SHALE Oil & Gas Magazine Nov/Dec 2014 by SHALE Oil & Gas Business Magazine

OIL & GAS BUSINESS MAGAZINE

VOLUME I / ISSUE VIIII NOV/DEC 2014

MARATHON OIL on Innovation and Engagement in the Eagle Ford

THE EAGLE FORD SHALE ECONOMIC IMPACT REPORT Predicts Further Growth

SAFETY Q&A

with Lewis Energy Group

KASPAR COMPANIES

DOING BUSINESS THE WAY

TEXAS

FOR 5 GENERATIONS

Big Brothers Big Sisters Giving Youths A Helping Hand Wildcatter Joseph Cullinan Leaves a Mark on the Industry

GLORIA LEAL GIVES US A PREVIEW OF THE 84TH LEGISLATURE

™

NOV/DEC 2014

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The leader in oilfield transportation and logistics since 1949

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AEP Texas: Your Business Partner in Shale Oil & Gas Extensive shale oil/gas reserves are located in and around geographic areas that align with the AEP Texas electric delivery service territory. Let the AEP Texas service team assist you with timely information regarding the location, capacity and availability of AEP Texas facilities. To request electrical service or gain access to a certificated planning map, please complete the information request form located at www.AEPTexas.com/shaleoilgas Contact: Bradley Lenz 361-881-5455 bhlenz@aep.com

John Longoria 361-881-5867 jflongoria@aep.com

www.AEPTexas.com/shaleoilgas @AEPTexasEconDev

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SHALE OIL & GAS BUSINESS MAGAZINE

- Sand Kings - Sand Chiefs - Blenders - Hydration - FRAC Pumps - Falcons - Batch Mixers

Specializing in oilfield supplies and service throughout the Eagle Ford Shale

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Exclusive Dealer for the Eagle Ford Shale Territory

PYRICOAT: is an all-natural soil treatment application designed to inhibit the oxidation process of soil with harmful metals and minerals. By coating the soil with Pyricoat, minerals will be encapsulated, which will stop any liquids from further contamination such as coal mining runoff. This application has increased acidic waters PH levels from 3.4 to 6.5 for over three years now in alpha test in coal mining areas. FeCONTROL: is an all natural product used to binds, encapsulates and creates a carrier for iron sulfites and other damaging microscopic particles from crude oil. When applied to crude oil directly it reduces iron, sulfides and other corrosives by up to 93% when separated. Using this product will save downtime by reducing maintenance days by eliminating the corrosive iron sulfides from the crude before being introduced into the refineries. This application will also augment the existing downstream process of removing iron from crude oil. ReLOAD: is an all natural product use for treating frac and produced water. This product creates a top layer of hydro Cardons in Frac or produced water. This application is perfect for recovering oil from the formation fracturing process in the flow back and produced water will help in the recycling of the

water for reuse in the formation fracturing process. ReLoad is most effective when introduce into holding tanks or holding ponds with a circulating pump. ReLoad will also help keep out moisture when needed. ReLoad is used on water for the separation of water and hydro carbons PREMIUM ReLOAD: is an all natural product use for treating frac and produced water. This product binds and encapsulates the heavy metals including the damaging iron sulfites and keeps them from the oxidation process. The method reduces iron sulfates by 90% and makes the separation of solids from water more efficient. This product pushes the hydrocarbons to the surface while creating a layer of encapsulated metals. This application is perfect for recovering oil from the formation fracturing process in the flow back and produced water will help in the recycling of the water for reuse in the formation fracturing process. Premium ReLoad is most effective when introduce into holding tanks or holding ponds with a high turbulence application. Premium ReLoad also binds heavy metals in acidic water and helps eliminate corrosive effects. Premium ReLoad is use on water for inert effect on heavy metals.

Clint Schweers / oilfieldexperts@gmail.com 13611 U.S. Hwy 181 S., San Antonio, Texas 78223 / (210) 471-1923

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CONTENTS

NOVEMBER/DECEMBER 2014

FEATURE 16

Earth Matters: Tervita Environmental Solutions 20 The Role of Innovation and Engagement in the Eagle Ford 22 Eagle Ford Shale Economic Impact Report Release Event

COVER STORY

26 KASPAR COMPANIES

THE LONG HISTORY OF THE FAMILY-OWNED KASPAR COMPANIES INCLUDES HIGH QUALITY AND INNOVATION

INDUSTRY

32 Eagle Ford Shale Growing Beyond Expectations 36 Shale Play! 38 Giving a Frac About the Environment 40 Industry’s Communications Efforts Must Improve 42 Safety Q&A on Fire Supression Systems 45 Innovation to Solve a Growing Problem 46 Natural Gas Rises to Market Prominence

POLICY

50 Petroleum Permeates the Permian Basin 52 Russia’s Campaign Against the American

Oil and Gas Industry

56 A Preview of the 84th Legislature

BUSINESS

60 Facing Personal Battles Head On 64 All Hands on Deck 66 El Camino Real de los Tejas Trail

Helps Preserve Texas History

of the Oil and Gas Industry

68 Live for Today and Plan for Tomorrow 70 Educating the Future Employees

LIFESTYLE

72 From Teenage Oil Field Work to Founding Texaco 76 Energy Boom Fueling Demand

DOUG KASPAR

KASPAR COMPANIES

for Luxury Ranch Real Estate

78 Upland Bird Hunting in the Texas Hill Country 82 Specialized Hand Treatment with a Gentle Touch

NONPROFIT

86 A Helping Hand Goes a Long Way

SCENE

90 John LaRue Cover Party 92 ConocoPhillips Scholarship Golf Tournament 93 Halliburton Chili Cook Off 96 Economic Impact Tour COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: MALCOLM PEREZ

NOV/DEC 2014

SHALE OIL & GAS BUSINESS MAGAZINE

ADVISORY BOARD

OIL & GAS BUSINESS MAGAZINE VOLUME I ISSUE VIIII • NOVEMBER/DECEMBER 2014

OMAR GARCIA - SENIOR ADVISOR

As president of the South Texas Energy & Economic Roundtable (STEER), Omar Garcia is an expert on business opportunities associated with the Eagle Ford Shale who works with the oil and gas industry, local officials, community members, regional stakeholders, educational institutions and economic development organizations to ensure that the natural oil and gas industry in South Texas is advancing in a positive way that is beneficial to both the community and the industry. Garcia has more than 12 years of economic development experience, and he spent two years working for Bank of America as vice president of business development for the bank’s treasury management division. He is a certified economic development finance professional through the National Development Council, and he graduated from St. Edward’s University with a major in international business and Spanish. In 2010, Gov. Rick Perry appointed Garcia to the Texas Economic Development Corporation.

KYM BOLADO CEO / PUBLISHER

CHIEF FINANCIAL OFFICER Deana Acosta

EDITOR IN CHIEF Lauren Guerra

ART DIRECTOR Jennifer Katz

ASSOCIATE EDITOR Rob Patterson

ADMINISTRATIVE ASSISTANTS Josie Cuellar, Savannah Castro

VICE PRESIDENT OF SALES

DOUGLAS STERLING CAIN

Douglas Sterling Cain is the president of Lake Truck Lines, which has enjoyed a 300 percent growth over the past two years. Cain links the company’s recent success to a decision to move headquarters from Houston to San Antonio, believing it all happened by “grand design.” The company arrived in San Antonio with 12 trucks, and it is now operating close to 100, quickly becoming the solution for custom oilfield equipment and tank manufacturing, as well as oilfield transportation and logistics. Cain prides himself on being innovative and “staying ahead of the curve.” Out of his desire to make oilfield jobs safer and more effective, he launched subsidiary company Lake Oilfield Services, which already manufactures six different types of oilfield equipment. As Cain sums up in his own words, “honor and integrity are incredibly expensive on Monday, but the dividends show up on Friday.”

Liz Massey Kimmel / Corpus Christi, McAllen, Laredo & Alice Joyce Venema / San Antonio

CONSUMER INSIGHT MANAGER Gloria Perez

ACCOUNT MANAGERS

Christi Guillory, Gloria Perez, Dina Ybanez, Salome Stevens, Stephanie Hawley & Laura Garza

CONTRIBUTING WRITERS

David Blackmon, Douglas Cain, Maria Calderon, Scott Courtney, Dr. Janet Cunningham, Omar Garcia, Bill Keffer, Gloria Leal, George F. Long, Rob Patterson, Jimmy Perkins, Commissioner David Porter, Kimberly Samoon, Corey Stormoen, Lee M. Tillman, Thomas Tunstall, Ph.D.

STAFF PHOTOGRAPHER Malcolm Perez

PHOTOGRAPHERS

Christi Guillory, Fonzie Munoz, Julian Ledezma, Alberto Delcampo, Brian Aho

JEFFREY A. WEBB

Jeffrey A. Webb is a senior associate in the San Antonio office of Norton Rose Fulbright, a global legal practice providing the world’s pre-eminent corporations and financial institutions with a full business law service. Recognized for its industry focus, Norton Rose Fulbright is strong across all of the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and health care.

www.shalemag.com For advertising information, please call 210.240.7188 or email kym@shalemag.com. For editorial comments and suggestions, please email lauren@shalemag.com.

SHALE MAGAZINE OFFICES: 5600 Broadway Ave., San Antonio, Texas 78209 18756 Stone Oak Pkwy, Ste. 301, San Antonio, Texas 78258 For general inquiries call: 210.854.3361

CONTINUED ON PAGE 11

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We See Shale Differently. We look at shale plays and see data. Data from the rocks, data from the wells, data from many sources. We deeply analyze that data to reveal information and predict production for any well, anywhere. That means fewer underperforming wells and more accurate reserve reports. See how we can help you see shale differently, too.

www.OAGshale.com

NOV/DEC 2014

SHALE SHALE OIL OIL & & GAS GAS BUSINESS BUSINESS MAGAZINE MAGAZINE

PUBLISHER'S NOTE

AS 2014 COMES TO AN END, I AM ABLE TO LOOK BACK ON A GREAT YEAR FOR THE OIL AND GAS INDUSTRY AND FOR SHALE OIL & GAS BUSINESS MAGAZINE. One of our finest achievements was our successful execution of a tour giving the community an opportunity to get detailed information on the Economic Impact of the Eagle Ford Shale, a study completed by the The University of Texas at San Antonio (UTSA) Institute for Economic Development. An event of this magnitude is not possible without generous sponsors and advocates. I would personally like to thank Kaspar Texas Traditions, AEP Texas, BHP Billiton, Coldwell Banker D’Ann Harper Realtors, Lewis Energy Group, South San Antonio Chamber of Commerce, Talisman Energy USA Inc., Port of Corpus Christi, Port of Victoria, Lake Truck Lines Inc., Capital Logistics, Valero, Kennedy Business Park, Del Mar College, Alcalde Hotel & Grill, Corpus Christi Hispanic Chamber of Commerce, Marathon Oil, and STEER for their support for SHALE and the important task of educating the public on the economic benefits of the Eagle Ford Shale. I am also happy to report that our recent cover party honoring our September/October cover, John LaRue of the Port of Corpus Christi, was a huge success. The city of Corpus Christi, Mayor Nelda Martinez, Port Commissioners and it’s members were so welcoming of the SHALE team, we really felt the overwhelming support of the community and its leaders. On behalf of the whole SHALE team, we wish all of our readers a happy holiday season filled with happiness and prosperity. We hope you enjoy this final issue of SHALE Magazine in 2014 and look forward to bringing you more on information on the Texas oil and gas industry in 2015!

KYM BOLADO

CEO/Publisher of SHALE Oil & Gas Business Magazine kym@shalemag.com

SHALE OIL & GAS BUSINESS MAGAZINE MISSION STATEMENT:

SHALE Oil & Gas Business Magazine is a publication that showcases the dynamic impact of the Texas energy industry. The mission of SHALE is to promote economic growth and business opportunities and to further the general understanding of how the energy industry contributes to the economic well-being of Texas and the United States as a whole. SHALE’s distribution includes industry leaders and businesses, service workers, entrepreneurs and the public at large.

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ADVISORY BOARD JAMES M. SUMMERS

James M. Summers joined in San Antonio office of Norton Rose Fulbright in 1976 and became a partner in 1985. He received his undergrad from Southern Methodist University and his law degree from the University of Texas Law School, and he has six professional honors. Summers’ legal practice focuses on real estate and oil and gas matters, which involve the representation of an array of clients who deal with complex and sophisticated financial transactions and situations. Summers represents many financial institutions and private equity groups in the securitization, CMBS and other related loan markets. He counsels clients and is involved in major workout and reorganization matters relating to all areas of real estate. His practice focuses on energy and oil and gas transactions with matters in the Eagle Ford Shale industry, representing everything from acquisitions and dispositions to refineries and solar power facilities.

SCOTT COURTNEY

Scott Courtney, P.G., is the president of Premier Hydro, and he has more than 30 years of background, education and experience in oil and gas, water resources, environmental management and business development. He was raised in West Texas, but he has made South Texas his home since 1984 while working around the country in major programs for the Department of Energy, the Department of Defense and the oil and gas industry. Over the last four years, he has focused on the Marcellus, Permian Basin and Eagle Ford Shale plays. He is the 2013 South Texas Wildcatter Committee chairman, and he has made a career of sustainable development and production of natural resources.

KIMBERLY WEBB

Kimberly Webb is the business development manager for Chemoil Energy, an oilfield service company specializing in frac fuel operations. Webb is in charge of managing and marketing the Texas region, and she is committed to improving the efficiencies of the oil and gas service industry. Chemoil Energy is a division of Chemoil Corporation that sells and markets fiveplus billion gallons of commodities worldwide. It is the world’s leading integrated producer and marketer of commodities.

THOMAS TUNSTALL, PH.D.

Thomas Tunstall, Ph.D., is the research director for the Institute for Economic Development at the University of Texas at San Antonio. Previously, he was a management consultant for SMEs, and the former Component 1 Team Leader for the Azerbaijan Competitiveness and Trade project. He has also served as an advisor relations executive at ACS, and was the founding co-chair for the Texas chapter of the International Association of Outsourcing Professionals (IAOP). He has published a business book entitled “Outsourcing and Management” (Palgrave 2007) and was the technical editor for “Outsourcing for Dummies” (Wiley 2008). Tunstall has consulted in both the public and private sectors. In 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas, and in 2005, he completed a long-term assignment in Afghanistan, where he was deputy chief of party for a central bank modernization project.

WTxEC Business & Industry Involvement “Industry input is vital in our decision making process. Help us as we work with the area community colleges and technical schools to determine industry specific training & certification requirements. We need your input to effectively train people with the knowledge, skills and abilities necessary to be successful in the oil and gas industry.” Provide expertise and input as we work to improve emergency services to communities and drilling locations. Be a part of the energy and economic growth forum in West Texas.

JOIN NOW!

Visit our website for more info: www.wtxec.org OR Contact Our Office 325-795-4206 / info@wtxec.org

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CONTRIBUTORS

David Blackmon is a managing director of the FTI Strategic Communications practice and is based in Houston. Throughout his 34 year career in the oil and gas industry, David has led industry-wide efforts to develop and implement strategies to address key issues at the local, state and federal level. David has more than 15 years experience working legislative and regulatory issues in Washington, DC, Texas and other states. He is a recognized subject matter expert on a variety of oil and natural gas issues, and regularly offers testimony at legislative hearings. David is currently a contributing columnist for Forbes. com, focusing on public policy issues affecting the oil and gas industry. He also writes regular commentary for World Oil Magazine.

Dr. Janet M. Cunningham serves as the executive director of Citizens for Educational Excellence (CEE), a non-profit education organization, and Education to Employment Partners, the regional P-16 council that serves 42 school districts in 11 Coastal Bend counties. Under her leadership, CEE has established Coastal Compass Education and Career Resource Center located in Corpus Christi’s La Palmera Mall. She also serves as the director of the Northwest Center for Advanced Studies, a dual enrollment program in Calallen ISD that provides college-level classes to students from four school districts. Dr. Cunningham serves on the Postsecondary Success City Action Network, Corpus Christi Mayor Nelda Martinez’s Education Workforce Task Force, Representative Todd Hunter’s Workforce Task Force, and Flint Hills Resources Community Action Council.

Bill Keffer has practiced law for thirty years as in-house counsel at a major oil and gas company and in private practice. He currently teaches at Texas Tech University School of Law and continues to consult. He served in the Texas legislature from 2003-2007 representing the 107th District in Dallas, TX.

Jimmy Perkins has spent 29 years as an entrepreneur in the music business as a concert promoter, artist manager, record producer and music publisher. Additionally, he is the Founder and CEO of Toro Pipeliner, LLC, a software design company providing data solutions for the oil and gas pipeline construction industry.

Rob Patterson is an Austin based writer and editor whose work has appeared in numerous consumer and trade magazines, daily and weekly newspapers, and a number of web publications. He writes about news, personalities, politics, film, music, food, buildings, education, books, energy, culture, travel and much more that catches his diverse interests; he also pens and edits marketing communications copy for corporations, businesses and individuals. He can be reached at to rpwrites@gmail.com

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Omar Garcia, president of the South Texas Energy & Economic Roundtable (STEER), is an expert on business opportunities associated with the Eagle Ford Shale who works with the oil and gas industry, local officials, community members, regional stakeholders, educational institutions and economic development organizations to ensure that the natural oil and gas industry in South Texas is advancing in a positive way that is beneficial to both the community and the industry. Garcia has more than 12 years of economic development experience, and he spent two years working for Bank of America as vice president of business development for the bank’s treasury management division. He is a certified economic development finance professional through the National Development Council, and he graduated from St. Edward’s University with a major in international business and Spanish. In 2010, Gov. Rick Perry appointed Garcia to the Texas Economic Development Corporation.

Introduction to Oil & Gas Basics

101

SHALE Oil & Gas Business Magazine is hosting a SHALE 101 Class - Introduction to Oil & Gas Basics

December 11, 2014 8am - 5pm A tour, lunch, and class materials will be provided. To register with a special SHALE discount, contact Ingrid Hollinger at the Wood Group Training Center office 830.583.9574, cell 361.227.6304, or by email at ingrid.hollinger@woodgroup.com NOV/DEC 2014

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NOV/DEC 2014

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FEATUR E

EARTH MATTERS ENVIRONMENTAL SOLUTIONS BY: JIMMY PERKINS

SHALE OIL & GAS BUSINESS MAGAZINE

NOV/DEC 2014

There are many facts about the oil and gas industry that cannot be denied:

it is the engine of our economy, the basis for our standing as a world power, and the source of our ability to become energy self-sufficient in a world that grows more and more uncertain. There is also no doubt that it is the most regulated industry on the planet. Any time an industry must alter or affect the earth in order to produce its commodity, that creates great scrutiny, and for good reason. It also comes with considerable responsibility. And the part that is too often overlooked is how seriously the oil and gas industry takes that responsibility. Oil and gas producers go to great lengths to minimize their environmental impact, and companies such as Tervita play a key role in this process in order to ensure a high level of environmental responsibility and stewardship.

not one that is determined by any law, government regulation or company policy. It is inherent to who they are as individuals. Corporations have policies, but it’s these individuals that put these policies into motion every day on the job. Tervita invests in the best equipment, the latest technology and the best practices to ensure the safe handling of drilling waste and wastewater. But it is the people in the field who make the difference. Drilling waste – or “cuttings” as it is known – as well as the briny and unusable wastewater from deep down below the earth’s surface are both byproducts of drilling into the earth to extract the oil and gas that is a vital lifeblood to our nation. These byproducts are a necessary fact of the energy industry. We cannot have one

PEOPLE MAKE THE DIFFERENCE Every company in this industry has its own practices, and all of these practices are shaped and governed by public policy. The practices may vary somewhat between corporations, but there are industry standards that generally apply. The one thing that does not change, though, is the dedication of the individuals who work in the industry. These men and women come from places in Texas like Kerrville, Cranfills Gap, Houston, Temple, San Antonio, Fort Stockton, Wimberley and my hometown of Bandera. They

without the other. How these byproducts are handled is what is important to anyone who cares about the environment, and you will not find a group of people who care more about it than those who work in the oil and gas fields.

