SHALE JAN/FEB 2016
OIL & GAS BUSINESS MAGAZINE
MISDIRECTED ENERGY ON CLIMATE CHANGE YOUNG WOMEN ENERGIZED TARGETING HIGH SCHOOL STUDENTS
2016
WOMEN’S ISSUE
SHATTERING THE OIL AND GLASS CEILING
SHARON SPURLIN
WOMEN IN ENERGY & BUSINESS AN ENTREPRENEUR IN THE BUSINESS OF GIVING STATE OF ENERGY SAN ANTONIO FEATURES GREAT SPEAKERS
SOUTH AFRICAN RESTAURANT IN HOUSTON WITH PROGRESSIVE CUISINE
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Specializing in oilfield supplies and service throughout the Eagle Ford Shale Oilfield Experts specializes in machine parts and machine work (wireline, coiled tubing, fracturing and gun loading departments). Providing a full line of automotive and truck parts and accessories (OEM and after-market parts). We offer a full line of gauges, butterfly valves, complete line of tools (Proto Tools), filters, chemicals, gear oil and synthetic gear oil, silicones, hydraulic hoses and hydraulic fittings, starters, alternators (12 and 24 volt), serpentine and V belts, hydraulic motors, pumps. We are open and provide hot shot services 7 days a week and 24 hours a day.
Free delivery service with a quick turn around time.
Oilfield Experts offers great service with affordable prices for all your oilfield, automotive, and mechanical needs.
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 2016 13611 U.S. Hwy 181 S., San Antonio, Texas 78223 /JAN/FEB (210) 471-1923
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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
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SHALE OIL & GAS BUSINESS MAGAZINE ď “ JAN/FEB 2016
John Longoria 361-881-5867 jflongoria@aep.com
www.AEPTexas.com/shaleoilgas @AEPTexasEconDev
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SHALE OIL & GAS BUSINESS MAGAZINE JAN/FEB 2016
JANUARY/FEBRUARY 2016
CONTENTS FEATURE
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Women in Business and Industry
COVER STORY
SHARON SPURLIN
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This female financial executive has climbed the corporate ladder and achieved significant success on many levels in a man’s world
INDUSTRY
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Building for the Future
POLICY
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COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: MICHAEL GIORDANO
INDUSTRY
30 Misdirected Energy 32 In Honor of the Hardworking Women at the Texas Railroad Commission 34 Oil and Gas Industry Comes Full Circle 36 Women Taking the Wheel at STEER 38 Taking Risks and Inspiring the Next Generation
POLICY
42 A Look Ahead for 2016
BUSINESS
48 The Business of Giving 50 Creating a Culture of Performance 52 Managing Your Savings
LIFESTYLE
56 The Junior League of Houston, Inc.
SCENE
64 State of Energy San Antonio 66 2015 Eagle Ford Excellence Awards 68 Houston Energy Breakfast
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Legislation Under Pressure
BUSINESS
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U.S. Suppliers Find a New Emerging Market Across the Border
LIFESTYLE
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Why a South African Restaurant is No. 1 in Houston
COMMUNITY
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Young Women Energized
SCENE
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Cover Party JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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ADVISORY BOARD 1
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4. Paula Waggoner-Aguilar
Paula Waggoner-Aguilar is a Chief Financial Officer and the Owner and President of The Energy CFO, LLC, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. She started her career in the 1990s working her way up the accounting ranks in Latin America, beginning in oilfield services and highly engineered equipment. Over the past 20 years, Waggoner-Aguilar has built a successful track record working in senior leadership roles alongside hard-driving independents, notable industry executives and engineers. In 2014, the San Antonio Business Journal awarded Waggoner-Aguilar BEST CFO for Private Medium Companies. Likewise, she has also been recognized as a trailblazer for her various efforts in recruiting and helping promote women in the industry. Originally from Dallas, she is a graduate of The University of North Texas (MS, taxation) and The University of Texas at Arlington (BBA, accounting), a Texas CPA and a member of the Association of International Petroleum Negotiators.
5. Jeffrey a. Webb 1. Omar Garcia Senior Advisor
As President and CEO of the South Texas Energy & Economic Roundtable (STEER), Omar Garcia is an expert on business opportunities associated with the Eagle Ford Shale. He works with the oil and 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 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.
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2. James M. Summers
James M. Summers joined the San Antonio office of Norton Rose Fulbright in 1976 and became a Partner in 1985. He received his undergraduate degree from Southern Methodist University and his law degree from the University of Texas School of Law, 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, commercial mortgage-backed securities 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.
SHALE OIL & GAS BUSINESS MAGAZINE JAN/FEB 2016
3. Bradley H. Lenz
Bradley H. Lenz is the Director of Economic and Business Development at AEP Texas. As Director, he oversees the company’s economic and business development operations, including oil and gas operations. This activity extends throughout the AEP Texas service territory. Previously, he was the Operations Support Manager of the Electric Distribution System of AEP Texas. His responsibilities included resource planning and managing the electric distribution budget, back-office functions and annual storm restoration drill to prepare for hurricanes and other major natural disasters. Prior to operations support, Lenz held several management positions with AEP Texas and the former West Texas Utilities Company. Lenz began his career in 1991 with West Texas Utilities in Abilene as an Engineer in marketing, focusing on commercial customers. Prior to that, Lenz was a cooperative student with TXU Electric. Lenz earned a bachelor of science degree in electrical engineering from Texas A&M University in College Station and has completed the Ohio State University Leadership Development program.
Jeffrey A. Webb is a Senior Associate in the San Antonio office of Norton Rose Fulbright, a global legal practice providing the world’s preeminent 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 healthcare.
6. 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 SME and the Component 1 Team Leader for the Azerbaijan Competitiveness and Trade project. Tunstall 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 titled “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 2005, he completed a long-term assignment in Afghanistan, where he was Deputy Chief of Party for a central bank modernization project. In 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas.
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PUBLISHER’S NOTE OIL & GAS BUSINESS MAGAZINE VOLUME 3 ISSUE 1 • JANUARY/FEBRUARY 2016
KYM BOLADO
CEO / PUBLISHER
A NEW YEAR AND A NEW LOOK FOR SHALE! As the new year begins I find myself thinking about what’s to come in 2016, and I must say I’m very excited! Along with the growth and success of our publication and the radio show, our annual events have us at SHALE excited to get this year started! We kick off the new year with our annual issue dedicated to women. I personally have a lot of pride in our women’s issues because it’s a topic I am personally affected by and supportive of. The glass ceiling women have encountered for decades is slowly diminishing, but not quick enough, in my humble opinion. I want to shed light on the opportunities women have in the oil and gas industry and the important role they play in many energy and service companies. The women profiled in this issue are an inspiration to myself and the team at SHALE. I hope that with the stories told within these pages, young women hoping to find an exciting and rewarding career are inspired to pursue the career that will make their dreams a reality. Looking forward in 2016, we have plans to bring our readers the latest news and stories in energy and in business. Stay connected with us by signing up for our newsletters and following our Twitter and Facebook accounts to get updates on our new issues and other news. As always, thank you for your support and interest in SHALE!
KYM BOLADO
CEO/Publisher of SHALE Oil & Gas Business Magazine kym@shalemag.com
CHIEF FINANCIAL OFFICER Deana Acosta
EDITOR IN CHIEF Lauren Guerra
ART DIRECTOR Elisa Giordano
ASSOCIATE EDITOR Katie Carmichael
COPY EDITORS
Katie Buniak, Maegan Sheppard
VICE PRESIDENT OF SALES Liz Massey Kimmel
ACCOUNT MANAGERS
Susan Brown, Kimberly Smith
SENIOR BUSINESS ANALYST Fernando Guerra
CONTRIBUTING WRITERS
Scott Bayley, David Blackmon, Katie Carmichael, Alex Charfen, Rogelio Cuevas, Omar Garcia, Lauren Guerra, Bill Keffer, Gloria Leal, David Porter, Thomas Tunstall, Paula Waggoner-Aguilar
STAFF PHOTOGRAPHER Malcolm Perez
CONTRIBUTING PHOTOGRAPHER Michael Giordano
www.shalemag.com
SHALE OIL & GAS BUSINESS MAGAZINE MISSION STATEMENT:
SHALE Oil & Gas Business Magazine is a statewide 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.
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 Copyright © 2015 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.
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SHALE OIL & GAS BUSINESS MAGAZINE JAN/FEB 2016
O I L & G A S P L AY E R S
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BUSINESS
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TECHNOLOGY
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POLICY
AUSTIN CORPUS CHRISTI HOUSTON MIDLAND ODESSA SAN ANTONIO
RADIO SHOW
KTSA 550 AM/107.1 FM Saturdays 10 p.m. (San Antonio, Corpus Christi)
iHeartRadio KTRH 740 AM Sundays 8-9 p.m.
KWEL 1070 AM/ 107.1 FM Saturdays 1-2 p.m.
(In Houston)
(In Midland)
Now aired throughout the Eagle Ford and Permian Basin
Where industry comes to speak
Pantone - Red 032c
sponsored by:
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FEATURE
WOMEN IN BUSINESS Brenda Love LOVE ADVERTISING PRESIDENT
Love Advertising is an award-winning full-service advertising agency based in Houston. Love is one of the most wellrecognized and well-respected agencies in the business. At the helm is Brenda Love, who founded the agency 36 years ago with $500 and a vision. Love, who was recently inducted into the Southwest Advertising Hall of Fame, held a private Q & A with SHALE in her office in Houston.
What is your typical day at the office like?
There’s no such thing as a typical day in advertising. Nothing is routine — it’s a whole new world every day. After 36 years in the business, there is only one thing I know to expect — daily problems that need solutions.
What do you like most about your work?
Challenge and variety — advertising is different every day and it’s fun. There is a high level of creativity — it’s never the same and I never get bored. We have a variety of clients and I like variety.
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How did you get started in this industry?
I studied advertising in school — it was something I thought would be fun. I was passionate about it from the beginning and still love what I do.
What are some of your career achievements you are most proud of? I was inducted into the Southwest Advertising Hall of Fame this year. I’m very proud of our 27-year-long relationship with Jim “Mattress Mack” and Linda McIngvale of Gallery Furniture. Awards are wonderful recognition, but the best reward is lasting and successful client relationships.
What advice would you give to other women just starting in your industry?
Love what you do. If you don’t love what you do, do something else. You need to be passionate about it. Don’t chase money. If you love what you do and are good at it, the money will come.
those new homeowners throughout the life of their warranty with our company. I’m very much a big-picture person and so I’m at my best when I have a hand in it all.
How did you get started in your industry?
Lauren M. Postler
MAZZARINO CONSTRUCTION & DEVELOPMENT HEAD OF OPERATIONS
What is your typical day at the office like?
As a member of the executive team for a small business my day is never typical, as we wear many hats and fulfill many different roles. I serve as the Head of Operations for Mazzarino Construction & Development, a boutique luxury home builder focusing on single-family residential projects in and around the highly sought-after inner loop neighborhoods in Houston. From working with interior designers, realtors and home buyers (both potential and existing) to overseeing payroll for over 150 individual subcontractors, each day can be very different — and definitely never boring!
What do you like most about your position?
I love the high-energy environment we sustain and encourage at Mazzarino Construction. My role affords me the opportunity to be creative in problem solving and participate in every aspect of the home-building process — from selecting premier lots in Houston’s most coveted neighborhoods to collaborating with designers and architects to create phenomenal homes and select high-end, luxury finishes, to marketing and selling to discerning buyers and on to assisting
I have almost 10 years of executive management experience working with nonprofits under my belt, so the homebuilding industry is still relatively new — and exciting! The President of Mazzarino Construction & Development, Richard Mazzarino, is a good friend; and when I made the decision to leave the nonprofit world, he asked me to come on board on a contract basis while I was considering MBA programs to pursue. Fast-forward six months and he offered me a full-time job — and six months after that, I stepped into my role as Head of Operations! It’s been a whirlwind but I’ve found that much of my experience managing nonprofits, specifically in overseeing the financial health of the organizations and the day-today operations, is universal to any industry.
What are some of your career achievements you are most proud of? I’m incredibly proud to serve as an integral member of the executive team to what was once a small start-up business. In the short time I’ve been with the company, we’ve grown from six full-time staff members to 10 employees, and we’re projecting over $30 million in sales next year. To be a part of and help propel such dynamic growth, especially in an economic downturn, is definitely a source of pride. I also serve on the board of directors for Houston PetSet and am so thrilled we will be able to contribute over $100,000 to worthy animal welfare and rescue groups in our community this year.
What advice would you give to other women just starting out in your industry?
Think outside the gender-role box! It seemed so natural, as a woman, to pursue a career in the nonprofit industry, specifically for organizations benefiting children, but I am the happiest I have ever been working as a home builder. Find out what drives you in terms of the role you want to play and the kind of work you enjoy doing, as opposed to focusing on the end product of said work. And think long and hard about the kind of company you want to work for — the people you work with will have more to do with your job satisfaction than any other factor. I’m lucky to have found the right fit for me, in an industry I never would have otherwise considered.
Shana L. Robinson BAPTIST HEALTH SYSTEM CHIEF OF SALES AND GROWTH
What is your typical day at the office like?
Healthcare is never typical. My day often starts at 7 a.m. and frequently ends in the evening, where a morning and an afternoon look very different. As the Chief of Sales and Growth, a workday can consist of many physician meetings, operational decisions, marketing, implementing new programs and presenting our wellness program to CEOs. A typical day is never predictable but always productive! Just like I like it.
What do you like most about your position?
My position is so exciting; it allows me to be a change agent for the oil and gas industry where traditionally there has been very little focus and attention on healthcare as a partner. With the understanding that healthcare is one of the most expensive line items in the business, we are able to show how to reduce the costs, reduce the claims, hold premiums flat and save lives. My position allows me to provide excellent healthcare options to corporate America, saving money and remaining profitable at the same time.
How did you get started in your industry?
