FREE
VOLUME 1 NO. 8
JULY 2013
POPULATION 8 GROWTH
IN MIDLAND & ODESSA
TCEQ
AIR QUALITY CHECKS 13
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OIL BIZ
Industry INSIGHTS FROM Chevron’S LOCAL LEADER Are You a Leader or a Manager? 26
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IN SOLIDS DOWNHOLE
• U.S. RIG COUNT • TOP 35 Drillers & Operators
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JULY 2013
contents 8
Pbe Features 8
Population Growth in Midland & Odessa
13 Tceq - Air Quality Checks 16 OIL BIZ - Industry Insights from Chevron’s Local Leader
Other Editorials
11 Calendar of Events 14 Are You a Leader or a Manager? 18 PBE Cares 20 Conferences in July - August
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21 Upcoming Auctions 22 Festivals and Events in Texas 24 Tech Bites 26 Suffocating in Solids Downhole 30 PBE News Briefs: Basin, Government, State, Nation, World, OffShore, Shale 34 Restaurant Bites - Back In The Day Cafe 36 PBE Inspires 38 By The Numbers: Texas Rig Count, Top Drillers, Top Operators 41 This Month in Petroleum
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LETTER FROM
THE EDITOR “We make a living by what we get, but we make a life by what we give.” - Winston Churchill In planning for each month’s issue, a lot of thought goes into deciding which stories to include in our feature pieces, our shorter news briefs and even our special sections like PBE Cares and Restaurant Bites. While planning for this month’s issue, the overarching theme naturally progressed into this focus on what seems to be the soundtrack of the lives of those living and working in the Permian Basin right now: unprecedented growth and undeniable evidence of sustainability. For those of us who have lived here long enough, we’ve been through these ‘booms’ before and we’ve survived through the busts that always followed, but there’s just something different this time around and industry leaders are confirming it. We’ve been climbing to the top of the highest point of the roller coaster for the past few years, all the while, squinting our eyes and clinching our teeth waiting for the drop that leaves our stomachs in our throats; and nothing. As you’ll read in this month’s issue, a local leader of one of the nation’s top oil and gas companies explains how times are different now and the roller coaster of the business is not the uncertain and unpredictable ride it used to be. There’s new technology, new resources and new promise for an industry that has historically lacked consistency. Adding to this industry insight of an encouraging economic outlook, are hard facts and figures showing consistent and continued growth across our region. Evidence of the growth can be seen in the hundreds of new businesses popping up in our area, like Back in the Day Cafe which you’ll read more about in this issue. Charities like the Bad Boy Blast are also flourishing as a result of a thriving economy and philanthropic community. All this goes to show we’ve come a long way from the pipe dream of long term prosperity our communities and our industries had always hoped for; rather, those dreams are finally becoming a reality. Of course, I’d be remise if I didn’t point out the fact that none of this would have been made possible without the freedoms we enjoy in this country as a result of our forefathers, those who have paid the ultimate price, and those who continue to fight for our freedom, which we celebrate and remember this month on Independence Day.
Carlos Madrid Editor in Chief/Publisher sales@pbemag.com
/PBENERGYMAG @PBENERGY
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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EDITORIAL CONTRIBUTORS
PBE MAGAZINE CONTACTS EDITOR IN CHIEF/PUBLISHER
Carlos Madrid
sales@pbemag.com 432. 559. 5886
HALEY RAGSDALE WRITER
SALES EXECUTIVE
Brandy Narvaiz
haley@pbemag.com
432. 528. 1082 ART DIRECTOR/LAYOUT & GRAPHICS
Luke Pawliszyn
Lukasz Design Studio West Hollywood, CA luke@lukaszdesign.com
IRIS FOSTER WRITER
SUBMISSIONS Submit story ideas & other news to: haley@pbemag.com
ADVERTISING For advertising info call 432. 559. 5886 or email sales@pbemag.com
PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886
AUDRIE PALMER FREELANCE WRITER Midland, TX audrierpalmer@gmail.com
www.PBEMag.com
Copyright © 2013 Permian Basin Energy, Inc. • Mad Ads Media All rights reserved. Reproduction in whole or in part without the written permission of PBE MAGAZINE, LLC is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at time of going to press, but we accept no responsibility for omissions or errors. PBE Magazine welcomes any comments, feedback, suggestions, and/or submissions for consideration for publication. These may be submitted to: sales@pbemag.com.
DANIEL STEPHENS SENIOR PASTOR Mid-Cities Community Church Midland, TX daniel.stephens@midcities.org
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Population Growth by Audrie Palmer
Boom Town: Economic forecasters predict Midland & Odessa to double in population by 2020. Experts say growth is sustainable, here for the long-term.
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ith populations in both Midland and Odessa up by more than seven percent in the past three years, many in the economic development departments of both cities say they expect the population boom to continue. By 2020, both Midland and Odessa are expected to double in population size, said Odessa Economic Development Director Guy Andrews, with the focus of that coming from the oil and gas industry.
thrived with new businesses calling the Permian Basin home. Nellwyn Barnett, executive vice president of chamber relations for the Midland Chamber of Commerce, said the chamber has had 322 members join in the last two years with 109 of those being in the last 12 months alone.
“It’s like we just discovered oil and we haven’t been going at it for 91 years. It seems there’s enough under there to last us past another 91,” he said.
“Obviously, we’re going to see an increase in retail spending. There are large increases in hotels and restaurants with the new population bringing in additional revenue for the economy,” she said.
Boasting the lowest unemployment in the country with less than four percent in the region, Midland and Odessa are in the top three in the country for areas experiencing a booming growth.
The increase in population has attracted larger franchise corporations with Saltgrass Steak House and Panda Express opening new locations in Midland in the past few months.
From April 2010 to July 2012, the U.S. Census Bureau estimated that the Midland population grew 7.4 percent. Last year, CNN reported that Odessa’s metro population was up an estimated 3.4 percent at a total of 141,325. With the added population, the local economy has
“We are seeing new business come to the area. We feel sustained in the business and retail sector that continues to grow with the population,” she said. “They have the ability to support one another because of the increase which is just of natural result.”
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And Barnett says there’s an additional ability to cultivate new retailers and entrepreneurs due to the buzz Midland is getting nationally for the increase in growth. “With the national recognition, we’ll start drawing the attention of corporations who want to stand up and take notice that there’s something extraordinary happening here and they want to be a part of it,” she said.
And local oil companies are not calling it a boom, she said, but more sustainable growth for the long term. “The thing we’re most excited about is the oil and gas industry is such a huge factor in our economy that what we’re really experiencing and what all the forecasts show is that this a sustainable growth trend and not a boom based on actual production, new technology and new resources and not based on speculation like in the past,” she said. July marks 40 months of economic expansion for Odessa, said Andrews, and over that time CNN reports 2,500 new businesses have opened in Odessa in the past three years. It’s an economy fueled by the oil and gas industry and oil company projections have shown Andrews that he believes this growth in population and economics is sustainable and can go on for a couple of more generations.
in JBS Business Park and South Industrial Park, Andrews said. Leeco Industrial Business Park, which first began construction in 2008, has since expanded to 1,500 acres and has contracts with 30 businesses. But with the increased populations, the housing prices have increased based on demand. Barnett said the Midland Chamber works closely with the local visitors bureau and that not being able to find a hotel room has been largely exaggerated. Many area hotels are full during the week because of business but have many weekends open with rooms for rent. But because of the need for supply and demand, the pricing structures are different than many would expect which has caused a dramatic difference in the economy even from two years ago. “The question is not that they can’t get a room, but do they want to pay for it?” she said. The Odessa economy has also been impacted tremendously because the infrastructure hasn’t caught up to demands. The lack of affordable housing in the area is not only hurting the retail industry in the case for workers and employees but education as well. “Most of our new apartment complexes coming in are high-end but $1,700 a month is a little steep for teachers,” Andrews said. “They’d like to move here and take the jobs but they have no place to live.”
“There are tremendous amounts of money being invested in the area,” Andrews said, with large companies such as Trican Industries, Schlumberger and Halliburton calling the region home. As of May in Odessa, there were 82,000 producing wells providing 71 percent of the oil in Texas provided with oil production estimated to grow 60 percent by 2016. Halliburton has planned a $5 million expansion of its facilities as has Baker Hughes with a $31.5 million expansion package. Companies like Union Pacific are investing also in the area, having started construction in April of over $50 million in rail improvements in the Permian Basin. Commercial lots of expanded with 24 tracts being sold JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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More national builders, from Arizona, Washington, Montana and Texas, are building apartments in the area, he said, as well as D.R. Horton, a national homebuilding company, that has built more than 100 homes in the past six months since moving to Odessa.
“We’re in the energy business regardless of what that looks like,” he said. “This all comes as a result of largest the oilfield in the United States and the second largest in the world being right here in the Permian Basin. “This thriving economy is just a good thing.”
The majority of growth for Odessa in the northeast corridor of Ector County where shopping centers are expanding, as well as new hotels and motels, apartments and single-family homes. Five new subdivisions are planned for Odessa to combat the lack of housing and since 2010, 1,904 apartment units have either been built or are planned to be built. As of May, Betenbough Homes acquired an additional 265 acres for single-family housing, Andrews said.
