SHALE Oil & Gas Business Magazine Mar/Apr 2017 by SHALE Oil & Gas Business Magazine

SHALE MAR/APR 2017

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CULTURE OF INNOVATION:

SPREAD THE WORD: AMERICAN ENERGY IS INNOVATIVE

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CITIZENS FOR LNG & ENERGY DAY A GREAT SUCCESS!

DOUG SUTTLES WITH ENCANA

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MARCH/APRIL 2017

CONTENTS COVER STORY

Thinking toward the future, Doug Suttles implemented a strategic push to diversify Encana’s assets. With a focus on innovation, the company’s steps toward transformation allowed Encana to stay ahead of the impending downturn.

INDUSTRY

Lessons Learned Through Two Oil Busts

POLICY

Oklahoma Oil and Gas Industry Poised to Contest Potential Tax Increase Proposals in 2017

BUSINESS

Why Aren't You Talking About Your Company Culture?

COVER PHOTO AND TABLE OF CONTENTS PHOTO COURTESY OF ENCANA

INDUSTRY

32 Spread the Word: American Energy Is Innovative

34 Trade Associations Support Innovation 36 A Culture That Knows So Much That Isn't So 38 Take STEPS to Improve Your Safety Performance

40 Committed to the Community 42 Cutting-Edge Culture Connection in Energy

POLICY

BUSINESS 52 Four Ways to Embrace and Excel in the Mobile Era 54 Texas, Diversification and Human Capital 56 Adapt to Innovate: How Volunteering Shapes My Life and Career

LIFESTYLE 62 No Roads? No Problem. 64 A Destination at Home 66 Make Plans to Celebrate National Nutrition Month

46 Pipeline Projects Get New Life

SCENE

48 Can President Trump Make the FDA

70 Lunch and Learn With Alphabet Energy 70 2017 NAPE Summit

Under Trump

Great Again?

COMMUNITY

National Safe Digging Month

LIFESTYLE

Vital Communities Concept Meets Healthy Lifestyle Demand

SCENE

Citizens for LNG & Energy Day 2017

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

ADVISORY BOARD

Omar Garcia Senior Advisor

shana robinson

Thomas Tunstall, Ph.D.

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

Shana Robinson is currently the Chief of Sales & Growth, Baptist Health System (BHS) for the Tenet San Antonio Market. Shana is a graduate of the University of Texas San Antonio, receiving her Bachelor of Liberal Arts degree. Shana joined the Baptist Health System in January of 2007. Her years of experience in sales, physician relations, business development, community service and marketing has been fundamental to her success in the development and implementation of wellness programs for the Baptist Health System. Shana’s most recent challenge and success has been the development and initiation of the Business-to-Business (B2B) programs for BHS, which encompass services such as healthcare screenings for athletes to onsite clinics which assist participating employers to reduce healthcare costs by providing onsite health services for employees.

Thomas Tunstall, Ph.D., is the Research Director for the Institute for Economic Development at The University of Texas at San Antonio. Previously, he was a Management Consultant for SME and the Component 1 Team Leader for the Azerbaijan Competitiveness and Trade project. Tunstall also served as an Advisor Relations Executive at ACS and was the founding Co-chair for the Texas chapter of the International Association of Outsourcing Professionals (IAOP). He has published a business book titled Outsourcing and Management (Palgrave, 2007) and was the technical editor for Outsourcing for Dummies (Wiley, 2008). Tunstall has consulted in both the public and private sectors. In 2005, he completed a long-term assignment in Afghanistan, where he was Deputy Chief of Party for a central bank modernization project. In 2006, he taught Ph.D. candidates in a business and government seminar at The University of Texas at Dallas.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

PUBLISHER’S NOTE VOLUME 4 ISSUE 2 • MARCH/APRIL 2017

THANK YOU FOR CHOOSING SHALE OIL & GAS BUSINESS MAGAZINE! This year is already looking promising for the energy and business community. We’ve seen progress in energy prices so far this year. The downturn of the energy industry has been an obstacle for many. The state of Texas and many others have seen drops in revenue and the effect on individual families is evident. Thankfully, through the work of our energy industry and elected representatives, we are seeing that energy is again in motion. New projects, such as the proposed ExxonMobil/SABIC Gulf Coast Growth Ventures ethylene plant in Gregory and Portland, Texas, and the Growing the Gulf expansion program announced by ExxonMobil, are bringing hope to the Gulf Coast community for new economic stimulation to the region and thousands of new jobs. We proudly stand behind these projects and encourage the community to learn more about the benefits to the region. In the coming issues we plan to bring you more information on these and other projects that will have profound effects on the state and local community. The Texas Energy Advocates Coalition (TEAC) and many of our partners visited the Texas Capitol for Citizens for LNG & Energy Day to advocate for and support energy. The group held a briefing to go over talking points and positions on energy topics and enjoyed lunch at the Capitol. A rally was held on the steps with speakers including Christi Craddick, Chairman of the Railroad Commission of Texas; Sen. Carlos Uresti; former Texas Railroad Commissioner David Porter; John LaRue, Port of Corpus Christi Port Director; and Haley Curry, Vice President of External Affairs at STEER. Following the rally, attendees split up into groups to meet with elected officials and their staff to cover talking points and show their support of energy in Texas. Our elected representatives work for their constituents and strive to represent them accurately. If we don’t share our views and support, they aren’t being given a fair chance to know what is truly important in their districts in the eyes of their constituents. The power in this event was simple in nature. We had members of the business community, from non-energy industries, showing support for the energy industry. This alone speaks volumes. To our attendees and sponsors, thank you for supporting TEAC, this event, and the energy industry.

KYM BOLADO

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

KYM BOLADO

CEO / PUBLISHER CHIEF FINANCIAL OFFICER Deana Acosta

EDITOR IN CHIEF Lauren Guerra

OIL AND GAS ASSOCIATE EDITOR David Blackmon

ART DIRECTOR Elisa G Creative

COPY EDITORS

Katie Buniak, Maegan Sheppard

VICE PRESIDENT OF SALES Liz Massey Kimmel

VICE PRESIDENT OF SALES & MARKETING Kristy Sommers

ACCOUNT MANAGERS Susan Brown

ONLINE CONTENT MANAGER Fernando Guerra

SOCIAL MEDIA DIRECTOR Courtney Boedeker

CORRESPONDENT WESTERN REGION Raymond Bolado

CONTRIBUTING WRITERS

Cindy Elliott Allen, Leslie Beyer, David Blackmon, Alex Charfen, Warren Edwards, Omar Garcia, Lauren Guerra, Courtney Hoyt, Bill Keffer, Kelly Moore, Jessica Sena, Thomas Tunstall, Ph.D.

STAFF PHOTOGRAPHER Malcolm Perez

www.shalemag.com

SHALE OIL & GAS BUSINESS MAGAZINE MISSION STATEMENT:

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

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For advertising information, please call 210.240.7188 or email kym@shalemag.com. For editorial comments and suggestions, please email lauren@shalemag.com. SHALE MAGAZINE OFFICE: 5600 Broadway Ave., San Antonio, Texas 78209 For general inquiries, call 210.240.7188 Copyright © 2017 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.

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IT’S OUR MISSION to serve as the bridge connecting the oil and natural gas industry to South Texas communities.

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PHOTO COURTESY OFENCANA

cover story

Encana Ward 17 drilling rig within the Permian Basin

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CULTURE OF INNOVATION:

DOUG SUTTLES WITH ENCANA By: David Blackmon

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

Suttles and his management team became convinced that the North American shale and other unconventional plays were already competitive, and would become more competitive over time, with other plays across the globe

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

Thus, Encana embarked upon a new life as one of North America’s largest independent producers, a company that was at the time, and would remain for several years, almost solely focused on the development of natural gas resources.

The Natural Gas Market Collapses The price for natural gas, which had risen to above $12 per MMBTU in 2008, collapsed in 2012, falling to around $2 MMBTU in May of that year. By mid-2013, it had become apparent to many companies with a heavy natural gas focus that the time had come to diversify their asset base. One of those companies was Encana. In June 2013, the company announced a new President and CEO, Doug Suttles, a veteran with over 30 years� of experience in the industry with companies like Exxon and BP. Suttles came into the job with a sense of urgency. He likes to say that one of the key learnings he took away from his role in managing BP’s response to the 2010 Macondo crisis in the Gulf of Mexico was that “time is not your friend.” Thus, the winds of rapid change began to blow through the halls of the Encana office buildings very quickly. By November, the company announced a new corporate strategic plan; and by early 2014, transactions designed to diversify and highgrade the Encana portfolio of assets began to roll out. In very short order, natural gasfocused positions in the Haynesville Shale, Jonah Field and Canada’s Bighorn Basin were divested, with more liquids-rich assets in the Permian Basin, Eagle Ford Shale, and Montney play in Alberta replacing them. Today, Encana remains one of North America’s largest independent oil and gas producers, but now with a much more diversified asset base that gives the company the options that Suttles believes it must have to compete and grow successfully. We recently caught up with Suttles on a very cold day at the company’s office in downtown Denver.

“The Problem Is Not What You Know. It’s What You Don’t Know.” “We undertook a big strategy effort when I joined in the middle of 2013, starting with first principles,” Suttles begins, seated at the head of the table in the company’s boardroom. “So, one of the things we looked at is where do you need to be in terms of asset base to be

PHOTO COURTESY OF ENCANA

he history of the oil and natural gas industry in North America is in many ways intertwined with the history of the railroad, which in the mid-19th century became the main means of transcontinental transportation for Americans and Canadians. As these great railroad systems were constructed across the continent, the companies building them gained ownership of great swaths of land, and, as importantly, obtained ownership of the minerals beneath the land. In the United States, as oil and natural gas began to be discovered across the Midwest and Rocky Mountain states, a good deal of it lay beneath land owned by rail companies like Burlington Northern, Union Pacific and Santa Fe. These companies all eventually created subsidiaries to manage their oil and gas royalty holdings, and those subsidiaries eventually evolved into some of the country’s largest independent producers: Burlington Resources, Union Pacific Resources and Santa Fe Energy. Those companies are all gone today, having been merged with or acquired by ConocoPhillips, Anadarko Petroleum and Devon Energy, respectively, but their place in history is firmly established. In Canada, a similar progression took place with the nation’s largest east-west rail company, the Canadian Pacific Railway (CPR). Indeed, the very first natural gas discovery in the province of Alberta was made in 1883, when workers for the CPR who were drilling what they thought would be a water well discovered a pocket of natural gas instead. CPR’s oil and gas-related assets grew over time; and by 1958, the company made the decision to create its own subsidiary to manage its oil and gas-related royalties. The Canadian Pacific Oil and Gas Company (CPOG) then embarked on an aggressive program to develop the company’s mineral assets and eventually grew into one of the largest producers in all of Canada. In 1971, CPOG merged with Central DelRio Oils to form the largest independent oil and gas producer in Canada, PanCanadian Petroleum Ltd. (PCPL). PCPL continued to grow and diversify until 2002, when it was merged with Alberta Energy Company to form Encana. By 2008, with the price of natural gas booming, the Encana board of directors decided to split what had grown into a major integrated oil and gas company into a large, independent producer of natural gas — Encana — and a fully integrated oil and refining company called Cenovus Energy Inc.

competitive in the world going forward? And that wasn’t just in North America, but globally. “We have a deep belief here that you have to be out on the low end of the supply cost curve,” he continues. “When you’re out on the high end, you’re kind of riding the curve. So we did a lot of work and looked at places that non-state oil companies could participate in and said, ‘Where do North American shales or unconventionals compete?’” Through this process, Suttles and his management team became convinced that these North American shale and other unconventional plays were

already competitive, and would become more competitive over time, with other plays across the globe. “They have the scale you need and plenty of running room,” he says, “So, this reconfirmed we wanted to be in shale. The second thing is, we realized the problem in strategy and driving your future is not what you know but what you don’t know. It’s unpredictable,” he says, referring to the dramatic collapse in the natural gas price in 2012, as North American producers had been so successful at tapping the immense reserves of natural gas from shale plays

that they had overwhelmed demand for the product. “Now, the consumer and the country are the big winners. Everything from low-cost electricity to security to jobs — it just enhanced any dimension you could imagine, and the country has been a huge winner in this.” But, despite the low price at the time for natural gas, especially when compared to the $100-plus price that oil was then commanding, Suttles and his leadership team did not want to just completely turn the portfolio over to a liquids focus similar to the natural gas focus the company had previously maintained.

Doug Suttles speaking during a companywide town hall

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

Instead, they decided to create more of a balance between oil and gas assets. “We wanted to have increased optionality in our portfolio. That would give us a better chance of having a robust business even around things that were difficult to predict. It’s not that we weren’t confident in the future; but, for example, with oil, we thought things could happen — and did happen at the end of 2014 — that changed that outlook. So, having this optionality is critical.” The next thing that Suttles and his team decided was that “great management, no matter how great it is, can’t make bad rocks good. If you are in the wrong places, you are

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

Their belief is that instilling a bias for constant innovation in every Encana employee, from the mailroom to the senior management team, is crucial for the company’s success.

fighting from behind and with one arm tied behind your back. So we have this deep belief that we want to have our portfolio to be in the best parts of the best places. That became a huge driver for us going forward.” The first step in the asset-transition process was to redirect a portion of the company’s capital toward oil in a limited number of plays. The second step was to sell some high-quality natural gas assets with the goal of redeploying those funds toward high-quality oil assets. “So, we exited things like Jonah, exited things like Haynesville, exited the Bighorn play up in Canada. All of these things were billion-dollarplus transactions, and we took that capital and

PHOTOS COURTESY OF ENCANA

Encana operations staff in front of Encana drilling rig PD 521 in northwest Dawson Creek within the Montney formation

Doug Suttles during an interview in 2016

● First, we had to have what we felt was the right strategy; ● Second, we needed the right organization structure to deliver that strategy, so we made some really big changes in the fall of 2013 as to how we were organized; ● Third, we needed to change some of our core processes, the single biggest being how we allocate capital; ● Finally, we needed a culture consistent with the strategy.”

redirected it into the Permian Basin and Eagle Ford Shale plays.”

