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THE ONG SPOTLIGHT - Page 3
Robert Beatty, CEO, “O” Ring CNG Fuel Systems, L.P.
ALTERNATIVE FUELS - Pages 28-29 Tri-State Alternative Fueling Expo & Conference
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WATER MANAGEMENT - p 6-7 HEALTH & SAFETY - p 10-11 ENVIRONMENTAL MANAGEMENT - p 12-13 INDUSTRY INSIGHT - p 14-15 NEW TECHNOLOGY - p 16-17 LEGAL & REGULATORY - p 24-25
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The Northeast ONG Marketplace
April 30 - May 1, 2014 Belmont County Carnes Center, St. Clairsville, Ohio
BELMONT COUNTY SUPPORTS AMERICA’S ENERGY INDEPENDENCE JOIN US IN BELMONT COUNTY FOR THE 3RD ANNUAL OHIO VALLEY REGIONAL OIL & GAS EXPO TO EXPLORE AND UNDERSTAND NEW POSSIBILITIES IN THE UTICA SHALE PLAY. LIMITED SPONSORSHIPS & EXHIBITOR OPPORTUNITIES ARE AVAILIABLE. SPONSORS
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Hopefully you enjoyed the redesign of the last issue of The ONG Marketplace. Also, Shale Media Group and The ONG Marketplace have collaborated to redesign the website, ongmarketplace.com. As always we welcome your feedback. If you have any comments, questions or suggestions for the next edition, please email us at info@shalemediagroup.com or call 215-317-1177.
April 2014
Page 3
THE ONG SPOTLIGHT A Message from Robert H. Beatty Jr, CEO, “O” Ring CNG Fuel Systems, L.P. Innovation. American ingenuity. Resourcefulness. Environmentally-conscious living. Energy independence. Support of local economies. These are just a few of the ideals that “O” Ring CNG Fuel Systems, L.P. embodies in its’ business model to alleviate our nations dependence on foreign oil and utilize local, clean natural gas to power the transportation industry. Along the path to success, “O” Ring CNG Fuel Systems, L.P., or “O” Ring CNG, has transformed a grassroots effort to utilize compressed natural gas (CNG) as a vehicular fuel into a regional movement that is now garnering national-level attention. For “O” Ring CNG, the idea for a locally sourced alternative for vehicle fuel began to take shape in 2006, a few months after hurricane Katrina. Taking note of increasing oil prices and our nation’s dependency on foreign sources oil, CEO of “O” Ring CNG, Robert H. Beatty, Jr., decided to take full advantage of Pennsylvania’s abundant supply of natural gas by using it to power his own small fleet of business vehicles. Beatty capitalized on his (then) 25+ years of experience in the compressor industry and built his own CNG fueling station. He then purchased or converted all of his personal and company off-road equipment to operate on CNG—everything from a dump truck, to lawnmowers, and even a forklift eventually enabling his entire fleet of equipment and vehicles to operate on CNG. “By making the switch to an alternative, clean, abundant, and cheaper fuel source, I cut my own fuel bills in half and saved our company over $4,000 per month, “ said Beatty. “I am also a patriot - I believe in reducing our nation’s dependence on foreign oil and promoting our own local economy by using the fuel supply that is literally right under our feet.” For Beatty, the next step was sharing the wealth. He goals expanded from not only cutting his own business costs and doing his part to lessen the demand for oil, but to also help others’ work towards energy independence and more profitable businesses. “I started by building about a half dozen private CNG fuel stations for other businesses to help them utilize PA gas supply and cut costs too. The results were so overwhelmingly positive that I saw a new business opportunity for alternative fueling stations.” Beatty’s unique experience in the compressor industry as well as experience as a natural gas well owner and operator has put him in an advantageous position as an industry expert as Pennsylvania and the United States moves more rapidly towards alternative fuel solutions. The road to success was not without challenges: according to Beatty, one of the most difficult challenges to overcome is a lack of understanding about the benefits of CNG. “Most people have an inherent fear of the unknown. A lot of our time and
efforts are focused on outreach programs to educate fleet owners on just how safe and beneficial CNG can be for them,” says Beatty. Towards that end, in 2013 “O” Ring CNG built a new CNG educational facility, collocated with the Brookville, PA CNG station. In addition to accredited college courses from the Community College of Allegheny County, “O” Ring CNG offers its own outreach programs and the facility is also open to other entities that are interested in promoting the use of alternative fuels. The education center is dedicated to dispelling myths and explaining the facts about CNG and other fuels. For instance, there one might learn that in addition to the cost and economical benefits, CNG is a much cleaner burning fuel than petroleum based fuel products. In fact, for every 1 atom of carbon released when burning CNG, 27 carbon atoms are released when burning the equivalent energy amount of diesel. Despite what some may erroneously believe, CNG is also much safer than petroleum based fuels. As a gas, it is lighter than air so in the event of a leak, spill, or even a catastrophic crash, CNG will simply vent off harmlessly into the atmosphere. Additionally, natural gas vehicle technology improved vastly over the past two decades. The tanks used to hold CNG are nearly indestructible and in the case that they are compromised; they are much less likely to cause any additional damage during a crash than a petroleum tank. Today Beatty can proudly state he is almost entirely energy independent - using Pennsylvania natural gas for heating, cooking, electric, and—of course—for vehicle fuel. More importantly, his local grassroots effort has taken hold and he has become a regional leader in the CNG industry, recognized by regional businesses, politicians, and industry partners as the go-to CNG expert in the tri-state area. In 2013, Beatty was awarded the Energy Leadership Award from the Pittsburgh Business Times and “O” Ring CNG was also featured on the In View Series, hosted by Larry King. As board member of the Pittsburgh Region Clean Cities (PRCC), he was recently selected to represent the organization at the 2014 national conference in Washington, DC. Beatty believes the next Industrial Revolution is upon our country, and you can find him leading the charge by inspiring crowns at various regional and national events. “O” Ring CNG’s recent projects include full-scale, turn-key CNG station projects for companies such as the Clinton County Solid Waste Authority, in McElhatten, PA; Ringler Energy in Marengo, OH; and Shale Media Group in Barkeyville, PA. In addition, Beatty recently chaired the board of the 2014 Tri-State Alternative Fueling Expo & Conference – the first full-scale expo and conference in our area dedicated solely to alternative vehicle fuel technologies. As Beatty often says during his talks: “There is no question as to the benefits of utilizing a cleaner, more economical, locally sourced fuel in our vehicles. The only question that remains is whether or not you will help lead the charge or will have to play catch-up later after the rest of the country is already doing it. You don’t want to be behind the power curve - the time to invest in CNG is now.” Learn more about “O” Ring CNG Fuel Systems at www.oringcng.com and follow next year’s Tri-State Alternative Fueling Expo & Conference updates at www. alternativefuelingexpo.com.
Page 4
The Northeast ONG Marketplace
ASSOCIATION MEETINGS
Lewisburg Warehouse/ Office space for lease A Over 12,000 square feet. 3 loading docks. A 8 offices. Easy access from Rt. 15
OGIS New York | April 7 - 9, 2014 New York, NY - www.ipaa.org
A South of Williamsport, PA. Call: 1-570-568-1412
KOGA Eastern Kentucky Meeting | April 29, 2014 Prestonsburg, KY - www.kyoilandgas.org TOGA Annual Meeting | May 21 - 23, 2014 Gatlinburg, TN - www.tennoil.com
IPAA Mid-Year Meeting | June 18 - 20, 2014 Colorado Springs, CO - www.ipaa.org VOGA Summer Meeting | June 25 - 27, 2014 Virginia Beach, VA - www.vaoilandgas.com
Tim Kuhns ~ for info.
M P J
AINTING
CONTRACTOR CORP.
