Calgary, Estevan 鈥� Sanjel Energy Services is launching a new remediation business line, dedicating specific staff and equipment to the growing issue of well abandonments.
CEO Shane Hooker spoke to Pipeline Newsby phone on Dec. 1. He said, 鈥淲e鈥檙e going to further commit resources to the remediation service line that existed as part of our primary business, previously. We鈥檝e created a standalone division that has separate management and client solutions efforts around the remedial and decommissioning space, which is evermore important with aging infrastructure challenges as they are, around Western Canada.
Abandonments and orphan wells have been rising in the headlines, especially in Alberta. 鈥淭his is the big conversation point, right now, and has been most discussed in the open in Alberta with the Orphan Well Fund, and the 100,000 inactive wells that currently exist,鈥� Hooker said.
鈥淲e believe this is a Western Canadian Basin opportunity, and we鈥檙e going to be targeting it across the basin.鈥�
鈥淚n Estevan, we鈥檝e got a dedicated resource in a pumping unit, and we鈥檙e looking to add another one for that very purpose.鈥�
鈥淩ight now, we鈥檙e going to stick to the cementing and acidizing end to the opportunity, with our eyes wide-open around other ways we can provide a more efficient, fulsome solution to customers, which could include service rigs or wireline or surface remediation 鈥� all the other pieces that go along with properly abandoning or decommissioning infrastructure. Right now, our focus is the cementing piece,鈥� Hooker said.
Asked if those other services would be in-house or third party, he said they could be either way. Their growth strategy is not limiting what that could be. 鈥淲e鈥檙e looking at all opportunities that make sense,鈥� he said. 鈥淲e鈥檙e in a very good position, based on the strength of the business, and our performance in the last year with our core business to be able to do that.鈥�
鈥淲e鈥檙e open to all opportunities that make the process more efficient, and cost effective for our customer. We believe you don鈥檛 have to always do things the way you always have, and that there鈥檚 opportunities to implement technology and build fit-for purpose equipment that could lead to totally different ways of doing things.鈥�
鈥淲e鈥檙e separating out a certain portion of our business to be standalone, to be able to leverage the infrastructure we鈥檝e already got in place, because we鈥檝e got 11 service locations across Western Canada, but have them focused on remediation business, and not have them drug into the primary side of the business. Conventionally, people would share those resources, where you have a truck that will do both. We鈥檙e dedicating those resources to just the remediation, so it won鈥檛 be out on a drilling rig, when a guy calls at 6 o鈥檆lock to go to work tomorrow morning on a squeeze.鈥�
To that end, a major part of the announcement was a splitting of the top executive duties. Murray Bickley will assume the role of president, effective immediately. Bickley will lead the execution of the company鈥檚 strategic initiatives, which include its expansion plan with the formation of the new dedicated remediation business line. Hooker remains as chief executive officer, leading the company鈥檚 growth strategy to maximize Sanjel Energy Services鈥� value for employees, clients and shareholders.
Hooker said, 鈥淥f our core business, which is primarily cementing, and now of the remedial space, he鈥檒l be day-to-day planning around how we keep that business healthy and moving forward. My role is going to be looking for other opportunities, outside of those, that can create value for our shareholders, and opportunities for our employees.鈥�
That means looking for other opportunities, but 鈥渋n our backyard.鈥� The previous Sanjel entity had international operations, including in the United States and Russia, both of which where shed when the downturn hit, before the old Sanjel went down and this new entity was born.
鈥淲e鈥檙e going to look to add complimentary services to our core businesses, or things that run alongside, but don鈥檛 compromise. Our strategic plan isn鈥檛 to recreate a full service upstream pumping company. Not at all. It鈥檚 to look to add things to the existing business, whether that be through vertical integration of supply of materials or chemicals, or when we talk about this remediation services group, something that adds onto the cementing that we do there to create a better solution for our customer that鈥檚 more cost efficient,鈥� Hooker said.
With regards to cementing pricing these days, Hooker said that compared to peak, it鈥檚 safe to say pricing is off 20 per cent. 鈥淚t鈥檚 still a very competitive business. In our strategic plan, nowhere does it include getting back to pricing levels of old, because we just don鈥檛 think that鈥檚 the new reality. We think the current environment and cost pressures and efficiencies are going to be what they are, as things grind, I guess, upward, long term. There鈥檚 been a reset in this environment. We鈥檙e embracing that and figuring out how we鈥檙e going to be successful with it,鈥� he said.
The company is hiring, but by early December they were getting close to their headcount targets for this winter. 鈥淚n our business, it鈥檚 always planning for Q1, which is the high activity period, and trying to anticipate what Q2 is going to bring and the rest of the year.鈥�
They took a different path in the spring, called 鈥済reen to competent.鈥�
鈥淲e just looked for good guys who had able bodies and good attitudes but no experience. We had training programs in place to give them the tools they need for operational competency, as well as driving. That鈥檚 paid off, in that we鈥檝e been able to reach our headcount targets, but the rate we鈥檝e been able to grow them has been slower than anticipated,鈥� Hooker said, adding, 鈥淲e always have room for good people.鈥�
They move equipment and people around Western Canada to 鈥渓evel load,鈥� deploying those assets to places that are busy and moving them to other locations when an area slows down. Their locations are spaced to generally cover a two-hour drive from each base.
Sanjel has locations in Swift Current, Kindersley, Lloydminster and Estevan in Saskatchewan.
New Estevan location
In Estevan, this past year the company consolidated its longstanding two yards, one on the east side, and one on the north side of the city. As of Aug. 1, all operations are now on the west side of the city, in the shop built for Trucking, and most recently occupied by Sonic Oilfield Services.
鈥淭hat move sort of speaks to the business in the last year-and-a-half. In the early days, it was about keeping wheels rolling, and currently, we鈥檙e finding and looking to optimize our operations. Having two shops in the same town, and trying to manage assets across town, wasn鈥檛 the best way to run our business. We were fortunate to find the location that we did, that would work well for us to consolidate our operation and run a good business out of Estevan,鈥� Hooker said.
In Estevan they have 34 people working. It will have its own remedial division, with different trucks, different people dedicated to it.
Asked how things are going, and looking towards 2018, he said, 鈥淭he landscape is fresh, and we are embracing those realities in the way we are running our business. It鈥檚 a continuous grind. There鈥檚 pressure everyday around costs versus revenue, not unlike everyone else in the service side right now. And our customers鈥� side, you know, commodities have not been strong for them over the last number of years, which has resulted in pressure over the last number of years.
鈥淲e鈥檙e focusing on people, rewarding them as much as we can, with a long-term view that things are going to turn around, and trying to do a good job in the field and exhibit a service attitude.鈥�
With regards to the rates they can charge, he noted they are widespread across the basin and have a good measure of where the market is in terms of pricing acceptance. 鈥淭here鈥檚 still a lot of competition in the space. Pricing is not one thing we鈥檙e anticipating changing greatly over the next year. We鈥檙e going to continue to be faced with the competitive environment we鈥檙e in, and relying on efficiency and utilization in order to generate earnings.鈥�
