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MARCH / APRIL 2015

The official publication of the Canadian Association of Drilling Engineers

Can the Torquay


maintain its
potential?

PLUS
OIL ON THE TRACKS
An update on rail
transport in 2015
WELCOMING WORKERS
Alberta program helps
women enter the trades

PM#40020055

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MARCH/APRIL 2015

The official publication of the Canadian Association of Drilling Engineers

The mandate of the Canadian Association of Drilling Engineers is to


provide high-quality technical meetings and to promote awareness on
behalf of the drilling and well servicing industry. With more than 500
members from more than 300 companies, CADE represents a broad
spectrum of experience in all areas of operations and technologies.
Through CADE, members and the public can learn about the technical challenges and the in-depth experience of our members that
continue to drive the industry forward. For drilling and completions
specialists, CADE currently offers one of the best networking and
knowledge sharing opportunities in the Canadian petroleum industry.

CANADIAN ASSOCIATION OF DRILLING ENGINEERS


PO Box 957 STN M
Calgary, AB T2P 2K4
Canada
Phone: 877-801-1820
www.cadecanada.com
PRESIDENT: Dan Schlosser
PAST PRESIDENT: Jeff Arvidson
WELL CONSTRUCTION JOURNAL EDITOR: Christian Gillis

WELL CONSTRUCTION JOURNAL IS PUBLISHED FOR CADE


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12

DEPARTMENTS
4

PRESIDENTS MESSAGE

THE DRAWING BOARD

10
11
17
25
26

Editors note, members


corner, news and notes,
technical luncheons

21

FEATURES
12 A BRIGHT SPOT

STUDENT PROFILES
HELP WANTED

Can Saskatchewans
promising Torquay maintain
its potential?

MEMBER PROFILE
BY THE NUMBERS
DRILLING DEEPER

18

PROVING ITS POTENTIAL

21

OIL ON THE TRACKS

23

STEPPING UP SAFETY

Crescent Point Energy is


bullish on the Torquays
promise

How will the transport of oil


by rail fare in 2015?

New Canadian technologies


are playing a significant role
in making pipelines safer

23
march /april 2015

Presidents

MESSAGE

Safe Pipelines Are


Our Greatest Asset

I
Dan Schlosser
CADE President

march /april 2015

N THE WAKE OF THE RECENT TRAIN DERAILMENTS


and subsequent oil spills in Quebec, Ontario
and West Virginia, which saw cars jump the
track and catch fire, its more important than
ever that we note the safe transport of oil via
pipeline. In my opinion, pipelines are getting a
bad rap unjustly, in both the public and political
realm.
No matter which method of shipment is being
used, there are safety considerations that need to
be addressed, as leaks, spills and other instances
could happen. As with any mechanical system,
its just a case of using technology and processes
to minimize those failures over the long run and
responding accordingly. By putting the method
of transportation underground, where its a lot
safer than anything above ground, you will maximize the safety of the operation.
The benefits of transporting oil by pipeline
rather than entirely by rail rest in technological
developments, which you can learn more about
on page 21. True, there have been instances
where a pipeline failure has injured people,

but thats rare compared to instances of a train


going down the tracks, derailing and catching
fire. Pipeline safety is consistently safer than rail,
due to the inherent technology being used and
constant evolutions in pipeline technology.
In the end, a lot of this debate is political,
rather than being based on technology and science. Politicians should be basing their decisions
more on the technology being used rather than
the politics of it all and should exclude the
dirty oil rhetoric from the lawmaking process.
As we all need oil transported, which way do you
want to do it? With pipelines incidents do occur,
but based on what we hear in the news, there
are a lot more rail incidents, even with improved
safety measures.
With the low oil price, a lot of U.S. producers
are leaving oil in the ground rather than drilling
it, and because of this, the U.S. is setting itself
up for an oil shortage. Having a pipeline coming
down from Canada that can safely transport
oil would be a very important thing to have in
their pockets.

Well Construction Journal

Please mention the Canadian Association of Drilling Engineers discount.

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The Drawing

BOARD

E D I TORS N OT E

Embracing Uncertainty

T IS NOW EARLY MARCH, AND FOR SOME BREAKUP CAME

right after the Christmas holidays. In both Canada and


the U.S., rig counts are way down over last year. Oil
prices seem to be holding around the $50 mark and the
amount of speculation in the media about oil going to $30 or
lower seems to be waning. Stockpiles in the U.S. grew again
last week, but they didnt grow as much as the week before.
This may be a sign that the reduction of activity in the U.S.
may start to result in a drop in daily production. There are
still those who believe that oil prices still have room to go
down, but there seem to be more people believing that prices
are ready to start coming back up. An article I read last week
referenced an interview from the early 80s with an OPEC
member and a quote from then remains prescient today:
the only certainty in our market is uncertainty.
As previously mentioned, CADE is looking to host a
bowling tournament during breakup. Be sure to keep an eye
out for emails mentioning registration and sponsorship. As
well, our 2015 technical luncheon presentations continue,
so please watch for registration emails or go to the website
to get your tickets.
As usual, please dont hesitate to contact us if you have
any ideas for upcoming topics or issues youd like to see
presented at the luncheons or in print. We are also looking
for topics that tie into our Journal focus for each month.

We hope to see more of this of the course of the year.


We hope you the membership will participate and
continue to make these events interesting and successful.
If you have any issues youd like to see covered, please
email me and we will do our best to get the story.
Dont forget, we would like to publish any of your
information and announcements on new products,
new technologies and senior personnel changes
for publication each month. Please forward any
announcements to us, as we would be excited to run
them in our new feature section.
We appreciate your continued support and look
forward to seeing you at the upcoming luncheons.
CHRISTIAN GILLIS, Managing Editor, Canadian Well
Construction Journal christiang@hawkeyeengineering.ca
Phone: (403) 265-4973

