Basin Resources Winter 2014

)0 + (()/ -$)(,

+" ,+-, & -$)( $( -# )+( +,

.'*$(" ($-, ("$( , & ,2

+-,

/ + +, 1* +$ (

+ ( 0)+% 2 .'*$(" --$(" * $+

,- - "( 000

($-

( 23 &))'!$ & 2 ., 2 000 *)0 +$(()/ -$)(, ( -

6 BaSiN RESoURcES

Fall 2014

contents Toxic mix KemKey has a solution that eliminates chemical cross contamination

34

Don Vaughan puBliSHER

Cindy Cowan Thiele EDiTOR

Dorothy Nobis CONTRiBuTiNG WRiTERS

Josh Bishop CONTRiBuTiNG pHOTOGRApHER

HoNSTEiN oiL BUyS FRaLEy & compaNy

Suzanne Thurman DESiGNER

Employee satisfaction, customer service drives company’s success

Shelly Acosta Clint Alexander Aimee Velasquez

27

SAlES STAFF

coNSTRUcTioN oN ScHEDULE New School of Energy getting rock star level attention

For advertising information Call 505.516.1230

www.basinresourcesusa.com

40

column

8 partners with Navajo Nation 20 Raytheon working on $4.4 expansion

School of Energy expansion

methane Hotspot Reports explanation shows ‘ignorance about fracking’

ipaNm photo contest winners

change of power midterm election results bode well for energy industry

10 Keynote Speaker

46

San Juan Basin Energy conference set for march 24-25

13 BLm refutes claims 14

50

pNm, pRc set hearings

56

Energy News

59

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 ommissions. © 2014 Basin Resources magazine.

www.basinresourcesusa.com • WiNTER 2014

8 BASIN RESOURCES

Along with new degree/certificate programs School of Energy will work to attract veterans The San Juan College School of Energy will offer nine new degree/certificate programs next spring. The addition and expansion of these programs comes at the request of our industry partners who direct, support and understand the importance of training provided by the School of Energy.

While the new degrees and certifications will assist all of our students, as the dean of the School of Energy, I hope we can reach another sector of our community that will benefit from the training and, ultimately, the jobs that training will provide.

That important sector is the United States military, our veterans who dedicated their lives and their service to protect our country and preserve our freedoms. Many of those veterans return home only to discover that good jobs are hard to find. The experiences they had, the lessons they learned, and the knowledge they gained while in the military aren’t always understood or appreciated by potential employers.

In addition to readjusting to a normal family life, veterans are also striving to find a place in the job market so they can provide for their families. It can be difficult and it can create additional stress on people who have endured the ultimate stress – fighting on and off the battlefield.

It is probable that no other segment of our population can truly relate to and understand the challenges offered by the oil and gas/energy industry. They understand and value the teamwork needed in the industry and they appreciate all the industry does for our country. They’re not afraid of hard work because they honed a good work ethic while serving in the military. They respect good leadership, they understand the importance of safety, and they recognize the need for beneficial policies and procedures.

The oil and gas/energy industry has added millions of jobs in recent years, and the opportunity to create more jobs is likely. Recent elections indicate that the Keystone pipeline is expected to receive Congressional approval, giving thousands of people good jobs with good pay and benefits. Who better to help fill those jobs than our veterans?

There will be a need for people who are skilled in environ-

mental, health and safety fields. There will be a need for maintenance mechanics, petroleum production operators, occupational health, safety and environmental professionals, and other jobs. Those who earn their degrees and certifications through the School of Energy’s programs will be recruited by our industry partners, because they know the experienced instructors and staff at the SoE are dedicated and committed to the success of each and every student. The industry reaches out to the School of Energy for employees and comes to the school annually, doing interviews and recruiting from our students. The solid reputation the school has in the industry attracts students from throughout the country, and our industry partners are eager to hire them when they complete their training.

The School of Energy provides scholarships to veterans and to others who need financial assistance. As the dean, I work individually with many students, helping them find the financial

* Pacheco 22

rAnDy PAchEco DEAn of School of EnErgy SAn JuAn collEgE www.basinresourcesusa.com •WINTER 2014

Whe hen it ccomes o omes to trucking, trucking, When to no one offers o off ffers ff ers yo you ou more. mo ore.

SERVICE | PARTS PARTS | COLLISION CENTER | NEW AND PRE-OWNED SALESS LEASING | FINANCING | INSURANCE IN NSURANCE SERVICE

With new and pre-owned Peterbilt trucks, an extensive parts inventory, a fleet of mobile service vehicles team o of ffac actor y-trained A SE-certified sservice er vice technicians, technician ns, we are are the the only source source you need need to to and a team factory-trained ASE-certified keep your trucks trucks up and rrunning. unn ning. keep se e w wh her de aler off ffers erss you mor e.

Come see whyy no ot other dealer offers more.

800-357-6643 Russh TTruck ruck Center – Albuquerque ue Rush 6521 Hanover Haanover Road N.W. N.W. | Albuquerque, Albuquerque, NM 87121 | 505-875-3410 -3410 direct | 505-884-0097 97 fax

10 BASIN RESOURCES

Methane hotspot

Report’s explanation shows ‘ignorance about fracking’ Dorothy Nobis Basin Resources the “cloud of methane” hovering over the Four Corners has scientists debating whether the cloud has evolved because of natural gas production and processing.

Eric Kort of the University of Michigan authored a study that was printed in october in the journal Geophysical Research Letters. in his study, Kort stated that the “hot spot,”

which covers 2,500 square miles, could be produced from agriculture, forest fires and the mining and processing of fossil fuels. in his study, however, Kort states the sources include heavy production of a fuel called coalbed methane, which exists as a gas in the pores and cracks of coal deposits, as well as from two power plants – the Four Corners Power Plant and the san Juan Generating station.

Kort also stated that the observation pe-

riod – gathered from 2003 to 2009 – predates the widespread use of hydraulic fracturing, called fracking, near the hot spot. therefore, the methane emissions didn’t come from fracking, but from leaks in previously established natural gas production and processing.

John byrom, president and chief executive officer for DJ simmons, an independent oil and gas company based in Farmington, took exception to Kort’s statement.

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 11 “This shows his ignorance on the fracking topic,” Byrom said. “We’ve been fracking in this basin since at least the early 1960s.”

Researchers used observations by the European Space Agency’s Scanning Imaging Absorption Spectrometer for Atmospheric Chartography (SCIAMACHY) and a Los Alamos Lab ground station for independent validation. Researchers found that from 2002-2009, the Four Corners area released about 650,000 tons of methane into the atmosphere.

Scientists at NASA and the University of Michigan released the information about the cloud of methane over the Four Corners in late October.

Byrom was reluctant to call the study a “scare tactic,” he did say he thinks people are taking advantage of the information and providing it at a time when President Obama is aggressively attempting to reduce America’s greenhouse gas emissions.

A Nov. 25 editorial on The New York Times website addressed President Obama’s pledged to reduce America’s greenhouse gas emissions 17 percent below 2005 levels by 2020. The president also pledge a 26 percent to 28percent cut by 2025. “The first target will be hard to reach – and the second virtual impossible – without a determined effort on his part to cut methane emissions from the oil and gas industry” the editorial stated.

Calling the timing of the study “interesting,” Byrom said those involved in the study have not yet provided the scientific data for public review. “If there’s a scientific study, let’s see it,” Byrom said.

Byrom also said that since the San Juan Basin is surrounded by mountain ranges which create a bowl, the hot spot would be brighter here than in other areas of the country, which also benefit from the oil and gas industry.

“The fact that the rocks that contain the gas that we drill for in the center of the basin are bent upward and are exposed at the surface, like the rim of a partially buried bowl,” Byrom explained. “This rock is known to leak hydrocarbons where they are exposed.”

Rock formations, including the Mesa Verde and Fruitland Coal formations, have been emitting emissions for years, Byrom said. “There’s a lot of leakage of gas where the producing rocks come to the surface around the rim of the basin,” he explained, “it’s been going on for millions of years.”

Byrom also understands the need for the oil and gas industry to work together to help minimize emissions. “I’m not an expert,” Bryom said, “but if there are questions raised, let’s study them. The (oil and gas) industry is dedicated to reducing vapor emissions. We’ve already made a lot of WINTER 2014 • www.basinresourcesusa.com

“There’s a lot of leakage of gas where the producing rocks come to the surface around the rim of the basin. It’s been going on for millions of years.”

— John byrom president dJ simmons

12 BASIN RESOURCES progress recovering vapors so they no longer go into the atmosphere.”

Working together – and sharing the necessary information and data – can do more to reduce emissions than a map showing a brightly colored spot over the Four Corners area, Byrom added.

By studying the concerns, sharing scientific information and working together, Byrom believes solutions can be found.

“But having people say we need to get rid of oil and gas – that’s just absurd.”

An article on the thinkprogress.org website also addressed the hot spot and the study. The article states that “The Obama administration’s Climate Action Plan has a whole strategy to cut methane emissions, which includes proposed EPA regulations to reduce methane from landfills, standards for oil and gas operators to reduce venting and flaring, and partnerships with the dairy industry to vol-

untarily reduce methane emissions from cows.”

Byrom has another explanation for the hot spot over Farmington, however.

“Everyone knows that Farmington is the breakfast burrito capital of the world,” he said. “So I think that’s what’s causing that hot spot.”

Someday you’ll stop working, and at that point, you’ll have to depend on your retirement income. To work toward building that income, you’ll need a strategy.

With over 20 years of experience, I can help you create a strategy for goals like retirement, estate planning and leaving a legacy.

Let’s put your money to work. Call me today to set up an appointment.

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 13

IPANM 2014 photo contest winners The premise that man and nature cannot co-exist, that where man encroaches, wildlife scatters and dies out, is simply untrue.

In New Mexico oil fields, many species of wildlife use equipment in a productive manner. Birds will use elevated surfaces as foundations for nests. Deer, such as caribou, use the equipment for a windbreak and warmth.

There is so much wildlife in the oilfield that in 2004 the Independent Petroleum Association of New Mexico created a photo

contest where oil field workers and others could win cash prizes for the best photo or video demonstrating wildlife adapting to manmade changes in their environment.

Photo contest winners 1st place: Paul Sikora II, Farmington, N.M. – $1,000 2nd place: Bill Royce, Farmington N.M. – $500 3rd place: Douglas McClean, Roswell, N.M. –$250

2nd place: Bill Royce, Farmington N.M.

3rd place: Douglas McClean, Roswell, N.M.

