Lay of the Land: The Convergence of Energy Sectors

Full Transcript

ELIZA FROM PANDELL Good afternoon everybody. Thank you for joining us today. My name is Eliza, I’m the Customer Engagement Specialist here at Pandell. This is our fourth in what we are calling the Pandell Leadership Series and today’s topic is Lay of the Land.

We’re very lucky today to have Larry Buzan and Janice Redmond joining us to talk about the Lay of the Land. Janice is the current Vice President of CAPL (Canadian Association of Petroleum Landmen) and works in Business Development and Project Management at Action Land & Environmental Services. Whilst Larry is a two-term past President of CAPL and the current President of BuzanLC Consulting.

Combined they have an extensive wealth of knowledge and we are absolutely thrilled to have them join us today. So, without further ado Janice and Larry I will pass the screen off to you.

JANICE Awesome. Thank you, Eliza. Obviously, we want to thank Pandell for bringing us into this. More so because they called Larry first [laughter] and then they called me after because Larry said I had to reign him in today. So, I guess I’m Larry’s sidekick, co-host for the day.

LARRY That’s right and we were so thrilled we haven’t slept for three nights before this. So, we have-actually practiced this in various forms over the last three days, so we had enough to fill four of these sessions. And we pared it down now to what we think you want to hear and what we want to tell you. So, why don’t we do our COVID-19 thing [elbow bump] and get this thing started.

Alright, I thought I’d start with a story and this will lead us down the garden path to start things off. First-of all, my very first deal, my very first negotiation was with our past President, Jack Erwin. He was working with Dekalb Energy and I was working in the Garrington area of Alberta for Dome Petroleum.

And we sat down at a restaurant because that’s what we did in those days, and he sat across from me at a table for two. And he said to me those magic words, “Do we have a deal?” And I shook my head, “Yup, we got a deal.” And he goes, “Give me your hand.” And he takes my hand, I’m not going to ask Janice to take my hand, takes my hand and he goes, “Lets shake on it.” And as I’m doing that he will not let my hand go. And he said, “Now Larry, I’m going to explain to you, if I were you, what I would have done in this deal.” That began my land career.

I had to evolve absolutely immediately. I was chastised, by myself mostly, over not doing the best deal that I could for Dome and a better one for Dekalb and so on and so forth. And it threw me into a fantastic go-forward spin of deal, after deal. I did thirty deals with Dekalb. All thirty with Jack. And I can say with a bit of flair at this point, different restaurant, same situation, thirtieth deal, and I told Janice this earlier, and Jack goes, “Do we have a deal?” And he takes my hand, but he lets it go this time and he stands up and he takes his jacket off and loosens his tie. He puts his wallet and keys and everything on the table and turns his pockets inside out and he goes, “I’ve taught you too much. You’ve learned too well” [laughter].

But in doing so, and this is what I want to get into is that…let’s roll it back to those of us who have kids that have toys that need batteries.

JANICE It’s Christmas.

LARRY It’s Christmas and what happens Christmas morning?

JANICE The batteries die, or you forgot to pick up the batteries last minute.

LARRY Rechargeable batteries, that was something, that was a God send by whoever invented those. And we had kids that were happy, not whining to us about what to do but they had their toys to play with. And who knew that rechargeable batteries would be such a prominent thing in our lives. And certainly, the laptop that we are working off today, although it’s plugged in, so it doesn’t go down on us. But to be able to take it and like that. And right up to Tesla I mean, I was really, excited when Tesla released the battery plans for free. And the thought of being able to use that in my house.

So, evolution. Let’s talk about that in terms of what that means as far as land is concerned and the industry.

JANICE So, I think the biggest thing for us and most of our audience, landmen I guess, we all started somewhere. And so, the difference now, is that somewhere where we started at isn’t necessarily where we are today. Right? So, a lot of us have had to evolve with the industry and not so much tighten our belts. But understand what it is that we can do for our companies to bring value into the land role…exist and evolves. The biggest thing that I’ve noticed with my role because I started off with in land in administration and then worked my way into negotiating. I still do some of my own administration and I think that’s been a huge backbone for me in this industry being able to have the ability to do my own paper. I don’t think that existed so much back in your time. I don’t know.

LARRY No, it was very separate.

JANICE You pre-date me [laughs].

LARRY Yeah, there was land clubs and specialization. And it got more and more specialized. Like we were just talking about. If somebody puts up an ad, hint, hint, for a contracts service and mineral administrator, somebody will notice it and go that’s a unicorn.

JANICE Absolutely.

LARRY It doesn’t exist, it’s too specialized. [laughter] Anyways, let’s not go there at this point. And there’s another land example of evolution. Jim McLean hats off to him, for all the works he’s done for CAPL and all of those standard agreements, well…

JANICE You should share that story, really, it’s actually a good one.

