JVViews: September 2016 Issue
President's MessageEditor's Note
Facilities 101 Announcement
PJVA Pre-Stampede Summary
PJVA September Luncheon
Pub Night
Early Morning Session - Facilities 101
PJVA-CAPL Pad Site Sharing Agreement
SAIT Celebrates 100 Years
Volunteers in Action - Lee Wahl
Upcoming Events
Social Media
President's Message
"May you live in interesting times" rings true as both a blessing and a curse. We are in what several banks and analysts have already called the most challenging time our industry has ever faced. The individuals, the associations, the producers and suppliers are all facing their own challenges, and the PJVA is no different.
However, while I send my daughter off to school, I'm reminded that learning, and growing, are lifelong pursuits. Similarly, the PJVA never stops improving, adapting, and as a result, growing.
Your Board of Directors is challenged with stewarding the trust that members have put into the PJVA for the past 31 years, continuing to maintain and invest in today, while we never stop building toward the future vision of the PJVA.
This past year we invested heavily into updating and moving our JV Certificate program to SAIT, and in creating a brand new Facilities 101 program. We are proud of both and feel they substantially increase our already very strong educational portfolio.
But, like all responsible operators, given the reduced activity levels in our industry and our association we have reduced our expenses through both direct cuts as well as reducing the size and frequency of some events. I'm proud to report that net of the above one-time investments, we were able to protect the membership assets and return a very slightly positive cashflow to the association.
We are taking this time of reduced industry activity, which I personally know can mean increased individual workloads, to build for the future. Our Strategy Session will be focused on diving into the wealth of great ideas that previous sessions have generated; developing solid execution plans to fulfill the PJVA's greater vision.
To help us toward that vision, we welcome 2 new board members, Maureen McCall, Luncheons Director, and Helen O'Brien, Co-Academic Director, who both bring with them new ideas and great enthusiasm. I would also like to thank our retiring Board members: Past President Lee Wahl, and Vice President Richelle Lindsay who is expecting her second child any day now! We appreciate the loyalty and hard work each of them brought to their former positions and to the Board itself.
The PJVA is an association; it wouldn't exist without you. I want to thank each one of our members, each one of our volunteers, and each one of our future volunteers; together we will continue to build, to improve, and to grow. Thank you for allowing me to be a part of this great organization!
Josh Carter
Editor's Note
After taking the summer off in July and August, PJVA is back in full swing in September. This month has a full slate of events including the Luncheon and Annual General Meeting (AGM) on Sep 15, the monthly Early Morning Session on Sep 27 and a 2-day seminar on Joint Venture Agreements on Sep 20-21. Please read on for highlights of each event. October promises to be just as busy and just as informative. Also, as announced in the May 2016 newsletter, we introduced a new monthly feature in JVViews titled Volunteers in Action. Each month a PJVA volunteer will be interviewed and profiled so the members at large can learn a bit more about the people who help make the PJVA a success. We have an excellent volunteer assisting us with this new feature – Risha Tedros, a student in the EAMS program at SAIT. For this month Risha interviewed Lee Wahl, former President and Past-President of the PJVA. Please be sure to read her article.
And now, your Oil Industry Tidbits
| 1970-1971 - | Gas blow-out on King Christian Island in Canadian Arctic. |
|---|---|
| 1971 - | First drilling on Labrador Shelf (East Coast). |
| 1971 - | Taglu gas field discovery by Imperial in McKenzie Delta (3 Tcf). |
| 1971 - | Pickering nuclear power plant opened in Ontario. |
| 1972 - | Moratorium on west coast drilling imposed by Federal and BC Governments. |
| 1972 - | Parsons Lake gas field discovered by Gulf Canada in McKenzie Delta (1.8 Tcf). |
| 1973 - | Liberal Government of Pierre Trudeau formed Petro-Canada and the Foreign Investment Review Agency (FIRA). |
| 1973 - | First oil discovered on east coast by Mobil at Cohasset. |
| 1973 - | Union Oil’s Nose Creek well - the deepest well drilled to date in the Western Canada Sedimentary Basin (18677 ft / 5693 m). |
| 1974 - | Bent Horn oil discovery by Panarctic on Cameron Island - the only oil field to be commercially produced in the Canadian Arctic. |
| 1974 - | Federal and Provincial Governments in dispute over resource revenues, resulting in "excessive" taxation of Industry. Industry responded by reducing activity. |
Kent Black
Publicity Director 2016/17
Facilities 101 Announcement
Extra Extra Read All About It
The long awaited "Introduction to Facilities" course is now being offered at SAIT from September 27 to October 20 on Tuesday and Thursday evenings from 6:00 pm to 8:50 pm. This course is just one of 6 required courses to complete the "Joint Venture Certificate of Achievement". Don't miss out on this exciting course described below.
