JUNE 2015 ENERGY PIPELINE 1
COMPRESSION, GAS AND AIR Wagner Power Systems offers combustion technology that will burn almost any gaseous fuel, natural gas, coal bed methane or wellhead gas and can be programmed to switch from one to another. This flexibility, along with high reliability, makes Wagner engine packages ideal for gas lift operations. The Cat engines, offered by Wagner Power Systems, handle the changing conditions of well head and gathering applications, with the ability to withstand a wide range of pressures and conditions. We’re built to supply the power you need as well as remote startup and monitoring capabilities to get the job done. In the processing industry, unmatched reliability and longterm output make Cat engines the obvious choice. Need an engine drive for compressed air? Let us help you with your application. We can supply the engine only, either diesel or gas, or we can design and supply the complete package. Find us on the web
Give us a Call
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2 ENERGY PIPELINE JUNE 2015
ANADARKO PETROLEUM CORPORATION
ANADARKO IS... Among the world’s largest independent oil and natural gas exploration and production companies – providing for today, innovating for tomorrow.
www.facebook.com/anadarkopetroleumcorporation
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JUNE 2015 ENERGY PIPELINE 3
Features
34
38
WORKING RELATIONSHIP
HANDS-ON TRAINING
Technology and conversations have improved interactions between agriculture and the oil industry.
Noble Energy’s outdoor training facility brings industry to community’s fingertips.
By Eric Brown
By Sharon Dunn
16
WATER PURITY
Water study shows no contamination from oil-gas drilling. By Linda Kane
20
POSITIVE STEPS Young energy leaders getting a leg up in the oil, gas industry. By Linda Kane
22
DIFFERING STRATEGIES Insurance costs play a role in safety, accident clean-up. By Allison Dyer Bluemel
24
OPPORTUNITY KNOCKS Internships help open door to energy industry, even in a downturn. By David Persons
4 ENERGY PIPELINE JUNE 2015
28
TECH TALK
Can horizontal wells enhance opportunities for small geothermal power.
ON THE COVER Photo illustration by Darin Bliss
By Gary Beers
42
NEW HORIZONS
Energy Pipeline magazine will expand coverage into other energy sources. By Randy Bangert
44
HANDS TIED
Energy rich U.S. states move to quash local limits on drilling.
Departments 8
Support Company Profile
10
Field Worker Profile
12
Executive Profile
52
News Briefs
62
Data Center
Titan Energy Services, LLC
An Associated Press story
48
SETTLEMENT HITS NOBLE ENERGY
Noble Energy to pay fine, upgrade equipment following EPA investigation. By Sharon Dunn
59
MAKING HOLE A look back at the origins of oil and gas.
Meet Zach Huston, Noble Energy
Meet Josh Bartlett, Bartlett Power & Automation
By Bruce Wells
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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www.WorthingtonOilandGas.com
Wooster, OH
Bremen, OH
Garden City, KS JUNE 2015 ENERGY PIPELINE 5
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EDITOR Randy Bangert GENERAL MANAGER Bryce Jacobson ACCOUNT/PROJECT MANAGER Bruce Dennis BUSINESS MANAGER Mike Campbell
219 E. Railroad Ave., Fort Morgan CO
(970) 370-3867 • (720) 635-3469
MANAGING EDITOR Sharon Dunn
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designed and provided to ensure appropriate containmentZGD (noWall‐bracing charge) Options for liner penetrations and cleanout sumps • OptionsSERVICES for uniqueINCLUDE CONTAINMENT containment requirements SPCC required & as‐built capacity ZGD Wall‐bracing
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CONTRIBUTING WRITERS Gary Beers Allison Dyer Bluemel Eric Brown Linda Kane David Persons Bruce Wells
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 June 2015, Volume 2, Issue 10. Published by Greeley Publishing Co., publisher of The Greeley Tribune, Windsor Now, the Fence Post, and Tri-State Livestock News.
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JUNE 2015 ENERGY PIPELINE 7
12706 Weld County Road #4 Brighton, CO • (303) 659-9690 • fax (303)659-9696 www.tcparts.net
SUPPORT COMPANY PROFILE
Titan Energy Services, LLC.
CORPORATE HEADQUARTERS 1314 North 7th Ave. Greeley, CO 970.515.2101
NUMBER OF EMPLOYEES 10
WEBSITE www.titanenergyservices.net
SERVICES OFFERED Containment Light plants Equipment rentals
HOW LONG HAS YOUR BUSINESS BEEN OPERATING IN WELD COUNTY?
value we bring. Integrity is more than just a word to us. We believe in doing the right thing even when shortcuts might work for others. Customer service is why we are in business. We never forget this.
2 years.
WHY SHOULD CUSTOMERS DO BUSINESS WITH YOUR COMPANY? Safety, integrity, customer service. Safety is paramount in the oilfield. Attention toward regulatory compliance, customer specific requirements and our own policies are fundamental to the
HOW LONG DO YOU ANTICIPATE BEING IN BUSINESS IN NORTHEAST COLORADO? Our leadership has deep roots In northern Colorado. We are long established and here for the long haul.
IS YOUR COMPANY IN A GROWTH MODE? We are honored and fortunate to be growing, despite the cyclical setbacks in our industry.
WHAT KIND OF SKILLS, EXPERIENCE OR EDUCATION DO YOU LOOK FOR IN EMPLOYEES? Up until recently our personal networks have provided for additions to the team. Our needs in the future will be advertised in traditional print ads and through various new media like our website.
TITAN ENERGY SERVICES, LLC For job opportunities, check www.titanenergyservices.net
8 ENERGY PIPELINE JUNE 2015
Agfinity’s Tire and Vehicle Centers provide tires and service for all major equipment from backhoes to man-lifts and cars to light pickups. Plus other services like:
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JUNE 2015 ENERGY PIPELINE 9
FIELD WORKER PROFILE
Zach Huston NOBLE ENERGY STAFF REPORT • FOR ENERGY PIPELINE
HOMETOWN Colorado Springs.
WHERE DO YOU LIVE? Greeley, 11 years.
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? Nine years.
HOW DID YOU GET INTO THE INDUSTRY? While going to grad school. A friend had an oil and gas surface company and I started working while going to grad school to pay the bills. After grad school, I thought about looking for other sources of income, and I found I really liked the industry and I’m making a career of it now. I was going to grad school for communications at the University of Northern Colorado. 10 ENERGY PIPELINE JUNE 2015
WHAT IS YOUR JOB TITLE AND DUTIES? I am a field training specialist. My duties: I’m an instructional designer. We find a need, develop and design training for that need, implement it and analyze the results. We spend time in the field doing training and here in the training lab and training yard, training our production personnel. More so as of late, we educate folks in the community. We recently had a first opportunity to do that collaboration with the Greeley Fire Department. GFD is outstanding.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB? There’s a lot of things that are interesting. Most interesting I’d say is one of the training programs we’re
currently developing. We’re building a well simulator that can demonstrate how a well would operate in the ground, but we’ll get to demonstrate it in a live environment where we use compressed air and water and operate using a plunger lift well. It’s the one of the finest types of training for field personnel. We are developing it, and what excites me is coming alongside an operator, regardless of experience and helping to explain the physics behind how wells operate instead of learning by trial-by-error knowledge or tradition. We eliminate some of the mystery.
WHAT IS THE BEST PART OF YOUR JOB? I get to work with some great people. We really do have some outstanding folks working here. They have an outstanding
temperament, and I have an amazing manager. We are serving the folks that are in the field who actually make a profit for Noble. It’s really fun.
WHAT IS THE HARDEST PART ABOUT YOUR JOB? The hardest part about my job? Besides my boss? That’s really not true. ... The tough part, there are so many things we want to do, yet with limited resources, time, also the availability of our operators, it’s hard to do them all. They have their day job, so we need to make sure when we ask them to come in for training, we make the best use of their time. We respect what they’re doing, so every time we take away from something else they could be doing, we need to make sure that it’s been well thought-out.
WHAT DO YOU DO IN YOUR PARE TIME? VOLUNTEERISM, SCHOOL, SPORTS? We hang out with friends on a regular basis - volunteer at Weldwerks Brewery, to help brew beer and serve. I love being out in the mountains, camping, hiking, rock climbing. I am an avid skier. Any excuse to go to the mountains, something that is refreshing to my soul, I do.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? Over the next couple of years, I would like to serve our personnel and to continue to develop the relationships to help them be successful and safe. I don’t know what the future holds. I’m passionate about
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Banking made simple. this industry, I love the people, and what we do for the state of Colorado. But I don’t know what the future holds as far as where I’ll be in 25 years.
WHAT DOES THE WATTENBERG FIELD AND THE DJ BASIN MEAN TO YOU? This is an amazing and under-appreciated resource that when we get to tell the story of what’s in the ground and how we’re bringing it to the surface, it’s a really fun story to tell. I have a couple of friends who work in the DJ Basin, and to see them doing something they enjoy, to see them provide for their families, this is an industry that’s really unlike any other. It’s challenging, it’s innovative, it’s inspiring and it’s a small community.
HOW DO YOU FEEL ABOUT THE CURRENT ENVIRONMENTAL DEBATE GOING ON WITH FRACKING” IN COLORADO? I think it’s misunderstood. I think it’s been overly publicized and if people would actually consider the physics behind what’s going on with fracking operations, they wouldn’t be concerned with that process. I think all too often, we rely on the media or a friend, or some third party to be our source of information instead of looking at the facts and investigating ideas for ourselves. I love the news and am big fan of what media can do, but instead of taking everything that one commentator is saying at face value, look at the issue, investigate for yourself and formulate your own opinion.
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JUNE 2015 ENERGY PIPELINE 11
EXECUTIVE PROFILE
BARTLETT POWER & AUTOMATION Owner & Operator
Josh Bartlett BY DAVID PERSONS • FOR ENERGY PIPELINE
josh bartlett has one of the most successful
industrial electrician companies in the region. His firm - Bartlett Power & Automation basically supplies electrical power and related services to oil and gas drilling rigs in Colorado and many surrounding states where the current shale energy boom is taking place. He’s made a reputation with the oil industry as a guy who can do the tough jobs and get it done against very tight deadlines. And, he’s quite proud of that. The most impressive thing about Bartlett, though, is that the Billings, Mont., native didn’t have high aspirations coming out of high school. There was nothing in his background that even hinted that he would be as successful as he has become. “My only desire (growing up) was to have a family and provide for them,” Bartlett said recently in a telephone interview from his Newcastle office. “I wanted to find a wife and be a provider and that’s the honest-to-God’s truth.” After graduating from high school in Billings, the 17-year-old Bartlett finally realized that he was going to have to pursue some sort of a career. “I had two choices: go to college or learn a trade,” he said humbly. He had no mentor to fall back on for guidance. But, he did recall a memory of someone he had once known. “I remembered a man in Montana who was an electrician,” Bartlett said. “I guess you 12 ENERGY PIPELINE JUNE 2015
could say he inspired me. He had a truck and provided for his family. He was a very simple man. He didn’t drive a nice truck or wear nice clothing. “I think his name was Frank. He had big, thick glasses and was a really nerdy looking guy. I figured I could spend four years in college and then start at the bottom (with a company). But, if I could learn a trade and make good money like Frank, I could excel.” As a result, Bartlett spent a year in the Job Corps working with a master electrician at a vocational school. A year later, at 19, he went looking for work as an apprentice electrician. “It was really difficult in Montana to find a job,” Bartlett said. “The unions controlled the work.” Fortunately, Bartlett saw an ad in a local newspaper about an apprentice electrican job in Glenwood Springs. “I packed up the Land Cruiser and drove right there,” he said. He quickly was hired by R&A Enterprises and worked there until he was 23 and then got his journeyman electrician’s license. Next, he went to work for Brad’s Electrical Service in Newcastle. However, that firm was soon bought out by Tarpon Energy Services, a large international firm that is a leading supplier of electrical and instrumentation services.