Audrie Palmer is a freelance writer based in Midland, Texas. She can be reached at audrierpalmer@gmail.com.
The area is also working with other projects to help sustain the economy. A 520 acre solar farm has been proposed, Andrews said. Odessa is also hoping to break ground this year on the Texas Clean Energy Project, a $2.5 billion investment that would be the first of its kind in the world located here in the Permian Basin.
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OBSERVANCES AND CELEBRATIONS
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JULY 2013 Birthstone: Ruby Flower: Larkspur, Water Lily
UNITED STATES INDEPENDENCE DAY
The Independence Day referred to here is the U.S. Independence Day also known as the “4th of July” that commemorates the adoption of the Declaration of Independence. It is a Legal U.S. Holiday that is celebrated with picnics and fireworks.
National: Parks Month, Blueberry Month, Hot Dog Month, Ice Cream Month,
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Cell Phone Courtesy Month
WORLD POPULATION DAY
World Population Day focuses upon people under 25, reproductive issues, and health. This day is sponsored by the United Nations World Population Fund (UNFPA).
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BASTILLE DAY
Bastille Day is celebrated on July 14th each year to commemorate the anniversary of the storming of the Bastille starting the French Revolution 1789 and the uprising of the modern French nation.
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19 COW APPRECIATION DAY
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MOON DAY
Commemorates the day man first walked on the moon in 1969.
20-21 FORT STOCKTON WATER CARNIVAL
HAMMOCK DAY
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NATIONAL PARENTS DAY
Parents’ Day is an American Holiday celebrating parents who provide for strong families to make a strong America.
NATIONAL LASAGNA DAY
AUGUST 2013 Birthstone: Jade, Peridot Flower: Gladiolus
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FRIENDSHIP DAY
19 NATIONAL AVIATION DAY
WOMEN’S EQUALITY DAY
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Promotional Products • TV/Video Production • Graphic Design • Photography Brandy Narvaiz cell 432-528-1082 office 432-559-5886 Sales 12
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TCEQ AIR QUALITY CHECKS by Haley Ragsdale
A red helicopter will grace the summer skyline of West Texas, hovering near pipelines and oil and gas facilities monitoring air quality.
T
erry Clawson, spokesman for the Texas Commission on Environmental Quality, said they regularly conduct aerial surveys like this across the state. Other similar studies have been performed in West Texas in years past but not recently. He explained no concerns led to this aerial survey, and that it is just regularly scheduled testing.
time to gather images and data on potential emissions sources. “The TCEQ is responsible for air quality in Texas, and we are doing this survey to see if VOC could be under reported in the amount of emissions in the air,” Clawson said.
“We are looking to get a good handle on ozone formations in Texas,” Clawson said.
Helicopter flights will be conducted over oil and gas production areas in the following counties: Andrews, Atascosa, Bee, Crockett, De Witt, Dimmit, Ector, Gaines, Howard, Irion, Karnes, La Salle, Live Oak, Martin, McMullen, Midland, Reagan, Reeves, Upton, Ward, Webb and Winkler.
The helicopter is equipped with a specialized infrared camera called the HAWK that can image volatile organic compounds (VOC) and other hydrocarbons invisible to the eye. VOC are a class of compounds present in common things like gasoline and used as solvents or industrial chemicals. VOC can combine with nitrogen oxides in the presence of sunlight to form ground-level ozone. When the camera detects possible hydrocarbon emissions, the technician on the helicopter will note the time and location and other information about the emissions source. The helicopter may hover or circle a particular location for an extended period of
The study is funded by the TCEQ and will run through the summer.
The survey is expected to be complete by midAugust. Clawson said once they process the results they will assess what needs to be done to correct any problems. He explained this is not about handing out fines it is just to identify potential problems. “The survey is for our purposes, once we take a look at the data, if we need to take further action we will.” Clawson said.
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Leader or a Manager?
Are You a by Curt Richardson
There’s a Difference
The terms leadership and management are often used interchangeably, but there is a huge difference between a leader and a manager.
L
eaders aren’t always managers and vise versa. It is a rare individual that is both of these things. They have very different skill sets, both critical to success at a highgrowth business.
Managers, on the other hand, are more adept at executing the vision in a very systemic way and directing employees on how to do so. They can see all of the intricate moving parts and understand how to make them harmonize. Managers are usually very risk-adverse.
Understanding who your leaders are and who your managers are will help you create an organizational structure that not only addresses core business functions and needs but also morale and culture, which are equally if not more important. It will also help you identify where there might be gaps or people in the wrong “seats on the bus,” to quote Jim Collins.
Deep down, a lot of entrepreneurs are leaders and not managers. I’m one of those. I don’t think that I manage well, and if I had to focus solely on that it would be extremely painful for all involved. Conversely, if a manager is expected to lead a company, that company will be managed into a nice, tidy grave.
Leaders have a unique ability to rally employees around a vision. Because their belief in the vision is so strong, employees will naturally want to follow them. Leaders also tend to be willing to take risks in pursuit of the vision.
It’s true that some managers can inspire and some leaders can systemically execute, but these are not their core strengths. For a start-up, the entrepreneur really has no choice but to be both leader and manager, which is usually okay since it’s probably just him/her and one or
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two others. Understanding which you are will help you make important, early choices about whom you need to grow that complement your strengths and ensure the success of your business.
his garage in the early 90’s and in 1998, OtterBox was born. OtterBox evolved into a leader in protective cases for mobile technology and is ranked No. 70 on the 2011 Inc. 500. @OtterBox
OtterBox founder and CEO Curt Richardson created the first prototype of a waterproof case in his garage in the early ‘90s. OtterBox evolved into a leader in protective cases for mobile technology. @OtterBox For OtterBox founder and CEO, Curt Richardson, entrepreneurial drive has always been a way of life. As a kid, Curt organized yard sales and started a lawn service business. By 21, he owned a plastics and tooling company and from there created several businesses. Combining his industry experience with his passion for innovation, Curt created the first prototype of a waterproof case in
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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OIL BIZ Industry insights from Chevron’s local leader by Iris Foster
Foresight, combining innovations, and demand are fueling current oil boom That’s the speculation industry insiders Mitch Mamoulides, Midland/Delaware Basin.
A
lthough supply and demand is still a consideration, this boom is driven by technology, not just price alone, Mamoulides believes. That differentiates it from previous booms. When Chevron’s predecessors (Texaco and Gulf) began here 90 years ago, he remarked, “We initially drilled, and when the wells wouldn’t flow, we installed pump jacks. Then we used water floods followed by CO2 flooding. Once we could find a technology application that worked for various fields, it was not just a price play, but new resources.”
technological increased worldwide the Permian Basin’s with no end in sight. of many energy including Chevron’s manager of the
paramount. Years ago, Odessa leaders had the foresight to create drill site agreements well in advance of the city’s development. Currently, Mamoulides and others are working with Midland officials to ensure that development and drilling can co-exist harmoniously. “We’re sitting on billions of barrels of reserves, and I’ve never seen (in 30 years) this many viable drilling opportunities,” he commented. “Chevron has wells inside other cities, but the advance planning in Odessa is best.”
Another indicator that the boom will continue apace is the amount of investor funding. The major oil companies are self-funded, but a lot of investment dollars have already come into our area and are continuing to flow in. If oil prices drop sharply, the out-of-town money is the first thing to dry up, he learned from some of the local independent producers. About six months after such a price decline, the rig day rate will drop.
The nature of multi-stage hydraulic fracturing on tight rock two miles below ground (in the Wolfcamp and Delaware Basin) he compares to jackhammering a driveway—it doesn’t open up large areas of rock; therefore, it doesn’t extend to fresh water tables. This is one reason that the industry has embraced hydraulic fracturing along with horizontal drilling. He calls it the latest wave to give producers the opportunity for “economic wells.”
In the meantime, drilling continues and responsibility for the environment and citizens’ health and safety is
Other environmental issues like concern for the local sagebrush lizard and various prairie chickens living in
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Photos courtesy of facebook.com/Chevron
five states can present serious roadblocks to energy development. Mamoulides’ company and many others have financially supported voluntary programs to improve the habitats for reptiles and fowl that might have been affected by large-scale drilling. Despite mandates for alternative energy, those are capital intensive projects and infrastructure like transmission lines from area wind farms to the large metropolitan areas take time to construct. Chevron is the largest producer of geo-thermal alternative energy in the world, but most of that is in Indonesia, not the U.S. However, he estimates that by 2030, the world will still get 80% of its fuel from hydrocarbons because more than 7 billion people on the planet are improving their standard of living through energy-driven technology. (Usage was 90,000,000 barrels of oil per day worldwide in 2012.) Texas oil production leads the country, adding 1,000,000 barrels a day during the past four years (2008-2012). The Permian Basin has produced more than 30 billion barrels so far. In fact, the rig count here is higher than in the early 1980s, and those rigs are more efficient. Mamoulides notes that as the number has fallen off slightly in recent months, it’s an indication that rigs are switching from vertical to horizontal drilling. “If there is only one target, like the Cline Shale, you go horizontal, but we’ll continue to see lots of vertical drilling here,” he stated. All of this activity is supported by a workforce ranging from welders, truck drivers, and electricians to various types of engineers. Fortunately, the Permian Basin is blessed with excellent hospitals, good school districts, an international airport, and other amenities. Mamoulides says Chevron has occasionally lost prospective employees because of the high cost of living in the Basin, but generally its generous moving
package, careful relocation timing, and a training facility on FM 1788 has enabled the company to secure most of the 500 employees it has needed during the past several years for the Mid-Continent Business Unit which covers eight states. With the recent ABET accreditation of UTPB’s mechanical engineering program (petroleum engineering is expected to follow), those graduates can now apply to Chevron. The area’s community colleges provide additional field workforce. He’s been amazed at both the number (sometimes 4,000) and distance traveled (as far as the Virgin Islands) of applicants during local career fairs. He believes they are not halfway through the Baby Boomer “crew shift,” and there are always vacancies listed on Chevron’s website.
