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SPRING 2015
content THE PRICE of oIL? San Juan Basin Energy Conference
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Don Vaughan puBliSHER
Cindy Cowan Thiele EDiTOR
Dorothy Nobis CONTRiBuTiNG WRiTER
Josh Bishop CONTRiBuTiNG pHOTOGRApHER
WEATHERING THE SToRM
Suzanne Thurman
STATE, LoCAL BUDGETS fEELING THE SQUEEZE fRoM oIL PRICE DRoP
DESiGNER
Shelly Acosta Clint Alexander Aimee Velasquez
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SAlES STAFF
MUD, SNoW, SAND AND CLAY Treadworks works with Bf Goodrich on best tire for oilfield trucks
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Energy Conference
Leadership recognition
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T. Greg Merrion to receive Leadership New Mexico award
School of Energy
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10-year plan comes together
Column
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The price of oil and NM’s economy Voluntary agreement continues to reduce energy consumption
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2015 capacity changes
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Devon on best workplace list
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Weathering the storm
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State, local budgets feeling the squeeze from oil price drop
BLM postpones lease sale
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Explore the world
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IEA launches new interactive atlas NMoGA becomes major sponsor of NMAA
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Drilling Productivity Report
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Energy News
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Majestic Media 100 W. Apache Street Farmington, NM 87401 505-516-1230 www.majesticmediausa.com Basin Resources magazine is published four times a year by Majestic Media. Material herein may not be reprinted without expressed written consent of the publisher. Opinions expressed by the contributing writers are not necessarily those of the publisher, editor or Basin Resources magazine. Every effort has been made to ensure the accuracy of this publication. However the publisher cannot assume responsibility for errors or omissions. © 2015 Basin Resources magazine.
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EnErgy confErEncE: Industry professionals discuss the price of oil and our future When the 2015 San Juan Basin Energy Conference committee began making plans for the event last fall, the oil and gas/energy industry was hopeful that the positive climate it was enjoying would last for a long time. Unfortunately, that didn’t happen. The price of oil dropped drastically, causing many of the industry’s leaders to reevaluate their company’s focus and to take a hard look at the company’s profit and loss projections. Concerns remain high in the industry, wondering whether the unexpected drop in oil prices will recover and, if they do, how soon they can recover. Many companies are reducing their workforce, tightening their spending belts and spending hours in conference rooms, planning for the worst while hoping for the best. The impact of those lower oil prices has affected everyone. Our state, which has depended on the oil and gas/energy industry for the taxes which have a tremendous effect on the state’s economy, is joining other states and municipalities in determining where cuts will be made to absorb the loss in funding. Our partners in the industry have been forced to cut jobs and limit or eliminate the overtime many employees counted on for their livelihood. Our industry, our state and our communities have felt that negative effect, but so have the families who depended on industry jobs to pay their bills. The conference committee, at the request of our industry partners, lowered the registration fees to attend the 2015 conference to $265. Because of the uncertainty of the industry, the committee and its partners believe it is important for people to attend the conference, to learn what the future of the oil and gas/energy industry will be. Those attending will have a better grasp of the challenges the industry faces and the plans to overcome them. The speakers and panelists won’t discuss just the negative impact to the industry, however. They will also share their knowledge and their personal experiences of past downturns and how they believe the industry will not only recover, but will become stronger.
This isn’t the first time the industry has gone through difficult times and it won’t be the last. Ebbs and flows are an integral part of the oil and gas/energy field and most companies plan for them. But this industry has an inner core of strength and faith that knowing that no matter how hard the fall is, the recovery, while sometimes slow and difficult, brings out the best in those who remain committed to a vocation they believe in. I encourage you to attend the 2015 San Juan Basin Energy Conference, March 24-25 at San Juan College. The conference committee believes it is important that as many industry professionals as possible attend the conference so they will understand better the impact of falling oil prices, will ask the questions that need answers, and will look ahead to better times. Our industry will rebound. It will recover. And it will continue to provide the products and services our country needs and, in addition, will create and refill jobs that our state, our communities and our families need.
ranDy PachEco DEan of School of EnErgy San Juan collEgE www.basinresourcesusa.com • SPRING 2015
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The price of oil? San Juan Basin Energy conference is March 24 and 25 Dorothy Nobis Basin Resources the 2015 san Juan basin Energy Conference will bring together leaders in the oil and gas/energy industry to share their thoughts, their hopes, their concerns and their vision for the industry. With companies throughout the industry facing challenges brought on by the low cost of oil, this year’s conference will provide insights into how and when the industry will recover. Attendees will have the opportunity to network, ask questions
of presenters, and take advantage of the experience and the knowledge these industry leaders will bring to the stage. “the conference will give those attending the opportunity to discuss and receive insights into the future of energy and the market it serves,” said randy Pacheco, dean of the san Juan College school of Energy and the CEo of Four Corners innovations. san Juan College school of Energy, Four Corners innovations and New Mexico Center for Energy Policy (a division of New Mexico tech) are sponsors of the event.
“We expect the conference to attract the same industry professionals who came in 2013, and who are willing to share their visions and knowledge of the industry,” Pacheco said. “the conference encourages networking and provides a positive environment for leaders to discuss their concerns and their expectations of the future of oil and gas and electrical generation.” Conference attendees will have an opportunity to learn from keynote speaker rick Muncrief, an industry professional who is familiar to many in the Farmington area.
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conference 2015
Schedule of eventS RichaRd MuncRief Richard (Rick) Muncrief, President and Chief Executive Officer at WPX Energy, will be the keynote speaker at conference. Muncrief is a petroleum engineer who has more than 30 years of upstream and midstream energy experience. He officially joined WPX in May and was previously the senior vice president of operations and resource development at Continental Resources. While with Continental, he helped increase reserves, production and share price more than four-fold, while lowering production expense by more than 15 percent. Muncrief ’s past experience includes the Williston and San Juan Basins, and he has worked for independents and a large supermajor company. He spent 27 years with ConocoPhillips, Burlington Resources and predecessors of both companies in several technical and leadership roles. From 19942007, Muncrief reenergized ConocoPhillips San Juan Basin operations by focusing the business on improved performance and organizational health while moving forward in his career from production manager to leading optimization to overseeing the entire business unit. Muncrief received his Bachelor of Science degree in petroleum engineering from Oklahoma State University in 1980. He is a native of Ardmore, Okla., and has spent the majority of his career in the Rocky Mountain region, working in Denver, Farmington and Billings, Mont. SPRING 2015 • www.basinresourcesusa.com
tueSday, March 24 6:30 – 7:50 — Breakfast 8 – 8:30 — Welcome/Introductions – dr. toni Pendergrass, San Juan college President dr. daniel lopez, new Mexico Institute of Mining and technology President 8:30 – 9:15 – new Mexico Governor Susana Martinez 9:20 – 9:50 – BP america (tBa) 10 – 10:15 — Break 10:20 – 10:50 – WPX energy Inc., Ken McQueen 11 – 11:40 — Panel Infrastructure Bottleneck – Western refining, WPX energy Inc., four corners economic development Inc. 11:50 – 12:50 — lunch 1 – 1:40 – WPX energy Inc., rick Muncrief, chief executive officer 1:45 – 2:30 — Panel – energy Production in the San Juan Basin and the state of new Mexico - nM energy Minerals and natural recourses, nn State land office, and San Juan county 2:30 – 2:45 — Break 2:50 – 3:45 — Judy Matlock, attorney, on “unbundling” 3:50 – 4:45 — Panel — Price of oil and Geopolitics
6-8 p.m. — reception farmington civic center, 200 W. arrington – Marita noon, executive director for energy Makes america Great Inc. and the companion educational organization, the citizens’ alliance for responsible energy (care).
WedneSday, March 25 6:30 – 7:50 — Breakfast 8 – 8:40 – united States department of energy, deputy under Secretary for Science and energy, Washington, dc; Michael Knotec 8:50 – 9:20 – ron darnell, Senior vice President, PnM resources 9:25 – 10 – Jon Goldstein, environmental defense fund natural Gas: challenges and opportunities 10 – 10:15 — Break 10:20 – 10:50 – colin Messer, new Mexico natural Gas vehicle coalition: natural Gas... from new Mexico, for new Mexico! 11 – 11:40 — Panel — State of new Mexico and the San Juan Basin education and Workforce training 11:40 – noon — conclusion
10 BASIN RESOURCES tries in New Mexico, including the energy sector. Her administration repealed and replaced portions of the “pit rule,” helping to manage waste from oil and gas drilling in a common-sense, environmentally-sound manner. The governor has also focused on easing unnecessary and overly-burdensome regulations on various sectors of the New Mexico economy allowing employers to operate with greater efficiency and effectiveness, while maintaining the necessary oversight by appropriate state agencies.
Gov. SuSana Martinez Prior to being elected New Mexico’s first female governor in 2010 and reelected in 2014, Susana Martinez was a prosecutor for 25 years. She was the elected District Attorney for the Third Judicial District in Doña Ana County in Southern New Mexico, a position she held for 14 years. Martinez was first elected to that office in 1996 and was re-elected three times, running unopposed for the office in 2008. In addition to managing the second largest District Attorney’s office in the state, Martinez personally tried some of the toughest cases, including child physical and sexual abuse and child homicide. In 2008, Heart Magazine named Martinez “Woman of the Year” for her dedication to children’s advocacy and her efforts to keep children safe. Governor Martinez’s agenda has focused on supporting critical job-creating indus-
of the Renewable and Sustainable Energy Institute at the University of Colorado. During this career, Knotek has led DOE-wide program formulation activities in Synchrotron Science and Facilities, Environmental Science, Fusion Sciences, High Performance Computation and postgenomic Biology. In addition to senior lab management positions, Knotek also served as senior science and technology adviser to the U.S. Secretary of Energy and was chief technology officer with the Battelle Memorial Institute. Dr. Knotek was a private consultant from 2001 through 2010, working with a wide range of Laboratories, DOE program offices, and other national science and technology concerns across a wide swath of renewable, fossil and nuclear energy science and technology.