For Bartlett, it was like walking into a dream job. “I went from working my way up (in a company) ... to working with electric motors and generators. I had always wanted to work on the industry side and now I was there. “If you could imagine being 23 and excelling at something so cool, it was just awesome.” Bartlett spent the next four years working as hard as he could, learning as much as he could, and saving as much as he could. “I then had an opportunity to start my own business and did,” he said. The opportunity he referred to was provided by his first client - Nabors Drilling, a company that specialized in drilling and
QA &
with Josh Bartlett
Bartlett continued to chat with Energy Pipeline about his young business and his career path.
Read his answers on page 14
FULLY SELF-CONTAINED, PORTABLE RESTROOM FACILITY rig services. Bartlett worked for Nabors as a SCR (silicone control rectification) tech. A silicon-controlled rectifier (or semiconductor-controlled rectifier) is a four-layer solid state current controlling device. “It was awesome, the most amazing experience of my life,” Bartlett said. “I made good money, worked under really, really good people.” Bartlett said he was on call 24/7 with Nabors and often worked 7080 hours a week. He even worked in the field in winter months. “Can you imagine working on a derrick in January, literally watching the sun go down and come up again while you’re working?” he asked. “That’s something that really stays in your head.” That position with Nabors lasted two years. Since then, Bartlett has become more of a businessman for his company, focusing on retaining other clients for his firm.
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Josh Bartlett
WHAT DO YOU DO IN YOUR SPARE TIME?
AGE
LAST GOOD BOOK YOU READ
34.
CURRENT JOB TITLE Owner and Operator of Bartlett Power & Automation.
YEARS WITH BARTLETT POWER AND AUTOMATION 7 years.
SPOUSE Shilo Bartlett.
CHILDREN Caleb, 12; Brooke, 9; Aubrey, 7.
CITY YOU GREW UP IN Billings, Mont.
HIGH SCHOOL YOU ATTENDED Senior High School in Billings, Mont.
COLLEGE ATTENDED/ DEGREES No college; licensed master electrician.
CITY YOU LIVE IN NOW Newcastle, Colo.
Spend time with family, exercise, golf, hike, fly fish on the Yellowstone River.
Mostly reads engineering and technical manuals.
SOMETHING ABOUT YOU THAT FRIENDS AND CO-WORKERS DON’T KNOW Likes to give to church and schools.
YEARS IN ENERGY INDUSTRY 14 years.
PROFESSIONAL BACKGROUND Bartlett, owner and operator of Bartlett Energy, is a certified master electrician in the state of Colorado. Bartlett has provided electrical, power, and automation services to the commercial and industrial industry for more than 12 years in Colorado. Bartlett has always been called upon by his clients to solve the most challenging problems under situations of extreme urgency. His aptitude and knowledge of the commercial and industrial industry has built his reputation among discerning customers who need expert results within limited time frames.
970-834-2508 • MBEAUCHAMP@KBCUSTOMAG.COM
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QA &
ENERGY PIPELINE: Looking at your website, you appear to be the kind of businessman who spends a lot of time in the field. Is that true? JOSH BARTLETT: I used to ... up until a couple years ago until the business got so big. I still have my truck and all my tools and meters. At the drop of a hat, I can still go out there. But, being in the office, I have to deal with a whole set of different problems ... got to deal with the fact that you have to send someone else out to do a job you use to do. There is a lot of privilege but there’s also a lot of responsibility. The future of the company is all on your shoulders. EP: Can you describe what a day in the life of Josh Bartlett is like? JB: Right now, I wake up, work out in the gym, eat a healthy breakfast, return phones calls, check email, work with operation guys, and take care of customers. EP: How many employees do you have? JB: I had 16 in 2014 but I have just
continued from page 12
five guys now. The drop in oil prices (and subsequent drop in work) forced me to lay off some of my workforce. EP: What is it about your job that gives you the most satisfaction? Is it resolving difficult problems? JB: When a customer calls in needing something and we take care of him, that’s the most awesome feeling. It’s a real morale booster. EP: How much work is your company doing now in the DJ Basin? JB: We have a couple jobs going on (in the Greeley area). EP: With the drop in oil prices and drop in work, is there anything you’re doing to take advantage of this slowdown? JB: We’re just maintaining a lot of our equipment that has come back. Right now, we’re mostly focusing on repairing the equipment, making it ready for service again, cleaning it so it will run right.
EP: Since you’re company runs pretty fast when times are good, is this (slowdown) helpful at all?
company are (1) being an electrician and (2) figuring out ways to be successful at providing electrical power on site.
JB:It totally is a blessing in disguise. We’re taking advantage of oil companies not completing or fracking wells. We’re trying to figure out how to make the algorithm work again in an economy that has adjusted itself. We are asking: How do we make that happen? Is it prices? Services?
EP: Over the past six months, we’ve seen the price of oil drop significantly. In your mind, is that going to have a dramatic impact on your company?
When you’re an oil field supply company, businesses are successful because they do a lot of little things over and over. Sometimes, everyone forgets how they got there. Customers want more little things. If you take care of it, they will remember you. So, we’re looking for little opportunities to show them. EP: Does your company mostly provide electrical power to rigs or is it a variety of services? JB: The fundamentals of the
JB: It’s going to have a dramatic impact on our company. The price of oil has dropped and the market is adjusting. We are oil field suppliers and we’re going to have to make some adjustments. In 2014, we could charge what we needed to be profitable. Now we can’t. The market is adjusting and we need to adjust if we want to survive. It is a huge impact. It’s the bad side of being in this industry. EP: Up to this point in your career, what has been the highlight for you and why? JB: The highlight for me has been trying to run a business and figuring out how to make it happen. It’s been unbelievable, amazing.
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JUNE 2015 ENERGY PIPELINE 15
WATER PURITY Water study shows no contamination from oil and gas drilling BY LINDA KANE • FOR ENERGY PIPELINE
“We were in an area without oil and gas - our control well in this case - and the salt level went up. We think it was due by oil and gas companies, some might be surprised at results to fertilizer they were using in the agriculture fields. It wasn’t found by the Colorado Water Watch team. necessarily bad, but it was a change.” Colorado Water Watch is a real-time groundwater monitoring Detecting changes in groundwater is the point of the program. pilot program developed by the Center for Energy Water CWW’s annual report stated at least six oil spills occurred near Sustainability at Colorado State University. The monitoring the testing wells. The oil contaminated the soil, according to the system is comprised of a network of water quality sensors capable report, but did not reach of detecting changes groundwater. in groundwater quality “There have been due to natural or a few alarms of events operational impacts. associated with water table The data is monitored, fluctuations during the gathered, analyzed and irrigation season at the reported by CWW and control monitoring station, posted on its web site but no oil and gas-related to provide information events have been detected to communities in at any of the stations,” the the Denver-Julesburg annual report stated. Basin. That website is And that’s part of the www.waterwatch. KEN CARLSON, member of the Colorado Water Watch team process of the CWW’s colostate.edu. project - to be an early Since beginning the warning system. program in February “It’s a monitoring program,” Carlson said. “It’s a real-time 2014, data was collected hourly, transmitted into the CWW monitoring system that is intended to provide the public with database and analyzed through event detection software. They a little bit more transparency into oil and gas activity and what monitor five well sites in the DJ Basin. impact it might be having on groundwater.” The results? CWW has found no incidences of groundwater What’s next? The CWW plans to have add five monitoring sites contamination due to oil and gas activity, according to Ken by the end of July. Possible new monitoring sites are continuously Carlson, a professor of civil and environmental engineering and explored by the CWW team and Noble Energy. Noble works part of the CWW team. with its landowners to find feasible sites for drilling and new “No industrial practice is risk-free,” Carlson said. “We have monitoring wells. The CWW team has been working closely with seen events. Some of them were related to equipment failures. the Department of Agriculture and various water districts in Weld Others have been related to agriculture. after a year of analyzing potential groundwater contamination
“This real-time monitoring network will also serve as a tool for risk management for the industries in case of any contamination.”
16 ENERGY PIPELINE JUNE 2015
“Some people have claimed chronic water contamination and this is one way to measure that. We haven’t seen that. Are we looking in the right areas? Maybe not. That’s why we’d like to grow a little more.” KEN CARLSON, member of the Colorado Water Watch team
County, including the East Greeley Conservation District and Central Colorado Water Conservancy District to look for existing wells that have potential to be new monitoring sites. Noble Energy has been a supporter of the program, Carlson said, and allows monitoring on their drilling pads. The Department of Natural Resources, Colorado Oil and Gas Conservation Commission and Colorado Oil and Gas Association are also among supporters. “Beyond the next set of wells, what is our strategy here?” Carlson said. “I think largely it would be to diversify beyond Noble Energy. We’d like to think this might be more of what the public wants to see.” Expanding locations is also important to diversification. “We want to grow to cover more area,” Carlson said. “Some people have claimed there is chronic water contamination and this is one way to measure that. We haven’t seen that. Are we looking in the right areas? Maybe not. That’s why we’d like to grow a little more.
THESE SENSORS ARE CAPABLE OF DETECTING CHANGES IN ANY BASELINE GROUNDWATER QUALITY, WHATEVER THE SOURCE. THE REAL TIME DATA FROM THE MONITORING STATIONS IS CONTINUOUSLY ANALYZED BY SOPHISTICATED CONTAMINATION SOFTWARE AND IS MADE PUBLIC.
“The oil and gas industry is important to the state of Colorado,” Carlson said. “But we can’t ignore communities who are concerned.” The project isn’t necessarily geared toward detecting flaws in the oil and gas industry, Carlson said. Contamination could come from animal feed processing plants, domestic waste water treatment facilities, airports, gas stations or power plants. The monitoring stations are equipped with real time water quality sensors. These sensors are capable of detecting changes in any baseline groundwater quality, whatever the source. The realtime data from the monitoring stations is continuously analyzed by sophisticated contamination software and is made public. If a change in groundwater is detected, CSU sends out a team to test the water and collect it for more rigorous testing to help determine the cause of the change. “The aim is to provide transparency to the public and to protect users in the Denver-Julesburg Basin,” according to CWW’s website. “Oil and gas companies are actively pursuing advanced methods of water management to eliminate water contamination and to minimize other impacts including competitive water use, truck traffic and excessive are emissions. “This real-time monitoring network will also serve as a tool for risk management for the industries in case of any contamination.” The project is funded by the DNR, Noble Energy and Colorado State University. Carlson explained the Colorado Water Watch is not a regulatory agency though they share results with state officials. The Colorado Oil and Gas Conservation Commission is the regulatory agency that requires water testing within half a mile of oil and gas wells. Groundwater sampling must occur prior to and after drilling a site. Mike King, executive director of the DNR, and a member of the COGCC, said in the fall this project is about transparency. “The public debate about the impact of fracking and oil and natural gas development on water supplies has, at times, been divisive and contentious in Colorado and around the nation,” he said. “Part of that is due to the lack of independent data available to the public. Often, the public believes they do not have enough information to make informed decisions. We hope the Colorado Water Watch will provide the type of real-time data that can alleviate that concern.” JUNE 2015 ENERGY PIPELINE 17
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POSITIVE STEPS
Young energy leaders getting a leg up in the oil, gas industry BY LINDA KANE • FOR ENERGY PIPELINE
if you’re a professional looking to learn more about the oil and gas industry, then the Energy Generation Leadership Program might be just what you need. The program is sponsored by the Colorado Oil and Gas Association to educate and empower the next generation of oil and gas leaders. The program provides industry-specific leadership and professional development. “There are so many parts of this very complex industry that I don’t know about. So I’ve been able to learn about the political side of the oil and gas industry here in Colorado, the drilling process, the leasing and land purchasing side of the process and those are things I didn’t know a lot about going into the program,” said Rachel Peterson, a geologist at A.G. Wassenaar in Denver. “So I feel like I’m coming out of it with a much more well-rounded understanding of the industry.” Wassenaar was part of the 2014 class. The EnGen program is a one-year, 20 ENERGY PIPELINE JUNE 2015
THE ENGEN PROGRAM IS A ONE-YEAR, CURRICULUMBASED LEADERSHIP DEVELOPMENT COURSE ESTABLISHED BY OIL AND GAS YOUNG PROFESSIONALS AND INDUSTRY VETERAN LEADERS curriculum-based leadership development course established by oil and gas young professionals and industry veteran leaders. It
consists of six education seminars, quarterly social networking events and one community outreach project.
