SEPTEMBER 2014 ENERGY PIPELINE 1
OIL & GAS PRODUCTION POWER
Wagner Power Systems is built to provide you with the engines and related equipment you need to generate power for oil and gas exploration, recovery and transmission and with engines that power applications in several industrial market sectors, including construction, mining, agriculture, forestry/waste, material handling, light/ construction/general industrial, irrigation and other pumps. It’s our people who make the difference by standing beside you and our products. We know specific power requirements, fuel consumption, fuel tolerance, and overall operating cost are vital to your production. That’s why we are there from system design to operational support.
Find us on the web
Give us a Call
WagnerPower.com
1-877-654-1237
2 ENERGY PIPELINE SEPTEMBER 2014
ANADARKO PETROLEUM CORPORATION
ANADARKO IS... Among the world’s largest independent oil and natural gas exploration and production companies – providing for today, innovating for tomorrow.
www.facebook.com/anadarkopetroleumcorporation
|
: APC SEPTEMBER ENERGY PIPELINE www.anadarko.com | 2014 NYSE
3
Features
40
12
SAND: THE KEY TO HYDRAULIC FRACTURING
INJECTION WELL DEMAND
Finding the perfect sand to frac a well is not as simple as going to the local gravel company.
14 18
OIL & WATER
City, state officials work to protect Brighton’s unique water structure with development buffer zone.
COGA AWARD WINNER
Sarah Bartlett takes home a leadership award at COGA conference.
20
RISKY BUSINESS
An emerging trend in oil train derailments brings discussion on federal safety changes.
4 ENERGY PIPELINE SEPTEMBER 2014
28
CANDID DISCUSSION
Collaboration is key in the debate on the energy industry.
34 58
GOVERNOR’S COMPROMISE
Governor creates task force to recommend balanced approach to local control issues.
MIDSTREAM & THE DJ BASIN Providers are working hard to keep up with demand.
Demand, a shut-in well has created a wastewater bottleneck in the Wattenberg.
Departments 8
Support Company Profile
10
Field Worker Profile
24
Executive Profile
46
News Briefs
50
Earnings Briefs
FMC Technologies
Meet Eddie Schmidt, Trinity Energy Solutions
Meet Renee Zemljak, Encana
SEPTEMBER 2014 ENERGY PIPELINE 5
EDITORIAL
PUBLISHER Bart Smith EDITOR Randy Bangert ADVERTISING DIRECTORS Bryce Jacobson Gary Loftus Sabrina Pope CREATIVE DIRECTOR Darin Bliss
MANAGING EDITOR Sharon Dunn CONTRIBUTING WRITERS David Persons Tracy Hume
ADVERTISING ACCOUNT MANAGERS Paul Dovenbarger Cristin Peratt Mary Roberts Kristy Zado CREATIVE MANAGER Alan Karnitz
We have prOduCt yOu need,
When yOu need it As an authorized panelboard distributor, we better serve you with product flexibility, quicker job turnaround and affordable prices. Contact Border States today for all your Siemens panelboard needs. We have product on hand to get you back to work faster. Greeley CO | 2414 4th Ave, Unit A 970.356.1150 | borderstates.com
BUSINESS MANAGER Mike Campbell
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.
630-250 ENERGY PIPELINE SEPTEMBER 2014 (2014-07)
DRIVING THE EVOLUTION OF SAFETY
OILFIELD SAFETY SERVICES • Custom Containment • H2S Testing • Vacuum Trucks • Hydro Vac Trucks
• Dust Control • Safeland Training • Emergency Showers • Pressure Testing
(877) 567-6436 • MAXIMUMSAFETY.COM
Agfinity’s Tire and Vehicle Centers provide tires and service for all major equipment from backhoes to man-lifts and cars to light pickups. Plus other services like:
• • • •
Bandag Retreads Paint and body services Service trucks that provide mobile tire service Gas and Diesel maintenance for all types of vehicles and equipment For more information about Agfinity’s Tire and Vehicle Centers, please call or visit: (970) 454-4068 (Greeley, CO) or (970) 454-4030 (Eaton, CO) After Hours: (970) 350-1293 / Emergencies: (970) 590-6755 www.agfinityinc.com
SEPTEMBER 2014 ENERGY PIPELINE 7
SUPPORT COMPANY PROFILE
FMC
Technologies Completion Services Inc. WIRELINE OFFICE 1277 Factory Drive Fort Lupton, CO 80621 FRAC FLOWBACK OFFICE 195 Telluride Drive, No. 9 Brighton, CO 80601 CORPORATE HEADQUARTERS 9785 Maroon Circle, Suite 200 Englewood, CO 80112 NUMBER OF EMPLOYEES Approximately 575 WEBSITE www.fmctechnologies.com SERVICES OFFERED Frac Flowback, Wireline
8 ENERGY PIPELINE SEPTEMBER 2014
HOW LONG HAS YOUR BUSINESS BEEN OPERATING IN WELD COUNTY? Wireline, 2.5 years; Frac Flowback, 1.5 years
WHY SHOULD CUSTOMERS DO BUSINESS WITH YOUR COMPANY? Not only does FMC Technologies Completion Services have an unprecedented reputation for success, we also are a leader in cutting edge innovative equipment and tools. Customers recognize and chose to work with us for several reasons. First, being our impeccable training programs, including an entire FMC University based out of Houston, Texas.
Employees have the opportunity to continue to learn and educate themselves, which in turn is mutually beneficial for everyone involved. Next, our environmentally conscience attitude, which comes from our four-step “Green Completions” packages that we offer all of our customers. The process is cleaner, accelerates more profit, and is efficient while still being effective. We also stand out to customers via our commitment to safety, also known as our “Destination Zero” program, which commits to zero safety incidents, worldwide, every day. And lastly we strive to create close clientele partnerships to provide solutions for their specific and individual needs.
HOW LONG DO YOU ANTICIPATE BEING IN BUSINESS IN NORTHEAST COLORADO? Completion Services has no plans to leave northeast Colorado. We are here to stay for the long haul. The industry is booming and projecting trends indicating that we are to keep a continual and steady growth in the area. As a show of our commitment to the DJ Basin and the surrounding areas, we are expanding our operations and building a large complex or, “superstation” in Brighton beginning by the end of this year. This superstation will allow for exponential growth and necessary expansion for future endeavors.
Northern Colorado is on the move and
technology is in the driver’s seat. Keep up with a high quality education at Aims Community College, where you can choose from a variety of Applied and Environmental Technology programs, including Engineering Technology,
IS YOUR COMPANY IN A GROWTH MODE? Yes, as mentioned previously the construction of our new superstation is a great example of our expected growth and with that comes more job opportunities! We are committed to hiring what consists of an almost completely local staff which in turn = positive economic impact for Weld County.
WHAT KIND OF SKILLS, EXPERIENCE OR EDUCATION DO YOU LOOK FOR IN EMPLOYEES? We seek and hire all levels of loyal, positive attitude, good work ethic and willingness to learn employees. No experience necessary (preferred, but not required). Our top employees are ones that started out not just wanting a new job, but wanting to establish a career with FMC Technologies Completion Services.
FMC TECHNOLOGIES
JOB OPPORTUNITIES, VISIT www.pure-energy.us
Construction Management, Industrial Technology and Oil and Gas Technology.
Learn building and construction site management, how to use Computer Aided Design, how to use renewable energy and green technology and Geographic Information Systems.
You’ll acquire the leadership skills and knowledge that will set you apart from the rest as you begin your career. Get started today at www.aims.edu or call 970-339-6251 for more information.
Greeley | Fort Lupton | Loveland Windsor | Online 5401 West 20th St | 970.330.8008 aims.edu | facebook.com/aimsfan For more information about our graduation rates, the median debt of students who completed the program, and other important information, please visit our website at, http://www.aims.edu/academics/ge-disclosures.pdf. SEPTEMBER 2014 ENERGY PIPELINE 9
FIELD WORKER PROFILE
Eddie Schmidt
TRINITY ENERGY SOLUTIONS BY STAFF REPORTS
HOMETOWN Greeley
WHERE DO YOU LIVE? LaSalle
HOW LONG HAVE YOU BEEN WORKING IN NORTHEASTERN COLORADO? I was born and raised in northern Colorado, so you could say 35 years. But more play than work.
HOW DID YOU GET INTO THE INDUSTRY? It was just by chance that a friend needed some help and at that time I needed a little money, so I began to do some equipment installation on VRUs for Trinity/Noble.
WHAT IS YOUR JOB TITLE AND DUTIES? My job title is sales representative. My duties include regional sales of product and equipment that support operations from the wellhead through the pipeline. I also maintain customer relationships, which begins with product quoting to product delivery and any startup assistance needed.
WHAT IS THE MOST INTERESTING THING ABOUT YOUR JOB? The most interesting aspect is responding to customer needs; not only in the present but also work with them to develop solutions for the future outlook of
10 ENERGY PIPELINE SEPTEMBER 2014
where the industry is heading.
WHAT IS THE BEST PART OF YOUR JOB? The best part is the selling of equipment. It is always a joy to see the hard work of product development pay off. The money part is nice too.
WHAT IS THE HARDEST PART ABOUT YOUR JOB? The hardest part of the job is to sell the cost-benefit of equipment. Is it best to spend the upfront money or extend into operation costs?
WHAT DO YOU DO IN YOUR SPARE TIME? Volunteerism, school, sports? Right now
with the industry moving as fast as it can, spare time is hard to come by. But I do find time to enjoy the outdoors, fishing and camping. And the honey-do list.
WHAT ARE YOUR FUTURE AMBITIONS IN THE INDUSTRY? My ambitions are to help Trinity Energy Solutions be, and continue to be, a company that is regarded in the highest respect in the basin as we hold our customers with the highest respect.
WHAT DOES THE WATTENBERG FIELD AND THE DJ BASIN MEAN TO YOU? Opportunity.
HOW DO YOU FEEL ABOUT THE CURRENT ENVIRONMENTAL DEBATE GOING ON WITH “FRACKING” IN COLORADO? I believe that fracking is a topic that should be talked about, not argued about. Fracking is a winwin for everyone in Colorado. It is outstanding to our economy, especially when you see other states struggling to keep their head above water, and it keeps energy costs down. But people have the right to keep in touch with what the industry is doing, what is going into the ground, because that affects all of us. So the public has to make sure we are doing it right and safely.
WELD COUNTY GARAGE • TRUCK CITY
“GMC MEANS BUSINESS”
3 FLATBEDS 3 UTILITY BODY TRUCKS 3 PICKUPS 3 CUSTOM BODIES
SERVING WELD COUNTY FOR OVER 100 YEARS Special Certifications • ASE Certified Technicians • GM World-Class Technicians • Isuzu Certified Repair • Workhorse RV Warranty Center • Allison Transmission Repair Center • IMPCO CNG Certified Installer
We Service All Makes & Models • • • •
GMC Ford Isuzu Trailers
• Chevy • Dodge • Recreational Vehicles • CNG & Propane Units
1415 1st Avenue 970.352.7200 www.ColoradoTruckCity.com
Benefits To You
• Fleet Discounts Available • We Work With Enterprise Fleet, ARI Fleet & Other Fleet Management Companies • Quick Turnaround On Our Parts Means Less Vehicles Downtime • Scheduled Preventive Maintenance Minimizes Costly Breakdowns
34 Bypass & 47th Avenue 970.352.1313 www.WeldCountyGarage.com
DRIVEN TO DO WHAT’S RIGHT
SEPTEMBER 2014 ENERGY PIPELINE 11
INJECTION WELL DEMAND OUTPACES CAPACITY IN WELD BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
It seems odd to say Weld County is flush with water - oil well wastewater that is. But the county is getting to the point where oil and gas operators are having to find temporary storage for produced and flowback water from drilling operations that would normally be injected into deep wastewater wells. Quite simply, supply is not keeping up with demand. “We have like 112,000 barrels worth of need and we have about 86,000 worth of capability for injections,” said Weld County Commissioner Barbara Kirkmeyer. “We’ve got four-fifths of the capacity for what we need out there. And it’s only going to grow.” Kirkmeyer and other Weld County commissioners voiced their concerns about the capacity problems at a lunch with members of the Colorado Oil and Gas Conservation Commission in late July, seeking answers to an increasingly sensitive issue. If companies cannot dispose of their water, they must ship it to Wyoming or find 12 ENERGY PIPELINE SEPTEMBER 2014
temporary storage above ground - and county officials favor neither approach. “In the last year, permits went up, rigs have gone up, so the need to dispose of the produced water is also going to increase,” Kirkmeyer said. Last year, 2,468 permits were issued for drilling oil wells in Weld County, which is poised to surpass that number this year - already more than half of last year’s total approved. There are 27 pending applications for injection wells to be approved throughout the state, about 20 in Weld. But those permits take a minimum of six to seven months to approve, commission members told their Weld counterparts. It’s a process that’s unwavering, as wells need to be dug and thoroughly tested before they can take wastewater injections. Seismic activity is one of the biggest fears. Lack of capacity has meant companies are storing wastewater on their properties, unpermitted, or trucking the water to Wyoming, putting added pressure on Weld County roads that weren’t designed for the
kinds of weights of long-haul water trucks. And, many times, trucks are backed up for hours waiting to inject water into wells. “What’s happening is the injection well company has contracts with Noble and Anadarko and several other companies,” Kirkmeyer explained. “We know how many barrels per day they can get in and inject. What they don’t know is that everyone will show up at once, so they all show up at the same time, so they have to wait. Sometimes people are waiting two, three, even four hours. Because they’re at capacity, and there’s more need than well space, then they’re going to other locations, and it’s the same thing, and backed up all over the place.” While many of the larger players, such as Anadarko, Noble and Encana, have their own injection wells, they also contract with private services, such as NGL Water Solutions (formerly High Sierra Water Services) or High Plains Disposal. The smaller companies that don’t have contracts for water disposal are suddenly finding long waits.
“We’ve got four-fifths of the capacity for what we need out there. And it’s only going to grow.” - BARBARA KIRKMEYER, Weld County Commissioner
It’s been a tough summer, said Doug White of NGL Water Solutions, one of about three disposal companies operating in Weld. Demand, while signaling the good times on the production side, also has spelled out a rough patch on the injection side, as NGL waits for more wells to be permitted. “Even the smaller producers down to the very smallest, they’ve really ramped up their operations,” White said. “If you add all those pieces and parts together, yes there has been a little bit of surprise in the amount of demand. That’s the bad news.” The issue didn’t get any better in July when the state ordered NGL to stop taking wastewater into one injection well that was used to taking 10,000 to 12,000 gallons a day. Scientists linked that one well to a pair of earthquakes registering 2.5 and above that rocked Greeley. While NGL officials dispute their well had anything to do with the earthquakes, they complied with state orders. They closed up 400 feet of the bottom of the well and today are still taking limited injections into the well before it can get to full capacity. So far, the seismic activity near that well has stopped. “That well being restricted by COGCC put us in a short-term bind,” White said, “because in June, there was a very high amount of flowback water. It was our peak month. Losing that 10,000-12,000 barrels a day of
capacity, that hurt everybody. I do know of some producers that were hauling water all the way to Wyoming because they couldn’t dispose of it in Weld County.” The good news in the field is that companies are expanding their disposal well options, albeit at a slower pace than many would like. In their discussions with the COGCC, county commissioners came up with a plan to move the permitting along a little faster by offering to hire an employee to loan to the state, to get permits through the pipeline faster. White said summer months are typically slower in demand, allowing his company to catch up. The one shut-in well didn’t make that any easier. He said NGL should have a new well permitted in September, and by April of next year, the company will have added three new injection facilities, and six new injection wells. In all, the company will have 12 facilities and 18 injection wells by next spring. “Now, we have 95,000 barrels of disposal capacity and 20,000 barrels of recycling capacity,” White said. “By April 1 of next year, we’ll have 200,000 barrels of disposal capacity.” The added demand, however, has pushed up interest in water recycling, White said. “This summer vs. this time last year, we have increased our recycling at least 100 percent. It’s doubled,” White said. “So that’s great news and a pretty big number. That is a positive from the lack of disposal capacity.” SEPTEMBER 2014 ENERGY PIPELINE 13
OIL & WATER
THE CITY OF BRIGHTON TALKS WATER PROTECTION WITH ENERGY COMPANIES BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
For almost a month last spring, Brighton business owners found out just how important the oil and gas industry was to their town. In March, shortly after the Brighton City Council put a four-month moratorium on oil and gas development - to some residents and business owners, seemingly out of the blue, with no pending applications for development — the oil and gas industry reacted, showing the tiny town just south of the Weld County line just what that could mean economically. “You have people like us, the motels, the restaurants, all these people who were doing a lot of business with oil and gas here, going ‘Wait a minute, what are you doing poking a stick in the eye of the major industry here?’” said Steve Whiteside, owner of Whiteside’s Clothing and Boots, 855 E. Bridge St., Brighton, who supplies energy employees with their industry-required flame-resistant clothing in town. “Yeah, we felt the effects.” The ill-timed ban seemed to punctuate the moratoriums and bans that were ongoing throughout the Front Range, with five votes in the previous election in November 2013. But Brighton was the first such city to 14 ENERGY PIPELINE SEPTEMBER 2014
induce the rancor of oil and gas-related businesses that helped fuel the local economy. The move prompted a bit of an uprising, and some local oil and gas-related businesses opted to do business elsewhere. Weeks later, the council rescinded the order under assurances from the industry that they would not submit any applications for development, so the city could buy time to study the effects it could have on its unique municipal water system that is almost entirely reliant on a series of shallow groundwater wells, ditches and streams in and around Barr Lake. In that time, the city worked out a deal with the Colorado Oil and Gas Conservation Commission, creating an order that creates larger setbacks surrounding those wells and natural waterways that supply Brighton’s water. The new boundaries extend setbacks beyond state rules because of the unique circumstances. “We met with operators, outlined the desire to protect the water system... then fleshed out details,” COGCC director Matt Lepore told the commission in late July. “It’s taken the better part of two months. It’s been a collaborative process, again with various stakeholders engaged in process all the way.”
TIMEOUT For many who hadn’t been completely advised on the city’s happenings, a four-month ban on oil and gas drilling seemed almost ridiculous given where they were — almost in the heart of the Wattenberg Field, where oil and gas drilling had been a mainstay since the field was discovered in 1970. Said Kristen Chernosky, spokeswoman for the city, it wasn’t really a ban. In fact, in a news release instituting the “time out,” the city stated it was implementing the period to: • Allow adequate time for educating of new planning commission and city council members regarding oil and gas development; • Adequate time for staff to draft revised regulations that address issues of local concern that are unique to Brighton and to take into consideration state regulations that have been adopted over the last year, as well as additional regulations currently being considered by the state; • Ongoing input and meeting with COGCC and the oil and gas industry partners related to the draft regulations; • Adequate time for review and consideration at public hearings of the draft regulations by the planning commission and city council. Chernosky wouldn’t answer questions other than through email and city officials deferred comment on the situation to her. It turns out the apparent knee-jerk reaction wasn’t so much about fear-mongering as it was a legitimate concern for the city’s water supply.
The council opted for the “timeout” after hearing the industry’s intention in town, Chernosky wrote. “Residents within the city of Brighton have been receiving leasing offers from the oil and gas industry,” Chernosky wrote. “The city also receives frequent notices from the COGCC about drilling applications in our area. ... As a result of the dramatic increase in oil and gas activity in our area, the city of Brighton put forward a four-month “timeout” to allow us to revise our oil and gas regulations. “Our oil and gas regulations had not been revised for eight years. The city council believed the timeout was unnecessary after the industry agreed to give the city time to update our regulations by voluntarily refraining from proposing oil and gas development within the city limits.”
