APRIL 2015 ENERGY PIPELINE 1
OILOIL & GAS & GAS PRODUCTION PRODUCTION POWER POWER
WagnerWagner Power Systems Power Systems is built to is provide built to provide you withyou thewith engines the engines and related and equipment related equipment you need you to need generate to generate
power for power oil and forgas oil and exploration, gas exploration, recoveryrecovery and transmission and transmission and withand engines with engines that power thatapplications power applications in several in several
industrial industrial market sectors, market sectors, including including construction, construction, mining, mining, agriculture, agriculture, forestry/waste, forestry/waste, materialmaterial handling, handling, light/ light/
construction/general construction/general industrial, industrial, irrigation irrigation and other and pumps. other pumps.
It’s our people It’s our who people make whothe make difference the difference by standing by standing beside you beside andyou our and products. our products. We know Wespecifi knowcspecifi powerc power
requirements, requirements, fuel consumption, fuel consumption, fuel tolerance, fuel tolerance, and overall and operating overall operating cost arecost vitalare to your vital production. to your production. That’s why That’s why
we are there we are from there system from design systemto design operational to operational support.support.
Find us on Find theus web on the web Give us aGive Callus a Call
WagnerPower.com WagnerPower.com 1-877-654-1237 1-877-654-1237
2 ENERGY PIPELINE APRIL 2015
ANADARKO PETROLEUM CORPORATION OIL & GAS PRODUCTION POWER
ANADARKO IS... Among the world’s largest independent oil and natural gas exploration and production companies – providing for today, innovating for tomorrow.
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APRIL 2015 ENERGY PIPELINE 3
Features
38
44
OILFIELD THEFTS ON THE RISE
TIME WELL SPENT
16
Company losses are approaching $1 billion a year.
Oil and gas task force concludes, making nine proposals.
By David Persons
By Sharon Dunn
AFTER THE BOOM
Greeley, Weld finding their way through oil and gas slowdown. By Bridgett Weaver
20
ENERGIZING MONEY
Colorado investors look favorably to both traditional and green energy. By Allison Dyer Bluemel
24
BELT TIGHTENING
Companies slice capital budgets but still spending billions in Weld County.
30
ENERGY SHOWDOWN
UNC delivers a 72-71 victory. By Samuel G. Mustari 4 ENERGY PIPELINE APRIL 2015
Unlocking chemical ancestry through stable isotopes.
ON THE COVER Photo illustration by Darin Bliss
By Gary Beers
50 54
NEW NEIGHBOR
Crall Products purchase $1.3m lot. By Allison Dyer Bluemel
BEING PREPARED Colorado regulators adopt rules to curtail future flooding issues.
Departments 8
Support Company Profile
10
Field Worker Profile
12
Executive Profile
58
News Briefs
70
Data Center
By Linda Kane
56
HOPE DOES SPRING ETERNAL Even with oil and gas task force work. By Dave Neslin
By Sharon Dunn
28
TECH TALK
67
MAKING HOLE A look back at the origins of oil and gas. By Bruce Wells
Bartlett Power and Automation
Meet BJ Juelfs, Green Earth Environmental
Meet Tisha Schuller, Colorado Oil & Gas Association
See What We’re Made Of. Storage, separation and control solutions when you need them, where you need them.
Let us show you the Worthington difference.
1.800.835.9136 Energy@WorthingtonOilandGas.com
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Wooster, OH
Bremen, OH
Garden City, KS APRIL 2015 ENERGY PIPELINE
5
We have the
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PUBLISHER Bart Smith EDITOR Randy Bangert GENERAL MANAGER Bryce Jacobson ACCOUNT/PROJECT MANAGER Bruce Dennis BUSINESS MANAGER Mike Campbell MANAGING EDITOR Sharon Dunn
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Greeley CO | 2414 4th Ave, Unit A 970.356.1150 | borderstates.com
CONTRIBUTING WRITERS Allison Dyer Bluemel Linda Kane Tracy Hume David Persons Bruce Wells Gary Beers Bridgett Weaver
ADVERTISING DIRECTORS T.J. Burr Sabrina Poppe ACCOUNT MANAGERS Cristin Peratt Mary Roberts Kristy Zado CREATIVE MANAGER Alan Karnitz CREATIVE TEAM SUPERVISOR Afton Pospíšilová ART DIRECTION & DESIGN Darin Bliss
ENERGY PIPELINE MAGAZINE 501 8th Ave. P.O. Box 1690 Greeley, CO 80632 For all editorial, advertising, subscription and circulation inquiries, call (970) 352-0211. Send editorial-related comments and story ideas to: editor@energypipeline.com For advertising inquiries, contact: bjacobson@energypipeline.com April 2015, Volume 2, Issue 8. Published by Greeley Publishing Co., publisher of The Greeley Tribune, Windsor Now, the Fence Post, and Tri-State Livestock News.
6 ENERGY PIPELINE APRIL 2015 30-250 (2014-09)
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SUPPORT COMPANY PROFILE
Bartlett Power and Automation
CORPORATE HEADQUARTERS 525 W. 2nd St. Rifle, CO 2881 31st Ave. Greeley, CO 855.778.2377
NUMBER OF EMPLOYEES 16
WEBSITE www.bartlettenergy.com
SERVICES OFFERED We specialize in energy services for the oil and gas industry, providing power generation, power distribution, well pad automation wiring and programming, highline electric drilling conversion, generator rentals, power distribution panels, industrial electrical services, generator service and repairs. 8 ENERGY PIPELINE APRIL 2015
HOW LONG HAS YOUR BUSINESS BEEN OPERATING IN WELD COUNTY? 9 years.
WHY SHOULD CUSTOMERS DO BUSINESS WITH YOUR COMPANY? From doing it right the first time, to create optimal power systems that allow our clients to achieve peak capacity of their power needs. We pride ourselves in our problem-solving skills. Many times, we find our clients are under-utilizing their power potential
and efficiency. In the long run, we work very closely with our clients to ensure their operation runs smoothly.
HOW LONG DO YOU ANTICIPATE BEING IN BUSINESS IN NORTHEAST COLORADO? Ideally we would be here for many years to come. However, our target market is in an ever-changing industry. As long as business continues to be consistent and we see company growth, we will continue to service our clients in this area.
IS YOUR COMPANY IN A GROWTH MODE? OR ARE YOU CUTTING BACK? At the end of 2014, we were in a major growth spurt. However, with the state of the oil and gas industry in a major slowdown, this has put us in the same situation many other companies who servicing the oil and gas industry have found themselves in. We are doing everything we can to keep from laying off staff members and making cutbacks. Unfortunately, our target market is making major cutbacks. And those cutbacks
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create a ripple effect to everyone in the pond. We are optimistic that in the second and third quarters the price of oil will stabilize and gain stronger numbers.
WHAT KIND OF SKILLS, EXPERIENCE OR EDUCATION DO YOU LOOK FOR IN EMPLOYEES? Our staff ranges from master electricians to
first year journeyman to master diesel mechanics. Our staff of electricians and mechanics have various skills and capabilities in power generation, automation programming, electrical wiring, diesel engines, diesel generators, power distribution, highline high-voltage power systems, low voltage and explosion-proof power solutions.
BARTLETT POWER AND AUTOMATION For job opportunities, apply by emailing resumes to jobs@bartlettenergy.com
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APRIL 2015 ENERGY PIPELINE 9
Jeff Hansen - General Manager
FIELD WORKER PROFILE
BJ Juelfs
GREEN EARTH ENVIRONMENTAL BY STAFF REPORTS
HOMETOWN Fort Collins.
WHERE DO YOU LIVE? Wellington.
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? 7 years.
HOW DIDYOU GET INTO THE INDUSTRY? I started out as an equipment operator for Green Earth Environmental, an oil field reclamation company. I learned a
10 ENERGY PIPELINE APRIL 2015
lot about the industry in my time there. When Clearwater was created, I was brought on board as a sales rep for our Filtrexx and EcoGuard products. Filtrexx is a high performance site perimeter control and storm water control device. It installs faster than straw wattle or silt fence and provides better site protection.
WHAT IS YOUR JOB TITLE AND DUTIES? Sales and operations. I oversee the manufacturing process for all of our products as well as logistics and sales to our distributors in Colorado and Wyoming.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB? Keeping up with the fast pace of the oil and gas industry and bringing a high performance, green, locally manufactured product to the market that makes our customers’ jobs easier and protects our environment.
WHAT IS THE BEST PART OF YOUR JOB? The people I get to work with. From our employees to our clients, we have a great group of people we do business with every day.
WHAT IS THE HARDEST PART ABOUT YOUR JOB? Keeping up with the high demand that the oil and gas industry brings. We take pride in making sure we have exactly what our customers need at the drop of a hat.
WHAT DO YOU DO IN YOUR SPARE TIME? VOLUNTEERISM, SCHOOL, SPORTS? I race motocross and have recently got involved as
a team coach for FCA Motocross. I like to hunt and spend as much time as I can with my wife and daughter.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? To create better product awareness for Filtrexx in the oil and gas field. It’s a fantastic product that will outperforms other site containment devices. Filtrexx is incredibly easy for contractors to install, and it keeps them in compliance.
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E C N E I R T E S P U EX CAN TR YOU
Trails End Enterprises, LLC and MCP Trucking, LLC are family owned and operated. We provide crude oil transportation in Colorado and Southern Wyoming 24hrs/7 days a week to provide superior customer service. Visit our website for career opportunities: www.trailsendenterprises.com (970) 515-5284 • 1716 1st Ave, Greeley, CO
APRIL 2015 ENERGY PIPELINE 11
EXECUTIVE PROFILE
COLORADO OIL & GAS ASSOCIATION President & CEO
Tisha Schuller BY TRACY HUME • FOR ENERGY PIPELINE in march, tisha schuller, of the Colorado Oil and Gas Association, announced that she will be stepping down. She has served as COGA’s president and CEO for the past five years. Schuller will continue as CEO until the end of May and will chair the Rocky Mountain Energy Summit in August. “It’s been a wild ride over the last few years,” she said. She wasn’t just referring to her tenure at COGA. In the past five years, the same lack of stability that has dogged the industry has also characterized her family life. For example, less than a year into her tenure at COGA, Schuller experienced trial by fire - literally. “My family was evacuated during the Fourmile Canyon fire in 2010,” she said. Schuller, her two young sons and their dog went to a Red Cross evacuation center. Her husband, Brian, a volunteer firefighter, stayed behind to fight the fire. “It was overwhelming at the time,” she said. “But the Red Cross really helped us. They helped us find shelter, and they asked if we needed money. They gave us a one-hundred dollar Visa card, and I remember taking the kids to Quizno’s to get some food and we just sat there until we figured things out.” The experience was life-changing for Schuller. “That was my first face-to-face encounter with the Red Cross as someone who was in
12 ENERGY PIPELINE APRIL 2015
need,” she explained. “I was really moved by that experience, and in my heart I vowed to repay them a hundred-fold.” In 2013, Schuller’s family was evacuated from their home a second time, during Colorado’s September floods. “I was at a meeting in Colorado Springs, and my son called me and said, ‘The bridge just washed away ...’ “, Schuller said. Her sons were airlifted out of the area. Her husband hiked out later, after completing 30 rescues. “Our house survived, but we were out of our house for seven weeks,” she said. “We lost our bridge and our well, so we lived without water for three months. It was quite a trying time.” Once again, the Red Cross provided support. And Schuller made good on her promise to repay them. She challenged herself to raise $1 million in donations from the oil and gas industry for the American Red Cross; in short order, she raised nearly $2.2 million in donations. Schuller now serves on the Executive Committee of the Board of Directors of the Colorado and Wyoming Region of the Red Cross. Last spring, Schuller and her husband chaired the Century of Champions Red Cross Ball, which raised more than $710,000 for Red Cross of Colorado. In February of this year, she co-chaired the Red Cross Heroes Soiree, an event which serves as a fundraiser
QA &
with Tisha Schuller
Schuller recently talked with Energy Pipeline about COGA’s role in the industry, her proudest accomplishments as president and CEO, and what the future may hold. ENERGY PIPELINE: What is COGA’s role in the industry? TISHA SCHULLER: We’re the face of the oil and gas industry in Colorado. My job has been to bring out the best in the industry and also to put the industry’s best foot forward. We do that in regulatory matters, by going to hearings and rule-makings and giving testimony on behalf of the industry. We also do community outreach and engagement. In some cases we speak for the industry, but in some cases we bring the operators in a community to the table so that they can meet with other stakeholders in that community. We also represent the industry at the legislature. A lot of our work
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and which provides recognition to community heroes, including first responders. “For the Heroes Soiree, Brian chaired the recognition part of the program, and I raised money,” Schuller said. “We brought our kids to that event, too. It’s a really nice way that our whole family repays our debt to the Red Cross and pays it forward to help others.” After experiencing both fire and floods in the past few years, Schuller isn’t sure what Mother Nature may have in store next. “We were waiting for the locusts to come,” she laughed. “They • Walk-in Service Available didn’t come for us, but we were ready.” • Mobile On-Site Services The upside of her family’s experiences has been that “it makes for tough kids,” Schuller said. As for herself, “nothing really scares • DOT/Non-DOT Drug Testing me anymore” she said. That fearlessness has come in handy in ANNOUNCING• OUR LINE OF Alcohol NEW Breath Testing her role as the voice of the oil and gas industry in Colorado. She noted that during her tenure, the industry has navigated a • 24-Hour Emergency Testing Services period “characterized by innovation and growth, but also extreme controversy,” she said. “I am proud of the way our industry has • Third Party/Consortium Administrator Services been able to evolve to meet these challenges.”
