SEPTEMBER 2015 ENERGY PIPELINE 1
HERE TO WORK AS HARD AS YOU DO.
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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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Features
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38
LEAVE NO TRACE
RISING UP
The oilfield’s new mantra is about restoring drilling sites back to their natural landscape.
Weld County poised to become Colorado’s largest gas producer.
By David Persons
By Tracy Hume
14
ESCAPING THE FLAMES
August gas pipeline explosion spares workers at Wells Ranch. By Joe Moylan
16 WIND POWERS ON
Wind PTC extension clears hurdle into the senate. By Bridgett Weaver
20 WORKING TOGETHER
Anadarko gears up for horizontal drilling in Fort Lupton. By Sharon Dunn
22 PIPE DREAM?
Investing in companies before they go public is ‘risky.’ By Allison Dyer Bluemel
4 ENERGY PIPELINE SEPTEMBER 2015
24
TECH TALK TALK TECH Can horizontal wells enhance
ON THE COVER
Internet of things - Thegeothermal rise opportunities for small power. ofByembedded Gary Beers intelligence.
Photo illustration by Darin Bliss
By Gary Beers
34 LET’S TALK
Relations between oil and gas industry and public improving. By Allison Dyer Bluemel
ALL 42 SEEKING PERSPECTIVES
COGCC traverses state for feedback on proposed rules to require more interaction between municipalities, producers
Departments 8
Field Worker Profile
10
Executive Profile
44
News Briefs
54
Data Center
By Sharon Dunn
51 MAKING HOLE
Coal oil of 19th century still fuels modern rockets. By Bruce Wells
Meet Eric Creed, Great Western Oil & Gas Co.
Meet Wouter van Kempen, DCP Midstream, LLC
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Dickinson, ND Garden City, KS SEPTEMBER 2015 ENERGY PIPELINE 5
ENERGY is your
BUSINESS 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 Tracy Hume Joe Moylan David Persons Bridgett Weaver Bruce Wells
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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
borderstates.com Supplying products and services to the construction, industrial and utility industries.
6 ENERGY PIPELINE SEPTEMBER 2015 30-250 (2015-06)
SEPTEMBER 2015, Volume 3, Issue 1. Published by Greeley Publishing Co., publisher of The Greeley Tribune, Windsor Now, the Fence Post, and Tri-State Livestock News.
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7
FIELD WORKER PROFILE
Eric Creed GREAT WESTERN OIL & GAS CO. STAFF REPORT • FOR ENERGY PIPELINE
HOMETOWN Lafayette, La.
WHERE DO YOU LIVE? Windsor.
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? Three years.
HOW DID YOU GET INTO THE INDUSTRY? My best friend pulled me into land work during one of the booms - when people with no experience could still enter the industry.
8 ENERGY PIPELINE SEPTEMBER 2015
WHAT IS YOUR JOB TITLE AND DUTIES?
WHAT IS THE BEST PART OF YOUR JOB?
Surface land manager. I manage a team of surface land men that negotiate surface use agreements. These agreements seek to accommodate the surface owner’s needs while meeting our development needs.
Working with a great group of highly competent and dedicated people.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB? Finding the balance between a farmer’s/ rancher’s needs and our development plans.
WHAT IS THE HARDEST PART ABOUT YOUR JOB? Finding the balance I mentioned when operating in suburban areas.
WHAT DO YOU DO IN YOUR PARE TIME? VOLUNTEERISM, SCHOOL, SPORTS? I have a long history of volunteer work, mostly with the American Cancer Society. I currently serve on ACS’s corporate development committee for their annual Cattle Barons Ball in Greeley on Sept. 19.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? I spent 10 years in college earning an MBA and a law degree and over 10 years in the industry. I’d like to combine all that I’ve learned over the decades and hope to retire in 20 years as the CEO of a small to midsized E&P company in Colorado.
WHAT DOES THE WATTENBERG FIELD AND THE DJ BASIN MEAN TO YOU? This field and basin means prosperity, a growing state economy, job opportunities, and one step closer to energy independence for the United States.
HOW DO YOU FEEL ABOUT THE CURRENT ENVIRONMENTAL DEBATE GOING ON WITH FRACKING IN COLORADO? I am disappointed that so many people make decisions, and form emotional convictions, without having all of the unadulterated facts. One example is that fracking contaminates ground water. That is wholly untrue and was proven in a study on the subject recently released by the Obama administration’s EPA.
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EXECUTIVE PROFILE
DCP MIDSTREAM, LLC Chairman, President, CEO
Wouter van Kempen BY DAVID PERSONS • FOR ENERGY PIPELINE
wouter van kempen grew up in Oegstgeest, a town of roughly 23,000 residents located between Amsterdam and The Hague in the Netherlands. When asked if he spent most of his free time outside playing sports like many American kids do, or if he was the type who liked to spend his time reading, van Kempen had to chuckle. “I was definitely not the latter,” he said. “I played outside and I played sports.” Van Kempen admits that playing outdoors likely helped create the competitiveness in him that has led to a successful executive business career in the oil and gas industry. Today, the 46-year-old is the chairman, president and CEO of DCP Midstream LLC, the largest producer of natural gas liquids in the U.S. and the largest natural gas processing company in the U.S. In fact, DCP Midstream gathers and/or processes about 12 percent of the nation’s natural gas supply. So did van Kempen have an executive business career in mind at an early age? “That’s a really interesting question,” he replied with a laugh. “I actually had to think about that. I couldn’t recall wanting to be anything (when I was young). So I called my parents in the Netherlands and asked them. 10 ENERGY PIPELINE SEPTEMBER 2015
ABOUT DCP MIDSTEAM, LLC Headquartered in Denver, DCP Midstream leads the midstream segment as the nation’s largest natural gas processor, the largest natural gas liquids (NGLs) producer, and one of the largest NGL marketers in the U.S. It is a 50-50 joint venture between Spectra Energy and ConocoPhillips. DCP Midstream owns and operates the general partnership of DCP Midstream Partners, LP, a master limited partnership created in Dec. 2005. DCP Midstream Partners, LP (NYSE: DPM) is engaged in the business of gathering, compressing, treating, processing, transporting, storing and selling natural gas; producing, fractionating, transporting, storing and selling NGLs and condensate; and transporting, storing and selling propane in wholesale markets For more information, go to the company’s website at www.dcpmidstream.com or Facebook page at www.facebook.com/dcpmidstream.
“They drew a blank, too.” So what put him on his career path? “I come from a family of academics (his dad was a scientist) so there was never any doubt about going to college,” he said. “It was just ‘which’ college.” If there was a time or place when the business world first crept into van Kempen’s mind, it could have been in high school, he admits. “Near the end of high school, I liked to study economics and business,” he said. “Why? I really don’t know. But I had a good teacher in economics and I think that had a great influence on me. It was fascinating. It’s probably why I ended up in a career in business.”
QA &
with Wouter van Kempen
Energy Pipeline recently had the opportunity to visit with Wouter van Kempen and delve deeper into his successful career.
Read the conversation on page 12
2015 OIL & GAS AND CONSTRUCTION JOB FAIR
ABOUT
Tuesday, Sept. 15, 2015 3:00p.m. – 6:30p.m.
Wouter van Kempen
officer of DCP Midstream, leading the gathering and processing business unit and the marketing and logistics business unit. He also oversaw all the corporate AGE functions in his role as chief 46. operating officer, including the 3:00p.m. - 4:00p.m. - Veterans Only functions led by the general CURRENT JOB TITLE 4:00p.m. - 4:30p.m. - Young Adults counsel, chief corporate CChairman, president and CEO (ages 16-24) ANNOUNCING OUR NEW LINE OF officer, and chief financial 4:30p.m. - 6:30p.m. - General Public of DCP Midstream, LLC officer. Wouter served in This event will provide 2012 as president of DCP’s employment opportunities SPOUSE midcontinent business unit for job seekers and career Yolanda van Kempen. and chief development officer exploration for young adults. DORMAN SOLUTIONS for the combined enterprise. Door s Han Sponsored by ube CHILDREN dle nt T PRAIRIE INDUSTRIES s ola Prior to joining DCP in 2010, o Employment C Two daughters. he was president of Duke PFV MEXICO Services of Weld County Energy’s Generation Services. CITY YOU GREW UP IN Wouter joined Duke Energy in Oegstgeest, Netherlands. 2003 as managing director of mergers and acquisitions COLLEGE ATTENDED/ before rising to vice president DEGREES of mergers and acquisitions. Erasmus University Rotterdam Prior to Duke Energy, he Funded by WIOA (Netherlands) with a Master’s worked at General Electric degree in business economics. ANNOUNCING OUR NEW LINE OF Corp. He joined GE Plastics Also has extensive business in 1993 in the Netherlands, HAVE THE REGION’S LARGEST and financial training WE from where he managed European INVENTORY OF USED PARTS FOR * * DORMAN SOLUTIONS General Electric, IMDMEDIUM AND HEAVY-DUTY TRUCKS. PRAIRIE INDUSTRIES WWW.ACTIVETRUCKPARTS.COM ow in S tock! manufacturing productivity N PFV MEXICO International Switzerland, programs. After a series Harvard Business School, and of promotions within GE Kellogg Graduate School. International, GE Lighting ACTIVE TRUCK PARTS ks Getting you back on the road and GE Plastics in Belgium, Tan ant Cool CITY YOU LIVE IN NOW wer the Netherlands, London, ATIONS OF Q N ER UA GE Denver, Colo. 866*238*4579 and Pittsfield, Mass., Wouter Nissan Rockwell WWW.ACTIVETRUCKPARTS.COM Mack Spicer was named GE Plastics Volvo Clark WHAT DO YOU DO IN audit manager for Europe Fuller Eaton YOUR SPARE TIME? and Asia in 1996. He then I spend time with my family. assumed the role of senior Golf and ski. analyst for corporate financial If we don’t have it, we’ll help you find it. planning and analysis at GE’s ATP 20132 Dorman Ad.indd 1 2/15/13 11:32 AM LAST GOOD BOOK YOU READ headquarters in Connecticut “The Death of Money: The in 1998. He was named Coming Collapse of the staff executive for corporate International Monetary System” mergers and acquisitions by James Richards in 1999. He also serves on the board of trustees for YEARS WITH ACE Scholarships, a Denver DCP MIDSTREAM LLC nonprofit focused on low5 (2010-present) income scholarships and school choice programs. All three Manufacturers are known for their superior quality and lasting performance—our priorities, PROFESSIONAL Wouter was born in the precisely. For those times when you need to buy new—and those when recycled makes sense—count BACKGROUND Netherlands and has dual on Active. Wouter van Kempen served as Along with these new items, we stock the region’s largest inventory of recycled and rebuilt parts for citizenship in the United medium and heavy-duty trucks. Our people can help you find what you need, fast, even when you’re not president and chief operating States. certain what you need. Call us—866.238.4579—or visit us at www.activetruckparts.com
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QA &
ENERGY PIPELINE: At what point in your life did you begin to have an idea of what you wanted to do? WOUTER VAN KEMPEN: It was probably when I got my Master’s degree in economics (at Erasmus University Rotterdam). I remember thinking, “Now, what do I really want to do?” I think I decided at that point that I wanted an international career.
continued from page 10 get them in spades from GE. It was an opportunity for me to stay on the steep end of the learning curve. When it flattened out, it was time to move on. It is hard though (on families). You work hard, long hours, and you move a lot. I moved so much that I got Christmas cards from moving companies. EP: Was it hard on your wife?
