Exploration World September 2014

WWW.EXPLORATIONWORLD.COM

SEPTEMBER 2014

THE U.S. COULD BE ON ITS WAY TO OIL INDEPENDENCE how the shale revolution is affecting african oil

New Regulations Could

curb oil train fires

EDITOR’S COMMENT

Markets build on top of one another.

T H I S I S A F U N D A M E N T A L LY accepted principle of modern

economics. If the price of oil goes up, so does the price of food, and so on. So it’s no surprise to see how the oil industry in America could affect markets abroad.

In our feature on the shale revolution in the U.S., we look at the events that have led to the current boom in American oil and gas production and why some analysts think we could see energy independence in the not too distant future.

Then, we take a look at how what’s good for the U.S. isn’t necessarily good for others. In this piece, we outline the ways in which African oil has taken a hit as U.S. imports have fallen dramatically.

We also talk to TransCanada about what it takes to keep an oil or gas pipeline running smoothly even as it ages, take a look at new regulations governing the shipment of crude oil by rail, and debut a list of the 10 richest individuals in oil and gas.

In our current geopolitical climate, it’s important to remember the threads that bind us together. Thank you for reading and I hope you enjoy.

Enjoy the issue!

Ian Hanner Editor ian.hanner@wdmgroup.com 3

CO CN OTNETN ETNST S FEATURES

30 Pipelines

This month we focus on the customer experience with the latest technology

6 Drilling

The U.S. Could Be On Its Way to Oil Independence

14 Exploration

New Regulations Could Curb Oil Train Fires

How Companies Keep Aging Pipelines Running Smoothly

22 Logistics

How the Shale Revolution is Affecting African Oil

38 Top 10

Wealthiest NAMCOR Americans in Oil & Gas

COMPANY PROFILES

44

Rock Energy

USA

AUSTRALIA

44 Rock Energy

62 TAG Oil

54 CBC Pipeline

74 Watson Drilling 80 Energyworks Limited

4

September 2014

74 Watson Drilling

30

Pipelines

How Companies Keep Aging Pipelines Running Smoothly

62 TAG Oil

54 CBC Pipeline 80

Energyworks Limited

5

DRILLING

6

September 2014

THE U.S. COULD BE ON ITS WAY TO OIL INDEPENDENCE The nation debates whether to reap the benefits of revenue or surplus W R I T T E N B Y: I A N H A N N E R

7

DRILLING ON NOV. 25, 1973, U.S. President Richard Nixon took to television to speak about what he called necessary cutbacks on the usage of oil and gas in the face of one of the largest energy crises that the nation had ever seen.

Up to this point in time the flow of oil from the Middle East, which was the most prolific region in the world, was taken for granted; it would always keep coming. When this assumption failed, the results were nearly catastrophic.

On Oct. 17, 1973, OPEC and a few other non-member countries agreed to an embargo against the U.S., Japan, Canada, the UK and the Netherlands as punishment for the U.S. backing of Israel in the Yom Kippur War. The price of oil shot up virtually overnight and by 1974 had increased to $12 per barrel ($58.01 adjusted for inflation), a four-fold increase. The U.S. now found itself in a very serious energy crisis. While the nation had always been a prolific producer of crude oil and natural gas, rates of consumption had been skyrocketing since World War II and the country had increasingly leaned on the Middle East to make up the difference.

Since the discovery of oil on American soil in the late-1800s, 8

September 2014

production rates had been steadily climbing, barring a few slight dips along the way. Ironically, at the time of the oil embargo, the U.S. was in one of its first ever real production slumps, declining from about 3.52 billion barrels in 1970 to about 2.98 billion by 1976.

Adding together U.S. Energy Information Administration ‘s (EIA) average annual data for the industrial, residential, commercial, transportation and electricity generation sectors throughout 1973 puts the country’s total petroleum consumption at around 17,307,679 barrels per day.

By contrast, the total estimated domestic petroleum production rate is 9,208,000 barrels per day, or about 53 percent of domestic demand.

It’s easy to see then why the OPEC embargo had such a substantial effect and it frames the significance of Nixon’s televised speech.

“Let me conclude by restating our overall objective,” Nixon closed his address. “It can be summed up in one word that best characterizes this nation and its essential nature. That word is ‘independence.’ From its beginning 200 years ago, throughout its history, America has made great

T H E U . S . C O U L D B E O N I T S W AY T O O I L I N D E P E N D E N C E

9

DRILLING

sacrifices of blood and also of treasure to achieve and maintain its independence. In the last third of this century, our independence will depend on maintaining and achieving self-sufficiency in energy.”

This was the first time the concept of energy independence, or ultimately oil and gas independence, entered the popular political realm. Since then, every president has stressed, in one 10

September 2014

way or another, the necessity for the U.S. to become self-sufficient.

“This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation,” said President Jimmy Carter in 1979.

“There is no security for the United States in further dependence on foreign oil,” said President George H.W. Bush in 1988.

“ At 206.8 meters tall, the XL Enhanced jackup rigs are more than four times the height of the Statue of Liberty and possess a lot more comforts”

And the list goes on. What makes this history lesson significant is that today, for the first time since Nixon’s address, it seems that energy independence may actually be a distinct possibility rather than an elusive concept.

The Shale Revolution In 2008, a few new technologies gave way to the most explosive increase 11

DRILLING

in U.S. oil production ever: hydraulic fracturing and horizontal drilling. By allowing access to tight oil reservoirs and shale gas, these technologies revived a slumping petroleum sector and transformed states that had never had an energy background into powerhouses, such as North Dakota.

Since the practice became more common around 2008, the 12

September 2014

exponential increase in production has been staggering. In 2008, the average oil production rate hovered around 5 million barrels per day. In 2013, that number was closer to 7.45 million, about a 49 percent increase in only five years. This number also only accounts for pure crude oil, but not the other petroleum liquids that are included in the total consumption

T H E U . S . C O U L D B E O N I T S W AY T O O I L I N D E P E N D E N C E

estimates. That production number was closer to 12.3 million barrels per day in 2013, about a 44 percent increase over 2008.

At the same time, a gradual shift toward cleaner forms of electricity generation and increased efficiency in vehicles and some industrial processes has driven down the overall energy consumption rate to its lowest level since 1997. At an average consumption rate 20.8 million barrels of oil per day, 2005 was the highest demand year in decades. Since then, consumption has fallen to the 2013 level of about 18.89 million barrels per day.

So comparing the total oil consumption to the total production, an optimistic new picture emerges for an energy sector that has been in a slow decline for the last few decades.

In 2013, production met about 65 percent of demand and has been increasing throughout 2014 thus far.

It’s also important to note the increase in natural gas production since the U.S. became the largest producer in the world in 2010.

Independence on the Horizon Since the oil and gas market is one that is even more susceptible to geopolitical events and changes than

most, no one can say for certainty that the U.S. is going to be 100 percent free of foreign oil in the foreseeable future, but that hasn’t stopped some optimistic assessments.

According to multiple sources, the EIA estimates the U.S. could completely sever reliance on foreign oil by 2037.

“This is the first time the Annual Energy Outlook has projected that net imports’ share of liquid fuels consumption could reach zero,” said EIA spokesman John Krohn, according to Bloomberg.

One of the major stumbling blocks to net zero import of petroleum is what we do with our own reserves, because in the 70s, following the energy crisis, legislation was enacted than banned the export of U.S. oil in all but a few specific instances. Now debate rages on between energy companies, refiners, economists and legislators, both domestic and foreign, about whether the U.S. should hold onto all of its oil to ensure citizens reap the benefits of a surplus or whether it should once again begin selling it so that citizens can benefit from the revenue and jobs created.

13

E X P L O R AT I O N

NEW REG

COULD CURB O

Finding a middle ground W R I T T E N B Y:

14

September 2014

GULATIONS

OIL TRAIN FIRES

d through federal regulation IAN HANNER

15

E X P L O R AT I O N

AMID MOUNTING PUBLIC pressure over the safety of increased crude oil shipments throughout North America, the U.S. Department of Transportation (DOT) announced on July 23 a series of new regulations aimed at preventing disasters.