LARRY Is that a good one? Okay. So, we had just approved the 2007 CA bill operating procedure. Bright and shiny, ready to drive. Forty plus companies involved, twelve lawyers, probably more. And we’re all set to go, and Jim turns to me and he says, “We have to start a new one right away.” I go, “Why? What the heck is going on?” And he goes, “They’re drilling horizontal wells, that’s not captured in the 2007.” And we sat there, and I went, “Oh man. Here we go again.” Four years of getting the 2015 out. And it got better and better with more supportiveness, but it had to evolve. And we were talking about little horizontals not the big ones. Then the big ones got involved and then these huge ones and multi, multi spacing units and lots of problems, and things like that. And so, just from Jim telling me that and I looked on that impact in my life. And so, it’s not easy as we know as landmen, but we hopefully have a lot of engineers online here as well. It’s hard to take the fill-in-the blank standard operating procedure and say, “Okay I got all I need. Thank you very much Jim. I’m gone.”

JANICE Well, some people think it’s easy.

LARRY They think it’s easy and then all of a sudden, they get their first notice. Or their first, ‘How do I deal with that?’

JANICE Yeah. Call your landman.

LARRY So, let’s talk about evolution in the world and as it relates to Canada, Alberta, United States for a big one. Let’s talk about the changing role of landmen but how they can get involved in the changes that are happening out there because there are a lot of transferrable skills. We just got to find our place and we got to be a little patient, right.

JANICE Well, I think the biggest thing is that, sometimes we don’t know that it’s there. Cause we don’t know what we don’t know. So, you’ve got to seek out those opportunities. And I know a lot of the focus for the industry evolving is stakeholder engagement. Most of us as landmen, either have dealt with other companies, or dealt with stakeholders in the public, landowners. I think that’s a skill that most landmen have. And it’s a skill that is crucial to the stakeholder engagement side. So, for any of us, I mean Larry and I are chatter boxes obviously. So, it comes naturally, and I think that most people in the land industry understand that. And that’s respected in the energy industry as a whole and that’s why we have landmen still doing their jobs and being able to, I don’t want to use the term but for lack of a better word, but pivot into other opportunities. And that role is stakeholder engagement, community relations, getting out there. You know we all love talking to our stakeholders. There’s no question right. So, going into that aspect, every company needs that. And it doesn’t just stick with the energy industry it’s also outside of the energy industry. So, if somebody needs to move into something else there’s nothing saying you can’t go into stakeholder engagement with insurance or contracts management. Right?

LARRY Right. Exactly.

JANICE I don’t know about you, but I don’t know how many people get excited about reviewing forty-page contracts [laughing].

LARRY You’re talking to somebody who gets excited over little things, but yeah. Most landmen, that’s right.

JANICE And that’s the thing, you know with my company and some of the things that we’ve been focusing on is working with the other energy sectors. Working with the renewables is a big one for us. The company is based out of Southern Alberta and let’s be honest that’s a hot bed for renewables right now. So, having the opportunity to work with our clients in those areas of stakeholder engagement. You’re still doing land deals. There’s no question that that’s happening. But again, there are so many other things that we can push into. The sky’s the limit, as long, as you’re willing to look at things from a different aspect and have that ability to afford. The other big one right now, I’m sure most of us have seen is indigenous relations. We’ve all dealt with indigenous at some point in our land career so having the ability to move into that is also a factor. Being able to again, pivot.

LARRY Right. And talking just about those two opportunities that landmen have been involved in and can grow into and be purposeful and valuable. I have a number of clients and were going to go into hydrogen and LNG and some other things, but one of the clients issued a statement yesterday. And it was to all of the people in the company. And it was talking about we have tremendous technical abilities in this company to work but now we need to change the positioning of the groups, so they have purpose.

To me that says, business. It has business written all over it. And because we’re specialized, because we have land teams, we’re not islands. We have certain responsibilities that take us and make us, if we want to be really isolated, but really when it comes down to it, we’re talking to the mineral, the contracts, the service, the aboriginal, the indigenous. We’re talking to all that stuff and speaking of strategic decisions, more or less together and that’s where land sees the picture.

It’s not easy folks, it’s not easy for people who didn’t come from an ENP background, and yet their great companies. Technical companies, they don’t see the world the way we do. And a lot of us are saying well try this, or try that, see how it works. Much of my career has been puzzle solving. There’s, ‘I don’t how to get from A to Z, but I can see it’. And then my job was to get folks to understand how they can get there. And many times, in my career they did get there. And that’s true of so many land people that’s why the stories. Problem solves and networking and storytelling. And I know now with being in isolation since March, for the most part that’s one of the big let downs is that and so I’ve gone, and you have too, way out of our way to get together with those on social media, on zoom, on all these other platforms, on this new platform, which I can’t because my laptop won’t do it (laughing) but that’s another issue.

JANICE Tech savvy not so much.

LARRY It’s not me. No, I know a lot of you say it’s me but it’s not [laughing]. So, anyways. Let’s move into this because folks want to hear about green technologies, fossil fuel, all the arguments about it and around it.

But I think what we want to talk about is the convergence of energy in Alberta, and across Canada, and of course the world.

