MAY 2015 ENERGY PIPELINE 1
HARD WORK NEVER LOOKED SO GOOD.
First in a full line of Cat vocational trucks, the CT660 redefines heavy-duty power, performance and productivity. You get the payload capacity you need for your applications, the creature comforts that fight driver fatigue, plus the low cost of ownership that protects your bottom line. Its pedigree is proven. Caterpillar leveraged industry-leading technologies, extensive worksite experience and unparalleled commitment to customer support to build you a better vocational vehicle. From moving rock and hauling trash to logging or pouring concrete, the rugged CT660 tackles the toughest jobs and keeps coming back for more. Available in truck or day-cab configurations, custom-built to your specifications and backed by Wagner Power Systems and the Cat Dealer network. The CT660 is more than a new truck on the worksite, it’s a new way to work smarter. Find us on the web
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2 ENERGY PIPELINE MAY 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.
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NYSE : APC
MAY 2015 ENERGY PIPELINE 3
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Features
38
44
DO NOT DISTURB
ROUGH TIMES, SEEKING CASH
By Tracy Hume
By Allison Dyer Bluemel
Nighttime oil and gas operations offer opportunities to be a good neighbor.
ROOT 16 TAKING IN COLORADO
API’s new Colorado office director, Tracee Bentley, discusses her role. By Sharon Dunn
20
SMALL SHOCKWAVES Noble Energy layoffs smaller than anticipated. By Sharon Dunn
24
THE WAR OF COMPLETION
Sliding sleeve or plug-n-perf sway companies in the quest for completion excellence. By David Persons
26 SAFETY MOVEMENT 28 ENERGY PARK
API to train first responders on crude rail safety. By Linda Kane
‘Worthwhile endeavor’ struggling a bit. By Eric Brown
4 ENERGY PIPELINE MAY 2015
Debt pressure pushes oil and gas companies to offer stock to raise capital.
48 N.Y. SECESSION 52 HUGE TINY GOAL 54 BENEFICIAL RESEARCH
ON THE COVER
In N.Y. state, fracking ban fuels secession talk.
Photo provided by Anadarko Pertroleum Corporation
An Associated Press story
Synergy aims high for lowest well costs. By Sharon Dunn
University of Wyoming research facility could benefit Weld County drillers.
Departments 8
Support Company Profile
10
Field Worker Profile
58 GIVING FROM THE HEART
12
Executive Profile
32 TECH TALK 67 MAKING HOLE
60
News Briefs
70
Data Center
By Anne Cumming Rice
56 SPOKEN WORD
Overheard at DUG Bakken-Niobrabra conference in Denver. By Sharon Dunn
Weld County companies help a local family. By Rick Powers
By Gary Beers
By Bruce Wells
Horizon Coatings
Meet Therese DeBenedette, Anadarko Petroleum Corporation
Meet Matt Lepore, Colorado Oil & Gas Conservation Commission
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Garden City, KS MAY 2015 ENERGY PIPELINE 5
PUBLISHER Bart Smith EDITOR Randy Bangert GENERAL MANAGER Bryce Jacobson ACCOUNT/PROJECT MANAGER Bruce Dennis BUSINESS MANAGER Mike Campbell MANAGING EDITOR Sharon Dunn CONTRIBUTING WRITERS Gary Beers Allison Dyer Bluemel Eric Brown Tracy Hume Linda Kane David Persons Anne Cumming Rice 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 May 2015, Volume 2, Issue 9. Published by Greeley Publishing Co., publisher of The Greeley Tribune, Windsor Now, the Fence Post, and Tri-State Livestock News. 6 ENERGY PIPELINE MAY 2015
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MAY 2015 ENERGY PIPELINE 7
SUPPORT COMPANY PROFILE
Horizon Coatings CORPORATE HEADQUARTERS 239 E. 4th Street Ault, CO 970.834.2508
NUMBER OF EMPLOYEES 10
WEBSITE www.horizoncoating.com
SERVICES OFFERED Spray in polyurea secondary containment liners. Our liners are installed onsite and custom-made to your specifications. In addition, we offer sprayed-on pickup bed liners, spray foam insulation, water closets, which are full self-contained, and portable restroom facilities.
8 ENERGY PIPELINE MAY 2015
HOW LONG HAS YOUR BUSINESS BEEN OPERATING IN WELD COUNTY? 4 years.
WHY SHOULD CUSTOMERS DO BUSINESS WITH YOUR COMPANY? Horizon Coatings’ Liner is a great solution for your secondary containment needs. Our polyurea material is extremely durable and flexible with a high tensile strength. It has excellent thermal stability and is resistant to most chemicals; making it one of the strongest liners in the industry.
Spraying Polyurea onto Geotextile produces a seamless liner and an impervious barrier. This process prevents any leaks or ruptures from penetrating the ground, thus diminishing the environmental risk. Our fast-setting and rapidcuring coating allows the containment area to return to service within hours. Polyurea contains no VOCs or toxic vapors, which makes it environmentally friendly. Our product (sprayed onto geotextile) has the ability to form to any substrate with no size limitations, allowing us to customize the
containment area to your specifications. We believe in “Extending The Life of Your Investment.” With our commitment to excellence, we can achieve this by constructing a containment system to last the life of your site.
HOW LONG DO YOU ANTICIPATE BEING IN BUSINESS IN NORTHEAST COLORADO? Northern Colorado is our home! We are a local company committed to being a valuable long term asset to the area.
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IS YOUR COMPANY IN A GROWTH MODE? We have experienced phenomenal growth since the startup, and continue to acquire new, longstanding accounts each year.
WHAT KIND OF SKILLS, EXPERIENCE OR EDUCATION DO YOU LOOK FOR IN EMPLOYEES? We search for hardworking dedicated
employees who are ambitious to learn new skills. We want team members who want to come to work each day to be a valued asset. We value entry level employees with the right mind set and attitude and excited to be a part of our continued growth and to train them in the skills that are necessary to complete our work to our standards.
HORIZON COATINGS For job opportunities, check www.horizoncoatings.com or stop by our office
Secondary Containment Solutions HORIZON COATINGS’ LINER is a great solution for your secondary containment needs.
Our Polyurea & Geotextile material is: • Durable and flexible with a high tensile strength & excellent thermal stability • Resistant to most chemicals • One of the strongest liners in the industry • Produces a seamless liner and an impervious barrier • Prevents any leaks or ruptures diminishing the environmental risk • Fast setting and rapid curing coating allows the containment area to return to service within hours • Environmentally friendly, no VOC’s • Form to any substrate - no size limitations • Customize the containment area to your specifications.
WE BELIEVE IN
“Extending the Life of Your Investment.”
Our commitment to excellence will construct a containment system to last the life of your site. MAY 2015 ENERGY PIPELINE 9
Call today! 970-834-2508 or email mbeauchamp@kbcustomag.com
FIELD WORKER PROFILE
Therese DeBenedette ANADARKO PETROLEUM CORPORATION BY STAFF REPORTS
HOMETOWN Boulder.
WHERE DO YOU LIVE? Arvada.
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? Since August 2013.
HOW DID YOU GET INTO THE INDUSTRY? I was working in aerospace as a software engineer and test engineer and a friend in the industry mentioned that Anadarko was looking to add engineering techs that have a software background to better help data processes. The interview and job posting was right up my alley! 10 ENERGY PIPELINE MAY 2015
WHAT IS YOUR JOB TITLE AND DUTIES?
WHAT IS THE BEST PART OF YOUR JOB?
I am an engineering technologist, which basically means I organize, merge and analyze data and provide tools for engineers, operators and management to better manage the Wattenberg Field. My primary focus is to enhance the efficiency of the team when it comes to gathering and analyzing data and to make the right decisions. In short, I’m a data geek.
I love the excitement from people when I can create something that makes their job easier and saves them time. My favorite thing to do is reduce the team’s labor intensity.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB? There is always a new challenge to solve. Nothing is repetitive and there are so many great ideas of how we can continuously improve and bring our analysis into a new era.
WHAT IS THE HARDEST PART ABOUT YOUR JOB? I’m always surprised at how spread out the data in the industry is because of the diversity of our assets, the tremendous scale of the business, and the breadth of the reach of our operations. As we continuously learn and develop newer facilities and technology, we upgrade equipment, which becomes a new dataset, constantly increasing the data
diversity. In aerospace, we had a single article we worked on, which had tons of data points to analyze, but it was a single type of product, so there was a somewhat finite data set. In oil and natural gas, the data sets change every day and we need to adapt to be efficient.
WHAT DO YOU DO IN YOUR PARE TIME? VOLUNTEERISM, SCHOOL, SPORTS? My entire immediate family lives in close proximity, so we see each other all the time, and we have dinner each month with about 20 people. I’m on the board of directors for a volleyball club for which I used to play, and other than that, I just love enjoying the beauty of Colorado with my husband and my dog.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? I never want to be too far from my data. I want to be a part of teams to work on processes to ‘pre-analyze’ our data: start letting our computers help out our operators by predicting issues with them and for them. With some of the leaps we’ve made in our data tools, we are in a place where we can use more complex methods and algorithms to help us work smarter.
WHAT DOES THE WATTENBERG FIELD AND THE DJ BASIN MEAN TO YOU? Being a Colorado native, the DJ Basin is my home. I never plan to leave Colorado, so this will always be my home.
I know all the important things that northeast Colorado provide to our wonderful state. When I go to farmer’s markets, I buy products from the farmers and ranchers in the DJ Basin, and of course I’m employed and am working in an asset that has plenty to do, even in the current market environment. Needless to say, my home has been a really great provider.
HOW DO YOU FEEL ABOUT THE CURRENT ENVIRONMENTAL DEBATE GOING ON WITH “FRACKING” IN COLORADO? For more reasons than just growing up in Boulder, I was always taught to use what you need, conserve, reuse, recycle and appreciate nature. My parents were always conscious of the environment, and they were both engineers, so they would always look at everything from the mind of an analyst. Very early on, I was taught to always question what you hear and do the research yourself, and always make sure everything is backed up by science and fact. I think we as Coloradans could have a much better discussion if we are always centered on science. I love the advice: ‘everything in moderation’ I truly believe if we all find common ground in everyone’s beliefs that we can continue
to operate safely and provide a product that we collectively use every day. I also think it’s important to remember it’s about more than gasoline prices or alternative fuels. Before coming to the industry, I didn’t realize how many everyday items that are essential to modern life are made from petroleum products, such as plastics, fabrics, medicines and protective clothing. If we, as an industry, continue to listen and more effectively communicate these things, I believe we will be able to have a much more respectful and solutions-focused discussion.
HOW DO YOU FEEL ABOUT THE POLITICS OF THE INDUSTRY AND HOW IT MIGHT AFFECT YOUR FUTURE IN THE INDUSTRY? I am thrilled to be working for a company that is so balanced. Because of the values that are at the core of our company and how strongly our employees believe in those values, I know that Anadarko will continue to be involved in all the right measures and will continue to be a leader in the industry. I have so much faith in the company to do what is right, and I’m confident in my future because I support the company’s wonderful leadership and my colleagues.
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MAY 2015 ENERGY PIPELINE 11
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EXECUTIVE PROFILE
COLORADO OIL & GAS CONSERVATION COMMISSION Director
Matt Lepore
BY DAVID PERSONS • FOR ENERGY PIPELINE
matt lepore has one of the highest
profile positions in the state as the director of the Colorado Oil and Gas Conservation Commission. The commission has the heavy responsibility to regulate oil and gas production in the state. As most everyone knows, oil and gas activity - especially in the Niobrara shale formation in and around Weld County - is a big deal. The drilling in the Niobrara formation has been a huge success as an abundance of oil and natural gas has been extracted in the past six years through the technology of horizontal drilling and hydraulic fracturing. That has not come without some controversy. Several communities have threatened lawsuits to ban hydraulic fracturing. Others are concerned about how close drilling is getting to homes and schools and if underground water sources are being contaminated. To say each day for Lepore and the commission is a challenge is probably an understatement. Yet, have no doubt, Lepore enjoys that environment and the challenges it brings. “I love serving the people of Colorado,” Lepore said proudly during a recent phone interview. “But, the public can be a tough customer. I don’t fault them. Oil and gas (industry) can bring up a lot of intense feelings about where and how it should be developed.” But, Lepore is up to the task. 12 ENERGY PIPELINE MAY 2015
Perhaps no one is more prepared. Lepore is a native Coloradan who is actually an attorney by profession and spent a lot of his early years in environmental practice. He also has spent time in the Colorado Attorney General’s office. So how did Lepore wind up where he is? He says it started in elementary school. “The light bulb to be a lawyer - not an oil and gas person - came on very early,” Lepore said. “I was reading a book on (the U.S.) Congress in elementary school. I saw that a lot of them had been lawyers. So, all the way through high school and into college, that’s what I wanted to be.” After picking up a bachelor’s degree in English from the University of ColoradoBoulder in 1987, Lepore went to Stanford University. He received his law degree there in 1993. Then it was on to his first job - with Holme Roberts and Owen LLP. There, he worked with Hank Ipsen, the firm’s group leader in environmental practice. “That part of the law practice was a very robust part,” Lepore said. “That’s where I wanted to be. It was a hot place and I wanted to be there. I represented Fortune 100 corporations as well as small mom-andpop businesses. It was a nice diversity of representation.” In 2008 and 2009, Lepore said the environmental practice changed significantly.
He decided to look for a change. He found that as an assistant attorney general, assigned to representing the Colorado Oil and Gas Conservation Commission. “This job appealed to me on a number of levels,” Lepore said. “Mr. Ipsen had spent a number of years as the attorney general in another state. And, I was interested in the opportunity to use my environmental law background in natural resources. “I thought it would be interesting to represent the commission. And, they were looking for someone with litigation experience.”
