Questor, Ridgeline Energy bulk up on green offerings
Meet four executives that have switched from energy to environmental services
Audrey Mascarenhas is a petroleum jack-of-all-trades. She started her career with Gulf Canada in 1982, and in 17 years worked as a reservoir engineer, an operations engineer, a production engineer and a facility engineer.
“Nobody could top the career Gulf had given me,” she says now. “I’m probably one of the luckiest engineers in this industry because I’ve had a chance to work A to Z in oil and gas, and I had all these amazing projects.”
But even an old hand can learn new tricks. When she joined Questor Technology Inc. as chief executive officer in 1999, it meant becoming familiar with a novel waste-gas incinerator for the oilfield.
“The first thing I thought when I looked at it was that’s crazy,” she recalls. “I put in all these flares – all these big, black smoky flares with yellow stuff on the ground – and I just walked around it. I had just accepted that this is the way we always worked and it had never crossed my mind that it should be different, but it should be different.”
Of course, that was 1999, and not many people shared the same view. “Everyone said I was crazy. They said, ‘Audrey, you’re smart and you have all these skills. Why are you wasting it on something nobody is ever going to care about?’” Mascarenhas says. “I know they don’t care right now, but they should because this is an enormous opportunity.”
She estimates the oil and gas industry, all around the world, flares 14 billion cubic feet of waste gas every day (that’s the equivalent of 2.5 million barrels of oil). “The problem is we’re taking that energy and we’re dumping it into the atmosphere that we breathe and we don’t do it in a great way from an environmental perspective,” she says.
Questor’s incinerator uses waste gas as the combustion fuel. The energy generated from the incinerator can also be used to heat water or generate power for the facility or a nearby community.
“That’s probably one of the smartest things we can do when it comes to energy efficiency and environment,” Mascarenhas says. When Mascarenhas arrived in 1999, Questor had four incinerators operating in the field. Today, the company has about 130 units and has worked on every continent except Australia and Antarctica.
In Canada, Mascarenhas says a lot of the business is driven by landowners who don’t like the view or smell of a flare outside their window. In the U.S., regulations put forward by the Environmental Protection Agency are playing a larger part in helping Questor’s business grow. The company’s U.S. revenue grew from around $660,000 in 2010 to $3.6 million last year.
Tyler Heathcote, president, Ridgeline Energy Services Inc.
Tyler Heathcote grew up in his parents’ construction firm. Working on road and civil construction projects around Lloydminster, he saw an opportunity to make his own mark. Before turning 30, Heathcote started an oilfield construction company.
The business did everything from preparing drill sites, constructing production pads, tying in pipelines and batteries and doing reclamation work when it was all was said and done.
The last task became a more frequent part of the operations. “After going and creating all these sites, there was a calling to replace and repair some of that,” the 41-year-old recalls. “That pulled me in that direction and led me to looking at what opportunities there were in the environmental services sector.”
So Heathcote founded Bio-Synergy Resources in 2000. At the time, he was still running the company he purchased from his parents, as well as his oilfield construction business. After three years of juggling three separate businesses, he decided to wind down the first two and move to Calgary to focus on Bio-Synergy.
“To really get off the ground at that point with an environmental services company, you really had to work hand-in-hand with the producers to come up with solutions to fix their problems,” Heathcote says.
In 2006, Bio-Synergy was purchased by Ridgeline Energy Services Inc. Treating and reusing water was starting to be an issue for producers, so Ridgeline decided to gamble on a technology being used to treat wastewater in Las Vegas. “I was quite skeptical at that point,” Heathcote says. “Casino wastewater is quite a bit different than oil and gas industry wastewater.”
Following successful lab tests and a pilot demonstration, Ridgeline commissioned its first water treatment unit in the Horn River basin, a region where Heathcote estimates an average of 180,000 barrels of water are used for a single fracture. The facility could process 600 cubic meters of water per day.
Production shut-ins and reduced capital forecasts caused by plunging natural gas prices have since forced the company to diversify beyond servicing just hydraulic fracturing operations.
In addition to steam-assisted gravity drainage schemes in the oil sands, Ridgeline is also looking at treating water from chemical polymer floods, water floods, other enhanced oil recovery techniques and produced water, which led to the recent purchase of a treatment facility in Santa Fe Springs, California.
