FREE
VOLUME 2 NO. 8
AUGUST 2014
www.PBEMag.com
EYES ON MEXICAN OIL 12 18
Global Television
Cookhouse:
PBE PROFILES:
Mud Company Goes All Out to Build Relationships 8
John Redfern, Jr. 22
• U.S. RIG COUNT • TOP 35 Drillers & Operators
Industry Data
|
News
|
Events
VIKI©
46 |
Auctions
|
Calendar
|
RESTAURANT BITES
Travel
|
Tips
|
Energy
|
Tech
2
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
3
AUGUST 2014
contents
Pbe Features 8
Horizon Cookhouse: Mud Company Goes All Out to Build Relationships
12 Eyes on Mexican Oil 18 VIKIŠ, Global Television
Other Editorials
8
17 Calendar of Events 22 PBE Profiles: John Redfern, Jr. 26 Conferences in August - September
12
27 Upcoming Auctions 29 Safety Tips - August 30 Advice for Mineral Owners from Permian Basin Land Girl 34 Festivals and Events in Texas 36 PBE Cares - The Blue Door 38 Tech Bites - Here's Google's Plan to Rid the World of Cyberattacks 40 PBE News Briefs: Basin, Shale, State, Government, Nation, Offshore & World 46 Restaurant Bites - Have Dinner Delivered! 48 PBE Inspires - Manly Men 50 By The Numbers: Texas Rig Count, Top Drillers, Top Operators 53 This Month in Petroleum
On The cover From Left to Right: Chef Samuel Ransom Jr., Executive Chef Michael Muller, Chef Daniel Jimenez, Brenda Villascas.
4
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
18
LETTER FROM
THE EDITOR To live is the rarest thing in the world. Most people exist, that is all. - Oscar Wilde
And so it begins. If your life is anything like mine, August marks the beginning of an exciting yet non-stop season of school activities, fall sports and family commitments. Add that to an already hectic work schedule and it's easy to get overwhelmed, stressed out and loose sight of the reason we put ourselves through all this madness. In this months issue of PBE, we'll learn more about how one local company has tackled the lunch hour challenge that seems to worsen when schedules pick back up in the fall, and pass along some much appreciated benefits to their employees and clients. As newcomers and natives look for new ways to unwind after a long day, an entertainment medium called Viki TV is also gaining popularity, which you'll read about in this issue. A story about new developments for companies trying to access Mexican oil is also featured in our August PBE, along with updates from across the Basin and around the world relating to the oil and gas industry. As always, Pastor Daniel Stephens from Mid-Cities Church gives us some encouraging words and much needed inspiration as we enter this hectic season and we'll learn about how one couple has started a business that not only helps people relax after a hard day, but also helps the community support those who need a helping hand. I hope you'll take the time to read through the many interesting articles featured in this months issue, but most of all, I hope you take the time to take a deep breath in, brace yourself for the busy season ahead, and remember the joy that lies in each activity filling up your schedule. Whether it is for family or business, there is surely a good reason for most of those hectic yet exciting commitments.
Carlos Madrid Editor in Chief/Publisher sales@pbemag.com
/PBENERGYMAG @PBENERGY
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
5
EDITORIAL CONTRIBUTORS PBE MAGAZINE CONTACTS VOLUME 2 NO. 8
EDITOR IN CHIEF/PUBLISHER Carlos Madrid sales@pbemag.com 432. 559. 5886 ART DIRECTOR/LAYOUT & GRAPHICS Luke Pawliszyn Lukasz Design Studio West Hollywood, CA luke@lukaszdesign.com
Taryn SnideR FREELANCE WRITER tarynsnider@gmail.com
ADVERTISING For advertising info call 432. 559. 5886 or email sales@pbemag.com ACCOUNT EXECUTIVE Tiffany Clemons tiffany@pbemag.com 432. 978. 2393
MORRIS BURNS FREELANCE WRITER morrisburns@sbcglobal.net
ACCOUNT EXECUTIVE Dominique Brown dominique@pbemag.com 432. 559. 3127 SUBMISSIONS Submit story ideas & other news to marcy@pbemag.com PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886 www.PBEMag.com
/PBENERGYMAG
DANIEL STEPHENS SENIOR PASTOR Mid-Cities Community Church • Midland, TX daniel.stephens@midcities.org @PBENERGY
Copyright © 2014 Permian Basin Energy, Inc. • Mad Ads Media All rights reserved. Reproduction in whole or in part without the written permission of PBE MAGAZINE, LLC is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at time of going to press, but we accept no responsibility for omissions or errors. PBE Magazine welcomes any comments, feedback, suggestions, and/or submissions for consideration for publication. These may be submitted to: sales@pbemag.com.
6
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Kimberly Smith CEO Development Resources, Inc.
Shawn Todd American Safety Services, Inc.
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
7
by Taryn Snider
Horizon Cookhouse: Mud Company Goes All Out to Build Relationships In the Permian Basin where the growth is rapid and the unemployment is so very low, companies are finding that innovation is the key to success. Many are also finding that in order to keep up it’s crucial to stand out. The team at Horizon Mud Company, a local service company specializing in drilling fluids, have really set themselves apart from the competition through a recent business move aimed at pleasing customers and employees alike. Like everyone else Horizon Mud Company has experienced the effects of the boom. Established in 1980, this isn’t their first rodeo. After surviving the boom and subsequent bust of the 1980s, Horizon was a small company when the oil and gas industry began to experience revival almost a decade ago. Now with offices all over Texas and Oklahoma they attribute their success to being the best at what they do while adhering to their principals. As Horizon Mud’s growth became more substantial, it became increasingly difficult to host customer appreciation barbeques out on location, homemade catering to customers’ offices and to cook out for charity events. As a result, the company purchased a house close to downtown that incidentally featured a room that would be a perfect solution to their catering woes. They equipped the room with a fully functional industrial kitchen and all they were lacking was the people to work in it. It was just happenstance that one of Horizon Mud’s own sales reps met and was impressed by Chef Michael Muller. After a conversation between the sales rep and the president of Horizon Mud, Muller was invited to the company headquarters in downtown Midland to interview for his dream job. 8
By May of this year the Horizon Cookhouse was in full operation. During his initial interview, the one thing that Muller hoped for was the ability to put together his own culinary team and the flexibility of creating his own menu – conditions that were easily granted. Muller’s favorite benefit as a consequence of working for Horizon Mud Company as opposed to working at a restaurant is the freedom to be creative. With everything, right down to the sauces, made from scratch the chefs have been very busy creating. “We don’t have to conform to corporate recipes or follow fifteen minute ticket times. We like to feed people and it’s instant gratification for us to see them nod their head when they take their first bite.” Muller, originally from Central Texas, attended culinary school at Le Cordon Bleu in Austin and has mastered his craft at places such as PF Chang’s, County Line, John Luke’s Bistro and Hill’s Café. Muller added, “it’s a dream job because we get to do what we want to do. We did Gumbo on a Wednesday and then a customer said, ‘Hey, we should make Cajun food every Wednesday;’ since he said that we now have Cajun Wednesdays.” Additionally, the Cook Team consists of Chef Samuel
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
and then extended her services to include the cookhouse when it opened. As a friendly gesture, she baked a cake for Muller on his birthday and it lead to her becoming a de facto member of the cooking team where she now provides her baking services. While the idea for the cookhouse began as a practical prep location, the possibilities amounted to so much more when the building was acquired. Their goal was to be in a position to cook for a barbeque, clay shoot, office lunch and a charity event all in the same day but after they put forth the cost of investing in the prep area there were still many unused rooms in the house. Horizon Mud Company’s president and CEO Tony Farish said “We just decided we could have a little invitation only lunch place for employees and customers. So that’s just how it all tangled out.” With tables arranged around the empty rooms, flat screen TVs mounted on the walls, a coffee bar and patio seating the Horizon Cookhouse provides a casual atmosphere where customers and employees can come together with no wait time and no question about who foots the bill at the end of the meal. It’s all free of charge to the patrons. But wait! There’s more – they even brew their own beer, an idea proven to be very popular. So far, the concept hasn’t been hard to sell at all. In fact, it’s been an instant hit. Lunch is served three days a week. Still new, the turnout is unpredictable but the most patrons to show up for lunch in one day has been thirty-five. The management at Horizon Mud even went a step further and decided to cater food from the cookhouse to their own office staff working downtown, an effort to promote a positive office morale and high efficiency which, at the end of the day, results in more time spent with family.
Ransom Jr., Chef Daniel Jimenez and Brenda Villascas. Samuel Ransom Jr. is originally from Jackson Mississippi and moved to Austin to attend culinary school. After working at PF Chang’s for nine years and traveling all over the country to open new restaurants, he describes his transition to West Texas as a surreal experience. “I got to fly here on the company plane and after seeing the house and everything they asked me what do I think. I said, ‘I’m there.” Daniel Jimenez was brought up in the restaurant business. His family owns a German Restaurant in San Antonio. The family culture that he observed at Horizon Mud is what sold him on the idea to move to Midland and pursue a career cooking in the oil patch – after he got over the shock that it was going to be a real job. Brenda Villascas began working for Horizon Mud Company cleaning the offices
The customer and employee response to the cookhouse has been considerable. It’s a fun and innovative way for employees to build relationships with customers. It’s not uncommon for a customer to call a Horizon employee and ask to go eat at the cookhouse that day. But the customer and employee satisfaction is nothing new. Horizon has always been a great company to work for and they have the high growth and the low turnover to prove it. Tony Farish’s business approach is “all about building relationships. If they trust us personally then they’ll trust us in business.” Wives and kids of employees and customers also enjoy what the cookhouse has to offer. Farish said, “When we can get our wives involved it’s a homerun. When we can get our kids involved it’s a grand slam!” Farish and Muller are both excited about what’s in store for the future of the Horizon Cookhouse. There are plans in place to package and label the sauces and other items produced at the cookhouse. They also plan to implement a private dinner club where customers and employees can meet at the cookhouse with their wives and enjoy a five course meal.
