Leadership for Energy


 


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Introduction


The energy service sector is facing a crisis unlike anything it has ever experienced before. New ideas and new business models are necessary to move the industry forward and to provide stability to the sector.
 
The energy service sector is in search of new leadership but, more importantly, it’s in earnest pursuit of a trade association that will provide real value to their business. A trade association that will work to reduce or eliminate inefficient regulations, standardize best practices, and fundamentally reduce operating costs and challenge hostile opposition. The industry needs a trade association that is not only focused on the macroeconomic obstacles and existential threats but is committed to resolving its day-to-day challenges.
 
NEWCO [name to be confirmed] roots are founded in the rich history of the Canadian Association of Oilwell Drilling Contractors (CAODC). The CAODC has played a vital role in the drilling and well-servicing industry since 1949. Over the years, the benefits of membership have helped form the foundation for what has become a world-leading industry renowned for its people, processes, and technology. Its hard-working volunteers from past and present have helped create tremendous value for the sector. Today, this same leadership and successful trade association model has been expanded to establish a more inclusive and influential energy service sector in Canada.

NEWCO will not be all things to all energy service companies. Instead, it will be intentionally and strategically selective in the types of energy service companies it serves to maintain a focused and disciplined operation. Its primary objective is to maximize its value proposition through a customer intimacy business model dedicated to supporting energy service companies operating on or near the wellbore.
 
NEWCO will provide a full-service offering to energy service companies from within the land drilling rig, service rig, drilling & completion service sectors. Through NEWCO’s unique governance structure, each membership sector will have the resources to effectively and collectively address their specific industry challenges. Other businesses, including energy service companies outside of the specified industry sectors such as explorers and producers, financial institutions, engineering, and manufacturing, are encouraged to join the organization as Affiliate Members.
Chart 1: Membership Sectors

Membership Sector Definition

Land Drilling includes an inventory of specialized equipment, when synchronized properly together, used to drill a wellbore through geologic formations at depth and prepare it for completing for the production or injection of fluids.  Primary functions of a drilling rig include handling, lowering, hoisting and rotation of bottom hole assemblies and/or drilling strings; preparation, pumping and recovery of drilling fluids; well control; and running of casing strings. Drilling rigs are operated by personnel who are capable of operating the specialized equipment with due care and diligence, in a good and workmanlike manner and in accordance with good drilling practices.

Service Rigs includes a mobile or skidded service unit, composed of a derrick, drawworks and capable of pulling and running jointed tubulars and conventional sucker rods, as well as attendant support vehicles such as pump trucks, winch trucks, portable doghouses (crew change facilities) and a rig manager’s vehicle.

Drilling Services consists of companies that provide a service to the drilling phase of an oil or gas well. These companies provide equipment and services prior to the drilling rig arriving on location, specialty drilling rigs or they are typically run in conjunction with a drilling rig. Specific examples include pre-set rigs, conductor rigs, coring rigs, cementing services, drilling fluid services, directional drilling services, wireline services and fishing services. A preset, conductor and coring rig is typically a truck mounted mobile unit with an attached mast and auxiliary mobile buildings with a shallower depth rating than a standard drilling rig. Cementing service contractors own and operate equipment to perform primary cementing services on oil and gas wells. This includes proprietary cement blends, pumping units, bulkers and silos. Drilling fluid services includes companies that provide specialty chemicals and technical services related to drilling fluid or ‘mud’. The main purpose of the mud is to provide hydrostatic pressure in the wellbore, keep the bit cool and remove cuttings from the well. Directional drilling services includes companies that employ and provide technical professionals to develop well plans as well as run Measurement While Drilling (MWD) and Logging While Drilling (LWD) tools, mud motors, monels, At-Bit Inclination (ABI) tools and rotary steerable systems for the purpose of drilling a deviated or horizontal well. Wireline services includes companies that employ and provide technical professionals for the purpose of logging an open or cased well, interpretation of logs and for fishing operations. A specialized mobile unit with a winch and electrical cable is used to lower logging tools into the wellbore for formation and casing evaluation or, for specialized fishing tools. Fishing services manufacture and provide specialty tools and skilled professionals to retrieve junk, debris and other items from the wellbore. Examples include but are not limited to hand tools, tong dies, twisted off drill pipe, lost directional assemblies, lost Bottom Hole Assemblies (BHA’s), etc. A coiled tubing service is defined as a mobile unit consisting of an injector head, coiled tubing reel, control cabin and power generation equipment used for drilling, workover and stimulation activities.

