Bakken Oil Report Spring 2016 by DEL Communications Inc.

Spring

Pipeline investment: An important priority American presidential candidates and their stances on oil Down, but not out: Bakken sees resurgence in other industries ND Legacy Fund to be the center of controversy in 2017

www.bakkenoilreport.com

2016

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Published by: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba Canada R3L 0G5

SPRING 2016

CONTENTS

Message from the Editor Shayna Wiwierski 10

The future of pipeline safety in the Bakken 68

Message from U.S. Senator Steve Daines 12

24th WBPC to focus on the technologies and techniques that will move the Bakken forward 70

Message from the Greater North Dakota Chamber of Commerce 14

Longevity is worth celebrating 72

Pipeline investment: An important priority 16

Engineering firm solves the issue of vibrating pump buildings 74

Fueling the Treasure State 20

Modular fabrication in oil and gas 76

Keystone XL controversy accelerates, enters U.S. court system 24

Financial focus: Best response to volatile markets? Stay calm. 78

A spade is a spade: Fracking measures in Colorado move forward 28

Encore Energy announces Kentucky Warsaw oil discovery and plans for the future 80

Presidential election year 2016 likely to be filled with surprising developments 34

Is the construction industry in the Bakken still healthy? 82

Leveraging a direct distribution strategy to build a better product 40 Dakota Access Pipeline offers great potential for income for states; safer for environment 44 New law changes oil tax framework: Means millions for the state 46 ND's Legacy Fund expected to be the center of controversy in 2017 48 Falling prices takes shine off Bakken oilfields 50 Temporary workforce housing challenged in Williston city limits 52 New technology to safeguard pipeline industry 56 Declining crew camp bed cause Capital Lodge to close its doors 58 Bakken still open for business: Despite downturn rumors, jobs plentiful for skilled workers 60

Come one, come all 84 Workplace wellness: The new frontier in affordable health care 86

Managing Editor Shayna Wiwierski shayna@delcommunications.com Sales Manager Dayna Oulion Toll Free: 1.866.424.6398 Advertising Account Executives Gladwyn Nickel Mic Paterson Anthony Romeo Gary Seamans Colin James Trakalo Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com Art Director / Design Kathy Cable

The evolution of portable gas detection 90

Advertising Art Sheri Kidd Dana Jensen

Mobile valve shop brings certified testing and repair services directly to gas compression sites 92 Customer-driven innovator 94 Take flight: Get to and from the oil patch with Executive Air Taxi Corporation 96 Maximize your investment dollars 98 EndurAlloy™ tubing extends run times 100 Miller Insulation: The safe choice 102 Cold-weather girth weld coating application issues 104 Under pressure: Transmitter basics for application and selection 106 The PEC Safety app: Now available on Apple and Android smartphones 108

Plenty of fish in the oilfields 64

Index to advertisers109

$5 million in grants help oil patch hospitals resolve bad debt 66

Fleet dealer’s longevity keeps Bakken strong 110

BAKKEN OIL REPORT – SPRING 2016

Publisher Jason Stefanik

Service, reliability, and innovation when loading and unloading petroleum fluids 88

Crime statistics increase as oil prices decrease 62

President David Langstaff

© Copyright 2016 DEL Communications Inc. All rights reserved.The contents of this publication may not be reproduced by any means, in whole or in part, without prior written consent of the publisher. While every effort has been made to ensure the accuracy of the information contained in and the reliability of the source, the publisherin no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officersor employees.

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MESSAGE

Message from the Editor Shayna Wiwierski This past year hasn’t been very positive for the oil industry. First, oil prices plunged, then President Barack Obama vetoed the Keystone XL Pipeline project, making it look like it couldn’t get any worse for oil. Although the industry has been down for some time now, there is hope on the horizon. The U.S. Energy Information Administration (EIA) forecasts that global inventory levels will rise again in 2016 before the industry sees the first draw on oil inventories in the third quarter of 2017 (Brent prices are forecast to average $50 per barrel in that year). Since oil is the main economic driver in the area, the Bakken region has had to weather the storm. Surprisingly things haven’t been as bad as you may think. In this issue of the Bakken Oil Report, we take a look at some of the taxes and funds that the state of North Dakota has implemented to stay afloat. We also take a look at the blossoming housing market in the region and the changeovers of man and crew camps in the area. And, let’s not forget one of the biggest news stories for this year, the 2016 presidential election, which will not only affect petroleum and natural gas in America, but throughout the rest of the world as well. I truly hope you enjoy this issue of the Bakken Oil Report, and I welcome you to pick up the inaugural issue of the Bakken Oil Directory, our sister publication which lists the suppliers in the region, as well as other information relevant for the region. If you want more Bakken news, you can visit our official site, bakkenoilreport.com. Thanks for reading, and if you have any questions, comments or concerns, please send them my way. Shayna Wiwierski Shayna@delcommunications.com @DELCommInc

BAKKEN OIL REPORT – SPRING 2016

MESSAGE

Message from U.S. Senator Steve Daines As a fifth-generation Montanan and someone with more than two decades of experience in the private sector, I know how important it is to bring high-paying jobs home to our state. Montana’s energy sector unlocks our state’s potential for high-paying jobs and keeps electricity prices low, allowing Montanans’ paychecks to go further. From oil, coal, and natural gas to hydropower and wind, energy is creating new opportunities for our state. We’re seeing this firsthand in Sidney and communities across eastern Montana where the energy sector creates thousands of new, goodpaying jobs, injecting millions of dollars into our state and local economies, and allowing for more young Montanans to put their training and education to use here at home. Unfortunately, affordable energy prices are at risk due to the Environmental Protection Agency’s (EPA’s) Power Plan. At the same time, the oil industry is experiencing an economic downturn in the face of burdensome regulations from the Obama administration. New oil and gas activity is the lowest it’s been in Montana in decades. Through innovation, collaboration, and hard work, our state can continue to pave the way if the Obama administration steps back from its out-of-touch regulations. I’ve also heard from countless folks across our state about the Obama administration’s reckless action in rejecting the Keystone XL pipeline. Montana, especially the Bakken region, was denied an opportunity for growth. Construction and operation of the Keystone XL pipeline will directly create 800 jobs right here at home. It will also support countless energy jobs required to produce and transport the 830,000 barrels of oil per day that this pipeline will carry, including 100,000 barrels from the Bakken region to be refined in the United States. 12

BAKKEN OIL REPORT – SPRING 2016

The Keystone XL pipeline would do more than carry oil across our state and would be a lifeline for some of our struggling small towns like Circle, Montana, and it would keep electricity rates low for consumers like those who purchase power from NorVal Electric Cooperative who would supply power to one of the pump stations. Moreover, the administration has proposed rules to govern venting and flaring of oil and gas wells, duplicitous rules for hydraulic fracturing, and intends to increased royalty rates for minerals. These actions, compounded with the economic downturn, make job growth even more difficult in the Bakken region. As a direct result of the Obama administration’s actions, Montana families could face severe hikes in their electricity bills. Recently, the U.S. Supreme Court issued a nationwide stay on the EPA’s new regulations on coal-fired power plants. This decision provides states like Montana relief from these misguided regulations while they are being challenged in court. These EPA regulations are part of the Obama administration’s relentless attacks on affordable energy and good-paying Montana jobs. President Obama’s actions stifle investments that could lead to innovation to make energy cleaner and more efficient here in the U.S. After all, it was American ingenuity, not Washington bureaucrats, that used hydraulic fracturing to unlock the Bakken formations in Montana. America can and should power the world. But we can only do it if the Obama administration steps back from its out-of-touch regulations and allows American innovation to thrive once again. We need more innovation, not more regulations. Together we can save Montana energy and save Montana jobs. w

MESSAGE

Message from Greater North Dakota Chamber of Commerce By Jon Godfread, vice-president of government affairs

As we have entered 2016, and with all the news of lower oil prices and a slowing of our economy I figured we could focus on some good news and look back on 2015. We have gone through a lot in the past year. Through it all, there is one key take away – we are living in the most prosperous time of our world’s history and it’s our freedoms and free enterprise we have to thank for this sustained prosperity. There were a lot of firsts in 2015, some we can look back fondly on – the first time we heard about the potential of water on Mars – and some not-so-fond memories – the first time we read the Clean Power Plan put forth by the EPA – but there is one other first you might not be aware of. According to the World Bank, 2015 will go down in history as the first time global poverty drops below 10 percent. People from across the globe have been quick to claim responsibility for this shift, saying the goals and focus they have put on poverty have been the solution. Without doubt, the international community has improved basic human goods such as health and education, but this obscures the true source of the progress the World Bank is celebrating: hundreds of millions of people over the past few decades have improved their lives through free enterprise. They are the source of progress. Incomes are rising for a growing percentage of people in the developing

BAKKEN OIL REPORT – SPRING 2016

world. This trend is not due to government aid or forced redistribution schemes, but to greater economic opportunity and prosperity made possible by free markets and economic freedom. As people in countries plagued with poverty are able to access new markets and benefit from commerce, they act not according to plans designed by faraway foundations, but according to the fundamental human drive to improve their lives through ambition, entrepreneurship, and work.

emerging businesses, entrepreneurs, and

Recognizing this fact is critical if we hope to maintain the free enterprise system in our world. We need to advance policies and a culture of enterprise that protect the rights and abilities of individuals to participate freely in their economies. The billions of decisions and actions each day by people working in free markets around the world will always produce the best available outcomes.

aircrafts, manufacturing, and technology,

South Korea and Chile offer all the evidence we need. Fifty years ago, both countries were stuck in poverty, and personal freedom was practically nonexistent as self-serving dictatorships ruled. In the ensuing decades, both countries enacted reforms that strengthened property rights and opened commerce to global trade, which freed everyday workers to boost their incomes.

themselves. As North Dakota continues

It’s no different here in North Dakota; at one time our stagnated economy couldn’t keep or attract anyone. Now, we have gained the reputation for supporting

expansions. Over the past decade our state’s economy has grown at a rate of 6.5 percent, which is staggering, when compared to the national average of 1.4 percent. North Dakota has led the nation in GDP growth four of the last five years. This top ranking proves once again our continued economic growth stems from nearly every business sector. There is more to our story than just energy and agriculture. Our story includes unmanned in addition to energy and agriculture. This growth has led to our per capita income increasing over $25,000 since 2004, a $4.3 million increase in exports, and roughly 123,000 new jobs. Free enterprise and entrepreneurship are elements of economic freedom that allow individuals to pull themselves, and others, out of poverty and make better lives for to strive to expand individual freedoms, our federal government seems to be retracting them. The best story in the world of 2015 is the story of freedom that is bringing more hope and opportunity to those countries that embrace the free enterprise system. Many Americans seem to have forgotten what made us the greatest nation in the world. Thankfully, North Dakota is here to remind them what free enterprise looks like in action. w

Sharing what you need to hear, not just what you want to hear It’s how Troy Nelson became one of Barron’s “Top 1,200 Financial Advisors.” And, it’s how Troy helps his clients work toward important financial goals in Bismarck, ND. Troy has been named No. 1 in North Dakota for the 5th year in a row.

Troy Nelson Edward Jones Financial Advisor 1701 Burnt Boat Dr. Bismarck, ND 701-255-1196 Troy.Nelson@edwardjones.com

Barron’s “Top 1,200 Financial Advisors,” Mar. 6, 2016. Barron’s Top 1,200 criteria based on assets under management, revenue produced for the firm, regulatory record, quality of practice, philanthropic work and more. The rating is not indicative of the financial advisor’s future performance. Neither Edward Jones nor its financial advisors pay a fee to Barron’s in exchange for the rating. Barron’s is a registered trademark of Dow Jones & Co. TAL-7212C-A-AD

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REPORT

Pipeline investment: An important priority By Robin Rorick, the American Petroleum Institute

North American pipeline capacity is in the spotlight after a decade of surging oil and natural gas production in the United States and Canada. While the most famous pipeline, Keystone XL, is one that hasn’t been constructed, the tens of thousands of miles of pipelines transporting oil and natural gas every day demonstrate the benefits – and impressive safety record – of this crucial infrastructure. 16

BAKKEN OIL REPORT – SPRING 2016

More than 199,000 miles of liquid pipelines crisscross the United States. According to the latest data collected as a part of the Pipeline Safety Excellence initiative, pipelines transported about 16.2 billion barrels of crude oil and petroleum products in 2014 at a safety rate of 99.999 percent. Pipeline Safety Excellence, launched in 2014 to ensure continual safety improvements, also reported that pipeline releases along

the sensitive areas of the right-of-way dropped 50 percent from 1999 to 2013. Particularly, two causes that have been excessive in the past have significantly decreased. These are corrosion incidents, which are down 76 percent, and damage from third-parties, which have declined 78 percent, in this same time period. While these trends show progress, the industry focus is prevention of all incidents, so operators continue to

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REPORT

continued

advance technology that can better detect threats to pipeline integrity. The industry also continues to develop safety standards promoting best practices that achieve the industry-wide goal of zero incidents. This year, the American Petroleum Institute plans to issue a new recommended practice, RP 1176, to strengthen the industry’s capability to predict and prevent crack-related pipeline failures by enhancing the gathering, integration, and analysis of data. RP 1174, issued in December 2015, provides operators with an enhanced framework to enable continual improvement of the pipeline emergency planning and response process. Also issued last December, RP 1175 provides guidance on the development, implementation, and management of a sustainable leak detection program. Finally, RP 1173, Pipeline Safety Management Systems, was published last summer and provides a scalable and flexible framework ensuring companies continually assess their practices to guarantee the appropriate steps are taken to prevent spills. Commitment to continual safety improvements is nothing new, but the 21st century energy resurgence has created new infrastructure needs. Prior to the production advances of the past decade, the priority was to transport imported energy from the coasts to points inland. Now that production is

surging in places like North Dakota, Pennsylvania, and the Canadian oil sands, infrastructure priorities have shifted. According to a study from Energy Policy Research Foundation, Inc., shipments of crude oil from the Midwest to the Gulf of Mexico jumped from just 50,000 barrels per day (b/d) in 2008 to over 380,000 b/d in 2013, while shipments from the Gulf to the Midwest decreased 500,000 b/d. For producers, inadequate transportation infrastructure creates bottlenecks that can raise production costs and depress revenue. The lack of efficient access to markets can lead to lower well-head values and reduced revenues for royalty owners, as well as local, state, and federal governments. Failure to address these limitations could discourage production investment – along with the associated employment and economic advantages that greatly benefit consumers. Updating energy infrastructure in the United States could generate up to $1.15 trillion in new private capital investment and support 1.1 million new jobs over a 10-year period, according to a study by IHS. Pipeline investment alone could support up to 830,771 average annual jobs. Pipeline constraints, on the other hand, can be costly to consumers too. According to the U.S. Energy Information Administration (EIA), residents of the northeastern U.S. paid up to 68 percent

more for electricity than the national average in the winter of 2014, while industrial users paid up to 105 percent more for electricity than the national average. Failure to expand natural gas and electricity infrastructure in the northeast could cost the region’s households and businesses an estimated $5.4 billion in higher energy costs and more than 167,000 private-sector and construction jobs between 2016 and 2020, according to a study from the New England Coalition for Affordable Energy. Some progress is underway. EIA reports that over the past 10 years pipeline operators have invested more than $57 billion to complete more than 400 projects, adding about 15,200 miles of pipeline and approximately 151,300 million cubic feet per day (MMcf/d) of capacity to transport natural gas to consumers and businesses. At the same time, according to EIA, operators have announced plans to invest more than $40 billion on 105 projects to add more than 7,500 miles and more than 72,650 MMcf/d in pipeline capacity. It’s a good start, but more expansion is needed. With a 99.999 percent safety rate, pipelines are among the safest, most efficient methods for transporting energy. To maintain and build upon the economic benefits of North America’s energy renaissance, additional pipeline investment must be a priority. w

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REPORT

Fueling the Treasure State By Jessica Sena, Montana Petroleum Association The petroleum industry is one of the most impactful economic drivers in Treasure State. Direct and indirect jobs account for 6.7 percent, paying wages two-thirds higher than the state average. Valueadded impacts represent 10.8 percent of the stateâ&#x20AC;&#x2122;s economy, fueling opportunity and prosperity in one of the most rural states in the country. Voice of the oil and gas industry The Montana Petroleum Association (MPA) is a voluntary, non-profit trade association representing more than 200 members from producers to refiners, and everyone in between. The association advocates for a competitive legal and regulatory environment to attract and gas activities on state, private, and public lands. MPA has been working fervently to stave off a host of state and federal proposals to ensure that once prices rebound, Montana has an advantageous business climate to attract oil and gas capital back into the state. Last January, MPA successfully stopped legislation to further hamper the industry, including proposals to increase well bonds; impose mandatory drilling setbacks; prohibit earthen pits and ponds; and raise taxes on oil and gas producers. At the local level, the association is working to combat activist movements like many of those which have been seen elsewhere around the country. Beyond state and local policy work, MPA provides comments on proposed rulemaking by federal agencies. The war on natural resource development, and fossil fuels in particular, has been made ever-apparent 20

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

Miss Montana USA 2015, Tahnee Peppenger on MPA oilfield tour.

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REPORT

continued

in a host of proposals, all of which will impact oil and gas production across the country. Most recently, the MPA intervened in a case involving a Regan-era lease on public lands in northwestern Montana. Just last month the Department of the Interior announced that the lease was to be cancelled, along with all remaining leases in the area. The decision has set a new precedent that makes the certainty of all federal leases unknown. Education not regulation Education, innovation, and negotiation, not regulation, have been the means by which the MPA has been successful in keeping red tape at bay in Montana. STEM outreach has been a priority for some of the MPA’s largest members, including both producers and refiners. The need for skilled labor and educated professional in STEM fields, particularly engineering, is creating unfounded opportunity for the workforce of the next generation. That’s why many oil and gas businesses are reaching out to students from elementary to high school. The MPA and its members also work to educate the public and community groups on regulatory issues, as well as on industry practices. In the recent past, the association hosted a FrackNation screening tour. The tour provided the opportunity for the general public to ask questions about the industry, and to learn more about the myths and facts development. The association also presents to business and student groups, along with facilitating oilfield tours. Last year, the MPA sponsored a site tour with Miss Montana USA, wherein she got to go onto a drilling rig, walk through a frac operation, and even gauge a few production tanks.

Employees of MPA members Liquid Gold Well Service and MCR (marginal well operator) north of Shelby in the Kevin-Sunburst field.

Every other year ahead of the legislature, MPA tours the state to meet with candidates and lawmakers. Dubbed the Legislative Briefing Tour, the multi-stop meeting tour reaches from Kalispell to Sidney in an effort to educate lawmakers about the importance of the oil and gas industry. In the black and giving back Beyond economic impact, oil and gas operators in Montana have contributed millions to charitable causes around the state, including Special Olympics, the Boys and Girls Club, the Montana Rescue Mission's Women and Families Shelter, and numerous education foundations. The generosity of MPA’s members exemplifies how vital the oil and gas industry is in Montana, and perhaps how often it’s taken for granted. w 22

BAKKEN OIL REPORT – SPRING 2016

Monica Mainland, MPA board member, refinery manager at ExxonMobil, with students at the Energy and Engineering Day STEM event in Billings, MT.

Keystone XL controversy accelerates, enters U.S. court system By Leonard Melman

Few subjects have garnered the amount of media ink during the past couple of years as has been devoted to the unlikely subject of petroleum pipelines. Not only have they become a subject of intense concentration within the world of petroleum exploration, production, and transportation, but they have also infiltrated themselves into the highest levels of public interest in political matters. Perhaps the greatest degree of interest in the subject of pipeline construction has been the focus of attention on one such endeavor, the Keystone XL Pipeline project, and as we enter the early part of 2016, important headlines continue to be made and rapt attention continues to be paid to the project's progress – or lack thereof. Keystone XL is a proposed massive pipeline extending almost 2,000 kilometers (about 1,200 miles) from the prolific oil sands of Alberta to Steele City, Nebraska, where it would join up with existing pipelines for transport to major refineries and Gulf of Mexico shipping ports. The pipeline would carry about COPYRIGHT © TRANSCANADA CORPORATION. ALL RIGHTS RESERVED. 24

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830,000 barrels of petroleum per day and would be constructed by TransCanada Corp. Financing would be provided by that corporation, plus refineries and oil shipping companies, which would be recipients of the end product. The matter is of vital importance to two particular petroleum producing regions, the economies of each one having prospered mightily through previous petroleum exploration, development, and production. The two regions are the province of Alberta and the oilrich regions of western North Dakota, particularly including the Bakken oilfields. In each case, these regions produce petroleum far in excess of their area's domestic consumption and therefore are heavily dependent on transporting excess production to various markets.

