Resource World Magazine

o c t o b e r / n o v e m b e r 2 0 1 4 www.resourceworld.com 55 Ferus positioned to serve the world's largest oil and gas boom by David Forest U p until now, Canada's petroleum sector has been largely focused on Alberta and Saskatchewan. But there's good reason to believe that focus is about to change – moving to British Columbia and the Pacific Coast. The big reason is natural gas, which is a commodity that's become abundant in North America with increasing demand from regions like Asia. That supply-demand dynamic may be setting up an enormous opportunity in BC. With the province positioning to become the premier hub for shipping North American natural gas across the Pacific, in the form of liquefied natural gas, or LNG. One of the major drivers here is that BC shipments of LNG would have a shorter sail to Asian consumers than say, from proposed LNG developments on the US Gulf Coast. Of course, this will mean big spending in the province's oil and gas sector. Recent analysis from National Bank Financial pegs the potential amount of development dol- lars required at $55 billion, to build the gas wells and associated infrastructure feeding large-scale LNG exports. That's a massive cash injection – one that's setting up to create big opportunities for companies ser- vicing the local petroleum industry. For investors, there are a number of ways to play this high-growth opportu- nity. But most analysts are suggesting that one particular sector will be the immedi- ate beneficiary of the coming big spending here – oilfield services. The challenge is that relatively few ser- vices firms have a substantial footprint in the burgeoning BC petroleum sector, leav- ing this realm open for smaller companies nimble enough to move quickly on emerg- ing opportunities. Companies like Ferus Inc., one of the few Canadian, homegrown, natural gas, supply chain solutions pro- viders in the game and a company that's moving quickly to become a go-to services firm for the province's surging natural gas sector. Ferus is actually a specialist in cryo- genic liquids. Beyond natural gas, the company is expert in the storage, transport and deployment of nitrogen and carbon dioxide throughout North America. As it turns out, that's a key advantage for the coming natural gas boom. Natural gas wells being drilled throughout Alberta and BC, as part of the $55 billion spend men- tioned above, need these substances to help in advanced drilling completions like frack- ing, which are a key component in coaxing big volumes of gas out of shale formations. For Ferus, that's a major opportunity in supplying and servicing the local drill- ing sector. Especially since the company already owns and operates liquid nitrogen, liquid carbon dioxide and liquefied natural gas facilities across Western Canada. The really interesting thing will be other upcoming opportunities in the natural gas boom for Ferus. In fact, the company is moving to use its expertise in natural gas supply chain solutions to change the face of the industry completely, including off-road applications such as mining, rail and marine. That's a great fit because the oil boom is going to require a great deal of energy; namely, power for trucking, drilling and associated equipment used to service the completion of thousands of wells. In remote places like northern BC, such development is often powered by diesel – an expensive and polluting fuel. But Ferus believes it can help the oil industry do things cleaner and cheaper by using natural gas for power generation. The com- pany owns and operates one LNG plant in Alberta that produces liquefied natural gas for use in the on-road and off-road sectors and is planning for a second one in that province. Beyond these high-level applications, Ferus may also be able to help natural gas drillers at the well pad itself. The company is looking at ways to use its gas products for onsite solutions for power and heating for drilling operations – offering customers even greater energy efficiency and savings. This grand plan got a big vote of confidence, when major international con- glomerate General Electric Company [GE-NYSE] joined with Ferus on similar projects in North Dakota – giving a big lift to the firm as it executes on its game- changing strategy and demonstrating that even the world's largest companies see a big opportunity in Western Canada's petroleum revolution. For those local firms leading the charge, things may be just getting started. n Ferus CNG (compressed natural gas) tube trailers on a drilling site in North Dakota. Photo courtesy Ferus Inc. OIL & g a s

• Cover