FREE
VOLUME 2 NO. 5
MAY 2014
www.PBEMag.com
Oilfield Theft
PERMIAN TRINITY
RESPONDING TO Local Criminal Behavior
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12
an oil and gas service company making ministry part of their business
WELCOME TO 16
TOWN! now what?
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Advice for Mineral Owners from Permian Basin Land Girl
• U.S. RIG COUNT • TOP 35 Drillers & Operators
Industry Data
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News
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Events
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Auctions
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Calendar
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Travel
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Energy
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Tech
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MAY 2014
contents
Pbe Features 8
Oilfield Theft
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12 Permian Trinity 16 Welcome To Town!
Other Editorials
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15 Calendar of Events 22 Conferences in May - June 23 Upcoming Auctions 24 Advice for Mineral Owners from Permian Basin Land Girl 27 Safety Tips - Defensive Driving can SAVE LIVES! 32 Festivals and Events in Texas 34 PBE Cares - Boy Scouts of America 36 Tech Bites - Big Tech Companies Offer Millions after Heartbleed Crisis 38 PBE News Briefs: Basin, Shale, State, Government, Nation, Offshore & World 42 Restaurant Bites - Dining Options in Boom Town 44 PBE Inspires - Dragnet: A New Construct for A New Context 46 By The Numbers: Texas Rig Count, Top Drillers, Top Operators 49 This Month in Petroleum
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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
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LETTER FROM
THE EDITOR “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty… I have never in my life envied a human being who led an easy life. I have envied a great many people who led difficult lives and led them well.” - Theodore Roosevelt If you were given a complete list of all the challenges and sacrifices you would have to make before you ever made a decision to step forward into a new project or business venture, do you think you will still choose to progress? Although we are often prepped with things to be aware of and challenges to consider when making big business or life decisions, we are usually not prepared for every problem that we will ultimately have to face and every sacrifice we will have to make. If we’re honest with ourselves, many of us may even choose to never make those steps forward into what could be a great new chapter of our lives due to fear of the storm we’ll have to endure before we see the rainbow waiting on the other side. In this month’s issue of PBE, you’ll read a couple of editorials that, on some level, address that very issue. In our feature story about the rise in oilfield theft, local business owners and even state officials are facing some of the not so great effects of our booming economy including a rise in theft and long term concerns on how to manage it. It’s a challenge that few likely anticipated when they began to grow their companies, yet many are having to plan for in order to stay in business. On a lighter note, one of our local writers provides a quick overview of how to get plugged in if you’re new to town, realizing the step of faith to move to a new area can be a great one when you don’t have any friends or family around to help you adjust. The lively economy in which we live right now makes this reality more and more prevalent for all the new faces and families packing up their lives in Michigan, California and so many other places as they move to West Texas for work and a new beginning. Some locals may consider this an unwelcome annoyance that’s causing more traffic, longer wait times in restaurants and other side effects, but isn’t the sacrifice worth it, to see our communities prosper at record-breaking rates? Encouragement and perspective on this subject can also be found in PBE Inspires this month as a highly respected and well known pastor, gives a prophetic and insightful take on what’s happening beneath the surface during this incredible time in which we are living in this hot spot of prosperity and spirituality. Since this is May, I would be remiss if I didn’t also remind you all to take the time and remember the lady in your life who played a pretty big role in giving you the breath of life you have today to experience these exciting and sometimes challenging times in the Permian Basin. Happy mother’s day to my mom, my wife and all the other women who hold their families together in West Texas.
Carlos Madrid Editor in Chief/Publisher sales@pbemag.com
/PBENERGYMAG @PBENERGY MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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EDITORIAL CONTRIBUTORS
PBE MAGAZINE CONTACTS VOLUME 2 NO. 5
EDITOR IN CHIEF/PUBLISHER Carlos Madrid sales@pbemag.com 432. 559. 5886
Taryn SnideR FREELANCE WRITER tarynsnider@gmail.com
ART DIRECTOR/LAYOUT & GRAPHICS Luke Pawliszyn Lukasz Design Studio West Hollywood, CA luke@lukaszdesign.com ADVERTISING For advertising info call 432. 559. 5886 or email sales@pbemag.com
AUDRIE PALMER
ACCOUNT EXECUTIVE Tiffany Clemons tiffany@pbemag.com 432. 978. 2393
FREELANCE WRITER Midland, TX audrierpalmer@gmail.com
SUBMISSIONS Submit story ideas & other news to haley@pbemag.com PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886
Jim Laffoon PASTOR King’s Park International Church
www.PBEMag.com
/PBENERGYMAG
@PBENERGY
Kimberly Smith CEO
Copyright © 2014 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.
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Development Resources, Inc.
Tiffany Hokett Vice President American Safety Services, Inc.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Oilfield
Theft
Federal Law Enforcement Responding to Local Criminal Behavior by Taryn Snider
Oilfield theft is a problem that is running rampant in the Permian Basin and everything seems to be fair game. From copper to equipment to the oil itself, “the criminal imagination is endless,“ said Assistant United States Attorney John Klassen when describing the theft. Before 2007, most oilfield theft was considered general crime or state felony offenses. It took crossing state lines with stolen property or, in other cases, wire or internet fraud before the federal government could get involved. Then a creative FBI agent applied the statute: Destruction of an Energy Facility, known more formally as 18 U.S. Code § 1366. The law makes it a federal offense to damage an energy facility. Furthermore, although the term “energy facility” is rather broad, the statute easily covers tank batteries, pumping units and drilling rigs – some of the most vulnerable and valuable targets. From 2005 to 2007 law enforcement and private sectors identified over $78 million in losses from theft in the oilfield. That number was staggering enough to prompt area law enforcement to create a task force which would allow law enforcement to focus on a specific objective, in this case oilfield theft. Supervisory Senior Resident Agent 8
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Troy Murdock of the FBI described the Permian Basin Oilfield Theft Task Force’s objective as “to continuously gather and share intelligence from law enforcement agencies and corporate security personnel.” Therefore, it’s a cooperative effort and sharing knowledge is their weapon in their fight against this type of crime. While copper is perhaps one of the most known examples of oilfield loot, other types of theft taking place ranges from equipment such as drill bits and pipe, FRCs, fuel from pickups and oil straight from the reserves. There have even been cases where pump jacks have been stolen. Other, more obscure types of theft include wire fraud and embezzlement. In addition to theft, the task force also deals with cases of malicious destruction where someone destroys equipment but no actual theft was involved. The task force is made up of three sheriff’s deputies. One from Midland County, Ector County and Andrews County, and they are each deputized as federal officers who report to the Sherriff and the FBI. It’s a mutually beneficial arrangement between the FBI and the counties involved. The FBI pays for overtime, gas and vehicle expenses
while the county sacrifices the deputies. Their first big break came in 2009 when they busted a crime ring stealing $2 million worth of condensate from a pipeline company. Another later case investigated by the task force involved copper thievery on drilling rigs costing an estimated $100,000. Both cases were prosecuted by Klassen who claims that federal prosecution has began to alleviate theft in the oilfield. The Permian Basin Oilfield Theft Task Force is the only oilfield task force in the country. Due to their success, Oklahoma and South Texas law enforcement agencies have expressed interest in creating similar task forces of their own and modeling them after our task force here. It’s likely that the Permian Basin Oilfield Theft Task Force and the Midland-Odessa division of the U.S. Attorney’s Office will be involved in implementing training programs for future task forces. Also created in an effort to prevent crime in the oilfield is the Permian Basin Oil Crime Commission which is an agency made up of law enforcement and oil corporate security. This networking relationship will provide creative methods to be proactive in preventing future oilfield crime.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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PERMIAN TRINITY by Audrie Palmer
“Do unto others as you would have them do unto you” – Luke 6:31 Treat others the way you would like to be treated. For the staff at Permian Trinity, it’s not only Biblical but a way of life. Started in 2011, the faith-based oilfield service company seeks to serve God and others by being a blessing to the community. Permian Trinity President Gary Douglas, a local pastor for five years and a career landman, had been taking care of his clients and landowners when he decided to start his own oilfield service company. He and his business partner Tye Orr hired a few college students and brought in a trailer to begin the business. Over the past few years, they’ve since expanded, adding on new staff to a total now of 40 employees with 20 trucks. “Each of our key personnel plays an integral role to how we operate on a daily basis,” Douglas said. 12
All the leadership at Permian Trinity has a faith-based background. Many of which have come directly from church ministry and now work making a difference in the oilfield one customer at a time. “A Christ-centered business is what we’re all about,” Douglas said. Co-owner Larry Johnson, an architect by trade, said they want to live an example of their Christian faith for others to see. Douglas added that they seek God and pray on
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
decisions for the company and that God leads every step that they make when it comes to the business’ direction. Their motto is simply this: “One company, many solutions.” They offer 19 services ranging from Frac Pit Packages (lining, repair, cutting and disposal), Lease Maintenance, Fence Build / Repair, Welding, Gate Guarding, Tank / Bin Monitoring, Weed Control, Noxious Weed Wash, Dirt Services and Soil Remediation, just to name a few. Their fastest growing area of the business is the Pressure and Rig Washing division that offers services from fleet truck washing, to high pressure cleaning of valves, tank batteries and pump jacks. The company also uses a specially-designed, purpose-built, high pressure unit for washing oil rigs. This trailer is equipped with four guns and uses heat-treated water to wash rigs and equipment of all sizes. The newest service that Permian Trinity offers is in the Safety Division. Safety is a top priority for many in the oil field and Chris Muse, Safety Director, said, “Permian Trinity offers safety training to help with the influx of safety concerns as well as to enhance safety performance in the field.” Their mobile safety program offers H2S certification, Safeland certification, Fit Testing and H2S monitor calibration. Muse said the staff is also very cautious and careful about who they hire and the testimony that their employees lead when out on the field, even from watching their language among other workers and operators. Their vision for the company is to promote an environment of integrity, character and dedication while on the job site. It’s also what’s built the company a trusted relationship and reputation in the local industry. Johnson said that he’s never seen a boom and influx like this in the past two years even compared to the previous 20. And with all the new people moving to the Permian Basin, the team at Permian Trinity believes it gives them a better chance to engage in business opportunities while remaining steadfast in their faith. “We’re here to be a blessing to as many people as we can. Our goal is to honor God in everything that we do,” Douglas said. And being a blessing means helping everyone from their own employees who may need some assistance to get on their feet, to reaching out to other individuals and organizations in and around the community who may need help.