THE OBJECTIVES • Empower through education. • Engage with industry leaders. • Unite professional from diverse facets of industry. • Establish relationship with the community through outreach projects. • Improve industry retention of future leaders. “Something that I appreciated about the program is how it has pushed me a little bit outside my comfort zone. It has pushed me to look at where I want to be in the next
five years,” said Kinzie Beavers, a drilling engineer with WPX Energy. Murugan Palani, a manager at Xcel Energy, found the entire program useful, but he found the session on politics most relevant for him. “I really liked getting the insight from our elected officials and their thought process and what they go through when they’re interacting with the oil and gas industry,” he said. “It’s a great program. I would highly recommend it to anyone who wants to know more about the industry and to network with peers and leaders.” Diversity was one aspect of the program enjoyed most by Ronnie Causey, vice president of Amegy Bank’s Rocky Mountain Energy Group. “I think having such a broad range of participants kind of made the class a little bit more enjoyable. Some in the class were newer and some had pretty successful careers within the industry,” Causey said. He’s been a lender to oil and gas clients for seven years. This program offered by COGA is fairly in-depth. Causey said he was out of the office about 10 days in 2014 attending the different classes. His class spent a day at the
state capitol and visited a facility that made fracking fluid. It’s easy to recommend this program to others. “I didn’t know what to expect coming to EnGen and COGA and I gotta tell ya, it’s unbelievable how it’s changed my perspective on not just the industry but me as a leader in the industry and as an employee at QEP Resources,” said Scott Smith, a geologist with QEP Resources in Denver. “It’s literally changed my perspective on literally every aspect of my job. “ Transparancy is an aspect of the oil and gas industry supported by ecologist Dr. Nathan Wojcik with SWCA Environmental Consultants in Denver. The industry is extremely complex and often misconstrued, he said. “I think the oil and gas industry needs to continue to do a lot more in terms of educating not only the professional that work within the industry, but all of the general public,” he said. “And through continued communication and transparency, I believe we can build the bridge between an ever-increasing demand for energy and protecting the habitats necessary for a healthy environment.”
GET INVOLVED Young professionals who have been in the industry for at least three years and no more than eight are invited to apply for the Colorado Oil and Gas Association’s Energy Generation Leadership Program. The 2015 class has already been selected. Applications for the 2016 class will be available in November via the COGA web site.
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DIFFERING STRATEGIES Insurance costs play a role in safety, accident clean-up BY ALLISON DYER BLUEMEL • FOR ENERGY PIPELINE
“Pollution exposures are one of the or a budget large enough to cover the bigger exposures most of these companies incurred costs. How they handle this can to discourage safety violations in the oil have,” he said. “You have to be careful that split two ways: pay for insurance that covers and gas industry, accidents and legal fees you have the proper coverage.” defense costs, some site clean-up and happen, and a company’s size plays a If a spill occurs, Mitchell said these contractor liability, or pay up to a certain large role in how they handle insurance to insurance policies also must cover cleanamount of pocket. mitigate the damage. up and legal fees. For smaller companies, those that Weld County leads Colorado in the Insurance also protects site operators often cannot afford to pay damages out number of active wells at 22,314 - 42 from damages done by contracted workers of pocket, more traditional insurance percent of the state’s total, and more than and ancillary companies. If someone that avenues offer them more protection from double the next leading county, Garfield does not directly work for the operator legal fees and operational costs following which places a lot of attention on accident causes an accident, the oil and gas an on-site accident. regulation and clean-up company, not that person’s for companies operating employer, is generally held in the county. responsible, he said. When environmental “Attorneys will always spills happen - and they go after the one doing the happen a lot in this work and the one who hired fast-producing state the work,” Mitchell said. - it draws even more However, for smaller attention, especially companies, a lack of if the spill garners business history, location, headlines. From 2009MIKE MITCHELL, agency principal, Mitchell Insurance Agency inclement weather risks 13, Colorado, as an and a history of accidents example, recorded can hike insurance premiums, he said. “The smaller operators may not be as 1,933 spills between three companies: “Weld County has its own unique fiscally fit to carry that type of insurance,” Noble, Encana and Anadarko, according circumstances because of the oil field said Robin Olsen, spokeswoman for to a study by the Natural Resources they’re in,” Mitchell said. “Also, weather Anadarko Petroleum Corp. in Denver. “A Defense Council. Overall, 197 spills have plays a role in vehicle, pump and half a million or $20,000 clean-up may be occurred in Colorado in 2015, compared claims coverage.” more impactful to their budget. It doesn’t to 850 in 2014 and 568 in 2013, according While these factors do not uniquely work for everybody.” to the Colorado Oil and Gas Conservation affect smaller companies, larger oil and In most cases, insuring their property Commission. gas companies or ancillary businesses and equipment helps reduce pollution Aside from negative publicity from - such as trucking - often choose to pay exposure and increases employee safety, accidents, spills and other violations put fees normally covered by insurance out of said Mike Mitchell, agency principal for companies at fiscal and legal risk that pocket up to a certain amount, Olsen said. Mitchell Insurance Agency in Greeley. require comprehensive insurance coverage
while penalties and regulations work
“Attorneys will always go after the one doing the work and the one who hired the work.”
22 ENERGY PIPELINE JUNE 2015
TO AVOID RISK ASSOCIATED WITH ACCIDENTS CAUSED BY CONTRACTORS, BRACKEN SAID CONTRACTORS ARE REQUIRED TO PROVIDE THEIR OWN COVERAGE TO ENSURE THAT THE COMPANY IS NOT UNDULY IMPACTED In Anadarko’s case, their insurance threshold kicks in when expenses exceed $1 million, said Korby Bracken, health, safety and environmental director for Anadarko. “We do have insurance for those incidents that are outside of a current threshold (number),” Olsen said. “We cover the cost for anything below that threshold.” The decision comes from weighing the cost of annual insurance against the amount incidents would cost annually.
“Very seldom do we ever hit an event that would cause us to need other insurance,” Bracken said. To avoid risk associated with accidents caused by contractors, Bracken said contractors are required to provide their own coverage to ensure that the company is not unduly impacted. “If something were to occur on our location and it’s their fault then they are covered,” he said. Bracken noted that the fact that clean-up money comes from company funds does
not motivate them any more or less to avoid incidents such as spills. “Regardless of what the cost is our goal is zero,” he said. “We do everything we can to be productive and prevent spills. We never like to incur costs for environmental clean-ups.” Contrary to smaller companies, larger corporations similar to Anadarko budget for possible clean-up costs and facility modification during regular fiscal year talks, Bracken said, and “incur them as normal operating business” costs.
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JUNE 2015 ENERGY PIPELINE 23
OPPORTUNITY KNOCKS Internships help open door to energy industry, even in a downturn BY DAVID PERSONS • FOR ENERGY PIPELINE
will hire 41 and Anadarko Petroleum thinking that a summer internship might Corporation will hire 130. not be a good bet this year since the price executives in the oil and gas industry “The number (of summer interns) of oil has plummeted in the past six months got their start in the “oil patch” as varies depending on the business and the news is full of companies that are college interns. needs,” said Amanda Johnson, recruiter laying off large numbers of employees. Internships are a tried-and-proved for Encana Corp., who experience that has manages the intern worked well for years, program in the U.S. “We not only for the interns want to be sure to have but for the industry, too. enough support and “The long-term goal work for these students is to have these interns to give a foundation for a return for a full-time meaningful summer. But, job after they graduate,” in the past few years we said Susie McMichael, have hired between 40 and senior public relations 50 students.” SUSIE MCMICHAEL, senior public relations representative, Halliburton representative for And, the good news is Halliburton. “We want that students don’t have to them to think broader, major in petroleum engineering to apply However, those students would be wrong. more long-term, and we want them to for an internship. Three of the largest oil and gas use this internship experience to be able “Anadarko has an internship program companies working now in Colorado to determine if Halliburton is a place that has historically employed students have plans to hire more than 200 total where they can see themselves having a enrolled in four-year universities in interns this summer. Halliburton will hire rewarding career.” the following disciplines: accounting, 30 student interns. Encana Corporation You can’t blame college students for it’s no coincidence that most of the
“The long-term goal is to have these interns return for a full-time job after they graduate.”
24 ENERGY PIPELINE JUNE 2015
YOU CAN’T BLAME COLLEGE STUDENTS FOR THINKING THAT A SUMMER INTERNSHIP MIGHT NOT BE A GOOD BET THIS YEAR SINCE... THE NEWS IS FULL OF COMPANIES THAT ARE LAYING OFF LARGER NUMBERS OF EMPLOYEES. HOWEVER, THOSE STUDENTS WOULD BE WRONG.
engineering, health, safety and environment (HSE), finance, geology and geosciences, human resources, information technology, land, land administration, legal, marketing, midstream and supply chain management,” said Christina Ramirez, public affairs and corporation communications for Anadarko Petroleum Corp. “The program is 12 to 14 weeks in length.” Johnson said Encana looks for students in engineering, geology/geoscience, land negotiation accounting and general business for its 12-week internships. So what exactly are oil and gas companies looking for in prospective interns? “In general, we look for those students that are mature, positive, driven and somewhat humble,” Johnson said. “We want our interns to be ready to enter the workplace and make valuable contributions while at the same time can persevere through challenges, be honest and transparent, and demonstrate respect for others. “We do require a minimum of a 3.0 GPA, enrolled as a full-time student through the fall semester after their internship (so for this summer, they have to be a full time student through December 2015), and depending in the discipline, we may require specific degrees. “I would say as a general practice, we want the well-rounded (involved in extra-curricular activities, volunteer work, student organization, sports, etc.) student because they tend to fit our culture the best.”
HOW TO APPLY FOR INTERNSHIPS Representatives of Encana Corporation, Anadarko Petroleum Corporation, and Halliburton offer these suggestions for college students seeking internships in the oil and gas industry: ENCANA CORPORATION All interested students can apply through encana.com. All opportunities are posted there. Additionally, Encana works with a number of the universities in the Rocky Mountains and in Texas. Encana representatives attend Career Fairs, post jobs on the Career Services site and do on-campus interviews as well. Just a quick word on timing - because it is so competitive, Encana tends to fill most of its intern roles the fall prior to the internship (so for summer 2016, Encana will be recruiting student in the fall of 2015). If you are interested in an internship, get busy during the fall to see when and where Encana will be on campus, and apply then.