QA &
with Matt Lepore
Lepore, in an extended interview with Energy Pipeline, went on to talk about his job as the head of COGCC and some of the challenges that the oil and gas industry faces in Colorado.
Read his answers on page 14
Lepore was an assistant attorney general from 2009-11 before he was “wooed away” by a small practice oil and gas firm called Beatty and Wozniak. In February 2012, COGCC Director David Neslin announced he was stepping down. “I asked myself: ‘Is that something I want to do?’ “ Lepore said. “Then some people began asking me if I was going to apply. After thinking about it long and hard, I applied.” In August 2012, Lepore was named director of the COGCC.
ABOUT
Matt Lepore AGE 56.
SPOUSE Molly Lepore.
CHILDREN Nathan Lepore, 17.
CITY YOU GREW UP IN Littleton, CO.
HIGH SCHOOL YOU ATTENDED Heritage High School.
COLLEGE ATTENDED/ DEGREES University of Colorado, B.A. English. Stanford University, J.D. degree.
CITY YOU LIVE IN NOW Denver.
WHAT DO YOU DO IN YOUR SPARE TIME? Skiing, cycling, and backpacking with family and friends in Colorado’s high country.
LAST GOOD BOOK YOU READ “The Yiddish Policemen’s Union,” by Michael Chabon.
SOMETHING ABOUT YOU THAT FRIENDS AND CO-WORKERS DON’T KNOW I do a lot of yoga. It’s never enough.
CURRENT JOB TITLE Director of the Colorado Oil and Gas Commission
YEARS WITH COLORADO OIL AND GAS COMMISSION 3 years.
YEARS IN ENERGY INDUSTRY
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Immediately prior to joining the COGCC in August 2012, Matt was a member of the law firm Beatty & Wozniak, P.C., where his practice focused on oil and gas regulatory matters, enforcement proceedings, and litigation. Prior to joining Beatty & Wozniak, Matt was a Colorado assistant attorney general and was counsel to the Colorado Oil and Gas Conservation Commission. Lepore represented the commission before the state trial and appellate courts, and advised the commission on regulatory and enforcement matters, and as well as agency rulemaking. In 2011-12 Matt was chairman of the Colorado Bar Association Environmental Law Section.
PROFESSIONAL ORGANIZATIONS Chairman of the Legal and Regulatory Affairs Committee for the Interstate Oil & Gas Conservation Compact.
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MAY 2015 ENERGY PIPELINE 13
QA &
ENERGY PIPELINE: Can you describe what a day in the life of Matt Lepore is like at the Colorado Oil and Gas Conservation Commission? What specifically do you do? MATT LEPORE: Well, what I do is never dull. It’s multi-faceted. I cannot ignore the fact that I respond to a lot of e-mail. I attend a lot of meetings, review a lot of work products, meet with staff, people in the Department of Natural Resources, and other stakeholders. I interface with the Attorney General’s office on legal matters. I am constantly engaged in reviewing our own policies and procedures. And, I do a significant amount of public speaking. I also travel to Durango and Rifle, where we have significant oil and gas operations. I never want for something to do. It’s the most challenging job I’ve ever had and also very rewarding. EP: What is it about your job with the Colorado Oil and Gas Conservation Commission that gives you the most satisfaction? Is it resolving challenges? ML: I think the position is definitely challenging. I’m engaged in problem
continued from page 12
solving and forging compromise and agreement. We try to reach fair and rational decisions with competing interests. We are striving to serve the best interests of the state of Colorado. EP: Do you see the Colorado Oil and Gas Conservation Commission taking on a more significant role as the current shale oil boom continues? Why? ML: We’re right in the middle of it now. It’s hard to see how it could get much bigger. The governor’s task force has completed its work and is now preparing to make recommendations (to the state and the COGCC). He said the work is not finished and that we will have to work through some issues ... and we will have to make it work.
disputes. They have various competing interests. But, they are very committed to getting it right. Listening to them as they go through all the information is like watching a jury deliberate. I’m both amazed and impressed that they always get to the right answer. EP: Do you think the anti-fracking movement will eventually lose steam as the public becomes better educated on the process? ML: I’m not convinced it’s simply a matter of education. There is an anti-fracking contingency and at the core of it is an anti-fossil fuel contingency. No amount of education will change that.
EP: The COGCC has nine commissioners. Do they all get along well or do you have to act as a referee from time to time?
We can endeavor to educate, but I’m not sure that is going to satisfy them or change their mind. I do think it is important. But, we live in an age where information is so easy to come by. Unfortunately, there is a major shortage of information that is authoritative.
ML: They get along pretty well. The commission acts not only as a legislative body but also as an adjudicating body that adjudicates
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
state drilling or do you feel this is just one of those “blips” that occur once in a while? ML: I think it’s more than a blip. I think lower (oil) prices will endure for a stretch of time. I see a reduction in the number of wells. But, I don’t think it will change the long range picture of the Niobrara (development). EP: Up to this point in your career, what has been the highlight for you and why? ML: I will say that it was an opportunity to be assisting with oil and gas companies in the region during the 2013 floods. There was a lot of dedicated sharing by the staff of the COGCC. They were dedicated to help out. They responded without any hesitation or questions about long hours or, in some cases, dicey circumstances. That was definitely a highlight. EP: What sort of plan did you implement during that event? ML: There’s not a manual you can grab off the shelf that says how you do this. It was just hard work and was very rewarding.
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TAKING ROOT IN COLORADO API’s new Colorado office director, Tracee Bentley, discusses her role BY SHARON DUNN • ENERGYPIPELINE.COM
everyday, as u.s. 85 draws commuters
into the Denver economic machine, Tracee Bentley is right there with them. Bentley, the head of operations for the American Petroleum Institute’s newest branch office in Colorado, has lived in Severance for the last eight years and has watched the landscape morph from one speckled with oil and gas drilling rigs to a virtual black desert in the recent downturn prompted by a sudden and dramatic drop in crude prices. “Driving my son to school every morning, we used to pass by no less than probably eight to nine rigs surrounded by people,” said Bentley, the new director of the Colorado API office in Denver. “Very early in the morning, it was something we got used to. It’s very noticeable now. My son pointed out, ‘Mom they’re not pumping anymore.’ It’s very visually different.” Before that physical landscape changed so dramatically in January, the political landscape was a heated one in the last year. Residents had placed on the ballot a ban on fracking and other limitations to oil and gas drilling that would have the effect of halting all oil and gas in Colorado, altogether. Gov. John Hickenlooper struck a deal last August with the proponents of the bills to drop their ballot issue in lieu of creating a task force to come up with compromise on the issue of urban drilling 16 ENERGY PIPELINE MAY 2015
THAT’S WHERE BENTLEY COMES IN, PUTTING A LOCAL FACE ON THE NATIONAL AGENCY, AND COMING ARMED WITH FACTS ON HOW THE REGULATIONS COULD NEGATIVELY AFFECT COLORADO’S ECONOMY and its proximity to population centers to be eventually debated in the Legislature. That group ended its work in February, coming out with nine recommendations that mostly would result in rulemaking efforts with the Colorado Oil and Gas Conservation Commission. A couple of recommendations would require legislative approval to hire more regulators at the state level to oversee the industry. Meanwhile, the Obama administration and the Environmental Protection Agency had proposed increasing restrictions on ozone - another move that those in the industry fear would could be devastating.
QA &
with Tracee Bentley
Bentley talked openly about the need for an API office in Colorado, which will be one of 34 across the country, and how she intends to enact her new position. ENERGY PIPELINE: How concerned are you and API about, and how involved will you be in the rulemaking efforts that came from the oil and gas task force? TRACEE BENTLEY: I wouldn’t say they’re big concerns. But as with anything, the devil always seems to be in the details. The recommendations that came out on the face seem reasonable ... anytime you get into rule making, that calls for a lot of detail. Our priority is to make sure the intent of the rulemakings that came out of that task force remain true, and we won’t start talking about things that are outside the scope of the recommendations. We’re going to be very involved, as involved as we need to be. I couldn’t tell whether that
Continued on page 18
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MAY 2015 ENERGY PIPELINE 17
“We’re going to be involved, heavily in everything from legislation to regulatory efforts, grassroots, education.” TRACEE BENTLEY, Colorado Petroleum Council, a division of the American Petroleum Institute
API calls the proposed regulations “duplicative, unnecessary, and costly,” and could “result in lost jobs and impact local and national economies,” according to a news release. “The fact is that our nation’s air is getting cleaner under the current standards, which are only now beginning to be implemented. U.S. oil and natural gas companies are leading the charge to reduce emissions by making investments in new technologies, and these efforts are paying off,” the release states. “Air quality will continue to improve as we implement the existing standards. Ground level ozone in the U.S. declined by 18 percent between 2000 and 2013, and we expect that progress to continue under the current standards.” A press release, however, can only go so far. That’s where Bentley comes in, putting a local face on the national agency, and coming armed with facts on how the regulations could negatively affect Colorado’s economy. “Colorado has been such a hotbed (of political charged issues), when they tend to be national trendsetters in regard to national regulations,” Bentley said. “We decided it was in the best interest of everyone if we had an office here.” As a national trendsetter, Bentley said, for past three years, Colorado has been on the forefront of the disclosure of fracking fluids, created stricter methane rules, to name a few. “No matter what it was, industry decided with all eyes on Colorado, it’s time to beef up if you will and have a stronger presence here,” Bentley said. “We’re going to be involved, heavily, in
18 ENERGY PIPELINE MAY 2015
everything from legislation to regulatory efforts, grassroots, education. If god forbid, (a fracking ban) comes back on the ballot, we’ll be very involved in that as well. Anything that impacts the economy with regard to the industry, we’ll be involved in.” API Spokesman Reid Porter said the Colorado office will be a permanent one. “This is not something that we just popped open,” he said from his Washington, D.C., office. “When we open an office we’re there because it’s an important area for us to be in. Colorado is an important part of the energy conversation for the entire country and it will continue to be so. That’s a reflection of the relationship in that Colorado is important spot for the industry.” Bentley grew up on the family farm in Buena Vista and went to college at Colorado State University in Fort Collins, where she earned both bachelor’s and master’s degrees. She lobbied for the Colorado Farm Bureau for a couple of years before starting her own firm, whereby she began lobbying for oil and gas interests. She most recently served in Hickenlooper’s office as legislative director and as a senior adviser on energy and agricultural issues. Previously, Bentley served in the Colorado Energy Office as deputy director of policy and legislative affairs. She also served as director of National Affairs with the Colorado Farm Bureau. A Severance resident since 2007, Bentley calls Weld County home. “My neighbors are a cornfield and some cattle, and that’s how I like it,” she said.
QA &
continued from page 16
involves us recruiting sponsors for bills in the legislature. We’ll play a very significant role. I feel like as far as this legislative session goes, it’s half over (as of this discussion in early April). But, I do think that as we look forward to next year and the year after, there are some things that could be looked at constructively instead of coming at the industry stating you must change or else. There are constructive conversations that can happen with all the concerned parties, if that’s in fact what people want to do. EP: What do you plan to focus on in the coming months? TB: Along with playing tough defense, I’d argue we’re very interested and plan on playing lot of offense as well. How our structure works, is that our membership, the governing industry folks, will sit down and give a lot of thought with me on what we want to do next session and beyond. ... I’m not ready to say I’m overwhelmed yet. There is no shortage of things to do, that has to do with getting new office up and running, but it’s been truly telling on why Colorado Petroleum Council is here. “I’ll be out and about (this summer), helping the effort to educate local communities on the importance of oil and gas to the state, and how its’ been a rock through the recession. When things that weren’t looking well, it was oil and gas that helped us rebound.”
The immediate need, however, is to get the office open and organized. She said in the news release: “I’m thrilled to work with the dynamic API team on the exciting energy opportunities in Colorado that are transforming our state into a leader in domestic energy production,” Bentley said. “With smart, pro-energy policies, we can create thousands of good-paying jobs, send more revenue to the government to help support our schools, and make Colorado and America more energy secure.”
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Workers in this 2013 file photo attach a section of wall to a new $20 million addition to the Noble Energy offices located at 2115 117the Avenue in west Greeley. On Tuesday, Noble announced that only 20 workers in Weld County would lose their jobs as part of a nationwide restructuring of the company.
