The Northeast ONG Marketplace - March 2015 by Northeast ONG

PRSRT STD U.S. POSTAGE PAID BECKLEY, WV 25801 PERMIT NO.19

P.O. BOX 1441 • OAK HILL, WV 25901 | WWW.ONGMARKETPLACE.COM

NEW TECHNOLOGY - Page 24

E-Finity’s New Skid Package Reduces Installation Time

MARCH 2015

ONG SPOTLIGHT - p 2 WATER MANAGEMENT - p 6-7 HEALTH & SAFETY - p 10-11

INDUSTRY INSIGHT - Pages 18-20

Upstream May Be Slightly Down, But Midstream is Definitely Up

ENVIRONMENTAL MANAGEMENT - p 14-15 LEGAL & FINANCE - p 26

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The Northeast ONG Marketplace

THE ONG SPOTLIGHT Oil and Gas Drilling Spurs Vendors to Adapt and Grow Despite Price Fluctuations By: George Koch, CEO and Founder, H&K Equipment The explosion of shale gas development in Pennsylvania over the past five years has reinvigorated the region’s role as a major source of American energy. This shift in fortune has done more than revive distant memories of Pennsylvania’s legacy as the site of the world’s first oil boom, it has also spurred area businesses to adapt to a new economic reality. This changed landscape presents a unique set of challenges and increased volatility even as it offers unparalleled opportunities for growth. To meet these challenges, many Pennsylvania vendors and other businesses new to the oil and gas supply chain have learned how to become more responsive, more efficient, and better positioned to ride out fluctuations in the market. “Flexibility” is no longer a buzzword but is a 21st century necessity, and in Pennsylvania the rise of a more flexible business model has in part been driven by and is a reflection of the changes we’ve seen in the drilling industry. Just as technology has opened up new horizons for energy development, a simultaneous technological renaissance is happening along the supply chain. Products are becoming smarter and more versatile, but also more complex. Taking advantage of these innovations is no longer a matter of simply adding a new truck to your equipment fleet, because the way we support and service these products needs to become more intelligent as well. And so at the start of 2015 we have found that the way we think of ourselves as a company continues to evolve. When H&K Equipment was founded in 1983 as an independent lift truck dealership in Pittsburgh, our primary customers were automotive manufacturers and the steel and aluminum industries. While traditional American manufacturing remains a key and once again growing market for our company, the introduction of the oil and gas industry to our client base has, in many ways, reshaped our identity into a more adaptive business. As the energy economy reinvents itself, so too have we invested in new equipment, new training, new technology, new services, and new tools to become more flexible in an exciting and fast-moving world. Take, for example, equipment rentals, which comprise much of our business. Rental units sent to traditional manufacturers are typically delivered to well-maintained facilities that are easily accessible by major roads, while shale drillers may find themselves operating in some of the most isolated and least developed areas in the region. A forklift delivered to a traditional manufacturer tends to be run indoors and on shifts, while a Cary-Lift or telehandler delivered to a drilling site faces around-the-clock duty cycles in rugged and extreme environments. If a piece of equipment needs serviced or replaced at a traditional manufacturer, someone can fix or replace it tomorrow. If a unit breaks down on a drilling site, it needs replaced an hour ago.

Managing these and other hurdles requires truly internalizing your core values so that they can be applied to a crisis that might arise in seconds; it requires a creative approach to problem solving and quality control; it requires understanding dizzying changes to technology; and ultimately it requires partnering with customers like never before. Embracing these kinds of shifts in strategic thinking, which we see happening with increasing regularity, strengthens the industry as a whole. This is why in spite of the much publicized decline in oil and gas prices, we plan to continue to expand and to serve a vibrant marketplace. In its Medium Term Oil Market Report, the International Energy Agency predicted that the United States will remain the top source of supply growth throughout the second half of the decade, even as worries of a broader slowdown continue to capture headlines. We have encountered the same prudent optimism from our customers, particularly in the shale plays in the tri-state region around our headquarters in Pittsburgh. Some have told us that they have needed to slow production or, in a few cases, lay off workers, but most say they expect the downturn to be temporary. Others note that they are finding ways to control costs and still plan to bolster development. The overall outlook, in our experience, remains positive. Working with the new energy industry in and around Pennsylvania has opened a door to the future of commerce that extends far beyond oil and natural gas. By taking a page from the industry’s playbook and becoming more flexible, we not only make ourselves more valuable assets to our new customers, but to our longstanding and more traditional customers as well. In a shifting and at times uncertain environment, the lessons from today’s oil and gas industry and the businesses that support it are laying a path to stability and sustained growth.

MARCELLUS AND MANUFACTURING DEVELOPMENT CONFERENCE MARCH 25-26, 2015 CHARLESTON CIVIC CENTER / CHARLESTON, WV

The Marcellus and Manufacturing Development Conference will be held in conjunction with the West Virginia Construction and Design Exposition. It combines the former Marcellus to Manufacturing Conference and the WVMA Leadership Summit/Annual Meeting to create one of the largest manufacturing events in the region. While conference attendance is free, you must register to attend at www.wvexpo.com. During the MMDC, WVMA will be hosting events in honor of its 100th anniversary. Registration is also required for paid special events associated with this celebration. Visit www.wvma.com for a listing and to register for these events.

March 2015

Page 3

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The Northeast ONG Marketplace

ASSOCIATION MEETINGS 2015 OOGA Winter Meeting | March 11-13, 2015 Columbus, OH - www.ooga.org

SHALE ENERGY BUSINESS BRIEFING SHALE NEWS EVERYDAY. NO ADS. Daily shale briefs sent directly to you

OGIS New York | April 20-22, 2015 New York, NY - www.ipaa.org

PESA Annual Meeting | April 22, 2015 Greensboro, GA - www.pesa.org

SOOGA Spring Membership Meeting | April 23, 2015 Marietta, OH - www.sooga.org

WHAT WE DO We give you the latest and most important news from North America's shale oil and gas industry on a daily basis. By giving you all facts -- no fluff -- in 400 words or less per story, you stay up-to-date with just one click of the mouse.

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ADDC Region I Meeting | May 14-17, 2015 Wheeling, WV - www.addc.org

There are two different plans available and you can choose the one that works for you. Whether you choose the best-value annual subscription, or the more-flexible monthly subscription, you will get access to Shale Energy Business Briefing’s articles and features.

