October 2009 Volume 10, Number 5

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Publication Mail Agreement No.: 40039458

October 2009 Volume 10, Number 5

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October 2009

Volume 10, Number 5

Contents

Publication Mail Agreement No. : 40039458

5 The Mega-Merger Hangover PUBLISHER

John Robertsen

6 70% of Canadian energy companies expect oil prices

to increase over the next year: PwC survey 7 Public Survey Yields Surprising Results

EDITORIAL ASSOCIATES

David Coll Seema D Dhawan Joni Evans Elizabeth Hak Joe Perraton

DESIGN & LAYOUT

millstonecommunications.ca [email protected]

7 Latest Chinese Purchase Big News for Oilsands 8 SAIT welcomes first students to new energy diploma

program 9-11 No Surprise – Oil Industry Profits Down from 2008

Record Levels 12 The Canadian Association of Petroleum Producers

(CAPP) released its 2009 crude oil production forecast and markets and pipelines outlook 14 IHS CERA: World Oil Demand Set to Resume Growth;

Return to Pre-recession Levels by 2012 ADVERTISING SALES

John Robertsen 403.503.0460 [email protected]

15 One-time field data capture: now a reality 16 EnCana proceeds with plan to split into two distinct

and independent energy companies Small Business Week 2009; 18 Experts reveal why this recession is a great time to

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26 Don’t be too quick to sign those pink slips 26 Oil Rigs Delivered in Record Time 27 Historical drilling records now digitized and online 27 Wood Group Offers High-Pressure, High-Temperature

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Oil & Gas Network, October 2009 3

The Mega-Merger Hangover When the dust finally settles, if indeed it does, what you wind up with looks very different from what you thought you were going to have

Corner

Coll’s

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lthough the Petro-Canada name will live on at its handsomely branded retail outlets, the company that many loved to hate (at least in its infancy) is gone, absorbed by Suncor, a company with an even longer history and, as you’d expect, a much better historical track record. With a market cap hovering around $50 billion, the new Suncor is about 20% bigger than EnCana, the monster created in 2002 by the so-called “merger of equals” — AEC and PanCanadian. But if anyone at Suncor is feeling particularly satisfied about being the undisputed domestic energy lynchpin, they should be aware that from the EnCana example that their status as number-one may well be short-lived.And the taste of champagne can leave a wicked hangover. The powers that be will pretend everything can be neatly wrapped up in a bow by a certain date, but the turmoil created within a newly merged enterprise so large and complex is ongoing. When the dust finally settles, if indeed it does, what you wind up with is very different from what you thought you were going to have. How we’d end up in this business? Why did we sell that? Who hired that guy? Just ask EnCana, which announced in May 2008 that it planned to divide itself into two separate companies; after postponing the deal a few months later in the wake of the global credit crunch, it was put back on the table in September 2009. To think that such a plan would emerge within just a few years would have been preposterous at the time of EnCana’s creation – when it was claimed with a great deal of flagwaving fanfare that a certain “critical mass” was necessary, if not for survival alone, then to offer investors improved liquidity, access to capital at lower costs and higher share prices relative to cash flow. Suncor is using essentially these same arguments today, ironically to absorb the company that virtually patented the flag-waving takeover in the early 80s. But it’s apparent now that “bigger is better” no longer works for EnCana. And so the question has to be asked: if the same market that was rewarding size above all else just a few years ago has now discovered that “more value” can be created by splitting EnCana along distinct business lines, why is the Suncor-Petro-Canada merger hailed as such a wonderful thing? Won’t that same fate ultimately befall Suncor once all its postmerger asset shuffling is finally concluded? There are differences in the two deals beyond the mere passage of time but, if anything, the Suncor deal is way more complicated than EnCana’s ever was, given the merging of downstream as well as upstream assets. It’s easy to foresee Suncor eventually splitting at least the upstream and downstream and perhaps bringing the weaker, regional Sunoco brand under the national Petro-Canada name and marketing umbrella. That leaves a final question that can also be asked of the EnCana split – at inception, would the production and net asset value of the new entity be that much greater than what could have been generated had the businesses that went into its creation been left to grow undisturbed? I have a sneaking suspicion the numbers might be closer than one would think. You can scoff at the notion and toss out a bunch of actual and projected numbers to make your case, but the reality is that no one will ever truly know. Precious little speculative comparison ever sees the light of day. There is also a huge body of data out there that would make anyone question the ultimate value of these large deals, financially, operationally and socially. The latter is often overlooked, yet many a study cites social/cultural/communication issues as the number-one cause of failed mergers. It’s one thing to say you’re going to integrate two cultures and quite another to actually achieve the integration. (Suncor has its hands full with Petro-Canada – they’re very different animals). In the end I can’t help but wonder if, in reality, the only people who ultimately benefit from these big deals are those who finance and broker them, those who are in a position to determine whether they proceed or not and can carefully orchestrate the timing, and the armies of lawyers, forensic accountants and others who back them up and thereby garner a hefty commission or dubious promotion for their loyalty to the cause and a few late evenings on computer. I’d compare it all to the formation of the so-called rock and roll supergroups of the late 60s and 70s – the hype outweighed the substance and the music itself, after the initial shine wore off, was flat and unmemorable.

Oil & Gas Network, October 2009 5

70% of Canadian energy companies expect oil prices to increase over the next year: PwC survey Crude oil and natural gas prices will have the most significant impact on the energy business in the next three years hile 2008 was a year of two extremes, with oil and gas producers experiencing boom and bust all within 12 months and many responding by cutting their capital spending plans for 2009 anywhere from 25% - 35%, they still continue to plan for the future according to the Canadian Energy Survey released today by PricewaterhouseCoopers (PwC). – 70% of respondents expect prices to increase somewhat over the next year and 11% believe prices will increase substantially. Approximately 16% said crude oil prices will stay about the same in the year ahead. – The majority of respondents said oil prices will have to increase to at least US$70-$80 before they would consider increasing conventional drilling programs, although an almost equal number said prices will have to head north of US$80 before spending more on conventional drilling. – Close to 57% of respondents said the ability to adapt to change is a critical requirement for their long-term sustainability; while 68% of respondents said attracting and retaining top talent was viewed as critical for their long-term growth. Technological innovation was seen by 40% of respondents as critical for ensuring sustainable growth. – Respondents also said they expect to increase their investment into research and development (R&D) over the next two years, with 23% indicating they plan to boost R&D spending in 2011 versus only 4% this year and 22% in 2010.

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6 Oil & Gas Network, October 2009

– 72% of gas producers believe prices should recover within the next two years to a level that will lead them to increase their drilling programs whereas 28% believed it might take three years or longer for natural gas prices to recover to levels that will result in more wells being spudded. “The turbulent swing in energy prices from all-time highs in the summer of 2008 to four-year lows in December is a powerful reminder that the booms in commodities can quickly evaporate,” says John Williamson, Partner and Canadian Energy Leader at PwC.“At the mid-way mark of 2009, while gas prices continue to languish, many believe natural gas fundamentals point to a recovery in 2010, which will lead to improved drilling activity levels. Crude oil prices have already rebounded from year-end 2008 levels.” Companies across the oilpatch are adopting a number of measures to remain profitable, including capital budget cutbacks, moving operations to other jurisdictions with lower royalties, as well as salary freezes or rollbacks, and layoffs. While industry has cut staff, many energy companies prefer not to lay off employees because so much time has been spent training them. In the survey, attracting and retaining top talent was viewed by 68% of respondents as critical for their long-term growth. This driver was seen by respondents as the most critical factor that will influence future growth.

Financing The financial crisis has reduced access to both debt and equity.As a result, 39% of survey respondents expect to rely on cash flow to support their business over the next year, while 26% identified debt and 14% equity as their primary sources of financing. Two-thirds of respondents said access to capital and credit is critical to sustain their growth over the long-term. But respondents also feel that debt will likely be the most difficult source of financing to obtain in the short-term (over the next three years), with 63% saying it will be somewhat challenging and 26% believing it will be very challenging. Close to 54% of respondents also believe it will be somewhat challenging to secure equity financing in the next three years, with 33% saying it will be very challenging.

Operating Costs Fully 57% of survey respondents said they anticipate their overall operating costs to decrease over the next year, with declining labour and material costs helping the bottom line. Some oil producers now say that labour and material costs have lowered so much that projects may be economical at lower prices. In addition, 76% of respondents said their land acquisition costs would stay the same or decrease over the coming year.

Continues on page 11

Public Survey Yields Surprising Results Rob Gray, Manager, Communications & Member Relations espite what media and naysayers may have you believe, communities where oil and gas activity is most active actually view the petroleum industry in a surprisingly more favourable light compared to the national average. However, community residents still point to some key issues where industry can improve its performance. Findings of a recent Ipsos-Reid public opinion survey, conducted on behalf of PSAC, suggest that communities within the WCSB where oil and gas activity is taking place – as in those communities that actually live with industry activity on a regular, if not daily basis –don’t think the industry is all that bad. This is in stark comparison to what industry and the public were led to believe during the royalty review process in 2007/2008, and varies widely from similar surveys that have taken a more national perspective. The survey was undertaken as a strategy for industry to listen to the public, hear and understand their concerns, and ultimately be able to address those concerns, in an effort to protect industry’s social license to operate. Against a backdrop of typically negative media coverage and seemingly negative public attitudes towards industry, the results of the survey were pleasantly surprising with 60 per cent of respondents having a favourable opinion of the industry, while another 20 per cent of people are indifferent. That means only two in 10 people hold a negative view of the industry, which, for any industry, is a pretty good number. Eight out of 10 respondents gave industry top ratings for providing jobs and supporting the local economy. And, nearly three quarters of respondents noted industry’s community participation - such as donations, volunteering, and sponsorships – as clear positives. Respondents also gave industry relatively positive marks for treating residents and property with respect. However, before becoming too self-congratulatory, it is important to note that the survey also highlighted some very specific areas for improvement. One of the prevailing themes of the survey is that industry is falling flat when it comes to communication. The benchmarks for listening and responding to community concerns, and just communicating in general about activity are all below where they should be. The survey shows that 50 per cent of people feel industry needs to do a better job on this front. Almost two-thirds of those surveyed are asking for more information from industry, which according to Ipsos-Reid is a startlingly high number compared to other industries. Some of the specific concerns noted by residents relate to driving habits, minimizing mess, reducing noise, and protecting public health and safety.The number one concern, which is shared by a majority of respondents, relates to protecting the environment. The detailed findings of the survey provide a lot of ammunition, both in support of industry, but also in support of some improvements that need to be made. It is critical for issues to address these issues now, in advance of the next upturn, so that industry can remain in good public favour.This is certainly something that PSAC will continue working on, on behalf of Members, and is something that other industry stakeholders may want consider as well.

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Latest Chinese Purchase Big News for Oilsands ince China’s need for energy is growing faster than any other country, it may not be too great a surprise that a governmentcontrolled Chinese company has purchased a large stake in the Alberta oilsands. In August, Athabasca Oil Sands Corp. (AOSC) entered into an agreement with PetroChina International Investment Co., allowing it to have a 60 per cent working interest in AOSC’s MacKay River and Dover oilsands projects for $1.9 billion. The agreement also provides for certain financing arrangements for AOSC. “This deal shows that the biggest energy company in the world has chosen Athabasca as their partner,” said Sveinung Svarte, Athabasca Oil Sands president and chief executive. “They clearly told us that’s because they like our assets the best and obviously, they (oilsands) are the crude oil story.” The projects are located in the centre of the Athabasca area in northeastern Alberta and have been assessed by an independent third party to contain roughly five billion barrels of bitumen. The deal basically allows for three billion of those barrels to be sold to PetroChina, said Bill Gallacher, chairman of the Athabasca Oil Sands. Oilsands projects require a huge investment, and now “we have a fully funded business model to go forward,” he said. "Oilsands projects are very capital-intensive long-term investments and difficult to fully finance in the traditional equity market. “AOSC therefore decided to look for joint venture partners, and these strategic joint venture arrangements with PetroChina, one of the world's largest energy companies, can ensure that the MacKay River and Dover projects will be developed in timely manner, which is excellent news for Alberta and the rest of Canada.” The deal is expected to close Oct. 31, Gallacher announced in a conference call. It is pending government approval, but AOSC executives say they don't foresee any obstacles. Some of them recently visited several oil facilities in northeastern China where PetroChina operates a number of heavy oil projects using sophisticated technologies, including various SAGD processes and firefloods. “I was pleasantly surprised at the operations we’ve seen. It was very, very impressive,” Gallacher said.