Anyone in the sales industry knows if you can sell a vision and not just a commodity you understand what you are doing. I started by creating a vision for funding more research to cure cancer. I transitioned into pharmaceutical sales and moved into hospital administration, where I was privileged to work with the physicians who perform amazing acts of medicine in our system every day, keeping our community healthy.
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What are some of your career achievements you are most proud of?
Developing the business-to-business (B2B) program for the Baptist Health System is one of my career-changing achievements. I am able to pursue the business objectives for Baptist while focusing on the business objectives for my clients. We have designed a program that allows us to partner with the oil and gas industry and become part of their profit instead of an expense. The Baptist wellness program continues to have amazing success by transforming lives with true measurable results. We are changing the face of healthcare and doing so as a team with our customers in mind.
What advice would you give to other women just starting out in your industry?
My advice is simple, stay true to your vision. We are so often pulled in many directions as an employee, mother, wife and all the other hats we wear that maintaining the vision is not always simple, but the reality is that anything is possible. The career level I have aspired to in a traditionally male-dominated, billion-dollar industry says I am determined. With my hands in multiple initiatives, I focus on the solution and that has served me well. I am here as a resource and colleague to those who are seeking the tools to achieve the highest level of healthcare for their workforce while reducing overhead and most importantly staying committed to a safe workplace for the oil and gas industry.
WOMEN IN INDUSTRY
Cindy Patman
HALLIBURTON SENIOR DIRECTOR OF CORPORATE AFFAIRS AND DIVERSITY INITIATIVES
What is your typical day at the office like?
My day can change on a dime. Since my job(s) are global and encompass not only diversity and inclusion initiatives but also internal communications and community relations, as well as some leadership development duties, I could be anywhere at any time speaking to charities or diverse groups, or organizing communications to our employees across the globe.
What do you like most about your position?
The variety. There’s never a dull moment and I learn something every day — and on top of that, I love what my team does for the company and the communities where we work and live.
How did you get started in your industry?
My father was in the industry, so I grew up with it. However, I personally didn’t get into the industry until 1989 when someone else saw something in me that I didn’t see and encouraged me to interview with the company. I haven’t looked back since.
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What are some of your career achievements you are most proud of?
I am proud to have been the first female executive to lead human resources in our Eastern Hemisphere operations and to be able to make a difference in those areas where we worked. I am proud to represent women in this industry and to be able to relay stories or life events and experiences that I have learned from in hopes that it helps them. I want to encourage young women to be the best they can be. And I feel so blessed to be part of a company that cares about people and the communities where we work and live and to be able to affect people’s lives in a positive way.
What advice would you give to other women just starting out in your industry?
I would tell women to do what they love and be passionate about what they do ... to understand that the path may not always be straightforward to get to where they want to be in their careers, but those twists and turns are where you learn the most. Don’t ever apologize for being a woman or let anyone intimidate you for being a woman. Realize that you can do anything you desire to do if you want it bad enough. My three P’s are patience, perseverance and passion — those together will help you be the best you can be for yourself, your family and in your career.
Katherine Stokes WEST TEXAS ENERGY CONSORTIUM EXECUTIVE DIRECTOR
What is your typical day at the office like?
It is never the same, that’s for sure. Currently, I’m working on several large projects throughout the region. The West Texas Energy Consortium awards scholarships to high school and college students in the region who are working on dual credit, certificate or associate degrees in career technology and STEM-related careers. We were blessed to be able to provide these awards for a second year in a row and are currently working on contracts with schools and identifying students for those awards. I also sit on the board of the local Association of Desk and Derrick Club here in Abilene, Texas, and we are making plans for education programs, field trips and fundraisers for the coming year. Those fundraisers support student scholarships as well. I’m also helping in the facilitation of a new transportation safety project, the Permian Road Safety Coalition, focusing on road safety and transportation best practices. The first meeting was hosted in Midland, Texas, by Shell in July 2015. The coalition has continued its efforts with meetings this past September, and we have upcoming forums for 2016. There is a lot of great work taking place with members like Shell, ConocoPhillips, Concho Resources, Chevron, Anadarko, Apache, Schlumberger and a dozen more actively engaged in an effort to lead a collaborative effort with oil and gas producers, service and trucking companies and, nongovernmental and governmental organizations to improve road safety in the Permian Basin.
We are continuing with health and public safety training throughout the region. Last year, I organized training throughout the region for our first responders — fire, emergency medical services (EMS), local law enforcement and safety supervisors — that focused on well-site incidents (blowouts and rig fires). We had such a great response from those that attended; I am organizing trainings throughout the region that will focus on railway/hazard material incidents and pipeline incidents. I’m also assisting with a safety training project that is taking place up in southeast New Mexico that will focus on Eddy and Lea counties. While traveling, attending meetings and facilitating these projects, there is also the work on redesigning and testing the redesign of the Consortium’s current website along with building the framework and architecture of a virtual STEM Center of Excellence subsite. This will be a resource for schools, students, parents, business and industry, and the public. Along with that STEM Center of Excellence is the development of a mobile app for lifestyle, career and education options. Students and adults will utilize this app as a quick reality check and be redirected to the Center of Excellence for more in-depth career choices and educational opportunities. The culmination of all things STEM will be the first of its kind in this region, the West Texas STEM Educators Conference & Expo. The planning for this event that will take place August 2016 started back in October. It is a huge undertaking, and sometimes I feel like that guy at the fair who is spinning a dozen plates at once. It’s exhausting and completely rewarding at the same time. But I’m not finished with those “light duties.” Nope, we have more outreach and planning going on for an Energy Day Festival in the Permian Basin along with three different regional career fairs for middle school and high school students throughout the year. In between all these projects, I speak to civic groups, talk to students about
renewable and nonrenewable energy, and most recently talked to college students about hydraulic fracturing and environmental ethics. Needless to say, it is never the same thing every day and never ever boring.
What do you like most about your position?
All of the above. Everything we do is in support of or directed at improving a current situation, creating opportunities and building on successful endeavors. I’m not doing this by myself. This would be an insurmountable hill to climb alone. Having such great partners, leaders, an amazing board of directors and people throughout this region, the rest of the state and beyond that cheer me on, take the time to listen, reach out a helping a hand and say, “What can I do to help? What do you need?” makes this the most amazing job. When I have an individual from an E&P company that is working in Japan contact me and say they’ve been reading about what the Consortium is doing in West Texas and makes a couple introductions to folks that can help with an ongoing project, that is outstanding. I don’t always get to see the results of hours of travel, phone calls, meetings, computer work, etc. I was leaving the office one day recently, heading to another meeting to work on a project and was just physically tired. I got in the elevator and it was packed. I noticed a young lady staring at a piece of paper intently and asked her how her day was going. She looked up and smiled and said, “Much better now. I can go home and tell my kids I have a job and start tomorrow.” It’s a great Christmas blessing. It’s those little victories or feel-good moments that make it so worth some of those very long days.
How did you get started in your industry?
I was born into it. Originally born in the Dallas-Fort Worth Metroplex, my dad moved us to Colorado. He
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partnered with his oldest brother in a drilling company. Five brothers, all in drilling, started out in the Permian Basin. Two went to Colorado/ New Mexico, two went to Utah and one ended up in Arizona. All are in the drilling business. Their sons (my cousins) are all in drilling and their grandsons are all in drilling. The girls, we all learned the business from inside the office. If we weren’t filing bills, typing up well logs or answering the phones, we were painting fences, putting in irrigation systems and anything else my dad could think of to keep us out of my mom’s hair, especially in the summer. Some Sundays after church, we would sometimes go along on location visits to bid new jobs or check on current jobs.
Rosario A. Garza
CONOCOPHILLIPS DRILLING & COMPLETIONS ADMINISTRATIVE SUPPORT
What are some of your career achievements you are most proud of?
At age 23, I was promoted to a Division Director’s position for a healthcare corporation and was the youngest executive at that level. My next oldest peer was 43 years old, and all the rest of my peers were in their 50s and 60s. I laugh now because 50 and 60 doesn’t seem that old, but when you are 23 years old it seems so far away. Regardless of the industry, whether it was healthcare, emergency response, education, auditing, training or private business enterprises, my objective in any of those circumstances was to promote excellence, build a strong core and help those around me. Looking back, I feel like I have done that in every case.
What advice would you give to other women just starting out in your industry?
Regardless of which industry you choose a career in, learn about the company’s business culture. It’s best to do your homework beforehand. I have found nothing is worse than living your life by certain principles and values, only to take a job with a company that has you choosing your job over your principles. Once hired, find your way around the company to get the information you need, building an internal network to help you learn the ropes. If the opportunity presents itself in which you are being challenged to step outside your comfort zone, take it. Grab ahold with both hands! My best learning experiences and most successful projects have been when I stepped out on a limb. Know that there is a difference between “I can’t do that” and “I have never done that.” Can’t do it means you’ve tried repeatedly and haven’t had success. Keep trying. Never having done something is an opportunity to learn something new, do something outside your comfort zone and add something to your skills toolbox. Not every undertaking will end in success but if we all sat around afraid to fail, we would never behold the achievements in ourselves and others. Last but not least, don’t be impressed by money, degrees and titles. Do be impressed by generosity, integrity, humility and kindness.
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What is your typical day at the office like?
My typical day at the office consists of two main buckets: 1. Managing daily office operations for our drilling and completions team, which includes planning, scheduling and attending meetings. 2. Leading philanthropic and community efforts as the Philanthropic Committee Chair for the company’s Lower 48 business unit. This role involves reviewing corporate and local philanthropic budgets with philanthropic committee members as well as reviewing and processing philanthropic and event requests from local organizations and members of our community. During the week, I may meet with community leaders to plan and discuss upcoming events. These requests/ events can include working closely with parks and recreation on the renovation of Joe Gulley Park, organizing a community Thanksgiving luncheon for those less fortunate, volunteering with the Special Olympics, coordinating Thanksgiving bingo luncheons for the elderly and organizing Share Your Christmas events with South Texas Children’s Home Ministries, only to name a few.
What do you like most about your position?
What I like most about my position is the ability to work closely with leaders in our organization as well as with leaders in our community.
How did you get started in your industry?
I joined ConocoPhillips in 2002 as an Accounts Payable Clerk and currently serve
as Administrative Support for our drilling and completions team. Our company gives people an opportunity to move around during their careers and move into different roles and departments.
What are some of your career achievements you are most proud of?
I have had many achievements that I am proud of during my career with ConocoPhillips. Like everyone in this business, I take pride in what I do and strive to excel in my position. However, all that pales in comparison with receiving a genuine smile of joy and appreciation when working on a community service project. Whether it’s bringing holiday cheer to the children of the South Texas Children’s Home Ministries or awarding scholarships to deserving high school seniors in the community, the compensation of their smiles is greater than I can express. Being part of such a pronounced organization is a gift like no other. I enjoy getting up every morning, and I look forward to what my day will be like. ConocoPhillips is truly committed to providing our employees with the opportunity to make a difference in our community and continue the legacy of building strong relationships with those community members. All it takes is a willingness to get involved. I am so blessed to be part of such a great organization.
What advice would you give to other women just starting out in your industry?
My advice to other women starting out in this industry would be to not feel intimidated, give 110 percent in all you do every day, stay true to who you are, surround yourself with experienced and optimistic employees, treat others with dignity and respect, and get involved with your community.
PREMIER SOUTH TEXAS WHITETAIL HUNTS TROPHY & MGMT. WHITETAIL HUNTS Brandon Davis 210-260-5228 cincolomas@sbcglobal.net
w w w . e l i n d io o u tfitters .co m
Chemical & Petrochemical Downstream Oil & Gas Upstream MMR Constructors, Inc. (Corpus Christi, TX) 2033 FM 2725 • Ingleside, TX 78362 Phone: (361) 758-4019 • Fax: (361) 758-4020 Randy Pawelek Business Development (361) 877-3577
www.mmrgrp.com/contact-us JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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PHOTO BY MICHAEL GIORDANO
cover story
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SHATTERING THE OIL AND GLASS CEILING By: Katie Carmichael
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he oil and gas industry is known for employing a diverse workforce, with varying levels of education and experience, and from all different walks of life. One group that has been historically underrepresented, however, is women — albeit somewhat understandably so. Traditionally, work in the oil field was often viewed as dirty, physically demanding labor, naturally lending itself toward a more rough-and-tumble crowd. Yet as women began to enter the workforce in droves during the 20th century — rising from 30 percent of total U.S. employment in 1950 to just under 50 percent in 2000 — and as the needs of the industry have evolved, increasingly more women are choosing careers in the energy sector. Even with an increase of women working in the industry, they are still heavily outnumbered, with men accounting for roughly 80 percent of oil and gas employment. But there is some progress being made. Women filled 46 percent of new oil and gas job openings in the first three months of 2013 and 30 percent in the last quarter of 2012. There has also been positive movement in regard to females in leadership roles, especially among major corporations. For example, Shell has upped the percentage of women in senior executive positions to 32 percent as of 2012. According to ExxonMobil, approximately 17 percent of executives are women — a 55 percent increase over the past decade. BP also reported 17 percent of its group leaders were female in 2012, up from 9 percent in 2000. Despite this progression, there are still plenty of gaps to fill. Less than 15 percent of the boards of the top 200 global utilities include women, and only 5 percent do so in the U.S. According to a 2014 report completed by Pearson Partners International, only 1 percent of oil and gas companies were led by females. Hiring women doesn’t just check the gender equality box, it adds real tangible value to companies. The 20 most diverse utilities saw a return on equity of 8.5 percent, compared to 7 percent for the 20 least diverse utilities. In general, companies with more women on their boards had a 42 percent higher return on sales, 66 percent higher return on invested capital and 53 percent higher return on equity. Luckily, there is no shortage of women working diligently to climb their way up the corporate ladder, both internationally and here at home. In 2006, Mariana Gheorghe was named the first-ever female Chief Executive Officer of OMV Petrom, the Romanian oil and gas group. The largest oil producer in Africa, Brittania-U Nigeria Limited, is run by a number of female executives, with Catherine Uju Ifejika serving as the Chairman and CEO. Debra L. Reed, CEO and Chairman of Sempra Energy, is one of only 25 female CEOs of Fortune 500 companies. Most recently, Occidental Petroleum Corporation announced Vicki Hollub would be assuming the role of CEO, making her the first female chief executive of a leading U.S. oil company. And yet another powerful woman in the oil and gas industry filling an important leadership role: Sharon Spurlin, Vice President and Treasurer of Plains All American Pipeline LP (PAA), one of the largest publicly traded master limited partnerships (MLPs) providing processing, transportation, storage, terminalling and
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marketing services for crude oil and natural gas liquids (NGLs) in the United States and Canada. As Vice President and Treasurer of the Fortune 100 midstream company, she is responsible for coordinating all financial planning activities, customer credit functions, insurance risk management, foreign exchange and interest rate management activities, in addition to all banking transactions and lending arrangements. Throughout her impressive career, the CPA has made a name for herself as a hardworking, proactive and energetic leader who excels in building and maintaining strong relationships with senior management, co-workers, employees, bankers, rating agencies, board members and investors alike. A native Texan, Spurlin was raised on a ranch outside of Gonzales, where she was taught from an early age the importance of a strong work ethic. From her time on the farm, she also learned to enjoy and appreciate the outdoors and, more importantly, how to roll up
Even with an increase of women working in the industry, they are still heavily outnumbered, with men accounting for roughly 80 percent of oil and gas employment her sleeves and work alongside the best of them — regardless of gender — in order to get the job done, a lesson that has proved invaluable as a female executive in a predominately male industry. “Growing up in Texas, oil and gas is a part of our DNA, plus the ability to work with men on the farm ingrained confidence that I could,” Spurlin says. “I mean, if I [was] a girl working on the farm, I certainly can be a girl working in oil and gas.”