“We simply treat people the way that we would want to be treated,” said COO Donald Bugg, who also served as a pastor for more than 20 years. “Helping others is just the right thing to do.” “Our goal is to maintain a positive testimony for Christ from the way we handle ourselves in the field, to the way we deal with our customers and employees. Our desire to serve God and others permeates everything that we do… Our prayer is that God would bless this business, so that in turn we can make an even greater difference in the Permian Basin,” Bugg said. They see the influx in the boom full of opportunity to help not only in business but ministry as well.
“We may have left vocational ministry; however, the broader spectrum of ministry is how we can serve the Lord in all situations,” Douglas said. When asked what the future holds for the company, the group laughs and adds that only the Lord knows. But for the next year, they’re looking to offer more specialized services. Many companies can pick up a lease or offer various types of oilfield assistance, but the staff at Permian Trinity are hoping to expand and strengthen the services they offer in order to become more specialized to better help their current clients as well as to meet the needs of a broader customer base. And they’re also looking for opportunity to give back more. “We are in the business of giving. The more that God allows us to grow, the more people we are able to help, and the more effective we are in ministry,” Douglas said.
To contact Permian Trinity or to learn more about the services that they offer, call 432. 684. 4852 or visit online at www.permiantrinity.com
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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OBSERVANCES AND CELEBRATIONS
MAY 2014
Birthstone: Emerald Flower: Lily-of-the-Valley and Hawthorne National: Barbecue Month Bike Month EVERY SATURDAY • 8:30 AM - 12:30 PM Blood Pressure Month Midland Downtown Farmers’ Market Hamburger Month 501 W. Texas Ave. Midland, TX 79703 Photograph Month The Midland Downtown Farmers’ Market is open every Saturday morning National Salad Month 8:30 a.m. to 12:30 p.m. from the first Saturday in April until the last Saturday in October. Join us downtown for locally grown farm fresh produce, gourmet foods, and so much more! This is a family and pet friendly event. Check our calendar of events on our website for special demonstrations, talks, and visitors!
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Cinco de Mayo
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National Teachers Day
8-10 11 Mother’s Day
5th ANNUAL CRUDEFEST TEXAS MUSIC FESTIVAL The biggest oil & gas celebration of its kind features over 20 bands. www.thecrudefest.com
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International Nurses Day
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National Maritime Day
National Maritime Day is a day for the U.S. to observe its proud maritime heritage and honor the men and women who serve and have served as merchant mariners.
Armed Forces Day
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Memorial Day
JUNE 2014 Birthstone: Pearl Flower: Rose
15 10 3rd ANNUAL trabajos west Texas job fair
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Held at La Hacienda Event Center from 10 AM to 2 PM. For more info call (432) 563-1826
Father’s Day
First Day of Summer
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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W e l c om e
to town !
by Kimberly Smith
If you’ve traveled during rush hour or have waited to be seated during a peak time at a local restaurant, you have certainly experienced a side effect of the recent and rapid growth in Permian Basin. Growth undoubtedly brings lots of new faces and many new challenges. Within the estimated 58 or 59 counties in the entire Permian Basin, the 2010 US census estimated the population to be at 1,226,432 (2010 US Census) with an estimated growth of 1,258,988 (July 2012 Estimate), according to the Economic Impact of the Permian Basin published by the Permian Basin Coalition. On a smaller scale, our friend James Beauchamp, Executive Director at MOTRAN (Midland Odessa Transportation Alliance) has helped us find the numbers specific to the Midland/Odessa district (Andrews, Crane, Ector, Loving, Martin, Midland, Pecos, Reeves, Terrell, Upton, Ward and Winkler Counties). That data shows that the population has increased within these twelve counties from 349,441 to 371,978 from 2011 to 2013. This is an additional 22,567 people! (MOTRAN, drivesmartwesttexas.org) Even though it is a busy time for many locals, there’s no doubt that the friendly and welcoming nature of many 16
West Texan’s still remains, through the boom and influx of new people. Midland and Odessa has all the luxuries, culture, health, fitness and night life similar to areas like Dallas, Houston, and Austin; it’s just a little more organic and entrepreneurial. There are many new, emerging businesses created by local families and partners that are striving to keep the quality of life in the Basin as progressive and modern as possible. You can find a place to work, play or volunteer at your preference; it just takes a little searching and networking among friends. A great way to get to know people is to volunteer at a local agency. Several of those experiencing growth such as the hospitals, schools, police departments, churches, non-profits, and fire departments would love to have your energy and enthusiasm! 22,267 new people means 22,267 potential volunteers!
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Here are a couple of suggestions of how to get involved: 1) Get involved in Midland Independent School District PTA, or Partners in Education 432-689-5105 / Email: info@PIEMidland.org Peggy or Jami will be more than happy to have new corporate partners or volunteers! In Ector, connect with www.ectorcountyisd.org
When you encounter those who have lived here for several generations, they are often the best ones to learn as much as you can from about the local dives and events! Don’t be alarmed by them, and if you face any resistance from the natives, while you are a “transplant,” or “newcomer” just keep going and make the Permian Basin your home!
2) Volunteer with the City of Midland or Odessa, Police Department Citizens on Patrol
It is often said that “people cry when they come to the Permian Basin and cry when they leave because they have made so many friends!”
3) Call the Permian Basin Area Foundation and ask what local charities need volunteers! www.pbaf.org Ask for Laura or Guy!
Bring it on and make West Texas a home your family loves!
4) Connect with your local faith community. All of the local churches are actively reaching out to help the community as it grows. 5) Volunteer at the Ellen Noel Art museum. www.noelartmuseum.org 6) Young professionals in Midland and Odessa are enjoying new gyms, YMCA, and Young Professionals in Energy. www.ypenergy.org 7) Facebook is full of trade communities, including young moms groups! 8) Visit Midland’s Downtown Farmer’s Market. www.midlanddowntownfarmersmarket.com 9) Volunteer at Junior League of Midland www.jlmidland.org or Junior League Odessa www.jlodessa.org 10) Experience West Texas football! Cheer for a local team at Grande Stadium or the Rockhounds for local athletic teams! Support the Odessa Permian Panthers, Odessa High School Broncos, Midland Lee Rebels or Midland High Bulldogs! MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Conferences in MAY - JUNE 2014 API International Oil Spill Conference 05/05/2014 - 05/08/2014 Savannah GA, USA www.api.org/events-and-training/calendar-of-events/2014/iosc2014
IOGCC Midyear Issues Summit 05/18/2014 - 05/20/2014 Biloxi MS, USA www.iogcc.state.ok.us/events
OTC Offshore Technology Conference 05/05/2014 - 05/08/2014 Houston TX, USA www.otcnet.org
SPE Hydrocarbon Economics and Evaluation Symposium 05/19/2014 - 05/21/2014 Houston TX, USA www.spe.org/events/calendar
Annual East Texas Energy Symposium 05/06/2014 - 05/06/2014 Kilgore TX, USA www.easttexasoilmuseum.com
SPE Hydrocarbon Economices and Evaluation Conference 05/19/2014 - 05/20/2014 Houston TX, USA www.spe.org/events/hees/2014
PSIG Annual Meeting 05/06/2014 - 05/09/2014 Baltimore MD, USA www.psig.org
AFPM Annual Meeting 05/20/2014 - 05/23/2014 San Antonio TX, USA 1 202 457 0480 - 1 202 457 0486 meetings@afpm.org www.afpm.org/Conferences
Four Corners Oil & Gas Conference 05/07/2014 - 05/08/2014 Farmington NM, USA www.fourcornersoilandgas.com/registration.html GPA MidContinent Annual Meeting 05/08/2014 - 05/08/2014 Midwest City OK, USA www.gpaglobal.org Eastern Oil & Gas Conference & Trade Show 05/13/2014 - 05/14/2014 Pittsburgh PA, USA http://www.pioga.org/event/2014-eastern-oil-gas-conference-and-trade-show AFPM National Occupational and Process Safety Conference and Exhibition 05/14/2014 - 05/15/2014 San Antonio TX, USA 1 202 457 0480 - 1 202 457 0486 meetings@afpm.org www.afpm.org/Conferences IADC Drilling Onshore Conference and Exhibition 05/15/2014 - 05/15/2014 Houston TX, USA www.iadc.org/event/drilling_onshore_2014
Advanced Contract Risk Management for Oil and Gas Summit 05/20/2014 - 05/21/2014 Houston TX, United States www.contractriskmanagement.us DUG Permian Basin Conference 05/20/2014 - 05/22/2014 Fort Worth TX, USA www.dugpermian.com/?gclid=CN30iPKenL0CFRQV7AodTm4A4A GPA Permian Basin Annual Meeting 05/22/2014 - 05/22/2014 Odessa TX, USA www.gpaglobal.org The Mexican Oil & Gas Opportunities Update Conference 05/27/2014 - 05/27/2014 Houston TX, USA www.petroleumconnection.com/MexicoUpdate2014 Annual California Energy Summit 05/28/2014 - 05/30/2014 San Francisco CA, USA www.infocastinc.com/events/ ca-energy?gclid=CMHC2K2R2b0CFU4R7AodfiMA0A SPE Exploitation of Tight Carbonates Forum 06/01/2014 - 06/06/2014 San Diego CA, USA www.spe.org/events/14fus2 Annual Mining Americas Summit 06/02/2014 - 06/03/2014 Denver CO, USA www.miningamericas.com/ GTL North America Conference 06/04/2014 - 06/05/2014 Houston TX, USA www.gtlnorthamerica.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
