Energy Excellence Awards: Oilsands operational excellence frontrunners value collaboration as much as innovation

The second annual Energy Excellence Awards (EEAs) program, presented by the Daily Oil Bulletin, uniquely recognizes energy excellence and focuses on the advancement of collaboration within Canada’s energy industry.

The country’s oil and gas industry is entering what could be the most challenging period it has ever experienced. While the current COVID-19 crisis will undoubtedly touch each one of this year’s nominees, there may be no better time to celebrate the achievements of those developing the energy solutions for the future.

For 2020, the DOB received close to 90 nominations in four broad awards categories — Project Execution Excellence; Innovation & Technology Excellence; Exporting Excellence; and Environmental Excellence — recognizing work completed last year. The nominees were further broken down into 12 subcategories across the four groupings, before being judged by a committee of industry leaders.

From April 21 to May 6, we will be sharing the finalists in each of these subcategories. Today, we feature the best in Project Execution Excellence in the subcategory of Oilsands.

Special Note: Starting May 7, we’ll be hosting a series of special online webinar presentations to honour these companies and announce the champions in each category. Register here for these events.

Since SAGD became a commercially successful in situ oilsands production process — an engineering marvel in itself — producers have striven to increase efficiencies and reduce costs, often through industry partnerships that are unique to the sector.

Energy Excellence Awards finalists for project execution in the oilsands uniformly fit into this category, while showing a flair for innovation themselves.

Chipewyan Prairie Dene First Nation and Horizon North Logistics Inc., in partnership with MEG Energy Corp., epitomize collaboration in achieving project success in a way that also directly benefits local communities. Cenovus Energy Inc. heavily leveraged local company expertise to bring in an expansion project with industry-leading efficiency and cost reduction.

And plucky Greenfire Oil And Gas Ltd. accomplished what many in the industry thought couldn’t be done when it brought a shuttered SAGD project back to life after compiling a project team composed of experts who had gained expertise toiling for other companies over several years.

Greenfire Oil And Gas: Rising from the ashes

When the devastating Fort McMurray wildfire tore through the oilsands region in 2016 — destroying large parts of the city and at an estimated damage cost of $9.9 billion representing the costliest disaster in Canadian history — one overlooked casualty was one of the province’s oldest SAGD developments.

The fire took the Hangingstone SAGD project, then owned and operated by Japan Canada Oil Sands Ltd. (JACOS), offline. Low commodity prices and what JACOS viewed as an increased technical risk of re-start put the project into long-term suspension. In 2017, JACOS made the announcement that the project was to be abandoned, stranding the remaining resources in place.

Greenfire saw opportunity in the shutdown and acquired the asset. The startup was told the project would never be able to produce bitumen again — that the facility, the pipelines and the wells had been suspended and inactive for too long. That reservoir pressure would not be able to be re-established back to pre-shutdown levels. But it persisted.

Greenfire began a detailed technical review of the project and its infrastructure, which includes two central processing facilities, a six well pad with 24 well pairs and the associated pipelines, before beginning with recommissioning and re-start. Plant operations were re-established in September 2018, first steam was delivered in October, first production was established in November and first bitumen sales were in December.

The project was successfully brought back online after 900 days of suspension, the longest suspension experienced by any in-situ facility in Alberta to date, with no lost time incidents, no major environmental incidents and in compliance with regulatory and legislative requirements, the company said. This year, it is producing at over 5,000 bbls bitumen per day, which is comparable to pre-suspension levels.

“Greenfire has achieved what was said to be impossible in a time frame that many still find unbelievable,” the company said. “These accomplishments were all achieved on a junior, start-up energy company budget. Through operational efficiencies, strict financial controls and running at efficient staffing levels, Greenfire is relentless, profitable and is looking to further development at the project and across Alberta’s oilsands region.”

Greenfire, an employee owned and operated company, put together a team of SAGD experts that have been working in Alberta for most, if not all, of their careers. It said it considers its staff the cornerstone of its operational achievements to date. “Greenfire’s staff pooled their money, got a loan, bought an asset and have been working together towards one goal: ensuring company success.”

The company also established an equity partnership with a petroleum marketing company that provides distribution and transportation services for Greenfire’s bitumen product to various traders and end-user markets across North America.

Greenfire helped create a First Nations/Metis trucking company that is responsible for the transportation of most of its production. It was also key to reopening a local lodging facility that was previously shut down due to the recent downturn.

A company goal is to support local residents and companies by hiring local businesses within Fort McMurray, within the Regional Municipality of Wood Buffalo, and those that are First Nation/Metis owned and operated are considered first for all required services.

Chipewyan Prairie Dene First Nation Economic Development: Industry partnership pays community dividends

Oilsands producers have a long history of working with local First Nations to the benefit of both parties. MEG Energy’s partnership with the Chipewyan Prairie Dene First Nation (CPDFN) and Horizon North Logistics Inc. (HNL) is no exception.