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
9
To Advertise call (432) 559 - 5886 or email
sales@pbemag.com
www.PBEMag.com 10
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
11
Source: The Texas Economy
Eyes on Mexican Oil
The Texas energy boom may be going south – south of the border, that is – as Texas oil and gas companies explore new business possibilities that are opening up throughout Mexico. The nationalized energy industry of Texas' southern neighbor and top trading partner is undergoing a sea change. Reversing 76 years of government policy, Mexico's state-run oil and gas monopoly, is opening itself to partnerships – and its fields to exploration and production (E&P) – by private firms. Many Texas-based O&G service companies already subcontract in Mexico, but allowing foreign E&P is a whole new ballgame. "I didn't think I'd ever see it in my lifetime," observed Eric Potter, associate director of the Bureau of Economic Geology at the University of Texas at Austin. He and his colleagues have conducted extensive research on various O&G formations for Pemex.
untapped deposits. The two big unanswered questions now are how attractive Mexico's business terms will be and how much oil and gas it can supply reliably and profitably.
While Mexico is already one of the world's oil-producing giants, economists believe its E&P growth potential is quite strong, given the country's vast amounts of
In December 2013, Mexico's state legislatures ratified a constitutional amendment that ended decades of public control over both the nation's electricity and oil and gas industries. Though advanced by an effective coalition, it
12
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
was still a hard sell given the government's longstanding, deep-seated dependency on Pemex. Mexico derives 35 percent of its federal budget from oil and gas revenue, according to Alejandra León, associate director of Latin America - Downstream Oil for global economic analysis firm IHS/CERA. Pemex sends the government 65 percent of its income, according to Potter, limiting what's available for reinvestment. Indeed, energy stagnation due to a lack of development resources bolstered the argument that Mexico would prosper if it brought in private and foreign investors. Not surprisingly, some critics continue to suggest that Mexico will be short-changed in the bargain. As Potter notes, the devil is always in the details. The Mexican congress is slowly modifying numerous laws and enacting new ones to implement the transition. The government also is determining how much of its resources Pemex will retain and what will be up for grabs. The outcomes will determine just how much investing there will be in Mexico's brave new energy world. Pemex will become one of many players, Potter said, but it will have more flexibility to sell greater interests in what it retains. This will, in turn, generate more operating capital. Given its historical dependence on oil, the Mexican government may still take a sizable cut of E&P revenue, León said, regardless of who is generating it. Nevertheless, both Potter and León think the initial impact of the new law could benefit firms across the entire E&P spectrum, from independent producers to the major global oil companies, perhaps including some Mexican entrepreneurs as well. Potter added that some investors might even negotiate deals and transfer them to others. "The overall pie should grow, even though Pemex's share will decrease," he predicted.
What's In It For Me? While not outright privatization, the new agreements are expected to be more lucrative than the current performance-based service contracts first allowed in 2008, according to analysts at PFC Energy, a subsidiary of IHS.
They expect Mexico to offer three types of contractual arrangements: Licenses (permits similar to concessions) and contracts for sharing production and profits. Licensees are paid in oil and gas produced. Production contracts, which earn holders a percentage of what's produced and to which they hold title. Both licenses and production contracts allow booking of reserves. Being more lucrative, production contracts are more likely to be applied to higher-risk operations. Profit-sharing contracts. Contract holders are paid in cash based on a percentage of earned profits. They own none of the resources but can book their shares of the revenue. Potter suggested that the business terms – royalties, taxes, and contractual obligations – that emerge would be key. He said potential investors also would need to consider where the opportunities are located and their types. The opportunities won't be immediate, says León, and Mexico's E&P likely won't be competitive in the near term. "Pemex must decide what it will keep," she explained. To date, in what has been dubbed "Round Zero," Pemex is opting to relinquish its northern Mexico shale plays and some of its deep-water offshore holdings. Both are expensive enterprises requiring extensive, and very different, expertise. Potter believes it is too early to predict how attractive Mexico's shale oil and gas plays will be in areas where the geology is complex and largely untested. Pemex has drilled only a half dozen wells in its portion of the Eagle Ford shale compared to more than 8,000 in Texas, he pointed out. Security also is a concern, given that portions of the formation extend southward beneath areas subject to control by Mexican drug cartels. However, there are other similar shale plays in Mexico that may also lure enhanced recovery firms.
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
13
Pemex's deep-water presence in the Gulf of Mexico is currently next to nothing, so it, too, is ripe for development. But only the more financially sound, technically sophisticated players need apply.
Hurry Up and Wait Mexico's energy ministry has until mid-September to decide if Pemex has the capacity to manage and develop the resources it wants to retain or open any of them up to competitive bidding. Then, over the next few years, it must prove itself capable of doing so. Short term, Le贸n said, there will be two concurrent systems: one for existing projects and a parallel regulatory framework for newly developed areas. The transition won't be complete until 2016. Regardless of what the new regulations are, Potter said, they must be administered fairly and ethically in order to work. The impact on global markets and prices is uncertain. But Potter is confident that the ripple effects in Texas will be positive and pervasive. While a bit of a mixed metaphor, Potter's observation is economically true nonetheless: "A drilled well is just the tip of the iceberg." 14
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
15
16
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
OBSERVANCES AND CELEBRATIONS
2
AUGUST 2014 Birthstone: Jade, Peridot Flower: Gladiolus
PERMIAN BASIN HEALTH & SAFETY CONFERENCE
National: Family Fun Month,
117 W. Wall St. Midland, TX, 8:00 AM-5:00 PM. Presented by Texas JRAC & the Texas EMS Trauma & Acute Care Foundation. This conference will be of interest and benefit to physicians, nurses and EMS personnel who respond to and treat trauma patients, particularly those injured in oilfield-related accidents.
Eye Exam Month, Golf Month, Peach Month Water Quality Month National Picnic Month
3
8 FRIENDSHIP DAY Job Fair
13
Hosted by the Permian Basin Apartment Association 5100 E. 52nd St. Odessa, TX 9:00 AM -11:30 AM
LEFT HANDER’S DAY
19 NATIONAL AVIATION DAY
26
WOMEN’S EQUALITY DAY
Women’s Equality Day is observed to remember the day women gained the right to equality. U.S. 19th Amendment - Women’s Right to Vote 1920.
26
DOG DAY
SEPTEMBER 2014 Birthstone: Sapphire Flower: Aster
1 LABOR DAY
Labor Day is a Legal U.S. Holiday originating from the Central Labor Union to create a day off for the working man. Became a Federal Holiday in 1894.
21
23
INTERNATIONAL DAY OF PEACE FIRST DAY OF AUTUMN AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
17
Global Television by Kimberly Smith
Need an escape from the Permian Basin and the demands of the industry right now? Maybe you’re used to traveling abroad and miss the cultural luxuries you had before you moved to the Permian Basin. Or…maybe you are just a conscientious objector of the American media culture. You also may be intellectually bored of the same reality television shows, cooking competitions, wife-swap and celebrity shows. Well now there’s a way you can refresh your mind and enjoy a global perspective beyond the Permian Basin. As the market is getting increasingly international, consider taking time to view life outside of the Permian Basin and outside of the United States. You can jettison into a global culture simply with the click of your smart phone or computer.
popular entertainment, regardless of language or country of origin. Razmig Hovaghimian and his co-founders took their life savings in 2010 and began VIKI©. Permian Basin entrepreneurs would love this multinational company from a business model. Although it was conceptually born on East Coast University campuses, VIKI© now has offices in San Francisco, Singapore, Seoul, Tokyo and Shanghai. The Wall Street Journal of Asian named VIKI© as one of the most innovative companies in 2012. www.viki.com You can watch VIKI© on your smart phone, computer or IPAD. A Chromecast Card (which is like a thumbdrive
VIKI© is a Rakuten company which was founded as a joint class project between Harvard and Stanford graduate students who wanted to remove barriers to 18
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Photo curtesy of www.blog.viki.com
You can now watch international prime time television on VIKI©, Global Television. This global television streams TV shows, movies and other premium content, translated into more than 150 languages by a community of avid fans. Over 1.5 billion videos are viewed and nearly 325 million words are translated. There are now over 24 million viewers a month and 10 million mobile users. (www.crunchbase.com)
and relatively inexpensive) allows you to watch the dramas if you have a digital television. The United States market for competition among chefs, models, and celebrities battling through the competition is certainly reflective of the global market. It appears that through the international response with live streaming through VIKI© Hulu, Netflix, and YouTube, there is global competitive market for content. We encourage you to try some international content for awhile. If are willing to step into international cultures, we suggest the series K-drama, The Full Sun or Doctor Stranger. Right now, we are able to watch Doctor Stanger within 12 hours of when it aired in Korea. Simply download Chromecast and VIKI© app to your smart phone or tablet and enjoy. Amazing technology… amazing minds, and an amazing world… all very similar to the brilliant minds who are drilling wells and supporting the energy surge in the Permian Basin!
