Monday July 28, 2014

Rushford Takes the Reins

Quicksilver exec becomes new Producers Group chair
Resources Canada Photo

Quicksilver Resources Canada’s senior vice president and chief operating officer Dave Rushford took over as chair of the Horn River Basin Producers Group in November.

Dave Rushford admits he has big shoes to fill.

Thirty years into a career in the Canadian energy sector that began with a stint as drilling foreman for Pancanadian Petroleum, the senior vice president and chief operating officer for Quicksilver Resources Canada is now taking over for Rob Spitzer, vice president of exploration with Apache, as the new chair of the Horn River Basin Producers Group, an association of eleven oil and gas companies operating in the shale gas play near Fort Nelson, British Columbia.

“Rob’s done a fabulous job,” Rushford said of his predecessor, a man who has built good relationships and a solid reputation in Fort Nelson during his time as chair.

Rushford hopes to build on those relationships, but it isn’t as though he is a newcomer to the region.

“The Horn River’s extremely important to Quicksilver. It’s by far our largest growth property in Canada. Maybe in the company,” said Rushford.

“I’ve had quite a long history, actually, with Fort Nelson,” he continued. “Because, back a number of years ago, I was the business unit vice president for Encana for their Fort Nelson business unit.”

That was in the days when Encana was developing the Jean Marie natural gas play in that region, long before everybody was talking about the Horn River Basin.

“I’ve known a lot of the players up in Fort Nelson for quite some time, both within the municipality and within the First Nations,” Rushford added.

Rushford was given the reins in early November, during a very quiet period in the life of the Horn River Basin, largely due to low natural gas prices.

That doesn’t mean the group isn’t relevant, however.

“The Horn River [Basin] Producers Group was established originally – and the reasons are still very valid – to create a [venue] for government, local municipalities and First Nations to have a window into the activities in the producer area,” said Rushford. “And I think the need to have those open communication lines are self-evident. And even though activity levels have slowed down up there, the need for communication hasn’t. I think it’s extremely important for industry to keep the communication lines open.

“Given the size and scale of the Horn River, it’s not like a normal play in Canada. When the thing gets kicked off [when] gas prices, hopefully, finally, come back a little bit, you’re going to have to have some coordinated activities in terms of the issues that a play that size brings.”

Many of those issues concern long-term planning.

“When I look at the municipality, there’s just tremendous draws on resources both within the service sector and the municipality itself,” Rushford said of Fort Nelson, adding that the Producers Group has a role to play in solving those problems.

The cumulative effects of natural gas exploration and production in the Horn River Basin is a frequently discussed issue, particularly in terms of what might occur when activity ramps up again because the natural gas price rebounds or the liquefied natural gas (LNG) business takes off.

“I have to confess my crystal ball probably isn’t any better than anybody else’s in terms of when those things are going to happen,” said Rushford.

“What I can tell you is, certainly, under the current gas prices it’s very difficult to justify large expenditures in the Horn River right now,” he added.

That is why much of the activity in the play – and Rushford admits that the activity level is currently quite low – is related to commitments made by the individual companies at the moment.

“You’ve got a couple parties that are doing some drilling on joint ventures,” said Rushford. “Those will go ahead. You’ve got a little bit of drilling that’s going on in terms of land commitments. And some drilling that’s going on to meet pipeline contractual commitments.

“You could summarize it by saying almost all the drilling that’s going on right now is related to commitments. That big push to have the ramp up in activity really isn’t going to happen until we get some pricing signals.”

Due to the economics of the play, joint ventures are becoming increasingly important for producers in the region, according to Rushford.

“When you look at the scale and size of these projects, there’s going to need to be an influx of third party capital,” he explained. “You’ve seen some of that already with Encana and Nexen in particular. But I think there’ll probably be some more joint venture work done up there just because of the amount of capital that’s going to be required to fully develop that play.”

Quicksilver is one of those companies exploring joint venture opportunities.

“We’re talking to a number of parties right now,” said Rushford. “Hopefully, we’ll have something concluded in the near future. But that’s about all we can say about it right now.”

The proposed central corridor road project, which was developed by the Producers Group, could also help spur activity in the Horn River Basin by improving access to the play from Fort Nelson.

“It’s about a $100 million project,” said Rushford.

The Producers Group has proposed to split that cost evenly with the Province.

“Some of the main reasons for [the road] are improved safety and cost efficiencies,” Rushford continued.

“Having a direct access from Fort Nelson right into the core areas of the Horn River Basin is going to have a huge impact.”

Rushford believes that impact will also be felt in Fort Nelson.

“It allows us to start doing more local work out of Fort Nelson,” he said.

“We have a significant reduction in travel time, which is going to increase safety for all of our workers and our contract workers. And, obviously, reduce transportation costs as well, which will help with the profitability of the basin.

“There really isn’t an area that that central corridor doesn’t have a positive impact on from a Producers Group perspective.”

Rushford has sat on the steering committee of the Producers Group for the last two years, almost as long as he has been with Quicksilver.

“Most of our involvement here over the last year has been around communications,” he said, citing their participation in hammering out enhanced benefits and consultation protocol agreements.

“We’ve done a lot of work … with the Northern Rockies Regional Municipality on some long range planning and infrastructure needs that we’re going to see as an industry,” he added.

The central corridor road is an example of those efforts.

During his time with the Producers Group, the most important lesson that Rushford has learned is that the lines of communication must be kept open.

“Whether it’s direct dealings with government, First Nations or the municipality, having those personal relationships is extremely important, because it allows you to sit down and have an honest dialogue around issues,” said Rushford.

That basically summarizes Rushford’s goals for his tenure as chair of the Producers Group.

“I think my professional and personal goals are probably the same,” he said. “And that’s to continue that legacy of communication that Rob has established and carry that going forward.”


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