EP: After graduating from college, how did you wind up working for GE Plastics in the Netherlands? WvK: First, they came looking for me. In the early 1990s, GE was not exactly a household name in Europe. I had a lot of discussions with Dutch multi-national companies and then with GE. I was interested in an international career and they said that’s what they were looking for. That intrigued me quite a lot. They said in two years ... if I was still working in the Netherlands, then something went really wrong. They offered to send me to different places and that worked out pretty well. EP: According to your biographical information, you then were promoted to positions within GE International, GE Lighting and GE Plastics in Belgium, the Netherlands, London and in the U.S. You must have been very happy with your employment with GE to have the opportunity for so many promotions. Is that true? WvK: I think GE has probably the best management development program in corporate America and the world. If you work hard and are open to new opportunities, you will
12 ENERGY PIPELINE SEPTEMBER 2015
EP: After leaving GE, you joined Duke Energy in 2003. Explain what you did and how that also helped prepare you for DCP Midstream. WvK: Duke was in a difficult time in the early 2000s. They had some (serious) issues. I joined them with mergers and acquisitions. We did $25 billion of buying and selling and cleaned up the balance sheet. It was a great opportunity to contribute to the company.
WvK: Not too hard. I actually got to know her at GE. She was from Missouri but we met in the Netherlands. She was a financial person and ended her career in HR (human resources). That (her working for GE) helped a lot. It was a great opportunity for both of us.
EP: Were you surprised when you were offered the job at DCP Midstream??
EP: At some point, you took over the role of senior analyst for corporate financial planning and analysis at GE’s headquarters in Connecticut. That was a big move for you career-wise, would you not agree?
EP: What, up to this point in your career, has been the biggest challenge for you?
WvK: That was a great move for me. It was an opportunity for me to look at things from a big picture point of view. Some people only get to look at the small picture but here I sat side by side with the best minds in America. It was very interesting. It was a great opportunity to think at a different level, a very high level. EP: What did you learn in that role that helped prepare you for where you are today? WvK: Being able to look at big patterns, to look at long cycles and short cycles, to look at the business level and the corporate level, and the ability to start recognizing patterns in business is very helpful.
WvK: No, not really. My predecessor at DCP - Tom O’Connor - had worked at Duke Energy. Tom left in 2007 to run DCP Midstream. He’s a great person.
WvK: Reduction in workforce in January of this year. You deal with a lot of people who give their life and soul for this company. It was a very, very difficult decision to make (to let some of these people go). You don’t get to make a lot of fun decisions (in my job). You have to make a lot of tough ones but this was the right one. I lost a lot of sleep over this. We’re also trying to change the culture at DCP and put more focus on operational excellence. Culture changes, especially when you have about 3,200 employees in 17 states, are very difficult. It takes time to push out culture change. It is very rewarding but very hard to do. EP: What have you been the most proud of achieving? WvK: I’d have to say when my wife said, “I do.” I definitely married
up. So, for me, it would be my wife and my two beautiful daughters. From a business point of view, I’d say it was Jan. 1, 2013 when I became CEO of DCP Midstream. From a personal point of view, it was a great accomplishment. It was very hard to do. I worked a lot of hours to hone my skills (to get the position). EP: According to your personal biography, you are the chairman-elect of the American Heart Association’s Denver Board of Directors. Is there some kind of personal attraction for you to belong to that board? WvK: As a company, we’ve had a great association with the American Heart Association. I do believe it’s important to give back to your community. I’m blessed to not have had a traumatic experience. I’m very lucky. It’s really great to be involved with them because heart disease is the No. 1 killer in America and it can be prevented. EP: Likewise, you also serve on the board of trustees for ACE Scholarships, a Denver nonprofit that focuses on low-income scholarships and school choice programs. Why is it important for you to serve on this board? WvK: I’m a huge believer in education. It’s the life blood of any economy or society. I came from a family where education was terribly important. Overall, (getting a good education) in the U.S. and Colorado often depends on what zip code you live in. A lot of kids don’t have the opportunity for education. ACE helps that with scholarships. That’s why ACE is a phenomenal charity.
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ESCAPING THE FLAMES August gas pipeline explosion spares workers at Wells Ranch BY JOE MOYLAN • FOR ENERGY PIPELINE
a natural gas pipeline explosion
and fire on the Wells Ranch northeast of Greeley sent flames hundreds of feet high and smoke billowing into the air that could be seen for dozens of miles. No one was injured. The explosion occurred about 2:15 p.m. Aug. 5, when an employee of either Williams Midstream or PDC Energy struck a sixinch liquid natural gas pipeline while digging a trench at the ranch, said Sgt. Sean Standridge, spokesman for the Weld County Sheriff’s Office. The employee was not injured, but the trenching machine was gutted in the fire. Neither company has accepted responsibility for the explosion, as a Williams Midstream news release stated the trench was being dug by an unnamed
third company. The excavation work was unrelated to the operations of the pipeline that was struck, it stated. The explosion, which occurred near Weld County roads 61 and 66, about
closed roads within a two-mile radius of the fire. Platte Valley firefighters recommended residents inside of that perimeter evacuate their homes. The roadblocks and optional evacuation were lifted about 5:30 p.m. after Williams employees capped the gas-line about two miles upstream from the rupture, Standridge said. Officials decided to allow any residual gas inside the line to burn off, rather than attempting to extinguish the fire with hoses. The firefighters monitored the scene along with company officials until about 7:30 p.m. Aug. 6, said agency spokeswoman Stephanie Cooke. The scene was turned over to the Galeton Fire Department after that. An inspector from the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration also visited
“Two weeks later, except for a small patch of burned grass, no one could even tell it happened.”
14 ENERGY PIPELINE SEPTEMBER 2015
STEVE WELLS, ranch owner 12 miles east of Lucerne, sent flames several hundred feet high into the air and touched off a small grass fire at the scene of the rupture. Smoke was visible in Greeley. Standridge said it also was visible as far south as Fort Lupton. First responders set up a perimeter and
the site. The fire did not threaten homes or property, the release stated. The pipeline ruptured encompasses a section of the Lucerne Lateral line, which is operated by Williams. The Lucerne Lateral ties into the 12-inch DenverJulesberg Lateral line in the Wattenberg area of the Denver-Julesberg Basin. The Denver-Julesberg Lateral connects to the larger Overland Pass Pipeline system, which transports natural gas liquids from Opal, Wyo., to Conway, Kan., where it is separated into other products such as butane and propane. The Overland Pass Pipeline encompasses 760 miles in the Piceance and Denver-Julesberg basins. It is designed to transport about 245,000 barrels of natural gas liquids per day, according to Williams’ web site. Williams does not anticipate any air quality impacts as a result of the explosion, but personnel and contractors are monitoring the air downwind of the incident site to ensure public safety, the release stated. Williams personnel will be on site 24 hours monitoring the scene and developing a repair plan for the Lucerne Lateral.
Ranch owner Steve Wells said two weeks later, except for a small patch of burned grass, no one could even tell it happened. The pipeline was fixed within days, Wells said. “I’m not concerned at all about moving forward,” Wells said. He said business is going on as usual at the ranch with the exception of some extra attention to safety programs with employees.
Wells Ranch fire Eaton
Galeton
Lucerne
Williams and the third-party pipeline company will conduct a joint, in-house investigation of the incident
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The location of the explosion was to the northeast of Greeley, Colo.
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WIND POWERS ON Wind Production Tax Credit extension clears hurdle in the Senate BY BRIDGETT WEAVER • FOR ENERGY PIPELINE
individuals, some that benefit businesses and others that will benefit the energy sector. Bennet said he hopes for continued would extend the wind energy production tax credit for two years, speed in the passing of the tax extenders. which could be a breath of fresh air for the local wind industry. Those opposed to continuing the PTC say an industry Wind producers have been buffeted by waves of good and bad shouldn’t rely on a government handout. over recent years as the tax credit comes up for a vote every year, Those in favor say the industry is just like any other budding creating insecurity in the industry. industry, but the other energy sectors’ tax credits don’t come up U.S. Sen. Michael Bennet pushed for the two-year extension, for a vote annually, causing all of the uncertainty. which would give wind producers $0.023 per kilowatt-hour on The PTC would be valuable for Danish wind giant Vestaswind projects until the end of 2016. American Wind Technology, which has four Colorado locations, Because the most recent extension expired at the end of 2014, including one in Windsor there is no wind PTC yet and two in Brighton. for 2015. “All our competitors, “Renewable energy the whole wind industry is an important piece of Colorado’s diverse is still being driven by energy industry and the PTC,” said David is a major economic Hardy, senior vice driver throughout the president of sales for state,” Bennet said in Vestas in America. a July 21 news release. He said the company “The wind PTC helps could survive without the support thousands of wind PTC, but it wouldn’t jobs in our state. Until be the best-case scenario. MICHAEL BENNET, Democratic U.S. Senator for Colorado Congress gets serious “We’re building about developing a 21st strategic plans for any Century energy strategy scenario,” he said. “Some with a tax code that supports all energy technologies, we need scenarios have a higher volume of growth.” to take steps to provide certainty for Colorado’s and the county’s “The cost of wind energy has come down significantly - it’s wind industry.” come down 58 percent in the last five years,” he said. The federal PTC and ITC are predominant drivers of new Vestas is building projects this year and next that were covered wind farm development, and have helped lower the cost of under the 2013-14 extension of the PTC, which went through American wind power by more than half over the last five years, the tail end of 2014. It was considered a “start of construction” while making the U.S. number one in the world in wind energy deadline, meaning projects didn’t need to be complete by the production, according to the American Wind Energy Association. end of the extension. The wind PTC passed through the finance committee with That extension required those building wind turbines to spend more than 30 other tax extenders, including some that benefit 10 percent of the project value by the end of last year or to start
the senate finance committee passed a bill in late July that
“Renewable energy is an important piece of Colorado’s diverse energy industry and is a major economic driver throughout the state.”