DRILLING DOWN PHOTOS BY CHRISTI GUILLORY

also come from places outside of Texas like Osceola, Arkansas, Lafayette, Louisiana, Beckley, West Virginia, Mount Stewart on Prince Edward Island in Canada and many other places around the world. The common thread that binds together all of these people from these various towns and cities is a dedication to their work and a commitment to the environment. That commitment is

CORPORATIONS HAVE POLICIES, BUT INDIVIDUALS PUT THESE POLICIES INTO MOTION EVERYDAY ON THE JOB

The triple rig towers 135 feet from the surface of the Franklin Ranch in McMullen County, stretching far up into the beautiful blue Texas sky. It’s a picture to behold at such close proximity, and those 135 feet seem impossibly high as you stand at the base. Yet that height pales when measured against the depths that the rotary bit powers down, deep below the earth’s surface through assorted formations, then into NOV/DEC 2014

SHALE OIL & GAS BUSINESS MAGAZINE

the Escondido Sandstone, the Olmos Sandstone, the Anacacho Limestone, the Austin Chalk and finally into the Eagle Ford Shale. With a 1,500 horsepower AC drive pushing the progress, the rig and those who operate it will drill a total of 19,000 vertical and horizontal combined feet in the span of roughly 20 days or fewer. And with each revolution that the bit journeys downward, it pushes up a wake of briny water, called drilling mud and cuttings. The fluids pumped down the drill

to see clearly as he moves the waste from the cuttings tank into the Tervita box. This is not the case if the operator is transferring into a box on top of a trailer that sits higher than his field of vision. He loses his ability to see the transfer, which increases the possibility of spills as well as the likelihood that transfer tanks that are not fully loaded. Tervita’s equipment minimizes transfer spills and maximizes loads. This is one of the points that Drilling Superintendent

TERVITA'S EQUIPMENT MINIMIZES TRANSFER SPILLS AND MAXIMIZES LOADS

PHOTOS BY CHRISTI GUILLORY

pipe push out of the bit, and the pressure from the pump brings the cuttings up to the surface. When the cuttings and water surface, the drilling mud travels through the flow lines and exits to the rig shakers. This is the first stage of separating water and solids, when 95 to 98 percent of the liquids are removed. The liquids are reused on site and the solids move to a secondary shaker system, or drying shakers as they are known. This is where the bulk of the remaining water is removed before the solids fall into a 200-barrel cuttings tank on the ground. When the cuttings tank is full, its load is ready for transfer into a Tervita roll off box. There will be approximately 40 loads of waste from drilling this well. Each loaded roll off box carries 15 cubic yards of waste, and about 12 of these loads occur in the first 24 hours of drilling. Then it begins to taper off. Tervita offloads its roll off box on the ground and positions it adjacent to the cuttings tank. An operator on a track hoe outfitted with a bucket begins to scoop the cuttings from the tank into the Tervita roll off box. The fact that Tervita boxes can be placed on the ground next to the cuttings tank may seem an unimportant detail, but it actually offers a very important advantage for the track hoe operator. He sits higher up in the cab and can easily see into the cuttings tank on the ground. So when he transfers his load into the Tervita box positioned on the ground at the same level, he is able

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NOV/DEC 2014

Mark Johnson makes when asked about the advantages of utilizing Tervita. “Logistically speaking, they are somewhat close to our site. That means fewer miles to transport from here to disposal, and that cuts down on the possibility of any accident on the road,” Johnson explains. “There are several good companies that handle waste, but I like the fact that Tervita’s boxes are sealed when they close. That eliminates the chance of contaminated soil or cuttings falling onto the highway during transport. It’s just the environmentally responsible thing to do.”

Earth Matters Tervita is a Canadian company founded in 1979 and today has over 4,000 employees and 137 locations in North America with headquarters in Calgary, Alberta and Houston, Texas. The company’s motto, “Earth Matters,” is more than a trademarked slogan. It is the core of the company’s philosophy, its guiding principle and the reason for its financial success. Their work is designed to minimize the environmental impact associated with the development of natural resources and to maximize the value of those extracted resources. They do so not only with competitive pricing but also a commitment to environmental leadership and innovation plus an expert knowledge of regulatory requirements. When the Tervita roll off box is fully loaded, the heavy

doors are sealed shut and a hydraulic cable system hoists the box onto the trailer. The driver then makes his way from the rig site to the Tervita disposal facility located 18 miles away just off East Highway 97. On entering the property, the first thing you notice is the line of housing units on the right and the offices on the left. Tervita’s on site workers have a two-week on and one-week off schedule. Further past the housing and office area, the Tervita facility receives its own transported waste as well as that from other companies. Each truck pulls up to the scale house for processing then travels to the off load area. Liquids are drained into concrete holding tanks for processing and solids are off loaded nearby. As with everything in the oil and gas industry, the disposal of waste is highly regulated, with permitting and oversight by the Texas Railroad Commission. Anyone who has ever taken a load of brush or household garbage to a municipal landfill knows what a large-scale waste facility looks like. The Tervita yard is similar, but much more organized and impressively clean. Yes, that’s right: a clean waste disposal facility. There are 714 permitted acres for

waste processing and disposal at this site. Tervita has one liquid injection well in full operation and a second one planned. The liquids are processed through a series of separator tanks designed to decant and process the liquid waste. This Tervita facil-

IT IS CLEAR UPON TOURING THIS FACILITY THAT TERVITA'S COMMITMENT TO THE RESPONSIBLE HANDLING OF WASTEWATER AND CUTTINGS IS PARAMOUNT TO THEIR SUCCESS ity currently handles about 6,000 barrels per day, with a capability to process up to 14,000 barrels per day with the

single injection well in operation. The briny and effluent wastewater is injected far below, almost a full mile underground, thousands of feet beneath the freshwater table. Additionally, there are two fully developed solid landfill cells on the site. The first is eight acres in size and was projected to be full in two years. But due to the activity in South Texas, that capacity was met in nine months. The second cell is 24 acres and is the dedicated space where dried solids are stored. Each cell is fully lined with two layers of 60-millimeter liner to protect against any waste leaching out. Additionally, there are two pumps that capture and remove any liquids that may leach, one below the liner and one above the liner, that then return the liquids to the processing area via a pipe system. The entire system

is organized, efficient and expertly operated by the Tervita team on site. It is clear on touring this facility that Tervita’s commitment to the responsible handling of wastewater and cuttings is paramount to their success. It is also clear that as a company, Tervita is committed to empowering their workforce to make safe and environmentally responsible decisions on a daily basis. They work hard to follow the rules and regulations, obey the laws, carefully avoid mistakes and properly handle the waste byproducts from drilling for oil and gas because it is simply what people in this industry do, and because it is what is right. My friend Richard Cole, vice president of AJ’s Logistics in Kenedy, is a 16-year oil and gas industry veteran who approached me a few months ago with the idea about this story. As he said to me, “Everyone knows that drilling for oil and gas creates waste, but nobody knows how much time, effort, energy and money goes into disposing of that waste the right way. That’s the part of the story that people need to know about.” I couldn’t agree more. That and how much care and personal responsibility is invested by the individuals who do the work each and every day. They are a group of people who truly understand that “earth matters,” and they work diligently to ensure a positive outcome for the benefit of all.

For more information: Visit tervita.com to learn more.

NOV/DEC 2014

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FEATUR E

THE ROLE OF INNOVATION AND ENGAGEMENT IN THE EAGLE FORD BY: LEE M. TILLMAN, MARATHON OIL CORPORATION PRESIDENT AND CEO

It's hard to believe that it was only six years ago that the first well was drilled in the Eagle Ford Shale. That was in 2008, when oil prices spiked to over $147 a barrel amid lower domestic production and unrest in oil-producing nations like Venezuela and Nigeria. The growth we’ve seen in the oil and gas industry is nothing short of historic. In April, Texas crude oil production topped three million barrels per day for the first time since the late 1970s, more than doubling production in the previous three years. This growth was driven by the Eagle Ford combined with the thriving Permian Basin – two of the highest quality shale plays right here in Texas. Together with North Dakota, the two states provided nearly half of the country’s crude oil production for the month. At the heart of the oil and gas supply revolution is a spirit of technological innovation. But there are legitimate issues such as air quality and road usage that continue to dominate the conversation around the development of oil and gas resources. We must address such topics in the right way, and with a sense of urgency. We must put them into context, engage openly and honestly with those who are voicing concerns, demonstrate our ongoing commitment to safe and responsible operations, and be solution driven. At Marathon Oil and across the industry, we continuously evaluate air emission reduction strategies and technologies, and we’re becoming more efficient in our operations. Flaring is a highly visible activity. This year, Marathon Oil continues to identify and prioritize significant flaring sources and we are constantly evaluating emissions reduction projects. We’re also participating with other companies to share best practices for reducing flaring in an effort to spread these practices throughout the Eagle Ford. At new well locations in the Eagle Ford, we’re committed to minimizing the amount of time we flare between bringing a well online and installing infrastructure to transport gas to sales. We now count that time in hours – instead of days – and this year have averaged less than seven hours of flaring per well before we’re able to send the gas to sales. Marathon Oil has applied a strategy of building central facilities that aggregate production for processing and separation before sending the product to sales. Using central facilities – instead of installing equipment at each well location – minimizes the overall surface footprint and reduces air emissions. And to further reduce emissions, we’ve begun using dual-fuel power systems that can take advantage of natural gas from the wellhead. We used dual-fuel to power two drilling rigs last year, and we’re expanding this effort to include completion operations. Every individual operator needs to contribute to this effort and implement best practices. It takes time and money and a relentless dedication to doing the right thing. But as an industry we can reduce flaring

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and emission intensity and maintain our commitment to environmental stewardship. Similarly, on the issue of roads, it’s readily apparent that increased development has caused strains on local and county roads and other infrastructure, and we’re working with elected officials, regulators and other community leaders to cooperatively address these issues and lessen the impact. During the last Texas legislative session, Marathon Oil, joined by our state oil and gas trade associations, was a strong supporter of a proposed constitutional amendment that will provide billions more in much-needed transportation funding for Texas. Known as Proposition 1, it was approved by the Legislature and will appear on the upcoming Nov. 4 ballot. If approved by a majority of voters, Prop 1 will authorize annual disbursements from the state’s oil and gas production tax collections – commonly known as the Rainy Day Fund – to the State Highway Fund. While the amendment will not completely resolve the state’s infrastructure funding challenge, it will provide a significant step toward funding transportation projects that are critical to meeting local community needs as our industry develops the state’s oil and natural gas resources. Moving forward, we expect impact on roadways to be greatly reduced as critical transportation infrastructure continues to be built out across the play, and companies strive to increase the volume of liquids transported by pipeline. Our industry is a dynamic one. And it’s one that’s built on solving tough challenges. Ten years ago it was unthinkable that America could once again become an energy exporter. Now, we’re poised to do just that. The application of hydraulic fracturing and other technologies has returned America to “energy superpower” status. The shale revolution in North America – and in the Eagle Ford in particular – is giving our industry the opportunity yet again to prove ourselves and remind the world of our value and role on the global energy stage.

AT THE HEART OF THE OIL AND GAS SUPPLY REVOLUTION IS A SPIRIT OF TECHNOLOGICAL INNOVATION

About the author: Lee M. Tillman is president and chief executive officer of Marathon Oil Corporation and a member of the Marathon Oil Corporation Board of Directors. He joined the Company in August 2013.

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econom

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FEATU R E

of the

EAGLE FORD SHALE ECONOMIC IMPACT REPORT RELEASE EVENT su

BY: THOMAS TUNSTALL, PH.D.

THE MOST RECENT STUDY ASSESSES THE ECONOMIC IMPACT OF THE EAGLE FORD SHALE FOR 2013 Cities and counties throughout South Texas continue to experience tremendous growth and stand to benefit from significant economic impact as a result of natural gas, oil and condensate development in the Eagle Ford Shale. Overall, oil and condensate production in the Eagle Ford has grown from 581 barrels per day in 2008 to over 1.1 million barrels per day as of June 2014. Natural gas production now tops four billion cubic feet per day. The Eagle Ford Shale continues to exceed expectations and currently attracts the most capital investment of any shale field in the U.S. The most recent study assesses the economic impact of the Eagle Ford Shale for 2013. This includes the direct, indirect and induced impact in the 21 counties directly and indirectly involved in production. Lavaca County was added to the geographical scope of the latest study. Part of the study also provides an analysis of the economic impact of related businesses such as construction projects, manufacturing investments as well as upstream, midstream and downstream impact. Estimates of overall economic impact for the 21-county area in 2013 top $87 billion, up from $61 billion in 2012. For 2023, the 21-county impact is estimated to exceed $137 billion, far higher than the $89 billion forecast for 2022 that we reported in the March 2013 economic impact study. The rationale for the upward revisions (as mentioned above) is due to how Eagle Ford production continues to exceed expectation . In addition, new manufacturing projects associated with the natural gas renaissance in the U.S. as well as new processing, refining and port facilities are factors driving increases in the economic impact statistics. Of particular note and highlighted at the event and in the report is the aspect of community sustainability. The ongoing activity – driven by energy companies and related industries – presents South Texas community leaders with a rare opportunity to ensure the long-term viability of their cities, towns and counties. As the

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The latest economic impact report on the Eagle Ford represents the fourth installment in the series, and the latest results continue to surprise to the upside. The report was recently released at the University of Texas at San Antonio’s (UTSA) downtown campus. Speakers included associate vice president for the UTSA Institute for Economic Development Robert McKinley, State Senator Carlos Uresti, Railroad Commissioner David Porter and Bexar County Judge Nelson Wolff. Of particular note was the panel discussion by Eagle Ford city managers, moderated by South Texas Energy and Economic Roundtable CEO Omar Garcia. The panel included Bruce Pearson from Pleasanton, Allen Barnes from Gonzales, Larry Dovalina from Cotulla and Don Tymrak from Karnes City. The city managers highlighted many of the issues that they have had to contend with, as well as some significant success stories – all geared toward the ultimate goal of long-term sustainability for the their communities.

bility sept. 2014

natural gas, oil and condensate production in the Eagle Ford continues to increase, the challenges facing community leaders are more critical than ever. Investments in infrastructure – roads, water, wastewater, K-12 education, medical facilities, etc. – are the key components that will provide the necessary foundation to ensure future sustainability of communities in South Texas. To address infrastructure investment, community leaders should be engaged with state legislators to develop systematic solutions to ensure that rural areas benefit from revenue sources such as the Economic Stabilization Fund. The Texas Economic Stabilization Fund (ESF) is more commonly referred to as the Rainy Day Fund. The balance is expected to approach $7 billion by the 2015 legislative session. Oil and gas severance taxes are currently providing the bulk of the funding for the ESF. Cities and counties that do not collect the two percent sales tax allowed by state law should consider doing so as well. The impact of Eagle Ford is far-reaching, but it will be up to community leadership to seize the opportunity. About the Author: Thomas Tunstall, Ph.D. is the Research Director at the Institute for Economic Development at the University of Texas at San Antonio. He was the principal investigator for the Economic Impact of the Eagle Ford Shale studies released in May 2012, March 2013 and September 2014, as well as the West Texas Energy Consortium Shale Study. He has published peerreviewed articles on shale oil and gas, and has written op-ed articles for the Wall Street Journal. Dr. Tunstall has spent a significant portion of his career on workforce and economic development assignments overseas in locations such as Azerbaijan, Afghanistan, Kenya and Zambia. He holds a Ph.D. in Economics and Public Policy, and an M.B.A. from the University of Texas at Dallas, as well as a B.B.A. from the University of Texas at Austin. COVER ART PROVIDED BY SHALE MAGAZINE

re·spon·si·ble

/riˈspänsəbəl/ adjective having an obligation to do something, or having control over or care for someone, as part of one’s job or role. synonym: Horizon Clear Fluid System

Re s p o n s i b l e . S u s t a i n a b l e . V i a b l e

™

How do you want your industry defined? Horizon Mud Company is committed to our people and the industry we serve. That’s why we bring you the Horizon Clear Fluid System™, a revolutionary new hybrid water-based drilling fluid system that is built with 100% environmentally-friendly ingredients, the responsible alternative to traditional diesel/oil-based muds. By design, this high-performance system eliminates disposal costs, reduces trucks on the road, and sets a new standard of health, safety and environmental practices in the field.

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BUSINESS THE

TEXAS WAY FAMILY-OWNED KASPAR COMPANIES KEEP SPINNING STEEL INTO GOLD IN SHINER BY: ROB PATTERSON

COVER STORY PHOTOS BY MALCOLM PEREZ

WHEREVER YOU MAY GLANCE IN THE EAGLE FORD SHALE PATCH, KASPAR COMPANIES LIKELY HAVE A ROLE IN SOMETHING WITHIN Small Town Values Yield Big sturdy and handsome grille guard on that YOUR FIELD OF VISION. The truck? It’s made by Ranch Hand, the leading Time Success

Four generations of Kaspars, left to right: Don, David, August, Arthur. 1953.

AS THEY LIKE TO SAY, THE HISTORY OF THE KASPAR COMPANIES SPANS 20 RECESSIONS, ONE DEPRESSION, TWO WORLD WARS, OIL EMBARGOES, STEEL SHORTAGES AND 20 PRESIDENTIAL ADMINISTRATIONS 28

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manufacturer of heavy-duty pickup accessories. A part within the mechanical equipment at work extracting oil and gas from the ground? Kaspar Die & Tool produced it. The smart and stylish new house that the foreman on the job just moved into? Built by Kaspar’s Silverback Homes. The valuable gold coin that the wildcatter who owns the operation was proudly showing around, part of his investment portfolio from a big well yield? Purchased from Texas Precious Metals – yes, yet another Kaspar company. So even if you don’t know the Kaspar company name and its many operations, it’s hard if not nigh on impossible in the patch and across the nation to not know some of the products it has created. And that’s how the Kaspar family that owns the clan of companies based in Shiner, TX likes it. Rather than tout themselves and their wealth and achievements, they rely on tried and true old-school, solid-as-steel business values and a sterling silver reputation built over more than a century for quality, reliability and a fair deal for the price paid – their not so secret formula for its success in an ever-expanding range of industries. Their business practices and the results speak quite eloquently for the company that began 117 years ago with strands of steel fencing wire that founder August Kaspar used to make a simple yet useful new product: wire baskets, that he first sold for a single dollar. Then sold another and another, which the Kaspar enterprises and his descendants have exponentially built upon over the years into multi-millions of dollars. It began the building of a family owned and run powerhouse now in its fifth generation that has not just survived but thrived. As they like to say, the history of the Kaspar Companies spans 20 recessions, one depression, two world wars, oil embargoes, steel shortages and 20 presidential administrations. It has been a feat of alchemy, if you will, all but literally transforming steel into gold in more ways than one. And much like how in 1897 August Kaspar sensed opportunity in spare steel fencing wire that was replaced by barbed wire as the Old West shifted to the New West, the companies that grew out of his original business, Kaspar Wire Works, now see the coming opportunities of this era, and are poised to play a role in the new oil and gas frontier found in Eagle Ford and beyond.