Rest your mind and tune into VIKI©
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
19
www.PBEMag.com
To Advertise call
(432) 559 - 5886 or email
sales@pbemag.com
20
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
21
PR O FILES John Redfern, Jr. by Morris Burns
All right, here is your trivia question for the day. Name the Permian Basin oil man and philanthropist who received his engineering degree from Rensselaer Polytechnic Institute in Troy New York. Give up? It's John Redfern, Jr. John was born in 1912 in New Jersey. He once read an article reporting that 2.5 million barrels of oil at $1.00 a day were being produced in the U.S. One eighth of that amount went to everyday folks who owned royalty interests. He determined that he would soon be one of those people. John was a sales engineer for a plumbing and heating company in Albany, N.Y. Since he was working with plumbing he became, at least in his own mind, a master plumber. Anything from a leaky faucet to a broken water pipe and it was “John to the rescue.” John married in 1936. He and his new bride drove to Midland to see the oil patch. He felt that this new oil and gas thing was going to be big and that Midland would be the center of it. His daughter, Rosalind Grover, has a photograph of her dad in a sand storm at Monahans on his first trip to West Texas, holding onto his hat to keep it from blowing away. John’s grandfather had given him $5,000 to get a start in business. In the middle of the great depression a person could live on $1,000 a year. 22
In 1937 the Redfern’s moved to Oklahoma City where he audited courses in geology at Oklahoma University. He soon moved to Midland and began buying royalty and mineral interests. John called himself “a native Texan from New Jersey.” In 1946 John partnered with Harvey Herd. That partnership ended in 1961, the same year he bought Flag Oil Company of Delaware. Flag Oil Company owned large sections of mineral acreage in six states, Texas, New Mexico, Kansas, Colorado, Arkansas and Oklahoma. In 1970 Redfern merged Flag Oil Company with Redfern Development Corporation and Peter F. Redfern & Sons and thus was born the Flag-Redfern Oil Company. At the formation FlagRedfern owned over one million mineral acres. John told young men starting out in the oil business, “Always buy minerals and never sell them.” In 1972 Arden Grover, traded his company, Pomaikai, which means good luck in Hawaiian, for a 25 percent interest in Flag-Redfern. Arden stayed with Flag-Redfern until 1977 when he left to operate as an independent under the name of Grover Oil Company. He remained a director of the company until it was sold in 1988.
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
John brought Glen Brant to Midland from Calgary to work for Flag-Redfern. Glen was President of Pennant Puma Oil Company in Calgary, a Flag-Redfern subsidiary. Glen became President of Flag-Redfern in 1983. In those days many companies had a company airplane, a kind of status symbol. Glen was told to run the company as he saw fit, but one of the corporate resolutions forbade him from buying an airplane. He still makes frequent trips to Calgary to keep up with his operations there, which now operates under the name of Glencoe Recourses. When John was trying to hire him Glen wanted to work half days to start since he had some clients he felt he needed to continue to work with. Since Calgary is so far north the summer days are much longer than in the south. John asked Glen, “You have a lot of daylight up there don’t you?” Glen told him, “You can read a newspaper at 11:00 o’clock in the evening.” John told Glen, “I’ll take my half days during the daylight hours.” Flag-Redfern had a number of loyal, long time employees such as the late Byron Greaves, a petroleum engineer, and as John described him, “one of the best employees I ever had.” Byron was placed on the Board of Directors. Another long time member of the Board of Directors was Tom Dugan of Farmington of NM, who was involved in both the U.S. and Canada and a shareholder in the company. John created a royalty trust each year beginning in the late 70s and for several years thereafter, with the proceeds being distributed among the shareholders. The first year it was simply the Flag-Redfern Royalty Trust. Each succeeding year another trust was created and named a Greek letter. They were Beta, Gamma, Delta, Epsilon, Zeta and Eta. These trusts continue to pay dividends to their holders to this day. John was a great believer in owning minerals and royalty. One of his favorite quotes was, “The meek shall inherit the earth, but not the mineral rights.” John had several colorful sayings he spread about freely. One was, “It is not the good deal you missed but the bad deal you made that gets you into trouble.” Another was, “Nothing is impossible to the man who doesn’t have to do it.” He severed on many community boards and was fond of saying in order to be a successful board member you needed two of the three W’s: Work, Wisdom and Wealth. His wife also volunteered in the community and both gave tirelessly to hospitals, libraries and the theater.
At its peak Flag-Redfern had offices in Casper, Wyoming, Midland, and Oklahoma City as well as a consulting office in Houston. Tom Price, now one of the officers of Chesapeake, was part of the Oklahoma City office. By January 1 of 1988 Flag-Redfern had reserves of 7 million barrels of oil and 93 billion cubic feet of gas. Their total revenues in 1987 were $30,441,000, when they produced 2,700 barrels of oil and 17 million cubic feet of gas per day. They had operations in Texas, New Mexico, Oklahoma and South Dakota, and had about 70 employees. Flag-Redfern also maintained a number of subsidiary companies including Peterson Drilling, where Ray Peterson currently Vice President of Drilling for Concho got started in the drilling business, drilled most of their wells, and Leamco Services which repaired and rebuilt pumping units. Leamco was eventually sold to Weatherford. Peterson Drilling was eventually sold to UTI and became Peterson UTI then later to Patterson as Patterson UTI. In 1988 Flag-Redfern sold to Kerr McGee. Flag-Redfern was always a family company and many continued to work together in Canada after the company was sold. John Redfern died September 28, 1986 following an automobile accident in Wisconsin. He maintained a lifelong interest in education and was a trustee of the Rensselaer Polytechnic Institute from 1957 to 1981. He was a member of the University of Texas Chancellor’s Council, the Texas Tech University President’s Council and of the University of Texas M.D. Anderson Hospital and Tumor Institute. He was inducted into the Permian Basin Petroleum Museum’s Hall of Fame in 1986. About the Author Morris Burns: From December 1997-October 2006, Morris served as the Executive Vice President for the Permian Basin Petroleum Association. Since retiring from the PBPA in 2006, Morris opened a public relations and safety consulting firm doing safety classes and public relations for many firms both in and out of the petroleum industry. Morris is also a frequent contributor to local TV news concerning the oil and gas industry in the Permian Basin, as well as a weekly radio show participant since 1998 on KWEL 1070 AM from 8:00 am to 9:00 am Tuesdays talking about oil and gas issues. morrisburns@sbcglobal.net
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
23
SPECIALTY PRODUCTS FOR THE OIL & GAS INDUSTRY ■ BIODEGRADABLE ■ NON D.O.T. REGULATED ■ HIGH Ph
I N C O R P O R AT E D
DETERGENT CONCENTRATE
THE BULLY is RoMix’s extra strong, high alkaline concentrate specially formulated for pressure wash and steam cleaning machine use. For removal of all types of ™ heavy soils from a wide variety of surfaces. Dilutes with water up to 40:1. Economical concentrate cleaner and degreaser.
“MEAN & GREEN”
PRO-SOLVE BIODEGRADABLE DEGREASER
■ DEGREASER ■ CUTS GRIME & DIRT
■ DILUTES WITH WATER ■ NON-HAZARDOUS
PRO-SOLVE is an industrial strength, all purpose cleaner/degreaser. This non-toxic “Super” cleaner ™ provides an infinite number of uses, in and around oil and gas operations. To use, simply mix with water up to 25:1 .
Toll Free: 800-331-2243 • www.romixchem.com 24
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
25
Conferences in AUGUST - SEPT 2014 Rocky Mountain Energy Summit 08/04/2014 - 08/07/2014 Denver CO, USA www.rmesummit.org
Pipeline and Energy Expo 08/25/2014 - 08/27/2014 Tulsa OK, USA http://www.pipelineenergyexpo.com/home
EnerCom's Oil & Gas Conference 08/17/2014 - 08/21/2014 Denver CO, USA www.enercominc.com/the-oil-and-gas-conference
Unconventional Resources Technology Conference 08/25/2014 - 08/27/2014 Denver CO, USA www.urtec.org
AFPM Cat Cracker Seminar 08/19/2014 - 08/20/2014 Houston TX, USA www.afpm.org/conferences
SPE/AAP/SEG Unconventional Resources Technology Conference 08/25/2014 - 08/27/2014 Denver CO, USA www.urtec.org
Surviving the Flood of Light Crude Oil Conference 08/19/2014 - 08/20/2014 Houston TX, USA www.rbnenergy.com/events/surviving-the-flood IADC Asset Integrity Reliability Conference 08/20/2014 - 08/20/2014 Houston TX, USA www.iadc.org/event/asset-integrity-2014 NAPE South - North American Prospect Expo 08/20/2014 - 08/22/2014 Houston TX, USA www.member.seg.org/Calendar/tabid/319/ModuleID/944/ ItemID/354/mctl/EventDetails/Default.aspx NAPE South Summer Expo 08/20/2014 - 08/22/2014 Houston TX, USA www.spe-uk.org/default.aspx.LocID-0a4008003.Lang-EN. emID-965.rss-cal.EventID-13676.htm
GPA Rocky Mountain Annual Meeting 09/04/2014 - 09/04/2014 Denver CO, USA www.gpaglobal.org/calendar/events/event/www. rockymountaingpa.org Rocky Mountain Energy Summit 09/04/2014 - 09/07/2014 Denver CO, USA www.rmesummit.org ACS Symposium on Hydrotreating/Hydrocracking Technologies 09/07/2014 - 09/11/2014 San Francisco CA, USA www.linkedin.com/groups/International-Symposium-onHydrotreating-Hydrocracking-4895622 SPE Deepwater Drilling and Completions Conference 09/10/2014 - 09/11/2014 Galveston TX, USA www.spe.org/events/calendar GPA Rocky Mountain Annual Meeting 09/14/2014 - 09/14/2014 Denver CO, USA www.gpaglobal.org API Offshore Structural Reliability Conference 09/16/2014 - 09/18/2014 Houston TX, USA www.api.org/events-and-training/calendar-ofevents/2014/osrc
26
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Leading Auctions in the Oilfield Industry. Upcoming Auctions and Auction Equipment listings from Tradequip International’s online and site-held auction companies. Saurce: Tradequip International
Drilling Rigs
Prod. Equip.