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QA &
is relational: bringing the industry together, helping the industry come up with one voice and one set of opinions and then representing those opinions. EP: You launched a number of successful initiatives during your fiveyear tenure at COGA. One of those is your leadership program, EnGen. Can you tell me more about that program? TS: EnGen is our Energy Generation Leadership Program. It’s in its fourth year right now and it’s designed to build the next generation of civic leaders for Colorado. We’re not just trying to prepare future industry leaders; we’re trying to prepare future Colorado leaders, who happen to come from the oil and gas industry. It is a year-long program, open to young professionals who have worked in the industry for at least three years. Only employees of COGA member companies can apply, and it is very competitive to get into. They meet one day each month, and when they meet, I clear my calendar for the day. Their energy and enthusiasm is so inspiring! It’s great to spend time with people who are going to be leading our industry and our state going forward. I hope that 30 years from now, every business, civic and political leader in Colorado has some kind of connection to EnGen. I am really proud of the program.
with Tisha Schuller continued to them. In some cases they meet quarterly, in some cases they meet monthly ... each community has a unique solution. It takes on a lot of different shapes and sizes, but creating that long-term engagement with our communities has been a real priority and interest of mine. EP: During your tenure, COGA also created the baseline water sampling program that presaged the Colorado Oil and Gas Conservation Commission (COGCC) groundwater sampling rules. TS: Yes, we started a voluntary baseline water sampling program that was the first of its kind in the country. Communities were concerned about protecting groundwater, and we wanted to demonstrate definitively that we were drilling wells without affecting groundwater. We created a voluntary program that involved preand post-drilling sampling. What was particularly important about it to me is that we got 95 percent participation from operators drilling wells in the state. And then, within a year, the state adopted a groundwater sampling program statewide. It is still the most comprehensive baseline water sampling program in the country.
EP: You also established a community outreach program at COGA.
EP: The Industry Ambassador program that you established at COGA has also been well-received. I see the Winter/ Spring 2015 series is already sold out.
TS: We built that from scratch. We now have three full-time employees that focus on community outreach. In communities throughout the state where there are either current or planned oil and gas activities, we bring together the operators, the local leaders, and other stakeholders, including concerned citizens, and set up whatever kind of relationship and communication building is important
TS: We’ve been doing the Industry Ambassador series for about three years. It is a series of four classes, held over the lunch hour. It is designed for people who work in the oil and gas industry, to help them talk about the industry to their neighbors. When things started heating up in communities around fracking, people who worked in the industry were feeling really uncomfortable because
14 ENERGY PIPELINE APRIL 2015
they would go to a picnic and someone would say, “You do fracking?!” We wanted to give people in the industry resources and tools for talking about the industry, ways to humanize themselves and ways to humanize the industry. How do you answer a question about earthquakes? How do you answer a question about water contamination? We offer the series twice a year in Denver and it always sells out. We have about 100 to 150 people participating each time and we get great feedback. I think it’s one of the nice things we do for the industry. EP: Many of COGA’s initiatives, such as EnGen and the Ambassador series, seem designed to empower individuals to speak out on behalf of the industry. TS: I think that everyone who works in the oil and gas industry can be a part of the de-escalating the fracking wars by simply talking to their neighbors in a thoughtful and empathetic way about what they do, what our business does, who we are, and how much we care about this state. COGA has 12 employees, but there are more than 40,000 people directly employed in the industry in Colorado. If each of those 40,000 people talked to one person a week, we could make significant headway in improving the way our neighbors feel about our industry. EP: Do you see COGA’s role continuing to evolve? TS: We have a really good team in place at COGA. Any success I have had over the past five years is largely due to the really incredible staff. That being said, I hope COGA always continues evolving in new directions. The industry is changing, the technology is changing, the public expectations of us as an industry are changing. In the last five
years we’ve built completely new systems and programs to meet those changes and expectations and I hope the next five years bring as much evolution, innovation, and growth as the last five years have. EP: What’s next for you? TS: I will be working part-time during the summer. The rest of the time I am going to take off to spend with my kids. My youngest, who is 8, has already started asking me how many days I have left on the job, and if he can start counting down now! And, of course, I am super passionate about the Red Cross, and it would be fabulous to do more for them. I enjoy working in different environments. Before COGA, I worked in a business environment; and then with COGA I have worked in a political advocacy role. But I am open to doing something else. There are so many cool jobs out there! I’m ready to move on to my next adventure. EP: What do you think the energy industry will look like 30 years from now, when your boys are your age? TS: I am encouraging both my boys to get engineering degrees so they’ll have as much lifelong flexibility as possible. My hope is that technology evolution in energy will take us into a new day. Whether its oil and gas production or a different kind of production, my hope is that we’re going to continue to see smaller and smaller footprints, and more and more energy efficiency so that we can continue to evolve our way of life. My commitment in the future is to technology innovation and to being energy agnostic, so that we’re going with the best energy solution going forward. That may be oil and gas, or technology may take us in a different direction. Obviously, I’m betting on oil and gas.
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A fracking rig sits in the distance as a sign marks the surrounding land as leased off of Weld County Road 25 and U.S. 34 in west Greeley. The rig has since moved from the area.
AFTER THE BOOM Greeley, Weld see oil and gas slowdown, but it’s ‘not a one-horse town’ BY BRIDGETT WEAVER • FOR ENERGY PIPELINE
short skirts to entertain the
guys and a game room to entertain the kids. With the flow of oil and gas customers starting to dry up, the Tilted Kilt in downtown Greeley is focusing on a different crowd these days - families. “Right now, with what has happened since (oil and gas companies) already started cutting down their manpower, we have seen a significant decrease in business for lunches and dinners,” said Aaron Freimark, marketing manager at the Greeley Tilted Kilt. Marketing efforts at the Tilted Kilt are reflective of a cold climate in the heavy hitting industry. The Kilt is now hoping to attract families and other residents. “We’re definitely looking to expand and bring in more of the Greeley community,” he said. “We’re here for the community.” The good news is the Tilted Kilt’s marketing strategy may work. There are other customers out there. The common thought among Weld residents is that the oil and gas industry almost singlehandedly pulled Weld County out of the economic downturn. It’s not true. Greeley and county officials insist the oil and gas industries’ recent downturn won’t turn Weld into a collection of ghost towns. 16 ENERGY PIPELINE APRIL 2015
THE COMMISSIONERS PUT IN PLACE SOME STRATEGIC PLANNING THAT ALLOWED FOR THE UPS AND DOWNS OF DIFFERENT INDUSTRIES Yet as the price of oil drops and threats of more layoffs rise, other industries such as hospitality, retail and call centers may feel the pang of hunger for business.
SUPPLY AND DEMAND City and county officials agree the dip will hurt the local economy. They also say there are other lucrative industries to stabilize it. “It wasn’t very long ago when we didn’t have the oil and gas industry here, and in spite of some tough times that the whole country went through, Greeley was doing very well before oil and gas came in,” said Pam Bricker, executive director of the Downtown Development Authority.
The downturn could be temporary, Bricker said, and officials seem to be hoping for that, at least right now. “It’s supply and demand,” she said. “Companies are asking, ‘Why should I give my depleting resource away at this price when I can hold onto it and sell it later for more?’” And that’s different from a so-called “bust” cycle when all the resources are gone, Bricker said. “There’s gold and then there’s not,” she said. “That’s what a true boom and bust is.” Weld’s agricultural industry, after all, goes through similar supply and demand issues almost every year. “When the farmers have a really good year in corn, the price goes down,” she said. “That’s the way our economy works.” Weld County Commissioner Barbara Kirkmeyer said the county prepared for this downturn. In 2009, the commissioners put in place some strategic planning that allowed for the county to flow with the ups and downs of different industries. Times have been good. The county is spending $40 million this year on onetime capital improvement projects, such as improving Weld County Road 49. Some of those projects could be delayed or even scrapped if things get dire.
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Oil and gas storage tanks sit behind a fence on Steve Wells’ ranch near Gill. Noble Energy is among the oil and gas companies that has numerous operations in Weld County. Photos by Josh Polson/ jpolson@greeleytribune.com
“Three or four years ago Weld County was number one in the state for job growth, and that was led by manufacturing jobs.” ERIC BERGLUND, president and CEO, Upstate Colorado Economic Development
If you think about it, people budget the same way: They may put off buying that bigscreen TV if they don’t get a bonus.
WELD’S DIVERSITY WILL SAVE IT Upstate Colorado Economic Development’s outgoing President and CEO Eric Berglund said he thinks there are many other industries powering Weld in the event that oil and gas continues to struggle. Berglund said the county survived the bust in the oil and gas industry before - the most famous bust in Weld occurred in the 1980s. “Greeley is not a one-horse town,” Berglund said. “Three or four years ago Weld County was number one in the state for job growth, and that was led by manufacturing jobs.” Other key industries include agriculture, health care, call centers and private industries such as JBS’ meatpacking plant and Leprino Foods’ cheese factory. According to the U.S. Bureau of Labor Statistics, in 2013, the oil and gas industry 18 ENERGY PIPELINE APRIL 2015
made up less than 7 percent of Weld’s total employment. That number may not be entirely accurate because it doesn’t reflect temporary workers, but it does show that the oil industry is just a small piece of the county’s workforce. Even allowing for a margin of error in the statistics, the percentage of oil field workers is low when compared to manufacturing, which accounts for almost 13 percent of Weld’s workforce. According to the same statistics, retail is 9.6 percent and heath care is 8.8 percent. Private industries make up 84.3 percent of the workforce and include oil and gas companies such as Halliburton, Anadarko Petroleum Corp., Noble Energy, Select Energy and A&W Water Service. Scott Ehrlich, who owns car dealerships in Weld and is heading up the Northern Colorado Economic Alliance, said some slowdown in the oil and gas industry might not be as bad as everyone thinks. “We need this diversity, and for a while there, oil and gas, they were just sucking up
the labor pool,” he said. “In a way, it’s not bad that it has slowed down because it was causing a labor shortage. It’s harder to bring in other companies if there’s not a labor force for them to hire.” Greeley was founded on agriculture, and the industry is still strong, with Weld ranking as the top agriculture producer in the state, bringing in almost $2 billion annually, according to the Colorado Department of Agriculture. Weld is the ninth largest agricultural producer in the country. “Agriculture has been the driving force since Greeley was founded,” Bricker said. Colorado Farm Bureau President Don Shawcroft said the increase in available labor because of layoffs would be welcome news to some farmers. “I think the ag economy would absorb some of that certainly because ag is such a large part of the county,” he said. The only issue? “A lot of oilfield workers would be accustomed to a higher wage than what they would be paid on a farm,” Shawcroft said.
