite
some time, but delays in the Keystone XL project
and other pipeline setbacks has led companies to
look for customers outside North America. The
shipment to Europe would act to open up a pos-
sible new market, though the logistics of sending
western crude across the Atlantic could prove to
be expensive and complicated.
drama easily, and that the highways it frequents
arent well-suited for the amount of industrial
trafc paired with bad weather.
Highway Thru Hell arrives in Alberta
Trinidad to build new high-tech rigs
DESPITE LOWER GAS PRICES, CALGARY-BASED
Trinidad Drilling has announced that its building
ve new high-tech rigs for the U.S. market. Trinidad
estimates that the new rigs will cost around $130
million over the next two years.
The company expects a strong industry in the
U.S., as well as during the Canadian winter season.
But it notes that demand in the U.S. for high-per-
forming rigs is outpacing that in Canada. The
rigs will be built in Houston and Nisku, and are
expected to be delivered in early 2015.
In 2013, Trinidad signed a contract to build
one of Canadas largest and most technologically
advanced land rigs for use in the Liard Basin.
T E C H N I C A L L U N C H E O N S
Suncor sends rst shipment of
western crude to Europe
Luncheon Tickets
MEMBERS: $47.50 (plus GST)
NON-MEMBERS: $55 (plus GST)
FULL TABLES OF 10: $475 (plus GST)
STUDENT: $20 (plus GST)
Save the Date: December 10, 2014
Topic: Varel Slipstream Completions Hybrid Rollercone
Presenter: Cary Maurstad
Varel International has developed the latest technology in drill bit
technology for completions applications. A hybrid rollercone, this
patented technology was specically engineered and manufactured
for the drilling out of frac and bridge plugs, and is also being
successfully deployed in other completions applications such as
stage tools, debris subs and retainers. This product has had close
to 500 runs to date in the U.S., and is just being introduced to the
Canadian market.
The presentation and discussion will address:
The product in relation to a standard roller cone used in the past
Why it was developed
Why its different than whats currently being used and the
various options available now
Well have a brief discussion on various cutting structures for
drilling composite, aluminum, ceramics, cast iron, steel and carbides
and how it will benet your well completions and lower AFE costs.
As well, there will be an illustration of its performance in the U.S.
GST REGISTRATION #R123175036
Visit www.cadecanada.com for all ticket purchases
and recent Canadian run data, with close to 500 runs to date utilizing
this technology over the past three to six months. A Slipstream RC
Pro will be on hand for open discussion.
Cary Maurstad is an industry veteran with 40 years experience
spanning engineering, research and development, holding several
patents related to design and manufacturing of PDC and rollercone
products. Maurstad has a mechanical design engineering degree
from the University of Houston, and is no stranger to operations
departments. As a eld engineer in South Louisiana he led the
research, development and commercialization teams on the Ream
While Drilling (RWD) tool for Hughes, and was the rst North
American oasis manager for Hughes.
THE RIG
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DIRECTIONAL DRILLING + FLOWBACK
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Trinidad to build new high-tech rigs
ENNIFER LE IS CURRENTLY A STUDENT AT THE UNIVERSITY OF
Calgary, in her third year of chemical engineering with a
specialization in energy and environment. She spent last
summer working with Rangeland Engineering, an engineering,
procurement and construction management company, as a process
engineer. In her role, she was focused on the design and operations of
processes in the midstream industry. She had an extremely rewarding
experience learning about the oil and gas industry, as well as applying
her knowledge to real-life projects.
Jennifer is vice-president external for the Petroleum and Energy
Society (PES), in which she has the opportunity to build mutual ben-
ecial relationships with corporate partners to provide professional
development opportunities to students. Last year she was a marketing
representative, where she acted as a liaison between student members
and the executive council. She was also director of sponsorship for
the 2014 Energy Bowl, a multidisciplinary competition that focuses
on current energy issues.
In addition to her involvement with PES, Jennifer was involved
with the Energy and Environment Students Association, the Engi-
neers Without Borders Youth Engagement team and the Engineer-
ing Students Society. She loves reading and also volunteers with
the Calgary Public Library to help struggling young readers. She
recognizes the importance of the petroleum industry in Alberta, but
hopes to work on improving processes to increase efciency and to
reduce the environmental impact of petroleum production.
Young Talent
Highlighting tomorrows best and brightest
Student
PROFILE
Jennifer Le
Chemical Engineering
University of Calgary
J
Kerri Olson
Petroleum Engineering Technology
SAIT
ERRI OLSON MOVED FROM ESSEX, ONT., TO CALGARY SIX YEARS
ago. The 24-year-old just started her rst year of Petroleum
Engineering Technology at SAIT in September, and has pre-
viously worked for a number of oil and gas companies doing
administration in both Calgary and in the eld. Her most recent work
experience was with winter drilling and SAGD projects. She says she
loved working on a rotation shift and travelling on her days off.
During her time at SAIT, Kerri has received two outstanding service
awards in chemistry and math, and is a member of the Student Petro-
leum Society. She has become a mentor to other students, working to
advise and inspire students who are undertaking academic upgrading,
to help them determine their next best steps for advancing their
education and career.
Kerri is excited to complete her rst year and work over the summer
months. She plans to search for a eld position with a company she
can grow and learn with. After her two years at SAIT, she wants to
become a drilling technologist and work in the eld.
