March 2001 Vol. 222 No. 3  International

Kurt S. Abraham,  Managing/International Editor

Canada looks forward to record E&P pace

CALGARY – Prompted by record activity levels, confidence is evident throughout Alberta’s upstream community. Wide grins and happy chatter were endemic among attendees at our magazine’s annual forecast presentation. Locals have good reason to be giddy – early data show that Canadian drilling activity broke a record last year at more than 16,500 wells. The well count should go higher in 2001; the question is how much higher. What follows are examples of how Canada’s E&P support industry is affected by, and is reacting to, strong activity. Please also see the Canadian feature by our regular contributor, Bob Curran, on page 83.

GO EXPO draws nearer. There is said to be a growing need to maintain an annual oil and gas conference / exhibition in the country. To satisfy the demand, organizers have created "GO EXPO," replacing the Intercan event that alternated in off years with the National Petroleum Show (now renamed Global Petroleum Show). To be held June 12 – 14, 2001, GO EXPO will focus on five areas: E&P; gas processing / oil refining; pipelines / transportation; environmental / remediation; and software / E-commerce. More than 25,000 attendees from at least 40 countries will descend on Stampede Park, with more than 400 exhibitors likely. GO EXPO also will feature "technical theaters," for hosting 700 attendees at the Petroleum Society’s Canadian International Petroleum Conference. For more information, please see the listing in our Meetings section on page 18.

From drought to flood. Two years ago, Tesco Corp. and Crown Industries were featured in this column as innovative, optimistic examples of how Canadian firms were surviving the 1998 – 1999 drilling depression. Now, with Canada poised for its best year ever, we thought it would be fun to visit these firms again, to see how their fortunes have improved.

"We are doing way better than two years ago," said Dick Heenan, Tesco’s sales and development manager for top drive (TD) systems. "We are averaging over 75% utilization for TD rentals. This compares to maybe 25% working at this time in 1999." Heenan said that during 2000, the company restructured itself into four divisions: Products (manufacturing, sales and service of TDs, integrated UBD equipment, push-pull machines, drilling rigs and well control equipment), Services (rentals of TDs, UBD equipment, push-pull machines and well control equipment), Completions and R&D. "In the Products Division, we did have a stock of new TDs available for sale, but those are all gone. We now have a number of orders in production from drilling contractors for new units. We are also increasing orders for our Services Division to increase our rental fleet."

The red-hot market boosts sales and dayrates, and it also allows some technologies, such as underbalanced drilling (UBD), to "penetrate" further into projects. "Two years ago, our UBD capabilities were used only in Canada," said Heenan. "Today, we have UBD operations in Canada, the U.S., Algeria, Argentina and are actively pursuing other locations. Similarly, our well control equipment was only in Mexico and Canada two years ago, but now it is in the U.S. and Australia, too." The company’s R&D division also recently completed a successful, five-well trial of casing drilling in Wyoming.

Meanwhile, Heenan’s firm cautiously rides the high tide of activity. "As an industry, we’re already at or near capacity, so we don’t know how much more ‘iron’ can go to work. Nevertheless, we’re going to do our best to meet the increased demand."

Up from the grass roots. A great Calgary success story has been Crown Industries’ rapid growth. The firm is a full-service manufacturer of equipment, including workover rigs and trucks; truck-mounted and skid-mounted stimulation units; coiled tubing units; various cementing equipment; and nitrogen pumping units. Back in 1998, just as drilling activity fell, Crown opened a new purpose-built facility in southeastern Calgary. Nevertheless, management was confident that they could ride out the industry depression, poised for better times.

That scenario came true. "We have had a 20-fold increase in revenues since mid-1998," said Reid MacDonald, vice president for business development. "That first half-year after the facility opened was dead flat, at C$5 million. Last year, we hit C$175 million. This year, we’ll be closer to C$200 million. A lot of our success is because we’ve gone from being that little fledgling company to a firm that now builds equipment for such clients as Halliburton, Schlumberger, BJ Services, Trican Well Service, CalFrac Well Service and Evergreen Resources. We’re fortunate to have some great partnerships."

Indeed, Crown appears to have quickly become a leader in its field. Halliburton’s announcement last April of its partnership with Crown extolled the firm as "the number-one equipment manufacturer in Canada." While Canada continues to be a large Crown market, the international sector outside North America also provides good growth, especially in terms of custom engineering / design solutions. As for whether Canada can fulfill analysts’ predictions for drilling and development activity in 2001, MacDonald shares Heenan’s caution. "I hope we can make the numbers. I do worry that the oil companies will all wait to pull out their wallets at the same time, and there won’t be enough capacity to go around."

Saudis thrash one of their own. Here’s a story for readers that are fed up with some cell phone users’ narcissism and lack of manners. According to an Associated Press report, a Saudi Arabian court last month sentenced a Saudi army captain to 70 lashes for using a mobile phone on a domestic airline flight. Court officials said the man put passengers and crew at risk by using the phone during the taxi-before-take-off period, despite crew members’ orders to turn it off. As you, our learned readers, know, cell phones and other electronic devices (such as laptop computers) can interfere with an airliner’s navigational and communications equipment. The flight was delayed 30 min., and airport security personnel escorted the army captain off the plane. As reported in the Al-Eqtisadiyah newspaper, court officials said – on condition of anonymity – that this was the kingdom’s first such sentence against a cell phone user on an airliner.