EXEC U TIVE TEAM

CADE Executive
Team 2014/2015

march /april 2015

President

Dan Schlosser

Vice President

Ryan Richardson rrichardson@secure-energy.ca

Education Chair

Linden Achen

lachen@westpetro.com

Membership Chair

Andy Newsome

andyn@xitechnologies.com

Social Chair

Kristy Hysert

kristy.hysert@shaw.ca

Treasurer

Cecil Conaghan

conaghan.concepts@gmail.com

WCJ Editor

Christian Gillis

christiang@hawkeyeengineering.ca

Sponsorship Chair

Craig Joyce

craigj@xitechnologies.com

Sponsorship Chair

Brooke Needer

Brooke.needer@cadecanada.com

IT Chairman

Matt Stuart

matt.stuart@surgeinc.com

Secretary

Tammy Todd

tammy.todd@taqa.ca

Communications

Oliver Descoteaux oliver.descoteaux@cadecanada.com

dschlosser@ncsfrac.com

Well Construction Journal

M EM B E R S C OR N E R
WELCOME NEW MEMBERS
JARED ALVEY
CHUKWUEBUKA KENNEDY ANYAEJI
CARLOS BARRIOS
PATRICK BAYO-PHILIP
OLUWATOFUNMI CAULCRICK
EMRAH CEBECI
JOE FISHER
JEFF GERLITZ
JOHN HAYES
PETER IDOGA
FRANK ISEH
PAUL MATTHEWS
JONATHAN MCGREGOR
NICOLE MEISSNER
CANDACE MENGER
MICHAEL NEEDHAM
ALEXANDRU NISTOR
JULIAN NUNEZ
ASEKIRIBEKE STANFORD OKUMGBA
KERRI OLSON
TOLULOPE OLUBAJO
FRANCIS PATRICK ONOJA
MUHEEZ OPEBIYI
RICHARD PEARCE
DANNY PROCTER
YOUNUS RASHAN
MUHAMMAD ADREES RAZA
DOMINIQUE ROCH
SABA SADIQ
JOHN SHAFSHOLT
EVE SURIYASRI
KASHIF SYED
MICHAEL UGHANZE
JONAH URTON
LONG VONG

www.cadecanada.com

WHY BECOME A CADE MEMBER?


As of 2015, the Canadian Association of
Drilling Engineers (CADE) has been active
for 40 years. With more than 500 members
from more than 300 companies, CADE represents a large spectrum of experience in all
areas of operations and technologies.
For drilling and completions specialists,
CADE currently offers one of the best networking and knowledge sharing opportunities in the Canadian petroleum industry.
The skills and knowledge obtained by your
participation in CADE will benefit you and
your employer, with direct application to
your professional career.
CADE offers various means for members
to connect and share their insights. Monthly
technical luncheons are held with topical industry presentations. Other mebership benefits include our monthly publication Well
Construction Journal and a membership directory, which is the whos who of the Canadian
drilling industry.
Our website cadecanada.com is an
excellent focal point for industry events,
blogs and other news. We are also active on
LinkedIn and Twitter.

personnel, sales personnel and students.


Student memberships are available to any
post-secondary student interested in learning more about drilling and completions.
Please feel free to share information
about CADE with all the people in your
organization who are interested in the
drilling and completions industry.

CADE MEMBERSHIP RENEWALS


CADEs membership year is from September to September. During the summer,
CADE members will receive an email and
link for the renewal process on our website.
Please remember the benefits of being
a CADE member include APEGAs professional development hour, staying abreast
of technological and industry advances,
drilling conferences and a great opportunity to network. Thank you for your support.

CADE MEMBERSHIP CHANGES


Log on to cadecanada.com to become
a member or to update your contact
information.

WHO CAN BECOME A CADE MEMBER?


CADE members can be anyone employed
in the drilling and completions industry or
anyone who is interested in the industry.
Typical members include drilling and
completions engineers, geologists, technical

march /april 2015

The Drawing

BOARD

N EW S AN D N OT ES

Albertas layoff notices


on the rise in 2015
THE NUMBER OF NOTICES SUBMITTED TO ALBERTAS
labour ministry took a spike during the first six
weeks of 2015. Before a company in the province
can lay off more than 50 people, they must first let
the ministry know so that they can help arrange
supports for the newly-laid off workers. Between
January 1 and February 10, 2015 the province
saw more than 4,500 people lose their jobs. The
number is nearly nine times higher than during
the same time period in 2014. That doesnt include
employers who didnt take the time to fulfill the
advance notice requirement.
New numbers from Statistics Canada showed
that the province gained about 13,000 jobs in
January, but lost about 1,000 jobs in the natural
resource sector, which includes oil and gas, mining and forestry. Another 3,700 jobs were lost in
the scientific and technical fields, including geologists and engineers in the energy sector. A large
number of the layoffs also came from the closing

of Targets Canadian stores.


Economists are currently predicting that Albertas famously-low unemployment rate will rise in
the upcoming year, with some estimating that it
could rise to about six per cent.

RCMP report warns of


anti-petroleum movement risks
THE RCMP HAS WARNED THAT A GROWING
anti-petroleum movement poses a security risk
in Canada. In a new intelligence report, the RCMP
reveals that foreign groups are bent on blocking
oil sands exploration and pipeline construction,
and that the tactics they could use to stop development could be dangerous.
The report is from January 2014, and was
accessed via an information request from
Greenpeace. Its public release has been tied
to the new Bill C-51, which would provide
greater power to security agencies that deal
with terrorist groups. The legislation notes that
activity which undermines the security of
Canada as being anything that interferes with
the economic or financial stability of the country or its infrastructure.

march /april 2015

Challenges have been mounted against the bill,


with detractors saying the bill not only targets
terrorists, but civilians who wish to protest against
various government policies.

Well Construction Journal

TEC H N I CA L LU N C H EON S
Save the Date: March 18, 2015
Topic: Deep Casing Tools A Smart Solution for Reducing Well
Costs and Risks
Presenter: Mike Chomack
Deep Casing Tools unique and patented technology provides a
step change in the process of running casing and liners, and can
be used on any rig or well in the world without the need of special
equipment. In this presentation Mike Chomack, a petroleum technologist with over 35 years of industry experience gained while
working for both service companies and operators, will address
how deep casing tools are a solution for reducing well costs and
risks. Chomack established the Deep Casing Tools operation in
Canada in April of 2013, and in May of the same year was promoted to the position of Vice President.

Save the Date: April 8, 2015


Topic: The Fundamentals and Tools of Multi-Fractured
Horizontal Well Casing Design
Presenter: Mark Woitt

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This presentation will outline how previous methods of vertical


well casing design are not suitable for multi-fractured horizontal
well applications. Mark Woitt is a senior completions specialist at
RPS Energy, and has worked in numerous positions since entering
the oil and gas industry in 1979. He now works out of the RPS
Calgary office, primarily on HPHT well construction projects internationally. The vast majority of the work performed in Canada
over the last five years has been casing design for multi fractured
horizontal wells.

