SHALE Oil & Gas Business Magazine July/August 2015 by SHALE Oil & Gas Business Magazine

SHALE J U LY / A U G U S T 2 0 1 5

DAVID PORTER: NEW CHAIRMAN OF THE TEXAS RAILROAD COMMISSION

SCOTT SHEFFIELD A PETROLEUM

OIL & GAS BUSINESS MAGAZINE

SENATOR CARLOS I. URESTI: 84TH LEGISLATIVE SESSION GOOD FOR OIL AND GAS

A BRIEF HISTORY: NATIONAL ENERGY POLICY

PIONEER

» LIFESTYLE AND LEISURE FOR FINE LIVING BHP BILLITON: COMMITMENT TO COMMUNITY AND SUSTAINABILITY IN THE EAGLE FORD JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

• Rail spur access

(Elmendorf, Tx location)

• 24/7 turnkey operation • BHA Inspection • Portable Drill Pipe/ Tubing Inspection • EMI and NDT inspection • Thread gauge inspection • OCTG services, maintenance and storage • UT Weldline inspection • Partnership with LO Transport & Yard

7281 FM 1784 Pleasanton, Tx 78064 Conveniently located 1/4 mile off of I-37 and Exit 117

832-473-7491 / sales@bos-company.com / www.BlessOilfieldServices.com JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

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

www.AEPTexas.com/shaleoilgas @AEPTexasEconDev

Specializing in oilfield supplies and service throughout the Eagle Ford Shale  Dual & single belts -Cam belt  Hydraulic Rams, Value Banks, Pumps, Motors  Sauer Danfoss, Chains, Chain Drive  Specialized Tooling. Tool Box, Machining  Discharge & Suction Pumps  Suction Manifold  Discharge Manifold  Murphy Gauges  Sensors  Circuit Board

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.

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

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

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

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CONTENTS

JULY/AUGUST 2015

FEATURES

16 BHP Billiton: Commitment to Community and

Sustainability in the Eagle Ford

18 A Brief History of National Energy Policy

COVER STORY SCOTT SHEFFIELD: PETROLEUM PIONEER 24 Scott Sheffield’s forward-thinking leadership

and wide-ranging experience in the industry solidified Pioneer Natural Resources as a leader in the oil and gas sector.

INDUSTRY

34 PEMEX Strengthening Relationships

With Suppliers

Railroad Commission

Leads by Example

36 New Chairman Elected to the Texas 38 The Eagle Ford Excellence Awards 40 The Shale Cliffhanger 42 The Women’s Energy Network in Houston

POLICY

46 Texas Energy Policy With Common Sense 48 Texas 84th Legislative Session Wrap-Up 52 84th Legislative Session Good for Oil and Gas

BUSINESS

56 Mexico’s Energy Industry Evolves 58 Business Opportunities in Mexico for Oil

and Gas

LIFESTYLE

62 Luxury Hotel, Casino and Spa in the Mountains 64 Season in Review: The Corpus Christi IceRays 68 Dove Hunting at Joshua Creek Ranch 70 A New Golf Experience 72 A Taste of Eataly

NONPROFIT 78 Energy Day

COMMUNITY

80 Championing Local Graduates 82 Broadening Our Focus

SCENE COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: WTL PHOTOS

84 Ryan Sitton Cover Party 86 Oil Barons Charity Ball 88 Eagle Ford Consortium Conference

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

ADVISORY BOARD

OMAR GARCIA - SENIOR ADVISOR

JAMES M. SUMMERS

BRADLEY H. LENZ

JEFFREY A. WEBB

THOMAS TUNSTALL, PH.D.

PAULA WAGGONER-AGUILAR

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

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

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

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 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas; and in 2005, he completed a long-term assignment in Afghanistan, where he was Deputy Chief of Party for a central bank modernization project.

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Bradley H. Lenz is the Director of economic and businessdevelopment 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, managing the electric distribution budget, and managing the back-office functions and the 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.

Paula Waggoner-Aguilar is a Chief Financial Officer and the Owner and President of The Energy CFO, LLC, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. She started her career in the 1990s working her way up the accounting ranks in Latin America, beginning in oilfield services and highly engineered equipment. Over the past 20 years, Waggoner-Aguilar has built a successful track record working in senior leadership roles alongside hard-driving independents, notable industry executives and engineers. In 2014, the San Antonio Business Journal awarded Waggoner-Aguilar BEST CFO for Private Medium Companies. Likewise, she has also been recognized as a trailblazer for her various efforts in recruiting and helping promote women in the industry. Originally from Dallas, she is a graduate of The University of North Texas (MS, taxation) and The University of Texas at Arlington (BBA, accounting), a Texas CPA and a member of the Association of International Petroleum Negotiators.

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

CONTRIBUTORS

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 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas; and in 2005, he completed a long-term assignment in Afghanistan, where he was Deputy Chief of Party for a central bank modernization project.

David Porter was elected statewide to serve a six-year term as Railroad Commissioner in November 2010. Commissioner Porter has been appointed to the Interstate Oil and Gas Compact Commission as the Official Representative of Texas, and in 2015, he will serve as the second Vice President. He has also been appointed as the Official Representative on the Interstate Mining Compact Commission and currently serves as an Advisory Board Member for the Texas Journal of Oil, Gas, and Energy Law.

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

Katie Carmichael is an Austin, Texas-based communications specialist. She is the founder and owner of Carmichael Communications and Consulting, which provides a wide range of communication services, including public affairs, government relations, consulting and writing, primarily within the energy industry. Notable clients include the Texas Alliance of Energy Producers and Power Across Texas. Most recently, Carmichael was the Director of Public Affairs for Railroad Commissioner David Porter. Prior to the RRC, she worked in the Texas House of Representatives. Carmichael received a bachelor’s degree in journalism from Texas State University.

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Gloria Leal is an Attorney and Government Affairs Consultant in Austin, Texas. Leal has a solo practice primarily relating to energy, environmental and healthcare/insurance matters. She represents the Texas Alliance of Energy Producers, a national association of independent producers and service providers, and other clients. Leal is former General Counsel and International Counsel of the Texas Department of Insurance and represented the department in international financial services negotiations with Mexico. She was also an Assistant Attorney General in the Energy and Transportation divisions. Leal is a graduate of the University of Texas School of Law.

Rogelio Cuevas is a Co-Managing Partner at Cuevas & Cuevas LLP. He is an expert on developing business opportunities across the border with Mexico. He works directly with the Mexican oil and gas industry at the federal, state and local government levels, developing and forming business legal entities for corporations and suppliers both in the U.S. and Mexico. He also works directly with mineral rights owners in Texas, serving the role as a Landman providing oil and gas accounting and management services for them. He graduated from St. Edward’s University in Austin with a BBA in economics, and he holds an MBA in accounting/finance from Our Lady of the Lake University in San Antonio. His co-managing partner oversees the International Tax Department at both their offices located in San Antonio and Ciudad Acuña, Coahuila, Mexico.

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

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

Paula WaggonerAguilar is a Chief Financial Officer and the Owner and President of The Energy CFO, LLC, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. She started her career in the 1990s, working her way up the accounting ranks in Latin America, beginning in oilfield services and highly engineered equipment. Over the past 20 years, Waggoner-Aguilar has built a successful track record working in senior leadership roles alongside hard-driving independents, notable industry executives and engineers. Waggoner-Aguilar is an expert in her field and is passionate about starting up, fixing, and growing strong companies. In 2014, the San Antonio Business Journal awarded Waggoner Best CFO for Private Medium Companies. Likewise, she has also been recognized as a trailblazer for her various efforts in recruiting and helping promote women in the industry. Originally from Dallas, she is a graduate of The University of North Texas (MS, taxation) and The University of Texas at Arlington (BBA, accounting), a Texas CPA and a member of the Association of International Petroleum Negotiators.

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& GAS BUSINESS MAGAZINE OIL OIL & GAS BUSINESS MAGAZINE VOLUME 2 ISSUE 4 • JULY/AUGUST 2015

KYM BOLADO CEO / PUBLISHER

CHIEF FINANCIAL OFFICER Deana Acosta

EDITOR IN CHIEF Lauren Guerra

ART DIRECTOR Elisa Giordano

ASSOCIATE EDITOR Katie Carmichael

COPY EDITORS

Katie Buniak, Maegan Sheppard

EDITORIAL INTERN Julia Le-Nguyen

ADMINISTRATIVE ASSISTANT Josie Cuellar

VICE PRESIDENT OF SALES Liz Massey Kimmel

ACCOUNT MANAGERS

Ingrid Hollinger, Salome Stevens

ASSISTANT ACCOUNT MANAGER Laura Martinez

SENIOR BUSINESS ANALYST Fernando Guerra

CONTRIBUTING WRITERS

David Blackmon, Katie Carmichael, Rogelio Cuevas, Omar Garcia, Bill Keffer, Gloria Leal, Julia Le-Nguyen, Thomas Tunstall, Sen. Carlos I. Uresti, Paula Waggoner-Aguilar

STAFF PHOTOGRAPHER Malcolm Perez

CONTRIBUTING PHOTOGRAPHERS Jose Alcala, Doug Cohen Miller Life Touch, WTL Photos

www.shalemag.com For advertising information, please call 210.240.7188 or email kym@shalemag.com. For editorial comments and suggestions, please email lauren@shalemag.com. SHALE MAGAZINE OFFICES: 5600 Broadway Ave., San Antonio, Texas 78209 18756 Stone Oak Pkwy, Ste. 301, San Antonio, Texas 78258 For general inquiries call: 210.854.3361

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PUBLISHER’S NOTE

THE ENERGY MARKET IS PICKING UP! LIKE MY SCHEDULE LATELY, THE MARKETPLACE IS BUSTLING ONCE MORE AND NEW OPPORTUNITIES ARE ON THE HORIZON. As we hit the midway point in 2015, I am reminded what a great year we at SHALE have had; and the rest of the year we have to look forward to is very exciting as well! The biggest news from SHALE getting our entire company riled up is the announcement of our State of Energy Luncheons. The first luncheon will take place on October 14 at the Congressman Solomon P. Ortiz International Center in Corpus Christi, followed by the San Antonio event taking place on December 4 at the Pearl Stable. Both events are going to feature speakers with invaluable information on the current state of our energy industry. This is an event business owners and energy professionals will not want to miss! For information on sponsorship opportunities or ticket prices, visit our website: www.shalemag.com. I was looking forward to doing this issue as soon as we set our theme calendar, because it is centered around lifestyle. I know that business people and especially oil and gas professionals work hard year-round. We all need some R and R from time to time. Traveling, relaxing, eating and playing are all part of the reward we give ourselves after all those long days and nights of hard work. After all, oil and gas is not just an industry, it’s a lifestyle! So, be sure to take a special look into our lifestyle section this issue and get some ideas for your next entertainment plans. To close this letter, I want to thank you for your continued support and loyalty to SHALE. As we continue to grow, we recognize it is all made possible by our loyal readers and fans. SHALE is committed to bringing you relevant and timely business and energy-related news and information. We know there are many media sources out there to choose from, and we are humbled and grateful you have chosen SHALE as your trusted media source.

KYM BOLADO

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

SHALE OIL & GAS BUSINESS MAGAZINE MISSION STATEMENT:

SHALE Oil & Gas Business Magazine is a 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.

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

OIL & GAS PLAYERS

BUSINESS

TECHNOLOGY

POLICY

Where industry comes to speak.

AUSTIN

CORPUS CHRISTI

HOUSTON

SAN ANTONIO

Join us on Saturdays at 10 p.m. sponsored by:

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FEATURE

BHP BILLITON:

COMMITMENT TO COMMUNITY AND SUSTAINABILITY IN THE EAGLE FORD

VIEW OF PAVILION FROM SOUTH PLAZA

he San Antonio River Foundation is pleased to announce a landmark $2.4 million gift from leading global resources company BHP Billiton. The gift was raised as part of the foundation’s Capital Campaign to build Confluence Park and will be provided the funds necessary to construct and name the “BHP Billiton Pavilion” and “BHP Billiton Multi-Purpose Room” at the park. Moving the Capital Campaign beyond the halfway mark, the gift is significant enough that it kicks off Phase II of the foundation’s Capital Campaign to raise funds for the design and construction of the park located at the intersection of the San Antonio River and San Pedro Creek on the Mission Reach of the San Antonio River. “One of our charter values as a company is sustainability,” says Rod Skaufel, BHP Billiton Asset President, Shale. “It’s defined as ‘putting health and safety first, being environmentally responsible and supporting our communities.’ Within that community support priority, we place a strong emphasis on education. The foundation’s educational vision for Confluence Park is well aligned with our priorities and we’re proud to be able to play a part.” The San Antonio River Foundation’s most ambitious project to date, Confluence Park will transform a former Southside industrial laydown yard into a unique, interactive learning and recreational space. The park will include an educational pavilion, a large-scale water catchment system, ecotype demonstration quadrants, interactive educational play stations and an inviting gateway to hiking and biking trails along the historic Mission Reach portion of the San Antonio River. The entire park is envisioned as a life-sized, interactive teaching tool that will inspire a greater understanding of Texas ecotypes and their relationships with one another, encouraging students and adults alike to become more involved with the preservation and stewardship of our waterways. “With environmental education as its core purpose, Confluence Park is designed to inspire students and visitors to become more involved with the river, practice environmental stewardship and gain a greater understanding of Texas ecotypes,” says San Antonio River Foundation Executive Director, Estela Avery. “This generous gift from BHP Billiton is instrumental in moving Confluence Park from concept to construction.” Confluence Park takes its name from the intersection of two waterways — the San Antonio River and Apache Creek. BHP Billiton’s involvement in the project is similarly the result of a confluence — between its deep commitment to the Eagle Ford region of South Texas and its worldwide commitment to sustainability and the integrity their operations.

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RENDERINGS COURTESY OF CONFLUENCE PARK

SPECIAL TO SHALE MAGAZINE

VIEW OF PAVILION FROM PARKING AREA

VIEW OF SUPPORT BUILDING FROM PAVILION

MITCHELL STREET ENTRANCE

VIEW OF PAVILION INTERIOR

AERIAL VIEW LOOKING SOUTH TO RIVER CONFLUENCE

VIEW OF PAVILION FROM RIVER CONFLUENCE

ELEVATION OF THE BHP BILLITON PAVILION

SITE PLAN OF THE BHP BILLITON PAVILION

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

FEATURE

A BRIEF HISTORY OF NATIONAL ENERGY POLICY BY: DAVID BLACKMON

IN THE BEGINNING, there was the Windfall Profit Tax. Well, ok, it wasn’t exactly the beginning, but for me it sort of was. I began what was to become a long career in the U.S. oil and natural gas industry in June 1979, just a few weeks before President Jimmy Carter signed the infamous Crude Oil Windfall Profit Tax (WPT) into law. I had landed a job as an accountant with Oscar Wyatt’s Coastal States Oil & Gas Corporation and was initially assigned the job of filing the company’s severance tax reports for Texas and several other states. Life was generally as good as it could be for a country boy from Beeville, Texas, who was trying to adjust to life in the big city of Houston while earning the princely salary of $1,200 per month. But then the requirements of the (WPT) came along, and management in our accounting department realized they had to assign compliance with this burdensome new law to some poor sap. So they asked for volunteers in a team meeting one Tuesday afternoon, and, seeing no one else jumping up and down to take on the task, I

nor a tax that was actually collected in any meaningful way from big oil. As I began to wade my way through the morass of regulations, certifications and filing requirements attached to the law, I quickly discovered something (to my everlasting dismay). Thanks to some terrific lobbying by big oil as the legislation was making its way through the Congressional sausage-making process, the WPT in fact impacted small independent producers and even royalty owners far more significantly than it ever would any large, integrated oil company. True story: In 1984 I went to work for a large company headquartered in San Antonio and was immediately assigned the task of completing the annual WPT reconciliation filings that had been required under the law since 1980, but which this particular company had never filed. The IRS had recently discovered this issue and had assigned a resident auditor to the company’s offices just before I arrived. So my job was to placate the auditor — who told me the first time I met him that he figured the company owed the government more than $10 million — and complete the company’s filings for the previous four years. One Friday about six months later, we filed our final WPT reconciliation and notified the auditor that the government, due to the somewhat irrational (possibly insane) way the law was structured, actually owed the company about $6 million in refunds. The following Monday, he didn’t show up, and that afternoon my boss got a call from the IRS office in Washington notifying us that the agency was terminating its audit residency, effective immediately. Because of the idiotic way the WPT was structured (and I won’t go into the details, because it could consume this entire article if I did so), the law actually stopped generating any revenue at all to the federal government by the mid-1980s. Conservatives like to complain that it is utterly impossible to repeal a tax once the federal government has implemented it. Well, it turns out that that is only true so long as the tax is actually generating money for the politicians in Washington to spend. In 1988, after WPT spent a few years generating zero

THE CRUDE OIL WINDFALL PROFIT TAX TURNED OUT TO BE NEITHER A TAX ON PROFITS, NOR A TAX THAT WAS ACTUALLY COLLECTED IN ANY MEANINGFUL WAY FROM BIG OIL stupidly raised my hand, beginning a recurring pattern in my career in which I found ways to advance up the chain by being willing to take on unpleasant tasks that nobody else wanted to do. (It’s a tough way to get ahead, but it is surprisingly effective.) Thus, for the first six years of my career, during which I spent time at three different companies, I became something of an expert on what was at the time — and likely remains to this day — the single most lamebrained “energy policy” ever enacted by the federal government on the U.S. oil and gas industry. The act was sold by President Carter and supporting members of Congress as a way to punish “big oil” and the “obscene profits” companies like Exxon, Mobil, Chevron, Texaco, Shell, BP and other majors were supposedly making as the price of oil approached $40 per barrel after two OPEC-created oil shocks of the 1970s. The WPT turned out to be neither a tax on profits,

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dollars in revenue, President Ronald Reagan convinced Congress to repeal this mind-numbingly stupid law. And thus ended my first exposure to federal energy policy, an exposure that has been a constant part of my 36-year career in the oil and natural gas industry.

