Bakken Oil Report fall 2012 by DEL Communications Inc.

FALL Lookin’ for ‘A Few Good Men’? The bold, the brave, and the beautiful: Women in the Bakken

Bakken blueprint for U.S. recovery, unprecedented prosperity New energy flowing to eastern Montana as Bakken development expands North Dakota’s infrastructure to get $2.5-billion boost The new American Dream

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

FALL 2012 CONTENTS

The return of the Bakken to Big Sky Country 10 North Dakota’s infrastructure to get $2.5B boost 14 Bakken provides opportunities for N.D. businesses 16 Opportunity knockin’ in the Bakken 18 Lookin’ for ‘A Few Good Men’? 20

University of Mary’s Energy Management MBA fills industry, career needs 98

President David Langstaff

CanElson Drilling – excellence in innovation 100

Publisher Jason Stefanik

Geosynthetics help the Bakken fuel the world 102 Oasis Petroleum: pure Bakken 106

Bakken blueprint for U.S. recovery,

How to succeed in catering without any equipment 108

unprecedented prosperity 26

MVTL: your partner in analytical chemistry 114

New energy flowing to eastern Montana

Navigating the landscape of hydraulic fracturing 116

as Bakken development expands 30

Cash flow stress hits the Bakken 120

Shale’s philosophy demonstrates long-term

Caveat Emptor: let the buyer beware 122

commitment to communities 36 The bold, the brave, and the beautiful: women in the Bakken 40 Growing midstream: MDU Resources Group 46 The new American Dream 52 Billings is a partner to the Bakken 56 Inaugural Best of Show Energy Day at MontanaFair a roaring success 60 Tap into the future: Dakota Gasification Company 64 Bismarck-Mandan a growing metro with a diversified economy 66 Enbridge in North Dakota: yesterday, today, and tomorrow 70 The BNSF and Bakken connection:

Tioga travel plaza under construction 126 Camex celebrates 20 years 128 The Sturgis Motorcycle Rally and the quality of life 130

MAC Heaters: North Dakota-born, North Dakota-based 134

Art Director Kathy Cable

Experience at work: Preble Medical Services 136

Layout / Design Dana Jensen

Miller Insulation Co., Inc. – rockin’ the Bakken 138 Dust is a four-letter word 140 Gravel Products providing N.D. with quality aggregates for 42 years 142 Embracing technology in the oilfield 144

Oil stream of information:

Industry leader continues rapid expansion 148

API – Williston Basin Chapter 84 From classroom to career – Williston State 86 The importance of hiring a properly licensed M&A advisor: Citadel Advisory Group 90 Trucking industry cites concerns regarding

Advertising Account Executives Gary Barrington Robert Bartmanovich Cheryl Ezinicki Ross James Gladwyn Nickel Michelle Raike Anthony Romeo Colin James Trakalo Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com

GM Petroleum: SE Montana’s largest full-line petroleum distributor 146

Transfers of overriding royalty interests 82

Sales Manager Dayna Oulion

Technology advances a key factor in record Bakken production growth 132

sharing a rich heritage 74 Don-Nan Pump & Supply 78

Managing Editor Katrina A.T. Senyk katrina@delcommunications.com

Trust leading oilfield services provider Graco to deliver superior results 152 Unit Liner Company protects you and the environment 156 The changing face of geosciences in the 21st century 155 Drug Checkers: quality, integrity and trust 158

federal oilfield rule 93

Crude-by-rail service steps up to meet demand in the Bakken 160

The pizzazz of refab: Star Building Systems 94

Index to Advertisers 162

COVER IMAGE courtesy of Enerplus: www.enerplus.com. The advent of horizontal drilling with hydraulic fracturing technology has enabled Bakken resources to be unlocked economically.

Advertising Art Reanne Dawson Julie Weaver © Copyright 2012 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. Publications mail agreement #40934510 Return undeliverable Canadian addresses to: DEL Communications Inc. Suite 300, 6 Roslyn Road Canada R3L 0G5 Email: david@delcommunications.com

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Communications Inc.

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BAKKEN OIL REPORT – FALL 2012

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The return of the Bakken to Big Sky Country By Governor Brian Schweitzer

irst developed in 2000, the Elm Coulee field in Montana was the birthplace of

oil production in the Bakken, and accounted for the majority of its early success. Since then, richer discoveries to the east have made Williston, N.D. the epicenter of the Bakken, while Montana has experienced moderate exploration and drilling activity. But things are picking up once again in Big Sky Country. While North Dakota will remain the hub of activity with a rig count

Many operators have continued to keep a toehold in Montana because of its friendly and sensible business climate, despite the fact that the majority of the oil resource is found in North Dakota. Several formations in Montana—the Bakken and others—carry favorable geologic characteristics and may very well yield strong production. The question of “how big is the Bakken?” is still on the table, and the industry is bullish on Montana.

response to the Bakken boom. Contractors once busy with the vibrant growth of the Flathead Valley in northwestern Montana, 560 miles away, have seen a downturn due to the recessed housing market, and have turned to the plains of eastern Montana and North Dakota to build apartment buildings, hotels, and offices. Likewise, many loggers, equipment operators, truck drivers, and skilled laborers have traveled hundreds of miles for a good paycheck.

Being on the edge of the Bakken has yielded Montana a number of benefits in the way of economic opportunity. Workers in North Dakota have turned west in search of goods and services that have gone scarce in boom country. Eastern Montana has become a supplier of many items needed to support the industry, from ham sandwiches to diesel fuel to well services to housing. Billings, 315 miles from Williston, N.D., now houses over 60 new businesses whose creation was a direct

At the same time, local governments are experiencing some of the same challenges as those afflicting small towns in North Dakota. Stress on local utilities, infrastructure, and an ever increasing cost of living have spread west across the border. While we will enjoy our share of economic benefits and job growth, growing pains inevitably come with development of this magnitude. Knowing this, I gladly reinstated over $16 million in local government oil and gas impact fees

around 200 rigs and production hovering near 600,000 bpd, that production is leveling off, and more rigs are beginning to move back into Montana. In the most recent Baker Hughes rig count, Montana has 21 rigs currently operating in the state. That count is more than double the count of one year ago, and the number may quadruple before year’s end. Another strong indicator of a substantial increase in drilling activity is permitting. The Montana Board of Oil and Gas typically processes a drilling permit in about ten days. That’s impressive, and it’s very good thing, since permit applications are now coming in at unprecedented rates. Montana permitted 232 oil wells in all of 2011, but in just the first two quarters of 2012, 228 have been permitted. The oil industry has not forgotten about where the Bakken began. Nor has it forgotten that prospecting and exploration are more attractive in Montana due to an 18-month tax holiday that keeps production taxes at 0.5 percent. These initial rates make the investment in drilling a $7-million to $10-million well more feasible. 10

BAKKEN OIL REPORT – FALL 2012

9.12 Bakken Oil Report Ad_Layout 1 9/4/12 10:32

that were stripped last session by the

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North Dakota’s infrastructure to get $2.5-billion boost By Lisa Fattori

Construction on the Northwest Temporary Truck Bypass. Images courtesy: North Dakota Department of Transportation.

new initiative by Governor Jack Dalrymple will inject $2.5 billion into North Dakota’s infrastructure, helping communities both large and small to keep pace with the tremendous growth that has occurred since the onset of the Bakken oil boom. Announced on July 23rd, the new Roads and Infrastructure Initiative is awaiting approval by the Legislature and will take effect in the 2013-15 biennium. Everything, from schools and law enforcement enhancements to roadways and water treatment facilities, stand to benefit from the investment, providing the citizens of North Dakota with additional housing, new amenities and enhanced services. Since Governor Jack Dalrymple first took office in December 2010, his administration has been very aggressive in addressing the infrastructure needs of the state, increasing the $609-million roads and highways budget to $1.376 billion for the 2011-13 biennium. The new $2.5-billion initiative for 2013-2015 once again almost doubles the funding in statewide infrastructure improvements, providing another $135 million in Energy Impact grants, including $25 million 14

BAKKEN OIL REPORT – FALL 2012

for schools, and $200 million for new school construction. The plan also calls for $1 billion for extraordinary highway and road maintenance projects and an additional $145 million for the County and Township Road Reconstruction program. Proposed changes to the Oil and Gas Production Tax formula will increase the local share of revenues for counties, cities and schools. “North Dakota is experiencing remarkable growth, particularly in the state’s oil-producing region,” says Jeff Zent, spokesperson for Governor Dalrymple. “With rapid growth comes challenges and Governor Dalrymple is committed to helping communities throughout the state meet those challenges.” The same sense of urgency that fast-tracked projects in the last two years can be expected with this new initiative. In Williston, for example, a temporary bypass on the west side of the city recently opened and talks are in the works for creating a permanent reliever road with an eastern route to follow. In August, three projects in Minot not only help the community rebound from flooding, but also

REPORT

Gov. Jack Dalrymple joined Attorney General Wayne Stenehjem and other state and local officials in breaking ground on Patterson Heights Apartments, a new 24-unit affordable housing development in Dickinson.

Gov. Jack Dalrymple joined Sen. John Hoeven, congressman Rick Berg, Minot Mayor Curt Zimbelman and other officials in breaking ground on Southgate Addition, a $109-million development in Minot that will include apartments, two hotels and a large retail center.

provide much-needed amenities and services. Governor Dalrymple was on hand to assist in the groundbreaking ceremonies for a new Wellness Centre, a new middle school and a new multi-use complex that includes apartments, two hotels and a large retail centre. “One of the funding sources that’s been very helpful is the Oil and Gas Impact Grant, which addresses infrastructure needs at the local level,” Zent says. “This can be used for everything from expanded sewer service, to new gear for firefighters. There is a need for additional housing and the Impact grant is being used to facilitate the construction of streets, sidewalks and sewer lines. When you have the basic infrastructure in place, it makes it much easier for developers to come in and build new housing.” In North Dakota, the energy impact on roadways is significant. According to the North Dakota Department of Transportation (NDDOT), for every oil well drilled in the state, it takes 2,300 truckloads to bring the well into production. There are currently 6,470 oil producing wells in North Dakota, with a projected 33,000 more wells to be drilled in the next 15 years. Vehicle miles traveled (VMT) on the state highway system has increased from 7.4 billion in 2005 to 9.1 billion in 2011. Statewide, in 2011, North Dakota saw a 10 percent increase in VMT. From 2008 to 2011, approximately $635 million was invested in state highway projects, and an additional $305 million has funded improved state transportation infrastructure in western North Dakota for 2012. The strain on state roadways is reflected in the Roads and Infrastructure Initiative that earmarks $1 billion for the Enhanced Road and Highway Fund. These funds will finance extraordinary state highway projects, including truck reliever routes around cities, upgrading highways, constructing underpasses, and providing special assistance for townships. Proposed enhancements include converting U.S. 85 into a four-lane highway between Williston and

Watford City. In addition to the new truck reliever route in Williston, similar projects are planned for Dickinson, New Town, Watford City, Alexander and Killdeer. Other recent infrastructure improvements include water and sewer extensions, road enhancements, and public works improvements, to support future development of permanent housing in Williston, Dickinson and Minot. The new $2.5-billion Roads and Infrastructure Initiative will further the state’s goal of building the required infrastructure to meet the needs and enhance the quality of life of North Dakota’s growing population. “We’ve been very blessed; but to get through this blessing, we need some help,” says Mayor of Williston Ward Koeser. “In the last five years, Williston’s population has grown from 12,500 to 22,000 and there are another 8,000 people living here temporarily. We need everything from new roads to daycare facilities. We are very excited and pleased with this new initiative to invest in infrastructure. It’s so reassuring to us that the government understands the issues and concerns of communities and is willing to address them.” n

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BAKKEN OIL REPORT – FALL 2012

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Bakken provides opportunities and challenges for North Dakota businesses By Andy Peterson, North Dakota Chamber of Commerce President and CEO

ith oil production on a steady upswing, opportunities to grow North Dakota’s economy, attract new businesses and expand existing businesses are abundant. However, with these new opportunities come challenges. It is now more important than ever for state and local officials to work together to capitalize on this growth, meet these new challenges, and create a business climate that fosters additional growth. The state has garnered national attention because of its booming oil industry, nearly three percent unemployment rate, and strong economy. As these business opportunities tied to the Bakken continue to grow across the state, so too does the need for additional investments in infrastructure, education and water projects.

Among the challenges is an influx of residents in the region’s communities and an increased demand for additional housing and community infrastructure. Increased activity on roadways has amplified the need for additional improvements and construction on area streets and highways. Reports note an increase in population has led to a slight increase in crime and the need for additional law enforcement officers. School space and childcare availability is also an issue for many communities. State and local leaders, as well as the North Dakota Chamber, have already taken action to ensure these challenges are being met and solutions are being developed to create an even brighter future for the Bakken region and the state as a whole.

The North Dakota Chamber supported legislation that provided $371 million to repair state and local roads in western North Dakota and an additional $73.6 million to counties and townships for road reconstruction. We also successfully lobbied for grants to address childcare needs and $625,000 in grants was recently awarded to help five western North Dakota communities address childcare shortages. North Dakota residents and businesses are also benefiting from more than $1 billion in cuts to personal, corporate and property taxes, the most in the state’s history, as a result of the cooperation of our legislators and business leaders. Because of our lobbying efforts, every North Dakotan will pay nearly 20 percent less in state taxes in 2012 while, at the same time, the state

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enjoys budget surpluses and healthy infrastructure investments. In the upcoming 2013 State Legislative Session, North Dakota will continue to support initiatives that support the Bakken region and the state’s businesses. Recently, the state’s tax department released tax revenue numbers that illustrate the impact of North Dakota’s growing oil industry. Oil tax revenue was reported on track to top $3.5 billion by the end of the 2013 fiscal year. This is a staggering $1.5 billion more than estimated by the 2011 state legislature. This revenue will help provide additional funding to counties impacted by oil development, as well as additional property tax relief and general fund dollars. In addition, $1 billion in sales tax revenue was collected in the past fiscal year, nearly $365 million more than expected, and individual and corporate income tax

revenue reached nearly $630 million, $300 million more than forecasted. While the state’s oil industry has played a significant role in the growth of this revenue, economic growth and impacts are strong statewide. North Dakota is proving to be a model for the rest of the nation. The state has created a tax, legal, and regulatory friendly environment which has allowed the Bakken play to flourish, is attractive to new businesses and provides opportunities for existing companies to expand. In 2012, the North Dakota Office of the Governor and the North Dakota Chamber of Commerce launched the 2020 & Beyond Initiative, aimed at gathering input from the state’s business leaders, legislators and citizens to map out a 20year development plan for the state. This will help ensure North Dakota continues to experience economic success and remains focused on creating and promoting

programs and initiatives that foster additional business growth. The future looks bright for not only North Dakota’s oil industry, but also for businesses across the state. We invite you to join us in exploring the business opportunities available now and in the future in the Bakken region and across North Dakota. The North Dakota Chamber of Commerce is the state’s largest, most influential general business organization. It offers many programs and services to help businesses succeed in North Dakota and to make the state an outstanding place in which to live, work and do business. For additional information on North Dakota business and job opportunities contact the North Dakota Chamber at 1-800-382-1405 or visit www.ndchamber.com. n

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Opportunity knockin’ in the Bakken By Jon Bennion, Government Relations Director of the Montana Chamber of Commerce

XNLV46431

nown as the “Treasure State,” Montana is celebrating 150 years of resource development this year as it commemorates the arrival of tens of thousands of miners in 1862. These new arrivals came in search of gold and silver, and within a few years, the territory of Montana was established in the Rocky Mountains. Several decades later, a new sort of gold rush once again spells opportunity for the state. At the center of this opportunity is the Bakken oil formation in eastern Montana and western North Dakota. While this is not the first time that this “black gold” resource has been a significant factor in Montana’s economy, new technology and global oil

BAKKEN OIL REPORT – FALL 2012

prices have created more interest and activity for this area of the state. But with increased opportunity comes increased risks and problems. A spike in population growth in rural eastern Montana creates new issues for infrastructure, schools, housing and community services. These issues can bring such rapid change that many long-time residents may no longer recognize the communities they have known for years. What do regular Montanans think about these new opportunities and potential risks? As part of its annual polling of Montana voters (600 likely voters, 4.1 percent margin of error), the Montana Chamber asked respondents whether they would like to see the state government promote more oil and gas development or discourage it because of potential impacts to the environment. The results were beyond what we expected. Most could have predicted that a majority of Montanans would favor more oil and gas development. However, few could have imagined that more than three-quarters, or 76 percent, would feel that way. It’s hard to find anything in polling where people agree so much on a question. We’ve seen this support translate into positive action as well. For decades, the environmental obstructionist crowd has been effective in mobilizing its small minority to appear like a noisy bunch. With their tiny numbers and big out-of-state budgets, they have been able to stop a number of big resource projects around the country and within Montana. But times appear to be changing, and the silent majority seems to be more aware of how they can have a positive impact in bringing more good-paying jobs to the state, more government revenues, and better energy security for our country.

Case in point was the debate over the Keystone XL pipeline. The proposed pipeline would not only carry crude oil out of Canada into refineries into the U.S., it would also have on-ramps for Montana and North Dakota crude from the Bakken. This project required federal State Department approval since the pipeline would cross an international boundary. This brought about a public input process, which usually is overwhelmed by negative comments from the environmental community. Instead, businessfolks, unions and regular Montanans stepped up to the challenge and produced more positive comments for the pipeline than probably any other proposed project. In fact, at a federal hearing in Glendive to receive public testimony, the number of propipeline attendees far outnumbered the obstructionists. While residents of eastern Montana are largely supportive of new oil and gas development, they are anxious to deal with issues that come as a result of spikes in population. North Dakota, seeing new opportunity, has taken new oil revenues and made significant new investments in infrastructure, schools and tax relief. In the 2013 Montana Legislative Session, the Montana Chamber of Commerce and other pro-development groups will encourage lawmakers to tackle the same issues. Without question, Montanans want to continue to see their state be the “Treasure State” through responsible development of these significant resources. They see long-sought opportunities that will bring new good-paying jobs, increased funds for schools, and energy security for America. n

Lookin’ for ‘A Few Good Men’?

Former military personnel especially suited for work in the Bakken oilpatch By Laura Tode

veryone’s hiring in the Bakken. From the new hotels springing up like wildflowers, to the established oil companies that were around for North Dakota’s first oil boom, it seems to an outsider like anyone can find a job; but there isn’t a single employer in the Williston Basin or beyond who hasn’t struggled to find the right worker for the job. It’s an unending challenge. However, in many cases, employers in the oilpatch are finding veterans can offer those sought-after soft skills – work ethic, responsibility, loyalty, resiliency, and determination – that other applicants cannot. Still, many veterans are unemployed. The unemployment rate for working-age veterans is about 12 percent compared to the national overall unemployment rate of 8.2 percent. “You hear a lot about unemployed veterans across the country, but there’s a pretty good solution for the problem right here in the oilpatch,” states Kevin Iverson, the executive director of the North Dakota Employer Support of Guard and Reserves (ESGR). The ESGR is a nationwide organization that advocates for members of the National Guard and reserves and newly-discharged

Phillip Young, a Floridian, wants to stay in Billings where there are three refineries – ExxonMobil, ConocoPhillips, and CHS – all located in the immediate area. service members. One of the primary objectives of the organization is to help them find jobs. In Iverson’s experience, veterans are a sought-after demographic group in the Bakken.

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“I think there’s a very good match between people leaving the military and jobs in the oilpatch,” he says. The Bakken presents a host of challenges for workers such as adverse weather, remote location, and long working hours. Those conditions are much like the conditions recent veterans encountered while on duty in Iraq and Afghanistan, Iverson says. Their experience has given those soldiers gritty determination. It’s honed their decisionmaking skills, and it’s offered them the chance to “think on their feet” with little supervision. In addition to work ethic, responsibility and drive, veterans, especially those fresh out of service, tend to be in good physical shape, and with the regular drug-testing done by the military and reserves, they’re less likely to use drugs, says Iverson. Beyond the Bakken, the oil and gas industry is attracting young veterans who are eager to work in the energy industry and make a good wage. Phillip Young, 30, landed in Billings, Mont. a year ago after leaving full-

time service in the U.S. Army, infantry, stationed in Ft. Bliss in El Paso, Texas. He spent a little less than a year in overseas duty at the closing of the Iraq war, and the GI Bill is helping him cover the costs of college. He’s earning an associate’s degree in Process Plant Technology from City College Montana State University Billings. The degree prepares students for work in refineries, chemical plants and power plants. He’ll also be qualified to work on pipelines, pump stations and drilling rigs in the field. Young says the Army taught him the value of hard work, dedication and responsibility, which he believes will serve him well in college and beyond. Like many students in his classes, Young is drawn to the oil industry because it offers variety and income potential. He is hoping to find work in a refinery, and although he’s from Florida, Young wants to stay in Billings, where there are three refineries – ExxonMobil, ConocoPhillips, and CHS – all located in the immediate area. “Hopefully, at least one will offer an internship for me,” he comments. “It’s

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a technical degree, so that should open some doors in the oil industry.” Young’s instructor Richard Wilson spent 32 years working at refineries for ExxonMobil, and he’s encouraged to see young people interested in the industry. Non-traditional students, including former military personnel, usually excel in the program, Wilson says. With projected growth from Bakken oil and an aging workforce, technically skilled workers are in demand nationwide. An education gives workers an advantage in hiring, and an education with experience almost guarantees employment. “The industry is looking for something that says you’re trainable, and that you already know something,” Wilson states. This year, employment opportunities for veterans in the oil industry garnered some attention in Washington with an amendment to the American Energy and Infrastructure Jobs Act that would have required all oil companies with domestic leases to give hiring preference to veterans. The amendment was rejected in February. Little if any reason was given for the decision, but part of the reason may have been that most oil companies already give hiring preference to veterans. In the Bakken, the veterans’ hiring preference also extends to companies including BNSF Railroad and Knife River Construction. “Nothing prevents companies from adopting a veterans hiring preference,” says Iverson. “And the companies here are a pretty patriotic bunch.” n

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ll the pundits expected the hottest issue of this election campaign to be the economy. Though the incumbent seemed to keep losing his focus on the most critical issue facing this country, candidates Mitt Romney and Paul Ryan haven’t. They know the answer; they have a plan. They recognized that the Bakken oilfield and others like it give us a clear blueprint for long-term fiscal prosperity and even independence from hostile foreign suppliers. Let’s look at the Bakken as a prime example of the riches the Obama administration wants to leave largely untapped. As the nation’s unemployment rate edges up, now at 8.3 percent, North Dakota enjoys 2.9 percent unemployment – that’s what the experts consider “fully employed.” Some parts of the state report even lower unemployment rates, as low as 2.0 percent. That’s an amazing feat in the face of the Obama administration’s anti-oil regime and the fragile global economy. But it’s not a fluke, and it’s not limited to only North Dakota and the few other states that have allowed oil operators to access the vast reserves under their lands and waters. Between what we know is available in the Barnett, Marcellus, Haynesville, Utica, Eagle Ford, Niobrara and a dozen other shale fields, states like Texas, Ohio, Nebraska, Colorado, Kansas, Alaska, Michigan, Indiana, Oklahoma, Louisiana, Mississippi, Montana, Wyoming, Pennsylvania, and others could (and some already are) enjoy the same embarrassment of riches as the state of North Dakota.

Chris Faulkner, founder, president and CEO of Breitling Oil and Gas.

What are so many states missing out on? Again taking North Dakota and the Bakken shale reserves as an example, the potential is enormous. Along with the enviably low unemployment rate, North Dakota is currently reaping in the neighborhood of $1.5 billion in annual tax revenues from the Bakken oil operations. Because of the Bakken oil, North Dakota is actually projecting a budget surplus of $858 million by the end of FY 2013. At North Dakota’s current tax rate, the revenues from the Bakken reserves could net the state $240 billion over the next 40 years.

advancements will keep coming. But even with today’s technology, we’re looking at reserves that could produce for 40 to 60 years. There are currently about 7,200 producing wells in North Dakota; within the next couple decades it’s likely that 35,000 new wells will be drilled. Amy Myers Jaffe of Rice University estimates that the U.S. could be sitting on two trillion barrels of oil reserves, which could not only turn the U.S. into one of the world’s top oil producers, but guarantee a period of wealth unparalleled in this country’s history.

Long-term recovery, prosperity We’re able to exploit the shale oil in the Bakken fields now because of new technologies, and you can bet the technological

The beneficial ripple effect As demonstrated by Penn State researchers studying the impact of the Marcellus boom in Pennsylvania, oil operations

BAKKEN OIL REPORT – FALL 2012

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The Breitling-Big Caesar #2H is the first horizontal well in Breitling’s Big Caesar horizontal Middle Bakken and Three Forks development prospect (Divide County, North Dakota). generate value-added revenues by creating not only jobs directly related to oil drilling, but also by generating indirect jobs stemming from the need for additional infrastructure and services – we all know about the “man camps” sprouting up and local businesses ramping up to accommodate the huge influx of oil workers – benefitting a wide range of industries such as construction, steel work, retail, mining, health and social services, professional services, wholesale, transportation and hospitality. The average salary of an oil worker is around $70,000, creating a much-needed boost in spending power and further feeding state and federal coffers with income taxes. In addition, property owners who lease to oil drillers benefit from a steady source of income – something many farmers and ranchers are appreciating now as the nationwide drought continues drying up their profits from crops and livestock.

from hostile nations. Remember, the Middle East and North Africa combined represent only 1.2 trillion barrels of oil.

Oil can help the feds with the deficit, too After income taxes, oil and gas royalties are the federal government’s top source of revenue – to the tune of $86 million a day. You would think that fact alone would keep legislators out of the oil industry’s way. Given the revenue generated at the local, state and national level by the oil industry, economic recovery for this country is actually pretty simple and easy, when we’re not shackled by the obstacles the Obama administration has made a habit of putting in our way.

Logic of oil boom potential stronger than political ideologies Despite the Obama administration’s desire to keep a cap on oil production in this country, some progress has been made. The promise of the economic boost that increased oil production can provide will surely continue to prevail over the politics. After all, it was only within the last decade that some experts were sounding the death knell for oil reserves in the U.S., turning the focus to development of new sources of energy. Some policymakers are still stuck in that mindset, having not yet absorbed the huge new world of opportunity opened up by new methods and technologies that are allowing us tap those formerly unreachable reserves. As it stands, after some unnecessary and frustrating delays, construction on the Keystone XL pipeline has finally begun and we’ll be able to move oil more efficiently and cost-effectively within the next few years. More progress can be expected, of course, under a Romney/Ryan administration. We’re likely to see EPA regulations relaxed, punitive taxes and royalties repealed, and permitting moratoriums lifted. Once other states are allowed to follow the Bakken blueprint and the U.S. can achieve its full drilling potential, the path to prosperity is clear.

Path to energy independence Not too long ago, we faced the prospect of dry wells and increased dependency on foreign oil. Shale plays like the Bakken are promising to free us from that dreary prospect. If Rice University’s Ms. Jaffe is correct in her estimate of U.S. reserves in the range of two trillion barrels, the U.S. would be among the world’s top oil producers, no longer forced to import

About the Author: Chris Faulkner is the founder, president and CEO of Breitling Oil and Gas, an independent oil and natural gas company based in Irving, Texas. With diverse and extensive experience in all aspects of the oil and gas industry in North America, Europe and the Middle East, Mr. Faulkner is an advisor to the ECF Asia Shale Committee and sits on the Board of Directors for the North Texas Commission. n

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A new energy flowing to eastern Montana as Bakken field development expands By Rebecca Colnar

he Bakken oilfield’s effect on towns in eastern Montana has been significant economically, whether in new condos and hotels being built, new businesses popping up in towns or increased traffic. RV parks are bursting at the seams, gas stations are full and service employees can be hard to find. “To describe the economic potential from the Bakken energy development in a few words would be ‘many opportunities with a few specific challenges’,” says Boe Gregson, project manager/water resource specialist for Western Land Services. “The business growth in eastern Montana has shifted from agriculture to energy in a drastic way. Towns like

Housing can make up for the difference between ag pay and oilfield pay, comments rancher Jim Steinbeisser.

The right place, right from the start It all started in the Williston Basin. When we launched Legacy Oil+Gas in 2009, this was our land of opportunity. The area has delivered on its promise ever since, helping Legacy evolve from an upstart junior to a premier intermediate producer. Today, we are a company of over 100 people, with a development drilling inventory in excess of 1,200 net locations and 2011 exit production of 16,250 Boe per day. Technology-driven light oil resource plays continue to steer our success, with the Williston Basin as a core operations region. Our Bakken, Three Forks and conventional assets have driven our strong growth and new plays like the Spearfish ensure this pace continues into the future. And with our dedicated people, high quality light oil assets and extensive development inventory, we know we are in the right place for a story that is just beginning.

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BAKKEN OIL REPORT – FALL 2012

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Glendive, Sidney, Culbertson, Bainsville, and Plentywood have seen exponential growth in their customer demographic.” Gregson believes that for the business entrepreneur, the potential for success in the energy sector, secondary support businesses, or infrastructure development is with little risk. “To meet the demands of the energy developers, consultants are being imported from Montana communities like Helena, Billings, Miles City, Glasgow, Bozeman, and Great Falls,” he says.