K
NEW RECRUITMENT FIRM EXPANDS TO COVER ALBERTAS WORKER SHORTAGE
HELP WANTED: Career Department
DRILLING SLANG
If you want to walk the walk on a drill site, it helps to talk the
talk. Here are some terms and phrases often heard out in the eld:
BEAN CHOKE: A xed choke used to control the ood of uids,
usually mounted on or close to the Christmas tree (see below).
A bean choke contains a replaceable insert, or bean, made from
hardened steel or similar durable material.
CAKE: The residue deposited on a permeable medium when a
slurry, such as a drilling uid, is forced against the medium under
a pressure.
CHRISTMAS TREE: An assembly of valves, spools, pressure gauges
and chokes tted to the wellhead of a completed well to control
production.
ALBERTAS NEW PREMIER, JIM PRENTICE, SAYS TIME IS SLIPPING
away from solving Albertas critical worker shortage. Prentice has
plans to meet with Prime Minister Stephen Harper in the near fu-
ture to discuss issues like changes to the temporary foreign workers
program, which has hit the provinces economy hard. Thanks to
Albertas economic engine being run by the oil sands, the prov-
inces economy had grown reliant on temporary foreign workers
to ll jobs. But in June, the federal government made changes to
the program to ensure that Canadians are rst in line for jobs. The
province had been home to 20 per cent of all temporary foreign
workers in the country.
That hasnt helped to ease the provinces employee crunch.
Albertas employment potential has even recently wooed a large
international energy recruitment specialist, Spencer Ogden. The
rm is opening its Canadian headquarters in Calgary during its
upcoming North American expansion.
In an interview with the Calgary Herald, co-founder Sir Peter
Ogden said: Theres going to be a massive shortage of labour in
the Canadian market ... and the numbers you need in people is
supposed to be large. We can bring people in from a wide range
of places. The company is skilled in arranging visas for expat
workers and has ofces around the world.
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GAS CHIMNEY: A subsurface leakage of gas from a poorly sealed
hydrocarbon accumulation. The gas can cause overlying rocks to
have a low velocity. Gas chimneys are visible in seismic data as
areas of poor data quality or push-downs.
MANTLE: The intermediate layer of the Earth beneath the crust that
is about 2,900 kilometres thick and overlies the core of the Earth.
The mantle consists of dense igneous rocks.
TRAVELTIME: The duration of the passage of a signal from the source
through the Earth and back to the receiver.
WEATHERED LAYER: A near-surface, possibly unconsolidated layer
of low seismic velocity. The weathered layer typically has air-
lled pores.
Spencer Ogden has estimated that Calgary will need around
9,500 new workers by 2015 alone. It says the positions in highest
demand include highly skilled engineers, like geologists, pipeline
engineers and drillers.
Jim Prentice
Premier of Alberta
REPORT
Special
LOCATION: Sahtu Settlement Area of the Central

Mackenzie Valley, Northwest Territories
RESOURCE: Oil, unconventional gas
SOURCE ROCK: Devonian shale
INITIAL ESTIMATED RECOVERABLE: Estimated 270
billion barrels in place, up to three billion barrels
recoverable
PRODUCTION: Test drilling
MAJOR PRODUCERS: Husky Energy, ConocoPhillips
Canada, Shell Canada, Imperial Oil and Paramount
Resources Ltd.
NORTHWEST TERRITORIES
CANOL SHALE PLAY
YELLOWKNIFE
Has bureaucracy stied development
in the Northwest Territories?
P
RI OR TO A HORI ZONTAL FRACTURI NG
operation conducted by ConocoPhillips
Canada this spring, the excitement was
palpable over the Canol shale play in the
Northwest Territories Central Mackenzie Valley.
A 2013 Nasdaq analysis predicted it could con-
tain about 270 billion barrels of oil in place, and
the N.W.T. government estimates between two
to three billion barrels is recoverable, making it
comparable to the Bakken.
Between 2011 and 2012 alone, work commit-
ments of nearly $630 million on 13 land parcels
had been made, with Husky Energy, Shell Can-
ada, Imperial Oil and MGM Energy being the
winning bidders along with ConocoPhillips.
Moreover, investment in the N.W.T.s oil and gas
industry hit $326 million in 2012 due to explo-
ration in the Canol, according to the Conference
Board of Canada.
In March, ConocoPhillips successfully under-
took the rst fracing operation in the N.W.T.s
history. But just two months later, it suspended
plans to frac two more wells and opted not to
fund capital expenditures in 2015. Instead, it an-
nounced it will ramp up activity at its Eagle Ford
shale operation in south-central Texas.
Overnight, Canol went from being the excit-
ing new kid on the block to just another face in
the crowd. In some ways it was reminiscent of the
Second World War, when Canols Devonian-age
Stalled
the Canol
at
By Robin Brunet
REPORT
Special
shale formations were touted as having the po-
tential to provide oil in the Pacic theatre. Noth-
ing came of the plan.
Back then, the main impediment was the
harsh northern climate. Now, in addition to the
cold, Canols players point to nonsensical en-
vironmental regulations as the reason that the
play has lost its lustre. Husky Oil project manag-
er Ken Hansen told the 14th Annual Arctic Oil &
Gas Symposium in March that, with regards to
submitting a regulatory application for its next
drilling program, It has taken us over a year
to prepare the damn application and thats not
even to do any real work. Its an absurd process.