However, consistently strong opposition to Keystone XL has arisen among environmentalists and their voices have made a strong impact on America's political systems. Because those environmental voices are not quite as potent in Canada as in America, construction permits for the Canadian leg of the pipeline were granted in 2010, but in America, much more powerful opposition emerged. In fact, Keystone XL has even become a major issue in this year's American presidential election.

Matters finally came to a head on November 6, 2015, when the Obama administration issued a formal declaration rejecting TransCanada's application to build Keystone XL, and many believed the seven-year saga was finally at an end as the president declared, with apparent finality, that the pipeline, "will not serve the national interests of the United States of America." The state department also added that in its view, the pipeline would not make a meaningful contribution to the U.S. economy.

At the same time Canada approved the northern leg of the pipeline, it was anticipated America would grant similar approval, but the Environmental Protection Agency (EPA) strongly suggested that President Obama not approve the project. He followed their

TransCanada's President and CEO Ross Girling quickly replied in a positive manner, stating simply that he continued to believe that Keystone XL would be built and that, "TransCanada and its shippers remain absolutely committed to building this important infrastructure project."

Few alternatives other than pipelines are available to accomplish the necessary transportation functions. Both regions are land-locked so marine tankers are unavailable; trucking is a non-starter considering the quantities of petroleum which must be transported; and shipment via lengthy rail tanker trains has been heavily condemned by environmental and safety experts since the tragic derailing of a lengthy oil tanker train in Lac Megantic, Quebec in 2013 when the resultant fire incinerated much of the town's downtown and tragically killed 47 people. Some of the strongest arguments for the project come from economists and those politicians who strongly advocate resource development, given that construction of Keystone XL would result in 42,000 jobs and completion of the project would permit continued expansion of petroleum production in both regions. 26

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

advice by verbally discouraging Keystone XL, and finally in 2015 he took decisive action by vetoing a Republican-led bill which would have given the project final authorization. Just prior to the president's decision, TransCanada Corp. asked the U.S. government to simply put any review of the project on hold. Encouraged by the president's action, the environmental community stepped up their attacks on the project, stressing two points in particular. First, the route chosen through Nebraska would pass through what they regarded as a particularly fragile ecosystem, which they wanted to protect. Second, they declared that approval of the project could be interpreted as tacit approval by the U.S. government of expansion of production from the Alberta oil sands, which they regard as particularly "dirty" oil.

As reported by Canada's CBC, reaction to the president's announcement was quite predictable. Environmental organizations were quick to heap glowing praise on the president, while energy groups blasted the president, declaring that his decision was based more on political motivation than on adherence to scientific fact. However, one more dynamic development remained and that took place on January 6, 2016, when the company filed a $15 billion claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) on the basis that the denial was, "arbitrary and unjustified". TransCanada also filed a lawsuit in the U.S. Federal Court in Houston, Texas, asserting that the president's decision, "exceeded his power under the U.S. Constitution." As this article is being prepared in April 2016, matters are now winding their way through the U.S. legal system and it is worth noting that for many people, the stakes in the eventual outcome of TransCanada's legal actions are vitally important and it might be added that several Republican candidates for the U.S. presidency have staked out positions strongly in support of the pipeline's completion. w

REPORT

A spade is a spade Fracking measures in Colorado move forward Colorado’s 2016 ballot will likely be flush with one or more of a dozen onerous antifracking amendments delivered to the secretary of state’s office by activists late in 2015. The state’s voters will not see a statewide ballot showcasing an actual, literal ban on fracking, but that may be just a naming technicality. Group sponsors Coloradans Resisting Extreme Energy Development pulled the measure explicitly entitled "Ban on Hydraulic Fracturing" on February 11. "We still have plenty to work with," says Karen Dyke, speaking to the Denver Business Journal. Plenty, indeed. It did not take long for opponents of responsible natural resource development to lay all their cards on the table, even if they folded their most obvious hand early. In 2014, similar activists vehemently protested the notion that their proposed measures – the ones subsequently pulled by Governor John Hickenlooper in exchange for a fracking task force – were anything more than so-called local control initiatives, and certainly not outright bans. "This is part of an expensive campaign by the industry to scare voters. This isn’t about banning fracking, it is about giving communities the ability to put some controls on development – community by community," says Local Control Colorado, even as they were caught and recorded on a conference call hosted by Americans Against Fracking, a group calling for a nationwide ban.

BAKKEN OIL REPORT – SPRING 2016

The 2014 measures were just more of the same, it was said at the time, as the 2013 local measures passed in a handful of municipalities across the state. It was not about banning hydraulic fracturing, they said, but about giving local citizens selfdetermination of health and regulatory standards that didn’t go far enough at the state level. Any mention of a statewide ban was not part of the agenda. Well, not that year at least. Fast forward to the 2016 cycle. Extreme dissatisfaction with fracking task force recommendations prompted one of the members to denounce the process. "You delude yourselves if you think that passing this rule solves any of the problems that Colorado is

facing," activist Sara Barwinski told the rulemaking body, referring to the Colorado Oil and Gas Conservation Commission ruling issued early in 2016. Similarly, Democratic U.S. Rep. Jared Polis, a backer of the 2014 initiatives and a key proponent of pulling his own proposals in favor of the task force alternative, called the 2016 COGCC decision a "failure." Meanwhile, legal challenges to the 2013 ban and moratorium that did pass in Longmont and Fort Collins, respectively, have reached the Colorado Supreme Court and will be decided sometime later in 2016. Lower courts overturned both local control measures. Enter the ban on hydraulic fracturing. "That the protection of public health,

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continued

safety, welfare, and the environment

a taking of private property," and that

be "enforced by any aggrieved person

has priority over the rights of oil and

such a prohibition "does not require the

or governmental entity" that felt they

gas development," proponents wrote

payment of compensation."

were not receiving "safe and sustainable

That would be the entire deck of cards.

conditions for life, including healthy air,

But anti-energy activists may still have an

water, land, and ecological systems."

the Constitution of the United States."

ace or two up their sleeves.

"While we didn’t want to eliminate any

The proposed constitutional amendment

The "Right to a Healthy Environment,"

proposals, we always knew that we could

also included an anticipatory clause

however, remains. Also a constitutional

only run one to two. At this point, it’s

proclaiming the ban on fracking "not

amendment, the declaration would

a process of elimination to get down

in their submission, "such prohibition is deemed necessary to their safety and happiness and will not be repugnant to

to one or two," said a different CREED

34%

spokesperson. The literal ban on fracking might be gone, but the stealth ban in the form of a "right to a healthy environment" could likely extend beyond just the drilling technique to all natural resource development throughout the state under

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the guise of protecting the "health, safety, and welfare of natural persons." Failing that, the remaining constitutional amendments include provisions for setbacks up to 4,000 feet from areas of "special concern" – "drinking water sources, lakes, rivers, streams or streambeds, creeks, irrigation canals, riparian areas, playgrounds, sports fields, public parks, open space or

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Another would permit local governments to ban all oil and gas development within their borders, stripping state regulatory agencies of their current authority, and perhaps setting the state’s constitution at odds with the state’s Supreme Court, should it rule in favor of state regulatory precedence over local control in the cases before this session. Those for responsible resource

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Presidential election year 2016 likely to be filled with surprising developments By Leonard Melman

These are indeed difficult times for the world of petroleum and natural gas in both Canada and the U.S. as the number of problems created by falling prices and declining industry activities is beginning to have a serious impact on many areas which only recently had been enjoying true "boom times." The Canadian provinces of Alberta and Saskatchewan are excellent examples. It was not too long ago that the corridor from Calgary to Edmonton and up to the rapidly growing community of Fort McMurray was widely regarded as one of the most prosperous regions on earth. Then the industry came face-to-face with price collapses for both crude oil and natural gas. Crude oil plunged in a spectacular manner from a relative peak of US$112 in mid-2013 all the way down to below US$30 per barrel in January 2016, while natural gas suffered through declines from above US$6.50 per contract (10 billion British Thermal Units) in early 2014 to below US$2.00 per contract in late December 2015. As a result of these declines, many 34

BAKKEN OIL REPORT – SPRING 2016

projects which had been very profitable suddenly found that revenues had fallen below their production costs and, unable or unwilling to sustain losses, they began to reduce or even cease operations. At the same time, many exploration and development projects which had previously been able to attract investment financing suddenly found those sources had dried up – and many such projects were put on "care and maintenance," or entirely abandoned. The effects of these pullbacks on previously prosperous areas have been significantly negative. In the province of Alberta, famous for relentless growth of oil sands recoveries, the news has taken on an ominous overtone. Waves of newcomers to the province are now unable to find work and are returning to their home areas. Apartments and condominiums are being abandoned in cities like Fort McMurray. The Alberta government reported that recent job losses are the worst since the Recession of 1980 – more than one-third a century ago. Moody's Investors Service recently indicated it was placing many

Canadian oil companies under review for downgrading of their debt. The situation is also turning bleak for those areas of southern Saskatchewan involved in exploration, development, and production of oil within the northern regions of the Bakken deposit. In early February, Saskatchewan Premier Brad Wall reported that a deficit during this fiscal year was very likely and that it would be difficult going forward to maintain the government's programs. He blamed "falling resource revenue" as an important source of the province's fiscal difficulties. North American problems associated with falling energy complex prices are hardly limited to Canada as several areas within America are also being hit hard, with North Dakota – primary home of the Bakken discovery – feeling particular pain. State Governor Jack Dalrymple reported in late January 2016 that state revenues would fall by more than $1 billion this year and state agency budgets would face deep cuts. The epicenter of Bakken activity, the city of Williston, has gone from "boom" to "bust" in short order with lengthy lineups each day at the city's job

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Presidential election year 2016 likely to be filled with surprising developments continued center. One-bedroom apartments that used to rent for $2,000 per month are now sitting empty. In addition to North Dakota, other states such as Colorado and Texas, both heavily involved in petroleum recovery via the controversial method known as fracking, have likewise seen prosperity quickly evaporate like water in the hot Texas sun. Given this difficult situation and the array of problems the industry is facing, some are now turning more than ever toward government action to help provide meaningful assistance, but in

TED CRUZ – Senator Cruz has given several indications that he is a strong supporter of the petroleum industry. He has come out strongly against cap-and-trade legislation, declaring that this measure, which would add considerably to industry and consumer costs, would "…weaken the nation's global competitiveness with virtually no impact on global temperatures." He has argued against government set-asides which would prevent oil exploration and development over wide areas. In addition, and in line with an expressed

to actually be "an environmental and aesthetic problem." Like Cruz, Trump has also spoken out against cap-and-tax laws stating that they would force Americans to "…face everincreasing (petroleum) prices." He heaped scorn on President Obama's opposition to Keystone XL, calling the President's rejection "disgraceful." In regards to the Keystone XL project, the San Antonio Business Journal noted that, "…Trump is in favor of the Keystone XL Pipeline, which would run from the tar sands oil region of Canada to the Houston and Port Arthur areas."

And now, another vital ingredient is in place and that is the reality that 2016 is a presidential election year for America and the stated energy-related policy preferences of many of the candidates in both parties contain sharp differences.

JOHN KASICH also has taken a stand against excessive environmental regulation by voting "no" in 2000 on an amendment which would have allowed full implementation of the international Kyoto protocol of 1997. In addition, he has been a strong supporter of the Keystone

fact, many others within the industry believe that government itself might be a source of new difficulties given the powerful influence of the environmental community.

goal of reducing general government

attempt to "…Stop costly new regulations

taken some heat from the petroleum

Despite the evident problems, concerns relating to government policies continue to mount, including taxation, climate change, cap-and-trade, pipeline nonapprovals, water purity, promotion of alternative energy sources, and continued land set-asides.

that would increase unemployment, raise

industry for favoring a sharp increase

consumer prices and weaken the nation's

in taxation when recoveries take place

global competitiveness…"

through the fracking process.

On the issue of the Keystone XL pipeline,

While several candidates dropped

Cruz has spoken strongly in favor of the

out of the race by early spring, some

pipeline's completion and co-sponsored

of their industry-related comments

Bill S2280, a "bill to approve the Keystone

show generally strong support among

XL Pipeline." (The bill subsequently

Republicans for petroleum exploration

passed, but was vetoed by the president.)

and development.

He also co-sponsored Bill S2181, which

SENATOR MARCO RUBIO has been quoted

DONALD TRUMP – Candidate Trump has

been quoted by ABC News as declaring

In the Republican Party, three candidates have emerged from the pack following the initial round of primaries. Those candidates are Senator Ted Cruz, Donald Trump, and Ohio Governor John Kasich. Each one has issued policy statements regarding petroleum development.

openly questioned the science behind

that he does not believe humans are

the "human-caused global warming"

responsible for current climate trends, but

concept. During a Fox News interview

rather believes that climate has always

in 2014 he declared the concept to be a

been changing and has never been static.

"hoax." He has also stated that many of

As a result, he is opposed to the complex

the suggested "remedies," such as the

regulations being proposed, which would

widespread use of wind turbines

control vast areas of human activity.

BAKKEN OIL REPORT – SPRING 2016

interference in commerce, he has specifically come out against excessive government regulations, stating he would

called for a prohibition on the adoption of any new Environmental Protection Agency regulations until a final costimpact analysis had been completed.

XL Pipeline and sharply criticized President Obama for his decision to terminate the project. However, he has

regarding climate change that he would not do anything which would make, "America a harder place for people to live, to work, or to raise their families." He has

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Presidential election year 2016 likely to be filled with surprising developments continued Rubio also strongly opposes cap-and-

On the Democratic Party side, only

trade schemes. During his 2010 senatorial

Hillary Rodham Clinton and Vermont

campaign he stated, "…As a U.S. senator,

Congressman Bernie Sanders remain

I would oppose a national energy tax

as viable candidates for the Democratic

on American consumers, farmers and

nomination. Both appear to favor strong

business owners. At a time when our

environmental regulation.

economy is struggling, a cap-and-trade scheme would further strain family

HILLARY CLINTON – During a 2015 broadcast of a CNN debate, Clinton

budgets and destroy jobs."

stated her opposition to the Keystone

Ben Carson declared his antipathy to

XL pipeline by noting, "…I now oppose

government domination in general by

Keystone, but I withheld opinion at first."

stating, "…I have concluded that the

Regarding energy markets, she stated

best policy is to get rid of all government

that a Clinton administration would, "…go

There was some hope among oil industry leaders that Clinton would be more open to their cause than President Obama, but Clinton recently supported Obama's Keystone XL decision.

Senator Rand Paul of Kentucky would also strive to cut government down to size. He recommends that, "…Cutting the red tape and encouraging energy freedom, new technologies and discoveries will be a priority in my administration." He also favors free market competition, developing mineral and energy resources on public lands, and completion of the Keystone XL pipeline.

after energy traders and speculators." She would also use government to investigate high gas prices when they occur. In point of fact, Clinton has made few definitive statements regarding petroleum over the past few years, causing the National Journal to discuss her energy issue statements in this manner, "At the same time, there is genuine sense of uncertainty about the front-runner, who has yet to offer detailed energy policy positions." There was some hope among oil industry leaders that Clinton would be more open to their cause than President Obama, but Clinton 2015-08-24 22:25:35 +0000

subsidies, and get the government out of our lives and let people rise and fall based on how good they are. It goes back to the concept of regulations. Every regulation costs in terms of goods and services."

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recently supported Obama's Keystone XL decision. BERNIE SANDERS – Representative Sanders is the most avowedly leftist of all the important candidates and, in fact, has described himself as a "democratic socialist." As such, it is not surprising that he describes his commitment to climate change legislation as "very advanced." He has issued statements describing climate change as a "moral matter," he advocates a tax on carbon, and he opposes the Keystone XL pipeline. Sanders recently made the sharply partisan statement that, "…the fossil fuel industry is funding the Republican Party" and he has made no secret of his advocacy of moving away from fossil fuels and toward sustainable energies. In a June 2015 statement he defined those sustainable energies as wind, solar, geothermal, biomass, and other forms of sustainable energy. Many observers agree that in general, the positions espoused by the Republican candidates appear to be in closer conformity to the goals of petroleum developers and producers than those of the two leading Democrats, who indicate they are in agreement with the environmental movement's goals and with the concept of using government's regulatory powers to advance those objectives. The year 2016 is barely underway. It should be fascinating for the world of petroleum to follow its progress. w

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EQUIPMENT SOURCE RENTALS

Leveraging a direct distribution strategy to build a better product In a direct channel of distribution, a producer designs and

successfully benefiting both the clients and business. Their

manufactures a product then distributes it directly to the

efforts have resulted in high-quality, innovative, and practical

consumer. When executed effectively, this arrangement benefits

equipment, while guiding the company in expanding its

both parties. The producer eliminates intermediary expenses and

offerings.

maintains control of how the product is promoted and delivered. The consumer gets an improved customer service experience, including manufacturer-direct support and faster responses to questions, requests, and complaints.

ESI started out in Fairbanks as an industrial heater reconditioning service for the North Slope oilfields in Alaska. Based on the experience of bringing new life to old heaters, they engineered and produced their first heater in 2001, the ES700. Through

However, the highest value of an effective direct distribution

extensive field trials and working with end users in extreme

strategy is the shared benefit of a superior product. A strong

winter conditions, ESI built a tough and reliable product that

product and successful product line are driven by a unique

produced continuous, high-temperature output with very little

partnership that develops through direct communication,

downtime.

when the producer listens carefully to the customers' input and constantly adapts to their needs.

From the first model, the design continuously evolved out of customer input. If a customer had a need for a specific feature

An example of this concept in action is Equipment Source Inc.

mid-season, ESI would respond by immediately implementing

(ESI), an organization that has leveraged direct distribution to

a custom solution. The engineers would then design the most

actively incorporate customer feedback into its product designs,

useful solutions into the next season's model. So the heater got

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

EQUIPMENT SOURCE RENTALS

better and better each year. The evolution of the ES700 mobile heater set the standard for production as the company continued to grow. While heaters remained the focus of the company, the product line was adapted to meet the demands of the local market, which required other equipment products built with ESI’s brand of "arctic tough" engineering. While working with heater clients,

Today, they operate engineering offices, an assembly plant, and a distribution center in the Seattle area. Equipment produced in Washington is distributed through ESI's Equipment Source Rental retail stores where customers enjoy the reduced cost of renting equipment plus the added benefit of manufacturer-direct support and service.

