Weyburn– Two years ago, Pipeline News did an entire edition on looking for work in the midst of the early days of the oil downturn. As part of that focus, editor Brian Zinchuk presented his own resumé as a former pipeline excavator operator to various companies to see what the jobs search would be like. One of the companies profiled then was Jerry Mainil Ltd. of Weyburn. At the time, there was no work to be found. Now, general manager Dennis Mainil is looking for skilled people again, and conducting interviews.
Pipeline Newsspoke to Dennis Mainil on May 6.
The bulk of Jerry Mainil Ltd.’s current work in the Oungre area. They also expect to have some crews working in the Stoughton area. Lease construction is the number one activity for Jerry Mainil, followed by lease reclamation and cleanup. He said, “We’ve got pipeline crews firing up. Our general maintenance has been fairly steady.”
They’re following a number of service rigs in that regard.
Compared to peak levels, Jerry Mainil’s staff level went from around 120 to around 90. They’ve started hiring again. How many?
“Not enough,” he laughed. “We can’t find people. That’s the problem we’re having.
“Skilled individuals have left the industry.
“You would think, with the downturn, there would be an abundance of highly skilled people, looking for work,” he said.
“We’re looking for three or four labourers right now, half a dozen operators. I’d take one truck driver.”
Mainil said, the work sharing program helped bridge them to this point. “We’ve been on it for two years,” he said. They are on their last extension, which runs out in August.
It helps out for rain days and rain weeks, he noted. They met their required hours, and it
kept revenue coming in for workers.
“I think a lot of the industry has seen that good people have found other employment,” he said. “The house is paid for, I got a steady job, who cares? I’m not going to chase the hills and valleys.
“The guys got burnt. If your rig fires up, and the toolpush says, ‘I’ve got two holes. I need you back.’
“Are you going to leave a full-time, paying job, and guaranteed hours, to go for a two-hole operation, or are you going to say, ‘Go drill your two holes, I’m going to sit this one out,’” Mainil explained.
Abandonments
Jerry Mainil Ltd. did about 80 abandonments for one of their main customers last year, and that created a lot of employment, he noted. “That ties in not only cut-and-capping the well, but the ground gas migration, and the reclamation work, putting the site back together after.”
“They look for efficiencies. We used to do one a day. Now we do two to three a day, re-inventing the wheel.
“Traditionally you would have four people doing the job. We did employ people and did more of an assembly line, instead of one guy starts, one guy finished. So we had one guy digging them all up, and another crew coming along. You need a backhoe to lift all the stuff out of the hole.”
The company found more efficient ways to use their staff.
Once completed, there would typically be roughly two metres of cover.
Economics of equipment
Oilfield services companies have been working with lean margins for several years now, and that has had an impact on capital purchases like equipment. “You can’t just go buy extra Cats, just in case,” Mainil said. “The exchange rate is hurting us bad. We’re still purchasing, but not new.”
The exchange rate has helped oil companies, but hurting service companies. That’s because heavy equipment is greatly dependent on the Canada-U.S. currency exchange rate.
For instance, a Caterpillar D8 dozer used to go for C$750,000, but now that same dozer costs C$1.1 million new. In the meantime, the amount oil companies are willing to pay out for equipment has dropped substantially, so service companies can’t charge as much as they used to. The net result is new heavy equipment simply isn’t being purchased.
“The economics just aren’t there,” Mainil said.
“We’ve been very frugal, using older equipment now. Our fleet is not current anymore. We’re rebuilding it. We’ve had three to four Cats torn apart all spring.”
It means more mechanic time and parts are needed to keep up.
When it comes to light vehicles, they bought several just before the downturn really hit.
“We just rigged up a brand new, 2015 crew truck. We bought it two years ago, and parked it in the shed. I have two more brand-new three-quarter tons sitting in the same shed. We got five trucks. In the time of 2014, the economy rolling as hard it was, you had to be ahead of the curve. So if you needed trucks, you had to order them in August so you would rig them up in the winter and have them ready to roll.
“We had ordered five new trucks, six, including a semi. The semi, we completed that and put it on the road. But the two three-quarter tons and two one-tons, I just took them and parked them at my place. They’re going to be off warrantee in six months, and have never been used.
“We’ve got a large surplus of trucks, so no sense running the new ones. You might as well mile it out. We’re running them longer, too – there again – economics. In the past, 160,000 to 180,000 kilometres. Now we’re over 250,000 kilometres, 270,000 kilometres.”
He noted that 300,000 kilometres can just be a number on the dash.
For the summer of 2017, they’re gearing up, hiring staff and rebuilding equipment. They’re still shopping for some new equipment as well.
PST impact
But there’s impact from the 2017 provincial budget that hasn’t got a lot of play – the provincial sales tax (PST) is now charged on many oilfield activities.
“Every lease, road, maintenance crew we send out – we now have to charge PST,” Mainil said, adding that it impacts oil companies’ spending.
“I was disappointed with the budget. It should have been simpler, the way they put the PST in. It should have been identical to the GST.
“In our business, we went from not charging PST, (charging it) 10, 15 per cent of the time, to now we’re charging it 90 per cent of the time,” he explained.
Oil companies’ budgets will stay the same, but they’re effectively reduced by six per cent, because of the PST.
“It’s huge,” Mainil said.
Even figuring out what PST is charged on has been a headache. Snow removal on a lease? No PST, but dealing with mud on the same lease? Charge PST, he explained.