Dr. Michael KnoteK Dr. Michael Knotek is the Deputy Under Secretary for Science and Energy at the U.S. Department of Energy (DOE) and currently oversees the day-to-day operations of the department. Knotek, a physicist, brings more than 40 years of research and management experience to this position. From 2010 to 2013, he was director
F. DaviD Martin
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 11 In January 2011, Governor Susanna Martinez selected F. David “Dave” Martin as Cabinet Secretary of the New Mexico Environment Department in Santa Fe, N.M. In April of 2013, Governor Martinez asked Martin to become Secretary of the Energy, Minerals, and Natural Resources Department upon the retirement of John Bemis. Martin has more than 50 years of experience in industry and academia in field applications and research. He holds a BS degree in chemical engineering from Texas Tech and an MS degree in petroleum engineering from New Mexico Tech. For almost 20 years he was employed at the Petroleum Recovery Research Center (PRRC), a division of New Mexico Tech in Socorro, and served as director of PRRC from 1987-1996. He established the oil/water experimental facility at New Mexico Junior College to support and improve the management of
petroleum industry wastes, including treatment and disposal of drilling muds and salt water, reduction of risks of ground water contamination, and cleanup of contaminated aquifers.
RobeRt R. oRtega Robert R. Ortega, of Questa, is currently serving as Deputy Commissioner of
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Public Lands for the state of New Mexico. Ortega is a native New Mexican and a lifelong resident of Questa. He spent 37 years in banking, working for Centinel Bank of Taos, an Independent Community Bank, starting his career in 1978 and working his way up through the ranks culminating as Executive Vice President and Chief Lending Officer. During his last years at the bank Ortega assisted the bank with business and community development. He has been very active in the community throughout his adult life. Ortega was elected to the Questa village council at the age of 26 and served two terms. He was elected mayor of Questa in 1994 at the age of 34. Ortega was appointed to the New Mexico State Acequia Commission and the N.M. Hospital Equipment Loan Council by then Gov. Garrey Carruthers. Beyond Ortega’s service to his community and his career in banking, he is also a
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with federal royalty data mining requests, compliance reviews, and unbundling under the marketable condition rule. She also assists clients with state, federal and Indian audits, private royalty class action lawsuits, and royalty appeals. She is a member of Phi Beta Kappa, Order of the Coif, and the Denver, Colo., and American Bar Associations. She has been named in The Best Lawyers in America® (oil and gas) since 1995.
pany’s Governmental and Regulatory Affairs Department. While at Xcel, his responsibilities included management of cost allocation studies and the design of rates and charges for various wholesale and retail utility services. He was also responsible for overseeing retail regulatory affairs for Public Service Company of Colorado, including tariff and contract administration, franchise and service territory administration, and case management.
ROB DARNELL
KEN MCQUEEN
Ron Darnell is senior vice president for Public Policy for PNM Resources. He is responsible for regulatory and government affairs, corporate communications and marketing, and community relations and stakeholder engagement. Darnell has been with the company since 2008. He joined PNM from Colorado’s Xcel Energy, where he was Director of Regulatory Administration South in the com-
Ken McQueen is the vice president for the San Juan Region at WPX Energy and has responsibility for the company’s assets and activities in the Four Corners area of New Mexico and Colorado. He has 36 years of diversified industry experience across 12 different states and three countries. McQueen has worked the San Juan Basin for the past 13 years at WPX. He holds a B.S. in Petroleum Engineering
JUDITH MATLOCK Judith Matlock is a partner in the Energy Group of the Denver law firm of Davis, Graham & Stubbs LLP. She has practiced in the area of natural resources law for more than 30 years. Her practice includes representing clients in connection with regulation, contracting, and litigation, as well as with royalties and taxes on production. She is involved in all aspects of the gathering, transportation, processing, fractionation and marketing of natural gas, liquids and crude oil, including advising clients on the federal and state jurisdictional status of transportation facilities. Her practice also includes representing producers in connection with the calculation, payment and reporting of royalties and production taxes. She assists clients
www.basinresourcesusa.com •SPRING 2015
BASIN RESOURCES 13 from the University of Tulsa, where he previously served as an adjunct professor in Petroleum Engineering and the Chairman of the School’s Industry Advisory Board. McQueen is a member of New Mexico Oil and Gas Association’s (NMOGA) Board of Directors, the N.M. State Land Office Advisory Board, and a member of SPE. He has been active in a number of New Mexico initiatives, including NMOGA’s horizontal rules committee in 2011. He was also a co-recipient of the 2013 Restore New Mexico Award from the State BLM office.
Las Animas Arch, San Juan Basin, North Park and Piceance Basins. Jewell advises midstream gas gathering operators with assets on Indian lands, represents clients before county and municipal boards for land use actions and permitting, and negotiates compatibility agreements with operators with competing land use interests. Jewell is a graduate of the University of Denver Sturm College of Law and has a master’s degree in public health and tropical medicine from Tulane University.
Senior Energy Policy Manager, Jon Goldstein helps lead Environmental Defense Fund's efforts to improve regulation of the oil and gas industry and protect precious air and water resources in the Rocky Mountain region. Goldstein previously served as Cabinet Secretary of the New Mexico Energy, Minerals and Natural Resources Department and Deputy Secretary of the state’s Environment Department. He served on the New Mexico Renewable Energy Transmission Authority, Finance Authority and Water Trust Board and was JON GOldsTeIN elected chair of the New Mexico Water Quality Control Commission and Mining Commission. He was appointed New Mexico's state liaison with the U.S. Nuclear Regulatory Commission. Goldstein received a Master’s in Public Policy and a certificate in Science, Technology and Environmental Policy from Princeton University's Woodrow Wilson School of Public and International Affairs where he was also honored with the MPP Award for academic achievement and commitment to public service.
Marita Noon is the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy and its role in freedom and the American way of life. Combining energy, news, politics, and the environment through public events, speaking engagements, and media, the organizations’ combined efforts have made Noon “America’s voice for energy.” MARITA NOON Noon is also a columnist for Breitbart.com and a regular contributor to many online commentary sites including Redstate.com, Canada Free Press and NetRight Daily. Her 20th book, Energy Freedom, is her first in the current affairs genre.
MIchAel J. Jewell Michael J. Jewell, head of Oil, Gas and Minerals for the Burns, Figa & Will law firm, leads the organization’s six member team that provides the full service oil and gas practice group with title, regulatory, omission, environmental, water and litigation practices. The group focuses on serving independent exploration and production clients throughout Colorado, including the DJ Basin/Greater Wattenberg Area, Niobrara Shale, SPRING 2015 • www.basinresourcesusa.com
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Leadership recognition T. Greg Merrion to receive Leadership New Mexico award T. Greg Merrion, President of Merrion Oil & Gas Corporation, will receive the Leadership New Mexico Distinguished Alumnus Award at the 2015 Leadership New Mexico Annual Dinner on May 1 in Albuquerque. The award recognizes graduates of the Leadership New Mexico Program who have used their leadership skills to improve the quality of life for New Mexico. T. Greg Merrion is the second generation president of Merrion Oil & Gas Corporation in Farmington. As a petroleum engineer for over 30 years, he has guided his family-owned business through the volatility of the San Juan Basin. Merrion served as a Planning and Zoning Commissioner in Farmington, headed
United Way fundraising drives, and has chaired the boards of the New Mexico Oil and Gas Association and the Independent Petroleum Association of New Mexico. He is a board member of San Juan Regional Medical Center and the San Juan College Foundation. Through the Merrion Family Foundation, he gives back to his community by supporting education, economic development and social services, and by serving in leadership roles. The 2015 Leadership New Mexico Annual Dinner will be held Friday, May 1, at the Sandia Resort and Casino in Albuquerque. Registration forms for sponsorship opportunities and dinner tickets are available online at the Leadership New Mexico Website or by calling 505.398.1500.
About Leadership New Mexico: Since its founding in 1995, Leadership New Mexico has provided a non-partisan perspective on statewide topics of concern and opportunities for improvement. The organization identifies current and emerging leaders throughout New Mexico, enhances their leadership skills, and deepens their knowledge of the challenges and opportunities facing our state. The Core Program, Local Government Leadership Program and Connect New Mexico Program contribute to developing a larger understanding of these issues and ultimately prepare the leaders of today and tomorrow to meet these challenges with innovation and enthusiasm. Since Leadership New Mexico’s inception, over 1,200 participants from 79 communities across the state have explored the issues facing our state through participation in Leadership New Mexico programs.
www.basinresourcesusa.com •SPRING 2015
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San Juan College School of Energy – 10-year plan comes together
www.basinresourcesusa.com •SPRING 2015
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Gov. Susana Marinez was at San Juan College in August of 2012 to thank BP America Production Company when they donated $4 million the new School of Energy. College fundraising for the new facility topped $15 million.
Community, SJC, energy partners create unique educational facility
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Dorothy Nobis Basin Resources it has been more than ten years since randy Pacheco, the san Juan College school of Energy Dean, had a dream of building a new facility that would put all of his staff under the same roof. the school of Energy had three sites – 800 s. hutton road, 3535 E. 30th st., and 133 Cr 5569 – where classes were held and training provided. With the increasing number of students who wanted to take advantage of the educational and training opportunities the school of Energy offered, Pacheco knew that putting his team of instructors and administrative staff together in the same building would benefit not only the school, but the students who attended. Pacheco visited with members of the san Juan College board of trustees and with san Juan College President toni hopper Pendergrass and shared his vision of a facility that would bring his students and his staff together. Pacheco also believed his partners in the oil and gas/energy industry would support the new SPRING 2015 • www.basinresourcesusa.com
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18 BASIN RESOURCES building financially, which would enable the college to build it without asking San Juan County taxpayers for support. “I knew our industry partners believed in what we were doing because they sent employees to us for training,” Pacheco said. “The quality of training our instructors provide isn’t available anywhere else, and our partners know that. I hoped we could raise a portion of the money for the new building by asking for their support.” The College board and president approved the project and encouraged Pacheco to seek private funding. Pacheco knew, however, that he couldn’t raise $15 million by himself. He turned to, Gayle Dean, his colleague and friendfor help. Dean is the executive director of the San Juan College Foundation and has been successful in raising funds to provide scholarships to students “Gayle had been on board with us from the very beginning,” Pacheco said. “She
Local elected officials, state legislators, oil and gas business leaders, and San Juan College staff gathered on the college’s campus for an Oct. 17, 2013, groundbreaking ceremony for the School of Energy’s new facility.
shared our vision, she knew the industry and she had knowledge of what the industry needed.” Dean’s expectation of what she and
Pacheco could raise, however, came as a shock to him. “Gayle told the (SJC) board that we would raise $15 million,” Pacheco said with a laugh. “BP had given us $5
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BASIN RESOURCES 19
Jaynes Corp. begins construction of the School of Energy’s new facility just north of the Quality Center for Business on College Boulevard.
