Derrick Digest for June 9, 2017: The world wants more Canadian oil and gas

The Derrick Digest is a weekly collection of curated content, based on events from across the oil and gas industry, that caught our eye at Pennine Petroleum Corporation.

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JUNE 9, 2017

 

Poised to become a 'major supplier in meeting the world's needs'

Canada is the go-to supplier when it comes to providing oil and gas imports, according to a new global research survey.

2017 Global Energy Pulse, conducted by Ipsos on behalf of the Canadian Association of Petroleum Producers, surveyed more than 22,000 respondents in 32 countries. Respondents were asked to rank their preferred choice for oil and natural gas imports from a list of 11 producing countries. Thirty-one per cent put Canada in the top spot. The five countries with the greatest interest in importing Canadian oil and gas included Israel, the U.S., Algeria, India and South Africa.

"With global energy demand forecasted to grow 31 per cent by 2040, Canadian oil and natural gas is poised to become a major supplier in meeting the world's needs,” said Jeff Gaulin, vice president of communications for CAPP. "Responsible and sustainable development of oil and natural gas has a positive impact on our daily lives and the majority of the world recognizes that. Canada is well positioned to be the preferred exporter for many, including those with the highest forecasted demand.”

In promising news, India and China — predicted to see their energy demand increase by 49%and 46%, respectively — gave Canadian industry high marks for minimizing environmental impact through technology.

"The world expects Canada to lead when it comes to environmental innovation and no one holds Canada's energy industry more accountable than Canadians," Gaulin noted.

The report also highlights an opportunity for the energy industry in Canada to better get the word out on its achievements. More than half (54%) of those surveyed said they were neutral or didn’t know enough about Canada’s industry to make an informed decision.

 

Opinion: Gwyn Morgan sinks oil tanker myths

It's time to "move beyond the rhetoric to some hard facts," writes the founding president and chief executive officer of Encana.

Now retired, Gwyn Morgan is a Wester Coaster who treasures “the unique and beautiful environment of the region, spending time kayaking its waters and anchoring our boat in its myriad coves.” And as the founding the founding president and chief executive officer of Encana, he’s in tune with the oil business.

It’s time to “move beyond the rhetoric to some hard facts,” when it comes to the upheaval in B.C. over the possibility of increased oil tanker traffic, Morgan writes in an opinion piece for JWNenergy.com.

While the spectre of the Exxon Valdez spill in 1989 looms large over the debate over oil tankers in B.C. waters, it’s important to remember regulatory reform that resulted from the incident. It was determined the spill wouldn’t have happened if the Exxon Valdez had a double hull.

“As a result, 150 countries mandated a 25-year phase-out of single-hull tankers and a requirement for all new vessels to be double-hulled by the end of 2014. That phase-out began soon after with new, greatly improved ships progressively replacing older ones. The new double-hulled ships, combined with advanced navigation systems and other safety measures, have resulted in a precipitous drop in global seaborn oil spills from an annual average of 2,340 barrels per day in the 1980s to just 110 barrels per day since 2010,” Morgan writes. “That staggering reduction has been achieved despite a doubling of tanker shipments to 60 million barrels per day.”

He also analyzes the current traffic in the Strait of Juan de Fuca by Vancouver Island and to the south by Washington State.  

“Despite hundreds of millions of barrels of seaborn petroleum movements over many decades, the only significant spill on the West Coast didn’t come from a tanker. It occurred when the BC Ferries vessel Queen of the North foundered near Price Rupert with 1,750 barrels of fuel on board,” he points out. “The Kinder Morgan capacity expansion would see its tanker shipments grow to 35 per month. The company’s spill prevention measures go far beyond employing the strongest and safest double-hulled tankers. Certified Marine Navigation Pilots will be on the bridge until the ships reach open ocean. Powerful ocean tugs, one of which will be tethered to the tanker and the other available to assist, will keep the ships safe, even in the highly unlikely event of engine failure.”

What does worry Morgan?

“The boat diesel, heavy bunker fuel and chemical pollutants pumped from the bilges of the other 6,000 large ships that travel our waters each year, ships that are not nearly as closely scrutinized as those 35 Kinder Morgan tankers are sure to be.”

 

Grains of sand: How fracking has created a boom in demand for one of the world’s oldest commodities

They are grains of sand that are “very round, very hard and very pure.” And they are very important to hydraulic fracturing operations.

As producers focus on getting as much out of their wells as they can, demand for frac sand is rocketing, kicking off the search for new mines to harvest sand that is up to the task. Currently, the Canadian market gets about 90% of its frac sand from Wisconsin, which is heralded for its superior “white silica” sand known as “Ottawa White.”

““Without exception, everybody is going through a phase of growth,” says Brad Thomson of Calgary-based Source Energy Services. This year, his company will build three rail terminals (in Edson and Fox Creek in Alberta, and one in Taylor, B.C.) at a cost of $25 million in order to receive shipments of frac sand from Wisconsin.

For example, in 2013 producers in the Montney Formation used about 500 pounds of sand per foot of a horizontal well. Four short years later, that figure is more like 1,000 pounds. And the wells are increasing in length as well, hitting 9,000 feet in 2017 as opposed to 5,000 in 2013.

Companies in Western Canada, such as Edmonton-based Athabasca Minerals Inc. and Saskatoon-based Hanson Lake Sands are making a play in the market with their gravel and nickel mines, respectively. What critical, however, is ensuring the quality of the product.

“Everybody thinks they’ve got frac sand,” says Ray Newton, co-founder of Canadian Sandtech Inc. He stands behind his product, known as “Bradley Brown” and says it can do the same job as silica sand.

 

Repurposing old coal shafts to create clean energy

Look down, way down, if you want to see the future of clean energy.

That’s the take of Virginia Senator Ben Chafin. He recently pushed through legislation that would see old coal mines converted into giant storage devices holding incredible amounts of renewable power.

It’s not a new idea, though. Back in 1909, a Swiss plant drew power from its hydroelectric facility set up in an old mine. The mine is filled with water, then electricity generated from wind and solar farms pump the water to a surface-level reservoir. When power is required, the floodgates are opened and the water rushes through turbines on the way down.

“Voila — you have electricity,” Chafin says. “These deep mines can act just like a giant battery.”

And unlike wind and solar farms, these unique pumped-hydro facilities can be called on at will. Solar farms in the Sonoran Desert in southeastern California harvest the energy from the sun all day long. It travels as electricity down a transmission line to Los Angeles until the sun goes down, just as millions of people get home from work and start powering up their homes.

“When the sun sets, that line goes empty,” said Steve Lowe, president of Eagle Crest Energy Co. “We want to do something about it.”

Eagle Crest is building a $2-billion pumped-hydro facility in partnership with NextEra Energy, Inc., the U.S.’s biggest clean energy developer. When completed, the 1.3 gigawatt facility in the Sonoran Desert could stockpile enough electricity to power nearly 1 million homes. The project, which is expected to take six years to complete, is located on the site of two pits in a defunct iron-ore mine.

Finding the right spot for such a facility is part of the challenge with this technology. It requires a steep ascent and room for all that water. In Virginia, Chafin’s legislation will fast-track the permitting process for pumped hydro in the state’s coal region. Pairing mine shafts with generators will be tricky, not to mention “incredibly expensive,” according to an employee with HDR Inc.

Nevertheless, Chafin is plowing ahead, or rather, down.

“I’d love to see the coal industry boom again. But we need to diversity our economy and get people back to work,” he said.