With massively increased production of oil in the last decade as a result of increased hydraulic 16

September 2014

fracturing, oil companies are generating more crude oil in the United States alone than they have since 1986. The U.S. Energy Information Administration (EIA) predicts that by the end of 2014, daily oil production will rise to 8.42 million barrels, up from 7.45 million barrels only a year before.

This influx in oil is widely received as a good thing for the U.S. The net

N E W R E G U L AT I O N S C O U L D C U R B O I L T R A I N F I R E S

American import of oil is down to its lowest point since 1987 and is showing continued decline, leading some authorities, such as the EIA, to estimate a zero net import of oil for the U.S. as early as 2037.

The potential for the U.S. to become energy independent, at least in the oil sector, has served as an excellent selling point for heightened rail shipping for oil. This crude needs to be transported to large scale refineries for processing, the majority of which are not located near the shale deposits that the oil is being generated from.

The problem with this is that according to activists, some legislators and regulatory groups, the process is not as safe as much of the public believes.

According to a report from the Congressional Research Service, about 434,000 carloads of crude oil were shipped by rail in the U.S. in 2013 as opposed to just 9,500 in 2008.

According to that same report, that number is expected to increase to about 650,000 carloads of oil in 2014.

This increased usage has already led to some few, but substantial incidents.

On July 6, 2013, a rail shipment of crude oil from the Bakken shale formation derailed while running

through Lac-Mégantic, a town in Quebec. The derailment resulted in a massive explosion that killed 47 people almost instantly and sparked an international dialogue about the safety of these shipments that has been getting louder since.

While the Lac-Mégantic disaster is by far the deadliest, there have been numerous other derailments that have caused fires, spills and millions in infrastructural damages.

“More crude oil is being shipped by rail than ever before,” said Transportation Secretary Anthony Foxx, according to The Hill. “If America is going to be a world leader in producing energy, our job at this department is to ensure that we’re also a world leader in safely transporting it.”

Foxx and the DOT outlined a list on July 23 of proposed new regulations to be placed on companies shipping oil by rail. Some of these regulations include a maximum speed of 40 mph, a hazardous distinction for trains with over 20 cars of flammable liquids, new brakes that have increased stopping capabilities and a series of other testing and logistical regulations.

A large part of the danger revolves around the type of car most frequently 17

E X P L O R AT I O N

used to ship oil: the DOT-111. While these cars are often the standard for transporting oil, critics have noted that their outer shells are substantially thinner than would be expected for a cargo as volatile as crude oil, their valves are not strong enough to withstand impact and the handles that open bottom outlet valves tend to open during derailment. According to the Railway Supply Institute, 18

September 2014

approximately 102,000 DOT-111 cars are currently in use in the U.S. If approved, one of the DOT proposals would require replacement of the DOT-111 cars to an unspecified, upgraded model or a retrofit for enhanced safety features, such as reinforced valves and shells. Vice News estimates that the cost for retrofitting one of these cars with recommended improved safety

“ More crude oil is being shipped by rail than ever before” said Transportation Secretary Anthony Foxx, according to The Hill

features would stand somewhere between $20-30,000.

According to the Association of American Railroads (AAR), current safety and inspection standards are sufficient to protect the American public from any incident related to shipping oil by rail.

“In light of increased volumes of crude oil moving by rail, the nation’s freight railroads have done 19

E X P L O R AT I O N

top-to-bottom reviews and improved on some of their operations, while federal regulators have issued new regulations related to how railroads are moving crude oil by rail,” reads the AAR website. “The result: freight railroads move each oil train under rules as rigorous as those required for more hazardous materials. Thanks to a nationwide rail network infused by years of major private investments reaching into the hundreds of billions of dollars, railroads are transporting 20

September 2014

what America’s economy needs and helping the nation achieve energy independence. From the selection of routes, train speeds, track inspections and the training of personnel, all reflect today’s high standards established to move oil by rail safely.”

Part of the reason shipping oil by rail has become increasingly popular is that the development of pipelines have lagged substantially behind.

According to The New York Times, “There are nearly 140,000 miles of railroad

in the United States, while the crude oil pipeline system is just 57,000 miles long.�

This lack of pipeline infrastructure is due mainly to two things: cost and public perception. The cost of building 1,000 miles of pipeline can be in the range of several billion dollars, while utilizing rails already in place is much cheaper. For any business, the costeffectiveness is easy to see.

Public perception however is harder to quantify. In the last few decades, pipelines have gotten a bad

reputation as prone to accidents and spills. The animosity that a good deal of the public feels toward pipelines has in many cases stymied their development. Now however, with public perception of the dangers of shipping crude by rail building, it’s possible pipelines will emerge as a preferable means of transport.

It should be noted that both rail and pipeline transport have much better safety track records than transportation by road.

21

LOGISTICS

HOW THE SHAL

IS AFFECTING While the shale revolution countries don’t W R I T T E N B Y:

22

August 2014

LE REVOLUTION

G AFRICAN OIL benefits the U.S., African share in the joy IAN HANNER

23

LOGISTICS

AS THE U.S. experiences the benefits of the massive uptick in oil and gas production domestically, the African oil industry and the economies that rely on it are finding themselves on thin ice.

As frequently reported by a number of news sources, some African countries that had historically been plagued by political, economic or militaristic strife, have found themselves stabilizing over the last decade. These nation’s economies saw foreign debt reductions, strengthened judicial systems and budget deficits reduced to name a few improvements.

Some analysts attribute these successes to the developing presence of the oil and gas industry in Africa.

The most notable African countries that have seen a positive effect from oil 24

August 2014

and gas also have the largest reserves: Nigeria, Libya, Algeria, Angola, Sudan and Egypt.

The success of these countries economically is not to say that they have become utopias, or that overnight they have solved their major societal issues. Nigeria dominated international headlines in April when militants from the radical Islamic group Boko Haram kidnapped 276 female students. Egypt has been in the midst of a series of political overthrows that have spanned nearly four years. A successful 2011 Libyan revolt against longtime dictator Moammar Gadhafi has not fully seen a return to normality as protests, both violent and peaceful, continue to disrupt some aspects of day-to-day life even now.

So with all these arguably negative societal factors, some context is

SHALE REVOLUTION IS AFFECTING AFRICAN OIL

Cape Town

25

LOGISTICS

Operating oil and gas well required for exactly how oil and gas have shown marked improvements in these countries.

According to the International Monetary Fund (IMF), nine of the 20 fastest growing economies in the world were African. Ernst & Young (EY), an international data analysis and business solutions company, explained in a report published last month why this is.

“Resources generally, and oil and 26

August 2014

gas specifically, have played an important role in this growth,” the EY report said. “African countries continue to increase their production of oil and/or gas; revenues from higher prices and the investment that new discoveries are attracting, have made a key contribution to growth and developmental initiatives.”

The report adds, “There is a distinct wave of optimism pulsing through the African oil and gas industry.

Particularly so in the eastern part of the continent, which has historically seen little oil and gas development, recent discoveries could transform the landscape, fuelling widespread economic and social development.�

EY reports that as a whole, Africa’s economic output doubled between 2000 and 2010.

So with this perceived economic benefit, it stands to reason that oil and gas is playing a stabilizing role to an

extent in certain African nations. The problem with this is very simple: what happens when Africa has a hard time selling that oil?

Following the attacks on the World Trade Center in Sept. 11, 2001, one of the many U.S. responses was to diversify the import of oil away from the Middle East, which made up a very large portion. In May of 2001, the U.S. imported 96.7 million barrels of oil from the Persian Gulf, a 10 year 27

LOGISTICS

high. Almost immediately following the attacks however, the annual importation of oil from the region fell from 1.007 billion barrels of oil and petroleum products in 2001 to 828 million the following year, according to the U.S. Energy Information Administration (EIA). With only a few slight deviations, this gradual trend of reducing oil imports from the area has continued through today.

In addition to increased importation 28

August 2014

of oil from Canada, Mexico and various other more established nations, the U.S. also turned its eyes to Africa, which already had a decently strong oil industry, but was showing signs of speeding up production.