THE BAN Reaction to the event, however, was pronounced, and potentially fueled by a growing resentment of an anti-industry sentiment across the Front Range. For those working in the oil and gas industry, as a matter of fact, it was time to do business someplace else. “Some of the oil related businesses took offense in a big way and said to city of Brighton, ‘If that’s your attitude about our industry, then we won’t do business in your town anymore,’” Whiteside said. “The whole kerfuffle got squared away, but it came to blows a bit.” But in the two weeks it took to lift that temporary timeout, local businesses felt the pain. Holly Hansen, president/CEO of the Greater Brighton Chamber of Commerce, noticed the effects almost immediately. Soon, her members were calling. “I eat out in Brighton probably every day. And if you go on a normal lunch hour almost anywhere, you’ll see a long line of oil and gas employees,” Hansen said. Hansen said officials at Halliburton and ConocoPhillips tried to get the city to back off its moratorium to no avail. Word came
down to employees. Brighton was suddenly off limits. “There was just nothing,” Hansen said. “It was dead. ... Something didn’t feel quite right. I had downtown merchants who weren’t really following what was going on (at city hall), in the first couple of days, saying, ‘I’m $1,000 down from last year at this time. What’s going on?’” The oil and gas industry in that area of southern Weld County is huge. Halliburton, which is an oil and gas service company working with the likes of Anadarko Petroleum, has a massive facility just a couple of miles north in Fort Lupton, and had recently invested more than $40 million to stay in the area, after initially seeking to move further north in the county. Several oil and gas employees had called Brighton home, and the time they spent away from Brighton business had an impact. The town also was reliant on other industry-related businesses. “There was a gas station in town that had a sign saying, “We love Halliburton,” said Jared Whipple, an area resource coordinator for Halliburton, on a recent lunch at the Philly Cheese Steak at the Pavillions in downtown Brighton. Shortly after the industry showed its collective might, the council agreed to rescind the ban. Meanwhile, the city would get to work with the COGCC on the concerns of its water system. “Actually, as soon as the (measure) was revoked, business did come back to Brighton, and that made companies really happy,” Hansen said. “But also, and I talked at length with folks from Halliburton, they made it clear they appreciated Brighton and the support the town gives to families of employees. The overall kind of lesson was that oil and gas has to work in tangent with city because it’s such an important industry.” Business owners, while lauding any agreement the city could make, feel that cloud has lifted. “From a business point of view, it was a bit shortsighted,” Whiteside said of the council’s ban. “It was presumptive, and I’m sure all with
Professional Solutions for all of your
Drug Testing Needs! • Walk-in Service Available • Mobile On-Site Services • DOT/Non-DOT Drug Testing • Alcohol Breath Testing • 24-Hour Emergency Testing Services • Third Party/Consortium Administrator Services
219 E. Railroad Ave., Fort Morgan CO
(970) 370-3867 • (720) 635-3469 www.coloradomobiledrugtesting.com
SEPTEMBER 2014 ENERGY PIPELINE 15
good intentions. But you know, people that aren’t really involved in (oil and gas) business maybe don’t realize how business works. It’s just such a key part of the economy in the area. “It was a little frustrating, but government oftentimes proves they’re really disconnected from what’s reality,” he said. “I’d think in this particular issue, they might have stopped and talked to a few people first.” Added small business owner Gary Mikes, who was opposed to any ban, and spoke out against it at the council. “It just sends a message that, ‘We don’t want your business, go away,’” said Mikes, who said his refrigeration business wasn’t directly affected by the temporary ban. “I look at it as a microcosm of what will happen statewide if we vote for no oil and gas exploration. These people will pack up and go to other places like Texas and Oklahoma, and we’ll be left holding our hands with nothing.” The event laid the groundwork the city council was looking for in protecting the city’s unique water resources.
A NEW DAY Brighton’s water system includes about 11 shallow groundwater wells near ponds and
Barr Lake, both of which serve as water storage for the town, as well as some streams and ditches that are integral parts of the city’s water supply, COGCC Director Matt Lepore told the state Oil and Gas Conservation Commission at its monthly meeting held July 28 in Greeley. “The circumstances in Brighton are unique,” Lepore said. “The regulatory agencies have crafted a unique response and solution that is appropriate we believe in these circumstances. The intent is this is a site-specific response to these set of circumstances.” The agreement — which is not in intended in any way to set a precedent for other municipalities throughout the state — will prohibit drilling around several natural water sources and shallow groundwater wells that make up a majority of the city’s municipal water system. The commission unanimously approved the order preventing drilling from 500 feet around water wells, and 300 feet from the city’s many streams, ponds and ditches, all of which make up about 70 percent of the city’s water. Lepore explained that the agreement also called for groundwater sampling - once before and twice after drilling - for all drilling locations within a half-mile of water wells or
from 301 to 500 feet of a river or a stream, or a ditch. “All the parties with a stake in this have been engaged and crafted this order together and presented it as a joint presentation for approval,” Lepore told the commission. “This represents a great partnership between state, municipality and operators. We all came together, worked hard and identified the issue, and we’re pleased to put this order in front of you and ask you to adopt it.” COGCC member Tommy Holton, who also is mayor of neighboring Fort Lupton, said he could understand the council’s concerns about drilling, especially being new and having so much misinformation out there. He said the agreement that came out of the mess, while not at all to be used as a template for other cities, showed that all entities could work together to come up with an amicable agreement. Mikes said he was pleased to hear that the parties could come together on a plan. “I’m encouraged they came to compromise. It’s shows the stakeholders they can come together,” Mikes said. “It’s 100 times better than an outright ban, not even considering the economic impacts to what happens when you totally ban something.”
www.powermotivecorp.com 888-845-2703
Sales | Rentals | Parts | Service
t Line
roduc
New P
Grand Junction Durango Milliken Denver Headquarters 2340 I-70 Frontage Rd. 39 Kay Cee Ln. 2600 Center Dr. 5000 Vasquez Blvd. 16 ENERGY PIPELINE 2014 Grand Junction, COSEPTEMBER 81505 Durango, CO 81301 Milliken, CO 80543 Denver, CO 80216
Colorado Springs 2259 Commercial Blvd. Colorado Springs, CO 80906
g this
Comin
June
Cheyenne 7854 Hutchins Dr. Cheyenne, WY 82007
100WATER %
FOCUSED.
We strive to change the oil and gas industry’s approach to water management. By providing strategic water management solutions from sourcing to disposal, Select delivers innovative, efficient, end-to-end solutions to producers in every major North American shale play.
SEPTEMBER 2014 ENERGY PIPELINE 17
AWARD WINNERS The Colorado Oil and Gas Conservation Commission revealed its annual outstanding operations award winners in August at the Rocky Mountain Energy Summit, put on the by the Colorado Oil and Gas Association. The awards recognize outstanding performance by operators in operational and environmental areas, as well as in community involvement. COMMUNITY ENGAGEMENT SWIFT ENERGY OPERATING
environmental impacts and honor its social license to operate are:
In 2013, Swift Energy permitted and drilled one of the first exploratory horizontal oil wells in the Niobrara formation in La Plata County. Swift proactively engaged with the public, local government, and COGCC. Prior to and during drilling, they hosted public informational meetings in town and onsite at the location. Swift also demonstrated strong environmental stewardship in a variety of ways:
> Implementing a tankless battery design to reduce surface impacts, emissions, and spills. > Redesigning locations in floodplains to prevent spills and disturbances during any future flooding Event. > Engineering a new wellhead and flowline design to avoid failures. > Designing avian friendly power poles to protect birds. > Expanding use of electric motors at its locations.
Site and access road construction practices and interim reclamation were exemplary; existing roads were expanded, grading and storm water management BMP’s, including noxious weed plan, grading, hydro-mulching, and traffic controls to protect wildlife and control dust, were exemplary. Swift’s diligent regulatory compliance program contributed to zero public complaints during construction and drilling of the location. ENVIRONMENTAL PROTECTION ANADARKO PETROLEUM CORP. In 2013, Anadarko made several improvements to its drilling and production facility equipment and layouts to help prevent spills, reduce emissions, and minimize its overall impact to the environment and surrounding communities. Some of the key improvements made by Anadarko to reduce its
TECHNOLOGICAL ADVANCEMENT WPX ENERGY In April 2013, WPX Energy introduced the Aztec 1000 rig, fueled exclusively by natural gas produced on location. The Aztec 1000 is the result of a partnership between Aztec Drilling Inc. and WPX Energy. The rig can meet the flexible multi-well pad drilling requirements of the Piceance Basin, as well as future horizontal wells. The rig is equipped with four Jenbacher J-320 engines providing the horsepower needed to drill vertical and horizontal well depths between 8,000 to 15,000 feet. The environmental benefits of the Aztec 1000 rig include a 24 percent reduction in total air emissions and an 80 percent reduction in ozone-forming compounds
18 ENERGY PIPELINE SEPTEMBER 2014
compared to diesel rigs. The natural gas fueled Aztec 1000 also reduces fuel consumption and costs. During initial operations in 2013, WPX’s fuel use was reduced by 85 percent, resulting in a daily average savings of over $7,100 in fuel costs. ENVIRONMENTAL PROTECTION GREENHOUSE GAS REDUCTION SOUTHERN UTE INDIAN TRIBE/DEPARTMENT OF ENERGY. The Vent Well project consists of a series of shallow Fruitland Coal Bed Methane (CBM) wells located along the western portion of the Fruitland Outcrop (Outcrop) on the Southern Ute Indian Reservation (Reservation) in La Plata County, Colorado. The purpose of the project is to mitigate methane seepage from the Outcrop by intercepting the gas as it migrates from the basin towards the Outcrop. Methane seepage is a naturally occurring phenomenon, but the Tribe believes seepage is exacerbated by downdip CBM production as the reservoir pressure is decreased via water and gas extraction. Methane is a potent greenhouse gas (GHG) and the Vent Well project serves to mitigate the associated environmental impacts while maximizing an important resource. SOURCE: Colorado Oil and Gas Conservation Commission
ROCKY MOUNTAIN ENERGY SUMMIT PDC EMPLOYEE WINS EMERGING LEADER AWARD
BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
Sarah Bartlett got into air quality on a fluke. She graduated from the Colorado School of Mines with a degree in chemical engineering, and a job in air quality was the first offer she got out the door. “There are a lot of environmental firms and I think air quality intrigued me because it’s something not as many people have done,” said Bartlett, clutching her “Emerging Leader” award, presented to her at the Rocky Mountain Energy Summit in August by the Colorado Oil and Gas Association. “If it’s new, I’m always going for it. I picked it up really fast, I really enjoyed it. I thought I did pretty good at it, and it’s carried me along.” Bartlett, 29, is the Lead Air Quality EHS Professional for PDC Energy. She took the home the Emerging Leader award for her tireless efforts throughout the industry in air quality. Sarah Landry, director of operations and programs for COGA, presented the award: “Every day I feel like she’s adding something impactful, whether it’s expertise, her go-getter attitude, or her strong support. Sarah is one of those people working as hard as she can to make the industry as good as possible.” Bartlett has spent the last three and a half years at the company, devoting much of the last year to helping create the most stringent air quality rules in the nation. She testified at the hearings involving Colorado’s air quality control measures, which the Colorado Oil and Gas Conservation Commission adopted in February, restricting methane emissions from oil and gas operations. The rules have been lauded as a model for other states across the country, and came together with broad industry support.
her shoulders. “Anytime someone recognizes you, that means you have to work really hard to continue to be great and not to mess that up,” Bartlett said. “It’s an honor, and I’ll use it to keep going in and working hard. I don’t take it lightly. I can already feel with a lot of the reception I received here, it’s going to open doors for me, a lot of introductions, new people, new connections, which will be instrumental” in the future. Added Tisha Schuller, executive director of COGA: “Over the last year, Sarah has repeatedly emerged as an industry leader. She has a very technical background but can balance that with building a common understanding and creating the consensus required to actually get things done during committee meetings and rulemakings. She’s able to translate between technical requirements and pragmatic needs with both colleagues and policy makers. She’s driven to put the best foot forward for the industry in a constructive and pragmatic way.”
Photo by: sdunn@greeleytribune.com
“She played an extraordinary role in the air quality rulemaking,” Landry said. Bartlett indeed spent 14 months working on the air quality control issue, helping put PDC Energy’s two cents into the rule-making process. She said PDC had a voluntary leak detection program for the previous six years and wanted to be a part of how any new rules were implemented. “I worked very closely with a lot of industry groups, like COGA and the Colorado Petroleum Association, to respond to rulemaking, negotiating with division and state on things we thought would help,” Bartlett said. Bartlett and PDC officials were on board with the backbone of the rules, she said, The details required a lot of conversation to make sure the company could comply and be successful with the final product. “It was a very long 14 months,” she said. “It was one of the biggest projects I’d ever participated in. It was very intense. But I learned a lot though that project, about the process, the different stakeholders, the different people. It was fantastic.” Bartlett said she was surprised by the award, and admitted it put a little extra pressure on
Sarah Bartlett of PDC Energy took home the Emerging Leader award in August at the Colorado Oil and Gas Association’s Rocky Mountain Energy Summit.
Now Selling Erosion Control Materials Straw Blankets Straw Wattles Silt Fences Stakes Staples HydroMulch
101 East 4th Street Rd. Greeley, CO 80631 800-421-4234
SEPTEMBER 2014 ENERGY PIPELINE 19
Photo by Jim Rydborn • jrydborn@greeleytribune.com
RISKY BUSINESS INCREASE IN OIL TRAIN TRAFFIC SPARKS FEAR OF MORE DERAILMENTS BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
Northern Colorado’s first oil-train derailment in recent memory could have been much worse. The last five cars of a 110-car oil train derailed west of LaSalle on May 9, dropping almost 8,000 gallons, which came dangerously close to the South Platte River. None of it fouled the river, as crews worked feverishly to vacuum oil spewing from one tank that was punctured and excavate the oil that spilled on the ground. For many, it was a wake-up call as oil train traffic increases with every well drilled in the prolific Wattenberg Field. Federal regulators had already been considering tighter rules on oil trains throughout the country after explosions and derailments made headlines in the last year. Now, they’re calling for public comment on formal proposed rules to reduce such accidents. While Weld County has yet to experience oil train fatalities, officials know increasing oil train traffic is just flirting with disaster. “On these things, it’s never if — it’s when,” said Carl Harvey, police chief and operations manager for the town of LaSalle, which has a 20 ENERGY PIPELINE SEPTEMBER 2014
rail switchyard in the middle of town. “It’s just one of those things. We know it’s going to be our turn one day,” he said. “We’ve not had any hazardous materials spills. We’ve had a couple of derailments that didn’t amount to anything. But again, next time, it could be our turn.” The U.S. Department of Transportation in July proposed stricter safety standards on oil trains, including notifying emergency managers every time hazardous materials (including crude oil and ethanol) cross a state’s borders. The proposed rules also call for reducing oil train speed limits in urban areas, a phased-in requirement of puncture-resistant rail cars; dual break systems, and increased track equipment inspections. The agency has opened a public comment period during which residents can put in their two cents. “These are a good start from my perspective,” said U.S. Sen. Mark Udall, D.Colo., who called for immediate changes to rail safety standards after the LaSalle derailment in May. “I’ll continue to press them to follow through and want to make sure they’re doing everything possible to reduce
the risk of fuel train disasters in Colorado and across the country.” Though Weld County has been relatively hazard-free when it comes to trains — thought to be a much safer mode of transportation than by truck — it could be a matter of time as rail traffic increases with more crude being shipped. Rail traffic has increased immensely across the country. In 2009, the number of crude carloads was at 10,800. Last year, that number rose to more than 400,000 carloads. In 2008, there were around 292,000 rail carloads of ethanol shipped throughout the country; in 2011, that number increased more than 40 percent to 409,000. Both have experienced derailments and accidents. Crude has been more prevalent beginning in 2013; shipments involving ethanol were more prevalent from 2006-2012. “Not surprisingly, this growth in rail traffic has been accompanied by an increase in the number of rail derailments and accidents involving ethanol,” the proposed rulemaking summary states. The summary said there were no mainline train accidents involving crude in 2010. So
RECENT OIL TRAIN DERAILMENTS/CRASHES
Transportation Specialists
LASALLE, CO MAY 2014
5 CARS 9 MPH 7,932*
GALLONS LOST
VANDERGRIFT, PA
LYNCHBURG, VA APRIL 2014
17 CARS 23 MPH 30,000 GALLONS LOST
FEBRUARY 2014
21 CARS 31 MPH 10,000
GALLONS LOST
CASSELTON, ND
NEW AUGUST, MS JANUARY 2014
Our transportation and storage services include OCTG Pipe, Line Pipe, tanks and all types of Oilfield Equipment and Building Materials.
30 Years of Experience
in Pipe Storage and flatbed and transportation services local and regionally. We also offer railspur service thru our UP Spur located in Evans, Colorado. Our brokerage division offers flatbed and step deck transportation services throughout the lower 48 states.
Offices Located at: Pipe Yard 1907 1st Avenue 4331 Brantner Road Greeley, CO 80631 Evans, CO 80620 www.lundvallenterprises.com
26 CARS 45 MPH 90,000
proudly serving the
Industry Oil & Gas
GALLONS LOST
DECEMBER 2013
20 CARS 42 MPH 476,436 GALLONS LOST
ALICEVILLE, AK
NOVEMBER 2013
26 CARS 39 MPH 630,000 GALLONS LOST
* This figure is derived from the Environmental Protection Agency, which investigated the potential of oil seeping into the nearby South Platte River. The rulemaking summary calculated the loss on this derailment to be 5,000 gallons of crude. SOURCE: U.S. Department of Transportation, proposed rulemaking. Note: All crude or crude oil accidents involved a train transporting more than 1 million gallons of oil.