Since 1970 Mike John, President Olean Industrial Park • 291 Homer St. Olean, NY 14760 Phone: 716-373-3033 www.mjpaintingcontractor.com
Member of: Veriforce ISNetworld Pipeline Testing Consortium Midwest Energy Assoc. Certified In: SPC Coatings Denso Coatings Plural Component NACE CIP Level 1
Services offered: Sandblasting Epoxy Coatings Above and Below Ground Coatings Tanks and Towers Natural Gas Compressor Stations Natural Gas Pipe Lines Oil Refineries
Regional
• National
ARTICLES
ADVERTISER INDEX
THE ONG SPOTLIGHT: Robert Beatty, CEO, “O” Ring CNG Fuel Systems, L.P.................................... 3
ALPINE ELECTRIC............................................... 27
“O”RING.............................................................. 30
ALBERTS SPRAY SOLUTIONS.............................. 5
PENNINGTON SEED............................................ 17
WATER MANAGEMENT: Produced Water in the
AMERICAN REFINING GROUP........................... 27
PPC LUBRICANTS.......................................... 18,27
BRI-CHEM............................................................ 18
PSB....................................................................... 17
CHANCELLOR INSURANCE................................ 19
REDGUARD.......................................................... 11
Marcellus Shale is Growing.................................. 6-7
HEALTH & SAFETY: The Fundamentals of Blast-
CST INDUSTRIES.................................................. 5
RIGMAIDS............................................................ 27
D&S INDUSTRIAL PRODUCTS............................. 7
ROCKWATER......................................................... 1
DMC DESIGN......................................................... 8
SAMCO ENTERPRISES........................................ 18
DR WELL SITE..................................................... 19
SHALE MARKETS................................................ 27
ERNST SEED........................................................ 25
SHALE MEDIA GROUP........................................ 25
ETC....................................................................... 17
SHANNON SAFETY PRODUCTS......................... 29
FAIRMONT SUPPLY............................................. 23
SKYCASTERS....................................................... 25
FOSSIL ROCK SERVICES.................................... 19
STEEL NATION STEEL BUILDINGS.................... 26
GLUVCO............................................................... 27
ST!CK................................................................... 18
GOODWIN PUMPS - XYLEM............................... 19
THE SHALE ACADEMY.COM............................... 27
GREENHUNTER WATER...................................... 31
UNIT LINER............................................................ 9
GREER INDUSTRIES........................................... 13
V-F CONTROLS.................................................... 18
JM MILLER........................................................... 18
VEYANCE TECHNOLOGIES................................... 8
CALENDARS
KEYSTONE CLEARWATER SOLUTIONS............. 29
WEAVERTOWN ENVIRONMENTAL.................... 18
ASSOCIATION MEETINGS................................ 4 TRAINING & WORKSHOPS........................... 19 UPCOMING EVENTS....................................... 21 NETWORKING EVENTS.................................... 8
LEE REGER BUILDS............................................ 17
Resistant Building Design for........................... 10-11
ENVIRONMENTAL MANAGEMENT:
Responsible Reclamation: Restoring................ 12-13
INDUSTRY INSIGHT:
The Eastern US Shale Plays............................. 14-15
NEW TECHNOLOGY: Wireless Remote Monitoring - Best Tool ..................................... 16-17 LEGAL & REGULATORY: It’s not just Capital.
It’s a Partnership.............................................. 24-25
ALTERNATIVE FUELS: Tristate Alternative
Fueling Expo & Conference.............................. 28-29
EVENTS OHIO VALLEY OIL & GAS EXPO.................... 2 DUG EAST.......................................................... 20 EGCR................................................................... 18 PIOGA’S CONFERENCE.................................. 26 NAPE EAST........................................................ 13 UTICA-MARCELLUS INFRASTRUCTURE.... 27
KUHNS BROTHERS............................................... 3 LEE SUPPLY........................................................... 9 MACHINERY STREET............................................ 7 MANSFIELD CRANE............................................ 19 MARCELLUS SAFETY CONSULTING.................. 17 MID-ATLANTIC STORAGE.................................. 19 MIDSTREAM PHOTO.COM................................. 27 MJ PAINTING CONTRACTORS.............................. 3 NEW PIG.............................................................. 22 NORTH AMERICAN FIELD SERVICES................ 29 OIL & GAS SAFETY SUPPLY............................... 32 OIL RESEARCH CENTER....................................... 8
CONTACT US FOR ADVERTISING, INFORMATION OR MAILING LIST CHANGES:
The Northeast ONG Marketplace P. O. Box 1441 • Oak Hill, WV 25901 855-269-1188 Fax: 304-465-5065 E-mail: info@ongmarketplace.com The Northeast ONG Marketplace will not be liable for any misprint in advertising copy which is not the fault of The Northeast ONG Marketplace. If a misprint should occur, the limits of our liability will be the amount charged for the advertisement. We do not assume responsibility for the content of advertising or articles herein. Any warranties or representations made in the advertisements are those of the advertisers and not The Northeast ONG Marketplace.
April 2014
Page 5
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INTERESTED IN ADVERTISING? CONTACT US AT INFO@ONGMARKETPLACE.COM.
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The Northeast ONG Marketplace
WATER MANAGEMENT
PRODUCED WATER IN THE MARCELLUS SHALE IS GROWING By: Kyle Wendel & Joseph Tinto, GE Power & Water Intro: Despite having an abundance of fresh water, the Marcellus shale only has a handful of disposal wells, and thus has to rely mainly on neighboring Ohio for deep well disposal. Additionally, the flowback and produced water in the Marcellus is over five times as salty as seawater, rendering it too saline for municipal treatment and surface discharge. The majority of flowback and produced water is being treated to reduce suspended solids and heavy metals creating a clean brine, which is then blended with fresh water and reused for new hydrofracture operations. This “floc and drop” treatment method significantly reduces the need to truck high volumes of water to Ohio. Using the disposal wells in Eastern Ohio has a high cost due to the long truck hauling distances and the rising deep well injection costs. Produced water will continue to flow from fractured wells for over 20 years at roughly the rate of five to twenty barrels per day. As fields began to mature, and or as drilling activity declines in a well field, the supply of produced water will become greater than the volume needed for hydrofactruring new wells. As supply outstrips demand, the blend and reuse option will not be Feed Brine Concentrated Brine as applicable or perhaps Steam Vapor even available. In lieu of Distillate/Condensate trucking this produced water to Ohio, another option will be the crystallization of this brine into valuable byproducts. Crystallization is a well proven and robust technology for treating high total dissolved solid Mechanical Brine Heater (TDS) fluids for waste Crystallizer Vapor Vapor Body Compressor stream reduction and Recirculation resource recovery. The Pump use of crystallization for the recycle and reuse of produced water, creating valuable products for both the well field and local industry, will significantly reduce or eliminate the need for trucking and deep well disposal. The resources of value are primarily; 1. Water: either (clean distilled water for local boiler use) or clean, crafted salinity solutions (3,000 – 50,000 mg/L) for use in the well fields per the operators requirements. 2. High density “clean” brines (1.5 s.g fluids) for well field uses such as well kill fluids, formation stabilization, or mud fluid viscosifiers. 3. Beneficial use salts (high purity NaCl) for use as feed stock for industrial chemical production such as sodium hypochlorite or feed stock to a chloralkali facility for the production of hydrochloric acid.