million and I knew the college would give us $2 million. When Gayle said we would raise $15 million, I hesitated. But industry responded.” Gayle Dean had no doubt she and
Pacheco could raise the money needed to build the new school. “I knew we could raise it and I never doubted it,” Dean said, “because of the quality of the work I was seeing every sin-
SPRING 2015 • www.basinresourcesusa.com
gle day at the School of Energy and the dedication of the college to the project. I think it’s such a testament to the amount of commitment and dedication of this community to education. That’s what made this goal achievable.” “The San Juan College School of Energy exemplifies the adaptability of San Juan College to meet the needs of its students and community,” Dean said. “Our new school represents the generosity of our local businesses and their commitment to a well-trained workforce.” With the state of New Mexico providing $5 million and San Juan College providing $2 million, the rest of the funding came from the private sector – something Dean believes is unique to San Juan County. “Without their (oil and gas/energy companies) support, and because of the groundwork done for 10 years in the School of Energy and the quality of that
20 BASIN RESOURCES
At left, a photo of the main floor from the top of the stairs Nov. 19, 2014. At right, constructon is almost complete on March 5, 2015. The college began moving in equipment the third week of March. Josh Bishop photos
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 21 groundwork, I knew raising the money was doable. Without that support, it would have been impossible (to raise the funds),” Dean said. “At San Juan College, we are dedicated to improving our local economy,” Dean added. “In this case, we have the opportunity to be an industry leader, not just in our community, but around the world. It has been a privilege to work with the people who made this dream come true.” The oil and gas/energy industry didn’t look at offering financial support as a charitable contribution to the School of Energy, Pacheco said. “It wasn’t a philanthropic gift,” he said of the donations. “They (industry leaders) see the School of Energy as an investment. They knew if they put in money, they’d get a well-trained workforce out of it. They had strong reasons to invest in the School of Energy because they knew they’d get a return on that investment.”
Dean’s goal of raising $15 million was achieved, with an additional $600,000 also coming forth. After months of fundraising and more months of planning, construction of the facility was awarded to Jaynes Corporation and ground was broken on the new facility in February of 2014. With the milder winter San Juan County enjoyed last year, construction was completed well within the scheduled time frame. “We sequenced construction so that the temperature sensitive systems were completed before expected freezing temperatures began,” said Jeremiah Hayes, project manager. “The amount of attention this building has received was unexpected. I guess once people caught the vision and passion behind the mission and purpose of the School of Energy, it became contagious.” With the fundraising over and construction begun, Pacheco said his biggest challenge at that point became providing a
facility that the community, San Juan College and industry partners would be proud of. “I’ve worked to ensure everything needed in the new facility is there. We only get one shot (at it) and we need to make sure all of our programs have their needs met. Things have to be well organized, there has to be enough room and we have to look to future needs.” Pacheco and his construction committee have done their job, and done it well. The new School of Energy will open its doors to students this fall. The 65,000-square-foot facility includes 14 classrooms, two conference rooms, six work/training bays, 30 offices, two computer labs and a coffee shop. Working with the staff of San Juan College on the project was a positive experience, Jaynes project manager Hayes added. “Our relationship with the various departments and representatives of the college was
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22 BASIN RESOURCES nothing short of a delight. It takes a lot of work to establish and maintain a trusting culture in any relationship, but I think we have excelled due to the wonderful folks we’ve worked with. This project has had an air of excitement and anticipation and fun. It truly has been one of the best projects I’ve had the privilege of being part of.” With completion nearing, Pacheco said he’s happy the project has gone well and he’s eager for the community to see the new facility. “I hope that we’ve made our community and the industry proud,” he said. “I hope it serves the community and is a good investment in our community.” With the oil and gas/energy industry facing the challenges caused by falling oil prices, Pacheco sees as more important than ever a need for a quality training center. “Obviously, it’s difficult to see the downturn,” he said. “But it also presents an opportunity for the School of Energy to be more responsive to what the industry needs. We can help the industry during a tough time. It is our responsibility to create a more efficient workforce to make employees more effective in the jobs they do.” San Juan College President Dr. Toni Hopper Pendergrass agreed with Pacheco. “We are eagerly anticipating opening the new state-of-the-art facility, where students will have an opportunity to increase their current skill set or prepare for a new career in the industry,” Pendergrass said.
“Through the ebbs and flows of the industry, with which we are all familiar, the San Juan College School of Energy will continue to serve students, both locally and globally,” she added. “It’s been a pretty exciting journey,” Pacheco said of the process. “I think we have a facility that the community, the college and the industry will use for years to come.”
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WEathEring thE Storm State, local budgets feeling the squeeze from oil price drop Dorothy Nobis Basin Resources With the state of New Mexico feeling the hit of the downturn in the oil and gas industry, the lack of revenue from the industry will have more than just a trickle -effect to our state’s cities and communities. A report from the New Mexico’s taxation and revenue Department to Larry A. Larranaga, chairman of the house Appropriation & Finance Committee, dated February 4, stated that state revenue declines in Fiscal year 2015 will be $5 mil-
lion, while a decrease in 2016 will likely be substantially more. those financial losses, the report states, are “largely due to further weakness in oil and gas receipts from what was estimated in December (2014).” the report also states that while oil exploration and production continue to show strength, New Mexico oil prices have been lower than expected.
Scott Eckstein
With the state’s crude oil price at $95.10 in Fiscal year 2013, four cents lower than the December 2014 forecast, officials estimate oil prices in the state to average $61 in Fiscal year 2015 and $56 in Fiscal year 2016. scott Eckstein, a san Juan County Commissioner and bloomfield Mayor, said his community, like many others across the state, is facing a decline in revenue
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BASIN RESOURCES 25
because of the slowdown in the oil and gas industry. “Last month (February) was considerably lower (in revenues) than the previous month of January, and is the lowest it has been for all of 2014 and the first part of 2015,” Eckstein said. “We are continuing to try to diversify our economy to help it be more stable during the ‘dips’ in the oil
and gas industry. We’re hoping we’ll start seeing an increase in drilling activity locally relatively soon.” In an article that appeared in the January 30 issue of Albuquerque Business First, San Juan County Chief Executive Officer Kim Carpenter shared
SPRING 2015 • www.basinresourcesusa.com
Kim Carpenter
his concerns about the loss in revenues from the oil and gas industry. “We’ve had a large number of people – close to 200 people in the last month – that were laid off from different organizations that are either
(oil) producers or provide some of the support behind the rigs,” Carpenter said, adding that he estimates between 160-200 jobs are lost when rigs shut down. Those jobs are typically high paying, Carpenter said, and when jobs are lost, people are forced to look outside the community and the state for work. Nate Duckett, a member of the Farmington City Council, said the city’s focus for this year’s budget, as it is with every budget, is to ensure the basic needs of the residents are met. “We want our residents to feel confident that when they flush Nate Duckett the toilet, turn on their lights, call for emergency services, and drive the roads, that the city has done its job with their tax dollars to support their quality of life,” Duckett said in a message.
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“Obviously, when the oil and gas industry is battling through a downturn, we have to be even more aware of these priority services and their costs.” Duckett said that oil and gas not only accounts for significant tax dollars that are used for those basic services (fiscal year 2014 the industry accounted for $2.2 million in GRT to the city), but it is also the city’s top job producing sector. “When they take a hit so do the pocketbooks of our residents,” he said of the oil field. “If we are all tightening our belts, there is less revenue flowing into our retail and restaurant sectors, as well as real estate. It's an unfortunate trickledown effect, but one that we are fairly familiar with since the last downturn in 2009.” Duckett said the future isn’t necessarily bleak. “The leadership in the city took a proactive approach in 2009, and became engaged in finding opportunities to become more efficient and has been able to tuck away money for this kind of event.” Industry experts predict a 12 to 18 month slowdown in production, Duckett added, but the companies that are here now aren't pulling up and heading out.
* Price of Oil 29
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28 BASIN RESOURCES
Muncrief: WPX to spend minimum of $275 million in San Juan Basin in 2015 Dorothy NoBiS Basin Resources Basin resources reached out to rick Muncrief, WPX President and Chief Executive officer, regarding the industry slowdown in the San Juan Basin. Muncrief responded with the following update: “WPX Energy plans to operate two drilling rigs in the San Juan Basin in 2015. the company’s total capital program for the basin is $275 million to $300 million, making this basin the leader in the company’s capital expenditures. to put this into perspective, only a few years ago, this basin’s yearly budget was about $60 million. “our capital plan is prudent, disciplined,
and consistent with our long-term focus,” said Muncrief. “We’ll stay primed to accelerate development, even as we take the appropriate steps to respond to current prices.” the company has dramatically increased its workforce in the Aztec office since fall 2013, due to increased drilling in the Gallup Sandstone near Lybrook. WPX’s local staff today has more than 70 people. Certain key staff positions have relocated from tulsa, okla., to join the local community, such as Ken McQueen, vice president of the San Juan Basin team, and Kathy hinkle, completions and production manager. McQueen and hinkle join randy VanDenBerg, the local operations manager, in heading up the local WPX San Juan Basin team.
technology and infrastructure improvements have played a large part in the company’s success. WPX reduced its drilling time on Gallup oil wells by 40 percent in 2014 to 13.5 days versus an average of 22.3 days in 2013. WPX’s best drilling time on a Gallup well is 8.9 days, set this year. WPX is also installing new oil, gas and water pipelines, and employing a rig which utilizes natural gas instead of diesel fuel. these improvements help reduce the company’s costs and provide additional protections for the environment and our communities through reduced emissions and traffic. “head winds bring challenges and opportunities,” Muncrief said. “We’re ready for both. it’s why we have a long-term plan to reshape WPX.”
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 29
Price of Oil
continued from 27
“The wells they have drilled in the Mancos play are profitable wells and with an emphasis by local entities, the tribe, and the state on finding a way to get a rail line through here, we could stand to benefit even more in the continued production of our oil and natural gas rich region,” the councilman said. “Our energy companies and the service groups that work with them in this state are Josh Ray strong supporters of our local economies, our business communities, and local charities.”
