Bakken Oil Report Fall 2016 issue

Fall 2016

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

Fall 2016

CONTENTS

President David Langstaff

Message from the editor Shayna Wiwierski 10

Gas demand heats up commodity

Message from Senator Steve Daines 12

Education is key to long-term success 54

market 52

A new tool that suspends rods within What’s really going on in Western North Dakota 14 North Dakota Workers’ Compensation – Good benefits, good payor, low premiums – How? 16 MPA provides REAL industry education 24 New oil and gas regulations misguided, counterproductive 26 Colorado anti-fracking ballot measures face uphill battle to reach ballot 28 Keystone XL advocates and opponents await American electorate decision of November 8, 2016 30

well, safeguards the environment, and protects company assets 56 Ten reasons why employee assistance programs make good business sense 60 Pump cavitation got you down? 62 New Salvation Army leadership in the Bakken 64 The power of magnets 66 Volant Products adds to the cementing mix with growing array of product offerings 68 Gas monitoring safety solutions for

Publisher Jason Stefanik Managing Editor Shayna Wiwierski shayna@delcommunications.com Sales Manager Dayna Oulion Toll Free: 1.866.424.6398 Advertising Account Executives Gladwyn Nickel Mic Paterson Anthony Romeo Gary Seamans Contributing Writers Pat Bellmore Rebecca Colnar Howard Feldman Melanie Franner Maxine Herr Dr. Joel Jorgenson Leonard Melman Michael Sandoval Jessica Sena Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com

shale production 70

Despite delays, Sandpiper project still forges ahead 32

Art Director Kathy Cable

Satellite Shelters, Inc. is changing the

Design / Layout Dana Jensen

Proposed pipeline getting the thumbs up 34

Exploring a solution for the integrity

The Dakota Access Pipeline: Four states and a thousand miles 36

Financial focus: Here’s how to keep your

Meridian’s Davis refinery: An industry game changer 40

Aviation company vital to state’s

industry, one BRM at a time 72

verification process 74

portfolio healthy 75

economy 76 North Dakota eyeing future petroleum price moves as indicator of economic growth 42 Williston: Settling into a new normal 44 Creating balance within Dickinson’s housing market 48 Power automation improves operating efficiencies, decreases costs 50

T&E Pumps: Built by a trucker, for truckers 78 What is the most important thing in our industry 82

Advertising Art Sheri Kidd

© Copyright 2016 DEL Communications Inc. All rights reserved.The contents of this pub­lica­tion may not be reproduced by any means, in whole or in part, without prior written consent of the publisher­.

While every effort has been made to ensure the accuracy of the information contained in and the reliability of the source, the publisher­in no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers.

Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers­or employees.

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MESSAGE

Message from the editor It’s the final countdown.

On November 8, 2016 America will change. In fact, not only the U.S.A., but also the world.

Very few elections have created as much buzz as this year’s American presidential elections. It’s Trump versus Clinton in the showdown of the century. Although there will be many industries affected, we’ll be watching the economy of the oil industry in particular. The fate of the long-controversial Keystone XL rides on who will be the next president. The proposed pipeline, extending 1,200 miles from Alberta to Nebraska, would create thousands of new jobs and is backed by Republican candidate Donald Trump, who would immediately approve a renewed Keystone XL application. Democrat Hillary Clinton, like President Obama, fears that the environment would take a hit if the pipeline were to be approved.

And, it’s not just the federal government that is making headlines. A little closer to home, North Dakota is keeping eye on who will be the next governor of the state. Fargo businessman and Republican Doug Burgum is the odds-on favorite to become the next governor, since voters in North Dakota haven’t elected a Democrat to office in almost a quarter of a century.

Although we cover these timely topics in this issue of the Bakken Oil Report, we also take a look at what is happening in the fields. Oil may still be low, but there’s lots of projects going on, proving that the industry isn’t going anywhere just yet. We take a look at WBI Energy’s proposed Valley Expansion Project; Enbridge’s Sandpiper Pipeline project; the Dakota Access Pipeline project, and more. And, as always we have tons of supplier features showcasing the latest in pipeline innovation, business features, and many other articles we know our readers love.

I hope you enjoy this issue of the Bakken Oil Report and like the rest of America – and the world – I’ll be glued to my TV on November 8 to see history being made.

Strike oil!

Shayna Wiwierski @DELCommInc

10

BAKKEN OIL REPORT – FALL 2016

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MESSAGE

Keep D.C. out of the Bakken

By Senator Steve Daines

Folks in western states like Montana and the Dakotas understand that to ensure our way of life for future generations, we need to balance the responsible development of our natural resources with protecting and conserving our great outdoors.

As an avid outdoorsmen myself, I’ve been backpacking, fishing and hunting across Montana all of my life. And I firmly believe that it is those of us who live here in the west who should make decisions on how our land is used, not federal government bureaucrats in Washington, D.C. from agencies like the Department of Interior’s (DOI) Bureau of Land Management (BLM).

the costs that will be passed on to communities like many in our region.

According to the BLM, their new rule will generate $11 million in additional royalty payments for the federal government, while at the same time costing the industry $161 million annually. Only in Washington, D.C. would an agency be able to justify this kind of math. And to be clear, reductions of this scale would have a miniscule impact on global climate change – with an estimated global climate reduction in greenhouse gas emissions of no more than 0.0092 percent.

As Montana’s U.S. Senator, it is one of my priorities to ensure that the industry and businesses in our state reach their full potential and support local jobs through exports. Unfortunately, time and again energy-producing states like Montana are bombarded with the Obama administration’s energy and land-use regulations that are stifling innovation that states and the private sector are capable of, and leaving our communities worse off. Already, applications for permits to drill in Montana have dropped 80 percent since 2008 – a significantly higher percentage than the overall national drop – threatening tens of thousands of jobs supported by oil and gas.

With the Bakken as a cornerstone, America has a great opportunity to responsibly grow our production and meet domestic and global demand while simultaneously being one of the most environmentally responsible energy producers. And I’m very proud of the fact that we can now say that America is the world’s leading producer of oil and liquids – surpassing Russia and Saudi Arabia. This standing not only benefits our allies overseas, it ultimately secures our own energy future and strengthens our national security. Our nation has become a leader in oil and gas production not because of the administration, but despite it. I’m working to push back on new BLM regulations to ensure the Bakken plays a vital role in American energy independence for years to come.

At a recent Senate Energy and Natural Resources Committee oversight hearing, I questioned the BLM on their proposed methane venting and flaring rule and

It’s not only energy development that is feeling the weight of stifling BLM regulations. Farmers, ranchers and private land owners behind Montana’s plan to

12

BAKKEN OIL REPORT – FALL 2016

protect Sage Grouse habitat are now once again feeling uncertainty brought about

by BLM overreach. For Montana, the BLM Sage Grouse Conservation Plan conflicts our locally-driven solution to protect Sage Grouse habitat while also ensuring that our way of life isn’t negatively impacted in some very significant ways.

I’m a firm believer that the folks closer to the lands should have the greatest voice in this process. I have and will continue to encourage BLM officials to amend its land use plans to reflect the successes of local landowners and our state’s plan. The bureaucrats sitting in offices in Washington, D.C. don’t seem to understand that a Sage Grouse can’t tell the difference between federal, state, and private land. And with 64 percent of their habitat overlapping private land, it is my priority to ensure that all land users have certainty going forward.

I talk to a lot of Montanans who, like myself, are worried about the future of our state and our nation if we continue down this path of over-regulation that the administration has paved. Whether ensuring that Montana plays a significant role in our nation’s energy future or protecting land owners from one-size-fitsnone regulations – I will continue fighting at every opportunity to push back against job-killing regulations and ensure that western states like Montana have a voice in Washington, D.C. w

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What’s really going on in Western North Dakota

By Janna Lutz, President, Williston Area Chamber of Commerce The opinion of this area from people who have not actually visited here is astoundingly different from reality. They tell me they are surprised about what they find – which surprises me…I wonder what they expected? But once people visit here, they get it! They see a town similar to many others in this country, with many small and large businesses and friendly people.

Then they hear about the jobs that are available. They see, particularly over the summer, abundant community activities and numerous construction projects.

Williston just hosted (for the second time in three years) the Babe Ruth World Series in August.

• Still hiring! There is an increase in longterm skilled labor jobs available: in oil and gas, healthcare, trucking, wind power mechanics, and more.

Of course the area has seen the reduction in the pace of growth due to the oil market, but that doesn’t mean it stopped. On the contrary, there is still plenty of activity:

• The use of Stony Creek rail yard positions Willison as a regional hub – most recently with wind tower pieces for the Sunflower wind project in nearby Tioga.

• The Sloulin International Airport relocation groundbreaking will occur in October and the plans for redevelopment of the existing airport will be unveiled.

• Retail development continues as we provide more options and improve the quality of life for our residents – particularly more shopping and restaurant choices.

• Williams County is updating their emergency services plan and building a new county complex – a $54 million project.

The Williston area is focusing on its future.

It is still a growing community. While some businesses may be more affected by the slower pace than others, most are still here.

People are moving their families here and making it their home. The industries that dominate our regional economy – whether it is energy or agriculture – may be cyclical in nature, but they are still strong industries.

As long as we continue on the path that we’ve started, Western North Dakota will continue to evolve as a great community for decades to come. Come check it out for yourselves – and then help spread the word! w

• The City of Williston has been working to update their comprehensive plan – to prepare for the continued growth. Even their pessimistic projections expect population to grow to over 40,000 by 2020.

• Continued infrastructure improvements: numerous NDDOT projects and a second fire station will be opening next month.

14

BAKKEN OIL REPORT – FALL 2016

• Pipeline construction is jutting across the landscape.

• Housing continues to catch up and available housing has normalized the prices. The change is reflective of other North Dakota markets.

• Williston High School’s new campus was built and opened in August. The superintendent reports that over 270 new students are enrolled in the school system for this year.

REPORT

North Dakota Workers’ Compensation Good benefits, good payor, low premiums – How? Established in 1919, Workforce Safety & Insurance (WSI) is a state agency dedicated to the safety, health, and security of North Dakota’s employers and employees. As the sole provider of workers’ compensation insurance in North Dakota, WSI administers wageloss and medical benefits for workrelated injuries, illnesses, and deaths.

Chart 1: Midwest States: SAWW, Maximum Benefit Rates, and Maximum Weekly Benefit Amounts

The employer premiums provide for the payment of wage-loss and medical benefits, as well as administrative expenses. The premiums fund North Dakota’s workers’ compensation system and WSI does not receive state general fund dollars. There are no provisions for self-insurance or private insurance for purposes of workers’ compensation. If a business has significant contacts in North Dakota, they must insure with WSI. Employing 260 full-time employees, WSI is responsible for collecting employer premiums, providing employer safety programs, and adjudicating claims for workers’ compensation benefits. The following is a glimpse of WSI’s business by the numbers: • Service approximately 25,600 employers • Covered workforce of approximately 436,000 workers • Annual earned premiums were $361 million in fiscal year 2015 • Process approximately 24,800 claims/ year The following are the current injured worker benefits, provider reimbursement, and employer premium information administered by WSI. 16

BAKKEN OIL REPORT – FALL 2016

Chart 2: State’s Average Weekly Wage by State

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REPORT

continued

Injured worker benefits

Chart 3: Maximum Weekly Benefit Amount by State

WSI administers workers’ compensation benefits as outlined in state statute. The benefits available to an injured worker may include: • Lifetime, deductible-free medical care related to the work injury.

• Wage-loss benefits up to a maximum of $1,219 per week (125 percent of North Dakota’s state average weekly wage, SAWW, which is $975 per week). u

Charts one to four reflect how North Dakota benefits compare with other midwest states.

• Permanent Partial Impairment (PPI) is an additional benefit awarded if an injured worker’s full-body impairment meets or exceeds the statutory minimum impairment. PPI awards can range between $3,420 and $513,000.

Chart 4: Maximum Weekly Benefit Rate by State

• Post-retirement benefit (additional benefit payable) when disability benefits cease at time of eligibility for social security retirement benefits.

• Cost of living adjustments (COLA) paid to long-term disability and death benefit recipients after three years and are equivalent to the increase in the SAWW. u

u

COLAs have averaged 5.9 percent over the last decade and 7.4 percent over the last five years; The cumulative effect of COLAs over the past five years is a 43 percent increase in benefits.

• Vocational rehabilitation benefits that provide for up to two years or more of retraining.

• Death benefits of up to $300,000.

• Scholarships up to $10,000/year for no more than five years for: u

18

Dependents and spouses of an employee who died as a result of a compensable work-related injury; and, BAKKEN OIL REPORT – FALL 2016

u

Spouses and children of injured workers who are catastrophically injured.

North Dakota’s state’s average weekly wage and benefits compare quite favorably to other jurisdictions.

and hospital fee schedule analysis, WSI’s reimbursement for physician services equates to 185 percent of Medicare’s reimbursement. WSI’s reimbursement for hospital services was 160 percent (inpatient) and 171 percent (outpatient) of Medicare’s reimbursement.

Provider reimbursement Fair payment for medical and hospital services ensures an injured worker has access to quality healthcare professionals. Based on a recent medical

Employer premium Before WSI issues any dividends, North Dakota continuously ranks as the lowest premium state in the country (2014

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REPORT

continued

Chart 5: Premium Index Rate by State

Oregon Premium Study). The Oregon Premium Study reflects North Dakota rates are the lowest in the country and 53 percent below the median state.

Neighboring state’s rates compared to North Dakota (before any dividends): • South Dakota—2.1x higher • Minnesota—2.3x higher • Montana—2.5x higher Other monopolistic (sole provider) state’s rates compared to North Dakota (before any dividends): • Wyoming—2.0x higher • Washington—2.3x higher • Ohio—2.0x higher Financially stable A financially secure fund benefits both injured workers and employers.

Favorable investment returns have resulted in additional surplus growth.

Fund investment returns for the last five 20

BAKKEN OIL REPORT – FALL 2016

years (FYs 2011-2015) have averaged 8.36 percent, ranging between 2.70 percent and 13.26 percent per year.

reform package was referred to the voters and upheld. Ongoing reform continues to this day.

State law outlines the required surplus levels, which are 20 percent to 40 percent of reserve liabilities. To the extent WSI exceeds statutory surplus requirements, the statute requires dividends be issued to policyholders.

Total dividends issued in 10 out of the past 11 years have amounted to nearly $940 million, ranging between 30 percent and 62 percent. This includes an estimated $100 million dividend for the 2015-16 policy year.

During the interim, the legislature monitors system trends and workers’ compensation developments through the interim legislative Workers’ Compensation Review Committee.

Good benefits, good payor, low premiums—How? Proactive Legislative Oversight. In response to a nearly $250 million unfunded liability and excessive premium adjustments in the early 1990s, the legislature and stakeholder groups became very active with reforming the system in the mid-1990s. The largest

Safety Focus. WSI plays a vital role in preventing workplace accidents by providing proactive safety programs, premium discounts to employers who utilize WSI safety programs, matching training grants to industry associations, safety consultants, and online safety training through WSI’s Learning Management System (LMS).

WSI has a dedicated safety/loss control department consisting of 14 WSI safety consultants assisting employers in the prevention of workplace injuries.