Completions Services consists of companies that provide a service to the initial completion and/or well servicing phase of an oil or gas well. These companies are specifically engaged in flush-by and rog rigs, coiled tubing services, hydraulic fracturing services, snubbing services and completion/frac tool services. Flushby and rod rigs are light weight units that typically consist of a mast and drawworks and are capable of pulling and running sucker rods and rod pumps as well as pumping fluids into the well. A swab rig uses a foldable mast and winch to run swabbing tools in the well for the purpose of removing fluids from the production zone. A coiled tubing service is defined as a mobile unit consisting of an injector head, coiled tubing reel, control cabin and power generation equipment used for drilling, workover and stimulation activities. Hydraulic fracturing service contractor owns and operates equipment to perform well stimulation services by pumping specifically designed fluids at high pressures and flow rates into a reservoir to initiate vertical fractures in an effort to increase well production. Snubbing Services are companies that provide equipment and employ skilled professionals to conduct snubbing operations on a live well. Snubbing is defined as forcing a drill string or other tubular into a well against wellbore pressure utilizing specialized BOP components to safely contain wellbore pressure and fluids. Completion/frac tool services employ technical professionals that design, engineer, manufacture and run specialty completions tools including liner hangers, debris seals, tubing hangers, multi-stage completions tools, multilateral systems, packers, frac plugs, frac ports, frac sleeves, and other fracturing systems. Wireline services includes companies that employ and provide technical professionals for the purpose of logging a cased well, interpretation of logs and for fishing operations. A specialized mobile unit with a winch and electrical cable is used to lower logging tools into the wellbore for casing evaluation, perforating or, for specialized fishing tools. Fishing services manufactures and provides specialty tools and skilled professionals to retrieve junk, debris and other items from the wellbore. Examples include but are not limited to hand tools, twisted off pipe, tubulars, cables, etc. Cementing service contractors own and operate equipment to perform remedial cementing services on oil and gas wells. This includes proprietary cement blends, pumping units and bulkers.

Note, some of these companies would fall under both categories, however membership would be based on the primary source of revenue for the company (coil tubing, fishing, wireline and cementing services). 


Vision & Mission



NEWCO will be the most influential trade association in the Canadian energy industry. It will be passionately devoted to serving the collective interests and long-term sustainability of its members.

The Association will intimately understand the needs of its members. It will be the trade association of choice for energy service companies in Canada. NEWCO will identify emerging challenges and opportunities in Canada through its grassroots committee infrastructure and communicate the same to key stakeholders, especially to government policymakers.

A membership in NEWCO will be an investment that will deliver monetary value exceeding the cost of joining.

NEWCO will have direct access and influence within the government and other key stakeholders to promote a business-friendly regulatory environment designed to improve profitability, lower costs, and advance operational excellence. The Association will advocate to self-regulate, wherever possible, and promote standardization and accountability within its membership.

NEWCO will:

  • Represent an inclusive constituency of energy service companies within a single energy trade association at a reasonable cost to business;

  • Have a government relations strategy focused on increasing industry activity and reducing operating costs through regulatory efficiency and standardization; and

  • Advance new business lines for energy service firms in a realistic and manageable energy transition.