The town of Shiner, population just over 2,000 folks, calls itself “The Cleanest Little City in Texas,” and rightly so. It’s so picturesquely neat, tidy and evidently prosperous that it could pass for a small Texas town Americana experience at Disney World. Other than for the fact that it’s a nice place to live and work aura is a fact as cold and hard as, yes, steel. And at the same time a rather warm and neighborly reality that recalls simpler times in this nation. “We used to have one bank and 10 beer joints, now we have three banks and three bars,” explains Greg Chumchal, general manager of Ranch Hand, as he gives a hometown tour in his truck outfitted with his company’s products. Shiner’s vintage brick and stone downtown is free of any signs of decay. The surrounding homes and lawns are all neat and tidy. The two public and private Catholic high schools excel in both academics and athletics. The town’s crown jewel is the loamy 148-acre Green-Dickson Memorial Park, where the air-conditioned Kaspar Pavilion hosts an annual stock show and other events. Situated at the northeast edge of Eagle Ford, Shiner is surrounded by brand new drilling sites. But its solid prosperity has a decidedly old-money feel. The town may be best known for the beer that bears the name of where it is made (inside hometown skinny: in Shiner itself, the locals drink Premium and not the brand’s iconic and popular dark Bock brew). But across Highway 95 from the just-expanded brewery, a hop, skip and jump north of Shiner’s sole stoplight in the town center, is a far less-known operation. Its beginnings – an old 1930-vintage barn-style work shed that Kaspar Wire Works grew into as a business – still sits beside the road. Spliced onto it is one of many steel-sided industrial shops in which Kaspar divisions disprove the lament that no one makes anything in America anymore. The corporate HQ, as it were, is an unassuming one-story brick building with homey wood-paneling inside. It could just as easily be the offices of a small regional construction firm, a feed and seed distributor or an upstart independent oil and gas company. Inside and out, there are no signs of an operation both worth and making millions, well beyond your usual small rural town family venture. From its humble beginnings, Kaspar Wire Works went on to create and sell what is

thought to be the first steel wire shopping cart alongside a range of other metal products. Its newspaper rack line grew into Sho-Rack, which makes newspaper vending machines with a patented coin mechanism the company invented. Many major news operations used Sho-Rack, which later hit pay dirt when it signed an exclusive deal with USA Today to provide its sales boxes nationwide. From the Wire Works base sprouted Kaspar Die & Tool (which stamps and forms products and machine components from metal, plastic and other materials), Kaspar Electroplating, Kaspar Custom-Fab (precision industrial metal parts and other items), and Kaselco (which

Home-Cooked Ranch Hand Operation Serves Texas & the Nation A business lunch in Shiner is meat and two or three comfort food served up cafeteria style at Sunken Gardens. In a dining room that feels like it’s just off a grandmother’s kitchen in her clean and cozy countryside home, Ranch Hand’s Chumchal sits in a high-back ladder chair and chats about his company’s market profile and growth – numbers that would get investment analysts salivating at its success. “Our biggest issue is making enough product to satisfy customer demand,” he explains with a relaxed good ol’ boy friendliness. “We’ve

REPUTATION AND QUALITY ARE A HALLMARK OF EVERYTHING KASPAR COMPANIES DOES, AND IT'S INGRAINED IN THEIR VARIOUS ENTERPRISES

PHOTOS BY MALCOLM PEREZ

they recently sold to BakerCorp), whose wastewater treatment units use an electrocoagulation process the Kaspars developed to separate impurities and industrial waste from water. Among other variations on their metal working expertise. The various enterprises all display Kaspar business traits that go back to the founder’s first wire baskets and, next, horse muzzles: recognizing market needs and an entrepreneurial and inventive spirit. Its longtime bywords are “quality, integrity and service.” Since it bought Ranch Hand in 2000, the family enterprises have also begun moving beyond its core operations with new ventures like Texas Precious Metals and Silverback Homes, which is developing the Las Colinas housing development in Kenedy, TX. As it does so, the Kaspar Companies continue to follow the lead of its core values and business acumen.

been running hard, double shifts, opened another factory, trying to do whatever we can to get more product out.” Its lines include grille guards, front and back replacement bumpers, headache racks (louvered steel shades mounted behind truck cab rear windows), running steps under cab doors, truck bed tool boxes and more. “We’ve had annual double digit growth mostly between 20 and 35 percent,” excepting a year or so after the economic downturn that hit in 2007 when sales briefly remained flat. “In heavy duty truck accessories we have about 60 percent of the market.” Any competition, if at all, is “quite a few” smaller companies without the muscle and smarts to even budge Ranch Hand off, not just the top, but most of the mountain. “How did we get to be #1? Really, it starts off with the solid construction of the product,”

Chumchal explains. “Ranch Hand is known as the highest quality and strongest vehicle protection equipment out there. If somebody’s going to spend $50,000 on a truck, and they want protection on it, they don’t want just anything. They want something that’s going to take an impact and keep on driving. People want to know their family is protected inside of that vehicle.” “Our manufacturing helps define all of that: the material we use, how we do it, what kind of welds, what kind of finish,” adds Chumchal. “We use a super-polyester powder coating that’s really, really durable, with very good UV protection in case it’s sitting out in the sun all the time.” “Then there’s the look. Our customers want something that is going to look good. We design ours a little differently than most of our competitors. Our products are truck-brand specific. For a Ford, you’ll get one design. For a Chevy, a little bit different. We design the product to complement the truck. We don’t just look at design cosmetically though, but also in terms of installation to make sure it’s really easy and non-complicated for our dealers and customers,” he points out. “The third leg of it is really customer service,” he stresses. “We go above and beyond to take care of our customers. We feel that our best form of marketing and advertising is word of mouth. We take great pride in taking care of the customer” – both wholesale and retail – “in one way or another.” Much like how the Kaspar operations grew out of a farm, Ranch Hand’s grille guards began as a sideline in a welding shop in Boerne in the mid-1980s. “It started as a need, out in the Hill Country, with its deer population. They got tired of hitting them and then thousands of dollars in damage later...” Chumchal explains. The grille guards were also used to bump open gates on ranches. “But it has become a status thing for people,” he notes. “People want the best and everyone in our industry knows that’s a Ranch Hand. Our product fulfills a need and a want. It’s been really cool to see that transition.” There’s one other component that helps the company excel, Chumchal stresses. “Ranch Hand’s success is about the people. You have to have the people there who are willing to do the job well.” It’s not the sophisticated inside business techniques and tactics taught at Harvard Business School. Rather it’s the old-school tried and true that still works like a charm. Reputation and quality are a hallmark of everything Kaspar Companies does, and it’s ingrained in their various enterprises. “It’s a culture, absolutely, really,” Chumchal observes.

Spinning Solid Gold Growth From a Firm Steel Base “Our whole company has been built on NOV/DEC 2014

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integrity, trust and reliability, which is distinct from 90 percent of the others in the industry,” says Tarek Saab, Chief Operating Officer of Texas Precious Metals as well as a number of other Kaspar operations. The newest Kaspar venture that began in 2010 doesn’t craft products from metal but instead sells investmentgrade gold, silver and platinum coins and bars. One might describe Saab as a bit of a wild card in the Kaspar business deck – an ace from a different suit. Unlike everyone else at the Kaspar HQ he wears a stylish sport coat (but with jeans) rather than the prevailing country working casual style of the firm’s executives. He brings some outside youthful contemporary edge to an outfit that already innovates in its old school style. Unlike the ribrock Swiss Methodist Kaspars, every one of them firm true maroon Texas A&M grads, he’s a first-generation offspring of Lebanese and Portuguese Catholic immigrants from working class origins outside Boston, MA. Yet at heart he shares their basic personal and business principles. Holding degrees in both liberal arts and electrical engineering, Saab has worked in commodities brokering, is involved in a hedge fund, and was a marketing manager for Texas Instruments. He was a finalist on the Donald Trump TV series “The Apprentice” and authored a book, “Gut Check,” about love, work and manhood issues for today’s young men. He was also a precious metals investor and trader who got connected with fifth generation investment expert Jason Kaspar via mutual contacts. Saab was living in South America at the time, and the two forged a working relationship and friendship via Skype. “It was like talking with a twin brother as far as the way we think and see the world,” Jason explains. “He has a lot of talents that I don’t have. We know how to make good quality products. But he brought a branding and image, E-commerce, IT sort of thing to us.” The company they started together has enjoyed phenomenal growth. “We went from $11 million to $50 million to $180 million by year three,” Saab says. “I attribute it to a few things. The name of the game is credibility in our industry. And when you can attach the Kaspar brand and the longevity to a company like Texas Precious Metals, I think that goes a long way. “I think we also hit a home run with the name of the company. Texas is a brand unto itself. And our slogan is ‘Business the Texas Way.’ That means something to people.” The company’s success has earned it the #1 spot on 2014 Aggie 100, which identifies, recognizes and celebrates the 100 fastest growing businesses in the world owned or led by Texas A&M graduates. Unlike many other firms in the industry, they only sell what they have in stock and ship it (fully insured by UPS) within three days, don’t do sales calls, and eschew high-pressure

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tactics as well as stirring fears about financial and systemic breakdowns, against which precious metals are the wisest hedge. And in the Kaspar way, there’s a nice family touch to their professionalism. “Everything that goes out of here is packed by moms,” Saab notes. His mother and Jason’s as well as that of another Kaspar staffer are the Texas Precious Metals packing crew. “We were really clever with the way we promoted the business,” explains Saab. “We didn’t have a huge budget. We started at the local level. As Greg mentioned, word of mouth is the greatest marketing utility. For me it’s the same thing. A satisfied customer is three to five more satisfied customers.” Just as August Kaspar discovered with his wire basket sales.

Values Measured Not in Net Worth But Business Practices Just how profitable and valuable is this privately-owned family of companies? “We just do what we do,” Chumchal observes when the question comes up. And it’s not just rhetoric said to maintain privacy. Among family-owned corporations in the nation, says Saab, Kaspar Companies are

“THE NAME OF THE GAME IS CREDIBILITY IN OUR INDUSTRY.”

“in terms of collective revenue, definitely Top 100.” You wouldn’t know it by seeing the Kaspars. Jason drives a funky old Toyota with some 220,000 miles on it. The reason why isn’t so much an almost-genetic Kaspar family humility as much as just their good ol’ common dollars-and-cents sense. “A car is a liability, not an investment. As soon as you buy it, it starts depreciating in value,” he succinctly observes. The Kaspar family has also stressed the value of hard work to its new generations. “My first job was on the ranching division when I was 13, hauling hay when it was 103 degrees,” recalls Jason, the oldest of the 10 fifth generation Kaspars. “My second job was Greg putting me outside the door of Ranch Hand grinding grille guards and almost dying of dehydration.” With a keen interest in finance since his youth, after graduating from A&M he worked for investment firms in Dallas and New York City before coming home to the family business. His sister Cherise Ratliff found her professional passion when she sought out a parttime job in her sophomore year at A&M and landed an office manager position at a real estate agency. She went on to be licensed and sell properties in Texas and Oregon, and after returning to the Lone Star State, joined the family concern to work as marketing manager for Ranch Hand. Today she is general manager of Silverback Homes, which is building the 300-plus home Las Colinas community in the heart of the Eagle Ford patch in Karnes County. “We would never have jumped into this project if it weren’t for the Eagle Ford,” Ratliff explains (pronouncing the shale field name in a local manner that comes out as one word, Eagleford, accent on the first syllable). The Kaspars had previously subdivided and prepared land they held in Shiner for two housing communities. As formerly barren Kenedy blossoms due to the shale boom, the cost of accommodations for the influx of workers is at a high premium. “Our goal is to provide affordable longterm housing for the growing community,” she explains. With many amenities as well as 28 duplexes and two commercial sites, the development’s home prices on eight different designs start at $179,900. “Las Colinas will be the place to live,” Ratliff says. And it brings some of the small town atmosphere the Kaspars value in Shiner to Kenedy.

A Future as Bright as a Shiny Gold Bar “We’ve been blessed with three or four industries that are all being positively impacted by the oil and gas boom,” says Ratliff. Including their current top-line enterprises like Ranch Hand, Texas Precious Metals and Silverback

NOV/DEC 2014 PHOTOS BY MALCOLM PEREZ

Homes, just how many companies are there under the Kaspar roof? Chumchal and Saab chuckle at the question. “Depends on how technical you want to be. Can range from four to...” Chumchal tries to explain. “21?” guesses Saab. “20....” Chumchal estimates. “That’s a loaded question.” Not so much as there’s any hush-hush state secrets around what they do as much as change is a constant for the Kaspar enterprises. Just as change is a constant in the marketplace. Since there’s a natural synergy among its many metal-working divisions, a corporate structural flow chart is almost irrelevant. The firm just purchased Austin-based Weatherall Enclosures, whose metal utility boxes are a good fit for its forming and fabricating operations. They recently sold Kaselco, whose water purification process is being utilized in hydraulic fracturing operations in the Shale patch. When the Bassick Casters line they acquired and made for years was sold to a competitor, Ranch Hand came into its quarters and took up any slack in operations. Ranch Hand’s franchise of retail stores, Truckfitters, added its eighth retail location in Cedar Park last year, and the hope is to grow that end of the business further (six of its stores are in Texas, but two others in Oklahoma City and Colorado Springs reflect the spreading appeal of their products). They sell and install all the Ranch Hand lines alongside a full-inventory of other truck accessories – and have the capacity to outfit fleets – plus act as wholesale suppliers for the company’s products to other vendors. Texas Precious Metals has introduced its own Texas Silver Round coin into the market, and given the family’s experience in punching and stamping metal, its own mint is even a future possibility. “If you look at where Kaspar Companies have been, 15 to 20 years ago, 80 percent of it was business to business and manufacturing based,” Jason points out. “Today we’re 50 percent business to consumer and 50 percent business to business and moving more business to consumer. “A mini Berkshire Hathaway is definitely the direction where we’re going,” he says. But whatever the company undertakes, it remains a hands-on family operation, epitomized by fourth generation veteran Douglas Kaspar’s many roles over the years. “I’m an industrial engineer from Texas A&M,” he explains. “I’ve been involved with all aspects of engineering, production management and facilities, compliance, and any kind of construction and projects, new business bids and all that stuff. I’ve had my fingers in just about everything that goes on here.” He says his position is more or less vice president of engineering. Just like the lines are blurred between Kaspar company divisions,

"ONE OF THE TRADEMARKS OF OUR FAMILY AND OUR BUSINESS IS THAT WE'VE BEEN ABLE TO ADAPT AND CHANGE WITH THE TIMES, AND TAKE ADVANTAGE OF THE OPPORTUNITIES OUT THERE."

“Titles aren’t that important here,” he explains. What is important is what they call “doing business the right way,” and central to that is a family atmosphere that pervades the Kaspar outfit and their 500 or so employees. “They’re a great company to work for,” Chumchal attests. “Family comes first. I enjoy my job, we have a great group of people that work together. I call it the Ranch Hand family, and it really is. Many have been around 30-plus years, we know each other’s families, we live in a small town, so we know everybody.” Inside the Ranch Hand manufacturing shop that processes some 60,000 pounds of steel a day using both traditional metal-working equipment and high-tech computerized techniques, one finds both men and women of all ages and races working away. As Chumchal gives a tour, friendly nods, waves and “how are ya?” greetings abound. If an employee has a sick child at home they need to attend to, that trumps work duties. If something in the shop needs fixing, Chumchal is ready to roll up his sleeves and help out. For the Kaspars it’s much more about who you are than what you have. “We were blessed being raised by our grandfather and our Dad to all work full time and work hard. Working was an expectation,” explains Ratliff. Her grandfather Donald Kaspar, well into his 80s, still comes into the office every day. “All our family emphasized non-worldliness about things that you could do with money,” says Jason. “Because you’re in a small town, we would compensate for it. Where my friends would all wear name-brand clothes, I would almost purposely not wear name-brand clothes.” The companies have been managed under smart financial principles. “We have no net debt at Kaspar Companies,” he points out. “Could we grow faster? Possibly. Could we have a yacht? Maybe. But it’s not the way of life that suits us or is wise in the long term.” Does he ever marvel at what his family has built? “All the time. Just walking from one side

of the factory to the other, it’s like, oh my gosh! And then there’s the work effort required to build upon one another.” It’s the result of capitalism with not just a conscience but heart and soul, plus the smarts to see market trends and respond to changing times. Sure, they pay keen attention to the financial end of their operations and investments. A Kaspar free-vend wire newspaper rack in Jason’s office is piled some three-feet high with copies of the Wall Street Journal he has delivered daily. But the talk from the executives is as much about human and social values as fiscal value. “One of the trademarks of our family and our business is that we’ve been able to adapt and change with the times, and take advantage of the opportunities out there,” Douglas notes. “Manufacturing has gone through some tough times in America. But we’ve been able to find our niches and thrive.” And become one of the oldest continuously-operating manufacturing concerns in the nation. So will the thriving Kaspar family businesses continue on into future generations? “Absolutely,” concludes Douglas, whose son Christopher is involved in marketing and graphics for the companies. “We’re in the early stages of transitions right now with the fifth generation coming on. We’ve got some very talented and very solid individuals in our next generation, and its exciting to see them get involved and passionate about things and take leadership and initiative in a smart way. We think there’s a very bright future for us.”

For more information: Visit www.kasparwireworks.com, www.texmetals.com, www.ranchhand.com and www.silverbackhomes.com for more information on the Kaspar companies. NOV/DEC 2014

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INDUST RY

EAGLE FORD SHALE GROWING BEYOND EXPECTATIONS $137 BILLION OUTPUT PREDICTED IN 2023 BY: OMAR GARCIA

South Texas continues to benefit from the oil, natural gas and condensate development in the Eagle Ford Shale, experiencing immense economic growth with forecasts expected to exceed expectations for economic output and job creation. The South Texas Energy & Economic Roundtable (STEER) leads the Eagle Ford Shale initiative, connecting the oil and natural gas industry to South Texas communities.

SUSTAINABLE GROWTH THROUGHOUT THE EAGLE FORD SHALE LOOKS PROMISING According to a study presented on Sept. 23 by The University of Texas at San Antonio (UTSA) Institute for Economic Development, the oil and gas industry generated an overall economic impact of more than $87 billion for the 21-county area, including Bexar County. The average 581 barrels a day in 2008 has grown to 1.1 million barrels per day as of June 2014 and natural gas production currently exceeds 4 billion cubic feet per day. The Eagle Ford Shale presently draws the most capital investment of any shale field in the U.S.

Furthermore, the Eagle Ford Shale continues to surpass expectations of development, extending predictions much greater than previously anticipated. The USTA study of Eagle Ford Shale previously projected the overall economic impact for the 21-county area to be $89 billion in 2022; UTSA’s new study has exceeded the projection to $137 billion in 2023 and providing 196,600 full-time jobs. By 2023 the regional economic output is expected to grow by 61 percent and supply more than $4 billion to local governments and to the state government. The revised projection is based on the Eagle Ford Shale’s current production path, which surpasses original production estimates. Additionally, new processing, refining and port facilities also contribute to the increases in the economic impact statistics. Due to the economic success in the Eagle Ford Shale, leaders in South Texas have the opportunity and responsibility to ensure the longevity of growth in the area’s cities, towns and counties. South Texas schools see the job opportunities the oil production has given the Lone Star State and are developing programs to train new workers to fill the employee demand. Some San Antonio area colleges and universities, such as UTSA and the Alamo Community College District, support this initiative to keep our employees local and limit the importation of workers, ensuring that jobs are given to our citizens. Sustainable growth throughout the Eagle Ford Shale looks promising. STEER will continue to work directly with the oil and natural gas industry, local officials, community members, regional stakeholders, educational institutions and economic development organizations to ensure that the oil and natural gas industry in South Texas is advancing in a positive way that mutually benefits the community and the industry. For more info: email us at info@steer.com.

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A Tradition of Trust

Coldwell Banker D’Ann Harper, REALTORS® Property Management has been the leader in residential property management in San Antonio and the surrounding areas for over 30 years. If you’re looking for the perfect place to lease or would like for us to manage your property, we can help! • Experts in Residential Property Code • Excellent Documentation of Property, including: video, photos and written reports • Exemplary Customer Service

• PowerHouse Marketing Program that includes postcards, professional photography and enhanced listings posted on a wide array of websites

For more information please visit our corporate Property Management office located at 18756 Stone Oak Parkway, San Antonio, TX 78258

(210) 483-6302 | shale@harperpropertymanagement.com

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INDUS T RY

SHALE PLAY! BY: SCOTT COURTNEY, PG

Hello Shale

I hope you enjoyed our trip through the Permian Basin in our last article. We have discussed a lot of facts, figures and phrases that describe the Permian Basin and Eagle Ford plays lately. Where do we get all this information and how do we sort it all out? I’d like to say it comes from 30-plus years of experience, education, background and training, but that would not be the whole story. In order to stay on top of the plays, trends, players and issues we attend as many conferences, seminars, industry meetings and events as possible. I know attending all these events is not possible for most folks and can be expensive as well as mentally and physically draining. Never fear, Shale Play! is here! We are willing to go the extra mile to gather the intelligence you need to make informed business decisions. From mid-August to mid-September we attended four industry events covering everything from frac sand to economic output. That’s a wide spread, but every grain of sand counts toward the bottom line for the companies that fuel the economic engine that drives our economy. Speaking of driving, the drive for efficiency is the overarching issue facing the industry today. With production soaring, demand flat and commodity prices dropping, margins are thin. Under the current market forces, the only way to improve margins is to shrink the cost of doing business by improving operational efficiencies. The challenges are great but the rewards are greater, and recognition followed by innovation is the pathway to success. I say “under the current market forces” because commerce bottlenecks, limited natural resources, and export constraints all lead to a difficult pricing environment for crude oil and natural gas here in the United States while international markets continue PHOTO BY TOMASZ WYSZOŁMIRSK to enjoy premium pricing. Let’s drill deeper into these issues based on what we have learned recently on the conference circuit. UNDER THE We learned from the Frac Sand Supply & Logistics Conference put on by the Petroleum Connection that frac sand demand is high and quantities of the precious proppant are available, but there is a bottleneck that impedes CURRENT MARKET end users from accessing the supply. Peter Cook, CEO of the Petroleum Connection, said nearly 500 people FORCES, THE ONLY and 60 exhibitors attended the conference held Aug. 22-23 at the JW Marriot Hill Country Resort. The agenda WAY TO IMPROVE included presentations from industry experts, frac sand mine owners, transportation and logistics companies, MARGINS IS TO consultants and operators, all with a vested interest in discussing industry issues, challenges, initiatives and SHRINK THE COST solutions. The Petroleum Connection does a great job putting together industry events with timely issues, quality presentations, diverse industry participants and, more importantly, decision makers. OF DOING BUSINESS Frac Sand or “proppant” is used to “prop” open the fractures created by the fracking process. Without the BY IMPROVING proppant, the fractures would simply close back up after the pressure is released and the whole effort would be OPERATIONAL for naught. This makes proppant one of the main poles in the tent, if you will. EFFICIENCIES The bottleneck comes from high demand for product with insufficient transportation and logistics infrastructure. The most preferred frac sand is “Northern White” sand, mined primarily in Minnesota, Wisconsin and Illinois.

PLAYERS!