Petroleum Joint Venture – Introduction to Facilities
Course Description:This is where it all starts! An idea to develop a field for the purpose of oil and/or gas production to provide your company with cash flow! In this exciting course, for the non-engineer, you will learn a broad range of engineering techniques that affect field development, facilities and operations which, ultimately, roll up to the joint venture team to manage under an agreement. This course is an in-depth look at different types of Gas and Oil Facilities, as well as Heavy Oil Facilities. Each section covers off on Reservoir & Geology, Gathering and Processing, and Transportation and Marketing for the product you are producing. But most of all, you will learn to understand your engineers and apply that understanding to the Joint Venture arrangements.
***Please note: If you have over 5 years of work experience in the Oil & Gas industry or have taken a similar course SAIT can waive the prerequisite. To have PTOV126 waived, please contact Leah.Chanthaseng@sait.ca**
This course is also now available online through the PJVA eStudies program, which you can take at your own pace, in your own space. Please find a link to our e-studies page here.
PJVA Pre-Stampede Summary
It was another beautiful morning for the annual PJVA pre-stampede breakfast at National on 8th Rooftop patio on June 29th. There was plenty of food, 'specialty' drinks, and 'downhome' music by Rotary Park! Despite the economy we still had 96 members sign up to get the in the 'stampede spirit' and kick off summer. Check out some photos here.
Our door prize winners included:
Katherine Rushfeld - variety basket supplied by Concierge Promotions
Cheryl Sweeney - Q Haute restaurant $50 gift card
Sharon Smith - tablet donated by JVSA
Ashley Weldon - PJVA cooler chair
We hope to see you at our Pub Night on the 22nd.
PJVA September Luncheon
September 15, 2016
Josh Carter President of PJVA and Lee Wahl, Past President of PJVA featured on panel of Energy Association leaders.
Where is the Pendulum swinging to? Diversification of Business Risk in the Energy Industry
Is there an LNG window and how is our timing? How long is "Lower for Longer"?
Do we "survive until the price recovers" or should we look at the current climate differently?
Has diversification become the key to survival?
Our Panel members tackle some of these questions: Cody Austin, President of PASC, Tony Cioni, President of AIPN, Josh Carter, President of PJVA, Past President of GPAC, and Lee Wahl, Past President of PJVA.
REGISTER NOW!
Pub Night
Join us for the first PJVA Pub Night of the new season on Thursday, September 22nd from 4-7 PM at State & Main Kitchen & Bar on the corner of 8th Avenue & 6th Street SW (next to Eighth Avenue Place). Come out to reconnect with fellow members after a busy summer and into a new PJVA year! Members and non-members are invited to join us for some drinks and chat about the upcoming PJVA Conference and what the outlook looks like for 2017. Some complimentary appetizers will be provided as well as 2 draw prizes for some PJVA Swag!! Hope to see you there :)
Early Morning Session - Facilities 101
Please join us at the upcoming Early Morning Session on Tuesday, September 27th at the Petroleum Club where Rein Evelein will be providing an overview on his Introduction to Facilities course. Rein will use the EMS to present a small sample of the course material and discuss how it is geared towards providing an in depth look on both oil and gas facilities for individuals with non-engineering backgrounds.
The course is being offered at SAIT from September 27 to October 20, 2016 on Tuesday and Thursday evenings from 6:00 pm to 8:50 pm. It is also available online through the PJVA eStudies program effective September 1, 2016.
PJVA-CAPL Pad Site Sharing Agreement
"Doing Nothing is Not an Option"
On April 28, 2016, Draft #1 of the model PJVA-CAPL Pad Site Sharing Agreement (PSSA) was released for industry comment. This draft was the result of two years of industry consultation and collaboration, involving members of PJVA, CAPL, PASC, CAPLA and the AER. The PJVA and CAPL Boards endorsed the Task Force in 2015, with the objective of preparing a draft model PSSA. The drafting committee and Task Force spent a great deal of time 'going down rabbit holes' while discussing this draft, and I suspect some of you are exploring rabbit warrens too, while you review this draft.
We thank you for your time, and look forward to receipt of comments which will make Draft #2 a better document. The Task Force plans to have Draft #2 available for industry comment in early November.
First, what the agreement isn't
One of the key things in reviewing this agreement is to understand what it is not meant to do. It is not meant to cover 100% owned wells drilled on 100% owned pads, because to draft a contract with yourself would be redundant. It's also not meant for those jointly owned wells that are governed by a single land contract, as the land contract with its Operating Procedure, is able to deal with these Pads.