Agriculture, the number-one industry in Montana, is facing challenges from the energy boom. “Traffic is insane, especially when you’re trying to move farm equipment down a very congested road,” notes Jim Steinbeisser, a rancher south of Sidney. “Some folks don’t realize that the steering on our large equipment is very loose so we might sway a few feet one way or the other,” he explains. “We ask that drivers have patience with farmers and their trucks and equipment on the road and don’t cut in too close.”

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Employees can be hard to find. Steinbeisser says at certain times of year, such as sugar beet harvest, it’s very difficult to find drivers. “We keep going further and further out of town to find folks, and some of them aren’t as experienced as the drivers we used to be able to get,” Steinbeisser says. “We have found that in some cases, women are taking up the tasks, which as great as they’re very willing to learn and follow instructions well.” Although the rumor is most agricultural employees have been lured out by highpaying jobs, Justin Myhre is a ranch-raised young man who headed to the Bakken a few months ago to make money.

Steinbeisser said one way their ranch can compete is by providing housing. “Jobs in the oilfields abound, but housing doesn’t. If we provide housing with a ranch or farm job, then we can attract and keep people. Housing can make up for the difference between ag pay and oilfield pay.” Justin Myhre is a ranch-raised young man who headed to the Bakken a few months ago to make money. “I grew up on my family ranch, did some outfitting for seven years and then worked for the Keller Ranch for five years. When that job ended, I was talking to a friend who was working in the Bakken, and decided to head up there,” says Myhre, whose wife and three young children have moved into a house in the small town of Custer. Myhre makes the 300-plus mile trek home every two weeks. “I drive a road grader, so it’s not that different from driving farming equipment,” he explains. He bought a camper, which is at a campground about 40 miles from work. “It’s not too bad. It’s almost like being in a little cow camp. We work long days, but not any longer than I was used to ranching. The good thing was I didn’t have to drag my saddle along,” he chuckles.

Changes coming to Glendive The town of Glendive, about 52 miles south of Sidney, was a boom town in the 1970s, followed by depression from the 1980s until the Bakken oilfield began developing. Amy Deines, executive director of the Dawson County Economic Development Council, says the town has new energy. “We have new business coming in all of the time. A new roundhouse was built for the railroad, so that was a great motivator to get this town going. Last year we had 200 new businesses, and this year I’m sure it will double. Most of the businesses so far have been energy-support types such as those that supply fracking fluid, sand, oilfield pipe and so forth. With those businesses comes the interest for hotels, apartments and houses. We’re expecting retail will follow. I get 15 to 20 calls per day with people looking to move here. There are almost no vacancies or houses for sale at this time.” Deines says the county is trying to be pro-active. They’re developing a new wastewater treatment plant which will double the capacity of the current one and have the capability to expand if necessary.

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“We’re being as prepared as possible, and have looked toward Williston, North Dakota to see what we might have coming up,” she says. “I’m sure there’s going to be something we haven’t thought of coming down the pike, though.” She notes that even though it’s not a scientific study, “The postman tells me his load of mail has doubled over the past year.” Jim Mires, an agent for Mountain West Farm Bureau Mutual Insurance Company, says he’s been in Glendive for 12 years, having moved from Glasgow, Mont. in the northeast part of the state. He believes the growth is mostly positive. “It’s exciting to see the buildings, the new motels. I moved here in 1996 and the Husky Truck Stop was falling apart. I heard in the early 1980s when the energy industry collapsed, people just walked out of their houses, even just leaving food on the table. Now there’s nothing to rent or buy, and all the old places are getting fixed up. This town is looking a lot better. The number of kids in schools is growing again, too.” He says because of the new growth, in the future his children might have the

chance to decide if they want to stay or leave; not be forced to leave because there are no jobs available. Mires has seen an increase in his business, as well, especially in writing policies for people, mainly truckers, from Idaho and Washington state. Challenges of growth One challenge of the boom is finding adequate personnel in the high demand for employees. “When you stop at gas stations, restaurants, and local businesses in the service industry, you may encounter staff from Idaho, Colorado, distant parts of the United States, and even distant parts of the world. You’ll hear accents from Europe, Jamaica, and other parts of the world as staffing issues are challenging for all businesses,” says Gregson. “The local folks have been drawn to the high wages of the energy sector, leaving a void in the service industry to be filled by any worker with the ambition and adventurous spirit to relocate to eastern Montana.” In this instance, relocating can be one of the most challenging tasks since housing is

in low supply. “The small town of Fairview on the state border with North Dakota has become encircled with makeshift RV areas as workers brave the central plains winters in summertime vacation homes. Another large sector of growth in these areas is home construction, as builders scramble to construct new hotels and housing projects to try and meet the demand,” Gregson explains. Food might be the best indication of a changing and growing demographic. Food trucks selling a variety of cuisine can be found in all of the towns around the Bakken, and the Farm to Table Food Co-op in Glendive has been seeing an increase in demand for some regional foods. Bruce Smith, manager of the Co-Op, explains that people from Louisiana and Texas have been coming in, asking for food with which they’re familiar. “You know you have a changing demographic when people show up in a place like Glendive asking for okra and collard greens,” Smith concludes. n

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Shale’s philanthropy demonstrates long-term commitment to communities I

n 2011 and 2012 Shale Exploration, L.L.C. (Shale), a division of GreeheyCo, was founded by Sam Tallis and Sid Greehey through leasing and acquisitions of more than 800,000 acres of resource plays from the Bakken shale to the Eagle Ford shale — and we’re not done yet. Shale currently has operations in Montana, North Dakota, Texas, Wyoming, New Mexico, Louisiana, Colorado, South Dakota, Oklahoma, and more. Our philosophies are a tribute to our Texas culture in that we are always chasing oil and gas, no matter where we hang our hats at night. Shale Exploration’s management and employees are men and women who are industry professionals that believe in doing it right or not doing it all. Following this mindset, in 2011 and 2012 Shale has proudly donated more than $500,000 in multiple states to charities and other benevolent causes such as: Montana Make-A-Wish, Mayfest, the Volunteer Firemen of Scobey, Leukemia sufferers, the Montana Rescue Mission Women’s and Family Shelter, and more. We believe in making a difference and wish the abundant resources of the industry, as a whole, would follow our lead. We at Shale also believe in the education of our customers, clients, and potential partners. That is why we will always do our best to make sure everyone involved with us has an informed opinion on what’s happening. This mantra flows within our core values so much that last year, we donated to the children of Scobey by providing iPads to the public schools. The core management team consists of former senior-level management members of highly successfully E&P companies with a broad base of experience in engineering, operations, and business development. We use state-of-the-art technology in all vertical and horizontal completions. This includes fracking, seismic 3-D, geochemistry, and our proprietary innovative seismic 4-D. Management is focused on pursuing targeted areas to acquire and exploit strategy primarily targeting the Williston Basin (Bakken Shale) in northeast Montana and various parts of North Dakota. Our current and primary project area is featured on the Shale

BAKKEN OIL REPORT – FALL 2012

Sandpile Creations formed a tribute to Shale Exploration’s sponsorship of Mayfest’s Market area. Exploration website and is one of our most promising prospects. Shale’s Bakken – Three Forks prospect reflects Shale’s current commitment to the leasing and development of Daniels County, Montana. The men and women who make up the Shale Exploration Team encourage you to drop us a line and get to know us; we would like the opportunity of getting to know you and telling you about our company. If you have minerals you would like us to take a look at, we would be more than happy to talk to you. Please contact us at (406) 487-2962 or email us at info@shaleexploration.com. Shale has offices in Fort Worth and San Antonio, Texas, as well as Billings and Scobey, Montana. We can also be found on Facebook, Twitter, LinkedIn, and YouTube. n

Sam Tallis, Shale president (left) and Sid Greehey, CEO (center) present donated iPads to Dave Selvig, superintendent of Scobey Schools (right).

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The bold, the brave, and the beautiful: Women in the Bakken By Laura Tode

hristina Chauvin arrived in Bainville, Mont. on February 15, 2011, just after a snowstorm swept across Montana’s Hi-line. She’d spent her entire life in Louisiana, and although she knew she was being delivered to a cold place, she had no idea what else to expect. Everything was frozen, including the fifth-wheel camper that was now home. To say that last winter was harsh is an understatement, but life the Williston Basin isn’t easy. With its long hours, harsh working conditions and extreme physical demands, the Bakken is a man’s world, where many men don’t last. So what brings a woman to the oil frontier? Starting Over, Again Chauvin works for Dual Trucking Inc., selling the company’s services across the Bakken. She had never driven in snow when she set out for Williston in search of warm clothes. Her first purchase was a pair of insulated Muck boots. Those boots, it turns out, are her lucky charm. Later that day, she made her first sale. Now she wears her Muck boots year-round on every call. Chauvin is 50, though she doesn’t look it with her curly red hair pulled back into a ponytail. She’s no newcomer to the oil and gas industry. Her whole career has been in sales in the facilities side of the oil and gas industry. Even 15 years ago, a woman in her line of work was rare. She made good living until Hurricane Katrina hit in 2005; like thousands of New Orleans residents, she lost everything. “I tried to stay; but mentally, I couldn’t take it,” Chauvin says. So she moved to Houston and invested money from a settlement on her house into a diving Christina Chauvin, a native of Louisiana, works for Dual Trucking Inc. selling trucking services. She arrived in the Bakken last winter looking to start over after a series of losses in the Gulf. Her boots are her lucky charms and she wears them on every sales call.

BAKKEN OIL REPORT – FALL 2012

company that built and repaired underwater pipelines. Before the company could turn a buck, the Deepwater Horizon explosion happened. The oil spill that it caused triggered a moratorium on drilling. For the second time in only a few years, Chauvin was left with nothing. That was until she was approached by the owners of a trucking company in Louisiana who had expanded their business to the Bakken. They needed someone in sales, and they rightly heard that she was among the best. “I’m very confident,” Chauvin says, neither proud nor aiming to impress. “I just get out there and do whatever I need to do.” That’s been Chauvin’s style her whole life. Five great grandfathers back in Chauvin’s family tree sits Daniel Boone, an American icon, a pioneer, frontiersman and explorer. Chauvin’s got a little of his blood and whole lot of his spirit. “I’m proud that I had the gumption to come up here,” she states. Earning a Living The population in the Williston Basin is in flux, so it’s difficult to estimate how many women are working in the Bakken. Some estimate that there are 10 men for every one woman. Fewer still are the women working in the oil and gas and construction industries. It’s a tough way to earn a living, and not everyone is cut out for it. “It’s high-octane stress out here,” says Loree Olsen, leaning on the railing of a contractors’ trailer at the site of a new hotel under construction in Ray, North Dakota. It’s the end of a long, hot, dusty day in August and Olsen’s Boston Red Sox baseball cap is turned backward. A carpenter’s pencil is tucked behind her ear alongside her blonde hair. Olsen is a master plumber and crew leader for Mechanical Innovations. The company is known for its quick turnaround on jobs, and Olsen has worked in Idaho, Montana, and now North Dakota, mainly building hotels and truck stops. Ask her why she’s there, in Ray, and she’s got a three-word answer: “Hunger, cleats, and college.” Olsen owns Progress Plumbing and Heating based out of Helena, Mont. and in the last few years, work has dried up back home. She needed to find a way to put food on the table. Her son, a standout athlete, plays high school baseball and football; sports gear doesn’t come cheap for a growing boy. Her daughter is in college at Montana State University, and Olsen wants to help her out as much as she can. “It’s worth it to have my family taken care of,” Olsen states. “Anytime I forget why I’m here, I pull their pictures up on my phone. I’m not here for myself.” Most days, being a woman in a man’s world doesn’t even enter

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Technologies that work in the field

Images courtesy: Laura Tode.

Olsen’s mind. She manages a crew of about 15 plumbers. All of them are men. To the crew, she’s more boss than woman. Talk on the construction site can get dirty, but Olsen doesn’t let it get to her. She’s there to do a job, and that’s her focus. “You have to callous up a little bit,” Olsen says. Under the tough exterior, Olsen has a big forceful personality, a goofball sense of Ask Loree Olsen why she’s working in the humor and a direct Bakken and she’ll say, “Hunger, cleats and manner of speaking. college.” She’s putting food on the table; helping her son, a standout baseball and She’s fair and football player, purchase sports gear; and appreciates hard helping put her daughter through college work. Despite the at Montana State University. challenges, working in the Bakken is exactly where she wants to be. She always wanted to take on a leadership role and tackle bigger projects. Joining Mechanical Innovations gave her a shot at management, and she’s reached a significant milestone in her career. “This is what I wanted to be doing at this stage in my life,” Olsen states. A Mother as President There are opportunities in the Bakken for everyone – men and woman alike – but it takes hard work, sacrifice and a willingness to take a risk. Michele Weiss saw opportunity in the Bakken when the

Michelle Weiss is a mother of two and makes her living as president of Chaznline Construction in Fairview, Mont.

BAKKEN OIL REPORT – FALL 2012

oil boom first started to take shape and, in the past five years, she’s managed to lead a company and raise a family. Weiss and her husband Luke own Chaznline Construction, a pipeline company based in Fairview, Mont. When they started the company, it only took a matter of days for business to take off, and it has grown steady every day since. She’s the president and handles all the front office duties, including ordering and accounts management as well as dealing with accountants, consultants and legal staff. Her husband heads up all the field work, managing a staff of 50 employees and dealing with clients and landowners. “I try to be a mom more than the president of a company,” Weiss says. She tries to only work while her son, 10, and daughter, six, are in school. Still, the children spend more time in the office after school and on holidays and weekends than Weiss would like. “I always promise them it’s only going to be a few minutes; but sometimes it ends up being hours,” she says. When the family isn’t together at the office, it always seems like they’re on the road, taking parts out to the crews in the field; or if it’s going to be a late night, Weiss will pick up dinner and run it out to her employees. If she’s not behind the wheel, she’s on the phone, and often it’s both (via a hands-free device). She didn’t have much management experience when she started, but quickly learned. Among her hardest-learned lessons is not to let things – big or small – bother her. “If I do, it brings my whole house down. It’s not just at work,” Weiss comments. “Finally, you have to say, ‘Well, there’s nothing I can do.’” From her vantage, Weiss doesn’t notice any bias against women working in the oil and gas industry. If they can do the work and stand the hours they’ll have no problem finding a job. The problem is housing, she says. Man camps are no place for a woman, and some of the trailer parks and overcrowded hotels can be dangerous. Olsen has her own fifth-wheel camper that she lives in. She tried bunking with her crew, but it didn’t work out – not because she couldn’t handle it, but because she decided they needed a break from their boss as much as she needed one from them. Olsen agrees with Weiss. The biggest obstacle for women in the Bakken isn’t discrimination; it is housing. Many companies don’t mind hiring women, but if they offer housing, which most do, they can’t usually offer separate quarters for women. Home on the Bakken After two years in the Bakken spent living in a camper and eating her meals from convenience stores, Anita Hayden is finally moving into a home of her own. She’s looking forward to cooking her own dinner and having her own washer and dryer. The long hours and cold winters took some getting used to, but she never liked the camper. Hayden works as a roustabout for Drakin Oil Field Construction, and she catches almost everyone by surprise at first meeting. When she climbs out of the cab of her trackhoe, they’re either stunned that she’s a woman or blown away by her age – or both. Not only is Hayden one of the only woman trackhoe operators in the Bakken;

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Anita Hayden is probably one of the only female roustabouts in the Bakken. And at 22, chances are she’s also the youngest roustabout in the Bakken – she’s also a crew boss.

at 22, she’s probably one of the youngest operators as well. Need another surprise? She is also a crew boss. “It’s actually kind of fun, because everyone has to listen to me,” Hayden says. “But being a boss can be frustrating and it’s sometimes overwhelming.” Hayden’s earned the respect of her peers with hard work. She grew up on a farm outside Baker, Mont. so she has been in the cab of big machinery since she was a little girl. After high school, she went to work for a pipeline company to earn money for college, but after working two summers in the oilfield, Hayden decided to put her education on hold and work full-time in the Bakken. She was studying accounting, and although it would have been a good living, it seemed boring compared to roustabout work.

BAKKEN OIL REPORT – FALL 2012

“The first time I ever ran a trackhoe, I about bucked myself out the window. I was going way too fast for my skill level,” Hayden says wryly. “Every time you jump into it, it gets a little easier.” Hayden lived in a camper along with the rest of the Drakin crew at the company’s shop, but she and her boyfriend bought a piece of land across the road, and this fall, they plan to move into a modular home. Having a real place to call home will make the long days easier, she says. On the job, Hayden doesn’t feel any discrimination; but off the jobsite, her minority status is difficult to avoid. Even in the small outpost of McGregor where she knows most everyone, she’s still a target for unwanted attention from men at the local bar. She knows better than to go anywhere by herself. Chauvin is careful too, and doesn’t fraternize with anyone outside the trucking company she works for. “There are so many men it can be dangerous,” Chauvin says. “Living so many years in New Orleans, I’m pretty street smart; but I don’t take chances.” Chauvin doesn’t know how long she’ll stay in the Bakken. It’s a good living; but it’s a tough living to make. At least two years – longer if she can. “I’m living for today. If I look too far into the future, I’ll get scared,” Chauvin says. n

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MDU Resources group

Growing midstream More ‘liquids-based in the midstream space’

any years ago, MDU Resources Group called itself a “multidimensional natural resource company.” The description was more than fitting since the Bismarck-based corporation had a utility division that offered electric generation and distribution along with natural gas distribution. The company also operated an interstate natural gas transmission pipeline and storage system, as well as an oil and natural gas exploration and production company, plus a utility construction services unit. The corporation also was in the coal business. These things are still very much part of the MDU Resources portfolio with the exception of the coal business. In the early 1990s, the company switched out of the coal business and into the aggregate mining and construction business. A multidimensional natural resource company, indeed. Company descriptors have come and gone over the years but the core elements of the description have always been the same. At the close of 2011, the company generated over $4 billion in annual revenues; and offers a portfolio of services that are essential to energy and transportation infrastructure. Now, in 2012, the company announced plans to expand even more into diverse natural resource development to include diesel fuel, processing and treating natural gas, and pipelining crude oil. Collectively, these activities are identified in the energy industry as

BAKKEN OIL REPORT – FALL 2012

This summer, WBI Energy completed construction of the Stateline Pipeline, connecting the output of two natural gas processing plants to the Northern Border Pipeline and pushing the company’s maximum pipeline capacity over the one billion cubic feet per day mark.

MDU

RESOURCES Upstream

FOR THE BAKKEN

Exploration and production.

Midstream Pipeline construction, natural gas transmission, storage and processing. Cathodic protection, gathering pipelines and full spectrum of energy services.

Construction Complete heavy-construction services; aggregate and ready-mix supplier. Electrical construction services, from inside wiring to transmission lines.

Utilities Natural gas and electric service.

We have served the Bakken for more than 85 years and are always here when you need us. See how we can work for you: Call our Bakken development office at (701) 530-1410.

1200 W. Century Ave., Bismarck, N.D. | www.mdu.com

MDU Resources group

Diesel topping plant: Quick Facts Capacity: • Input of 20,000 barrels/day of crude oil. • Output of 9,000 to 10,000 barrels/day of diesel fuel or kerosene. • Remaining byproducts (naphtha and atmospheric bottoms) will be shipped by rail to other facilities for further processing into other products which include lubricating oils, solvents and gasoline. Operations: • Facility will operate 24 hours per day, seven days a week. • Ninety to 100 employees. • Plant will be a state-of-the-industry facility utilizing the best available emission-control technology. “midstream.” The pipeline segment of the corporation, now called WBI Energy, is where you will find this exciting new growth. In a May 2012 news release announcing an agreement to purchase an interest in some existing natural gas and oil midstream assets, Terry Hildestad, MDU Resources’ president and CEO, was even poetic about this growth. “This transaction is an important step forward in executing our strategy to become more liquids-based in the midstream space,” Hildestad stated.

BAKKEN OIL REPORT – FALL 2012

And, liquids based in the midstream space is exactly what’s happening. Diesel fuel, natural gas liquids (NGLs) and crude oil are the prime liquids we’re talking about. In late February, the company announced its intent to explore the feasibility of jointly building and operating a diesel topping plant in western North Dakota. The facility would process Bakken crude oil and market the resulting diesel within the Bakken region. Through the spring and summer, the project has been moving forward at a swift and successful pace.

A plot of land has been secured with an option to purchase in Stark County about four miles southwest of Dickinson, adjacent to the Burlington Northern/ Santa Fe railroad. In early July, the Stark County Planning and Zoning Board reviewed and recommended a rezoning plan on the proposed plant site and the Stark County Commission approved the recommendation to rezone the land from agricultural to industrial. “So far, we’ve been involved mostly in paperwork,” says John Stumpf, vice president of strategic planning for MDU Resources and one member of a broad cross-corporation team working on the project. “The plant design and primary engineering has been completed, and the next step includes completing a constructability study.” Another necessary step is obtaining an air quality permit, which is planned for submission to the North Dakota Department of Health in early September. The facility will operate under air and water permits issued by the State of North Dakota. Assuming timely receipt of the permits, construction could begin next spring, with completion targeted for mid-year 2014. If the plant is built, it would operate as an independent jointly owned Limited Liability Corporation (LLC) with a governance group representing all investing owners of the facility. At this point, MDU Resources is joined by Calumet Refining, LLC in the project. The other “liquids” in the midstream space are NGLs and crude oil. WBI Energy announced an agreement in May to purchase a 50 percent undivided interest in Whiting Oil and Gas Corporation’s oil and natural gas midstream assets near Belfield, N.D. in the Bakken area. The facilities include a newly constructed, state-of-the-industry natural gas processing plant that extracts NGLs from the rich gas stream, a natural gas gathering pipeline system connected to

MDU Resources group

the plant, and a natural gas residue line

system. Also included are a crude oil

that ties into the WBI Energy pipeline

gathering system, a crude oil storage

ASK FOR

WANE

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2012

terminal, and a crude oil pipeline that connects the terminal to the Bridger Pipeline. Whiting will continue to operate the facilities. The Belfield natural gas processing plant has an inlet processing capacity of 35 million cubic feet per day. The oil terminal is currently under construction, with completion expected in the third quarter of 2012. It will have a storage capacity of 20,000 barrels of oil. The natural gas processing plant was just put into service in December 2011 so, as a new facility, the volumes fed into the plant will continue to grow as more wells are drilled and field production is connected to the plant. In mid-August, the plant was processing approximately 13 million cubic feet per day of rich natural gas, which is a little over one-third of its full capacity of 35 million cubic feet per day. n

The new American Dream A

merican industrialist Jean Paul Getty once quipped that the formula

of people everywhere. In western North Dakota and eastern Montana today,

for success was to “rise early, work

dreams are being realized and destinies

hard and strike oil”. Although history

changed as individuals and organizations

proves that the formula worked for

alike leverage the same opportunity

Getty, the odds of striking oil in the

championed by Jean Paul Getty.

typical American backyard are minimal

Last summer Kevin McLeod of Coeur

at best. Nonetheless, the “American

d’Alene, Idaho, a 33-year-old unemployed

Dream” of reshaping the destiny of a

construction worker, husband, and father

family lives on in the hearts and minds

of a five-year-old, headed for the Bakken

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BAKKEN OIL REPORT – FALL 2012

oilfields of North Dakota. With little more than a dream in his heart and the final $600 of his family’s savings in his pocket, McLeod sought only an opportunity to parlay hard work into a fresh start for his young family. Far from home but not alone, McLeod found himself in an unfamiliar environment which was rapidly being populated by countless others with strikingly similar stories, from almost every corner of the country. For some, this may have seemed like a reckless gamble – but not for the McLeods, who literally didn’t know how they were going to make next month’s rent, let alone catch up the past due. With a weakened economy throughout the Inland Northwest, the McLeod family was facing an issue that is the polar opposite of the American Dream – “homelessness”. McLeod had heard of endless oilfield jobs for workers not intimidated by long hours and hard work. In Williams County, N.D., the epicenter of the Bakken oil play, unemployment is generally less than one percent, versus 10 percent in Spokane County, Wash. The rumors proved true, and within two weeks McLeod had landed a job as a roustabout. Lacking experience, he started out at $16/hour; but the potential for almost unlimited overtime, raises and bonuses made the job offer do-able. Initially McLeod parked his camper at a county park, washed up in a five-gallon bucket, and visited his family back in Idaho when he could. Over time, the McLeods transitioned from two households to one, a 40-foot travel trailer in an RV park north of Williston. Their short-term hope is to catch up their financial obligations, improve their credit, and rent a home in the area. Their long-term dream is to eventually return to Coeur d’Alene, buy a neighborhood pub and enjoy the tranquility of the lake. While the Bakken is the world’s largest oil play, it’s also a transition play for people looking for a fresh start.

N O R T H D A K O TA I S B L E S S E D W I T H V A S T R E S E R V O I R S

high-paying, high-quality jobs but we also invest in projects

of natural resources which have transformed the state into one

and programs that improve the quality of life for North

of the worldâ&#x20AC;&#x2122;s most productive, efficient engines for growth.

Dakotans. As we celebrate our 45th year as a crude oil-focused

Continental Resources has called North Dakota its second

company, Continental Resources will continue to champion

home for nearly three decades. As the largest oil producer in

domestic oil production to help America reach its goal of

the Williston Basin, Continental Resources not only creates

energy independence.

Operations in the Bakken run 24 hours a day. Many workers clock 70 to 110 hours each week. Red Bull and cigarettes have become dietary staples as workers strive to stay alert. Long hours and hard work aren’t the only working conditions in Bakken; North Dakota winter temperatures can easily reach 50 degrees below zero before wind-chill. Laborers get ice crystals in their noses and eyelashes can freeze shut. Summer brings sweltering heat, humidity and clouds of aggressive mosquitoes. Housing is difficult, if not impossible to find. Every day goods and

BAKKEN OIL REPORT – FALL 2012

services to run one’s daily life are in short supply; and greed and gluttony abound. Yet newcomers to the Bakken are happy, excited – “energized”, if you will, by the opportunity to rebuild their lives. For families who are struggling with difficult economic conditions throughout America, the Bakken represents another shot at the American Dream. Lucrative jobs in the oilfields have helped people keep the roof over their family’s head, forestalled foreclosures, funneled money into depleted retirement savings, and helped folks to salvage their credit.

According to Williston mayor Ward Koeser, “We’ve become one of the last great hopes for people,” with the average oil and gas industry wage in North Dakota at $90,225. To an unemployed construction worker from Idaho, names like Schlumberger, Statoil, Nabors Well Service, Sanjel, and Continental Resources are no longer just names emblazoned on a corporate letterhead; they are harbingers of true hope. Suddenly, terms like “fracking”, “porosity”, and “horizontal drilling” sound more like a new lease on life than a lead news story. Almost overnight, technology has transformed the empty prairies of western North Dakota and eastern Montana into a land of opportunity and immeasurable potential not just for the McLeod family, but for an entire nation. In a world where the demand for energy is growing faster than at any other point in history, the vast untapped resources of Montana and the Dakotas have become a fulcrum of opportunity waiting to be leveraged by those willing to overcome the associated challenges. For the founders of Synergy Station, the challenges are the opportunity. After listening to and learning of countless, compelling stories like that of the McLeod family in the Bakken oilfield, the McRaes were struck with an overwhelming sense of wanting to help. How could they help people find jobs, find housing, leverage a business opportunity, and find solutions for rural communities imploding under the Bakken boom? With the belief that the tracks are always easier to move when the train is not sitting on top of them, in January 2012 the Synergy Station team launched a web portal to facilitate communication, collaboration and education. The portal currently offers a dynamic, virtual business directory complete with digital image and video capabilities; and a searchable jobs board known as the Synergy Station Hiring Hall. Much like Grand Central Station, the web portal is designed for people to connect and move on. If you don’t find what you are looking for on this portal, email the founders so they can personally help: www.synergystation.com. n

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Solving challenges.™

REPORT

Billings is a partner to the Bakken By Jeremy Vannatta, Big Sky Economic Development

ver 200 miles away from the closest Bakken well, the city of Billings has

businesses and major corporations alike

businesses in the Billings area with cities

continue to reach out to the area in hopes

like Sidney, Glendive, Williston and others.

quickly become one of the largest providers

of finding a niche to serve.