1st place: Paul Sikora II, Farmington, N.M.

$ " ! %RE *HQVRQ

WINTER 2014 • www.basinresourcesusa.com

! #

! ! ! $ "# "$

! !$

14 BASIN RESOURCES

Change of power, Change in poliCy Midterm election results bode well for energy industry Now that the dust has settled on the 2014 midterms, we can get a sense of how things will change in Washington under a Republican-controlled Senate – and energy will be front and center.

Republicans and Democrats have very different views on energy development and policy. The past six years have seen taxpayer dollars poured into green-energy projects that have embarrassed the administration and promoted teppan-style renewables that chop up and fry unsuspecting birds midflight and increase costs for consumers and business. Meanwhile, Republicans have touted the job creation and economic impact available through America’s abundant fossil-fuel resources.

Voters made their preference clear: Republicans won more seats, and with bigger majorities, than anyone predicted.

The day after the election, the Friends of the Earth, wasting no time, sent out a dramatic fundraising pitch, opening with: “The election’s over — the planet lost.” (You may not have even known that the planet was on your local ballot, but apparently it was.)

The email’s proclamation, once again, exposes the environmentalists’ agenda: “President Obama hasn’t always done the right thing for the environment. He should have denied the Keystone Pipeline years ago, he should be rolling back unchecked fracking, and he should have taken stronger action on climate both at home and in international negotiations.”

Thankfully, though ideologically aligned with them, he attempted to appease and didn’t take the extreme level of action Friends of the Earth would have liked.

The Keystone pipeline remains a strong possibility, though the Canadians have nearly given up on us. While it failed in a recent vote, Republicans plan to make it a top priority when they take over in January.

Fracking is regulated at the state level, which mostly allows it to continue to increase America’s energy freedom – resulting in lower prices at the pump. Because more than 96 percent of the wells drilled in America today use the decades-old – but new-and-improved – technology of hydraulic fracturing, a fed-

eral fracking ban, like that which environmental groups have been trying to pass through city and county initiatives, would virtually shut down our booming energy economy. President Obama tried, but he couldn’t pass a cap-and-trade bill – even when his party controlled both houses. Nor could he get a new Kyoto-style international treaty ratified. Most of the western world is now retreating on the climate pledges made in a different political era.

Friends of the Earth is correct, though. The email states: “Now, with both the Republican Senate and the House salivating and

Marita k. noon exeCutive DireCtor energy Makes aMeriCa great inC. www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 15 ready to sink their teeth into our most basic environmental laws, the President’s environmental legacy is truly at stake.”

The Republicans are likely “salivating” – though not specifically about “basic environmental laws.”

Big changes in energy policy are in the works. Not just because Republicans want to destroy the president’s “legacy,” but because a wealthy country is better able to do things right. A growing economy needs energy that is efficient, effective and economical – which is why countries such as China and India will not limit energy availability and why Republicans want to expand access in the U.S. What energy policies might the Republicans want to “sink their teeth into”?

Federal lands President Obama likes to brag about the increased U.S. production of oil and

gas. In his post-election press conference he stated: “Our dependence on foreign oil is down.” While the statement is true, it falsely implies that he had something to do with that fact.

Reality is, as a Congressional Research Service report makes clear, while oil production has increased 61 percent on state and private lands, it has decreased 6 percent on federal land where the administration has authority. Additionally, the report points out, applications to drill on federal lands take nearly twice as long to process under the Obama administration than they did previously.

Not only has the White House discouraged drilling on federal lands, President Obama has used his pen to lock up federal lands with potential development, such as the newly designated Organ

3625>,,8 *,790-0,+ 04

0,2+ #,7;0*,8

(4+-(73 #,7;0*,8 @ 08658(2 5- 54 (?(7+5:8 " " 02-0,2+ '(89, 04*2:+04. @ 702204. 2:0+8 3:+ *:9904.8 @ >+75*(7)54 89(04,+ 8502 @ !09 9(41 )599538 @ '(8/5:9 8,+03,49 @ $(41 $7:*1 '(8/5:9

# (4+

Mountain Desert Peaks National Monument – which blocks production without analyzing the economic impact. “Every time they lock up federal lands, whether through national monuments, conservation areas, or wilderness areas,” Steven Henke, President of New Mexico Oil and Gas Association, told me, “they eliminate the potential for royalties from the federal estate. Those funds benefit both the state and federal government and reduce the burden to the taxpayers.”

For example, one prediction has drilling in the Arctic National Wildlife Refuge (ANWR) becoming a part of the Republican Party’s vision of energy independence. Alaska’s senior Senator: “Lisa Murkowski has long argued that drilling in ANWR would help reduce the national deficit.”

Not all federal lands have oil and gas

#

=,369

7:.

@ ',9 7> 04. &(*::3 $7:*18 @ >+75 =*(;(9054 @ '(9,7 $7:*18 @ :36 $7:*18 >(7+ @ 5)02, ,4970-:.,8 258,+ 556 702204. 2:0+ (4(.,3,49 @ %297( 0297(9054 %4098 @ 2(70-0,78 @ 029,7 !598

@ @ @ @ @ @

!" 0789 0+ (?3(9 # 54-04,+ #6(*, 75:4+ 089:7)(4*, # /5:78

08 ( #(-,9> 0789 536(4> ,3),7 (4+ 04 .55+ 89(4+04. <09/ 2*5/52 53620(4*, @ # ,9<572+ (4+ ! !7,30,7 #(-,9> 53620(4*, 5485790:3

(4+-(73

!,73099,+ #:7-(*, '(89, (4(.,3,49 (*0209>

WINTER 2014 • www.basinresourcesusa.com

!/54,

"

75:*/ ,8( ?9,* @ (= 57 <<< 04+:8970(2,*58>89,38 *53

16 BASIN RESOURCES or other mineral-extraction, potential, so a reversal of policy may not increase production by the 61 percent seen on state and private lands – but it could mean the U.S. not only passes Saudi Arabia in oil production, it leaves it in a dust storm.

Oil and natural gas exports Before the new Congress is sworn in, we already hear a lot of talk about lifting the ban on oil exports that was put into place in response to the 1970’s Arab oil embargo. Reuters reports that Senator Murkowski: “has fought to relax the ban all year by issuing a series of papers detailing how such exports have been allowed in the past, holding a private meeting on the subject with Commerce Secretary Penny Pritzker, and hinting that 2015 could be the time to introduce ban-ending legislation.”

With the Republicans now in charge come January, Murkowski will become the Chairman of the Energy and Natural Resources Committee. She is expected to start by “holding hearings, pressuring Obama administration officials, and testing the level of support from party leadership.”

“Policy makers need to catch up with the industry,” said Harold York, an analyst of the refining sector at Woods Mackenzie. He projects that easing the crude oil restrictions “would lead to $70 billion in investment spending in the U.S. oil sector and further economic stimulus.”

Different from crude oil, the law currently allows liquefied natural gas (LNG) exports, but the Energy Department has dozens of applications for LNG export terminals languishing on some bureaucrat’s desk. Just six applications have

been approved in the past year. Bipartisan support exists for expediting the permitting process – especially in light of Russia’s stranglehold on natural gas supplies to many of our European allies.

Legislation must be drafted and passed to allow exports to non-European freetrade countries.

Environmental Protection Agency President Obama’s Clean Power Plan (CPP) has widespread opposition within the Republican Party – including state governors who struggle to interpret the regulations but who are asking the right questions regarding the impact on their individual states. Even coal-state Democrats, such as Senator Joe Manchin (DW.Va.), have concerns with the CPP. The CPP has the potential to prematurely shutter hundreds of coal-fueled power plants when viable options exist

www.basinresourcesusa.com • WINTER 2014

for the plants’ replacement. This winter, Massachusetts is experiencing a 37 percent increase in electricity rates over last year because plants closed without sufficient infrastructure for their replacement.

The CPP plus the many other regulations – such as those coming on ozone and methane – have many lawmakers concerned about the EPA’s impact on grid reliability and the economy. President Obama is not likely to sign any legislation designed to rein in his personal priorities, but Republicans can make changes in EPA appropriations.

In a post-election analysis webinar, Scott Segal, founding partner of the Washington, D.C.-based Policy Resolution Group, declared Obama’s approach to greenhouse gas emissions – specifically the CPP which projections show may cost $42 billion – is the number one priority of the Energy and Natural Resources and Environment and Public Works Committees. He believes the committees’ oversight will look at reliability, cost, and, benefits. Segal said: “I think you can expect tailored legislation to focus on these topics. You can expect use of the Congressional Review Act for resolutions of disapproval when these regulations become final. You can also look to the appropriations process. ... that might mean an Interior and Environment appropriations bill might have a rider, not that sets aside the CPP entirely, but that makes narrowly targeted changes to that plan. Then the president would be confronted with a choice: ‘Do I essentially shut down the EPA, or do I work with Republicans in the House and Senate to reform my proposal?’”

The Endangered Species Act The ESA is in dire need of revision, updating or outright repeal. Though well-intended in the beginning, it has more recently been used as a funding tool for environmental groups WINTER 2014 • www.basinresourcesusa.com

18 BASIN RESOURCES and a way for them to block economic activity, such as oil-and-gas extraction, and ranching, farming, and mining.

Earlier this year, a group of 13 GOP lawmakers released a report, which called for an ESA overhaul, though CBS News called the changes “unlikely, given the pervasive partisan divide in Washington, D.C.” CBS continues: “The political hurdles to overhaul are considerable. The ESA enjoys fervent support among many environmentalists whose allies on Capitol Hill have thwarted past proposals for change.”

Reports now declare: “Climate change compromises may be easier with China than with Congress.”

What does Inhofe have in his power?

Andrew Wheeler, EPW staff director when Inhofe previously was chairman, says: “I know he won’t hesitate to conduct oversight of the Democratic Obama Administration.”

“I think his climate work will probably be focused more on the EPA regulation.”

— andrew wheeler ePw staff director

The E&E report projects: “Among the topics Inhofe would likely zero in on: EPA’s rules to clamp down on greenhouse gas emissions from power plants, a controversial EPA proposal to clarify the scope of the Clean Water Act and the science underpinning federal environmental rules.

EPA management could also be the topic of some oversight hearings.” Wheeler

added: “I think his climate work will probably be focused more on the EPA regulation.”

The $3 billion pledge to developing countries is subject to Congressional appropriations. In a statement from Inhofe’s office, he vows to work with his colleagues “to reset the misguided priorities of Washington in the past six years.”