What it is meant to do
This document is meant to be used for those situations where the Pad Site will have a blended DOI resulting from wells that are drilled pursuant to more than one contract or a mix of a land contract and 100% rights. This is the foundational principle of this document, and is meant to address the gaps that are not covered on the Pad Site and shared facilities. The Task Force is of the opinion that the underlying land agreements do not adequately address the issues in these situations, and that there are significant gaps in terms of compliance with Prime Contractor legislation and adequate liability and indemnity protections with respect to activities anywhere on the Pad Site. The Task Force is of the opinion that a surface focused Joint Use or Surface Sharing Agreement will address some of the issues, but believes that these agreements fall short in terms of addressing construction and ongoing management of the shared facilities, cross indemnities, liability coverage, Prime Contractor legislation, etc.
The 80% solution
The PSSA model is meant to be an 80% solution, and the Task Force believes that it will address the typical Pad Site. The Task Force quickly realized that it was an impossible task to draft a model that could cover every conceivable situation (and others that couldn’t even be imagined in 2016), but our hope was to provide you with a good starting place that would allow easier customization for your own particular circumstances. We wish we could solve all the problems in the world with this model, but we're not that smart. So instead we started with a concept of a typical Pad Site based on a survey conducted among the member companies of the Task Force. The results of this survey had a typical pad site as 2 – 4 wells, with minimal capital expenditures on surface lease, road, pipeline and shared facilities, but with the combined capital for drilling and completing the pad site wells between $10MM - $100MM.
The model also provides a great starting point for those instances that don't quite fit the 80% norm. For those that don't fit the 80% solution, the model is a template which can be modified to fit the unique business case, and the detailed annotations will provide guidance for some of these situations.
A few of the contentious areas
1) Single Site Operator is an area that the Task Force knew would attract comments. The Task Force obtained a legal opinion regarding Prime Contractor legislation, spoke with HSE experts, consulted with AER, and all of these pointed to a Single Site Operator as being the logical recommendation for this model. In this way, the PSSA is similar to a Unit Agreement: the underlying land agreements and 100% interests continue to exist with its respective Operator, but the PSSA will appoint a single Site Operator for the Pad.
This doesn't prevent companies from entering into a different business arrangement, but the Task Force believes that companies should only do so when they understand the risks and complications of having more than one Operator conducting operations on the site. The most obvious example is having Operator A conducting a fracking operation while Operator B is conducting other operations on the same site. Multiple Operators, multiple drilling/completion equipment on site at the same time, responsibility for the single required Emergency Response Plan, etc., complicate the situation significantly. It exponentially increases the likelihood of problems to have more than one Site Operator, but in some cases it may make sense, and companies are free to customize the model to accommodate this in the context of their own known circumstances and in a manner in which they will satisfy regulatory Prime Contractor requirements.
Another alternative is that a party could also take out a second surface lease adjacent to the original Pad Site, and the second surface lease could have a different Site Operator.
2) Interaction with the Land Agreement is another area on which the Task Force expects to receive comments. We understand that using the PSSA to modify any rights and obligations under the land contract makes people uncomfortable, but it does work successfully with Unit Agreements.
Any party in the underlying land agreement can serve an Independent Operations Notice (ION), but only the Site Operator can conduct the operation on the Pad Site. In the vast majority of cases, the Site Operator will also be a WIO in the ION.
3) Accounting Issues is another area on which the Task Force expects comments. The PSSA allows parties to choose which vintage of PASC (1996, 2011, or some future version) to attach to the PSSA, and also incorporates by reference the Draft PASC Guidelines for Accounting for Shared Pad Site Costs. We encourage companies to review the PSSA in conjunction with the PASC Guidelines for Shared Pad Site Costs. The PSSA isn't meant to dictate which internal processes a company chooses to adopt for cost sharing, but these documents can provide some guidance.
Some companies may choose to set up a cost center for the PAD and allocate Pad Costs to it, while other companies may choose to push these costs to the respective wells on the Pad.
The Task Force looks forward to receipt of your comments on this industry draft. Draft #2 will be ready for industry comment by early November, with an expectation that the model be finalized in 2Q2017. Thank you for your input!
Lorraine Grant, Drafting Chair for the PSSA
Michael Bruch, Chairman for the PSSA Task Force
Jim MacLean, Drafting Committee
SAIT Celebrates 100 Years
Be part of history as SAIT celebrates 100 years! Join them on the October 15-16th weekend for a variety of activities, food and music for the whole family!