SMALL SHOCKWAVES Noble Energy layoffs smaller than anticipated BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM a top greeley employer could have dropped a bomb in early April. Instead, it was more like a firecracker. Noble Energy, one of the top two oil and gas exploration companies in Weld County, announced April 7 it would eliminate 20 positions - a small fraction of its workforce - from its Greeley headquarters. The cuts represent only a smidge of a planned 220-employee layoff across its U.S. operations. Another 80 were laid off from Noble’s Denver office. Steven Silvers, company spokesman, said layoffs represented an “organizational realignment of its U.S. operations,” which also included cuts in Houston and Canonsburg, Pa. That brings Noble’s Colorado employment base down to 950, Silvers reported. The Greeley headquarters started two years ago with about 300 employees, but with expansions that number had swelled to about 550. After Tuesday’s cuts, Greeley’s headquarters employ just over 530, Silvers reported. He wouldn’t discuss what kinds of jobs were eliminated. 20 ENERGY PIPELINE MAY 2015
NOBLE ENERGY PLANS TO SPLIT $1.8 BILLION EVENLY BETWEEN ITS DJ BASIN PROGRAM AND ITS MARCELLUS GAS PROGRAM IN PENNSYLVANIA The news was received with almost a collective sigh of relief at Upstate Colorado Economic Development and by city officials. “Twenty is a lot better than upwards of 400 that I had heard about,” said Greeley city manager Roy Otto. “At the same time, I’m concerned about those people who lost jobs.” Otto said he would reach out to Noble to inform them of city openings for which those newly laid off could be considered. Rich Werner, president and CEO of
Upstate Colorado Economic Development, said the layoffs felt more like regular industry fluctuations. “You’re going to have a workforce that fluctuates. I think you’re seeing one of these trends,” Werner said. “I wouldn’t be surprised if you didn’t see both positive and negative fluctuations in the future.” The near 10 percent Colorado workforce cut comes after the company announced in February a 40 percent spending cut this year across its operations. Other oil and gas companies have announced similar cuts amid rapidly sinking crude prices, and many have had their own layoffs. “We remain committed to our Colorado communities as we are in all our core operating areas,” Silvers reported in a statement. “Moving forward, we will continue to create a competitive advantage for Noble Energy through innovation and focus on the essential drivers of our success: safety and environmental stewardship, operational excellence, financial strength and by enhancing our portfolio for longterm growth.”
and U.S. 34 Bypass. The company opened - price cuts from service companies, selling Silvers stated that the Denver-Julesburg its Greeley headquarters in May 2012, with assets, and even some creative financing such Basin, which encompasses all of Weld, a 65,500-square-foot, $15 million building as stretching payments on certain projects. “continues to be Noble Energy’s largest on 23 acres at the HighPointe Business Layoffs for many had remained a last resort. onshore operation, and now serves as Park. It was originally scheduled to house But the industry hasn’t slowed to a stop. the base for all of the company’s onshore 300 employees. It announced an expansion Upstate continues to field calls from oil and operations.” in 2013, which was In February, Noble completed last year. announced capital The move bolstered the reductions as well as plans company’s footprint in to reduce its drilling Weld, which in 2005, had program to four rigs in only 120 employees and the DJ Basin. They are a couple of vertical rigs in among several drillers the Wattenberg Field. By who have cut their its opening in 2012, the spending in the area by company was operating double digits to wait out RICH WERNER, president and CEO of Upstate Colorado Economic Development with seven horizontal and the pricing environment, four vertical rigs. in which crude prices fell Overall this year, Noble by more than 60 percent plans to invest 60 percent of its $2.9 billion from a $100 peak gas-related companies who want to locate in global spending program in its United Weld County. last summer. States programs. The company plans to And frankly, officials have said, companies In 2015 capital planning reports, many split $1.8 billion evenly between its DJ Basin like Noble and Anadarko wouldn’t lay down companies are expecting to pull out of the program and its Marcellus gas program in brick-and-mortar roots with short-term goals. downturn in 2016, and plan to wait out the Pennsylvania, according to reports detailing Noble last year completed an expansion slump by delaying well completions - leaving its 2015 spending plans. of its Greeley headquarters at Colo. 257 product in the ground after initial drilling
“You’re going to have a workforce that fluctuates. I think you’re seeing one of these trends.”
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THE WAR OF COMPLETION Sliding sleeve or plug-n-perf sway companies in the quest for completion excellence BY DAVID PERSONS • FOR ENERGY PIPELINE
completion can take a couple of days method you’re most comfortable with.” oil and gas companies drilling in Some oil and gas officials admit there or more. the Niobrara shale formation in and studying both methods closely before they So, how do these two completion around Weld County have been using the commit to one or the other. techniques work? technologies of horizontal drilling and “We’ve done both,” said John Kruljac, vice hydraulic fracturing with great success the president of Capital Markets and Investor COMPLETING THE JOB past couple of years to free up oil and gas Relations with Synergy Resource Corp. “We deposits that previously were too deep and gathered some empirical data to date but Plug-and-perf completions, according too difficult to get out of the ground. our sample really isn’t large enough (to to officials at Schlumberger, are extremely That hasn’t exactly been a big secret. commit to one or the other). We’re still flexible multistage completion techniques, But, what you may not know is that oil and doing both but we are leaning a little toward especially for cased-hole wells where a liner is gas companies also utilize two completion sliding sleeve.” cemented in place throughout the well. technologies - “plugEach stage (or zone) of and-perf” and “sliding the well, using this method, sleeves” - which really can be perforated any do the heavy lifting number of times at varying underground and have distances. It is favored by greatly enhanced the some because a number of process. Companies options can be used up to the are clearly picking one moment the perforating gun method over another. is fired. Engineers can apply The plug-and-perf knowledge from each previous method was the primary MARK BALDERSTON, completions superintendent for Encana Corporation stage to optimize treatment of technique used before the current stage. sliding sleeve technology Oil and gas officials will tell you that The process consists of putting a cement was introduced. these two completion techniques are gameliner in place, clearing part of it out, and Which method is better depends on which changers and that there are pros and cons pumping a plug and perforating guns to a company you ask. Some companies even to both. They say the decision on which given depth. The plug is set and then the use both methods. method to use often comes down to more cemented liner in that zone is perforated, “It’s kind of like playing golf,” said Mark than comfort. The cost involved, the ease creating a path for fracking fluid to be Balderston, the completions superintendent of the fracking job, and the time it takes forced into the shale formation. After for Encana Corporation, based in Denver. are huge issues, as well. perforation, the tools are removed from “If you play better with your irons, you might However, when time is the deciding the well. A ball is pumped down to isolate like the plug-and-perf method. If you play factor, the sliding sleeve technology usually the zones below the plug. better with your drivers, then you might like wins out. It generally takes less time The ball-activated plug diverts highthe sliding sleeves. about a day and a half. A plug-and-perf pressure fracture fluids through the “It often just comes down to using the
“It often just comes down to using the method you’re most comfortable with.”
22 ENERGY PIPELINE MAY 2015
MAY 2015 ENERGY PIPELINE 23
perforations and into the shale formation so it can be fractured. After the stage is completed, the next plug and set of perforations are initiated, and the process is repeated moving further up the well back toward the well head. A sliding sleeve completion is slightly different from plug-and-perf in that it is used primarily in open-hole wells, not cased wells. It also utilizes pre-perforated sleeves so that a perforating gun or system is not needed. Its main use is to shut off flow from one or more reservoir zones or to regulate pressure between zones. As a result, sliding sleeves are shifted between a full open position and a closed position, according to experts. This helps to limit or stop flow from a zone for cost reasons and also can be used to shut off a zone that is using or producing too much water. Sliding sleeves can be placed in the well either mechanically or hydraulically. This completion method is fairly simple and inexpensive when using mechanically actuated sleeves but does require a lock which must be run in the well on a wire line or coiled tubing. However, it can be a bit more complicated when hydraulically actuated sleeves are used, although they can be actuated at the surface by a small pump. Once the sleeves are in place, drillers can pump high-pressure fracturing proppant into the perforated sleeve to fracturize the shale formation and dramatically reduce completion times.
GETTING THE BEST RESULTS If you’re looking to have more control of the fracturing process, especially location of the frac, plug-and-perf might be the best way to go, experts say. “Plug-and-perf allows the use to be more customized to the well, to vary things a whole bunch, to decide just where you want to place the perforations,” Balderston of Encana said. “Say you have a 100-foot zone, you can perforate every 10 feet, 20 feet or 50 feet with plug-and-perf. “With sliding sleeves, you’re sort of at the mercy (of where the pre-perforations are located). It’s faster and can cost less. But, if you don’t have them set exactly right, you might have to take them out and do a plugand-perf anyway. So, to answer your question, 24 ENERGY PIPELINE MAY 2015
it’s kind of trade-off. There are pros and cons for both techniques.” Balderston said Encana is experimenting with both, trying to find a repeatable consistency. “With consistency, you have less issues and you have dollars saved,” the completions superintendent said. Kruljac said plug-and-perf is being favored by some drillers who choose to go back into vertical wells and refracture them.
expected ultimate recovery (EUR) volumes and payback. The report added that it tested plug-and-perf technology up to 12 million pounds of sand and up to 55 fracture stimulation stages. It concluded by saying that current well costs, including the larger fracture stimulation stages, are currently $7.5 million per well, which represents a 10 percent reduction from 2014.
IF YOU’RE LOOKING TO HAVE MORE CONTROL OF THE FRACTURING PROCESS, ESPECIALLY LOCATION OF THE FRAC, PLUG-AND-PERF MIGHT BE THE BEST WAY TO GO, EXPERTS SAY
Some companies are doing a hybrid form of completions, although the costs are reportedly higher. The reason for these hybrid systems is to increase the number of compartment sections for hydraulic fracturing because of the limitations of ball-actuated frac sleeves, the Society of Petroleum Engineers reported in a 2012 industry paper. These hybrid systems place ball-actuated frac sleeves along sections of the wellbore starting at the toe. Once the maximum number of frac sleeves has been spaced out using open hole packers for isolation, the additional sections of the wellbore are separated without sleeves using only open hole packers, the paper said. During the frac, balls are used to shift open frac sleeves and provide isolation from the previously treated sections. Once all the sleeves have been opened and the fracs placed, composite frac plugs are pumped down and set to isolate and treat additional stages using the plug-and-perf method. The SPE paper said experimenting with hybrid systems provides operators with the ability to optimize spacing of frac stages along the horizontal section when sleeve technology alone did not allow for the desired number of stages. The high costs for hybrid-type completions, the paper concluded, have driven the need for enhanced sleeve technology. Kruljac said Synergy is not using a hybrid system - yet - but his company has heard about them. “It’s more for extended laterals that can go as far as 2 miles,” he said. Kruljac said he foresees the two technologies and hybrid applications continuing to improve and change. “It’s always good to have options with technology,” Kruljac said. “It’s all part of the evolution going on. And, there’s more to come.”
WHY NOT USE BOTH? Some oil and gas companies are using both technologies. One of those is Bill Barrett Corporation. The company said in a Feb. 3, 2015, corporate report that it recently used a combination of these completion methods on nine holes in the northeast portion of the Wattenberg area in the Denver-Julesburg (DJ) Basin. In the report, it said that six of the wells were located in the northern section and were drilled into the Niobrara B formation and three wells were located in the southern section and drilled into both Niobrara B and C formations. The wells were drilled to an average lateral length of 9,140 feet. The six wells were completed with a hybrid sliding sleeve and plug-andperf technology. The other three wells used plug-and-perf exclusively. Bill Barrett Chief Executive Officer and President Scot Woodall said in the report that he was pleased with the initial results of all the wells. The report went on to say that efforts were made to control the flowback rate to optimize recoveries, which will enhance the
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SAFETY MOVEMENT API to train first responders on rail safety with crude oil trains BY LINDA KANE • FOR ENERGY PIPELINE
core value in everything we do - exploration, but the oil and gas industry’s goal for the american petroleum institute production, refining and transportation.” safety is zero incidents, he said. wants to make sure the public knows how “This is not a goal that can be reached much it’s focused on safety. That includes As the U.S. becomes a worldthrough any single action or step,” Gerard making sure first responders are properly leading producer of oil and natural said. “Eliminating the last trained in the event a elements of risk requires rail car transporting a holistic and sciencecrude oil derails. based approach to better In March, API prevent, mitigate and introduced efforts to respond to derailments of enhance the work of trains carrying crude oil.” first responders who One element of that respond to derailments. work is enhancing tank “A truly comprehensive car safety. Comprehensive safety effort also requires EDWARD HAMBERGER, president and CEO, Association of American Railroads efforts already industry and regulators require preventing to do more to prevent train derailments and effectively train derailments and effectively respond if gas, shipments of crude by rail have responding should a derailment occur. an incident occurs,” said Jack Gerard, API increased, Gerard said. North America’s In the last year, API, the Association president and CEO. “The oil and natural freight railroads move 99.998 percent of of American Railroads and member gas industry is committed to safety; it is our hazardous materials without incident,
“Freight railroads are fully committed to the safe movement of crude oil and other hazardous materials by rail.”
26 ENERGY PIPELINE MAY 2015
companies have worked to develop a crude-by-rail education module for first responders. The course complements existing training efforts and was taught for the first time in March at a firefighters’ conference in Nebraska. Participants learned about the characteristics of crude oil, rail cars and spill response. After completing the course, participants should be able to:
AMERICA’S FREIGHT RAILROADS MOVE 99.998 PERCENT OF HAZARDOUS MATERIALS WITHOUT INCIDENT, BUT THE OIL AND GAS INDUSTRY’S GOAL FOR SAFETY IS ZERO INCIDENTS
• Understand the growth of crude oil by rail. • Identify shipping papers used. • Recognize the markings used for identifying rail cars transporting crude oil. • Describe basic spill responses - basic firefighting containment and confinement. “Freight railroads are fully committed to the safe movement of crude oil and other hazardous materials by rail,” said Association of American Railroads President and CEO Edward Hamberger. “This course is another example of how railroads and their customers work with communities coast-to-coast to help with awareness and preparedness for any type of incident.” The Crude Oil by Rail Response Safety Course is available on the API web site at www.api.org. Fire departments and other officials interested in the course
should contact their TRANSCAER state coordinator at www. transcaer.com/state.aspx. TRANSCAER is a voluntary national outreach group that helps communities prepare for and respond to transportation incidents involving hazardous materials. No taxpayer money was used to create this program, Gerard said. It was fully funded by the oil and rail industries. API represents all segments of America’s oil and natural gas industry. Its more than 625 members produce, process and distribute most of the nation’s energy. The industry also supports 9.8 million U.S. jobs and eight percent of the U.S. economy.