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ARTICLES

ADVERTISER INDEX

THE ONG SPOTLIGHT: Oil and Gas Drilling Spurs Vendors To Adapt, George Lock, H&K Equipment.... 2

AIR/TAK.................................................................. 8 ALPINE ELECTRIC................................................. 5 AQUA AMERICA.................................................... 9 BENMIT................................................................ 23 BRAD PENN LUBRICANTS................................... 8 BRAWLER INDUSTRIES........................................ 1 BUCK’S FABRICATING........................................ 17 CALU...................................................................... 8 CATS....................................................................... 8 CHANCELLOR INSURANCE................................ 16 CPI SERVICE........................................................ 13 CST INDUSTRIES.................................................. 7 D&S INDUSTRIAL PRODUCTS........................... 12 ERNST SEED........................................................ 11 ETC......................................................................... 5 HETRICK MFG, INC............................................... 5 JH TOMBLIN FENCE CO...................................... 16 L&L BOILER MAINTENANCE ............................... 5 LEE REGER BUILDS............................................ 16 LYDEN OIL COMPANY......................................... 22 MACHINERY STREET.......................................... 12 MARCELLUS SAFETY CONSULTING.................. 16 MID-ATLANTIC STORAGE.................................... 8 MJ PAINTING CONTRACTOR................................ 8 NEW PIG................................................................ 3 NORTH AMERICAN FIELD SERVICES.................. 5 ONG LIST............................................................. 16 ONG ONE CALL................................................... 25 PREMIER SAFETY & SERVICE INC.................... 11 PULS.................................................................... 15 PSB INDUSTRIES.................................................. 8 RIGMAIDS.............................................................. 5 RJR SAFETY INC.................................................. 16 SHALE ENERGY BUSINESS BRIEFING................ 4 SHALE ENERGY INSTITUTE................................. 5

WATER MANAGEMENT: Produced and Flowback Water Management in the Marcellus.................... 6-7 HEALTH & SAFETY: Safety Solutions for a Start-Up Shale Company................................................ 10-11 ENVIRONMENTAL MANAGEMENT: Standard Operating Procedures Reduce Risk ................. 14-15 INDUSTRY INSIGHT: Upstream May Be Slightly Down, But Midstream is Definitely Up.............. 18-20 NEW TECHNOLOGY: E-Finity’s New Skid Package Reduces Installtation Time.................................... 24 LEGAL & FINANCE: Words of Inheritance-Can They Really Affect Mineral Ownership in Ohio?..... 26

CALENDARS ASSOCIATION MEETINGS.................................... 4 NETWORKING EVENTS...................................... 23 TRAINING & WORKSHOPS................................ 16 UPCOMING EVENTS........................................... 21

EVENTS DUG EAST ........................................................... 28 EGCR.................................................................... 25 NAPE.................................................................... 13 SHOWCASE ONTARIO 2015 ............................. 23 WVMA-M2M ......................................................... 2

SHANNON SAFETY............................................... 8 STRAD OILFIELD SERVICES................................ 7 UNIT LINER............................................................ 9 WESTERN ENVIROMENTAL LINER.................... 17 WEAVERTOWN ENVIRONMENTAL...................... 8

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. Any warranties, representations or opinions made in the advertisements or articles are those of the contributors and not The Northeast ONG Marketplace.

March 2015

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Page 6

The Northeast ONG Marketplace

WATER MANAGEMENT

PRODUCED AND FLOWBACK WATER MANAGEMENT IN THE MARCELLUS By: Adam Larson, Staff Writer, Shale Media Group Edited By: Mindy Gattner, Editor, Shale Media Group

Recycling and reuse of flowback and produced water have been a common thread amongst Marcellus operators, reducing the total amount of fresh water used in their operations, and at the same time, reducing the volumes of flowback and produced water that have to be transported, treated, and disposed.

In the shale oil and gas industry, the mentality of American producers has been backed with: drill, drill, drill – get as much hydrocarbon product out of the ground as possible. Producers move swiftly and with rational, calculated decisions. When it comes to fracturing shale, a few ingredients are integral: steel pipe, cement, drilling mud, proppants, pressure, and most importantly water.

“Nearly 90% of flowback and produced fluids are being recycled in PA, the majority of which is being managed in the field with some treatment – often sediment removal via filtration or a scalant removal treatment prior to recycling,” said Yoxtheimer.

In fact, the demands for fresh water used in hydraulic fracturing operations is placing pressure on water sources across regions involved in North American shale. Hydrogeologist David Yoxtheimer, Extension Associate, Penn State Marcellus Center for Outreach and Research, weighs in on the water discussion surrounding the Marcellus Shale. “Typically it takes between four to five million gallons [about 100,000 barrels] to hydraulically fracture a horizontal well in the Marcellus,” expressed Yoxtheimer. “Laterals are getting longer, so a 10,000 foot long lateral could require ten million gallons—one million gallons per 1,000 feet.” Along with this intense pressure for the demands of fresh water acquisition, water disposal demand has also increased. Well stimulation flowback water and produced water are generally considered waste byproducts of shale oil and gas production and increasingly present logistical factors for operators. Mainly, associated with these waste byproducts, compliance with local jurisdictions and environmental regulations hinder the disposal of water in the oilfield. Notably, these water management problems are a bump in the road for the industry. Operators are using alternative methods of water management and killing two birds with one stone when it comes to fresh water acquisition and water disposal.

Recycling Frack Water

Numerous companies are developing technologies to clean up water used to hydraulically fracture shale wells. Here’s a look at a process oﬀered by Halliburton.

There are a few options when it comes time to manage flowback and produced water. Water management options include direct reuse without treatment – blending with fresh water for reuse in fracturing shale; on-site treatment and reuse; off-site treatment and reuse; and off-site treatment and disposal. Direct reuse incurs minimal cost, but results in the potential for well plugging. On-site treatment reconditions the water at a temperate cost and has a decreased potential for well plugging. Off-site treatment and reuse incurs high transportation costs. Lastly, off-site treatment and disposal incurs high transportation and disposal costs. “Reuse water is becoming a larger percentage of the water being used for fracturing; however, the volume used really depends on how much reuse water is available during fracturing operations compared to the total water demand,” noted Yoxtheimer. “It has been demonstrated that 100% reuse water can be used for fracturing as long as the chlorides and TDS level doesn’t interfere with the friction reducers, though generally it represents about a quarter of the water used in a hydraulic fracture job.” One size does not fit all though, as water treatment technologies vary from shale play to shale play. Two broad classifications of technologies available for treatment and reuse of flowback and produced water are conventional treatment and advanced treatment technology. Both water technologies have environmental, economic, and energy upshots that are related to the quality of flowback and produced water.

WATER USE Fracking a shale-gas well uses as much as ﬁve million gallons of water. Up to 40% of it returns to the surface containing hydrocarbons, heavy metals, solids and bacteria.

COLLECTION Contaminated water is stored temporarily in a man-made pond or in a storage tanks. CLEANING PROCESS A. When contaminated water passes through the electrocoagulation cells, positively charged ions are released by the anode tube... B. ...binding to negatively charged particles, resulting in coagulation or clotting... C. ...gas bubbles attach to the solids, sending them to the surface.

ELECTROCOAGULATION CELLS The cleaning process uses electricity to destabilize and clot suspended matter in the water.

PH ADJUSTMENT If required, the pH balance of the water can be adjusted to speed up coagulation.

2012 PENNSYLVANIA FRACK WATER* A growing percentage of water used to frack Marcellus Shale wells is being recycled. PERCENTAGE OF RECYCLED WATER 2011 12.7%

2012 16.8%

FILTRATION AND REUSE This step removes any remaining suspended materials. This water can be reused for future frack jobs.