16 ENERGY PIPELINE SEPTEMBER 2015
THE FEDERAL PTC AND ITC ARE PREDOMINANT DRIVERS OF NEW WIND FARM DEVELOPMENT, AND HAVE HELPED LOWER THE COST OF AMERICAN WIND POWER BY MORE THAN HALF OVER THE LAST FIVE YEARS, WHILE MAKING THE U.S. NUMBER ONE IN THE WORLD IN WIND ENERGY PRODUCTION moving dirt at the construction site by the end of the year. This meant there was a scramble to start wind farms and order parts by the end of 2014. “Last year was actually a record-orders year for Vestas, so we’re seeing a building and order year (in 2015),” Hardy said. Vestas has announced more than 1,000 megawatts in orders in the U.S. so far this year. The company helped customers choose projects that were qualified for the PTC, Hardy said. “I would say Vestas was pretty strategic in our approach to the looming PTC expiration,” Hardy said. Projects under the 2014 extension must be finished by the end of 2016. “Anything that people can’t get built by the end of 2016, they’re basically putting on hold until they hear about the PTC,” he said. To remain profitable without a PTC, a few other things would likely have to give, Hardy said. Specifically, a U.S. law that prevents the construction of turbines over 500 feet tall. Hardy said if those laws were reconsidered it would help the wind industry’s future with or without the PTC. “Without the PTC, wind would be reliant on being able to go bigger,” he said. “The key for wind long-term is to lower the cost of energy and the key to doing that is for wind turbines to be bigger and taller.” Meanwhile, he said, Vestas has done a lot of planning around the PTC, taking on orders that aren’t so tied into its future. “We’re securing orders with American customers who have a different path,” or who aren’t dependent on the PTC, he
MORE WORKERS NEEDED TO HANDLE PRODUCTION GROWTH With additional production lines on the horizon, Vestas continues to beef up its staff in Colorado facilities through October.
based recruiting manager for Vestas North America, said they are taking their time in the hiring process.
The wind energy giant, based in Denmark with three manufacturing facilities in Weld County, held two hiring fairs in August to round out the 400 open positions announced in March. Officials hope to add up to 250 people to its ranks in its Windsor and Brighton manufacturing plants by October. The Windsor facility and one Brighton facility build turbine blades. Another Brighton plant builds nacelles, or turbine motors.
The company originally announced in early January that it would hire throughout the year to staff an expansion project.
To house the many new employees, the Windsor facility will see the addition of three new buildings this fall, said factory manager Hans Jespersen. “We are probably looking at adding around 100,000 square feet,” he said. At least one of the new buildings will be reminiscent of Denver International Airport’s tent structure, so the construction will be quick. “We actually decided that we would try a new concept and build a tent structure for some of the buildings, not all of them,” Jespersen said. “It means that we can fast establish more production lines.” Two more lines, to be exact. Jespersen estimated the two additional lines, for a total of eight in Windsor, will be up and running early this fall. Jespersen said he could not release the number of blades that are made by each production line per day, citing confidentiality of the company as the reason, but he did say “it’s a lot.” Leslie Nelson, the Colorado-
In March, Vestas held a hiring fair to fill 400 positions and almost 600 job seekers showed up; some hires were made, but the total number was not immediately available. Nelson said the hiring fairs this month are a continuation of the March fair. “We’re really focused on finding high quality people who are interested in a long-term career with Vestas,” she said. “When you do a recruitment ramp up, you have to be strategic in terms of how you take in people.” Jespersen said they are looking for mostly production operators in this round of hiring to run the new lines, but they also will be looking for engineers, technical staff and support staff. Vestas offers a good wage and benefits, Nelson said, so they normally have a lot of interest when hiring. “We have a good, safe, clean working environment, which we feel is highly competitive in this market,” Nelson said. Nelson said they hope to make nearly 250 hires by October but they will take the time necessary to get the right people. “It does take many months to go through,” she said. “And that’s OK. We’re OK with that because we want the best people.” - Bridgett Weaver
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WIND FACTS According to Wind Vision, a new Department of Energy report released in early 2015, with stable policy wind could supply 10 percent of the nation’s electricity demand by 2020, 20 percent by 2030 and 35 percent by 2050. By 2030, that could result in wind supporting 380,000 jobs; increase tax payments to communities to $1.8 billion a year; and increase lease payments to farmers and ranchers to $650 million a year.
said. “There are people who have projects they’re going to build in 2017 and they’re not dependent on the PTC renewal.” There are a few options moving forward: the PTC can undergo a long-term renewal; the PTC can be renewed a few years at a time; the PTC can be phased out of use; or the PTC can be cut off suddenly, which would certainly hurt the industry. “Because the PTC is in place, the industry relies on that for the economics,” Hardy said. “If there’s a long-term renewal, that’s fine. But if there’s a long-term phase out, that’s probably the best thing for the industry because it forces the industry to work without it. No one wants to be in an industry that’s reliant on an incentive. But an abrupt stop to the PTC would be really hard.” The extension is gaining importance throughout America, as it supports jobs. According to AWEA, in 2013, after the renewable energy tax credits were allowed to expire even briefly, installations of new wind farms fell 92 percent, causing a loss of 30,000 jobs across the industry that year. After Congress renewed the PTC, the U.S. wind energy industry added 23,000 jobs the following year, bringing the total to 73,000 at the end of 2014. Today, more than 70 percent of congressional districts contain operating wind turbines, wind-related factories, or both, according to industry data. In June this year, AWEA reported, proposed legislation threatened to eliminate the PTC. That led to 85 companies sending a letter to Congress to protest the bill saying if passed, the bill would “take away an effective, business tax incentive that creates jobs, drives rural economic development and reduces energy costs for Americans across the country.” A March 2015 Gallup poll found 84 percent of American voters want the U.S. to put more emphasis or the same emphasis on producing domestic energy from wind. Twothirds of Republicans and Independents wanted more emphasis, AWEA reported.
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WORKING TOGETHER Anadarko gears up for renewed horizontal drilling in Fort Lupton BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
fort lupton - Oil and gas activity may “At Anadarko, we want to be known be trailing off throughout the country, but as a company that does what it says,” he officials at Anadarko Petroleum are gearing said. “We recognize the importance of up to make their southern Weld County the energy we produce, but (also) the acreage more active than it has been in importance of the manner in which we five years. produce it.” Officials from the Fort Lupton city, Walters said the drilling should begin in along with economic development folks September or October. The drilling area and energy industry advocates, celebrated encompasses much of the acreage the Anadarko - one of the top two oil and gas companies in Weld County - amid a backdrop of vacant grassy land that will house the next phase of development for the county due east of town. The pomp was about Anadarko’s continued commitment to Weld County. This time it CRAIG WALTERS, vice president of operations, Anadarko centered in its upcoming Fort Lupton drilling program. Craig Walters, vice president of company gained when in 2013 it swapped operations for Anadarko, said the roughly 100,000 acres throughout Weld company planned to drill up to 50 wells County with Noble Energy. The land swap within the city as part of a much larger allowed both companies to concentrate project in southern Weld. “In 2015, we their efforts in compact regions in Weld expect to drill over 300 wells, which will rather than the hopscotching throughout generate approximately $320,000 worth the county they had been doing for years. of tax revenue (per well),” Walters told The swap put Anadarko’s “territory” a community group that had assembled in southern Weld, in more of the heart under a tent near the Fort Lupton Fire of the Wattenberg Field, the area from Station No. 2. which the county derives much of its
natural gas. Noble’s new territory became concentrated in northern Weld. Weld County Commissioner Barbara Kirkmeyer lauded Anadarko’s investment into the community, through its donations to schools and nonprofits. “They’re very active in investing back into the community that we work and play in, and they work in and employ our residents,” Kirkmeyer said. “The list goes on and on how they contribute back to community.” Anadarko has always had some long-established vertical wells in the Fort Lupton area. This new phase of development will be the company’s first jaunt into horizontal drilling there. For the city, it means working with the company to ensure mitigating impacts on neighbors in what is really the center of the Wattenberg Field. It’s not hard for residents to jump on board, as most have grown up with drilling activity, Fort Lupton Mayor Tommy Holton said. “Drilling has been on and off in the last five years,” Holton said after the barbecue luncheon. “They were west of U.S. 85 and east of U.S. 85, and they were just converging this way. “What Anadarko was waiting for was the perfect time to drill to get underneath the
“We recognize the importance of the energy we produce, but (also) the importance of the manner in which we produce it.”
20 ENERGY PIPELINE SEPTEMBER 2015
PREVIOUS PAGE Craig Walters, vice president of operations for Anadarko Petroleum Corp., addresses a crowd at the Fort Lupton Fire Station No. 2 at a luncheon celebrating the company’s drilling plans in Fort Lupton. RIGHT Walters visits with Weld County Commissioner Barbara Kirkmeyer at the event. Photo by Sharon Dunn/sdunn@ energypipeline.com
town,” he added. The Fort Lupton City Council earlier this month approved the company’s request to begin drilling 11 new wells, which should be running 24 hours a day over the next three to four months. Holton said the economic impact of each producing well in taxes came to $300,000-plus, which goes a long way toward polishing city roads and infrastructure. Anadarko has been hit with the oil and gas downturn like many in the drilling fields, but it’s taken a different approach. There have been no major announced layoffs at the company. In its most recent operations report, Anadarko stated it would defer completing 120 wells in the Wattenberg, which would result in flat production for the remainder of 2015. Deferring completion means the company will drill the initial holes, but not stimulate and frack the rock beneath to produce the oil and gas. The strategy of waiting allows the company to continue to drill, and keep crews working, but also wait to stimulate until crude prices rebound. Anadarko and companies throughout the field have been working to reach efficiencies in drilling, and paring down costs through service companies. In doing so, Anadarko reported it was able to double the workload of its drilling rigs, which has helped bring the cost of drilling a horizontal well to $1 million. Holton said the company had also been working with Fort Lupton to do it right. “They’re working with the municipality on land-use issues so we can make oil and gas work in the city and the county,” he told the group. “The highest and best use for land is not oil and gas, it’s oil and gas and development and oil and gas and ag. Between us and Anadarko, we’re making that happen.”
THE ECONOMIC IMPACT OF EACH PRODUCING WELL IN TAXES CAME TO $300,000-PLUS, WHICH GOES A LONG WAY TOWARD POLISHING CITY ROADS AND INFRASTRUCTURE SEPTEMBER 2015 ENERGY PIPELINE 21
PIPE DREAM? Investing in companies before they go public is ‘risky’ BY ALLISON DYER BLUEMEL • FOR ENERGY PIPELINE
QUESTION A friend of mine purchased shares of an energy company that is in the waiting period before becoming a publicly traded company. Is there a restriction on what kind of information the company must release, or is there a limit on how long they are allowed to be in the waiting period before being publicly traded?