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As joint venture partners, AOSC and PetroChina plan to use common in-situ methods to develop the oilsands projects. AOSC has filed regulatory applications for approval of two pilot projects within the project areas with the Alberta Energy Resources Conservation Board. The Calgary-based company intends to file a regulatory application for the first 35,000 bbl/d phase of the MacKay River commercial project at the end of this year. The MacKay River project is about 60 kilometres west of Fort MacKay, while the Dover project is about 35 kilometres northwest of Fort McMurray.

“We will remain as operators for the time being of the two assets,” Svarte said. Commercial oil could flow by 2014, with subsequent phases reaching 150,000 bbl/d of production. PetroChina is not the only Chinese firm to show interest in northern Alberta's oil reserves. Sinopec Corp. has a 50 per cent stake in the Northern Lights project 100 kilometres northeast of Fort McMurray. A Scotiabank commodity report says that Chinese oil consumption has increased 3.5 per cent this year and in July was at 8.1 million barrels per day.

Oil & Gas Network, October 2009 7

SAIT welcomes first students to new energy diploma program he first students enrolled in SAIT Polytechnic’s new Energy Asset Management (EAM) program were celebrated at a special launch event for industry partners and students. “We are very pleased to welcome the first group of students to the Energy Asset Management program,” said Mary MacDonald, Dean of SAIT’s MacPhail School of Energy. “Over the past two years we have worked together with industry to develop a program that will

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give students the training required to succeed in this essential field.” The first known program of its kind in North America, EAM was created in response to the Alberta oil and gas industry’s growing demand for job-ready employees in the field of energy asset management. The EAM program will focus on the management and administration of regulatory, financial and contractual compliance pertaining to energy assets.

SAIT Polytechnic’s President and CEO, Irene Lewis

“The demographics in this industry show there will be a tremendous shortfall of qualified workers over the next 10 years,” said Melinda Scherger, Chair of the Centre for Energy Asset Management Studies Board of Directors. “Future SAIT graduates of the Energy Asset Management program will be extremely valuable to the energy industry.” Interest in the two-year diploma program was so high that SAIT added a second class for the current fall semester. Sixty-four students are enrolled. The EAM program was developed in partnership with the Centre for Energy Asset Management Studies. Graduates will find career opportunities in areas such as land contracts, operations accounting and well asset management, and with energy service companies and governments.

August 2009 Volume 10, Number 4

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www.oilgas.net 8 Oil & Gas Network, October 2009

No Surprise – Oil Industry Profits Down from 2008 Record Levels Current Environment The Canadian oil industry has always been a boom or bust industry, and there is no better illustration than the events of the past 12 months. The West Texas Intermediate (WTI) price of crude has been on a roller coaster that pushed prices above US$145 in July 2008, only to see them collapse to US$35 just six months later. The catalyst for these sharp movements was the global recession that was brought on by the collapse of the American housing market and the credit crisis that followed. The Conference Board projects real GDP in the United States will contract 2.5 per cent this year. The U.S. economy accounts for a huge share of global consumption, and as the U.S. consumes less, industrial and commercial activities around the world are negatively affected. Determining the near-term prospects for oil prices remains difficult given the conflicting signals in the market. The rapid decline in global demand that began last winter has only now started to show up in terms of higher inventory levels, putting downward pressure on oil prices. On the other hand, OPEC has cut production several times in the past year, resulting in less supply to the market. Geopolitical tensions remain a concern—the rebuilding of Iraq has yet to yield much in the way of increased capacity or production there, and political dissent continues to hamper production in Nigeria.The purchase of oil futures for non-commercial use has begun again, introducing a disconnect between fundamentals and the prevailing price. After considering these factors, we estimate that the WTI price of crude will average US$69.88 for the remainder of the year.A weak production profile will also weigh on the near-term performance of the industry. Shortages of labour and materials have delayed completion of several projects. Despite the billions of investment dollars sunk into the industry over the past decade, production still declined in 2008 and will advance only marginally this year.The conventional industry is being hit particularly hard this year, as drilling activity has declined in record fashion. But capacity for expansion of non-conventional production is enormous; and as prices rise over the forecast, the economics of these megaprojects will improve, ensuring impressive gains over the medium term. Indeed, non-conventional production will be the dominant oil type produced going forward, eventually reaching 2.4 mmbd by 2013. Relative to last year’s record performance, revenue growth will suffer in 2009. Even though prices have doubled since the start of the year, they remain more than 50 per cent below their 2008 record highs. As a result, revenues will grow by just 6.3 per cent. Fortunately, growth in the industry’s costs has also slowed. Despite this deceleration, costs remain high—a result of the massive increases seen near the end of 2008. Profits will suffer as a result, falling 24.5 per cent to $11.6 billion. Economic growth is predicted to remain weak through the end of the year, but stimulus packages around the world will lead to improved performance starting in 2010. Accordingly, oil prices will resume their long-term upward trend, eventually reaching US$103 by 2013. Surging revenue growth related to higher prices will result in profits topping $32 billion by the end of the forecast. The industry will also be a source of job creation for Canada, adding 17,800 jobs over the forecast.

According to the International Energy Agency (IEA), global demand for crude will total 83.3 mmbd this year, down 2.5 mmbd from 2008. (See Chart 1.) Demand has been hardest hit in OECD countries, where economic growth has been hurt the most. (See Chart 2.) These developed countries will see consumption fall 2.3 mmbd. On the other hand, nonOECD countries have been able to sustain consumption levels near where they were a year ago, as many developing economies have been able to sidestep the recession. As such, non-OECD demand will contract just 200,000 b/d, or about 0.5 per cent. Of the major developing regions, only countries in the former Soviet Union will actually see demand fall, while China, the Middle East, and Latin America will all pull through with demand unscathed. The emerging middle class in these countries ensures that energy-hungry luxury goods continue to be in high demand. The recession will also impact global supply. Low prices have caused companies to slash investment intentions. Worse, even oil plays that are profitable at current prices are finding it difficult to acquire the necessary financing to move forward. The IEA estimates that $170 billion in global investment has been deferred or cancelled as a result of the recession. NonOPEC production is therefore projected to fall 100,000 b/d to

50.5 mmbd, leaving 32.8 mmbd for OPEC to supply if balance is to be achieved in the global market. OPEC produced 33.4 mmbd in May, sufficient to keep the market in equilibrium, and the IEA estimates that OPEC has more than 6 mmbd of spare capacity should demand accelerate more quickly than current forecasts. (See Chart 3.)

Oil Price Even though there appears to be sufficient supply to satisfy the forecast weak demand, the price of oil has risen significantly. The benchmark price rose 65 per cent between February and July to hover around the US$70 level. Clearly a disconnect exists between fundamentals and current price levels, and one explanation offered is that a future supply crunch is inevitable as demand will continue its upward trend.We think these concerns are premature. According to BP’s Statistical Review of World Energy, the global reserves to-production ratio stands at 42 years, which has been relatively constant over the past several years as energy companies continue to replace every barrel of oil produced with oil from new reserves moving into the commercial category. That suggests medium-term supply will not exert undue upward pressure on prices. In the summer of 2008, at the height of the oil price spike, Saudi Arabia announced unilateral production increases—first in May, and then again in June. Markets were unconvinced of the Saudis’ ability to get the extra oil onto the market, however, and prices increased following the announcements. Because of the usual lag time between when oil leaves the wellhead and when it reaches the storage facility, these production increases did not show up in higher inventories until late 2008—roughly the same time that global demand collapsed. Prices crashed, prompting OPEC into action once again. This time the cartel cut production, hoping to provide a floor for prices. However, crumbling demand ensured that it was “too little, too late” to slow the decline that persisted into the first quarter of 2009.As a result, global stock levels rose steadily over the first half of the year. By April, inventory levels in OECD countries were 208 million barrels higher than 12 months earlier and 6 per cent above their five-year average. While market fundamentals are indeed the main driver

Macroeconomic Drivers Industrial and consumer demand for oil products around the globe have fallen considerably as the recession remains firmly entrenched in much of the developed world.This has led to a rapid building of stockpiles, pushing prices to very low levels by recent standards. Global stimulus packages should help to lift economic activity as we move through the second half of 2009, boosting oil demand and prompting prices to resume their long-term upward trend.The WTI price is expected to average $103.38 in 2013.

Supply and Demand Slower economic activity around the world has drastically affected the supply demand balance for oil. Oil & Gas Network, October 2009 9

behind price determination, the recent increase in crude prices is difficult to explain based on fundamental factors alone, even while OPEC production remains low by recent standards and gasoline markets have tightened. Although supply and demand are the key drivers, it is foolish in the current market to assume they are the only drivers. According to the IEA’s June Oil Market Report: Prospects for equity markets and the global economy, backed up by exchange rate fluctuations, expectations about future oil market tightness and, by inference, a shift of money into or out of the futures market can all influence short-term prices. There is little doubt that the financial markets have played a role in the recent run-up in prices. Indeed, the shift in NYMEX non-commercial positions— from a net short position at the beginning of May to a net long position a month later—provides clear evidence of the financial markets’ role in this most recent increase.1 At least in the near term, oil prices will likely be determined by a mix of

fundamental factors and the whims of the financial markets. Still, the recent narrowing of the contango (the difference between the spot price and the higher future price) would suggest that oil prices are not expected to take off in the next 12 months—and adequate supply to satisfy weak demand should help to keep the appreciation of oil prices slow over the medium term. As such, the Conference Board estimates that the WTI price of crude will average just US$61.74 for 2009 as a whole (thanks to the low prices at the start of the year), but will increase steadily throughout 2010 to reach US$76.89 by year’s end. (See Chart 4.)

The deferral of billions of investment dollars will affect Canadian production in the medium term, particularly on the conventional side of the industry, as drilling will drop in record fashion. Low prices, and tight credit markets will ensure that some non-conventional production is pushed back. Nevertheless, the remaining potential of the oil sands provides security in the long term for the industry, and will outweigh the expected losses in the conventional industry. Total crude output should reach 3.5 mmbd in 2013. Export capacity is also expected to rise significantly over the forecast, allowing Canadian companies to ship incremental production to the United States.