Administratively Efficient. WSI has a 10 percent administrative expense ratio (FY 2015). Workers’ compensation industry

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continued

Periodic injured employee and employer customer satisfaction surveys, independently conducted for WSI, consistently rank in the "high" satisfaction category. expense ratios typically range between 25 percent and 30 percent. As a monopoly, North Dakota does not incur the marketing, broker, tax, and other fees incurred by other private workers’ compensation insurers.

review, medical bill review, evidence-

Good Service and Overall Customer

based treatment guidelines, medical

Satisfaction. In FY2015, WSI received

case management triage of complex

24,767 filed claims with an acceptance

claims, and a pharmacy formulary all

rate of 92 percent. The WSI acceptance

serve to ensure appropriate medical

rate of 92 percent exceeds the

care is provided.

acceptance rate of other similar states.

Few Disputes and Low Litigation.

Litigation is a cost driver in many jurisdictions. This is not the case in North Dakota. Overall litigation requests represent less than one percent of total decisions issued.

Return-to-Work Programs. Time-loss

Periodic injured employee and

claims account for approximately 13

employer customer satisfaction

percent of the total claims in North

surveys, independently conducted for

Dakota compared to 20 percent in other

WSI, consistently rank in the "high"

jurisdictions. North Dakota employees

satisfaction category. On a low-to-high

have a good work ethic, and if they are

satisfaction scale of one to five, most

Medical Cost Containment. WSI is a managed care organization. Medical and hospital fee schedules, utilization

injured, they want to get back to work.

recent surveys reflected an injured

WSI’s Return-to-Work program greatly

worker satisfaction rate of 4.13 and an

assists these efforts.

employer satisfaction rate of 4.34. w

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MPA provides REAL industry education

By Jessica Sena Through a public-private partnership, the Resource Education and Agriculture Leadership (REAL) Montana program has been providing leaders from around the Treasure State with an indepth look at natural resource development industries. This year, the second class of participants makes their way through a two-year course, wherein seminars are scheduled throughout the state, as well as in Washington, D.C. At the end of the course, participants also take an international trip.

The current class is comprised of business owners, ranchers, representatives of the coal mining, logging, and energy development industries, with many holding leadership positions in professional organizations, advocacy groups, and trade associations.

On June 9 to 11, 2016, the REAL Montana class attended an oil and gas seminar in Sidney, Montana. Richland County remains the state’s top oil-producing county, in spite of the downturn in activity. With the help of the Montana Petroleum Association (MPA), the entire class was given an informative tour of a drilling rig and fracking site, along with a natural gas processing plant and rail terminal by MPA members Oasis Petroleum and ONEOK Rockies Midstream.

The MPA and its members provide informative tours and pretentions around the state, in order to combat the misinformation about the oil and gas industry.

REAL Montana class in front of a Nabors drilling rig near Watford City, N.D.

REAL Montana at Oneok's Riverview Rail Terminal, Sidney.

REAL Montana class at Oneok's Lonesome Creek Plant, southwest of Watford City, N.D.

Tour hosts provided an education in the many high-tech changes that have taken place in the oil and gas industry, both through regulation and innovation, in hopes of providing an accurate portrayal of an industry often misrepresented by the media and anti-oil groups. The REAL Montana class visited with Oasis drilling and fracking directors while they were fracking. Both a chemist and a petroleum engineer with the company explained the constituents in frac fluid, and purpose of the controversial well completion process.

At ONEOK’s newest gas processing facility, Lonesome Creek (outside of Watford City, N.D.), company representatives explained how increased regulation on flaring has created opportunities for midstream companies like ONEOK to build new, revenue-generating infrastructure to capture and utilize otherwise flared gas at the wellhead. Today, ONEOK is the largest independent operator of natural gas gathering and processing facilities in the Williston Basin.

The class finished the tour at the Riverview Rail Terminal in Sidney, also owned by ONEOK. Prior to the day-long oilfield tour, the class had the opportunity to hear from speakers about the current regulatory environment, the city and county planning process, and how oil and gas extraction and processing works.

Representatives from Oasis Petroleum provided an Oilfield 101 presentation ahead of the tour day, and Bret Gallo, project engineer for Bison Engineering, discussed the state of flaring and air quality regulations. Other speakers included Leslie Messer with the Richland County Economic Development Office; Pete Hanebutt of the North Dakota Farm Bureau; Jim Talbert, McKenzie County, N.D. planning director; and Danette Welsh, government affairs manager for ONEOK Partners.

Paul Babb, community relations manager with NorthWestern Energy, presented a persuasive speech at the oil and gas seminar; a task each participant of the class completes during the course.

He focused on the importance of attitude to individual and corporate success, giving back, and telling the personal story of each company (industry). Babb used many philanthropic stories of work that NorthWestern employees have engaged in to point to the positive impact the company is making beyond its day-today operations.

Future classes are open to the public, and companies are encouraged to refer and/or sponsor their employees to participate. To learn more about the class, visit www.realmontana.org. For information on setting up a tour or presentation, contact Jessica Sena at the MPA at sena.jessica@rocketmail.com. w BAKKEN OIL REPORT – FALL 2016

25

REPORT

New oil and gas regulations misguided, counterproductive

By Howard Feldman More than a dozen states, including North Dakota, have now filed a lawsuit challenging the Environmental Protection Agency’s (EPA) latest rule for new oil and natural gas sources. The American Petroleum Institute (API), as well as a number of state associations, is also taking action to prevent the duplicative and potentially costly regulations from moving forward.

leadership and current regulations.

Cutting methane is good for the environment and good for business. As the primary component of natural gas, the oil and natural gas industry already has every incentive to capture as much methane as possible for delivery to customers.

Methane emissions from natural gas production are already falling, even as production has soared. Both before and after the EPA moved the goalposts for measuring emissions, the trajectory shows progress. The latest Inventory of U.S. Greenhouse Gas Emissions and Sinks showed that from 1990 until 2014, methane emissions from natural gas systems declined by 15 percent, while natural gas production increased by 47 percent. Emissions are headed in the right direction: down.

Industry innovations are key to progress.

We’re spending more than ever on reducing emissions, including the green completions the industry invented to capture methane emissions, which are now required by EPA for all new wells. Methane reduction technology is just one component of industry’s commitment to emissions reductions, which includes $90 billion of investments in zero- and low-carbon technologies from 2000 to 2014 – more than twice the next largest industry sector (at $38 billion) and almost as much as the federal government (at $110 billion).

And there’s every reason to expect that progress will continue under industry

Adding new regulations on top of the existing, successful system is more than

just unnecessary; it risks undermining progress. The United States has cut carbon emissions more than any nation on earth – while also leading the world in oil and natural gas production. Our success in reducing carbon emissions to levels not seen since the 1990s is largely due to increased use of clean-burning natural gas for power generation.

Imposing new regulations could raise operating costs, jeopardizing natural gas production and all the economic benefits and emissions reductions that go with it.

The shale energy revolution has reduced consumer costs, generated significant emissions reductions and bolstered our national security. Those benefits are too valuable to risk through EPA’s regulatory overreach. Market-based solutions are already working to reduce methane emissions.

Howard Felman is the senior director of regulatory and scientific affairs for the American Petroleum Institute. w

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REPORT

Colorado anti-fracking ballot measures face uphill battle to reach ballot

By Michael Sandoval, Senior Energy Policy Analyst, Independence Institute For Colorado’s environmental activists, August may feel like the summer doldrums as, for the second straight cycle, their hopes of seeing anti-fracking ballot measures make the November election could be dashed by last-minute failure.

In 2014, competing proposals from antidevelopment activists and pro-industry groups to shape the state’s hydraulic fracturing landscape were pulled at the last minute. Instead of dueling ballot measures and heavy campaign spending, Governor John Hickenlooper proposed a blue ribbon fracking commission.

The commission’s efforts failed to please the most committed activists, some still reeling from the perceived “betrayal” at the August 2014 deadline. Undeterred, they returned in 2016 with two more measures, variants of the “local control” and mandatory setbacks for drilling that first appeared in 2014.

In the 2016 version, Initiative 75 would allow for expanded local restrictions that exceed state regulations. Current law does not permit local governments to regulate in a manner that conflicts with state law.

Initiative 78 sets mandatory setbacks to 2,500 feet from any “occupied structure” or “areas of special concern”, raising it from the current 500 feet.

Those setbacks would constitute a de facto ban of hydraulic fracturing from more than 90 percent of the state, according to a report by the Colorado Oil and Gas Conservation Commission, as it would blanket the state’s largest oil and gas producing counties with comprehensive 28

BAKKEN OIL REPORT – FALL 2016

no-drill zones (See Figure 7, courtesy of the COGCC report). The areas of light blue and orange would be strictly off-limits.

That’s more than 100,000 jobs and $14.5 billion in economic activity in jeopardy, according to a report from the University of Colorado’s Leeds School of Business.

The Colorado Supreme Court reaffirmed in a May ruling that state government regulations on oil and gas development superseded local government bans and moratoria due to “well-established principles” that allowed state pre-emption.

While the ruling settled policy and legal battles stretching back to 2012, it did not hinder efforts by anti-fracking activists to return to the ballot box with a dozen possible ballot measures of varying language.

‘I think they are doomed’ This August, backers of both initiatives finally delivered, with just under an hour to spare, what they believe are the necessary signatures that will put their proposed restrictions up for a vote.

But most observers aren’t so sure. Colorado Secretary of State spokeswoman Lynn Bartels touched off a Twitter-storm when she pointed out that while anti-fracking activists had delivered boxes and boxes of signature forms (in a fossil fuel-powered U-haul, no less), the boxes themselves appeared to be fairly empty.

“Proponents of fracking measures turned in lots of boxes with very few petitions in them,” she tweeted.

Figure 7 – 2500' buffer for both occupied structures and areas of special concern. 60 million acres of surface area, roughly 90% of the state, could be affected by proposed mandatory setback. Blue-outlined countries are Colorado's top oil and gas producers.

A Politico story just days later highlighted internal divisions within the environmental community.

“If I were a betting person, I would not bet they would get on the ballot,” one Colorado environmentalist told Politico, while others expressed mixed feelings about the measures’ prospects, even if they were successful in making it to November.

“I’d rather not see the measures crushed at the ballot box,” the anonymous activist said.

But investigations by local CBS reporter Shaun Boyd casts doubt on the number of adequate signatures – 98,492 – that must be approved by the Secretary of State’s office for the measures to proceed, seeming to support initial suggestions that the 11th hour submission would come up empty handed.

Former Secretary of State Scott Gessler agreed.

“I think they are doomed,” Gessler told Boyd.

Energy In Depth’s Randy Hildreth quoted a Denver Business Journal report that found that experts suggest around 140,000 signatures should be submitted in order to clear signature verification by the Secretary of State’s office, given a typical 30 percent rejection rate. Activists claimed they had more than 100,000 for each initiative, but that may not be enough once random sampling begins of a smaller portion of those submitted signatures.

September 7 is the deadline for Secretary of State Wayne Williams to certify the activists’ petitions.

For more information, check out https://youtu.be/WwbFW_TAWwg. w

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Keystone XL advocates and opponents await American electorate decision of November 8, 2016

By Leonard Melman Few elections in recent memory have provoked the depth of animosity and controversy as the presidential election of 2016 between Republican candidate Donald Trump and Democratic candidate Hillary Clinton. Many positions represent polar opposites and this has been especially true of anything relating to environmental topics, such as climate change and the world of petroleum transportation, specifically including pipelines.

Within that last sentence, we find one of the most controversial of all matters, the proposed, but recently rejected, application to build the Keystone XL pipeline.

Keystone XL is the proposed pipeline extending 1,200 miles (about 2,000 kilometers) from the prolific oil sands of Alberta to Steele City, Nebraska where it would join up with existing pipelines for transport to major refineries and Gulf of Mexico shipping ports. The pipeline would carry about 830,000 barrels of petroleum per day and

would be constructed by TransCanada Corp. Financing would be provided by that corporation and refineries and oil shipping companies, which would be recipients of the end product.

The matter is of vital importance to two particular petroleum-producing regions whose economies have previously prospered mightily through oil and natural gas exploration, development and production. The two regions are the provinces of Alberta and Saskatchewan, plus the oil-rich areas of western North Dakota, particularly including the Bakken oilfields. In each case, these regions produce petroleum far in excess of their area's domestic consumption and therefore are heavily dependent on transporting that excess production to various markets.

Few alternatives other than pipelines are available to accomplish the necessary transportation functions. Both regions are land-locked, and therefore marine tankers are not possible. Given the quantities of petroleum involved, trucking is a non-starter and shipment

via lengthy rail tanker trains has been heavily condemned by environmental and safety experts.

Some of the strongest arguments for the project come from economists and those politicians who are strong advocates for approval of Keystone XL, as they claim it would result in 42,000 jobs during construction, and completion of the project would permit continued expansion of petroleum exploration and production in both regions.

However, consistently strong opposition to Keystone XL has arisen among those opposed to the project's approval.

Those anti-Keystone XL forces have brought forth several important points with their arguments being a primary factor in President Obama's decision to 'veto' the project - and it is the vast differences between the two groups and the fact that the two current presidential candidates have advocated diametrically opposite positions that has raised Keystone XL into a raging hot topic in this years’ campaigns.

Former Secretary of State Clinton is siding strongly with her party's general support of the environmental

30

BAKKEN OIL REPORT – FALL 2016

Keystone XL

vs nald Trum Photo of Do

p courtesy

of official

site.

community's hostility to Keystone XL. In a detailed statement posted on her Hillary for America website, Clinton offered several points including, "Since the application was filed, the effects of climate change have grown more acute"; "We shouldn't be building a pipeline dedicated to moving North America's dirtiest fuel through our communities"; and "Building a clean, secure, and affordable North American energy future is bigger than Keystone XL or any other single project". She also indicates strong support for strengthening the body of national pipeline safety regulations.

In addition, Hillary has sided with environmentalists on other topics such as the recent Paris UN climate accord; opposition to fracking as a means of oil recovery; plus extensive research and expenditures to promote 'alternative,

non-polluting and renewable' sources of energy.

For his part, candidate Trump has used the Keystone XL debate as a means of promoting his general political and economic philosophies. He is generally against what he regards as over-regulation and would not only immediately approve a renewed Keystone XL application, but would also simplify the entire pipeline application process. He would end support for the Paris climate accord.

He would ignore environmentalists' warnings about Canadian tar sands oil being particularly 'dirty', and would in fact encourage further tar sands development as part of an American energyindependence strategy.

And, as a particular insult to the political Left, he adamantly continues to declare

that the entire global warming concept is simply "an expensive hoax", and the American Environmental Protection Agency (EPA) as being "an impediment to both growth and jobs�.

Simply put, Hillary has declared President Obama's rejection of the Keystone XL project as being "the right call!". On the other hand, Trump openly declared that if he is elected president, TransCanada should file a new application and he would, "absolutely approve it, 100 percent!".

It is hard to get starker differences than those - and the political, petroleum, environmental and economic communities await, sometimes eagerly, sometimes with trepidation, for the results of American voters' decisions of Tuesday, November 8, 2016. w BAKKEN OIL REPORT – FALL 2016

31

Despite delays, Sandpiper project still forges ahead

By Maxine Herr When Enbridge began its efforts three years ago to construct

For now, the scope of the project has not changed, she said.

the proposed Sandpiper Pipeline stretching 616 miles from

The pipeline will deliver up to 225,000 barrels per day of

Tioga, North Dakota to its terminal in Superior, Wisconsin, the

North Dakota's Bakken crude to its terminal in Clearbrook,

oil industry was booming and desperate for more pipeline

Minnesota. Though North Dakota has approved the corridor

capacity. The company hoped to meet demand by having the

permit for the project, Enbridge is still awaiting approvals

project in service by early 2016, but due to regulatory approval

from Minnesota regulators due to revisions in the state’s

delays the new completion date is set for early 2019. Enbridge

process. Construction of facilities began in North Dakota

spokesperson Katie Haarsager says the delays are disappointing

in 2014 and if they obtain approval, Enbridge anticipates

since so much effort is put into developing a project, but the

construction will begin in Minnesota in 2018.

extra time did allow the company to concentrate on engaging stakeholders and gearing up for construction at a slower pace.