Sources: Halliburton (recycling process); Susquehanna River Basin Commission (recycled water) Graphic by Alberto Cervantes/The Wall Street Journal * Through Oct. 24 Note: Represents the average well drilled in Susquehanna Rover watershed, about 60% of all wells in Pennsylvania

March 2015

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Conventional treatment includes flocculation, coagulation, sedimentation, filtration, and lime softening water treatment processes. These methods are effective in removing nondissolved constituents, such as total suspended solids, hardness compounds, and oil and grease. Simple filtration methods with nominal chemical inputs have lower energy, economic, and environmental effects.

Tanks & Domes

In the Marcellus, Yoxtheimer underscored a popular water treatment technology. “Use of filter socks in the field is becoming common to remove sediment. Also, chemical precipitation has been commonly used for several years; however, some operators have backed off and are not as concerned with the potential for downhole scaling issues.” Advanced treatment technologies are usually used to treat total dissolved solids (TDS). These advanced features include: reverse osmosis membranes, thermal distillation, evaporation, and crystallization processes. These advanced treatment technologies have proved to be less popular in the Marcellus, as producers aren’t too worried about TDS levels. “High TDS fluids can be desalinated but that is more energy intensive and therefore more costly, many producers are not as concerned about high TDS as they can dilute it with fresh water,” confirmed Yoxtheimer.

Frac Storage

Closing the looped conversation, Alan Larson, a chemical engineer and water treatment expert, conveyed, “Produced water can be efficiently and effectively recycled by utilizing standard and innovative technologies. Many of these water technologies being used in the oil and gas industry have also been successfully applied in other industries for decades, assuring preservation of America’s abundant water resources.”

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Shale Media Group (SMG) is the news, information, and education 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 SMG’s latest news delivery system—Shale Energy Business Briefing (SEBB), an ad-free subscription based service, where subscribers receive a real-time, daily email, featuring concise, hard hitting shale news 7 days/ week, 365 days/year. To sign up, go to sebb.us. In addition, join us on March 19th for our next Elite Energy Event at the Holiday Inn Express in Bentleyville, PA from 5-8pm. Adam Larson is a Staff Writer with Shale Media Group. Contact him at ALarson@ShaleMediaGroup.com.

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The Northeast ONG Marketplace

HEALTH & SAFETY

SAFETY SOLUTIONS FOR A START-UP SHALE COMPANY By: Kristie Kubovic, Director of Communications, Shale Media Group Edited By: Mindy Gattner, Editor, Shale Media Group

DirkThomas Solutions is a shale oil and gas field service company that specializes in a wide spectrum of quality clear brine fluids, fluid filtration, and fluid recycling. Cameron Derzack, President, DirkThomas Solutions, expressed, “Our goal is to provide our clients with solutions that improve their efficiency, lower their costs, and increase their yield.” The company became involved in the shale oil and gas industry about a year ago, but ironically much of Derzack’s knowledge and training for the shale oil and gas industry came from his other business, Alert Snow, an advanced all-terrain snow and ice removal business, primarily in the telecommunications industry. Derzack is also the owner and president of Alert Snow.

In addition, health and safety are paramount to the shale oil and gas industry. Derzack explained, “We are a hands-on, frontline company that works daily in our clients’ environment. As such, we share their every health and safety concern. The standards in this industry in this regard are intense, to say the least. I can’t think of any other industry that is as concerned with health, safety, and the environment.” In order to adhere to these strict health and safety regulations, DirkThomas Solutions voluntarily became ISNetworld® (ISN®, ISNet®) certified in their first year of business. Established in 2001, ISNetworld® is a global leader in contractor and supplier management and is a resource for the shale oil and gas industry as well as numerous other industries. “ISNetworld® brings together hiring clients and contractors, creating safer work environments and lasting partnerships to help ensure compliance with safety and procurement standards,” according to ISNetworld.com. ISN® points to “maintaining safety, insurance, quality, and regulatory information on contractors and suppliers” as items that could strain internal resources. “ISN® streamlines these processes, saving time, and improving safety standards.” Ray Pader, CEO, Shale Markets, helps companies become ISNetworld® certified and recommends that any contractor currently doing or wanting to do business in the industry with any of the operators or those working on a rigsite become ISN® certified. Pader also helped DirkThomas Solutions become ISNetworld® certified.

(Photo from DirkThomas Solutions) “The ice and snow removal market requires a high degree of expertise and training. One of the results of our involvement in this industry was our development and understanding of clear brine fluids (CBF) for winter operations. This was a natural fit for the shale oil and gas industry as well. We then expanded our line of clear brine fluids for other purposes such as density and composition. Water filtration and recycling were a natural extension of CBFs in offering a comprehensive line of fluid management products,” relayed Derzack. Headquartered in Leetsdale, PA and serving the Marcellus and Utica Shale plays, Derzack says, “It is a tremendous opportunity to be involved with the exciting, shale oil and gas industry that has global energy and environmental outreach. Plus it is based in our own back yard.” Derzack added, “The quality of our product line is of critical important. We want to be known as the provider of elite and specialized CBFs, technologically advanced filtration, and recycling. In todays’ challenging economic environment, we believe that partnering with our clients to lower costs, while improving their operations, is a critical factor in developing long term relationships. We are highly motivated to provide unparalleled customer service. These are the points that differentiate us from our competition, while providing our clients with their own competitive advantage in their marketplace.”

Pader says there are essentially two phases in becoming ISNetworld® certified. The first phase starts with getting an ISN® account. The company that is applying receives a ‘To Do List’ which involves answering a questionnaire of about 2,000+ questions, which pertain to items such as business practices, services, insurance, safety training, workers’ compensation, and safety manuals, along with gathering all of the proper documents for prequalification. Once these items are submitted, the company gets initial prequalification and receives a grade (which is similar to a student’s school grade) along with access to the ISNet® portal website. From there the company will be able to see where it has deficiencies. In addition, another company looking to hire can also see the same information, ensuring that a company that they might potentially hire has a ‘good’ grade. “Many larger and some smaller companies in the shale oil and gas industry are going toward the ISNetworld® system. If a smaller company wants a big contract, ISN® aids in getting them in the door and is a way to help obtain that. If the hiring company requires a high score on ISNetworld®, it minimizes the risk and doesn’t compromise their insurance,” explained Pader. In terms of length, Pader says the application for prequalification could take anywhere from six months, if a company is doing the process themselves, to a couple days, if a company is outsourcing it to a company with expertise in the subject. Pader added, “Those 2,000 plus questions are pre-graded before they are submitted, so that a company will know that they’ll get a nearly perfect score before submission.”

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Derzack relayed, “In order to guide us in the process of becoming compliant, we sought the services of Shale Markets, who assisted us in our training and the submission of documents to ISNetworld®. It was a relatively straightforward process to set up an ISNetworld® account with their help.”

equipment/respiratory; prevention of workplace violence; working at heights; permit to work; driver safety/transportation safety; environmental; excavation – trenching and shoring; industrial hygiene/occupational health; and site specific hazards and emergency evacuation.