IN THE OILFIELDS Art Guttersen, a managing partner at Gusher Oil Field Services, said he’s trying to make it through this dip without layoffs. “We’re doing everything we can to move forward and keep our people so we don’t have to replace them,” he said. “Once these people are gone, they don’t come back. We’re hoping and praying that this thing changes tomorrow.” Steven Tracy, a consultant for oil and gas surface leases, said he’s already seen a cut in the money he’s making in the industry. “Income’s in half,” he said. “They’re cutting back the consulting rates, and the oil income is cut 40 percent, so your income is cut down.” Tracy, like the county, has learned to adjust: He’s spread out his income across several industries, including ranching and farming. Tracy said the sudden nature of the dip has really caused some scramble. “It’s really tough because it happened so fast,” he said. “It’s really hard for people to adjust.”
IN 2013, THE OIL AND GAS INDUSTRY MADE UP LESS THAN 7 PERCENT OF WELD’S TOTAL EMPLOYMENT Guttersen said there are other jobs in Greeley and Weld for oil field workers to hang out during a layoff season, but typically they aren’t the caliber of job the employees are used to. “I think there’s a lot of jobs but there’s no getting around it, the oil field is a lot of highdollar jobs,” he said. “That’s where everyone wants to be. The hours are good, the wages are good, the benefits are good.”
THE DOMINOES START TO FALL Hotel occupancy rates have been at or above 75 percent for the past year, driven
largely by temporary oil and gas employees. Renee von Weiland, vice president of operations at Spirit Hospitality in Fort Collins, said in February that the industry drives a good percentage of the business at their Greeley hotels, but it’s not all oil and gas. “At our Hampton Inn in Greeley probably 15 percent of our business is oil and gas and at our Candlewood Suites, which is extended-stay, the oil and gas probably takes up about 43 percent of our business,” von Weiland said. Von Weiland said she thinks there are a lot of industries booming in Greeley to fill the hotels. David Amin, the developer of the incoming Homewood Suites at Centerplace, said he isn’t building his new hotel to attract more oil and gas business to the area. Amin said the hotel will cater to the existing demand in Greeley. He said smaller hotels go up to serve industry booms. “We’re catering to the corporate guest that is in Greeley,” he said. “This is a $13 million project. It’s not going to run with the ups and downs of the oil and gas.”
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ENERGIZING MONEY Colorado investors look favorably to both traditional and green energy BY ALLISON DYER BLUEMEL • FOR ENERGY PIPELINE
37 percent support expanding production of traditional energy while 73 percent of Colorado high-net-worth investors support and 18 percent suggest pursuing both energy types equally. fracking of shale deposits to develop oil and gas resources, 86 percent “Colorado investors want to see development of alternative of them agree that the U.S. should invest in programs to increase energies, but are still open to traditional energies in their energy efficiency, according to Morgan Stanley’s Investor Pulse Poll. portfolio,” according to a news release from Morgan Stanley. High-net-worth investors are individuals who have investable In terms of where Coloradans invest, 79 percent invest in assets exceeding $100,000. natural gas, 67 percent invest in petroleum-based energies, 53 Morgan Stanley conducted the survey in late 2014 to check in percent invest in solar, 46 percent invest in wind and 45 percent with investors after the downward shift of energy stock prices, invest in electric vehicles. said Bruce Hemmings, “The evolving senior vice president of economics in green wealth management at energy are still sometimes The Hemmings Group challenging,” Hemmings at Morgan Stanley in said. “When you’re an Loveland. investor and you look “It’s a matter of best at those economics it’s practices to check in difficult to invest there.” with the investors and However, Hemmings see if what we’re doing said that the challenging, fits their plans,” he said. economics do not wholly Of the 86 percent BRUCE HEMMINGS, senior v.p. of wealth management at The Hemmings Group deter investors. of investors polled Compared to the who support energy nation’s average, Colorado investors show more support of efficiency expansion, 75 percent support the expansion of wind fracking - 73 percent to 53 percent nationwide - and feel less farms and 71 percent support the expansion of solar farms, supportive of expanding solar farms and parks - 71 percent to 80 according to the poll. percent nationwide. “Coloradans seems to support energy development in all its “It’s possible that the behavior and outlook are influenced by forms,” Hemmings said. the high knowledge of energy issues (in Colorado),” Hemmings However, investors feel split between developing traditional said. “Colorado investors have a long history of experience in the energy and continuing development of alternative energy forms; energy industries.” 43 percent favor expanding wind, solar and biomass production,
“It’s possible that the behavior and outlook are influenced by the high knowledge of energy issues (in Colorado).”
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IN TERMS OF WHERE COLORADANS INVEST, 79 PERCENT INVEST IN NATURAL GAS, 67 PERCENT INVEST IN PETROLEUM-BASED ENERGIES, 53 PERCENT INVEST IN SOLAR, 46 PERCENT INVEST IN WIND AND 45 PERCENT INVEST IN ELECTRIC VEHICLES When looking at investments, Morgan Stanley reported that 93 percent consider the amount of money returned on the investment, more than 80 percent look for a record of growth in a company, 76 percent aim to diversify their holdings in different sectors, 70 percent consider energy independence and 66 percent consider environmental impact. While 76 percent look for diversification in their stock holdings, investors allocate 17 percent of their portfolio to the energy sector. This reflects confidence in the energy, both traditional and alternative, but puts Coloradans at a higher risk than nationwide investors with a smaller allocated amount, Hemmings said. Based on the Standard and Poor 500 index, a ranking of the 500 companies thought to best represent the U.S. economy, investors should allocate 8.5 percent, he said.
However, Hemmings said it is not surprising the Colorado investors would lean more heavily on the energy sectors in their portfolios due to the state’s long history and experience with the industry. In terms of personal implementations of green energy, Morgan Stanley reported that 95 percent of investors plan to adopt one of 12 sustainable behaviors in the next three years. Of those investors, 69 percent plan to conserve water, 64 percent hope to install more energy saving light bulbs, 54 percent plan to recycle more, 45 percent replacing appliances with more energy efficient models, 38 percent plan to purchase a more fuel efficient vehicle and 20 percent hope to buy products that use less energy. Due to high overhead costs, Hemmings said only 3 percent of investors anticipate installing solar panels in the near future.
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BELT TIGHTENING Companies slice capital budgets but still spending billions in Weld County BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
the shine on Weld County’s oil and gas jewel may be starting to fade amid tumbling commodity prices, but many companies are still focusing a majority of their capital budgets in the area. Between just the big players, Weld County will still see more than $4 billion spent this year for oil and gas development in its borders. “That just goes to the power of the Wattenberg,” said John Christiansen, manager of external communications, public affairs and corporate communications for Anadarko Petroleum, which will spend $1.8 billion in our backyard this year, even while cutting spending by a third. “This is an awesome field, that produces oil and natural gas and it does so in a way that still competes well. It’s one of the most economic onshore fields in the industry.” Companies outlaying their 2015 spending programs on drilling and exploration show steep declines over last year, however. Spending in Weld County is slowing down, while companies cut costs and redirect cash, in some cases, to drilling programs outside of Colorado. Encana, for example, doesn’t even include the Wattenberg in its estimates, instead 24 ENERGY PIPELINE APRIL 2015
BETWEEN JUST THE BIG PLAYERS, WELD COUNTY WILL STILL SEE MORE THAN $4 BILLION SPENT THIS YEAR FOR OIL AND GAS DEVELOPMENT IN ITS BORDERS focusing 80 percent of its capital program on plays in Texas and Canada. Noble Energy, one of the top two players in Weld County, announced in late February it would reduce its spending in the area by 40 percent, and reduce its drilling program to four rigs. The company at this time last year had 10 rigs operating in Weld County’s portion of the DJ Basin. It takes 10 people per day to physically run a drilling rig, but when indirect jobs are taken into account, such as truckers and engineers, a rig can support roughly 100 jobs, industry insiders say.
“With commodity prices at depressed levels, costs must find new equilibrium with product prices before we begin new investments,” said Noble CEO David Stover in a conference call with analysts. Just last summer, companies were enjoying $100-per-barrel crude prices, but they’ve sunk to roughly half of that today, with a global glut of almost 2 million barrels a day more than demand. Today, many companies are crossing their fingers banking on $50 a barrel pricing, and they just hope to make it to 2016. Anadarko Petroluem, Weld’s other top producer, announced a 33 percent cut in its 2015 capital investments, slicing its rig count to nine from a high of 14 last year. In the Wattenberg Field, Anadarko plans to reduce operations to nine drilling rigs from a high of 14 last year, but a continued investment of $1.8 billion about half of the company’s total U.S. onshore capital expenditures for the year. Anadarko reports that it will drill 280 wells in the Wattenberg this year, down 24 percent from the 369 wells drilled in 2014. Christiansen explained that existing production continues to help boost production numbers, and the hope is to keep production flat through 2015
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stage compared to recent wells that have program in Pennsylvania, the company “We’ve got all the existing production averaged 26 stages with less sand,” the pumped up its Gulf of Mexico exploration and one of the things we’re really focusing company reported in a December news program to $600 million for the year. on now is maximizing the estimated release. “This reduced stage count should “In a highly uncertain commodity ultimate recoveries from each well, and save approximately $200,000-$300,000 per environment, this program retains that is a big emphasis in the Wattenberg,” well. By utilizing this new completion design, substantial operating and financial Christiansen said. “Though we’re drilling the company estimates the 25 standard flexibility to adjust our plans while allowing fewer wells, we still have all the existing length wells currently in the drilling phase us to take advantage of value-creating production that’s already on, and we’re will have total drilling and completion costs opportunities that may arise,” Stover said in continuing to see fantastic reservoir of $3.4-$3.6 million per well.” a new release. “We have already captured performance in the Wattenberg.” Some companies are still well above $4 significant cost savings, which should PDC Energy, arguably the third largest million per well in total costs. enhance margins as we move through the oil production company in Weld, reported Others, however, disagree with the year. Our high-quality and diverse portfolio it planned a further 15 percent reduction strategy to delay completions. Scot Woodall, positions us to extend growth into 2016 at in spending in the area to $473 million CEO and president of Bill Barrett Corp., even lower capital levels this year.” just a month after announcing a reduced which is reducing capital spending by Companies are hoping to save hold program to $557 million. But the company more than half of its 2014 budget, said the onto their money in many areas, including still plans to operate five rigs here. The company wouldn’t be delaying drilling. He selling assets, cost savings from service company announced earlier in the year that told analysts in the company’s earnings call company’s price reductions, drilling it would suspend its Ohio drilling program, that he didn’t believe that concentrating drilling delaying completions leads efforts in Colorado. to greater returns. In its quarterly “It seems like that if you earnings conference call, are spending the capital PDC officials remained at drilling, you might as optimistic, noting their well go and spend the strong hedging position, capital to complete them,” in which 85 percent Woodall told analysts. of the company’s oil Other companies production is hedged are similarly cutting. this year at $89 per Whiting Petroleum cut barrel, with additional JOHN CHRISTIANSEN, manager of external communications, its 2015 spending by 50 hedges next year at public affairs and corporate communications, Anadarko Petroleum percent this year, while $85 oil. Companies
“...we still have all the existing production that’s already on, and we’re continuing to see fantastic reservoir performance in the Wattenberg.”
