DECEMBER 2014 ENERGY PIPELINE 1
COMPRESSION, GAS AND AIR Wagner Power Systems offers combustion technology that will burn almost any gaseous fuel, natural gas, coal bed methane or wellhead gas and can be programmed to switch from one to another. This flexibility, along with high reliability, makes Wagner engine packages ideal for gas lift operations. The Cat engines, offered by Wagner Power Systems, handle the changing conditions of well head and gathering applications, with the ability to withstand a wide range of pressures and conditions. We’re built to supply the power you need as well as remote startup and monitoring capabilities to get the job done. In the processing industry, unmatched reliability and longterm output make Cat engines the obvious choice. Need an engine drive for compressed air? Let us help you with your application. We can supply the engine only, either diesel or gas, or we can design and supply the complete package. Find us on the web
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2 ENERGY PIPELINE DECEMBER 2014
ANADARKO PETROLEUM CORPORATION
ANADARKO IS... Among the world’s largest independent oil and natural gas exploration and production companies – providing for today, innovating for tomorrow.
www.facebook.com/anadarkopetroleumcorporation
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DECEMBER 2014 ENERGY PIPELINE 3
www.anadarko.com
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Features
38
42
A FAMILY THAT STAYS TOGETHER
RECYCLING WATER
By Sharon Dunn
By Tracy Hume
Windsor family works decades to build clothing and gear shop in northern Colorado.
16
ONE KNOCK AT A TIME
34
New Wattenberg oil and gas company moves in on busy territory.
NOW HIRING
Finding talent is more complex, difficult in today’s market.
26
Working through the holidays is common in the oil patch. By Linda Kane
30
ELECTION RESULTS
Voters nationwide weigh in on fracking, water measures. By Lindsay Harmon • AP story
4 ENERGY PIPELINE DECEMBER 2014
ON THE COVER Photo illustration by Darin Bliss
By Sharon Dunn
48
DRY FRACKING
Could be a water-saving game changer. By Allison Dyer Bluemel
By Tracy Hume
WORKING HOLIDAYS
FRIENDLY CRUDE
Crude prices drop as american oil production surges.
By Sharon Dunn
20
Trying to save produced water from going down the drain.
66
MAKING HOLE
A look back at petroleum’s past.
Departments 8
Support Company Profile
10
Field Worker Profile
12
Executive Profile
54
Earnings Briefs
60
News Briefs
By Bruce Wells
Greystone Technology Group
Meet Noel Miramontes, Bill Barrett Corp.
Meet Robert Watson Jr., EnerJex Resources
DECEMBER 2014 ENERGY PIPELINE 5
Our SERVICES shine bright with
SERVICE EXCELLENCE
PUBLISHER Bart Smith EDITOR Randy Bangert GENERAL MANAGER Bryce Jacobson
Happy HOLIDAYS! Need an electrical distributor that’ll spread good cheer to your business all year long? We’ve got the best products and service. It’s what we, as employee-owners, call the perfect package. » Inventory management » Technical support and training » Job site project management trailer » Lighting and energy management
Our holiday hours are: » » » »
December 24 open until 12 p.m. December 25 closed December 31 open until 12 p.m. January 1 closed
CREATIVE MANAGER Alan Karnitz BUSINESS MANAGER Mike Campbell MANAGING EDITOR Sharon Dunn CONTRIBUTING WRITERS Linda Kane Tracy Hume Bruce Wells Allison Dyer Bluemel
ADVERTISING DIRECTORS Bruce Dennis Gary Loftus Sabrina Poppe ACCOUNT MANAGERS Paul Dovenbarger Cristin Peratt Mary Roberts Kristy Zado ACCOUNT/PROJECT MANAGER T.J. Burr CREATIVE TEAM SUPERVISOR Afton Pospíšilová ART DIRECTION & DESIGN Darin Bliss
ENERGY PIPELINE MAGAZINE 501 8th Ave. P.O. Box 1690 Greeley, CO 80632 1501 5th Ave., Suite 101 Belle Fourche, SD 57717 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 September 2014, Volume 2, Issue 1. Published by Greeley Publishing Co., publisher of The Greeley Tribune, Windsor Now, the Fence Post, and Tri-State Livestock News.
30-250 (2014-11)
6 ENERGY PIPELINE DECEMBER 2014
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SUPPORT COMPANY PROFILE
Greystone Technology Group HOW LONG HAS YOUR BUSINESS BEEN OPERATING IN WELD COUNTY? Since 2001.
CORPORATE HEADQUARTERS Denver, Colorado Fort Collins Location 1136 East Stuart St., Suite 2220 Fort Collins, CO 80525 970.372.5280
NUMBER OF EMPLOYEES 53
WEBSITE www.greystonetech.com
SERVICES OFFERED Comprehensive IT management, technology infrastructure design and implementation, cloud consulting and migration, strategic IT planning, SharePoint consulting and development, web design, web application development, online marketing, social media marketing and strategy. 8 ENERGY PIPELINE DECEMBER 2014
WHY SHOULD CUSTOMERS DO BUSINESS WITH YOUR COMPANY? As we interact with people and organizations about their technology situations, what we most often find is dissatisfaction and disappointment. It seems that is just the nature of technology services. We cannot accept that. We won’t accept it. Our pursuit is to show that you don’t have to settle for “good enough.” We don’t think the common practices of our industry have the
clients’ best intentions in clear view and we’ve defined a mindset intent on making a deeper impact.
HOW LONG DO YOU ANTICIPATE BEING IN BUSINESS IN NORTHEAST COLORADO? We’re a Colorado company, born and bred and we love it here. We’re going to be here a long, long, long time.
IS YOUR COMPANY IN A GROWTH MODE? Absolutely! We’ve been named to the Inc. 5000 list for two years in a row, now. We have also received several other recognitions from
other publications for our growth.
WHAT KIND OF SKILLS, EXPERIENCE OR EDUCATION DO YOU LOOK FOR IN EMPLOYEES? We are absolutely looking for technical proficiency, but we’re also looking for problem solvers and critical thinkers, for situation managers and for people who can think on their feet. We’re looking for “people” people. We’re looking for those who are passionate about customer service and client care, and who will go above and beyond to own a situation and see it through to a positive outcome.
GREYSTONE TECHNOLOGY GROUP Interested applicants can visit our website www.greystonetech.com/careers
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DECEMBER 2014 ENERGY PIPELINE 9
FIELD WORKER PROFILE
Noel Miramontes BILL BARRETT CORP. BY STAFF REPORTS
HOMETOWN Windsor
WHERE DO YOU LIVE? Fort Collins
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? 2 years
HOW DID YOU GET INTO THE INDUSTRY? I have to thank my best friend Kevin Hughes. I came from retail, and I was barely making ends meet working paycheck to paycheck. One day, Kevin called me and said, “Hey, I found this job in the oil field. I’ve been working here about two weeks now making good money. Maybe I can get you on?” Knowing nothing about the oil and gas industry, I had many questions
about what I would be doing, and I had doubts about leaving my retail job where I had a stable position and future opportunities to rise up through the ranks, though not at a very good pay rate. I would be a flowback for a contract company, he explained. After discussions with my wife and family, I decided it was worth a shot. I needed to do something different and make a better life for my family, no matter how hard I had to work. A week later, there I was in the oil and gas industry contracted through Bill Barrett doing flowback; 11 months later, Bill Barrett hired me as a lease operator.
WHAT IS YOUR JOB TITLE AND DUTIES? I’m a lease operator, also known as a pumper. As a pumper, there are multiple duties.
10 ENERGY PIPELINE DECEMBER 2014
Basically, I’m in charge of everything on location. I have a route with multiple lease locations. In our routes we operate VRTs; VRUs; heater treaters; multiple combustors; separators, which separate oil, gas, and water; generators, compressors, and pumping units. That’s just the equipment we operate. We also maintain quality and quantity of oil that has to be tracked every day, making sure all oil sells and is being hauled safely. More important duties include making sure gas in not leaking, oil is not spilling, and all regulations of Colorado Oil and Gas Conservation Commission are being followed. Safety is a duty I take very seriously; we sometimes have contractors working on our locations and it’s part of our duty to ensure all personnel and
equipment are working safely and properly.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB?
WHAT IS THE HARDEST PART ABOUT YOUR JOB?
The most interesting thing is how I’m making a difference and doing my part to help our country come closer to energy independence. I’m a small part of a bigger picture. But I’m still part of it, and that keeps me moving forward from every ounce to every barrel, were are getting closer.
I have to say it is working in the winter. Trying to keep production going when things start to freeze makes for long hours. When equipment goes down and on days when we have high demand, trying to meet those demands in 12 hours starts to become challenging. But it is not so much the work that makes it hard. It’s trying to be home a decent time to be a husband and a father to my family that waits for me.
WHAT IS THE BEST PART OF YOUR JOB?
WHAT DO YOU DO IN YOUR SPARE TIME?
Being able to work outdoors. I came from retail, and I was stuck inside all day long. I also like working on a team. We all work together and no man is left behind. We all move as one to reach the same goal.
I’m a big family man. I love being around my wife, daughter and extended family. They’re the world to me. When I have time off, I like to watch my daughter practice and compete in cheerleading competitions. I spend a lot
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for all your DOT help needs! DOT HELP SERVICES, INC. Over 30 Years of Experience in Transportation Free Consultation DOT Help DOT Compliance of time helping her practice her stunts and volunteer for things when she needs me too. I also like to help my motherin-law with her house projects when needed, though now that I have recently purchased my own home, I’ve been working on my own projects. When the weather is nice and I have spare time, I love to play disc golf, or go explore nature with my family.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? I can see myself as foremen one day. I will continue to grow with Bill Barrett and the oil and gas industry. Hopefully in my lifetime, I can celebrate energy independence.
WHAT DOES THE WATTENBERG FIELD AND THE DJ BASIN MEAN TO YOU? It is one step closer to energy independence and
many opportunities for future generations. I see lots of jobs for thousands of people. It means more growth in Colorado, stronger financial communities and better schools. Continuance of manufacturing everyday products. People don’t realize how many products we use on a daily basis that are made by or from oil.
HOW DO YOU FEEL ABOUT THE CURRENT ENVIRONMENTAL DEBATE GOING ON WITH “FRACKING” IN COLORADO? The majority of people I have found who are against fracking are not fully educated on it and have only heard one side. They don’t realize how much it benefits our country, our future independence and how it creates thousands of jobs for people. I do my best to educate these people when I do come across them though.
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Pick Your Present! $2,500 Landscape Certificate, Washer/Dryer, or $4,000 towards purchase price* up to $8,000 in closing costs with preferred lender** Offer valid on homes purchased by december 31st that close by February 26, 2015 *Offer valid in Colorado only on new D.R. Horton purchase agreements written December 1, 2014 through December 31, 2014 that close by February 26, 2015. Buyer must choose from ONE of the options listed above, and will receive the chosen incentive only at time of closing and only if closing occurs. Option 1: Buyer will receive $2500 in landscaping. Option 2: Buyer will receive a washer and dryer with a value of up to $1,500. Option 3: Buyer will receive up to $4000 towards the price of the home. Buyer must choose only ONE of the three options. Not valid on any buyer currently under contract with DR Horton, Inc., or in conjunction with any other promotions. DR Horton reserves the right to change or withdraw this program at any time without notice or obligation. Prices, included features, availability, and delivery dates are subject to change without notice. See sales agent for complete details including appliance makes and models. Terms and conditions are subject to credit approval, market changes, and availability. **Financing offered by DHI Mortgage Company Ltd.,9555 S. Kingston Ct, Ste. 100, Englewood, CO 80112, Phone 720488-2080. NMLS #133322. Company NMLS #14622. Regulated by the Division of Real Estate. DHIM is an affiliate of DR Horton. For more information about DHIM and its licensing please visit http://www.dhimortgage.com/affiliate/. Additional closing costs incentive of up to $8,000 is also available if buyer funds and closes with seller’s affiliated lender OR another seller “Preferred Lender.” To receive incentive for any lot, buyer must contract between 12/1/14 and 12/31/2014 and close by 2/26/2015. Provided for informational purposes only. This is not a commitment to lend. Not all borrowers will qualify. Buyer is not required to finance through DHI Mortgage or another seller “Preferred Lender” to purchase a home; however, buyer must use DHI Mortgage or another seller “Preferred Lender” to receive the incentive. Some restrictions apply. See sales agent for complete details including a list of all seller DECEMBER 2014 ENERGY PIPELINE 11 “Preferred Lenders”. EXP 12/31/2014
EXECUTIVE PROFILE
ENERJEX RESOURCES
Robert Watson Jr. BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM he’s young, he’s got two young kids
and he lives to do anything outdoors. Robert Watson Jr., of San Antonio, also runs an oil and gas company, EnerJex Resources, which just moved into Weld County’s rich resource plays with a small acquisition of about 4,000 acres. Watson is 38, which makes him a young buck as far as oil and gas executives go. But a wave of executive retirements may usher in more in his age group. “It’s not the age, it’s the mileage,” Watson quips over the phone from his San Antonio office. Watson has been leading this small public company out of Texas for the last three years, as it slowly builds its way up into a highly competitive industry. The company, which started in 2007 and took over Black Raven Energy in 2010, has about 100,000 acres in Texas, Colorado, Nebraska and Kansas, and most recently bought acreage in Weld County. “We’re the little engine that could; keep watching us,” said Watson, as he works to generate profit for his shareholders for his small publicly-traded company. Watson, a third-generation oil man out of San Antonio, founded Centerra Energy Partners in 2005 after working his way up in energy investment banking at CIBC World Markets. He founded Black Sable Energy in 2008, developing two oil projects in south Texas, before the company was acquired by EnerJex in 2010. Then the oil markets hit bottom, and Watson, who ran the company after the 12 ENERGY PIPELINE DECEMBER 2014
acquisition, was faced with a tough task turnaround. Difficult as it was to turn around this small ship in a busy ocean of oil companies, Watson has led the way, and acquisition has been the name of the game. “At that point, EnerJex was very small, and we’re still very small,” Watson said of the early days. “We needed at the time to have a bigger asset base to grow into public company shoes.” A little more than two years ago, EnerJex acquired Black Raven Energy, taking on 20,000 acres in the Adena Field, which is the third largest producing field in Colorado. But much of it was idled. Watson said the strategy was to re-establish production in the field, then grow its footprint in the DenverJulesburg Basin. “We think there are parts of the Niobrara and Codell that are still emerging, and we’ve done some technical work and wanted to see if we can get a foothold in areas we think have potential to heat up,” Watson said. “We bought those areas for two reasons: We think there’s a lot of opportunity in the basin and it’s still being rationalized.” The new acreage in Weld County, the company’s first purchase in the county, is from a variety of players in some areas that have yet to be totally explored. But they’re sandwiched in between the likes of Noble Energy and EOG Resources, which are continually experimenting in the area. Watson said he’s got his eye on EOG’s recent work back in northern Weld County, where it discovered Jake - the well that touched off the shale
frenzy - almost five years ago. Drillers later abandoned the area for the more Wattenberg rich resources in central Weld. “They’re looking back to see if they could have done anything different there,” Watson said. Though they’re not actively drilling, the idea is to get there. “We’re not land flippers. We’re trying to book reserves and put ourselves in a position to test that acreage,” Watson said.