Membership Benefits

The following highlights the significant advantages NEWCO will provide members:


Industry Planning & Development

Participation on the Board of Directors

The Board of Directors is a governance board. It will include a diversity of core competencies and members to ensure broad representation and good governance. The Board will consist of no more than twelve (12) directors serving a two (2) year term. The Board will not deal with specific industry operational issues but instead will focus its time on legal & fiduciary, policy development, financial reporting & monitoring, CEO performance & succession planning, board recruitment, orientation & evaluation, strategic outcomes, and risk management issues. The primary decision-maker i.e. CEO within a member company can stand for election and serve the collective interests of the industry.

Participation on the Industry Council

The Industry Council will bring primary decision-makers i.e. CEOs together to discuss emerging industry issues. It will provide strategic feedback to the Board of Directors and encourage broad collaboration within the membership. The Industry Council will have a direct two-way, collaborative and informative relationship with the Sectorial Executive Committees (SECs) and the Board of Directors. It has the authority, within the overall strategic plan of NEWCO, to:

  • Appoint individuals to serve on the Sectorial Executive Committees (SECs);

  • Identify and discuss the strategic interests within each of the membership sectors; and

  • ​Inform the Association’s overall strategic and operational plans.



Participation on the Sectoral Executive Committees

There are six (6) Sectorial Executive Committees (SECs) representing NEWCO’s six (6) membership sectors and comprised of senior decision-makers from within the membership. The SECs will provide leadership to their respective membership sector and are the final operational decision-making bodies. The SECs have the authority, within the overall strategic plan of NEWCO, to:

  • Standardize industry best practices;

  • Develop industry resources such as training and operational guidelines;

  • Establish recommended minimum field wages;

  • Develop a standardized master service agreement (MSAs) if one is not currently available; and

  • Communicate business intelligence as needed.

Participation on the Sectorial Operation Committees

The Sectorial Operation Committees (SOCs) are the lifeblood of NEWCO and report directly to the SECs. The SOCs have two primary purposes. The first is to investigate and exchange valuable information about current and future risks and opportunities within the membership and report the same to the SECs. The second is to take direction from the SECs and help execute NEWCO’s operational priorities.
The SECs are comprised of subject matter experts within the membership in the professional fields of accounting, taxation, legal, contracts, health, safety, engineering, operations, transportation, and training. Together, these committees engage and educate members about regulatory changes, develop best practices and standards, and advance the industry in the following three (3) strategic areas:

Business Environment – In conjunction with other industry partners, influence public and industry policy to help create a healthy and favourable business environment for members.

Operational Excellence – To maintain a flexible and nimble structure that anticipates and responds quickly to opportunities to improve safety and operational excellence and lower the costs of doing business for members.

Reputation Management – To promote and enhance the reputation of its members and the industry to all stakeholders.



The following provides a detailed list of the SOCs and the activities they perform:

Engineering & Technical Committee​

  • Standardize the methodology surrounding the inspection, repair and certification of equipment;

  • Recommend amendments to legislation that benefit members;

  • Provide a forum for mutual assistance to fellow members in applying the principles of equipment inspection, repair and certification;

  • Provide communications support as it pertains to engineering and technical issues;

  • Provide consensus on issues that affect member companies and their employees in the areas of equipment inspection, repair and certification;

  • Develop Recommended Practices as required; and

  • Review, revise, reaffirm or withdraw current Recommended Practices every three (3) years.

Transportation Committee

  • Monitor and review industry transportation practices and regulations;

  • Recommend amendments to legislation that benefit members;

  • Provide a forum for mutual assistance to fellow members in applying the principles of safe transportation;

  • Provide consensus on issues that affect members and their employees in the areas of safe transportation;

  • Develop information bulletins and stakeholder communications; and

  • Provide communications support as it pertains to transportation issues.

Health, Safety & Training Committee

  • Report on health, safety and training strategies and recommendations;

  • Coordinate industry input on health, safety and training policies and initiatives, including interfacing with the appropriate regulators as needed;

  • Make recommendations on industry priorities to improve safety performance;

  • Promote engagement and consistency on health, safety and training issues; and

  • Actively support Energy Safety Canada (ESC) as the industry’s leading advocate and leading resource for continuous improvement of safety performance.