Granted, the domestic oil industry has known booms and busts, and those inherently affect Permian Basin residents. Our country is also still dependent upon foreign oil. At this time, Mamoulides believes the future is bright for our area and our state as the Permian Basin and Eagle Ford are developed. For the rest of the country, production in states like North Dakota is increasing to offset hurricanes that affect Gulf of Mexico wells and decreasing output in Alaska. With technology driving this boom as well as a healthy oil price, there are billions of recoverable reserves in the forecast. Mitch Mamoulides, the manager for Chevron’s Midland/Delaware Basin, is an LSU-trained mechanical engineer who began his career with Texaco 30 years ago in Hobbs, NM. He was transferred to Midland twice with Texaco, and after it merged with Chevron, this is his third assignment in Midland. He has held positions of increasing responsibility in the Permian, Central U.S., and MidContinent Business Units in operations, drilling, and asset development.
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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BAD BOY BLAST Cares
PERMIAN BASIN ENERGY
MAGAZINE
10 years ago, Conoco Phillips and Halliburton employees began brainstorming
for a way they could give back to the community. It didn't take long for them to decide they wanted to do something specifically for law enforcement. After more discussion, the idea to have a little sporting clay shoot was born.
The Bad Boy Blast, celebrating it's 10th year this June, has now grown into the largest non-profit sporting clay shoot in Texas. What started as an event of a couple hundred shooters has turned into a West Texas tradition in clay shoots bringing in over 1,000 shooters each year and raising thousands of dollars for local law enforcement agencies. The money raised has provided K-9's, bullet proof vests and gun ranges for the OPD, MPD and Ector and Midland County Sheriff's department. The event has grown so big, it is now its own 501c3, non profit agency, the employees of Conoco Phillips.
www.badboyblast.org
CONOCO PHILLIPS
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Blast Facts: 37 - the number of food stations
sponsors at this years event
WELLHEAD DISTRIBUTORS INTL
1,269 - the highest number of
shooters who participated in the event
2,000 - the number of briskets served since the event started
Almost 9,000 - the number of
shooters participating over the past 10 years
Over $700,000 - the value of guns
given away over the past 10 years
OIL STATES ENERGY SERVICES
MESQUITE OIL TOOLS INC.
$1.1 million - expected 10 year total proceeds donated to local law enforcement
WINCH -N- WRENCH JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Conferences in JULY - AUGUST 2013 AAPG Geomechanics and Reservoir Characterization of Carbonate and Shale Meeting
ASME International Pipeline Geotechnical Conference
07/16/2013 - 07/17/2013
Bogota, Colombia
Baltimore, MD, USA
www.asmeconferences.org/ipg2013/
07/24/2013 - 07/26/2013
www.aapg.org/gtw/2013/baltimore/index.cfm
Houston, TX, USA
SPE 2020 Foresight Ensuring Educational Excellence for Upstream Engineering Resources Forum
07/16/2013 - 07/17/2013
08/04/2013 - 08/09/2013
www.api.org/events-and-training/calendar-of-events/2013/
Coeur d’Alene, ID, USA
offshore-safe-lifting-2013
www.spe.org/events/13fus3
OilMax Conference
APPEA National Oil and Gas Safety Conference
07/18/2013 - 07/19/2013
08/05/2013 - 08/07/2013
Denver, CO, USA
Perth, Australia
www.infocastinc.com/oilmax13
www.appea.com.au/events/appea-events-calendar.html
SPE Quest to Reduce the Environment Footprint Forum
SPE Nigeria Annual International Conference and Exhibition
07/21/2013 - 07/26/2013
08/05/2013 - 08/07/2013
Asheville, NC, USA
Lagos, Nigeria
www.spe.org/events/calendar/
www.spe.org/events/calendar
Oil Sands and Heavy Oil Technologies 07/23/2013 - 07/25/2013
Annual Chem/Petrochem and Refining Shutdowns and Turnarounds Conference
Calgary, Alberta, Canada
08/06/2013 - 08/08/2013
www.oilsandstechnologies.com
Dallas, TX, USA
API Offshore Safe Lifting Conference and Expo
www.marcusevans-conferences-northamerican. com/marcusevans-conferences-event-details. asp?EventID=20038&SectorID=3
GPA North Texas Annual Meeting 08/07/2013 - 08/07/2013 Dallas, TX, USA www.gpaeurope.com
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Leading Auctions in the Oilfield Industry. Upcoming Auctions and Auction Equipment listings from Tradequip International’s online and site-held auction companies. Saurce: Tradequip International
Drilling Rigs
Prod. Equip.
Drilling Equip.
Tubular Goods
Oilfield Trucks
Oilfield Trailers
Parts & Tools
www.tradequip.com
Support Equip.
SOUTHCENTRAL AUCTIONS
COMPANY
DATES
LOCATION
AESC BENEFIT AUCTION
Kruse Energy & Equipment LLC
July 24, 2013
San Diego, CA
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Richie Brothers
July 24, 2013 July 25, 2013
Fort Worth, TX
AMERICAN PEAK PRODUCTIONS - FOLSE OILFIELD SER - PARCO RENTALS
Rosen Systems
July 30
Dallas, TX
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
Sept 11, 2013 Sept 12, 2013
Odessa, TX
INVENTORY
INTERNET AUCTIONS
COMPANY
DATES
LOCATION
PIPE & EQUIPMENT AUCTION
Network International Inc
Jul 10, 2013 Jul 17, 2013
Internet
COMPLETE PLANTS SEALED BID
Network International Inc
July 10, 2013 July 24, 2013
Internet
PIPE & EQUIPMENT AUCTION
Network International Inc
Jul 24, 2013 Jul 31, 2013
Internet
PIPE & EQUIPMENT AUCTION
Network International Inc
Aug 07, 2013 Aug 14, 2013
Internet
PIPE & EQUIPMENT AUCTION
Network International Inc
Aug 21, 2013 Aug 28, 2013
Internet
INVENTORY
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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JuLY & AUGUST TOP
FESTIVALS AND EVENTS IN TEXAS
ROAD TRI P
All across Texas, a variety of festivals, events and attractions are a great way to have fun and to spend time with your family.