“The regulatory process has been unpredictable and we hope to work with regulators in the future to find ways to come to decisions through a more expedited, but thorough process,” Haarsager said. “But we continue to work with them, and we shifted our timeline while keeping shippers and those that want access as informed as possible so they know what their options are.”

Joint venture adds uncertainty Sandpiper hit a snag in early August when Enbridge Energy Partners and Marathon Petroleum Corp. announced a joint venture to purchase a minority percent interest in the Dakota Access Pipeline and the Energy Transfer Crude Pipeline.

Those are slated to be complete by the end of the year and send crude from the Bakken to Midwest refineries and then on to the Gulf Coast. The $2 million deal is expected to close during the third quarter of 2016, resulting in termination of Marathon Petroleum's commitment to Sandpiper. Haarsager said Enbridge will evaluate the project at that time, but believes it is still very viable since producers are always seeking ways to move what is coming out of the ground.

“Whether it’s slow or busy, there's still going to be that need for pipeline capacity,” Haarsager said.

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BAKKEN OIL REPORT – FALL 2016

the impact will be, but more oil will leave by pipeline than by rail, and that will have a far-reaching effect on the economy.

There was a lot of investment into long-term planning during the boom cycle – hiring engineering and consulting firms to extract what the impact would be. Now all those studies are sitting on shelves collecting dust and people aren’t in the mood to spend more money to see what the impact is going to be.

Tioga appreciates the economic boost it is receiving from the construction crews in the short term as they frequent restaurants, stores and hotels, but the City is uneasy when it eyes the future, particularly as it sees many workers already being laid off at transload stations.

“I think everybody is holding on by their fingernails,” Lindahl said.

“There was a lot of investment into long-term planning during the boom cycle – hiring engineering and consulting firms to extract what the impact would be. Now all those studies are sitting on shelves collecting dust and people aren’t in the mood to spend more money to see what the impact is going to be.”

debt is impossible at $45 a barrel. We’ll see people who will want to ditch out before 2017 and cut their losses before December 31.”

Enbridge’s Haarsager estimates that the new miles of pipeline will require 30 to 50 jobs in each state, and places like Tioga would benefit from tax collections.

“Those 616 miles come back in the form of property taxes, and I believe that has a substantial impact that affects local schools and communities,” she said. “That helps in the long term to continue those positive impacts that the short-term construction boom can bring into a community.”

Lindahl expects big peaks and troughs in production as price per barrel fluctuates, but he doesn’t foresee any real movement in price until there is new administration and policy in the U.S.

Haarsager says Enbridge employs over 170 workers within its North

“In the short term, I expect a lot of foreclosures in the third quarter in multi- and single-family, hotels and man camps,” Lindahl said. “All those guys have tremendous vacancy rates right now – probably greater than 70 percent in multi-family. So for them to service their

the amount of work and the initiatives that take place,” she said.

Dakota region. “[Employee] numbers are hard to judge, because it depends on “It depends on how much we’re investing in integrity or other construction projects. We’re still looking at what that employment may look like in 2019.” w

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BAKKEN OIL REPORT – FALL 2016

33

Proposed pipeline getting the thumbs up

By Rebecca Colnar

Having a way to supply natural gas easily to far western Minnesota and eastern North Dakota has resulted in the proposed WBI Energy Valley Expansion Project. The 38-mile pipeline will take gas from the Viking Gas Transmission Company Pipeline near Felton, Minnesota, and move it to WBI Energy’s interconnect in Mapleton, west of Fargo.

“It’s a good location and excellent way to move gas to an area where there is a real demand for it,” says Tony Spilde, spokesman for WBI Energy. “Everyone from shippers to end-users to lawmakers have deemed the pipeline to be a good project.”

34

BAKKEN OIL REPORT – FALL 2016

The company recently wrapped up its

regulations have required producers to

‘open season’, a period of time when

capture more of the gas that otherwise

potential shippers can make bids on

was being flared. That gas needs to be

shipping gas on the line. The bids

transported, which increases volumes.

supported the interest in developing

We expect to have continued good

this infrastructure, so WBI Energy is

volumes this year.”

currently making progress on negotiating contracts with those potential shippers.

The benefits of this estimated $50 million pipeline to MDU Resources are two-fold.

Spilde notes that even with the

First, it provides a good source of natural

“slowdown” in the energy market, natural

gas to support growth in the area, and

gas is still being moved, whether to

second, it enhances the reliability of

storage or through transmission.

the system during the winter heating

“We had record volumes last year, some

months.

of which could be attributed to gas

Although the economic impact doesn’t

flaring regulations. The state’s flaring

compare to hundreds of construction

Two factors must be taken into consideration when planning the pipeline: the route and the administration of the project. workers hired for much-longer pipeline projects, MDU still expects between 50 to 75 people to be employed during pipeline construction.

explain the project and listen to what

“Hiring workers to build this line will have a positive impact on communities, as workers will need places to stay, eat, and shop,” said Spilde. “I’d say it will benefit nearby towns over several months. Once the project is completed we may hire a couple of additional staff to manage this line.”

an easement. We explain the reliability

they have to say. Then we talk about the portion of the pipeline that will pass through their land, and work on getting of our system, and let them know that this pipeline will provide natural gas to an area that really needs it. We work with landowners to alleviate their concerns

The administrative side of the project includes collecting and evaluating potential shipper bids and negotiating agreements regarding the capacity of the pipeline.

As for complying with regulations, WBI Energy works closely with the Federal Energy Regulatory Commission (FERC).

“It’s going smoothly so far and we anticipate it will continue to go well,” Spilde says.

The company must follow a process that begins with identifying the route while taking into account environmental, cultural, and agricultural concerns.

“You plan the best route you can, then determine the landowners for all of the different parcels,” Spilde says. “The next step is to meet the landowners and

If all goes as planned, residents and businesses in far western Minnesota and eastern North Dakota will be benefitting from natural gas from this pipeline in the fall of 2018. w

34%

Two factors must be taken into consideration when planning the pipeline: the route and the administration of the project.

“First, we start planning the route and doing survey work. We already have about 50 percent approval to survey on our chosen route from landowners, and that number grows daily,” Spilde says.

“Once we have all of those landowner approvals to go ahead with the pipeline, construction can begin. We’re on track to start actual construction as early as the weather allows in 2018, pending approval.”

and make sure we have minimal impact on their land and farming operations. Of course, reclamation plays a large role, as we will put the land back as we found it.”

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35

The Dakota Access Pipeline: Four states and a thousand miles

By Rebecca Colnar Judge Boasberg’s ruling was met with applause by the North Dakota Petroleum Council. Its president Ron Ness issued a statement, “The NDPC is pleased with Judge Boasberg’s ruling that upholds what a vast majority of North Dakotans have known and believed all along: that this is a legal project that has met and exceeded the requirements of four states and the federal government.

We are, however, disappointed with the U.S. Department of Justice, the U.S. Department of Interior, and the U.S. Army Corps of Engineers’ decision to intervene in this lawfully approved project and continue to postpone the construction of this infrastructure that is so vital to our nation’s energy future.”

When the Bakken Oil Report last covered the Dakota Access Pipeline, it was imperative to have the state of Iowa’s approval. Since this spring, Iowa has signed on, and construction is now underway in North Dakota, South Dakota, Iowa and Illinois.

“We recently received the Nationwide Permit 12 from the Army Corps of Engineers for all four states,” notes Lisa Dillinger, spokesperson for the Dakota Access Pipeline. “We can move forward with construction in all areas as quickly as possible in order to limit construction activities to one growing season and have construction completed by the end of this year.”

Although three percent of the landowners still need to sign the easement agreements in Iowa, construction of this 1,172-mile pipeline is proceeding in the four states.

“In North Dakota, South Dakota, and Illinois, we are in all stages of the 36

BAKKEN OIL REPORT – FALL 2016

construction process with restoration occurring in some areas,” Dillinger explains. “In areas of Iowa that are furthest along, we are stringing and welding pipe and lowering it in. Pipeline construction does not typically start at one end and progress continuously, but instead takes place in separate ‘spreads’ along the route, with multiple spreads under construction at the same time.”

Unfortunately, a project was slated to run smoothly until it was halted in August when the Standing Rock Sioux Tribe contended that the pipeline, which had been moved off their reservation, will still tear up burial grounds and protestors were unwilling to let the project continue. On September 9, 2016, U.S. District Judge James Boasberg in Washington denied the tribe’s request for a temporary injunction in a one-page ruling that included no explanation. It ordered the parties to appear for a status conference on Sept. 16.

The project had met with all of the requirements needed in four states and with the federal government. They had also provided sufficient time for public comment and had acquired necessary easements.

However, at the time of this article’s publication, protesters were still flocking to the site, the National Guard had been called in, lawsuits had been threatened and the pipeline work remains stalled.

Apparently archeology will be done to see if the tribe’s claims can be substantiated and pipeline progress in the area depends on those findings.

Those involved in the project expressed dismay; the pipeline is expected to benefit many. It’s expected to bring jobs to many communities, and not necessarily rely on labor outside of each state. There are three spreads in Illinois and each spread will have approximately 600 to 800 people working on those jobs. One hundred percent of those workers will be union contractors with up to 50 percent sourced from local union halls.

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In addition, environmental concerns have also been addressed.

The Dakota Access Pipeline Project has a written promise to communities and to customers to operate the pipeline with “the utmost level of integrity and safety at all times, and provide environmental protections and minimizing any impacts to land properties”.

Connecting with the landowners is important, not only paying fair easement value, but protecting the top soil in all agricultural areas and restoring the land to preconstruction elevations and contours, repairing and replacing any impacts to drain tiles along with working around the farmers’ growing season.

Construction of the Dakota Access Pipeline in South Dakota.

Dillinger explains that the slowdown in energy production has not greatly affected production of this infrastructure project. The pipeline will transport an impressive 470,000 barrels per day with a capacity as high as 570,000 barrels per day or more.

Safety is top priority to the project. The pipelines will be monitored 24 hours a day, seven days a week, and 365 days a year by full-time operations maintenance staff.

“We have an automated valve technology that will automatically close if a problem is detected, and there is an emergency shutdown system that can immediately halt the pump systems if pipeline pressure exceeds safety limits,” noted Dillinger. “We will perform routine ground and aerial leak inspections about every 10 days, and have programs to educate the public about having underground pipelines.

“We have hired leading agricultural specialists and environmental experts to assist in minimizing impacts to soil resources and mitigating impacts to crops,” Dillinger explains.

Those resource specialists are available to landowners along the proposed route for consultation and property and project planning regarding DAPL construction and restoration techniques on individual croplands.

“Dakota Access is one of the most important energy infrastructure projects in U.S. history that will provide independence from foreign-sourced oil supplies and energy security for our nation,” Dillinger adamantly states. “Dakota Access will provide the base supply of crude that our entire country relies upon for fuel and other products used daily by all Americans. Additionally, the project is contributing millions of dollars into the U.S. tax base from direct tax benefits to sales tax from material procurement and manufactured goods, and tens of thousands of related jobs.” w

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BAKKEN OIL REPORT – FALL 2016

Meridian’s Davis refinery Industry game changer

By Melanie Franner

Basic equipment-built processing systems.

The North Dakota refinery industry is about to advance by leaps and bounds, so says William Prentice, CEO of the Meridian Energy Group, Inc. The company’s proposed Davis crude oil refinery is expected to be a state-of-the-art facility located in the heart of the Bakken oilfields – which currently produces around 1.2 million barrels of oil every day – and ships some 95 per cent of that to refineries located hundreds of miles away.

not tied to legacy technology, such as

“The average age of oil refineries in

when you modify an existing facility, but

the U.S. is between 40 and 50 years,”

instead have the opportunity to make use

explains Prentice, who adds that the

of the many advances in hydro-carbon

Davis refinery will be only the second

processing technology that have emerged

greenfield facility constructed in the U.S.

over the past several years. That is why

for the past few decades. “None of the

this refinery will be orders of magnitude

things that we’re going to use have ever

cleaner than existing facilities.”

been put together like this. Some of the

The new technology – something that

else like this in the U.S. The combination

The Davis Refinery received permitting approval from Billings County in early July.

Prentice refers to as more like a new

of all these elements will change the

process strategy than a new process

way the industry has been managed.

“This new refinery signals a very significant change in the way the downstream industry will be organized in the future,” explains Prentice. “We are

design – will not only increase efficiencies,

It used to be that you kicked refineries

reduce costs, and lower emissions, it will

into some industrial ghetto. The way

also change the way refineries are viewed

our facility will operate will mean that

from here on in.

you can locate it anywhere – like right

40

BAKKEN OIL REPORT – FALL 2016

New perspective

pieces have been used here and there in retrofits, but there won’t be anything

Vepica-designed refinery.

William Prentice, CEO of the Meridian Energy Group, Inc.

The average age of oil refineries in the U.S. is between 40 and 50 years. beside some of the best oil producers in the country. We’re taking a downstream industry and moving it upstream. That will equate into all sorts of economic efficiencies as well.”

The new Davis refinery is currently undergoing the necessary permitting and regulatory processes. Prentice anticipates that these will all be in place by the end of 2016, whereby Meridian Energy Group can begin field construction on the 715 acres of land near Belfield.

“During the interim period, we will be buying/fabricating long lead-time items to compress the schedule and prepare all of this equipment and material to be moved to North Dakota when we get into the ground,” explains Prentice, adding that the expectation is to be in operation on the first stage of the refinery by the end of 2017. “The initial capacity, placed into service in about 18 months, will be 27,500 bpd, producing gasoline, kerosene, diesel, and ATB. This capacity will be doubled in the next phase, with additional complexity, and the bottoms will be turned into liquid fuels.”

Some 500 jobs are expected to be generated during the initial construction phase, with about 200 full-time jobs during actual operations.

“The State of Washington has done studies of the local economic impact of refineries in Anacortes, which indicates that the employment multiplier – ratio of total increased employment to direct employment – is about 12:1,” explains Prentice. “This means that the Davis refinery will result in total increased employment in the region of up to 2,400 jobs.”

Full speed ahead Although Prentice admits that the Davis refinery project has received some “mixed” reactions, he is quick to add that these reactions tend to stem from people’s idea of an old-school refinery.

“Both Billings County and the North Dakota Department of Health are giving us a chance to show them what the Davis refinery is going to be like, which is miles different from what is currently out there,” says Prentice. “We are filing the air quality control permit as a minor

source, which is very significant for a refinery of this size.”

Already, North Dakota State Governor Jack Dalrymple is on board.

“We wish them the best in their efforts to move beyond the initial stages of development,” he says. “North Dakota is a great place to pursue new endeavors, and we continue to support the development of projects that add value to our many resources.”

And, as far as Prentice is concerned, the governor’s response is one that he is getting from all levels of government.

