NOVEMBER 2014 ENERGY PIPELINE 1
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Features
34
38
NEWFOUND WEALTH
DRUGS IN THE OIL FIELD
By Sharon Dunn
By Sharon Dunn
Oilfield money allows for sharp investing, legacy building.
16
EARTH RENEWAL
30
Company turns well cuttings into super soil.
$40 MILLION HELP
New company forms to move crude out of the DJ by rail.
COLORADO THE ORIGINAL
Refracking gains steam throughout the country, but it’s old hat in Colorado. By Anne Cumming Rice
28
ON THE COVER Photo illustration by
Darin Bliss
By Eric Berglund
42
By Sharon Dunn
26
YOU’RE INVITED
Energy Proud invites visit to Weld oil patch.
By Sharon Dunn
22
Oil, gas companies take a hard line against an old problem.
ANOTHER BOOM
Wyoming oil field may be on the verge of new boom. An Associated Press Story
58
MAKING HOLE
Departments 8
Support Company Profile
10
Field Worker Profile
12
Executive Profile
50
News Briefs
A look back at petroleum’s past.
By Sharon Dunn
4 ENERGY PIPELINE NOVEMBER 2014
Meet Kimberly Purdy, Halliburton
By Bruce Wells
ENERGY PROUD
Industry’s economic importance focus of new advocacy group.
Trinity Energy Solutions
Meet Jim Winter, NGL Water Solutions DJ
NOVEMBER 2014 ENERGY PIPELINE 5
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MANAGING EDITOR Sharon Dunn CONTRIBUTING WRITERS David Persons Anne Cumming Rice Bruce Wells
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.
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SUPPORT COMPANY PROFILE
Trinity Energy Solutions
CORPORATE HEADQUARTERS 600 26th St. Garden City, CO 80631 970.506.2723
NUMBER OF EMPLOYEES 13
WEBSITE www.trinityenergysolutions.com
SERVICES OFFERED ASME Code Separation, Compression Services and Equipment, Emissions Control Services, Pipeline Pigging Solutions, Production Optimization, Operations and Services.
HOW LONG HAS YOUR BUSINESS BEEN OPERATING IN WELD COUNTY?
HOW LONG DO YOU ANTICIPATE BEING IN BUSINESS IN NORTHEAST COLORADO?
7 years.
WHY SHOULD CUSTOMERS DO BUSINESS WITH YOUR COMPANY? Trinity is a solutionsbased products and services provider that has the experience and expertise to evaluate opportunities as a whole, providing the best overall solutions to the customer.
This is, and will continue to be our home base of operations.
IS YOUR COMPANY IN A GROWTH MODE? Yes. Our team has the portfolio of products, services, and support team in place to meet the needs of expanded operations currently taking place in the DJ/Niobrara basin. We have
invested in product development, training and development of our team to proactively address and resolve issues facing production companies in the field.
WHAT KIND OF SKILLS, EXPERIENCE OR EDUCATION DO YOU LOOK FOR IN EMPLOYEES? We look for employees who possess exceptional work ethic, integrity, willingness to learn, and the desire to be part of a team with a commitment to safety and excellence.
TRINITY ENERGY SOLUTIONS For job opportunities, visit www.trinityenergysolutions.com & click the “Employment Opportunities” tab or email a resume to recruiting@trinityenergysolutions.com. 8 ENERGY PIPELINE NOVEMBER 2014
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FIELD WORKER PROFILE
Kimberly Purdy HALLIBURTON BY STAFF REPORTS
HOMETOWN Buffalo, Wyoming
WHERE DO YOU LIVE? Thornton
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? I’ve been working in the area for three years. I moved here straight out of college to start work for Halliburton at the Fort Lupton facility.
HOW DID YOU GET INTO THE INDUSTRY? I earned my bachelor of science in chemical engineering from Montana State University. I went to the career fair my senior year and met the Halliburton folks, and the rest is history. I knew being in this industry would be a good fit for me as I come from a ranching family in Wyoming and enjoy being able to work outdoors.
WHAT IS YOUR JOB TITLE AND DUTIES? I am an account
representative for the production enhancement business line, where we perform hydraulic fracturing operations for our customers. I work with the majority of Halliburton’s customers in the DJ Basin on the field sales level to ensure quality of service and to provide technical solutions. Prior to this role I was hired on as a fracturing engineer where I carried out realtime engineering control on location.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB? I can always learn something new. The portion of the industry that I know is minuscule in comparison of the breadth of the industry. While that realization is sometimes daunting, it is also an exciting challenge.
WHAT IS THE BEST PART OF YOUR JOB? Knowing that the job I have helped to complete for a customer was
10 ENERGY PIPELINE NOVEMBER 2014
successful and is going to enable them to make the best well they can. I’m a people person, so when the people I work with are happy, I’m happy.
WHAT IS THE HARDEST PART ABOUT YOUR JOB? Meeting the growing industry demands. As they say, “when opportunity knocks, you answer,” but sometimes that’s hard when there are a hundred doors!
WHAT DO YOU DO IN YOUR SPARE TIME? It depends on the time of year. During the summer I spend a lot of time outdoors, hiking, fishing, riding horses, enjoying all that the area has to offer. During winter I’m on the ski slopes for most of my free time. I also enjoy volunteering when I can at events such as GESTEM (Girls Exploring Science, Technology, Engineering and Math) to encourage young girls to get into
science- and mathbased careers.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? I want to continue to learn and keep up with the technical advances of the industry, utilizing my engineering background, as well as learning more of the business side of my work. Also, I’d like to develop myself as a steward of the industry for those outside it who have questions.
WHAT DOES THE WATTENBERG FIELD AND THE DJ BASIN MEAN TO YOU? The basin as a whole is the perfect example of an opportunity for any person to come and work, make a life and better themselves. I think of the families I know that are supported by the work available in the DJ Basin, and I find it hard to imagine that they could be better off anywhere
else. Hopefully one day their kids can come back from college and join the industry and take us to even higher levels of smart energy development.
HOW DO YOU FEEL ABOUT THE CURRENT ENVIRONMENTAL DEBATE GOING ON WITH “FRACKING” IN COLORADO? As with any debate I take an interest in, I believe that it is most important to educate yourself on the facts. Once that step is taken any person should be able to form their own opinion and stand by it. I feel that fracturing in Colorado is done safely, in regard to both the environment and the families that live in the area. There are reliable sources for facts that anyone can access online. I find it disappointing that some would share misinformation that could affect the livelihoods of so many families.
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EXECUTIVE PROFILE
NGL WATER SOLUTIONS DJ
Jim Winter BY DAVID PERSONS • FOR ENERGY PIPELINE
jim winter will tell you that working “in
the oil patch is a fun place to hang your hat.” He should know. Winter, a senior vice president for NGL Water Solutions DJ, has been involved in the oil and gas industry for more than 30 years and has had his share of fun. That’s the result, he says, of understanding the industry in a way that few do since he has done a variety of jobs over the years, working from the bottom up. In fact, he’ll tell you that starting at the bottom was really key to his success. “When I was in college (the University of Colorado-Boulder), I didn’t know what I wanted to do,” Winter said. “I was a ship without a rudder. It wasn’t until probably my second semester in my MBA program that I heard about the oil and gas industry. “I heard you could make good money and be successful from a career standpoint.” After picking up his MBA in 1978, Winter went to work as an independent petroleum landman for Joseph S. Rose & Company in Denver. He calls that the turning point of his career. “Joe Rose became my mentor,” Winter said. “I learned a ton from him.” Winter said that job entailed two things, both of which helped prepare him for future success. 12 ENERGY PIPELINE NOVEMBER 2014
“First, was the process of determining mineral ownership,” he said. “That required a lot of title work which was very exacting and precise. But, it helped me to understand legal documents. That proved to be very beneficial. “The second piece was to meet with mineral owners for the purpose of gaining the right to drill and produce those minerals. This was very fun work because most of the time you were meeting with ranchers and farmers. I met so many really good people.” From there, Winter co-founded High Plains Energy Company in 1986. That company was an oil and gas land services firm that served a variety of exploration and production companies throughout the Rockies and the northeastern U.S. In 1992, Winter joined Petro Source Partners, Ltd. In 2000, Petro Source was acquired by SemGroup. Winter’s role there involved marketing refined products and the acquisition of refined products assets. In 2007, Winter was hired by High Sierra Energy as a vice president. He held that job until High Sierra merged with NGL Energy Partners LP in 2012. Winter currently is a senior vice president of water for NGL Water Solutions LLC, a division of NGL Energy Partners.
QA &
with Jim Winter
A very busy oil executive, Winter found some time recently to discuss with Energy Pipeline his job and the future of NGL in the DenverJulesburg Basin. ENERGY PIPELINE: What can you tell us about your role with NGL Water Solutions? JIM WINTER: We have split the managerial side of our water business into two segments. On the operating side of the business, it is under the auspices of Doug White, while I am primarily responsible for growing the water business, either through acquisition or organic growth. EP: Can you talk a little about each one of those? JW: Organic growth is basically growing from within by adding new capacity to existing NGL owned facilities in order to
ABOUT
Jim Winter AGE 60
SPOUSE Jennifer Winter
CHILDREN Michael Winter (27) Brian Winter (26)
CITY YOU GREW UP IN Littleton, CO
HIGH SCHOOL YOU ATTENDED Littleton High School
COLLEGE ATTENDED/DEGREES BS in Finance from University of Colorado in 1976 and an MBA from the University of Colorado in 1978.
CITY YOU LIVE IN NOW Highlands Ranch
WHAT DO YOU DO IN YOUR SPARE TIME? Hobbies include golf and various fitness-related activities.
LAST GOOD BOOK YOU READ “Lone Survivor” by Marcus Luttrell
SOMETHING ABOUT YOU THAT FRIENDS AND COWORKERS DON’T KNOW I enjoy yard work, but don’t seem to have time to do much of it these days
CURRENT JOB TITLE
Senior Vice President-Water for NGL Water Solutions.
YEARS WITH NGL WATER SOLUTIONS DJ 2 years
YEARS IN ENERGY INDUSTRY 30 years+
PROFESSIONAL BACKGROUND Jim Winter has over 30 years of experience in the energy industry. He began his career as an independent petroleum landman in 1979 with Joseph S. Rose & Company. In 1986, Winter co-founded High Plains Energy Company, an oil and gas land services firm that served a variety of E&P companies throughout the Rockies and northeastern U.S. In 1992, Winter joined Petro Source Partners, Ltd., where he managed the company’s Permian Basin crude oil purchasing and transportation program. Petro Source was acquired in 2000 by SemGroup, where Winter was primarily involved in refined products marketing and the acquisition of refined products assets for SemFuel through 2006. In 2007, Winter then became vice president of High Sierra Crude Oil & Marketing. In 2009, he became senior vice president of High Sierra Water Holdings, where he oversaw the operations of High Sierra’s various water businesses. In 2012, High Sierra merged with NGL Energy Partners, LP with Winter being named Senior VP/Water for NGL Water Solutions LLC, a division of NGL Energy Partners LP.