Non-Conventional Production The events of the past 12 months have lowered expectations for future oil production. Lower oil prices are one reason for lower forecasts, but the slowdown in the global economy has also curtailed future prospects for oil demand and lowered current investment intentions. Nevertheless, long-term opportunities remain bright. According to Alberta’s Energy Resources Conservation Board (ERCB), remaining established reserves of bitumen resources stand at 170 billion barrels, with only 6.4 billion barrels having already been exploited. Indeed, the areas that are currently under development alone represent 27 billion barrels. Non-conventional production dropped in 2008, as the three main mining companies all experienced a variety of technical issues that restrained production. Syncrude saw two unplanned turnarounds on coker units lower production by 8 per cent; Suncor’s planned maintenance pushed its production 7 per cent lower; and the Albian Sands project underwent changes to its tailings plan that led to unplanned maintenance and lower grade ore, yielding a decrease of 10 per cent. With these issues resolved, and the fact that mining at CNRL’s Horizon project began in September 2008, non-conventional production will rebound in 2009. Barring any further unplanned maintenancerelated delays or stoppages, bitumen and synthetic crude production will combine to increase 9.2 per cent this year. Going forward, the profile for nonconventional oil in Canada remains bright. (See Chart 5.) The ERCB estimates that as much as 1.6 mmbd of additional capacity from bitumen mines will be brought online sometime in the next decade. However, this future production is rife with uncertainty regarding timing and project scope, and it depends heavily on current economic conditions, expectations for oil prices, cost structures in Western Provinces, construction delays, and the availability of refining capacity. Considering these factors, the Conference Board estimates that non-conventional production will average annual gains of 15.6 per cent over 2010 to 2013, eventually reaching 2.4 mmbd by the end of 2013. Conventional Production: Slowing Productivity Hurts Production As bright as the outlook is for nonconventional production, the outlook is dark for the conventional industry. Conventional crude production already faced a long and steady decline, due to the maturation of the Western Canadian Sedimentary Basin.Then, as oil prices crashed at the beginning of the year, drilling came to a virtual halt. According to the Canadian Association of Oilwell

10 Oil & Gas Network, October 2009

Drilling Contractors, rig utilization rates in Western Canada stood at just 19 per cent in July, compared with a 44 per cent utilization rate a year earlier when oil prices peaked. Drilling will not pick up this year. Peak season has already passed, and the prospects for the remaining months of the year are bleak. The Petroleum Services Association of Canada estimates that wells drilled will decline to 9,500 this year—a decrease of nearly 45 per cent. This estimate includes natural gas as well as the oil extraction industries, but it highlights the general slowdown in activity in the Western provinces. Helping to maintain what little activity there is, drillings costs are lower— steel prices have come down significantly and the cost of fuel is lower than it was at this time last year.The Alberta government has also amended its royalty program for the fifth time in two years. The initiative extends by one year the measures put in place last March, with intent to spur conventional activity. The new well incentive program offers a maximum five per cent royalty rate for the first year of production on new oil (and gas) wells. The program also offers a credit of $200 per metre drilled, applied on a sliding scale based on 2008 production levels. It is not clear what the net effect of this program will be in the long term, as the confusion created by ever-changing royalty levels may detract from any short-term benefits generated by the potential for increased drilling. Finally, the average productivity of conventional oil wells in Canada is falling. (See Chart 6.) Having already exploited the best pools, companies now turn to marginal discoveries. This raises the cost per barrel of oil produced—and even with enhanced recovery techniques, some oil will be left in the ground because it won’t be profitable to extract.The average productivity of an oil well at the end of 2008 in Western Canada had declined 30 per cent since the beginning of the decade. Over that period, productivity declined 34 per cent in Alberta and 14.4 per cent in Saskatchewan—the provinces that are home to the bulk of Canada’s oil wells. Because drilling will fare so poorly this year, conventional Western production is predicted to drop 5.4 per cent. Going forward, production will continue to decline but at a slower pace as drilling is expected to rebound somewhat starting next year in response to higher prices and lower drilling costs. Production will decline 2.2 per cent on average between 2010 and 2013. Offshore production is also expected to decline over the medium term. However, a number of potential new projects and satellites to current fields exist but remain in various stages of regulatory development.The planned expansion of the Hibernia field faces some regulatory difficulty, but is assumed to begin producing in 2012, providing a boost to production at that field if approved. Husky and the provincial government finally worked out an arrangement on North Amethyst (a satellite of White Rose), and first oil is projected for late 2009 or early 2010.6 White Rose South and West White Rose also have proven deposits but, given the current environment, are unlikely to come online in the medium term. Offshore production will drop 15.7 per cent this year and then average declines of 4.3 per cent annually until the end of the forecast.

petroleum products (rather than crude oil) so as to take advantage of the higher value added. Still, refinery capacity is insufficient, and much of the additional supply will flow outside Canada to the United States. Canada is the single largest supplier of imported oil to the United States, accounting for nearly 20 per cent of total imports last year at approximately 2.4 mmbd, a share that has been steadily rising over the past 20 years. (See Chart 8.) Given the U.S.’s desire to move away from Middle Eastern oil, we expect Canadian oil sands to play an increasingly important role on the world stage. Virtually all of Canada’s oil exports head to the U.S. via five major pipelines that provide a total of about 2.7 mmbd in export capacity. With 1.9 mmbd of capacity, the Enbridge pipeline is the world’s largest crude oil and products pipeline, servicing Eastern Canada and the U.S. east coast. Canada’s other pipelines all end in the Rocky Mountains or the Midwest. Still, Canada will require additional export capacity to accommodate the large increases in production. To that end, plans call for nine major export pipelines to begin operating before 2014, with capacity totalling nearly 3 mmbd. TransCanada’s Keystone pipeline alone will have over 1 mmbd of capacity upon completion of the expansion set for 2012 or 2013, with the oil destined for the U.S. Midwest and Gulf Coast. So while exports will decline this year (with most of the drop coming in the first half the year), they will then expand steadily—averaging 7.8 annual growth from 2010 to the end of the medium term—as demand in the U.S. stabilizes. (See Chart 9.)

Continues from page 6 In the first half of 2009, producers paid the Alberta government an average of $137 per hectare for petroleum and natural gas rights versus $307 per hectare in the first six months of last year.

Climate Change Canada’s climate change plan aims to reduce the country's total greenhouse gas (GHG) emissions by 20% from 2006 levels by 2020 -- and by 60-70% by 2050. Survey respondents indicated they are taking a number of steps to respond to the issue of climate change, and, within the next 12 months, 40% will make strategic investments to lower GHG emissions, 35% will adopt more rigorous risk management processes, 34% plan to optimize their supply chain management and 32% anticipate deploying new technologies “All Canadian oil and gas producers -- from small juniors to trusts to large integrated companies -- are affected by a list of growing concerns related to the economic downturn: volatile and weakened commodity prices, input costs misaligned with current prices, changing royalty situations and the disruption of capital markets,” says Stephen Marsters, Editorial Director at JuneWarren-Nickle’s Energy Group. “Respondents to the Canadian Energy Survey provided detail on the state of the industry, their own set of challenges as well as key drivers affecting growth and we felt it was important to provide this forward-looking view of the industry.”

Methodology and Demographics The 2009 Canadian Energy Survey contains results from an online survey, conducted by PricewaterhouseCoopers and JuneWarren-Nickle’s Energy Group during the 22-day period from May 25 to June 15, 2009, to better understand issues currently impacting the industry. Close to 85% of the 140 respondents fill senior roles within the energy sector (49% in a leadership role; 35% in a managerial role), with the balance comprising employees and consultants. The majority of respondents work for exploration and production (E&P) companies that produce a mix of natural gas and crude oil. Just over 50% of respondents reported their company’s annual revenues at more than $500 million, with about 17% listing revenues at $100 million to $500 million per year, and close to 16% said annual revenues were $10 million to $100 million. About 15% of respondents said revenues were $5 million or less per year.

Exports Trade is a vital part of the oil extraction industry. Domestic demand in Canada will be particularly weak this year and next thanks to a weaker economy (see Chart 7), but demand will pick up near the end of the forecast as domestic refining capacity increases. Crude oil is feedstock for refineries, and companies prefer to export refined

Oil & Gas Network, October 2009 11

The Canadian Association of Petroleum Producers (CAPP) released its 2009 crude oil production forecast and markets and pipelines outlook arlier this year CAPP conducted a survey of producers to determine planned production of oil through 2025. CAPP used this data along with other inputs to prepare its annual forecast, which this year provides both a Growth Case and an Operating & In Construction Case. “CAPP’s Production Forecast indicates that even with delays due to current economic circumstances, oil sands production is expected to

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grow, although the pace of development has slowed,” said Greg Stringham, CAPP’s Vice-President, Markets and Oil Sands.“Producers expect continued demand for the security of supply that crude oil from Canada provides to the North American energy market.” The Growth Case represents expected production and assumes the current investment climate will improve over time. The more

conservative outlook in the Operating & In Construction Case includes only projects currently in operation or under construction. This case represents a minimum growth outlook. Both cases are presented in the chart below: Total Canadian Crude Oil Production (million barrels/ day) - including oil sands 2008 2015 2020 2025 -------------------------------------------------------------------------------Growth Case 2.7 3.3 4.0 4.2 -------------------------------------------------------------------------------Operating & In Construction 2.7 3.0 3.0 2.8 -------------------------------------------------------------------------------Canadian Oil Sands Production (million barrels/day) -------------------------------------------------------------------------------Growth Case 1.2 2.2 2.9 3.3 -------------------------------------------------------------------------------Operating & In Construction 1.2 1.9 2.0 2.0 --------------------------------------------------------------------------------

Low oil prices, receding short-term demand as a result of the global economic downturn, and constraints in securing investment capital are some of the factors contributing to the reduced pace of development reflected in the Growth Case. In the Operating & In Construction Case, production is forecast to rise to 3.0 million barrels per day (b/d) by 2015 and then decline gradually through 2025, due to a reduction in conventional production. This reduction is moderated by increased light crude oil production from the Bakken field in Saskatchewan over the near-term, and the Hebron heavy oil project in Atlantic Canada, expected to come on stream by 2017. For the oil sands component of Canada’s oil supply, the share of supply coming from in situ projects increases slightly over the forecast period and the proportion of total oil sands that is upgraded remains relatively unchanged over the forecast period. “In terms of pipeline capacity to meet market expectations, this year’s outlook indicates that the significant pipeline development now underway will amply connect forecasted production to long-term demand in the North American energy market,” Stringham said. A full copy of the 2009 forecast is available at www.capp.ca.

www.oilgas.net OIL & GAS NETWORK Suite 300, 840 6th Ave SW Calgary AB T2P 3E5 Phone: 403 503 0460

12 Oil & Gas Network, October 2009

IHS CERA: World Oil Demand Set to Resume Growth; Return to Pre-recession Levels by 2012 Signs point to recovery that will be quicker than in the early 1980s due to strength of emerging markets and lack of options to substitute fuels orld oil demand is set to grow next year for the first time since 2007 and return to pre-recession levels by 2012, according to IHS Cambridge Energy Research Associates (IHS CERA) in its quarterly World Oil Watch report.The rebound would mark a turnaround from the largest drop in global oil demand since the oil crisis of the early 1980s. IHS CERA expects oil demand growth to resume by 900,000 barrels per day (bd) in 2010 and return to its 2007 high of 86.5 million barrels per day (mbd) by 2012—a five year turnaround. “There are a lot of questions as to whether things will be ‘different this time’ in terms of the recovery of oil demand,” said IHS CERA chairman and Pulitzer Prize-winning author of The Prize, Daniel Yergin. “While the answer is that it will be shorter, it is still going to take a substantial amount of time.” Oil demand dropped by 2.8 mbd from its high point of 86.5 mbd in 2007 to 83.8 mbd in 2009. The last time that the world experienced such a severe decline in oil consumption was in the early 1980s and it took nine years for demand to return to the 1979 pre-recession high.A five year turnaround—while still a substantial amount of time—would be swift in comparison. The key differences between the current recovery and that of the 1980s are demand from emerging markets and fewer options for substituting fuels on a global scale, said IHS CERA global oil managing director, Jim Burkhard. “In the 1980’s the largest area of the demand decline came from power generation, where

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oil was replaced by readily available substitutes like coal, gas or nuclear,” Mr. Burkhard said. “Today, global demand growth is coming from the transportation sector in emerging markets where there are fewer large-scale options for switching fuels.” Overall, emerging markets will drive the recovery of oil demand. IHS CERA expects oil demand to increase from 83.8 mbd in 2009 to 89.1 mbd in 2014. 83 percent (4.4 mbd) will come from non-OECD countries. China alone is expected to account for 1.6 mbd of cumulative growth. Just 900,000 bpd of growth is expected to come from OECD countries. “This near-stagnation of oil demand growth in the industrial countries of the OECD highlights several structural changes,” Burkhard said. “Decreasing oil intensity associated with economic growth, higher fuel efficiency, the displacement of conventional oil with renewable energy sources and a slower pace of growth in transportation fuel consumption – all these point to a leveling off of demand in the industrial world.” While the trajectory of oil demand seems certain, Burkhard pointed out that, as always, future events large and small could alter the course of demand. “While our base case suggests that 2012 will be the year that global oil demand recovers to 2007 levels, we continue to research the alternative scenarios that could alter the balance in the oil market,” said Burkhard.