Drilling Equip.
Tubular Goods
Oilfield Trucks
Oilfield Trailers
Parts & Tools
www.tradequip.com
SOUTHCENTRAL
Support Equip.
AUCTIONS
COMPANY
DATES
LOCATION
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
August 6, 2014
Tyler, TX
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
August 6 & 7, 2014
Shreveport, LA
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
August 20 & 21, 2014
Odessa, TX
Fishing & Rental Tools
Kruse Energy & Equipment LLC
August 26, 2014
Shawnee, OK
INVENTORY
No Lots are Currently Posted for this Auction
INTERNET AUCTIONS
COMPANY
DATES
LOCATION
Pipe & Equipment Sealed Bid Auction
Network International Inc
August 7, 2014
Internet
Chevron Gas Plant Sealed Bid
Network International Inc
August 13, 2014
Internet
Pipe & Equipment Auction
Network International Inc
August 13, 2014
Internet
Pipe & Equipment Sealed Bid
Kruse Energy & Equipment LLC
August 21, 2014
Internet
Pipe & Equipment Auction
Kruse Energy & Equipment LLC
August 27, 2014
Internet
INVENTORY
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
27
28
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
SAFETY TIPS August... August means back to school, back to Football (my favorite), and back to an even crazier gauntlet of rush hour traffic. It means that thousands of students and parents with their students will be back on our roadways shuffling to and from school, lunch, practices, and events daily. It means that driving, the most dangerous thing we do each and every day, will soon be much more dangerous. So here are a few tips to make your life easier and hopefully keep you out of a jam. First of all, the best thing that you can do to avoid traffic is to leave early. Why? Because, very few of us take joy in getting less sleep just to avoid dealing with rush hour traffic. It works, and you will start your day feeling less stressed and less angry. Secondly, be patient. Sometimes it seems as though everyone is driving angry and aggressively and it is all take and no give. Imagine how much better your driving experience would be if everyone yielded when they are supposed to
and waited for their turn to go. You will get to your destination eventually so relax! It’s a crazy thought I know but a little courtesy and patience would go a long ways. Lastly, avoid bad traffic areas at certain times of the day. We all know where these areas are in our towns. Go around them, take the long way around. Once again you will make it to your destination and if you go the less congested route you will probably be more relaxed when you get there. Unless you are late and in that case you should have left earlier. Whenever possible avoid the bad areas and you will probably avoid trouble. In conclusion, August is upon us and so are dangerous roadways. Driving by far is the most dangerous thing that we do each and every day. So leave early, practice patience, and avoid the traffic hot spots and perhaps you will have a safer and less stressful driving experience.
Shawn Todd Safety Manager, American Safety Services, Inc.
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
29
ADVICE for Mineral Owners from a Permian Basin Land Girl This month I worked with mineral owners who weren’t afraid to ask for what they wanted. Every landman in West Texas can tell you that last minute negotiations are tough and tense. However, the mineral owners persevered. The mineral owners were representing non profit agencies who manage the groups minerals. Their lease terms would impact several hundred children and families.
Mineral owners can leave their mineral and royalties to charities like … ◆ West Texas Rehabilitation Center, Abilene, Texas (westtexasrehab.org) ◆ Their church ◆ The John Wayne Cancer Institute, Santa Monica, California (jwci.org) ◆ High Sky Children’s Home (highsky.org)
The operator and the mineral owner came to an agreement! In addition, the mineral owners included surface provisions to ensure that the surface owner was provided surface damages. Although the operator was reluctant to relent to surface provisions, the mineral owners insisted they stay in the lease. The operator did not know that the surface owner was a substantial “father” of the community. The mineral owners honored their family and honored the legacy of their minerals.
First Presbyterian, Midland Scottish Right, the Fasken Foundation, Saulsbury Family Foundation, and others provide scholarships for Midland students and support many services in the Permian Basin. Certainly, oil royalties have significantly contributed to the next generation.
Did you know that … If you don’t have any heirs that mineral gifts can be left to charities? (or maybe you don’t like your family?)
Truly yours, Kimberly Smith, CEO Development Resources, Inc. can also help retrieve and inventory your mineral estate. @permianlandgirl on twitter or landmaam.com
In August, our radio show, Ask the Permianlandgirl on KWEL FM 107.1 will focus on:
The Famous causes of Famous People - how royalties impact the Permian Community and people. ◆ August 2 Wemus – Wemus Entertainment. This West Texan was inducted into the Lee High Honor Roll in 2013. He launched his own company from Midland, Texas. While in West Texans, he produced events for gubernatorial events and presidential inaugurations. Wemus Productions helps many charities find interesting and affordable speakers. Wemus.com ◆ August 9 Jami Owen, Partners in Education, Midland Independent School District. Jami works furiously to meet K-12 and University standards and raises awareness among corporations about Midland Public Schools. Development Resources, Inc. has been a partner in education and Jami will talk about oil companies who give generously to our students. Piemidland.org. While Ector County also has a Partner in Education Program. ◆ August 16 Ms. Janet Pollard talks about Williams- Pollard family history and her book “Hard Times.” She will discuss her favorite charity in the Permian Basin. ◆ August 23 Anita Swift, famous Granddaughter of the infamous DUKE – John Wayne talks about her love for West Texas, and her favorite charity, The John Wayne Cancer Foundation in Santa Monica, California. jwci.org ◆ August 30 Craig Atherton and Ty Roberts. Independent Film Producers, Austin, Texas. Why they chose to produce a movie about the West Texas Oil Industry the Book, 1966 The Iron Orchard by Tom Pendleton. Are film producers like hardworking energy explorers and driller? Is thinking outside the box, is the key to success for energy and film production. How his hard work on this movie will highlight the hard work it takes to generate royalty payments and then later charitable contributions!
Let your minerals be a joy in your life….
Contact us to help us inventory your minerals. Permianlandgirl.org Our radio show for mineral owners airs each Saturday at 1:00 Ask the Permianlandgirl on kwel.com FM 107.1 and AM 1070. Call to speak to our guests: 432-620-8700
30
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
31
32
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
33
AUGUST & SEPTEMBER
TOP
FESTIVALS AND EVENTS IN TEXAS All across Texas, a variety of festivals, events and attractions are a great way to have fun and to spend time with your family. The Legacy of Lady Bird Johnson Wilderness and Wildflowers Exhibition June 21 thru September 12 Repeats Every Monday, Tuesday, Wednesday, Thursday, Friday until Sep 12, 2014 Midland County Library - Downtown Branch. 301 W. Missouri 9AM-6PM. This exhibition was created to honor the former first lady and wife of the 36th President, Lyndon Baines Johnson, during the centennial year celebrating her birth in 1912. Featuring photographs, video and excerpts from her speeches and writings, this exhibition shows us a strong, highly intelligent, and committed woman who cloaked her enterprising spirit in civility and a warm, gracious manner. Summer Art Camp August 4-8 10am. Ellen Noel Art Museum. 4909 E University Blvd. Odessa, TX 79762 Petroleum Museum Movie Camp August 5 The Petroleum Museum’s Movie Camps are the perfect getaway this summer for children ages 5 and up! Each camp will include a fun animated movie and a creative activity, as well as popcorn and lemonade for only $5 per child! 9:30am and 1pm. Petroleum Museum. 1500 Interstate 20 W. Midland, TX 79701
34
Rock the Desert August 7-9 This annual three-day festival showcases Christian music artists and provides a family-friendly atmosphere for praise and worship, games, sports, and fun activities. 2000 S. FM 1788. Midland, TX
"Out of the World" Summer Science Class August 8 9am. Children entering 3rd through 6th grade can blast off with us as we explore the wonders beyond planet Earth. Classes include age-appropriate experiments, Museum exploration, guest speakers and creative activities focused around a scientific theme. Pre-registration is required by August 1, 2014. Museum Members: $20. NonMembers: $25. Petroleum Museum. 1500 Interstate 20 West. Midland, TX 79701
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
2014 CAF Mustang Stampede August 23 9am. Get your engines roaring! Join the CAF Airpower Museum on Sat., Aug 23, 2014, for a day of cars, airplanes and history. Mustang Stampede, presented by Rogers Ford, will feature the worlds only airworthy B-29, our own Fifi and other vintage aircraft, along with the best area show cars for a car show unlike anything in the area. The event takes place at the CAF Airpower Museum, 9600 Wright Drive, Midland, Texas. Doors open to the general public at 9 a.m. for just $5 per person with children 5 and under Free! CAF Airpower Museum. 9600 Wright Drive. Midland, TX. For information on registering your show car email or call Amanda Peppers, (432) 563-1000 apeppers@aahm.org
Southside Sr. Center 3rd Annual Health Fair August 25 Free Admission 9-2pm. Open to the public everyone welcome! 1225 N. Adams. Odessa, TX 79761 If interested in having a booth for this event call: (432) 337-4531 for additional information. 4th Annual CigarFest/Pars & Cigars Golf Tournament August 27 Join us at the Odessa Country Club for an evening of cigar sampling, wine tasting & dinner. Enjoy delicious food, amazing raffle prizes and loads of fun all while supporting Odessa Crime Stoppers. Pars & Cigars Golf Tournament tee's off at 1:00 pm. CigarFest beginning at 6:00 p.m. Golf teams, Sponsorships, CigarFest tables and tickets available! Odessa Country Club.