typically enter into contracts to lock in certain percentages of their oil at steady price levels to protect themselves from the kind of volatility the market has seen this year. All companies are relying on those hedges. “PDC begins 2015 in a uniquely positive position,” PDC President and CEO Bart Brookman told analysts in the call. “While we recognize the severity of the market position, the company business plan remains growth focused and we’ll continue to deliver value.” In a news release, Brookman stated the company would concentrate on its Wattenberg play this year. “We have seen significant reductions to our capital cost structure and expect to benefit from strong operational enhancements, both of which will increase our drilling economics in 2015,” Brookman said in the release. While Noble Energy still plans to invest $1.8 billion in the U.S., split evenly between its DJ Basin program and its Marcellus gas 26 ENERGY PIPELINE APRIL 2015
efficiencies, updated completion techniques, and delaying completions, to name a few. Noble also has had conversations with its suppliers and vendors to reduce prices. Anadarko expects to hold off on completing 70 wells in Weld County in 2015, leaving a drilling plan of 280 wells. Anadarko also sold some of its Wyoming assets for $700 million in a deal that should close later this year. At Synergy Resources in Platteville, the company plans to continue tweaking its completions design, but also save some cash by delaying completions. Officials there expect to drill 20 percent more net wells for less capital by perfecting its completions recipe. “Specifically, the company plans to complete future standard length horizontal wells with an average of 20-22 frac stages (approximately 170-190 foot spacing) but will increase the sand concentration per
still spending $2 billion between its northern Rockies in the Bakken and the DJ Basin. “We have taken prudent measures in 2015 to reduce our capital budget while maintaining our financial flexibility,” said James Volker, Whiting’s Chairman, president and CEO in a news release. Whiting will reduce its rigs to 13 - 10 in the Bakken/Three Forks and to three in the Redtail area in northeastern Colorado, down 12 in all from 2014. “We will focus our operations on our highest rate-of-return properties,” Volker said in the release. “At the same time, we are seeing lower completed well costs through service company price reductions and technology applications. We expect our 2015 completed well cost in the Bakken/ Three Forks to average $7 million, down from $8.5 million in 2014. We expect our 2015 Redtail Niobrara well cost to be $5 million. We continue to work on driving these costs lower while maintaining our EURs (estimated ultimate recoveries).”
Officials will rely on their global diversity to pull the company through to 2016. Noble has promising assets in Israel, the Gulf of Mexico, and even the Falkland Islands. “When you think of the trajectory for the DJ, the second half of the year will probably be lower than the first half at this activity level,” Stover said. “But the company overall, the fourth quarter may be our highest volume yet when you consider the influx of Gulf of Mexico production.” Anadarko, too, has worldwide operations, but expects flat to lessening production. Anadarko’s total investment this year in capital programs will be upward of $5.8 billion, with 22 percent going to international and deepwater drilling programs, and 10 percent going to international and deepwater exploration. Christiansen said it’s anyone’s guess how long this slowdown will last, but Anadarko will weather it - especially in Weld. “From Anadarko’s perspective, it will be less (painful) than others in the industry, and a lot is because of how we’re positioned in the play, with our acreage and mineral interest ownership, which is a big piece,” Christiansen said.
EXPLORATION AND PRODUCTION COMPANIES’ CUTS AND CAPITAL PROGRAMS AT A GLANCE ANADARKO PETROLEUM 33 percent reduction in capital spending in the U.S. In the Wattenberg, the company plans to spend $1.8 billion in the Wattenberg. NOBLE ENERGY 40 percent reduction in capital spending, with $900 million to be spent in the Wattenberg. WHITING PETROLEUM Slashed its capital budget by half this year, splitting $2 billion between the Bakken and the Wattenberg. PDC ENERGY 15 percent reduction in spending in the area to $473 million.
BONANZA CREEK Cut its capital spending by approximately 36 percent 38 percent as compared to 2014. The Wattenberg Field will see $380 million in spending this year from Bonanza Creek, or 90 percent of the company’s capital budget. BILL BARRETT CORP. Officials announced they would reduce capital spending to between $240 million to $280 million this year, which is less than one-half of the company’s 2014 expenditures. SYNERGY RESOURCES Reduced its 2015 capital budget to $180 million from $200 million in the Wattenberg.
CARRIZO OIL AND GAS Reduced its overall capital spending 42 percent for the year. In Weld County, however, the company plans to reduce spending by 66 percent to $37 million. ENCANA CORP. Announced it would reduce its 2015 budget to between $2 billion and $2.2 billion, a $700 million drop from previously announced reductions. The company is focusing more than 80 percent of its capital budget outside of Colorado, to plays in Canada and Texas. Source: Company earnings reports and 2015 guidance documents.
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APRIL 2015 ENERGY PIPELINE 27
ROCKY MOUNTAIN ENERGY SHOWDOWN Northern Colorado slips by with 72-71 victory BY SAMUEL G. MUSTARI • FOR ENERGY PIPELINE
there’s nobody on the University of
Northern Colorado bench that won’t take the March 7 result with open arms. Now, if some of them had their druthers, they’d have liked what was looking like a cruise-control victory for the Bears. Beggars can’t be choosers so the Bears will take their 72-71 Big Sky Conference victory over North Dakota, in the first annual UNC Energy Proud Showdown, a match-up that featured teams from the top two energy producing states in the Rocky Mountain region. The game featured discounts for oil company employees and complimentary drinks and popcorn, and had a crowd of more than 2,000 in attendance. Colorado ranks seventh in overall energy production (seventh in crude and sixth in natural gas); North Dakota ranks 12th (second in crude; 14th in natural gas). What followed was a nail-biter from moment one, and continued until the final possession.
28 ENERGY PIPELINE APRIL 2015
TOP OF PAGE: UNC sophomore guard Cameron Michael drives toward the basket while North Dakota junior forward Josiah Coleman defends. ABOVE LEFT: UNC senior forward Dominique Lee goes for a layup against North Dakota freshman center Bryce Cashman. ABOVE MIDDLE: UNC freshman forward Spencer Mathis, goes for a layup against North Dakota forward Dustin Hobaugh. Photo by Ben Trubia/University of Northern Colorado. ABOVE RIGHT: UNC senior guard Corey Spence goes for a layup as North Dakota sophomore guard Quinton Hooker defends.
APRIL 2015 ENERGY PIPELINE 29
TECH TALK
UNLOCKING CHEMICAL ANCESTRY THROUGH STABLE ISOTOPES BY GARY BEERS • FOR ENERGY PIPELINE while a dna test can unlock a biological
history to provide unique identities and to display ancestral connections, a parallel more powerful and comprehensive test is experiencing breakout use in many activities to unlock the chemical history of living and nonliving materials. Staple isotope analysis is experiencing increasing widespread application in many activities. In 1977, the first article was published on the use of stable isotopes analysis (SIA) to answer archaeological questions. Since then, especially after the turn of the century, uses of SIA have exploded in number and infused into many areas of investigations, especially as a new powerful tool in the red-hot field of forensic science. Let’s look at a few of the interesting uses that impact everyday life.
FOODS • Can the “organic” status of vegetables be assured? Instead of relying on the claim that the vegetables are grown under organic farming practices (i.e., no synthetic fertilizers, no applications of pesticides), agricultural experts in New Zealand have used SIA to answer this question. Using measurements of nitrogen and carbon isotopes, there is a clear distinction between organic and conventionally raised vegetables. However, this approach does not work for leguminous vegetables (i.e., peas) that fix their own nitrogen from the atmosphere. Is your food adulterated or the source mislabeled? Did you buy synthetic vanilla flavoring sold as the natural extract, real maple syrup cut with molasses, expensive wine that has been diluted with a cheaper wine? 30 ENERGY PIPELINE APRIL 2015
Did you buy expensive wild salmon that was farmed or illegally poached, valuable olive oil that did not come from Italy, or cheap single-malt whiskey intentionally mislabeled as an upscale brand? Chemists can now use SIA to answer questions about the composition and origin of food, even though the most sophisticated chemical analyses cannot provide these identities. • Analyses of narcotics (i.e., heroin, cocaine, cannabis, steroids) and other drugs can be submitted for SIA analyses to determine origin and/or manufacturing source. For example, a man was initially arrested on the street for possessing five tablets of ecstasy. Suspicious, the police obtained a search warrant and found a hidden bag containing thousands of ecstasy tablets. Since the man claimed the bag was not his and belonged to a friend, the police needed more information for a conviction. SIA was performed on both sets of tablets and the isotopic profiles were identical. • Natural variation in explosive materials often hampers clear conclusions. SIA of explosives, including burnt match sticks from an arsonist’s fire, can provide valuable information on the composition and origin of these materials.
For over 50 years, GARY BEERS, has worked in numerous fields of environmental science as a consultant, regulator and educator. This career included senior management position with major consulting, nonprofit and public organizations. He has founded several successful firms to capture emerging resource management markets. One of his latest ventures, EnviroScienceINFO, provides content for public media.
APRIL 2015 ENERGY PIPELINE 31
TECH TALK
ISOTOPE • A substantial amount of precise information on the origin of the cotton fiber in the paper and ink used to produce counterfeit paper money can be obtained from SIA. • The origin of jewels can be revealed with SIA. For example, researchers have a difficult time pinning down the source turquoise using trace element analyses, since these components vary too much within mines to allow precise source identification. In 2008, a breakthrough occurred when a researcher used SIA to confirm the origin of a piece of turquoise. The longest history, over 30 years, for the use of SIA exists in the fields of archaeology and anthropology, especially the identification of the origin of the heritage materials.
HUMAN We are what and where we eat and drink. The immense analytical power of SIA is best seen in uses to identify the dietary habits and where one has lived and traveled during their lifetime. Every molecule in our bodies is made up of not just different elements, but of different rations of stable isotopes of these elements. As we age, certain tissues only form during a 32 ENERGY PIPELINE APRIL 2015
specific time and others are continually renewed and are built of what is being presently consumed. Thus, as shown in Graphic 2, teeth and bone tissue contain permanent information on what we ate and where we were during specific time periods of our life - and hair and fingernail tissues provide a moving, recent snapshot of these properties. A fascinating article was published in 2014 (“Multi-isotope analysis demonstrates significant lifestyle changes in King Richard III”, Journal of Archaeological Science 50:559-563). He lived from 1452 to 1485 and his remains were excavated in August 2012 - some 527 years after his burial. Based on an SIA of his remains, a description pieced together his diet, geographical movements, and periods of residence. Interesting results are from the 26-month period when he became King of England and his life changed. This research using SIA provided a rare opportunity to cross-reference science-based archaeology with history. While full of technical jargon, this paper is worth a read.
CRIMINAL INVESTIGATIONS The use of SIA is emerging and rapidly expanding in law enforcement, including finding who is the unidentified body.
Forms of same element that have the same chemical properties and only differ in relative atomic mass (i.e., each as different numbers of neutrons). All isotopes behave the same way in chemical reactions.
STABLE ISOTOPE An element that does not change over time (i.e., does not decay).
EARTH SCIENCES
ISOTOPE MEASUREMENT Isotopes are measured using the differences in mass and can not be measured using chemical analysis for the element. An instrument called a mass spectrometer. For example, a sample of carbon is analyzed and the relative percentages of each stable isotope (i.e., carbon-12 and carbon-13) are determined.
One outcome is the improved evaluation of physical evidence. As an example, white paint chips were found at a crime scene and were chemically matched to white paint on the walls of the suspect’s home. However, SIA testing revealed that the two samples of paint were made in different factories. Thus, an innocent individual was cleared of the crime. Another outcome is expressed by one of the world leaders in this field (Dr. Wolfram Meier-Augenstein, James Hutton Institute, Scotland) who recommends viewing each stable isotope as a filter to aid focusing other forensic tools: “In our globalized world, a John Doe could have come from anywhere. Investigators start looking for clues close to where the victim was found, but if nothing turns up, they could end up combing through every missing persons list in the world. Stable isotopes narrow that search. Deuterium and oxygen-18 from a victim’s hair or fingernails can exclude 80 percent or 90 percent of the world. A nitrogen-15 analysis of the victim’s muscle tissue could reveal that he was a vegetarian, another useful clue. And heavier isotopes such as strontium leach from rocks and make their way into our bones and teeth. Together, all these clues narrow the field of potential matches, greatly simplifying things for detectives. We don’t find a needle in a haystack. What we do is, in an ideal circumstance is reduce the haystack to a manageable size.” SIA of hair is proving to be an emerging powerful forensic tool. Isotopes from current diet and environmental location are locked into the base of a hair strand as it grows. The analysis of how the isotopes change along a hair strand can reveal a person’s recent food habits and extent of travel.