Hansen added: There are
40 different agencies that
review these applications
and thats called the pre-
liminary screening. Any-
where else in the world that
would be a full regulatory review.
Hansen revealed that Husky had already
spent $160 million on the project: Were put-
ting in a huge amount of effort to just try and
prove that we have a play that could have some
economic merit. This is an exploration play; we
dont even have proof of concept that we can
actually ow oil. The recently acquired MGM
Energy Corp. halted plans to drill in the Canol
after withdrawing its application in 2012, in
response to a demand by the Sahtu Land and
Water Board for an environmental assessment.
But energy consultant Doug Matthews
doesnt think bureaucracy is entirely to blame.
What killed Canol is the Bakken and Eagle
Ford, pure and simple, he says. Exploration
companies go where the prospects are most fea-
sible, and while the regulatory process can seem
complicated, at the end of the day Canol is just
too far from market for the serious players to
keep focusing on certainly not at the expense
of existing plays in Texas and other regions.
The Canol shale play is an area of unconven-
tional oil and gas potential
located in the Sahtu Set-
tlement Area of the N.W.T.
Studies have concluded that
oil and gas is likely present
in geologic formations one
to two kilometres below the surface (meaning
any oil and gas within the shale is expected to
be found within tiny pores with low permeabil-
ity and will not ow easily). The hydrocarbon
potential of the area has been known for some
time, but only recent technological advances
have made further exploration possible.
Local First Nations groups worry about the
chemicals used in hydraulic fracing causing
The Mackenzie River valley.
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Were putting in a huge amount of
effort to just try and prove that we
have a play that could have some
economic merit. Ken Hansen
FAST FACTS:
Geochemical testing shows that the
Canol formation is the source rock
for the oil found within the Kee Scarp
reef in the Norman Wells area, one of
Canadas largest conventional oilfields.
Canol is an acronym of Canadian Oil,
referring to the wartime pipeline project
between Alaska and the N.W.T.
irreversible damage to groundwater overlaying
the regions of fractured rock. However, opposi-
tion to development has so far been minimal
(possibly due to the high unemployment rate
in N.W.T), especially compared to provinces
like New Brunswick and British Columbia.
Husky Energy cased two vertical test wells
at Slater River in winter 2012, and in October
2013, the National Energy Board gave Cono-
coPhillips, which has 216,000 net acres of Ca-
nol rights, permission to build fracing wells.
MGM, which estimated it could be sitting on
as many as 11 billion barrels of oil, drilled at
one of its four licences in the winter of 2013,
and its partner Shell Canada, which also has
four licences in the Canol, drilled a single ver-
tical well north of Tulita (for the record, MGMs
East MacKay wells tested at about 140 barrels of
uid during four days.)
But as Matthews suggests, the logistics of
northern development seem to have taken
their toll. The same Nasdaq analysis pegging
the Canol content at 270 billion barrels also
noted the Sahtus lack of infrastructure (the lat-
ter of which drives up the cost of a well to four
times that of one in northern Alberta.) The op-
erating window in the region is only about 100
days, and no roads means that companies must
barge heavy equipment up the Mackenzie River
before it freezes.
After the rst frac this winter, Dione
McGuinness, ConocoPhillips stakeholder en-
gagement co-ordinator, told the press that his
company is continuing to assess its drilling re-
sults: It will take quite a long time to analyze
and well need more than one season to under-
stand the potential. Its really a long-term pro-
cess. The company still plans to drill 10 more
wells in next ve years.
THE N.W.T.S PERCEIVED RED TAPE EXCESS STEMS
from the region having no single regulator
companies can submit applications to. Because
of settled aboriginal land claims, various re-
source management boards have been estab-
lished throughout the region to review appli-
cations.
At the Arctic Oil & Gas Symposium, oper-
ators said they need a clear understanding of
what an environmental assessment entails and
a timely outcome to the process. Currently,
they already le project descriptions (which
can be as voluminous as 1,000 pages) that in-
clude all chemical usage and how the land and
subsurface will be protected. These documents
were then reviewed by over 25 territorial and
federal agencies. That has since been narrowed
down to three departments, after devolution
advancements earlier this year.
Despite obstacles, the Canol still attracts in-
terest. Last year, Calgary-based International
Frontier Resources successfully bid $1.2 million
for the rights to explore Parcel EL-495 in the
Central Mackenzie Valley. But at the end of the
day, its a far cry from the glory days of spend-
ing commitments in the N.W.T. The dollar
value of exploration licence bids in the Central
Mackenzie Valley include $70 million in 2007,
$500 million in 2011 and $92 million in 2012,
but absolutely nothing in 2014, says Matthews.
He goes on to predict that nothing of sig-
nicance will occur in the region for at least
ve years, because itll take at least ve years
for Bakken and Eagle Ford to shape up. Its
bad news for residents of the Central Macken-
zie Valley, who had high hopes for economic
development.
Still, he is optimistic about long-term pros-
pects. The shale is still there, and its huge, he
says. The government is talking about improv-
ing the road infrastructure. Even if the N.W.T.
in general is far away from market, who would
have seriously considered North Dakota just
ve years ago? Circumstances change over time.