Call (888) 381-1818 or (940) 387-2632 Visit www.ntfair.com for more information 39th ANNUAL WESTFEST August 29-31 West. Labor Day weekend festivities with Czech foods, music, international entertainment, dancing, pastries, costumes, arts & crafts, horseshoe tournament, Polka Mass, races, sports, children’s area & kolache baking contest at Rodeo & Fair Grounds. (254) 826-5058 www.westfest.com CHAPPELL HILL LAVENDER & WINE FEST August 9 Chappell Hill. Enjoy a morning or afternoon of lavender cutting, lavender demonstrations, live music, vendors and lavender cuisine at Chappell Hill Lavender Farm (8 mi. N. of historic town of Chappell Hill). Complete your day with wine tasting, grape stomp, vendors and live music at Windy Winery. Saturday ONLY. 2250 Dillard Rd, Chappell Hill. Call (979) 251-8114 www.chappellhilllavender.com 19th ANNUAL NAVASOTA BLUES FESTIVAL August 8-9 Navasota. Honoring Navasota’s own famous blues musician and songster-the late Mance Lipscomb. Enjoy a dozen nationally-known blues stage performers. Friday night music 5:30pm-midnight. All Day Saturday Blues Fest 11am-midnight. Grimes County Expo Center. (936) 825-6600 www.navasotabluesfest.org
NORTH TEXAS STATE FAIR & RODEO August 15-23 Denton. Join us for the largest livestock show in the area with championship rodeos, live music, carnival, food, exhibits, cook-offs and more. North Texas Fairgrounds. AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
35
Cares The BlueDoor by Marcy Madrid
Two years ago this July, Erica and Cody Reeves' dream finally came true. The couple first met while they were both working in the restaurant business. From starting out as servers, moving to bartenders and ultimately managers, they began paving the way and building their experience to one day have their very own bar. When they decided to move to Midland to start an Eskimo Hut chain, the couple became that much closer to fulfilling their dream.
After traveling all over Texas and the US, gathering ideas from different bars they liked in bigger cities, it was ultimately a vacation in Portugal that gave them the extra push they needed to take the next step. Erica and Cody met a couple there that gave up their corporate careers to start their own bar and were very happy and successful doing it. That little bit of encouragement was the confirmation this couple was looking for and that's where our story begins. The Reeves opened up The Blue Door on July 23rd, 2012 as a high class, yet non-judgmental lounge for Midlandlers who wanted more of big-city experience. Erica explains that their motto consisted of 3 main points: quality libations, zero pretense and Texas roots. They wanted to give locals a high quality, lounge experience using Texas vendors yet free them from the snooty style they've experienced in many other, high end bars. It's a concept many Midlanders have obviously appreciated as business has done very well since it opened 2 years ago. So well, in fact that another overseas trip gave Erica another business idea; one that landed the Midland lounge in this months PBE Cares. A Restaurant owner they met in Peru had decided
36
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
to give part of her profits back to her impoverished community. It was a concept that filled Erica's heart and became the impetus for a rather unique business model Erica and Cody have just recently adopted. Originally closed on Monday's, The Blue Door now Opens on the first day of the week and gives all profits for every Monday in the month to a charity. With the concept just launching a month ago, the Midland Bar and Lounge is scheduled to distribute their first check to the West Texas Recording Library who was chosen to be their first charitable recipient. A new charity will be chosen each month and those interested must be an established 501c3 and will need to fill out an application. Not only does The Blue Door give their monthly Monday proceeds to the chosen charity, but they also spend the month promoting the non-profit on their social media outlets and in their business to make sure the community knows the services they offer. At a time when many businesses are simply enjoying the fruits of a booming economy, this couple has decided to use their dream to help pay it forward, and maybe help someone else accomplish a dream of their own.
The BlueDoor 4610 N Garfield St Suite D-1C Midland, Texas 79705 Phone (432) 218-8793 thebluedoor79705@yahoo.com Find The BlueDoor on: • Facebook • Twitter (@BlueDoorMidland) and • Instagram (TBD79705)
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
37
Tech
Bites
Source: CNN Money
Here's 's plan to rid the world of cyberattacks The Internet is full of bugs, and Google just launched a superhero team to kill 'em all. A new team at Google is aiming to be the cybersecurity superheroes of the Internet. They're looking to exterminate those nasty computer bugs that let hackers and government spies sneak into our computers -- not just for Google, but also for everyone.
The special team is called Google Project Zero. And whether you use products by Adobe (ADBE), Apple (AAPL, Tech30), Microsoft (MSFT, Tech30) or software most people don't know by name, the team is working on it. "You should be able to use the Web without fear that a criminal or state-sponsored actor is exploiting software bugs to infect your computer, steal secrets or monitor your communications," Chris Evans, a Google researcher who's leading the new effort, wrote in a blog post. Project Zero is made up of some of the world's smartest, well-intentioned hackers. They spend their days poking at holes in computer code we all rely on -- and making sure those holes get patched. The Project Zero name comes from the very types of bugs they're trying to eliminate: "zero day" vulnerabilities, which are never-before-seen software flaws that hackers love to exploit. 38
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
When Google researchers discover flaws in another company's software, they'll quietly alert that firm. If nothing gets done soon, they'll go public with it on their blog. And if the bug is particularly critical, they'll put extra pressure on the company and try to develop an alternative themselves, Google (GOOG) told Wired, which first reported the story. The team already spotted holes in Apple's iOS device software and Microsoft's malware protection program, and it got public nods from both. There's clearly a need for this kind of help. Devastating bugs that undermine our privacy and financial safety have been found in little-supported, community-maintained software we all use. That was the problem that led to the Heartbleed bug in April and the similar Handshake bug in June. Why the stroke of benevolence? Google says it's part of the company's all-around altruistic mission to make the world a better place. And ex-Google folks tell CNNMoney they back that up 100%. But it's also good business. "Google realized early on that what's good for the Internet is good for Google," said Shuman Ghosemajumder, an executive at cyberdefense firm Shape Security. By creating Project Zero, Google is helping shoulder a burden presently carried by nonprofits. Groups like the Electronic Frontier Foundation spot digital weaknesses that threaten online safety and develop privacy tools. But now those volunteers have help from a superpower -- with super money. "The level of investment and resources, access to Google infrastructure and knowledge takes it to a completely different level," Ghosemajumder said. Also, putting together a ragtag team of coding geniuses is a relatively small cost for Google compared to what it's getting. "This gives Google the reputation of taking security seriously," said Jay Kaplan, an ex-NSA analyst who now leads the cybersecurity firm Synack.
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
39
PBE NEWS BRIEFS Watching the basin
Horizon Mud Company acquires specialty drilling fluids company, The Mud Masters Group Horizon Mud Company, Inc., a full-service drilling fluids company headquartered in Midland, Texas, announced in mid-July its acquisition of The Mud Masters Group, LLC, a high-performance specialty drilling fluid product company. “This alliance reflects Horizon’s commitment to our customers to meet their toughest drilling challenges with cutting edge products and technology while continuing to provide best in class service and value,” said Tony Farish, president and CEO of Horizon Mud Company. The acquisition grants Horizon Mud Company ownership of several patented proprietary products that will allow the company to broaden its service offerings within the drilling fluids sector. Horizon also intends to expand its footprint through manufacturing capabilities with the attainment of Mud Masters’ blending, packaging and distribution facilities located in Bell Chasse, LA and McComb, MS.
40
Raymond Griffin, VP operations of The Mud Masters Group, said, “We are pleased to join Horizon Mud Company and introduce to a larger network the development of the patented family of water-based mud additives that are revolutionizing the air drilling and fluid phase drilling processes through NDRT® (Non-Damaging Reservoir Technology). This unique water-based mud process is ecologically friendly, and for the last three years this technology has been proven to control shale to near 100 percent. Our other family of specialized wellbore products spans 35 years with proven results to provide superior mud fluid control.” “These two companies align perfectly with one another when it comes to our overall mission and business practices. Our combined strengths give us the possibility to do great things as individuals, as a company and for the industry we serve,” said Farish.