ECOLOGY One of the prime uses of SIA in ecology is to construct a timeline of how and when populations of herbivores migrated and reacted to changes in the types and abundance of different types of vegetation.
Stable isotopes are indispensable for nearly every earth science discipline. For example, they are useful in tracing the water cycle, and used to help understand geological processes at low and high (deep subsurface) temperatures. Probably most notable are the uses of stable isotopes of oxygen, carbon and sulfur for understanding the past climate on earth on variable time scales (historic, prehistoric, quaternary and deep time). More specifically, oxygen isotopes of biologically precipitated calcites (foraminifera, corals, mollusks) and occasionally inorganically precipitated ones (limestone cave formations, speleothems) can be used to interpret the temperature during precipitation. In environments where temperatures vary very little (the deep sea), oxygen isotopes of carbonates can be used to infer the presence or absence of ice cover at the Earth’s poles. Carbon isotopes of these carbonates track large perturbations in the carbon cycle.
WIDESPREAD USE IN OIL AND GAS EXPLORATION SIA when applied to natural gases from different formations in a basin can identify whether the origin of the gas is biogenic (i.e., low value gas at shallow depths generated by bacterial metabolism and unrelated to processes that form oil) or is thermogenic (i.e., high value gas at deeper depths generated by thermal breakdown of organic matter). Thermogenic gas is a strong indicator of a petroleum pay zone in a formation. The results from SIA of natural gases from several formations in the Wattenberg Field are graphed in graphic 3. These are thermogenic gases and those from the deeper formations exhibit the presence of a higher quality of petroleum. If biogenic gas was present, the plotted values would be lower than minus 60. Besides their value to exploration, the SIA can identify the petroleum sources contributing to spills and/or placed in disposal areas. A forensic investigation of accidental discharge of oil-based drill cuttings onto the seabed of Norwegian North Sea, after eight years of exposure to biodegradation and weathering was able to identify several sources from drilling operations. (Reference: Source identification of oil-based drill, cuttings on the seabed based on sable carbon isotopes. Environmental Chemistry Letters, B. Skaare, M Schaanning, and P.T. Morkved, 2008). APRIL 2015 ENERGY PIPELINE 33
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ficiencies of state programs, and improve stomer service for boaters and anglers. ne of the many products of this effort cludes a Model Legislative Provisions r Watercraft Inspection and Dentamination Stations, which was proved by the Association of sh and Wildlife Agencies at their enver North American Conferce in March 2013. Expanding the partnership that olorado has created to other ates is imperative to long term stainability. The threat of zebra quagga mussels entering Colodo from another infested state greater than ever before. While, ere has never been an adult ussel found in Colorado, we e surrounded by infestations in her states. Almost all states to e east of Colorado have mussel estations, including Kansas, Oklahoma d most recently in northern Texas. The wer Colorado River is heavily infested th quagga mussels from Lake Mead, NV ownstream through Lake Mojave to Lake
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APRIL 2015 ENERGY PIPELINE 39
THE RAPID GROWTH OF THE SHALE OIL AND GAS INDUSTRY IN COLORADO (THE DJ BASIN), TEXAS (EAGLE FORD), NORTH DAKOTA (BAKKEN) AND PENNSYLVANIA (MARCELLUS) IS HAVING A NOTICEABLE IMPACT IN THOSE STATES. The rapid growth of the shale oil and gas industry in Colorado (the DJ Basin), Texas (Eagle Ford), North Dakota (Bakken) and Pennsylvania (Marcellus) is having a noticeable impact in those states. There is more drilling activity on the visible landscape. There is more truck traffic on rural, state, and federal highways for motorists to deal with. And, there seems to be a never-ending stream of railroad activity. That’s the obvious.
“If we keep seeing the same sites (victimized) and trends... then we put up cameras and increase surveillance.” SEAN STANDRIDGE, spokesman, Weld County sheriff’s office What might not be so obvious is that crime in the oil patch is on the rise, too. It’s not small-time crime either. Because of the kinds of sophisticated tools and materials used, thefts can run from tens of thousands of dollars to millions of dollars very quickly. According to stopoilfieldtheft.com, oil field thefts are approaching $1 billion a year, although exact numbers aren’t available due to the fact that many oil and gas companies simply do not report to law enforcement. To make matters worse, laptops, which hold proprietary data, also are being targeted for theft. If the data isn’t backed up, its loss could be quite severe. And, if the data wound 40 ENERGY PIPELINE APRIL 2015
up in the hands of competitors, it could be disastrous. Need proof of how widespread the problem is? The Oklahoma State Bureau of Investigation’s Oil Field Theft Unit arrested a man in early February in Edmond, Okla., after the unit recovered $2.5 million worth of oilfield equipment at his business. DeSoto Parish (Louisiana) Sheriff’s investigators last August arrested a Texas man for thefts of more than $110,000 worth of equipment at oil and gas sites scattered around the parish. West Texas law enforcement agencies say that oil field equipment thefts there are costing drilling companies at least $20 million a year. However, the FBI and local police formed the Permian Basin Oilfield Task Force in 2008. By 2012, the task force had won 39 convictions and recovered about $18 million in stolen equipment. It’s happening in northern Colorado, too. The Weld County Sheriff’s Office strike team ended a string of thefts at oil well sites in northern Weld County last December. The strike team members arrested Jamie Marie Snodgrass, 25, and Jason Helzer, 30, who were accused of stealing as many as 50 lithium batteries used to help power modern hybrid drilling rigs. The majority of those batteries were stolen from Noble Energy of Denver near or at oil and natural gas well sites in the Galeton and Camfield areas. The strike team also connected Snodgrass and Helzer to six battery thefts dating to mid-September. Weld County deputies have recovered 35 batteries so far with an estimated value of $10,500, as well as about $450 in copper and lead pipefittings, said Sean Standridge, spokesman for the sheriff’s office.
TIPS TO PREVENT OILFIELD THEFTS
PREVENT THEFT
INVENTORY CONTROL
Update your security systems to deny entry to unauthorized personnel. Add surveillance cameras and remote monitoring to leverage the effectiveness of your security team. Educate the crew about the scope of the problem and how important simple things are, like locking a doghouse.
Make sure you can quickly identify when equipment is stolen and alert law enforcement in a timely manner.
DETERRENCE Post signs alerting potential criminals that all equipment is marked and traceable. Even if surveillance cameras didn’t prevent a crime, they can provide footage of the crime that helps law enforcement. Place a StopOilfieldTheft.com sticker on all your equipment to let thieves know they’ll have a hard time fencing their illgotten goods.
GPS Consider investing in GPS sensors for your most valuable equipment.
RECORD SERIAL NUMBERS Ensure that you have the information you need to help catch the criminals.
CLOSE THE LOOP ON STOLEN GOODS Always report stolen items as quickly as possible after the occurrence. Check serial numbers on this site before buying equipment. By preventing the sale of stolen equipment you hinder the ability of thieves to profit, and thus reduce the desirability of oilfield equipment.
SOURCE: STOPOILFIELDTHEFT.COM
APRIL 2015 ENERGY PIPELINE 41
So, what measures are area oil and gas companies taking to deter thefts? Do they have security guards? Motion-sensing cameras? Fencing? Well, that depends on whom you ask. Some oil and gas companies are open about their security measures while most are tight-lipped. “We have seen equipment at production facilities vandalized and stolen (solar panels, batteries, wire, tanks, etc.) but we attempt to take all allowable measures with fencing to minimize these types of events,” said Korby Bracken, the HSE director of the Rockies with Anadarko Petroleum Corp. “Other regulations limit the amount of security we can place on sites because it does not allow those (law enforcement) agencies free access to our facilities.”
“The safety and security of our assets and our people is a top priority for Anadarko.” ROBIN OLSEN, External Relations, Anadarko Petroleum Corporation Another Anadarko executive was even more cautious about revealing security measures. “The safety and security of our assets and our people is a top priority for Anadarko,” said Robin Olsen, External Relations for Anadarko Petroleum Corporation. “For that reason, we do not discuss the confidential nature of our security programs.” Great Western Oil and Gas Company officials admit they take security measures but are vague about what those are. “Great Western has not experienced any losses from theft,” said Rachel George, of RBG Communications LLC. “But they do maintain 24-hour security and supervision on their drilling locations.” Standridge said the reluctance of oil and gas companies to discuss their security and/ or arrangements with the sheriff’s office is understandable. You certainly don’t want to inform criminals of everything you’re doing to catch them, he said. 42 ENERGY PIPELINE APRIL 2015
Certainly, the Weld County Sheriff’s Office strike team is an effective deterrent. It encompasses a consistently rotating team of deputies. It was created in 2012 to combat a surge in thefts in Weld County. Although not limited in the types of cases it works, the strike team is generally deployed when law enforcement officers identify a pattern in the types of crimes taking place, or if there is a rash of crimes in a specific area, Standridge said. “If we keep seeing the same sites (victimized) and trends, say the same sites north to south and it makes a pattern, then we put up cameras and increase surveillance,” Standridge said. Standridge said the strike team also works with local metal recovery companies. These companies are advised to watch for items that appear to be stolen. “We tell them to tell these people that, ‘We don’t take these things.’ And, then we have them keep the items and call us,” Standridge said. “We also have them require a photo ID and cameras so we can get photos of these guys.” In addition, Standridge said the strike team is working with liaisons of the oil and gas companies to encourage them to stamp their equipment and materials so they can be identified in the event they are stolen. The cooperation between the strike team and the oil and gas companies has been good, Standridge added. “I think it’s been really effective,” he said. Standridge said that cooperation is important, too, when you have to cover an area as large as Weld County - about 4,000 square miles. Since the strike team’s members rotate on and off, Standridge says it has been necessary to keep one to two former members on the team to help train the new members. That retention of knowledge is helping the strike team to keep its edge, he said. The kind of work the strike team does is ever-changing, Standridge added. “We evolve, depending on the trend (in crime),” he said. “(The kinds of thefts) always seem to change. When it does, we change, too. We try to eliminate that aspect of it when it occurs.”
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TIME WELL SPENT
OIL & GAS TASK FORCE TIMELINE 8.4.14
Creating the task force was an effort to head off a public vote on initiatives that were headed for the November ballot box - two that industry officials say would have stopped energy development in its tracks and one pro-drilling measure that would exclude cities that ban fracking from sharing the tax wealth generated by the industry statewide.
BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
IT TOOK FIVE MONTHS, 56 PROPOSALS AND SEVEN FORMAL MEETINGS TO COME UP WITH NINE ROCK-SOLID SUGGESTIONS for change to revamp problems facing the state when it comes to the rapid increase in oil and gas drilling in the last four years. Gov. John Hickenlooper’s 21-member oil and gas task force didn’t solve all the problems it was organized to do, but members feel the suggestions for change in local government roles in oil and gas siting and comprehensive planning tools, as well as increasing staffing for regulatory agencies, represent a decent step toward progress. “I knew we’d be taking incremental steps,” said Sara Barwinski, who represented Greeley and the environmental group, Weld Air and Water. “I wanted to make sure those were steps forward. Did we get the job done? No. ... We came up with things that will make things better for people, but we’ve not solved the problem.” The last official word (as of March 10) on the nine proposals is that the administration within the COGCC was reviewing the proposals to make “a final determination of what needs to go forward as a rule making or other action out of COGCC and what would need approval from the General Assembly,” reported Todd Hartman, spokesman for the state Department of Natural Resources, which oversees the COGCC. “For actions that will require a rule making, we hope to kick off that process with public input in the spring.”
