SHALE Oil & Gas Business Magazine July/August 2016 by SHALE Oil & Gas Business Magazine

SHALE JULY/AUG 2016

EXPLAINING THE ROLE OF OIL AND NATURAL GAS

OIL & GAS BUSINESS MAGAZINE

AMERICANS AND THEIR CARS

THE IMPACT OF MINERAL PROPERTY VALUATIONS

LEADING FROM THE FRONT

REGINA MAYOR

KPMG GLOBAL ENERGY CONFERENCE

PROPERTY TAX SYSTEM POSES COMPLICATED CHALLENGE FOR TEXAS JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

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. 

Hydraulic pumps, motors and relief valves

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  JULY/AUGUST 2016 S., San Antonio, Texas 78223 / (210) 471-1923 13611 U.S. Hwy 181

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JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

SHALE is proud to announce the creation of

Texas energy advocaTes coaliTion

TEAC is a social, educational and advocacy group of energy supporters. The goal of the organization is to encourage networking within our community and the community that surrounds us.

JOIN TODAY AT SHALEMAG.COM 4

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JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

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JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

JULY/AUGUST 2016

CONTENTS FEATURE

All of the Above

COVER STORY

As the leader of the national energy, natural resources and chemicals sector with KPMG, Regina Mayor gives insight into the changing energy market.

INDUSTRY

COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: MICHAEL GIORDANO

INDUSTRY

28 Some Things Never Change 30 The Impact of Mineral Property Valuations in South Texas

32 Take the Time to Learn from Others 34 History Worth the Price of Admission 36 U.S. LNG Markets Under Seige 38 Innovation Through Dynamic Change: PESA Annual Meeting 2016

BUSINESS

48 Americans and Their Cars 50 Don’t Sanction Incompetence, Transform it

LIFESTYLE

54 Healthy Living 56 Editor’s Pick: Éilan Hotel & Spa

40 Nominations for the STEER Eagle Ford

Excellence Awards Now Being Accepted

POLICY

44 Property Tax System Proposes

Complicated Challenge for Texas

SCENE

60 Eagle Heights Development Open House

62 KPMG’s 14th Annual Global Energy Conference

The Catch 22 for Oil and Gas Developers

POLICY

Texas Tough on Bad Operators

BUSINESS

5 Ways to Improve Cybersecurity in the Cloud

LIFESTYLE

Swimming Towards Success in STEM Education

SCENE

May/June Cover Party

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

ADVISORY BOARD

Omar Garcia Senior Advisor

bradley h. lenz

Thomas Tunstall, Ph.D.

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 majors in international business and Spanish. In 2010, Gov. Rick Perry appointed Garcia to the Texas Economic Development Corporation.

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.

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.

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

LOCATIONS IN TEXAS

1 GOAL - YOUR TOTAL SATISFACTION FLEET SALES AND SERVICE • PICKUP AND DELIVERY ALVIN BAILEY | ABAILEY@KAHLIGAUTO.COM | 830-480-3656 The Kahlig Auto Group are Minority Owner Dealerships JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE 11

PUBLISHER’S NOTE OIL & GAS BUSINESS MAGAZINE VOLUME 3 ISSUE 4 • JULY/AUGUST 2016

KYM SCHWEERS CEO / PUBLISHER

Summer is in full swing and, boy, is it getting hot! But that’s not stopping #teamSHALE from growing and evolving. I am excited to get this issue with Regina Mayor out to the masses because she has an incredible story to tell. Not only is she an inspiration as a leader in the energy service sector, but as a woman, her passion and knowledge make her a role model to many young ladies out there preparing for a career in energy. Her story demonstrates so much, but one important point I want to make is that she made her career in energy by working with energy companies from the outside. There are so many opportunities directly and indirectly related to oil and gas for young professionals out there, with more becoming available each day as technology and innovation transform our industry and our lives. You may not think you’re an energy advocate and then one day you become one without even knowing it’s happening. Speaking of energy advocates, I am so pleased to make you aware, if you weren’t already, that SHALE has started a new advocacy organization focused on education, advocacy and networking. Texas Energy Advocates Coalition, or TEAC, recently launched in San Antonio and Corpus Christi, and our Houston launch is soon to follow. This is a membership organization with so many benefits, including the opportunity to meet other energy advocates, a listing in our new SHALE mobile app directory, a chance to make a difference by letting your city, state and national leaders know you support the energy industry and so much more! I invite you to visit our website, shalemag.com, to learn more about TEAC and sign up for membership. I hope to see you at the next meeting! In closing, I just want to thank you for your support of SHALE and all that we do to bring oil and gas news and information to the community. Stay up-to-date with us by following our social media pages and registering for our newsletter on our website. I hope you enjoy this new issue of SHALE and look forward to hearing your feedback on Facebook, Twitter or by email at kym@shalemag.com.

KYM SCHWEERS

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

CHIEF FINANCIAL OFFICER Deana Acosta

EDITOR IN CHIEF Lauren Guerra

ART DIRECTOR Elisa G Creative

COPY EDITORS

Katie Buniak, Maegan Sheppard

VICE PRESIDENT OF SALES Liz Massey Kimmel

ACCOUNT MANAGERS

Susan Brown, Kristy Sommers

ONLINE CONTENT MANAGER Fernando Guerra

SOCIAL MEDIA DIRECTOR Courtney Boedeker

SR. CORRESPOND WESTERN REGION Raymond Bolado

CONTRIBUTING WRITERS

Dick Barden, Scott A. Bayley, David Blackmon, Alex Charfen, Bryce Cramer, Omar Garcia, Lauren Guerra, Bill Keffer, David Porter, Thomas Tunstall, Ph.D., Sen. Carlos Uresti

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.

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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 OFFICE: 5600 Broadway Ave., San Antonio, Texas 78209 For general inquiries, call: 210.240.7188 Copyright © 2016 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.

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JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

 FEATURE

All of the Above

A NEW APPROACH TO EXPLAINING THE ROLE OF OIL AND NATURAL GAS Special to SHALE

n the spirit of this issue’s focus on energy in our daily lives, we want to encourage you to make energy part of your conversations. Many members of our industry are a little apprehensive about discussing oil and natural gas. It’s easy to see why — we’ve all heard a steady stream of criticism and misinformation about oil and natural gas. Bad science, misplaced fears and political pressure — coming from media, government officials or political candidates — too often drive the conversation and result in government decisions that hurt our industry.

energy today — and we are investing in the future. Our industry is also a leading investor in technologies that help our environment. Since 2000, we’ve invested about $90 billion in low- and zero-emission technologies. Further, the increased use of natural gas to generate electricity has helped lower our nation’s carbon emissions to levels not seen for decades. A great way to learn more about our industry’s All-of-theAbove story and help spread the word is by participating in Energy Nation, the American Petroleum Institute’s issue education and advocacy program for industry

Our industry is providing energy today — and we are investing in the future But, by working together, our industry can change the conversation. We have a great story to tell. We are an important part of America’s All-of-the-Above energy strategy, which includes traditional and alternative energy sources. Our industry is providing

employees. Energy Nation provides tools and information that help you communicate a positive, compelling picture of oil and natural gas — not only to government officials, but also to family, friends, neighbors and others in your community.

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

The Facts Here are some key points that you can make that show our industry as a part of the whole picture: ‣ Oil and natural gas are part of our nation’s broad energy mix. No single source of energy can meet our nation’s needs to power our businesses, heat our homes, light our schools and more. Oil and natural gas are an essential part of a broad energy mix that also includes hydropower, nuclear, coal, wind and solar. ‣ Natural gas is the primary driver of carbon emissions reduction. The U.S. leads all other industrial nations — by a significant margin — in reducing carbon emissions. Our success is a direct result of America’s ability to access natural gas resources. ‣ Oil and natural gas are essential for the production of thousands of consumer goods.

Modern medicine, clothing, household paint and building materials, your computer, your phone, sports equipment, eyeglasses and much more exist because of oil and natural gas. ‣ Our industry invests in helping the environment. In addition to investing in alternative energy, our industry has made tremendous strides in reducing emissions with new technologies. Between 1990 and 2014, American energy companies spent more than $154 billion on environmental improvements that are resulting in cleaner air. With all this in mind, do what you can to make the energy conversation part of your everyday routine. As you can see, we have a strong story to tell. We can be proud, not defensive. We can be inclusive, not exclusive. We are energy leaders — and we should lead the conversation.

To learn more about Energy Nation and its mission, visit www.energynation.org.

Sept. 12-14, 2016 San Antonio,Texas

Henry B. Gonzalez Convention Center

EARLY BIRD PRICING

REGISTRATION IS OPEN

DUGEagleFord.com

n Learn where the industry’s top analysts forecast oil prices to be in 2017 and beyond n See hands-on technology demonstrations from hundreds of exhibitors — experience the latest solutions helping producers save precious time and money

At a Crossroads As signs of a market recovery take hold, industry leaders’ questions are shifting from “how low will it go, and how long?” to “how much will it recover, and how quickly?” Texas’ prolific Permian Basin is already experiencing a surge in activity. Producers look to their core assets in the Eagle Ford next.

Attend DUG Eagle Ford to: n Hear directly from the region’s most active producers — find out how they are driving breakeven costs down by operating more efficiently

through August 19

Blessed with 18,000 square miles of diverse resources (crude oil, NGLs and dry gas), ample takeaway capacity (via pipe, rail and barge), and close proximity to Gulf Coast customers and export terminals, the Eagle Ford is poised for resurgence. But as market conditions improve, producers remain focused on costs and the latest efficiency-focused solutions. This September, join thousands of industry professionals and hundreds of exhibitors in San Antonio for an in-depth look at what’s working, what’s not and what’s next!

View the full agenda at DUGEagleFord.com

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Hosted by: JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

COVER STORY

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

Leading From the Front:

REGINA MAYOR KPMG’s National Sector Leader, Energy, Natural Resources & Chemicals By: Lauren Guerra Photography: Michael Giordano

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

harles Darwin once said, “It is not the strongest or the most intelligent who will survive but those who can best manage change.” In an industry that is constantly evolving, this frame of mind couldn’t be more true. Especially in current market trends, the companies that are open to adapting are finding opportunities to weather the storm. At prices hovering around $50 per barrel, the market is already seeing an uptick from the depressed prices in 2015 and early 2016. The rise in oil prices has everyone excited for what’s next in the industry. Will prices rise once again to the $100 per barrel mark, or will we face a new reality with different price landscapes? Most experts estimate that the oil price will never bounce back to the $100 range. Our new reality will encompass lower oil prices ... and lower operating costs. Out of hard times, innovation is born. New technology and practices are put into place to cut down the breakeven margin. And as companies implement these changes, the leadership team grows in knowledge and experience. Going forward, the companies who have survived the downturn will look forward to an ongoing change cycle. For it’s those who are willing to be in constant change that will reap the benefits.

A pillar of knowledge, experience and strength within KPMG, Regina Mayor has grown within the industry and serves as the Energy, Natural Resources & Chemicals (ENRC) National Sector Leader and Americas Oil and Gas Leader

Oil and gas companies have highly intelligent, technologically savvy and uniquely talented employees. But we all have our limitations. In many ways, investing in accounting and financial consulting services is investing in a company’s future. While you focus on the day to day and doing what an oil and gas company does best, letting the tax and financial experts work for you can mean real return on investment (ROI) in a short period of time. As one of the “Big Four,” KPMG operates as one of the largest accounting services companies in the world. Operating in 155 of the 195 countries in the world, it would be accurate to say that this group has a wide reach and a wealth of knowledge to offer clients. KPMG is segmented based on industry, as well as by the tax, accounting and advisory services that it provides to clients. The company specializes in asset management; banking and capital markets, energy and natural resources, government and public sector, healthcare and life sciences, industrial manufacturing and technology, to name a few. A pillar of knowledge, experience and strength within the organization, Regina Mayor has grown within the industry and found herself taking on the large task of serving as the Energy, Natural Resources & Chemicals (ENRC) National Sector Leader and Americas Oil and Gas Leader. As the ENRC leader, Mayor works with large and small energy companies on projects ranging from tax, process improvement, financial restructuring, investment planning, growth strategy, technology deployments and more. As a leader, and especially as a woman, Mayor is an inspiration to many. It was a great honor to learn more about her incredible journey to her current position. Through her many life and career experiences, she has earned a reputation as an expert in energy topics.