NOVEMBER 2014 ENERGY PIPELINE 13
accommodate increased demand. Acquisition involves purchasing existing businesses from outside parties and then integrating them into NGL. As a master limited partnership, NGL has a high appetite for growth, so both acquisition and organic projects are potentially attractive. If we perceive a great opportunity, we will pursue it. Because fracking and horizontal drilling have opened up new vistas, if you will, for the oil and gas industry, we are finding that opportunities abound.
This job requires a lot of due diligence both onsite and on paper. I’m basically part of the team that initiates deals and coordinates the associated due diligence. I do have the pleasure of getting deeply involved in negotiations and deal structure.
You need water for fracking and we’re one of the premier water services companies in the U.S. when it comes to disposal and treatment of frack water. Technology has really created demand for our services.
JW: It absolutely is. We currently have seven facilities in the DJ Basin but some are multi-wells. We have a total of 12 disposal wells with a combined capacity of about 95,000 barrels a day. We also have a significant growth plan for new wells in the DJ Basin to meet our customer demand.
EP: That seems like a pretty timeconsuming job. Does it take you out of the office and into the field a lot? JW: It used to. Not as much anymore. When I do get out of the office, it is typically to Weld County, Wyoming, south Texas and west Texas.
EP: I would assume that water disposal is one of the biggest parts of your company. How many sites do you have in the DJ Basin and how many barrels are disposed of each year?
We’re trying to create capacity where it will be needed most through interaction with our customers and through trying to anticipate future demand rather than react to what has already happened. It’s challenging.
But, we will more than double our capacity in the DJ Basin over the next year. We’re also treating oilfield waste water in the DJ Basin and in Wyoming so it can be reused for future fracks or even returned to the environment for beneficial use. The water that is discharged to the environment is treated to a better than drinking water quality and is discharged to a tributary of the Colorado River. Between the DJ Basin and Wyoming treatment facilities, we have recycled more than 40 million barrels of oilfield waste water. EP: How many oil and gas companies do you serve in the DJ Basin? And, is that likely to go up in coming years? JW: Our customer list includes over 100 companies in the DJ Basin. Some are extremely large and some are fairly small operations. I don’t know if we’ll see many more. I’m sure our list will continue to be healthy but possibly not grow as much because
of the consolidation that has taken place in the industry. EP: There have been some stories in the news recently connecting earthquake activity with injection wastewater disposal sites. How is your company dealing with that issue? JW: From a sheer scientific standpoint, I don’t believe anybody has definitively confirmed that wastewater injection is the issue. But, knowing that is a possibility, we have worked closely with the regulatory authorities to continually reaffirm we are meeting or exceeding regulatory requirements and expectations. Our relationship with the Colorado Oil and Gas Commission is one of cooperation and collaboration. EP: NGL Water Solutions is taking the treatment and recycling of oilfield wastewater very seriously. Not every water service company does that. Why is it such a priority for NGL? JW: We think water treatment, to a large extent, is the wave of the future. As time
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passes, produced water treatment will be more and more important. Disposal will always be an effective and needed alternative. But, water has been an undervalued commodity. As customer demand has moved toward treatment for re-use, we have made a commitment to be positioned to meet that demand.
treatment process that will consistently and reliably achieve the water quality spec desired by the customer. Along with a state-of-the-art lab, our R&D facility contains a pilot plant that allows us to scale up and optimize our treatment process to make it as efficient and cost effective as possible.
Disposal in some parts of the country doesn’t make sense because the geology does not lend itself to injection. In these areas, we are either already actively providing treatment or are looking at opportunities to do so as part of our growth strategy.
EP: Are there oil and gas companies insisting on reusing treated water?
EP: NGL inherited a 10,000-square-foot research and development facility in Denver when it merged with High Sierra. What happens there? JW: When companies look to us for water treatment, the first thing we need to do is understand the makeup of the water. Water chemistry varies from basin to basin. Once we have a thorough understanding of the water chemistry, we then develop a customized
JW: Yes. Noble Energy is a very good example of a company that is aggressively pursuing the use of recycled water. They are doing this in spite of the fact that there are cheaper options available to them for dealing with produced water. NGL currently has two recycling facilities in the DJ Basin that provide recycled water for Noble. One is near Platteville and the other is near Briggsdale. EP: What has been your greatest achievement with NGL, something that you’re most proud of? Can you talk a little about how that transpired and the role you played in it?
JW: Our water treatment. I’m very proud of that. We’re moving in the direction of the future. We’ve spent millions of dollars in research and development facilities to provide solutions now and in the future. I’m very proud of what we’ve accomplished and very fortunate to have worked with such the great team of people that has made it happen.
than double capacity over the course of the next year.
I’m also proud of what we’ve done on the disposal side. We are constantly striving to take it to the next level with safety, compliance, and operational efficiency. We make sure wells are drilled properly and we take great care to ensure we’re doing everything the right way. We have a public conscience.
EP: Finally, a lot has been said about local regulation vs. state regulation of the oil and gas industry. Do you believe that Gov. Hickenlooper’s recentlyappointed energy committee will come back with helpful recommendations to address this issue?
EP: What is the outlook for growth by NGL in the DJ Basin? JW: Our outlook for growth is extremely bright. It has proven to be one of the best basins in the country from the standpoint of the economics being realized by the producers. From our company’s position, we plan to more
We are working closely with customers to locate facilities as strategically as possible in an effort to minimize the costs associated with water handling and disposition. In some cases, we have even installed pipelines to carry the water directly to our facility.
JW: I’m actually familiar with some people on the commission. They are very qualified, knowledgeable people. There is an opportunity for the commission to be very helpful, provided all parties keep an open mind. I certainly think it is a better idea than placing propositions on a ballot in 2016. I support it and hope it is allowed to do its job without political interference.
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Mike Sever peers into the rows of corn that were grown on their test plot near on Friday near Milliken using the HydroLoc blend he and Bruce Sandau devised as a soil amendment to help reclaim areas disturbed by oil and gas drilling.
Photo by Josh Polson • jpolson@greeleytribune.com
EARTH RENEWAL Company breaks sustainability gap in drill cuttings to create rich soil amendment BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
like a sponge, the HydroLoc soil
amendment sits in the dirt on Weld County’s sandy grasslands and soaks up the moisture in an arid, often unforgiving climate. Made out of bacteria, fungi and waste from oil wells drilled about 8,000 feet underground, the combination, amid a proprietary blend of other soil goodies, creates an environment for growth, promoting a happy subsurface home for native grasses and plants to thrive. For HydroLoc creators Bruce Sandau and Mike Sever, of Green Earth Environmental of Milliken, it’s pure elation after a year of trials that could revolutionize the oil and gas industry’s growing focus on sustainability. “It’s like organic matter on steroids,” Sever said, noting that their blend results in increased microbial activity, nutrient cycling, water holding capacity, soil organic matter, nutrients and decreased soil density - perhaps a foreign language to everyday folk, but
music to area farmers and ranchers hoping to get the best out of their land and reclaim sites scarred by oil and gas drilling. “The neat thing you don’t see very often is it gives back and no one can say that’s bad,” Sever said. HydroLoc is a patent-pending soil amendment that’s for real, putting oil and
they came in and did a massive excavation, removed it and brought me more soil. I just wanted my dirt. I wanted to keep my dirt.” Could it be cleaned, so they don’t have to remove it? “There’s so much money and effort spent when something like that happens, it just seemed like there should be a better way,” Sandau said. Sandau, who had been working on drill site reclamation projects for Noble Energy with his company Green Earth Environmental, got on the phone to people he knew in the oil and gas industry, and A-1 Organics in Eaton, calls which eventually led him to Sever, who was in Wyoming testing soil remediation techniques. More talks led to the creation of HydroLoc, with heavy involvement still from Bob Yost at A-1 Organics. Together, they all came up with a proprietary blend in a highly competitive environment, so the only thing they’ll say
“It’s like organic matter on steroids...”
16 ENERGY PIPELINE NOVEMBER 2014
MIKE SEVER, Green Earth Environmental gas waste to work to nurture the future, bringing the drilling process full circle. They perfect it, manage and market it out of the Green Earth Environmental offices in Milliken, with Sandau’s business partner, Jim Daulton. Like most inventions, HydroLoc started out of necessity. “Years ago, on my farm, I had an (oil and gas) flow line leak,” Sandau explained. “So
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ENERGY PIPELINE 17
Photo by Josh Polson • jpolson@greeleytribune.com
Bruce Sandau, with Green Earth Environmental, walks among the rows of HydroLoc, a patentpending proprietary blend that uses well drill cuttings in a mixture to improve the soil and aide well site reclamation, at a Noble Energy drilling site near Milliken.
about the magic mixture is that it is made up of drill cuttings, a finished Class 1 compost, water and air. Mother Nature does the rest in a 20- to 45-day process, in which the drill cuttings are mixed in with the HydroLoc blend and set on site to blend back into the soil once the drilling rigs are gone. “We’ve taken it to drill rigs and big burly oil well workers are scared to death of it because they think it’s poop,” Sandau said, noting that there is a smell to the blend, but not exactly what first comes to mind. “We get that reaction all the time. But there’s nothing in it that’s poop. It’s very rich organic, enriched soil. That’s what you smell, the life of the soil.” The process is by no means simple, but it’s built on basic tenets of soil management. The drill cuttings, though mined from as much as 8,000 feet below the surface and laced with hydrocarbons, are still organic materials. “You’ve got the makings of something that just wants to be dirt,” Sandau said. “All these cuttings are from 6,000 to 8,000 feet below surface, and they just want to be dirt and grow something. We’re helping them get there. We’re giving life to them, and organisms, and it becomes a very high quality dirt.”
been the local landfill, or applied on specified, registered plots of land. The Colorado Oil and Gas Conservation commission requires tracking of all drill cuttings because of its hydrocarbon make-up. That’s why their whereabouts have been limited to specific land applications or specific landfills. Every move of the stuff must be documented. But HydroLoc is gaining some favor with state regulators, who have recognized its benefits and will allow its use to reclaim drilling sites and areas where its application can be tracked and documented. Sandau and Sever have only tested the blend to reclaim disturbed areas for Noble Energy, but the story of its success is spreading. “So we take this and with science behind it and not going to a landfill, its treated, tested, and we put it out on farmers’ and ranchers’ soil as a soil amendment. There’s no accumulation, it’s done once. We don’t need to do it again. We’re tying to enhance the soil,” Sandau said. “So the liability (of hydrocarbons in the soil) goes away. It creates a win-win situation for the producer, the state, the community, landowners and for the environmental groups.”
WHAT’S THE BIG DEAL?