Accounting & Taxation Committee

  • Monitor and review industry accounting and taxation practices and regulations;

  • Recommend amendments to legislation that benefit members;

  • Provide input when required to the application of accounting and taxation rules and regulations; and

  • Provide communication support as it pertains to accounting and taxation issues.

Legal & Contracts Committee

  • Review common legal and contract issues;

  • Provide communication support to members as it pertains to legal and contract issues; and

  • Develop and monitor the Master Service Agreements (MSA).



Representation on External Committees

The members of NEWCO are represented through NEWCO’s executive team at external committees and industry groups where decisions could impact the industry. These groups, both governmental and non-governmental, have significant influence over the industry. The objective of NEWCO is to participate and lobby for outcomes that benefit members. The following list details some, but not all, of the groups NEWCO monitors:

Canadian Council of Motor Transport Association (CCMTA) 

The CCMTA provides collaborative leadership in addressing Canadian road safety priorities and includes a Compliance and Regulatory Affairs Committee, which is responsible for compliance activities related to commercial drivers and vehicles, transportation of dangerous goods and motor carrier operations.

Drilling & Completion Committee (DACC)

The DACC is responsible for the development of recommended technical operating practices for the upstream oil and gas industry in the areas of drilling, completions and servicing of wells. The primary focus of DACC is to develop sector recommended practices (IRPs), where the objectives include cost efficiencies, optimization, productivity, safety and environmental performance.

Clean Resource Innovation Network (CRIN)

The CRIN is a network of industry professionals, universities, research institutions, governments and innovators committed to the success of the hydrocarbon energy sector.

Energy & Mines Ministers’ Conference (EMMC)

The EMMC is an annual gathering of federal, provincial and territorial ministers to discuss shared priorities for collaborative action to advance energy and mining development across the country.

Energy Council of Canada (ECC)

The ECC brings together senior energy executives from industry and government engaged in national, continental and global energy activities and issues to share in strategic thinking, dialogue, collaboration and actions around energy matters in Canada and abroad.

Modern Miracle Network (MMN)

The MMN is a citizens’ group concerned about Canada’s future prosperity with its mission to effectively shift the conversation surrounding energy to one that recognizes, celebrates, and embraces the miracle of modern hydrocarbons in Canada.

Multi-Industry Association Committee on Transportation of Dangerous Goods (MACTDG)

Sponsored by the Chemistry Industry Association of Canada, the MACTDG represents members’ interests on a range of issues, including access to materials, energy, transportation, taxation, trade and regulatory efficiency.

Pacific Northwest Economic Region (PNWER)

PNWER provides a cross-border forum to coordinate provincial and state policies, enhance the competitiveness of the region in both domestic and international markets, and leverage regional influence in Ottawa and Washington D.C.

Alberta Energy Regulator (AER) Regulatory Efficiency Council

The Regulatory Efficiency Council is a senior-level committee that focuses on reducing regulatory burden across the Alberta regulatory system.

Energy Safety Canada Representation

NEWCO is an owner of Energy Safety Canada (ESC) and influences its strategic and operational priorities. Moreover, it has representation on the ESC Board of Directors, the Advisory Councils (British Columbia, Alberta, and Saskatchewan), and the Safety Standards Council (SSC).


Business Intelligence & Learning Exchange

Industry Statistics Collection and Analysis

NEWCO collects and distributes land drilling and service rig activity data. The data is reported by land drilling and service rig members on a daily and monthly basis and includes the status of rigs, i.e. moving, drilling, down, and provides a barometer of the health of the industry. The data is in high demand by market research analysts, government policymakers, and industry professionals. NEWCO has a scalable database that can be made available to collect additional industry statistics from other membership sectors.