ANADARKO PETROLEUM CORPORATION Students can get involved in Anadarko’s recruiting process at select schools by participating in on-campus events and interviewing during the fall semester. In Colorado,
these schools have historically included the Colorado School of Mines, Colorado State University and the University of Colorado-Boulder for various disciplines. Anadarko makes all internship offers through our oncampus recruiting efforts. Students should connect with their campus career center for a schedule of events and Anadarko’s participation. Additional information is also available online at www.anadarko.com/careers.
HALLIBURTON Students should apply through their Career Services site where active Halliburton positions are posted. Halliburton recruits from 70 universities in the U.S. If a student attends a university where Halliburton doesn’t recruit, students can go to Halliburton’s Students Careers page in the Careers section on the Halliburton website and/or send us a message at University@Halliburton.com. - David Persons
“...activities include field trips to operating areas across the U.S., lunch and learns with company leadership, and career trainings, as well as participation in social activities and community service projects.” CHRISTINA RAMIREZ, public affairs and corporation communications, Anadarko Petroleum Corp.
Anadarko officials say they are seeking students with many of the same traits. “Anadarko is looking for students who are interested in creative problemsolving, are self-starters, eager to learn, and, most importantly, embody Anadarko’s core values of integrity and trust, servant leadership, people and passion, commercial focus and open communication,” Ramirez said. The same could be said for Halliburton. “We also look for candidates that are adaptable, display a willingness to learn new concepts and be up for a challenge,” McMichael said. The benefits of being a student intern are numerous, industry officials say. “I could go on forever,” Johnson said. “But some of the benefits I emphasize to students, leaders and anyone who will listen: An internship provides a foundation of technical training and experiential learning while at the same time giving students the opportunity to apply school learnings in a real-world setting. “Interns collaborate with industry professionals on value-added, meaningful work. The work these students do in 12 weeks is very important to Encana and that provides a great capstone for their summer experience. They aren’t just fetching copies and booking conference rooms - they are doing work that will drive Encana forward, and we hope that gets theme excited and keeps them engaged. “Opportunity to build a professional network with their future colleagues. They may not all end up as Encana employees, but we work hard to make 26 ENERGY PIPELINE JUNE 2015
sure these students build a strong network with other interns. Plus, we have interns from the Rocky Mountains and Texas and this provides an opportunity to meet new people and build new connections that they might not have had otherwise. The best part of this is that it is across disciplines. We do a number of events - a community service event, a field
THREE OF THE LARGEST OIL AND GAS COMPANIES WORKING NOW IN COLORADO HAVE PLANS TO HIRE MORE THAN 200 TOTAL INTERNS THIS SUMMER tour, social events and lunches - so that all the interns can get to know each other; not just engineers meeting engineers. It’s much more comprehensive than that and so important for the students. “Finally an opportunity to ‘test drive’ the car before they buy it. Our interns spend 12 weeks here at Encana, and we hope it gives them a robust view of what it would be like to work here. They can see the ins and outs and the day-to-day with
much more honesty and transparency than an interview would ever provide. In the end, we hope they want to join our team after graduation (as a new grad). Our interns are given first priority when making decisions on who to hire for new grad roles as well.” Ramirez said the same is true at Anadarko. “Anadarko’s interns gain real-world experience in the oil and natural gas industry,” Ramirez said. “Each intern is assigned to a group within their discipline and based on their knowledge and experience. Interns are invited to participate in different activities throughout the summer that will expand their knowledge of the industry and further their professional development. “These activities include field trips to operating areas across the U.S., lunch and learns with company leadership, and career trainings, as well as participation in social activities and community service projects. “Additionally, interns are invited to complete a summer-long project that will directly add value back to the business.” McMichael says that Halliburton interns are exposed to what they could be doing in the future. “The internship gives students a glimpse of what they could be doing for Halliburton if they decide to work here after they graduate,” McMichael said. “They will be exposed to our culture, our values, how we run our business and what it means to work for Halliburton. Overall, it’s a great experience for the students who get the opportunity to intern at Halliburton.”
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TECH TALK
CAN HORIZONTAL WELLS ENHANCE OPPORTUNITIES FOR SMALL GEOTHERMAL POWER? BY GARY BEERS • FOR ENERGY PIPELINE
FEASIBILITY FOR GEOTHERMAL POWER GENERATION Electrical power generation from co-produced fluids using binary-cycle power plants has been demonstrated at the Rocky Mountain Oilfield Testing Center in Wyoming, and at the Huabei Oilfield near Beijing, China. Research investigating the feasibility and profitability of implementing co-production at the oilfields of the Los Angeles Basin was published in 2012 (“Power Generation Potential From Coproduced Fluids in the Los Angeles Basin,” Kara Bennett, Stanford Geothermal Program, Stanford University). The key conclusion is co-production is feasible when at least 82,000 barrels of produced water are generated each month with a minimum temperature of 170 Farenheit. Let’s consider - under what general conditions would a co-production facility utilizing produced water from the Wattenberg Field, specifically the Niobrara Formation, be feasible? According to the study, power generation is feasible if the temperature is high enough and the flow is large enough. The temperature of the Niobrara Formation is in the range of 240 to 260 F, which is above the minimum of 170 F, but within the past decade, a vertical well in Weld County has typically generated about 30 barrels per month of produced water. At this rate, approximately 2,700 wells would be needed to supply the above minimum volume. The logistics to link flows from this many wells could render a potential coproduction project infeasible. However, the recent widespread installation of horizontal wells is a game-changer for the rate of
28 ENERGY PIPELINE JUNE 2015
produced-water generation and could contribute to the feasibility of a co-production facility. The technological marvel of horizontal drilling has been extensively used by oil/gas companies due to substantial cost savings and reductions in the environmental footprint. But, little recognition has surfaced about the change in the generation of produced water and how this change can provide increased opportunities for beneficial uses.
THE SETUP OF HORIZONTAL WELLS The technological marvel of horizontal drilling has been extensively used by oil/gas companies due to substantial cost savings and reductions in the environmental footprint. The oilfields around Greeley are dominated by widespread horizontal wells drilled 1,000’s feet into oil/gas formations from “super pads” at the surface, where there are 10 to 30 or more wellheads. An artistic rendering of this arrangement is shown in Graphic 1. As an example of the real-world
GRAPHIC 1
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.
Drilling pads allow widespread underground development by concentrating wellheads at the surface. Source: Energy Institute of America.
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GRAPHIC 2
Exisiting and planned horizontal wells. Source: Colorado Oil and Gas Conservation (COGCC).
situation, the actual layout of approximately 232 horizontal wells in T6N R62W, which is 15 miles east of Greeley, is shown in Graphic 2.
INCREASE IN PRODUCED WATER Obviously, a horizontal well extending 4.000 to 10,000 feet into an oil-bearing formation will generate more produced water than a vertical well crossing several hundred feet of the same formation. But how much more ? For an answer, water production data from Section 20 (Graphic 2) is examined. The monthly average for the 17 horizontal wells, during August 2014 to February 2015, is 485 bbls/mo/well. Data from four vertical wells, during an eightmonth period (in 2011), provides an average of 24 bbls/mo/ well. Thus, a horizontal well generates about 20 times more produced water than a vertical well.
CAN HORIZONTAL WELLS CAN ENHANCE OPPORTUNITIES FOR SMALL GEOTHERMAL POWER PLANTS? As mentioned above, 82,000 bbls/mo of produced water was the minimum rate needed for a potential facility to be considered feasible. The existing and planned horizontal wells identified in Section 20 (Graphic 2) can be projected to provide an estimated 112,520 bbls/mo. Since the projected flow of produced water from these horizontal wells clearly exceeds the minimum rate, it is an interesting proposition to further consider the feasibility of this 36-square-mile area supporting a small geothermal power plant. 30 ENERGY PIPELINE JUNE 2015
LET’S SEE HOW IT WORKS IN BOWMAN COUNTY, N.D. Field testing of the feasibility of using the heat from produced water to turn electricity-generating turbines is starting in the Cedar Creek Oilfield in southwestern North Dakota. The 250-kilowatt geothermal generator has the potential to contribute an extra $100,000 annually per well, according to estimates from the U. S. Energy Department. The project (“Electric power Generated from Co-Produced Fluids from Oil and Gas Wells”) has been underway since 2010 at the University of North Dakota with involvement of a major oil company and geothermal technology companies. Details about the project are available online at https://www4.eere. energy.gov/geothermal/project.
DIFFERENT APPROACHES TO GENERATING SUFFICIENT VOLUMES OF PRODUCED WATER While the Weld County and Bowman County oilfields may be feasible for locating geothermal facilities and involve horizontal wells, key factors pertaining to the generation of produced waters are different. Under these factors, the approach in Bowman County is to locate wells that generate high volumes of produced water and propose siting geothermal plants in these locations. A stumbling block to this approach is the profitability of a well decreases as the water:oil ratio increases and these wells may be among the first to be shut-down when economic conditions decline. The Project Officer for the North Dakota Project indirectly referred to this issue in the following statement included in the 2013 annual talk for peer review. The top producing oil wells in the Madison-Lodgepole formation do not yield sufficient water to be economic as a co-produced system. If the wells were produced solely for water at rates water wells in the Lodgepole are now to produce, the power production would be significant. A different approach is available in Weld County and should result in a more sustainable basis for siting geothermal plants. Super pad development is based on placing many horizontal wells in oil-rich formations and extracting the oil under favorable economic conditions. This scaling up of the extraction process has the concurrent effect of concentration large volumes of produced water where the water:oil ratios are low in the formation. Consequently, sufficient volumes of produced water for use in geothermal plants are expected to be co-located with the more profitable wells - which contributes to a sustainable arrangement. The ‘hidden” benefit of horizontal wells from super pads could be the creation of a sustainable, beneficial use for produced water. Extending this thought a little further, why not use the generated electricity for onsite treatment of produced water to a quality level suitable for agricultural use and/or discharge to streams. Think about it ....
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JUNE 2015 ENERGY PIPELINE 33
WORKING RELATIONSHIP
A night-and-day difference — Operators reflect on how technology, conversations led to dramatic improvements in relationship between ag and oil and gas BY ERIC BROWN • FOR ENERGY PIPELINE
34 ENERGY PIPELINE JUNE 2015
DENNIS HOSHIKO AND BRUCE WHITE, AMONG OTHERS IN WELD COUNTY, CAN TELL YOU HOW BAD THINGS USED TO BE. The oil and gas and agriculture industries were often “at each other’s throats” in the 1980s and 1990s - the time period most negatively reflected upon by locals when discussing the relationship between Weld County’s two biggest industries. Fast forward decades later: Oil and gas and agriculture are each larger now than they were then - worth billions to the local economy and recognized nationally for their size. Rapid urban sprawl often has drillers and ag producers working with one another in tighter quarters and on more crowded roads, and in many cases are in need of the same resources, such as water, which are getting tighter in supply. The simple math doesn’t add up to a relationship that would be any more symbiotic today - perhaps more combative. But those who were around back then and are still involved in the industries today would emphatically tell you otherwise. “There’s just no comparison,” said Hoshiko, a Greeley-area farmer. “It’s by no means perfect, but the relationship between the two is remarkably better. It’s just night and day.” The stark difference in relationships between then and now can be attributed to myriad factors - legislation, the weeding out of “bad players,” improved technology that has shrunk the footprint of drilling operations, and improved economics. But ask a number of local residents, and they’re quick to mention that one important element of the improvement
is the fact that Hoshiko and White sat down to talk about 30 years ago.