This federal energy policy has completely distorted the market for corn and many other crops, as millions of acres of land formerly used to produce wheat, rice and other crops have been converted to corn by farmers who smartly want to collect the federal subsidies. This has resulted (very predictably) in higher grocery prices on a wide variety of foodstuffs. The use of so much corn in the making of a manmade fuel has also resulted in shortages that have contributed to hunger and starvation in Third World countries that are heavily dependent on U.S. exports to feed their populations. When one adds to all of that the reality of plenty of alternatives to corn ethanol as a means of reducing ozone, one comes to the quite obvious conclusion that this is a tragic national energy policy that the country — and the world — could do better without.

» ENERGY POLICY = PICKING WINNERS AND LOSERS

If you pay attention to energyrelated news, you hear lots of people complaining about this country’s supposed lack of a federal energy policy on a daily basis. One of the most visible such advocates, famous oilman T. Boone Pickens, has made a call for a national energy policy a part of his daily talking points as a part of his Pickens Plan for the last seven years. He has also advocated for the government to enact policies that would encourage the use of compressed natural gas (CNG) as a transportation fuel. I always look at such complaints with a jaundiced eye, because my long experience has shown that what the federal government does well in the realm of energy policy is screw things up. The reality is, if you take a look behind the curtain to divine the motives of advocates for a national energy policy, you almost invariably discover that what they really want is for the government to pick winners and losers in the energy marketplace. Mr. Pickens — a brilliant man for whom I truly have a great deal of respect — is a good example. He wants the government to create incentives for truckers who convert their dieselfueled rigs to run on natural gas and subsidize the installation of natural gas fueling infrastructure. But this is already happening in the marketplace as we speak, only not at as rapid a pace as Pickens would prefer. In Texas alone, well over 100 new CNG fueling stations have been built just in the last four years, and companies are beginning to convert their large truck fleets to a cleaner-burning, more economic fuel. Natural gas, it turns out, doesn’t need subsidies from the federal government to succeed in the marketplace.

» THE TRAGEDY OF CORN ETHANOL

For other fuels, like corn-based ethanol, it’s a different story. Lobbyists for this fuel — most notably the gargantuan Archer Daniels Midland Company — have succeeded in convincing the federal government to adopt policies that not only subsidize

» CRUDE OIL EXPORTS

THANKS TO THE BOOM IN THE EAGLE FORD SHALE AND THE PERMIAN BASIN, THERE IS SO MUCH NEW LIGHT SWEET CRUDE COMING ONTO THE DOMESTIC MARKET THAT IT THREATENS TO OVERRUN THE CAPACITY OF U.S. REFINERS TO HANDLE IT ALL the making of the fuel but also include heavy-handed EPA regulations that require refiners to add it to the gasolines they create under the guise of reducing atmospheric ozone. Without these subsidies and regulations, corn ethanol simply would not exist. Corn is probably the least efficient grain to use to convert into fuel, often requiring as much or more energy use to create as it actually produces. Yet, the ethanol lobby has succeeded in creating and perpetuating a self-serving energy policy largely due to the reality that much of this corn happens to be grown in Iowa, and the Iowa caucuses are the first contest in the process of electing presidents every four years. Thus, Democrats and Republicans alike are heavily incentivized to always express their undying love for corn ethanol.

One of the current ongoing debates related to federal energy policy is whether or not to repeal an antiquated law that bans the export of crude oil that is produced in the United States. We see lots of people trying to blame this particular bad policy choice on President Carter, but he is not the culprit in this case. That dubious honor in fact goes to President Richard Nixon, who initially issued an executive order banning crude exports in 1974, in the wake of the first Arab oil embargo that had caused U.S. gasoline prices to double. President Nixon was in fact responsible for a whole rash of horrific energy policies in response to the actions of OPEC during the early 1970s. Fortunately for the country, all except this weird, illogical prohibition on oil exports has been unwound over the years. But this one remains, and it is proving a very hard one to undo, as it has become tied up not only in energy politics, but also in environmentalist politics as well. Where energy politics are concerned, the effort to repeal this law runs into the following concerns: • Should we really begin exporting crude oil when we are still importing about a third of our daily oil use from other countries? • Will opening up exports of crude result in a rise of gasoline prices at the pump? That second concern is critical, because members of Congress and key personnel in the Obama administration are loathe to enact a policy — or in

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DESPITE ALL OF ITS PATHOLOGIES AND WARTS, OUR NATIONAL POLICY HAS RESULTED IN A SITUATION IN WHICH THE UNITED STATES IS THE LEADING PRODUCER OF OIL, NATURAL GAS, AND WIND AND SOLAR POWER ON THE FACE OF THE EARTH

this case, repeal one — that voters then blame for causing them to have to spend more of their hard-earned money to fill up their gasoline tanks. None of the experts who have studied the issue believe that allowing exports of crude would impact the price at the pump in any real way; but the existence of a series of studies demonstrating this provides precious little comfort to politicians who must run for reelection in 2016 and beyond. Another energy-related concern mitigating the repeal of this ban comes from the nation’s independent refiners, i.e., refining companies that are not a part of integrated companies like ExxonMobil, Shell and BP. These companies, who enjoy no similar federal restrictions on the export of the refined products they produce, oppose the export of crude since it might deprive them of domestic feedstock they can obtain at depressed prices because it lacks access to international markets. But at the same time, thanks to the boom in the Eagle Ford Shale and the Permian Basin, there is so much new light sweet crude coming onto the domestic market that it threatens to overrun the capacity of U.S. refiners to handle it all. The first time there is a load of Eagle Ford light sweet crude that can’t find a home at a domestic refinery, the price for U.S. crude will become even further depressed when compared to the international market. That may be good for independent refiners, but it isn’t for anyone else. And of course, the radical “environmental” community has gotten into the debate, as it tends to do on any issue that it sees as a possible tool for depressing domestic oil production. Groups like the Sierra Club, Earthworks and the Natural Resources Defense Council have watched in abject horror as the shale boom has dramatically increased our domestic oil production and reduced our foreign imports from 65 percent of our daily use to about 30 percent in the last six years. And they seem anxious to latch onto any issue that would reverse that trend. It is doubtful that anyone in leadership in the environmental community was even aware of this ban until it began to surface as an issue about 18 months ago, but they now treat it as if it were some sort of Holy Grail of sensible energy policy. This opposition from the left-wing environmental community makes it more difficult for many congressional Democrats — even some from Texas — to support the repeal of this ban. So we have the spectacle of this clearly archaic, counterproductive energy policy, enacted when yours truly was in high school, still clinging to life more than 40 years later thanks to a confluence of special interests whose real motivation seems to be to keep the federal government in the business of artificially picking winners and losers and distorting the marketplace on their behalf. And that, friends, is exactly what most advocates for a national energy policy really have at the top of their respective agendas.

» THE ENERGY POLICY WE ALREADY HAVE The truth is that this country already has

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a national energy policy in place. It is a fluid, disjointed, often counterproductive mess, but the policy is there. And the reality is that, despite all of its pathologies and warts, our national policy has resulted in a situation in which the United States is the leading producer of oil, natural gas, and wind and solar power on the face of the earth. Since so much of this energy policy exists in the form of regulations governed by federal agencies like the EPA, the Department of Energy and the Department of the Interior, the national energy policy tends to ebb and flow as presidential administrations come and go. One outcome of our national energy policy in recent years is that this nation is extremely fortunate that the vast majority of shale oil and gas plays happen to lie beneath private and state lands, which are mainly regulated at the state level. President Barack Obama likes to point out occasionally the fact that the shale boom has taken place under his watch, but the reality is that his administration has been heavily focused on restricting and diminishing the ability to search for and produce oil and natural gas on federal lands. If most shale resources happened to lie beneath federal lands, President Obama’s national energy policy would likely have ensured that no boom would have ever taken place, and we would likely still be importing 60 percent of our daily oil needs from countries who are hostile to this nation’s interests. Another major part of our energy policy lies in our tax code, which can heavily influence the national fuel mix, even to the point of picking winners and losers. The Obama administration, influenced by the radical environmental lobby, has used the tax code to heavily subsidize the wind and solar industries in order to try to make them competitive with coal and natural gas in the power production sector of the economy. This aspect of our national energy policy has had decidedly mixed results and has resulted in a series of embarrassing incidents, such as the bankruptcy of solar-panel company Solyndra, which had received over half a billion dollars in federal subsidies.

» IN THE END

At the end of the day, we all should be very careful what we ask for when it comes to national energy policy and pay close attention to what other more public figures really mean when they advocate for this elusive animal. Because, more often than not, what they are really after is the ability to take your tax dollars and use them to artificially make their preferred energy source a “winner” in a marketplace in which it otherwise cannot compete.

About the author: David Blackmon has spent 36 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 Blackmon at david. blackmon@shalemag.com.

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SCOTT SHEFFIELD PETROLEUM PIONEER

or many, the word “pioneer” evokes iconic imagery of the first American settlers — romantically rugged and sunsoaked — who braved new, unforgiving terrain and adverse conditions in the name of posterity and prosperity. These early pioneers are responsible for igniting the evolution of the United States from a fledgling, uncharted territory into the world power that it is today, and they embody the first notions of pursuing the American dream. But what comes to mind when thinking of modern-day pioneers, and do any even still

exist? To answer this question, look no further than an impressive, granite-covered office complex in Irving, Texas. Scott Sheffield — an unassuming, downto-earth yet phenomenally successful businessman in his early 60s — is truly a modern-day pioneer, a title he appropriately shares with the large, independent oil and gas company that he leads as chief executive officer and chairman of the board. Pioneer Natural Resources was officially formed in 1997, when the Parker & Parsley Petroleum Company, formerly headed by

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Sheffield, merged with MESA Inc. Since that time, Pioneer has grown to become one of the most prominent independent producers in the country with approximately 4,000 employees and annual revenue exceeding $4 billion. Even in the midst of a cyclical industry downturn, the company is poised to continue its growth and revenue trajectories. Pioneer’s success is largely attributed to Sheffield, although his humility would never allow him to take all of the credit. Sheffield’s forward-thinking leadership and intuition, finetuned by nearly a lifetime of experience in the

PHOTO COURTESY OF SCOTT SHEFFIELD

BY: KATIE CARMICHAEL

cover story

industry, have positioned the company as a leader in the oil and gas sector.

Next Frontier: Oil Exports REPEALING RESTRICTIONS

One new horizon Sheffield is pursuing is crude oil exports. Not only is the CEO at the forefront of the debate, rallying the troops in an effort to repeal the 40-year-old federal ban, he also chartered the discovery of a new conduit for U.S. companies to move petroleum products abroad.

On December 22, 1975, President Gerald Ford signed into law the Energy Policy and Conservation Act, which, in part, banned the export of American crude oil, ostensibly in response to the Arab oil embargo of the 1970s. In the decades since, the global landscape has changed dramatically. Geopolitical powers have shifted and re-shifted, regimes have risen and fallen, and the discovery of domestic unconventional resources has led to a tremendous increase in the amount of oil and natural gas the U.S. is producing. In fact, the U.S. Energy Information Administration reports that the surge in oil production growth in 2014 was the largest volume increase since record keeping began more than 100 years ago, a staggering 1.2 million barrels of oil equivalent per day (BOEPD) increase to equal a total of 8.7 million BOEPD for the year. With this huge boost in production, the U.S. has surpassed historically top oil producers, such as Russia and Saudi Arabia. A report from Columbia University’s Center on Global Energy Policy lays out the argument: “Increased U.S. crude production can weaken the economic power, fiscal strength and geopolitical influence of other large oil producing countries.” The report also notes that allowing crude oil exports will provide for “greater U.S. diplomatic leverage in future application of sanctions or pursuits of other objectives.” Lifting the ban would mean huge economic benefits for the U.S. as well. According to IHS Energy, allowing exports could spur investments of nearly $750 billion, as well as increase the GDP by $135 billion as a result of the uptick in production. Additionally, the balance of trade would be significantly impacted, narrowing the trade deficit by $22.3 billion in 2020, according to ICF International. The repeal has the potential to create thousands of new jobs and put money directly back into consumers’ pockets. It’s projected that U.S. consumers could save, on average, up to $5.8 billion per year over the next two decades as a result of lower gas or fuel prices. Predictions on job growth range from about 300,000 to 400,000 newly created jobs, with the highest estimate peaking around 1 million in 2018. And investmentled economic expansion and lower unemployment rates would lead to a significant boost in American households’ disposable income. By far the most significant benefit is to domestic oil producers, who are undeniably on an uneven playing field with the rest of the world. West Texas Intermediate (WTI), the light sweet crude oil produced in the state, has seen a price differential of as much as $20 less than Brent, the typical benchmark for pricing on the international market. “It’s our domestic price versus the world price,” Sheffield explains. “Just a $10 swing will make a difference of whether we’re increasing

SCOTT SHEFFIELD'S FORWARDTHINKING LEADERSHIP AND INTUITION,

FINE-TUNED BY NEARLY A LIFETIME OF EXPERIENCE IN THE INDUSTRY, HAVE POSITIONED PIONEER NATURAL RESOURCES AS A LEADER IN THE OIL AND GAS SECTOR production 2 million barrels a day long-term, or decreasing production 2 million barrels a day.” Sheffield points out that it is not just the oil producers who are getting a lesser deal per barrel, but also individual royalty owners — who collect payments on a percentage of oil sales — and the federal and state governments that hold production on publicly owned lands. “[Lifting the crude oil export ban] gets what should be a fair price for all constituents of the oil and gas industry,” Sheffield says. He has long been an outspoken advocate for exports and has made multiple trips to Washington, D.C. with his team and other energy CEOs. In March, Sheffield testified before the U.S. House Subcommittee on Energy and Power in support of lifting the outdated restrictions. “I think the comments were very well received,” Sheffield says, adding that the critical impacts on national security and job creation, and the importance of getting a competitive price were key points in the discussions. In conjunction with legislative efforts in D.C., Sheffield is a founding member of the Producers

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Yet prohibiting crude exports puts the oil industry in a precarious position, which is further compounded by the current pricing slump, as well as oversupply and lack of storage. “If current trends continue and the export ban is not lifted, U.S. shale oil production will flatten or decline by disproportionate volumes versus our overseas competitors, diminishing the profound benefits of the shale revolution,” Sheffield said in a testimony before Congress. He is also concerned with the timing of when such a bill would go before Congress. “The biggest concern, sad to say, is that

Concho Resources, Devon Energy, Encana, EOG Resources, EP Energy, Hess, Laredo Petroleum, Marathon Oil, Noble Energy, Occidental Petroleum and WPX Energy. “We hope that we can get a bipartisan bill through both the Senate and the House sometime this fall,” Sheffield says, although he knows there are still significant obstacles to overcome in the meantime. First, not everyone agrees that exporting crude oil is the best move for the U.S., specifically some inland refiners. Consumers and Refiners United for Domestic Energy (CRUDE) was recently formed by four refiners — Philadelphia Energy Solution, Alon USA Energy, PBF Energy and Monroe Energy — with the purpose of maintaining the current restriction on crude oil exports. The group says reversing the ban will actually cause gasoline prices to go up — not down — and cites potential unintended consequences to the economy, energy independence and national security. But Sheffield sees it differently. “Their point is that if U.S. crude gets the same price as world crude, they’ll go under,” the oil executive says.

most politicians are worried about the price of gasoline,” Sheffield says, referring to elected officials’ hesitancy to cause discontent among voters, who often have knee-jerk reactions to any increase at the pump. In reality, U.S. gasoline is priced off global gasoline prices, not domestic crude prices, and Sheffield points to various independent studies that show that repealing the crude oil export ban will benefit U.S. consumers by putting downward pressure on gasoline prices due to increased global oil supplies. Nevertheless, Sheffield admits that the vote could easily be delayed if the price of gasoline is going up at the time. Ideally, he says, Congress would approve the repeal within the next few months, but he realistically gives it a 50-50 chance of passing this year.