A WORLD APART Mayor, a Hawaii native, stumbled upon the energy industry by happenstance. It wasn’t until she left her beloved island home that she was given the opportunity to learn about energy topics. Attending Cornell University in Ithaca, New York, the incoming freshman faced many new experiences. Seeing snow for the first time at 18 years old, emphasized just how far from home she really was. “I was really cold all the time,” Mayor remembers, “and when it snowed in April, I cried.” But the excitement of the new territory was

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infectious. With grandiose dreams, she looked forward to what was possible in her future career. As a communications major, Mayor envisioned one day becoming a broadcast journalist. “I wanted to be the next Connie Chung,” Mayor recalls. “Or an actress. I thought, Ithaca, New York is close to New York City; I would be down in New York City every weekend to see if I could make my big break. But it was very far away. I think I went there three times in four years.” Sadly, Mayor’s dream of making it in show business was not in the cards. But new opportunities were on the horizon. As the daughter of two teachers, Mayor was able to attend an Ivy League school in New York state with the help of a Reserve Officer Training Corps (ROTC) scholarship. And with her involvement in the military training program at Cornell, an interest in the federal government and policy was born. “The army was really very good to me,” she says. “I did a lot of exciting things like jump out of airplanes, drive tanks and fire almost every bit of weaponry known to mankind.” Upon graduation, Mayor was commissioned as a second lieutenant in the U.S. Army Reserve. She was very fortunate in her timing of service, as peace was breaking out over the globe. At the time, President Reagan was downsizing the military. This made it possible for Mayor to obtain a full scholarship to Cornell and join the Army Reserve, which requires a time commitment of one weekend a month and two weeks in the summer, as opposed to active duty U.S. Army service. During her time in the Reserve, She was commissioned as a finance officer. At the time, Mayor thought she would pick a job that would be most applicable to her civilian life. In hindsight, this was a defining moment in her life, leading her down the path that brought her to the energy sector at KPMG. Also during her time at Cornell in the late �80s, Mayor was given the prestigious opportunity to intern for a semester at the Pentagon in the Supreme Headquarters Allied Powers Europe (SHAPE). During her tenure, she supported the Supreme Allied Commander Europe, Gen. John Galvin, as well as his speechwriter, Maj. David Petraeus, future general and CIA Director. Upon graduating from Cornell, Mayor followed her passion for government policy to the John F. Kennedy School of Government at Harvard University, where she received her master’s degree

“

The use of technology has been the largest change I’ve seen,” Mayor says. “The changes that have been made and potential for what can be changed in this industry are mind-boggling.”

in public policy. With her focus set on government and a fascination with defense policy, Mayor aspired to be the first female U.S. Secretary of Defense, a designation a woman has yet to gain. Once again, however, our fates are changed in a moment’s notice and Mayor found herself heading to Houston.

NEW OPPORTUNITIES Starting over in a new area, with new career opportunities, can be challenging but it didn’t stop Mayor. “Moving to Houston was great for my career,” she says. Almost immediately after relocating to Houston in �93, Mayor began working in the energy industry as a Senior Associate with Ernst & Young, another of the “Big Four” accounting firms. The opportunity to work with oil and gas companies gave her the opportunity for work/life balance. “The energy business, I fell in love with it very quickly because it’s an amazing industry,” Mayor explains. “My clients were right in town so I didn’t have to travel as extensively as others in my field might have had to travel,” an important factor for the mother of three. Working with multinational oil and gas companies, Mayor delivered customized process-improving solutions on a global basis. After more than six years with the firm and gaining much experience in the energy sector, she became the Vice President of Marketing and Strategic Planning at Capgemini in 2000. Capgemini is a leader in consulting, technology and outsourcing services, helping clients improve their performance and competitive positioning. Mayor served on the

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

evolve in the energy consulting arena, opening up their full array of services to many large energy companies.

LEARNING AND GROWING KPMG takes on a very full-service approach to their clients. In some cases, especially for clients out of the country where mandatory audit rotations are being contemplated, KPMG provides various services to keep the client in the KPMG family for life. “We recognize that we may be playing different roles during the life cycle of that relationship,” Mayor says. “We want to be able to bring the full power of what KPMG has to offer to the client so that they can be successful if they’re an audit client or a non-audit client. That’s what really attracted me to come to KPMG.” Mayor’s passion and expertise in the energy industry really came to light after she helped transition the global oil and gas company from an audit client to a tax and advisory client. Her work with some of the largest and most well-known energy companies since 1993 led KPMG to embrace Mayor as an expert in the energy advisory field and provide her with many leadership opportunities that would eventually bring her to her current role. Throughout her career with KPMG, Mayor has seen significant changes in the market, the industry, her company and herself. After only one year with the company, in 2007, Mayor was asked to lead the oil and gas consulting team, a subset of the energy practice at KPMG. She led a fraction of the number of people within her team today, but this was a major stepping-stone for Mayor. In 2009, Mayor

PHOTOS COURTESY OF REGINA MAYOR

Americas executive team with the company, working to reduce the total cost of marketing while simultaneously launching a major brand campaign for the company. And finally in 2006, Mayor found her home at KPMG. At the time KPMG was serving a global oil and gas company in an audit capacity. KPMG had a great relationship with the company in Europe but had not made any connection with the large company in the U.S. Mayor, on the other hand, had strong U.S. connections due to her work as a service provider since 1996. KPMG brought Mayor in due to her positive relationships with this global oil and gas company, but her potential within the company beyond this significant client relationship was quickly realized. She worked her way up the ranks, finding her leadership team to be supportive of her growth in the energy segment. With Mayor’s help, KPMG was able to transition a 50-plus-year audit relationship to an ongoing tax and advisory service agreement, which represented a huge growth point for the company. Due to specific SEC regulations, many companies will choose audit services from their audit provider and seek out other companies for tax or advisory services. “We have audit clients, who are incredibly valuable to us and who we want to bring new ideas and thoughts to but they have rules and regulations about other things they might be able to hire us to do that we need to be very careful and cognizant of. And then we have our Tax and Advisory clients, which we can provide the full-suite of our services, and we provide them with insights from our audit practice.” Mayor’s reputation and contacts within the industry helped KPMG

With Mayor’s help, KPMG was able to transition a 50-plus-year audit relationship to an ongoing tax and advisory service agreement, which represented a huge growth point for the company

was asked to then lead the entire Houston office in the consulting part of the company. This role made her the principal in charge of the advisory practice. Mayor was overseeing several hundred people and leading the team to grow revenue by double digits five years in a row. Once again, Mayor was asked to take on more leadership responsibilities. In 2011 she was made the head of the energy advisory team, a group that encompasses all the energy industries, including oil and gas, power and utilities, chemicals, mining and renewables. Mayor stayed in this role for many years under the head of the energy practice for KPMG. Then, in 2015, the leader of the energy practice, John Kunasek, was named the National Managing Partner across all of the industries covered by KPMG. “I think that was recognition of all of the great things we were doing within the energy vertical,” Mayor states. Following the promotion of Kunasek, Mayor was named the head of the energy practice in August 2015. “The firm has given me tremendous opportunities for leadership and growth. Even though I was a relative newcomer, I felt embraced by our team and the leaders here,” Mayor adds. But with the opportunities came challenges. She had many years of experience working with oil and gas companies but needed to create that same level of depth in other sub-segments, like utilities. “I was very oil and gas specific, which gave me significant depth of expertise. But I didn’t know as much about the other segments,” Mayor explains. But over time, She took on various endeavors, such as a large outsourcing project with Energy Future Holdings (formerly known as TXU Corp.) in 2005, which gave her insight and an opportunity to learn about the electricity industry. Now, after learning over many years of working with various energy companies across industries, Mayor says things are changing.

ENERGY GOING FORWARD As a service provider, Mayor has witnessed a transformational change in the energy industry. “The use of technology has been the largest change I’ve seen,” Mayor says. “The changes that have been made and potential for what can be changed in this industry are mind-boggling.” As technologies evolve and grow more efficient, companies are finding new, costeffective ways to change their process to increase their ROI. Within the oil and gas arena, companies

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

like ConocoPhillips, Halliburton and Devon Energy are actively using new technologies to find underproduced wells to refrac. The technology is helping these companies save money and tap into oil and gas reserves that may have otherwise been unretrieved. According to The Wall Street Journal, new software has been introduced at well sites that aids in determining the perfect amount of sand, water and chemicals at precisely the right location to extract the most oil and natural gas. In previous years, the E&P company would blast large amounts of sand to ensure that fissures stay open, but that meant a huge cost for the company. Using technology, companies are removing the guesswork from their process and seeing large benefits. In addition to new technologies, companies are changing their mindset on the value chain on an end-to-end basis. Knowing their consumers and what their needs are is new to the energy industry, Mayor explains. The new mindset is a shift to a more commercialized business model with a focus on the total life cycle cost and total profitability aspect of the product and process. “Ten years ago parts of the energy industry were still in an engineering mindset. Companies tended to be more excited about the engineering aspects that they were accomplishing and thought less about how they would ultimately make money.”

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

In a sea of suits, Mayor stands out proudly in a fashionable ensemble representing strong women in the energy industry Looking at the current commodity market, what is Mayor telling her clients to help them succeed going forward? “We’re telling them to rethink everything, challenge every established norm and every part of the status quo. Some of them are, and some of them aren’t. But the successful ones, I think, are going to use this downturn as a catalyst to radically reshape who they are, how they compete, how they define themselves with their customers and what kind of talent they retain.” The challenges facing most energy companies are basic in nature: access to capital and liquidity. But the opportunities for growth are immense. Thinking outside the box to improve current policies and practices is going to be the greatest takeaway of the

current market condition. Developing an eye for talent is also a major lesson in this situation. As far as employment, we hear a lot about downsizing. But many companies are taking this opportunity to locate the future industry leaders who are going to revolutionize the energy industry going forward. All in all, Mayor says she and others on her team are focusing on the future and how things may change. There are going to be major social, demographic, geopolitical and technological disruptors that come up in the next 10 years that could mean large-scale changes for various energy segments. What if there is a significant increase in use of electric vehicles? What does this mean for gasoline usage? What impact will social/ demographic changes ultimately have on the

number of miles traveled? Companies in the downstream market may be rethinking the use of their products in the future. The utilities arena is going to undergo transformative changes with innovations in batteries, fuel cell technologies, fourthgeneration solar and other technologies. All of these factors will affect how power is generated, transmitted, stored and used. “Companies are looking ahead to see what may affect their value chain and what they may do under different scenarios. A lot of boardroom leaders are waking up to these realities.” But thinking ahead and planning for these scenarios is what is going to help these companies persevere in a changing environment.

STRENGTH IN DIVERSITY Named a “Breakthrough Women” by the Greater Houston Women’s Chamber of Commerce in 2016, Mayor is breaking down barriers and inspiring women around the world to follow their passion as far as they can go. She has used her diversity, as a woman, to set herself apart from her counterparts. In a sea of suits, Mayor stands out proudly in a fashionable ensemble representing strong women in the energy industry. Her life experiences, as a second lieutenant in the

U.S. Army Reserve and a leader in the energy advisory sphere, have proven her ability to adapt in different environments and lead with grace and knowledge. But the two worlds are more similar than you’d think, Mayor says. “I find the energy industry to be a lot like the Army. It’s a very male-dominated, -oriented industry.” While in the Reserve, Regina never let herself be limited from gaining new experiences. One story she is proud to share is about her experience jumping out of a plane. It was the summer of 1987. Mayor, a mere 20 years old, was sent to paratrooper training at Fort Benning, Georgia. She was one of about 15 women there at the time, out of 500 troops, learning how to fall properly and preparing to jump from a plane. The boot camp style was challenging mentally and physically for Mayor, but nothing can prepare you for the fear that comes over you on your first jump. When the time came for that first leap, the Sergeant Airborne went down the aisle numbering off the order of jumpers. As he walked by, he tapped Mayor’s helmet, said “one” and kept going down the line. Mayor realized she was going first. It wasn’t easy to conquer that fear, but she did it. She jumped first and then did another four jumps to earn a badge she proudly displayed on her uniform, signaling she had completed the required five jumps.