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Photos by Sharon Dunn • sdunn@energypipeline.com
PLATTEVILLE
ENERGY PARK A ‘worthwhile endeavor’ at a bit of a standstill BY ERIC BROWN • FOR ENERGY PIPELINE
the impacts of oil and gas companies slashing spending has been far-reaching in Weld County, and local developers, once benefiting from growing businesses in need of additional industrial space, are falling victim to the decline in the price of oil. After two years of planning, progress began heating up for Terry Wiedeman’s 77-acre Platteville Energy Park during the fall of 2013, but that forward movement has cooled off, he said recently. With four companies now operating in the energy park, Wiedemen said he was on the cusp of filling the park’s last remaining industrial plot, but that interested business backed out, and it’s been tough finding another one to take its place. “It’s definitely still been a worthwhile effort,” Wiedeman, a broker associate with Kreps Wiedeman Auctions and Real Estate in Greeley, said of the Platteville Energy Park. Wiedeman’s partner in the endeavor is Dale Boehner. “I think it’s definitely turned out nice. But looking at the industry when we started this a while back, I thought we’d have it filled up by now.” In an interview with Energy Pipeline in the fall of 2013, Wiedeman said then he hoped to the have the park full by the spring of 2014. During 2013 and 2014, industrial properties were in high demand along U.S. 85, with production in the Wattenberg Field skyrocketing. There were slim pickings of existing suitable buildings, and many companies wanting to expand operations were forced to build new facilities. But the recent plummet in oil prices - cut in about half compared to the $100 per barrel prices seen last summer - has slowed much of that development for Wiedeman and others who were recently going full-tilt to provide expanding oil and gas businesses new homes. Industry experts earlier this year said they expect Colorado’s oil and gas companies to cut their overall spending in the state by as much as 50 percent in 2015 compared to last year. “It’s really having an impact on just about everyone,” said Wiedeman, a long-time real estate and development professional in Weld County. 28 ENERGY PIPELINE MAY 2015
TOP: A pile of rocks sits in a lot across from the new location of Redi Services at the Platteville Energy Park. RIGHT: Energy Park Drive is an entrance into the Platteville Energy Park, where developers have struggled to fill what was once premium industrial space.
DURING 2013 AND 2014, INDUSTRIAL PROPERTIES WERE IN HIGH DEMAND ALONG U.S. 85, WITH PRODUCTION IN THE WATTENBERG FIELD SKYROCKETING The Platteville Energy Park consists of six industrial lots, plus some outlying commercial lots - a development that has been lauded by officials with the town of Platteville, which has a population of about 2,500. With its recently completed 114,000-square-foot building in the energy park, housing 240 employees, Anadarko Petroleum is occupying one of those plots, plus some extra, Wiedeman said.
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“This let-up in demand may actually give the companies still looking for space a good opportunity and developers a better chance to help them.” MARK BRADLEY, Realtec Commercial Real Estate
30 ENERGY PIPELINE MAY 2015
Little Creek Oil Company occupies another plot, as does R&H Supply and Redi Services, LLC - a client of Anadarko’s, which moved over from the Western Slope in 2013 and spent months operating out of leased space in southern Weld County - now occupies two industrial plots in the park. Redi Services operations in the Platteville Energy Park consist of 2,000 square feet of office space, and another 11,000 square feet for a repair shop, with about 12 acres of fenced property. “If you look at the space we’ve acquired here, and the current oil market, you’d think we maybe overbought,” Jay Anderson, chief financial officer at Redi Services, said of the facilities they now occupy in the energy park. “But we may have an oil market months from now that once again justifies it.” Likewise for Wiedeman, it’s a wait-and-see situation, regarding the oil market, and getting his energy park completely filled. In addition to his six industrial sites, Wiedeman hopes to eventually fill the three commercial plots in the park, ideally with restaurants, he said. While it’s been tougher lately to find oil and gas businesses looking to expand or build new facilities, for those who are willing to spend the money to do so, it’s hard to imagine a better place to set up shop, according to the four companies who have relocated to the Platteville Energy Park. “We’re certainly happy to be where we are now,” said Robin Olsen, spokeswoman for Anadarko - a company that just in February, after two years of construction, celebrated the official ribbon cutting of the $20 million facility in the energy park that will be a nexus of Anadarko operations in the Wattenberg Field for 20 years to come, according to the lease agreement that was signed. “After having our operations spread out between Evans and Brighton, it’s so nice to have a location that’s centralized in the Wattenberg Field.” Anderson echoed those comments on behalf of Redi Services, a company that performs plant and facility maintenance, general construction and services support for oil and gas companies like Anadarko. “We’re definitely augured in here for the next several years,” Anderson said, noting that Redi Services began operations in the Platteville Energy Park this past fall. “It took us a while to find a place that worked so well for us, but we have it now.” Hopeful of a forthcoming rebound in oil prices, Wiedeman looks forward to having a fifth business occupying his last industrial plot, who equally enjoys operating in Platteville.
Photos by Sharon Dunn • sdunn@energypipeline.com
INNOVATORS IN SEPARATION AND EMISSION CONTROL TOP PHOTO: An empty but developable lot sits across the field from Redi Services in the Platteville Energy Park. PHOTO ABOVE: Anadarko Petroleum sits in the background of the Platteville Energy Park. The oil and gas company signed a 20 year lease to anchor the facility.
Is there a silver lining in the slowdown? While oil and gas expansion and industrial development has cooled off with the downturn in the market, developers in the area say there is still some demand out there, and the slowdown has even provided a little silver lining. “It might actually give us a bit of an opportunity to catch up,” said Mark Bradley with Realtec Commercial Real Estate, who like Wiedeman, has been working on industrial developments in the area for oil and gas expansion in recent years. “The area was just so far behind in keeping up with the demand for space needed by oil and gas companies. This let-up in demand may actually give the companies still looking for space a good opportunity and developers a better chance to help them.” Bradley said he began noticing the downturn in activity a few months ago. “Another benefit for those still needing space is that this let-up in demand for space has brought down the cost of building. Materials are certainly a little cheaper. Overall, it’s definitely not a great thing, and we want a rebound in the industry as soon as possible ... and hopefully oil prices will give us that before too long. But on the development end and for businesses needing the space, there has been a little bit of benefit to the slowdown.”
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TECH TALK
RECYCLING PINE TREES USING STATIC ELECTRICITY - REALLY? BY GARY BEERS • FOR ENERGY PIPELINE when pine trees are harvested, approximately
66 percent of each tree (about 300 pounds) is left behind as waste (slash), which is typically burned. The residual limbs, bark, needles, leaves and cones are storehouses of nutrients and other important chemicals that should be recycled for various uses. Also, this slash includes vegetation from the forest floor, such as hay, flowers, grass and berries. Recognizing the needless loss of this resource, many approaches to recycling have been proposed and tried but abandoned due to costs. Simply, the expense to recycle slash to a marketable product exceeds the projected revenue from the sale. A sustainable, economic solution would require lowering the costs of processing the slash to provide a recyclable material that could be incorporated into a marketable, high-value product. How can the processing become more efficient and less expensive? Here is a wild idea. What if the slash were placed in a large pile and struck with a lightning bolt to produce small pieces that can be recycled into useful, valuable products? If this outrageous idea was tested by the scientists on the popular television show, “MythBusters,” everyone would expect the conclusion to be “busted.” Well - a scientific inventor and entrepreneur (who owns 42 acres containing 17,000 pine trees located west of Fort Collins) has proven the science of the wild idea is true. Basically, he creates lightning in a tube to reduce slash to small pieces as follows: • A chipping machine reduces the slash to small pieces (Image 1) • Several pounds of chipped slash is placed in plastic tube ( 6 inches in diameter, 24 inches long) with metal rods and then closed with end-caps. 32 ENERGY PIPELINE MAY 2015
• Tube is turned on mechanical roller for a few hours. • The small pieces of slash are removed from tube and passed through a sieve to improve homogeneity (Image 2). • In some cases, the further sifting is necessary to provide a fine powder (Image 2). The two sizes of materials are now ready for further processing into commercial products. By the way, the above process is an important scientific break-through. As youngsters, our first fun experience with static electricity happened on touching a Van de Graaff generator (Graphic 3). These electrostatic generators are used to generate high voltages in various science experiments, but have not received much commercial use in the everyday world. The above use of a static electricity to breakdown slash is probably the only commercial application of an electrostatic generator in a viable business. This process is protected under three, full patents.
HIGH-VALUE PRODUCTS (UPCYCLING) The slash pieces generated in the plastic tubes is upcycled into two commercial products with established markets. These products retail in the range of $8 to $10 per pound.
IMAGE 1
IMAGE 2
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.
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SOAP The antioxidant-rich powder is mixed with borax, sodium soap with Lanolin to prepare a soap, which is biodegradable. Besides cleaning skin, the soap is used to spot clean clothes, tools and other items. This product is distributed and sold in 15 to 20 states and the overseas demand is growing (i.e., large standing order recently received from China).
FERTILIZER The homogenous particles are a valuable, dry, natural organic fertilizer marketed for uses in indoor and outdoor potted plants. The small pieces allows convenient handling and application in a uniform manner, as well as being mixed with water and sprayed on plants as a liquid fertilizer. Colorado State University scientists conducted an investigation to determine the effectiveness of this product as an organic fertilizer, when used in a lettuce growth test. Findings included:
• Lettuce - improved growth, increased nutrients, lower metals content. • Soils - improved sandy/silty soil, loosened clay soil to improve. • Drainage - increased cation-exchange capacity. Further research and development is underway to identify additional interested markets for upcycled products derived from the particles generated by the electrostatic process. Attractive avenues of development are based on the patented process that results in isolation of useful chemicals and the breakdown of longer-chain hydrocarbons. One attractive avenue is the isolation of natural antioxidants that may be incorporated into pharmaceutical products. Some users of the soap have reported unexpected side-benefits. In addition to cleansing properties, the soap seemed to reduce rashes and related skin conditions. Pine needles are known to contain strong antioxidants. Thus, recycled pine slash may be a
key ingredient for pharmaceutical products to treat certain types of skin disorders. Another attractive avenue, especially in the oilfield sector, is the addition of recycled pine slash to drill cuttings and impacted soil (i.e., containing petroleum spills) to generate enriched, soil suitable for farming. The pine tree has already created the required balance of nutrients and minerals during the growth process which upon decay strongly supports growth of seedlings. In a sense, the particles from the above recycling process are able to provide these growth-supporting compounds in a more available form for development of soil micro-organisms and subsequent plant communities. The scientific inventor is finding the addition of the particles to traditionally nutrient-poor mountain soils is resulting in productive gardens with rich sustainable soils. The possibility exists that the particles can serve to inoculate cuttings with the appropriate balance of chemical to kick-start the development of useable soil. We will be hearing more about the growing success of “green” products from this break-through recycling process.
MAY 2015 ENERGY PIPELINE 35
36 ENERGY PIPELINE MAY 2015
MAY 2015 ENERGY PIPELINE 37
NO. 1 COMPLAINT
BRIGHT LIGHTS 38 ENERGY PIPELINE MAY 2015
DO NOT DISTURB Nighttime oil and gas operations offer opportunities to be a good neighbor BY TRACY HUME • FOR ENERGY PIPELINE
MAY 2015 ENERGY PIPELINE 39
IN JANUARY, THE COLORADO OIL AND GAS CONSERVATION COMMISSION ANNOUNCED A NEW PROCESS FOR HANDLING PUBLIC COMPLAINTS ABOUT THE OIL AND GAS INDUSTRY. DAVID KULMANN
DEPUTY DIRECTOR OF FIELD OPERATIONS, COGCC
DOUG HOCK
MANAGER, MEDIA RELATIONS, ENCANA SERVICES CO. LTD.
ALEX HOHMANN
STAKEHOLDER RELATIONS MANAGER, ANADARKO
40 ENERGY PIPELINE MAY 2015
The new process includes a dedicated webpage (http://cogcc.state.co.us/ complaints/complaints.html), an online complaint form, and detailed reports about the complaints COGCC receives. A glance at COGCC’s detailed report for 2015 to date shows about 25 percent of the complaints received have been about noise and about 10 percent have been about lighting. The report doesn’t show the time of the complaints, but based on his experience, Dave Kulmann, COGCC’s deputy director of field operations, estimates that the majority of those complaints are related to nighttime operations. Unfortunately, a lot of people outside the industry don’t understand why oil and gas is a 24/7 industry. “Drilling and completion operations are where you see the most nighttime activity,” said Kulmann. He said there are three good reasons drilling and completion operations take place around the clock: “Safety, the efficiency of the process, and economics.” “When you are starting up or shutting down a rig, there are safety issues,” he said. “Obviously, the operators do a lot of work to make sure it is safe, but starting and stopping the rigs unnecessarily adds additional risk.” The efficiency of the process is a second consideration. “Operators want to get in and get out as quickly as possible,” he said. “If you shut a rig down for eight hours during the night, you would lose much more than eight hours each day of drilling. The procedures for shutting down and starting up a rig take a significant amount of time. So if a well takes 12 days to drill going 24/7, it would take much longer than 24 days to drill that well if you were to shut down for some portion of the day because of nighttime operations.”