Today, a properly optimized crystallizer facility, treating well field produced water, can nearly eliminate the need for deep well disposal, dramatically reduce truck hauling runs and distances, and provide valuable beneficial use products. The use of an optimized crystallizer facility can substantially reduce overall well field water management operational costs. The Produced Water Crystallizer Process will involve the following steps • Pretreatment The produced water will require the removal of suspended solids, dissolved iron and manganese. In optimizing the recovered resources, additional constituents such as barium may be required to be removed. • Detection and control of NORMs When removing barium from produced water specific methods must be undertaken to ensure that the sludge created and removed in pretreatment is not contaminated by NORM (naturally occurring radioactive material). GE Water & Process Technologies has spent five years, in cooperation with NETL (National Energy Technology Lab), to develop methods for detecting, and handling NORM in this process in a safe and regulatory compliant manner. The NORM material is kept below local health and safety limits. • Crystallization Crystallization involves concentrating the waste stream to the point(s) where specific salts will precipitate as solids (crystals). The process extracts water vapor which is condensed into very pure distillate. Some of the higher soluble salts will be removed from the crystallizer as a “clean” heavy brine. • Distillate water and crafted salinity solutions The distillate water has use as boiler feed water and some local industry may wish to purchase this water. In most cases the distillate is mixed with some of the “clean” heavy brine to craft specific salinity solutions ranging from 3,000 – 30,000 mg/L for well field use. • Heavy Brine and purification The crystallization process will create “clean” heavy brine, having a 1.5 s,g, which has many well field uses. The heavy brine pulled from the crystallizer is taken through purification steps to ensure the applicability to targeted use. • Beneficial salts and purification The crystallization process will create clean beneficial use salts such as sodium chloride or calcium chloride. The beneficial use salts created in the crystallizer are taken through purification steps to insure the applicability to targeted use. Summation: As the production of shale gas in the Marcellus increases, so will the volume of produced water. To eliminate the need of costly trucking and deep well disposal, producers have and will turn to the reuse of the produced water for future hydrofractruing operations. In some cases, this reuse option will not be sustainable as fields mature and drilling activity declines. Crystallization of the produced water to generate valuable by-products will allow the industry to avoid trucking the produced water to Ohio for deep well disposal. For more information, please contact Kyle Wendel +1 425 828 2400, Kyle.Wendel@ ge.com or Joseph Tinto +1 425 691 2472, Joseph.Tinto@ge.com
April 2014
WWW.ONGMARKETPLACE.COM FOR LINKS TO UPCOMING INDUSTRY EVENTS.
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The Northeast ONG Marketplace
NETWORKING EVENTS April 2
April 26
YPE Pittsburgh Crew Change Bridgeville, PA | www.ypepittsburgh.org
Elite Crew Change Bridgeville, PA | www.ypepittsburgh.org
April 10
May 8
Energy Group Mixer Wellsville, PA | stephanie.paluda@84lumber.biz
April 22 OVOGA Boomtown Panel Wheeling, WV | www.boomtownpanel.com
Energy Gala Washington, PA | www.bizjournals.com
May 10 A Shale-abration Cambridge, OH | www.cambridgeohiochamber.com
FOR MORE EVENTS VISIT WWW.ONGMARKETPLACE.COM/EVENTS.
WWW.ONGMARKETPLACE.COM
April 2014
Page 9
FRACT OR FICTION?
Potassium sodium carbonate is one additive in fracturing fluid? See the answer on page 26.
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Page 10
The Northeast ONG Marketplace
HEALTH & SAFETY
THE FUNDAMENTALS OF BLAST-RESISTANT BUILDING DESIGN FOR PETROCHEMICAL FACILITIES By: Ali Sari, Ph.D., PE, Principal Consultant, Atkins A new frontier Blast-resistant building design is a relatively unexplored frontier. For one thing, very little research has been done on the actual effects of blasts on various types of structures. Then there are aesthetic and psychological considerations; in addition to making a building safe, it’s important to create interior spaces that are functional and provide appropriate levels of comfort for personnel. The reason my team was hired by RedGuard of Wichita, Kansas, to help design blastresistant buildings was that we’re one of the only engineering firms in the world with actual blast experience. We were called in to investigate the Texas City, Texas, refinery disaster in 2005, which provided us with data that’s ordinarily very difficult to come by, and which informed our efforts to design new and safer structures for personnel in blast zones.
But some applications call for foundation-mounted facilities with office-like interiors and amenities. RedGuard’s answer to this is SafetySuite, which feels less like a warehouse and more like an executive office on the inside. In addition to being more elegant and somewhat more permanent (usually foundation-mounted), SafetySuites offer a psychological advantage: many people are accustomed to seeing finished interior walls in permanent structures, so they feel safer in this type of environment. Making sure it works Various engineers performed analysis on our design, trying to predict how it would behave in a blast, and some said it would slide or roll across the ground. My results indicated that it would not do so, but with all our math and real-world observation, we really didn’t know what would happen until we tested it.
Structural considerations When we design a blast-resistant building, we start with a framework similar to that of the human rib cage. You can appreciate the strength of this natural construct if you have ever seen slow-motion video of a boxer taking a punch to the side of the body. His ribs compress in a way that dissipates the energy of the punch over a large surface area, protecting the vital organs inside. The same is true of the steel studs we place at 11 to 12 inch intervals in the frame of a blast-resistant building. When we weld steel walls around these “ribs,” we have a structure many times tougher than a traditional building. The interior walls are often made from oriented strand board, which minimizes the likelihood of wall shrapnel breaking free and injuring personnel. Practical considerations We equip every blast-resistant building with battery powered emergency lights, smoke detectors and a fire extinguisher. Broken glass is a huge danger in a blast, so we use tamper-proof fluorescent light fixtures, which are designed for correctional facilities. They have hard plastic diffuser housings with shielded fluorescent tubes inside. If a tube breaks, the glass is safely contained inside these two protective layers. Electrical and communication wiring conduits are deliberately left exposed so any damage incurred in a blast will be visible, and personnel will know not to turn power on until it’s repaired. Making it comfortable Many of the blast-resistant buildings we’ve helped design for RedGuard are placed in the field with very few frills, and they work well in a variety of applications, from guard shacks to tool cribs. They can be transported like shipping containers, and this portability allows petrochemical facilities to move them quickly and easily as needs and work flows change.
We detonated 1,250 pounds of high explosive ANFO charge at a standoff distance of 110 feet from the building, which created a blast strength far in excess of the ratings required to meet ASCE low- to medium-response standards. The building suffered no structural damage, and it did not slide or roll. The furnishings, equipment and test dummy inside also sustained no damage. Although blast-resistant building design is still a comparatively new discipline with very little information available to the safety engineers who are tasked with protecting employees, we are making progress at last. Learn more at redguard.com or call 855.REDGUARD.
April 2014
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MARCELLUS • UTICA ANTRIM • NEW ALBANY Each month over 10,500 professionals receive a free copy of The Northeast ONG Marketplace, the only publication that covers all of the shale plays in the northeast U.S. oil and gas industry. Our affordable rates allow large and small businesses alike to let the industry know that you are here to do business.
THE NORTHEAST ONG MARKETPLACE 855-269-1188 • 304-465-6640 info@ongmarketplace.com www.ongmarketplace.com
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The Northeast ONG Marketplace
ENVIRONMENTAL MANAGEMENT
RESPONSIBLE RECLAMATION: RESTORING ECOLOGICAL FUNCTION By: Randy Ferguson, Ernst Seeds
Many progressive operators in the oil & gas industry have recognized a unique opportunity to go a step beyond basic reclamation standards and adopt a practice of responsible reclamation. So what is this concept of “responsible reclamation,” and isn’t reclamation, by its very definition, already a responsible practice? It’s a fair statement. After all, Merriam-Webster defines reclamation as: “to restore to a previous natural state.” That sounds pretty responsible, right? But what if we could actually improve the land from what it was before development? What if, in the years after disturbance, affected areas became bio-diverse ecosystems with improved ecological function, greater wildlife populations, less erosion and improved water and soil quality? This notion of responsible reclamation suggests a deeper commitment to informed, proactive and, well… responsible reclamation practices. It promotes the use of native species indigenous to the area being restored. It’s an opportunity to affirm the industry’s commitment to environmental stewardship and position it favorably in the minds of landowners and the public at-large.
value to strip mine reclamation seed mixes. He soon learned, as have others, that switchgrass offers a whole host of ecological benefits including strong carbon-fixing properties, outstanding erosion control capabilities and great biomass potential, especially on otherwise marginal grounds that hold little other agricultural value. Less than 25 years after those early native seed introductions, Ernst Conservation Seeds now offers over 400 species of native and naturalized seeds and live plant materials. From asters to Zizia aurea (Golden Alexanders), the company offers the widest selection of native plant species and ecotypes available. The topography of the Marcellus and Utica shale plays varies significantly from those of mid-western oil states like Oklahoma and Texas. A ten-mile stretch of pipeline in Pennsylvania, for instance, might pass through wetlands, over steep mountain slopes, across rivers and through agricultural areas and state game lands. These areas should be reclaimed with vegetation that best matches the intended purpose of the land, the biodiversity that existed before disturbance and which best addresses issues such as erosion control, habitat fragmentation and other environmental concerns. This approach to reclamation involves more planning and a bit higher cost at the outset, but pays dividends over time in the form of lower maintenance costs, improved environmental quality and a stronger public image for the contractor and the industry as a whole.