And even if it takes 10 years to get the Canol to
the development phase, its going to be there for
another 20 after that.
FIRST DRILLS
In 1920, Imperial Oil sited the rst commercial
oil well in the Sahtu region. Records show that
when the bit hit pressurized oil at 122 metres
deep, the column shot 21 metres into the air.
Other wells were quickly drilled, and a small
renery was built to make fuel for bush planes.
Development kicked into high gear after the
1941 attack on Pearl Harbor, with the intention
to send oil from the Canol via a pipeline built
by the U.S. Army to a renery in Whitehorse.
Petroleum would subsequently be piped to
Skagway, Alaska. Procurement waste and cost
overruns ended the project. All told, only 20
wells have penetrated the Canol over the years.
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Scratch the Surface

Uncertainty in the Liard Basin leaves a vast, untapped resource hanging
By Jacqueline Louie
ITUATED ALONG THE TRIANGLE WHERE
British Columbia, the Yukon and North-
west Territories meet, the Liard Basin
was touted as one of the best potential
gas plays in North America just a few years ago.
A sub-basin of the West-
ern Canada Sedimentary
Basin, 100 kilometres
west of the Horn River
shale gas play, the Liard
has developed into an
unconventional exploration property for compa-
nies chasing shale gas.
At rst, Everyone was excited about the
play, says Cody Kwong, director of Institutional
Research at FirstEnergy Capital, a Calgary-based
energy investment rm. In 2012, the natural gas
price complex was on the mend, prices were go-
ing up, it was a new discovery and LNG was hot.
According to Kwong, the initial fanfare
surrounding the Liard has since zzled out,
mainly due to low gas prices and little in the way
of followup results. Right now, particularly
when gas prices have fallen
back a little, you see compa-
nies focusing more on low-
risk development opportuni-
ties, he says.
The Liard Basin is one
of the more expensive plays along the Western
Canada Sedimentary Basin, with each well cost-
ing around $20 million to $30 million to drill
due to the areas remoteness and the difculties
involved in accessing it. The topography is
something you have to be aware of, Kwong says.
Much of what could happen in the Liard, he
Its an exciting basin. There is a lot of
hydrocarbon potential there. Industry
has really just scratched the surface of
whats there. Dana Roney
An Apache drilling rig at work in the
Liard Basin.
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LIARD BASIN
www.cadecanada.com NOVEMBER/DECEMBER 2014 17 www.cadecanada.com
adds, is contingent on whether the proposed
LNG projects will go ahead, and with that, were
just in waiting mode right now. All the rhetoric
in B.C. suggests that LNG is not a foregone con-
clusion. There are all sorts of issues to iron out.
With Apache Corp.s announcement in July
that it plans to exit the proposed Kitimat LNG
project in northwestern B.C., That doesnt
sound like a strong signal this play is going to
advance any time soon, Kwong says. I think
we can safely say [the Liard Basin] does hold a
massive amount of resource, although its tangi-
bility right now is in question.
According to Gord Currie, senior oil and gas
analyst with Salman Partners, a Vancouver-based
boutique investment dealer, the companies that
have big LNG projects in the works will need to
develop massive amounts of natural gas reserves
to support them, but were probably still at
least ve years away from seeing the rst LNG
shipments. There is still some uncertainty as to
which of all the various projects that have been
announced will go ahead, Currie says. There is
a lot of capital required to build these projects.
Youve got to have customers signed up. And the
big issue that needs to be resolved is pricing
there is a big gap [and] a lot of moving parts.
The companies that own all the land up in the
Liard are probably going pretty slow until some
of these issues get resolved.
One company thats looking at what the
Liard Basin has to offer is Lone Pine Resources,
formerly Canadian Forest Oil, which has a long-
term lease of land there.
A Calgary-based indepen-
dent oil and gas explora-
tion and production com-
pany, with operations in
Alberta, B.C., Quebec and
the Northwest Territories,
Lone Pine is in the very early stages of exploring
this unconventional play, and is currently evalu-
ating whether to drill.
We feel there is tremendous opportunity
there, says Lone Pine drilling and completions
manager Dana Roney. The work we have done
has shown very positive geology for the potential
for shale gas production. The tests we have done
conrm there is very good opportunity.
The main challenge the Liard Basin poses,
Roney notes, is its remoteness. Its not a
very well-developed basin, so the infrastructure,
both for production and takeaway capability, is
difcult.
For Lone Pines particular site, with part of
the eld situated on the Liard Rivers west side,
accessibility is an issue. During the summer, the
company would have to barge all of its equip-
ment 16 kilometres up the Liard River, and in
the winter it would have to create ice bridges. It
takes a signicant amount of time, Roney says.
It shortens your drilling and access window. You
have to be very well organized to drill on that
side of the river, and you have to plan on drilling
through breakup, in case youre not able to get
your equipment in and out in one season.
In addition, You pay a premium to get any
services up there. Fort Nelson, approximately
three hours away, is the closest oileld service
centre. However, the services it offers in terms of
equipment and personnel are somewhat limited,
Roney says, so much of the infrastructure required
would need to come from Grande Prairie, Alta., or
Fort St. John, B.C.