When the day was done and she made her way back to the female barracks, Mayor learned that most of the women, out of the 15 that were stationed there were the first to jump in their groups. Keep in mind that this was the summer of 1987. The U.S. Army was leveraging the women on the teams to motivate the rest. But this was more than just a ploy by the Army. “It taught me a lot,” Mayor reflects. “It taught me about leading from the front, conquering my fears and the importance of diversity in leadership. These lessons are a part of who I am.” Within the industry, women are growing into more leadership roles now than ever before. No one can say that men are a better fit for a role because of their gender-specific skill set, and the same can’t be said for a woman. But that doesn’t mean there isn’t strength in being a woman in a male-dominated industry. “I have learned to value what I bring as a woman. I know I stand out; I look different from everybody else. I try to make myself memorable in a positive way and use the fact that I’m different as an advantage.”

To learn more about KPMG, the leadership team, and its services, visit www.kpmg.com.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

The Catch 22 for Oil and Gas Developers By: Dick Barden

t’s no surprise that sustained low oil prices have caused many companies to make dramatic changes to their normal modes of operation. From shutting down rigs and canceling drilling programs to forcing layoffs, office closures and even discontinuing business operations, the industry has not seen this level of economic distress and belt tightening for quite a few years. For those companies that remain active, margins are narrow and it is more important than ever that each drilling and field development decision is a really good one.

static conditions at a particular point in time; a “snap-shot” of the well or reservoir, as it were. Reservoir simulation, on the other hand, is a dynamic tool that accounts for changes that take place over time in both the well(s) and the reservoir(s), and that can also account for well-to-well, well-to-boundary, and frac-to-frac pressure communication and interference effects over time. There is no other tool that can do all of that. Since many drilling/field development decisions involve issues concerning (i) optimizing well completions, (ii) identifying the most cost-effective well spacing, (iii) determining the

The best way to make “really good” drilling decisions is to apply as much experiential knowledge and scientific analysis as possible The best way to make “really good” drilling decisions is to apply as much experiential knowledge and scientific analysis as possible. On the analytical side, petroleum engineers have, generally speaking, two basic types of tools to work with: static and dynamic. Static tools, such as RTA, decline curve and nodal analysis software, can do an excellent job of examining specific aspects of well behavior under certain

most efficient water injection pattern, and (iv) making valid long term EUR forecasts, it is clear that any company engaged in these activities would be able to derive great benefit from including reservoir simulation as part of their normal, overall evaluation and decision making process. Unfortunately, that’s where we run into the “Catch 22”. With oil prices at or near 10 year lows, operating margins are very thin and, consequently,

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

WATERFLOOD COMPARISONS All cases assume 60% sweep efficiency and 10% residual oil saturation. The oil well produces on depletion drive for 10 years, then on flood for another 20 years. All injectors are pumping 100 bbl/day with 100% injection efficiency.

Water front maps for each of the scenarios at the end of the 30 year study period.

there is much less room for error in drilling new wells. This new imperative for making better field development decisions means that, now more than ever, companies also need to increase the amount of reservoir simulation that they perform – preferably to include every new well or workover they do. By adding more dynamic analysis to all the other static evaluation that is being done, the opportunity for optimizing well spacing, hydraulically fractured completions and overall field development success can be dramatically improved. However, conventional reservoir simulation is not a quick, easy or inexpensive process. Grid-based simulators require the tedious construction of many hundreds or thousands – sometimes tens of thousands – of cells, which must then be populated with different kinds of geophysical and petrophysical data. This data is often of a specialized nature that can only be obtained by shutting in existing producers or drilling new wells in

order to run the necessary tests. Such models often require days or weeks (sometimes months) to build and hours to run. And since dozens of model runs are typically required for any given study, it is not unusual for simulations to take many weeks (or months) before results and solutions can be generated and conveyed to the project engineers who are waiting for that information. On the man-power side, it takes weeks and weeks of formal training just to learn how to properly set up, adjust and run grid-based models; then a year or more of actually doing that in order to become really proficient. And finally, there is the financial cost to consider. At well into six figures per year for a single seat license, the more capable finite difference (grid-based) reservoir simulators are very powerful, but also extremely expensive. And regardless of the cost, the cumbersome nature of these systems is such that there is only time to model a very small percentage of the wells that are drilled by any company over the course of the year. Even if much of the modeling is outsourced to third party

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

WHAT’S YOUR NEXT MOVE?

consultants, the price of doing so is always high and turn-around times are often way too slow to be of any practical benefit. So there’s the dilemma: low oil prices equals greater necessity to make better field development decisions meaning there is an increased need for simulation; but companies also have smaller budgets so they have less money, fewer people and less time to spend on simulation. A real Catch 22. So what is the solution? One potential option is presented by a more rapid, user-friendly simulation technology that was developed about 16 years ago, known as the boundary element method or just “BEM”. This simulation technology dramatically simplifies and accelerates the process of modeling wells and reservoirs by eliminating the necessity of building cumbersome grid meshes and data decks to describe the reservoir, and by providing the user with a rapid and extremely intuitive graphical interface that makes it very easy to set up or modify any kind of model very quickly. It also incorporates a variety of speed-enhancing features, including parallel processing math engines to take full advantage of upgraded hardware capabilities. The result is an easy to build, fast-running reservoir model that can deliver rapid, accurate solutions to complex problems using ordinary rate and pressure data that is typically available to virtually every operator. The current generation of BEM simulation technology is capable of handling most types of field situations, including any kind of well with any kind of completion in any kind of rock, and in one or many reservoirs of any shape or size. All the elements of this functionality are presented in a highly flexible, graphical system designed to fit into existing, short-term workflows and be utilized in conjunction with other engineering software that may already be in place. Model construction typically takes only an hour or two, and run times are most often a few minutes, more or less. Given the speed with which BEM simulation can be performed, virtually any operator can have access to models that may not only be created quickly by staff engineers, but that also can evolve in synchronization with and as a reflection of actual field development. And at about 10 to 15 percent of the cost of the better known grid-based systems, BEM simulation (and consulting) is also very affordable. E&P companies that remain active in the current economic climate need the benefit of reservoir simulation more than ever in order to ensure that every drilling decision and each new well is the very best it can possibly be. With tight budgetary constraints now being the norm throughout the industry, conventional simulation is simply not an option for the vast majority of companies. However, BEM simulation can be an excellent alternative. Now that it is imperative that the productivity of every new well be maximized and drilling programs be made as efficient and cost-effective as possible, reservoir simulation analysis has become a virtual necessity. With BEM modeling, rigorous solutions to most types of drilling/field development issues, including unconventional wells and reservoirs, can be generated quickly and at low cost.

Low oil prices equals greater necessity to make better field development decisions meaning there is an increased need for simulation; but companies also have smaller budgets so they have less money, fewer people and less time to spend on simulation

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About the Author: Dick Barden is President and CEO of Graphical Reservoir Modeling Corp. (“GRM”), which pioneered the development of BEM technology for the petroleum industry. With degrees in business and law, GRM is the third company Mr. Barden has formed since entering the oil and gas industry in 1973, and the second to be involved with developing scientific software applications specifically for the energy sector. More information about the technology can be obtained from GRM’s website at www.daedalusmodel. com and at info@grm-daedalus.com.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

Some Things Never Change By: David Blackmon

al-Falih in early June that the global oil supply and demand equation has basically come back into balance. If accurate, that is a major milestone in the advancement of an ultimate recovery in prices. A number of factors have led to this rebalancing: Since its peak in July 2015, overall daily U.S. production has declined by roughly 700,000 BOPD; █

OPEC nations have by and large held their production steady at late 2015 levels throughout 2016 thus far; █

Military conflicts and civil strife have led to major supply disruptions in Nigeria and Libya; █

Iran’s ability to increase its oil exports has been slower than many had anticipated; █

All of these factors and others have led to a diminution in what had at one point been a global daily surplus approaching 2 million BOPD; and if Minister al-Falih is correct, the surplus was essentially erased by the end of May. This rebalancing of the global supply and demand equation, along with a weakening of the U.S. dollar against other currencies, led to a recovery in price from the high $20s in early 2016 to the $50 level by the end of May. The latter half of May also began to bring reports

There are some factors we can talk about that are likely to impact the price of oil in the coming months

Despite slowing from 2014 levels, global demand for crude oil has continued to increase. █

of crude inventories in the U.S. and other parts of the world beginning to be drawn down, another sign that the market had come back into balance. But the latter half of May and early June also brought announcements from several active U.S. drillers that they would begin activating more drilling rigs should it look like the oil price would remain in the $50 range or higher. Indeed, in the first week of June, the U.S. domestic rig count grew for the first time in months. Also during that same general time period, the Russian government surprised everyone by announcing its plans to boost its own production by 185,000 BOPD by the end of 2016, though whether that plan actually can and will come about is anyone’s guess. So what does it all mean? A good question, and a couple of scenarios seem the most likely to come about. First would be a potential situation in which, for the next several years, we see the oil price fall into the same depressed-price situation in which the domestic natural gas price has been mired for the last several

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ll of us who deal in public policy around the oil and natural gas industry are frequently asked for our views on where oil prices are headed. Why anyone asks us is a bit of a mystery, since we tend to have no more knowledge than anyone else, but, still, it happens. This is especially mystifying when one observes how often and consistently wrong even the most prominent senior executives in the industry and the smartest market analysts tend to be when attempting to project a price for oil into the future. After all, if any of these folks really knew what the price was going to be, we would not have just seen roughly 100 oil and gas corporations declare bankruptcy during this most recent redetermination season, and they’d all be billionaires and doing something else for a living. Or nothing at all. But, despite all of that, there are some factors we can talk about that are likely to impact the price of oil in the coming months. First is the statement by new Saudi Arabian Oil Minister Khalid

years. If world oil demand continues to rise at a slow pace and production elsewhere in the world remains essentially stable overall, then you could conceivably see oil fall into a seesawing situation in which U.S. producers activate a bunch of new drilling rigs any time the price of oil breaches a certain level — say, $50– $60 — and rapidly increase U.S. production to a point at which a new glut of oil is created. At that point, the price would rapidly fall and rigs would again be deactivated until the glut was rebalanced, at which point the seesaw would again begin its cycle. This may seem like a scenario that could realistically come about, but expectations for it happening should be tempered with a dose of reality. After laying down about 1,400 drilling rigs, deactivating hundreds of hydraulic fracturing crews, and terminating hundreds of thousands of jobs over the last two years, the U.S. industry is likely to face real challenges in rehiring and training the human resources that would be needed to rapidly increase overall domestic production in a truly impactful way. We have to remember that the domestic industry had roughly 1,800 drilling rigs running prior to the price bust in 2014, and that at the end of May the rig count was roughly 400. While it’s easy to imagine the industry being able to reactivate a couple hundred or so of those idle rigs in short order, it’s also easy to imagine it taking quite a long time to activate any more than that. So, given the rapid decline rate that exists in the huge shale formations that have provided the great preponderance of new U.S. production in recent years, one cannot just assume that the U.S. industry would be able to drill itself out of any new prosperity that might come about. Another equally plausible potential scenario involves canceling hundreds of billions of dollars in investments in the planning stages prior to the price bust, soon resulting in an inability of producing countries to keep up with growing global demand for oil. Over the last two years, we have seen large corporations and national oil companies announce the cancellation of major proposed development projects all over the globe. This lack of investment in the development of major future oil reserves could conceivably result in a major shortfall in the near future, assuming global demand continues to rise. The wild card in this scenario is whether or not the Saudis, the Iranians or some combination of other producing nations possess and are able to quickly bring online the excess producing capacity necessary to fill a developing gap. At the moment, it is hard to know if and where such excess capacity exists. What we do know is that, in the longer term, hundreds of billions of dollars in new investments not currently in the pipeline are going to be required in order for global oil supply to continue to keep pace with growing global demand. We also know that the creation of that level of investment is going to require a significantly higher commodity price than what currently exists. Thus, we can say with some certainty that the price of oil will indeed go up. It’s just that nobody can say when that will happen. Some things never change.

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.

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www.mmrgrp.com/contact-us JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

The Impact of Mineral Property Valuations in South Texas By: Omar Garcia

if we don’t work with these tax entities, mineral owners’ and oil and gas companies’ taxes will increase as everyone looks to balance budgets. The oil and gas industry remains committed to the communities of the Eagle

Ford Shale region. We must all work together to ensure that the backbone of the Texas economy remains steady, providing thousands of jobs and contributing millions of dollars in tax revenues to local and state taxing entities.

