Brian Zinchuk is editor and owner of Pipeline Online
Paul Cheung. Photo submitted
In recent years, the Saskatchewan Oil and Gas Show has presented its Southeast Saskatchewan Legends Award. Pipeline Online is publishing their biographies here. The oil show is June 5-6, with the Legends awards being presented on June 5. Tickets to attend the awards ceremony and luncheon can be purchased here (if you are an exhibitor, please do not use that link.) More information can be found at oilshow.ca.
Paul Cheung was born in Hong Kong in 1953. He came to Canada at the age of 17 as a student. He attended the University of Calgary where he obtained a bachelors of geology and then a masters of geology from Oklahoma State University in 1978. He became a professional geologist, although these days he focuses more on business than rocks, and no longer practices as a P.Geo.
In 1978 Paul went to work for Gulf Oil in Calgary as a geologist. From there he worked with two smaller oil companies before launching his own oil company, Grand Bow Petroleum, in 1984. The company’s wells were in southeast Saskatchewan.
Paul Cheung. Submitted
“I started the company in August, 1984, with very little money – enough money to drill one well. I spread that money into a small percentage in many, many wells. The first well I drilled was in Halbrite,” he said, and is still able to recall the location: 1-3-7-12-W2.
This is where Merlin Skjonsby came into the picture, as Grand Bow’s field manager. Skjonsby had substantial influence in Cheung’s future affairs. “My Saskatchewan operations were all handled by Merlin. I didn’t have to go to Saskatchewan much, I just had to stay in Calgary, finding money, organizing partners, and deciding where to drill. And that pretty much went on from 1984 to 2006, when I stopped drilling,” Cheung said.
Brian Skjonsby, left, Paul Cheung, Merlin Skjonsby. Photo submitted
The second well was at Steelman, leading to many more Frobisher A wells in that area. After 30 years of operation, Grand Bow is is in the process of abandoning its last wells.
In 1989 Cheung started a public oil company called Alliance Energy, which has been drilling wells in southeast Saskatchewan, with an occasional well in southwest Saskatchewan. “I have either operated or participated in over 200 wells,” he said.
Alliance was sold in 2001 to ATF Royalty Trust when it was producing around 2,000 barrels per day.
Advance Drilling Rig 9 in 2011. Photo by Brian Zinchuk
Advance Drilling
That was right around the time Cheung got involved with the pumpjack business, and involvement that would quite literally change the landscape of southern Saskatchewan. But before he got there, along the way, Cheung got into drilling rigs and service rigs.
“When I was drilling wells in 1997, I went to China, looking for drilling rigs. At the time, in Canada there were about 300 drilling rigs, and about 13 drilling rig companies. There were no drilling rigs available for little companies like Grand Bow. So, I went to China.”
The drilling rig business was dominated by American companies, he explained. But there were a number of drilling rigs available in China. “Maybe I could go there and rent one or lease one from them. I never thought of buying one, because I didn’t have the money,” he said. “I went over there with a drilling consultant, because what do I know about drilling rigs? I hired them to drill wells, but I actually didn’t know how drilling rigs (operate). So I went there and got my education.
“Lo and behold, at the time, CNPC, the Chinese National Petroleum Company, wanted to expand their experience around the world. They wanted to send their drilling rigs. That was the time Talisman was drilling wells in Sudan, and Chinese National Petroleum Company was in Sudan. They knew their equipment and people skills were inferior. They couldn’t get work anywhere else in the world except Sudan. Talisman was brave enough to take them on as a partner.
“So they had a great desire to learn how the western world drilled and how our people operated. I went to China for the first time in 1997. We ended up forming a company called Advance Drilling. Over the next six year it grew to a 10-rig company, because there was a shortage of drilling rigs.”
CNPC and Cheung were 50/50 partners in Advance.
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“I started bringing drilling rigs in from China. And besides the ones that drilled for Advance, we sold these rigs to other drilling rig companies. Some are still around.”
“By the time 2012 came along, the drilling activity in Saskatchewan was still very robust. And then meanwhile, the CNPC now had learned to operate. The drilling division now had 160 rigs working over the world and they had become a fairly big company. And that division was called Great Wall Drilling.”
By that time, it was clear to Cheung that CNPC wanted 100 per cent ownership, so they decided to split Advance, with CNPC carrying on with five rigs and Cheung and Canadian shareholders forming a new company, Alliance Drilling, with the other five rigs.”
Independent Well Servicing working on a helium well near Climax, Saskatchewan July 9, 2021. Photo by Brian Zinchuk
Independent Well Servicing
Six years after the start of Advance came the formation of a service rig company. Tim Huber, Brian Crossman and Jerry Mehler approached Cheung about partnering in the formation of that service rig company.
Cheung recalled that they had never met before, but the partners were familiar with his involvement in Advance and asked if he could help them set up this new service rig company. “I picked up the phone and called Merlin and said, ‘What should I do?’
“These guys are really solid,” Merlin said.
Cheung said, “Over a piece of paper, we structured Independent Well Servicing.”
It was launched in 2003 and grew to a fleet of 10 rigs.