Meanwhile, Back at the Ranch
Spurlin was raised in nearby Moulton, a community of just over 1,000 residents, where her father, Gene Selzer, had a small ranching operation raising cattle and chickens. “My dad taught us to work hard, do your job right and don’t quit until you are finished,” Spurlin remembers. “But he always had such a kind spirit; he would stop whatever he was doing to help someone else, and my mom was the same way.” Her mother, Rose Selzer, worked as the Director of Nurses at the local nursing home, while also helping out on the ranch. “My mom is an amazing woman in that she balanced two full-time jobs — the nursing home and the farm — and raised a family at the same time,” she shares. “I could not have been more blessed with a better mom and mentor.” Her parents always encouraged her and her brother, Gene Jr., to believe that anything was possible as long as you’re willing to put in the work to achieve it. The only
PHOTO BY MICHAEL GIORDANO
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Spurlin led the controllership department at American Ref-Fuel, which eventually included 50 employees and nine direct reports, on $300 million and $350 million acquisitions soon after starting
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foundation it built in my character and what I have accomplished today.” Growing up in a small town, her career options seemed somewhat limited. Most professionals in the community were employed either in the healthcare sector, as doctors and nurses, or in education, as teachers and school faculty — both of which Spurlin considered at one point. While still in high school waiting tables, she was approached by the local dentist, Dr. Kroschel, and his wife, Sue, to come work as a dental assistant in their office. The young waitress jumped at the opportunity. “I thought one day maybe I’ll be a nurse, just like my mom,” she remembers. “But after working in the dentist’s office and seeing blood, I decided that was not for me.” She went back to the drawing board, returning to her original plan to become a teacher and basketball coach. Upon graduating from high school, she was awarded a basketball scholarship to Texas A&M University-Kingsville, formerly Texas A&I University. It was after working a basketball camp for the university prior to her freshman year and coaching a team of middle school girls that Spurlin realized a possible coaching or teaching career was not for her. “I lost every game during a two-week camp and I decided I was adverse to a career in teaching and coaching,” she laughs. “I excelled at math in school, so I signed up for accounting [in college] thinking accounting was math.” Although there was more to it than just math, it was in accounting and business that Spurlin flourished. One of her professors, Dr. Sunderman, saw her potential and helped the undergrad land a job during her senior
PHOTOS COURTESY OF PLAINS ALL AMERICAN
problem was, Spurlin wasn’t exactly sure what it was that she wanted to achieve. The rancher’s daughter was very active in high school. She played basketball, ran track, served as the President of the Beta Club, Treasurer of the senior class, a Student Council member and Editor of the yearbook. Spurlin also achieved district honors in University Interscholastic League (UIL) prose reading, number sense and one-act play, and was voted most athletic with her brother her senior year, in addition to waiting tables at a local restaurant and working at the dental office of Dr. Forrest Kroschel. “I wanted to be involved in everything; I enjoyed leading, working with people and at the same time trying to figure out what [it was that] I wanted to do,” Spurlin recalls. She also admits that staying busy was a great way to avoid chores on the farm, a potential career that she was able to eliminate pretty early on. “I realized that farm work was not something I wanted to do for the rest of my life,” she confesses. “But in hindsight I appreciate the
year at Hahn & Oldham, an accounting firm based in Kingsville, Texas, which happened to be owned by two women, Linda Hahn and Mary Ann Oldham. It was a match made in heaven, as the female-run firm was in charge of accounting and financial work for King Ranch, one of the largest ranches in the world located in South Texas, and the families who lived there. The budding accountant was primarily responsible for entering payables for the families’ personal expenses and printing the checks for mailing. “I had a great time recording the clothes, purses, home furnishings and cosmetics purchases — I was not accustomed to purchases of that magnitude!” While in college, Spurlin not only discovered her love of finance, she also found the love of her life, her husband, Steve, who played basketball at the university as well. After graduating magna cum laude with a business degree focused in accounting, the small-town girl accepted a position with Arthur Andersen LLC, a major public accounting firm, and moved to the big city still a little unclear on what exactly her career path would look like. “I was not sure what industry I wanted to be in or what type of accounting career I wanted to pursue, so I took a job with the biggest and the best public accounting firm in Houston.”
Climbing the Corporate Ladders
Spurlin began working at Arthur Andersen in August 1987 as an audit staffer in the commercial department and gained diverse experience working on multiple accounts, ranging from large multinational construction firms, waste firms, and oil and gas service providers to small-scale construction firms, small oilfield service companies and nonprofits. “One of the not-for-profits I worked on literally dumped the receipts out of a bag,” she laughs. Her outstanding potential and strong work ethic did not go unnoticed. After just one year, she earned the attention and confidence of one manager in particular, Amy Chronis, who gave Spurlin full control of one of her first major accounts, the American Ref-Fuel Company account, and provided invaluable mentoring along the way. “Amy was my first female manager ... who helped set my career on the trajectory that I achieved,” she says. “Amy exemplified that a woman could successfully achieve an upper management position and raise a family.” After about seven years with Arthur Andersen, Spurlin was offered and accepted the Controller position with her first and biggest client at the firm, American Ref-Fuel. The waste-to-energy joint venture burned municipal solid waste to produce electricity that it then sold to local utilities. Shortly after Spurlin started with the company, the Chief Financial Officer left and the new hire quickly stepped in to pick up the slack. “I found myself as a fairly new Controller reporting to CEO Paul Varello, the board and audit committee during a time when
the company doubled in size through two acquisitions,” she remembers. Spurlin led the controllership department, which eventually included 50 employees and nine direct reports, on $300 million and $350 million acquisitions soon after starting her new gig. She was responsible for due diligence on all acquisitions, reporting financial results, building a budget, answering all investor questions and inquiries, integrating new systems and people into the company and hiring new staff to round out the team. “I learned early on that you can’t do everything yourself,” the CPA reflects. “Some of the keys to success include hiring staff who are experts in their area and smarter than you. You must empower your staff to do their job; communicate both up and down the chain of control; and watch out for your staff, as they have lives and are busy with work and family issues, so you need to be flexible and empathetic and motivate your team to help out and work as a unit to accomplish the goals at hand.” It was this caring and collaborative attitude that, despite her overwhelming workload, helped make her one of the first recipients of the company’s Core Principles Award for creative teamwork, employee enthusiasm and integrity. In 1998, American Ref-Fuel hired a new CFO who made the interesting move of inverting the Controller and the Director of Financial Analysis as a way to give both managers even more experience and exposure within the company. Spurlin, having served as Controller for more than four years, was named Director of Financial Analysis, a position she held until 2002. “For the first time in my career, I was on the finance and treasury side, and was responsible for the long-term strategic plan, acquisition modeling, assisting with debt capital market transactions and working closely with the operations team to model the business and opportunities,” she explains.
Around that time, the power industry was going through deregulation and many of the company’s contracts were being bought out or renegotiated. Plus, the company itself was being sold for the third time and relocating its headquarters to New Jersey. Spurlin was offered a promotion to Treasurer, although she ultimately decided it was not the right move for her and her young family, with their deep personal and professional ties to Texas. After nearly 15 years of steady employment, the seasoned financial manager found herself back on the job market. Fortunately, she was soon connected to Plains All American Pipeline through a recruiter; although the available position, Director of Internal Audit, wasn’t necessarily what she had in mind. “Internal audit was not on the top of my ‘ideal’ job list, but since I hadn’t interviewed since college, I decided that I better go and give it the ol’ college try,” she jokingly admits. After meeting with Plains’ leadership, specifically Chairman and CEO Greg Armstrong, then CFO Phil Kramer (now Executive Vice President) and President and COO Harry Pefanis, she had a change of heart. “Greg, Phil and Harry were straightforward and down-to-earth people,” she remembers, adding that she was most impressed with their entrepreneurial spirit and vision, and the fact that they had built the company themselves from the ground up, among many other admirable attributes. “They gave me confidence that they would trust me to build the internal audit department into one that adds value,” she says. “There was no question; I had found my new home.” For the first couple of years at Plains, Spurlin spent significant time and energy ensuring the company was compliant with the Sarbanes-Oxley Act, also known as SOX, which was signed into law in 2002 in response to high-profile accounting scandals in the JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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corporate world, namely Enron and WorldCom. The Securities and Exchange Commission closely regulates compliance with the federal law, which addresses responsibilities and accountability of a public company’s board of directors and leadership, including criminal penalties for certain misconduct. With the help of a solid team, the new Director was able to achieve this massive undertaking and successfully complete the project on schedule, which she still to this day considers one of her greatest career accomplishments. After about five years with Plains, there was a job opening for Assistant Treasurer, an
many other weighty responsibilities and impressive achievements.
Pursuing an Entrepreneurial Path
In 2009, Spurlin received a call from a recruiter who was looking to fill the CFO position at a private equity-backed venture, PetroLogistics. She was just as impressed with David Lumpkins, the Executive Chairman, and Nathan Ticatch, the CEO and President, as she had been years ago with the Plains team. PetroLogistics actually consisted of two separate but corresponding companies. PetroLogistics LP owned and operated the only propane dehydrogenation plant located
company, she would have a small staff in Houston. With the tremendous amount of work and travel associated with this opportunity, the Spurlin family needed to make some adjustments. “To make my dream come true, my husband, Steve, gave up his job as the Head Men’s Basketball Coach at [Blinn] College, where he had a winning record and was very successful,” the wife and mother of two says appreciatively. “He put his career on hold for several years, as the boys needed one of us at home.” With the support of her family and the strong desire to build something herself, Spurlin began working with the fledgling companies as Senior
area with which Spurlin was comfortable and familiar. She was a natural fit. “Although I loved what I was doing and my team, I was excited to move back into the finance side of the company,” she says. As Assistant Treasurer, Spurlin was responsible for leading her department’s daily management of $2.6 billion in banking facilities, customer credit exposures, as well as preparing and presenting various results at the annual bank meetings and to the audit committee. She also evaluated and redesigned the cash management process, which resulted in the implementation of a treasury system that eliminated duplicate inputs of information, automated controls and improved effectiveness and efficiency, in addition to
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in North America intentionally producing propylene, a common industrial organic compound used to make a wide variety of everyday products like plastic containers, car seats, cosmetics, medical supplies and much more. PL Midstream LLC owned and operated salt dome storage facilities and ethylene and propylene pipeline distribution systems. “Both companies, being in start-up [mode], were going to require a lot of travel and time commitment, but the ability to get in on the ground floor of a midstream company ... was very intriguing,” she admits. “I have an entrepreneurial spirit and I was eager to build something from the ground up.” PL Midstream’s operations were based in Louisiana; although if Spurlin joined the
Vice President and CFO in June 2009. She soon began preparing to simultaneously take the two companies public, which was no easy task considering she was starting from scratch. She worked to establish and implement the company’s governance structure, board charters, policies and procedures; developed the board and audit committee meeting agendas and led the audit committee calls and meetings; and established and led investor relations. Plus, she fully structured and built out the finance department, which included recruiting roughly 25 employees in crucial roles like Corporate Controller, Assistant Controller, Director of Finance and Director of Taxation. “The goal was to hire staff that were experts in their area; individuals that were willing to
PHOTO COURTESY OF PLAINS ALL AMERICAN
Plains has the most comprehensive crude oil pipeline and terminal systems in the U.S. and is the largest gathering transporter of crude oil in the MLP space
do what was needed to get the job done, that worked well as a team, had great attitudes, were willing to learn and change course as necessary, and ... willing to step in and help in any way possible,” the financial officer explains. Fortuitously, the shale renaissance that was making headlines at the time provided the perfect backdrop for the small start-up to thrive. A solid team of experts, abundant feedstock, ever-increasing demand of propylene and, of course, Spurlin’s financial guidance helped secure the company’s success. Shortly before taking both ventures public, however, the decision was made to instead sell PL Midstream. At the end of April 2012, PetroLogistics LP began the initial public offering (IPO) road show, which entailed two weeks packed full of investor meetings all across the country. Spurlin’s habit of hiring the best and the brightest could not have served her better during this experience, as even the best-laid plans of mice and men often go awry. “We were set to finish the road show the next day and price that Wednesday, when we received new propylene projections that required our entire S-1 document to be changed and our IPO to be re-priced,” she begins.