PIONEERING CONDENSATE EXPORTS

While Pioneer’s chairman homed in on the larger issue of crude oil exports, that didn’t distract him from finding a clever way around it. In 2011, while other oil producers were riding

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high on solid prices and a newfound abundance of shale resources, Sheffield was beginning to see the writing on the wall. The excess oil produced domestically must go somewhere, typically to the Gulf Coast or Cushing, Oklahoma — the delivery point for WTI futures contracts. “I was worried about the storage issues like they’re having today and moving [oil] down to the Gulf Coast,” he says about his early calculations. And he was right to be concerned. This March, crude oil storage at Cushing reached 54.4 million barrels, the highest volume on record. The 70.8 million barrels of storage capacity represents more than 60 percent of crude oil working storage space in the Midwest. In addition to the glut at Cushing, West Texas has been grappling with production that is outpacing takeaway capacity. In May, the region also experienced significant pipeline disruptions. This created record levels of stockpiles and forced oil to be diverted to Cushing instead of the Gulf Coast, further compounding storage issues. But back before this congestion was making headlines, Sheffield had the keen insight to anticipate such events. “We researched the 1975 law in regard to the ban on oil exports and realized there was a mechanism that if you had condensate that was processed, like we have in the Eagle Ford play, there’s a chance that the Commerce Department would agree with us and consider it processed condensate,” Sheffield recalls. To everyone’s surprise, the U.S. Commerce Department issued a private ruling approving Pioneer’s request to export condensate in less than a month. Sheffield and his team were the first to uncover an overlooked loophole, buried deep in various sections of archaic laws and government codes. Section 754.2(a) of the Export Administration Regulations states: “Lease condensate that has been processed through a crude oil distillation tower is not crude oil but a petroleum product.” As long as the crude oil has undergone stabilization and distillation, it can be considered a refined petroleum product, and therefore may be exported with far fewer restrictions. Sheffield admits that credit must be given to the Obama administration as well. “Instead of lifting the ban outright, which is what they should do, they’re giving a little bit to the industry to allow this [oversupply] problem to at least get pushed back,” Sheffield explains. In July 2014, Pioneer exported its first shipment of condensate, making it the first U.S. company to export the petroleum product under current restrictions. The company exported 10,000 barrels per day (BPD) of Eagle Ford condensate to Asia and Europe last year. In 2015, Pioneer is exporting approximately 20,000 BPD, with significantly improved pricing compared to domestic sales. After news of the Commerce Department’s ruling broke, several companies followed suit.

PHOTO COURTESY OF SCOTT SHEFFIELD

for American Crude Oil Exports (PACE), an industry group aimed at sharing factual information with elected officials and the public about the benefits of allowing U.S. producers to sell crude oil in global markets. “Ryan Lance, the chairman and CEO of ConocoPhillips, and I got together about a year ago,” Sheffield recalls of the group’s organic origins. “We had a discussion about this point, and we began soliciting members to join the group.” PACE membership also includes Anadarko Petroleum, Apache, Chesapeake Energy,

Enterprise Products Partners, Royal Dutch Shell, BHP Billiton, BP, Trafigura, Cima Energy (a Texasbased Mitsubishi Corporation affiliate), NuStar and Cheniere Energy are currently exporting or in the process of exporting condensate.

PHOTO COURTESY OF SCOTT SHEFFIELD

a pioneer in the making Sheffield’s rise to the upper echelons of the oil industry was not by chance or luck, and it certainly did not happen overnight. His journey to the top has been nearly a lifetime in the making. His father, Hugh D. Sheffield, was a petroleum engineer and executive at Atlantic Richfield Company, also known as ARCO. Sheffield was born in Dallas, and in 1966, the family moved to Tehran, Iran, where Sheffield attended high school. From his time in Iran, the future CEO learned several lessons about life and the world that have undoubtedly shaped his perspective today. “You learn to appreciate foreign cultures when you live there,” the Texas native says. “You have to learn to live in and appreciate their environment.” This heightened sense of respect is a trait that Sheffield has maintained throughout his life, and one of the attributes that makes him so beloved by his employees at Pioneer. Time abroad also provided an enhanced understanding and unique perspective on the geopolitical intricacies that have an impact on foreign relations and the oil industry, as well as an ingrained sense of gratitude for life back home. “You get a greater appreciation for the U.S. … all the things that we have in this country that we don’t think about versus living in a foreign culture,” Sheffield says.

Upon graduating from high school in 1970, Sheffield returned to the U.S. to attend college at The University of Texas at Austin. Although he loved math and science, the college freshman initially felt the urge to carve his own path. “I rebelled against my father and signed up for pre-law,” Sheffield says somewhat jokingly. It didn’t take long for Sheffield, and the university, to realize that pre-law was not the right fit. “I flunked out of college,” Sheffield admits with a grin, quickly clarifying, “they called it a forced withdrawal.” Although Sheffield came close to joining the ranks of modern-day millionaires who never graduated from college, his father stepped in and gave his son a harsh dose of reality. In what Sheffield calls “a game-changing event,” he was sent to roughneck on an offshore rig for about four months. “You need to focus and get an education is what it taught me, and not party and have fun,” Sheffield reflects. He returned to school after his semester off with new zest, switched majors and surpassed minimum requirements for continued enrollment, achieving an almost perfect grade point average that semester. Sheffield graduated from The University of Texas in 1975 with a Bachelor of Science in petroleum engineering and went to work as a production and reservoir engineer for Amoco in Odessa, Texas. He stayed with the company for about four and a half years, primarily working on enhanced oil recovery projects in West Texas. In 1979, fate came knocking. Sheffield accepted a position at the Parker & Parsley Petroleum Company, a small, independent oil

company, making him the fifth employee and the only engineer on staff at that time. The intimate environment was exactly what the young engineer needed to flourish. “I basically was taught by the founders at Parker & Parsley everything you can know about the oil and gas industry,” Sheffield says. “I learned more just in a year with them than I did [in] five years with a major oil company.” Two years after joining the company, Sheffield was named vice president of engineering. In 1985, the founders of Parker & Parsley sold their interest in the business, and Sheffield stepped up as president and a director on the board. In 1989, Sheffield and his management team made the prudent decision to purchase the company from the owner at the time, a financial real estate company that was teetering on bankruptcy. Shortly after gaining control of the company, Sheffield was named chairman of the board of directors and CEO. In 1991, the new leader took the company public. In 1997, Sheffield skillfully navigated the merger between Parker & Parsley Petroleum Company and MESA Inc., forming Pioneer Natural Resources. Today, he is the CEO and chairman of the board of directors of one of the topperforming oil and gas producers in the country.

SECRET TO SUCCESS As a seasoned veteran of the industry, the current oil pricing slump is not exactly Sheffield’s first rodeo. “Going through five downturns, you gain experience,” he says. Through that experience, the oil executive has

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

GOOD ROCKS

“We have some of the best shale rocks in the country, in both the Permian Basin in West Texas and the Eagle Ford,” Sheffield says. But that wasn’t always the case. If not for Sheffield’s sensibility and intuitive decisionmaking, Pioneer very well could have missed some of its greatest opportunities. In the mid-1990s, major oil companies began divesting large portions of their U.S. acreage, convinced that domestic production had matured, and diverted attention and resources overseas. Sheffield chose a slightly different path. “That time period is when we made most of our acquisitions from the major oil companies in the Spraberry and Wolfcamp field,” Sheffield says. Located in the Permian Basin, the Spraberry and Wolfcamp Shale play is one of the nation’s oldest producing oil fields and was often overlooked at the time. The company also dabbled in the international arena, achieving success in the deepwater Gulf of Mexico, Africa and Argentina. But by the early 2000s, the newly discovered Barnett Shale in North Texas was turning attention back home, as it was the first shale formation heavily produced by the combination of horizontal drilling and hydraulic fracturing. Shale plays quickly became the new hot topic. “In 2005, we made the decision to exit, over time, all of those [international] businesses and refocus our staff,” Sheffield says, noting that Pioneer was somewhat late to the party in the

Barnett Shale. “We said there has to be shale under our South Texas and Permian Basin properties.” A handful of years later, in 2009, the first horizontal well was drilled in the Eagle Ford Shale in South Texas, unleashing a frenzy of drilling activity in the once-quiet region. While the CEO was right in thinking there may be shale under Pioneer’s South Texas properties, the real breakthrough was yet to come. “I saw a presentation in 2011 by our

geosciences staff that was sort of the game changer for the company,” Sheffield remembers. “The game changer was really the Permian Basin: the Spraberry and Wolfcamp field.” That presentation revealed that Pioneer was already sitting on billions of barrels of recoverable oil, literally right under their feet. “This was a 10-billion-barrel discovery on our own lands, most of it held by production, right outside of Midland, Texas,” Sheffield remarks of the tremendous find. Today, Pioneer is the largest acreage holder in the Permian Basin, boasting a 100-yearplus inventory and more than 20,000 drilling locations. From its first well drilled in 2011 to 2014, Spraberry/Wolfcamp production has more than doubled, increasing from 45,000 to 99,000 BOEPD. It could be said that Sheffield initiated the resurgence of the mighty Permian Basin. Last year, Pioneer added proved reserves from horizontal drilling activities in the Permian Basin and Eagle Ford totaling 157 million BOE, and oil production was up 25 percent year over year. Even with the decline in oil prices and activity, Pioneer still projects production growth of 10 percent for 2015, with estimated production in the second quarter of this year averaging 198,000 to 203,000 BOEPD.

GOOD BOOKS

Possibly the most essential lesson Sheffield has learned throughout his decades in the industry is the importance of being financially secure. His cardinal rule: “Always have a great balance sheet, because you don’t know when the price of oil is going to change.” To protect against inevitable volatility in oil prices, Sheffield says one of the most important steps is securing good hedges. Pioneer is currently 90 percent hedged at $71 per barrel, which has resulted in roughly an extra $20 per barrel on the majority of sales so far this year. Sheffield estimates it could provide somewhere in the ballpark of $400 million to $500 million overall for 2015. The company is also heavily hedged next year, according to the CEO, well over 50 percent at $70 or higher, potentially adding another $350 million in 2016. Sheffield took additional steps to strengthen the balance sheet in direct anticipation of the Organization of the Petroleum Exporting Countries (OPEC) meeting last fall, at which the group decided to maintain current production levels, further depressing prices brought on by oversupply and weakening demand globally. “We raised a billion in equity back before the OPEC meeting,” Sheffield says. Since the meeting, several companies again followed Pioneer’s lead. Sheffield predicts in the six to eight weeks prior to our discussion in April, approximately $12 billion to $13 billion of equity had been raised by the industry. In 2014, Pioneer also divested of three

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nonessential business components in an effort to boost cash flow. The sale of its Alaska, Barnett Shale and Hugoton assets resulted in net proceeds of $745 million. Additionally, the company is currently in the final stages of negotiating the sale of the Eagle Ford midstream business. In response to the decline in oil prices, Pioneer, like many companies, has significantly reduced the number of rigs operating across the state. Currently, it has 16 horizontal rigs online — 10 in the Permian Basin region and six in the Eagle Ford. However, because of Sheffield’s ability to keep the company financially lean and well-positioned in regard to acreage, it is poised to rebound much faster than most once prices stabilize. Sheffield predicts the company could start adding rigs sometime in the second half of this year, although that’s contingent upon several factors. First, the CEO expects the sale of the Eagle Ford midstream business will close during the second quarter, providing another cash infusion to the balance sheet. Additionally, Sheffield wants to be sure the worst is not yet to come in terms of oil prices. “I’m optimistic that we saw the bottom when it hit $42 to $44 twice,” Sheffield says. The third factor is achieving ambitious reductions in key budgetary items, namely drilling and completion costs. The company announced drilling and completion costs had already reached the targeted 15 percent reduction in the first quarter, with the most significant of these reductions in materials, such as drilling mud, chemicals, guar and water; fuel charges; labor and transportation; rental equipment, such as blowout preventers and coil tubing; and well services, such as wireline, direction and cementing services. To achieve such goals, the company is cutting down to two-string casing from threestring in several areas, utilizing dissolvable bridge plugs for increased efficiency in each stage of stimulation, drilling near existing tank batteries and drilling multiple wells from a single pad to reduce costs. By the end of the year, Pioneer expects to achieve an overall 20 percent reduction in these costs, with the key contributors being casing and tubing, well stimulation and drilling rig costs. Additionally, Pioneer projects the cost to construct new facilities, particularly horizontal tank batteries, and lease operating expenses in 2015 to be 15 percent and 10 percent lower, respectively, than the prior year. As of the first quarter, the company had already realized a 5 percent reduction in lease operating expenses. The company is also implementing additional cost-cutting methods to maintain profitability and productivity. For example, Pioneer made the decision in mid-February to exclusively utilize Pioneer Pumping Services, eliminating the need for a third-party service company.

PHOTO COURTESY OF SCOTT SHEFFIELD

perfected the recipe for success in the industry. Simply put: good rocks, good books and, most importantly, good people.

Pioneer also recently announced the closing of its Denver office and streamlined operations in the Raton Basin. In February, Pioneer shut down the vertical drilling program in the Permian Basin, as it was no longer necessary to hold acreage and provides lesser returns compared to horizontal wells. Pioneer’s CEO sees a strong, continued presence for years to come in the Permian Basin and the Eagle Ford Shale.

PHOTO COURTESY OF SCOTT SHEFFIELD

GOOD PEOPLE

Acreage wasn’t the only valuable asset Pioneer was scooping up from major oil companies as they were moving internationally in the ’90s. “We went to the majors and hired a lot of employees from them,” Sheffield says, explaining one reason for the company’s relocation to Irving. “It was easier to attract them in the Dallas-Fort Worth area than it was in Midland.” With the ramp up in industry activity over the past decade, hiring the best in the business has become an increasingly competitive sport for oil and gas companies, who are offering even more enticing compensation packages. Pioneer offers a two-for-one match on employee retirement plans, up to 5 percent of an employee’s salary, as well as stock purchase plans, an annual incentive bonus program and an employee referral awards program. It also provides a tuition reimbursement plan, employee-assistance plan and affordable insurance coverage for employees, including medical, life and disability programs.

Pioneer goes a step further than most by making it as convenient as possible for its employees to achieve a healthy work-life balance. The company’s recently constructed office complex in Midland boasts a free day care center, two workout rooms and a cafeteria where employees enjoy complimentary lunch together. Employees also have the chance to bond and be active in the Corporate Challenge, an eight-week, Olympics-style tournament held each fall in which companies and organizations in the Dallas area compete in a number of sports and events, such as badminton, golf, tennis, volleyball, flag football, and more. The proceeds go to support the Special Olympics. Sheffield says everyone involved has a great time and really gets into the competitive spirit — it seems himself included. “[We’re] threetime champions!” But the real draw boils down to the leadership, and Sheffield’s belief in open communication, trust and humility. The chief executive says his office is always open to all employees, and he constantly stresses to treat everyone with the same level of respect. “Don’t sit there and do something differently for me that you wouldn’t do for somebody working out in the field or a file clerk,” Sheffield says. “Treat everyone the same — everybody is important in this company.” Throughout our conversation, Sheffield often seemed to downplay his role in Pioneer’s accomplishments, rarely using the word “I” — instead saying “we.” “I feel like I’m just another employee,” the CEO admits.

“I always say it started with my parents,” Sheffield says. “That’s what I was taught, and so it’s natural to be that way.” The proof is in the pudding. Pioneer has consistently been recognized as a top employer for several years running. It’s one of only 12 companies to land on The Dallas Morning News’ “Top 100 Places to Work” since the program was started in 2009, receiving the coveted No. 1 spot in 2014. Pioneer has also been named one of the “Best Companies to Work for in Texas” every year since 2010, which holds special significance as it is based on employees’ feedback.

GOOD TO THE CORE One of the underlying reasons Pioneer is consistently recognized as a great place to work is the strong corporate culture Sheffield established and maintains within the company. For Pioneer, core values aren’t just a colorful poster on the wall. Community involvement, charitable giving, safety and sustainability are a way of life.