While some of Africa’s most notable oil powers like Egypt and to an extent Libya never really saw much an increased demand from the U.S., countries like Nigeria, Algeria and Angola experienced huge surges

SHALE REVOLUTION IS AFFECTING AFRICAN OIL

in demand. Algeria, for example, supplied no oil at all to the U.S. in December 2001, but by August 2007, they exported over 17.7 million barrels of crude oil alone. Even more impressive is Nigeria’s imports, which climbed from a February 2002 low of 11.9 million barrels to 40 million barrels in March 2007.

So where do these imports stand today?

Nigeria supplied the U.S. only 2.6 million barrels of crude in May, with Algeria back to supplying virtually none (about 796,000 barrels in the same month).

Africa is certainly not the only country that has taken a hit from decreased American imports, but they do show the most striking changes.

Within Africa, the western oil exporting nations seem to be the most affected.

“The bulk of the production in the U.S. is of very light sweet crude and West Africa in particular produces pretty much exactly the same quality of oil,” said Amrita Sen, chief oil analyst with Energy Aspects, in an interview with Financial Times. “So as U.S. domestic production has grown, they have reduced imports from West Africa and that’s why that’s the region

that has been the most hit.”

While many presidents and congresses over the last few decades have regarded African stability as a matter of importance to the U.S., they now have to weigh the benefits of a developing Africa against the prospect of oil independence.

In 2010, the U.S. became the largest producer of natural gas in the world and in June the International Energy Agency (IEA) said that America had surpassed Saudi Arabia as the top producer of crude oil as well, though that statistic is still somewhat disputed.

Never the less, a huge increase in domestic production, gradually reducing consumption and a ban on the exportation of U.S. crude oil has some analysts predicting that America could be on its way to being completely selfsufficient with oil and gas.

It’s a tricky situation for lawmakers to balance the pros and cons of the situation, but in the meantime, African oil exporting countries have wasted no time in finding new buyers.

“What we have seen is that more and more of the West African oil is now heading to Asia,” added Sen. “China and India are big buyers of West African crude oil as opposed to the U.S.” 29

PIPELINES

30

August 2014

AGING WITH GRACE:

HOW COMPANIES KEEP AGING PIPELINES RUNNING SMOOTHLY Exploration World speaks to TransCanada about how they maintain pipelines W R I T T E N B Y: I A N H A N N E R

31

PIPELINES

Pipeline Connection Pipelines have long been the preferred means of transporting both crude oil and natural gas, but as the extensive pipeline infrastructure ages, it’s possible that they have a higher chance for accidents.

There are about 1,382,570 miles of pipelines in the U.S. that transport a wide range of oil types and natural gas across the country, according to the 32

August 2014

CIA’s World Factbook. While the focus of these systems is clearly to deliver as much of the product as possible, as quickly as possible and as cheaply as possible, industry officials maintain that these goals are less important than the safety of the environment and the people that live within it.

There are a number of factors that could potentially cause an aging

C O M P A N I E S K E E P A G I N G P I P E L I N E S R U N N I N G S M O O T H LY

pipeline to rupture. For example, welding technology and techniques have changed over time and some industry experts speculate that the older welds are more susceptible to leaks. The most common cause for damage though tends to be common corrosion from exposure to the elements on the outside and

eventually, the fluids inside.

There are a number of ways that industry officials safeguard against ruptures. TransCanada is a Canadian energy infrastructure company that largely specializes in pipelines, both oil and natural gas. While based out of Canada, many of their practices have become common standards for

33

PIPELINES

pipelines companies in the U.S. TransCanada spokesman Davis Sheremata spoke to Exploration World in August about some of the ways the company prevents pipelines from breaking down or becoming dangerous as they get older and some of the new technologies they’re working on to support their efforts.

Exploration World: What are some of the common ways pipelines are built to 34

August 2014

safeguard against damages over time?

Davis Sheremata: We monitor our pipeline system through a centralized high-tech center 24 hours a day, 365 days a year. We use satellite technology that sends data every five seconds from thousands of data points to our monitoring center and if a drop in pressure is detected, we can isolate any section of our pipeline by remotely closing any of the hundreds

of valves on the system within minutes.

TransCanada’s ongoing Integrity Management Program includes regular maintenance, routine aerial patrols, ground surveys, cathodic protection against corrosion, monitoring by trained operators 24 hours a day and internal inspections using devices like Smart PIGs (pipeline inspection gauges) to detect and respond to any abnormal condition

along the pipeline.

EW: What sort of measures are in place to determine a remote stretch of pipe is in need of repair before it becomes a problem? Do technicians still rely on the sight test or are there sensors involved?

DS: TransCanada currently uses leading technology to monitor its Keystone Pipeline system around the clock. Our computational pipeline 35

PIPELINES

36

August 2014

C O M P A N I E S K E E P A G I N G P I P E L I N E S R U N N I N G S M O O T H LY

monitoring (CPM) system uses SCADA (supervisory control and data acquisition) to provide real-time remote monitoring of temperature, volume, pressure, flow rate, and is highly accurate for detecting possible leaks or other issues on our pipeline. We are always looking at new technology and systems that can complement our existing systems for leak detection, which also include regular aerial and ground patrols as well as a comprehensive public awareness and education program.

EW: What are some technologies being developed to help with leak detection?

DS: We are focused on R&D into cable-based external leak detection systems right now because we see it as one of the most promising new technologies that could potentially be applied to our new oil pipelines in the future. We have to do comprehensive testing to determine how effective these systems are and how easily they can be incorporated into the construction and maintenance of our pipelines. We expect to begin doing some pilot tests with some of these systems on some of our new oil pipeline projects in the future.

EW: At what point is a pipeline run down enough that it becomes more viable to shut it down and build a new one rather than fixing it?

DS: The age of a pipeline is not an indication of its integrity. Well maintained pipelines can operate indefinitely. Pipelines being converted from natural gas to oil also exceed the required thickness. The long-term life of a pipeline is directly related to the quality of the materials used and the maintenance and integrity programs put in place by TransCanada. Our pipeline integrity programs are designed to meet and in some cases exceed government standards.

EW: With the focus on pipelines operating for the benefit of oil and gas producers utilizing them, how important is ensuring safety for the public?

DS: No one has a stronger interest than TransCanada in making sure that our pipelines operate safely and reliably. Over the last year, we have invested almost $1 billion in proactive inspection and maintenance programs. TransCanada’s safety record in transporting oil is exceptional as the industry safety record is 99.9994%, and we exceed this rate.

37

TOP 10

TOP10 wealthiest

americans in oil and gas The men and women who reap the industry’s greatest benefits Written by: Ian Hanner

39

TOP 10

Oil and gas is an industry that has made a lot of people well-off and a select few well and truly rich. While statistically most people will not become billionaires in the course of their lives, these individuals have all either personally harnessed their business acumen to achieve their wealth in the American oil and gas sector or have inherited their money from someone who has.

The following ranking was created with respect to personal wealth estimates from Forbes at close of day on Aug. 4.

10

W. Herbert Hunt, $3.2 billion

In late 2012, Hunt sold a portion of Petro-Hunt’s holdings in the Bakken shale formation to Halcon Resources for $1.5 billion in cash and stock, securing him a 25 percent share on Halcon stocks, according to Forbes. Hunt controls Placid Refining and holds stock in PacRim Coal. Hunt is also related to the next individual on this list.

40 September 2014

09

Ray Hunt, $5.8 billion

Ray Hunt is W. Herbert Hunt’s half-brother. Both brothers inherited a portion of their wealth from their father H.L. Hunt who was an early 20th century wildcatter. Ray Hunt owns Hunt Consolidated, Inc., the parent company of Hunt Consolidated Energy and Hunt Consolidated Investments. Hunt’s company was among the first to invest in the production of oil in Iraqi Kurdistan following the 2003 U.S. invasion of Iraq.

08

Jeffrey Hildebrand, $6.2 billion

Hildebrand controls Hilcorp Energy, a privately owned oil company that Hildebrand started in 1989 after leaving a position at ExxonMobil. According to Forbes, the company was founded on the concept of buying up proved oil fields that were too small for the world’s major oil companies.

T H E 1 0 W E A LT H I E S T A M E R I C A N S I N O I L & G A S

pipelines. Preferable market development has made Frantz another $1 billion in the last year.