Our prOducts & services include: • • • • • • • • • • • • •
Fr safety clothing and gear steel/composite toe work boots Heavy duty hand tools soap, dope, and rope Hydraulic hoses (1/8" - 2") Welding supplies safety equipment and supplies shop supplies PVC, galvanized black and weld fittings valves transfer & trash pumps pipe threading in-store credit
Main Store HOURS: 310 8th Street Farm Store Mon - Sat 8am - 6pm Greeley 305 8th St. Sun 1pm - 5pm 970-352-0544 970-352-3306 Carpet Dept. Closed Sunday SEPTEMBER 2014 ENERGY PIPELINE 21 www.bigrofgreeley.com 800-BUY-BIGR
far this year, there have been five across the country with the LaSalle derailment being the latest and the smallest. In all, those accidents resulted in spills of almost 140,000 gallons of crude. In 2013, there were only two such accidents, but they involved more than 1.1 million gallons of crude spilled. The American Association of Railroads on July 17 reported increased overall train traffic in the prior week was up 4.8 percent from the same time last year. Shipment of petroleum products grew to 15,331 carloads that week, up 16.2 percent from the same time a year prior. Coal shipments decreased 5.3 percent in that time. Petroleum shipments, percentage-wise,
were only behind motor vehicle shipments in that time, according to the AAR. In May, the Department of Transportation issued an emergency order requiring rail companies to notify state emergency agencies any time more than 1 million gallons of Bakken crude came through their borders. Bakken crude, which comes from Bakken shale in North Dakota, is viewed as more flammable by some officials. So far, Weld County has received no notices of Bakken crude coming through town, said Roy Rudisill, emergency manager for Weld County. That may be because not all trains reached that threshold, but it also is likely Bakken crude isn’t being transported through
Weld’s rail corridor, which essentially mirrors U.S. 85, with some small short-line rails jutting across I-25 to Fort Collins, or connecting smaller transloading facilities to the larger lines. A lot of oil is transported through Weld via pipelines, including the Pony Express, which takes oil from the Bakken through the northeast corner of the state to pipelines connecting eventually to markets in the Gulf Coast. White Cliffs, a pipeline that starts in Platteville, and connects through another series of pipelines to Cushing, Okla., was just expanded as well. Though railways typically keep their cargo private, Rudisill said he does get annual reports of what the railways ship through Weld — including oil, coal, chlorine, ammonia and other hazardous materials. That communication, alone, is enough to keep first-responders training on the worstcase scenarios. “The rule itself is good intentioned, but I think we already know what’s being shipped through here,” Rudisill said. “Those are hazards and risks. We just want to make sure we stay on top of things.” Rudisill said the lack of hazardous rail accidents through Weld, so far, has fostered
Get TEAM Oil Tools Excellence From KB Oil Tools
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
Keith Beamer
22 ENERGY PIPELINE SEPTEMBER 2014
(970) 397-3779 kbeamer@kboiltoolsllc.com 207 1st St. Kersey, CO 80644
a stronger level of comfort on the rail front. “We understand there is a hazard with rail transportation. But we haven’t had a lot of accidents, so it’s not a high risk for us,” Rudisill said. Dale Lyman, fire marshal for the city of Greeley, agreed that there was no cause for heightened sensitivity given the accident record in the Weld area so far. In his 28 years, he said he couldn’t remember one hazardous rail incident. But the odds are changing. “Any time you’re increasing those numbers, you’re increasing the odds of an incident occurring,” Lyman said. “It’s kind of the law of averages. We’ve been fortunate so far, but it doesn’t mean we’re immune. It’s always in the back of our mind.” Lyman said he would be interested to see the proposed rules come into effect, if only to know exactly when such shipments are coming through. He said the LaSalle/Milliken derailment in May woke up emergency responders in the area to the potential. “It definitely brings it closer to home, and we start thinking about what we’d do,” Lyman said. “With rail going through Greeley, it’s concerning because it’s really close to
residences. As a firefighter, you look at those things and think about” the what-ifs. With any new rules comes the question of enforcement. Only the Colorado Public Utilities Commission has some say about rail travel in Colorado, and they’re concerned about rail crossing safety. At present, the U.S. Department of Transportation is the only agency that enforces rules along the rail lines. The Federal Railroad Administration, which reports to the DOT, has inspectors on the ground in every state, who are called in on every train accident, FRA officials report. They oversee more than 160,000 miles of track throughout the country, only a tiny portion of which are in Colorado. There are six inspectors based in Colorado and they are among 41 inspectors who could be dispatched to train accidents in Colorado, Wyoming, Nebraska, Kansas, Iowa, Missouri and Illinois. There are more than 400 inspectors throughout the country, according to the FRA. The inspectors are responsible for random inspections of track and safety equipment, and adherence to federal regulations. Only certain types of rail accidents, however, merit a federal investigation. FRA
investigators usually will not look into an accident unless it involves loss of life. In the LaSalle derailment, for example, there weren’t any injuries, let alone loss of life. The cause has finally been determined to be bad track alignment due to a soft roadbed, said Mark Davis, spokesman for Union Pacific. He said crews have already made the necessary repairs. EPA inspector Craig Myers was at the crash site for days, noting that no crude got into the South Platte River, and all oil was excavated and removed from the site. Officials from the sate and Weld County departments of health also were on scene. Udall said the proposed new rules are being supported by many involved in transporting oil. “When you have the regulated, like the oil producers and shippers, and communities and consumers saying we think the risks right now are larger then the ones we want to embrace, that’s the way it should work,” Udall said. “There are always a few naysayers ... In this case, clearly all the involved parties want to do more to protect public health and reputation of oil producers and manufacturers. That’s a good place to start.”
THE BEST SELECTION OF FR CLOTHING AND SAFETY FOOTWEAR AT THE BEST PRICES.
CARHARTT HAS YOU COVERED FROM HEAD TO TOE WITH SAFETY GEAR YOU CAN TRUST.
CORPORATE ACCOUNTS WELCOME 855 Bridge St., Brighton, CO, 80601 303-637-9774 202 19th St., Loveland, CO, 80537 970-669-7808
SEPTEMBER 2014 ENERGY PIPELINE 23
EXECUTIVE PROFILE
ENCANA
EXECUTIVE VICE PRESIDENT FOR MIDSTREAM, MARKETING AND FUNDAMENTALS
Renee Zemljak BY DAVID PERSONS • FOR ENERGY PIPELINE
Renee Zemljak, one of the top executives for Encana Corporation, says she had a good childhood and was raised in a warm, loving home. But, it would be a stretch to call her home life traditional. That’s because Zemljak’s father died when she was young, which left the responsibility of providing for her and her two sisters up to her mother as a single parent. It was a task that Zemljak’s mother did with love and care, leaving a lasting impression on Zemljak. “My mother has always been my mentor,” said Zemljak, who is the executive vice president for midstream, marketing and fundamentals for Encana. “She was incredibly independent, motivated, and always had a great attitude.” Zemljak watched as her mother first graduated from college with honors and then law school. “I learned from her that everything is possible and that an education is a privilege,” Zemljak said. “She’s been an incredible mentor to me. I look back at some of her challenges that she overcame ... like in law school where women weren’t exactly welcome. “She has had a lot of influence on me. She taught me a strong work ethic and that if you work hard, things will work out.” 24 ENERGY PIPELINE SEPTEMBER 2014
Zemljak, like her mother, was very driven and worked hard. By the time she graduated from the University of Montana with a degree in finance and accounting, she was married and had two sons. She then began looking for a job that would provide security and benefits for her growing family, and room for career growth. She found that job in the accounting department at Montana Power shortly after she graduated in 1989. Although that was just a temporary job, Zemljak soon took advantage of a big opportunity to take her career in a slightly different direction. “That position ended just about the time that the whole (utility) industry started unbundling,” Zemljak said. “They created a marketing group and I joined it. It was the opportunity to build something from the ground up and to get into the marketing side of things. “Eventually, we grew a side business into a major marketing organization.” That success led to other positions with Montana Power, PanCanadian and Encana. Zemljak joined Encana in 2002 as vice president of USA Marketing, which has since grown with more responsibilities into her current position. Energy Pipeline recently talked at length with Zemljak about her career and helping other women climb the corporate ladder.
QA &
EP: According to information in your bio provided by Encana, you are responsible for marketing all of Encana’s natural gas, crude oil and natural gas liquids as well as execution of all commercial midstream negotiations. That sounds like a pretty full plate. Talk a little bit about what a typical week for you is like. RZ: I really don’t have many typical weeks. But, I do try to balance my time between our Denver and Calgary offices. Encana’s midstream, marketing and fundamentals team resides in both offices. I also spend about one day of every week with Encana’s executive team, reviewing operating results, key projects, strategic direction and any recent business opportunities that have surfaced. Outside of that, the weeks will vary. I spend a significant amount of time in meetings. The internal meetings are focused on lowering our costs to access markets, maximizing our sales revenues, protecting our cash flows with our hedge program and continual discussions about our market outlook and ensuring it is aligned with our overall strategy. I also spend a lot of my time with external companies that purchase Encana’s production and companies that provide midstream services. It’s never boring.
LOWEST PRICES
ABOUT
ON FR CLOTHING
Renee Zemljak AGE
YEARS WITH ENCANA
SPOUSE
YEARS IN THE ENERGY INDUSTRY
49
Ed Zemljak
CHILDREN
Two sons, Patrick Zemljak, 31 and Zachary Zemljak, 27
CITY YOU GREW UP IN Butte, Montana
HIGH SCHOOL YOU ATTENDED Butte High School
COLLEGE ATTENDED/ DEGREES
BS in Finance and Accounting in 1989, with emphasis on computers, from the University of Montana
CITY YOU LIVE IN NOW Denver
WHAT DO YOU DO IN YOUR SPARE TIME?
Spend time in mountain home near Grand Lake; hiking, boating, traveling, scuba diving
LAST GOOD BOOK YOU READ
“The Advantage,” by Patrick Lenicioni
SOMETHING ABOUT YOU THAT FRIENDS AND COWORKERS DON’T KNOW
Most people believe I was born in Butte and then moved to Denver. Actually, I was born in Denver and we moved to Butte where I went to school and college. So, I’m actually a (Colorado) native.
12 years
A WIDE VARIETY OF BRANDS TO CHOOSE FROM INCLUDING:
20-plus years
PROFESSIONAL BACKGROUND
Zemljak has held a variety of jobs in the energy industry including marketing, trading, transportation, commercial midstream, commodity derivatives, commodity research and price risk management. She has held leadership positions at North American Resources Company, Montana Power, PanCanadian and Encana. As Executive Vice President of Midstream, Marketing & Fundamentals, Renee is responsible for marketing all of Encana’s natural gas, crude oil and natural gas liquids as well as execution of all commercial midstream negotiations. She is also responsible for leading an energy fundamentals team focused on the assessment of global energy markets and trends, executing a comprehensive commodity price risk management program and contributing to the overall strategic direction of Encana. Her leadership has been instrumental in the development and execution of Encana’s strategic plan as it relates to capital allocation, portfolio management and revenue maximization. In 2002, Renee joined Encana as Vice President of USA Marketing, which led to her current position.
126 Oak Ave. Eaton, CO 80615 (970) 454-8772
$10 off*
your box lunch order when you order 10 or more box lunches
$25 off* of $250 or more of catering
For All Of Your Catering Needs
- Catering available 24/7 - Breakfast / Lunch / Dinner - Box Lunches - Business Catering - Hot and cold food menus - Custom orders to meet your needs
ccmeals.com • 970.356.3425 SEPTEMBER 2014 *Valid for new customers only
ENERGY PIPELINE 25
6101 E. 2nd St., Casper, WY
Fremont Motors proudly presents this
2014 Ram PROMASTER 2500 HIGH ROOF 159’ WB. Represented in BRIGHT WHITE CLEARCOAT and complimented nicely by its GRAY interior. Warranty Information: Purchase this Ram with confidence knowing it is backed with a 36month / 36000 mile warranty. MSRP:$35,925
SALE:$33,733 20%
OFF any Additional Services
Lube, Oil & Filter Change $69.95 Diesel Truck (non-Synthetic) $89.95 w/Tire Rotation (of 4-tires)
*Coupon only valid at this location; excludes all synthetic oils and dually rotations
Contact: Smokey Spencer Fleet & Commercial Department 307-277-0346 sspencer@fremontmotors.com
EP: Besides all of that, you also are responsible for leading an energy fundamentals team, executing a comprehensive commodity price risk management program, and contributing to the overall strategic direction of Encana. Can you talk about the energy fundamentals team and what it does? RZ: This group studies (analyzes) the supply demand fundamentals of the global energy market, with most of the focus on North America, oil and natural gas. We use that information to guide our strategic decisions, like where should we allocate our capital funding and what supply basins fit best in our portfolio. With this information, we also strive to identify what basins or specific commodity could be subject to significant downward price pressures due to expected high production growth during a time of limited demand growth. If we do identify a risk to Encana, say prices might go significantly low, we will enter into financial derivatives to lock in our prices to protect our cash flow. An in-house fundamentals team isn’t a standard competency that all oil and gas companies have. It’s very strategically important to Encana and it has been identified as one of our core competencies or a pillar of strength that gives us a competitive advantage when making strategic decisions. EP: What has been your greatest achievement with Encana, something that you’re most proud
of? Can you talk a little about how that transpired and the role you played in it? RZ: This is along the line of the fundamentals team. I had a vision of not just using a marketing fundamentals team to maximize our sales revenues, but I wanted to be a strategic partner to Encana. When the company rolled out our new strategy and restructured our organization in November 2013, our fundamentals team was identified as one of our core strategic pillars. Our pillars are, capital allocation which reports to our chief financial officer, operation excellence which reports to our chief operating officers, business development and exploration which reports to our BD, and exploration executive vice president and market fundamentals, which reports to me. This recognition of value contribution and strategic fit was a huge accomplishment for me and my team. One of the specific initiatives leading up to this recognition was at a time when Encana was establishing itself in the U.S. Our primary area of focus was growing our production in the Rocky Mountain region and our fundamentals team identified a significant risk of downward prices as we expected demand growth to lag supply growth in the region and there was not enough pipeline infrastructure to access other markets. Several years in advance of the downward price spiral, we locked in our natural gas prices to protect our cash flow and we gave life to a $5 billion, 1,600-mile pipeline
Lolly’s
Gifts for Every Occasion
Bring this in for 20% off one regularly priced item
www.fremontmotors.com/fleet
26 ENERGY PIPELINE SEPTEMBER 2014
2030 35th Ave. • 970-356-3929 • Mon.-Fri. 8-7 • Sat. 9-6 • Sun. 11-4
project that would eventually deliver 2 billion cubic feet per day of gas from the Rocky Mountain supply region to the premium Northeast markets. Prior to construction we sold the pipeline project to a wellestablished pipeline company. As our fixed price program rolled off the pipeline went into service and it uplifted gas prices and allowed Encana and other producers to continue to invest and grow production in the region. Our rapid production growth in the Rockies was a catalyst for Encana becoming one of the top producers in the U.S. EP: We found a video on YouTube where you were being interviewed about supporting and promoting women in leadership roles. Can you talk a little about the importance of that and if you have been able to incorporate that into the Encana work culture. RZ: That is interesting that you found that video. In March 2011, I kicked off the Encana Women’s Network. As we all know, the oil and gas industry is very maledominated and that dynamic can cause some interesting challenges to women. As I looked around Encana, it was obvious that we had a great number of strong, talented women but we were dwarfed by the number of men. There seemed to be an opportunity to create a network where the women could come together to share learnings and provide
support to one another. It’s been extremely successful and its participation rate has exceeded my expectations. Through somewhat of a trial-and-error process, we have had a number of events and kicked off a variety of initiatives that have been extremely wellattended. Strictly on a volunteer basis, we have grown to need a steering committee and several subcommittees to address the demand and interest in the network. We kicked off an informal mentoring pilot project through the network that matched up-andcoming women leaders with very senior level vice presidents. In fact, our CEO was even a mentor in the program. The program was highly successful and we are hoping to make it more of a permanent program in the future. The network has been a great success and not only for the network members but for Encana, too. It has raised the awareness of emerging key women leaders in our organization and it has facilitated an opportunity to create an incredible support network for women. The funny thing is, I often get feedback from those who take the time to share learnings or to be a mentor about how much they get out of the program versus the person on the other end. It is a true win-win for everyone and the trust and friendships that are developed along the way are facilitating a great work culture for Encana.
YOUR FUTURE
STARTS HERE
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 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
UPS & Local Delievery Available
www.a-1base.com 4890 Niagra St. Commerce City, CO
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.
www.pure-energy.us SEPTEMBER 2014
ENERGY PIPELINE 27
HARDER: Chuck, can you talk about how this (compromise) came to be from your perspective and what it means for the state and country?
ROCKY MOUNTAIN ENERGY SUMMIT
A CANDID DISCUSSION ON COLLABORATION BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
DAVIDSON: I think was a real breakthrough and I give a lot of credit to the governor and others who recognized that trying to regulate a complex area such as oil and gas development through a constitutional amendment is not the right path. It ... fits in well with what we are talking about here today and that is how you collaborate and find solutions. As many know, we at Noble were trying to find a legislative solution with the governor earlier this summer and were not successful in finding the right balance... But it does bring us to what I think is really an important path. We’ve got an opportunity to bring all constituents together to talk about a solution that we know we need to address. The issues of surface use and how to balance the mineral estates with surface rights and minimize impacts on people’s lives. We want to make sure we do that as a great job in industry and earn trust with. ... Yes, it’s not on the ballot. I think we’ll end up with a much better solution having all voices heard ...” HARDER: Fred, can you talk about what this means for the Environmental Defense Fund?
CHUCK DAVIDSON
FRED KRUPP
CHAIRMAN & CEO
PRESIDENT
NOBLE ENERGY
ENVIRONMENTAL DEFENSE FUND
A large portion of the Colorado Oil and Gas Association’s Rocky Mountain Energy Summit contained a discussion between Noble Energy Chairman and CEO Chuck Davidson and Fred Krupp, president of the Environmental Defense Fund. Together, they were going to hash out ways for both sides of the oil and gas debate to come together in collaboration. A day before the discussion, Colorado Gov. John Hickenlooper and U.S. Rep Jared Polis worked out a deal that would bring an end to turmoil that pitted residents and industry against each other at the ballot box. Amy Harder, an energy reporter with the Wall Street Journal, moderated their discussion:
28 ENERGY PIPELINE SEPTEMBER 2014
KRUPP: “Specifically, the agreement reached and the challenge the state made, that the ordinances be dropped, two industry sponsored referendums will be dropped and commitment from the state and governor to have the COGCC enforce the setback requirements... that there will be a setback of 1,000 feet.. Our focus has been different. We have focused on frac fluids, air regulations, and had an interest in groundwater and testing. “From a bigger standpoint, we have to realize where does the energy come for these referendums and I think it comes from really understandable frustration from citizens, who are personally in a direct way feeling impacts on their lives ... I’m hoping this big step back gives space to everybody involved to create the sort of rule to allow people to have more confidence... to do something good to reduce the frustration. HARDER: The precedent was set with the methane emissions rule-making. The governor said it was a hard 10-month process, where both sides threatened to walk out. What was the hardest part? DAVIDSON: Certainly the easiest part, at least for us, was understanding we needed to do something. Once you get into your mind we have to find a solution here, and from our perspective we believed the time was right, methane emission needed to be addressed with oil and
gas. ... We believed it was the view of the state of Colorado. If we did not do something then the state would do something. That to me was the easiest part was recognize something in front of us, and we needed to address. We had to face it head on and don’t dodge it. The hardest part was just persevering. We weren’t very far apart. There had to be a lot of understanding of how each other was looking. ... It was long and difficult, it would be easy to walk away, but we weren’t walking away. We decided it had to be dealt with. KRUPP: Definitely, there were moments of rough sledding on both sides. In the end, we did persevere. It starts with a common objective. You have a vision, if we can agree on strong rules, sane and sensible, minimize costs, that got the emission results.
We really tried to stand in Noble’s shoes, and Anadarko and understand their operating realities, and I think they did the same to understand environmental objectives. Then we figured out, our objective is not to maximize the costs. It’s more durable to minimize the costs... so I think we were able to come up with frankly spectacular results. This is the equivalent of taking all the cars and trucks off the roads, 100,000 tons of methane from our air - annually reduced from our air. The requirements are sane and sensible. They’re graduated so more active well pads have to have monthly detection, some of the smallest pads have very minimal requirements. And those in between get quarterly inspections. ... I think it’s great and it would be a model for our nation.
HARDER: Did you learn anything from the early agreement on methane, or did you find this latest one even more difficult? DAVIDSON: One thing that is apparent and certainly one thing I’ve learned is while it’s not possible to include everyone in the conversation, it’s very important to get a number of parties involved. It clearly required a broad group of players from industry, but other industries represented in Colorado. When we looked at restrictions that would possibly be proposed through constitutional amendment, that could have broad implications across the Colorado economy, so everyone wanted to get in. ... It’s important to throw the net as wide as possible. In the case of working on air rules, initially it was more narrow, but we worked to broaden it out. It was so
complex and had to be done so carefully, that we needed the right people involved. It’s a very delicate balance, because we both have others in the industry. The governor played a strong hand, literally. KRUPP: With natural gas and oil being developed here and not stand up for it, I think doesn’t make sense. I’d rather engage, get rules in place and make sure folks are protected ... DAVIDSON: Anytime you’re working on something that would set a precedent, you’ll feel some heat. You’re in a different place when ... at same time, you have to go where your heart is. In this case, as in some of the other collaborations, we believed this was the right area and time, that our industry needs to address the issue of methane emissions and need to be addressed more broadly than in just Colorado. I’m still taken aback
EFFICIENCY. COMFORT. VERSATILITY. YOUR THREE NEW FAVORITE WORDS.
THAT’S SMART.