One-time field data capture: now a reality Exploring the benefits of effective data capture for oil and gas companies and the contractors that serve them By Marty Hilsenteger, Singletouch Corp. or those working in the field operations of the oil and gas sector, the concept of entering data just once has been a much desired but generally unachievable objective. All too often, capturing the data from the field is a haphazard, disorganized and frequently duplicated process, and many executives and field workers alike despair at the inefficiencies and inaccuracies that stem from these problems. Traditionally, data has been captured on a clipboard, log book or the inside of a pack of smokes. Sometimes, information can be recorded and then re-recorded as often as five times before it is finally entered into the correct systems and properly processed. Administrative staff often have to be specifically hired to direct this flood of data from the field, and to re-enter it in the back office. Errors are inevitable as the same information is entered and re-entered, and delays are unavoidable as paper-based records get lost or simply held up on their way between the field operations and headquarters. The key factors for any field-based company are to maximize production and minimize downtime. What is required is a way to address those needs through effective data collection, analysis and integration with a company’s existing analysis tools. And today, thanks to advances in software and mobile computing, there are now options for oil and gas companies that want to improve the accuracy with which they capture data in the field, whether it be at a gas well, plant, oil battery, pump jack or lease. But how best to roll out such new technologies? What should come first when building an IT strategy for a field-based organization, the field or the office? Given the evidence, for most companies the answer to date has been the office. But why should this be the case? If the work is being conducted predominantly in the field, why is the IT infrastructure supporting that work built from the back office out?

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Back to front? Consider a typical rollout of a new enterprise software system. Invariably, the IT plan starts with the creation of a new system in the back office, which is then eventually rolled out to the field. Often, the company’s management in the field has little or no idea about the existence of the new system until it has already been implemented. Perhaps the reason for doing this is that it’s simply easier to train the office staff during implementation, or maybe companies would rather ignore all the complex processes presented by the field in favour of forcing acceptance of a new way of doing things from the office outwards. Either way, the result is that these field processes are often left as manual steps to be completed in the same way they have always been. Field staff end up frustrated because the new system fails to address the administrative headaches they deal with on a daily basis. Company executives may be pleased with the final outputs generated from the new system, but they may well not realise that the whole process is far from optimised, and that their final data is still the product of a series of time-consuming and error-strewn manual processes.

The field comes first For a new IT system to truly succeed, such companies must see that starting in the field, where most of their significant inefficiencies lie, will result in a far more productive end-point, with both happier field staff and an IT infrastructure that both supports and drives their business. At Singletouch, when it comes to technology implementations in the oil and gas sector, we strongly believe in putting the field first. Singletouch Collector is a paperless data collection software application, designed for oil and gas producers and their contractors to track production and maintenance data related to wells, compressors, tanks and other field equipment. The software is developed for use on laptops and other intrinsically safe handheld devices. Singletouch Collector can be deployed on a multitude of devices to speed up field data collection and to feed field information directly into a company’s core databases. It allows field personnel to easily capture all field production data from any field location. This data is then transmitted to a web-based viewing platform or to a production management system, esnuring that time-critical production data is available at all times for office staff. The product also offers a web-based viewing package for field information allowing trending and analysis of data, and allows companies to create a secure login site for viewing data, ensuring that the field and office have access to the same information. Continues on page 17 Oil & Gas Network, October 2009 15

Continues from page 15 But effective data capture can do more than help the field operations of oil and gas companies… it can also help improve the way the industry works with its contractors.

Data capture and contractors For large oil and gas companies, the cost of using electrical contractors and other skilled trades can add up to billions of dollars a year, and yet projects often suffer from lack of centralized oversight and control. Project costs easily and frequently spiral out of control. Recent drops in commodity prices have been a rude awakening for many industry giants, who have committed billions of dollars to projects that have invariably exceeded budgets by huge margins. In a recessionary economy, contractor companies are an easy target for cost-cutting. This leaves contractors squeezed to deliver their services more efficiently, and operational efficiency has now become a major pain point in the contract services sector. Due to the same field data collection challenges faced by oil companies in, it is almost impossible to track the costs and status of a given project with any kind of real-time accuracy, or to gain the kind of intelligence needed to inform a project owner how specific variables are affecting the budget. Most important of all, the whole process takes a significant period of time, meaning invoices to customers are delayed, payments delayed while invoice details are contested, and management of cash-flow becomes an increasing challenge. As these headaches become more pronounced in the industry, new technologies are being developed to help contractorsimprove their business efficiency and keep up with the increasing demands of their customers. Singletouch has developed a comprehensive data-capture platform for electrical contractors working in industrial construction that enables real-time input of information

in the field – one time, easily and accurately – thus eliminating the paperwork headaches that have plagued the industry. Details collected in the field are instantly accessible at head office and seamlessly integrated into backend systems, expediting payroll, accounting and project reporting. Singletouch is a comprehensive solution that easily integrates and shares data with traditional accounting, payroll and other reporting software, in addition to generating its own customizable reports. Once data have been entered, project managers and office administrators can use the data for invoicing and reporting, even before the team has returned from the site.

Enter data once In an industry where cash flow is critical, and timely and accurate billing essential, this back-office integration eliminates paperwork bottlenecks.Accurate details are entered in the system only once, at the time and point where the transaction occurs, and delivered instantaneously to all stakeholders, eliminating the logjams and errors traditionally associated with the filing of paperwork and subsequent re-entering of details to create invoices and reports. At any time, built-in reports provide an up-to-the-second view of project completion status, with all work and materials accurately accounted for, and actual performance against budgets and schedules easily reported to the customer. Ultimately, Singletouch has designed a solution for contractors that will not only help them to conduct their business more effectively, but also provides their oil and gas company customers with unparalleled insight into their business, with accurate, timely reporting on the budget and status of major projects. If you aren’t getting this kind of information from your contractors, then maybe you need to ask them why not. 16 Oil & Gas Network, October 2009

EnCana proceeds with plan to split into two distinct and independent energy companies he Board of Directors of EnCana Corporation has unanimously approved plans to proceed with a corporate reorganization to split EnCana into two highly focused energy companies: one a natural gas company – EnCana (GasCo), which has an outstanding portfolio of prolific shale and other gas resource plays across North America, and the other an integrated oil company – Cenovus Energy Inc., which has industry-leading enhanced oil production and top-performing refineries, as well as an underlying foundation of reliable oil and gas resource plays. This transaction – expected to close November 30, 2009 – is designed to enhance long-term value for EnCana shareholders by creating two sustainable, independent, publicly traded companies, each with an ability to pursue and achieve greater success by employing operational strategies best suited to its unique assets and business plans. EnCana first announced the proposed corporate reorganization on May 11, 2008 and was advancing plans for the split last fall when the global debt and equity markets experienced unprecedented turmoil and volatility. Given that uncertainty, EnCana announced on October 15, 2008 a revision to the original reorganization schedule and delayed seeking shareholder and court approval for the transaction until clear signs of stability returned to the financial markets. “We believe the conditions are now favourable to proceed with the split. Equity and debt markets have improved significantly with debt financing available at reasonable cost. Global and national economic indicators suggest that the world’s economies are showing promising signs of recovery.As well, the strategic rationale for creating two leading energy companies remains as sound as ever – the conversion of one leading unconventional resource company into two independent, premium entities unlocks greater long-term shareholder value from industry-leading North American energy assets,” said Randy Eresman, EnCana’s President & Chief Executive Officer. “While natural gas prices are currently low, we have reduced our near-term

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commodity price risk by hedging a significant portion of our expected production for the 2009-2010 gas year. We are a leader in low-cost natural gas production and our continued pursuit of that objective helps us enhance our competitive position during periods of low commodity prices. Over the longer term, we believe the current low natural gas prices are not sustainable and we expect a recovery in prices in 2010,” Eresman said.

Strengthened foundation for creating two leading energy companies “In addition, the financial and operational strength of each company’s asset base has improved during the past year. Additional drilling in our natural gas shale plays has advanced our understanding of their enormous potential and increased our confidence in our ability to grow these prolific new natural gas supplies from the Montney, Horn River and Haynesville plays.With the start up of two new phases at Foster Creek and continued production increases from Christina Lake, gross production from these enhanced oil recovery projects now exceeds 100,000 barrels per day, a significant milestone in the longterm oil growth plan for the assets that will be transferred to Cenovus. Construction of our coker and refinery expansion (CORE) project at the Wood River refinery is past the midpoint. It is on time and on budget, and is expected to start up expanded capacity in early 2011. And overall, looking at the financial position of EnCana, our debt at August 31, 2009 was about $8.2 billion, down about 19 percent from when we first

announced our plan to split in May 2008,” Eresman said.

Well advanced reorganization plans lower transaction risks “Our extensive work in the past year has helped reduce the risks associated with the transaction.We have received tax rulings from the Canadian and U.S. federal tax authorities that confirm, subject to the terms of the rulings, that the transactions will not be taxable from a corporate and shareholder perspective.We have secured committed financing for Cenovus that will support its independent business plan. We have acquired and built much of the infrastructure for Cenovus’s information technology systems. The leadership teams have been identified and employees have been assigned to new or continuing roles in each of the proposed companies. Having completed this foundational work, and with the return of financial market stability, we are proceeding with this value-creating transaction in a prompt and prudent manner,” Eresman said.

Continuing tradition of focused execution to deliver enhanced value and capture competitive opportunities Since its formation in 2002, EnCana has established a strong track record of value creation through the continued pursuit of low-cost natural gas and oil production, growth in proved reserves and an innovative strategy of developing unconventional natural gas and oil resources in North America. That success is founded in the central belief that companies with a disciplined focus on establishing leadership in their core business will earn increased value recognition of their assets, capture competitive opportunities and be best positioned to effectively respond to changing markets. With this planned split into two companies, each management team will focus more directly on the critical success factors in its respective businesses. They will be better equipped to direct their strategies and operations towards building value by tailoring practices and execution to fit the unique nature of their assets. The two companies will be focused on achieving attractive total shareholder returns through a combination of growing production and reserves, achieving strong refining margins, paying a meaningful dividend and by investing free cash flow in share buy backs. With greater transparency and focus, the investment community will be able to more easily follow and more accurately assess and value these companies.

EnCana shareholders to own one share in each of the two companies The proposed transaction would be implemented through a Plan of Arrangement under the Canada Business Corporations Act and is subject to shareholder approval, approval of the Court of Queen’s

Bench of Alberta, receipt of appropriate regulatory approvals and satisfaction of other customary closing conditions. Under the proposed transaction, EnCana common shareholders will retain their EnCana shares and receive one Cenovus common share for each EnCana share held. EnCana intends that the initial combined dividends of the two companies will be approximately equal to EnCana’s current dividend of US$1.60 per share annually. Future

dividends will be at the discretion of the respective boards of directors of each company and no dividend policy has yet been adopted.