“We Don’t Have Hats and T-shirts.” Suttles knew that re-balancing Encana’s portfolio of assets was only the first part of the job. The next parts involved putting the right organizations and processes in place, and perhaps, most importantly, implementing a culture shift at the company focusing on innovation. “When we launched this new strategy in the fall of 2013, we actually said that we need to bring four things together to make it work:

Before continuing with that last point, he pauses and smiles. “We did a lot of work on this, but you might find it interesting that in the three years we have been working on this, we have never held what you might call a ‘culture workshop.’ We don’t have hats and T-shirts, that sort of stuff.” He knew that any real culture change in any large organization must be led from the top, “and it would start with me and my direct reports. Once we felt we were starting to embody it and role model it, we would engage the next level, and so on and so forth. “And it’s worked, because we all know the cynicism that comes out of the culture workshop, but we also know the impact it has when people look up at their boss and see that, wow, their behavior is different than it used to be. How they’re acting is different; the things they are emphasizing and reinforcing are different.” The major focus in this culture shift for Suttles and his direct reports was on creating what he calls a “culture of innovation.” Their belief is that instilling a bias for constant innovation in every Encana employee, from the mailroom to the senior management team, is crucial for the company’s success. Ongoing innovation, of course, has been at the heart of the history of the oil and gas industry since its very beginning. As Suttles puts it, “We can’t stop innovating, we can’t help ourselves.” “Here at Encana, we’ve heard some people talk about shales as being a ‘manufacturing process.’ When we hear that, we smile because we disagree entirely. We believe it’s an ‘innovation process.’ Manufacturing implies that we want to standardize. But the reality is that we get so much better each year at what we do that the worst thing we could do is standardize.” Suttles is so passionate about maintaining this culture of innovation that he made sure it became embedded in the company’s quarterly performance management process. “Every asset, when they report to me and my COO each quarter, they not only have to talk about safety, cost and production, they also have to talk about innovation. They have to describe what we call their Design of Experiments, or DOEs, and they have to have those running all the time. They must be focused on things that matter and that we can scale. So, we’ve embedded it, and people know that they are expected to innovate as a part of their job.”

“You Have to Wear a Hard Hat and Steel-Toed Boots If You Want to Go to Our Lab.” When asked whether or not he can point to examples that show that this culture of innovation gives Encana a competitive advantage in acquiring and developing resources, Suttles doesn’t hesitate: “Yes, I can. We absolutely believe it works, and we have empirical data as evidence. A MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

great example is we entered the Permian in 2014. It was the biggest deal to date in the Permian with a price tag of $7.1 billion. We saw that great stacked play potential, and we could see the opportunity to apply technology and innovation to make it better. And guess what? It’s worth more today — a lot more — than what we paid for it in 2014, yet the oil price is half today what it was then.” That really is an outstanding outcome. But what led Suttles and his team to risk that much capital in a single play area in the first place? Again, there is no hesitation as he describes the decision process in detail: “In 2013, we looked at some of the big shale plays across North America at that time and studied their history. One of the things that we observed was the performance difference between the best operator and the poorest operators

“We joke here in the company that we don’t have a technology arm; we don’t have an R and D arm. We joke that you have to wear a hard hat and steel-toed boots if you want to go to our lab, because our lab is in the field. And the cool thing about shale and other unconventionals is, you can try things in real time; they’re not really expensive; and if they work, you know really fast. You know in like 90 days — you don’t have to wait three years or five years or 10 years. What you want to do is to be trying things all the time. “When we observe competitors, there are a few of them who do this all the time, and they tend to be consistently at the front end. There are some who never do it, there’s a few who do it in little spurts, think they’ve figured it out, and stop. We believe you have to do it all the time.”

Encana drilling rig PD 521 in northwest Dawson Creek within the Montney formation

shown that it is incredibly resilient. It is more innovative here than anywhere else in the world; it’s more creative here than anywhere in the world; and when the price moves lower, many operators figure out how to live within a lower price. “So what we’ve seen happen, over the last 12 months in particular, is that the efficiencies delivered across the industry are now making investments economic at these lower prices, where a year or two ago they would not have been. A great example is that if you look at the price of oil and the price of gas in the third quarter of 2016 and the third quarter of 2015, they’re almost identical. But in the third quarter of 2015, it was ‘How do we batten down the hatches in order to survive?’ Now you have some people talking about expanding and growing. So even though the prices were basically the same, third quarter to third quarter, it doesn’t feel the same to us as an organization as it did a year ago. It’s a testament to this industry and the men and women who have done a great job of finding smarter ways to work. It may have shocked the world that we didn’t just disappear, but instead we got better. “Here at Encana, we feel great about where we are. We just launched a five-year growth strategy that was incredibly well-received by the market. Our organization takes a lot of pride in the changes we have gone through that are working and putting us in a better place where we can actually build and grow at today’s price deck. We don’t have to have prices going up in order to be successful and that feels great.”

was about 40 percent. If you look at our third quarter 2016 operating results, we show data that demonstrates that the best operator in the non-core area of the Midland Basin wasn’t as good as the worst operator in the core area of the basin. Which just shows that the quality of the rocks also matter. “The second thing we observed is that, in the core area of the Midland Basin, the spread between the best operator and the worst operator was, again, 40 percent. And we believe that the main difference between the best and worst performing operator is generally innovation. The companies at the front are generally the companies that are working to find a better way to do it.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

“It May Have Shocked the World That We Didn’t Just Disappear, But Instead We Got Better.” After a two-year downturn, the industry in North America is beginning to show signs of life once again. The U.S. rig count has been on an upward trajectory since June, drilling and completion costs have dropped dramatically, and the industry’s workforce situation appears to have stabilized. We asked Suttles if he is optimistic that a turnaround can continue in 2017. “I think the answer is yes, but I think it will be modest. What has happened is that the industry here in North America has always

If it sounds like Doug Suttles is proud to have been a part of this industry throughout his career, there is good reason for that. He grew up around the oil and gas industry; being part of the industry is something of a family tradition. It’s more of a way of life than just a job. Prior to joining Encana, Suttles held several roles managing operations in various parts of the world, including the North Sea, Russia’s Sakhalin Island, Trinidad and Alaska. We asked him to talk about how those roles helped to prepare him for his current responsibilities at Encana. “I’m a third-generation oil and gas guy — my dad worked in this industry, my grandfather worked in this industry and now my daughter is working in the industry, so we’re on our fourth generation in the family. So, I’ve been around it my whole life. When I started in the industry as an engineer, I just thought I’d be an engineer, and found it fascinating and loved the work. Our history as an industry is kind of neat, because you tend to get a lot of responsibility early on, and you can see the impact you’re having pretty quickly. I found that to be incredibly motivating and exciting. “Then, as my career progressed, I found

PHOTOS COURTESY OF ENCANA

“I’m a Third-Generation Oil and Gas Guy.”

database, if you will, that you begin to call on when you get into the kind of role I’m now in. How did I think about this problem back then, and how can I use that to address this one? What you learn is to be really clear on strategy, build a great team of people around you and figure out how to align and motivate others to get to where you want to go. I am always conscious of the fact that our employees do all the work; my job is just to make sure we’re pointed in the right direction. And if they’re not doing the right stuff, the guy I’ve got to look at is me.”

Drone shot No. 1 of Encana’s mega pad in Midland County, Texas, within the Permian Basin

“In a Crisis, One of the Things You Learn Is That Time’s Not Your Friend.”

Doug Suttles grew up around the oil and gas industry; being part of the industry is something of a family tradition

Drone shot No. 2 of Encana’s mega pad in Midland County, Texas, within the Permian Basin

myself ... traveling around the world, which was interesting because I hadn’t flown on a commercial jet until I was 22 years old, while interviewing for a job. I didn’t have a passport until I was 27 or 28. So I had never envisioned that I would go to 25 different countries, some of which you normally wouldn’t really want to go to [laughing]. “I was put into some unique roles. I started out with a pretty good operating background, which gives me an advantage really right up to today, because I can understand some of the opportunity and the risk and can communicate well with that part of the organization. “But I also got to work some more strategic roles. At BP, I worked on the merger with Amoco and through that got to see strategy in action in a real way. Then, by working all around the world, I got to see how you manage both below-ground risk and above-ground risk. And the big thing you learn when going around the world is that the rocks aren’t really that much different, but the risks sure are. You also learn that if you get the right team, the right knowledge and you build good relationships, that most of these risks are manageable; and if you can identify them and manage them, you can be successful. “So, I’ve seen a lot of things in my career, and I’ve been able to build up this information in an internal

While at BP in 2010, Suttles became responsible for leading the company’s response to the tragic Deepwater Horizon incident, which was an intense and emotional time for everyone involved. He reflects on the lessons he learned during that time and how they may have impacted his outlook on safety-related considerations since then. “One thing I learned is that the skills required to lead in a crisis are no different than those required to lead every day — they’re just on steroids. They’re like hyperdrive, because you don’t have the luxury of time. So what that means is that you have to have immediate feedback loops, you’ve got to be able to make decisions in real time, and to do all of that you need great people around you and you have to listen really, really well. “In a crisis, another thing you learn is that time’s not your friend, it’s your enemy. Because the crisis is still going on, and the longer it takes to deal with it, the worse it can become. But you also don’t want to make hasty, rushed decisions. One thing you learn is that once you get the right people together and get really clear on what the key questions are, you can make really good decisions quickly. So you try to transfer those learnings to your day-to-day job, and when you get back there you start to ask yourself, ‘Am I taking time to make this decision because I can or because I need to?’ “So, when you look at the things we’ve done at Encana during our transformation, we took the view that time is our enemy, that we needed to get after things. And little did we know, it was. Because if we hadn’t acted in 2014, the downturn that began late in 2014 would have had much greater consequences for this company than it actually did. When the price fell, we

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

were already on that runway of taking the steps we needed to take to make this company stronger and more efficient. We weren’t in the situation of having to shift our portfolio and become more efficient because the prices fell; we were doing those things already as a part of our strategy.”

“Why Do All the People in California Have New Cars?” Like many executives in the oil and gas industry, Doug Suttles has spent time on assignments in several countries during his career. Trying to raise a family while moving from place to place every few years will create challenges for any family. But the positive side of the story is that it can also create experiences, memories and friendships that will last a lifetime. When talking about this subject, Suttles relates all of those aspects and more. “My wife, Christy, and I have two grown children now who traveled around the world with us, and it’s interesting in that it probably makes your family closer, because the people you know the best are the ones who are moving with you. So, you don’t live in the same town for 20 years — you might be there for three — but we got to see things that I’m pretty certain I’d have never seen and I’m sure they’d

have never gotten to see.” This experience of moving from place to place and frequently having to become immersed in a new culture and making new friends can help broaden horizons and develop a heightened sense of self-confidence. “One outcome of that is that my daughter, when she was in college, decided to do a semester in Australia and just got on a plane by herself and flew all the way across the world. Landed in a place she’d never been before and went right to the university there. I’m not certain I would have done that when I was her age, but they’d done that growing up and realized that these things were very doable. “We spent a lot of time in Alaska, and, as you know, Alaska sometimes wants to be part of the U.S. and sometimes seems like it doesn’t,” Suttles says with a laugh. “They like to refer to the rest of the United States as the lower 48. Our kids were born there and when they were about 7 and 4, we went on a holiday to San Diego. We got into the rental car and drove out of the airport, and pretty soon, my daughter was asking, ‘Why do all the people in California have new cars?’ And of course, what she meant was ‘clean’ cars, because when you live in Alaska your car stays filthy for about nine months of the year. So my wife and I looked at each other for an answer and finally realized she just wasn’t used to seeing

cars that were clean. So, because of all the things my kids have gotten to see and do, their openness to other ideas, other cultures, other perspectives — there’s no fear there. They have pretty fond memories and a global group of friends to this day. “I look back on it, and there are trade-offs. For me professionally, being able to move allowed me to gain experience faster. For my family, we’ve gotten to see a great bit of the world together.” Not surprisingly, then, both of the Suttles kids have now grown into adults who are independently building successful lives of their own. “Our 28-year-old daughter has a finance degree. She is married and just gave us our first grandchild. She and her husband live in Utah and own two small oilfield service companies, so they’re learning how to deal with their first downturn. We also have a 24-year-old son who is a civil engineer and is right now working on a highway project in Phoenix. I tried to convince him to come into the industry, but he really likes the idea of building bridges and roads, and so that’s what he does.”

“You Need to Find a Way to Give Something Back.” Over the years, Suttles has served on the boards of organizations like The Foraker

DON’T EV ER WASTE A CHANCE TO

WANDER.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

Group and The Nature Conservancy. We asked him to talk about how serving in those roles has impacted his outlook, both in a personal and professional sense. “Two things that I think help from this: One, when you’ve been blessed to be successful in life, you need to find a way to give something back, and serving with these groups is a good way to do that. The second thing is you get exposed to other stakeholders, and you hear more about what they think of your industry and your company in a way that you wouldn’t get through normal channels. You actually get perspective about what people care about, what they like, what they’re concerned about. “One of the things I always emphasize to emerging leaders is that you need to build broad, wide networks to give you that information. Because people who are directly around you probably think a lot like you do, probably perceive the world much the way you do, maybe even want to tell you the world looks like the way you want it to look. But when you get outside that group of people you work with every day, these other people have a different perspective, and they have different priorities and things they value. “So you need to get to know what these people value, what’s on their mind, what they like, what they dislike. And as these people get to know you, to some degree that’s their avenue to learn about your company. So, their perceptions of your company are shaped by you, and they could become an ally or supporter down the road when you need it.”

“If It’s Done Outdoors, I Probably Like to Do It.” When asked about how he spends his personal time, it quickly becomes obvious that Doug Suttles has a bias for being outdoors. Whether it is golfing, hiking, boating, hunting or fishing, if you can do it outside of the confines of four walls, there’s a good chance he is doing it on a regular basis.