It has come to our attention that some consulting firms are calculating mineral interest’s taxable value differently than Texas property tax valuations, which Section 23.175 of the Property Tax Code requires

About the author: Omar Garcia is the President and CEO of the South Texas Energy & Economic Roundtable. STEER connects the oil and gas industry to South Texas communities, facilitating and coordinating communication, education and public advocacy surrounding the production of energy resources in South Texas. For more information, visit www.steer.com or email info@steer.com.

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s the largest producer of oil and natural gas in the nation, Texas is closely tied to the strength of the petroleum industry. Regardless of whether or not you are directly involved in the industry, everyone feels the effects in one way or another. In the past couple of years, the impacts of a lower-priced commodity have affected households and businesses throughout the Eagle Ford Shale region. It is important to remain cognizant of the opportunities that the industry has provided the South Texas region. The taxes collected from the oil and gas industry have provided billions of dollars to the state, a record $15.7 billion in 2014 alone. These taxes provide funding avenues for educating future generations of South Texans and other essential services. For example, in Dimmit County alone, the oil and gas industry provided approximately 79 percent of the local tax base in Carrizo Springs with $60.3 million of that going to the local school district in fiscal year 2015. In Karnes City, the oil and gas industry provided $66.5 million in taxes to the local school district and made up 88 percent of the local tax base in 2015. Additionally, the industry pays nearly eight times more taxes and royalties on a per employee basis than the average private sector company. These taxes not only fund education, but they help to fund roads, libraries, community centers, parks and emergency responders. As we continue to face a lower-priced environment and work through the challenges associated with it, appraisal districts and taxing entities should work together on mineral valuations. These valuations determine the amount of taxes collected from minerals. It has come to our attention that some consulting firms are calculating mineral interest’s taxable value differently than Texas property tax valuations, which Section 23.175 of the Property Tax Code requires. This tax code states that “the actual 12-month average price received by an oil and gas lease for the prior year must be used in the calculation of the mineral interest’s taxable value. For 2016, [consultants have] opted to ignore the law and [have] used the 2015 average West Texas Intermediate (WTI) ‘Reference Price’ instead of the actual prices received by the lease. In most instances, this will lead to [over-appraisal] of the mineral interest’s 2016 taxable value,” according to Tricia Davis, President, Texas Royalty Council. In good times, tax revenues are increased, but in slower times, as we are experiencing today, the revenues may be adjusted to compensate for low commodity prices. The oil and gas industry is cyclical and prices will always rebound but

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INDUSTRY

Take the Time to Learn from Others Special to SHALE

Are you making time for yourself? With the hustle and bustle of everyday life, finding the time for what we want outside of job and personal responsibilities can be a challenge. As part of its mission, the Women’s Energy Network (WEN) provides opportunities for networking and fosters career and leadership development of women who work in the energy industry. As one WEN member shares, she sees the value that making time for herself has on her overall happiness. As Johana Camelo, Director of Audit Risk & Support and Financial Assurance at Cheniere Energy, says, “When a colleague introduced me to WEN, I was attracted to the opportunities it provided for training and coaching and also to give back to the community through numerous outreach programs. However, as a full-time professional and mother of two beautiful kids, I find myself at [a] crossroads trying to make time for what I perceive to be priority. So when I joined WEN, my first challenge was to find the time to attend the events. My plan was to join the mentoring program, as I figured I was making time for professional growth. What I found was amazing. I encountered a group of ladies from all walks of life who, just like me, were searching for ways to improve, to make an impact in their sphere of influence or were dealing with similar situations in their careers. Making the time to listen to their stories and opening up to share my own was invaluable. Every time I shared my story, I was in a way becoming a mentor, but, most importantly, I was uplifting someone and giving them support. In giving, I was getting so much more. I learned that if I want to improve and give back, I first have to give myself time. So when I do, I attend a conference or a luncheon, [and] I walk out energized, inspired and motivated to tackle the next challenge. Additionally, I feel compelled to share what I have learned with others. I believe this is a win-win situation and one of the objectives WEN strives to achieve.” As Camelo notes, WEN offers mentoring among its many opportunites. Designed to assist women with career development, the mentoring program focuses on professional development topics with highly qualified and experienced advisers. The Mentors facilitate and engage mentees in group discussions on a number of topics to help provide career guidance and perspective based on their career and life experiences. The WEN mentoring program is open to members who are

Designed to assist women with career development, the mentoring program focuses on professional development topics with highly qualified and experienced advisers

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

interested in participating as a mentor or a mentee. The program begins in August and runs through May with monthly mentoring circle meetings. While many of us see this as an activity we don’t have time for, choosing to make time for yourself and your development can become part of your daily lifestyle to achieve overall happiness. WEN’s mentoring program features topics such as: ● Advancing Through Authenticity: Knowing Your Purpose ● Confronting the Imposter Syndrome: Owning the Spotlight, Developing Your Elevator Speech ● Leadership Presence: How to Change How Others See You ● How to Effectively Toot Your Horn ● The Glass Ceiling: What Part Do You Own? How to Keep Your Career Energized and Personal Paths to Success As you wrap up one of the busiest times of the year for most of us, summertime, challenge yourself to find areas where you make time for yourself. Ask yourself: What is important to you? What are you doing today, tomorrow, this week, this month that is just for you? Are you making time for yourself a priority to ensure a healthy and happy lifestyle? If not, WEN encourages you to take that step today.

For more information about the Women’s Energy Network, visit www. womensenergynetwork.org.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

History Worth The Price Of Admission By: Bill Keffer

In short, this museum packs a powerful punch of solid information and history, but it does so in such a modern, high-tech way that you don’t even realize that you are learning of that past as a path to our future. The Permian Basin Petroleum Museum in Midland originally opened in 1975 but has just undergone an $18 million renovation, which has turned it into an incredible experience for anyone who already has an interest in oil and gas, as well as — and, perhaps, especially — for those who don’t yet realize the irresistible fascination of this story and industry. The museum walks you through time and teaches you how the abundant supplies of crude oil and natural

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

gas came to be deposited throughout the Permian Basin. The visual demonstration of that process over millions of years in geologic time, fortunately, is a lot faster and is quite effective. Another exhibit allows you to see into the ancient Permian Sea with all of its creatures that would eventually provide the ingredients for the oil and gas yet to be discovered. With the advent of wildcatters and speculators in West Texas in the 1920s, a section of the museum designed as a typical boomtown from that era includes a land office and a general store, along with numerous items common during that time. The land office includes the famous map created by O.C. Harper in 1924, which was the first attempt at delineating the general outline of the geology of the Permian Basin and has since proved to be amazingly accurate. Although the first producing oil well in the Permian Basin was completed three years earlier, the one that gets the attention and acclaim for that accomplishment is the famous Santa Rita No. 1 well in Reagan County. Discovering the Big Lake field and being on university land, Santa Rita No. 1 was the beginning of what has grown into one of the largest university endowments in the world for the University of Texas and Texas A&M University. The museum pays tribute to that seminal event and to the personalities who were involved, such as Frank Pickrell, Haymon Krupp and Levi Smith, who thought there might be something there, and Joseph Trees and Michael Benedum, who came from the West Virginia oil fields to lend their expertise. And there’s no shortage of significant contributors to the long-running story of oil and gas in the Permian Basin. In fact, the museum has honored dozens of individuals in its Hall of Fame: pioneers like George Abell, who was the energy behind the idea of having such a museum; Robert O. Anderson, who became CEO of ARCO and was the reason ARCO discovered Prudhoe Bay in Alaska, still the largest oil discovery in North America; both President George H.W. Bush and President George W. Bush, whose childhood home in Midland is also a popular tourist stop; brothers J. Hugh and William Liedtke of Pennzoil fame; Howard Parker and Joe Parsley, whose company would later

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et’s face it — the fastest way to let the air out of an enthusiastic bunch of travelers is to suggest stopping at the local museum; museums are usually where vacations go to die. I’m exaggerating, of course, because that’s not always true. We might even look back as adults and recall that there were museums we were dragged to by our parents that made a lasting impression on us and that we now consider a substantive part of our formative education. But there have been enough of those lessthan-scintillating museum experiences to poison the whole subject and cause us to reflexively reject an innocuous suggestion that we include any museum on our itinerary. Given that presumptive starting place for those of us who aren’t otherwise employed as art curators or librarians, there is one museum that not only is a perfect match for the readership of this publication, but also is fantastically designed and delivered as a bridge to understand our history and recognize the importance

merge with Mesa Petroleum and form the current powerhouse Pioneer Natural Resources; and the father-son team of Clayton Williams Sr. and Jr. just to name a few. The museum walks you through the subsequent chapters of our national history and the contributions made by the oil and gas industry. One interesting presentation is a creative video that makes the compelling, but typically unknown, point regarding just how pervasive petroleum products are in our everyday life — you never know just how dependent you have become on something until you don’t have it anymore. There is an entertaining Q and A quiz that will challenge even those who think they are well-schooled in this area (including your humble columnist). You can interact with different scenarios of risk and reward in drilling your own oil well. There is also a very well-executed demonstration of what future exploration might look like, involving boarding a futuristic spaceship called the PetroTrekker that flies high above the earth but also dives to vast depths in the ocean to find new reserves. That’s just a glimpse of what the museum offers inside its walls — I spent over two hours there and still didn’t see everything. And then I went outside. The museum has assembled an impressive collection of equipment and machinery in an outdoor area called The Oil Patch. The collection includes several different types and sizes of pump jacks, a wellhead assembly, a modern drilling rig and a restored version of the Santa Rita No. 2 well (not quite as successful as the No. 1) dating back to 1923. In short, this museum packs a powerful punch of solid information and history, but it does so in such a modern, hightech way that you don’t even realize that you are learning — which is the best way to educate anyone from a young child to those of us who think we’re too old to make any additional learning worth the effort. Anyone passing through the MidlandOdessa area needs to put the Permian Basin Petroleum Museum on the list as a must-see; it might even be worth making a special trip to Midland. And if you live in the area, there’s no excuse for not checking it out. When history comes to life, the future becomes history worth making.

The Permian Basin Petroleum Museum in Midland originally opened in 1975 but has just undergone an $18 million renovation, which has turned it into an incredible experience

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.

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.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

U.S. LNG Markets Under Siege

By: Thomas Tunstall, Ph.D.

Liquefied natural gas companies in the U.S. have had a tough go of things these past couple of decades. Before the shale revolution, LNG shippers were spending billions of dollars on import facilities along the Gulf Coast. At that time, the U.S. was running out of natural gas. Of course, that changed, and the billions of dollars spent on import terminals are now sunk costs that will never be recovered. In response, LNG companies pivoted and began planning to export natural gas instead, spending billions more to do so. The backdrop certainly looked attractive. As recently as 2013, natural gas prices were as high as $16–$17 per thousand cubic feet (MCF) in Japan, and $11–$12 per MCF in Europe, while selling for as little as $2 in the U.S. The market for LNG export appeared very promising indeed. Yet once again, the landscape is shifting. Worldwide natural gas price differentials are shrinking due to the ability to overcome previous technological limitations that apply to natural gas — but not to oil. Crude oil has always been easier to store and ship by sea than natural gas, and so global prices have been relatively uniform for decades. By comparison, natural gas markets have been predisposed to regional markets. In order to move natural gas long distances overseas, the vapor must be supercooled to minus 260 degrees Fahrenheit, loaded onto LNG carriers and then regasified at its destination. This set of processes was not commercially viable on a large scale until relatively recently. In 1996, the seeds of change were planted when Qatar opened the world’s first large LNG export facility. Twenty years later, Qatar remains the largest LNG exporter in the world, but now other countries are also entering the market. Here in the U.S., the prospect of LNG export was

inconceivable even just a few years ago, though not due to technological limitations. Rather, U.S. natural gas production was thought to have peaked in 1973, with volumes regularly declining until the late 1980s. Then something unexpected happened. Starting in 2006 as a direct result of the shale revolution, U.S. natural gas production began a steady increase, finally surpassing 1973 levels in 2011. Since then, production has risen every year and is now at an all-time high — in excess of 27 trillion cubic feet annually. Not surprisingly, natural gas prices have become much more predictable in the U.S. In fact, with so much natural gas available from the U.S., several companies along the Gulf Coast are in various stages of permitting, constructing or operating LNG export facilities. In February of this year, Cheniere Energy shipped its first cargo of LNG to Brazil. Unfortunately, the prospects in Asia and Europe are no longer as attractive as they once were. In fact, it is fair to say that export markets for U.S. LNG producers are under siege. Spot prices in Asia — which constitutes 70 percent of global demand — hit a low of $4.24 per MCF on April 25 in large measure because Australia is now reliably shipping large quantities of natural gas to Japan. In Europe, Russia’s Gazprom monopoly has indicated willingness to lower prices for natural gas buyers in response to import competition from the U.S. This admission by Gazprom makes it very likely that prices in Europe could fall to around $7 per MCF — more or less at the break-even point for U.S. LNG shippers. In effect, U.S. LNG exporters will again be forced to rethink their business models. One option: vertically integrating forward into projects such as onshore and offshore regasification facilities in developing countries. Floating regasification terminals, for example, are currently operating in Egypt, Jordan and Pakistan. Other opportunities to expand LNG export markets in countries with accessible coastlines will likely follow suit. U.S. LNG exporters may also invest in foreign manufacturing facilities that use natural gas in order to encourage usage. Transportation and electricity production are other potential applications that overseas developing countries may be persuaded to adopt. For besieged LNG exporters in the U.S., these new strategies represent their best hope for survival in light of growing competition in Asia and Europe.