Creation of two independent energy companies Upon completion, this transaction would create Cenovus Energy Inc. – a publicly traded integrated oil company that will be focused on the development of EnCana’s Canadian enhanced oil assets and United States refinery interests, underpinned by a well-established natural gas and oil production base in Alberta and Saskatchewan with significant capacity to deliver long-term free cash flow.The Cenovus assets, which encompass EnCana’s Integrated Oil and Canadian Plains divisions, represent about one-third of EnCana’s current production and proved reserves at year-end 2008. EnCana’s other major operating divisions, Canadian Foothills and USA, would form a pure-play natural gas growth company, aimed at growing existing high-potential resource plays in Canada and the U.S. This natural gas company would retain the name EnCana Corporation and represents about two-thirds of EnCana’s current production and proved reserves at year-end 2008.

Cenovus – a premier enhanced oil growth company integrated with expanding refinery capacity “At inception, Cenovus is designed to be North America’s premier enhanced oil company. Our enhanced oil recovery projects at Foster Creek and Christina Lake are positioned to deliver, over the next five years, an expected compound annual growth rate of 12 to 14 percent. Cenovus’s total oil and natural gas production is expected to be steady as the company generates strong free cash flow from its mature gas and oil properties to fund enhanced oil production growth. Cenovus is also positioned to pursue the benefits of the full value chain integration of its successful enhanced oil recovery projects in Alberta with two top-performing refineries at Wood River in Illinois and Borger in Texas. Our integrated oil business is into its third year of our 50-50 joint venture with ConocoPhillips – a successful partnership that strategically and financially links premier oil assets with 226,000 net barrels per day of ideallylocated refinery assets, creating one of the industry’s lowest cost integrated oil developments,” said Brian Ferguson, EnCana’s Chief Financial Officer, and designated President & Chief Executive Officer of Cenovus. “While Cenovus’s medium and long-term growth is expected to be driven by our enhanced oil recovery projects at Foster Creek and Christina Lake, we will also hold extensive lands covering top-tier oil reservoirs located in the heart of Alberta’s Athabasca oil region, properties that provide opportunity to grow oil production for decades ahead. Cenovus’s 1.4 million acres of existing high-quality leases

recovery technologies and will examine divestitures of mature natural gas and oil assets,” Ferguson said. “In addition, our well-established gas and oil resource plays consisting of enhanced oil recovery projects such as Weyburn in Saskatchewan, Pelican Lake in northern Alberta, plus vast Shallow Gas lands in southern Alberta, are capable of delivering strong free cash flow and they have an extensive inventory of future well locations capable of delivering predictable and reliable production. These are excellent characteristics for building a financially strong, sustainable, integrated oil company that builds net asset value per share,” Ferguson said. In 2009, the Cenovus assets are forecast to produce net oil production of more than 110,000 barrels per day and natural gas production of about 820 million cubic feet per day, for a total of about 248,000 barrels of oil equivalent per day. The assets contain about 8.1 million net acres of land and, as of the end of 2008, an estimated 1.2 billion barrels of oil equivalent of net proved reserves, which are about 75 percent oil.

EnCana (GasCo) – a pure-play natural gas company growing high-potential North American resource plays “Our natural gas business is very strong and the properties designated for EnCana (GasCo) are extremely well positioned to grow at anticipated double-digit rates. We have a diversified portfolio of unconventional natural gas assets across North America and hold a highly competitive land and resource position in a number of the continent’s most promising shale and tight gas resource plays, including Haynesville in the U.S. and Horn River and the Montney in Canada. Our natural gas exploration and development teams have been industry leaders in applying long-reach horizontal drilling and multi-stage fracing – revolutionary innovations that are the foundation for our continued pursuit of the lowest production costs and maximized margins. These transformative technologies have unlocked an enormous new inventory of natural gas supply in North America – clean burning natural gas that is abundant, affordable and readily available to supply consumers’ growing transportation and power needs while reducing the continent’s environmental footprint,” Eresman said.

Strong gas growth potential ahead “Over the next five years we will be targeting a compound annual production growth rate of about 10 percent. Our properties have a proven track record of strong and sustainable growth. From 2006 to 2008, natural gas production from our Canadian Foothills and USA divisions grew by 12 percent. Despite the more moderate approach we have chosen to take for this year when gas prices are very low, these assets are capable of deliver ing strong growth for years ahead,” Eresman said. “EnCana’s (GasCo) portfolio of prolific gas resource plays will include our Coalbed Methane in central and southern Alberta, the Bighorn Deep Basin play in Western Alberta, Cutbank Ridge and Greater Sierra plays in British Columbia, Jonah play in Wyoming, significant Piceance basin plays in Colorado, the Barnett shale play in Fort Worth and Deep Bossier play in East Texas. In addition to these established resource plays, our teams have recently achieved some promising exploration results in a number of North American shale plays, such as Horn River in British Columbia and Haynesville in Louisiana. These and other emerging plays have the potential to add significant depth to the company’s strong portfolio of natural gas assets,” said Eresman, who will continue as EnCana’s (GasCo) President & Chief Executive Officer. “With about 16 million net acres, 12.4 trillion cubic feet equivalent of proved gas reserves and 3 billion cubic feet per day (Bcf/d) of natural gas production, EnCana (GasCo) is expected to retain its standing as a leading North American natural gas producer with strong growth potential,” Eresman said.

About half of expected 2010 natural gas production hedged at more than $6 per thousand cubic feet EnCana has hedged two-thirds of expected 2009 natural gas production, about 2.6 Bcf/d, through October of this year at an average NYMEX equivalent price of $9.13 per thousand cubic feet (Mcf). EnCana has also extended its risk management program through 2010. As of September 8, 2009, EnCana had established fixed price hedges on about half of expected 2010 natural gas production – or about 2 Bcf/d – at an average NYMEX equivalent price of $6.08 per Mcf for the gas year, which runs from November 1, 2009 to October 31, 2010. EnCana also has 27,000 bbls/d of expected 2010 oil production hedged at an average fixed price of WTI $76.89 per barrel. EnCana plans to split the 2010 hedges between the two companies based on their current proportion of production volumes for oil and natural gas. The company’s price hedging strategy increases certainty in cash flow to help ensure that EnCana can meet its capital and dividend requirements without substantially adding to debt. EnCana continually assesses its hedging needs and the opportunities available prior to establishing its capital program for the upcoming year.

Two large energy firms to emerge contain an estimated 40 billion barrels of original bitumen in place. We believe these assets are among the best in the business. Our teams have more than a decade of innovative technical and development experience in achieving industry-leading production and capital efficiencies. They have set the pace in reducing environmental impact and have consistently increased the energy efficiencies of daily production. We will continually look for opportunities to optimize our portfolio by advancing the development of new oil

Both of these companies will be large, Calgary-headquartered enterprises with strong, visible growth profiles, competitive cost structures and solid financial positions. It is expected that both companies would be among Canada’s 30 largest corporations and among the top seven energy companies in Canada. “Each company plans to continue the tradition that created and sustains EnCana’s success, applying the principles of strong b u s i n e s s l e a der ship that are focused on the objectives of enhancing the value of every share, disciplined capital investment and leadership in low-cost production. Each will operate in a principled and ethical manner, pursue energy efficiency, strive to be employers of choice and actively participate in helping to build the communities where they operate. These companies will strive to maintain the same corporate responsibility principles that EnCana has established and its employees practice,” Eresman said. Oil & Gas Network, October 2009 17

Small Business Week 2009: October 18-24 Experts reveal why this recession is a great time to go green t’s understandable to think this recession has put a damper on “green” or environmentally friendly business practices. Going green or staying green may be a luxury many struggling businesses simply can’t afford these days. But while that may have been the case for past downturns, times have certainly changed. For starters, many green initiatives save companies money. Catherine Swift, president and CEO of the Canadian Federation of Independent Business (CFIB), which represents 105,000 small businesses nationwide, says she’s seen no indication from her members that saving the Earth is taking a back seat to saving the business. “One reason is that for smaller companies, the recession hasn’t been as dire as for large firms that are driven by the stock markets. Our members are privately owned companies, and among them, we’re continuing to see a focus on environmental practices,” she says. A 2007 CFIB survey found that energy conservation ranked as the second most important environmental issue after recycling of materials, with 83% of its members having already implemented energy conservation changes. While about half of respondents said cost savings was a factor in making changes, 81% said they were motivated by their own personal views. Swift says that trend appears to be holding. “These companies are motivated primarily by the owner’s personal views about the importance of protecting the environment for future generations. Embracing environmental practices isn’t something you usually have to convince them to do,” says Swift. Of course, it’s always nice if a company can help the environment and its bottom line at the same time. A quick Google search will turn up thousands of web pages on how companies of all sizes can be both green and profitable. First, there’s the low-hanging fruit, things like printing on both sides of paper, recycling, switching to energyefficient light bulbs, turning down the thermostat and shutting off idle office equipment. Natural Step Canada (www.naturalstep.org) has a free sustainability toolkit that can be downloaded from their website. Another helpful resource is a book authored by Bob Willard entitled “The Business Case for Sustainability”. According to Willard, integrating sustainability strategies can increase profits up to 38% for large companies and 66% for small- or medium-sized companies over a five-year period. A lot of these savings can be achieved by reducing energy costs. “If your energy costs are high, you certainly have an incentive to reduce them,” says Michel Bergeron, Vice President, Corporate Relations at the Business Development Bank of Canada. “But even if they aren’t high, cutting your energy costs can give your company a competitive

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advantage by improving efficiencies and your corporate image with both customers and suppliers.” Tax credits and incentives for energy efficiency and other green incentives are being pushed from Ottawa all the way down to local municipalities. Most utilities now offer businesses incentives to reduce energy use. Hydro Quebec, for example, offers financial assistance for electricity-saving industrial equipment, systems or processes. Keeping ahead of the law and public opinion Lower operational costs aren’t the only reason to reduce energy use. All levels of government, including local, are introducing laws and regulations that will require companies to reduce waste and embrace more sustainable business practices. For example, once cap and trade rules become more widespread, Bergeron said companies will need to be careful about how much carbon they produce. “Reducing your energy use – and thus, your carbon footprint – should be part of any business plan. You can start with something as simple as reducing your corporate travel by using inexpensive videoconferencing technologies like Skype,” he says. “But the most important building block should be an energy efficiency audit of your workplace. ” Business owners that act early will find themselves at a competitive advantage when new rules are implemented. “At some point, the consideration of environmental and social issues will be mandated, so for business this becomes a central risk factor. It also becomes an opportunity. Companies shouldn’t wait until the economy picks up,” says Melissa Shin, managing editor of Corporate Knights, a magazine focusing on corporate responsibility. Attracting a green workforce Companies that don’t embrace environmental practices could also find themselves as a competitive disadvantage in attracting young, skilled employees. Today’s young workers are more environmentally aware than previous generations, and they’re bringing those values into their workplaces. “BDC, for example, is heavily paper-based and this becomes an irritant for our younger employees who view paper as a waste of resources,” says Bergeron.“They’re putting pressure on us to move more quickly to change our ways, and we are. Companies that incorporate environmental responsibility into their mandate will also tend to have more loyal employees who are more willing to make sacrifices, if needed, during a recession. “Embracing environmental and socially sustainable practices is a great way to retain your staff in an economic downturn,” says Shin.

Small Business Week ntrepreneurs and their innovative businesses are key to Canada's economic growth. By responding to the changing demands of the marketplace and creating jobs, entrepreneurs continue to be a primary force in driving the national economy. Since its inception in 1979, as a small event in British Columbia, Small Business Week® has grown substantially in both size and scope. Now a nationwide celebration of entrepreneurship, Small Business Week (SBW) continues to pay tribute to the important contribution that small businesses make to the national economy. SBW activities provide established and prospective entrepreneurs with training and development opportunities, and create a forum for networking and sharing ideas. Events include conferences, trade fairs, seminars, workshops and business luncheons. BDC branches, with the assistance of numerous local public and private sector organizations, play an active role in planning and publicizing these events.