THE PROCESS
So earth is milled from beneath the surface and brought back after millions of years. Though organic, it’s considered exploration and production waste by state regulators’ standards, and removal is highly regulated. The cuttings - earth that has been bored out of a drilling well to drill for oil - must be disposed of properly. For years, that place has 18 ENERGY PIPELINE NOVEMBER 2014
Through their bucket testing to treat the hydrocarbon cuttings, they stumbled upon a formula that essentially mimics nature. “There’s no specific ratio that has to be met. There’s no chemical reaction that has to occur,” Sandau said of the magic of HydroLoc. “There’s no synthetic injection of anything. This is a totally organic process,
what happens in the soil every day.” Their process has been tested and retested and tried extensively. Noble Energy, which is the first company to take on the blend in a test pilot due to urgings of Bill Moser at the Wells Ranch, put the product through a litany of tests. It was tedious to say the least. “I wasn’t worried so much that they’d find something wrong ...,” Sandau said. “But every difficulty that came up made us better, it taught us more about the product, our process, that we were better than can be expected, and just how healthy we were making this waste product.” After five months of testing with Noble last year, they got the green light, Sandau said. At that point they were testing it on one rig; recently, they just finished their sixth, in which they used the blend to reclaim the areas disturbed by the drilling process. By June of this year, the state had received enough information on the process that they were given the green light for expanded use, such as on pastureland.
WHAT IT DOES So far, the HydroLoc blend has chiefly been used for Noble Energy on Steve Wells’ ranch northeast of Lucerne. It’s gone through the last year of testing, and already, reclamation projects are showing a lot of promise. Rows of reseeded grass in year one have grown high and strong enough for cattle to graze. They produce a grassy photo of a patch of land from the Wells Ranch, where it’s year two, and growth is lush. “Typically on second-year growth, it’s still very sparse, but the cattle are grazing this,”
SANDAU AND SEVER HAVE ONLY TESTED THE BLEND TO RECLAIM DISTURBED AREAS FOR NOBLE ENERGY, BUT THE STORY OF ITS SUCCESS IS SPREADING
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Sever said, “which is phenomenal. They started grazing at the end of firstyear growth. The root system was dynamic enough to actually hold.” Added Sandau: “Any experience in rangeland seeding will tell you it takes two to three years to establish.” Wells said this year, with the wetter weather, it was harder to determine just how good the HydroLoc made his grass. But on any other year, the seeds would have blown away with the Weld County winds. “It takes a problem product and it turns it into a benefit,” Wells said. “The drilling cuttings mixed with the fertilizer product provides just enough fertilizer for the grass to grow and keeps the ground from blowing. “Since we rely on rain to grow the grass, too much fertilizer has always been a problem,” Wells said. “This however seems to be the perfect fit. Where we once had maybe 1 inch of topsoil, we now have close to 7 or 8. The roots on the grass, instead of going down 1 inch and sideways, seem to be going straight down for 5 inches. ... I have nothing but good things to say about this.” Noble, on the other hand, has embraced it as an environmental alternative to taking the cuttings, which range in the tons per well, and putting it back to use instead of filling up a landfill. That takes trucks off the road, too. “All those benefits encouraged them to look deeper,” Sandau said. On the first six wells, from which cuttings were used to create the new blend, Noble took about 600 individual testing samples, Sandau said.
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MASS APPLICATIONS Based on such testimonials and testing, some would think the sky is the limit, and it could benefit agriculture in general. More corn and carrots and onions. But there are limits to the waste produced from oil and gas exploration and production. “Oil producers cannot capitalize on their waste,” Sever explained. “Even though we created a very high quality soil amendment, they can never sell it or produce it. It has to be within the boundaries of COGCC limits, and landowner permission has to be acquired, so that limits us to agriculture and rangeland. Even if the health department said you could put this in grandma’s garden, we won’t because we can’t. (We) have to stay within limits of ag land, oil and gas permits.” The tracking requirement essentially keeps them being able to mass
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Reseeded grass on the Wells Ranch in central Weld County shows faster growth that withstands grazing in its second year. The grass was planted with the HydroLoc blend to reclaim land disturbed by oil and gas drilling.
“We’re giving back in a manner where we can sustain crops, growth and nutrients and productivity.”
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MIKE SEVER, Green Earth Environmental produce the product. Regulators keep keen track of where it’s applied. It’s all about liabilities, Severe explained. “It’s not so much associated with fear,” Sever said, addressing some public concern about potential hazards with oil an gas. “It has to do with standing regulations for dealing with and E and P waste. Those regulations are set to guard the public. Because it typically goes to a landfill or a spread fill, the regulatory agency knows exactly where it went. So if there’s an issue 10 years from now, we can say, that was this well, it went here. This is all data behind it, and all the science is already there.” HydroLoc, Sever said, takes the liability out of the equation, because it “gives back,” mimicking nature at its best. Already, ranchers across Weld County are seeking them out, Sandau said. They’ve heard of the growth on Wells’ ranch, and want some for themselves. The process alone could probably save them $75 per acre in the costs of soil amendments such as nitrogen, phosphates or potassium, for example, Sandau said. Sandau himself is testing the product on several agricultural plots on his own farm. “And this was material that had the potential of the landfill,” Sandau said. The cuttings technically belong to Noble, which mined them from the earth. Ultimately, officials there can decide what to do with the extras that aren’t applied to their own projects. HydroLoc already is bound for a project in La Junta, they said, where the soil is laden quite a bit heavier with hydrocarbons. The men are confident the steroidal soil their blend creates can rise to the challenge. “The hydrocarbon levels are highly elevated through the process down there, so this is a little more challenging,” Sever said. “They always take those to a landfill. If we can treat those and be successful and turn that into a soil amendment, it would be really good for the industry.” Global applications are almost mind-boggling. There are uses in just about every oil field, as well. That includes Pennsylvania, where exploration and production companies are required to take the cuttings to Ohio for application because of a fear of contamination. “Think about the millions of dollars spent, and the risks,” Sandau said of trucking waste out of state. “If we could start this process to enhance an agriculture program, what does that mean? I don’t want to let myself go there because we still have to get really good at what we’re doing right here.” They’re still testing every aspect of the process to make sure nothing goes wrong, to make sure their process is 100 percent all the time. They’ll keep documenting their progress all they way up to years three and four. “This gives back to the Earth,” Sever said. “So much is taken away and it’s nice to be in a position to give back. To me, that’s sustainability. We’re giving back in a manner where we can sustain crops, growth and nutrients and productivity. “It helps an industry, that at least has a reputation out there of taking away from the Earth, and gives the industry the opportunity to give back. We get to be a part of that.”
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loading facility is planned for an industrial site south of Evans, a move being lauded as a savior for a long-idle property, and one that could relieve growing pressure on takeaway markets. The 224-acre site, abutting the Union Pacific Railroad to the north and Weld County Road 33 to the west in the southernmost edge of Evans was previously slated to become the Great Western Ethanol Plant. For four years, developers had planned to crack into the growing fuel industry, but the failure of New Frontier Bank in 2009 put an end to it. The ethanol plant developers had about $3 million in loans with the bank, which were called in by the entities that bought the notes through a subsequent FDIC sale. The land, though zoned industrial, has sat vacant all these years with nary a nibble. Now, ARB Midstream, a Denver-based company formed earlier this year by longtime market analyst Adam Bedard, plans to infuse $37 million into the area, if the project is approved by the city. Bedard plans to meet building midstream demand to haul crude out of the basin with a crude rail loading facility with three loops, with the capability of handling 120-unit crude trains to take crude from the prolific Niobrara play to markets on the east and 22 ENERGY PIPELINE NOVEMBER 2014
Illustration courtesy of ARB Midstream.
Takeaway markets will get relief from new crude-rail facility
An artist rendering shows the configuration of a three-loop crude-rail loading facility that ARB Midstream has proposed to build on a 224-acre lot in south Evans. ARB Midstream means simaply, from A to B by rail.
west coasts. The facility could provide about 25 jobs to the area. “It’s a pretty exciting thing to see some activity out there,” said Evans City Manager Aden Hogan. “We’re hopeful that we’ll be successful with this group and it could attract other folks here. We don’t have a tremendous amount of industry.” Bedard met with Evans officials recently to discuss his plans for the site, what he’s calling the Niobrara Connector, or NiCon. It will be initially designed to receive crude oil from trucks, with pipe connections planned in the future. Total rail capacity is expected to be 79,000 barrels per day of crude, with initial truck unload capacity of 35,000 barrels per day. The plan is to begin some
TOTAL RAIL CAPACITY IS EXPECTED TO BE 79,000 BARRELS PER DAY OF CRUDE, WITH INITIAL TRUCK UNLOAD OF 35,000 BARRELS PER DAY
takeway with individual rail cars until the loops can be built for the unit trains. The idea of ARB Midstream is to provide another avenue for area producers to move their crude from the field that is experiencing tightening infrastructure. Analysts have said they expect the area to be “pipeline constrained” for the next five years. “Things producers want most is to get oil to market. If they get shut in and have to put rigs down, that’s bad,” Bedard said. A couple of pipelines are in the works, but Bedard said he believes he can get his project underway prior to them opening, giving producers more options. “If we can get our rail facility up and running in 12-15 months, it’ll take pipelines longer,” Bedard said. “We’ll be moving barrels before they will. Early 2016 is where the market gets really tight, and that’s when our facility will be up.” At present, only the White Cliffs pipelines moves oil to only one market, Cushing, Okla., and as production increases throughout the field, there’s less room available in the pipeline. “My view is Cushing is not the best place,” Bedard said. “We’re saying, hey you can put oil on a pipeline, if you want you can put it on rail at our facility and push it to the coasts. It offers some flexibility in the markets.” Pipelines, though cheaper, also are big
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commitments for companies, Bedard said. Most companies when they sign on to pipe out their crude, they’ve committing to seven to 10 years. For companies that ship out thousands of barrels a day, that can be quite costly on a long-term commitment. “Generally, pipelines are less expensive per barrel, but you’re signing up for the longer term. But rail can get you to better markets,” Bedard said. If rail is $3 more per barrel than pipelines, but producers can get $10 more per barrel in a different market, that’s still a nice take-home, Bedard said. “Pipelines tend to be more efficient and a little less expensive, but they get you to one place, and that’s Cushing,” Bedard said. “And our view is in Cushing, there’s a glut, which means it gets discounted.” Many producers use the White Cliffs pipeline, but also the Plains All American Pipeline Tampa offloading facility near Hudson off of Interstate 76, that was completed last year. There’s a rail loading station in Carr, but nothing in between. Rimrock Midstream and NGL Energy partners have proposed a 130,000 barrel-per-day pipeline to move oil out of Weld; the DJ Lateral has been proposed to connect to Kinder Morgan’s existing pipeline that runs from Guernsey, Wyo., to Cushing. Still, all roads lead to Cushing. Demand for moving crude out of the area is growing, and Bedard, who has been analyzing the crude market for years in Denver, knows the numbers will only go up. While oil production out of Weld County is coming out about 200,000 barrels of oil a day now, he expects that to rise to 500,000 to 700,000 barrels per day in just three and a half years. NiCon would be in the middle of the DJ Basin, and may offer producers an easier, and closer, option for offloading their crude, Bedard said. He said it won’t increase the number of trucks on the road, in fact, it could just reduce their mileage, with a closer terminal to offload. He said he’d like to get the facility up and running by mid-2016, starting in the winter with what is called manifest rail, in which a couple of crude cars are added to existing trains. At full build-out, he hopes to ship trains full of crude out every six days. “We’re looking at capturing 5 percent of total Weld County production,” Bedard said. “We’re hoping to move 35,000 barrels a day.” Bedard said he’s talked to some of his new neighbors, a vegetable farmer to the east, and a farm equipment distributor to the south. He is conducting a traffic study now, and said it is likely his company will have to make some upgrades to Weld 33, as it is only a dirt road now. Bedard said he still needs to get an air permit, and perform a fiscal impact and drainage study - about four to six more months worth of work. Overall, he said, the property is in great shape to transform it into the next crude-by-rail facility. “It’s centrally located, and it has a lot of great attributes,” Bedard said. It’ll contain two 100,000 barrel storage tanks on site, and it will have the capability to expand with two more storage tanks. “There’s enough acreage, it has a great rail spur ... and there are no weight restrictions. At the end of the day, we’ll be able to get our project to market fairly quickly.”