Speaker Series & Industry Events

NEWCO can attract leading public speakers to engage the membership on relevant and timely industry topics at a reduced cost. These events provide members with critical intelligence needed to make informed business decisions and to provide professional development for their staff. Moreover, NEWCO can use its influence to promote the value of the sector to the investment community.

Examples:

  • Leadership & Sales/Marketing Training

  • Energy Services Investment Symposium

Access to In-the-Know Association Staff

The business model of NEWCO is one that is centred on customer intimacy. The staff of NEWCO have an in-depth understanding of the regulatory and business environment in which its members operate and can provide meaningful direction to members.


Standardization & Industry Best Practices

Recommended Practices

Through the development of Recommended Practices (RPs), NEWCO will strengthen the industry’s ability to self-regulate. RPs foster more efficient and effective operations by standardizing and documenting industry best practices for the benefit of all members.

Minimum Recommended Wages

The Association reviews the wages from several different trades and occupations and surveys the membership before making a recommendation. The Wage Schedule is voluntary; however, it provides an informative benchmark for members.

Master Service Agreement (MSA)

The Master Daywork Contract and Master Well Service Contract were developed nearly two decades ago for land drilling and service rig members. These contracts provide the most equitable split between risk and liability for members and eliminate a large portion of required legal counsel for repetitive services, permitting both parties to make minor adjustments. As such, liability risks are discussed ahead of any potential challenges resulting in better communication and customer relations between all parties. NEWCO will support the development of similar agreements for use by other membership sectors.


Public Advocacy/Government Relations

Direct Access to Government Policymakers

One of the most salient membership benefits through NEWCO is the unified voice to regulators and policymakers in a non-partisan style. NEWCO helps members effectively work with governments by providing a single point of contact. Relevant technical and industry information is gathered from committee experts and then communicated through the Association to policymakers so they can make informed decisions on industry policy. Understanding member perspectives help ensure regulatory bodies are not imposing unfair, costly, or technically inaccurate requirements on industry. Moreover, it allows members to stay anonymous, directing policy concerns and questions through the Association.

Examples:

  • Alberta, Saskatchewan, and British Columbia, Well Remediation Program (WRP) Advisory Council

  • Day on the Hill (Victoria, Edmonton, Regina, Winnipeg, St. John’s, Ottawa)

Regulatory Relief and Harmonization

NEWCO will negotiate and establish, at the direction of the SECs, regulatory permits and concessions to reduce unnecessary regulatory costs and strengthen the industry’s operations competitiveness. These permits include Transportation of Dangerous Goods (TDG) permits and Transportation MOAs with federal and provincial governments. Moreover, NEWCO will target specific regulations to harmonize across affected provincial jurisdictions to make cross-border operations more efficient.

Public Advocacy

NEWCO will advocate on behalf of members and the industry in areas of strategic importance such as public perception, recruitment, education, and issues management. Accurate information about the oil and gas services industry in Canada and abroad is critical. It helps promote a balanced and responsible conversation in the public sphere, foster favourable opinion, support government relations strategies, and attract and maintain a healthy labour pool.

As an example, since February 2016, the Oil Respect campaign has been standing up for the Canadian oil and gas industry from coast to coast to coast. Oil Respect advocates directly to provincial and federal governments and regular Canadians. It addresses the misinformation and half-truths about the industry, giving oil workers and their families a voice and letting Canadians know about the value of the oil and gas industry. As part of the campaign, the campaign successfully lobbied the Alberta Government to recognize February 13 as Oil and Gas Celebration Day formally. In September 2016, Oil Respect tabled the most signed e-petition in the history of the House of Commons. The petition collected almost 35,000 signatures and called on the government to stand up for oil and gas families and to make pipelines a national priority.


Real Value, Real Savings, Real Results

The following examples highlight the effectiveness of having a focused and disciplined association. Under the leadership of CAODC, real value and real savings were delivered to drilling and service rig contractors through direct cost relief and targeted regulatory advocacy. The same successful model will be deployed on a larger scale through NEWCO supporting a stronger and more competitive industry in Canada.