Back in 2011, for example, the organization

of goods and services to the Williston Basin

Big Sky Economic Development (BSED),

brought a full bus of local business

area. While many Billings-based companies

the agency responsible for economic

owners, city officials and legislators to

have been doing business for many years

development efforts in Yellowstone County,

in the Williston Basin, numerous new small

Montana has made it a priority to connect

Sidney and Williston to get a first-hand view of the opportunities and challenges the communities were facing â&#x20AC;&#x201C; from infrastructure to workforce to a cultural shift. With local officials, the group of about 45 people visited new developments, housing projects, and a Target Logistics crew camp. The group then spent some time learning from local business owners of the renewed opportunity the area continues to hold. After that visit, the tour group identified several priority action items to determine how the Billings community could assist and support those communities and the companies doing business. Since that initial trip, Big Sky Economic Development organized two more bus trips, which shaped a continued understanding of how the oil industry is changing and the products and services that are most

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2012

REPORT

needed. BSED also fostered several other meetings for healthcare facilities, land developers and others. For example, the Billings Chamber of Commerce/ CVB hosted a visit to the Williston Basin to develop tourism opportunities. Often, oilfield employees and local residents look to Billings for events such as Magic City Blues, a three-day blues festival in downtown Billings; shopping; or a quick jaunt for a weekend getaway. More

than ever, the Billings Chamber/CVB creates guest packages and markets to this particular target audience. Recently, Tom Rolfstad, Williston Economic Development’s executive director, spoke in Billings at BSED’s annual meeting and later designated Billings their Community Partner of the Year. But the Bakken’s growth is not limited to just extreme eastern Montana and western North Dakota. Billings is growing

because of the Bakken and other oil plays. Many oil workers are moving their families to Billings and commuting to work the Williston Basin for 10 to 14 days at a time. They enjoy the superior quality of life that Billings has to offer and the high pay that the Basin offers. Not surprisingly, the Billings housing market continues to tighten as home inventory remains low. And, the number of new home construction permits continues to climb as businesses move to Billings to service the Bakken boom. In fact, CanadianAmerican Homes Structures, or CASS, launched operations in Billings to build manufactured homes and other structures that will be used in the Bakken. Under a current contract to build hundreds of units, CASS continues to hire new employees. Indeed, Billings is strategic to energy and the community is a vital partner in the play. About the Author: Jeremy Vannatta is the director of recruitment and marketing for Big Sky Economic Development. Reach him via email at vannatta@bigskyeda.org or by phone at 406.869.8416. Find out more about Billings at www.thinkbillings.com. n

BAKKEN OIL REPORT – FALL 2012

Baranko Bros., Inc. began as a partnership in 1967 doing primarily soil conservation work. We expanded into the oilfield in the 1970â&#x20AC;&#x2122;s and were incorporated in 1979. Baranko Bros., Inc. is owned by Emil Baranko who retired in 2000, and his son Glenn. Center CoalThe company is based in Dickinson, North Dakota, with yard and shop facilities in Beulah, Center, and Fairfield, North Dakota. Glenn also owns a coal crushing facility in Center, North Dakota, providing stoker and lump coal to customers throughout North and South Dakota and into Canada. Click on Center Coal Company for more information. The company continues to expand into all types of earthwork, including: underground, concrete, material hauling, construction of landfill facilities, coal mine ash pits, clay liners, as well as projects involving installation of plastic liners for water or waste containment. We have successfully completed projects in size from few hundred yards to over a million yards. Clients we have worked for include Amerada Hess, Encore Operating, Headington Oil Company, Burlington Northern Santa Fe, N.D. Public Service Commission, Montana Dakota Utilities, N.D. Department of Transportation, Dakota Gasification Company, Minnkota Power Cooperative, Basic Electric Power Cooperative, Great River Energy, Falkirk Mine, Exxon/Mobil, Conoco/Phillips, U.S. Forest Service, U.S Army Corps of Engineers, and many other clients. As of April 2003, we became a preferred supplier for Basic Electric Power Cooperative. We have experienced estimators and job supervisors that can give quotes and perform supervisory duties. We also maintain a regular safety program and employ a full time safety coordinator.

barankoinc.com

Inaugural Best of Show Energy Day at MontanaFair a roaring success By Laura Tode

state fair is an unlikely place to find a high-rate fracturing blender, but the ultra-modern piece of oilfield machinery

was attracting plenty attention during the MontanaFair in Billings Aug. 16 to 18. The equipment was part of an informational display presented by Sanjel Corporation during the Best of Show Energy Day. “Our primary goal was to connect the community to the energy

BAKKEN OIL REPORT – FALL 2012

industry, and to help citizens learn about it; and on the flip side, for these big energy players to put together their ‘best in show’ to reach out to the community,” says Laura McRae, one of the event organizers. Some 40 businesses large and small set up booths and participated in the interactive tradeshow. Exhibitors included many of the big players in the Bakken, including Sanjel, Schlumberger, Bay Ltd., and Nabors Well Service, but they weren’t the only ones on the floor. Exhibitors ranged from the wholesale giant Costco to Big Sky Linen, a small Billings-based uniform cleaning business. “It doesn’t matter if you’re an oilfield business or not, you can find a way to leverage the Bakken dollar,” McRae states. Each day, prior to the opening of the fair to the public, tradeshow participants took part in a variety of activities to develop new alliances and business partnerships. On the first morning, each business gave a brief presentation to the rest, and on the second day the participants took in a businessfocused networking event held in the style of speed-dating. In a work session on the morning of the final day, they learned new strategies for marketing to the energy industry. True to the spirit of the state fair, a “best of show” was chosen from among the participants. “Our goal was to ask them, ‘How can we help everyone succeed?’” McRae says. The inspiration behind the Best of Show Energy Day was the Montana Energy 2012 Conference and Trade Show, which was held in Billings in April. The event was a success by any measure, but McRae and other participants in the planning process thought they could engage the public even further.

Fuel Propane Service

“The MontanaFair board and county commissioners responded to community interest and this is what they came up with,” McRae says. The fair, where families have traditionally gone for entertainment and information, seemed like the best place for the event and MontanaFair, which lasts eight days, provides a steady stream of visitors. About 300,000 people visit each year, and it draws people from a 500-mile radius, McRae explains. “People come to the fair to learn something new. They want to be educated,” she says. Visitors to the Best of Show Energy Day could take part in presentations and panel discussions on topics that ranged in diversity from hydraulic fracturing to sage grouse. Each day included plenty of information on jobs and working conditions in the Bakken, presented by several of the oil industry’s biggest employers. “Everybody’s got this sense, like, ‘Wow this is bigger than we thought,’” McRae comments.

McRae and her husband Kendall are

That plan included a media blitz with

founders of Synergy Station, a web portal

promotion through social media, provided

that provides an up-to-date business

by Brenda Segna of BLaST Creative,

directory for companies working in the

and design and print services by Kinetic

energy industry in eastern Montana and

Marketing Group in Billings. The campaign

western North Dakota. The website, at

was so effective that McRae was getting

www.synergystation.com, also includes

calls from as far away as Boston, and

a jobs board which links job seekers

attracting investors from Washington, D.C.

with various companies that are hiring.

Many of the participants cleared their

The site is aimed at providing regional

busy schedules to come to Billings, and

collaboration among companies across

it wasn’t long before the show was sold

the Bakken. The McRaes’ experience

out. The response from exhibitors and

attracted the attention of the MontanaFair

the community far exceeded expectations,

board and the Yellowstone County

McRae says.

Commissioners who were hoping to host

“They thought it would take five years

an energy-related event at the fair.

to get to this level,” she adds.

MontanaFair was only six weeks away

Most of the exhibitors said they’d like

when they got the call, but the McRaes

to be included in next year’s event, and

wasted no time pulling together a team to

planning for the Best in Show Energy Day

promote the event.

2013 is already underway, starting with

“We realized early on that you can have

feedback from everyone who participated.

the best thing in the world, but if you don’t

“We’re not a tradeshow that just says

package it right you don’t have anything,”

see you next year; we’re asking everyone,

McRae states. “We launched a marketing

‘What do we need to do this better?’”

plan to match our business plan.”

McRae says. n

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BAKKEN OIL REPORT – FALL 2012

Hot Shots & Trucking Drill Bits Super Vac Truck Pipe Racks Stabilizers & Reamers Bed and Winch Truck P.S. Mud Motors Breakout Machine Float Equipment Welding & Fabrication Pipe Straightening Rental Equipment

Dakota Gasification Company

Tap into the future

akota Gasification Company, a wholly-owned subsidiary of Basin Electric Power Cooperative, is a global leader in carbon capture. Its Great Plains Synfuels Plant has been collecting carbon dioxide from its Rectisol unit since 2000. Dakota Gas has successfully collected and transported over 20 million metric tons of carbon dioxide for Enhanced Oil Recovery (EOR) to date. The Great Plains Synfuels Plant is the only commercial-scale coal gasification plant in the United States that manufactures natural gas. Located five miles northwest of Beulah, N.D., the Synfuels Plant has been in operation since 1984. The Synfuels Plant produces approximately 170 million standard cubic feet (mmscf) of natural gas daily. Other products produced at the plant include anhydrous ammonia, ammonium sulfate, cresylic acid, phenol, krypton/xenon, liquid nitrogen, naphtha and carbon dioxide. Dakota Gas started collecting and transporting carbon dioxide from its Rectisol unit in 2000. It is the largest

BAKKEN OIL REPORT – FALL 2012

carbon dioxide capture project from an industrial source in the world. Dakota Gas captures carbon dioxide in a gaseous form and compresses the carbon dioxide in three eight-stage 20,000-HP compressors. The carbon dioxide exits the compressors in its dense phase (liquid), or super critical phase. The carbon dioxide is then injected in a 205-mile pipeline that extends from the Synfuels Plant in Beulah, N.D., to oil plays in central Saskatchewan. Oil companies inject the carbon dioxide into oil reservoirs for EOR. Carbon dioxide is injected into oil reservoirs in order to pressurize the reservoir and push oil to collection wells. EOR allows companies to collect 10 to 30 percent more oil than would have otherwise been possible. Dakota Gas currently transports 150 mmscf per day to oilfields in Canada. “We currently have additional carbon dioxide available for EOR,” reports Steven Liebelt, marketing manager for Dakota Gas. “Dakota Gas is always looking for new and innovative ways to capture and

transport additional carbon dioxide. The response from oil companies has been very positive and we are glad we can offer a value-enhancing product to help the energy needs of our country.” “We have carbon dioxide and we would love to expand our development in the United States,” says Paul Quist, market development manager for Dakota Gas. “We are always looking for opportunities, both big and small, to improve energy development in the area. EOR is a great opportunity to take carbon dioxide out of the atmosphere and put it to good use in the oilfields.” Dakota Gas, a pioneer in capturing carbon dioxide from an industrial source, has carbon dioxide available in the northern plains. For additional information, please contact Paul Quist at 701-221-4412. Dakota Gas is a Responsible Care provider and is dedicated to providing products and services for rural communities. “Tap Into The Future” – call to find out where there is a pipeline tap near you! n

REPORT

Bismarck-Mandan, North Dakota: Growing metro with a diversified economy

The National Energy Center of Excellence (NECE) on the campus of Bismarck State College in Bismarck, N.D. Growing metro The Bismarck-Mandan, North Dakota metropolitan statistical area (MSA) was noted as one of the 50 fastest-growing metro areas when the U.S. Census Bureau’s 2011 population estimates were released. The estimated 2011 population of 110,879 showed an increase of 1.9 percent over the 2010 Census count of 108,779. The cities of Bismarck and Mandan, with the mighty Missouri River flowing between them, form the core of the two-county MSA in south-central North Dakota and home to the bulk of the population. Located in the center of the state of North Dakota as well as the center of the North American continent, the Bismarck-Mandan metro area sits at the intersection of Interstate 94 and U.S. Highway 83. Bismarck is the North Dakota state capital, and serves as the center of government for most state agencies, Burleigh County, and most of the federal agencies that service North Dakota. In addition, Mandan is the Morton County seat. Combined, Bismarck and Mandan are the economic hub of a large portion of south central North Dakota, and stand poised to continue their steady growth and leadership. Diversified economy, boosted by oil and gas growth The Bismarck-Mandan, N.D. MSA enjoys a diversified economy that is thriving across the board. Industries making their mark in the metro include healthcare, government, energy, back office and IT, government, manufacturing and agriculture. 66

BAKKEN OIL REPORT – FALL 2012

Annual employment and worksite numbers in those industries and others have increased steadily, with wages increasing along with them. From 2002 to 2010, annual average employment grew from 49,640 to 58,781. Over the same period of time, 826 worksites were added in the metro while annual average wages increased by just over $10,000 per year. Also steadily increasing in the Bismarck-Mandan MSA: taxable sales and purchases, city sale tax collections, home values, the number of new construction permits issued, and airline boardings. “The current diversified economy will continue to form a stable base, with growth coming in most, if not all industries,” says Bismarck-Mandan Development Association president and CEO Russell Staiger. “The metro maintained its strong diversified economy and came through the recession relatively unscathed. And it continues to thrive.” Long a center of coal mining and oil refining, the BismarckMandan region is experiencing additional energy growth thanks to increasing oil production in the western half of the state. While Bismarck-Mandan is not directly in the oilpatch itself, it has seen substantial growth in the professional service sectors that work with the oil and gas industry. “The oil and gas industry will no doubt continue to have a great impact on the community,” notes Staiger. “Combined with ongoing coal and refining activities, the energy sector overall remains a vital part of our economy.”

Bismarck-mandan, north dakota

Bismarck-Mandan, North Dakota, is growing with the state’s oil industry . . . professional services, logistics, commercial space, residential neighborhoods and family living. Whatever your needs – business, employment, housing – consider Bismarck-Mandan and all it has to offer. • convenient location – Bismarck-Mandan sits at the intersection of US I-94 and US Highway 83, giving it easy access to the oil industry to the west and north. • air service – daily jet service to Minneapolis-St. Paul and Denver with charter service to western North Dakota.

• access to government – the State Capitol in Bismarck offers direct contact with regulatory agencies and elected officials, as well as the North Dakota Petroleum Council and the Lignite Energy Council. • Well-rounded community – Whether for business or family, Bismarck-Mandan offers available workforce, quality educational institutions, stateof-the-art healthcare, recreational opportunities yearround, and a safe atmosphere to live, work, and raise a family. Contact the Bismarck-Mandan Development Association to learn more, or visit bmda.org

bmda.org • 701-222-5530 • info@bmda.org • 400 East Broadway Ave. • Bismarck ND 58501

Northern Plains Commerce Centre (NPCC) is currently transloading crane mats, pipe, metal rebar and other products for use locally and in the Bakken. NPCC operator Tubular Transport & Logistics took over transloading operations in August 2011. Image courtesy: NPCC.

REPORT

A place to call home, for businesses and people The positive economy that Bismarck and Mandan continue to experience offers a wealth of opportunities for businesses to expand or locate in the metro area. Additionally, the greater community boasts a quality of life that is impossible to beat. Whether you are a business owner or employee, Bismarck-Mandan presents you and your family an outstanding community to make your home. To learn more about the Bismarck-Mandan, North Dakota MSA and the opportunities available to you, contact the Bismarck-Mandan Development Association (BMDA). BMDA offers assistance to companies considering an expansion or new location. Contact: Russell Staiger, President/CEO Brian Ritter, Director of Business Development Bismarck-Mandan Development Association 400 East Broadway Ave., Suite 417, Bismarck, N.D. 58501 701-222-5530 | info@bmda.org | www.bisman.org n

“

Aerial view from the State Capitol in Bismarck.

Our equipment is the best in the oil field.

“

- Robert Wattrud

BAKKEN OIL REPORT – FALL 2012

Jasper Engineering & Equipment Co. Phone: 877-258-4070 www.jaspereng.com

Natural Gas Moisture & Sulphur Analyzers

Magnetic & Liquid Level Gages, Sight Flow Indicators. Specific Gravity Analyzers, & Magneto Restrictive Level Transmitters

Wireless Radio Systems V-Cone Flowmeters for Gas & Liquid Applications No Straight Run Required; No Moving Parts Little Joe & Big Joe Gas Pressure Regulators Safety Relief Valves with Auto Seat Technology

Ruffneck Explosion Proof Unit Air Heaters Cata-Dyne Catalytic Heaters & Line Heaters

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Explosion Proof Pressure Transmitters, Manifold Valves, Pressure Gauges. Thermometers

RTDâ&#x20AC;&#x2122;s, Thermocouples, Temperature Transmitters Radar Level Transmitters Magnetic, Clamp-On & Coriolis Flowmeters Pump Panels, Safety Disconnect Switches, PLC Control Systems & Components

Sharp Eye Triple IR & IR/UV Flame Detection Innovative Coalescing Gas Filtration Systems Custom Engineering Gas & Liquid Filtration Systems

Turbine Flow Meters, Monitors, & Replacement Parts

Enbridge north dakota

Enbridge in North Dakota: yesterday, today, and tomorrow E

Enbridge celebrated its 50th anniversary of the North Dakota System with several local dignitaries, including Governor Jack Dalrymple (center).

nbridge Pipelines (North Dakota) LLC has devoted a great deal of time this summer to bringing the North Dakota

community together in celebration of their 50th anniversary. On June 29, Enbridge hosted the 50th Anniversary Luncheon. Enbridge officials, North Dakota Governor Jack Dalrymple, and other invited dignitaries came together at this event to recognize the company’s commitment to leadership in responsible energy delivery. At the event, Mike Moeller, director of operations for Enbridge’s North Dakota System, and Kevin Hatfield, senior director, Gathering System Management, Enbridge Pipelines presented a $50,000

Williston area supervisor Tony Kueffler and members of the Williston Fire Department pose for a picture after discussing operations, emergency response, and the fire department’s plans for the future.

Fire Resistant Clothing

• Jeans • Jackets • Coats • Coveralls • Shirts • T-shirts • Pullovers • Sweatshirts • Custom Embroidery • Steel Toe Boots & More...

Good selection of styles and sizes in stock.

Riley Bros. Construction began in 1974 with one simple goal: “To be committed to our customers” Your project is important to us. We will work with you to understand your vision, goals, and objectives. We will partner with you to provide a quality project on time and on budget.

2221 S. Central Avenue, Sidney, MT 59270

CORPORATE OFFICE Office 320-589-2500 Toll Free 800-568-6595 Main Fax 320-589-2545 Parts Fax 320-589-8810 Accounting Fax 320-589-0355

406-433-6757 www.sondassolutions.com

PAvIng Office 320-634-3535 Toll Free 800-422-0378 Main Fax 320-634-3838

BAKKEN OIL REPORT – FALL 2012

www.RileyBros.com

R&R ContRaCting, inC. has been around for nearly 25 years, founded by W.K. “Bill” Reimer, who, in 1988, decided it was time to bring his formidable railroad experience to the contracting side of the world. Since then R&R has grown to 6 regional facilities operating under four different divisions, including: ➧ grand Forks, nD - R&R Contracting, inc. CoRPoRatE HEaDQUaRtERS ➧ Minneapolis, Mn - MJ track ➧ Chicago, iL - all Rail ➧ Brookhaven, MS - Smith Rail • Tulsa, OK • Houston, TX

these locations are responsible for servicing all construction, maintenance, inspection, and repair work that we take on. our engineering is all handled out of our corporate offices in Grand Forks, ND. Our primary market area includes states East of the Rockies and West of the appalachians - the ‘bread basket’ of the country. our teams of tenured rail construction professionals average between 5-10 members each. We are constantly expanding our forces to accommodate our growth as we become poised to respond to our customers’ needs quickly and efficiently. R&R Contracting, inc. works hard to earn our customer’s business by delivering exceptional results that will enhance their bottom line on each and every project we do. Give us a call today to discuss your next project!

“Keeping Your Business on Track!” 5201 n. Washington Street, grand Forks, nD 58203 | Phone (701) 772-7667 | www.rrcontracting.net

Enbridge north dakota

Enbridge has invested over $1 billion in maintaining the North Dakota System’s legacy.

One of the first pipelines under construction for Enbridge’s North Dakota system in 1962.

Employees were out in the communities of Grand Forks, Williston, and Minot serving burgers and brats to all who attended. donation to the Williston Fire Department in North Dakota. The donation will assist in constructing the Regional Fire Training Facility to be utilized by emergency officials throughout the region. A number of community-wide BBQs were also hosted by Enbridge employees. One such event held in Minot drew in more than 750 people, from landowners and community members to industry workers. These events provided a great opportunity to share the story of Enbridge North Dakota. Enbridge employees also participated in the North Dakota State Fair Parade, where their 50th Anniversary-themed float received the Chairman’s Award for “Best Commercial Float.” As part of the 50th anniversary event, Enbridge employees showcased the recently approved Berthold Station Expansion Project. The $145-million investment will enhance the capability of Enbridge’s North Dakota crude oil system by expanding capacity out of the Berthold terminal by 80,000 72

BAKKEN OIL REPORT – FALL 2012

barrels per day (bpd) through a rail car loading facility. The full 80,000 bpd of rail export capacity is scheduled to be in service in early 2013. With current projects such as this, as well as upcoming projects, Enbridge plans on more than doubling its 2011 capacity, from 235,000 bpd to 475,000 bpd by the end of 2013. “We’re proud of the difference we are making in North Dakota, both professionally by transporting more Bakken crude in an environmentally friendly and safe manner, as well as from a community standpoint with our 50th anniversary donation to the Williston Fire Department,” says Moeller. Over the years, Enbridge has invested more than $1 billion to expand the Enbridge North Dakota system and increase pipeline access for North Dakota and Montana oil producers. This year’s anniversary celebrations have highlighted the company’s continued involvement in the community while celebrating the ongoing expansions within the Bakken oil formation. n

Mountainview Energy Ltdâ&#x20AC;&#x2122;s mission is to explore, drill and develop for oil and gas in the Williston Basin Bakken/Three Forks Resource Play and the South Alberta Bakken Resource Play. By acquiring these properties we have the opportunity, through exploration and development drilling, to increase our daily production. Our strategy will allow Mountainview Energy Ltd to build an oil and gas company based on solid fundamentals. To accomplish our goals Mountainview will reply on Managementâ&#x20AC;&#x2122;s proven record of over 50-years of developing oil and gas fields, both in private and public companies. TSXV: MWV.W

33 First Ave S.W. P.O. Box 200 Cut Bank, Montana 59427-0200

Phone: (406) 873-2235 Fax: (406) 873-2835 e-mail: mvw@bresnan.net

Mountainview Energy Ltd is a Canadian public company traded on the TSX Venture Exchange

www.mountainviewenergy.com

BNSF Railway

The BNSF and Bakken connection: Sharing a rich heritage and prospects for a bright future

ong before the first train arrived at Williston, N.D., in 1887, visionary James J. Hill recognized the limitless potential of the region, then ripe for agriculture and ranching. But North Dakota was only very lightly populated at the time. Without people, the promise of this rich landscape would be unfulfilled. Rather than build his Great Northern Railway through North Dakota with federal assistance, Hill had another plan. Hill constructed the rail lines first and then worked tirelessly to develop traffic for the new lines. As the track was laid, settlers followed. Known as the “Empire Builder” and one of the visionary founders of what eventually became present-day BNSF Railway, Hill essentially created a customer base while helping to expand the West. The little town of Williston lived up to Hill’s dream, and is once again a boom town thanks to new fracking technology, the huge potential of the oil shale in the Williston Basin, and the ongoing collaboration between BNSF, oil and gas producers, and communities in North Dakota. The railroad that Hill built through Williston has since grown into a 32,000-mile network in 28 states and two Canadian provinces with access to multiple geographic markets. Hill’s legacy of providing creative and long-lasting solutions also carries on at BNSF, which offers efficient, reliable and cost-effective ways to move sweet crude and drilling materials by rail. “BNSF has long been part of the fabric of North Dakota, and the history and experience we share can be leveraged to support the supply chain for the growing oil and gas business in the region,” says Tom Williams, BNSF’s vice president, Industrial Products – Sales. “Our railroad supports all energy-related operations: upstream, midstream and downstream.” Streamlining operations Today, BNSF is a Berkshire Hathaway-owned railroad operating nearly 1,000 miles of rail infrastructure through 16 of the top 19 oil-producing counties in central and western North Dakota and serving 61 stations in the Bakken region, including Williston, Minot, Stanley, Dickinson and Mandan, N.D., as well as Glendive, Mont. BNSF moves railcars, either individually in merchandise train service or in unit trains, depending on the flexibility and capacity shippers require. With individual railcars, BNSF can maximize

BAKKEN OIL REPORT – FALL 2012

the efficiency of shippers’ equipment, providing direct service to or from the origination. Unit-train service can provide more than twice the velocity performance of regular merchandise trains. “Either way, BNSF has the network, the logistics expertise and the resources to deliver long-term, reliable and fast transportation solutions, whether shipping in one or multiple carloads or dedicated unit-rain service,” says Teresa Perkins, general director of business development, Industrial Products – Sales for BNSF. In the Williston Basin, BNSF supports the oil and gas industry’s upstream operations, providing materials for drilling and exploration. This includes much-needed sand, pipe, aggregate and cement. One horizontal drilling rig requires up to 38 railcars of inbound products, and BNSF ships more than 9.5 million tons of sand and drilling materials each year. BNSF is America’s largest crude-by-rail network, supporting midstream operations, or outbound crude and NGL-natural gas liquid business, by providing affordable and reliable access to key markets. “BNSF offers complete market coverage, providing access to all major coastal and inland markets with 40 destination facilities by the end of 2013,” Perkins states. “BNSF also directly serves 30 percent of the U.S. refineries in 14 states.” On the downstream operations side, BNSF moves finished products from refineries (such as diesel fuel, asphalt and plastics) into their final market. Preparing for continued growth As oil and gas production from the Bakken and other formations in the Williston Basin continue to rise – and promise to

A deep reserve of shipping solutions for the oil and gas drilling industry.

BNSF Railway is proud to provide transportation solutions to oil and gas industry customers. Whether youâ&#x20AC;&#x2122;re shipping thousands of barrels of crude oil from or thousands of tons of sand into oil producing regions, weâ&#x20AC;&#x2122;re thankful for every tankful and every carload. Your operations may be upstream, midstream or downstream; wherever you are, your business is mainstream to the mission of BNSF. We have the vast network and the range of services to provide you with long-term, reliable solutions. Let us customize a transportation plan that lowers your cost and increases your shipping capacity.

To drill deeper, call 817-867-0778 or visit www.bnsf.com/shale today.

BNSF Railway

get even bigger in the coming years – BNSF is responding. BNSF’s Economic Development team offers customized, comprehensive facility development services, from site selection and planning to development and startup. With the team’s input, 10 unit-train loading facilities will be operational by the end of 2012 in the region with production efficiencies allowing a 100-tank car train to be filled in less than 24 hours. BNSF customers have spent nearly $1 billion developing these origin crude facilities and associated tank cars. The railroad is also committing capital, investing $86 million in North Dakota in 2012 to bring greater capacity and track efficiency, all part of an overall $3.9-billion capital program this year. Last year, BNSF opened a $30-million new car shop in Minot, N.D., and also added two new inspection tracks there at Gavin Yard to serve the growing freight

volumes moving on its routes through North Dakota. With oil production in the Bakken consistently increasing by 15,000 to 20,000 barrels per day each month and thousands of additional wells anticipated to be drilled there in the coming years, BNSF expects to continue the long and storied partnership in this region. “Since 2010, BNSF has moved 100 million barrels of crude. Decades from now, BNSF will still be providing transportation services all along the energy supply chain, especially in North Dakota,” Williams says. “We’ve been moving products through the region for more than 125 years and are committed to building long-term, sustainable rail solutions for all operations in the years to come. After all, nobody knows the freight transportation in this area like BNSF.” n

Class I, Class II, Class III Nitrogen Services • Production & Frac Cleanouts • Bridge Plug Retrieving Drillouts & Abandonments • Production Logging • Pipeline Cleanouts Estevan: 306.634.8912 | Weyburn: 306.842.8901 | Toll Free: 1.877.580.8901 #3 20th Avenue South East, Weyburn, Saskatchewan

www.essentialenergy.ca 76

BAKKEN OIL REPORT – FALL 2012

Don-Nan Pump & Supply

Oil stream of information By Emerson Norman

“Information technology and business are becoming inextricably interwoven. I don’t think anybody can talk meaningfully about one without talking about the other.” – Bill Gates

mobile ad spending is on pace for a 96.6

can easily be exported into an Excel

percent increase from 2011.

spreadsheet for engineers and production

well performance for engineers and

Enter PumpTrak, a new online

superintendents to organize and view

production superintendents. Large

database created by an oilfield service

how they see fit by the past week, month,

oil companies have had the privilege

company called Don-Nan, headquartered

quarter, or previous year. The information

of utilizing sophisticated software for

out of Midland, Texas. Initially designed

can be localized to a central well or an

years in their exploration initiatives. That

to keep track of well history with regard

entire lease of wells. And, there are plans

technology is now flowing downstream

to subsurface pumps, the database

to provide more data such as tracking

and even over the embankments to

now provides Echometer readings and

tubing anchors and supply orders as

service companies.

Dynamometer videos that display current

customers increasingly clamor for more.