Once a company is certified and receives their ISN® profile, they don’t need to go through any type of annual recertification. However, they must constantly keep their profile up-to-date. Pader explained, “If a company gets a good grade, then ignores their profile, that grade will drop.” He recommends going into the profile on a weekly basis and keeping it up-to-date. Pader also says a company could partner with services that do this.

For more on DirkThomas Solutions, check out dirkthomas.com. For assistance with ISNetworld® pre-qualifications or audits, contact Ray Pader at RPader@ ShaleMarkets.com or 304.99SHALE (304.997.4253). In addition, Shale Markets, LLC offers SafeLand Orientation Training up to twice a month. The seminars are held from 8am to 5pm in Bentleyville, PA at the Holiday Inn Express and in Monroeville, PA at the Holiday Inn. Monroeville’s next seminars will be held on March 3 and April 7. Bentleyville’s next seminar will be hosted on April 23. The cost is $195 per student and includes breakfast, lunch, and snacks. Visit ShaleMarkets. com and click on SafeLand Training for more information or to register.

Implementation is the second portion of ISNetworld® certification. This involves a company getting audited to prove that they are doing everything that they say they are doing in the questionnaire. These audits could happen at any time and are not by ISN®, but rather by one of the operators or a third party hired for an audit. Pader says, “A company that is being audited could hire a company [like his], which would prepare the company for the audit and sit through it to make sure everything is fine. If anything does come up, they could create a solution, such as documents, right on the spot.” According to ISNetworld.com, ISN® is a way “to standardize contractor management across multiple sites and geographic regions, clearly communicate requirements and expectations and exchange data with other internal systems. The result is lower incident rates and higher compliance numbers.” Essentially, ISN® is a third party pre-qualifier that collects important industry information and provides one centralized location to view that information. Participation with ISN® is a way for the industry to enforce high standards through audits. Derzack adds, “It is critical and necessary for DirkThomas to be a part of ISNetworld®. This is the conduit that ensures our compliance with the requirements of our clients when it comes to health and safety issues. It is a great service and a way of life in this industry that must be embraced to be a part.” In addition, DirkThomas has sent several employees through SafeLandUSA (SLUSA) Orientation Training, which was developed as a widely accepted, standardized safety and environmental orientation to set high minimum requirements with the primary goal of reducing the number of preventable incidents in the shale oil and gas industry to zero accidents. Certified SafeLand instructor and MAC Safety, Inc. president and founder Chris Miranda, explained, “SafeLand is required for access to most local shale oil and gas sites and is a pre-requisite to establish at least baseline safety knowledge. SafeLand training is an all-day safety course covering the basics in safety knowledge and shows a commitment from the company to invest in employee safety.”

Shale Media Group (SMG) is the news, information, and education 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 SMG’s latest news delivery system--Shale Energy Business Briefing (SEBB), an ad-free subscription based service, where subscribers receive a real-time, daily email, featuring concise, hard hitting shale news 7 days/ week, 365 days/year. To sign up, go to sebb.us. In addition, join us on March 19th for our next Elite Energy Event at the Holiday Inn Express in Bentleyville, PA from 5-8pm. Kristie Kubovic is the Director of Communications at Shale Media Group. Contact her at Kristie@ShaleMediaGroup.com.

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March 2015

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ENVIRONMENTAL MANAGEMENT

STANDARD OPERATING PROCEDURES REDUCE RISK AND IMPROVE QUALITY IN CONTAINMENT AND OILFIELD SERVICE DELIVERY By: Eddy Biehl, Stonebridge Oilfield Services

Stonebridge Oilfield Services provides reliable drilling, completion and production services from spud to plug. Geologist Eddy Biehl is the company founder. A fourth generation oilfield worker and almost 40-year veteran of the oil and gas industry, Biehl spent his childhood working in the oilfield alongside his grandfather, hearing the stories of the adventures of his great, great uncles who were well-shooters and wildcatters. From that early education, he has grown both his knowledge and his company to a position of leadership in the oil and gas industry. Biehl founded his first oilfield consulting company 35 years ago and ultimately acquired more than 1,000 oil and natural gas wells in the Appalachian Basin. Through booms and busts, Stonebridge has adapted and evolved into a multi-faceted operation.

with organizational practices, improves work efficiency, reduces error occurrences, and improves data comparability, credibility, and defensibility. Standard operating procedures are used in a variety of industries including: healthcare, aviation, engineering, education, industry, and military. The first service we have developed and implemented a standard operating procedure for is containment. We complete primary and secondary containment on well pads throughout the Ohio Marcellus and Utica Shale play. The purpose of containment is to prevent spills from reaching the ground and thereby contaminating the

We offer customized solutions based on customer needs and our solutions are tailored to address unique oilfield challenges. We have been solving oilfield problems on well sites for 35 years and we have experience on more than 2,500 wells in the Appalachian Basin. Our expert service professionals have a broad range of oilfield experience in Appalachian Basin wells. We can be your oilfield performance partner and keep you focused on drilling, completing, and producing your wells on budget and on time. Some recent examples of projects for customers include: retrofitted containment on production equipment on multi-well pads, constructed a four mile 6-inch poly pipeline, provided hotshot services of drilling tools from Canada including customs brokerage, designed and completed a well intervention to address casing failure in an existing disposal well and reestablished injection, and successfully completed pressure washing a drilling rig and support equipment for a time sensitive interstate move after another contractor failed to meet the requirements. We are a leader in adopting new technology and best practices in the oilfield. We are currently utilizing standard operating procedures for our services to ensure consistent training and service quality. As the US EPA describes, standard operating procedures are written documents that describe, in great detail, the routine procedures to be followed for a specific operation, analysis, or action. Consistent use of an approved standard operating procedure ensures conformance

environment. Primary containment involves installing an impermeable plastic barrier over the entire work area with an eight to twelve inch high berm around the entire site. Before the plastic goes down, the entire area is covered with a heavy oil absorbent woven material or felt to both protect the plastic from the stone below and absorb any fluids should a puncture occur. Think of it as two football fields covered with a solid plastic sheet that is fifty times thicker than the typical heavy duty trash bag. This primary layer is then covered with matting which may be made of wood and steel decking or composite plastic to prevent drilling trucks and equipment from tearing the plastic. If there are oil, chemical, or oil based mud tanks on site, a secondary containment is installed around them. The secondary containment consists of an additional layer of plastic with three to four foot high walls as additional protection. Most operators in the eastern Ohio shale plays have installed containment on well pads for both drilling and completion operations as a Best Management Practice (BMP) in advance of any regulatory requirements imposed by ODNR, OEPA or USEPA. The common goal is to protect Ohio’s natural resources by catching and containing for proper disposal “every drip, drop or even drab of sweat off a roughneck’s brow”. At Stonebridge, we use our standard operating procedures for training as well as for ready reference and documentation of how we lay containment. By utilizing a consistent method and ensuring all employees are trained to this method, we reduce risk of a containment failure. Our standard operating procedure includes the following sections: required materials, procedure, reference documents, forms, and revisions. Our standard operating procedure provides instruction on how to provide containment for the drilling pad. The procedure covers the time frame from when