THE SHORT ANSWER IS NOT REALLY BUT FIRST A LITTLE BIT OF BACKGROUND Initial Public Offerings are the first public sale of stock on stock exchanges such as the New York Stock Exchange. Small, younger companies looking to raise capital to expand their future business by going public often do them. Occasionally, however, large companies will decide to go public, such as Facebook and Twitter, which represent only a small percentage of companies making that transition. Unfortunately, this can give people an inaccurate picture of the kind of profit they can see when investing in these companies before they go public. In an IPO, companies seek assistance from underwriting firms,
which counsel them through the process. Part of this recommendation includes advice on whether the company should issue common stock - representing a share of ownership in the company - or a preferred stock, which represents a slightly higher claim on company assets. First, a company must file with the Securities and Exchange Commission that regulates the market to protect investors. During this process, the company will issue a document called a prospectus that is used to attract investors. This document is extremely important for potential investors since it includes the terms of the offering and the financial condition of the company. However, unlike public companies, pre-IPO companies do not have analysts that regularly check the information provided for accuracy. And, while the SEC’s staff looks over the document to make sure it complies with SEC guidelines, the review process does not guarantee the company is being entirely upfront with its information. “There is simply not a lot of
information about those companies or how they value their stock,” Colorado Securities Commissioner Gerald Rome said. “It is difficult to gain an understanding of whether or not the stock is what it’s worth.” There are often also conflicts of interest in the process as the same person trying to sell the shares is often the one trying to make the company look its best. “No one reviews the truthfulness of the person promoting the shares,” Rome added. Ideally, investors would buy shares in a pre-IPO company and once it goes public the stock price would skyrocket and they would make a substantial profit. But this is rarely the case. “The exact opposite is true,” Rome said. “These are very risky companies to invest in.” Additionally, investors are liable for any money lost if the shares plummet when the company goes public. As is the case in existing public companies, Rome said the key was doing in-depth research. Pre-IPO companies also present huge risks to investors because there are no
limits on how long they can wait to go public or if they even have to at all. “There is no rule and that’s one of the problems with investing in a pre-IPO company. They are under no obligation to ever go public,” he said. If the company does not go public, the shareholders do not receive their money
IF THE COMPANY DOES NOT GO PUBLIC, THE SHAREHOLDERS DO NOT RECEIVE THEIR MONEY BACK AND OFTEN HAVE TO WAIT AT LEAST SIX MONTHS BEFORE THEY CAN TRY TO SELL THEIR SHARES
back and often have to wait at least six months before they can try to sell their shares. In some cases, the shares can be placed on lockdown to prevent insider trading, which can last up to two years. This is not to say it is never a good idea to invest in a pre-IPO company, but it takes an extra amount of caution and research and should be done through a financial professional, Rome said. Most of the time, offers that come through email or social media directly to investors should be considered spam and avoided. “If you are solicited by someone to buy shares in a pre-IPO do not do it,” he recommended. Instead, ask financial advisors about the options or wait until sources such as mutual or hedge funds make an offer to their clients. “Minimize the risk,” Rome said. “If there’s not fraud, there’s always the potential of you losing your investment, so you want to do your homework to make sure that it’s the right kind of company for you to be investing in.”
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INTERNET OF THINGS (IOT) THE RISE OF EMBEDDED INTELLIGENCE BY GARY BEERS • FOR ENERGY PIPELINE
only a small portion of the Internet of Things
(IoT) is experienced as we use an increasing array of consumer-facing smart devices: smart phones and tablets, Fitbits, remote-controlled household appliances, smart watches, desktop/ laptop computers, and other “brilliant” devices. There is a much larger, industrial portion of the IoT consisting of physical objects with embedded sensors communicating through the cloud with each other and with computers. During the past decade, business and governmental operations have begun to implement massive networks of these objects which share information on their physical state. This “embedded intelligence” is driving today’s most important technological advances in commerce.
20 BILLION SMART DEVICES In the next five years, the number of installed IoT devices is projected to increase by over 20 billion. As shown in Graphic 1, approximately 75 percent of these devices (15 billion) will be placed in infrastructure and industrial services.
efficiency. The outcome of profits and savings from IoT implementation is predicted to be at least $19 trillion. One obvious example of efficiency is the improved uses of resources in business processes. Internet-based scheduling of energy usage, workers with difference skills, robotics, and supplies can generate substantial cost savings, for example: oil and gas ($ 90 billion); power ($65 billion), healthcare ($ 61 billion), aviation ($30 billion); and rail ($27 billion). A less obvious example of efficiency is realized through “predictive analytics” which is based on “real-time” transmission of information from a sensor embedded in a machine part that impaired performance or failure is expected. Through the industry’s internet, the needed new part can be ordered and delivered to the specific location and be available for replacement before failure is experienced. As an example, Union Pacific America’s largest railroad company - has wired locomotives with sensors that monitor parts with internet connections to algorithms that predict when a component may break down. Enormous savings are realized when interruptions due to part
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.
HOW BUSINESS EFFICIENCIES CHANGE Why is business pursuing increasing, widespread use of smart devices? The simple answer is - substantial improvements in two types of
24 ENERGY PIPELINE SEPTEMBER 2015
GRAPHIC 1
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failure and replacement/repair are minimized. The manager of General Electric’s Complex Systems Engineering Laboratory recently said, the internet is no longer just about email, e-commerce, and Twitter. We are at an inflection point, the next wave of productivity will connect brilliant machines and people with actionable insight.
WHAT DOES AN IOT LOOK LIKE? In January 2014, China’s vice minister of agriculture announced the launch of regional pilot “Internet of Things Agriculture Projects.” The graphic view of the design of the system for this regional pilot (Graphic 2) is reproduced from Dim Sums (a Chinese blog on Rural China Economics and Politics). This view displays the embedded sensors and uses of local and cloud communications.
OIL AND GAS OPERATIONS The capability of the IoT is widely recognized and implemented by oil and gas industries. A few instances are:
GRAPHIC 2
• Intelligent Pipeline Solution (GE Software) serves to harvest data from sensors installed along a 15,000-mile gas pipeline and equipment in the eastern region of the U.S. and synchronizes this information with external data sources to provide detailed analytics and risk assessment from key points of the pipeline system. GE official says, The goal is to help pipeline operators make proactive rather than reactive decisions.
•
Smart Blowout Preventer (BOP) sits on sea floor, and internal sensors transmit data, via Internet, on operational and wear status of components. A GE Oil and Gas official says, “We need to move from the ‘break-fix’ model to a predictive maintenance model. What if you have a technology gathering BOP data so that the next time you pull it out you know exactly what needs to be replaced and have the replacement parts available on the drilling rig? It costs between $10 million and $16 million to surface a blowout preventer. Predictive maintenance could save drilling companies millions in unplanned downtime. Telling a customer what to fix after it has failed is relatively easy, telling them to fix something before it costs them money is the magic.
BIG DATA, BIG CONCERNS The IoT is creating new, growing concerns about the storage of enormous amounts of electronic data in clouds, how these data can be re-assembled into new information, and who has accessibility to these data. General materials providing a layman’s introduction to these concerns include: • “Big Data: Seizing Opportunities, Preserving Values. May 2014, Executive Office of the President. • “Internet of Things - Privacy & Security in a Connected World”. January 2015, FTC Staff Report. • “The Connected World: Examing the Internet of Things. February 2015, Congressional Internet of Things Caucus, Senate Committee on Commerce Science, and Transportation. Finally, there is an emerging, salient concern about “embedded intelligence” that requires urgent attention with regulation. Selfreporting components of machinery certainly contribute information leading to cost-savings and more efficient business operations. However, inappropriate situations may occur where information unrelated to the intended performance of the component is collected and used for a separate purpose, without the knowledge of the industrial purchaser of the component.
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BY DAVID PERSONS • FOR ENERGY PIPELINE
NATIONAL PARKS HAVE BEEN PUSHING A THEME OF “LEAVE NO TRACE” FOR SOME TIME. This simply means picking up your trash, packing it out, and making sure that you leave your camping site in as much the same condition as you found it.
the oil and gas industry also is working hard to
follow this example: to “leave no trace” of activity when companies are done at a drilling site. When the drilling stops, the rigs and related equipment are removed. Trash and wastewater is disposed, and revegetation begins in an attempt to leave the site in the same condition it was in before drilling. That wasn’t always the case in the past. In fact, the state is still littered with about 47,000 inactive wells that have had little or no reclamation work done. But, that was then. Today, oil and gas companies, from the smallest to the largest, are making a concerted effort to “leave no trace.” That’s a good thing considering that there are about 53,000 active wells in the state. Noble Energy, Encana, Anadarko Petroleum, DCP Midstream, PDC and others are frequently mentioned when it comes to being good stewards of the environment. Representatives from these companies admit that protecting the environment is not only a duty but also a mindset. “It just comes with all facets of our company,” said Korby Bracken, the health, science and environment
THE COLORADO OIL AND GAS CONSERVATION COMMISSION REQUIRES OIL AND GAS COMPANIES RESTORE LAND “AS NEARLY AS PRACTICAL” TO ITS CONDITION AT THE COMMENCEMENT OF DRILLING OPERATIONS director at Anadarko. “We want to reduce our impact (on the environment) as much as we can. It’s an important role for us.” Of course, oil and gas companies in Colorado are not given the option to clean up after themselves. It’s required under guidelines set for by the Colorado Oil and Gas Conservation Commission, the body that regulates the oil and gas industry in the state. And, it’s not always easy, given that many drill sites are located in semi-arid parts of the state where soil conditions are not the best and rainfall is uncertain. As a result, there exists a gap in reclaiming and restoring land. Here’s a look at how the state and the industry are working together along with various reclamation-related companies to keep Colorado’s landscape as beautiful as possible.
HOW IT STARTS? the regulations regarding reclamation and revegetation are set forth by the Colorado Oil and Gas Conservation Commission. The COGCC requires oil and gas companies restore land “as nearly as practical” to its condition at the commencement of drilling operations. There is a loose timetable to be followed as well. Companies have to begin “interim reclamation” recontouring, reseeding, erosion control, weed fighting three to 12 months after finishing fracking while wells are still producing. In addition, COGCC officials say that site-cleanup tasks, such as removing equipment and debris, must be done within a year from when a well stops producing.