SUMMER CONCERT SERIES June to August 1705 W. Missouri Midland, TX Enjoy Sunday evening concerts on the lush Museum of the Southwest grounds. Bring a picnic and spend an hour entertained by the best local jazz, pop, country and folk music groups. No admission. (432) 683-2882 SUMMER MUMMERS June to Labor Day Catch a production chocked full of mayhem and hilarity performed at the historic Yucca Theatre in downtown Midland. Melodrama is a unique theatrical experience invented in America and no one does it quite like Summer Mummers, the oldest existing theatrical organization of its kind in the country. Join Summer Mummers as we celebrate our 65th Season with Magical Malevolence in Midland. Bring your friends, bash the villain with popcorn and enjoy side-splitting laughter during the olio. Call for tickets and times 432-570-4111 www.mctmidland.org or www.summermummers.com TEXAS COWBOY REUNION AND RODEO July 3-6 Stamford, TX “The Largest Amateur Rodeo in the World” hosts 700 contestants in its 83rd year, plus evening dances by prominent country/western bands. Also western art, BBQ & chuckwagon cook-offs/meals, Old Settlers reunion, downtown parade, fiddlers’ contest, trade show, poetry and cowboy symposium. (325) 773-3614 www.tcrrodeo.com 22
CONCHO-SHOOTERS THAT SHARE/SPORTING CLAY SHOOT July 12 9am-5pm Windwalker Farms - Sporting Clay Range 2551 Co. Rd. 2801 Stanton, TX 6 man teams $160 per person. For Sponsoring opportunities or Underwriting opportunities call SHARE at 432-218-4622 or 432-553-9197 432-218-4622 Tom Jones 432-553-9197 David Schmidt
WAGNER NOEL-SINBAD July 13, 2013 7:30-8:30pm 1310 FM 1788 Midland, TX $30-$50 Etix 800-514-3849 or 432-552-4430 www.wagnernoel.com 50TH ANNUAL MIDLAND WOMEN’S CITY GOLF TOURNAMENT July 15 Ranchland Hills Golf Club
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
1600 E. Wadley Midland, TX $30 Entry Fee plus cart charges per day Qualifying Round Note: Handicaps 16.9 or lower - Stroke Play 432-520-0326 Marty Farris FORT STOCKTON WATER CARNIVAL July 20-21 3rd Street and Rooney Street Fort Stockton, TX Annual musical and water production. Held at Comanche Springs Pavilion and pool. (915) 336-2264 www.tourtexas.com/fortstockton
8th ANNUAL CHEESEBURGER COOK-OFF & FESTIVAL July 20 Friona, TX Start perfecting your cheeseburger recipes, and join in the fun at Friona City Park in Friona on Main Street downtown to compete for a first place prize of $1000 & second place $300. Also enjoy Texas recording artist Kris Gordon. For more information, contact Friona Chamber of Commerce: (806) 250-3491 fedc@wtrt.net www.frionachamber.com
25th WATERMELON FESTIVAL July 26-27 Knox City, TX The Knox City Watermelon Fest offers free melon slices, free swimming, craft & art booths, live music, food booths and kids’ events. Held at City Park in Knox City. kcchamber@srcaccess.net (940) 658-3442
TALL CITY BLUES FEST (TCBF) July 26-27 Downtown Midland (Centennial Plaza) Midland, TX Presented by Riley Geological Consultants. The Festival hosts multiple stages, educational clinics, an art auction, a blues memorabilia raffle, food vendors, and a midnight spectator jam; while also giving back philanthropically into the community. Tall City Blues Fest is a communityservice project that showcases award-winning and emerging talent, introduces new opportunities into the community, offers a culturally diverse attraction in West Texas, contributes positively to the quality of life and creates tourism. Weekend Festival Passes are $30. Friday Day Passes are $15; Saturday Day Passes are $25. $20 Weekend Festival Passes are available at the gate for students presenting a valid student ID. (432) 262-0034 www.tallcitybluesfest.com SILVER SPUR GUN & KNIFE SHOW July 26-28 Midland County Horseshoe Arena 2514 Arena Tr. Midland, TX NIGHT IN OLD PECOS / CANTALOUPE FESTIVAL July 27 Pecos, TX This one day event starts is 6pm until midnight. The downtown streets are blocked off with a variety of vendors, activities and live music. Free Admission. (432) 445-2406 pcoc@cebridge.net www.pecostx.com
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
23
Tech
Bites
Source: www.nfib.com
The PROS and CONS of an ALL-DIGITAL BUSINESS PLAN Learn the ins and outs of using a digital format to get your business plan in front of potential investors. Brevity is the watchword of the business plan. Investors don’t dawdle over the details, at least not on the first read. But there’s an exception: A picture still is worth a thousand words. While shorter is better, you can score with 30 pages broken up by charts and graphs, as compared to 20 pages of dense text. Now-emerging technology presents a new way to play out that high-visuals approach. Take that basic block of text, put it online, and adorn it with the full range of multimedia bells and whistles. Add video testimonials or product images, PowerPoint explanations, a voice-over and charts and graphs. All this will likely liven up the plan. But will the high-tech pitch actually land an investor? Greg Goodman of Goodman Strategies, Maciej Fita, of Brandignity, and Caroline Cummings of Palo Alto Software share the following pros and cons to consider before taking a business plan digital.
PRO
CON
REAMS OF INFORMATION
A digital business plan can offer a depth of information impossible to convey in a static presentation. The business owner can speak directly to the camera about his or her history, ambitions and goals. Video can show off the product or facility. PowerPoint decks can steer a visitor through the business logic.
Conventional wisdom says you’ve got 10 minutes with a prospective investor. If a digital plan demands half an hour—if it fails to deliver the core message up front—all that effort may be squandered. The videos and voice-overs are not your pitch. They are back-up materials, to be accessed only if the investor has made it through the first 10 minutes and still wants more.
TECHNOLOGY BONANZA
A multi-media pitch can wow ’em. A web presentation that flows seamlessly, that looks and feels like a big-time professional site, sends the message that this is a serious enterprise. Certainly, this matters for a proposed IT-based business, but the same holds true for any small enterprise, even one that is not technology-based. The ability to work the world of multimedia demonstrates a marketing savvy necessary in today’s world.
This stuff doesn’t always work. Video won’t play in PowerPoint, links don’t always link, demos and charts won’t format properly. For the novice, the choices are obvious: Steer clear or hire a pro. If a seamless multimedia effort broadcasts competence, it’s equally true that a clunky presentation will undermine an image of professionalism.
EASY TO ADAPT
A digital business plan can be managed on the fly, with adjustments being made in real time. If financial expectations change, or the competitive landscape shifts, the fluid nature of digital media makes it possible for a business owner to keep a business plan timely and accurate.
A savvy investor will know full well that a digital presentation can be managed at a moment’s notice. This creates an expectation of dead-on accuracy. When you sit down to talk, and the numbers don’t jibe, the investor will be quick to spot the discrepancies.
EASY ACCESS
The Internet delivers a profound opportunity to get your business plan into the hands of potential investors. Before the first sit-down, those with an interest can get familiar with your work on their own time, at their own pace. After the initial meeting, investors can follow up at their leisure. Anyone with an Internet connection can become a benefactor.
Handled sloppily, an Internet-based business plan becomes the property of the whole world, including potential competitors. Eager as we may be to reach out to potential angels, no one should be careless about handing out the family jewels to every curious passer-by. The simplest solution there is to password-protect. Put the plan on your site, but limit access. Don’t set it free on YouTube. Try one of the many sites that make protected plans available only to pre-qualified investors.
Clearly, there are plenty of advantages and also numerous caveats to the fast-emerging practice of the digital business plan. Tread with caution. If the budget will bear it, hire a professional. 24
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
FISHING & RENTALS
FISHING & RENTAL TOOLS REVERSE UNITS FOAM/AIR UNITS
1511 Garden City Hwy • PO Box 150
MIDLAND TEXAS
432.684.3898 JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
25
by Jyothi Samayamantula
First and foremost, sand and solids cannot be eliminated; they can only be worked with and/or around. The ultimate goal is to stave a downhole sucker-rod pump, rod, or tubing failure as long as possible. Failure is inevitable. Minimizing failure is the only success.
T
he following should serve as a general hand-guide reference of sorts for combatting downhole sand and solids in the well. Just as the fisherman must adjust his tackle, string, and bait for diverse watering holes, so too must the oil operator understand their sucker-rod pump options of give-and-take for maximizing pump life and production in the murky waters below. This article has conveniently been divided into four basic sections of the pump for manipulation considerations: Barrels, Plungers, Holddowns & Accessories. First, understanding that minimal sand can be achieved before the sucker-rod pump ever enters the well is necessary. The first give-and-take begins with the type of frac sand an operator selects. By upgrading to a resincoated frac sand, operators will pay significantly more upfront financially, but will find considerably less sand flowing back to the well. However, the high costs of this approach will deter many operators who will opt to simply try to fight the sand downhole. Oil operators will have to analyze their own production costs and choose which direction they feel will be the most profitable in the long-run. Now, it was common logic in the past to assume a tighter fit between the plunger and barrel of the pump would best combat the issue of sand and other solids scoring the plunger (example -0.002” clearance). Since then, operators realize this results in an increased likelihood of sticking the pump sooner rather than later. Today, some 26
operators have flipped their thinking and now try to give the pump an extra-large clearance fit between plunger and barrel (example -0.008”) effectively providing more room for minimal scoring, but also negatively increases slippage. Of course, the amount of solids downhole will dictate which approach is effective for any given well since there is no wholly right or wrong choice here. Depending on the downhole environment, the appropriate selection in clearance should result in minimizing the amount of damage and optimizing the amount of production.
BA R R E L S A chrome-plated barrel would be ideal for dealing with the abrasion of solids; but high costs, limited supply of this barrel, and its susceptibility to deterioration within acidic environments are disadvantages in this barrel option. Other suggested barrel options when introducing acid to the downhole environment (a common practice for combatting scale in the well) are brass nicarb, steel, or carburized hardened/honed barrels. Of these remaining barrel options, the brass nicarb will cost—sometimes up to four times—more than a steel or carburized barrel, but may achieve twice the run-time. Depending on average run-times for a given well, the higher price may or may not justify the extended production a brass nicarb barrel will provide in sandy wells over the steel or carburized barrel.
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
Another common sucker rod pump application for dealing with solids is the use of some form of a strokethru pump in conjunction with a grooved-body plunger where barrel extensions are required on both ends of a shortened barrel. In providing a tighter plunger fit within the barrel than is allowed in both the upper and lower barrel extensions, the plunger grooves are washed clear of most solids from the grooved body plunger before stroking back through the barrel. Since this allows most solids to remain within the fluid that exists above and below the barrel (inside the larger I.D. of the barrel extensions), the plunger is minimally scored.