THE SAME TECHNOLOGY THAT HAS MADE DRILLING MORE PRECISE AND LESS INVASIVE ALSO HAS MADE IT MORE PROFITABLE FOR DRILLERS, WHICH THEN INCREASES THE ROYALTIES TO THE LAND OWNERS FINDING MIDDLE GROUND White, the owner of what was then Conquest Oil, could see there was a need for change. “I firmly believe the oil and gas companies had good intentions back then,” White said of his fellow drillers in the 1980s, when locals say then-new technologies and federal tax credits led Weld County and rest of the DenverJulesburg Basin to see an influx of oil and gas activity. “They just weren’t
aware then of the issues facing farmers and ranchers.” But White was aware, having grown up in Ault and knowing personally many of the Weld County farmers and ranchers who had oil and gas operations taking place on their land, or on leased land where they had crops or livestock. “Some would put a drilling site right in the middle of section, and, without much thought, all of the sudden the way that farmer’s center-pivot irrigation functions was disrupted, which has an economic impact on the farmer. Or in other cases, the ground around the drilling site was left too loose, and then a farmer making a pass on his tractor would sink his tires into the ground. These are the kinds of things in the ag world that some oil and gas companies just weren’t taking into account.” Hoshiko also was all too aware of the disconnect between agriculture’s day-to-day functions and oil and gas companies back then, having seen it on his own farm ground. “There was just a serious lack of communication,” Hoshiko said. “And in the case of the really bad ones, they just didn’t care. They were there for the minerals, and didn’t care about much else.” Out of frustration with how oil and gas companies then treated farmers and land owners, Hoshiko helped found the Front Range Land and Mineral Owners Association. White at the time helped organize talks among the oil and gas companies, creating the Denver-Julesberg Petroleum Association - which would eventually go on to become the Colorado Oil and Gas Association, a still heavily influential voice in the oil and gas industry that focuses on education, political and regulatory developments, and community engagement. “We both helped lead the conversations on each side, and JUNE 2015 ENERGY PIPELINE 35
Bruce White stands over a tiny pump in his yard at one of his properties in Greeley. White was among the many in oil and gas that saw the importance of improving relationships with the agricultural community in Weld County. Photos by Josh Polson jpolson@greeleytribune.com
eventually, folks just told Dennis and I to sit in a room and figure things out,” White said. They did, and although they certainly “didn’t agree on everything,” what resulted was an updated version of “surface damage agreements,” to be used when oil and gas operations created negative economic impacts for farmers and ranchers, as well as new suggestions for spacing and positioning of drilling operations. A number of bills passed during those years to help address the issues. Bill Jerke, like Hoshiko, still farms in Weld County and has oil and gas operations on his ground. He, too, was around in the 1980s and 1990s to see just how combative the relationship between oil and gas and agriculture use to be, and how much it’s improved since. “It’s truly amazing,” said Jerke, who recently helped found FUEL Colorado, an alliance of Weld County civic and business leaders aimed at increasing the public’s understanding of the natural resource industries, including oil and gas and agriculture. In addition to being an impacted farmer, Jerke was a member of the Colorado House of Representatives from 1989-96, sponsoring a number of the bills that Hoshiko and his fellow farmers supported. “Bruce didn’t always agree with everything Dennis and I were supporting, but we also found some common ground, and those conversations truly helped pave the way for how great the relationship is now between oil and gas and agriculture,” Jerke said. “I have no doubts about that.” 36 ENERGY PIPELINE JUNE 2015
JOINING SIDES While legislation in the 1980s and 1990s was aimed at resolving differences between oil and gas and agriculture, the two industries often find themselves on the same side of many political issues today. Rather than being positioned against agriculture, the oil and gas industry finds itself now doing battle more so with the Front Range’s rapidly growing municipalities, as well as environmental groups. Often coming to their support are agriculture groups around the state, including the largest, the Colorado Farm Bureau, which has been among the most vocal on the side of oil and gas in some of the most highly publicized battles recently, such as setback proposals aimed at requiring drilling sites to be further away from buildings and structures. This year, agricultural groups also were quick to put their support behind Senate Bill 93, which proposed that whenever a local government implements bans on drilling or rules and regulations that reduce the value of the owner’s mineral interest, the impacted mineral owners would obtain compensation from the local
government. That bill, however, was killed. “What oil and gas and ag did back then could certainly serve an example to municipalities of how to work together today,” said Weld County Commissioner Sean Conway, who, too, has witnessed for decades how oil and gas and agriculture have functioned alongside one another in Colorado. “There were certainly lessons learned then that are applicable today.”
TECHNOLOGY, DOLLARS AND ATTITUDE While considered extremely impactful, legislation and conversations that took place decades ago only tell part of the story. Technology, too, has been a major factor in more recent years toward improving relationships between oil and gas and farmers and ranchers, greatly reducing the footprint of drilling operations. In the days of vertical drilling, more well sites were needed to get at the shale formations that stretched for miles below the earth’s surface. But today, horizontal drilling
“Bruce didn’t always agree with everything Dennis and I were supporting, but we also found some common ground, and those conversations truly helped pave the way for how great the relationship is now between oil and gas and agriculture.” BILL JERKE, Weld County farmer
allows one drill site to stretch out underground for miles, with those drilling sites also sitting in the corner of fields rather than being put smackdab in the middle, where they once disrupted the most valuable soil. Economics, too, plays a big part. The same technology that has made drilling more precise and less invasive also has made it more profitable for drillers, which then increases the royalties to the land owners and also makes it easier for the driller to compensate the farmer or rancher for any disruptions to their ag production. Those improved economics have also stretched far into the local communities and schools via job creation and taxes. And there’s also what many describe as just a simple change in attitude. “People still in business today realize that maintaining this relationship is a critical piece of doing business in Weld County,” said Alex Hohmann, the stakeholder relations manager with Anadarko Petroleum Corp. “And those who haven’t realized it are the ones who probably aren’t in business anymore, or won’t be in business much longer.” As part of harnessing their relationships with agriculture, oil and gas companies also have made their presence known at community events. At this past summer’s Weld County Fair Junior Livestock Sale, Anadarko paid $18,500 to the youth who raised the grand champion beef winner, $15,000 to the swine winner, and spent thousands more on other rural youth who raised winning livestock, helping the event raise nearly $800,000, shattering the previous record for the sale.
STILL ROOM FOR IMPROVEMENT White - whose once-Conquest Oil is now called NGL Energy Partners, and who also was a pioneer in deepinjection wells to deal with wastewater from oil and gas operations - realizes there’s still room for improvement. As does Hoshiko. It was just last year that one of Hoshiko’s fields suffered tens of thousands of dollars in crop losses when storm water runoff from a drilling site on a neighboring field flooded his crop. Because he documented the incident and his losses in detail, he said he was fairly compensated by the oil and gas company that caused the flooding. However, rather than receiving compensation, he said he’d just assume produce the crop and make good on the contracts he has with the buyers of his products. “Oil and gas companies truly have improved in working with land owners and the farmers and ranchers where they’re operating, but where the improvement is needed now is with the adjacent landowners,” Hoshiko said. Others near oil and gas operations have made noise about certain issues in recent years, such as additional dust coming from oil and gas operations, which they say poses a health hazard to livestock, and a safety hazard to drivers along the unpaved roads. But even the most vocal farmers and ranchers on these issues today say they believe the solution won’t come about pitting one industry against another
- it’ll come from working together to ensure that both industries can thrive.
PASSING THE TORCH Ty Walter, too, sees some room for improvement. A recent college graduate who’s working back on his family’s ranch near Hudson, Walter has pretty basic reasons for being a supporter of drilling. “I like always being able to fill my truck up with diesel when I need to, and heating my home in the winter,” Walter said. “We need energy, so it makes sense that we would need to be involved on our end. “I think a lot of young people in ag see it that way and are willing to cooperate.” Walter said there are a number of wells on the land he and his family work on, and that being the case, there have certainly been some issues - pastures near drilling sites that will take years to recover, and late nights after drillers left a livestock gate open. “It just depends on who you’re working with,” said Walter, who in addition to being the next in line to run Walter Angus, also serves on the board of the Colorado Angus Association - the youngest to ever do so. “It’s gotten better overall, it seems, but there are still companies that don’t put as much of a priority on relationships with farmers and ranchers as others. “I have a lot of respect for those who are responsible for making the progress we’ve seen over the years. Now I suppose it’s up to me and others my age to keep things moving in the right direction.” JUNE 2015 ENERGY PIPELINE 37
HANDS-ON TRAINING Noble Energy’s outdoor training facility brings industry to community’s fingertips BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
OPPOSITE PAGE TOP: Mike Stewart, training manager at the Noble headquarters in Greeley, stands inside the unique training facility. The facility helps to teach new employees how to handle a variety of situations and maintain different equipment in the field. OPPOSITE PAGE BOTTOM: Zach Huston, field training specialist, stands near one of the training platforms at the Noble training facility in Greeley. The facility operates off of air pressure to eliminate some of the danger for employees in training but to simulate the real thing. NEXT PAGE LEFT: Zach Huston, Field Training Specialist, explains the flow of some of the equipment at the Noble training facility in Greeley. NEXT PAGE MIDDLE: Mike Stewart, training manager at the Noble Energy headquarters in Greeley, flips through a checklist created as it sits next to a flight checklist that served as inspiration for the Noble checklist booklet. NEXT PAGE RIGHT: Mike Stewart, training manager at Noble Energy, explains some of the equipment that students and employees work on in the shop at the Noble Training Center in Greeley. Photos by Josh Polson jpolson@greeleytribune.com
noble energy’s new training center is idled for the time being. At least until the babes have flown the nest. A mother robin has made the hammer of the company’s pump jack her place to nest for the season, and Noble Energy’s Mike Stewart and Zach Huston aren’t about to disturb the expecting mama, even for the educational tours they send through regularly. It’s part of the company’s mantra of “do no harm.” “We have a safety culture in Noble, that’s do no harm - to communities, or environments, or birds,” said Mike Stewart, Noble’s training manager of the bird nesting in the pump jack. “In the spirit of do no harm, that robin, we’ll let her have her babies ... the pumping unit won’t work” until that time. Under a steel canopy on the east side of its massive headquarters in west Greeley sits myriad structures that belong in an oil and gas production facility, from the pump jack to separators and volatile organic compound (VOC) incinerators and tank batteries, Noble has created a learning space not only for employees, but the community. “We leverage science and technology so much more today than we did in the past, there is a requirement to provide some education and training for our workforce as they come on board,” said Noble’s Training Manager Mike Stewart. The outdoor production simulator stands as a shining example of what the global company does in the field. All the equipment is donated by Noble’s vendors, with cutouts to show the
inner workings - one even shows the thickness of the pipes that go into a well to illustrate to people how protected the ground really is from the drilling process. A short walk into the building, is the indoor training lab, where Noble employees are put to their respective testing on equipment, company processes, even safety. Gone are the days of the ride-alongs and having to learn the ropes by repetition. “A lot of training was with on-the-job training,” Stewart said. “It’s typical of the industry. You arrive in a company, just like anyone else, you get a computer, you get the keys to a truck, go meet their foreman or lead and the lead runs them through the field in a ride-along. “I really give credit to the company for having vision to say that going forward, that’s not satisfactory, and we need to do something different.” The training lab was the brainchild of Dan Kelly, who recently retired from Noble as the vice president of Rockies operations. It was completed in November 2014, at the tail end of the company’s last expansion. The training incorporates safety first, and company processes, and working on the latest technology, which changes all the time. “The whole program is a game changer,” Stewart said. “The yard is awesome and gives us to leverage tools in a safe, effective way. This is what changes the industry. The tribal knowledge in the past, we’re doing away with that. “This all allows us to change that culture” of learning on the job, Stewart said. “To have a regimented, rigorous, professional training cadre in or like this, that has skill sets and capability and subject matter expertise to carry someone from knowing nothing to being safe, success and productive operator, this is watershed for a business this size.” All new employees go through training in the lab and in the production yard. All employees in the field walk away with a field manual that explains everything they’ve been taught - something they can have at their fingertips at all times. There are constant upgrades and advances that keep new training essential. The point is process. Noble officials want their employees to follow all guidelines to guarantee they all adhere to safety rules and JUNE 2015 ENERGY PIPELINE 39