“I’m a huge outdoors fan. I love to fish, I’m a big boater — we do own a boat out in the Northwest and have run our boat all the way from Seattle up to Whittier, Alaska, three different times. We just love the adventure of that and to go into these great, wild places. Hiking is another love. We live in Calgary [Alberta] now, and my wife and I can get up on a Saturday morning and say, ‘Let’s go for a hike,’ and quickly be in some of the most spectacular country in the entire world. And you decided to do this at 9 in the morning and be back home in time for a quiet dinner on the back patio. I also like to golf, bird hunt — if it’s done outdoors, I probably like to do it.” And then there’s hockey. “If it’s indoors, I’m probably watching football, basketball and ice hockey. It used to just be football and basketball, but when you’re in Canada you have to follow hockey, too. It’s a good sport to watch live, very fast-paced.” Given the speed at which Doug Suttles has transformed Encana and positioned the company for growth, it’s perhaps no surprise he’s become a fan of the fast-paced sport of ice hockey.

About the author: David Blackmon is Associate Editor for Oil and Gas for SHALE Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles, and the last 22 years engaged in public policy issues at the state and national levels. Contact David Blackmon at david.blackmon@shalemag.com.

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INDUSTRY

Lessons Learned Through Two Oil Busts

“

How does this bust differ from the bust in the ’80s?” I get asked that question quite often, partly because I’m growing old and it shows on my face, and partly because I’ve been in the oil and gas industry since 1979, and people assume — rightly or wrongly — that I know some stuff because of that. I did live through that bust in the ’80s, and it wasn’t fun. I got laid off from a job in 1985 and was out of work for a few months — the only time I’ve been unemployed since I was 16 years old — and that caused me and my wife great financial hardship. So I do remember those days all too well. To understand why that bust happened, you first have to go back to the oil shocks of the 1970s, when the Saudis and other OPEC nations implemented oil embargoes, first in 1973 and then again in 1979. Two memories from that period of time stick with me to this day. The first is of filling my mother’s 1972 Pontiac Grand Ville up with gasoline on the day in 1974 when the price of gas at the local Circle K in Beeville, Texas, reached the then unheard of sum of 50 cents per gallon. That was the first time I had ever had to come up with 10 bucks (the aircraft carrier-size Grand Ville had a 26-gallon tank) to fill up a car with gas. I knew I was going to have to start working overtime or get another job if I was going to keep putting gas in that car. The second memory is of sitting

at a long-disappeared Texaco station at the corner of Richmond Avenue and Buffalo Speedway in Houston during the summer of 1979, having to wait in a very long line of cars on an odd-numbered day to pay over $1 per gallon for my allotment of gas to fill up my Chevy Caprice. Another 26-gallon tank that was even more costly to fill. Memories like that stick with you and tend to make you want to do something to stop the madness. Those two oil embargoes had two effects in the United States: 1) Americans began to drive fewer miles and look for cars that used less gas, and 2) the U.S. government started implementing energysaving policies, including requirements that automakers increase the miles per gallon their cars could attain. Those changes in behavior and policy in turn led to a lowering of demand for oil in the U.S. and other developed nations in the early 1980s, during a time when OPEC nations were flooding the market with oil and the U.S. industry was steadily increasing oil production. When a global recession hit in late 1980, the pace of destruction of demand for crude oil increased. OPEC nations woke up in 1982 and started to implement cuts to their own production in an effort to maintain a higher oil price, but those measures proved to be too little, too late. By 1984, the result of all of this demand destruction was the creation of a gigantic

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surplus of crude oil on the global market, a glut that at one point reached as high as 7 million barrels of oil per day (BOPD). It didn’t take very long for the price of crude to collapse, going from about $40 per barrel in 1983 to as low as $9 in 1985. As one might imagine, the impacts of such a collapse on the Texas economy were extremely severe. A state economy that had been the envy of the other 49 states fell into a deep recession, even as the national economy began to boom. Thousands of rigs (the rig count in the U.S. had topped 4,000 during the boom of the early ’80s) went idle and remained idle for years. The numbers of employees laid off during the bust were in the high hundreds of thousands during the mid-’80s, with more layoffs continuing well into the 1990s. College students stopped going into the fields of geology and petroleum engineering based on the belief that oil and gas was a dying industry that would never recover. This reluctance of incoming college students to major in energy-related disciplines lingered into the 2000s and played a big role in creating the industry’s infamous 15-year gap in its employee base. Recovery from that bust of the 1980s was slow and difficult. In fact, the price of crude didn’t top the $40 mark again until 2004, more than 20 years after it began. By then, the industry had completely changed, companies had become leaner and more efficient, and the shale revolution that ultimately played a role in creating our most recent price collapse was just underway. What benefits us today can end up causing hardship tomorrow. We are now more than two and a half years into our current price bust,

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By: David Blackmon

and the light at the end of the tunnel seems to be nearing. At least for now. The price has recovered somewhat, thanks largely to the deal to curtail exports between OPEC and Russia. Rigs are being reactivated and companies in the U.S. are starting to hire again. But here is the reality we all must face: The price of crude oil today is roughly half of what it was before the current bust began, and the days of $100 oil won’t be coming back anytime soon, if ever. The oil and gas industry in the U.S. has become even leaner and more efficient over the last two years, not least because companies basically had no choice in the matter if they wanted to survive. Service companies like Halliburton and Schlumberger have created outstanding advances in fracing and well-completion technologies,

Changes in behavior and policy in turn led to a lowering of demand for oil in the U.S. and other developed nations in the early 1980s, during a time when OPEC nations were flooding the market with oil and the U.S. industry was steadily increasing oil production and expected recoveries from shale wells have increased dramatically. While a recovery has begun — the Permian Basin is, in fact, in a full boom status — what all of this increased efficiency, technology and per-well recovery means is that the U.S. industry is capable of significant advances in overall production while drilling far fewer wells than before. If that production ramps up too quickly and the OPEC/ Russia deal begins to fall apart, then we could be right back down to $40 per barrel of oil in a hurry. We should all be prepared for the oil price to fluctuate between $40 and $60 for years to come due to these market dynamics. So, although the causes of the current bust differ from that of the bust of the ’80s, and the overall glut of the last few years never exceeded about 2.5 million BOPD, we have the potential for the same sort of lingering lower price situation going on for years to come. In fact, it will take a lot of discipline on the part of OPEC countries and Russia to prevent a fall back to lower prices later this year. These countries are not known for their self-discipline where oil exports are concerned. Bottom line, those expecting a quick return to high oil prices are most likely going to be highly disappointed. Hope for the best, but prepare for the worst.

Focused on

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INDUSTRY

Spread the Word: American Energy Is Innovative

merican energy development has a long history, going back well into the 19th century. Our industry is also associated with older movies like 1956’s Giant and older equipment like the counterbalanced pump jack, which goes back to 1925. It’s great to have a colorful history — and to play such a central role in the story of America. But the problem is that too many people have the misperception that we are stuck in our ways, that we look back instead of ahead. Nothing could be further from the truth. America’s Energy Leadership Is Driven by Innovation Not that many years ago, the United States imported most of its energy. We had ceded our energy leadership to other nations — and become dependent on foreign oil. This dependency made our economy and our security vulnerable. But one risk-taking innovator, Texan George P. Mitchell, changed everything by vastly improving the decades-old process of hydraulic fracturing. Just as Thomas Edison improved — but did not invent — the lightbulb to make it commercially viable, Mitchell made extracting shale oil and gas economical. It took dozens of trials and cost tens of millions of dollars before Mitchell succeeded in 1998. Today, the combination of fracing and horizontal drilling has made the U.S. the world’s leading producer of oil and natural gas. Energy innovation has unlocked enormous economic value and created millions of jobs. America’s oil and natural gas sector is an innovation industry. Innovation Never Ends The energy industry continues to invest in innovation to improve operations and minimize environmental impacts. Innovative uses of data and information technologies are helping to pinpoint oil and natural gas resources and reduce operational downtime. Engineering innovations have helped reduce methane emissions, which means more energy can be captured and less gas enters our atmosphere. Investments in innovation have also improved safety, onshore and offshore.

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Mitchell passed away in 2013 at the age of 94, but innovations in fracing have continued. For example, in recent years, energy companies and independent innovators have pursued ways to recycle and reuse fracing fluid. New filtration systems are enabling water used in energy development to be reused for agriculture and returned to the water cycle. In La Porte, Texas, an innovative zero-emission natural gas power plant is now under construction. This demonstration plant will generate electricity without any emissions, including carbon dioxide. The plant will have a small footprint and use very little water. This project demonstrates that natural gas and energy innovation

are helping our environment, despite what you might hear from anti-energy activists. Every member of the energy industry should seize every opportunity to share examples of our industry’s innovation with friends, family, neighbors ... and government officials. We need to stand up for American oil and natural gas and be proactive champions for the work that we do. Energy Nation, our industry’s workforce advocacy program, provides energy employees with opportunities to raise their voices and help paint a more accurate picture of our industry. Yes, our industry goes back many years, but we also operate on the cutting edge of technology and innovation.

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

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

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

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INDUSTRY

Trade Associations Support Innovation By: Leslie Shockley Beyer, PESA

ESA’s mission is to promote all that oilfield service, supply and manufacturing companies are doing to lead innovation across the industry. We work to elevate the understanding that these companies are actively developing the tools and technologies to harness our resources more safely, efficiently and with a smaller environmental footprint. Oilfield equipment, growing increasingly stronger in automation and digitalization, is perfect to attract a younger generation that was raised on a diet of computers and video games. Young people coming into the oil and gas industry today will be those with knowledge in process automation, process-domain expertise, data management, cybersecurity and interface design. Our industry is on the verge of the most dramatic demographic shift in its history, and change is inevitable. How do we as trade associations support and promote the reality of this innovation in our industry? PESA and many others engage with local, state and federal policymakers on legislation and regulations that will impact our business, maintaining an open dialogue between a collective group of member companies and the government entities that oversee and regulate our industry. PESA and other trade associations coordinate meetings between their member company technical experts and federal regulators to provide input on regulations and legislation, focused on avoiding any unintended safety or operational consequences for the industry. Every trade association approaches its engagement with regulators and policymakers differently. At PESA, we strive to be a trusted resource to our state and local governments, providing technical expertise and education. We also support energy education programs at the elementary, high school and undergraduate levels to promote STEM disciplines that drive the industry; and we create workforce development programs to cultivate our oilfield personnel, developing their skills and competitiveness with trainings. At the elementary and middle school level, we work with the Offshore Energy Center and schools across the U.S. to deliver on-campus field trips through Mobile Oilfield Learning Units (MOLU). At the high school level, we support five Petroleum Academies in Houston and Fort Worth, Texas, and the first-of-its-kind Energy Institute High School, a full magnet high school in the Houston Independent School District dedicated entirely to the development of geosciences, alternative energy and offshore technology. And at the undergraduate level, Rice University’s Center for Civic Leadership has created a PESA fellowship, which consists of

undergraduate internships with our member companies geared toward exposing engineering students to the social responsibility, sustainability, safety and environmental efforts of the oil and natural gas industry. It is essential that we continue to cultivate and educate the next generation of oilfield employees, and very often it is trade groups that support this investment in innovation for the future. To support our sector’s pipeline for innovation today, energy trade groups are continually providing member company personnel with best practices, technical trainings and relationship-building opportunities,

Oilfield equipment, growing increasingly stronger in automation and digitalization, is perfect to attract a younger generation that was raised on a diet of computers and video games growing talent in difficult market conditions where internal resources for these activities might not be available. In a specific program example, PESA has an Emerging Leaders Committee comprised of one top-performing nominee from each member company. This group receives additional benefits such as executive coaching, mentorship with top PESA executives, small roundtable discussions with industry leaders and higher-level networking events. This is the group that will lead the great crew change, leading their respective companies’ future innovations and success. What matters most, especially during times like this when the industry is experiencing such a volatile commodities market, is to continue to be engaged and promote dialogue between industry, education and government entities at all levels. And even though our industry is facing challenging economics, our commitment to innovation does not stop. We’re proud of our legacy as innovators, and I’m honored to work in an industry that does so much to support and improve modern life for millions around the world each day.

For more information about PESA, visit pesa.org.