Luncheon Tickets
MEMBERS:
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WeldCor Supplies Inc.
Edmonton, Alberta, Canada
www.WeldCor.ca
sales@weldcor.ca

Student

PROFILE

Young Talent
Highlighting tomorrows best and brightest

J
Julian Nunez
Oil and Gas Engineering Program
University of Calgary

ULIAN NUNEZ IS IN HIS FOURTH YEAR OF THE OIL AND GAS

engineering program at the University of Calgary. He completed


a 16-month internship for Cenovus Energy, working as a production engineer for a tight-oil and natural gas asset, as well as
a process engineer with the Foster Creek SAGD facility under the water
treatment group. Prior to that, Nunez did a summer field term with
Cenovus, where he had the chance to experience operations at the
ground level. Through his industry exposure, Nunez has developed a
keen interest in operations, and hopes to continue to learn about this
exciting industry.
He currently serves as the vice-president of marketing and growth
for the Petroleum & Energy Society, a student-run club that looks to
connect students to industry in hopes of creating a stronger workforce. In his role, he engages students in the many events that the
club organizes, such as networking events, technical sessions and
field trips. He also mentors a team of 10 representatives and directors,
providing direction in their activities. He enjoys being on the people
side of activities, and believes that people are the strongest asset that
an organization can have.
Nunez moved to Calgary in 2005. Being from Colombia, his
mother tongue is Spanish. He enjoys languages, and hopes to learn
Italian, French and Portuguese by travelling. Other activities he enjoys are playing guitar and snowboarding.

UHEEZ ADEDAYO OPEBIYI IS FROM NIGERIA, WHERE HE ATTENDED

post-secondary school. He later went to Ferris State


University, Michigan, where he graduated with a degree
in electrical engineering technology. At Ferris, Opebiyi
was on the Deans Honour List throughout his studies and received
scholarships based on merit. After graduation, he came to Calgary to
work and was admitted to SAIT last September to study petroleum
engineering technology.
Opebiyi likes mathematics and physics calculations, as well as
dismantling and coupling things back together. He is drawn by the
need to discover a method that can increase the hydrocarbon yield
from reservoirs. And he loves that the oil and gas industry in Alberta
is a place where small contributions can yield a great positive result.
He loves playing basketball, hockey and watching movies (especially science fiction and health-related ones), as well as reading suspense
novels. He hopes to increase the amount of volunteer work he does
because he enjoys contributing to his community. Opebiyi loves
Canada because it is diverse, and appreciates that it gives everyone an
opportunity to excel.
After graduation, Opebiyi would like to work towards becoming a
technologist. My long-term goal is to become a registered engineer
with APEGA and a registered technologist with ASET, he says.

10 march /april 2015

Muheez Opebiyi
Petroleum Engineering Technology
SAIT

Well Construction Journal

HELP WANTED: Career Department


PROGRAM HELPS WOMEN ENTER THE TRADES
AN ALBERTA ASSOCIATION IS BRINGING A SUPPORT SYSTEM TO
women that want to enter the trades. Women Building Futures
provides the provinces construction companies with apprentice-ready women and prepares female students for careers in a
predominantly male-oriented business. The program covers everything from in-class training to mentorship opportunities and
long-term support.
The CEO and president of WBF, JudyLynn Archer, estimates that
about 85 per cent of the women who complete the program go on
to become registered apprentices and eventually find employment
in their chosen trade. This year, those numbers will be tracked in
collaboration with Alberta Enterprise and Advanced Education.
Archer says the program has a very rigorous application process,
and she aims to make sure the women that apply know that construction isnt for everyone.
Still, there are a lot of opportunities in the trades and a lot of
room for women to take up those jobs. While most construction
and trades jobs are filled by men, Women Building Futures hopes
to help create a more open workspace for women in the trades.
The program offers flexible learning options, such as an option
to learn some skills online, an important factor for many women
who cant easily leave their homes or communities to go to school.

Women Building Futures notes that this is often the case with First
Nations people who want to become apprentices. Afterwards, the
program provides support during the apprenticeship stage, including help seeking out scholarships to complete their training.
The provincial government offers a number of scholarships to
Albertans that are interested in learning a trade, and there are also
grants available from the federal government for those who complete their training.

DRILLING SLANG
If you want to walk the walk on a drill site, it helps to talk the
talk. Here are some terms and phrases often heard out in the field:

KRINGING WEIGHTS: The weights assigned to control points in


kringing operations to minimize the variance, thus eliminating
systematic estimation errors.

ABANDONMENT COSTS: The costs associated with abandoning a


well or production facility. Such costs typically cover the plugging
of wells, removal of well equipment, production tanks and associated installations.

NON-DARCY FLOW: Fluid flow that deviates from Darcys law, which
assumes laminar flow in the formation. Since most of the turbulent
flow takes place near the wellbore in producing formations, the
effect of non-Darcy flow is a rate-dependent skin effect.

The bleed-off process must be conducted with a high degree of


control to avoid the effect of sudden depressurization, which may
create shock forces and fluid-disposal hazards.

Source: Schlumberger Oilfield Glossary

BLEED OFF: To equalize or relieve pressure from a vessel or system.


UNCONFORMITY TRAP: A type of hydrocarbon trap whose closure is
controlled by the presence of unconformity.

GRAVEYARD TOUR: The overnight work shift of a drilling crew. The


graveyard tour is the shift that begins at midnight.

www.cadecanada.com

march /april 2015

11

Special

REPORT

SASKATCHEWAN

REGINA
MANITOBA

MONTANA

TORQUAY SHALE PLAY


NORTH DAKOTA

PHOTO: CANADIAN PRESS

SOUTH DAKOTA

12

march /april 2015

Well Construction Journal

By Robin Brunet

Bright

Spot

LOCATION: North Dakota, southeast Saskatchewan


and southwest Manitoba
RESOURCE: Interbedded dolomite mudstone, silty
dolostone and anhydrite
SOURCE ROCK: Overlying Bakken shales
ESTIMATED RECOVERABLE RESERVES: Up to 45
billion barrels
PRODUCTION & MAJOR PRODUCERS: Low-decline,
high rate of return wells drilled by Crescent Point
Energy. Continental Resources and Vermilion Energy
are prepping development

www.cadecanada.com

Can Saskatchewans
promising Torquay
maintain its potential?

