Some of the winners from this policy are the companies that are mining the vast gas deposits in the Athabasca tar sands in Canadian tundra. Although uneconomical when the price of oil is low, as the price rises, the profit heats up for companies that dig up the tarry dirt beneath the surface of the tundra and truck it or pipe it to a refinery.
As a result the Fort McMurry, Alberta area, 450km (300 mi) north of Edmonton is booming. “The last report that we heard was that over the next 10 years, there would be CAN$100bn plus spent in the tar sands,” says Greg Gessner, national sales manager of Canadian crane builder Kaverit.
This economic activity matches the economic boom of Alberta of the late 1970s-1980s, he adds, possibly even the third biggest economic boom in the world. The region sells more than half the cranes of Ontario, Quebec and the maritime provinces – CAN$90m compared with CAN$150m – with only a seventh of the population, Gessner says.
“In Edmonton you have a great manufacturing base: petrochemical, there is a great contingent of plastics, forestry, the steel industry – they have their own steel mill – and there are a ton of steel fabricators.”
The oil sands market
Gessner estimates the new cranes market for oil sands contractors is worth between CAN$4-5 million per year, but adds that the unit numbers are hard to judge because the cranes can vary so much in complexity and price. Also, these figures do not include orders from subcontractors.
Processing millions of tons of sand per year is not at all simple. It takes thousands of trucks, thousands of miles of pipe, and thousand of pumps and compressors and other machines to keep the sands flowing toward the refineries. All need to be maintained. Syncrude, currently the largest operation, employs 4,500 people directly, and three or four times that number as contractors.
“The maintenance is huge; the grit in the sand goes through metal in record time,” says Steve West of Canada’s Cranes R Us says.
Most of the cranes have relatively low duty – in FEMterms, 1Bm, West says. “Most are used in the process area, they strip down the equipment up to four times a year in high-abrasion areas,” he says.
“When the raw product is piped from the mined area, it goes to a cyclo-feeder [a treatment machine], which has different levels. Each is like a little plant, with monorails and jibs and travelling cranes. Every motor has something over it.”
“Overhead cranes are everywhere in a plant, in the process area, over tumblers and tailings,” West says.
“Basically any compressor in a pumping station needs maintenance, and cranes pull out valves, pumps and motors and remove them from the building,” Gessner says. Because the loads need to be lifted and shifted sideways to be offloaded, stationery hoists cannot do the job.
In process buildings, cranes are often installed 100 ft (30m) high to be able to raise loads above steam injection, standing treaters and other obstacles. It is common to need two large mobile cranes outside a building to install a single overhead crane. “You can have an installation cost of CAN$100,000 for a $100,000 crane,” he says.
Everything in the oil sands is done large. For example, Kaverit supplied cranes for a new bay for an expanded Suncor maintenance shop for its big 150t payload trucks. A few 40t cranes in a couple of bays would be further supplemented with another three to six bays with 20t cranes. These cranes would lift off the buckets, raise the front end, or replace the 14ft-diameter tyres, for example. Typical cranes in these shops have large spans – 70ft (21m) or more, he says.
The hoist spec
But what is unusual about the tar sands operations is that they often require explosion-proofing, even for maintenance equipment. “It is a precaution to ensure employee safety,” says Gessner of Kaverit. “Maybe they will be in a building where fumes aren’t going to clear. Gas rises, and cranes are near the roof. You have to make sure in any event that there is some explosion protection as a minimum requirement,” he says.
“The minimum requirement is usually a Class 1, Zone 2,” classification, Gessner says, referring to the National Electrical Code for environments where explosive gases are likely to be present, but not in high concentrations. That specification typically requires intrinsically safe contactors, explosion-proof pendants and motors and adds 35-45% to the standard price, depending on capacity. (For more detail on hoists for explosion-prone environments, see pp. 29-32).
In more restrictive cases, where the risk of the presence of gas is higher – such as Class 1, Zone 1, the hoists will need non-sparking components such as bronze travel wheels, bronze hooks and stainless steel wire ropes, as well as completely sealed control panels, electrical connections sealed with compound. This can double the price of a crane.
Only in the most extreme cases – such as in the presence of hydrogen – where no electric components can be supplied will the company install air hoists, Gessner says. Air hoists are not the preferred option because there is no natural air source available, Gessner says – the company would need to have a separate compressor, oiler, regulator. And the economics of such lifting equipment starts to become more difficult above 10t capacity, where the hoist requires greater air pressure to operate.
West echoed the same thoughts. “Nobody likes air. The only thing you have is the throttle ability. If you have very good, very clean air you can live with air, but usually you have not-good very dry air,” he says. “And there is a natural delay. If the supply of air and the control circuit is very close to the motor and the valves, you get a small delay, but if there is any distance between them, even with quick exhaust in the pilot system, you get a drift after you let go,” which could be dangerous, he says. Air products – Cranes RUs supplies either JDN or Shaw-Box – make up less than 10% of their sales.
Explosive sales growth
Most of the extra work in supplying explosion-proof equipment is in electrical engineering, Gessner says, to make sure everything meets electrical code and CSA (Canadian Standards Association) specification. Every explosion-proof hoist is assigned a unique LR number. Kaverit claims to be one of only three companies CSA-certified for explosion-proof hoists. (The other two are Stahl CraneSystems and Verlinde).
Cranes R Us tends to customise standard products for the job. “They build them plain Jane, we add all of the jewellery, that’s all,” West says. “Each of the plants has their own specification. Syncrude wants to see lights and horns and travel limits, and we’ll put them on there.”
When they can keep up with demand. Kaverit is booked four months ahead. “We are averaging CAN$2m order intake per month,” Gessner says. “Our backlog isn’t decreasing – in fact it is growing. This is a problem. We are bursting at the seams trying to keep up. We have been qualifying enquiries, and only pursuing those beneficial to the end user and also to the company,” he says.
He is expecting to sell 450 cranes this year. “Three years ago we were trying to fill the shop with orders,” he says. The company has plans to wall in an external part of the factory and to take on a third shift in August to cope with demand.
Beyond that, the company’s plan is to increase its service business. “Unless we buy a new shop, CAN$22m-25m in market sales is the most we can squeeze out of our plant. It’s in the service area where you are unlimited in growth. You are simply adding people and resources.”
West calls the new cranes side of the business the “necessary evil to back up service.” The company expects to start supplying Abus hoists soon. He says that most customers want to outsource maintenance to reduce labour overheads. Cranes R Us maintains cranes to the 1996 CSA B167 96 standard, which requires cranes with a 1Bm duty to be inspected once per year, and 2M-duty cranes two or possibly three times a year, depending on the application.
He says that the large contractors appreciate outsourcing their service jobs. “Occupational Health and Safety law requires regular maintenance inspections,” he says. The only problem is finding service techs. “We hire a good guy, train him, and with a high percentage, Syncrude or Suncor hire him away. It happens a lot. It’s hard to compete with their rates,” he says.
Gessner says Kaverit works hard to hold on to their technicians. “We implement programmes and events. We give them incentives to show them that Kaverit’s a great place to work. There’s a lot of freedom that comes with being a tech at Kaverit, especially in the tar sands. You have to work alone. Nobody’s looking over your shoulder. We give them a long rope, but not so they hang themselves,” he says.
