Natural Resources Committee on Nov. 20th, 2012

[Wally Kozak]

Number one, it is safe. Our company has been doing it for 12 years. The technology itself has been around for 60-plus years. It's immediate post-war technology. It's older than television.

We can argue this until the cows come home. I'm sure other people have different perspectives, but there is still, to date, in North America no proven case of hydraulic fracturing having gone up through fractures and contaminated ground water. Yes, as an industry, we recognize that there have been incidents in which fluids have gone up as a result of poor well integrity and caused damage. That is an area of focus for our sector.

Where we're going in the next five years is a very difficult question. We are looking at incremental improvements in dozens of ways in our inputs, whether those be through chemistry, base fluids, equipment, or supplies such as proppants. They are being hauled tremendous distances, so we're looking at improving our local sourcing of that material.

What else can I add to that?

Operationally we are looking at productivity gains from reconfiguring equipment to improve ergonomics. As development gets more frequent and intense, we are looking to get efficiencies in our labour and labour logistics.

Finally, on treatment design, we are looking at new fluids, more benign fluids, and at trying to improve the fluid effectiveness to try to achieve more with less.

Does that answer your question?

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Sure. How soon will implementation be for some of those changes that you seem to be optimistic about?

I'm just wondering if anyone else has a response to the question as well.

[Wally Kozak]

The things I'm talking about are either in progress and in evaluation right now or are within the realm of testing within the next five years.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Would it be safe to say the discussion is more about political issues than it is about scientific ones, and that you believe the science is safe and that your technology is safe?

[Wally Kozak]

I agree. The science and technology are safe.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

An earlier comment was made that basically you can walk through an oil field from 3,000 meters above. I'm just wondering if you can give a little explanation of how that works. What is the computer technology, the data analysis, data management that goes into that? We'd be interested in hearing a little bit about that.

[Mark Bentsen, President and Chief Executive Officer, Cathedral Energy Services Ltd., Petroleum Services Association of Canada]

On some of the technology, you have to realize we are starting above ground and trying to put a wellbore in place in a spatial situation that is desired by the oil and gas company. We start with an initial surface survey. We have a bottomhole survey as well. We do some engineering around exactly the placement of that wellbore. We then use a guidance system called a measurements-while-drilling system, which essentially tells us various parameters as we drill the wellbore, and as we drill that down, we're computer-simulating exactly where we are in a 3-D formation.

We also receive different levels of information from that particular tool. It gives us various logging spots. As we drill down, we're trying to match the formations that were designed and picked out through seismic. We're matching those exactly to what we're actually seeing as we drill down.

With regard to the tools we have, we're starting to develop things that have significant computing horsepower so we can try to determine exactly what the bit is doing and where it's heading, so as we drill that wellbore down, we end up landing in the horizon they are looking at. Then we take the logging data we are picking up through real-time information and steer the wellbore across the formation in the desired path and in through the most economic part of the reservoir that we can get into.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Mr. Calkins has a question about the mud pulse. He was wondering if that technology has evolved as well.

[Mark Bentsen]

Well, there are two different technologies used for the MWD system. One is mud pulse and the other is electromagnetic. The mud pulse has been around for a significantly longer period of time.

As a company, we have moved toward electromagnetic, sending it up as a radio wave rather than through the fluid system. That is essentially much more efficient in getting that information to surface. We're able to send probably ten times the data at ten times the data rate. As we start to bring more technology onto the tool, there's only so much data that we can send over a time period that provides the accuracy, so the technology that we have developed, the electromagnetic, is the most efficient method of bringing that information back to surface. That's one of the innovations we've been able to bring forward.

[The Chair, Conservative, Leon Benoit]

Thank you.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Can I have a second, Mr. Chair?

[The Chair, Conservative, Leon Benoit]

Okay, Mr. Anderson. You'll take a little bit of Mr. Allen's time.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I'll ask one more question and then Mike can take over.

I'll change the topic quite a bit here. We've talked a lot about labour shortages across this country. I'm wondering if you're doing anything in terms of employment innovation and education employment in your industry. Just today, in a report on energy development in the north, we heard a lot about the challenges of acquiring workers in the local area and some things that need to be done differently in terms of education. Can you tell us what your industry is doing in terms of educational innovation and employment innovation?