“With very few exceptions, the reaction to the project has been very positive once our approach has been made clear,” he concludes. “Government officials at both the state and county levels have been very thorough and tough on us, but the evaluation and approval process has been very fair. North Dakota is no stranger to energy development, and we have found that there is an exceptional level of competency at all regulatory levels, which makes our jobs easier in the long run.” w BAKKEN OIL REPORT – FALL 2016

41

North Dakota eyeing future petroleum price moves as indicator of economic growth

By Leonard Melman of crude from shale sources generally ranges from $30 to $70 per barrel, and it is the comparison of those costs with the rapidly changing commodity price for crude oil which has indeed resulted in dramatic economic and social changes for the City of Williston and the State of North Dakota. Clearly, when the price of crude is far above the cost of production, industrial expansion leading to rising prosperity takes place – and vice versa.

Democrat Marvin Nelson, who will be running against Republican Doug Burgum for North Dakota governor this upcoming November. Photo courtesy of official site.

Many of these changes relate to the price of crude oil itself, particularly when combined with the relatively new method of producing oil known as fracking. For those not familiar with the term, fracking essentially means breaking apart rock formations located deep underground in order to recover vast quantities of oil

which had, before the age of fracking, been trapped inside those formations and been virtually inaccessible.

2015-08-24 22:25:35 +0000

For the North Dakota oil industry, major changes seem to be occurring on a regular basis and now, those changes appear likely to impact politics in general, and the upcoming gubernatorial race of fall 2016 in particular.

One of the most important of all fields which involve the fracking method is the Bakken oilfield located in western North Dakota, with activity centered near the city of Williston. The quantities of recoverable oil have been estimated to be as large as seven-billion barrels, and it is the scope of that opportunity that has driven activity in recent years.

According to a recent article from CNBC News, the cost of producing a barrel

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After some years of relative dormancy, the price of crude headed sharply higher from 2008 through mid-2011, rising from the low $30s to near $115 per barrel, and then remained inside a range of $80 to $110 through mid-2014. Those years coincided with the widespread use of fracking and opened the doors to vast potential profits for oil capital. As a result, rapid expansion of oil exploration and production programs took place, accompanied by gains in employment and associated economic activities – and prime beneficiaries of those activities were Williston, in particular, and the government of North Dakota.

Then came the dramatic reversal – and dramatic it truly was as the price of crude collapsed to under $30 per barrel by early

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2016 and is trading in the lower $40s as this is written in late summer 2016.

As many companies found their costs exceeded their revenues, operations began to shut down and economic activity contracted sharply.

Williston's own history can serve as a barometer of those years. During the high oil price expansion boom, as petroleum drilling and production activities expanded, the city's population grew from about 14,000 in 2010 to near 24,000 by 2014, and when man camps for oilfield workers were included, it is estimated the area population reached as high as 40,000. This growth fueled soaring construction, retail and government programs, adding fuel to the 'boom' psychology.

But it didn't last. When the oil price collapsed, companies shut down their operations, laid-off workers left the area, apartment and trailer park vacancies rose, retail establishments went out of business, real estate “for sale” signs littered the landscape – and, of particular importance, tax revenues plunged for both the City of Williston and the State of North Dakota.

The impact of these revenue declines on the state government had a severe impact. After years of strong revenue growth which allowed for a continual expansion of government programs, matters reversed swiftly. In February 2016, Governor Jack Dalrymple issued a public information release, which noted he was ordering "…deep cuts to government agencies and a massive raid on state savings to make up for a more than US$1 billion budget shortfall..." He also acknowledged "…after 15 years of receiving almost entirely good news… things have gone in the other direction”.

Much of the shortfall has been made up by raiding funds accumulated during the halcyon years, but that source of funds may be running dry. As the release noted, "…the Governor also will take more than US$497 million from the state's Budget Stabilization Fund...". However, the release also noted that, "…that fund will now have a balance of about US$75 million…",

leaving open the question of what will happen if that fund becomes exhausted and petroleum prices remain low.

Dalrymple will not have to face that problem, however, as he recently announced his imminent retirement when his present term ends. Primary elections were held in North Dakota this past June with Democrat Marvin Nelson winning his party's uncontested primary, while businessman Doug Burgum of Fargo won the Republican nomination after a heated contest with N.D. Attorney General Wayne Stenehjem.

Political observers note that Burgum is the odds-on favorite to become the next governor in November's election since North Dakota voters have not elected a single Democrat to important statewide office for almost one-quarter of a century.

Whatever the outcome in November, the new governor will be forced to face the distinctly ominous reality that unless the price of petroleum climbs quickly and strongly back above the cost of production, the State of North Dakota could be facing a period of true austerity. w

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43

Williston: Settling into a new normal

By Maxine Herr

Ribbon cutting for new city of Williston office space: Williston Center for Development (April 2016). Photos courtesy of Williston Economic Development.

When the price of oil began to plummet and activity within the Bakken followed suit, businesses like 3 Amigos Southwest Grill in Williston, North Dakota took a bit of nosedive too. General manager Alayna Moody said the restaurant cut its hours about a year ago in an effort to stay afloat.

Instead of being open from six a.m. to 10 p.m., they now close at three p.m.

“When we cut our hours it did affect the business at first because people weren’t used to us only being open during the day,” Moody said. “But we still have the regulars that come every day and they are what keep us alive.”

44

BAKKEN OIL REPORT – FALL 2016

Ribbon cutting for new FBI Field office in Williston (June 2016).

Generators for the new wind farm in Tioga are transported via Stony Creek Railyard in Williston.

Though the business isn’t as busy as it once was, she believes the slowdown has benefited the community.

“The companies got to weed out the people that didn’t belong,” she said.

“Now that the boom has slowed down I think the whole town has changed to a tighter community.”

Executive director of Williston Economic Development Shawn Wenko echoes those sentiments. When the boom hit, companies were hiring anyone “upright and with a pulse”, he said, but now they are seeking certain requirements in their labor force.

Beth’s Kept Secrets, a new women’s clothing boutique in Downtown Williston.

“There’s a lot of optimism in the area,” he said. “We’re seeing some job fairs for some of the service companies, and the oil and gas industry is starting to hire again, but not on a massive scale.” He continues, “They’re looking for some type of skillset or background, so it’s not BAKKEN OIL REPORT – FALL 2016

45

The Williston Fire Station 2 and Training Tower that will opened in September 2016.

as simple to get a job as it was a few years ago.”

He sees companies finding ways to survive, such as offering early retirement buyouts and keeping their young talent ready for the day oil prices warrant another ramp up in activity.

In the meantime, Wenko sees a very healthy economy in Williston. His office typically offers an average of 25 lowinterest loans for business startups within the community each year, ranging from mom and pop coffee shops to downtown building redevelopment. He said the number of projects hasn’t changed, but the companies are a fraction of the size of the multimillion dollar companies that applied in 2012-13.

A demand for retail Wenko sees Williston settling into a new normal where companies – particularly restaurant and retail – have had to get more competitive.

“There was such a demand for services here you pretty much just had to open up the door and you were successful,” he said. “They’ve had to change their model of how they do things.”

He says generally Williston businesses have seen about a 30 percent drop in sales since the price of oil took its plunge.

But a 2015 study by data analysts at Buxton Co. indicates that Williston has a huge unmet demand for retail.

46

BAKKEN OIL REPORT – FALL 2016

“In Williston, and within 60 miles, we’re losing a billion dollars in retail sales because we don’t have the opportunities here, so it’s going to Minot, Billings or Bismarck,” Wenko said.

He suspects a cautious optimism within that market, but expects the retail sector to begin developing a broader base in Williston once oil prices even out and the city settles in for a long period of steady economic growth.

Though Williston is already considered to be a regional hub for the oil and gas industry, it is aiming for even greater stability with its new airport set to break ground in October.

“That regional airport will be a game changer, and as we see retail start to take off, that’s going to be another game changer and what solidifies Williston as the hub,” he said.

Other industry booms Fortunately, Williston’s economy does not rely solely on the oil and gas industry.

Red River Supply’s Stony Creek rail yard is expanding at a rapid pace – loading everything from oil and gas products to agriculture products, wind farm components and aggregate. In fact, when the state’s Department of Transportation decided to replace the Lewis and Clark Bridge near Williston with a new bridge to the west, all the steel needed to construct it came through this rail yard.

“That rail yard work been going at a breakneck speed and we’re excited about that,” Wenko said.

In addition, AGT Foods USA, one of the largest suppliers of value-added food ingredients in the world, has brought pulse crop processing to Williston and boosted the economy.

Wenko is working to complete a 10year strategic plan that revolves around the relocation of the new airport and the development of the old one. With 800 acres of property left behind in the middle of the city, Wenko sees it as a blank canvas to build Williston’s future. At the top of the list is some type of event center to accommodate large-scale meetings. He also wants to determine what sort of infrastructure is needed to entice the technology sector. The acreage will also include office space, housing, and university and medical expansions.

Wenko hopes to attract more light manufacturing to the area with a foreign trade zone designation at the new airport.

The designation would provide a cost savings as foreign cargo would be dutyfree.

“We have a lot of things going on,” Wenko said. “The picture of what Williston will look like will take some time. It’s not going to be days or months, it’s going to be years.” He continued, “I really see this community settling in for a nice 20-year run of economic prosperity.” w

Creating balance within Dickinson’s housing market

By Maxine Herr When oil activity in western North Dakota sent housing costs soaring in 2013, Dickinson found itself with some of the highest rental rates within the nation. Affordable housing was desperately needed, and developers began the process of answering that call.

Alex Burkhalter of Missoula, Montana had recently formed his company, Housing Solutions LLC, which specializes in developing affordable housing units, and was seeking funding from the North Dakota Housing Finance Agency to begin a $5.8 million project in Dickinson. They lost out to Heritage Hills, a fixedincome senior housing development, but reapplied in 2015 and successfully landed the funding. In addition, Burkhalter says he received financial support from the City of Dickinson and the Stark Development Association. But when oil prices fell, finding parties willing to invest delayed the project. Finally, First Security Bank in Missoula chose to take a chance on the project.

We were losing people on fixed incomes because they couldn’t afford to live here and that included a lot of seniors who were forced to exit.

“It was just about finding the right partner that understood and would work with us on it,” Burkhalter says. “After going through a couple potential groups we found one comfortable with what was happening out there and got it done.”

The 36-unit affordable housing building will feature 24 twobedroom apartments and 12 three-bedroom apartments, with six of those units targeted to those who were formerly homeless.

Depending on income, prices will range from $360 to $695 for the two-bedrooms and $395 to $795 for three-bedroom units. Amenities include garages and a children’s play area. The development is located at the intersection of 12th Avenue West and Koch Street in north Dickinson and is anticipated to open at the start of 2017. Rental applications are being accepted now by calling a leasing agent at (701) 225-9671. The apartments target renters earning between 30 percent and 60 percent of the area’s median income.

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BAKKEN OIL REPORT – FALL 2016

Burkhalter eyed the location because it is near the new middle school and a recent elementary school addition.

“It seemed like a lot of the growth plans showed infrastructure and road improvements headed northwest, so we wanted to be a part of that,” he said.

Dickinson city administrator Shawn Kessel says the new facility brings a much-needed balance to the housing market within the community.

“Housing prices and rental units have come down in price which is nice for those people in the market to rent,” Kessel says. “But having options like this facility is always appreciated because it’s nice to have choices – to select the option that best fits your living style.”

Grieving a tear in the social fabric When Burkhalter’s project was sidelined by the Housing Finance Agency in 2013 in favor of Heritage Hills, it was due to an obvious need for the senior market. Kessel said when rental costs were skyrocketing in 2013, Dickinson was losing a critical population.

“We were losing people on fixed incomes because they couldn’t afford to live here and that included a lot of seniors who were forced to exit,” Kessel said. “When you lose that knowledge and that history, it really does have an impact on the social fabric of a community.”

The loss of a senior population is greatly noticed amidst social organizations such as the Rotary, Elks, and Lions Clubs, Kessel said. Churches and Girl and Boy Scout troops feel the vacancy of their leaders, too.

“People who have spent sometimes decades in our community were helpful because of the time they committed to social issues and furthering the bedrock of a community,” Kessel said.

Every institution and private sector in Dickinson was forced to adjust to a new normal – one in which many middle management positions were left to be filled by less-experienced personnel.

The City of Dickinson responded by implementing an intense educational course called Effective Supervisory Practices, led by Kessel.

“It served as a way to provide skills and mentoring to those people we thought could take a step to the next level,” he said.

The concept was replicated throughout businesses in Dickinson as people that could have benefited from another couple years of experience were thrust into leadership roles after receiving similar training. w

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Power automation improves operating efficiencies, decreases costs

A power automation package provided by Aggreko on a single rod pump application.

The need to reduce wasteful spending practices is more imperative than ever before in the oilfield. Many exploration and production companies have been “sticking to the grid” and drilling new wells within parameters close to permanent utilities.

However, sometimes permanent utilities are not an option, such as in remote production areas of the U.S., including the Bakken.

In these scenarios, temporary power providers are becoming increasingly challenged to develop innovative technologies off the grid that meet environmental regulations and satisfy stringent economic requirements.

For example, many operators are turning to alternative fuel generators that leverage excess flared/ stranded gas captured from the wellhead. This allows optimized production activities, a reduced operating expense, and meets tighter environmental regulations that require a reduction of flared gas. While diesel remains one of the most widely used fuels for powering drilling and production sites, costs associated with using diesel are far from optimal.

Further, by incorporating a power automation system, operators can eliminate generator idle hours and reduce the associated high costs of diesel while greatly reducing emissions, regardless of the fuel source. Customized automated power kits can be retrofitted on both diesel and natural gas generator sets to communicate with an operator’s programmable logic controls, for any remote project with intermittent power needs.

The design of the controls allows generators to automatically start and stop, only running when power is required. This 50

BAKKEN OIL REPORT – FALL 2016

innovative application not only saves fuel and reduces emissions, but also increases uptime due to lower maintenance needs and fewer failures associated with overheating or excessive idle time.

The most common applications for power automation include rod pumps, midstream pumping stations, and de-watering facilities. At many pumping stations, producers have been able to reduce their associated fuel costs by 50 to 80 percent.

Real-world results One of the largest exploration and production companies in North America was operating a field of five producing oil wells on electrical submersible pumps (ESPs). As each of the wells began to experience slower production volumes, they deployed rod pumps to replace the ESPs. Since the sites did not have access to utility infrastructure, standard diesel generators were used to power each rod pump.

However, the operator later needed to reduce site emissions and lower operating costs. Aggreko was consulted and developed a solution including the installation of power automation kits and Tier 4i diesel generators to seamlessly transition the sites. The new power packages allowed the generators to only run when the rod pumps were operating, and to automatically shut off when the rod pumps were inactive, effectively eliminating idle hours.

The power automation solution saved the operator $130,000 annually, reduced emissions by 50 percent and delivered 100 percent uptime. w

“Power Automation saved us 52% on fuel costs.”

– Permian Basin Operator

Many oilfield operations are intermittent by nature, and do not demand power 24/7.

Yet, the generators on these sites have historically run non-stop, regardless of whether the application needs power at the time.

Thanks to innovations in Power Automation technology and in-house engineering expertise at Aggreko, idle hours can be completely eliminated. What this means for operators is up to 60% savings in fuel costs – which translates to saving hundreds of thousands or even millions of dollars annually, depending on the number of automated sites.