HE THREE FORKS FORMATION, WHICH


underlies the Bakken in Saskatchewan
and is better known as the Torquay
in Canada, is a prime example of yet
another Next Big Thing that causes analysts to
enthusiastically reassess their yield estimates
and energy producers to invest millions in
development.
In 2013, the U.S. Geological Survey revealed
that the Williston Basin, in which Torquay is
located, contains 7.38 billion barrels of technically recoverable oil. This is considerably more
than the USGSs 2008 assessment of 3.73 billion
barrels, and a far cry from its 1997 estimate of

march /april 2015

13

Special

REPORT

FAST FACTS:

Torquays potential has led Canadian


energy producers to spend hundreds
of millions of dollars to acquire
prospective acreage in Saskatchewan
and North Dakota.
When the USGS revised its assessment
of Torquay, it increased its estimate
by 25 times and that was a cautious
reassessment

only 151 million barrels of technically recov- the oil business, analysts are careful to temper
erable crude. Crescent Point Energys president their enthusiasm at least publicly. Weve
and CEO, Scott Saxberg, has publicly stated that tried to be deliberately conservative in our foreTorquay, has the potential to be the equivalent casts, in that we dont want to overblow where
size of our Viewfield Bakken play, which pro- its going, CAPP vice-president of oil sands and
duces 70,000 boe/d.
markets Greg Stringham told Alberta Oil magaT h is reassessment has caused ot her zine in September 2014.
organizations to adjust their predictions of
Saskatchewans total oil production. The T O R Q U AY S T R E TC H E S across North Dakota,
Canadian Association of Petroleum Producers southeast Saskatchewan and southwest Manitobelieves production in that province will grow ba. As is the case with Middle Bakken, it has a
from 486,000 bpd to
number of distinct hydroThe size of the prize is just too big
607,000 bpd by 2030 a
dynamic systems. Though
to ignore. Investors made fortunes
substantially brighter foreits name implies three paywith the Bakken in its early years,
cast than its estimate two
zones, Torquay consists of
years ago that production and a similar investment scenario may four stacked oil-bearing
would peak sometime this
formations that are cumunow unfold. Keith Schaefer
decade. Much of the excitelatively 250 feet thick (the
ment over Torquay stems from Crescent Point USGSs dramatic increase in yield estimates is
developing its outcomes in the Flat Lake area partly due to the survey including the upper
of southeast Saskatchewan from zero to over layer, which alone is about 50 feet thick).
5,000 boe/d, by drilling 36 low-decline, high
Torquay
consists
of
interbedded
rate of return wells that pay out in less than sev- grayish-green dolomitic mudstone, pink silty
en months This is a remarkable achievement, dolostone and anhydrite. Its part of the
considering investors typically look for 12 to Sinclair Field, which had been explored in the
15-month payouts.
1960s but whose pay was overlooked during
But, perhaps mindful of how quickly a Next that time (reserve discovery came in 2004, and
Big Thing can turn into Yesterdays News in the field was designated the following year).

PHOTO: CANADIAN PRESS

A Crescent Point crew


working in Saskatchewan

14

march /april 2015

Well Construction Journal

As with the Bakken, oil is produced from Tor- tubing units have also benefited Crescent Point
quay using both horizontal drilling technology operations, the former positively impacting the
and hydraulic fracturing. Between 2008 and companys cash flows by lowering production
2013 alone, approximately 450 million boe declines and improving rates of return on prowere produced from the Bakken and Torquay ducing wells. Meanwhile, Legacy has designed
its own frac plans and conducts real-time monin the U.S.
In April 2014, after Crescent Point itoring rather than passing over the task to serannounced the outcome of its 36 wells drilled vice companies. This has allowed the company
in Torquay, the company acquired CanEra to optimize the efficiency of well completion
Energy for $750 million. This gave it an extra and better cope with unforeseen geological
680 square kilometres of acreage in the region, challenges. Additionally, because it already has
gathering systems in place
and Crescent Point spent
the rest of the year devel- The Canadian Association of Petroleum for oil and natural gas due
oping the play (to the tune Producers believes production in that to prior drilling in the Bakof $200 million). This province will grow from 486,000 bpd ken and Midale Formations,
Legacy can rapidly increase
summer it is initiating its
to 607,000 bpd by 2030.
production from early stage
first waterflood pilot.
Continental Resources and Vermilion Ener- to full-field development as can Crescent Point
gy are monitoring Crescent Points work close- and Vermilion, for the same reasons.
But for all the recent interest in Torquay, anly. The former, a longtime Bakken player, has
drilled exploration wells in the three deepest alysts are reluctant to discuss production potenTorquay zones. The latter has meaningful ex- tial. Energy Aspects turned down Well Construcposure in the Torquay, according to director of tion Journals request for an interview, stating it
investor relations Dean Morrison, but it is al- doesnt have anyone looking closely at the play.
lowing industry to progress the play further Petrel Robertson Consulting and even Tundra
before investing in development (when con- Oil and Gas (the latter regarded as having contacted to discuss opportunities in Torquay, in- siderable knowledge about the formation), also
vestor relations analyst Andrea McCormick de- declined to be interviewed.
This may be due to the fact that, despite
clined to participate, stating that Vermilion is
not actively drilling the Torquay at this time.) Crescent Points well successes to date, the TorFor the record, Continentals assessment of quay remains largely unexplored and given
the Torquay states that the inclusion of the the predominance of the Bakken, there hasnt
deeper parts of the formation boosts the total been much incentive until now to drill deeper
amount of oil originally in place from 577 bil- and determine the specific challenges of the forlion barrels to 903 billion, with as much as 45 mation. That would explain why, when asked
in September if Torquay as a commercial rebillion barrels being technically recoverable.
Legacy Oil and Gas has also explored the source will affect CAPPs crude oil forecasts for
Torquay: in 2011, it drilled a well just north Saskatchewan, Greg Stringham replied, Its
of the Saskatchewan border with reportedly a bit too early to say that its going to make a
modest results. It commenced further drilling substantial change.
In a piece he wrote for his Oil and Gas Investin 2014 in the Flat Lake and Taylorton areas.
Legacy continues to evaluate and increase its ments Bulletin newsletter in June 2014, analyst
potential in the Taylorton and Pinto areas, Keith Schaefer points out that, although the Torwhere Torquay oil is sourced by the overlying quay has invigorated the Canadian side of the
Bakken and caused industry to leap-frog estiBakken shales.
Torquays success depends on the type mates in the U.S., Its important for investors to
of technology used for development. Cres- remember that Torquay/Three Forks is still in its
cent Point, for example, continues to refine early stages, and different areas and formations
its 25-stage cemented liner completion tech- may respond differently.
Still, Schaefer concedes that, The size of
niques, which uses up to 45 per cent less water
than previous completion methods and results the prize is just too big to ignore. Investors made
fortunes with the Bakken in its early years, and a
in decreased well costs.
Waterflood programs and the use of coil similar investment scenario may now unfold.
www.cadecanada.com

march /april 2015

15

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Member

PROFILE

By Martin Dover

The Possibilities
are Endless
Troy Taddeo finds a world of
promise in his switch to sales