Gov. John Hickenlooper and U.S. Rep. Jared Polis announced the formation of the task force to resolve conflicts arising between oil and gas development and residents concerned about the health effects of such development. Of the 21 members, Weld County was represented by Sara Barwinski, a representative of the watchdog group Weld Air and Water, Weld County Commissioner Steve Moreno, both of Greeley, and Kent Peppler, a farmer from Mead and head of the Rocky Mountain Farmers Union.
9.25.14
The task force meets for the first time in Denver, taking public comment.
10.9.14 10.10.14
The task force meets in Durango, taking public comment.
10.24.14
The task force tours Anadarko Petroleum drilling rig sites in southern Weld County, featuring industry innovation such as an electric drilling rig and remote fracking. The task force members got to hear from workers and management how operations work and what the industry does to safeguard the public, the air and water. timeline continued on page 46
OPPOSITE PAGE TOP: Korby Bracken, Anadarko Petroleum’s director of health, safety and environement, explains processes to Sara Barwinski of Greeley, a member of the governor’s Oil and Gas Task Force. The 21-member task force toured some Anadarko drilling and fracking sites Oct. 24 in southwest Weld County. OPPOSITE PAGE MIDDLE: Dr. Larry Wolk, director of Colo. Department of Public Health and Environment, speaks during a January meeting of the state’s oil and gas task force at Island Grove Regional Park in Greeley. Among the main topics of the panel was the health effects of the oil and gas industry. Photo by Joshua Polson/jpolson@greeleytribune.com. OPPOSITE PAGE BOTTOM: Moe Felman of Anadarko Petroleum explains procedures in drilling operations to members of the Colorado Oil and Gas task force during a rig site tour Oct. 24.
APRIL 2015 ENERGY PIPELINE 45
Keri Dennison holds a sign at the oil and gas rally in November at Island Grove Regional Park in Greeley. The rally was held while the oil and gas task force met next door. Photo by Joshua Polson/jpolson@greeleytribune.com.
timeline continued from page 45
11.20.14 11.21.14
Nov. 20-21 - The task force meets at The Ranch in Loveland, hearing from local government officials their issues with oil and gas. The meeting drew hours of public comment, for and against the industry. From 100 to 200 people were in attendance throughout the afternoon. Members heard everything from pleas for more local control, to requests for limits to the number of wells on pads, and mandates for companies to look for alternative drilling sites away from residential areas. Others offered cautions about over-regulation.
12.10.14 12.11.14
The task force meets in Rifle, taking public comment and discussing regulatory vs. nonregulatory approaches to oil and gas governance. Concerns from residents and official were that a “one-size-fits-all” approach to new state regulations may not work.
1.15.15 1.16.15
Task force meets in Greeley. After hearing a panel of health experts and listening to two hours of public comments, the group assembled on its second day to bounce ideas off each other. From this meeting, the group will devise 56 separate proposals to change several aspects of law regarding the oil and gas industry.
2.2.15 2.3.15
2.24.15
Task force meets in Denver. The meeting sends a strong signal the group is heavily divided in their interests of pro-industry or anti-industry. Initial straw polling shows only a handful or so proposals would make it to the governor’s desk with the required twothirds majority of the group. Final meeting, voting on 36 proposals for rule making or legislation; only nine proposals make it to the governor’s desk.
46 ENERGY PIPELINE APRIL 2015
The governor formed the group in August as a compromise with local groups proposing ballot measures that would some in the industry said would have killed the oil and gas industry in Colorado. The proposals would have created as much as 2,000-foot setback distances between oil and gas operations and occupied structure, quadruple what they are today, and also allow local governments more say over whether oil and gas could come into their communities. The group’s nine recommendations passed with at least a twothird majority vote, and were winnowed down from an initial 56 recommendations. All that failed will be included in a “minority report” to the governor, from which he’ll be able to read their work, arguments and amendments. “It’s been a long process and 21 members dealing with very difficult issues ... and with the nine that went through, they are really good recommendations,” said Brad Holly, vice president of the Rockies division for Anadarko Petroleum Corp. Most of proposals failed in a clear divide between industry and nonindustry interests, which was evident early on in the group. Industry executives, seven of whom were on the committee, voted in a block a majority of the time, and almost always against proposals that garnered heavy support from interest from local government and environmental groups. But the group saw fit to pass seven recommendations unanimously, such as requesting more funding for oil and gas regulators, as well as funding a mobile emissions testing unit. The measures also would bring more people to the table before permits would be issued at the state level and give local government a larger role in working on solutions to difficult sighting issues. One of the group’s major recommendations would seek a rulemaking hearing through the Colorado Oil and Gas Conservation Commission to include including local governments in the planning process for oil and gas, allowing them in the siting process prior to permitting, which for Barwinski, was just good enough to satisfy her concerns for setbacks. She withdrew a proposal to seek more power for the COGCC director to consider impacts on surrounding uses prior to approving permits, stating it would be accomplished in another way.
THE TOP NINE PROPOSALS THAT WILL MOVE ON TO THE GOVERNOR’S DESK FOR CONSIDERATION OF LEGISLATION AND RULEMAKING WITHIN THE COLORADO OIL AND GAS CONSERVATION COMMISSION: PROPOSAL A A proposal that outlines a process for increased collaboration with local governments when it comes to “large scale oil and gas facilities” in urban mitigation areas. The proposal calls for the COGCC to initiate a rulemaking to address this, and siting issues of largescale operations before permitting has taken place. Local government and operators would be required to work toward a compromise in location, including
production facilities to local governments, as well as the number of wells expected to be drilled. Municipal planning departments would have to include future drilling sites in their comprehensive plans and maps, and provide those maps to operators. (Unanimous support.)
PROPOSAL C A proposal to provide for an enhanced role of a local government designee to work with industry, and residents on site and planning issues. The provision also would suggest using Mineral Impact funds to help local governments to hire such a designee. (Passed with 18 votes.)
PROPOSAL D
air quality monitoring unit. (Passed with unanimous support)
PROPOSAL F A proposal to create an oil and gas clearinghouse to be a central spot for all information about oil and gas drilling in Colorado, the rules, etc.. (Passed with unanimous support.)
PROPOSAL G A proposal for COGCC and the Colorado Department of Transportation to lead or convene a working group to come up with ways to reduce truck traffic due to oil and gas activities. (Passed with unanimous support.)
PROPOSAL H
considering alternate locations for large sites in urban neighborhoods. If agreement can’t be reached, it spells out requirements to engage in mediation. (Unanimous support.)
A proposal to request additional staff for the COGCC to increase inspection and oversight of oil and gas operators, as well as increase permitting staff. (Passed with unanimous support.)
PROPOSAL B
PROPOSAL E
PROPOSAL I
A proposal to include future oil and gas drilling and production facilities in the local comprehensive planning process. Operators would be required to reveal their future drilling sites and related
A proposal to request additional staffing for the Colorado Department of Public Health and Environment, as well as creating a health complaint line, human health risk assessment and a mobile
A proposal to create a compliance assistance program for oil and gas companies to help them comply with ever-changing rules. (Passed with unanimous support.)
A proposal to allow for the continued operations of new rules on methane restrictions the COGCC enacted last spring. (Passed with 20 members in support.)
APRIL 2015 ENERGY PIPELINE 47
Task force members sit in a roundtable discussion in December in Rifle, while residents and local officials listen in. Photo for Energy Pipeline.
The group could present a host of meaningful changes to the Proposal 17, as the group would call it, spelled out a process for Legislature, only to see them killed in committee; or proposals could increased collaboration with local governments when it comes to get so watered down in the amendment process through legislation “large scale oil and gas facilities” in urban mitigation areas. they could come out resembling nothing of their original intent. “I don’t know if we passed a lot of meat and potatoes, but No. 17 is “I think it will be interesting to see how it plays out,” said Kent a real solid vegetarian meal,” Barwinski said. Peppler, a Mead farmer and president of the Rocky Mountain “It can be very helpful, but does it in itself satisfy our charge? It Farmers Union, who also represented Weld County on the task does not.” force. “I hope that politics in general don’t play as big a role as I The proposal garnered significant group support from the think they could and everyone looks at what’s in the best interest of beginning, but it will require the COGCC to do the heavy lifting, all the people in the state, including the citizens, as well as oil and creating a rule-making process, whereby there would be several gas industry, and make statewide meetings and decisions based on that.” public input. Legislators wonder just Industry leaders how much they can do voted for the proposal. this late in the session. “I do believe this is Group co-chairwoman a huge step forward,” Gwen Lachelt has been said Dan Kelly, vice working on theses issues president of operations for 30 years in New for Noble Energy Mexico and Colorado. Inc., and one of the STEVE MORENO, Weld County Commissioner and task force member She said it may not be members on the task
“Did we do our job? That will be determined when we see what the governor does.”
force. “It brings parties together early.” Kelly said many of the issues facing governments also caught the industry off-guard, given the speed of recent technology and how it’s changed industry practices. The group’s proposals, are however, just advisory. The group knows what’s next is in the governor’s hands. It’s a bit late in the Colorado Legislature’s 2015 session, so it could be too late to get some issues into legislation. That’s why it focused some proposals as rulemaking measures with the COGCC. “Did we do the job? That will be determined when we see what the governor does,” said Weld County Commissioner and task force member Steve Moreno. The bottom line, however, is up to the Legislature, which is already halfway through its four-month session. 48 ENERGY PIPELINE APRIL 2015
realistic to think it’s over or “problem solved,” but she thinks that the group tried to get it right. “I’m not going to walk away feeling like we finished our job,” Lachelt said prior to that final meeting. “There’s so much left to be done.” “You can’t hope to adequately address or resolve an issue that’s been an issue for over 30 years in five months,” said Lachelt, who is a La Plata County commissioner. Based on her 30 years of working to change regulations, she’s learned patience. “We made great strides, but it took years to get reforms in place in La Plata County,” Lachelt said. “I understand the impatience people have that we don’t move more quickly. These processes just take time.”
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BY ALLISON DYER BLUEMEL • FOR ENERGY PIPELINE
a texas-based manufacturer of
filtration equipment for agriculture and the oil and gas industry expects to build upward of a $10 million plant in Windsor later this year and provide 150 jobs. After a year of communication with Great Western Oil & Gas and the town of Windsor, Crall Products Inc. spent $1.3 million to buy an 8.1-acre lot last month in the Great Western Industrial Park in Windsor. Crall Products, based in Pampa, Texas, develops and manufactures filtration systems for industries such as oil and gas and agricultural operations. Chil Wilson, vice president for Crall, said the company plan is to build two 47,000-square-foot manufacturing facilities on the lot. “Our original plan for it is to build a facility to supply products for the oil and gas industry and look at expanding
our filtration market for food, chemical industries, water purification, agricultural products and wild life products,” he said. The project will cost approximately $9 million to $10 million, though that estimate will likely increase based on planning recommendations from the town
of industrial development for the Broe Family Foundation, which owns the industrial park. Crall Products’ filtration systems have been installed in facilities across the country, producing everything from peanut butter to tomato paste, Wilson said. Additionally, he said the company’s filtration systems also were installed in the Windsor Kodak facility. A former Weld County resident sparked company officials’ interest in the market after telling them about the healthy oil and gas and agriculture markets and the business friendliness of the region, he said. “It’s a really nice place to be because there’s a lot of well trained labor in Denver and the surrounding areas,” Wilson said. “There’s a really good quality of people for the skill level of manufacturing.” Wilson said he estimates that the projected facilities will bring in 150
“We are trying to get involved with the community and source everything that we can locally.”