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MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

A Culture That Knows So Much That Isn’t So By: Bill Keffer

his issue of SHALE highlights company and industry culture, but there is a developing national culture in the U.S. regarding the energy industry, and oil and gas in particular, that should give us pause. At a time when the domestic oil and gas industry is discovering, developing and producing from more known reserves than ever before and standing on the brink of becoming a net exporter and maybe even of achieving energy independence, there is another movement quickly

We have reached a point in our national condition where, paradoxically, our advanced education leaves us ignorant of the explanation for our success gaining strength by disrupting, delaying and denying various oil and gas projects across the country. This opposition movement became more emboldened over the past eight years, receiving protective cover and subtle encouragement from an administration similarly hostile to the oil and gas industry’s incredible growth. With the advent of a new administration whose view of the oil and gas industry is much more positive, it

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

is likely that the same opposition movement will become even more hostile and aggressive out of fear of becoming irrelevant. A grass-roots organization in the Barnett Shale area that is supportive of oil and gas development recently published a report revealing the identities of these opposition organizations who are so heavily involved in shutting down an industry that is such an integral part of our economy. North Texans for Natural Gas published its report “Messing With Texas: Exposing the Campaign to Shut Down Oil and Natural Gas in the Lone Star State.” The report reveals various national environmental organizations and the roles they have played in Texas in opposing the oil and gas industry — organizations like Earthworks, Sierra Club, Public Citizen Texas and Environment Texas. Earthworks was the single largest financial contributor in the fight in Denton, Texas, over the fracking ban, a fight that fracking opponents eventually lost when the Texas Legislature enacted HB 40 in 2015. According to the report, Earthworks states that it is waging a self-described “war on fracking” and that “no drilling should be permitted for the foreseeable future.” The organization receives funding from the Park Foundation, a philanthropic organization headquartered in New York, part of whose mission is to “challenge continued shale gas extraction and infrastructure expansion.” New York, of course, has banned fracking statewide, and oil and gas opponents regularly disrupt and interfere with current efforts to build new pipelines. An automatic corollary to such intransigence should be to simply stop sending any oil and gas to the state at all for any purpose. Perhaps, then, more rational thinking would prevail. The Sierra Club, whose website displays pictures of protestors with the message “Fight Back Against Trump,” is another organization clearly opposed to oil and gas development. The report quotes the Sierra Club’s Executive Director Michael Brune: “The Sierra Club is opposed to fracking, period.” The Sierra Club’s website quotes its President Allison Chin: “If drillers can’t extract natural gas without destroying landscapes and endangering the health of families, then we should not drill for natural gas.” This is from the leader of an organization that supports erecting tens of thousands of monster wind turbines across every open area in this country, except where elites are wealthy and influential enough to keep them from invading their space. Environment Texas is the state organization for Environment America. The report quotes Environment Texas as having the position that “fracking should not occur anywhere.” Curiously, the Environment America website lists “Stop Fracking Our Future” as one of its issues, while the Environment Texas website discreetly leaves that one off of its list of issues. On the national website, the organization warns that there are already “more than 1,000 documented cases of water contamination from fracking operations” — an interesting claim, given that the EPA’s recently released report suggested otherwise, and the highly publicized alleged instances presented in the propaganda piece Gasland have all been discredited. But don’t let facts get in the way of fundraising. Public Citizen Texas, the state arm of Ralph Nader’s Public Citizen, likewise has an absolutist view on fracking. In a 2011 letter to President Obama, the organization’s President Robert Weissman wrote: “On behalf of Americans who live in every U.S.

state and territory, we urge that you employ any legal means to put a halt to hydraulic fracturing.” There might be more than a few Americans “on whose behalf” Weissman was not speaking. In an illustration of historical headscratching irony, one of the most significant sources of funding for these organizations that are so aggressively dead set on shutting down the oil and gas industry and “keeping it in the ground” is the Rockefeller Brothers Fund, whose ancestor, John D. Rockefeller, is the father of the modern oil industry in America. So these demonstrations of opposition have occurred over local and statewide fracking bans, the construction of the Keystone XL Pipeline and the construction of the Dakota Access Pipeline, replicated over and over again by protesters whose grasp of a world without oil and gas for fuel, electricity and countless manufactured products is nonexistent. We have reached a point in our national condition where, paradoxically, our advanced education leaves us ignorant of the explanation for our success. As President Reagan once famously quipped, “It isn’t so much that liberals are ignorant. It’s just that they know so many things that aren’t so.” It is almost as if we are nearing the end of the life cycle of a free republic. Our nation was founded in hope and hardship. It was nurtured in opportunity, which eventually led to great success. Continued success led to comfort, but that comfort has grown into indolence. Indolence has permitted an increasingly large disjunction between a knowledge and appreciation of our past sacrifices and a simple, indifferent expectation of waking up every day in the greatest country in the world. That disjunction has now given birth to an elitism among those who oppose oil and gas that is founded on utopian hopes and practical ignorance. A much more constructive mission for these organizations and the philanthropies that fund them would be restoring a literacy to our citizens that educates them on how we got here and why it works.

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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INDUSTRY

Take STEPS to Improve Your Safety Performance By: Ian Threadgold these regional networks and the major shale oil and gas basins in the country. The vision statement of STEPS is “incidentfree operations.” Many of the networks have signed formal alliances with OSHA. The networks hold regular meetings, at both regional and national levels, where safety, health and environmental issues and good practices are discussed. Focus groups are set up to work on specific topics. A great example of what meetings can produce is the Tank Hazard Alert issued in 2015. The alert covers tank gauging, thieving and fluid handling, and helps people recognize and

avoid the hazards seen from these activities. It describes the potential effects of exposure, discusses personal protective equipment (PPE) that can help, and provides important guidance for both employers and workers around assessments of the specific hazards and best practices for managing them. So if you want to improve your company’s safety performance, consider joining your local STEPS network. Why not take your contractors along to one of the local STEPS meetings and encourage their participation? Help your team learn what is happening in the rest of the industry around safety in the shale basins.

About the author: Mr. Threadgold, an associate consultant at Accumyn, serves as a safety management systems expert and auditor in the capital project management and petroleum & chemicals practices. He is the founder and owner of Threadgold Safety Management L.P. which is a specialized consultancy providing safety management services and advice to the geophysical sector and to the broader oil and gas industry. His almost forty years of technical, supervisory, managerial, and operational experience in worldwide geophysical and exploration projects in the upstream oil and gas industry has provided him with exceptional project management and safety management insight. His deep knowledge of operating company safety, health, and environmental management processes enables him to professionally address almost any facet of worker safety management in the petroleum industry today. For more information, you can check out the National STEPS Network and the Tank Hazard Alert at www.nationalstepsnetwork.com.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

CURRAHEESHUTTER/BIGSTOCK.COM

he National Service, Transmission, Exploration & Production Safety (STEPS) Network is a national safety network in the oil and gas industry that is comprised of volunteers from oil and gas companies, service companies, contractors and trade associations that operate within the U.S. It began in 2003 in South Texas, where the first regional effort was established with a goal of reducing fatalities and injuries in the industry. Success led to the creation of the National STEPS Network, along with more than 20 other independent regional networks. There is much overlap between

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

Committed to the Community By: Omar Garcia, STEER

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

Our industry boasts a corporate culture that is both innovative and inclusive programs, land reclamation efforts and tree planting, to name a few. Beyond the beautification efforts, what you may not see is the innovation and technological advances that go into preserving the environment. Not only do we encourage members to stay involved in their communities and protect the environment, but we honor those working with the oil and gas community during our annual Eagle Ford Excellence Awards. The awards are focused on recognizing companies and organizations for diligent efforts to preserve the environment, ensure safety in and around the Eagle Ford Shale region and give back to the community in which they live in and serve. The Eagle Ford Excellence Awards recognize companies and organizations that are acting with the values that STEER sees as essential for continued advancements that benefit the greater South Texas community. Although 2016 was a tough year in the oil and gas industry, it’s encouraging to see that the oil and gas industry’s commitment to the communities of South Texas has not wavered.

For more information on STEER, visit www.steer.com.

PHOTOS COURTESY OF STEER

consider myself lucky to be a part of the oil and gas industry in South Texas. Our industry boasts a corporate culture that is both innovative and inclusive. Innovative because the oil and gas industry has a way of adapting to the various needs of the community and the environment. Inclusive because we make it a priority to work in collaboration with those living and working in South Texas. A skilled workforce is imperative to develop assets in the Eagle Ford Shale region, and STEER is dedicated to assisting in training throughout South Texas. I am proud of the work we have done over the last four years to educate students throughout South Texas about the importance of the oil and gas industry, the career opportunities available, the importance of safety in and around the workplace and the innovation that goes into the production process. STEER members have offered scholarships to area high school students, given presentations on the industry and participated in numerous career fairs, summer camps and other school district-sponsored activities. Last year, STEER partnered with the San Antonio Spurs, Holt Cat and SHALE Oil & Gas Business Magazine to host students from South Texas for a one-day oil and gas education program at its first Spurring Energy Education Day event in San Antonio. The event brought 1,000 students to the AT&T Center for a day that was filled with fun and educational activities to inform the future workforce about the many opportunities that await them upon graduation. In addition to the educational outreach programs that STEER members participate in, the oil and gas industry places a premium on the protection of the environment. STEER members participate in trash pickup

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

INDUSTRY

Cutting-Edge Culture Connection in Energy Special to SHALE

ulture is the driving factor behind why people feel connected — whether it is within a company, an industry group, a recreational club or a nonprofit organization. Although often overlooked, connection is critical to organizational success and essential to unlocking extraordinary performance in employees. Many tech companies are known for their flexible culture and cutting-edge work styles; health and fitness companies are recognized for their eco-friendly wellness programs; and retail companies often offer a friendly and fun work environment. Slowly but surely, employers are beginning to say farewell to rigid work schedules and incorporate flex time and other perks. The energy industry has been at the forefront of this cultural change, recognizing the importance of employees feeling connected for years. Energy companies carry a culture of volunteerism and giving back to the communities where they live and work. The Women’s Energy Network (WEN) educates, attracts, retains and develops professional women working across the energy value chain through a network of countless volunteers. Each volunteer is empowered through her individual employer to be involved and to further develop themselves and other women around them. WEN took a deeper look into some of the organizations that encourage their female employees to volunteer. One energy company making waves due to its corporate culture is Chevron. The Chevron Way aims to establish a common understanding among employees and those who interact with the organization about who Chevron is, what it does, what it believes and what it plans to accomplish. This approach of unification is likely a contributing factor to the company being ranked No. 9 on Glassdoor.com’s 2014 list of the 25 companies that employees say have the best corporate cultures. Deloitte is a WEN national sponsor that

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supports multiple professional volunteers each year and is paving the way for employee development and retention through culture. In September 2016, Deloitte announced a new family leave program where men and women alike are eligible for up to 16 weeks of fully paid leave to support a range of life events affecting them and their families. This is a firstof-its-kind program for a professional services organization and a testament to its culture and drive to be a good corporate citizen.

make money, the reality is that the culture of each company has greater impact on the bottom line than many realize. A company’s culture drives employee retention, employee satisfaction and community development. We can see these companies place a large emphasis not only on supporting their employees while physically in the office, but also fostering their development outside of the office. Additionally, they give back to their communities by encouraging volunteerism

Hess Corporation is a regular sponsor of WEN Houston and encourages its female employees to get involved. It also cultivates a culture of giving back to the community through education of not just its own employees, but of future energy professionals. In December 2016, Bismarck State College reported that Hess Corporation donated nearly $200,000 worth of oil and gas-related equipment to aid students studying energy — the third such time that Hess has given money and equipment to the school. While some may view the companies we work for as simply organizations out to

and promoting corporate goodwill. All of these benefits propel employee performance and provide a competitive advantage to any organization. As you settle into the new year and work on new goals, challenge yourself to be a culture-driven leader who helps to shape, enhance or influence the success of your company’s culture. Seek to align yourself with high-caliber professionals whose leadership skills are invaluable. Network with executives or millennials who thrive on sharing lessons learned and personal experiences in their company’s culture evolution.

For more information about WEN, visit www.womensenergynetwork.org.

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MARCH/APRIL 2017 ď &#x201C; SHALE OIL & GAS BUSINESS MAGAZINE

POLICY

Oklahoma Oil and Gas Industry Poised to Contest Potential Tax Increase Proposals in 2017 By: Cindy Elliott Allen

Last fall, the State Chamber Research Foundation issued an updated Economic Impact of the Oil & Gas Industry on Oklahoma report that confirms the state’s current gross production tax, which was raised in 2015, has created stability in Oklahoma’s market that other highertaxed states, other than Texas, have not seen in the two-year commodity price downturn

s the state of Oklahoma once again faces a budget shortfall of about $900 million, lawmakers are looking to find ways to create new revenue, including eyeing potential new taxes on the state’s oil and natural gas industry. Meanwhile, oil and natural gas trade organizations and the State Chamber of Commerce are reminding legislators that the oil and natural gas industry is a key economic driver in Oklahoma, and that the state’s competitive gross production tax rate has boosted, promising new exploration and production in the state’s SCOOP and STACK plays. Last fall, the State Chamber Research Foundation issued an updated Economic Impact of the Oil & Gas Industry on Oklahoma report that confirms the state’s current gross production tax, which was raised in 2015, has created stability in Oklahoma’s market that other higher-taxed states, other than Texas, have not seen in the two-year commodity price downturn. Economic Impact Report Shows How Much Oil and Gas Contribute The foundation’s report issued in late September 2016 shows that almost 150,000 Oklahomans earned about $15.6 billion in wages or self-employment income from oil and natural gas activity. It also shows that the industry supports an estimated $28.6 billion in additional spillover output of goods and services in other industry sectors statewide. “Even with the drastic price reductions we’ve seen in the past couple of years, oil and natural gas is still the most important contributor to economic growth in Oklahoma,” State Chamber President and CEO Fred Morgan said when the report was released.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

Other economic factors for 2015 found in the report include: • Oil and gas companies paid $1.7 billion in royalty payments to Oklahomans in 2015. • Each oil and gas job supports two additional jobs in the state, and that jumps up to four additional jobs in rural areas. • Millions of gross production tax dollars are dedicated to schools and local governments every year. • Despite the downturn in prices, the oil and gas industry continues to be a significant funder of education. The industry generated $542.1 million in net severance taxes in fiscal year 2015. Of that amount, $328.7 million went to dedicated uses, with education’s $224 million as the largest share. “For policymakers, the volatile and everchanging environment for oil and natural gas makes balancing the need for tax revenue with the desire to foster growth in the state’s trademark industry more challenging than ever,” says Dr. Mark Snead, Economist and President of RegionTrack, who conducted the study. “The oil and natural gas industry remains the largest single source of state tax revenue, and important shifts have taken place in the types and amounts of taxes paid by the industry. The channels of economic influence on the state economy have also changed, as ownership and investment in the industry are now as important as employment and wages as a source of economic stimulus.”