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SBW theme: Your dream, your business, your passion Entrepreneurs are idea people – filled with ideas, aspirations and objectives. They see an opportunity at every turn and are continuously looking for improvement. An entrepreneur’s life is frenetic, powered by a seemingly unlimited vitality. The entrepreneur’s tenacity is surpassed only by a strong passion for business. The theme of Small Business Week 2009,“Your dream, your business, your passion”, reflects the energy and efforts of Canadian entrepreneurs of all ages and pays tribute to their important contribution to the strength of the economy. It will also be the background for all the activities that will take place throughout the Week.

Young Entrepreneur Awards he Young Entrepreneur Awards (YEA) were established by BDC in 1988, and are presented each October during Small Business Week®. One winner in each province and territory is selected to receive the award in recognition of their spirit of innovation and business acumen. Nominees must be young entrepreneurs between the ages of 19 and 35. Nominations may be submitted by individuals, associations, organizations, and various levels of government.Young entrepreneurs may also nominate themselves. All nominees are judged using the same criteria: the company’s success and growth potential, innovation and community involvement. The panel also considers the company's export performance, the entrepreneur’s age when the business was established, and any special challenges that were overcome. Winners are selected by a panel of judges comprised of business professionals, entrepreneurs, members of local Boards of Trade and Chambers of Commerce, and BDC employees. Each year, the awards ceremony is held in a different city. Award recipients are presented with a commemorative trophy, and applauded by the business community for their hard work and ingenuity.They benefit from nationwide media visibility, unparalleled opportunities for networking with other entrepreneurs, valuable media training and many skills development opportunities. The 2009 YEA gala will take place in Ottawa on October 20.

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Colfax Unveils Alternative Fluid-Handling Strategy for Crude Oil Transport Solutions leveraging rotary positive displacement screw pumps increase efficiency and minimize emissions olfax Corporation a global leader in fluidhandling solutions for critical applications in the most demanding environments, has unveiled a new approach to handling highand low-viscosity fluids that require high pressure boosts in the transport of crude oil. The Colfax line of rotar y positive displacement (PD) screw pumps not only delivers the unsurpassed reliability required in crude oil transport applications but responds to growing Oil & Gas industry demands for higher energy efficiency and greater environmental responsibility. “Rotary pumps have been the standard in delivering high-efficiency, low-maintenance solutions for critical fluid handling in the past,” said John A. Young, president and CEO of Colfax. “But the perception that screw pumps mean higher expense is simply outdated, preventing oil transport companies from taking full advantage of their significant benefits for energy savings and reduced environmental impact in these applications. “In fact, rotary PD screw pumps actually offer tremendous cost advantages,” he continued. “A typical Colfax solution on a single 250,000 BPD crude oil pumping station in Western Canada – using three rotary PD screw pumps operating in parallel with one standby pump – delivers a 29 percent reduction in combined capital, energy and maintenance costs over a five-year period, when compared to the traditional centrifugal pump solution of two pumps operating in parallel with one standby pump. That translates into more than $7 million in savings to own and operate a rotary PD screw pump solution over five years, a concept that we call Total Savings of Ownership at Colfax.”* “We’ve also taken the lead at Colfax in developing various shaft-sealing solutions, for the industry to address market demand for reduced process fluid emissions,” Young noted. “Like the rotary PD screw pump designs themselves, they are efficient and reliable, providing operators with the highest level of safety.” According to Mike Moore, a product specialist in crude oil transport for Colfax Americas – the division responsible for Colfax customers in North and South America – Western Canada recognized early on the advantages of the screw pump’s simple, but robust design. “Oil companies have used screw pumps to move crude oil to market for the past 30 years; and in Alberta and Saskatchewan, screw pump lines manufactured by Colfax handle 4.8 million barrels of crude oil each day,” he said. The hydraulic principle behind screw pump operation delivers both high volumetric and high overall operating efficiencies, he stated, in addition to offering long mean time between repairs (MTBR) and ease-of-maintenance features for field servicing, which combine to maximize operational uptime. Other value-added advantages of these pumps include: Constant flow, even in the presence of varying system backpressures Non-pulsating flow, without the need for pulsation dampeners Low noise and vibration levels, minimizing foundation requirements Keith Schafer, vice president of sales and marketing for Colfax Americas, underscored the company’s commitment to expanding the use of rotary PD screw pump systems throughout the industry.“Colfax’s strong portfolio of screw pump designs from global brands Allweiler, Houttuin, Imo, Tushaco and Warren means that we can provide more product solutions than any other PD pump manufacturer on the globe. But product is just the beginning of our Total Solutions approach.We also bring deep expertise in critical Oil & Gas applications, including crude oil transport, and provide ongoing service and support to our customers, from assessing their specific needs to designing and implementing solutions that meet those needs to providing ongoing monitoring and maintenance. “As true partners, we help our crude oil transport customers – and ideally the Oil & Gas industry at large – balance reliable and efficient performance, fiscal responsibility and environmental stewardship with fluid-handling solutions that improve business and grow the bottom line,” Schafer concluded. www.colfaxcorp.com

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Calgary technology companies ensure lone worker safety from the convenience store to the oil field ogers Wireless is partnering with local technology companies to help employers keep their lone workers safe and comply with new provincial legislation mandating that employers must be in constant contact with employees working alone. “The lone worker legislation may be new, but we’ve been doing some real pioneering here in Calgary on this topic for some time,” said Steve Roberts, vice-president for Rogers Wireless in Alberta. “We’re proud to partner with innovative companies like Blackline GPS, Premier GPS and NelTrak to create and provide simple wireless technologies that help keep people safe, no matter where and when they’re working.” Until recently, there have been few options available for employers to meet lone worker requirements. While some use costly call centers to check in on workers, others opt for a low-tech solution like having workers call into the office. Rogers Wireless has worked with its local partners to improve lone worker safety by producing well-tested, reliable and portable wireless safety communication products. For a tiny, fits-on-the-hip option, there’s the Loner by Blackline GPS, a manufacturer of communication technology security, tracking and monitoring devices. The size of a mobile phone, the Loner is worn by the lone worker and constantly provides its GPS location. It also includes a panic button for emergencies and motion detector that tracks lack of motion which can indicate a worker in distress. The SafetyBerry is a BlackBerry application by Calgary’s Premier GPS. Available on the BlackBerry Curve and Bold, it offers advanced real-time GPS tracking functions and ways for lone workers to indicate distress or check in with their employer with the click of a few keys. For oil and gas workers traveling alone in their vehicles, NelTrak, a Calgary wireless solutions provider, offers several options including a GPS unit with built-in panic button that is installed in vehicles, a FOB that workers can carry with them, and a portable unit that can be strapped onto an ATV or sled. Each option can be monitored 24/7 by highly trained oil and gas specialists in a technical centre—a one-of-its-kind approach in the oilpatch. “These are all home grown solutions,” said Roberts.“They are great examples of Alberta businesses pioneering in technology to promote worker safety in an easy and affordable way.” To further ensure lone worker safety, especially in Alberta’s oil and gas industry, Rogers Wireless announced in June a $42 million expansion of its world-standard GSM wireless voice and data network. The expansion adds 49 new wireless sites expanding coverage throughout the energy heartland.

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Nexen helps build the next generation classroom Nexen Theatre is one of the most technologically equipped conference facilities in Canada AIT is celebrating the official opening of the Nexen Theatre with the announcement of a $1 million donation from Nexen. “Industry partners such as Nexen are critical in providing our students access to the latest technology,” says Dr. Sam Shaw, NAIT’s President and CEO. “Nexen has made a significant contribution to build a high-tech distance education facility. Nexen’s leadership as a company is shown in their support for NAIT to have the technology to train workers anywhere, anytime, to be globally competitive.” “As a company with operations across Canada and around the world, Nexen knows firsthand the importance of effective communication,” said Marvin Romanow, Nexen President and CEO. “This next generation classroom will allow students the ability to communicate and learn in a virtual environment.The advances in technology that this facility offers will greatly enhance student learning and development.” Some of the features the theatre boosts include a 19 foot by 7.7 foot screen, a 103-inch plasma screen, a high definition camera with remote capabilities, Dolby sound and five computer stations connected to the screen which allows for group work. “The Nexen Theatre is about possibilities,” says Dr. Shaw. “The equipment is the most technologically advanced available for this type of facility, so I am very excited about how it is going to be used to enhance our students’ learning experience.” NAIT is one of the preeminent institutes of technology in Canada, providing real-world education in business, advanced technologies and skilled trades to more than 84,000 learners worldwide. Known for student success, NAIT also engages with business and industry in applied research and innovation and provides corporate training around the world.

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Oil & Gas Network, October 2009 21

All Terrain Vehicles

PFM Manufacturing, Inc. Build one of The Most Versatile, Most Extreme, Heavy Duty Remote Access Vehicles for Oil and Gas Exploration s Natural resources are often located in remote swampy areas, accessing these areas by helicopter can prove be expensive. The Land Tamer has been identified as an economic means to keep costs down when servicing remote gas line well heads. The Land Tamer’s® unique drive system allows the installation of tracks over the tires for year around use in any terrain type. This is a unique capability and strength of the Land Tamer’s® go-anywhere, anytime, easy mission configurability.

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Question / Answer Q: How does the Land Tamer’s hydraulic gear drive system work? A: The Land Tamer’s hydraulic gear drive system utilizes the proven benefits of a closed loop hydraulic drive system that is found in mobile and construction equipment applications, such as skid steer loaders, etc. Q: What is a closed loop hydraulic drive system? A: Closed loop system means that hydraulic oil flows from a pump to drive a motor and back to the pump completing the loop. Most closed loop drive systems utilize a variable flow displacement pump that flows to the drive motor. Nearly all the hydraulic oil flow from the pump drives the hydraulic motor in a closed loop system, but a small percentage of the hydraulic oil redirected through a cooler and back to the tank.The Land Tamer utilizes commercial grade, Made-in-America Eaton Hydraulics tandem pumps and motors, in which one pump drives the left motor and the other pump drives the right motor. The left drive motor delivers torque to the left side wheels and the right motor drives the right wheels. The benefits are proven reliability and availability. Q: How is the torque delivered from the hydraulic drive motors to the wheels? A: A pair of powerful Eaton 6000 Series hydraulic motors is connected to parallel reduction gearboxes that are coupled to a set of right-angle gearboxes at each axle on each side of the vehicle. This parallel gearbox is coupled to a common drive shaft that supplies equal torque to all axles on each side of the vehicle. Benefits – this system allows maximum torque to all wheels no matter which tires have the most traction with the ground. Maximum torque from the engine and pumps can be delivered no matter how many wheels are off the ground as when crossing ditches or large obstacles. Virtually no maintenance or adjustments are required either.

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Storied History PFM Manufacturing, which was founded by Patrick F. Miller Sr. in 1998, was successful in developing, patenting and introducing the new Land Tamer 6x6 ATV to fill a niche in the marketplace for a heavy-duty, low-impact, commercial grade amphibious all-terrain vehicle. As the company’s commercial market grew for the Land Tamer ATV, it became apparent that a larger Land Tamer ATV was needed. In 2000 the Land Tamer 8x8 model was introduced to fill the need for a heavier hauling amphibious vehicle. In conjunction with introducing the Land Tamer 8x8 ATV, commercial customers demanded a diesel model. Consequently, in 2001 PFM introduced the first diesel engine powered Land Tamer 8x8 ATV. In 2005 the name “Remote Access Vehicle” (RAV) was chosen to differentiate the Land Tamer from other ATVs. Coinciding with the new name reference were new design improvements and upgrades to the vehicle that made it even more capable and more versatile than ever before. “The new 2005 Land Tamer II RAV featured taller, more durable truck or Ag tires, higher ground clearance, larger cargo capacities, and a sealed hydraulic gear drive system,” he says. “Other upgrades included a simple to use T-handle or electric joystick control, and a more powerful, external mounted water propulsion system.”