“Some of the wells I was just visiting in California are getting 98 per cent water cut, so they’re producing 110,000 barrels of water and 2,000 barrels of oil.”
The ratio is one reason the environmental boutique has a bright future. “When we started the water division we never envisioned this is what was in store,” Heathcote says. “It’s really turned into a massive industry. It’s nothing I’ve ever seen or expected.”
John Gibson was consulting for a small firm in the United States, and working off his non-compete agreement, when he was approached by a couple of people from Tervita Corp.
The Calgary-based company, then known as CCS Corp., was looking for a new chief executive and hoped Gibson, who formerly led Halliburton’s Energy Services Group, might be able to identify potential candidates.
The more he examined the position, the more he liked himself for the job. “The value of the stock was low and there was that drive to make it great,” Gibson recalls. “It was an opportunity on a personal basis to see if my leadership could span beyond producer companies or traditional service companies.”
He arrived in Calgary in July 2010. Over the next two years, he set about reorganizing the firm’s 12 separate companies, including more than 4,000 employees and $3.1 billion in assets, into a single entity.
Gibson’s career began with Gulf Oil. He decided to leave the company and a role working in a subsurface research lab after its merger with Chevron Corp “I love research and I love technology,” he says. “Back in the early 1990s, the research and development dollars were being put to service companies to spread the technology further into the field.”
A similar redistribution of industry dollars is one of the reasons Gibson signed on with Tervita. A few decades ago, he explains, producers began outsourcing not just research and development, but a number of operations as well, such as drilling and seismic.
“They created a service sector by divesting their equipment,” Gibson says. “I think we’re at that phase on the environmental service side where producers are letting service companies focus on reclamation, environment, treating waste water and waste services.”
Tervita’s various divisions focus on all of those areas. In Western Canada alone, he says, 19 million barrels of waste water is produced every day from oil and gas operations.
The company currently only handles about one per cent of its customer’s waste water. “The opportunity here is tremendous,” Gibson says. “Our customers are handling the majority of it, some of which is reused for enhanced oil recovery, but there’s a large opportunity for us to handle and reclaim more.”
Dick Brown, president and CEO, Ferus Inc.
Dick Brown was following the typical business model of junior oil and gas executives in the 1990s – purchase property, grow production, sell the business to a larger producer, rinse and repeat. After his second successful venture, rather than follow the same formula again, Brown decided to tackle a problem plaguing certain well completion techniques in the industry.
“There was an insecure supply of [carbon dioxide] and there were problems with the logistics and delivery,” he says. “Because I had experienced it personally, I knew there had to be a better way of doing it. You can’t have a bunch of rig equipment or service rig equipment or pumpers waiting on product.”
Brown worked on rig crews for three years before attending the University of Alberta and earning a petroleum engineering degree. As president and chief executive officer of Calgary-based Ferus Inc., he now has a front-row seat to an energy revolution wrought by hydraulic fracturing and advanced completions techniques.
He says using foam nitrogen or CO2 to energize a reservoir is becoming more popular because it uses about 80 to 90 per cent less water than a slickwater completion and increases recovery rates at the same time.
“The driving force behind it is the fracture stimulation industry advancing as significantly as it has,” Brown says. “In some of the areas that are being drilled in the U.S., like the Marcellus, they’re basically banned from using water. So, foam nitrogen fracks are being used.”
This has created a business niche. When Ferus Inc. launched in 2002, the company partnered with oil and gas processing plants as suppliers of CO2.
In one decade, Ferus has grown from five processing plants to 11 and from five trucks to 220 pieces of equipment. The Calgary-based company produces 1,300 tonnes of CO2 and 1,100 tonnes of nitrogen per day. Brown estimates 2,000 tonnes are needed for a well completion.
As well as increasing production of CO2 and nitrogen, Ferus is building a handful of liquefied natural gas stations in northwestern Alberta and northeastern British Columbia. The first plant is expected to be operational in early 2013.
The facilities are designed to serve the off-road market, rig market and service companies. “This is another large environmental discussion,” Brown says. “Emissions would be reduced by 30 per cent. Liquid natural gas is so much cheaper and it’s environmentally friendly. It’s the only way I can see we’ll meet long-term emission targets.”