From Fort St. John, its a full day just to get
there before you can do a job, he says. It adds a
tremendous cost to even the most basic operation.
Lone Pine Resources would have to have
enough proven reserves to make drilling econom-
ically viable, Roney says, and the deliverability in
terms of the extended gas ow rate would also
have to be signicant.
In terms of its next step, Lone Pine still has
some exploration work to do in the area. We
need to further prove up the deliverability and
the reserves associated with
the shale gas resource, Roney
says.
We havent got a timeline,
and right now were restruc-
turing and trying to deter-
mine what areas were going
to focus on. Whether we bring in a partner or do
it ourselves, its something we are still continuing
to evaluate. Right now, the price of gas is not very
high, and it would take a very signicant nd for
it to be economically viable, due to the remote-
ness and the lack of infrastructure.
Despite the challenges, hes hopeful that even-
tually, the work theyre doing in the Liard will
pay off.
Its an exciting basin. There is a lot of hydro-
carbon potential there. Industry has really just
scratched the surface of whats there.
I think we can safely say the Liard
Basin does hold a massive amount of
resource, although its tangibility right
now is in question. Cody Kwong
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FAST FACTS:
Trinidad Drilling built the largest drilling
rig in Canada in order to help tap the
Liard Basin. The CANDRILL 3000 AC
#58 is a 3,000-horsepower rig able to
drill to a depth of 8,000 metres.
The Liard is one of the most remote
natural gas plays in all of North
America. Unconventional gas
exploration is a key industry in
nearby Fort Nelson, B.C.
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One call to Global Steel provides customers with com-
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Providing seamless collaboration from the rig to the ofce.
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Data Solutions
BROOKE NEEDER HAS BEEN WORKING IN THE
oil and gas industry for a decade, and
her move there coincided with a step off
the ice.
After growing up in Rouleau, Saskatche-
wan, Needer headed to Detroits Wayne State
University on a hockey scholarship. Playing
forward, Needer had racked up a series of hon-
ours in her long hockey career, including con-
sistent rewards for sportsmanship and dedi-
cation. When she was done, and after having
enjoyed city life in Michigan, she decided to
move back to Canada, and settled on Calgary.
Needer graduated with a degree in market-
ing, and heard that the oil and gas industry
was a promising field of work. Despite being
offered internships and opportunities with
the Detroit Tigers and Red Bull, she turned
both down to start work at a lab in Calgary,
where a number of her friends had moved.
I decided Id take a chance and thought Id
give it a shot, she says. I always knew that I
wanted to be in sales, I just wasnt sure which
industry I wanted to be in. After that posi-
tion, she sold construction services for seven
years. Now, shes working for SB Navitas Tubu-
lars as an OCTG salesperson.
Needer says her background in athletics
has prepared her well for sales. Playing hock-
ey has taught me many of the skills I bring
to my sales position. I know the importance
of working as a team and accountability, and
how to overcome adversity, she says. She
adds that learning how to handle the highs-
and-lows of the sales world is one of the big-
gest things she has taken away from hockey.
I really didnt know what to expect
when I started working in the industry, but
it was a decision I have never regretted, she
says. Looking back on the different direc-
tions that I could have gone, Im happy that I
ended up where I am.
Needer says she has stuck around Calgary
and the industry because she enjoys her job
and the people shes been surrounded with.
I like the culture of working in oil and gas,
she says. Its kind of like a big small town,
everyone knows each other and you devel-
op a lot of friendships in the industry rather
than just business relationships. These days,
Needer spends her free time snowboarding,
golfing and travelling.
PROFILE
Member
By Martin Dover
B
From Ice to the Patch
After excelling at hockey, Brooke
Needer brings her competitive
spirit to the oil and gas industry
Brooke Needer
S
Cracking the
Northern Nut
REPORT
Regulatory
By Samus Smyth
INCE THE 1960S, THE NORTHWEST TERRITORIES
has been going through the process of
devolution with the federal government.
Through various agreements, authority has
been slowly transferred to the territory for things
like hospitals and highways. But last years step was
in some ways the biggest yet through Bill C-15 and
the Northwest Territories Devolution Act, control of
land and resources is now squarely in the N.W.T.s
hands. On April 1, 2014, devolution became ofcial,
a move that could lead to major economic develop-
ment in the territory.
Allan Chtenay, president of Explor Seismic Data
Canada, has had a keen interest in the exploration
and progress of the N.W.T. for over two decades. He
says the passing of the bill serves as an extraordi-
nary development.
If they get it right, they
could attract a lot of invest-
ment the reserve estimates
are astronomical, he says. It
presents itself as an opportuni-
ty, but like any opportunity it
requires good decision-making along the way.
Calgary-based Chtenay says the process is a step
towards the territory one day hosting a bolstering
economy not unlike British Columbia and Alberta.
N.W.T. MP Dennis Bevington says the bills net
impact will unfold over the next few years. The ter-
ritory will receive a greater amount of the resource
revenue, albeit not as much as the province of
Alberta. But with the N.W.T. working with a mod-
est budget of $1.2 billion, and a potential inux
of $45 million this year alone suddenly going to
it and not the federal government, the nancial
boon could encourage more than just a handful
of multimillion-dollar oil companies to conduct
research in the area.
The underlying part of any economy is small
business. This is what makes an economy solid,
says Bevington. Large businesses come and go and
have great impact but the foundation will be the
small business structure.