COMMUNITY INVOLVEMENT AND CHARITABLE GIVING

Giving back to the communities in which they live and operate is an important focal point for Pioneer’s CEO and employees. In addition to the considerable tax revenue and employment the company provides, Pioneer is actively involved in local charities and places significant importance on providing educational opportunities for the betterment

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

of communities and to prepare a future Texas workforce. In the Permian Basin region where Pioneer has long been active, Sheffield is regarded as a highly respected member of the community, in part because of his philanthropic endeavors. Pioneer donated $1 million to the Permian Basin Petroleum Museum in 2011 for renovations, expansion and much-needed improvement of the nation’s largest museum dedicated to the petroleum industry. The company has made financial contributions toward the construction of the Bush Tennis Center, which opened in 2012 in Midland. Employees also team up annually with Christmas for Our Troops to pack almost 3,000 gift boxes for service members stationed in Iraq and Afghanistan during the holiday season, as well as sending small care packages and letters to members of the military throughout the year. But perhaps the largest and most meaningful contributions have gone to Midland area schools. In 2012, Pioneer made a four-year commitment of $1 million to the Early College High School at Midland College, a program in which high school students can concurrently take collegelevel courses and receive a high school diploma and an associate degree upon graduation. The same year, Sheffield publicly endorsed the $163 million elementary school bond initiative, which passed largely thanks to support by the industry and community leaders like Sheffield. Last year, Pioneer and a small coalition of local companies collectively dedicated $6.25 million to the Midland ISD Education Foundation; $3.25 million went to new teacher signing bonuses, and the remainder was used for re-signing bonuses. This donation was intended to help the district attract and retain quality teachers, which has been difficult given the cost of living and fluctuations in enrollment. Youth and education are also a charitable focus in Pioneer’s South Texas operating area. The company partners with local colleges, such as Coastal Bend College in Beeville and Victoria College, to ensure courses are meeting the industry’s needs and sufficiently preparing students to work in their chosen fields. Pioneer also partners with local junior highs and high schools to help meet needs in math and science, from delivering graphing calculators to helping acquire new microscopes and lab equipment. Each June, Pioneer and the Victoria Business and Education Coalition host the YOUth

LEADership Conference, a five-day program at which middle school students are taught essential leadership skills to help them succeed in school and their future careers. And as Pioneer is a founding member of the South Texas Energy & Education Roundtable (STEER), STEER and its employees support youth livestock shows by sending letters of encouragement to students and contributing funds. In the company’s new home of North Texas, Pioneer has collaborated with Habitat for Humanity, building 16 new homes in the area, as well as participating in A Brush with Kindness, a Habitat sub-program that assists the elderly and disabled with minor home repairs and helps revitalize local neighborhoods. Each spring, Pioneer sponsors a fundraising campaign to assist the North Texas Food Bank, as well as co-hosting the annual Dallas CASA Classic golf tournament, the highest grossing one-day charity tournament in the Dallas-Fort Worth area. In 2014, the event raised more than $1.7 million for the Court Appointed Special Advocates nonprofit organization. In both North and West Texas, the company is also deeply involved with the United Way. Employees donate on an individual basis through payroll deductions and through other means, and every dollar donated is matched by Pioneer. Employees enjoy organizing creative fundraising events, even turning two floors of the Midland office into a nine-hole miniature golf course to help raise money for the Midland United Way. In Irving, the company hosts an in-office event in which employees race their homemade, food-constructed model cars against one another to raise money for Meals on Wheels, one of United Way’s agencies. The company was recognized for its efforts and unique fundraising approach, receiving the 2013 Trendsetter Award from the United Way of Metropolitan Dallas. Pioneer provides economic benefits to communities by providing stable employment and substantial tax revenue. It is the No. 1 taxpayer in Midland County and employs roughly 2,000 West Texans in its Permian Basin operations. In South Texas, the company employs about 530 workers; and it paid almost $71 million in production taxes and $31.5 million in ad valorem taxes in 2013. Pioneer also employs more than 1,000 people in the Irving headquarters, contributing over $4 million in production taxes and close to

IN JULY 2014, PIONEER EXPORTED ITS FIRST SHIPMENT OF CONDENSATE, MAKING IT THE FIRST U.S. COMPANY TO EXPORT THE PETROLEUM PRODUCT UNDER CURRENT RESTRICTIONS

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

$2 million in ad valorem taxes to North Texas communities in 2013.

SAFETY

Safety is a critical component of every operation, and Pioneer devotes significant time and resources to ensuring all employees are well-versed in safety practices and procedures. In 2012, Pioneer’s Health, Safety and Environment team spent more than 16,000 person-hours training more than 1,300 employees. The following year, the Pioneer Pumping Services training department initiated a comprehensive two-week, on-site new hire training program, in which participants attend OSHA courses and equipment training, as well as receiving hands-on experience with PPS-specific equipment and field and yard inspections. Over the past year, Pioneer has featured a series of three targeted training programs; the most recent is the WeBelieve program, which was created by company staff and features participant polling, group discussions, case studies and interactive videos. Sheffield believes corporate culture starts at the top; and as such, Pioneer’s top supervisors and managers regularly attend the awardwinning DuPont Sustainable Solutions Managing Safety courses. In 2013, more than 150 managers attended the two-day training session. Pioneer’s board of directors has also established the Health, Safety and Environment Committee to provide oversight of these practices within the company and monitor management’s efforts in maintaining a culture based on safety and environmental protection. Vehicle safety is another area of focus, especially considering the substantial amount of time employees spend on the road. In 2012, employees drove a total of 43 million miles and completed more than 17,000 person-hours of driver safety training courses. Approximately 1,700 of Pioneer’s fleet vehicles are equipped with GPS tracking technology, which monitors safe driving practices and helps optimize routes and reduce mileage. In 2012, for every million miles driven by Pioneer employees, there were on average 2.05 preventable vehicle accidents. Last year, Pioneer’s OSHA recordable injury rate and losttime accident rate dropped to an eight-year low.

SUSTAINABILITY AND ENVIRONMENTAL STEWARDSHIP

In terms of sustainability, Pioneer utilizes a multidisciplinary approach to balancing economic growth, social progress and environmental stewardship. Pioneer’s Sustainable Development department works to reduce its environmental footprint and provide cost-effective solutions through scientific analyses of information and knowledge. The company is also expanding the

PHOTO COURTESY OF SCOTT SHEFFIELD

role of its Corporate Environmental team. Overall, the company’s sustainability efforts coalesce around three key issues: water, air and surface. In regard to water, Pioneer has made tremendous strides in sustainability through several initiatives. For one, the company is increasingly using brackish, non-drinkable groundwater for its drilling operations. Because of the consistent occurrence of droughts in Texas, Sheffield assembled a team of geologists about three or four years ago to examine alternative sources of water, specifically brackish water. “We found a lot of brackish water in the Santa Rosa formation,” Sheffield says. “We’ve been very successful there as the first area to replenish and supplement fresh water.” To further avoid the use of fresh water in its West Texas operations, Pioneer has created a unique partnership with the city of Odessa to purchase effluent water from the municipality. While this type of agreement is not commonly seen in Texas, Sheffield notes it is a mutually beneficial one. This relationship provides Pioneer with a steady supply of water to produce wells and significant cost benefits. Sheffield estimates that moving away from fresh water could save the company about $300,000 to $400,000 per well in drilling and trucking costs. For the city, the financial commitment secures funding for the construction and maintenance of such infrastructure. Odessa is able to build a sophisticated new treatment plant capable of processing water to the standards Pioneer needs, but the plant will also serve the needs and residents of the greater area for years to come. Pioneer is also in talks with the city of Midland regarding a similar agreement, further increasing the amount of effluent water being utilized. “We hope by 2020 to essentially be using a combination of effluent water and brackish water and not use fresh water at all,” Sheffield says. And the company is exploring several water-recycling projects for the fresh water it does still use, although the economics have slowed the widespread implementation of such initiatives. “So far the recycling projects are very expensive,” the chairman admits. “But over time we think it’s better to recycle, so we’re still working on a couple of [projects], trying to get their costs down.” To protect existing groundwater, the company is installing covers on selected water storage ponds at well sites to combat evaporation. Pioneer is also adding pressure gauges to monitor and test the annular space of all new wells to ensure well integrity and further protect water resources. To better understand the company’s impact on air quality and emissions, Pioneer implemented a new program that includes advanced emissions measurements. Improved

practices and data collection helped the company achieve a 20 percent decrease in reported gross emissions in 2012. The company has also made improvements to the completion process, specifically in the Eagle Ford Shale, which has resulted in a 79 percent reduction in flaring in this production stage between 2011 and 2012. As well, Pioneer has converted more than 13 percent of light-duty trucks to natural gas fuel as of mid-2013 — representing roughly 2,000 vehicles. Going a step further, the company is expanding its use of this domestic fuel by converting three drilling rigs in South Texas to natural gas, reducing particulate matter and carbon monoxide emissions. Pioneer’s efforts are not going unnoticed, as it claims the first oil and gas project to ever receive the Texas Commission on Environmental Quality’s Texas Environmental Award in the Pollution Prevention category. Deeply committed to surface protection and conservation, one of the company’s key initiatives is reducing well pad footprints by drilling multiple wellbores from a single pad. In South Texas, Pioneer has reduced its average footprint per wellbore from 2.75 acres in 2012 to fewer than 2 acres in 2013. In 2009, Pioneer was awarded the prestigious Bruno Hanson/Midland College Environmental Excellence Award for achievements in the spill management program and pollution prevention initiatives, extensive training in proactive safety measures and overall demonstration of corporate and environmental stewardship.

MEASURING SUCCESS Although his net worth is well into the millions, Sheffield measures success not in dollars and cents. Rather, he prefers the

sense of pride he feels when reflecting on the company he’s built and the jobs he’s provided to thousands of Pioneer employees. Sheffield’s greatest personal accomplishment: “Creating a great company where 4,000 employees really think it’s a fun place to work,” the CEO says. On a larger scale, Sheffield says his impact on the country’s oil supply, namely finding and participating in one of the world’s largest oil fields, the Permian Basin, gives him personal fulfillment. “Career wise, [my greatest accomplishment] is that we’ve been the best S&P 500 energy company stock performer over the last five years,” Sheffield says. Pioneer’s stock is also ranked as the 49th top performing stock overall on the S&P 500. Sheffield and wife Kimberley reside in Irving. They have five children — Roseanne, Bryan, Kit, Bonnie and Cassandra. Bryan has followed in the family business, founding Parsley Energy in 2008. In his free time, Sheffield enjoys playing tennis and skiing, a hobby he picked up during his time in Iran. He is also active in several industry groups and organizations, including the National Petroleum Council, America’s Natural Gas Alliance and The University of Texas’ Cockrell School of Engineering advisory board, and serves as a board member of Southern Methodist University’s Maguire Energy Institute. In 2012, Sheffield was honored with the prestigious Top Hand Award by the Permian Basin Petroleum Association and was inducted into the Permian Basin Petroleum Museum Hall of Fame the following year. He is also the recipient of the Texas Oil and Gas Association’s 2014 Distinguished Service Award; the 2012, 2013, and 2014 Texas Top Producers Award in the Best CEO (large company) category from the Texas Independent Producers and Royalty Owners and Texas Monthly; SMU’s 2013 L. Frank Pitts Energy Leadership Award; the 2012 National Multiple Sclerosis Society’s Hope Award; and the 2012 Henry Cohn Humanitarian Award. Even with countless awards and honors to his name, Scott Sheffield remains humble and dedicated to his work. Leading the energy industry in myriad ways and with constant concern for his employees, the community and the environment, this trailblazing executive continues to make Pioneer Natural Resources a wonderful place to work in Texas and a topperforming company in the energy industry.

Pioneer Natural Resources is a large independent oil and natural gas company that is focused on helping meet the world’s energy needs. To learn more, visit the company online at www.pxd.com. JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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INDUST RY

PEMEX STRENGTHENING RELATIONSHIPS WITH SUPPLIERS SPECIAL TO SHALE MAGAZINE FROM PEMEX’S PROCUREMENT DIVISION cataloging over 2 million material group codes and services contracting texts, and providing business solutions rather than incomplete, obsolete databases.

PEMEX IS ONE of the 10 largest oil producers in the world, ranked top three of the largest companies in the Americas. As of Sept. 30, 2014, total hydrocarbon production averaged 3.5 million barrels oil equivalent per day (mmboe/d), and the average number of operating wells totaled 9,450. During 2013, PEMEX spent $25 billion to $30 billion in equipment, services, leases and public works procurement procedures, awarding an average of 30,000 contracts per year. PEMEX recognizes the importance of its purchasing power to generate savings and develop standardized, streamlined, timely and more transparent processes. Centralizing procurement has been a catalyst for action to improve performance, business intelligence and decision-making, with the development of new contracting methods and boosting integrated partnerships of suppliers and contractors. The company has evolved into a new purchasing philosophy by strategically sourcing through category management; that is, a transformation in the methodology and supply-chain management, by segmenting the procurement of goods, leases, services and public works in order to achieve the most favorable conditions of quality, timeliness and price. The Procurement Division (DCPA, the acronym for its name in Spanish) standardized functions, procedures and best practices to assess business needs and strategies, administer contracts, develop long-term relationships with suppliers and determine spend categories. PEMEX has also developed specific improvements to strategic risk management by defining roles and responsibilities, 34

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The relationship with its suppliers and contractors defines the way PEMEX interacts with the industry. How it does business with its suppliers affects the quality of the goods and services it receives to meet the needs of the operation. By collaborating with key suppliers through best business practices, PEMEX shapes its competitive advantage. Because the company’s business relationship is critical to the efficiency of the operation, the DCPA seeks to establish more than just contractual obligations. PEMEX believes that its suppliers and contractors are a part of its stakeholders. This demands that a continual improvement in quality, innovation and logistics, and delivery must come from intimate partnerships in an increasingly competitive market. On May 20, 2015, the DCPA launched a robust risk assessment and suppliers’ evaluation registry, with which PEMEX is now able to rate and assess its potential and current suppliers. This comprehensive evaluation of suppliers and contractors aims at understanding both PEMEX’s suppliers’ operative and technological credentials and capabilities in supplying specific goods and services. PEMEX’s procurement strategy includes a commitment to grow and develop its supply chain in order to ensure it has the appropriate product and supplier at the appropriate time and price. By diversifying its supply chain, PEMEX will be able to achieve its corporate goals with higher quality goods and services. Those who intend to be part of PEMEX’s suppliers and contractors database will be required to meet the formalities required through the suppliers and contractors registry and comply with the corresponding documentation. Within the context of the new energy policies, PEMEX brings to the table an enormous potential and, without any hesitation, it will reach its full efficiency with the advantages of being a more competitive and profitable company. PEMEX is enthusiastic and willing to assume broader responsibilities and face — for the first time in its history — its biggest challenge: competition.

Visit www.pemex.com to find valuable information about PEMEX, its products, services, efforts to strengthen its relationship with suppliers as well as any information regarding the supplier registration process.

KHUNASPIX/BIGSTOCK.COM

Supply-Side Management

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

INDUST RY

NEW CHAIRMAN ELECTED TO THE TEXAS RAILROAD COMMISSION Congratulations to our SHALE Contributor: Texas Railroad Commissioner David Porter SPECIAL TO SHALE MAGAZINE

COMMISSIONER DAVID PORTER WAS UNANIMOUSLY ELECTED CHAIRMAN OF THE TEXAS RAILROAD COMMISSION ON JUNE 9 AT THE COMMISSIONÕS OPEN MEETING. “As Railroad Commissioners, it is our job to make sure the industry produces efficiently and economically, and does so in the safest, most responsible manner possible,” Porter said. “We meet our responsibilities at the Commission – we’ve been doing it for over a century – and I am honored to serve as Chairman during this important time for our State. “I also want to thank Chairman Craddick for her leadership. This Legislative Session was a success for the Commission, and her leadership at the Capitol helped secure the funding we need for staffing and for developing our IT programs,” Porter said. “I’d also like to thank Commissioner Sitton for being a strong new addition to the Commission and for being so engaged in his service here.” Former Chairman, Commissioner Christi Craddick said, “I am pleased to turn over the responsibilities of Chairman to my colleague Commissioner David Porter. After working alongside him for the past two and a half years, I know his knowledge, steady approach, and dedication to the agency will guide his leadership and keep the Commission on a path toward an even stronger future.” “David Porter has been an outstanding leader on the Railroad Commission and I look forward to his continued leadership as Chairman,” said Commissioner Ryan Sitton. “David’s thoughtful approach to very challenging issues facing the Commission should give Texans confidence that this agency will be proactive in keeping them safe while encouraging the responsible production of our natural resources.” As the Chairman of the Commission, Porter will oversee the official meetings the Railroad Commission holds. The Texas Railroad Commission discusses and regulates the oil and gas industry in Texas, including mining, pipeline safety, and natural gas utilities. “Texas is blessed with an abundance of natural resources, but we aren’t the nation’s leading energy producer just because of our geology. Regulatory framework matters,” Porter said. “Unfortunately, our State and its regulatory framework are under attack from Washington, DC. Perhaps our greatest challenge comes from EPA regulations brought on by Obama’s war on fossil fuels. We must continue to challenge Federal overreach because Texans know how to oversee Texas oil and gas production better than Washington does.” Elected to the Commission in November 2010, Commissioner Porter has used his time in the government agency to create the Eagle Ford Shale Task Force, the first of its kind at the Texas

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Railroad Commission. The mission of the Task Force is to establish a forum that brings the community together to foster a productive and forward-looking dialogue regarding drilling activities in the Eagle Ford Shale. Additionally, in 2013, Porter launched his Texas Natural Gas Initiative: a series of statewide events that bring stakeholders together to discuss business opportunities, challenges and

regulatory barriers and solutions for natural gas conversion and infrastructure – focusing largely on the transportation and exploration and production sectors.

To learn more about the Texas Railroad Commission and Chairman David Porter, visit www. rrc.state.tx.us.

PHOTO BY MICHAEL GIORDANO

AS THE CHAIRMAN OF THE COMMISSION, PORTER WILL OVERSEE THE OFFICIAL MEETINGS THE RAILROAD COMMISSION HOLDS

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

INDUST RY

THE EAGLE FORD EXCELLENCE AWARDS

STEER is taking entries for awards to recognize companies and contractors operating in the Eagle Ford BY: OMAR GARCIA

THE SOUTH TEXAS ENERGY & ECONOMIC ROUNDTABLE (STEER) serving the Eagle Ford Shale region in South Texas is opening its call for nominations for the third 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 they live in and serve. Led by president and CEO, Omar Garcia, STEER ensures 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 recognize companies and organizations that act with consideration to values that STEER sees as essential for continued advancements that benefit the Greater South Texas community. “STEER and its members place a premium on safety, environmental protection and solid community involvement throughout the Eagle Ford Shale region. It is important to recognize companies and organizations who share our values and vision,” Garcia says. “Past years’ recipients demonstrated their dedication to the region through their impressive innovation, safety performance and educating the oil and gas industry’s future workforce.”