INVENTORY
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
May 6, 2014
Casper, WY
Big Trucks, Trailers, Construction Machinery & More
Machinery Auctioneers of Texas
May 7, 2014
Odessa, TX
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
May 28, 2014 May 29, 2014
Pittsburgh, PA
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
Jun 11, 2014 Jun 12, 2014
Oklahoma City, OK
No Lots are Currently Posted for this Auction
OILFIELD EQUIPMENT TRUCKS & TRAILERS
Kruse Energy & Equipment LLC
Jun 18, 2014 Jun 19, 2014
Odessa, TX
No Lots are Currently Posted for this Auction
INTERNET AUCTIONS
COMPANY
DATES
LOCATION
PIPE & EQUIPMENT AUCTION
Network International Inc
May 7, 2014
Internet
PIPE & EQUIPMENT AUCTION
Network International Inc
May 21, 2014
Internet
INVENTORY
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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ADVICE for Mineral Owners
from a Permian Basin Land Girl My colleagues and I hear all the time, “my minerals are too small to manage.” Our mantra is that no mineral interest is too small to manage. Our tip this month is take time to file & organize your minerals. Purchase folders with multiple dividers and begin filing your minerals so you can access them easily. Add a label for the following: 1) Maps 2) Mineral or royalty deeds. Try to get the mineral deeds from sovereignty to current demonstrating a clear chain of title to your mineral or royalty ownership. 3) Current lease offers and leases signed 4) Continued development which might include surface damages, Right of Way, or pooling or unitization agreements 5) Revenue statements, tax records Creating a system allows easy access when you get a call from a landman. Many mineral owners even call Development Resources, Inc. to discuss open acreage with them to see if their acreage is in an area of interest of an exploration play. As we have said on the radio show, “Ask the Permianlandgirl” on (KWEL 1070 FM, 107.1 AM or KWEL.com) your minerals are NOT like the family heirloom, like a grandfather clock, a historic quilt, or the family cattle brand that sit on your mantle. Owning minerals does take some organization, management and professional assistance. Minerals Weekly tips will be on our radio show at 1:00 p.m. Our May and June guests will include the following remarkable guests: • May 3 – Ray L. McKim the third, Certified Professional Landman, Texas Tech Graduate and owner of Telecom Site Services – Tips for surface and mineral owners. Discussion about environmental issues. • May 10 – Stephen Coffman, Texas Independent Producers and Royalty Owners Association (TIPRO) – TIPRO’s advocacy and events for mineral and royalty owners from Austin, Texas. • May 17 – Kimberly Smith, CEO, Development Resources, Inc. – What you can expect from a professional landman. Terminology discussion – minerals, royalties, non-participating royalty, working interest - what does it all mean? • May 24 – Alyssa Yinget, West Texas Energy Consortium – How residents and companies working together in a region promotes stronger economic development.
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are part of your heritage and reflect your family’s hard work and sacrifices. We have worked with many mineral owners and when walk into their home, they go to their closet and pull out shoe boxes with their mineral deeds. Shoe boxes are fine, but files are better. Some people even go to an effort to put their mineral deeds in a safe, safety deposit box or make digital copies. Country boys can even store them in a safe with their guns! If you take time to organize, then you’ll have the information ready for a trust officer like Marion Bryant, Senior Vice President at Southwest Bank, who was a guest on our show a few weeks ago, or Mary Lou Cassidy, Attorney with Stubbeman, McRae, Sealy, Laughlin and Browder or Stephen McClain with T.Scott Hickman. Each of these professional guests this last month discussed on the “Ask the Permianlandgirl” the importance of mineral management. Organizing such information will prepare you to meet with oil and gas professionals. Bring your family history and personal plan to respective professionals. Truly yours, Kimberly Smith, CEO Development Resources, Inc. Development Resources, Inc. can also help retrieve and inventory your mineral estate. @permianlandgirl on twitter or landmaam.com • May 31 – Graham Pollard, West Texas and Eagleford Landman, hosted by radio celebrity, Graham Pollard. June will focus on various West Texas, and energy writers exposing the Permian Basin Energy and KWEL.com audience to entertaining & educational writers. • May 7 – Tanner McElroy, Texas Tech Graduate who lives in Dallas – War of Wings. • May 14 – Mark Stansberry- Nationally known author & energy investor, America Needs America’s Energy: Creating Together the People’s Energy Plan. • May 21 – Lloyd McDonald- Baylor University, Graduate, Midland author & Attorney, Tejanos in the Texas Revolution. • May 28 – Rebecca Ponton, landm’aam in San Antonio – Women in Energy – highlighting key leaders in energy and why she is compelled to write about rising leaders.
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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
SAFETY TIPS Defensive Driving can SAVE LIVES! One of the hottest topics of discussion in and around the Permian Basin during the last few years is the increase in traffic and reckless driving tendencies, to be specific. Traffic in and around the area is heavy, aggressive, fast, dangerous and deadly. It seems as though drivers are always in a hurry, weaving in and out of tight traffic, accelerating too quickly and hitting the brakes at the last possible moment to avoid an accident. Such erratic driving tendencies used to be somewhat isolated to the younger male generation or “oilfield” workers. However, throughout the Permian Basin, more and more men and women of all ages seem to be driving in this manner. It seems as though no amount of media coverage, radio warnings or actual witnessing of horrific motor vehicle accidents are getting drivers to change their driving habits. How can one stay safe on the road knowing that such drivers are unwilling to change their behaviors on the road? Defensive driving is the best “defense” and method to avoid being in accident, causing an accident and avoiding an accident. The National Safety Council defines defensive driving as “…driving to save lives, time, and money, in spite of the conditions around you and the actions of others.” As drivers, most of us have heard this mantra before. But in this era of technological advances both in vehicles and personal devices, there are so many new ways one can be distracted behind the wheel. Below are a few of the most common defensive driving habits that will help you stay proactive on the roadways and not take reactive actions to avoid an accident.
• Keep a safe distance from the vehicle in front of you • Always use your signal • Always use seatbelts for you and your passengers • Plan ahead for the unexpected • Be able to control speed • Be Prepared to react to other drivers • Do not expect the other driver to do what you think he or she should do • Respect other users of the roadway • Be aware of driving in special road and weather conditions • Be alert and avoid distractions, e.g., cell phone use, eating Once you take charge of a vehicle, it’s your responsibility to ensure the safety of yourself, your passengers and others that share the road. Accidents and near misses could be greatly reduced if drivers were more courteous, contentious and concerned for other drivers on the roadways rather than solely focused on themselves. If you or your business would like a Defensive Driving class as a preventative measure to reinforce the habits listed above, please contact our offices and we would be happy to setup training to accommodate your specific needs. Tiffany Hokett Vice President, American Safety Services, Inc.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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What do you see at your SWD facility?
All activity.
Or a blank screen.
See the Dividia difference: surveillance, security and support. Can you spot a spill at your SWD facility from 100 miles away? Can you stop illegal dumping before it happens? Can you check on your equipment from afar? You can see all this–and more–with Dividia’s remote security and surveillance systems. In addition to offering you the latest High Def Recording technology, we provide service and support with full-time Dividia technicians who are based in the Permian Basin. See what you’re missing: call 432.614.8000 or visit www.dividia.net/swd.
Surveillance. Security. Support. That’s the Dividia difference.
432.614.8000 l www.dividia.net/swd tx Lic #B16555
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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Got leaking wells? MetalPatch it! MetalPatch restores the integrity of your well with a single trip solution. Cement squeezes are now a thing of the past. MetalPatch seals off the problem area with minimal loss of inner diameter, providing maximum production and wellbore access. Some highlighted features: » Casedhole and Openhole Patch Solutions. » Seal off perforations or leaking casing. » Straddle wellbore restrictions, e.g., Frac Valves. » Cover multiple trouble zones while drilling without losing borehole diameter. » Deployed On and Off-Shore. » Single trip installation with no drill out. » Long Lengths up to 9,000 ft. » High Pressures over 10,000 psi. » Installed in build sections up to 45°\100 ft. » H2S NACE “A” Qualified.