QA &
with Robert Watson Jr.
Energy Pipeline took a few minutes to quiz the Wattenberg’s newest executive to find out a little more about EnerJex Resources, the newest company to come into Weld County to drill and explore the mighty Niobrara: EP: Your website states EnerJex’s producing assets are characterized by “long lived reserves with low production decline rates.” Why do you opt to hit those areas for workover potential? ROBERT WATSON JR.: In Kansas, we’re implementing a water flood, which maintains pressure in an old reservoir, so production is flat and doesn’t decline much. We have
Like other small players, EnerJex will be looking to see how the big boys proceed, and try to move in with their positions. “With our acreage positions, we’re watching what the big guys are doing. A lot of what they can figure out can translate to our acreage,” he said. The Weld County acreage is the first in which the company plans to do horizontal drilling. The rest of the company’s time is spent re-developing existing vertical wells with new technology. Though not as lucrative as the big boys, it’s a start. “When you’re small, you’ve got to be scrappy, look hard and shake a lot of trees to see what opportunities fall down, and chase the ones you can make work,” Watson said. Though the company got its start in south Texas, Watson said he and his small team of 35 employees and board of four are looking toward the DJ as its core operations. “We think the basin has a lot of oily rocks that have been under-explored,” Watson said. “The tools we have today from a technology standpoint can unlock those resources. “If we can prove up the acreage in Weld, that could be answer. It’s just an exciting piece of the puzzle we’re still building.” Watson has established a team in Denver, which will prove advantageous in the summers, he said. It’ll be the perfect time to get up in the mountains and be in the great outdoors. “I don’t mind getting up there in July,” he said. “San Antonio Julys are not that fun.”
ABOUT
Robert Watson Jr. AGE 38
SPOUSE Lacey
CHILDREN Emmy (5) Thomas (3)
WHAT DO YOU DO IN YOUR SPARE TIME? I’m an avid outdoorsman, as long as I’m doing something outside - hunting, fishing, hiking, golfing, get me outside.
LAST GOOD BOOK YOU READ “The Big Rich: The Rise and Fall of the Greatest Texas Oil Fortunes” by Bryan Burrough
SOMETHING ABOUT YOU THAT FRIENDS AND COWORKERS DON’T KNOW
San Antonio, Texas
I’m pretty much an open book. I’d say not much, because what you see is what you get.
HIGH SCHOOL YOU ATTENDED
PROFESSIONAL BACKGROUND
CITY YOU GREW UP IN
Alamo Heights High School, San Antonio, Texas
COLLEGE ATTENDED/DEGREES Southern Methodist University in Dallas, Texas; Bachelors of business administration in finance
CITY YOU LIVE IN NOW San Antonio, Texas
I took over EnerJex at the end of 2010. CEO and Founder of Black Sable Energy, January 2008 to December 2010; partner and founder of Centerra Energy Partners, Sept. 2005-December 2007. The short story is I started my career in private equity and investment banking, started out in finance. I’m a third-generation oil guy and a fifth-generation Texan, so I moved into those.
DECEMBER 2014 ENERGY PIPELINE 13
the ability to expand that operation. Our Adena Field, (in northeastern Colorado) is similar. It’s old, we’re re-establishing an old water flood. We think there’s significant amount of barrels in growth that we use technology to get out. As we’re re-establishing a field, production comes on and it’s low decline. The reason we highlight that is because it contrasts all the projects you hear today that involves technology like hydraulic drilling and fracs, they have hyperbolic declines ... we’re a little different in that we will drop, just not near as much, and so it’s more of a platform production profile. We’d certainly love to have some high IRR projects with hyperbolic declines. We point out to investors we have a stable production base. ... Everything we have is conventional and shallow at the moment. It’s an appropriate risk for the size of our company at the moment. The stuff we’re doing is relative to our size, so we can generate an attractive rate of return. For big companies like Noble or EOG, they have to focus on bigger projects. There’s a niche in a lot of conventional projects where you can create value by going in and putting a little TLC in some older assets, or expanding older assets. There’s a niche there for sure, I think. In all of our fields, we’ve made a commitment, gone in and spent money, got them up and going and producing, and we’re constantly looking for more opportunities. We understand how to do that. But as you’re successful at some of the smaller things, you get up to more medium things, then graduate up. Eventually you’ve got to find a spot where you can really grow. EP: Has your company identified efficiencies in getting to previously untapped resources in those 500 well locations in your existing properties? RW: Yeah, just the definition of secondary recovery is just that. When you go into an oil field, you have a lot of fixed costs. You have to leverage those, focus your operation and you’re recovering oil that was, for lack of better term, left behind. That’s the name of the game. That’s exactly what those projects are. 14 ENERGY PIPELINE DECEMBER 2014
We do have success, but again for us, the reason we bought the Weld acreage, we needed to start looking at projects that were a little bit bigger, higher risk, but a higher rate of return. They’re great projects and can make money, but it takes a long time to grow them. ... Everything on our portfolio is conventional and geared toward secondary, except for the acreage in Weld, which we intend to develop horizontally. Our first goal is to de-risk it. EP: It looks like EnerJex is moving into some areas in central and northwestern Weld County, quite the opposite of where the hot activity is. Why buck the tide? RW: What we think is in that area, you still have some thermally mature rock, not maybe the A-plus-plus stuff, but we think the rock properties are mature enough, the rocks have the properties where we think we can make economic production. If we can get a B+ well that’s really impactful, there’s lot of big players with A-plus-plus stuff, but we think we can make a return. ... We think the rock properties are similar to where people are having a lot of successes down there. We’re surrounded by Noble and Carrizo and they’re developing. Noble has had success just a little over a mile way from our acreages. We think that that part of the play will get revisited and people will look analytically and determine you can make money, though it might not be the hottest of hot in the Wattenberg. EP: EnerJex got kind of a jolty start just prior to the economic collapse. How difficult was it to turn this boat around? RW: It was difficult. When I took over, the damage had been done. Turnarounds are difficult and I had some experience doing turnarounds before in my private equity days, and you have to change mindsets and have good people. If you look at a successful company, you’ll find successdriven people. You focus on the right assets and sell what didn’t make sense, and we did all of that. Once we got the thing on track and got it rolling, it started working well. Our issue became, EnerJex was a small company to be public, we were a fraction of the size we are today. Then it became we have to take some risk to get bigger and generate (returns).
That’s dictated the Raven move and other things. The turnaround work, what helped me, once I got the right people in the right place, oil prices came back and the market came back, it certainly helps to have cooperation from all variables. Turnarounds are difficult. I’d say it’s still ongoing, and we still have a lot of goals to achieve. To me, we’re not finished with our work until we’re much bigger and delivered a return for our shareholders. There’s still a lot of work to do, but the big hurdle is getting cash-flow positive. EP: By acquiring Black Raven Energy in 2010, EnerJex gained 20,000 acres in northeastern Colorado’s (Adena Field) in an area where the wells had been shutin in since the mid-1980s. Your plan was to aggressively bring the field back to life in 2014. How is drilling there now? RW: It’s going well. Whenever you’re restoring production in an old field, it’s two steps forward and one step back. Our thesis, we’ve proven it works, the step back recently and we hinted at this, we’ve had to focus on some infrastructure issues. As far as bringing it back to life, the 60-year-old pipe doesn’t do what it used to do. So the plumbing needed upgrading, and we’re working on that. It’s coming along. We still think with time and capital, that asset can really be something. Raven had two core areas, the Adena Field, and we owned 55,000 acres in Phillips and Sedgwick, which is focused on the gaseous part of the Niobrara. When gas was at $5-$6 that area was booming, now not so much. We think there are interesting opportunities there, potentially underneath original targets. We’ve got to keep looking. EP: How do your newer acquisitions compare to your Texas assets? RW: Adena and Kansas are similar in that we’re redeveloping old fields. Adena is certainly bigger, in complexity as well. Texas would be more akin to more horizontal development and some of those things going on, but on those we just shifted our focus. At the time we were working down there, we were too small to compete for services, and focused on developing Kansas. Texas has become more non-core, it could be a neat little horizontal project, but we’ve been focused
in other areas. Where we are in Kansas, it’s an interesting state because you could lop it off into thirds, geologically, so a lot of bigger players are in the western part of the state, and bigger independents and others are ... we’re on the eastern part, where players are smaller and wells are little shallower, just by nature of how we started, we started there. Colorado is a direct focus. We really think we’re going to make our hay in Colorado at the moment. We’re a deal away from splitting that up a bit, but now Colorado is our focus. If we had the opportunity to find a way into another basin or another play, that could help us grow. Our focus would be split, so we’re constantly looking for those opportunities now. We think a majority of upside in our portfolio is the stuff we have in Colorado. EP: How do you feel about the political environment that comes with acquiring acreage in Colorado? RW: It’s challenging. If you look back at the history of the oil and gas business domestically, there has been an environmental oil and gas development discussion going on for 100 years. With consciousness out there, and awareness and everything going on, and lot is being driven by development near residential areas, which is a relatively new concept. I’m not surprised by the debate, it’s going to happen. I think the industry, and really when you’re talking about those sorts of issues, talking about industry being represented by much bigger companies than EnerJex. We can’t affect that. We have confidence that the industry, environmental groups and governing bodies will come to some sort of balance with how we can operate in an environmentally friendly manner and still bring resources to market that our country needs. The industry has gotten much better technologically at being environmentally friendly. I don’t think anyone will mistake an oil company for a solar company from a green standpoint. But it’s gotten good at containing the environmental footprint given what we’re doing. We’ll have to deal with it one way or the other. I feel confident looking back, these things have gotten worked out and will get worked out again.
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Northern Electric, iNC. - E-House Facility - 10100 119th Street, Longmont, CO 80504 2014 ENERGY PIPELINE 15 Northern Electric, Inc. - Corporate Headquarters 1275 West 124th Avenue, Westminster, CO 80234 DECEMBER 877-265-0794 www.northernelec.com
The lead principals of Extraction Oil and Gas, from left, Mark Erickson, chairman and CEO; Rusty Kelley, CFO; and Matt Owens, president. In not quite two years, the company has grown from three employees to more than 50, and has a growing acreage in the Wattenberg Field.
