JVViews: March 2015 Issue
Editor's Note
4th Annual Energy Asset Management Capstone Project Showcase
Cross Marketing PJVA and Other Oil & Gas Industry Associations
Early Morning Session - Wednesday, February 25th
February Luncheon Review
Social and Membership Report
Strategies for Business Etiquette
New Volunteer Opportunities are Available!
eStudies and Web Based Learning
JV Rep Tool + Role Opportunities
Looking for a New Opportunity?
PJVA Linkedin Group
Editor's Note
Has Spring really arrived early? One would think so with the warm, sunny weather we’ve been enjoying the past few days and weeks; and the short-term forecast is for more of the same. However, don’t be fooled! Anyone who has lived in Calgary for a few years knows all too well that we are not out of the woods yet. I’m sure Mother Nature still has a few cold spells and heavy, wet snow falls in store for us. But for now, we’ll take all of this beautiful weather we can get.
This month’s Education article is titled “Joint Ventures 101 – What’s it All About?”. The article provides a basic introduction to Joint Ventures in the Canadian Oil and Gas Industry and to the PJVA. It is geared towards people who are new to the Oil and Gas industry, or new to Joint Ventures, or who may be considering a career in Joint Ventures. This is particularly timely as the PJVA is working on increasing its visibility in the industry.
Joint Ventures 101 - What’s it All About?
Joint Ventures are pervasive in the Canadian oil and gas sector. Multiple companies jointly developing an area through activities ranging from drilling and well site development to production facilities such as gas plants and oil batteries, allows companies to decrease risk and share specialized resources. Despite the ubiquitous nature of jointly owned land and infrastructure, joint ventures are often difficult to identify as the operating company typically operates the joint venture under its own name, rules, and company logo. Sometimes, even the personnel of the operating company itself may not realize that the asset they support is jointly owned. Joint venture arrangements also extend to a third party’s use of facilities, not just jointly owned and operated facilities. As such, a wide variety of joint venture agreements are entered into to manage the business relationships; such as Construction, Ownership and Operation Agreements, Unit and Unit Operating Agreements, and a wide variety of service agreements including Gas Handling, Emulsion and Water Handling, Water Disposal, Pipeline Tie-in, Contract Well Operating, and Pad Sharing arrangements.
The Operator of a joint venture is typically the company with the largest ownership; however, it can be any owner that has been elected as Operator by the other owners. The Operator will operate the asset within rules defined by government regulations and the Joint Operating Agreement, in which each owner has a right to participate in decisions regarding the asset and to audit the Operator’s actions. However, the asset will often bear the name of the operating company, and the operating company will typically supply all personnel to run the asset.
In an oil and gas company the Joint Ventures (JV), Operations, and Land departments work closely with each other. JV generally stewards the business for the asset teams and that role involves collaborating with other departments such as Engineering, Operations, Accounting, Legal, Safety & Environment, and Land. JV Agreements are written to incorporate all of these functions; however, the joint venture is only entered into when the business scope can be managed operationally.
The JV and Land functions in particular need to have strong communication as JV and Land agreements can overlap and one may take precedence over the other depending on the scope of work contemplated by the Operator. The expense and revenue accounting procedures should align with the applicable JV or Land agreements. As an oil and gas employee, having a basic understanding of JV agreements can help to increase one’s effectiveness when dealing with joint venture partners and with joint operating agreements.
In Western Canada, the Petroleum Joint Venture Association (or PJVA) is a not-for-profit organization that represents and supports individuals and organizations involved in petroleum joint ventures by providing a multi-disciplinary forum to address current petroleum joint venture issues. The PJVA creates and manages an inventory of model JV agreements on which many of today’s joint ventures are based. It also provides training on these model agreements and on the basic principles of joint ventures. This training is a good starting point to understanding the commercial aspects that can impact a company’s project or operations.
To learn more about the PJVA, go to www.pjva.ca. For online training options, select JV eStudies for individual courses, or www.mtroyal.ca for certificate programs (on-line and classroom based).
Tracey Moore-Lewis (Education Director – PJVA)
Kent Black (Publicity Director – PJVA)
4th Annual Energy Asset Management Capstone Project Showcase
Save This Date!
April 8, 2015
4th Annual Energy Asset Management Capstone Project Showcase
SAIT’s MacPhail School of Energy and the Centre for Energy Asset Management Studies would like to invite you and your company, to the 4th Annual Energy Asset Management Capstone Project Showcase at SAIT Polytechnic on:
Date: Wednesday, April 8, 2015
Time: 5:00pm – 7:00pm
Location: The Atrium, Stan Grad Centre, SAIT Polytechnic
Light refreshments will be served.
