well construction journal - november/december 2014

8/10/2019 Well Construction Journal - November/December 2014

1/28

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

means for industry

From Canol to the LiardBasin, a look at the Northsresource potential


2/28

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3/28www.cadecanada.com NOVEMBER/DECEMBER2014


DEPARTMENTS

4 PRESIDENTS MESSAGE

6 THE DRAWING BOARDEditors note, members

corner, news and notes,

technical luncheons

10 STUDENT PROFILES11 HELP WANTED

19 MEMBER PROFILE

24BY THE NUMBERS

26DRILLING DEEPER

FEATURES

12 STALLED AT THE CANOLHas bureaucracy stifled

development in the

Northwest Territories?

16 SCRATCH THE SURFACEUncertainty 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 FILESDrilling 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

[email protected]

PUBLISHER: Ruth Kelly

DIRECTOR OF CONTRACT PUBLISHING:Mifi PurvisMANAGING EDITOR:Lyndsie Bourgon

ART DIRECTOR:Charles Burke

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ASSOCIATE ART DIRECTOR: Colin Spence

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PRODUCTION TECHNICIANS:Brent Felzien, Brandon Hoover

CIRCULATION COORDINATOR:Karen Reilly

ACCOUNT EXECUTIVE: Kathy Kelley

CONTRIBUTING WRITERS:

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Jacqueline Louie, Samus Smyth

NOVEMBER/DECEMBER 2014

20

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CONTENTS 2014 CADE. NOT TO BE REPRINTED OR

REPRODUCED WITHOUT PERMISSION. 10


12


4/28Well Construction Journal4 NOVEMBER/DECEMBER2014

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 easyplace 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 slowlyswiveled 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-

ficult, some companies have been working to

foster alternative methods in the fracing proces

A lot of the time these alternatives still includ

recycled or wastewater, but there are also som

methods being developed that use propane-base

gels and acid-mine drainage solutions.Though we often want to get to work doin

our jobs, and we know the traditional way th

has so far worked best, these new technologi

are a great thing for engineers to get behind. W

should be concerned with finding alternatives

freshwater when it comes to fracing, because

fears for freshwater access grow, alternatives w

keep us in operation.

Fracing is a challenge, not least because

public perception and misinformation aroun

what it means for surrounding water supp

and its effect on freshwater. When considerinthe opportunities presented to us in the Nort

we should embrace environmental stewardsh

in pump and frac water. These new techno

ogies will make it easier for us to continue o

work and will help us keep opening up ne

opportunities.

T

MESSAGEPresidents

EmbracingNew Technologies

Dan Schlosser

CADE President

Apache Corp.s Debolt Water Treatment Plantallows for the reuse of water over time, and is

the first of its kind in North America.


5/28

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BOARDThe Drawing

E D I T O R S N O T E

Carrying On During Uncertain TimesHE 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 [email protected]

403-265-4973

T

President Dan Schlosser [email protected]

Education Chair Linden Achen [email protected] Chair Ryan Richardson [email protected]

Membership Chair Andy Newsome [email protected]

Social Chair Kristy Hysert [email protected]

Treasurer Cecil Conaghan [email protected]

WCJ Editor Christian Gillis christiang@hawkeyeengineering.

Sponsorship & Marketing Craig Joyce [email protected]

IT Chairman Matt Stuart [email protected]

Secretary Tammy Todd [email protected]

Member at Large Kali Charron [email protected]

CADE ExecutiveTeam 2014/2015

E X E C U T I V E T E A M


7/28NOVEMBER/DECEMBER2014www.cadecanada.com

M E M B 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 FLETCHERRHYS FLETCHER

LESLEY FURLAN

SHUBHAM GARG

DONNY HALL

GARETT HEATH

BEN HOCKIN

TAUQEER JAVAID

RANVEER KANDOLA

ADEDEJI KUYE

BLAKE LAWRENCE

COREY MCNAIR

ERIC MOIGNYCHRISTOPHER 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 andknowledge obtained by your partici-

pation in CADE will benefit you and

your employer, with direct applica-

tion to your professional career.

CADE offers various means for

members to connect and share

their insights. Monthly technical

luncheons are held with topical

industry presentations. Other mem-

bership benefits include our monthly

publication Well Construction Journal

and a membership directory, whichis 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 renewalprocess on our website.