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Sand from these mines must be transported by rail hopper cars to markets in the Bakken, Marcellus, Permian Basin and Eagle Ford. Hopper cars are also used to transport agricultural grain products such as wheat and oats. There

THE EAGLE FORD CONTINUES TO EXCEED PRODUCTION ESTIMATES AND AMAZE INVESTORS AND SKEPTICS ALIKE is a shortage of hopper rail cars nationwide for all demands combined. This shortage has both buyers and sellers of sand scrambling for rail car access. In today’s marketplace, you can have tons of sand or want to buy tons, but if you do not have rail transportation, you are not going to make a trade. This is forcing the industry to look for alternatives such as trucking, which is less efficient and more costly than rail, but at least you can get your product to the well. Sand is hauled by trucks pulling pneumatic trailers, which are in short supply as well. In addition, pneumatic trailers are relatively inefficient due to their long unloading times, degrade the product while unloading with high air pressure, and create a workplace hazard due to fugitive dust emissions. Barge transportation is gaining market share but presents a whole new set of headaches such as frozen rivers, floods, low water and port proximity to the markets. Last but certainly not least, modular delivery systems are gaining interest. Modular delivery systems are box-like structures filled at the mine and shipped on flat bed rail cars which are cheap, plentiful and underutilized. On arrival at the marketplace they are transferred to flat bed trailers and hauled to the frac site. In addition to solving the transportation bottleneck, they deliver the sand at a lower cost and in better condition than conventional methods. Now that we have looked into the frac sand situation and found new ways to get the sand to the well site, we still have to get the sand down hole to where it does its thing. We need water to pump the sand down hole, and water in Texas, as we all know, is in high demand and short supply. Fresh water that is. Turns out brackish water that is anywhere from 1,000 to 10, 000 milligrams per liter (mg/l) and brine water (>10,00 mg/l) is relatively abundant in the State of Texas. So we went on the hunt to find out if these brackish and briny aquifers could

be used to frac wells. Shale Play! attended the Second Annual Texas Desalinization Association Conference on Sept. 11-12. We learned there of the latest trend in treating brackish and saline aquifer produced waters to use in fracking wells. The conference emphasis was on desalinization of both groundwater and seawater, legal and regulatory issues, stakeholder involvement and technology advancements. The next logical question: Do we have a market to sustain the need for fracking? To find out, Shale Play! attended the Hart Energy Publications 2014 DUG Eagle Ford Conference at the Henry B. Gonzales Convention Center held in San Antonio, Texas. This year more than 4,500 attendees, 30 speakers and 400 exhibitors packed the convention center for two days of world-class conference sessions, exclusive networking opportunities and deal-making on the sold-out exhibit floor. The event’s world-class speaker lineup featured top executives from the most-active exploration and production (E&P) companies in the region, including Pioneer Natural Resources, Marathon Oil, BHP Billiton, Phillips 66 and Halcón Resources Corp. The speakers discussed their growing interest in engineered completions and expanding into targets above and below the Eagle Ford proper, including the Upper Eagle Ford, Austin Chalk, Olmos, Georgetown and Escondido intervals. All in all the conference attendees, presenters, exhibitors and visitors remain bullish on the Eagle Ford and confident there are plenty of wells to frack in the future. In order to get a feel for what the Eagle Ford is doing to contribute to our overall economy, Shale Play! also attended the 2013 Economic Impact of the Eagle Ford Reception at the Sonterra Country Club in San Antonio on Sept. 23. The report was prepared by the Center for Community and Business Research at the University of Texas at San Antonio’s Institute for Economic Development. The project was supported with funding from STEER, America’s Natural Gas Alliance (ANGA) and SHALE Oil & Gas Business Magazine. The report confirms our optimistic outlook for the Eagle Ford by finding the economic impact rose from $61 billion in 2012 to $87 billion in 2013! That is a lot of economic impact for just a 21 county area. The Eagle Ford continues to exceed production estimates and amaze investors and skeptics alike! That’s all for Shale Play! today, thanks for your time and attention and keep playin’!

For more information: If you have questions or comments on this article or would like Shale Play! to delve into other issues, contact Scott@ shalemag.com. NOV/DEC 2014

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INDUST RY

GIVING A FRAC ABOUT THE ENVIRONMENT BY: COREY STORMOEN, PRESIDENT AND OPERATIONS MANAGER OF RESIRKULERE USA

BALANCING THE DISPOSAL AND/OR REUSE OF WATER AND FINDING ACCESS TO FRESH WATER IN AN ENVIRONMENTALLY ACCEPTABLE AND ECONOMICALLY FEASIBLE WAY REMAINS A CHALLENGE TO THE OIL AND GAS INDUSTRY. WITH SOCIOECONOMIC AND GEOPOLITICAL CONCERNS COMPOUNDED BY THE EFFECTS OF CLIMATE CHANGE AND NATURAL SHORTAGES OF WATER IN CERTAIN REGIONS, ACCESS TO FRESH WATER IS INCREASINGLY DIFFICULT TO SECURE FOR OPERATORS AROUND THE WORLD. The Resirkulere Wastewater Filtration System uses a physical separation process that has the capacity to remove suspended solids including frac gels and proppant from the water to a level that makes filtration possible. Key Features

99% reduction in Total Suspended Solids (TSS) Breaks emulsions

Fully portable

Maintenance free

Scalable

Operator supplied

When contaminated water – as returned during coiled-tubing drill outs, rig-assisted plug drill outs or other clean out operations – passes through the specialized separator, the process mimics the retention time equivalent to “flocking” the water hundreds of times. This allows the chemical gels which suspend the sand and other proppants enough time to “break out” of suspension. This increase in retention also allows oil and other hydrocarbons an opportunity to separate from the emulsion and be saved (while also eliminating the tendency for these materials to plug the filtering medium). In this way, water is prepared for filtering and reused for physical applications (such as during plug drill outs) while retaining the valuable sellable oil. Heavier coagulants and sand sink to the bottom of the specialized separator where they pass through sock filters (generally 25 micron), leaving clear water, suitable for reuse in drilling and production operations. The Resirkulere Wastewater Filtration System is most effective at treating the following contaminants: • TSS • Total Petroleum Hydrocarbons (TPH) • Turbidity • Resirkulere water treatment effectively removes oil from non-contaminated water

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PHOTO BY WAVEBREAKMEDIA LTD

Reduced Environmental Footprint Resirkulere’s focus with the specialized separator filtration service is to treat produced and flowback water to a standard that is suitable for reuse in fracturing or drilling fluids. In doing so, the volume of waste water sent for disposal is minimized. Water acceptable for use in fracturing or drilling fluids is returned to the operator, reducing their demand for freshwater. Additionally, the specialized separation system can result in significant reduction of truck use in water management. On average, each specialized separator unit working daily would eliminate 4,320 barrels (bbls) of fresh water and 4,320 bbls of disposal (assuming operations at 3bbls/ min) per day, or roughly 72 truckloads of water (at 120 bbls/truck), 8,640 miles of truck traffic (at 60 miles each way) and 144 hours of road time and emissions. Another area of savings is trucking and the safety factor associated with trucks entering and leaving locations. On average, Resirkulere USA has found that the cost to the customer for using this system is offset in retained oil alone, much less the enormous savings for trucking, disposal and freshwater acquisition.

Operational Benefits Resirkulere’s mobile filtration system will generally operate as high as 18 to 20 bbls per minute but is easily scalable for any size project to quickly treat the large volumes of water “on the fly” during plug drill outs, coil operations or other field applications. The specialized separator technology was designed to remove suspended solids, oil and other insoluble organics from the water. The technology works extremely well during coil operations, but may be applied as a first rendering for clarification in conjunction with any other services where suspended solids need to be removed from emulsified “trash” water.

For more information: Visit www.resirkulere.com or email info@resirkulere.com.

NOV/DEC 2014

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INDUS T RY

INDUSTRY’S COMMUNICATIONS EFFORTS MUST IMPROVE If you watched the news coverage of the ill-named "People's Climate March" that took place in late September, you likely saw that anti-fracking propaganda was one of the group's focal points. Indeed, the demonization of one of the world's safest, cleanest and most well-regulated industrial processes has become a real moneymaker in recent years for anti-development conflict groups in the U.S. and around the world. Radical groups like the Sierra Club, the Natural Resources Defense Council and Food & Water Watch have spent the last seven years coordinating with sympathetic media outlets and policymakers to literally turn the word "fracking" into a new curse word in the American lexicon.

BY: DAVID BLACKMON

THE COMBINATION OF "FRACKING" WITH HORIZONTAL DRILLING HAS ALLOWED THE OIL AND GAS INDUSTRY TO UNLOCK THE MASSIVE QUANTITIES OF NATURAL GAS

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The main question a person might ask about this phenomenon is simply: Why? The combination of “fracking” with horizontal drilling has allowed the oil and gas industry to unlock the massive quantities of natural gas. The new abundance of domestic natural gas has in turn allowed power generators to retire a large number of coal-fired electrical plants and replace them with new and clean gas-fired plants. That in turn has led to the happy result of lowering U.S. carbon emissions to pre1994 levels. Thus, due strictly to market forces and innovation – without the implementation of heavy-handed regulations or a national cap and trade system and any meaningless, toothless international treaty – the U.S. has successfully lowered its national carbon footprint far more than any other developed nation on earth. One might think that any environmentalist who truly views carbon dioxide as a problem would be happy about that result. The environmentalists might even be grateful to the industry and the technological innovation that made it possible. But if one thought that, one would be wrong, obviously. “Environmentalism” as it exists today, is not

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actually about cleaning the environment. And why should it be, given that our environment today – our land, our air, our water – is light years cleaner and safer than it was 40 years ago? What modern “environmentalism” – the “green” movement – is really about these days is making money. It is a gigantic, multi-billion dollar industry with bills to pay and budgets to fund, and the main way groups like those mentioned above make money is to create and maintain an illusion of constant, ongoing crisis and conflict. Frightened, worried and nervous people are far more likely to respond to that fundraising letter they get in the mail from one of these groups than are happy, relaxed and complacent people. So these groups spend all of their time each and every day making sure there are enough frightened, nervous and worried people out there willing to write big checks to them so that they can fund their gigantic propaganda budgets. They figured out around mid-2007 that if they could turn “fracking” into a frightening term in the public’s mind, it could become a huge moneymaker for them. And they have succeeded in that quest. The reality, of course, is that pretty much none of what the “green” movement contends

about “fracking” is true. The Environmental Protection Agency (EPA) has tried for six years now to find a single instance in which “fracking” contaminated underground water, and has failed, leading both of the Obama administration’s EPA administrators to publicly state that “fracking” is not a threat to water quality. Both the EPA and the National Academy of Sciences have publicly refuted dummied-up “studies” by academics funded by the “green” movement that contend that methane emissions are a huge problem. There is simply no credible science available that backs up the fright tactics used by the “green” movement. But hey, this is about making money, not protecting the environment. In around mid-2009, a couple of years after the campaign to demonize “fracking” began , these same groups and individuals realized that a similar demonization campaign targeting the proposed Keystone XL Pipeline project might become another big moneymaker for them. That campaign has also been quite successful despite the similar absence of a shred of scientific support for the claims made about what would be a shovel-ready, job-creating machine of a project.

way to go to be truly competitive in the marketplace of ideas. The pace of improvement must accelerate, because the opposition isn’t slowing down. Three years ago, the “People’s Climate March” would have been lucky to attract a few thousand participants, many of whom would have been paid to be there. Those professional protesters turned

Again, this is about making money, not protecting the environment. This campaign to demonize what it does creates great frustration in the oil and gas industry, which does so much to enhance the American standard of living and our national security. But the industry must come to grips with the reality that the public perception, not reality, about “fracking” and every aspect of its business activities will ultimately determine its ongoing ability to maintain its license to operate. If the fright propaganda emanating from these conflict groups goes unanswered, then the public will begin to believe it is true. That’s just human nature. All of which means that oil and gas companies must continue to improve and expand their efforts to accurately tell their own story to policymakers and the public. If companies don’t start speaking up on the benefits of their work, no one else is going to do it for them. The industry has improved greatly in this area over the last decade, but it still has a long, long

out in late September, this time joined by an estimated throng of between 300,000 to 400,000 people. These radical conflict groups are expanding. Their coffers and memberships grow every day, and their ability to spread their anti-oil and gas propaganda will grow apace. If the industry’s efforts do not similarly expand, then it is falling behind. That’s reality, like it or not. There is no reason other than complacency why the industry should lose this fight. All it must do to win is effectively tell the truth. It isn’t rocket science.

IF COMPANIES DON'T START SPEAKING UP ON THE BENEFITS OF THEIR WORK, NO ONE ELSE IS GOING TO DO IT FOR THEM

For more information: Contact David Blackmon at David.Blackmon@shalemag.com.

NOV/DEC 2014

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SAFETY

Q&A ON FIRE SUPRESSION SYSTEMS WITH LEWIS ENERGY GROUP

Fires are dangerous in any situation, but in workplaces that have an ample supply of highly flammable materials, a fire can spell disaster. For instance, when a fire starts during a hydraulic fracturing operation, it is critical to evacuate personnel to a safe area and get them out of harmâ&#x20AC;&#x2122;s way. Large quantities of fuel sources, such as diesel and hydraulic oil, are not easily extinguished with the industry standard five or 20 pound fire extinguishers. If a fire is not quickly eliminated, it can spread quickly to nearby units with additional fuel sources. This can quickly have a domino effect and cause extensive damage to the business, or worse cause harm to employees trying to extinguish the fire. We spoke to Collin Neisen, manager of completion services with Lewis Energy Group, about a new technology being used to quickly diffuse fires. They have experience using the Tri-Max FRAC Engine Fire Control System (EFCS), and spoke with SHALE Oil & Gas Business Magazine on their experience with this safety technology.

Q. Is the Tri-Max FRAC EFCS cost effective and how has the service been on assisting with installations and continuing operations? Installation of these onboard fire control systems are cost effective when weighed against the alternative: a burnt down frac pump, blender, or worse yet the entire frac fleet. The installed unit is a small percentage of the total value of the truck, so it was considered an investment. Q. Have you had any fires on the trucks since installation of system? Yes, in May we had an alternator catch fire on a frac pump. The system was activated and the fire was extinguished quickly before it spread or did damage to anything other than the alternator. Q. How easy is the system to service and maintain and how reliable is it? Would you purchase more of this type of technology from Kingsway Industries? When needed, the Tri-Max EFCS is easy to service. The system has been reliable so far largely because it has no moving parts or pumps, as it runs on compressed air. We plan to outfit any future frac equipment with fire suppression systems. Q. What are the primary reasons that made you want to invest in this product for your company? The safety of our employees is paramount. Knowing that we are taking every precaution to safeguard our employees and keep our assets protected provides a great deal of satisfaction and security for the future of the company. Q. What are challenges with fires in the oil & gas industries? Most oil and gas exploration and production takes place in remote areas where there are no nearby fire stations for intervention. We take every precaution possible to ensure we are providing the tools needed to protect our employees and prevent a major catastrophe. Q. What is the single most important factor about this product? Knowing we have a fire suppression system that works. Combine that with the large volume of foam the system is able to create makes compressed air foam (CAF) systems vastly superior to conventional fire extinguishers.

For more information: Visit www.trimax.us or email info@trimax.us.

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FIRE CAN DEVISTATE A FRACKING OPERATION

TRANSFORM YOUR EQUIPMENT INTO AN INDEPENDANT FIRE TRUCK with the installation of a TRI-MAX FRAC EFCS system. 30 gallons of pre-mix solution expands to approximately 500 gallons of finished foam, giving you superior fire fighting capabilities.

TRI-MAX FRAC EFCS at rear of the truck. Operator is at a safe distance from fire and heat. The External Fire Hose is located here.

The CAF system foam deluge nozzles create a cool zone and extinguishes fire.

The TRI-MAX FRAC EFCS quickly isolates the fire, creating a barrier from other trucks and preventing further loss.

Proximity of trucks leads to extensive damage as fire quickly spreads. The quickest and most economical way that this sequence can be stopped is by the addition of the TRI-MAX FRAC Engine Fire Control System (EFCS) that can fight, suppress and extinguish fire within the first crucial moments. TRI-MAX FRAC EFCS gives operators the power to stop the initial fire and prevent the fire from spreading with FOAM DELUGE NOZZLES and a 100FT EXTERNAL FIRE HOSE. The foam barrier deployed by the adjacent trucks stops the fire from spreading laterally. Trucks outside of the fire barrier may also pull their fire hose attack lines and attack the fire quickly suppressing any fire that remains. The TRI-MAX FRAC EFCS, and its ability to quickly extinguish a fire, may be the only thing standing between your FRAC site and total destruction caused by fire. External fire hose deployed.

TriMax Foam Agents are totally green, non-corrosive and donâ&#x20AC;&#x2122;t require any clean up.

CONTACT KINGSWAY INDUSTRIES, INC. CALL 1-888-774-6299 NOV/DEC 2014

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INDUST RY

INNOVATION TO SOLVE A GROWING PROBLEM BY: JOYCE VENEMA

For less than an average of 40 cents per barrel, water can be evaporated at the site of oil wells in the State of Texas.

Many people including those in the industry don’t yet know this innovative technology exists. Gary Smith, president and CEO of Hydro, wants to spread the word about this technology that could save companies millions of dollars. Smith’s career began after graduating with a civil engineering degree from the University of Texas at Austin In 1974. After working as a drilling engineer for more than 30 years, Smith saw first-hand the need for a system to improve the water process on oil well sites. He went to work with the help of his employees to build machines that provide the industry with quick solutions for their water concerns. Currently, Smith and his team are servicing the West Texas and Midland areas with their technology. When asked why more people aren’t familiar with this product and why it hasn’t received more mainstream attention, Smith responded, “I don’t think enough people know that it exists, nor the amount of money it could save. The savings on costs across the board would benefit companies that are looking to cut spending.” Water evaporation has the potential to reduce disposal costs and labor handling time. Many that know about this process feel this could be the solution to many of the industry’s needs. While many companies ship their water to off-site locations for evaporation or disposal, Smith says Hydro is focused on providing an option for companies that allow this process to stay on-site, cutting costs. To meet the growing needs of the Eagle Ford Shale, Smith says his company will build more units to accommodate the continuing demand. As Hydro grows, they will add additional staff and build more units to provide service to the industry. Even though Hydro hasn’t celebrated their first year yet, the future is looking very bright for this young company. With a seasoned engineer at the helm, a dedicated staff and an innovative technology, rest assured Hydro will be around for years to come.

PHOTOS PROVIDED BY GARY SMITH

WATER EVAPORATION HAS THE POTENTIAL TO REDUCE DISPOSAL COSTS AND LABOR HANDLING TIME 44

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For more information: Contact Gary Smith at gary.smith1150@gmail.com or call 918-408-8449.

NOV/DEC 2014

ET EVAPORATOR TECHNOLOGY

ELIMINATING WATER DISPOSAL

Instead of hauling your water off location evaporate it away at a fraction of the price The Evaporator is a floating unit designed for effective operation in small areas, especially flow back pits, drilling reserve pits and sites containing large particles or highly corrosive water. The unit is durable, simple to use and easy to maintain â&#x20AC;&#x201C; a reliable way to manage excess water.

Gary Smith

gary.smith1150@gmail.com | 918.408.8449 NOV/DEC 2014

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NATURAL GAS RISES TO MARKET PROMINENCE BY: ROB PATTERSON

In today’s energy game, to pull from expressions both old and new, natural gas (NG) is the new black gold.

THIS NEW AMERICAN NG BOOM IS LESS THAN A DECADE OLD, YET IT PROMISES TO BE A BRIGHT SPOT IN AMERICAN INDUSTRY AND OUR ECONOMY FOR THE FORESEEABLE FUTURE

PHOTOS BY OLEG FEDORENKO

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And Texas and the Eagle Ford Shale (EFS) patch are integral forces in forging a new energy revolution that is transforming the state and the nation in numerous vital and important ways. The results of the national NG boom are already notable: a significant reduction in U.S. carbon dioxide emissions; a powerful and sustained economic bonanza with regional, state, national and worldwide impact; America’s likely return to being an energy exporter rather than importer, and as a result, energy independence that heightens our national and economic security – to cite some but hardly all of the benefits. And at both the center and forefront of it all are the 21 South Texas energy-producing and adjoining counties in the EFS patch, now the largest gas and oil play in the world, according to the University of Texas at San Antonio’s Institute for Economic Development (UTSA/ IED), generating some $87 billion in economic impact in 2013, up $26 billion from the previous year. And it’s only the beginning, with more and better to come. With an estimated 95 to 100 year national supply of NG, or more than 2,170 trillion cubic feet, the drilling business in the EFS patch is just getting started. As energy expert and Manhattan Institute Fellow Robert Bryce notes, “the U.S. is now leading the world in natural gas production.” Plus we are doing so at a cost far lower than other nations – NG prices are three times higher in the European Economic Union and four times greater in Japan, Bryce reports – creating a renewed American edge as an energy producer in the global economy. “Natural gas makes a lot of sense from several viewpoints,” says Texas Railroad Commissioner David Porter. It is significantly cheaper as a transportation operating fuel. It emits less solid matter and poisons into the air than gasoline or diesel does, so it’s an improvement from that viewpoint. “From the State of Texas viewpoint, we’ve got a lot of natural gas out there that could be drilled for

and used, which would be good for the state economy. If you look at everything from an international geopolitical viewpoint, oil production is up substantially in the U.S. in the last few years, but we’re still importing 30 percent of the oil we’re using in the country. If we can change over a substantial portion of the fuel used for transportation [also the largest American source of emissions] from oil-based to natural gas-based, we can substantially if not entirely reduce the amount of oil imported

NG'S ABUNDANT RESERVES IN AMERICA, ITS LOWER EMISSIONS, AND CHEAPER WHOLESALE AND RETAIL PRICE POINTS THAN OIL OR COAL NOW POSITION IT AS THE ENERGY SOURCE FOR THE FUTURE into the U.S., which would have an extremely positive effect on our balance of trade,” Porter notes. As well, “Look at electricity generation,” says Christopher Ashcraft, Vice President of the South Texas Energy & Economic Roundtable, a.k.a. STEER. “Natural gas is an incredible power generator for our utilities. It’s a lot cleaner and the least carbon-based fuel. With NG you can rev those turbines up when they are needed and shut them down when they are not needed. With the price point where it is now it’s more economical. And it meets the new greenhouse gas rules just imposed by the EPA.” This new American NG boom is less than a decade old, yet it promises to be a bright spot in U.S. industry and our economy for the foreseeable future. In the EFS patch, vibrant shale oil and gas activity plus visible and tangible benefits abound, and it is transforming once sleepy and economically-depressed South Texas into an engine that will help drive and sustain the Lone Star State’s current robust economy for years to come.