He says: “The President’s climate change agenda has only siphoned precious taxpayer dollars away from the real problems facing the American people.”

The National Journal states: Republicans “want nothing less than to send money to poor countries to fight climate change.”

As a part of this shift, watch for environmental activists to be more aggressive on the state level – pushing for increased mandates for renewables and more regulation and/or bans on hydraulic fracturing.

www.basinresourcesusa.com •WINTER 2014

534/-%2 %26)#% )3 /52 0%#)!,49

%,#/-% 4/ %!-

!,/

/ */" )3 4// ")' /2 4// 3-!,, % !2% (%2% 4/ 4!+% #!2% /& !,, 9/52 ),&)%,$ .%%$3

% !2% "!3%$ ). ,//-&)%,$ %7 %8)#/ !.$ 02/6)$% 3%26)#%3 4/ 4(% !. 5!. !3).

/534!"/54 !).4).' %%$).' .35,!4)/. %#,!-!4)/. 2%% 253( %-/6!, !#),)49 /.3425#4)/. (/0 !"2)#!4)/. 9$2/ %34).'

2% !34 )24 /6).' )0%,).% /.3425#4)/. !).4%.!.#% )0% 425#452!, %,$).' 15)0-%.4 !4%2)!, 2!.30/24!4)/.

6%23):% )4% 5),4 4/2!'% !.+3 %,, !$ /!$ /.3425#4)/. !2)/53 4(%2 %26)#%3 !3 %15%34%$ "9 534/-%23

!4)3&!#4)/. !.$ !&%49 !2% /52 4/0 02)/2)4)%3

!-),9 /7.%$ !.$ /0%2!4%$

,//-&)%,$

20 BASIN RESOURCES

25-year partnership with Navajo Nation

www.basinresourcesusa.com â&#x20AC;˘WINTER 2014

BASIN RESOURCES 21

Drawing of new 30,000-square-foot warehouse.

$4.4 million expansion plans at DinĂŠ Faciliy set for completion in 2015 Dorothy Nobis Basin Resources A contractor has yet to be selected and a design has yet to be completed, but the enthusiasm and excitement of political, tribal

and business leaders who are anticipating the construction of a new raytheon warehouse likens to children waiting for santa Claus. the new facility, located on Navajo Nation land, will span 30,000 square feet

WINTER 2014 â&#x20AC;˘ www.basinresourcesusa.com

and will be located adjacent to the main site. it is the result of three years of collaboration between the Navajo Nation, the state of New Mexico, san Juan County, and raytheon.

“Raytheon’s plan is a very long-term partnership with the Navajo Nation to grow the abilities and responsibilities of Navajo team members, while increasing the size of the Raytheon presence with the Navajo Nation.”

— MATTHEW RYAN, DINé FACILITY PLANT MANAGER

Raytheon partnered with the state of New Mexico and Navajo Nation to fund the expansion project. Upon completion, the Navajo Nation will retain ownership of the site, and Raytheon will lease the manufacturing space.

“Our NAPI facility has delivered exceptional production and safety metrics, making it the ideal location for us to expand our high-rate production capability,” said Louise Francesconi, Raytheon Missile Systems president. “We look forward to building on its success with this expansion.”

The new warehouse will enable Raytheon to increase production efficiency, while reducing risk to materials and products.

Raytheon provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing, effects and command, control, communications and intelligence systems. In addition, the company provides cyber security and a broad range of mission support systems.

Raytheon is headquartered in Waltham, Mass., and had sales of $24 billion in 2013. With 63,000 employees worldwide, the company is a technology and innovation leader specializing in defense, security and civil markets throughout the world.

Construction on the $4.4 million warehouse is expected to begin in early 2015, said Matthew Ryan, plant manager of the Raytheon Dine’ Facility. Funding of the building is being

Pacheco

continued from 8

resources they need to complete our programs and to find good jobs.

If you’re a veteran or know a veteran, or if you are a civilian looking for a career that is challenging and exciting and which offers great pay and benefits, please call us at 505.327.5705.

The oil and gas/energy industry continues to grow and needs trained employees. You will be surprised at the small investment you will make when you attend our classes and I encourage you to invest in your best resource – YOU. www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 23 provided by the Navajo Nation, which will lease it to Raytheon.

The building design is being funded by the State of New Mexico.

In addition to adding to the footprint of the current facility, the new warehouse construction will provide jobs to the area.

“Many construction jobs will be created during the project,” Ryan said. “The completed facility will ensure the retention of over 40 employees long-term at the entire Raytheon Dine’ Facility.”

The partnership between Raytheon and the Navajo Nation has been built on economic development.

“Raytheon is always looking for approaches to be a great partner to the Navajo Nation,” Ryan

!

WINTER 2014 • www.basinresourcesusa.com

24 BASIN RESOURCES added. “Efforts include active searches for more work at the Raytheon Dine’ Facility, which provides employment opportunities, support of Navajo schools to develop needed technical skills, and support to numerous Navajo organizations that promote health and education.”

Raytheon has been adding to the economic foundation of the Navajo Nation for 25 years.

Construction is anticipated to be completed by fall of 2015.

“Raytheon’s plan is a very long-term partnership with the Navajo Nation to grow the abilities and responsibilities of Navajo team members while increasing the size of the Raytheon presence with the Navajo Nation,” Ryan said.

At the NAPI facility, Raytheon currently assembles parts of 12 missile and munitions programs for the U.S. Army, Air Force, Marine Corps and Navy.

Raytheon Company, with 2006 sales of $20.3 billion, is an industry leader in defense and government electronics, space, information technology, technical services, and business and special mission aircraft. With headquarters in Waltham, Mass., Raytheon employs more than 80,000 people worldwide.

Courtesy photo Ben Shelly, president of the Navajo Nation, gives remarks at the groundbreaking.

www.basinresourcesusa.com •WINTER 2014

1-800-554-5111

www.FlyGreatLakes.com

Four Corners Regional Airport

1300 W. Navajo St. Farmington, NM â&#x20AC;˘ 505-599-1395 www.IflyFarmington.com

BASIN RESOURCES 27

Photos by Josh Bishop

Honstein oil buys Fraley & Company

Employee satisfaction, customer service drives company’s success Dorothy Nobis Basin Resources A partnership between a father and son in 1982 in Española, N.M., has grown into a company that hasn’t forgotten its core

belief in doing business – taking care of its customers and its employees. rod honstein and his father, roy, started honstein oil & Distributing Company to distribute Chevron fuels and lubricants in the santa Fe/Las Vegas, N.M.,

WINTER 2014 • www.basinresourcesusa.com

area. roy had been a distributor for Chevron in Española, N.M., since the late 1950s, and rod had been an area sales manager for the construction machinery division of FiAt, based at its North American headquarters in Chicago.

28 BASIN RESOURCES Originally doing business out of a small rented warehouse in Santa Fe, Honstein Oil outgrew that facility in four short months and moved to a larger building on Airport Road in Santa Fe. In 1985, the company purchased Smith Oil Company in Santa Rosa and Moriarty, expanding its territory. In 1992, the company acquired Champion Oil, a Phillips 66 distributor in Santa Fe, which gave Honstein Oil a retail site in the capital city and the opportunity to add two FUELlink cardlock locations.

0

0

*&/ (*'$'# $!%-)+

0

"&$."*$"+

0

$'" '

0

**/

0

,"*$'#

-,

Big Bear Petroleum in Albuquerque was the next acquisition for the company, once again expanding its market. A Chevron convenience store/gas station was added to the company’s retail presence. Two additional retail stores were added in 1999 and in 2004 Honstein Oil again expanded with the acquisition of Gunderson Oil Company in Grants.

In 2013, Honstein Oil became a part of the Brad Hall & Associates (BHA) family, which became a major stockholder and strengthened the company’s financial position and its market presence.

Growth continued when the company acquired Fraley & Company, a successful marketer in the Four Corners. Fraley’s presence in the oil and gas sector, as well as mining and agriculture, added to the strength of Honstein Oil. While growth is exciting, it also brings challenges, said Jason Allee, Honstein Oil’s general manager.

“The largest challenge we faced was creating synergies between two companies when we purchased Fraley,” Allee said. “This was not the type of purchase where we came in and changed everything. We took what Fraley had and tripled it, nearly overnight.

With that, we needed all former Fraley employees to buy into our new vision.”

# %" (! *!&% &' ! # # !% !# ! # &+)* &+* !* $ ! *!&% !' #!% &%)*(+ *!&% (* &,!% ##. +$') ,. +# ( " & " & & ( &/ ( !##

!# .

-% (

( )!

%*

( $ !% * & %

!! $ !#

" -)!

& ( !% ) * & ( $ % * www.basinresourcesusa.com •WINTER 2014

30 BASIN RESOURCES

“The largest challenge we faced was creating synergies between two companies when we purchased Fraley.”

— Jason allee Honstein oil General ManaGer

Growing technology to responsibly grow assets.

Pioneering new technologies allows Encana to optimally grow its assets in the San Juan while minimizing disturbance to nearby communities.

Learn more Learn more about Encana’ Encana’ss oper operations ations in San Juan: encana.com/sanjuan

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 31 Allee has personal knowledge of the area. He and his father owned Farmington Oil Co., in Farmington, which was sold in 2007, and he continued to run the company for seven years. During that time he managed two different mergers and acquisitions.

With that experience, he knew firsthand the challenges of creating a culture where employees can thrive and be excited about change.

“Most people inherently fear change and the biggest challenge is to create confidence in them and share the vision for the future.

We have had tremendous success in this endeavor and employees seem to be happier than ever,” Allee said.

Rewarding employees who provide new ideas and methods of operation that benefit the company is also a priority for Honstein Oil. “We have spent much energy focusing on how to properly give our employees ‘buy in’ into the company,” Allee said. “Not stock, but pride. With this, we have created several unique and, we consider, groundbreaking pay structures from the top (level of management) to the commercial drivers. In addition, we have unique safety incentives and many surprise spot checks that are rewarded with gift cards and other financial means.

*

!

*

$

! &"!

((( %( "! $ & %'## ) "

WINTER 2014 • www.basinresourcesusa.com

The success of the company isn’t guaranteed with the happiness of employees, however. “Our secret to success is our people and our unified mission of taking care of the customer,” Allee said. “Customer service drives our success. We see a lot of potential for growth and we’re currently experiencing exponential growth, even exceeding our expectations.”

“Of course, our success is directly tied to the local oil and gas economy,” Allee added. “We are cautiously proceeding forward with a lot of excitement.”