[Mark Salkeld]

From a PSAC perspective we actually have a number of significant areas with regard to labour development within Canada, working closely with institutions, but we've also been in discussions with the federal government.

I have a senior vice-president who heads up our human resource committee, which is well attended by a significant number of PSAC member companies. We're talking about identifying skilled labour within Canada, skilled labour that's already established and that we can identify across Canada and map to needs in western Canada in the oil and gas services sector. We've published those reports through the Petroleum Human Resources Council of Canada as well as with the University of Alberta.

We're also identifying six significant skilled labour shortages with respect to trades. We're working with institutions, as well as with the federal government on the immigration side, to identify skilled labour and trades equivalencies around the world where necessary, but across Canada first and foremost. As well, we are working with first nations, developing programs with groups to introduce folks into trades there.

Those are two or three off the top of my head, but I'd be more than pleased to forward a more detailed report of what we're doing with respect to labour in this area. We have a very good relationship with the educational institutes, with SAIT and NAIT in western Canada, as well as three others across western Canada, in B.C. and Saskatchewan, as well as the university. A lot of effort on the part of the oil and gas industry as a whole is going on, including CAPP members in the other areas, to develop skilled labour within Canada, without a doubt.

[The Chair, Conservative, Leon Benoit]

Thank you for offering to send that report. We'll look forward to it.

Mr. Allen, you have two and a half minutes.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much.

With respect to the growth in shale gas around the world, the U.S., China, and other places, would you consider that our technology and innovation are on par or ahead? Do you see that as an opportunity for us to export more technologies?

That's to the Petroleum Services Association of Canada.

[Mark Salkeld]

I sincerely apologize. Could you—

[A voice]

He was asking about the opportunities to export technologies for shale gas around the world.

[Mark Salkeld]

You know what, I've got it.

There's one thing I want to really try to clarify here. Everybody talks about shale gas. Actually, it's always all natural gas, but we find it in different formations, one of them being shale. From surveys that we've developed over the years, we realize that people really don't understand the difference. It's all natural gas; it simply comes from different formations.

That said, the technologies that we've developed, essentially for 60 or 70 years, have clearly identified significant pools of resources. The Pembina, the Cardium, and the Viking have all been well established.

The technology we've developed here in Canada is taking us below ground, beyond those conventional pools, and into the outer reaches of those same formations, and it's allowing us to steer into them with a directional drilling piece in combination with the hydraulic fracturing. These types of formations are found in vast quantities, not only in Canada but in China and in Russia, obviously, and different parts of the world.

There again, to go back to the high levels of collaboration between the services sector and the producing sector, we have a unique environment where I honestly believe we are leaders in this area. That's what's generating a lot of interest by foreign investors and other countries, because they have these resources under their feet and we've developed a technology to get at them safely and efficiently. That opens those doors for export potential for Canadian skills, labour, manufacturing, and product development.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you very much, Mr. Allen.

Thank you all for your great questions.

Go ahead, Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I know there is only a minute left and it's our turn. I did inform the clerk I want to take that minute.

[The Chair, Conservative, Leon Benoit]

Mr. Julian, I've got to have the meeting close on time today.

I just want to thank the witnesses for their presentations today. Here in person, from the Canadian Association of Petroleum Producers, we had Mr. Bleaney. Thank you very much.

By video conference from Calgary, Alberta, from the Canadian Association of Petroleum Producers, we had Greg Stringham, vice-president, oil sands and markets. Thank you.

We had Dan Wicklum, chief executive, Canada's Oil Sands Innovation Alliance. Thank you.

From the Petroleum Services Association of Canada we had Mark Salkeld, president and chief executive officer. Thank you.

We had Wally Kozak, engineer chief, global services, Calfrac Well Services Ltd. Thank you.

As well, we thank Mark Bentsen, president and chief executive officer, Cathedral Energy Services Ltd.

By video conference from Edmonton we had, from the Pembina Institute,Tim Weis, director, renewable energy and efficiency policy. Thank you.

We had, via video conference, of course, from London, the United Kingdom, Mr. James Cameron, chairman of Climate Change Capital. Thank you.

Thank you to all the witnesses and to committee members for what I think is a great start to our study.

We'll see you again on Thursday for more of the study. Thank you.

The meeting is adjourned.