Thursday, 30 June 2016
By David Yager - Yager Management
Published: EnergyNow Media
Published: EnergyNow Media
Tuesday, 21 June 2016
Friday, 17 June 2016
By: Gordon Jaremko
Former editor of Oilweek and a member of the Canadian Petroleum Hall of Fame.
Court raises respect, but not pay, for geoscientists
The Court of Queen’s Bench of Alberta says a specialty regarded for generations as a geek branch of industry – nicknamed human computers and doodlebuggers – deserves greater respect. A spring judgement declared geophysicists’ portrayals of subterranean structures worthy of copyright as creative masterpieces.
But the decision stopped short of awarding a pay increase. Earth scientists still have to settle for their costly work being defined as public art and made available for others’ use, free of charge, to the degree that government control of natural resources includes compulsory disclosure to regulatory agencies for release to prospectors.
Oil and gas exploration firms hung on to free access to Canadian offshore and northern geological treasure maps in the landmark court ruling.
Federal disclosure requirements, under legislation and regulation dating back to 1950, trump copyright recognition, ruled Justice Kristine Eidsvik.
Geophysical Service Inc. (GSI) immediately moved to overturn the verdict in the Alberta Court of Appeal.
Eidsvik’s verdict covered 25 lawsuits that GSI launched against regulatory agencies, seismic information distributors and a roll call of producers from Encana, Devon and ExxonMobil to Husky, Statoil and Suncor.
GSI, a private venture owned by Calgary’s Einarsson family, claimed ownership of Canada’s largest seismic data warehouse. The treasures include a multi-million dollar library of information about Atlantic seabed oil and gas prospects.
After a lengthy trial, Eidsvik agreed that the status quo is hard on geophysical surveyors, but the case suggested that the crusade for permanent intellectual property rights, to keep results of the science confidential far into the future and always charge industry for viewing the reports, belongs in the political arena.
“The regulatory regime has confiscated the seismic data created over the offshore and frontier lands, and the Canadian Petroleum Resources Act is not apologetic for it – indeed, it makes clear that there is no compensation for any confiscation,” said the verdict.
The regime requires surveys to be filed with the Nationals Energy Board and the Nova Scotia and Newfoundland offshore petroleum boards. The agencies make the costly reports available for free after protected periods of five to 10 years. The system is designed to help attract industry activity, starting with requests for leases of drilling prospects. A pure copyright regime would enable survey firms to demand payment for 50 years or longer.
Eidsvik noted that parliament heard the earth scientists’ commercial concerns while enacting the mid-1980s legislation that established the current disclosure code.
“There is a great deal of expense, effort and risk in developing speculative seismic data for license, yet the cost of duplicating the produced data is very small,” Eidsvik observed.
Her verdict included a quotation from a 1980s expert witness who described an early version of the property rights crusade that had its day in her courtroom 30 years later.
“This becomes an emotional issue when upper management of a seismic survey house is approached and asked to spend so many millions of dollars on a survey, and there is an element of chance in terms of making their money back. They know full well that the government will release the a in five years and that, after three or four years, potential survey buyers will realize that in another year or two they will have free access to that information,” the expert told Parliament.
“GSI was fully aware that some of its data would have to be summited and that it would be made public when it undertook its work on these offshore and frontier lands,” said the Queen’s Bench judge in her 74-page verdict. “It is perhaps true that the provisions for submission have become more onerous over time and that the quality of the materials submitted have become better, further encroaching on GSI’s ability to license its data to others, but the provisions have always been there. Unfair as this may seem, it is not for this Court to re-write the legislation comprising the regulatory regime.”
GSI insisted it only filed its material with Canadian regulatory agencies after being assured its intellectual property rights would be respected.
GSI said it has uncovered “evidence of hundreds of instances where the offshore boards were making copies for third parties, scanning data, disclosing image files, sending data to be copied on behalf of third parties and further disclosing data to third parties, undermining the commercial value.”