Democrats Want to Increase State’s Gross Production Tax Rates The Oklahoma Policy Institute (OPI), a progressive Oklahoma tax policy organization, has been critical of the gross production rates paid by the oil and gas industry since horizontal drilling has been responsible for Oklahoma’s oil and natural gas production growth. In 2014, the Legislature simplified the gross production tax and raised the gross production tax rate on the initial months of horizontal production. Since the mid-1990s, horizontal wells were taxed at 1 percent for the first 48 months of production and 7 percent for the remaining life of the well. When the Legislature passed HB 2562, that initial rate on horizontal wells was increased to 2 percent for 36 months and then 7 percent afterward, effectively raising taxes on oil and gas production by 100 percent in the first 36 months and by 600 percent starting in the 37th month. Since July 2015, all new production is being taxed at the higher rate. The production tax changes in 2014 also sunset a number of tax exemptions and created a permanent tax rate for all oil and gas activity. However, in a policy statement following the conclusion of the 2016 legislative session, OPI called on lawmakers to consider indexing the gross production tax to the price of oil, adopting a 4 to 5 percent tax when prices are lower and a 7 percent tax when oil prices are high. Democratic State Rep. Scott Inman, who is said to be a possible 2018 gubernatorial candidate, and several other Democratic lawmakers are embracing that suggestion. Inman says Oklahoma made a serious mistake by not implementing a higher gross production tax on the oil and gas industry when the rate was up for renewal in 2014. Inman has introduced HB 1632, which imposes a gross production tax graduated scale tied to the price of oil and natural gas. Arnella Karges, Executive Vice President of the Oklahoma Oil & Gas Association (OKOGA), says such a policy would bring uncertainty not only to oil and gas producers in the state, but to the state budget as well. “That’s risky for state appropriators in that it makes the state budget even more volatile,” Karges says. OKOGA is also critical of increasing the rates just as commodity prices are making exploration and production more palatable in Oklahoma. One hurdle for any new revenue measures is they must receive three-fourths approval

The election and inauguration of Donald Trump as the 45th President of the United States has boosted the spirits of oil and gas producers who are anticipating more favorable tax and regulatory environments for the industry in both houses to move to the Governor. The Oklahoma Legislature is overwhelmingly Republican, and most legislators understand that state tax rates impact where the oil and gas industry chooses to invest in oil and gas production, Karges says. Recent State Treasurer reports show that while revenue from oil and gas is still weaker than two years ago, oil and gas gross production revenue has been on the rise. In his January 2017 report, State Treasurer Ken Miller said that for a second month, tax collections from the production of oil and natural gas exceeded collections from the same month of the prior year. In November 2016, gross production taxes generated $34.1 million, up by $3.9 million, or 12.9 percent, from November 2015. Sales Tax on Services Could Hurt Oil and Gas Service Providers One significant issue the oil and gas industry could face in the upcoming session is consideration of a sales tax on services, Karges says. OKOGA is preparing for SB 331, a measure that repeals Oklahoma’s sales tax exemption on repair, maintenance, delivery and installation of taxable goods, which are taxed in 24 other states. Sen. David Holt, a Republican who wrote the bill, said it could be expanded to include items that are taxed in at least a dozen states nationally or most surrounding states, including oilfield services, construction services, information services, data processing, automotive leases, and more. “The American economy has evolved, and government has to modernize with it,” Holt said in introducing the bill. “There are a number of items that are taxed in many other states that have gone untaxed in Oklahoma for no reason other than having a good lobbyist or because the nature of the economy has changed. I drafted SB 331 to include the one item already mentioned, but view the bill as a potential vehicle for a much broader modernization of our sales tax code. I am very hopeful that the business community will come to the table and propose an equitable combination of items that spreads the burden fairly, so that our state’s education

system can improve.” Karges says this new tax proposal “could be a big price tag for the oil and gas industry, just as we are trying to ramp up production in the SCOOP and STACK.” Trump Election Gives Oklahoma Producers Hope The election and inauguration of Donald Trump as the 45th President of the United States has boosted the spirits of oil and gas producers who are anticipating more favorable tax and regulatory environments for the industry. In particular, the nomination of Oklahoma Attorney General Scott Pruitt to be the director of the Environmental Protection Agency is a welcome move. As Attorney General, Pruitt has been a dogged critic of the EPA and has enacted several lawsuits challenging overzealous EPA regulations he considers detrimental to Oklahoma’s business climate. OKOGA and the Oklahoma Independent Petroleum Association issued a support statement for Pruitt’s confirmation. “For the past eight years, we’ve seen executive overreach put increased, unnecessary and burdensome regulations in place to the detriment of not just Oklahoma’s oil and natural gas industry, but industries across the state and nation,” said Jeffrey McDougall, OIPA Chairman. “As Attorney General, Scott Pruitt has been a consistent challenger to overreaching EPA regulations, and his appointment will change the course of how the EPA is utilized by the White House administration.” OKOGA President Chad Warmington said, “As Oklahoma’s Attorney General, Scott Pruitt has proven that he is a legal expert, which is exactly what our nation needs at the helm of the Environmental Protection Agency. ... We are excited about having an Oklahoman in a prominent role of a Trump administration and we welcome a more measured regulatory approach at the EPA that will give a voice to all.” The industry also applauded other nominees with ties to the oil and gas industry, including former ExxonMobil CEO Rex Tillerson’s selection as Secretary of State and former Texas Gov. Rick Perry’s selection as Energy Secretary.

About the author: Cindy Elliott Allen is a veteran Oklahoma journalist who has spent most of her career as a reporter, editor and publisher of community newspapers in Oklahoma, Arkansas and Kansas. She most recently has concentrated on writing about the oil and natural gas industry and has served as a Communications Specialist for Devon Energy and as a Strategic Communications Adviser for the Oklahoma Oil & Gas Association. She also writes about public policy and politics on her blog, www.conservativemakingsense. wordpress.com.

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

POLICY

Pipeline Projects Get New Life Under Trump By: Jessica Sena

Dakota Access Dakota Access, a 30-inch-diameter pipeline owned by Energy Transfer Partners, will move up to 570,000 barrels per day from the Bakken oil fields to Patoka, Illinois. It was scheduled to be operational by the end of 2016. All permits, including approval by the U.S. Army Corps of Engineers, were obtained by the company; however, protests, federal intervention and a change in position by the Corps have stopped the pipeline in its tracks. Self-proclaimed “water protectors” descended upon a protest site last summer near Lake Oahe at the confluence of the Cannonball and Missouri rivers to protest the pipeline crossing a half mile north of the Standing Rock Sioux Indian Reservation. Celebrities and environmental activists have flocked to North Dakota to stop what they believe is an injustice against the Sioux people. Earthjustice filed a lawsuit on behalf of the Standing Rock Sioux tribe, stating, “The public water supply for the Tribe, which provides drinking water for thousands of people, is located a few miles downstream of the proposed pipeline crossing route.” It argues, “The cultural and religious significance of these waters cannot be overstated. ... Construction of the pipeline ... would destroy burial grounds, sacred sites and historically significant areas on either side of Lake Oahe.” Consultation with GeoEngineers, a subcontractor on the Dakota Access Pipeline, provided information concluding that the boring process would not be of a magnitude to impact natural features, cultural resource features or above-ground structures. In a response to the federal order to stop construction on the pipeline, Chairman and CEO of Energy Transfer Partners Kelcy Warren wrote, “Concerns about the pipeline’s impact on the local water supply are unfounded,” and “multiple archaeological studies conducted with state historic preservation offices found no sacred items along the route.” Within the corridor where the Dakota Access line was sited lies an existing natural gas pipeline. In September, Judge James E. Boasberg of the U.S. District Court denied the tribe’s lawsuit to block pipeline construction, citing a lack

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of evidence that building the pipeline would harm the tribe or cultural resources. The Judge added that while the tribe had been provided countless opportunities to comment on the proposed route, tribal members did not appear at any of the 141 meetings held by the Dakota Access team. Immediately following the failed lawsuit, the Department of Justice, Department of the Interior and Army Corps of Engineers announced an indefinite suspension of pipeline construction to reassess cultural impacts to what the tribe calls sacred ground. In the joint statement to halt construction beneath Lake Oahe, it was said that the conflict highlights the need to consider “nationwide reform with respect to considering tribes’ views on these types of infrastructure projects.” Keystone XL Across the border, Canadian

Pipelines are lifelines to the American economy and modern way of life

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resident Trump wasted no time issuing executive orders to move stalled pipeline projects forward: the Dakota Access and Keystone XL. The United States is the No. 1 consumer of oil and boasts the largest pipeline network in the world. Pipelines are lifelines to the American economy and modern way of life. They are an indispensable part of our nation’s energy infrastructure and the safest means of transporting petroleum products. Let’s take a look at the two pipelines and what the President’s executive orders mean for each.

midstream company TransCanada has been given the go-ahead to resubmit an application for the long-awaited Keystone XL pipeline. Keystone XL is a proposed 36-inch-diameter crude oil pipeline that starts in Hardisty, Alberta, and stretches south to Steele City, Nebraska. It would deliver up to 830,000 barrels of crude oil per day to Gulf Coast refineries and contribute $3.4 billion to the national GDP. Keystone XL has served as a poster child for needlessly delayed projects under the Obama administration. TransCanada filed the permit more than eight years ago. After a yearslong process, the Keystone XL decision was pushed off indefinitely, in spite of extensive study by Obama’s Department of State. The reason: politics. In 2014, the Department of State released a report that should have cleared the path to approval of the pipeline. It concluded that the Keystone XL would not substantially impact greenhouse gases. Oil transport by pipeline is, in fact, the least impactful on emissions. Consider the emissions produced by dieselpowered rail or truck transportation. Had TransCanada been approved for construction three years ago, the pipeline would likely have sailed smoothly through Montana, where the pipeline has already been approved. The Montana Land Board voted unanimously in 2012 to grant rights of way to TransCanada. Two years ago, the Sioux and Assiniboine tribes of the Fort Peck Reservation passed a resolution opposing the Keystone XL pipeline. Unquestionably, the Dakota Access protest near the Standing Rock Reservation in South Dakota has placed pipeline projects in the crosshairs for opponents. Following the announcement of Trump’s executive orders, protesters warned they’d be out in full force to stop the projects from being built. No doubt the passivism of the Obama administration has empowered activists and opponents of the oil and gas industry. Like Dakota Access, Keystone XL would cross west of a reservation boundary. The 2015 Fort Peck tribe resolution was the result of concerns that a pipeline failure upstream from Fort Peck Dam could contaminate the entire Missouri River water supply. In North Dakota, similarly, concerns have been voiced over the impact to water in Lake Oahe and the Missouri River, which provide drinking water to the Standing Rock Reservation through an intake located downstream.

The intake for the Montana Assiniboine/ Sioux Water Project is on the Fort Peck Reservation off the Missouri River, which borders the reservation on the south side. At the Missouri River, the Keystone XL would be buried 40–60 feet below the riverbed. Additionally, a TransCanada spokesperson says the company has agreed to 59 special conditions for the project, including the use of flexible, high-strength carbon steel near waterways that can withstand the impact of a 65-ton excavator. The steel TransCanada will use is designed with special features to reduce corrosion. Both the Keystone XL and Dakota Access pipelines will be utilizing the latest and safest monitoring technologies, including pressure and temperature sensors and automatic shut-off valves. Before any crude moves through either pipeline, they will be required to be hydrotested to ensure their mechanical integrity. Once complete, these pipelines will be monitored 24/7 from a central control station capable of responding within seconds to any pipeline abnormality. Beyond the protest of the tribes and environmental groups, Keystone XL has earned widespread support from landowners, county commissioners, legislators, Montana’s Governor and congressional delegation. That’s because of the enormous economic impact the pipeline would have, making it a boon for hard-up rural communities. Under the Obama administration, federal agencies relied upon political gamesmanship and an arbitrary application of the law to shelve projects that would spur the nation’s economy. Many of the decisions and rules made over the last eight years were fueled by an agenda to dismantle the energy industry, an agenda that has made casualties of America’s working class.

Comfort.

Connectivity.

Choices.

Trump’s Move President Trump’s executive orders regarding the Dakota Access and Keystone XL pipelines — along with his cabinet selection and repeated calls for a regulatory rollback — provide a glimpse into the agenda he campaigned on, an agenda focused on unleashing the country’s energy potential. While cautiously optimistic, many in the oil and gas industry, from corporate offices to rig floors, are looking forward to the resurrection of a consistent application of the law and predictable energy policies that put boots (and drill bits) back on the ground.

About the author: Jessica Sena is currently under contract with a variety of clients in the natural resource development industry. She has worked with trade associations, namely the Montana Petroleum Association, as well as private companies as an Independent Public Relations and Communications Adviser. Sena has presented to a variety of industry associations and provided interviews on subjects related to energy policy on a wide array of programs. Her work is regularly featured in regional trade publications on oil and gas. Sena is a Guest Host on the statewide radio program Voices of Montana. She is also a Policy Adviser to the Heartland Institute. MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

POLICY

By: Kelly Moore

he Food and Drug Administration may not be the first government agency you think about when wondering how the Trump administration will affect your business and daily life, but it shouldn’t be too far down the list. The organization is responsible for the regulation of everything from your pet’s heartworm medicine to your father’s pacemaker — and all the food, drugs and vaccines in between. The FDA regulates over a trillion dollars’ worth of

The FDA regulates over a trillion dollars’ worth of products — about a quarter of all consumer spending — which has real-life impact on every American multiple times a day products — about a quarter of all consumer spending — which has real-life impact on every American multiple times a day. The U.S. has one of the best safety records in the world when it comes to food and drugs, largely because of the important regulatory oversight the FDA provides. So how can this vitally important agency be re-engineered and revitalized so that the remarkable engine of American innovation and creativity can be unleashed to provide better, safer, more economical products more quickly for our citizens and for patients around the world? This will be a huge challenge and, in order to meet it, the next FDA commissioner cannot and should not be

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

a mere figurehead. Of course, the person selected must be competent and able to understand not only the reasons behind policies, but the unintended consequences of those policies. More importantly, they must have demonstrated extraordinary managerial acumen and conviction of purpose that does not bow easily to the pressures of political controversy or mediafueled hysteria. The agency has such a broad remit that no one person should be expected to have all of the expertise in all of the necessary disciplines to be able to go it alone. In this highly visible agency, the commissioner must be able to select and effectively manage superior individuals who can provide guidance and trusted counsel for all the various disciplines involved in ensuring the safety of our food and drug supply. These include not just medicine and science, but engineering, business, finance and legal aspects of regulatory policymaking and enforcement. The inarguable highest priority for the FDA is to make decisions based on scientifically rigorous data. With that in mind, too often the agency loses sight of that and important new products or devices are delayed due to political grandstanding, and regulations that may have been well-intentioned morph into onerous, unwieldy and expensive rabbit holes. My hope is that the next FDA commissioner is in the mold of most of President Trump’s cabinet nominees: expertise based on broad and complex real-world experience rather than academic, theoretical or ideological altruism. Given the generous compensation and relative privacy that industry provides compared to government bureaucracy, any appointee who chooses to accept this position must also be recognized for the personal sacrifice required to enter into this important public service. The FDA is just one of 11 operating divisions and multiple agencies supporting

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Can President Trump Make the FDA Great Again?

public health interests as part of the Department of Health & Human Services. It has nearly 15,000 employees and close to a $5 billion budget, and its commissioner is one of nearly 4,000 political appointees that President Trump and his cabinet appointees must select. The commissioner has at times been seen as more of a figurehead or public advocate of an administration’s policies rather than the administrator and managing director of one of our country’s most powerful, impactful and important regulatory authorities. That has had important consequences for both the pharmaceutical and biotech industries as well as consumers who are waiting for life-changing therapies. And, given the rapidly changing scientific, technology and healthcare reform environments, it is an agency in desperate need of a certain infamous reset button. For example, a long-standing benchmark regulation for drug approval has been that any new compound must be proven to be both safe and effective. As scrutiny on drug costs increased and insurers attempted to develop tiered formularies for drugs they would cover and at what cost to the patient, that morphed to mean that a new drug must have a safety and efficacy profile that is at least as good as other drugs of the same class that are currently available. This reduced the attractiveness for pharmaceutical companies to spend time and money developing and promoting “me too” drugs without significant differences from those already available, which was probably a good thing because that research and development money can now be spent on truly new therapies or formulations. Unfortunately, this regulation has experienced additional scope creep, and the agency has expanded its own authority. Now a new drug must often prove itself to be more effective than other drugs currently on the market. “Well, that makes a lot of sense,” you might say, and at first blush, it does. However, proving this superiority is much more complex and expensive than the original conscripts of “safe and effective.” Particularly in the realm of new medications that are highly targeted therapies, proving superior effectiveness in a drug that has a marginal difference with a competitor requires huge patient numbers in a clinical trial or multiple trials to give the statistical significance necessary to support the claim that the agency requires.