See smart in action: volvoce.com/smartworks
Equipment, Parts, Service and Dedicated Support of Colorado’s Oil & Gas Industry 8806 E US Hwy 34 Johnstown, CO 80534 (970) 669-6209 www.power-equip.com
SEPTEMBER 2014 ENERGY PIPELINE 29
NORTHERN COLORADO’S PREMIER
24/7 HEAVY DUTY TOWING & ACCIDENT RECOVERY SERVICE
by the transformation of what’s occurred in America on energy... To me, it’s all about ensuring you do have that social license to operate. We’ve gone down this path before, and it’s kind of what I rely on to give us strength that this is the right thing to do. We have taken on as one of our attempts and successes on collaboration. ... We decided rather than going through litigation and fighting ..., we were going to collaborate with governor and develop a new set of regulations on how to permit deep water drilling in the Gulf of Mexico. We did receive the first deep water drilling permit in the Gulf. Sometimes you just have to stick your neck out, listen to you heart, even if it means setting precedent, you drive forward. HARDER: Should the regulations be applied throughout the nation?
OIL FIELD CERTIFIED
FOR TOWING SERVICE CALL
970-775-4860 Dan Daniels - General Manager
DAVIDSON: What we did in Colorado was specific to conditions in Colorado. We need to look at methane more broadly across the country, but I’m not convinced one size fits all. ... We have to be thoughtful before we apply the Colorado model to everyone. I do believe methane is an issue the industry needs to address ... HARDER: How do we encourage more of the moderate leadership? KRUPP: To the extent that we can show by working with companies like the ones involved here that the air gets cleaner, methane gets reduced, more of the ... I will say there’s something to that.
• • • •
SERVICES OFFERED
Trucking Excavation Dirt and Water Hauling Location and Road Building
• • • • •
Hydrovac Winch trucks Vac Transport Crane & Rigging Roustabout
970-284-7824
30 ENERGY PIPELINE SEPTEMBER 2014
Jeff Hansen - General Manager
Broadly. So many times, the story is told as though it’s a win-lose negotiation. I think the insight that Chuck and others in the industry are coming to and certainly I’ve come to, not in all situations, but in some situations there are win-wins to be had. The story should be told not in they get this, or that. Sometimes, finding that path forward, ... that could be a win-win.
As more people recognize we get environmental benefits... there’s less sulfur emissions, less carbon emission, if you take ... the economic benefits, no doubt. The ... win from the industry side, is getting the methane issue behind us, getting certainty on lot of other issues citizens have, that certainty is good for business ... HARDER: It seems like there was an increasingly larger base that wants to ban fracking, in doing that as a rallying cry to act on climate change. How do you engage with organizations on the left that are getting lower and lower and want to ban fracking? KRUPP: We do have good relationships. We listen to their opinion and try to understand concerns, and partner with them when we can. So I guess the key is, we agree with them, the more we can deploy solar, wind, energy efficiency, ... shave off the peaks, that’s better for the environment. We want to put the pedal to the metal on completely clean sources. At the same time, we’re going to be in natural gas for a while, either going to be developed and burned in a way that protects neighbors and maximizes protections against greenhouse gas. ... We think it’s important to stand up for rules that make natural gas as clean as it can be. DAVIDSON: When I looked at what happened in the past seven to eight years in resource development, there’s been huge transformation for this country and our industry. It’s created a lot of economic activity and provided an abundance of natural gas, low cost, efficient energy to our country. ... Maybe it was bubbling below the surface, but the scale of unconventional development brought it out, was evolution of the public and the public role in revolution of resources. The public role in terms of development of the resource
is much more apparent than it was 10-20 years ago... now the public is very interested in our operations... While fracking is maybe what is first mentioned, that’s really not necessarily the issue. The issue in Colorado, there is significant support of fracturing, and that became more balanced when we got into things like local control and community involvement, and proximity of operations, the real issue was underneath what some would call fracking ... it’s just an indicator that to me that throughout this evolution... the public has gotten more involved, demanded to be more involved and we as an industry need to be more open to working with them about finding solutions. It’s not about fighting, it’s about finding solutions. Until we find solutions, our life as an industry is going to be very difficult and I personally want to make my life easier. KRUPP: We have not supported banning fracking, though we (believe) there are some places where fracking is inappropriate, when it’s too close to the water table, national parks, and by some states like New York, making their own decisions. The real issue is not whether or not to frac, but how to do it safely, because in almost all cases where you have the resource, it’s going on - 90 percent of all wells are being fractured. And most of the environmental issues don’t have anything to do with fracturing of the shale, but rather with development or problems with water contamination... or spills on the surface. Those are real issues to people and they need to be dealt with and we don’t think it’s going to happen through voluntary practices when we have 6,000 operators in the country... We need more monitoring and reporting on what is happening. There hasn’t been routine measurement ... Just getting the monitors in place, like we have in our homes to protecting
us, getting low-cost monitors deployed on wells ... so operators are aware. ... HARDER: What advice do you have to win the trust to the public? KRUPP: Yesterday, I noticed the governor and Polis were receiving a lot of praise for reaching an agreement, but .. I hope this provides space for some of the substance to be worked out. From my vantage point, in the very beginning as the shale boom started, it was kind of a dysfunctional conversation, where neighbors saying our water is getting contaminated, industry also saying, but it’s not the fractures, and neighbors are saying, but the water is contaminated, it was like two ships passing through the night. The way out is not through TV commercials or PR spin. I think it’s through actually finding solutions to legitimate concerns, ... the science should be brought forth. To a significant extent, the concerns are based on actual cases of water contamination, not from fractures, but surface spills ... so improving standards of practice and laws and environment is the way to gain trust. DAVIDSON: Yesterday’s announcement was really an announcement on how to move forward. It eliminated one path we were on, and most would agree it was a very bad way to do it. The real test is in front of us. Now we have got an opportunity through a commission and I think we will be judged on being able to produce solutions. If it’s another task force that just ends up as a dead end that doesn’t come up with recommendations, what we’re faced with, is 2016, here we go again. The community is looking for better ways to manage surface use ... I know there will be some in this room that will participate in the task force. I encourage you to look for common ground.
2014 Circle R Side Dump 24.2 Cubic Yard, Air Ride, 6” Cylinders, Elec over Hyd, Bolt On Push Block & Bumper, Wrap Under Tarp $CALL
20 Ft Storage Containers Starting at $2750 40 Ft Storage Containers Starting at $3800
2014 Landoll 440 POWDER COATED, Traveling Axle, Alum Wheels, 20,000# Braden Winch, Wireless Remote, Central Grease $CALL
2014 Landoll 855C POWDER COATED, 19” Deck Height, Easiest Detach, Air Lift 3rd Axle, Central Grease, Strobes $CALL
5075 Vasquez Blvd • Denver, CO • 80216
303-494-6472
US DOT REGULATIONS, LICENSING AND BOOKKEEPING BONDED & INSURED
Dawn Marie Tesch
Agent/Owner
PO Box 298 • Kersey, CO 970.302.0157 • Fax 970.506.1079 • cscsupport@live.com
PICK UP PULLING TRAILER • STRAIGHT TRUCK • RIGS AND ANY OTHER COMMERCIAL MOTOR VEHICLES SEPTEMBER 2014 ENERGY PIPELINE 31
Change your oil. Not your schedule. -
eds less ned oil and eds.
.com
Managing a fleet of vehicles can be complicated. Prestige On-Site Oil Change wants to help change that. Here’s how: WE ARE THE SHOP:
We come to you, which means your employees aren’t wasting valuable hours driving to and from, and waiting in auto shops taking care of routine maintenance.
3 3 3 3 3 3 3
WE KEEP YOUR FLEET RUNNING WITH OUR UNIQUE ON-SITE SERVICES:
A professional oil change with choice of conventional, synthetic-blend or full-synthetic oil Replace air filters, headlamps, bulbs, and wiper blades (if needed) Check and replenish antifreeze, windshield washer fluid, transmission fluid, and power steering fluid Check and correct tire pressure, inspect belts and hoses, lube chassis Free 23-point inspection If a mechanical problem is found on vehicle, we offer to come to your location, pick up the vehicle, transport it to our shop, and deliver it back to you once repairs are completed. This includes warranty repairs on all Chrysler, Dodge, Jeep, Ram and Ford vehicles Provide 30-day invoicing and special fleet discounts on all services
WE DO IT RIGHT:
2
We use top quality filters and premium API-certified oil that meets and, in most cases, far exceeds manufacturers specifications. An on-board computer system ensures that each vehicle, regardless of manufacturer, is being serviced to exact specifications. We offer the services of factory trained technicians. Our mobile service technicians have the OSHA and EPA training needed to enter oil drilling sites. We can be anywhere you need us to be. We understand every fleet is unique and has special needs. We welcome the opportunity to meet with you and discuss your service needs. Please contact us and schedule a time that is convenient for you.
Alpine St., Longmont, CO 80501 PRESTIGE 200 866-391-3817 • prestigedodge.com Chrysler Dodge Jeep Ram
32 ENERGY PIPELINE SEPTEMBER 2014
6
BUSINESSLINK DEALERS STOCK THE RIGHT COMMERCIAL VEHICLES FOR YOUR BUSINESS NEW 2014 RAM REG CAB 4X4
#27019 Popular Equipment Group, 6-Speed Auto, 5.7L V8 HEMI MSRP
$25,815 Prestige Price
Dealer Incentive
-$4,000
$23,274
19,274** NEW 2014 RAM NEW 2014 RAM 2500 2014 NEW 2014 RAM NEW RAM 2500 NEW RAM 1500 REG CAB 4X4 PROMASTER REG CAB 4X4 ST CREW CAB 4X4 ST CREW CABCARGO 4X4136” $
#27019 Popular Equipment Group, 6-Speed Auto, 5.7L V8 HEMI MSRP
Dealer Incentive
$25,815
-$4,000
#26536 Chrome Appearance Group, Popular #26121 Cloth Seats, Cargo Convenience Group, Equipment Group, 6-Speed Auto, 6.4L V8 HEMI, 6-Speed Auto, 3.6L V6, Rear Hinged Doors with Fixed Trailer Tow Mirrors, Trailer Brake Control Glass, Speed Control, 16”X6.0” Aluminum Wheels MSRP
$42,000
Dealer Incentive
-$4,500
MSRP
$31,555
Dealer Incentive
-$1,000
#26536 ChromePrestige Appearance Group, Popular Price $37,874 $23,274 $28,989 Equipment Group, 6-Speed Auto, 6.4L V8 HEMI, Popular Equipment Group, $ 24 $ #27019 $ 33,374** 19,274** 27,989** Trailer Tow Mirrors, Trailer Brake Control 6-Speed Auto, 5.7L V8 HEMI MSRP Dealer Incentive MSRP Dealer Incentive NEW RAM 1500 NEW RAM 3500 $42,000 -$4,500 PROMASTER $25,815CARGO 136”-$4,000 CAB CHASSIS 4X4 Prestige Price
$19,274**
Prestige Price
$33,374**
$27,989**
Prestige Price
Prestige Price
$37,874
$23,274
$ 33,374** 19,274** PRESTIGEDODGE.COM
$
SE HABLA ESPAÑOL
1-888-454-0009 NEW RAM 3500 NEW RAM 1500 PROMASTER CARGO 136” CAB CHASSIS 4X4
#26904 Cloth 40/20/40 Bench Seat, Cold Weather Group, #26121 Cloth Seats,Avenue Cargo Convenience Group, Heavy Duty Snow Plow Prep Group, MaxWeekdays Tow Package, Until 9pm • Sat. Until 8pm East 3rd in Longmont All Prices plus Taxes and applicable fees, Dealer retains all rebates, W.A.C. Photos for illustration only.SEPTEMBER 2014 ENERGY PIPELINE 6-Speed Auto, 3.6L V6, Rear Hinged*Purchase Doors Price withOnly, Fixed Powerwith andChrysler, Remote Entry Group, Auto,9/30/14 6.7L **(Must finance Must be current truck 6-Speed owner.) Expires Glass, Speed Control, 16”X6.0” Aluminum Wheels Cummins Turbo Diesel Engine, Trailer Brake Control
33
GOVERNOR’S COMPROMISE TASK FORCE ENSURES ALL SIDES TALK ON CONTROVERSIAL OIL, GAS ISSUES BY SHARON DUNN • SDUNN@ENERGYPIPELINE.COM
While many area oil and gas executives spent much of their summers figuring a way to deal with potentially the most restrictive setback rules in the nation, Colorado Gov. John Hickenlooper was sweating out a high-stakes compromise. If backers of two antioil and gas initiatives had their way come November, they could have put a stop a $30 billion-a-year economic engine in Colorado. On the day those groups were set to deliver a minimum of 86,000 signatures to get 2,000-foot setback requirement on the ballot to be placed into the Colorado constitution, Hickenlooper had arranged a deal. He promised to create a task force peopled by all sides of the issue to suggest legislation to give residents more of say over the industry influence on their lives. “I have more than enough industry support on this,” Hickenlooper said of his plans for the task force before about 200 oil and gas employees assembled Aug. 5 at the Rocky Mountain Energy Summit at the Colorado Convention Center in Denver. “I had a lot of input from everyone on this. One of the really rewarding things 34 ENERGY PIPELINE SEPTEMBER 2014
about this, is we have some of the most responsible companies in this country in terms of how they address oil and gas operations in Colorado. “We realize we have social contracts in partnership with the public.”
“I guarantee that we’ll get the industry’s attention, and they’ll provide safeguards.” - JOHN HICKENLOOPER, Governor
But there was a big if. If the backers of two initiatives, one requiring the lengthy setbacks, the other promising more local control over drilling permits, would drop their measures. And, if backers of a contrary measure — which would prevent municipalities that banned fracking from collecting tax revenues from statewide oil production —
dropped their efforts. And, if the Colorado Oil and Gas Conservation Commission dropped a lawsuit filed against the city of Longmont after it banned hydraulic fracturing in city limits a year ago. The deal essentially created a clean slate, with the threat of almost every bit of it coming back to voters in two years. While similar efforts at the governor’s behest had failed — the Legislature failed to find a compromise to avoid the citizen initiatives earlier in the summer — Hickenlooper promised a quick turnaround with a “yes” outcome from his newly announced task force to solve Colorado’s growing discomfort around oil and gas drilling. In a discussion with Utah Gov. Gary Herbert, and in a news conference with reporters in August at the Rocky Mountain Energy Summit, Hickenlooper said billions were at stake if the 18-member task force couldn’t emerge from discussion in the following six months with some proposed legislation, or a “yes” to a solution. “I had someone in my office representing two hedge funds, and they were going to invest over $1 billion in Colorado,”
OPEN HOUS E
PERSONAL
PROTECTIVE EQUIPMENT SMALL ENOUGH to care about you BIG ENOUGH to cover everything you need
FREE Dräger X-DOCK 6300 STATION WITH THE PURCHASE OF 25 DRÄGER X-AM 2500 4 GAS MONITORS • • • • • • • •
Touchscreen operation at the master station Up to three configurable test routines Automatic leak tests Automatic tests of alarm elements (acoustic, visual and vibration alarms) Optional charging function for X-AM 1/2/5*00 Replaceable seal cartridge 12V operation allows for mobile use Can be subsequently expanded with up to 10 modules (X-Dock 6300/6600) • Evaluation of sensor response time
Dräger X-AM 2500 Portable, Multi-Gas Detection Monitor: Detects O2, CO, LEL and H2S and is the only 1-4 gas monitor you need for a wide range of applications.
128 30th St. Unit B Greeley, CO www.beckersafetyandsupply.com
970-576–3988 SEPTEMBER 2014 ENERGY PIPELINE 35
Hickenlooper said during a discussion with Herbert before a packed crowed at the convention center. “Had this stayed on the ballot, they weren’t going to invest. If I heard that once, that means there were probably 50 companies making that same decision. Capital will go where there’s predictability and on the expectation they know what’s going to come.” Hickenlooper told reporters the task force will be assembled with the goal of coming up with a solutions to bring to the 2015 Legislature. Though other ideas for compromise had failed, precedent had been set. Industry and policymakers worked for nine months to enact the toughest air quality standards in the nation last year. The rules governing methane emissions got the backing of both sides of the debate and have been lauded as a model throughout the country. “Is six months going to be enough time to get ideas distilled so they can be engaged? I think it is. It is a push,” Hickenlooper told reporters. “There’s only four months of the Legislature. I wanted to get it there as quickly as possible to get it before the Legislature. I wanted to make sure there is enough time for both.” Hickenlooper said the 18-member task force would be different from efforts earlier this summer to find a legislative compromise to the issue, because it will come from a variety of interested parties. Politics apparently hampered recent efforts at a legislative compromise earlier this summer that was designed to keep issues off the ballot. Hickenlooper said he was confident a diverse group headed up by leaders from local government, environmental groups, oil and gas, agriculture, business and the homebuilding industry, could come up with legislation that would satisfy the conflicts that come with drilling near people’s homes. One suggestion, he said, was to raise the ceiling on fines to $10,000 a day for oil and violations. “I guarantee that will get industry’s attention, and they’ll provide safeguards,” Hickenlooper said. 36 ENERGY PIPELINE SEPTEMBER 2014
WHAT THEY SAID TISHA SCHULLER, president and CEO of the Colorado Oil and Gas Association: “We commend Gov. Hickenlooper for never giving up on trying to find a compromise. By putting the state’s interests ahead of politics, the governor has cleared a path for conversation and understanding, rather than fighting through talking points. These issues are complex and must include a wide range of stakeholders to find common ground with workable solutions. We are grateful that such a diverse group of stakeholders from around Colorado came to together to support the oil and gas industry, which is critical to overall economic health of our state. It is now time to get back to the important work of actually engaging with our communities to find localized solutions.” MICHAEL HANCOCK, Denver mayor: “This is an issue that’s better at the table and legislated and not embedded in the constitution. I’m proud the governor has found a way to continue the conversation. Those conversations need to be productive and be in a forward moving way.” “I have no doubt the conversation about energy and energy future will be talked about plenty. We work best when we work together.”
TOM SHEFFIELD, chairman of the Colorado Oil and Gas Association and vice president western division of Pioneer Natural Resources. “This has been a long process with many COGA members involved in finding a solution. As the COGA chairman, it is heartening to see that we can now focus on bringing people together to find solutions for our communities which provide energy to our nation.” PETE MAYSMITH, executive director of Conservation Colorado: “Conservation Colorado believes local governments have a historical right and responsibility to protect the public health and environment of their communities from land-use impacts of industrial activities like drilling and fracking. We applaud Congressman Polis’ strong advocacy for his constituents and on behalf of many other Coloradans concerned over the impacts of oil and gas drilling on Colorado communities. “We congratulate Congressman Polis and Gov. Hickenlooper for working diligently to bring this complicated issue to a good public policy result. No Coloradan should have to wake up and see a drilling rig over their back fence and worry that their families health or quality
of life will be adversely impacted.” Statement by ANADARKO PETROLEUM: “We appreciate the leadership and efforts of Gov. Hickenlooper, statewide business organizations, homebuilders, developers and many others who have worked to develop the 18-member Task Force with the aim of ensuring diverse viewpoints are represented and communities continue to have a strong voice when it comes to oil and natural gas development. “Today’s agreement ensures the 111,000 jobs, providing approximately $6.5 billion in total labor income and $29 billion in economic output annually, contributed by oil and natural gas development in Colorado will continue. “As a company, we will continue to be engaged with our communities, listen to our stakeholders and work to address concerns as we develop Colorado’s vast and vital oil and natural gas resources responsibly.” Statement from ENCANA: “We’re pleased that these initiatives (88 and 89) won’t go forward, as they would’ve had a very negative impact on Colorado’s economy. Nevertheless, we also recognize that as drilling
hungry? A COLLECTION OF VIEWPOINTS FROM COMPANIES, ORGANIZATIONS & POLITICIANS
moves into more urbanized areas, people are concerned about the impacts. It’s incumbent upon us to produce energy in a safe and responsible manner, recognizing that both the regulators and communities will hold us accountable to ensure that we do so.� Statement from KAREN CRUMMY, spokeswoman for Protecting Colorado’s Environment, Economy, and Energy Independence: “This is the way we do things in Colorado: we forge compromises by balancing the interests of all parties. Policy questions of this importance should never be decided at the ballot box and certainly not through inflexible constitutional amendments. Today, tens of thousands of Coloradans who depend on responsible oil and natural gas development to make their living, can breathe a sigh of relief. “Coloradans have always believed that a person’s property is sacred, and these ballot proposals posed a threat to every property owner in the state. We have confidence that the task force will find solutions that protect all Coloradans.� Statement from NOBLE ENERGY: “Noble Energy supports the governor’s creation of a task force to avoid adverse ballot initiatives that, if passed, would become constitutional amendments that leave no room for accommodating unique community needs or special situations and risk tens of thousands of jobs, billions of dollars of investments, and hundreds of millions of dollars in local and state tax revenues.
