It has been just about four years since Petroforma opened its doors on Southside Road, and the commercial lab has quietly been building a roster of clients in the provincial offshore oil industry.
The reason? Petroforma is the only commercial laboratory in Eastern Canada that provides reservoir fluid analysis to oil and gas companies.
It's a crucial service that used to take six to eight months and cost much more, as companies had to ship offshore samples to Alberta, Houston or Norway now, the same process takes three to four weeks.
Michael Hanrahan, Petroforma's president, explained that operators provide samples of oil, gas and producted water, the three materials that come out of oil reservoirs, and then conduct phase behaviour tests.
We recreate the reservoir conditions in our lab, so we would take the samples, combine the oil, gas and water into one. We would heat them up to 100 to 300 F, we would pressurize that up to 20,000 psi, and now we've recreated the reservoir.
By conducting tests involving pressure, temperature and volume, said Hanrahan, the company can determine how the reservoir will perform - information oil companies need to determine how best to extract the oil from a particular reservoir. It's important that the oil and gas stay combined in the reservoir, he explained, as companies want to extract and sell the entire homogenous mixture.
"If you pull the liquids from the reservoir too quickly, you can reduce the pressure. And if you reduce the pressure, the oil and the gas are going to separate," he said. "It's the exact same thing as having a pop bottle that is closed and you've shaken it up for a million years as hard as you possibly can and then you pop it open. The gas separates, and now you'll never be able to get the oil out either."
How oil is extracted from a reservoir is based on a model, said Hanrahan, that constantly needs to be fine-tuned. As oil gets removed from a reservoir, its properties change, he said.
"If you started, originally, with 100 million barrels, 10 or 20 years later you're dealing with 50 million barrels. So that's a completely different reservoir than what you started with, and that's why it's always important to keep the data current."
Hanrahan has worked in the oil and gas industry for more than 20 years, from working on the Hibernia construction project to 10 years with the Irving family. The spark that became Petroforma happened several years ago when Hanrahan was in Aberdeen, Scotland, for an international oil and gas show.
"I took some time and went to the library, and I went through the archives of the newspapers and I looked back 25, 35 years, because there are parallels between Aberdeen and St. John's," he said. "I looked for articles on new companies that were starting, the companies that were critical to the oil and gas industry, and then I compared that to the list of names that were currently very successful. Huge, huge companies around the world. And several names that came up throughout that exercise were lab companies."
Upon his return to Newfoundland, Hanrahan started scouting potential customers, asking operators what the benefits for them would be to having a lab in St. John's.
"We were very surprised to learn that until we came along, samples that were taken from offshore Newfoundland and Labrador since pre-Hibernia, every sample was either sent to Europe or Houston or Calgary for analysis," he said. "The problem with that is that by the time they get shipped off, as a high-pressure sample, shipped as a dangerous good outside of country, analyzed and then the results come back, it was often six to eight months."
That same turnaround, with the exact same data set, said Hanrahan, is three to four weeks for Petroforma. It's obvious the need is there now, said Hanrahan, but that wasn't necessarily always the case.
"It's a multi, multimillion-dollar lab," he said. "So you have to have a critical mass of operators present, and a critical mass of exploratory work. Was that present 15 years ago? No. Is it present now? Yes, and is the potential there in 10 or 20 years? Absolutely. Even now we're in expansion mode."
Petroforma just invested half a million dollars in new equipment, which will expand not only the company's testing capacity but also the range of tests it can do. "Up until a year ago, even we had to subcontract some lab work to an Alberta lab, for instance. But now we can perform all lab work required by the offshore operators here in our lab."
The lab, which currently employs seven people, will fill two positions in the next few months. Hanrahan is gratified that the company has made it through the uncertain early years that any young business faces.
"For us, it's growth. It's expansion. We've gone through the hurdles of becoming a qualified vendor for many companies," he said, pointing out that Petroforma had to prove itself to oil companies, a process that took about three years; when oil investments mean multibillions of dollars, a quicker turnaround time means little if a local company's analysis isn't as good as established labs elsewhere.
"We were all pretty much scared to death. It's an incredibly tough journey," he said. "Not only do you have to demonstrate that you have the basic ability or that you have the right street address. You have to demonstrate that you are as good as any other lab in the world, or that you can provide the standard-level service that would be expected in Saudi Arabia or Houston - or St. John's, Newfoundland."
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