Photo by Sharon Dunn • sdunn@energypipeline.com
ONE KNOCK AT A TIME New Wattenberg oil and gas company moves in on busy territory BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
seemingly out of nowhere, a little known oil and gas exploration company has swept into the Wattenberg and is making some noise. Extraction Oil and Gas Company started in 2012 in Denver and is making some big moves that company officials hope will make it one of the heavy hitters in the Wattenberg Field in years to come. It started as two engineers with a dream. Two young engineers. Mid-20s. Matt Owens and Jesse Silva. Both worked for larger oil and gas companies in the Wattenberg, but they wanted to break out of the corporate walls that bound them. “We left our jobs. We didn’t have anything, just an idea,” said Owens, now two years older at 28. Owens had a modest plan to drill wells. He knew where he wanted to drill, and he understood where he could get the best out of the geology. They secured some money and started knocking on doors. “I’d never leased before,” Owens recalled. “I’d always worked at a bigger company and someone else did that. Jesse and I started calling people, and it was pretty embarrassing off the bat. “We probably failed in our first 20 attempts, and we finally got one 16 ENERGY PIPELINE DECEMBER 2014
lease, and then we got pretty good at it,” Owens said. “When you’re leasing someone and you’re an operations person, it’s easier to swing them your direction because you can explain a lot more. That was fun.” A few months later, and the small, private company is, as they say, moving on up, much faster than any of them had imagined. “We’re a company that nine months ago alone was producing 150 barrels of oil a day,” said CEO and chairman Mark Erickson, who has worked in the industry for more than 30 years, running companies, starting them, taking them public and the like. “We’re currently producing in excess of 20,000 barrels of oil equivalent grow and 10,000 BOE a day net. “We’re building out extremely fast. We’ve gone from three core employees to six to over 50 now,” Erickson said. Nine months ago, Extraction didn’t have Tekton Energy’s assets, nor a majority stake in Greeley-based Mineral Resources Inc., two deals that put the company square in the core of the Wattenberg - right where they want to be.
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“We really feel that early development and the best potential for success in this basin is in the core. We’ll start at the core and go out from there,” said Erickson, who still remains as chairman of the board of PRE Resources, a private oil and gas company he started in 2010 that has assets in the DJ Basin, Wyoming’s Powder River and Greater Green River Basins; the Michigan Basin in northern Michigan, California’s Ventura Basin and the Williston Basin of North Dakota. In the last several months, Extraction has built itself on good old fashioned know-how, experience, the monetary backing of Yorktown Partners - as well as a strong entrepreneurial spirit. The company already has its hands on two other private acquisitions that will cement a standing of 50,000 net acres in the Wattenberg. Their sites are set one more deal that could possibly double that.
Owens said. Erickson hooked him up with Yorktown Partners, and they got their money. Then they began to build their team, with Erickson and Owens on top. “A lot of people look at our company and say, ‘You have so many young people there,’” Erickson said. “But guess who is drilling the horizontal wells in the U.S.? Young people. Matt and his crew have touched way more horizontal wells, been part of drilling, completing, and operating. That’s where they cut their teeth, and they’re the best people in the industry today with horizontal drilling. They were on the cusp when the unconventional boom in northern Colorado was in its infancy.” In the beginning of Extraction - well, a few months ago now there wasn’t anyone on Owens’ operational team who’d reached their 30th birthday.
AS A SMALLER COMPANY, THE EXTRACTION TEAM CAN EXPERIMENT, TEST THE WATERS ON NEW TECHNIQUES, FEED THEIR INNOVATION. THEY HAVE FREEDOM TO CHANGE THEIR MINDS, AND TAKE MORE RISKS For Erickson, it started over the neighborhood fence. Erickson, who has been working in the Wattenberg and other states in a variety of roles in the energy indutry, years ago moved next door to Owens. “I’ve known Matt since he was 12 or 13 years old,” said Erickson. “I like to think I had a little something to do with him going to the Colorado School of Mines and getting a degree in petroleum engineering. He continues to debate that. But he made the right choice.” Erickson watched the younger man’s progress while in college drilling in the Uinta Basin in Utah. He later hired him at one of his energy startups. In 2010, Owens started working with PDC Energy as an operations engineer leading the horizontal completion and production activities in the Wattenberg. But that plan to start his own company was tugging away at his ambition. When Owens left his job at PDC, he started looking for capital. But the New York investors, he said, told him to leave before he could even sit down. “I didn’t think Extraction was going to be an oil and gas company,” Owens said. “I told Jesse, ‘We may have to make this a consulting company.’” Then he sat down to lunch with Erickson, a date they held every couple of months to catch up. Erickson was running PRE Resources at the time, focusing more on conventional drilling. “I showed him the presentation I wanted to show in New York,” 18 ENERGY PIPELINE DECEMBER 2014
“Me and the other engineers here, we were the ones pretty much out in the field, trying to figure out how to make the technology work,” Owens said of their early work in the field. “We knew we had the tools, but we didn’t know all the best methods and practices to get the costs down to make (horizontal drilling) economic. “It’s constantly innovating,” Owens said. That constant innovation might as well be a typical day for the Extraction team, all of whom emigrated from other, larger companies in the basin. “We’ve got a lot of ideas,” Owens said. “The core of us that came over here, from being in the field and watching and supervising implementation of new technology, there were things we thought could make wells more economic.” That just wasn’t an approach they could go with easily at the bigger firms, where the approach was more assembly-line in thought. The bigger push was pleasing investors, and that meant going with the plans that historically worked. As a smaller company, the Extraction team can experiment, test the waters on new techniques, feed their innovation. They have freedom to change their minds and take more risks. “We started trying different techniques, and almost every well we drill, definitely every pad, we try to tweak something to see if it works,” Owens said. “Sometimes it doesn’t, but a lot of times, it does. So we’re continuously tweaking our design.”
“We’re building out extremely fast. We’ve gone from three core employees to six to over 50 now.” MARK ERICKSON, CEO Extraction Oil & Gas Company
That approach, plus their continued relationships with larger companies, has helped Extraction grow much faster than they’d ever dreamed. “Our production has been really good, and our wells have been phenomenal and shown a lot of bigger companies how our production is ... it drew questions, and that’s how we were able to grow our acreage positions,” Owens said. Pretty soon, they were in a position to buy Tekton Energy, a private oil and gas production company that was drilling its leases in Windsor. Rusty Kelley was an investment banker with Moelis and Co., out of Texas, helping them find a creative way to ink that deal that others couldn’t do. He spent much of his career at Goldman Sachs. He knew oil and gas and he knew finance. “Rusty was the first who came along who had new thinking on how to try to put this together,” Erickson said. “We told Rusty we’ve got this strategy. ... Rusty was skeptical.” They made the deal with Tekton work, but they wanted more. Months later, they lured Kelley to their team as the CFO, and have been building their accounting team since. Said Kelley of the move: “I used to cover folks, from majors to top private companies, and I’ve never seen a group of individuals on operations and land management put together in a way that have relationships and opportunities that this had, that could also very clearly demonstrate expertise to manage that and working ... in ways that say we’re here to stay.” Next came the deal with Mineral Resources, in which Extraction bought a majority interest; drilling plans for which are just getting up to speed. All this time, the Extraction team has been content to fly under the radar in the Basin. But people are talking. Their name is popping up at different community meetings throughout northern Colorado for new drilling locations. Soon, they have may have five acquisitions under their belts. “It doesn’t always happen this way,” said Erickson, who’s started a number of small companies, and even taken them public. “Yes, having a lead on multiple acquisitions and putting together a leasehold in very mature basin, it doesn’t happen like this. It is a credit to our financial partners and team we put together that we were able to be nimble and quick.” Now, on to year three. Owens can’t wait. “We’re going to drill different formations that people haven’t drilled horizontally, and were going to see if it works,” Owens said. “The public markets aren’t going to crucify us if we drill a well and it doesn’t work at all. We have that freedom now, and we’re trying to make every bit of it count.”
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NOW HIRING Finding talent is more complex, difficult in today’s market BY TRACY HUME • FOR ENERGY PIPELINE
JACK EKSTROM
ELIZABETH DAHILL
jack ekstrom joined Whiting Petroleum Corporation in 2008, the company had 450 employees. Six years later, the company has 1,100 employees, said Ekstrom, vice president of corporate and government relations at Whiting. “At any given time, we have about 250 approved positions that we need to fill during a 12-month period,” Ekstrom said, “even though we are not recruiting for all of them at the same time.” Whiting Petroleum’s surge in hiring reflects a larger hiring boom within the oil and gas industry that is playing out across the nation. U.S. Bureau of Labor Statistics indicate that 119,800 people were directly employed in oil and gas extraction across the U.S. in 2004. Ten years later, that number has nearly doubled, to 213,500. Advances in production technology including horizontal drilling and hydraulic fracturing - are the primary factor behind the hiring growth in the oil and gas industry. “The new technology has driven activity to levels that were previously not believed possible,” said Ekstrom. The problem now is that companies can’t find enough qualified people to fill the positions being created. “If you look at all the companies operating in the DJ Basin PDC, Noble, Anadarko, Whiting, Carrizo, Bill Barrett - every one of us is recruiting for jobs in Weld County,” Ekstrom said. “We have all talked about how demand [for qualified talent] has outstripped supply.”
THE LOST GENERATION
BILL CASSIDY
JAMES MASTERS 20 ENERGY PIPELINE DECEMBER 2014
The boom-and-bust history of the oil and gas industry is partly to blame for the dearth of experienced talent available today, according to Elizabeth Dahill, principal at The Dahill Group, a professional oil and gas recruiting firm based in Denver. “Back in the late 1980s and early 1990s the industry was in a slump and there were significant layoffs,” Dahill explained. “Most of the big majors - like Apache and Marathon - pulled out of operations. They retrenched, laid off people here in the Rocky Mountain region, and moved their operations to Houston. It meant that we
have this lost generation of individuals that were unable to find work in the industry, so they had to retool themselves into other industries.” Colorado’s best-known industry dropout may be Gov. John Hickenlooper, who opened the state’s first brew pub after he lost his job as an oil and gas geologist in the mid-1980s. “Twenty years later, now that the industry is back, we are experiencing a lack of leadership because we don’t have the individuals that were just being groomed for oil and gas leadership roles 10 or 15 years ago,” Dahill said, “This ‘lost generation’ has really had a significant impact.” Indeed, surveys conducted by Deloitte Research indicate professionals in exploration and production (E & P) companies are, on average, 50 years old. Furthermore, 40 percent to 60 percent of the industry’s aging professional workforce, including geoscientists and engineers, are expected to retire in the next five to 10 years.
A WAVE OF RETIREMENTS Many companies with connections to the DJ Basin already have begun to experience the coming wave of senior-level retirements. In March of this year, Bonanza Creek announced the retirements of Gary A. Grove, executive vice president of engineering and planning, and Patrick A. Graham, executive vice president of corporate development. In April, Noble Energy announced the retirement of CEO Charles Davidson, who had served in that position since 2000. In August, Carrizo Oil & Gas Inc., announced the retirement of Paul F. Boling, vice president, chief financial officer, secretary and treasurer. And in October, Plains All American Pipeline announced the retirement of Chuck Kingswell-Smith, vice president and treasurer. “Many companies lack the bench strength they need at the executive level,” said Dahill. “In fact, only 15 percent of the companies we surveyed actually believe they have an internal candidate available to take over for a retiring CEO.”
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Number of Bachelor's Degrees in Petroleum Awarded, Colorado School of Mines Engineering 140 127
120
115
100
100
80 67
60 40 20
25
30
35
2004
2005
2006
106
87
75
0 2007
2008
2009
2010
2011
2012
2013
Source: Colorado Department of Higher Education, highered.colorado.gov/Data/Search.aspx, retrieved 101214
ENGINEERS IN SHORT SUPPLY The downturn in the fortunes of the oil and gas industry affected not only people already employed in the field, but also students deciding on career directions. Bill Cassidy, executive vice president and CFO at Bonanza Creek Energy, said, “At the end of the 1990s, there was a lot of oil and gas company consolidation. So a lot of kids heading to universities walked away from energy and studied tech and business and finance instead.” Data from the Colorado Department of Higher Education shows that in 2004, the Colorado School of Mines awarded only 25 baccalaureate degrees in petroleum engineering; in 2013, the number of baccalaureate degrees awarded in petroleum engineering increased to 127. “There are always going to be companies looking for engineers,” said Jacques Pernitz, president of Precision Placement Services Inc., which specializes in oil and gas recruiting. “Engineers have always been difficult to find. If you are a strong engineer, you are going to find a job. Companies will create positions for those types of good people.” The catch is that it takes time for an engineer to develop marketable expertise. A 2014 Labor Market Analysis of the Oil and Gas Industry, conducted by Mercer, estimated that it takes three years of experience for a petroleum engineer to master the fundamentals of the job; four more years to become proficient; and 11 more years to become an expert. “Companies that come to us want experienced talent,” Pernitz said, “They don’t want to pay for inexperienced talent. 22 ENERGY PIPELINE DECEMBER 2014
THE DOWNTURN IN THE FORTUNES OF THE OIL AND GAS INDUSTRY AFFECTED NOT ONLY PEOPLE ALREADY EMPLOYED IN THE FIELD, BUT ALSO STUDENTS DECIDING ON CAREER DECISIONS We can’t bring them entry-level people. That is why when we get contacts from entry-level people, we give them advice, and we encourage them to contact the companies themselves. It is very unlikely, from a recruiting company standpoint, that we are going to be able to place them. “In almost all areas of oil and gas now, the five- to 10-year person is an extremely valuable person,” Pernitz said. “That is probably the most marketable candidate out there, because they are not that 30-year person, coming up on retirement, but they have enough experience at that five- to 10-year level. They are up and coming, and they are highly marketable.”