Expanded Tubular Geometry
Customers Casing OD
5.50
Wt [lb\ft] 23.0 20.0 17.0 15.5 13.0
ID [in] 4.670 4.778 4.892 4.950 5.044
API Drift [in] 4.545 4.653 4.767 4.825 4.919
Nipple [in] 4.420 4.528 4.642 4.700 4.794
OD [in] 4.552 4.670 4.795 4.859 4.962
4.50
Wt [lb\ft] 15.1 13.5 12.6 11.6 10.5 9.5
ID [in] 3.826 3.920 3.958 4.000 4.052 4.090
API Drift [in] 3.701 3.795 3.833 3.875 3.927 3.965
Nipple [in] 3.576 3.670 3.708 3.750 3.802 3.840
OD [in] 3.705 3.810 3.853 3.900 3.959 4.002
Nominal ID [in] 3.209 3.321 3.366 3.416 3.478 3.524
Mohawk Energy expanding the limits 30
Special Drift [in] 4.006 4.130 4.261 4.327 4.435
Expanded Tubular Geometry
Customers Casing OD
Nominal ID [in] 4.066 4.190 4.321 4.387 4.495
Expanded Tubular Performance
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Int. Yield [psi] 8,653 8,339 8,023 7,869 7,628
Collapse [psi] 4,104 3,800 3,496 3,344 3,112
Expanded Tubular Performance
Special Drift [in] 3.149 3.261 3.306 3.356 3.418 3.464
Int. Yield [psi] 10,846 10,410 10,241 10,058 9,838 9,681
Collapse [psi] 6,232 5,808 5,640 5,464 5,256 5,104
5440 Guhn Road Houston, TX 77040 e: info@mohawkenergy.com p: 713.956.7473
1969 Ford Mustang Mach 1 CJ R-Code Fastback
1969 Chevrolet Chevelle 502 RestoMod
Classic Car Auction & Show Over 175 Cars Expected. Consign Now For Best Numbers. Saturday, May 31, 2014 路 10am
The Horseshoe - Midland County Multipurpose Facility
1924 Nash Series 690 Four Door Touring Sedan
1928 Ford Model A Custom Roadster Pickup
1932 Ford Hi-Boy Custom Roadster
1939 Ford Steel Bodied Street Rod Coupe
1953 Cadillac Eldorado Convertible
1956 Ford F100 Pickup
1964 Porsche 356 Cabriolet
1967 Chevrolet Corvette L68 Sting Ray Coupe
1967 Mercedes-Benz 250 SE Coupe
1967 Pontiac Grand Prix Convertible
1968 Ford Mustang GT350 Fastback
1968 Mercury Cougar RestoMod Two Door Hardtop
1968 Volkswagen Samba 23-Window Bus
1969 Oldsmobile 442 W-32 Convertible
1972 GMC 2500 Pickup
2001 Dodge Viper RT Convertible
Check our Website for New Inventory Added Daily! TxE 7674 Daniel J. Kruse, CAI Dan Kruse Classics 11202 Disco 路 San Antonio, TX 78216 tiffany@kruseclassics.com PBE Full Page.indd 1
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MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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MAY & JUNE
TOP
FESTIVALS AND EVENTS IN TEXAS All across Texas, a variety of festivals, events and attractions are a great way to have fun and to spend time with your family. Insane Inflatable 5K May 3 Scharbauer Sports Complex - 5514 Champions Dr. - Midland, TX 79706 Note The Insane Inflatable course is unlike any other experience! Made up solely of 14 - 17 inflatable obstacles, the 3.1 mile course will challenge you, surprise you, and leave you wanting more! The course isn’t just a couple of silly slides and bounce houses - it’s super-sized inflatables without rules. It’s imagination and creativity X10. It’s the start of something new and an event you’ll look forward to year after year. (325) 650 1811 andi.markee@townsquaremedia.com insaneinflatable5k.com SONORA CINCO DE MAYO FIESTA May 3 Sonora - Enjoy arts & crafts booths, dancing under the stars, children’s rides, food booths, and entertainment. 10am-5pm. Sponsored by Viva Sonora. For more info: 1-888-387-2880 or (325) 387-2880 www.sonoratexas.org Cirque Dreams Rocks May 4 7 PM-9 PM Wagner Noel • 1310 N. FM 1788. Midland, TX www.visitmidlandtexas.com
10 years, more than 7,730 children with health issues that would typically prevent them from attending Camp have attended Victory Junction at no cost to their families, thanks to the Kyle Petty Charity Ride. Follow the Ride live at www.facebook.com/kpcharityride, and on Twitter and Instagram @KPCharityRide for more. 5th ANNUAL CRUDEFEST TEXAS MUSIC FESTIVAL May 8-10 5209 South County Road 1270 • Midland, TX The biggest oil & gas celebration of its kind features over 20 bands, 1000 campsites and 3 days of real Texas music. Enjoy such bands as Johnny Cooper, Larry Joe Taylor, Roger Creager, Josh Abbott, Cory Morrow, Aaron Watson, Casey Donahew Band and more, plus a Championship Cook-off of brisket, pork spare ribs, chicken, beans and margaritas. www.thecrudefest.com Shipwrecked! May 16-17 and 24 8 PM Globe Theater • 2508 Shakespeare Road • Odessa, Texas 78761 Shipwrecked, a self-narrative of Louis de Rougemont, is about his “Life Experiences” of being shipwrecked for thirty years. Believers as well as skeptics emerge and as with all good stories, Shipwrecked holds adventure, mystery, love and suspicion of who really is telling the truth.
Kyle Petty Charity Ride visits Midland! May 5 5 PM-7 PM 1401 Tradewinds Boulevard. Midland, TX 79701 200+ participants make stop on coast-to-coast tour for charity. Homewood Suites Midland Las Cruces, NM to Midland, Texas. May 6th- Midland to Austin. The 20th Anniversary Kyle Petty Charity Ride will kick-off in Carlsbad, CA on May 3! Come out to the Hilton Carlsbad Resort & Spa to help send off NASCAR’s Kyle Petty as he leads more than 175 motorcyclists and several notable celebrities on their first ever coast-to-coast tour! The Ride raises funds and awareness for Victory Junction, a camp created to enrich the lives of children with chronic illnesses. The community will have the opportunity to meet the riders, receive autographs and take photos. Additionally, locals are encouraged to support the Ride through it’s “Small Change. Big Impact.” program that directly benefits Victory Junction. In the past 32
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Texas Thunder Fest May 16-17 8 AM-11 PM 16853-17099 N. Chinaberry Ave. • Gardendale, TX Get ready for the premier festival of West Texas. Imagine your favorite music, fantastic atmosphere and great friends making amazing memories. Set on beautiful farmland with the huge Texas sky and picture perfect pump-jacks as a backdrop, Texas Thunder brings you the best country music artists the Lone Star State has to offer over 2 glorious days in the West Texas sunshine. Join thousands of the friendliest people in the country and enjoy cold beer, homegrown talent and the most fun you can pack into a big ole Texas weekend. CHEROKEE CREEK MUSIC FEST- IVAL... May 16-17 Great musical entertainment in the Hill Country! Jimmy LaFave, Bob Schneider, Indigo Girls, Patty Griffin, and Lucinda Williams. All in a beautiful setting, with camping, lunch & dinner in the ticket price. Held at 4160 FM-501 in San Saba County. Benefiting non-profit charities for children. (214) 981-0700 www.cherokeecreekmusicfestival.org 41st PASADENA STRAWBERRY FESTIVAL May 16-18 Pasadena - Enjoy three days of fabulous fun at the Pasadena Fairgrounds with dozens of attractions, carnival rides, musical stage entertainment, pageants, children’s activities, cook-offs, wine tastings, vendors, tournaments, foods & much more. Free parking & shuttle bus. RV hook-ups & camping available. (281) 991-9500 www.strawberryfest.org
8th ANNUAL DFW DRAGON BOAT, KITE & LANTERN FESTIVAL May 18 Irving - Dragon boat racing; kite flying demos & com-petition; 15 countries’ cultural performances; ethnic food; lantern displays; shuttlecock contest & more. Marco Polo World Foundation proudly brings the first dragon boating to North Texas! 8:30am-8pm. Free admission. Free concert. Lake Carolyn near Riverside/Hwy 114. Ride DART to Las Colinas Urban Ctr Station & enjoy free APT Transit System to the Fest. www.dfwdragonboatfestival.com 48th ANNUAL NATIONAL POLKA FESTIVAL May 23-25 Ennis - Downtown & Three Czech Halls. Celebrate Memorial Day Weekend with Czech & Slovak heritage festivities, folk dancing, authentic cuisine, 200 craft & food booths, Czech costumes, 14 live polka bands, country concert, and a giant parade. (972) 878-4748 www.nationalpolkafestival.com Satisfaction Rolling Stones Tribute Concert May 30 Aphasia Awareness Concert • 5514 Champions Drive • Midland, TX 79703 7 PM-10 PM. International touring band SATISFACTION will play Rolling Stones greatest hits. Gates and food vendors open 6:30 with Tony Barker at 7 p.m. FREE. Bring your lawn chair, blanket. No outside food allowed. For reserved seats, catered meal, VIP parking, private bar and more, call 432-699-1261 www.AphasiaWTx.org The Color Dash 5K Run/Walk May 31 5514 Champions Dr. • Midland, Texas 10:30 AM-1 PM Proceeds go to The Life Center which is a non-profit, faith-based organization aimed at promoting sexual integrity for life, offering compassionate assistance for women and men facing an unplanned pregnancy. ROUND TOP MUSIC AT FESTIVAL HILL 2014 June 1-July 12 100 young musicians from around the world study & perform in a series of orchestra & chamber music concerts with renowned international faculty, conductors & soloists. The Festival & Chamber Orchestras perform several times during June. Individual & season tickets available. Round Top Festival Institute, Hwy 237 at Jaster Road. (979) 249-3129 www.festivalhill.org
7th Annual SeniorAdvantage Health Fair at Odessa Regional Medical Center May 17 8 AM-12 PM in the East Campus Auditorium and Conference Rooms. Free Admission. Free Lipid Profile with PSA for men and TSH for Women. FASTING AFTER MIDNIGHT REQUIRED, Diabetic Foot Screening, Blood Glucose Checks, Blood Pressure Checks. Free SeniorAdvantage Memberships, Community Resource Information along with Medical Supplies, Equipment and Medical Service Information. For vendor information contact TERRI at 432-582-8796
Hot Summer Nights with Cool Music June 6 Noel Heritage Park • 5th and Lincoln Streets • Odessa, TX 8 PM. White Ghost Shivers - Hot Jazz Vaudeville. Bring a lawn chair, relax under the shade and enjoy the music! Opree June 7-20 7 PM Globe Theater • 2308 Shakespeare Road • Odessa, TX 79761 Odessa Brand New Opree was founded on the bases of bringing new talent, artists and music to Odessa. All music that is performed is live with no music pre-recorded on cd or tapes. All band members play their own instruments and sing live as well.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Cares Boy Scouts of America It’s more than a badge. It’s a way of business. It’s a way of life.