March 2015 the containment crew arrives on site to provide containment until the time the drilling rig has setup to start drilling the first hole on a drilling pad. All of our employees working on a containment job will lay down it down the same way every time. Our procedure also addresses unexpected contingencies and circumstances that may arise such as adverse weather conditions, changes to the rig footprint due

Page 15 further reduce the risk that damage will result in a leak, we regularly patrol and repair our containments during use to patch and repair dimples or tears. Starting square and true means we do not use excess material which reduces waste and decreases customer cost. In addition, our clean, straight lines allow us to lay the containment more efficiently and provide a safeguard to allow us to lay it correctly the first time and every time. And, that means our customer can drill or frac sooner on a high-quality containment delivered within deadline and budget. To date, we have laid containment for drilling operations on more than 60 multiwell Utica pads without a single failure. Our customer base includes: American Energy Partners, Antero Resources, Chesapeake Energy, Gulfport Energy, and The Shelly Company among others. To learn more about Stonebridge, visit www.stonebridgeoilfieldservices.com or call 740-373-6134.

to pad size or geometry and poor cellar and well bore alignment among a wide range of small problems that can cause big delays if not properly addressed before the rig or frac crews arrive on location. Our SOP ensures a square and true containment that garners respect from the crews working on it which in turn reduces the chance of damage and the potential for a leak. Corners are the second highest leak risk after damage and our process for welding square, tight corners significantly reduce that risk. In addition, to

Page 16

The Northeast ONG Marketplace

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INDUSTRY INSIGHT

UPSTREAM MAY BE SLIGHTLY DOWN, BUT MIDSTREAM IS DEFINITELY UP By: Kristie Kubovic, Director of Communications, Shale Media Group; & Rick Stouffer, Senior Energy Editor, Shale Energy Business Briefing Edited By: Mindy Gattner, Editor, Shale Media Group The shale oil and gas industry is broken into three sectors: upstream, midstream, and downstream. Upstream is the first stage and involves exploration and production. The midstream stage is associated with the processing, storing, transporting, and marketing of natural gas. The final stage, downstream, is after production through the point of sale. The recent drop of crude oil prices has affected the US shale oil and gas industry. The most recognized effects have been in the upstream sector, particularly with the producers, where rigs have been laid down and both budgets and jobs have been cut. However, the midstream sector, which alone accounts for a multi-billion dollar industry in the Marcellus and Utica Shale plays in Pennsylvania, Ohio, and West Virginia, has (for the most part) been full speed ahead. This was on display at Hart Energy’s recent Marcellus-Utica Midstream (MUM) Conference and Exhibition in Pittsburgh, PA, and in daily news headlines, including those at Shale Energy Business Briefing. Marcellus-Utica Midstream Conference and Exhibition MUM focused on the midstream sector of the Marcellus and Utica Shale plays. “The Marcellus has emerged as a world-class producer. The Utica, for its part, is an impressive contributor to North America’s energy output as well. These two unconventional shale plays, taken together, have done no less than reshape the energy business,” stated Paul Hart, Host, MUM Conference and Exhibition, and Editorin-Chief, Midstream Business, who added, “Moving the abundant flows of natural gas, gas liquids, and crude to market requires replumbing North America’s midstream network. … This conference focuses on how it will happen – even in a price-challenged environment. … Hart Energy’s MUM emphasized that this may be a temporary correction, but meanwhile the Marcellus and Utica regions will continue to grow and have a bright future.” Sherri Scott, Senior Marketing Manager of Conferences, Hart Energy, relayed, “The 2015 Marcellus-Utica Midstream Conference and Exhibition has been our largest attended midstream event. We are so pleased with the (Paul Hart at Hart Energy’s MUM 2015. Photo courtesy of turnout of more than 2,100 attendees--up more than 300 from the 2014 event. The continued Hart Energy.) support from the industry and the Appalachian region for this conference the last six years has been very exciting. Although we are in a softer market, Hart Energy will continue to provide value to industry professionals and companies who are in need of current and accurate industry data, intel, and contacts.” Around 160 exhibitors filled the convention center floor—all related to the midstream sector in one way or another. In addition, attendees had the opportunity

to listen to conference sessions from over two dozen speakers and moderators on the latest information and key issues affecting midstream development from the crude oil price drop to exports to infrastructure. Here are some highlights from a few of the conference sessions. Regulatory Spotlight: Regulatory & Policy Update The “Regulatory Spotlight: Regulatory & Policy Update” session was conducted by John Kneiss, Director, Governmental Affairs, Stratas Advisors, who began with a look at key takeaway points for Marcellus Shale production. Projecting “dramatic production growth from 2010 to 2018 with dips and valleys from crude oil price fluctuations,” Kneiss also forecast a “peak around 2020” and “steady output through 2030.” Even after 2030, he indicated, “Significant production declines were (Exhibition floor at Hart Energy’s MUM 2015. unlikely.” With current data, Photo courtesy of Hart Energy.) Kneiss estimates the Marcellus Shale to be a 100-year play and the Utica Shale to be an 80-year play. Speaking of the nation’s natural gas liquids (NGL) export infrastructure getting organized, Kneiss noted, “Of the 600+ infrastructure projects included in our models, we see all purity product exports occurring via pipeline, rail, and marine terminals presently operating or under construction. Pipelines, storage facilities, tank farms, shipbuilders, tanker railcar makers, fractionation plant operators, and de-ethanizer developers will feed those export facilities.” He also added, “The US is now a net exporter of refined products, which was unheard of 10 years ago.” In addition, Kneiss spoke of both federal and state policy and regulation, noting that on the federal level, Congress is limited in what it can do as the Republicancontrolled Congress is impeded by a Senate Democrat filibuster and White House veto threats. However, he added to keep an eye on H.R. 351, which would speed up LNG exports and spoke of the Climate Action Plan, which pertains to emission controls of shale oil and gas wells. Spotlight: To Market, To Market— Where Will The Production Go In the “Spotlight: To Market, To Market—Where Will The Production Go?” session, Karen Kabin, Vice President of Business Development, Kinder Morgan Energy Partners, L.P., relayed that the crude oil price drop was good as it allowed the industry, which has seen huge growth in the last four years, “to catch its breath.” She stated, “The Northeast is rapidly becoming saturated with product, resulting in product value degradation. For producers to achieve the best netback, access to multiple consuming markets will be required.”