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Gas demand heats up commodity market

By Melanie Franner Energy is in constant demand – be it air conditioning in the summer or heating in the winter. Add to that the regular need for electricity for cooking, lighting, or even water delivery, and the demand continues to rise. The correlation between energy demand and commodity prices may be nothing new, but the downturn in the oil and gas industry has made the link that much more apparent.

0.85° C between 1880 to 2012.

Climate change

The U.S. Environmental Protection Agency (EPA) has said that since 1901, the average surface temperature across the contiguous 48 states has risen at an average rate of 0.13° F per decade.

Since the late 1970s, however, average temperatures have risen more quickly – 0.26 to 0.43° F per decade. Worldwide, adds the EPA, 2014 was the warmest year on record.

Global warming is doing its part to highlight the correlation between energy demand and oil and gas prices. Over the last half of the 20th century alone, according to the Government of Canada, global warming was about twice that for the entire century. And, it adds, global warming experienced since the mid20th century can be attributed largely to human influences. The government cites a long-term global warming of about

Climate change can impact the environment in a variety of ways, such as increase or decrease rainfall, affect crop yields, affect human health, change ecosystems, and even impact energy supplies. Scientists have advised that temperature increases be limited to 2° C above pre-industrial levels, and that in order to do so, net carbon dioxide emissions need to decrease to almost zero by 2050.

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BAKKEN OIL REPORT – FALL 2016

On December 12, 2015, Canada was one of 194 countries to sign the Paris Agreement, an effort to fight climate change and limit global average temperature rises to well below 2° C – and to pursue efforts to limit the increase to 1.5° C. The Paris Agreement is an ambitious effort, given the fact that even the slightest rise in temperature can produce dramatic results.

According to the EPA, if the U.S.’s climate were to warm up by 1.8° F, the demand for energy used for cooling would increase by about five to 20 per cent, while the demand for energy used for heating would decrease by about three to 15 per cent. Warming is likely to increase summer peak electricity demand in most regions of the U.S. The EPA suggests that a 6.3 to 9° F temperature increase could result in climate change that would

require the need for additional electric generating capacity of approximately 10 to 20 percent by 2050.

Another area that would be greatly impacted by climate change is water.

Not only is energy needed to pump, transport and treat drinking water and wastewater, but rising temperatures can affect the amount of water available.

Warmer temperatures increase the rate of evaporation.

The EPA states that the Colorado River system, for example, is a major source of water supply for more than 30 million people. Recent droughts, reductions in winter precipitation and drier springs have caused water supplies in the river to decrease. According to the EPA, every one percent decrease in streamflow in the Colorado River Basin results in a three per cent decrease in hydroelectric power generation in the region.

Performance, energy exports jumped 7.6 per cent in April of this year, with natural gas exports accounting for most of the gain. Exports of natural gas leapt 43.2 per cent for the month, which was attributed largely to a spike in prices linked to belowaverage seasonal temperatures in the northeastern U.S. at the beginning of April.

The U.S. Energy Information Administration states that 97 per cent of natural gas imports arrive via pipeline from Canada. The numbers show a steady decline in almost every year since 2007,

with 2015 being the lowest level since 1994.

That being said, warmer weather translates into greater energy demand and – ultimately – higher pricing for oil and gas. As such, the ongoing fluctuation in energy demand will undoubtedly continue to impact the price of oil and gas – both domestically and internationally.

And although the effects of climate change and global warming remain unknown, one can easily assume that more dramatic weather conditions will persist well into future. w

Climate change and commodities All of these potential increases in temperature and decreases in water supplies will undoubtedly help shape the future oil and gas markets. Already, some analysts have witnessed the correlation between the higher temperatures experienced as of late and the increased demand for energy. The International Energy Agency released a report in November 2015 entitled Making the Energy Sector More Resilient to Climate Change. In this report, it cites extreme weather events as having been a cause of oil and gas production disruptions.

For example, the report states that the May 2015 wildfires near the oil sands production areas in Alberta reduced total oil output by around 10 percent, at the time its lowest level in almost two years. The report also refers to Hurricanes Katrina and Rita as damaging more than 100 oil-drilling platforms in the Gulf of Mexico in 2005.

The numbers have it According to Global Affairs Canada’s monthly April 2016 report on Canada’s International Merchandise Trade BAKKEN OIL REPORT – FALL 2016

53

Education is the key to long-term success

Bismarck State College

Throughout the boom and bust cycle in the energy industry, one thing has remained constant- employers in all sectors of the industry have turned to the Bismarck State College (BSC) National Energy Center of Excellence (NECE) as a source of qualified graduates ready to enter the workforce.

For decades, BSC has met the demands of employers by educating generations of employees, and by providing topnotch industry training for operators and technicians as technology advances in the industry.

BSC offers 12 program degree and certificate options in areas focused on operations, maintenance, instrumentation, and energy services, all of which are in demand in the Bakken region. State-of-the-art technology and equipment is used to train students to become the thousands 54

BAKKEN OIL REPORT – FALL 2016

Bismarck State College

of BSC graduates and employees in the energy industry throughout the nation.

Customized training allows companies

or operators find these very helpful as

to maintain their training and

learning aids for in-house training of

Graduates can continue their education to pursue the next step in their career by obtaining a bachelor of applied science in energy management degree.

This program, the only one of its kind in the nation, focuses on the issues that managers and supervisors are faced within the energy industry.

certification requirements, educate new

experienced and new employees. ILTs

hires, and supplement existing training

focus on transmission and distribution,

programs. BSC uses equipment,

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teach techniques and troubleshooting

The license is valid for six months and

skills by creating workforce scenarios

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Many of these programs can also be completed online, where students use animations and simulations to learn the same concepts and theories that are presented in the classroom.

This allows students to earn a degree while maintaining employment and balancing other needs. Courses begin every three to eight weeks online and students can enroll at any point.

Employers also see the value in turning to BSC for their industry training needs.

in a safe environment. These are cost-effective ways for companies to deliver high-quality training that will enhance their employees’ skills, while also creating efficient and economical methods in the workplace.

BSC also offers an online source of Interactive Learning Tools (ILTs) that are valuable resources to enhance training programs. ILTs are animations and simulations created in the NECE that

users.

At a time when budgets and the bottom line are being looked at with a critical eye, ensuring that employees are up-to-date on skills and techniques is an efficient way to ensure safety and increased productivity. BSC’s National Energy Center of Excellence can be a great resource for companies looking to make the most of their workforce.

provide visual and simulated exposure

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to equipment and scenarios from the

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industry. Industry trainers, supervisors

bismarckstate.edu, or 701-224-5651. w BAKKEN OIL REPORT – FALL 2016

55

Well Suspension Tools Ltd.

A new tool that suspends rods within well, safeguards the environment, and protects company assets Due to tough times in the oil industry, there are thousands of oil wells that are shut in throughout North America. Having the ability to suspend and re-activate the wells cost effectively is now here.

To save money, companies leave wells with the sucker rods and pump downhole and the polished rod reaching up towards the sky. The only thing preventing oil and gas from leaking is a stuffing box, rubber seals pressed against the rod, hopefully forming a tight seal. The problem is, stuffing boxes are a maintenance item and old rubber seals dry out and start to leak both fluids and gas, sometimes a lot. Oil pools around the well and methane and H2S gas drift into the atmosphere, creating a hazardous situation and a major liability to the oil company.

Governments want wells suspended properly. They want full wellhead assemblies installed on the wells so wells are secure.

Well Suspension Tools Ltd. is offering two product lines that assist in converting shut-in wells to suspended wells along with simplifying regular maintenance. Ken Gordey is the technical manager for Well Suspension Tools Ltd. (WST) and was the inventor of the tools.

“Today, our Bakken wells are starting to turn sour because of our fracking techniques using brackish high-bacteria-laden water. We need to protect workers and residents from the H2S gas which is being dispersed from the wells after being shut in.”

Gordey is a certified engineering technologist with over 42 years of industry experience. The WST team has over 150 years of experience and they are concerned about the environmental impact of the oil industry, specifically well spills that can be avoided using the new WST tools.

Well Suspension Tools has two key products, the 'C’ tool and the ‘T' tool. Both appear something like their namesake letters. Both allow the rods to be left in the well and the well secured, while allowing a simple way to re-activate.

‘C’ Tool Suspending a well using a ‘C’ tool is easy. You pull up on the polish rod to unseat the bottom-hole pump. The 'C' tool slides over the sucker rod, with the rod in the centre of the ‘C’. The cylindrical tool

‘C’ Tool installed suspending rods. Ready for a wellhead assembly.

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BAKKEN OIL REPORT – FALL 2016

www.wellsuspension.com | 1-844-483-1124 New Technology for Suspending & Optimizing Oil Wells

REDUCE YOUR COSTS & YOUR LIABILITIES HELP PROTECT THE ENVIRONMENT Well Suspension Tools & Environment Enables wells to be suspended with the rod assembly left in the well, in an inhibited secure state, with a proper wellhead installed. This helps prevent leaks of toxins, which reduces health concerns of the general public and the liabilities with landowners.

Savings - WST vs Conventional Method Suspending a well – save up to $5,000 Reactivating a well – save up to $45,000

WST Tools & Safety Tools give the wellsite supervisor the capability to shut in a well at any time during a rod job operation. This enables the supervisor to mitigate overtime and fatigue, deal with emergencies, and improve overall worksite safety.

Proper Secure Wellhead

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is chamfered such that it seats itself at the very edge of the top of the tubing, raising the entire rod string and pump several inches off the bottom. The polished rod is removed and a wellhead assembly is installed. The tool can be installed with a sub nipple and collar, or landed in the tubing hanger. With the pump unseated, inhibitors and fluid can be pumped down the tubing, preventing corrosion.

When it’s time to resume production, just reverse the procedure. Remove the wellhead, pull up on the rods, remove the ‘C’ tool, and reconnect the polished rod.

Your pump and rods are already in the well and are ready to go.

“We used to set the pump at the bottom, but when solids – the paraffins, asphaltenes and waxes – built up, and with the pump seated, there was no way to access the tubing to properly clean and flush the well. We couldn’t even pull the rods out of the well. Our reactivations costs used to be three or four times the value of the well.”

Using the ‘C’ tool, there is “no need for expensive fishing jobs.”

Suspending or reactivations using the Well Suspension tools take about an hour for a 1,500-meter well. The well assets are protected as rods and bottom-hole pumps remain in the well and are not removed. A savings in time and money.

Gordey says, “To re-activate a well with new rods, a bottom-hole pump can cost an additional $50,000 to $60,000, plus service costs. Using the ‘C’ tool, it can be a little as $5,000.”

‘T’ Tool Interest in the ‘C’ tool led to the development of the second tool, the ‘T’ tool for well operations. This tool threads directly onto the rod string holding the string static.

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BAKKEN OIL REPORT – FALL 2016

The ‘T’ Tool.

It's been designed for service rig operations, well maintenance, as well as protecting offset wells during fracking, but it is still able to be used just as a suspension tool – whether the well is to be shut in a day, a week, or for years.

“If the rods are being put into or being pulled out of a well and the operation needs to stop – weather, darkness, safety – simply connect the tool and put on a wellhead valve and shut down the well," Gordey says. This tool connects to any size rods with crossovers at any time making it safe and fast.

It also allows for level loading your service operations for the first time.

If the oil company insists on no overtime pay, work until quitting time, and easily resume work the next day, it enables well servicing to be balanced for the first time. Well operations can be suspended at any time.

The ‘T’ tool is designed with by-pass slots along the side allowing for fluid to be pumped into the well and for pressure to bleed off.

When a rod string is stuck in a well it usually requires an expensive, unsafe, stripping operation.

“Now, for the first time ever, with the ‘T’ tool, you can squeeze solvents or chemicals safely using a 3,000 psi or 5,000 psi wellhead valve and pumping

at high pressure through the tool,” Gordey said, adding, “currently to squeeze the chemicals, the rig crew would have to stop, put the polish rod, the crossover, and the stuffing box back on the well (it's the only means they have for hanging off rods), and then the maximum pressure allowed is less than 500 psi!”

Fracking Already in North Dakota, Texas, and Alberta, when fracking, sometimes the pressure can blow the stuffing box seals or the rod string out of an adjacent well. The stuffing box was the seal and was holding rods and is, essentially, the weakest link. Nearby wells need a proper wellhead to reduce the threat, rods and pump are pulled out of nearby wells and wellheads are put on. When fracking was completed, the rods and pump had to be put back. Using the 'T' tool it allows the rods to safely remain in the well and the pump is unseated.

They put the valve on and the well is locked down. “The savings alone, down in Texas is approximately a quarter-

Well Suspension Tools Ltd.

leaking, prevent oil or saline waters from destroying the soil, and can give neighbors confidence in the knowledge that the environment is not being destroyed.

Shut-in well's polished rod was bent by a farmer getting too close. This will significantly compromise the stuffing box. million dollars on a six-well pad. It's a massive savings," Gordey said.

The Landholders Farmers are seeing how these tools can be a blessing for them as well.

Leaking hydrocarbons don’t just ruin the crop where the oil leaks into the soil – sometimes for decades –- but gas leaks, methane, and hydrogen sulphide gas can also cause significant problems for cattle.

Calf death, horrible mutations, and poor growth are a few of the issues for ranchers in areas with moderate-to-high fugitive H2S gas.

Landowners can work with oil companies and insist that any shut-in wells, whether or not they are currently leaking, be properly suspended with a wellhead assembly.

In some areas of North Dakota and Southeastern Saskatchewan, the rotten egg smell from H2S gas has become extremely bad. The Well Suspension Tools Ltd. tools can prevent the gas

The Tools “While marketing the tool line, customers were determining even more applications for it, either suspending the well or well maintenance."

The WST tools are manufactured in Canada to the highest standards using ISO 9001 and API standards. They're designed for high stress, high-pressure, and hightemperature environments. They can also handle H2S and CO2 environments.

The WST ‘C’ tool kits include the tool and marker sub nipple and collar that ensure that workers can tell a tool is installed.

The WST ‘T’ tool kits include the proper marker sub, nipples, and crossovers to ensure that the tools can be installed easily and the position is marked.

products, said, "The response was very strong. Customers really liked what they saw and the simplicity of it.”

Well Suspension Tools was also part of the DNOW booth at the Williston Basin Petroleum Conference held in Bismarck, N.D. Both tools are simple and yet extremely efficient. They are easy to use, inexpensive, and save companies thousands of dollars, whether you are suspending service work until the morning, protecting your downhole equipment during fracking of an adjacent well, or putting a well “to bed” while you wait for the oil price to rise.

Protecting the environment and your company assets is the ultimate goal.

Almost everyone that sees the tools has the same reaction. A quiet slap on the head and the comment, “That is so simple.

Why didn’t I think of that?” w

In business for a year, Well Suspension Tools Ltd. is off and running and making its big marketing push. The tools are currently sold through TS&M Supply and DNOW (Distribution Now), which are distributors. TS&M highlighted the products at their Redvers and District Oil Showcase booth on May 12-13, 2016.

Gordey, who was there to showcase the

Protecting the environment and preserving the company's assets is the goal of Well Suspension Tools Ltd.

With leaks like this one, you are destroying the environment, angering the landowner, and the oil and gas lost reduces the value of your well.

BAKKEN OIL REPORT – FALL 2016

59

Blue Cross Blue Shield of North Dakota

Ten reasons why employee assistance programs make good business sense

By Pat Bellmore

As oil industry activity ebbs and flows in the western part of North Dakota, employers must make decisions that make smart business sense.