PLUNGERS The most common plungers run in the Permian Basin for solids tend to be either: grooved body plungers, hardened Eagle Dual 92 Plungers, Farr Plungers, or nonmetallic, soft-packed ring plungers. Since it is understood that on a long enough timeline, solids will eventually score, or damage, a plunger, the grooved body plunger provides minimal damage; whereas without the grooves, solids would be allowed to score the plunger in great lengths. With a grooved body plunger, the plunger has grooves along the plunger to minimize the length of scoring. So if scoring occurs between the grooves, it is minimized by providing a settling space on the plunger for the solids to rest before being washed out on the upstroke or downstroke in a stroke-thru pump. This provides a longer life for the plunger insomuch that the bulk of the plunger maintains it seal with the barrel so as to minimize any production inefficiencies.
The hardened plunger, or Eagle Dual 92 (92 referring to the Rockwell hardness), evolves from the grooved body plunger in that it does have grooves, but only one at the top and one at the bottom of the plunger at approximately 6 inches into the length of the plunger. This plunger comes with a steel pin end and a sprayalloy coating to provide extra strength and durability. The recipe here confidently dares solids to damage the potent plunger with the upper and lower grooves serving as longevity insurance. The patented Farr Plunger (from Muth Pump) takes a “if you can’t beat them, join them” approach. Rather than working next to and against solids, the Farr Plunger means to work with and usher solids through the plunger. By funneling solids through the plunger, scoring of the plunger is effectively reduced; however, with a rod running through the center of the plunger, fluid volume is affected negatively with less space to move within the plunger. And since the outer shell of the Farr Plunger wall is thinner than a standard API plunger, it may be more susceptible to breakage in wells or horizontal wells with depths closer to 10,000 feet. Operators at depths closer to 10,000 feet can use an alternative with similar principles of funneling fluid and solids through the plunger in the Sand Diverter (from Don-Nan Pump) when used in conjunction with a Positive Seal Plug (PSP). However, some of the key differences enter when it comes time to repairing the plunger. If failure is more a matter of when and not if, then the inevitable servicing of the plunger is
One such practice is simply flipping the plunger over and reinstalling if the bottom is still good. This is because most scoring occurs in the upper end. Scoring of the plunger deteriorates the initial seal provided by the typically tight clearance between the barrel and plunger. This deterioration leads to inefficient pumping operations by allowing fluid—though minimal—to fall back down the side of the plunger. The goal is to lift (artificially) the fluid to the surface. Over time, the scoring will continue to expand in length and depth, so the goal is to maintain that initial tight clearance. Even if the upper plunger has lost the seal, the rest of the grooved body plunger still maintains the initial intended seal down the rest of the plunger. JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
27
the primary difference among the Farr plunger and using the Sand Diverter in conjunction with a Positive Seal Plug. If the Farr Plunger ends become scored or damaged, the plunger must be replaced; but if the Sand Diverter/PSP is scored or damaged, the plunger may be reused by replacing the damaged accessory.
H O L D D OW N In selecting a holddown for sand applications, keeping in mind the natural advantages and disadvantages, operators at this fork in the road must decide between travelling the avenue of ease or down longevity lane. In a solids-stuffed well environment, top holddowns will comparably be easier to unseat than bottom holddowns. On the flip side, using a top holddown will not always be able to sustain the pump longevity that a comparable bottom holddown will provide, given equal factors. The degree of difficulty in unseating a pump with a top holddown will be less than a pump with a bottom holddown. With a bottom holddown, the fluid discharged from the top of the pump allows sand and other particulates to settle above the seating nipple between the barrel of the pump and the tubing, increasing the difficulty of pulling the pump when necessary. With a top holddown, the area near the seating nipple is constantly flushed with every upstroke and the remaining barrel underneath is free and clear of solids for pulling of the pump.
the barrel contracts and expands repeatedly. If the goal is to stave failure, this process is its antithesis.
AC C E S S O R I E S One of the most common sucker-rod pump accessories employed is the sand-shield. Sand-shields rests just below the valve rod guide and above the barrel. The sand-shield simulates the effect of a top-holddown whereby the solids dispersed from the top guide can rest on the sand-shield, preventing the solids from settling any further down the side of the pump. However, since the sand-shields are composed of a non-metallic substance, this solution—as with all of these—will eventually fail over time due to continuous abrasion and downhole thermal heat. When sand-shields don’t work long enough, operators may decide to go with a top-seal option. A top-seal accessory can be substituted for the sand-shield resting once again below the valve rod guide. With a rubber pad circumference, the top-seal essentially serves as a mini pack-off rubber for preventing the sand to travel any further south down the annulus between the barrel and the tubing. This, too, will eventually wear-out, but operators may find this solution to prove longer-lasting. Operators may find a minor weakness in this approach when it comes to deeper wells. Currently, anything smaller than a 2 – 1/2” holddown (or 2 - 7/8” tubing) will require a smaller valve rod than typically used. In this scenario, by downsizing an 11/16” valve rod from a 7/8” valve rod, the weakness introduced becomes the threaded connection in wells around 8,000 feet or deeper.
“the amount of solids downhole will dictate which approach is effective for any given well”
The bottom holddown will provide longer sustainability since the heavy hydrostatic pressure load of the liquid column rests on the standing valve. This eliminates heavy pressure differentials across the inside and outside of the barrel. This differs with a top holddown where the hydrostatic pressure load in the tubing rests within the barrel, but not on the outside of the barrel since it sits below the seating nipple. In shifting the weight and pressure of the fluid column to only the inside of the barrel with a top holddown, the operator runs the risk of swelling, deforming, or bursting the barrel and/or standing valve. Resting under the seating nipple, the barrel no longer has an equalizing amount of pressure on the outside walls; meaning on every stroke, 28
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
ABOUT THE AUTHOR: Jyothi Samayamantula has a bachelor’s in mechanical engineering and a master’s in industrial
engineering. He
specializes
in
downhole applications regarding beam and rod artificial lift with Don-Nan Pump & Supply Co.
3113 W Industrial Ave • Midland, TX 79701
432
688-3993
Company Parties • Safety Meetings • Birthdays Weddings • Quinciñeras • Christmas Parties • Client Mixers JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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PBE NEWS BRIEFS Watching the basin
PARKS LEGADO UPDATE Phase 1- Cork and Pig Tavern, The Egg and I and the Residence Inn by Marriott are now open for business. Opening soon will be Joe James Salon and Day Spa and Kenzington’s Closet. These businesses will be joined soon by Cavender’s Boot City, Whitehouse Meat Market, Jersey Mike’s Subs and more. Phase 2-will include Sewell Volkswagen, starting construction this summer, plus Sewell Ford-Lincoln, Great Texas Oil Change and restaurant pad sites. Parks Legado Town Center will include over 500,000 sq ft of businesses and will add over 150 jobs to the Odessa economy.
Watching the GOVERNMENT
BIG COMPANIES PAY LOW TAX RATE Profitable U.S. corporations paid an average federal effective tax rate of 12.6 percent in 2010, less than half the statutory rate of 35 percent, according to a study released this month by the Government Accountability Office.
shift the tax burden to families and small businesses.
The GAO cited several possible reasons for the finding, including one-time benefits for capital investments made during the economic recovery and taxes paid to foreign and state governments. Companies’ effective tax rates were 13 percent in 2009 and 15.3 percent in 2008.
Effective tax rates are higher -- as much as 22.7 percent -- if money-losing companies are included in the calculation. That’s because those losses lower the total amount of income earned.
“This report underscores the need for comprehensive tax reform,” Senator Tom Coburn, an Oklahoma Republican, said in a statement. “We would be better off with a code that eliminated these loopholes so we can lower rates for both corporations and individuals.” Coburn requested the report along with Senator Carl Levin, a Michigan Democrat, who said the report shows how “unjustifiable loopholes and offshore gimmicks” 30
GAO used data from tax forms, specifically the companies’ reconciliation of their income for accounting and tax purposes.