06 In 2011, Hildebrand sold a $100 million investment in the Eagle Ford shale formation to Marathon Oil for $1.4 billion. In 2010, Hildebrand famously gave every Hilcorp employee $50,000 for new cars as a reward for their roles in helping the company double in size.

07

Elaine Marshall, $8.9 billion

Marshall is the widow of deceased businessman Pierce Marshall. Pierce left Elaine Marshall a 15 percent share in Koch Industries. Marshall has since reinvested portions of her wealth. The family spent millions paying lawyers to contest a claim from deceased Playboy model Anna Nicole Smith that she was entitled to a portion of the family wealth as Pierce Marshall

Milane Frantz, $6.6 billion

Frantz, along with three other siblings, inherited the majority of their wealth from their father, Dan Duncan, who died in 2010. Duncan ran Enterprise Product Partners, a company that operates over 51,000 miles of petroleum product 41

TOP 10

05

George Kaiser, $10.1 billion

At 61, Jiping has spent more than two-thirds of his life working in China’s petrochemical industry.

Jiping is the chairman of the board of directors and chief executive officer of PetroChina, as well as the chairman of China National Petroleum Corporation. He served as both chairman and president of PetroChina for an interim period between April and July of 2013.

PetroChina is currently the most profitable company in Asia and the largest oil and gas producer and distributor in China. The company has an average daily crude production of 4.4 million barrels per day.

42 September 2014

04

Philip Anschutz, $10.4 billion

Anschutz started early buying up huge tracts of land, originally for agricultural purposes. Anschutz made his first large amount of money in oil when in the 1980s, over 1 billion barrels of oil was discovered under the Anschutz Ranch. Since then Anschutz has continued investing and directing various oil endeavors while branching out into telecommunications as Chairman of the Board of Qwest. Most notably, his Anschutz Entertainment Group has brought Anschutz a series of investments in the sports indus-

T H E 1 0 W E A LT H I E S T A M E R I C A N S I N O I L & G A S

try by buying and constructing numerous high-profile venues, such as the Staples Center in L.A.

03 Harold Hamm, $19.4 billion Hamm owns 70 percent of Continental Resources, a company with substantial operations in the Bakken shale formation. The company reports production of about 150,000 barrels per day.

According to Forbes, Hamm believes his holdings in the Bakken formation will surpass 1 million barrels per day in the next decade or so.

Charles Koch

1-2

Charles & David Koch, $40.1 billion each

The second and first place slots on this list are occupied by Charles and David Koch, brothers and co-owners of Koch Industries.

The two hold an 84 percent share of Koch Industries, a company involved in a massive array of activities, but most notably pipeline and refiner y operations. The two brothers are not only the richest individuals to have earned their for tune in oil and gas, but the sixth richest individuals in the world, according to Forbes.

David Koch

43

Rock Energy Rock, Reinvented

Since the company’s change of focus in January of 2012, R to become a key figure in Canada’s exploration and produc Written by: Kevin Smead Produced by: Alex Hortaridis

Rock Energy is poised ction fields.

45

ROCK ENERGY

Rock Energy is a company that understands its position in the Canadian energy market. In January of 2012, the company went through what CEO Allen Bey calls a “reinvention.” With fresh, energetic talent and focus now specifically on oil, Rock is looking to become one of Canada’s most sought after exploration and production companies.

While Rock has never been through any major financial crisis, the company realized the trajectory it 46

September 2014

was on was not the most sustainable.

Seeing more opportunity in Canadian oil, Rock sold off its gas assets. Also, a capable new team was brought in to help lead in this new era. Nearly three years into this reinvention, Rock’s capitalization on the newfound momentum has paid off greatly, and appears it will continue to do so.

Currently a 5,000 barrel per day company, Rock believes it can more than double this number in the next 2 to 3 years and plans on doing

ENERGY

Mantario Battery

so by making smart, calculated decisions. Rock wishes to be a lucrative, yet predictable investment that will attract investors.

ground that we can.”

This has afforded Rock the ability to play it safe when it comes to tackling projects and managing finances.

A Growth-Oriented Approach “Our quarter end debt is $16.8 Taking a growth oriented approach million, which is very low compared starts with Rock’s biggest focus: the against our bank line of $70 million highest possible recovery factor. and our quarterly cash flow of $19 “With the high recovery factor, million,” Bey said. “What that shows you get longest possible reserve is that we have a lot of excess debt life, lowest possible decline, which capacity that we can be flexible with ultimately yields that predictable once we find the right project. We base of production, cash flow, can deploy capital towards it, don’t and sustainability,” CEO Bey said. need to raise any new equity, and “Everything we’re trying to do is to can weather price storms.” get the most possible oil out of the Rock’s two major projects are in w w w. r o c k e n e r g y. c a

47

MEETING CHALLENGES

DELIVERING RESULTS

Every company is different, every project unique. At Weatherford, we believe in getting every job right, listening to your concerns, and working with you to meet your needs and your expectations.

We don’t succeed until you do—that’s the bedrock principle of our business and the measure of our commitment. From start to finish, our resources are focused on your objectives.

Contact and collaborate with us: www.weatherford.com

Formation Evaluation

|

Well Construction

|

Completion

|

Production © 2013 Weatherford. All rights reserved.

ROCK ENERGY

ENERGY

southwest Saskatchewan: the Onward play in the North of Kindersley and Mantario South of Kindersley.

“What’s particularly great about Mantario,” Bey says, “is we’ve got a pool producing about 3,500 barrels of oil per day right now and we’re implementing an EOR polymer flood there. Once that’s operational early next year, we’ll have about a 3300-3500 barrel per day production platform that will stay flat for the next 3-4 years. It’s a very strong foundation of cash flow.”

These projects are paying off, since 2012 cash flow per share has increased more than 100 percent each year. Production per share is up dramatically as well and is expected to grow another 25 to 30 percent this year.

Allen Bey President and CEO

SUPPLIER PROFILE

WEATHERFORD

Weatherford (NYSE: WFT) is one of the largest global providers of products and services that span the drilling, evaluation, completion, production and intervention cycles of oil and natural gas wells.

Weatherford is a new breed of service company—one that can provide the industry with extended products and services, more efficient operations, more powerful research and development capabilities and greater geographic diversity.

Website: www.weatherford.com

w w w. r o c k e n e r g y. c a

49

5 – Range III Top Drive Singles, 3 – Conventional Singles.

Tempco Drilling has provided quality drilling services in Western Canada since 1980.

Phone: 403.259.5533 Fax: 403.255.7067 sales@tempcodrilling.com

www.tempcodrilling.com

ROCK ENERGY Finding a Balance In order for these numbers to be possible, Rock Energy takes a balanced approach in two key areas: risk versus reward and aptly enough, its actual balance sheet.

In balancing its risk and reward, Rock moved operations out of Northern Alberta, where drilling each well cost between $10 and $15 million, to Southern Alberta, where drill and abandonment costs were only $500,000.

“Back in the old area, with $30-40 million a year in cash flow, you could drill 3 wells,” Bey said. “Today, we drill today over 60 wells a year. We have to have enough wells to make statistics work so we can afford to continue to explore.”

Managing risk is important, as Rock’s focus on sustainable developments is entirely built on reliability.

“What shareholders want is to know that they’re going to get paid every day,” Bey said.

On the side of the actual balance sheet, Rock always aims to be below a 1 to 1 ratio of debt to cash flow on a long term basis. Despite having higher available bank lines, the

ENERGY

company still believes in keeping the finances in balance, since they need to be ready to weather a storm.

“We’re pretty confident in oil prices, but we’re seeing gas prices take a pretty big dive,” Bey said.

“They’re coming back a little bit now, but you want to maintain your financial flexibility in that volatile market.”

A Rock-Solid Track Record Rock Energy is looking to continue to add to its already impressive asset base. While many companies are moving away from exploration, Rock is continuing successfully as both an exploration and production company. This has worked out brilliantly for Rock, as all of its current assets were exploration discoveries the company made. Not surprisingly, Rock is going to keep forging ahead with this approach.