SEPTEMBER 2015 ENERGY PIPELINE 31
“ REACHING THE 80 PERCENT REVEGETATION LEVEL CAN TAKE MANY YEARS AND CAN BE INFLUENCED BY WEATHER AND CLIMATIC CONDITIONS.” TODD HARTMAN communications director Colorado Department of Natural Resources
a time limit for the land to be restored, however,
is a moving target. “Reaching the 80 percent revegetation level can take many years and can be influenced by weather and climatic conditions,” said Todd Hartman, the communications director for the Colorado Department of Natural Resources, which oversees the COGCC. “It can take three to seven years. Parts of Colorado have experienced abnormal to exceptional drought conditions in recent years, which have made revegetation challenging.” The state also collects financial assurance from oil and gas companies - $10,000 to $20,000 per well - or a $60,000 to $100,000 “blanket” covering unlimited wells statewide. The money is returned after the site is inspected. The companies also can enter into a surface unit agreement with a landowner, especially if the landowner wants the land returned to the level that he can plant crops on it again. In either case, the COGCC has to inspect the site and approve the reclamation work. The COGCC’s field inspection unit has 28 full-time staff, including one manager, four field supervisors, one
32 ENERGY PIPELINE SEPTEMBER 2015
reclamation supervisor, one quality assurance staffer, two reclamation specialists and 17 engineering/physical science technicians. According to Hartman, the state legislature has increased staffing over the last several years and the agency now utilizes advanced IT and GIS tools that make inspecting wells less complicated and more efficient.
RESTORATION A JOINT VENTURE when it comes to restoring a drilling site to its
original condition, the work required is generally shared by the oil and gas company and a private contractor. It is that way primarily because the restoration work is very challenging. “Anadarko’s people put together a restoration plan and contracts with a third party to assist us with the work,” Bracken said. “We have a great relationship with reclamation contractors. We sure couldn’t do it without them.” One of those companies that is often called upon for reclamation work is Green Earth Environmental in Milliken. Green Earth owner Bruce Sandau, who has 30 years of experience in this area, says working with oil and gas companies in northern Colorado - largely in Weld County is something that has really taken off in the past four years. “We do storm water management, and reseeding and revegetating the footprint,” Sandau said. “But, what we really do is different depending on the location and availability of water. And, Mother Nature has to play your game too. “In poor soil, it’s important to use the right see and soil amendment.” Sandau said even with a great plan and execution, it took an average site several years to return to its natural state. “Trying to get it right, it takes three to five years for establishment,” Sandau said. “But if it’s dry it can take longer than seven years.”
SMALL COMPANIES GET INVOLVED while there are a handful of companies like Green Earth that assist oil and gas companies, there are also a number of smaller seed companies that play a critical role too.
Don Hijar, owner of Pawnee Buttes Seed Inc. in Greeley, says his company does more than just assist oil and gas companies and landowners, it helps come up with a reclamation plan. “It takes more than just recommending the right seed,” he said. “You have to have the right ingredients, mix the batter, and then bake the cake. “We look at the soils and also look at the site. At some sites, the top soil has been taken off and there is not as much to work with. That means we might have to amend the soil. “We have to look at the native grasses for the area and shrubs. We also have to talk to the landowner who may want the land to be fixed for planting hay or alfalfa.” In addition, Hijar says mulch also is critical so the seed doesn’t blow away and helps to retain moisture. Dustin Terrell, the manager for Buffalo Brand Sharp Bros. Seed Company in Greeley, says his company does many of the same things. And not just in Colorado. He said his company provided seed for the Ruby Pipeline, a 650-mile project that stretches from Opal, Wyo., to Malin, Ore. The natural gas pipeline project ended in July 2011. But, simply put, Terrell says his company’s goal is to recommend the right seed for the right job. He, like everyone else, says his job is a lot easier if the weather cooperates when seeding begins. “Rain is a huge factor,” Terrell said. “The rain we had in May made me look like a genius.”
TECHNOLOGY, INNOVATION HELPS one of the things that has changed how the oil and gas
industry does its job in recent years is horizontal drilling. By being able to drill up to seven to eight holes horizontally from one pad site, the industry has boomed, especially in the Niobrara shale fields in the DJ Basin. The advent of horizontal drilling, which has spiked production, also has enabled the industry to do a better job of reclamation and restoration since one site - not seven or eight - is now needed. “It’s (horizontal drilling) huge,” said Pete Stark, the senior research director of IHS in Englewood. “It used to be that in drilling, everything was done vertically. That was a lot of sites. “Now, you end up with one pad site. That dramatically reduces the footprint. It all adds up to incredible change.”
THE ADVENT OF HORIZONTAL DRILLING, WHICH HAS SPIKED PRODUCTION, ALSO HAS ENABLED THE INDUSTRY TO DO A BETTER JOB OF RECLAMATION AND RESTORATION SINCE ONE SITE — NOT SEVEN OR EIGHT — IS NOW NEEDED. RESTORATION WORK AFFECTS ECONOMY it probably goes without saying, but the amount of restoration and reclamation work in recent years alos boosts revenue for many local companies. Sandau said the work his company did with oil and gas companies accounted for about 40 percent of his total business. “This (restoration work) really started for you about four years ago,” Sandau said. “I was looking for a developing business and it led us to the oil field.” He added that as a result, the ups and downs of the oil business affect his business too. When times are good and there is a lot of oil drilling activity, he has lots of business. When activity drops, his business drops. Hijar said the oil and gas work “is a significant part of my business, perhaps 20 percent of the business.” So has the oil industry slowdown hurt him? “Yeah, it has,” Hijar said. “But, we’re still selling seed. It’s a nice part of our business. We also sell to mining companies in Colorado and Wyoming. But, if those industries slow down, our business slows down too.” Terrell couldn’t put a percentage on the amount of business his seed company did with the oil and gas industry but said, “It’s a lot.” And like Sandau and Hijar, Terrell said his company’s business went up and down with the price of oil. “When it was $65 to $70 a barrel, we had a lot more business,” Terrell said.
S ’ T LE K L TA Relations between oil and gas industry and public improving BY ALLSION DYER BLUEMEL • FOR ENERGY PIPELINE
AMID A CROWD OF BUSINESS OWNERS, WINDSOR RESIDENTS AND TOWN STAFF, PROPONENTS AND OPPONENTS OF OIL AND GAS ACTIVITY IN THE REGION JOCKEYED TO INFLUENCE WINDSOR’S FUTURE DURING A COMPREHENSIVE PLAN MEETING LAST MAY. town staff tried to ease the tension
between oil and gas representatives and community organizations, but their best efforts were in vain. Some residents, many of them from the Windsor Community Rights Network, were dismissive of the industry representatives. Many others in the audience, who were there to shape Windsor’s future, were somewhat dismissive of the community representatives. The oil and gas representatives often looked frustrated, even tired of the accusations. This was just one meeting, but on a broader scale, it shows how strongly rooted fear and distrust has been a part of the conflict in Weld County between the oil and gas industry and community organizations. While it’s hard to recall a time that discussions about oil and gas weren’t met with spirited, sometimes hostile debate and skepticism, recent years have reflected an improving relationship between industry and communities in the region overall. “Communication can help immensely,” said Sara Barwinski, spokeswoman for Weld Air and Water, a resident group working to protect the environment and community in the face of growing oil and gas operations in residential areas. “Part of that is agreeing to disagree on certain
things and doing that in a respectful, dialogical way.” On the industry side, oil and gas companies have established more efficient ways for the community to give feedback and have begun to recognize the impact of their operations on quality of life. More Weld residents, even those such as Barwinski, who initially just wanted them to go away, now respect the corporate interests of companies and recognize the steps those in the industry are taking toward a middle ground. “There have been improvements,” Barwinski said, “but I always think there are (more) to be made.”
ONGOING FRUSTRATIONS, MOUNTING QUESTIONS as oil and gas companies have grown
over recent years, companies have shifted closer to residential areas. Both are fighting for what little open space is left in Greeley. “Some of it was because we were facing a kind of paradigm shift as the sites increased in production volume,” Barwinski said. “The community, the industry, the city and the citizens were all coming to a head with how to deal with this.” When Weld Air and Water first began
negotiations about proposed sites of wells next to Northridge High School in Greeley years ago, representatives were met with a dismissive contractor. They went on to face similar communication issues with Greeley-based Mineral Resources when the organization appealed a proposed drilling site near Frontier Academy in Greeley. The beginning negotiations were frustrating at best. Barwinski spearheaded efforts to appeal the approval of the wells near Northridge. Residents - often also among the ranks of Weld Air and Water frequently attended community meetings expressing their concerns about safety and health impacts of having such an industrial process in their backyards. Instead of being heard, their comments were met with criticism that they simply didn’t understand how oil and gas worked. “We’re not just crazy people who have concerns about health,” Barwinski said at the Greeley Planning Commission meeting July 23, 2013, referencing the Colorado Oil and Gas Conservation Commission and the Colorado Department of Public Health as entities that had said they did not know the full health effects of oil and gas activity. Barwinski later learned to compromise, as did the industry. She recognized the unlikelihood of companies just packing up and leaving. The industry budged on its plans as well. Ultimately, only a third of the wells were drilled and - using more advanced technology - they were accessed further away than originally planned. Ideally, new restrictions and uniform standards would solve the problem by preventing those sites from reaching the planning stage in the first place. “Rule-making would benefit everybody,” she said. “If the playing field and the
marching orders are clear, it doesn’t have to be citizen by citizen or community by community or individual by individual that gets involved.” For other community networks, no change other than the complete withdrawal of the industry from the area will be enough. “They need to accept that some communities don’t want it,” said Carol Heinkel, spokeswoman for Windsor Community Rights Network. The network fights for community rights of all kinds, and has received the most recent attention for their strong stance against oil and gas activity in Windsor. To further their cause, they emphasize third-party studies and academic materials over information provided by companies. The network meets in private, as they aim to give fellow residents what they view to be a safe space to discuss what they want for the future of Windsor. “People know they aren’t getting the truth (in the company information),” Heinkel said. While other groups testify the industry has become better about relating to communities, the Windsor network argues simply dressing up the presentation of damaging operations under the guise of public outreach does not make it better. “It’s not possible for us to say that the industry can present itself better,” Heinkel said. “The facts are the facts.” Even so, not every group laments the industry’s presence. For the Larimer Energy Action Project, which advocates for the benefits of the industry particularly in Windsor, frustration comes through active misinformation or fear campaigns lauded by oil and gas opponents. For LEAP, oil and gas represents a source of economic growth, both through additional industry jobs and tax dollars. Additionally, they laud discussion through evidence that promotes the coexistence of both traditional and alternative energy. “We are civil and respectful in our communications with everyone,” said Director BJ Nikkel, a former state representative whose territory included Windsor. “That is not always reciprocated to us by ‘fractivists’ who have attended our events to disrupt.”
However, as a strong proponent of property rights, Nikkel said educating other county residents on the rights of private property owners and the state constitution was particularly frustrating. Typically, the “fractivists’“ effort includes what Nikkel calls misinformation campaigns that prey more on fear than facts, such as fracking causing drinking water contamination. “We try to be ahead of the ‘misinformation game’ played by energy extremists,” she said. “If misinformation takes hold, it becomes much more difficult to have a discussion around the facts.”