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BY ANNE CUMMING RICE • FOR ENERGY PIPELINE in the last decade, hydraulic fracturing has ushered in an oil and gas boom across the United States. The next boom could be what the industry calls refracking. The process stimulates a well again, leading to increased output. Earlier this year, Encana Corp. successfully refracked two horizontal wells in Louisiana’s Haynesville shale formation, after the company saw production in the area drop 27 percent from 2012 levels. Refracking, however, is nothing new to oil and gas companies that operate in the Denver-Julesburg Basin. Vertical wells in northern Colorado have been refracked since the mid-1990s, said Doug Hock, manager of media relations at Encana. “Colorado was the original refracking boom,” said Will Fleckenstein, interim head of the petroleum engineering department at the Colorado School of Mines in Golden. “It started with Patina Oil. Other companies saw their success and started refracking wells, too.” In fact, many vertical wells in northern Colorado have been fracked several times over. “Wells here have actually been refracked, tri-fracked, quad-fracked,” Hock said. “It’s one of the few basins where it’s been routinely successful because of the geology of the region.” Refracking uses tiny plastic balls, called diverting agents, pumped at high speeds into older wells. The idea is that the plastic balls go to the cracks with the least amount of pressure, bypassing cracks with greater pressure. This increases the pressure of the 26 ENERGY PIPELINE NOVEMBER 2014
Photo courtesy of Encana.
COLORADO WAS THE ORIGINAL REFRACKING BOOM
Hydraulic fracturing has led to a shale boom across the U.S., including northern Colorado. For years, vertical wells in the Wattenberg Field have been successfully fracked again - called refracking. But the jury is still out on whether refracking would be viable on horizontal wells.
entire well and leads to better output overall. The question for northern Colorado, as well as basins in other parts of the country, is whether that success will translate to horizontal wells. “Refracs have been proven successful with vertical wells for a long time,” Fleckenstein said. “But with horizontal wells, you do this multi-stage fracking. So the question becomes how do you isolate one of those stages and refrack that by itself? Or how do you refrack the whole well?”
VERTICAL WELLS IN NORTHERN COLORADO HAVE BEEN REFRACKED SINCE THE MID-1990S Producers in northern Colorado are focused on drilling horitzontal wells. Platteville-based Synergy Resources Corp. has more than 300 wells, about 90 percent of which are vertical. But the company has seen so much more success with hortizonal drilling, it’s not investing in refracking the vertical ones. “Even refracked, a vertical well struggles to produce as much as a horizontal well does,” said Craig Rasmuson, chief operating officer
of Synergy Resources. In the last 15 months, Synergy Resources has drilled more than 30 new horizontal wells, with an additional 20 to be drilled in the next few months, Rasmuson said. But with multiple fracking stages on horizontal wells, it’s hard to say whether refracking those wells will prove successful in every area of the country. Refracking vertical wells in Wyoming, for example, reduced efficacy of the wells, Hock said. Refracking horizontal wells also is tricky because horizontal drilling brings up much more oil and gas than vertical drilling does. So how much oil and gas will actually be left to make refracking necessary? Part of what makes refracking vertical wells so viable is that initial vertical production is very low, leaving so much more of the resources in the ground, Fleckenstein said. “Success depends so much on geology,” Hock said. “I heard the D-J Basin described once as the Energizer Bunny. It’s the field that just keeps going and going.” Would it keep going if horizontal wells were refracked? “That’s the $64,000 question,” Hock said. “It will require more study and evaluation.” That approach makes sense, especially given that many of the horizontal wells in northern Colorado are relatively young and still productive, Fleckenstein said. “Most companies that operate in Colorado are waiting for someone to be successful at horizontal refracking before they start doing it,” he said.
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ENERGY PROUD New group forms to educate about economic importance of oil, gas industry BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
Get involved in the conversation about Energy Proud
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28 ENERGY PIPELINE NOVEMBER 2014
the hope is to spread the word.
Not that the word of the oil and gas boom has escaped anyone’s notice in Colorado. The founders of Energy Proud, a grassroots organization formed this summer in Greeley, hope to build an understanding of the energy industry’s economic importance to the region. The group, formed by Sarah MacQuiddy, president of the Greeley Chamber of Commerce; Eric Berglund, president and CEO of Upstate Colorado Economic Development; Amy Oliver Cooke, of the Independence Institute; and Bill Jerke, of FUEL (Fostering Unity, Energizing Leadership), held its second quarterly meeting in mid-October with about 80 people in attendance. “The reason we’re here is because we’re energy proud,” Oliver Cooke told participants at the meeting. “We invite anyone to come up and see it. We’re in this fight together.” The fight is to educate people about the importance of the energy industry in Weld County and the communities within. Weld County Assessor Chris Woodruff illustrated that point with a discussion on the Weld tax situation, which shows the industry is footing 63 percent of the county tax bill this year, placing Weld only second to Denver County in assessed valuation. MacQuiddy said that the group will likely meet quarterly, and will make presentations regularly to community groups that want them. But the group also will try to come up with fun ways to celebrate the energy proud theme, such as hosting a basketball game between the University of Northern Colorado and a university in North Dakota, another prolific oil and gas producing state. The group was originally set up with the idea of combating some planned ballot measures that would severely limit drilling in the state by creating much stricter setback requirements. Since then, however, Gov. John Hickenlooper convinced ballot backers to drop their measures in favor of a balancedmembership task force coming up with a solution to the question of how close is too close for drilling in urban settings.
Energy Proud already has extended an invitation to the task force to visit some Weld oil well sites because “seeing is believing,” MacQuiddy said. “It’s still about education and awareness,” MacQuiddy said. “There are still people who truly don’t understand the industry. They hear the negative, which is often the loudest voice. We want to be proactive and positive in sharing the good that it’s done.” MacQuiddy said the group still hopes to get out the information, just from a perspective of how the bottom line is improving for so many businesses out there. The importance is evidenced in Greeley by the bulging hotels, busy restaurants and retail outlets, and the local housing market, where homes are sold before they’re even built. She tells the tale of the Boot Barn, which opened in Greeley last year and met its annual sales goals within six months. “You can’t tell me restaurants aren’t benefiting, or small retailers. It’s everywhere,” MacQuiddy said. The hope is for the word to spread. If the 80 people who attended Tuesday’s event go home and tell their family and friends what they learned, the message will spread quickly, MacQuiddy said. “That’s how this works,” she said. “It’s kind of if you start in someone’s back room, then they come to the front room, and outside, and you scream it out loud, you get to where you want to be.”
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NOVEMBER 2014 ENERGY PIPELINE 29
YOU’RE INVITED Visit Weld County and get your boots dirty BY ERIC BERGLUND • FOR ENERGY PIPELINE
Get involved in the conversation about Energy Proud
www.weldisenergyproud.com facebook.com/EnergyProud
now that gov. John Hickenlooper’s task
force on energy has begun its deliberations, we’d like to extend an invitation. Come to Weld County. Not just for a meeting, where you sit in a crowded conference room all day and listen to testimony, but come to Weld County and get your boots dirty. Come to Weld County, the heart of Colorado’s energy boom, and go on a rig tour, visit our bustling restaurants and stores and see how energy companies and Coloradans can co-exist to develop our natural resources, power our nation and become energy independent. If you come to Weld County with an open mind, you will find many success stories ≠stories of workers with diverse backgrounds getting good-paying jobs to provide for their families and build their American dream. As members of Energy Proud, we get it. We live here and work here, and we support the responsible development of our natural resources because we see the many benefits of the industry first-hand. For example, Weld County has enjoyed the biggest percentage job gain among 339 of the largest U.S. counties over a one-year period ending March 31, according to a story in the Greeley Tribune. Our employment grew by 7.5 percent over the 12-month period - more than quadruple the national gain of 1.7 percent, according to the federal government’s quarterly Employment and Wages report. Weld County’s natural resources and mining jobs soared 24.1 percent over the year, with the county adding 2,145 jobs in that category. We’re fueling more than cars; we’re fueling the economy and our nation’s future. A new study from Duke University also shows that our state’s oil and gas industry is having a very positive impact on our public coffers. “The study only reinforces what we already knew: local governments in Colorado are getting big boosts from fracking,” Karen Crummy, director of communications for the nonprofit group, Protecting Colorado’s Environment,
Economy and Energy Independence, was quoted in the Greeley Tribune. “Weld County’s government is collecting millions from oil and gas development through property taxes, leases and severance taxes. This money helps make schools better, roads safer and law enforcement stronger.” It’s so true. And we see it every day. Chris Woodruff, Weld County assessor, reported recently that the oil and gas industry is now contributing close to 63 percent of the county’s assessed value. The oil and gas industry has been such a gift to Weld County’s coffers that our county commissioners are now even considering lowering the mill levy next year. When was the last time a politician lowered your taxes? You can thank the hard-working men and women who are harnessing our natural resources for that. We at Energy Proud feel like there’s such a positive story to tell the members of the task force, if they choose to hear it. So please, task force members, take a look around Weld County. We’re energy proud, and we’re not afraid to show it. Eric Berglund is a member of Energy Proud, a grassroots group of diverse community members from Weld County who support local energy development that is safe, affordable, reliable and clean.
Eric Berglund 30 ENERGY PIPELINE NOVEMBER 2014
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GOOD IDEA
Talk with a financial planner.
BAD IDEA
I didn’t cross the Delaware to be stuffed under a mattress.
MANAGING NEWFOUND OIL WEALTH
RIFE WITH
COMPLEXITIES, RESPONSIBILITY BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
34 ENERGY PIPELINE NOVEMBER 2014
GOOD IDEA
Make a smart investment.