Oil companies like Chevron are at the

activity occurring downhole. Don-Nan

“PumpTrak is really helpful for me as

forefront of the campaign push towards

Pump & Supply provides this system

a well tech,” says Jason Lara, production

seamless integration of technology with

free-of-charge for all of their current

field technician for SM Energy. “I can get

the oil and gas sector, as evidenced

customers to access. With wells, leases,

in and get pump details that sometimes

by their latest ad campaigns. And just

and offices separated sometimes by

are not put in our daily reports. I also

recently, Warren Buffet’s company

hours of drive time, PumpTrak provides

look at failures and the pictures are very

purchased 2.8 million shares in National

information wherever an Internet

helpful. I think it’s easy to navigate and

Oilwell Varco. With that type of financial

connection exists.

very informative.”

backing and Warren’s self-professed

The online database currently provides

While the pump service company (and

love of ad spending (see GEICO), the

pump histories equipped with loads of

API 11AX pump manufacturer) operates

oilfield services will soon be following

data from run-times, cause of failure,

primarily in the Permian Basin in West

the marketing and ad spending that is

costs of repairs, detailed descriptions of

Texas, Don-Nan does provide wholesale

trending toward online services. A recent

failed parts and current parts, and images

pump parts to the Bakken and Three

report from eMarketer noted that U.S.

of serviced pumps. All of this information

Forks areas among other oil and gas

ncreased drilling means more analysis and record-keeping of

BAKKEN OIL REPORT – FALL 2012

IPS CoIled TubIng & nITrogen ServICeS Rock Springs, WY • 307-382-7575 | Minot, ND • 701-838-2286 | Dickinson, ND • 307-367-1602

IPS oPTImIzaTIon ServICeS Pinedale, WY • 307-367-4559

WarrIor e-lIne ServICeS Rock Springs, WY • 307-382-7575 | Casper, WY • 307-234-2433 Greeley, CO • 970-352-3345 | Watford City, ND • 701-842-4268 | Minot, ND • 701-838-2286

WarrIor PreSSure TeSTIng ServICeS Riverton, WY • 307-857-0077 | Evanston, WY • 307-789-9213 | Rock Springs, WY • 307-382-7575 Big Piney, WY • 307-276-5265 | Greeley, CO • 970-352-3345 | Minot, ND • 701-838-2286

WarrIor ProduCTIon TeSTIng ServICeS Riverton, WY • 307-857-0078

WarrIor SnubbIng ServICeS Rock Springs, WY • 307-382-7575 | Dickinson, ND • 701-483-1602

WarrIor SlICklIne ServICeS Grand Junction, CO • 970-263-0400 | Rock Springs, WY • 307-382-7575

merCer SWabbIng ServICeS Rock Springs, WY • 307-362-5615

Superior Energy Services Companies

Don-Nan Pump & Supply

plays throughout the U.S. In an attempt to provide more for their customers, the company would like to provide a similar online database for their wholesale customers to utilize for oil producers. With an influx of fresh, yet inexperienced, engineering talent filling the pool of decision-makers in the O&G sector, many feel that with the right amount of information provided, they can make better production decisions. Colby Marler, a production foreman for Berry Oil, says, “Don-Nan’s PumpTrak is one of the best online tracking systems for inventory, tear-down information, and file database systems for our downhole pump applications.” Before taking the PumpTrak tour, there was some skepticism on the ease of navigating through such a complex and information-intensive database, but even the weariest of computer users should not be afraid. There aren’t many choices 80

BAKKEN OIL REPORT – FALL 2012

to choose from other than selecting one’s lease and well. There is an option to simply select all the wells in a given lease. From there, the user can select a preferred date range to view or decide to pull all known history. Now, there are currently two options for viewing the reports: 1) pump history; or 2) well optimization. A third tab at the top allows engineers and production supervisors to view the current pump templates they’re using across various leases and regions, since these decisionmakers could not possibly keep all of this information memorized. Another option in Don-Nan’s web services provides customers in the Midland, Texas area the option to view live delivery run-boards online so they can see where their current order stands and if the order is still sitting in the shop or enroute. “The engineers I work with say they

love seeing what equipment is actually in the hole, and they like seeing past failures without having to call two to three people,” says Rick Roderick, operations manager at one of the largest pump shops in the nation, Don-Nan Midland. “They can make an assessment much faster in an industry where time is of increasingly high value. Everyone in this industry is being pulled in twenty different directions.” It may have taken a little longer for the O&G service sector to catch up to service sectors in other industries, but the time is here. In the age of information, businesses are conducting faster, more efficient business than ever before. While the old guard may still be hesitant to computers and the Internet, it is shrinking the oilfield just as it has been shrinking the world by bringing multiple parties together in a digital space that may not have been possible years ago. n

Coil Tubing up to 3800m 2 inch

Drillouts, cleanouts, and anything needed for successful well completion

WWW.SIDEWINDERCOIL.COM

Eide Bailly LLP

Transfers of overriding royalty interests Complex accounting rules By Peggy E. Jennings, CPA, Partner/Director of Oil & Gas, Denver, CO

conveyance is the transfer of an ownership interest from one entity to another. Accounting requirements can be complex when recording the conveyance of mineral interests, as a single transaction may involve multiple types of transfers that require separate accounting. The transfer of royalty interests can be as complex as the transfer of working interests.

most applicable standard appears to be Accounting Standards

Two common transactions include: • Sale of an override from an unproved property: treated as a recovery of cost until the book value of the original property (or original cost if group impairment has been used) has been recovered; any excess is treated as a gain. • Sale of an override from a proved property with no working interest retained: considered by accounting standards to be the sale of an entire proved property interest whereby gain or loss is recognized for successful efforts accounting, and generally treated as a recovery of capitalized pool cost for full-cost pool accounting. When an undivided portion of an override is sold, the seller recognizes gain or loss by allocating the override’s book value between the portion sold and portion retained based on their relative fair values. A more complex transaction is the sale of an override carved from a working interest in proved property. There are conflicts between accounting standards; however, the

by apportioning book value to the asset sold and the asset

Sidney R ental

Codification topic 932-360-40-8 which requires that a loss on such a transaction should be recognized at the time of conveyance, but not a gain. Gain or loss is measured to determine whether a loss exists (and must be recognized) or whether a gain exists (and the sales proceeds are then credited to the cost of the asset). Gain or loss is measured retained in proportion to their relative fair values. Conveying an override to a key employee is not unusual and many companies have agreements with key employees to hold a carried working interest or a net profits interest on their behalf. While conveyed in substance to key employees, title may not transfer until certain future economic events take place with regard to specific properties or investments. Often, such conveyances occur before the property becomes proved and the value is usually nominal and immaterial. In theory, this type of conveyance should be recorded at fair value (with a charge to wage expense). Hence, conveyance of an override after well completion may add considerably to the charge. Certain types of overrides (term overrides) do not extend to the end of the property’s economic life in that they have a shorter duration than the underlying working interest. Term overrides can be limited in either quantity or time. Generally, term overrides are construed to be production payments and,

Dennis Lorenz Manager Phone: 406-433-8338

Cell: 406-489-8338 Fax: 406-433-8340 2508 Lincoln Avenue South Sidney, MT 59270

if so, are accounted for as either volume production payments or loans. The brief discussion here addresses a portion of the applicable generally accepted accounting principles related to conveyances. Another important consideration is the income tax treatment of the same transactions, which can be sharply different than the accounting treatment. Please contact an Eide Bailly professional with questions

Tool & Equipment Rental • Wacker Sales

concerning either the accounting treatment or the income tax treatment of these types of transactions.

BAKKEN OIL REPORT – FALL 2012

Bakken Formation Flow-Back Specialists “The Rest is Just Iron”

Guiding Principals Work Safe...People First Respect the Environment The Right Equipment…The Right People…The Right Result Customer Satisfaction Always

Minot, North Dakota Ph: 701-858-1718 Sidney, Montana Ph: 406-433-8840 Toll Free / Sales Ph: 888-701-4171

www.ameritest.us.com

API â&#x20AC;&#x201C; Williston Basin Chapter

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2012

PHOTOGRAPHY BY RENEA MITCHELL.

he Williston Basin Chapter of the American Petroleum Institute (API) is a nonprofit organization comprised of service-oriented individuals who serve the local oil and gas industry, as well as the surrounding community. Our corporate members, from the largest major oil company to the smallest of independents, come from all sectors of the industry. They are producers, refiners, suppliers, pipeline operators, as well as service and supply companies that support all segments of the industry. Our members are committed to develop and adhere to the highest-level industry standards, protect the environment, and lead in health and safety performance. The Williston Basin API Chapter is committed to supporting the community and its growth. We hold two fundraising events a year, where the proceeds are used for scholarships and numerous donations to other organizations and events. The 30th annual Chili Cook Off will be held in February of 2013. The Chili Cook Off is one of the most popular events of the year. Over twenty teams compete to win the trophy. The prizes consist of first through sixth places that come with a trophy and a cash prize. The best-decorated booth holds memorable moments with a variety of imaginations and decorations. The Bakken Bread Winner is a new award started in 2012. This award allows the teams to collect donations from the attendees. The team with the most amount of money (for the community) wins the Bakken Bread Winner Traveling Trophy. With a live band and a dance following the competition, and safe transportation at the end of the night, the 2012 Chili Cook Off is an historical event in the Bakken area. The other annual event is the API Williston Basin Chapter Golf Tournament. The tournament is a two-day event involving The Links of North Dakota and Eagle Ridge Golf Courses. With 72 six-man teams, the courses are filled with a variety of companies sponsoring food holes along with representatives of every corner of the industry. A golferâ&#x20AC;&#x2122;s banquet follows the first day of golfing and an award night following the second day. With weather permitting us only to play one of the two days this year, we will still move forward, planning another two-day tournament in 2013. This tournament offers an amazing opportunity to network and celebrate our interaction. All proceeds to these events are used for the community and surrounding areas. The Williston API is a proud sponsor of educational scholarships for local high school graduates, youth sporting organizations, cultural programs, and several other organizations and events. Over the years, our chapter has supported The Boy Scouts of America, The Salvation Army, Relay for Life, Mentors and Friends, Williston State College, Mercy Community Sale, Williston Band Day, Dance Fever, The Chokecherry Festival, The Tioga Farm Festival, Community Builders playground and splash pad projects, and The Quality of Life. It is a goal to make an impact in the community where we live and work.

Achievement Awards The Williston API Achievement Awards celebrate the many positive contributions and accomplishments of the oil and gas industry throughout the Williston Basin. The awards recognize the achievements of companies and individuals whose tireless work, innovative solutions, varied business activities, and community involvement produce the energy and economic activity that fuel our communities and country. The three awards to be presented include Industry Innovation, Community Service and Outstanding Achievement. Industry Innovation Award The Industry Innovation Award recognizes significant achievement for advancements in technology, systems, processes and the application thereof in the oil and gas industry in the Williston Basin. Innovative technologies and processes have led not only to the development of oil and gas resources in the Williston Basin but have also provided solutions to associated challenges such as reducing gas flaring, controlling dust, reducing truck traffic, increasing recovery percentage and more. Granting this award provides a venue for showcasing these innovations and the dedicated companies and professionals who contribute to the continued growth and prosperity of our industry and communities.

Community Service Award The Community Service Award seeks to recognize individuals and organizations for their commitment to their community and contributions to community service. Nominees’ contributions of time and resources bolster community pride, enable local non-profits to meet their missions, strengthen our community boards of directors, and help solve community challenges. Outstanding Achievement The Outstanding Achievement Award identifies individuals and organizations deserving of recognition for an activity or accomplishment that can be described as an outstanding achievement in the Williston Basin. It may include an individual or company that has made a significant impact over a long period of time, or it may include a single event that fundamentally changes the way something is done. There are many diverse activities and accomplishments that may deserve such recognition and therefore the criteria are general in nature. Membership and Meetings API meetings have recently changed location and date; we’ll be meeting the second Tuesday of every month from September to May and the location is at the Airport International Inn. The meeting begins with a social starting at 6:30 p.m., dinner at 7 p.m., followed by a company presentation. If you’re interested in sponsoring a dinner meeting or presenting at one, please visit our website at www. willistonapi.com to obtain more information. You can sign up for email list; however, if you want to join and become a member, you must download a membership application and either mail it to Williston API PO box 546, Williston, N.D. 58802-0546 or bring it to one of our meetings. n

Kathleen neset Geologist

PO Box 730 | 117 North Welo Street | Tioga, ND 58852 Office: (701) 664-1492 | Fax: (701) 664-1491 | Email: ncsoffice@nesetconsulting.com

www.nesetconsulting.com BAKKEN OIL REPORT – FALL 2012

Williston State College

From classroom to career

Petroleum production technology at Williston State By Mary A. Stenberg

illiston State College is located in the heart of the Bakken oilfields and the school and its workforce training division, known as TrainND, is working to keep up with the changing and unique needs of the oil industry. One way in which the school is trying to help is by developing courses and programs of study that will be of use to the industry and will help provide trained employees who are read to work – a commodity that is in short supply in the middle of this latest oil boom. The Petroleum Production Technology Program, now up and running with six students in its second semester, is a program of study which will be of great benefit to oil companies looking for employees who have some basic knowledge of what will be required of them on the job site. Billy Giles, the current Petroleum Production Technology instructor, helped develop the program, which he modeled after similar programs he helped develop in Texas. This program was later adopted by other schools, including Pennsylvania State as well as several schools in Louisiana and Mississippi. Giles, who has 30 years’ experience developing training courses for the oil industry, earned his degree in engineering technology from West Texas A & M. He started his employment with WSC in December 2011. “They had done a little bit of work getting the program ready to go, then I started here in December and reworked it, modeling it after ones I did in Texas,” 86

BAKKEN OIL REPORT – FALL 2012

Close up of gauges and valves on a simulator used for instruction at the Petroleum Safety and Technology Center. he says. “We had the program in Texas that a lot of schools around the country adopted – Pennsylvania State is one of those schools – that used our same curriculum.” The program is a two-year course of study which, when completed, will earn the successful students an associate’s degree. “It was a very successful program in Texas, but I don’t know how well it will work here in Williston. With all the work that is currently available and with housing being so expensive – if you can find housing at all – it’s hard to get anyone to commit to two years of schooling,” Giles states. He says that they are working now to develop short-term training which would be anywhere from three to six months long.

“It would be very specific to what companies need. We’re working to get individuals trained and out on the job so they don’t have to wait to get a job.” He explains that the program is industry driven, with the courses being created around what the oil companies have said they want their potential employees to learn. “They are telling us what they want us to teach,” he says. “We are not telling them what we will teach. That’s a big plus for this program.” He says that the program has six students enrolled, most of whom are going for the one-year certificate. “Essentially, they will have received enough training that a company will be able to hire them and not start their training at square one, like they would with someone walking in off the street

WILLISTON STATE COLLEGE making the [difference] [in academics]

Over 25 career & technical programs offered. Associate degree leading to university transfer in more than 70 areas of study. On campus, online and interactive video methods of delivery. Providing in-demand careers, supplying the Bakken with skilled workers in healthcare, business & other areas of industry.

[for the future]

New & continued partnerships with business & industry to meet workforce demands. Construction of $67 million community recreation facility to begin Summer 2012. Construction of 74-unit apartment to begin Fall 2012, to house Willistonâ&#x20AC;&#x2122;s growing workforce.

[in financial aid]

Eighty-six percent of enrolled WSC students and nearly every degree-seeking student receive some type of financial aid. Tuition for the 2012-2013 academic year is $3,020.40 (based on a 16-credit semester). The WSC Foundation has nearly $1 million in scholarship dollars to award annually.

For more information, please call 701.774.4200 or visit willistonstate.edu

Williston State College

Petroleum Production Technology student Edward Spencer poses outside Stevens Hall. who has no prior experience,” Giles says. “[Students] will understand what the oil business is, what the job functions are and have a very basic knowledge of the oil field. They will be good entry-level employees at this point, but leaps and bounds above the man or woman off the street.” He adds that they will know the equipment that is being used, will have much of the necessary safety training under their belts and will understand the business. “They will be ready to be trained for a company’s specific applications at that point.” While he is pleased with where the program is headed, he is worried about the publicity that the area has received and the influx of people who are not prepared for what they will find here. “What scares me is the people who pack up their lives and move here without a plan,” he says. “If these people (in the petroleum tech program at WSC) didn’t have student housing, etc., they’d be in trouble. People need to make sure they have accommodations before they pull up and make a move up here.” A STUDENT’S PERSPECTIVE For Ed Spencer, who traveled to Williston from Boston, Mass., to earn a degree in the Petroleum Production 88

BAKKEN OIL REPORT – FALL 2012

Billy Giles, Petroleum Production Technology instructor, stands outside the TrainND building on campus.

Technology Program, this is an opportunity for him to check out the oil industry and what it has to offer. He earned his associates degree in paralegal studies last year in Massachusetts, and was looking for work. “I was looking at a couple of run of the mill jobs, but felt I needed to do something different,” Spencer explains. “Through the media, I was watching what was going on here in Williston and found out about the petroleum tech program. It seemed to me there is a tremendous amount of opportunity in this area of the country and I decided to give it a try. “There are a lot of changes going on here and it’s interesting talking with and listening to the people who are here, both those who have just moved here and those who have been here for a long time. There are lots of people from all around the country – it’s so interesting and exciting, which is what I love about the area.” Spencer adds that he did some research, looked at the potential for earnings one could get after completing the program, and found it worth trying. At this time, his plan is to graduate from the program and get a job as a lease operator. As such, he will be responsible to measure and maintain oil wells as they are producing, making sure the calibrations are correct and that the well is operating smoothly.

“As a new student who’s learning lots of things fast, that is how I understand it,” he laughs. “The program isn’t about learning the job of drilling wells, but about maintaining wells after they are producing.” With just a few days of instruction under his belt, Spencer is looking forward to what he will learn – including what the oil and gas industry is about, the electronics and the production work, as well as learning to manage and operate controls for the systems, which are mostly computer controlled. And when his year here is up, he would like to stay in the area, using his newly acquired knowledge and experience. “I will go where the job opportunities come from,” Spencer states. “I came here because of what is going on up here and if there is an opportunity for me when I finish, I don’t see any particular reason to leave. I’m here to focus on the opportunity and my studies, and to get well-paid, gainful employment.” For more information on the Petroleum Production Technology Program, contact Giles at 701-774-4554 or toll-free at 1-866-938-6963, or email him at william.giles@willistonstate.edu. More information can also be found on the WSC website, www.willistonstate.edu. n

KLJ has worked with oil and gas companies for more than 70 years in the Bakken Shale Formation. We conducted 75 percent of the surveying work, finalized 45 Environmental Assessments on Reservations, performed thousands of miles of archaeological surveys and mapped hundreds of miles of pipeline in 2011. Our professionals are on site collaborating with our clientâ&#x20AC;&#x2122;s field staff, acquiring data needed to complete projects and serve as client liaison between local, state, federal and Tribal agencies.

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Citadel Advisory Group

When opportunity knocks, take care who you let in The importance of hiring a properly licensed M&A advisor By Chris Frevert, Founder/Managing Director, Citadel Advisory Group, LLC

he oilfield industry is one characterized by astounding highs and abysmal lows. As the price of the commodity goes, so

Rules are Rules Since the global financial crisis reared its ugly head in 2008,

too goes the strength of the merger and acquisition market for

the SEC and FINRA have taken a keen interest in protecting

companies involved in producing that commodity. Ultimately,

investors. This translated into increased oversight in areas not

when the market is at its highest, an influx of M&A advisors and

previously governed by their rule, namely the sale of businesses

business brokers flood the hottest basins. At times, not a week

involving securities – i.e., stock versus asset sales. FINRA

goes by without someone knocking on your door, professing to

requires that M&A advisors hold the Series 79 license to perform

have an investor already lined up to buy your business. But before

securities-based transactions. The rub for many traditional

you sign on the dotted line, there are many key points to consider

business brokers is the expense and oversight required to

before trusting an advisor with your business.

become a registered representative. Brokers not taking the time to

Maximizing Returns for Energy Service Companies Citadel Advisory Group assists companies across the country in need of growth capital, strategic acquisitions, divestitures or exit planning. • Over 100 Completed Transactions • Over 50 Energy Services Transactions • Nearly 30 Additional Advisory Engagements Chris Frevert, Partner ‐ 970.267.0802 Call for a complimentary market evaluation. All inquiries are confidential. 2120 Milestone Dr., Ste. 103 Fort Collins, CO 80525 Toll Free: 877.267.0802 90

BAKKEN OIL REPORT – FALL 2012

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WHERE PROGRESS MEETS PRESERVATION Providing cultural resource inventories and GPR services throughout the Great Plains, our services include: • NEPA & NHPA compliance assistance • Archaeological inventories • Native American consultation • Architectural history

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get properly licensed are throwing up a red flag as to how much effort they’ll put into your transaction. Check if the advisor you’re considering working with is properly licensed by visiting www. FINRA.org/Investors/ToolsCalculators/BrokerCheck. And keep in mind, oftentimes it’s not known at the start of a transaction if the buyer will want to turn an asset sale into a stock transaction. Ignorance of the law is no defense. Not a One-Size-Fits-All Approach You should consider what you, as a business owner, want to do. Many times selling outright is not the answer. You had a vision long ago when you started your company with one truck and hundreds of hours behind the wheel, and today you still have the drive and knowledge to grow your business. If you’re ready to take some, but not all, of your chips off the table – you’re looking for a partner, not an exit plan. Traditional business brokers are prohibited from offering anything less than the sale of 100 percent of the company, which means they can’t market your company to a large group of financial buyers; private equity groups. Deal Structure and Your Bottom Line How you get paid at the closing table is a key consideration when choosing an M&A advisor. Both financial and strategic investors may insist on securities as part of their terms. If your deal turns from an asset sale to a securities transaction, only a properly FINRA-licensed advisor may legally represent you. Or perhaps you want to raise capital and acquire other companies – only a FINRA licensed securities representative can legally handle a capital raise. It’s important to note here that simply being an attorney does not qualify one to handle a securities transaction.

often posting an “asking price” rather than letting the market potentially drive the price higher. Check “under the hood” to see what type of transactions they’ve completed in the past. Spend some time talking with the team that would handle your transaction. Do they understand your industry and have relationships with a well-rounded investor pool? Will they advise you every step of the way, even after the transaction closes? Will they handle the entire process with confidentiality and a high degree of professionalism? Have they taken the time to be properly licensed? Never Pay an Upfront Fee Like bad contractors swarming regions after a natural disaster, hot basins can attract business brokers that are in it for a quick buck. You should never pay an upfront fee for an Offering Memorandum or other sell-side services. There are too many horror stories of brokers who talk a good game and collect a fee without any intention of ever selling your business. Don’t let that happen to you. Take Care Who You Let In Choosing an advisor whom you trust and respect is a decision not to be taken lightly. Interview different M&A professionals, check their credentials, and make sure they live and breathe your industry. As M&A activity heats up in the major oil and gas basins around the country, you can bet there will be more knocks on your door than ever. Don’t let just anyone in. About the Author: Chris Frevert has 15 years of experience in mergers

Beware of Ill-Equipped Advisors Check out their past transactions: do they speak your language, or are they more skilled at selling real estate, restaurants, or flower shops? These types of “main street” brokers merely take their real estate agent approach and apply it to your business,

and acquisitions, corporate finance, investment banking and client advisory services. He is widely known as an industry expert in oilfield-related mergers and acquisitions with a particular emphasis on energy service

Oilfield Locations, Roads All Types of Dirt Work Snow Removal 24 Hour Service

companies. Chris is also the president of Caroden Energy, an independent O&G company with operations in Central Kansas, and he holds the Series 7, 66, and 79 licenses. Citadel Advisory Group is an investment banking firm specializing in oil and gas service companies. With more than 50 oil & gas transactions, and numerous advisory engagements, Citadel’s team

Box 1046, Sidney, Montana Office (406) 482-4760

is focused on the energy services sector. Citadel Advisory Group offers securities transactions through Hunter Wise Securities, LLC, registered broker/dealer, FINRA/SIPC member firm, a wholly owned subsidiary of Hunter Wise Financial Group, LLC. n

BAKKEN OIL REPORT – FALL 2012

Trucking industry cites concerns regarding federal oilfield rule By Barry “Spook” Stang

ederal regulatory “guidance” issued in June restricting the number of oil and gas drivers allowed to extend their workdays beyond the 14-hour limit could have significant adverse economic and safety implications for the trucking industry, several truckers said in comments filed earlier in July. The Federal Motor Carrier Safety Administration (FMCSA) said that the new provision allows drivers who are waiting at oil or gas well sites to count that time as off-duty – but that the exemption applies only for trucks that are “specially constructed for use at oil and gas sites” and whose operators require “extensive” training for the use of the equipment. But nearly all of the more than 25 public commenters, including American Trucking Associations (ATA), agreed that the guidance should be withdrawn and the FMCSA should seek greater input from the industry. “The operational changes required to comply with the new guidance will require more trucks, more drivers, and could very easily reach into the millions of dollars,” ATA wrote. “At the same time, ATA is not aware that the FMCSA has initiated any research as to the safety effects of this change.” ATA said the guidance changes have the potential to “render some sites economically unfeasible for exploration, hobbling America’s efforts toward energy independence.” “Ultimately, the unknowns are simply too great,” ATA wrote. “The FMCSA needs to pursue further research in this matter before changing the playing field.” The FMCSA said the guidance did not constitute a rule and was done only to clarify current regulations in response to questions raised by carriers. “A significant increase in oil and gas drilling operations in many states has resulted in a major increase in [truck] traffic to move the

inexperienced drivers on the road. Director Ferro committed to taking another look at this and to extending the comment period, which ended July 27th 2012.

oilfield equipment, and to transport large quantities of supplies, such as water and sand, to the sites,” FMCSA’s guidance stated. The Motor Carriers of Montana (MCM) Board of Directors filed comments on behalf of MCM member companies. At a recent ATA meeting, association execs, including the author, met with FMCSA director Ann Ferro to explain our frustration with the guidance. Our main concern is that this ruling may mean more trucks would be on the road in an area that has already seen expanded CMV traffic, and that more drivers may be needed at a time when they are already hard to find. This shortage may result in a large number of

About the Author: Barry “Spook” Stang has served as executive vice president of Motor Carriers of Montana since 2001. Spook was raised in St. Regis, Montana, where he was a partner in the family grocery store. As well, he has served in the Montana House of Representatives and Montana State Senate from 1986 until 2001. n Stay tuned for an update on this issue in a future edition of the Bakken Oil Report.

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BAKKEN OIL REPORT – FALL 2012

star building systems

The pizzazz of refab Star metal buildings bring charm and function to the oil and gas industry

etal buildings are boring. Supposedly. The idea of a pre-fabricated metal structure can conjure up the idea of a square building with less character than a 1950s lunchbox. The exterior is cold, the interior monotonous. It’s affordable but drab; fast but featureless. Supposedly. Mike Dunn is one of a 1,000 authorized Star Builders nationwide who is proving otherwise. As the business development manager for Construction Engineers, Ltd. in Grand Forks, North Dakota, Dunn isn’t churning out lunchboxes. In five years, Construction Engineers has built nearly 215,000 square feet of Star Buildings in North Dakota, erecting everything from warehouses to offices to compressor stations for the oil and gas industry in the Williston Basin. Each structure is designed specifically to the client, from the visual

BAKKEN OIL REPORT – FALL 2012

wants to the practical needs. That could mean building with the practical desire for low maintenance and longevity to building with the more personal desire for an abundance of daylight. All is individualized. In 2009, Dunn proved that steel buildings have aesthetic grace by winning the Star Building Systems Master Builder Award for Hess Corporation’s office complex in Tioga, North Dakota. Designed with a desire for a professional exterior in a rural

environment, the Hess complex incorporated multiple cupolas and window systems to bring inside all the fresh light, while the outside masonry gave a sense of class. “Huddle rooms”, areas where three or four people can get together on work projects and meetings, were designed throughout the building to allow for a culture focused on teamwork. Even the layout of the building was painstakingly custom-detailed so that the public traffic and private offices were welcome but separate.

Building America始s Boomtowns Star Building Systems is the leader in custom designed metal building systems for the oil and gas industry. For more than 85 years, we have set the standard in affordable, versatile, quick-to-market buildings that both meet and exceed customer expectations. With 1,000+ authorized Star Builders throughout the U.S. and internationally, and manufacturing plants strategically placed for speed-to-market delivery, we guarantee faster construction, which builds faster profitability for you.

