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Dec Jan 2004/2005  - The Logging and Sawmilling Journal

SMALL SAWMILLING

Cutting lumber in the oil patch

A small sawmiller is enduring the harsh climate of northern BC and Alberta to build a timber salvage/sawmilling business with energy companies in the booming oil patch.

By Tony Kryzanowski

Over the past three winters, Peace Fibre Consulting has milled lumber on site from timber salvaged from pipeline easements and oilfield leases, and used that same lumber to construct 34 kilometres of quad tails, consuming over a million board feet of lumber in the process.

Resource companies working in remote areas frequently need experienced help to market the timber they salvage to gain access to oil and gas leases. A Fort St John, BC-based forestry consultant and sawmill operator is helping to show the way. Darrel Leahy owns Peace Fibre Consulting Ltd and works with a number of oil and gas companies operating in the Fort Nelson and Fort St John areas of northeastern BC. Leahy not only markets their salvage timber, but also solves the problem of building quad trails to access well installations located in the middle of muskeg. Over the past three winters, Peace Fibre Consulting has milled lumber on-site from timber salvaged from pipeline easements and oilfield leases, and used that same lumber to construct 34 kilometres of quad trails, consuming over a million board feet of lumber and 238,000 nails in the process.

Given the success of his program, the high level of resource development in northeastern BC, and the problem of driving through the muskeg in summer, Leahy says there is a lot of sawmilling business potential for the person willing to work in a challenging environment. Sawing the lumber on-site gives his industry clients the option of using the lumber themselves or working with him to sell lumber products to outside sources. “I think there should be more milling out in the bush,” says Leahy. “I think some of the companies that I work for are now considering that option.” The opportunities are sometimes right in your face. He gave one example of a major energy company that uses wood to construct helicopter pads at every one of its petroleum leases in the area, as well as a walkway from the pad to the producing well.

Peace Fibre Consulting rents an Economizer sawmill from Trans North Timber to produce lumber and chips. Sawing on site gives Peace Fibre’s clients the option of using the lumber themselves or working with the company to sell the lumber to outside sources.

At present, the company is shipping truckloads of 3x10 and 3x12 material at $700 per thousand board feet —plus trucking costs over long distances—to build these structures. Meanwhile, Leahy is a mere stone’s throw away shipping bucked logs over long distances for consumption by area sawmills and OSB plants. “I could be sawing those logs for that company’s use right there,” he says. While the business potential exists, Leahy has learned from experience what business practices work and what to avoid when dealing with companies whose primary focus is not the forestry business.

The first major hurdle is the general remoteness of business operations. Calgary-based energy company Nexen Inc is one of Leahy’s major clients. He contracts services to the company primarily in its Hay River field in the vicinity of Rainbow Lake, Alberta. “The remoteness is a real challenge for me,” says Leahy. “It’s about an eight hour drive, one way.” His role at Peace Fibre Consulting is primarily marketing and customer relations. Last winter, he put 50,000 kilometres on his truck. One important aspect to succeeding in providing a timber salvage service is having an understanding of how the client’s business operates. For example, there’s no use meeting with oil company representatives once a timber salvage project is already underway, because budgets have been allocated and plans have already been put in place.

At that time, their main focus is on how they will access the non-timber resource. Leahy says any attempt to provide a timber salvage service has to be done when the client is planning winter projects—not when these projects have already started. “With Nexen, they provide me with their survey maps, we fly the area, then I submit a timber volume estimate and a salvage plan,” says Leahy. He adds that credibility is an important factor with oil companies, and this ties into how he got involved in the timber salvage and consulting business in the first place. Back in 1994 he took a job as general manager of North Peace Timber in Taylor, BC, which had a hardwood chipping contract with Fibreco Export in Vancouver.

For the quad trails, six-foot long cross pieces are laid every six feet along the trail, and five, 12-foot runners are placed on top, with three-inch spacing between each board. Six-inch spiral nails are used to attach the components.

While with North Peace Timber, he gained invaluable experience estimating timber volume and purchasing both private and salvage timber. “In buying salvage timber, I realized how much help these oilfield consultants needed with their timber salvage because they had never been in the game and didn’t understand it at all,” he says. “That prompted me to start my consulting company.” Leahy says oil companies seemed to be able to hire loggers to get the wood decked, but had trouble organizing its transportation to mills.