Whether you have an employee who is going through a divorce, or you’ve recently undergone a reduction in staff, a good employee assistance program (EAP) can help you assist your employees in obtaining and sustaining a healthy worklife balance.

If you employ 20 people or 2,000 there are many benefits to EAP services. Here are top 10 reasons why you should invest in an EAP: 1) EAPs save money EAP services save money by offering free counseling and support services that won’t affect employers’ group insurance plans.

2) EAPs can step in during workplace conflicts EAP counselors and crisis intervention specialists are well versed in workplace situations that may need mediation. They can also offer group or individual counseling.

Whether you have an employee who is going through a divorce, or you’ve recently undergone a reduction in staff, a good employee assistance program (EAP) can help you assist your employees in obtaining and sustaining a healthy work-life balance.

3) EAPs offer outplacement services for employees who have lost their jobs EAP services can help employees begin to look for new employment, housing opportunities, provide them with emotional support, and much more – all in a confidential environment.

4) EAP services are wide-ranging Depending on how you customize your program, EAP services will empower you with tools, techniques and resources to help with many life-changing events, including: • Cultural assimilation for workers coming from out of state • Financial counseling • Transient employment support for the entire family

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Blue Cross Blue Shield of North Dakota

• Reduce workplace violence • Support resources for drug and alcohol abuse • Onsite information sessions • Resources for depression and anxiety 5) Most EAP services are available 24/7 and they are always confidential Employees who take advantage of EAPs available to them through their employer can access services at any time – day or night.

6) Employees’ families may use EAP services

8) Services are usually based on a sliding scale and customizable Based on many factors, including the size of your business and workforce culture, EAP companies will build a program that suits your needs.

9) EAPs simplify HR function EAPs can assist your current HR division in educating and empowering employees to balance work and life.

10) Help create a holistic look at health and wellness

Family members who wish to use the EAP services provided by their spouse or significant other may do so, also on a confidential basis.

EAP services can help create a strong work culture by looking at many aspects of employees’ lives. Plus, the right EAP for your business will also encompass the mission and vision of your company.

7) ROI is significant

Learn more

There are many ways EAP services mitigate business risks. Some of these include:

Your Blue Cross Blue Shield of North Dakota agent can help you find the right EAP. Contact your agent for details.

• Increased productivity

EAPs are an example of BCBSND’s BlueElements at work. The program broadens the spectrum of health and wellness by emphasizing six dimensions: physical, social, emotional, financial, professional, and environmental. w

• Decreased absenteeism and presenteeism • Lower turnover • Reduced healthcare costs • Safer workplace environments

Pat Bellmore is chief marketing officer and vice president of marketing at Blue Cross Blue Shield of North Dakota.

BAKKEN OIL REPORT – FALL 2016

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Dixon

Pump cavitation got you down?

One-piece suction manifolds Dixon innovation is demonstrated in the development of the one-piece suction manifold that feeds slurry into high-pressure pumps. The manifold design was the result of hydraulic fracturing companies experiencing pump cavitation due to proppant dropout, which causes destructive flow restrictions.

End-user input is invaluable, and it’s the feedback that has helped guide our direction on an economical solution.

• Acidizing well treatments attack weld seems.

• CO2 transfers at -30°F temperatures, and can cause performance issues.

• Repairs consist of re-welding and/or using rubber washers with screws.

Within the hydraulic fracturing operation there are multiple scenarios where downtime and pump failure can be avoided.

Feedback on manifolds

Figure 1 shows a traditional welded pipe manifold, and Figure 2

• Sand dropout causes flow restrictions, and pump cavitation is common.

exhibits sand dropout and internal weld erosion.

• Traditional welded pipe manifolds create turbulence-causing excessive abrasion on internal walls.

piece iron manufacturing technology to increase flow and

• Leaks along the weld seams are a regular nuisance.

The Dixon design combines unique flow geometry with oneeliminate 7-18 leak-prone weld seams. The 3-Port and 5-Port suction manifolds are patented for use with HHP pumps, and

Cut Monitor Combustible and Toxic Gas Detection

Not just Smart Transmitters, It’s Smart Business

LaTech Equipment Process Controls & SCADA Solutions

Environmentally Bulletproof

Reliable, Accurate & Maintenance Free

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

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BAKKEN OIL REPORT – FALL 2016

Dixon

Figure 1 have been lab and field tested. The flow profile simulation demonstrates the differences between the standard welded pipe and the Dixon manifolds.

Dixon has been building a credible reputation for over 100 years, demonstrating that it’s a responsible manufacturer producing safe, reliable, and long-lasting products. Open communication with customers and following through with solutions strengthens trust as a supplier of both current and future products.

Founded in 1916, Dixon is a premier manufacturer and supplier

Figure 2 of hose couplings, valves, dry-disconnects, swivels, and other fluid transfer and control products. The company’s global reach includes a wide range of products for numerous industries, including petroleum exploration, refining, transportation, chemical processing, food & beverage, steel, fire protection, construction, mining and manufacturing.

How can Dixon help you? w For more information, visit www.dixonvalve.com, or call (877) 963-4966.

www.jmservicesinc.com

5610 Interstate Avenue, Billings, MT 59101 Office: 406-839-5035 Fax: 406-294-5269

JMS Crane and Rigging is a full service company from the start of a project to completion by providing planning strategies, engineering solutions, crane lift, transportation, and cartage all while performing with integrity, efficiency, and safety.

BAKKEN OIL REPORT – FALL 2016

63

Salvation Army

New Salvation Army leadership in the Bakken

Captain Cappy Moore shares a message of hope and encouragement.

Say hello to Captains Cappy and Rhonda Moore, the newest leaders of the Williston Salvation Army. They’ve replaced Captains Joshua and Rhegan Stansbury, who were relocated to Springfield, Ill., after serving in Williston for five years.

The Moores have been Salvation Army officers for 13 years with Captain Cappy considering himself a “jack of all trades”.

Prior to joining The Salvation Army, he worked many different jobs: electrician, auto mechanic, construction and roofer, plus agricultural work on a grain farm and in a potato factory. He feels his vast work experience has prepared him to be a better Salvation Army officer.

The new captains are excited to build upon the great work that the previous Salvation Army officers put into the organization 64

BAKKEN OIL REPORT – FALL 2016

in Williston and western North Dakota. In the interview below, Captain Cappy explains why he is a Salvation Army officer and his vision for serving people in the Bakken.

Why did you become a Salvation Army officer?

I felt early on in life that God was going to use me in full-time ministry. In my late 30s, I knew it was time to respond to that calling. My wife, Rhonda, and I knew that The Salvation Army was the organization we wanted to join to fulfill our God-given purpose. We visited the nearest Salvation Army facility to where we were living at that time – Stevens Point, Wis. – and decided to start getting involved there. When we shared our desire to become Salvation Army officers with the leadership in that area, they encouraged us to pursue it.

Salvation Army

What do you love most about being a Salvation Army officer?

My wife and I love helping people. We love helping people improve their situation, whether spiritual, emotional, or physical.

It’s fulfilling to see people in a better position than they were in before they came to The Salvation Army for help.

Most Salvation Army officers are relocated every four to six years. Now that you’re here, are you excited to be living in western North Dakota?

Yes! We’ve never lived this far north or west — it’s the farthest we’ve ever lived from where either of us we were raised (Wisconsin and Illinois). Captain Rhonda and I are looking forward to getting to know new people with a different approach to life. New opportunities, new challenges, and new ideas are exciting to us!

Captains Moore are excited about their new adventure in the Bakken.

What will be your biggest challenge serving the needs of people in the Bakken?

The economy changes so much here depending on the oil industry. The Salvation Army is directly affected by whatever the current economy is — both in resources available, and the amount of people needing assistance from our organization.

It will be a welcome challenge to start becoming familiar with how things work in this area, how to connect people with the right resources, and how to plan for needs in an area that can change quickly.

What are your biggest strengths, and how will they benefit the Williston Salvation Army?

New Salvation Army officers jump right in and pick up where the previous officers left off.

My biggest strength is my dependency on God. I try to find the direction that He’s moving, and join him. Our job is to continue the work that has already started where we are placed, and to continue in that momentum. I love to train and empower my employees to be the best they can be, and I believe in a team approach. My wife and I love getting ideas and input from others.

Is there anything else you would like the readers of the Bakken Oil Report to know about you?

Most people don’t know that The Salvation Army not only offers social services and runs thrift stores – it’s also a church!

Everyone is invited to come check out our service Sunday mornings at 11 a.m. w To learn more about the Williston Salvation Army and its mission to serve those in need, visit WillistonSA.org.

Captain Rhonda Moore.

BAKKEN OIL REPORT – FALL 2016

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Precision Equipment Manufacturing

The power of magnets Patented technology produces intense heat without flames or liquids

By Dr. Joel Jorgenson, Phd, President of Precision Equipment Manufacturing, maker of MagFan flameless heaters Keeping moisture-rich well heads from freezing in cold climates is a tough enough battle as it is. Now try introducing additional moisture from propane, dealing with the maintenance headaches of liquid heat transfer agents, or worrying about the unsafe conditions presented by using flames, and you have a recipe for a long, stressful, and expensive winter.

A new technology that uses magnets instead of flames or liquids recently hit the market and allows oil and construction companies to produce 2,000 to 8,000 cubic feet per minute (CFM) of clean, dry heat using magnets and a direct-drive CAT diesel engine that burns as little as two gallons per hour. The minimum-maintenance industrial heaters are fully automatic and can be monitored and controlled remotely through a secure cellular connection.

MagFan heaters are unlike any other heater on the market. The simplicity of this patented technology results in the easiest-to-operate and most reliable heater available. And the per-hour cost to operate is lower than anything else on the market.

Picture trying to push two magnets together when the opposing forces are facing each other. As you push the magnets closer, the force gets stronger.

MagFan heaters use this concept on a larger scale by moving aluminum arms past powerful magnets and creating heat, which is then blown out of the unit by an axial-flow fan. As the speed of the spinning aluminum arms is increased 66

BAKKEN OIL REPORT – FALL 2016

or decreased, the heat generated is controlled proportionately.

what their customers are doing with rented equipment.

The result is super-heated air coming out of the trailer-mounted MagFan, while the interior of the heater remains relatively cool. Magnets don’t wear out, leak, make loud noises or pollute and since MagFan heaters don’t use flames or liquids and have very few moving parts, maintenance is limited to the lubrication of three easily accessible grease points and oil changes every 500 to 1,000 hours. Scheduled maintenance can be performed in about 20 minutes, meaning the area being heated barely has time to cool down, even in sub-zero temperatures.

Precision Equipment Manufacturing is rapidly expanding its MagFan distribution network and is actively seeking new dealers. The ability to sell flameless, non-liquid heat that comes from a fullyautomated, minimum-maintenance and trailer-mounted platform gives MagFan dealers a significant advantage over their competition and the ability to promote an exciting new technology that will draw attention to their businesses.

MagFan heaters also feature an optional cellular-connected Netbiter system that allows the heater to be monitored and controlled from any location. Output temperature is measured by an onboard temperature probe and site temperatures can be monitored remotely with external temperature probes. When combined with engine performance data, the system has the information it needs for automated control and will notify users if performance isn’t ideal. Users can remotely login to the web-based portal to view real-time performance, or use a number of analytics tools to analyze past use and GPS-tracked locations.

When combined with the safety of flameless heat, the ability to monitor and control MagFan heaters remotely is a game changer. Businesses don’t need onsite personnel once the heater is running, and rental companies can keep tabs on

We’re not only providing companies with consistently safe, reliable and dry heat, we’re also giving them access to data that will ensure they are operating at peak efficiency even when there aren’t personnel on site. The powerful combination of magnets and technology is incredible!

Precision Equipment Manufacturing is a leading manufacturer of flameless heaters and trailers for the construction, oil and gas, agriculture, and rental industries. The company’s line of patented MagFan heaters use magnets and an axial-flow fan to generate a 200-degree temperature rise heat at up to 8,000 cubic feet per minute, without spark, flames, friction or liquids. Precision Equipment Manufacturing also produces side dump, belly dump, end dump, step deck and truss trailers. w For more information, visit www.precisionequipmfg.com, or call (844) 391-7780.

Volant

Volant Products adds to the cementing mix with growing array of product offerings

Volant casing running tools.

A quality cement job is vital to ensuring uninterrupted zonal isolation and long-term well integrity. As the cementing process quickly rises in rank as one of the most critical components in well construction, operators and service companies are constantly looking for opportunities to streamline cementing processes while maintaining the highest standards of safety. Volant Products has been a key player in enabling efficient reliable cement jobs through the use of their casing running tools and inner string cement tool, and are continuing to grow their suite of cementing products.

Since 2001, Volant has developed strong and stable relationships with satisfied customers, enhancing operations on six continents around the world. At its core, they are a technology company designing and manufacturing smaller footprint equipment making your work more productive, safer and easier. Through in-house design, testing, and manufacturing, Volant 68

BAKKEN OIL REPORT – FALL 2016

Volant

Plug Launcher.

Volant’s existing line of casing running tools.

These new tools have similar design ratings to further improve the efficiency, safety, and quality of the cementing process, at the industry-leading capacities expected from Volant tools.

Cement Swivel.

remains committed to doing more with less, and proving themselves where it matters – in the field.

Using the Volant CRTi™ and CRTe™ casing running tools, there is no need to rig out the tool between running casing and cementing. Drillers are able to cement through the top drive and the Volant casing running tool, saving valuable nonproductive time and allowing rotation and reciprocation of the string while pumping cement. It is widely known that this is critical in achieving a uniform cement distribution in the annulus, contributing to long-term integrity of the well and maintaining the intended zonal isolation cement provides.

These tools can also be adapted to carry an inner cementing string using Volant’s Inner String Cementing Tool for operations requiring introduction of cement into the casing at depth such as near the casing shoe. This tool couples the end of the CRT to an inner string through a swivel element that mitigates risk of connection back-off during rotation.

In addition to these existing products, Volant is meeting customers’ needs by developing two new tools intended to integrate with

Taking proven seal technology with an improved pressure capacity (10,000 psi) and wear resistance, Volant has developed a more robust, long-lasting cement swivel (CST) with no welded parts and a replaceable wear path. Volant’s CST connects in-line with the top drive quill and provides two side entry ports to support fluid entry to the casing bore with rotation and ball launch at select rotary positions. The CST circumvents the need to pump cement through the top drive, eliminating the risk of cement setting in the top drive components.

Customers can expect to have access to the CST in the coming fall of 2016, available for both purchase and rental (in select markets).

Designed to be in series with a casing running tool and cement swivel, or as a standalone cement head, Volant’s plug launcher (PL) is currently in the field trial stage and set to launch in 2017. With a single piece rotary actuated collet release system, the PL is capable of maintaining full flow while launching plugs straight—every time, with a physical launch indicator confirming plug passage. The system is mechanical, easy to operate, and boasts a near flush OD for improved safety during rotation. It has a small footprint and won’t break down, minimizing the need for extra personnel or equipment on the rig floor.