The Queen’s Bench verdict assures Canadian and international gas and oil hunters that, at least for now, they are complying with the accepted status quo. It will be up to higher courts, or maybe parliament, to say otherwise about the regulatory agencies.
By: A Chemist in Langley
Wednesday, 15 June 2016
By: David Yager
Published: JWN Energy
Follow us: @jwnenergy on Twitter
Published: JWN Energy
The collapse of oil and gas prices has forced oilfield service (OFS) managers to dramatically slash costs. It’s survival. The short-term impact on workers and companies is already well known. The long-term damage will be determined.
The three main OFS trade associations—Petroleum Services Association of Canada (PSAC), Canadian Association of Oilwell Drilling Contractors (CAODC) and Canadian Association of Geophysical Contractors (CAGC)—have not been spared. Revenue from membership renewals and other sources of income have fallen sharply, forcing operating budgets of about half of what they were in better times. While this is appropriate given the current economic environment for member companies, at some point these organizations must consider their own futures.
And so should the OFS as a whole. The incredibly important work OFS trade associations perform on behalf of the entire sector versus the number of OFS companies providing financial support has been a mismatch for decades. Losing these important voices would be terrible.
Although no hard numbers exist it is estimated there are as many as 10,000 OFS operations of various sizes and disciplines across the Western Canadian Sedimentary Basin. Including incorporated consultants, that number could easily double and possibly triple. They range from the well-known, publicly traded global giants to a myriad of owner-operators with a single water truck or backhoe. They are in every oil town from southwestern Manitoba to northeastern B.C., from the 49th parallel to Norman Wells, N.W.T.
They all do essentially the same thing, which is trade oil companies goods, services or expertise for money. Big or small, all OFS operators work within the same macroeconomic drivers of commodity prices, royalty rates, taxation levels, interest rates, property taxes, fuel taxes and oil company spending. They must all comply with the same federal, provincial and municipal regulations on everything from employment standards to health and safety and transportation of dangerous goods. There is only one Canadian oilpatch and only one set of government operating regulations, regardless of the size of the operator or whether management regards supporting trade associations as a worthwhile investment.
The largest single contribution these associations have made is forcing politicians and regulators to understand that Canada’s oilpatch is much larger and more complex than just the big, bad, wealthy oil companies making too much money at the expense of consumers and taxpayers. Governments have proven time and again they used to write energy policy affecting producers in a vacuum and only later discover massive collateral damage to the extensive OFS supply chain.
Today, no government makes major policy decisions regarding the oil and gas industry without consulting PSAC, CAODC and CAGC. Alberta’s recent royalty review is proof. Government today has no time to engage with hundreds of individual companies. Politicians, regulators and bureaucrats prefer working with consensus views from industry trade associations. Most of this work is done behind the scenes, fine-tuning the myriad regulations affecting the day-to-day operations of everybody in the business.
As awful as today’s mountain of rules and regulations can be, rest assured it would be much worse had these associations and their supporting member companies not been working tirelessly and quietly to educate politicians and regulators about the industry to prevent them from making business even more challenging through well-intentioned, but ultimately harmful, rules and policies.
But what is grossly unfair is the numerically small number of OFS operators that support these associations versus the number that benefit. At their peak, the total membership for all three (direct OFS operators) was only about 600 companies plus another 300 associate members, primarily sub-suppliers. Now this already-low number is down by about one-third and shrinking fast as managers conclude the short-term benefit of saving a few bucks on trade association dues is more important than the long-term implications of not having this important lobbying voice.
Which is fine for now, but just plain wrong for the future. The relatively small percentage of OFS companies that have been paying freight for decades can be proud of their contribution. But the vast majority of operators that have benefited mightily from the investment by their competitors should look in the mirror and recognize their success was not entirely the result of their own managerial genius.
In April MNP estimated even in 2016 that the OFS piece of the pie will be $67 billion. The $6 million/year required to fully fund these three associations is 9/1,000 of one per cent of revenue. An associate membership is only $1,000/year. Supporting PSAC, CAODC and CAGC is a proven value proposition nobody in his business can afford to ignore.
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