Equipment Source Rental continues the tradition of working with clients to improve products and In order to foster relationships with customers in the build new ones. The engineering department at ESI in Washington is an active member of the support contiguous states, ESI recently expanded out of Alaska to system at Equipment Source Rental outlets. This allows serve the oil, construction, and agricultural industries in the the designers and builders of ESI equipment to assist Bakken, northern mountain states, and pacific northwest. local service departments with support issues while analyzing the market and responding with improved ESI realized that many worksites were experiencing persistent, and new products to fill the gaps. weather-related maintenance issues with equipment that, while Like ESI, when a company is capable of positioning itself in excellent for most applications, was simply unsuitable for the alignment with a direct channel of distribution, it has the arctic environment. So ESI collaborated with existing customers opportunity to develop a partnership with its customer base. to design and build generators, water pumps, and a variety of An effective partnership succeeds with great products that specialty products engineered to allow worksites to function customers actually want and need. Producing great products and effectively in even the most extreme conditions. satisfied customers results in a business that grows. In order to foster relationships with customers in the contiguous Visit www.EquipmentSourceRental.com for more information states, ESI recently expanded out of Alaska to serve the oil, about ESI heaters, generators, and pumps. Or call (701) 774-5312 construction, and agricultural industries in the Bakken, northern mountain states, and Pacific Northwest. to contact Equipment Source Rental’s Bakken location directly. w 42

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Dakota Access Pipeline offers great potential for income for states; safer for environment

By Rebecca Colnar

In January 2016, the Dakota Access Pipeline was approved by the North Dakota Service Commission, which joined the states of South Dakota and Illinois in seeing the pipeline get closer to construction. If the Iowa Utilities Board gives their approval, the pipeline will become a reality. The majority of landowners affected by the project have signed agreements, and negotiations are underway with the remaining ones. The Dakota Access Pipeline is a $3.78 billion investment that will create up to 4,000 jobs per state during construction. The project will generate an estimated $120 million in state sales tax revenue to North Dakota, South Dakota, Iowa, and Illinois during construction. Once in service, it will pay an annual property tax to the four states, generating approximately $54 million in its first year. "We are pleased with the decision by the North Dakota Public Service Commission, which follows on the heels of the permit approvals from the Illinois Commerce Commission and the South Dakota Public Utilities Commission," says Lisa Dillinger, spokesperson for Dakota Access Pipeline, LLC. "Dakota Access Pipeline now has approvals from three of the four states 44

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

through which it passes. We continue to work with the Iowa Utilities Board to achieve a similar outcome as the final state in our permit approval process." Dakota Access Pipeline is an important energy infrastructure project that will provide a more direct, cost-effective, and safer manner to transport the currently constrained supply of light sweet crude oil out of the production areas in North Dakota to refining markets around the country.

source, encouraging greater energy independence for the United States." Ron Ness, president of the North Dakota Petroleum Council, applauds the project. "This pipeline is a critical piece of long-term infrastructure. It will assure that Bakken barrels get to markets safely and reliably, and provides incentive to grow production here. We are likely to see production decline at some levels, but long-term there is great growth potential."

Is there any concern that international slide in the price for oil will slow down oil production in the Bakken, making this pipeline non-essential? Not likely, notes Dillinger.

Ness adds that this pipeline will reduce the industryâ&#x20AC;&#x2122;s dependence on rail production and provide some market optionality. "The Dakota Access Pipeline will provide midcontinent refineries the oil that they want from the Bakken."

"The Bakken-Three Forks region produces approximately one million barrels of oil per day, much of which is shipped via rail or truck," explains Dillinger. "Dakota Access will enable this light sweet crude oil to reach major refining markets in a more direct, cost-effective, safer and environmentally responsible manner. Additionally, it is important to note that the United States still imports millions of barrels per day to meet our consumer needs. Dakota Access will help the domestic supply of this critical energy

Although there were some concerns about the pipeline, there was not the fervor of opposition regarding the Keystone XL Pipeline. "As with any large infrastructure project, there have been a myriad of opinions, and yes we have heard from environmental groups, which we have in most cases worked with to successfully mitigate their concerns," notes Dillinger. "It is part of the process to communicate with communities, landowners, and other interested parties on topics, such as the pipeline will be underground and

unnoticeable once construction and restoration is complete, allowing the land to return to its former use." Pipelines are heavily regulated by the U.S. Department of Transportation for both safety and reliability, and have proven to be the safest, most efficient means of transporting energy resources. Ness agrees there hasnâ&#x20AC;&#x2122;t been much controversy over the pipeline. "You will always have some haggling with landowners about easements, but by and large, the Dakota Access Pipeline has had tremendous approval with easements. This is a great win for North Dakota, and a great win for infrastructure of this size and magnitude," says Ness. "This also will reduce rail traffic for shipping oil and that helps the agriculture community shipping their grain on the railroads." If Dakota Access gets approval from Iowa, construction will begin in the spring, pending proper weather and ground conditions. The project is expected to be in service by the fourth quarter of 2016. w BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

New law changes oil tax framework: Means millions for the state By Melanie Franner North Dakota State Tax Commissioner Ryan Rauschenberger.

Ron Ness of the North Dakota Petroleum Council.

Since the late 1980s, the state of North Dakota had been operating on an oil tax framework that incorporated "high" and "low" price triggers. This meant that during "good" times, oil producers paid taxes at a rate of 11.5 percent – which included a five percent gross oil production tax and 6.5 percent oil extraction tax. In "bad" times, when the price of oil dropped below a fixed price per barrel (based on inflation) for five consecutive months, the tax rate dropped to 6.5 percent. But falling oil prices and a weaker economy necessitated a review of this system. "This is the first major change in our oil tax rate since the 1980s," says North Dakota State Tax Commissioner Ryan Rauschenberger. "If it hadn’t changed, the oil tax rate would have been reduced by almost half." In April 2015, the North Dakota State Legislature passed a new law that replaced the long-standing price-trigger tax rate system with a basic 10 percent tax rate. The new law came into effect on January 1, 2016. "We’ve had some mixed reactions from industry," says Rauschenberger. "We had the lower-price triggers in effect from 1987 to 2004. But since 2004, we’ve been operating at the top rate of 11.5 percent. There are many oil producers that have benefitted from the many years of the lower tax rates. But we believe that the stable 10 percent oil tax rate will be more beneficial in the long run for both industry and from the state’s perspective. It provides more certainty in our revenue stream and will be a more predictable rate for our industry over the long term." 46

BAKKEN OIL REPORT – SPRING 2016

Rauschenberger emphasizes that the 10 percent rate is not a temporary measure. "This is permanent," he says. "It is essentially a re-vamping of an oil-tax system that has been in place for decades." Industry agreement Ron Ness, president of the North Dakota Petroleum Council (NDPC), an industry association serving the oil and gas industry in North Dakota since 1952, concurs with Rauschenberger. "The NDPC was supportive of the change in tax code because it provides more consistency and allows for better planning and budgeting for both the industry and state," says Ness, who goes on to highlight the benefits of the move. "In the short term, obviously the tax exemption would have been helpful during the current down cycle, but it would have been extremely detrimental to the state, counties, and cities. We are focused on the long term, however, a more predictable and consistent tax code will be far better for the industry as they work out budgets and plan for any future development." According to the NDPC, the oil and gas industry is a significant contributor to the state’s economy, accounting for $43 billion to the state in 2013. "Oil and gas extraction and production taxes accounted for over 50 percent of all state tax revenues last year, so it’s a major contributor to the government’s coffers and to helping fund our state’s priorities, including education and infrastructure," says Ness.

and Arikara tribes) with approximately $4 million per month

Results from a 2013 study conducted by North Dakota State University show that the oil and gas industry is one the largest single basic-sector industries in the state, supporting more than 81,000 jobs. The oil and gas industry was reported to have generated $17.7 billion in direct business activity, and $25.3 billion in secondary business activity in 2013. These monies were reported to impact every other sector in the state, including: • $11.3 billion in retail trade; • $9.3 billion in households (personal income); • $4.5 billion to the finance, insurance, and real estate industry; • $4.4 billion to government revenues; and • $12.7 billion total to several other North Dakota industries.

extra versus the amount they would receive under the low-price trigger system. "They’ve stated that they want to continue receiving the 11.5 percent rate," adds Rauschenberger. "Essentially, the ball is in their court. We, as the state commissioner’s office, have no room for negotiation. Our job is to administer state law." And state law currently calls for a flat 10 percent oil tax rate. Although the new system does not have any price triggers built in, the more oil produced in the state, the more revenue is generated for the state.

Additionally, the report found that for every dollar spent in the state by the oil and gas industry, an additional $1.48 was generated in business activity. Each drilling rig is said to have resulted in $40 million in in-state expenditures.

"We’re hoping that we’ll start to see some rebound in oil prices in 2017, if not sooner," concludes Rauschenberger. "The industry is down, but we’re still ahead of production forecasts. We thought we would be at 1.1 million barrels a day and we’re at 1.6 million.

Money: It’s a gas

The fact that we’re ahead of production forecasts is a good sign."

The current 10 percent flat oil tax rate translates into 3.5 percent more for the government than what would have been available using the old tax-rate system, which would have dropped to 6.5 percent in 2015 because of the falling price of oil.

Another positive sign is the number of wells drilled but not yet

"The $55.09 price per barrel that used to be the low price trigger is indexed against the NYMEX," explains Rauschenberger. "But in this current environment, assuming this month is the same as last, that 3.5 percent translates into an extra $30 million per month."

concludes Rauschenberger. "There is a lot of value in the ground

fracked. "If the 1,100 drilled wells that aren’t yet fracked were to come online today, we’d be looking at half-a-million barrels of oil," that we know will be realized at some point in the future." w Ad for Bakken Directory 7 x 9.5.pdf 1 2/23/2015 2:52:21 PM

According to Rauschenberger, these monies are bound primarily for constitutional trust funds, such as the government’s trust fund for long-term education, its legacy fund, its resource trust fund (which supports water projects across the state), its general fund, and its property-relief tax fund. Having a stable tax rate means more certainty for government expenditures. And although the current 10 percent rate is lower than the 11.5 percent that had been in effect for decades, it still generates significant revenue for the government.

"Constitutionally, we have to balance our budget," says Rauschenberger. "If we have a budget shortfall, we have to cut somewhere."

CMY

Tribal negotiations North Dakota’s new oil-tax law has been operational since January 1, 2016. But tribal officials on the Fort Berthold Reservation haven’t yet signed off on the new agreement. "Three Affiliated Tribes sent notice on December 31, 2015 that they were not going to sign the new agreement," says Rauschenberger. "We are still in negotiations with them." According to Rauschenberger, the 10 percent rate would see the Three Affiliated Tribes (which include the Mandan, Hidatsa, BAKKEN OIL REPORT – SPRING 2016

ND's Legacy Fund expected to be the center of controversy in 2017 By Laura Bailey With the help of oil and natural gas production and extraction taxes, North Dakota is sitting on a $3.4-billion nest egg. It’s known officially as the North Dakota Legacy Fund and with oil prices hitting all-time lows and production slowing to nearly a standstill, the account isn’t growing as fast as it was. It could be a target for lawmakers looking to close the gap on what’s expected to be a significant state budget shortfall in the next biennium.

correlation with a drop in oil and gas

Kempenich, like many of his fellow

production in western North Dakota.

legislators, doesn’t believe that the intent

In addition to a decrease in the oil and

of the fund is to balance a state budget

gas taxes, the diminished activity in the

shortfall, and it’s doubtful a two-thirds

area has also caused a drop in state sales

majority can be achieved.

The Legacy Fund was established with voter approval in 2010, and began to

Rep. Keith Kempenich, the chairman of

taxes, income taxes, and property taxes. "We’re doing across-the-board cuts and taking some money from the budget stabilization fund," says Pam Sharp,

"Even spending the earnings is controversial," he says. Beginning July 1, 2017, the interest

director of North Dakota’s Office of

earned on the Legacy Fund principal will

Management and Budget.

be added to the general fund. However,

the Legacy and Budget Stabilization Fund

at the last session, a bill was introduced that would have required the earnings be immediately added back to the principal, but the governor vetoed the bill, saying

Thirty percent of all oil and natural gas production and extraction taxes are routed into the Legacy Fund, while the remaining 70 percent is routed into the state’s general fund and shared with various political subdivisions, and constitutional and statutory funds.

it wasn’t in line with what the voters intended when the Legacy Fund was established. The $3.4 billion in the Legacy Fund sounds like a lot, but Kempenich points out that when it’s compared to similar programs in other states such as Alaska,

accumulate funds in 2011. Thirty percent of all oil and natural gas production and extraction taxes are routed into the Legacy Fund, while the remaining 70 percent is routed into the state’s general fund and shared with various political subdivisions, and constitutional and statutory funds.

Advisory Board, was serving in the state assembly when the fund was established and says the intent of the lawmakers at the time was to set the funds aside for a time when oil production drops and the state is left without oil and gas revenues.

According to the law enacted when the fund was established, the principal and earnings can’t be accessed until after June 30, 2017. Tapping the Legacy Fund would require at least a two-thirds majority vote, and no more than 15 percent of the principal can be used in any biennium.

Like many lawmakers, Kempenich doesn’t think now is the time to dip into the fund. The slowdown that the Bakken is experiencing, is just that – a slowdown, and certainly not the end of North Dakota’s oil production. The oil boom is waning, but it hasn’t stopped. Kempenich and many others in state government remember the oil boom of the ‘80s and its crash.

North Dakota is in the 2015-2017 biennium, and in January, the state was forced to cover a $1 billion budget shortfall. The deficit was in direct 48

BAKKEN OIL REPORT – SPRING 2016

"We were looking 30 years down the road for this," he says.

"This isn’t the first time we’ve seen this fall apart," he says.

Oklahoma, and Texas, it’s not nearly as established, or as large. North Dakota Lawmakers balance about a $14 billion budget each biennium, and Kempenich says the Legacy Fund won’t last long if it’s used to meet North Dakota’s budget needs, especially as they continue to increase and oil and gas revenues don’t keep up. What’s important, he adds, is what the state does with the oil and gas taxes it collects and can use – the remaining 70 percent of oil and gas production and extraction taxes. There is less of it, which means there will be budget cuts, but the state has many options for balancing the budget, says Kempenich. "We’ll play the hand we’re dealt and hope for the best," he adds. w

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Falling prices takes shine off Bakken oilfields By Melanie Franner Over the last couple of decades, the Bakken region has become a growing source of oil and gas production for the United States. In mid-2012, rig count reached a high of 700 throughout the region. The introduction of hydraulic fracturing and horizontal drilling around the year 2000 sped up oil production to new levels. According to the U.S. Energy Information Administration (EIA), new well oil production per rig in the Bakken region has climbed from 300 barrels of oil per day (bopd) in 2013 to over 700 bopd in 2016. And rig count has been in the decline – expecting to fall to just over 50 in 2016. In fact, the EIA predicts that new well oil production per rig in the Bakken region will climb from 719 bopd in January 2016 to 724 bopd in February 2016. Total oil production in the Bakken is expected to drop from 1,122 thousand bopd to 1,098 thousand bopd over that same time period. "We’re down to 1.16 million bopd with one third the number of rigs that we had one-and-a-half years ago," says North 50

BAKKEN OIL REPORT – SPRING 2016

Dakota State Tax Commissioner Ryan Rauschenberger. "That’s because we’re now drilling into the core of the Bakken and have become more efficient at it. Essentially, we’re getting more bang for the buck."

country’s imports fell from 10.6 million

North Dakota became an oil and gas producing state in 1951 and has since become one of the top 20 oil producers in the world.

The dropping oil price can be attributed,

According to numbers from the North Dakota Petroleum Council (NDPC), the state has undergone an 894 percent increase in annual oil production between 2006 and 2014. In 2014, its average daily production was 1,086 million barrels of oil per day (bopd). It operated an average of 190 rigs in 2014 – down slightly from the all-time high of 218 rigs on May 29, 2012. Each rig resulted in 177 direct and indirect jobs. The industry supports approximately 80,000 direct and indirect jobs.

states that OPEC crude oil production

The Bakken formation has helped the U.S. produce more oil and thus, limit its imports. In 2014, the U.S. produced an average of 8.7 million bopd, a 16 percent increase over 2013. Meanwhile, the

is expected to account for a lot of this

bopd in 2012 to 7.3 million in 2014. It all looked good – until the global price of oil took a nose dive. Market drop in large part, to the surplus of oil that has come onto the market. The EIA’s ShortTerm Energy Outlook, January 2016, averaged 31.6 million bopd in 2015, an increase of 0.9 million bopd from 2014. Iraq reportedly led the increase, raising its production by 0.7 million bopd in 2015. Saudi Arabia sought to defend its share of the global oil market by increasing its production by 0.3 million bopd during the same year. The EIA report goes on to suggest that OPEC crude oil production will increase again in 2016 – by 0.5 million bopd. Iran amount, once international sanctions are suspended. The country is expected to increase its oil production again in 2017, accounting for the majority of the

responsiveness of non-OPEC production to low oil prices.

Additionally, the EIA report suggests that OPEC surplus crude oil production capacity – which averaged 1.6 million bopd in 2015 – will increase to 2.0 million bopd in 2016 and will be 1.9 million bopd in 2017. Iran’s crude oil production capacity is 3.6 million bopd, which the EIA suggests is 0.8 million bopd higher than its current estimated production level.

"Based on what we’re hearing from commodity markets and industry experts, we don’t expect much of a rebound in oil prices in 2016," states Rauschenberger. "Two of the most difficult things to predict

Crude oil production in the U.S., as identified in the EIA report, averaged an estimated 9.4 million bopd in 2015. Forecasts see that number falling to 8.7 million bopd in 2016 and 8.5 million bopd in 2017. Rebound re-positioning The EIA estimates that global oil inventories will have increased by 1.9 million bopd in 2015, which will make it the second consecutive year of inventory builds. The resulting over supply has contributed to oil prices reaching some of the lowest monthly average levels since mid-2004. Brent crude oil spot prices, as stated in the EIA report, decreased by $6 per barrel in December 2015 to a monthly average of $38 per barrel – the lowest monthly average since June 2004. The EIA forecasts that global inventory levels will rise again in 2016 – by 0.7 million bopd – before the industry sees the first draw on oil inventories in the third quarter of 2017. Brent prices are forecast to average $50 per barrel in 2017 and $56 per barrel in the Q4 2017. In the end, the EIA points to heightened volatility in the near future. It suggests that this year’s uncertainties include the pace and volume at which Iranian oil re-enters the market, the strength of oil consumption growth, and the

in this age are the weather and the price of oil. We’re hoping to see the start of a rebound sometime in 2017. But when it comes to the price of oil, you just never know. There are so many geopolitical factors at play." w

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BAKKEN OIL REPORT – SPRING 2016

Temporary workforce housing challenged in Williston city limits

City commission looking at eliminating crew camps by July 2016 By Rebecca Colnar

IMAGES COURTESY OF TARGET LOGISTICS.

Above: Target Logistics' Watford City Lodge in North Dakota. Inset: Target Logistics' Bear Paw Lodge in Williston, North Dakota. To the Bakken oilfield worker, temporary worker housing, referred to as "crew camps" or "man camps," provides a place to shower and sleep, and is often a place to eat, exercise, and relax. To others in the community, crew camps are unsightly and a place of concern, as workers come and go and don’t spend money in the community. To the City of Williston, crew camps are temporary housing. "Crew camps were approved as temporary housing, not as permanent," notes Donald Kress with the Williston Planning and Zoning Department. "It was determined they would come to an end at some point. As the Bakken boom caused more development and crew camps were established, the City of Williston adopted a policy in September 2013 that brought all the crew camps under one set of regulations set to expire December 31, 2015." As that deadline approached, city commissioners wrote Ordinance 1026 moving the deadline for crew camps to be out of the city to July 31, 2016. Two revisions to Ordinance 1026 that were proposed allowed crew camps that meet the conditions of that ordinance to extend their permits until July 1, 2016 with the 52

BAKKEN OIL REPORT – SPRING 2016

facility required to be removed by September 1, 2016. Another proposed ordinance suggested an extension of the terminal date of private temporary workforce housing to December 1, 2019 with a date by which the facility must be removed and the site restored as of July 15, 2020. However, during the commission meeting in February, the vote was for most temporary workforce housing facilities (crew camps) to close July 1, 2016—that is, the facility can no longer be occupied. The facilities will have to be removed, and the site restored by September 1, 2016. Two crew camps that are in the city’s one-mile extra-territorial jurisdiction (ETJ) will continue in operation past July 1, 2016 due to conditional-use permits previously granted by Williams County. The ETJ is an area that is outside city limits, but in which the city has responsibility for zoning, planning building code, fire code, and crew camp ordinances and regulation. During the public meetings, several business owners stepped forward and spoke in support of the crew camps as necessary for the oil industry.