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“Branding is important for Hess,” Dunn says of the more than 65,000-squarefoot project. “The green roof and green accents throughout the building are a Hess color and critical to the design.” Goodbye lunchbox. Of course, Star Buildings aren’t only a pretty face. Their materials are top-of-the-line, with high-grade metal, premium components, and all 99 percent recyclable. And, just to show off, they are also the fastest, most affordable way to create additions or new constructions even in seriously aggressive weather. “Star Systems are a great fit for fastpaced design-build delivery. Through working with Star, we can develop early project cost estimates and project schedules to share with our clients, which allows them to plan their operations around the completion of the facility,” says Dunn. “Our crews have developed

innovative ways to erect the building with limited labor and in all 12 months of the year. The extreme weather conditions are not an issue for us to get a building up.” The availability of quality materials and skilled labor are the reasons why Tyson Bittner, the vice-president of Industrial Enterprises, Inc., a general contractor in Bismarck, North Dakota, looks to Star Buildings when he’s looking to build. “Star Buildings are a well-known brand,” says Bittner, “with a good track record around the country. They have good sales literature, a website with lots of information, and it’s always easy to find a dealer/building in your area online.” Star Buildings aligns itself with local contractors, while also providing warehouses with manufacturing facilities nationwide in order to aid those local builders. It is this unique approach that gives their customers the best of both

worlds – the support and resources of a national company, the personalization and intimacy of a local builder. “We hold four builder schools a year so Star Builders can estimate and revise buildings in their own office, while sitting with their client,” says PJ Bogensberger, Heartland district manager for Star Building Systems. “We hold national sales meetings, along with quarterly newsletters, to keep our builders upto-date with changes in the industry or product improvements. Each builder has their own district manager, estimator, and building system representative so they can build a relationship with a team.” With Star Buildings metal structures, you can have the speedy construction, the lower cost, the environmentally-friendly materials, the local contractor and the 25year warranty, all while turning heads for a second look. n

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Specializing in Frac Tank Spray Foam Insulation Frac Tanks are used to store heated water for injection into an oil well along with a sand or synthetic material which, under extreme pressure and volume, fractures the strata allowing the oil and gas to flow more easily to enable pumping to the surface. These tanks are commonly made of single wall steel and hold 500 barrels of water or about 21,000 gallons. The tanks are transported empty, moved in place in a row next to the drilling rig, filled with water and heated by a mobile boiler fired with Liquid Propane Gas. With Heatlok-Soy spray foam applied to these Frac Tanks, daily energy usage can be greatly reduced, especially in cold weather months. The spray foam insulation allows the tanks to hold their temperature longer, significantly reducing the amount of energy needed to keep the contents of the tank heated throughout the day. Take advantage of our spray foam process and let us insulate your Frac Tanks today, then sit back and enjoy the energy savings like these clients are. Steveâ&#x20AC;&#x2122;s Sprayfoam Insulation Tim Mamali: tim@fracfoam.com P 701.842.3105 | F 701.842.3106

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The Frac Tank Spray Foam InSulaTIon proceSS Step 1: The Frac Tank is placed into our climate-controlled facility and cleaned to remove all dirt and oil residue. We then prep with plastic and masking tape for overspray protection. Two inches of Heatlok-Soy spray foam is applied to the entire tank and allowed to cure for 24 hours. Step 2: To protect the cured foam from the weather and elements, MaxGuard protective coating is applied to the exterior of the spray foam insulation and allowed to cure for an additional 24 hours. Step 3: The spray foam insulation allows the tanks to hold their temperatures longer, significantly reducing the amount of energy needed to keep the frak tanks heated throughout the day.

university of Mary

New Energy Management MBA fills industry, career needs W

ith a significant portion of the energy industry’s explosive growth taking place in its own backyard, the Bismarck, N.D.,-based University of Mary is launching a new graduate degree program this fall to prepare leaders to deal with accompanying challenges on the management front. An accelerated, flexible online format, a curriculum designed by experts in the energy management field and taught by qualified instructors, and the university’s proven approach to integrating students’ on-the-job experiences with current management theory provide the opportunity to earn a meaningful degree in as few as 24 months. “The MBA–Energy Management program focuses on developing management and leadership skills in the

BAKKEN OIL REPORT – FALL 2012

context of the challenges presented by the burgeoning energy sector,” says program director Tim Moore. “Building on U-Mary’s core MBA program, the curriculum allows students to expand their individual expertise, enabling them to advance into management or to adapt their existing management background to meet the specific challenges of the energy field.” In addition to incorporating career and prior learning experiences, the new program is specifically designed to fit adult learners’ busy lives. U-Mary’s MBA–Energy Management is offered in an accelerated format and is available completely online, with the added feature of an interactive video network (IVN). This advanced video technology makes it possible for students to interact with other

Dr. Shanda Traiser, Gary Tharaldson School of Business dean. students and facilitators and for experts to share their knowledge, no matter where they may be located. Courses are delivered by highly qualified faculty who hold masters or doctoral degrees in the field in which they teach. The faculty are also recognized as business and community leaders and bring a “real world” perspective to classroom discussions. Moore, an experienced U-Mary adjunct faculty member, has extensive knowledge of the energy industry and professional ties with many leaders in the energy community. He was instrumental in the development of the program’s curriculum. The University of Mary has been a leader in adult education since its founding over 50 years ago. Recognizing the importance of providing and facilitating educational opportunities for adult students with obligations of family, work, and community has been a key expression of the university’s mission to serve the religious, academic, and cultural needs of the people in this region and beyond. Carrying forward its commitment to meeting the needs of the community, the university has made great efforts to reach out to the expanding energy sector with this program to prepare leaders to meet the challenges facing the region now and in the future.

university of Mary

Moore, along with Gary Tharaldson School of Business dean Dr. Shanda Traiser, had numerous conversations with individuals involved in various aspects of the industry to identify learning outcomes for the energy management concentration that would ensure the value of the program to the students and employers. Representatives of the University of Mary also attended various energy events, including the Energy Generation Conference, the Renewable Energy Action Summit in Bismarck, and the Montana Energy Conference to learn more about the industry and raise awareness about U-Mary’s program. “Feedback concerning the MBA–Energy Management program indicates strong support in the community,” notes Traiser. “The university expects to see increasing enrollment in the program as the energy industry continues to expand in the region.” The University of Mary MBA–Energy Management Program is geared toward individuals seeking to enter the energy field or to advance within an organization, with a strong body of administrative knowledge and skills in a less technical role. Students completing the program will be able to: • Examine and interpret energy issues and realities for the energy sector in the 21st century. • Compare and contrast the environmental, regulatory, legal and political environments for various types of companies within the energy sector. • Discriminate differences in energy finance practices from standard business practices. • Evaluate economic factors, energy markets and trading practices utilized within the energy sector. • Assess risk factors for various energy organizations. In keeping with its longstanding emphasis on accessibility, the University of Mary is striving to make its energy management program affordable for individuals and employers who recognize the benefit of advanced education for their employees. U-Mary is partnering

with various organizations to develop scholarship opportunities in which a student from a partnering organization will receive a scholarship to be applied to their tuition throughout their course of study. Since its founding, the University of Mary has endeavored to evolve with the changing needs of the people it serves in this region and beyond. The MBA–Energy Management is one more example of

the university’s commitment to service and leadership, supporting and helping to further the growth that the region has enjoyed with the progress of energy production. For more information about the University of Mary’s MBA–Energy Management Program, visit www.umary.edu/energy. n

the business of energy MBA – Energy Management

The energy business is booming and needs leaders with the expertise and education to meet the challenges of a thriving, constantly changing industry. In addition to vital administration skills, the University of Mary MBA – Energy Management provides a solid background in industry-related: • accounting and finance • regulation and policy

University of Mary Online Center 701-355-8340 800-408-6279, ext. 8340 cadeonline@umary.edu www.umary.edu/energy

• legal topics • challenges

Plus, the entire program can be completed online in just 24 months. BAKKEN OIL REPORT – FALL 2012

canElson drilling

CanElson Drilling – excellence in innovation

ontinuing on a path of excellence and innovation in the drilling industry, CanElson Drilling Inc. (“CanElson”) is continually challenging its people to raise the bar higher. Whether it’s new recruitment initiatives, cost-saving initiatives or industry-leading rig design initiatives, president and CEO Randy Hawkings challenges his people to be leaders in everything they do. One such initiative has been the recruitment of military personnel for its Texas operations. CanElson Drilling (US), Inc. (CanElson’s U.S.-based company) was recently presented the Veterans Employer Award by the Texas Workforce Commissioner Representing Employers at a recent Texas Business Conference. The company was recognized for its efforts to employ military veterans. “The success of our business is based on the quality of our people. In a tight labor market, finding good people can be a challenge. The fact we were able to connect with the military was a win-win situation. The fact we received the award was nice; but the fact we were able to offer employment to these great men who are team players and who realize the importance of safety, was the real win-win here,” says Hawkings. “Drilling people are very adaptable; the challenge is that there’re always things you can do better and that’s what drives people,” says Hawkings, who along with his team is trying to do just that – making things better – in the oil industry. It’s these great drilling people working for CanElson that helped establish an industry-leading initiative. CanGas Solutions Inc., CanElson’s newly formed Compressed Natural Gas (“CNG”) division, is leading the way with environmental changes. The company has a patentpending technology on the use of flared natural gas to displace diesel fuel on its drilling rigs. To help offset CanElson’s carbon footprint of operations, it is actively converting a number of its drilling rigs from pure diesel to a natural gas and diesel fuel bi-fuel system. “Our people, like our customers, never accept that the current practices can’t be changed and/or improved upon. It is this drive for 100

BAKKEN OIL REPORT – FALL 2012

improvements that is changing the way we operate for the better,” Hawkings states. Hawkings’ background as a drilling engineer for more than 33 years, including a number of years working for exploration and production companies, has driven home the importance of offering a total well-cost solution. That is a big driver behind CanElson’s newest initiative. “We are working on developing a triple rig that can be the most efficient moving design out there, and thereby drill long reach horizontal wells more efficiently,” states Hawkings. CanElson knows that a big cost for customers is long and expensive rig moves. Perhaps nowhere is this more prevalent than the North Dakota Bakken, where labor and moving trucks are at a premium. “If we can save the customer time and money on moving and still meet or exceed the customers’ drilling curve target, we know that the customer will put those cost savings into the next well,” Hawkings comments. To date, the company has focused its efforts on building a fleet of primarily heavy-duty telescoping doubles (“tele-doubles”) that drill to measured depths greater than 18,000 feet and can still be moved in less than half a day. This rig is ideally suited to most of today’s resource plays, but Hawkings notes that it is always important to listen to ongoing needs for customers’ drilling programs, including efficient rig moves and environmental stewardship. “If our people continue to look at innovative solutions for cost savings for our customers, we have a good chance of staying busy even during times of commodity price volatility,” states Hawkings. CanElson Drilling Inc. (TSX: CDI) operates contract drilling rigs in Canada, the U.S. and Mexico for oil and natural gas exploration and development companies. CanElson also assembles new drill rigs at a facility in Nisku, Alberta, operates contract oil and gas service rigs in Mexico, and operates a CNG transportation and related services business. For more information about CanElson Drilling Inc. visit www.canelsondrilling.com. n

Experience, leadership, performance.

Since it was established in late 2008, CanElson Drilling Inc. has grown quickly to become one of Canadaâ&#x20AC;&#x2122;s premier drilling contractors. In addition to building its own drilling rigs, the company is expanding its fleet of drilling and service rigs through acquisition. CanElson now operates a fleet of 38 rigs (35 net). With operations in Western Canada, West Texas, North Dakota and Mexico, CanElson Drilling Inc. is setting new standards for rig utilization. With right-sized, purpose-built rigs built for horizontal and resource play drilling and experienced, well-trained crews, the company is achieving new records for cost-effective, efficient drilling operations.

CanElson Drilling Inc. Suite 700, 808 - 4th Avenue SW, Calgary, AB, Canada T2P 3E8 Phone 403.266.3922 Fax 403.266.3968 www.CanElsonDrilling.com TSX: CDI

huesker Inc.

Geosynthetics help the Bakken fuel the world H

eavy equipment is a necessity in energy resource operations. Remote regions, wherein many of the richest energy and mineral stores are found, often contain soils that are not suitably strong enough to support heavy equipment and largescale construction. The Bakken fields are no exception, but the use of geosynthetics allows construction to happen in very poor conditions. Two projects provide exemplary stories on how geosynthetics are being utilized. Well Site Pad Construction When a contractor working on behalf of a major oil company drove onto a proposed site to assess the on-site soil conditions, the scraper alone left three-foot-deep ruts that filled almost immediately with groundwater. The instability of the soil would certainly not allow the site to be developed as-is, and removal and replacement of these poor soils with better materials would be

expensive and time consuming. Finding a new site was discussed as an alternative. The contractor, at the owner’s direction, then proposed the installation of a high-strength, durable geogrid. This solution would require significantly less expensive fill than conventional construction, while still providing the necessary strength and support. The owner agreed and the solution was implemented. The section built consisted of two layers of nonwoven filter fabric, a high-strength HUESKER Fornit® 80/80 geogrid, and a 12inch layer of four-inch rock. This composite solution resulted in a modified or “Reinforced French Drain.” The two layers of filter fabric provided the necessary separation between the wet on-site soils and the four-inch drainage rock. The Fornit® 80/80 geogrid provided the confinement and reinforcement for the overall system. Upon completion of the reinforced French drain, the contractor was able to use on-site soils to complete the pad site. Roughly 24,000 square yards of Fornit® 80/80 geogrid were

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Reinforcing well sites and access roads with HUESKER geogrids

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huesker Inc.

installed. The pad site was completed quickly and economically. Rehabilitating Unpaved Roads Geogrids can be used in applications beyond oilfields. Often, just getting to a site and securing steady access is a problem. County and township roads are often older, and were never engineered to handle the size and volume of traffic experienced in the Bakken fields today. Unpaved roads carry the bulk of the oilfield Unpaved road before geogrid placement.

traffic. Paving these roads to sustain economic growth and modern energy operations would be extremely expensive without reinforcement technology. One contractor, working with a major energy company, proposed the rehabilitation of a number of substandard unpaved roads in its development zone with a geogrid and aggregate design. Grids are engineered to redistribute tensile forces and interlock with the aggregate. The contractor selected a Fornit® 30 geogrid from HUESKER. The design consisted of two to three inches of ¾-inch minus stone, four to eight inches of two-inch minus

Reinforced French Drain.

stone, and a layer of Fornit® 30. Roughly 100,000 square yards of geogrids were installed to improve the area’s roads, which both the energy company and the community appreciated. Today, more than 15 months later, these roads continue to perform well and show no signs of distress. Manufactured with high-strength polypropylene yarns and coated for protection against both installation damage and exposure to ultraviolet rays, Fornit® geogrids are made to last. Strong and durable, they reinforce, confine, and separate unbound aggregate base and subbase materials. Fornit® geogrids are easy to install and are resistant to freeze-thaw conditions and degradation from a wide range of chemicals. By distributing loads over a greater area, Fornit® significantly improves the bearing capacity of subgrade soils. Fornit® has

Placing rock on top of Fornit® 80/80. 104

BAKKEN OIL REPORT – FALL 2012

proven that it’s up to the Bakken’s challenge. n

Helping to fuel the future of the oil industry

• Tax Planning and Preparation • Estate and Wealth Transfer Planning • Accounting for Drilling Costs • Depletion Calculation • Entity Selection for Oil and Gas Activities • Quickbooks Consulting • Bookkeeping and Payroll Services

www.bradymartz.com

John Schell, CPA Bismarck, ND (701) 223-1717

Nathan Sorenson, CPA Dickinson, ND (701) 483-6000

Taryce Mailnaa, CPA Minot, ND (701) 852-0196

oasis petroleum

Oasis Petroleum: pure Bakken

n 2006, following the acquisition of Burlington Resources by ConocoPhillips, a group of senior employees from Burlington began discussing forming their own company. Very few people have the opportunity to start from scratch after so many years of service with one company, but when the time was right, these 13 former Burlington employees did just that. By early 2007, thanks to the persistence and drive of Tommy Nusz, president and CEO, and Taylor Reid, EVP and COO, Oasis Petroleum was formed. The team secured a $100-million commitment from EnCap Investments and also invested a significant amount of their own personal net worth into the start-up. Since many members of the team spent some portion of their careers working in the Williston Basin, it quickly became a focus area for the new company. Within three months of formation, Oasis acquired 175,000 net acres and 1,000 Boepd of production in the Montana and North Dakota portions of the Williston Basin for $83 million. 106

BAKKEN OIL REPORT – FALL 2012

This was followed by several additional transactions, and by 2009 Oasis held approximately 300,000 net acres, having established itself as a significant acreage owner and operator in the fledgling Bakken play. In order to secure the capital required to develop this large position, Oasis went public on the New York Stock Exchange (NYSE) and completed an Initial Public Offering (“IPO”), raising $400 million for the company on June 17, 2010. Fast forward two years to see an organization once employing 35 people, with five rigs running at the time of the IPO, that now has over 250 employees and 10 rigs running. The company’s 4,500 Boepd of production in the second quarter of 2010 has grown to over 20,400 Boepd of production in the second quarter of 2012. Additionally, Oasis launched its own well services subsidiary, Oasis Well Services, to complete a portion of Oasis’s operated wells. Oasis has remained a pure Williston/pure Bakken player with a current position of 320,000 net acres. Lastly, Oasis has a

strong balance sheet with $1.1 billion of liquidity as of June 30, 2012. It’s been an incredible run over these first five years, both as a result of a lot of hard work and the good fortune of being in the right place at the right time. We’ve built a unique organization where every employee takes pride in their personal and professional accomplishments, and all share in the ownership of the Company. Nusz and Reid’s guiding principles in 2007 were to build a company to “do what you want to do with the people you want to do it with”; and “if the company does well, everyone does well.” Those core principles remain today and are embraced by people throughout the company. Oasis has been and will continue to be a growing company. After our first five amazing years of excitement and growth, we still anticipate years of growth ahead of us. We continue to look for talented people to join the team to help shape and share in the future success of Oasis. Oasis Petroleum is listed on the NYSE with the ticker symbol: OAS. n

Pure Bakken Oasis Petroleum Inc. is 100% focused on the Williston Basin and has been since the companyâ&#x20AC;&#x2122;s inception in 2007. We have rapidly grown our acreage position, production, reserves, and employees. With over 320,000 net acres and production in excess of 20,000 barrels of oil equivalent per day in the second quarter of 2012, we have positioned ourselves as one of the leading operators in the Williston Basin. We have 10 rigs currently drilling and are operating Oasis Well Services, which provides completion services exclusively for our operated wells. We now have over 250 exceptional employees and over 100 are located in our new Williston, ND office. We are actively seeking intelligent, innovative, and committed people who want to be challenged, work hard, and have a direct impact on our ongoing success.

Great People. Great Assets. Great Opportunity. 5437 137th Ave, NW Williston, ND 58801 | EOE

OasisPetroleum.com

morgan chase

management

How to succeed in catering without any equipment By Laurie McCarthy

I am a self-described “Yankee” who has lived most of my life in Mississippi. It is by pure happenstance and good fortune that I have spent the last 31 years being involved with and working for a family of caterers who in their early years defined catering in the Deep South. This is a story about my observations in catering in the Williston Basin.

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keep thinking back to 2010 when a series of fortunate meetings and

of people in Mississippi after Hurricane

and people were in Mississippi. How

Katrina, we decided to pursue new

could we possibly do it? We weren’t even

alliances were formed, and North Dakota

opportunities in the Bakken oilfields of

thinking in that direction, but when we

became a second “home” to me and our

North Dakota, providing housing and

first arrived in Williston, a party was about

little band of food aficionados who enjoy

food services for the oil and gas industry

to happen, and it was our own party! We

putting on a good party while catering to

in the area. We were here talking to

were breaking ground on a “crew lodging

our clients. Our company had back then

people, gathering interest, dotting I’s and

facility” (that’s a fancy term for a “man

invested heavily in providing disaster

crossing T’s.

camp” – what I have come to understand

services all across the Gulf Coast; as a

What we were NOT doing was

is a somewhat pejorative term to locals)

direct result of successes we had with

considering the idea of starting a catering

that ascribed to a higher level of service

basecamps and feeding large numbers

business in Williston. All of our equipment

to its clients and the community at large.

BAKKEN OIL REPORT – FALL 2012

OPENING FALL 2012

Our campus will provide your employees with the amenities to make their experience as close to their home away from home while in Our management team consists of the very best professionals in the hospitality, construction, administration and service industries. We will not settle for second best, why should you? Inquire about availability by calling:

701-651-7531 - Sonny Alford salford@pioneerlodgeandcommons.com

701-651-7786 - Mike Pulfer

mpulfer@pioneerlodgeandcommons.com

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701.651.7786

701.664.5587

SERVING NORTHWEST NORTH DAKOTA AND THE COMPLETE BAKKEN AREA & MORE

Wedding â&#x20AC;˘ Social â&#x20AC;˘ Corporate Small events or large - FULL SERVICE CATERING www.vipgrandeventsnd.com

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Mouth Watering Barbeque that will make you smile!

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morgan chase

management

But I digress. Since we were so busy breaking ground for this incredible project, getting all the necessary parts to fit and the work to be done; we felt that we could leave the catering of a little bit of food for our guests – the photographers, editors, business people, politicians and the like – to a caterer in Williston. The mistake we made was thinking that someone else could do what we have been doing for the past 40 years as well as we could, and have the same enthusiasm and willingness to pull it off. Like everyone in Williston and around, the people we picked to cater were busy people; busy with their own restaurants and catering businesses. At the last minute, they decided to take our event off their to-do list – not a profitable enough situation, probably. I really couldn’t blame them – although I was a bit put-out at the time; they made a business decision and besides, the locals have reason to not take outsiders seriously – at least not at first. I get it. So like the pliable businesspeople and caterers we are, we jumped into action. Catering like this was not something we were prepared for at the time. We had to buy everything – from food and presentation ware to napkins. Needless 110

BAKKEN OIL REPORT – FALL 2012

to say, our first little party was a success! People loved our ideas for the crew lodging facility, and loved the food even more. Which now brings me to my current focus in North Dakota… Catering? You know, I love to cater. I love to talk to people about catering. I love to plan cool events that make people say, “Wow!!” I absolutely do not like doing dishes and cleaning up at the end of a fabulous party – but that’s part of the whole, and so it gets done. Our motto: “Leave it better than you found it!” Catering in Williston and the surrounding areas is no easy feat, and I understand why it is so hard to find people/businesses that do it on a large scale in the state. Catering is not an easy life or business. It is one of the few undertakings that progresses from raw materials to production, distribution, service, and clean-up; and then doing it all in one day – and sometimes more than once a day. After we had been here a few weeks and with our first little catering job under our belts, the Williston Basin Energy Festival was in the planning stages. It had been 60 years since oil was discovered in the area and it was a great reason

for a party. We contacted the Chamber of Commerce about being a part of the celebration, and were glad to be of assistance when we mentioned that we could help in a big way with the VIP party that was being planned to say thank you to the pioneers, leaders, and businesses that fueled the growth of the oil business in North Dakota. This is not to say there weren’t others whom the Chamber could have chosen – there are a great many people in the area who are great cooks – but we had the magic combination of time, talent, and the desire to feed 350 people a fancy dinner on fine china that hadn’t ever been served in the area. We were well on our way with our crew lodging facility and were already feeding large numbers of people on a daily basis – so we had all the cooking equipment we needed. What we didn’t have was the fine china, silverware and glasses to pull off an “event” like the VIP party for this Energy Festival. We dove into action on the phone, almost non-stop calling everywhere in North and South Dakota trying to find 600 wine glasses, 500 martini glasses and matching china and silverware for 350 guests. No luck!! So we bought

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morgan chase

management

the glasses, brought in the china from

salad, scrumptious filets, braised greens,

Mississippi, and moved our mobile

and sweet potatoes – and then topped it

kitchen to the party place where we

off with an incredible chocolate dessert.

prepared a four-course meal of crisp

There was a wonderful cocktail hour

where wine and beer were served, and guests were treated to hors d’oeuvres which were scooped up by the delighted guests. The Governor of North Dakota was there; as were Miss North Dakota and the Mayor of Williston – along with 347 others who were very impressed with the meal, the service, and the staff. That was our plan! We wanted to make it known that Morgan Chase Management was “in it” for the long haul, and that we intended to become a part of the community, citizens of Williston, and proud “Nodaks”. My fellow colleagues who log a great deal more time here in North Dakota share my love of this great state and consider themselves “Nodaks” now. The inquiries started coming after these two events, and we had to seriously make a decision about leaving

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morgan chase

management

the business and potential profit on the table; or go into the catering business. (It is important to note is that the future is bright in northwest North Dakota for businesses like ours who want to serve their clients and work hard to bring sustainable business, quality housing, and residential services to the Bakken area.) That was then; this is now. We thought long and hard about it and are officially jumping in to the catering business in northwest North Dakota. The great thing about this was that we had to pick a name for the catering arm of our business. We have two great partners in our business who are BBQ kings from Oklahoma. We decided on “Fat Sally’s BBQ” for our BBQ and picnic side and “VIP Grand Events North Dakota” for our more upscale catering side. Fat Sally’s BBQ and VIP Grand Events

North Dakota – a great pair and a great asset to the Morgan Chase Management team. Currently, we are working on a catering agreement with the Hampton Inn and Microtel Inns & Suites to be their exclusive caterer, and our event planner spends days working with and talking to people and businesses who have sampled our wares and have come back for more. We are looking forward to the Bakken Oil Show in October, a great many business after-hours and corporate events as well as weddings, engagement parties, and social functions. We are working smart these days and bringing our abilities to the attention of people, while not trying to over commit ourselves. It is important to know that we are made up of locals from the Williston area and transplants who are committed to bringing a new level of

catering to the Bakken area. We are still small and growing, as each new business is in its initial stages. We are adding to our equipment and presentation ware slowly. We are here for the long haul. Watch us grow! About the Author: Laurie McCarthy is president of professional management company Morgan Chase Management, Inc. and VIP Grand Events North Dakota. Contact her at: laurie@ morganchasemanagement.com. n

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MVTL Laboratories Ltd.

MVTL: your partner in analytical chemistry

hirty-five years ago, MVTL expanded its service area by establishing a laboratory in Bismarck, North Dakota to meet the needs of the coal mining and power generation industries. Over the years, we have developed a high level of skill in environmental testing and fuel quality analysis. Fortunately these skills can be directly applied to the oil and gas industry as well. In 2010, it became obvious to us that the rapidly expanding Bakken play would create a greater demand for, and a broader range of, analytical services. Anticipating this need, we built and moved into our new state-of-the-art laboratory, which we opened in the summer of 2011. Water is a key component of oil and gas exploration and production. Water supplies originate from multiple sources including ground water, surface water, flow-back and produced water. This water in turn is used in a variety of ways including drilling, hydraulic fracturing, pipeline testing and general cleaning. An array of analyses are required to evaluate the suitability of water for these various uses and

114

BAKKEN OIL REPORT – FALL 2012

ultimately for its appropriate discharge or disposal. Inorganic analyses normally include mineral profiles, salts and metals. Organic analyses typically include Gasoline Range Organics (GRO), Diesel Range Organics (DRO), Volatile Organic Compounds (VOC) and Polynuclear Aromatic Hydrocarbons (PAHs). As drilling activity in the Bakken progresses, we are seeing an increasing need for analysis of solid material such as soils, drill cuttings, sludges and occasionally, “unknown” materials. These solid materials often require a wide variety of organic and inorganic analyses as well as special processing and extraction techniques such as Toxicity Characteristic Leaching Procedure (TCLP) and Synthetic Precipitation Leaching Procedure (SPLP). MVTL is proud to serve a variety of professions working in the Bakken from our laboratory in Bismarck, N.D. These clients include consultants, engineers, drillers, pipeline operators, transportation firms, special waste handlers and disposal companies.

Protecting the fragile environment above the Bakken shale and preserving the Great Plains’ legacy for the generations to come is our license to operate. Whether your activity in the Bakken involves the extraction of energy, its transportation to market, the development of a technology that will alter yesterday’s waste into tomorrow’s useable product or reclamation and safe disposal, MVTL is here to help. MVTL has 60 years of analytical expertise in many diverse industries. The one overriding constant is our ability to work closely with our customers, to understand their needs and to assist them with their analytical requirement. As the O&G industry continues to evolve in the Bakken, MVTL is here to help you solve your problem, enhance your products and services and to earn the right to be your “go-to” lab. Contact Jeff Reiser at our Bismarck laboratory to discuss your testing needs. Jeff is available at: 701-258-9720 or 800-279-6885. He can also be reached via email at jreiser@mvtl.com. n

RELY ON MVTL

FOR QUALITY ANALYTICAL & SAMPLING SERVICES Surface & Ground Water Drinking Water Wastewater Biosolids Soil & Overburden Solid Waste Waste Characterization Industrial Waste Priority Pollutants Coal & Petroleum Products Hydrocarbon Residues Field Sampling Services Wastewater Flow Studies Rental of Flow Recorders & Sampling Equipment MVTL Laboratories, Inc. 2616 East Broadway Avenue Bismarck, ND 58501 P: 701.258.9720 F: 701.258.9724 E: csc@mvtl.com Toll Free: 800.279.6885 www.mvtl.com

xylem inc.

Navigating the landscape of hydraulic fracturing By Kristen Gurick

ver the past few years, increased awareness of environmental impact has led to a need for greener, safer methods and technologies. Clean energy is an essential part of this, and companies have begun finding ways to meet the demand for more environmentally friendly energy sources. Domestic natural gas is one such resource. Newer technology was necessary to access natural gas reserves, which are available deep underground in several areas of the United States. Hydraulic fracturing – which has been used for decades as a method of aiding production in oil wells – was further developed as a natural gas extraction method. Hydraulic fracturing, or “fracking”, is often performed in shale rock formations where fractures are already present. At accessible depths below the earth’s surface, expanding these fractures allows more gas to be extracted from a single well source. A fracture network is created through horizontal drilling to access a wider area and restore or increase the flow of natural gas. Water and additives are injected into a well under very high pressure to increase the number of fractures and push them open. Sand is typically pumped into the well with the fracking liquid to allow the pores in the rock to remain open and gas to flow more freely through the fracture. This allows more product to be extracted and maximizes results from each location.