The Energy Asset Management (EAM) students learn all the business functions within the industry including mineral and surface land, joint ventures, operations and production accounting and well and facility asset management. They also gain an appreciation for the technical side of the business, and will graduate with relevant skills in the administration of the regulatory, financial, and contractual compliance workflow pertaining to energy industry assets.
The Capstone Project provides students an opportunity to demonstrate their knowledge of EAM by building a presentation that clearly demonstrates this integrated interdisciplinary approach to tackling a current industry challenge. Students accomplish this by working in groups and with a mentor, to complete a realistic EAM based project.
This evening is designed specifically to highlight program competencies mastered by students, showcase the finished products of the capstone project and provide an opportunity for all industry stakeholders to interact with EAM graduating students and discuss their projects.
The Capstone Project serves as a platform linking academic studies with industrial applications and is the culmination of a two-semester process in which students are required to:
- Research, analyze, prepare, document, submit, and defend a Capstone Project Report relating to a significant program-related issue/topic.
- Apply current industry practices of project management and business principles.
Cross Marketing PJVA and Other Oil & Gas Industry Associations
In marketing, we're continually looking for new vehicles to use for marketing our ideas or products. That’s why the PJVA is embarking on some cross Association marketing in order to promote its products and services elsewhere while at the same time opening up opportunities for its membership to take advantage of products and services from other Oil and Gas Associations.
Why would PJVA ever market to other associations? They're full of great opportunities that are directly, or indirectly, linked to Joint Venture work.
Talks are underway currently with several associations for those very reasons. These Associations have multiple training and educational opportunities that may interest PJVA members who are looking to bolster their knowledge base. In turn, PJVA may have courses and educational opportunities that interest other association memberships, allowing all associations the occasion to make more revenue as the market base is increased. In today’s oil and gas industry the more you know the more valuable you may become to your company. In addition to the current potential partners, the PJVA will begin discussions with more industry associations to broaden our opportunity horizon.
Potential benefits? You'd One would definitely market through other associations if you're all part of similar industries and would like to arrange a convention, for instance. This would allow for synergies and potential cost savings where hotels, convention space, caterers, promotional products, printed material, ballrooms, ground services, and on-site entertainment, to name a few, may be concerned. PJVA currently has one joint conference with GPAC (Gas Processing Association of Canada) held every fall in downtown Calgary, Alberta, Canada.
PJVA will be looking at web site, monthly publication or newsletter and e-mail advertising openings through this initiative. As association publications are frequently well regarded, they will provide increased credibility to the PJVA in those publications.
Honestly, PJVA realizes that this cross Association advertising isn’t for everyone. Not everyone is looking for these types of opportunities. Due to this possibility, the association contact / mailing lists will not be shared amongst other associations; rather, we will create notifications to be e-mailed to the lists or specific web content to be posted for all to see and utilize should the individual be so inclined.
Our primary goal is to simply broaden the scope of opportunities for PJVA and any partnered associations to educate memberships. This effort represents access to more for the sake of educating all members about other associations and their products and services.
Early Morning Session - Wednesday, February 25th
The topic for discussion at the February 25th Early Morning Session was the Well Pad Sharing Agreement.
Task Force Members Michael Bruch (presenter) and Lorraine Grant spoke to the need for such an agreement to deal with the current reality of multiple HZ wells drilled from a single pad and the relationship between well pad owners and well owners, operators and non-operators.The Well Pad Sharing Agreement will incorporate provisions from both land and joint venture ownership and operating agreements.
Task Force members come from a wide variety of companies, disciplines and associations. As a first step in developing the Well Pad Sharing Agreement, the Task Force has identified a number of the issues that will have to be addressed in the agreement, from defining the shared facilities, to cost sharing, to independent operations and regulatory, to name a few. One of the questions asked at the EMS was if the Task Force included a regulatory presence. At present, it does not but both Michael and Lorraine agreed a regulatory member would be invaluable. The search begins….!
The Task Force are targeting a 1st draft of the agreement for review in 2Q 2015 with the final available in early 2016.
Copies of the Powerpoint presentation and list of issues to be addressed by the Task Force are available on the PJVA Website. In addition, a link to the Draft 2014 CAPL Operating Procedure which has been updated to include reference to well pad sites is also included.
As of this date, we are without a topic for the EMS scheduled for March 25th. Details on the topic will be communicated to members at the earliest opportunity.
February Luncheon Review – Liar, Liar - What is your Duty to be Honest in Contract Performance?