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Watching THE SHALE
The Big One: Russia's Bazhenov shale As U.S. and EU policymakers have imposed targeted sanctions on Russian individuals and firms in response to the crisis in Ukraine, Western companies have sought to insulate their own projects from the political imbroglio and continue developing the country’s vast oil and gas resources. Exxon Mobil and Shell have joint ventures with Rosneft and Gazprom respectively to explore and produce shale oil and gas from beneath the swampy plains of Western Siberia and both want to be allowed to continue operating there. The West Siberian basin is the largest petroleum basin in the world, covering 2.2 million square kilometers between the Ural Mountains and Yenisei River, extending from Kazakhstan in the south to under parts of the Kara Sea in the north. The region contains dozens of super-giant and giant oilfields, including Samotlor with 28 billion barrels of oil originally in place, and Urengoy with more than 350 trillion cubic feet of original gas reserves. The first oil discovery in the region was made in 1953. Most of the large oil and gas fields were discovered in the 1960s and 1970s. Since then, new field discoveries
have been much smaller, which helped fuel the peak-oil panic in the early 21st century. But more than 90 percent of that oil is thought to have come originally from a layer of black shale averaging just 20-40 meters thick and buried almost 3 km beneath the surface. Now oil and gas companies are trying to figure out how to go straight to the source, known as the Bazhenov shale. Tapping shale directly has revolutionized oil and gas production in North America. Western oil companies and their Russian counterparts hope it can do the same in Siberia. Bazhenov covers an area of almost 1 million square kilometers - the size of California and Texas combined, and the formation contains 18 trillion tons of organic matter, according to the U.S. Geological Survey. Bazhenov is estimated to hold more than 1.2 trillion barrels of oil, of which about 75 billion might be recoverable with current technology, making it the biggest potential shale play in the world, according to the U.S. Energy Information Administration. Source: Reuters
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
41
Watching the STATE
North Dakota and Texas now provide nearly half of U.S. crude oil production U.S. crude production in April 2014 was 8.4 million barrels per day (bbl/d), with two states, Texas and North Dakota, accounting for nearly half of this total. Texas production topped 3.0 million bbl/d for the first time since the late 1970s, more than doubling production in the past three years, and North Dakota production broke 1.0 million bbl/d for the first time in history, nearly tripling its production over the same period, according to data from the U.S. Energy Information Administration's Petroleum Supply Monthly report. Combined crude oil production volumes from Texas and North Dakota reached 4.0 million bbl/d. From April 2010 to April 2014, crude oil production volumes in North Dakota and Texas grew at average annual rates of 37% and 28%, respectively, versus 2% average annual growth in the rest of the United States. During this period, North Dakota and Texas's combined share of total U.S. crude oil production rose from 26% to 48% . By comparison, the Gulf of Mexico's crude oil production share declined from 27% to 17%.
42
Gains in Texas crude oil production come primarily from counties that contain unconventional tight oil and shale reservoirs in the Eagle Ford Shale in the Western Gulf Basin, where drilling has increasingly targeted oil-rich areas, and multiple reservoirs within the Permian Basin in West Texas that have seen a significant increase in horizontal, oil-directed drilling. North Dakota's increased oil production comes primarily from counties that contain the Bakken formation, also a tight oil reservoir, in the Williston Basin, where crude oil production growth has spurred a rise in crude-by-rail transportation. Since April 2011, the largest monthly average increase in production has come from the Eagle Ford, with an average monthly increase exceeding 32,000 bbl/d, more than twice the 14,000 bbl/d increase in the Permian. Production from the Bakken increased 19,000 bbl/d on average each month over the same period. Source: U.S. Energy Information Administration, Petroleum Supply Monthly
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Watching the GOVERNMENT
Significant fuel economy improvement options exist for light-duty gasoline vehicles Although light-duty vehicle types such as diesel, fullhybrid, plug-in hybrid, and plug-in electric have garnered significant attention in recent years as ways to reduce petroleum consumption and lower consumer fuel costs, standard gasoline vehicles, including those that use micro and mild hybridization, are projected to retain nearly 80% of new sales in 2025 and 78% in 2040 in EIA's Annual Energy Outlook 2014 Reference case. Several fuel-efficient technologies that can deliver significant reductions in fuel consumption are currently or will soon be available for standard gasoline vehicles. These technologies can enable manufacturers to meet future greenhouse gas emissions and Corporate Average Fuel Economy (CAFE) standards, at a relatively modest cost. These technologies include: - Engine technologies such as variable valve timing and lift, cylinder deactivation, turbocharging, and downsizing - Electrification technologies such as electric power steering, and micro or mild hybridization (turning off the engine when the car is stopped) - Vehicle technologies such as fuel-efficient tires and aerodynamics
- Weight-reduction technologies - Transmission technologies such as aggressive shift logic (controlling on automatic transmission to maximize fuel efficiency) or 8-speed transmission The addition of these fuel-efficient technologies to standard gasoline vehicles substantially increases fuel economy. For example, in the midsize passenger car category, the largest share of sales among light-duty vehicles, standard gasoline vehicle compliance fuel economy increases from around 35 miles per gallon (mpg) today to 53 mpg by 2025, an increase of about 50%, while the vehicle price rises from about $25,000 (2012$) today to about $27,000, an increase of less than 10%. Given the long time frame taken in setting greenhouse gas and CAFE standards through model year 2025, EPA and the National Highway Traffic Safety Administration plan to conduct a comprehensive mid-term evaluation by no later than April 2018. The agencies plan to assess fuel efficient vehicle technologies with up-to-date information as part of this mid-term evaluation. Source: U.S. Energy Information Administration
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
43
Watching the Nation
Whiting Petroleum to Buy Kodiak Oil & Gas Whiting Petroleum Corporation said it would buy Kodiak Oil & Gas Corporation for $3.8 billion in stock, and assume $2.2 billion of Kodiak’s debt, according to reports in late July.
Both companies are based in Denver, and have competed for many years. “The two companies, culturally, are very similar,” Lynn A. Peterson, Kodiak’s chief executive, said in an interview. “It was a natural fit.”
The deal will unite two big exploration and production companies, both of which have a strong presence in the Bakken and Three Forks formations, some of the most oil and gas rich areas of the Dakotas and Montana.
The companies hope to achieve cost savings by combining their workforces.
Combined, Whiting and Kodiak will be the biggest producer in the region, the companies said, producing more than 107,000 barrels of oil equivalent per day.
“The savings can be a billion dollars to us over time, most of that over the next five years,” Mr. Volker said. “Our two acreage positions fit together hand in glove.” Whiting shareholders will own 71 percent of the combined company, and Kodiak shareholders 29 percent.
“That was the real reason we came together,” James J. Volker, Whiting’s chief executive, said in an interview. The combined company will have 855,000 net acres, and 3,460 future drilling locations.
44
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Source: Reuters
Watching Offshore
U.S. approves plan to open Atlantic to oil reserve surveys The Obama administration in late July approved a plan that would allow companies to assess oil resources off the Atlantic Coast; angering environmental groups that worried the plan will harm marine life and open the door to offshore drilling.
Green groups slammed the plan, which they said did not offer enough protection for fisheries and marine mammals and would lead to more oil and gas production. They are concerned that the underwater blasts of compressed air could wreak havoc.
First outlined by the Bureau of Ocean Energy Management in February, the plan lays out the mitigation measures companies would be required to undertake before conducting seismic testing to gauge the oil reserves in the Atlantic Ocean.
"The use of seismic airguns is the first step to expanding dirty and dangerous offshore drilling to the Atlantic Ocean," Oceana campaign director Claire Douglass said in a statement.
"We are taking every step we think is reasonable to take to try and put those protections in place, while still allowing surveys to occur," Acting BOEM Director Walter Cruickshank said on a press call. BOEM emphasized that the plan does not authorize any particular seismic surveys and that companies would still have to apply for site-specific permits. Several companies have pending applications to assess the Atlantic oil reserves. Cruickshank said surveys could begin early next year.
While a decades-old ban on drilling in the Atlantic was lifted by Congress in 2008, the Obama administration cancelled a planned lease sale off the Virginia coast after the BP oil spill in the Gulf of Mexico in 2010. The administration has begun to craft the next five-year U.S. offshore oil and gas leasing plan, which will run from 2017 to 2022. The BOEM said the seismic testing framework does not mean a decision has been made on whether the Atlantic will be included in the new five-year plan. Source: Reuters
Watching the WORLD
Encana may sell Deep Panuke natural gas project by year-end Encana Corp , Canada's largest natural gas producer, may sell its Deep Panuke natural gas project, off the coast of Nova Scotia, by year-end, Bloomberg News reported on its website, citing unidentified sources. The company is working with financial advisers and could begin a formal sales process within months, with a deal raising as much as $2 billion completed by yearend, Bloomberg reported. Deep Panuke, 250 kilometers (155 miles) southwest of Halifax, produced 253 million cubic feet of gas per day
in the first quarter, its first full quarter of operation after years of construction delays. The company has long maintained it does not consider the project to be central to its operations and could put Deep Panuke up for sale. Encana is in the midst of a restructuring to increase production of valuable oil and natural-gas liquids while cutting back on dry natural gas and reducing the number of regions where it operates. Source: Reuters
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
45
RESTAURANT
BITES
Have dinner delivered! by Marcy Madrid August is a busy month for many in the Permian Basin as families begin returning from summer vacations and gearing up for school and fall sports. To help relieve a little of the end of summer pressure as your schedule fills back up, I wanted to focus this month’s restaurant bites on convenience. So, I sought out to find all the restaurants in our area that will deliver to your home or office, without having to buy for a large group or party (although some of your families may qualify for that too!). Aside from the typical pizza joints we all know about, there are a few other restaurants you can call on for delivery to help with a lunch-time crunch or the dinner rush. MD's Pizza Factory, a locally owned and operated restaurant, is actually rated as the top pizza place in Midland on Urban Spoon and they deliver just like the big chain pizza places. If you’re in the mood for Chinese Hunan Garden 4410 N Midkiff Rd, Midland, TX 79705 (432) 697-9818 www.hunangardenmidland.net Texas Steak Express Midland: (432) 694-4040 Odessa: (432) 366-5050 10:30am - 10:00pm
46
and live in Midland, Hunan Garden is also a top rated restaurant on Urban Spoon and they will deliver to your home or office as well. If you’d like something on the lighter side or are interested in gluten free options, Jason’s Deli will deliver for a small fee. Their delivery options and fees do vary based on the time of day, so be sure to call ahead. Finally, for a traditional burger or steak and potato meal, Texas Steak Express offers delivery options in Midland and Odessa. If none of that sounds good and you’re still hoping for the convenience of delivery, there is a great service now offered that will deliver your food from a variety of local restaurants for a fee. It’s called Basindelivery.com and all their orders are placed and paid for online. So as your bracing yourself for what will likely be another busy fall, take some of the stress out of planning for lunch or dinner and let someone else do all the work. MD's Pizza Factory 4706 N Midkiff Rd #13 Midland, TX 79705 (432) 682-4440 Jason's Deli Midland: (432) 682-2200 Odessa: (432) 362-3135 Gluten-Free Friendly, Delivery Stop at 5pm, $5 delivery charge after 3pm , $8 before 3pm , $12 out of city.