The partners contracted a new company called Sekui Limited Partnership (Sekui means “home” in Dene), an equity-based partnership between CPDFN and HNL to manage the camp and catering services provided to MEG at its Christina Lake project site. Previous to the establishment of the new company and business model, CPDFN had mainly participated in MEG’s camp business via joint venture marketing partnerships and not via actual business ownership.

The business structure and lessons learned through the establishment and initiation of the new business at MEG allowed Sekui to better prepare for additional contract planning and proposals for submission to other operators to grow the business. It also allowed Sekui to purchase an open camp facility located within a community-owned business park and plan for future business development.

A performance-based contract was negotiated among the partners. The greater the level of success for the business against key performance indicators, the greater the profit and, subsequently, the greater the return back into the CPDFN for economic development and social programming.

The business provides opportunities for employment and training for CPDFN members and the profits earned are reinvested back into the community for furthering economic development along with funding social initiatives including youth education, day care, recreation, health and infrastructure.

“Keeping both business owners, not just the core camp and catering specialist, involved all along in the process and quarterly reviews resulted in greater motivation beyond corporate profits — it provided the mechanism for a direct social benefit as well,” said CPDFN.

The contract with MEG also provided a foundation on which Sekui could grow, as the company subsequently purchased an open camp facility and later won an additional camp and catering contract with another oilsands operator.

The focus on growing equity in the business rather than just revenue sharing has allowed for the development of greater business acumen among CPDFN management and is a model for future business development at the Nation, CPDFN added.

At the open camp, the Nation has tested business models for ancillary services to help broaden the service offering to clients and allow for greater integration and collaboration between Nation-owned business ventures, advancing the goal of increasing opportunity and raising the Nation out of poverty. Operating an open camp within the Nation-owned business park leverages one Nation-owned business opportunity to support another.

“MEG’s commitment to working with CPDFN and Sekui to identify additional economic development opportunities and ways to support other CPDFN business ventures resulted in viable businesses that now have the ability to take on additional contracts with other oilsands operators in the region, increasing the prosperity and potential for success for the Nation long-term,” concluded CPDFN.

Cenovus Energy: Setting new standards in SAGD cost control in tough times

In the perpetually cyclical oil and gas sector, booming times tend to lead to project overruns, while the inevitable downturns force companies to razor focus on reducing costs. In the most recent bust cycle, Cenovus led the pack in delivering its Christina Lake Phase G SAGD oilsands expansion project.

The project, which increased total installed production capacity at Christina Lake to 260,000 bbls/d from 210,000 bbls/d, was completed with industry leading full-cycle capital efficiencies of approximately $15,000 per bbl of capacity.

The expansion project was completed four months ahead of schedule and 25 per cent under budget, and achieved more than one million person hours worked without an incident.

The state of the industry in the economic downturn created unique challenges as it contributed to a distracted workforce due to job security concerns, Cenovus said.

The company undertook a number of initiatives to accomplish the expansion as efficiently and safely as possible. In its module assembly, for example, it requested proposals from assembly companies that targeted small- to mid-tier organizations with lower overheads and a willingness to innovate.

It worked with proponents to understand cost drivers via multiple working sessions (material availability, risk, schedule, overtime, yard costs), and it partnered with leading proponents to achieve a 40 per cent reduction in costs versus the previous phase.

In engineering the expansion, Cenovus partnered with mid-tier engineering organizations and focused engineering effort on templating the previous phase expansion to reduce engineering effort (template equipment, drawings and general streamlining of processes).

Construction indirect cost reductions were brought about by maintaining prime and general contractor roles for all construction and commissioning activities. Cenovus also worked with suppliers and field contractors to improve crane utilization through detailed planning and schedule compression, and it engaged with contractors of all disciplines to optimize and plan scaffolding.

Seasonal construction optimization involved minimizing civil and concrete activity in winter, and avoiding coating and major hydrotesting in winter months (tanks coating and hydrotesting, and high pressure system hydrotesting).

Cenovus also partnered with several Indigenous joint-venture organizations for the expansion, including Brock Canada Industrial Ltd. for scaffolding and insulation, NCSG for cranes and heavy-haul services, and Swamp Cats Ltd. for earthworks and site preparation.

Since 2009, Cenovus has spent nearly $3 billion with Indigenous businesses and continued to spend through Phase G, the company noted. It has nine long-term benefit agreements with Indigenous communities, four of which were stakeholders engaged on Phase G consultation and execution.

The majority of fabrication — comprising piping, equipment, structural and expansion phase module assembly — was performed locally as Cenovus focused on small- and medium-sized construction and engineering contractors based in Alberta.

The Project Execution Excellence awards category is brought to you by our Industry partner, Fluor Canada.

Since 1949, Fluor Canada has been involved in the engineering, procurement and construction of a wide range of energy related projects that are spread across the Canadian landscape. Throughout its 70-year history in Canada, Fluor has provided local, regional and international clients with full-service capabilities, which include economic evaluations, conceptual engineering, feasibility studies, program management, detailed engineering, procurement, transportation and logistics, modularization, fabrication, direct-hire construction, construction management, commissioning, start-up, operations and maintenance.

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