The Buffalo Trail Council, Boy Scouts of America Is getting ready to produce the First Annual Sustainability Awards Luncheon. This special event not only highlights the efforts and achievements of industry leaders in sustainability, it also recognizes outstanding young men or women in the Scouting program who are making strides toward educating our world and impacting the way we utilize our natural resources by presenting them with a university scholarship. Investing in new technology, exploration, extraction, and processing is necessary to stay competitive in the energy industry. But investing in our future requires a broader perspective. Participating in the Sustainability Awards Luncheon provides an excellent opportunity to network with leaders in cutting edge practices of resource management. But it also creates incentive and enthusiasm for coming generations to rise to the challenges of growing demands and higher standards of living throughout our world. 34
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
The Boy Scouts of America has long lead the charge in environmental education and responsible use of our natural resources. The Forestry merit badge was introduced in 1911, Soil and Water Conservation in 1952, Geology in 1953, Environmental Science in 1972, Energy in 1976, and most recently the Sustainability merit badge in July of 2013. Through these and many other programs, Scouting continues to provide our youth with the tools they need to make wise and ethical decisions for the energy of the future.
Already, industry leaders such as Henry Resources, Key Energy, PBE Magazine, Whiting Petroleum, Shenandoah Petroleum, Apache Corporation, Pioneer Natural Resources, and others have expressed their willingness to commit to the event which is scheduled to take place August 15, 2014. If you’d like more information on how you can be involved in this year’s event, call (432) 570-7601. To find out more, become a volunteer or to donate, visit www.scouting.org
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Tech
Bites
Source: Reuters, Reporting by Jim Finkle
Bi g t ech c ompanie s o ffer m illions a f t er
Heartbl eed crisis The world’s biggest technology companies are donating millions of dollars to fund improvements in open source programs like OpenSSL, the software whose “Heartbleed” bug has sent the computer industry into turmoil.
Amazon.com Inc., Cisco Systems Inc., Facebook Inc., Google Inc., IBM, Intel Corp and Microsoft Corp are among a dozen companies that have agreed to be founding members of a group known as Core Infrastructure Initiative. Each will donate $300,000 to the venture, which is recruiting more backers among technology companies as well as the financial services sector. Other early supporters are Dell, Fujitsu Ltd NetApp Inc., Rackspace Hosting Inc. and VMware Inc. The industry is stepping up after the group of developers who volunteer to maintain OpenSSL revealed that they received donations averaging about $2,000 a year to support the project, whose code is used to secure two-thirds of the world’s websites and is incorporated into products from many of the world’s most profitable technology companies. 36
“I think we get complacent as an industry when we see something as working well or working ‘well enough.’ We sort of see it as a ‘maintenance job,’” said Chris DiBona, director of open source and engineering with Google. “We have to be a bit more vigilant.” The Heartbleed bug has likely cost businesses tens of millions of dollars in lost productivity as they have had to update systems with safe versions of OpenSSL, according to security experts. Also, it has already resulted in at least one major cyber attack: the theft of data from Canada’s tax authority. The non-profit Linux Foundation, which promotes development of the open source Linux operating system, organized the group, whose formation it announced on Thursday.
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
It will support development of OpenSSL as well as other pieces of open source software that make up critical parts of the world’s technology infrastructure, but whose programmers do not necessarily have adequate funding to support their work, said Jim Zemlin, executive director of the Linux Foundation. Heartbleed is a major bug in OpenSSL encryption software that is widely used to secure websites and technology products including mobile phones, data center software and telecommunications equipment. It makes systems vulnerable to data theft by hackers who can attack them without leaving a trace. Open source software refers to programs developed by groups of developers spread across the globe, who seek community involvement to improve the code. Companies are typically free to incorporate such code in their products without paying any fees to volunteer developers who maintain the code.
such as Red Hat Inc. and Oracle Corp, which offer premium services such as updates and help-desk support. The Core Infrastructure Initiative expects to offer one or more of the small crew of OpenSSL developers full-time jobs working on the project through fellowships, Zemlin said in an interview. It will also identify other projects like OpenSSL that it believes are equally critical to the infrastructure of the Internet and merit support. Eben Moglen, a Columbia Law School professor and attorney who represents many open-source software projects, said he believes there are six to 10 such open-source software. “The process of keeping software secure is constant. It never stops,” said Moglen, whose clients include the group of OpenSSL developers.
Some types of open-source software, such as Linux and the MySQL database, have versions that are sold by companies
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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PBE NEWS BRIEFS Watching the basin
Fatal crashes on the rise in the Permian Basin According to a new report released by the MidlandOdessa Transportation Alliance (MOTRAN), there has been a steady increase in road fatalities, particularly in Ector County which has seen 16 more fatal accidents from 2012 to 2013. Stats also show that Midland and Ector counties have the highest number of fatalities in the Permian Basin with Ector County at 58 and Midland County at 44 in 2013. Agency spokesmen say the majority of these wrecks are being caused by driver error like speeding, DUI, failing to stop at lights and signs and failing to yield the right of way. Both MOTRAN and Texas Department of Transportation have been actively researching traffic accidents and fatalities in order to help curb the numbers moving forward. Each entity has launched
an online campaign to inform and educate drivers on the shocking stats and ways each driver can prevent themselves from becoming one. • 50% of Crashes in Midland-Odessa District Involve a Single Vehicle • Fatal Crashes increased by 47% in the MidlandOdessa District from 2011 to 2012 • The Cost of Crashes to Families and Individuals is more than $300,000,000 annually • 44% of Fatalities Due to Roadway Departures • 35% of Fatalities Due to Failure to Stop or Yield For more information including statistics and safe driving tips, logo onto drivesmartwesttexas.org Source: www.drivesmartwesttexas.org
Watching THE SHALE
PetroChina hikes shale gas spending to more than $1.6 bln Chinese state energy giant PetroChina plans to spend more than 10 billion yuan ($1.6 billion) on shale gas this year, sources with knowledge of the matter said, as domestic competition heats up after rival Sinopec announced a commercial find. Faced with high drilling costs and the complexity of tapping shale gas, China has struggled to revolutionize its energy supplies. The top energy consumer wants to unlock what could be the world’s largest shale gas reserves by emulating the hectic success of the U.S. shale boom. PetroChina’s decision to triple its shale gas spending from expenditures on the unconventional fuel over the past few years comes just months after Sinopec Corp lifted hopes that China is near a breakthrough by announcing a commercial find. PetroChina, Asia’s largest oil and gas producer, has also lifted its 2015 shale gas output target to 2.6 billion cubic metres (bcm), up from the previous 1.5 bcm, according to a company official and a government source. 38
That would represent only about 2.3 percent of China’s total natural gas output of around 113 bcm last year. “PetroChina wants to play catch up after Sinopec’s success,” said a government source who has been briefed on PetroChina’s plans. Since around 2010, PetroChina has spent about 3 billion yuan ($482.39 million) total on pilot shale drilling, according to both sources. The state giant, which makes up around 70 percent of China’s total natural gas output, has so far largely focused on growing its conventional oil and gas portfolio. PetroChina will focus on two pilot zones - Weiyuan-Changning in southwest Sichuan basin and Zhaotong in Yunnan province. “PetroChina has over the past four years improved understanding of the shale resources and achieved some technological breakthroughs,” said Mao Zefeng, joint company secretary of PetroChina. “We’re stepping up shale gas development this year,” he said. Source: Reuters
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Watching the STATE
Texas takes top spot in the US rankings for wind power in 2013 In 2013, 12 states accounted for 80% of U.S. windgenerated electricity, according to preliminary generation data released in EIA’s March Electric Power Monthly report. Texas was again the top wind power state with nearly 36 million megawatthours (MWh) of electricity. Iowa was second, with more than 15 million MWh, followed by California, Oklahoma, Illinois, Kansas, Minnesota, Oregon, Colorado, Washington, North Dakota, and Wyoming.