However, business is business Duckett said the oil and gas companies are faced with prioritizing their investments. Josh Ray, Aztec’s City Manager, said his city has been fiscally responsible with tax dollars. “The City of Aztec does not receive a large revenue stream directly from the oil and gas industry,” Ray said in an email. “However, a large percentage of our overall Gross Receipts Taxes come by way of the money generated by the industry. As the industry takes a downturn, so does our local economy.” “For the past five years, the city of
SPRING 2015 • www.basinresourcesusa.com
Aztec has been extremely conservative in our budgeting process when predicting revenue outlook for the next fiscal year,’” Ray added. “This is simply part of sound fiscal management. In doing so, we feel confident we are in good shape moving forward. As our revenues come in low, we take measures to lower our expenditures until we see actual revenue streams.” San Juan Countians are familiar with the “booms” and “busts” of the oil field, and city and county officials are confident the industry – and county residents – will survive. “We will weather this storm with them and do all we can to support their efforts so when the next opportunities come to re-energize our fields, we will be ready,” Duckett said.
30 BASIN RESOURCES
the price of oil and new Mexico’s economy Oil is integral to New Mexico’s budget and overall economy. According to the New Mexico Tax Research Institute, an astonishing 31 percent of the State’s budget is derived directly from oil and gas drilling within New Mexico’s borders. A total of 105,000 jobs are also supported by the industry. The only states more reliant on oil and gas in terms of their state budgets are Alaska and Wyoming. According to the state’s finance and administration secretary Tom Clifford, a single dollar change in oil prices can cause a $6 million change in revenue for the state. That makes for a $360 reduction in expected state revenues since the summer of 2014. Obviously, the recent, dramatic drop in oil prices, while pleasant for motorists at the pump, even in New Mexico, is concerning to state policymakers. Anyone whose government agency or institution relies on those funds is bound to be concerned that a barrel of oil which peaked at nearly $110 for West Texas Intermediate during the summer of 2014, now bounces around the $50 mark. In January of 2015, Katharine Winograd, the president of New Mexico’s largest community college, CNM, warned of “severe revenue and budget cuts at the school due mainly to falling oil prices.” While many New Mexicans worry about the impact on government services, of reduced price of oil’s, the real concern for
New Mexicans should be the loss of jobs in the oil patch as well as in the broader state economy. Job growth in New Mexico has been especially weak in the wake of the 2008 economic crisis. While neighboring states like Texas have seen impressive job growth since the recovery began in 2009, New Mexico’s economy has barely seen
Paul GessinG rio
President Grande Foundation www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 31 any job growth at all, despite relatively high oil prices during much of this time frame. This poor job growth even led to New Mexico losing population during 2014. New Mexico has been listed as a top “outbound” state on an annual report by United Van Lines which tracks how many people the company moves into or out of the 50 states. All of this brings us to the issue of the impact the declining or at least significantly-reduced price of oil could have on New Mexico’s economy. There is definitely potential that declining oil prices could exacerbate the state’s economic woes. After all, the drop in gas prices has been experienced all over the United States with salutary impacts on families’ bottom lines, but the oil and gas jobs are concentrated in New Mexico. Sustained low prices will reduce drilling and could negatively impact production, thus costing thousands of New Mexico oil
patch workers their jobs. Those workers could be forced to find work in other industries outside of the New Mexico oil patch. For a better understanding of the outsized role oil plays in New Mexico’s economy, it is worth looking at Hobbs, New Mexico, the
prototypical oil patch city. By October of 2014, Hobbs, with fewer than 35,000 residents, was generating gross receipts tax revenues of $8.7 million. To put that in perspective, only Albuquerque, a city of 558,000, takes in more gross receipts tax.
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32 BASIN RESOURCES Astonishingly, Hobbs generated more gross receipts revenue during that month than Las Cruces, which at more than 100,000 people is triple the size of Hobbs. Hobbs, like all oil patch towns and the state of New Mexico, has been through oil busts before. The difference for New Mexico is that the federal government was always there to pick up the slack with military spending or new projects at the state’s two national laboratories. Today is different. Without its usual seniority in Congress – Pete Domenici and Jeff Bingaman often traded chairmanship of the powerful Senate Energy Committee – there is less “bacon” to be brought home. And, Washington, with red ink as far as the eye can see driven by “entitlement” programs such as Social Security, Medicare, and the newly-expanded Medicaid programs, is seeing discretionary
spending on defense and energy cut back. These are precarious times for New Mexico’s economy. As tough as things were with oil over $100 per barrel, one only wonders what The Land of Enchantment will be like if oil prices at $50 or below are here for the long-haul.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
www.basinresourcesusa.com • SPRING 2015
34 BASIN RESOURCES
Voluntary agreement continues to reduce energy consumption of television set-top boxes About 85 percent of U.S. households have at least one set-top box (STB) designed to deliver subscription-based television service by cable, satellite, or other telecommunication signals, according to 2013 data from the National Cable & Telecommunications Association and the Consumer Electronics Association. In most cases, these STBs operate at almost full power whether they’re actively being used or inactive. Energy efficiency advocates, set-top box manufacturers, service providers, and the federal government have reached a voluntary agreement to improve energy efficiency of set-top boxes, generally based on the ENERGY STAR program’s product specifications. Some STBs consume about half of the electricity a typical refrigerator uses in a year, and households may have multiple STBs per household, making them a target for efficiency improvements. These devices are essentially never off, even when no one in the household is watching television or recording a program. Instead, they remain in a standby mode drawing nearly full power, often about 15 to 20 watts. Energy saving modes such as deep sleep are present on EN-
ERGY STAR models but may or may not be enabled. Because STBs are typically supplied by service providers, consumers have little choice as to what model of energy-consuming device is used. The increasing use of more-efficient thin client devices does help to offset some of the consumption for multiple STBs in a home. Similarly, video streaming devices such as the Apple TV and Roku consume only a fraction of the energy used by typical STBs. No federal appliance standard currently exists for STBs. The federal rulemaking process requires years of
extensive market analysis, which can prove cumbersome for some electronics, as their features evolve much faster than, for example, water heaters or freezers. The voluntary agreement among industry and efficiency advocates allows for greater flexibility and shorter development times than the federal rulemaking process, while still working to reduce energy consumption of a device now well saturated in U.S. households. The voluntary agreement became effective Jan. 1, 2014, and states that 90 percent of all new STBs purchased by service providers for delivery to customers should
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 35 meet the current ENERGY STAR specification, with a more stringent specification going into effect January 1, 2017. Some service providers have participated in the ENERGY STAR program since the initial specification was released in 2008. Even prior to the agreement, almost 90 percent of set-top boxes that were shipped in 2012 and 2013 met the earlier, less stringent, ENERGY STAR specifications. Because this agreement does not require service providers to switch out existing STBs with more efficient alternatives – or discard less efficient devices rather than refurbish them – it may take years for the more efficient devices to make up a significant portion of the installed base. However, some existing STBs may be able to incorporate energy-saving features through firmware updates without replacing equipment. The ENERGY STAR program maintains a list of qualified products currently
available, with information about each STB’s power-saving features and power draws in active and inactive modes. STBs are among a group of devices whose use is considered a miscellaneous electric load in the residential and commercial sectors. In the residential sector, this group includes other electronics such as televisions, computers and related electronics,
SPRING 2015 • www.basinresourcesusa.com
as well as small but pervasive appliances such as microwave ovens, dehumidifiers, and rechargeable devices. A recent report on miscellaneous electric loads, commissioned by EIA, provides details on the current and anticipated energy consumption of some of these devices, based on changes in technology, efficiency, and market saturation.
36 BASIN RESOURCES
2015 capacity changes
Most additions are wind, natural gas; retirements mostly coal In 2015, electric generating companies expect to add more than 20 gigawatts (GW) of utility-scale generating capacity to the power grid. The additions are dominated by wind (9.8 GW), natural gas (6.3 GW), and solar (2.2 GW), which combine to make up 91 percent of total additions. Because different types of generating capacity have very different utilization rates, with nuclear plants and natural gas combined-cycle generators having utilization factors three to five times those of wind and solar generators, capacity measures alone do not directly show how much generation is actually provided by new capacity of each type. Nearly 16 GW of generating capacity is expected to retire in 2015, 81 percent of which (12.9 GW) is coal-fired generation. The addition of more natural gas, solar, and wind generating capacity follows the pattern of the past several years. Although most states have a planned addition of some type this year, a few trends have emerged: • Wind additions are largely found in the Plains states, with nearly 8.4 GW, or 85 percent of total wind additions, found between North Dakota and Minnesota in the north, to Texas and New Mexico in
the south. • Utility-scale solar additions of systems with at least one megawatt of capacity are dominated by two states—California (1.2 GW) and North Carolina (0.4 GW)— which combined for 73 percent of total solar additions. Both states have renewable portfolio standard (RPS) policies in place, with North Carolina's policy including a solar-specific target. These figures do not
include small-scale installations such as residential rooftop solar photovoltaic systems. • Natural gas additions are spread throughout the country, but Texas is adding more than double any other state (1.7 GW, 27 percent of total natural gas additions). There are also many additions in the Mid-Atlantic region, with more than 1.6 GW, or 26 percent of total natural gas
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BASIN RESOURCES 37 additions, expected in New Jersey, Pennsylvania, Delaware, and Maryland. • Tennessee Valley Authority's Watts Bar 2 nuclear facility in southeastern Tennessee, with a summer nameplate capacity of 1.1 GW, is currently listed as coming online in December 2015. When it comes online, it will be the first new nuclear reactor brought online in the United States in nearly 20 years. These values reflect reported additions and retirements, not model projections. In many years, expected capacity additions in December were much higher than in any other month. The impending expiration of certain tax credits on December 31 often encourages a rush of activity to start or complete projects by the end of the year, depending on how the credit is awarded. Large reported values in December are also attributable to how respondents complete the survey; many projects expected
to begin operation sometime in 2015 are conservatively estimated for a December completion date. Generator retirements are heavily composed of coal-fired generation, with nearly 13 GW expected to be retired in 2015. The total of scheduled coal-fired generating capacity retirements is split between 10.2 GW of bituminous coal and 2.8 GW of subbituminous coal. Most of this retiring coal capacity is found in the Appalachian region: slightly more than 8 GW combined in Ohio, West Virginia, Kentucky, Virginia, and Indiana. The coal-fired units planned to be retired are smaller and operate at a lower capacity factor than average coal-fired units in the United States. The to-be-retired units have an average summer nameplate capacity of 158 MW, considerably smaller than the 261 MW average for other coal-fired units.
Based on 2013 data, the retiring units have a weighted-average capacity factor of 24 percent, which is much lower than the average capacity factor of 60 percent for all coal-fired generators over the same time frame. The large number of coal-fired generator retirements is primarily because of the implementation of the Environmental Protection Agency's Mercury and Air Toxics Standards (MATS) this year, although some units have been granted extensions to operate through April 2016. MATS requires large coal- and oil-fired electric generators to meet stricter emissions standards by incorporating emissions control technologies in existing generating facilities. Some power plant operators have decided that retrofitting units to meet the new standards will be cost-prohibitive and are choosing to retire units instead.