So, six years ago I would say that a lot of us were lighting up saying, ‘What’s this green technology coming, it’s going to take away my job.’ And I didn’t realize what kind of effect it was going to have on all of us.

But there are certain instances in the world that have lit a fire on the combination of fossil fuels and green energy. And the one that brings to my mind is the Shell International. They had a huge CBM project, coalbed methane, natural gas from coal, we call it a lot of stuff, but a one hundred percent pure methane project. But they had, they were using the methane to produce the methane. And Australia put out a regulation that they couldn’t do that. And so, I heard that at a seminar four years ago. The speaker was just rallying around this and saying it was a like a light bulb went off when he said it, “the convergence of energy. That’s what we should drive towards”. And we know cars that have two kinds of energies and all kinds of stuff. But in this case what they did, of course Australia, tremendous sun and they used a solar project fire up their huge CBM project. Well one of my other clients is down in Australia and they’re getting into this stuff and then we looked and said well wait a minute, there’s lots of convergence happening in Alberta today. And it’s burgeoning, and it’s starting slow but it’s getting faster. And it’s tremendous opportunities for us.

Through that we want to talk about one of the big ones that is coming up, but I do want to talk about how hard it is to develop these things in the pace that we would like it.

So, there’s probably some folks out there that own Tesla’s, cars. And this story is about the very first day that the charging station on Highway number one was opened. Two Tesla’s rolled, this is on the way to Jasper and I have this from a great source, and they rolled in to charge up. And a third Tesla got on, his or her phone, and just lambasted the company that was allowing these to charge. “I have to wait thirty-five minutes this is outrageous. Why don’t you have three charging stations?” Well, why don’t you have twenty? I mean really three.

The issue is, and this is from somebody he knows, is that it’s two-hundred and fifty thousand dollars to set up such a remote charging station on Highway two for two. To go to three is now costs, not an incremental one, twenty-five, it’s five hundred thousand dollars and more.

This company has done their darndest to make sure we get these charging for free, for the most part. And so, how good is that? Put yourself out there. And so, you look at it and why does it cost five hundred thousand dollars plus? It’s because it’s very dangerous to bring that volume of electricity to that single point. To the customer. So, think about that. You’re going, ‘it’s going to take time’.

JANICE Well, that’s the thing right. Right now, if you look at the world, we live in. Especially like here in Calgary the infrastructure needs to be built to support that convergence. So, again we need to have the ability to talk to municipalities, talk to homeowners and see if that ability exists, right. If we’re all driving electric vehicles, we need to charge it somewhere. You’re going to want to have a charging battery facility within your own home. Would you not?

LARRY I know I would. But if you live in a condo that raises a whole other issue because condos aren’t ready for the kind of electric needs of electric vehicles. There may be rules, I know there are rules against that in certain condos. So, you sit there, and you go, ‘yeah but we’ll get there.’ But it’s a huge jump to go to all the other electric stuff that we want to use. And we’re good citizens of the earth, so we say, ‘okay we want to use that’, and we’re going ‘okay fine’. But right now, let’s talk about one the propellants of I guess of this story is that…let’s say for arguments sake, this is not fact, this is sort of loose right.

JANICE [laughing] Larry’s words.

LARRY Yep exactly. Let’s say the cars and trucks right now, ninety-five percent of their transportation fuel is fossil fuels and five percent comes from other. It could be electric it could be all kinds of things. Alright, for us to get to fifty, fifty is going to take twenty years. And I said it first and a lot of people don’t want to hear that it’s going to take twenty years but over time it will do that.

And that brings us into the discussion about hydrogen. And what’s all the talk, and what’s all the work, and what’s all the money going for hydrogen? And of course, you can’t talk about hydrogen unless you are going to talk about CO2 sequestration. So, well call it CCS (Carbon Capture Sequestration). I hate to interrupt this conversation with facts.

JANICE No, I’m going to listen. [laughing] It’s my turn to listen.

LARRY Alright so, just so we are all on the same wave lengths. So, there’s different kinds of hydrogen, there’s blue, there’s green, there’s brown, and there’s grey. Blue is the world that I largely live in and work with. Blue is steam methane reformation process. And its carbon capture and it deals a lot with fossil fuel production and CO2.

And green of course is the one everybody would like to get to. Only because it’s got no carbon footprint. And that’s solar and wind using water electrolysis. In as much as we like to for the most part, the government would like to have us all drive electric cars and we would like to because of the carbon footprint at this point it’s not going to work because there’s not an electric grid that can handle all this. Think about how the green hydrogen. Where’s all the water going to come from? Like we’re talking massive amounts of water to make this happen. In small areas, in experimentation and so on and so forth, and in some areas, it’s working really well but it’s pretty small.

And of course, brown, and grey hydrogen comes from coal gasification and straight fossil fuel production. Which represents ninety-five percent of the way hydrogen is produced today, It’s the grey. So, from that it just shows me that we’ve got a long way to go. How far do we have to go? Well, I think that’s interesting.

