Calfrac Well Services is a leading oilfield service provider, with more than 1,400 employees and operations in Canada, the United States, Russia and Mexico.

Premier Business Partners:

Atlas Resin Proppants Weir SPM MSI Firestone Canada Enerflow Industries

Established in 1999 as a four-person company, Canadian-based Calfrac Well Services has grown to be a leading oilfield service provider, with more than 1,400 employees and operations in Canada, the United States, Russia and Mexico. Its growth has been largely organic with a handful of strategic acquisitions, it adds. “Calfrac believes that through its presence in the world’s top-[four] fracturing markets – Canada, the United States, Russia [and Mexico] – we are well positioned to serve customers in their major operations areas,” the company says.

“Our established operating bases ... will act as a springboard for our future growth by leveraging off the experience, technological advantages and our established customer base.” In 2002, Calfrac entered the U.S. market. Because the United States is the largest fracturing service market in the world, “it’s a market that most fracturing service companies want to participate in,” says John Grisdale, president of U.S. operations. “We were looking for the right opportunity to bring our services to the U.S. market and that occurred when we obtained our first fracturing service contract in the United States.

“It happened in the DJ basin just north of Denver and, from there, our reputation grew for providing high-quality products and services,” he says. “We expanded our operations into western Colorado in 2005 as the tight gas market began significant expansion in this area. In 2007, we continued our U.S. expansion as we entered the shale fracturing market and the oilfield cementing market in Arkansas. Today, our U.S. operations have service fleets throughout Colorado and Arkansas, and we have performed treatments in Colorado, Wyoming, Utah, Nebraska, New Mexico, Arkansas and Oklahoma.”

In 2006, the company opened an operations base in Russia. This was part of Calfrac’s global diversification program. Russia is primarily an oil well service market for Calfrac, and it is subject to different economic factors than the North American gas market, Grisdale notes.

Recent Expansions
Last year, Calfrac announced its entry into the Mexican well service market through a three-year, $75 million contract with PEMEX. It will provide hydraulic fracturing services in northern Mexico’s Burgos field. Calfrac also announced in late 2007 that it was entering the pumping service business in Argentina, where it will begin cementing operations in 2008.

“Entry into these markets is a continuation of [our] strategy of diversifying geographically into new markets that are not dependent on natural gas drilling in the United States and Canadian markets,” the company says. “These international markets add balance to Calfrac’s revenue streams as it is not solely dependent on one area for its financial well-being.”

Around-the-World Demand
Today, Calfrac provides fracturing, cementing, acidizing and coiled tubing well services for customers around the world. “Our services are in demand around the world, and the economies of the world are using more energy,” Grisdale says.

“Our services are primarily utilized on natural gas wells. I think it’s because the number of oil wells to be discovered is getting harder to find. Gas has been seeing a large increase in its use for power generation, as well as for home heating, so it’s a cleaner fuel and it’s easier to move to the source that would be utilizing it.”

Mexico, Canada and the United States have been increasing power generation that comes from the use of natural gas as its main fuel, Grisdale says. “However, there are still a lot of oil wells to be treated,” he asserts. “Certainly, all wells have to be treated, whether they are oil wells or gas wells.”

Regardless of the sector, Calfrac is “well-positioned to take advantage of additional worldwide opportunities as demand for our services continues to grow,” Grisdale says.

Diverse Range of Services
Calfrac strives to improve its operations by investing in new technology in fracturing, coiled tubing, cementing and other well service materials.

“Each of these growing service lines offers new opportunities to add value through new, innovative technologies and equipment designs that improve operating efficiency, reduce environmental impact, lower finding costs for our clients and deliver results,” the company says.

“Every reservoir, every well and every company is unique in character, thus we create custom stimulation programs for every job. Our in-house software integrates the latest downhole fracturing technology, ensuring an effective treatment [when provided with] the unique parameters for any given well. Our aim is to increase [our clients’] hydrocarbon production.”

Unconventional Fracturing
Calfrac says the principal focus of its business is the provision of hydraulic fracturing services to oil and natural gas exploration and production companies. “The objective of hydraulic fracturing is to increase the conductivity of an oil or natural gas zone,” the company explains.