POACHING ABOUNDS The finite labor pool in the industry sometimes leads companies to poach the talent they need from other companies. “People poach back and forth as they see
great talent out there that can bring their drilling forward and allow them to grow their company,” Cassidy said. “It’s a very competitive environment.” “It’s a seller’s market here for employees,” said Ekstrom, “if you are available and you have the skills, you can pretty much name your own price.” James Masters, manager of investor relations for Bonanza Creek Energy, said that one advantage Bonanza has is its Colorado location. “At higher levels, people have options and can go wherever the pay is best, or wherever they want to be,” he said. “Living in Colorado is a bit of a selling point. We have a lot of people who want to be here. They want to leave Houston and come to Denver, so that is a kind of intangible benefit that we have compared to some of our peers in other areas of the country.” Pernitz said that poaching has always been a strategy used within the oil and gas industry, but “in the past, when they used an outside recruiter, nobody would complain, because the recruiter did the poaching. “Now companies are hiring their own recruiters and doing it [poaching] directly,” Pernitz said. “They are going to LinkedIn and contacting the candidates themselves, which I think is going to cause major problems in the industry. There are going to be payback ramifications.”
TRANSFERABLE SKILLS Some companies are approaching the labor shortage by casting a wider net and looking for talent outside the oil and gas
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“There is a big difference between being an engineer within the oil and gas industry and being an engineer outside of the industry.” JACQUES PERNITZ, President of Precision Services, Inc.
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industry. The mining industry, for example, has many concerns in common with the oil and gas industry. “Some of the skills and issues in mining and oil and gas are similar,” Dahill said. “For example, managing the capital to mine, the capital to drill, the shareholder issues, the government regulation issues, the special interest issues. You have all of those things in both industries, so I have seen people that migrate back and forth a little bit from the mining industry to the oil and gas industry.” “Some skills are transferable,” said Dahill. “Chief financial officer skills can sometimes be learned outside the industry, and chief technology officer skills as well. The CFO and the CTO are not as critically driven by the nuances of the industry as the CEO and engineer are.” “In the engineering space, the skills are not transferable,” Dahill said. “You can’t go and pick somebody up who is a chemical engineer at a place like DuPont and train them to become a reservoir engineer or a drilling engineer or a completions engineer because of the complexity involved.” Pernitz agrees that “there is a big difference between being an engineer within the oil and gas industry and being an engineer outside of the industry.” “In the history of my company, none of my clients have ever asked me to find somebody who did not have specific industry experience in oil and gas,” Pernitz said.
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The limited effectiveness of poaching in a finite market and the limitations of bringing in talent from outside industries has led many companies right back to the starting point. That is, hiring talent fresh out of school and growing their own. “Whiting is recruiting heavily at the Colorado School of Mines, at Colorado State University, Montana State, the University of North Dakota, Texas A&M, and places like that, for the exploration geologists and the geophysicists and the petroleum engineers that have advanced degrees,” said Ekstrom. “We recruit very heavily for those because those are the ones that define the future success of the company.” “One of the most important things the industry is learning right now is that they need to take a long-term view in building the professional talent pool,” agrees Dahill. “Even though the industry may surge and dip, based on oil prices, it will cycle back up, and if we can continue to stay on track in identifying skilled and experienced individuals who can be trained and nurtured into these new roles, it will make a significant difference.”
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WORKING THROUGH THE HOLIDAYS IS COMMON IN THE OIL PATCH BY LINDA KANE • FOR ENERGY PIPELINE it’s good to have an understanding
family, especially if you’re working through the holidays. For 46 years, Ed Pilcher, a drilling superintendent with Integrated Petroleum Technologies, has toiled in the oil patch, holidays included. That’s just standard operating procedure. “My wife’s been a real trooper,” Pilcher said. “She understands that sometimes I’m going to be away from home. We raised five kids. It’s a good living. I was able to provide a good living for my family, and my kids went to private school and I was able to do that because I worked in the oil field.” “There have been times when it’s been hard to miss birthdays and holidays, but like I say, my wife has always been a good partner in that and she understands and we’ve just dealt with absences the best we can.” Pilcher’s company employs 161 with the bulk of them working in the fields. Those employees work for two weeks, followed by two weeks off. In general, the company
does not shut down for the holidays even Christmas. “You only work six months out of the year anyway so nobody really complains. If they work a holiday one year, they know they’ll get it off the next year,” Pilcher
going in, officials say. “We really can’t shut down. In the office setting things settle down as most industries, but business continues,” said Doug Hock, spokesman for Encana. “Wells are still pumping. I doubt there’s much drilling on Christmas Day, but if a project is ongoing we can’t just stop it.” Like many oil and gas companies, Encana’s administrative offices are closed Christmas Day. Pending approval, employees who have built up vacation time may decide to use it during the December holiday. With 1,300 wells in the area, however, a handful of employees are needed to keep watch, no matter the day. John Ed Singleton, area superintendent for Bill Barrett Corporation out of Greeley, agreed it comes as little surprise to handson oil and gas workers they may end up working a holiday like Christmas. “Sometimes it’s better to work during the holidays,” he said. “You can get a lot done. There’s no one to distract you.” Bill Barrett employees who work Christmas are paid double-time and
“You only work six months out of the year anyway so nobody really complains. If they work a holiday one year, they know they’ll get it off the next year.”
26 ENERGY PIPELINE DECEMBER 2014
ED PILCHER, Integrated Petroleum Technologies said. IPT is an engineering company based out of Golden. In an industry that operates 24 hours a day, 365 days a year, the holidays can sometimes be challenging for employees and their families. However, several oil and gas industry spokespeople said employees generally know going into the job that working a holiday is likely. Many companies don’t put a second thought to the holidays, and employees know that
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www.pure-energy.us 28 ENERGY PIPELINE DECEMBER 2014
ANADARKO PETROLUEM, AS WELL, TOUTS ITS 1,500-STRONG WORKFORCE VOLUNTEERING IN THE COMMUNITY, ESPECIALLY WITH VOLUNTEERS OF AMERICA’S BASKETS OF JOY PROGRAM
employees also receive a cash bonus around Thanksgiving, Singleton said. “It definitely helps to kind of kick off your Christmas gift buying if that’s what they elect to use it for. Or pay a bill or two,” Singleton said. The company has about 250 employees in Colorado and typically hosts a Christmas party for employees and their families. “The corporate office has theirs and we have ours,” Singleton said. It typically consists of dinner at a nice restaurant along with door prizes and games. Singleton said they try to host it on a Saturday evening so workers in the fields can be included. “That way the guys in the field can get their routes taken care of and get finished early and be able to get home, get cleaned up, pick up their spouse and come back to the party.” Like the others, the Bill Barrett doesn’t completely shut down Dec. 25. “We might try to slow down during these times, but we’re still going,” Singleton said. “There’s going to be movement in the industry all through the holiday season.” Since the holidays can be busy for a lot of employees, Encana last year held its holiday party in January. Hock said the company plans to do so again this year. The company typically rents a hotel banquet room and hosts music, hors de’ ouvres and last year the CEO from Calgary, Canada, joined the Colorado party. Encana also has a bonus program, but it’s not linked to the Christmas holiday. “Our bonus program is tied to our whole compensation package and that typically happens in the spring,” Hock said. Encana employs about 1,000 in Colorado with its U.S. headquarters based in Denver. Halliburton is another company that slows during the holidays, but doesn’t completely shut down. “Office support staff employees get Christmas day as a holiday,” said Susie McMichael, senior public relations representative for Halliburton. “Field operations employees work their normal business hours unless our customer shuts down operations on the wellsite that day.” With an estimated 2,000 employees in Colorado, holiday parties are decided upon by individual office management, McMichael said. To celebrate the season, employees in the
“More than just donation money, we give of ourselves for the good of our neighbors families and communities.” ROBIN OLSEN, spokeswoman for Anadarko Petroleum Corp.
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Wind Tarp Barriers Brighton, Denver and Highland Ranch offices participate in the Toys for Tots program. Halliburton also sponsors for the Brighton Parade of Lights and will have a float in its parade. “Halliburton, its employees and the Halliburton Foundation contribute to nonprofits and educational institutions in Colorado throughout the year,” McMichael said. Halliburton’s regional headquarters for Colorado and 10 other western states is in Denver. Halliburton has about 40 facilities in Colorado, with two major operating locations in Grand Junction and Fort Lupton. It’s easy to think about charitable giving during the holiday season, but Halliburton isn’t the only oil company that makes contributions throughout the year. Students and teachers at Mead Elementary School were recipients of a $70,000 grant from Encana in the spring. The school purchased five iPad minis for each of its 20 classrooms and about 50 laptop computers for its 503 preschool through fifth-graders. “We’re very appreciative for the community partnership that our district has with Encana,” said Mead Principal Betsy Porter. Clients of the Mead Community Food Bank received turkeys for Thanksgiving and will receive hams for Christmas thanks to $1,000 donated from Encana. Throughout the year, Encana supports mobile food pantries in Weld County and employees are committed to ongoing volunteer support at pantry locations in Frederick and Fort Lupton. “The charitable part is just how we do business,” said Hock of Encana. “We try to support agencies and nonprofits in areas where we work.” Anadarko Petroluem, as well, touts its 1,500-strong workforce volunteering in the community, especially with Volunteers of America’s Baskets of Joy program. “This has always been the bedrock of our culture and our values of integrity and trust, people and passion, open communication and commercial focus,” said Robin Olsen, spokeswoman for Anadarko. “More than just donation money, we give of ourselves for the good of our neighbors families and communities. We wish everyone a safe and happy holiday season.”
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VOTERS NATIONWIDE WEIGH IN ON FRACKING, WATER MEASURES BY LINDSAY HARMON • ASSOCIATED PRESS election day on nov. 4 in many parts
of the country wasn’t just about having a say on candidates for Congress and local government. Climate, environment and energy issues were prominent on ballots, too, in some states. Voters in Denton, Texas, banned fracking. Louisiana voters approved money for an artificial coral reef development fund. In Alaska, voters restricted mining in Bristol Bay. But in North Dakota, a measure to provide millions of dollars in oil and gas tax revenue for conservation projects across the state failed overwhelmingly. Here’s a breakdown of the results of the climate, energy and environment-related measures that appeared on ballots on Election Day:
FRACKING BANS Measures to restrict hydraulic fracturing appeared on ballots in Texas, California and Ohio, with mixed results. 30 ENERGY PIPELINE DECEMBER 2014
The city of Denton, Texas, became the first city in the Lone Star State to ban fracking, a method energy companies use to extract crude oil and natural gas involving the high pressure injection of millions of gallons of water, sand and chemicals deep underground.
JUST LIKE BANS VOTERS PASSED IN COLORADO IN RECENT YEARS, THE ENERGY INDUSTRY IN GENERALLY FRACKINGFRIENDLY TEXAS IS EXPECETED TO MOUNT A LEGAL CHALLENGE TO DENTON’S BAN
Denton is in the middle of the Barnett shale gas boom in the Dallas-Fort Worth area, where fracking has been occurring in urban areas. Just like bans voters passed in Colorado in recent years, the energy industry in generally fracking-friendly Texas is expected to mount a legal challenge to Denton’s ban. Two of three proposed local fracking bans succeeded in California: one in San Benito County and another in Mendocino County. Voters in Santa Barbara County defeated an anti-fracking measure there. At least four local anti-fracking measures appeared on ballots in Ohio, where the town of Athens became the fifth Ohio town to ban fracking in the form of a “community bill of rights” in which residents claim the right to clean air, water and a community free of fracking and wastewater injection wells. Similar measures were defeated Tuesday in the Ohio towns of Gates Mills, Kent and Youngstown.
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A MEASURE IN LOUISIANA WAS APPROVED... GIVING OIL AND GAS COMPANIES THE ABILITY TO USE EQUIPMENT FROM OFFSHORE OIL AND GAS RIGS AND PLATFORMS FOR THE CONSTRUCTION OF ARTIFICIAL CORAL REEFS WATER CONSERVATION INITIATIVES California voters approved a $7.5 billion water bond, which would pay for numerous drought-related water conservation measures, including new groundwater storage and water recycling and conservation projects. A water-related $53 million bond measure passed in Rhode Island, helping to pay for flood prevention projects, wastewater treatment plants, protection for Narragansett Bay and other conservation projects.