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Devon on Fortune’s Best Workplace list for 8th straight year Devon Energy announced today it has again been named to Fortune magazine’s list of the “100 Best Companies to Work For,” the eighth consecutive year the company has earned a spot on the prestigious list. Devon is ranked No. 38, up from No. 56 last year. Devon is one of two oil and natural gas producers and the only Oklahoma Citybased company to make the 2015 list. “Making Fortune’s list of great places to work for the eighth straight year is a source of pride for everyone at Devon,” said Garry Diamond, Devon’s production superintendent for Navajo Dam. “It’s great to be recognized as a leader in the energy industry, and it’s our people who make that happen.” Devon has approximately 40 employees in the San Juan Basin with a field office in Navajo Dam. The company’s total employment is approximately 5,500, including about 4,000 in the U.S. Said Devon President and CEO John Richels: “Our continued inclusion on Fortune’s list is particularly gratifying because it recognizes one of the attributes that defines a premier company – a positive, high-performance workplace culture. It’s that type of environment and our employees’ laser-sharp
“Making Fortune’s list of great places to work for the eighth straight year is a source of pride for everyone at Devon.” — GARRY DIAMOND DEVON ENERGY
focus on execution that drive our companywide pursuit to deliver strong shareholder returns.” Devon’s rank on the Fortune list was based in part on a random, anonymous survey of employees conducted by the Great Place to Work Institute. The survey found, among other things, that employees enjoy a high level of responsibility in their work roles and feel pride in their performance, consider the company’s leaders to be honest and ethical and think Devon promotes a healthy work-life balance. The Fortune list is the leading measure of workplace culture in the United States. Companies on the list generally attract a higher number of qualified job applicants, experi-
ence lower turnover rates and consistently outperform major stock indices, according to the Great Place to Work Institute. Devon’s inclusion on the Best Companies list further distinguishes the company among potential employees. As Devon develops its premier oil and natural gas plays and focuses on increasing production, the company is taking a thoughtful approach to hiring experienced engineers and geologists to tackle new challenges and manage these areas. Devon is reaching out to prospective candidates through its website: careers.devonenergy.com. Devon Energy Corp. (NYSE: DVN) is a leading independent energy company engaged in finding and producing oil and natural gas. Based in Oklahoma City and included in the S&P 500, Devon operates in several of the most prolific oil and natural gas plays in the U.S. and Canada and is the secondlargest oil producer among North American onshore independents. Devon has been recognized as one of the nation’s most community-minded companies and supports the areas where it operates by being stewards of the environment and contributing to youth and education programs, the arts, civic initiatives and emergency response organizations. For more information, please visit www.devonenergy.com.
www.basinresourcesusa.com • SPRING 2015
40 BASIN RESOURCES
Renewable Taos PRojecT wins Taos team will join national experts for renewable energy transition planning The Rocky Mountain Institute and its Electricity Innovation Lab, or eLab, recently selected the Renewable Taos Project to join teams from throughout the nation who are “…leading the most impactful
and innovative projects at the distribution edge of the electricity system,” teams are all creating groundbreaking electricity system solutions based on new utility business models for building and distributing lo-
cally generated renewable energy. “RMI is a world leader in transforming global energy use to create a clean, prosperous and secure energy future,” Bob Bresnahan, Co-Founder of Renewable
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 41
“We began building a microgrid in earnest in 2009 when the solar array at UNM-Taos went online.” — Luis reyes team member
Taos, stated. “Our successful application is based on establishing the Kit Carson Electric Cooperative service area as a new energy innovation district. Taos has a long history of leadership in solar energy.”
“The Renewable Taos Project is to be applauded. It has been an extremely competitive process,” according to Martha Campbell, Senior Associate for Communities at RMI.
The Renewable Taos Project core team members are: Luis Reyes, CEO of KCEC; Valerie Espinoza, New Mexico Public Regulation Commission; Andrew Gonzales, Taos Town Councilor; Jay P. Levine,
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42 BASIN RESOURCES Levine Mesa Web and Board Member, Renewable Taos; and two business and industry principals now being interviewed. Energy Consultant Bill Brown of Arroyo Hondo is the Team Coordinator. “It speaks well of the state of New Mexico to be selected from a field of so many applicants,” stated Public Regulation Commissioner (District 3) and Renewable Taos Project core team member Valerie Espinoza. “I look forward to joining the national experts as we plan for more renewable energy distribution in our future. New Mexico should be on the forefront of the push toward solar power.” Renewable Taos began working with RMI advisers in the summer of 2014 to determine ways to supply Taos area energy demands with renewables. “We began building a microgrid in earnest in 2009 when the solar array at UNM-Taos went online,” said Team mem-
ber Luis Reyes. “Today, we generate nearly six megawatts of power from four large solar arrays, several smaller arrays, and nearly 250 residential and business solar arrays.” “KCEC has almost maximized the amount of local solar power it can generate under the terms of its contract with TriState Generation and Transmission Association (Tri-State). Tri-State recently approved our request to install three community solar arrays in our service area that will generate an additional 1.5 megawatts,” said Reyes. “However, we need to have a new and better contract with Tri-State or another wholesale electricity provider in order to move forward with our community’s demands for substantially more renewable energy.” “Renewable Taos’ modeling efforts for KCEC show we can generate the bulk of our energy demands from solar arrays, and
sell our excess generation to the regional grid,” said John Gusdorf, Renewable Taos Co-Founder and Energy Analyst. “Our local demand peaks in the winter months, whereas grid demand in most of New Mexico peaks during the summer due to the use of air conditioning. A local microgrid could produce income from our solar power generation in excess of our demands throughout more than half the year.” “All local governments in the KCEC service area that signed a joint resolution on renewable energy will participate, “said Team Coordinator Bill Brown. “We will involve major players from the State of New Mexico and from the renewable energy groups of large utilities like Tri-State and PNM. The momentum of what we have already done locally is having an impact on the way these large utilities are thinking about their futures. The move to business models based on clean-energy microgrids
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BASIN RESOURCES 43
is well underway in both the USA and the world. What we are doing here in Taos is a leading example of what is possible for all of Tri-State’s member Rural Electric Cooperatives (RECs), and RECs and municipal utilities across the country.” “We have to be realistic as we phase in to the renewable energy realm,” Commissioner Espinoza said. “We’re ready to shift to the age of the new millennial. We all want a cleaner environment, and we need to appeal to the newer generation of energy consumers. I am honored to partake in such a distinguished group of experts to research innovative solutions as we transition into the future of the new energy economy.” For more information, visit renewabletaos.org and www.rmi.org/elab.
SPRING 2015 • www.basinresourcesusa.com
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BLM postpones lease sale Environmentalists say well sites may damage Chaco Canyon Dorothy Nobis Basin Resources it is considered a sacred site to Americans indians, many of whom can trace their ancestry back to their clan’s migration paths, and as a spiritual place to be
honored and respected. the beauty of Chaco Canyon, and the history that is told through the ancient ruins of the Anasazi, have become the center of a controversy. the bureau of Land Management wants to lease five Navajo allotment parcels
(more than 2,800 acres) for fracking near the World heritage site. Local and regional opponents, however, have challenged the lease sale and asked bLM to suspend fracking on public lands in northwestern New Mexico until it can safeguard the public health of local communities, climate,
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 45 clean air and water, and the park’s unique cultural heritage, according to the Western Environmental Law Center or WELC. The Western Environmental Law Center uses the power of the law to safeguard the wildlife, wildlands, and communities of the American West, states the organization’s web site. The WELC does not charge clients and partners for its services, the web site said, but relies on donations from individuals, families and foundations to fund its mission. A Competitive Oil and Gas Lease Sale, set for Jan. 21, was postponed by the BLM, “because additional time is required to evaluate public comments regarding potential drainage, tribal consultation and environmental justice,” the BLM stated in a media release. Five lease parcels were included in the
postponed sale period. Three of them, however, will be considered for a lease sale set for Oct. 21. The other two will be delayed until after alternatives are developed for the Mancos Shale/Gallup Formation Resource Management Plan Amendment/Environmental Impact State. “Deferring these parcels was the right, and, indeed, only legally defensible decision,’ said Kyle Tisdel, attorney and Climate & Energy Program Director for Western Environmental Law Center, in a media statement. “Necessary safeguards and analysis must be completed before any further leasing and development of the area’s treasured landscapes can continue in compliance with the law.” A letter to the BLM New Mexico State director in October from the law center, WildEarth Guardians, San Juan Citizens Al-
SPRING 2015 • www.basinresourcesusa.com
liance and the Chaco Alliance, demanded that the BLM stop “rubberstamping hundreds of new drilling permits in Mancos Shale/Gallup Formation wells in the San Juan Basin.” The letter also stated that the approvals made by the BLM regarding Chaco Canyon National Historical Park “are putting the region’s cultural heritage at risk, endangering significant landscapes like Chaco Culture National Historical Park and its outliers, and other areas critical for preserving, understanding and promoting indigenous presence in the region.” Environmentalists have threatened legal action against the BLM if necessary to stop new industrial activity beginning before the federal agency completes a required amendment to its resource assessment plan, which is expected to be signed and implemented in 2016, according to a story written by Julie Dermansky for the DeSmogBlog.
46 BASIN RESOURCES The DeSmogBlog Project began in January 2006, and, according to its website, “quickly became the world’s number one source for accurate, fact-based information regarding global warming misinformation campaigns. Environmental groups are also against the Pinion Pipeline project, a 13-mile oil pipeline that would transport extracted oil out of the area, saying it shows industry is already in a production phase. Saddle Butte Pipeline has proposed the project to provide additional capacity for the current predictions of crude oil production, according to the BLM’s website. The proposed pipeline route would accommodate initial startup volumes of 15,000 barrels per day of oil from Lybrook and would follow existing pipeline/utility corridors when possible to minimize the surface impact and resource conflicts. “In an area already besieged by oil, gas, and coal extraction, BLM cannot continue
“We began building a microgrid in earnest in 2009 when the solar array at UNM-Taos went online.” — RANDY PACHECO DEAN sAN juAN COllEgE sCHOOl Of ENERgY
surrendering our public lands to industry without understanding the long-term effects that such development has on our health, environment and sacred cultural resources,” stated Kyle Tisdale in information released by the Western Environmental Law Center. Not everyone agrees that the oil and gas industry is irresponsible and negligent when it comes to fracking and drilling. Randy Pacheco is the dean of the San
Juan College School of Energy and has worked closely with industry partners for more than 10 years. In addition, the School of Energy provides training for many major oilfield companies, which continually demand a more educated and informed workforce. “The state of New Mexico has had strict rules and regulations for years and oversees drilling, workover and completion (in the oilfield), as well as production,” Pacheco said. “All of the companies in the San Juan Basin take safety and environmental issues very seriously. It is very rare to find companies that don’t operate with an environmentally conscious mind.” Companies that operate in the San Juan Basin, Pacheco added, emphasize safety, the environment and business operations and “strive to abide by the rules and regulations set and, many times, go above and beyond them. Companies have become their own watchdogs.”