BAD IDEA
Paying in all pennies for any sort of business transaction.
Not unlike the lottery, the sudden wealth that comes with oil and gas development could easily burn a hole in some previously cash-deprived pockets. That’s not so much the story in Weld County, where oil and gas exploration and drilling has created some multi-millionaires in the last four years. Not all buy mansions and move to Beverly Hills. “I don’t see a change in their personal spending habits, and I don’t see a change in personalities,” said Bruce Hemmings, senior vice president of wealth management at the Centerra Morgan Stanley office in Loveland. “No one’s running out to buy a Corvette that I’ve come across. Maybe more updated equipment or the farm next door.” Some call it mailbox income, and many longtime property owners in the county, who’ve lived the ups and downs of agriculture through the decades, are reinvesting in the family farms, donating to charities, even creating long-standing endowments that will keep the money flowing to their cause of choice for years. Almost monthly, new people are walking into Hemmings’ office with some fat checks, and plans for
years of returns. For some, it’s deer in headlights. “You feel like it’s their turn,” Hemmings said. “For many, many years, for agriculture and people involved in agriculture, it was a bit of a struggle. You kinda feel like it’s happening to the right people. It may seem like they’re wealthy, but a lot of times, their background is out of hard work. There’s definitely a group of individuals who are seeing a dramatic change in their lives, maybe not their lifestyles.” Jeff Bedingfield, an attorney with Otis, Bedingfield and Peters, who helps his clients negotiate with oil and gas companies on leases and other issues, as well as finding ways to manage their proceeds, said he’s seen a lot of new money come to old farming families - who own the land and the mineral rights to their property. The money is chiefly coming to longtime farming families in Weld because that’s where the drilling boom in Colorado is happening. “A lot of this wealth is being generated in the ag community and it’s significant that most would never
NOVEMBER 2014 ENERGY PIPELINE 35
GOOD IDEA
Donate money to a good cause.
BAD IDEA
Selfishly spending your money, leaving behind a suspect legacy.
have imagined receiving,” Bedingfield said. “They worked hard, year in and year out and they find this wealth somewhat overwhelming and concerning about not only their lives but the next generation.” He and Hemmings say many who come into the mailbox money have a different take on newfound wealth. Some look for ways to reinvent their operations and reinvest in their life’s work; others want to build a family legacy or keep longstanding ones going. Others worry about such wealth killing work ethics. “There’s clearly a lot of discussion in the farming community about oil and gas and what it means and how they’re going to manage it,” Bedingfield said.
Saving the family farm Many farming families who struggled for years have found a savior in oil and gas. Junior, who maybe swore off farming because of the difficulties, is starting to come back. The family legacies are getting new life, Hemmings said. “Where before it was going to be hard to make the family farm continue to work, it appears some people we’re talking with are redirecting that line of thought, ‘Maybe we can do the family farm.’ “I’ve actually seen some families where sons are going back in and joining the family farm, and I think it has something to do with the available cash flow to help fund and offset the costs of agriculture, and make it a doable business again.” But one tangible concern also is coming with the windfalls on the farms.
36 ENERGY PIPELINE NOVEMBER 2014
“I deal more with the concerns of leaving too much wealth to the next generations in a way that would hurt their work ethic,” Bedingfield said.
Finding a good use for the money For longtime farmer and rancher Steve Wells, the extra money for his cooperation with oil and gas has helped him beef up his farms, and pay his 70-plus employees a little better and provide good insurance. But it also makes for easy donations to his favorite causes, such as the Weld Food Bank, the Guadalupe Shelter, A Woman’s Place in Greeley, and the Humane Society - his wife’s favorite charity. Last year, that total came to well over $1 million, he said. “I think this year, we will be over that $2 million mark in donations,” said Wells, who owns 32,000 acres east of Lucerne. Of course, most of the initial windfall went back into making his farm work better, adding pivot irrigation and new farm equipment. “Other than a couple new pickups and two new Polaris Rangers, what the government didn’t take, I reinvested back in,” Wells said. One of the big concerns is the government’s take. If someone comes into $1 million, the tax bill could be quite burdensome. “More than anything, people are trying to find ways to hang onto this newfound wealth,” Bedingfield said. Next year, a married couple will be able to pass
GOOD IDEA
Passing money on to the next generation.
BAD IDEA
Playing with lightning for any other reason than in the name of science.
on roughly $11 million without estate or gift tax, Bedingfield said. But that could be small potatoes to some out there. “We’re seeing a lot of wealth in far excess of that, so there are people trying to find ways to get the next generation involved now to minimize gift or estate tax, which means shifting some assets.” The calls have been coming into the Community Foundation serving Greeley and Weld County. President Judy Knapp has found herself explaining options to a couple of handfuls of residents coming into oil and gas money of late. Those are the people with no families to leave anything to, or who just want to do some good. “We’ve had a lot of people talking more about planning and giving out of their oil and gas money. They’re not ready to do anything now, but as a part of their estate plan, they’re putting things together,” Knapp said. “Some of them are just not sure what to do with it. A lot are looking to leave some kind of legacy, others want to leave a gift.” Those who set up a Donor-Advised Fund, she said, can escape some of the taxes of holding onto such money. And, it allows the giver to choose where the money goes for the duration of the fund. Already she’s helped a resident set up a scholarship fund for a Greeley Central High School student. That donor already had two kids. “You can only gift so much money a year to children without it being taxed,” Knapp said. “They’re bringing in so much money they need to do something with it to help them tax-wise.”
Plan ahead For those who are still wondering what to do with the money - the bonus checks that have already come and the promise of royalties for years to come - it’s never too soon to start planning, Hemmings said. Sure, they can stuff their mattresses, or park it, but it’s doing no good. “I think sometimes, people wait too long to start the planning process,” Hemmings said. “It’s a process you really need to invest a year in, so go slow.” And while the temptation to rely on your neighbors and friends for advice are high - who really wants to pay those professionals, right? - it may not be wise. Hemmings, who sees himself as a quarterback helping clients manage money that’s already been discussed and hashed out with their accountant and lawyer, said it’s the same as retirement planning. People first need to decide what their goals are, and then get educated. And visit their professionals. “The number one thing I think people need to do is understand if this comes to pass, what they want their goals to be. What do they want to try to accomplish?” Hemmings said. “For the family, it could be to expand the farm, continue farming. It may not be to invest a single dime outside the farm. It’s significant enough in most cases you could pay off the car and the credit cards.” Said Bedingfield: “If they plan it properly, they can preserve that and pass it on to a number of generations to come.”
NOVEMBER 2014 ENERGY PIPELINE 37
BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
The bustling oil field has brought many benefits to the area, but with it comes a bit of the dark side of alcohol, drugs and crime. The scene has played out throughout the oil fields across the country with increased trade in meth, marijuana and even heroin, and bits and pieces are beginning to rear their ugly heads in Weld County. Drug arrests are up this year over last, and Greeley police are often getting tips on meth trade. But local oil and gas companies have taken a zero-tolerance approach to drugs in the workplace, and will randomly test employees at the mere hint of the scourge near the work site. “I was born and raised in Rock Springs, Wyo., and back when the oil field started, it was a pretty rough community. It was very rough with drugs and alcohol and prostitution,” said Korby Bracken, health and safety director for Anadarko Petroleum, one of the top two oil and gas exploration and production companies in Weld County. “Now, I think just who we are, that’s changed. Drugs are especially not as tolerated as has been in the past. Tolerance is extremely small. It’s cleaned up an awful lot.” Still, in a workforce that’s building every year, there are some clues that problems may be bubbling to the surface. The Weld County Sheriff’s Office reports that drug arrests are up slightly from last year. Through September this year, there were 527 arrests on drug charges, compared to 470 last year at the same time, a 12 percent increase. But those numbers don’t specify the offender’s line of work. 38 ENERGY PIPELINE NOVEMBER 2014
Photos by Josh Polson • jpolson@greeleytribune.com
COMPANIES WORK TO PREVENT THE PLAGUE OF DRUGS IN THE OIL PATCH
Stacy Marting and Chuck Marting stand at the door to their office in Fort Morgan. Chuck and Stacy run a mobile drug testing company that assists a number of oil and gas companies in Weld County.
“There has been a spike in how many of those people are connected to the industry,” said Weld County Sheriff Office Bureau Chief Steve Reams. “It doesn’t mean they’re all there on drug charges. ... We probably have a higher than normal occurrence of people coming to jail connected to the industry.” Reams said while companies are vigilant in their efforts to screen for drugs, the perception of bad actors is always there. “There’s always that nexus that’s made between oil and gas workers being on the edge of criminal activity,” Reams said. Any online search will show a growing concern of meth and drugs in the oil patch, from south Texas to North Dakota, where federal prosecutions in the western half of the state nearly tripled from 2009 to 2013, according to an Associated Press report. While thousands flocked to North Dakota to follow the money and good oilfield work in the Bakken, the drugs and violence followed. A North Dakota State University study in 2013 looked at police calls in Williston, where much of the oil field activity is, finding that calls for service quadrupled to almost 16,000 from 2005 to 2011. In one city, about 30 miles from Williston, calls went up from 46 in 2006 to almost 4,000 five years later, according to the Associated Press report. Greeley police say they have some undercover operations ongoing to flush
out some illegal trade, on which they’ve received some tips. “We’ve seen a bump in the amount of use of illegal meth tied to the oil and gas industry because of people who need to work long shifts,” said Jerry Garner, Greeley’s police chief.