OTHER MEASURES North Dakota oil and gas companies won’t be paying for conservation projects
there after voters rejected a measure requiring 5 percent of the state’s oil and gas taxes to be used for water and wildlife habitat conservation projects. In the middle of the Bakken shale oil boom, North Dakota conservation groups had hoped the measure would have helped relieve some of the impacts of fracking and fossil fuels extraction spreading rapidly across the state. Alaskans approved a measure that would restrict mining around Bristol Bay, a salmon-rich bay southwest of Anchorage and the site of the proposed Pebble Mine, where copper, gold and molybdenum would be extracted. The measure requires legislative approval for mining operations in the region as a
way to protect salmon runs and the Bristol Bay watershed. In Florida, voters approved a measure that would use revenues from a state real estate tax to pay for land purchases aiming to protect beaches, drinking water resources, wetlands, recreation areas, and other environmentally sensitive lands. A measure in Louisiana was approved Tuesday giving oil and gas companies the ability to use equipment from offshore oil and gas rigs and platforms for the construction of artificial coral reefs. Energy companies will be required to give the state a portion of any savings earned from decommissioning the equipment. The money will help pay for the artificial reef program there and fisheries habitat improvements.
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DECEMBER 2014 ENERGY PIPELINE 33
CRUDE PRICES DROP AS AMERICAN OIL PRODUCTION SURGES BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
Photo for Energy Pipeline • American Petroleum Institute
Kyle Isakower, vice president for regulatory and economic policy at the American Petroleum Institute.
“For the first time in generations, surging domestic production americans would likely be paying $4 or more per gallon of is driving our energy security and providing a crucial buffer against gasoline today if the U.S. drilling boom hadn’t put so much supply disruptions in Europe, Africa, and the Middle East,” Isakower said. on the market, buffering global oil disruptions in recent years, a Gasoline prices are based on the international prices of crude, petroleum expert says. which sunk to as low as about $80 per barrel in October. If the savings “In the last few months, motorists have watched with growing stuck around for a year, it would save each American household $350 optimism as U.S. gasoline prices fell to levels not seen in nearly at the pump, said Rayola Dougher, a senior economic adviser with the four years,” said Kyle Isakower, vice president for regulatory and American Petroleum Institute in Washington, D.C., in an interview. economic policy at the American Petroleum Institute, noting the “If you had $150 crude prices, you’d have gas prices near $5 a majority of U.S. filling stations in late October priced gas at less gallon now,” Dougher said. than $3 a gallon. “This would normally seem impossible given the The ICF study found that U.S. oil production from horizontal turmoil we’ve experienced overseas.” drilling totaled 4.78 million barrels per day in 2013, accounting for 48 A study by ICF International, commissioned by API in late percent of all oil production in the country. That’s up 11 percent from October, found that Americans would be paying as much as 94 2008, the study found. cents a gallon more The numbers are today were it not for important on the federal horizontal drilling and level, where the Bureau hydraulic fracturing of Land Management in the previous five and the Environmental years. Together, the Protection Agency are RAYOLA DOUGHER, American Petroleum Institute methods account for currently evaluating the a growing amount of effects of horizontal drilling and hydraulic fracturing, Isakower oil production in the United States, more commonly described said. Both have yet to complete their studies, which could have as unconventional drilling. While lauded for its benefits to the far-reaching consequences. economy, horizontal drilling combined with hydraulic fracturing “It’s important for policy makers to recognize that the U.S. has gained the ire of a growing campaign against the practice for energy revolution was not a lucky accident, but the result environmental concerns. Bans on the practice were the subject of of decades of American innovation aimed at unlocking our more than 200 ballot measures in 34 states this November, resources here at home,” Isakower said in the call. “To build Isakower said. that momentum and strengthen our position as an energy “According to ICF’s analysis, without horizontal drilling and superpower, it’s critical that policy makers turn aside duplicative hydraulic fracturing, international crude oil prices would have regulations on hydraulic fracturing and ensure that U.S. averaged $122 to $150 per barrel in 2013 - an increase of $12 to $40 consumers can benefit from energy production on federal lands per barrel,” Isakower said. “The corresponding discount on gasoline that remain off-limits.” and other refined products was estimated to be 29 cents to 94 cents Federal officials also have been lobbying to ease trade per gallon. In total, this decline in prices saved U.S. consumers as restrictions on non-OPEC countries, which they say are from much as $248 billion in 2013 and as much as $624 billion over the outdated policies created in the 1970s when oil was at a premium. 2008 to 2013 period.
“If you had $150 crude prices, you’d have gas prices near $5 a gallon now.”
34 ENERGY PIPELINE DECEMBER 2014
DECLINE IN CRUDE OIL PRICES HAS LEAD TO MAJOR SAVINGS IN THE U.S. 2013
2008-2013
BILLION
BILLION
NORTHERN COLORADO’S PREMIER
$248 $624
Opening more global markets to American crude will strengthen demand, driving more jobs in the American economy. “New American production is the main factor counterbalancing supply disruptions on the global market,” Isakower said. “Study after study has shown that lifting restrictions on free trade will drive more jobs, a stronger economy and put downward pressure on fuel prices.” Crude prices in many ways dictate the amount of drilling producers take on, though much of their drilling is hedged on prices that are locked in, drillers always leave a little room for higher prices in higher demand months. But it’s a price watched closely. “We’re still in very good shape in the U.S.,” Dougher said. “I’m sure drillers are probably concerned now about how low prices are going, but we’re still in a wonderful place in terms of bringing product to market, and we can do even more in future.” Ryan Smith, a senior energy analyst Bentek Energy in Denver, said prices are not even close to crisis levels. “We’re at $80 and we don’t see a huge impact,” Smith said. “Prices would have to get significantly lower, like at $60-$70 for (West Texas Intermediate, one of two major U.S. crude exchanges), to really have a significant impact on drilling operations. It will impact some returns, definitely. If prices stay at this level, they won’t be earning what they did last year.” Though there’s no real way of predicting, Dougher said if gas prices stayed below $3 for a long period of time, drillers would cut back production, which could be disastrous to a growing economy. “You don’t want that to remain too deep and too low for too long,” Dougher said. “The oil and gas industry has been the biggest source of strength in our economy. If this goes on too much longer, companies would have to scale back on production. There will be fewer jobs, and you have less tax revenues and less economic growth, so you have a ripple effect.” Dougher said global demand should remain high in the coming years, which will likely drive prices back up. “We’ll continue to need more oil in the world market for many decades to come and the U.S. has been a leader in bringing on more and more crude,” Dougher said. “We gained a lot of market share of world market for crude, but that was primarily because of political instability.” ICF issued its Forecast Energy Outlook in October, stating it expects gas prices to rise as demand rises internationally, especially with Mexico. “Looking farther into the forecast, ICF expects that increased gas exports (in the form of liquefied natural gas and pipeline exports to Mexico), a surge in demand from the petrochemical industry and a continued shift from coal toward gas in the power sector will all place upward pressure on gas prices through the remainder of the decade,” the forecast stated. “As demand growth accelerates, the potential for price volatility will increase.”
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A THAT STAYS TOGETHER Windsor family works decades to build clothing and gear shop in northern Colorado BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
sitting around the family table which now doubles as Randy Becker’s office desk, the Beckers laugh heartily at the thought of the ‘93 Topaz that started it all. The Becker family - Randy and Elesa and their children, Devin and Bradee - have lived the salesman’s dream for 15 years, culminating most recently with a new 8,000-square-foot warehouse in southeast Greeley to house Becker Safety and
38 ENERGY PIPELINE DECEMBER 2014
Supply, where oil and gas workers go to get safety gear for the field - from gloves to boots to glasses. The Becker family, now of Windsor, originating from a farming background, were always involved in some aspect in the oil field, at one time owning water trucks. In 1999, they changed. Randy Becker was a salesman. He could sell ice to an Eskimo, his wife said. So when he came home one day with the idea
to sell gloves out of the back of that Topaz, Elesa furrowed her brow. “I said, ‘I can’t hear you. We’re going to do what?’” Elesa said. “It was like, ‘How in the world could you possibly make a living selling gloves?’” Randy laughs at the memory: “For many years after we started it, I’d hear, ‘So what else do you do?’ I’d answer, ‘This is kinda it.’ And it was like, ‘No really, what else do you do?’ “ From the back of that Topaz, that’s exactly what Becker did, often taking his homeschooled kids to the field to show off samples of gloves to field workers. He sold for a distributor out of Fort Collins for years.
Though they started out selling gloves based off of fabric samples, they eventually moved toward gloves, glasses and a few other safety items. “Any workplace you walked into, you always saw that people had gloves and safety glasses on,” Elesa said. “So there was a need.” Those days he brought Bradee were the days he sold a lot, he says with an approving nod toward his daughter, now 23. “My favorite part was the price gun,” said Bradee. “I’d go through and price everything. I was a happy girl.” Said her brother, Devin, 25, “We sold more gloves when Bradee went on the route.”
The longer dad was out, the more the family rolled their eyes when he came home. Randy Becker was always thinking, and the more time he was on the road - what the family called “windshield time” - the more ideas he was armed with when he walked through the door. They’d sit at the kitchen table — which now serves as Randy Becker’s office desk — and talk over the myriad ideas to sell this or that. ABOVE: The Becker family, from left to right, Bradee, Elesa, Randy, Crimson, and Devin, stands among the rows of stock at their store, 128 30th St. in Greeley. Photos by Sydney Hulse, For Energy Pipeline.
DECEMBER 2014 ENERGY PIPELINE 39
“It’s exciting to see where we’ve been and where we’re going. Not just business, but the whole company, being more efficient, new technology, new software, new everything.” DEVIN BECKER, son of Randy
“He’d come home, ‘OK, kids. I got a great idea. Breakfast burritos. I got a place you can set up, if you make breakfast have them there, and it would be great,” Elesa said. The family didn’t bite on many of them. “The point was we were always trying to figure out the next step,” Randy Becker said. Added his wife: “He bleeds entrepreneurship and vision. That’s really what’s grown our business. There’s nothing he can’t do.” Randy scoffed: “There’s lots of things I can’t do.” The best part for the Beckers was mixing business with family. “It’s been cool to grow up with the business,” Bradee said. “We’ve watched it go from nothing and how hard they worked ... just experiencing every part, the ups and downs.” While the oil business fluctuated through the years, the ag sector of the economy was a mainstay for the family. Both Elesa and Randy came from farming families. The years were filled with struggle and strife, and success here and there. In January 2011, however, when the family cut ties with their distributor and started Becker Safety and Supply, the tide turned. “From going from one distributor to establishing relationships with all these vendors directly, that was a leap of faith, honestly,” Elesa said. “We didn’t have peace with where we were at. It felt like the direction of our business was not moving where it needed to be.”
40 ENERGY PIPELINE DECEMBER 2014
They went from being limited in what they could sell to the sky’s the limit. If someone needed, they’d get it. “We had a little shop out of a pole barn out in Galeton,” Randy said of the early years. “Our office has always been in the home, and still is.” In May 2012, they expanded into a 3,000-square-foot building in Evans, but quickly grew out of that as the oil and gas industry began thriving, and industry representatives wanted a physical place to pick up their orders. While the ag sector held them steady, oil and gas was growing. Today, the oil and gas industry is not even gravy - it’s so much more. “It’s actually like sweet chocolate,” said Elesa, with a sigh of relief. Said Randy: “We’re proud that we’re associated with oil and gas, and that we’re helping not only our local economy, but the guys out producing the product are out helping our country. We’re excited to be a small part of that.” The family said they never imagined customers would come to them in the droves they did.
“The business had always been based on Randy going to the end user, or the other retail shops,” Elesa said. “So we started stocking the racks, and we stated getting foot traffic. This is weird, the guys are wanting to come in. We always thought they wanted us to bring it to them. But they’re in town, and they honestly love to shop. “They just love to browse the aisles and see what we’ve got,” Elesa said. They could only get two years out of their Evans warehouse before they needed to expand. “We were bursting at the seams,” said Devin Becker, who is in charge of the gas monitor section of the business. His wife Crimson, a victim’s advocate with the Colorado State Patrol, often helps the business when she can. After a good-sized search for an ever-shrinking pool of available properties this past summer, the Beckers found a spot in southwest Greeley in the Greeley Commerce Center. Some wrangling with a somewhat reluctant owner led to the Beckers buying the building, which about doubled their previous size, at 8,000 feet. If they need to in the future, another 4,000 square foot of space they’ve leased is
available next door. A loading dock makes it easier to unload shipments. They’re loving the elbow room. They have room to stack their multiple varieties of shirts, overalls, boots, gloves, sunglasses, you name it. They even created a dressing room for workers. “Were not retail at all,” Elesa said. “We’re a wholesale distributor, and this is a warehouse. A lot just come in and pick up their stuff.” Always involved in the business, the kids branched off on their own. Bradee developed a photography business and Devin, 25, became a firefighter. But their spare time is in the store. “With the family business, it’s not just money through Friday, it’s all the time, it’s off hours, weekends, really whenever we’re not doing something else,” Bradee said. “You just make time for it.” And they’re integrally involved. “It’s exciting to see where we’ve been and
where we’re going,” Devin said. “Not just business, but the whole company, being more efficient, new technology, new software, new everything.” While they’re content to see how business progresses now in their new warehouse, Randy Becker never stops dreaming. It’s been suggested that he open up satellite offices in other places where the oilfield is heavy - Texas, Oklahoma, Pennsylvania. Devin looks at his dad across the that former kitchen table, “WWW....” he prods. “Oh, yeah,” Randy recalls. “The next big step is a great website and an e-commerce feature to that. That’s the next big step. We’ve had customers from different states and regions, who said, ‘You really ought to take a look at west Texas, or north Dakota or whatever.’ “ Elesa takes a breath, “It’s scary to me, but I trust him.” Her husband added: “It’d be something we’d probably need to really firm up some
business in those areas, or have enough business there that we’re shipping or deliver that would” justify the bricks and mortar and staff that goes with it. “That has potential,” he said. They’ll fall back on their faith. They say the man upstairs is in charge. “Our faith is very important to us, so that’s really what we’ve tried to build the whole business on,” Elesa said. “The integrity of that and instill our faith into our decisions and choices, and try to be a light.”