Lawmakers in both parties and President Barack Obama support changes to the corporate tax system that would reduce the 35 percent rate -- the industrialized world’s highest -- and curtail tax breaks to offset the lost revenue. The U.S. collected $191 billion in corporate taxes in 2010, equal to 1.3 percent of gross domestic product, according to the Office of Management and Budget. Source: www.Bloomberg.com
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
Watching the STATE
EAGLE FORD OIL PRODUCTION INCREASES Oil production in Texas’s Eagle Ford shale formation rose 54 percent in April from the previous year. The nine fields that make up the majority of Eagle Ford yielded 530,689 barrels of crude a day, according to preliminary data released by the Texas Railroad Commission, which oversees oil and gas drilling in the state. The fields produced 345,702 barrels daily in April 2012. February output was revised to 561,554 barrels a day from the preliminary report of 529,874, the commission said. Production totals typically increase in subsequent months as the state receives revised, corrected or late reports. Growing production out of Eagle Ford is helping fuel a renaissance in Texas crude. The state produced 2.37
million barrels a day in March, the highest monthly level since February 1986, according to the Energy Information Administration, the statistical arm of the Energy Department. The EIA hasn’t released March production data for the state. EOG Resources Inc. (EOG) is the largest leaseholder in the Eagle Ford play, with 639,000 net acres. Chesapeake Energy Corp. (CHK) is next with 485,000, according to data compiled by Bloomberg. Plains Marketing LP’s posted price for Eagle Ford light oil was $94.75 a barrel yesterday, compared with the settlement prices of $98.24 for West Texas Intermediate and $106.12 for Brent. Source: Dan Murtaugh, Bloomberg.net
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Watching the Nation
INCREASE IN COAL PRODUCTION Coal exports from the United States in March 2013 totaled 13.6 million short tons, nearly 0.9 million short tons above the previous monthly export peak in June 2012. EIA is projecting a third straight year of more than 100 million short tons of coal exports in 2013, following annual exports in 2011 of 107.3 million short tons and record annual exports in 2012 of 125.7 million short tons. Increased Asian demand for coal contributed to the record level of coal exports from the United States in March. Of the record export tonnage, 6.3 million short tons were steam coal and 7.4 million short tons were metallurgical coal. Five customs districts accounted for 90% of the coal exported from the United States during March: Norfolk, Virginia; New Orleans, Louisiana; Baltimore, Maryland; Mobile, Alabama; and HoustonGalveston, Texas. Each of these customs districts is located on the Atlantic Ocean or Gulf of Mexico, and each has access to world-class coal loading infrastructure. Source: www.eia.gov
Watching the WORLD
SINGAPORE HOUSES NEW TECHNOLOGY TO PREVENT OIL DISASTERS Although Singapore lacks domestic oil deposits, it is a significant oil refining and trading hub for the oil industry in Asia. Its key location between the Indian and Pacific Oceans allows it to easily import crude oil from Brunei, Malaysia and Indonesia, establish successful petrochemical and refining activities and have easy access to key markets.
This shows again that the oil industry is heavily investing in R&D to find effective solutions to prevent potential incidents. The BBC reports ‘this well cap is part of a 230 million dollar project and only another one exists in Norway’. However, by the end of the year two more oil caps will be created and placed in South Africa and Brazil to cover the rest of the world. Source: www.bbc.com
Although Singapore has no commercial oil reserves, it hosts many oil and gas companies’ regional headquarters and is a worldwide pivotal city for R&D activities, investments and new technologies. According to a video recently released from the BBC, a new technology to safeguard the future of the oil industry has been built in Singapore. It is a new oil well cap which can be placed over leaking wells to prevent oil disasters such as the Macondo.
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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
Watching Offshore
SHELL OIL CEO STEPS DOWN The hunt for Shell’s next chief executive is under way, its chairman said in June, after CEO Peter Voser made what could be his last appearance at the oil group’s annual shareholder meeting. Voser announced his surprise decision three weeks ago to step down in the first half of 2014, before his 56th birthday, and less than five years into the role. “The process has started,” Shell chairman Jorma Ollila told Reuters after the meeting when asked about the succession plan. Ollila chairs the three-strong nomination and succession committee that will choose Voser’s replacement.
Voser has been a pillar of Shell’s new-found stability since he rejoined the company as finance director in October 2004 as part of a wholesale clearout of disgraced former top management following a reserves accounting scandal. Employees of the 180-year old Anglo-Dutch group, which traditionally grows its own top executives, believe an import is unlikely to get the top job, but Voser is only the second person to hold the CEO role under a simplified corporate structure introduced in 2005. A small investor in the company said he expected Shell to appoint someone in Voser’s mold and he thought it likely to be an internal candidate Source: Reuters
Watching THE SHALE
A SHALE GAS AND OIL RESOURCE UPDATE EIA estimates that there are 7,299 trillion cubic feet of shale gas and some 345 billion barrels of shale oil in 41 countries, 95 basins and 137 shale formations worldwide. This means shale oil adds 11% to global oil reserves while shale gas adds 47% to gas reserves worldwide. 1 EIA estimates used for ranking order. ARI estimates in
parentheses.
TOP 10 COUNTRIES WITH TECHNICALLY RECOVERABLE SHALE GAS RESOURCES Rank Country
Shale gas
(trillion cubic feet)
1 China 1,115 2 Argentina 802 3 Algeria 707 665 (1,161) 4 U.S.1 5 Canada 573 6 Mexico 545 7 Australia 437 8 South Africa 390 9 Russia 285 10 Brazil 245
World Total
7,299 (7,795)
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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RESTAURANT
BITES
Fabela’s
The story behind this family restaurant that has served the Remember the days when Basin forfamily's almostwould 15 years sit together at the dinner table for a home cooked meal? Before social media, schedule overload and fast food dinners on the run, we used to take the time to savor a hearty meal together, passing the portions around as we discussed the day at work, at home andFabela, at school. Lupe who onlyThose went times seem so long ago for many of tous, school the 2nd butthrough for David and Rhonda Roe, it's a concept worth grade, started his career at reviving. Back in the Day Cafe opened in January of 2013 the age of 19 as a janitor and as the result of Truck a dream the Roe's had to bring back the cook at The Warfield Stop Restaurant off A time when life was less hectic and spirit of the located old days. of Highway 20 in between families and always made time for a good meal together. With Midland Odessa. ofLupe items straight out of grandma's favorite cook a menu Working his way up to kitchen manager, stayed couple remembers that in the first 2 months of business, with Warfield for over 20 years. When tough times fell book, this unique restaurant features the flavors of south on the Basin, he was instructed to begin laying off their daily sales were consistently under $200. and good food representing the staples of a several of the employees who hadthe worked for 'ol himcomfort for The building owners Lupe and he probably wouldn’t meal. portions are told hearty the side years. It was an action thathome seemedcooked inconceivable for The make money at that location and they’d be surprised if him and a decision that sparked a fire and a new vision items come in generous bowls meant for passing 'round he made it 6 months, but he was determined. The first
Los Fabela’s Restaurant
in this husband and father of three. Around the same time, Warfield Too was opened just down the street on Country Road 127. The added location was meant to accommodate the large population of Texas Instrument and oil field employees frequenting that area during the boom in the 80’s; however, lagging profits and a retiring owner led to the restaurants’ closure a few years later. That’s when Lupe’s dream began to take shape. Emma recalls how Lupe would tell her that he would own that little restaurant on CR 127 someday. She thought he was crazy, certain it was a pipe dream they could never make a reality. Despite the odds, Lupe’s dream to begin his own restaurant grew and he soon built up the confidence to make the new owners of the closed down Warfield Too property, an offer. In August of 1998, using his house as collateral for the loan, Lupe was in business. Selling a variety of Mexican and American dishes popular to oil and gas industry employees, the
few months were no doubt a struggle, as Emma recalls having to run 5 burrito routes to make ends meet. But what began as an action of desperation would later develop into what is now the family’s very successful catering business.
8 years after putting it all on the line for a dream, Lupe and Emma Fabela not only made that little restaurant profitable, but they made enough profit to pay off the building, completely. Fast forward to today and the name Fabela’s has become a household name in the Permian Basin. Beyond the small restaurant they started on CR 127, they have since expanded into a satellite restaurant at the airport and most recently taking over the popular lunch time stop
4317 W. Illinois Ave • Midland, TX (Corner of Midland Dr. & Illinois)
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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
on Highway 80, formally known as Prescott’s. Fabella’s has also grown to offer a full array of catering services to companies across the Permian Basin, reaching into Ozona, Pecos, Monahans, Denver City and even Dallas. When asked what their secret was, without missing a beat, Lupe and Emma said, “perseverance”. They never gave up and kept the faith even when the odds and the bills were stacked against them. Emma adds that they’ve always treated their customers as friends, striving to create more of a family environment than a business, and people in this area appreciate that. Having a lot of long term employees including several members of their own family has also made a difference for this family business, as everyone really does care and feels like they’re part of the family. The delicious and hearty homemade dishes haven’t hurt either.
Adding to the Thethe newtable. location on Highway 80nostalgia features a large of the food anseat atmosphere to match meeting room that is can up to 200 people and is that will surely bring back memories regularly safety meetingsFrom and other businessof the old The Spot Cafe and Chief longused timeforMidlanders. replica's related gatherings. There is also an outside area with a Drive to a recreation of the National Bank and of course, the stage that isIn, currently under construction, setMidland to open this Bush summer.Childhood The spacious new area, inthe which Lupework is Home, hard and thought the Roe's put into doing most of the construction himself, will able recreating some of work Midland's oldbelandmarks, is obvious. The location may to hold about 500 people, when complete.
for
be off the beaten path, but the experience is hard to beat and certainly worth Emma Lupe both reinforced that they are so blessed theanddrive to encounter this and feel God has guided them through every step of this journey, bringing them to where they are today: a family that is truly living the American dream.
For more information on booking a meeting or catering, please call (432) 563-3505 Just when Lupe said he was ready to sell his restaurant on CR 127 and look into a modest retirement, a customer pulled him aside one day and said, “God’s in this place”. After an inspiring conversation, the stranger told Lupe to not be surprised if he got another restaurant. Within 3 days, the opportunity to take over Prescott’s Cafe came about and the rest is history.
FABELA’S CATERING Lupe & Emma Fabela - Owners 12302 West Highway 80 East Midland TX 79701 Phone: (432) 563-2882 JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Inspires
by Daniel Stephens
The following is a prophetic word spoken by Pastor Jim Laffoon during a recent Wednesday night church service at MidCities Church, in between Midland and Odessa.
