SHALE Magazine March/April 2019 by SHALE Oil & Gas Business Magazine

SHALE MAGAZINE

MAR/APR 2019

ENERGY AT THE FOREFRONT OF FEDERAL POLICY AGENDA

AI & MACHINE LEARNING: THE NEXT TRANSFORMATION FOR OIL & GAS

HOW THE RAILROAD COMMISSION REGULATES NATURAL GAS PIPELINE RATES

THE BEST IS STILL TO COME

THE EVOLUTION OF AMERICAN NATURAL GAS IN THE 21ST CENTURY

ORAL HEALTH IS CRUCIAL TO HEALTHY LIVING

FUTURE OF THE REGION SOUTH TEXAS AND TEXAS ENERGY ADVOCATES COALITION VISIT TEXAS CAPITOL

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O I L & G A S P L AY E R S

BUSINESS

TECHNOLOGY

POLICY

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MARCH/APRIL 2019

CONTENTS SHALE UPDATE

Shale Play Short Takes

FEATURE

Energy at the Forefront of Federal Policy Agenda

COVER STORY

COVER: PHOTOWRZESIEN/BIGSTOCK.COM, ABOVE: lightmoon/bigstock.com

INDUSTRY

BUSINESS

36 Betting on Bakken Innovation 38 A Natural Gas Primer 40 A Star is Born 42 The Many Benefits of Natural Gas

54 The Oil and Gas Industry Take a New

Approach to Alleviate Truck Order Backlog in 2019

LIFESTYLE POLICY

60 Oral Health is Crucial to Healthy Living

46 How the Railroad Commission Regulates Natural Gas Pipeline Rates

48 Future of the Region Conference 50 Colorado Lawmakers to Tackle Oil and Gas Rules Again

52 PESA Offers Insight Into Next 2 Years of Congress

SOCIAL 66 Future of the Region South Texas and

Texas Energy Advocates Coalition Visit Texas Capitol

68 South Texas Women's Energy Network 2019 Mentorship Kickoff Luncheon

Natural gas has defied the findings of a 2002 National Petroleum Council (NPC) study in spectatuclar fashion. The natural resource has seen growth in production, consumption and exportation. But the story of natural gas is far from finished. We cover natural gas, it’s rise to current status and the future of this commodity that benefits our society, economy and environment.

INDUSTRY

Media Hype Cannot Alter Immutable Facts About the Oil and Gas Industry

POLICY

South Texans Visit the State Capitol to Address Regional Issues

BUSINESS

AI & Machine Learning: The Next Transformation for Oil & Gas

LIFESTYLE

How a Patient Advocate Can Work With You and Your Dentist MARCH/APRIL 2019  SHALE MAGAZINE

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VOLUME 6 ISSUE 2 • MARCH/APRIL 2019

KYM BOLADO

PUBLISHER / CEO CHIEF FINANCIAL OFFICER Deana Andrews CHIEF OPERATING OFFICER & EDITOR-IN-CHIEF Lauren Guerra

Providing energy for the world while staying committed to our values. Finding and producing the oil and natural gas the world needs is what we do. And our commitment to our SPIRIT Values—Safety, People, Integrity, Responsibility, Innovation and Teamwork— is how we do it. That includes caring about the environment and the communities where we live and work – now and into the future. © ConocoPhillips Company. 2017. All rights reserved.

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EDITOR David Blackmon ASSOCIATE EDITOR David Porter DESIGN Digital Halide Media COPY EDITOR Kelly Hamilton VICE PRESIDENT OF SALES & MARKETING Joyce Venema ACCOUNT EXECUTIVES John Collins, Ashley Grimes, Doug Humphreys, Matt Reed, Amanda Villarreal ONLINE CONTENT MANAGER Fernando Guerra SOCIAL MEDIA DIRECTOR Courtney Boedeker CORRESPONDENT WESTERN REGION Raymond Bolado CONTRIBUTING WRITERS Jack Belcher, David Blackmon, Matt Dempsey Teri Dreher, Bette Grande, Brent Greenfield Brian Holland, Bill Keffer, Jim McBride, David Porter Shane Randolph, Tim Tarpley, John Tintera Thomas Tunstall, Ph.D. STAFF PHOTOGRAPHER Malcolm Perez EDITORIAL INTERN LeAnna Castro

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For editorial comments and suggestions, please email lauren@shalemag.com. SHALE MAGAZINE OFFICE: 5150 Broadway St., Suite 493, San Antonio, Texas 78209 For general inquiries, call 210.240.7188. Copyright © 2019 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.