“The months of due diligence, and then announcement and closing of the transaction was the hardest thing I have ever done in my professional career,” the empathetic executive admits. “I had to face my staff and tell them that we were being sold, and I had no control over their destiny.” Fortunately, having hired such talented employees, she gladly reports that her staff had no trouble finding work and many landed in even better positions. She adds that the group still stays in touch and tries to occasionally get together. “PetroLogistics and the people will always be a fond part of my past and present,” the former CFO remarks warmly. The day the sale was announced, Spurlin got a call from her old friends at Plains. The Vice President and Treasurer was retiring, and after several meetings with Al Swanson, Executive Vice President and Chief Financial Officer, the former employee was offered the job. The decision, she says, was a no-brainer. “Plains is and has been one of the best, largest, well-run and respected midstream companies in the U.S. and Canada,” the Vice President and Treasurer says. “I definitely was going back home.”
Home, Home on the Plains
The CFO started to panic. It was already well into the evening, she was on the road traveling and her team had only a few short hours to completely recalculate and reproduce a 100-plus-page document, full of detailed projections and figures. “I called my staff in Houston and told them if we didn’t want to lose this deal, we needed them to [update] the entire document overnight with Vinson & Elkins and Lindsay Goldberg, get Ernst & Young to sign off and get it filed with the Securities and Exchange Commission by 8 a.m. the next morning.” Against tremendous odds and a ticking clock, the team was able to complete the document — signed, sealed and delivered — by the deadline. PetroLogistics successfully went public a few days later in early May, setting a record as the largest MLP IPO at the time. “To this day, that is one of my proudest moments,” Spurlin shares, even tearing up at one point as she retells the emotional story. But the work wasn’t over just yet. She immediately jumped into the sales process with PL Midstream, which sold a few months later in October 2012 to Boardwalk Pipeline Partners. Over the next year or so, PetroLogistics started searching for new growth opportunities when it surprisingly received an offer from Flint Hills Resources, a Koch Industries-owned venture, to buy the company.
While her schedule is hardly standard, Spurlin’s routine typically begins by meeting with one or more of Plains’s 28 banks in order to stay updated on the recent debt and equity capital market transactions, interest rate forecasts and hedging opportunities, foreign currency and any other relevant market trends. Next, she’ll usually touch base with her direct reports, meeting with any number of the Directors and Managers of the four major departments she oversees — treasury, which manages more than $4.5 billion in banking facilities; credit, which continually updates customer credit reviews and monitors exposure in excess of $3 billion; insurance risk management, which handles insurance policies, renewals, claims and the like; and financial planning, which is responsible for the annual and five-year strategic plan and public financial guidance. As a financial officer for a leading oil and gas midstream company, there is certainly plenty to keep up with and adjust to as of late. The precipitous drop in oil prices and less than favorable market conditions have only increased competition in the midstream sector, which is feeling the pinch of tightening belts as well. Spurlin says that Plains has taken actions to reduce its capital expansion program, going from approximately $2.2 billion in 2015 down to approximately $1.5 billion in 2016, and is putting certain projects on the back burner for now. “We have rationalized which projects made the most sense, deferring some to the future and trying to make sure we invest our capital as prudently and efficiently as possible,” she explains, adding that most of the capital spending is already in process for ongoing projects, which are largely underpinned by long-term contracts with minimum-volume commitments or acreage dedications. According to the Treasurer, the company will be looking at more “joint venture-type” arrangements, similar to the Saddlehorn Pipeline, which is owned partly by Plains and was recently combined with the Grand Mesa Pipeline, owned by NGL Energy Partners LP. JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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Plains is also examining the option of selling some non-strategic assets and exploring other types of alternative capital, instead of raising common equity at currently depressed prices, as well as reducing operating expenses and other general and administrative costs. The company anticipates that market conditions will level out over the next year and begin to rebound in 2017. In the meantime, Plains is well-positioned financially to weather the low-priced environment and will be ready and able to respond once conditions improve. Upon the announcement of its thirdquarter results in November 2015, PAA’s Chairman and CEO, Greg Armstrong, said the midstream company has a solid financial position with “... numerous capital projects scheduled to come online or ramp up activity levels over the next 18 months that will contribute meaningfully to our cash flow.” The most significant capital projects coming online during the next 18 months include the Saddlehorn Pipeline, which will be capable of transporting at least 190,000 barrels of oil per day from the DJ Basin, and potentially from the larger Rocky Mountain region, to storage facilities in Cushing, Oklahoma; the Red River and Caddo Pipelines, which will connect Cushing to Longview, Texas, and Longview to Shreveport, Louisiana, respectively; and various enhancements to the Fort
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Saskatchewan NGL facility in Canada. Plains already has the most comprehensive crude oil pipeline and terminal systems in the U.S. and is the largest gathering transporter of crude oil in the MLP space. It handles more than 4 million barrels of crude oil and NGLs a day and is active throughout the midstream value chain, from the wellhead to the refinery inlet. In fact, its integrated asset network allows Plains to move crude oil to substantially all inland and coastal markets in the U.S. Plains has three operating segments: transportation, which moves crude oil and NGLs via pipelines, gathering systems, trucks or barges; facilities, which offers storage and terminalling services for oil, refined products, NGLs and natural gas, in addition to offering NGL fractionation and isomerization services, and natural gas and condensate processing services; and supply and logistics, which is responsible for marketing activities, such as purchasing crude oil from producers, storing it, reselling or exchanging it with refiners or resellers, and moving the product from various delivery points to the end user. The company is active in resource plays across the continent; but by far the largest area of operations, and the region it believes has the most growth potential, is West Texas. In the Permian Basin alone, PAA projects that there are more than 15 million acres in the region
and the possibility for at least 100,000 new wells, if not more. The potential within the prolific Permian Basin, in combination with numerous other major North American shale plays where Plains has a strong presence, should provide the midstream company ample business for years to come. “The intermediate and long-term fundamentals of our business are very strong given the level of proved reserves in the U.S. and Canada, and the ongoing technological and drilling efficiency gains,” Spurlin says. “Ultimately, the world will need U.S. and Canadian shale production to meet global demand growth.”
Beyond Plains
Spurlin’s work doesn’t end when she leaves the PAA office. She also serves on the board of directors for another start-up company based in Houston, Smart Sand Inc., which provides frac sand primarily in the Eagle Ford and the Bakken Shale regions. After the sale of PetroLogistics LP and before officially rejoining Plains, the sought- after financial expert was approached with several private-equity opportunities, one of which was Smart Sand. Although she ultimately decided to return to Plains, Spurlin was impressed after meeting with Smart
PHOTO COURTESY OF PLAINS ALL AMERICAN
Sand’s private equity and senior management team. Upon finding out the company intended to go public potentially as an MLP, and having intimate knowledge of what exactly that process entails, she knew Smart Sand would need to assemble a board with at least three independent directors. She volunteered to fill one of these roles and officially joined the board in 2015. Additionally, Spurlin is a member of various industry groups, such as the American Institute of CPAs, the Texas Society of CPAs and the Women’s Energy Network in Houston. Outside of the professional realm, the dynamic, down-to-earth Texan loves spending time with her husband and two sons. The family thoroughly enjoys spending quality time outdoors, whether it’s at the baseball field watching her youngest son play; hunting, skeet shooting and fishing on the ranch where she grew up; or even running down to the coast to do some deep-sea fishing. Her older son, Trevor, is training to be a mechanic, and the younger, Terrence, is still in high school and has several baseball scholarship offers to consider. “My greatest accomplishment has to be raising two great kids with my husband,” the successful executive reflects. “They are both caring, respected and respectful young men ... they’re just really good kids.” She is also passionate about working with children, especially those who are homeless, orphaned or underprivileged, which she says most likely stems from the fact that her own mother was orphaned at age 11. The Spurlins even have plans to eventually take in foster children once their own birds have left the nest, in addition to hopefully doing some mission work geared specifically toward helping children. As a young girl growing up on the farm in Moulton trying to figure out what it was that she wanted to do, there’s probably no chance she could have imagined achieving all that she has. With a stellar career, a supportive husband and two great kids, as
well as worthwhile passions and interests of her own, Spurlin seems to have it all but is still humble about her achievements. “I am by no means a perfect person, but I do know that I have been graced with many blessings, for which I am truly grateful.”
Katie Carmichael is an Austin-based communications specialist. She is the founder and owner of Carmichael Communications and Consulting, which provides a wide range of communication services, including public affairs, government relations, consulting and writing, primarily within the energy industry.
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To learn more about Plains All American Pipeline LP and its services, please visit www.plainsallamerican.com.
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INDUSTRY
Building for the Future ENERGY ADVOCACY AND WORKFORCE DEVELOPMENT Special to SHALE
W
hile times are tough for our industry, the long-term outlook is certain: Our nation — and the world — will need more energy, specifically oil and natural gas, for many years to come. But it remains a question whether America will sustain our global energy leadership or return to the days of energy scarcity and heavy dependence on overseas resources. Our industry must shape our own destiny by taking steps to ensure that our nation builds on our current energy leadership. Two steps are especially critical:
Building a Diverse 21st-Century Workforce — Human capital remains the single most important factor driving America’s energy revolution. With a huge wave of retirement expected in our industry over the next decade, we need to seize this historic opportunity to create an oil and natural gas workforce that reflects the increasing diversity of our nation. THE PUBLIC POLICY EQUATION Simply put, government policies should promote, not thwart, energy development. We need science-based national, state and local energy policies that support free market competition and encourage innovation. Energy is simply too important to let policymaking be driven by misinformation and ideology. Government policies must include a commitment to: ● More energy production from all sources. ● Greater energy efficiency. ● Investment in advanced energy technologies and long-term energy initiatives. ● Allowing market forces to allocate products and adjust to changing conditions. ● Refraining from new taxes that make it more expensive to develop domestic supplies. ● Support for participation in global energy markets.
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The federal government recently took a step in the right direction by lifting the decades-old ban on crude oil exports. We now need to lift red tape on liquefied natural gas (LNG) exports and energy infrastructure development. The best way for every industry stakeholder to help shape positive public policies is by participating in Energy Nation, the American Petroleum Institute’s core-issue education and advocacy program. Energy Nation provides the tools and information needed not only to participate in the policy arena, but also to respond to family, friends and others who spread misinformation and attack our industry. A COMMITMENT TO EDUCATION AND WORKFORCE EXPANSION With the right public policies in place, U.S. energy production will increase for many years to come. In turn, the number of jobs available within our industry will increase — with as many as 1.3 million new jobs created through 2030. Even in our current low-price environment, we must continue to make connections with new communities and prepare them to take advantage of the opportunities ahead in our industry. Workforce training is critical to our competitive advantage and to our ability to provide the energy that our nation and the world depend upon. To build a robust workforce, our industry
absolutely must increase the participation of women and minorities in the oil and natural gas industry. We need to ensure that the oil and natural gas workforce of the future is as diverse as our nation. It is not only the right thing to do, it is a long-term business imperative. In addition, in order to prepare the future’s energy workforce, we must support improved education in science, technology, engineering and math, or STEM subjects. The U.S. has slipped relative to other developed nations when it comes to producing college graduates with degrees in science and engineering — and this trend must be reversed. All of us can help not only by supporting educational improvements, but also by talking with others about what we do and the benefits of working in our global-leading industry. We should all be advocates as part of Energy Nation, but we can also support our industry’s future one conversation at a time.
A PANEL OF FEMALE ENERGY INDUSTRY MEMBERS AT ENERGY NATION’S RECENT WOMEN WHO LEAD DINNER IN HOUSTON
»
To learn more about Energy Nation and its mission, visit www.energynation.org.
PHOTO COURTESY OF ENERGY NATION
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INDUSTRY
Misdirected Energy By: Bill Keffer
us today; an ironic proclamation made in the city still reeling from its worst terrorist attack since World War II. Such is the Orwellian world of 1984 in which we live, some thirty years later. We live in a time when economists and anthropologists can easily agree that nations and societies progress only where there are accessible and affordable sources of energy; when there is no argument that oil, natural gas and coal are, by far, the most accessible and affordable sources of energy in the history of the world; and the world is currently experiencing the greatest rate of production and the largest glut of oil and natural gas in its history. Ironically, this is also a time when our 151 world leaders are deciding that we should take the greatest risks in the name of economic victory, based on the altar of speculation supported only by computer models, resulting from incomplete and, occasionally, inaccurate data. Climate-change discussion left the environs of civil discourse long ago, so that it now is heresy to suggest otherwise. But no question should be forever closed, and true subscribers to the scientific method should have no patience for those who have locked up the final answers to climate change and thrown away the key. There are certain threshold questions that these world leaders should have to confront — and not just once, but continuously, as long as there are reasons to raise
legitimate questions. First, are we concerned about global warming specifically or climate change in general? If the latter, how is it defined, so that it can have any semblance of meaning, apart from the rhetorical reality that the climate is always changing? Second, how can we be sure that any man-made activity (as opposed to solar flares or some other force outside our control) is making any meaningful contribution
This movement that began as a crusade against global warming has been rebranded as a crusade against climate change to the change? Third, if the climate is changing in some unnatural way and man is making a substantive contribution, what is inherently right or wrong about any change that occurs? Fourth, to what extent can denying third-world countries a chance to make progress by having access to affordable energy and choking the economies of developed nations by cutting off their access to that same abundant energy be justification for the hope of possibly making a potentially insignificant contribution to the rate at which the climate will inevitably change? If we’re not careful, we might end up surrendering our fossil fuels to facile fools.
About the author: Bill Keffer is a contributing columnist to SHALE Magazine. He teaches at the Texas Tech University School of Law and continues to consult. He served in the Texas Legislature from 2003 to 2007.