Long Neglected Natural Gas Rises to Prominence Natural gas has been a part of human existence since ancient history. The legendary Oracle of Delphi in ancient Greece was a temple built in about 1000 B.C. around a seeping NG flame lit by lightning, which was thought to be sacred. NG use as an energy source goes back as far as 600 B.C. in China, where it was channeled through bamboo pipes and used to heat and boil seawater to yield salt.

It was first tapped in the U.S. in 1821 near Fredonia, N.Y. and transported into the town via a pipeline to provide lighting. The Drake Well drilled in 1859 near Titusville, Pa., recognized as the birthplace of the American petroleum industry, also tapped natural gas. NG has long been a part of the nation’s energy mix. But until recently it was considered petroleum’s lesser stepsister, and lagged behind oil and coal, initially due to the need for pipelines to transport it. Countless cubic feet of this resource were either vented or flared as a byproduct of drilling for oil over the years. Lighting was the main early commercial use of NG. As electricity replaced it as a power source for lights, gas shifted to powering home heating and cooking. Consumer and industrial NG use grew as a national pipeline system was constructed in the 1930s and ‘40s. NG pipelines and demand increased further during World War II as the overseas war effort drew heavily from petroleum resources. U.S. Energy Information Agency statistics show a steady rise in national NG production over the last three decades, and since 2005 it has increased 41 percent. NG’s abundant reserves in the U.S., its lower emissions, and cheaper wholesale and retail price points than oil or coal now position it as the energy source for the future. Houstonbased Petrohawk pioneered Eagle Ford drilling in 2008. Since then NG yields in the patch have soared from two million cubic feet per day to 40 billion in the first half of this year.

Gas Helps Meet & Spur Growing Needs “The story of American gas exports is often talked about as being far off in the future,” says Jason French, director of government and public affairs for Cheniere Energy, Inc. But by sometime after the middle of next year, the company will ship its first cargo of liquefied natural gas (LNG) from its new $20 billion Sabine Pass liquefacton facility just across the Texas/Louisiana border in Cameron Parish, which just received final federal Energy Department approval to export the resource. The first LNG export plant of its kind, it will have the capacity to liquefy nearly four billion cubic feet a day when completed. The Houston-based firm is also developing a $13 billion LNG export plant in San Patricio County outside Corpus Christi that will be able to process and ship 1.8 billion cubic feet per day

when it is completed in 2018. Other companies are planning export facilities in Brownsville and Freeport. The construction of Cheniere’s Texas plant project will create an estimated additional $5.2 billion of secondary economic activity in South Texas. Once it is online, it will support 50,000 jobs in the energy and service industries, French says. Congress has recognized the need to support NG exports. Both the House and Senate introduced bills this year to help fast track approval of export ventures. With falling NG production in European Union nations and political issues with gasproducing Russia prompting them to look elsewhere for NG, U.S. exports are poised to start fulfilling their needs. Demand from Japan and China is also on the rise while the growth of manufacturing in Mexico is also increasing the market for American NG. Recently-issued tighter Environmental Protection Agency power plant emission regulations will also spur greater use of NG as a cleaner alternative to coal. Gas has already been a pivotal fuel in electricity generation to fire quick-start turbines to meet peak use demands. Plus, as Ashcraft points out, “It works very well with renewables like wind and solar. Those forms of power have a lot of limitations where gas doesn’t. And you have access to it all the time.” Between 2002 and 2012, NG demand for generation grew 60 percent. NG use as a transportation fuel in America currently lags well behind other nations. Asian Pacific Rim countries had 6.8 million natural gas vehicles (NGVs) in operation in 2011, and Latin America had 4.2 million NGVs. As of 2009, the U.S. had less than 120,000 vehicles running on primarily compressed natural gas – mainly transit bus fleets, though large

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companies like UPS and Waste Management as well as the U.S. Postal Service are steadily building their NG-powered truck fleets. But NG’s advantages are beginning to spur a growing market. The Texas Railroad Commission has bought 10 NG vehicles, Porter reports. “To the extent that we can, over time, we are hoping buy a number more. But it would probably be premature to say that we are moving entire the fleet over.” The extensive U.S. gas pipeline system has helped the nation establish the sixth largest system of fueling stations in the world. The dispersal of such stations in primarily urban areas currently limits NG vehicle growth. But the growing economic advantages to using NG should spur new stations throughout the nation. Existing gasoline-powered vehicles can be converted to run on NG, but the cost is rather expensive. Automakers have begun to manufacture cars and trucks that run on NG or have a flex-fuel option that can switch from petroleum to gas. The large size of CNG fuel tanks is the one current hindrance to larger scale conversion with passenger vehicles. But current technological advances suggest that this issue will likely be addressed and solved in the near future. The current shale boom has resulted in an NG oversupply in America at this juncture. But the coming exports and ever-increasing domestic usage in not just power generation and transportation but also a number of manufacturing uses will help solve that issue.

The Eagle Ford NG Industry Helps Meet Challenges Even though former Environmental Protection Agency Chief Administrator Lisa Jackson said in 2011, “I’m not aware of any proven case where the fracking process itself has affected water,” public concerns remain high. In Eagle Ford, STEER focuses on addressing such matters. “Someone in the community should care about what’s happening in their backyard and want to be in the know,” says Ashcraft. “It’s about communication and about knowledge and education. What you don’t know scares you unless you know what it is, why it’s needed, how it works and why it’s important. The facts and science are on our side.” As Bryce also notes, “Hydraulic fracturing is an industrial process, and nobody likes to live next to an industrial site.” But the new jobs and many other economic benefits have made the shale boom a welcome presence in Eagle Ford. One valid water concern with NG drilling in this drought-stricken state is its high water use. But companies like Resirkulere and others are pioneering filtration, purification and recycled chemical reuse to assist in conserving resources. As well, notes Ashcraft, “Companies are co-locating natural gas power production with desalinization of brackish water or other forms of water. So why just use one energy for one purpose when you could be creating energy and drinking water?” The biggest challenge in NG production after capturing the most immediately recoverable resources over the next 10 years is getting to the deeper and harder-to-access deposits that are estimated to exist in shale patches. But given how the NG boom is driving innovation across the board, prompted by the economic and environmental benefits, the energy industry will likely be ready to meet that task when the time arrives.

have spurred rapid growth to the point where it now attracts more capital investment than any other shale field in the nation. Between 2005 and 2013, according to the BP Statistical Review of World Energy, U.S. carbon dioxide emissions fell by 8.7 percent. Growing NG use in power generation has made a significant contribution to that progress and lowered utility fuel costs. But even beyond the environmental advantages, economic benefits will continue to drive the NG revolution. Recovery from the financial downturn of 2007 and ‘08 has benefited from increased energy production of both oil and gas. From January 2008 to February 2014, the oil and gas sector expanded employment by 26 percent. Due to that increase, the U.S. Bureau of Economic Analysis reports an oil and gas multiplier effect of 6.9 – every job in oil and gas supports 6.9 further jobs within the larger economy. Shale drilling accounts for a substantial part of those numbers. A recent Purdue University study estimates that shale energy production adds $473 billion per year to the U.S. economy, which accounts for some three percent of the gross domestic product. The numbers in EFS show similar economic growth. In the latest economic impact study by UTSA/IED released in September, shale gas and oil activity last year employed nearly 155,000 people, and contributed over $2.2 billion in revenues to local and state government. By 2023, the 21-county area is estimated to generate over $137 billion in economic output, provide 196,660 full-time equivalent jobs, and supply over $4 billion in local and state government revenue. The energy activity ripples throughout the South Texas region. New homes, roads, stores, hotels and service economy growth are readily evident in the EFS area. The increase in local tax revenues will result in better schools and other improved government services and public amenities. Until recently the region seemed like a land that the current Texas economic boom had largely bypassed. Not so anymore. NG is an integral element in the impressive revenue and employment numbers and overall growth. Its increasing production and use as well as greater oil domestic oil production has led BP to predict that by 2030 the U.S. will produce 93 percent of its energy at home. When gas exports come on line and NG prices rise, America will further benefit. As the rapidly growing economies of Asian nations like China and India create rising energy demands alongside the emissions

IT ALL ADDS UP TO AMERICA BECOMING AN INTERNATIONAL LEADER IN NG PRODUCTION AND TECHNOLOGY IN THE COMING YEARS

Natural Gas Set to Power the Economic Future of Texas & America “Today, we’re poised to become a global energy superpower,” says French. The rich energy resource deposits discovered in the EFS patch

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concerns with both nations, the U.S. will also likely be exporting the advances in shale drilling technology and equipment that are being driven by increased domestic shale activity to those countries and other nations. It all adds up to our nation becoming an international leader in NG production and technology in the coming years. And Texas shale patches like Eagle Ford, Permian Basin, Granite Wash, Barnett and Haynesville/Bossier are helping drive and benefitting from the NG revolution. “What this means for economic and environmental benefits goes throughout every sector of America,” says Ashcraft of NG’s coming prominence. “In terms of jobs, dollars and erasing the trade deficit, it’s tremendous.” With green energy as yet unable to meet growing international energy needs at economically feasible costs, NG is the next primary international energy source thanks to supplies, pricing, and its lower emissions addressing environmental concerns. The result, as Ashcraft notes, is that “Texas is well poised for the future.”

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POLIC Y

PETROLEUM PERMEATES THE PERMIAN BASIN BY: BILL KEFFER

It is difficult not to be giddy with gratitude at the fortunate situation in which we find ourselves in 2014 when you consider what is underway in the oil and gas business. There is no better nation than the United States in which to be searching for, producing, and selling oil, natural gas and all of their countless refined products. Only in the U.S. do private citizens own the mineral rights and have a direct stake in the development of their natural resources.

THE PERMIAN BASIN HAS THE GREATEST RIG COUNT OF ANY BASIN OR REGION IN THE WORLD

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Likewise, there is no better state in the nation than Texas in which to be making a living in the oil and gas business. Fortunately, given Texasâ&#x20AC;&#x2122; history of having been an independent republic before joining the United States, there is not the same excessive federal ownership of land and minerals in Texas as there is in so many of the other western and southwestern states. There is no better region in the state of Texas in which to be engaged in all of these activities than the Permian Basin in West Texas. Because of the long history of oil and gas exploration and production in West Texas and the central role it has played in the regional economy, there is no resistance or objection to implementation of the technological advancements in horizontal drilling and hydraulic fracturing â&#x20AC;&#x201C; unlike other cities such as Flower Mound, Denton, Dallas and Arlington, which resist this new technology in the form of burdensome local ordinances that either purport to restrict or ban hydraulic fracturing outright. Recognizing the inherent capacity of people to squander precious opportunities and snatch defeat from the jaws of victory, however, it is incumbent upon those who understand just how blessed we are to consistently spread the word to those who might not understand as well as rebut those whose only purpose seems to be to shut down the industry on unfounded notions of environmental concern or unrealistic dreams of utopian economies without fossil fuels. To assist in making the case for the substantial benefits flowing from the oil and gas industry, Texas Tech University recently published a current and comprehensive study of the economic impact of that industry on the counties in Texas and New Mexico situated in the prolific Permian Basin. In this extensive economic review commissioned by the Permian Basin Petroleum Association, principal

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author Dr. Bradley T. Ewing makes it abundantly clear just how impressive that economic impact is. The numbers reported in the study describe the economic conditions in the Permian Basin in 2013. The Texas portion of the Permian Basin covers 41 counties. As Texas has a total of 254 counties, that translates into almost one-sixth of the state. In area, the Permian Basin stretches 250 miles in width and 300 miles in length. Historically, the first major well drilled in the Permian Basin was the iconic Santa Rita #1 in Reagan County in 1923, which opened the prolific Big Lake oil field and started the massive revenue stream for the Permanent University Fund. The total cumulative production from wells drilled over its history in the Texas part of the Permian Basin is more than 29 billion barrels of oil and 75 trillion cubic feet of natural gas. But even with such a staggering history, and despite the many booms and busts that have visited this industry and this region over the decades, what is happening in the Permian Basin right now is even more jaw-dropping. The report found that the oil and gas industry in the Texas portion of the Permian Basin is sustaining more than 444,000 jobs. It is generating over $113 billion in economic output, and is contributing more than $60 billion to Texas in gross state product. Of course, we know that there is an oil and gas revolution occurring all over the United States in the Northeast with the Marcellus Shale, in the Midwest with the Utica Shale, in the Northern Plains with the Bakken Shale, in Oklahoma with the Woodford Shale, in Louisiana with the Haynesville Shale, in Arkansas with the Fayetteville Shale and in California (maybe someday) with the Monterey Shale. But in Texas, we are experiencing the revolution in spades with the Barnett Shale, the Eagle Ford Shale and all of the numerous productive formations in West Texas, like the Sprayberry, Wolfcamp, Bone Springs, San Andres, Clearfork, Cline and Wolfberry. Among all of these formations in Texas that are prolific in their own right, the Permian Basin boasts the most impressive numbers. The Permian Basin has the greatest rig count of any basin or region in the world. It is home to 27 percent of the total rigs in the United States, and 56 percent of the total rigs in Texas. Economically, that translates into Midland and Odessa being rated as the top two fastest-growing metropolitan statistical areas in the country in 2013, with unemployment rates of 3.1 percent and 3.6

percent, respectively. Personal income per capita has increased almost 90 percent in Midland and over 62 percent in Odessa, with Midland having the highest personal income per capita in the country. Another beneficiary of a booming oil and gas industry in Texas is, of course, the state treasury. State Comptroller Susan Combs reports that in 2013 the state received $2.1 billion in revenue from oil production and $1.5 billion in revenue

THIS INDUSTRY CONTINUES TO PROVIDE ENERGY FOR OUR ECONOMY, REVENUE FOR OUR GOVERNMENT AND EMPLOYMENT FOR OUR POPULATION

from natural gas production. One half of the state’s biennium budget for 2012-13 (excluding the federal portion) was $53.5 billion, so the combined oil and natural gas revenue to the state of $3.6 billion represents 8.4 percent of the budget. The oil and gas industry is currently contributing one-third of the Texas gross state product. If Texas were its own sovereign nation, it would have the 14th largest economy in the world, so contributing one-third of that gross product is an incredibly big deal. Our state’s Rainy Day Fund is hovering around $9 billion right now, expressly because of severance-tax revenue that comes from oil and gas production. That fund will likely be the salvation of our increasing number of backlogged transportation projects as a result of a constitutional amendment on this November’s ballot. I wouldn’t be surprised if oil and gas revenue plays a role in reforming how we fund public education statewide; it already has been the salvation of several sparsely-populated rural independent school districts across the state. This industry continues to provide energy for our economy, revenue for our government and employment for our population. Its significance to our past, present and future is undeniable. So why are there still those who try to deny it? Reports like this one by Texas Tech can go a long way toward setting the public record straight. About the author: Bill Keffer is a contributing columnist to SHALE Magazine. He teaches at Texas Tech University School of Law and continues to consult. He served in the Texas legislature from 2003-2007. NOV/DEC 2014

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RUSSIA’S CAMPAIGN AGAINST THE AMERICAN OIL AND GAS INDUSTRY BY: COMMISSIONER DAVID PORTER

The Railroad Commission of Texas (RRC) is charged with regulating the state’s oil and gas industry – a responsibility I take very seriously. This industry is vital to Texas’s economic strength as well as the strength of the entire United States economy. The U.S. produces approximately 328 billion cubic feet of natural gas per day, making us the largest natural gas producer in the world. Texas is responsible for almost one-third of all marketed natural gas produced in the nation, more than any other U.S. state.

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Accordingly, I am very concerned about multiple reports that describe Russian President Vladimir Putin’s funded efforts to negatively impact the U.S. and European Union (EU) natural gas industries in order to increase the global market share of his staterun gas production company, Gazprom. For example, in a 2014 report by Foreign Policy magazine, Georgetown University energy expert Brenda Shaffer supported this assertion by raising concerns about the likelihood of Russia backing anti-hydraulic fracturing efforts throughout Europe: “There is a lot of evidence here; countries like Bulgaria, Romania, Ukraine being at the vanguard of the environmental movement is enough for it to be conspicuous,” says Shaffer. The evidence is unsettling, to say the least. What is most alarming about these circum-

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stances is the fact that Gazprom Bank has been hit with two U.S. sanctions in one month as a consequence of Russia’s role in shooting down Malaysia Airlines Flight 17, which resulted in the death of 283 passengers, 15 crew members and at least one American citizen. I am rightfully concerned that a blacklisted, government-owned Russian bank is able to continue its campaign to weaken the American oil and gas industry by expanding its influence in the U.S. I fear the White House’s sanctions may only be symbolic at best, as Gazprom continues to strengthen its power in America with the high-priced assistance of some of the most influential lobbying firms in the country. Putin’s lobbyists have somehow managed to escape sanctions, allowing them to continue to profit while damaging the American oil and gas industry. Russia – the second largest producer of natural gas in the world – is responsible for roughly 30 percent of Europe’s natural gas. The U.S., having an abundance of natural gas that’s almost a third of the price of natural gas in Europe, presents a formidable threat to Russian industry, especially if we start exporting the resource to our European allies. Reuters reports that, since 2006, Gazprom has secured contracts with several international public relations and lobbying firms such as Ketchum, whose agreement alone is worth more than $55 million, in an effort to damage the natural gas industry in the EU and U.S. It is reasonable to assume that by hiring these firms, Gazprom hopes to reduce competition and increase its country’s market share of natural gas production and distribution. Gazprom’s apparent strategy includes: supporting anti-hydraulic fracturing environmental organizations, placing misinformation in the public and even mass media propaganda – namely its suspected assistance with the distribution of “Gasland,” an incredibly deceitful film about hydraulic fracturing in America.

Gazprom’s effort – with the assistance of the Kremlin, Ketchum and others – has already resulted in the ban of hydraulic fracturing in many EU countries, and now PUTIN'S LOBBYISTS they appear to HAVE SOMEHOW have their sights MANAGED set on the U.S. TO ESCAPE I am not sugSANCTIONS, gesting that RusALLOWING THEM sia is behind all localized efforts TO CONTINUE TO to ban hydraulic PROFIT WHILE fracturing in the DAMAGING THE U.S. I understand AMERICAN OIL AND that many proGAS INDUSTRY testers in the antihydraulic fracturing movement are sincere in their opposition efforts. However, I do feel that many fear-driven messages in the anti-hydraulic fracturing movement within the U.S. originate from Russia’s successful efforts to thwart European-based drilling and hydraulic fracturing, and these efforts have snowballed into organized groups in the U.S. I intend to continue my work to expose Russian efforts to malign the American oil and gas industry, because this campaign’s geopolitical ramifications reverberate throughout the U.S. and around the globe. I have already penned my concerns to Secretary of State John Kerry and have been patiently awaiting his response. The first step in this effort is to limit the influence of companies like Gazprom by encouraging the current U.S. administration to tighten sanctions. These sanction loopholes must be closed so that foreign interference in one of our most important industries can be stopped. For more information: Email mary.bell@rrc.state.tx.us.