Temporary workforce housing challenged in Williston city limits continued

Kress explains that not all camps and locations are equal. "Crew camps are all different, so coming up with a one-size-fitsall is difficult. We have facilities that range from seven beds to 911. There is this housing owned by the company for its workers, and others are run by companies whose business is providing temporary housing," explains Kress.

they are often long distances from the jobsite," he says. "That demands our full-service solution of providing accommodations, meals, entertainment, housekeeping, transportation and security. Hotels, apartments and houses are not an effective solution to meet their needs." According to the Watford City planning, the Town has never

The other difficult situation is some camps originally approved in Williston that were outside of the city limits were then annexed, and the city adjusted its "extra-territorial jurisdiction," which made the city encompass camps that had previously been outside of the city limits.

allowed man camps to be within the city limits. After watching

City Commissioner Deanette Piesik explains the situation. "Workforce housing camps were a temporary solution to meet the shortage of available housing at a time that the city was experiencing extreme growth," she says. "Williston, as many other cities, decided to allow temporary housing to help companies house their employees. Williston has had numerous hotels, as well as housing/apartment complexes constructed these past few years so many feel that the service provided by these camps is no longer needed."

temporary workforce housing. "As a commissioner, I recognize

Ryan Pruett is spokesperson for Target Logistics, which is one of the largest providers of turnkey housing solutions in North America and the largest in the United States. Target Logistics’ Williston Complex (consisting of Bear Paw Lodge, Williston North Lodge, and Williston Cabins) is a multi-million-dollar facility built specifically to optimize the performance of oilfield worker guests.

workforce housing operators to look at the housing they provide

Pruett explains that this type of housing is necessary. "There are large crews who work irregular schedules and long hours, and

says. "To us, it’s not about housing, it’s about people and ensuring

BAKKEN OIL REPORT – SPRING 2016

what happened with Williston and the controversy over temporary housing, the Town didn’t want to repeat mistakes made in Williston during their development boom. Piesik believes it is time Williston begins transitioning away that the oil and gas industry will always have a number of workers who rotate in and out of our community. That is the reality of the business," says Piesik. "Those that feel there is not a need for the transient workforce do not understand the nature of the oil and gas industry. I would like to allow time to phase out the temporary camps as this allows rents to stay at a rate that our citizens can afford; affordable housing is a hot topic in Williston. I would like to encourage oil and gas companies, as well as and work with the city to move to a permanent form of housing for their employees." Pruett hopes there can be a better answer than sending crew camps packing. "We are eagerly working with city leaders on a win-win solution and appreciate their openness to discussion," he continuity of business in the region." w

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New technology to safeguard pipeline industry By Melanie Franner

A new intelligent coating system has the potential to

students – from doctorates to undergrads – to better

significantly increase the safety of oil and gas pipelines

shape the idea. The PHMSA awarded NDSU with an

– along with critical areas of other metallic structures.

additional $299,607 in September 2015 to support

The brainchild of North Dakota State University (NDSU)

research aimed at mitigating pipeline corrosion using a

associate professor of mechanical engineering Dr.

smart-thermal spraying coating system.

Fardad Azarmi and NDSU assistant professor of civil and environmental engineering Dr. Ying Huang, this new technology already has been proven in the lab. The next two years of the project will see the technology tested out in the field, with the last of the three-year program potentially focusing on commercialization. "We were inspired by actual pipeline spills that have

"As we continue to work towards building an ‘all-of-theabove’ energy plan for our nation, it’s important for us to invest in research that will help us move energy as safely and efficiently as possible, now and into the future," says Senator John Hoeven, in making the announcement. Potent combo

occurred in the oil and gas industry," says Azarmi, who

The new intelligent coating system uses a combination

adds that he and Huang initially wrote a proposal to

of a very advanced coating technique and very sensitive

the U.S. Department of Transportation’s Pipeline and

sensors to enable monitoring of pipelines for corrosion

Hazardous Materials Safety Administration (PHMSA)

or cracking, thus increasing their overall safety.

a few years ago. "We were awarded approximately $150,000 in October 2013."

"The important thing with the technology is that the very delicate sensors are placed onto the surface of

That was the start of the project. Over the last couple

the pipe and are covered by deposited hard coatings,"

of years, the two researchers have worked with NDSU

explains Azarmi, who adds that it is significantly better

BAKKEN OIL REPORT – SPRING 2016

The new intelligent coating system uses a combination of a very advanced coating technique and very sensitive sensors to enable monitoring of pipelines for corrosion or cracking, thus increasing their overall safety.

than the current technology, which uses soft coatings like epoxy or polymers that can be easily scratched. "Our system lasts 20 times longer than conventional technology."

need the help of industry. "We need some collaboration with the pipe manufacturers," explains Azarmi, who adds that the industry reaction has been great. "We have had calls from

Another key ingredient to the system is the thermal spray

different companies in the U.S., as well as from places as

technique itself. NDSU has established a Hard Coating

far away as Germany and Japan. It has certainly grabbed a

Research Laboratory as part of its Mechanical Engineering Department with the help of funding received from North

lot of international attention."

Dakota EPSCoR Major Equipment program. It is here in

Although the technology calls for the hard-coating to be

this lab that initial success has been found.

applied to the pipe during the manufacturing process,

"One of the future challenges will be designing the technology that allows us to use the spray system out in

Azarmi says that it can also be applied to specific areas of the pipe already in situ.

the field," says Azarmi. "Using thermal-spray technology

"Gradually, as pieces of pipe are replaced, they can be

usually takes place in a stationary environment. But we

replaced with the new pipe already coated with the

will now have to take that technology out to the actual

technology," he says.

site." Azarmi, Huang, and their team will focus on adapting the technology and intelligent-coating system for use on actual-sized pipes of the kind used in the oil and gas industry. The group is also looking at the potential of applying the technology to pipes used in the LNG industry, along with critical areas of metallic structures, like the joints and welds of steel bridges. "We think that at least in regards to safety, this technology could be a game changer for the industry," states Azarmi.

But, he admits, there is a still bit of work ahead before that happens. "We are also working on reducing the cost of the technology," he says, adding that the current downturn in the oil and gas industry doesn’t necessarily bode well for corporate investment in new technology. But regardless, Azarmi and his team believe that commercialization is definitely in the future. "I really don’t know when that might be," concludes Azarmi. "I’m a university professor, not a business man.

Next steps

But I believe that this technology has the potential to

Having already proven that the technology works in

significantly increase the safety of pipelines. For that

the lab, Azarmi and his team will focus their efforts on

reason alone, I think it will eventually be adopted by

transposing that success out into the field. To do so, they

industry." w BAKKEN OIL REPORT – SPRING 2016

Declining crew camp bed cause Capital Lodge to close its doors By Amanda Lefley The intent behind building Capital Lodge, temporary housing for oil industry workers located on 72 acres within Williams County, North Dakota, was to construct a superior type of crew lodge facility that exceeded the conditions of traditional man camps, according to CEO Mike Boudreaux. In 2010 the developers of Capital Lodge took note of the influx in development occurring in North Dakota, coinciding with the oil boom. And, in 2011 they started the construction of Capital Lodge.

the best of the best," says Boudreaux.

"We determined that if we were going to get into business, we were going to be

"Aside from having a very nice living

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

Capital Lodge started seeing guests the same year of construction. The crew lodge facility featured large sound-proof rooms that could hold two queen-size beds. Every room had a full bathroom, closet space, a desk, and a large flatscreen television. There are 120 individual buildings that comprise Capital Lodge, and each building features seven bedrooms with a separate living and kitchen.

accommodation, we had a state-of-the-

art kitchen that provided very good, highend food with three meals a day," explains Boudreaux. Other amenities of Capital Lodge included a workout facility, an outdoor track, basketball courts, picnic areas, and a deck. Boudreaux says these add-ons were built so workers could experience some comfort, which paid off during peak years. Capital Lodge had 2,000 beds available at its peak. Mike Sizemore, director of development services with Williams County, provided a larger picture; estimating in 2011 there were 10,000 crew camp beds in the area.

"Williston, Williams County didn’t have the housing capability to absorb all of the influx of workers," says Sizemore in regards to why lodging facilities such as Capital Lodge were needed. But, the crew camp bed numbers declined alongside the price of oil; with as few as 150 beds available at Capital Lodge at the end of 2015, and as little as 2,000 crew camp beds in total, according to Sizemore. Low occupancy was the contributing factor to the decision to close Capital Lodge on January 1, 2016.

As for the future of Capital Lodge’s

opportunities might be, and that is just

structures, Boudreaux says no official

one of the options we’re looking at."

decisions have been made.

Capital Lodge is located in an area zoned

"We had a vision initially when we built

industrial, with a conditional-use permit

Capital Lodge with an exit strategy to

for the existing facilities, according to

convert all of our modular buildings to potential residential homes, spreading

Sizemore.

them out, making it like a subdivision,"

"They did file an application early last

explains Boudreaux. "We are still looking

year to try to convert it to a hotel and I

at what the viable options are. We will

believe some residential uses, and that

more than likely repurpose our inventory

was denied by the county commission,"

and buildings to other states where other

says Sizemore. w

"I don’t think we’re different from any other business in North Dakota, affected by the downturn of the oil," says Boudreaux. Williams County gauges the pulse of the oil industry by the number of permit applications, according to Sizemore, with the county starting to see a drop in those numbers within the first quarter of 2015. "The permit activity is down significantly. In 2015 our numbers are comparable to 2011, which was our fourth busiest year," says Sizemore. "I would say we had about a 60 percent drop off from 2014 to 2015, but we’re looking at the fourth or fifth busiest year here in Williams County still." Boudreaux explains with the price of oil around $30 per barrel, comparing that to more than $100 per barrel this time last year, he cannot foresee when North Dakota will need the type of housing Capital Lodge provided previously. "It certainly won’t be this year, and we don’t think it will be next year," he says. However, Sizemore ensured Williams County is still a growing, viable community because of the permanent population that remains. "North Dakota is still pumping, I believe, over one-million barrels a day of oil, which is pretty significant," says Sizemore. "There is plenty of wells; we’re still pumping at a high rate, but the folks don’t need the crew camps anymore because they are in permanent housing. If we go back to drilling wells then there’s always going to be that population of temporary folks who will probably need crew camps." BAKKEN OIL REPORT – SPRING 2016

Bakken still open for business Despite downturn rumors, jobs plentiful for skilled workers By Rebecca Colnar

Read mainstream media stories about the recent downturn in the Bakken economy and they are full of gloom and doom. Oil production has slowed, people are leaving in record numbers, and jobs are scarce. Talk to those more closely involved with the Bakken economy, and they will tell you the situation is not bleak. "We have jobs," states Cindy Sanford with the North Dakota Jobs Service in Williston. "Yes, the oilfield production is down, but we are not bust in Williston. Far from it. Yes, there have been layoffs, but that is statewide. Williston is a thriving community." Sanford explains that compared to the frantic development pace of the past four years, things are slowing down, which translates into life in Williston becoming more manageable.

Residential real estate in the Bakken area is doing relatively well, however, the prices for homes still remains high. PHOTO COURTESY OF NIKKI RITTER, WATFORD CITY REAL ESTATE GROUP. What we are seeing is a higher need for

agent for Waterford City Real Estate

"Think of it as we’ve hit the pause button,"

skilled labor across the board. Many of

Group, says, "In 2016, I’ve sold twice as

notes Sanford. "The jobs that have seen

these companies when they first started

much as residential as I had sold last year.

the greatest impact in the downturn have

up filled those basic labor jobs. Now those

Many buyers are people who work in

been oilfield jobs. However, there is a

jobs have evolved and a higher skill set is

different industry developing. We have

the community who are not necessarily

needed to do them."

involved in the oil industry. We have

a lot of road construction and pipeline construction jobs. We are building infrastructure." The good news is many of the workers who did construction for the oilfield work can switch to construction jobs. "There are many transferrable skills in construction," she says. "We are now getting stability with jobs. People aren’t jumping jobs like they used to." Sanford notes pipeline work should start

In fact, North Dakota Job Service hosted a job fair March 30-31, 2016, which saw a large turnout. "Would that happen in a town going bust?" asks Sanford. "It’s going to get really crazy here this summer with all of the construction work for roads and pipelines. It used to be during the boom workers would come and go. Today, people are making Williston their home." The real estate market

teachers, county employees, people who work for the electrical plant. Some of these people have been renting and finally there is enough real estate on the market to find a home. Where last year at this time there might have been two houses to buy, now there are 10 on the market. There is more inventory due to more homes being built." Even though there are more homes for sale, the prices remain high. "The

in the spring. "Right now, we have 132

Residential real estate is doing remarkably

developer has already paid top dollar for

positions available that are oilfield related.

well. Nikki Ritter, a licenses real estate

the lot and the builder has paid top dollar

BAKKEN OIL REPORT – SPRING 2016

"The developer has already paid top dollar for the lot and the builder has paid top dollar for materials. All these factors would have to slowly come down before the price of homes drop, and I don’t see that happening rapidly," says Ritter.

for materials. All these factors would

Getting help for those in need

have to slowly come down before the

Kristin Oxendahl, community

price of homes drop, and I don’t see that

engagement director of The Salvation

happening rapidly," says Ritter.

Army in Williston, says they have

Companies are offering incentives to

frequently been asked if the downturn

employees who are willing to purchase a

has caused their services to increase.

home. "Companies are getting creative to

"Truly, it’s about the same. There has

help their employees remain committed

just been a shift in circumstances," notes

to a company. They might give them a

Oxendahl. "When the boom was in full

bonus so they have a down payment for their home."

swing, people were flocking to Williston with only the clothes on their back and would arrive without a plan. They would

Commercial property sales are slow. "It’s

not have secured housing or have a job.

too early to tell if it’s the time of year or

They weren’t prepared for the weather

because of the slowdown," notes Ritter.

or the challenge of finding housing. In

addition, we had local families affected by the high cost of living who were suddenly unable to match those high housing costs. The needs have now switched because now someone may have lost a job or had their housing allowance cut and need some assistance until they find another job." Despite the media reports of the slowdown, the communities surrounding the Bakken seem confident that not only can they stay viable, they can thrive and provide families with a great place to work and live. w

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BAKKEN OIL REPORT – SPRING 2016

Crime statistics increase as oil prices decrease By Amanda Lefley Approximately one year has passed since the price of oil has begun to plateau. The oil boom in the Bakken formation has heavily influenced the surrounding North Dakota county’s ways of life, and so has the decline.

The Williston Police Department’s 53 offices cover approximately

For the Williston Police Department, thefts have increased, according to statistics supplied by Detective Daniel Dery. There were approximately 190 thefts in 2006; around the time when the oil boom began. There were approximately 418 thefts in 2010; around the mid-point in the oil boom. While Dery says the police department doesn’t have exact statistics for last year at this time, he estimated those theft numbers have increased to 2,000 for 2015; the year oil prices started to plummet.

the increases in crime the department is experiencing.

"We have had increases in thefts, burglaries, and drug use since the downturn," explains Dery. "We have hired more officers and started a theft task force with the sheriff’s office. More of the patrolman on the road are getting comfortable with investigating narcotics with their traffics stops and calls for service."

2014, with each rig supporting approximately 177 jobs.

He says no other major crime areas have increased. There has been a decrease however in the number of assaults. One instance of such crimes is Jayde Sundheim, says Dery. The 19 year old was charged in connection with a string of thefts in the Bakken area. Arrested in November 2015, Sundheim has been charged with 45 counts of theft and burglary; 40 felonies and five misdemeanors. "We have had many other cases like this since the oil boom first heavily started in late 2011," says Dery. 62

BAKKEN OIL REPORT – SPRING 2016

22 square miles of territory. Dery explains the increase in manpower has been helpful, and the department is hiring more and more peace officers. But, the need to hire is still present with "Well sites have had a series of vandalism after the downturn in oil," explains Dery. "Also, companies have become victim with theft of supplies due to fraudulent orders." Tessa Sandstrom, communications manager for the North Dakota Petroleum Council, gave a picture of the job loss seen in the area recently. Although there are no firm estimations on the number of layoffs, she says 150 rigs have shut down since September "We would estimate that there are between 20,000 and 25,000 fewer jobs," says Sandstrom. "Now there are a lot of people who are still working reduced, 40-hour workweeks, or have filled other needed jobs, such as trucking. So it’s very hard to know for certain how many of those people who held those jobs are actually unemployed." Sandstrom further explains that her organization has not specifically worked on the issues of vandalism or theft within the Bakken region and how that related to their members. "We haven’t heard anything from our members," says Sandstrom. Oasis Petroleum, Newfield Exploration, Imperial Oil, and XTO Energy Inc. were not available for comment by press time. w

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Plenty of Fish, also known as POF, is a free website and app with over 100-million registered users. Over four million people log into their profiles everyday.

Match.com is the world's first and largest dating company with over 2.39 million subscribers in North America.

Plenty of fish in the oilfields

By Jordyn Wegner

North Dakota can be easily forgotten in

According to the New York Times, in 2011

fingertips. Matchmaking services such

relation to the rest of the United States.

approximately 58 percent of single 18

as Plenty of Fish (POF), Tinder, and Match

The flat prairies and vast farmland

to 34 year olds in North Dakota are men,

have become somewhat of a main lifeline

wasn’t necessarily a hot spot for fellow

this statistic only includes permanent

for men in the Bakken region, using these

Americans – that is until the recent oil

residents, thus leaving out the large

apps to meet women they might not

boom. Oil was first discovered in North

number of men temporarily moving in

have a chance to meet otherwise.

Dakota in the 1950s but it wasn’t until the

from other states. The population grew

spike in gas prices and the advancement

from 12,000 residents to approximately

of technology that people started to take

40,000 with the majority of that number

notice of the northern state.

being workers in the oil industry.

The Bakken region is one of the United

The Bakken region may be a place to find

love in the oilfield region can sign up for

States’ most abundant oil exporters,

wealth, but where it exceeds in money

oilfieldsingles.com to meet their match,

so much so that it has reduced

it lacks in women, making it extremely

although this website in particular

unemployment and given North Dakota

difficult for men to meet their female

charges a fee to send and receive

a billion-dollar budget surplus.

counterparts.

messages, which most likely results in

Although oil single-handedly boosted

Technology has advanced in a way that

the economy in North Dakota, it also had

makes the world around us seem slightly

a hand in boosting the male to female

smaller, especially since the introduction

One of the most popular dating

ratio quite significantly. In fact the state

of dating websites and phone apps.

websites on the market today is POF,

currently has the third highest ratio of

People that we otherwise would never

a free matchmaking service with over

men to women in the entire country.

be in contact with are suddenly at our

100-million registered users. According

BAKKEN OIL REPORT – SPRING 2016

There is a well-known saying that "There’s someone out there for everyone." There is also a dating website out there for everyone. Single people looking for

less users than dating sites that are free of charge.

Technology has advanced in a way that makes the world around us seem slightly smaller, especially since the introduction of dating websites and phone apps. People that we otherwise would never be in contact with are suddenly at our fingertips.

to POF’s public relations team, over

says Jason. "I have never had to use

Meeting women in person seems to be

four million people log into their POF

a dating site like this before I moved

next to impossible for men in this area,

profile every day and they believe their

up here. The men-to-women ratio is

website helps create over one million

and if by chance they do meet someone

insanely high. This is not the place a

relationships per year. The difference

who seems to good to be true, jdahep727

single bachelor goes to meet a woman;

between POF from other dating

all the ones you meet around town seem

warns they probably are, "they’ll try and

websites is that users can chat with

to be married or moved here with their

fellow members free of charge, this is something many dating websites do not offer. I wanted to get a personal grasp for what the dating scene is like in the Bakken

boyfriend." "I wasn’t really into the idea of dating sites and forgot about it, then figured why not and gave it a go," explains jdahep727.

region so I signed up for as many dating

Men aren’t always just looking for a

websites as I could, including POF,

potential partner on these websites,

Date.com, and of course, Oilfield Singles.

sometimes they’re simply looking for a

I set my search settings to match

female companion.

with men in the Bakken region, more

"I tend to use [Plenty of Fish] more as a

specifically Williston, North Dakota.

way to meet people and make friends

Most men I matched with were polite and talkative until I asked them about finding

because I’m not from this area and I’ve been here for about six months," says

take [you] back to a hotel and expect you to pay them." It was beginning to make a lot more sense why online dating is so popular in the oilfield regions. Talking to a member from the opposite sex is difficult enough as it is, never mind when you’re competing against several other people. Online dating gives the feeling of exclusivity and whether that person is talking to several others at the same time, at least users get the illusion that they’re the only one.

Landon when asked why he uses the

So what is the success rate like on dating

of them accused me of being a "catfish"

dating site.

websites for these men? Like most

(someone who lures another person into

I was curious why so many young men

love in the oilfields. At that point most

a relationship by means of a fictional online persona) and abruptly ended the

were choosing matchmaking services

stories, there’s good news and bad news. Out of the men I spoke with, none have

over meeting women the old-fashioned

met a significant other during their time

way – in person. When asked what the

in the oilfields – through POF, or in any

I did happen to match with four men that

bar scene was like in their area, I got the

other way for that matter.

were willing to talk more in depth about

same kind of response – it was bleak. In a

the struggles they faced when it comes

region where men seem to dominate, it

to meeting women around them: Keley,

is so unbalanced that it can be extremely

Landon, Jason, and a user who went by

difficult to meet women when so many

the screen name jdahep727.

other men are vying for the chance to talk

All four men have been living in the

with them. "On average, there is about

Williston area between one to four years

eight males per one female," explains

and chose POF as their dating website of

Jason when describing the bars in his area.

female is all these men are looking for.

choice.