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SSUAPHOTO/BIGSTOCK.COM
I
n November, 151 world leaders convened in Paris at the U.N. conference on climate change. Their mission: to reach an international accord that would purportedly save the world from the catastrophic consequences of man-made global warming. However, since this movement that began as a crusade against global warming has been rebranded as a crusade against climate change, it makes one wonder about what strategic adjustment was thought to be needed. Apparently, it’s not just warming that we should be concerned about, but any meteorological event with which we are displeased and isn’t exactly in accordance with our adjustable-thermostat society. Forgive my hesitation in scrambling to follow the lemmings off this latest fashionable cliff, but I still can distinctly remember the Chicken Little headlines from the 1970s, in which we were all assured that the next ice age was only just around the corner. I didn’t rush out and buy Eskimo wardrobe or invest in prefab igloos then; and I don’t intend to leap to apocalyptic extremes in the tropical direction now. However, our President and a sizable number of our elite class have already reviewed and ruled on the evidence as they see it, and they have declared an international emergency. Indeed, President Obama has declared climate change as the most important issue confronting
JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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INDUSTRY
In Honor of the Hardworking Women at the Texas Railroad Commission By: David Porter
Railroad Commission of Texas Chairman
polite and very helpful. It is truly a delight working with her. Thank you again to all the important, dedicated women who I have the privilege of working alongside at the Railroad Commission, and to all 700-plus
Commission employees statewide. I’m proud and grateful to work with such an incredible team, as I do my best to protect the health and safety of Texans and promote the responsible resource production that is vital to our state and our economy.
Allow me to briefly highlight a small group of distinguished women who stand out for their significant contributions, longtime service and leadership roles at the Commission
To learn more about the hardworking men and women at the Railroad Commission of Texas, visit www.rrc.state.tx.us. David J. Porter was elected statewide to serve a six-year term as Railroad Commissioner in November 2010. He is the current Chairman of the Commission.
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SHALE OIL & GAS BUSINESS MAGAZINE JAN/FEB 2016
ANDRES/BIGSTOCK.COM, HEADSHOT PHOTO BY MICHAEL GIORDANO
G
iven that this issue of SHALE Magazine is devoted to recognizing important women in the energy sector, I would like to take this opportunity to also acknowledge and express appreciation to all the hardworking women at the Railroad Commission of Texas (RRC). Regardless of gender, these dedicated employees deserve recognition for carrying out the Commission’s important duties and responsibilities on a daily basis. But allow me to briefly highlight a small group of distinguished women who stand out for their significant contributions, longtime service and leadership roles at the agency. First and foremost, I must mention fellow Commissioner Christi Craddick, who is perhaps one of the most prominent female regulatory figures in the oil and gas community today. As a native West Texan, Craddick has a deep understanding of the activities that take place in the oilfield, in addition to experience working as an oil and gas attorney in both the private sector and state government prior to joining the Commission in 2013. Her background in the industry and in politics lends relevant perspective to the three-member panel of Commissioners and has proven to be a valuable asset to the agency. I would also like to point out a few exceptional division and department leaders who are all highly esteemed in their respective fields and play an important role in maintaining the RRC’s status as a leading regulatory agency in energy circles around the world. Lori Wrotenbery, Director of the Commission’s Oil and Gas Division, previously served as Deputy Director and Assistant Director for Environmental Services at the RRC prior to rejoining the agency a year ago. She brings extensive regulatory expertise, having also held various leadership positions at the Oklahoma Corporation Commission, the Oil Conservation Commission in New Mexico and the Ground Water Protection Council. Leslie Savage, Assistant Director of Technical Permitting, has dedicated more than 30 years of service to the agency and is regarded as an extremely knowledgeable geologist and technical expert. Since joining the RRC in 2014, Kari French has also emerged as a reliable, qualified leader within the agency, serving as Director of the Oversight and Safety Division and the Gas Services Division. Last but certainly not least, I would be remiss to not give credit to an incredibly dedicated longtime employee, Commission Secretary Kathy Way. During the 35 years she has been with the RRC, Way has acquired a vast amount of institutional knowledge regarding the agency, the industry and the people who have worked in or around it over the years. She is always professional,
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INDUSTRY
Oil and Gas Industry Comes Full Circle By: Thomas Tunstall, Ph.D.
I
n the course of my economic development work, I have had the pleasure of living in some interesting places, including Afghanistan in the post-9/11 environment as well as Kenya and Zambia. A particularly interesting assignment was in Azerbaijan, where I spent several months in Baku, the capital city. Many people are unaware that the world’s first oil well was completed in Baku in 1847. By the 1860s, Azerbaijan was producing 90 percent of the world’s oil. Onshore oil production across the globe continued apace after that. Although the first oil well in the U.S. was drilled in Pennsylvania in 1859, the event everyone in Texas usually remembers is Spindletop, which started gushing in 1901 near the Beaumont-Port Arthur area. Twenty years later, the Permian Basin completed its first well in 1921; and in 1930 the East Texas Oilfield began producing. Shallow-water offshore drilling in the U.S. began tepidly in 1896 off the coast of California. However, in 1947, Kerr-McGee completed a productive offshore well in shallow water off the Louisiana coast that was not visible from land. This marked the first shift in the oil and gas industry from essentially onshore activities to offshore, and required new technologies to implement. Then in 1975, the first deepwater oilfield discovery was made in the Gulf of Mexico. Since that time, the focus of the major exploration and production (E&P) companies
has been on developing evermoreextensive deepwater assets. Once again, new technologies were required. Deepwater offshore platforms are expensive propositions, requiring hundreds of millions of dollars of investment capital and up to 10 years of development time before production begins. These are long-term
deepwater and shale. Unconventional shale oil wells typically produce several hundred barrels per day, while deepwater platforms produce tens of thousands of barrels per day. Nonetheless, in a sense, we have come full circle. Starting in the mid-1800s with onshore activities, the E&P industry migrated to shallow-water offshore fields in the mid-1900s, and then to deepwater fields starting in the 1970s. Now many producers have returned onshore using unconventional drilling and extraction techniques for shale. This latest iteration in the ever-changing oil and gas industry
Innovative U.S.-based energy companies now have the ability — as international developments warrant — to both cut back and ramp up production of crude oil more quickly than any other country in the world projects that cannot be started and stopped quickly. It is this deepwater business model that the major E&P companies have increasingly used for the past 40 years. Yet, once again, the landscape is shifting. The shale revolution — which so far has only occurred in the United States — runs on yet another type of business model, which also requires new technologies. Instead of investing hundreds of millions of dollars for a single platform, shale wells are drilled and completed in as few as 10–15 days for as little as $6 million to $8 million. Of course, production per well differs significantly between
has upended many previous assumptions. For example, after spending billions of dollars along the Gulf Coast on natural gas import terminals a decade ago, companies in the U.S. are spending additional billions of dollars to develop natural gas export terminals. Equally important, Saudi Arabia and OPEC are running at full tilt and no longer appear to be the global swing producers of oil. Unlike deepwater offshore, shale drilling can start and stop relatively quickly. Further, onshore wells in the U.S. can be drilled and then put on hold, as is the case with several thousand wells currently. So, when oil prices settle above 50 dollars for any extended period, this inventory of drilled-but-not-completed wells can be selectively tapped. No doubt, the recent slowdown in the energy industry has been painful. Nevertheless, it leaves the U.S. in a good position to moderate swings in the worldwide price of oil. Innovative U.S.based energy companies now have the ability — as international developments warrant — to both cut back and ramp up production of crude oil more quickly than any other country in the world.
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.
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JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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INDUSTRY
Women Taking the Wheel at STEER
W
omen make up approximately 19 percent of employees within the oil and gas industry (according to the most recent data available from the American Petroleum Institute). This number is rapidly climbing as women join the oil and gas workforce, both in the field and in the office. Attracting and retaining women is a priority within the industry. STEER’s regional support consists of an area that covers approximately 22 counties, and it takes a dedicated team to execute our mission in a manner that is mutually beneficial to those in the Eagle Ford Shale communities and the oil and gas industry. As a trade association with a total of four employees, each of us at STEER plays an important role in the organization. We are lucky to have two women who help to fulfill our mission on a daily basis. As the Vice President of External Affairs, Haley Curry is an integral part of STEER. She regularly travels within the Eagle Ford Shale region to visit various elected officials,
We are lucky to have two women who help to fulfill our mission on a daily basis educational institutions, community groups, economic development organizations and other stakeholders. Curry oversees the Stakeholder Relations Committee, which focuses on grassroots efforts in the Eagle Ford region that are deemed priorities to maximize relationships in the region. Three subcommittees were formed to enhance the committee’s outreach efforts: education, environmental enhancement and road safety. In an effort to educate young residents of the Eagle
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Ford Shale region, Curry led the team that created an educational guide for middle school and high school students in the area. With this tool, STEER was able to reach 15 schools in 2015. Curry is also involved in educating students in other areas in South Texas, including Corpus Christi and San Antonio. With Curry’s leadership, Haley Curry Justine Hall STEER was a part of a hockey game in partnership with the Corpus Christi IceRays, where we presented to more than 4,000 students. We are looking forward to the Spurring Education Energy Day, which Curry is coordinating along with the Stakeholder Relations Committee and the San Antonio Spurs, and will be held on April 1. Justine Hall joined STEER in 2015 as the Director of Communications. She is responsible for communication that comes from STEER in all facets, including both regional and national media, social media, board communication and the organization’s website. Additionally, she is responsible for the planning and execution of STEER’s annual Eagle Ford Excellence Awards ― an event that honors those in the Eagle Ford Shale region who are doing their part to protect the environment, give back to their communities and make safety a priority. The event, held in November, had more than 280 in attendance with approximately 40 award entries. Hall also oversees the Communications Committee that works collaboratively to provide timely responses to media outlets, generate messaging for dissemination to the public, create fact sheets for South Texans and support the Eagle Ford Excellence Awards. We look forward to seeing the numbers increasing for women in oil and gas. As you can see, they contribute to the success of our organization and I am proud to have Curry and Hall as a part of the team at STEER. STEER is a conduit that helps foster communication, research, education and positive economic development for both the oil and natural gas industry and South Texas communities. We work to ensure that all stakeholders throughout the Eagle Ford Shale region are able to effectively maximize opportunities in a responsible and collaborative way by working closely with industry representatives, local officials, regional stakeholders, educational institutions, media and community members.
To learn more about STEER and its mission, visit www.steer.com
TOP HEADSHOT PHOTOS BY MICHAEL GIORDANO
By: Omar Garcia
JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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INDUSTRY
By: Paula Waggoner-Aguilar
W
hen I got hired by what is now Halliburton (formerly Dresser Industries) in the mid’90s, I thought I was one of the luckiest women in the world! Seriously, at that time there were so few jobs in the oil and gas industry. I had been rejected over 100 times for jobs in Latin America before the energy industry found me. Society has changed a lot — back then some people still had strong perceptions of what an appropriate job was for a woman (sometimes irrespective of their education, skills and career aspirations). Ironic isn’t it? An industry with a male-dominated reputation was willing to give a young woman like me the chance to pursue my dreams, even if it meant working in some dangerous places. I have never forgotten that and, yes, it is one of many reasons why I am still committed to and working in this Paula Waggoner-Aguilar, industry today. The Energy CFO, with Patricia Thomson, one of When I speak to women studying the first female engineers science, technology, engineering to work offshore in the industry. “Meeting and math (STEM) fields at trailblazers like Patricia universities today, I tell them that I inspires me to keep taking risks, working hard and believe the energy industry is the going after my dreams.” best career choice for them. By sharing my own story and talking openly about those early career rejections and how that made me feel, they know I am sincere and a real woman who has lived it, persevered
Women in energy have come a long way over the past
20 years
About the author: Paula Waggoner-Aguilar is a CFO and the owner and president of The Energy CFO LLC, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. To learn more about services available at The Energy CFO LLC, visit www.theenergyCFO.com.
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PHOTO COURTESY OF THE ENERGY CFO LLC
Taking Risks and Inspiring the Next Generation
and overcome those and many more obstacles over the years. Then I tell these women about the amazing career I have in energy and one they can have too! I have worked in more than 20 countries, held senior leadership roles for several Fortune 500 energy companies and one of the large private independents in the nation, and gone on to start my own company, The Energy CFO LLC, and the South Texas chapter of the Women’s Energy Network in the same month. I also tell them stories about my female friends who work as engineers, business owners, traders and schedulers, land professionals, attorneys, technologists, accountants, quantitative analysts, scientists, marine professionals, and the list goes on. I also mention that the industry has paid me well, given me healthcare benefits, opened doors across the value chain, educated me further and given me the choice to decide how I wanted to navigate and blend my career and personal life. Sure, sacrifices are involved — but I got to choose which ones I wanted to make. Women in energy have come a long way over the past 20 years. There are so many organizations and energy companies focused on trying to improve our representation in the industry by various means and expand our career opportunities. Their efforts are paying off. We are beginning to see quite a few STEM women join our ranks. In addition, we are seeing more women reach the senior ranks in organizations. I am proud of those collective accomplishments — many of these women I know and call friends. Make no mistake — they have also worked extremely hard, made sacrifices and have a trail of accomplishments in their careers, all while juggling families and sometimes dualenergy careers. They inspire all of us. When I think about what success should look like in five to 10 years — honestly, the picture in my mind is seeing more women taking risks, exploring, experimenting, developing, leading projects and businesses, starting companies and even boldly daring to become legendary independents or wildcatters. Right now, women represent 19 percent of the industry or approximately 226,000 women as per a 2014 study commissioned by the American Petroleum Institute. What has really gotten my attention is the tiny population of femaleowned energy firms — I know of 40 of these firms across three states. Of those 40, only six are operators and/or oil and gas producers. I find those stats shocking. So as we set the collective vision for women in energy into the next decade, I believe we need to figure out how to encourage and teach the next generation of women to take risks, both in the corporate environment and as entrepreneurs, and to aspire to disrupt, innovate, and lead the next energy revolution. One thing women in our industry can do is get more of our female trailblazers to share their stories and their failures with the aim of helping inspire confidence in our ranks, talking about the risks they have taken and boldly challenging the next generation to dream big.