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BAKKEN OIL REPORT – FALL 2012

PORTABLE PUMPS IN FRACKING Portable pumps are used in hydraulic fracturing applications to transfer water and drill mud. Submersible or centrifugal pumps are used in water withdrawal stations to draw water from their source to the site or well pad for use in the fractionation process. Water can come from many sources: • Surface waters (lakes, streams, rivers) • Municipal water supplies (convenient and easy, but costly) • Produced waters from area wells • Alternative sources like mine drainage or treated wastewater The use of portable dewatering pumps instead of water trucks saves energy companies time and money. Some projects would need to employ hundreds of trucks to get water to the site. Instead, temporary pumps and piping can be used to transfer the water. Aside from the bulky operation the projects would require, pumps keep truck traffic off the roads, which reduces the carbon footprint from the trucks’ emissions and prevents expensive repairs of road infrastructure. Moving liquid is a necessity during all phases of the process. “Pumps are used to circulate drilling mud while the drill rig is onsite, before fracking even begins. The mud is used to flush out the boring hole, as well as for lubrication. There can be up to 15,000 feet or more of pipe in the ground, and oil-based drill mud as a

Xylem, Dewatering Solutions offers the most comprehensive line of portable pumps in the industry. From water supply on frac sites, to flowback and drilling mud, our powerful diesel and electric driven Godwin pumps are designed to handle the harshest conditions. With a complete selection of rental piping, hoses, manifolds and fittings, we have the equipment, parts, service and engineering support to ensure your success. With facilities in Billings and Helena, MT, serving the greater Bakken Oilfield. Call us today at 406-495-1335.

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• Optimized pipeline installation and HDPE pipe fusion service • Regulatory compliance • System optimization for reduced cost and carbon footprint • Ease of scaling pump system up or down, safely and effectively

lubricant keeps everything running smoothly without the need for additional product,” says Brent Hatch, branch manager for Xylem. Portable pumps can move water from impoundment to storage tanks and supply water to high-pressure frack trucks. Well flow-back and produced water can be blended with fresh water during the fracking process, treated and reused during the operation. Pumps are used to manage flow-back from the wells to the storage tanks and pump solids-laden drill fluids. When raw water is pumped up through storage tanks that feed the water system, pumps with hard iron parts – such as impellers and insert rings – are used because of their durability and strength withstanding tough product. They are suitable for wastewater with oxygen or chloride levels up to 500 ppm, which prevents clogging and erosion. Standard diesel or natural gas powered pumps are used for flat ground and high-head, high-pressure pumps are needed for long distances and hilly areas. Geography and area topography dictate the flow rate and lift that will be needed. Centrifugal dewatering pumps are used for these applications, along with rental pipe, hoses and manifolds. Fluid transfer specialists should operate pumps, tanks and valves. For a temporary job of this nature, one could consider utilizing a pump company with all essential accessories and service technicians. Water transfer is needed in each step of the hydraulic fracturing process, but a rental company has the knowledge to keep it running smoothly. The benefits of working with a vendor with a large rental fleet include: • Rental availability of pumps, accessories and control equipment • Complete 24-7 access to service, support and inventory • On-site system set-up, operation and maintenance • Application specialists and design engineers 118

BAKKEN OIL REPORT – FALL 2012

LANDSCAPE Shale rock, which consists of consolidated clay particles, is the most common sedimentary rock. It has high porosity and low permeability. Shale gas occurs in vertical fractures or tiny poorly connected pores, so new methods were needed to extract the natural gas within. But this gas is an unconventional source of energy, which had untapped potential in many locations where energy was not usually produced. In many cases, shale basins in the United States are found in flat regions, such as the basins found in Texas. When everything is flat, it’s most economical to use ring-lock pipe, snap it together and begin. Marcellus shale, however, located throughout Pennsylvania and New York, is found in a very mountainous environment. High-density polyethylene (HDPE) pipe with various pressure ratings is used, and a knowledge of pumping extreme high-head is crucial. “It’s important to have an understanding of the environment and geography, so you are able to perform pressure calculations for piping and fusion requirements. For example, as the pipe continues up a mountain, different pipe ratings would be utilized and fusion requirements would be evaluated,” explains Mike Ramos, director of engineering for Xylem. High-pressure systems are required to get the water over the mountain. A typical portable pump would not work for supplying water in the Marcellus shale region. Rather, the ideal would be a high-head pump with total dynamic head capabilities reaching 500 feet or more. This would eliminate the need for multistage pumps for jobs where placement could be crucial to a successful, streamlined project. ENVIRONMENTAL PRECAUTIONS Federal and state regulators work to ensure natural gas extraction does not harm the environment. There are limitations in place on the amount of groundwater and surface water withdrawn to reduce any potential stress. There are also efforts in place to prevent spills and restrict potential contamination. Fracking is a regulated industry; as long as guidelines are followed, it is an environmentally sound method of extracting natural gas. “Several pumping elements can be tailored to be environmentally friendly. We use interim Tier 4 engines in our dewatering pumps, which offer a substantial reduction in nitrogen oxides (smog), particulate matter (soot) and

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hydrocarbons. The pumps also have the option of electric motor or natural gas engines, which use fuel produced right on the fracking site,” says Ramos. Spill containment is stressed to even further minimize the carbon footprint. Kristen Gurick is a marketing communications specialist for Xylem, and can be reached at kristen. gurick@xyleminc.com or 856-467-3636. REFERENCES “Hydraulic fracturing.” Wikipedia, the free encyclopedia. N.p., 4 Jun 2012. Web. “Hydraulic Fracturing Background Information.” U.S. Environmental Protection Agency. EPA, 09 May 2012. Web. “Natural Gas Extraction - Hydraulic Fracturing.” U.S. Environmental Protection Agency. EPA, 04 May 2012. Web. n

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TCi Oilfield factoring

Cash flow stress hits the Bakken By Glen Herrig

henever people get together and talk about the opportunities in the Bakken, more often than not the discussion turns to cash flow. I recently had the opportunity to sit down and interview Eric Schoch, executive vice-president of TCI Oilfield Factoring. Schoch, a 17-year veteran of the factoring industry, has spent much of his career studying the cash-flow needs of small to mid-sized oilfield service companies. Herrig: Good afternoon, Mr. Schoch. Can you tell us what it is about the Bakken that puts the cash-flow conversation front and center? Schoch: Well, I think it’s a combination of things. First, the Bakken is still growing, so you have a lot of companies moving their operations into the area from out of state. The costs associated with moving, finding housing and adding staff are expensive. Second, the rapid growth that we see with so many Bakken oilfield service companies inevitably puts them into a working capital deficit or a cash crunch soon after they ramp up. Herrig: How do companies get caught up in the cash-flow crunch? Schoch: Typically, there are three different reasons why it happens—and more often than not, all three are involved. The first issue is working capital. The fact is, it is difficult to make accurate cash-flow projections to determine working capital needs—and especially difficult when your business doubles in 120

BAKKEN OIL REPORT – FALL 2012

size in less than 30 days. In the Bakken, we see this every day: companies that have been well capitalized for years look to expand; they win large bids; and the next thing you know, they have doubled in size and are suffering from cash-flow problems. These companies literally become cash-poor overnight. The second issue, which is severely overlooked, is billing and invoicing. Billing and invoicing errors are all too common in the oil industry. Sadly, we find that most companies just don’t understand how to dot all the I’s and cross all the T’s on their billing until they have a real mess on their hands. Because of this, their payments get delayed, naturally causing cash-flow stress. The third issue is the accounts receivable turn in the oil industry. It’s slow. The industry average is around 60 days. If you add the additional time it takes to get field tickets signed, the number goes up from there. If a growing company has to pay for fuel every day, make payroll every two weeks and make equipment payments every 30 days, let’s face it, waiting 60 days to get paid won’t work. The math just doesn’t add up. Herrig: Can you tell us how TCI Business Capital helps oilfield service companies with these issues? Schoch: Yes, absolutely. First off, we find out what’s going on with the company so we can address their cashflow deficiencies. Once we have a clear understanding of their situation, we present them with a value proposition that addresses their specific needs.

For working capital, our factoring lines allow our customers to access the cash that is tied up in their accounts receivables. As a result, they have the working capital they need to get caught up on bills, meet payroll, and make necessary purchases to take advantage of this exciting boom. As far as the billing and invoicing are concerned, we have the experience and industry expertise necessary to help our clients get paid on time. Over the years, we have built solid relationships and are on first-name basis with the accounts payable departments of oil and gas companies nationwide. These close relationships have allowed us to fully understand the complex and often cumbersome billing requirements that are common in this industry. To help our customers, we take the time to train their staff on the best billing practices for each of their customers. Doing so greatly reduces the likelihood of any payment delays. Herrig: Any final thoughts? Schoch: These are exciting times. One of our customers once told me, “If you don’t take the bull by the horns, someone else will—and then you may never get the chance again.” Well, he’s right. You have to take control of your cash flow and invoicing; if you don’t, the stress will take control of you. About the Author: Glen Herrig is the director of public relations for TCI Business Capital. He can be reached at 952-656-3400, or gherrig@tcibizcap.com . n

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Caveat Emptor: let the buyer beware By Harold Kilts, PE, BSME

eadline: “False Claims Abound in the Flameless Heat Industry”. Some claims from flameless heater manufacturers regarding BTU output are either honest wrong beliefs or just exaggerations to assist in the selling process. It has been noted that one manufacturer’s claim for their heater output was 750,000 BTU/hour when their maximum fuel input energy was only 550,000 BTU/hour! This would amount to virtual perpetual motion, which is impossible; energy can neither be created nor destroyed – it is only a conversion process from one form to another, and it is always less than 100 percent efficient! To prove a point, if their claims were true, one could put one’s tongue on the exhaust stack of the running machine and it would freeze to the stack; there being no energy left in the exhaust at all, the exhaust would come out colder than ambient temperature. Currently, there are no regulatory or rating agencies for flameless heater equipment. Since it is not easy for customers to evaluate real performance, one is at the mercy of “hocus-pocus” numbers and wild claims. This article will provide a basis for analyzing flameless heating equipment. Think: Energy Balance This is technical equipment and it is worth a customer’s time and expense to have a critical technical eye examine the available flameless heat products. Energy balance of thermodynamics requires that energy going into a system equals the energy out of the system. For the purposes of this article, a flameless heater is defined by the use of a diesel engine as a burner. Burning fuel is a chemical process where the energy of the fuel is released as heat. The diesel engine converts about 39 percent of this heat into mechanical shaft energy. Another 33 percent of the heat is expelled through the exhaust while the remaining 28 percent is given off as heat into the coolant and engine compartment. All flameless systems capture and deliver the 28 percent. They also convert the shaft power into heat such that the 39 percent is fully captured. The First Law of Thermodynamics: Energy cannot be created or destroyed – it can only be converted from one form to another. To convince yourself of the above numbers, think about the engine-based air-heating device as a black box. Fuel energy goes into the box while heated air comes out of the box in two forms; heat that is expelled into the desired space and heat expelled through the exhaust. No mechanical shaft energy comes out of 122

BAKKEN OIL REPORT – FALL 2012

the box and no light energy or electrical energy comes out, only a little heat leaks out, and an insignificant amount of sound energy comes out. In practical terms, the device used to convert shaft power to heat, drives the energy balance of the system. As more duty load is put onto the engine, more fuel is used and more heat is given off through the coolant and exhaust. In fact, the energy ratios of the engine (39 percent, 33 percent, and 28 percent), always stay about the same. These numbers are measured and published by the engine manufacturers and do not vary much from brand to brand. Since all flameless heaters reclaim the shaft energy (39 percent) and they all reclaim the engine heat loss (28 percent), the they all achieve at least 67 percent (39 + 28 = 67) overall thermal efficiency. The remaining 33 percent is often lost through the exhaust. It is also a fact that the method of shaftpower conversion to heat does not change the energy balance. Regardless of the method used, you will always get 39 percent of fuel energy from the shaft power. If your device converts more, there is more fuel used. Less fuel used means less horsepower is produced from the engine and less shaft-conversion has taken place. Anything magnetic does not somehow create more heat or produce it from the environment. Assessing Heat Output Capacity and Overall Efficiency Armed with the above information, one only needs to look at how heat is reclaimed from the exhaust stream to get a sense of how much above 67 percent a particular flameless model would be. I would assert that today, most flameless equipment on the market is less than 79 percent efficient and most are really closer to 70 percent. This means that 21 percent to 30 percent of the available fuel energy is going out the stack. One only needs to look at the residential warm air furnace equipment that was popular several decades ago. They were all about 78 percent efficient because of the destructive risk of condensation in the heat exchanger. That 79 percent to 89 percent range is where condensation occurs some of the time but not all the time. Furnaces marketed in this range a few years ago, suffered corrosive damage from condensation, as they were not equipped to mitigate the condensation. As the demand for higher efficiencies grew, the need arose to develop furnaces able to handle the by-product of corrosive condensation. The common home furnace today has a 90+

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efficiency rating and must be equipped with a drain hose to relieve the large volume of condensation. These condensing type furnaces are much more expensive to build, but the payback in energy savings makes it a great investment. Thus we see home furnaces with rating of 78 percent or at 90-percent-plus and nothing in between. Logically, if it is made to handle condensation, then it might as well be manufactured to a rating of 90 percent or higher. These same circumstances hold true for the flameless exhaust heat exchangers offered today; if the manufacturer claims their flameless heaters are higher than 78 percent efficient, then they may have serious maintenance issues in the life of their units, unless their models are designed to manage the condensate and wet-soot buildup. In assessing the effectiveness of an exhaust heat exchanger, one needs to look at the fundamental equation for heat transfer: Q = H * A * ΔT • “Q” is the heat reclaimed. • “H” is the heat transfer coefficient of the hardware. • “A” is the total area of the heat exchange surface. • “ΔT” is the temperature difference between the fluid being heated and the exhaust temperature. H cannot be changed much by design but A certainly can be. More heat exchange surface area will result in more heat reclaimed. The ΔT can also be designed in a way that the coldest outside air goes through the coolest part of the exhaust heat exchange surface first – which results in the most efficient heat transfer. The least efficient or even useless heat exchanger design is one where it is physically too small in surface area and placed in the machine where the already-warmed air passes through it, which results in little if any heat recovery. Unfortunately, this design is too prevalent with the current cadre of flameless heater manufacturers. You can see that a model with 550,000 BTU/hour input would have 67 percent or 386,500 BTU/hour output as a baseline. If air passes through the radiator, engine compartment and shaft conversion device first, it would be hard-pressed to achieve six percent more. This would result in 401,500 BTU/hour output rather than some ludicrous claim of 750,000. (The actual Exhaust Stack 32%

Fuel Energy Input 129,400 *GPH

• All heat from coolant recovered • All shaft power converted to heat • All heat given off to the engine compartment recovered.

Useful Heat Output 68%

Note: percent values published by the engine manufacturer.

being only a little more than half the claim.) Since temperature rise is easy for a customer to measure, claims of higher heat capacity must be matched with exaggerated airflow to avoid embarrassment. Benefits of High Efficiency It is possible to spend as much in fuel the first year as the initial cost of the flameless heat machine. The first benefit in high efficiency is the obvious operational savings of 30 percent in fuel dollars. The second benefit is that a model that actually achieves 90 percent will have an heat output capacity in excess of 23 percent higher than another model with the same engine. Thirdly, the higher-efficiency model will put much less stress on the engine and will result in less maintenance, increased reliability and a longer product life. Reliability In the end, the first three most important features of a flameless heater are: reliability; reliability; and reliability. Aside from less engine load, the largest factor in reliability is the method of shaft-conversion to heat. There are many ways to do this but many are fraught with maintenance issues. Look for systems that have no moving parts to wear, no seals to leak, and no fluids to degrade with use. Looking at the numbers: One gallon of diesel converts to 129,400 BTUs. An important measure of an engine is to understand its full load fuel flow. Let’s say you have an 83 HP engine that has a maximum burn at 4.25 gallons/hour. Simple math shows that the maximum fuel input is 550,000 BTU/hr (4.25 gal. x 129,400 BTU). To quantify BTU claims of the manufacturer, look for the brand and model of the engine advertised and then search the engine manufacturer to find the maximum fuel consumption value in gallons per hour. As a potential buyer or renter of equipment, you typically evaluate heat output capacities, BTU claims and overall product life cycles. Hopefully, this article will help you make a more informed value judgment. Let the buyer beware! n First Law of Thermodynamics: Energy cannot neither be created nor destroyed – it can only be converted from one form to another. You can’t get more energy out than is put in. Chemical energy of fuel is converted to partial shaft power, partial heat radiation off the block, and the balance goes out the exhaust stack. The remaining question is: How efficient is the total entity capable in capturing the total energy conversion and supplying it to the intended output? BAKKEN OIL REPORT – FALL 2012

123

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farmers union oil

Tioga travel plaza under construction By Kim Crawford

new convenience store for Farmers Union Oil of Tioga has been long

dreamt of and long needed. Those needs

and dreams are being fulfilled in an almost unfathomable way, as ground has been broken on a 37,000-square-foot

Farmer’s Union Oil

We offer a full line of Flame Resistant work apparel, including Bulwark & Key,

also Georgia, John Deere, Baffin and Muck work boots. In our electronics section

you can find GPS units, cell phone accessories and headsets, antennas, small flat screen TVs with DVD, computer notebooks and much more. We are truly your one-stop shop.

CLOTHING DEPARTMENT Cenex C-Store of Stanley, ND 701-628-2921 126

BAKKEN OIL REPORT – FALL 2012

facility – the biggest travel plaza in the Bakken. Far more than a convenience store, it will boast services and hospitality that will more than please our area patrons, our newest business partners in the oil industry, and anyone traveling through the region. We will be providing amenities such as an expanded hardware department. A large, new grocery section will offer fresh fruits and produce, as well as a variety of refrigerated and frozen foods. Our state-of-the-art kitchen will be offering homemade delectables to cover breakfast, lunch, dinner and snacks in between. A sampling of our menu items are breakfast burritos and sandwiches; smothered, smoked pulled pork; jumbo smoked hot links; and fall-off-the-bone best-ever ribs! Comfort foods such as meatloaf and mashed potatoes, lasagna, and a variety of hot dishes will be a pleasant surprise for travelers, workers, and locals alike. Naturally, for those on the go, freshly made items like pizza, burgers, and sandwiches will be offered. Our bakery department will also be offering made-from-scratch items such as cookies, pastries, breads and more. Along with the biggest and best food offerings around, we will be able to provide everyone with their beverage of choice with a beverage bar that is over fifty feet long! In addition to standard beverage fare, our customers may chose from shakes, ice cream, custard, and frozen yogurt. For those who don’t care to eat on the run, we have planned a generous seating area. This will give people a chance to slow down a bit and enjoy that home-cooked meal, and will provide a

farmers union oil

Ground-breaking ceremony Sept. 6th 2012. Featured left to right: Mike Becker, Farmers Union Oil; Todd Lambrecht, St. Cloud Refrigeration; Rory Gjestvang CHS, Inc.; Kim Crawford, Farmers Union Oil; and Rich Palletier, Greystone Construction.

place for friends to gather over coffee as they currently do in our downtown location. Farmers Union Oil employees who have been developing this site have asked a number of locals, employees and daily customers about their wants and needs. We are proud to offer more expanded departments in one location, making it a onestop shop for all your needs. This facility will offer a Verizon phone center, a salon/barber shop, a business center, and a

5,000-square-foot electronics and clothing store that will cater to farming, construction and FR needs. Our Tioga travel plaza is now under construction. We look forward to opening soon, and providing everyone with the best hospitality in the Bakken. About the Author: Kim Crawford is energy coordinator and planning team member of Farmers Union Oil Company, Stanley/Tioga. n

ND Oil Patch Opportunity 147 acres in the heart of the Bakken Shale discovery! Price: $2,935,000 • • • •

147 Acres Zoned COMMERCIAL Heart of the Bakken High Traffic Location

• • • •

ND Highway 2 4,000 pp Nearby Nice Level Site Corner of Hwy 2 & County 19

More info at: nwrealtynow.com Property Description Zoned Commercial—147 acres in the heart of the largest oil discovery in the lower 48 states! Located on Hwy 2, between Ray & Tioga ND. Nice level site located next to Target Logistics’ 1,250 person lodging facility and across from Capital Lodge, a 2,500 person lodging facility. Ideal location for oilfield distribution facilities, major truck plaza with convenience stores, restaurant, multi-family housing, etc. New fiber optics and a 16" main rural water line runs along the north border of the property.

Jim Christianson President/CEO 701-258-4800 Office 701-220-4888 Mobile jim@jimchristianson.com 414 East Main Ave., Bismarck, ND 58501

BAKKEN OIL REPORT – FALL 2012

127

camex equipment sales & rentals inc.

Camex celebrates 20 years 2

012 marks the 20th anniversary for Camex Equipment Sales and Rentals Inc. – that is twenty years of being a major supplier to rig-moving companies and oil service contractors throughout North America and beyond. Both of Camex’s rig-up shops, and their tank shop, are running full-out with the increased sales pressure. Growth in all sectors of the business has necessitated strategic alliances with equipment suppliers to satisfy the increasing demand. Inventory still remains key to Camex’s business strategy – with over $65 million of on-site inventory, clients are able to fully outfit their company from complete rig-moving packages, tank and vacuum trucks for oilfield service and liquid handling, to construction equipment... and take immediate delivery. Camex not only offers the most comprehensive line up of inventory, but also provides the financial services and after-sales support to back it up. New and used equipment includes heavy-spec bed trucks, winch tractors, picker trucks, lowboy trailers, oilfield floats, pipe trailers, fluid handling trucks such as vacuum trucks and trailers, tank trucks and fuel/lube trucks, plus an array of construction equipment. SALES GROWTH IN BAKKEN CONTINUES The activity level in the Bakken has remained constant. There has been a lot of transport companies moving into North Dakota to handle the demand, as well as many of them heading to other plays in Texas and Oklahoma.

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BAKKEN OIL REPORT – FALL 2012

“A lot of the strong local companies like Bad Land Power Fuels, Farden Construction, Petroleum Services, and M & K Hotshot, to name a few, are adding to their fleets and purchasing new units to keep up with the local demand and the technology that the industry is demanding,” states Tom Huyghe, Camex Equipment sales manager. “We still anticipate a lot of business in the area and expect it to last several more years. As the drilling activity slows, there will be an increased need for service and pipeline equipment,” continues Huyghe. As well as North Dakota, Camex still sees steady activity in southern Saskatchewan and southwest Manitoba. With the price of oil today sitting at $90 per barrel, it is a good balance between the supply and demand at price levels with which everyone can work. The gradual increase in oil prices and reduced fluctuations this time around offers more stability in the marketplace. This bodes well for long-term development of oil plays such as the Bakken. It allows suppliers to look at their business and growth in terms of years, as opposed to month by month. NOT STANDING STILL Camex is ever developing and refining oilfield equipment to remain the leader in oilfield transportation and servicing equipment. Just recently at the Global Petroleum Show, Camex introduced the CAT R/T 444 Big Bed Truck for use in extreme rig-moving operations. This ultimate bed truck is equipped with

camex equipment sales & rentals inc.

carry oilfield technological advances,” 66-inch by 25-inch floater tires to handle states Robb Brandl, designer and rig-up soft, muddy and challenging off-road manager, Camex Equipment. conditions. The Camex CAT R/T 444 Big Bed The CAT R/T 444 features a single Truck’s extra-long 420-inch bed, with a hydraulically operated octagonal lifting 12¾-inch live tail roll, accommodates the pole, the first of its kind in the world, largest and heaviest of rig components with an electronic weight indicator. This with ease. Articulated steering offers an unique lifting pole is rated at 130,000 unmatched turning radius compared to pounds. It is engineer-rated at 65 tons, standard bed trucks, thereby giving the making the winch line the weakest link for operator greater manoeuvrability and a 4½:1 safety factor. The second winch efficiency in tight areas. Independent line can be threaded through the tail skirt, seven-inch lift rolls facilitate quick allowing the operator to use that line to unloading. The bed also features a boltmanoeuvre the rig components. on Holland heavy-duty fifth wheel for “This rough terrain unit enjoys the full attaching an oilfield float. Day and night spectrum of talents brought together in infrared cameras equipped with audio, the ultimate bed truck for use in North one located behind in the tail skirt and America’s off-road oilpatch. The CAT R/T one on the swamper side of the truck, 444 Bed Truck includes the combination allow the operator a clear color view of of Caterpillar’s proven power train, blind spots, ensuring safe and efficient coupled with Camex’s extensive off-road Camex Bakken Report 2012:Bakken 2011 of 12-09-18 operation the bed 1:50 truck.PM Page 1 expertise and theOillatest in heavy lift and Oil Report With the largest selection of NEW & USED on-site inventory, Camex provides a one-stop shop for all your oilfield equipment needs. Bed Trucks Winch Trucks Picker Trucks Heavy Haul Trailers Vacuum Trucks Water Trucks Fuel/Lube Trucks Construction Equipment

“The CAT R/T 444 Big Bed Truck offers unparalleled safety, mobility, manoeuvrability, and stability – all while increasing the operator’s situational awareness in a close-quarter environment, which has never before been implemented in the design of a rigmoving truck,” continues Brandl. Camex encourages its clients to let them know how its equipment is performing and if there are improvements they feel would make the equipment and the associated tasks more efficient and productive. Customers in the field have been instrumental in initiating design improvements and refinements. For more information, please visit Camex Equipment Sales and Rentals Inc. online at www.camex.com or call toll free: 877-955-2770. n

View over 700 New & Used Trucks and Trailers on-site or on-line at www.camex.com

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BAKKEN OIL REPORT – FALL 2012

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MESSAGE

The Sturgis Motorcycle Rally and the quality of life By Branden Bestgen

eptember 26, 2011 was the day I realized that something big was going on in North Dakota. I had called a real estate agent with whom I’ve done business to inquire about a listing he had. During the course of our conversation, I told him I had heard he and his partner had built a man-camp south of Watford City, North Dakota. When I asked him if that was true, his demeanor instantly changed and he told me he didn’t want to talk about that. My relationship with him went back almost 10 years prior; when he brokered a transaction I was involved with that made him and his partner a lot of money. I was thinking to myself, he must be joking because no one in their right mind, especially in sales, would want to come across in such a rude manner. So I asked him again, and quickly realized he wasn’t joking and he wasn’t going to share one bit of information with me. I hung up the phone and recognized if he’s willing to burn a bridge over a question like that, something big was going on in North Dakota and I needed to go see it for myself. I live in Sturgis, South Dakota, and at the time, there was basically no local media coverage of the North Dakota oil boom. Once in a while you’d hear a comment or two about someone moving up there to work in the oilfields, but that was about it. In hindsight, we were absolutely in the dark about what was happening a few hours north of us. Within a few weeks of that telephone conversation I made my first trip to North Dakota to see first-hand what was going on. What I saw truly amazed me. As I traveled north on Highway 85 from Belfield to Watford City, and then ultimately north to Williston, I saw truck after truck after truck. I’ve lived in Sturgis, South Dakota all my life, and all of the activity and traffic reminded me of the Sturgis Motorcycle Rally; but instead of motorcycles everywhere, there were trucks everywhere. I remember thinking to myself: this is a modern-day gold rush. Over the next few months, I made several trips to North Dakota, driving all over the western side of the state. I’ve been investing in real estate all of my adult life and I was looking to see if there might be an opportunity I’d like to take. I had missed the first wave of real estate speculation, and wasn’t sure I wanted to get involved 130

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Photo of a poster that was handed out in March 1927. in the next tier. I spoke with land speculators from Massachusetts, Colorado, and California; those that were in the game early and purchased or optioned large plots of farm land and were subdividing it. I was at the point in the game where land that was recently worth a few thousand an acre was now going for tens of thousands an acre; or being sold by the square foot. Things were moving very fast and I wasn’t sure I wanted to jump in. Every time I’d come back from a trip to N.D., I’d get bombarded with questions about what was going on up there. No one believed it. Many of them still don’t believe it. Misinformation was rampant; I decided to organize a conference so people could hear firsthand what was going on in the Bakken. I got to work and with the help of Black Hills Vision, a regional economic development organization, held the inaugural Black Hills Bakken Conference in Spearfish, S.D. in May 2012. The event was a success and we’re planning for the next event to be held in the spring of 2013, along with a large tradeshow. The South Dakota Oil & Gas Association was also formed as a result of that conference. It’s a brand-new entity with the mission of facilitating the growth of the oil and gas industry in South Dakota. Most of the presenters for our conference were from North Dakota. Several of them talked about what a refreshing break it was; to be able to get away and spend a few days in the Black Hills, free from the non-stop grind going on in North Dakota. As they were sharing with me, that’s when the correlation to the

MESSAGE

Sturgis Motorcycle Rally came to mind again. As the assistant chief of the Sturgis Police Department for many years, I was responsible for coordinating the law-enforcement side of the Sturgis Rally. It’s an intense period of time where all you do is work and sleep, work and sleep, work and sleep for 10 days straight. Motorcycles are everywhere; you can’t get anywhere quickly; everything is expensive; and it disrupts normal life as you know it. It wears a person out physically and emotionally and before you know it, you have a bad attitude, you’re grumpy, and critical of everything. As my North Dakota friends were talking, I realized they’re living the Sturgis Motorcycle Rally every day; but it doesn’t leave. It’s there 365 days a year and the hustle and bustle is taking its toll on their quality of life. Quality of life is why people love visiting the Black Hills; to get away from it all. To wind-down, relax, and take a moment to enjoy life. Quality of life is also why people choose to live in the Black Hills. South Dakota may never have the amount of drilling activity that’s occurring in North Dakota, but we’re close enough to the action that businesses located here can serve those markets in North Dakota, Montana, Wyoming, and Colorado, while still maintaining a high quality of life. Location isn’t all we have to offer. South Dakota state geologist Deric Iles spoke at our conference; he believes South Dakota is underexplored and there is a lot of untapped oil here. It’s not unreasonable to think that while all the big players are busy in North Dakota for the next several years, there will probably be a small operator that seizes on the untapped potential of South Dakota; and in a few years, we’ll all be wishing we had taken that step. There is opportunity in South Dakota right now. There is no corporate or personal income tax, and the county I live in, Meade