We can talk about Alberta. Right now, there’s two CO2 sequestration reservoirs that are putting away about one and a half each of megatons of CO2. So, megatons, thousand tons. And the thing to remember is that it’s one for eight basically. If you produce one ton of hydrogen you produce ten megatons of CO2. And right now, the world is producing eight hundred and thirty megatons of CO2 compared to of course eighty-three tons of hydrogen. And so, a lot of people are going, ‘what does that mean?’ We got a long way to go. And so, when we look at it, we say right now six percent of the hydrogen is produced from methane and two percent from coal. That’s world-wide. There is such a tiny dot with the green side of it at this point, that’s what is producing the eight hundred and thirty megatons.

Before we get lost in all the data here, I’ll just throw you one bit. The cost to store this stuff. So, you can store this stuff in a-number of different ways. We know CO2 is being used for enhanced oil recovery for twenty years. I mean I was involved with Burlington. We had a huge project down south of the border. Using CO2 to help us produce our oil and gas.

JANICE And that’s a great example of how technology has helped us converge.

LARRY Right and why we use hydrogen and of course we get CO2 with it, just as a side. Hydrogen burns four times hotter than methane does. So, in combination, right now they are experimenting using three percent hydrogen in R and using exactly what you have right now in your, far as furnaces go. It can take three percent but you’re using twenty-five percent less natural gas. So, that’s a fantastic turnover. Again, it’s a great start.

LARRY Right and why we use hydrogen and of course we get CO2 with it, just as a side. Hydrogen burns four times hotter than methane does. So, in combination, right now they are experimenting using three percent hydrogen in R and using exactly what you have right now in your, far as furnaces go. It can take three percent but you’re using twenty-five percent less natural gas. So, that’s a fantastic turnover. Again, it’s a great start.

But I think what’s interesting is the cost per storage is, just so everybody knows. Salt caverns, which are very tiny, and they are…used to be fifty million dollars to get a salt cavern. They’re getting the cost down to thirty-nine. So, big dollars. Right now, in Alberta we need one hundred and forty of those. Now just multiply thirty-nine million times one hundred and forty and we’re talking about what it costs to do salt caverns. Anyways, right now it’s a dollar, sixty-one per kilogram for H2.

The one that we concentrate a lot on in this industry is depleted oil and gas reservoirs and that’s a dollar, twenty-three. Saline aquifers are two, seventy-seven and that’s where most of the greens are looking at. And hard rock caverns, a lot of them under the big lakes in Ontario, are a dollar twenty-nine. And so, it begs the question, ‘because the costs are so large, we’re going to get there but who can play the game?’

JANICE Yep, well I mean they say that the costs are large, but they’ve also said that the cost of the production has decreased immensely.

LARRY Yes, no question.

JANICE The facts that I show that it’s decreased for green hydrogen production has decreased by fifty percent since 2015. And potential further thirty percent by 2025. So, clearly technology is coming into play. It’s helping them move forward with bringing those costs down making it a lot more competitive.,

LARRY Absolutely, and like you said at the beginning of the conversation that’s what’s going to happen. So, this is really all about economics. So, what role does the government play other than fugitive? Oops, I said that.

The government plays a huge role in helping us get to a hydrogen front that actually-makes a difference because being able to put and store hydrogen. Hydrogen is a very small molecule it wants to escape so, leaky reservoirs not good. Norway stores a lot of their CO2 under the ocean. The biggest issue they had there and the big story since 1988 is that if it leaks it acidizes the ocean. Oops, okay so we stop that. They’re going to look at that and say we can do it, it’s just bad. And we don’t know how bad and that’s the problem.

But anyways, so we look at this and we say, we want to store hydrogen, make a big difference and use a depleted reservoir. So, let’s go find a three hundred Bcf depleted reservoir. And we’ve got a lot of those in Alberta and a lot of them with wells that should have been abandoned a long time ago and so on and so forth. Okay, so it’s a bit negative that way, but what hydrogen can do is, you can go in there as a company and you buy that reservoir, a unit would be great, but let’s say you buy that reservoir you will abandon ninety-five percent of those wells. You actually-spend the money to go in there and do what Albertans want. You want to abandon those wells and how anxious would a company be to get rid of that off their books and then you’re going to drill. In that case, say three hundred Bcf, we’ve run the numbers, and you’re gonna drill thirty-five horizontal wells back into that reservoir and most of those are going to be input wells.

You’re going to stuff it all in there and then you’re going to take it all out because we’ve got lots of uses, like we’ve said for hydrogen. Fuel cells, all that kind of stuff. We’re going to talk about some of the uses later, but the problem you guys, is does it leak? Is it a solid? And so, the only thing that doesn’t leak right now are salt caverns and they’re just not big enough and too expensive. In combination again, convergence, we’re going to do a little bit of both.

So, we need to experiment with this stuff. We need to go through a-period of time, just like everybody else, in coming up with new energy sources, to look at smaller reservoirs and try them out.