Disturbed sites and erosion control efforts used to follow a fairly simple mantra: “keep the soil in place.” This was largely the case when Calvin Ernst founded what was then Ernst Crownvetch Farms in 1964. The propagation of crownvetch seed for vegetating and securing highway rightsof-way and median strips is what put the company on the map and carried the business for decades.
Many companies have already adopted an approach that includes assessing the various ecosystems their pipelines will traverse and developing a menu of predetermined native seed mixes and bioengineering (live plant material) species to be placed on each as they are encountered. Others take this one step further by putting biologists, botanists or horticulturists in the field to assess the specific ecosystems within each project, develop a species inventory, replicate and, in some cases, enhance that inventory through native seed mixes and bioengineering materials customized for each project and/or site.
Then, in the late ‘80’s, a shift in thinking began to take place. The benefits of native plants were fast being recognized as preferable over the use of non-natives, specifically in rehabilitating strip mine sites and other disturbed areas. These plants were ideally adapted to the environment after centuries of natural selection, they required minimal inputs and very little maintenance.
These areas may consist of rock fill, little to no topsoil or heavily compacted areas. These sites tend to be generally low in fertility and can benefit by adding a layer of topsoil or organic matter. Typically, the topsoil originally removed from the surface has been banked for use in the reclamation process. Always check the soil pH and add the correct amount of lime as recommended by soil analysis. After re-grading the site, eradicate any vegetation that may have re-established on-site, as it is easier to control unwanted weed infestations before the new seeding is complete. Perennial weeds not addressed before seeding will be difficult to remove after.
Native deertongue was one of the first such native species used in Pennsylvania strip mine reclamation where low soil pH was a challenge. Ernst credits the propagation and marketing of deertongue seed as the turning point in his Company’s eventual transition from the non-native crownvetch that had driven sales for the first 20plus years to the native plant species that would assume that role moving forward. Soon after, the Company planted its first foundation switchgrass seed (‘Shelter’ variety) in 1988. Ernst was interested in switchgrass because it added wildlife
The next step in responsible reclamation involves assessing and preparing the site for seeding activity.
April 2014
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Seeding methods such as hand seeding, mechanical broadcasting, hydroseeding or drill seeding may be used across the project area. Once the seed has been planted, drag with a light harrow or cultipacker, or track it in to ensure good seed-to-soil contact of 1/4”-1/2” deep. Following with straw mulch, hydromulch or covering with a straw/coconut fiber mat is recommended to protect the seed from drying out and washing away. Follow erosion & sedimentation control BMPs that fit the situation. With adequate temperature and moisture, the seed should start to germinate within approximately three weeks. Due to the varying terrains that these projects traverse, it’s wise to assess the site and use the appropriate maintenance schedule. Mowing to 4”-6” high or spot-spraying competitive, invasive weeds should follow seeding during the first year. Ernst Conservation Seeds can assist in your efforts to adopt responsible reclamation practices. We have fifty years of conservation and restoration experience, and a highly experienced staff of sales consultants and plant materials specialists. We take the time to discuss your project’s individual needs and help you make informed species selections. If necessary, we can often send a representative to consult with you on-site, or we can refer you to the appropriate resources through our extensive network of associated partners. For more information, visit www.ernstseed.com or call 814-336-2404.
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The Northeast ONG Marketplace
INDUSTRY INSIGHT
EASTERN U.S SHALE PLAYS By: Kristie Kubovic, Director of Communications, Shale Media Group Contribution By: Adam Larson, Staff Writer, Shale Media Group Edited By: Mindy Gattner, Editor, Shale Media Group
Shale Media Group has aggregated countless sources of information across our country on the shale oil and gas industry, while reaching millions through our news and information system. This first-of-its-kind chart is meant to be a general overview of the eastern U.S. shale plays. Information such as area, shale depth, thickness and estimated recoverable gas varies from source to source and can be affected by the age of the study, measurement methods and economic variables. The recoverable gas estimates tend to increase from year to year, especially in the more developed plays. Some shale plays even receive different names in different states and are often grouped in various ways. Jeff Reid, Senior Geologist, North Carolina Geological Survey, Division of Energy, Mineral and Land Resources, NC Department of Environment and Natural Resources related, “It is like comparing apples and kumquats.” Greg Kozera, President, Virginia Oil and Gas Association (VOGA), expressed, “There are technical challenges, but it is important to get fresh data on the industry. Almost anything is possible with technology. Some of the bigger challenges are linked to the need for public education.”
1. MARCELLUS 1.1. Location: southern New York, northern and western Pennsylvania, eastern Ohio, western Maryland, most of West Virginia, extreme western Virginia, below Lake Erie and into southern Ontario, Canada 1.2. Basin: Appalachian Basin 1.3. Age: Devonian age 1.4. Area (in square miles): 104,000 sq. miles 1.5. Shale Depth: 2,000 to 9,000 ft 1.6. Thickness: 50 to 350 ft 1.7. Estimated Recoverable Gas (in trillion cubic feet): 410 to 516 Tcf 1.8. Producers: Range Resources, Chesapeake Energy, Dominion, Rice Energy, CONSOL Energy, Atlas Energy, Noble Energy 1.9. Production Start Up: Range Resources pioneered the Marcellus Shale play in 2004 by drilling a vertical well, the Renz #1. 1.10. Misc: The Marcellus Shale formation is thought to be the second largest natural gas field in the world.
4. ANTRIM 4.1. Location: Michigan, extreme northern Ohio and extreme northern Indiana 4.2. Basin: Michigan Basin 4.3. Age: Late Devonian age 4.4. Area: 39,000 sq. miles 4.5. Shale Depth: 600 to 2,200 ft 4.6. Thickness: 60 to 220 ft 4.7. Estimated Recoverable Gas: 20 Tcf 4.8. Producers: BreitBurn Energy Partners, Atlas Energy, Whiting Petroleum, HighMount E&P LLC 4.9. Production Start Up: The Antrim Shale has produced gas since the 1940s, but the play was not active until 1980. 4.10. Misc: Horizontal drilling is not typically used in the Antrim shale; however, it has been produced by vertical wells for several decades.
2. UTICA 2.1. Location: New York, Pennsylvania, eastern Ohio, West Virginia, extreme eastern Kentucky, western Maryland, northeastern Tennessee, western Virginia and into Ontario and Quebec, Canada 2.2. Basin: Appalachian Basin 2.3. Age: Middle Ordovician age 2.4. Area: 170,000 sq. miles 2.5. Shale Depth: 2,000 to 14,000 ft 2.6. Thickness: 50 to 500 ft 2.7. Estimated Recoverable Gas: 38 to 69 Tcf 2.8. Producers: Chesapeake Energy, BP, Chevron, Talisman, Anadarko, Rice Energy, Range Resources 2.9. Production Start Up: Drilling and producing began in 2006 in Quebec. Forest Oil was the first company to do extensive shale testing and drilling in the Utica Shale Formation. 2.10. Misc: The Utica shale is a major source of shale gas in Quebec and rapidly growing in Ohio.