ROY TADDEO IS NO STRANGER TO SEIZING THE


day. A born-and-raised Calgarian, Taddeo
went to SAIT Polytechnic, but when an
opportunity presented itself, he left his
program earlier than expected. It kind of led
me down the path that Ive gone down, he says.
Taddeo was offered a job working in the field
as a MWD (measurement while drilling) operator. It was the job I wanted when I started at
SAIT, and it just kind of came up a year early, so
I decided it was good timing, he says. Taddeo
knew some friends who had taken similar jobs
before him, and he thought it seemed like the
best of both worlds. It was technical, hands-on
and you were in the field, he says. He split his
time working up in Dawson Creek, B.C. and in
Saskatchewan.
But a few years later, he was ready for a challenge. I worked my way into the office because
Troy Taddeo
I was tired of the field, he says. It was good to
be home, and to have a kind of normal life even
though I was on call 24/7. With another em- harder you work the more you are rewarded.
Taddeo currently works for Precision Drillployee, Taddeo was managing a group of about
ing, in their directional
60 employees as a field coordivision. He says the comdinator. I really enjoyed the
It seemed like before, I was at a
pany itself is a great fit
people managing part of it,
dead end, but sales had limitless
even though its a big comhe says.
possibilities. I like dealing with new
pany, it feels small and the
Four years after taking on
people all the time, new relationships,
company treats everyone
that position, he was ready
and in sales the harder you work the
well. He also finds opporfor a change, and decided
more you are rewarded.
tunities for career develthat getting into sales was a
Troy Taddeo
opment through CADEs
step in the right direction.
function and technical
I wanted it for that opportunity down the line, he says. It seemed like luncheons. Its such a broad spectrum of all
before, I was at a dead end, but sales had limit- oil and gas, and Im learning new stuff all the
less possibilities. I like dealing with new people time. You can network and meet new people in
all the time, new relationships, and in sales the all different areas.

www.cadecanada.com

march /april 2015

17

Economic

REPORT

Proving Its Potential


Crescent Point Energy is bullish on the Torquays promise

PENDING CUTS ARE COMMON DURING PERIODS

of market fluctuation, but not all oil and


gas companies are forced to follow the
same slash-and-burn path in order to survive. With a strong balance sheet, Calgary-based
Crescent Point Energy remains more financially
flexible than some of its competitors. With its
high engagement in the shale play of southern
Saskatchewan, this flexibility could open possibilities for the company over the next year.
Weak oil prices in 2015 pose a threat to the development of unconventional oil reserves across
North America. Oil and gas companies are facing
cuts not seen since 2008/2009, when falling

18 march /april 2015

market prices led to major changes across industries. As of February, a number of energy companies have announced plans to rein in spending and
exploration in order to survive the recent dip in oil
prices. BHP Billiton, Total and ConocoPhillips are
just a few of the companies who have announced
plans to cut expenditures on North American shale
oil exploration in 2015.
The Torquay region in southeastern Saskatchewan has won attention from investors and companies looking to gain access to North Americas
next big shale play over the last several years. The
play is an extension of the Three Forks shale gas
formation located in North Dakota. In contrast to
Well Construction Journal

By Lisa Catterall
capital expenditures budget by 28 per cent in
order to accommodate falling oil prices.
One of the things they have is almost 50 per
cent of their oil hedged through the end of this
year at $93 a barrel. Thats huge. Oil is below $50,
but theyre getting $93. Most companies dont
have hedges like that, so Crescent Point reaps the
benefit when their price is set higher. That, plus
their already strong balance sheet is a big help,
says Bruce Campbell, president of portfolio management at Torontos Campbell, Lee and Ross.
Last year alone, the company drilled 41 horizontal wells, including 11 step-out wells, in the
Torquay play. It aims to expand on the regions
2014 growth by drilling 44 net wells this year. As
Canadas largest driller of horizontal wells, Crescent Point has planned for expenditures of $188
billion in the Torquay (Flat Lakes) in 2015, which
accounts for approximately 13 per cent of the
companys budget. The budget not only allows for
continued drilling and traditional exploration of
the area, but in mid-2015 its also looking to begin
the first waterflood pilot in the area.
Low break-even prices for current operations
in the Torquay and Bakken have meant that
even with lowered oil prices, Crescent Point still
retains an advantage. With a break-even point at
just below $50 per barrel, the company stands to
continue its success even in the current economic
environment.
The main focus for the companys spending will
be technology, which reduces production costs
the part of the Three Forks resting south of the while increasing output. This method has been
border, Torquay has presented lower capital costs successful in lowering decline rates and increasing
and higher rates of return from wells, making it a recovery factors over time across Crescent Points
lucrative development area.
activities in Canada.
The potential of the play has been of great
In a January 6, 2015, press release, Crescent
interest to Crescent Point, one of the biggest Point president and CEO Scott Saxberg said, Our
players in the area since 2007. Between then commitment to technology is a key value-driver
and now, the company has
for the company. TechnoThis time, we know its not going
logical advancements such
acquired more than 960
to be five years, its not going to be as our 25-stage cemented
net sections of land in the
three years; you can wait it out and
liner completion techniques,
area. Now, with oil prices
cut
costs and do whatever you can to waterflood programs across
at less than $50 per barrel,
Crescent Point is faced with survive and then live to fight another all major plays, and the use
of coil tubing units provide
the dilemma of cutting costs
day and itll be 2016.
us with a clear advantage
while maintaining its strong
Bruce Campbell
that has direct impact on our
position in the Torquay.
Though the companys initial budget for the cash flows and, ultimately, our bottom line.
One of the things thats helping is that theyre
year is conservative, its bottom line is cushioned
somewhat by hedged prices, which will protect going to the drillers and asking for cuts in the fees
the companys development plans in Saskatch- that are paid in order to drill a well, says Campewan. This year, Crescent Point has reduced its bell. Like a lot of other companies, theyve cut
www.cadecanada.com