“The task force will represent broad interests, including members of the oil and natural gas industry, agricultural industry, home building industry, conservation community, local governments and civic leaders. “In Colorado, we have a history of working together to develop sensible solutions that enable us to have the energy we need, the economy we want and the environment we value. We are pleased with this approach involving a wide group of stakeholders working together to develop recommendations for the Legislature that will provide an acceptable balance. “We believe the Legislature and regulation is the right place to address concerns related to energy development. “We are committed to working with the governor’s task force to design a solution that provides communities a stronger voice in the regulation of oil and natural gas development, protects private property rights, and supports responsible energy development.�
Š2014 Dickey’s Barbecue Restaurants, Inc.
FULL SERVICE - DELIVERY BUFFET - BOX LUNCHES
GET A CATERING QUOTE
any event. any size. we cater!
CALL 970.330.7005 OR DICKEYS.COM
0 ,$$ CALL TODAY FOR A)-# FREE QUOTE! 0 $#- )/ ,!! + 0 '. ,& " *
OpenOpenDaily Daily 11am–9pm 2331 23 Ave. 11am–9pm rd
Greeley
2331 23rd Ave
970.330.7005
Greeley, CO 80634
GET 970.330.7005 A QUOTE AT
dickeys.com dickeys.com
We deliver! Order online at OrderUp.com
EXIT HERE
for all your DOT help needs! DOT HELP SERVICES, INC.
House Minority Leader BRIAN DELGROSSO (R-Loveland): “It’s concerning that Gov. Hickenlooper’s idea of a successful outcome for this oil and gas commission is more regulation on this industry when Colorado is already the most heavily regulated state in the nation. It’s crucial to find a balance between helping this vital industry thrive and protecting our environment, but more regulation should not be Gov. Hickenlooper’s default position.�
Over 30 Years of Experience in Transportation Free Consultation DOT Help DOT Compliance CALL US BEFORE THE DOT CALLS YOU!
DOT HELP SERVICES, INC.
2522C South Worchester Court Aurora, CO. 80014 SEPTEMBER 2014 (303) 500-3026 • www.DOThelp.us
PUC UCR IFTA ENERGY PIPELINE 37
OIL & GAS FAIR Monday, Sept. 29, 2014 2:00pm - 4:00pm Students & Veterans Only 4:00pm - 6:00pm open to the public
Island Grove Park, Exhibition Building 525 N 15th Avenue, Greeley, CO 80631 This event will provide career exploration for students and employment opportunities for job seekers.
A promised task force peopled by all sides of the issue to suggest legislation will give residents more say over industry influence on their lives.
Sponsored by Employment Services of Weld County
In the absence of a solid plan consequences would have been coming out of the group, U.S. much more significant than Rep. Jared Polis, D-Colo., vowed people thought and much to return in 2016 asking voters more far-reaching.” to limit oil and gas development Hickenlooper has not yet (as of mid August). He was the announced the make-up of money behind the 2,000-foot the group. setback measure. The COGCC indeed agreed Funded by WIA Hickenlooper said there was to drop the lawsuit against a good chance that wouldn’t Longmont, but went further happen. in deciding to get tougher on “If we get legislation done, we existing regulations. In 2012, have a reasonable chance that the COGCC updated its setback we’ll settle this for a significant rule, increasing the minimum amount of time,” Hickenlooper distance between wells and said. “People will feel they have occupied buildings to 500 feet, a voice in their communities and to 1,000 feet from high and their future.” occupancy buildings, such as While billions are at stake schools or hospitals. That has sses Native Grasses, Forbs, Shrubs in future investment, he said not been changed as part of the it’s not worth gambling on creation of the task force. c Site-specific Recommendations recommendations r e The existing setback rules also when it comes to more than atio Reclamation Consulting 110,000 industry jobs — many require operators to implement of which don’t require a certain mitigation measures college education — and an when they drill within 1,000 industry that contributes $30 feet of an occupied building, billion a year to the state’s gross such as adhering to noise limits, eliminating pits, using domestic product. “Those are tough jobs to green completions to minimize replace in the modern world,” odors, and developing a leak In Experience Integrity Knowledge te Hickenlooper said. “I’m sure detection plan. Colorado Department of we’d survive and go forth. Would there be disruption Natural Resources Executive of people’s lives and setbacks Director Mike King directed the for people’s households? It commission to begin requiring would be tough. That would additional detail from operators oo Don Hijar ♦ David Moore ♦ Glenn Ledall ♦ Dave Rady re not be done easily. But if 2,000- when submitting applications to 605 25th Street, Greeley, CO foot setbacks had passed, the locate facilities and ascertaining
Questions? Call: 970-353-3800 x6717
1-800-782-5947
38ed ENERGY PIPELINE SEPTEMBER 2014 e www.pawneebuttesseed.com info@pawneebuttesseed.com .c o
If backers of two anti-oil and gas initiatives had their way come November they could have put a stop to a $30 billion-a-year economic engine in Colorado.
105 3rd Ave., Longmont, CO 80501 STORAGE CONTAINERS & TRAILERS FOR SALE
CONTAINER SIZES FROM 8’ TO 40’ TRAILER SIZES FROM 28’ TO 53’
Newer 40’ Containers starting at $4,900 ea.
setback distances, according to a news release issued by the COGCC. “Going forward, operators must verify and document compliance with a part of the setback rule that requires production facilities associated with a multiple-well site to be located “as far as possible” from building units when those facilities fall within the 1,000foot range,” the release stated. Another mitigation measure for sites within 1,000 feet of an occupied structure requires “multi-well production facilities,” such as tanks, separators, compressors and other equipment, be located “as far as possible” from the building unit. King asked that companies provide a written basis verifying compliance and justifying how those facilities are located. The task force, once its make up is decided, will have some difficult conversations ahead. The COGCC has spent the past few years wrestling with not only the stronger setback rules, but the recent methane emissions restrictions. “I think they will have to grapple with many of the issues we have grappled with,” said Matt Lepore, director of the COGCC.
“A key issue for them to resolve is where oil and gas development is allowed and who decides, and I can think of so many ways they might do that. But I do think they will learn through the process that there are many variables and considerations and interested parties.” Lepore and others echoed the concerns of legislating from the constitution. “A constitutional amendment is not the best way to regulate, and the wrong way to regulate any issue,” Lepore said. David Neslin, the former director of COGCC and now a private attorney, said the best way to reach a compromise is through the task force rather than the ballot box. “I think is a very positive step,” Neslin said, “and much superior to a ballot initiative that goes directly into the constitution. These are complicated issues as reflected by the fact that Colorado has repeatedly revisited this question over past few years, as well as other states. We’re likely to make the best progress by having a group of knowledgeable individuals with different perspectives and focusing on facts in a collaborative framework rather than dueling TV spots.”
Newer 20’ Containers starting at $3,150 ea.
Used 40’ Containers starting at $3,850 ea.
Used 20’ Containers starting at $2,600 ea.
High cube & double door containers are available. Call Jerry at:
303-589-4738 or 1-800-795-2610
KEEP YOUR EQUIPMENT SAFE & DRY
SEPTEMBER 2014 ENERGY PIPELINE 39
SAND IS CRUCIAL TO FINDING FRACKING SUCCESS BY DAVID PERSONS • FOR ENERGY PIPELINE
AS SMALL AS IT IS, THIS TINY GRAIN OF QUARTZ SAND PLAYS A BIG PART IN THE FRACKING PROCESS
40 ENERGY PIPELINE SEPTEMBER 2014
Hydraulic fracturing is the key technology that is spurring the current oil and natural gas boom in shale in Colorado and around the country. The key to its success may be surprising. It’s not the millions of gallons of water that is used for each well drilled. It’s not even the highly-guarded mix of chemicals used to lubricate each drilling hole. The single most important ingredient - one that makes the entire fracturing process work so well - is sand. Oil company officials say the best way to explain it is to describe the hydraulic fracturing process from the beginning. Fracturing starts with a mixture of water and sand that is pressurized and introduced into deep shale and rock formations, often with the aid of additives that help guide the water and sand down the hole. The force of the water creates a number of tiny fissures. The sand then finds its way into cracks and “props” them open, as a proppant allowing the trapped natural gas and liquids to travel back to the surface. Without the sand to hold open the fissures, the fracturing process would not be nearly as successful. “It’s an essential part of the process,” said Doug Hock, Encana’s Manager of media relations. With sand so common around Colorado, it would seem that “frac sand” would be easy to come by and plentiful. As it turns out, that is not the case. That’s because “frac sand,” the kind preferred by most oil and gas companies operating in the DJ Basin, is a special kind of sand - one that is more commonly found in Wisconsin and other states. What is frac sand? “Frac sand” is a high-purity quartz (silica) sand with very durable and very round grains, according to geology.com.
It is a crush-resistant material - with a compressive strength between 6,000 and 14,000 pounds per square inch - produced for use in the hydraulic fracturing process to produce petroleum fluids, such as oil, natural gas and natural gas liquids from rock units that lack adequate pore space for these fluids to flow to a well. Most “frac sand” is a natural material made from high purity sandstone, the website reported. The characteristics of a high-quality “frac sand” include: high-purity silica sand, grain size perfectly matched to job requirements, spherical shape that enables it to be carried in hydraulic fracturing fluid with minimal turbulence, and durability to resist the crushing forces of closing fractures. “Frac sand” is produced in a range of sizes from as small as 0.1 millimeter in diameter to over 2 millimeters in diameter depending upon customer specifications. Most of the “frac sand” consumed is between 0.4 and 0.8 millimeters in size. Size and shape of “frac sand” does matter, according to oil and gas company officials operating in the DJ Basin. “The texture and shape of the sand grains are such that they work best as proppants to keep the fissures in the rock open and oil and gas flowing,” said Encana’s Hock. “A more rounded grain is preferred. Sand from river valleys where it’s eroded and rounded over millions of years works best. That’s why so much of it comes from the Midwest, with the Mississippi River and its tributaries. “Most sands in Colorado are too angular and jagged. Also, you want the sand to be a more pure silica if possible. Silica is strong enough to hold up to the pressures to which it’s subjected. Colorado sands often contain feldspars and other minerals.” Chevalier Mayes, Halliburton’s Public Relations Representative, says there are other considerations when deciding on the right frac sand. “There are different qualities of sand used in
SEPTEMBER 2014 ENERGY PIPELINE 41
High quality silica sand that looks like tiny white marbles is one of the most preferred frac sands. This sand has a compressive strength between 6,000 and 14,000 pounds per square inch and is found commonly in Wisconsin and other states.
Where these rock units are produced they are usually soft, poorly cemented and sometimes lightly weathered. This allows them to be excavated and crushed with minimal damage to the quartz grains.
Photo courtesy of Minneapolis Sttar Tribune
THE COST OF FRAC SAND
fracturing operations, and the choice is based on what the operator determines is best for the well,” Mayes said. “That decision is based on several factors, including cost. “Halliburton does recommend certain types of sand for specific formation and well conditions, but the decision is up to the operator, who is also doing their cost/benefit analysis for that well. So this is pretty specific by basin, well and operator. “In some wells, the benefit of using a higher grade of sand, for example Ottawa sand, will outweigh the cost of transportation. In other wells, the benefit won’t be realized, and the operator may prefer less expensive, locally sourced sand.” So what are the qualities that Halliburton looks for when acquiring “frac sand?” “A higher grade of sand is typically characterized by a few different items,” Mayes said. “These include cleanliness, sphericity (how round is the sand grain) and strength (resistance to crushing).”
These areas are also where tectonic forces have not caused severe folding of the rock units and weakened the sand grains. The prime area is in the mid-western states (Illinois, Indiana, Iowa, Kansas, Kentucky, Minnesota, Michigan, Missouri, Nebraska and Wisconsin). Most of the high-purity silica sands in the United States have been known for a long time. They have been used for glass-making and metallurgical uses. The current search for frac sand is more about determining which sources produce superior materials. According to most experts, the best rock units to produce frac sand are the St. Peter Sandstone, Jordan Sandstone, Oil Creek Sandstone and Hickory Sandstone. These rock units are composed of quartz grains that have been through multiple cycles of weathering and erosion, according to geology.com. That long history has removed almost all mineral grains other than quartz and produced grains with very round shapes.
A few years ago, the cost of St. Peter Sandstone frac sand was fairly cheap. According to the U.S. Geological Survey Minerals Yearbook, the preferred frac sand cost between $45 per ton and $50 per ton in 2010. However, it rose to an average price of more than $54 in 2011. And, the prices have continued to rise. When you add on the price of transporting frac sand by rail, the cost can easily double or triple, industry experts say. Just how much companies in the DJ Basin are paying, no one is willing to discuss. “As you can imagine, this is very competitive, so it’s not something I can really discuss,” said Encana’s Hock. But, because the total cost of frac sand has risen so much some local companies admit that they now have to consider the lower cost of local frac sands that might not be the same quality as out-ofstate frac sands. “Generally speaking, the price of the local sand itself isn’t necessarily much cheaper than the
FINDING THE BEST “FRAC SAND” When asked, most oil and gas officials are quick to say that the best frac sand is in Wisconsin, although many other states have the high-quality sand that is preferred. Up until a few years ago, sand operations in Wisconsin and Texas were supplying much of the frac sand used by the oil and gas industry. However, a huge spike in demand caused by the natural gas and shale oil boom has motivated others to provide the product, according to geology.com. Many of these companies are in the central part of the United States where the St. Peter Sandstone and similar rock units are close to the surface and easily excavated. 42 ENERGY PIPELINE SEPTEMBER 2014
According to most experts, the best rock units to produce frac sand are the St. Peter Sandstone, Jordan Sandstone, Oil Creek Sandstone and Hickory Sandstone.
Colorado’s building needs for over 20 years. • Free estimates & advice. • Any size project from a 600 square foot loafing shed to an 80,000 sq. ft. office-warehouse.
CUSTOM POST FRAME BUILDINGS
QUALITY
KING
•
• Any size project from a 600 satisfaction. fasteners. • Free estimates & advice. siding, stucco finishes and bric square foot loafing shed is to aan • Behlen manufacturing • Custom sidings including wood • Any size project from a 600 80,000 sq. of ft. office-warehouse. member MBMA and AISC-MB siding, stucco finishes and brick. square foot loafing shed to an
BEHL
QUALITY FRA • STEEL QUALITY • INTEGRITY • BUILDIN INTEGRITY • SATISFACTION 80,000 sq. ft. office-warehouse.
80 Factory Road • Eaton, Colorado 80615 (970) 454-2400 (p) • (970) 454-2407 (f) email: clarkent@slbbi.com
of
PROPPANTS
Complete General Contractor for All Your Construction Needs
FREE ES AT ESTIMVICE! & AD
Behlen Building Systems 2012 BUILDING OF THE YEAR
First Place - Factories/Warehouse Category - IPS/Warrior Energy -
In general, though, sand While high quality silica created by Mother Nature sand is the preferred is the preference.â€? proppant in hydraulic fracturing operations in Ceramic beads and the DJ Basin and other Clark Enterprises aluminum beadsServices: can be shale plays, it is not the Construction • Project Design & some manufactured from only proppant. Management forms of clay. High-grade • Building Maintenance & bauxites, manufactured There are a number of Repair fromcomplete sintered high-grad alternatives, say oil and • Your contactor—we bauxite kaolin, you want gas industry officials. provide and everything areneed oftenincluding preferred plans, or permits, sitethe work, for achieving highplumbing, They include ceramic electrical, HVAC, strength required in concrete deep beads, aluminum beads and our own erection crews. wells where pressures can and sintered bauxite. exceed 8,000Frame to 10,000 Steel & Post Bldgs: • Farm & per Ranch, & pounds squareCommercial inch. Frac sand generally delivers the highest level Industrial Design Build Services • Licensed Contractor in many of performance and is the But, sand remains king Northern Colorado cities. as the proppant of choice for all proppant most frequently • Engineered structures mainly because used by the petroleum building codesof &cost. loadings. • Taking care of Northern industry. Colorado’s According tobuilding industry needs for over 20 years. officials, it takes about 3 But, that doesn’t mean • Free estimates & advice. million pounds of ceramic that these alternative • Any size project from a 600 beads per wellloafing at 50 shed to an proppants aren’t square foot cents a pound frack a considered. 80,000 sq. ft. to office-warehouse. well. That’s $1.5 million • a well.QUALITY On the other hand, “There are a variety it takes about 5 million of man made or pounds of sand at 10 engineered products (to cents a pound to frack a be considered),â€? agreed well. That’s $500,000 Doug Hock, Encana’s a well. Manager of Media Relations. “Resin-coated Despite the cost sands, bauxite materials, differential, many as well as ceramics. companies in the U.S. These are usually used (China and Russia, too) in areas where there’s a are moving forward with high level of stress in the plans to produce these rock. “This rock is not as alternative proppants with ductile and so it requires plans to reduce the costs something that can take a higher level of pressure. and be more competitive.
CUSTOM POST FRAME BUILDINGS
BEHLEN STEEL FRAME BUILDINGS
• Steel & Post Frame Buildings • Behlen Steel Frame Buildings • Bins & Tanks
26
80 Factory Road • Eaton, Colorado 80615 (970) 454-2400 (p) • (970) 454-2407 (f) email: clarkent@slbbi.com
87 ce 19 ss sin In Busine
80 Factory Road • Eaton, Colorado 80615
970.454.2400 (p) • 970.454.2407 (f) • email: clarkent@slbbl.com www.clarkenterprisesconst.com Clark Enterprises Construction Services: • Project Design & Management • Building Maintenance & Repair • Your complete contactor—we provide everything you want or need including plans, permits, site work, plumbing, electrical, HVAC, concrete and our own erection crews.
Behlen steel frame buildi Post frame Buildings: Grain bins: • Custom designed for your • Behlen manufacturing has specific needs & ideas. ATTENTION EMPLOYEES! an industry leader for 70 y • Pre-engineered laminated post • Coupled with the services • Machine stress rated lumber. provided by Clark Enterpr • 18 colors to choose from on the Construction you are gua 29 GA steel panels & complete a quality project with com trim packages with screw ATTENTION satisfaction. HALLIBURTON fasteners. 1 QUALITY • INTEGRITY • SATISFACTION AND ANADARKO EMPLOYEES! ATTENTION EMPLOYEES! • Behlen manufacturing is a • Custom sidings including wood member of MBMA and AI siding, stucco finishes andHit brick. a home run with your Steel & Post Frame Bldgs: • Farm & Ranch, Commercial & Industrial Design Build Services • Licensed Contractor in many Northern Colorado cities. • Engineered structures for all building codes & loadings. • Taking care of Northern Colorado’s building needs for over 20 years. • Free estimates & advice. • Any size project from a 600 square foot loafing shed to an 80,000 sq. ft. office-warehouse.
Post frame Buildings: • Custom designed for your specific needs & ideas. • Pre-engineered laminated post • Machine stress rated lumber. • 18 colors to choose from on the 29 GA steel panels & complete trim packages with screw fasteners. • Custom sidings including wood siding, stucco finishes and brick.
Behlen steel frame buildings & Grain bins: • Behlen manufacturing has been an industry leader for 70 years. • Coupled with the services provided by Clark Enterprises Construction you are guaranteed a quality project with complete satisfaction. • Behlen manufacturing is a member of MBMA and AISC-MB.