The challenges that face the oil and gas/energy industry are many and Allee said planning and investing is done with caution as well. “The oil and gas industry’s greatest challenge is the political risks, driven by health, safety and environmental issues. In addition, an unclear energy policy makes it very difficult to plan and invest for the future.”

Twin Stars, a locally owned equipment maintenance and natural gas compressor leasing company in Bloomfield, has been a client of Honstein from the beginning of its operations in the Four Corners.

“Chevron lubricants have helped us get superior run time out of our equipment, which gives us peace of mind and the competitive edge we need to maintain our service and quality equipment reputation,” said Roger Armstrong, Twin Stars general manager.

“It’s not surprising at all that we get great service from Honstein,” Armstrong added.

“Jason Allee and his crew have always given us the best service of any lubricants and coolants supplier in the area. It all comes down to the great results we have had for many years with Chevron lubricants, along with the exceptional customer service and relationship we’ve developed with Jason and his people.”

“We know we can count on Honstein and Chevron lubricants to deliver consistent quality products at a fair price. And if we need help resolving any issues, they are right there for us with all the resources they can get their hands on,” Armstrong said.

“Twin Stars is a service oriented company and our reputation

32 BASIN RESOURCES means everything to us,” Armstrong said. “Honstein understands that and does everything they can to help us serve our clients at the level they’ve come to expect from us.”

With a long history of success, Honstein Oil is confident it will continue to be a major player in the oil and gas industry. “Our work environment is very collaborative and we are always trying to discover newer, better and different ways to accomplish our business and customer goals,” states the company’s website. “Our organization doesn’t have a lot of layers of management, which means that employees can, at any time, get all the way to the top with any issue, problem or concern. We try hard to foster an environment where innovation and customer service is rewarded.

The bottom line is, we just enjoy our work and providing our customers with great service.”

,%''" / ,!- 0 " ! $" &- 0 /(+", "+' %," $ %)- (*," -.

%) 0

"(").-

,(%)#.*) 01 www.basinresourcesusa.com •WINTER 2014

34 BASIN RESOURCES

Photos by Josh Bishop

KemKey has a solution that eliminates chemical cross contamination www.basinresourcesusa.com â&#x20AC;˘WINTER 2014

4

BASIN RESOURCES 35

Dorothy Nobis Basin Resources in the 30 years randy brown has been in sales and management for the special chemistry industry, he has seen, heard and experienced a lot.

Most important to brown over the years was the numerous incidents he was aware of that involved chemicals being transferred into the wrong tanks.

While many of those incidents were not life threatening and involved just the ruination of a tank were chemical, there were incidents that caused property damage, evacuations and, unfortunately, death.

“Many of the accidents were never re-

ported nor had investigations done outside of the plant/company where the incident took place,” brown said.

“No one was hurt and the results were contained within the confines of the plant.” “there have been many instances/accidents,” brown added. “A good example is the incident where PNM put acid into a tank of chelant, making a brown cloud.

No one was hurt, but $55,000 of chemicals were wasted and the cost of cleanup is unknown.” brown decided there needed to be a better way of ensuring the right chemicals were placed in the correct tanks. “it is not possible to plug a 110-volt appliance into a

WINTER 2014 • www.basinresourcesusa.com

220-volt receptacle,” he said. “you can’t put diesel into a gasoline car. you cannot connect an acetylene cylinder to the oxygen connection for a cutting torch. Not every house key works in every door lock.” brown’s vision was to help the industry make it impossible to transfer the wrong chemical into the wrong tank. “i was inspired to produce a product when i was in a meeting with Los Alamos National Lab,” he said. “they had an incident and were in the process of expanding and restarting the facility that had the accident. they (LANL officials) asked me how they could make sure that it would not happen again. i told them they needed different fittings for each chemical.”

36 BASIN RESOURCES Brown created fittings that were specific for each chemical, color-coding them to make it easier to put the correct chemical into the correct tank. He contacted a patent attorney and filed a patent application in September of 2012. With the help of friends and the Merrion Foundation, Brown started his business, KemKey, and displayed his product at his first trade show in June of 2013.

PNM became his first customer and the University of New Mexico became his second. “We have interests in New Mexico, and in Florida, New Jersey, Ohio, the United Kingdom, Brazil and Australia,” Brown said proudly. I contracted with a testing lab to test our fittings and to compare results with the industry standard, as well as one of our higher quality competitors.”

The results of that testing showed KemKey’s product was better than the

competition – so much better that Brown believes Los Alamos National Laboratory and Sandia National Laboratory will be interested in his products.

Ed Munoz, a lab and plant operations supervisor for PNM, said the San Juan Generating Station has had several incidents that could have been catastrophic when incompatible bulk chemicals were mixed together.

“After one of our last incidents, I started researching these types of events and it seems it happens on a very frequent basis industry-wide,” Munoz said, “and some have had the effect of endangering life and property.”

“Because of our own experiences, I was very open to anything that could decrease these chemical hazards,” Munoz added.

Brown had been an account manager for one of PNM’s chemical distributors

and had become a trusted associate to Munoz. “When Randy approached me with this novel concept of fittings that were made for each family of chemical, this immediately caught my attention. He brought me prototypes of his product and I told him I would be his first customer.

Munoz took the concept to the engineering and safety staff, who agreed that using Brown’s products, would reduce the probability of mixing incompatible hazardous chemicals.”

“We have installed these bulk delivery fittings at our facility and are in the process of making sure all bulk chemicals that are delivered onsite are set to this standard,” Munoz said. “I believe this to be a revolutionary concept that can make industries that use hazardous bulk chemicals a lot safer.”

Brown’s goal is to become profitable

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 37

#$ !

WINTER 2014 • www.basinresourcesusa.com

"

#

#

!!!

!

!

!"

38 BASIN RESOURCES

by June, 2015. “This is an interesting concept in that there are only two ways for the company to go,” he said. “It can collapse and never get any footing (which no one who has seen the concept believes because it makes so much sense), or it will become an industry standard over time. I estimate that the chemical quick-connect market is about $500 million in North America and several billion dollars worldwide.”

KemKey is located in Edgewood, N.M. and has two employees. With a future that looks promising, Brown is optimistic and confident. “In the future, instead of asking for a standard cam-locking fitting, industry will order the correct KemKey Safety coupling for the job,” he said.

For more information visit www.Kemkey.com.

www.basinresourcesusa.com •WINTER 2014

! !

! #*# "$'), )%-

,-") "$'), )%/// "+(,-+*)&$*.+0'),.+")$% $*(

BASIN RESOURCES 41

ConstruCtion

on sChedule New School of Energy getting rock star level attention Dorothy Nobis Basin Resources san Juan College school of Energy’s new facility continues to be a source of interest in the community. “the amount of attention this building is receiving was unexpected,” said Jeremiah hayes, project manager for Jaynes Corporation, contractor for the facility. “i guess once people catch the vision and passion behind the mission and purpose of the school of Energy, it becomes contagious. We have loved walking different delegations from private and public entities through the construction site and showing off the skills of our team.” the construction has gone well, hayes said. “the college has been a delight to work for and our crews Photos by Josh Bishop

SPECIALIZING IN • Residential Projects • Commerical Projects • Industrial Projects • New Construction • Remodeling Additions Financing Options Available • Blueprints with estimates (not guesstimates) • Service Calls

505-327-7525 3005 Northridge Drive, Suite K www.basinelectricnm.com

WINTER 2014 • www.basinresourcesusa.com

• Repair & Replacement

42 BASIN RESOURCES are amazing. The workers are putting a lot of blood, sweat and tears into the building and it is humbling to watch these trades in action.”

The 65,000-square-foot building will bring together, under one roof, three satellite offices for the School of Energy. Currently, offices are on South Hutton Avenue, 30th Street and at the Quality Center for Business on the San Juan College main campus on College Boulevard.

“Having the entire staff all together in the same building will facilitate service and assistance to our students and will bring our team together for the first time in a long time,” said Randy Pacheco, dean of the School of Energy.

“The new facility will provide office space for our instructors and staff, as well as classrooms, study areas, work bays for our programs and meeting rooms for our industry partners.”

(+

(

%) . !-)"

$) .

!"(&'(

*"

( .

)(" ' * )(" ' *

# &# '#!$ (%$

-) .

“The amount of attention this building is receiving was unexpected.”

— Jeremiah hayes, ProJect manager Jaynes corPoration

Construction on the project began in February, and completion is expected in the early spring of 2015. The planning and timing of the construction was carefully scheduled by the Jaynes Corp. team. “We sequenced construction so that the temperature sensitive systems will be complete before we experience freezing temperatures.

The interior of the building will be heated for work to continue,” said Hayes.

&(#

.

+ %*"*",

"*

)*"%

'#!$ (%$ (

# &# -. +++ ' "! $

#

!

" '%)& %#

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 43

(505) 326-1195 WINTER 2014 • www.basinresourcesusa.com

www.sjunitedway.org www w.sjunitedway y.org

44 BASIN RESOURCES “The outside of the building will be nearly complete before the holidays and progress will look slower from the street,” “But don’t be fooled,” Hayes added with a smile, “There is a team of busy badgers diligently installing the finishes on the inside.”

Working with the San Juan College staff on the project has been a positive experience, Hayes said.

“Our relationship with the various departments and representatives of San Juan College has been nothing short of a delight,” he said. “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 get to work with. This project has an air of excitement and anticipation and even fun that, I believe, most of us are experiencing. It truly is one of the best projects

I’ve had the privilege to be a part of.”

“We are excited that the new School of Energy is on schedule,” said Dr. Toni Hopper Pendergrass, president of San Juan College. “It is going to be a beautiful facility that expands the campus of

San Juan College and one that will provide the capacity to serve more degree and certificate seeking students in the energy industry. The partnership with Jaynes regarding this major project has been both positive and enjoyable.”

www.basinresourcesusa.com •WINTER 2014

46 BASIN RESOURCES

Jeff Balmer, San Juan Basin asset manager for Encana, speaks March 18, 2013 at San Juan College during the San Juan Basin Energy Conference. – File photo www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 47

Rick MuncRief keynote speakeR

San Juan Basin Energy Conference set for March 24 – 25 Dorothy Nobis Basin Resources the 2015 san Juan basin Energy Conference, set for March 24-25 at san Juan College, will have a keynote speaker who is familiar to many in san Juan County rick Muncrief, who was named WPX Energy inc.’s Chief Executive officer in May, has ties to the san Juan basin, and will speak to the expected 750 attendees on March 24. Muncrief worked for ConocoPhillips and burlington resources locally and spent five years with Continental resources before taking the helm at WPX. Muncrief ’s return to Farmington is anticipated by many who knew him. bill standley was a classmate of Muncrief ’s in the Leadership san Juan Class of 1996. standley, former mayor of Farmington and now a municipal judge,

remembers Muncrief as a man of intelligence, integrity and “such a nice guy,” he said.