CLOCKWISE FROM LEFT: Derrick Meis stacks crates that are used for inventory at Becker Safety and Supply in Greeley; Matt Ericson crouches low to speak to CJ Gartrell, 3, at Becker Safety and Supply. Ericson gifted souvenir stickers to CJ from his trip to the warehouse; Brett Lawhead helps customer Aaron Gartrell find new gloves at Becker Safety and Supply; Devin Becker cycle counts inventory at Becker Safety and Supply. Devin is the son of Randy Becker, who owns the warehouse.
DECEMBER 2014 ENERGY PIPELINE 41
RECYCLING PRODUCED WATER BY TRACY HUME • FOR ENERGY PIPELINE
42 ENERGY PIPELINE DECEMBER 2014
Concord Produced Water Services provides mobile treatment units that can be used to treat produced water in the field. This mobile treatment unit was used in the Wattenberg Field to treat produced water and return it for re-use in hydraulic fracturing. Photo courtesy of Industrial Water Permitting and Recycling Consultants, L.L.C.
GARY BEERS IS A WATER QUALITY EXPERT AND HE’S TRYING TO SAVE WATER FROM GOING DOWN THE DRAIN
Most of the produced water coming out of exploration and production operations in Weld County ends up being disposed of in one of 39 injection wells in the county. The produced water is injected back into the earth, thousands of feet deep, never to be used again. Water quality expert Gary Beers thinks that’s a waste, and he is on the front lines of a growing movement to examine the economic and environmental benefits of treating and re-using produced water from oil and gas operations. Beers’ company, Industrial Water Permitting and Recycling Consultants, LLC, helps operators navigate Colorado’s complex regulatory environment and permitting processes to find better uses for produced water than just throwing it away. “I was born and raised in southern Arizona, where water is very scarce,” Beers said, “I guess that planted the seed of being very concerned about not wasting water.” Beers’ interest in water led him to pursue several degrees in the field, including a master’s degree in fisheries management from the University of Arizona and a doctorate in aquatic ecology from Utah State University. He established his consulting firm after a long career in the water quality field, including stints with the Environmental Protection Agency office in Denver and nearly 10 years in the Water Quality Control Division of the Colorado Department of Public Health and the Environment. His extensive experience on the regulatory side helps him to help operators DECEMBER 2014 ENERGY PIPELINE 43
A typical Weld County well requires 5 million gallons of water for fracking. Only 200,000 gallons will return to the surface as flowback. Source: of Industrial Water Permitting and Recycling Consultants, L.L.C. based on information from Anadarko Petroleum.
identify and navigate the obstacles that impede beneficial use of produced water. One of those obstacles is the public perception of produced water as “contaminated.” According to Beers, a lot of people “don’t understand that E&P (exploration and production) waste is just a category that’s used to identify any type of waste material generated while they’re drilling and producing oil and gas. “But just because it is labeled ‘E&P waste’ doesn’t mean the water is polluted or anything; it just says that’s where it came from,” Beers said, “You can have E&P waste that’s very clean, or you can have E&P waste that’s contaminated. There is a lot of variability.” Produced water comes in two main types, each with distinctive characteristics that have implications for beneficial use. The first type of water to return from a well, called “flowback,” is the water used to facilitate the initial drilling process, and may include traces of the chemicals used for hydraulic fracturing. The second type, “formation water,” is the water that is part of the original geological formation and is brought to the surface in the course of oil and gas production. “Most of the produced water people talk about is the long-term formation water that’s brought up as the well is producing oil and gas,” Beers said. “The quality of the initial flowback water can change, because of the different chemicals used in drilling and other factors, but the quality of the formation water is pretty consistent, depending upon the original geological formation.” Some operators in the DJ Basin have 44 ENERGY PIPELINE DECEMBER 2014
“...just because it is labeled (exploration and production) waste doesn’t mean the water is polluted or anything; it just says that’s where it came from...” GARY BEERS, Industrial Water Permitting and Recycling Consultants, L.L.C. taken steps to treat and re-use produced water, including flowback water, for hydraulic fracturing. Flowback water may include chemical additives and total dissolved solids, but it typically includes fewer salts than formation water, making it easier to treat for industry re-use. Concord Produced Water Services is a produced water treatment provider that Beers has worked with in the DJ Basin. Among the services Concord offers is mobile recycling units, which can be taken out into the field to treat flowback and produced water for re-use. Re-use of produced water within industry operations is, in some ways, the most straightforward beneficial use to implement. When operators re-use produced water within their own organizations, it minimizes the number of regulatory hoops that have to be negotiated. Furthermore, the public typically supports industry re-use of produced water because it reduces the industry’s impact on public water supplies.
“There’s a lot of controversy around the issue of using fresh water supplies, such as surface water or shallow ground water, for hydraulic fracturing,” Beers said. “The use of public water to supply the oil and gas industry is a continuing issue in Weld County.” The possibilities of treatment and re-use could make it possible for the industry to decrease its reliance on municipal water sources. “There have been significant efforts to ramp up re-use practices in Weld County,” Beers said, pointing out that “in theory, the demand for water for hydraulic fracturing in Weld County could be met by recycling all the produced water five times over.” Another possibility for beneficial use of produced water is dust suppression. Many rural communities with high numbers of dirt roads use significant amounts of water to mitigate dust and maintain roads. Some communities have begun exploring the idea of using produced water, particularly formation water, for this purpose.
Produced water from marine sediments is similar in chemical composition (chlorides and Total Dissolved Solids) to commercial magnesium chloride solutions used on dirt roads for dust suppression, road stabilization and ice control. Source: Industrial Water Permitting and Recycling Consultants, L.L.C.
“The deeper formations were laid down when the land was almost totally dominated by oceans,” Beers explained, “so produced water from these marine sediments typically has a high concentration of salts.” Interestingly, the composition of these briny produced waters is similar to the composition of common commercial magnesium chloride solutions municipalities use for dust control on unpaved roads. Beers sees an opportunity there. “Many counties in Colorado spend hundreds of thousands of dollars a year for commercial magnesium chloride solutions,” Beers said, despite the fact that the produced water coming out of the oil fields might serve the same purpose. However, this particular beneficial use is quite a bit trickier to implement. The beneficial use of produced water is overseen by a complex network of regulatory agencies including the Colorado Oil and Gas Conservation Commission, the Water Quality Control Division of the Colorado Department of Public Health and the Environment, and county permitting processes. Which regulations and permitting processes apply is contingent upon variables such as the produced water source; the composition of the water; whether the water has been treated, how it has been treated, and by whom; and the proposed use. Beers finds irony in the fact that despite the similarities in composition between commercial magnesium chloride products and produced water (brine), there are virtually no regulatory hurdles to using a commercial magnesium chloride solution for dust suppression, but there are numerous regulatory hurdles to using produced water for the
BEERS SAID HE BELIEVES THAT WITH ENOUGH EDUCATION, THE PUBLIC, TOO, WILL BEGIN TO SEE THE BENEFITS OF TREATING AND USING PRODUCED WATER same purpose, because it is classified as industrial waste. “Let’s say you’re going to buy ‘Compound X’ for dust suppression,” Beers said. “The company is required to disclose what chemicals they put in their solution. If you look at that, they’ll say so much magnesium chloride, etc. Then they’ll say ‘confidential’ or ‘proprietary’ ingredients and they won’t disclose what they are. So you don’t know. “But if you were going to use produced water,” Beers said, “you would have to get state approval to do that. You would have to analyze hundreds of compounds and disclose what each of those were. So if you were going to buy the magnesium chloride solution from a commercial guy, he would say, ‘Well, it only has salt in it and a bunch of stuff which I can’t tell you.’ And then you look at the produced water and say, ‘Look at all of the things they found in it!’ Whether those components are harmful or not. “Nine times out of ten the buyer will say, ‘I’m not going to get that produced water because it’s got all these weird things in
it.’ But I’ve done some side-by-side testing and there are a lot of materials in the commercial products that they should tell you about, but they don’t, because they don’t have to,” Beers said. The bottom line is, “it’s an uneven playing field, because recycled products, like produced water, have regulatory baggage and they have to disclose everything, unlike commercial products,” he said. Beers sees the possibility of change on the horizon. The industry is starting to acknowledge the economic benefits of water re-use. Treating and re-using water in the field cuts down on the cost of purchasing water and transporting it to the site. Treating produced water and using it for dust suppression, or similar beneficial uses, even holds the potential of turning an industry expense, such as disposal of produced water, into a revenue stream, such as selling treated produced water to municipalities. Stakeholders, such as regulatory agencies, are also beginning to discuss streamlining permitting processes to make it easier to recycle produced water and use it for beneficial purposes. In January of this year, the Colorado Energy Office and the Water Center at Colorado Mesa University convened 65 stakeholders from the Grand Junction community to talk about re-use projects on Colorado’s Western Slope. Beers said he believes that with enough education, the public, too, will begin to see the benefits of treating and using produced water. “A lot of people are looking at beneficial uses for produced water,” Beers said, “it’s just a matter of having a few on-the-ground projects to show people that it does work and that it can be done.” DECEMBER 2014 ENERGY PIPELINE 45
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DRY FRACKING COULD BE A WATER-SAVING GAME CHANGER BY ALLISON DYER BLUEMEL • FOR ENERGY PIPELINE
20 percent is managed in evaporation McLennen said that the advantages to ponds, and the remaining 20 percent goes gel use have yet to be fully researched or looking at liquefied petroleum gas gel for into surface waters under permits by the substantiated. However, it has the potential to hydraulic fracturing as a way to reduce Colorado Department of Public Health drastically reduce water use in areas were the dependence on already-scarce water supplies. resource is expensive because of drought or and Environment. Gas gel presents a potentially viable high transportation costs. The injection of water through an replacement to the millions of gallons of On average, each well requires between 1 underground injection control well requires water used in the fracking process at each million and 5 million gallons of water during certain casing and cementing, monthly well site, said John McLennen, an associate fracking operations. reporting on materials and volumes injected professor of chemical engineering at the and pressure tests to ensure the University of Utah. waste stays in the designated area. Also referred to as dry The majority of evaporation fracking, the process does not pits sit in the Raton Basin in involve water. Instead, highly southern Colorado, and some pressurized gas is injected water is used on roads for dust directly into a formation to suppression if it does not meet crack the rock. the necessary parameters for “Conceptually it’s a great disposal in streams or rivers that idea. People are definitely are drinking sources. looking for water substitutes,” Companies reuse recycled he said. water most if the surrounding While the gel reduces the area has high demand for it in use of water dramatically and DOUG FLANDERS, COGA director of policy and external affairs other operations; otherwise they can benefit both producers dispose of the production water. and operators, many companies In the average mixture, water have not incorporated the gel In Colorado, hydraulic fracturing and sand make up roughly 99.5 percent into their operations due to the explosive and operations account for approximately .08 of the mix with the additional 0.5 percent flammable nature of propane, McLennen said. percent of water consumed statewide, with consisting of chemicals that assist the flow Under the Colorado Oil and Gas companies working on ways to re-use and of sand into the formation, according Association, companies have the autonomy to recycle water annually, Haley said. to COGA. make individual technology related decisions, The gel would help to solve the challenge In addition to water and sand, COGA spokesperson Dan Haley said. of recycling flow-back water from wells, said reports that hydraulic fracturing mixtures “There are a number of different Jason Munro, president of GASFRAC based include gelling agents to make fluids thicker techniques that Colorado companies use in Calgary, Alberta. cross linkers to continue to thicken fluids, in oil and gas development,” said Doug Oil and gas companies dispose of water breakers to thin fluids to ensure production Flanders, COGA director of policy and that cannot be recycled, using Colorado after time, surfactants to improve production external affairs. “The most important factor Oil and Gas Conservation Commission and recovery, biocides to control bacteria, when deciding which technique works best is guidelines where approximately 60 percent and additional additives to address the type of formation where you’re trying to goes into underground injection wells, other challenges. extract oil or gas.” companies in drought areas have begun
“The most important factor when deciding which technique works best is the type of formation where you’re trying to extract oil or gas.”