march /april 2015

19

Economic

REPORT

back their 2015 budget, so they wont spend as


to be. But this time, we know its not going to be
much. Returns would be at $44 per barrel, and
five years, its not going to be three years; you can
wouldnt be economical. All in all, it wouldnt
wait it out and cut costs and do whatever you can
be worth their while. So theyve slowed down in
to survive and then live to fight another day and
terms of growth.
itll be 2016.
Crescent Point has acquired more than
In the event that oil
The
final
question
960 net sections of land in the Torquay. remaining, according to
prices remain low throughNow, with oil prices at less than $50 per Campbell, will come about
out 2015, Crescent Point
has left itself a number
barrel, it is faced with the dilemma of once prices have reboundof options to weather the cutting costs while maintaining its strong ed and companies are
storm, including a strong
looking for growth in 2016.
position in the area.
inventory depth, additional
This is the big question:
reductions to capital expenditures and the option
everybodys taking these measures of caution,
to reduce facilities spending while shifting capital
and its great for survivability and for getting
to its re-frac inventory.
oil prices back up over the year ... but what will
Campbell believes that the change in oil prices
happen in 2016 when you didnt spend and drill
this year is purely cyclical, and that there are a
in 2015 so you dont have a lot of growth in
number of differences between the current reducproduction?
tion in oil prices and the last market downturn.
FAST FACTS
Its very different than in 2008/2009, when people had this uncertainty and it felt like the world
According to the U.S. Geological Survey,
was coming to an end. At that time, the oil price
there are 3.73 billion barrels of undiscovered
was down, but you knew that it was not because of
oil in place in the Three Forks (Torquay,
supply and demand of oil. So now, this is the first
in Canada) formation.
time since, and it is really demand and supply,
In April 2014, Crescent Point announced that
says Campbell. And so, you fix that it is fixable,
its production from Torquay had gone from
it takes time but the oil prices will come back up.
zero to 5,100 boe/d in under a year.
So that time, we didnt know how long it was going

20 march /april 2015

Well Construction Journal

Transportation

REPORT

By Jacqueline Louie

FAST FACTS:

According to the Rail Association


of Canada, about 70 per cent of all
surface goods moved in Canada are
now moved by rail.

Oil on the Tracks


How will the transport of oil by rail fare in 2015?

S THE EFFECTS OF LOW OIL PRICES RIPPLE

means for market access because I dont think well


throughout the economy, the outlook for
have resolved the pipeline issues. But certainly
moving crude oil by rail is not quite as rosy
there is an expectation, within Alberta and within
as it was in 2014.
the U.S., that if drilling stops
The economics of rail
then production levels will
They dont spill much oil at all,
versus pipeline, at this point,
relative to the amount of oil they are eventually start to show deare not as robust as they were
clines, she says.
moving. I worked for the railway for
four to six months ago, says
This trend will likely be
35 years, and I can tell you they are
Tammi Price, vice-president of
more pronounced in the
maniacal about safety.
investor relations and corpoU.S., where shale plays typ Randy Meyer
rate development for Gibson
ically have higher decline
Energy, a midstream company
rates than conventional oil,
providing crude oil and natural gas liquids transporPrice says. And well see less crude-by-rail moving
tation and logistics to the energy industry.
out of the Bakken. ForCanada, the forecast is still
In the current pricing environment, shipping by
sunny for increasing volumes coming out of the
rail isnt as economically viable as it was six months
oil sands in the long run because those are very
ago, and the industry could see reduced volumes of
long-term investments being made up there, with
crude oil moving out of Western Canada by rail.
multi-year construction capital projects that have
If pricing persists at current levels for the full 12
been ongoing.
months of 2015, we most likely are going to see a
Still, Price thinks there will be less volume
reduction in overall crude-by-rail volumes in 2015
moving out of Canada by rail in 2015 compared
[compared to] 2014. Rail remains an important
to last year. Because there are still market access

www.cadecanada.com

march /april 2015

21

Transportation

REPORT

FAST FACTS:

In September 2014, CN became the


first rail company fined under the
Fair Rail for Grain Farmers Act, which
requires CN and CP to move a weekly
minimum amount of grain in railcars
or face a fine.
Between 2007 and 2011, the
industry average for accidents
involving dangerous goods
averaged 161 per year.