50 ENERGY PIPELINE APRIL 2015
CHIL WILSON, vice president, Crall Products Inc.
of Windsor in the coming months, he said. The lot is currently zoned for heavy industrial use. With the land market looking up since the recession, the addition of Crall Products will help diversify the business in the industrial park and in northern Colorado, said Jenni Stanford, director
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CRALL, WHICH STARTED IN 1946, HAS 135 DISTRIBUTION FACILITIES IN TEXAS AND TWO MANUFACTURING PLANTS, ONE IN PAMPA AND ONE IN FORT SMITH, ARKANSAS
permanent jobs. Wilson didn’t give exact pay scales for potential employees, but said for welders alone, the company expects to have a $35 million payroll in Windsor. “We are trying to get involved with the community and source everything that we can locally,” Wilson said. “We want to come up there with the presence and attitude of being a Colorado company.” The town of Windsor will benefit from the company’s dedication to local labor and materials as well, said Stacy Johnson, town of Windsor director of economic development. “High quality jobs are a fantastic benefit to any community and that’s always a plus,” she said. “They look at us as a long term viable entity to invest in and show it by spending money to build facilities like this.” Wilson said he also hopes to establish a working relationship between Crall Products and two local colleges, Aims Community College and Front Range Community College, to give college students experience in the field. In addition to the appeal of a qualified labor pool, Wilson said the industrial park offers the company a central location for business in the county. “We worked closely with Great Western who has a strong, solid infrastructure,” he said. Crall, which started in 1946, has 135 distribution facilities in Texas and two manufacturing plants, one in Pampa and one in Fort Smith, Ark. While the company manufactures products across multiple industries, he said it would initially focus on the agriculture, food and petrochemical industries. “We do believe that the petrochemical market will be coming back at some point, but at this point we are pretty active in research and development in new products and engineering,” Wilson said. “It’s really just a broad base for expanding the filtration market at first.” Wilson said he hopes to establish a partnership between Crall and Cargill Inc., which Crall has worked with as a supplier in the past. “We think they will be a great community and market fit due to their diversified product line and the synergy and cost savings they’ll see by locating next to Cargill,” Johnson said. Company officials estimate the site’s construction will begin in six to eight months, Wilson said. 52 ENERGY PIPELINE APRIL 2015
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BEING PREPARED
Colorado regulators adopt rules to curtail future flooding issues BY LINDA KANE • FOR ENERGY PIPELINE
after record flooding in 2013 that cost Colorado $1.7 billion in damages, the Colorado Oil and Gas Conservation Commission voted March 2 on new requirements for oil and gas operators located within floodplains. During the historical floods, more than 48,000 gallons of oil and 43,000 gallons of polluted water spilled from toppled or damaged oil and gas tanks. An estimated 2,650 wells were shut down. Major damage from the flooding was evident along much of U.S. 34 south of Greeley north to Estes Park. Many Weld County residents were displaced while 122 bridges, 140 roads, 7,000 parcels of land and 64 irrigation canals were damaged. Weld County suffered $12 million in damages to oil and gas facilities and $1.7 billion in damage statewide. The flooding was the worst the area had seen since the late 1930s, according to Robert Kimbrough, a hydrologist at the U.S. Geological Survey in Colorado. The new rules set out by the commission mostly apply to facilities in a 100-year 54 ENERGY PIPELINE APRIL 2015
THE NEW RULES SET OUT BY THE COMMISSION MOSTLY APPLY TO FACILITIES IN A 100YEAR FLOODPLAIN, WHICH MEANS THERE’S ONLY A 1 IN 100 CHANCE OF MAJOR FLODDING OCCURRING IN ANY YEAR floodplain, which means there’s only a 1 in 100 chance of major flooding occurring in any year. The new rules formalize “best management practices” when operating within a floodplain.
“We learned a great deal from our experiences in September of 2013, including what existing practices were successful in reducing damages,” said Matt Lepore, director of the COGCC. “Requiring these practices for oil and gas operations within a floodplain makes sense and will ensure environmental impacts are reduced and equipment is further protected should we see another flood event.” The new rules require operators to establish an inventory of wells and critical equipment located within a floodplain and to register all wells and equipment with the COGCC. Operators must do this by April 1, 2016. They also are required to create a formal plan on how they will respond to potential flooding. “These new rules requiring operators to establish an inventory and a form response plan will help ensure both operators and the COGCC can react more quickly when a flood threatens or strikes,” Lepore said. The new rules are effective June 1, 2015, for new wells and equipment and
THE NEW RULES REQUIRE All tanks, new and existing, to be surrounded with hardened berms made of steel, or similarly engineered protections, instead of earthen barriers. Critical equipment must be anchored according to an engineered anchoring plan. The removal of existing pits used for exploration and product waste. All new wells must be configured so operators can shut them in remotely.
“These new rules requiring operators to establish an inventory and a form response plan will help ensure both operators and the COGCC can react more quickly when a flood threatens or strikes.” MATT LEPORE, director, COGCC
April 1, 2016, for retrofitting of existing equipment. Resource advocates point out how the new rules miss key objectives, however. “We appreciate the stride forward the new regulations represent, but more work still needs to be done to protect public health, our water supplies and the environment,” said Laura Belanger, an engineer for Western Resource Advocates, a group dedicated to protecting the region’s air, land and water in a news release. “The new rules have two critical gaps. “For one, the new rules still allow oil and gas operators to readily develop facilities close to streams and rivers. This is contrary to a key recommendation the COGCC outlined in a ‘Lessons Learned’ report it developed after the 2013 floods. The COGCC report stated: ‘Tanks, tank batteries and other production equipment should be located as far from waterways as practical.’ “ Belanger said in the release that more than 20,000 oil and gas wells are within 500 feet of a river, streams or other drainage. “These are water supplies that our towns, cities and agricultural communities depend on so we need to ensure that oil and gas facilities are kept out of areas prone to flooding whenever possible,” she said in the release. “While the new rules will help prevent spills during
flood events, no amount of safeguards can guarantee that equipment located in the floodplain won’t fail and spill oil and wastewater into waterways during catastrophic events like we experienced in September 2013.” Belanger said in the release that the new regulations failed to recognize the current role of local government land use authority in regulating industrial activity such as oil and gas in floodplains. Belanger said local governments have long regulated development in floodplains and have the local knowledge necessary to protect water quality and public health. “Colorado would be best served if the COGCC acknowledged the critical role local governments play in permitting oil and gas development within the floodplains,” Belanger said in the release. The new floodplain rules are the latest of numerous steps undertaken in Colorado’s government to improve regulation of oil and gas development. Since 2011, Gov. John Hickenlooper’s administration has crafted rules to increase setbacks, reduce nuisance impacts, protect groundwater, cut emissions and disclose hydraulic fracturing chemicals. The administration has also pushed for increased spill reporting and elevating penalties for operators violating commission rules, according to a release from the COGCC. APRIL 2015 ENERGY PIPELINE 55
HOPE DOES SPRING ETERNAL Even with oil and gas task force work BY DAVE NESLIN • FOR ENERGY PIPELINE
it was unrealistic to expect the Oil and Gas Task Force to resolve the recent controversy over state and local energy regulation to everyone’s satisfaction. After all, this issue has a 30-year history in Colorado and has provoked dust-ups in other energy-producing states such as New Mexico, Ohio, Pennsylvania and Texas. If a panacea were readily identifiable, the task force would have been unnecessary. But through the hard work and diverse experience of its members, the task force has brought forward nine consensus recommendations that promise more collaborative and better-informed regulatory decision-
planning and improve state and local interaction. How will our decision-making become better informed? Through developing a new information clearinghouse, assessing risks to human health, and identifying measures for traffic mitigation. How will we attain better follow-through? By adding government inspectors and scientists, creating a new health complaint line, and providing operators with compliance assistance. It’s worth noting that all of these recommendations were unanimously or nearunanimously approved by the task force, whose 21
THE STATE ALSO HAS ERECTED A ROBUST REGULATORY FRAMEWORK FOR LOCAL INVOLVEMENT, WITH THE COGCC CONDUCTING 13 RULEMAKINGS, ADOPTING 110 PAGES OF REGULATIONS, AND DEVELOPING 26 POLICIES OVER THE PAST SEVEN YEARS making and more effective regulatory follow-through. If none of these recommendations is a home run, they are all singles and doubles with maybe a triple or two. Collectively, they should help us attain our ultimate objective: ensuring that the energy we use is generated safely, responsibly and equitably. How will the Task Force recommendations promote more collaborative decision-making? They would create a special process for approving large, multi-well facilities in or near urbanized areas, which is one of the most difficult issues facing some communities. They would also facilitate local 56 ENERGY PIPELINE APRIL 2015
members reflect an extraordinary mix of state and local officials, environmental advocates, industry representatives, and farmers and ranchers. They include a former chief justice, a former secretary of state, a former speaker of the house, two former mayors, a former city council president, and current county commissioners. That’s an impressive lineup. Some have criticized the task force for not recommending that local governments receive greater authority to regulate energy development independent of the state. But the task force mandate was not to transfer authority from one
DAVE NESLIN is an attorney with Davis Graham & Stubbs LLP in Denver. He is the former director of the COGCC, and he frequently writes and speaks on energy-related topics to local, national, and international audiences.
level of government to another, but to identify ways to “better harmonize state and local regulation.” The task force accomplished this through a variety of recommendations that should not only help harmonize but also improve the quality of energy regulation. Criticism of state regulatory leadership also overlooks an important consideration. While the state has the final say over oil and gas development, it doesn’t exercise this authority in a vacuum. There are multiple opportunities for local involvement, with local governments able to convene meetings with state officials, propose additional requirements, consult on applications, and enter into agreements with the state and operators. Many local governments have successfully employed these tools to achieve cooperative governance. The state also has erected a robust regulatory framework for local involvement, with the COGCC conducting 13 rulemakings, adopting 110 pages of regulations, and developing 26 policies over the past seven years. The state’s dominant regulatory role also is justified by the importance of energy development. Even setting aside the economic, employment and tax considerations, most of us heat our homes with natural gas, and Colorado has almost as many cars
WHILE THE STATE HAS THE FINAL SAY OVER OIL AND GAS DEVELOPMENT, IT DOESN’T EXERCISE THIS AUTHORITY IN A VACUUM and trucks as people. Our Legislature has often limited local authority where similarly significant statewide interests are implicated, with other examples ranging from wages, pesticides, firearms and rent control to transmission lines, group homes and manufactured housing. For many years, the Colorado Rockies led the league in home runs. But the team didn’t win the pennant until 2007, when they led the league in base hits. Hopefully, the same will be true of the task force. Even if none of its recommendations clear the fence, all of them are solid base hits that should help us achieve our ultimate objective: Responsibly developing our energy resources and protecting our quality of life. As all baseball fans know, this time of year hope springs eternal.
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News Briefs New social collaboration channel aims to advance women in energy industry Pink Petro has launched a new online community that aims to unite, connect, develop and grow the number of women working across the energy industry. The program is funded by Halliburton and Shell, collaborating to give women a new resource to help advance their careers in an industry long dominated by men, according to a news release. “We have created Pink Petro to elevate the much-needed voice of women in energy globally,” said Katie Mehnert, the founder of Pink Petro, in the release. Mehnert, an energy veteran with global safety leadership roles at Shell and BP, believes women bring a unique perspective to the sector. “In light of the market downturn, the time to fight for the future†of our industry is now. Our for-purpose community will help women seize career opportunities and get them exactly where they should be: leading the fight to solve today’s energy challenges.” The release reported that a recent study by Rigzone showed that 48 percent of employees and 53 percent of hiring managers said a culture created by a male-dominated environment is a contributing factor to the gender imbalance in the industry. Pink Petro allows members to post questions, share advice, join groups, connect to coaches or follow thought leaders to gain meaningful insights, the release stated. The community also offers mobile applications for iOS and Android tablet and phone users. Individuals, companies, trade associations and nonprofit organizations can all join the platform by applying and investing in a membership, with individual fees starting at $50 annually, the release stated.