The addition of these tools to Volant’s current capability portfolio further enables customers to decrease cost and improve safety by selecting the right tools and the right people for the job. For additional information on Volant’s suite of products and how we can help you ‘do more with less’, please contact Volant at (780) 784-7099, sales@volantproducts.ca, or online at volantproducts.ca. w BAKKEN OIL REPORT – FALL 2016

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MSA THE SAFETY COMPANY

Gas monitoring safety solutions for shale production

Safety monitoring is necessary during shale gas hydraulic fracturing production, gas processing, storage, and pipeline distribution. In order to detect potential health hazards, such as gas leaks and fires, special safety technologies must be utilized to prevent disastrous consequences from occurring. Advanced flame sensing and gas leak technologies provide a comprehensive approach to protecting people, facilities, and equipment. Process and operation engineers are utilizing these high70

BAKKEN OIL REPORT – FALL 2016

reliability monitoring technologies in safety processes to detect potential health risks and reduce false alarms.

Continuous monitoring and detection is readily available by implementing these safety protection solutions for shale applications.

Drilling operations can potentially expose on-site workers to various toxic gas hazards, such as hydrogen sulfide (H2S), and combustible gases. Hydrogen sulfide is created by decomposing organic material found within the earth and

MSA THE SAFETY COMPANY

Every few years, workover operations may occur at a drill site where re-fracturing, re-drilling, or other maintenance activities are necessary. can be released into the air during the hydraulic fracturing processes. Fixed gas monitoring devices protect shale drilling workers by using thin film metal oxide semiconductor (MOS) detectors, catalytic bead detectors, and infrared point detectors. The thin film MOS detectors protect shale drilling workers from the unexpected release of hydrogen sulfide, while catalytic bead and point infrared detectors protect against the release of explosive combustible gases during drilling operations. These advanced-fixed gas monitoring devices are vital safety components to the entire production operation of shale gas drilling.

Once the production phase of shale gas hydraulic fracturing has been completed, continuous fixed gas monitoring is required to detect toxic and combustible gases during normal maintenance and upkeep operations. Another advanced fixed gas monitoring device, ultrasonic gas leak detectors, can be integrated into the protection scheme as well. While infrared point and MOS detectors continue to protect the well head area from hazardous hydrogen sulfide and combustible methane leaks, ultrasonic gas leak detectors monitor and detect pressurized gas leaks within production lines.

Every few years, workover operations may occur at a drill site where re-fracturing, re-drilling, or other maintenance activities are necessary. These workover operations are designed to keep shale natural gas wells fully operational and safe, however they exhibit all of the same potential safety risks as the drilling and production phases. Welding, or any other sparkproducing labor, creates a great threat to the overall safety and functionality of a drill site. Therefore, it is necessary to have

the same fixed gas monitoring safety equipment present and functional during such workover operations.

During storage and distribution of shale gas, pipeline compressor stations require protection from fires and gas leaks created by failed compressor seals or protrusions, as well as unsecured valves and pipes. In order to counter these complications, fixed catalytic bead, infrared point detectors, and ultrasonic gas leak detectors can be placed in compressor rooms to monitor leaking combustible gas. Furthermore, flame detectors are also essential to caution and initiate shutdowns when flames appear.

Combining various fixed gas and flame technologies into the protection scheme prevents accidents from occurring that could pose as potential safety threats to people, facilities, and equipment. Working with industry supply chain partners to understand the different safety monitoring technologies and applications help ensure that a comprehensive gas and flame monitoring system is designed, built, and commissioned. Through proven performance, high reliability, and utilizing the latest technologies, safety monitoring has never been easier to meet your shale gas safety requirements. w

www.MillerInsulation.com

INSULATION, BUILDINGS, AND SCAFFOLDING SERVICES OIL FIELD • INDUSTRIAL • COMMERCIAL • RESIDENTIAL NORTH DAKOTA BRANCH LOCATIONS: 3520 East Century Avenue Bismarck, ND 58502-1393 General Manager: Bill Eckroth Phone: 701-258-4323 Fax: 701-222-8045 3258 SW 110 Z Ave Dickinson, ND 58601 General Manager: Brian Janke Phone: 701-225-5877 Fax: 701-225-7884 3222 4 th Avenue Southwest Fargo, ND 58103 General Manager: Curt Heiser Phone: 701-297-8813 Fax: 701-297-8816 9124 Derrick Avenue Williston, ND 58801 General Manager: Don Ell Phone: 701-572-2718 Fax: 701-572-7433

WYOMING BRANCH LOCATIONS:

UTAH BRANCH LOCATION:

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

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

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

BAKKEN OIL REPORT – FALL 2016

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Satellite Shelters, Inc.

Satellite Shelters, Inc. is changing the industry, one BRM at a time For the longest time, when it came to additional building space within a plant or refinery, the industry looked to temporary modular buildings to fill their needs. These buildings came in multiple sizes, were quick to set up, and offered the space to accommodate the needs of the turnaround or shutdown.

However, after the accident in Texas City, TX, the industry took a hard look at finding a safer solution for their workers. At first, the office space was moved outside of the blast radius, but the inefficiencies of constantly moving the workforce in and out of the plant was not practical.

Exterior view of Satellite’s 12-foot-by-40-foot Tool Crib BRM.

Then came the introduction of the blast resistant module (BRM). The original BRMs were simply modified “sea containers” which offered protection, but didn’t offer enough square footage for workers. Suppliers have since diversified away from these containers and now offer reinforced steel BRMs. These BRMs are built to withstand a blast and still protect the inhabitants inside.

BRMs from Satellite Shelters come in different sizes and configurations to accommodate any size space requirement. They are built to strict codes with reinforced steel walls that create a building that will protect and shelter workers that need to be in high-risk areas to perform their jobs. BRM applications have grown exponentially to meet the ever-changing need to provide a safe work environment inside the blast zone. Satellite’s BRM product offering has grown and adapted to these new needs: Single-wide BRMs

Interior view of Satellite’s multi-wide BRMs.

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BAKKEN OIL REPORT – FALL 2016

Satellite’s single-wide BRM sizes range from eight feet by 20 feet to 12 feet by 40 feet, with the 12-foot-by-40-foot module considered the primary standard for the industry. Single-wide

Satellite Shelters, Inc.

BRMs give the flexibility to be scattered throughout a plant in areas with limited space or work areas that require a minimal number of workers.

Uses include offices, rest rooms, conference and meeting space, or small break rooms, etc.

Single-wide BRMs can also be configured in a tool crib option. These buildings have two doors on one side of the module and a countertop for the necessary tool check-in/out process. The walls of the BRM are lined with shelving, racks, and hooks to provide a wide variety of tool storage needs.

Multi-wide BRMs Multi-wide BRMs are designed by assembling multiple 12-foot-wide units together to create a single cohesive

structure. They can be as small as a double-wide created by assembling two 12-foot-wide units together to create a 24-foot-by-40-foot building, or upwards of a 10-plex or larger created by assembling 10 or more 12-foot-wide units together.

Multi-level BRMs are used when the

Uses for the multi-wide BRMs include: cubical office space, lunch rooms or break rooms, conference and meeting space, training rooms, and more.

buildings for administrative access on the

Multi-Level BRMs

Once you recognize your need for

In areas that have space restrictions, BRMs can be stacked to double the square footage without doubling the footprint.

They can be single-wide units stacked together in a quad formation or combined with the multi-wides to create a twostorey structure. Scaffolding is attached to the exterior of the building to allow easy entry to the second level.

call on Satellite Shelters to help you

customer has limited job-site space and the only way to go is up. These BRMs are a great place for customers to conduct all-in-one on-site safety meetings, while other customers have used these top level with employee access on the bottom level including an office/cafeteria combo. additional space inside the blast zone, determine how much you need and what products will be the best fit for you. w For more information and to request a quote, visit www.satelliteco.com/ products/blast-resistant/, or contact Michele M. McMurdo at (216) 276-3720, or MicheleM@satelliteco.com.

Blast Resistant Modules

Safety Shelters

Single, Multi-Wide & Multi-Level

MER O T S CU FERRED PRE

Safe. Comfortable. Reliable.

Satellite - changing the industry one BRM at a time!

www.satelliteco.com

(800) 453-1299

inquiry@satelliteco.com BAKKEN OIL REPORT – FALL 2016

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Bartlett & West

Exploring a solution for the integrity verification process thinking operators have implemented best practices for obtaining critical information about newly constructed pipelines by performing “as-built” or “inthe-ditch” surveys as the pipeline is being constructed. Yet, performing an as-built survey alone will not be enough to meet the requirements of the new rule. There needs to be a mechanism to review, check and reconcile data against other simultaneous operations, such as pipe tallies, MTR reports, NDT reports, and inspection reports.

That is where Bartlett & West’s Centralized The data management and recordkeeping requirements for pipeline operators seem to be ever increasing and are daunting for integrity management professionals. In the past couple of decades, companies within the oil and gas industry have made great strides to improve pipeline safety with the development of integrity management (IM) programs. However, there are still newly constructed pipelines, or pipeline replacements, every year that don’t meet PHMSA’s new proposed safety regulations, MEGA Rule, for being traceable, verifiable, and complete (TVC) with respect to the requirements posed by the integrity verification (IV) process.

Scott Komarek, pipeline project manager at Bartlett & West, explains, “On more than one occasion I’ve seen that operators’ pipeline safety or integrity management groups are not on the same page as their new capital groups.” Komarek further explains that these two groups sometimes operate completely independent of each other. “In some cases, the integrity 74

BAKKEN OIL REPORT – FALL 2016

management groups may not know about a new pipeline being constructed until the construction records land on their desk.

They then scramble to validate records, update their GIS system, and get the pipeline into their IM program,” he said.

Data and Quality Management Program

This creates a major risk of missing or conflicting information, and once the pipeline is in the ground it can be difficult or costly to reconcile or validate the data.

processes are that all stakeholders can

In order to meet the MEGA Rule requirements posed on operators, Bartlett & West has developed a holistic approach to managing construction documentation, which they call a Centralized Data and Quality Management Program. This program is a simple workflow that couples streamlined field procedures with emerging technologies so that the IV process is completed and the TVC requirements are satisfied in real time, and before the pipe gets buried.

progress and forecasting.

For this process to be successful, collaboration and sharing of data across service groups is critical. Forward-

consistency, reliability, completeness, and

comes into play. By having a clear understanding of the end deliverable, their team develops processes that streamline the IV process and ensure TVC has been met. Other benefits of these have access to all construction records in real time, to help manage expectation and communicate accurate and reliable

Komarek said, “Our approach is simple.

We work with the operator to clearly understand the data deliverables at the end of the project and collaborate with the other service groups to centrally organize and effectively manage the construction documentation.

The Centralized Data and Quality Management Program will enable you to develop a repeatable method to drive accuracy of the construction records for your organization between projects.” w

EDWARD JONES

Financial focus Here’s how to keep your portfolio healthy If you have a medical appointment the first week of May, you might want to wish your nurse a Happy National Nurses Week. This annual event is designed to celebrate the important role nurses play in healthcare. Of course, while nurses and doctors can help you in many ways, you can do a lot of good for yourself by adopting healthy living habits, such as eating right, exercising frequently, and so on. But you can also do much to help your financial health.

Here are a few suggestions: • Stay invested. During times of market volatility, it can be temping to head to the investment sidelines until things cool off. Going to the sidelines can mean a few different things – you could simply not invest in anything for a while, or you could move a substantial portion of your portfolio to “cash” instruments, which are safe in the sense of preserving your principal, but offer almost nothing in the way of return or protecting against inflation.

If you’re not investing during a market downturn, or if you’ve moved heavily into cash, you might well miss out on the beginning of the next market rally.

• Rebalance your portfolio. It’s a good idea to periodically rebalance your portfolio to make sure it still reflects your goals and your comfort level with risk. Over time, and without any effort on your part, your portfolio can become unbalanced. For example, following a long “bull” market, the value of your stocks could have risen to the point where they make up a greater percentage of your portfolio than you had intended. When that happens, you may need to rebalance by adding bonds and other fixed-income vehicles.

• Diversify. Rebalancing is important.

But a balanced portfolio should also be a diversified portfolio. If you only owned one type of financial asset, such as U.S. growth stocks, you could take a big hit during a market downturn. But different types of financial assets don’t always move in the same direction at the same time, so by owning a wide variety of investments – U.S. stocks, international stocks, government securities, corporate bonds, real estate, certificates of deposit (CDs), and so on – you may help reduce the effects of market volatility on your portfolio. Keep

READ. SHARE. RECYCLE.

in mind, though, that diversification by itself can’t guarantee profits or protect against loss.

• Maintain realistic expectations. If you expect the financial markets to always move upward, you will be disappointed many times. Market downturns are a normal part of the investment process, and they will always be with us. Once you accept this reality, you will be less likely to make questionable decisions, such as abandoning a longterm strategy. If you’ve designed an appropriate strategy, possibly with the help of a financial professional, you can stick with it through all market environments.

By following the suggestions mentioned above – staying invested, rebalancing your portfolio as needed, diversifying your holdings and maintaining realistic expectations, you can go a long way toward maintaining the fitness of your financial situation. w This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

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

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BAKKEN OIL REPORT – FALL 2016

75

Executive Air Taxi Corporation

Aviation company vital to state’s economy Executive Air Taxi Corporation, providing aviation services to the Bakken region

services such as engineers, attorneys, contractors and medical personnel, to name a few, who many times have a last-minute urgent need to travel to smaller communities throughout the region to close a deal, oversee a project, or attend to patients in an outlying medical facility. Executive Air is there to make that happen and have them back for dinner.

Executive Air Taxi Corporation in Bismarck, N.D. serves the oil-rich areas of North Dakota and beyond. What began in 1973 as an air taxi service has grown into the region’s complete full-service aviation center operating 24 hours a day.

Professional on-demand air charter remains a priority for Executive Air as many oil and energy-related businesses, professionals and personal travelers depend on them to transport themselves, family, staff, and/or materials to and from the oil patch and throughout North America. This also includes ancillary 76

BAKKEN OIL REPORT – FALL 2016

Since it began nearly 45 years ago and as business demand increased, Executive Air also saw a need and partnered with regional medical facilities in bringing rapid-response emergency medical helicopter and fixed-wing services to rural North Dakota.

In partnership with Trinity Health in Minot, the Northstar Criticair Program stands ready to respond to medical emergencies throughout all of Northern North Dakota and Eastern Montana, and beyond with a team of advanced life support personnel bringing life-saving services right where it is needed, whether that be another hospital, roadside accident, or right to a drilling rig itself.

Executive Air Taxi Corporation

Executive Air provides a wide range of aviation services critical to the client companies’ and organizations’ overall mission and success. These 24/7 services include aircraft refueling, aircraft maintenance and avionics repairs, aircraft interior and upholstery work, as well as parts and accessories to keep them in the air. Customers from Montana, South Dakota, Minnesota, and all over North Dakota and the upper midwest utilize Executive Air’s services. When unable to come to us, we will go to them.

Executive Air has teamed up with major aircraft manufacturers and avionics suppliers, such as Beechcraft, Cessna, Bell

We travel to a variety of popular cities, from Bismarck/Mandan to Minneapolis, Denver, Dallas, New York, or wherever you need to go!

We offer customized direct flights to over fifty locations us , Cirr a n in ND and thousands throughout North America. s s e gion! ell, C It’s YOUR flight on ly B r in the re n o e e h YOUR schedule! cent ir is t

ice A t serv utive Exec eechcraf and B

Helicopter, Cirrus Aircraft, Garmin, S-Tec, Aspen, Appareo, and many more, and recently received the region’s only FAAapproved authority to operate an aircraft Mobil Maintenance Unit. Executive Air will respond with a team of maintenance professionals with necessary equipment to get clients back in the air, minimizing downtime as much as possible.