Another example of the need for restructuring our regulatory environment can be seen as researchers now have increased access to and understanding of powerful analytical tools and real-world, real-time validated patient data that should help to streamline both the cost and time to market for drug development. The ability to strategically target appropriate potential trial subjects based on that analysis — which can dramatically reduce trial length by shortening the time and expense to recruit patients — as well as the number of patients needed to provide statistically significant data, can and will be a game changer in the industry. Unfortunately, the regulatory requirements are lagging significantly behind available technologies for streamlining research and, instead of increasing the effectiveness of the billions of dollars spent on research each year by the industry, the FDA has increased the length and number of trials per use case as well as the number of procedures per patient necessary to bring a drug to market. So, in an era of exploding new possibilities for remarkable new therapies and the understanding of how data can be captured and understood more quickly to provide actionable insights earlier in the process, drug approvals have taken much longer and have occurred with greatly reduced frequency over the past 15 years or so. Adding insult to injury is that only about one in five drugs that a pharmaceutical or biotech company chooses to invest in and enter into the multimillion-dollar, multiyear process of regulatory approval actually recoups the costs of development. The end result? Fewer drug choices for prescribers and patients, and higher costs due to decreased competition. Not to mention, less chance of truly game-changing therapies even getting into the pipeline because of the immense regulatory and financial burden and risk associated with groundbreaking research. If a new FDA commissioner, with the support of a strong secretary of HHS, can commit to unraveling unnecessarily burdensome regulations and requirements, and look at the future regulatory landscape with an eye toward what is and what is to come more than, “We do it this way because this is the way it’s always been done,” that will be an excellent first step.

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About the author: Kelly Moore has sold clinical research and development software solutions to the pharmaceutical and biotech industries for the past several years. She previously spent 20 years in business development for the pharmaceutical research and development field, focusing on multi-study, global clinical programs. She has a bachelor of arts degree in economics from The University of Texas. Any opinions expressed in this article are strictly her own and are not meant to represent those of any employer, client, or organization with whom she is affiliated.

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Why Aren’t You Talking About Your Company Culture? By: Alex Charfen

are general tactics that can help any leader improve the engagement of their team and get leveraged results. Client-Centric Mission The single most important element driving your team’s engagement is an established Client-Centric Mission. This mission should reinforce items like: ● ● ● ●

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

optimists, these numbers provide an incredible opportunity to gain an unfair advantage over the competition. If we as entrepreneurs could flip those numbers around and build a team of actively engaged individuals with a shared vision and sense of purpose, we could all move forward faster toward our greatest contribution. But creating a cohesive, motivated team isn’t always easy. There are a multitude of opinions on the best way to do it and thousands of online articles offering up different ideas and solutions. All entrepreneurs are unique, and everyone has different ways of inspiring their team. But in my 20 years of helping entrepreneurs and Fortune 500 companies grow and expand, I’ve found the fastest way to create an inspired yet stable workforce is to have a strong, established company culture as the backbone of the organization. I’ve also discovered there

When people have a clear picture of where they’re going, why they’re going there and how to get there, things fall into place more easily. There’s less ambiguity around team roles, and an individual’s sense of purpose increases as they’re able to actually see the impact of their work. No one enjoys busy work. The clearer you make your Client-Centric Mission, the more energy and intention your team can put into their work. Collaborative Creativity Few people enjoy blindly following orders or being a pawn in someone else’s scheme. So I’ve found that one of the best ways to create engagement is to make sure your team is a part of the creative process. Whether you’re building a new system, brainstorming content or coming up with new strategies, try setting an outcome for your team to figure out. By allowing them to contribute their thoughts and opinions, and help develop a solution or plan of action, you give them a stake in the outcomes of that project. When people are brought in at the beginning of a new undertaking, they carry more responsibility and feel a sense of ownership for successful delivery. They’ll care more about success because they have a personal investment in it.

PRESSMASTER/BIGSTOCK.COM

very entrepreneur I’ve met wants to go faster. Whether that means faster processes, faster content creation or faster sales, people like us are hard-wired to chase momentum. But in my experience, entrepreneurs often overlook their single biggest weapon in increasing the speed of growth: their company’s culture. One of the greatest challenges CEOs, managers and business owners face is the motivation and engagement of their team members. A 2015 study found that only 32 percent of employees were truly engaged in their job, 50.8 percent of employees were not engaged and 17.2 percent were actively disengaged. These numbers are disturbing for entrepreneurs looking to build a solid team around them and usually reflect the lack of a strong company culture. But for the

Who your company wants to help. How you’re going to help them. The changes you want to make in the world. How success will be measured.

Daily Huddle The daily huddle is a quick meeting held every morning to provide the team with a chance to get on the same page, set an intention for the day and understand company performance. It also gives the team a chance to acknowledge the contribution of unique team members. In my company, a section of the daily huddle is called “Who Got Caught Being Awesome?” By encouraging all team members to point out something valuable a fellow team member did the day before, you create a positive environment that rewards performance. When you acknowledge a team member in the daily huddle, that recognition is leveraged because it’s done in front of their peers. Praise is always magnified when shared in front of a crowd, even with only a few people. So use this meeting as a chance to celebrate wins and focus on critical issues that the company needs to address.

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Culture Meetings Your culture won’t take hold or grow unless you talk about it often. Holding monthly or quarterly culture meetings (depending on how fast your company is growing) allows you to discuss the foundations of your culture and what you’re trying to build. It also allows team members to express what the company culture means to them and any ways they think it can be improved. These

One of the greatest challenges CEOs, managers and business owners face is the motivation and engagement of their team members meetings are especially helpful when leadership takes the time to tell personal stories about how the company was founded and what it means to them. The more teams understand leadership, the greater their connection to the company and its direction. I’ve seen these small habits and perspective shifts change entire companies. When you can provide a clear path for your team and show them how their role contributes to the company’s overall mission, individual talents become leveraged, momentum increases and the work environment is more enjoyable. If you’re looking for the quickest way to speed up your company’s growth, look to the people around you. Figure out how you can improve their careers, and your company will improve along with them.

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5600 Broadway Avenue • San Antonio, TX 78209 KingRealtors.com tabitha@kingrealtors.com MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Four Ways to Embrace and Excel in the Mobile Era By: Warren Edwards, Enaxis Consulting LP the way their organizations work to accommodate the market demand. Companies are optimizing websites for mobility, developing apps on codeless platforms, and designing internal websites to mimic the familiar Google Play and the Apple stores. These innovations can increase data availability and better meet the needs of their redefined, mobile customer. Recently, ESPN implemented Apple’s single sign-on feature - users have to sign on to only one device to enable all of the features available on its app. When an organization understands the pain points of its customer, it is better enabled to provide for their needs and ultimately, drive brand loyalty. Four Ways an Organization Can Prepare for a UserDriven Market Shift

connectivity and stability. Gartner recently predicted that by 2018, more than 50 percent of users will use a tablet or smartphone first for all online activities. The growing availability of connections and mobility of devices are leading many organizations to redefine and reimagine how they work and market. How Are Businesses Tackling Innovation? Many organizations are refocusing, both internally and externally, to adjust their points of interaction with customers. Some have gone as far as redefining

1. Define and monitor group culture. End-user device use should be determined by the way teams work and interact. Depending on factors such as team structure and communication needs, mobile devices, tablets, two-in-one devices, and even wearable technology may have a place in your business. 2. Road map internal app development with mobility and accessibility in mind. SharePoint sites,

application stores and collaborative tools can mimic the look and feel of the universally familiar App Store, which allows for ease of operation and improved employee engagement. 3. Reimagine the way business opportunities are defined. Sales forces, field technicians, security teams, engineers, human resources and many other groups can benefit from live data, instant analytics and even wearable technology. Define new business opportunities based on the potential application of these innovations. 4. Optimize websites for multiple devices. Many websites still aren’t optimized for mobile users. An organization’s website should be designed to account for different screen sizes and load times of different technologies. Review the site design, structure and page speed to ensure the site enhances internal productivity and provides a user-friendly portal to your business. In an age when information is endless and instantly available, organizations would be remiss not to explore the possibilities of an end-user device strategy. As end-user device limitations become a thing of the past, organizations must prepare for the shift.

About the author: Warren Edwards is a Senior Technical Manager and Enterprise Architect with over 16 years of experience in all phases of an IT infrastructure. He has consulted with clients on strategic planning and process improvements in server, storage and network infrastructur; data center and cloud service migrations; mobility; IT service delivery; security; governance; and networking.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

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aiting on information is a thing of the past. In this age of instant knowledge, real-time data grants immediate information, whenever and wherever you want it. In today’s agile markets, problems are solved faster, questions are answered more quickly, and data can be accessed at the click of a button using rapidly expanding connectivity options. Unlimited access to mobile networks and the proliferation of emerging technology allow end users to be productive on an expansive and evolving number of platforms. While convenience, portability and user interface have always been the drivers of mobile technology, lack of applications, power and connectivity have slowed the adoption of cutting-edge technologies within businesses. However, industry trends indicate that change is on the horizon, and these limitations may finally be behind us. Increasing the computing power of tablets and smartphones, the stabilization of two-in-one and transformational hybrid devices, and the emergence of wearable technology have driven adoption and growth of applications within these on-demand platforms. Mobile devices are rapidly becoming the dominant computing platform and go-to device for end users, while desktops and laptops are becoming obsolete, due to their limitations in terms of load times,

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Texas, Diversification and Human Capital By: Thomas Tunstall, Ph.D.

portion of the state’s $1.6 trillion economy. Agricultural exports outside the U.S. totaled $6.5 billion in 2012, which placed Texas sixth in the U.S. in dollar terms. Leading international exports from Texas were cotton and cottonseed ($1.6 billion) and beef ($855 million). Texas produces more cattle, cotton, hay, sheep, goats and mohair than any other state. There are over 248,000 farms and ranches in Texas, more than any other state. Rural land area in Texas is considerable, making up 84 percent totaling 142 million acres. Rural Texas is home to 12 percent of the state’s population. Annually, food and fiber production in Texas contributes over $100 billion in economic impact. Recent changes by the state legislature may now serve to increase agricultural margins when those products are used as inputs for spirits manufacturers. Industry representatives report that agricultural products are typically sold at a premium when the buyers are alcohol beverage producers. Since 2008, Texas has gone from eight distillers licensed to over 90 in 2015. Brewery and brewpub licenses have increased from two in 2005 to 156 in 2014. The technology industry in Texas has undergone a significant transformation in recent years as well. Certainly Texas has had its share of high-tech startups over the past few decades, perhaps most notably Texas Instruments, but also Dell, and the former EDS and Compaq, both of which were acquired by Hewlett-Packard. Another noteworthy example is Rackspace, the managed cloud computing company based in San Antonio that was recently taken private. More recent cutting-edge startups that have grown significantly continue to be located in the Silicon Valley area. These companies include Facebook, Apple, Google, Uber, Dropbox and Yelp. In this regard,

In the years ahead, success will depend on whether Texas can continue to develop its capital — human as well as natural — in order to expand on its leadership role in the U.S. and around the world

Austin, Texas, has become a significant satellite location for many California-based firms, but the metro area still boasts only relatively small homegrown startups such as HomeAway (acquired by Expedia in 2015) and RetailMeNot, both reporting less than half a billion dollars in revenue in 2014. For Texas, this means that the future success of high tech will require the ability to generate and grow successful startups on a similar scale to that of Silicon Valley. Hightech job creation in the state will be ever more dependent on software and design creativity — and that innovation will, in turn, be dependent on developing human capital by improving the educational infrastructure in the state — at all levels, in both urban and rural areas. By 2050, one in 10 U.S. citizens will live in Texas. The state plays an outsize role both nationally and globally. Yet, as the saying goes, past performance is no guarantee of future results. In the years ahead, success will depend on whether Texas can continue to develop its capital — human as well as natural — in order to expand on its leadership role in the U.S. and around the world.