“We’re allocating $12 million to exploration each year for the next several years,” Bey said. “We’re going to take 10 shots per year and we think that’ll yield us one or two more pools, which will continue the growth of the company. Our track record on what we already w w w. r o c k e n e r g y. c a

51

have done demonstrates some confidence as to where we can go.”

While Rock’s previous efforts are already noteworthy, it’s the future that looks particularly bright. The company is looking to expand to 6,000 barrels per day in the next 6 to 12 months and is continuing its exploration efforts in hopes of finding its next reliable asset. In 2 to 3 years, the company hopes to hit 10,000 to 12,000 barrels per day.

Eventually, Rock hopes to switch from a growth investment to a Exceptional Service Since 1986

Quality is our Business Safety is our Guarantee

Trust Us, we are the land experts who make it happen

Vortrax is a diverse construction company offering services and products to oilfield, municipalities, and transportation Companies. info@brittland.com www.brittland.com

Toll Free: 1-877-972-2006 Email: vortrax@netago.ca

www.vortrax.ca

ENERGY

dividend pay model. To do this, Rock would need to hit its 10,000 barrel per day target, among other things.

“We’d need to also have a corporate decline rate that’s less than 20% and make sure the management team at that point is focused on cost control,” Bey said.

To get there, Rock is developing its team to be ready to tackle any future challenges the company may face.

“They have to recognize it’s a risky business,” Bey admits. “They have to have a fairly decent risk aptitude. In helping to train them, there’s still a few of us old guys still here, and we’re trying to mentor them to take our positions. We’re trying to build the next generation.”

Still, working toward the future at Rock is a daily process that starts with making sure its assets are in line with its philosophies.

“We want to be able to get a very predictable production base and low decline rate, so we’re making sure the assets we build are like foundation stones for the company,” Bey said.

“What we can do every day is make sure we make the right decisions, build the right kind of assets, and have the right foundation stones in this company so that people will always want to own it and we can continue to grow or roll it all into the next thing.”

Company Information INDUSTRY

Oil & Gas HEADQUARTERS

Alberta, Canada EMPLOYEES

30 REVENUE

$82 Million

w w w. r o c k e n e r g y. c a

53

For

The comp

CBC Pipeline, LLC.

CBC Pipeline, Safety is Key

pany has created a culture where safety is always the top priority—and everything else just comes naturally.

Written by: Kevin Smead Produced by: Alex Hortaridis

55

CBC PIPELINE, LLC.

Founded in 1996, CBC Services, Inc. has been a go-to partner for oil and gas pipeline construction, horizontal directional drilling (HDD), and station installations for over a decade. Brothers Greg, Delton, and Jeff Caskey initially founded CBC Services, Inc. as a local contracting company, but CBC expanded in 2003 and now performs full oil and gas pipeline installations throughout the United States.

CBC Pipeline, LLC. is headquartered in Goldonna, Louisiana, has a regional office in Cadiz, Ohio, and establishes local field offices in proximity to 56

September 2014

its current projects. The company has completed work in Oklahoma, Kansas, Arkansas, Mississippi, Texas, West Virginia, and Louisiana, as well as Ohio.

While the company currently has around 300 employees, 2013 was a banner year for CBC, and while a great year is always cause for celebration, CBC actively pursues expansion opportunities, specifically through the creation of Master Service Agreements (MSAs) with potential energy partners. Keith Caskey, CBC’s Engineer and Project Manager, believes CBC’s safety record will definitely be a factor in its

OIL & GAS

future success.

“We are always striving for growth,” he said, “and we are not willing to compromise safety in the process.”

and to establish and insist upon safe practices at all times, by all employees,” Joe Porcaro, Safety Director and Lead Safety Specialist, said.

Because of this, safety training Caring About Safety for CBC Pipeline employees begins For CBC Pipeline, safety isn’t just on the day they’re hired. Upon hire, an industry standard: it’s the top employees are drug tested, provided priority. CBC Pipeline believes with personal safety gear (PPE), and its maintenance of a clean safety immediately trained on all safety record gives its partners confidence protocols. It doesn’t end there, though. in its work and at the end of the day, Staying safe is a constant focus, the goal is that both parties leave because safety is everyone’s job. with a record that’s spotless.

“We have an open-door policy, “It is the intent of safety to provide so employees know they can report safe and healthy working conditions, any incident at any time,” Porcaro w w w. c b c p i p e l i n e . c o m

57

CBC PIPELINE, LLC. said. “Also, we have weekly safety communication meetings to discuss and remind employees of the potential hazards they can face daily on their job.”

Along with internal safety checks, CBC Pipeline operates under OSHA guidelines. Due to rising industry standards, many of CBC’s employees are Veriforce-trained for their appropriate tasks before going to the field. CBC Pipeline is certified through Veriforce and ISNetworld, and is currently pursuing certification through PICS. “We cover the potential hazards and concerns to make sure that everyone goes home the way they show up,” Gavin Caskey, Project and HDD Coordinator, said.

A Full Service Oil and Gas Contractor A clean record of safety is important to CBC Pipeline, no matter what the project. And the projects are, in fact,

OIL & GAS

quite diverse—spanning the whole oil and gas spectrum from pipeline construction to station installation and from project start to completion.

Whether installing small gathering systems, large transmission pipelines, or performing an HDD bore, CBC Pipeline’s highly experienced staff handles each project in a dependable, efficient manner.

Currently, CBC Pipeline has a number of major projects underway with big players in the Utica Shale.

In addition to its recently-completed 3.6 miles of 6- and 24-inch pipe in Monroe and Noble counties, CBC Pipeline is currently installing over 30 miles of various sized pipelines throughout eastern Ohio. This includes 14 miles of multiple-sized lines in Harrison County, 10 miles of 10-inch, 4 miles of 20-inch, and 1.2 miles of 12-inch pipe in Belmont County, and 5.3 miles of 12-inch pipe in Carroll County.

“It is the intent of safety to provide safe and healthy working conditions, and to establish and insist upon safe practices at all times, by all employees” – Joe Porcaro, Safety Director and Lead Safety Specialist, said. w w w. c b c p i p e l i n e . c o m

59

CBC PIPELINE, LLC.

New for 2015

S.D. NOLD INC. “50 Years in Business”

Pipeline Welding Supplies Test Weld New Lincoln & Miller Welders Welder Repairs SA200 Parts

9026 St Rt. 45 Lisbon, Oh 44432

CALL: 330.424.3134 www.sdnold.com

60

September 2014

Fostering Strong Relationships CBC Pipeline consistently works with a number of different partners and has built relationships based on trust and accountability.

“CBC Pipeline’s mission has always been to ensure that every project is completed as safely and effectively as possible in order to provide our clients with utmost satisfaction,” the company writes. “We strive to meet each deadline while providing quality work, excellent service, and a personable experience that will bring our clients back

OIL & GAS

Company Information

time and again.”

Caskey explained that CBC Pipeline’s relationships with those it works with give it a competitive edge.

“We take everything they say into consideration and try to do the best every time,” he said. “If there is any job that needs to be done, we will get it done safe and efficiently. We keep at it and try to be the best. We make sure the quality of work remains high, as well as on time and on budget.”

This level of interpersonal and organizational excellence have also allowed CBC Pipeline to foster relationships with its supply chain and partners, making for a more efficient and effective completion of any given project.

As CBC Pipeline enters its second decade, it hopes to continue the successes of its first, all while continuing to drive improvement and foster growth.

CBC Services, Inc. was established in Goldonna, Louisiana in 1996. Beginning as a local, family oil and gas contracting business, CBC’s reputation for quality and service carried us into new fields and locations.

In 2003, in order to satisfy the needs of a growing market, CBC Services, Inc. founded CBC Pipeline-a full-service pipeline company dedicated to meeting the demands of a competitive market.

w w w. c b c p i p e l i n e . c o m

61

TAG Oil:

TAG Oil: Canadian O New Zealand Run

Merging the best of Northern and South Written by: Ian Hanner Produced by: Wayne Masciotro

Owned,

hern Hemisphere exploration 63

TA G O I L

Itaque consed quam aspero et modite volu aborept.

BY BLENDING PRODUCTION styles from Canada and New Zealand, TAG Oil has managed to find a sweet spot for operations in the Southern Hemisphere.