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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INDUSTRY

Innovation Through Dynamic Change: PESA Annual Meeting 2016

As market conditions will inevitably improve, a focus on innovation, sustainability and collaboration remains key 38

he 2016 PESA Annual Meeting held April 6–8 in San Diego focused on opportunities and challenges for the upstream industry in transition. PESA Chairman Saeid Rahimian, President & CEO of Gardner Denver’s Energy Group, opened the meeting, setting the tone for the conference and giving insight into the theme. “Often, we don’t know what we are truly capable of achieving until we are challenged, and put our minds to the task at hand. Competing and prospering in the future will hinge on our ability to become more cost competitive through science and technology while increasing efficiency by leveraging best practices. Right now, we have an opportunity to show the rest of the energy industry, and the world, what the service and supply sector is really capable of. That we can, and will, rise to the challenge,” said Rahimian. Keynote speaker Andrew Card, President of Franklin Pierce University, Former White House Chief of Staff and Secretary of Transportation, shared insight into the upcoming presidential

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

election and how politics affect the industry. Card stressed the importance of selecting qualified candidates across all governmental roles as the political climate rapidly changes. He also discussed the president’s responsibility to make difficult decisions regarding national security and safety. “PESA is significant to your success and significant to America’s ability to have an industry that is competitive with the world and is part of our national security blanket,” Card stated. During the onshore panel, Susan Cunningham, Executive Vice President of Exploration, New Ventures, Frontier, EHSR and Business Innovation at Noble Energy, Steven Mueller, Chairman of the Board at Southwestern Energy, and Kevin Neveu, President and CEO of Precision Drilling, discussed challenges and opportunities available as the market continues to adapt and change. The panel also discussed risk, noting that business models have switched from a focus on production growth to return growth. Proper risk appropriation creates full cycle returns that foster a more collaborative relationship between suppliers and operators; and while headcount reductions help achieve cost reductions, they also hinder innovation. J. Robinson West, Senior Adviser of the Energy and National Security Program at the Center for Strategic & International Studies, called for a change in the relationship dynamic between operators and the service and supply sector. One barrier to

PHOTOS COURTESY OF PESA

PESA HOSTS TOP EXECUTIVE INDUSTRY LEADERS AND KEYNOTE SPEAKER ANDREW CARD, PRESIDENT OF FRANKLIN PIERCE UNIVERSITY, FORMER WHITE HOUSE CHIEF OF STAFF AND SECRETARY OF TRANSPORTATION Special to SHALE

“Right now, we have an opportunity to show the rest of the energy industry, and the world, what the service and supply sector is really capable of.” collaboration is a lack of understanding between business models. The combination of distrust and pressure to cut costs impedes open communication. West encouraged the two sectors to view each other as partners and work together “to improve efficiency, invest in long-term solutions, develop common methods for reporting and best practices to positively impact the industry.” Offshore panelists James Painter, Executive Vice President of Execution and Appraisal at Cobalt International Energy, and Mark Mey, Executive Vice President and CFO of Transocean, continued discussion on cost reduction and the importance of safety with an added focus on discipline. As industry members work to reduce costs, the panelists unilaterally urged companies not to reduce safety efforts. PESA’s first-ever analyst panel engaged with the audience on the outlook of the industry with panelists J. Marshall Adkins, Director of Energy Research at Raymond James & Associates; Pearce Hammond, Managing Director and Co-Head of E&P Research at Simmons & Company International; and James Wicklund, Managing Director at Credit Suisse. “We are positive on the industry; we always knew it was going to come back, the question is just how fast,” stated Wicklund. “We believe that 2017 will be stronger than 2016.” PESA President Leslie Shockley Beyer closed the meeting with the message, “It is this sector of the industry that is known for using innovation and optimization to not just survive difficult times, but to forge a new, successful path and emerge stronger than before.” As market conditions will inevitably improve, a focus on innovation, sustainability and collaboration remains key. PESA members will continue to work together to drive innovation through dynamic change, conquer challenges and create opportunities throughout the downturn cycle and beyond.

For more information on PESA, visit www.pesa.org.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

Nominations for the STEER Eagle Ford Excellence Awards Now Being Accepted Special to SHALE

he South Texas Energy and Economic Roundtable (STEER), serving the Eagle Ford Shale region in South Texas, is opening its call for nominations for the fourth annual Eagle Ford Excellence Awards. The awards are focused on honoring members of the oil and gas community for diligent efforts to preserve the environment, ensure safety in and around the Eagle Ford Shale region and give back to the community in which they live in and serve. Led by president and CEO, Omar Garcia, STEER works to ensure the development of the Eagle Ford’s energy resources is accomplished in a manner that is mutually beneficial to the industry and communities throughout South Texas. The Eagle Ford Excellence Awards recognizes companies and organizations that are acting with consideration to the values that STEER sees as essential for continued advancements that benefit the greater South Texas community. “Although it has been a tough year in the oil and gas industry, it’s encouraging to see that companies have remained focused on safety, environmental protection and community involvement,” said Garcia. He continued, “It’s important, particularly in times like this, to persevere and stay true to your core principles. STEER is proud to honor those companies who share our value and vision.” Eagle Ford Excellence Award categories include: ● Environmental Stewardship: To be considered for this category, organizations must demonstrate elements of innovation in reducing environmental impact through implementation of practices or use of technology benefiting the environment, current, practical applications of the solution or initiative and long-term, sustainable environmental benefits. ● Safety Performance: To win an award in this category, applicants must have developed specific initiatives or products that have reduced the risk to workers and members of the local community. These initiatives should be evident in the company’s culture and safety record. ● Community and Social Investment: To receive an award in this category, the organization must show true commitment to the community. The applicant should have provided a benefit to deserving individuals or groups, positively impacted the company’s or organization’s reputation in the communities in which it works, or provided a measurable and positive impact on its surrounding community. ● STEER Impact Award: This category is intended for nonprofit organizations and educational facilities working with the oil and gas industry in the Eagle Ford Shale. For consideration in this category, organizations must demonstrate excellence in: education, economic development, workforce development/training, safety performance, community relations or environmental stewardship. Third-party judges will examine the description and evidence provided to determine the winner for each category. Entries that best demonstrate commitment to the protection of the environment, community involvement and safety – issues that the oil and gas industry considers to be a top priority – will receive recognition from STEER for their efforts. STEER will accept both applications and third-party nominations for the Eagle Ford

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

Excellence Awards. To apply for an award or submit a nomination for companies, contractors or organizations working in the Eagle Ford Shale visit steer.com and complete the necessary forms. STEER will contact nominated entities to complete the application process. Award entries and nominations must be submitted before the deadline of Monday, September 26, 2016 at 5:00 p.m. CST. Full details on the categories and additional information, including entry forms, can be found at steer.com. Winners will be honored at an event in San Antonio on Wednesday, November 30. 2015 Eagle Ford Excellence Award winners: Safety Performance For companies or organizations with less than 250 employees: Listo Services For companies or organizations with more than 250 employees: FTS International Community and Social Investment For companies or organizations with less than 250 employees: Energy Waste For companies or organizations with more than 250 employees: NuStar Energy L.P. Environmental Stewardship For companies or organizations with less than 250 employees: Exclusive Energy For companies or organizations with more than 250 employees: Weatherford Impact Award Falls City Education Foundation Victoria College

Learn more about the Eagle Ford Excellence Awards at steer.com.

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POLICY

Texas Tough on Bad Operators By: David Porter, Texas Railroad Commission Chairman

As a Texas Railroad Commissioner elected by the people, I am charged to regulate the oil, gas, pipeline and mining industries in the safest, most efficient ways possible enforcement responsibilities very seriously. It is charged to protect this great state and the people in it, and it has done so successfully for 125 years. Reflecting on my time as a Commissioner and as Chairman, I am quite proud and humbled to have helped shape an institution where the regulatory framework effectively supports responsible business and protects our people and resources.

About the author: David J. Porter was elected statewide to serve a six-year term as Railroad Commissioner in November 2010. For more information about the Railroad Commission of Texas, visit www.rrc.state.tx.us.

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

RICHARD MCMILLIN/BIGSTOCK.COM, HEADSHOT BY MICHAEL GIORDANO

e have a saying in our state that we hear time and time again: “Don’t Mess with Texas.” It’s not just a slogan; it’s a mind-set, and it influences everything we do here, including how we govern. As a Texas Railroad Commissioner elected by the people, I am charged to regulate the oil, gas, pipeline and mining industries in the safest, most efficient ways possible. As the most mature energy regulatory body in the world, our agency does its job well. So well, in fact, that delegations from around the globe visit the Railroad Commission of Texas regularly to learn about our policies and procedures. Unfortunately, despite the success of our regulatory structure, many people — Texans included — are not aware of how hard we work and how effective we are at enforcing our rules. One especially effective enforcement tool is the Commission’s authority to issue a severance or seal order, meaning a well cannot sell its production if it is not compliant with Commission rules. Severance and seal orders have an immediate effect. Because they block an operator’s ability to produce and sell oil and gas from a lease until it corrects the violation, the orders essentially put the well out of business. These orders are intended to put a prompt end to irresponsible behavior that could hurt the people of our state. Over the past 10 years, the Commission has averaged more than 26,000 notices of severance per year, resulting in the operator coming into compliance without an order more than 62.5 percent of the time. Operators who do not comply after receiving the notice face two significant consequences: not being able to sell oil and gas, and paying a severance fee before they are allowed to sell again. In the last fiscal year alone, the Commission sealed close to 10,000 wells. Over the past 10 years, matters resolved after leases were severed have resulted in the Commission imposing more than $17.5 million in severance fees. Regulators are not only responsible for encouraging the industries they oversee to meet the highest standards possible, we are also responsible for seriously and quickly letting them know when they are not living up to the standard. The severance and seal order does just that. Unlike regulators from other jurisdictions such as the U.S. Environmental Protection Agency, Texas regulators generally recognize the value for everyone when successful businesses put the resources we offer to productive use while following the rules. When an operator violates this understanding, the Railroad Commission does not sit by idly and allow it to continue. Instead, it puts to use the most effective enforcement tool given to us by the Texas Legislature. Contrary to what many people may think, the Commission takes its