“Calfrac provides both conventional hydraulic fracturing and unconventional hydraulic fracturing to produce natural gas found in coal – also known as CBM fracturing. Deep fracturing is a technically and operationally challenging segment of the fracturing market that is currently experiencing strong growth worldwide,” it notes. Conventional hydraulic fracturing is achieved by pumping a viscous fluid with suspended proppant through the wellbore and into the reservoir zone being stimulated.

“The pumping pressure causes the zone to fracture and accept the fluid proppant suspended in the fracture,” Calfrac says. “A considerable amount of technology is incorporated into the design of the fracturing fluid. The final fluid can be gelled, emulsified or foamed, and can be preceded by acid.”

Calfrac says it has become “a leading service provider” in the deeper, more technical areas of northern Alberta, northeastern British Columbia, Colorado and Arkansas by offering “innovative equipment, technology solutions and highly trained personnel to execute these difficult projects.

“As a result of our extensive involvement in various pilot projects, evaluating the viability of CBM production in Western Canada – along with our customers – has developed an unconventional method of fracturing multi-zone CBM wells by pumping nitrogen gas through coiled tubing at very high rates without the use of proppant, fluid or chemicals.”

Advancements in Technology
“The importance of technology in delivering value-added solutions begins in our own operations with the ability to share ideas and best practices, support regional and global customers, improve productivity, increase efficiency, reduce environmental impact and drive continuing growth,” Calfrac says. “[We are] committed to continuing to invest in technology and engineering to maintain [our] leading market position and serve [our] customers in innovative and effective ways.”

“In our business, there are two areas that we’re focusing on for advancing technology,” Grisdale says. “One is in the equipment that we use to perform the treatments that we pump and the other is on the types of fluids that we use in our daily operations. We’re looking at equipment innovations that reduce costs and different products that create better performance for our customers.

“Reducing our customers’ costs and creating better well performance increases our customers’ financial performance,” he continues. “Calfrac believes this leads to more investment by its customers and higher activity levels for itself.”

The industry’s technologies are changing rapidly with advancements in drilling and completion techniques. Grisdale says service companies like Calfrac have to reinvest in research and development programs to be able to provide their customers the best value for the money they spend.
Always Innovative
Falling behind is never an option, Grisdale asserts, noting that Calfrac has proven itself capable of competing on the world stage with the most up-to-date research and development programs. He says this has brought the company “the success it has derived in the years since it was established.”

Calfrac sees further advances on the equipment side of its operations. “The newest technical advances are going to be made with the capability to pump very high-rate jobs with a minimal amount of equipment,” Grisdale says.

“So, we’re working on new equipment designs that will be capable of going to much higher rates than are conventionally being utilized. If we accomplish that, we can reduce the amount of equipment on the location. This will reduce our cost and our customers’ cost."

Grisdale says Calfrac is working on methods to help it accomplish more stages of fracture treatments with a single set of equipment. Companies are going to be drilling multiple wells on a single location, he explains.

“What we’re focusing on is the capability to treat multiple wells on a single location without having to move the majority of the equipment at any given time. When we accomplish that, we can treat more zones in a single day.”

Calfrac’s customers are designing their locations to achieve this, he adds. “So, we’re trying to lower their costs by being more efficient in how we pump the jobs,” Grisdale notes. “It’s a win-win for both the customer and our company in terms of lowering costs and increasing efficiency. And, it’s certainly more environmentally friendly in that there is only one location vs. multiple locations. For example, in Colorado, our customers are drilling up to 22 wells from a single location now.”

Service First
“Service First” is Calfrac’s philosophy to create new value for its customers and greater opportunities for its employees, Grisdale says.

For instance, the company’s “comprehensive fleet of specially designed fracturing, well servicing and cementing units” enables it to respond quickly to customer demand and new opportunities by “mobilizing equipment and personnel to geographic regions as required with minimal time and cost,” it states.

However, “as a service company, there is only so much you can do in terms of equipment and products,” Grisdale admits. “At the end of the day, it’s the people you have working for you who apply the products correctly, service the equipment and accomplish the jobs according to the expectations of your customer – that’s what’s going to determine how successful you are.”