Rediscover TEAM Have you ever felt like Moses?
Not the “parting of the Red Sea” or “bringing plagues on a bunch of Egyptians” Moses, but the “leading a group of complaining folks through the wilderness” Moses. Leadership can be exhausting, even if the cause is great. You may not consider yourself a leader, but when you stop to think about it, we are all leading somebody. You may lead a company, a few employees, or your family. One of the biggest mistakes leaders make is believing that if they have the vision and are the designated leader of that vision, he/she must do it all.
Thank God for Father-In-Laws: Moses believed that. After miraculously leading the Israelites out of four hundred years of slavery to the Egyptians, he found himself trying to do it all. He was settling disputes for an entire nation from morning till night until his father-inlaw Jethro, concluded; “What you are 36
Daniel Stephens is the Senior Pastor of Mid-Cities Community Church, since 2006. He is the honored husband to Kayla Stephens, a proud father of twin sons Jonah & Jude, daughter Kampbell, and a precious foster daughter.
doing is not good. You and the people with you will certainly wear yourselves out, for the thing is too heavy for you. You are not able to do it alone”. 1 The awareness that you cannot do it alone is not an admission that you are weak; it is an admission that the vision and mission of what you are leading needs more than just YOU to be great. Sometimes we need someone to come alongside us and say what Jethro said, “You can’t do it alone”. You can’t accomplish the vision of your company alone. You can’t accomplish the vision of your family alone. You need a team.
Rediscover Team: Jethro gave Moses this great advice, “Moreover, look for able men from all the people, men who fear God, who are trustworthy and hate a bribe, and place such men over the people as chiefs of thousands, of hundreds, of fifties,
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
and of tens. And let them judge the people at all times. Every great matter they shall bring to you, but any small matter they shall decide themselves. So it will be easier for you, and they will bear the burden with you.” 2 Every leader needs people, a team, to help carry the load, to carryout the vision. Relying on others, letting their strengths augment your weaknesses, valuing their unique gifts and contributions and giving them room to run causes those of us with “control issues” heartburn, but if we are honest, it’s the only way to produce what we ultimately want.
Team Stephens: I invariably have to relearn this lesson every so often, both at work and at home. As I sense the weight of the responsibility to lead the congregation that God has entrusted to me, I constantly find myself feeling as if I have to do it all
myself. God reminds me, he’s placed an amazing team of people around me who are more than capable to carry the load. At home, I can easily revert to a pre-Jethro Moses style of leadership. There are bills to be paid, yards to be mowed, kids to be fed, kitchens to be cleaned, vacations to be planned, bed time stories to be told. I can easily start knocking out tasks, bossing Kayla and the kids around like General MacArthur marching towards victory. All the while forgetting that this is the team God’s placed me in.
right? You’re not alone. We are in this together. I like that she does that. Because it reminds me not to fall into the trap of trying to do it all myself. I know our family is better when we are a team. So I smile, extend my fist to hers and say “Team Stephens”. Just because you’re the leader, doesn’t mean you have to do it alone. Rediscover your team!
Whenever I get all Norman Shwarzkopf, Kayla typically looks at me smiling, extending her fist towards me (giving me “knucks”) and asks, “Team Stephens?” That’s her way of saying, we are a team
1. The Holy Bible: English Standard Version. 2001 (Ex 18:17–18). Wheaton: Standard Bible Society. 2. The Holy Bible: English Standard Version. 2001 (Ex 18:21–22). Wheaton: Standard Bible Society.
Follow Danieal on Twitter: @ DanielBstephens
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
37
U.S. RIG COUNT - TEXAS States &
June 28, 2013
BAKER HUGHES RIG COUNT
RIGDATA RIG COUNT
Four Week Average 2012
Four Week Average 2013
Last Week
This Week
Four Week Average 2012
Four Week Average 2012
Last Week
This Week
Waiting to Spud
Texas RRC District 1
145
139
139
141
153
144
138
144
12
Texas RRC District 2
90
84
83
80
82
79
80
81
6
Texas RRC District 3
45
47
46
44
49
52
51
49
3
Texas RRC District 4
40
32
31
33
38
29
22
28
1
Texas RRC District 5
19
13
14
12
18
12
12
11
1
Texas RRC District 6
34
26
26
26
34
26
28
27
0
Texas RRC District 7B
14
13
13
11
24
17
12
21
0
Texas RRC District 7C
88
81
82
81
90
80
80
79
2
Texas RRC District 8
320
281
274
275
301
262
257
263
6
Texas RRC District 8A
36
35
38
36
36
38
36
40
1
Texas RRC District 9
27
21
21
19
43
30
30
29
9
Texas RRC District 10
76
62
62
65
79
70
69
75
0
Texas Total
934
834
834
823
947
839
815
847
41
U.S. Totals
1,977
1,766
2,176
1,946
1,918
1,961
83
Districts
1,759 1,748
COPYRIGHT Š 2013 RIGDATA P.O. Box 820547 Fort Worth Texas 76182-0547 1-800-627-9785 | www.rigdata.com This report is protected under United States and international copyright laws and is intended for the exclusive use of the subscriber. Any unauthorized reproduction, retransmission, distribution, publication, broadcast or circulation of this report to anyone, directly or indirectly, without the express prior written consent of RIGDATA is prohibited. To order additional report copies at a reduced rate or for a corporate site license, please contact: 1-800-627-9785 38
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
Top 35 Drillers Rankings Each month we track the activity of all the drillers and compile the results into a report that identifies the top 35 out of 100 drillers based on their footage drilled. Updated monthly, these reports also detail the number of well starts and the number of directional wells drilled by each of the top 35 out of 100. through July 1, 2013 Company
Footage Drilled
% of Total
Average Footage
Well Starts
% of Total
Directional Wells
1
Helmerich & Payne, Inc.
24,444,348
16.30%
10,168
2,404
12.40%
2,108
2
Patterson-UTI Drilling Company, LLC
15,140,445
10.10%
9,876
1,533
7.90%
1,294
3
Nabors Industries, Ltd.
12,655,366
8.40%
7,698
1,644
8.50%
1,446
4
Precision Drilling Trust
6,444,944
4.30%
9,142
705
3.60%
625
5
Ensign Energy Services, Inc.
6,164,938
4.10%
5,899
1,045
5.40%
561
6
Nomac Drilling, LLC
5,700,963
3.80%
9,377
608
3.10%
606
7
Trinidad Drilling, Ltd.
4,187,695
2.80%
11,049
379
2.00%
323
8
Pioneer Energy Services Corp.
4,126,006
2.80%
9,442
437
2.30%
306
9
Unit Drilling Company
3,614,024
2.40%
7,689
470
2.40%
459
10
Cactus Drilling Company, LLC
3,514,760
2.30%
10,619
331
1.70%
305
11
Savanna Energy Services Corp.
3,327,729
2.20%
10,598
314
1.60%
114
12
Capstar Drilling, LP
3,276,110
2.20%
6,755
485
2.50%
74
13
Desoto Drilling, Inc.
2,144,613
1.40%
4,324
496
2.60%
494
14
Xtreme Drilling and Coil Services Corp.
2,118,102
1.40%
9,716
218
1.10%
213
15
Complete Production Services, Inc.
1,726,884
1.20%
9,982
173
0.90%
57
16
Sendero Drilling Company, LLC
1,590,285
1.10%
11,608
137
0.70%
0
17
CanElson Drilling, Inc.
1,358,639
0.90%
9,774
139
0.70%
16
18
Orion Drilling Company, LLC
1,334,422
0.90%
11,309
118
0.60%
114
19
Union Drilling, Inc.
1,302,976
0.90%
10,508
124
0.60%
49
20
Lariat Services, Inc.
1,295,124
0.90%
6,476
200
1.00%
98
21
Robinson Drilling of Texas, Ltd.
1,289,085
0.90%
11,113
116
0.60%
0
22
Latshaw Drilling & Exploration Company
1,166,853
0.80%
7,293
160
0.80%
157
23
Cyclone Drilling, Inc.
1,157,121
0.80%
4,801
241
1.20%
229
24
Scandrill, Inc.
1,154,130
0.80%
12,149
95
0.50%
78
25
Big Dog Drilling Company
995,917
0.70%
11,717
85
0.40%
6
26
Lewis Petro Properties, Inc.
973,000
0.60%
12,316
79
0.40%
79
27
SST Energy Corporation
962,288
0.60%
9,528
101
0.50%
84
28
Basic Energy Services, Inc.
939,244
0.60%
6,661
141
0.70%
32
29
Sidewinder Drilling, Inc.
902,134
0.60%
5,501
164
0.80%
164
30
Bison Drilling and Field Services, LLC
885,946
0.60%
11,358
78
0.40%
8
31
Silver Oak Drilling, LLC
812,893
0.50%
7,669
106
0.50%
42
32
Aztec Well Servicing Co.
725,850
0.50%
6,423
113
0.60%
55
33
Murfin Drilling Company, Inc.