Please remember the benefits of be-

ing a CADE member include APEGAs

professional development hour, stay-

ing abreast of technological and in-

dustry advances, drilling conferences

and a great opportunity to network.

Thank you for your support.

CADE MEMBERSHIP CHANGES

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

contact information.



BOARDThe Drawing

N E W S A N D N O T E S

Suncor sends first shipment ofwestern crude to EuropeIN SEPTEMBER, SUNCOR ENERGY ANNOUNCED ITS

first 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 find new custom-

ers and promote product overseas. The crude wasshipped 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 accidentsalong 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 tobe expensive and complicated.

drama easily, and that the highways it frequents

arent well-suited for the amount of industria

traffic paired with bad weather.

Highway Thru Hellarrives in Alberta

Trinidad to build new high-tech rigsDESPITE LOWER GAS PRICES, CALGARY-BASED

Trinidad Drilling has announced that its building

five 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.


9/28

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

Luncheon TicketsMEMBERS: $47.50 (plus GST)

NON-MEMBERS: $55 (plus GST)

FULL TABLES OF 10: $475 (plus GST)

STUDENT: $20 (plus GST)

Save the Date: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 specifically 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 benefit 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.comfor 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 field engineer in South Louisiana he led the

research, development and commercialization teams on the Ream

While Drilling (RWD) tool for Hughes, and was the first North

American oasis manager for Hughes.

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Our best-in-class services are the result ofour honest and hardworking team members

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10/28Well Construction Journal10 NOVEMBER/DECEMBER 2014

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-eficial 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, buthopes to work on improving processes to increase efficiency and to

reduce the environmental impact of petroleum production.

Young TalentHighlighting tomorrows best and brightest

Student

PROFILE

Jennifer Le

Chemical EngineeringUniversity of Calgary

J

Kerri Olson

Petroleum Engineering TechnologySAIT

ERRI OLSON MOVED FROM ESSEX, ONT., TO CALGARY SIX YEARS

ago. The 24-year-old just started her first 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 field. 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 first year and work over the summer

months. She plans to search for a field 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 field.

K


11/28NOVEMBER/DECEMBER2014www.cadecanada.com

NEW RECRUITMENT FIRM EXPANDS TO COVER ALBERTAS WORKER SHORTAGE

HELPWANTED: 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 field:

BEAN CHOKE: A fixed choke used to control the flood of fluids,

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 fluid, is forced against the medium under

a pressure.

CHRISTMAS TREE:An assembly of valves, spools, pressure gauges

and chokes fitted 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 fill jobs. But in June, the federal government made changes to

the program to ensure that Canadians are first 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

firm 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 offices around the world.

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-

filled 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



REPORTSpecial

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


13/28NOVEMBER/DECEMBER2014 1www.cadecanada.com

Has bureaucracy stifled developmentin the Northwest Territories?

P

RIOR TO A HORIZONTAL FRACTUR ING

operation conducted by ConocoPhillipsCanada 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 first 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 Canolat

ByRobin Brunet



REPORTSpecial

shale formations were touted as having the po-

tential to provide oil in the Pacific 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 flow oil. The recently acquired MGM

Energy Corp. halted plans to drill in the Canol

after withdrawing its application in 2012,

response to a demand by the Sahtu Land an

Water Board for an environmental assessmen

But energy consultant Doug Matthew

doesnt think bureaucracy is entirely to blam

What killed Canol is the Bakken and Eag

Ford, pure and simple, he says. Exploratio

companies go where the prospects are most fe

sible, and while the regulatory process can see

complicated, at the end of the day Canol is ju

too far from market for the serious players t

keep focusing on certainly not at the expen

of existing plays in Texas and other regions.

The Canol shale play is an area of unconve

tional oil and gas potenti

located in the Sahtu Se

tlement Area of the N.W.Studies have concluded th

oil and gas is likely prese

in geologic formations on

to two kilometres below the surface (meanin

any oil and gas within the shale is expected

be found within tiny pores with low permeab

ity and will not flow easily). The hydrocarbo

potential of the area has been known for som

time, but only recent technological advanc

have made further exploration possible.

Local First Nations groups worry about th

chemicals used in hydraulic fracing causin

The Mackenzie River valley.

Were putting in a huge amount of

effort to just try and prove that wehave a play that could have some

economic merit. Ken Hansen

FAST FACTS:

Geochemical testing shows that theCanol 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.