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All Terrain Vehicles Continues from page 23 Q: How does the operator drive the Land Tamer? A: All driving functions, forward, reverse, right or left turns, are achieved with our unique proprietary single T-handle Controller. Pushing the T-handle forward moves the vehicle forward. The farther you move the T-handle forward the faster the vehicle goes. To travel in reverse, you pull the T-handle back and to turn left or right one simply twists the T-handle right or left to whatever degree of turn you desire. This system allows for zero turns in which one set of wheels rotates forward at the same time the other set of wheels rotate backward allowing for 360 degree on the spot turns. Benefits – the Land Tamer is very simple to drive. One hand is all that is needed to operate the vehicle and it frees up the other hand for work applications, like holding a weed spraying nozzle, or a fire spray nozzle, etc. Q: Why is the Land Tamer’s Hydraulic/Gear Drive System better than any other amphibious vehicles which use drive chains or hydraulic gear motors on each axle? A: The main disadvantage of chain drive vehicles is that they require much adjustment and maintenance.They may be okay for a weekend recreational vehicle, but they simply do not hold up for the working outdoors man who needs a seriously reliable vehicle with low maintenance. The Land Tamer’s proven hydraulic/gear drive system is the only way to go. It is very efficient, easy to drive, built for heavy-duty commercial work, very low maintenance and built to last. The Land Tamer is hands down the best in amphibious vehicle design and in a league of its own. But don’t take our word for it, ask our customers! Q: What are my options for an engine and the advantage of each one? A: You have your choice of the 60- HP Kubota Turbo Diesel, 80-HP Deutz, and 91-HP Zenith fuel injected Gas/LP engine for our full size models. The RS (reduced size) model comes with a Kohler 40-HP V-twin gas engine standard or optional diesel engine.

In most cases the 60-HP Kubota will provide enough power for most slower moving applications. However, if the primary application is traveling faster or swampy or snow covered ground with tracks installed, then we would recommend the 80-HP Deutz or the 91-HP Zenith engine.These bigger displacement engines will provide the raw power needed to power through the toughest conditions. Q: What is the 3-Point Hitch system and what can I use it for? A: Our optional 3-Point Hitch turns the Land Tamer into a full fledged tractor and adds a whole new dimension of work applications never available before for an amphibious vehicle. To our knowledge, the Land Tamer is the only amphibious tractor manufactured in the world. The 3 Point Hitch allows the owner to attach to the front or rear of the Land Tamer any Category 1, 3-point hitch farm attachment.These include a snow blade or snow blower for winter use, or a rotary mower, post hole auger, lifting device, generator or just about any after-market farm equipment available by any farm equipment manufacture rated as Category 1.This adds to the Land Tamer’s four-vehicles-in-one-concept – serving as boat, ATV, snowmobile and tractor. No other vehicle has this much versatility. www.landtamer.com

The New RTV1100 Factory Cab Utility Vehicle elcome the industry’s first Factory Cab Utility Vehicle; another innovation from Kubota.The advantage of a one piece tubular design integrates the cab structure with the chassis for optimal durability and a pressurized cab.The tight seal is ideal for the RTV1100 comforts like standard air conditioning and heater. The RTV1100 is powered by Kubota’s new 25 HP diesel engine and a Variable Hydrostatic Transmission. Other standard features include a 70 amp alternator, power steering, cloth seats, head rests, rear view mirror and its radio ready. Look for the RTV1100 in Kubota Orange or Realtree® Camouflage this spring. For more information please visit the Kubota booth or www.kubota.ca to locate your local dealer.

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All Terrain Vehicles

New Prinoth Go-Tract™ 4500 Carrier RINOTH Ltd. proudly introduces the GO-TRACT™ 4500 fullytracked equipment carrier that offers a line-leading 46,000pound payload with maximum mobility and minimum impact. Designed to carry heavy equipment such as cranes up to 40 ton capacity, man-lift booms, aerial devices, large drill rigs, and other heavy payloads, the new GO-TRACT 4500 has a ground pressure of just 4.4-pounds per square inch at the maximum gross vehicle weight rating (GVWR). The new carrier offers 35-square feet more deck space than the GO-TRACT 3000 stretch.Yet it will fit on a double drop deck trailer. A Caterpillar C9 EPA-Certified Tier 3 engine provides 375 horsepower to propel the GO-TRACT 4500 at ground speeds up to 6 miles per hour (10Km/hr).The 120-gallon (US) fuel capacity allows a full day’s work on a single tank. An ergonomically engineered cabin includes an easy to read fullcolor operator information display, micro-controller-assisted steering, and R.O.P.S. certification at maximum GVWR.A back-up camera is optional. Like all GO-TRACT series vehicles, the new GO-TRACT 4500 is backed by PRINOTH’s comprehensive post-sale service support featuring 24/7 telephone inquiry assistance and PRINOTH-certified technicians on-site if required.

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The new RTV1140 is the newest released vehicle form Kubota he operator can easily switch from two rows of seating to one row of seating and expand the cargo box area. This is a requested addition to our line for increased cargo capabilities and added worker transport In 2004 Kubota introduced the work utility vehicles to the marketplace with the RTV900 Series. Renown for the bullet proof diesel engines, industry leading success in compact tractors and excavators, the RTV900s experienced immediate success. Shortly thereafter came the first factory pressurized cab with standard HVAC system, the RTV1100. Last fall the family expanded to the pick-up truck friendly RTV500, Kubota’s own gasoline powered small utility vehicle. A comprehensive family of utility vehicles, but one model was still on the creative engineer’s minds. A machine that could carry more cargo, yet also carry extra passengers without being too big or too long. Kubota is now pleased to introduce the all new RTV1140CPX Utility Vehicle. Stretch your productivity with the new 24.8Hp Kubota RTV1140CPX Four-Seater. If you need more cargo room slide and lock the back seat to the forward position without tools to achieve industry leading cargo space. Transporting more passengers is an easy slide and lock process. In either position the operator can easily dump the cargo box hydraulically with the lift of a lever. Manoeuvre around your worksite in confidence and ease with the smooth acting, heavy-duty 3 Range Variable Hydrostatic Plus transmission and hydrostatic power steering. As always Kubota keeps safety at the top of the list, with fully Certified Roll Over Protection structure, a standard design in all Kubota work utility vehicles. For more information on the RTV1140CPX or any of the Kubota work Utility Vehicles visit www.kubota.ca or see them in action at your local Kubota dealership.

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Oil & Gas Network, October 2009 25

Oil Rigs Delivered in Record Time nly 13 months after initiating training for new 3D CAD/CAM software, Lamprell Energy launched the LT-116E Jackup Rig. The entire project was completed in only 18 months. Other shipyards have achieved large gains in productivity as well.This is noteworthy in the current economic climate with the constant pressure to reduce costs.

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Lamprell LT-116E Jackup Rig

In a paper delivered at the International Conference on Computer Applications in Shipbuilding (ICCAS) held in Shanghai, Dr. Oskar Lee explains how these shipyards have managed to achieve such impressive results. According his analysis, the most successful shipyards link the geometry and associated material data from 3D models to databases such as ERP systems so that information can accurately be shared and utilized by various departments to plan efficient production. In this manner, critical path issues are identified and resources effectively deployed. His research also indicates that effective change management is important due to frequent modifications requested by owners and classification societies. To accommodate these changes, Dr. Lee

observed that the most successful yards in his study utilize complete models consisting of geometric and attribute information. Each model was not merely a drawing or a series of drawings. Rather, the model was contained within a database from which drawings, machine cutting code and other information could automatically be derived and shared amongst various departments.This dramatically simplified the ability to accurately make changes, thus increasing productivity. All of the shipyards in Dr. Lee’s study used ShipConstructor software during the detail design process. Because ShipConstructor uses a data-rich 3D model capable of linking to other databases, the use of ShipConstructor was a key reason for the shipyards’ productivity in oil rig fabrication. www.shipconstructor.com

Fleet Safety and GPS Tracking Firm Partners with Rogers afefreight Technology, a fleet safety www.safefreight.com /fleet-safety/ and GPS fleet tracking provider, is pleased to announce its strategic partnership with Rogers Communications to market SmartFleet, Safefreight’s GPS driver safety and fleet management system. “Safefreight’s technology is unique in Canada and offers our customers the most comprehensive solution on the market to mitigate driver risk and optimize vehicle performance. We look forward to working with the Safefreight team to provide our current and future customers with these innovative tools to enhance the safety and management of their fleet operations,” said Steve Roberts, Rogers’ Vice President. “We are extremely excited to be working with Canada’s premier provider of wireless products and services,” said Curtis Serna, Safefreight’s Chief Executive Officer. “Rogers’ recent expansion of network coverage in Alberta in combination with our fleet safety technology offers companies in safety focused industries – like the energy sector - a cost-effective solution to enhance safety in the field.” SmartFleet is a telematics solution that incorporates a “smart” vehicle mounted device, asset-to-internet capability, wireless communications and web-based fleet management software. It helps fleet managers measure and manage the company’s driving culture. In addition to providing real-time risk alerts, SmartFleet provides a forensic trail and makes it easier for fleet owners to substantiate warranty claims and more effectively manage fleet service plans. ROI on the solution is usually measured in months, depending on the number of devices deployed and the metrics being monitored.

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SmartFleet empowers fleet managers with actionable data to: · Decrease number of accidents by up to 70% · Cut vehicle downtime by up to 50% · Reduce fuel consumption by up to 35% · Lengthen the lifetime of tires, brakes, clutches and gears · Enhance workforce and equipment productivity · Improve customer service through timely reporting of asset location · Reduce carbon emissions · Reduce risk of theft and expedite stolen vehicle recovery · Secure cargo assets (monitoring tampering and temperature) · Manage data in the field (including real time data capture) Safefreight and Rogers are offering incented pricing of devices and software subscriptions, exclusively through the Rogers sales channel. Rogers’ customers get a free, one year software subscription to Location Based Services. Advanced and Premium software subscriptions are also available at discounted pricing through the Rogers promotion.

Historical drilling records now digitized and online

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or decades, the ERCB has provided an invaluable service to the industry by sourcing the tour sheets of every well drilled in Alberta. These tour sheets tell the entire story of a well, from spud to rig release. What bits are used, what mud weights are applied, important notes and comments from the rig manager, etc. all recorded on a daily (sometimes hourly) basis. Thanks to this readily available information, our collective knowledge on drilling techniques and strategies throughout our province is unmatched. This information is critical to well planning, benchmarking drill performance, and analysis on past wells drilled…an imperative practice to any efficient drilling department or service company. It’s not enough to know your own wells: you need to know what’s going on around you. Tour sheets hold very valuable information, but in a very inaccessible format. It is very time consuming, depending on photocopies and trips to the ERCB Core Research Center to access this data, yet that is the only way that companies can review tour information on-demand. In cooperation with CAODC, companies have built advanced systems to capture this information in a digitized format…and yet the information is still stored publically in paper/hardcopy format only.