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BASIN RESOURCES 47
In addition, organizations such as the La Plata (Colo.) County Energy Council, the Good Neighbor Program offered by the New Mexico Oil and Gas Association, and the New Mexico State Land Office have been set up to provide citizens with the opportunity to share their concerns.
Robert Redford, an actor and wellknown environmentalist, opposes the Pinion Pipeline and wrote a letter to the BLM stating his opinion. “I am writing today to respectfully ask that you deny Saddle Butte LLC’s permit for the Pinion Pipeline,” Redford wrote.
“This pipeline will forever change, and in some cases decimate, lands owned by the Navajos, private owners and the state and federal government. As important, it will mean thousands of new oil wells at a time when the price of oil has plummeted and climate change threats have increased dramatically.” Pacheco disagrees. “If we look at the operations of the oil and gas industry in the last 20 years, there have been drastic changes in the rules and regulations that govern the industry,” he said. “Companies have environmental departments. They’re not out there trying to violate those rules and regulations. That’s not their goal.” More information on oil and gas lease sales and the postponement of the January sale may be found at: www.blm.gov/nm/st/en/info/news_releases0/2014/december/blm_postpones_ja nuary.html.
The San Juan Basin’s Elite Service Provider Since 1951. Solving challenges. challenges.™ © 2013 Halliburton. All rights reserved.
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48 BASIN RESOURCES
ExplorE thE world IEA launches new interactive energy atlas
If an atlas is a window on the world, the new IEA Energy Atlas offers panoramas on every aspect of energy on a global basis and for 138 individual countries, with interactive maps and customizable charts that detail and compare a host of data based on the Agency’s authoritative statistics. Available on the IEA website’s statistics area, the Energy Atlas provides its wealth of data in 40 varying map views across eight topics: electricity and four fuels – coal, natural gas, oil and renewables – as well as energy balances and indicators plus CO2 emissions from fuel combustion, all for every year from 1973 through 2012. “Last year the IEA launched an animated Sankey flow representation of the evolution of the energy balance of countries over the last 40 years,” explained Jean-Yves Garnier, Head of the IEA Energy Data Centre, which produced the atlas. “We received a lot of compliments from policy makers, analysts and the public, but we also had many requests for more visualization, including mapping of the world energy situation and the possibility of comparing countries. The Energy Atlas is an attempt to help everyone to better understand the complex world of energy.” On the webpage for each of the eight topics, a world map graphically illustrates countries’ global proportion of consumption, output, etc., for five different data sets. For instance, purple circles show countries’ natural gas output in proportion to other nations (above), with the largest producers, the United States and Russia, represented by huge circles, but just small dots for smaller producers, such as Japan at number 69. Hovering over a purple circle displays the amount extracted in million tonnes of oil equivalent. But production is
Interactive maps depict a wealth of data, from oil consumption to CO2 emissions, for the globe and 138 countries
not the only data visible: click on the second of the five options, consumption, and green circles replace the purple ones (homepage photo), with Japan expanding to a large circle, as it is the fifth-largest
consumer of the fuel. Most of the fuels offer comparable data sets: production, consumption, share of the fuel used for electricity generation and for non-energy purposes as well as trade. www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 49 The electricity map offers the share of all fossil fuels, nuclear or renewables in generation by country, as well as total generation and per capita consumption. The energy indicators map illustrates total energy production as well as energy self-sufficiency and intensity, while the map on the energy balance page can display total supply as well as consumption, both total and by sector. Emissions data depicted include CO2 per capita or per economic output, even adjusted for purchasing power parity. Like all good atlases, the Energy Atlas also features maps for specific countries, augmented by country profiles with specific national data for dozens of key energy statistics, organized in descending order according to the nation’s rank in each category among the 138 indexed countries. Hyperlinks in each table shift to detailed text summaries of the information, and the map shifts to display data not just for the country, but also for its neighbors. But the Energy Atlas is more than just maps. For instance, charts display all the data sets dating back to 1973, and users can add and subtract countries to compare their statistics: for instance, contrast the share of electricity generated by fossil fuels in Denmark, Germany, India and Japan since 1973. Finally, each topic page features the cover of the IEA Energy
Data Center statistics publication that is the main source of the data; all of its information is available in paper, PDF, CD-ROM or online format, accessible by clicking on the image. The Energy Atlas is the latest of a variety of new data visualizations on the IEA website. Besides the Sankey graphics, the Statistics section of the website features an interactive map of gas flows in Europe, and the IEA offers graphic representations of the data in each annual edition of its flagship technology publication Energy Technology Perspectives.
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WE’VE GOT THIS. With the largest make-ready shop in the Southwest, Exterran’s Contract Compression and Aftermarket Parts & Services are ready to help your project succeed in the San Juan Basin!
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SPRING 2015 • www.basinresourcesusa.com
50 BASIN RESOURCES
New Mexico Oil & Gas Association becomes major corporate sponsor of NMAA ALBUQUERQUE, N.M. - The New Mexico Activities Association (NMAA) is excited to announce that the New Mexico Oil & Gas Association (NMOGA) will be a Platinum Level Corporate Sponsor for all championship events held throughout the remainder of the 2014-2015 school year. In addition, the New Mexico Oil & Gas Association will serve as the presenting sponsor of the NMAA’s two electronic publications – the Monday Morning News and the Student Spotlight. “The taxes and royalties related to oil
and gas production accounted for over $2 billion in revenues to the General Fund of the state of New Mexico in fiscal year 2014,” said Steve Henke, NMOGA President. “The general fund is the largest source of funding for public schools in New Mexico, and we are proud that the oil and gas industry plays such a large role in funding education. An educated and motivated workforce is key to the oil and gas industry’s ongoing success. The experiences, skills and values that are taught and reinforced by participating in NMAA events are an integral part of a quality education for so
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many young women and men in New Mexico.” NMAA Executive Director Sally Marquez said, “The NMAA is thrilled about the opportunity to work with the New Mexico Oil & Gas Association. Their members have played an integral part in providing funding for education across the state, and it is great that they appreciate, value and support the role that the NMAA plays in the educational process. High school athletics will directly benefit from the generosity and support of NMOGA.” For additional information pertaining to this announcement, please contact Dusty Young, NMAA Associate Director at (505) 977-5385 or dusty@nmact.org.
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www.basinresourcesusa.com • SPRING 2015
Drilling Productivity Report for March 2015 The U.S. Energy Information Administrations Drilling Productivity Report uses recent data on the total number of drilling rigs in operation along with estimates of drilling productivity and estimated changes in production from existing oil and natural gas wells to provide estimated changes in oil and natural gas production for seven key regions. EIA’s approach does not distinguish between oil-directed rigs and gas-directed rigs because once a well is completed it may produce both oil and gas; more than half of the wells produce both. While shale resources and production are found in many U.S. regions, at this time EIA is focusing on the seven most prolific areas, which are located in the Lower 48 states. These seven regions accounted for 95 percent of domestic oil production growth and all domestic natural gas production growth during 2011-13.
SPRING 2015 • www.basinresourcesusa.com
52 BASIN RESOURCES
Mud, snow, sand and clay Treadworks works with BF Goodrich on best tire for oilfield roads Dorothy Nobis Basin Resources the only tires terry burson cared about for years were the tires on the cars he sold. When health issues prompted burson to leave his management position at Ziems Ford Corners after 10 years, he wasn’t sure what he wanted to do with his life. An un-
expected family situation gave burson a new career path. “i took over a failed (family) business,” burson explained. “When the business failed, my dad asked me to close the store for him. he said if i would run it for a while and pay off what was owed against it, i could have it.” burson and his wife, Debbie, took over
treadworks almost 24 years ago and it was a struggle for several years. “business is hard enough, especially when we were starting in the hole (financially),” burson said. “but we worked hard and hired good people who have stayed with us. Debbie and i worked six days and 60-80 hours a week those first few years.” the hard work and long hours paid off
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54 BASIN RESOURCES and the company is a thriving family business. With the main store at 4227 E. Main Street in Farmington and another at 4215 Highway 64 in Kirtland, Treadworks’ customer base has grown. About 60 percent of that business comes from the oil field. With oil field trucks going from pavement to rough non-maintained county roads, the tires on those trucks are critical to the comfort and safety of the drivers. A new BF Goodrich ® tire, the K02 All Terrain, was designed for the tough roads and the hard wear the oil field creates. There are two kinds of tires for the oil field, Burson explained – the mud tire and the all-terrain tire. The KO2 not only is effective in mud, but also in snow, sand and clay – all of which are found in San Juan County and on oil field roads. Because of the different types of roads in San Juan County, BF Goodrich ® has
used Treadworks as a testing store for several of it tires – including the KO2. “We’ve worked with BF Goodrich’s engineers and they’ve been in this store frequently in the last several years,” Burson said. “They gave us a couple of sets of tires (to test).” The KO2 has received good reviews, including one from Car and Driver’s web site. “The old T/A KO (T/A for Trans Am, and homage to BFG’s TA racing heritage, and KO for key off-road) is popular and proven capable. BFG says the most frequent complaint about the previous tire was durability, so beefing up the Ko’s stamina was a requirement for this fourthgeneration All-Terrain. Working truck tires have to endure driving on debris-riddled sites; chunks of broken concrete and jagged rebar are not friends to sidewalls,” the web site states. Burson and his staff understand that oil
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field workers need to have tires put on, rotated and/or repaired in a timely manner and they do their best to get the work done quickly. “We work hard getting them in and out quickly,” he said. “They need to get in and back out to the field. Our goal is to get them in and out in an hour (for tires) and to do a flat (tire) repair in 30 minutes. We can’t always do that, but it is always our goal.” “We have tremendous clientele,”Burson added. “They know we’ll take care of them, so they take care of us.” Burson is also quick to credit Paul Ziems of Ziems Ford Corners for his success. “Paul has been really good to me,” he said. “I was just a young man when I went to work for him and he put a lot of faith and trust in me.” But it isn’t just his former employer that gets credit for Treadworks’ success. “We
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BASIN RESOURCES 55 hired good people who have stayed with us,” Burson said. “You can’t work with people for 16-17 years and not feel like they’re part of your family.” “I know one of the main reasons of my success is I’ve had the blessing of God,” Burson added. “With His wisdom and strength, we were blessed.” While his extended family of employees is critical to Treadworks, Burson also has a son, James, who is being groomed to take the business over when Burson retires. James has been part of Treadworks since he was a youngster. He graduated from college and spent several years working as an auditor for the State of Colorado. When James decided the
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work he was doing wasn’t fulfilling, Burson asked if he’d like to come home and help with the family business. James jumped at the opportunity. When Burson and his wife began talking about his retirement, Burson knew the decisions made would not only affect him, Debbie and James, but those employees who have become part of his extended family. They all came together to create a plan to take Treadworks into the future. “Some of our employees have been with us for 16 to 17 years and Treadworks is their livelihood too,” Burson said. “James is the general manager and has several managers underneath him. We created a plan of action (together) and it’s in place and working.” While Burson doesn’t plan to retire completely º “I’ve cut back to four days a week, then I’ll go to three and maybe two,” Burson said. “But I’ll always be part of it.” – he does look forward to having more time to hunt, continue his Bible study group, mentor young people, travel and maybe play a little golf. The family business that Burson took over and made a success, will continue under the leadership and guidance of his son, James, and his extended family of his Treadworks employees. www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 57
Oil price decline leads to lower tax revenues in top oil-producing states The decline in spot oil prices in the last half of 2014 and first month of 2015 has reduced oil and natural gas production tax revenues in some of the largest oil- and natural gas-producing states. Texas, North Dakota, Alaska, and Oklahoma are four of the five top oil- and natural gas-producing states, and they derive a significant share of their unrestricted operating revenues from taxes on oil and natural gas production. Although California produces more oil than both Alaska and Oklahoma, its economy is much larger, making it relatively less affected by changes in oil and natural gas prices and production.