procedures, state law in regard to emissions and other environmental controls, and have a clear, consistent message on how everything is supposed to be done, from the smallest of protocols. That keeps Stewart and his team rather busy, especially when bringing on new lease operators. “We brought on board 70 lease operators in August 2013, and we were able to bring in many completely inexperienced, in very short time, have them operating in capacity in past I think would have taken a coupe of years,” Stewart said. Added Huston: “There are some things that only come with time and experience, and we can bridge that gap of understanding the fundamentals of oil and gas production.” There are still some portions that are being worked on, but once complete, the production simulator will be fully automated to show tours and trainees how the processes work. The equipment works on air pressure in the training yard to simulate the pressures that put their field equipment throughout the paces daily. “We can demonstrate the (company’s) capacity to control wells remotely, and lease operators can see it happening, which is incredible reinforcement tool,” Stewart said. “I’m going to keyboard something in and that motor valve is going to close, and they see it. It’s building trust. They know what happens when we push the buttons.” Huston added: “Our community role is a growing opportunity. We started with the Greeley Fire Department and we also will bring volunteer firefighters through the summer and fall. We’re partnexring with (Greeley-Evans School District 6).” The Greeley Fire Department went through the tour, to get firefighters up to speed on how to deal with equipment in emergency situations, and more firefighter 40 ENERGY PIPELINE JUNE 2015
ALL NEW EMPLOYEES GO THROUGH TRAINING IN THE LAB AND IN THE PRODUCTION YARD. ALL EMPLOYEES IN THE FIELD WALK AWAY WITH A FIELD MANUAL THAT EXPLAINS EVERYTHING THEY’VE BEEN TAUGHT. training is scheduled this summer. Emergency training brings first responders into controlled environments to prepare for the worst. Firefighters from New Raymer, for example, simulated a medical emergency on the oil and gas location recently, in which their own personal safety was at risk. They learned the physical make-up of a production site and the potential hazards they could face on sites, topics on which firefighters do not receive a lot of training. “We’ve been doing some cross training with dispatch teams, helping them understand what kind of questions to be asking if a citizen calls” about a problem on site, Huston said. “Not only where is it, but how do we get to the location? There’s a big difference between a fire in farmer’s field, vs. you head out on 39 and head south. “It was really encouraging. Everyone who came through the course, we gave them a resource, we gave them a participant’s guide with information about type of equipment,
processes and hazards.” A school tour also is in the offing to offer curriculum in science and technology to give students another career option. “This fall, we’ll work with teachers to develop training for their students,” Huston said. “They’ll come to this lab and yard, and do oil field awareness. It’s so they can think about potential careers in the future.” Recently, Noble opened the outdoor training simulator to business leaders throughout the community - the first big open house in at least a couple of years. “They were thoughtful and gracious, but so blooming impressed with what they saw, and helping them understand what it is we’re doing. Seeing that wellhead, that speaks so much,” Stewart said of the light bulbs he sees when people can touch and feel the equipment and learn about their functions. “Understanding the engineering and science, and the care we take ... you can’t make that up.” The indoor and outdoor training labs together are seen as game changers in the industry, Stewart said. Whether it’s oncea-month training, new technology or the all important safety aspects of the job, they don’t skimp on their messages. Now that the oil and gas industry has experienced a downturn, they can use that time to catch employees up on the latest and greatest, help the non-technical employees understand the work that goes on in the field, and the keep everyone on the same page on safety. Stewart and his team will soon begin Oil and Gas 101, to do just that. “Our target audience is anyone from the Greeley office, or in Denver - people who may work in legal, but who are curious about what production looks like in the field,” Huston said. “It’s a unique opportunity to help people understand the big picture, and it adds value to what they already do.”
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NEW HORIZONS Energy Pipeline magazine will expand coverage into other energy sources next month BY RANDY BANGERT • RBANGERT@ENERGYPIPELINE.COM
when we first launched Energy Pipeline
magazine in September 2013, we wrote about the everyday evidence of the booming oil and gas industry in northern Colorado - new jobs, increased taxes flowing into county coffers, sprouting oilfield support businesses, jam-packed hotel parking lots, and increased traffic on county roads and highways. Although the industry has slowed down a bit since our magazine launch - thanks to a nearly 50 percent decline in crude oil prices - it would be a mistake to say it has slowed to a crawl. Much of the evidence in 2013 still exists today; it’s just a little less obvious and you might have to look a little harder to find it. But there’s no question that the oil and gas industry has had, and continues to have, a major impact on an economic revival in northern Colorado that is the envy of many communities around the nation. The thirst for knowledge about the oil and gas industry continues strong among Energy Pipeline readers. After our inaugural 32-page edition, Energy Pipeline has grown to a consistent 64 or 72 pages every month, with cover-to-cover stories, photos and advertising to help readers understand what is happening in the oilfields and how it affects our communities. What has become more obvious to us in recent months is a curiosity and thirst for information on all forms of energy development — not only oil and gas, but also wind, sun, hydroelectric and coal. With that in mind, beginning next month we will include stories in Energy Pipeline about the other sources of energy in our world today. The biggest focus will remain on oil and gas, but most northern Colorado residents also know that other forms of energy production are prominent in our midst, and they also are important economic drivers in the state. 42 ENERGY PIPELINE JUNE 2015
WHAT HAS BECOME MORE OBVIOUS TO US IN RECENT MONTHS IS A CURIOSITY AND THIRST FOR INFORMATION ON ALL FORMS OF ENERGY DEVELOPMENT Solar panels continue to grow on rooftops in northern Colorado. A day trip to northeastern Weld County produces an easy view energyproducing windmills on the horizon. Vestas and other support companies provide hundreds of jobs in Weld County. Coal trains continue to pass through northern Colorado from Wyoming to drop their load at power plants in the region, and many say water that flows through northern Colorado has much more potential to produce power in our region. In many ways, northern Colorado is at the epicenter of all kinds of power production throughout the world - both the traditional fossil fuels as well as “green” energy that is growing as an economic force throughout the world. We think our monthly Energy Pipeline magazine should capture all energy production in the Rocky Mountain region, and we hope you enjoy our expanded coverage in the coming months. Feel free to suggest stories for the magazine by reaching out to managing editor Sharon Dunn, at sdunn@energypipeline.com, or editor Randy Bangert at rbangert@energypipeline.com.
RANDY BANGERT is editor of The Greeley Tribune and Energy Pipeline magazine, and he also has editorial content oversight of sister publications Windsor Now and The Fence Post. He can be reached by phone at (970) 392-4435.
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COMPANIES HANDS ARE GETTING TIED Energy rich U.S. states move to quash local limits on drilling BY EMILY SCHMALL • ASSOCIATED PRESS
mansfield, texas
a massive expansion in drilling that pushed the United States - Lawmakers in Texas and energy producing to the number one oil and gas producer in the world. Cities states across the nation are rushing to stop local communities responded to environmental and health concerns by passing from imposing limits on oil and gas drilling despite growing restrictions. Now, state lawmakers are stepping in to shut down public concern about the health and environmental toll of such the groundswell of local activism in order to keep the energy activities in urban areas. expansion rolling. The slump in oil prices that has led to job losses in the oil “It had gotten to the point where various municipalities patch has only added to the urgency of squelching local drilling have been writing extremely detailed and onerous ordinances, bans and other restrictions the industry views as onerous. making it difficult The number of jobs for companies to nationwide in the operate,” said Ed sector that includes Ireland, head of the energy production Barnett Shale Energy has fallen 3.5 percent Education Council, since December, and whi ch advocates for Texas alone lost developing the rich about 25,000 jobs in deposit in Texas. March, according to About 60 federal data. municipalities in Texas A half dozen states - the nation’s biggest - Texas, Oklahoma, oil and gas producing Ohio, Pennsylvania, state - have some form Colorado and New ED IRELAND, head of the Barnett Shale Energy Education Council, of ordinance on the Mexico - have imposed which advocates for developing the rich deposit in Texas books limiting drilling or grappled with the or fracking, according issue of putting limits to the Texas Municipal League. Dallas does not permit drilling on local municipalities’ ability to regulate drilling or hydraulic closer than 1,500 feet of homes, schools or churches. Suburban fracturing, a practice of blasting huge volumes of water and chemicals Southlake bans drilling during the dry summer months. Mansfield underground to release ti ght deposits of oil and gas. And two of the doesn’t allow drilling on Sundays or holidays. biggest energy producers in the nation, Texas and Oklahoma, are In Mansfield, a wealthy suburb about 30 miles southeast of Dallas, poised to ban cities and towns enacting any ordinances considered Tamara Bounds said the loud whir of fracking a few hundred feet unreasonable to energy exploration, including limits on fracking, from her backyard kept her awake at night for nine months. water disposal, well maintenance and other activities. “I couldn’t sleep. I had to barricade my windows with The backlash against local bans represents the third phase mattresses,” said Bounds, who is running for the city council on a of the U.S. shale boom. In the last decade, fracking spawned
“It had gotten to the point where various municipalities have been writing extremely detailed and onerous ordinances, making it difficult for companies to operate.”
44 ENERGY PIPELINE JUNE 2015
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DETAILS OF THE DEBATE IN U.S. STATES ON OIL DRILLING, FRACKING Clashes are growing between cities and states across America over oil and gas drilling and hydraulic fracturing, the practice of high pressure injections of water, sand and chemicals underground to free deposits of oil and gas. Energy-rich states are rushing to quash some of the local activism. Following is a summary of state debates. In Texas, which leads the nation in oil and natural gas production, a measure to limit local regulations to those deemed “commercially reasonable” has passed the Legislature and is expected to be signed into law by Republican Gov. Greg Abbott. Cities would be allowed to regulate surface activities such as noise, lights and traffic but not drilling itself. No less than 11 bills have been introduced to the Texas Legislature this session to put limits on local control. The Oklahoma House approved a wide-reaching bill last month that prohibits cities and towns from banning oil and natural gas drilling, or implementing re strictions that are not “reasonable.” On the other side of the issue, New York state banned fracking statewide in December. In Pennsylvania, after fracking in the Marcellus Shale deposit began booming in 2008, the Legislature imposed a 2012 law restricting the ability of
46 ENERGY PIPELINE JUNE 2015
municipalities to dictate the location of drilling activity. The law was struck down by the state Supreme Court last year. After some Ohio cities passed municipal bans, that state’s Supreme Court recently ruled the opposite, finding that the state had exclusive authority over all aspects of oil and natural gas drilling, including fracking. Colorado state law prohibits local ordinances that ban energy exploration such as fracking, but some towns have imposed them anyway, sparking lawsuits. Fracking opponents last year attempted to put a measure on the election ballot stating that cities and counties could impose limits. The state’s Democratic governor got the opponents to drop the measures with the promise of a task force to look at the question. When New Mexico’s Mora County imposed a ban on oil and gas development that was eventually struck down in federal court, state lawmakers responded with four bills designed to prevent future bans - though none passed. The Republican-controlled Michigan Senate rejected two bills from suburban Detroit lawmakers that would have empowered local governments to limit oil and natural gas drilling. - The Associated Press
platform that includes tighter control of oil and gas activities. Hundreds of natural gas wells dot the hilly landscape, and pipelines snake behind housing cul-de-sacs. A 16-well pad site and com pressor station hums behind the city’s performing arts center. Mayor David Cook is an example of the fine line some public officials try to walk in Texas between protecting their communities and supporting the oil and gas industry. He backs the natural gas drilling in the area but opposes efforts by the state Legislature to prohibit communities from setting some rules. “Instead of a balancing act, it’s a Texas two-step. Health and safety come first. After that, you do everything you can do to develop the economy of the state of Texas,” Cook said. Drilling is forging ahead in energy rich states despite growing evidence that the practices are effecting the environment. In Oklahoma, the state’s geological survey conceded last month it was “very likely” that recent seismic activity was caused by the injection of wastewater from drilling into disposal wells.