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A PREVIEW OF THE 84TH LEGISLATURE BY: GLORIA LEAL

The 84th Texas Legislature will convene on the second Tuesday in January 2015 with historic new leadership at the helm. A new governor and new officeholders in all the major statewide offices will usher in a new era in Texas politics. Whether the successors will adopt the priorities of their predecessors or have a different focus remains to be determined. However, after two decades of GOP dominance and the usual long-odds faced by Democrats running for statewide office, Texas should continue to be the epicenter of the conservative movement for the immediate future. This does not mean, of course, that there will not be division within the Republican ranks. In the Governor’s office, for the first time since 2001, Texas will have a new governor: Republican Attorney General Greg Abbott or State Senator Wendy Davis, a Democrat. The Lieutenant Governor’s office will be assumed by either Texas Senator Dan Patrick, R-Houston or San Antonio’s Senator Leticia Van De Putte, a Democrat. The next Attorney General will be State Representative Ken Paxton, R-McKinney or Houston lawyer Sam Houston, the Democrat. And the State Comptroller’s office will be headed up by Senator Glenn Hegar, R-Katy or former energy company CFO Mike Collier, hailing from Houston. Both Republican and Democratic candidates recognize the role that oil and gas development has played in making the Texas economy the strongest in the country. However, Republicans differ from Democrats on the role of government in maintaining that growth and funding priorities from the growth. Candidates also have contrasting positions on oil and gas regulation and fiscal and social policy issues that will impact the direction of policy making and legislation. Each of the statewide positions plays a pivotal role in the legislative process. But the absence of Rick Perry, arguably the most powerful governor in Texas history, will likely produce a void in leadership to be filled in ways yet to be seen. Governor: In addition to the power of making appointments to boards and commissions, the ability to call a special session and to veto legislation are the governor’s chief powers. Following the end of the 83rd Regular Session, Governor Perry called three legislative sessions to take up specially-called items. It was on the issue of restrictions on abortion that Senator Davis raised her state and national profile. The constitutional authority to veto

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laws and budget provisions can be a formidable threat to influence and manipulate legislative action. Historically all governors have exercised that prerogative. But no veto in modern history has generated the attention wrought by Governor Perry’s veto of a state appropriation to the Travis County District Attorney’s Public Integrity Unit, overseen by DA Rosemary Lehmberg, who refused to resign following an arrest for drunk driving. The constitutional limits of the governor’s veto power will now be subject to review in the wake of Perry’s indictment on charges of abuse of power and coercion of a public official.

BOTH REPUBLICAN AND DEMOCRATIC CANDIDATES RECOGNIZE THE ROLE THAT OIL AND GAS DEVELOPMENT HAS PLAYED IN MAKING THE TEXAS ECONOMY THE STRONGEST IN THE COUNTRY Senate: The lieutenant governor presides over the Senate and is regarded by some as the most powerful person in state government. The 2015 Senate will likely tilt to the right with at least seven new senators taking office. It is an-

ticipated there will be changes to senate committee structure and procedural rules which will affect the balance of power. Such changes may also impact the historic role the Senate has played as a consensus body and the part Democrats will play. The absence of Perry assures that the next lieutenant governor will continue to have significant power. State Comptroller: The Texas Comptroller of Public Accounts is the state’s chief fiscal officer, bookkeeper, tax collector and economic forecaster. As revenue estimator, the comptroller is responsible for annually reporting the state’s financial condition to the Legislature and providing estimates of revenue for future years. The comptroller also projects the state’s cash flow position and produces fiscal analyses of legislation, administrative rules and other proposals affecting state revenue. The revenue estimate can make or break a piece of legislation. The timing of the revenue estimate release as well as the estimate itself can be used as political tools. House: Speaker Joe Straus of San Antonio will likely continue as speaker of the House of Representatives with a coalition of Republicans and Democrats. One third of the House will be composed of freshman members. As leader of the House, the speaker will name committee chairs and the members to those committees and therefore guide the policy and fiscal direction to be taken by House leadership during the 2015 legislative session. The House of Representatives led by the strong, deliberative Speaker Straus is expected to serve as a brake to controversial initiatives during next year’s session.

Health and human services: The Health and Human Services Department is up for sunset review, and with that will come an examination of all its key services. The expansion of Medicaid under the Affordable Care Act displays the contrasting visions between the Republican and Democratic parties on the issue and the role of the states, with Democrats supporting expansion and Republicans opposing the federal mandate. Infrastructure – Water & Roads: The oil and gas industry has drawn increased scrutiny from those who have raised concerns about the industry’s impact on the environment, public health and local infrastructure. Although the 83rd Legislature took steps to address infrastructure funding of water and roads, the 2015 session will continue to have to deal with ongoing shortfalls.

NEW LEADERSHIP AT THE STATE LEVEL AND IN THE LEGISLATURE WILL LIKELY CREATE A NEW DYNAMIC IN THE LEGISLATIVE PROCESS

Priorities for the 2015 Legislative Session Rainy Day Fund: The Comptroller projects that the state’s Economic Stabilization Fund commonly referred to as the Rainy Day Fund will grow to more than $8.4 billion next year, with some experts projecting upwards of $12 billion by end of 2015. The Texas oil and gas boom – fueled by hydraulic fracturing and new horizontal drilling techniques and the record increase in drilling on state lands, including acreage in the Barnett Shale and the Eagle Ford Shale – has generated the budget surplus. Unlike previous sessions where the Legislature had to deal with budget shortfalls, distribution of the Fund will be the major challenge for the 84th Legislature as different interests compete for funding. The state’s systematic shortfalls relative to four primary functions of state government are poised to take center stage in the funding discussion: education, health and human services, water and roads. Education and school finance: A $1.26 billion contribution to the state’s Permanent School Fund from the Rainy Day Fund will help finance public education but won’t change the fact that several hundred school districts in Texas remain underfunded. Unless overturned, a recent court decision in Austin, which ruled that Texas’s current system of funding education is unconstitutional, will require the Legislature to come up with a new plan to adequately and fairly fund all Texas schools.

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Water: The passage of House Bill 4, Senate Resolution 1 and authorization for Proposition 6 by the 83rd Legislature laid the foundation for funding of the State Water Plan. Water priorities for the 2015 Legislative session include continued state investment in meeting water needs, funding seawater desalination projects, reviewing water use and ways to reduce freshwater use in oil and gas and other industrial uses, and providing incentives for new technology, conservation and recycling. Transfer of water – particularly interbasin transfers – is also expected to be a hot issue that will require the Legislature to review current law related to water rights and the movement of surface water and groundwater. Whether the role of groundwater conservation districts should be expanded and authority made uniform across the state may also be the subject of legislation. Roads: A continuing issue from the 2013 session is concern about the impact of oil and gas activities on county and state road infrastructure. The 83rd Legislature passed H.B. 1747 establishing a grant pro-

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gram for counties and an additional budget appropriation of $225 million, providing some necessary relief. And similar to Proposition 6, the water initiative approved by the voters in 2013, the Legislature passed a law authorizing a referendum, Proposition 1, to dedicate a portion of the state’s energy production tax revenues into a savings account for roads. If it is approved by the voters on Nov. 4, an estimated $1.4 to $1.7 billion would be transferred from the Rainy Day Fund to the State Highway Fund in the first year alone. However, road funding is projected to be short even if Prop 1 passes. The Texas Department of Transportation estimates it needs about $5 billion more a year to maintain the current infrastructure and build new state highways and roads to keep up with expected population growth. Additional funding sources to be considered by the 2015 Legislature include: re-dedicating highway funds that have been diverted for other uses; increasing registration fees; increasing fees on main users including service providers, truckers and water haulers; dedicating a portion of the motor vehicle sales tax to road construction and maintenance; using sales tax on automobile parts to fund transportation; and authorizing more toll and non-tolled roads. In addition, counties will continue to challenge policies that channel revenues from oil and gas production directly to the state and pursue options to ensure that funding of county road infrastructure remains a priority.

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Local versus state control: The encroachment of oil and gas activities into both urban and bucolic settings in rural Texas has generated increased hostility and resistance. Some communities have initiated PHOTO BY WALLENTINE local control ordinances which would restrict or outright ban drilling within city boundaries. The 84th Legislature will undoubtedly consider measures that would consider local control over functions presently reserved for state government. Liability and insurance: The chairman of the Department of Transportation has called on Texas officials to address motor vehicle deaths and multiple-fatality crashes involving trucks and other commercial vehicles that have accompanied the state’s oil and natural gas boom since 2008. Worker’s compensation issues are also expected to be reviewed. As can be seen, the 84th Legislature will deal with new, old and evolving issues. New leadership at the state level and in the legislature will likely create a new dynamic in the legislative process. About the author: Gloria Leal is an attorney and government affairs consultant in Austin, Texas. Ms. Leal has a solo practice primarily relating to energy, environmental and healthcare matters. She also represents the Texas Alliance of Energy Producers, a national association of independent producers and service providers. She can be reached at GLealLaw@sbcglobal.net.

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BUSINE S S

FACING PERSONAL BATTLES HEAD ON BY: DOUG CAIN

Some of my closest friends know that I am battling an early-stage pancreatic cancer. There, I said it. It isn’t a death sentence. We caught it early, and are going after it aggressively. I am a bit weak and not the mountain of a man I was a few months ago. But this article has nothing to do with me… or cancer. This article is similar in vein to my other articles about facing challenges and arising victorious, but most importantly it is about how much more personal it is when the challenge comes from within you. Give up or fight like hell. I like this mantra made famous by Lance Armstrong. Make whatever judgment you want to about Lance Armstrong, the cyclist, but he is a survivor and the above quote is a testament as to why. When you fight something as insidious as cancer, something that is eating at you from the inside, something that you have to face, there will be those times, those days, those singular moments when you want to give up… and I have wanted to give up for just a moment (well, maybe a little longer). But I promised not to make this about me, as my columns are always about you, the reader. So, the question begs, what are you fighting inside of you that is causing you problems, ruining your life and stealing your joy? My beautiful daughter Erin recently said something quite profound: “This cancer is not just attacking you, it is attacking our family.” So there are two ways to look at that. First, you have a team standing with you when you are under attack. Secondly, there is a hell of a lot more at stake than just your ego; you must protect your family. I have had Erin’s statement in my head and it came to me that this is a hell of a lot more personal than whether or not I make another deal or beat another competitor. My guess is that you will be

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able to understand how the deep-seated feelings of the conflict get significantly more real when you really get that your son and your daughter are also affected greatly. As I thought of my “From the Legend Comes the Legacy” moment, I mustered up the strength to fight again. It’s the personal nature of the thing that allows you to do it. The personal nature of it... that kind of makes it sound not so bad, doesn’t it? Maybe if it isn’t so bad I won’t have to give my ultimate effort. It is not up to you to determine how bad it is. How could you possibly know how bad it is going to be tomorrow, or next week, or two months from now? That is why your very best effort is required whether it is handling a job loss, a divorce, a runaway child, or cancer. Half measures will avail nothing; even 99 percent efforts will mean little when you fail. The personal nature of it is what gives the challenge in your life a whole new meaning that you have never felt before. I thought of myself as always giving my all, whether on the athletic field or the business boardroom. This, though, did not prepare me for the personal nature of this battle. So you gather your strength, you find new solutions, you find skills you never thought you had. The question is, when you “pull yourself up by the bootstraps,” where does it come from? Your character, that inner part of yourself that defines who you are and who you will evolve into, is what makes the difference. I recently read about the world famous cellist, Pablo Casals, who even in his 90s was still playing both the cello and piano, and even conducting. When asked in an interview (at the age of 90) about the most pressing problem facing world peace, he responded that it was a problem of individual helplessness. Please read the following paragraph that was Don Pablo’s explanation (quoted by Norman Cousins in his book, “Anatomy of an Illness as Perceived by the Patient,” page 88). “The answer to helplessness is not so very compli-

BE RESOURCEFUL cated. A man can do something for world peace without having to jump into politics. Each man has inside him a basic decency and goodness. If he listens to it and acts on it, he is giving a great deal of what it is the world needs most. It is not complicated, but it takes courage for a man to listen to his own goodness and act on it. Do we dare to be ourselves? This is the question that counts.” Remember one of my Doug-isms: Your integrity is very expensive on Monday and doesn’t even start paying off until Friday. It took the courage to have integrity and the goodness to act on it every one of those Mondays that lasted for 30 years. Now, with my integrity intact, I have the finest and most dedicated employees in

"WE HAVE TWO OPTIONS, MEDICALLY AND EMOTIONALLY: GIVE UP OR FIGHT LIKE HELL." ~ LANCE ARMSTRONG

the industry, a brand name that is the industry standard for best in class, vendors that fight like gladiators to work for us, and, without a doubt, the world’s most beloved, devoted clients. Of the four, the last one humbles me the most. So, give up or fight like hell when finding your own basic goodness and decency. They are two sides of the same coin really. If you are not willing to fight like hell, you will never find your goodness. If you are not in a daily search for your basic decency, you will be forever lost in your battle. My battle with cancer has changed me, and reading the words of Don Pablo have evolved my feelings about myself. Douglas Sterling Cain will fight like hell as he battles daily with this damned cancer, and as I look inward and plan my future I will make sure that the integrity that I have carried all these years works alongside the basic goodness and decency that Pablo Casals spoke of, and we will see what evolves. Thank you. Don Pablo, message received. Until next time….

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ALL HANDS ON DECK BY: DR. JANET CUNNINGHAM

Looking for a few good employees? Look no further than the Coastal Bend. As a military city, Corpus Christi has an abundance of educated and skilled workers – our local veterans. Veterans make ideal candidates for jobs in the oil and gas industry because of their specialized and transferable training, discipline, leadership skills, ability to work as team members, and understanding of the long days and time away from family. With numerous educational programs now available to veterans, it is the perfect opportunity for employers to seek out those who have served our country. Not only do the programs help veterans become more marketable, but also employers save thousands of dollars in training and are able to obtain employees with skills for industry positions in a relatively short period of time. With more veterans available for positions – not only because of the massive numbers returning home from Iraq and Afghanistan, but also because of recent military cutbacks – employers have an additional source of workers to meet the high demand. Unfortunately, the unemployment rate for veterans remains high. According to the most recent U. S. Bureau of Labor Statistics report, the national unemployment rate for all veterans is 5.6 percent. However, for those veterans who served in the military post 9/11, the unemployment rate is 8.1 percent, with young male adults from 18 to 34 having the highest unemployment rates. While this is a prime population for jobs in the oil and gas industry, over 1,000 veterans in the Coastal Bend are seeking employment. Coastal Bend veteran programs provide numerous advantages: employers can earn tax credits, receive recruiting benefits, be part of specific hiring events that give preference to veterans, and, more importantly, obtain high-quality employees.

AS A MILITARY CITY, CORPUS CHRISTI HAS AN ABUNDANCE OF EDUCATED AND SKILLED WORKERS Ð OUR LOCAL VETERANS 64

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One example of such an opportunity is the Texas Workforce Commission’s annual job fair: Hiring Red, White, and You! Last year over 1,500 employers and 11,000 veterans participated. Now in its fourth year, the event is scheduled for Nov. 13 at locations throughout Texas. Workforce Solutions of the Coastal Bend will host the event at Sunrise Mall in Corpus Christi, and more than 100 employers are expected to participate. At Workforce Solutions of the Coastal Bend, a partner in the hiring fair, veterans receive priority services and advisors assist veterans in all aspects of the job search. Karen Fox, Texas Veterans Commission veterans representative, works with employers from Victoria to Brownsville to help fill positions. By working directly with employers, she can help bridge the gaps by translating military skills to the skills that employers are seeking. As the point of contact for employers, she informs them on tax credits, explains how skills may transfer from the military to civilian positions, provides recruiting assistance, and assists employers in working with disabled veterans. Staff members help prepare veterans for jobs by providing assistance with job-seeking skills, interviewing, resume writing, etc. More information may be obtained by emailing Karen.fox@tvc.state.tx.us or calling her at 361-8827491 ext. 452. In addition to direct assistance from the Veterans Commission, a number of other programs are available to assist those with former military experience in obtaining the skills that local employers are seeking. One such program is the Accelerated Welding and Pipefitting Program at Craft Training Center of the Coastal Bend (CTCCB), for which the GI Bill can be used to pay the tuition. Specifically designed for veterans, the training provides an intensive, fast-track option to help individuals obtain entry-level jobs in the construction and maintenance industry. Students attend classes from 9 a.m. to 4 p.m. each day for six weeks, and the next enrollment period will be in early 2015. CTCCB, in partnership with Del Mar College (DMC), also designs specific training programs for employers, and is currently working with local companies, such as TPCO America, Chicago Bridge and Iron and other local employers. For more information about CTCCB programs, contact Dr. Michael Sandroussi at msandroussi@ctccb.org or 361-289-1636. DMC is partnering with First in Rescue Safety Training (F.I.R.S.T.) to provide training opportunities through the First to the Field program. As a veteran, Program Director Deme Gonzalez knows firsthand the difficulty that retired military or veteran personnel face. He and F.I.R.S.T. owner Roy Creager have teamed up to help veterans earn Emergency Medical Responder and OSHA 30 national certifications. Taught by instructors who have real-world experience in the oilfield, participants are given up-to-date, relevant materials that prepare them for work in the oilfield. Gonzalez says there are many similarities between military training and oilfield work, such as practicing safety, working in confined spaces and contingency planning. “We find the commonalities and remove barriers related to terminology,” explains Gonzalez. “Often times, the language used on the DD 214 [military separation papers] is very different from what is used by employers. When we translate the experience, employers

are more apt to recognize that the skills learned through military training transfer very easily to the workplace.” The program, which is designed specifically for veterans, is two weeks long and will begin in November. Cost for the two-course program is $1,600. Contact information for Deme Gonzalez is Deme@firstcallfirst.com or call 361-779-5670. DMC is also implementing an Industrial Construction Program, thanks to being awarded a $175,000 grant from the Texas Workforce

SERVING OUR COUNTRY WAS A PRIORITY FOR OUR VETERANS; LET'S MAKE HIRING VETERANS A PRIORITY FOR THE COASTAL BEND

Commission. With plant construction and expansion proliferating in the Coastal Bend, the program will train 88 veterans to build commercial and manufacturing plants. Six classes – Introduction to Building Construction, Construction Safety, Construction Math, Building Construction, Blueprint Reading, and Basic Electrical – will be taught at night for 14 weeks, or students can choose a fast track of four weeks during the day. Successful completion of the program will earn a Workforce Skills certificate from DMC. The next program begins on Nov. 10. Veterans need to complete an application and pass a drug test to enroll. More information may be obtained from Mary Afuso, mafuso@delmar.edu or 361-698-2407.

DMC works with many Coastal Bend employers to develop programs for particular areas of need. Although not specifically for veterans, DMC is currently working with the Corpus Christi Army Depot (CCAD) at Naval Air Station Corpus Christi to provide students with over 300 hours of continuing education credit in Electroplating Applied Technology. Out of the nearly 100 applicants, nine were selected for the program, which will prepare them to in refurbish worn aircraft components. The curriculum for the year-long program was developed by DMC, and professors from the college meet with students at CCAD for eight hours of classroom instruction each week. The other component of the program provides students with 32 hours of on-the-job training. Employers who need assistance with the development of specific training programs, such as the electroplating course, should contact Kiwana Denson, Coordinator for Corporate Services, at k1denson@delmar.edu or 361-698-2411. Employers and veterans seeking employment can find more information about these and other programs at Coastal Compass Education and Career Resource Center in Corpus Christi’s La Palmera Mall. Services are free and available to everyone. Visit the website at www. coastalcompass.org or call 361-906-0703. All hands are on deck – educational institutions and training centers, workforce agencies, employers and veterans. Together we have an unparalleled opportunity to strengthen our workforce. Serving our country was a priority for our veterans; let’s make hiring veterans a priority for the Coastal Bend.

For more information: Contact Dr. Janet M. Cunningham, Executive Director of the Citizens for Educational Excellence/Education to Employment Partners, at jcunningham@edexcellence.org or 361-813-9946.

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EL CAMINO REAL DE LOS TEJAS TRAIL HELPS PRESERVE TEXAS HISTORY BY: THOMAS TUNSTALL, PH.D.

El Camino Real de los Tejas National Historic Trail Louisiana, Texas

El Camino Real de los Tejas National Historic Trail

Natchitoches Alto Waco Crockett

TEXAS

Nacogdoches San Augustine

Los Adaes

Bryan

LOUISIANA

The El Camino Real de los Tejas trail,

Austin 10

Bastrop

San Marcos

Houston

New Braunfels San Antonio Cuero Eagle Pass

Victoria Goliad

Guerrero

Gulf of Mexico

37 35

MEXICO

Laredo

Villa de

Corpus Christi

Dolores PHOTOS PROVIDED BY THOMAS TUNSTALL, PH.D.

50 Miles

No warranty is made by the National Park Service as to the accuracy, reliability, or completeness of these data for individual use or aggregate use with other data.