“Economics plays a role, too,” said Kulmann. “Rigs are typically contracted on a day rate, so anytime you have to shut the rig in and keep the rig there longer, you are going to have to pay more. If you takes you 24 days to drill a well rather than 12 days, you are paying extra.” Colorado’s rules and regulations don’t say much about nighttime operations, Kulmann said. “The only rule we have that specifically addresses nighttime operations is Rule 802 on noise abatement,” he said. “It sets lower levels of allowable noise at night, from 7 p.m. to 7 a.m. If they are drilling a well at night, they typically have to be 5 decibels less than when they are drilling during the day.” The rule states that for light industrial activity, the maximum permissible noise level is 70 decibels between 7 a.m. and 7 p.m. That drops to 65 decibels between 7 p.m. and 7 a.m. For comparison, a normal conversation is about 60 decibels according to the National Institute of Health (NIH). An increase of 10 decibels means a sound seems twice as loud, but is actually 10 times more powerful. The noises emanating from a dishwasher or vacuum cleaner are examples of sounds that typically measure around 70 decibels. Noise becomes a particular issue at night because “the ambient noises of the day dissipate” said Kulmann. “Everything else is quieter, so the noise from drilling operations becomes a little more prevalent. It’s not any noisier at night, it just seems noisier because everything else around is quieter.” The lighting associated with nighttime operations, such as the nighttime lighting on drilling rigs, is another common source of public complaints. Kulmann said, “Noise is something we have specific rules for, but the lighting rule (Rule 803) doesn’t specifically address
nighttime. It generally says lights cannot shine or glare on roads or houses that are nearby.” Kulmann noted that operators often go above and beyond to try to ensure that nighttime operations near residential structures do not aggravate neighbors. “If there are houses nearby, operators typically take more precautions to get the light and sound levels down, even more than the rules require,” he said. “If they don’t, they are going to have neighbors complaining to us, and then we will perform an investigation. If we determine they are above those levels, they will be in violation of the rules.” Operators - and the service subcontractors who typically conduct drilling and well completion - often walk a fine line, balancing the efficiency of business operations against stakeholder concerns. Doug Hock, manager of media relations for Encana, said, “Once we begin drilling operations, we can’t disrupt the process without potentially impacting the integrity of the well or losing circulation. It’s a matter of practicality. Once we start that process, we have to continue drilling.” Hock pointed out that neighbors benefit from the shortened time frame that 24/7 operations entail. “If we can operate 24/7,
LOUD NOISES
NO. 2 COMPLAINT
THE MAXIMUM PERMISSIBLE NOISE LEVEL IS 70 DECIBELS BETWEEN 7AM TO 7PM. THAT DROPS TO 65 DECIBELS BETWEEN 7PM TO 7AM One of the noisier activities at a drill site involves trucking in, unloading, and installing steel pipe into the well. Anadarko adjusted the timing of scheduled pipe deliveries in order to minimize the nighttime noise impacting neighbors. SOURCE: Provided by Anadarko Petroleum Corporation.
MAY 2015 ENERGY PIPELINE 41
ENCANA USES MEASURES SUCH AS BUILDING SOUND WALLS TO LESSEN THE OFFSITE DECIBEL LEVEL OF OPERATIONS we can decrease by almost half the time that we’re on location, “ he said. “That reduces the impacts on nearby residences. The sooner we can be in and get our wells drilled and on production, the sooner we can lessen the impact on neighborhoods in the areas where we’re drilling.” Encana uses measures such as building sound walls to lessen the offsite decibel level of operations. Encana also redirects lights away from residences, or uses curtains to obscure lights from beaming offsite. “We don’t want people to deal with lights shining in their bedroom window in the middle of the night,” Hock said. Anadarko also strives to find the middle ground between operational efficiencies and stakeholder concerns. Alex Hohmann, stakeholder relations manager for Anadarko Petroleum, said that “increasing our listening” is one of the ways Anadarko builds trust in the communities where it operates. “We need to understand how it’s working, or what opportunities might exist in places where we are conducting operations,” Hohmann said. About a year ago, Anadarko established a company response line - called the Anadarko Colorado Response Line - to facilitate the company’s ability to respond to concerns from residents directly affected by Andarko’s operations. The response line
includes both a dedicated phone number and an e-mail address. “It’s a communication channel for stakeholders and community members to call us and speak with an Anadarko representative directly or to email us with questions or concerns that matter to them,” Hohmann said. “They can submit pictures to us as well. We’ve had people send us photos that they have taken with their mobile device of our drilling operations or our hydraulic fracturing operations. That really becomes helpful with exactly which light plant is troublesome, for example. We can forward that to our representatives out on the drilling rig and then they know precisely what to tackle. It’s a great example of how our response line is helping us improve the quality of our operations.” With respect to concerns about light, Hohmann said Anadarko has had some recent success in using light emitting diode (LED) technology. “We have been using LEDs for our lighting arrays on location, as opposed to the old incandescent flood lights. We are finding that it is a much more focused light beam, it generates a lot less glare across the horizon, and there is a bit of energy savings, so it is a technology we are liking more and more,” he said. “It’s a good example of something we are finding helpful around nighttime
“If we can operate 24/7, we can decrease by almost half the time that we’re on location.” DOUG HOCK, spokesman, Encana Corp.
42 ENERGY PIPELINE MAY 2015
operations,” Hohmann said. “It is not something that is mandated by COGCC, but a situation where we had feedback from the community and had our problem solvers work on what could we do, what might we do, what should we do,” he said. Another example is changing the timing of scheduled delivery of steel pipeline to drilling sites, to minimize the disturbance from what is typically a pretty noisy activity. “The reality is we have to truck steel pipe in to sites, we have to unload it, and we have to pick it up and stand it up in the derrick. It’s incredibly loud. When we had the trucks in there at 2 or 3 a.m., we got feedback from the community about it,” he said. “With a little different scheduling and planning, we can avoid having that delivery in the middle of the night and minimize the disruption.” Again, this practice is not mandated by COGCC, but is “an internal protocol regarding nighttime operations,” Hohmann said. “It’s part of being a good neighbor in terms of oil and gas operation. These are home-grown solutions. They get adopted, and as we grow new team members and bring them into the operations, they learn that this is the Anadarko way of doing it.” Complaints about nighttime operations decrease as responsible operators, like Encana and Anadarko, find ways to address concerns about noise and light. And of course, in the natural lifecycle of a well, when drilling and completion activities cease, concerns about nighttime noise and lights dissipate. “Producing wells operate 24/7, too” Kulmann said, “but there is very little noise or light or truck traffic associated with producing wells. There is really not a whole lot going on at a producing site. It’s pretty quiet.”
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DEBT PRESSURE PUSHES OIL AND GAS COMPANIES TO OFFER STOCK TO RAISE CAPITAL BY ALLISON DYER BLUEMEL • FOR ENERGY PIPELINE
MAY 2015 ENERGY PIPELINE 45
TO RAISE MONEY TO PAY OFF DEBT AND MOVE FORWARD WITH OPERATIONS, SEVERAL OIL AND GAS COMPANIES OFFERED SHARES OF THEIR COMMON STOCK FOR SALE IN THE FIRST QUARTER OF 2015. The decision stems from a lack of recovery in oil prices, causing companies to borrow more since OPEC opted not to cut its production in November 2014. That move flooded the international supply of oil, driving barrel prices down. Many companies also have slowed or halted additional production ventures, laid off staff and attempted to make operations more efficient to save money. “You can only outspend your cash flow for so long,” said Jack Ekstrom, vice president of corporate relations for Denver-based Whiting Petroleum Corp, whose acreage is mostly centered in the Bakken, with a small portion in northeastern Weld County. “When the price of the commodity has fallen by half you’re going to try and spend half of what you have before.” Across the U.S., the trend has been the same as companies look to gain efficiency and get the highest return they can, said John Hilfiker, energy analyst for Denver-based Bentek Energy. “It’s kind of a race to the bottom to see who can weather (the low prices) the longest,” he said. When the industry experienced barrel prices in the $100 range, they expanded debt, as they didn’t anticipate the downturn at the end of 2014, said Fred Taylor, president and co-founder of Denver-based Northstar Investment Advisers. “When it collapsed more than 50 percent, all of the sudden they have to lay off people
and refinance debt,” he said. To raise capital, Equity Analyst Stewart Glickman with New York City based S&P Capital IQ said companies have two choices: raise it through stock offerings or raise it through debt. “The idea is that they want to reduce debt as long as the equity markets remain open,” NASDAQ Lead Energy Analyst Tamar Essner said. The pressure from financial institutions looking to collect on debt in 2017 and 2018 also pushes energy companies to find ways to raise additional capital during the sector’s downturn, she said. “It varies from company to company, but the (market) is clearly rewarding the companies that can reduce debt or avoid adding debt,” Essner said. For companies such as Whiting, which raised $1 billion following its stock offering of 35 million shares of common stock March 24, the first option offers a quick solution to offset operational debt or costs. The sale of the stock completed on March 27, according to a company press release. By the beginning of March, Essner said the sector has raised between $9 billion or $10 billion through additional stock offerings, which is more than the industry has raised in any other two-month period. “We didn’t want to increase our debt levels, and our stock price held up well despite low
“It’s kind of a race to the bottom to see who can weather (the low prices) the longest.” JOHN HILFIKER, energy analyst, Bentek Energy 46 ENERGY PIPELINE MAY 2015
MANY COMPANIES ALSO HAVE SLOWED OR HALTED ADDITIONAL PRODUCTION VENTURES, LAID OFF STAFF AND ATTEMPTED TO MAKE OPERATIONS MORE EFFICIENT TO SAVE MONEY commodity prices, so issuing was a viable option,” said Michael Edwards, senior director of investor relations at Denver-based PDC Energy Inc., which raised $203 million from its most recent stock offering. However, some market analysts remain confused on how the companies manage to sell so much stock in a market that has not recovered. “It’s a big question,” Essner said. “A lot of people in the investor community are a little perplexed as to how they’ve raised capital.” While additional capital from the sales can help to balance the expenses of smaller companies, it prolongs an inevitable thinning of the market that can create a loop of too much supply and falling prices, Essner said. With a large number of companies drilling wells to preserve leasing rights, but avoiding completion to prevent having to put the oil on the market, she said that companies would likely flood the market again with reserved oil once it recovers, which would cause prices to fall back down. Those wells that companies continue to drill, however, have focused their operations on sites that provide them with the best return, Glickman said. “They aren’t drilling as many holes in the ground recently, but the ones that they will still drill will be their best acreage all around,” he said. Some investors feel that the cutbacks in spending and the interest rate decline could
STOCK
OFFERINGS SHARES SOLD & PROFITS EARNED
lead to a recovery of the market in fourth quarter of 2015. However, Essner said that the prevailing outlook is more skeptical. “People were sort of looking for lower oil prices as an opportunity to have a clean-out in the sector,” she said. “It would put pressure on the weaker buyers and they would have to file for bankruptcy.” Another concern of analysts is that smaller capital companies don’t have the overhead to take on the large debt amounts bigger companies can, Taylor said. “Now we’re sort of prolonging (bankruptcy) because we’re enabling weak companies by giving them breathing space and prolonging the inevitable,” Essner said. Smaller capital, or small cap, companies vary in definition between brokerages, but often refer to companies whose capital does not exceed $5 billion. For reference, Denver-based PDC Energy Inc. has a market cap of $1.99 billion while Exxon Mobil Corp. has a market cap of $358.9 billion. Additionally, smaller companies attract investors by advertising dramatic, quick production growth, Glickman said. “The reason that people gravitate to a small company is the potential for faster growth,” he said. “Their whole reason for being is to grow and you can’t do that if you’re cash-constrained.” However, the downturn of the market pushed investors to value returns on investment more - which is more common in larger companies - when small companies show a large debt-toearnings ratio, Glickman said. “I think the smaller companies are a huge risk,” Taylor said. “They have too much debt and are over leveraged. Plus, (with lower prices) they’re getting smaller.” However, if the market recovers and companies see demand increases to match or exceed the flood of new oil, Essner said that the companies could continue operations. “It would be a function of demand picking up so that even the backlog of deferred wells isn’t enough to meet the demand,” she said. “It seems like it would be hard to break that cycle for at least the foreseeable future for the remainder of this year.”
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MAY 2015 ENERGY PIPELINE 47
THE OTHER SIDE OF THE FENCE In New York state, fracking ban fuels secession talk BY TINA SUSMAN • ASSOCIATED PRESS windsor, n.y. - From this village of dairy farms and friendly diners,
“I think it really has to be looked at seriously,” said Price, who has watched her town of 6,200 wither as locals move away in Carolyn Price can see across the border into Pennsylvania, and it is search of jobs. “We only need to drive a few miles, and we can see a bittersweet view. The rolling hills a few miles away are as green as ourselves.” She nods toward Pennsylvania, where once-depressed the ones here, and the Susquehanna River is icy and beautiful on towns now boast bustling businesses catering to workers from both sides of the state line as it meanders toward the Atlantic. companies like Chesapeake Energy, Houston-based Cabot Oil and Price sees something else, though: towns brimming with money Gas, and EOG Resources, which used to be part of Enron. extracted from the gas-rich Marcellus Shale, where the high-pressure “The natural gas is the drilling method known as only thing that’s truly going hydraulic fracturing, or to save this area,” Price said. fracking, has spurred an economic boom. Windsor is one of about 15 towns in New It is a different story York’s southern tier where here on the New York side, secession is being eyed, if where Gov. Andrew Cuomo not as an attainable goal in December declared a than as a radical proposal statewide ban on fracking aimed at grabbing state - one of only two in the lawmakers’ attention and country - saying he was LISA HAYES, resident of southern New York state forcing them to take notice not convinced it is safe. of the region’s desperation. The national debate For years, the state over fracking, which has vowed to create economic opportunities in the southern tier, critics say can pollute groundwater and endanger public health, once home to factories that produced everything from cigars to heated up last week when the Obama administration announced computers. For years, though, nothing has turned around a decline the first-ever federal regulations on the practice. But nowhere is that is evident in the shuttered businesses and “for sale” signs dotting fracking as heated an issue as in the stretch of New York known the rural landscape. as the southern tier, where Cuomo’s ban has spurred talk Broome County, which includes Windsor, is the southern of secession. tier’s most populous county. Its biggest city and the county seat, Political leaders like Price, Windsor’s town supervisor, say Binghamton, had 80,000 residents in 1950. Today, it is home to secession is not such a farfetched idea, and they are gathering 47,000 people. The fracking ban came on the same day that the state feedback from constituents to see whether there is support for a rejected the area’s bid for two casinos, exacerbating locals’ despair. breakaway movement.
“My roots are here, but I see how people are struggling, and it’s just so depressing.”
48 ENERGY PIPELINE MAY 2015
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MAY 2015 ENERGY PIPELINE 49
In February, Supervisor Jim Finch poses at Conklin Town Hall in Conklin, N.Y. Some Southern Tier towns are raising the question of seceding to Pennsylvania. Finch and other local officials talking about expanding Pennsylvania’s border to gobble up some towns clustered around the Keystone State’s northeast corner don’t really expect it to happen. But members of the Upstate New York Towns Association hope the headlinegrabbing idea will result in something good for a struggling part of the state. AP Photo by Mike Groll.