15/28www.cadecanada.com NOVEMBER/DECEMBER2014 1

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, MGMsEast MacKay wells tested at about 140 barrels of

fluid 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 Riverbefore it freezes.

After the first 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 five 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 file 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-

nificance will occur in the region for at least

five years, because itll take at least five 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 stil l 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 wouldhave seriously considered North Dakota just

five 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 first 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

refinery 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 refinery 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.



S

Scratch the SurfaceUncertainty in the Liard Basin leaves a vast, untapped resource hanging

ByJacqueline Lou

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 first, Everyone was excited about the

play, says Cody Kwong, director of Institutional

Research at FirstEnergy Capital, a Calgary-based

energy investment firm. 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 fanfa

surrounding the Liard has since fizzled ou

mainly due to low gas prices and little in the wa

of followup results. Right now, particular

when gas prices have falle

back a little, you see comp

nies focusing more on low

risk development opportun

ties, he says.

The Liard Basin is on

of the more expensive plays along the Wester

Canada Sedimentary Basin, with each well cos

ing around $20 million to $30 million to dr

due to the areas remoteness and the difficulti

involved in accessing it. The topography

something you have to be aware of, Kwong say

Much of what could happen in the Liard, h

Its an exciting basin. There is a lot ofhydrocarbon potential there. Industry

has really just scratched the surface of

whats there. Dana Roney

An Apache drilling rig at work in the

Liard Basin.

REPORTSpecial

LIARD BASIN


17/28www.cadecanada.com NOVEMBER/DECEMBER 2014 1www.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 thathave 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 five years away from seeing the first 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 theLiard 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

confirm 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

difficult.

For Lone Pines particular site, with part of

the field 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 significant 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, approximatelythree hours away, is the closest oilfield 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 interms of the extended gas flow rate would also

have to be significant.

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 significant find 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

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.


18/28

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19/28NOVEMBER/DECEMBER2014 1www.cadecanada.com

BROOKE NEEDER HAS BEEN WORKING IN THE

oil and gas industry for a decade, and

her move there coincided with a step offthe 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 industrywas 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. Sh

adds that learning how to handle the high

and-lows of the sales world is one of the bigest things she has taken away from hockey

I really didnt know what to expe

when I started working in the industry, bu

it was a decision I have never regretted, sh

says. Looking back on the different dire

tions that I could have gone, Im happy that

ended up where I am.

Needer says she has stuck around Calgar

and the industry because she enjoys her jo

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 tow

everyone knows each other and you deve

op a lot of f riendships in the industry rath

than just business relationships. These day

Needer spends her free time snowboardin

golfing and travelling.

PROFILEMember

ByMartin Dov

B

From Ice to the PatchAfter excelling at hockey, Brooke

Needer brings her competitive

spirit to the oil and gas industry

Brooke Needer



S

Cracking theNorthern Nut

REPORTRegulatory

BySamus Smy

INCE THE 1960S, THE NORTHWEST TERRITORIES

has been going through the process of

devolution with the federal government.

Through various agreements, authority hasbeen 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 official,

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 influx

of $45 million this year alone suddenly going to

it and not the federal government, the financial

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 an

have great impact but the foundation will be th

small business structure.

He says its no secret that Alberta-based oil companies will take a feverish interest in the potenti

blossoming of the N.W.T. economy. The territory

relatively untapped market, particularly for sha

gas reserves, will be viewed with ravenous eyes.

Aaron Miller, manager of Northern Canada O

shore for the Canadian Association of Petroleu

Producers, says there have been a number of spik

and downturns in exploration of activity in th

North, which could be why the territory has yet

get over the economic hump it resides on.

They have been trying to crack the northern nu

if you want to call it that, for a long time. It has beea perennial paradigm of pote

tial, says Miller. While ear

estimates of oil reserves hav

produced massive interest, h

says there are a plethora

challenges that need to be a

dressed before any econom

golden eggs can be hatched.

It is a much harsher geography and it is lackin

infrastructure, whether it be pipelines, local wor

force or the vast web of companies that are neede

to feed into this. It is a very high-cost environmen

and you have to remember that a lot of compani

have global competition, therefore capital is scarce

he continues.

Along with this next step in devolution, Bill C-1

adjusts many current acts and boards that hav

loomed heavily over how the relatively young pro

ince operates.

The whole notion of devolution is to bring th

N.W.T. closer to acting like a province. Prior to dev

lution, it was a territory controlled from Ottaw

The notion is that people affected by the decision

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

The latest step in devolution gives the Northwest Territoriesmajor pull in its own backyard. Will it make a difference?