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POLICY
Legislation Under Pressure
T
he oil and gas industry had a busy and difficult year in 2015 from a public-policy perspective, and 2016 promises to be no different. At the state level, those states that rely heavily on oil and gas taxes, royalties and fees to help fund their governments will once again likely face significant budget challenges. A precipitous drop in the price of crude oil always creates ancillary effects, and this is one of them. Given that it appears likely that the price of oil will remain at low levels throughout most if not all of 2016, states with high levels of industry activity will once again be searching for means through which to balance budgets. The problem this creates for the industry is that lawmakers often feel pressure to raise taxes and fees during such down times, when companies can least afford a higher burden. Few state governments actually moved in that direction during 2015, but as this low-price environment extends into its second year, we can expect an increased level of activity in this area. Policymakers at all levels of government will also continue to find themselves under pressure from anti-fossil fuel activist groups, who never run short of novel proposals for limiting the industry’s ability to do its business via federal, state and local regulation. Even with the passage in 2015 of HB 40, a statute that essentially prevents Texas local governments from regulating downhole operations, activists continue to devise and propose other means for cities and counties to diminish the industry in Texas. We will certainly see a new series of such proposals in Texas and other states during the coming 12 months. At the federal level, the Obama administration will no doubt redouble its efforts to overlay as many new regulatory actions as its various agencies can get onto the Federal Register in its final 12 months in office. Not since the days of Woodrow Wilson has any U.S. President engaged in such overt and aggressive efforts to damage one of this country’s major industries. The volume of new regulations proposed and finalized by the EPA alone during
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2015 is breathtaking in its scope and complexity, and the industry should expect to see more of the same as President Obama attempts to cement his legacy. The positive news for the industry in this arena is that all of the major new regulations issued by the EPA and Department of the Interior during 2015 were immediately challenged in federal court, and thus far the decisions issued by the various courts have been almost uniformly positive. This is not all that surprising, given that these agencies, in their zeal to get their new regulations on the books, have tended to shortcut or ignore requirements under the Administrative Procedure Act and other provisions in the federal laws that govern the development of new regulations. Hopefully, the courts will continue to hold these agencies to the letter of the law during the coming year. However, if the courts fail to uphold the rule of law and enforce the provisions of the Clean Air Act and Clean Water Act as they were intended, then the ultimate impacts to the oil and gas industry and the entire economy in general will be gigantic. Probably the most costly would be the new ozone standard of 70 parts per billion that the EPA announced in October, which the National Association of Manufacturers and U.S. Chamber of Commerce estimate would become the single most costly regulation in U.S. history. Given that the city of San Antonio has teetered on the brink of non-attainment for more than a decade under prior ozone standards, this new, lower standard could place the area into formal non-attainment status, and activists are already attempting to place blame on the activity in the Eagle Ford Shale region. That’s nonsense, but that doesn’t mean it won’t get a lot of play in the local and state
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By: David Blackmon
news media. In fact, it already has. Given that 2016 is an election year, during which every seat in the U.S. House of Representatives will be in play, 34 U.S. Senate seats will be up for grabs and the country will elect a new president, it is unlikely we will see Congress and the President agree to any sweeping new, potentially controversial legislation. In other words, expect the gridlock we’ve seen the last five years to continue. The industry was able to celebrate a very significant legislative victory at the end of 2015, as Congress voted to include language repealing the 1970s-era ban on the export of crude oil in the omnibus budget package that the President signed into law just before Christmas. This culminated in a successful end of a focused two-year effort that began in the summer of 2013, as the U.S. refining industry’s ability to process all of the light, sweet crude oil coming out of shale basins like the Eagle Ford and Permian Basin was nearing its limit. That looming crisis had largely been relieved by the dramatically changing price conditions that have resulted in falling overall production levels in these and other oil fields around the country. Despite some reports in the media to the contrary, this change in law is unlikely to have any significant upward effect on the price of oil in the near term. In the long run, however, it can be nothing but a positive development for producers of U.S. crude oil to have access to global markets. And after all, if Iran can access the global market, U.S. producers should also have the right to do so. We can also expect the President to make one final plea to Congress to repeal every oil and gas-specific tax treatment that exists in the U.S. Tax Code. This would include repealing the ability to deduct intangible drilling costs (IDCs), percentage depletion and a variety of other tax provisions that afford the oil and gas industry the same sort of treatment under the tax code that is available to every other industry in America. President Obama has singled out the oil and gas industry provisions for repeal in every year of his terms in office, and there is no reason to expect 2016 to be any different. Fortunately, the
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While it is doubtful Congress would take the President’s desire to single out the oil and gas industry for negative tax treatment any more seriously in 2016 than it has in years past, it will be important for industry executives and lobbyists to remain vigilant and continue
The volume of new regulations proposed and finalized by the EPA alone during 2015 is breathtaking in its scope and complexity industry lobby in Washington, D.C., has done a great job of educating members of Congress about the critical nature of maintaining these tax treatments, especially to independent producers, and Congress has never been willing to follow through on the President’s proposals, even during 2009–2010, when his own party had near-super majorities in both houses of Congress.
these education efforts. Because if you don’t keep working the issue, the politicians might think you no longer care. That’s how the political process has always worked, and there is no reason to think 2016 will be any different. It’s a messy process but it’s the one we have, and the industry must continue to work it diligently, because if we don’t do it, nobody else is going to do it for us.
About the author: David Blackmon has spent 35 years in the oil and natural gas industry, in a variety of roles. He has spent the last 20 years engaged in public policy issues at the state and national levels. Contact David Blackmon at david.blackmon@shalemag.com.
JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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POLICY
A Look Ahead for 2016 By: Gloria Leal
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SHALE OIL & GAS BUSINESS MAGAZINE JAN/FEB 2016
seek reelection shook up the oil and gas industry and resulted in a stampede of candidate filings for the now open slot on the Commission. All bets are off for what was expected to be a relatively noncontroversial contest. Lest we forget, volatile markets and politics have repercussions on regulatory systems and in shaping policy. A Preliminary Look at the 2016 Texas Primary The Texas primary is scheduled for March 1, 2016, and campaigning and fundraising are in full swing. The ballots for the 2016 Republican and Democratic primary elections are set; and as in prior years, the primary races are expected to be more competitive than the general races in November. Although the majority of incumbents seeking reelection do not face primary opposition, there are some notable exceptions for a few congressional, judicial, Senate and House seats. The March 1 primaries are expected to turn the state even redder. Although it is possible there could be some surprises, as candidates
NIYAZZ/BIGSTOCK.COM
T
he drumbeat of low crude prices has taken hold in the oil and gas industry, from the Eagle Ford in South Texas to Wall Street. Companies are slashing capital budgets, and the downturn is expected to last through 2016 as the market and industry adjust to this recurring cycle in the oil patch. Last year was especially difficult for smaller oil and gas producers, and the new year is expected to bring additional pain to this group as well as the oil industry at large. According to specialists, at least one in five domestic oil companies is at risk of significant corporate reshuffling, downsizing or bankruptcy proceedings this year. On the political and regulatory front, the new year is shaping up to be one of the most active in Texas politics to be dominated by the sound and fury of presidential politics and possible clash of apparent front-runners Hillary Clinton and Donald Trump. Statewide, the unexpected announcement from Railroad Commissioner David Porter that he will not
hope to capitalize on presidential Democratic coattails. It should be noted that for most congressional seats, half of the state senators, most statewide judges and all but one executive-level seat — on the Railroad Commission of Texas — the 2016 elections are just a spectator sport as most elected officeholders ran in 2014. Not so for the following: Congress: Facing primary opposition, some of more consequence than others, are Republicans: Louie Gohmert in District 1; Sam Johnson in District 3; John Ratcliffe, District 4; Joe Barton, District 6; John Culberson, District 7; Kevin Brady, District 8; Randy Weber, District 14; Bill Flores, District 17; Lamar Smith, District 21; Will Hurd, District 23; Michael Burgess, District 26; Blake Farenthold, District 27; John Carter, District 31; and Pete Sessions, District 32. Randy Neugebauer, District 19, holds the only Republican Congressional seat with a retiring incumbent. There are nine candidates for that district. A few Republican representatives also face challengers in November — the most notable being the rematch in District 23, where incumbent Rep. Will Hurd will be challenged by former Rep. Pete Gallego seeking to reclaim his congressional seat. The 23rd congressional seat from El Paso to San Antonio is ground zero for energy issues and is on the country’s top 10 watch list for both Republicans and Democrats. Facing challengers in the Democratic primary are incumbents: Beto O’Rourke in District 16; Sheila Jackson Lee in District 18; Henry Cuellar, District 28; Gene Green, District 29; Eddie Bernice Johnson, District 30; and Marc Veasey in District 33. With the open seat left by retiring Rep. Ruben Hinojosa in District 15, a total of seven candidates pack the field. Four Democrats and three Republicans, consisting of two attorneys and several local politicians, are vying for the congressional seat, which stretches from the Mexican border to north of San Antonio into Seguin. Statewide Judicial: In what is considered surprising to both the political and legal community, all three Supreme Court justices whose terms are up in 2016 face both primary and general election opposition. Republican incumbent Justices Debra Lehrmann, Paul Green and Eva Guzman are campaigning across the state to hold on to their seats. Likewise, all three Republican incumbent Court of Criminal Appeals justices face opposition in the primary and in the November general election. Texas Senate: Contested Republican primaries will likely determine who will replace retiring Sen. Kevin Eltife (R-Tyler) in District 1 and Sen. Troy Fraser (R-Horseshoe Bay) in District 24. In District 19, Sen. Carlos I. Uresti (D-San Antonio) faces Helen Madla, wife of the late Sen. Frank Madla in the Democratic primary and Republican Peter Flores in November. In District 26, Sen. José Menéndez (D-San Antonio) will once again face off with state Rep. Trey Martinez Fischer. In District
Companies are slashing capital budgets, and the downturn is expected to last through 2016 as the market and industry adjust to this recurring cycle in the oil patch. 27, Sen. Eddie Lucio Jr. (D-Brownsville) is challenged by O. Rodriguez Haro III.
Allan Ritter to serve as Senior Advisor.
House of Representatives: The number of Republicans in the House is unlikely to change dramatically, but many of the most competitive races could see a moderate Republican replaced by a more conservative lawmaker. Approximately 15 House members face primary challengers, including Speaker Joe Straus (R-San Antonio) who faces two long-shot challengers for his seat. Approximately 30 members have no primary opponents but will face a candidate from the other major party in November. Sixteen members of the House will be retiring or otherwise not returning, resulting in the loss of vital institutional knowledge. Key Legislative Appointments In appointments suggesting a move toward a more conservative Texas Senate in 2016, Lt. Gov. Dan Patrick appointed Sen. Craig Estes (R-Wichita Falls) Chairman of the powerful Senate Committee on Natural Resources & Economic Development to replace retiring Sen. Troy Fraser, and Sen. Kelly Hancock (R-North Richland Hills) to replace retiring Sen. Kevin Eltife as Chair of the Senate Committee on Business & Commerce. In other appointments of note, Lt. Gov. Patrick appointed new members of the Legislative Budget Board and the Texas Sunset Commission, which is currently reviewing the Railroad Commission. On the House side, Speaker Straus announced Patricia Shipton as new Chief of Staff and former state Rep.
Key Regulatory Appointments The future of the Railroad Commission will be guided by new personnel hires to handle management, operations and legal affairs within the agency. In a unanimous vote, the Railroad Commission appointed Kimberly Corley as Executive Director of the agency. Corley, a former Shell Oil Company executive, will replace Lindil Fowler, who was temporarily filling the position after Milton Rister retired in August of 2015. Corley holds a bachelor’s degree in business administration from Sam Houston State University and a master’s degree in liberal studies with a concentration in environmental science and policy from Rice University. In another key agency appointment, Alexander Schoch was named the Commission’s new General Counsel. Schoch brings more than 30 years of industry and industry-related legal experience to the Railroad Commission. Schoch retired from Peabody Energy, the world’s largest private-sector coal company, and previously served as International Attorney for Marathon Oil. The appointments are effective as of February 1, 2016. The above is intended as a brief look at Texas elections and related issues. Next issue: Texas primary results and more interim news, including the Railroad Commission of Texas/Texas Sunset Commission update. For more information, please feel free to contact me directly.
About the author: Gloria Leal is an attorney and government affairs consultant in Austin, Texas. 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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BUSINESS
U.S. SUPPLIERS FIND A NEW EMERGING MARKET ACROSS THE BORDER By: Rogelio Cuevas
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The highly anticipated round one, in which the Mexican government has tendered several blocks to private companies and PEMEX, is currently in progress. A challenge still remains, which is measuring the national content percentages that Mexican E&P companies will need to comply with. The objective is to increase Mexico’s internal growth and not have to bring supplies from another country. The reality is that the oil and gas industry in Mexico still needs more development, especially with creating new suppliers internally. Cuevas & Cuevas LLP is helping Texas oil and gas suppliers connect with the newly formed Mexican E&P companies. There are many opportunities for oil and gas suppliers that are interested in moving inventories to this new emerging market developing across the border.
Mexico needs a push to develop its four upstream areas: exploration and production, supply chain management, infrastructure development, and financing and private equity
Visit www.cuevasandcuevas.com to learn more about the international business advisors at Cuevas & Cuevas LLP.