AT FIRST, THE IDEA (SECESSION) WAS SEEN AS A JOKE, BUT THE DISTRESS AMONG LOCALS WHO HAD COUNTED ON NATURAL GAS TO REVIVE THEIR COMMUNITIES WAS SERIOUS The Marcellus Shale covers about 104,000 square miles, from New York south to parts of West Virginia and Ohio, and it is believed to be the largest source of natural gas in the United States. Energy companies have been drilling into it and other U.S. shale for decades. Only in recent years have technological advances enabled them to reach previously inaccessible deposits by blasting water, sand and chemicals into the earth to create new cracks. Energy companies say hydraulic fracturing is no more hazardous than many traditional extraction techniques when proper precautions are taken. Critics say the technique brings a host of health and environmental problems, including seepage of chemicals into groundwater and earthquakes in areas where rock is being fractured. In drought-prone areas such as California, questions have been raised about the millions of gallons of water needed in fracking when residents face rationing. Nonetheless, only Vermont and New York have banned fracking. Cuomo’s ban came after years of study by the state’s Department of Health, which cited “critical information gaps” in potential hazards of fracking. “I have asked myself, ‘Would I let my family live in a community with fracking?’” Howard Zucker, the department’s acting commissioner, said as he presented the results of a 184page report to state lawmakers on Dec. 17. “The answer is no. I therefore cannot recommend anyone else’s family to live in such a community either.” Cuomo cited the study when he announced the fracking ban. “I’m not going to put the health at risk for jobs,” he said. “I’m 50 ENERGY PIPELINE MAY 2015
not going to make that choice. I’m not going to make it in the southern tier. I’m not going to make it anywhere in the state.” Within days, Jim Finch, the town supervisor of Conklin, about 15 miles from Windsor, had begun mentioning secession as an option. At first, the idea was seen as a joke, but the distress among locals who had counted on natural gas to revive their communities was serious. “The southern tier is desolate,” Finch told Binghamton’s WBNGTV last month, even as he conceded that the chances of secession were remote. Still, state Sen. Thomas Libous, a Republican who represents the region, has been asking constituents their views on secession in an online survey. The Upstate New York Towns Association, which represents southern tier communities and is headed by Price, plans to review results from Libous’ survey once they’re tabulated and decide what to do next. The organization was formed in July 2013 in response to what regional leaders say is the state’s tendency to make decisions that favor New York City and other so-called downstate areas. Chief among those decisions has been the fracking ban, Price said. Local disappointment was sharpened by the knowledge that friends living a few miles away in Pennsylvania are thriving since energy companies began fracking there. “It’s hard for them to accept that the line on the map makes such a huge difference,” said Price, adding that New York’s taxes, which are higher than Pennsylvania ‘s, add to residents’ ire. The crowd at Kennedy’s Diner one recent lunch hour reflected the local frustration. As they devoured bowls of soup, heaping
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MAY 2015 ENERGY PIPELINE 51
NEW WELLS NEARING HALF WHAT THEY COST BACK IN 2010? Synergy aims high for lowest well costs BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM platteville-based synergy resources, a rising star in the Weld County oil and gas drilling scene, has plans to achieve what many in the industry believe is perhaps the impossible. Officials there hope to drive the cost of drilling a horizontal well to $2.5 million - unheard of in most oil and gas circles, and a claim that evoked some disbelief in April during the company’s second quarter earnings call with investor analysts. “I just wanted to confirm that I heard (co-CEO Ed Holloway) state you guys are hoping to get well costs to $2.5 million,” one analyst asked Thursday during the call. “Did you get too excited there, Ed? How realistic is that?” Drilling innovations and efficiencies reached in all parts of the drilling process have steadily brought costs down in the Wattenberg Field, which many in the industry see as one of the most economic plays in the country. A year ago, Synergy was shocking people with claims of $3.5 million per well. That’s down from over $5 million a horizontal well typically cost in this field when the shale revolution started in 2010 in Weld County. In comparison, drilling costs in the Bakken - an oil and gas rich region in North Dakota which produces three times more than the Niobrara shale in Weld - typically range around $8 million to $10 million per well. Pete Stark, an industry analyst with IHS in Englewood who follows and researches the 52 ENERGY PIPELINE MAY 2015
SYNERGY AND OTHER COMPANIES HOPE TO REDUCE OVERHEAD, TRANSPORTATION COSTS AND SERVICE INDUSTRY COSTS; AND THEY ARE EXPERIMENTING WITH DRILLING AND COMPLETION FORMULAS TO SHAVE AS MUCH AS THEY CAN OFF THE TOP oil and gas industry, said companies were sitting at the range of $5 million per well. “I know costs have come down, but they’re talking step changes there,” Stark said of Synergy’s $2.5 million target. “Hallelujah if they can do it. In the big picture ... that is incredible. I really tip my hat and say hallelujah.” In an environment that has seen crude prices drop roughly 60 percent since a
summer 2014 peak of $100-plus per barrel, companies are doing everything they can to shave costs to reach a break-even point that keeps drilling profitable. Today, crude prices hover around $50 per barrel, which is about $15 lower than what is considered a healthy profit. Noble Energy, in its latest presentation to the market, touted getting its drilling costs in the DJ Basin down 30 percent from 2013 and expects $4 million-per-well costs this year. Noble and Anadarko Petroleum are the top two oil and gas exploration companies in Weld County. In its most recent presentation, Anadarko reported it expected to keep its costs down to $3.6 million per well. Stark said even $4 million was eyeopening and will bode well in the future. “When oil gets back to $60, how much more oil will be able to be produced profitably at $60 than the industry produced at $60 before?” he said. “It’s the type of thing that can help transform the operational efficiencies going forward that will make the industry, and also, makes the economy more efficient and effective. “Instead of economy being healthy at $80 oil, it could be healthy at $60 oil.” Those in the industry have long been working to reduce costs. Now, when oil is hovering at $50 a barrel, belt-tightening is imperative. Companies throughout he field have laid off employees consistently since January.
can we get better every day?” Synergy and other companies hope The latest cost savings for Synergy may to reduce overhead, transportation costs come in eliminating trucking its crude to the and service industry costs; and they are Suncor refinery in Commerce City. Synergy experimenting with drilling and completion officials are working to build pipelines formulas to shave as much as they can off directly to the refinery, which takes 95 the top. Synergy officials, however, said that percent of the company’s crude output. doesn’t mean cutting corners. “Piping oil is another savings where we Holloway said he continues to discuss eliminate three quarters of the tanks on prices with service companies - the ancillary companies that bring workers and product to their operations -in the field. In many cases, those companies are chopping prices. “I think what’s really happening is they’re PETE STARK, an oil and gas analyst with IHS in Englewood understanding the whole economic play,” location,” Holloway said. “Our footprint is Holloway said. “They’ve all skinnied down, smaller. It’s really an intriguing period of laid off a few people, there may be pay cuts. time, and capital efficiency is really starting They’re looking at their own food chain, to go up. That’s what you want is to recycle and we just keep pressing on what we need capital and see how fast you can get it back to have.” into the ground.” Added Bill Scaff, who shares that CEO The company also plans to change its position with Holloway: “When prices casing program - or the width of steel pipe get down this low everyone gets a lot it puts into the well bores for each well. more innovative.” Completion techniques, or the amount of Holloway agreed: “It’s not always them sand, or proppant, they use to frac a well, as cutting costs, but them coming up with ideas well as the chemistry involved, also result in that saves everyone money,” he said. “It’s some realized cost savings, Holloway said. how can we improve operations and how
“We think there’s a possibly of getting there, changing up our casing program, as well as additional savings across the board,” Holloway told that incredulous analyst of the $2.5 million target. “We have that possibility. (These) last 13 wells we just finished fracking... went extremely well and really made great improvements on that side of the costs. ... So we’re really setting those targets to see how we can get there. “Across the board we’re really fine-tuning everything,” Holloway said. With the downturn, and the layoffs that have resulted, Synergy has been able to secure some the more experienced employees to help drive efficiencies. “We’re able to get some of the elite crews that all these companies have and that efficiency is really showing up in spades for us,” Holloway said. Stark said that kind of thinking leads to innovation that will help the country in the long run. “To me, that is the type of innovation that I think is absolutely critical for the U.S. industry to become more efficient and effective coming out of this oil price collapse we’ve experienced.”
“Hallelujah if they can do it. In the big picture... that is incredible.”
SYNERGY RESOURCES EARNINGS RESULTS Synergy Resources posted a continued production increase for its second fiscal quarter, though net income fell slightly from the same time last year. Synergy reports its earnings on a fiscal year calendar, which starts in August. Its earnings report in April was its second quarter, or the three months ending Feb. 28, which is the very beginning of the slowdown in the industry amid low oil prices. It is the first company in the area to report earnings and how the recent downturn has
“This quarter’s financial results reflect the benefits we are reaping from maintaining a keen eye on controlling costs as we achieved a 63 percent operating cash margin on revenues in the quarter, even while commodity prices were falling,” reported CFO Monty Jennings in a news release.
barrels of oil equivalent (oil, gas and natural gas liquids) per day in the quarter, a 98 percent increase from the same time last year. The company stated that increase was “primarily from the new horizontal wells it brought online in an acquisition from a Denver company, Bayswater Exploration, in December 2014.” COO Craig Rasmuson said they hope Synergy will be producing 13,000 boe per day by August.
Overall, the company’s production averaged 7,745
Net income dipped to $4.7 million from $5.2 million
affected them, as others report on a calendar year and should be out in the next month.
at the same time last year, but adjusted earnings before interest, taxes and other expenses increased 56 percent to $27.3 million, the company reported. Officials report their natural gas takeaway efforts are still constrained by midstream issues, but hope that will be alleviated once DCP Midstream opens its Lucerne II plant later this year. The company at this time also has been adding employees while others have been laying off.
Researchers at the University of Wyoming examine core samples of rock to determine how oil and gas move through them.
Photo for Energy Pipeline
BENEFICIAL RESEARCH University of Wyoming research facility could benefit Weld County drillers BY ANNE CUMMING RICE • FOR ENERGY PIPELINE
chemical and petroleum engineering. A space between the grains of sediment a $54 million research facility under decade ago, he started developing a line beneath the surface of the ground. construction at the University of Wyoming of research using instruments designed Now imagine that same bucket of golf in Laramie could have a big impact for the medical field, such as X-rays and balls, but add a deck of playing cards to it. on oil and gas companies operating in CT scanners, to analyze core rock samples It’s harder to get water in as well as out. Weld County. down to the nanometer and how oil and This is like an unconventional reservoir, The university broke ground in early gas move through them. That analysis can where there is little space between March on the High Bay Research Facility, help increase the effectiveness of fracking the grains. where faculty, students and scientists will in tight rock formations. examine the physics This research is of oil and gas flow already being done at the on unconventional University of Wyoming’s reservoirs, much like Energy Innovation the DJ Basin. Center, a $25 million “At the outset, facility that opened this facility will have in 2013. But at 90,000 a bigger impact on square feet, the new the companies that MARK NORTHAM, director, School of Energy Resources, University of Wyoming facility will have triple operate in northern the space, 25,000 Colorado than in square feet of which will be “high “So the question is, ‘How do you find Wyoming,” said Mark Northam, director bay” space, extending up to 28 feet to the pathways in unconventional reservoirs of the School of Energy Resources at the accommodate large equipment needed to get the oil and gas out of the ground?’ “ University of Wyoming. to conduct research. Northam said. Conventional reservoirs are like The facility will be shared among the Finding those pathways has been the a bucket filled with golf balls with School of Energy Resources, the College of work of Mohammad Piri, chairman of the water poured into it. Like the bucket, Engineering and Applied Sciences and the University of Wyoming’s department of conventional reservoirs have significant
“At the outset, this facility will have a bigger impact on the companies that operate in northern Colorado than in Wyoming.”
54 ENERGY PIPELINE MAY 2015
Photo for Energy Pipeline
STUDENTS AND SCIENTISTS WILL EXAMINE THE PHYSICS OF OIL AND GAS FLOW ON UNCONVENTIONAL RESERVOIRS, MUCH LIKE THE DJ BASIN Department of Geology and Geophysics. As Piri continued to develop his line of research, the university approached oil and gas companies about investing in the construction of facilities. Several oil and gas companies contributed to the Energy Innovation Center. Results from research being done there enabled the university to cast an even bigger vision for the High Bay facility. “We came up with a vision for the research we wanted to do,” Northam said. “Some of it
resonated with the oil companies, but some of it didn’t. We kept refining the vision until they got on board.” Forty percent of funding for the High Bay Research Facility came from Hess Corp., Exxon Mobil, Ultra Petroleum, Halliburton, Marathon Oil Co., Royal Dutch Shell, Baker Hughes and Arch Coal Inc. The state of Wyoming kicked in 60 percent. The facility will initially have $30 million-$40 million of instrumentation to conduct research. “But we believe it will take $100 million to totally instrument it,” Northam said. Construction is expected to be complete in August 2016. Northam anticipates the facility being available to a host of visiting scientists and engineers. There’s also the capability to apply the line of research to other fields - not just oil and gas. “We anticipate 50 people doing research in this facility every day,” Northam said. “We are very excited about that first scoop of dirt and finally seeing this vision become reality.”
Research at the university’s new High Bay Research Facility, expected to open in August 2016, will help oil and gas companies operating in northern Colorado improve their effectiveness in fracking tight rock formations.