ANY ONLINE SEARCH WILL SHOW A GROWING CONCERN OF METH AND DRUGS IN THE OIL PATCH, FROM SOUTH TEXAS TO NORTH DAKOTA Officials can’t tie drugs or crime to the increasing oil and gas population, which now is at its highest in Weld County. According to state Department of Labor and Employment statistics, the “mining, logging and construction” industry in Weld is larger than it’s ever been with a workforce 17,600 strong, or 17.6 percent of the total workforce. That’s a dramatic change since 1990, when the industry was 7.2 percent of the total workforce. Garner said with any population
increase, there’s bound to be more of any crime, but he said the numbers are growing, and he expects more. “If we have a lot more oil and gas folks drawn to this area, I’d anticipate the problem will get bigger,” Garner said. “In fairness, when you have more people added to an area, no matter what they do for a living, when the population is bigger, you’ll have more of everything.” Chuck Marting, a former Thornton police officer who runs Colorado Mobile Drug Testing with his wife out of their Fort Morgan office, said meth is popping up in the random screens he’s paid to conduct at the drop of a hat. But so are prescription drugs. “There’s not too much of a drug problem out there,” Marting said. But in the instances that do reveal drug issues, companies show little tolerance. “A lot of these guys are working 12 hours or more and Red Bull is only going to get you so far,” Marting said. “There will be some guys doing meth. On one site, over half the crew came back positive. They’re gone. When you have an operation that size, you have to shut down.” Operational safety is such an intensive concern that companies employ massive drug screening efforts. They will pre-screen for drugs with tests that can go back as far as 90 days. At the mere hint of a drug issue on site, they’ll shut down an entire operation, lock the gates and subject everyone on site to random testing. It’s not just a trend. Drug testing and prevention is standard in these industries that put people to work in safety-sensitive jobs. “I do extensive work for companies in the energy field, and I think they’re among the leaders in America in terms of sustance abuse prevention and efforts,” said Mark deBernardo, executive director for the Institute for a Drug-free Workplace and a senior partner with Jackson Lewis, a management-side employment law law firm in Reston, Va., near Washington D.C. “In the energy fields, you’ll see an intolerance NOVEMBER 2014 ENERGY PIPELINE 39
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Working with oil/gas companies since 2007
Chuck Marting demonstrates how they take saliva samples in the field while at his office in Fort Morgan. Marting is able to administer these tests and get results within minutes.
of drug abuse and the reason is because there is no margin for error. It’s not that thought of, ‘Wouldn’t it be nice if we had a drug-free workforce.’ No it’s imperative we have one, and since it’s imperative, you’re going to have programs that are aggressive in preventing drug abuse and the inclusion of drug abusers in safety-sentive positions.” Statistically, drug use has a way of running down a workplace, deBernardo said. Drug users are one-third less productive, incur 300 percent higher health care costs, are almost four times more likely to be involved in an accident in the workdplace, which affects attendance or performance. They are five times more likely to be involved in accident off the job, which also affects attendance, deBernardo said. “Nobody is retreating from drug testing,” deBernardo said. “Once they start, they see the benefits in terms of reduced accidents, absenteeism, turnover and better performance.” Anadarko requires random testing quarterly, and employees have 30 minutes to get tested when their number is up, said Bracken. “Random drug screens are just like rolling the dice,” Bracken said. “If your number comes up, you go. Sometimes, it’s twice in a row, sometimes it’ll be never.... If they do not follow through and go through with the testing, that’s considered a positive,” Bracken said. “And then they get a call from HR.” Marting barely keeps a schedule, but he is often on the run testing employees involved in accidents, or doing the random quarterly testing. Often those random tests will involve hundreds of workers at once. “We just went out the other night and did a collection in New Raymer, and did over 400 tests. ... We’re going crazy with collections,” Marting said For every 100 employees, deBernardo said, on average, 11 of them will have used drugs in the previous 30 days. “That doesn’t mean 11 percent are addicts, but they used drugs in last 30 days,” deBernardo said. Colorado’s newly passed marijuana laws have misguided some oil and gas wannabes, however. Since consumption of the drug is now legal in the state, a host of workers from out of state came to Colorado to work in the industry. “We had some guys come in from out of state and all tested positive for marijuana,” Marting said. “They thought it was legal. ... A lot of people worry about meth, but we’re seeing marijuana and we’re seeing a lot more prescription drug abuse than anything else. Pain pills are huge.” And for those who can no longer get prescriptions, some have turned to heroin, a growing problem throughout the country, said Garner of the Greeley police.
“Given the detrimental impacts of substance abuse in the workplace employers already had and have religion when it comes to preventing substance abuse.”
Eliminate Downtime & Increase Production!
MARK DEBERNARDO, Executive Director, Institue for a Drug-free Workplace
“Some of the logic behind that is people get addicted to painkillers like Oxycotin and can’t get it anymore and find heroin is much cheaper,” Garner said. “We’ve seen an increase in Weld County, a definite increase in heroin.” Unless there’s a valid prescription, there’s now little tolerance for any drugs. Most companies will fire employees on the spot if they test positive. Halliburton and Encana are two such companies that will terminate instantly. Both do pre-employment screening, reasonable suspicion, postincident and random drug testing. “Halliburton sometimes conducts unit sweeps where all employees at a location are tested,” reported Susie McMichael, spokeswoman for Halliburton. Some give them the opportunity to go through the company’s employee assistance program to clean up, go through a program, and return to their jobs. At Halliburton, passing such programs is mandatory for anyone who’s tested positive to return to the job. In addition to the various screenings, employees at Encana must take drug awareness training, which includes information about prohibited substances, as well as prescription drugs and being fit for duty. “I think employees value their jobs and our safety culture,” said Dyan Piscopo, occupational health analyst for Encana. “Also, their tests go back 90 days, which provides another incentive to avoid illegal drugs.” Marting said he often will come across employees who try to cheat the tests, such as strapping urine to their legs, or shaving their heads to avoid hair follicle testing. He plucks an armpit hair instead, he said. In some cases, companies will opt for fingernail testing, which can go back six months into an employee’s usage history. “You can’t beat the test,” Marting said. “A lot of these guys know, when we show up, it’s part of their job. The ones who get upset, they’re the ones who test positive.” Overall, Marting said he’s not seen a huge swath of drug use in the Wattenberg, even with meth. “If it was a huge issue, you’d be seeing a lot of turnover in the oil field jobs,” Marting said. “Frankly, they wouldn’t be able to keep up with the demands they’re asking if they were all coming back positive. ... Drug use is taken very seriously and dealt with very aggressively. If they were turning the other cheek and kicking it under the trailer, it would be a huge concern.” Bracken at Anadarko said he feels the industry polices itself well, and contractors follow company guidelines. “Everyone knows our policy,” Bracken said. “In all, we’ve been very fortunate that the contractors or the employees we have adhere to our policy and standards.” Added deBernardo: “Given the detrimental impacts of substance abuse in the workplace, employers already had and have religion when it comes to preventing substance abuse. The potential liabilities, legal and financial, are enormous if you don’t.”
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ANOTHER BOOM Oil-gas industry talking another oil boom in the state of Wyoming BY GREG JOHNSON • GILLETTE, WYO. (AP)
dan coolidge has been on this ride before.
“We have ups, we have downs. It all cycles through then comes back again,” said Coolidge, a Campbell County commissioner and third-generation oil and gas producer. “What’s happening with oil now I saw coming.” How exactly to describe what’s happening with oil now in the Powder River Basin and across Wyoming is subjective. It’s hard to go a day around Gillette without hearing someone say oil here is “booming.” After nearly a quarter century of continual decline in oil production, Coolidge is hesitant to utter the “B’’ word but not by much. “You know, that’s a fine line,” he said. “Are we booming? I think we’re in the 42 ENERGY PIPELINE NOVEMBER 2014
early stages of a boom. Town is certainly busy, all the hotel rooms are booked, rental vacancy rates are down. So yeah, maybe we’re in it.” Coolidge and his family have ridden the energy roller coaster before, first with oil in the late 1970s and mid-1 980s, then again more recently with the coal-bed methane boom. This time, he said he thinks Campbell County and the state are in for a long and exciting ride. Aside from the minuscule 0.7 percent vacancy rate for apartments in Gillette, hotels packed with oil-field workers and the daily convoys of trucks crisscrossing southern Campbell and northern Converse counties, the proof is in the numbers, said Bruce Hinchey, president of the Petroleum Association of Wyoming.
And the numbers are convincing. Oil production topped out in 1985 at nearly 130.5 million barrels statewide with 26.8 million of those coming from Campbell County - the second highest on record with the Wyoming Oil and Gas Conservation Commission. Production then went on a 24-year downward spiral. Since hitting an all-time low in 2009 - the county produced 7.4 million barrels that year - production has rebounded exponentially. In 2013, production in the county was up to more than 13 mi llion barrels - a 175 percent increase in four years - and is on pace to fill more than 18 million barrels this year. Campbell County also has solidified itself as the clear leader in oil for the
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Cowboy State, accounting for 20.5 percent of Wyoming’s overall production in 2013 and nearly 25 percent for 2014 through July. Those numbers “are certainly good for the county, good for the state,” Hinchey said. “The hotels are full, the restaurants are full, the industry is providing good paying jobs. It’s hard work, but they’re high-paying jobs, which means there’s a lot of spending capital.” Hinchey is one who’s still hesitant to say “boom” out loud. “It’s definitely on a rebound,” he said. “Is it a boom yet? That depends on your definition of what a boom is. I’ll say this: things are looking much better. . The more we produce the less we have to import. We used to import about 60 percent of our (nation’s) oil needs and now we’re at about 40 percent. I’d like to see that go down to about zero.” With brisk oil production elsewhere across the United States in places like Oklahoma, Texas and Louisiana - along with the breakneck production in the Bakken in North Dakota, which recently topped the 1.1 million barrels per day mark - 2013 was notable for being the first time since 1995 that the United States produced more oil that it imported.
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While nobody predicts Wyoming production will ever approach what the Bakken has become, many in the industry believe the upturn in production will be sustainable for decades. “What we’re tapping into here are significant reserves,” Coolidge said. “These wells will have a 20-year life or more, whereas the coal-bed methane wells (of the most recent local energy boom) had maybe a twoyear life.” The major formations that make up the Powder River Basin - Turner, Frontier, Parkman and Niobrara - are all producing oil, and Coolidge said their potential hasn’t been tapped. “Companies are able to drill out farther and stay in these formations,” he said, adding that southern Campbell and northern Converse counties represent “the sweet spot.” “What they’re doing now is drilling the sweet spots, then stepping out and stepping out. It hasn’t even been delineated yet where the boundaries are,” he said. There are two main reasons oil is surging again in Wyoming, said Mark Watson, supervisor for the Wyoming Oil and Gas
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Conservation Commission. One is the tanking of the coal-bed methane market as prices plummeted. The other is technology. “The major difference between now and previous booms concerns new technology,” he said. “Horizontal drilling and high volume fracks are two major reasons we are seeing new activity in previously discovered areas.”
“These wells will have a 20-year life or more, whereas the coal-bed methane wells had maybe a two-year life.” DAN COOLIDGE, a Campbell County commissioner (Wyoming)
Although hydraulic fracturing - or fracking has been around since 1949, it’s only been the last couple of years that technology has begun to help producers realize the extent of that fracking and extract oil, Coolidge said.
New equipment and techniques allow horizontal drilling in shallow reserves that weren’t accessible before. “Now they’re able to go out farther and stay in these formations,” he said. “We’ve drilled through them for years, but could never get the oil out. You could drill through a formation vertically, but it may only be 5 feet deep. But if you drill horizontally for 12,000 feet, you can imagine how much of the reservoir you’re accessing.” The technology has not only revived oil production, it’s evolved it. This recent oil renaissance is different from previous booms in that nearly all the drilling activity is for horizontal wells. Also, hydraulic fracturing technology has developed to a point where it can extract previously unattainable shallow oil pockets from already existing wells. One of the most telling numbers to show this evolution is comparing historic to current production numbers and amount of oil produced per well. Wyoming’s highest yearly production of oil on record was 1978, when nearly 136 million barrels were produced. Done mostly through vertical drilling, that oil was accessed through 10,583 wells, an average of 12,727 barrels per well. Last year, 63.2 million barrels were
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produced with 34,418 wells, an average of 1,831 barrels per well. Those advances in technology and confidence in the sustainability of the basin’s oil reserves has progressed to the point of attracting some of the country’s major energy producers. Last month, Anschutz Exploration Corp. and Anschutz Oil Co. announced a deal where it traded about 8,000 acres of land in Colorado for about 30,000 acres in the Powder River Basin. The trade was a deliberate play into the area’s oil production potential, said Joseph DeDominic, Anschutz president and COO.