IN OKLAHOMA, THE STATE’S GEOLOGICAL SURVEY CONCEDED LAST MONTH IT WAS “VERY LIKELY” THAT RECENT SEISMIC ACTIVITY WAS CAUSED BY THE INJECTION OF WASTEWATER FROM DRILLING INTO DISPOSAL WELLS Earthquake activity in 2013 was 70 times greater than it was before 2008, Oklahoma geologists reported. Even so, the Oklahoma House approved a wide-reaching bill last month that prohibits cities and towns from banning oil and natural gas drilling, or implementing restrictions that are not “reasonable.” When a single Texas community, the university town of Denton near Dallas, voted last fall to impose a ban on fracking within its boundaries, lawmakers in the Republicancontrolled Texas Legislature sprang into action to ensure others wouldn’t follow suit.
“Instead of a balancing act, it’s a Texas two-step. Health and safety come first. After that, you do everything you can do to develop the economy of the state of Texas.” DAVID COOK, mayor of Mansfield, Texas
There are no fewer than 11 Texas bills designed to ban future local limits on energy production. The state’s energy industry lobbied heavily to ensure passage of the Texas legislation, which allows communities to have a say in things above the surface of the ground such as noise, lighting and traffic. But the bill says any local limits have to be “commercially reasonable,” a test that critics contend will allow drillers to do pretty much what they want. The bill sailed through the Texas Legislature and is n ow headed to Republican Gov. Greg Abbott, who is expected to sign it into law. In Mansfield, the looming law is throwing into doubt an ordinance passed in March that includes notifying potential
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home buyers if a gas well has been permitted within 300 feet of their property. “It could be months of work down the tube,” said Cook, the mayor. Texas politics have for decades been awash in oil money. Drilling operations contributed more than $12 billion to state coffers in 2013, accounting for about 4.5 percent of the budget. Oil and gas industry donors contributed about $400 million to 2014 campaigns. “Our government in Texas is owned by the oil and gas industry,” said Sharon Wilson, a Gulf regional organizer for the environmental group Earthworks. The 11 bills in the Legislature “are meant to show Texans who’s in charge,” she said.
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SETTLEMENT HITS THE POCKETS OF NOBLE ENERGY Noble Energy to pay fine, upgrade equipment following EPA investigation BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
of the Clean Air Act was announced one of weld county and Colorado’s A Department of Justice release stated in May, whereby the Environmental that Colorado will receive almost $1.5 top drillers will pay one of the heftiest Protection Agency stated the company million of that civil penalty. fines ever levied at the state level for air agreed to spend roughly $60 million quality violations detected three years “This is a significant penalty and in the next four years to upgrade its one of the largest the state has ever ago as part of a settlement that could systems to reduce emissions coming imposed,” said Will Allison, director of be held up as an industry standard for the state’s Air Quality oil and gas storage Control Division of operations. the Department of Noble Energy, one of Public Health and the top two drillers in Environment. “It does Weld County and one of send a message that we the leaders in helping take compliance very form the state’s strict seriously and we are very new methane emissions focused on reducing regulations last spring, emissions particularly, agreed to pay a $4.95 VOC emissions, with million fine, plus spend our ongoing ozone another $8.5 million challenges. on environmental “I think we’re hopeful mitigations to combat WILL ALLISON, director of Colorado’s Air Quality Control Division other companies will the rampant VOC
“I think we’re hopeful other companies will look at some of the design issues that may exist in the field and make any needed fixes to ensure compliance.”
emissions throughout Colorado. Drilling in the Denver-Julesburg Basin, a massive drilling are that encompasses all of Weld County, is seen as responsible for 54 percent of the state’s output of volatile organic compounds, which help create dangerous ozone levels. A settlement agreement to a federal and state investigation into the violations 48 ENERGY PIPELINE JUNE 2015
from older equipment in the field. That’s a number Noble officials dispute, however. The company did agree to pay an additional to $4.5 million to fund environmental mitigation projects, $4 million on supplemental environmental projects and pay a $4.95 million civil penalty.
look at some of the design issues that may exist in the field and make any needed fixes to ensure compliance.” The news came in separate announcements from the U.S. Department of Justice, the U.S. Environmental Protection Agency and the Colorado Department of Public Health and Environment.
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“We’ve known for years now that the oil and gas sector is responsible for over half of the ozone (in the state). We’ve been on notice this is a problem. It behooves us to get the strongest uniform regulations in place so we can hold all companies accountable.” CHRISTINA RAMIREZ, public affairs and corporation communications, Anadarko Petroleum Corp.
According to a release from the state health department, in 2012, state and federal inspectors found noncompliance with the Colorado Air Quality Control Commission’s Regulation No. 7 at select Noble facilities in the region. They cited violations related to excess emissions of VOCs due to over-pressurization and venting from some storage tanks, a release stated. The company elected to review all 3,400 of its tanks in the field as a part of the settlement. Noble, however, wasn’t unique in its equipment issues. Allison said many companies had the same equipment. The problem, however, was that the storage tanks essentially weren’t designed for the pressures and volumes that came after the shale rush that began in 2010. Oil that normally would have slowly been pumped into storage through vertical wells was replaced by the fast pace of horizontal drilling and hydraulic fracturing, which yielded in many cases 10 times the amount of product. Allison said Noble’s storage was looked at, perhaps, because it was so prevalent in the area. Allison said the investigation into those wells, which truly began in 2013 with infrared cameras, indicated to officials new rules needed to be implemented on methane emissions for the oil industry. That happened last spring. The new rules were expected to reduce Colorado’s VOC emissions by 92,000 tons a year, or by 24 percent of the state’s estimated tonnage output annually from all sources.
50 ENERGY PIPELINE JUNE 2015
Noble executives were a part of the group that ironed out strict new state emissions regulations last year, but nothing was said about an EPA and state investigation into Noble.
THE PROBLEM, HOWEVER, WAS THAT THE STORAGE TANKS ESSENTIALLY WEREN’T DESIGNED FOR THE PRESSURES AND VOLUMES THAT CAME AFTER THE SHALE RUSH THAT BEGAN IN 2010. Dan Grossman, regional director for the Environmental Defense Fund, who served on the group to form those regulations, said the news of Noble’s violation was surprising to him, but it affirmed the need for the state’s new rules. “Had the (new rules) been in place in 2012, then a lot of these violations
subject to the consent agreement would have been avoided,” Grossman said. “In that respect, I think it’s further evidence that the rules that were accepted in 2014 are important. And they apply to all operators. “We’ve known for years now that the oil and gas sector is responsible for over half of the ozone (in the state). We’ve been on notice this is a problem. It behooves us to get the strongest uniform regulations in place so we can hold all companies accountable.” Allison said that Noble complied with the investigation and helped craft regulations that not only restrict others’ operations but their own. “A formal request for information was submitted in summer 2013, and it took a long time for federal regulators to review and for Noble to gather. As we got more information, settlement talks progressed,” Allison said. “Noble was very responsible and thoughtful, and we’re hopeful in fact that some of the issues they’ve identified and some of the potential fixes they identify will benefit not only them but other operators in the industry.” As part of the settlement, Noble has agreed to evaluate vapor control system designs, significantly reduce VOC emissions, and provide reports to the public, according to a release by the EPA. Said Gary Willingham, Noble Energy executive vice president of operations, “By working together with the federal government and the state of Colorado to
reduce emissions, we are doing the right thing.” “We’re implementing a serious action plan through which we will evaluate tank batteries throughout our DJ Basin operations, remove the tank batteries that should be removed, improve others and implement enhanced environmental strategies.” Grossman said he knows Noble to be a strong proponent of environmental work within its own walls. “Noble is a large company with a lot of resources that are spent on environmental services and they have a decent track record,” Grossman said. “But I was also pleased to see that a good portion of resolution will be devoted to upgrading their emission-reducing strategies in the field.” In accordance with the agreement’s schedule, Noble Energy will spend the next four years evaluating, monitoring,
verifying, and reporting on the design, operation and maintenance of certain aspects of its storage tank systems, the EPA release stated. Noble spokesman Steven Silvers said the cost of such system upgrades “are not expected to be material for our operations in the DJ Basin.” Mitigation measures include retrofitting engines to run on natural gas, upgrading control systems for transferring oil and other liquids from storage tanks to tanker trucks, and supporting scientific research on sampling and analytical methods for managing pressurized liquids, the EPA release stated. Noble Energy also will provide funding for Front Range air quality programs, including incentives for the change out of wood-burning stoves and gasolinepowered lawn mowers, the EPA release stated.
PUBLIC COMMENT A notice of the agreement between Noble Energy, EPA, DOJ and the state of Colorado has been filed with the U.S. District Court in Denver. The consent decree will be published in the Federal Register and subject to public comment for 30 days. For more on this settlement, go to the EPA’s website.
www.epa.gov
JUNE 2015 ENERGY PIPELINE 51
News Briefs Anadarko names Hollek as executive vice president Anadarko Petroleum Corp.’s Board of Directors has named Darrell Hollek as executive vice president of U.S. onshore exploration and production, effective immediately to replaced the retiring Charles Meloy, who leaves this month. “Darrell is widely recognized as a respected leader both within Anadarko and throughout the industry,” said Al Walker, Anadarko chairman, president and CEO in a news release. “Darrell’s extensive industry knowledge and leadership skills will be of great benefit to the executive committee as we continue to move our industry-leading U.S. onshore program forward.”
PDC Energy makes donation to Ault museum project Representatives of PDC Energy presented a check for $2,500 to the board of directors of the Ault Area Historical Museum (AAHM) at their meeting in April. The donation will assist the efforts to rehabilitate the historic 1907 Pump House in Ault to an area museum.
“We are incredibly thankful for Chuck’s vision, his passion, and his unwavering focus on our mission, and we congratulate him on his retirement,” said Walker in the release. “The phenomenal growth and enhanced capital efficiency of Anadarko’s U.S. onshore operations over the past nine years have largely occurred under Chuck’s leadership of the teams that have built a deep portfolio and a strong foundation for continued success.”
The AAHM has been awarded two grants from the State Historical Fund (SHF), one to do a structural assessment of the pump house and another to produce construction documents to rehabilitate the pump house. A third grant application was submitted in April 1, 2014 to finish the drawings and do the first phase of the construction. That grant was awarded on Aug. 1, 2014, for a total of $182,291.00. The SHF requires that the applicant organization provides 25 percent of the grant as a cash match. Due to the generosity of the Ault community including, families, clubs, businesses, organizations and former residents the required $45,573 was raised to create this community asset.