“When rick left the community, we lost a great contributor to the city of Farmington,” standley said. “he was involved at many levels, including the community,

schools, and his church. he just stood out as a member of Leadership san Juan and he was a pleasure to be around.” standley also said tjat if he were a member of a board of directors of a major oil and gas company, he would invest in a chief executive officer of Muncrief ’s caliber. “i’m sure WPX will reap the rewards of its investment by hiring rick.”

Nancy shepherd was one of the organizers of Leadership san Juan and she is not surprised at the success Muncrief has enjoyed. “rick is definitely a neat guy,” shepherd said, adding Muncrief is typical of those who graduate from the program. “People have leadership qualities when they participate (in Leadership san Juan),” she said. “the program helps them expand (their knowledge) and helps them look at things differently.”

SIERRA CHEMICALS

WINTER 2014 • www.basinresourcesusa.com

48 BASIN RESOURCES It’s always satisfying, Shepherd added, to see a graduate of Leadership San Juan enjoy the success Muncrief has. “It was a loss when Rick and his wife, Gail, moved, but we’re proud of him.”

For Muncrief, coming back to San Juan County and the San Juan Basin is much like a homecoming.

“My family and I spent more than a decade in Farmington earlier in my career,” Muncrief said. “I learned a lot and grew tremendously, both personally and professionally. I feel very connected to the community, the state and the industry in the San Juan Basin.”

“It’s always an honor to return to the area where we have so many friends and close acquaintances,” Muncrief added.

Muncrief is a third-generation oil and gas

“It’s always an honor to return to the area where we have so many friends and close acquaintances .”

— RICK munCRIef WPX eneRgy InC.

professional, and his children are continuing the family tradition. Muncrief ’s grandfather worked on work-over rigs for a time, along with being a sharecropper. His father spent his career in pipeline, compressor and plant construction. Now, Muncrief ’s son works for Samson Resources, an independent oil and natural gas company engaged in the exploration, development and production of oil and natural gas from properties located on-

shore in the United States. His daughter works for ExxonMobil.

Muncrief recently made news in southwestern Pennsylvania when he announced WPX has decided to divest itself of its Marcellus Shale assets. WPX has about 160 active wells in dry gas areas in southern Pennsylvania, and has been drilling in the Marcellus since 2010.

Muncrief and the board of directors of WPX decided to focus on New Mexico and two other areas of the country in which WPX has assets. Colorado, which has natural gas liquids, and North Dakota, along with New Mexico, where the company drills for oil, offer a positive return on investment, a spokesman said of the three states.

The continuing drop in oil prices and the opportunities for natural gas will be a focus during the San Juan Basin Energy Confer-

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 49 Juan College School of Energy and the CEO of Four Corners Innovations, sponsors of the event.

“The conference will give those attending the opportunity to discuss and receive insights into the future of energy and the market it serves,” said Pacheco. “We expect the 2015 conference to attract the same industry professionals who came in 2013, and who are willing to share their visions and knowledge of the industry. 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.”

Dr. James Henderson is on the steering committee for the conference and also is excited about what attendees will hear and discover during the 2015 event.

“The conference will provide insights into what’s happening with PNM (Public Service Company of New Mexico and the San Juan Generating Station), the coal mines and the

two power plants,” Henderson said. “Our speakers will share their thoughts on where we are and what the challenges and opportunities are for the oil and gas/energy industry.”

In addition to Muncrief, speakers expected to participate in the conference include Ken McQueen, also of WPX; David Martin, Secretary of the Mew Nexico Energy, Minerals and Natural Resources Department; Dr. Dan Fine, research associate for the New Mexico Center for Energy Policy/ New Mexico Institute of Mining and Technology; Steve Henke, president of the New Mexico Oil and Gas Association; and Marita Noon, executive director of Citizens' Alliance for Responsible Energy, a lobby group funded by New Mexico oil and gas industry interests, and the executive director for Energy Makes America Great Inc. Other speakers have been invited to participate in the conference and those names will be released when they are confirmed.

WINTER 2014 • www.basinresourcesusa.com

This is the second San Juan Basin Energy Conference. The first one, held in March of 2013, was a great success, with more than 450 people attending.

“The tremendous response from the leaders in the industry to our first conference, and the success we enjoyed from it, has set the bar pretty high for the 2015 conference,” said Randy Pacheco. “We anticipate about 700 people to attend the 2015 conference.

The cost of oil, the direction and future of the oil and gas/energy industry, and the vision of industry leaders will make this conference, just like the 2013 one, an event that will bring together people who have invested their time, experience and talents to an industry that remains the backbone of our economic foundation.”

The conference is hosted by San Juan College, New Mexico Tech and Four Corners Innovations. For additional information, visit the conference web site at www.sanjuanbasinenergy.org; or call 505.566.3676.

50 BASIN RESOURCES

BLM refutes claims Groups call for Four Corners fracking moratorium Dorothy Nobis Basin Resources An official at the Farmington Field office of the bureau of Land Management, bLM, has refuted allegations by environmentalists that inspectors at the bureau of Land Management have been negligent in protecting the environment from oil and gas drilling.

A 34-page letter, in late october, from the san Juan Citizens Alliance, the Chaco Alliance, WildEarth Guardians and the Western Environmental Law office, outlined issues with the bLMâ&#x20AC;&#x2122;s Farmington Field office and its approval of Mancos shale drilling permits.

* Fracking 54 www.basinresourcesusa.com â&#x20AC;˘ WINTER 2014

BLM board nominations Second call for nominations for Wild Horse and Burro Advisory Board The Bureau of Land Management announced a second call for public nominations over a 30-day period to fill three positions on its national Wild Horse and Burro Advisory Board. To be considered for appointment, nominations must be submitted via email or fax by Dec. 20, 2014, or postmarked by the same date. The BLM announced its second formal request for nominations in the Nov. 18 Federal Register at www.gpo.gov/fdsys/pkg/FR-2014-11-18/pdf/201427273.pdf .

Those who have already submitted a nomination in response to the first call for nominations (published in the Federal Register on Aug. 29, 2014 (79 FR 51601), do not need to resubmit. All nominations from the first and second calls will be considered together during the review process.

Nominations are for a term of three years and are needed to represent the following categories of interest: wild horse and burro advocacy, veterinary medicine (equine science), and public interest (with special knowledge of protection of wild horses and burros, management of wildlife, animal husbandry, or natural resource management).

The board advises the BLM, an agency of the Department of the Interior, and the U.S. Forest Service, an agency of the Department of Agriculture, on the protection and management of wild free-roaming horses and burros on public lands administered by those agencies.

The board generally meets twice a year and the BLM director may call additional meetings when necessary. Members serve without salary, but are reimbursed for travel and per diem expenses according to government travel regulations.

The Advisory Board comprises nine members who represent a balance of interests. Each member has knowledge or special expertise that qualifies him or her to provide advice in one of the following categories: wild horse and burro advocacy; wild horse and burro WINTER 2014 • www.basinresourcesusa.com

52 BASIN RESOURCES research; veterinary medicine; natural resources management; humane advocacy; wildlife management; livestock management; public interest (with special knowledge of equine behavior); and public interest (with special knowledge of protection of wild horses and burros, management of wildlife, animal husbandry, or natural resource management).

Individuals shall qualify to serve on the board because of their education, training, or experience that enables them to give informed and objective advice regarding the interest they represent. They should demonstrate experience or knowledge of the area of their expertise and a commitment to collaborate in seeking solutions to resource management issues.

Any individual or organization may nominate one or more persons to serve on the advisory board; individuals may also nominate themselves. In accordance with Section 7 of the Wild Free-Roaming Horses and

Burros Act, federal and state government employees are not eligible to serve on the board.

For those interested, please submit a nomination letter and full resumé. The following information must be provided: the position(s) for which the nominee wants to be considered; the nominee’s first, middle, and last name; business and home addresses and phone numbers: email address; present occupation/title and employer; education (colleges, degrees, major field of study); career highlights; qualifications: relevant education, training, and experience; experience or knowledge of wild horse and burro management; experience or knowledge of horses or burros (equine health, training, and management); and experience in working with disparate groups to achieve collaborative solutions. Applicants must also indicate any BLM permits, leases, or licenses held by the nominee or his/her employer; indicate whether the nominee is a federally registered

lobbyist; and explain why the nominee wants to serve on the board. Also, at least one letter of reference from special interests or organizations the nominee may represent must be provided.

Nominations may be submitted by email, fax, or regular mail. Email the nomination to stbohl@blm.gov. To send by the U.S. Postal Service, mail to the National Wild Horse and Burro Program, Department of the Interior, Bureau of Land Management, 1849 C Street, N.W., Room 2134 LM, Attn: Sarah Bohl WO-260, Washington, DC 20240. To send by FedEx or UPS, please send to the National Wild Horse and Burro Program, Department of the Interior, Bureau of Land Management, 20 M Street, S.E., Room 2134 LM, Attn: Sarah Bohl, Washington, DC 20003. Or fax to Ms. Bohl at 202-9127182. For questions, please call Ms. Bohl at 202-912-7263.

The BLM manages wild horses and burros as part of its overall multiple-use and

)!! * # * '" # ($#

% # )( ! )&) '&)

+( +(

# ( ( '" # ($#

!*

(

CUT COST. NOT COVERAGE

# ( '" # ($#

( ( '" # ($#

www.basinresourcesusa.com •WINTER 2014

sustained-yield mission. Under the authority of the 1971 Wild FreeRoaming Horses and Burros Act, as amended, the BLM manages and protects wild horses and burros while ensuring that population levels are in balance with other public rangeland resources and uses.

The BLM manages more than 245 million acres of public land, the most of any federal agency. This land, known as the National System of Public Lands, is primarily located in 12 western states, including Alaska. The BLM also administers 700 million acres of sub-surface mineral estate throughout the nation. The BLM’s mission is to manage and conserve the public lands for the use and enjoyment of present and future generations under our mandate of multiple-use and sustained yield. In fiscal year 2013, the BLM generated $4.7 billion in receipts from public lands.