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MAY 2015 ENERGY PIPELINE 55
WHAT THEY SAID
SPOKEN WORD Overheard at DUG Bakken-Niobrara conference in Denver BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM every year, hart energy puts on the DUG
Bakken-Niobrara conference in downtown Denver, where industry officials talk about economics, production and innovation in the Bakken region in North Dakota and the Niobrara region in the Denver-Julesburg Basin. The conference, held March 31-April 2 at the Colorado Convention Center, focused this year on companies finding ways to continue innovation and operation in the bust side of the oilfield lifecyle. Crude prices reached a high over $100 a barrel last summer but have sunk more than 60 percent in recent months, signaling companies’ needs to downsize and control costs. That has meant job losses and price cuts across the board. Most conference speakers discussed the ways that companies can weather the cycle. The following are some highlights of discussions pertaining to the Niobrara:
56 ENERGY PIPELINE MAY 2015
window, as opposed to back toward the Wattenberg, where it’s predominantly gas. DIANE SANTOS, vice president of Phillips 66 Pipeline, which owns DCP Midstream: “You producers have proven to the world that the U.S. has enough (resources). It has meant a renaissance in terms of investments and opportunities to respond to this shale revolution. We’re investing now at a pace that we haven’t seen since the last infrastructure buildout in the ‘70s. “In late 2012, I was with BNSF (Burlington Northern Santa Fe) executives talking about our own crude by rail movements. I told them crude by rail is a flash in the pan because it’s so ineffecient and costly. ... Clearly, crude by rail has become an important element particularly in the Bakken. For my own company, a very important part of our strategy.”
“... Although I will say it’s good, rich, gas out here, we already built our own gas plant out there ... . We’re masters of own fate up there. We’re not waiting for anyone to hook us up. “As we look at the infrastructure, you really couldn’t in my opinion, even if you could plan it with Mother Nature, where to place a brand new field, you couldn’t have picked a better spot than Redtail. It’s bounded on the north by two large interstate pipelines... . To the east of us, there’s the Pony Express oil pipeline and as a consequence, we’re committed early to that line and enjoying a low differential in comparison to the current market.”
JEFF KNUPP, director of investment banking for Tudor, Pickering, Holt & Co., in Houston, Texas:
JAMES VOLKER, CEO and chairman of Whiting Petroleum Corp., on the company’s assets in northeastern Colorado, commonly referred to as the Redtail area:
“We have a bit of a different view on oil prices, long term strip is mid-$60s. The long-term research consensus is $75 plus; we at TPH think we’ll return to $90-oil. Fingers crossed on that one.
“Basically where we’re drilling is an eastern extension to the Wattenberg, basically out there within the Colorado mineral belt ... where we have about 132,000 net acres under lease, well away from population centers, in an areas where predominantly all our acreage is on three fairly large ranches. And it’s an areas where the Niobrara is in the oil expulsion
“We believe with massive rig reductions, supply will come back into balance with demand near the fourth quarter of this year. If you assume a modest 1 percent growth in demand, we as a global economy have to increase supply, and the U.S. is the only area with the demonstrated ability to rapidly increase supply.”
TOM PETRIE, chairman of Petrie Partners in Denver: “With the U.S. supply growth we’ve had, we also have a real imbalance of quality. There’s so much light oil in the U.S. that really, we’re very rapidly approaching the full capacity of the U.S. refinery system to efficiently operate using that light oil. Much more effective would be to ship some of that oil at a premium into the international market, and continuing to import more sulfurous oil. ... Some $85 billion has been spent in reconfiguring refineries in the last decade. If one didn’t have access to international markets, there will have to be a price to idle that capacity, and that translates to bigger discounts. ... We’re rapidly approaching the reality of that. “There’s quite a bit of persuasion (in Congress) going on about the benefits, if in fact, we lift the ban (on exporting U.S. crude). There’s a trade deficit benefit, because light, tight can go to markets that can pay full value, as opposed to what happens when we reach a point where you’ve reached capacity to run light, tight oil in the U.S. system. Now you go to the refineries... the sophisticated equipment you would normally use to create gas, diesel and aviation fuel now has to be sidelined. To do that, I’m going to give you a bigger discount. “In the absence of action, we’re likely to reach that limit
sometime this year, the third quarter potentially, and it might be under conditions where we are looking at even lower prices than today. At some level that becomes a lose-lose. The government loses revenue, job loss picks up and ... (and the ongoing benefits of a lower trade deficit will go away). If you don’t do something here pretty soon, it will go the other way.”
TRISHA CURTIS, director, upstream and midstream research, Energy Policy Research Foundation Inc.: “What’s really important, when we go forward and look at what reservoirs look like, these years with low oil prices will matter. There’s a lot of job losses here. When you send everyone home, you just can’t bring them back overnight.”
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MAY 2015 ENERGY PIPELINE 57
OPINION
GIVING FROM THE HEART Weld County companies help a local family in need BY RICK POWERS • FOR ENERGY PIPELINE
in january, I learned of the Sperry Family
and their plight. Jay and Donna Sperry (Jay a veteran fireman, Donna a teacher and artist) have a daughter named Kelley who is 24. Once an aspiring CNA in the medical field, Kelley has been battling a horrible combination of epilepsy and Parry Romberg syndrome, which has forced her to be totally dependent on her family. The epilepsy creates multiple body-stiffening seizures daily, often resulting in uncontrolled falls. The Parry Romberg causes the facial bones on one side to deteriorate, resulting in the skin pulling away as well, disfiguring the face. Kelley has had more than 20 surgeries on her face due to the disease. She has a service dog named Kobi who has saved her life repeatedly by ushering her to chairs and couches when he senses seizures coming on, as well as laying with her to help ride out the seizure. Traveling across the country as often as they could to specialists and medical centers took a toll, along with the surgeries and medications, which bankrupted the family. Another challenge was the fact that they were loading up and traveling in a small compact car including the service dog and 58 ENERGY PIPELINE MAY 2015
KELLEY HAS BEEN BATTLING A HORRIBLE COMBINATION OF EPILEPSY AND PARRY ROMBERG SYNDROME luggage to make these trips across country, which worsened Kelley’s pain level each time. When I learned of the Sperry’s situation, I met with Pastor Dave Slone as well as Warren and Lee Yoder, whom I knew from Weld County Garage and Greeley Subaru Mazda. All three of these men are staunch followers of Christ, and huge figures in local outreach programs of their own. They didn’t hesitate to help the family. My plan was to raise money through the oil industry here locally and use the money to help buy a reliable and larger vehicle for the family, hoping for around $20,000. In the beginning, many local
RICK POWERS is the training manager for Covenant Testing Technologies and the founder of Gift for Guardians, a Greeley-based soldier care package program that has shipped over 2,100 gifts to local soldiers overseas since 2011.
companies lined up to help, but unfortunately a certain company backed out of donating altogether, which set us back by $15,000. It was a hard pill to swallow, but I trusted that God put this family on my heart for a reason. Chipping away at the goal creatively, I began making and selling abstract canvas paintings of American flags and donating the profits to the fundraiser. I also made reclaimed wood furniture, wine racks, and other items using discarded pallet wood and donated wood scraps from local new home construction sites. Area businesses helped out as well, including Pelican Joe’s Pizza in Windsor, where a fundraiser pizza day was held. Many people in the community bought paintings and reclaimed wood products to help support the cause. A huge thank you to Select Energy Services, ARDENT, Dave’s Flow Measurement, Widow Maker Bucking Bulls, Max Muscle, Windsor Flooring, Coral Bay Liquors and Main Street Properties for donating to help the family. One year and one month later, this past February, we saw the dream to fruition, raising a total of over $5,000 for the family. Trading in their compact car, and using the funds raised through the drive, Greeley Subaru got the Sperry family into a great late model Suburban at cost, with an added maintenance
“This endeavor speaks volumes about doing something bigger than self, leading by serving, and rallying together for a local family in need.” RICK POWERS, training manager, Covenant Testing Technologies warranty to protect them from any future worries. This endeavor speaks volumes about doing something bigger than self, leading by serving, and rallying together for a local family in need. I am grateful to have played a part in it. On behalf of the Sperry family, thanks so much to all who helped see this dream become a reality. At the time of this writing, Kelley is sadly hospitalized and under a drug induced coma to combat a recent onslaught of massive seizures. A positive note is that prior to this latest hospitalization, Kelley had become a certified service dog trainer to help other disabled people live better lives. A true champion. Our thoughts and prayers are with the Sperry family as they continue to fight for Kelley.
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12706 Weld County Road #4 Brighton, CO • (303) 659-9690 • fax (303)659-9696MAY www.tcparts.net 2015 ENERGY PIPELINE 59
News Briefs Energy Information Administration’s Annual Energy Outlook 2015 The United States could eliminate all energy imports in the next decade, according to projections in the Energy Information Administration’s Annual Energy Outlook 2015. The potential to eliminate net U.S. energy imports exists sometime between 2020 and 2030, the report stated. This reflects changes in both supply and demand, as continued growth in oil and natural gas production and the use of renewables combine with demand-side efficiencies to moderate demand growth, the report stated. The United States has been a net importer of energy since the 1950s. The United States exports of petroleum products and coal, but it is an importer of natural gas and crude oil. When the energy content of these fuels is combined, the United States last year imported 23.3 quadrillion British thermal units of energy and exported 12.2 quadrillion Btu.
Anadarko buys into pipeline project Magellan Midstream Partners and Plains All American Pipeline announced recently that a wholly owned subsidiary of Anadarko Petroleum Corporation has purchased a 20 percent equity interest in Saddlehorn Pipeline Company. As a result, the equity ownership in Saddlehorn will be 40 percent Magellan, 40 percent Plains and 20 percent Anadarko, according to a news release. Saddlehorn is a limited liability company that will build, own and operate the Saddlehorn pipeline, an approximately 550-mile pipeline that will transport various grades of crude oil from the DJ Basin, and potentially the broader Rocky Mountain area resource plays, to storage facilities in Cushing, Okla., owned by Magellan and Plains. The 20-inch pipeline will have an ultimate capacity to transport up to 400,000 barrels per day, but the initial capacity of the Saddlehorn pipeline is expected to be closer to 200,000 bpd, the release stated.
The timing of the projected end to U.S. net energy imports depends on assumptions about oil prices, energy resources, and economic growth, but initial projections indicate the U.S. will become a net exporter of energy in just four years if prices are high, the report stated. In the case of continued low prices, the United States remains a net energy importer through 2040, the report stated.
An extension to Carr, Colo., is also under consideration for connection to existing crude oil assets owned by Plains in that region. This lateral is being designed to provide additional shippers with flexible options and streamlined access into the Saddlehorn system.
The United Statesis expected to transition from a net importer of natural gas to a net exporter in 2017, the report stated. These natural gas exports are mostly sent by pipeline to Mexico or in the form of liquefied natural gas (LNG) to other countries, the report stated. The United States continues to be a net importer of crude oil and liquid fuels in most cases, despite increases in exports of petroleum products. Net trade in coal and other energy commodities is relatively unchanged.
The project is estimated to cost between $800 million and $850 million. Magellan will serve as construction manager and pipeline operator of the Saddlehorn system, the release stated.. Subject to receipt of necessary permits and regulatory approvals, the Saddlehorn pipeline is expected to be operational during mid-2016.