March 2015 Access to multiple markets allow for opportunities for expansion. Kinder Morgan Energy Partners, the largest midstream energy company in North America, is investing well over a billion dollars each on midstream projects, such as Utopia East, which will take ethane and an ethane-propane mix from Ohio to Canada; Utopia West, which will transport natural gasoline from Ohio to Canada; and Utica Marcellus Texas Pipeline (UMTP), which will transfer propane, butane, natural gasoline, condensates and/or mixed NGLs from Pennsylvania to the Gulf Coast. In addition, the Milford, IN, Diluent Rail Terminal provides a “near term solution by utilizing existing infrastructure,” according to Kabin. The terminal is not in use, but could be utilized to move light condensate and natural gasoline (diluent) to Canada. Also, Kabin noted, “Offloading facilities can be expanded as Utica and Marcellus production increases.” Operator Spotlight: The Marcellus Evolution In the “Operator Spotlight: The Marcellus Evolution” session, John Mollenkopf, COO, MarkWest Energy Partners, stated, “The evolution of the Northeast shales is a story still being written. The Marcellus and Utica Shale plays are an incredible resource, which is fitting since oil and gas began here.” He sees “great potential in the Marcellus,” especially with gas takeaway projects, reversals, and LNG exports as there are “more than enough NGLs to supply the Northeast.” One of a handful of small companies that began in the northeast, MarkWest now operates 33 Marcellus and Utica facilities, with two major complexes located in Houston, PA and Majorsville, WV. Plus, MarkWest is constructing 18 new plants in the Northeast. The company saw its largest increase in volume (John Mollenkopf at Hart in 2014 with a current processing capacity of Energy’s MUM 2015. Photo 4.1 Bcf/d. MarkWest has invested $7.5 billion in the Northeast, which includes 1,000 miles of courtesy of Hart Energy.) pipeline. In addition, its workforce grew by 925 employees in six years, from 476 in 2008 to 1401 in 2014, which was primarily in the Northeast. Mollenkopf also spoke of some of the challenges in the Northeast and for the industry, including the “extreme engineering” needed in areas like West Virginia, where the ground isn’t flat and therefore creates challenges. For example, the company needed to make a flat spot 900 ft. above a road for one of its facilities. Concerning the current downward spiral of gasoline prices, Mollenkopf relayed that he didn’t expect to see crude oil prices this low again in his lifetime. Noting that MarkWest’s assets in the Appalachian Basin are still seeing a high degree of profitability, Mollenkopf explained,” This wasn’t a matter of luck.” The company moved to the most economic areas, where wells still get drilled even when producers cut back. Closing Spotlight: Sailing Ahead During the “Closing Spotlight: Sailing Ahead” session, Hank Alexander, Vice President, Business Development, Sunoco Logistics, relayed, “More than 800,000 barrels per day of liquids will be flowing out of the Marcellus by 2016,” and noted that with this production growth, the message was to plan, think ahead, and build the infrastructure. Looking at some of Sunoco Logistics’ NGL pipeline projects, Alexander explained, “Mariner East I has come to fruition after years in the making and is moving propane and ethane from the Marcellus Shale in Western Pennsylvania to the company’s Marcus Hook facility.” According to Alexander, the granddaddy of them all, Mariner East II, will feature 275,000 BPD of capacity for ethane, butane, and propane and will largely parallel Mariner East I. It is expected to be up and running in the fourth quarter of 2016. Combined, Mariner East I and II represent a $3 billion investment and are a local stimulus that provides a comprehensive takeaway solution for transporting Marcellus and Utica liquids to the Marcus Hook Industrial Complex, a world-class Northeast NGL hub, for processing.

Page 19 The Marcus Hook facility is closer to the Marcellus than its Gulf Coast counterpart. Plus Alexander said there is only a 396-mile difference from the Marcus Hook facility outside Philadelphia compared to the US Gulf Coast (Houston Ship Channel) when shipping NGLs through the Panama Canal to the Far East. The price of moving product from Marcus Hook is minimal, 0.2-0.3 cents per gallon of product. Alexander also relayed that the Marcus Hook Industrial Complex, a facility that sat idle 15 years ago, has positively affected Philadelphia through resurgence. The complex has utilized a strong labor force and acquired local government support. Noting there is “a lot of opportunity,” he concluded that the export market will be interesting to watch and relayed the importance of being well positioned. Recent News/Shale Energy Business Briefing Located at sebb.us, Shale Energy Business Briefing (SEBB) is an ad-free subscription based service, where subscribers receive a daily current events email, seven (7) days/ week, 365 days/year. SEBB covers the North American shale oil and gas industry and features hard hitting, concise news, along with a weekly roundup of the top stories and analysis of the big issues. Here are a few of the top SEBB midstream briefs from the past month. Falling Commodity Prices Spurring Midstream Mergers and Acquisitions: Fitch Ratings Falling commodity prices and expectations for slowing growth has begun to loosen midstream assets housed in exploration and production (E&P) companies, Fitch Ratings said Wednesday, Feb 11. Midstream assets’ valuations have held up well even as prices have fallen. Such asset sales could help provide capital needed to cover funding short falls associated with oil at the $50/Bbl price level. Fitch expects lower commodity prices may also have an indirect effect on select midstream and master limited partnership (MLP) names, specifically those with direct exposure to commodity prices or names with limited asset and geographic diversity and less robust growth backlogs as upstream names scale back production. “We expect midstream MLP credit quality will be under pressure as smaller, growth-challenged MLPs try to maintain distribution growth,” Fitch said. “We believe continued pressure will drive commodity- exposed midstream issuers to diversify and scale up operations in an effort to more effectively grow and maintain cash flow stability. Slower production growth will lead to limited opportunities for midstream providers to grow, particularly for names with limited geographic or business line diversity and prompt merger activity.” The ratings service expects the M&A consolidation trend to accelerate as upstream production contracts and E&P names look to fill funding gaps with asset sales and smaller scale, sub-investment grade midstream names struggle with future growth. This trend is starting to emerge with recent increased merger activity in the midstream sector. The credit ramifications for midstream names expected to be neutral to positive should prices paid be reasonable and the assets acquired offer operational benefits. Last month, Kinder Morgan kicked-off midstream acquisitions for 2015, announcing it would buy Hiland Partners for $3 billion including the assumption of roughly $1 billion of Hiland debt from Harold Hamm, CEO, Continental Resources. Energy Transfer Partners (ETP) soon followed with the announcement of the acquisition of affiliate Regency Energy Partners in a unit-for-unit transaction valued at roughly $18 billion including the assumption RGP debt. Low commodity prices weighed on RGP’s ability to fund accretive growth, and the transaction provided ETP an opportunity to fund that growth its lower cost of capital and consolidate midstream assets across multiple basins.

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The Northeast ONG Marketplace

Pioneer Natural Resources announced on Feb 4, it’s pursuing the sale of its 50.1% stake in its Eagle Ford Shale Midstream business, EFS Midstream. The asset sale has been rumored to be in the $3 billion range, according to Fitch.

Carlin Conner, CEO of SemGroup, Rose Rock Midstream’s general partner. “The transaction strengthens and diversifies Rose Rock’s asset base while immediately increasing distributable cash flow on a per-unit basis.”