Award Categories

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 a safety performance award, 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

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 THEY LIVE IN AND SERVE 38

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organization must show true commitment to the community. The applicant should have provided a benefit to deserving individuals or groups, positively impacted the company 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. A 2014 Eagle Ford Excellence Award recipient, NuStar Energy president and CEO Brad Barron says, “We are thankful to STEER for recognizing NuStar and showcasing the great work that is being done by so many outstanding companies that are operating in the Eagle Ford Shale play. The safety of our employees, contractors and neighbors has always been our No. 1 priority at NuStar, and the Safety Performance honor recognizes the outstanding work our employees are doing to ensure our operations meet the highest safety standards. We are also proud of the positive impact that our company and employees are having on the communities where we live and work, so the Community and Social Investment honor is a great tribute to the outstanding work our South Texas employees are doing in their communities.” Third-party judges examine the description and evidence provided to determine the winner for each category. The organizations that best demonstrate

BE RESOURCEFUL

commitment to the protection of the environment, community involvement and safety — issues that the oil and gas industry considers to be of the utmost importance — will receive recognition from STEER for their efforts. STEER will accept both applications and third-party nominations for the Eagle Ford Excellence Awards. To apply for an award or submit a nomination for companies, contractors or organizations working in the Eagle Ford Shale, visit www.steer.com and complete the necessary forms. STEER will contact nominated entities to complete the application process, including evidentiary support and records. Award entries and nominations must be submitted before the deadline of Thursday, September 10, 2015, at 5 p.m. CST. Full details on the categories and additional information, including entry forms, can also be found at www.steer.com. Winners will be announced at the 2015 Eagle Ford Excellence Awards luncheon, to be held in San Antonio on Tuesday, November 17.

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2014 Eagle Ford Excellence Award Winners 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 Safety Performance » For companies or organizations with less than 250 employees: S&B Infrastructure » For companies or organizations with more than 250 employees: NuStar Energy Environmental Stewardship » For companies or organizations with less than 250 employees: Green Energy Oilfield Services » For companies or organizations with more than 250 employees: Aggreko STEER Impact Award United Independent School District Karnes City ISD Education Foundation

2013 Eagle Ford Excellence Award Winners Community and Social Investment » For companies or organizations with less than 250 employees: Energy Waste » For companies or organizations with more than 250 employees: Halliburton

s y a l P le a h S s xa e T es g c n i i v l r e e u F nS o i t a t or p s n a Tr d l com e i f rces. il esou urces.com r t s a o sunc ncoastreso 3604 * u ) s 5 @ 3 shale L (38 E U F 677800-

Safety Performance » For companies or organizations with less than 250 employees: Primera Energy » For companies or organizations with more than 250 employees: Dynamic Industries Environmental Stewardship » For companies or organizations with less than 250 employees: Caesar Kleberg Wildlife Research Institute at Texas A&M University — Kingsville » For companies or organizations with more than 250 employees: Holt Cat

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

INDUST RY

THE SHALE CLIFFHANGER BY: PAULA WAGGONER-AGUILAR

WEST TEXAS INTERMEDIATE (WTI) IS INCHING BACK UP INTO THE $60S. Let’s start with a safety recommendation: Fasten your seat belts tight and secure your harnesses! This market resembles a legendary North Texas roller coaster called the Texas Cliffhanger (later appropriately renamed the Wildcatter), a first-of-its-kind coaster dropping a cab of people in free fall only to be closed due to excessive G-forces. Not quite HUET training, but definitely on the adrenaline list. Now that we have your attention, here comes the warning: This third-quarter oil market looks like it is going to get really interesting. Speaking of free falls, we are all still recovering from the breakneck speed crude dropped in the last 11 months.

HOW WE GOT HERE: » Disruptive technologies give rise to the shale revolution » Shale becomes a bright spot in the post-recession

mergers and acquisitions and “debt workouts.” The turnaround kings we talked to at the Offshore Technology Conference in May said the spreads (the delta between the bid and ask) are narrowing. Truth be told, there is plenty of money for companies with the best rocks (high-permeability quality assets) and weak balance sheets. For everyone else, if you never have to go through a debt workout, be glad. Imagine sitting in a room with your bankers (in this market) trying to negotiate the cost of additional capital or worse, the price of your company. This is not like a 45-minute workout at the swanky YMCA in Big D or downtown Houston — it is more like CrossFit, where you toss a bunch of semi rig tires across parking lots without a break. Try that when you are out of financial shape! Shale will survive — but the cost of production is going to drop significantly to compensate for the margins. It already has. In the meantime, everyone is conserving their cash, delaying fracing and hookup activities, asking for even

U.S. economy

» With a zero percent interest rate, easy access to debt fuels the boom

» U.S. crude production surges » The U.S. economy and U.S. dollar surges, making crude more expensive for slowing economies

» Global oversupply and the “oil-soaked game of Prisoner’s

ban contributing to WTI/Brent spread

» Prices fall 50 percent between June 2014 and January 2015

The energy industry cycles in peaks and valleys. It has always been a lumpy business. The rough ride is attributed to weak demand, strengthening U.S. currency and a surge in U.S. production. Despite the recent increase in prices, the supply and demand fundamentals have not significantly changed. That’s why this uptick in prices is concerning. Maybe it is simply a dead cat bounce, a temporary recovery followed by the continuation of a downward trend. U.S. crude producers feel like they are getting hit from all sides — OPEC, Saudi Arabia and the U.S. government. Incredibly, in the United States companies like Google can sell their goods anywhere in the world — so can Toys R Us — but not our crude producers. Yet, we encourage our entrepreneurs, independents and majors to go out and take risks and bet the bank on the rocks. It was not that long ago that we were all chanting “drill, baby, drill” (and drill and frac we did) and the independents actually cracked the geological code, but U.S. crude producers are denied free trade. Instead, everyone has their marketing teams hunting high and low onshore and offshore for storage so they can park all the light crude oil and do their best to wait this out. How does that dry gas market look now? So what is the next wave? Everyone is talking about

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deeper discounts and looking for new ways to cut costs. We are seeing some bright spots out there — some of our energy veterans are starting up new technologies designed to eliminate proppant (sand), reduce fracing costs, enhance images on existing 3-D seismic surveys, and optimize and automate operations. Some are even looking ahead to Mexico. For private companies, affordable field ticket and dispatch technology have caught our eye. We see more E&P companies and oilfield service companies spending endless amounts of money chasing around well data and signatures. And it’s not just finance and accounting professionals working on this; C-suite individuals have also been getting involved to chase down invoicing or payment information. With this technology — if done right — companies can reduce their cash-conversion cycle, redeploy their people to focus on more critical issues, get out of the “paper business” and reduce their post-workout cost of capital. Now, we call that a win!

For more information: Paula WaggonerAguilar is with The Energy CFO, a niche entrepreneurial energy finance firm providing CFO leadership to energy and technology entrepreneurs and start-ups. To learn more about services available at The Energy CFO visit www.theenergyCFO.com.

GRAPH COURTESY OF THE ENERGY CFO

Dilemma,” as per T. Boone Pickens

» Survival of the fittest: market share turf war at play » Light crude glut parked in the U.S., in part due to export

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

INDUST RY

THE WOMEN’S ENERGY NETWORK IN HOUSTON LEADS BY EXAMPLE

or most people, a new year means a fresh start. January is a time to set goals and resolutions for a healthier life. Even though summer is right around the corner, it’s never too late for a new beginning — and that’s exactly what the Women’s Energy Network (WEN) in Houston has in store. Founded in 1994, WEN is a premier industry organization that educates, advances and develops professional women working across the energy value chain. Its development programs foster career and leadership growth, mentoring and connecting women in energy to science, technology, engineering and mathematics (STEM) opportunities ranging from educational luncheons and expert speaker programs to members-only coaching and executive events, as well as the STEM Charity Luncheon and the national conference. With seven chapters across the U.S., several more are poised to launch in the near future. With new chapters constantly in development, WEN offers its members the chance to expand their networks through strategic national and global growth. The onset of the newest chapters in development furthers the group’s new beginnings by promising opportunities for its newest members. The Greater Oklahoma, Chicago and Permian Basin chapters will span across a variety of regions and energy sector hubs. These locations will give new representation and leadership opportunities for women in energy in Oklahoma (Tulsa, Bartlesville, Cushing and Oklahoma City), Chicago, Midland, Odessa and various other areas. WEN’s founding chapter, Houston, is the model for development and is leading a launch for the first international chapter in the organization’s history. With fearless, focused and forwardthinking leadership, invaluably supportive national

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and corporate sponsors, loyal members and a wide market area, the Houston chapter looks forward to the opportunities and visibility that these new affiliates will bring to the organization. Tomira Eason, President-Elect of WEN Houston, devotes her time and energy to expanding WEN’s geographical reach by collaborating with grass roots interests in energy hubs in the lower 48 states that understand the need for a premier global organization that will educate women on opportunities in the oil and gas industry. WEN takes pride in being actively involved in philanthropic activities in the Houston community, Eason explains. “Our leadership understands that the success of an organization is directly linked to community awareness. This insight motivated our board to expand the scope of our charity program from past events,” she adds. “In the past, our program’s charity program has raised over [$160,000] for local charities, such as The Women’s Home, who recently named us as their community partner for the year. This year, WEN announced a new charitable focus that is geared toward supporting STEM organizations or STEMbased programs in the Greater Houston area. Our new emphasis will build awareness and support for innovative STEM programs that are committed to encouraging females to seek careers in the energy industry. Nominations ended May 31 and the number of submittals for our new charitable endeavor are unbelievable! We look forward to announcing the recipient of the 2016 STEM Charity Luncheon in the fall. We are very pleased to have received such overwhelming support from the community.” WEN currently has approximately 3,400 members in chapters in the Appalachia, Greater

Atlanta, Houston, North Texas, South Texas, Washington, D.C. and South Louisiana areas to satisfy women’s networking and careerdevelopment needs. The organization is a one-stop shop for women in the energy industry. To learn more about WEN and its local chapters and membership details, visit the organization online at www.womensenergynetwork.org.

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POLIC Y

TEXAS ENERGY POLICY WITH COMMON SENSE BY: BILL KEFFER

rare and surprising thing happened in Austin this spring. The Texas Legislature was in session, which typically is in and of itself reason enough to hold our collective breath and checkbooks. At least in this one instance, however, the Legislature acted decisively, expeditiously and almost unanimously on a substantive matter of economic significance to the entire state. Rep. Drew Darby (R-San Angelo), Chairman of the House Energy Committee, authored and managed House Bill 40, which purported to reaffirm a legal doctrine that had been the operating assumption in the oil and gas industry for almost a century. Known as preemption, it simply stands for the proposition that the state is the level of government empowered to regulate the oil and gas business. Although this principle has rarely been questioned in the long history of exploration and development of oil and gas in Texas, it was suddenly thrust into the spotlight by the opposition to hydraulic fracturing that has manifested itself in various locations across the country. For example, Vermont enacted a statewide ban against hydraulic fracturing — and, of course, since there is no known oil or gas in Vermont, nobody cared. However, after years of indecision, New York, which does sit atop a significant share of the Marcellus Shale, also recently enacted a statewide ban against hydraulic fracturing — to the chagrin of its many economically stagnant communities and mineral-owning citizens. Where statewide bans still seemed somewhat ambitious, individual communities in states like Pennsylvania, Ohio and Colorado pursued their own efforts to enact local ordinances to ban fracing or, in the alternative, to establish requirements so burdensome that drilling a well would be rendered economically or practically impossible. As unlikely — even heretical — as it might have seemed, that very kind of initiative was undertaken in the Texas city of Denton last year. By referendum, local voters declared hydraulic fracturing to be prohibited within city limits. Although other communities in the Barnett Shale of North Texas, like Flower Mound, had been making it progressively more difficult for oil and gas development to occur within their city limits, Denton was the first Texas city to flatly

prohibit fracing; and since Barnett Shale gas is economic only because of fracing, the ban was effectively a prohibition on oil and gas development altogether. Enter the state legislature, which meets only every other year; and 2015 happened to be that year. Although the Denton ban was already being challenged in lawsuits brought by the Texas Oil & Gas Association and the General Land Office, the Legislature uncharacteristically went on mission and never blinked in its objective to reaffirm its preemptive authority to regulate oil and gas activities. Unlike the perennial abdication of responsibility the Legislature has demonstrated in the area of school finance — repeatedly deferring to the state Supreme Court to divine the Legislature’s constitutional responsibilities — in this case it did not seem to hesitate in recognizing its task and getting it done. Perhaps it was the undeniable role that the recent surge in oil and gas activity had assisted in providing the so-called “Texas miracle” and protecting the state’s economy from the 2008 recession. Or it may have been the tremendous economic growth in areas historically unfamiliar with profitability, such as the Eagle Ford Shale, or renewed growth in areas like the Barnett Shale and the Permian Basin. Maybe it was the unmistakable contribution that oil and gas activity has made through severance taxes into the state’s Rainy Day Fund, making it possible to allocate billions of dollars to Texas’ water infrastructure and transportation needs. Or it could have been that rare moment in modernday partisan politics when representatives and senators from all parts of the political spectrum were able to exercise collective common sense. Whatever the explanation, Rep. Darby and his band of brothers and sisters were able to shepherd his bill through the House and Senate without any amendments and with overwhelming majorities. Quite frankly, it looked a lot like how the system is supposed to work. But what of the ancient and revered chant of “local control?” Texans loathe federal mandates from Washington, D.C.; why is this not an equally loathsome exercise of Austin power over the local preferences of a municipality? There is a spirited debate that is yet the latest manifestation of constitutional illiteracy in our nation and state. The American

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system of government is premised on the proposition that the state government is the origin of all delegated power; the individual states delegated limited powers to the federal government in the U.S. Constitution (although that proposition seems to have been relegated to the “Museum of Curious Vestiges from Our Past”). Similarly, under our state constitution, local governments are created by the state government and have only those powers that the state has delegated to them. So, with respect to the oil and gas industry, the state has the authority to regulate it, and local governments can only regulate what the state allows it to. HB 40 reaffirmed this principle and essentially declared that while local governments are authorized to regulate activities that occur above ground (like zoning, noise, hours of operation, transportation routes, etc.), the state retains exclusive authority to regulate what happens below ground (like hydraulic fracturing). But HB 40 also makes it clear that a city’s above-ground ordinance has to be commercially reasonable and cannot have the effect of prohibiting oil and gas development. It remains the case that Texas and the U.S. are blessed with an abundance of natural resources, the responsible and efficient development of which can keep us on the path of being less dependent on undependable, even hostile, countries and becoming increasingly more independent — the short-term and long-term benefits of which are truly incalculable. Our greatest obstacle, to paraphrase the old comic strip character Pogo, is us. Unfortunately, we are perfectly capable of snatching defeat from the jaws of victory. The swift response of the Texas Legislature to the Denton ban with HB 40 is at least some current evidence that, when necessary, common sense can still prevail. About the author: Bill Keffer is a contributing columnist to SHALE Magazine. He teaches at the Texas Tech University School of Law and continues to consult. He served in the Texas Legislature from 2003 to 2007.

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JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

POLIC Y

TEXAS 84TH LEGISLATIVE SESSION WRAP-UP BY: GLORIA LEAL

SPECIAL COMMENTS ON H.B. 40

nlike previous sessions, the 84th legislative session ended calmly on Monday, June 1, without the threat of imminent special sessions being called. After intensive negotiation and compromise, the Legislature ultimately passed a $209.4 billion budget for the 2016-17 biennium without busting the spending cap or tapping the Rainy Day Fund. The budget is the only piece of legislation the Legislature is required to pass every session. In addition to negotiated property tax relief and a broad 25 percent cut to the state’s business tax,

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H.B. 40 will be recognized as a historic piece of legislation to the oil and gas industry and is already being touted as a nationwide model on state preemption jurisdiction. The bill, authored by State Rep. Drew Darby, Chair of Energy Resources, was filed in response to the Denton ban on hydraulic fracing and was controversial from its inception. However, Darby guided the bill through the legislative process and showed mastery at the helm by working out a compromise between the oil and gas industry and municipalities, then holding firm on no amendments. On the Senate side, Sen. Troy Fraser, Chair of the Senate Natural Resources & Economic Development Committee, was the force to be reckoned with, claiming H.B. 40 as his own. Recognition that oil and gas is the economic engine of the state and the need to establish the parameters for regulation by the state

and local governments on oil and gas activity led to unprecedented solidarity and bipartisan support on the issue.