The South Dakota Oil & Gas Association held the inaugural Black Hills Bakken Conference in Spearfish, S.D. in May. County, is offering no real estate taxes for five years on new construction. The Black Hills of South Dakota are already evolving into the “bedroom community” and “recreation playground” of choice for those working in the Bakken region. There is an abundance of opportunity, and there is no way that one person or entity can possibly take advantage of all those opportunities. Land is still affordable and available for your business. Just make sure you get here before the land speculators do. Branden Bestgen is the executive director of the South Dakota Oil and Gas Association: www.BrandenBestgen.com or www.SDOil.org. n

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BAKKEN OIL REPORT – FALL 2012

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Technology advances a key factor in record Bakken production growth By Andrea Winkjer Collin

ecord oil production continues in the Bakken. This has elevated North Dakota to the rank of second-largest oil producer in the nation in March, with a daily production average of 575,490 barrels. These and other production figures from the North Dakota Department of Mineral Resources show how production has continued to be surpassed in the months since, with a daily average of 639,000 barrels reported in May. This compares with May production in Texas, the top-ranked oil producer in the nation, which was 1.834 million. The 20 million barrels of North Dakota oil produced in June is nearly twice the amount from a year ago, which was 11.5 million barrels. Several factors are generally credited for the 7,352 producing oil wells that were

reported in North Dakota in June. These include a high enough price for a barrel of oil to make exploration profitable, plus improvements in horizontal drilling and hydraulic fracturing technologies. Two veteran oil production professionals at Halliburton, one of the world’s largest providers of products and services to the energy industry, have watched the technologies evolve. Halliburton was founded in 1919, and has been involved in hydraulic fracturing since 1947. “Stimulating production from oil and gas wells by fracturing is not new,” says Pat Kundert, a long-time technical services advisor at Halliburton’s Denver office who has watched the technology evolve over the years. “Before hydraulic fracturing, the industry sometimes stimulated wells

with explosives. The entire process has evolved and improved over the years. The advent of fracturing by using high-pressure pumping was a breakthrough that has greatly increased the producton of oil and gas worldwide. “According to the American Petroleum Institute (the API) more than a million wells have been hydraulically fractured all over the world. It’s a carefully engineered, efficiently designed and well-managed process.” The first Bakken well that an oil company hired Halliburton to hydraulically fracture was west of Watford City, North Dakota, in October 1964. Kundert, working on a Halliburton treatment for another oil company customer, was involved in fracturing his first Bakken well near Stanley, North Dakota, in the fall of 1980. Kundert says that initially all wells targeting the Bakken and Red River formations were vertical. “It’s the combination of both horizontal drilling technology and hydraulic fracturing that has made all the difference,” he says. “Shale initially was not considered an economical producer of hydrocarbons. Horizontal drilling and fracturing made the area productive from the huge formations of shale in the region.” Learning from the Barnett Kumar Ramurthy, a technology manager for Halliburton’s Rocky Mountain operations in Denver, says it was the success of the Barnett shale formation in Texas that demonstrated shale plays could be productive. “But, it took 17 years in the Barnett to figure it out,” says Ramurthy. “The lessons learned from that play helped in the Bakken.” There are differences between the two formations, they say. “The Barnett is a gas play, unlike the Bakken, which is primarily oil,” says Ramurthy. “But because the oil

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The advent of fracturing by using high-pressure pumping was a breakthrough that has greatly increased the producton of oil and gas worldwide. and gas are contained within the extremely low permeability Barnett and Bakken shales, without fracture stimulation, neither would be productive. The shale is simply too tight for the hydrocarbons to be produced economically without fracturing.” A common technique used in stimulating wells in shale formations is called perf-and-plug fracturing. In this process, the horizontal wellbore is divided into multiple sections by installing tools called packers. “We have been using this technology for the past four or five years, and it has made the difference in the Bakken,” Ramurthy notes. “It is done on nearly every well now.”

Future Challenges include Resource Efficiencies Every oilfield has its challenges; and the Bakken is no exception, they say. “The challenge not only in the Bakken but everywhere is more effective use of water and water management,” says Kundert. “Currently, trials are underway in which all the water used in hydraulic fracturing is recycled water that would otherwise be disposed. This development can help greatly reduce the requirement for fresh water.” Kundert says another challenge is the future availability of materials, such as the proppant, and making the fluid systems more environmentally benign. “Compared to the late-‘80s and ‘90s, our fracturing fluids are a lot greener now, and are all water-based,” he says. Optimizing fracturing stages to recover a greater percent of the oil is another challenge. “I don’t believe we have optimized these stages as well as we can,” Ramurthy says, noting that each fracturing job can be 20 to more than 40 stages per well.

Kundert says that as with any field, the industry will continue to explore how to recover a greater percentage of the Bakken oil in each well. “The best-producing wells in the Middle East have high permeability and yet only recover 30 percent of the oil,” he says. “One of the biggest challenges in the Bakken is that only eight to nine percent of the oil is usually recovered. We are still leaving a lot behind. We may never reach the Middle East recovery rate, but we can do better at recovering more oil in an economical and environmentally responsible way,” he says. Halliburton has introduced CleanSuite™ technologies that include CleanStim® fracturing fluid system that is comprised of materials sourced entirely from the food industry. It also has a CleanStream® service that uses UV light instead of additives to control bacteria, and a CleanWave® system that treats wastewater at the wellsite, allowing it to be reused and recyled by the operater, significantly reducing the need for fresh water. n

ENVIRO DRY® – The Bakken’s best quality fly ash and drill cutting solidification products. Proven performance with Fresh water, Brine, and Oil based drill cuttings. Environmental Materials’ Enviro Dry® generates the most heat in the industry and set you can drive on. On call 24/7 to deliver directly to your location in 1-ton weather protecting super sacks and bulk trailers. With operations structured throughout ND, MT, WY, and CO, we are prepared to support your dry bulk needs.

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2348 N. Frontage Road, Billings, MT 59101 BAKKEN OIL REPORT – FALL 2012

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mac heaters

MAC Heaters:

North Dakota-born, North Dakota-based

AC Heaters, in business for nearly three decades, continues to evolve and grow with their clients’ needs and demands. In 1983, MAC Heaters started a production facility in Glenburn, N.D. As many of our clients in the Bakken oilfield already know, this area of North Dakota can produce some of the most extreme temperature variations. The extremes in temperature prove the resilience of our products and technology and have become a great testing ground on which to prove our products. MAC is known for some of the safest, most reliable and easy-to-operate heaters in the industry, and has a wide range of heaters to fit most every need. The MAC line of heaters provide a safe, reliable heat source for any situation where heat is needed for personnel quarters, equipment warm-ups, water flooding stations, mining, pipeline construction, airlines, warehouse and supply depots, loading docks, construction heating, maintenance or mechanic shop heating, paint and coatings applications, dehumidification – the list goes on. All MAC heaters are portable and can be moved where heat is needed.

MAC has listened to their clients’

the customer before we started design.

needs from the beginning, setting the

We have the most accessible service

company apart from competitors. We

and maintenance doors on the flameless

take pride in engineering the best-quality

heaters, and designed all of the service

product and will take the extra steps to

points to one side of the unit and all of

ensure that there will be no breakdowns

the operational points to the other side

in the field causing lost production and

of the unit. The unit comes standard with

revenue. MAC expanded its facilities in 2010 by purchasing a building in Bismarck, N.D. that is our corporate headquarters and also has a top-notch assembly line. This new facility now allows us to produce heaters more rapidly and efficiently in order to meet and capture the demands of the industries. MAC has doubled – if not tripled – our square footage, laborers and production to meet these demands. MAC has offices located across the

full secondary fluid containment, exterior service ports and the most innovative and technologically advanced controls in the market today. MAC has also created a Manufacturing Services division to aid our customers with their custom manufacturing needs from fracturing tanks, oil production tanks, satellite trailers, single axle trailers, and tandem axle gooseneck trailers to tandem axle generator trailers

U.S.A. to provide sales, rental and

and much, much more. If you have

service support for all our customers.

custom manufacturing needs, contact

MAC Heaters are proudly manufactured

us today. MAC can fabricate most

right here in North Dakota, with mid-

anything and we have a top-notch team

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of engineers, welders, fabricators and

our customers’ expectations every day.

painters. We also have one of the largest

At MAC we are very excited about our

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new and innovative flameless heater

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BAKKEN OIL REPORT – FALL 2012

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MAC Heaters offer clean, safe, and reliable heated air for a wide range of industries such as oil & gas exploration, rig floor heat, platform cellar heat, utilities & power plants, employee locker, housing, and break areas, equipment pre-warming and thawing, emergency back up heat source, and much more! MAC Heaters are capable of ducting long distances with minimal loss of air pressure or outlet temperature. Our design and rugged heavy duty steel construction are made to withstand the rigors of any job and the most extreme conditions. MAC Heaters offer a variety of models and sizes to choose from, and will work with you to fit your heating needs.

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preble medical services inc.

Experience at work: Preble Medical Services By Jill Schettler

il companies and American businesses pay out $79 billion dollars in absenteeism, lost productivity, workplace accidents and associated medical claims due to drug and alcohol abuse in the workplace. Studies show that compared to the average employee, a typical substance-using employee in the workplace incurs 300 percent higher medical claims than non-users—and are five times more likely to file a workers’ compensation claim. As Preble Medical Services Inc. proposes, “Put our experience to work for you.” Mary Ann Preble, owner of Preble Medical Services, is working with companies across North Dakota to increase drug and alcohol awareness in the workplace. There are ways for companies to be proactive, offers Preble, such as through random testing. “Many companies recognize the need for random testing, not only as a deterrent, but as a cost-savings device for their Workers’ Compensation Insurance,” says Preble. “Preble Medical can manage any type and any size of random testing program your company may need, including on-site collections.” Preble Medical is a North Dakotaowned and operated company that has been in the drug and alcohol field for over 25 years. The company offers a variety of alcohol and drug screening services for Department of Transportation (DOT) and non-DOT companies and individuals including pre-employment, post-accident, reasonable suspicion/cause, random, return to duty, follow up, personal/ youth testing, hair testing, quick tests, and collections only. The third-party

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administrator (TPA) provides additional services, such as paramedical insurance exams, background checks, DNA paternity testing, and First Aid/CPR training, which are available through the company’s DOT certified collectors. On-site testing is one of the most popular methods among the oil and gas sector, as drug and alcohol collections can take place on the customer’s premises. Mobile offices allow Preble Medical to travel to remote job sites. “Mobile service saves companies time and money when we come to their locations and employees do not wait in clinics or need an appointment,” shares Preble. “Our offices are walk-in and provide after-hours and weekend service by appointment. Phones are manned all weekend and collectors are dispatched to locations where needed.” Consultations are available through Preble Medical on how to prevent and manage problems that may arise as a result of the drug-testing program, shares the owner, and the company stays current with the latest developments in the field of drugs and alcohol testing to ensure top-ofthe-line guidance and services. As the oil and gas industry developed, so too did Preble Medical Services Inc. When drug screens first became commonplace in the 1990s, Preble left her position as a clinic nurse and began working out of her home, visiting sites until approximately 1994 when she opened her first office in Mandan. Since then, the industry grew, prompting Preble Medical to become a third-party administrator. Today, Preble Medical serves the state of North Dakota with offices in the following locations: Dickinson, Fargo,

Mary Ann Preble. Minot, Stanley, Williston, and Mandan (the corporate office location). Mobile collectors cover the other locations throughout the state such as Devil’s Lake, Grand Forks, Watford City, and Bottineau. Each of the six offices are now automated to comply with Form Fox—an online data collection process—and act as a DISA collection site for oil companies, trucking companies, power plants, refineries, federal railroad, and transit companies. Also, adding to their services is eScreen, the state-of the-art automated quick test. Actively listening to industry needs, Preble and her team are continually committed to fast, friendly and confidential service. Because of the increase in business, Preble’s son, Lance, moved from Minneapolis to join the firm and help assist with day-to-day operations, managing office personnel, and administering office locations. “We have made a difference keeping employees safe at work, keeping companies in compliance with federal regulations and federal audits, and working with companies through audits. We consult with new businesses to streamline their scope of business doing DOT and nonDOT programs. Every year there is an increase of companies joining our TPA program. We do not charge an annual fee, therefore keeping costs down for the employer.” For more information, please visit http://www.preblemedicalservices.com/. n

PREBLE MEDICAL SERVICES, INC. 101 Collins Avenue, Mandan, ND 58554 (701) 663-6021 phone | (701) 663-1426 fax Check us out on the web at www.preblemedicalservices.com

miller insulation co. inc.

Miller Insulation Co., Inc. Rockin’ the Bakken

Miller’s senior management team. Back row (left to right): Don Ell, Williston GM; Mike Idso, Casper GM; Bill Eckroth, Bismarck GM; Curt Heiser, Fargo GM; and Brad Miller, president. Front row (left to right): Dennis Banyai, Salt Lake GM; Dwight Miller, vice president; Fritz Messer, Cheyenne GM; Brian Janke, Dickinson GM; and Rick Thompson, controller.

efore the basin was racin’ and the Bakken was rockin’, Miller Insulation was serving the Williston Basin oil industry as far back as 1972 when Donald Miller started his company in Bismarck, N.D. In the 40 years that have passed, Miller Insulation has worked for every major oil company, and most all of the independents, to become the largest insulation company in North Dakota and one of the largest in the country. Miller Insulation is a family-run business, owned and operated by two of Donald Miller’s sons. Brad Miller is president and CEO and his brother, Dwight Miller, is vice president. Both Brad and Dwight have grown up in the business and are actively engaged in the day-to-day operations of the company. As part of the national Small Business Administration’s (SBA) annual recognition program, in 2008 Brad Miller received the North Dakota Small Businessman of the Year on behalf Miller Insulation. While based on many things, Brad Miller’s entrepreneurial spirit and pioneering efforts in the energy industry certainly played a part in this award. 138

BAKKEN OIL REPORT – FALL 2012

In addition to our extensive oilfield and energy industry operations, Miller Insulation offers complete residential, commercial, and industrial insulation products and services along with scaffolding construction and certified design service. Our trucks and crews can be found at refineries, gas plants, power plants, compressor sites, condos, apartment buildings, schools, shopping malls, and at various other commercial sites working on all manner of structural insulation and heating/cooling systems. Over the years, Miller Insulation has had to significantly expand its business in order to accommodate customer needs. Not only has the company’s scope of operation grown from the early days in the oilfields; our physical footprint has grown as well. While Bismarck, N.D. is still the headquarters for Miller Insulation, six branch offices have been added in Williston, Dickinson, and Fargo, North Dakota; Cheyenne and Casper, Wyoming; and Salt Lake City, Utah. In 2012, Miller was licensed to do work in 25 states, with a willingness to go where our clients need us.

Today, Miller Insulation hires between 375 and 475 employees. Our core team has been with the company for many years and is the primary reason for our on-time, on-target, quality reputation and repeat client business. The company’s seven branch general managers, alone, average 27 years of service with Miller Insulation, with a collective total of over 190 years. Combined with Brad and Dwight Miller having grown up in the family business, Miller Insulation brings a management experience level to the table that is likely second-to-none. Between our Bismarck, Williston, and Dickinson, N.D. offices, Miller Insulation directly employs over 250 craftsmen in western North Dakota, working on everything from oilfield treator and pump houses to industrial plants and pipelines. Miller Insulation employees are trying to keep up with the massive growth in the region as a result of the residential and commercial expansion taking place. Miller Insulation has been a part of the Williston Basin’s history for four decades, and is poised to play an important role in the region’s extremely bright future. n

Dust control sysdustgard liquid

Dust is a four-letter word By Michelle Daum, Gravel Roads Academy™

ust is more than a dirty word – it’s expensive, and potentially unsafe, and unhealthy. Airborne dust is one of the greatest contributors to bumpy, raveled gravel roads, as well as potential health problems related to inhaling dust. The Dust Bowl of the 1930s is a well-known example of how airborne dust of epic proportions can be caused by human activity and dry weather. In more recent years, improved agricultural techniques and more paved rural roads have decreased the typical amount of airborne dust in many areas. But, in the Bakken oilfield, the hundreds of trucks per day that travel on the roads have produced colossal maintenance challenges for those who manage the road systems. When dust flies off the road, the support around the larger rocks is lost. Those larger rocks are pulverized into smaller, fine particles by heavy traffic and become more dust. Potholes and washboards result; as well, the road surface can actually become lower. Motor graders can smooth-out the road surface, but without a plan to keep the fine particles on the road, a vicious cycle of dust and rock leaving the road surface is inevitable. Lack of visibility from plumes of dust kicked up by thousands of tires can be hazardous not only to other trucks, but also to local citizens. And, despite the best efforts of all involved, breathing the small particles can be unhealthy. County municipalities develop road maintenance plans which include periodic grading and re-graveling of unpaved road surfaces. The main contributors to increased maintenance frequency and cost are traffic (number of vehicles, speed of travel, and weight of vehicles) and weather. The traffic counts on the county roads in the Bakken are climbing each year as more rigs are constructed and oil is transported to terminals. And the financial impact on county budgets can be staggering. But, road maintenance professionals have options in their

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BAKKEN OIL REPORT – FALL 2012

tool box. Roads can be paved if the traffic classification warrants that option. However, as traffic counts change, pavement may be expensive and difficult to maintain. One lower cost option that many municipalities rely on is a magnesium chloride road stabilizer, commonly referred to as “Mag Water.” Magnesium chloride is a natural, abundant mineral from Great Salt Lake. It works by attracting moisture from the air and keeping the top surface slightly damp, which minimizes dust. It also binds tiny dust particles to clay and other rocks in the road. Its environmentally friendly characteristics make it widely used by the U.S. Forest Service, the Bureau of Land Management, and many counties throughout the United States. DustGard® Magnesium Chloride Road Stabilizer is a commonly used dust control and road stabilization product, because it can be safely sprayed on unpaved roads, driveways, rodeo arenas, parking lots, and construction sites – anywhere airborne dust is a problem. A study performed by Colorado State University has shown that magnesium chloride has been proven to cut unpaved road maintenance frequency by as much as 75 percent and gravel replacement by over half. Its forgiving nature also allows grading and correcting spot problems without ripping up the whole road. A study is currently underway by the Upper Great Plains Transportation Institute to review other products. But in most cases, magnesium chloride remains the workhorse of choice for road stabilizers. Dust is an annoyance. But it is really cost and safety that are the driving forces behind stabilizing gravel roads. Although dust is a four-letter word, using the right stabilizer with a welldeveloped road maintenance program can turn cost into savings and improved safety. Plus, the air you, your employees, and your family are breathing will be as clean and healthy as possible! n

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gravel products inc.

Gravel Products, Inc. – Providing North Dakota with quality aggregates for 42 years

ravel Products was founded in 1970 by William Schriock Jr. Known for its quality products and competitive prices, the family-owned business has grown to become one of North Dakota’s largest suppliers of construction and landscaping aggregates. With commercial locations in Minot and Williston, as well as other active minesites in western N.D., Gravel Products can provide all types of materials for the oil industry where and when they are needed. Gravel Products offers many types and sizes of materials; the widest variety can be found at the Main, West and Sooline pits in Minot. Photos, pricing, and other information is available at www.gravelproductsinc.com. Gravel Products also provides a number of services. Whether it’s crushing, screening, washing or hauling 142

BAKKEN OIL REPORT – FALL 2012

– we have the people, equipment and experience to get the job done right. Crushing: We operate several highoutput portable crushing plants that travel throughout the state of North Dakota. Each plant is capable of producing a variety of sizes, types and classes of materials. Some of the more common are NDDOT Class 5 and Class 13 crushed gravel, crushed concrete, crushed asphalt and crushed stone (including railroad ballast, concrete rock, asphalt rock and more). Screening: For jobs that don’t require crushed aggregates, we can quickly set up and begin processing a variety of screened materials. These plants are also high-output, portable and capable of producing many different products. Washing: Gravel Products has two stationary washing plants and one that is portable. The stationary plants are

located on the east and west sides of Minot. The plants can scrub, rinse and separate raw material into several sizes of washed rock and washed sand. Pea-rock, roofing rock, sewer rock, and concrete rock, as well as mason and concrete sand, are all made by these quiet, smooth-running machines. Hauling: Whether it’s a short-distance city delivery, a longer run to the oilpatch, or a journey to Fargo, our large fleet of side, belly, and end dumps can deliver the products you need where and when you need them. For quotes on products and services, please contact: Joel Schriock President, Gravel Products Inc. Office: 701.852.4751 Mobile: 701.720.2059 Fax: 701.852.8521 Email: joelgpi@srt.com n

One of North Dakotaâ&#x20AC;&#x2122;s largest suppliers of construction and landscaping aggregates Known for it's quality products and competitive prices, Gravel Products has been serving North Dakota since 1970. With locations in Minot and Williston, Gravel Products can provide all types of material for residential, commercial, and oil industry applications. Check us out online for details on our statewide locations and services.

Locations Main Pit 2920 Railway Ave, Minot, ND 58703 Ph: 701.852.4751 Soo-Line Pit 3000 Hwy 52 S, Minot, ND 58701 Ph: 701.852.8475 West Pit 3305 4th Ave NW, Minot, ND 58703 Ph: 701.838.8888 noW oPEn Williston Pit 2 mi S of Jct. US2 & ND 1804, 1 mi E, 1 mi S Ph: 701.571.6173

www.gravelproductsinc.com

OILFIELD INTEGRATORS

Embracing technology in the oilfield O

ilfield Integrators (OFI) was formed with a mission to provide integrated solutions to address three management concerns in the oil and gas industry: production, security and safety. Our services provide true and total integration offering turn-key solutions involving engineering and design, automation and control, communications, video surveillance, access control, electrical contracting and hosted/managed services. We are available from design throughout production, or any phase of oilfield development, as a “true” full-service company understanding the top concerns and priorities of the oil and gas industry. As an integrator, our company is a “one-stop-shop”, having the broad range of expertise and over 30 years of day-

to-day business experience to offer our customers. We understand and embrace the production, security and safety needs of the oil and gas industry. We offer customized software applications, the necessary hardware and electrical power solutions to manage your operations. The key to integration and automation is working with a company that understands all facets of the process as well as the technology needed to accomplish full integration. Once a high-speed Internet connection is established at an individual location, our clients then gain the ability to manage, control and monitor each and every facility as if they were on-site. True integration also requires a team consisting of consultants, engineers, electricians and technicians working

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Highest quality industrial gas products. Whether it’s oxygen, nitrogen or argon we work with you to resolve your current and future supply needs in the most economical fashion possible.

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Liquid and gaseous nitrogen, oxygen and argon as well as storage and transportation solutions to suit large or small customers. We serve the medical, welding, food, oil and gas, refining, high tech, chemical, paper and other

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together to provide your company with customized solutions. OFI is currently working with one client needing a solution for accountability and efficiency at their salt water disposal (SWD) location. The client fully embraced all of the solutions OFI had to offer and the answer included highdefinition surveillance cameras, a NVR and a cellular data connection to identify spills, equipment damage and even illegal off-loading. This solution gave our client the ability to easily access the site over the Internet, allowing for remote monitoring of their SCADA and camera systems, thus streamlining their operations while protecting their assets. This particular client also gained the ability to manage staff and contractors coming and going to and from the location. Another one of our clients’ sites included a complete automation system consisting of pump controls, tank level monitors, wellhead pressure monitors, a PLC cabinet and a local Human Machine Interface (HMI), allowing the client to control the entire site from a remote location. We are also currently working with a major production company in the Bakken region. They have hired us to integrate a SCADA system with a high-definition video surveillance system to more closely monitor a production well. Once we complete our first BETA site for them, we will be looking at an additional 200-plus production wells for this particular client. These solutions continue to create around-the-clock efficiencies and a safer, more secure environment, thus positively affecting the bottom line. OFI can help you embrace technology in the oilfield and increase your revenues by decreasing the cost to do business, all the while managing day-to-day risks and creating an enhanced oilfield environment. n

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GM petroleum

GM Petroleum: southeastern Montana’s largest full-line petroleum distributor G

M Petroleum Distributors (“GM”) located in Billings, Montana was founded in 1964 by R. M. “Rollie” Grunstead. Southeastern Montana’s largest supplier of diesel, gasoline, lubricants, propane, aviation fuels, and also VP race fuel, GM is an authorized marketer for ConocoPhillips, Sinclair and Cenex fuels. We also offer loaned petroleum equipment, including portable skid tanks up to 12,000 gallons for commercial contractors. Our transport division is one of the largest in southeastern Montana. We operate our own fleet of trucks, which gives us the flexibility to accommodate short-notice deliveries. GM Petroleum’s fleet operates 24 hours a day, seven days a week, with the capability to transport up to 12,000 gallons. Truck maintenance and safety is top priority for our company. GM Petroleum works very hard at being an environmentally conscientious company. We have an excellent CSA 2010 rating with the DOT and have GPS tracking on all our trucks. We can locate your delivery at anytime and estimate its arrival. Our trucks can accommodate multiple products, and for your convenience we can split them between locations. GM operates four discount fuel centers in the Billings metro area, including fuel centers at the bulk plants in Forsyth and Miles City. Our discount fuel centers are clean, well-lit and accessible to any size of vehicle, including tractors and trailers. They accept all major credit cards and Fleet cards including Wright Express, 146

BAKKEN OIL REPORT – FALL 2012

Comdata, Fuelman, Gascard, T-check and Voyager. GM Petroleum may also serve your business needs with the GM Petroleumissued charge card. This card works only at our discount fuel centers. Your invoice is customized to your needs; you may choose to list employees’ names, truck numbers, and odometers. Limit the type of fuel accessible at the pump and choose individual PIN numbers. Manage your fleet with the GM Petroleum card – call for your special pricing today. Propane is a very important part of GM Petroleum’s business. GM supplies agricultural, residential and commercial customers from our bulk plant locations in Billings, Forsyth, and Miles City in quantities from 200 to 11,000 gallons. Propane services provided: bottles for barbeque grills, travel trailers, motor homes, and forklifts. GM Petroleum offers prefilled barbeque bottles, on an exchange basis, at most of our locations, including Conomart Superstores. If you are looking for residential or commercial propane tanks, GM Petroleum sells and installs above and underground tanks. Owning your own propane tank allows you to take advantage of GM’s competitive pricing. Please give us a call and we can discuss the size of tank best suited for your needs. Fleets, farmers and factories have also depended on GM Petroleum for quality lubricants since 1964. We have supply contracts with Chevron, Conoco and Kendall. Together, these lubricant product lines allow us to supply even the

most demanding specifications. Our sales staff has a combined 56 years of training and experience in lubrication technology, and their knowledge can help you design a cost-saving preventive maintenance program. The payoff: less downtime and longer equipment life. GM Petroleum’s bulk oil packaging facility, at 1819 Montana Avenue, was recently awarded “Top Tier” status by ConocoPhillips. This program is for marketers who have achieved top tier status for exceeding quality, safety and environmental operation standards. The elite recognition is awarded to a select number of ConocoPhillips lubricant marketers who exceed the company’s rigorous Marketer Operations Standard guidelines as set by ConocoPhillips. Lubrication specialists and ConocoPhillips lubricant engineers conduct continuous inspections of GM Petroleum’s facility. GM owns and operates a chain of eight convenience stores located in and around the Billings area. Conomart Superstores pride themselves on “Top Tier” Conoco gasoline and diesel, cleanliness with competitive prices. Check out their large product assortment, propane bottle exchange and fast, friendly shopping experience. Whether you’re coming to Billings, Forsyth or Miles City, or looking for a supplier in the Bakken area, GM Petroleum is certain you will be satisfied with our products and our courteous, professional, certified, knowledgeable staff. We are located at 2100 1st Avenue South in Billings, Montana. n

EASTERN MONTANAâ&#x20AC;&#x2122;S LARGEST, FULL-LINE DISTRIBUTOR OF FUELS AND PROPANE.

GM Petroleum Distributors, celebrating 48 years, locally owned and operated in Billings, Montana. Our fleet of transport, tank wagon and bobtail trucks, operates 24/7 with GPS tracking technology and has the ability to transport up to 12,000 gallons. GM Petroleum is Eastern Montanaâ&#x20AC;&#x2122;s largest, full-line distributor of Conoco, Sinclair and Cenex fuels and propane. We offer loaned petroleum equipment, including contractor skid tanks. GM Petroleum is an authorized Marketer of Conoco, Kendall and Chevron lubricants. Our bulk oil repackaging facility was awarded Top Tier Marketer status, from ConocoPhillips. Six discount fuel centers are available in Billings and Eastern Montana. GM Petroleum services the Montana, Wyoming, North and South Dakota areas.