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etróleos Mexicanos (PEMEX) began the second week of December 2015 with a steep drop of 6.71 percent in the price of its oil compared to previous days, while industry oil prices only dropped 1 percent worldwide. Mexico’s oil mix finished the week with a price of $29.91 per barrel. This low price has not been seen since late 2008. As for the U.S., natural gas prices have also been declining but could be worse if Mexico was not consuming more natural gas. U.S. natural gas flowing south of the border increased by 60 percent to average a record 3.26 billion cubic feet a day. The new pipelines built along the border with Mexico have driven the increase of U.S. natural gas exports. Power generators across the border and industrial users taking advantage of low U.S. shale gas will more than double those pipeline flows in the next few years. This year’s gain on southbound gas deliveries to Mexico increased exponentially. Kinder Morgan Inc. joined up with TrailStone Group to form a Mexican gas marketing company to serve industrial facilities and electricity production companies. The project, operated by TrailStone, plans to begin providing natural gas in the first quarter of 2016. Most U.S. crude oil exports have been banned since the 1970s. The recent removal of the nation’s ban on most crude oil exports marks the most significant shift in U.S. oil policy in more than a generation. With one-third of the Mexican government’s budget funded by PEMEX, a decline in the state-owned oil company’s production hits the government heavily. In the past decade, insufficient operational capabilities, lack of capital and maturation of the once abundant Cantarell field and Chicontepec basin have dropped production. Mexico’s crude oil production, which comprises about 85 percent of its total liquids production, fell to a monthly average of 2.5 million barrels per day, its lowest level since 1994. By comparison, Texas is expected to produce more than 2.7 million barrels per day as of 2014 data. During July 2014, the entire production for the U.S. reached 8.4 million barrels per day, compared to the 6.5 million barrels that were being produced during 2012. Mexico’s petroleum trade balance with the U.S. is now negative for the first time in the past 40 years. According to PEMEX, it has decided to import oil from the U.S. for refining and use U.S. companies to manage that refining. In the near future, we will see how this industry takes shape. Mexico needs a push to develop its four upstream areas: exploration and production, supply chain management, infrastructure development, and financing and private equity.
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JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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BUSINESS
THE BUSINESS OF GIVING
A
s an entrepreneur, Kym Rapier has made the business of contributing to the community her bread and butter. You may not recognize her name immediately, but you’ve probably heard of WellMed Medical Group, the family business her husband, George Rapier, created and owns. Kym’s start as a business owner came out of her passion for fitness. Starting out as a personal trainer,
she found enjoyment in helping others lose weight and improve their health. But she felt the gyms she worked at lacked one crucial element: customer service. With the lack of personal attention in mind, Kym set out to create a gym where members were more than a number and the whole family could find enjoyment in exercising. Kym started Family Fitness Unlimited in hopes that she could bring fitness to the community on the south side of San Antonio. The gym focused on catered services for every member of the family, including martial arts and kickboxing, weight-loss training and even day care. Each new member of the
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gym received three personal training sessions to get them acquainted with the equipment and on a good path. Each senior citizen received complimentary personal training throughout their membership. Meanwhile, George had created the WellMed facilities, specializing in senior healthcare. WellMed is a well-known medical services chain, with locations in Texas, Florida and New Mexico. The medical group provides services in medical risk management, disease management and chronic care programs, home healthcare, healthcare delivery services and more. Kym and George made the decision to combine their businesses, and so the WellMed Senior Center was born. The gym was converted to a resource center for seniors to receive services such as computer training, a free lunch program and fitness programs. Kym continues to oversee this and the six other senior centers in the WellMed Medical Group, to provide that exceptional customer service and personalized care that was lacking at the gyms in which she had once worked. Kym’s drive to help people didn’t start in the gym, though. Her journey to entrepreneurship and volunteerism actually began when she was about 6 years old. Kym was watching TV one day and learned of a terrible disease called muscular dystrophy. Muscular dystrophy is an incurable condition that causes progressive weakness in the muscles and loss of muscle mass. The disease can get pretty severe, leaving some unable to walk and, in some severe cases, breathe unassisted. “I knew that was what I was supposed to do: help other people,” Kym thought after learning of this debilitating disease. That’s when Kym started out on her journey to help people. She went door to door collecting donations for people with muscular dystrophy, without knowing a single person with the disease. Fast-forward to present day and Kym is still helping others. She started the charity Kym’s Kids of San Antonio with the mission of helping underprivileged
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By: Lauren Guerra
children in the area raise money to go to school. The funds can be used for college or a vocational training program. The program is based on a points system, in which kids earn points by volunteering for those less fortunate than them. This genius idea gives kids huge benefits: money for a brighter future and a glimpse into life on the other side of the spectrum should they not take advantage of the opportunity; and assistance programs, like the food bank, get the benefit of having a volunteer. “This charity was started because I had a dream,” Kym says. “I had a dream about helping kids, and I knew I just had to do it. I didn’t know what I was doing, so I just started telling people about my idea. Eventually, everything just fell into place.” To this day, Kym’s Kids of San Antonio has provided over 25,000 hours of community service and funded $175,000 in scholarship funds for San Antonio students. Kym has even inspired her husband’s medical group to follow her lead. She helped with the creation of the WellMed Charitable Foundation, which provides funds to support seniors and caregivers in the community. To date, the foundation has donated over $3 million to the community. The charitable giving in this entrepreneur knows no bounds. Kym has started a new venture that includes a donation with every purchase. Bear Bottom Candles are hand-poured and made with 100 percent American soy wax. They are deliciously fragrant and luxurious. They also provide funds for the charitable organizations Kym supports, including Kym’s Kids of San Antonio; Club 21, a learning and resource center for individuals with Down syndrome; Vet Hunters, a grassroots group that strives to end homelessness for veterans; City Year, which aims to increase graduation rates in high-poverty communities; and Holy Cross Children’s Services, an organization that intends to meet the needs of vulnerable kids and their families. To round out this charitable portfolio, Kym plans to open a nokill animal shelter. This will not be your average animal shelter; Kym would like to be able to take in every animal that needs a home, whether it be a dog or a donkey! She foresees opening a shelter in the San Antonio area and one in California. As you can see from her impressive and extensive background, Kym has and will continue to help people through her entrepreneurial adventures. She has already accomplished great success in her career and managed to give so much back to the community, but this is only the beginning for Kym. I, for one, cannot wait to see what’s next for this woman who inspires many!
The charitable giving in this entrepreneur knows no bounds
WTxEC Business & Industry Involvement Please tune in to KWEL 1070 AM every Saturday from 1-2 p.m. Where industry comes to speak! Listen to the latest podcasts www.wtxec.org/shale-podcasts
CALL NOW FOR MORE INFO! Katherine Stokes 325-795-4206 or e-mail me: Katherine@wtxec.org Visit our website: www.wtxec.org for additional information.
To learn more about Kym’s Kids of San Antonio and to donate to the organization, visit www.kymskidssa.org.
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BUSINESS
CREATING A CULTURE OF PERFORMANCE By: Alex Charfen
Disclaimer: This article contains buzzwords like culture, performance, core values, vision, accountability, results, and the mother of all buzzwords: transparency. But I promise this article casts them in a new light, one that can clarify what may be lacking or missing in your organization, and holding you back from achieving higher levels of performance.
I
often tell founders and CEOs: You either define your culture or it defines itself, but there is always a culture. To take this one step further, culture is a reflection of leadership, and any attempt to create a culture contrary to the natural values of your leadership will fail. Culture Is a Living Thing The reason so much emphasis has recently been placed on company culture — and why it has become a top business buzzword — is the direct influence it has on both positive and negative business performance. In Corporate Culture and Performance, John P. Kotter and James L. Heskett found that a performance-enhancing culture contributes to significant growth in revenue, employment, stock price and net income. For greater perspective, Kotter and Heskett state: “To consider that the difference between a nine-hundred percent and a seventy-five percent appreciation in equity value is somewhat attributable to the strength of a company’s corporate culture highlights the significance of this often-overlooked issue.” I couldn’t agree more. Unfortunately, too many organizations and “culture consultants” focus on company culture in a vacuum, as if it were a thing that could be grown synthetically through perfected messages and ideal behaviors. Culture is an organic thing. It cannot be absolutely controlled, but it can be directed toward the vision of the founder, CEO or leadership team. When it comes to company culture — especially a culture of performance — every organization needs a simple model through which to say, “Do we have everything we need to move forward?” In other words, does every member of our team understand the organization’s vision, know what they are responsible for and have the necessary information to act? The challenge has always been one of two things: Either the model wasn’t simple or there wasn’t a model at all. Today, I see a very clear Performance Culture Model that creates an understanding of what success looks like for the organization and the individual. Building Blocks of High Performance The elements of the Performance Culture Model begin with core values, which are surrounded by vision, accountability and transparency. When working together, these elements create predictable results for any organization, no matter the size. When
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isolated, they will never achieve their desired outcomes. While you may have preconceived notions about these elements, each has a specific definition within the context of this model.
Performance Culture Model™ vision
predictable results
core values transparency
accountability © Charfen 2015 all rights reserved reproduction without permission prohibited
Core Values: Most organizations spend a lot of time and money defining their core values, but then forget about them. The only places to find them are on web pages, job listings or posters in the hallway. Your core values — what you stand for (and won’t stand for) — should actually find their way into just about everything your company does or creates, even into how decisions are being made. They should be so commonplace that they become the language of the organization (I once heard someone say, “If your employees are making fun of them, you’re repeating them enough”). Your core values provide the guardrails by which the organization chases down its vision. They’re that important. Vision: By definition, vision needs to be big, bold and directional — but does everyone on your team know what it is? And do they know how they fit into that vision? When an organization — from top to bottom — has clarity around its vision and the outcome it is creating, then everyone can pull in that direction. Accountability: Are we doing the things necessary to move toward our organization’s vision? When we create accountability around milestones and measurements that link to that vision, we create perspective for each individual on the team. Perspective leads
Today, I see a very clear Performance Culture Model that creates an understanding of what success looks like for the organization and the individual
to greater buy-in and ownership by those responsible for results. Transparency: How can you hold your team responsible for results you don’t share with them? This goes double for financial metrics. Key metrics like net profit, revenue and operational expenses — if teams are held accountable for them — must be shared openly to help individuals identify how they are creating success for the organization. In short, think of transparency as proactively sharing what’s needed to create alignment on the team. It can seem magical, but when we’re proactive and tell people what’s needed to move forward, we actually do move forward. So by having a vision, accountability and transparency understood throughout the organization, each individual will know how to create success and move forward on a daily basis. As these elements work together, guided by strong core values to influence decision-making, your organization will create a culture of performance that generates predictable results over time. And isn’t that what we’re all chasing?
Learn more about the Performance Culture Model at www.charfen.com. Alex Charfen is co-founder and CEO of CHARFEN, a training, education and consulting organization for entrepreneurs and small businesses. For the past two decades, he has created and curated proven business philosophies, models and strategies geared specifically to entrepreneurs and small-business owners.
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BUSINESS
MANAGING YOUR SAVINGS FIVE STRATEGIES IN A LOW INTEREST RATE ENVIRONMENT By: Scott A. Bayley
President and Founder of Houston-based companies Accumyn Consulting and Bayley & Company CPAs
I
f you’ve been paying attention to your savings, you know that the interest rate paid by banks is barely discernable. This has been the case since the financial crisis of the late 2000s when, to stimulate the economy, the Federal Reserve lowered the federal funds rate. This is the rate at which banks can lend money to each other, and it currently hovers at about 0.1 percent, directly impacting the rate that banks pay their depositors. In 2007, it was common to find a savings account that offered more than 5 percent on deposits. The current low interest rates have been a godsend for homeowners looking to refinance and consumers looking to buy their first home. But what about the savers, the investors trying to build their nest egg for retirement? With CD rates yielding less than 1 percent in many instances, savers must carefully look for opportunities to grow their wealth. Below are five strategies for growing your savings and achieving your retirement nest egg in a low interest rate environment:
1
Saving early and often pays off hugely Making a habit of saving a little from each paycheck is a habit you should never break. If you save a bit for a long time, you will be better off than a person who starts later and must save more. The longer you delay establishing savings, the greater the paycheck pinch later in life. To illustrate, compare the impact on saving requirements for a 25-year-old and a 45-year-old who both plan to retire early at age 62. Beginning at age 25, 22 percent needs to be socked away each year. If savings begins at age 45, and factoring in the 20 years of average earnings growth, a whopping 65 percent is required, an amount that may not be possible.
2
Take advantage of what your employer offers Corporations are not providing pension plans for employees as in decades past. But, if offered, take advantage of your employer’s 401(k) plan and a match. To maximize your savings, contribute as much as your employer will match. The company match, coupled with the use of before-tax dollars, will allow you to supercharge your retirement nest egg. When you withdraw money from a 401(k) plan later in life, the funds will be taxed like income. For this reason, the savings that exceed what your employer will match should be deposited into a Roth IRA, not the 401(k). Although you cannot deduct contributions to a Roth IRA, the money invested grows on a tax-deferred basis and withdrawals are 100 percent taxfree, provided you’re older than 59 and a half and opened the account more than five years ago.
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Diversify your investment portfolio with variety, not quantity Optimizing the return on your investments, while mitigating risk of loss, is achieved by spreading your money around. Diversification gives your savings exposure to a variety of asset classes that provide investment returns that are not closely correlated between classes. Putting all your eggs in one basket is a risky strategy that can be disastrous, for example if there is a sharp decline in stock prices. In order to diversify correctly, you need to know what kinds of investments to buy, how much money to put into each one, and how to diversify within a particular investment category. Investments in each of these different asset categories do different things for you: ● Stocks help your portfolio grow. ● Bonds bring in income. ● Real estate provides both a
hedge against inflation and low correlation to stocks — in other words, it may rise when stocks fall. ● International investments provide growth and help maintain buying power in an increasingly globalized world. ● Cash gives you and your portfolio security and stability and liquidity regardless of the market. Deciding the particular composition of your portfolio, and how the composition should evolve over time, is affected by factors such as the number of years remaining until your expected retirement and the right balance between an aggressive growth strategy and level of risk tolerance. An investment advisor can help you navigate these decisions.
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Do not design your investment plan looking in the rearview mirror. Over time, opportunities will emerge that should cause you to reconsider asset allocations. For example, just because a 40 to 60 percent allocation to bonds worked in the past does not mean you must always stick with that. Consider diversifying the bond portion of your portfolio to other assets that today may have an equal or higher yield, plus the potential to appreciate. Two examples of assets that can be purchased through exchange-traded funds, which trade just like stocks, are real estate investment trusts (REIT) and oil and gas pipelines. An REIT is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types with regular income streams, diversification and longterm capital appreciation. REITs are required to pay out at least 90 percent of their income in the form of dividends to investors each year. The average yield on REITs in 2015 has been 4.19 percent. Most oil and gas pipeline
To learn more about saving and investment topics, visit www.bayleycpas.com. Scott A. Bayley, Founder and President of Accumyn Consulting and the Managing Partner of Bayley & Company CPAs, has provided economic and financial advisory, valuation of complex securities and closely held businesses, and accounting services to corporations and individuals for over 30 years.