The proportion of wind to total electricity generated varied widely by state. Leading the nation in wind generation share was Iowa with 27.4% of net electricity production coming from wind turbines. Second was South Dakota, at 26%. Other states with more than twice the national share of 4.1% wind power were Kansas, Idaho, Minnesota, North Dakota, Oklahoma, Colorado, Oregon, Wyoming, and Texas. Source: www.eia.gov
These 12 states produced a combined 134 million MWh of electricity from wind. Nationwide, 167 million MWh of power came from wind in 2013, a 19% increase from 2012. Wind power increased its share of U.S. total electricity generation in 2013 from 3.5% to 4.1%. All but 13 states reported to EIA some generation from wind, and 23 states increased their wind generation more than 10% above 2012 production levels. California’s wind generation exceeded geothermal generation for the first time in 2013.
Watching the GOVERNMENT
U.S. government pursues new rules for teacher-training programs President Barack Obama has directed the Department of Education to craft rules to evaluate U.S. teacher training programs amid concern that too many new teachers are walking into classrooms unprepared for the job, the White House said in late April. By this summer, the department will propose regulations to strengthen teacher preparation programs and, after a period of public comment, will aim to publish final rules on the matter within the next year, the White House said. Education Secretary Arne Duncan told reporters poor teacher preparation programs produce teachers “who are under-prepared, who are ineffective and who are frustrated.”
“The administration will encourage and support states in developing systems that recognize excellence and provide all programs with information to help them improve, while holding them accountable for how well they prepare teachers to succeed in today’s classrooms and throughout their careers,” the White House said in a statement. “Other countries, as we know, are today out-performing us educationally. We don’t think that’s fair to our students. We don’t think that’s fair to our teachers. And we don’t think it’s good for our nation and our nation’s economic interests,” Duncan said.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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Watching the Nation
Eleven states generated electricity from nonhydro renewables at double U.S. average About 6.2% of total U.S. electricity supplies in 2013 were generated from nonhydro renewable energy sources such as wind, solar, biomass, and geothermal, up from 5.4% in 2012. But 11 states produced electricity at more than twice the national average from these sources—accounting for between 14% and 32% of their net electric generation—according to preliminary 2013 generation data in EIA’s Electric Power Monthly report. Maine led all states by generating 32% of its electricity from nonhydro renewables—primarily biomass generation by the wood products industry. The state had one-fourth of its net electric generation come from biomass resources. Nearly all other states with high proportions of renewable generation relied primarily on wind power. Iowa and South Dakota each got more than 25% of
their net electricity from wind generation, and Idaho, Kansas, Minnesota, North Dakota, Oklahoma, Oregon, and Colorado generated 12%-20% of their power from wind resources. California generated more than 18% of its electricity from nonhydroelectric renewable sources, but 2013 was the first year that wind produced more electricity than the state’s geothermal resources, which are the nation’s largest. Biomass and solar generating resources also contributed to the state’s renewable portfolio. The largest amount of nonhydroelectric renewable power was generated in Texas, with California a close second. But Texas produced more electricity than any other state, so the proportion of nonhydroelectric renewable sources in its generation was about 9%. Source: www.eia.gov
Watching Offshore
Gulf Coast crude oil inventories reach record level Crude oil inventories on the U.S. Gulf Coast (USGC) reached 207.2 million barrels (bbl) in mid April, a record high. The elevated inventory levels are the result of the continuing strong crude oil production growth, the opening of TransCanada’s Marketlink Pipeline, and a drop in crude oil inputs at USGC refineries as a result of seasonal maintenance. EIA weekly crude oil inventory data include inventories at tank farms, refineries, and in pipelines. Total working crude oil storage capacity on the USGC totaled 273.3 million bbl as of September 30, 2013 (the most recent date for which that number is available). Tank farm storage accounted for 200.5 million bbl of that capacity, and storage at refineries accounted for 72.9 million bbl. EIA does not include a pipeline capacity number in its working storage capacity estimate. While USGC crude oil inventories typically build during the beginning of the year, this year’s increase has been particularly notable. On January 10, USGC inventories were 161.0 million bbl, 1.4 million bbl above the five-year average. Since then, they have increased 46.2 million bbl (29%) to the current level, which is 24.2 million bbl above the previous five-year average and 22.2 million bbl above year-ago levels. Typically over this period, USGG crude oil inventories build only 23.4 million bbl. 40
The main driver of the recent crude oil inventory builds on the USGC is start-up of TransCanada’s 700,000-bbl-per-day (bbl/d) Marketlink Pipeline, which runs from the Cushing, Oklahoma storage hub to the Houston area. In late January, TransCanada completed the first delivery of crude oil via Marketlink to USGC refineries. Trade press has reported that crude oil deliveries via Marketlink are expected to average 525,000 bbl/d in 2014. The pipeline start-up has been a main driver of recent corresponding draws at Cushing. Additional sources of crude supply on the USGC coming from rising in-region production have kept inventories generally high in recent years. In the 106 weeks since March 2012, USGC inventories have been above the previous five-year average in all but seven of those weeks. That coincides with a period during which crude oil production growth in the USGC has averaged about 584,000 bbl/d. Likewise, crude oil production growth in the Midwest has averaged 278,000 bbl/d from March 2012-January 2014 (the most recent date for which crude oil production data are available). With more production on the USGC and transportation of Midwest crude to the region, more storage capacity has been required to meet these logistical challenges. Source: Reuters
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Watching the WORLD
Egypt to lift natural gas prices for homes, businesses Egypt plans to double the price of natural gas piped into some homes and businesses from next month, but the move will trim its huge fuel subsidy bill only slightly because few premises are connected to the gas network. Energy prices in Egypt are among the lowest in the world, and the cash-strapped government spends more than a fifth of its budget on keeping them down. Although successive governments have called for reform, none have dared push through big price rises for fear of stoking public unrest. According to a government decree issued in mid April, residential and commercial users of less than 25 cubic metres of gas per month will pay 0.40 Egyptian pounds ($0.06) per cubic metre from May. The Oil Ministry’s website shows the current price of gas for households at 0.20 Egyptian pounds ($0.03) per cubic metre, or about $0.80 per million British thermal units (mmbtu).
State newspaper Al-Ahram reported that the current price is 0.10 Egyptian pounds ($0.01) per cubic metre for consumers that use less than 30 cubic metres a month. By contrast, U.S. householders paid an average of $0.36 per cubic metre of gas, or around $9.60/mmbtu, last year, according to U.S. Energy Information Administration data. The price hike, announced in the country’s official gazette, does not apply to the electricity generation sector, which is the largest consumer of gas in Egypt. State news agency MENA quoted an unidentified Oil Ministry source as saying that the move would increase state revenues by 800 million to 1 billion Egyptian pounds ($114.5-$143.1 million), “which will be used to finance projects that deliver natural gas to homes and expansion (of the grid)”. The decree also says that bakeries, which produce the staple food of most Egyptians, will not have to pay any higher price. The price hike therefore only affects a small number of citizens whose homes have been connected to the gas network. Most poor Egyptians use cylinders of butane for cooking. Egypt raised the price of the cylinders last year for the first time in two decades ahead of talks with the International Monetary Fund on a $4.8 billion loan. The government also last year began a World Bankbacked plan to link 800,000 households a year to the gas grid in a bid to get consumers to use less statesubsidised butane.
Photography by: Luke Pawliszyn
Government officials and industry experts says the wasteful subsidy system is at the root of a range of problems in Egypt’s chaotic energy sector. Egypt, facing the worst energy crunch in years, is scrambling to secure adequate fuel supplies for the summer to avoid popular anger over power cuts. Source: Reuters, Maggie Fick MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
41
RESTAURANT
BITES
by Marcy Madrid
NEW dining options in boom town As Kimberly Smith mentioned in the welcome to town story, anyone who has tried to eat at a restaurant in Midland or Odessa during a peak time recently has felt the effects of living in a booming economy. Almost all the restaurants are packed during lunch and dinner on a regular basis. It’s no surprise then that many new restaurants have popped up and many more are moving into town within the next year to cash in on the lively economy and offer West Texans some expanded options. Here’s a list of restaurants that have just opened or are slated to open in Midland and Odessa within the next year.
Odessa
Midland
• Chipotle Mexican Grill - 3810 E. 42nd St.
• Abuelos
• Sonic Drive-In - 8684 Andrews Hwy
• Grub Burger
• Osaka Japanese Steakhouse
• Brew Pub on Holiday Hill and Loop 250
4020 Faudree Rd.
• Wings and More on Wadley
• Jersey Mike’s - 7270 E. Hwy 191 Ste 214
• Texas Burger
• Dickey’s Barbecue - 6105 E. Hwy 191
• Jay Penos #2
• Dairy Queen - 811 Maple Ave.