He says its no secret that Alberta-based oil com-
panies will take a feverish interest in the potential
blossoming of the N.W.T. economy. The territorys
relatively untapped market, particularly for shale
gas reserves, will be viewed with ravenous eyes.
Aaron Miller, manager of Northern Canada On-
shore for the Canadian Association of Petroleum
Producers, says there have been a number of spikes
and downturns in exploration of activity in the
North, which could be why the territory has yet to
get over the economic hump it resides on.
They have been trying to crack the northern nut,
if you want to call it that, for a long time. It has been
a perennial paradigm of poten-
tial, says Miller. While early
estimates of oil reserves have
produced massive interest, he
says there are a plethora of
challenges that need to be ad-
dressed before any economic
golden eggs can be hatched.
It is a much harsher geography and it is lacking
infrastructure, whether it be pipelines, local work-
force or the vast web of companies that are needed
to feed into this. It is a very high-cost environment,
and you have to remember that a lot of companies
have global competition, therefore capital is scarce,
he continues.
Along with this next step in devolution, Bill C-15
adjusts many current acts and boards that have
loomed heavily over how the relatively young prov-
ince operates.
The whole notion of devolution is to bring the
N.W.T. closer to acting like a province. Prior to devo-
lution, it was a territory controlled from Ottawa.
The notion is that people affected by the decisions
tend to make better decisions, said Chtenay.
It presents itself as an
opportunity, but like any
opportunity it requires good
decision-making along the way.
Allan Chtenay

Remove PHOTO CAPTION. Catpion: A
NuvAero unmanned aerial vehicle, equipped
with a camera, can take on tasks from land
surveys to pipeline inspections.
The latest step in devolution gives the Northwest Territories
major pull in its own backyard. Will it make a difference?
A signicant number of boards have been essen-
tial in representing the diverse population of the
N.W.T., and yet they have also been criticized for
acting as massive barriers to signicant progress.
In a controversial move, Ottawa has proposed
combining four of the existing regional land and
water boards into what has become known as an
all-encompassing superboard.
The superboard is intended to stimulate robust
change and swift progress, but many believe the
conglomeration goes too far. Particularly annoyed
by the massive merger have been the Sahtu Secre-
tariat and Tlicho government, who are preparing
to go to court with the federal government over
the alterations.
Their representation has dwindled signicant-
ly, says Bevington. They had their own regional
water boards with an administration structure in
each of their regions and they had guaranteed
equal representations on these regional boards. On
the superboard they only get a single representa-
tive out of 10, says Bevington, who says the feds
now determine who sits on the superboard as well.
When the idea of the superboard came up,
most people in the N.W.T. wondered, Why change
something that isnt broken? he continues.
Chtenay agrees that First Nations groups have
a valid point concerning the loss of signicant
inuence over their land. But it was a mountain
of paperwork and bureaucracy that paved the way
for the eventual introduction of the contentious
superboard.
Chtenay gives an example of how frustrating
the multitude of hurdles has been over the years:
If we go and pursue land use data, for example, we
have to send 48 copies to the [Mackenzie Valley]
Land and Water Board for referrals with dozens of
different agencies all asking for different things on
one single application that is absurd, he says.
Also not helping matters has been a decision by
the federal government to retain control of one
of the oldest and most prolic oil resources in the
N.W.T., Imperial Oils Norman Wells operation.
Issues like the superboard and the Norman
Wells exemption have led many to believe that the
N.W.T. may still be years away from reaching its
hinted-at potential.
There is not much road infrastructure where
some of the likely deposits of oil are. Those things
add tremendously to the cost. If you are going after
shale in the Sahtu region, and it costs you 10 more
times to drill for oil than it would in the Bakken in
Saskatchewan, then companies are going to go to
Saskatchewan. Thats the reality, says Bevington.
Miller said that, similar to almost every commu-
nity in todays world, environmental impact is a
prominent issue that will also play a starring role
in how, or if, the N.W.T. ever reaches economic
lift-off.
We hear that they are worried about impacts
to the environment. How do we best balance
economic development with protecting our
environment? That is not unique to the north.
We see these debates all over Canada, and all over
the world.
The bill is up for review in 2019.
FAST FACTS:
Its estimated that devolution could
generate $28 million in annual spinoff
business opportunities.
The duty to collect resource revenue will
land with the N.W.T., but the territory
will only keep 50 per cent.
The N.W.T. still wont be a province, so
devolution doesnt mean the federal
government will stop supporting the
territory financially. It will only have
province-like powers, not status.
22 NOVEMBER/DECEMBER 2014 Well Construction Journal
Cold Case Files

Drilling for oil and gas in extreme cold requires complicated logistical
networks and long underwear
REPORT
Enviro
By Robbie Jeffrey
D

ALE ERESMAN HAS DRILLED FOR OIL AND
gas in weather as benumbing as -55 C. He
has shut down production when conditions
were too dangerous, when the extreme cold
threatened to snap his metal oil derrick. His winter
operations require three seasons of planning, an
assortment of technological innovations, an ev-
er-vigilant eet of employees and an entourage of
safety personnel. Yet he describes the undertaking
as though he was shovelling the driveway. Its like
anybody getting ready for winter, he says. You put
on winter tires and you get out your winter boots
and your coat. Its really the same thing when we
go drilling.