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

POLICY

Property Tax System Poses Complicated Challenge for Texas By: Sen. Carlos Uresti

exas is one of a handful of states where individuals do not pay income tax. Instead, the largest source of government revenue is the property tax, which is collected by municipalities for local needs. Meanwhile, the state itself collects revenue from sales tax, oil and gas tax, and licensing fees. While this system has made Texas an attractive place to work, many homeowners struggle with rising appraisals and rates. In this system, each county is responsible for collecting and spending its property tax. Counties have appraisal districts, administered by a board of directors, which determine the taxable value of property annually. Disputes are sent to the county’s appraisal review board, which determines the validity of a protest. Once appraisal values are determined, rates are set based on the needs of local taxing units: school districts, counties, cities, community colleges and special districts. Taxes are then collected by the elected County Tax AssessorCollector and distributed to the appropriate entities. In total, there are more than 3,900 local governments collecting property taxes in Texas. However, there are exceptions — some forms of property have been made exempt. The largest of these is the homestead exemption, which means that a certain initial value of a primary residence is tax-free. This past legislative session, I worked to increase this amount from $15,000 to $25,000. Additional homestead exemptions of $10,000 are available for seniors and disabled homeowners. This allows homeowners some breathing room on their primary residence. Even with the exemption, most appraised property values are far higher than $25,000. As property values rise in the booming cities and suburbs of Texas, taxes are rising with them. For many Texans, property taxes consume a large percentage of their income — larger than the dent income taxes make on the budgets of people in other states. Taxpayers are starting to feel the heat. This is not only an issue in the big city suburbs. For the most part, reaching the middle class in the United States depends on the ability to own a home, and thus the burdens of high property taxes may

pose a barrier to social mobility. The annual per capita income in Maverick County, which I represent in the Texas Senate, is only $13,668. A modest property tax bill would make a home unaffordable at this income, even with the homestead exemption. Additionally, the system can be regressive for school districts, as funding schools with local property taxes means the amount of money available per pupil is heavily dependent on the value of property within the taxing district. Simply put, many taxpayers are now frustrated with the property tax system. As a member of the Senate Select Committee on Property Tax Reform & Relief I have traveled across the state, and homeowners everywhere have told me that they feel boxed in by ever-higher appraisal values and subsequent taxes. Our hearings have featured spirited testimony by homeowners, activists and local officials, all with their own perspective on the merits of our current system. Next legislative session, there will be a push to limit local government’s ability to raise property taxes. We can anticipate a lively debate on this issue. These rates are set locally and should be responsive to local needs. However, some tax

Local governments have legitimate reasons to collect this revenue, and the principal recipients are local school districts. This May, the Texas Supreme Court ruled the current system of school finance to be constitutional, meaning it is unlikely that the state will provide significant new revenue to local school districts. Further complicating matters is the increasingly cautious revenue forecast for the remainder of the biennium. As oil and gas activity in the state has declined in tandem with global oil prices, so have sales tax receipts and property values. In 2014, oil and gas generated $15.7 billion in taxes and royalties for Texas, and the overall health of the state’s economy ebbs and flows with the oil and gas market. However, Texas is wellpositioned to weather a downturn as lawmakers left some revenue unspent that can be utilized to fill in for a shortfall. Ultimately, a weaker budget forecast and rising political interest in property tax reform will create complex issues that will have to be addressed by the 85th Texas Legislature. The hours I’ve spent traveling and listening to testimony as a member of the Senate Select Committee on Property Tax Reform & Relief has

The largest source of government revenue is the property tax, which is collected by municipalities for local needs increases have exceeded what many citizens would consider reasonable. Yet the state must be careful, as handicapping the taxing ability of local governments could leave schools, roads and city services underfunded. Changing the system will be difficult due to these concerns.

highlighted the challenges of our current system. As committee members, we juggle the competing priorities of funding our local schools, keeping housing affordable and maintaining the right degree of local control. I look forward to working on these issues next spring.

About the author: Sen. Carlos Uresti represents District 19, which covers more than 35,000 square miles and contains all or part of 17 counties with more than 23,000 producing oil and gas wells. Uresti is the only Senator who represents both the Eagle Ford Shale and Permian Basin. He serves on the Finance and Natural Resources & Economic Development Committees, and is the first Senator from San Antonio to serve on the Legislative Budget Board.

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2nd Annual

STATE ENERGY of

oct. 12 2016 At the Omni Hotel Corpus Christi Hotel

OIL & GAS BUSINESS MAGAZINE

900 N. Shoreline Blvd., Corpus Christi, Texas 78401 Doors Open 11:15 am - 1:00 pm

JOIN SHALE OIL & GAS BUSINESS MAGAZINE IN PARTNERSHIP WITH THE CORPUS CHRISTI REGIONAL ECONOMIC DEVELOPMENT CORP. AT THE 2ND ANNUAL STATE OF ENERGY EVENT. SHALE MAGAZINE AND THE CCREDC WILL WELCOME INDUSTRY LEADERS, BUSINESS & COMMUNITY STAKEHOLDERS FOR A DISCUSSION ON THE CURRENT STATE OF THE ENERGY SECTORS THAT INCLUDES EXPLORATION & PRODUCTION, LNG & REFINERIES, AND THE INDUSTRY'S FUTURE OPPORTUNITIES AND CHALLENGES IN A DISRUPTIVE MARKET.

The ENERGY INDUSTRY is a key driver of the global economy in Texas. This industry has transformed Corpus Christi and will continue to shape it’s future. The State of Energy is an annual event that features top energy industry leaders and gives insight into their future development plans. Panelists will be announced soon!

For sponsorship information, contact Sarah Tindall at 361-882-7448 or at saraht@ccredc.com. The luncheon will include a panel discussion and key note speaker to address oil and gas, refinery and LNG representatives. For more information on SHALE visit shalemag.com For more information on CCREDC visit http://www.ccredc.com

TICKETS CAN BE PURCHASED AT THE CORPUS CHRISTI REGIONAL ECONOMIC DEVELOPMENT CORP'S WEBSITE.

TO PURCHASE TICKETS OR TABLES PLEASE VISIT THE CCREDC EVENTS CALENDAR OR CALL 361-882-7448.

http://www.ccredc.com

Karen Alderman Harbert is president and chief executive officer of the U.S. Chamber of Commerce’s Institute for 21st Century Energy Institute. Harbert leads the Institute’s efforts to build support for meaningful energy action nationally and internationally through policy development, education, and advocacy. Under Harbert’s leadership, the Energy Institute has evolved into a premier national and international organization dedicated to advancing a constructive energy agenda with the business community, KEYNOTE SPEAKER policymakers, and consumers. Harbert frequently testifies in front of Congress and provides analysis to the media, KAREN HARBERT policymakers, and industry leaders. 21st Century Energy Institute

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Ways to Improve Cybersecurity in the Cloud

By: Bryce Cramer, Enaxis Consulting

The Gap in the Cloud Traditional security paradigms of corporations focus significantly on strong perimeter security. Most organizations already realize this is a dated model and are questioning how to adapt to Cloud and BYOD. Many now are reassessing their security approach and filling gaps by purchasing new tools. In complex environments, security is typically tackled with a layered approach. The difficulty is each layer requires different management tools that are often managed by different teams so maintaining top down visibility is difficult. For example, the team responsible for application security (often developers) has very little interaction with the team responsible for DMZ management resulting in deployment and maintenance challenges. One common gap is the management of file sharing services such as Microsoft OneDrive or Box.com. This was made clear with a recent high profile attacks against Apple iCloud in 2014 where sensitive (ahem) data was exposed due to an API related with the Find My iPhone service that did not have any protections against a brute-force password attacks. This vulnerability allowed hackers unlimited password guesses and allowed them to capture iCloud accounts with simple passwords. Apple quickly released a fix but the damage was done. Any corporate data in iCloud was also compromised albeit without the headlines. Traditional on-premises monitoring tools cannot prevent this scenario. Another security gap is managing external service providers who require connectivity to your internal network. As a result, individuals outside of your company’s direct control represent more attack surfaces. Often seemingly innocuous points of entry are used as jumpoff points to attain privileged access to internal resources. This is similar to the attack on Target in 2013 where an HVAC vendor’s account was used to gain entry and attain control of their PointOf-Sale systems to steal credit card information. One study commissioned by Cyberark states that 80-100% of attacks rely upon elevated accounts. That is a staggering statistic but securing such accounts is easier said than done. The New Cloud Security Layer IT departments often address security gaps by purchasing new tools as is the case with the new breed of products that Gartner refers to as Cloud Access Security Brokers (CASB). These products aim to centrally manage cloud service providers, however,

many are new to the market and subject to acquisitions. There is a lot of uncertainty in the CASB space and we suggest due diligence before purchasing such products. A New Security Paradigm The traditional layers of security have fundamentally changed where the Application Layer now is now outside the Perimeter and therefore existing tools provide no protection to sensitive data. IT departments traditionally make assumptions that the data is secured based on the outside layers but often this no longer applies. It is increasingly important to tackle Data Security head-on. A better approach, for now, may be to assess new strategies around your IT governance and security policies. Consider the following: 1/ Institute a top down security model that can be applied in a distributed fashion. Security should be everybody’s job, not just the security team 2/ Implement a customer-driven architecture to engage the business and better understand industry drivers and business process. IT Security should be engaged, even up to executive level, to meet both business and security objectives 3/ Simultaneously, institute an inside-out datacentric security model to align both business and IT requirements 4/ Review your data security policies to ensure they are scalable and standardized across your organization 5/ Institute a common set of controls, particularly for cloud applications, to attain some level of visibility. CASB tools or your existing SIEM strategy may help.

About the author: Bryce Cramer is a Manager at Enaxis Consulting with nearly 20 years of experience across various industries including four Fortune 500 companies to smaller businesses with a focus IT architecture, cybersecurity, project management as well as all phases of deployment and maintenance. Bryce holds a Bachelor’s Degree from Rice University with an emphasis in Cognitive Science.

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Americans and Their Cars THE RACE FOR AN ECO-FRIENDLY LIFESTYLE OPTION

estled between upscale clothing boutiques in Houston’s Galleria is the busy Tesla Motors showroom, enticing a growing number of enthusiasts to kick the petrol habit. The crowd surrounding a single Model S, the world’s first premium all-electric sedan, takes up half the showroom space. The attentive concierges, recruited for the same characteristics shared with their counterparts at the Apple Genius Bar, present with breathless enthusiasm the technical details: no oil changes, zero to 60 mph in 2.8 seconds, manufactured in California. What follows is the only sales pitch required, “Pretty cool, huh?” It is, without a doubt, the car of the moment. But it is also an emblem of how far and how fast alternativefuel vehicles (AFVs) — any vehicle that doesn’t run exclusively on standard gasoline — have come. More than a dozen alternative fuels are in production or under development for use in AFVs — the most commercially available being natural gas, electricity, propane, diesel and, to a lesser extent, hydrogen, ethanol and biodiesel. Automakers are racing to produce models to capitalize on the growing interest. Ford and GM are pushing ahead with all-electric and plug-in hybrid electric (a gas engine combined with a rechargeable lithium-ion battery) models. Clean diesel and compressed natural gas (CNG) cars that boast higher fuel efficiency and cheaper per-gallon costs are finally, after decades of apathy, gaining consumer attention. Using alternative fuels and advanced vehicles instead of conventional fuels and vehicles helps the U.S. reduce petroleum use and vehicle emissions. According to the U.S. Department of Energy, there are approximately 20 million AFVs on U.S. roads today — more than a quarter million of which are plug-in electric vehicles. Continued growth is expected as a result of federal mandates for higher-efficiency vehicles that become effective in 2017. The two primary barriers facing alternative vehicle adoption are refueling infrastructure and consumer cost. A strong refueling infrastructure system is needed for all of the fuels discussed above if they are to serve as a viable alternative to traditional fuels in the passenger and commercial vehicle fleet as the effective range of these vehicles

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

increases. There are several federal, state and local initiatives aimed at developing the necessary retail refueling infrastructure for electric and natural gas-based vehicles. These efforts are expected to significantly increase the number of retail refueling options for these technologies in the near to midterm. The second barrier facing alternative vehicle adoption is the cost to consumers, as these types of vehicles can be more expensive than their traditional fuel counterparts or require a significant investment in order to retrofit existing technology to work with alternative fuels. However, there are numerous federal and state incentives aimed at offsetting these costs through tax rebates or discounts to consumers. Furthermore, incentives are in place to encourage developers to improve existing technology and lower costs for consumers. Additional factors driving adoption of AFVs, particularly in the commercial sector, are federal, state and local regulations on air quality. The transportation sector is viewed as a major contributor of airborne pollutants, and state, federal and local entities have numerous methods for addressing this issue. The federal government imposes standards on mediumand heavy-duty vehicles (MHDVs) in regard to newer models’ fuel efficiency and emissions limits, and local governments can establish localized emissions targets. By 2040, AFVs are anticipated to account for about 18 percent of the U.S. domestic passenger fleet and 11 percent of the commercial vehicle fleet according to a forecast prepared by the Texas A&M Transportation Institute. Much of the anticipated growth in alternative passenger vehicle sales will be in the electric vehicle market, while growth in alternative

KASTO/BIGSTOCK.COM

By: Scott A. Bayley, Founder and President, Accumyn Consulting

prevented biodiesel supply from becoming widespread.