Hollek has 35 years of experience in the oil and natural gas industry. He began his career with the company in 1980 and most recently served as senior vice president of Deepwater Americas Operations. He holds a Bachelor of Science in mechanical engineering from Texas A&M University. He is a member of the American Petroleum Institute and the Society of Petroleum Engineers, and also serves on the board of The Offshore Energy Center and the National Ocean Industries Association and on the CEO Council for the Gulf of Mexico Foundation.
The next steps are to sign contracts with the SHF and the architect, finalize the construction documents, bid the project and then select a contractor. The first phase of the project will be to refurbish the exterior brick, windows, and doors, do the needed interior demolition, install underground utilities and install a new floor. Construction activities should begin prior to the end of 2015.
- Staff Reports
- Staff Reports
Hollek joins Bob Daniels, executive vice president of international and deepwater exploration; Jim Kleckner, executive vice president of international and deepwater operations; Bob Gwin, executive vice president, finance and CFO; Bobby Reeves, executive vice president, general counsel and chief administrative officer; and Meloy on Anadarko’s Executive Committee, reporting to Walker.
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COGA names new director after five-month search DENVER -- After a five-month search involving dozens of candidates, the Colorado Oil & Gas Association, the state’s largest industry trade association, proudly announced Dan Haley as its new president and CEO. Haley comes to COGA from EIS Solutions where he is vice president of Communications, Development and Strategy. “I’m honored to represent this industry that’s been a rich part of our Colorado heritage and is an important part of our future,” Haley said. “This is a challenging time for the industry, which makes it more important than ever that we engage fully with impacted communities to find common ground, while also working to protect all of the benefits the industry brings to our state and country. I’m excited to promote such a vibrant, innovative and critical industry and its incredible employees.” Haley spent more than 20 years in daily journalism working for newspapers across the West, including 13 years at the Denver Post, where he served as editorial page editor. Prior to joining EIS Solutions, where he also worked as consultant to COGA, Haley was the director of corporate communications for CoBank, a $107 billion bank headquartered in Denver. He started the job June 1. Haley will succeed Tisha Schuller, who announced she will be departing at the end of May after five successful years at the helm of COGA. “It’s hard to pass the baton for leading an organization that I care so much about, but Dan is the right person for the job,” Schuller said. “He’s got the strategic vision, grace under pressure, and willingness to adapt that this job requires. I’m committed to supporting his success in whatever way I can.”
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Alan Harrison, chairman of COGA’s Board of Directors, said Haley “has established strong connections and meaningful credibility with a broad range of stakeholders across Colorado.” “He has proven that he can engage in controversy with patience and integrity, moving toward meaningful solutions,”
Harrison added. “I believe Dan can build off of COGA’s success while adapting to whatever new opportunities and challenges lie ahead.” In January, Heidrick and Struggles was retained for the national search for the new CEO; the COGA Board of Directors appointed a diverse selection of COGA executive and advisory board members for the Leadership Selection Committee.
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“I’ve been impressed with Dan’s ability to think strategically and innovatively,” said Bart Brookman, CEO of PDC Energy and Chair of COGA’s Leadership Selection Committee in the release. “Colorado’s oil and gas industry requires a leader who can engage in complex, changing issues with intelligence and compassion. Dan is just such a leader and I look forward to working with him in his new role.” Over the past five years, COGA has expanded its mission from a focus on state regulations and the General Assembly to broad programmatic engagement that includes community and local government outreach and diverse education efforts. The association helped local governments craft agreements with operators that gave cities and counties a greater voice in the oil and gas development process. These efforts have been a model for outreach and education to build support for other organizations in Colorado and the United States. When three Colorado cities voted to ban oil and gas development in 2013, COGA filed lawsuits that eventually overturned each ban. COGA has been and will continue to be the champion for the industry, one of the economic engine’s for the state. “We will continue to build upon COGA’s many successes, continue to reach out to Coloradans across the state and, when necessary, fight for an industry that’s so important to Colorado,” Haley said. Prior to joining EIS, he was director of corporate communications for CoBank, a $107 billion bank headquartered in Denver. His team was responsible for all of the internal and external communications functions for the bank, along with marketing, advertising, social media and corporate social responsibility. - Staff Reports
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“The cost per foot among shale wells has declined over 43 percent since 2009, and that drive toward efficiency is helping U.S. energy production to stay competitive in a difficult market,” said Arafa in the release. “Strong domestic production means savings for consumers, greater energy security, and more economic opportunities for workers here in the U.S.” - Staff Reports
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Energy Pipeline is a monthly magazine dedicated to covering the rapidly expanding oil and gas industry in Northern Colorado and surrounding states. Energy Pipeline focuses on the business aspects of this industry, as well as the many people who make it all work. Stay up to date on the latest news on growth and expansion as companies continue to work to make the most of the rich oilfields in this region. Learn about the new trends and discoveries. Read about the key players in this industry and what they have to say about future prospects.
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MAKING HOLE A look back at the origins of oil and gas BY BRUCE WELLS • AMERICAN OIL & GAS HISTORICAL SOCIETY
Shooters, a fracking history modern hydraulic fracturing technologies
can trace their roots to a Civil War veteran who in 1865 received the first of many patents for an “exploding torpedo to fracture oil-bearing formations and increase oil production.” Col. Edward A.L. Roberts patented what became known as the “Roberts Torpedo” - an example of early “fracking” technology for oil and natural gas production. Prior to his invention, many early wells in Pennsylvania, New York and West Virginia produced only small amounts of petroleum, often for a short time. Filled with gunpowder, the first Roberts torpedoes were lowered into wells and ignited by a weight dropped along a suspension wire to percussion caps. Water provided weight to keep the explosive force down in the well. Soon, nitroglycerin replaced gunpowder in most torpedoes. Roberts later reported he conceived his invention after the Civil War battle at Fredericksburg, Va. Amid the chaos of the December 1862 battle, where he led a New Jersey regiment, Roberts saw the results of explosive Confederate artillery rounds plunging into a narrow canal. Cashiered from Union army in 1863, his Virginia battlefield observation gave him an idea that would evolve into what he described as “superincumbent fluid tamping” so oil-bearing sandstones would crack and release oil. Roberts moved to the booming oilfields of
Applied legally or illegally, by 1868 nitroglycerin was preferred to black powder, despite its often fatal tendency to detonate accidentally. Doing it at night for an illegal well “shooting” perhaps led to the term “moonlighting.”
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.
northwestern Pennsylvania. His technique had an immediate impact - production from some oil wells increased 1,200 percent within a week of being shot - and the Roberts Petroleum Torpedo Company flourished. The Titusville Morning Herald newspaper reported: “Our attention has been called to a series of experiments that have been made in the wells of various localities by Col. Roberts, with his newly patented torpedo. The results have in many cases been astonishing. The torpedo, which is an iron case, containing an amount of powder varying JUNE 2015 ENERGY PIPELINE 59
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When Col. Edward A.L. Roberts founded the Roberts Petroleum Torpedo Company in 1865, his many patents soon gave him a monopoly on a key technology for increasing production. The stock certificate today is worth about $300 to collectors.
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from fifteen to twenty pounds, is lowered into the well, down to the spot, as near as can be ascertained, where it is necessary to explode it. It is then exploded by means of a cap on the torpedo, connected with the top of the shell by a wire.” The inventor would spend the rest of his life in court battles protecting his invention, which was a major technological achievement of the young U.S. petroleum industry. With its exclusive patent licenses, the Roberts Petroleum Torpedo Company charged up to $200 per torpedo “shoot” and a one-fifteenth royalty of the increased flow of oil. Seeking to avoid the Roberts Petroleum Torpedo Company fees, some oilmen secretly used unlicensed practitioners who operated at night with their own devices. An angry Roberts hired Pinkerton detectives and lawyers to protect his patent, spending more than $250,000 to stop the unlawful “torpedoists” or “moonlighters.” Col. Edward A.L. Roberts - perhaps responsible for more civil litigation in defense of a patent than anyone in U.S. history - died a wealthy man on March 25, 1881, in Titusville. A simple headstone at Woodlawn Cemetery is marked only by his name and the military rank he held at the Battle of Fredericksburg 19 years earlier. The first commercial use of hydraulic fracturing to stimulate wells came in the late 1940s in Oklahoma. In March 1949, a team of production experts from Halliburton and Stanolind companies converged about 12 miles east of Duncan - and performed the first commercial “fracking” job. The method soon became used in 90 percent of all oil and natural gas wells. Hydraulic fracturing technology was applied nearly 1 million times by the 1980s, when George Mitchell and his Mitchell Energy & Development Corp. began experimenting with hydraulic fracturing in horizontal wells in the Barnett Shale near Fort Worth. His innovation would lead to the ongoing great American shale boom.
JUNE 2015 ENERGY PIPELINE 61
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.....................................................................................568 (58.1%) Garfield............................................................213 (21.8%)
State May 8 April 10 March Avg. Feb. Avg. Colorado 39 ........36 ......... 38................... 49 Louisiana 70 ........67 ......... 85.................107 Oklahoma 102 ......124 ....... 136 ..............162 North Dakota 80 ........88 ......... 100 ..............121 Texas 379 ......427 ....... 492 ..............599 Kansas 10 ........13 ......... 14................... 18 California 13 ........15 ......... 14................... 16 Utah 6 ..........8 ........... 9..................... 12 Alaska 10 ........13 ......... 13................... 10 Ohio 24 ........26 ......... 31................... 37 Pennsylvania 47 ........50 ......... 49................... 54 Source: Baker Hughes Rig Count, May 4
2014 GAS PRODUCTION COUNTY *YTD PRODUCTION (% OF STATE) Garfield......................................598,408,734 (38%) Weld........................................380,855,211 (24.2%) La Plata .....................................324,457,349 (21%) Rio Blanco .................................. 79,777,500 (5.1%) Las Animas ................................ 74,922,690 (4.7%) Mesa ........................................... 33,512,599 (2.2%) State ................................. 1,575,757,774
Rio Blanco.......................................90 (9.2%) La Plata......................27 (2.8%) Larimer......21 (2.2%) Arapahoe..........8
2014 OIL
Adams............. 8
PRODUCTION
Lincoln..........4
COUNTY *YTD
Cheyenne......3 State....................................................976 Source: Colorado Oil and Gas Conservation Commission as of May 4.
US RIG COUNT
The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999. Area May 8 April 10 March 6 *U.S. ..... 905............988 ............... 1,192 Canada... 79..............100 ...................300 Source: Baker Hughes Rig Count.
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Weld ...........80,858,560 (85.5%) Rio Blanco ........4,756,089 (5%) Garfield ..........2,041,644 (2.2%) Lincoln .........1,454,192 (1.54%) Cheyenne.....1,364,291 (1.44%) Moffat..............394,869 (0.42%) Jackson ...........310,967 (0.33%) State......................... 94,602,520 Source: Colorado Oil and Gas Conservation Commission as of May 10; 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 May 10; 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 ENERGY PIPELINE JUNE 2015
PRODUCTION (% OF STATE)
Weld..........................................................................22,351 Garfield .....................................................................10,992 Yuma...........................................................................3,881 LaPlata .......................................................................3,339
Las Animas .................................................................2,990 Rio Blanco ..................................................................2,920 36 others ....................................................................6,971 State .........................................................................53,444
Source: Colorado Oil and Gas Conservation Commission as of May 4.
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