TAG Oil was founded in Canada in 2002 by Alex Guidi with the express purpose of exploration in New Zealand. While trading on the Toronto Stock Exchange, the company invests nearly 100 percent of their capital in the development of projects in their host country.

Though a relatively small company in the world of oil production, Chief Operating Officer Drew Cadenhead says the company has no problem 64

September 2014

competing in their niche market.

“We are the most active explorer in New Zealand and have had good exploration success over the last few years,” Cadenhead said. “A very strong financial position [has us] positioned well for future growth into the next few years.”

Cadenhead’s optimism is not without merit. TAG Oil has seen tremendous growth in the last decade. TAG Oil was “relatively inactive” for the first seven years of its existence, according to Cadenhead, who used to be the Chief Executive Officer.

“We were just JV partners with

E X P L O R AT I O N W O R L D

Itaque consed quam aspero et modite volu aborept.

some other companies, so once we took control of things ourselves and we were getting much more active operationally, I switched from CEO to COO,” he said. “I relocated myself and my family back to New Zealand to run all of our operations here. Our CFO at the time, Garth Johnson, took over the role of CEO up in Vancouver.”

Cadenhead’s expertise comes from several decades of experience working for various exploration companies in both Canada and New Zealand. He also holds a Bachelors of Science Degree in Geology from the University of Calgary. Now tasked with the direction of TAG Oil’s operations in New Zealand, he’s putting his skills to work.

“It is something that’s very important to us: our perception as a good corporate citizen; as a very safety and healthoriented company. Our record is impeccable here and it’s very important for us to maintain that record.” w w w. t a g o i l . c o m / d e f a u l t . a s p

65

energy services ltd

TA G O I L

E X P L O R AT I O N W O R L D

“Our niche here in New Zealand is to run our company as a small nimble junior company-- sort of like a Canadian model, not surprisingly,” he said. “What we found was that there were a number of Majors down here, [such as] Shell and some of the big Australian companies, mainly focusing offshore. No one was really focusing on-shore where there’s some really nice oil. In particular, shallow oil plays, so really kind of up our alley as far as what we were familiar with as Canadians working in Calgary.”

One of TAG Oil’s strongest plays is in the Taranaki Basin. The only

SUPPLIER PROFILE

sedimentary basins in New Zealand to have been commercialized to date, the company has invested heavily in the region with three plants and a wholly-owned network of pipelines just east of the field.

From there, everything ties into their mother facility, the Cheal plant.

The drilling operations in that region produce between 2,300 and 2,500 barrels of oil equivalent per day, securing a steady cash flow.

According to Cadenhead, TAG Oil will be producing in that region for years to come having only drilled roughly 25 percent of the company’s total acreage.

TAG OIL

Horizon Energy Services Ltd, a specialist oil and gas service provider based in New Plymouth, New Zealand has held the operations and maintenance contract for TAG Oils Cheal Production Station and well sites for over seven years.

We currently supply a full operations team to TAG, including an onsite Production Manager, Operations and well testing Technicians, permit issuers and safety personnel.

In addition to providing personnel support, our extensive expertise has also been pivotal in the development of a document management, HSE and permitting system, operational procedures and training regime to complement TAGs own infrastructure.

Our people and processes have developed along with TAGs growing operations, and we continue to work alongside each other in a very seamless and synergistic way.

Website: www.horizonenergy.co.nz

w w w. t a g o i l . c o m / d e f a u l t . a s p

67

HG Tubulars (Canada) LTD.

HG Tubulars (Canada) Ltd is a distributor of casing and tubing in Canada and worldwide. We have our manufacturing facility in Hebei Province, China which produces API casing, tubing and couplings. We are proud to supply Tag Oil with their tubular requirements.

High Quality Tubular Products at the Best Price CONTACT US: Tel: 001 403 266 6367 Fax: 001 403 266 6341

Email: info@hgtubulars.com www.hgtubulars.com

TA G O I L

E X P L O R AT I O N W O R L D

“If we were to stop drilling here today, the oil would keep flowing for about another 10 to 15 years,” he said. “They’re nice long reserve life, index fields. They produce very well.”

Speaking about new drilling operations in the region, he added, “These wells will cost us about $3 million to drill and complete and tie in and we’ll get a net present value out of these wells of somewhere between $10 to 30 million. It’s really a great little play for us.”

The success of smaller scale, but very stable operations in shallow plays like these, has afforded the company the ability to develop higher risk operations. With reportedly zero debt and about $50 million in reserve, TAG Oil is looking to explore deeper targets in the region. According to Cadenhead, there are numerous reservoirs situated at depths of between 4,000 and 5,000 meters. With larger pool sizes, he estimates the value of each of these wells would be closer to $20 million.

With stable cash flow from the Taranaki Basin, the company has been able to turn its attention to

other regions yet to be developed, such as the East Coast Basin. “[The East Coast Basin] clearly has a working hydrocarbon system,” Cadenhead said. “We know that because there’s 300 or 400 oil and gas seeps where oil and gas is actually gurgling out of the ground. So we know the kitchen is working there and we recognized that about five years ago and secured a very large land base-nearly 2 million acres.”

He estimated it would take about three years to gather enough data and drill enough exploratory wells to prove commercial viability, but according to Cadenhead, several independent engineering assessments have indicated that the company is sitting atop reserves in the billions of barrels.

“It just remains to be seen if it can be cracked,” he said. “We’re the only ones trying to crack it. It’s one of the main reasons the shareholders in TAG are keeping their fingers crossed and hoping for a hit over there, as well as the good work that we’re doing in the Taranaki Basin.”

The small staff size at TAG makes the company’s successes thus far

w w w. t a g o i l . c o m / d e f a u l t . a s p

69

WHEN THE CHALLENGE IS MATURE FIELDS,

THE SOLUTION IS HALLIBURTON. UNCONVENTIONALS

Halliburton brings a wealth of knowledge and expertise to mature fields with over six hundred and fifty industry-leading consultants and project managers. We’re involved in all the major oil-producing provinces across the globe and have a track record of increasing ultimate recovery an average of 20%. In one instance, a well treated with our SandWedge ® conductivity enhancer raised initial production, maintained it, and its cumulative production was 50% higher than wells fractured with sand only. Whether it’s reassessment and planning, field productivity, well productivity, or well abandonment, we help maximize the value of mature fields.

What’s your mature fields challenge? To learn more, visit Halliburton.com/MatureFields

Solving challenges.™ © 2014 Halliburton. All rights reserved.

CONTINUING TO GROW & DIVERSIFY Taranaki Civil Construction Ltd is a family owned business that is proud to carry out all site works and road construction for TAG Oil Ltd.

Tel: +64 6 7566080 Email: admin@tccl.co.nz

www.tccl.co.nz

TA G O I L even more impressive. With only 25 employees in New Plymouth, TAG’s revenue for the 2014 fiscal year was just over $2.3 million per person. Over the last five years that the company has been growing, the staff has been hired on one-byone, with only two people leaving the company in that time span,

E X P L O R AT I O N W O R L D

according to Cadenhead.

“We have a lot of fun here,” he said. “It’s a really loose atmosphere and because it’s such a small group, we don’t get bogged down in red tape and paper work. We just yell at each other down the hallway instead of sending memos around. We chat around the coffee pot. It really is a

Itaque consed quam aspero et modite w w w. t a g o i l . c o m / d e f a u l t . a s p

71

TA G O I L small family type of [operation] here.”

As a foreign entity operating in another country, TAG Oil has to be extra careful about their perception as good for the community. With a very active role sponsoring both local academic and sporting organizations, the company tries to make it clear that they’re trying to give back to their host country.

The process isn’t easy though.

Cadenhead pointed out that in recent year, the oil and gas industry has come under scrutiny from the public

Oceania’s leading supplier of OCTG and Linepipe We supply steel tubulars & offer: • End-to-end assurance • Secure supply from the region’s best Mills • Logistics management • Inventory control • Technical support

Contact us to discuss your onshore and offshore requirements: Australia +61 8 9483 1700 enquiries@mitubulars.com.au New Zealand +64 9 917 1040 www.mitubulars.com.au

in a way that it hasn’t before.