BALANCING INFORMATION CONCERNS AND OUTSIDE INTERFERENCE in years past, the main concern of companies was how to communicate safety regulations and concerns to the public. Now, as the conversation has expanded, public relations must respond to everything from environmental impact to the moral image of their company to demands for more transparency in their day-to-day operations. “Best management practices used to be very focused on safety at the job site, casing a well, etc., but that spectrum has expanded,” Great Western Oil & Gas CEO Rich Frommer said.
AT THE END OF THE DAY, THE NEW DYNAMIC HAS PULLED THE DISCUSSION AT LEAST IN PART AWAY FROM OPPONENTS AND PROPONENTS AND PUSHED IT TOWARD MORE COOPERATIVE EXPERIENCE
In the past, companies opted for silence and privacy at all opportunities. Relations with the public began to improve, however, when they realized two-way communication was better than closing down to the public’s concerns and questions, especially as more people moved into the areas surrounding their operations. This problem started a few years ago, when state groups began spreading misinformation about health impacts, which resulted in local attempts to ban fracking, he said. Information, which had been their greatest weak spot, became one of the best tools in relating to the public and addressing rumors about the industry. “Education is hugely important, because when we aren’t out there communicating with people about our plans and the benefits of oil and gas, others will fill that vacuum with misinformation,” Frommer said. To aid this, they took a page out of the western Colorado operators by establishing a website - or, as they call it, a microsite specifically built to receive direct feedback from concerned residents. “Every company is a little bit different depending on where they operate,” he said. “Some companies that operate in very rural parts of the Western Slope, for example, approach outreach differently because the closest community is 50 miles away.” While larger populations demand more information across the board, companies like Great Western and Anadarko Petroleum view their efforts to communicate as being overwhelmingly transparent within their trade secret limitations, though people sometimes view that as lying to the community. “In our business, we can’t divulge the specifics of our agreements with land and mineral owners, but we can and do always let people know where we’ll be drilling, when and for how long,” Frommer said. Great Western spends time sending representatives to community meetings where they operate, such as the Windsor comprehensive plan meetings this summer. Anadarko makes employees available to visit schools, organizations or events to meet the public and talk about their operations and how they play a role in the local economy. Being out in the community “gives
“Education is hugely important, because when we aren’t out there communicating with people about our plans and the benefits of oil and gas, others will fill that vacuum with misinformation.” RICH FROMMER, CEO, Great Western Oil & Gas
(them) a chance to tell our personal story,” said Alex Hohmann, manager of Stakeholder Relations for Anadarko. Anadarko defines stakeholders and customers as anyone in an area affected by their operations. “Our observation has been that not only do we need to operate with excellence but also share what it is that we do,” Hohmann said. For Anadarko, the biggest obstacle has been getting the word out about the resources it offers its customers, which include a website to voice concerns and a hotline to contact its version of customer support. By dedicating staff to the hotline, its customers can call someone whose job is to respond to their concerns, questions or complaints, streamlining the process While they definitely hear about road conditions and safety concerns, Hohmann said 20 to 25 percent of the inquiries that came in were from people looking for more information. While they hear complaints, oil and gas companies do believe their efforts combined with a more public conversation setting has resulted in greater public understanding and support in recent years. “The vast majority of the public recognizes that this industry is vital to the economic health of the state and that we are interdependent on oil and gas,” Frommer said.
MEETING IN THE MIDDLE it’s hard not to argue oil and gas and community organizations butt heads on many levels, but progress comes through agreeing to disagree.
“Operators are actively involving local government and citizens,” Barwinski said. “I’ve really worked hard, as have (the companies), to develop constructive relationships with operators.” Although their goals sometimes differ, as feedback becomes easier and operations fall into the public eye more often, compromise - or at the very least hearing each other out - lays the foundation for relationships down the road. “Anyone operating in the (DenverJulesburg Basin) has learned that they need to engage with local communities and build a rapport in order to be successful,” Frommer said. Unlike past efforts, companies now reach out to residents when they have plans to drill in an area. For Anadarko, this means walking door to door to provide residents in the surrounding area with pamphlets, operation schedules and magnets that have the company’s hotline number. Great Western provides similar materials and makes employees and staff available to speak at public meetings throughout the planning process. “We try hard to engage in a dialogue with anyone who is impacted by our operations and has legitimate concerns,” Frommer said. “As an industry, we have to view those voices as separate from people who just want to vilify oil and gas.” While the change has been less theatrical than public arguments, Barwinski said it was important for people to realize there had been more progress than people realize because so much was done behind the scenes. In addition to Weld Air and Water meeting with Extraction and Synergy, the two companies met with each other to
update operations as well. “Good companies are being much more deliberate,” she said. This change also pushes “good companies” to pressure those not meeting new standards. “Not all companies are created equal,” Barwinski said. “Some of the companies that want to be more responsible know that companies that cut corners and run their trucks where they shouldn’t give the whole industry a black eye.” Coupled with the fact the industry now impacts more people than ever - both in jobs and in operation size - companies have reevaluated public relations strategies to fit community demands. “We have new neighbors and it might help us to understand what’s important to them,” Hohmann said. Hohmann made sure to note no single company did it alone. It was rather a game of trial and error supplemented by borrowing ideas from others. “We actually looked at other companies in oil and gas and said, ‘If they’re doing that, we ought to do that too,’ “ he said. Part of this effort goes to giving stakeholders the chance to see operations for themselves. “There’s really no substitute for that hands-on experience, and that works better than anything to demystify (the industry),” Hohmann said. “There’s really no substitute for, ‘I was there, I saw it.’ “ At the end of day, the new dynamic has pulled the discussion at least in part away from opponents and proponents and pushed it toward more cooperative experience. “Having a successful resolution with someone is not a linear process,” Hohmann said. “We’re dealing with people.”
SEPTEMBER 2015 ENERGY PIPELINE 37
BY TRACY HUME • FOR ENERGY PIPELINE
WELD COUNTY POISED TO BECOME COLORADO’S LARGEST GAS PRODUCER
G N I S I R 38 ENERGY PIPELINE SEPTEMBER 2015
G N
In the game of musical chairs that characterizes fossil fuel energy production, no single county seems to stay on top for long, due to variables such as commodity price, advancements in technology and the natural lifecycle of different types of plays.
TWELVE YEARS AGO, La Plata County, in southeastern Colorado, was the state’s top gas producer. Colorado Oil and Gas Conservation Commission data indicate that La Plata County’s natural gas production peaked in 2003. La Plata County gas, drawn primarily from the Ignacio Blanco gas field in the Northern San Juan Basin, accounted for nearly 46 percent of Colorado’s total natural gas production in 2003, with 473 billion cubic feet produced. By 2012, Garfield County had overtaken La Plata County as Colorado’s top gas producer. In that year, Garfield County, drawing from the Piceance Basin, produced nearly 41 percent of Colorado’s total natural gas, with 701 billion cubic feet produced. SEPTEMBER 2015 ENERGY PIPELINE 39
Insight to the natural gas industry provided by
Percentage of Colorado's Coalbed and Natural Gas ProducTon: Top Three CounTes 1 0.8 0.6 0.4 0.2 0
2010
2011 Garfield County
2012
2013
La Plata County
2014
2015 (reported to date)
Weld County
SOURCE: Data from the Colorado Oil and Gas Conservation Commission (COGCC), Monthly Gas Production by County
TAYLOR CAVEY Energy Analyst Bentek Energy
GRAPH ABOVE Weld County is poised to overtake Garfield County as Colorado’s top producer of natural gas. Source: Data from the Colorado Oil and Gas Conservation Commission, Monthly Gas Production by County.
GRAPH OPPOSITE PAGE Oil has a consistently higher price point than gas when measured in terms of dollars per MMBtu equivalent. Data for natural gas pricing from the Henry Hub (HH) natural gas spot price; data for oil pricing from the West Texas Intermediate (WTI) benchmark. Source: Bentek Energy, a division of Platts. Price data from Nymex (HH) and West Texas Intermediate (WTI). 40 ENERGY PIPELINE SEPTEMBER 2015
focused their resources on “their highest return assets and acreage, where CAPTION: Weld County is poised to overtake Garfield County as Ccore olorado's top producer of natur they’ve already drilled and they’ve already seen very good initial production rates and returns,” Cavey said. By using this strategy - called “high grading” producers hope to boost production while reducing expenditures at the same time. “If you look at the price of oil and the price of gas on an MMBTU basis, where you basically make them equivalent in terms of dollars per molecule of energy,” said Cavey, “the return on oil is better.” “Since the price point for oil is higher than the price point for gas, producers are targeting oil and in the process, they are getting gas as a byproduct,” he said. That’s good news for liquid-rich plays, Preliminary COGCC data for the first part such as the DJ, and not-so-good news for of 2015 shows Weld County producing dry gas plays. In this economic context, 32 percent of Colorado’s total natural drilling activity in dry gas plays declines. gas, with Garfield County at just under Drilling activity in liquid-rich plays, such 30 percent, and La Plata County a as the DJ, may also decline, but efficiency distant third at 21.4 percent. gains have allowed production to grow. “The DJ has been growing at a The difference in oil versus gas price tremendous pace the last four or points is partly due to the different scope five years,” said Taylor Cavey, energy of the two commodities’ markets. “Oil analyst at Bentek Energy, a division of is a global commodity, whereas natural Platts. “None of the other basins within gas is more of a domestic commodity,” Colorado, or even the Rocky Mountains, have seen that kind of growth. I don’t see Cavey said. Global oil markets are wellestablished, with high volumes of import anything else in Colorado being able to and export activity between countries. compete with it in terms of oil and gas Natural gas activity is more domestically production growth.” and regionally focused. Since prices for both oil and natural “The U.S. is very independent in gas have declined precipitously since terms of gas production and demand,” early 2014, producers have curtailed Cavey said. “With oil, prices are very exploratory drilling and have instead
HOWEVER, DUE TO CONTINUING PRODUCTION INCREASES IN THE DENVER-JULESBURG BASIN, WELD COUNTY APPEARS POISED TO TAKE OVER THE TITLE IN THE NEAR FUTURE.
dependent upon the global environment. A geopolitical event in the Middle East can have a significant effect on the price of oil in the U.S., whereas something happening in the gas market outside of the U.S. isn’t really going to affect the U.S. gas price. “We have more than enough gas to meet the demand within the U.S.,” Cavey said. “We don’t rely on foreign markets for natural gas. And since we have more than enough to meet the domestic demand, we are actually trying to export gas now.” One of the keys to using natural gas as an exportable commodity is converting it to liquefied natural gas (LNG). According to the U.S. Energy Information Administration, natural gas is liquefied by cooling it to -260 degrees Fahrenheit. The liquefied gas represents about 1/600th of the volume of the gas in its natural state, making it easier to transport to areas not served by natural gas pipelines. According to the EIA, the first LNG carrier, the Methane Princess, began service more than 50 years ago, in June 1964. The Methane Princess primarily supported the United Kingdom’s import of LNG from Algeria. Since then, the global LNG carrier fleet has increased to more than 350 ships, with an average capacity of 150,000 cubic meters of LNG per ship (the equivalent of 3,300 million cubic feet (MMcf) of natural gas (U.S. Energy Information Administration, June 19, 2014). At the beginning of 2015, the Kenai
LNG export terminal, in Alaska, was the only U.S. facility exporting domesticallyproduced LNG to foreign countries. However, according to the EIA, companies in the Lower 48 states began applying to build LNG export infrastructure in 2010, when high oil prices impacted the demand for natural gas. As of July 1, 2015, the U.S. Department of Energy has received more than 50 applications for projects to export domestically-produced LNG from the Lower 48 states to both Free Trade Agreement and non-Free Trade Agreement countries. (For details on these projects, see the Summary of LNG Export Applications at the
GLOBAL OIL MARKETS ARE WELL ESTABLISHED, WITH HIGH VOLUMES OF IMPORT AND EXPORT ACTIVITY BETWEEN COUNTRIES. NATURAL GAS IS MORE DOMESTICALLY AND REGIONALLY FOCUSED.