Wood Group Offers HighPressure, High- Temperature Well Cement Bond Logging Service ood Group Logging Services, part of international energy services company John Wood Group PLC (“Wood Group”), has introduced a new cement bond evaluation service designed for deeper wells with wellbore conditions up to 500° F (260° C) and 30,000 psi of hydrostatic borehole pressure. The service is accomplished in a single well logging run by using a new 360° radial measurement that identifies potential channelling, void areas around the casing and inadequate bonding. The resulting evaluation confirms intervals of good cement bond that adequately isolate zones, and minimizes nonessential remedial cementing. “This new cement bond evaluation service is expedient and cost-effective, and builds upon our reputation for providing outstanding service in hostile downhole conditions” stated John Paul Jones, president of Wood Group Logging Services. “The service expands the operating range for cement bond evaluation and will enable our clients to make better informed decisions on deep high value wells.”

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The challenge is now to make it available to those who need it. XI Technologies has responded to demands from the drilling industry for better access to this vital tool for diligent drilling practices. XI discovered a clever way to make this data available to the industry…share it. There’s no secret that operators/service companies have their finger on the pulse of their offsetting competitors…there are also no secrets contained in tour information, considering the sheets are publically available. Through XI’s TourXchange agreement, operators have mutually agreed that the value of this information (in digital form) is immeasurable in terms of drilling efficiency, cost savings, and overall drilling performance. Therefore, in order to access digitized tour records of offsetting operators, they have endorsed the philosophy by offering their own digital data into the collective TourXchange database. The program is simple – share the digital version of the already-public tour sheets and in turn, they can access the digital tour reports of existing participants. Acceptance of this program has been quite positive so far, building a database of over 40,000 wells worth of digital tour data. As the concept gains further recognition, the TourXchange database will eventually contain a major portion of the digital drill records throughout Western Canada in the next year. Researching pacesetters, understanding the problems of historical wells that offset your locations, and having a general knowledge of best-drilling-practice is key to prudent drill planning. Data is the key to building these types of analytical tools, and now the industry can finally make use of the information that was previously locked away in paper documents.

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Laid-off professionals get help transitioning their careers

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hen geologist Larry Spence was suddenly laid off, it came so suddenly and unexpectedly his wife thought it was a joke.

“They went and got my things for me out of my office, and ‘allowed' me one phone call,” he recalls, “it just happened to be April 1st.” Spence was shocked.While his company had been letting people go since January, his coworkers were as surprised as he was. He'd been an exploration manager with Talisman Energy for 22 years and, just one month before, was given a glowing performance appraisal. There was no advance notice. Two minutes after being informed he was let go, a representative from Toombs Inc. – a career transition service – introduced herself to Spence. Almost four months later, Spence is in a very different position indeed. On July 27, Spence started his new job, as exploration manager with TransGlobe Energy. He chose the position with TransGlobe over another excellent offer from a different company. His compensation package is “equal or better” than his equivalent position at Talisman. As Spence freely admits, however, he got there with significant help. “We help people (who have just lost their jobs) in a variety of ways,” says Kathleen Wollenberg, vice president and general manager of Toombs. “For people (like Spence) who haven't had to look for work in years and years, it can be very scary –looking for work is a process that requires a lot of different skills.” At the professional career level, simply skimming the classified ads just isn't good enough. It's not unlike fishing – the big fish aren't caught with luck, but with patience and skill. For many professionals suddenly thrust back into the marketplace, they need to re-learn even the most basic but necessary skills – including the seemingly basic skill of resume writing.

“I'd always kept my resume up to date, but again, it had been 22 years since it saw the light of day,” says Spence. “Things change in 22 years – especially style and format.” Spence attended a resume workshop, with about 12 other Toombs clients, which included instruction, time to re-write, and one-on-one counselling and proofing. The result? A much betterlooking, and in Spence's case, concise resume. “It was six or seven pages before, which I had thought was more impressive,” he chuckles.“It's about half that now, with nothing missing and much more concise reading.” Another vital career management skill many professionals lack, says Wollenberg, is just learning who’s really hiring: she estimates “a full 80% of jobs at this level aren’t advertised. Even if they are, she adds, they're usually still hired through referrals and networking. “Our program really emphasizes the importance of networking,” says Wollenberg.“So many people have told me they’d always blown it off, but the light goes on and they say ‘I get it now.’” “Networking is so important – you need to have a lot of people in your camp” agrees Spence, adding that one of his two offers came via a colleague in a similar position. Skills aside, Spence says one of the most important things Toombs did for him was also one of the simplest: it gave him a place to work. “I felt lost without an office,” says Spence. He’d had an office downtown for 22 years. He was used to working in a professional setting, and wasn’t comfortable working from home.To address this feeling of disorientation, Toombs gives its clients access to a “bullpen office,” with computers and private booths to make calls. “Toombs was like a transition home,” Spence laughs. In a buyer’s market for work, mastering as many career management skills as possible is vital. While Alberta’s unemployment rate is the lowest in the country, it’s still on the rise. In June, it reached the highest percentage since November 1996 – 6.8%, up from 6.6% in May. Companies forced to let some of their people go can still help them by engaging a career transition service, says Briar McGinnis of Alberta Employment and Immigration. “I think there’s more overall sensibility now than before – at lot of companies hire private contractors to assist after layoffs,” he says. The Alberta government also offers career transition services, he adds, up to and including financial assistance. 28 Oil & Gas Network, October 2009

BGAN Demonstration Joni Evans

imple, portable, and easy to use are deceiving words for such complex technology, but this is exactly how Inmarsat’s Broadband Global Area Network (BGAN) service works. The BGAN system utilizes three powerful Inmarsat 4 (I-4) satellites to provide broadband coverage anywhere in the world. On Thursday, Sept 10, Inmarsat, their distribution partner Stratos Global, and service provider Infosat Communications LP came together in Calgary to demonstrate the technology behind the BGAN terminals and their applications within the oil and gas industry. After a brief introduction and explanation of several BGAN features, Guy Mariz of Inmarsat gave the step-by-step demonstration showing how quickly and easily a BGAN terminal is set up. Within five minutes, including a detailed explanation of each step, the Explorer 700 terminal was up and running.The BGAN terminal had located the satellite, registered the user, and accessed the internet, all through Mariz’s laptop. A quick Google search illustrated the connection speed. The Explorer 700’s standard variable bit rate is 492 kbps, but if a guaranteed service rate is needed streaming at 384 kbps is possible, explained Mariz. “Automatic setup is also possible,” Mariz says.The BGAN terminal uses a single SIM card which is programmable for specific users, streamlining the setup process. “BGAN excels as a mobile device,” he says, “You only pay for what you use, per megabyte or per minute.” BGAN terminals are able to simultaneously utilize voice and broadband data transmissions. Mariz demonstrated this by simply plugging in a regular telephone and placing a call. “BGAN gives anyone the connectivity they would enjoy in an office anywhere in the world,” he says. “Essentially you can replicate your office.” The terminal uses Launch pad, a simple interface, and is compatible with all Microsoft products, Citrix and many FTP programs. There are several terminal types based around the needs of industry. Many terminals offer Ethernet, Bluetooth and USB connections for a variety of laptops. One BGAN terminal has the ability to support 11 simultaneous users. There are several different access terminals available, each with their own unique features. Each access terminal is designed for portability and will fit easily in a laptop bag or briefcase, making it ideal for use in remote locations, man alone situations, and at the exploration phase. BGAN easily allows workers to remaining in touch, instantly sending photos, reports, and updates back to the office. Next, BGAN’s video conferencing capabilities were highlighted as he connected with a colleague in Inmarsat’s London, England office. “We’ve had many requests for video conferencing from our oil and gas clients,” says Dale Gamber, Infosat communications vice-president of sales and marketing. The video conferencing capabilities are becoming more commonly used all the time, says Gamber. “It’s surprising what a powerful tool it is. Companies are able to get their message out to everyone at the same time,” he says. Two additional products were demonstrated using the BGAN network, a Frontline Communicator by AudiSoft Technologies and AFIANT Satellite Network Video Management System by Modern Security Solutions LTD. The Frontline Communicator is a small portable device with a small camera attached to a headset, for hands-free use, and its own interface. The communicator was designed with telemedicine or off-site expert advice in mind. Users are able to connect to the BGAN network, and communicate through voice and live video, with an expert who may be located half a world away. The AFIANT Satellite Network Video Management System is a unique security offering jointly offered through Stratos Global and Modern Security Solutions LTD. AFIANT provides a cost effective solution for video surveillance and monitoring of remote assets. By utilizing the BGAN background IP channel, user’s can implement motion triggered recording, and view or manage the information from anywhere in the world. “The balance BGAN strikes between portability and data capacity makes it the prefect solution for our customers,” says Sarah Crew, Infosat’s sales and marketing coordinator. “The portability and easy use of the terminals are where BGAN really shines.” Infosat Communications LP is a complete communications solutions provider located in Calgary,Alberta.As one of North America’s leading providers of satellite communications, BGAN was a natural addition to Infosat’s services.

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By building upon Inmarsat’s global satellite coverage through the I-4 network, and Stratos Global position as the only first tier BGAN service providers in Canada, Infosat offers 24/7 customer support and the right BGAN solution to resolve unique communication challenges in the industry.

Oil & Gas Network, October 2009 29

Maintenance in Upper- and Lower-Deck FPSO Applications

Global Heat Transfer Ltd. announces a breakthrough in lightweight cooling systems

oyno® Progressing Cavity Pumps from Moyno, Inc. provide numerous performance enhancing benefits in upper- and lower-deck FPSO applications in the oil and gas industry. Moyno Progressing Cavity Pumps provide the ultimate in positive displacement pump versatility as they are capable of cost-effectively handling clean and oily liquids as well as corrosive fluids and thick, abrasive slurries and sludges, even with viscosities over 1,000,000 cps. The product line includes models capable of generating flow rates up to 2,500 gpm and pressures to 2,100 psi. Moyno pumps are well-known for low maintenance, dependability and long service life which result in low overall total cost of ownership in both top-side and hull-side applications.Their high performance, progressing cavity design results in a gentle, low shear, pulsation-less discharge. A variety of proprietary Ultra-Flex® stator elastomers and Ultra-Shield® rotor coatings sustains peak pumping efficiencies, minimizes maintenance and extends useful service life even in the most corrosive and/or abrasive service environments. Typical Moyno Progressing Cavity Pump applications include the following: • Oily Bilge Water • Desalter • Diesel Fuel Generator Feed • LP and HP Flare • Drilling Mud Transfer • Closed Drain • Sludge Drain

he Jumbotron design utilizes GHT’s latest Aluminum Technology to cut more than 50% of the weight out of previous 3000HP designs, 30% out of 2500HP designs and even cuts 27% out of the 2250HP designs. Combined with our industry partners we are able to help the industry design some of the first Canadian road legal 3000HP Frac Pumpers in the market today. The math was easy. With an average well requiring up to 50,000 HP to Frac the current fleet of 2250HP pumps requires a minimum of 23 units at site. A fleet of 2500HP pumps requires 20 units at site. The cost savings of getting to 3000HP boils down to the math. With a 50,000HP well, it only requires 17 units on site vs 20 or 23 units previously. That’s an immediate 15% improvement (compared to 20 units) or a 26% improvement when compared to 23 units on site. When the capital cost of the fleet and the labor to operate the fleet is factored in, it’s adds up as a major cost savings for the industry. If the math was that easy, why was it never done before? The issue was always the weight of the radiator. To get an extra 500HP cooled you needed larger radiators than 2500 or 2250HP units. Larger radiator meant more weight. More weight on the cooling system added up with more engine wet and a heavier transmission meant the units could not pass legal road bans. GHT combined with a few select industry partners and reduced weight on our cooling system by 50% in the 3000HP application and are able to certify the 3000HP pumps as road legal. Contact GHT today for more information.

Moyno® Progressing Cavity Pumps Offer Dependable Performance & Low

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