About the author: Thomas Tunstall, Ph.D., is the senior research director at the Institute for Economic Development at The University of Texas at San Antonio. He was the principal investigator for numerous economic and community development studies. He has published peer-reviewed articles on shale oil and gas, and has written op-ed articles on the topic for The Wall Street Journal. Dr. Tunstall 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.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

STEVE OEHLENSCHLAGER/BIGSTOCK.COM

he economy of Texas is highly diverse and complex, and commands a global reach in terms of trade partners. Demographically, Texas is well-positioned with a population two to four years younger than the rest of the U.S. on average. With a diverse economy, and a diverse, growing and youthful population, how best should policymakers leverage those strengths? Texas companies export far more than any other state at $251 billion annually. The next closest competitor is California, with $165 billion in annual exports. Texas is also the No. 1 trading partner with Mexico, generating over $92 billion in export revenues annually. The top export industries from Texas to Mexico, as well as the rest of its trading partners overall are computer and electronic equipment, and natural gas and refined petroleum products. While the downturn in both oil and natural gas prices has depressed economic activity in many parts of the state, particularly rural areas, export and manufacturing is still driving economic activity in port cities like Corpus Christi and Houston. Because of the low cost of natural gas, Corpus Christi has attracted billions of dollars in manufacturing projects that use natural gas as a feedstock. Export of crude oil and liquified natural gas (LNG) is driving additional economic activity, despite the downturn in energy markets. It’s worth noting that the energy portfolio of Texas is diversified and includes a substantial amount of wind-generation capacity. For example, many people are unaware that Texas produces the most wind energy of any state by far, generating 39.4 million megawatt hours (MWh) in 2014. Iowa comes in a distant second at 16.3 million MWh, followed by California, with 13.8 million MWh. Agriculture continues to drive a significant

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MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

BUSINESS

Adapt to Innovate: How Volunteering Shapes My Life and Career By: Courtney Hoyt

This is how she pays tribute to her son. My job is to connect wonderful people like her to our patients, many of whom are depressed, financially stressed and in physical pain. One of the most important aspects of serving in a volunteer role is that it constantly evolves to meet the needs of others. If our roles do not adapt to innovate, they will become less effective and less successful. As a volunteer manager, both for the hospital and for the Junior League of Houston, cultural competency is a huge factor in my relationship with the volunteers I serve. It helps me become a more responsive and helpful manager, and it’s something I must model and teach them as they volunteer in situations that may be unfamiliar with people who may be different from themselves. Through both a professional and personal viewpoint, I know and stand behind the

positive effects community service can have on those in need. I see the tangible benefits of others’ service every single day — the time our volunteers contribute, as well as the in-kind donations, make our patients’ lives better in very real ways. I feel compelled to share what time and energy I have in support of wonderful causes. Not just in my job, but in my personal life serving at the Junior League, I have been thankful to have the opportunity to fulfill that desire and serve the Houston community.

One of the most important aspects of serving in a volunteer role is that it constantly evolves to meet the needs of others

About the author: Courtney Hoyt is the Manager of Volunteer Services at Ben Taub Hospital and served as the Holocaust Museum Houston’s Chairman from 2013 to 2014. She holds a bachelor’s degree in English from The University of Texas at Austin. Hoyt has been a member of the Junior League since 2010 and currently serves on the board of directors for the Junior League of Houston. Beginning in June 2017, Hoyt will serve as the Community Vice President for the Junior League.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

MONKEYBUSINESSIMAGES/BIGSTOCK.COM

s a young girl, I never realized my career path would lead to volunteer management in a hospital — but I’m so glad that it did. Volunteerism has been a common thread that has linked my past to my present. From a young age, I learned the importance of giving my time and resources to others, and earned the international baccalaureate diploma from Lamar High School, which required 150 hours of community service. This continued into my collegiate years and took many forms, including my sorority’s philanthropy, and became second nature. As Manager of Volunteer Services at Ben Taub Hospital in Houston, I oversee an average of 350 truly incredible volunteers a year, who are all from different walks of life. We see teenagers, young professionals and even those who just retired who are looking to give back to their community. My daily tasks include recruiting, building programs and keeping up with the everchanging day-to-day needs of the volunteers who assist the staff and patients at the hospital. I have found a career that is a passion, and I have never had one boring day — seriously, never! There is always a new challenge, and, most importantly, I have a wonderful group of colleagues with whom I am honored to work. Connecting with people in ways I never thought possible has been the best part of my work. For example, a mother of one of our patients signed up a few months after her son passed. This particular volunteer decided to channel her grief into helping others, and now she spends one day a week visiting patients, providing that same care and happiness that volunteers brought her own son. She is always ready to bring a smile to our patients’ faces and brighten their day with cheerful conversation and maternal concern.

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COMMUNITY

National Safe Digging Month

n Texas, the month of April means the anniversary of the Battle of San Jacinto in 1836. Gen. Sam Houston defeated Gen. Santa Anna in a brief fight on land that is now part of southeastern Harris County, securing Texas’ status as an independent republic. April is also known for taxes being due and as the month in which the Titanic sank, though there is no direct evidence linking the two. More importantly, April is also National Safe Digging Month — aimed at protecting our nation’s underground infrastructure from accidental pipeline and cable breaks through careless digging or drilling. The Common Ground Alliance (CGA), a stakeholderrun organization dedicated to protecting underground utility lines and the people who dig near them, has recognized April as National Safe Digging Month since 2009. At its heart is the use of the 811 telephone number. The Federal Communications Commission designated 811 in March 2005 as a national number used to reach organizations whose job it is to process locations for underground utilities prior to excavation. Just as 911 is used nationwide for emergencies, 811 connects callers to the nearest 811 center, no matter the state. The call to 811 is free, as is the subsequent underground utility locating service — and in Texas it’s also the law, specifically the Texas One-Call law, which can be found in the Utilities Code, Title 5, Chapter 251. With few

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

exceptions, any digging below a depth of 16 inches in Texas using mechanical equipment requires a call to 811 first. Calling 811 prevents injuries, property damage, repair costs and, in the case of oil or gas lines being hit, hefty fines from the Railroad Commission of Texas. In Texas, the nonprofit 811 call center is Texas811, serving the state for over 30 years. In 2016, Texas811 processed more than 3 million individual locate requests. Open 24 hours, seven days a week, the center works with its more than 1,600 members — many of whom are oil and gas companies — to protect underground Texas through a call to 811 prior to digging or drilling. A Las Vegas gambler would shy away from the odds of not hitting an underground line in Texas: The Railroad Commission estimates there are over 439,000 miles of pipeline in Texas, the largest amount in the nation. That gives Texas one-sixth of the more than 20 million miles of underground utilities in the nation. According to data compiled by the CGA, those nationwide 20 million-plus miles equal more than one football field’s length in buried utilities for every single person in the United States. A breakdown of the Texas oil and gas pipelines by the Railroad Commission shows over 148,000 miles of natural gas and liquified petroleum gas distribution pipe, over 66,000 miles of hazardous liquid and natural gas transmission lines, over 175,000 miles of intrastate production and gathering lines originating

PHOTOS COURTESY OF TEXAS811

Special to SHALE

from lease lines and an additional 45,000-plus miles in interstate lines in the state. With Texas811 taking more than 3 million locate requests in 2016, one might think that underground is pretty safe. However, for calendar year 2016, there were 9,064 incidents reported to the Railroad Commission of Texas through use of the Texas Damage Reporting Form (TDRF) online system. That works out to 3.03 damages per 1,000 locates, according to Railroad Commission numbers. According to data collected by the CGA, an underground utility line is damaged once every six minutes nationwide because there was no call made to 811 for a line locate before excavation — but a simple call to 811 reduces the likelihood of damage to 1 percent. When you call 811, the locate center takes your proposed dig information and in turn contacts utility and pipeline owners in the immediate area of the need to mark their line location with paint or flags. Forty-eight hours (excluding weekends and holidays, unless it is an emergency situation) are allowed for this process to take place with the clock starting as soon as you end the voice call or finish an electronic submission over the Texas811 portal on its website. For example, a call placed at 2 p.m. on Friday would have until 2 p.m. on Tuesday to be located. A call placed at 2 p.m. Monday would have until 2 p.m. Wednesday. While a big push is made in April’s National Safe Digging Month to educate the public on the need to call 811, initiatives continue throughout the year. One of the largest is the Damage Prevention Councils of Texas (DPC). A fully incorporated 501(c)(3), it is dedicated to underground utility damage

prevention, along with the promotion of the “811 — Call Before You Dig” message and the Common Ground Alliance best practices. Currently, there are 23 regional councils encompassing the state, falling roughly along Texas Department of Transportation district lines. A DPC is typically comprised of construction contractors, utility operators, gathering and transmission pipeline operators, municipalities, utility locators, engineering firms, TxDOT and other associated industry stakeholders, with Texas811 serving in a liaison capacity. Damage Prevention Councils meet on a regular basis throughout Texas. DPC meetings provide an optimal forum where stakeholders can share information and perspectives, and then work together on all

aspects of damage prevention issues. In promoting a spirit of shared responsibility, regional DPCs welcome all stakeholders who would like to be a part of the damage prevention solution. Additional safety education is provided by Texas811, DPC, Texas A&M Engineering Extension Service (TEEX) and Enertech. This partnership provides mock line strike, damage prevention and pipeline response liaison programs that, like DPC meetings, are free to attend. TEEX will instruct the free pipeline response training class covering local information about pipelines, products, product properties, response information and local pipeline operators’ contact information. Attendees will see and hear what happens when an excavation crew accidentally ruptures a pipeline. This demonstration is followed up with local fire, police and pipeline operators working together in a unified command to deal with the incident. Texas811 will also be instructing free damage prevention training classes covering pipelines, products, product properties, state one-call laws, safe digging practices and local pipeline operators’ contact information. As the oil industry goes, so goes the nation. Help make this April the best National Safe Digging Month ever by promoting the need to call 811 to know what’s below.

For more information on safe digging and 811, visit dpcoftexas.org, texas811.org, commongroundalliance.com and diggingtexas811.com.

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

Vital Communities Concept Meets Healthy Lifestyle Demand Special to SHALE

ealthy living is more than just a New Year’s resolution; it’s a year-round lifestyle. For thousands of homebuyers across the U.S., total wellness has become a way of life, and typical fitness amenities alone don’t make the cut when looking for a new community. With an everincreasing number of homebuyers actively seeking opportunities to put down roots in communities that embrace a healthy-living lifestyle, Freehold Communities created the Vital Communities™ concept. Texas has three such master-planned residential developments: Headwaters in Dripping Springs and Orchard Ridge in Liberty Hill, both near Austin, as well as Homestead in Schertz and Cibolo, part of San Antonio’s metro area.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

OFFERINGS AT THE ACTIVITY CENTER AT HEADWATERS — RESORT-STYLE POOL, PLAY AREAS, OUTDOOR PAVILION, GRILLS — WERE DESIGNED TO ENCOURAGE OUTDOOR LIVING AND RECREATION, STAPLES OF THE FREEHOLD COMMUNITIES’ APPROACH TO HEALTHY LIVING.

Vital Communities vs. Traditional Amenities “It’s not just about amenities,” says Suzanne Maddalon, Vice President of Marketing for Freehold Communities. “It’s about empowering the lifestyle and creating a community culture of health and wellness.” From first-timers to those looking to trade up or trade down, homebuyers across generations are moving away from the traditional golf course community and are in search of master-planned communities that offer a healthy living approach that brings together nature, the convenience of recreational activities and the opportunity to share it with a neighbor. The Vital Communities™ plan makes healthy living second nature with diverse outdoor recreation-based activities, such as miles of nature trails, open spaces, neighborhood parks, playgrounds and resort-style pools. In addition, amenities are developed that are unique to each community’s environmental qualities. For example, the Headwaters property has 723 acres of neighborhood open space, eight miles of trails and a stargazing park for residents to enjoy. In addition to providing spaces that cultivate neighbors getting to know one another, Vital Communities™ include organized events and state-of-the-art fitness centers that are well-equipped with exercise rooms and on-site fitness classes. Plus, Headwaters, Homestead and Orchard Ridge

PHOTOS COURTESY OF VITAL COMMUNITIES

What the Research Says According to Reach Advisors, a New York-based research firm, concentration on a more active lifestyle started with the emphasis on outdoor recreation within the baby boomer generation. Then, Title IX increased opportunities for younger women to pursue athletics, and those same women incorporated fitness into their lives after graduation. “Today, younger women are as likely, or more likely, than younger men to be active in fitness and outdoor recreation,” Reach Advisors President James Chung says. “This is a fundamental and accelerating shift, not a short-lived fad.” According to Chung, while the average American has been slow to adopt the idea of exercising three or more times a week, the number pursuing healthy lifestyles continues to grow, especially among those with higher education. That group also reported a desire to pursue their favorite fitness passion, have ready access to healthy food and connect with like-minded people.

CHARACTERISTIC OF THE VITAL COMMUNITIES™ CONCEPT, HOMESTEAD’S UNIQUE ARCHITECTURAL DESIGN RESPECTS THE LAND AND LOCALITY, REFLECTING THE LOOK OF THE FARMS AND HOMESTEADS THAT ONCE DOTTED THIS AREA AND SIMULTANEOUSLY PROVIDING CONTEMPORARY FLOOR PLANS AND DETAILS FOR A MODERN LIFESTYLE.

WHILE FITNESS AND OUTDOOR ACTIVITIES ABOUND THROUGHOUT VITAL COMMUNITIES™, BUILDING STANDARDS FOR FREEHOLD COMMUNITIES INCLUDE DISTINCTIVE HOME DESIGNS WITH THOROUGHLY MODERN FLOOR PLANS, INTERIOR DESIGNS AND FEATURES, WHILE TAKING ADVANTAGE OF THE NATURAL BEAUTY OF THE NEIGHBORHOOD.

have a Lifestyle Director who plans year-round events for residents that promote physical activities like hiking, biking and yoga. Other goals of the Vital Communities™ concept include built-in connectivity — Wi-Fi at no extra charge and other tools that bridge the gap between neighbor and community — and environmental stewardship that preserves natural resources and makes the most of land before, during and after communities are built. Headwaters Located 30 minutes southwest of downtown Austin, home construction is underway at Headwaters by David Weekley Homes, Drees Homes and Trendmaker Homes.LiveHeadwaters. com

CREATING GATHERING PLACES AND OPPORTUNITIES TO CONNECT WITH NEIGHBORS ARE CORNERSTONES TO EVERY MASTER-PLAN DEVELOPMENT BY FREEHOLD COMMUNITIES, RECOGNIZING THAT COMMUNITY ENGAGEMENT IS AN IMPORTANT PART OF HEALTHY LIVING AND HIGHLY SOUGHT AFTER. PICTURED HERE ARE THE COMMUNITY GARDENS AT ORCHARD RIDGE.