Executive Air also provides flight instruction and aircraft rental to those who always wanted to be a pilot, but did not own an aircraft. Executive Air also provides aerial survey flights, pipeline, and power-line patrol flights for companies who need to fly over a job site, or just the joy-rider who wants to get a bird’s eye view of the activity in the Bakken and beautiful North Dakota scenery. It is a sight to behold! w

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

Call us for all of your travel needs: 701-258-5024 Executive Air Taxi Corporation

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

800-932-8924 • 701-258-5024 • Fax 701-258-2693 marketing@executive-air.com www.executive-air.com BAKKEN OIL REPORT – FALL 2016

77

T&E Pumps

T&E Pumps Built by a trucker, for truckers

T&E Pumps is a perfect example of ingenuity born of necessity, of perseverance, and the entrepreneurial spirit evident in many oil boomtowns.

Ted Devine established T&E Pumps Ltd. in 1999 after 24 years in the patch. For 15 years he owned and operated tank trucks specializing in infield hauling. In all those years there were daily struggles with poor suction, leaking pumps, pumps that couldn’t be repaired, waste, pumps that were worth nothing after a couple weeks, and poor performance after the initial new worn off. Couple this with the fact that the Alberta oilfield was becoming increasingly aware of its environmental impact, Devine decided to fix these problems, and he did. T&E manufactures the most reliable, longest-lasting pumps on the market, as well as the most environmentally friendly.

The first prototypes of T&E were put onto trucks other than his in about 1998. By 2001 the patent had been granted, and the trickiest part became figuring out how to manufacture the parts required on a larger scale. Many of the parts that were needed were either unavailable or too costly to produce on a small scale. Thus the manufacturing facility that we now 78

BAKKEN OIL REPORT – FALL 2016

have as a bulk of our space was born. The expertise of local machinist Neil Polson (Consort Machine Shop) was heavily relied upon. Polson was instrumental in helping Devine with the creation of our helical cut gear, as well as the perfection of many of the other parts in our pump.

Selling the product was a different story.

With the market already flooded with other pumps, no retailers wanted to touch a T&E Pump, so he sold it himself.

The most important thing for Devine was making sure that the truckers who wanted a T&E could get a T&E, and that they weren’t being taken advantage of by a middle man.

Although we now have dealers, it is still important for us to maintain contact with the end user and make sure that they are getting what they need. Anyone can walk into our shop and buy a pump, dealers are required to provide the same price we do, advise clients that our pumps can be repaired, and have core credit value.

We have a repair shop where pumps are brought in daily either on or off the truck for complete repair. Once repaired, they perform like new, with all of the worn components being replaced. Reusable parts are cleaned up and reused, saving

the customer money and reducing waste.

Our new pump installations are done in a streamlined fashion, allowing easy access to the pump for repair or maintenance.

As we understand the importance of downtime, our services are all completed in the timeliest possible way, often with three or more guys working to get you on the road quickly.

Environmental impact continues to be paramount in our business and we endeavor to reduce our footprint as much as possible. Almost every part put into a T&E can be recycled. We actively recycle everything from steel to paper and bronze to batteries in our shop. Anything that can be purchased locally is, and if we can’t get it in, it comes from as close to our location as possible.

Devine passed away in February, but T&E continues on with his wife Elaine, and daughters Rachel and Erica at the helm, and the 23 staff that keep the business rolling. Nothing in our business is more important to us than the quality of our product, our relationship with our clientele, and our staff, who are like family.

It is our distinct pleasure to work with truckers to keep the fluid moving.

We look forward to working with you! w

Over 20 years experience

Sandpiper Diaphragm Pumps T& E Gear Pumps Cam-n-Groove Fittings Hose Trash Pumps

Teco Motors Pressure Washers Fisher Pumps Masport Vac Pumps Recycle Units

BAKKEN OIL REPORT – FALL 2016

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5 OVERLOOKED AND MISUNDERSTOOD FACTURES Badlands Integrity Group provides all-inclusive service that fulfill its mission to have their clients have a safe work, learning environment, and ensure regulatory compliance by implementing programs and services.

WE HAVE THIS

Call Badlands Integrity Group TODAY to see what we can do for your company!

1-855-235-4BIG

EASY… I can do this

WHICH ONE?

ARE YOU READY?

STOP PICK ING ON M E

BADLANDS INTEGRITY GROUP 366 21st Street East, Dickinson, ND 58601 701-483-6559 | 1-855-235-4BIG

Badlands Integrity Group

What is the most important thing in our industry?

As the instructor begins the training class full of oilfield workers, this question is presented to all students, “What is the most important thing in your industry?”. Several students answer with the catch phase “safety first, or money”.

Shelly Fleck, president of Badlands Integrity Group, tells them this will be the first time you will ever hear “wrong, safety isn’t first”. It’s funny to watch the expressions on their faces. Safety is a core value she tells them, but you are the most important thing in the industry.

She continues on to explain why you come into play first and foremost.

If you have a bad day at work and you don’t make the right decisions, then you could be accountable and looking for the unemployment line tomorrow. If you point your finger at someone placing the blame on them, you will have three more fingers pointing at you. If you don’t take care of yourself, who will? Who is waiting at home for you to return home from

work? If you see a co-worker about to do something that would hurt you and don’t say anything to correct the action who, would be accountable? You are! So as you can see, you come into play more than safety first or money, right?

the General Duty Act, which states in the first part that employers are held accountable, and in part 2.b, the employees are held accountable,” says Fleck. “I think Conoco got it right when they started their ‘TAKE 5’ position.”

Fleck says that she was taught a long time ago that taking care of yourself is a big deal in the fire department and now uses it daily to instruct students and companies. She states that companies need to stop using “safety first” as signage on their trucks or preaching that to their employees. It is so important that our workers in the field understand that they are important and that when the atmosphere is changed that safety would come first.

Fleck opened the doors to Badlands Integrity Group in March of 2006 and it became a brick and mortar in July of 2011. Exciting things continue to happen within Badlands Integrity Group, which includes expanding into other locations, updating safety programs as the industries move forward, and developing new working relationships within the industry. They have kept the same idealism of what Badlands Integrity Group stands for and what the future holds for them. They will always continue their work ethics, their integrity, and keeping up with the ever-changing industry standards. They will always be pulling their boots on, and rolling up their shelves to assist anyone going to work, actually working side-by-side with clients. Fleck states her goal for 2017 is to spend time with every client on locations, getting to the root of the skills they need for their job and how they can continue to improve within Badlands Integrity Group. The future for Badlands Integrity Group is unlimited, they are here 24/7.

“I don’t want companies or people to think I am telling them safety doesn’t matter, because it does! I want the boots on the ground to be accountable for their actions, and should read

If you have a bad day at work and you don’t make the right decisions, then you could be accountable and looking for the unemployment line tomorrow.

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BAKKEN OIL REPORT – FALL 2016

Badlands Integrity Group provides allinclusive services that fulfill its mission of enabling their clients to have safe learning and working environments, and ensure regulatory compliance by implementing programs and services.

“We help companies exceed their safety and compliance standards,” says Fleck. w

BU YERS OF NON-OPER ATED WOR K ING INTER EST • 13 Years Of Experience In The Non-Op Space • Well Capitalized And Purpose Built Team

CONTACT: SCOTT RICE - SVP ENG & BD: SRICE@RBOIL.COM / 713-874-9005 COLIN BARNETT – LAND MANAGER: CBARNETT@RBOIL.COM / 713-874-9000

PEC

The PEC Safety App – Now available on Apple and Android smart phones Forget your physical PEC ID card?

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

About the app The PEC Safety App provides a convenient method for users to view their digital PEC ID card and acquired training/validated courses while granting them access to download course materials and quick reference cards - applying PEC's safety programs from the classroom directly to the worksite.

The digital PEC ID card will include the user’s name, company name, picture, PEC ID number, and a scannable barcode. A list of all acquired training will also be viewable - showing which courses are active and expired (within 30 days of expiration). Users also have the ability to receive OSHA Alliance nationally recognized hazard alerts and PEC Safety push alerts regarding hazards in your area.

In-app purchases The PEC Safety App is free of charge to new students who have taken the following PEC training courses in 2016, inclusive of the digital PEC ID card and downloadable course materials/quick reference cards: • PEC Basic Orientation • PEC Core Compliance • PEC H2S Clear (four-hour) End User • SafeLandUSA • SafeGulf Students who have previously taken PEC courses have the opportunity to download the free app to receive the free OSHA Alliance hazard alerts and PEC Safety push alerts. Through an in-app purchase of $10, these students can receive their digital PEC ID card and have access to electronic course materials/quick reference cards. w Contact us!

For help downloading the PEC Safety app, or if you have any questions, please contact PEC Safety's training support department at 844.848.5884, or via email at trainingsupport@pecsafety.com.

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BAKKEN OIL REPORT – FALL 2016

PEC SAFE CONSTRUCTION ORIENTATION PEC Safety is the technological safety resource for construction. By creating the standardized safety orientation, PEC Safe Construction, we have developed a sturdy foundation for companies who can utilize our orientation to help develop a safety structure within their organization. We are offering this one-day standardized safety orientation which is inclusive of an advanced training tracker database and worker identification system.

We are ready to support your goals. Safe Construction encompasses all trades within the construction and maintenance industry by providing general safety information that workers need to know before entering a company facility and while performing their assigned work duties.

TRAIN THE TRAINER DETAILS Join PEC Safety’s Instructor Network to become a part of our interconnected safety network of Owner Clients, Instructors, Contractors, and Workforce. The PEC Safe Construction Train the Trainer (TTT) is a 2-day course.

If you are interested in beginning the process of becoming a PEC Safe Construction Training Provider/Instructor, please complete the Instructor Application by visiting: www.pecsafety.com/become-an-instructor or visit the TTT calendar here: www.pecsafety.com/ttt-calendar to see the dates and locations of our upcoming PEC Safe Construction TTT courses.

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

INDEX TO ADVERTISERS A-1 Evans Septic Tank Service.................................42

Ferguson..........................................................................37

PEC Safety........................................................................85

Ae2s...................................................................................33

Fraccure............................................................................22

Polyguard Products.....................................................38

Aggreko - Americas.....................................................51

General Equipment & Supplies, Inc.......................43

Precision Equipment MFG........................................67

Badlands Integrity Group..........................................80

Graham Construction................................................... 7

QMC Cranes....................................................................47

Bartlett & West...............................................................15

Hampton Inn and Suites............................................42

Quality Mat Company................................................29

Bismarck State College...............................................27

JMS Crane & Rigging...................................................63

R. J. Corman Railroad Group...................................... 4

Blue Cross Blue Shield of N. D..................................11

Klj........................................................................................ 3

Reynolds French & Co.................................................21

Borsheim Crane Service, Inc................................... IFC

LaTech Equipment & Supplies.................................62

Riverbend Oil & Gas.....................................................83

CCI Thermal Technologies.........................................53

Lynden..............................................................................17

R&R Contracting............................................................39

Dakota Gasification Company............................OBC

MSA The Safety Company........................................... 5

Satellite Shelters Inc....................................................73

Dixon................................................................................... 9

Maple Leaf Marketing, Inc.........................................13

Southern Glove, Inc.....................................................35

Edward Jones.................................................................19

Miller Insulation Co., Inc.............................................71

T&E Pumps......................................................................79

Encore Energy, Inc......................................................IBC

Northern Technologies, Inc......................................32

Volant................................................................................49

Executive Air Taxi Corporation........................ 6 & 77

Nov Completion & Production Solutions...........23

Well Suspension Tools Ltd.........................................57

BAKKEN OIL REPORT – FALL 2016

85

Maple Leaf Marketing, Inc.

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

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

EndurAlloy™ tubing has a 13-year proven track of extending well run-times in U.S. oilfields. Producers like Pioneer Natural Resources and Crownquest rely on EndurAlloy™ to lower lifting costs and increase production.

EndurAlloy™ is standard J55 production tubing that has been specially treated using a thermo-chemical process to diffuse boron into the substrate, creating a new iron boride alloy that is extremely hard and abrasion resistant. The iron boride case depth is part of the internal surface on the inner diameter of the tube, not a lining or a coating. EndurAlloy™ is the ultimate protection against wear and corrosion in rod pumped wells.

Five to 10 joints at the bottom of the string, or multiple joints around deviated sections, are the standard applications for EndurAlloy™.

Case studies with Pioneer Natural Resources, Concho Resources, Aera Energy and other leading oil producers demonstrates that EndurAlloy™ performs as advertised, often in the most difficult wells. Over 18,000 joints of EndurAlloy™ tubing are installed each year and the number of customers is growing rapidly.

“Customers don’t give you the easy wells to test your product, they give you the tough ones,” says Mike Truitt, CEO of Maple Leaf Marketing, Inc. “Customers can see the benefits for themselves in a few months.

Well records don’t lie. If a well that was failing every three to six months runs for more than two years with EndurAlloy™ in it, customers call that a big success.”

Seven benefits of EndurAlloy™ over carbon steel production tubing 1. Typically, EndurAlloy™ lasts three to 10 times longer than regular J55 production tubing, depending on specific well conditions.

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

3. Increases production by reducing down-time.

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BAKKEN OIL REPORT – FALL 2016

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

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

6. EndurAlloy™ tubing is effective in a variety of producing environments, including H2S, CO2 flood, water flood, and steam injection, and can be used in wells with operating temperatures as high as 900°F. 7. No special handling requirements.

EndurAlloy™ is manufactured by Endurance Technologies Inc. at a state-of-the-art plant in Calgary, Alberta, Canada using customdesigned furnaces and materials-handling equipment.

“Endurance is the only company in the world that diffuses boron into the surface of J55 tubing,” said Truitt. “It invests in new equipment, training, and processes to continually improve the product. The goal is to make the best joint of tubing possible.”

EndurAlloy™ outperforms specialty niche products like polylining, ZeroCor, and MAC200. None of them offer the superior wear, abrasion, and corrosion protection of EndurAlloy™.

“Every one of our customers has stories to tell about trying the latest fad in coated or lined tubing,” said Truitt. “At the end of the day, they always come back to EndurAlloy™. Saving a few bucks on specialty pipe doesn’t come close to paying for an unneeded pulling job and the lost production while the well’s down.”

Approximately 25,000 joints of EndurAlloy™ tubing are installed annually in problem wells throughout North America. w

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

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

• Encore Operating Kentucky, LLC has developed strategic business relationships with landowners, well services companies, and other industry experts.

Encore has focused it efforts toward the • Encore owns the rights to extensive aggressive acquisition of shallow oil geological and geophysical acreage in south central and western information regarding new oil Kentucky. The C ompany is currently discoveries, New Albany Shale and drilling and developing a 30 – well other potential targets. shallow oil project in Kentucky and

seeking a Bakken operator to participate • Lease acreage is extremely affordable in these projects. as compared to similar plays across the US. 82.5-­‐78.5% NRI delivered with attractive lease terms.

• The liquids-­‐rich New Albany shale reports high TOCs, 100 – 200’ formation thickness and significantly high liquids content.

• Third-­‐party report(s) estimate EUR ~15,000-­‐20,000 BO and ~$200,000 AFE per well.

• The projected horizontal AFE approximates ~$500,000-­‐1,000,000 per well, potentially lower.

• Encore owns exclusive rights to the well-­‐bore, analysis in south central Kentucky. The Company is currently making plans to drill its first horizontal well.

There also exist the potential for new deeper oil and gas discoveries.

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

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