3. DEVONIAN (OHIO) 3.1. Location: southern New York, northwestern Pennsylvania, Ohio, West Virginia, eastern Kentucky, extreme western Virginia 3.2. Basin: Appalachian Basin 3.3. Age: Devonian age 3.4. Area: 79,400 sq. miles 3.5. Shale Depth: 1,600 to 6,000 ft 3.6. Thickness: 50 to 300 ft 3.7. Estimated Recoverable Gas: 29 Tcf 3.8. Producers: Equitable Resources, Cabot Oil & Gas, Chesapeake, Dominion, Rex Energy, CONSOL Energy, Range Resources 3.9. Production Start Up: The first Devonian well was drilled by Range Resources in 2009. 3.10. Misc: It is the shallowest of the Appalachian Basin shale plays.
5. NEW ALBANY 5.1. Location: Indiana, eastern Illinois and northwestern Kentucky 5.2. Basin: Illinois basin 5.3. Age: Devonian and Mississippian age 5.4. Area: 43,500 sq. miles 5.5. Shale Depth: 120 and 2,100 ft 5.6. Thickness: 100 to 300 ft 5.7. Estimated Recoverable Gas: 11 to 19 Tcf 5.8. Producers: CNX Gas, Noble Energy, Atlas Energy, BreitBurn Energy Partners, El Paso (CONSOL), Aurora, Magnum Hunter Resources, Trendwell Energy, Rex Energy 5.9. Production Start Up: It has been a producer of gas for over 100 years. Production peaked in 1940. 5.10. Misc: It was discovered accidentally by early settlers in search of saltwater.
April 2014
Page 15
6. DAN RIVER-DANVILLE BASIN 6.1. Location: south central Virginia and north central North Carolina 6.2. Basin: Continental rift / lacustrine Mesozoic basin 6.3. Age: Late Triassic (Carnian) 6.4. Area: 200 sq. miles 6.5. Shale Depth: Surface to 4,700 ft. 6.6. Thickness: The stratigraphically lower, the Walnut Cove Formation, is over 400-feet-thick, has a strike length of about twenty-two miles, and a probable width of ~1.1 miles – all in North Carolina. Its average total organic carbon (TOC) is 3.55% (n=122) from outcrop and three diamond drill hole cores. Its average %Ro is 1.85 (n=23). The stratigraphically higher Cow Branch Formation, is over 1,500-feet-thick, has a strike length of at least 6.5 miles in North Carolina and an additional 2-3 miles in Virginia and a probably width of 1.5 miles straddling the border between North Carolina and Virginia. Additional exposures occur to the southwest in North Carolina along strike of up to 10 miles; an isolated patch occurs near Greta, Virginia. In North Carolina the Cow Branch Formation has an average total organic content (TOC) of 1.38% (n=42) from a continuous quarry section. Its average %Ro is 2.08 (n=25). 6.7. Estimated Recoverable Gas: 49 bcfg 6.8. Producers: None 6.9. Production Start Up: Hydraulic fracturing and horizontal drilling became legal in 2012. Revised administrative rules are to be completed by October 2014 by a special commission. The first permits may be issued in March 2015. Current rules allow permitted vertical exploration wells, but no hydraulic fracturing. 6.10. Misc: There are three shallow core holes in North Carolina. There has been no drilling in Virginia.
8. FLOYD-NEAL 8.1. Location: western Alabama and eastern Mississippi 8.2. Basin: Black Warrior Basin 8.3. Age: Late Mississippian age 8.4. Area: 21,000 sq. miles 8.5. Shale Depth: 4,000 to 9,000 ft 8.6. Thickness: 80 to 180 ft. 8.7. Estimated Recoverable Gas: 2 Tcf 8.8. Producers: HighMount E&P, Chesapeake Energy, Energen, Anadarko, GeoMet, Carrizo Oil & Gas, Cabot Oil & Gas, Denbury Resources, Murphy Oil 8.9. Production Start Up: Well testing began in 2005. 8.10. Misc: There has not been a lot of industry development in this play.
9. CONASAUGA 9.1. Location: Alabama, northwest Georgia and Tennessee 9.2. Basin: Black Warrior Basin 9.3. Age: Middle Cambrian age 9.4. Area: 18,000 sq. miles 9.5. Shale Depth: 5,000 to 8,000 ft 9.6. Thickness: 8,000 to 15,000 ft 9.7. Estimated Recoverable Gas: 4 Tcf 9.8. Producers: Dominion, Energen, Highmount, Northeast Alabama Gas District 9.9. Production Start Up: In 2005, Dominion Black Warrior Basin drilled the first well. 9.10. Misc: The Conasauga has one of the thickest shale sections in the world.
7. DEEP RIVER BASIN 7.1. Location: North Carolina 7.2. Basin: Continental rift /lacustrine Mesozoic basin 7.3. Age: Late Triassic (Carnian) 7.4. Area: 1,200 sq. miles 7.5. Shale Depth: Median depth of 2,600 to 3,000 ft. 7.6. Thickness: 180 to 800 ft. The TOC of the Cumnock Formation (n = 401) averages 1.89 weight percent. The range is from 0.01 to 33.62 weight percent. The standard deviation is 3.32 weight percent. 7.7. Estimated Recoverable Gas: 1660 bcfg 7.8. Producers: None 7.9. Production Start Up: Hydraulic fracturing and horizontal drilling became legal in 2012. Revised administrative rules are to be completed by October 2014 by a special commission. The first permits may be issued in March 2015. Current rules allow permitted vertical exploration wells, but no hydraulic fracturing. 7.10. Misc: Gas and oil shows occur in eighteen core holes, petroleum exploration wells and mine workings of the 36 coal assessment core holes plus eight petroleum exploration holes that penetrated the Cumnock Formation. Two shut-in wells have pressures, respectively, of over 900 psi (Butler #3) and ~300 psi (Simpson #1) as of March 2009. Coal mines, long closed, had underground oil shows in the coal workings, and three major fatal methane gas mine explosions.
10. CHATTANOOGA 10.1. Location: eastern Tennessee, northern Alabama, southern Kentucky and northeast Georgia 10.2. Basin: Appalachian Basin 10.3. Age: Late Devonian age 10.4. Area: 20,000 sq. miles 10.5. Shale Depth: 3,000 and 4,000 ft 10.6. Thickness: 80 to 1,000 ft 10.7. Estimated Recoverable Gas: 12.2 Tcf 10.8. Producers: Atlas Energy, CNX Gas Company, GeoMet, CONSOL, Energen Corporation, Miller Energy Resources, Dominion Exploration and Production 10.9. Production Start Up: The first wells were drilled in 2007 with interest growing more so in 2008. 10.10. Misc: It is considered a fairly small shale gas play, still in its infancy.