Source: U.S. Energy Information Administration, based on crude oil production data and preliminary information from state governors' offices and publicly available information for North Dakota and Texas.
SPRING 2015 • www.basinresourcesusa.com
• Texas collected $583 million in tax receipts from oil and natural gas production in August 2014, but tax revenue declined by 40 percent to $352 million in January 2015, based on data from the state's comptroller. EIA estimates crude oil and lease condensate production in Texas also increased through December, growing from 88 million barrels to 107 million barrels from January to December 2014. • North Dakota’s tax revenue from oil and natural gas production decreased from $323 million in August 2014 to $254 million in January 2015, a 21 percent reduction. Monthly production has continued to increase through December even as prices declined, according to the latest production data. • Alaska relies on revenue from crude oil production for 90 percent of its operating budget. The state's 2015 revenue projections assumed oil prices at $105 per barrel. According to initial oil and natural gas production tax receipts received by the Alaska Tax Accounting System, monthly oil and gas production tax revenue in August 2014 was $108 million. In January 2015, revenue from these taxes was $26 million. The state's budget deficit is expected to reach $3.5 billion in 2015. The oil and natural gas production tax represents one of the four primary components of petroleum revenue for the state, with the others being corporate income taxes, property taxes, and royalties collected by the Alaska Permanent Fund Corporation. • Oklahoma collected $62 million in funds from production oil and natural gas taxes in August 2014. This value declined to $43 million in January 2015, a drop of roughly 30 percent, based on information from the Oklahoma Tax Commission. Oklahoma's production was relatively flat during this period. The production estimates and tax data referenced in this story are preliminary and are subject to change. www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 59
.E. . N . . .E. . R. . G . . . Y. . . . N . . . E. . W . .
Across the Nation
. S.
Natural gas inventory exceeds five-year average for first time since November 2013 Working natural gas in storage has surpassed five-year average levels for the first time in more than a year. At 2,157 billion cubic feet (Bcf ) as of February 13, stocks are 58 Bcf greater than the five-year average. Recent extremely cold weather may have resulted in high stock withdrawals for the week ending Feb. 20, which could push stocks below their five-year average. However, natural gas production in February and March that is forecast to average 5 Bcf/day above the year-ago level is likely to contribute to healthy inventories and moderate prices as the nation moves from winter into spring. At no point during 2014 did inventories surpass their five-year average; the most recent excess was on November 22, 2013. Inventories ended the 2013-14 winter withdrawal season last March at a 10year record low of 837 Bcf. After a record injection season in 2014 (April-October), weekly working gas inventories reached a seasonal peak on November 7, 2014, of 3,611 Bcf, but were still 237 Bcf below the five-year average of 3,848 Bcf for that week. While there had been several near-record withdrawals early this heating season, withdrawals so far this season have been significantly lower than the record levels of last winter, and 16 percent lower than the fiveyear average. Recent production growth and moderate demand have allowed for the increase in storage, and have also led to relatively low prices. The most recent Short-Term Energy Outlook (released February 10) projects inventories will end the injection season at 1,699 Bcf, 43 Bcf more
than the five-year average. Increasing natural gas production has helped to displace some of the need for storage during peak-use periods. Dry natural gas production has averaged 71.7 Bcf/d since November 1, as reported by Bentek Energy, approximately 6.3 Bcf/d more than production for the same period last winter. This higher level of production is forecast to continue through the end of the heating season. EIA’s Short-Term Energy Outlook forecasts that February and March production will average 72.7 Bcf/d, 5.0 Bcf/d higher than during the same period in 2014. At a national level, lower natural gas consumption this winter has also reduced the need to withdraw natural gas from storage. Above-average temperatures experienced in the western half of the United States so far this winter have helped to offset the effects of colder weather in other parts of the country, dampening overall natural gas consumption. According to data from Bentek Energy, since November 1, U.S. natural gas con-
SPRING 2015 • www.basinresourcesusa.com
sumption has averaged 88.4 Bcf/d, 3.3 Bcf/d lower than the same period last year. With closer-to-normal temperatures reducing residential and commercial consumption, EIA forecasts that total natural gas consumption in the United States will average 88.1 Bcf/d for the remainder of the heating season (February-March) in 2015, compared with an estimated 90.9 Bcf/d during that period in 2014. Henry Hub spot and Nymex near-month futures prices for natural gas have remained at relatively low levels for the past few months, falling from prices above $4 per million British thermal units (MMBtu) in November. The Henry Hub spot price and Nymex near-month contract have traded below $3/MMBtu since January 20. While the national benchmark price remains low, regional natural gas spot prices, particularly those in New York and Boston, have spiked this winter, reflecting high demand and transportation constraints in times of extreme cold.
60 BASIN RESOURCES
On the rise Oil production in federal Gulf of Mexico expected to continue increasing Because of the long timelines associated with Gulf of Mexico (GOM) projects, the recent downturn in oil prices is expected to have minimal direct impact on GOM crude oil production through 2016. EIA forecasts GOM production will reach 1.52 million barrels per day (bbl/d) in 2015 and 1.61 million bbl/d in 2016, or about 16 percent and 17 percent of total U.S. crude oil production in those two years, respectively. This forecast production growth is driven both by new projects and the redevelopment and expansion of older producing fields. Five deepwater projects began in the last three months of 2014: Stone Energy-operated Cardamom Deep and
Source: U.S. Energy Information Administration Note: Production data have not yet been reported for four of the eight fields (Cardamom Deep, Jack, St. Malo, and Tubular Bells).
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 61 Cardona projects, Chevron-operated Jack/St. Malo fields, Murphy Oil-operated Dalmatian, and Hess-operated Tubular Bells. Also occurring at the end of 2014 was the redevelopment of Mars (Mars B) and Na Kika (Na Kika Phase 3), both of which are mature fields. Cardamom Deep, Jack/St. Malo, and Tubular Bells were slated for a late 2014 startup, as well. Although industry press releases have indicated they have started producing, their production data have not yet been reported to the Bureau of Safety and Environmental Enforcement (BSEE) under the U.S. Department of the Interior. The relatively high number of fields that came online in 2014 and are scheduled for 2015 and 2016 production startups reflects the revival of interest and activity in the GOM following the moratorium on deepwater drilling after the 2010 Deepwater Horizon incident. While the moratorium officially lasted from April 30 to October 12,
2010, there were relatively few field startups in 2011 through 2013. Thirteen fields are expected to start up in the next two years, eight in 2015 and five in 2016. Development of offshore fields requires both surface and subsea production equipment. The high cost of surface structures limits their application to large fields. Those fields with reserves not large enough to justify the necessary capital expenditure
SPRING 2015 • www.basinresourcesusa.com
use subsea infrastructure to connect to nearby existing platforms. This approach, known as a subsea tieback, can reduce project costs and startup times. More than half of the projects starting up in 2015 and 2016 will be subsea tiebacks to existing production platforms. These new projects, combined with continuing production from the developments brought online in late 2014, are forecast to add 265,000 bbl/d by the
62 BASIN RESOURCES
Shale gas, tight commercially produced in just four countries The United States, Canada, China, and Argentina are currently the only four countries in the world that are producing commercial volumes of either natural gas from shale formations (shale gas) or crude oil from tight formations (tight oil). The United States is by far the dominant producer of both shale gas and tight oil. Canada is the only other country to produce both shale gas and tight oil. China produces some small volumes of shale gas, while Argentina produces some small volumes of tight oil. While hydraulic fracturing techniques have been used to produce natural gas and tight oil in Australia and Russia, the volumes produced did not come from low-permeability shale formations.
Source: U.S. Energy Information Administration calculations with data from DrillingInfo, Canadian National Energy Board, Cedigaz, Fact Global Energy China Monthly, Chevron, and Yacimientos Petroliferos Fiscales Note: Actual production from Canada through October 2014, November and December 2014 totals estimated. Canadian shale gas production total includes the Montney formation.