JANICE Test the waters.

LARRY Test the waters before we take the big leap because none of us want to take the big leap and fall flat on our face.

Think of what the land role, just for a second, would be involved with hydrogen put away, in oil and gas, depleted reservoirs. I don’t know it sounds like the last job we just did for the last thirty years.

JANICE I was just going to say, I don’t think there would be a whole lot of difference there, to be honest.

LARRY Right, and it involves the whole team. The surface team, the mineral team, the drilling team, the production team, all the new facilities. This is probably over the next ten years one of the biggest job makers in Alberta by far. And if you compare, look at BC, like we have. Look at Alberta, BC and Saskatchewan. Alberta is where you want to be. Alberta’s got the biggest potential by far of that.

JANICE I feel like you are selling the Province right now.

LARRY I am, and you know what, I’ve got a PC button on (laughter) and that kind of stuff. But I’m just saying is that speak kindly when you talk about Kenney and Savage saying we need your money (laughter). And of course, that money, they’re just printing it right now, but we want to get back to the part where we are making money. So, we would be glad to pay taxes instead of it coming out of an empty pocketbook.

JANICE Exactly, and the fact that, you know, we might have a lead with the Orphan Well Association, and all of these defunct wells.

LARRY Yeah, exactly.

JANICE Why not repurpose that? Right, I think that’s just involving change and the convergence of energy that we’ve been talking about.

LARRY The first thing I was thinking about and I just said hydrogen is for only the big boys and big girls to play. So, that’s not true because what happens is hydrogen has huge uses. And one of the articles that I picked out in fact, is the Emissions Reductions of Alberta, the ERA, put up seven point three million dollars. They have two transport truck divisions, and this is Bison and Trimac. And what they’re doing is, they actually have hydrogen fuel cell powered vehicles travelling up the QE2 and they can go seven hundred kilometers without re-fueling with their hydrogen. And this project is going to take them right into mid-2022, and then they’re going to report to all of us how successful that’s going to be. And of course, they’re going to tweak it and all that stuff.

Can you imagine all the trucks, literally all the trucks powered by hydrogen fuel cells, and the need for hydrogen? So, it isn’t about storing the hydrogen and it’s going to sit there for twenty years, we’re going to put it in and take it out. And so, this constant putting it in, injection, taking it out is again, it’s nothing but jobs for us.

JANICE And not just for land, it’s for oil and gas.

LARRY No, no, no it’s for everybody. You know we’ve heard about our communities, our trucking communities and how desperate they are to get going again. Well, this is going to happen, especially with this kind of technology.

So, I think that’s great and I think there’s another group worth mentioning out there right now, and I know Grant owes me for this, is Proton Technologies. Grant’s on LinkedIn, he’s a great guy and he comments on a lot of stuff. And they’re using, and I love this idea, they’re using a fireflood in South East Saskatchewan that produces steam. And Proton Technology captures with their filter the hydrogen. That’s green. So, that’s huge. It’s having trouble now cause of the price of heavy oil and all the stuff we’re going through but it’s going to go somewhere.

Can you imagine if that technology, and whether it’s Proton that does it or one its competitors, I think Proton is well fixed to do this, went up into the oil sands. It’s just made for that kind of technology and all the hydrogen. So, you’ve got CO2 coming out, but it’s been recaptured with the hydrogen, redispersed and put in there. And Shell is going to expand their Quest projects, of course ACTL. So, it’s going to be a really interesting future in the near term, as we’re talking about now with the trucks and all this stuff, to what’s going to happen over twenty years. Repurposing a depleted reservoir, I mean I guess I’m too much of a glass half full guy, I can’t wait to go out and do that.

JANICE Well yeah, it’s exciting times right and I think the biggest thing that people need to understand is you can sit on the sidelines and watch it happen, or you can get involved. And that’s the biggest thing, I mean I’m not gonna lie I might call my stockbroker here and maybe change my…

LARRY Take-a look [laughter]. Exactly, who’s the bitcoin collector out there, yeah good for you.

Okay, so let’s talk a bit about pitfalls and promises.

JANICE [sigh] Yes.

LARRY Right, because like we said, it’s a bit of a unicorn that we’re looking at but it’s the game we’re gonna play and largely because, can you imagine one of the big CO2 emitters being able to balance out economically, balance out their CO2 emissions and create hydrogen at the same time. And so, that’s really the goal. There’s three big emitters just east of Calgary, they’re all over the place, I mean any cement plant, you name it. And they’re not bad. This is what they do for a job, they’re not bad.

JANICE We like them.

LARRY Exactly, but they are going to be very, very involved in the solution especially as our carbon taxes are going to go up. So, how do you balance it off? Green credits, you do this you’re going to be fine. Storage companies and you know who they all are. And they’re going to be big, little and small and they’re going to get involved to do this. So, one of the pitfalls is me, I look at this, not me personally, I’m not going to get in the way of this. I look at it and I go, ‘wait a minute I want it right now. I want it yesterday.’ And isn’t that just like the Tesla chargers.