• Bills Bistro by Wine Rack
42
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
43
Dragnet: A New Construct for A New Context The following is a prophetic word spoken by Pastor Jim Laffoon during a recent church service at MidCities Church, in between Midland and Odessa. Despite my own concern over the direction and the political situation in American, and whether you’re democrat or republican, you ought to be concerned today, but here’s why I’m optimistic. There is a cycle in the life of countries that if you can understand it, you’ll see what a divine moment we have coming as people. It starts with what I call ripe, in other words people are ready to be picked, and people are ready to be saved. Now, if something is ripe and it’s not picked it becomes overripe which is a nice word for rotten. So maybe we feel like our country is rotting, our moral fibers are rotting. All that means is that when we were ripe we were not picked or we were resistant. Rotten scares us but the good news is when a country becomes rotten, sin begins to create opportunity. Here’s’ why: sin kill marriages, sin kills friendships, sin kill consciences, sin kills joy, sin wrecks children. And sin brings such death, that as death begins to work in a society it decomposes. When something decomposes, it eventually creates compost. Beneath the surface of a rapidly amoral America, decomposition is taking place and we are getting ready for massive, astonishing harvest the last half of this decade. Quite honestly, Texas is one of my great hopes for the country. There is more mega churches and churches this size or larger in Texas than in any other states in the country. And in the middle of Americas decline, Gods alive and well in Texas. There are still areas where the Bible belt mentality is prevalent. There’s also 44
by Pastor Jim Laffoon
Jim Laffoon is the teaching pastor of King’s Park International Church. He and his wife, Cathy, live outside of Chapel Hill, N.C. with three of their seven children.
the interesting migrant and immigration patterns you see in Texas. As God brings precious Hispanics into Jim made a commitment to Christ during our country, no his senior year of high school. He spent matter what three years serving in the US Army you think about Paratroopers, then earned a degree in immigration, Biblical Theology from Manna Christian thousands of College. Since that time, he has served as them are going a missionary, senior pastor and the Dean to be touched. of Students at a bible college. These precious catholic people In addition to being the teaching pastor living in Texas at King’s Park, Pastor Jim Laffoon also are going to be serves on the leadership team of Every swept in revival Nation Ministries and travels throughout in ways that the body of Christ ministering will stagger you. prophetically and pastoring leaders. Then there’s the internal migration pattern in our country.
Hundreds and thousands of people are moving to this state because of employment opportunities and tax issues. Their moving from areas where there’s not much God left in the culture to an area where there is and when they move here they are ripe to be harvested, ripe to be touched. Gods doing something here.
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Then there’s Midland; you all are paying the cost for being the fastest growing metropolitan area in all of America. This is the highest mean income in Texas, and this is probably the lowest unemployment in America today. This is where you live and it’s showing no signs of stopping. With fracking and horizontal drilling, your population is going to easily double over the next decade or two. It’s going to be astonishing. So what does that mean for you? What is God after, what does God want to construct here to reap this harvest? In Matthew 13: 4748 Jesus says this: “Again, the Kingdom of Heaven is like a fishing net that was thrown into the water and caught fish of every kind. When the net was full, they dragged it up onto the shore, sat down, and sorted the good fish into crates, but threw the bad ones away.” The word net here is the only place in the New Testament this word for net is used. It’s the word dragnet. Back in those days a dragnet was a net fastened to the fishing boat and they would allow it to sink to the bottom and then as they propelled the boat through the sea it would drag deep, catching fish. Jesus says, I’m forming you into something. He says I’m forming your lives into something like the net you saw there. So what does this mean for you and me? It really means 4 things: 1) God has a priority on preparing you for something. 2) Once he’s prepared you, he’s going to cast you into something. 3) Once he’s cast you into something, He may let you hit bottom and get deeper into things you don’t even like. He’ll drag you through them and 4) When you’re full of the people he’s called you to reach, he’ll bring you back to the top and help you connect those people to the church. Jesus walked in ministry 3½ years. At 12 he’s the smartest being on the planet, yet He disappears for 18 years to help his mom raise kids and earn money. You say you don’t like your job, do you think God liked his job? Imagine, God, who created the earth, hiding out in a back alley carpenter shop for 18 years, hidden away. Why did he do that? Because life wasn’t about him, it was about you.
Your job is not just about you, it’s about someone else. The same God that threw his son into a broken sea of humanity will throw you into places you don’t like because there are people there who will never see his love unless you’re there, loving them and loving Him in the middle of the situation you don’t like. He’s busy preparing you. Jesus spent most of his ministry not speaking to the thousands we hear about but preparing a select group of men and women to change the earth when he left. God is not just preparing you to be a whole person, He is preparing you for a divine purpose. The net God is casting in this city from this church is only as strong as the weakest fiber in the weakest member. And what God is doing is so important and the reason He is so adamant about making you stronger is because if you crack under pressure, if you backslide or walk away from Him, it’s not just about your testimony or your character, it‘s about something breaking and it effecting all the other people you were called to reach. There are parts of our culture getting dark now. There are people deep in sin, deep in pain, deep in ideologies that were not used to in our country. The no-religion affiliation is growing in our country. So Jesus is throwing you into jobs and situations right now and you may not like it, but it’s not just about you. There may be someone in that job or situation that you’re supposed to reach. Much of what you go through in your life as you mature as a Christian is not about your person, it’s about your purpose. There are people living in such pain who have hit bottom spiritually, emotionally and in their marriages and unless they see some Christian bobbing along their path, they’ll never get out of that darkness. This church is not going to have enough attraction power to find them, it’s going to have to happen through you being cast out to them. Our culture is dying around us. The good news it’s forming compost, the bad news is, you’re the seed, and you’re the net. The storms of American culture aren’t going to end. The moral chaos is not going away anytime soon, nor are the threats we feel to our understanding of this country. That’s why He’s got to find a group of people so whole in their character, so whole in their relationships, they can stand the strain of being thrown into a stormy culture. Beneath the storms you fear, beneath the darkness that’s so suffocating, there are teams and schools of men and women in Midland and Odessa and Lubbock and all over this area who are waiting for you.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
45
U.S. RIG COUNT - TEXAS States &
through May 30, 2014
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 2013
Last Week
This Week
Waiting to Spud
Texas RRC District 1
135
127
124
126
128
127
131
122
9
Texas RRC District 2
83
81
81
82
90
89
92
92
3
Texas RRC District 3
42
55
54
56
46
64
65
68
6
Texas RRC District 4
36
36
36
36
32
37
33
37
1
Texas RRC District 5
14
8
8
9
14
9
10
9
0
Texas RRC District 6
26
34
34
34
24
34
34
33
2
Texas RRC District 7B
16
9
9
10
21
16
15
15
4
Texas RRC District 7C
81
91
93
90
80
99
101
102
7
Texas RRC District 8
275
319
320
324
259
313
314
311
9
Texas RRC District 8A
38
37
38
38
32
46
45
47
2
Texas RRC District 9
25
17
16
16
29
26
24
27
2
Texas RRC District 10
64
69
69
71
67
68
71
66
0
Texas Total
835
883
882
892
822
928
935
929
45
U.S. Totals
1,762
1,839
1,920
2,099
2,110
2,093
99
Districts
1,831 1,861
COPYRIGHT Š 2014 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 46
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
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 May 30 2014 Company
Footage Drilled
% of Total
Average Footage
Well Starts
% of Total
Directional Wells
1
Helmerich & Payne, Inc.
13,127,005
16.7%
10,288
1,276
12.8%
1,121
2
Patterson-UTI Drilling Company, LLC
7,701,604
9.8%
10,228
753
7.6%
669
3
Nabors Industries, Ltd.
6,541,224
8.3%
7,268
900
9.0%
824
4
Precision Drilling Trust
3,621,016
4.6%
8,401
431
4.3%
392
5
Nomac Drilling, LLC
3,446,253
4.4%
9,763
353
3.5%
353
6
Ensign Energy Services, Inc.
3,227,807
4.1%
6,292
513
5.1%
305
7
Unit Drilling Company
2,351,023
3.0%
9,596
245
2.5%
234
8
Pioneer Energy Services Corp.
2,151,141
2.7%
10,099
213
2.1%
160
9
Trinidad Energy Services Income Trust
2,079,460
2.6%
10,094
206
2.1%
165
10
Capstar Drilling, LP
1,798,007
2.3%
6,562
274
2.7%
81
11
Cactus Drilling Company, LLC
1,773,745
2.3%
10,558
168
1.7%
163
12
Savanna Energy Services Corp.
1,155,898
1.5%
9,030
128
1.3%
39
13
Xtreme Drilling and Coil Services Corp.
1,149,515
1.5%
10,844
106
1.1%
103
14
Sidewinder Drilling, Inc.
1,045,624
1.3%
8,233
127
1.3%
119
15
Complete Production Services, Inc.
933,942
1.2%
10,263
91
0.9%
45
16
Desoto Drilling, Inc.
779,159
1.0%
4,530
172
1.7%
172
17
Pinnergy, Ltd.
757,420
1.0%
9,588
79
0.8%
79
18
Scandrill, Inc.
721,766
0.9%
12,444
58
0.6%
55
19
Sendero Drilling Company, LLC
719,536
0.9%
11,243
64
0.6%
0
20
Latshaw Drilling & Exploration Company
701,477
0.9%
8,555
82
0.8%
82
21
Orion Drilling Company, LLC
700,056
0.9%
11,476
61
0.6%
57
22
Lariat Services, Inc.
698,555
0.9%
6,782
103
1.0%
39
23
Robinson Drilling of Texas, Ltd.
652,114
0.8%
11,243
58
0.6%
2
24
CanElson Drilling, Inc.
619,900
0.8%
8,610
72
0.7%
32
25
Frontier Drilling, LLC
611,730
0.8%
8,380
73
0.7%
65
26
Cyclone Drilling, Inc.
534,198
0.7%
3,957
135
1.4%
128
27
Bison Drilling and Field Services, LLC
508,125
0.6%
11,817
43
0.4%
15
28
Basic Energy Services, Inc.
475,139
0.6%
7,542
63
0.6%
15
29
Cade Drilling, LLC
471,166
0.6%
11,218
42
0.4%
42
30
Big Dog Drilling Company
464,400
0.6%
11,908
39
0.4%
5
31
SST Energy Corporation
459,448
0.6%
9,988
46
0.5%
45
32
ProPetro Services Incorporated
432,400
0.5%
11,379
38
0.4%
0
33
Lewis Petro Properties, Inc.