BLM oil and gas lease sale nets more than $83 million As part of President Obama’s all-of-the-above strategy to continue to expand safe and responsible domestic energy production, a Bureau of Land Management oil and gas lease auction netted over $83 million in revenues from the sale of 31 federal leases totaling 13,282.01 acres in Chavez, Eddy, Guadalupe, and Lea counties. The highest bid per acre for a 640-acre parcel was $21,000 in Lea County.

BLM oil and gas leases are awarded for a period of 10 years and for as long thereafter as there is production in paying quantities. The revenue from the sale of these federal leases, as well as the 12.5 percent royalties collected from the production of those leases, is shared between the federal government and the state of New Mexico. Fiftytwo percent of the revenue generated goes to the federal government and 48 percent to the state where leasing occurs. The sale netted $83,080,090. The state of New Mexico will receive about $39,878,443.

The Mineral Leasing Act of 1920 and the 1987 Federal Onshore Oil and Gas Leasing Reform Act authorize leasing of federal oil and gas resources. The 1987 law requires each BLM state office to conduct oil and gas lease sales on at least a quarterly basis. BLM lease sales are competitive and conducted by oral bidding.

Sale dates for 2015 Information pertaining to specific sales is listed by sale date. This includes sale notices, results, public comment opportunities, environmental assessments, protests and other documents.

Note: Not all documents may be available at a given time. They will be added as they become available. www.blm.gov/nm/st/en/prog/energy/oil_and_gas/lease_sale_n otices • January 21, 2015 Lease Sale • April 22, 2015 Lease Sale • July 22, 2015 Lease Sale • October 21, 2015 Lease Sale WINTER 2014 • www.basinresourcesusa.com

54 BASIN RESOURCES

Fracking

continued from 50

The letter states the BLM continues to issue permits for hydraulic fracturing (fracking), but hasn’t analyzed how the process affects the environment.

In the letter the groups demanded the U.S. Bureau of Land Management put the brakes on fracking in northwestern New Mexico until the agency can safeguard the climate, clean air and water, and the region’s cultural heritage.

Dave Mankiewicz, assistant field manager for the Farmington BLM office, said the office has 18 inspectors and funds an additional five Navajo inspectors and four Jicarilla Apache inspectors.

“They are all fully trained and inspect about 5,000 wells each year,” Mankiewicz said.

Reports that the Farmington office has a shortage of inspectors have been exaggerated Mankiewicz added. “We’re down

three (inspectors),” he said, “because people have retired, transferred or quit. And there’s no funding (to replace them).”

BLM inspectors are trained to do production inspections, drilling inspections, abandonment inspections, workover inspections, environmental inspections, records verification, undesirable event inspections and alleged theft inspections, according to the BLM’s web site.

“We look at all of the environmental impacts before we issue permits,” Mankiewicz said. “We look for endangered species, groundwater and air quality, among other things. We’ve been fracking in the (San Juan) basin since the ‘60s and we don’t believe we’ve impacted the groundwater at all.”

Neil Kornze, BLM director, told representatives of the American Petroleum Institute at a meeting in Washington recently,

that the BLM has a shortage of inspectors, declining budgets and a record number of wells on public lands that the agency must address.

A fee system has been proposed in President Obama’s budget, would allow the BLM to recruit more than 60 new inspectors throughout the country, which Kornze said is needed.

“It is critical that we increase our inspector efforts to ensure that taxpayers are getting a fair return on public resources,” Kornze stated in a BLM media release.

Despite having a full staff of inspectors at the Farmington office, Mankiewicz said his inspectors are diligent in their efforts to ensure that before permits are issued locally, all inspections have been completed and environmental issues have been addressed.

“I’m comfortable with what we’re doing,” he said.

Missing Work to Care For Your Loved One? Injured on the Job? IN-HOME CARE SERVICES AT AFFORDABLE RATES Companionship Home Cooked Meals Light Housekeeping Errands/Transportation -Grocery Shopping -Doctor Appts.

-Hair Appts. & More

Philips Lifeline Services -Fall Prevention -Medication Dispensing 2 Hrs up to 24 Hr. Care Respite Care or Family Relief Dementia/Alzheimer’s Care

Individualized Care Personal Care -Toileting -Bathing -Transferring End of Life Care Private Duty Nursing Available

Partners Assisted Living Services 505-325-9600

Caring For Our Community Since 2002 BACKGROUND CHECKS • CONTINUING EDUCATION • BONDED • INSURED www.basinresourcesusa.com •WINTER 2014

56 BASIN RESOURCES

January meetings PNM, PRC set week-long hearings on plant’s future Dorothy Nobis Basin Resources in october, PNM filed a settlement agreement with New Mexico regulators, asking for permission to implement a revised state plan for the san Juan Generating station to comply with federal environmental regulations while minimizing the cost to customers. the agreement would allow the addition of renewable energy. PNM would cut water use and seven different emissions at the plant by about 50 percent. the settlement, however, was not approved, said susan sponar, senior Communications representative for PNM. “there will be hearings on our request starting Jan. 4, 2015, through Jan. 15, 2015, if necessary. A final decision will come sometime later, likely in the early spring,” sponar said. if the request is approved as submitted, sponar added, customers would not see some of the expected 7 percent increase until 2018; however some costs would be passed on earlier.

“For example, we have asked for approval to build 40 megawatts of new solar under a separate request,” sponar said. “if approved, those costs would be passed along to customers in 2016.”

With solar remaining a positive alternative to the emissions problem, PNM hopes to extend its customer rooftop solar program through 2019. the current program is only approved through 2016. the lower costs of solar panels – about

half of the cost of PNM’s first solar installations in 2011 – along with a 30 percent federal tax benefit that is in place through 2016 (after that, it drops to 10 percent), helps make solar a cost-effective choice for PNM and its customers, sponar added. “however, as you know, the sun does not always shine, so solar must be used along with other resources that are available around the clock – coal, natural gas and nuclear,”

sponar explained. the closures of Units 2 and 3 at the coal-fired san Juan Generating station have caused some concerns about a possible loss of jobs at the station.

“Although san Juan will only have two operating units as opposed to four after 2017, we will still have a workforce at the plant,” sponar said. “today, we have 310 employees at the plant and we estimate we could need as many as twothirds that number, plus we will still need contractors.”

www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 57 PNM has also proposed building a 177 natural gas peaking plant on or near the site. That, Sponar explained, will create hundreds of jobs during the construction phase.

“PNM has also agreed to donate $1 million for workforce training for Navajo students and (has) donated to Four Corners Economic Development Inc.,” she said. “Finally we agreed that we would not lay off any employees as a result of the shutdown.”

The Environmental Protection Agency is expected to propose a new ozone standard in December.

Depending on where the standard for ozone is set, San Juan County, which is where the San Juan Generating Station is located, could be designated as not attaining the standard for ozone. If that happens, the New Mexico Environmental Department would have the responsibility of bringing the county into compliance, Sponar said, and would look at all sources of NOx and volatile organic compounds, since those are pollutants that form ground level ozone.

Nitrogen dioxide (NO2) is one of a group of highly reactive gasses known as “oxides of nitrogen,’ or “nitrogen oxides (NOx).” Other nitrogen oxides include nitrous acid and nitric acid. EPA’s National Ambient Air Quality Standard uses NO2 as the indicator for the larger group of nitrogen oxides. NO2 forms quickly

“This case was settled by some of the parties via a stipulated agreement (stipulation) and the hearings in January will address the merits of that stipulation.”

— Patrick Lyons Prc commissioner for District 2

from emissions from cars, trucks and buses, power plants, and off-road equipment, the EPA’s web site states. In addition to contributing to the formation of ground-level ozone, and fine particle pollution, NO2 is linked with a number of adverse effects on the respiratory system.

With the implementation of the state plan for regional haze, Sponar added, San Juan Generating Station should not have to install additional controls to further reduce emissions, especially with the two unit shut down.

Also expected in December is a ruling by the EPA regarding the handling of coal ash. “Although this rule will not directly address how we currently manage coal ash (which is used as reclamation

WINTER 2014 • www.basinresourcesusa.com

material in the adjacent mine pits), it will likely influence the Office of Surface Mining as it drafts a rule next year to cover mine placement of ash,” Sponar said. “In general, we believe that the plant, because we dry handle our ash, will be able to continue with our current ash handling method. And we believe our actions at the plant put the state in a good position to comply with recently proposed federal carbon regulations.”

PNM believes its proposal is the most cost-effective choice for complying with federal haze regulations and will put New Mexico ahead toward compliance with recently proposed carbon regulations. The company further states that it has done an analysis of thousands of

power supply replacement strategies and believes its proposal to use carbon-free nuclear and solar power, along with natural gas – which emits about half the carbon of coal – is the most cost-effective and most balance option.

“We have worked to strike the right balance between reliable power, the environment and affordability,” Sponar said of PNM’s efforts. “Closing two units at the plant will reduce our coal power by 30 percent and it will reduce water use and seven emissions from the plant by about 50 percent, including greenhouse emissions.”

In an email, Patrick Lyons, the PRC Commissioner for District 2, said hearings will begin in January 2015, and will be conducted by Hearing Examiner Ashley Schannauer.

“These hearings will address PNM’s ‘Application of Public Service Company of New Mexico for Approval to Abandon San Juan Generating Station Units 2 and 3, Issuance of CCNs for Replacement Power Resources, Issuance of Accounting Orders and Determination of Ratemaking Principles and Treatment,’ case 1300390-UT,” Lyons said. “This case was settled by some of the parties via a stipulated agreement (stipulation) and the hearings in January will address the merits of that stipulation. The hearing examiner will issue a recommended decision on the stipulation. The parties may file exceptions to the recommended decision. The five-member commission at the NMPRC will then be briefed on the recommended decision and the parties’ exceptions during one of the Regular Open Meetings and vote on the hearing examiner’s recommended decision.”

Lyons cannot comment further on the settlement request because he is one of the five commissioners who will decide the case, and can’t offer an opinion or judgment until the case is heard.

Scott Eckstein, a San Juan County Commissioner and Mayor of Bloomfield, supports PNM in its efforts to diversify its power generation with new technologies.

“PNM is a very vital industry in our community, not only in providing energy but in providing much needed jobs in a tough economy,” Eckstein said. “I would hope the PRC takes all of this into consideration when deciding on the future, and I have faith that they will make the right decision.”

Dr. James Henderson is the chairman of the board of directors for 4 Corners Economic Development (4CED) and said he hopes PNM and the New Mexico Public Regulations Commission can agree to a settlement when the hearings are held in January.