Composition of U.S. New Vehicle Sales Traditional Fuels

Passenger Fleet

Alternative Fuels

Year

Gasoline

Diesel

Electricity

Natural Gas

Ethanol

Propane

2015

83%

>1%

13%

>1%

2040

78%

>1%

11%

>1%

Year

Gasoline

Diesel

Electricity

Natural Gas

Ethanol

Propane

2015

13%

86%

>1%

2040

11%

78%

>1%

10%

Traditional Fuels

Alternative Fuels

Commercial Fleet

Source: U.S. Energy Information Administration, Annual Energy Outlook 2014

commercial vehicle sales will be strongest in the natural gas market. For now, among the alternatives, electric cars have a clear edge in the market. But which vehicle wins out in the long run is anybody’s guess. Because electric cars work better for short drives, they might be more appealing to a person living in a city, whereas hydrogen cars, with their longer range, might work better for people who drive longer distances. Faced with uncertainty about how the competing technologies will develop, a growing network of government entities, research institutions and private-sector interests are using a variety of approaches to help clear the hurdles standing in the way of AFVs reaching mass adoption status. Will the expected growth in AFVs pan out, or will green vehicles remain a tiny niche of the American car market? Given advancements in technology and growing environmental concerns, it’s a good bet that AFVs will become more common in the years to come. So, what are the pros and cons of the alternatives to gas-powered vehicles? Consumer Reports provides the following guide: HYBRIDS Pros: Potential for excellent fuel economy, run on existing gasoline supplies and drive just like regular cars, requiring no change in lifestyle habits. Cons: Some hybrids cost much more than similar conventional cars. Some don’t live up to the gas mileage buyers may expect, especially considering the extra purchase price. On a mass scale, they are considered too little too late, but big savings mean we’ll see lots more of them. PLUG-IN HYBRIDS Pros: All-electric range can address short commutes for many drivers, home recharging infrastructure is available, gas engine can extend range for long trips, cheaper cost per mile and no vehicle emissions when running in electric mode. Cons: Big, expensive batteries plus a gas engine drive up prices, daytime recharging could strain electric grid and they need to be plugged in to deliver any benefit. Gas mileage benefits are highly dependent on driving habits and frequently overstated. BATTERY ELECTRIC VEHICLES Pros: Quiet running, instant torque from electric motor, no emissions from the car, cost per mile is a fraction of that for a gasoline-powered car, widespread electric infrastructure and electricity can be partially derived from renewable sources. Cons: Long recharging times, limited range, expensive batteries, electricity production in much of the country uses coal — not a clean-

burning source. High-voltage home chargers can be expensive and public chargers scarce. DIESEL Pros: Thirty percent better fuel economy than an equivalent gasoline vehicle, widely available, lower cost premium than for hybrid vehicles, engines deliver lots of torque for a given displacement, and any diesel car can run on a blend of renewable biodiesel fuel. With effort and investment, older diesel engines can be converted to run on pure waste vegetable oil. Cons: Traditionally more engine noise and vibration. Additional emissions equipment drives up vehicle prices, which along with current higher cost of diesel fuel takes a big bite out of any savings. Most clean diesels require refills of urea solution. Manufacturers won’t warranty biodiesel blends of more than 5 percent biodiesel. BIODIESEL Pros: Renewable, fairly widely available and older diesel cars can seamlessly burn biodiesel or diesel. Used vegetable oil can sometimes be free. Cons: Using vegetable oil requires a costly conversion and a lot of effort. Quality of biodiesel varies widely, so carmakers will only honor warranties up to 5 percent biodiesel. And biodiesel costs more than petroleum diesel. So far, supply issues have

ETHANOL Pros: Reduces demand for foreign oil, low emissions, high octane and can potentially be produced from waste materials. Existing cars can use 10 percent blends (called E10), and more than 8 million cars already on the road can use E85. Cons: Twenty-five percent lower fuel economy on E85 than gasoline. Less than 1 percent of U.S. gas stations carry E85. Federal fuel economy credits awarded to automakers for E85 cars lower overall fuel economy for all cars. Ethanol made from any food crop can adversely affect food prices. Farm equipment involved in crop production runs on petroleum, limiting the net benefits. COMPRESSED NATURAL GAS Pros: Costs much less than gasoline, burns much cleaner and provides comparable power. It is an abundant natural resource in the U.S. Cons: Huge gas tanks reduce trunk space and carry the equivalent of only a few gallons of gasoline. CNG provides limited range, and there are few places for consumers to refuel in most of the country, plus refueling is relatively slow. HYDROGEN FUEL CELLS Pros: No vehicle emissions other than water vapor. Fuel economy equivalent to about twice that of gasoline vehicles. Hydrogen is abundant and can be made from renewable energy. Cons: This space-age technology is expensive. Acceptable range requires extremely high-pressure, onboard hydrogen storage. Few places to refuel. Hydrogen is very expensive to transport and there is no infrastructure in place yet. Currently hydrogen fuel is made from nonrenewable natural gas in a process that creates enormous CO2 emissions.

About the author: About the author: Scott A. Bayley is CEO and Founder of Accumyn Consulting, serving public and private businesses, governmental entities and law firms with accounting, financial and economic consulting services. For over thirty years, a primary focus of his practice has been assisting clients and their outside counsel with matters in dispute, including the analysis of damages, fraud and forensic accounting examinations, securities and business valuation, preparation of expert reports and providing expert testimony.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Don’t Sanction Incompetence, Transform It By: Alex Charfen

Whether you’re growing a business, part of an existing company or just starting out in a new venture, you quickly discover that there are performers, overperformers and underperformers. This is par for the course. We’re human, after all. And if you put enough humans together in the same place, you’ll inevitably discover variations in activity, energy, engagement, buy-in and, yes, competence. But the fact remains, no matter our ultimate potential, we are all capable of periods of underperformance. So, underperformance happens... even to the best of us. But there’s a point for some people where underperformance becomes actual incompetence. Consulting for Fortune 500 companies and leading multiple businesses, I’ve found that one major factor contributes to underperformance evolving into incompetence, and it’s very difficult to admit: Leadership is complicit. This doesn’t mean that leadership is necessarily incompetent but that their involvement — or lack thereof — has allowed for incompetence to develop and emerge. Such a situation is called sanctioned incompetence, one of the most damaging issues an organization can experience. It is contagious and directly affects the productivity and morale of your team. Sanctioned incompetence occurs when a member of your team is underperforming and no corrective action is taken by leadership. Other team members recognize this and assume that underperformance, or even

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incompetence, is OK and is tacitly sanctioned by leadership. As a result, underperformance spreads throughout the organization.

neglecting responsibilities, that team member has gone beyond incompetence and may be insubordinate.

The Origins of Sanctioned Incompetence

Building Competence in the Workplace

The most common cause of sanctioned incompetence is a lack of transparency. Leaders who do not have insight into the performance of their team members don’t know when to communicate the results they expect. Consequently, team members may actually not know they are underperforming simply because they haven’t been told. Reasons for which team members can underperform due to a lack of transparency include:

It’s important to view incompetence not in terms of a person, but in that person’s performance. Often, incompetence is simply a lack of familiarity with tools or the requirements of a role. As such, it can be coached. Here is an ideal view of the evolution from incompetence to competence in team members:

● Not understanding their role: Team members should always understand their role and responsibilities, and be notified when these change. If a team member is underperforming, a leader should reinforce what the role is and what expectations are. This clarification can help team members understand where to improve. ● Not understanding the win: If a team member isn’t sure of the results expected of their role, then it will be impossible to purposely drive toward those results. Be sure your team members understand what their daily win is (what success looks like). Without a clear understanding of the win, team members are almost sure to flounder. Now, this doesn’t mean that all incompetence can be coached. If a team member is clearly capable of the requirements of a role and is willfully underperforming or

● Incompetence: In any role, competence is achieved over time. A team member new to a role (by virtue of needing to develop tactical competence) is incompetent on some level. Over time, a team member will learn processes and systems to become more productive. ● Conscious competence: Once a team member is able to function without coaching, this individual has achieved a level of conscious competence. He or she is able to fulfill the requirements of the role and drive toward results in a productive manner, without significant correction. ● Unconscious competence: With enough time, a team member should not require coaching and reach a level of unconscious competence. The team member will have achieved a mastery of the tools and systems within their role, and be able to consistently drive toward the right results. Unconscious competence leads to

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Underperformance happens.

strategic thinking and advancement in the workplace. Accountability Begins With the Leader Many times leaders fail to offer accountability through corrective behavior because they fear confrontation with team members. In reality, most team members will appreciate this feedback and guidance. As a leader, you must lead the charge of accountability. This means knowing when to provide correction and coaching. If you haven’t already, you should be evaluating the performance of your team members through:

Opening Doors in San Antonio Since 1974

● Metrics: Performance metrics are a sure way to gauge how a team member is progressing toward goals, driving to results and winning on a daily basis. ● One-on-one meetings: These meetings are best conducted weekly or bimonthly, and notes should be taken to capture topics and key takeaways. While the focus of these meetings should be on progress and growth, friction points and challenges should also be addressed and then documented in the notes to create accountability. ● Trust your instincts: Typically, when there’s a challenge with a team member, leaders instinctively know something is off but fail to trust their instincts. Trusting your instincts helped you gain a position of leadership. If you feel something is off in your organization, don’t just let it slide. ● Dig deeper: This goes hand in hand with trusting your gut. Sometimes the evidence that a team member is struggling or slipping into incompetence will be readily available. Other times, you’ll have to ask questions to determine performance issues and how those issues might be affecting your team. Coaching and Correction Don’t just offer correction to a team member who’s underperforming or learning; coach them through the process of achieving the result you want. Explain processes, offer examples and give the them the opportunity to try the process on their own while you observe. When you do offer correction and coaching, remember that you’re correcting the behavior, not the person. More likely than not, poor performance is a result of a bad situation rather than a bad attitude. This may sound counterintuitive, but as a leader your focus should not be on how to cut out incompetence from your organization. This ultimately results in exhaustive cycles of micromanagement, policy changes, oversight systems and high rates of employee turnover — all destabilizing and very costly. Instead, find ways to proactively identify underperformance. This will drive you to have the conversations you need to engage your team, discover challenges and produce a more cohesive team. An engaged and aligned team will inherently produce more predictable, positive results for your organization.

KING REALTORS is dedicated to helping San Antonio and the oil industry with their real estate needs. If you are looking to buy or sell a property, call us and say you saw it in SHALE Magazine!

TABITHA KING 210.414.4255 About the author: Alex Charfen is co-founder and CEO of CHARFEN, a training, education and consulting organization for entrepreneurs and small businesses. For more information, visit www.charfen.com.

5600 Broadway Avenue • San Antonio, TX 78209 KingRealtors.com tabitha@kingrealtors.com JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

Swimming Toward Success in STEM Education

he seconds swim swiftly past as the young scientists hurry as quickly as they can to take measurements of the shark. With intense looks of concentration, they note the apex predator’s body condition, cautiously examine its teeth, draw blood, and measure its body length as time ticks down. The timer buzzes just as the nod is given to release the great white back into its home. The scientists each take hold of the animal’s fins ... and the plush shark lands with a soft thud on the floor. “You guys did it!” exclaims SeaCamp and Home School Coordinator Randy Slayton. The activity, one of many offered by Texas State Aquarium’s education department at its shark-themed minicamp, allows budding scientists to learn how real-life scientists and conservationists track and tag sharks in the wild and also why these amazing animals need our help. The camp is so beloved that education staff decided to dedicate one section of the aquarium’s popular summer SeaCamp to the study of shark biology and conservation. From said SeaCamp to field trips, home-school classes, distance learning and more, the program’s educational messaging and programming is designed to foster exploration and discovery, and empower learners of all ages to reach their full potential.