So he broke into the business by offering to help them with their timber sales and transportation problems. This grew into pipeline easement clearing inspections and salvage supervision. Eventually, he hooked up with Nexen field representative Dan Hommy, who needed help estimating volume and putting together a timber salvage program for the company’s operations in the Hay River field. In the winter of 1999-2000, Peace Fibre Consulting moved 6,000 cubic metres from Nexen’s pipeline and oilfield leases, and roads to sawmills in Fort Nelson. “I’ve looked after their salvage project every winter now for five years,” says Leahy.

His client list now includes many other prominent names in the Canadian oil and gas business, such as Husky, Canadian Natural Resources Limited, PennWest, and Duke Energy. Concerned with the cost of shipping salvage logs over long distances, Nexen representatives asked Leahy if they could somehow use the wood themselves. “Their people working in the Hay River area always wanted a method to get from one well to the next in the summer time,” says Leahy. “It’s all muskeg country and they were spending a lot of money in helicopter costs. They tried quads, argos, and even hovercraft.” Nothing worked. With the wet terrain, a three kilometre return quad trip by an operator to go to a well site to do a half-hour job took all day. So Leahy suggested cutting the decked timber on-site and using it to build quad trails.

While the idea seemed quite achievable in principle, it has taken a lot of coordination in practice. For example, because Leahy must wait for the construction of winter roads and the ground to freeze, he has a very tight production window to saw the lumber and build the quad trails. His season starts from mid-November and concludes at spring break-up. Leahy first hires a couple of self-picker trucks to transport the decked wood to a central location where he has set up a headrig sawmill to saw mostly the larger timber, as well as a rented Economizer sawmill to saw logs nine inches in diameter and smaller. All the wood is scaled and mostly bucked by hand to 12-foot lengths.

Larger diameter timber that is 20 inches and over is bucked to 16-foot lengths and sawn into 3x10 and 3x12 timbers. Part of the challenge of sawing lumber from salvage timber is that there is no predictability in the size and quality of the timber. With the smaller softwood timber, the company has three sorts by diameter, resulting in the manufacture of 4x4’s, 4x5’s, and 6x6’s, which are sawn on the Economizer to 3x6’s. All of the hardwood lumber is transported to another Nexen project in Fort McMurray, Alberta, for use in a pipe yard. Leahy rents the Economizer sawmill from Trans North Timber owner Leonard Peterson, who operates a portable sawmilling and chipping business in Fort Nelson. He says the Economizer mill was originally manufactured by Murphy’s Manufacturing in the BC Okanagan. An improved version of the Economizer is now marketed by a company called Micromill, located in the same area.

Peterson modified the infeed and outfeed rollers to increase productivity and to centre the log better as it proceeds through the mill. He also modified the set-up for the cutting head so that it would accept a Key Knife system. “It’s the right size and type of mill for that particular project,” he says. “Also, the chips that are generated are the right quality for the oil companies to use for their absorption projects.” Leahy says the process of manufacturing the components for Nexen’s quad trails consists of bucking, sawing, and stacking, followed by unstacking and trail construction. “It’s the most labour intensive thing I have ever asked anyone to do,” says Leahy. All trails are constructed on pipeline easements. It starts by laying six-foot long cross pieces every six feet along the trail, then placing five, 12-foot runners along the top, with three-inch spacing between each board. The company uses six-inch, spiral nails to attach the components.

Each must be started by hand, and then pounded in using an electric jackhammer. At present, Peace Fibre Consulting employs three seasonal workers. Leahy says two of his biggest challenges are finding enough work year round to keep his employees, and ensuring that they have taken all the safety courses required by his energy clients. After spring break-up, he has been able to find a few, smaller consulting contracts in the Fort St John area, and has also taken on some summer brushing contracts to keep his employees. The quad trails themselves have held up quite well. Energy company operators are able to conduct any regular maintenance required on the trails themselves, just by keeping a hammer and some nails on their quads. While the sawmilling work is challenging, Leahy feels he has been very fortunate to land this type of work. “I consider my Nexen Hay River project to be a dream project for an ex-sawmiller like myself,” he says. He adds that Nexen’s progressive attitude toward timber salvage has been very beneficial to his business, as has the support of consultant Todd Hommy and plant manager Len Elliotte.

In fact, the quad trails are now part of Nexen’s safety plan requirements for the area. For individuals looking for an entry point into independent sawmilling, Leahy has proven that working with other, non-forestry resource companies is viable for those willing to work in a challenging environment under tight time constraints.

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