Santa Fe Midstream Forms Partnership with PFE Energy Spectrum Capital Plano, TX-based Santa Fe Midstream on Wednesday, Feb 11, announced it’s partnering with private equity firm Energy Spectrum Capital, which will initially invest up to $150 million in equity to pursue midstream opportunities across the US.

Conner added SemGroup remains committed to drop-down the company’s US natural gas assets to Rose Rock “in the near future.”

Santa Fe Midstream’s management team is led by the company’s four founding partners, including Greg Kegin, CEO; Amer Rathore, Founder; Clay Gordon, Vice President-Commercial; and Paul Dolan, Vice President-Engineering. Prior to Santa Fe’s formation in late 2014, Kegin served as director of Business Development for Chesapeake Midstream/Access Midstream, where he directed such activities as acquisitions, divestitures, joint ventures, and organic growth projects across the US.

The Glass Mountain Pipeline is a 210-mile crude oil pipeline system that comprises two lateral pipelines originating in the Granite Wash and Mississippi Lime Plays. The two pipelines, with a capacity of 140,000 barrels per day (BPD), join and then terminate in Cushing, OK. The Wattenberg Oil Trunkline System is a 75-mile crude oil pipeline in the DJ Basin, which transports production from Noble Energy to the White Cliffs Pipeline. The Wattenberg Oil Trunkline System includes a 38-mile extension that came online Feb 1. In other Rose Rock news, the company said Tuesday, Feb 10, it priced 2 million common units at $40.32/common unit. Rose Rock has granted the offering’s underwriters a 30-day option to purchase up to an additional 300,000 common units. Rose Rock intends to use the net proceeds from the offering and from any exercise of the underwriters’ option to purchase additional common units to fund a portion of its pending acquisition of SemGroup’s remaining crude oil assets. RBC Capital Markets, Morgan Stanley, UBS Investment Bank, and Wells Fargo Securities are acting as the joint book-running managers for the offering.

Kegin has also served in various executive, commercial and operations roles at ARCO Pipe Line, The Williams Companies, Transok, and Atlas Pipeline. Rathore is one of four founding partners of Santa Fe Midstream, and he brings to Santa Fe over 30 years of experience in both the power and natural gas industries. Gordon most recently served as manager of Business Development at Chesapeake Midstream/Access Midstream. He has built, owned and operated three successful midstream companies, and also served in various capacities with Delhi Gas Pipeline and Aquila Energy. Dolan most recently served as Director of Infrastructure Services for WPX Energy with responsibility for midstream activities in the Lower 48 States. He supervised the handling of roughly 30,000 barrels of oil per day, 1.2 billion cubic feet of gas per day, and up to 30,000 barrels per day of natural gas liquids. Prior to WPX Mr. Dolan held various management and engineering positions with The Williams Cos, ARCO Oil and Gas, and United Engineers & Constructors. “We are excited and proud to be associated with Santa Fe as the company pursues its growth strategy in the domestic midstream sector,” said Tom Whitener, a founding partner of Energy Spectrum. “The partnership continues Energy Spectrum’s tradition of backing exceptional management teams which build on their relationships and commercial and operational expertise to become a service provider of choice in the producer community.” Rose Rock Acquiring SemGroup’s Remaining Crude Oil Assets in $325 Million Deal Tulsa, OK-based Rose Rock Midstream announced Monday, Feb 9, that it will pay $325 million for the remaining crude oil assets of SemGroup, including the Wattenberg Oil Trunkline System and SemGroup’s 50% interest in the Glass Mountain Pipeline. The purchase prices includes cash and 1.75 million Rose Rock Midstream common units. The acquirer expects the acquisition to close by April 1. “We’ve been working toward this agreement for some time now, and we are pleased to have reached this important milestone for both Rose Rock and SemGroup,” said

NGL Energy Partners Acquiring Magnum NGLs in $280 Million Deal Tulsa OK-based logistics company NGL Energy Partners announced Monday, Feb 9, it is acquiring midstreamer Magnum Development from private equity firm Haddington Ventures in a $280 million transaction. Magnum owns and operates a natural gas liquids storage facility located southwest of Salt Lake City Utah, with multiple existing salt caverns and a potential capacity of greater than 10 million barrels. NGL said the acquisition will enhance NGL’s existing asset footprint to better support Western US customers, while increasing the partnership’s fee-based revenue stream from current and future contracts on the facility. The deal is fully-financed and will be paid through a combination of $80 million cash and $200 million in NGL common units. RBC Capital Markets is serving as the exclusive financial advisor to NGL, while McGrath North Mullin & Kratz and Winston & Strawn are acting as NGL’s legal counsel in the deal. Simmons & Company International is the exclusive financial advisor to Magnum Development and Haddington Ventures and King & Spalding are serving as Magnum’s legal counsel in the transaction.

March 2015

Page 21

UPCOMING EVENTS FEBRUARY

APRIL

1-5

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8-10

SPE Production and Operations Symposium

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3-5 SPE Digital Energy Conference Woodlands, TX | www.spe.org

13-15 SPE International Symposium on Oilfield Chemistry The Woodlands, TX | www.michiganoilandgas.org

5-6 IOGA Annual Convention and Trade Show

Evansville, IN | www.ioga.com

Michigan Petroleum Conference

22-26

Traverse City, MI | www.michiganoilandgas.org

SAGEEP

14-15

Austin, TX | www.eegs.org

Embracing Energy Conference for Women

23-25

Wheeling, WV | www.wvonga.com

SPE Coiled Tubing and Well Intervention Conference

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State College, PA | www.upstreampa2015.com

24-25 SPE Coiled Tubing and Well Intervention Conference

Upstream PA 2015

20-22 OGIS New Yoirk New York, NY | www.upstreampa2015.com www.ipaa.org

Woodlands, TX | www.spe.org

25-26 WVMA Marcellus to Manufacturing

28-29 Ohio Valley Oil and Gas Expo St. Clairsville, OH | www.michiganoilandgas.org

Charleston, WV | www.wvma.com

APRIL 8 Utica Upstream 2015

MAY 4-7 Offshore Technology Conference Houston, TX | www.otcnet.org

Canton, OH | www.cantonchamber.org/utica-upstream

8-9 AADE National Technical Conference San Antonio, TX | www.aade.org

11-12 Appalachian Regional Shale Conference Farmington, PA | www.neienergy.com

14 IADC Drilling Conference Houston, TX | www.iadc.org

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The Northeast ONG Marketplace

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The Northeast ONG Marketplace

NEW TECHNOLOGY

E-FINITY’S NEW SKID PACKAGE REDUCES INSTALLATION TIME AND INCREASES RELIABILITY By: Jerry Todd, E-Finity Distributed Generation