According to Keley, the women who go

"At first I was hoping to possibly meet

"I was told [Tinder] was more for

out are "so used to being bombarded

a really cool chick to share some

hookups, which is cool, but not the

by guys that it’s almost useless to talk to

adventures with," says Jason. "But now I

reason I decided to try online dating,"

them."

am just on here to meet anyone new." w

conversation.

What I did discover is that dating websites are a place where men can meet female friends or simply just someone find someone to talk to. And in an area where men heavily outweigh women, sometimes a simple conversation with a

BAKKEN OIL REPORT – SPRING 2016

$5 million in grants help oil patch hospitals resolve bad debt By Laura Bailey

A good portion of oil and gas production taxes are making their way to support healthcare at critical access hospitals across the Bakken. Six hospitals in oil production-impacted areas are splitting $5 million, and most of those hospitals plan to use the funds to offset uncompensated care and provide financial assistance to patients.

The $5 million in grants came from the Oil and Gas Impact Grant

"They are seeing, of course, an increased utilization of hospital resources statewide," says Gerry Fisher, North Dakota Energy Infrastructure and Impact Grant Fund administrator.

state revenue forecast, I’m not sure how much will be available,"

CHI St. Joseph’s Healthcare in Dickinson received $2.1 million, which has been used to offset some of the hospital’s bad debt. Many of the unpaid hospital bills come from patients who used emergency room services, says Reed Reyman, CHI St. Joseph Health Market Based president.

for the fund, compared to $140 million appropriated for the

"We do want to take care of everybody," he adds. "We won’t deny anyone any care, but we need to survive as well."

might expect," he adds. "We’ve had to put our grants on hold,

Fund, which is funded through gross production tax collections and was distributed to various public agencies in January. Those agencies include law enforcement, airports, fire departments, schools, nursing homes, and many other public services. "It’s set up to happen again next January, but with the revised says Fisher. The revised state revenue forecast projected only $28.6 million 2015-2017 biennium. Falling oil prices and a slowdown in production has resulted in less money available for grants, says Fisher. "We have pretty much had to put the brakes on things, as you and at the moment we are just waiting to see what happens

Part of the grant will be used for awareness campaigns and education. Patients need to know that an unpaid hospital bill is something to take seriously, and hospital staff need additional skills in communicating the importance of payment.

next."

"We’re working to come up with some operational ideas to minimize bad debt and some different ways to communicate with people," says Reyman.

Healthcare Services in Bowman, St. Andrew’s Healthcare in

BAKKEN OIL REPORT – SPRING 2016

The other six hospitals that shared the remaining grant funds include McKenzie County Memorial Hospital in Watford City, Mountrail County Health Center in Stanley, Southwest Bottineau, St. Luke’s Hospital in Crosby, and Tioga Medical Center in Tioga. w

The future of pipeline safety in the Bakken By Heather Syverson, AE2S Communications

According to records maintained by the Department of Mineral Resources' Oil and Gas Division of the North Dakota Industrial Commission, there were 1,393 oilfield environmental incidents in North Dakota between March 16, 2015, and March 10, 2016. More than 75 percent of those spills were contained within the boundaries of the production or exploration facility. The State of North Dakota takes spill prevention and tracking seriously, as evidenced by the passage of House Bill 1358, which was signed into law by Gov. Jack Dalrymple in April 2015. All spills, including freshwater, must now

Installation of the Hidden Bench produced water pipelines. Inset: CloudSCADA technology can provide access to system data on mobile and desktop devices.

be reported under HB 1358. The changes under HB 1358 also include stricter

multiple high-tech risk management

monitor input and delivery, as well as

services to prevent leaks and spills from

verifying the safe transfer of liquids,

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such as produced source water. When

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conjunction with OpWorks™, a unique

pipelines. By continuously measuring and

"AE2S Operations has had the

web-based reporting and operator

recording the actual flows and pressures,

opportunity to provide instrumentation

logging application designed by AE2S,

SCADA is able to detect a possible leak

and controls services, as well as operate

instrumentation data from SCADA can be

and activate an alarm to shut down

several produced water systems," says

consolidated with operator field readings

pumps, nearly immediately with no

Grant Slick, AE2S Operations general

and other sources to monitor and report

required direct operator action.

manager. "Our experience with design

pipeline performance and operational

and operation really helps provide a lot of

parameters.

reporting guidelines and mandatory third-party inspections of infrastructure. AE2S Operations provides monitoring and other technology to safely operate infrastructure, plus third-party inspection services.

insight as a third-party inspector." Slick says AE2S Operations can provide 68

BAKKEN OIL REPORT – SPRING 2016

Both CloudSCADA and OpWorks™ can be accessed by mobile, as well as desktop

Pipelines equipped with dual metering

devices, to ensure those working in

allow operators to simultaneously

the field have real-time access to their

OpWorks is a web-based operations software application developed by the AE2S Operations Technology Division which can be customized for your facility infrastructure to log and report data. Integration of SCADA data with operator field readings and other data sources to monitor and report pipeline performance and operational parameters is also available.

pipeline system data. "We are able to remotely monitor and automate so many safety features with our SCADA systems, using OpWorks™ and CloudSCADA together," says Slick.

AE2S Operations provides operations services for water, wastewater, and produced water infrastructure systems. Jarrod Vink works on a client's I&C system.

Thanks to the technology and inspection services available, compliance with House Bill 1358 and other state regulations can be relatively easy.

"As we look towards the next legislative session, AE2S Operations will continue to stay on top of new regulations to help our clients remain in compliance," says Slick. w

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24th WBPC to focus on the technologies and techniques that will move the Bakken forward " The one unchangeable certainty is that nothing is unchangeable or certain." – John F. Kennedy Certainty is something that all businesses strive for, but it is also elusive. This is especially true in commodities where so many external influences from politics to weather can change the outcome of operations overnight. Legendary coach Lou Holtz will provide the keynote address the final day of the conference.

Market research analyst John Gerdes of KLR Group will be present at the WBPC to add some insight into how and when prices may rebound and what we can expect from the "new normal."

Yet, as uncertain as certainty may be, it does breed innovation and efficiency. While politics, weather, and even economics can’t be changed, individual operations of companies can, and we’ve witnessed it over the course of the past year as the oil industry and related businesses have done what they can to change and adapt to market conditions. The change has been remarkable. Just two years ago, we lauded the fact that companies were becoming better at what they do, making it economic to produce oil at a "mere" $70 per barrel. Today, we see production continue as the barrels hover at $35. It has not come without its pains, but industry is rising to the challenge. Slowdowns afford the opportunity to evaluate operations, cultivate ingenuity, embrace efficiency, and deploy the technologies that will take the Bakken forward. Although the mainstream media is concentrating primarily on the price collapse and layoffs, industry publications are focused on what this period could be: the opportunity to be better. "This makes the phase that we’re in very exciting. It’s not the best financial time for any of us, for sure, but it’s a great time of

BAKKEN OIL REPORT – SPRING 2016

learning and reflecting," Don Conkle of Carbo Ceramics told E&P Magazine. Ryan Hummer of NCS Multistage echoed those sentiments, "We’ve probably learned more as an industry in the last 15 to 18 months than we have in the previous several years where the activity was so high there wasn’t as much focus on costs. Now everyone is laser-focused on making every improvement we can make, whether it’s on the completion side, on the drilling side, or reducing operating costs. It’s actually an exciting time for the industry as we go through this, even though it’s painful certainly for the services industry and painful for our customers as well." In fact, the Williston Basin Petroleum Conference (WBPC) was borne from very similar conditions that we face today. The resource was there, but the ability to harvest them was not quite ready, and so began the Williston Basin Horizontal Drilling Symposium. This symposium brought together industry leaders to explore the technologies that have since unlocked the Lodgepole Field under Dickinson, the Cedar Hills Field in Bowman County, and of course eventually the Bakken, defining our region as a top energy producer in the world. This is a feat that just a little more than a decade ago may not have seen plausible, because at that time, the Bakken was still considered uneconomic to produce. The relentless work of industry pioneers, however, led to the innovation and combinations of technologies that have since made the Bakken shale play a world-class resource. The conference has since evolved into the

the Minneapolis Federal Reserve Bank will discuss the regional economy and widespread economic pull of the Bakken.

Williston Basin Petroleum Conference, but its focus is still on making the technology, technical, and regulatory improvements needed to move our industry and this resource play forward. This year, we are pleased to welcome many prominent industry and company leaders to discuss the technologies and efficiencies that are changing the way we develop our vast natural resources. Among them will be CEOs Jim Volker of Whiting Petroleum, Rick Muncrief of WPX Energy, and Jay Ottoson of SM Energy, who will share their experience in the industry and how their companies are deploying technology, people and resources to protect and enhance their assets in the Bakken. Also joining them will be Gerbert Schoonman, vicepresident for Hess Corporation’s Bakken Asset, to talk about the company’s use of lean manufacturing to reduce well costs and optimize well productivity.

Encouraging our industry’s best and brightest to find these new opportunities will require leadership, especially during these more difficult times. To inspire current and future leaders, legendary coach Lou Holtz will provide the keynote address the final day of the conference. Deemed "the master of the turnaround,"

Holtz’s experiences and lessons learned as a coach can be applied outside of sports, especially when and where leadership is needed most. A few years back, the motto for the WBPC was "The best is yet to come." We still believe that’s true. We look forward to the discussions that will grow out of the 24th annual WBPC and see the investments that can – and will – move the Bakken and our industry forward. w

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Attendees will also hear a keynote address from Don Hrap, the president of Lower 48 for ConocoPhillips. Hrap leads the development, operations, and services related to the company’s exploration and production business in the lower 48 region of the United States, and will offer valuable insight into the future of the Bakken and ConocoPhillips’ involvement as one of the largest producers in North Dakota. Market research analyst John Gerdes of KLR Group will be present to add some insight into how and when prices may rebound and what we can expect from the "new normal," while other speaker panels will focus on optimization, technology, and artificial lift to maximize production from existing wells. Neel Kashkari, the newly-hired president of

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Longevity is worth celebrating Long-time Williston Salvation Army advisory board member, Gloria Johnson, reflects on her involvement with the organization.

One of the greatest strengths of The Salvation Army in Willison, North Dakota is its long and enduring history of providing critical services to people in the Bakken. The Salvation Army came to Williston in 1908, just 19 years after North Dakota became a state, and less than 30 years after The Salvation Army came to America. The Salvation Army was founded in London, England by William and Catherine Booth in 1865. This year, the Williston Salvation Army is proud to celebrate its 108th year of serving the local community and surrounding area. From social services programs to spiritual care, the organization has been a beacon of light and hope for those in western North

Williston Salvation Army women's quilting group – 1986.

BAKKEN OIL REPORT – SPRING 2016

invited me to come and teach classes to

Dakota for well over a century. Gloria Johnson, a longtime Willison Salvation Army advisory board member of 20 years, recently offered her perspective and involvement with the organization. In the 50 years since Johnson moved to Williston, she’s lived through three oil booms and has witnessed The Salvation Army’s growth every step of the way.

to show them how to do craft projects for the church. I have also shopped at the Salvation Army Family Store for many years. How did you get involved as an advisory board member? GJ: In the early 1980s, I was the chairman

Here, she explains more about life in Williston and her experience with the organization.

of the Williston Basin Resource Coalition, a group that helped with issues surrounding homelessness in Williston.

How did you first get involved with The Salvation Army? Gloria Johnson (GJ): I owned a craft and hobby store many years ago in Williston. The Salvation Army officers at that time

the ladies group at The Salvation Army

The coalition asked The Salvation Army to attend one of our meetings and make a presentation about their organization. Because of my involvement with this group, I was asked to be on The Salvation Army advisory board in the early 1990s.

Williston Salvation Army honors young girls in their programs – 1966.

Have you been involved in other Salvation Army volunteer opportunities? GJ: I have volunteered with different things throughout the years. I have done a lot of volunteer work at the Salvation Army Family Store. What has it been like to be involved with The Salvation Army for so many years? I have seen a lot of changes over the years, including the changing of Salvation Army officers and the Salvation Army Family Store moving to its current location. They have always been changes for the better.

Salvation Army red kettles have been a long-time symbol of community support during the Christmas season.

What do you see as the biggest challenge of The Salvation Army of Williston? GJ: Our biggest challenge is the growth we are experiencing. We have struggled with keeping the Salvation Army Family Store with enough staff over the past couple years, but we are doing better now. What do you like most about being a part of The Salvation Army? GJ: I really enjoy being on the advisory board. The Salvation Army is an organization that I care about. It is fun and encouraging to see the growth and expansion of our ministry, including the positive changes at our store. To learn more about the Williston Salvation Army and its mission to serve those in need, visit WillistonSA.org. w

Salvation Army food baskets being delivered during a snow storm. BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

bartlett & west

Engineering firm solves the issue of vibrating pump buildings By Jame Todd, PE, location manager, Bartlett & West Far left: A LACT building. Left: Helical piers (seen here) are quick to install and there is no need to compact the soil or wait for concrete to cure.

Structural integrity is a benchmark consideration for engineers.

forces would be exerted by the system, as these are dependent

Therefore, any type of structural vibration is a challenge within

on a number of various factors too complex to calculate before

the design equation. The engineers within the Bismarck, North

the building is in operation. So, a pier loading was specified and

Dakota, office of Bartlett & West recently took on the challenge

given to the installation contractor who installed the piers and set

of solving an issue with vibrating pump buildings in the Bakken

the LACTS on them.

oilfields in western North Dakota.

Glueckert explains, "As the system went into operation we started

In 2015, the engineering firm worked on a gathering system

hearing reports of the LACT buildings vibrating or shaking,

project where pump buildings called Lease Automatic Custody

so a vibration expert was hired to analyze the system and

Transfers (LACTs) were placed at each of the well locations. These

troubleshoot a solution. The vibration expertâ&#x20AC;&#x2122;s analysis and report

locations are the point of sale for the oil where the crude is tested

indicated that the pump and motor were operating correctly, and

for quality, accurately measured with a meter, and pumped to

the issue was caused by the fact the specific pump and motor

pipeline pressure.

used were operating at the natural frequency of the building and

"The owner had these buildings built on helical piers, which are kind of like a corkscrew drilled into the ground to well below the frost line," says Zach Glueckert, the Bartlett & West project

pier structure it was supported with. The conclusion was that no amount of mass or additional stiffness would eliminate the vibration we were seeing."

manager for this gathering system. "Helical piers are quick to

That left Bartlett & West challenged with the problem of how to

install, can be installed in the winter, and cause no need to

fix the issue.

compact the soil or wait for concrete to cure."

"Various ideas were discussed and contemplated. We went back

However, as the project progressed, it quickly became apparent

to the drawing board a number of times and came to a solution

that helical piers are good for direct axial loading, but a poor

that all parties agreed to," says Glueckert. In this case, Bartlett

choice to withstand any lateral forces. The high-pressure pumps

& West devised a method to partially support the LACT with a

that were installed in these particular LACT buildings were

concrete pad, while retaining the helical pier support.

progressive cavity pumps; they have a high rotating mass at a low speed, which translate into high centrifugal forces exerted on the building as a whole.

"We have installed the concrete pad solution at all locations and it has successfully solved the vibration problem," he concludes. "Despite the challenges, we now have a great understanding of

There was no information available on how the pump, building,

the factors that caused the vibration issue, and a solution that can

and helical piers would interact together and what side-load

be replicated for other systems facing the same challenges." w

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Call for information on recycling or repair options! www.facebook.com/tepumpsofficialpage

edward jones

Financial focus Best response to volatile markets? Stay calm. In recent months stocks have fallen sharply from their record

10 years, why wouldn’t you want to buy their stocks at potentially

highs, with one-day drops that can rightfully be called "dizzying".

lower prices?

As an investor, what are you to make of this volatility?

• Diversify. During the downturn, just about everyone’s portfolio

For one thing, you’ll find it useful to know the probable causes of

was effected. But if yours took a particularly large hit, it might be

the market gyrations. Most experts cite global fears about China’s

because your holdings are over-concentrated in stocks, especially

economic slowdown, falling oil prices, and anticipation of a move

the types of stocks that fared the worst. You may need to further

by the Federal Reserve to raise interest rates as the key factors

diversify your portfolio through a mixture of domestic and

behind the stock market’s decline.

international stocks, bonds, government securities, real estate,

On the other hand, the U.S. economy is still doing fairly well.

certificates of deposit (CDs), and other vehicles. Diversification,

Employers are adding jobs at a pretty good clip, wages are rising, home prices are up, and overall economic growth has been reasonably solid. In other words, we are in a vastly better place

by itself, can’t guarantee a profit or prevent against all losses, but it can help blunt the harshest effects of volatility. • Review your investment strategy. Unless your goals have

than in the period before the Great Recession of 2008 and early

changed, there’s no reason to revise your long-term investment

2009, when the financial markets bottomed out.

strategy, even in the face of wild fluctuations in the financial markets. Still, it’s always a

Nonetheless, it’s only natural that you might feel some trepidation

good idea to review your

over what’s been happening

strategy at least once a year,

in the financial markets over

possibly in consultation with a

the past few weeks. So, what

financial professional. You may

should you do? Here are a few

need to make smaller-scale

suggestions: • Expect more of the same. Be prepared for more volatility, potentially including big drops one day followed by big gains the next. Until the factors considered responsible for the current

adjustments in response to changes in the economy, interest rates, and so on, but don’t abandon your core principles, such as maintaining a portfolio that reflects your goals, risk tolerance, and time horizon.

volatility – that is, China’s slowing economy, low oil prices,

Investing will never be either risk free or predictable. But by taking

and the Federal Reserve’s decision on rates – have been fully

the steps described above, you can relieve some of the stress

absorbed into the market’s pricing mechanisms, big price swings,

associated with volatility and help yourself stay on track toward

one way or another, are to be expected.

your financial objectives.

• Don’t panic. The headlines may look grim, but today’s

Past performance does not guarantee future results. Investors

newspapers are tomorrow’s recycling pile. Volatility is nothing

should understand the risks involved of owning investments,

new, and the financial markets are more resilient than you may

including interest rate risk, credit risk, and market risk. The value

think.

of investments fluctuates and investors can lose some or all of

• Look for opportunities. By definition, a downturn occurs when investors sell massive amounts of stocks, but it actually may be a good time to buy them, while their price is down. Look at the

their principal. Special risks are inherent to international investing, including those related to currency fluctuations and foreign political and economic events.

most successful businesses and their products and services. If you

This article was written by Edward Jones for use by your local Edward

can envision these companies still being around and thriving in

Jones financial advisor. w

BAKKEN OIL REPORT – SPRING 2016

FOR INDUSTRIAL CONSTRUCTION PROJECTS

VEIT IS RIGHT.