Hit a home run with you company’s employee dis program. Switch and sav to 27% off your auto an home insurance!
company’s employee discount program. Switch and save up to 27% offoffers: your auto and MetLife Auto & Home’s Group Insurance INTEGRITY •Program SATISFACTION home insurance! s 3PECIAL EMPLOYEE DISCOUNTS2 1
s 0AYROLL DEDUCTION WITH NO DOWN PAYMENT3 s CLAIM SERVICE MetLife Auto & Home’s Group Insurance Program offers: s 3PECIAL EMPLOYEE DISCOUNTS2 #ALL AND GET THE SAVINGS AND TREATMENT YOU DESERVE 3 s 0AYROLL DEDUCTION WITH NO DOWN PAYMENT s CLAIM SERVICE #ALL AND GET THE SAVINGS AND TREATMENT YOU DESERVE
RandyRandy AndradeAndrade 46314631 W. 20TH RD ST RD W.ST20TH SUITESUITE 101 101 GREELEY CO 80634 (970)GREELEY 371-8558 CO 80634 randrade@metlife.com (970) 371-8558 www.randyandrade.metlife.com randrade@metlife.com
Randy Andrade 4631 W. 20TH ST. RD. SUITE 101 GREELEY, CO 80634 (970) 371-8558 www.randyandrade.metlife.com randrade@metlife.com www.randyandrade.metlife.com
1 !VERAGE ANNUAL SAVINGS BASED ON NATIONAL SAVINGS lGURES REPORTED BY NEW -ET,IFE !UTO POLICYHOLDERS WHO CALLED OUR DIRECT RESPONSE CALL CENTER AND SWITCHED TO -ET,IFE !UTO FROM TO 3OURCE -ET,IFE !UTO INTERNAL RESEARCH 2 3UBJECT TO AVAILABILITY INDIVIDUAL QUALIlCATION AND PROGRAM LIMITATIONS 3 -UST BE ELIGIBLE FOR PAYROLL DEDUCTION TO QUALIFY ! DOWN PAYMENT IS REQUIRED IN SOME INSTANCES -ET,IFE !UTO (OME IS A BRAND OF -ETROPOLITAN 0ROPERTY AND #ASUALTY )NSURANCE #OMPANY AND ITS AFlLIATES -ETROPOLITAN #ASUALTY )NSURANCE #OMPANY -ETROPOLITAN $IRECT 0ROPERTY AND #ASUALTY )NSURANCE #OMPANY -ETROPOLITAN 'ENERAL )NSURANCE #OMPANY -ETROPOLITAN 'ROUP 0ROPERTY AND #ASUALTY )NSURANCE #OMPANY AND -ETROPOLITAN ,LOYDS )NSURANCE #OMPANY OF 4EXAS ALL WITH ADMINISTRATIVE HOME OFlCES IN 7ARWICK 2) -ET 0 #ÂŽ -ET#AS3- AND -ET'EN3- ARE LICENSED IN -INNESOTA #OVERAGE RATES AND DISCOUNTS ARE AVAILABLE IN MOST STATES TO THOSE WHO QUALIFY 0%!.543 ÂĽ 0EANUTS 7ORLDWIDE ÂĽ -ET,IFE !UTO (OME , ;EXP =;!LL 3TATES=;$#=
SEPTEMBER 2014 ENERGY PIPELINE 43
!VERAGE ANNUAL SAVINGS BASED ON NATIONAL SAVINGS lGURES REPORTED BY NEW -ET,IFE !UTO POLICYHOLDERS WHO CALLED OUR DIRECT RESPONSE CALL CENTER AND SWITCHED TO -ET,IFE !UTO FROM TO 3OURCE -ET,IFE !UTO INTERNAL RESEARCH 3UBJECT TO AVAILABILITY INDIVIDUAL QUALIlCATION AND PROGRAM LIMITATIONS 3 -UST BE ELIGIBLE FOR PAYROLL DEDUCTION TO QUALIFY ! DOWN PAYMENT IS REQUIRED IN SOME INSTANCES 1 2
higher grade Northern sands (although it can be a bit cheaper),” said Halliburton’s Mayes. “But, the logistics of getting Northern sand from the mine to the wellhead makes local sand generally less expensive as rail requirements are reduced, minimized or eliminated.”
THE FUTURE OF FRAC SAND
sand, U.S. Silica Chief Executive Bryan Shinn said recently. Today’s wells often use double that amount, and some wells have as much as 8,000 tons of sand pumped into them, he said. If Shinn’s company - U.S. Silica Holdings Inc. - can be used as a barometer for future sales, then the frac sand industry is going to be successful for a very long time. U.S. Silica Holdings sold 1.3 million tons of sand to the energy industry during the first quarter of 2014 - a 45 percent increase over the same period last year. That helped fuel the company’s 6 percent boost in quarterly profit to $18.4 million, or 34 cents per share. In fact, U.S. Silica’s energy customers are asking for new contracts seeking four to five times as much sand as they’re currently buying. The demand for finer grained sand is even cutting into supplies available to make glass and high-tech products. Shinn said the company is projecting that demand will grow another 25 percent this year. 44 ENERGY PIPELINE SEPTEMBER 2014
Photo courtesy of Halliburton
Photo by: sdunn@greeleytribune.com
- Doug Hock, Encana
Photo by: sdunn@greeleytribune.com
According to United States Geological Survey, sales of frac sand increased by 77 percent between 2010 and 2011. That meteoric climb has continued. The industry today is valued at more than $1 billion in the United States alone. Using one of the top frac sand production companies as an example U.S. Silica Holdings - you can see how the industry is booming. A year ago, the average fractured well used roughly 2,500 tons of
“Sand from river valleys where it’s eroded and rounded over millions of years works best.”
TOP LEFT: A Halliburton employee guides a sand truck to the sandcastles during a fracking operation at an Anadarko Petroleum drill site in southwestern Weld County earlier this spring. TOP RIGHT: Halliburton employees must wear masks on the job while working with the fine sand that is used to frac a well. ABOVE: Halliburton’s SandCastle PS-2500 vertical silo for storing frac sand or other proppants is designed to address well site locations with space constraints.
For a Safe, Reliable, and Timely Source of Transportation Crude Oil Transportation
Now In Nunn, CO
Jay Obergfell - Supervisor Cell (406) 480-5519 Stephen C. Bowman President Ole Hagen District Manager Cell (701) 263-5571 Daryl Sorenson Vice-President Cell (406) 765-8563
Kara Eggen Office Manager Cell (406) 480-0458
Alan R. Caldwell CDS Safety Coordinator Cell (408) 765-8600
Chuck Ensrud Operations Manager Cell (406) 480-3183
Plentywood, MT Westhope, ND Phone: 1-800-876-1376 or 701-245-6663
The Cheyenne Store (Shop 6332) would like to thank Helmerich & Payne Rig 310, and producers, for its long-term service. We appreciate your business!
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.
PO Box 200489, Evans, CO • 80620 970-506-2723 • 970-506-0749 SEPTEMBER 2014 ENERGY PIPELINE 45 www.trinityenergysolutions.com
News Briefs DrillingEdge.com targets upstream oil, gas data AUSTIN - Austin entrepreneurs Jeff Chambers and Marshall Capps, have created DrillingEdge.com, an online platform delivering upstream oil and gas data. DrillingEdge.com provides oil and gas data for wells, operators, leases, permits and production across 21 states in the U.S., according to a news release. “Our mission is to make this powerful information available in a simple and easy to use format, at an affordable price,” said Chambers, the company’s CEO, in the release. Users of the service consist of operators, service companies, individuals and investment firms using oil and gas data to run their operations. DrillingEdge.com customers can look up location and production information for oil or gas wells, find the top producers in their area, see permits filed and approved and keep tabs on what’s going on around them. Chambers said other data sources in the field have become too complicated, and said they are difficult to use. “This created a gap between those that had information and those that didn’t,” Chambers said in the release. “Our service eliminates that gap for millions of individuals, families and companies that rely on this type of information to run their businesses or family operations.” For more information, go to http://www.drillingedge.com. - Staff Reports
46 ENERGY PIPELINE SEPTEMBER 2014
Udall welcomes $2.6 million investment in Colorado School of Mines
> $1.2 million into a study examining the geo-mechanical effects from large-scale carbon dioxide injections underground.
The U.S. Department of Energy has put more than $2.6 million in into two carbon-sequestration efforts underway at the Colorado School of Mines in Golden, according to a news release from U.S. Sen. Mark Udall.
> $1.4 million into a project studying the risk of carbondioxide leakage in rock formations used for carbon sequestration.
Both projects are aimed at studying innovative ways to sequester carbon emissions and will help ensure Colorado’s coal and other job-creating, traditional energy sources remain a strong part of the nation’s energy strategy, according the release. “Colorado’s energy innovators are leading the nation in developing technologies that will ensure our coal industry and other traditional energy sources are a strong part of our energy strategy,” Udall said in the release. “This support for the Colorado School of Mines’ groundbreaking carbonsequestration research projects are the types of investments we need to make to achieve true energy self-reliance.” The U.S. Department of Energy’s Office of Fossil Energy’s National Energy Technology Laboratory has committed to investing:
- Staff Reports
PDC Energy announces asset reduction, additions PDC Energy Inc. has agreed to sell its 50 percent interest in PDC Mountaineer, a Marcellus Joint Venture, to Mountaineer Keystone Energy, for approximately $250 million, subject to certain purchase price adjustments. PDC expects proceeds of approximately $190 million $150 million in cash and a $40 million note. The effective date of the transaction is Jan. 1, 2014, and it is expected to close on or about Oct. 15, subject to customary closing conditions. The assets are approximately 99 percent natural gas and include an estimated 240 billion cubic feet of proved reserves net to PDC, as of Dec. 31, 2013. The assets produced approximately 24 million cubic feet equivalent per day (MMcfe/d) net to PDC in the
first quarter of 2014, according to the release. Through a series of transactions, the company recently added approximately 13,000 net acres, subject to confirmation of title, in the liquid-rich windows of the Utica Shale play in southeast Ohio, the release stated. The newly acquired acreage closely offsets PDC’s existing acreage in southern Utica, including the company’s recently drilled Palmer unit acreage in eastern Morgan County as well as leasehold in northern Washington County. The cost for the additional acreage is approximately $35 million which the company expects to be funded within its existing 2014 capital budget of approximately $647 million, the release stated. PDC’s total acreage position in the Utica Shale with the additional acreage increases from approximately 54,000 to 67,000 net acres. Total gross horizontal
well inventory is projected to increase from approximately 300 to 350 locations. The Company’s acreage position in southern Utica is substantially contiguous in the wet-gas and condensate windows and provides for increased drilling, operational and midstream synergies. The Company continues to pursue additional acreage acquisitions that complement its existing Utica Shale position. PDC recently added a second drilling rig in the play. - Staff Reports
Whiting set to acquire Kodiak Oil and Gas Whiting Petroleum is set to acquire Kodiak Oil & Gas Corp. in an all-stock transaction valued at $6 billion, based on the closing price of Whiting on July 11, 2014, and including Kodiak’s net debt of $2.2 billion as of March 31, 2014,
according to a news release. Whiting reports the acquisition will create the largest Bakken/ Three Forks producer with over 107,000 barrels of oil equivalent per day of production in the first quarter of 2014, 855,000 combined net acres and an inventory of 3,460 net future drilling locations. “We believe this transaction represents a significant opportunity for both Whiting and Kodiak shareholders to benefit from the strength of our combined company,” reported Whiting’s CEO, President and Chairman James Volker. “The addition of Kodiak’s complementary acreage position and substantial inventory of high return drilling locations will provide the opportunity to drive significant value growth for both Whiting and Kodiak shareholders through an acceleration in drilling
and increase in operational efficiencies. “The combined company’s shareholders will also participate in Whiting’s 175,000 gross (123,000 net) acre, oil-rich Redtail-Niobrara prospect in the NE DJ Basin, where production is rapidly growing. We expect the combined entity to have an initial enterprise value of $17.8 billion, total 2014 production of 152,000 barrels of oil equivalent per day, and proved reserves of 606 million barrels of oil equivalent, providing a leading platform for future oildriven growth.” Lynn Peterson, chairman, president and CEO of Kodiak added in the release, “We are proud to have reached an agreement that provides Kodiak shareholders with the opportunity to own a company with significant upside potential. We expect
Truck Outfitters and Much, Much More
Come in and see all we have to offer!
2102 9th Street Bldg B Greeley, CO 80631
Family Owned and Operated Charlie, Becky and Troy Phagan
Phone: 970-351-8603 Fax: 970-353-3066 E-mail: info@crptruck.com www.crptruck.com
Tool Boxes
Nerf Bars and Running Boards
Replacement Bumpers and Grille Guards
Truck Caps and Tonneau Covers
Leveling Kits, Lift kits
Air Bags and Suspension
Transfer Tanks, Pumps, Filters
Seat covers, Floor Liners, Mud Guards
Cold Air Intakes
Hitches, Turnovers and Accessories
Installation available on parts we sell
SEPTEMBER ENERGY PIPELINE We also sell and repair Remote Control2014 Cars & Trucks
47
GET OUT OF THE HOTELS
AND INTO A HOME! 3 3 3 3
New Listings delivered instantly to your email FREE Greeley/Evans Buyer’s Guide Low and NO Money Down programs available Sears Real Estate had 35.09% market share in 2013
Tired of Living in Rentals or Hotels?
CALL ME!
REAL ESTATE
970-330-7700
BRAD INHULSEN
BROKER ASSOCIATE/OWNER
970-584-4144
Bradi@searsrealestate.com
spring in for a
HAIRCUT & SHAVE ROOSTERS spring in for a Book an Online Appointment at www.RoostersGreeley.com
L O V E S ROUGHNECKS
the combined company to have increased operational and financial flexibility that will allow for accelerated and efficient development of the assets of both companies. In particular, we have been very impressed by Whiting’s operating capabilities and technical expertise, and we expect the combined company will benefit from the operating expertise Whiting will be able to bring to bear on the combined portfolio. Additionally, we expect the transaction to be tax free to Kodiak’s U.S. shareholders.” Kodiak shareholders will receive .177 of a share of Whiting stock in exchange for each share of Kodiak common stock they hold, representing consideration to each Kodiak shareholder of $13.90 per share based on the closing price of Whiting common stock on July 11, 2014, the release stated. The Whiting senior management team will lead the combined company. Peterson and James Catlin will join the Board of Directors of the combined company at closing of the transaction, the release stated. - Staff Reports
Cheyenne may be poised for a surge in oil production
HAIRCUT & SHAVE 2000 35TH AVENUE • (970) 356-5750 MONDAY - FRIDAY: 9AM – 7PM • SATURDAY: 9AM – 4PM THE
classic AMERICAN BARBERSHOP
$5 off a shave and haircut.
48 ENERGY PIPELINE SEPTEMBER 2014
One coupon per guest. Ask for the “Roughneck Special!”
CHEYENNE -- Laramie County has long been talked about as the site of the next big oil boom. At the beginning of the decade, companies like Noble Energy, Rex Energy and SM Energy flooded the region in hopes of scoring big in the Niobrara shale formation. Production did grow. Between 2008 and 2013, Laramie County’s oil output increased by 1 million barrels, from 474,063 barrels to 1.4 million barrels, according to the Wyoming Oil and Gas Conservation Commission. But a full-scale boom never materialized. Today, Noble, Rex
and SM Energy have disappeared from the golden prairie around Cheyenne, but the long-rumored increase in production appears poised for takeoff. State statistics confirm that energy production is on the rise. In May, a record 132 drilling applications in Laramie County were filed with the state. The next highest total was 104 applications, submitted the month before. Production also is increasing. Through Aug. 8, oil production in Laramie County was 1.3 million barrels, just shy of the 1.4 million barrels produced there last year. EOG Resources is the company spearheading the drilling charge, with reported production in the county of 507,289 barrels through Aug. 8. The Houston-based oil and gas firm dedicated much of its first quarter earnings presentation to its growing output in Laramie County and the Powder River Basin. EOG touted the success of three wells drilled in the Codell sandstone formation. The trio sported initial production rates of 1,325 barrels of oil per day, 1,400 Bopd and 1,165 Bopd. It represents a significant increase over the 200 and 500 Bopd reported by many producers when interest in the DJ Basin in southern Wyoming took off after 2010. “The DJ Basin historically has been very variable, so there are sweet spots that really kind of set up by the basin architecture, and it varies,” EOG CEO William Thomas told financial analysts in May. “We really believe with our good results that we’ve had from the drilling in this area and with our geologic mapping that we have a spot, (a) sweet spot that will give us very consistent results.” The company estimated that it could recover the equivalent of
400 million barrels of oil from the Codell and Niobrara around Cheyenne and from the Parkman and Turner formations in the Powder River Basin. - Associated Press
European firm signs shale ethane gas deal PHILADELPHIA - A European firm has signed a deal to buy a type of Marcellus Shale natural gas liquid from Antero Resources Corp. The Philadelphia Inquirer reported that the Austrian petrochemical company Borealis has signed a 10-year contract to buy ethane coming from the Marcellus and Utica Shale formations in Pennsylvania and Ohio. The liquid, a raw material in plastics production, would be piped to the Sunoco Logistics Partners terminal in Marcus Hook and loaded onto ships. Antero is based in Denver. The new agreement would start in 2016, when Sunoco expects its second Mariner East pipeline will begin service. The first Mariner East project is scheduled to begin transporting gas liquids this year. Gov. Tom Corbett’s administration and gas-industry leaders support the pipelines, but some nearby residents oppose them. - Associated Press
Leggette joins BakerHostetler DENVER - BakerHostetler announced that energy attorney L. Poe Leggette has joined the firm as a partner in its Denver office. Leggette becomes co-chair of BakerHostetler’s energy practice and its national shale team. He arrives from Norton Rose Fulbright, where he was partner-in-charge of the Denver and Pittsburgh offices and regional head for the Americas energy practice, according to a news release.
Leggette has represented oil and gas companies in a range of transactions, disputes, regulatory proceedings, and other matters, the release stated. He focuses on onshore shale plays; oil and gas companies operating on federal and Indian lands; and companies operating under federal leases in the Gulf of Mexico, the release stated. Leggette spent more than a decade at the U.S. Department of the Interior, where he served as assistant solicitor and advised the Bureau of Land Management and the Mineral Management Service on their onshore and offshore energy programs, the release stated. “As the energy sector continues to grow in importance and shale development makes an increasing impact on America’s energy profile, the addition of someone with Poe’s deep knowledge and experience becomes a real differentiator for us,” said Ray Whitman, chairman of BakerHostetler’s Litigation practice, in the release. “Oil and gas development inevitably brings with it a host of complex litigation, regulatory challenges, and policy changes. Poe has represented the world’s leading energy producers and trade associations before state and federal courts as well as the most powerful regulators and we look for him to make significant contributions to our entire energy practice moving forward.” Leggette received his J.D. from the University of Virginia and a B.A., magna cum laude, from Tufts University. BakerHostetler is one of the first national law firms to create a dedicated shale practice and also produces its own shale blog tracking the industry -- www. northamericashaleblog.com. - Staff Reports
OIL & GAS SERVICES Tetra Tech provides innovative solutions to our oil and gas clients’ most complex challenges. Supported by Tetra Tech’s depth of resources, our local, client-focused project teams deliver certainty of performance. Our integrated approach offers optimal value over the lifecycle of oil and gas upstream, midstream, and downstream projects. Caryn Becker, P.E. | 720.931.9307 caryn.becker@tetratech.com | www.tetratech.com
MITCHELL INSURANCE AGENCY LOCAL OFFICE IN GREELEY
• Oil & Gas Servicing • Blow Testers • Pumpers • Pipe Dealers / Contractors • Roustabout • Flow Testers • Oil Related Construction Businesses
We insure most oil & gas related businesses Mike Mitchell
3835 West 10th Street Greeley, CO 80634
SEPTEMBER 2014 ENERGY PIPELINE 970-352-6418
49
Earnings Briefs
Anadarko Petroleum As with most financial reports, Anadarko Petroleum continues to announce record levels of production across the board, led by Texas and Colorado assets. In all, U.S. onshore sales volumes averaged 667,000 BOE per day, an increase of 117,000 BOE per day from the same time last year. These increases were primarily driven by outstanding results from Anadarko’s Wattenberg field, Eagle Ford shale and Delaware Basin assets, the company reports.
