|Date Published||September 10, 2012|
|Article Author||Markham Hislop|
|Article Type||September 2012 Issue|
Rick Johnston remembers his first Lloydminster Heavy Oil Show well. The burly, baldheaded 53-year old production consultant was managing a field near Lost Hills, California. The oil was viscous, asphaltine-based with an API gravity of 12 to 14. How was he going to produce it economically? Fortunately, he worked for Nations Energy, a Canadian firm headquartered in Calgary that was familiar with the production techniques and technology used in the Lloydminster heavy oil fields.
One of his first tasks was to trek north to the 2002 Heavy Oil Show, where he discovered plenty of knowledgeable oil patch guys to answer his questions and plenty of equipment designed for fields just like his.
â€œI was mainly looking for a better way to pump,â€ Johnston says. â€œWhen it was cold that oil was like tar. We had to heat it up thermally just to get it to move. Pumping it was a huge problem.â€
What he also found in Lloydminster was a new approach to heavy oil extraction called cold heavy oil production with sand, or CHOPS. The idea is produce the sand with the oil, which is quite different than the predominant California thinking, which is to keep as much of the sand as possible in the reservoir. Producing the sand leads to much more oil production, but also a host of related problems, such as how to remove the sand from the oil and what to do with it afterward.
These were radical ideas for a California oil man. But what he learned at the Lloydminster Heavy Oil Show during his three visits helped set up a whole new way of heavy oil production that was unknown in the 100-year old oil field, located 40 miles north of Bakersfield and still a significant reservoir in California.
â€œThereâ€™s a big heavy oil industry in California, and obviously around Alberta and Saskatchewan, but the technology between the two doesnâ€™t always gets shared,â€ says Johnston. â€œAs an American I had to approach it with an open mind. We tend to think that everything that we do is absolutely the most correct way to do it, but thatâ€™s not always the case.â€
Johnston says every time he visited the Heavy Oil Show he saw more Americans, from states like Texas, Oklahoma, and Colorado which donâ€™t produce much, if any, heavy oil. It was the reputation of the show that lured producers from south of the border. And it wasnâ€™t just Americans who were coming in ever larger numbers. Mike McIntosh, chairman of the Lloydminster heavy Oil Show, says industry professionals from 16 countries are registered for the 2012 edition, which is scheduled for September 12-13.
â€œPrimarily we see there are quite a few American companies and then some South Americans who are
interested,â€ said McIntosh, who adds that even Middle Eastern producers are showing interest in heavy oil.
â€œIf you think of the Middle East where they could ignore heavy oil, now theyâ€™re starting to look into it. We need to look at the next step for those scenarios.â€
This is a big change from 1984, the first year of the Lloydminster Heavy Oil Show. Back in the old days
organizers wanted to keep the show small and easy to manage. The industry was in its infancy then and producers were still testing and developing how to best produce heavy oil. But as expertise grew with experience, and more and better technology was invented and perfected, the show slowly grew to its present size of around 6,000 attendees.
The reason foreign oil professionals are flocking to the show is that it has become the place to connect with world class technology.
Kirby Hayes is a veteran of the Lloydminster heavy oil industry. As a consultant heâ€™s worked with many of the producers and manufacturers that call Lloydminster home. He also sits on the oil show executive and helped organize the symposium that is a key part of the show. Sharing information is a critical part of expanding the industry, he says.
â€œI helped get the symposium held on the same days as the show. That was important because people who attend the show can sit in on some technical presentations on CHOPS,â€ he said. â€œTheyâ€™re a real good fit.â€
â€œThe educational component of the whole Lloydminster area has been a very significant underpinning to membership,â€ says Gerald Bruce, president of the Heavy Oil Association. â€œItâ€™s kind of like the real root foundation of the Heavy Oil Association.â€
Lloydminster is a real innovation hub, says Hayes, and the heavy oil show taps into local oil companies and equipment manufacturers.
â€œWe have the infrastructure and the established technology. The technology is well understood right now. Thereâ€™s been a lot of work and a lot of effort spent,â€ he said.
McIntosh, whose day job involves providing technical support for pumps to Weatherford International, says manufacturers bring samples of wares and potential customers can even head over to the factory to see how theyâ€™re assembled.
â€œWe donâ€™t specifically organize that but some of the suppliers and manufacturers try to do those types of things and several will be trying to have tours of the facilities where they can get people out to the actual well sites and show the equipment in action,â€ he said.
WHAT TECHNOLOGY ARE PRODUCERS LOOKING FOR?
Like Rick Johnston, many are looking for better pumping options. Around Lloydminster, that means
the progressing cavity pump, commonly known as a PC or screw pump. The PC pump wasnâ€™t invented locally, but it was adapted there for heavy oil extraction.
â€œOne of the predominant forms of artificial lift for heavy oil is progressing cavity pumps, so interest on the technology is spanning worldwide,â€ said McIntosh.