WATER — THE NEW OIL

During the 84th legislative session, State Rep. Jim Keffer made a smooth transition from being Chair of Energy Resources to heading up the increasingly important Natural Resources Committee. Whereas last session the drought had the stakeholders united behind Proposition 6 and funding of the state water plan, this session was characterized by competition for limited water resources and balancing the needs of producers and users. Jim Keffer’s H.B. 200 — which establishes the framework for uniform regulation of groundwater conservation districts and desired future conditions — is a noteworthy piece of legislation in the evolving treatment of water, also referred to as “the new oil.” Key pieces of legislation are presented below:

RAILROAD COMMISSION BUDGET/SEISMIC MONITORING/ TRANSPORTATION H.B. 1: House author: Otto, John / Senate sponsor: Nelson, Jane General appropriations bill The bill appropriates approximately $87 million for fiscal years 2016 and 2017 and 820 FTEs to the Railroad Commission (RRC). The funding for the RRC includes the following exceptional items: $2.8 million in addition to the base budget; 20 additional FTEs to enhance safety inspections; and $150,000 to replace the microfiche reader for the central record department. The RRC is scheduled to undergo an extensive Sunset Review during

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the Legislature also passed into law significant legislation related to oil and gas regulation and production in Texas. One of the priorities of the oil and gas industry was to support funding of the Railroad Commission of Texas (RRC) for personnel and technology updates to strengthen the agency’s functions. Another priority was to pass legislation establishing the state’s pre-eminence in regulation of oil and gas production. Both goals were accomplished. The Legislature also passed legislation to fund needed transportation infrastructure and legislation related to the future regulation of water use in Texas. Also passed was legislation making certain changes to proceedings related to the Texas Commission on Environmental Quality (TCEQ) and the Texas Water Development Board (TWDB) and legislation affecting industry in general.

the interim months leading up to the next legislative session. Efforts to delay the review until 2023 were defeated in the final days of the session. In a separate rider, the Legislature approved a seismic monitoring program at the University of Texas Bureau of Economic Geology. A technical advisory committee will advise and a report will be submitted to the next Legislature. SJR 5: Senate authors: Nichols, Robert / Nelson, Donna Proposing a constitutional amendment dedicating a portion of the revenue derived from the state sales and use tax and the tax imposed on the sale, use, or rental of a motor vehicle to the state highway fund. If approved by the voters, would give Texas Department of Transportation (TxDOT) an additional $2.5 billion a year in sales taxes; and with contributions from the Rainy Day Fund from the 2013 constitutional amendment adds up to close to $5 billion more a year in spending cash than TxDOT had in 2014.

may enact, amend, or enforce an ordinance or other measure that regulates only aboveground activity related to an oil and gas operation that occurs at or above the surface of the ground, including a regulation governing fire and emergency response, traffic, lights, noise, imposing notice or reasonable setback requirements. The ordinance must meet the reasonably prudent operator standard, must be commercially reasonable, may not effectively prohibit oil and gas operations and must not be pre-empted by state or federal law. A “safe harbor” provision is included for qualifying, existing municipal ordinances. Signed by the governor, effective May 18, 2015. H.B. 497: House author: Wu, Gene / Senate sponsor: Uresti, Carlos I. Relating to the applicability of the law governing saltwater pipeline facilities located in the vicinity of public roads.

This resolution is to be sent to the President of the U.S. Senate and Speaker of the U.S. House of Representatives. It has been sent to the governor for signature.

The 83rd Legislature passed legislation relating to saltwater pipeline facilities that helped set standards for the placement of a saltwater pipeline on a right-of-way. This bill will allow for water to be brought to production sites and for non-produced waterlines to also be installed on public roads or rights-of-way. The definition was expanded to include water that contains salt and other substances and is intended to be used in drilling or operating a well used in the exploration for or production of oil or gas, including an injection well used for enhanced recovery operations, or is produced during drilling or operating an oil, gas or other type of well. Sent to the governor, effective Sept. 1, 2015.

SCR 32: Senate author: Bettencourt, Paul / House sponsor: Wu, Gene

H.B. 1331: House author: King, Phil / Senate sponsor: Fraser, Troy

Urging Congress to expedite natural gas exports.

Relating to the treatment and recycling for beneficial use of certain waste arising out of or incidental to drilling for or the production of oil or gas.

OIL AND GAS: SCR 13: Senate author: Seliger, Kel / House sponsor: Anchia, Rafael Urging the U.S. Congress to end the ban on crude oil exports.

This resolution is to be sent to the President of the U.S. Senate and Speaker of the U.S. House of Representatives. It has been sent to the governor for signature. H.B. 40: House author: Darby, Drew / Senate sponsor: Fraser, Troy Relating to the express preemption of regulation of oil and gas operations and the exclusive jurisdiction of those operations by the state. The bill provides for “exclusive jurisdiction and expressed pre-emption” of oil and gas operations and provides that municipal ordinances must be deemed to be “commercially reasonable.” A municipality

The increase in oil and gas production has inspired a number of environmentally minded companies to pioneer new methods of recycling the solid waste from drill sites. However, well operators interested in recycling had concerns about liability associated with the cuttings once recycled and used for another purpose. The bill amends current law and provides that unless otherwise expressly provided, when drill cuttings are transferred to a permit holder, the transferred material is considered to be the property of the permit holder; and when the permit holder transfers possession of the treated product to another person, ownership and tort liability associated with the permitted use is also transferred. Sent

to the governor, effective Sept. 1, 2015. H.B. 2207: House author: Keffer, Jim / Senate sponsor: Eltife, Kevin Relating to the foreclosure sale of property subject to oil or gas lease. The bill protects an oil and gas lessee of the unsevered minerals from a foreclosure of a mortgage on the surface. For example, where an owner grants a mortgage to build a building on the surface and also grants an oil and gas lease on the underlying minerals but defaults on the mortgage and is foreclosed upon, prior law would have terminated the lease under some circumstances. The oil and gas lease, if not already recorded prior to the mortgage, and if executed and recorded before the foreclosure sale, will survive the foreclosure but with the loss of surface rights. Royalties payable to the lessor become payable to the purchaser at the foreclosure sale and no agreement between the mortgagor and mortgagee can modify the statute. The ownership of the reversionary interest is uncertain. Sent to the governor, effective Sept. 1, 2015. H.B. 3291: House author: Raymond, Richard / Senate sponsor: Zaffirini, Judith Relating to the creation of the offense of theft of pipeline equipment, oil and gas equipment, oil, gas, or condensate and the unauthorized purchase or sale of oil, gas, or condensate. The bill elevates the theft of crude oil, gas and condensate from a third-degree felony to a second-degree felony. Though exempting pipelines and gatherers, the legislation requires that anyone possessing, transporting, removing, delivering, accepting, purchasing, selling or physically storing crude oil, gas or condensate must have a permit, approval or authorization for the transaction from the RRC or must have a pending application for such. Sent to the governor, effective Sept. 1, 2015. S.B. 1985: Senate author: Uresti, Carlos / House sponsor: Bonnen, Dennis Relating to the appraisal for ad valorem tax purposes of a real property interest in oil or gas in place. To accommodate timely posting of ad valorem tax data, a chief appraiser shall use the projected current and preceding calendar year spot price of West Texas Intermediate crude oil in nominal dollars per barrel or the spot price of natural gas at the Henry Hub in nominal dollars per million British thermal units,

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

as applicable, as stated in the Short-Term Energy Outlook report published in January of the current calendar year by the U.S. Energy Information Administration in the price adjustment factor calculations. Signed by the governor, earliest effective date.

WATER: H.B. 30: House author: Larson, Lyle / Senate sponsor: Perry, Charles Relating to the development of seawater and brackish groundwater. Provides incentives for the development of brackish groundwater. Each regional planning group is required to submit to the Texas Water Development Board (TWDB) a water plan that identifies data, water sources, possible actions, infrastructure, drought planning, water transfer, etc. Includes opportunities for the development of large-scale desalinization facilities for seawater or brackish groundwater. The TWDB shall submit to the Governor a biennial progress report. Uses 1,000 ml/l to separate brackish from freshwater. Exempts several groundwater conservation and subsidence districts. Also exempts permitted zones used for wastewater injection or disposal. Will identify brackish water production zones within these and other parameters. Sent to the governor. H.B. 200: House author: Keffer, Jim / Lucio, Eddie III / Senate sponsor: Perry, Charles Relating to the regulation of groundwater. Landmark legislation clarifies vested property rights in the ownership of groundwater, ensures “loser pay” provisions apply to suits challenging groundwater districts, establishes “best available science” as the determining factor for establishing a desired future condition, establishes an appeals process for challenging the reasonableness of desired future conditions, provides a mediation period for agreement before the administrative process and develops an administrative hearing process for parties in order to develop findings of fact and conclusions of law. Sent to the governor; effective date Sept. 1, 2015. H.B. 655: House author: Larson, Lyle / Senate sponsor: Perry, Charles Relating to the storage and recovery of water in aquifers, authorizing fees and surcharges; adding provisions subject to a criminal penalty. Authorizes the undertaking of an aquifer storage and recovery (ASR) project. Identifies and allows permitting of ASR injection wells

as Class V wells by the Texas Commission on Environmental Quality (TCEQ), allows for water recovery wells, identifies native groundwater and defines parameters for permits. Requires ASR operator to provide monthly reports. Sent to the governor. H.B. 2230: House author: Larson, Lyle / Senate sponsor: Estes, Craig Relating to the authority of the TCEQ to authorize an injection well used for oil and gas waste disposal to be used for the disposal of non-hazardous brine produced by desalination operations or non-hazardous drinking water treatment residuals. Allows the dual authorization of Class II (oil and gas) injection wells to inject brine from desalination or water treatment residuals when non-hazardous. Requires the RRC and TCEQ to enter into a memorandum of understanding. Sent to the governor, effective Sept. 1, 2015. H.B. 2767: House author: Keffer, Jim / Senate sponsor: Perry, Charles Relating to the powers, duties, and administration of groundwater conservation districts. The bill would amend the definition of “operating permit” in the Water Code and permit a groundwater conservation district to impose fees for water exportation, administration and production under certain circumstances. The bill originally would have required a financial audit and other financial standards. Under the provisions of the bill, a county could pay costs and expenses incurred in the creation and organization of a district and the TWDB to allocate funds to a district under certain circumstances. Signed by the governor, effective immediately.

LEGAL: H.B. 1692: House author: Sheets, Kenneth / Senate sponsor: Huffman, Joan Relating to the doctrine of forum non conveniens. Under the legal doctrine of forum non conveniens, a court may dismiss a lawsuit if another court is a more appropriate forum to hear the case because the lawsuit has little or no connection to the state. Most jurisdictions consider the legal residency of the plaintiff as one of many factors in a balancing test, but Texas uses residency alone as the basis to maintain a lawsuit in Texas. The definition of “legal resident” was considered overly broad

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

and interpreted to allow resident intervenors or derivative plaintiffs to bring a case from nonresidents into the state (for example, an accident occurring in Mexico). The bill amends the doctrine to preserve Texas courts for Texas residents by requiring nonresidents to establish that claims arising in another state or country have a significant connection to Texas. Sent to the governor, effective Sept. 1, 2015; application of the act is prospective. H.B. 1794: House author: Geren, Charlie / Senate sponsor: Hancock, Kelly Relating to suits brought by local governments for violations of certain laws under the jurisdiction of, rules adopted, orders or permits issued by the Texas Commission on Environmental Quality; affecting civil penalties. The bill amends current law relating to suits brought by local governments for violations of certain environmental laws under the jurisdiction of the TCEQ such as illegal dumping of pollutants and unpermitted waste sites. Current law allows such actions to supplement the enforcement activities of the TCEQ and has been in place for several decades. The genesis of the bill was a ruling in a lawsuit in Harris County where penalties were assessed against a company for the release of pollutants into Texas waters and the award of attorney fees which might have set a precedent for environmental enforcement in Texas and by extension, the economic competitiveness of the state. The bill identifies factors to be considered in determining the amount of civil penalty and provides for division of the penalties between the local government and the state. Sent to the governor, effective Sept. 1, 2015; application of the act is prospective. S.B. 529: Senate author Hancock, Kelly / House sponsor: King, Phil Relating to the eligibility of a landman for unemployment compensation. Ambiguity in interpretation of the definition of “landman” resulted in the Texas Workforce Commission challenging the status of independent contractors working as landmen and their eligibility for unemployment benefits. Reconciliation of the definition between certain provisions of state law provided consistency and clarity in the application of the term’s definition. The bill amends the Labor Code to clarify that “employment” under the Texas Unemployment Compensation Act does not include services performed for a private for-profit person by a landman and to instead provide for the definition of “landman” by

reference to the Private Security Act. Signed by the governor, effective immediately.

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S.B. 709: Senate author: Fraser, Troy / House sponsor: Morrison, Geanie Relating to environmental permitting procedures for applications filed with the Texas Commission on Environmental Quality. In contested case hearings challenging a permit at the TCEQ, the administrative judge must, after a preliminary hearing, return a proposal for decision no later than 180 days or a date specified by the commission, whichever is earlier. The draft permit prepared by the executive director of the commission and supporting documentation establishes a prima facie demonstration of state and federal legal and technical compliance. Also, it provides the criteria for a group or association designation as affected party. Signed by the governor, effective Sept. 1, 2015.

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SOME NOTEWORTHY LEGISLATION WHICH DID NOT PASS

Toward the end of the session, bills mysteriously disappeared, reappeared, died and were resurrected, and referred to as “Lazarus bills,” as if a divine hand was at work. Legislation that did not pass included H.B. 14 relating to the Texas Emissions Reduction Plan and S.B. 12 relating to alternative fuel fleets of certain governmental entities, including funding for motor vehicles, infrastructure and equipment. H.B. 1552, relating to oil and gas (allocation) wells that traverse multiple tracts, died in the House but was surprisingly resurrected as an amendment in the Senate, and then died again. H.B. 1392, a seemingly non-controversial bill relating to the recovery of stranded oil and/or gas from depleting Cenozoic Era reservoirs in East Texas, got unexpected opposition from West Texas and died. And SB 118 relating to unit operations for oil and/or gas production from depleting reservoirs or carbon dioxide storage seemed to have powerful enemies from the start.

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LOOKING FORWARD

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The interim promises to be a busy one as agencies initiate rule-making to implement legislation. The effective date for most of the legislation passed is Sept. 1, 2015, although some legislation is effective immediately. For a complete list of relevant legislation contact this author or go to Texas Legislature Online at www.capitol.state.tx.us. The disappointments and successes of the 84th Legislative Session will set the stage for the 85th. The Tea Party has identified at least 30 candidates who will challenge Republican incumbents in primaries next March. Already, several incumbents considered moderate Republicans have announced plans to retire or not run for re-election for several reasons — intraparty politics being one of them. Democrats meanwhile are pinning their hopes on increased voter turnout during the next presidential primary to boost their numbers and influence. In the next issue: Agency news, rulemaking and pre-election maneuvering.

About the author: Gloria Leal is an attorney and government affairs consultant in Austin, Texas. Leal has a solo practice primarily relating to energy, environmental and healthcare matters. She also represents the Texas Alliance of Energy Producers, a national association of independent producers and service providers. She can be reached at gleallaw@sbcglobal.net.

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POLIC Y

84TH LEGISLATIVE SESSION GOOD FOR OIL AND GAS BY: SEN. CARLOS I. URESTI

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

target those related to exploration, development or production of oil and gas. Another policy I championed to better help energyproducing counties address roadway damage from production activity was House Bill 2521. It will allow counties to claim mineral royalties and lease fees from county road rights-of-way for the first time in more than 50 years. Currently, that money is going to the state. The condition for receiving this money is the royalties have to be used for maintenance and construction of county roads. I also supported House Bill 40, which stipulates that the Railroad Commission of Texas has exclusive jurisdiction over oil and gas operations. Although cities will retain authority to address above-ground activity such as noise and light levels and hours of operation, this measure will help avoid a patchwork of regulations over methods used to recover hydrocarbon resources. I sponsored House Bill 497 in the Senate. It will expand on last session’s new law that allows wastewater to be carried from oil and gas wells in pipelines laid along road rights-of-way. H.B. 497 will allow such pipelines to also carry water to drilling operations. This should help cut truck traffic on our roadways, reducing damage and improving safety. I believe these are areas where good policy can complement economic activity in our energyproducing communities across Texas. When the energy sector is able to bring their product to market, we all win. Although drilling activity has slowed, there’s ample evidence that operators are working smarter to keep the tankers and pipelines full. Along with strategic development decisions, continuing technological advances are making operations more efficient. But we can’t ignore the fact that good public policy that embraces energy production has proven to have a dynamic economic impact. I believe the policy decisions we implemented during the 84th session will help to ensure an environment poised to resume an upward trend for drilling and oil prices. About the author: Sen. Carlos I. Uresti represents Senate District 19, which covers more than 35,000 square miles and contains all or part of 17 counties, two international ports of entry, 10 state parks, 61 school districts, 2,700 miles of highways and more than 23,000 producing oil and gas wells in both the Eagle Ford Shale and Permian Basin. The district is larger than 12 states and 82 nations, and contains over half of the Texas-Mexico border. Sen. Uresti is proud to serve on the Finance, Natural Resources & Economic Development, Health & Human Services and Administration Committees.