JANICE I’m not going to lie I think that the majority of the people right now would probably be in the same boat as you. Demand, right?

LARRY Demand and job wise. I mean when you buy a house, and they throw in the solar panels for free or as an option. Please, please check out how long they last, what it really costs, and if it’s actually going to play a role in reducing your costs. You might just trade costs and for some people that’s good enough right now because technology is going to catch up.

JANICE Well, and that’s the thing. We talk about costs decreasing with some of this technology and if you look back at some of the stats. I pulled some stats from the Canadian Renewables Association and solar costs have declined eighty-nine percent since 2009. That’s impressive.

LARRY At the same time, I would say that their funding has been reduced because they’re on their own now or getting to be on their own. That was Ontario’s big problem is that the huge support for the wind folks turns into tax dollars. You know unfortunately, but that’s come around.

JANICE Lessons learned. Lessons learned.

LARRY Yep, so we can use that. The other thing I think is how are lives, so I’m you know, you could say at the end of my career, you’re in the middle.

JANICE [laughter] middle, really?

LARRY Okay, okay, just starting. I just want to be kinder. When I did that deal with Jack Erwin, she said she was going to ask me, “And when was that deal Larry? Was I born yet?” And I go, “yikes okay”.

JANICE I don’t think I was. [laughter]

LARRY We learn so much from land people sharing these things, especially now that we are all isolated at home or we have the privilege of working in large empty offices and so there’s no danger. But I look at it and I go, ‘yes, I can see a way back here’. Especially with the vaccination announcements and so on and so forth but really, it’s the job announcements. It’s those things that we want to hear because we all know there was a time where all you had to say was. “I can walk and talk. Good you’re hired and you can learn.”

JANICE That’s true and during the boom days, and everybody can remember those boom days. You’d be coming out of school and you’d have a job just like that. And now, you know our programs are definitely dwindling they’re not graduating as many students and you’re not seeing demand for it either. Right? A lot of people are trying to look at other opportunities outside of what we are known for in Calgary is the oil and gas.

LARRY Right and so, one of the evolutionary things that has happened of course we have to go through bad times. Is that you have companies in receivership, you have a great well inventory, and I know that the Trident assets got dispersed at least four different ways. One of those companies has a plethora of money available for LNG because what they said was, “Why wouldn’t we invest in LNG?” And I’m not talking about the giant stuff. I’m talking about the little stuff. LNG and sell that. Now where are we going to sell that, that’s a bit of a secret I’m working with them, but it’s not in Alberta. There’s no question that it won’t be in Alberta because there’s other places that want it and will pay for it. But we’d rather have pipelines for sure but there’s lots of ways…

And land people are the ones who can help somebody who’s gotten money that doesn’t know anything about land, very little about oil and gas but have these assets. And so, when you have receiver assets who’s going to pick up, like we were just talking about that, who’s going to pick up the ball and run with it? And maybe with less staff but knows how to deal with that.

JANICE Yeah, and they’re complex files. And you don’t know that, sometimes you open up a file and you’re like, ‘Oh, what am I walking into?’ And it takes a seasoned, I don’t want to say a veteran but somebody that’s experienced to open up that file and understand everything from, and I’ll use that term, from surface to basement essentially.

LARRY Exactly, one of the side notes and folks if you know about this that’s great. It seemed a really, really good example of the whispering of convergence out there when people say so, the Seattle Governor was elected on a green mandate, I said I wasn’t going to talk about this [laughter] but…

JANICEWhat do you mean it’s in big red letters [laughter]?

LARRY I know, you printed that out and I saw that, and I thought oh okay I guess we better talk about that. What happened was, his first words to his electorate, “I was elected on this and will tell you right now is that Seattle and Washington is going to run on wind and solar power.” Everybody clapped and I saw his acceptance speech and so on and so forth. And I’ll bet you he was on the phone a half an hour later after that to find out who’s going to provide the backup in case that doesn’t work? Right, the wind doesn’t blow, the sun doesn’t shine what’s going on?

JANICE What’s plan B?

LARRY What’s plan B? Or plan A plus B? And one of the largest companies out there said, “well, will put forward one of the things you need are generators.” And how are those powered? Propane. So, just think about the giant fossil fuels that are being used right now. And when Seattle gets cooler and they want to turn the heat up and they want to do all kinds of stuff. That is a convergence of energy that’s being used today and it’s to answer the wants but the needs.

JANICE Absolutely.

LARRY Right, of everybody. So, really that’s a big part of what we had to say today.

ELIZA FROM PANDELL Thank you Larry. We have about twenty minutes left in the hour and obviously the audience has been captivated by what you’ve been saying and yeah you’ve got people thinking. And another comment was, “Landowners are upset that we’re abandoning producing wells due to companies going bankrupt.”