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Cheung noted he’s the president of these two companies in Saskatchewan – Alliance and IWS – but “they are so efficient. I don’t have to do anything. I just deal with things like to do we need to buy or build another rig?”
The two companies work side by side and share a yard and office in Estevan.
Mel Grimes, left, and Paul Cheung, right. The man in the centre was the mayor of the city where the HG pumpjack is made. Photo summitted
HG pumpjack
By the end of 2001, Cheung was very well known in China’s oilpatch as a result of the drilling rig company. Twice a year he would travel to China for board of directors meetings and doing financial reporting to the shareholders.
“They introduced me to a drilling rig manufacturer. So I was bringing in drilling rigs and service rigs to Canada.”
“By 2001 I had a number of wells in southeast Saskatchewan. This one well Merlin said there’s lots of fluids there, but we don’t have a pumpjack that can move oil on it. I asked, ‘Why not?’
Skjonsby explained they only had single phase power available at the site, which could only run a small motor. The Chinese had a new design of pumpjack available. “I was shown this curved beam jack. They claimed you can use less energy. It’s all physics, and very simple physics once you understand it,” Cheung said.
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The design of the HG jack uses 25 per cent less energy than a conventional straight walking beam jack. That was enough of a difference to be successful in this application. So two jacks were sent from China for testing. Again, Cheung picked up the phone to Skjonsby, asking who they should deal with. At the time, Mel Grimes of Lampman was dealing in used pumpjacks, and was the only company Grand Bow was dealing with. So Skjonsby recommended Grimes.
“I called Mel Grimes. ‘I know we’ve never met. But you know me. I know you. We’ve done business for years and bought a lot of used pumpjacks and I have this thing. I think it will work, but would you be interested in checking it out for me? I’m sending two of them for two of my wells, this well in Carlyle and we’ll put one there and we’ll put another one (elsewhere).’
“He said, ‘Sure.’
Some of the HG pumpjacks, as seen in southwest Saskatchewan in 2021. Video by Brian Zinchuk
“I said the Chinese want to keep sending us these jacks and they will let us be the agent. So I got the two jacks, and put them on the wells at Carlyle with this little single phase motor. We tripled our volume, our oil production with that same little motor. So that told us it does use less energy.”
It took a bit of time to adapt the Chinese product to the realities of Canadian operations, especially in winter. A different steel was used, and servicing time was greatly reduced.
“I was able to show the Chinese what we do, how we do things in Canada, and they listened and became really good partners,” he said.
The HG pumpjack’s curved walking beam results in about 25 per cent less energy consumption. Photo by Brian Zinchuk
The improved product was good, and the Chinese were very cooperative and a good supplier, according to Cheung. “So the business just grew, year after year.”
About four years into this, the Chines government had become more open to foreign ownership in their businesses, and there was an opportunity for Cheung and Grimes to buy into the factory.
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“We just hit the window at the right timing. So the Chinese were worrying that we me and Mel would start buying it from other manufacturers. And we were worrying that they will be selling it to other dealers. So, there was a mutual desire to get closer together. It was like, ‘Let’s get married. Let’s become exclusive.’
“So one way to do that is that they said, “We will sell you 50 per cent of our manufacturing plant,’ which wasn’t a lot of money at all because basically it is a big welding shop. There’s very little equipment. So me and Mel said, ‘Yes, it makes sense.’ So we bought 50 per cent of the drilling rig manufacturing. We had about 200 workers and three buildings – no fancy buildings.”
In March, 2014, Schlumberger bought the manufacturing plant and Grimes Sales and Service (owned by Grimes.) By that point, they had sold 11,000 pumpjacks, dominating the landscape in southern Saskatchewan, but also penetrating into other markets like Alberta, Manitoba and North Dakota.
And the timing was fortuitous, as that spring oil was $120 per barrel. And later that year, oil prices plummeted.
Alliance Drilling near Glen Ewen in the fall of 2023. Photo by Brian Zinchuk
These days, Merlin’s son, Brian Skjonsby, is looking after Alliance Drilling and winding down Grand Bow, abandoning its last wells. IWS is going steady, with another generation coming into management there, as Tim Huber’s son, Jason, involved. (Merlin Skjonsby passed away in 2017.)
“I’m 70 years old, and three years ago I decided I will move back to Hong Kong where I was born. And so I’m living in Hong Kong, officially and I spend about little over half a year in Hong Kong. And I spent a little bit less than half a year in Canada.”
Cheung is very active in the Vancouver real estate market as a developer, from rental house to warehouse and hotels, where his children are both involved. Daughter Alison, born in 1982, has been involved in the office, while her husband, Alex Watson, is involved with the corporate side. Son Phillip, born in 1984, helps with renovation projects and building housing. Phillip’s wife, Jessica, works in real estate sales.
When asked if the real estate business is more interesting than looking at rocks, the geologist in him replied, “No, no, no. Rocks are very interesting. But we no longer look at rocks. Right now, it’s all engineering. We know where the oil is. It’s in these rocks that it’s very hard to get the oil out. We squeeze the oil out, like from olives. We squeeze the oil out from the rock.”
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