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Basin Delivery www.basindelivery.com
$4.99 Local Restaurant Delivery, TX INCLUDED Restaurants: Burgers, Fries, & Cherry Pies Bush's Chicken Chinese Cuisine Crazy Mango Donuts Hacienda Vieja IHOP Jersey Girl Pizza Oie's Spicy Thai The Barn Door - Cash, Credit or Debit - No Checks - $15 Minimum Order - One Restaurant Per Delivery Hours of Operation Monday - Friday 10:45am-2:15pm & 4:45pm-9:30pm Saturday 4:45pm-9:30pm Sunday Closed
Map of delivery area
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
47
Manly MEN by Daniel Stephens
Daniel Stephens is the Senior Pastor of Mid-Cities Community Church, since 2006. He is the honored husband to Kayla Stephens, a proud father of twin sons Jonah & Jude, daughter Kampbell, and a precious adopted daughter.
I recently talked to a guy who told me an unbelievable story of manliness. The topic of discussion was “what was the manliest thing you’ve ever done?” We were discussing a new book by New York Times best selling author Stephen Mansfield titled “Mansfield’s Book of Manly Men: An Utterly Invigorating Guide To Being Your Most Masculine Self ”. This guy, who is not known for telling tall-tales, began to recount a moment years ago when he and his friend were hunting. They were tracking an eight-point mule deer from a pick-up truck.
because mine got scratched on our most recent vacation. Wow. As I re-read what I just wrote, I feel sissier than ever.
They saw the mule deer in a clearing and raced beside it at thirty miles an hour. My friend, telling me the story, said he jumped out of the truck (at thirty miles per hour mind you) and jumped on the back of the mule deer. He wrestled the eight-point buck to the ground and killed it with his bare hands. WHAT????? “Say that again”, I said as I looked at him in disbelief. THAT, my friends, is a man. It’s good for me to hear those stories sometimes because I am constantly surrounded by luxury. I am writing this article from an Apple product. I drove to work with cold AC pumping in my car. I slept in a comfy bed last night and I am seriously considering getting some new sunglasses 48
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
While it is true there is something very manly about taking down your protein source with your bare hands, it’s the idea that you would do all that to provide for your family that is the manly principle. In Mansfield’s book he calls it his second manly maxim, which is Manly Men Tend Their Field. They take responsibility for what God has entrusted to them. They understand that God has given them a family to care for and if it takes jumping off a truck at thirty miles per hour and taking down Bullwinkle to provide for them, then they do it. I got a call from a friend today who told me that he and his wife needed some help. They love each other deeply, have a great foundation, but they haven’t been connecting lately. They needed someone to help them talk and pray through their issues because he is not content with the way things are when he knows what they could/should be. I understand. Every marriage goes through seasons, mine included. Marriage is one of the most important fields God has given us to tend. According to the Bible our wife is a blessing, someone to cherish
and love sacrificially. Caring for her and your marriage is the second most important field you will tend outside of our personal relationship with God. Some would say, reaching out for help is a sign of weakness. I would say it’s tending your field. I would say finding the help you need, humbling yourself before others, your spouse, and doing what is necessary to change is one of the manliest things you could ever do. I would say it’s manlier than wrestling down an eight point mule deer. While I enjoy hearing stories of manly conquests as much as the next guy, I am personally more encouraged and challenged to be a man when I see other men care so much about their wife and family that they suck up their pride and do what it takes to tend their field. God, make us manly men who tend our field. (If you would like to find out more about “Mansfield’s Book of Manly Men”, check out any book retailers/distributer near you!) Follow Daniel on Twitter: @DanielBstephens
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
49
U.S. RIG COUNT - TEXAS States &
through August 1, 2014
BAKER HUGHES RIG COUNT
RIGDATA RIG COUNT
Four Week Average 2012
Four Week Average 2013
Last Week
This Week
Four Week Average 2012
Four Week Average 2013
Last Week
This Week
Waiting to Spud
Texas RRC District 1
143
121
121
121
134
128
116
119
20
Texas RRC District 2
82
86
83
83
80
91
92
85
19
Texas RRC District 3
48
60
60
60
48
72
72
72
9
Texas RRC District 4
34
32
31
30
31
33
39
33
8
Texas RRC District 5
13
7
7
8
14
11
12
13
0
Texas RRC District 6
27
32
30
31
27
33
32
33
1
Texas RRC District 7B
14
14
13
15
19
23
20
24
1
Texas RRC District 7C
79
103
102
100
79
103
102
101
5
Texas RRC District 8
271
321
321
318
252
326
327
322
13
Texas RRC District 8A
34
43
43
42
38
48
49
50
0
Texas RRC District 9
20
15
15
15
32
26
26
25
6
Texas RRC District 10
68
58
60
61
75
67
67
68
0
Texas Total
833
892
886
884
829
959
954
945
82
U.S. Totals
1,774
1,883
1,938
2,187
2,189
2,168
135
Districts
1,871 1,883
COPYRIGHT Š 2014 RIGDATA P.O. Box 820547 Fort Worth Texas 76182-0547 1-800-627-9785 | www.rigdata.com This report is protected under United States and international copyright laws and is intended for the exclusive use of the subscriber. Any unauthorized reproduction, retransmission, distribution, publication, broadcast or circulation of this report to anyone, directly or indirectly, without the express prior written consent of RIGDATA is prohibited. To order additional report copies at a reduced rate or for a corporate site license, please contact: 1-800-627-9785 50
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Top 35 Drillers Rankings Each month we track the activity of all the drillers and compile the results into a report that identifies the top 35 out of 100 drillers based on their footage drilled. Updated monthly, these reports also detail the number of well starts and the number of directional wells drilled by each of the top 35 out of 100. through July 31, 2014 Company
Footage Drilled
% of Total
Average Footage
Well Starts
% of Total
Directional Wells
1
Helmerich & Payne, Inc.
29,600,749
17.3%
10,437
2,836
13.3%
2,518
2
Patterson-UTI Drilling Company, LLC
17,654,598
10.3%
10,527
1,677
7.9%
1,513
3
Nabors Industries, Ltd.
14,862,409
8.7%
7,583
1,960
9.2%
1,804
4
Precision Drilling Trust
7,894,757
4.6%
8,676
910
4.3%
819
5
Nomac Drilling, LLC
7,222,943
4.2%
9,814
736
3.5%
736
6
Ensign Energy Services, Inc.
6,911,375
4.1%
6,490
1,065
5.0%
631
7
Unit Drilling Company
5,544,002
3.2%
10,210
543
2.5%
512
8
Pioneer Energy Services Corp.
4,421,090
2.6%
10,187
434
2.0%
326
9
Trinidad Energy Services Income Trust
4,345,615
2.5%
9,810
443
2.1%
352
10
Cactus Drilling Company, LLC
3,742,469
2.2%
10,425
359
1.7%
352
11
Capstar Drilling, LP
3,596,192
2.1%
6,354
566
2.7%
150
12
Sidewinder Drilling, Inc.
2,501,186
1.5%
8,965
279
1.3%
263
13
Savanna Energy Services Corp.
2,392,534
1.4%
8,994
266
1.2%
85
14
Xtreme Drilling and Coil Services Corp.
2,384,197
1.4%
10,457
228
1.1%
220
15
Complete Production Services, Inc.
1,800,591
1.1%
10,116
178
0.8%
92
16
Latshaw Drilling & Exploration Company
1,610,186
0.9%
8,520
189
0.9%
189
17
Lariat Services, Inc.
1,487,758
0.9%
6,672
223
1.0%
77
18
Robinson Drilling of Texas, Ltd.
1,440,314
0.8%
11,165
129
0.6%
3
19
Sendero Drilling Company, LLC
1,430,921
0.8%
11,179
128
0.6%
0
20
Pinnergy, Ltd.
1,382,750
0.8%
8,921
155
0.7%
155
21
Orion Drilling Company, LLC
1,377,076
0.8%
11,381
121
0.6%
116
22
Scandrill, Inc.
1,328,271
0.8%
12,075
110
0.5%
99
23
CanElson Drilling, Inc.
1,317,000
0.8%
9,083
145
0.7%
66
24
Cyclone Drilling, Inc.