The ability to listen to customer needs and respond in a way that meets the demand of the industry is key to a company’s success. This ability can most recently be seen in E-Finity Distributed Generation’s innovative, new product offering. E-Finity Distributed Generation, a distributor of the Capstone Turbine product line, has been leading the way in sales since 2007. Starting in October 2014, E-Finity began packaging Capstone’s established C30 and C65 units into one compact, customizable skid mounted package. “The skid package offering, like our mTIM PLC controller is a result of listening to our customers and responding to a need,” said Jerry Todd, Senior Sales Engineer, Oil & Gas Division, for E-Finity. The skid package design is similar to and builds upon the popularity of the Capstone C1000 series in which up to five C200 microturbines are packaged in a single container. The C1000 series is designed and assembled by Capstone and can provide 600kW, 800kW or 1MW of power. The skid package was originally created in response to a request from a gathering and production customer in southwest Pennsylvania. With sites in the heart of the wet gas region of the Marcellus Shale, the customer was faced with the issue of bringing their compressor stations online quickly to take advantage of market prices. They wanted to reduce construction and startup time while increasing the reliability of the power systems. To achieve these goals, E-Finity assembled a system that incorporated gas piping and electrical components that were specified by the customer. In order to meet the urgent need of the customer, the system was

pre-commissioned before leaving the shop and arrived onsite ready for final gas and power connections. “Once the system arrives onsite it can be powered up in a matter of hours, this greatly reduces construction time and guarantees the quality of the microturbine installation,” said the customer. The skid size is limited to six Capstone C30 or C65 microturbines, which makes the system easily transported by a flatbed truck. Each E-Finity skid mounted system comes with a fuel header that includes the 10 micron filter, regulation, and individual disconnects at each microturbine. The system is welded and tested to meet the customer’s specifications. Copies of all test reports are made available to the customer when the system ships. The skid package also contains the full control system normally present in any microturbine array and an outdoor rated PLC control system mounted next to a power distribution panel with 480v disconnects for each unit. The power disconnecting devices and the fuel isolation valves allows the lockout, tagout of individual microturbines without shutting down the array. If lower voltage systems or single phase power is required this can be added to the skid as well. The completed package is commissioned at E-Finity’s facility before shipping. Since all the assembly and commissioning is complete when the system arrives onsite, the customer saves on construction time and cost because the construction contractors do not have to perform the installation of the Capstone units. The units can also be expanded quickly or moved if the power requirements of the facility change. E-Finity plans on supplying these customizable and scalable skids to many oil and gas sites within the Marcellus and Shale regions and expanding it into the company’s commercial and industrial CHP and CCHP product offering, helping customers meet the increasing demands of their facilities. For more information, please contact E-Finity Distributed Generation 161 Pennsylvania Avenue Wayne, PA 19087 P 610-688-6212 www.e-finity.com

March 2015

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The Northeast ONG Marketplace

LEGAL & FINANCE

WORDS OF INHERITANCE – CAN THEY REALLY AFFECT MINERAL OWNERSHIP IN OHIO? By: Stephanie Skeen, Attorney, Davis Law Group Property rights are often analogized to a bundle of sticks, with each stick representing a different property right. Property rights or “sticks” can be added or taken away individually or as a bundle. Some of the most common landowner sticks include the right to: sell, lease, mortgage, subdivide, and grant easements. When a landowner enjoys all the rights that one can have in a property, they own the property in fee simple. Fee simple ownership is the greatest possible estate in land and represents absolute ownership of land. This ownership includes mineral rights, specifically shale oil and gas.

and from all the words of the instrument, the object being to ascertain and give effect to the intention of the parties.” 74 Ohio St. 295, 303-304 (1906). See also Sloan v. Lawrence Furnace Co., 29 Ohio St. 568 (1876); Akron Cold Spring Co. v. Unknown Heirs of Ely, 18 Ohio App. 74 (1923); Ricelli v. Atkinson 99 Ohio App. 175 (1955); Ewing v. McClanahan, 33 Ohio App.3d 46 (1986). Although G.C. 8510-1 effectively eliminated the need for words of inheritance and succession to create a fee simple estate, the reasoning in the above noted cases is still applicable, and therefore each reservation and exception of a mineral right, whether prior to 1925 or after, must be examined individually.

When conveying their bundle of rights in a property to another person, landowners have the option of retaining the mineral stick. This retention of mineral rights by a landowner is accomplished by a reservation or exception of part of the bundle of sticks associated with a property. Until the enactment of G.C. 8510-1 in 1925, now Ohio Revised Code § 5301.02, Ohio required the use of words of inheritance or succession (i.e. “heirs and assigns”) to create a fee simple estate.

“Fee simple ownership is the greatest possible estate in land and represents absolute ownership of land. This ownership includes mineral rights, specifically shale oil and gas.”

When identifying ownership of mineral rights prior to 1925, knowing the different between a reservation and exception is paramount, as words of inheritance are needed for a reservation, but not an exception. “A reservation is something taken back out of that which is clearly granted.” Akron Cold Spring Co. v. Unknown Heirs of Ely, 18 Ohio App. 74, 76 (1923). On the other hand, an exception “is some part of the estate not granted at all.” Id. An example of a reservation and exception of mineral rights that includes words of inheritance is: “Excepting and reserving to Grantor, his heirs and assigns, all oil, gas, and other minerals now owned by Grantor”. A conveyance that does not include words of inheritance when attempting to make a reservation of mineral rights prior to 1925, arguably creates a life estate interest. A life estate interest is an ownership in a property for the duration of a person’s life. Therefore, if a reservation of mineral rights that does not include words of inheritance creates a life estate, then the mineral right expires with the life of the reserving party. Even prior to 1925, however, Ohio courts expressed the importance of taking into consideration the intention of the parties and the words of the instrument in regard to the use or non-use of words of inheritance with a reservation or exception. The Ohio Supreme Court noted in Gill v. Fletcher that the weakness of the theory that a reservation without words of inheritance is only a life estate “lies in the fact that it does not give full force and effect to all the words of the deed…It is conceded that if the language of the deed constitutes an exception, words of inheritance are not necessary to transmit the estate to the [reserving party]; but the use of the word ‘reserve’ or ‘reserving’ or of other words of similar import, does not necessarily create a technical reservation. The deed may, nevertheless, operate as an exception. The construction of the deed is to be drawn from the circumstances of each case

Stephanie Skeen is an attorney at Davis Law Group, a boutique law firm for the shale oil and gas industry. Davis Law Group won the Northeast Oil & Gas Awards’ Law Firm of the Year award in 2014 and has been named as a finalist for the 2015 awards, which will be announced this month. Davis Law Group is located at 4313 State Route 51 North, Belle Vernon, PA 15012. To contact Davis Law Group, call 724.243.5005 or email info@caradavislaw.com.

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March 2015

855-269-1188 P.O. Box 1441 Oak Hill, WV 25901 www.ongmarketplace.com info@ongmarketplace.com

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The Northeast ONG Marketplace

June 23-25, 2015

Pittsburgh, PA

David L. Lawrence Convention Center

SAVE THE DATE

• Exploration • Drilling • Completions • Production •

About DUG East The DUG East conference and exhibition is the premier event focused on resource development in the Marcellus-Utica region. Produced by Hart Energy — the creator of the DUG conference series — this event attracts more than 3,100 industry professionals from companies working in the Appalachian Basin.

3,100+ Attendees

70+