08 March 2018 0 Comments Posted By : Nelson Bennett

Persistence, location beat oil downturn

One of the only independent natural gas engineering firms based in B.C., Solaris expected a major boom in business from a new liquefied natural gas (LNG) industry.

Then in 2014, oil prices tanked, multibillion-dollar LNG projects got shelved or cancelled and Alberta’s oil and gas sector suffered a withering downturn.

Solaris saw its business and head count fall by about 17%, but it was even worse for many Alberta companies.

“Most of the industry experienced a contraction of 60% to 70%,” said Solaris founder and president Avi Salh.

The company was well positioned to weather the storm, since one of the few regions that continued to attract investment in new natural gas plants, gathering systems and new wells was northeastern B.C., where Solaris does much of its business.

But Salh also said that being located in B.C., rather than Alberta, turned out to be an advantage. The company’s location has been good for employee retention, he said, adding that about 50% of Solaris’ workers have been with the company for eight to 10 years.

“If you want to work in the upstream oil and gas space in B.C., then you work here, or you go to Calgary,” Salh said. “There’s not many people in town who do this kind of work.

“The clients know that this team has almost been insulated from the hire-fire [cycle]. Alberta, when it gets busy, the people become very transient. That has a huge impact on some of the companies and their ability to provide a quality service. Here we’ve never had that.”

As everyone in the business community knows, Vancouver is the centre of excellence for the mining sector, whereas Calgary is the hub for companies serving the oil and gas sector. So when Salh was starting out as an independent engineering consultant for the oil and gas sector in 1993, Surrey was an odd place to hang out a shingle.

A chemical engineer who worked in the North Sea offshore oil industry, Salh immigrated to Canada from the U.K. in 1992. When he decided to set up shop as an independent engineering consultant, he planned to go to Calgary, but his wife, Mindy Salh, who is from B.C., urged him to stay here. It was tough for an independent engineer from B.C. to get his foot in the door.

“Nobody would give me a contract because I’m a kid, right?” Salh said. “I used to fly up north to Fort St. John. I used to work on the oilfields and do free work for them. People in Fort St. John used to give me local orders for $5,000, $10,000.

“I did that for many, many years. It took almost 15, 17 years to break that mould.”

Solaris works exclusively in natural gas upstream engineering, procurement and construction management. The company designs the well pads, pipelines and compression and gas treatment facilities for natural gas development, and manages their construction.

Solaris is also working on one of the two propane export terminals proposed for Prince Rupert, and is focused on designing small LNG plants for domestic use, like bulk fuelling for transportation.

Salh also sees opportunities for companies like his in new federal and provincial regulations that will require the natural gas sector to reduce fugitive methane emissions by 45%, since that will be accomplished through engineering.

When Solaris first started in the 1990s, natural gas extraction in Western Canada was carried out through conventional drilling. Today, it is done through unconventional extraction such as horizontal drilling and hydraulic fracturing.

Thanks to the growth in natural gas activity in B.C., Solaris’ head count has quintupled in 10 years – from 60 or 70 employees to 320 today.

Since about 2012, northeastern B.C. has increasingly drawn investment from the natural gas sector. Some Alberta companies have come to focus almost exclusively on northeastern B.C.

While part of that boom has been driven by big companies like Shell, Chevron (NYSE:CVX) and Petronas developing upstream assets in preparation for an LNG industry, others have invested there because of the abundance of natural gas liquids, which include light oil, propane and condensates that are used to dilute the bitumen mined in Alberta.

“In 2012, 2013, we were working with Apache Canada and Chevron, and we were doing all the upstream work to feed Chevron’s Kitimat LNG plant,” Salh said. “In addition to that, we were also doing all the work for Nexen for Aurora LNG. And we had set up this company for an infrastructure of 650 people, which we easily would have hit.

“Had those projects gone ahead, we probably would have been one of the largest companies in town [Surrey]. It was a huge missed opportunity.”


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