1,306,480
0.8%
4,521
289
1.4%
277
25
Frontier Drilling, LLC
1,295,052
0.8%
7,994
162
0.8%
141
26
Bison Drilling and Field Services, LLC
1,131,948
0.7%
11,791
96
0.5%
33
27
SST Energy Corporation
1,082,533
0.6%
10,023
108
0.5%
106
28
Desoto Drilling, Inc.
1,062,894
0.6%
4,581
232
1.1%
232
29
Cade Drilling, LLC
1,035,794
0.6%
11,509
90
0.4%
90
30
Basic Energy Services, Inc.
973,229
0.6%
7,373
132
0.6%
36
31
ProPetro Services Incorporated
913,400
0.5%
11,562
79
0.4%
0
32
Lewis Petro Properties, Inc.
910,000
0.5%
10,341
88
0.4%
87
33
Big Dog Drilling Company
822,900
0.5%
11,926
69
0.3%
5
34
Murfin Drilling Company, Inc.
795,285
0.5%
4,706
169
0.8%
0
35
Aztec Well Servicing Co.
779,969
0.5%
6,094
128
0.6%
82
Total Top 100 for year 2014
170,644,379
100.0%
---
21,315
100.0%
---
RANK
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
51
Top 35 Operators Rankings Updated every month, we track and rank the top
35 out of 100 operators based on their footage drilled.
Keep track of the most active operators with details on their number of well starts.
through July 31, 2014
RANK
Company
Footage Drilled
% of Total
Average Footage
Well Starts
% of Total
Directional Wells
1
Anadarko Petroleum Corporation
9,119,596
5.3%
10,399
877
4.1%
868
2
Chesapeake Energy Corporation
7,113,706
4.2%
10,206
697
3.3%
697
3
Pioneer Natural Resources Company
5,748,041
3.4%
12,975
443
2.1%
313
4
EOG Resources, Inc.
5,745,607
3.4%
10,504
547
2.6%
527
5
Occidental Petroleum Corporation
5,669,797
3.3%
6,156
921
4.3%
467
6
Apache Corporation
4,897,810
2.9%
8,841
554
2.6%
379
7
Marathon Oil Corporation
3,870,177
2.3%
14,772
262
1.2%
262
8
Devon Energy Corporation
3,428,869
2.0%
9,292
369
1.7%
336
9
BHP Billiton Limited
3,396,262
2.0%
13,750
247
1.2%
247
10
Chevron Corporation
3,044,326
1.8%
5,108
596
2.8%
272
11
ConocoPhillips Company
2,932,417
1.7%
8,260
355
1.7%
283
12
QEP Resources, Inc.
2,806,070
1.6%
11,941
235
1.1%
214
13
Noble Energy, Inc.
2,428,576
1.4%
9,872
246
1.2%
246
14
Oasis Petroleum North America, LLC
2,366,703
1.4%
10,158
233
1.1%
233
15
Exxon Mobil Corporation
2,359,448
1.4%
5,243
450
2.1%
206
16
Concho Resources, Inc.
2,225,512
1.3%
11,297
197
0.9%
153
17
Encana Corporation
2,045,074
1.2%
12,246
167
0.8%
160
18
Whiting Petroleum Corporation
2,015,132
1.2%
9,782
206
1.0%
184
19
Southwestern Energy Company
1,869,418
1.1%
4,472
418
2.0%
415
20
Linn Energy, LLC
1,851,409
1.1%
5,645
328
1.5%
163
21
SandRidge Energy, Inc.
1,760,853
1.0%
5,336
330
1.5%
230
22
Laredo Petroleum, Inc.
1,708,300
1.0%
11,165
153
0.7%
60
23
EP Energy E&P Company, LP
1,689,103
1.0%
9,707
174
0.8%
154
24
Murphy Oil Corporation
1,488,776
0.9%
10,559
141
0.7%
141
25
CrownQuest Operating, LLC
1,481,100
0.9%
11,944
124
0.6%
0
26
WPX Energy, Inc.
1,455,650
0.9%
6,739
216
1.0%
214
27
Newfield Exploration Company
1,395,279
0.8%
6,342
220
1.0%
209
28
Antero Resources Corporation
1,362,925
0.8%
11,264
121
0.6%
121
29
Ultra Petroleum Corp.
1,362,418
0.8%
12,274
111
0.5%
111
30
Cimarex Energy Co.
1,205,172
0.7%
10,480
115
0.5%
111
31
Continental Resources, Inc.
1,200,255
0.7%
3,489
344
1.6%
344
32
Penn Virginia Corporation
1,187,500
0.7%
14,482
82
0.4%
82
33
Energen Resources Corporation
1,102,671
0.6%
9,758
113
0.5%
71
34
Windsor Energy, Inc.
1,093,526
0.6%
10,935
100
0.5%
78
35
Parsley Energy Operations, LLC
1,062,700
0.6%
11,808
90
0.4%
7
Total Top 100 for year 2014
170,644,379
100.0%
---
21,315
100.0%
---
52
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
Source: www.eia.gov
California continues to regulate carbon intensity of motor fuels used in California The U.S. Supreme Court has declined to review the Ninth U.S. Circuit Court of Appeal’s September 2013 ruling that upheld the constitutionality of California’s Low Carbon Fuel Standard (LCFS). The court on June 30, 2014 returned the case to a lower court for additional review and the California LCFS remains in effect.
intensity. In addition, providers of alternatives to liquid transportation fuels, such as natural gas and electricity, may opt-in to the LCFS program if they meet program requirements.
The Ninth Circuit had overturned a finding by a lower court that the LCFS violated interstate commerce laws. The plaintiffs in the case contended that the California LCFS improperly discriminates against fuels produced outside of California and violates the U.S. Constitution’s commerce clause that prevents a state from regulating commerce outside its borders. Plaintiffs included farm groups (the Rocky Mountain Farmers Union and others), biofuels trade groups (Renewable Fuels Association and Growth Energy), and petroleum fuel manufacturers (American Fuel and Petrochemical Manufacturers).
Fuel providers (generally, petroleum refineries and fuel importers) that sell motor gasoline or diesel fuel for consumption in California are classified as regulated parties under LCFS. These parties are required to report the carbon intensity of the fuels they sell in California and to ensure that such fuels meet regulatory targets. Regulated parties must determine the lifecycle carbon intensity of a particular fuel by calculating it using the CA-GREET computer model or by using a lookup table provided by CARB. Regulated parties that anticipate either under-satisfying or overcomplying with the carbon intensity requirements can balance their requirement by trading LCFS credits with other regulated parties.
The California LCFS is a state regulation designed to reduce by 10% the average lifecycle carbon intensity of the motor gasoline and diesel transportation fuel pool, including all petroleum and nonpetroleum components, sold for consumption in California from 2012 to 2020. The lifecycle carbon intensity of a fuel is a measure of greenhouse gas emissions associated with producing and consuming the fuel. Increased production and use of low-carbon-intensity fuels, such as renewable diesel and cellulosic ethanol, and petroleum fuels made from less carbon-intensive crude oil is expected to reduce lifecycle carbon
The LCFS carbon intensity targets for gasoline and diesel become progressively stricter through 2020. For example, using the carbon intensities from the CARB lookup table, the 2014 target for gasoline can be met with a blend of 90% CARBOB (which is a petroleum blendstock for gasoline that meets California specifications) and 10% sugarcane ethanol imported from Brazil. The 2020 target, however, will require gasoline blends made from less-carbonintensive components, such as cellulosic drop-in biofuel or ethanol made in an extremely energyefficient production facility.
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
53
Because the Supreme Court denied review of the Ninth Circuit ruling, the LCFS will remain in effect pending additional review by lower courts. In the meantime, CARB is proposing to readopt the LCFS in 2014 to implement administrative improvements to the original 2009 regulation. CARB also expects the 2014 readoption to “provide a stronger signal for investments in and production of the cleanest fuels, offer additional flexibility, update critical technical information, and provide for improved efficiency and enforcement of the regulation.�
Gasoline and diesel fuel prices both decrease
The U.S. average retail price of regular gasoline decreased four cents to $3.64 per gallon as of July 14, 2014, less than a cent lower than last year at this time. Prices decreased in all regions of the nation except the Rocky Mountains, where the average price increased less than a penny to remain at $3.64 per gallon. The largest price decrease occurred in the Midwest, where the price decreased eight cents to $3.54 per gallon. On the West Coast, the price was down four cents to $4.00 per gallon, and the East Coast price was down three cents to $3.63 per gallon. The Gulf Coast price was down two cents to $3.44 per gallon. The national average diesel fuel price decreased two cents to $3.89 per gallon, three cents higher than last year at this time. Prices decreased in all regions of the nation, with the Midwest decreasing the most, by three cents to $3.84 per gallon. The West Coast, East Coast, and Gulf Coast prices all decreased two cents, to $4.05 per gallon, $3.96 per gallon, and $3.79 per gallon, respectively. The Rocky Mountain price was down one cent to $3.90 per gallon.
Propane inventories continue to rise
U.S. propane stocks increased by 3.2 million barrels last week to 63.3 million barrels as of July11, 2014, 5.3 million barrels (9.2%) higher than a year ago. Gulf Coast inventories increased by 1.6 million barrels and Midwest inventories increased by 1.2 million barrels. East Coast inventories increased by 0.2 million barrels and Rocky Mountain/ West Coast inventories increased by 0.1 million barrels. Propylene non-fueluse inventories represented 6.4% of total propane inventories.
54
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | AUGUST 2014
AUGUST 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
55