That’s an opinion shared by Oklahomabased Devon Energy, already one of the basin’s largest oil producers. In its second-quarter earnings call released in August, Devon lays out its intention to expand production even more in the Parkman formation. “We expect to add a fourth rig later this year and more aggressively develop the Parkman focus area in the second half of 2014 and 2015,” the report says. Denbury Resources Inc. is another name hoping to expand in Campbell County, said Ross Campbell, the company’s manager of investor relations and corporate communications.
equipment running for its customers, vice president Bryan Lass said. He has more business than he can handle. “We’ve seen booms and busts and more booms and more busts,” he said. “I can tell you that now we’re busy. We have more work now than we can get to. We’re at 100 percent utilization. All the equipment and personnel I have that’s capable of working is, and it’s been like that probably for the last six months.” Precision has 12 service rigs - seven in Gillette and five in North Dakota - and Lass said he can tell the health of either the local oil or gas industries by how busy he is.
While producers like Anschutz, Devon and Denbury continue to make plays to pull more oil from below Campbell County, the impending boom is also good news for local businesses that support the industry. “We see a lot of potential in that basin,” he said. “It’s geologically attractive, there are a lot of objectives and horizons to target. It’s a big area, a lot of vertical stacked horizons and it’s oil rich.” DeDominic also said he likes doing business in Wyoming, a state he said is “friendly to the industry,” and he’s committed to “putting money and resources in the basin.” While Anschutz has a target number of barrels it expects to pump out of the basin, DeDominic wouldn’t say what that is. What he did say is that the company sees the recent upturn in Wyoming oil as more than a blip on the radar. “Our view is that it’s early in the development,” he said. “I don’t know personally if I’d call it a boom. It’s not that insane and it’s not like the ‘80s was for a period of time, but it’s definitely an uptick in activity. I think you’ll see that continue to grow and I think it’s sustainable.’ 48 ENERGY PIPELINE NOVEMBER 2014
“We see the increasing opportunity to build out, particularly in Wyoming and Montana and up in that area,” he said. “We will continue to invest in Wyoming in the future, and specifically in Campbell County.” As long as oil prices remain over $75-$80 a barrel, the commodity will be attractive to producers, Coolidge and Watson said. “Oil production will continue to increase over the next two or three years as long as the price of oil stays about $80,” Watson said. “The price has stabilized and the techniques they have now are pretty good, so I think you’re going to see continued drilling,” Hinchey added. While producers like Anschutz, Devon and Denbury continue to make plays to pull more oil from below Campbell County, the impending boom also is good news for local businesses that support the industry. For more than 30 years, Precision Well Service has helped keep wells and
“Right now, the demand for service is high, which i s indicative of a strong market,” he said. “We’re seeing the same thing with the competition. They’re just as busy as we are.” While an oil boom will always be welcome for Coolidge, the commissioner said this one is beginning at an pportune time for Campbell County and the state. With rail backlogs limiting the amount of coal that can be shipped and proposed EPA regulations on CO2 emissions from power plants, coal revenues in the nation’s largest coal producing area have waned over recent years. That oil production has surged at the same time has been fortunate for the county, Coolidge said. That the county could lose revenue from coal taxes but make that up in increase oil tax collections could be called fate by some, a happy coincidence by others.
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News Briefs More than 30,000 sign Vital for Colorado’s pledge DENVER - Vital for Colorado has collected more than 30,000 pledges from residents who support Colorado’s oil and gas industry. The pledge outlines seven principles regarding energy development and hydraulic fracturing that are paramount to a vibrant and successful oil and natural gas industry in Colorado, including recognition that the state already has some of the toughest rules in the nation and that hydraulic fracturing is a safe, transformational technology, according to a news release. “The sheer number of Coloradans who have stepped forward to say they not only support Colorado’s oil and gas industry, but that they also support our existing comprehensive, statewide approach to regulating the industry should send a clear signal to the governor’s task force,” Peter Moore, a Denver lawyer and chairman of the Vital for Colorado board of directors, said in the release. “This tremendous show of support tells us that more and more Coloradans, once they take time to learn the issues, don’t want a patchwork of regulations, or these illegal energy bans that have been popping up in cities across the state,” Moore added. “They support responsible oil and gas development, and all of the benefits that brings to this state.” The pledge has been signed by thousands of Colorado citizens, companies, associations and leading business groups, such as the Denver Metro Chamber of Commerce, Colorado Concern, and Colorado Cattlemen’s Association. For more information on Vital, and to view the pledge, go to www.vitalforcolorado.com. - Staff Reports
Denver Bronco endorses energy development in new radio ad Colorado’s energy industry has gained some support from a popular Denver Bronco, who also grew up in an oil family. Denver Broncos’ defensive tackle Mitch Unrein pledged his support in a radio ad in which he talks about the oil and natural gas industry’s positive impact not only on Colorado, but his own family. One of six children, Unrein and three of his brothers started out as roughnecks - an important position on the floor of a drilling rig, handling specialized drilling equipment and pressure controls - just as their father Mike did 48 years earlier. “Before I was out on the gridiron, I worked in the oilfields. In fact, almost everybody in my family has worked in oil and gas and still does. I know firsthand the importance of fracking and the economic benefits it brings to Colorado families,” Unrein said in the radio spot. His family is from Eaton. Weld County is home to 85 percent of Colorado’s oil production and a large employment base for the industry. While Unrein is now on the playing field, his three brothers have worked their way up the ladder in the oil and natural gas industry. His father Mike went from earning $1.80 an hour in 1966 to working his way up to project manager. “I’m proud to be a Coloradan for responsible energy development,” Unrein says in the ad. He urges listeners to go to StudyFracking.com, where they can learn how advancements in horizontal drilling and fracking technology have put the U.S. on a path toward greater energy security and independence. - Staff Reports
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News Briefs
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to be drilled as extended-reach laterals, or having lateral well lengths up to two miles. The company expects these wells, in which it has a 70 percent working interest, to begin producing by February 2015. Several more wells are planned. Synergy’s production from its operated horizontal wells is meeting the company’s objectives, despite persistent high line pressures and other midstream constraints in parts of the Wattenberg Field, the release stated.
Energy Pipeline is a monthly magazine dedicated to covering the rapidly expanding oil and gas industry in Northern Colorado and surrounding states. Energy Pipeline will focus on the business aspects of this industry, as well as the many people who make it all work. Stay up to date on the latest news on growth and expansion as companies continue to work to make the most of the rich oilfields in this region. Learn about the latest in technology that is lowering drilling costs. Keep informed on new trends and discoveries. Read about the key players in this industry and what they have to say about future prospects.
The company also stated in the release that it has accelerated permitting of 22 wells in Greeley that will consist entirely of 9,000 foot extended-reach lateral wells, the release stated. - Staff Reports
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Noble Energy updates planned Falkland Islands drilling Noble Energy, Inc. plans to resume exploration drilling on the 10 million acres it has in the Falkland Islands in 2015. The company’s initial operated prospect has been named Humpback, according to a news release. The Humpback is just one of many planned drilling areas that Noble believes collectively contain 1 billion barrels of oil equivalent. Drilling is expected to begin mid-2015, with a second exploration well planned later in the year. Noble Energy operates its licenses offshore the Falkland Islands with a 35 percent working interest, the release stated. “We are excited about our upcoming exploration program in the Falkland Islands, where we will be testing a basin with multibillion barrel potential,” said Mike Putnam, Noble Energy’s vice president of exploration, in the release. “Our recent 3D seismic acquisition has confirmed our initial thoughts that the basin contains prospects of material size with ample follow on opportunities. The Falklands provides an opportunity to create another core area for Noble Energy through organic exploration success.”
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Turbine Technology Services broadens parts and services, appoints new VP Orlando, Fla.-based Turbine Technology Services’ transactional parts and service business - which does business in Fort Lupton - has added Pat Begley to lead growth in the company’s expanded parts and services. Begley has been appointed vice president of parts and services to manage and build this business initiative. Previously he served as, vice president of International Business Development for Europe, Africa, and the Middle East. Begley brings a network of global partners from his 32 years in both the technical and sales and business sides of the gas turbine industry, according to a news release. TTS will serve the industry from its Orlando office as a supplier of components and services, focusing initially on providing gas turbine parts to owners of GE heavy industrial gas turbines in both the U.S. and international markets. On the services side, TTS will continue to provide its traditional DLN tuning and control system support services on GE unit types and seeks to expand these services to other units and platforms around the world, the release stated.
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Encana announces Texas acquisition in Permian Encana Corporation has acquired all shares of Texasbased Athlon Energy Inc. for $5.93 billion. The acquisition will add Athlon’s land position of approximately 140,000 net acres focused solely in the heart of the oil-rich Midland Basin in west Texas to Encana’s portfolio, giving the company a seventh growth area.
FMC Technologies Completion Services, Inc (formally Pure Energy) is continually expanding operations in the US. We are currently seeking qualified candidates for the following positions out of our Colorado operations: Frac Flowback Supervisors (Brighton location) - 2+ years experience in production testing/frac flowback operations required, supervisory experience required, self starter, handle multiple projects, excellent communication skills, willing to work a flexible rotational schedule 3 weeks on, 1 week off with work in other states, strong work ethic. Frac Flowback Operators (Brighton location) - entry level, Production Testing/Flow Back experience a plus, must be willing to work a flexible rotational schedule, strong work ethic - 3 weeks on, 1 week off, 12 hour shifts
“This transformative acquisition further accelerates our strategy and provides us with a prime position in what is widely acknowledged as one of North America’s top oil plays,” said Doug Suttles, Encana CEO and president in a news release. “The Athlon team has built an exceptional asset with massive running room that includes greater than 10 years of drilling inventory with up to 11 potential productive horizons of high-margin liquids.” Encana expects that the transaction will add current production of about 30,000 barrels of oil equivalent per day. Encana sees the potential for approximately 5,000 horizontal well locations with potential recoverable resource of approximately 3 billion barrels of oil equivalent, the release stated. Next year, Encana intends to invest at least $1 billion in the play and ramp up to at least seven horizontal rigs by year-end 2015, making the Permian an important part of Encana’s portfolio.