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he world market has not been kind to oil prices lately, but Texas continues to play a major role in domestic oil and gas production. Drilling activity may be less than half the historic rate of a year ago, but it’s important to note that it’s still occurring. With the state’s oil production near 50-year highs, Texas produced 38.6 percent of the U.S. total in March, according to the Energy Information Administration. I would conclude this is due not only to sound business practices but also effective and predictable public policy. As a member of the Texas State Legislature, and a member of both the Energy Council and the Senate Natural Resources & Economic Development Committee, I work with multiple stakeholders to draft and implement good public policy. I work with my colleagues to craft measures that will have meaningful economic impact while balancing state resources with multiple demands. With one of the largest Texas senatorial districts, and the only one to contain portions of both the Eagle Ford and Permian Basin oil fields, I spend a great deal of time immersed in energy policy. During the 83rd Legislative Session in 2013, I worked to secure funding for those counties impacted by energy production. Senate Bill 1747 provided counties access to $225 million and marked the first time Texas invested in county infrastructure. Through the implementation of the program, we identified areas of improvement; and during the 84th session, I worked to put them into place. That included changing some of the criteria used to rank funding allocations. We gave a higher weight to the number of horizontal versus vertical wells drilled. The horizontal wells are usually fracing wells associated with a lot more heavy-truck traffic. We also narrowed the definition of overweight trucks to better

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SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

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BUSINE S S

MEXICO’S ENERGY INDUSTRY EVOLVES BY: ROGELIO CUEVAS, CO-MANAGING PARTNER, CUEVAS & CUEVAS LLP

exico is going through a major overhaul with an energy reform that will change the territory completely. The Mexican energy reform approved last year and the subsequent secondary legislation passed to structure the energy sector established that the National Hydrocarbons Commission (CNH, the acronym for its name in Spanish) would be responsible for carrying out and managing future oil rounds in Mexico. The CNH is an organization with technical autonomy that regulates and supervises the exploration and production of hydrocarbons in Mexico. This organization was formed on November 28, 2008. Its mission is to oversee, regulate and evaluate all hydrocarbon explorations and production in Mexico. The CNH has the ability on the behalf of the Mexican state to enter into and manage hydrocarbon exploration and production contracts. It will safeguard at all times the principles of maximum transparency and international best practices, in order to assure the optimal development of

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

the national energy industry. Its vision is to be transparent, reliable and act as a professional regulator that provides the technical basis for overseeing the country’s hydrocarbon contracts and allocations ensuring optimal use of the resource and maximum profit for the Mexican state. The CNH has three strategic objectives it accomplishes. First, it regulates and supervises surface reconnaissance and exploration activities, as well as the extraction of hydrocarbons, including its collection from the points of production, its transportation and storage. Secondly, it tenders and executes the contracts for the exploration and extraction of hydrocarbons. Thirdly, it technically manages all hydrocarbons exploration and extraction contracts and allocations. The CNH has announced a series of 12 rounds starting with Round Zero, which has already concluded. The third stage of Round One is now beginning. Within the time frame established in the Sixth Transitory Article of the Constitutional Energy Reform, Petróleos Mexicanos (PEMEX) put forward its request to the Energy Ministry for the exploration areas and production fields that according to the company, it is able to operate via entitlements. During this process, known as Round Zero, PEMEX was awarded the oil resources it needs to assure adequate and sustainable investments in exploration, development and extraction. These are the resources PEMEX will have at its disposal at the start of this new era in Mexico’s energy sector. PEMEX will also have the opportunity to participate in other areas through future bidding processes. Round Zero also establishes the oil resources the Mexican state has at its disposal in order to multiply investments in the exploration and extraction of hydrocarbons in open bidding rounds, to increase Mexico’s energy security. Round One has announced 26

companies that pre-qualified for the 14 blocks of the first stage back in May. The companies that are selected will be able to submit their economic proposals. Their goal is to explore and produce oil in shallow waters through production-sharing contracts. The CNH has been paying attention to the comments that oil companies have made about the bidding process since the clarification stages began in

THE MISSION OF THE CNH IS TO OVERSEE, REGULATE AND EVALUATE ALL HYDROCARBON EXPLORATIONS AND PRODUCTION IN MEXICO January. The clarification stages have given pre-qualified companies the opportunity to inform themselves, study and evaluate all data in order to present their questions and opinions regarding regulations. Pre-qualified companies had until June 8 to present any closing inquiries. After concluding these steps, the CNH will evaluate the opinion received and answer the questions to clear up any misconception about Round One’s procedures. After the CNH analyzed the questions it published its final terms and contracts on June 9. It is important we are aware that several changes to the conditions of the original contract have been made since its initial release. Visit www.cuevasandcuevas.com to learn more about the international business advisors at Cuevas & Cuevas LLP.

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BUSINE S S

BUSINESS OPPORTUNITIES IN MEXICO FOR OIL AND GAS UTSA encourages U.S. companies seeking to export products and services to Mexican oil and gas sector BY: THOMAS TUNSTALL, PH.D.  PHOTOS BY: DOUG COHEN MILLER

n May 8, the University of Texas at San Antonio Institute for Economic Development and the U.S. Department of Commerce hosted a daylong series of sessions designed to assist companies interested in doing business in the newly reformed Mexico energy environment. The intent of the conference was to help prepare U.S. companies to identify and take advantage of business opportunities in Mexico’s oil and gas industry. The day’s events kicked off with a panel led by Robert McKinley, Associate Vice President for the UTSA Institute for Economic Development; Daniel Rodriguez, Director with the U.S. Commercial Service in San Antonio; and Karen Allen, director with the U.S. Commercial Service in Mexico City. In all, about 150 stakeholders attended the event held at the Omni San Antonio Hotel at the Colonnade. Speakers addressed such topics as the economic impact of shale oil and gas development in Texas, issues associated with legal and regulatory reform, as well as opportunities for small and medium-sized businesses. Energy reform in Mexico presents opportunities for private companies all over the world, but particularly for those in Texas, as this is where shale oil and gas extraction techniques were first pioneered. Alejandra Bueno with the law firm of Cacheaux, Cavazos & Newton discussed the latest

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

ENERGY REFORM IN MEXICO PRESENTS OPPORTUNITIES FOR PRIVATE COMPANIES ALL OVER THE WORLD, BUT PARTICULARLY FOR THOSE IN TEXAS, AS THIS IS WHERE SHALE OIL AND GAS EXTRACTION TECHNIQUES WERE FIRST PIONEERED developments on legal and regulatory reform in Mexico. The luncheon keynote address was provided by Carlos Garcia of Lewis Energy Group, a company that has been actively pursuing shale opportunities in Mexico since long before the energy reform legislation was enacted. Opportunities for unconventional or shale oil and gas production in Mexico are in the earliest stages of development. While shale gas production has increased significantly in the U.S. over the past decade or so, and shale oil production over the past few years, no other country in the world has yet to replicate that success. Due to its close proximity to major shale field development in the Eagle Ford and Permian Basin, Mexico is particularly well-positioned to take advantage of unconventional extraction techniques. Yet significant challenges will have to be addressed. Though Mexico sits atop an estimated 545 trillion cubic feet of shale natural gas reserves — and additional trillions of cubic feet of conventional reserves — the country has remained a net importer of natural gas. Estimates for unconventional oil reserves in Mexico are 13 billion barrels, according to the U.S. Energy Information Administration. In both cases, however, the lack of available geological information remains an issue. The importance of energy reform in Mexico cannot be understated. Despite increasing amounts of investment on exploration and production by Petróleos Mexicanos (PEMEX), oil production in the country peaked in 2004. Were it not for the prospect of energy reform implementation, Mexico would likely transform from a net exporter of crude oil to a net importer within a few years. The bulk of Mexico’s shale prospects appear to lie in the north and northeastern sections of the country, where infrastructure is often largely undeveloped. This means that in order to tap the country’s bounty of shale oil and gas, infrastructure such as roads, housing, rail, pipeline and many others will have to be built out first. The ability to develop a suitably skilled workforce will

be key to long-term success. Security issues must also be addressed. The slate of reforms in Mexico include not only energy, but also electricity generation/ distribution and telecommunication, which taken together have the potential to transform the economy in ways not seen since the NAFTA agreement was implemented. Energy reform will create opportunities for companies throughout the U.S., but particularly for those in Texas — with San Antonio well-situated to be the primary gateway to Mexico.

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

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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VISIT SHALEMAG.COM/MARKETING OR CALL 210.240.7188 FOR ADDITIONAL INFORMATION.

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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LUXURY HOTEL, CASINO AND SPA IN THE MOUNTAINS SPECIAL TO SHALE MAGAZINE

STAY

PLAY

The hotel at Black Hawk is rated among the nation’s elite lodging facilities and earned the prestigious AAA Four Diamond designation. All rooms feature luxury furnishings, top-of-the-line mattresses, luxurious linens, plasma-screen televisions, double vanities, separate tubs and showers, and premium bath products. Wireless high-speed Internet access is also offered. Each standard 450-square foot guest room has a marble foyer and either one king-sized or two queen-sized beds. All 64 suites include oversized hot tubs, and some have double-sided fireplaces and panoramic views of the Continental Divide. Wheelchair accessible rooms are available. The spacious casino consists of 55,000 square feet of gaming excitement, with a complete selection of popular slot and table games.

Offerings include: » » »

More than 1,365 slot machines; including reels, video reels and video poker 33 table games, including blackjack, craps and roulette A new expansive poker room (opened December 2014) features 22 tables and state-of-the-art amenities for players

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

PHOTO COURTESY OF AMERISTAR

ocated in the Rocky Mountains, a short 40 miles west of Denver, Ameristar Casino Resort & Spa in Black Hawk, Colorado, offers an exceptional gaming and entertainment experience in the Denver metropolitan area. The property features a 71,500-square foot casino with over 1,300 slot machines, 33 table games and 22 poker tables; a luxury AAA Four Diamond hotel with 536 well-appointed rooms, including 64 luxurious suites; a rooftop pool; fitness center; dining and entertainment venues; a full-service luxury day spa, Ara Spa; 15,000 square feet of meeting and event space; and the largest parking garage in the market.

EAT

These offerings benefit from Ameristar’s emphasis on culinary excellence, with Executive Chef Steve Jamison overseeing all culinary efforts.

TIMBERLINE GRILL

Its menu includes such traditional favorites as dryaged steaks, Rocky Mountain trout and king crab, as well as lavish house-made desserts created by Ameristar’s Executive Pastry Chef Sky Goble. The property’s signature dessert is the 24K Candy Bar.

CENTENNIAL BUFFET,

WAYPOST DELI features

featuring multiple exhibitionstyle serving stations, offers American, Italian and Asian favorites; fresh seafood and crab legs; and delectable desserts. With its hand-hewn timbers, wrought-iron fixtures and dry-stacked stone columns, the atmosphere is pure Colorado, right down to the woodcut-style prints on the wall celebrating the history of Black Hawk.

sandwiches, burgers, pizzas from a stone-fired oven and more.

FIRESIDE KITCHEN has a comfy

mountain feel and a menu that includes delicious breakfast offerings, such as pancakes, skillets, a signature green chili, smothered burrito and more. In addition, this venue offers lunch and dinner specials featuring signature burgers, tasty sandwiches and specialty shakes.

RELAX AND SWIM The swimming pool, along with its indoor and outdoor hot tubs, is located on an open-air, heated patio on the hotel’s roof. This pool level features a movable glass wall to enclose the pool during winter months, while preserving the panoramic mountain views. Beverage service is available on weekends. The full-service Ara Spa is located within the hotel. It features hot tubs, sauna and steam rooms, and six treatment rooms. The 7,000-square-foot day spa offers innovative experiences in addition to traditional spa services, including massages, scrubs, facials, pedicures and manicures. Splash Passes are available for purchase on weekdays. Perfect for tired feet, this

Fire and Ice Pedicure

combination of a cooling salt scrub and warm paraffin wax relaxes and soothes even the most overworked feet.

A Day of Relaxation at Ara

PHOTOS COURTESY OF AMERISTAR

Start With a Splash! Take to the waters with our ‘splash at ara’ hydro-experience. Our steam, sauna, swiss shower, and pool circuit stimulates circulation and provides deep muscle relaxation. shower: rinse away the day’s stress (3 minutes) steam: purify your mind and body (5-10 minutes) shock: plunge in the cold shower (1 minute) sweat: feel the heat in the dry sauna (5-10 minutes) shiver: refresh with a cold shower (1 minute) submerge: relax in the whirlpool (10-15 minutes) shower: conclude with a warm shower

Rocky Mountain Ritual

Adjusting to our Rocky Mountain altitude can be hard! Rebalance your body by exfoliating with our special high-altitude moisture treatment and finish up with a hydrating mini massage application.

To learn more and book your next stay, visit www.ameristar.com/black-hawk. JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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SEASON IN REVIEW: The Corpus Christi IceRays

he Corpus Christi IceRays have completed their fifth season in the North American Hockey League (NAHL) as well as their 17th as a hockey franchise in the Coastal Bend. They are coming off a historic year, finishing with a 3124-5 record — their best in junior franchise history — while finishing fourth in the South Division and qualifying for the Robertson Cup playoffs. While their postseason life was short, it’s the second time the IceRays have qualified over the past five seasons. In addition to overall records, the IceRays broke six other key team and individual records. Forward Wes Michaud set records in all three major single-season scoring categories: goals (30), assists (43), and points (73), which all break records set by Rudy Sulmonte in the 2012−13 season.

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

Defenseman Travis Howe set two different records: single-season and career penalty minutes (246), with the single-season record surpassing Brandon Marshall’s 2010 −11 record of 208 minutes and the career record beating Luke McDiarmid’s time set over the previous two seasons at 216 minutes. Additionally, the IceRays set a new attendance record for the second straight year, bringing 6,965 fans into the American Bank Center on February 7, 2015. That record beats out the previous number set on March 29, 2014 (6,553 fans). This comes along with hosting 98,495 fans for 30 games. The IceRays led the league in attendance for the second consecutive season and were the only NAHL team with 3,000-plus fans per game and 90,000-plus fans annually.

Two IceRays gained league recognition from the NAHL for their work in the 2014−15 season. Michaud and Howe swept awards in both the South Division and the NAHL. Michaud was named both First Team All-South Division and First Team All-NAHL after finishing third in the NAHL in scoring and second in the South Division. Howe earned the Community Service Award for both the South Division and the NAHL by helping the IceRays set a new season high for hours giving back to the community (178.5 hours) and serving 70 of those hours. These award winners are the first two in franchise history to earn an NAHL award over the last five seasons as a junior franchise. Over the 2014 −15 season, the IceRays raised over $100,000 in donations for local and national beneficiaries through a wide variety of events both on and off the ice. In total, 12 companies received funds from the IceRays fundraising efforts: the Brooke’s Blossoming Hope for Childhood Cancer Foundation, American Cancer Society, American Diabetes Association, National Multiple Sclerosis Society, CASA of the Coastal Bend, St. Jude Children’s Research Hospital, Ronald McDonald House Charities, Texas Department of Assistive and Rehabilitative Services, The Miracle League of Corpus Christi, Corpus Christi Metro Ministries, Tuloso-Midway Independent School District and PeeWee’s Pet Adoption World and Sanctuary. Four IceRays players have committed to playing NCAA hockey starting next season, two of whom will play at the NCAA Division I level. Michaud committed to the NCAA Division I program at Colorado College

PHOTO COURTESY OF THE CORPUS CHRISTI ICERAYS

SPECIAL TO SHALE MAGAZINE

PHOTOS COURTESY OF THE CORPUS CHRISTI ICERAYS

in November, and forward Tanner Lomsnes signed his commitment in March to play for Niagara University, another NCAA Division I program. The two skaters led the IceRays in scoring through the 2014−15 season. Committing to Saint John’s University NCAA Division III-level program at the same time were forwards Joe Chitwood and Matt Colford. With it only being summer, there is still time for more college commitments during the off-season. Two former IceRays players made history at the professional level, strengthening the magnitude of the 2014−15 season. On January 9, goaltender Pheonix Copley (2010−11) became the first junior player to earn a call-up to the National Hockey League (NHL), hockey’s highest league level. Though he did not earn any ice time with the Washington Capitals, it does mark a moment in the young junior franchise’s lineage. Less than one month later on February 8, the Philadelphia Flyers recalled goaltender Anthony Stolarz (2011−12) from the Lehigh Valley Phantoms to the NHL. At 21 years old, Stolarz becomes the youngest player called up to the NHL. He would make this jump four different times, however he also did not receive any ice time.

PARTNERSHIP WITH SHALE

“We at the IceRays are extremely excited

to be partnered with SHALE Oil & Gas Business Magazine. SHALE has a great number of companies they work with, and that Rolodex not only helps us network with those companies for promotions and offers from the IceRays, but also gives us more of a chance to partner with these companies for events that benefit the Corpus Christi and South Texas

communities. Their expanded following aids our efforts to expand the reach of the IceRays from a business and a fan base perspective. SHALE continues to produce quality work and is well-respected in both the oil community and the greater Corpus Christi area, and we offer our resources to them as they have done for us. I firmly believe that this partnership can

JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

be nothing but positive for both the IceRays and SHALE.” — Pat Dunn, Corpus Christi IceRays General Manager

TREVOR HEUSER — DEFENSEMAN ALTERNATE CAPTAIN EXPERIENCE WITH THE ICERAYS

“This will be my third full season. We definitely have the best fans. They’re so supportive of us. The town is great and is regularly cheering us on, and that helps give us momentum with them [being] so lively. There are a lot of fun experiences, and [we] have a great coaching staff between Head Coach John Becanic, our Trainer Jeff Paluseo, our Equipment Manager George Escamilla, and having a general manager and front office that’ll do anything for you. Other teams don’t have that. From playing for another team in Johnstown, it’s easy to see the differences. Every time my parents come down here, they tell me how lucky and spoiled I am. There’s no comparison to how I’m treated here. It’s definitely a professional model.”