LARRY Well, it’s ugly, ugly out there. And I can say from my experience working for another organization which you know about - is the small producers, you know blanked out by lots of stuff. Including and I’m going to raise it now and saying the minimum bid at the crown land sales, and so just send all your notes to, no I won’t say it. If we want to change it…I truly feel that that was done without understanding our business. All of it. Like not all of it, we’ve got small, medium and very large companies and if effects people quite differently. You’re right and thank you for that comment whoever sent that in chat. The landowners are upset and three years ago in response to that they got a visit from a solar group, remember we talked about this, Janice and I had a great conversation [laughter] with the entire association of solar providers.

JANICE Wasn’t solar, I feel like it was wind.

LARRY I’m sorry wind. It wasn’t solar. [laughter] Solar is what led me to the wind to talk about that because when you put up solar you’ve actually covered so much land and then all of a sudden what led to that discussion was the caveats that’s put-on title. And that conversation, is where absolutely, at least in Alberta, is that you need to have a licensed landman procure these sites for folks right?

JANICE Yes, we say you should.

LARRY You say you should, but they all don’t, right?

JANICE They don’t always.

LARRY And a landowner, looks at a much larger document then cause we’re pretty happy with a three pager.

JANICE And that’s the biggest difference right now is that the oil and gas industry, you look at the CAPL documents that have come out and they’re standardized. Right. And so, when we look at the renewable industry, they’re not standardized but that’s also the competitive advantage that some of these companies have, right?

LARRY Right.

JANICE Very similar in how some of them are being dealt with, but for the most part every client that we have, I don’t think I’ve seen a document that looks the same yet.

ELIZA FROM PANDELL Janice we have a question here “Is CAPL formerly addressing the minimum bid recently imposed by Alberta Energy with joining with CAP or EPAC, on the matter?

JANICE Yeah, I can speak to that. So, we did actually send a letter to the Alberta Energy office. We have addressed it. There’s obviously our business development portfolio, which is led by Director Jacquie Farquhar. Jacquie’s group has been dealing with that, so we are on the phone with them. We’ve told them how we feel about it but again, you know the thing is that sometimes the problem is, you know without getting myself in trouble…Jacquie has done a great job. She’s done an amazing job but sometimes even our own government doesn’t necessarily see the value in working with CAPL. So, were trying to build on those relationships even farther.

LARRY Right, it’s a not a revolving door but it’s a door that we’re pushing open because we do have some of the answers. And some of the answers are we all know that a bonus bid at a land sale does not mean a productive well.

JANICE Yep, and I mean the other thing too is the fact that we did actually, have some, I would say there was some reward in it because we were able to, for lack of a better term, negotiate but they did bring the minimum bid price down from what they were initially looking at. So, do we want to call that a win? We can. I mean is it an overall win compared to what we were paying before? Not so much. Right?

ELIZA FROM PANDELL I think it’s just got people thinking. You know, someone else mentioned, “Is there an opportunity for CAPL to standardize renewable contracts?”

JANICE It’s a tough situation because I work for a service provider and so we work with renewable clients right and that’s one of the things that they take pride in is their documentation. No different than any land person, we take pride in our documentation. Do I see that coming? I mean that would be a conversation that would definitely have to have with the regulator and in Alberta specifically that’s not the AER that’s the AUC (Alberta Utilities Commission). You’re dealing with different regulators. I think a lot of the things for us to is that…you know when you look at renewables and specifically in Alberta and Saskatchewan, we have an existing industry already. So, oil and gas has been here obviously a lot longer than renewable industry has, and I’m not saying renewables is new because if you think about it back in 1993, I think I was no I wasn’t still in diapers [laughter]. I was still in grade school though. Back in 93 was the first commercial wind farm built in Alberta. That was Cowley Ridge. So, renewables has been around in the west, it just hasn’t been as much in the forefront as it is now.

ELIZA FROM PANDELL Can we touch a little more on that because there has been a lot of chat and a few questions have now just popped in about, is there a future for geothermal power and job creation in Western Canada?

LARRY Well, Western Canada is kind of a big territory because we have a family cabin and a condo out in Windermere and geothermal was all the rage. You know, because why wouldn’t you tap into that stuff?

JANICE Just look at Saskatchewan. Like, hello.

LARRY That’s right and one thing Eliza that hasn’t been mentioned is what about helium? And I thought it was only used to fill up balloons and so I could talk funnier [laughter]. You know that opportunity is still there.

JANICE Just don’t blow out any candles.

LARRY No, but doesn’t anybody know the price of helium? It’s outrageous. Well, what’s it used for? Go out of this and go on there and look at it. And all of us are going, is helium something we can chase? Well, Saskatchewan definitely has the cornerstone and the foundation for most of the helium. But that doesn’t mean it’s not here because there are wells and part of looking for depleted reservoirs, when you get into the chemistry of this stuff you do find helium producing reservoirs. Well, that could be one of the diamonds in the rough.

JANICE Absolutely and we do have CAPL people actually work within that industry. Donna Bowles over at North American Helium. So, if there is anyone that knows a lot about it call Donna.