Energy.gov, Office of Fossil Energy website: http://energy.gov/fe/downloads/summarylng-export-applications-lower-48-states ). Houston-based Cheniere Energy is currently expanding its Sabine Pass LNG Terminal in Cameron Parish, La., near the Louisiana-Texas border. The facility is slated to become the first plant in the Lower 48 to begin shipping LNG, beginning in late 2015. After completion, the facility will have bi-directional capabilities, meaning it can both export LNG, and receive (import) LNG for regasification, depending upon market conditions. “Bentek is tracking several different projects that are expected to come online in the next couple of years to export liquefied natural gas,” Cavey said. “In the near-term, the demand for natural gas is going to be more dependent on domestic factors, such as weather. But once these LNG projects come online, global demand could start to play a significant role in natural gas production.” As to whether the global export of U.S.-produced LNG could have an impact on gas production in the DJ, it’s hard to say, said Cavey. “The DJ continues to be a powerhouse of production,” he said, “If it keeps going that way through 2018, when a lot of these LNG export projects are expected to come online, they could source gas from the DJ, and that could definitely be helpful to producers.” SEPTEMBER 2015 ENERGY PIPELINE 41
SEEKING ALL PERSPECTIVES COGCC traverses state for feedback on proposed rules to require more interaction between municipalities, producers BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
tensions flared in early August when
pictures of their actions, then walked out as COGCC Director Matt Lepore explained his wants for the meeting. “My staff is not the experts in local government planning and process,” he said, as a woman from the group laid something in front of him on the table and walked away. “I’m interested in hearing from you all about what makes sense.”
officials from Weld County and some of those from surrounding communities met with the Colorado Oil and Gas Conservation Commission director to provide input into effective ways to allow local governments input in the oil and gas siting process. COGCC officials met with Weld County Commissioners and leaders from some of the county’s municipalities, such as Greeley, Windsor, Milliken and Hudson, from which they had hoped to help fashion official rule making of two proposals that came out of the Governor’s oil and gas task force last winter. The COGCC has held like meetings BARBARA KIRKMEYER, Commissioner, Weld County throughout the state to garner input from local government officials The rules, known as 17 and 20, which the and residents. task force devised last winter to allow local Early on, however, Commissioner Barbara governments more say when it comes to Kirkmeyer announced there would be no the industry entering and drilling in their public input, as the meeting was supposed to communities, were meant to help facilitate involve discussion with municipal leaders. early conversations between the industry and “It is open for the public to observe, local governments before trouble brewed. but there is no public input available,” she Proposal No. 17 would require industry told a small crowd. Minutes later, a group officials to consult with local governments identifying themselves in a press release later before choosing sites in urban areas in which as Coloradans Against Fracking stood up, to located a “large scale oil and gas facility.” turned their backs to the meeting, holding “First of all, large oil and gas facility is up signs against the COGCC, paused for
not defined in our regulations,” Lepore explained. “One of the things that we need to define is what is a large oil and gas facility? “If there is a large oil and gas facility, the recommendation is to carry out a process of consultation between operators and local governments... that process is really between local government and operators. My question is, “How do we make a rule that is effective and efficient for all of you as local government?” Proposal No. 20 would require oil and gas operators to register with municipalities and provide them with at least a five-year drilling plan in those areas. Those plans would include a good faith estimate of the number of wells the company planned to drill in that time. “My interpretation of what the task force was interested in, is helping everyone plan better, upfront, as you look down the road on where oil and gas is likely to occur,” Lepore explained. “This was the proposed process for doing that. Again, and let me say, both recommendations’ intent is there would be off-ramps for jurisdictions. There would be no consultation required unless local government wants that.” Lepore sought information from those in attendance on what the consultation
“We don’t agree with you going out and getting into local government business.”
42 ENERGY PIPELINE SEPTEMBER 2015
between industry and municipalities should look like. But he heard early on that Weld County municipalities such as Greeley and Windsor, were happy with the way things are, for the most part, and asked that the state not impose more rules on a processes that Greeley and Weld County, for example, had crafted on their own for years - a process that worked. “I don’t think we need you to come in and put that kind of regulatory process in front of us,” Greeley Mayor Tom Norton said. “With our (memorandum of understanding), we have done that.” The city of Greeley has had a memorandum of understanding with the COGCC that essentially functions like the proposed rules, Norton said. The MOU has been in place for a good five years now. That understanding has allowed the city to work with COGGC in much the same vein as the rule-making intends, Norton said. “I think in essence that’s where we are anyway,” Norton said of the rule-making and how similar it is to the city’s memorandum of understanding. “The rule-making, as long as it’s not more restrictive than the city of Greeley or tells the city specifically what to do, then we don’t have a problem. “If it becomes one where the state is infringing on property rights, the authority of local government to maintain their own property right authority, then we’ll have problem. ... As long as we have a good understanding, it’s not going to be a big deal.” Kirkmeyer proclaimed the county would not allow the state to usurp its authority over Weld’s authority over land use. “We don’t agree with you going out and getting into local government business,” Kirkmeyer said. “You’re going on beyond your authority, because you don’t have landuse authority on siting, noise, lights, weeds, truck traffic. “I know you stepped your way into it ... but we don’t really adhere to or listen to your setback rules,” Kirkmeyer said. “With regard to additional siting criteria, it’s not necessary. If local government chooses to have a permit process or increase mitigation measures, that’s up to you. That should not be, and is not under the purview of the COGCC. ... We will fight you every step of the way on it.” Lepore disagreed, stating the COGCC was within its purview to regulate land use: “I don’t agree with Commissioner Kirkmeyer about the scope of our
BUT EVEN THOUGH WELD COUNTY AND GREELEY OFFICIALS HAVE HAD YEARS TO DETERMINE BEST PRACTICES TO WORK WITH THE INDUSTRY, SMALLER COMMUNITIES, SUCH AS WINDSOR HAVEN’T jurisdiction on land use. We believe it is our jurisdiction to say where an oil and gas facility is located.” But even though Weld County and Greeley officials have had years to determine best practices to work with the industry, smaller communities, such as Windsor, haven’t, explained Mayor John Vasquèz. “For years I was told they have a constitutional right, you can’t stop them, they’re coming, end of discussion,” Vasquèz said, discussing a fight the city had with an operator who recently planned to drill outside of city limits , but in proximity to a Windsor neighborhood.
He sought clarification about what municipalities can do to work with operators, and impose restrictions on them to satisfy concerns of residents who may live near sites planned for drilling. Vasquèz said the town of Windsor had to force-annex the property just to have a seat the table to discuss ways to mitigate impacts on the surrounding neighborhood. “It’s all about co-existence,” Vasquèz said. “We want to have teeth in the policy to mitigate” industry’s manipulation of the process. “If I get a dead cat, give me a shovel, give me something to work with.” Commissioner Julie Cozad said in her eight months on the commission, it seemed liked Weld County had determined the right formula for working with industry, and more regulation wasn’t necessary. “I would rather have that be at the local level and not have the state involved,” Cozad said. “I’ve done 20 years of land use planning, and in Weld we do a pretty good job of making sure we’re working with surface owners and municipalities, and it works well.” Commissioner Sean Conway said he worried about the “unintended consequences” or the proposed rules, based on a “rush to judgment.” “One-size-fits-all doesn’t work,” he said. “I beg you to continue to give local government the ability to work it out. At the end of the day, I really hope you take into consideration the ability for us to continue to do what we’ve been doing 30 years.”
RULE-MAKING MEETINGS The Colorado Oil and Gas Conservation Commission has traveled the state to get feedback on proposed rules that would spell out how municipalities should work with oil and gas producers to help determine the siting of large scale oil and gas facilities, as well warn municipalities of future plans for drilling. COGCC representatives will start the official rule-making process with public hearings next summer.
SEPTEMBER 2015 ENERGY PIPELINE 43
News Briefs Three injured in Wyoming fire treated at Greeley hospital CHEYENNE, Wyo. - The three welders who suffered severe burns in a flash fire in early August at an oil and gas facility northeast of Cheyenne were in Greeley receiving treatment at North Colorado Medical Center. The unidentified men were working on Kaiser-Francis Oil Co. when natural gas left in the system exploded and started the blaze. Laramie County Fire District 2 operations chief Manny Muzquiz said burns covered up to 30 percent of the victims’ bodies. One man was transported immediately by helicopter to the Western States Burn Center at NCMC. The other two were initially taken by ambulance to Cheyenne Regional Medical Center, before being flown to NCMC, according to the Wyoming Business Report. Occupational Safety and Health Administration spokeswoman Hayley McKee said: “The OSHA inspectors are also gathering their own evidence and will interview any available witnesses. Any evidence that has been gathered will be considered. The inspectors will then sort through all of the evidence and interviews and reconstruct the accident.” The facility where the fire broke out is about a mile south of U.S. 85 on Laramie County Road 135. Attempts to contact officials at the company headquarters in Tulsa, Okla. for an update on the condition of the men were unsuccessful. Local fire officials also said they had no information. - Staff Reports
FBI closes in on Bakken crime ring; 29 indicted Almost 30 people have been indicted on drug-related offenses after an investigation by the Bakken Organized Crime Strike Force, which investigated the trafficking of methamphetamine and heroin from Bakersfield, Calif., to the Bakken region. “The strike force was designed to work as one unit to identify, target and dismantle criminal organizations working in the Bakken, and reach beyond the borders of North Dakota to ensure the entire criminal organization is brought to justice,” said acting U.S. attorney Chris Myers said in a news release. “After only a few months we are seeing the efficiency, strength and extended reach provided by the strike force model. The results here are exactly what we hoped for when we designed the strike force.” The investigation involved two years of work by various state, local and federal enforcement agencies, including the FBI, the North Dakota Bureau of Criminal Investigation, the Bakersfield Police Department, the Minot Police Department, the Ward County, N.D., Sheriff’s Office, the Ward County Narcotics Task Force, the Drug Enforcement Administration, the Metro Area Narcotics Task Force, the North Dakota Highway Patrol and the U.S. Border Patrol. The result of the investigation so far has been the indictment of 22 people in Minot, N.D., and seven people in Bakersfield, Calif. - Staff Reports
44 ENERGY PIPELINE SEPTEMBER 2015
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News Briefs TRAILER SALES & TRUCK FITTING
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Wind energy: A major solution under clean power plan Washington, D.C. - Wind energy can provide a majority of the clean power that states will need to comply with the government’s new rule to reduce carbon pollution from electric power plants, U.S. industry leaders have said. “American wind power can do this,” said Tom Kiernan, CEO of the American Wind Energy Association, in a news release. “Low-cost wind energy reduced carbon emissions by five percent in 2014, and we’re capable of doing a lot more. We can build a more diverse, reliable, cleaner energy mix for America while creating jobs and keeping money in consumers’ pockets. “We are pleased to see the administration responded to the comments we and others made that renewables are ready to serve,” Kiernan added. “The Clean Energy Incentive Program holds promise as a way to encourage states to move forward well before 2022, we look forward to the opportunity the EPA is providing to comment on the details. We know wind energy is a solution that works, and we’re ready to meet this challenge.” The final rule of the Environmental Protection Agency’s Clean Power Plan will be announced today after over a year of comments. It’s expected to call for reducing carbon emissions 32 percent
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Paul Gaynor, executive vice-president of SunEdison for EMEA and Americas, said: “The Clean Power Plan presents an important opportunity to create thousands of jobs, save customers money, and improve reliability of our electrical system. This isn’t about politics - it’s about economic opportunity for all Americans, and cost savings for everyone.”