SERVING THE OIL/GAS AND INDUSTRIAL SECTORS • Earthwork – Mass grading, landfill construction, contaminated soil cleanup, structural excavation, rail subgrade construction, containment liner/berm construction, hydraulic dredging

• Utilities – Sewer, water, HDPE pipe fusing, commercial diving • Demolition – Total, interior, explosive • Foundations – Drilled piers,driven piles, retention systems, soil solidification

Bismarck, ND • Duluth, MN • Minneapolis, MN • Milwaukee, WI

veitusa.com

ENcore energy

Encore Energy announces Kentucky Warsaw oil discovery and plans for the future Encore Energy has recently made a new Warsaw oil discovery in south central Kentucky. The company has immediate plans to drill 11 drill-sites to prove-up a new field in an area offset to where millions of BO have been produced from the Cincinnati Arch and Illinois Basin. The company plans to drill up to 30 additional wells in the area and is targeting approximately 50,000+ lease acres, strategic production acquisitions and horizontal oil (much shallower than the Bakken) for the long term. Encoreâ&#x20AC;&#x2122;s recent discovery well reported a ~270 BOPD IP (initial 24-hour production rate) with ~20-foot formation, high-oil saturation and porosity approaching 18 percent. Encore currently has ~15,000 acres and prospects targeting several limestone and dolomite oil formations in south central Kentucky. The company has drilled 25 of 28 wells and is planning a new 30 well program for 2016. "Encore's team carefully engineered the stimulation treatment, and the initial production test rate from this discovery is welldocumented," says Steve Stengell, Encore's president, CEO, and chairman. "These initial results far exceed our expectations, projections, historical rates, and provide the company with tremendous confidence in the continued development of a much

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

larger formation trend and more potential new discoveries in the area." The company anticipates the well to stabilize at 10 to 20 percent of its 24-hour test rate. Encore is currently drilling the direct off-set locations while expanding into Butler, Ohio and Edmonson counties and evaluating horizontal prospects for the future. Rig rates are at all-time record lows, global production is on the decline, and Encore is confident that the price for oil is going to make a strong recovery. The U.S. government allows qualified SEC-defined accredited investors to deduct 100 percent of the intangible drilling cost (ICD) deductions against all ordinary income with up to 95 percent of the deduction occurring in year one at the time the investment is made. This typically results in an immediate tax savings equal to 40 to 53 percent of his or her total investment. Oil and gas exploration and development involves a high degree of risk and uncertainty. No assurances can be made as it relates to production, reserves, income, or timelines. For more information, please contact Joseph Hooper at (270) 842-1242, ext. 224, or via email at Joseph.hooper@encore-energy.com. w

miller architects and builders

Is the construction industry in the Bakken still healthy? Though oil was first discovered in the Bakken formation in 1951,

profitable. The reason this is important to note for the commercial

the formation itself dates back some 350 to 375 million years

construction industry is that fewer jobs inevitably leads to fewer

ago. It was not known when early settlers to the area arrived, that

residents. There will be less need for apartments to house them.

beneath them lie a discovery that would forever alter the area in

Some have noted that fewer hotels will be necessary for area

extraordinary ways. From 1995 to the present, the Bakken area

newcomers and visitors. While this all may be true, it certainly

has experienced an explosion as oilfield discoveries became a

does not spell the end of construction projects. Fewer projects is

bonanza. Thousands of men, women, and families flocked to this

a reality, yet it is far from the end of the story.

small rural area in North Dakota seeking quality jobs with good pay. The unfortunate truth, however, was that the infrastructure

Continued need

of the area was simply not suited to accommodate this massive

Although the slowdown in oil and gas has cost some their jobs, it does not mean they are without options. The increased infrastructure to support those working in the oilfields remains. Everything from new industry to restaurants and shops has assisted in creating a vast number of positions available for employment. These small cities may have grown exceptionally quickly, but grown they have. There remains even today a shortage of apartment housing for residents of these cities prompting a continued need for new construction. There remain a large number of individuals working in the oilfields, and also in other service and trade industries created by the boom. Looking to the future The very nature of a boom ensures that it will provide a rapid ascent in the construction sector. However, it can also be expected that in time, the boom will begin to slow.

influx. Rapidly, construction firms began building homes,

This is as true in the Bakken area as it was in any other boom. Of

apartment complexes, hotels, stores, and many other types of

course, nobody can predict the future with a guarantee. The oil

residential and commercial construction projects. This trend has

and gas industries continue to flux, and they involve a vast range

continued, and the cities of Williston, Tioga, Parshall, and many

of variables that affect it. Everything from the economy to foreign

others experienced a building boom that completely transformed

policy play a role. It will be interesting to see how these industries

them. However, growing concern regarding slow-downs in the

change following the upcoming presidential election. However,

gas and oil industries have left many wondering what the future

we can use the data, trends, and world events to generate a

construction outlook for the Bakken area is.

reasonable estimation. Therefore, commercial construction in

Why employment and construction are intertwined

the cities located within the Bakken area will continue. The speed at which these projects occur may not remain "boom like." It is, however, reasonable to believe that the infrastructure that has

Data has been showing that there is indeed a slowdown that

been created ensures that the industry will continue to be strong,

is affecting the Bakken area. Job losses due to this slowdown

and continue serving residents in the Bakken area for many years

have occurred as companies must shed workers to remain

to come. w

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

DEVILS LAKE CONVENTION AND VISITORS BUREAU

Come one, come all By Rachel Lindstrom Industry and recreation are paired

If you are ready for construction, there is

Center, TrainND, and Lake Region State

perfectly in Devils Lake, North Dakota.

a 130-acre industrial park with railroad

College. Our community is able to keep

Our thriving business community and

access, natural gas, city sewer and

the small town feel while preparing

the new developments throughout the

water, and is located along a four-lane

our students for their career. The next

community make Devils Lake a great

highway – Highway 2 which is only 90

generation will be well prepared for their

place to be.

miles from Interstate 29. Lots can be

future endeavors with the educational

designed to fit your needs and range in

services that are offered in the lake

size from five to 130 acres. There is also

region.

a 125,000-square-foot manufacturing

Housing availability has been difficult

building available for lease or purchase.

in past year, but Devils Lake has created

Devils Lake offers competitive prices

programs and has successfully assisted

and incentive programs to aid in your

in the development of rental units, newly

Devils Lake is a small community of 7,500

business expansion, relocation, or grand

constructed homes, and residential lots.

people surrounding a lake that covers

opening.

Our community has great options for

over 200,000 acres of land in northeast

Even though we’re a small community,

you and your employees to establish a

North Dakota. Tourism and agriculture

we can accommodate your business

permanent residence.

are the biggest economic industries in

needs. There are educational services

Devils Lake is famous for recreation.

the area. The community has taken an

available to ensure you have adequate

Families come from all over the United

interest in the energy and manufacturing

workforce available. Devils Lake is home

States to experience the unique

industries to diversify the local economy.

of the Lake Area Career and Technology

atmosphere. Come experience the water

We are located on the edge of the Bakken oilfield and our small town advantages, along with close proximity to the oilfield, makes this a great location for your company.

BAKKEN OIL REPORT – SPRING 2016

sports, hunting, fishing, hiking, camping, bird watching, or our great shopping and nightlife. There are a wide variety of accommodations in the area; rustic lakeside cabins, newly built resorts on the lake, or hotels located within city limits. Devils Lake is a great place to visit. Downtown is a medley of successful business establishments. From nostalgic businesses that have been passed down through the generations to trendy new establishments. There are available commercial locations for lease at competitive prices. Our community is focused on growth and is willing to assist you with your development needs. For more information about Devils Lake, access Forward Devils Lakeâ&#x20AC;&#x2122;s website at development.devilslakend.com. Forward Devils Lake is the economic development corporation for the lake region. There are a number of financial programs available to new developers along with available properties. Rachel Lindstrom, MBA, is the executive director of Forward Devils Lake. w

PLEASE RECYCLE

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

blue cross Blue shield of north dakota

Workplace wellness: The new frontier in affordable health care By Mike Carlson, director of employer consultation and wellness, Blue Cross Blue Shield of North Dakota. For years, Google topped Forbes’ annual

longstanding, and our ultimate goal is to

list for being a best place to work.

protect the health and wellness of all our

The tech giant’s offices are famously

members.

designed for both work and play.

Though the landscape of insurance has

"Googleplex," with its swimming pool,

definitely changed, at BCBSND, we’ve

billiards room, massage service, and

developed programs and solutions that

gourmet cafeterias, created a new frontier for how employees work and stay healthy.

will help employer groups optimize their employees’ health, improve life in the

Like Google’s legacy of developing a

workplace, and balance the books in

culture of wellness at work, North Dakota

an increasingly unpredictable business

businesses are also at the forefront of

environment.

many discoveries and opportunities of its own. Helping build those legacies is Blue Cross Blue Shield of North Dakota (BCBSND), which has been working for and with members for more than 75 years. As North Dakota continues to be the frontier for many innovations, also on the horizon is the reality that providing

Through the decades, we’ve learned a

• • • •

Create a wellness plan Customize wellness efforts Form a team Get support from management

getting the most out of their healthcare

BlueElements

dollars. We’re here in the western part

Built upon the foundation that good health reaches beyond the absence of disease, BCBSND’s BlueElements is the springboard for six intersecting dimensions of well-being: physical, social, emotional, financial, professional, and environmental.

of the state, partnering with employer groups to optimize group plans and create cultures of health, wellness, and success. BCBSND’s health and wellness programs

employees healthy comes at a cost.

Employer groups of BCBSND have many

As a member-owned, independent non-

wellness incentives, like health club credit,

profit organization, BCBSND lives and

the HealthyBlue Online Wellness Center,

breathes North Dakota. This legacy is

and the new BlueElements program.

BAKKEN OIL REPORT – SPRING 2016

A great starting point for employer groups is the North Dakota Worksite Wellness (ndworksitewellness.org). The site helps leadership:

lot about how to ensure members are

employee health benefits and keeping

Worksite Wellness

BCBSND employer groups have the opportunity to implement dozens of BlueElements wellness and health programs, which will help contribute to

employees experiencing a fuller, richer, more intentional life, and help create that "best place to work" mindset. Most BlueElements programs are built into existing employer group plans, while others are products and services available for purchase. The fundamental elements Programs under the Physical element include: • On-site screenings • Online assessment • Online and on-site workshops and resources • Workplace flu shots • Health Club Credit • Silver Sneakers • MediQHome • Case management • Rare and complex disease management • Prenatal Plus • Health coaching • HealthyBlue trackers • A nurseline

Programs under the Social element include: • Online and on-site workshops • Virtual libraries • Online challenges • Health coaching • Health Club Credit • Silver Sneakers • Prenatal Plus • Community event sponsorships Programs under the Emotional element include: • Online and on-site workshops • Virtual libraries • Employee Assistance Programs • Health coaching • Member advocacy Programs under the Financial element include: • Health plan and pharmacy designed for employers • Online and on-site workshops • Participating provider directory • MyPrime Rx Tool • Specialty drug management • Ancillary insurance • Blue Rewards

Programs under the Professional element include: • Worksite Wellness Summits • Gearing Up training • ACA tours for employers • Worksite Wellness Toolkit • Well Workplace awards Programs under the Environmental element include: • Organizational wellness consulting • Community sponsorships for wellness events, like the Fargo Marathon 5K, Annual Walk@Lunch, and Shoes for Kids "We know that there is no other place in your life that you spend more time during the week than at the worksite, so there is a really great opportunity to influence individuals' health at the worksite," says Pete Seljevold, administrator for BCBSND’s Worksite Wellness Initiative. To learn more about BCBSND’s Worksite Wellness programs and Blue Elements, visit BCBSND.com. Or if you already have an employer group set up, contact your agent or call 701-282-1140. w BAKKEN OIL REPORT – SPRING 2016

dixon, valve & coupling company

Service, reliability, and innovation when loading and unloading petroleum fluids

Dixon® Valve & Coupling Company has been building a credible reputation in the petrochemical industry since 1916, and regularly demonstrates that it is a responsible manufacturer that produces safe, reliable and long-lasting products. The Dixon® product offering has evolved within the midstream segment, and today has many components being used in loading and unloading fluids throughout the world. Products in service include hose couplings, dry disconnects, API couplers, swivels, and customized railcar unloading assemblies. One of Dixon®’s most innovative and fastest-growing business units within midstream* transportation is the extensive Bayco tank truck product offering, and the FloTech electronic overfill protection products. Dixon® has several associated patents that fall under these trade names, and the division engineering staff holds more than a dozen U.S. and international patents for innovative designs covering various valves and controls used in the transportation industry. The focus on product reliability permits Dixon® to offer customers a three-year warranty on both Bayco and FloTech products. Dixon®’s Bob Koeninger explains their team’s approach. "Dixon® supplies numerous products that are used in the transportation industry, and both our sales personnel and engineers regularly collaborate with end users that use our products in these environments," says Koeninger. "The new product development process starts with understanding customer challenges when transferring hazardous and nonhazardous materials. When working closely with end users, we 88

BAKKEN OIL REPORT – SPRING 2016

possess the ability to define their challenges, develop possible resolutions to these challenges, and then utilize technology, such as 3D printing and rapid modeling, to produce a prototype suitable for field test. Service solutions are also available to end users through our distributor sales channel, as they regularly service customers with a 24/7/365 focus, and are technically astute." Open communication with customers and following through with solutions strengthens trust in Dixon® as a supplier of both current and future products, Koeninger goes on to say, "We continue to identify new technology that will allow Dixon® to improve product reliability, lower costs and speed time to market. This is part of the LEAN process to remain focused on speed, quality, and costs." Dixon® is committed to delighting customers by being the easiest company they do business with every day. How can Dixon® help you? Dixon®, founded in 1916, is a premier manufacturer and supplier of hose couplings, valves, dry-disconnects, swivels, and other fluid transfer and control products. The company’s global reach includes a wide range of products for numerous industries, including petroleum exploration, refining, transportation, chemical processing, food and beverage, steel, fire protection, construction, mining, and manufacturing. For more information, visit dixonvalve.com, or call (877) 963-4966. *Midstream includes gathering, processing, transportation, and storage. w

SUITE 300, 6 ROSLYN ROAD, WINNIPEG, MANITOBA, CANADA

www.delcommunications.com

The key to publishing success.

We offer outstanding personal service and quality in the areas of: • Creative Design • Advertising Sales • Trade Publication • Video Production & Editing • Qualified Sales & Editorial Team

BAKKEN OIL REPORT – SPRING 2016

msa the safety company

The evolution of portable gas detection

ALTAIR 5X Multigas Detector provides a fast sensor response and recovery, and requires less calibration gas to maintain.

Combustible gas, carbon monoxide, hydrogen sulfide, and oxygen deficiency/enrichment, also known as the big four, are commonly monitored in industrial applications such as oil/gas/petrochemical, chemical, and utilities. Portable multi-gas detectors are widely relied upon to protect workers from such hazards, but should also provide performance, reliability, toughness, ease of use, and value. For practicality, instruments must be compact and lightweight, but also durable and easy to use. In the past, multi-gas detectors were large, heavy, cumbersome devices worn on a shoulder strap. As technology advanced, instruments became much more compact, providing greater comfort for the wearer. In addition, advanced features such as data logging, extended battery life, vibrating alarms, brighter visual alarms, and louder audible alarms were added. Portable instruments must be rugged and resistant to the rigors of realistic use, while still providing accurate readings. The drop test benchmark for portable instruments has increased from three feet to 10 feet, and in some cases 25 feet, which illustrates the level of design that now combines advanced technology with instrument durability and reliability. Twenty years ago instrument alarms were easily missed, but now vibrant visual, piercing audible and vibrating alarms are typical even in very small units. Alarms can be configured to provide users with a confidence signal â&#x20AC;&#x201C; typically an LED flash or icon to provide confidence indicating proper instrument function.

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

Information input or adjustment of alarm set points should

recovery, and requires less calibration gas to maintain. MSA

be simple, practical, and password-protected, preventing any

exclusives include an instrument end-of-sensor-life warning

unwanted alteration of alarm settings. The convenience of being

that reduces instrument downtime and sensor inventory;

able to change settings and sensor configurations via software is

MotionAlert™, which signals ‘man down’; and InstantAlert™,

obvious as well.

which allows users to manually activate alarms. The glow-in-

Industry record keeping, along with the streamlining of workplace procedures, prompted hardware and software development that enables instrument linkage to computers, for maintenance and capture of data-logging records instrument events. Network capability and wireless communication are the latest trends in instrument fleet management.

the-dark housing makes it easy to see in a confined space. Offering easy bump tests, calibration and maintenance, and with a rugged housing, it’s built for durability. And now available with a photoionization (PID) option, the ALTAIR 5X provides the most advanced sensor technology available in a six-gas portable instrument. By including PID technology into this industryleading platform, MSA brings VOC detection into an extremely

Workers around the world who face potentially dangerous

durable instrument. Furthermore, the Altair 5X with PID easily

situations deserve the best gas-detection instruments and

integrates into existing GALAXY® GX2 test stand capabilities and

sensors available. At MSA, we work tirelessly to build smarter,

MSA Link Pro fleet management software.

better gas detection instruments to keep workers safe. And

MSA continues to set the bar in gas detection with this addition

our dedication to advanced sensor technology and product

to the ALTAIR family. Now available with PID, the ALTAIR Multigas

durability not only helps to provide a high level of safety, but

Detector provides a complete platform for users around the

delivers a reduced total cost of ownership.

world.

The rugged, multi-featured ALTAIR® 5X Multigas Detector driven

To learn more, visit www.MSAsafety.com, keyword "ALTAIR", or

by XCell® Sensor Technology provides fast sensor response and

call (800) MSA-2222. w

What’s the Value Place promise? A truly affordable, incredibly clean, much safer experience that’s always simple to fit your needs. No matter what brings you to our three Value Place locations in North Dakota, you can count on a respectful, helpful and friendly team dedicated to keeping the Value Place promise to our guests.

CALL NOW TO MAKE YOUR RESERVATIONS!

Value Place Williston Value Place Dickinson Watford City 121 Well St. W. 3233 Legend Dr. 4005 Frontier Ave. Williston, ND 58801 Dickinson, ND 58601 Watford City, ND 58854 1-888-338-0045 1-888-568-8210 1-877-345-4950 Discounts available for long term or volume bookings. Please call 701-713-0156.

BAKKEN OIL REPORT – SPRING 2016

novaspecT

Exterior side views of the Mobile Valve Shop after the addition of graphics. The completely independent unit is selfcontained, equipped with onboard diesel generator and fully equipped to provide compressed air, electricity, and water.

Mobile valve shop brings certified testing and repair services directly to gas compression sites Turnaround downtime can eat you

has become a necessity to adjust to the

alive. In this competitive economy, the

demands of outage schedules and the

difference between a profitable gas

need for skilled, certified valve technicians.

compression site and a marginal one

Instead of transporting valves from each

depends on efficiency and availability.

compression station to a remote repair

So more than ever, reducing valve

location, leading processors want their

maintenance labor costs and downtime

testing and repair services on demand

becomes critical to the bottom line.

and on-site.

As a result, the mobile valve repair shop

To respond to this industry need, Midwest

Certified and tested safety relief valves (SRVs) ready to be reinstalled. 92

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

Top: MVS valve technician takes a pressure reading to verify testing prior to certifying the valve as ready to return to service. Above: MVS valve technician uses the electric hoist to position a typical pressure relief valve for testing.

Valve Services (MVS), a Novaspect company, has launched its newly redesigned and equipped Mobile Repair Shop. As an extension of their certified valve repair facility located in Mandan, North Dakota, the 53-foot trailer is fully equipped with specialized tools and equipment to perform valve testing, repair, and maintenance. The MVS Mandan shop is certified by the National Board of Boiler and Pressure Vessels to provide ASME Section I and VIII testing and repair of relief valves in steam, air/gas, and liquid applications. The MVS mobile repair shop provides the flexibility to accommodate unplanned repairs and make turnarounds more efficient. On-site machining, testing, and diagnostics capabilities minimize or eliminate unnecessary travel to remote locations to perform certain activities. The new trailer is self sufficient and fully equipped with almost everything a valve technician needs, including power generation and air compression. Other MVS Mobile Shop benefits: • Local service: Dispatched from its Mandan, North Dakota base, the Mobile Valve Shop has easy access to the Bakken region customers’ sites. • Experience: MVS has a proven track record of expertise, trusted by major industry companies as successful customers (ONEOK, Whiting, Hess). • Range of capability: MVS is able to test and repair a wide range of pressure-relief valves installed on smaller ¾-inch and up to larger six-by-eight flange connections. • Convenience: Technicians perform onsite turnkey valve removal to on-site trailer shop.