ELIZA FROM PANDELL So, someone wanted to know if you have any advice for good direction for future graduates to the energy industry? How should things be approached these days for those future graduates?

LARRY First of all our backgrounds, Janice’s current actions on the board with CAPL, and my previous one is, we have a tremendous relationship with the University of Calgary. And we all know that I would say that churning them out would be a bad way to say it, but there was a lots-of students coming out looking for work. And in the heyday, that’s why it was there and created and we had a tremendous way to get that to happen. And then it’s changed into the EPLM Program. And Janice knows they’re teaching tremendous amount of stuff about all energy sources and they’re also not limiting themselves to land students, in so much as anybody can take this course. And so, we have a lot of engineers, and a lot of marketers, and so on and so forth. Out of which, I know based on what we talked about today, the evolution of this will turn into jobs. It just isn’t big right now. It could be big next year.

JANICE I think the biggest thing that I’ve learned that I can pass off to the younger generation. I still like to think I’m part of the younger generation [laughter].

LARRY Yep you are.

JANICE And you know, even just learning from Larry, it’s building your network. Let’s be honest, the energy industry, as large as it is, it’s actually-quite small. And everybody in that industry it’s about sharing that network. So, one of the things that I’ve always prided myself on is my network. And I’ve always said this to people, ‘my net worth is my network’. Right, because we want to make sure…

LARRY I’m going to write that down.

JANICE [laughter] You want to make sure that the people that are in the room with you remember you for something that’s valuable to them. I have no quarrels about sharing my network with anyone. Right. I think we’re all in this industry to help each other and I think that’s one of the biggest value-adds that I’ve been able to give people. Is if you see someone on my network or you see, obviously we don’t have any events going on right now, but if you see somebody that has a relationship with me, I am more than happy to share that. Maybe that’s the biggest thing, build that network because it can really, it’s the bases of who you know and what they can do. Like Larry and I were talking about this earlier. You know Larry chimed in about his first deal and I remember doing some of my first deals. And being super junior to it and fresh. And, actually having to call on some of my senior people in the industry and be like, ‘So, I’ve got this and I’m a little stumped do you think you could help talk me through that?’ And that’s one of the values that I find for not just CAPL but within the land community itself. CAPL, CAPLA, IRWA. Is that everyone is so open to helping each other. And don’t close that door of opportunity because you never know, like if you’re doing a deal with someone, one day they might be sitting across the table from you doing that deal. The next day they might be your boss. Always present yourself with that opportunity to network and to create a better opportunity to do a better deal.

LARRY I would be remiss for mentioning a couple of names here of people who supported us in getting ready for this talk and having those great factoids. Maureen McCall is the writer for the BOE. She put out an article on Nov. 27th, I was quoted in that but…so it’s a little incestuous, but I just look at it and I go that was a tremendous article talking about opening the doors to more education about. So, it is all about more, we want more, more and more. And let’s get as many facts as we can because we are the purpose driven people for business. So, we can take all these facts and then we can try and make money with it.

And the other one is, a really good friend of mine, my geologist that I par up with at one of my clients, Ed Matcinew. Eddie’s oil, I love that guy. He’s so bright and he’s one of the driving forces out there for the work behind, what the clients, a number of them that I’m working for, are excited to get into hydrogen, excited to talk about LNG, excited to talk about the future. And we just have to follow the money and you could see where this is going.

JANICE I feel like he’s an honorary landman.

LARRY Yeah, and he knows a lot of the landmen out there. His background is drilling wells competitively so, great thanks Ed and Maureen. Absolutely, and make sure you follow Maureen on BOE and LinkedIn.

JANICE Yes absolutely.

LARRY Any other questions?

ELIZA FROM PANDELL Since we have a couple of minutes, a lot of people seem concerned about repairing those relationships with landowners.

LARRY Okay, so outside of the organizations we’ve mentioned there is a very active organization working right now to change that. And it’s cost them as an organization, tremendous amount of money but they’ve got the ear of the Ministers in Edmonton listening to it. And changing the way we looked at LLR (licensee liability ratio) and abandoning wells. And making it possible for the land fraternity for sure, getting involved and turning that around because of networking conversation that started three years ago.

And so, we say to the landowners we are doing our best. Some of those wells, like I said, have changed hands so they’re not going to be derelict, they’re going to be active. And one of the first things they have to do of course is makeup for the rental payments they hadn’t made in the last three years. So, that’s part of it. Unfortunately, some of the assets just don’t make money. And I think that we have to look at that.

JANICE Well, you just have to cut your losses.

LARRY Yep, exactly. So, we can’t speak the economics for everybody, but we know there’s certainly a role for landmen to play in that.

ELIZA FROM PANDELL Great thank you. So, yeah Larry and Janice you have been wonderful. We’ve had a fantastic group in the audience, and I think this is an all-around success. So, thank you so very much for your time and we really do appreciate it here at Pandell. Thanks guys. Have a great afternoon everybody.