704,910
0.50%
4,638
152
0.80%
0
34
Mattlock Drilling, LP
688,000
0.50%
12,741
54
0.30%
0
35
Ringo Drilling I, LP
678,459
0.50%
6,652
102
0.50%
0
Total Top 100 for year 2013
149,841,213
100.0%
---
19,330
100.0%
---
RANK
JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
39
Top 35 Operators Rankings Updated every month, we track and rank the top
35 out of 100 operators based on their footage drilled.
Keep track of the most active operators with details on their number of well starts.
through July 1, 2013
RANK
Company
Footage Drilled
% of Total
Average Footage
Well Starts
% of Total
Directional Wells
1
Anadarko Petroleum Corporation
8,084,416
5.40%
10,233
790
4.10%
777
2
Chesapeake Energy Corporation
6,530,743
4.40%
10,285
635
3.30%
635
3
EOG Resources, Inc.
5,406,296
3.60%
10,518
514
2.70%
484
4
Devon Energy Corporation
5,085,843
3.40%
9,247
550
2.80%
503
5
Apache Corporation
4,937,831
3.30%
8,913
554
2.90%
248
6
BHP Billiton
4,573,089
3.10%
13,066
350
1.80%
342
7
Pioneer Natural Resources Company
4,483,841
3.00%
13,266
338
1.70%
187
8
Occidental Petroleum Corporation
4,479,792
3.00%
6,095
735
3.80%
358
9
Marathon Oil Corporation
3,056,086
2.00%
14,019
218
1.10%
218
10
Encana Corporation
3,055,042
2.00%
10,645
287
1.50%
275
11
Concho Resources, Inc.
2,800,417
1.90%
10,073
278
1.40%
105
12
Exxon Mobil Corporation
2,798,211
1.90%
6,808
411
2.10%
260
13
Southwestern Energy Company
2,627,296
1.80%
4,617
569
2.90%
567
14
Chevron Corporation
2,579,063
1.70%
4,454
579
3.00%
212
15
Shell Exploration & Production Co., Inc
2,475,491
1.70%
13,830
179
0.90%
178
16
ConocoPhillips Company
2,357,467
1.60%
7,964
296
1.50%
221
17
QEP Resources, Inc.
2,000,134
1.30%
9,524
210
1.10%
204
18
Whiting Petroleum Corporation
1,877,315
1.30%
9,113
206
1.10%
160
19
Noble Energy, Inc.
1,724,435
1.20%
9,854
175
0.90%
173
20
SandRidge Energy, Inc.
1,703,982
1.10%
5,259
324
1.70%
246
21
Energen Resources Corporation
1,657,200
1.10%
8,815
188
1.00%
23
22
Newfield Exploration Company, LLC
1,516,869
1.00%
6,653
228
1.20%
213
23
CrownQuest Operating, LLC
1,484,900
1.00%
12,072
123
0.60%
0
24
EP Energy E&P Company, LP
1,319,485
0.90%
10,072
131
0.70%
118
25
Murphy Oil Corporation
1,278,870
0.90%
9,837
130
0.70%
128
26
Oasis Petroleum North America, LLC
1,189,340
0.80%
9,994
119
0.60%
119
27
Continental Resources, Inc.
1,124,589
0.80%
3,439
327
1.70%
326
28
SM Energy Company
1,092,855
0.70%
8,095
135
0.70%
129
29
Linn Energy, LLC
1,092,044
0.70%
8,667
126
0.70%
41
30
Parsley Energy Operations, LLC
1,078,000
0.70%
12,988
83
0.40%
0
31
Plains Exploration & Production Company
1,004,301
0.70%
6,564
153
0.80%
71
32
BP America Production Company
985,982
0.70%
10,061
98
0.50%
96
33
WPX Energy, Inc.
984,028
0.70%
6,979
141
0.70%
139
34
Lewis Energy Group, LP
982,000
0.70%
12,275
80
0.40%
80
35
Cimarex Energy Co.
942,798
0.60%
10,837
87
0.50%
79
Total Top 100 for year 2013
149,841,213
100.0%
---
19,330
100.0%
---
40
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | JULY 2013
Source: www.eia.gov
U.S. Refinery Capacity: Restarts and expansions increased capacity in 2012, with continuing changes in the first half of 2013 It may not rival the seasonal excitement many students have about the last day of the school year, but petroleum analysts eagerly anticipate each year’s release of the
U.S. Energy Information Administration’s (EIA) Refinery Capacity Report, detailing information about every refinery in the United States. U.S. refining capacity fluctuates, expanding or contracting as market conditions vary, reflecting shifts in consumption patterns and changes in product specifications. Corporate ownership of refineries changes as well, and some facilities have changed hands multiple times. In 2012, refinery expansions, restarts, sales, and closures affected total refinery capacity, and there have been additional changes so far this year, as discussed below. Further changes may occur before the end of 2013, as market conditions evolve.
oil distillation unit (ACDU) is not in operation and not under active repair, but is capable of being placed in operation within 30 days; or when the ACDU is not in operation, but is under active repair that can be completed within 90 days. A refinery may be idle for any number of reasons including routine maintenance, unplanned maintenance, or shutdown due to market conditions. The increase in capacity as of January 1, 2013 versus the prior year is mostly due to Motiva’s expansion of its Port Arthur, Texas refinery and the restart of the Trainer, Pennsylvania refinery formerly owned by Phillips 66 and now owned by Monroe Energy, a subsidiary of Delta Air Lines. Motiva is a joint venture between subsidiaries of Royal Dutch Shell and Saudi Aramco. The Port Arthur facility’s ACDU capacity increased from 285,000 bbl/d at the start of 2012 to 600,250 bbl/d at the start of 2013, and is now the largest refinery in the United States.
As of January 1, 2013, the United States had 139 operating refineries and 4 idle refineries with total atmospheric crude oil distillation capacity of 17.8 million barrels per calendar day (bbl/d), an increase of 501,000 bbl/d from January 1, 2012. A refinery is classified as idle when the atmospheric crude JULY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
41
While the latest Refinery Capacity Report presents a snapshot of the refinery sector at the start of the year, EIA continues to track additional expansions that have been completed or announced and additional ownership changes that have occurred, changing the rankings of the largest refiners (Table 1). BP sold two refineries in 2013 in Texas City, Texas, and Carson, California. In February, Marathon Petroleum Corp. completed the purchase of the Texas City refinery and is now the third largest refiner in the United States. In June, Tesoro completed the acquisition of BP’s Carson refinery. Tesoro has also announced the sale of its Ewa Beach (Kapolei), Hawaii refinery to Par Petroleum Corp. In addition to the sales of Texas City and Carson, BP has a project underway to increase the heavy crude oil processing capability of its Whiting, Indiana, refinery. The project will expand coking capacity to 102,000 bbl/d, and add a hydrotreater. Northern Tier Energy expanded its St. Paul Park, Minnesota, refinery in May. With its purchase of the Carson refinery, Tesoro has become the largest refiner on the West Coast (Table 2). The concentration of refinery ownership in other regions is mostly unchanged from last year (Table 3). Crude distillation capacity is one of the most widely tracked indicators of refinery size; however, the capacity of other secondary units is a key indicator as well.
Expansion of secondary unit capacity can follow a different pattern over time, as refiners invest in the specific types of capacity needed to support changing crude and product qualities. In 2012, vacuum distillation, thermal cracking, catalytic hydrocracking, catalytic reforming, and hydrotreating capacity all increased, due to unit restarts and expansions, while catalytic cracking capacity was unchanged, and deasphalting capacity decreased. In 2013, secondary unit capacity expansion continues as companies work to maximize the production of ultra-low-sulfur diesel.
Gasoline and diesel fuel prices both decrease again The U.S. average retail price of regular gasoline decreased five cents to $3.58 per gallon as of June 24, 2013, up 14 cents from last year at this time. The Midwest price dropped 19 cents from last week to $3.55 per gallon, down 32 cents over the last two weeks. The Rocky Mountain price is lower by two cents at $3.67 per gallon. Prices on the East and Gulf Coasts both decreased by less than a penny, to remain at $3.50 and $3.38 per gallon, respectively. Rounding out the regions, the West Coast price is $3.95 per gallon, up six cents from last week. The national average diesel fuel price decreased less than one cent to remain at $3.84 per gallon, 16 cents higher than last year at this time, but the lowest price since July 30, 2012. The East Coast price increased less than a penny to remain at $3.84 per gallon. The Gulf Coast price is $3.74 per gallon, down less than one cent from last week. The Midwest and Rocky Mountain prices both fell one cent, to $3.85 and $3.84 per gallon, respectively. Rounding out the regions, the West Coast price is up one cent to $3.96 per gallon.
Propane inventories gain Total U.S. inventories of propane increased 1.7 million barrels from last week to end at 54.8 million barrels, but are 6.5 million barrels (10.6 percent) lower than the same period a year ago. The Gulf Coast region led the gain with 1.3 million barrels, while Midwest and East Coast stocks each increased by 0.2 million barrels. Rocky Mountain/West Coast stocks gained by 0.1 million barrels. Propylene non-fuel-use inventories represented 5.6 percent of total propane inventories. 42
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