With Special Thanks To: Jeff Reid, Senior Geologist, North Carolina Geological Survey, Division of Energy, Mineral and Land Resources, NC Department of Environment and Natural Resources (NC DENR) Greg Kozera, President, VA Oil and Gas Association (VOGA) Joanne Reilly, Board of Directors, North American Coalbed Methane (NACBM) Forum 1
Reid, Jeffrey C. and Taylor, Kenneth B., 2013, Mesozoic rift basins – Onshore North Carolina and south central Virginia, U.S.A.: Deep River and Dan River ‐ Danville total petroleum systems (TPS) and assessment units (AU) for continuous gas accumulation: North Carolina Geological Survey, Open‐file report 2013‐01, 8p. 2 Milici, R.C., Coleman, J.L., Rowan, E.L., Cook, T.A., Charpentier, R.R., Kirschbaum, M.A., Klett, T.R., Pollastro, R.M., and Schenk, C.J., 2012, Assessment of undiscovered oil and gas resources of the East Coast Mesozoic basins of the Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and New England Provinces, 2011: U.S. Geological Survey Fact Sheet 2012–3075, 2 p. available at URL http://pubs.usgs.gov/fs/2012/3075/ 3 Reid, Jeffrey C. and Taylor, Kenneth B., 2013, Mesozoic rift basins – Onshore North Carolina and south central Virginia, U.S.A.: Deep River and Dan River ‐ Danville total petroleum systems (TPS) and assessment units (AU) for continuous gas accumulation: North Carolina Geological Survey, Open‐file report 2013‐01, 8p. 4 Natural Gas Potential of the Sandford sub-basin, Deep River Basin, North Carolina, by Reid, Jeffrey C. and Taylor, Kenneth B., with contributions by Olsen, Paul E., and Patterson, III, O.F., in Taylor, Kenneth B., and Jeffrey C. Reid, editors, “Field Trip Guidebook – 60th Annual Meeting,” Southeastern Section, Geological Society of America, Wilmington, North Carolina - March 2011. 5Milici, R.C., Coleman, J.L., Rowan, E.L., Cook, T.A., Charpentier, R.R., Kirschbaum, M.A., Klett, T.R., Pollastro, R.M., and Schenk, C.J., 2012, Assessment of undiscovered oil and gas resources of the East Coast Mesozoic basins of the Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and New England Provinces, 2011: U.S. Geological Survey Fact Sheet 2012–3075, 2 p. available at URL http://pubs.usgs.gov/fs/2012/3075/ Maps 1-5, 8-10: Courtesy of Energy Information Administration, http://www.eia.gov/oil_gas/rpd/shale_gas.jpg. Maps 6-7: Courtesy of US Geological Survey, Provided by: Jeff Reid.
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The Northeast ONG Marketplace
NEW TECHNOLOGY
WIRELESS REMOTE MONITORING - BEST TOOL IN YOUR TOOLBOX By: Joe Mitchell, LevelCon
It is quite amazing to look at an over view of a fracking site opera-tion. One only needs to see all the massive equipment, well head, sucker pipes and the man power to understand the substantial in-vestment operators spend to hit 1000 or 10,000 feet below the earth’s surface. But what about the most important details of this operation, water and fuel? Since water is the basis of the fracturing fluid that transmits the pressure created from the fractur-ing pumps in order to crack (fracture) the shell formation, ensuring a site always has proper wa-ter levels is absolutely critical to the operation. Furthermore, all the machinery on site must have fuel to sustain full operational capabili-ties. So how does one manage all these pieces of an operation? Through Wireless Remote Moni-toring. One of the most inexpensive pieces of technology available to completely ensure each site has sufficient fluid levels is through re-mote wireless monitoring. Level data from water impoundments or remote fuel tanks, is remotely transmitted and monitored by the client’s staff at all times, so that the operation runs without interruption. Remote tank monitoring data allows the various dispatch compa-nies to accurately monitor how much water, fuel or fracking chem-icals is on site so as to avoid late night emergency deliveries, costly run outs, partial fills, or hazardous overfills. The LevelCon Remote Monitor uses cellular or satellite communi-cation to a secure web portal which is easily accessed by any smart phone or tablet 24x7. Customers view their tank levels, GPS position, daily consumption and much more all from one screen, and can set up custom-ized alarm notices via email or text message alerts. A typical impoundment or tank application calls for one wireless remote unit, capable of 4 analog and 4 digital chan-nels, and one pressure sensor (though a wide array of sen-sors, from pressure to radar can be used). The pressure sensor is anchored to the bottom of the impoundment or lowered to the bottom of the tank and then connected to the moni-tor. The monitor can be powered with a solar panel and battery backup, with an 110v power adapt-er or with a robust lithium battery. Report intervals depend on the application and power source. The
default solar powered or lithium powered unit reports 2-4 times a day, but can be adjusted up to eve-ry other hour. Whereas the pow-ered up unit, is capable of 20 min report intervals. These can be ad-justed via simple remote com-mands, so customers can set low report intervals when they are not in production, and high report in-tervals when they need the data the most. Customers can set up “special” trigger reports based on tank lev-els. The unit wakes up every twen-ty minutes for a regular diagnostic check. If the sensor detects a level above the set threshold, it auto-matically sends a report. Thus, if the system is set up for three hour report intervals, and the unit de-tects that the level has broken the Wireless Remote Monitoring- Best tool in your toolbox set threshold, it will send a report in-between its scheduled time. Therefore customers are assuredto always be in control of their operation. The secure web portal is open to all who possess password access. Often times the operator wants to see all tanks/impoundments in operation, but only wants customers to see their individual assets. That is not a problem. Each customer is assigned to an account manager whois responsible for setting up all the user accounts that a company needs. They also regularly monitor the web portal and alert the customer if anything is out of the ordinary. The advantage of the LevelCon monitor does not stop at tank levels. This same piece of equipment monitors generators, well heads and pump stations. With the digital input, we can display pump status, engine runtime and more. Beyond that, we can automaticallycontrol the pumps and stop them before there is an overfill or runout. The digital output detects the sensor level and cuts power to the pumps if the high or low threshold is broken. Couple this with email and text alerts, and the operation should never run dry. Though water is extremely vital in the frac process, it is also very valuable to know how much product is being pulled into the frac tanks. The wireless remote monitor is ideal for this application; especiallyfor sites with multiple frac tanks being filled simultaneously. It is quite easy to monitor all equipment from one console. Built with a 10” outdoor touch screen and SCADA interface, customers can monitor all tank activity from one central location on the site. This central monitor acts as a gateway for all other devices and pulls the data into one location. Each device talks seamlessly with one another so no data is lost and the full operation runs smoothly. No longer do clients need to put employees in harm’s way, with the technology of the remote monitoring system, customers have all eyes on their operation and never have to leave the office. For more details on wireless remote monitoring, look us up at www.levelcon.com, or contact Joe Mitchell @ 937.689.6537
April 2014
Page 17
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The Northeast ONG Marketplace
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TRAINING & WORKSHOPS APRIL
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3 Transportation Safety Day and Flagger Training State College, PA marcelluscoalition.org/get-involved
12 PEC Basic Orientation – SafeLand USA New Philadelphia, OH evanfossen@buckeyecareercenter.org
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3 PEC Basic Orientation - SafeLand USA Washington, PA www.rjrsafety.com
13 Federal Motor Carrier Safety Administration Workshop Pittsburgh, PA marcelluscoalition.org/get-involved
7 PEC Basic Orientation – SafeLand USA New Philadelphia, OH evanfossen@buckeyecareercenter.org
13 PEC Basic Orientation - SafeLand USA St. Clairsville, OH www.rjrsafety.com
8 ESCGP-2 DEP Planning and Permitting Training Pittsburgh, PA marcelluscoalition.org/get-involved
15 PEC Basic Orientation - SafeLand USA Washington, PA www.rjrsafety.com
8 PEC Basic Orientation - SafeLand USA St. Clairsville, OH www.rjrsafety.com 9 Energy Industry Training Series Washington, PA ypepittsburgh.org 16 PEC Basic Orientation - SafeLand USA Clarksburg, WV www.hshi.com 17 PEC Basic Orientation - SafeLand USA Clarksburg, WV www.hshi.com 17 PEC Basic Orientation - SafeLand USA Washington, PA www.rjrsafety.com 18 PEC Basic Orientation - SafeLand USA Bridgeport, WV www.hshi.com 19 PEC Basic Orientation - SafeLand USA Bridgeport, WV www.hshi.com
MAY 1 PEC Basic Orientation - SafeLand USA Washington, PA www.rjrsafety.com
19 PEC Basic Orientation - SafeLand USA Clarksburg, WV www.hshi.com