CAODC Legacy

The CAODC is proud of its history and has played a vital role in the drilling and well-servicing sector since 1949. Over the years, it has helped form the foundation for what has become a world-leading industry renowned for its people, processes, and technology.

The milestones CAODC has accomplished through its philosophy speak for themselves. Together, the industry can build upon this record during these unprecedented times. 

The following are just a few of the CAODC's historical achievements:

1968 CAODC designs the first Blowout Prevention (BOP) course, bringing a new level of safety to the Canadian energy industry.

1994 CAODC introduces Recommended Practices for drilling and service rig equipment, bringing a new level of standardization to the energy industry. 

2001 CAODC introduces the CAODC/CAPP Standard Daywork Contract, managing risk in the energy industry and promoting investment and certainty.

2004 CAODC introduces the Rig Technician trade, promoting worker development and leadership to ensure Canadian energy is the most responsibly produced anywhere.

2010 CAODC obtains a Federal Hours of Service exemption, permitting service rigs to use tour sheets as log books.

2016 CAODC launches the Oil Respect advocacy campaign to help raise national awareness for the many benefits of Canada's oil and gas industry.

2018 CAODC negotiates the only carbon tax exemption in the industry with the Notley Government for its service rig members in the province of Alberta.

2019 CAODC signs a new Transportation MOA with Alberta and Saskatchewan to harmonize transportation regulations and reduce red tape.

2020 CAODC successfully lobbies the federal government to fund the closure of inactive wells across western Canada.

2020 CAODC negotiates the Geothermal Collaboration Network with Clean Energy Canada, Canada's most influential green energy lobby, to put rigs back to work.


Conclusion

The Canadian energy industry is at a cross-road, unlike anything we have ever experienced. Today, smart and strategic decisions are necessary to ensure our industry's long-term success.

Over eight decades, the Canadian Association of Oilwell Drilling Contractors (CAODC) has successfully promoted the world's premier energy service industry. Although we are looking at an uncertain future, we are excited to explore new ideas and new business models to move the industry forward. 

I am excited to share with you that the CAODC is pursuing an open and transparent strategic review to discuss the evolution of the industry and its future needs. We know that our industry must adapt to a new reality, and our Association is responding accordingly. We have a responsibility to collaborate with industry leaders and to chart a new course for our world-class industry. But we cannot do it without you.

The CAODC is focused on strengthening the service sector and is always interested in speaking with partner associations and industry leaders to find common ground. We will engage with every energy company in Canada that wants to build a more resilient future for our sector. 

Together, we have an opportunity to create something new and bold. As part of our strategic review, we have identified gaps in how the energy industry advocates for itself with all levels of government, collaborates and works together, and promotes innovation and entrepreneurship. One option is to strategically expand our membership to energy service companies operating on or near the wellbore.

We see an opportunity to give likeminded companies a stronger voice by modernizing our Association, but remaining devoted to reducing inefficient regulations, standardizing best practices, and challenging hostile opposition.

Together, we will establish an association that is tirelessly in pursuit of improving the Canadian business environment so that industry is more profitable and its operations safer. More importantly, NEWCO will be an investment, delivering unmatched value to its members.

NEWCO will intimately understand the needs of its members and will be the trade association of choice for energy service companies in Canada. It will passionately defend the interests of members and work with government of all political stripes to advance its objectives. 

We want to include you.

We want to listen to you.

We want to learn from you.

We will chart this journey together, and fight for what matters most, a strong, respected, resilient, and influential Canadian energy services sector.

I look forward to hearing your feedback.

Together, we will make a difference.

Mark A. Scholz
President & CEO
CAODC
mscholz@caodc.ca
(403) 264-4311


"The best way to predict the future is to create it."
-Abraham Lincoln-


 






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