• Identification and traceability: Technicians utilize Class I Division II field tablets, along with Class I Division I Bluetooth barcode readers, accurate bar coding and tagging system. • Documentation: Technicians complete detailed record keeping of testing and repair reports. All information is tracked and managed in an online database. • ASME VR Certified: Test and repair procedures are performed using calibrated instruments. Technicians can test, repair, and recertify as required. If a valve fails, then it is rebuilt, retested, and repeated until acceptable. • Responsive and timely: Mobile shop responds to demand, dispatched to site; capable of providing prompt services within a shorter window of opportunity, precisely where needed.

maintenance reliability software. • Expedient: The process requires only a three-hour set-up and teardown in a convenient location selected by the customer. • Availability: The mobile shop is scheduled per customer requirements for three to six days, or as needed; emergency service is also available on request. • All major valve brands are serviced: including, but not limited to, Mercer, Consolidated, Wellmark, Crosby, Taylor, and Farris. For more information or to schedule an appointment, contact Novaspect – Midwest Valve Services at www.novaspect.com. w

• Capacity: 53-foot, climate-controlled trailer is designed and equipped to accommodate a wide range of valves with temperature-controlled testing and repair conditions. • Fully self-sufficient: The completely independent unit is self-contained, equipped with onboard diesel generator and fully equipped to provide compressed air, electricity, and water. No additional plant support is required. • Capability: Mobile shop is equipped with valve industry specialized testing and repair equipment, plus tools onboard, including: a lathe, full-size mill, media blasting equipment, test equipment, portable lapping equipment, calibration instruments, and

The interior view of the Mobile Valve Shop center aisle show the work area and wide range of specialized testing instruments.

• Reduced downtime: Because valves don’t have to leave the site, the process takes less time. • Lower inventory costs: Since technicians can repair valves within a shorter time frame, fewer spares are required in stock. • Certification: Testing is performed on a portable test stand, in compliance with ASME section VIII VR stamp.

A recent on-site visit in the Bakken region to a gas compression station for a scheduled valve turnaround. Note the trailer without the new graphics. BAKKEN OIL REPORT – SPRING 2016

wellhead systems

Customer-driven innovator By Troy W. Habben Customers’ needs should drive all aspects of new product development and current product improvements. This philosophy has driven Wellhead Systems Inc. (WSI) to market leadership dominance. It has been several decades since any significant product development has emerged in the independent low-pressure hookup market. WSI strategically organized its leadership team with personnel that were key drivers for some of the original manufacturing pioneers. This leadership team has culturally and systematically brought proven organizational and business philosophies of the past to the next century, focusing on safety, environment, product development, and quality. WSI is leading the industry in new product development, field service, and support, as well as training. This focus is a direct initiative to support the ever-changing industry dynamics, including new personnel entering the energy industry and increasing requirements for higher 94

BAKKEN OIL REPORT – SPRING 2016

pressure independent products, never seen in the low-pressure independent line. WSI is leading the development in higher pressure sealing components for 3000 and 5000 PSI stuffing boxes and production blow-out preventers with patented designs and premier pressure sealing components used in conjunction with the sealing application. In addition, WSI introduced the first-ever "Family" line of one-way bearing rod rotators to the market. This new bearing design eliminated the largest failure component, ratchet pawls, and improved runs up to five to 10 times longer than the old design. Again, helping producers increase productivity and reduce costs. The U.S.based manufacturer has a state-of-the-art testing facility utilized for test verifications and recertification of all critical service components. WSI has become the largest provider of domestic manufactured independent products. In turn, they represent the largest product offering breadth of any

similar manufacturer. The product offering services producers of a few stripper wells to majors with several-thousand wells in environmental sensitive locations and higher pressure containment needs. Products to fit the economic budget of producers at both ends of the spectrum are a focus of WSI, not only from a product needs standpoint, but also from a service and support advantage. In order to successfully provide factory presence and support to all customers, WSI has invested in factory personnel referred to as business development managers (BDM) in key plays across North America. The business development managers are responsible for supporting producers’ needs for training, field support and new product development. In addition, they manage and support the 22 stocking warehouse locations, which also have personnel trained by the BDM’s and support the local territory with sales and service. The stocking warehouse locations provide WSI with more than

product development and improvements of existing products in an effort to provide the producers with value-added solutions." Goodeyon continues, "Our commitment to provide training to new and young people entering the oil and gas segment is also an industry responsibility, that as a manufacturer, we take very seriously." Many companies have slogans, however, "Make Your Connection with WSI" is more than a slogan to the 70 people available to support activity

WSI is not relaxing. They are engaging

throughout North America.

the customer to address business needs.

team at Wellhead Systems Inc., it is a long-

In good times or soft markets, it’s easy for

According to Joe Goodeyon Jr., president

term partnering relationship connected

companies to become complacent and

and founder of the company, "We are

through value-added solutions and

withdraw from an aggressive approach.

constantly pushing the envelope for new

support. w

SUITE 300, 6 ROSLYN ROAD, WINNIPEG, MANITOBA, CANADA

www.delcommunications.com

The key to publishing success. We offer outstanding personal service and quality in the areas of... • Creative Design • Advertising Sales • Trade Publications • Video Production & Editing • Qualified Sales &

employees and leadership

A COMMITMENT TO YOUR SUCCESS. A North Dakota company that’s been serving the state for more than 20 years, NTI is located throughout the upper Midwest. Talk to us about your project.

NORTH DAKOTA

• • • • • •

Minot: 701.839.5400

Geotechnical Engineering Materials Testing Services Forensic Engineering Special Inspections Environmental Consulting Non-Destructive Testing Services

Fargo: 701.232.1822 Grand Forks: 701.219.0920

Bismarck: 701.425.5791

MINNESOTA Minneapolis: 763.433.9175 St. Paul: 651.389.4191

Editorial Team 3522 4th Avenue South, Fargo, ND 58103 701.232.1822 | ntigeo.com

BAKKEN OIL REPORT – SPRING 2016

executive air taxi corporation

Take flight Get to and from the oil patch with Executive Air Taxi Corporation

Well before the recent oil boom began to generate, the activity we see today and the strong North Dakota economy that followed, Executive Air Taxi Corporation in Bismarck, North Dakota was already serving the oil-rich areas of the Bakken and beyond. What began in 1973 as an air taxi service has grown into the region’s complete full-service aviation center operating 24 hours a day. The convenience and value of ondemand air charter remains a priority for Executive Air, as many oil and energyrelated businesses depend on them to transport staff and materials to and from the oil patch. This also includes ancillary services such as engineers, attorneys, contractors, and medical personnel, to name a few, who many times have a lastminute urgent need to travel to a smaller community in oil country to close a deal and oversee a project or attend to patients in an outlying medical facility. Executive Air is there to make that happen for them on a same-day basis and have them back for dinner. Clients include contractors from out 96

BAKKEN OIL REPORT – SPRING 2016

of state, like Minnesota and Wyoming, who utilized Executive Air to transport teams to the work site and return another team home after a long stint building infrastructure to support all of the activities, which in turn plays a vital role in North Dakota’s overall economy. Since it began over 40 years ago and as business demand increased, Executive Air also saw a need and partnered with regional medical facilities in bringing rapid-response emergency medical helicopter and fixed-wing services to rural North Dakota. In partnership with Trinity Health in Minot, Northstar Criticair stands ready 24/7 to respond to medical emergencies throughout the Bakken with a team of advanced life support personnel bringing life-saving services right where it is needed, whether that be another hospital, roadside accident, or right to a drilling rig itself. Other services critical to companies and organizations involved in the Bakken includes the need for a wide range of aircraft services, including refueling, aircraft maintenance and avionics repairs,

custom aircraft interior and upholstery work, as well as parts and accessories to keep them in the air. Customers from Montana, South Dakota, Minnesota, and all over North Dakota utilize Executive Air’s services, and when unable to come to us, we will go to them. Executive Air has teamed up with major aircraft manufacturers such as Beechcraft, Cessna, Garmin, Aspen, S-Tec, Bell Helicopter, and Cirrus Aircraft, and recently received the region’s only FAA-approved authority to operate an aircraft mobile maintenance unit. Executive Air will respond with a team of maintenance professionals with necessary equipment to get clients back in the air, minimizing downtime as much as possible. Executive Air also provides flight instruction and aircraft rental to those who always wanted to be a pilot, but did not own an aircraft. Executive Air also provides aerial survey flights for companies who need to fly over a job site, or just the joyrider who wants to get a bird’s eye view of the activity in the Bakken. It’s a sight to behold. w

Call us for all of your travel needs, 701-258-5024.

We travel to a variety of popular cities, from Bismarck/Mandan to Minneapolis, Denver, Dallas, New York, or wherever you need to go! We offer customized direct flights to over fifty locations in ND and thousands throughout North America. It’s YOUR flight on YOUR schedule!

irrus C , a n s s ll, Ce e on! i B g y e l r n e o h is the r in t e r t i n e A c e e v i ic Execut echcraft serv e and B

On Demand Charter Service • 24/7 FBO Services Aircraft Maintenace • Avionics • Parts • Flight Training Sales • FW & RW Air Medical Services • Custom Interiors

Executive Air Taxi Corporation

2301 University Drive, Bismarck Municipal Airport, Bismarck, ND 58504

800-932-8924 • 701-258-5024 • Fax 701-258-2693

marketing@executive-air.com

www.executive-air.com

D&G POLYETHYLENE PRODUCTS LTD.

Maximize your investment dollars

We are well aware of the challenges we all face as companies

switch valves with many different sizes and configurations

entrenched in the oil and gas industry. Whether as producers,

to house a wide variety of valves. These valve shelters

suppliers, or in the service industry, we are also well aware

generate huge savings when compared to the traditional

that everyone must adapt to an increasingly tougher

scaffold and insulated tarp method for hoarding in valves

economic uncertainty when it comes to world prices. Every

to prevent freezing. Scaffold required many man hours to

producer must find ways to cut costs while maintaining and

erect, disassemble, and are not an efficient means of freeze

increasing production.

protection.

At D&G Poly Products, we are proud to consider ourselves

Our shelters are all shipped fully assembled and require no

partners with our clients and are pleased to offer a very economical alternative to some of the higher-priced traditional shelters and buildings. For the past 25 years, we have strived to manufacture affordable, functional quality shelters for the oil and gas industry. If you need to protect something from the harsh northern environment, look to D&G Poly Products Ltd. We have one of the largest bi-axial rotational molding ovens in Western Canada. This allows us the capability to mold exceptionally large seamless products, like our nine-foot-

on-site construction. Our valve shelters can be installed and removed in a matter of minutes, not hours or days. We have in-house mold-building capabilities, where our team can design, fabricate and produce custom products to exactly suit your requirements. If it can be done ... we can do it. Although our main business is manufacturing insulated polyethylene shelters, we can work with our clients from conception to production on any custom projects you have in mind. Our management team has over 40 years combined

by-nine-foot-by-nine-foot-high King shelter. Our rugged,

experience in rotational molding and product design. At

durable, maintenance-free, corrosion-resistant insulated

D&G, we take pride in assuring clients superior quality

polyethylene shelters come in a variety of sizes ranging from

control of products, friendly service, as well as affordable, and

a seven-foot, three-inch conical, to a spacious 16-foot-by-

prompt delivery services. D&G Polyethylene Products Ltd. is

48-foot modular building, and every size in between. Our

committed to manufacturing quality products at exceptional

shelters range from four-feet high all the way to 15-feet tall.

prices.

We have recently added a line of shelters for tailings pond

Please visit us at www.dgpolyproducts.com. w

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

Phone: (306) 823-4789 Fax: (306) 823-4277 Toll Free: 1-866-384-4789 PO Box 276 Neilburg, SK S0M 2C0

info.dgpoly@sasktel.net

www.dgpolyproducts.com

YLENE POLYETHUCTS PROD

D&G

Polyethylene Products Ltd. Wellhead and Switch Valve Shelters Custom Design and Molding

Wellhead Shelters • • • •

Durable polyethylene construction Lightweight • Virtually indestructible Insulated • Very economical Many sizes available

Custom Design & Molding • No maintenance • Variety of secondary containment products • Plastic welding

maple leaf marketing inc.

EndurAlloy™ tubing extends run times

including H2S, CO2 flood, water flood,

Maple Leaf Marketing, Inc., as the agent for Endurance Technologies, Inc., provides sales and support for the EndurAlloy™ Tubing for the U.S. oilfield.

as advertised, often in the most difficult wells. Over 18,000 joints of EndurAlloy™ tubing are installed each year and the number of customers is growing rapidly.

Low oil prices mean producers are looking for innovative ways to cut costs. EndurAlloy™ lowers operating costs by reducing tubing failures and costly work overs, while keeping wells pumping longer.

"Customers don’t give you the easy wells to test your product, they give you the tough ones," says Mike Truitt, CEO of Maple Leaf Marketing, Inc. "Customers can see the benefits for themselves in a few months. Well records don’t lie. If a well that was failing every three to six months runs for more than two years with EndurAlloy™ in it, customers call that a big success."

7. No special handling requirements.

Seven benefits of EndurAlloy™ over carbon steel production tubing are:

new equipment, training, and processes

EndurAlloy™ tubing has a 13-year proven track of extending well run times in U.S. oilfields. Producers like Pioneer Natural Resources and Crownquest rely on EndurAlloy™ to lower lifting costs and increase production. EndurAlloy™ is standard J55 production tubing that has been specially treated using a thermo-chemical process to diffuse boron into the substrate, creating a new iron boride alloy that is extremely hard and abrasion resistant. The iron boride case depth is part of the internal surface on the inner diameter of the tube, not a lining or a coating. EndurAlloy™ is the ultimate protection against wear and corrosion in rod pumped wells.

1. Typically, EndurAlloy™ lasts three to 10 times longer than regular J55 production tubing, depending on specific well conditions.

Five to 10 joints at the bottom of the string, or multiple joints around deviated sections, are the standard applications for EndurAlloy™. Case studies with Pioneer Natural Resources, Concho Resources, Aera Energy, and other leading oil producers demonstrates that EndurAlloy™ performs 100

BAKKEN OIL REPORT – SPRING 2016

2. Keeps the rig off the hole, eliminating well service jobs.

and steam injection, and can be used in wells with operating temperatures as high as 900 degrees F.

EndurAlloy™ is manufactured by Endurance Technologies Inc. at a stateof-the-art plant in Calgary, Alberta, using custom-designed furnaces and materialshandling equipment. "Endurance is the only company in the world that diffuses boron into the surface of J55 tubing," says Truitt. "It invests in to continually improve the product. The goal is to make the best joint of tubing possible." EndurAlloy™ outperforms specialty niche products like polylining, ZeroCor and MAC200. None of them offer the superior wear, abrasion, and corrosion protection of EndurAlloy™.

3. Increases production by reducing down-time.

"Every one of our customers has stories

4. The ID of the J55 tube is unchanged, allowing for full bore production.

coated or lined tubing," says Truitt. "At

5. Iron boride alloy has a dense microcrystalline uniform structure on the entire length of the tubing, which allows EndurAlloy™ tubing to not experience pits, separation, holidays, spalling, delamination, or breaking off.

back to EndurAlloy™. Saving a few bucks

6. EndurAlloy™ tubing is effective in a variety of producing environments,

in problem wells throughout North

to tell about trying the latest fad in the end of the day, they always come on specialty pipe doesn’t come close to paying for an unneeded pulling job and the lost production while the wells down." Approximately 25,000 joints of EndurAlloy™ tubing are installed annually America. w

1 - 8 0 0 - 2 2 7- 8 1 5 9

ROCK drill site

Q M A T. C O M 5-ACRE MAT DRILL SITE

MAT drill site

AFTER ROCK DRILL SITE

Disadvantages - Damaging native farm land - Lost work time due to unsafe work surface - Delays in drilling - Unable to access due to bad weather - Wasting unnecessary amounts of rock - Unnecessary extra cost - High reclamation expense

WORLDS LARGEST SUPPLIER

AFTER MAT DRILL SITE

Advantages - No reclamation cost - Reduce the environmental impact - Reduce the amount of rock on native farm lands - Minimize unnecessary accidents - Mats provide a safe and stable work surface - 24/7 all-weather access with no down time - Potential to drill one to two more additional wells per year - Reduce the amount of truck traffic on roads - No additional cost - Protect existing flowlines

MANUFACTURING SINCE 1974

miller INSULATION CO., INC.

Miller Insulation: The safe choice Since 1972, the Miller family has been providing diverse insulation services from a headquarters in Bismarck, North Dakota. Donald Miller established the family-owned and -operated company in 1972. Having spent his entire career in insulation – specializing in oilfield work – he set out on his own later in life. Miller Insulation Co. Inc. began as a residential insulation contractor, but at the request of former customers, Donald and his team were soon back in the industrial sector, later adding commercial services to the docket.

high-quality, safe work to customers in North Dakota, throughout

Donald’s sons run the company now. Brad Miller serves as president alongside his brothers Dwight Miller, vice-president, and Dave Miller, safety director. The family’s dedication to safety is only one factor that sets the business apart from competitors.

A few jobs that Miller has worked on in the Bakken region and

"You can see what an emphasis we have on safety when one of the Millers is running the program," says Brad.

in Tioga. These are just a few of the jobs that Miller Insulation has

While Miller Insulation offers a broad scope of insulation services, the company’s forte is in the oilfield market. Aside from an incident rate far below the national average, the team has more experience and a better performance record than competitors. With approximately 500 employees, Miller Insulation provides 102

BAKKEN OIL REPORT – SPRING 2016

the Bakken region, and beyond. Miller Insulations tends to hire more experienced crews than its competitors. With a more efficient team, the business is able to provide standout value. "We’ve been around in the Bakken before it was called the Bakken," he notes. "We’ve been doing work in this region since it was called the Williston Basin." throughout the state include the Dakota Prairie Refinery for MDU Resources/Calumet Specialty Products Partners, most of the oil and gas plants in North Dakota, and the Hess Gas Plant expansion worked on, and there is plenty more work that Miller does outside of North Dakota as well. Brad is cognizant of the cyclical nature of the industry he serves, meaning there is no sense of panic for the team. Miller Insulation Co. Inc. will continue to provide quality work on a diversified platform throughout the midwest and beyond. w

INSULATION, BUILDINGS, AND SCAFFOLDING SERVICES

OIL FIELD • INDUSTRIAL • COMMERCIAL • RESIDENTIAL NORTH DAKOTA BRANCH LOCATIONS: 3520 East Century Avenue Bismarck, ND 58502-1393 General Manager: Bill Eckroth Phone: 701-258-4323 Fax: 701-222-8045

3258 SW 110 Z Ave Dickinson, ND 58601 General Manager: Brian Janke Phone: 701-225-5877 Fax: 701-225-7884

3222 4 th Avenue Southwest Fargo, ND 58103 General Manager: Curt Heiser Phone: 701-297-8813 Fax: 701-297-8816

WYOMING BRANCH LOCATIONS: 3700 Salt Creek Highway Casper, WY 82601 General Manager: Mike Idso Phone: 307-265-5646 Fax: 307-235-0052

2615 Industry Drive Cheyenne, WY 82007 General Manager: Fritz Messer Phone: 307-635-5311 Fax: 307-635-8500

9124 Derrick Avenue Williston, ND 58801 General Manager: Don Ell Phone: 701-572-2718 Fax: 701-572-7433

UTAH BRANCH LOCATION: 50 North 500 West North Salt Lake, UT 84054 General Manager: Dennis Banyai Phone: 801-936-8352 Fax: 801-936-8397

www.MillerInsulation.com

polyguard PRODUCTS

Cold-weather girth weld coating application issues By David D’Ambrosio and Richard Norsworthy, Polyguard Products, Houston, Texas, USA There are many types of coatings that have been used on pipelines around the world. Some older technologies are no longer used and new coatings are being developed to meet the demands of the changing environments in which pipelines are constructed. The environment considered in this discussion is that of extreme cold weather. When field coating girth welds on plant-coated pipelines during cold weather conditions, the applicator must consider many factors in selecting the type of coating to be applied. The extent of preparation and amount of money the contractor or owner is prepared to spend will be determining factors in the selection criteria. Coatings systems must be properly selected for the environment in which they are to be used. Environmental conditions are not specific to application, but also include the storage environment and service life conditions, such as operating temperature, soil stress, and backfill conditions. Successful coating performance also requires proper surface preparation and adequate cure time prior to backfill. Existing low-temperature coating solutions all have limitations. Ambient cold temperatures in North Dakota can average 2.2 degrees Fahrenheit in the depth of the winter and reach extreme low temperatures of less than -50 degrees Fahrenheit, with average high temperatures of 23 degrees Fahrenheit. These extreme conditions demand products and processes able to withstand such conditions. Many coatings work well in cooler temperatures, but few work in these frigid conditions. Some coatings can be formulated for these harsh environmental conditions, but still require additional work process modifications. Even those materials designed to work at extreme low temperatures may require long cure times and may not cure at all if the temperature drops below the acceptable range. If the weather is too cold, the coatings may not cure or mix properly. If the substrate is too cold, curing and proper adhesion may not occur. The procedure in general includes ensuring that the product is kept in a warm environment immediately prior to application. All coating materials must be stored in heated storage containers in the temperature ranges identified in the manufacturer’s recommendations. Even when transported to the job site, the coating materials must be properly stored in the proper temperature ranges, as well as being kept out of inclement 104