Since 1964.

Toll Free: 877-808-4661 www.gmpetroleum.com

MBI energy services

MBI Energy Services Industry leader continues rapid expansion

s oil production in North Dakota continues to develop, overtaking Alaska as the second largest producer of oil in the United States, MBI Energy Services is prepared to meet the needs of the oil and gas industry. MBI Energy Services is one of the Bakken’s great home-grown success stories. Started by CEO Jim Arthaud and his brother Jody Arthaud in 1979, MBI Energy Services (formally Missouri Basin Well Service), came from humble beginnings. The Arthaud brothers started with one truck that they operated themselves, and have since grown the family business into the largest private employer in North Dakota. MBI now serves all segments of the oil-well production cycle. Its North Dakota service offerings include being the largest oil and water hauling company and having the largest privately owned and operated network of salt water disposals (28). In addition, over the past 18 months, MBI has added wireline, hot oil, workover rigs, and rental services, through acquisition, to provide complete end-to-end service for its customers. It has grown five times over in the past five years – from 200 employees to over 1,600. Jason Homiston, MBI’s vice-president of development explains, “With over 33 years of experience, what differentiates us is our commitment to providing lasting, safe solutions to both our community and our customers.” People and Infrastructure MBI has grown with the oilfield, investing in infrastructure and personnel as demand continues to grow. Aside from MBI’s Belfield headquarters, it has eight satellite locations in communities across the oilpatch. Its locations in Dickinson, Minot, Beulah, 148

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High Plains Wireline became a part of MBI Energy Services in 2011. High Plains is equipped with a fleet of trucks and cranes to provide the latest technology and tools in wireline services.

All MBI trucks are currently being fitted with GPS tracking and electronic ticketing software.

North Dakota Service Provider As demand in North Dakota continues to grow, MBI Energy Services is ready to quickly, safely respond with local, proven expertise.

Services Fluid Management & Logistics Oil Hauling Fresh Water Hauling Salt Water Hauling Proppant Hauling Winch & Flatbed Hauling Water Heating, Storage & Transfer Well Services & Rentals Wireline Units Workover Rigs Fishing Services Ancillary Services Field Maintenance & Supervision

North Dakota | CO | PA | TX | WY mbienergyservices.com

GROWING WITH NORTH DAKOTA SINCE 1979, MBI Energy Services has been dedicated to providing dependable, safe oilfield solutions in North Dakota. With our proven experience, strategic locations and integrated services, MBI is committed to responsibly growing with North Dakotaâ&#x20AC;&#x2122;s oil and gas industry.

MBI energy services

Watford City, Ross, Stanley, Lignite and Westhope, combined with its fresh water and salt water disposal resources, give MBI a competitive advantage – enabling the most efficient operations in parts of the oilfield that are difficult to operate. “As we work with our major customers, they ask us to move our services and grow our offices,” explains Homiston. Customer demands prompted MBI to expand beyond the Bakken into Texas, Wyoming, and Pennsylvania. Finding people to put its extensive infrastructure to work has proven to be a serious challenge. MBI has grown from over 100 company-owned trucks to over 500, and has added another 500 subcontractors in the past five years. In 2011, it hired over 400 drivers, and currently employs someone from each state within the United States, including Hawaii. MBI hopes to hire another 400 employees in 2012. It is a challenge to find that many new hires, let alone house, train and retain them. To meet this challenge, MBI invests heavily in its employees. Each driver receives a week of classroom training and 30 days with a designated trainer. “Safety is our most important value,” says Homiston. “We hold ourselves to the highest standards, and our major customers have come to demand that level of commitment. “ Over 10 percent of MBI’s staff is dedicated exclusively to safety support operations. Future Prospects North Dakota’s Bakken region has seen unprecedented growth in the past few years, and development will continue at a rapid pace for years. With almost 200 drilling rigs currently operating around the clock, and more on the way, demand for services will continue to grow. MBI is already hauling more than 100,000 barrels per day in fresh and produced water alone, and is poised to continue expanding its services. MBI is investing millions of dollars to integrate GPS and digital billing systems into its operations – greatly improving efficiency. It has also partnered with oil producing companies to build better rail facilities, making it easier to get over 100,000 barrels of oil a day to market. Efficiency will be one of the most important factors in driving down costs and maintaining profits that allow development to continue. MBI is positioning itself to continue to grow in size and efficiency to serve the oilfield for decades to come. n 150

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MBI Energy’s rig fleet includes ten “500 Series” workover rigs. Additional rigs will be added to the fleet throughout the remainder of 2012 and will also include new power swivels, pumps, and mud tanks.

These MBI 400 barrel upright tanks, shown on a drilling rig, hold diesel, water and invert. MBI provides rental and delivery services to its customers throughout North Dakota, Montana and South Dakota.

MBI’s network of salt water disposals (28) is the largest privately owned and operated in North Dakota.

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graco oilfield services

Trust leading oilfield services provider Graco to deliver superior results G

raco Oilfield Services is a privately owned and operated fishing, rental tool and service company with ten locations in the United States. We are strategically positioned in most major oil- and gas-producing regions, with the ability to serve operators in North Dakota, Montana, Wyoming, Utah, Colorado, New Mexico, Texas, Oklahoma and Arkansas. Graco’s corporate headquarter are located in Vernal, Utah. In additional to traditional fishing and rental tools, Graco’s service and equipment offering to the oil and gas industry includes foam air units, nitrogen units, reverse units, pressure pumping, production workover and completion services, packers and power swivels. The company is well poised to serve operators with both rotary- and production-related services and equipment. Graco’s core values are integrity, knowledge and strength. These traits have been developed with over 30 years of wellsite experience and represent the foundation of the company business philosophy. Graco was founded as a wellbore fishing service and tool company. We are still recognized nationwide as a leader in fishing expertise. Drillers and completion supervisors alike call on Graco in time of need… when no other option seems available. Each Graco store at its core is a fishing store with experienced and mature fishermen who can handle any problem your well presents. Rental tools are a natural fit to the fishing-service industry and all Graco installations have a complete range of rental tools available for your wellsite needs. Additionally, our machine shops and repair centers are capable and ready to

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graco oilfield services

support rental tool repairs and deployment so that your downtime is minimized. Packer services have emerged as a key complimentary business to the fishing and rental tools offering. All Graco stores stand ready to respond to your packer needs. We offer experienced supervisors who understand how to effectively and efficiently address you wellbore packer challenges. Graco utilizes only the most reliable packer brands and has a deep bench of experience in running and retrieving most packer styles. Circulation and pumping equipment services are currently provided at several Graco locations. We have the ability to move pumping and circulation equipment and expertise into an area for any client if desired. From foam air and nitrogen units

to high-horsepower 15,000 psi pumps, Graco can cover the full pressure range of the industry. Regardless of the well conditions or job requirements, Graco has the equipment and experience necessary to meet the required application. Graco operations are enveloped and guided by a robust safety attitude. Adherence to industry and company prescribed safety standards are a key component of Graco’s success. Continual investment in personnel, training, equipment and process improvement ensures that safety remains a constant priority and condition of business for all employees. Independence to respond quickly to customer needs and market conditions is another one of Graco’s unique

characteristics. Unhindered by large corporate layers, the company has a lean, yet effective, management structure that gives appropriate guidance and support to field operations yet provides workers with the autonomy and empowerment to react quickly and decisively to an ever-changing oil and gas service market. Graco continues to grow through key acquisitions and organic expansion. Focusing on the core business product and service offerings, while always maintaining a strong spirit of excellent service delivery, will ensure the company continues to create value or its customers, employees and ownership. n

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united liner Company

Unit Liner Company: protecting you and the environment U

nit Liner Company, established in 1967, provides innovative solutions for oilfield challenges. We

offer industry-leading secondary containment with the Enviro-Guard metal containment system. We also

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W W W . E N V I R O G U A R D C O N TA I N M E N T. C O M 154

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provide oilfield pit liners, tank battery containment liners, walkovers, tank rings, load-line containment, foam and snap-up berms, RSS pumps, RAMS units, and cattleguards/gates/panels. With our large inventory, the EnviroGuard complete containment systems are in stock and ready to ship because prompt service is our priority. Quality containment installations are very important to us, and so is safety. Our safety program is one of the best in the industry and meets or exceeds major energy companies’ requirements. Unit Liner Company always provides quality workmanship in a timely manner. From lining pits for drilling to metal secondary containment for production sites, our innovative liner and containment products are only a phone call away. Let us bring peaceof-mind to your operation with products that offer low-cost maintenance. To learn more please visit www. enviroguardcontainment.com or call (888) 748-5463. n

Unit Liner’s Mission Statement Unit Liner Company is committed to meeting challenges and creating solutions. Our promise is to meet or exceed our commitments to the customers we serve, and in doing so, lead our industries in quality and innovation.

The changing face of geosciences in the 21st century What you need to know to survive By Larry Herd The Changing Geosciences World It wasn’t long ago (at least it seems like just yesterday) that the domestic upstream oil and gas industry was still in the exploration phase – looking for new reserves, exploring for new play concepts and enhancing technology to find new resources. Our geosciences disciplines were generally isolated disciplines that got together as technical teams but operated as generalists within their silos. The majority of geoscientists were involved in the exploration side of the business, and we spent our time and energy looking for new and yet undiscovered resources. Now, the industry compass has swung around to other directions. Today, the most hydrocarbons being “discovered” are by the drill bit as unconventional resource. The new resource plays are based on resources that we’ve known existed in the ground for years – we just couldn’t economically get them to the surface. The “mining” of oil and gas (oil shale, tight gas, heavy bitumen) is now a materials-handling process rather than true exploration. Much of our current technology advancement is in the area of horizontal drilling, rock mechanics and induced fracturing – all designed to assist in the extraction of hydrocarbons from known areas and to bring the resource to market.

specific knowledge of resource extraction technology and apply geology and geophysics to rock mechanics, pore connectivity and fracture analyses. • The Specialist: One segment of our discipline, which I believe is a growing component, is the geoscientist who excels in a specific field of geology or geophysics. These are the ones most likely to speak at technical luncheons, and who understand and do research in a specific narrow field of study. They are the technical leaders in whatever field they work in, and are usually, but not always, found in major service or oil and gas companies. A Primer for the Gen-Y Geophysicist What do you need to know to survive once you “get there”? Well, here are my credentials: I graduated from the University of Manitoba in 1978 and am a full-fledged stereotypical baby boomer. My parents are classical “builders” (traditionalists) and my children (a relative term) are generation Y. I have managed a service company of baby boomers, gen-X and gen-Y staff for many years and I have at least a cursory understanding of the issues. For my sources of information, I flagrantly plagiarize from reliable

The Geoscientist of Today For the benefit of the undergrad student peering into the looking glass, trying to get a glimpse of our industry, I have classified today’s geoscientist into three broad classifications. • The Explorationist: There are still a myriad of small to mediumsized companies in the exploration game, and they are doing a great job of finding oil (since natural gas is a four-letter word today). Geoscientists still play a vital role in finding these resources, and many senior geologists and geophysicists can be found at the helm or in the management team of most small outfits. They have a general knowledge of many aspects of their respective fields – seismic including acquisition, processing and interpretation, and geology – depositional environments, core and cutting analysis and play-making, having all cut their teeth early in their careers with large oil companies or major service companies. • The Exploitationist: If you “follow the money” however, you find that most investment dollars are flowing into the unconventional resources. These geoscientists work as part of an integrated team to develop unconventional resources. They possess more

Internet sources like Wikipedia and various blogs, rely on innuendo and hearsay, discuss issues with my peers over beverages and read the odd professional management article. All in all: sound and reliable sources of fully pedigreed information – see note of apology below. Kids these days... “They waste time chatting with co-workers. They show up for work in shorts and T-shirts. They plug in their music, text on their phone and try to work at the same time. And then they take the afternoon off to go skiing.” (Overheard in a management meeting.) Welcome to the “Age of Entitlement”, the brave new world of generation Y. Gen-Yers value positive reinforcement, autonomy, positive attitudes, diversity, money and technology. They have grown up in prosperous and tranquil times and as a result, have a very optimistic outlook on life. They demand more input into their learning regimen, crave supportive feedback and lots of variety in the workplace and expect good salaries to spend on multitasking gadgets. They are the generation of “multi-taskers” and utilize technology to read, listen, type and talk all at the same time. BAKKEN OIL REPORT – FALL 2012

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Why Understanding the Generation Gap is Important to the Gen-Yer You (the gen-Yer) need to understand the relational working environment in which you (hopefully) find yourself. I call it the “Totem Pole Concept of Corporate Hierarchy” – chances are that when you start into your new role as a young geoscientist, you will be at the bottom of the totem pole. Your boss will likely be a gen-Xer and his or her boss will likely be a baby boomer. If you think your boss doesn’t understand you – try talking to his or her boss! Gen-Xers believe in investing in their own development rather than in their organization’s and they embody the entrepreneurial spirit. They are cautious about investing in relationships with employers because experience has shown that these relationships are not reliable. To a gen-Xer, this may mean twoweek’s notice. They usually have clear goals and prefer managing their own time and solving their own problems rather than having

them managed by a supervisor. This generation works hard but they would rather find quicker, more efficient ways of working so that they have more time for fun. While the baby boomers worked hard to move up the ladder, gen-Xers are working hard so that they can have more time to balance work and life responsibilities. When communicating with this generation, use email and texting as your primary tool, and talk in short soundbites to keep their attention. Keep them in the loop and ask them for feedback regularly. Baby boomers, who coined the phrase “workaholic”, value peer competition. They work hard because they view it as necessary to climb the ladder of success, which is a fundamental belief. Boomers are the “show me” generation and body language is important when communicating. When dealing with boomers, answer questions thoroughly and expect to be pressed for the details, and present options to demonstrate flexibility in your thinking. They embrace the team approach to business and as long as you perform to their standards, they will accept you as an equal. They don’t appreciate rules for the sake of having rules, and they are not afraid of challenging “the system”. Baby boomers have strong principles and will fight for a cause if they believe in it. Supportive Tips to Gen-Yers As a guideline to help you, the gen-Yers: • Experience does count. Learn from others’ experiences. • If you don’t know – ask. If you don’t get an answer, ask again. • Continue to network – your bosses may not understand, but your network of peers is an invaluable tool for both you and the company for which you work. • Technology is a tool, not an answer. Use the technology to its fullest but remember that technology only assists in the creation of knowledge. Auto-picking the 3-D seismic survey on a workstation provides the data picks but doesn’t tell you how to interpret the trap. Supportive Tips to Gen-Y Bosses and their Corporations As a guideline to help the supervisors of Gen-Yers: • Don’t manage; mentor. Don’t assign; explain. They thrive on learning through mentorship. • Use action words, and challenge them at every opportunity. • Don’t dictate; solicit. Gen-Yers appreciate interaction, and resent being talked-down to. • Don’t ignore; respond. Gen-Yers have little patience for bosses who don’t respond. Email is preferred. • Don’t conceal, communicate. Provide an open-door policy and make sure you talk to your gen-Yers. Seek their feedback and provide them with feedback regularly. • Use humour and create a fun learning environment. Don’t take yourself too seriously.

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• Encourage risk-taking. Encourage them to break the rules so that they can explore new ways of learning. As a leader of a corporation whose employees span the three generations, you might consider restructuring leadership across the generations, providing compensation, benefits and incentives to satisfy each generation. The traditional boomer’s “one-size-fits-all” strategy won’t work. Stop trying to communicate using the standard company line – effective corporate communications must now include multiple formats and styles. Closing note: the Scale-up Challenge As an industry, we are facing an incredible dilemma. Our brain trust demographic is retiring, and we have a small group to fill their shoes. While the job market should be running full throttle to replace us, the rapidly departing baby boomers and early gen-Xers, hiring is still subjected to the whims of the ebb and flow of oil economics. Yesterday, all of the new grads were offered jobs; today, there are many who go without an interview. As

SERVING THE OIL AND GAS INDUSTRY SINCE THE DISCOVERY OF ELK BASIN

soon as the industry regains its traction

ATTORNEYS

and needs to fire on all cylinders, where are the experienced talent to drive business forward? We had better figure out more ways to keep our young people enthused about the geosciences or we won’t have replacements coming in our stead. Author’s note: An apology to my sources (Sharyn Devereux, Catherine Jones, Shane Austin, Jennifer Blanchard and Ray Williams); I have mutilated this discussion so much over the years so as to make all references from reputable sources indistinguishable from my own. If you recognize any of the text as direct quotes, I will just plead ignorance so I ask your indulgence. About the author: Larry Herd is the president of RPS Boyd PetroSearch, a geophysical consulting arm of RPS Energy, and is also the 2011-2012 president of the Canadian Society of Exploration

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Geophysicists. n BAKKEN OIL REPORT – FALL 2012

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DRUG CHECKERS

Drug Checkers: quality, integrity and trust I

n early 2004, Janette McCollum conducted research to see how on-site drug and alcohol testing had worked throughout the U.S. Research showed there was a definite need for the services that Checkers has developed today. McCollum and Wendy Haugen entered into a partnership in February 2004, which they operated out of the McCollum home. Because Haugen had another full-time job, the majority of management and collections fell on McCollum. In June 2008, Haugen asked to be bought out of her 50 percent ownership of the business; at that time, Checkers was conducting testing for approximately 300 accounts in 16 locations. The business has grown to over 40 employees in 23 locations in Montana and North Dakota, serving over 900 accounts. McCollum says she could never have done it without all the support from her family and from past and present employees. “I am so proud of all the staff and collectors. They are all truly professional!” The oil industry is not the only one to benefit from Checkers’ expertise. Checkers serves all six modes of transportation from the DOT including the Coast Guard, railroads, airlines, transit buses, semi-drivers and pipeline workers. “We are very thankful for all the accounts we have,” McCollum states. “Our motto is ‘You call, we go’. We take good care of our clients and appreciate their loyalty.” Clients also appreciate Checkers. Wanda Miller, office manager at LandTech in Sidney, Mont. says, “We use them all the time because they’re local. They are prompt, efficient and professional when they come. They do testing on all our new hires and conduct the random testing, too. We have a lot of employees. The Checkers collectors come to our place and they’re here early in the morning. Our people can get their test done and get back to work.” After eight years of operating in McCollum’s home, Checkers expanded to the former PATH building at 223 N Central Avenue in April 2012. The building has been completely renovated with a welcoming entryway; the clinic is located in the front and the headquarters for Checkers Main Office is located in the rear of the building. Checkers offers a wide range of special services including urine drug screen collections, breath alcohol testing and hair testing. In addition, Checkers offers TSA Hazmat fingerprinting and DOT Physicals and Employment Physicals which are conducted by Don Hopwood, M.D. and Joan Turek, PA-C. The

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DOT/Federal Motor Carrier Safety Administration has instituted a new program effective August 20, 2012, which requires all medical professionals conducting physicals to be certified by the National Registry of Certified Medical Examiners. Hopwood and Turek are currently registered under the new program. They are available for physicals Monday through Friday from 8 a.m. to 5 p.m. Drug and alcohol collection services are offered 24-7 on site or at most of Checkers’ 23 locations. Professional collectors will come to your site any time, providing the quickest possible service, allowing your employees to get back on the job in 10 to 15 minutes, thus increasing productivity in your workplace. All collectors are well-trained and receive annual continued education courses on federal and state regulations. Checkers and all collectors are also fully insured. n

Facts about Checkers In 2011, Checkers conducted over 26,000 drug and alcohol tests, which equal: • 18,698 urine tests = 841,410 oz. = 6,573 gallons of urine (not to mention all the extra we discard!) • 7,226 alcohol tests • 792 hair tests. Tests require 120 strands of hair/person = 95,040 strands of hair. • 33 people who refused to take a test • 147 people who didn’t show for their appointment • 16 tests were conducted on holidays • 159,809 miles were driven by collectors doing testing In 2012 thus far: So far this year thru September 11th, Checkers has conducted over 20,000 tests which equals: • 13,882 urine tests = 624,690 oz. = 4,880 gallons of urine • 5,859 alcohol tests • 562 hair tests = 67,440 strands of hair (tests require 120 strands of hair/person) • 23 people who refused to take a test • 105 people who didn’t show for their appointment • 33 tests were conducted on holidays • 107,397 miles have been driven so far by collectors doing testing

QUALITY, INTEGRITY & TRUST 24 HR DRUG & ALCOHOL TESTING

1-‐877-‐488-‐5901

Phone: 406-‐488-‐5900 Fax: 406-‐488-‐5899 *********************************

HAZMAT FINGERPRINTING AT CHECKERS HEADQUARTERS IN SIDNEY, MT ONLY

DOT PHYSICALS/EMPLOYMENT PHYSICALS Dr. Don Hopwood, MD & Joan Turek, PA-‐C

Registered with the National Registry of Certified Medical Examiners Monday – Friday 8:00am – 5:00pm Make an appointment! Phone: 406-‐488-‐5500 Fax: 406-‐488-‐5499

Visit our Website: www.drugcheckers.com

Crude-by-rail service steps up to meet demand in the Bakken By Lisa Fattori

he drive to get product to market has some oil producers and mid-stream companies looking to crude-by-rail service as a

viable solution in expediting delivery and in reaching higher-paying

producers to make up the difference in cost, by accessing those prefered markets and achieving the highest possible netback. Since the fall of 2010, Canadian National (CN) has provided

markets. Railways are responding by ramping up service and

truck-to-rail service in Willmar, Saskatchewan, transporting a

partnering to develop transload facilities next to rail lines. While

regular supply of crude oil out of the Bakken. “CN’s network reach

pipeline is the traditional and preferred system for moving crude, the

gives crude producers and marketers access to the U.S. Gulf

roll-out of new pipeline infrastructure isn’t keeping up with record

Coast, U.S. Midwest, or into eastern and western Canada,” said CN

production, particularly in the Bakken play.

spokesperson Warren Chandler in an email. “CN offers a flexible,

The oil boom in North Dakota has sparked a surge of activity in

scalable solution with assets and service to match the oil industry’s

building transload facilities and the trend to use dedicated unit trains,

evolving needs. The CN network is fluid and has capacity to meet

with 80 to 100 cars loaded with oil, has caught on. Bottlenecks do

the needs of our customers as production increases. We can ramp

occur and rail service is picking up the slack to maintain consistent

up service to daily units train quantity based on customer demand.”

delivery to downstream markets. “We use much of the Enbridge pipeline system, because it sits

Canadian Pacific (CP) has also expanded service to meet increasing demand. In North Dakota, the company moved more

strategically where we’re producing and our market is in Chicago on

than 13,000 carloads of crude oil in 2011, which is a huge increase

the Enbridge mainline,” said Rene La Prade, senior VP of operations

from the 500 carloads that CP transported just two years earlier. In

for PetroBakken Energy Ltd. “It’s not our business plan to use rail,

the last two years, CP has invested $100 million in North Dakota to

but we are using it as an alternative when there is oil apportionment

expand network capacity and enhance rail service to meet increased

on the Enbridge system.”

traffic demands.

Unlike the time delays involved in locating pipeline and attaining

CP’s investment in its U.S. mainline to North Dakota is a

necessary approvals before construction of a pipeline can even

successful expansion model. In December 2011, the company

begin, infrastructure for rail service is already in place. What’s

expanded the transportation of crude-by-rail from the Saskatchewan

more, railways have access to coastal markets, such as California,

Bakken formation through a new transload facility. “The crude from

Louisiana and Texas, which can fetch a $30 per barrel premium

Estevan is going to the Midwest and West Coast of the U.S., as well

when compared to Cushing, Oklahoma prices. Crude-by-rail enables

as to eastern Canada,” said Ed Greenberg, spokesperson for CP.

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Other producers and refiners are also assessing the possibilities

Tesoro Corp. will be transporting Bakken crude via rail to its

involved in making similar investments. Bill Klesse, Valero Energy

Anacortes, Wash. refinery.

Corp.’s chief executive, is on record as having stated refiners

Delta Airlines, which hopes to save about $300 million each

“should all be in the railcar business” at a recent conference.

year in jet fuel expenses, also recently announced that it is seeking

Meanwhile, Valero Energy and Phillips 66 have both purchased rail

alternate means of bringing Bakken crude from North Dakota to its

cars in order to bring crude to their refineries. As of September,

newly purchased refinery in Pennsylvania. n

www.essentialenergy.ca BAKKEN OIL REPORT – FALL 2012

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INDEX TO ADVERTISERS

4 States Energy LLC................................... 96

Franz Construction Inc............................... 92

PTI Group Inc................................................ 57

AE2S..................................................................7

Frontier Energy Group................................ 63

QMC Hydraulic Cranes.................................77

American Steel Span Inc. (Legacy)......... 50

GES Power Rentals..................................... 60

Quality Mat Company................................... 23

Ameritest Inc................................................. 83

GM Petroleum Distributors.......................147

R&R Contracting Inc..................................... 71

APEGS.............................................................51

Graco Oilfield Services.................................21

Results Unlimited/Power Fuels................ 68

Arctic Oilfield Services................................22

Grand International.................................... 102

Aspen Air..................................................... 144

Richland Pump & Supply.............................18

Gravel Products...........................................143

Riley Bros. Construction............................. 70

H. & L. Rentals and Well Service.............132

Ritter Brothers Diamond Cutters.............. 98

Halliburton..................................................... 55

Rocky Mountain Rod.................................... 30

Huesker Inc..................................................103

RPM Consulting.....................................48, 56

Big Sky Economic Development.................11

Jasper Engineering & Equipment Company............................... 69

Shale Exploration...............................38 & 39

Bismarck-Mandan Development Assn.... 67

Journey Energy Services........................... 93

Baranko Bros. Inc......................................... 59 Beaver Creek Archaeology......................... 91 Bert Baxter Transport Ltd......................... 119 BIG – Badlands Integrity Group................. 19

Blue Cross Blue Shield of North Dakota........................................ 49 BNSF Railway............................................... 75 Brady Martz & Associates....................... 105 Breitling Oil and Gas..........................24 & 25 Brock White Company................................IBC

Kadrmas Lee & Jackson............................ 89 Legacy Oil + Gas Inc.................................... 30 Logan Completion Systems....................... 33 Lower Yellowstone Rural Electric Assn. Inc...........................15

Sidewinder Coil Services Inc.....................81 Sidney Rental................................................ 82 S/L Services, Inc.......................................... 32 Sondas Solutions......................................... 70 Stahllion LLC..................................................16 Star Building Systems................................ 95

MAC Air Heaters.........................................135

Steamboat Energy Consultants................. 31

Manger Insurance....................................... 112

Steve’s Sprayfoam Insulation LLC.............97

MBI Energy Services..................................149

Sund Manufacturing................................... 112

CanElson Drilling Inc.................................. 101

MDU Resources Group Inc........................ 47

Citadel Advisory Group............................... 90

Medora Foundation.......................................12

Suretuf Secondary Containment Partnership....................... 43

Continental Resources................................ 53

Mid-Plains Distributing Inc......................... 52

Crowley Fleck...............................................157

Miller Architects & Builders........................12

D. Hughes Construction and Concrete Pumping, Inc........................... 20

Miller Insulation Co., Inc.............................139

Calfrac Well Services...................................41 Camex Equipment Sales & Rentals Inc...........................................129

Target Logistics............................................ 29 TCA Marketing.............................................145 TCI Oilfield Factoring Company................ 121

Missouri Valley Petroleum Inc.................... 61

Thawzall LLC....................................124 & 125

Monster Energy Rentals............................153

Thru Tubing Solutions....................................3

Mountainview Energy Ltd............................73

Titan Machinery............................................ 37

MVTL Laboratories, Inc.............................. 115

Trucks of Bismarck..................................... 113

Nabors Well Services.....................................5

Unit Liner Company....................................154

Neset Consulting Service........................... 85

University of Mary........................................ 99

Northern Oilfield Services........................... 17

Veit & Company Inc.................................... 13

NorthWest Realty Group, LLC...................127

Wanzek Construction, Inc........................... 27

Enbridge Pipeline (North Dakota) LLC.... 58

Oasis Petroleum..........................................107

Warren Transport........................................133

Environmental Materials Inc.....................133

Oilfield Integrators...........................................9

Warrior Energy Services.............................79

Essential Coil & Stimulation Services......76

Pat’s Offroad................................................. 44

Wells Fargo Wealth Management............. 35

Executive Services, Inc.............................. 131

Petroleum Services..................................... 62

Whiting Petroleum Corporation................IFC

Farmer’s Union Oil......................................126

Pioneer Lodge..............................................109

Williston State College................................. 87

Ferguson Enterprises....................................6

Portal Service Company............................. 34

Xylem Inc.......................................................117

Flexsteel Pipeline Technologies Inc......... 151

Preble Medical Services, Inc....................137

Z&S Dust Control........................................ 141

Dakota Gasification Company.................... 65 Dan’s Tire Service........................................ 45 Diamond B Oilfield Trucking, Inc.............134 Do All Industries Ltd.................................... 54 Don-Nan Pump & Supply........................OBC Drug Checkers.............................................159 Eagle Welding & Petroleum Equipment.. 111 EideBailly LLP..................................................4

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BAKKEN OIL REPORT – FALL 2012

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