JUNE 3-6 Gas Operations School Eastern US - TBD www.northeastgas.org/events.html 5 Energy Industry Training Series Washington, PA energytrainingseries.com 5 PEC Basic Orientation - SafeLand USA Washington, PA www.rjrsafety.com 10 PEC Basic Orientation - SafeLand USA St. Clairsville, OH www.rjrsafety.com 17 - 20 OSHA 5810 – Hazards Recognition and Standards for On-Shore Oil and Gas Exploration & Production Morgantown, WV safetyandhealth.ext.wvu.edu 19 PEC Basic Orientation - SafeLand USA Washington, PA www.rjrsafety.com
Page 20
The Northeast ONG Marketplace
June 3-5, 2014 David L. Lawrence Convention Center Pittsburgh, PA
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April 2014
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UPCOMING EVENTS APRIL 1-3
MAY 5-8
SPE Unconventional Resources Conference
Offshore Technology Conference
The Woodlands, TX | www.spe.org/events
Houston, TX | www.otcnet.org/2014
7-9
12-13
ShaleSafe Conference & Expo
5th Annual National Shale Conference
Wheeling, WV | www.shalesafe.info
Farmington, PA | www.neienergy.org
9-11
13-14
NAPE East
Oil & Gas Environmental Compliance Conference - Appalachian Basin
Pittsburgh, PA | www.napeexpo.com
Washington, PA | http://oilandgas.awma.org
14-16 VOGA Regional Natural Gas Vehicle Conference Richmond, VA | www.vaoilandgas.com
16-17 AIPG 5th Annual Symposium Columbus, OH | www.aipg.org
17 12th Annual Michigan Petroleum Conference Acme, MI | www.michiganoilandgas.org
22-24 Utica-Marcellus Infrastructure Pittsburgh, PA | www.infocastinc.com/events/utica
29-30 Utica & Marcellus NGL & Natural Gas Markets Congress Columbus, OH | www,american-business-conferences.com
13-14 PIOGA’s Eastern Oil & Gas Conference & Trade Show Pittsburgh, PA | www.pioga.org
13-15 Eastern Gas Compression Roundtable Moon Township, PA | www.egcr.org
15 Drilling Onshore Conference & Exhibition Houston, TX | www.iadc.org
18-20 IOGCC Midyear Summit Biloxi, MS | www.iogcc.state.ok.us
19-21 Advanced Contract Risk Management of O&G Houston, TX | www.oilandgasiq.com
29-30 LNG Export USA 2014: Global Buyers Congress Houston, TX | www,american-business-conferences.com
30-May 1 Ohio Valley Oil and Gas Expo St. Clairsville, OH | http://www.ohiovalleyoilgasexpo.com/
JUNE 3-5 DUG East Pittsburgh, PA | www.dugeast.com
16-18 Cyber Security for Oil and Gas Houston, TX | www.oilandgasiq.com
Denotes National Event
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Page 22
The Northeast ONG Marketplace
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Page 24
The Northeast ONG Marketplace
LEGAL & FINANCE
IT’S NOT JUST CAPITAL. IT’S A PARTNERSHIP By: Stuart Rexrode, Managing Partner, Blue Rock Energy Partners As a small oil and gas producer looking for a growth catalyst, the right capital partner can make all the difference. And the key word is Partner. What kind of partner? While bank debt financing may be an alternative, advance rates against current production and restrictive covenants and guarantees can significantly limit the creativity and control needed by small players looking to grow. And bank debt may simply be unavailable to a small producer. Small producers may also be considering a working interest sell-down to equity participation capital providers. While mitigating some risk, the producer may be giving away too much upside and control of the project to really maximize its own cash flow and value.
Here’s how it works: • The capital provider purchases a financial production payment structured as a term overriding royalty interest (“ORRI”) in the client’s producing assets and development assets • The temporary ORRI is structured as a defined percentage of revenue flowing to the capital provider • Typically, the ORRI percentage is the remaining % of revenue after sufficient revenue is left with the producer to cover landowner royalties, LOE’s, overhead, and a small buffer % • The capital provider is paid directly from the oil or gas purchaser • Once a contracted rate of return is met, the capital provider will revert the temporary interest back to the producer • In some cases, a 1-3% permanent override will be retained by the capital provider once the term override is reverted back to the producer Below is a graphical representation of the transaction:
So the question is what better alternatives are there to selling down your working interest to a standard industry partner? The answer is simple - a relationship that provides all the benefits of a trusted partner for a limited time period, but the partner then exits the project leaving virtually all the upside value to the producer. The good news is there is another alternative which will allow the small producer to have their cake and eat it too. More specifically, the producer will be able to retain the maximum project upside and control (like debt), while enjoying a partner that shares in the production and price risk (like a working interest partner). Essentially, it’s a structure that has a variable payback based on actual production and commodity pricing, and once a specified rate of return is met, the capital partner “goes away”. That is to say the partner is a temporary partner that provides needed growth capital for either acquisitions or proven reserve development, then exits the project, leaving the producer with the upside. What structure does all this? It is known as a financial production payment structured as a temporary term overriding royalty interest.
Ultimately, the structure provides a much lower cost alternative to the typical working interest sell-down. Additionally, the advance rates against producing reserves is greater than bank debt, and the structure is non-recourse.
As can be seen, the capital facility is front end loaded, and the producer retains virtually all of the economic upside in the project. This structure provides a much higher level of overall net present value to the producer, and thus a lower cost of capital, as compared to selling down a working interest to a standard industry partner. BlueRock Energy Partners is a firm that specializes in term overriding royalty interests and provides capital up $20MM per transaction. The BlueRock team has exclusively structured this type of project financing for 20 years, specializing in the small independent sector. BlueRock understands that a project often has unforeseen events that can affect the timing of cash flow and payback. As a partner, when small producers experience bumps in the road, BlueRock will work creatively with the client to provide the needed flexibility to ensure continuation of the project. This spirit of partnership is what makes BlueRock unique in the industry. Other benefits of BlueRock’s structure are the following: • Non-recourse • No 3rd party engineering reports required • No personal or corporate guarantees • Higher advance rate than a bank • Simple deal structure and reporting • Repeatable and expandable • Favorable accounting and tax treatment may apply
April 2014
Page 25
There are many things to consider when choosing the right capital partner. The following matrix summarizes many of those considerations for capital structures from senior debt through equity. BlueRock’s capital product and partner approach is positioned to give the small producer the simplest and most flexible relationship, while providing the most upside value.
If interested in speaking with BlueRock, please call 281-376-0111, and a BlueRock partner will be happy to discuss your project.
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Page 26
The Northeast ONG Marketplace
➤ New Dates ➤ Exciting New Venue ➤ Same Great Program
May 13-14, 2014 Heinz Field • Pittsburgh, PA
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April 2014
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ALTERNATIVE FUELS
TRI-STATE ALTERNATIVE FUELING EXPO & CONFERENCE By: Kristie Kubovic, Director of Communications, Shale Media Group Edited By: Mindy Gattner, Editor, Shale Media Group Photos Provided By: John Kitchen, midstreamphoto.com
The inaugural Tri-State Alternative Fueling Expo and Conference was held February 18th-20th at the Monroeville Convention Center in Monroeville, PA. Themed, Powering America’s Future – Today, the event promoted the use of alternative energy sources in an effort to revolutionize the transportation industry with the hopes of boosting the local and national economies and protecting the environment. “The Marcellus region is arguably the second largest gas supply and maybe even the second largest energy source on the planet right now. There are a lot of opportunities to take advantage of this resource that we have. We’ve had a lot of industry trade shows and events in the past few years that focus on drilling and Marcellus opportunities, but very little have focused on alternative fueling and the infrastructure for fueling those vehicles. Our transport sector has largely been ignored in this recent boom. It is our belief that this will be the sustainable business that is here when the drilling rigs go home, so we’re focused on creating a new market in the industry to take advantage of it,” explained Bob Beatty, Advisory Board Chairman, Tri-State Alternative Fueling Expo & Conference, and President, “O”Ring CNG Fuel Systems. Dan Weaver, Director of Public Outreach, Pennsylvania Independent Oil and Gas Association (PIOGA), a nearly 100year old association that represents over 900 shale oil and gas members from exploration and production companies to service providers to end users, says, “It is important to see what is going on in the industry, especially on the end user side. There needs to be places or outlets for the product to go. It is fantastic to see new markets opening up at events like this.”