The Vital Communities™ plan makes healthy living second nature with diverse outdoor recreation-based activities, such as miles of nature trails, open spaces, neighborhood parks, playgrounds and resort-style pools

Homestead Nestled between San Antonio and Austin, just south of New Braunfels, Homestead builders include CastleRock Communities, Pulte Homes and Scott Felder Homes. Model homes will be open by spring 2017. LiveHomesteadTx.com Orchard Ridge About 15 miles from northwest Austin, Orchard Ridge is now selling homes built by Dream Finders Homes and Buffington Homes. LiveOrchardRidge.com

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

No Roads? No Problem. ATV ADVENTURE TAKES FLIGHT Special to SHALE

Man Card-Approved To see a SkyRunner in person is to stand, mouth hanging open, asking yourself, “When did Transformers become real?” The body construction uses carbon fiber body panels and seamless, air-hardened, heat-treated steel tubing to achieve immense strength but with less weight. The open architecture — think exoskeleton — delivers a stripped-back driving experience that also helps eliminate unnecessary structural weight. SkyRunner’s inverted double wishbone suspension is the perfect partner to its inherent chassis control, which helps to handle either rough roads or sharp corners equally well. In addition, an elevated midline positioning, heavy-duty shocks and responsive brakes on the SkyRunner’s smartly designed suspension

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

PHOTOS COURTESY OF SKYRUNNER

nce upon a time, we imagined flying cars. Think The Jetsons and Back to the Future. While we haven’t reached that point (yet), there’s a glimpse of the future on the market now: a flying all-terrain vehicle (ATV). The brainchild of CEO Stewart Hamel, the SkyRunner travels by land and air, taking the driver and passenger virtually anywhere. Because sometimes where you need to go doesn’t have roads. The current SkyRunner model evolved from an original prototype that first appeared in 2008. The design and styling have changed based on testing and use-case improvements, with a strong commitment to safety and efficiency. The fundamental appeal is the adrenaline-fueled sense of adventure SkyRunner evokes.

system ensure that you can traverse rugged terrain without incident and as comfortably as possible. Inside, the sleek design of SkyRunner’s dash eliminates distracting dials and switches. All of the focus is on the controls needed to operate the vehicle smoothly on land or in the air. Plus, the systems are smartly divided on either side of the steering column, with the air systems on the left and the ground systems on the right. Power Play SkyRunner is equipped with dual power systems, one for ground transport and one for air. On the ground, the ProStar 1000’s powerful, ultra-smooth engine provides a range of 240 miles and a maximum speed of 70 mph. In the air, the Rotax 914 UL — the same engine used in the U.S. Air Force’s MQ-1B Predator — features 115 horsepower that when paired with ram-air parafoil wing technology gives the SkyRunner a flight range of 120 miles and a maximum airspeed of 40 mph. When in flight, the SkyRunner is remarkably easy to operate. It has only two flight controls — left and right steering via hand-held toggles — and a throttle pedal to climb or descend. This intuitive flight system makes SkyRunner one of the easiest and safest forms of flight to master. While a sport pilot certificate is required, it takes only 12 hours of instruction to complete. Sport pilots can carry a passenger and operate in certain types of controlled airspace, but only fly aircraft lighter than average privatepiloted aircraft. Without a doubt, the SkyRunner heartily embraces serious adventure. However, SkyRunner was also designed with some very serious operators in mind such as upstream and midstream oil and gas producers, emergency medical teams, searchand-rescue teams, ranchers, U.S. border control and other public safety agencies working in remote and rugged terrain.

SkyRunner is equipped with dual power systems, one for ground transport and one for air

Try It on for Size The SkyRunner is on the market and available for purchase through a specialized dealer network. The best way to appreciate the innovation and adventure potential of the SkyRunner is to experience it firsthand.

For more information, visit www.flyskyrunner.com. To find a dealer near you, contact info@flyskyrunner.com or 318-219-5722.

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

A Destination at Home

ach issue I like to make a special visit to a location such as a restaurant, hotel, entertainment venue, etc. to share with readers what my thoughts are on the chosen location. This month, I was very excited to visit our friends at Fogo de Chão to have a proper meal there. I’ll admit, it was my first time there for a full meal. I’d had light appetizers at an event there before, but I didn’t get the full experience. And, boy, have I been missing out! So Kym Bolado (Publisher of SHALE) and I went to the downtown San Antonio location to see what I’ve been missing out on. My trip started out with a tour of the restaurant, including the private event spaces. Oddly enough, at those events I mentioned, I never had the time to focus on the walls. I guess I was too busy shaking hands and meeting new people. But on this trip I was able to take my time and studying the design and artwork. I was happy to see that the restaurant kept the Brazilian culture throughout many of their design choices. Being right on the River Walk, the location is great for visitors to the city to come over from the Marriott or Grand Hyatt hotels. The location is also just a stone’s throw from Rivercenter Mall and the newly constructed Margaritaville restaurant. Fogo de Chão was open and bright. I looked around, surprised. Prior to my visit to Fogo de Chao, most of my experiences going to steakhouses consisted of

candlelit rooms with quiet tables. However, lunchtime at Fogo was lively with light and discussion. This wasn’t your typical quiet steakhouse. My first order of business was a drink. I had heard they had this amazing cocktail that is a cross between a mojito and a margarita. The Caipirinha consists of muddled Fogo premium-aged cachaça (Brazil’s most popular spirit), fresh limes and cane sugar. The drink is a little sweet and a little sour and packs a big punch! It’s really good! For an appetizer, Kym and I split an impressive order of shrimp cocktail. The shrimp were enormous and so fresh! The order came with eight large shrimp served on a bed of ice with lemons and cocktail sauce. The sauce was perfectly matched to embellish, not mask, the fresh flavor of the shrimp. Given to us when we sat down, there were little cardboard discs left on the table for each of us. The coaster-looking discs signaled to the staff when we were ready to be served meat. Kym and I flipped our coins from red to green and the meat started to make its way to our plates. I am a New York strip steak kind of girl. Sometimes I venture out but for the most part I know when I’m having steak I want the strip. And at most steakhouses you order your sides separate from your meat and share with your table family-style. My experience at Fogo was nothing like this. I tried every kind of meat they had. That’s right, 13 different

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

PHOTOS COURTESY OF FOGO DE CHÃO

By: Lauren Guerra

meats including lamb, beef, pork and chicken. By the time I left I wasn’t sure if it was the Caipirinha or the meat that had me feeling tipsy. I visited the market table, which is basically a salad bar but with so much more than salad. The market table offers options that are either Brazilian or safer, less adventurous American dishes. And once I was seated again, our waiter brought out a plate of mashed potatoes, fried cornmeal and fried plantains. The mashed potatoes were exceptional! I couldn’t get enough and the fried plantains seemed more like a delicious dessert than a side dish. With all of the side options available between the table offering and the market table, there is something for everyone to enjoy. The meats were brought by the table on huge skewer-like poles by knowledgeable staff wearing Brazilian gaucho pants. Of the many types meats I tried, I thought I would mention a few that stuck out to me that day. First, the filet mignon. The servers brought over the filet mignon both with and without bacon. Both were truly delectable. Tender, flavorful and juicy, this cut was my favorite of the day. I also enjoyed the garlic steak — it was tender and the garlic really added to the natural flavor of the meat. The pork tenderloin with Parmesan cheese was to die for. It had so much flavor in each bite. Finally the bacon-wrapped chicken, a classic favorite, was delicious as well. I tried very hard to save room for dessert. It wasn’t easy considering the sheer amount of side and meat options I tried. I was tempted to go with a common dish, like chocolate cake or cheesecake, but I figured when in Rome (or Brazil, rather). So we shared two Brazilian desserts, a caramelized pineapple dish served a la mode and drizzled with caramel and South American flan. I’m not a huge flan fan normally, but this had to be the best flan I’ve ever tasted. It had a different texture than other versions. It was more custard-like, almost like crème brûlée without the crispy top. The pineapple dessert, however, was like nothing I’d ever seen before. The caramelized sugar on top of the tangy pineapple was divine. The pineapple was still warm when it came to the table so the ice cream was a really nice touch. I left the restaurant with a full stomach, but not uncomfortably full. I love that with this restaurant you can choose exactly how much food you want. You can try everything, like I did, or only try a few things. You can get multiple pieces of the same kind of meat if you really like it. The options at this restaurant are endless. And the staff makes you feel welcomed. I saw them conversing with each table, discussing the cut of meat, the seasonings, how it’s prepared, etc. Each of them was really a meat connoisseur I will definitely be returning to Fogo de Chão for happy hour and dinner. I had a great time learning about the Brazilian culture and cuisine. If you can’t make it to Brazil, Fogo de Chão is a great option without having the cost of airfare!

For more information about Fogo de Chão, including their menu and brand-new happy hour options, visit www.fogodechao.com.

MARCH/APRIL 2017  SHALE OIL & GAS BUSINESS MAGAZINE

LIFESTYLE

Make Plans to Celebrate National Nutrition Month Special to SHALE

Lunch break

Healthy snacking

Pack a lunch

At times it feels like 24 hours in the day are somehow not enough. Now we can’t change the fact that there are indeed only 24 hours, but we can change the way we spend them. For example, if you have an hour for your lunch break, try spending 30 minutes eating and 30 minutes doing some physical activity. Try going for a walk outside around the building and create a step challenge with some of your colleagues. You’ll feel much more awake after your walk, which in turn will lead to a more productive afternoon. If you’re not able to walk outside, try doing some exercises at your desk, such as tricep dips, lunges or weighted arm raises.

Many times we get so caught up with work without even realizing that we missed our lunch break. In cases like this, it’s a good idea to keep some healthy snacks at your desk to avoid mindlessly eating high-calorie foods or being tempted by candy on someone’s desk. For example, you could stock your desk with H-E-B PassioNut Bars. These bars come in a variety of delicious, satisfying flavors that are sure to keep you full with the fiber and protein they contain. If you have a refrigerator at work, try keeping H-E-B Ready Fresh Go packs, which are great for when you need a quick snack.

Oftentimes, we end up blowing our calorie budget when we go out to eat for fast food or at a nice restaurant. To avoid situations like this, try setting a goal for bringing your lunch a few days out of the week. Doing so may prevent you from overindulging in appetizers or high-calorie drinks. If you can’t avoid going out for a lunch meeting, be sure you’re still setting yourself up to be successful. This means making sure you are not starving when you reach the restaurant. This could cause you to overindulge and it makes saying no that much harder. Try having a protein- or fiber-rich snack before you go to lunch so that you’re able to feel satisfied after eating a smaller portion — like a serving of pistachios or an H-E-B Cheese Stick.

Even though March is our only designated National Nutrition Month, we can make it a yearlong event by making healthier choices every single day.

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For more healthy snack and meal ideas, visit www.HEB.com.

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WAVEBREAK MEDIA LTD/BIGSTOCK.COM, JULIA_N/ BIGSTOCK.COM, NADIANB/ BIGSTOCK.COM

IT’S THAT TIME OF THE YEAR when the weather is becoming more and more beautiful, the flowers are blooming and the days are getting longer. It’s the perfect time to take advantage of all the new beginnings happening in nature and implement a few new changes in our day-to-day lives. Every year in March, we celebrate National Nutrition Month. It’s a whole month designated to developing healthier habits for ourselves, friends and family. Many of us may spend more time at work than at home. If this is the case for you, it may be a good idea to bring some healthier habits into the workplace.

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Citizens for LNG & Energy Day 2017 Texas Railroad Commissioner David Porter; John LaRue, Port of Corpus Christi Port Director; Matt Barr, Director of Government and Public Affairs at Cheniere Energy; Judge Jim Huff, County Judge and President of Future of the Region South Texas; and Haley Curry, Vice President of External Affairs at STEER. *Energy Day is a registered trademark of Consumer Energy Alliance

PHOTOS COURTESY OF SHALE

The Texas Energy Advocates Coalition (TEAC) hosted Citizens for LNG & Energy Day* at the Texas Capitol in Austin on Feb. 22. TEAC members gathered at the Capitol to learn about legislative issues concerning the energy industry and took the opportunity to meet with legislators to share the importance of promoting a healthy energy market. Speakers at the event included Christi Craddick, Chairman of the Railroad Commission of Texas; Sen. Carlos Uresti; former

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SCENE

SHALE Magazine teamed up with Alphabet Energy to host a Lunch and Learn event at the Pleasanton Country Club just outside San Antonio on Jan. 27. Guests were treated to a delicious lunch and an informational presentation on energy topics. Following the discussion, guests were given an opportunity to play a round of golf with prizes for participation.

PHOTOS COURTESY OF SHALE

Lunch and Learn with Alphabet Energy

SHALE attended the NAPE Summit in Houston Feb. 15–17 at the George R. Brown Convention Center. The event hosted a myriad of companies interested in connecting and networking in the upstream oil and gas business. The annual three-day event offered over 14 acres of exhibition space and included breakout sessions featuring respected and renowned speakers and vendors. This is a must-attend event if you’re looking to connect with companies in the upstream oil and gas industry.

SHALE OIL & GAS BUSINESS MAGAZINE  MARCH/APRIL 2017

PHOTOS BY ROBB COHEN PHOTOGRAPHY

2017 NAPE Summit

OIL & GAS BUSINESS MAGAZINE

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