GOALS FOR THE UPCOMING SEASON

“The greatest thing would be to be part of a winning team and bringing the first championship to Corpus Christi. That’s the first thought in all of our minds. Being part of a winning team in Corpus Christi will last a lifetime. Once you win a championship, you’ll never forget it. It’s almost like a brotherhood. The other is to continue development and get to play in college. It’s a big thing to get a college scholarship. College isn’t cheap these days, and the environment of college hockey is just great. But we really want to bring a winning team to Corpus Christi. It’s the least we can do for the fans and our front office and the best way to say thank you.”

“My dad took me skating one day when I was young. After the first and second time, I loved it. I’m an aggressive and energy-filled person, and it allows me to get my anger and physicality out. Now, I love getting involved and being around my teammates and the experience and memories that it’s brought me. There are so many memories I’ll never forget. It’s such a blessing, and I’m so thankful for [hockey]. I’ve met so many great people through it.”

WHAT DRIVES HIM TO KEEP PLAYING

“I’m just living the dream. It really is a dream. I wake up at 5 a.m. to go skate, go to the gym, and go to work and practice until 8 p.m. I’m getting a taste of the real world in a way. But you do it for the memories. Some of these people you meet will be your friends forever. And winning a championship can come out of it. It’s all about the people I’ve met, the places I’ve been, and the experiences I’ve had.”

» 66

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

Visit www.goicerays.com to learn more about the team and to purchase tickets.

PHOTO COURTESY OF THE CORPUS CHRISTI ICERAYS

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DOVE HUNTING AT JOSHUA CREEK RANCH Premier Hill Country hunting and shooting resort ideal for corporate outings SPECIAL TO SHALE MAGAZINE

ove hunting is an undeniable Texas tradition. From the Panhandle to the Gulf Coast, the end of summer means hunters are dusting off their shotguns, pulling out their best camo gear and rounding up loads of #7.5 shot ammo in preparation for white-winged dove season. Opening in September, dove season marks the beginning of fall and the prelude to other popular Texas hunting seasons like upland birds, whitetail deer and turkey. Right now is the best time to book dove-hunting adventures, and Joshua Creek Ranch is the place to do so!

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

Dove hunting is a popular choice for corporate outings and client entertainment. Small and large companies can participate in this relatively inexpensive, yet action-packed activity. Dove hunting appeals to novice and experienced shooters and can be enjoyed right in the heart of the beautiful Texas Hill Country — without having to travel all the way to Argentina to have a great experience. Companies are always searching for new ways to treat, retreat or entertain, and this quintessential Texas hobby is a great option. At Joshua Creek Ranch, the overall hunting and guest experience is like no other. Dove-hunting guests will arrive for a gourmet lunch on the Cypress Lodge patio. After lunch, shooters warm up on the wobble trap and hedge bets on who will shoot the most birds. In the early evening, professional guides follow these migratory birds to lush fields where shooters take their positions and birds take flight. After bagging a limit of these white-winged beauties, which are retrieved by expertly trained dogs, hunters can enjoy drinks and appetizers while they share tales from the field and relish the renowned Hill Country sunset. Guests then take comfort in the rustic Cypress Lodge dining room for a gourmet dinner before retiring to one of many luxury lodging options. Activities like sporting clays, upland bird hunts, kayaking on the Guadalupe River and/ or fly-fishing the spring-fed, crystal-clear waters of Joshua Creek can be added to customize any itinerary for corporate groups or individuals. Plus, the new Branch Haus Lodge and Utopia Great Room is the ideal venue for late summer or early fall business retreats, meetings and conferences. The 10,000-plus-square-foot facility offers up to 13 luxury guest rooms and a state-of-theart conference and event facility. For local groups just looking for an evening adventure, Joshua Creek Ranch offers packages that include dove hunting and dinner only. Finding new ways to create memorable team-building experiences that help solidify relationships within an organization or among colleagues and clients is an important part of doing business. Joshua Creek Ranch is a world-class destination resort that offers much more than your typical hunting adventure or corporate outing. “In 26 years of representing manufacturers in the outdoor industry, I have not seen a better place to have a business meeting, conference or large event than at Joshua Creek Ranch. We were able to customize each meal to our groups’ preferences. The lodging was perfect, with decor that redefines what a true Texas Hill Country lodge should be. Every detail has been addressed for your comfort. From a cooler full of your favorite iced-down beverages surrounded by rocking chairs in the center

PHOTO COURTESY OF JOSHUA CREEK RANCH

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PHOTOS COURTESY OF JOSHUA CREEK RANCH

hospitality suite to your luxurious rooms that make you feel as if you are in your own personal hunting lodge, the accommodations spell “total Hill Country comfort.” Even our bath towels were just as soft as the pillows! Joshua Creek Ranch knows what is needed to make our customers and sales team feel important and special. They set up the right atmosphere for success around you and allow you to host your group as if they were kings. There’s not a better group of people or facility to conduct business or host an event in Texas … or in the South. Whether it’s wingshooting, flyfishing, sporting clays or simply relaxing alongside Joshua Creek, this special place has become the new standard for corporate events.” — Waylan Owens, Principal, Owens Outdoor Sales Recognized as one of only five Beretta Trident Lodges for Excellence in Upland Bird Hunting in the United States and the only one in Texas, one of only two Orvis Endorsed Wingshooting Lodges in Texas and the recipient of the 2013 Award of Excellence from Sporting Classics Magazine for Hunting Lodge of the Year, Joshua Creek Ranch truly represents the best of the best … and it’s getting even better!

To learn more about Joshua Creek Ranch or to book your next corporate or social event, visit www.joshuacreek.com or call 830-537-5090. JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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A NEW GOLF EXPERIENCE

rom a distance, Topgolf might seem like your typical driving range where avid golfers hit golf balls and hone their swing in preparation for the next big golf tournament. On the contrary, people visit Topgolf for a variety of reasons — date night, a fun night out with friends, a corporate event or fundraiser, or even just to eat. Topgolf is truly a destination that the entire community can enjoy. It appeals to all ages and skill levels during all seasons. In fact, more than half of its guests actually describe themselves as non-golfers. Combine an upscale and playful experience with top-notch hospitality, and Topgolf is the perfect venue to spend your summer. This season at Topgolf is perfect for improving your swing, entertainment, doing business and fundraising. If you are looking to improve your swing and score more points, Topgolf U is your answer. This golf instruction program allows guests to improve their game in a fun, highenergy and non-intimidating atmosphere. Unlike traditional lessons, Topgolf U uses microchip technology that provides instant shot feedback, slow-motion video analysis

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

powered by Ubersense, covered and climate-controlled hitting bays for yearround comfort, and made-from-scratch food plus a variety of beverage options to enjoy while learning. If you want a playful experience, Topgolf is the ultimate venue for fun. Topgolf Nights is a summertime concert series with live music every Thursday through Saturday evening from Memorial Day until Labor Day weekend. Topgolf Nights combines the fun and entertainment of the game with a party vibe. Not interested in golfing? Head to the lower-level lounge and play complimentary games of pool, shuffleboard or Xbox Kinect. Or head to the third-floor rooftop terrace to enjoy the views and some spirited games of cornhole. Topgolf has summer fun for the kiddos too! The Summer Academy is an exciting instructional program for kids 6 to 12 years old, filled with all of the components that make up the great game of golf. No matter which activities you choose, don’t forget to try some of the amazing food and drinks. The majority of Topgolf’s food is prepared from scratch daily. Local favorites

PHOTOS COURTESY OF TOPGOLF

SPECIAL TO SHALE MAGAZINE

include Mushi (Mexican sushi), injectable doughnut holes and the Mac Daddy Burger (topped with green chili macaroni and cheese). Topgolf also offers local beers on tap, an impressive wine list and refreshing cocktails. For corporate events and fundraising, Topgolf has a work hard, play harder mentality. Topgolf Houston hosts more than 100 corporate events, teambuilding sessions, fundraisers and birthday parties each week. Topgolf will keep your guests entertained with great food, fullservice bars, upscale facilities with full audiovisual functionality and competitive fun everyone can enjoy. “Musket Corporation has hosted two successful fundraising tournaments at Topgolf, and we are planning our third. We have raised more than $380,000 to benefit Texas Children’s Hospital with these events. Topgolf has made our fundraisers seamless. The staff is friendly and professional. The associates make sure our guests are well taken care of; they are one of the reasons we keep coming back,” says JP Fjeld-Hansen, Vice President of Musket Corporation. In May, TripAdvisor awarded Topgolf Houston the 2015 Certificate of Excellence award, based on consistently great reviews from guests. Now it’s official: Topgolf is an awardwinning destination for summer fun, no matter what experience you are looking for.

HOUSTON-AREA LOCATIONS: PHOTOS COURTESY OF TOPGOLF

Topgolf Houston Katy 1030 Memorial Brook Blvd. Houston, TX 77084 Topgolf Spring 560 Spring Park Center Blvd. Spring, TX 77373 Topgolf Webster Opening late 2015

To learn more about Topgolf, visit www.topgolf.com. JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTY LE

A TASTE OF EATALY When Texans visit the Big Apple, they can take a bite out of Italy SPECIAL TO SHALE MAGAZINE

TASTE La Pizza & La Pasta — Guests can enjoy expertly prepared pastas and classic Neapolitan pizza made in a traditional wood-burning oven.

create colorful dishes inspired by the seasonal vegetables and flavors of Italy.

Il Pesce — Eataly’s delicious seafood restaurant is responsibly sourced and comes from right around the corner at its seafood counter.

La Piazza — Guests feel like they’re in the middle of a grand plaza at La Piazza, Eataly’s stand-up food and drinks bar.

Le Verdure — Vegetables are the star at this restaurant where chefs

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

Birreria — At this popular rooftop restaurant and brewery, Eataly brews unfiltered, unpasteurized and naturally carbonated cask ales in

PHOTOS COURTESY OF EATALY

THE LARGEST ITALIAN MARKETPLACE IN THE WORLD, Eataly is committed to promoting high-quality yet affordable regional Italian food with a local twist. It maintains an elevated standard of quality in both ambiance and cuisine in order to offer a cohesive and seamless culinary experience that allows guests to taste, shop and learn. At 50,000 square feet, Eataly New York has plenty for visitors to explore.

its in-house microbrewery. Pranzo — Guests can travel to the Italian Alps, the Mediterranean coast, or the Tuscan countryside at Eataly’s specialty lunch restaurant, which focuses on educating guests with a constantly changing menu. Manzo — Eataly’s more formal dining experience focuses on meat and offers both modern Italian preparations and traditional Piemontese beef dishes.

SHOP THE MARKETPLACE houses every essential grocery department, including produce, dairy, sweets, spreads and jams, dry pastas and condiments. » Eataly houses more than 100 single-estate olive oils and has its very own olive oil sommelier. » The housewares section includes beauty products, dishware and more. » The bookstore is filled with volumes on Italian cuisine and culture.

Lavazza and Vergnano — At these two cafes, guests can order a traditional Italian espresso, lattes, fresh pastries, cocktails and more. Nutella Bar — This brand-new bar features over 30 menu options revolving around this delicious hazelnut spread from Piemonte, including crêpes, waffles and coffee. Bakery — Baked daily, the bread from each Eataly around the world is made with the same “Mother Yeast” from Italy, which is over 30 years old. The company’s bakers are on duty around the clock to make sure guests have the freshest goods.

PHOTOS COURTESY OF EATALY

Mozzarella lab — Eataly has two in-house mozzarella makers who make 200−300 pounds of mozzarella per day. Gelateria — Created by pastry chef Katia Delogu, Eataly’s gelato is the only thing that is frozen at Eataly.

LEARN EATALY believes that the key to eating well is education, and guests are encouraged to discover its food, chefs and the producers who inspire the company. Each class offered at La Scuola di Eataly provides a unique culinary experience. During the Chef’s Kitchen courses, guests join chefs as they prepare signature dishes and demonstrate step-bystep techniques. During the hands-on Chef’s Workshop courses, Eataly’s team of experts shows how to prepare signature Italian products that guests will then prepare. Eataly also hosts a communal regional dinner every month called “Chef’s Table” to showcase one of the twenty regions of Italy and explore what makes each one so exceptional. Each class includes a full meal tasting and complimentary wine. Those interested can view all upcoming classes at www. eataly.com/lascuola.

Eataly USA comprises Eataly New York and Eataly Chicago, both modeled after the first Eataly in Turin, Italy, founded by Oscar Farinetti in 2007, and in partnership with Eataly Italia; Mario Batali, Joe Bastianich and Lidia Bastianich of Batali & Bastianich Hospitality Group; and Adam and Alex Saper, brothers and operating partners.

Visit www.eataly.com to learn more and to plan your next visit. JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

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SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

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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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JULY/AUGUST 2015 // SHALE OIL & GAS BUSINESS MAGAZINE

/ / N ONPR O F I T

ENERGY DAY SPECIAL TO SHALE MAGAZINE

fun for all ages, the Energy Day exhibits and their accompanying interactions feature experts from national and international energy companies and help spark students’ interest in STEMrelated studies and careers. As part of the Energy Day festival, nearly 100 students and teachers are awarded on stage for their achievements in STEM-related competitions through the annual Energy Day Academic Program (EDAP). EDAP is a yearlong initiative created by CEA and CEEF to engage students in energy and STEM education. The program partners with several Houston-area academic groups to host a series of nine unique, citywide, energy-related competitions aimed to motivate, challenge and inspire young minds to seek careers in science and technology. The 2014 EDAP awarded more than $13,000 to over 80 K-12 students and teachers, and it has awarded nearly $60,000 to more than 300 K-12 students and teachers since its launch in 2011. Each year, EDAP aims to add new competitions and partners to the program to expand its outreach to Houston-area students and teachers. Energy Day is proudly sponsored by over 100 businesses, including ExxonMobil, Anadarko, ConocoPhillips, Total, Torch Energy, Caterpillar and Hess Corporation. To learn more about Energy Day, visit www.energydayfestival.org.

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

KOTOFFEI/BIGSTOCK.COM

ith the need for students to be knowledgeable in science, technology, engineering and mathematics (STEM) more important than ever, the Consumer Energy Alliance (CEA) and Consumer Energy Education Foundation (CEEF) are hosting the fifth annual Energy Day on Saturday, October 17, from 11 a.m. to 4 p.m. at Sam Houston Park in downtown Houston. Energy Day takes place during a time when the U.S. is in the midst of a record-breaking energy revolution that is creating millions of much-needed jobs, increasing wealth for American families and communities, and increasing our national economic competitiveness and security. In order to sustain this high growth and promote an all-ofthe-above energy policy approach, we need to better educate and train students in the fields that are critical to energy development and fill the job vacancies that are popping up all across the country. “During this time of unprecedented growth, it is important that we continue to spark the imagination and interest of our students by giving them the tools that are needed to succeed in these very challenging but highly rewarding and growing energy careers,” says CEA President David Holt. “It has been evident to educators and parents for years that schools need to put more emphasis on developing math and science skills in students. Energy Day is a great way to do that.” With more than 25,000 attendees at the 2014 event, Energy Day has become one of Houston’s largest free family festivals. The event hosts more than 70 interactive exhibits and demonstrations geared toward K-12 students and their families showcasing STEM, energy, conservation, efficiency and careers in the energy industry. In addition to music, food, games, contests, presentations and nonstop

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C O M M UNI T Y

CHAMPIONING LOCAL GRADUATES ConocoPhillips awards scholarships to local students SPECIAL TO SHALE MAGAZINE  PHOTO BY: LIFE TOUCH

ive Kenedy High School graduates received the inaugural ConocoPhillips Drilling and Completion Legacy Scholarship during the May 29 Kenedy commencement ceremony. “ConocoPhillips, as well as our service partners, realize the potential of our youth, and we want to be a part of their development,” says Seth Crissman, Drilling and Completion Manager at ConocoPhillips. “The scholarship recipients were selected out of 16 applicants based on scholastic performance, extracurricular activities, recommendations, as well as other considerations.” In total, $25,000 in scholarships was awarded to the five Kenedy High School seniors. Awards ranged from $2,500 to $7,500. The money for the ConocoPhillips Drilling and Completion Legacy Scholarship Fund was raised through a golf tournament last October. This scholarship is one of ConocoPhillips’ community investment activities in the Eagle Ford. ConocoPhillips also supports a number of local non-profit and civic organizations. “We’re honored to be able to play a part in shaping the students’ legacies just like Kenedy is playing a part in shaping our company’s legacy in the Eagle Ford,” says Crissman. “The people of Kenedy have embraced our presence in their community, and we’re pleased to give back to this community in the form of scholarships [that] will help students in their pursuit of higher education.” The 2015 ConocoPhillips Drilling and Completion Golf Tournament will be held at the River Bend Golf Club in Floresville, Texas, on October 2.

ABOUT THE AWARD RECIPIENTS LACIE WEILBACHER — Plans to attend Texas A&M University JENNIFER LEE ZELAZNY — Plans to attend Paradise Valley Community College RALEIGH JOHN MORALES — Plans to attend Sam Houston State University KELLI JAYNA BROWN — Plans to attend Texas A&M University Corpus Christi PATRICK TAM — Plans to attend Texas A&M University

To learn more about ConocoPhillips and its community involvement, visit www.ConocoPhillips.com.

SHALE OIL & GAS BUSINESS MAGAZINE // JULY/AUGUST 2015

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