Produced by National Trails Intermountain Region

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March 16, 2011

NOV/DEC 2014

which runs across a large portion of the Eagle Ford Shale, led to the founding of Texas. The Camino Real was initially the road that Spanish settlers used to travel north from Mexico City through Monterrey, Laredo, San Antonio, Nacogdoches and ultimately to Natchitoches in Northern Louisiana, spanning approximately 2,580 miles in all. Conversely, the road was also the avenue later used by Anglo and African American migrants to Texas. The trail crosses 40 Texas counties and two parishes in Louisiana. The network of the route that became the Camino Real was based on established American Indian trails. Literally translated, El Camino Real de los Tejas means The Royal Road of the Tejas Indians. The road’s original purpose was to connect Mexico City with Los Adaes in Northern Louisiana (now known as Robeline). Los Adaes was the first capital of Texas beginning in 1721 and for the next 50 years that followed. The Camino Real Trail also includes the Alamo and the San Antonio Missions. The key contributing factor for the establishment of the Camino Real trail system was Spain’s desire to buffer its land holdings from the French in the late 1600s. The Spaniards had shown little interest in settling Texas until 1685, when they learned that the French explorer René Robert Cavalier Sieur de La Salle had established a colony on Matagorda Bay. Alonso de

✯

Own a piece of Texas History

www.E s ca l e r a R a n ch18 3 3 .co m

León of Spain eventually found only the ruins of La Salle’s settlement in 1689. But the ultimate result of the various search efforts was the beginning of an ongoing Spanish presence in East Texas. In 2004, the Camino Real was designated as a National Historic Trail by the National Park Service and part of the National Trails System created by Congress in 1968. The trail is managed in cooperation with the El Camino Real de los Tejas National Historic Trail Association, a non-profit organization that works closely with the National Parks Service. The association is in the process of attempting to purchase sections of the trail to preserve it for posterity. In addition, the association’s board has developed a comprehensive management plan that provides a framework for the administration of the trail. Stakeholders in the plan include local government agencies, landowners, American Indian tribes, area residents, trail-user organizations and National Park Service staff. Throughout its long history, the lands along the Camino Real became home to a variety of immigrant ethnic groups in addition to the more than 60 tribes indigenous to the region. These settlers included the Spanish, French, Mexicans, African Americans, Anglos and various other Europeans. In fact, El Camino Real is responsible for much of the diversity of Texas as we know it. Yet there is limited public awareness of the trail. Most of the Camino Real remains in private hands, and only a small portion is federally owned or managed by state and local entities. The El Camino Real de los Tejas National Historic Trail Association is working to protect the historic integrity of the trail and promote its contributions to tourism and economic development along its path as well as educate the public about its history, resources and opportunities.

IN 2004, THE CAMINO REAL WAS DESIGNATED AS A NATIONAL HISTORIC TRAIL BY THE NATIONAL PARK SERVICE AND PART OF THE NATIONAL TRAILS SYSTEM CREATED BY CONGRESS IN 1968

El Camino Real de los Tejas National Historic Trail Association Regional Map

Cherokee 22069 Nacogdoches

Houston

Leon

Robertson

22085 San Augustine

Sabine

Madison

Milam Brazos

Williamson Burleson Travis

Lee Washington Bastrop

Hays

Fayette

Caldwell

Comal Guadalupe Bexar

Gonzales

Medina

Lavaca

Wilson DeWitt Frio

Zavala

Karnes

Atascosa

Victoria

Maverick

Goliad

Dimmit

Coahuila

La Salle

McMullen

Live Oak

Legend

Bee

El Camino Real de los Tejas Trail

Webb

South Texas Region

Gulf of Mexico

µ Map by Steven Edward Gonzales

San Antonio - Goliad Region

Zapata

Brazos Region East Texas - Caddo Region Texas

Nuevo Leon

Louisiana

Tamaulipas

37.5

150 Miles

Mexico

About the Author: Thomas Tunstall, Ph.D. is the Research Director at the Institute for Economic Development at the University of Texas at San Antonio. He was the principal investigator for the Economic Impact of the Eagle Ford Shale studies released in May 2012, March 2013 and September 2014, as well as the West Texas Energy Consortium Shale Study. He has published peer-reviewed articles on shale oil and gas, and has written op-ed articles for the Wall Street Journal. Dr. Tunstall has spent a significant portion of his career on overseas workforce and economic development assignments in such locations as Azerbaijan, Afghanistan, Kenya and Zambia. He holds a Ph.D. in Economics and Public Policy, and an M.B.A. from the University of Texas at Dallas, as well as a B.B.A. from the University of Texas at Austin.

V i ctor i a,

NOV/DEC 2014

Tex a s

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BUSINE S S

LIVE FOR TODAY AND PLAN FOR TOMORROW ESTATE EQUALIZATION IN FAMILY BUSINESS SUCCESSION PLANNING BY: GEORGE F. LONG

One of the greatest challenges facing a family-owned business is properly planning for business succession.

PHOTO BY RIDOFRANZ

IF ISSUES OF BUSINESS SUCCESSION ARE NOT DISCUSSED AND A PLAN IS NOT PUT INTO PLACE, CIRCUMSTANCES COULD DEVOLVE AFTER THE DEATH OF THE BUSINESS OWNER 68

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The owners may be too busy dealing with everyday business needs to consider the tough issues of succession planning. They may not be asking themselves the questions they should, such as: Who will be the next operations manager? Do I want my spouse to own the business when I am gone? Does my spouse want to own the business? Which of the children will get involved? How will I treat the ones that don’t? What if the family needs money during the transition? If issues of business succession are not discussed and a plan is not put into place, circumstances could devolve after the death of the business owner. This could spell disaster for the business and the family, and even possibly result in a forced sale. Let’s look at an example that illustrates the importance of dealing with these issues earlier rather than later. John Smith, age 62, is the sole owner of a construction company. His wife Judy, age 61, is a teacher in a local school and is not involved in the business. John and Judy’s children are grown, and their older son Bill, age 30, has been working in the family business for the past 10 years. Their other two children, Jim and Mary, have their own careers and are not involved in the business. John is the company’s main salesperson and maintains all of its business contacts. John has a long-time employee, Sam, the operations manager, who runs the day-to-day business operations. John’s salary from the business provides John and Judy with their primary means of income. John and Judy face several issues with respect to business succession planning. If they fail to plan, the construction company could be thrown into disarray when John dies. Bill and the operations manager, Sam, may be able to maintain the day-today business activities, but new sales would dry up if John failed to train Bill and Sam as the new sales team. If Sam fears the business will fold without John, he may leave to join a competitor. If the business does manage to continue, Judy would be forced to either step in to manage the business as the new owner, or cede management to Bill without the expertise to know if he is succeeding in his new role.

The failure to address these issues in advance could cause the business to be sold or liquidated. Turning the business over to Bill would also cause problems with his siblings, Jim and Mary. They may perceive Judy’s actions as showing favoritism to Bill to the detriment of Jim and Mary and their families. What if Judy gives ownership of the busi-

are working on your business succession plans and thinking about life insurance, make sure you work with a company that is an established leader in the field, such as Massachusetts Mutual Life Insurance Company (MassMutual). MassMutual is a strong supporter of family-owned businesses with a long history of providing high quality products and services specifically designed for business

MASSMUTUAL IS A STRONG SUPPORTER OF FAMILYOWNED BUSINESSES WITH A LONG HISTORY OF PROVIDING HIGH QUALITY PRODUCTS AND SERVICES SPECIFICALLY DESIGNED FOR BUSINESS OWNERS

ness to all three children equally? In that case, Jim and Mary would have to leave their own careers and put their efforts into running the construction company they inherited with no training or prior experience. That could make the day-to-day operation of the company difficult and inefficient. Should that occur, Bill might decide to leave and start his own company, further complicating family dynamics and impacting Judy’s financial future.

Planning for a stable transition A better idea is for John and Judy to plan for these issues now, and implement a successful business succession strategy. If John believes that Bill and Sam would be trustworthy successor owners of the business, he could start training them in both sales and operations. John, Judy, Bill and Sam could all agree in writing that if John dies, Bill and Sam will purchase the business from Judy. Bill and Sam could purchase life insurance on John’s life which would provide the cash to pay Judy for the business. This cash could provide Judy with the security she needs to support herself in the future. From the family dynamic perspective, since Bill paid fair value for his interest in the business, his siblings would not feel slighted. Eventually, Judy could leave her remaining estate to her children in equal shares. Bill’s success or failure would be determined by his ability to stabilize the business with Sam, and the future would be up to him. Judy’s financial future would not be contingent on her son’s success, thus taking substantial pressure off of Bill and increasing family harmony.

Life insurance – a critical component Life insurance can be a critical component for business succession planning. When you

owners. Furthermore, MassMutual’s representatives are supported by a team of attorneys specializing in estate and business planning, located in the home office.

Financial services professional You can benefit from working with a financial services professional who has knowledge, experience, insight and an active interest in your financial success. A skilled financial services professional can not only advise you on the type and amount of insurance protection that is right for you but also coordinate your business succession plan with your attorney, accountant and any other professional advisors you may work with to help you achieve what is most important to you. Your financial services professional can help you be prepared for whatever tomorrow may bring.

Like. Follow. Connect.

For more information: Provided by George F. Long, a financial representative with MassMutual South Texas, a MassMutual Agency; courtesy of Massachusetts Mutual Life Insurance Company (MassMutual) (210) 384-5314, gflong@financialguide.com.

OIL & GAS BUSINESS MAGAZINE

This information represents our understanding of the federal gift and estate tax laws as currently interpreted. The information provided is not written or intended as specific tax or legal advice and may not be relied on for purposes of avoiding any federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. NOV/DEC 2014

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BUSINE S S

EDUCATING THE FUTURE EMPLOYEES OF THE OIL AND GAS INDUSTRY BY: MARIA CALDERON

Laredo and Nuevo Laredo comprise the largest inland port in the Western hemisphere.

PHOTO BY PURESTOCK

This expanding international hub serves an industrial community with a long history of global logistics. A milestone for this area began in 2008 with the Eagle Ford Shale boom. Webb County, with Laredo as the county seat, became part of the 15-county area most impacted by the Eagle Ford Shale exploration. The Texas Railroad Commission reports that since 2008, Webb County has consistently been one of the top five counties soliciting the most drilling permits. The Laredo business community is in a steady state of transformation, attempting to serve the varied needs this boom has created. Urban development has grown exponentially as have the housing, medical and retail sectors. Laredo has been and continues to be a major contributor to the development of a workforce that meets the current and projected needs of the region and the state of Texas. Texas A&M International University (TAMIU) has dedicated itself to taking a leadership role in creating educational opportunities for students to engage in the varied fields of expertise required in this inland port. The fastgrowing energy sector has created new workforce demands. In order to meet the increasing need for skilled employees in the energy sector, TAMIU has created the International Energy Institute, scheduled to open in 2015. The Institute, in conjunction with Laredo Community College, will offer a multi-disciplinary educational curriculum to serve the energy sector. Laredo Community College will develop advanced technical training for the energy sector and TAMIU´s new School of Engineering will add a new engineering degree dealing with petroleum, water and logistics. These opportunities will be available in English and Spanish. The Shale oil and gas industry has provided over 155,000 jobs in Texas, and we anticipate that the oil and gas sector in Mexico will provide at least an equivalent number of jobs in Mexico’s northern region. Unlike Texas, Mexico does not have an existing infrastructure to adequately handle the expected boom within its oil and gas industry. Mexico has taken aggressive actions to ensure that it will be able to capitalize on its oil and gas resources. Their first major step in improving the Mexican system has been amending their Constitution to allow for private industry to

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NOV/DEC 2014

participate in its energy sector, which was previously restricted to state-owned operations. Changes in the nation’s laws now ensure that national and international private enterprises can be involved in the oil and gas industry in Mexico. As mentioned previously, the infrastructure to support the growth is not yet in place, but the system is slowly changing and improving. The transportation, pipeline and service industries, to name a few, have to be developed to meet the needs of the expanding oil and gas industry in Mexico. Developing this infraTHE SHALE OIL structure and AND GAS INDUSTRY sustaining HAS PROVIDED the oil and OVER 155,000 JOBS gas industry will create IN TEXAS, AND more jobs WE ANTICIPATE and greater THAT THE OIL demand AND GAS SECTOR for a skilled IN MEXICO WILL binational PROVIDE AT LEAST labor and professional AN EQUIVALENT NUMBER OF JOBS workforce. In preparaIN MEXICO'S tion for this NORTHERN REGION historical transformation, TAMIU and its International Energy Institute is collaborating with a number of Mexican universities to provide the necessary components to create seamless bilingual, bicultural educational programs that can meet the needs of the emerging South Texas and Mexican international petroleum and energy industry. For more information: Call the TAMIU Binational Center at 956-326-2832.

K5 SERVICES, LLC

CORPORATE OFFICE: P.O. Box 1358 711 San Antonio Hwy. Mason, Texas 76856 Office: 325-347-5262 Fax: 325-347-5305 k5services@hotmail.com

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SOUTH TEXAS DIVISION: 127510 Hwy. 97 East Cotulla, Texas 78014 830-431-3747 PERMIAN BASIN: 404 North Rogers Blvd. Pyote, Texas 79777 830-370-6045

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FROM TEENAGE OIL FIELD WORK TO FOUNDING TEXACO BY: ROB PATTERSON

Who's the man responsible for putting the "Tex" in Texas on countless gas station signs across America and around the world? Joseph S. Cullinan. Not one of the best known nor most colorful oil wildcatting legends, nor anywhere near the richest, Cullinan nonetheless had an impact on the oil business as big as anyone. Born near Sharon, Pa. on New Year’s Eve in 1860, he started working in the Pennsylvania oil fields at age 14. He became an expert in virtually every aspect of the oil game by the time he was invited to Texas in 1897 by the city of Corsicana to oversee its gushing field that was opened by accident four years earlier by prospectors drilling for water. It was the first significant oil and natural gas patch in the Lone Star State. While there, Cullinan opened the PHOTO BY OLICLIMB first oil refinery west of the Mississippi. The operation eventually became the Magnolia Oil Company, whose winged-horse Pegasus emblem became the famed symbol for Mobil gas stations after Standard Oil of New York acquired its ownership in a stock swap in 1925. He also came up in Corsicana with such innovations as using oil to power locomotives and utilizing natural gas for lighting and heating. Upset at the wasteful and polluting practice by early drillers of dumping crude oil, Cullinan was influential in getting the Texas Legislature to pass the state’s first petroleum conservation law. After Spindletop came in at the beginning of 1901, Cullinan headed to Beaumont and started the The

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Texas Fuel Company, soon after renamed The Texas Company, which in an early move of corporate branding later became known as Texaco. For many years it was the only company retailing gas in all 50 American states, and its red and white logo with a star and ‘T’ became iconic in national culture (along with such advertising jingle lines as “You can trust your car to the man who wears the star” back when gas stations were full service, including auto repair). A 1903 strike in the Sour Lake patch made The Texas Company a major oil producer as well as refiner. Two years later Cullinan moved the firm to Houston, and it was soon followed by other oil ventures, establishing the city as America’s petroleum center. In 1913, Cullinan was ousted from The Texas Company’s presidency after a stock proxy battle with East Coast investors. He continued to be successful in drilling and refining in Texas. After making Houston synonymous with oil, Cullinan helped further it both in commerce and culture. He was a prime proponent of developing the Houston Ship Channel, served as the president of the city’s chamber of commerce from 1913 to 1919, and was a major supporter of the Houston Symphony and Museum of Fine Arts as well as the Houston Negro Hospital. In 1916 Cullinan bought a 37 acre plot in order to create an enclave where he and his friends could live in close proximity. It became the walled-in Houston neighborhood of Shadyside, a precursor of today’s exclusive gated communities. With its 16 grand homes and no businesses or aboveAFTER MAKING ground utility lines, it epitomizes prosperHOUSTON ous and graceful SYNONYMOUS WITH Texas big money living. OIL, CULLINAN If all that weren’t HELPED FURTHER IT enough, Cullinan also BOTH IN COMMERCE left a mark on the national landscape AND CULTURE as the chairman of the Mount Rushmore National Memorial Committee. A friend of President Herbert Hoover, he served as an advisor to the national Food Commission during World War I. While visiting Hoover in 1937 at the former-president’s home in Palo Alto, Calif., Cullinan caught pneumonia and died on March 11 of that year. His last name may not resonate in the American oil business pantheon like Hunt, Bass or Richardson. But Joseph Cullinan left an indelible legacy within the petroleum industry, Houston, the nation and popular culture that attest to the impact of his life and career.

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RLI. A Solutions Company.

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RLI, A RAIL LINK INTERNATIONAL COMPANY, is a full service shipping and freight handling specialist, offering fully customized and integrated logistics solutions. RLI’s expertise in US-Mexico cross border operations and customs broker services, allows expedited clearance of commercial shipments to and from Mexico.

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EAGLE FORD NEWS is dedicated to sharing news, information, events, jobs, resources, opinions and conversations related to the Eagle Ford Shale. We have the largest Facebook page dedicated to Eagle Ford, where we encourage two way communication from our fans and members. www.facebook.com/EagleFord You can also join our conversations on LinkedIn and Twitter

News where you get to participate. NOV/DEC 2014

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ENERGY BOOM FUELING DEMAND FOR LUXURY RANCH REAL ESTATE: TEXAS HILL COUNTRY'S BOOT RANCH REPORTS RECORD SALES BY: KIMBERLY SAMOON

One of the byproducts of the shale industry's contribution to the booming Texas economy is how it has fueled demand for luxury ranch real estate. Texans have traditionally preferred to own a second or weekend home in their own backyard. Property in the Texas Hill Country – and increasingly, property located near the historic town of Fredericksburg, which was listed by Southern Living magazine in its “Small Towns We Love” feature – are attracting a fair share of second-home dollars being generated by the shale industry boom. Located just five miles from Main Street, Fredericksburg, and about an hour’s drive away from San Antonio and Austin, Boot Ranch, the Texas Hill Country’s finest private golf and family community, reported an eightyear record high for home and property sales at the end of September. Well on its way to completing Phase 1 of its development and nearly $15 million in sales year to date, the property reported that 70 of its 103 estates and eight of its 24 overlook cabins are sold, and its fractional ownership Sunday houses (inspired by weekend residences shared by the original Fredericksburg settlers when they came to town) are booming. Sean Gioffre, Boot Ranch co-director of marketing and sales, observes: “There is no doubt that the energy boom is fueling much of the demand we are seeing for premier ranch real estate, including here at Boot Ranch. Confidence is back, and with low interest rates, many people are looking to second homes as a hedge against inflation and as a tangible asset in which to put their money.” Boot Ranch is a master-planned retreat on more than 2,000 picturesque rolling acres, featuring a world-class championship golf course designed by PGA legend Hal Sutton, exquisite food led by Executive Chef Aaron J. Staudenmaier (formerly chef and general manager of Abacus and Kent Rathbun’s #2 in Dallas) and delectable wines (Messina Hof and Becker Vineyards are nearby).

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PHOTOS PROVIDED BY BOOT RANCH

Amenities at Boot Ranch are unparalleled in the Hill Country and have resulted in exceptional interest in its real estate and club memberships. Owner and member privileges at Boot Ranch include access to the 55,000-square-foot Clubhouse Village; casual and fine dining; a fully-stocked wine cellar; golf shop; ReStore Spa & Fitness Center; the 4.5 acre Ranch Club with pavilion; pools, tennis and sports courts; 10 member/guest lodge suites; a trap and skeet range overlooking

AMENITIES AT BOOT RANCH ARE UNPARALLELED IN THE HILL COUNTRY AND HAVE RESULTED IN EXCEPTIONAL INTEREST IN ITS REAL ESTATE AND CLUB MEMBERSHIPS

Longhorn Lake; hiking, mountain biking, canoeing and fishing. Construction is under way on a fishing pier and comfort station near Boot Ranch’s signature hole #10 on the golf course. The course includes a 34-acre practice park, short game range and executive Par 3 course. Vertical membership privileges extend from the primary member up two generations to

parents, grandparents, and their spouses, as well as down two generations to children, grandchildren, and their spouses, providing access to the entire family under one membership. “Just call it the ‘American Dream Texas Style,’” says Andrew Ball, Boot Ranch codirector of marketing and sales. “Prospective owners we meet are looking to join an established community that balances privacy and accessibility. They want to be with their families and create lasting memories in a place where they can golf, fish, dine, swim, relax and generally enjoy the Texas outdoors. Boot Ranch offers all of that and more.” The three living options available at Boot Ranch include two to 18 acre Estate Home sites, which range in price from $300,000 to $2.5 million, inclusive of club membership; Overlook Cabins on half to full acres, with all-in-prices starting above $800,000, including lot, membership and completed structure ranging from one to eight bedrooms; and a limited number of Sunday House fractional ownership shares, starting at $350,000 per share, inclusive of club membership, for the 4,500 square foot, multi-structure, five bedroom, 5.5 bathroom compound. For more information: Visit Boot Ranch online to learn more at www.bootranch.com.

A PRIVATE OASIS IN THE TEXAS HILL COUNTRY

Our expanded Ranch Club complex is the perfect paradise for rest, relaxing and recreation. Just steps from Clubhouse Village, it now offers many additional resort-style amenities including four separate swimming pools, Jacuzzi, Ranch Club Grill featuring a wood burning pizza oven, a luxurious open-air pavilion for lounging and seating for up to 300, lighted hard-surface tennis and sport courts, and much more.

To learn more please contact Sean Gioffre at 830-997-7693 / sgioffre@bootranch.com or Andrew Ball at 830-997-6200 / aball@bootranch.com. bootranch.com

NOV/DEC 2014

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UPLAND BIRD HUNTING IN THE TEXAS HILL COUNTRY Joshua Creek Ranch

SPECIAL TO SHALE MAGAZINE

For more than 25 years, Joshua Creek Ranch has delighted wingshooters from all across the country by featuring a variety of game birds and hunting scenarios.