Eresman, manager of drilling and completions
for Devon Energy, is being modest. Devon cur-
rently operates wells around Lloydminster and
Jacksh, Alberta., where temperatures routinely
drop to -45 C. Winter is the busiest drilling season
in Western Canada, so precision and productivity
are paramount. Further north, the stakes increase:
a 2008 study by the U.S. Geological Survey found
that nearly a third of the worlds undiscovered
conventional gas could be located north of the
Arctic Circle. In 2012, Apache Corp. estimated that
the Liard Basin north of Fort Nelson, B.C., could
contain 210 trillion cubic feet of natural gas. Com-
panies like Shell, Imperial Oil and Husky all hold
leases in the relatively undeveloped Canol shale oil
play in the N.W.T.s Sahtu region. Devon, too, has
had operations in the Horn River Basin, just south
of the Yukon border.
So what stands in the way of full-on develop-
ment? As with resource development of any kind,

there are steep political, cultural and economic
hurdles to clear. But these reservoirs around the
Arctic Circle are rare in that the biggest obstacle
to their development may not be the element of
politics, but the politics of the elements.
Winter is the busiest drilling season because
theres such a eeting window of opportunity to
access sites by ice roads, muskeg or tundra. There
are some areas we simply cant access [the rest
of the year] because its essentially swamp, says
Eresman. The remote environment means that
drilling contractors have no infrastructure of the
kind that is found in B.C. and Alberta. The Sahtu
region, for example, has no all-weather road
connecting it to southern Canada.
The bone-rattling cold complicates the brief
drilling period even further. We have to have heat,
so all the rigs are equipped with boilers that pro-
vide heat for the blowout prevention equipment,
Eresman says. And if we have any services that
show up to do things like cementing, they need
heat for the water. Any water pipes exposed to
the cold have to be heated or the lines have to
be traced with steam. The rigs are outtted with
prefab shelters to protect
workers from the wind
chill on the rig oor,
and if the temperature
is dangerously low the
crew watches for crack-
ing metal.
The need for high-performance technology has
led to the creation of equipment as resilient as the
Arctic itself. Weatherford International produces
drilling-with-casing technology that can drill the
permafrost layer in a single trip, and VAM Drilling
has released a line of harsh-environment drill
pipes that can maintain full ductility at -60 C. But
ultimately, the technology is only as good the em-
ployee operating it.
One of the things we ask our employees to do
is to dress properly, says Eresman. Everything
has to be either cotton or Nomex, and it has to be
reproof from their rst layer on out, from steel
toe boots and work gloves to hard hat liners. Con-
sidering most drilling companies also encourage
their employees to wear cleat-like footwear to avoid
slipping on the ice, it doesnt take long to notice
another impediment: lost productivity from slower
movement. Employees also have more breaks
when its freezing cold Eresmans crews have a
buddy system in which they spot their co-workers
for signs of frostbite. There are regulations around
their work hours and safety personnel are always
present. It takes gusto to be out there at all, but
despite the employees go-for-gold attitude, there
are snow days. Well talk it over with supervisors
who will make a recommendation, Eresman says,
and if need be, well shut it down.
Its difcult to make nancial generalizations
about a region so varied in geography and about
companies with such different levels of investment.
But David Houseknecht, a research geologist with
the U.S. Geological Survey, says, Company after
company has documented that costs are signi-
cantly higher [than elsewhere]. Its not unusual to
see that the cost for drilling oil in the Arctic would
range between 50 per cent and 100 per cent more.
In 2012, the cost of drilling a single well in the
Liard Basin was $35 million, signicantly higher
than southern plays, and ConocoPhillips bid $66.7
million just to secure the rights to explore on an
87,000-hectare parcel of land. The boilers Eresman
mentioned run at least $4,000 per day. Its no sur-
prise that he begins winter preparations in May.
The biggest liability, however, would be for the
already brief drilling season to become even short-
er. Yet this is the dynam-
ic that Houseknecht, a
former geology professor
and energy program
manager of the USGS,
claims is confronting
drilling companies. In
Alaska, for example, there are regulations that stip-
ulate that the tundra has to be frozen to a certain
depth before tundra travel is allowed, he says.
And the season has been reduced dramatically
over the last three or four decades. (The Alaska
Department of Natural Resources claims that the
winter exploration season has been effectively cut
in half since the early 1970s.) As the tundra travel
season is reduced in length, the number of areas
that can be explored away from existing infrastruc-
ture decreases. In Alaska, theres only one road
across the North Slope, Houseknecht says. So un-
less you are within a radius of that one road, then
you are limited as to how far out you can explore.
So is Eresman right to describe winter drilling as if
its like anybody getting ready for winter? Proba-
bly not this arena of the oil and gas industry is rife
with complications both political and elemental.
But it shows that, to him, its just another day at
the ofce. And in the extreme cold more so than
anywhere else, 90 per cent of the job is getting out
the door.
It takes gusto to be out there at all, but despite
the employees go-for-gold attitude, there are
snow days. Well talk it over with supervisors
who will make a recommendation, Eresman
says, and if need be, well shut it down.