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Mike Garland, president and CEO of Pattern Energy, said: “This is a win-win for our environment and the economy. The best deal for consumers will be to get the majority of the new clean power we need from the wind. Iowa and South Dakota already generate nearly 30 percent of their electricity yearround from wind. And wind represents true energy abundance, because it will never run out.”
Patrick Woodson, chairman of E.ON North America, observed: “The Clean Power Plan finally gives the electric industry certainty while stimulating a surge of clean energy resources that will create jobs and secure America’s energy independence. As generators, we need to quickly take the initiative to work towards a cleaner future so that we are not standing around like dinosaurs watching meteors.”
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Mike Storch, executive vice-president and chief commercial officer at Enel Green Power North America, said: “Across the country, states have already seen firsthand how wind energy can provide low cost, reliable, clean energy to their generation mix. Not only does wind provide direct savings to ratepayers, but it also creates direct, longterm, sustainable support and benefits to local communities. As states look to attract large capital investments to their economies, wind can play a critical role in achieving economic growth, while also guarding against costs associated with harmful pollutants.”
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John Purcell, vice-president of the energy division at Leeco Steel, said: “Wind energy is an integral part of the collective solution for diverse, stable and home-grown energy solutions. And if this initiative is supported by a multi-year extension of the PTC, we can help bridge the gap between today and the 2022 compliance goal; allowing the wind turbine OEMs to bring another technology cycle to the fore, helping wind become increasingly competitive with other commercial scale electricity generation solutions. As modern wind technologies are introduced, more manufacturing companies in the heart of America can keep people working. We all benefit.” For all of the latest information wind power and the Clean Power Plan, visit www.awea.org/cleanpowerplan. - Source: American Wind Energy Association
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Weld commissioners, Anadarko partner to provide clean water Weld County and Anadarko Petroleum helped out this summer when the water supply in the unincorporated town of Wattenberg in southwestern Weld County became unsafe due to failed water filters at the water plant for the Wattenberg Improvement Association. Last year, elevated nitrate levels were a result of failed membranes in the water plant, according to a news release. The plant has about 12 membranes, which filter out nitrates and other materials in the water. The membranes were removed and sent to California for testing to discover why they were failing. New filters were purchased and installed. And this summer, the elevated nitrate levels caused the new filters to fail again. In 2014, Anadarko Petroleum covered the costs of bringing safe drinking water to this area. The company has offered to cover the costs of providing potable drinking water to the residents this time around as well.
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“Unfortunately, the Wattenberg area is dealing with this issue again,” said Commissioner Chair Barbara Kirkmeyer. “We are assisting the community to get safe drinking water out to the residents, and we are pleased that Anadarko has offered to cover the costs.” Weld County has co-applied for a Community Development Block Grant from the U.S. Department of Housing and Urban Development for $648,000 to provide a permanent solution for this problem. The Wattenberg water system was expected to be down for six to eight weeks. - Staff Reports
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MAKING HOLE A look back at the origins of oil and gas BY BRUCE WELLS • AMERICAN OIL & GAS HISTORICAL SOCIETY
Coal oil of 19th century still fuels modern rockets a 19th century petroleum product made America’s 1969 moon landing possible. On July 16, 1969, kerosene rocket fuel powered the first stage of the Saturn V of the Apollo 11 mission. Four days after leaving earth, astronaut Neil Armstrong announced: “Houston, Tranquility Base here. The Eagle has landed.” America’s historic achievement rested on many new technologies - and tons of fuel first refined for lamps by a Canadian geologist in 1846. During launch, five Rocketdyne F-1 engines of Saturn V’s first stage burned “Rocket Grade Kerosene Propellant” at 2,230 gallons per second - generating almost 8 million pounds of thrust. The F-1 engines burned highly refined kerosene RP-1 (Rocket Propellant-1 or Refined Petroleum-1), which, while conforming to stringent performance specifications, was essentially the same “coal oil” of the previous century. Canadian physician and geologist Abraham Gesner in the 1840s began experimenting with refining and illuminating fuel from coal. According to Canadian historians, in August 1846, Gesner gave the first public demonstration of the preparation and use of his new lamp fuel. His audience in Charlottetown, Prince Edward Island, was enthusiastic, but unaware they were witnessing the birth of the petroleum refining industry.
Powered by five first-stage engines fueled by “rocket grade” kerosene, the Saturn V remains the tallest, heaviest and most powerful rocket ever built.
“I have invented and discovered a new and useful manufacture or composition of matter, being a new liquid hydrocarbon, which I denominate Kerosene,” he later noted. By 1850, Gesner had formed a company that installed lighting in the streets in Halifax, Nova Scotia. In 1854, he received a U.S. patent (No. 11,203) for “Improvements to Kerosene BurningFluids” and established the North American Kerosene Gas Light Company at Long Island, N.Y. Although Gesner coined the term kerosene from the Greek word keros (wax), because his fluid was extracted from coal, many American consumers called it “coal oil” as often as they called it kerosene. By the time of the first commercial U.S. oil well, drilled by Edwin Drake in 1859, a Yale scientist (hired by the well’s investors) had reported oil to be an ideal source for making kerosene, much better than refined coal.
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.
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The F-1 engines of the Saturn V first stage at the U.S. Space and Rocket Center in Huntsville, Alabama. Photo courtesy NASA.
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Demand for kerosene refined from petroleum soon launched the nation’s exploration and production industry. Although electric light bulbs would replace kerosene lamps and gasoline would dominate 20th century demand for a transportation fuel, kerosene’s ease of storage and stable properties attracted early rocket scientists. The Apollo 11 landing crowned liquid-rocket fuel research in America dating back to Robert H. Goddard and his 1914 Secondary Containment Systems gasoline-powered “Rocket Apparatus”. ntainment Systems In March 1926, Goddard launched the world’s first liquid-fuel rocket from his aunt’s farm in Auburn, Massachusetts. It was Paul Taucher P.G. powered by liquid oxygen and gasoline. Secondary Containment Systems Systems Secondary Containment Owner / Principal Hydrogeologist Paul Taucher P.G. 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Sterling, Colorado Servicing the Niobrara and Bakken oil field SEPTEMBER 2015regions ENERGY PIPELINE
53
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.............................................................................................1,091 (65.8%) Garfield....................................................................230 (13.9%)
State Aug. 14 July Avg. June Avg. May Avg. Colorado 37 ........38 ......... 38................... 39 Louisiana 89 ........74 ......... 71................... 70 Oklahoma 105 ......106 ....... 106 ..............105 North Dakota 70 ........71 ......... 76................... 79 Texas 386 ......369 ....... 363 ..............375 Kansas 11 ........10 ......... 13................... 12 California 12 ........11 ......... 11................... 13 Utah 4 .........7 ........... 7....................... 6 Alaska 11 ........10 ......... 10................... 10 Ohio 20 ........19 ......... 20................... 24 Pennsylvania 39 ........44 ......... 47................... 47 Source: Baker Hughes Rig Count Aug. 4.
2015 GAS PRODUCTION
COUNTY *YTD PRODUCTION (% OF STATE) Weld...........................................202,841,788 (32%) Garfield...................................186,896,619 (29.6%) La Plata ..................................135,027,945 (21.4%) Las Animas ..............................34,018,232 (5.38%) Rio Blanco .................................. 22,433,276 (3.6%) Mesa .........................................12,592,848 (1.99%) State .....................................631,895,336
Rio Blanco............................................98 (5.9%) Mesa.......................................62 (3.4%) La Plata...................56 (3.38%) Larimer..................28
2015 OIL
Gunnison.........20
PRODUCTION
Adams.........13
COUNTY *YTD
State....................................................1,657 Source: Colorado Oil and Gas Conservation Commission as of Aug. 5.
US RIG COUNT
The U.S. rig count peaked at 4,530 in 1981 and bottomed at 488 in 1999. Area July Avg. June Avg. May Avg. April Avg. U.S. 884 866 861 889 Canada 211 183 128 80 Source: Baker Hughes Rig Count, August 14.
PRODUCTION (% OF STATE)
Weld ..............42,097,305 (88%) Rio Blanco .....1,827,218 (3.8%) Garfield .............578,971 (1.2%) Lincoln ............601,399 (1.25%) Cheyenne........549,034 (1.15%) Moffat................196,410 (0.4%) Jackson ...........161,214 (0.34%) State......................... 47,748,462 Source: Colorado Oil and Gas Conservation Commission as of Aug. 17.
Source: Colorado Oil and Gas Conservation Commission as of Aug. 17.
COLORADO ACTIVE WELL COUNT 54 ENERGY PIPELINE SEPTEMBER 2015
Weld ..........................................................................22,569 Garfield .....................................................................11,027 Yuma ...........................................................................3,880 LaPlata........................................................................3,326
Las Animas .................................................................2,990 Rio Blanco ...................................................................2,914 36 others .....................................................................6,984 State .........................................................................53,690
Source: Colorado Oil and Gas Conservation Commission as of Aug. 5.
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