PHOTOS PROVIDED BY JOSHUA CREEK RANCH

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From the carefully mentored habitat producing exceptional upland bird hunting to the new addition of decoyed mallard duck hunting, there is plenty of action available for wingshooting enthusiasts. There are so many aspects to the incredible wingshooting experience at Joshua Creek Ranch – managed habitat, well-trained hunting dogs, professional guides, Beretta rental guns and a variety of shooting scenarios – but it’s always the birds and different styles of hunting them that seem to be the most intriguing for guests. The three primary upland birds hunted at Joshua Creek Ranch are quail, pheasant and chukar. All three of these upland bird species are well-adapted to the Texas Hill Country, which has strong similarities to their native habitats around the world. In addition, all three make exceptional table fare. After 25 years of continuous liberation of these birds over hundreds of acres at Joshua Creek Ranch, it’s common to see any and all of these species throughout the ranch year-round. The most common type of quail at Joshua Creek Ranch are Northern Bobwhite Quail – a ground dwelling bird native to the United States, Mexico and the Caribbean. Named after its distinctive “bobwhite” whistling call, this moderately sized game bird can grow up to 11 inches in length with a 15-inch wingspan. Bobwhite quail are elusive and rely on their natural camouflage to stay undetected, but will flush in low flight groupings if threatened or disturbed – otherwise known as a “covey rise.” The pheasant at Joshua Creek Ranch are primarily Ring-necked Pheasant. Originally native to Asia and one of the most hunted birds in the world, adult males can range up to 35 inches in length and nearly seven pounds. Pheasants are the most colorful and highest-flying of the upland birds at Joshua Creek Ranch. The chukar, or “chukar partridge,” at Joshua Creek Ranch are Eurasian upland game birds that are prevalent in the Middle East and are also part of the pheasant family. Ranging up to 14 inches long with unique black and white “bandito” bar markings, chukar can also be flushed in small coveys presenting a challenging shot with their fastflying abilities. As for the wingshooting scenarios at Joshua Creek Ranch,

traditional walk-up hunts guided by professionals with pointing and flushing dogs are most frequently requested. But guests can also enjoy other unique styles of upland bird hunting such as Driven Pheasant Shoots or Continental Pheasant Shoots. European-style Driven Pheasant Shoots are very popular, especially for group outings. Drive sites have been developed all over the ranch. Guides use the rugged ledges above the bottom lands to drive pheasants from high scenic limestone bluffs and ridges, creating the most exciting shots for the line of guns positioned below. In a half day, shooters will be challenged at three different drive sites. Continental Pheasant Shoots give a similar experience as driven shooting, but in a single, more controlled setting. From a central tower, pheasants are released to challenge shooters who rotate through ten stations, each set in a different habitat location to give a variety of shots: high incoming, snap shots through tree tops, high left and right crossers. New this season, Joshua Creek Ranch will expand its highly-awarded bird hunting experience to include decoyed mallard duck hunting. Texas has always been a great destination for duck hunting, particularly along the marshes and mangroves up and down the Gulf Coast. But now waterfowl enthusiasts can get their fix in the Hill Country. The newly developed duck habitat at Joshua Creek Ranch features ponds surrounded by light woods with multiple blinds where hunters will get a variety of shots and perspectives. Just 45 minutes northwest of downtown San Antonio, Joshua Creek

Ranch provides guests a world-class experience in the field plus gourmet dining and exceptional lodging with spectacular views. Recognized as one of only five Beretta Trident Lodges for Excellence in Upland Bird Hunting in the United States and the only one in Texas, an Orvis Endorsed Wingshooting Lodge and recipient of the 2013 Award of Excellence from Sporting Classics Magazine for Hunting Lodge of the Year, Joshua Creek Ranch truly represents the best of the best. For more information: Contact Joshua Creek Ranch in the Texas Hill Country by calling (830) 537-5090 or visit them online at www. joshuacreek.com.

1st Annual

IMPACT

Economic Development Forum December 4, 2014 • 11am –2pm Laredo Country Club • Laredo, TX Keynote Speaker:

International Trade Manufacturing & Logistics Petroleum Technology Allied Agencies Contracting Personnel Thriving Oilfield Industry

Mr. Christopher C. Herring

Chairman of the Texas Association of African American Chambers of Commerce presented awards

Economic & Industrial Development Award Rolando Ortiz, Killam Development, LTD

Workforce Development Award Rogelio Treviño, Workforce Solutions for South Texas

International Trade Award

Commerce & Business Award

Mario Palos Garza, Grupo Palos Garza

Ignacio Urrabazo Jr., Commerce Bank

laredo.edu/edc

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n 1990 Joshua Creek Ranch began its journey to becoming Texas’ premier hunting and shooting resort destination. Long-term commitment to excellence has earned the Ranch recognition for world-class hunting and shooting opportunities, gourmet dining, superb lodging and warm Texas hospitality. Located in Boerne, TX, just 45 minutes NW of San Antonio, Joshua Creek Ranch offers guests a first-class setting to enjoy the ultimate outdoor experience. Quail and Upland Bird Hunting • Decoyed Mallard Duck Hunting • Driven Pheasant Shoots • Fly-Fishing for Rainbow Trout • Sporting Clays • Whitetail & Axis Deer Hunting • Turkey Hunting Thoughout the mild-weather October-March hunting season, guests enjoy all there is to do at Joshua Creek Ranch… where a customized itinerary is created to meet the preferences of each client. Joshua Creek Ranch is celebrating 25 years as a superior hunting and shooting resort destination. Recognized as a Beretta Trident Lodge for Excellence in Upland Bird Hunting, an Orvis Endorsed Wingshooting Lodge and recipient of the 2013 Award of Excellence from Sporting Classics Magazine for Hunting Lodge of the Year, Joshua Creek Ranch truly represents the BEST of the best.

www.joshuacreek.com a (830) 537-5090 a info@joshuacreek.com

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SPECIALIZED HAND TREATMENT WITH A GENTLE TOUCH Baptist Emergency Hand Center

SPECIAL TO SHALE MAGAZINE

An injury to your hand can have a profound impact on your quality of your life. An injured hand makes the simplest tasks like getting dressed, cooking or using your cell phone difficult to do without additional help. At its worst, a diseased or nonfunctioning hand can prevent you from working, which can lead to financial hardship. This is why it’s important to seek early specialized treatment that will lessen the longterm effects of a hand injury.

The center’s specialists and therapists work with patients to help them understand their injury and its implications, giving patients insight into the treatments that are available to them. For some patients, a non-surgical rehabilitative treatment is the key to addressing their hand injury. This is why the Baptist Emergency Hand Center offers access to Baptist Health System’s HealthLink outpatient rehab centers. There, therapists help patients carry out a customized, results-driven plan of care. If a surgical option is needed, the center’s dedicated specialists and therapists work closely as a team to help heal patients’ hands to fully restore their function and help return the patients’ lives back to normal as quickly as possible.

THE BAPTIST EMERGENCY HAND CENTER OFFERS A RANGE OF TREATMENT THERAPIES TAILORED TO MEET THE UNIQUE NEEDS OF EACH PATIENT PHOTOS PROVIDED BY BAPTIST EMERGENCY HAND CENTER

One Call Focused Care The Baptist Emergency Hand Center offers a wide range of treatments for hand conditions such as carpal tunnel syndrome and arthritis to more critical conditions caused by serious accidents. With just one phone call, you’re connected to the center and linked to the most-extensive expert resources offered by Baptist Health System, including: Same and next-day appointments, so you can start receiving treatment as quickly as possible. Board-certified and fellowship-trained orthopedic and hand surgeons with dedicated hand-focused training. Minimally-invasive hand surgery for less pain and faster recovery. Outpatient rehab facilities (HealthLink) conveniently located throughout San Antonio.

A Dedicated Team of Specialists Each person who seeks treatment at the Baptist Emergency Hand Center receives highly individualized care.

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Range of Therapies The Baptist Emergency Hand Center offers a range of treatment therapies tailored to meet the unique needs of each patient. For example, in the case of carpal tunnel syndrome – which can be associated with assembly-line work, wrist sprains or fractures, arthritis or thyroid problems – initial treatment typically involves resting the wrist in a splint. Once symptoms have lessened, special exercises may be advised. Medication may also be prescribed. If symptoms persist, surgery may be the best option. Seek a professional opinion if you are experiencing pain in the hand due to an injury. Don’t let an injury slow you down or cause any unneeded pain in your daily life. Seek help early on to get treatment. In some cases, very noninvasive remedies can make a large difference in reducing pain and increasing functionality of injured hands.

For more information: Connect today to the Baptist Emergency Hand Center and meet your specialized orthopedic surgical team by visiting baptisthealthsystem. com/handcenter or calling 210-297-HAND (4263).

NOV/DEC 2014

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A HELPING HAND GOES A LONG WAY Big Brothers Big Sisters

SPECIAL TO SHALE MAGAZINE

PHOTOS PROVIDED BY BIG BROTHERS BIG SISTERS

For over a century, Big Brothers Big Sisters (BBBS) has been providing support and guidance for at-risk youth in order for them to grow up successfully. Having a Big Brother or Big Sister changes kids’ perspectives and gives them the opportunity to reach their potential. Former Little Brother Russell met his Big Brother Mario in July of 1999. He joined the program when he was nine years old because even though he had older brothers, he lacked a positive male role model in his life. During their mentoring relationship, Russell

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watched many hardships befall his siblings. His oldest brother was incarcerated, his second oldest brother was murdered in 2002, and the youngest of his older brothers ran away and dropped out of school. Through it all, Russell had his Big Brother to help him make good decisions as well as stay focused on school. Russell became the first in his family to graduate from IN 2013, NEARLY high school. He 3,000 CHILDREN attends UTSA WERE MENTORED BY and is considering pursuing THE SAME NUMBER a law degree. While he has exOF VOLUNTEERS perienced many challenges throughout the course of their relationship, Russell has been able to look to his Big Brother for direction, support and advice. “I’m so glad Mario is my Big Brother,” says Russell. “I helped him when he temporarily lost his health, and he helped me when I lost my brother. I hope I’ll always have him to talk to.” Like Russell, the youth in this program are some of the most vulnerable in the community. They deal with a combination of family difficulties, lack of adult attention, the peer pressures of adolescence, and struggle with grades, attendance and behaviors that have long-term implications for their health and success. Academic failure and dropout rates across South Texas, which are as high as 36 percent in the Hispanic population, hinder students’ access to higher education and their future possibilities. Socioeconomic factors such as high poverty rates and single or incarcerated parents coupled with negative peer pressures create conditions that are ripe for attrition, delinquency and poor decisions. The clients enrolled in the program are at greater risk for perpetuating community cycles of negative behaviors. 74 percent live in single parent homes, with grandparents or in foster care. 26 percent have a parent that is incarcerated, on probation or parole, putting them at a 70 percent higher risk of being imprisoned during their own lifetime.

30 percent have household incomes below $10,000, and an additional 22 percent come from households with incomes between $10,000 and $20,000. 43 percent are between the ages of five and 12, 39 percent are 13 to 15, and 18 percent are 16 years or older. 61 percent are Hispanic, 15 percent are African-American, and nine percent are white. 54 percent are female and 46 percent are male. In 2013, nearly 3,000 children were mentored by the same number of volunteers. As encouraging as those numbers may seem, there are still 1,200 kids and nearly 400 volunteers waiting for a match. Big Brothers Big Sisters exercises an evidence-based preventative approach that addresses the root causes of the harmful cycles that at-risk youth often fall victim to, including academic failure and juvenile delinquency. The purpose of BBBS mentoring programs is to facilitate long-term, sustainable change in the lives of youth through positive, supportive relationships with caring adults. For mentored youth, the consistent support and presence of their mentor facilitates the development of the life skills and critical assets identified by the Search Institute as the building blocks of childhood. These assets not only contribute

THE PURPOSE OF BBBS MENTORING PROGRAMS IS TO FACILITATE LONGTERM, SUSTAINABLE CHANGE IN THE LIVES OF YOUTH THROUGH POSITIVE, SUPPORTIVE RELATIONSHIPS WITH CARING ADULTS

to their long-term ability to make the right choices and succeed, but over the course of the year they will improve their academic performance, behaviors and attitudes towards school. Through consistent interaction with a positive adult role model, they build their self-esteem, avoid engaging in delinquent activities and benefit from new experiences and hobbies. There are three one-to-one mentoring programs: the Community, School and Workplace mentoring programs. In each program a school-aged student is paired with a vol-

unteer. The “match” meets one to four times per month anywhere from one to five hours per meeting. The “Bigs” and their “Littles” engage in activities that enhance relationship skills, support positive decision-making and nurture other developmental assets needed to become productive adults. In the community-based program, matches meet outside of school hours and have the flexibility to find the activities that fit their individual hobbies and interests. Matches may attend community or sporting events, go to the park, complete homework or simply cook dinner together and talk. All volunteers undergo an extensive screening process. Throughout the mentoring relationship, BBBS provides professional case management support to the youth, families and volunteers to ensure child safety and positive experiences. The focus on relationship development as a stepping stone to success has led to well-researched, positive outcomes for adolescents who face seemingly insurmountable obstacles – children with an incarcerated parent or youth living below the poverty level. In a 20-year University of Texas study released in 2005, 87 percent of children studied who were matched in the BBBS program graduated from high school or got their GED.

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A study conducted by Harris Interactive and released in June 2009 finds that 50 percent of adults mentored as children in the BBBS program reported that their mentor kept them from dropping out. 65 percent agree that their big helped them reach a higher level of education than they thought possible. In the well-known Public/Private Ventures mentoring study, children matched in the BBBS program were found to be 46 percent less likely to start using drugs, 27 percent less likely to start drinking, 52 percent less likely to skip a day of school and 33 percent less likely to hit someone. In another Public/Private Ventures national study released in 2007, children who were matched with a Big Brother or Big Sister showed improvement in eight academic areas. “One thing [Big Brother] Jim has done for me is help me feel good about myself and it’s nice to have someone who’s just mine, not in the family. Jim is like my safe base no matter what is going on in my life.” – Little Brother Justin

For more information: To learn more visit bbbs.org. NOV/DEC 2014

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NOV/DEC 2014

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SHALE OIL & GAS BUSINESS MAGAZINE

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With the Port of Corpus Christi as a backdrop, The Ortiz

Center provided an excellent venue for the SHALE Cover Party on Oct. 9 honoring John LaRue. Congressman Blake Farenthold, Mayor Nelda Martinez of Corpus Christi, along with Port Chair Judy Hawley, Port Commissioner Barbara Canales, and Omar Garcia, President and CEO of STEER, were a few of the dignitaries on hand to recognize John LaRue’s dedication to the Port of Corpus Christi. The red carpet evening was a wonderful networking opportunity for guests who attended the bi-monthly event. PHOTOS BY FONZIE MUNOZ

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ConocoPhillips held its first Drilling and Completions Scholarship Golf Tournament at the River Bend Golf Club in Floresville on

Oct. 3. One hundred forty-four golfers participated in the tournament, which raised nearly $70,000 for scholarships for select Kenedy ISD graduating seniors. More than 42 companies sponsored the event by donating breakfast, lunch, drinks, green fees, and great raffle prizes, including Dorsal Services, United Energy Rentals, and XPAT Xtreme Pump and Testing. “This tournament was a huge success and will be the first of many more,” said Seth Crissman, Gulf Coast Business Unit Drilling and Completions Manager. ConocoPhillips feels strongly about building a legacy in the Eagle Ford. One way they are doing that is by giving back to the communities in which they operate. Aside from the tournament, ConocoPhillips supports many non-profit organizations in and around the area. The primary philanthropic focus areas are education, health and safety, natural disaster relief and other community investments. ConocoPhillips was awarded 2012 Business of the Year by the Kenedy Chamber of Commerce for its numerous philanthropic efforts. For more information on upcoming ConocoPhillips events go to www.conocophillips.com. PHOTOS BY CHRISTI GUILLORY

SHALE OIL & GAS BUSINESS MAGAZINE

NOV/DEC 2014

Halliburton hosts charity events company-wide frequently throughout the year. Their energy office in Elmendorf, Texas hosted their

2nd Annual Chili Cook-off on Oct. 17 to raise funds for various local charities. Thirty-six teams submitted their best chili recipes and also competed for awards in Best Tent, Best Presentation and Best Taste, hoping to take home the prize and bragging rights. The fun continued on Saturday, Oct. 18, at the Republic of Texas Golf Course in San Antonio, where 38 teams competed in a charity golf tournament. All the funds raised in both events will be donated to nearly 10 different charities within the community. At Halliburton, devoting time and resources to charitable causes where their employees live and work is central to their corporate culture. From revitalizing neighborhoods, local youth events and raising awareness for various health causes, just to name a few, Halliburton strives to make a difference in the approximately 80 countries around the world in which they operate. For more information, refer to their community page at www.Halliburton.com PHOTOS BY CHRISTI GUILLORY

NOV/DEC 2014

SHALE OIL & GAS BUSINESS MAGAZINE

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economic

impact

tour

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On Sept. 23, The Economic Impact of the Eagle Ford Shale Tour opened in San Antonio, Texas. The Sonterra Country

Club was a fitting venue for the first stop on the tour, providing an excellent background for the night’s festivities. Texas Railroad Commissioner David Porter was one of the many VIPs on hand for the event, along with radio celebrities Randy Carroll of KJ97 and JC Carpenter of iHeartMedia, to name a few. With over 200 attendees, our first night exceeded expectations to successfully launch the tour. PHOTOS BY JULIAN LEDEZMA

NOV/DEC 2014

SHALE OIL & GAS BUSINESS MAGAZINE

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TABITHA KING 210.414.4255 98

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 SCENE 

Texas A&M International University in Laredo, Texas hosted the second stop on The Economic Impact of the Eagle Ford Shale Tour on Sept. 25. As

our first event ever held in the city of Laredo, the beautiful city and university welcomed SHALE and our guests with open arms. Local business and community leaders were on hand to hear Dr. Tom Tunstall of UTSA, Omar Garcia of STEER, and Texas Railroad Commissioner David Porter speak. SHALE looks forward to many more events in Laredo in the near future. PHOTOS BY BRIAN AHO

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A sponsor of the

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AEP Texas is as: Your Business Partner in Shale Oil & Gasto and connected serves more than oil/gas reserves are located in and around geographic areas that align with the one million electric ric delivery service territory. Let the AEP Texas service team assist youconsumers with timely in the arding the location, capacity and availability of AEP Texas facilities. deregulated Texas marketplace. It’s head-

rical service or gain access to a certificated planning map, please complete thein Corpus Christi, with quartered

regulatory and external affairs offices in Austin. Major cities served include Corpus Christi, Abilene, McAllen, Harlingen, San Angelo, Vernon, Victoria and Laredo. www.AEPTexas.com/shaleoilgas As an energy delivery (wires) company, AEP Texas delivers elec@AEPTexasEconDev tricity safely and reliably to homes, businesses and industry across its nearly 100,000 square mile service territory in south and west Texas. AEP Texas also maintains and repairs its lines, reads electric meters, and handles connections and disconnections as directed by the Retail Electric Providers (REPs) selling electricity in the area. More than 2,000 AEP Texas employees are connected to their local Texas communities and actively involved in many civic organizations helping to make their communities better places to live, work and play. In addition, AEP Texas contributes more than $1 million annually to teach electrical safety, improve education, enhance the environment, and support community and economic vitality in the areas served.

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John Longoria 361-881-5867 jflongoria@aep.com

SHALE OIL & GAS BUSINESS MAGAZINE

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AEP Texas is part of the American Electric Power system, one of the largest electric utilities in the United States, delivering electricity to more than five million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.

For more information: See the AEP corporate website, www.AEP.com.

SHALE landed in Corpus Christi, Texas for the third stop on The Economic Impact of the Eagle Ford Shale Tour on Sept. 26 at the Ortiz Center. Mayor Nelda

Martinez was on hand to welcome SHALE to her beloved city. Guests had a wonderful question and answer session with speakers including Dr. Tom Tunstall of UTSA, Omar Garcia of STEER and Texas Railroad Commissioner David Porter. Business owners in attendance were able to have open discussions about the future of the Eagle Ford Shale, hear ideas for their companies and engage guest speakers with industry questions. PHOTOS BY ALBERTO DELCAMPO AND BRIAN AHO

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 SCENE 

The final stop on The Economic Impact of the Eagle Ford Shale Tour was in Houston, Texas on Sept. 30. The Houston Club gave

guests a gorgeous view of the large Texas city from 48 floors above the ground. Guests came from every part of the state to be part of the final day of the tour and listened intently as speakers gave informational presentations. We are very grateful to have had a successful first tour end in such a fitting place. We would like to thank all of our sponsors and attendees for making this event truly wonderful and we look forward to many years to come. PHOTOS BY BRIAN AHO

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SHALE Oil & Gas business magazine is an industry publication that showcases the significance of the South Texas petroleum and energy markets.

SHALE’s mission is to promote economic growth and business opportunity that connect regional businesses with oil and gas companies. It supports market growth through promoting industry education and policy, and it’s content includes particular insight into the Eagle Ford Shale development and the businesses involved. Shale’s distribution includes industry leaders and businesses, services workers and entrepreneurs

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