Celebrating our Western Heritage. 1-800-275-5646 • www.thefencepost.com
“Our operating performance was outstanding in the second quarter, ...” Anadarko CEO Al Walker told analysts in an earnings call. “The biggest contributor was the Wattenberg, which grew an impressive 39,000 BOE per day sequentially, 80 percent of which was higher margin liquids. The growth in the Wattenberg Field has been northing short of exceptional and was driven by our horizontal program coupled with higher NGL recoveries from the start up of the Lancaster (cryogenic) plant and lower line pressures in the field as a result of our midstream investments over the past several months.”
Eliminate Downtime & Increase Production!
Fence Post Rocky Mountain NUMBER 8 | VOLUME 34 Y 25, 2013 MONDAY, FEBRUAR
PERIODICAL
| $1.50
NUMBER 16 VOLUME 18 21, 2012 | SATURDAY, JULY
55 one year
PERIODICAL
40 one year $
86 two years ANNUAL PRODUCT
Hereford Junior National Show
ER CHAMPION STE STROPE WINS N JR NATIONALS AT SHORTHOR
ION SALE
ND p.m. • THE MARCH 2 • 1:00 See page 141
RANCH
| $1.00
$
$
S FFA CH AP TER CE LEB RATE EK FFA WE
Plains Fence Post
61
$
two years
Name: ____________________________________________________________ Address: ___________________________________________________________ City: ____________________________ State: ___________ Zip: ___________
Product List: Wind Walls, Ram Sleeves, Heat Socks, Man Lift Covers, Truck Covers, Wet Bags, Tarps, Fence Panels, Sound Barriers, Flags, Misc. Covers & More!!!
Phone Number: ____________________________________________________ Payment:
Check
Cash
Credit Card
Name on Card: _____________________________________________________ Number: ____________________________________ Expiration: ___________ Please Select an Edition:
Plains
Rocky Mountain
This offer is for new subscriptions only. Please fill out this form and mail to: 50 ENERGY PIPELINE SEPTEMBER 2014
FENCE POST- SUBSCRIPTIONS, PO BOX 1690, GREELEY, CO 80632
(formerly Greeley Tent & Awning) 2209 9th St. Greeley, CO. 80631 970-352-0253 • www.getshade.com
Officials in an earnings call also lauded exploration in areas such as west Texas and Larimer County, Wyo. The company reports in its Rockies assets, the company drilled 171 wells, the majority of which were in the Wattenberg Field. The company spent $831 million in capital investments, 70 percent focused on the Wattenberg assets. The company reported that it average 169,000 BOE per day net sales volumes up 30 percent from the first quarter. Production from horizontal drilling grew 46 percent from the first quarter and 134 percent from the same time last year at 121,000 BOE per day.
this 300 million a day plant and we added a lot of compressions. ... I’m really proud of the fact that years ago we went in, and we got the midstream position into Anadarko, then we bought the Wattenberg plant, we have made critical investments in compression, and additional processing and we’ve changed the whole dynamic by repositioning the plant to take full advantage of all of that infrastructure. So it’s been a great story for us.”
first quarter of 2012. The company reports it has more than 100,000 mineral rights in an emerging play in Laramie County. So far this year, it has participated in more than 30 wells, with anticipation of participating in 40 more this year.
That infrastructure is a key link in the chain, Walker said.
Bill Barrett Corporation recorded a net loss in the second quarter of almost $27 million compared with net income of $14.3 million in the second quarter of 2013.
The company reports its Lancaster Cryogenic plant is processing 290 million cubic feet per day of natural gas liquids.
“I think this really does underscore the difference in owning and actually being in charge of your infrastructure and being able to handle, managing your growth by having a midstream organization that is synced up with the upstream,” Walker said.
“We made some big moves to get ahead of ourselves on the midstream sense,” Check Meloy, executive vice president, told analysts. “So we build
Officials reported they continue to drive down drilling time, with short lateral wells averaging 8.7 days, representing a sixday, or 40 percent, reduction since the
Bill Barrett Corporation
The loss reflected a $46.8 million commodity derivative loss and higher per unit depreciation, depletion and amortization expenses, the company reported. In adjusted figures, the loss came out to $8.6 million for the quarter and $10.8 million in the first half of the year.
THE LEADER IN FRAC FLUIDS HEATING® WITH OVER 1.8 BILLION BTU IN TOTAL HEATING CAPACITY
Licensed Provider servicing Frac Tank Heating | Water Pit Heating | Heat On-The-Fly®
1 888 WE HEAT 24/7
the
dJ Basin
McAdaFluidsHeating.com
SEPTEMBER 2014 ENERGY PIPELINE 51
Earnings Briefs
Adjusted net income (loss) removes the effect of unrealized derivative gains and losses and non-recurring charges such as impairment expenses, property sales and certain one-time items.
The company reports it achieved high year-over-year production growth from its two core oil programs, with DJ Basin production up 141 percent and East Bluebell production up 56 percent.
“In the Northeast Wattenberg, I am very pleased to report that we have been able to accelerate our development drilling of extended reach lateral wells, having drilled (not yet completed) 16 wells to date,” CEO Scot Woodall said in a news release. “In the first half of the year, our drilling program in the DJ Basin included drilling in the higher-gas prone Core Wattenberg and exploratory drilling in the Chalk Bluffs area. We have now directed our focus to the Northeast Wattenberg area, where we have three rigs drilling extended reach lateral wells, which offer the most favorable rates of return.”
In the DJ Basin, Bill Barrett spent $85.3 million in the field for the quarter, and spud 22 gross (11 net) wells, and produced an average of 7,126 BOE per day.
Overall oil production averaged 11,281 barrels per day, up 25 percent from the second quarter of 2013. Oil production increased to 39 percent of total production in the second quarter of 2014 compared with 22 percent in the second quarter of 2013.
Woodall reported that the company will drill roughly 70 cross-operated wells (56 net) and participate in 45 gross (8 net) wells in the DJ Bashing throughout the year. At June 30, 2014, Bill Barrett had an approximate 81 percent working interest in production from 370 gross/241 net wells, including approximately 200 legacy vertical wells from prior DJ Basin property acquisitions. As of the end of the second quarter of 2014, the company had approximately 76,300 net acres in the DJ Basin program, according to an earnings release.
MORE OPTIONS FOR
OWNING & OPERATING As low as $600 per month! • Unlimited hours on reliable Bobcat equipment • Reduced operating costs • Flexibility to trade, purchase or return
Limited time offer. Available at eligible and participating dealers only. Some restrictions apply. Please see participating dealer for details. Financing subject to credit approval of qualified buyers by authorized Bobcat finance providers. Bobcat Company reserves the right to discontinue this program at any time without prior notice. Bobcat® and the Bobcat logo are trademarks of Bobcat Company. 14-B028
Authorized Bobcat Dealer
Bobcat of the Rockies
970-356-8800
SALES & SERVICE www.bobcatoftherockies.com
Parts. Service. Sales. Rental.
52 ENERGY PIPELINE SEPTEMBER 2014
Bonanza Creek Highlights from the second quarter for Bonanza Creek’s drilling program in the DJ Basin include continued work on its well-spacing experimentation. While second-quarter revenues of $151.7 million almost doubled from the same time last year, net income for the company came in at $1.15 million compared to $14.7 million at the same time last year. The difference came in with a $36 million loss on derivatives and interest expenses. Net income for the first half of the year came in at $14.6 million compared to $26 million at the same time last year. Company officials report they are increasingly confident with the company’s 40-acre spacing, lateral lengths and well configuration. The Rocky Mountain region, chiefly the company’s Wattenberg drilling program,
produced 17,061 BOE per day, or 75 percent of the company’s total sales volumes, and 95 percent coming from horizontal wells. The company reports sales volumes increased 104 percent over the same time last year.
and have seen that the economic upside over 4,000-foot laterals is extremely compelling. This is especially important considering that a great majority of our acreage is contiguous in nature and lends itself to extended-reach drilling.”
The company spud 32 gross wells and put 38 wells into sales, according a news release.
The company lost 18,000 BOE per day volume takeaway capacity through 2020 in the White Cliffs pipeline due to a federal ruling. But company officials will continue to look for ways to move product, officials report.
The company reports it successfully drilled two 9,000-foot laterals and one 7,500-foot lateral, all with average 30day production rates ranging from 809 BOE per day to 592 BOE per day. “So all of our longer lateral wells this year have produced strong results and we look forward to reporting on more over the course of the year and increasing the number of extended laterals in our 2015 program,” reported COO Tony Buchanan in a second quarter earnings call with analysts. “As you know we’ve been cautious about jumping into extendedreach lateral drilling but we are quickly gaining confidence and an aptitude for it
“We are clearly going out and continue to look for an option to move our crude,” said Bill Cassidy, Bonanza’s CFO, in the earnings call. “We don’t see it as being a problem to move our crude. We are seeing over the next six to nine months with the White Cliffs expansion 75,000 barrels a day, the Pony Express Pipeline in Q4 which is 230,000 barrels a day and then the DJ lateral on Pony Express in Q1 2015 90,000 barrels a day, there will be a lot of capacity coming into the basin which we think will provide a lot of relief in the basin.”
-CHEMICALS -GASKETS AND SEALS -CONSTRUCTION SUPPLIES -HOSE AND HOSE FITTINGS -DRILLING SUPPLIES -INDUSTRIAL SUPPLIES WELCOME FOR ALL YOUR -INSULATION AND COATINGS INDUSTRIAL NEEDS. -ENVIRONMENTAL PLEASE CALL FOR AVAILABILITY. -INSTRUMENTATION -FASTENERS -MACHINERY -FITTINGS -SAFETY AND PERSONAL PROTECTION -FLANGES -TOOLS -TUBING -VALVES -HAMMER UNIONS GREELEY: 1517 2ND AVE. 970.515.5754 • WWW.TISCOINC.COM -WAREHOUSE SUPPLIES
SPECIAL ORDERS
ENERGY SUPPLY Mens & Womens
SEPTEMBER 2014 ENERGY PIPELINE 53
Earnings Briefs “The overall liquids component as a percent of total DJ volumes has really ramped up over the past two years, as we have concentrated our production in the more liquid rich portions of the basin,” president and COO David Stover reported in the call. “The 68 percent liquid contribution this quarter is a record, an increase from 62 percent one year ago and 57 percent from two years ago.” Davidson said the company is particularly excited about the company’s 2015 exploration program “that should include multiple game-changer wells, with our first operated Falklands well, the deep Mesozoic oil test in the eastern Mediterranean and several Gulf of Mexico wells.”
Noble Energy
Kenneth Olds M.D.
We Take Uninsured Patients
Noble Energy officials continue to stress experimentation in its second-quarter earnings calls. The company, while gaining in the DJ Basin and Marcellus plays on the East Coast, is spending a lot of time honing its completion methods in the DJ, while more time is spent on emerging plays across the globe. The company reported net income of $192 million for the quarter.
Certified To Do CDL Physicals Experienced Family Doctor • Concierge service to include all family members.
• Same day appts with minimal wait time. • Reasonable prices for uninsured. • Treat depression/anxiety • Laser hair removal, Botox, Latisse and Juvaderm. • CDL and FAA physicals. Walk Ins Welcome Open 7:30 a.m. - 5:00 p.m. Mon - Fri 6801 W. 20th St. #206 • 330-9061
54 ENERGY PIPELINE SEPTEMBER 2014
“We continued to make great progress on numerous fronts during the second quarter and find ourselves well-positioned to accelerate our growth profile in the second half of 2014 and into 2015,” Chairman and CEO Chuck Davidson said in a news release. “Our U.S. on shore horizontal programs have set yet another quarterly volume record and new completion techniques are enhancing well performance in both the DJ Basin and Marcellus programs. Our Gulf of Mexico program has built significant momentum with a commercial oil discovery at Katmai, as well as by adding a significant new lease position with attractive and sizable prospects.” Overall, the company saw continued record production in its Colorado drilling. “First off, our onshore programs continue to perform very well, setting a new combined quarterly production record from the Marcellus and the DJ Basin in the second quarter,” Davidson said in the company’s quarterly conference call. Total volumes were up 35 percent from the same time last year, he reported.
UNDER NEW OWNERSHIP
Take advantage of our
Big Box Deal
18 Donuts $23.48
EVERYDAY Includes: 6 Evolved, 11 Classics, 1 Fritter 2608 11th Ave, Greeley • 970.353.2400 Open 6am - 4pm Every Day www.redsdogsanddonuts.com
He said the second half of the year is “all about delivering growth in the upside from our onshore programs.” Throughout its U.S. core programs, Noble reported that sales volumes were approximately 140,000 BOE per day. Total horizontal production volumes from the onshore plays pumped in a record 112,000 BOE per day, up 56 percent from last year and more than 200 percent from the same time in 2012. Production from the DJ Basin alone came in at 98,000 BOE per day in the second quarter, the company reported. Horizontal production averaged 70,000 BOE per day, a quarterly record and up 33 percent from the same time last year, the company reported. “Production volumes for the quarter were lower than expected due to the company’s decision to upgrade facilities for more than 60 wells, third-party processing plant downtime and related higher line pressures in certain areas of the field, as well as longer drilling lead times associated with extended reach lateral wells and larger pads,” according to the company release. The release noted that DJ Basin drilling activity in the quarter included 80 operated wells, of which 53 wells had standard length laterals and 27 wells were extended-reach. Well completions totaled 66, while 85 wells were brought on line, the release stated.
PDC Energy Despite a 64 percent increase in production, PDC Energy recorded a net loss of $28 million in the second quarter vs. the same time last year, according to an earnings release.
Auto Detail & Carpet Cleaning
20% off AN INTERIOR/EXTERIOR DETAIL
For First Time Client.
2015 2nd Ave Unit K, Greeley, CO 80631 • (970) 373-3336 • rcautocity.com
GREELEY
Rental & Sales
cre
.ce ww
w
m
co
s. nt
1645 1st Ave. Greeley, CO 80631 970.353.0386
COMMERCE CITY
5280 Colorado Blvd. Commerce City, CO 80022 303.289.2121
THE RIGHT EQUIPMENT FOR COLORADO
info@cecrents.com
Net income would have been $11.4 million for the quarter, but some administrative expenses and a $20 million hit on a litigation charge associated with a class-action lawsuit that is going to trial in September put a dent in company profits. PDC’s production growth is mostly due to its Wattenberg Field assets, according to Barton Brookman, incoming CEO of PDC in an earnings call with investors. “Our Wattenberg Field continues to be a big driver in our growth, Brookman told analysts in a second quarter earnings call. “In
200 Racquette Dr • Fort Collins, CO 80524 (970)494-1610 • awws.org Specializing in Full Service Water & Wastewater Compliance From Oil & Gas Camps to Domestic Treatment Systems
We Provide Services In The Field & Regulatory Liaison Support From Our Main Office: Operations • Sampling • Management • Electronic Data Logging SEPTEMBER 2014 ENERGY PIPELINE 55
anchor Tank Coatings single page insert:Layout 1
4/8/13
11:48 AM
Page 1
Anchor Paint Manufacturing 7205 Gilpin Way #200 Denver CO 80229 303.744.2361
Earnings Briefs this basin, production was up 55 percent over the second quarter of 2013. Non-operated production for the company, primarily from the Wattenberg Field, was two times our budgeted levels at approximately 3,600 BOE per day.” The company sold half of its assets in the Marcellus for $250 million, and will refocus the company’s efforts on the Utica field and Wattenberg, Brookman said.
Tank and Well SiTe CoaTingS Tank and Well SiTe CoaTingS
“Going forward, we remain focused on two ... asset areas,” he said. “The Wattenberg, where we recently added the fifth rig, and the Utica, whereValue we recently added our second drilling rig. As of Forand durable ProTeCTion and eConomiCal ANCHOREDANCHORED For durable ProTeCTion eConomiCal Value June 30, we had $478 Anchor’s Saf-T-Gard Tank and Well Site coatings are specifically designed for industrial maintenance applications withinmillion of liquidity and with the proceeds Anchor’s Saf-T-Gard Tank and Well Site coatings are specifically designed for industrial maintenance applications within the Oil and Natural Gas Industry. coatings are easy to Industry. apply and provide protection suitable for: theThese Oil and Natural Gas Thesedurable coatings are easy to apply and provide durable protection suitable for: from our announced sale of the Marcellus assets, our balance • Oil and gas tank farms, oil depots, oil terminals Tank and Well Site Coating Products • Oil and gas tank farms, oil depots, oil terminals Tank and Well Site Coating Products • Oil and gas well site storage tanks • 900 Series – High solids medium oil alkyd enamel sheet will be even stronger upon closing of this transaction.” • Oil and gas well site storage tanks • 900 Series – High solids medium oil alkyd enamel • Oil and gas well site meter runs • Oil and gas well site separators, production • Oilgas and gas well units, valves & other equipment • Oil and gas well
• 1300 Series – High solids long oil alkyd enamel
2200 – Rust site• meter runsBLOK series – chalking, self cleaning • 1300 Series – High solids long oil alkyd enamel primers and enamels site separators, gas production • 2200 – Rust BLOK series – chalking, self cleaning The 64 percent improvement units, valves & other equipment primers and enamels
WHY PAY MORE FOR SIGNAGE, PRINTING, AND WORK WEAR APPAREL? Working with oil/gas companies since 2007 • Quality Indoor and Outdoor Signage • Vinyl Lettering • Banners • Safety and Compliant Signage • Magnetic Signs • Traffic and Parking Signs • Business Cards • Decals, Stickers, and Labels • Vehicle Wraps and Graphics • FR Apparel, Name Brand Work Wear, Reflective Safety • Vests, Screen Printing and Embroidery ...all at Affordable Prices!
in production for the second quarter came in at 2.7 million BOE, or 29,700 BOE per day. That’s and an 11 percent increase from the first quarter of 2014. Wattenberg production accounted for 77 percent of the company’s production. Wattenberg also saw a quarterly production level of 23,300 BOE per day, a 55 percent increase from the same quarter last year. In the Wattenberg, the company added a fifth rig in June. Drilling on all five of the rigs is on schedule and the company is on pace for 115 to 120 spuds anticipated this year, Brookman said. The company has approximately 20 longer lateral projects planned for the year and 25 tests of increased stage density completions. “Our completion team continues with ongoing technical improvements and testing of different methods in 2014,” Brookman said, “including several plug-and-perf jobs. In year-todate, our non-operated production for this basin now accounts for 15 percent of the Wattenberg total.” The company’s total capital budget of $647 million is on budget, but the picture is changing slightly. “First, we’re about $30 million less in total in the Wattenberg,” Brookman said. “Currently forecasting about $443 million, that budget number is slightly lower due to fewer non-operated dollars and projects in the fourth quarter, primarily the 26-well
Find us on
56 ENERGY PIPELINE SEPTEMBER 2014
&
303-587-8629 • info@buysignsforless.com
PHYSICAL THERAPY & SPORTS MEDICINE
Niobrara down space tests that we are partnering on with Noble Energy. That is now scheduled for the first quarter of 2015.”
ANNOUNCING OUR NEW LINE OF
KEEPING YOUDUTY HEALTHY AFTERMARKET PARTS FOR MEDIUM & HEAVY TRUCKS.
Wattenberg horizontal production for the quarter came in at 23,300 BOE per day, which is another record-setter for PDC, Brookman said.