Wireline Supervisors ( Ft. Lupton location) - 4+ years logging and perforating experience, supervisory experience. Responsible for Wireline unit, location, personnel, management, etc. of Wireline segment. Wireline Operators (Ft. Lupton location) - entry level but previous logging and perforating experience a plus, must be willing to work a flexible schedule, strong work ethic, CDL and crane operations experience preferred Please visit our website to apply at: www.pure-energy.us FMC Technologies Completion Services Inc. offers full benefits beginning the first day of employment, competitive salary, set work schedule, and opportunity for advancement.
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Following this oil-rich acquisition, Encana now expects to achieve its initial 2017 target to reach 75 percent of operating cash flow from liquids production in 2015, marking a major strategic milestone. In the past year, the company has significantly realigned its portfolio through divestitures of natural gas-weighted assets and the acquisition and development of higher-margin oil and natural gas liquids (NGLs) opportunities. “We believe this acquisition, when combined with other recent portfolio changes, is highly accretive to our longterm cash flow per share projections and our goal of sustainably growing shareholder value,” Suttles said in the release. “Our portfolio now aligns with our vision of being a leading North American resource play company. Our growth areas now include the top two resource plays in Canada, the Montney and Duvernay, and the top two resource plays in the United States, the Eagle Ford and the Permian.”
INNOVATORS IN SEPARATION AND EMISSION CONTROL Combining the best products with experienced service, Trinity Energy Solutions, Inc. is the premiere end to end supplier of High Efficiency Production and Emission Control Separators, Traditional Separators, Vapor Recovery and Flash Gas Compressors, Pigging Valves, Combustion Equipment, Valves, and more industry leading products for you to turn to for your needs in the oilfield and natural gas field.
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MAKING HOLE A look back at the origins of oil and gas BY BRUCE WELLS • AMERICAN OIL & GAS HISTORICAL SOCIETY
“Making Hole” is a term for drilling coined long before oil or natural gas were anything more than flammable curiosities. “DAD” JOINER DISCOVERS GIANT OILFIELD With a crowd of more than 4,000 landowners, leaseholders, stockholders, creditors and spectators watching, Daisy Bradford No. 3 erupted near Kilgore, Texas, on Oct. 3, 1930. Two months later, another wildcat well struck oil about 10 miles to the north. A third well even farther north brought another large oil discovery. At first, the great distance between the three wells suggested they were separate fields. Petroleum geologists were stunned when it became clear these East Texas discoveries came from the same oil-producing formation (the Woodbine) that encompassed more than 140,000 acres. To the delight of many small, struggling farmers who owned the land, the wells were part of one giant oilfield. “All of East Texas waited expectantly while Columbus ‘Dad’ Joiner inched his way toward oil,” notes Jack Elder in his book, The Glory Days. “Thousands crowded their way to the site of Daisy
A 1930 wildcat well drilled by Columbus “Dad” Joiner’s discovered the East Texas oilfield, which remains the largest in the lower-48 states. 58 ENERGY PIPELINE NOVEMBER 2014
Bradford No. 3, hoping to be there when and if oil gushed from the well to wash away the misery of the Great Depression.” By the summer of 1931, about 1,200 Rusk County oil wells produced 900,000 barrels of oil per day. Among the successful oilmen was H.L. Hunt, whose purchase of the Daisy Bradford No. 3 provided a financial base for founding Hunt Oil Company. The East Texas Oil Museum in Kilgore preserves the heritage of the “Black Giant,” which today has yielded more than 5 billion barrels - and is still producing. Read more in “H.L Hunt and the East Texas Oilfield” at www.aoghs.org.
“ROARING RANGER” FUELS WWI VICTORY As early as 1913, several newly discovered North Texas oilfields were producing almost half of all the oil in the state. Refineries began to appear in Wichita Falls in 1915 when Wichita County alone reported 1,025 producing wells. However, farther south wildcatters pursued oil with little success since 1904. That changed on Oct. 17, 1917, when the J.H. McCleskey No. 1 well produced a roaring geyser of oil in Eastland County. Texas and Pacific Coal Company’s William Knox Gordon and his driller Frank Champion brought in the well that produced 1,600 barrels a day of high gravity oil. Within 20 months, the exploration company’s stock jumped from $30 a share to $1,250 a share. The discovery well, 3,432 feet deep, launched a drilling boom at Ranger and nearby Cisco. The once quiet Eastland County farming communities filled with
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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ORIO™ III Toe Valve The ORIO™ III Toe Valve is a hydraulically operated sliding sleeve which is run at the bottom of a cemented casing completion in horizontal wells and provides a means of establishing circulation to facilitate subsequent treatment operations, such as “Plug and Perf.” The unique design ensures that the sleeve, once activated, is always fully open as opposed to standard shear sleeves which tend to open only partially when activated. This is achieved by hydrostatic pressure always being applied across the sleeve against an atmospheric chamber.
Super X™ Retrievable Bridge & Frac Plug
The TEAM Super X™ Retrievable Bridge & Frac Plug is designed for use in multi-zone stimulations where fracing down the casing is desired. Typically set on electric line using standard setting tools or on coiled or jointed tubing using a hydraulic setting tool. The plug is retrieved using a pulling tool run on tubing. Multiple quantities can be pulled in a single trip provided each plug is installed with a retrieving tool below it. The plug can be supplied with a puncture disk, drop ball or trapped ball to facilitate equalization and multiple plug retrieval. For more information go to www.teamoiltools.com
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oilmen and entrepreneurs. With oil selling for $2.60 a barrel, many “Roaring Ranger” wells flowed at more than 10,000 barrels of oil a day. Ranger’s population alone grew to more than 25,000. Eight refineries were soon open or under construction, and the city’s four banks held $5 million in deposits. Meanwhile, the new oilfield’s massive production proved essential to America’s victory in World War I. When the armistice was signed on Nov. 11, 1918, a member of the British War Cabinet declared, “the Allied cause floated to victory upon a wave of oil.” After the war, a young Conrad Hilton visited Eastland County in 1920 intending to buy a Texas bank. He witnessed firsthand the Ranger oilfield boom towns. When his bank deal fell through, Hilton (at the Cisco train station ready to leave), noticed across the street a two-story red brick building called the Mobley Hotel. Seeing a long line of oilfield roughnecks waiting for a room, Hilton decided to buy his first hotel. Today, Ranger annually celebrates an annual Roaring Ranger Day Festival. To learn more about North Texas oil booms, read “Pump Jack Capital of Texas” at www.aoghs.org.
NATURAL GAS POWERS LAND SPEED RECORD Natural gas made a spectacular rocket fuel debut on Oct. 23, 1970, at the Bonneville Salt Flats in Utah as the Blue Flame sets a new world land speed record of 630.388 mph in the kilometer (622.407 mph in the mile) - a record that will stand for 27 years. The 38-foot-long, 4,950-pound Blue Flame - powered by a rocket motor combining liquefied natural gas and hydrogen peroxide - was capable of producing 22,000 pounds of thrust, about 58,000 horsepower. Sponsored by the American Gas Association, the Blue Flame evolved from the imaginations of three Milwaukee men with a passion for speed: Dick Keller, Ray Dausman and Pete Farnsworth. After building a record-setting rocket dragster, the X-1, they began the Blue Flame project in 1968. AGA funded the effort to promote the safety and usefulness of liquefied natural gas. According to Keller, who is completing a book called “Speed Quest,” with the growing environmental movement of the late 1960s, AGA executives saw the value of educating consumers.
“The Blue Flame was really ‘green’ - it was fueled by clean-burning natural gas and hydrogen peroxide,” he explains. “It was the greenest world land speed record set in the 20th century.” Today, natural gas supplies nearly one-fourth of U.S. energy, according to the AGA. The first record land speed record was set by a Frenchman in 1898. Count Gaston De Chasseloup-Laubat, driving an electric-powered car, reached 39.24 mph. Read more in “Blue Flame - Natural Gas Rocket Car” at www.aoghs.org.
The natural gas-powered Blue Flame in 1970 set a land speed record that remained unbroken until 1997. Today, natural gas fuels more than 120,000 vehicles.
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Trails End Enterprises, LLC and MCP Trucking, LLC are family owned and operated. We provide crude oil transportation in Colorado and Southern Wyoming 24hrs/7 days a week to provide superior customer service. 60 ENERGY PIPELINE NOVEMBER 2014
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DATA CENTER
The oil and gas industry is a large part of Colorado’s economy. Below, find statistics on energy pricing, drilling production, well permits, spills and rigs.
2014 GAS PRODUCTION
2014 DRILLING PERMITS
COUNTY *YTD PRODUCTION (% OF STATE) Garfield .............. 302,983,813 (39.4%) La Plata.............. 164,467,542 (21.4%) Weld ..................... 146,777,484 (19%) Las Animas............. 40,610,882 (5.3%) Rio Blanco.............. 45,036,779 (5.8%) Mesa ...................... 19,946,919 (2.6%) State ............................... 769,262,049 Source: Colorado Oil and Gas Conservation Commission as of Oct. 10; figures do not include June or July production numbers.
(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
(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 62 ENERGY PIPELINE NOVEMBER 2014
NO. (% OF STATE TOTAL)
Weld........................................................................................1,635 (55.5%) Garfield...............................................................................727 (25%) Lincoln.....................................................................101 (3.4%) Rio Blanco..........................................................75 (2.5%) La Plata.......................................................57 (1.9%) Yuma...................................................49 Moffat...........................................46 Mesa.......................................................52
NATIONAL OIL PRODUCTION
NATIONAL GAS PRODUCTION
COUNTY
Adams............................................30 Arapahoe...................................21
2014 OIL
PRODUCTION
Montezuma.........................19
COUNTY *YTD
Cheyenne.....................................22
Weld ..............29,946,919 (82%) Rio Blanco .....2,110,943 (5.8%) Garfield .............980,297 (2.7%) Cheyenne..........819,083 (2.2%) Lincoln ..............775,046 (2.1%) Moffat..............224,444 (0.61%) State......................... 36,486,898
Gunnison......................16 Jackson.....................14 Morgan.................6 Larimer.............4 State ........................................................2,944 Source: Colorado Oil and Gas Conservation Commission as of Oct. 2.
COLORADO DRILLING RIG COUNT
Colorado ................................. 74 Weld ...................................... 49 Garlfield ................................. 11 Source: Colorado Oil and Gas Conservation Commission as of Oct. 2.
PRODUCTION (% OF STATE)
Source: Colorado Oil and Gas Conservation Commission as of Oct. 10; figures do not include June or July production numbers.
SPILLS
2012 ..................... 402 2014 .................... 429 2011 ..................... 527 2013 ..................... 568 2010 ..................... 493 Source: Colorado Oil and Gas Conservation Commission as of Aug. 11. * Numbers are year to date. *
Weld..........................................................................21,668 Garfield .....................................................................10,833 Yuma...........................................................................3,901 LaPlata .......................................................................3,337
Las Animas .................................................................3,047 Rio Blanco ..................................................................2,906 36 others ....................................................................6,976 State .........................................................................52,668
Source: Colorado Oil and Gas Conservation Commission as of Oct. 2.
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