“It’s probably one of the biggest challenges for us, to tell you the truth, and one of the biggest risks is getting permission and consent to drill wells,” he said. “It’s something we put a lot of effort into and I can honestly say many, many more times the effort than we [put into it] just four or five years ago. It just wasn’t a consideration. It has become a consideration. And that’s not just here in New Zealand; that’s a global phenomenon.”

He added, “It is something that’s very important to us: our perception as a good corporate citizen; as a very safety and health-oriented company. Our record is impeccable here and it’s very important for us to maintain that record.”

The natural gas produced by the company doesn’t just benefit New Zealand by introducing jobs and taxable revenue. Since TAG Oil doesn’t own a facility to liquefy natural gas, all of the

E X P L O R AT I O N W O R L D

natural gas produced in the country is sold in New Zealand without the added costs accrued by shipping overseas.

Meanwhile, the company’s crude oil is shipped to primarily Asian markets such as China, Japan and India, which require oils with very low sulfur content, and sold at a premium. From there the company imports cheaper oil back from the Middle East to refine into gasoline and diesel for use in New Zealand.

“We’ve got the choice of either consuming that oil here or shipping it offshore,” Cadenhead said. “There’s an insatiable thirst for oil in the Southeast Asia part of the world. It’s a great place to find oil. It’s a great place to find high quality oil in particular. As I said, we’re netting back on our oil sales here probably close to $80 a barrel right now.”

Cadenhead said he could see the company taking a number of paths in the decade to come.

Most exciting would be proving commercial viability on their unconventional plays in the East Coast Basin.

“If the unconventional play starts to work for us and we can have success with the proof of concept of being able to flow hydrocarbons from those multi-billion barrel reservoirs that we see over on the East Coast Basin, that’s a completely different ball game,” he said. “Most likely, TAG, at the size that we are, would get bought out by a Major at that point.”

Company Information INDUSTRY

Oil and Gas HEADQUARTERS

Vancouver, Canada FOUNDED

2002 EMPLOYEES

25 REVENUE

$57,546,899 (2014) PRODUCTS/ SERVICES

TAG Oil is a Canadianowned exploration and production company for both oil and gas that operates exclusively in New Zealand. By merging the styles of both countries, the company has been able to solve problems no one else has, becoming the busiest explorer in New Zealand.

With a small staff size, the company is able to stay highly-adaptive to an evolving energy market and act fast to capitalize on growth opportunities.

w w w. t a g o i l . c o m / d e f a u l t . a s p

73

Wat

Watson D Harsh Env

Watson Drilli with a recen

Written by: Laura C

tson Drilling:

Drilling: Experts in Drilling in nvironments

ing offers their clients a range of services, nt focus returned to water drilling.

Close Produced by: Wayne Masciotro

75

WAT S O N D R I L L I N G WATSON DRILLING, A leading resource and water drilling organisation, providing service to private, mining corporate, rural and government sectors. The company specialises in ground water supply for mines, which has become a major service offered by the business in the last five years.

With expertise in water drilling and exploration with services including: Mud rotary (with depths up to 1000 meters), Down-hole hammer, Pump Testing, Exploration, Wireline coring as well as conventional coring up to depths of 1500meters, RC drilling, RAB, Mobile camps, and additional plant and equipment available for hire, including back hoe, excavator, mud pumps, generators, light towers, test pumps and more. Watson Drilling is able to offer their clients a range of services that compliment the company’s professionalism and can-do attitude.

Ability to Work in Any Terrain The employees in the field at Watson Drilling are multi-skilled licensed drillers, meaning they can complete several different 76

September 2014

forms of drilling. The company and their drilled experts can tackle most geological formations. The machinery Watson Drilling employs is all-terrain, allowing them to work in all environments. In fact, Watson Drilling’s ability to adapt to different types of environments and geologies is what they are known for.

“Our goal is to continue to get the Watson Drilling name out there, so that our clients and prospective clients know that we’re a one-stop shop that can take on difficult locations, geology and drilling conditions,” said managing director Rex Watson. “We’re happy to take the tough jobs on, to advise and lead. We can travel to where the need may be.”

Watson Drilling is able to fulfill their commitment to travel anywhere, anytime, as fully accredited and fully licensed professionals.

The success of Watson’s supply chain is a driving factor of their success in remote area drilling.

“Our supply chain runs smoothly because of the long-standing relationship our company has with certain businesses that know what we go through, where we have to

CONSTRUCTION

Watson Drilling site, Australia

be and how to help us get there,” commented Watson. “We’ve become fairly loyal to those who not only look after us with their pricing but actually look after us in their service, which can be more important than the price in the long run.”

Employee Safety The safety of their employees is a high priority for Watson drilling. The company’s Health, Safety and Environmental Plan and Safe Work Procedures help to create a safe, healthy and environmentally

“We’re happy to take the tough jobs on, to advise and lead. We can travel to where the need may be,” said Rex Watson.

w w w. w a t s o n d r i l l i n g . c o m . a u /

77

responsible work environment.

The company is very mindful of the environment and has environmental policies and procedures in place. These ensure that the company does not have any negative effect on cultural or heritage sites, or contaminate the environment or aquifers. This is especially important in regards to all Watson Drilling’s projects.

Their plans and procedures include rigorous routine inspections and hazard identification procedures; early identification

Insurance expertise The right solution for you

At OAMPS Insurance Brokers, we use our strength and industry knowledge to help position you and your business to survive any insurable event.

OAMPS is now part of Arthur J Gallagher & Co, one of the largest insurance broking companies in the world. With more than 30 branches across Australia and backed by a global network of expertise, we’re well placed to look after your insurance needs.

Contact OAMPS today to find out how we can help to protect your business.

+61 3 5832 8800 shepparton@oamps.com.au

oamps.com.au Closer to clients Closer to communities® OAMPS Insurance Brokers Ltd. AFSL 238312. Ref: 0802 Aug2014

and removal of workplace hazards; monitoring and updating safety procedures to improve performance; and compliance with government regulation and legislations.

Training programs are another way Watson Drilling maintains their high quality safety programs. All employees who operate drilling equipment are inducted and assessed using Drilling Industry Competency Standards. The company also has ongoing practical training that develops the more day-to-day safety habits, including JSA’s, Take Two’s, SWP’s, Working at Heights, Manual Handling, Job Hazard Analysis, Fire Extinguisher training, Drilling Licenses, and others.

Current Projects Australia is the driest continent on the planet, so it is important that the earth’s greatest natural resource is protected. When Watson Drilling engages in a new water drilling project, the company offers their clients advice and information to assist in understanding each territories unique regulations on ground-water use.

WAT S O N D R I L L I N G

CONSTRUCTION

Watson Drilling is currently involved with water drilling for fracking and infrastructure projects for large mining companies; some of these projects are in very remote locations and see harsh conditions. These water drilling projects have been going on for at least two years, although this year saw the addition of two new clients on top of their current client list.

Another of Watson Drilling’s services is the set up and maintenance of mobile camps. These living quarters can be provided for weeks at a time. They are set up and completely usable by workers in remote locations, making Watson Drilling the ultimate one-stop shop for projects. In the future, Watson Drilling wants to retain its small company appeal, and be an industry leader in their specialised field.

“I’d like to continue to grow our sound reputation, of not being large company, but a company that when you give us a job, you don’t have to worry about it. We want our clients to know that once they hand it over to us, we’ll take care of it from there.”

“I’d like to continue to grow our sound reputation, of not being large company, but a company that when you give us a job, you don’t have to worry about it,” said Rex Watson.

Company Information INDUSTRY

Construction HEADQUARTERS

Deniliquin, Australia FOUNDED

1030 EMPLOYEES

45 PRODUCTS/ SERVICES

Watson Drilling was founded in the 1930s for exploration drilling in pursuit of alluvial gold. The company is currently run by fourthgeneration family members of founder W.L. Watson. With a traditional expertise in water well drilling, Watson Drilling provides this and other services to the private, mining corporate, rural and government sectors.

w w w. w a t s o n d r i l l i n g . c o m . a u /

79

Energyworks Limited

Energyworks Limited’s New

After securing new investment for future growth, Energyw that will expand the Company throughout Australia and N Written by: Laura Close Produced by: Wayne Masciotro

d:

w Strategic Plans

works has introduced new initiatives New Zealand.