BAKKEN OIL REPORT – SPRING 2016

weather such as snow, rain, wind-blown debris, and other things that may affect the coating performance. Once at the job site, the coating material must continue to be kept in the proper temperature range during the surface preparation stage, mixing and application (wrapping, brushing, troweling, rolling, spraying, etc.). One of the most common mistakes is to throw the coating in the back of the construction truck early in the morning when the coating is warm, and within a short time, the coating temperature is out of the required temperature range for proper application. The other issue is the temperature of the pipe itself. This may affect the cure time of the coating, the primer, and/or the adhesion of the coating compound to the pipe. If the pipe is not heated to the proper temperature based on the manufacturer’s recommendations, the coating will not function as intended. Overheating the pipe can also cause the coating to fail by causing over cure or compound damage. If the pipe or air temperature cools too quickly, that will also affect the coating performance. When ambient conditions drop below 45 degrees Fahrenheit, some coating types are not only difficult to apply, but may not cure properly. This has been the case with some two-part epoxies and other liquids coatings that have been used in the Bakken shale area during the cold weather months. Even the cold weather cure varieties do not always provide acceptable service when applied in extreme cold environments. Two-part epoxies and other liquid-applied coatings are very good coating systems when used and applied properly. Surface preparation is a critical component of coating performance, and the pipe surface must be blasted for proper adhesion and the surface warmed for these epoxies to cure properly. Even if these coatings appear to cure, the cure may not be complete. When the pipe is handled during construction activities, the epoxy can crack because of the under cure. In some cases, even when cured properly, the extremely cold temperatures can cause these epoxies to crack during normal construction activities. For these reasons, many companies are now turning to using mesh-backed tapes that allow more flexibility in these extreme conditions. When stored properly and applied properly, these products have been proven to perform as designed when properly applied to the pipe.

polyguard products

As with all coating systems, the pipe surface must be properly prepared and protected from the elements during the application process. The pipe should be preheated to remove moisture and provide enough temperature in the pipe to provide a quick cure for the primer and residual heat for providing good adhesion of the tape’s compound to the pipe surface. When applied with proper tension on a pipe that is properly prepared in the right temperature range, then these products have a proven history of success without significant disbondments or issues with cathodic protection (CP) shielding if disbondments were to occur. A non-CP shielding, non-adhering outer wrap is then applied over the mesh-backed tape to provide a slip plane in the event of soil stress problems. This outer wrap also provides additional protection to the soft compound under the mesh backing in the event of rocks or other hard places with backfill. This is a simple economical process that provides a great advantage to the coating performance. The advantage of the mesh-backed tape is that as soon as it is applied there is no more curing to take place. The pipe can be buried or allowed to cool and handled without concern for damage to the coating from the weather conditions. Caution during construction handling will prevent damage to the meshbacked girth-weld coating.

The time to apply this coating system is less than most systems, so the work is not exposed to the extreme weather conditions as much as with some of the other coating types. The equipment needed for the application is minimal and simple to operate. Once the applicators are properly trained, they can quickly apply this coating system without much waste or excessive work or equipment. As with any coating applied in the field in extreme conditions, the best practice is to protect the girth-weld area using a tent to allow for better control of the air and pipe temperatures. This is an expensive process and is not always available when coating field joints in extreme weather. The mesh-backed tapes may be the best option, especially at times when these areas are not being tented with proper temperature control. The mesh-backed tapes have been used for over 25 years with excellent success. In the extreme cold environments of the Bakken shale and other such areas around the world, these products provide the end user and contractors with a reliable coating that can be easily applied during these conditions. Once properly applied, these products need no cure time and can be immediately backfilled. Because of the flexibility of these products, the coated pipe can be left above the ditch until the time the construction process allows for it to be installed in the ditch. w

Cold temperatures affecting epoxy cure!

RD-6

Coating System

be their solution. Applied at temperatures as low as -40° F with no cure times and less installation problems. For more information, scan the QR code on the right with your smart device or call us at

281.580.5700

www.Polyguard.com

Innovation based. Employee owned. Expect more.

BAKKEN OIL REPORT – SPRING 2016

105

LATECH equipment

Under pressure Transmitter basics for application and selection By Carl Wilmarth

Pressure measurement is one of the most important process

absolute unit it is sealed and evacuated so that the influence

measurements made not only in oil and gas applications, but

of the atmosphere will add to the high-side pressure port and

across all industries. We use pressure and differential pressure

is included in the measurement. Typical applications for gauge

transmitters to make gauge, absolute, and differential pressure

pressure are either straight process pressure measurement or

measurements directly, as well as for level, flow and density

as a tank level measurement. For instance, in an open-top tank,

measurements in a variety of applications. After selling and

the level is a combination (sum) of the atmospheric pressure, the

working with pressure transmitters for over 38 years, we still see

height of the liquid level in the tank times the specific gravity of

a lot of application and performance questions on a daily basis.

the liquid that creates the pressure on the high-side diaphragm,

This article is an abbreviated overview of an initial discussion of the information that we train and discuss from a sales and application standpoint to ensure that we provide the correct

minus the atmospheric pressure from the low-side port of the pressure transmitter. This yields a true level in inches, minus the effect of atmospheric conditions on the measurement.

transmitter for the application with the best possible accuracy at

Level = [ATM+ {liquid height x specific gravity of liquid}] from high-

the most cost-effective price.

side port â&#x20AC;&#x201C; [ATM] from low-side port

Correct selection and application begins with an understanding

Inches may be converted very easily to PSI and a gauge pressure

of what the basic pressure measurements are, how they are

transmitter can be used for this application. A differential

related, and the transmitters capability to make the correct

pressure transmitter open on the low side may read out

measurement. Pressure by definition is force per unit area. The

directly in inches H2O and is often used for the same liquid

units are pounds, kilograms, bar or other units of weight applied

level measurement with the advantage that if the tank is

to a unit area, usually a square inch, yielding for example pounds

closed-topped, the internal pressure may be routed into the

per square inch (PSI).

low-side pressure port to negate the tank pressure on the level

The next thing that is required is to determine what the

measurement.

reference point of the measurement is (Figure 1). All pressure

Absolute measurements, which take into account the effects of

measurements are related to some type of atmospheric, or lack

atmospheric conditions, are made for certain gas calculations

of atmospheric, influence on the measurement, so it is important

and also for air-handling systems where volumes of air need to

to know which reference point should be used, and if the

be exchanged based on current atmospheric conditions.

atmospheric conditions are to be included in the measurement or not. At sea level, we have approximately 14.7 PSI pressure on the surface of the earth due to the effect of the atmosphere. If this pressure is to be included in our measurement, we would reference it to complete vacuum and we would use an absolute transmitter. If we negate (compensate) for the effect of the atmospheric pressure on the measurement, we would use a gauge measurement and use the appropriate transmitter to make that measurement. In the case of a gauge pressure transmitter, the low-side pressure port is open so it sees the influence of atmospheric pressure on it, and on the

106

BAKKEN OIL REPORT â&#x20AC;&#x201C; SPRING 2016

The last area that we will reference in this article is differential pressure measurement. This measurement is made at process conditions usually across an orifice plate that will create a differential pressure drop across it, high pressure being upstream and low pressure downstream of the plate. A differential pressure transmitter makes this measurement relative to the two points upstream and downstream from the plate, which creates the differential measurement, usually measured in inches of water column. We most often see this measurement across an orifice plate or used as an indicator of a filter or backwash fouling or plugging indicating a filter cleaning or back wash is required.

pressure drop across it, high pressure being upstream and low pressure downstream of the plate. differential pressure transmitter makes this measurement relative to the two points upstream and downstream from the plate, which creates the differential measurement, usually measured in inch water column. We most often see this measurement across an orifice plate or used as an indicator latech equipment a filter cleaning or back wash is required. filter or backwash fouling or plugging indicating Figure 1

Carl Wilmarth is the owner of LaTech Equipment, a manufacturer’s Further discussions Figure 1 from this point revolve around applications representative in the Rocky Mountain States, who has been and transmitter selection, understanding transmitter turndown applying and selling pressure transmitters for over 37 years to and complete discussions on understanding true transmitter all major industries. He is the localtransmitter Autrol pressure transmitter accuracies in field applications and may be addressed in further Further discussions from this point revolve around applications and selection, underst representative. w articles.

transmitter turndown and complete discussions on understanding true transmitter accuracies in fi applications and may be addressed in further articles.

Carl Wilmarth is the owner of LaTech Equipment, a manufacturer’s representative in the Rocky Mo States, who has been applying and selling pressure transmitters for over 37 years to all major indu He is the local Autrol pressure transmitter representative. Cut Monitor Combustible and Toxic Gas Detection

Not just Smart Transmitters, It’s Smart Business

LaTech Equipment Process Controls & SCADA Solutions

Environmentally Bulletproof

Reliable, Accurate & Maintenance Free

1950 South 900 West, Suite S7 Salt Lake City, UT 84104 800-801-3982

w w w. l a t e c h e q u i p m e n t . c o m BAKKEN OIL REPORT – SPRING 2016

107

PEC safety

The PEC Safety app: Now available on Apple and Android smartphones Forget your physical PEC ID card?

In-app purchases

Ensure your company's employees, contractors, and/ or your subcontractors have their PEC ID card on hand at all times. Need to verify/validate your PEC, SafeLandUSA, or SafeGulf training to gain access to a location or worksite? The PEC Safety App, available in the Apple and Google Play app stores, will solve your problem by providing you a digital copy of your PEC ID card, which includes SafeLandUSA and SafeGulf validated courses.

The PEC Safety App is free of charge to new

About the app The PEC Safety App provides a convenient method for users to view their digital PEC ID card and acquired training/validated courses while granting them access to download course materials and quick reference cards – applying PEC's safety programs from the classroom directly to the worksite. The digital PEC ID card will include the users name, company name, picture, PEC ID #, and a scannable barcode. A list of all acquired training will also be viewable – showing which courses are active and expired (within 30 days of expiration). Users also have the ability to receive OSHA Alliance nationally recognized hazard alerts and PEC Safety push alerts regarding hazards in your area. 108

BAKKEN OIL REPORT – SPRING 2016

students who have taken the following PEC training courses in 2016, inclusive of the digital PEC ID card and downloadable course materials/quick reference cards: • PEC Basic Orientation • PEC Core Compliance • PEC H2S Clear (four-hour) End User • SafeLandUSA • SafeGulf Students who have previously taken PEC courses have the opportunity to download the free app to receive the free OSHA Alliance hazard alerts and PEC Safety push alerts. Through an in-app purchase of $10, these students can receive their digital PEC ID card and have access to electronic course materials/quick reference cards. For help downloading the PEC Safety app or if you have any questions, please contact PEC Safety's Training Support Department at 844.848.5884 or via email at trainingsupport@pecsafety.com. w

PEC H2S CLEAR (4-HOUR END USER)

PEC Safety has developed a 4-hour standalone H2S course titled “PEC H2S Clear (4-hour End User).” PEC H2S Clear will improve employee safety performance for general industry workers who may come in contact with hydrogen sulfide during their regular day to day job duties.

While not only improving safety performance, this course also prepares general industry workers by providing crucial knowledge of the dangers of H2S and the precautions, tools and controls necessary when working in H2S environments. This course has no prerequisite and covers the current classroom requirements of ANSI Z390.1 and is designed to meet the new ANSI requirements coming in 2016. PEC H2S Clear can also be used to enhance our other training courses such as PEC Basic Orientation, PEC Basic/10, or PEC Core Compliance. At a minimum, it is recommended to complete PEC Basic Orientation prior to taking H2S Clear to meet general industry safety orientation requirements.

With hundreds of authorized PEC trainers nationwide and a Train the Trainer available for companies with in-house trainers, PEC Safety makes it easy for your company to obtain PEC H2S Clear. Ensure your employees are trained on standardized H2S topics required by regulatory agencies in the most complete and cost effective program developed by PEC Safety, the leader in the safety training industry.

PEC H2S CLEAR ID CARD

Upon successful completion of the PEC H2S Clear course, the student will be issued a PEC ID card that displays their photo, name, company name, and scannable barcode on the front and training documentation on the back. Also, all training will be entered into PEC Safety’s training database. Students will also receive a physical photo ID card as well as a digital photo ID card which can be accessed through the PEC Safety App, now available for download in the Apple and Google app stores.

HYDROGEN SULFIDE (H 2 S) Topic H2S Clear (4-Hour)

Date Topic

Date

01-15

DISCLAIMER: This card-holder has not met the requirements to work in H2S environments above the Occupational Exposure Limits (OEL) until such time as the Employer provides and documents additional, applicable training required by 29CFR, including medical evaluation, fit test, and use of respirator, monitor and rescue equipment specific to the work place.

PEC Safety | Phone – 866.647.2338 | Email – safety@pecsafety.com | Website – www.pecsafety.com

INDEX TO ADVERTISERS A-1 Evans Septic Tank Service.................................38

Ferguson..........................................................................63

Ae2s Construction.......................................................69

General Equipment & Supplies, Inc.......................71

Bartlett & West...............................................................27

Graham Construction.................................................85

Blue Cross Blue Shield of North Dakota..............11

Hampton Inn & Suites................................................38

Bobcat of Miles City.....................................................49

Helly Hansen Workwear.............................................61

Borsheim Crane Service, Inc................................... IFC CCI Thermal Technologies Inc.................................59 D & G Polyethylene Products Ltd...........................99 Dakota Gasification Company............................OBC Devils Lake Convention & Visitors Bureau............ 7 Diamond B Oilfield Trucking, Inc............................51 Dixon................................................................................... 6

Jasper Engineering......................................................31 KLJ......................................................................................... 3 LaTech Equipment & Supplies.............................. 107 Lifting Gear Hire............................................................89 Lynden..............................................................................17 MBI Energy Services....................................................43

Novaspect Inc. / Emerson Process Management..........................39 PEC Safety..................................................................... 109 Polyguard Products.................................................. 105 Puklich Chevrolet.........................................................13 QMC Hydraulic Cranes...............................................53 Quality Mat Company............................................. 101 R&R Contracting............................................................81 Reynolds French & Company..................................55 RJ Corman Railroad Group.......................................23 Schlumberger Artificial Lift......................................37 Southern Glove, Inc.....................................................30

MSA The Safety Company.........................................19

T&E Pumps Ltd...............................................................77

Maple Leaf Marketing, Inc.........................................29

Value Place Williston....................................................91

Eide Ford Diesel Services...........................................25

Miller Architects & Builders......................................83

Veit Usa..........................................................................79

Encore Energy..............................................................IBC

Miller Insulation Co., Inc.......................................... 103

Volant................................................................................21

EnTech Industries..........................................................75

Netzsch Pumps North America LLC......................47

Weir Oil & Gas................................................................... 9

Equipment Source Rental.........................................41

North Dakota Petroleum Council..........................67

Wellhead Systems Inc.......................................32 & 33

Executive Air Taxi Corporation................................97

Northern Technologies, Inc......................................95

West Dakota Oil, Inc.....................................................35

Easter Owens.............................................................4 & 5 Edward Jones.................................................................15

BAKKEN OIL REPORT – SPRING 2016

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PUKLICH CHEVROLET

Fleet dealer’s longevity keeps Bakken strong At the height of the oil boom, it seemed new vendors appeared daily in the Bakken to fill companies’ demands for services, supplies, and equipment. But as production has slowed, managers and purchasing departments can find it most profitable to work with established businesses. Puklich Chevrolet in Bismarck has been serving the energy industry with fleet sales and service reliably since long before the recent boom. Puklich Chevrolet has been a family-owned North Dakota business since 1983, says Owner/Dealer Elyse Puklich. The dealership has won numerous awards for commercial sales and service and is a Chevrolet Business Elite Dealer. "Regardless of oil trends, we’re always out there doing our best to serve companies with reliable fleet," says Puklich. "It’s our core values of honesty, integrity, teamwork, mutual respect and support for these communities that keep us dedicated to our customers." "When the Bakken was going full steam, buyers needed a lot of fleet vehicles in a hurry," says Rob Leingang, Puklich fleet manager. "They would call us hoping they could get a few, and were surprised to learn we had such a large inventory in stock and that we could get them in the field at the drop of a hat." Puklich regularly stocks one of western North Dakota’s largest fleet inventories, with dozens of service bodies, crane trucks, light- and medium-duty work trucks, cab and chassis trucks, service beds and vans. "We deal with all kinds of companies whether it’s a small momand-pop needing one to five vehicles, or a big contract for 200 vehicles," says Leingang. "We’ve been here a long time and we do very high volume, so we’re in the best position to meet the demand." But there’s more to serving the industry than just having a large inventory, says commercial manager Scott Allen. "They need to know that we’re going to take care of them." One important way Puklich takes care of fleet and commercial 110

BAKKEN OIL REPORT – SPRING 2016

Puklich fleet manager Rob Leingang (far right) and Puklich commercial manager Scott Allen. customers is by going on-site for vehicle delivery or to see a clients’ needs first-hand. "We’ll go kick rocks with them or go step in the mud with them, or do whatever they need to do at their location," says Allen. "Sometimes they have certain requirements for accessories, graphics or Rhino Linings spray-in bed liners. We do all of it." Puklich also offers a dedicated commercial service department. As a certified medium-duty service center with medium-hoist capabilities, Puklich has built a reputation for keeping vehicles running and their clients happy. "Even though Bismarck is outside the heart of the Bakken, we have customers come from all over the region for service because they know we have the parts and the people to minimize their downtime and get their vehicles back on the road," explains Leingang. To help minimize customer downtime, Puklich offers commercial loaner vehicles, on-site pick-up and delivery, a full-service collision center – one of the largest and most advanced auto body centers in the region. Leingang says qualifying businesses can take advantage of the GM Business Choice Program that includes certain scheduled services for two years or 24,000 miles with a vehicle purchase or lease. "Business Choice adds a lot of value, especially when it’s combined with an Upfit Cash Allowance or GM Accessory Cash Allowance," says Leingang. "The important thing is to talk with us and find out the details. Find out what programs are available and work best." Customers can contact Puklich Chevrolet’s commercial and fleet department directly by calling (701) 214-6332 or 800-552-2299. More information is available at www.Puklich-Chevrolet.com. w

Encore Energy, Inc., the most active operator in south central Kentucky, having made a major discovery (~270 BOPD IP 24-‐HR rate), is currently seeking industry partners to drill shallow oil projects.

Encore has recently made significant new oil discoveries in Kentucky and is moving forward with an aggressive exploration and production campaign for the following reasons:

• Encore Operating Kentucky, LLC has developed strategic business relationships with landowners, well services companies, and other industry experts. Encore has focused it efforts toward the • Encore owns the rights to extensive aggressive acquisition of shallow oil geological and geophysical acreage in south central and western information regarding new oil Kentucky. The C ompany is currently discoveries, New Albany Shale and drilling and developing a 30 – well other potential targets. shallow oil project in Kentucky and seeking a Bakken operator to participate • Lease acreage is extremely affordable in these projects. as compared to similar plays across the US. 82.5-‐78.5% NRI delivered with attractive lease terms.

• The liquids-‐rich New Albany shale reports high TOCs, 100 – 200’ formation thickness and significantly high liquids content. • Third-‐party report(s) estimate EUR ~15,000-‐20,000 BO and ~$200,000 AFE per well. • The projected horizontal AFE approximates ~$500,000-‐1,000,000 per well, potentially lower. • Encore owns exclusive rights to the well-‐bore, analysis in south central Kentucky. The Company is currently making plans to drill its first horizontal well. There also exist the potential for new deeper oil and gas discoveries.

For more information, please contact us at (270) 842-1242 or via E-mail at joseph.hooper@encore-energy.com

Contact: Steven Liebelt Vice President of Marketing and Sales sliebelt@bepc.com 701-557-4418