48 ENERGY PIPELINE DECEMBER 2014
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Liquefied petroleum’s lower specific gravity decreases the volume necessary in operations by half which can reduce truck traffic by up to 90 percent and eliminates the need for post stimulation transport, Munro said. GASFRAC’s system is primarily propane due to its presence as a natural, nondamaging hydrocarbon, he said. The liquefied petroleum gas gel alternative involves injecting petroleum gel combined with sand under high pressure into the shale at similar ratios to hydraulic fracturing, he said. GASFRAC has worked with liquefied petroleum gas technologies since the company became operational in 2008 and provides consultation to companies in Canada and rural Texas. The company lauds liquefied petroleum gas gel as a “rare technology breakthrough in the oil and gas industry that can deliver both economic and environmental benefits for its producers.” GASFRAC utilizes three major components in the use of the gel: storage tanks, a sand blender and specialized high pressure pumping units. The company’s storage tanks involve a boost pump and nitrogen pressurization which feed the gel into the sand blender. Tanks are coated with a pressurized nitrogen blanket as a safety measure, Munro said. Proppant, such as sand, is preloaded, purged and pressurized with the nitrogen to create a sand laden mix that stimulates the reservoir. The process ensures the even distribution of sand in the mixture, which prevents it from settling in formations. Munro said that the gel offers fewer restrictions than water in that more sand can be added to the mix to increase down-hole pressure and that the mixture can be altered to each well more efficiently. As a formation friendly substance, the gel reduces the damage to surrounding environment as it occurs naturally down hole and is within a closed pressurized system. On average, more than 75 percent of the propane can be recovered and sold again compared to water operations, were recycling and reusing water can present a challenge, Munro said. Additionally, he said the presence of hydrocarbons already in production eliminates the presence of biocides found in conventional fracking operations. “It’s way more environmentally friendly and less likely to cause seismic events such as earthquakes,” he said. 50 ENERGY PIPELINE DECEMBER 2014
THE LOWER SURFACE TENSION OF LIQUEFIED PETROLEUM GAS GEL CAN ALSO PRODUCE A HIGHER YIELD FROM WELLS WHEN USED PROPERLY Compared to the price of water recovery, he said the gel has a minimal cost after companies resell or repurpose recovered propane. Additionally, the lower surface tension of liquefied petroleum gas gel can also produce a higher yield from wells when used properly, Munro said. Due to the substance acting as an energized gel, petroleum gel helps to push fracking fluid in the well which has the potential to increase the natural gas yield in the wells, McLennen said. “There is a pretty dramatic curve,” Munro said. “If used properly there can be a dramatic uplift in production.” Munro said that they have seen the most dramatic increase in production at their Texas sites. Additionally, McLennen said the higher availability of propane on site allows to easier access for oil and gas companies. Another benefit of the gel comes through the use of butane which helps performance under high-temperature surface conditions, he said. However, McLennen said the use of gel petroleum presents safety considerations which would require new expenditures and precautions to avoid injury. “They are very expensive and because of the explosive properties of the substances used, they can be very dangerous,” said Encana’s Media Relations Manager Doug Hock. Hock said that due to the gel’s relatively recent appearance in the oil and gas world, very few companies know about its definite benefits and disadvantages or have done research into its applications on individual formations. “In speaking with our chief of completions, he tells me that completely waterless fracs are seldom done,” Hock said. Alternatively, Hock said Encana has utilized nitrogen gas in its San Juan Basin operations
in New Mexico which reduces, but does not fully eliminate, water use. “The reason for using a nitrogen (fracture) is low reservoir pressure,” he said. “While it does reduce the amount of freshwater used, that’s not why it’s used.” Nitrogen, which makes up between 30 and 70 percent of the mixture with water, is added at the wellhead in a mixture with the water and pumped down hole. The nitrogen additive appears as foam similar to shaving cream, Hock said. Both nitrogen and CO2 do not have the same volatile properties and risk of explosion, he said. “The main problem with propane is that it is explosive, that’s been the big challenge with it,” he said. “Of course, we’re always looking for new ways to be efficient.” Other options, such as non-flammable hexaflouropropane used in inhalers, stand as viable options to decrease water use in hydraulic fracturing operations. Hexaflouropropane solutions virtually eliminates the flammability risk at the surface and replaces water in the fracking process, McLennen said. To ensure the safety of on-site employees, GASFRAC implemented remote control shut-offs, automatic shutdowns if propane leaks are detected and thermal monitors. In addition to these precautions, no physical workers are present on site, Munro said. Thermal cameras are used to monitor all high-pressure lines while crews monitor pressure transducers throughout the system remotely from vans offsite, according to the company’s safety statement. “We’re the safest operations in the world,” he said. “These are the safest operations I’ve ever observed during my time in the industry.” However, the necessary safety precautions to monitor the highly explosive propane can provide high overhead costs that can deter companies from implementing the use of gel to replace water. “It’s not something we are exploring here for several operational and effectiveness issues,” Noble Energy Corporate Communications Manager Steve Silvers said. While many companies, such as Noble Energy and Halliburton, do not currently use liquefied petroleum gel technology, Munro said that the growing popularity of hydrocarbon technology will lead to more widespread use of the substance in the future. “For us it’s a game-changing technology,” he said. “It allows us to recapture and reuse (the gas) effectively.”
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Earnings Briefs Weld County’s top drillers closing in on big-number production Weld County’s top two drilling and exploration companies are closing in on producing 300,000 barrels of oil per equivalent day out of the Denver-Julesburg Basin, which covers the entire county and parts of Wyoming, Nebraska and Kansas. Both Anadarko Petroleum and Noble Energy reported in late October that they had delivered record results out of the DJ, which also covers parts of Wyoming, Nebraska and Kansas, in their separate earnings releases detailing the third quarter of the year. Anadarko reported 88 percent sales volumes increase in the quarter to an average of 189,000 BOE/day. Noble reported a 15 percent increase on volumes from the same time last year to 102,000 barrels of oil equivalent per day. “It’s outstanding, but to me, it’s expected,” said Adam Bedard, a longtime energy industry analyst in Denver, who recently started his own midstream company, ARB Midstream, to transport crude out of Weld by rail. “I think so highly of the DJ play, that makes sense. It’s fantastic. It’s a big number, it’s showing those two companies who put big bets on DJ are doing very well.”
54 ENERGY PIPELINE DECEMBER 2014
Noble’s overall worldwide drilling program netted 302,000 boe/day, while it spent $1.3 billion in capital expenditures. The company reports that horizontal well production in the DJ Basin was up 30 percent, a company record. For the quarter in the DJ, the company drilled 75 wells, including 22 extended-reach laterals. Anadarko stated it spent $548 million to drill and produce its assets in the Wattenberg in the third quarter, producing 82,000 barrels of oil out of the Wattenberg drilling program - which eclipses the entire year of 2010 for all production for the prolific field. In 2010, oil production averaged 66,000 barrels of oil per day out of the Wattenberg, said Ryan Smith, a senior energy analyst at Bentek Energy in Denver. “It’s a lot more from where it was before, and that growth will continue,” Smith said. “It’s definitely a result of them pouring a lot of capital into the basin.” In October, there were 56 drilling rigs in Weld County, nine of which were from Noble Energy and 12
from Anadarko. That means several other smaller companies will see similar results to the big boys, Bedard said. “They’re drilling less than half the wells currently,” Bedard said. “If you looked at all the active rigs, only half are for Anadarko and Noble.” He said more records will continue to come out of the basin, which will bring more investment and infrastructure. Even shrinking oil prices, which had sunk to around $80 a barrel by late October, weren’t prompting a drilling slow down, Smith noted. Companies are still struggling with bottlenecks in getting product to market, problems that many believe will be taken care of next spring with new pipelines and compression facilities become operational. Meanwhile Weld County production continues to increase. So far for the year, Weld County had produced 81.5 percent of all the oil in the state at 32.3 million barrels - about half of the entire state’s take last year, which broke a 50-year record. - By Sharon Dunn
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DECEMBER 2014 ENERGY PIPELINE 55
Earnings Briefs
Synergy’s growth allows for more acquisitions The recent dip in crude prices is helping a local exploration and production company acquire more acreage on which to drill in Weld County. Officials from Platteville-based Synergy Resources said falling crude prices only positioned them to acquire more acreage - and they proved it days later, announcing they had acquired 17 horizontal wells, 73 operated vertical wells, 11 nonoperated vertical wells, and 5,040 gross acres (4,053 net) with rights to the Codell and Niobrara formations. The deal cost $125 million. “We’re always looking. We always have our antennas out,” said Synergy co-CEO Ed Holloway in an interview. “It’s just part of the business.” Holloway said in an earnings call with analysts on Oct. 28 that the company plans its future on $75-a-barrel oil to avoid the headaches of volatility. Prices swung from over $100 earlier this year to $80.52 per barrel in late October on the West Texas Intermediate exchange, prices on which the Rockies producers typically rely. “While recent volatility is disconcerting, it’s not a surprise to us, nor were we counting on a $100 (per barrel) model to execute our plans,” Holloway said in the earnings call.
56 ENERGY PIPELINE DECEMBER 2014
The newly acquired acreage is in a strategic spot for the company, Holloway told analysts in a conference call Oct. 31. “If you looked at our map and where our acreage is at, our weakest acreage position was in southern part of the new Wattenberg Field, and it happens to be in an area where (drillers are) having really strong results. “And we’re on a leasing campaign in that area, as well, and trying to bolster up our positions,” Holloway said. “We’re currently working on a 22-well pad in that area that this acquisition bolts onto. ... Once you look at our map, it really shows how this all bolts together for us going forward.” The company reported its year-end (ending Aug. 31) earnings with triple-digit growth all around from the same time last year, reported Monte Jennings, the company’s CFO:
• And, net income is up 940% for the quarter and up more than 201% for the year at $28.8 million The company through the year brought on an additional 31 horizontal wells, and plans for another 35 in the next five months.
• Operating income is up 133%
Together, the results will mean the company, which now has a third drilling rig in its program, will produce on average 8,000 barrels of oil equivalent per day for their first fiscal quarter of 2015, which it is now in. Earlier this fall, the company reported it had reached a production record at 8,600 barrels of oil/equivalent.
• Earnings before interest, depreciation, taxes and amortization are up 164%
The additional acreage does not mean the company will add more rigs, Holloway said.
• Production is up 169% • Revenues are up 147%
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ENERGY PIPELINE 57
WISHING YOU A MERRY CHRISTMAS AND HAPPY NEW YEAR CALL ME TODAY FOR THE LATEST UPDATE ON THE NORTHERN COLORADO REAL ESTATE MARKET
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Earnings Briefs
“I really think everyone has to be careful about rig count,” Holloway cautioned analysts. “The efficiencies of these ADRs (Automatic Drilling Rigs), the two rigs we picked up earlier in ‘15 will be capable of drilling what three rigs in ‘14 were.” In November 2013, the company completed two acquisitions in the Wattenberg Field that added approximately 1,800 net acres to its leasehold in the field and 59 operated producing vertical wells. This came after acquiring Orr Energy’s 36 producing wells in late 2012. Prices hit a high of $144 in June 2008 and bottomed out at about $54 in March 2009, according to Macrotrends. Crude prices hit a high of $109 per barrel in August, and have been falling ever since.
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Jennings reported that the company on average sold its oil between $75 to $87 per barrel in the last year. Holloway told analysts that the plunging oil prices prompted the aggressive players in the acquisition market to slow down. “It’s opened up opportunities for us to move in and get into discussions with operators because they’ve backed off,” he said. “We’ve seen this in the past, going forward. We continue to have our antenna up, and we’re always in discussion on several opportunities.” Added company COO Craig Rasmuson, “As prices come down, we really scale up opportunities for acquisition.” While acquisitions are always on the table, in some cases can take a couple of years to flesh out, Holloway said.