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operators are structured as master limited partnerships (MLPs), which also require the vast majority of their earnings to be distributed to shareholders regularly. The average yield on these MLPs in 2015 was 7.6 percent. These investments might present tax issues and different risk profiles, so it’s best to consult a financial advisor before jumping into these more sophisticated issues.
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Your short-term emergency fund money still belongs in the bank. Money that may be needed to live on over the next few years should not be exposed to risk of loss. Carefully consider your options for getting the most from your savings kept in a bank account. Consider accounts that offer compounding interest rates, certificates of deposit and government savings bonds. And if you have any debts, consider paying them off. You’ll get a much better return on your dollar by making an early debt payment, since most likely all of your debt has an interest rate much higher than what you earn on your savings in a bank account.
Current federal funds rate: 0.24 percent as of 01/04/16 Source: Federal Reserve Bank of St. Louis.
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Why a South African Restaurant is No. 1 in Houston Special to SHALE
THE PELI PELI BAR FEATURES ART FROM RENOWNED PERFORMANCE ARTIST DAVID GARIBALDI AND A HONEY ONYX SURROUND.
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W
hen thinking of the type of restaurant that was recently ranked No. 1 on TripAdvisor out of over 7,300 restaurants in Houston, one might assume a steakhouse or Mexican concept would be at the top of the list. But most people are surprised when they find out that Peli Peli, a South African concept with two successful locations in Houston, was recently listed at both No. 1 and No. 5 on TripAdvisor’s list of best Houston restaurants. “I think the people of Houston are embracing Peli Peli because they are ready to try something new and interesting,” says co-owner Thomas Nguyen. “Houston’s restaurant industry is leading the way in terms [of] progressive menus and diversified flavors, and we are honored to be a part of it.” While successfully serving the community of north Houston at Vintage Park for six years, Peli Peli introduced its South African cuisine to a larger Houston audience in 2014 at its second location in the Houston Galleria. The reception has been overwhelming as the Peli Peli Galleria location recently finished as the fifth highest grossing restaurant in the Houston Restaurant Weeks program, which broke an all-time record by raising $1.9 million for the Houston Food Bank.
Peli Peli,
with Houston locations at 110 Vintage Park Blvd. and The Galleria at 5085 Westheimer Road, features award-winning South African cuisine by Executive Chef Paul Friedman.
“Our goal is to provide a dining and tasting experience unlike any other,” says co-owner and Executive Chef Paul Friedman. With that in mind, Architect Si Dang of Andria Design (Moody Gardens, Houston Baptist University Cultural Arts Center and KUU Restaurant) has designed an enchanting dining space featuring a domed ceiling emulating the view beneath a canopy of trees in the middle of the desert, created by a backlit pattern of leaves and branches with color-changing LED lights programmed to mimic watching the sunset within a one-hour period. “The design of the restaurant is inspired by the food and culture of Peli Peli,” says Dang. “The vibrant flavors of the food and warm hospitality have been infused into every detail and overall ambiance of the interiors.” A late-night lounge boasts three works of art by world-renowned performance painter David Garibaldi. Created on-site, the paintings include South African leader Nelson Mandela, Jesus Christ and a scene from Friedman’s childhood in South Africa, depicting a young boy’s momentous encounter with a lion underneath a majestic acacia tree. The main bar is surrounded by a warm glowing envelope of honey onyx, a naturally translucent stone. Forty feet in length, it is the largest bar in The Galleria and is backed by a wall of TVs. Peli Peli’s menu evokes Dutch, SOUTH English, French, AFRICAN CHEF PAUL Portuguese and FRIEDMAN Indian cuisines, the melting
PHOTOS BY CHAN DO
LIFESTYLE
PELI PELI’S MAIN DINING ROOM SITS UNDERNEATH AN LED-LIT DOME PROGRAMMED TO MIMIC THE SUNSET. THE CAPE TOWN SKILLET, THE RESTAURANT’S SIGNATURE SEAFOOD PLATTER, INCLUDES MUSSELS, PELI PELI SHRIMP, SCALLOPS AND JUMBO TIGER PRAWNS.
CLOCKWISE: PHOTO BY CHAN DO, PHOTO BY CHAN DO, PHOTO BY DRAGANA HARRIS
ESPETADA, MEANING “MEAT ON A STICK,” IS A PORTUGUESE DISH FEATURING FILET TIPS AND IS PELI PELI’S MOST POPULAR ENTRÉE.
pot of South Africa. The marriage of these cultures’ spices is revealed in Peli Peli’s signature dishes, including its legendary bobotie, a cottage pie featuring curried house-made sausage and carrot bredie, topped with a pastry lid and mango chutney. Although grilled beef, lamb and chicken dominate the menu, seafood and dessert also shine. Friedman’s playful take on the traditional melktert (milk pie) is a popular finale. Expect the largest collection of South African wines in the country, including Peli Peli private label wines. A captain’s list of boutique wines from California, Spain and France adds depth to the selection. And a well-trained staff assists guests in finding the perfect wines to pair with the restaurant’s exotic dishes. “South African Flavor, Southern Hospitality” is the restaurant’s motto, distinguishing Peli Peli from over 7,000 restaurants in the Greater Houston area. A faithful following has resulted in numerous awards, including Best Service, Best Atmosphere and Best Romantic Restaurant, among others. In 2013, Peli Peli made OpenTable’s list of the Top 100 Best American Fare Restaurants in the United States. Peli Peli, named after the South African bird’s-eye chili pepper peri peri, is open seven days a week, serving lunch and dinner from Monday to Friday and brunch and dinner on Saturdays and Sundays. For reservations, visit www.opentable.com or call 281-257-9500.
»
For more information, visit www.pelipeli.com or follow the restaurant on Facebook at www.facebook.com/peligalleria and www.facebook.com/pelivintage, Twitter at www.twitter.com/pelipeli and Instagram at www.instagram.com/peli_peli. JAN/FEB 2016 SHALE OIL & GAS BUSINESS MAGAZINE
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LIFESTYLE
The Junior League of Houston, Inc. A TIME-HONORED TRADITION OF BUILDING A BETTER COMMUNITY
F
or almost a century, The Junior League of Houston, Inc., an organization of women committed to promoting volunteerism, has been sending out trained volunteers to a diverse group of charitable organizations with a mission to improve communities in the Houston area. In the past year, the League dispatched over 1,500 trained volunteers to 38 community projects. Community projects range from local schools, animal rescue operations, neighborhood centers and hospitals to some of the city’s most notable cultural outposts. The League outreach affects women, children, families and senior citizens. Over the last year, the League’s efforts resulted in $2 million in volunteer time and direct financial support. The League continues to review its projects and expand its scope of activities to increase the positive community impact on the city of Houston. Founded in 1925, the Junior League of Houston focuses on developing the potential of women and improving communities through the effective action and leadership of trained volunteers. Its purpose is exclusively educational and charitable. The organization has been “building a better community” with a community program that addresses a variety of critical issues, including basic needs,
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abuse of women and children, healthcare, education and cultural enrichment. The League also offers community assistance grants to worthwhile organizations that currently do not receive volunteer or financial support from the League. Additional community initiatives include an Outside Board Representative program, with League volunteers serving as non-voting board members for other organizations, and a program to address shortterm volunteer needs through the Done in a Day program. The League’s annual charity ball is an integral source of funding for its community program and volunteer initiatives. Since 1949, the charity ball has served as an opportunity to celebrate the pivotal partnerships that enable the Junior League to continue its mission of training volunteers to champion positive change in the Houston community each year. For every dollar received from its generous donors, the Junior League is able to triple its value by pairing it with trained volunteers. This year’s Bon Temps Ball will be held on Feb. 5 and 6, with a preview evening on Feb. 4.
»
To learn more about The Junior League of Houston, Inc., please visit www.jlh.org.
PHOTOS COURTESY OF THE JUNIOR LEAGUE OF HOUSTON, INC.
Special to SHALE
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COMMUNITY
Young Women Energized Special to SHALE
H
ow many young women dream of working in the energy industry? Not enough, according to some experts. A March 2014 study commissioned by the American Petroleum Institute found that while women account for nearly half of the country’s overall workforce, they make up only 19 percent of the workers in the oil and gas and petrochemical sectors. This is a figure the industry as a whole would like to see increased. But how? Studies have identified a few approaches that may help bridge the gap, including introducing role models, generating awareness of the industry early in young women’s schooling and better describing the benefits the industry provides. The Houston chapter of the Women’s Energy Network incorporates these strategies with its annual Young Women Energized (YWE) event. A 2012 World Oil Awards Best Outreach Program finalist, YWE has a vision to not only introduce young women to a career in energy, but also to cultivate the next generation of female leaders in the industry. The Women’s Energy Network also encourages the pursuit of STEM careers. Five scholarships are awarded
currently engaged in the industry. It is open to all high school girls in the Greater Houston metropolitan area. The 2015 event brought together 630 young women, parents and educators to be inspired and encouraged by the career opportunities the energy industry provides — and they weren’t disappointed. Hosted at Rice University, the crowd was welcomed by Lilibeth André, the Associate Director of Rice’s Shell Center for Sustainability, which manages research, outreach and education activities promoting sustainable development. André explained what sustainable development means and how every individual can play a role. Shelly Cory, a 15-year Baker Hughes engineer, engaged the girls with her keynote address. Cory is a STEM leader for Baker Hughes, creating various STEM initiatives within the organization. She is also actively involved in the Women’s Resource Group as well as the Million Women Mentors initiative. The attendees could not wait to answer Cory’s pop quiz on what STEM is and take a stroll down memory lane as she described changes to the industry in her lifetime. She also told great stories of her earlier experiences as one of the few women in her field.
to Houston-area high school seniors, and the recipients are announced at the YWE event. YWE is a free event targeting high school girls, their parents and educators offering the opportunity to interact with women
The group then participated in three breakout sessions: The junior/senior program divides the girls into small groups led by an industry representative who describes her career,
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education or skill sets and responds to the girls’ questions. The objective is to demonstrate the vast opportunities in the industry that can fit a variety of interests. It is also designed to expose the girls to role models in the energy sector. The freshman/sophomore program introduces girls to activities they can get involved with today to help further their interests going forward, such as mentorships and networking — soft skills that will make a big difference for them as they decide their career paths. The parent/educator program is designed to equip those who have so much influence with the knowledge needed to encourage STEM studies and to best promote interested girls. Local college and university representatives discussed educational programs and financial aid opportunities, while an industry panel discussed what they look for in new hires and
YWE is a free event targeting high school girls, their parents and educators offering the opportunity to interact with women currently engaged in the industry trends they see in the industry. The 2015 Young Women Energized event was the largest to date and will only continue to grow. Impactful, informative and invaluable were just some of the adjectives used to describe this year’s event. One student commented, “I really enjoyed the event and found it inspiring. I strengthened the direction that I want to take toward chemical engineering. I was in awe to actually see [with] my own eyes how many girls in high school wanted to pursue STEM careers and took charge by coming to the event.” And a parent provided this feedback: “... to hear from a woman in a male-dominated work environment some of the things young women can do to make themselves stand out was invaluable ... the mentorship advice is something we truly plan to utilize.”
For more information related to the Women’s Energy Network or Young Women Energized, please visit www.womensenergynetwork.org/houston.
SHALE OIL & GAS BUSINESS MAGAZINE JAN/FEB 2016
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SCENE
Cover Party
PHOTOS COURTESY OF SHALE MAGAZINE
SHALE hosted the first dual cover party in its history on Dec. 3, featuring PESA President Leslie Shockley Beyer and David Porter, Chairman of the Railroad Commission of Texas. The event was very well-attended and served as an end to a year of amazing cover stories. Guests had the opportunity to mingle with a diverse group of industry and business leaders. Light appetizers and cocktails were greatly enjoyed by guests as they listened to short speeches by Kym Bolado, STEER’s President Omar Garcia, Beyer and Porter.
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SCENE
State of Energy
PHOTOS COURTESY OF SHALE MAGAZINE
The inaugural State of Energy luncheon in San Antonio was a major success, just as the Corpus Christi luncheon was. The event featured Chairman of the Railroad Commission of Texas, David Porter, as keynote speaker. Panelists at this event included Paul Sheppard, Vice President of Halliburton; John Fremont, Chief Revenue Officer with Chaotic Moon; Brandon Seale, President of Howard Energy Mexico; Sen. Carlos I. Uresti; and Tim Baer, Senior Manager, Eagle Ford Development with Encana. Steve Spriester with the KSAT 12 News served as the Master of Ceremonies for the event.
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SCENE
STEER Awards Each year, the South Texas Energy and Economic Roundtable (STEER) hosts the Eagle Ford Excellence Awards to honor oil and gas companies, educational organizations and nonprofit organizations that go above and beyond in social responsibility. The winners of the 2015 awards in the four categories are as follows: Environmental Stewardship: ● Companies or organizations with fewer than 250 employees: Exclusive Energy Services ● Companies or organizations with more than 250 employees: Weatherford
Community and Social Investment: ● Companies or organizations with fewer than 250 employees: Energy Waste Rentals & Service ● Companies or organizations with more than 250 employees: NuStar Energy LP
Impact Award: ● Falls City Education Foundation ● Victoria College
PHOTOS COURTESY OF STEER
Safety Performance: ● Companies or organizations with fewer than 250 employees: Listo Services (LS) ● Companies or organizations with more than 250 employees: FTS International
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SCENE
Houston Energy Breakfast
PHOTOS COURTESY OF HOUSTON ENERGY BREAKFAST
The latest Houston Energy Breakfast event took place on Dec. 3 at the Westin Oaks Houston at the Galleria. Speakers included R.T. Dukes, Wood Mackenzie; Regina Mayor, KPMG; Leigh-Ann Russell, BP; and June Ressler, Cenergy International. SHALE hosted a networking station and discussed branding in the oil and gas industry. This is a quarterly event.
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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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