Pro-industry residents form energy council in Weld County A grassroots group of residents in southern Weld County has formed to educate people about how communities can prosper and stay safe with the oil and gas industry in their backyards - in contrast to the many groups that have formed against the industry. The Energy Council of West Weld purports to promote education and awareness of responsible energy development in Colorado, one of the most highly regulated states in the nation. “The last thing our state needs right now is any more out-of-state efforts to ban fracking. We all benefit from the increased funding for schools, roads and thousands of jobs,” said Energy Council of West Weld chairman and former Firestone Mayor Chad Auer in a news release. Fringe activist groups, whose ultimate goal is to ban fracking, have lately attempted to gain traction in locations as unexpected as Denver. Even the Governor’s Blue Ribbon Oil and Gas Task Force came under attack for not going far enough and some of these groups asked the Governor to immediately ban fracking in Colorado by executive order, the release stated. The Energy Council of West Weld is for responsible energy development in Colorado and reasonable compromise, representing the mainstream views in Colorado. “We can all enjoy our Colorado lifestyle in peace if we keep our facts straight and our community informed,” said Auer said in the release.
Pink Petro is one of several energy, extraction and engineering-related organizations that have launched communities to drive innovation, productivity, career development and safety, the release stated.
The ECWW is inviting more residents to join its growing membership as it continues to help lead communities in the right direction.
- Staff Reports
Contact Auer to get involved, (303) 304-7908. - Staff Reports
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Colorado Energy Coalition names new chairman The Metro Denver Economic Development Corporation has appointed new leader to its industry affiliate, the Colorado Energy Coalition. Chris Hansen, senior director of energy insight for IHS Inc., will serve a two-year term as cochairman of the CEC. In his role at IHS, Hansen leads a global portfolio of energy events and partnerships. In addition, he directs a social media analytics development team with a suite of products across several industries. IHS is the leading global source of critical information, insight and analytics, providing trusted data and expertise to businesses and governments around the world. Hansen succeeds outgoing co-chair, Lee Boughey, senior manager of communications and public affairs for Tri-State Generation and Transmission Association Inc., and joins existing co-chairman John Armstrong, CEO of Enserca LLC, according to a news release. “The CEC represents all aspects of the energy value chain, from upstream fossil fuel producers to solar
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APRIL 2015 ENERGY PIPELINE 63
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American Petroleum Institute opens Denver office The American Petroleum Institute has established the Colorado Petroleum Council to focus on energy priorities in the state, as the state seeks to create jobs, generate more revenue to the government, and produce more domestic energy. API also has hired Tracee Bentley, a former Colorado state official, to lead API’s new office in Denver as executive director, according to a news release. “Colorado is at the forefront of American’s energy renaissance,” said API President and CEO Jack Gerard in the release. “The right energy policies are essential to maintain strong economic growth, which energy development is generating across the state. Bipartisan cooperation among state government officials and business and consumer groups to address critical energy development issues will ensure Colorado remains a leader in creating energy jobs. Tracee Bentley is ideally positioned to lead our industry’s efforts, now and into the future.” A Colorado native, Bentley most recently served in the office of Gov. John Hickenlooper as legislative director and as a senior adviser on energy and
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agricultural issues. Previously, Bentley served in the Colorado Energy Office as deputy director of policy and legislative affairs. She also served as director of National Affairs with the Colorado Farm Bureau. Bentley earned her bachelor’s of arts and her master’s of arts from Colorado State University in Fort Collins. “I’m thrilled to work with the dynamic API team on the exciting energy opportunities in Colorado that are transforming our state into a leader in domestic energy production,” Bentley said in the release. “With smart, pro-energy policies, we can create thousands of good-paying jobs, send more revenue to the government to help support our schools, and make Colorado and America more energy secure.”
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API represents all segments of America’s oil and natural gas industry. Its more than 625 members produce, process, and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and 8 percent of the U.S. economy. - Staff Reports
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Invest wisely. HDPE can cost more than you think. Only FALCON TECHNOLOGIES containments are seamless, durable and worry-free. Before you decide to go with a cheap alternative for secondary containment, consider total costs. Our seamless, FALCON LINER速 technology is engineered to protect速 against punctures, weather, UV and common oilfield chemicals. It lasts the life of a facility with no maintenance costs. And if a spill occurs, it is completely recoverable, eliminating reportable incidents, remediation costs and negative publicity. When compared with risky alternatives such as HDPE, you can clearly see why FALCON TECHNOLOGIES速 containment solutions are the smart investment. Our products are engineered to protect your investment, the environment and your reputation.
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MAKING HOLE A look back at the origins of oil and gas BY BRUCE WELLS • AMERICAN OIL & GAS HISTORICAL SOCIETY
The true crude history of cosmetic aides when a young chemist distills paraffin from Pennsylvania oil fields into petroleum jelly Vaseline - its leads to a new mascara and the Maybelline Company. Few people associate 1860s Pennsylvania oil wells with women’s smiling faces, but they are fashionably related. This is the story of how the goop that accumulated around the sucker rods of America’s earliest oil wells made its way to the eyelashes of American women. In 1865, a 22-year-old chemist left the prolific oil fields of Titusville, Pa., to return to his Brooklyn laboratory and experiment with a waxy substance that clogged oil field well heads. Within a few years Robert Augustus Chesebrough would patent a method that turned the paraffin-like goop into a balm he called “petroleum jelly.” In 1872, Chesebrough patented “a new and useful product from petroleum,” which he named “Vaseline.”
FEW PEOPLE ASSOCIATE 1860’S PENNSYLVANIA OIL WELLS WITH WOMEN’S SMILING FACES, BUT THEY ARE FASHIONABLY RELATED
ONE THING LEADS TO ANOTHER
BRUCE WELLS, is the founder of American Oil and Gas Historical Society, a 501c3 nonprofit organization dedicated to preserving the history of oil and gas. He is a former energy reporter and editor who lives in Washington, D.C.
TOP: Vaseline inventor Robert Chesebrough consumed a spoonful a day and lived to be 96. Photo courtesy the Drake Well Museum, Titusville, Pa. LEFT: Women who bought Vaseline, including Mabel Williams, mixed the petroleum product with lamp black to create mascara. By 1917, Mabel’s brother Tom was selling premixed “Lash-Brow-Ine” by mail-order catalog. Photo courtesy Sharrie Williams.
APRIL 2015 ENERGY PIPELINE 67
Cosmetic industry giant Maybelline began with a refined petroleum product. “What a Difference Maybelline does Make” magazine ad from 1937. Photo for Energy Pipeline.
68 ENERGY PIPELINE APRIL 2015
Even before America’s first commercial oil well was drilled in Pennsylvania in 1859, Chesebrough was in the “coal oil” business in Brooklyn, N.Y. His expertise was in the reduction of cannel coal into kerosene - an illuminant in high demand among consumers. Chesebrough knew of the process for refining oil into kerosene, so when Edwin Drake’s August 1859 discovery launched the U.S. petroleum industry, he was one of many who rushed to the Titusville oil fields to make his fortune. “Now commenced a scene of excitement beyond description,” Scientific American reported. “The Drake well was immediately thronged with visitors arriving from the surrounding country, and within two or three weeks thousands began to pour in from the neighboring states.” Robert Chesebrough’s fortune was out there somewhere; he just had to find it.
In the midst of the Venango County oilfield chaos, the young chemist noted that drilling was often confounded by a waxy paraffin-like substance that clogged the wellhead and drew the curses of riggers who had to stop drilling to scrape the stuff away. The only virtue of this goopy oil field “sucker rod wax” was as an immediately available first aid for the abrasions, burns, and other wounds routinely afflicting the crews. Chesebrough eventually abandoned his notion of drilling a gusher and returned to New York, where he worked in his laboratory to purify the troublesome sucker-rod wax, which he dubbed “petroleum jelly.” He gave it to Brooklyn construction workers to treat their minor scratches and abrasions. In 1872, Chesebrough patented a new product that would endure to this day - Vaseline. He soon had a dozen wagons distributing the product around New York. Meanwhile, for years women had been using lamp black (made by holding a saucer over the flame) and a toothpick to create an impromptu mascara. One story goes that in 1913, Miss Mabel Williams employed just such a concoction preparing for a date, Chet Hewes. Her brother Thomas was intrigued by her method and decided to add Vaseline in the mixture, according to a Maybelline company history. Another version of the story, written by his grandniece Sharrie Williams, described Mabel as demonstrating “a secret of the harem” for her brother. “In 1915, when a kitchen stove fire singed his sister Mabel’s lashes and brows, Tom Lyle Williams watched in fascination as she performed what she called ‘a secret of the harem’ - mixing petroleum jelly with coal dust and ash from a burnt cork and applying it to her lashes and brows,” Williams noted in her 2007 book, The Maybelline Story. Mabel and Thomas began marking “Lash-BrowIne” and soon recognized it had great potential. In honor of his sister, who married Chet in 1926, Chesebrough renamed the mascara “Maybelline.” Mabel Williams later became bookkeeper of the cosmetics giant named after her. Today, both Vaseline, now part of Unilever, and Maybelline, a subsidiary of L’OrÈal, continue producing highly successful products distantly connected to Pennsylvania’s historic oilfields. “Making Hole” is a term for drilling coined long before oil or natural gas were anything more than flammable curiosities. Read more petroleum history at the American Oil & Gas Historical Society’s website, www.aoghs.org.
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DATA CENTER
The oil and gas industry is a large part of Colorado’s economy. Below, find statistics on energy pricing, drilling production, well permits, spills and rigs.
2015 DRILLING PERMITS COUNTY
RIG COUNT BY STATE
NO. (% OF STATE TOTAL)
Weld.......................................................................................297 (62%) Garfield........................................................124 (26%)
State Mar 6 Feb. 6 Jan Mar 6, 2014 Colorado 39 ........55 ......... 64................... 61 Louisiana 100 ......107 ....... 108 ..............103 Oklahoma 139 ......176 ....... 198 ..............182 North Dakota 105 ......132 ....... 170 .................. X Texas 538 ...... 654 ...... 773 ..............872 Kansas 15 ........18 ......... 25.................. 31 California 14 ........16 ......... 19................... 41 Utah 9 ..........12 ......... 17.................. 27 Alaska 12 ........10 ......... 10................... 14 Ohio 35 ........39 ......... X ..................... 41 Pennsylvania 47 ........54 ......... X ..................... 53 Source: Baker Hughes Rig Count
2014 GAS PRODUCTION COUNTY *YTD PRODUCTION (% OF STATE) Garfield .............. 561,894,053 (38.5%) La Plata.............. 290,392,326 (19.9%) Weld .................. 342,145,607 (23.4%) Rio Blanco.............. 77,469,048 (5.3%) Las Animas................ 73,599,817 (5%) Mesa ...................... 33,453,626 (2.3%) State ...................................1,459,466,376
Rio Blanco....................................26 (5.4%) Larimer.......................13 (2.7%) La Plata.................5 Lincoln............3
2014 OIL
Adams..........2
PRODUCTION
Cheyenne.....2
COUNTY *YTD State....................................................478 Source: Colorado Oil and Gas Conservation Commission as of Mar. 2.
US RIG COUNT
The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999. Area March 6 Feb. 6 *U.S. ........ 1,192 .............. 1,456 Canada...... 300 .................... 381 Source: Baker Hughes Rig Count.
PRODUCTION (% OF STATE)
Weld ...........70,523,233 (84.7%) Rio Blanco .....4,394,316 (5.2%) Garfield ..........1,834,561 (2.2%) Cheyenne.......1,340,722 (1.6%) Lincoln ........1,291,459 (1.55%) Moffat..............373,227 (0.45%) State......................... 83,240,689
Source: Colorado Oil and Gas Conservation Commission as of March 5; figures do not include complete production numbers. Companies have 45 days to report production; 2015 production numbers are still coming in.
Source: Colorado Oil and Gas Conservation Commission as of March 5; figures do not include complete production numbers. Companies have 45 days to report production; 2015 production numbers are still coming in.
COLORADO ACTIVE WELL COUNT 70 ENERGY PIPELINE APRIL 2015
Weld..........................................................................22,199 Garfield .......................................................................0,959 Yuma...........................................................................3,887 LaPlata .......................................................................3,329
Las Animas .................................................................3,009 Rio Blanco ..................................................................2,917 36 others ....................................................................6,988 State .........................................................................53,288
Source: Colorado Oil and Gas Conservation Commission as of Mar. 2.
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