The PC is a positive displacement pump that transfers liquid by using an eccentric rotor that turns in the pump, creating small cavities that lift the fluid. PC pumps are especially suited to viscous fluids, which is why they caught on in heavy oil regions.
â€œThe thermal aspects of the technology are the big thing these days,â€ says McIntosh. â€œA lot of people are looking at it from a progressing cavity pump point of view. High temperature pumps are definitely something that all the manufacturers are currently working on.â€
The exhibitors list of the heavy oil show is chock full of local manufacturers, ranging from sand handling equipment (necessary because of the thousands of PC pumps used in the region) to electronic data collection and pump control (required because PC pumps must operate within a certain RPM and torque range) to special tanks (sand, again) and competing pump designs.
â€œThereâ€™s quite a bit of manufacturing here in town that the productâ€™s developed here and going all over the world,â€ partly due to the exposure offered by the Lloydminster Heavy Oil Show, says McIntosh.
Those manufacturers and service companies, along with the oil companies, are the backbone of the Lloydminster economy. Mayor Jeff Mulligan understands that as heavy oil goes, so goes the local tax base. He thinks of himself as an oil guy, someone who understands the local industry, both producing and manufacturing. He rhymes off four or five innovations developed in Lloydminster like he was reciting his postal code.
â€œWhen I see us exporting to Venezuela, transporting these technologies to Yemen and other places it makes you pretty proud, but more importantly, as these companies evolve and grow and are bought out by bigger firms, weâ€™re seeing those funds invested right back in our community,â€ he said.
Mulligan sees the Lloydminster Heavy Oil Show as a critical part of that process and says the City will do what it can to support the showâ€™s growth.
â€œLloydminster is the heavy oil capital of Canada, if not the world, and since I became the mayor three years ago I have been working hard for us to be a world class event hosting location,â€ he said.
â€œWeâ€™ve been brokering the right people together to make sure that all of the facility requirements are met, all of the venues are made available and we try to make sure in the process that whatever theyâ€™re going to need, from permits to security and special accesses are provided as efficiently as possible.â€
The show is almost certain to grow because of the increasing global interest in heavy oil, according to McIntosh.
â€œAt some point what the worldâ€™s going to need for oil and what the worldâ€™s going to be able to supply, itâ€™s going to be challenged and the heavies are going to have to play a bigger and bigger role in that future supply,â€ he said.
Bruce foresees a significant increase in heavy oil production over the next 10 to 15 years. He notes that the annual oil and gas production forecast from the Canadian Association of Petroleum Producers pegs 2011 production at 1.6 million barrels, destined to double to 3.04 million by 2020 and triple to 5.1 million by 2030. Much of that increase will come from the oil sands and SAG-D production, but Lloydminster and area will probably see an increase in production, too. More emphasis on heavy means a continuing high profile – and high attendance – for the Lloydminster Heavy Oil Show.
WHERE IS THE SHOW GOING IN THE FUTURE?
Itâ€™s run by volunteers, explains McIntosh, so slow and steady grow is the order of the day. Organizers have spent the past couple of years bringing the show into the digital age.
â€œA few years ago we didnâ€™t have a website. Now not only do we have a website, we have it set up so you can pre-register for your showpass online so that when you arrive at the show your showpass is waiting for you,â€ he said.
McIntosh and his team have made things easier for this yearâ€™s participants.Â â€œSome of the changes weâ€™ve seen from our end is we try to learn a little bit every year and try to adapt a little bit,â€ explains McIntosh. â€œI guess you could take it smarter and thatâ€™s what weâ€™ve tried to do this year.â€
The next step is to improve marketing. Attendance has plateaued for the past few years. The executive would like to see it begin to grow again, albeit at a manageable rate.
â€œWe try and get the word out domestically and internationally,â€ adds McIntosh. â€œWe know for sure from a potential exhibitor that some of the marketing that weâ€™ve done have actually been working so weâ€™re hoping that translates to more visitors coming through the door.â€
Mulligan says that the City has recently moved its economic development functions out of city hall into a stand-alone corporation, partly to foster a stronger relationship with the heavy oil show.
â€œProbably not this year, but the next time the Lloydminster Heavy Oil Show rolls around well have a much stronger operating partnership,â€ he said.
The heavy oil show seems to be an important part of an already strong partnership with oil companies, local manufacturers, the Heavy Oil Association and the municipality. And that relationship is paying big dividends for the partners as high prices and dwindling convention production raises heavy oilâ€™s international reputation. That international profile will keep attracting more and more oilfield professionals like Rick Johnston, who says Lloydminster was one of the best shows he ever attended.
â€œIâ€™ve had a very positive experience with the show. Everybody was very friendly and very knowledgeable,â€ he recalls. â€œNinety-eight per cent of it was relevant to my operations and that made the long trip very worthwhile.â€
High praise, indeed, for a show that started with a few local volunteers and has now grown into the premier tradeshow and symposium of its kind in the world.