“The foundation of our success is our people,” the company states. “The greatest challenge facing the oilfield industry today is securing a reliable, qualified and dedicated work force. Employee development is a vital part of Calfrac’s efforts to strengthen its organization and assure that it has the right people in place at the right time.”

Grisdale says Calfrac has been able to attract “good people in every market we have entered so far and that’s because we understand the value of our people. We have created a great work environment.

“People like to work for Calfrac because we recognize the value of each individual and value their contribution to the success of the company. Every single employee has a contribution to make.”

In continuation of its “Service First” philosophy, Calfrac seeks to educate its customers about the services it provides. For instance, in the company’s “Open Lunch and Learn” sessions, it provides customized presentations on relevant industry topics such as:

• Calfrac fluid systems
• Energized fluid systems
• Advances in conventional systems
• Stimulation in natural gas from coal
• Complex fracturing issues

In addition, the company has asked experts to present topics specific to its customers’ industries that would “interest and educate” them. Past topics have included:

• Fracture fluid optimization for low deliverability gas reservoirs by understanding capillary retention issues
• Resin-coated proppant selection guide
• The impact of density and sieve distribution on conductivity
• Commingling of production from two or more pools in the wellbore using the notification process

Health, Safety and Environment
The Calfrac Management System outlines policies and procedures in regards to health, safety and environment (HS&E), quality assurance and training.

“Our goals are to ensure that the health and welfare of our employees and contractors are properly maintained, the company meets or exceeds current regulatory standards through the use of sound business practices and respects the environment in all that we do,” it says.

“Continuous improvement is the key aspect of the design and sustainability of this system. We believe every business has a responsibility to their people, their community and their industry. That responsibility is to manage the economic, environmental and social impact of their business through sustainable business and operational practices.

“We see the inherent value of industry leaders setting the standards for accountability and transparency in their corporate governance practices. That’s why we’re committed to leading the oilfield services industry in corporate governance and sustainability.”

Watching the World Markets
Grisdale says while activity in the United States and Mexico is increasing, “Russia will probably remain flat in terms of activity.” He explains that this is because Russia is constrained by the lack of infrastructure in place. “There are not enough drilling rigs and other services required across the industry for them to expand substantially,” he notes. “So, they are going to be industry-constrained for all of the services required.”

In Canada, Grisdale predicts a “slight reduction in activity because of what Canada has been getting for the revenue for their gas.

“There have also been some changes in government policies – the change in tax structure announced for royalty trust just over a year ago, [for example] – so there is a forecast of a downturn for Canada for 2008. The first quarter looks pretty good in my view, but it could fall off considerably.”

Grisdale says there were some industry concerns with the western portion of Colorado in 2007 because of the lack of pipeline capacity, but the situation was alleviated in January 2008 with the development of the Rockies Express Pipeline. “So, we’re expecting activity in western Colorado to increase,” he adds.

Busy Times at the Shales
Grisdale is also predicting heavy activity in the U.S. shale areas. “Barnette shale in Texas, Woodford Shale in Oklahoma and the Fayetteville Shale in Arkansas – there is an expected increase in activity based on the success of our customers so far in those areas,” he comments.

“All of those shales require large fracture stimulation operations, which has certainly led to an increased number of fracture treatments being done in North America as a whole.

“For a fracture service company, that’s an exciting opportunity, and it has led to a lot of growth in the market,” he adds. “I’m aware of other basins within North America that have yet to be developed, so there is potential to grow further.”

Optimistic Outlook
Grisdale says Calfrac is excited about its opportunities in Mexico and expects to explore more opportunities as it settles into that market. “[Clients] are looking to develop cleaner power generation, and they’re focusing on gas as the fuel of choice for that,” he says.

Overall, Calfrac has enjoyed successful, controlled growth in all of the markets it has entered into to date, Grisdale notes. “We plan to continue to evaluate opportunities around the world and to act on the ones we consider to fit our strategy of diversification,” he states. “Calfrac will stay focused on developing innovative technology and our ‘Service First’ philosophy to serve all of the markets that we participate in.”