Canadian Rig Counts
October 14, 2014
Drilling Down Total Utilization
Alberta 289 276 565 51%
B.C. 48 16 64 75%
Manitoba 13 11 24 54%
New Brunswick 0 0 0
Newfoundland 0 0 0
Northwest Territories 1 1 2 50%
Quebec 0 1 1 0%
Saskatchewan 85 68 153 56%
Totals 436 373 809 53%
Source: Alberta Department of Energy
NUMBERS
By the
Stats at a Glance
Top 5 Most Active Operators
October 14, 2014
Active
Rigs
Canadian Natural Resources 26
Crescent Point Energy Corp. 24
Progress Energy Canada Ltd. 18
Tourmaline Oil Corp. 17
Husky Energy Inc. 16
Source: CAODC
Top 5 Most Active
Drillers in Western Canada
October 14, 2014
Active Total
Precision Drilling Corp. 86 190
Ensign Energy Services Inc. 53 101
Savanna Energy Services Corp. 42 71
Nabors Industries Ltd. 39 64
Trinidad Drilling Ltd. 38 57
Source: FirstEnergy Capital
Alberta Completed Wells
August 2014
August 2014 August 2013 YTD 2014 YTD 2013
Oil and Natural Gas
Land Sales $74.9 million $42.9 million $387.8 million $518.8 million
Price Per Hectare $872.16 $290.06 $491.63 $364.63
Oil Sands
Land Sales $18,555 $128,547 $4.23 million $10 million
Price Per Hectare $58.13 $26.09 $212.93 $189.77
Source: Alberta Department of Energy
2014 Baker Hughes Incorporated. All Rights Reserved. 38071 10/2014
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By Robbie Jeffrey
New Energy
for Old Dreams
As Northern communities move away from diesel,
decades-old development issues could resurface
AVID RAMSAY, THE MINISTER OF INDUSTRY,
tourism and development in the Northwest
Territories, wants to move northern com-
munities away from using diesel, replacing
it with liqueed natural gas. LNG is signicantly
less expensive, and would reduce greenhouse gas
emissions by 25 per cent compared to diesel. The
N.W.T. Energy Action Plan, released in 2013, cites
LNG as a viable replacement for diesel in northern
communities. NT Energy has big plans to truck
in LNG to power 70 per cent of Inuviks electrici-
ty needs, possibly kick-starting a territory-wide
conversion.
Grant Hood, Inuviks
senior administration of-
cer, agrees that the Norths
communities will eventual-
ly have to abandon diesel in
favour of a more econom-
ical and environmentally-friendly energy source.
But thats an onerous task: of the 33 communities in
the N.W.T., he says, To my knowledge, Inuvik and
Norman Wells are the only two communities that
dont use diesel. LNG would have to be trucked in,
and Hood estimates that 20 of those communities
are accessible only via ight in the spring and sum-
mer months and ice roads during winter. Even in
Inuvik, only one of the Northwest Territories Power
Corporations two power plants run on LNG, and
thats as part of a pilot project. The rest of the town
uses propane, or synthetic natural gas, with diesel
on backup.
LNG is seen as a natural t, especially for Inuvik
because we have the infrastructure in place to han-
dle natural gas, Hood says. But our understanding
is that theres no secure supply, as Inuviks LNG
comes from Vancouver-area overstock.
Inuvik, however, is near the coast of the Beaufort
Sea, where trillions of cubic feet of natural gas lie
in untapped elds. Ramsay wants to develop these
reserves with the primary intention of exporting the
gas, and the secondary benet of providing north-
ern communities with a viable alternative to diesel.
He also wants to put the Mackenzie Valley pipeline
back on the table.
The long-delayed pipeline project, rst proposed
in the 1970s but held up by countless setbacks and
poor market conditions, is garnering interest once
again thanks to a price hike and growing demand
from markets in Asia. Imperial Oil is also approach-
ing its end-of-2015 deadline to begin construction
on the pipeline, a $20-billion process that began
when Judge Thomas
Berger visited the territory
in 1975 to examine its
potential impact on ab-
original communities and
the environment. His rec-
ommended decade-long
moratorium turned into 40 years, and in the dis-
course surrounding the Keystone XL and Northern
Gateway pipelines, it acts as a cautionary tale. By
the time the Mackenzie Gas Project was approved in
2011, natural gas had fallen to $4.57/MMBtu from
its high of $15.38/MMBtu four years prior.
Its a timely proposition. Though most of the nat-
ural gas would be exported, the pipeline would solve
the territorys supply issues if the LNG could be
transported by barge or if communities could build
the appropriate storage. If you can get there in the
fall and have the storage capacity to load them up
for the winter, then its still a possibility, Hood says.
Thats a dream of ours weve had for 40 years to
have a gas pipeline down the Mackenzie Valley,
Ramsay said at a meeting of resource ministers in
Ontario this summer. He may see it t to seize the
opportunity before the completion of the project
turns pyrrhic. Ramsay wants to move northern
communities away from diesel, but he may accom-
plish much more.
D
LNG is seen as a natural t, especially
for Inuvik because we have all the
infrastructure in place to handle natural
gas. But our understanding is that
theres no secure supply. Grant Hood
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The official publication of the Canadian Association of Drilling Engineers

NOVEMBER / DECEMBER 2014

2014 CADE. NOT TO BE REPRINTED OR

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