424,000
0.5%
10,341
41
0.4%
41
34
Murfin Drilling Company, Inc.
379,135
0.5%
4,568
83
0.8%
0
35
Aztec Well Servicing Co.
375,362
0.5%
6,054
62
0.6%
33
Total Top 100 for year 2014
78,621,496
100.0%
---
9,966
100.0%
---
RANK
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
47
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 May 30, 2014
RANK
Company
Footage Drilled
% of Total
Average Footage
Well Starts
% of Total
Directional Wells
1
Anadarko Petroleum Corporation
4,387,803
5.6%
10,373
423
4.2%
416
2
Chesapeake Energy Corporation
3,350,466
4.3%
10,153
330
3.3%
330
3
EOG Resources, Inc.
2,601,154
3.3%
10,322
252
2.5%
240
4
Pioneer Natural Resources Company
2,581,588
3.3%
12,780
202
2.0%
136
5
Occidental Petroleum Corporation
2,568,319
3.3%
5,837
440
4.4%
208
6
Apache Corporation
2,392,468
3.0%
8,796
272
2.7%
173
7
Devon Energy Corporation
1,788,682
2.3%
9,220
194
1.9%
171
8
Marathon Oil Corporation
1,719,740
2.2%
14,452
119
1.2%
119
9
BHP Billiton Limited
1,620,952
2.1%
13,737
118
1.2%
118
10
Chevron Corporation
1,561,803
2.0%
5,087
307
3.1%
145
11
ConocoPhillips Company
1,284,860
1.6%
7,558
170
1.7%
135
12
Noble Energy, Inc.
1,162,280
1.5%
9,449
123
1.2%
123
13
Oasis Petroleum North America, LLC
1,121,262
1.4%
10,011
112
1.1%
112
14
QEP Resources, Inc.
1,104,130
1.4%
11,383
97
1.0%
96
15
Encana Corporation
1,028,931
1.3%
12,548
82
0.8%
79
16
Exxon Mobil Corporation
992,696
1.3%
5,039
197
2.0%
85
17
Whiting Petroleum Corporation
989,961
1.3%
9,519
104
1.0%
95
18
Linn Energy, LLC
961,351
1.2%
5,655
170
1.7%
76
19
Concho Resources, Inc.
959,348
1.2%
10,902
88
0.9%
67
20
Southwestern Energy Company
878,245
1.1%
4,574
192
1.9%
191
21
EP Energy E&P Company, LP
818,584
1.0%
9,745
84
0.8%
74
22
Laredo Petroleum Holdings, Inc.
812,000
1.0%
11,278
72
0.7%
21
23
SandRidge Energy, Inc.
761,996
1.0%
5,404
141
1.4%
99
24
Murphy Oil Corporation
710,608
0.9%
10,767
66
0.7%
66
25
Newfield Exploration Company
692,132
0.9%
6,409
108
1.1%
101
26
CrownQuest Operating, LLC
684,800
0.9%
12,014
57
0.6%
0
27
WPX Energy, Inc.
630,387
0.8%
6,499
97
1.0%
97
28
Ultra Petroleum Corp.
624,204
0.8%
13,281
47
0.5%
47
29
Cimarex Energy Co.
574,772
0.7%
10,644
54
0.5%
53
30
Rosetta Resources, Inc.
573,950
0.7%
9,896
58
0.6%
52
31
Antero Resources Corporation
569,846
0.7%
10,959
52
0.5%
52
32
Penn Virginia Corporation
564,500
0.7%
14,474
39
0.4%
39
33
Parsley Energy Operations, LLC
487,850
0.6%
11,899
41
0.4%
3
34
SM Energy Company
487,005
0.6%
9,019
54
0.5%
54
35
Windsor Energy, Inc.
476,400
0.6%
11,079
43
0.4%
31
Total Top 100 for year 2014
78,621,496
100.0%
---
9,966
100.0%
---
48
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
Source: www.eia.gov
Upstream oil and gas spending continues to favor exploration and development activity Annual reports by oil and natural gas companies show that spending on exploration and development activities increased by 5% ($18 billion) in 2013, while spending on property acquisition continued to decline by $17 billion. Total upstream spending was relatively flat after a period of strong growth (averaging 11% per year) from 2000 to 2012. In the past two years, flat oil prices and rising costs have contributed to declining cash flow for this group of companies. Continued declines in cash flow, particularly in the face of rising debt levels, could challenge future exploration and development. However, reduced spending levels could be offset by rising drilling and production efficiency.
expenditures rose 5% ($18 billion) in 2013 (Figure 1), while production expenditures grew by just 0.6% ($1.4 billion) and acquisition expenditures decreased 33% ($17 billion). Acquisition expenditures can fluctuate, spiking when there are large mergers and acquisitions. After a large increase in 2010, driven by ExxonMobil’s acquisition of XTO, an independent oil and gas producer, acquisition expenditures have declined steadily and in 2013 were the lowest since 2009.
EIA reviewed data from 42 recently released financial statements for public oil and natural gas companies. The reports, required by the U.S. Securities and Exchange Commission, show that the slight increase in spending was driven by expenditures to develop fields acquired in previous years. Expenditures to buy new property fell in 2013, and spending on production activities was flat. Companies report expenditures related to oil and natural gas production activities in three categories: property acquisition, exploration and development, and production, collectively referred to as the upstream. Property acquisition includes costs incurred to purchase proved and unproved reserves. Exploration and development includes expenditures related to searching for and developing the facilities and infrastructure to produce reserves. Production includes costs associated with extracting oil and natural gas from the ground once the field has been developed. Composition of the 0.4% increase in upstream spending in 2013 included the following: exploration and development
For this analysis, EIA considered 42 U.S. and international oil and gas companies that have reported data on upstream expenditures since 2000. The companies range in size of production and include publicly traded as well as state-owned enterprises, including large producers such as ExxonMobil and Petrobras, and smaller ones such as Encana Corporation and Talisman Energy. The 42 companies made up approximately 39% of nonOPEC production in 2013, and had a combined market capitalization of more than $2.4 trillion.
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
49
Generally rising oil prices from 2000 through 2011 contributed to large increases in the companies’ cash flow from operations (Figure 2) and provided the funds needed to increase upstream expenditures. As crude oil prices increased, projects that had been uneconomic became feasible. Companies significantly expanded operations related to tight oil production in the United States and oil sands production in Canada. With many companies expanding oil and gas production activities at the same time, costs for equipment and personnel also increased, further pushing up expenditures. Costs for raw materials increased as most commodities experienced a general price rise from 2002 through 2008, although commodity prices have come down since 2012. After the 2008-09 economic downturn, property acquisition expenditures slowed first, as spending shifted to exploration, development, and production.
April Drilling Productivity Report indicates continuing oil production growth The April update to the Drilling Productivity Report (DPR) indicates continuing oil production growth in the key oil-producing regions. Altogether, in the Bakken, Niobrara, Permian, and Eagle Ford, oil production is expected to increase by 70,000 bbl/d in May 2014. The monthly growth rate is 3,000 bbl/d more than in April 2014 due to solid gains in Permian rig count and continuous rig productivity gains across the regions. While the DPR does not forecast weather impact, the spring thaw season has officially started in the Bakken region and may disrupt some drilling activity between now and June.
Gasoline prices mostly up, diesel fuel prices down slightly The U.S. average price for regular gasoline increased by six cents this week to $3.65 per gallon as of April 14, 2014, 11 cents higher than the same time last year. West Coast and Gulf Coast prices increased by 10 cents and 8 cents, to $3.98 and $3.47 per gallon respectively. The Midwest gasoline price rose by six cents to $3.63 per gallon, while the average gasoline price on the East Coast increased three cents to $3.61 per gallon. The Rocky Mountains saw the only price decline, by a penny to $3.44 per gallon. Although oil prices remained relatively flat in 2012 and 2013, rising costs contributed to a decline in cash flow from operations. Nonetheless, cash spent on investing activities, which tends to lag changes in cash flow, increased slightly in 2013 as companies increased debt to maintain investment, taking advantage of interest rates that have been low since 2009. Companies have increased debt every year since 2006, with long-term debt increasing 9% and 11% in 2012 and 2013, respectively.
The U.S. average price for diesel fuel fell by a penny this week to $3.95 per gallon, a cent higher than at the same time last year. East Coast, Rocky Mountain, and Midwest diesel fuel prices all decreased by a cent, to $4.07, $3.94 and $3.93 per gallon respectively. West Coast and Gulf Coast prices each fell by less than a penny, remaining at $3.98 and $3.79 per gallon respectively.
With a larger share of cash flow from operations directed to investing activities, companies have made less money available for financing activities, including dividends paid to shareholders, share repurchases, and changes in debt. Dividends increased 1% in 2013, but the dollar amount was more than twice as high as the amount paid in 2000. Repurchase of outstanding shares decreased for the second year in a row in 2013 and was well below the 2006 peak, but remained a substantial use of cash.
U.S. propane stocks increased by 0.8 million barrels last week to 28.4 million barrels as of April 11, 2014, 10.7 million barrels (27.3%) lower than a year ago. Inventories in the Midwest, East Coast, and Rocky Mountain/West Coast increased by 0.7 million barrels, 0.3 million barrels, and 0.1 million barrels, respectively, while Gulf Coast inventories decreased by 0.3 million barrels. Propylene non-fuel-use inventories represented 11.1% of total propane inventories.
50
Propane inventories gain
PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2014
MAY 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE
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