going to remain more stable as diesel rises over time. Thirdly, and very importantly, it is our fuel in this country. We want to get off of foreign dependence on petroleum and we think this is a good way to do that.” Another exhibitor, Beemac Trucking, a flat-bed trucking company headquartered in Ambridge, PA, with offices nationwide, purchased 20 Volvo tractors that are original equipment manufacturer (OEM) CNG. In addition, Beemac is building a public CNG station in Ambridge to fuel those trucks. Ron Phelps, Director of Logistics, Beemac Trucking, expressed, “We decided about three years ago to look at optimizing CNG for our fleet. This is an effort to go green. Plus, it will be a cheaper cost for the fuel. In the long run, the trucks should help pay themselves off much quicker than if they were diesel products.” ProGas, Inc., a propane distributor in western Pennsylvania, West Virginia and Ohio, that services residential accounts, commercial, motor fuel, and is now pursuing Autogas for propane, had a 1,000 gallon propane dispensing station that would be used for a fleet account on display. Ronald Schramm, President, ProGas, explained, “It is a unit that we could take out to their location. From that they could fuel their cars or vehicles. We as a nation need to utilize our own energy source. With the Marcellus shale and all the natural gas underneath us, propane is a part of that process. We should be using our own product from our own country.”
Showcasing over 100 vendors, the expo and conference opened with an evening of networking that included a job fair and casino night, where participants were able to view exhibits and ‘gamble’ with Dollar Bank Dollars. Alternative fuel trucks, new technology, various equipment and even a transportable compressed natural gas (CNG) fueling station and propane, liquefied petroleum gas (LPG), dispensing stations were on hand for attendees to view.
Representatives from across the region were in attendance, including, Green Eye AutoGas Solutions, a company that operates in eastern Pennsylvania and New Jersey. Green Eye AutoGas Solutions is a type of general contractor for the alternative fuel industry and works with Autogas and CNG. “There are benefits to both Autogas and CNG. Which one is better for an individual or company comes down to the customer’s needs, filling infrastructure and economics. Due to the availability of propane filling locations and that propane infrastructure and conversion costs are less expensive upfront, propane may be the better option for some. We work with our clients through the process. In general, it comes down to awareness and educating the general public. Working together, we can take advantage of a natural resource that the U.S. has a vast supply of. This is a great American story that needs to be told,” informed John Iannarelli, President/CEO/CFO, Green Eye AutoGas Solutions.
FYDA Energy Solutions offers complete sales, parts and service for alternative fuel vehicles and had a converted bi-fuel CNG Ford on display. Part of what the company does is offer CNG and propane conversions to the transportation industry and general public. “FYDA offers three primary products to the industry. First, we offer fueling containment and delivery systems for both CNG and Propane/LPG. Secondly, we offer conversions to dual-fuel for heavy duty diesel engines, and thirdly we offer a bi-fuel conversion for light duty vehicles, whether it be a van, pick-up truck or taxi cab,” relayed Tim Fyda, Owner and Founder, FYDA Energy Solutions, who also added, “Being in the heart of the Marcellus shale created interest, but there were three main objectives for creating the company. One, natural gas offers a clean alternative for vehicles. Two, it offers an economical alternative for vehicles since natural gas is roughly half the price of diesel. We believe that natural gas is
Working for petroleum based reductions and clean air, Pittsburgh Region Clean Cities (PRCC) is one of over 87 coalitions in partnership with the Department of Energy with the goal of educating people about all alternative fuels and technology. Responsible for 33 counties in western Pennsylvania, PRCC works on local initiatives and is fuel neutral. Rick Price, Executive Director, Pittsburgh Region Clean Cities, pointed out, “We teach all technology and work on the education side. There are a lot of misnomers about alternative fuel and technology. I like to give the facts and background. The expo was unique in that it brought five Clean Cities coalitions together: two from Pennsylvania, two from New York and one from Ohio, and two managers from the Department of Energy. Plus, the event in itself brought so many different varieties of vendors to one area for the purpose of alternative fuels. Investors were on hand for people to talk about being able to
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April 2014 afford and move to alternative fuels. While, first responders were in attendance and spoke of how they prepare for an accident. The event is a great option and lines up with the outreach of our Odyssey Day event that is held in October.” The conference side of the event began on the 19th with various sessions and workshops. One point that was stressed is that a barrier of natural gas is the need for education. A CNG safety video was played that showed various crash, pistol firing and fire tests. All tests displayed the safety of CNG. The video can be found at https://www.youtube.com/watch?v=NqH_s3YC4sE. In a seminar, titled, CNG…Why Now?, Beatty discussed the many advantages of natural gas and stated, “Natural gas is safe.” For example it doesn’t pool and mixes quickly with the air, unlike gasoline, which is more volatile, since it collects and pools. It is better for the environment and the cleanest of hydrocarbon fuels. Its use is reversing pollution, and it is non-toxic. Plus, it is domestic, affordable and the U.S. economically benefits from it. Beatty pointed out, “The rest of the world uses CNG. Iran, which is the size of New Jersey, has 2.8 million CNG vehicles. The U.S. only has a little over 100,000 CNG vehicles. Natural gas is our opportunity. It offers energy independence, and it is green.” In the same seminar, R.T. Walker, Vice President, Pittsburgh/Marcellus Utica Field Services Consultant, Energy Facilities Group (EFG), CBRE, talked about the strategy of the infrastructure and finding land for CNG stations. He stressed the importance of research and putting a station in a strategic area and looking at items such as the ability to buy into transmission lines. Walker believes, “In 10 to 15 years, CNG stations will be everywhere. They are actually an easier sell since they are not below the ground.” The Honorable Samuel Smith, Speaker, Pennsylvania House of Representatives, gave the Keynote Address on the final day of the expo and conference. Smith expressed, “We’re looking at a snapshot of history right now. The shale oil and gas industry is a true game changer and a great opportunity that should be promoted
and encouraged. Pennsylvania has had a long history in energy, since the heart of the Industrial Revolution. With negative issues of the past, we have figured out how to manage the industry in a responsible and effective manner.” Relaying that the government needs to help and not get in the way, Smith gave his perspective on the current state of the Pennsylvania Legislature and pointed out that many issues are driven by geography (east vs. west) as well as by party (Democrat vs. Republican). Smith spoke of the Pennsylvania Supreme Court decision to strike down specific provisions of Act 13 and believes the decision to be ill informed. “Act 13 was a long, hotly debated bill that was based on compromise. The court’s decision has taken away predictability and left a murky and unclear area. It is almost impossible to say where we’re going now. It wasn’t a clear decision with the judges and a solution won’t be reached quickly,” expressed Smith. Believing there is no single energy domain, Smith says there is room for all of them. We just need to figure a way to work together. Looking at the jobs already created by the industry and the possibility for many more with the potential Shell cracker plant, the expansion of CNG stations along the Pennsylvania Turnpike and other corridors and the return of manufacturing with companies like Walmart and Urban Outfitters, the state is developing a diverse portfolio with the help of natural gas right under our feet. For a video highlight of the event, visit http://vimeo.com/87626089. The TriState Alternative Fueling Expo and Conference will return to Monroeville, PA in February 2015.
Shale Media Group (SMG) is your news, information, education and mapping resource dedicated to the shale, oil and gas industries by messaging across video, Internet, publications, events and radio. For more, check out ShaleMediaGroup. com to access all platforms, including: TheMarcellusShale.com, The UticaShale. com, TheShaleAcademy.com, ShaleaAdvantage.com and ShaleEnergyNow.com.
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