Oil production
continued from 61
end of 2015. The production estimates for 2015 and 2016 include adjustments to account for delays caused by hurricanes. The current low oil price adds uncertainty to the timelines of deepwater GOM projects, with projects in early development stages exposed to the greatest risk of delay. In an effort to reduce this risk, producers are collaborating to develop projects more cost-effectively in order to shorten the time to final investment decision and first production, and by sharing development costs. For instance, Chevron, BP, and ConocoPhillips recently announced a collaborative effort to explore and appraise 24 jointly held offshore leases in the northwest portion of the Gulf of Mexico's Keathley Canyon.
www.basinresourcesusa.com • SPRING 2015
BASIN RESOURCES 63 The four countries producing commercial volumes of shale gas and tight oil all increased output in 2014, and in all four countries, natural gas and crude oil production from shale and tight formations grew at a faster rate last year than production from non-shale and non-tight formations. • In the United States, a large portion of shale gas production growth has occurred in the Appalachian Basin’s Marcellus Shale. In the Marcellus region, dry natural gas production has more than tripled in the past three years, from an average of 4.8 billion cubic feet per day (Bcf/d) in 2011 to an average of 14.6 Bcf/d in 2014. A large portion of tight oil production has come from Western Gulf Basin’s Eagle Ford and from the Williston Basin’s Bakken Shale. In the Bakken region, oil production in 2014 averaged 1.1 million barrels per day (bbl/d), more than 2.5 times greater than the 2011 average of 0.4 million bbl/d. • In Canada, tight oil production doubled
between 2011 and 2014, from 0.2 million bbl/d to 0.4 million bbl/d. Most Canadian tight oil production comes from Alberta and Saskatchewan. The same is true of Canadian shale gas production, which increased from 1.9 Bcf/d in 2011 to 3.9 Bcf/d as of May 2014, when including production from the Montney formation (natural gas produced in the Montney formation is considered nonshale gas production by the Canadian National Energy Board, but is included in the Canadian shale gas production total). • In China, Sinopec and PetroChina have reported commercial production of shale gas from fields in the Sichuan Basin. Their combined shale gas output has reached 0.163 Bcf/d, or 1.5 percent of total natural gas production. • In Argentina, tight oil production comes mainly from Vaca Muerta’s Neuquén Basin. National oil company YPF, partnering with Chevron, is producing about 20,000 barrels of tight oil per day from the
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Loma Campana area. Notable shale resource exploration efforts are underway in several countries, including Algeria, Australia, Colombia, Mexico, and Russia. However, commercial shale development of the type demonstrated in the United States requires the ability to drill rapidly and complete a large number of wells in a single productive geologic formation. The logistics and infrastructure necessary to support this level of activity, including the drilling and completion processes, the manufacturing of drilling equipment, and the distribution of the final product to market are not yet evident in countries other than the United States, Canada, China and, to some extent, Argentina. Other above-the-ground factors such as ownership of mineral rights, taxation regimes, and social acceptance also play a role in decisions regarding the development of shales and other tight resources.
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64 BASIN RESOURCES
Wind generates more than 10 percent of Texas electricity in 2014 In 2014, more than 10 percent of the electricity used in the grid covering most of Texas came from wind generation, according to the grid’s operator, the Electric Reliability Council of Texas (ERCOT). Wind’s share of the ERCOT generation mix grew from 6.2 percent in 2009 to 10.6 percent in 2014 as total electricity generation increased over the same period by 11.3 percent. The growth in wind generation is a result of new wind plants coming online and grid expansions that have allowed more wind power to flow through the system to consumers. Wind generation in ERCOT nearly doubled from 18.8 million megawatthours (MWh) in 2009 to 36.1 million MWh in 2014. Wind capacity has also grown substantially over the past six years (and much more so in the years before that), but wind generation grew at a faster pace, partly because transmission constraints that previously prevented wind generators from operating at their maximum capability were gradually removed through a state-directed transmission expansion program. As these transmission constraints were removed, more generation from wind plants (largely concentrated in the northwestern part of the state) could reach the state’s population centers. The result has been a faster increase in wind generation than in wind capacity from 2009 to 2014. Wind’s contribution to ERCOT genera-
Source: U.S. Energy Information Administration, based on the Electric Reliability Council of Texas (ERCOT)
tion is not evenly distributed throughout the year. In Texas, peak wind season occurs during the spring – March to June – before significantly dropping off during the summer – July to September. Based on data for the past six years, the four months from
March through June account for, on average, about 40 percent of annual wind generation in ERCOT. The graph on the right above shows a fairly consistent seasonal pattern from year to year, despite the difference in actual volumes of generation.
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Animas Environmental Services .................23 Farmington, NM 505-564-2281 Durango, CO 970-403-3084 www.animasenvironmental.com
Four Corners Community Bank...................25 505-327-3222 New Mexico 970-565-2779 Colorado www.TheBankForMe.com
Morgan Stanley/Adam Hewett ...................55 4801 N. Butler Farmington, NM 505-326-9323 www.morganstanleyfa.com/hewettloleitpalmer
Southwest Concrete Supply .......................18 2420 E. Main Farmington, NM 505-325-2333 www.southwestconcretesupply.com
New Image Powder Coating ........................xx 2792 Inland Street Farmington, NM 505-326-2797
Spencer’s Diesel Clinic Inc.........................35 2201 E. Bloomfield Hwy. Farmington, NM 505-325-9329 1-888-325-9329
Animas Valley Insurance ............................xx 2890 Pinon Frontage Rd. Farmington, NM 505-327-4441 www.aviagency.com Antelope Sales & Service Inc. ....................27 5637 US Hwy 64 Farmington, NM 505-327-0918 www.NMASSI.com Bailey’s Welding .......................................52 6175 Hwy 64 Bloomfield, NM 505-632-3739 Basin Electrical Contracting .......................22 3005 Northridge Drive, Suite K Farmington, NM 505-327-7525 www.basinelectricnm.com Basin Tire and Auto ..................................17 1110 Hutton Ave. Farmington, NM 505-326-2231 1-800-589-2414 Basin Well Logging Wireless ......................15 2345 E. Main Farmington, NM 505-327-5244 BM Technology & Supply...........................54 2303 Bloomfield Hwy. Farmington, NM 505-326-9144 Brady Trucking, Inc. ..................................68 5130 S. 5400 E Vernal, UT 84078 435-781-1569 Farmington, NM Division 505-598-5580 Grand Junction, CO Division 970-263-8791 Williston, ND Division 701-572-1522 Bloomington, IL Division 309-556-0077 Calder Services.........................................34 #7 RD 5859 Farmington, NM 505-325-8771 Comfort Solutions Mechanical....................43 534 E. Broadway, Suite A Farmington, NM 505-325-2665 Elite Promotional & Embroidery ................58 1013 Schofield Farmington, NM 505-326-1710
Four Corners Innovations ..........................50 505-566-3676 www.sanjuanbasinenergy.org Foutz Hanon.............................................12 2401 San Juan Blvd. Farmington, NM 505-326-6644 Halliburton ...............................................47 www.halliburton.com Halo Services ...........................................39 70 CR 4980 Bloomfield, NM 505-632-7007 Hands on Safety Service ...........................10 1901 E. 20th St. Farmington, NM 505-325-4218 Harpole Construction ................................42 60 RD 3961 Farmington, NM 505-325-1249
Odessa Pumps..........................................19 940 Hwy 516 Flora Vista, NM 505-334-1330 Park Energy ...............................................3 2050 Afton Place Farmington, NM 505-258-4284 www.parkenergyservices.com Parkers Office Products ............................57 Farmington, NM 505-325-8852 www.parkersinc.com Partners Assisted Living ...........................21 313 N. Locke Ave. Farmington, NM 505-325-9600 www.partnersassistedliving.com PMS .........................................................38 1001 West Broadway Ave., Suite E Farmington, NM 505-327-4796 www.pmsnm.org
Hi Country Fleet Team ...............................41 B Baldwin 505-947-6039 Bill Stockert 505-330-1098 David Stockert 505-360-0103
QuickLane Tire & Auto Center....................37 5700 East Main St. Farmington, NM 505-566-4729
Highlands University.................................26 505-454-3004 nmhu.edu/energy
RA Biel Plumbing & Heating ......................32 505-327-7755 www.rabielplumbing.com
Honstein Oil .............................................45 96 Road 4980 Bloomfield, NM 505-632-5730
Reliance Medical Group .............................64 3751 N. Butler Ave. Farmington, NM 505-324-1255 Occupation Medicine 505-324-1255 Urgent Care 1409 Aztec Blvd. Aztec, NM 505-334-1772 www.reliancemedicalgroup.com
IEI Industrial Ecosystems ..........................63 49 CR 3150 Aztec, NM 505-632-1782 www.industrialecosystems.com Imagenet Consulting .................................62 Farmington, NM 505-327-7383
Rocky Mesa Auto & Truck Repair ...............35 2201 E. Bloomfield Hwy. Farmington, NM 505-327-3223 www.rockymesaautoandtruck.com
KAVE Construction ....................................36 PO Box 443 Flora Vista, NM 505-793-3942 facebook.com/kaveconstruction
San Juan Casing Service ............................51 6101 E. Main St. Farmington, NM 505-325-5835
Magnet Signs ...........................................26 2700 E. Main St. Farmington, NM 505-599-8100
San Juan United Way .................................28 Helpline 505-326-4357 www.sjunitedway.org
Mechanical Solutions, Inc. ...........................2 1910 Rustic Place Farmington, NM 505-327-1132
Sanchez and Sanchez .................................5 Farmington, NM 505-327-9039
The Spare Rib...........................................36 1700 E. Main Farmington, NM 505-325-4800 www.spareribbbq.com Arlon Stoker .............................................20 2713 E. 20th St. Farmington, NM 505-326-0404 Sunray Casino...........................................29 Farmington, NM 505-566-1200 Treadworks ..............................................31 4227 E. Main St. Farmington, NM 505-327-0286 4215 Hwy. 64 Kirtland, NM 505-598-1055 www.treadworks.com Twin Stars, LTD.........................................67 100 Iowa Ave. Bloomfield, NM 505-632-9202 7169 Roswell Hwy. 575-746-6690 Uncle Bob’s Auto & Truck..........................62 3995 Cliffside Dr. Farmington, NM 505-436-2994 US Eagle Federal Credit Union ...................61 3024 E. Main St. Farmington, NM 888-342-8766 useaglefcu.org Vectra Bank ..............................................29 Farmington, N.M. 505-564-8652 www.bectrabank.com Wagner Equipment....................................43 905 Hwy 516 Flora Vista, NM 505-334-5522 X-Chem, LLC .............................................33 855-829-0001 www.x-chem.com Zia Wire Rope and Supply .........................42 5941 Hwy. 64 Farmington, NM 505-632-7000 Ziems Ford Corners ..................................46 5700 East Main Farmington, NM 505-325-8826
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