- Staff Reports
- Staff Reports
60 ENERGY PIPELINE MAY 2015
ficiencies of state programs, and improve Powell National Park began detecting adult end user to take precautions to avoid and isWater now infested. Many Colo- spreading invasive species. If every boater ustomer serviceInfor boaters Beneficial and anglers. Expertise Permitting Usesmussels Of Produced to clean, clean One ne of the many products of this effort rado boaters frequent Lake Powell, Lake and angler takes a few seconds We Take the spread cludes a Model Legislative Provisions Mead, Arizona and Kansas waters, among drain and dry; we can stop Uninsured of ANS and protect our waters for r Watercraft Inspection and DePatients future generations. Recognizing ontamination Stations, which was pproved by the Association of the importance of education in stopping new introductions and sh and Wildlife Agencies at their containing current infestations, infestations enver North American ConferCPW has expanded its statewide nce in March 2013. IndustrialWaterPermittingandRecyclingConsultants.com educational campaign to all recExpanding the partnership that reational users. In doing so, the olorado has created to other Contact: Gary Beers Water is state invasive species program 303.748.0390 always a to long term ates is imperative gary1beers@gmail.com RESOURCE launched a new campaign Protect ustainability. stainability. The threat of zebra Colorado’s Lands and Waters r quagga mussels entering Coloto inform all recreationists and ado do from another infested state Experienced professionals about the harm greater than ever before. While, Family Doctor invasive species pose and simple here ere has never been an adultOrders Welcome! Special ways they can help protect Coloussel found in Colorado, we • Concierge service to include Check us out rado’s great places. The campaign re e surrounded by infestations in onlineDecontamination at all family members. Decontamination of of watercraft watercraft Delivtoery thetime. International revelationsteel.biz ther her states. Almost all states • Same day appts withlaunched minimal at wait 1324 North 7th Ave, able il a v A Sportsman Expo in January 2014 • Reasonable prices for uninsured. he e east of Colorado have mussel Greeley, CO 80631 and is expected to expand over the next Boaters using infested waters must • Treat depression/anxiety Phone: 970.356.2005 festations, including Kansas, Oklahoma others. • Laserfive hair removal, Botox, Fax: extra 970.356.2006 years. take care not to transport mussels nd most recently in northern Texas. The Latisse and Juvaderm. For FAA morephysicals. information, visit www.cpw. wer Colorado River is heavily infested across state lines and to comply with Col• CDL and Ins Welcome state.co.us. ith quagga mussels from Lake Mead, NV orado’s mandatory inspection regulations. Walk ownstream through Lake Mojave to Lake A huge portion of the program’s obOpen 7:30 a.m. - 5:00 p.m. Mon - Fri Sales: John, Mark, Kim, Terry, Todd & Sean 6801 W. 20th St. #206 • 330-9061
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News Briefs DCP Midstream recognized as fit-friendly worksite by AMA DCP Midstream has been recognized as a Platinum-Level Fit-Friendly Worksite by the American Heart Association for helping employees eat better and move more. “Physical activity and employee wellness are important priorities at DCP Midstream. We are honored and excited to be recognized by the American Heart Association as a Platinum-Level Fit-Friendly Worksite,” said Chairman and CEO Wouter van Kempen, in a news release. “We’re committed to providing the best workplace environment possible. This will benefit our employees’ health and produce even more positive results for our worksite overall.” Platinum-level employers: • Offer employees physical activity options in the workplace. • Increase healthy eating options at the worksite. • Promote a wellness culture in the workplace. • Implement at least nine criteria outlined by the American Heart Association in the areas of physical activity, nutrition and culture. • Demonstrate measurable outcomes related to workplace wellness. In the five years since DCP Midstream began a wellness program for its employees, they have begun to bend the curve on employee health and employee healthcare costs, the release stated, noting a 15 percent yearover-year improvement in enrollment in the company’s employee wellness program. Every year, employees log points by completing tasks that earn a wellness credit on paychecks for the following year, the release explained. They must complete tasks in various categories that include completing a biometric screening and health risk assessment, completing online training courses, attending doctor’s and dentist’s appointments, logging wellness related trackers like water consumption, hours of sleep, and servings of vegetables, and participating in team and individual health challenges, the release stated. 62 ENERGY PIPELINE MAY 2015
The Fit-Friendly Worksites program is a catalyst for positive change in the American workforce by helping worksites make their employees’ health and well-being a priority, the release stated. American employers are losing an estimated $225.8 billion a year because of health-care expenses and health-related losses in productivity, and those numbers are rising, the release stated. Because many American adults spend much of their time at sedentary jobs, they lack physical activity, which raises the risk for medical problems, such as obesity, high blood pressure and diabetes. Employers face $12.7 billion in annual medical expenses due to obesity alone, the release stated. The American Heart Association is working to change corporate cultures by motivating employees to start walking, which has the lowest dropout rate of any physical activity. Employers that join this program qualify for official recognition by the American Heart Association. They are listed on the program’s national website, as well as at the Denver Fit-Friendly Worksite Symposium and the Denver Heart & Stroke Walk. Qualifying worksites also have the right to use the program’s annual recognition seal for internal communications and with external, recruitment-related communications. “The Fit-Friendly Worksites Program offers easy-toimplement ways for organizations to help employees eat better and move more, which will help improve their health - and their employer’s bottom line,” said Vice President of Human Resources Tamara Bray, in the release. “Even people who haven’t exercised regularly until middle age can reap significant benefits by starting a walking program. A study published in 1986 in the New England Journal of Medicine found that some adults may gain two hours of life expectancy for every hour of regular, vigorous exercise they performed.” For more information about the Fit-Friendly Worksites program and how it’s helping to improve the health of Americans by focusing on the workplace, call (303) 801-4630 or go to heart.org/worksitewellness or heart.org/denver. - Staff Reports
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64 ENERGY PIPELINE MAY 2015
COGA seeks nominations for annual conference awards The Colorado Oil and Gas Association is seeking nominations for awards in the oil an gas industry to be presented at its annual Rocky Mountain Energy Summit Conference, Aug. 24-27. The three awards to be given out are: • Lifetime Achievement Award: This award honors an individual who has performed outstanding service and achieved noteworthy accomplishments over the course of their career in Colorado’s oil and gas industry. This individual’s exceptional devotion of time, effort, thought, and action serves as an inspiration throughout the industry. (2014 Inaugural Honoree: Fred C. Julander, Julander Energy) • Industry Advocate Award: This award recognizes an individual who has shown outstanding personal dedication and commitment to proactive advocacy on behalf of the oil and gas industry. Going above and beyond all expectations, this individual is engaged in public education, community engagement, and meaningful dialogue about responsible energy development in Colorado. This individual may be employed by the industry or may advocate on our behalf as an ally. (2014 Inaugural Honoree: Dave Brown, BP) • Emerging Leader Award: This award recognizes the outstanding achievement of an emerging leader within industry. This individual will have already made significant contributions to the industry and have demonstrated the potential for leadership, dedication, and innovation. All nominees must be under 35 years of age. (2014 Inaugural Honoree: Sarah Bartlett, PDC Energy) If you know of someone fitting these criteria, please send a brief nomination, including the nominee’s name, title, company and description of merit to Sarah Landry by close of business on Friday, May 29. Final selection will be approved by COGA’s Conference Steering Committee. - Staff Reports
Scientists launch study of emissions over fracking sites BOULDER - (AP) Researchers are taking to the air to measure trace emissions over oil and gas production sites in the Bakken oil fields of North Dakota, the Niobrara shale formation of northern Colorado and Wyoming, and the Four Corners. Scientists from the Cooperative Institute for Research in Environmental Sciences at the University of Colorado and the National Oceanic and Atmospheric Administration plan 15 research flights out of Colorado and Texas through May. The researchers are using aircraft equipped with chemical instruments and their data will take more than a year to synthesize. U.S. natural gas production has increased thanks to fracking, and the drilling technique has raised environmental and health concerns. Joost de Gouw, a research physicist and lead scientist on the project, said methane emissions are of particular interest. Natural gas, he said, is mostly methane. Although carbon dioxide is more abundant in the atmosphere, when compared molecule to molecule, methane is a more potent greenhouse gas. The researchers will be looking for values in excess of methane’s typical atmospheric concentration of 1.85 parts per million. Previous measurements in Colorado, de Gouw said, have shown that methane can go over 2 parts per million. Another area of focus will be organic compounds and nitrogen oxide. When combined in the atmosphere, these trace gases form ozone and fine particles that affect air quality. Under the Clean Air Act, these particles are classified as pollutants and strictly regulated. Gouw said researchers are studying sites that have shown a large variability in these emissions, and scientists are unsure why. - Associated Press
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ENERGY PIPELINE 65
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66 ENERGY PIPELINE MAY 2015
MAKING HOLE A look back at the origins of oil and gas BY BRUCE WELLS • AMERICAN OIL & GAS HISTORICAL SOCIETY
American roughnecks stayed at Kelham Hall, an Anglican Monastery ideal for the year-long operation to drill wells in 1940s Great Britain - it was isolated from the community.
The roughnecks of Sherwood Forest by the summer of 1942, the situation was
desperate. The future of Great Britain and the outcome of World War II depended on petroleum supplies. As demand for 100-octane gas approached 150,000 barrels a day, tanker convoys from America were subjected to relentless Nazi submarine attacks. U-Boats ruled the Atlantic. Meanwhile, Field Marshall Erwin Rommel’s rampaging North African campaign threatened England’s access to Middle East oilfield sources. In August 1942, British Secretary of Petroleum Geoffrey Lloyd called an emergency meeting of his Oil Control Board to assess the “impending crisis in oil.” Many at the meeting were surprised
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.
to learn England had a productive oilfield. The obscure oilfield, discovered in 1939, was in Sherwood Forest. The field, near the village of Eakring at Dukes Wood, produced modestly about 700 barrels a day from 50 shallow wells. Extreme shortages of drilling equipment and personnel kept Britain from further exploiting the field. Perhaps America might help. In November 1942, a British representative traveled to Oklahoma to meet Lloyd Noble, president of Noble Drilling. They met in Noble’s hometown of Ardmore to negotiate a deal. Although U.S. oil companies were already heavily committed to wartime production, Noble Drilling and partner Fain-Porter Drilling
MAY 2015 ENERGY PIPELINE 67
“They even sent me a pair of original overalls so I would get it exactly right.” JAY O’MEILIA, sculptor of the “Oil Patch Warrior” statues
Company of Oklahoma City agreed to a oneyear contract to drill 100 new wells in England. On March 12, 1943, a top-secret team of 42 American drillers, derrickmen, roustabouts and motormen boarded the troop ship HMS Queen Elizabeth. Four rotary drilling rigs were shipped on separate transport vessels. One was lost to a U-Boat attack. The drilling crews, mainly from Oklahoma and Texas, joined the “The English Project” managers at billets prepared in an Anglican monastery at historic Kelham Hall. Word spread that the sudden influx of Americans from Oklahoma was for the making of a movie, probably a Western. It was said that John Wayne would arrive soon.
By the end of the war, more than 3.5 million barrels of oil had been pumped from England’s “unsinkable tanker.” But not without cost. Herrman Douthit, a derrickman from Texas, was killed when he fell from a rig’s mast. Douthit was buried with full military honors at the American Military Cemetery in Cambridge. He remains the only civilian to be buried there. Today, two identical bronze statues separated by the Atlantic commemorate the achievements of the World War II roughnecks. Dedicated in 1991, the first 7-foot statue by Tulsa artist Jay O¥Meilia stands holding a Stillson wrench in Sherwood Forest’s Dukes Wood near the village of Eakring in Nottinghamshire. The twin, dedicated in 2001, greets visitors at
THE DRILLING PROJECT’S CONTRACT WAS COMPLETED IN MARCH 1944 WITH THE AMERICANS LOGGING 106 COMPLETIONS AND 94 PRODUCERS Dedicated in Ardmore in 2001, the bronze “Oil Patch Warrior” (top photo) is the twin of a statue dedicated one decade earlier in England (bottom photo).
68 ENERGY PIPELINE MAY 2015
Within a month, enough equipment had arrived to enable spudding the first well. Two others quickly followed. Four American crews worked 12-hour tours with National 50 rotary rigs equipped with 87-foot “jackknife” masts. The roughnecks amazed their British counterparts with their drilling speed. Using innovative methods, the “Yanks of Sherwood Forest” drilled an average of one well per week in Duke’s Wood, while the British took at least five weeks per well. The British crews had made it a practice to change bits at 30 foot intervals; the Americans kept their bit as long as it was “making hole.” The drilling project’s contract was completed in March 1944 with the Americans logging 106 completions and 94 producers.
Memorial Square in Ardmore, Okla. Sculptor O’Meilia remembers how authenticity was critical, down to period gloves and hard hat. “They even sent me a pair of original overalls so I would get it exactly right,” he later explained. Those who look closely will see the tell-tale impression of a pack of “Lucky Strike” cigarettes in the oil patch warrior’s pocket. Read more in the 1973 book, “The Secret of Sherwood Forest - Oil production in England during World War II,” by Guy and Grace Woodward.
“Making Hole” is a term for drilling coined long before oil or natural gas were anything more than flammable curiosities. Read more petroleum history at the American Oil & Gas Historical Society’s website, www.aoghs.org.
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DATA CENTER
The oil and gas industry is a large part of Colorado’s economy. Below, find statistics on energy pricing, drilling production, well permits, spills and rigs.
2015 DRILLING PERMITS COUNTY
RIG COUNT BY STATE
NO. (% OF STATE TOTAL)
Weld.....................................................................................481 (62%) Garfield..............................................................146 (19%)
State April 10 Mar Avg. Feb Avg. Jan Avg. Colorado 36 ........38 ......... 49................... 64 Louisiana 67 ........85 ......... 107 ..............108 Oklahoma 124 ......136 ....... 162 ..............198 North Dakota 88 ........100 ....... 121 ..............170 Texas 427 ......492 ....... 599 ..............773 Kansas 13 ........14 ......... 18................... 25 California 15 ........14 ......... 16................... 19 Utah 8 ..........9 ........... 12................... 17 Alaska 13 ........13 ......... 10................... 10 Ohio 26 ........31 ......... 37................... 45 Pennsylvania 50 ........49 ......... 54................... 52 Source: Baker Hughes Rig Count, April 10
2014 GAS PRODUCTION COUNTY *YTD PRODUCTION (% OF STATE) Garfield ................. 606,750,563 (37%) Weld .................. 383,693,600 (23.6%) La Plata.............. 333,207,622 (20.5%) Las Animas............. 87,641,600 (5.4%) Rio Blanco................. 81,253,791 (5%) Mesa ...................... 36,389,860 (2.2%) State ...................................1,623,233,775
Rio Blanco......................................78 (10%) La Plata.....................19 (2.5%) Larimer....13 (1.7%) Araphaoe.........5
2014 OIL
Adams..........4
PRODUCTION
Lincoln.........3
COUNTY *YTD
Cheyenne.....3 State....................................................771 Source: Colorado Oil and Gas Conservation Commission as of April 2.
US RIG COUNT
The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999. Area April 10 Mar 6 Feb. 6 *U.S. ......988........1,192........1,456 Canada.....100........300............381 Source: Baker Hughes Rig Count.
PRODUCTION (% OF STATE)
Weld............79,817,176 (85.3%) Rio Blanco......4,756,276 (5.1%) Garfield...........2,035,598 (2.2%) Lincoln.........1,453,706 (1.55%) Cheyenne.....1,359,614 (1.45%) Moffat..............393,797 (0.42%) State..........................93,537,998 Source: Colorado Oil and Gas Conservation Commission as of April 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 April 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 70 ENERGY PIPELINE MAY 2015
Weld..........................................................................22,318 Garfield .....................................................................10,975 Yuma...........................................................................3,883 LaPlata .......................................................................3,333
Las Animas .................................................................2,999 Rio Blanco ..................................................................2,921 36 others ....................................................................6,971 State .........................................................................53,400
Source: Colorado Oil and Gas Conservation Commission as of April 2.
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MAY 2015 ENERGY PIPELINE 71
RENTING
THE SMART WAY TO GET THINGS DONE Interstate Rental and Sales is your source for contractor’s equipment in the oil field industry. We also specialize in the repair of construction & heavy equipment. 24 hour sales & service.
Call INTERSTATE RENTAL & SALES, INC. at 303-485-5600 today for all your commercial & residential equipment needs.
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8127 W. Interstate 25 Frontage Road • Frederick, CO 80516 Rental/Sales (303)485-5600 • Email Address: irs@interstaterental.net Jenson/Sales (970)689-1956 • Alan Fisher/Shop&Service (303)956-0768 ENERGYGary PIPELINE MAY 2015