81

ENERGYWORKS LIMITED

Front view of headquarters New Plymouth, New Zealand

ENERGYWORKS LIMITED, A market leading provider of engineering solutions to the energy sector in New Zealand, secured new investment to the business in January 2014. As a new shareholder, Direct Capital is providing additional capital to support Energyworks’ growth initiatives. The investment was made alongside the existing 82

September 2014

owners, CEO Allen Clarke, and Executive Director Dallas Chadwick, both of whom who continue to be significant shareholders in the Company and continue to manage the business.

The additional capital will enable Energyworks to continue its investment programme into new premises, additional people,

E X P L O R AT I O N

new systems, and new capabilities which will support Energyworks’ ongoing growth.

As to the future, Energyworks has identified a number of growth and strategic initiatives, which include 1) expanding into Australia and other geographies, 2) substantially increasing its paint and blast solutions for customers on the back of its recently commission and purpose built industrial coatings facility, 3) increasing the range of specialist engineering services that Energyworks provides, and 4) continuing investment in new systems and capabilities,

“We’ve been investing heavily for the last 2-3 years in integrating multiple management systems to optimize our efficiency,” said Ian McGrath, CSO Chief Specialist Officer (QHSE/HR).

w w w. e n e r g y w o r k s . n e t . n z

83

Energy sector services specialists with 35 years’ experience delivering industrial cleaning, waste disposal, corrosion protection and transportation solutions, Intergroup can help you solve your industrial services challenges.

Installers of Insulation and Fire Protection Systems Ph: 64 6 755 1647 A New Zealand owned Freight Forwarder and Customs Services Company, proud to be New Plymouth based servicing our local clients.

Forman Insulation is a leading NZ installer of insulation systems, sheetmetal cladding and passive fire protection products.

Accredited IATA Cargo Agent Over 25 Years Experience

Phone: 64 6 759 8104 Fax: 64 6 757 3151 Email: alpha@alphacustoms.co.nz 330 Devon Street East, New Plymouth, New Zealand

Email: pieter.voorwinde@forman.co.nz Web: www.forman.co.nz

ENERGYWORKS LIMITED

E X P L O R AT I O N

particularly around health, safety, Safety Management Practices (ACC and environmental performance. WSMP) certification to tertiary level.

“Our continual improvement Growing the Company commitment does not just include To accomplish these three major meeting requirements for the goals for their new strategic plan, certification, but exceeding those Energyworks is focusing on the requirements and not just for the continual improvement of the clients who we work for, but to push company’s management system us beyond the local and industry certification. “We’ve been investing competition,” shared McGrath. “We heavily for the last 2-3 years in hope it will enable us to provide not integrating multiple management just an internal quality benchmark systems to optimize our efficiency,” for the company, but also external said Ian McGrath, CSO Chief recognition in terms of increasing Specialist Officer (QHSE/HR). our competitiveness and ability to They have several certifications influence the winning of tenders.” from the international certification recognition organisation, Bureau Moving to Australia Veritas, including ISO 9001 (Quality) As part of the strategic plan, and 4801 (Health & Safety).

Energyworks is looking towards Energyworks is also in the process re-entering the market in Australia of adding ISO 14001, which relates and establishing a base in the to the environment. In the last 12 to country. Geographically, the 18 months, the company has also east side of Australia will provide increased their ACC Workplace the most opportunities for the

“We hope it will enable us to provide not just a quality benchmark for the company, but also an external benchmark in terms of increasing our competitiveness and ability to influence the winning of tenders.” w w w. e n e r g y w o r k s . n e t . n z

85

More than good ideas

Steel Pipe and Fittings Specialists PipesNZ offers a comprehensive stock of Pipe and Fittings.

We specialise in large diameters and heavy wall thickness, API, ASTM and AS/NZ compliant with a “cut to length service”.

We offer fittings in a number of different designs, schedules and pressure ratings.

Established in 1918, KAEFER is one of the largest independent multi-discipline contracting groups operating in the field of: • Insulation (hot, cold, cryogenic) • Scaffolding • Surface Treatment • Fire Proofing • Access Management • Cladding • Maintenance Management • Building Wall & Roof Cladding • Asbestos Removal

Phone: +64 6 755 4153

info@kaefer.com.au

KAEFER Integrated Services Pty Ltd 8 Bradford Street, Kewdale WA 6105, Australia P: +61 8 9224 4600 F: +61 8 9224 4691 www.kaefer.co.au

KAEFER Integrated Services (NZ) Ltd 6 Sunley Street, Westown New Plymouth 4310, New Zealand P: +64 (0) 6753 0360 F: +64 (0) 6753 8241 www.kaefer.co.nz

STORK TECHNICAL SERVICES IS THE EXPERT PROVIDER OF ASSET OPTIMISATION AND INTEGRITY MANAGEMENT SERVICES TO THE GLOBAL OIL & GAS INDUSTRY.

www.stork.com

Auckland: 09 282-4243 207 Connett Road East, New Plymouth: 06 755-9155 Bell Block, New Plymouth 4341 Christchurch: 03 974-1168 Head Office:

sales@pipesnz.co.nz | www.pipesnz.co.nz

ENERGYWORKS LIMITED company because of the strong Gas Transmission infrastructure and the Coal Seam Gas market.

“The infrastructure there has been well established over a period of years and the anticipated need, which we are looking to provide, is the ongoing project contracts and on-going maintenance of those facilities,” commented McGrath.

“As part of that process we are looking to appoint a general manager in Australia to formally set up and establish the business in Queensland That may include establishing our own infrastructure or an acquisition of an established small business operating in that environment. At the moment, all options are being considered.”

Current and Future Projects Energyworks has just completed the workshop fabrication and site installation of five modules for Todd Energy on the Mangahewa C Development. Those new facilities are for gas supply to the existing Todd Energy production station. The project was started in November of 2013 and was completed in May 2014.

A pipeline construction project in

E X P L O R AT I O N

Auckland is Energyworks’ current project. It involves constructing 7.6 kilometres of 6-inch gas distribution for their client, Vector. The pipelines are being installed to support a dairy factory development project, which will create 120 local jobs.

Due to the high quality of work the company completed on the Mangahewa C Development project; Energyworks has also been awarded the Mangahewa D, E, and F well-site development work.

Energyworks also has a project in Australia with their client Jemena, for the construction of two scraper stations inland from Gladstone in Queensland. Energyworks is building the structural supports and pipework at their New Zealand facility, exporting it to Australia and installing it onsite for the client.

Defining Qualities When asked what he thought defined Energyworks and set it apart from others in the industry, McGrath had several answers.

“Our ability to manage and execute a wide-range of project and maintenance work for our clients is really distinguished by the quality, w w w. e n e r g y w o r k s . n e t . n z

87

ENERGYWORKS LIMITED

ENERGYWORKS LIMITED

E X P L O R AT I O N

skills and experience of our people. We like to solve our clients’ problems and provide them with solutions. Our success has been built on key relationships with a range of significant clients within the Energy Sector” Other important characteristics that Energyworks provides are world class facilities at their New Plymouth site, a quickly scalable work force and a niche expertise in pipeline construction.

“Most important though, and something that we actively promote inside the business is that our company demonstrates an attitude, ambition and desire for excellence that drives continual improvement within the company,” said McGrath.

“I think that is recognized by the clients we work with and that provides them with a huge amount of assurance in terms of our intent.”

Company Information INDUSTRY

Energy, Construction HEADQUARTERS

New Plymouth, New Zealand FOUNDED

1972 EMPLOYEES

200 REVENUE

$50 Million

“The infrastructure there has been well established over a period of years and the anticipated need, which we are looking to provide, is the ongoing maintenance of those facilities now that they’re established,” commented McGrath.

PRODUCTS/ SERVICES

Energyworks provides mechanical maintenance and project services to Dynea including stainless steal piping and mechanical work.

w w w. e n e r g y w o r k s . n e t . n z

89