Synergy Resources
k! c o t S n i Now
“Center of Excellence for Orthopedic Physical Therapy”
DORMAN SOLUTIONS How We Can es PRAIRIE INDUSTRIESCUMULATIVE Coolant Tub CERTIFIED FUNCTIONAL TRAUMA PFV MEXICO DISORDERS DRY NEEDLING (CTD)
Han
dADHESIVE les CAPSULITIS “FROZEN SHOULDER”
ACTIVE RELEASE TECHNIQUES
CERTIFIED HAND THERAPY
SPRAINS/ STRAINS
MUSCLE ACTIVATION TECHNIQUES
SPINE REHAB
OSHA NON-RECORDABLE TREATMENTS
end
ers
Getting you back on the road
el S
ACTIVE TRUCK PARTS
Door
Fu
For its third quarter results ending May 31, Synergy Resources reported an average of more than 4,100 BOE per day for the quarter, which led to a 108 percent increase in revenue to $25.7 million, compared to $12.3 million from the same time a year prior. Operating income grew to $11.3 million, a 131 percent increase.
Help
GREELEY 506-4066 | EATON 454-2560
WWW.GETPROACTIVEPHYSICALTHERAPY.COM ANNOUNCING OUR NEW LINE OF
AFTERMARKET PARTS FOR MEDIUM & HEAVY DUTY TRUCKS. ts
DORMAN SOLUTIONS PRAIRIE INDUSTRIES PFV MEXICO
Co
ola
ube nt T
dle
s
Sen
der
s
Reg
3 GE
N ER
ATIONS OF Q UA
ulat
ors/P
SERVICE
Freightliner Kenworth Peterbilt International New Process
s
Rockwell Spicer Clark Eaton Cool
ower
GMC Ford Isuzu Hino
Nissan Mack Volvo Fuller
ant
k Ta n
ts
k Tan
igh
Nissan Mack Volvo Wi ndo w Fuller
SERVICE
Thr ee
866*238*4579
WWW.ACTIVETRUCKPARTS.COM
ant
adl
ATIONS OF Q UA
Thr ee
N ER
WE HAVE THE REGION’S LARGEST INVENTORY OF USED PARTS FOR MEDIUM AND HEAVY-DUTY TRUCKS.
Y& LIT
3 GE
Cool
wer
Y& LIT
“We’re encouraged by the result so four first 16 operated horizontal wells, we’re increasing the pace of our development in the Wattenberg Field,” Synergy Co-CEO Ed Holloway told analysts in an earningsATP call in July. 20132 Dorman Ad.indd 1
Han
el
ACTIVE TRUCK PARTS Getting you back on the road
As operator, Synergy completed five horizontal wells for the quarter. As of May 31, the company was the operator of 16 producing horizontal wells in the Wattenberg Field.
Door
s
igh
tock!
Fu
Horizontal well production led to an 83 percent increase in oil and gas production for the company to roughly 380,000 BOEs for the quarter.
Now in S
adl
WWW.ACTIVETRUCKPARTS.COM
He
MEDIUM AND HEAVY-DUTY TRUCKS.
866 238*4579
He
Net income increasedWEtoHAVE $18.9 million, a 103 percent increase THE REGION’S LARGEST INVENTORY OF USED PARTS FOR form the same time the year before. *
s
Rockwell Spicer Clark Eaton
If we don’t have it, we’ll help you find it.
ATP 20132 Dorman Ad.indd 1
2/15/13 11:32 AM
2/15/13 11:32 AM
The company added a third rig in August, which is naturalgas powered. It was added to drill eight wells, half scheduled to be extended-reach laterals. Holloway said the third rig also has prompted the company to speed up its permitting with 50 horizontal permits approved and another 104 in the pipeline. Company officials reported in an earnings call that they planned to spend from $200 million to $215 million to start off its fiscal year 2015, which begins this month. About 95 percent of the expenditures will be used for drilling and leasing in the Wattenberg Field, officials reported.
All three Manufacturers are known for their superior quality and lasting performance—our priorities, precisely. For those times when you need to buy new—and those when recycled makes sense—count on Active. Along with these new items, we stock the region’s largest inventory of recycled and rebuilt parts for medium and heavy-duty trucks. Our people can help you find what you need, fast, even when you’re not certain what you need. Call us—866.238.4579—or visit us at www.activetruckparts.com
IN BUSINESS FOR OVER 35 YEARS!
SEPTEMBER 2014 ENERGY PIPELINE 57
MIDSTREAM PROVIDERS WORKING HARD TO MEET GROWING DEMAND BY TRACY HUME • FOR ENERGY PIPELINE
Have natural gas midstream capacity issues improved in the Denver-Julesburg Basin since last year? The answer depends. In a recent earnings report, David Stover, president and COO of Noble Energy, said that although recent capacity additions “have been helpful,” Noble has experienced “higher than expected third-party processing downtime at multiple facilities, which result in reduced throughput and higher line pressures in certain areas of the basin.” Consequently, Stover said, “... our guidance for the second half of the year includes more conservative assumptions for midstream capacity.” The problems with midstream capacity in the DJ Basin (which encompasses the drilling in Wattenberg Field), are basically the flip-side of a surge in production. Horizontal drilling has led to exponential growth in production that sometimes exceeds the capacity of the existing midstream infrastructure. Ryan Smith, senior energy analyst with Bentek Energy, pointed out that in 2009, Bentek estimated the DJ Basin’s gross gas production at 0.76 billion cubic feet per day (Bcf/d). The DJ’s current gross gas production is estimated at 1.22 Bcf/d, an increase of 62 percent. Bentek projects that natural gas production in the DJ Basin will reach 1.94 Bcf/d by 2018, a 60 percent increase over current numbers. “It’s like if you had a small town with a main street and a few side streets, and the next thing you know, it becomes a big town, so you have to start building freeways and railways and things of that nature,” explained Kevin Williams, senior vice president, North Business Unit, for DCP Midstream, the primary natural gas processor operating in the Wattenberg Field. 58 ENERGY PIPELINE SEPTEMBER 2014
“That’s really what we are doing here.” “Midstream” refers to the infrastructure that bridges the gap between the drilling sites where production occurs - and the distribution systems that deliver processed natural gas to companies and consumers. Midstream infrastructure includes “gathering lines” that connect to producing wells; processing plants that remove contaminants and separate raw natural gas into its various components, including methane; and compressor stations, which compress the gas to help propel it through the high pressure pipelines that carry it to its destination. Some operators, like Anadarko Petroleum Corp., have acquired and/or developed their own midstream infrastructure. For example, in 2006, Anadarko acquired both Kerr-McGee Corp. and Western Gas Resources Inc. The acquisition price for Western Gas included about $1.6 billion in midstream gathering, processing and transportation assets. This year, in Anadarko’s second-quarter earnings call, president and CEO Al Walker emphasized that Anadarko’s positive performance “really does underscore the difference in owning and actually being in charge of your infrastructure and being able to handle, managing your growth by having a midstream organization that is synced up with the upstream.” Walker added, “This quarter is a great quarter to highlight just exactly how important that is and how differentiating that is for us.” Other operators choose to outsource midstream operations to providers such as DCP Midstream. DCP Midstream, headquartered in Denver, is the second-largest natural gas
gatherer and processor; the largest natural gas liquids producer; and one of the largest marketers in the United States, leading the midstream segment. Whether operators choose to develop their own midstream or outsource it is “really just a different business model” said DCP’s Williams. “Some people prefer to be vertically integrated - in other words, they do exploration, production and the gathering and processing of their own gas - and some people want to focus on what their core business is.” DCP’s customers in the Wattenberg Field include, among others, Noble Energy Inc., Synergy Resources Corp. and Bill Barrett Corp. Craig Rasmuson, COO of Synergy Resources, said, “We tip our cap to DCP. They have been working diligently to increase their capacity, spending hundreds of millions of dollars in capital, trying to upgrade an infrastructure that was built during the 1980s to handle vertical wells. “This horizontal renaissance has produced more natural gas than anyone predicted,” Rasmuson said. “No one had a crystal ball to understand what these horizontal wells were going to do. Today’s technology is allowing us to produce much more gas than vertical wells did, so they [DCP] are working their tails off to stay ahead of it.” Rasmuson said that Synergy uses both DCP and Anadarko’s midstream infrastructures, with about 80 percent going to DCP and 20 percent going to Anadarko. Often, the choice of midstream providers is a matter of logistics. “The pads that we took to Anadarko, it was simply that their gas line was nearby and had more capacity. DCP was going to have to get a
two- or three-mile run of pipe to come gather us and Anadarko had infrastructure already in place half a mile away, so it made more sense to go with them in the area that we drilled,” Rasmuson explained. Even so, Synergy still struggles at times with high line pressure. “But that is no different than when we were doing vertical wells only two years ago,” Rasmuson said. “Gas line pressures in this basin have always been an issue.” Rasmuson pointed out that lack of gas line capacity directly impacts oil production. “If you are not moving gas at the right rate, then you are not making oil. The gas is the natural transporter of the oil to the surface. So if you are only able to move two-thirds of the gas, because the pressure’s only allowing two-thirds into the line, then you are only making twothirds of your oil,” he said, “So it does slow the production process.” “You will still get all of that oil and all of that gas, it is just going to be over a longer duration of time,” Rasmuson said. Bill Barrett Corp, which operates a threerig program at the northeastern edge of the Wattenberg, also uses DCP Midstream. “Generally, DCP builds to us at a capacity that has been reasonable for our pace of development,” said Bill Crawford, vice president of finance and marketing at Bill Barrett. “As a producer you always want to have
lower line pressures and fewer interruptions than they give you, but it has not materially impacted our performance.” DCP’s Williams agrees with the idea that collaboration is a critical component of ensuring that midstream capacity is where it needs to be. “On a daily basis, we work very closely to make sure we are co-planning with these producers,” Williams said. Recent enhancements to DCP’s midstream capacity include the opening of the O’Connor Plant near LaSalle in late 2013. “That execution went very well,” said Williams. “The one challenge we had was the thousand-year flood. That was an extraordinary event for our industry and that was happening about the same time we were trying to commission the first phase of that plant. But we commissioned that plant shortly thereafter, and then we expanded it again in the first quarter of 2014, and basically the plant has been running full now for some time. “We are currently constructing a new plant at Lucerne (Lucerne 2), and that will answer the question of doubling our capacity again over a three-to-four year period,” Williams said. “That plant is expected to be done mid-2015.” Lucerne 2 will have a 200 million cubic feet per day (MMcf/d) capacity, increasing the total capacity
of DCP’s nine-plant system in the DJ Basin to 800 million cubic feet per day (MMcf/d). During the first week of August, DCP filed a permit to build a 10th plant in the greater Denver-Julesburg Basin. One of the challenges in matching midstream capacity to production is that the time from conception to completion is considerably longer for midstream infrastructure than for drilling. “If you are a producer, you can go get a permit and drill 14 wells from a pad pretty quick,” said Williams. Compare that to the years it can take to establish new midstream infrastructure. Comparing the speed of drilling operations to the speed of midstream development is like “comparing PT boats to aircraft carriers,” Williams said. “You can get a PT boat up and running pretty quick. Not so with an aircraft carrier. That is why, where drilling is heavy, our infrastructure is trying to catch up.” “But we catch up in very big chunks. When that new Lucerne plant comes on, life will be good, there’s a lot of other facilities that come on out in the field that will help those producers and the pressures will come down on our system and that will help their productivity. Then, as they continue to drill again, it is kind of a cycle, they will pressure us back up,” Williams said.
Take the technology of safet and security seriously. Take the technology of safety and security seriously.
• Highly trained law enforcement professionals teams • • Critical Highly response trained law enforcement • K-9 services Contact us for a customize professionals • Fixed and mobile surveillance systems for officessecurity and drilling rigs assessment today
• Critical response teams • K-9 services Contact us for a customized • Fixed and mobile surveillance security assessment today! systems for offices and drilling rigs
Phone: 415-867-3810 Email: info@singularity-technologies.co
Putting Boots on the Ground and Eyes in the Sky for Your Complete Protection
We make it our duty to protect your interests.
Phone: 800-815-0512 xt 800 Email: info@LEDPS.org www.ledps.org
Phone: 800-815-0512 xt 801 Email: info@singularity-technologies.com SEPTEMBER 2014 ENERGY PIPELINE 59 www.singularity-technologies.com
FOR ALL YOUR OIL FIELD TRAILER NEEDS
28685 HWY 34 BRUSH, CO 970-842-3600 • 800-764-4497 WWW.SILVERSPURTRAILERS.NET
60 ENERGY PIPELINE SEPTEMBER 2014
ADVERTISER INDEX 4 Rivers Equipment - Ag, LLC ............................60
KB Oil Tools, LLC ...............................................22
A & W Water Service ..........................................50
Law Enforcement Direct Prof Services ..............59
A-1 Base, Inc. .....................................................27
Lolly’s Hallmark Shop .........................................27
Active Truck .......................................................43
Lundvall Enterprises ...........................................21
Agfinity...............................................................07
Maximum Safety ................................................07
Aims Community College ....................................09
McAda Fluids Heating Services ..........................51
Alberts Water & Wastewater Specialists .............55
MetLife-Randy Andrade .....................................41
All Colorado Semi - GT........................................31
Mike Mitchell Insurance Agency ..........................49
Anadarko Petroluem Corporation .......................03
National Oilwell Varco .........................................57
Anchor Paint Manufacturing ...............................56
Pawnee Buttes Seed .........................................44
Becker Safety & Supply ....................................35
Power Equipment Company ...............................29
Big R of Greeley .................................................21
Power Motive Corp.............................................16
Bill Barrett Corp .................................................63
Premier Healthcare Services-GT ........................54
Bobcat of the Rockies........................................52
Prestige Chrysler Dodge ................................32-33
Border States Electric (BSE) ..............................06
ProActive Physical Therapy / Sports Medicine ....43
Brekke Storage / EP ...........................................45
RC Auto Detailing & Carpet Cleaning ..................55
Clark Enterprises - GT ........................................41
Red’s Dogs & Donuts ........................................ 55
Colorado Mobile Drug Testing .............................15
Reedesign Concepts ......................................... 04
Compliance Specialist of CO ..............................31
Roosters Men’s Grooming Center ...................... 48
Contemporary Cook ...........................................25
Schneider’s FR Clothing LTD ............................. 25
Contractors Equip Center Rental & Sales ...........55
Sears Real Estate ............................................. 48
CRP 4 x 4 Diesel Performance ...........................47
Select Energy Services .................................... 17
Devoe Contracting .............................................30
Shade Outdoor Living Solutions ......................... 50
Diamond B Oilfield Trucking Inc. ..........................57
Sharp Bros Seed .............................................. 19
Dickey’s Barbecue Pit-Corporate........................37
Signs for Less................................................... 56
DOT Help Services.............................................37
Silver Spur Trailers............................................ 60
Employment Service of Weld Cou .......................44
Tetra Tech-Complex World ................................. 49
Energy Pipeline Subscribe ..................................60
Tisco Energy Supply ......................................... 53
FMC Technologies ..............................................27
Trinity Energy Solutions ..................................... 57
Fremont Motors - GT ..........................................15
Truck logic / Meadow Creek GT ......................... 13
Fremont Motors - GT ..........................................26
Wagner Equipment Co. ...................................... 02
Fremont Motors - GT ..........................................54
Weld County Garage.......................................... 10
Interstate Rental - GT .........................................64
Whiteside’s / Loveland ....................................... 23 SEPTEMBER 2014 ENERGY PIPELINE 61
DATA CENTER
The oil and gas industry is a large part of Colorado’s economy. Below, find statistics on energy pricing, drilling production, well permits, spills and rigs.
2014 GAS PRODUCTION
2014 DRILLING PERMITS
COUNTY *YTD PRODUCTION (% OF STATE) Garfield ................. 242,082,478 (42%) La Plata.............. 126,417,906 (21.7%) Weld ....................... 93,235,636 (16%) Las Animas............. 37,034,252 (6.4%) Rio Blanco.............. 34,458,644 (5.9%) Mesa ...................... 15,385,803 (2.6%) State ............................... 582,047,920 Source: Colorado Oil and Gas Conservation Commission as of Aug. 11; figures do not include June or July production numbers.
(thousand barrels per day) Region ........ Aug. 2014 .............Sept. 2014 Bakken........... 1,116 ................. 1,136 Eagle Ford ...... 1,479 ................. 1,510 Haynesville ...........54 ...................... 54 Marcellus .............50 ...................... 51 Niobrara .............350 .................... 356 Permian ......... 1,680 ................. 1,718 Utica....................37 ...................... 40 Total............... 4,766 ................. 4,865 Source: Energy Information Administration, Aug. 11
(million cubic feet per day) Region ........ Aug. 2014 .............Sept. 2014 Bakken........... 1,325 ................. 1,348 Eagle Ford ...... 6,506 ................. 6,590 Haynesville ..... 6,592 ................. 6,581 Marcellus ..... 15,632 ............... 15,884 Niobrara ......... 4,448 ................. 4,494 Permian ......... 5,645 ................. 5,707 Utica.............. 1,270 ................. 1,348 Total............. 41,418 ............... 41,952 Source: Energy Information Administration, Aug. 11
COLORADO ACTIVE WELL COUNT
NO. (% OF STATE TOTAL)
Weld.......................................................................................1,282 (53.7%) Garfield..............................................................................666 (28%) Rio Blanco.................................................................74 (3.1%) Lincoln....................................................................73 (3%) La Plata.........................................................41 (1.7%) Yuma................................................................32 Moffat........................................................28 Mesa...................................................24
NATIONAL OIL PRODUCTION
NATIONAL GAS PRODUCTION
COUNTY
Adams............................................21 Arapahoe........................................21
2014 OIL
PRODUCTION
Montezuma...............................17
COUNTY *YTD
Cheyenne...............................16
Weld ..............18,185,207 (79%) Rio Blanco .....1,697,055 (7.4%) Garfield .............759,034 (3.3%) Cheyenne..........522,024 (2.3%) Lincoln ..............524,745 (2.3%) Moffat................164,769 (0.7%) State......................... 23,027,290
Gunnison...........................13 Jackson.............................13 Morgan.........................6 Larimer....................4 State ........................................................2,386 Source: Colorado Oil and Gas Conservation Commission as of Aug. 4.
COLORADO DRILLING RIG COUNT
Colorado ................................. 78 Weld ...................................... 51 Garlfield ................................. 12 Source: Colorado Oil and Gas Conservation Commission as of Aug. 4.
PRODUCTION (% OF STATE)
Source: Colorado Oil and Gas Conservation Commission as of Aug. 11; 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..........................................................................21,486 Garfield .....................................................................10,780 Yuma...........................................................................3,892 LaPlata .......................................................................3,337
Las Animas .................................................................3,047 Rio Blanco ..................................................................2,911 36 others ....................................................................6,964 State .........................................................................52,417
Source: Colorado Oil and Gas Conservation Commission as of Aug. 4.
62 ENERGY PIPELINE SEPTEMBER 2014
Bill Barrett Corporation is a Colorado company and a proud partner of the Greeley Community.
New Greeley DJ Headquarters
Producing Energy Providing Jobs Protecting the Environment Promoting Community
www.billbarrettcorp.com
|
NYSE: BBG SEPTEMBER 2014 ENERGY PIPELINE 63
RENTING
THE SMART WAY TO GET THINGS DONE Interstate Rental and Sales is your source for contractor’s equipment in the oil field industry. We also specialize in the repair of construction & heavy equipment. 24 hour sales & service.
Call INTERSTATE RENTAL & SALES, INC. at 303-485-5600 today for all your commercial & residential equipment needs. 8127 W. Interstate 25 Frontage Road • Frederick, CO 80516 Rental/Sales (303)485-5600 • Email Address: irs@interstaterental.net 64 ENERGY PIPELINE SEPTEMBER 2014 Gary Jenson/Sales (970)689-1956 • Alan Fisher/Shop&Service (303)956-0768