22 march /april 2015

issues for crude oil coming out of Western Canada,


transporting crude oil by rail will have to serve as
an option for market access for Western Canadian
producers.
Of course, everything is contingent on how
long the current pricing structure will last, and
nobody knows what OPEC will do or when pricing
will start to turn. At the end of the day, it all comes
down to economics, Price says.
For 2015, Canadian Pacific Railway Ltd. has taken its expectations down from 200,000 carloads of
crude to 140,000 carloads. Weve obviously seen
significant price declines for the commodities that
were not expected, noted CP president and chief
operating officer Keith Creel in the companys Q4
call at the end of January.
Meyer says. Rail really mitigates the risk of what
Canadian National, meanwhile, believes that
theyre doing. It gives them a very diverse market
heavy oil production will be less affected by lower
that they can go to if it makes sense. You can turn
crude oil prices than will conventional sources of
rail down quite a bit ... With rail, you pay for what
crude production. In future, CN expects heavy
you move.
crude to account for greater than 60 per cent of CNs
In comparison, light oil is far better to move in a
total shipments of crude oil, says CNs director of
pipeline than on rail, Meyer notes: Bakken crude
communications and pubdoesnt make sense to move
lic affairs, Mark Hallman.
on rail. It only makes ecoRail remains an important means for
CN believes its crude-bymarket access because I dont think well nomic sense for niche playrail business will continue
ers where they dont have
have resolved the pipeline issues. But
to grow, as rail continues
pipeline connections or a
certainly there is an expectation, within
to play a complementary
particular market access.
Alberta and within the U.S. that if drilling
role to pipelines in getting
In addition to economics,
stops then production levels will eventually safety is another considercrude oil to markets.
start to show declines. Tammi Price
Heavy crude is by far
ation when transporting
and away better to move
crude oil by rail.
by rail, says Randy Meyer, vice-president of corpoSince the Lac-Mgantic disaster in 2013, regrate development and logistics at Altex Energy, a
ulation in the railway industry has increased
Canadian company that transports crude oil proddramatically from a safety point of view. Those
ucts using rail as a pipeline. The heavy oil moved
requirements are much more stringent than what
in rail cars is far less hazardous in the case of a leak,
was previously in place, Price says. Industry inhe says, adding that in the Alberta to Texas corridor,
siders note that safety concerns for Canadian oil
using rail to transport heavy oil would be a cheaper,
are different than they are for lighter oil: for the
more effective and environmentally advantageous
most part, Canadian oil is a heavier grade that is
transportation method than pipeline. You can
less volatile.
move one metric tonne of crude oil 197 kilometres
You couldnt light undiluted heavy oil on fire if
with one litre of fuel it is extremely fuel efficient,
you put a match to it it is extremely safe to move
he says. You can use existing rail rights-of-ways,
this product. And if it does escape, because each
and no more land has to be taken out.
car is isolated as a unit, it will limit the amount of
And, Meyer notes, the industry does not need to
product that comes out, says Meyer, noting that
go to the U.S. and ask any permission at all to ship
both rail and pipelines are extremely safe forms
heavy oil by rail. Its also cheaper to move heavy
of transportation. They dont spill much oil at
oil over time because there is no diluent penalty.
all, relative to the amount of oil they are moving.
You pay to move that diluent down, and you pay
I worked for the railway for 35 years, and I can
to move it back. And, there is a secondary cost
tell you they are maniacal about safety. CP had
because the market demand for diluent at the head
its lowest train accident frequency ever in 2014,
of the pipe is higher than at the tail of the pipe,
according to a company spokesperson.
Well Construction Journal

Safety

REPORT

By Samus Smyth

Stepping Up Safety
New Canadian technologies are playing a significant role
in making pipelines safer

IBRE OPTICS, LEAK PREVENTION TECHNOLOGY

and smart pigs are some of the latest instruments being used by Albertas pipeline
leaders to ensure the oil and gas industry
plays it as safe as possible.
The dialogue surrounding pipeline safety in Canada is charged. Because they carry and transport some
of our most lucrative natural resources through our
countrys most delicate terrain and environment,
pipeline concerns take a prime seat when it comes
to natural resource extraction debates. And while
yes, companies have been motivated to advance
their technology due to environmental concerns,
its also the large volumes of men and women that
have careers in the pipeline business that has made

www.cadecanada.com

a number of Albertas most prominent players step


their safety game up.
This more intense commitment to safety has
paved the way for new technologies and innovations to take shape across the province. Alexandra
Frison, communications director for the Canadian
Energy Pipeline Association, says advancements
have been made at every stage of the pipeline cycle. She cites applying specialized coatings used to
prevent corrosion, and 24-hour monitoring rooms
which allow for stern supervision as just two examples of preventative measures.
One example of this is Calgary-based Legacy Oil
+ Gas, which has a room in their downtown office
dedicated solely to monitoring their projects across
march /april 2015

23

Safety

REPORT
the province. Aptly named the Frac Room, it
ATCO, for one, hasnt been underestimating the
has four television sets documenting its hydraulic
work they have cut out for them when it comes
fracturing projects, ensuring optimal attention to
to upgrading old pipelines and regulating news
detail.
ones. Its a suite of things, says Hahn, about
Further north, Edmonton-based C-FER Technolwhat the company takes on in this regard. From
ogies has been researching and testing methods
field inspections to your inline inspections, to the
to utilize fibre-optic sensors and hydro-carbon
revealing of the maintenance records, they are all
detecting cables to enable them to detect notable
part of managing the risk of pipelines to the lowest
temperature changes and leaks more rapidly in
possible number. We want safe, reliable, sustainpipelines. Brian Wagg, C-FER Technologies direcable service thats our pipeline goal.
tor of business development, and his team have
All of this comes at a cost. CEPAs Frison says the
actually created a testing ground for spills via a
pipeline industry spent $1.4 billion on pipeline
massive tank, which boasts a 24-foot pipe with the
safety in 2013. She points to a number of factors
ability to purposely leak through leak ports. Its one
as playing significant roles in the improvements,
of C-FERs many ways of offering vendors the most
but says nothing trumps the research and work of
futuristic and optimal equipment.
post-secondary institutions across the country.
What Wagg views as the most significant inCanadas universities have the highest propornovation in the pipeline industry has been the
tion of pipeline researchers in the world, and our
industrys ideological movement from qualitative
industry works hard to support them to ensure we
data to quantitative data. In the past, the methods
continually develop new technologies to advance
were semi-quantitative or
our safety practices, says
There is a push by the regulators and Frison. A number of collabsemi-qualitative, based on exthe operators to use hard numbers to orations between competing
perience and opinions of the
characterize the risk on the pipeline
people with experience. But
companies in the name of
there is a push by the regulaand to evaluate where they should be safety have also given Frison
tors and the operators to use
hope that pipeline safety has
spending their money.
hard numbers to characterize
set a bold, new standard.
Brian Wagg
the risk on the pipeline and
CEPA members have also
to evaluate where they should be spending their
established their own program to take their pracmoney, Wagg says. How you are processing that
tices to the highest level going beyond regulation
info, whether it be by using engineering models,
and coming together as an industry to demonevaluating that data and entering data to assess the
strate their commitment to acting responsibly and
impact, doing a repair or even doing a survey, now
in Canadians best interests. Safety is one of the
you are confident in identifying the features on the
key focus areas of the program, and the industry
pipeline.
collaborates to improve and advance their safety
ATCO President Brian Hahn says the company
practices to reduce the risk of pipeline incidents,
has had pipeline monitoring stations for as long
with a goal of zero incidents, she says.
as he can remember. Stations are manned at all
In 2013, all CEPA members signed the Mutual
times and on all days throughout the year, and
Emergency Management Agreement (MEAA),
have served as invaluable methods of gathering
which formalized the industry practice of sharing
data. All have pre-determined notice levels and
resources between companies in the event of
alarm levels that help the monitors make sure they
a significant incident. And in September 2014,
working within the operating parameters that are
CEPAs members took part in a joint emergency
set, he explains.
management exercise to test this agreement and
A new technology that stands out for Hahn is
strengthen the industrys ability to work together
pipeline inspection gauges, otherwise known as
in the event of an emergency she continues.
smart pigs. They have been used to determine
Its this internal teamwork that has the pipeline
the overall health and condition of a pipeline by
industry confident about the future, including
gauging the thickness of pipes and checking for
ATCO president, Hahn. Industry collaborating
corrosion. Theyre called pigs for a few reasons
and sharing best practices, this is how industry
its an acronym (which stands for pipeline inspecworks on a journey of continuous improvement
tion gauge) and also references the squeal created
and sharing their experiences and so everyone can
when making its journey through a pipeline.
be a beneficiary, he says.