PJVA’s February 19 luncheon featured Joanne Luu from Burnet, Duckworth & Palmer LLP. Joanne discussed 'good faith' in contractual relationships by examining the Supreme Court of Canada's decision in the 2014 case of Bhasin v. Hrynew and how that changed contract law.
The doctrine of 'good faith' is recognized in Canada and other countries such as the U.S, Australia and the EU. But, what is 'good faith'? In simple terms, Joanne explained, it means don't enter into a contract, and then act in a way to try to defeat it.
Yet, there is no official definition of 'good faith'. Leading up to the Bhasin v. Hyrnew case, Canadian courts had previously imposed a duty of good faith in three types of situations — contracts requiring cooperation to fulfill the contract, contracts involving the exercise of discretion and where contractual power was used to evade a contractual duty — and relationships: employment law, insurance law and tendering. An in-depth review of those cases influenced the final ruling in the Bhasin v. Hyrnew case.
Joanne identified two key outcomes from the Supreme Court decision in this case: (1) the 'organizing principle of good faith' which requires a contract party to have appropriate regard to the legitimate contractual interests of the other side and (2) the 'duty of honesty in contractual performance' meaning parties must not lie or otherwise mislead each other about matters directly linked to the performance of the contract.
Without making the issue overly complex, Joanne brought it all back to the audience level with some practical takeaways for our PJVA members: always ask questions and document, don't lie or mislead, don't exercise your discretion or contractual rights in a capricious or arbitrary manner and be a 'good guy'.
Joanne provided a wealth of good information on the potential consequences when breaching a contract or acting in bad faith and provided plenty of illustrative detail from the Bhasin V. Hyrnew case. If you would like to view additional information on this topic, the PowerPoint presentation is available on the PJVA website.
Social and Membership Report
Come out to PJVA Pub Night upcoming Thursday, March 19th at the Unicorn. The Unicorn – Calgary’s Original Pub was established in 1979 and has been a favorite spot for the downtown crowd on Stephen Avenue for 35 years! It’ll unfortunately be closing its doors in 2015 so come and say Farewell to the Unicorn!
Are you newly retired? Stay in touch with PJVA for only $20/year. This new membership category was implemented in the effort to keep our Senior JV knowledge involved in industry and passed on to the next generation. There is no minimum time you have to be retired; however you cannot be consulting in the industry for more than two days per week.
Join Paulina Ponsford as she Touches on Strategies for Business Etiquette
Business Etiquette is one of the most important assets you can have in today's competitive business world, and will speak volumes about who you are. This presentation will give you some strategies on how to successfully manage first impressions, effective business communication, meetings etiquette, working in close quarters with colleagues, and self-assessment in the workplace.
More details on our Lunches page.
New Volunteer Opportunities are Available!
Check out what's needed for Social events, Marketing and the Early Morning Discussions.
eStudies and Web Based Learning
PJVA is excited to offer customizable and accessible web-based learning options to industry professionals. PJVA has a suite of web based courses geared towards practicing and prospective JV professionals and personnel involved in the development and operation of a Joint Venture facility.These courses, available via the eStudies link at www.pjva.ca, are a supplement to the Joint Venture Certificate Program offered through PJVA and Mount Royal University. The courses offered on eStudies are identical to the courses offered at Mount Royal, the only distinction being that the Mount Royal courses are applicable towards the Joint Venture Certificates while eStudies are not. As well, the eStudies courses are offered in segments such that the student can customize and streamline their learning experience.
eStudies courses include Joint Venture Agreements, with modules in Construction, Ownership and Operating Agreements, Unit Agreements, and Service Agreements, Joint Venture Administration as well as Joint Venture Analyst Levels 1 and 2. The Agreements courses offer excellent background knowledge to anyone who works with or is bound by a Joint Venture Agreement. Joint Venture Administration details exactly how work is to be conducted within the legal framework of Joint Venture agreements. The Analyst courses provide understanding of Joint Ventures techniques and processes.
Check out www.pjva.ca today and click on eStudies!
JV Rep Tool + Role Descriptions
Don't forget this valuable member benefit when looking to define or advance your career.
Looking for a New Opportunity?
Check out the PJVA Job Board for recent postings.PJVA LinkedIn® Group
PJVA is on LinkedIn®, the world's largest professional network. It's a great way to stay connected and exchange ideas with other PJVA members and industry professionals.Click here to submit your thoughts and ideas!
PJVA was incorporated in 1985 to represent individuals and organizations involved in petroleum joint ventures. JVViews is published to keep members informed about upcoming PJVA and industry events, courses and seminars offered and/or sponsored by PJVA and current projects being facilitated by the Association.