Volunteers in Action - Lee Wahl
Written by Risha Tedros, Energy Asset Management Student, SAIT
The Petroleum Joint Venture Association (PJVA) announced their new segment, Volunteers in Action, in the May 2016 JVViews newsletter. The Volunteers in Action monthly feature will recognize the accomplishments and dedication of select PJVA members. At PJVA, our intention is to create meaningful connections and rapport amongst our members. The Volunteers in Action articles will serve as the vessel to relate all PJVA members, whilst acknowledging the efforts and commitment of our Volunteers in Action featured members.
For the September 2016 edition, Volunteers in Action are pleased to present:
Lee Wahl
Lee Wahl, Country Manager, of the Canadian division of Kuwait Foreign Petroleum Exploration Company (KUFPEC) has been a PJVA member for eight years. His current position within KUFPEC is considered a presidential role for Canada.
KUFPEC is in 65 joint ventures and participates in 15 countries as an operator and partner. The company has acquired a joint interest with Chevron in an Alberta formation. The property is the first investment within North America, which Lee illustrates as an "exciting, mega project".
KUFPEC upstream values demonstrate a two-tiered investment of both strategic business advancements, and urban development for the Kuwaiti people. KUFPEC is a state-owned organization and applies resources to reinvest into technology and education. The corporate culture is aligned with the values that are true and dear to joint venture relations. As listed in the KUFPEC 33rd Annual Report, the values include: "Excellence, Flexibility, Partnership, Motivation, Commitment to HSSE and Society, One Identity and Integrity [1]."
Lee describes his role of Country Manager as the highlight of his career. He has utilized his education, work and volunteer experiences to cater to this riveting role. Lee is both representing Canada to the international subsidiary of the Kuwait Petroleum Corporation, and is the liaison to important Canadian political figures.
Lee is an Engineering graduate from the University of Calgary. His studies included Reservoir, Production and Frontier Engineering. The Country Manager position is stimulating because, coupled with his background, he is able to express his leadership qualities, administer his marketing knowledge and apply his joint venture understanding.
Personal Interests
During his personal downtime, Lee enjoys downhill skiing, water skiing, fishing, hiking and boot camp fitness sessions.
PJVA Involvement
Previous to his current role, Lee was the Manager of Joint Venture with Canadian Natural Resources Limited (CNRL). At the time, Lee was not an active PJVA member, but was approached and invited to join the PJVA board as the Social Business Director. He recounts the experience as "a meaningful relationship".
His dedication to and involvement with PJVA is commendable. Lee served as the Social Business Director for three years, Treasurer for two years and, subsequently, joined the executive committee. In the latter, Lee acted as the Vice President, President and Past President. He embraced each role and successfully carried out their responsibilities. He completed his term of Past President on June 30, 2016.
Lee continues to support PJVA by promoting the benefits of our social organization. PJVA is both a hub for joint venture information and a networking opportunity. Lee recommends individuals to involve themselves with associations that are representative of who they are. Networking and volunteer opportunities are fundamental to introducing your qualifications to potential employers. During the interview, Lee quoted a Chinese proverb "Luck is when preparation meets opportunity".
Lee associates his accomplishments and accolades with being part of PJVA. Many of his colleagues are members of the association and, collectively, they are able to work together and create examples of the best partnership practices in the world. The social and joint venture learnings are essential benefits from the PJVA membership. There are events and seminars, which are held frequently, for members to network and further their awareness of joint venture. Lee encourages members to become actively involved to experience the various rewards accompanied with their PJVA membership.
Significant connections are gained from PJVA. Executive and senior members constantly enthuse and encourage others within the association. Lee named his most influential connections as: Tim Reimer, Principal at Gas Processing Management Incorporated; Suma Mathew, Manager of Joint Venture at Talisman Energy; and Marcel Savoie, Joint Venture Representative at Cenovus Energy. Lee referred to the diverse panel on the PJVA board as a reflection of the positive strides made within industry. He mentioned, "As a board, we meet for a strategy session at the beginning of September to discuss the long term vision (for PJVA)." The educational courses, offered to members and individuals at Mount Royal University and SAIT, will provide PJVA with longevity as a not-for-profit volunteer organization.
Lee Wahl is a leader within the KUFPEC organization and as a Past President to the PJVA association. His outstanding professional achievements have been an asset to provide direction and vision for PJVA. The association continues to thrive and grow based on the volunteers that exemplify a strong commitment to showcase membership advantages. His contributions and expertise are essential to highlight to our members. We are thankful for his continued efforts with PJVA.
References
[1] "Values", Smart Growth KUFPEC 33rd Annual Report (2014), (n.d.), pp. 5
Upcoming Events
September 15, 2016 - September Luncheon
September 20-21, 2016 - JV Agreements Seminar
September 22, 2016 - Pub Night
September 27, 2016 - EMS Facilities 101
Social Media
@PJVA
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.