21/28www.cadecanada.com NOVEMBER/DECEMBER 2014 2

A significant 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 significant 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 robustchange 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 significant-

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 significant

influence 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 prolific oil resources in theN.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 couldgenerate $28 million in annual spinoffbusiness opportunities.

The duty to collect resource revenue willland with the N.W.T., but the territorywill only keep 50 per cent.

The N.W.T. still wont be a province, sodevolution doesnt mean the federal

government will stop supporting theterritory financially. It will only haveprovince-like powers, not status.


22/2822 NOVEMBER/DECEMBER2014 Well Construction Journal

Cold Case FilesDrilling for oil and gas in extreme cold requires complicated logisticalnetworks and long underwear

REPORTEnviro

ByRobbie Jeffre

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 fleet 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

Jackfish, Alberta., where temperatures routine

drop to -45 C. Winter is the busiest drilling seaso

in Western Canada, so precision and productivi

are paramount. Further north, the stakes increas

a 2008 study by the U.S. Geological Survey foun

that nearly a third of the worlds undiscovere

conventional gas could be located north of th

Arctic Circle. In 2012, Apache Corp. estimated th

the Liard Basin north of Fort Nelson, B.C., cou

contain 210 trillion cubic feet of natural gas. Com

panies like Shell, Imperial Oil and Husky all ho

leases in the relatively undeveloped Canol shale o

play in the N.W.T.s Sahtu region. Devon, too, h

had operations in the Horn River Basin, just sout

of the Yukon border.

So what stands in the way of full-on develo

ment? As with resource development of any kin


23/28NOVEMBER/DECEMBER 2014 2www.cadecanada.com

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 fleeting 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 outfitted with

prefab shelters to protect

workers from the wind

chill on the rig floor,

and if the temperature

is dangerously low thecrew 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

fireproof from their first 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 difficult to make financial 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 signifi-

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, significantly higherthan 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 office. 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, Eresmansays, and if need be, well shut it down.



Canadian Rig CountsOctober 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

NUMBERSBythe

Stats at a Glance

Top 5 Most Active OperatorsOctober 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 CanadaOctober 14, 2014Active 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 WellsAugust 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


25/28

2014 Baker Hughes Incorporated. All Rights Reserved. 38071 10/2014

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DEEPERDrilling

ByRobbie Jeffr

New Energyfor Old DreamsAs 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, replacingit with liquefied natural gas. LNG is significantly

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 offi-

cer, agrees that the Northscommunities 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 flight 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 fit, 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 fields. Ramsay wants to develop these

reserves with the primary intention of exporting th

gas, and the secondary benefit of providing nort

ern communities with a viable alternative to dies

He also wants to put the Mackenzie Valley pipelinback on the table.

The long-delayed pipeline project, first propos

in the 1970s but held up by countless setbacks an

poor market conditions, is garnering interest on

again thanks to a price hike and growing deman

from markets in Asia. Imperial Oil is also approac

ing its end-of-2015 deadline to begin constructio

on the pipeline, a $20-billion process that bega

when Judge Thom

Berger visited the territo

in 1975 to examine i

potential impact on aoriginal communities an

the environment. His re

ommended decade-lon

moratorium turned into 40 years, and in the di

course surrounding the Keystone XL and Norther

Gateway pipelines, it acts as a cautionary tale. B

the time the Mackenzie Gas Project was approved

2011, natural gas had fallen to $4.57/MMBtu fro

its high of $15.38/MMBtu four years prior.

Its a timely proposition. Though most of the na

ural gas would be exported, the pipeline would solv

the territorys supply issues if the LNG could b

transported by barge or if communities could bui

the appropriate storage. If you can get there in th

fall and have the storage capacity to load them u

for the winter, then its still a possibility, Hood say

Thats a dream of ours weve had for 40 years

have a gas pipeline down the Mackenzie Valley

Ramsay said at a meeting of resource ministers

Ontario this summer. He may see it fit to seize th

opportunity before the completion of the proje

turns pyrrhic. Ramsay wants to move norther

communities away from diesel, but he may accom

plish much more.

D

LNG is seen as a natural fit, especially

for Inuvik because we have all the

infrastructure in place to handle naturalgas. But our understanding is that

theres no secure supply. Grant Hood


27/28

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well construction journal - november/december 2014

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