“PNM supports and is a member of 4CED and is as concerned about the economy and job force in San Juan County as we are,” Henderson said. “PNM has been very responsive to the requirements EPA has put before it. It is the hope of 4CED that the issues will be resolved and PNM will continue to provide jobs that are needed by our residents and our local economy.” www.basinresourcesusa.com •WINTER 2014

BASIN RESOURCES 59

.E. . N . . .E. . R. . G . . . Y. . . . N . . . E. . W . .

Across the Nation

. S.

Crude oil, lease condensate production now at highest levels since 1986 Crude oil and lease condensate production in the United States exceeded 8.6 million barrels per day (bbl/d) in August, a production volume not observed since July 1986, according to EIA’s latest Petroleum Supply Monthly.

More than half of total U.S. production was accounted for by record production from three basins in three states.

Production from the Permian Basin in Texas and New Mexico accounted for 1.66 million bbl/d, while the Eagle Ford Shale in the Western Gulf Basin, also located in Texas, produced 1.57 million bbl/d. The Bakken Shale in North Dakota’s Williston Basin accounted for 1.13 million bbl/d.

Domestic production has increased dramatically over the past four years, increasing from 5.4 million bbl/d in January 2010 to its current level, driven by increasing production from shale and other tight formations. During 2014 alone, 10 states (the three states previously mentioned in addition to Oklahoma, Colorado, Wyoming, Utah, Ohio, West Virginia, and Pennsylvania) have set monthly production records since 1995, and accounted for more than 64 percent of total U.S. production during August.

Although down from 2,031 rigs in 2008, U.S. oil and natural gas rig counts have been increasing over the past two years. A total of 1,904 rigs were actively drilling during August, 1,578 of which

were targeting liquids. Notably, once production starts, three-fifths of all the wells produce both oil and natural gas. Of the 1,904 active rigs, 62 rigs were operating

WINTER 2014 • www.basinresourcesusa.com

offshore while the remaining 1,842 rigs were drilling onshore.

Now typical of the industry, horizontal

* Crude Oil 61

60 BASIN RESOURCES

Coal fired power plants stockpiles are smaller than in recent years Coal stocks at electric power plants, which totaled 121 million tons at the end of August, are relatively low in both absolute and days of burn terms relative to recent historical norms. This is true both nationally and in the Upper Midwest. About two-thirds of coal used to generate electric power moves from coal mine to power plant either fully or partially by rail.

Power plants in the Upper Midwest operated at very high rates during last winter's extreme cold weather, burning lots of coal.

As these plants rebuild their stockpiles, many operators want shipments of coal well above the levels they received in 2013.

Issues with delivery by rail are making it more difficult to ship larger volumes of coal and rebuild stockpiles at coal-fired power plants. Although the rail problems are real, their role should not be overstated. Despite the problems on the rail system, particularly in the Upper Midwest, coal car loadings year to date through Oct. 25 were up slightly from last year (0.3 percent). Loadings have been on an upward trend in recent weeks: during four weeks in October, coal car loadings averaged 4.7 percent higher than the comparable weeks in 2013.

Four very small plants in Minnesota have shut down to conserve coal stocks, but not because they ran out of coal. Rather, grid operators have opted to dispatch other units during the fall shoulder season, when they have the option to dispatch non-coal units to conserve coal stocks for use during winter, the peak period for power demand in Minnesota and other states in the north of the country.

There have also been reductions in operating levels (utilization rates) at plants in several other states as a result of concerns about coal availability. Operators have substituted higher-cost power from other sources, such

as natural gas-fired generation, to make up the difference. In addition, some power plants have increased their purchases of coal moved by truck to their power plants, at significantly higher cost compared to usual rail shipments.

At an individual plant, stockpiles can be viewed in terms of days of burn. The daysof-burn calculation takes into account both the current stockpile level at a plant and its estimated consumption (burn) rates in coming months to approximate how many days the plant could run at historical levels before depleting its existing stockpile. EIA calculates days of burn by averaging the most recent three years of historical data and applying that to the upcoming three months.

EIA groups coal plants into three days-ofburn categories: those with less than 30 days of burn, 30 to 60 days of burn, and those with more than 60 days of burn. EIA excludes from the categorization plants that rely on lignite or waste coal, as these plants rely on coal from mine-mouth sources (lig-

nite mines or waste piles and ponds) and do not maintain stocks comparable to other coal plants.

At the end of August 2014, the amount of coal capacity with less than 60 days of burn was 63 percent of the total, compared to only 42 percent at the end of August 2013. Within that group, the percent of capacity with less than 30 days of burn for those same months rose to 23 percent, up from 13 percent in 2013.

Railroads faced weather-related problems last winter that curtailed deliveries. This year railroads have had to accommodate record grain harvests (up 16 percent this year) and increasing amounts of petroleum and petroleum products shipments (up 13 percent this year) vying for space on railroad networks.

Total U.S. rail traffic has increased for every commodity type tracked by the Association of American Railroads, and year-to-date traffic (through mid-October) is 4.5 percent higher compared with the same period last year.

www.basinresourcesusa.com â&#x20AC;˘WINTER 2014

BASIN RESOURCES 61

Crude oil

continued from 59

rigs represent the most common rig type with 1,330 active drilling operations in August, while 374 vertical and 210 directional drilling rigs were operational, respectively. Higher rig counts, along with improvements in drilling productivity, are expected to increase U.S. liquids production to nearly 9.7 million bbl/d by December 2015.

U.S. oil production has been increasing monthly at an average of 62,000 bbl/d since 2010. EIA forecasts that previous production highs set in the 1970s will be surpassed before the end of 2015. This is especially notable as Alaska production provided up to 2 million bbl/d of total U.S. production volumes during high production years in the 1980s. Decreases in

Alaska production are related to natural reservoir decline and reduced exploration along the North Slope; however, discoveries in southern portions of Alaska’s Cook Inlet are adding new production capacity.

Production gains have been observed across the Lower 48, with particular increases in crude oil and lease condensate production from shale and tight formations. Production estimates from EIA’s Drilling Productivity Report confirm that many top-producing reservoirs include production involving horizontally drilled

wells, hydraulic fracturing reservoir stimulation, and multi-well pad drilling. The highest-ranked tight producing reservoirs in 2014 include Texas’s Eagle Ford and Wolfcamp formations, North Dakota’s Bakken-Three Forks formations, New Mexico’s top Spraberry and Bone Springs formations, Oklahoma’s Woodford Shale formations, Colorado’s Niobrara formation, Utah’s Green River formations, Ohio’s Utica and Point Pleasant formations, and the Marcellus Shale formations in West Virginia and Pennsylvania. – EIA

"6)) *""0 ,. " 0 3,1. "/0 -.& " ,+ * ',. . +! 0&."/ 2" /"))

+ ))

+ *" . +! 0&."/ 2" /"))

#.,*

0,

&!+&$%0

&#" &/ "00". &+ 0%" 1& ( ,

0"! 0 &"*/ ,.! ,.+"./ 4

WINTER 2014 • www.basinresourcesusa.com

/0

&+ 0.""0 4

.*&+$0,+

,+ .& +"5

0

62 BASIN RESOURCES

Increased natural gas production would meet most demand from added LNG exports Increased natural gas production is projected to satisfy 60 percent to 80 percent of a potential increase in demand for added liquefied natural gas (LNG) exports from the Lower 48 states, according to recently released EIA analysis.

The report, Effect of Increased Levels of Liquefied Natural Gas Exports on U.S. Energy Market, considered the long-term effects of several LNG export scenarios specified by the Department of Energyâ&#x20AC;&#x2122;s Office of Fossil Energy (FE). The study also considered implications for natural gas prices, consumption, primary energy use, and energy-related emissions. Effects on overall economic growth were positive but modest. A discussion of caveats

www.basinresourcesusa.com â&#x20AC;˘ WINTER 2014

BASIN RESOURCES 63 and limitations of the analysis is also included.

In the export scenarios that EIA was asked to analyze, LNG exports from the Lower 48 states start in 2015 and increase at a rate of 2 billion cubic feet (Bcf ) per day per year, ultimately reaching 12, 16 or 20 Bcf/d. EIA also included a 20Bcf/d export scenario (Alt 20-Bcf/d) with a delayed ramp-up to identify the effect of higher LNG exports implemented at a more credible pace.

EIA looked at these scenarios in the context of five cases from its Annual Energy Outlook 2014 (AEO2014) that reflect different supply and demand assumptions. The cases used in the study were: EIA’s Reference, Low Oil and Gas Resource (LOGR), High Oil and Gas Resources (HOGR), High Economic Growth (HEG), and Accelerated Coal and Nuclear Retirements (ACNR). The five AEO2014

cases used as baselines in the study already include some amount of LNG exports from the Lower 48 states. The LNG exports in the AEO2014 baseline cases, rather than the scenarios specified for this study, reflect EIA’s own views on future LNG exports.

LNG exports from the Lower 48 states

WINTER 2014 • www.basinresourcesusa.com

in the baselines have projected 2040 levels ranging from 3.3 Bcf/d (LOGR case) to 14.0 Bcf/d (HOGR case). Estimated price and market responses to each pairing of a specified export scenario and a baseline will reflect the additional amount of LNG exports needed to reach the targeted export level starting from that baseline.

64 BASIN RESOURCES

Natural gas is dominant heating fuel in colder parts of U.S. Natural gas consumption varies widely by region of the country.

The majority of households that heat with natural gas are located in the Midwest and Northeast. In the upcoming winter months, homes in the East North Central Census division are expected to consume the most natural gas, but not as much as last winter. Extreme cold weather in natural gasintensive regions caused unexpectedly high consumption during the winter of 2013-14.

Residential and commercial consumers use natural gas primarily for space heating.

The East North Central Census division (Wisconsin, Michigan, Illinois, Indiana, and Ohio) is the largest residential and commercial natural gas-consuming division in the country, making up 28 percent of all residential consumption and 24 percent of commercial consumption in 2013.

Because the East North Central Census division has the largest number of households heating with natural gas, its collective response to changes in weather (as measured by heating degree days) is greater than in any other region (see maps below). The response to changes in heating degree days in the South Atlantic Census division (with about 6 million homes which heat primarily

with natural gas) is similar to that of the Pacific and Mid-Atlantic Census divisions (where 10.2 and 9.4 million households, respectively, heat with natural gas). This response may be attributable to natural gas used as a secondary heat source, such as natural gas fireplaces, or as the supplemental heat source to air-source heat pumps. When temperatures drop below a certain threshold (usually around freezing temperatures), heat pumps rely on a supplemental heat source.