24 march /april 2015

Well Construction Journal

By the

NUMBERS

Stats at a Glance
Canadian Rig Counts
February 13, 2015

Drilling

Down

Total

Utilization

Alberta

231

309

540

43%

B.C.

54

24

78

69%

Manitoba

16

44%

New Brunswick

Newfoundland

Northwest Territories

Quebec

100%

Saskatchewan

55

84

139

40%

Totals

348

426

774

45%

Source: Alberta Department of Energy

Top 5 Most Active


Drillers in Western Canada

Top 5 Most Active Operators


February 13, 2015

February 12, 2014

Active
Rigs

Active

Total

Precision Drilling Corp.

78

194

Crescent Point Energy Corp.

24

Savanna Energy Services Corp.

37

72

Progress Energy Canada Ltd.

20

Ensign Energy Services Inc.

33

102

Tourmaline Oil Corp.

15

Western Energy Services Corp.

32

49

Encana Corporation

12

Trinidad Drilling Ltd.

30

60

ConocoPhillips Canada Limited

12

Source: FirstEnergy Capital

Source: CAODC

Alberta Land Sales


January 2015

January 2015

January 2014

YTD 2015

YTD 2014

$31.8 million

$39.1 million

$31.8 million

$39.1 million

$163.07

$245.80

$163.07

$245.80

$139.047

$1.2 million

$139.047

$1.2 million

$38.12

$183.03

$38.12

$183.03

Oil and Natural Gas


Land Sales
Price Per Hectare
Oil Sands
Land Sales
Price Per Hectare
Source: Alberta Department of Energy

www.cadecanada.com

march /april 2015

25

Drilling

DEEPER

By Robbie Jeffrey

Long Way Down


Alberta will be bruised by low oil prices.
How will the rest of Canada fare?

PRECIPITOUS DIVE IN OIL PRICES MEANS upwards of $1 billion, income people were
the Conference Board of Canada is earning in Alberta, going back to other provnow doing double duty as both a re- inces, says Burt.
search organization and a harbinger
The slowdown in the oil patch in Alberta
of doom. In January, it forecasted a reces- will likely increase the supply of skilled worksion in Alberta after benchmark oil prices ers in the rest of the country, adds Richard
dropped more than 45 per cent between June Truscott, vice-president of B.C. and Alberta
and December of last year. Cash flow, busi- at the Canadian Federation of Indepenness confidence, long-term investments dent Business (CFIB). But that does little to
its all under fire, according to a report it offset the effects of the cuts in the short
published on the impact of low oil prices. term, which are deep: in January, Baker
Alberta, responsible for 77 per cent of Cana- Hughes, Schlumberger Ltd. and Weatherford
das conventional and oil sands production, all announced between 7,000 and 9,000
will bear the brunt
job cuts. Halliburton
of the $5.2-billion
announced plans to
This year is shaping up to be a pretty
loss in provincial
lay off between six
rough ride. If we dont see a rebound
government reveand eight per cent of
soon, its going to be a dark year
nues on top of job
its global workforce.
for Alberta.
losses in the tens of
Pengrowth Energy
Richard Truscott
thousands, accordcut its capital spending to Kevin Hebner
ing platform by 74
of JPMorgan Chase & Co., whose company per cent from last year, Shell announced a
warned Canadians, There will be blood. In $15-billion spending cut, Civeo laid off 30 per
Alberta alone, says the Conference Boards cent of its Canadian workforce and Cenovus
report, Total business investment could be cut $700 million from its 2015 budget and
down by $12 billion this year.
halted expansions. Suncor, Canadian Natural
And the effects of the slump will ripple Resources and Husky have all cut their budacross the country. There are two strong links gets or halted expansions, or both.
between Alberta and the rest of the provStill, there is a bright side if you look hard
inces, explains Michael Burt, director at the enough just not for most Canadians. There
Conference Board of Canada. One is through are provinces that will be better off, on net,
the supply chain, the firms providing goods says Burt. Ontarios GDP will actually imor services that are used by oil companies in prove by about 0.7 or 0.8 per cent in 2015,
Alberta. This supply chain represents every- due firstly to the weaker dollar making exports
thing from metal products to transportation more cost-competitive but also to lower prices
services, to financial services or engineering, at the pump. But these small benefits arent
he says. Out-of-province employees are the enough to mitigate the 0.4 per cent reduction
other: about 3,000 people from Newfound- in Canadas GDP, the $4.3-billion drop in
land were working in Alberta in 2014, and the federal government revenues and the eight to
numbers for B.C. and Saskatchewan arent far 10 cents that low oil prices have shaved off
behind. Very conservatively, we estimate the loonie, says Burt.

26

march /april 2015

Well Construction Journal

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For drilling and completions specialists, CADE currently offers one of the best networking and knowledge
sharing opportunities in the Canadian petroleum industry. As you look to build your business and launch new
technologies, new products and services in the drilling industry, a CADE Sponsorship offers you a cost effective
way to deliver your message directly to the entire membership of the leading industry association for Well
Construction Professionals in Canada.

Support CADE by sponsoring our technical lunches, our website and the Well Construction Journal.

YOUR SPONSORSHIP INCLUDES:


Ads in Well Construction Journal, full of relevant industry news and
articles, presented in a high quality, well-read magazine
Your logo in the Thank you to our sponsors feature on the CADE
website and in every issue of Well Construction Journal
Your logo on the Thank you to our sponsors display at every CADE
Technical Luncheon
Authorized use of the CADE logo on your website and in marketing
materials

2014 SPONSORSHIP PACKAGES ARE NOW AVAILABLE


Contact CADE at 403.532.0220 or by email at info@cadecanada.com

www.cadecanada.com

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