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“We’ve been in chatter or discussions with a lot of acquisitions a couple of years ahead of time, where we can grow into a certain level,” Holloway said. “Just maintaining the communication level with potential sellers or trade-outs, it’s an ongoing conversation. We always have the antenna up and looking.” Meanwhile, the company plans to go forward with a $325 million to $350 million on capital expenditures this coming year, mostly in the core of the Wattenberg Field. - By Sharon Dunn
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News Briefs Noble names new president, CEO, chairman Noble Energy Inc.’s board of directors has named David L. Stover as president and CEO of the global oil and gas production company. He succeeds Charles D. Davidson, who will retire in May 2015. Stover has previously been serving as the company’s president and COO. Davidson will continue to serve as the company’s chairman until the 2015 annual meeting, at which time he will leave the board of directors. The Board also announced it intends to elect Stover as chairman of the board immediately following the 2015 annual meeting. The company also announced that Susan Cunningham has been elected executive vice president responsible for Noble Energy’s global exploration, new ventures, frontier, environmental, health, safety, regulatory and business innovation activities. In addition, Gary Willingham has been elected executive vice president responsible for Noble Energy’s global production, drilling, major projects and supply chain activities. Both Cunningham and Willingham will report directly to Stover. Noble Energy is a leading independent energy company engaged in worldwide oil and natural gas exploration and production, and it is one of the top two drilling companies in Weld County. The company has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa. Go to www.nobleenergyinc.com for more information. - Staff Reports
Nothing like an Anadarko internship Anadarko Petroleum Corp. announced that its summer internship program has been ranked first among the Best Energy Internship Programs in the United States, according to Vault Inc. The program ranked 10th overall in the U.S., according to the nationally recognized careerintelligence website. “We are honored to be recognized among the top internship programs in the U.S. by Vault based on the feedback of our interns for the opportunities and overall experience they gained at Anadarko,” said Anadarko Vice President of Human Resources Julie Struble in a news release. “Our interns represent the future of the oil and natural gas industry, and offering a dynamic work environment that nurtures, mentors and challenges students is important for a sustainable energy future.” In 2014, Anadarko employed approximately 150 interns in a variety of engineering, science and business disciplines at its office and field locations nationwide. The company’s top ranking in the energy industry and 10th overall is based on Vault’s comparison of more than 5,800 intern survey results evaluating 500 organizations. Respondents rated their internship programs on quality of life, compensation and benefits, interview process, career development and future employment prospects, the release stated. As of year-end 2013, Anadarko had approximately 2.79 billion barrels-equivalent of proved reserves, making it one of the world’s largest independent exploration and production companies. For more information about Anadarko and APC Flash Feed updates, go to www.anadarko.com. - Staff Reports
60 ENERGY PIPELINE DECEMBER 2014
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DECEMBER 2014 ENERGY PIPELINE 61
News Briefs ®
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Whiting Petroleum Corp., which drills in Weld County but has a larger leasehold in the Bakken, reported record production in the third quarter of the year, equating to an average production of 116,675 barrels of oil equivalent per day. That’s a 6 percent increase over the second quarter, according to a news release. “Whiting continues to lead the way in implementing new technologies to enhance productivity and recovery rates in the Williston Basin,” said James Volker, Whiting’s chairman, president and CEO, in the release. “We are systematically honing the best completion designs in our different areas of operations. At our Sanish field, the Brehm 13-7H was completed in the Middle Bakken formation using a slickwater frac design flowing 3,770 BOE/d. Adjusted for lateral length, it is one of the most productive wells we have drilled in this prolific asset. We also continue to enhance our plug-and-perf completion technology with multiple frac clusters. At Hidden Bench, our four-well Sovig pad achieved an average initial production rate of 3,278 BOE/d per well. All the new producers were completed with five perf clusters per stage versus our prior design of three perf clusters.”
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At the company’s Redtail assets in Weld County, Voker reported the company is seeing “exciting results” in its acreage that will add significantly to its Redtail inventory. Volker continued in the release, “Despite the recent pullback in oil prices, we remain confident in our outlook for continued strong growth in our production and reserves. We believe our efficient operations and leadership in the implementation of new completion technologies enhances the capital productivity of our asset base helping to offset the impact of lower prices. Also, Whiting has been proactive in rationalizing its portfolio to build a strong balance sheet and liquidity position. In conjunction with the pending Kodiak acquisition, we have arranged $3.5 billion of bank commitments under our credit facility. In addition, Whiting continues to review its asset base for further liquidity enhancements. In the last 15 months, Whiting has generated $1.1 billion of liquidity through asset sales.”
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PDC Energy closes on sale of Marcellus assets PDC Energy Inc. has closed the sale of its 50 percent interest in PDC Mountaineer LLC, for $250 million. PDC’s net pre-tax proceeds were approximately $190 million after repayment of its share of debt and other working capital and other adjustments and fees. Net proceeds in the deal came from $150 million in cash and a $40 million note from the buyer. The buyer also assumed PDC’s share of the related firm transportation obligations as well as PDC’s share of certain PDCM natural gas hedging positions, according to a news release. The assets produced approximately 26 million cubic feet equivalent of natural gas per day net to PDC in the second quarter of 2014 (99 percent natural gas) with estimated proved reserves net to PDC of 240 billion cubic feet as of Dec. 31, 2013. PDC also announced it increased its borrowing base to $700 million from $450 million following the recently completed semi-annual redetermination of its revolving credit facility. The company elected to
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maintain its commitment level at $450 million at this time since it expects to be minimally drawn on its revolver at year-end 2014 in part due to the proceeds from the sale its interest in the PDCM JV. Barton Brookman, president and chief operating officer, said in the release, “The net proceeds from the PDCM sale and the increase in our borrowing base are expected to both further strengthen our balance sheet and provide PDC with excellent liquidity. This liquidity gives us tremendous flexibility to execute our capital programs while our strong oil and natural gas hedging positions protect the company’s cash flow.”
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PDC Energy Inc. is a domestic independent exploration and production company that produces, develops, acquires and explores for crude oil, natural gas and NGLs with primary operations in the Wattenberg Field in Colorado and in the Utica Shale in the eastern United States. - Staff Reports
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ENERGY PIPELINE 65
MAKING HOLE A look back at the origins of oil and gas BY BRUCE WELLS • AMERICAN OIL & GAS HISTORICAL SOCIETY
Photo courtesy of Drake Well Museum.
“Making Hole” is a term for drilling coined long before oil or natural gas were anything more than flammable curiosities.
Although their design would not last, Brothers Amos and James Densmore in 1865 built the first successful railroad tank cars used in oilfields. Photo courtesy Drake Well Museum.
BROTHERS BUILD RAILROAD OIL TANK CAR Railroad oil tank cars became the latest of a growing number of oilfield innovations soon after the Civil War. Two brothers in 1965 designed and built the first successful railroad tank cars used in the Pennsylvania oilfields. James and Amos Densmore of Meadville soon patented their “Improved Car for Transporting Petroleum.” Using an Atlantic & Great Western Railroad flat-car, the brothers secured two tanks to ship oil in bulk. Their 1866 patent filing described and illustrated the railroad car’s unique design.
66 ENERGY PIPELINE DECEMBER 2014
“The nature of our invention consists in combining two large, light tanks of iron or wood or other material with the platform of a common railway flat freight-car,” the Densmores wrote. “They carry the desired substance in bulk instead of in barrels, casks, or other vessels or packages, as is now universally done on railway cars,” the brothers added. The freight-car design used special bolts at the top and bottom of the tanks to act as braces and “prevent any shock or jar to the tank from the swaying of the car while in motion.” The benefit of such tank cars to the petroleum industry cars was immense. It cost $170 less to ship 80 barrels of oil from Titusville to New York in a tank car than in barrels.
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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Riveted cylindrical iron tank cars replaced Densmore brothers’ wooden vat cars. Discarded Densmore tanks can be seen in the foreground.
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A 2004 Pennsylvania historical marker on U.S. 8 south of Titusville memorialized the brothers’ contribution to petroleum transportation technology: “The first functional railway oil tank car was invented and constructed in 1865 by James and Amos Densmore at nearby Miller Farm along Oil Creek. It consisted of two wooden tanks placed on a flat railway car; each tank held 40-45 barrels of crude oil. “A successful test shipment was sent in September 1865 to New York City. By 1866, hundreds of tank cars were in use. The Densmore Tank Car revolutionized the bulk transportation of crude oil to market.” However it was just a one-year revolution since the tank car had design flaws, according to oil patch historians at Explore PA History website. “They were unstable, top-heavy, prone to leaks, and limited in capacity by the eight-foot width of the flat-car,” noted one writer. “Within a year, oil haulers shifted from the Densmore vertical vats to larger, horizontal riveted iron cylindrical tanks, which also demonstrated greater structural integrity during derailments or collisions,” the historian concluded. The same basic design for transporting petroleum is still used today as railroads have put dozens of other products - from corn syrup to chemicals - in the cylindrical tanks. Although the brothers left the Pennsylvania oil region by 1867, their inventiveness was far from over. In 1875, Amos Densmore assisted inventor Christopher Sholes, who had designed a “type writing machine.” Densmore rearranged the keyboard so commonly used letters no longer collided and got stuck. His “QWERTY” arrangement vastly improved Shole’s original 1868 invention. When brother James found financial success in the oilfields, the brothers established the successful Densmore Typewriter Company, which produced its first model in 1891.
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DECEMBER 2014 ENERGY PIPELINE 69
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.
2014 DRILLING PERMITS
2014 GAS PRODUCTION
COUNTY *YTD PRODUCTION (% OF STATE) Garfield .............. 327,187,167 (39.8%) La Plata ................ 171,230,066 (21%) Weld .................. 160,233,373 (19.5%) Las Animas............. 41,370,425 (5.0%) Rio Blanco.............. 46,684,337 (5.7%) Mesa .................... 22,579,310 (2.75%) State ............................... 821,073,895 Source: Colorado Oil and Gas Conservation Commission as of Nov. 3; figures do not include complete production numbers. Companies have 45 days to report production.
(thousand barrels per day) Region Oct. 2014 Nov. 2014 Bakken................. 1,164.............1,193 Eagle Ford ............ 1,579.............1,614 Haynesville ................ 57.................. 57 Marcellus .................. 52.................. 53 Niobrara .................. 362................370 Permian ............... 1,765.............1,807 Utica......................... 40.................. 43 Total..................... 5,019.............5,137 Source: Energy Information Administration, Oct. 14
70 ENERGY PIPELINE DECEMBER 2014
Weld........................................................................................1,842 (55.6%) Garfield...............................................................................773 (23%) Lincoln.....................................................................115 (3.5%) Rio Blanco..........................................................98 (2.965%) La Plata.......................................................72 (2.2%) Yuma.......................................................53 Moffat.................................................49 Adams............................................41 Arapahoe.................................27
2014 OIL
PRODUCTION
Montezuma.....................22
COUNTY *YTD
Cheyenne...........................23
Weld ...........32,335,333 (81.5%) Rio Blanco .....2,524,039 (6.4%) Garfield ..........1,056,633 (2.7%) Cheyenne..........824,201 (2.0%) Lincoln ..............835,801 (2.1%) Moffat................236,232 (0.6%) State......................... 39,676,681
Gunnison.................16 Jackson....................16 Morgan.............6 Larimer..........4 State ........................................................3,315
(million cubic feet per day) Region Oct. 2014 Nov. 2014 Bakken................. 1,432.............1,462 Eagle Ford ............ 6,938.............7,040 Haynesville ........... 6,730.............6,797 Marcellus ........... 15,828...........16,045 Niobrara ............... 4,499.............4,559 Permian ............... 5,779.............5,841 Utica.................... 1,459.............1,534 Total................... 42,665...........43,278 Source: Energy Information Administration, Oct. 14
COLORADO ACTIVE WELL COUNT
NO. (% OF STATE TOTAL)
Mesa.......................................................53
NATIONAL OIL PRODUCTION*
NATIONAL GAS PRODUCTION*
COUNTY
Source: Colorado Oil and Gas Conservation Commission as of Nov. 3.
COLORADO DRILLING RIG COUNT
Colorado ................................. 69 Weld ...................................... 44 Garlfield ................................. 10 Source: Colorado Oil and Gas Conservation Commission as of Oct. 29.
PRODUCTION (% OF STATE)
Source: Colorado Oil and Gas Conservation Commission as of Nov. 3; figures do not include complete production numbers. Companies have 45 days to report production.
*Note: Up to date national oil and gas production numbers were not available at press time.
Weld..........................................................................21,731 Garfield .....................................................................10,860 Yuma...........................................................................3,905 LaPlata .......................................................................3,336
Las Animas .................................................................3,047 Rio Blanco ..................................................................2,903 36 others ....................................................................6,986 State .........................................................................52,768
Source: Colorado Oil and Gas Conservation Commission as of Nov. 3.
Bill Barrett Corporation is a Colorado company and a proud partner of the Greeley Community. New Greeley DJ Headquarters
NOW OPEN!
Producing Energy Providing Jobs Protecting the Environment Promoting Community
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NYSE: BBG DECEMBER 2014 ENERGY PIPELINE 71
RENTING
THE SMART WAY TO GET THINGS DONE Interstate Rental and Sales is your source for contractor’s equipment in the oil field industry. We also specialize in the repair of construction & heavy equipment. 24 hour sales & service.
Call INTERSTATE RENTAL & SALES, INC. at 303-485-5600 today for all your commercial & residential equipment needs.
72
8127 W. Interstate 25 Frontage Road • Frederick, CO 80516 Rental/Sales (303)485-5600 • Email Address: irs@interstaterental.net Jenson/Sales (970)689-1956 • Alan Fisher/Shop&Service (303)956-0768 ENERGYGary PIPELINE DECEMBER 2014