The National Oceanic and Atmospheric Administration projection is that tempera-

tures this coming winter will be closer to normal.

The most recent Short-Term Energy and Winter Fuels Outlook projects that residential and commercial prices will be higher than they were last year, largely because through 2014 (when utilities began buying natural gas for the upcoming winter) prices have averaged higher than year-ago levels, and are currently higher than a year ago.

However, EIA projects lower residential heating bills for consumers because of lower consumption.

www.basinresourcesusa.com â&#x20AC;˘WINTER 2014

BASIN RESOURCES 65

Lower demand, higher supply drive oil prices to lowest level in 5 years Crude oil prices extended their losses the first week of Decmber, falling to their lowest levels in nearly 5 years after the Organization of Petroleum Exporting Countries elected to keep its output target unchanged, even after one of the steepest slumps in oil prices following the global recession. NYMEX crude prices fell to about $65 per barrel, while Brent crude breached the $70 per barrel mark. There is a possibility that prices could fall further in the near term since it seems likely that OPEC, which accounts for about a third of global crude output, is looking to maintain global market share while waiting for higher-cost producers like the U.S. shale industry to scale back production.

Before its recent decline, average monthly Brent spot prices had traded within a narrow $5 per barrel range, from $107 to $112 per barrel, for 13 consecutive months through July 2014.

During that period of low price volatility, substantial oil supply disruptions in the Organization of the Petroleum Exporting Countries (OPEC) were offset by increases in U.S. production and weaker-than-expected global demand. More recently, however, the resumption of significant Libyan oil production, combined with the weakening outlook for global oil demand, has put downward

pressure on prices.

The sustained increase in Libyan production over the summer – increasing from 200,000 barrels per day (bbl/d) in June to 900,000 bbl/d at the end of September – has added supplies to an already well-supplied light sweet crude market in the Atlantic Basin, despite the fact that Libya’s recent production has not come close to its previous level of 1.65 million bbl/d in 2010 and 2011, before fighting that occurred during the Arab Spring.

Over the past several years, increasing U.S. light sweet crude production has significantly reduced light sweet crude imports to the United States. Those reduced imports, which were sourced primarily from Africa, became

WINTER 2014 • www.basinresourcesusa.com

available to replace Libyan production lost during a time of civil war and subsequent unrest. While Libyan production was disrupted, supply and demand in the Atlantic Basin was relatively balanced. However, as Libyan production has returned and has remained largely online despite internal unrest, the price of Brent crude oil has fallen.

Although the return of significant Libyan production has been an important factor putting downward pressure on the Brent price, weakening global demand, particularly in Europe and Asia, is also important. Economic growth in 2014 outside of the United States has been slow, and recent data releases appear to confirm lower-than-expected growth, particularly in Asia and Europe.

66 BasiN resoUrces

advertisers directory Allstate ....................................................52 Viviana Aguirre 900 Sullivan Ave., 505-327-4888 B J Brown 3030 E Main St., Ste X9, 505-324-0480 Kelly J. Berhost 1415 W. Aztec Blvd, Ste. 9, Aztec, NM 505-334-6177 Harold Chacon 8205 Spain Rd. NE, Suite 209 C Albuquerque, NM 505-296-2752 Dennis McDaniel, 505-328-0486 Matt Lamoreux 4100 E. Main St., 505-599-9047 Silvia Ramos 2400 E. 30th St., 505-327-9667 American Dream Realty .............................13 Farmington, NM 505-566-9901 Animas Environmental Services .................33 Farmington, NM 505-564-2281 Durango, CO 970-403-3084 www.animasenvironmental.com Animas Valley Insurance..............................7 2890 Pinon Frontage Rd. Farmington, NM 505-327-4441 www.aviagency.com Antelope Sales & Service Inc. ....................58 5637 US Hwy 64 Farmington, NM 505-327-0918 www.NMASSI.com Armstrong Coury Insurance.......................39 424 E. Main Farmington, NM 505-327-5077 www.armstrongcouryinsurance.com Bailey’s Welding .......................................28 6175 Hwy 64 Bloomfield, NM 505-632-3739 Basin Electrical Contracting .......................41 3005 Northridge Drive, Suite K Farmington, NM 505-327-7525 www.basinelectricnm.com Basin Well Logging Wireless ......................55 2345 E. Main Farmington, NM 505-327-5244 BM Technology & Supply...........................23 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.........................................60 #7 RD 5859 Farmington, NM 505-325-8771 City of Farmington....................................25 1300 W. Navajo St. Farmington, NM 505-599-1395 www.IflyFarmington.com Elite Promotional & Embroidery ................17 1013 Schofield Farmington, NM 505-326-1710 Encana.....................................................30 www.encana.com/sanjuan Four Corners Community Bank...................64 505-327-3222 New Mexico 970-565-2779 Colorado www.TheBankForMe.com Four Corners Innovations ..........................44 505-566-3676 www.sanjuanbasinenergy.org Foutz Hanon.............................................57 2401 San Juan Blvd.

Farmington, NM 505-326-6644 Halliburton ...............................................48 www.halliburton.com Halo Services ...........................................19 70 CR 4980 Bloomfield, NM 505-632-7007 Hands on Safety Service ...........................65 1901 E. 20th St. Farmington, NM 505-325-4218 Harpole Construction ................................16 60 RD 3961 Farmington, NM 505-325-1249 Highlands University.................................53 505-454-3004 nmhu.edu/energy Honstein Oil .............................................38 96 Road 4980 Bloomfield, NM 505-632-5730 IEI Industrial Ecosystems ..........................15 49 CR 3150 Aztec, NM 505-632-1782 www.industrialecosystems.com Imagenet Consulting .................................51 Farmington, NM 505-327-7383 Mechanical Solutions, Inc. ...........................2 1910 Rustic Place Farmington, NM 505-327-1132 Mesa West Directional ...............................31 505-402-8944 www.mesawestdirectional.com

Miller & Sons Trucking ................................4 1110 W. Sategna Ln. Bloomfield NM 87413 505-632-8041 www.powerinnovations.com Morgan Stanley/JimLoleitt .........................12 4801 N. Butler Farmington, NM 505-326-9322 www.morganstanley.com New Image Powder Coating .......................21 2792 Inland Street Farmington, NM 505-326-2797 No Limit Motorsports ................................36 Farmington, NM 505-326-5477 Odessa Pumps..........................................49 940 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 ............................18 Farmington, NM 505-325-8852 www.parkersinc.com Partners Assisted Living ...........................54 313 N. Locke Ave. Farmington, NM 505-325-9600 www.partnersassistedliving.com Pumps and Service ...................................29 3440 Morningstar Dr. Farmington, NM 505-327-6128 www.pumpsandservice.com QuickLane Tire & Auto Center ....................61 5700 East Main St. Farmington, NM 505-566-4729 RA Biel Plumbing & Heating ......................63 505-327-7755 www.rabielplumbing.com Reliance Medical Group .............................42 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 Rush Truck Centers of New Mexico ..............9 6521 Hanover Road N.W. Albuquerque, NM 87121 505-875-3410 www.rushtruckcenters.com San Juan College.......................................36 Farmington, NM 505-326-3311 www.sanjuancollege.edu Sanchez and Sanchez .................................5 Farmington, NM 505-327-9039

San Juan Casing Service ............................22 6101 E. Main St. Farmington, NM 505-325-5835 San Juan United Way .................................43 505-326-1195 www.sjunitedway.org Sierra Chemicals .......................................47 104 Bison Trail Aztec, NM 505.334.0447 www.sierrachemicals.com Southwest Concrete Supply .......................31 2420 E. Main Farmington, NM 505-325-2333 www.southwestconcretesupply.com The Spare Rib...........................................28 1700 E. Main Farmington, NM 505-325-4800 www.spareribbbq.com Sunray Casino...........................................52 Farmington, NM 505-566-1200 TJ’s Diner .................................................47 119 East Main Street Farmington, NM Treadworks ..............................................37 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 U.S. New Mexico Federal Credit Union ........24 3024 E. Main St. Farmington, NM 505-599-3610 usnmfcu.org Uncle Bob’s Auto & Truck..........................13 3995 Cliffside Dr. Farmington, NM 505-436-2994 Vectra Bank ..............................................62 Farmington, N.M. 505-564-8652 www.bectrabank.com X-Chem, LLC .............................................45 855-829-0001 www.x-chem.com Wagner Equipment....................................16 905 Hwy 516 Flora Vista, NM 505-334-5522 Ziems Ford Corners ..................................32 5700 East Main Farmington, NM 505-325-8826

www.basinresourcesusa.com •WiNter 2014

!&, & & ( !*+ ! $ /'*# *,+ *.! $+ "

-%( " # + *.! !& , * ,* &+ * (-%(+ & & !& + 1 * -$! (-%(+ & & !& + '%(* ++'* & & !& % !&, & &

" % *'

,/'*$ &

%!++!'& '%($! & -( !,+ & +,' & $12 *+ -,!$!2 '* (*'( * %!++!'&+ ,-&!& " , ' + +- + '!$ & $1+!+ !$-* & $1+!+ & '-* '%(* &+!. (* . &, ,!. % !&, & & (*' * % (-, -+ +, ( ' '%( ,!,'*+ !& , !& -+,*1

" /!& , *+ ( *+'&& $ * 0( *! & % !&, & & , &! ! &+ ( $ ' &', '&$1 % !&, !&!& 1'-* ! $ )-!(% &, -, $+' ( * '*%!& % &1 % "'* * ( !*+ -* . ! $ + * -$$1 )-!(( /!, * & + ,''$+ ( *,+ & (* ++-* / + *+ ,' ( * '*% % &1 * ( !*+ '& +!,

$ * '* -%%!&+ ,-* $ + & !& *,+ -%%!&+ !$, *+ & 0 -+, '%('& &,+ !+,*! -,'* '* * & * &. * '%(* ++'*+ *,+ & ( !* &, * '! '%(* ++'*+ *,+ & ( !* &, * *'/ &- ,-*!& !$ ! $ & !& *,+ '++ & -+,*! + '%(* ++'*+ *,+ %+'!$ 1&, ,! $-! + -& * '$-,!'&+ , -* ,*'# &, $$! &, ! , 1+, %+ *,+ & -(($! + '+, ( *,+ !& +,' # $,+ '+ + '. *&'*+ +# ,+ & %'* . * , '-&, * + $ +

/// -/&),-#+, $*( */# .%

*,/%'' /0 !