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Two powerful partners in helping students reach this potential are the Texas State Aquarium and Flint Hills Resources. In 2014, Flint Hills donated $1 million to the aquarium’s education department to create the Flint Hills Resources Center for Excellence in Science, Technology, Engineering, and Math (STEM) Education. Focused through the familiar lens of environmental education, the center will place a powerful new emphasis on STEM practices and skills, featuring the habitats and animals of the Gulf of Mexico and, soon, the Caribbean, that are featured at the aquarium. This new approach aims to improve STEM teaching, learning, and career recruitment in South Texas and beyond — an issue of importance to the aquarium, Flint Hills, and the Coastal Bend community. The center will work over the next five years to provide leadership in the STEM education community, empower staff and area educators with best and “next” practices, demonstrate excellence in STEM and environmental education through an emphasis on science process skills, double program participation from 60,000 to 120,000 learners per year, and produce measurable gains in environmental, marine, and general STEM literacy among all audiences. This donation was not Flint Hills Resources’ first foray into supporting the aquarium or students. Flint Hills has been the presenting

partner for the aquarium’s distance learning program, Aquavision, since 2007 and has been a strong supporter of the aquarium for over 25 years. Through Aquavision, the Texas State Aquarium’s educators are broadcast via video right into classrooms throughout the country. Distance Learning Coordinator Sasha Orman beams out interactive and unique STEMbased educational programs from the Flint Hills Resources Distance Learning Studio in Corpus Christi across the U.S. and all the way to Canada and Mexico. Programs like these featuring live American alligators are especially popular in landlocked areas. “When we project these live feeds from the aquarium, for some of these kids, it’s the first time they’ve ever seen a live dolphin or shark,” explains Orman. She will regularly include incredible biofacts like turtle skulls and carapaces, as well as live animals such as jellyfish, starfish, and urchins in her programs to capture students’ interest. The otter program even involves mailing the class’s teacher a box of imitation felt otter pelts so that the children can feel for themselves just how thick an otter’s fur is. Thanks to Flint Hills Resources, this popular program and others have already seen a boost in how many children are reached. “We have doubled our distance learning audience, retooled programs for a more studentfocused approach, and facilitated large STEM stakeholder discussions,” says Leslie Peart, Vice President of Education and Conservation. With the opening of the aquarium’s $55 million Caribbean Journey expansion just around the corner, Aquavision and other programs will experience growth throughout the aquarium and beyond. Peart says there will be a mobile education unit in the new wing, as well as a host of new cameras installed at different dynamic exhibits for students to enjoy, not to mention the occasional visiting scientist. “This will allow us to enhance our STEM Professional in Residence program, among many others,” Peart explains. This particular program allows for the aquarium to host a science professional on-site or in the field and bring his or her research to students with various programming and activities built into

PHOTOS COURTESY OF TEXAS STATE AQUARIUM

Special to SHALE

the aquarium’s curriculum. Dr. William Sager, professor of geophysics in the department of earth and atmospheric sciences at the University of Houston, was the aquarium’s first STEM Professional in Residence. Dr. Sager’s research specialties include marine geophysics, which involves exploring the ocean using sound waves or gravity and magnetic fields, as well as paleomagnetism and plate tectonics. Students were able to follow along last year on a historic trip made by Dr. Sager, Texas State Aquarium Manager of Distance Learning and Outreach Suraida Nañez-James, and a team of scientists as they mapped Tamu Massif, the world’s largest underwater volcano. In addition to the Professional in Residence program, the support from Flint Hills will allow the aquarium to sponsor a teacher fellowship. This stipend will give a lucky Coastal Bend science teacher the chance to teach and learn alongside aquarium education staff. The winner of this fellowship will be able to report back and share his or her immersive, newfound skill set with students and other educators within the local community and school system. The Flint Hills Resources Center for Excellence in STEM Education will encompass not only the new wing but also the entire aquarium. Integral to the aquarium’s education mission, the center will provide the opportunity to retrain staff, focusing particularly on STEM process skills, and retool existing programs to better represent updated teaching methods. “The STEM skills are something we really want to focus on developing,” details Peart. “We want students observing, describing,

As the number of students pursuing STEMrelated careers has declined in recent years, the aquarium hopes to help turn the trend around — especially in regard to women, who statistics have proven are less likely to pursue careers in a STEM field comparing, contrasting, measuring and using all of these sensory skills.” Peart says it has always been her dream to move away from the classroom and “make textbooks come alive” through engaging education. “That’s what this will help us do; we want to erase the walls and move away from the traditional teaching methods that have kind of been ingrained,” she says. Instead, the goal is to immerse students in fun, fascinating and fact-filled learning environments. That’s where out-of-the-box ideas like “soft” shark tagging come in. Peart

and the rest of the education staff ultimately want to help form and inform the scientists of tomorrow. As the number of students pursuing STEM-related careers has declined in recent years, the aquarium hopes to help turn the trend around — especially in regard to women, who statistics have proven are less likely to pursue careers in a STEM field. These are big goals, but that is what Flint Hills’ support of the aquarium will help make possible. As the aquarium’s mission is to engage people with animals, inspire appreciation for our seas and support wildlife conservation, big goals are what its team swims toward.

For more information on the Texas State Aquarium and the Flint Hills Resources Center for Excellence in Science, Technology, Engineering, and Math Education, visit www.texasstateaquarium.org. JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

Back and Neck Care Millions of Americans suffer from back pain every year. The reasons for the pain are many, including bad posture, accidents, improper lifting, obesity and weak muscles. Practice prevention to minimize your risk for back pain — get regular exercise, lose any excess weight and learn good posture.

SHALE OIL & GAS BUSINESS MAGAZINE  JULY/AUGUST 2016

Blood Pressure High blood pressure is called the “silent killer” because it has no symptoms. If high blood pressure remains unchecked, it can lead to a stroke, heart attack, heart failure and more. You can stop this silent killer — if you catch it in time.

Cholesterol There’s a lot of news about cholesterol these days, and with good reason. High cholesterol contributes to heart disease, which kills more Americans than all cancers combined. A regular exercise routine and good eating habits — along with medication if your doctor recommends it — can keep cholesterol levels under control and lower your risk of heart disease.

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Healthy Living

Fitness You may wonder what all the fuss is about exercise. Simply put, inactivity is hazardous to your health. Physical activity can help you prevent chronic disease, manage your weight and stay mentally fit. The best news is that it’s never too late to adopt a more active lifestyle.

Nutrition Could your diet use a nutritional tuneup? A healthful diet has many benefits, and it doesn’t have to be bland and boring. Add color to your plate with fresh fruit and vegetables, choose whole grains and low-fat dairy, and keep an eye on your portion size. Aim for balance, variety, flexibility and moderation.

Mental Health Your mental health is just as important to your overall well-being as your physical health. Exercise and proper nutrition will improve your mental health. Practicing meditation and optimism are two additional ways to improve your mental health and relieve stress.

Smoking Cessation You’ve heard all the reasons to stop smoking. You may have thought about quitting or even tried it a time or two. But you may need a little help. Learn how to permanently quit, how to quit and how to stay quit for a healthier, smoke-free future.

Stress Management If you feel overwhelmed by stress, you’re not alone. But you can start to view stress as a fact of life and respond to it in positive ways. Learn the skills to keep stress in check and have a more balanced, healthy life.

Weight Management Are you at a weight that lets you feel and look your best? If not, it’s time to start managing your weight. The good news is that to lose weight, you don’t have to diet. But you may need to learn new skills. Find out how to lose weight safely and keep it off for good.

For more lifestyle information and resources, visit www.bhealthy.net/wellness-news or contact Michelle Smith, the Director of Growth & Development for Baptist Healthy Solutions – Wellness Division of Baptist Health Systems, at Michele.Smith1@baptisthealthysystem.com.

JULY/AUGUST 2016  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

Editor’s Pick:

Éilan Hotel & Spa

ranquility, relaxation and luxury ... Those are the three words I would use to describe my experience at the spa at the Éilan Hotel & Spa in the outskirts of San Antonio. My day of relaxation started with a delicious meal provided by Sustenio, renowned Texas chef Stephan Pyles’ nearby restaurant. I enjoyed thoroughly my bacon-jalapeño meatloaf dish. I personally am not a fan of spicy food, so I was a little terrified I would be overwhelmed by the spicy jalapeño, but I am happy to report that the meatloaf had the perfect amount of spice to add flavor but not mask the bacon-y, meaty goodness. The sides included delicious potatoes and Brussels sprouts that were so good, I ate them all! So far, so good. Lunch was delicious! I eagerly walked up the grand staircase from the restaurant to the lovely spa and stepped inside. Immediately, the scent in the air was so fresh, so serene. I was ready to get my spa day started. I was given a robe and slippers and asked to wait for my masseuse in the waiting room. Oversized one-person couches, each with their own privacy curtain, lined the room. I poured myself a glass of champagne and reclined waiting for my name to be called. It was lovely. The champagne was bubbly, as was I with excitement. When I was called back, I was more than ready for a day of pampering. I, like many of our readers, feel the pressures of the energy industry. Busy workdays, complex schedules filled with meetings and calls, traveling from city to city chasing energy conferences, parties and press events can all take a toll. I’ll be honest, I was stressed. I felt I needed this massage then more than ever! This week had been particularly busy. As I walked into the room and lay down on the cushiony soft table, I instantly felt more relaxed. I listened to the gentle music playing overhead while waiting for the masseuse to enter the room. It seemed like a Native American-inspired instrumental tune — the sound was lovely. I was lost for a moment enjoying the music in the quiet room that smelled so heavenly. And then the masseuse came in. Her voice was so sweet and hushed. Everything about her was quiet. She moved quietly, spoke gently, even her touch was careful and

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delicate. As she performed the full-body, deep-tissue massage, I felt my stress melt away. The scent of essential oils reduced my tension and eased my mind. Following the massage, I felt so carefree and light. I walked around with a smile. I sat back in the waiting room with a glass of tasty white wine on the oversized couch and waited to be called back for a pedicure. The first thing I noticed about the pedicure area was that there weren’t the big basins with jet streams for your feet like most other salons I go to. In this case, each chair had a small tub for your feet. At first I didn’t think much of it, with my sunny, tranquil attitude following my massage. But when I realized why they did this, I was instantly intrigued. Each person had their own basin, without jets, which means no cross-contamination between clients. My feet are safe here, I thought. Once the pedicure began, I was once again relaxed with a glass of wine in my hand and great conversation going on around me. The technician took great care to be gentle while massaging my feet. The sugar scrub exfoliated while the shea butter wrap gave moisture to my thirsty skin. The final touch was the pastel pink polish that looked oh so pretty! I entered the spa expecting to leave relaxed and rejuvenated, and that’s exactly what happened! I loved my day of relaxation and would do it again and again and again. Whether you’re interested in a staycation with fantastic amenities or you’re planning your next trip to San Antonio, I would definitely recommend the Éilan for the sophisticated professional looking for a hotel with more than just comfy beds.

To book your next stay or spa day, visit eilanhotel. com or call 210-598-2900.

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may/june cover party

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SHALE Magazine hosted their cover party honoring Brandon Seale and Howard Energy Partners on June 23 at J Prime Steakhouse in San Antonio, Texas. The room was packed as SHALE media partners; Howard Energy employees, partners and stakeholders; elected officials and others networked and discussed the international-themed issue.

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eagle heights development open house The new, upscale housing option for oil and gas professionals in Pleasanton, Eagle Heights Development, hosted an open house celebration for their grand opening. Guests included oil and gas professionals and executives, city leaders, media representatives and community members. The event provided an opportunity for the guests to tour the new housing option while enjoying beer, bar b que and live music by the Chris Sauceda Band. The development generously underwrote a donation of $10,000 to the Birds of Prey Conservancy, an organization that aids endangered raptors such as hawks and bald eagles. The organization brought some of their birds to the opening and gave educational demonstrations on the majestic animals.

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Did you know: Oilfield workers are some of the most likely people to find distressed raptors while working?

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A room with a view.

Plan your getaway to Corpus Christi, and experience a funfilled stay at the Omni Corpus Christi Hotel. Whatever your reason to escape, you’ll enjoy luxurious accommodations, amazing amenities and fine dining, all within steps from your room. Let us elevate your stay to extraordinary.

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KPMG’s 14th Annual Global Energy Conference

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KPMG’s 14th Annual Global Energy Conference took place on May 25-26 at the Royal Sonesta Hotel in Houston. The conference was designed to provide senior energy executives with critical insights to help navigate the structural shift in commodity prices and focus on the role disruptive forces are playing in transforming the energy industry. The keynote speaker, Alan Mulally, former president and CEO of the Ford Motor Company, discussed designing a turnaround to gain competitive advantage amidst an economic downturn. Additionally, political commentators George Will and Paul Begala provided an insightful look at the U.S. presidential candidates and their views on the future of U.S. foreign policy.

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