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PUBLISHER’S NOTE

This issue of SHALE Magazine is a tribute to the economic and environmental benefits of the natural gas industry in the United States. We recognized a need to shed light on this particular industry and product as there has been substantial growth in the production and use of natural gas in the U.S. Likewise, the growth in demand for natural gas in global markets has also added to the export industry. Meanwhile, the necessity for greater infrastructure to transport this commodity has also been at the forefront of discussion and decision. Because of the increased use of natural gas electricity, the U.S. has seen a large reduction of CO2 emissions. Fatih Birol, Executive Director of the International Energy Agency said recently during a press conference with U.S. Energy Secretary Rick Perry, “In

the last 10 years, the emissions reductions in the United States has been the largest in the history of energy― almost 800 million tons―and this is a huge decline of emissions.” There is much work still to be done to ensure a growing and thriving domestic natural gas industry — another reflection covered in this issue of SHALE Magazine. As always, I would like to thank our readers and supporters for joining us for another great issue tackling energy and business topics. We look forward to continuing to share information on critical topics such as the importance and growth of the natural gas industry in the future.

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SHALE UPDATE

SHALE PLAY SHORT TAKES By: David Blackmon

Bakken Shale – North Dakota/Montana

Due to ongoing booming production from the nation’s second-largest oil producing basin, Energy Transfer announced it was expanding the capacity in its Dakota Access Pipeline system to 570,000 bpd. The company said it had moved more than 500,000 bpd during the fourth quarter of 2018 and would be able to meet rising demand by boosting horsepower in its compressor systems. Energy Transfer also said it was considering new pipeline capacity to the system in the coming months due to the region’s surging production, which the EIA projected would reach a record 1.45 million bpd in March. Targa Resources reached a deal to sell a 45 percent interest in a portion of its Bakken assets to funds managed by GSO Capital Partners and Blackstone (NYSE:BX) for $1.6 billion. Per the company’s press release, the assets “include 480 miles of crude oil gathering pipelines, 12K barrels of operational crude oil storage, 260 miles of natural gas gathering pipelines, the Little Missouri natural gas processing plant with a current gross processing capacity of 90 mcf/d and a 50 percent interest in the 200 mcf/d Little Missouri 4 Plant that is expected to be completed in Q2 2019.”

Denver/Julesberg (DJ) Basin - Colorado

The oil boom is also ongoing in Colorado, as Noble Energy reported record oil production from its DJ Basin operations in its fourth quarter 2018 earnings release. The company’s production in the region rose to 138,000 bpd, up 9 percent from the previous quarter. Noble reported that it drilled 50 onshore wells in the U.S. during Q4 2018, and expects to drill 165 to 175 new wells during 2019. Anadarko Petroleum also reported new highs from its own DJ Basin operations during its earnings call on Feb. 6. Anadarko CEO said that the company enjoys “substantial scalability due to our premium acreage positions in the Delaware and DJ basins today, and in the Powder [River Basin] in the future. These basins contain decades of cash flow enhancing inventory, supported by our midstream MLP that ensures APC's access to extensive infrastructure that provides flow assurance.”

Longtime Pioneer Resources CEO and Chairman of the Board Scott Sheffield re-assumed the CEO positionin late February when it is was announced that the man who replaced him as CEO, Tim Dove, would be retiring. During Dove’s time in the CEO post, Pioneer transitioned from a company with a diverse set of assets around the U.S. to being purely Permian Basin-focused, and ranks as one of the Basin’s largest producers. Dove’s retirement, announced on Feb. 21, was effective immediately. By far the nation’s largest oil-producing region, the Permian continues to set new production records. In late February, the EIA projected that the U.S. would set another alltime oil production record in March, exceeding 12 million bpd for the first time. EIA said that 4 million bpd — fully a third of total U.S. production — would come from the Permian. According to data compiled by the EIA, if it were an independent nation, Texas would currently rank as the fourth largest oil-producing country on Earth, trailing only the rest of the U.S., Russia, and Saudi Arabia. The Permian Basin alone would rank fifth on that list, also trailing Iraq by a small margin.

SHALE MAGAZINE  MARCH/APRIL 2019

Eagle Ford Shale – Texas

In late February, Howard Energy Partners and NextEra Energy Partners announced the formation of a new joint venture designed to develop new opportunities to export Eagle Ford Shale natural gas into Northern Mexico. Both companies own and operate midstream infrastructure in the Eagle Ford, and the plan will be to develop new markets to which to move their system gas. Rocky Creek Resources announced the completion of a record producer in the lower Eagle Ford formation in Lavaca County. Per the company’s press release of Feb. 5, the Shiner 1H well came on-line last fall at an initial production rate of 2,070 bpd, and even after 120 days on-line was still producing more than 900 bpd. The well was drilled to a depth of 12,320 feet, with an 8,550 foot lateral. Despite a slight fall-off in the regional rig count through the first two months of the year, the Eagle Ford remains the nation’s thirdlargest oil producing basin, and fourth-largest natural gas basin, according to the EIA.

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Permian Basin – Texas/New Mexico

Marcellus Shale – Pennsylvania/West Virginia/Ohio

Pennsylvania Gov. Tom Wolf continues to push legislators to enact a severance tax on natural gas produced from the Marcellus Shale. Wolf’s latest tactic is to tie a proposed volume-based tax with a $4.5 billion spending plan that would address a variety of projects he would like to fund. His proposed rate of tax would start at 9.1 cents per mcf of production when the price is at or below $3.00, and rise to a top rate of 15.7 cents per mcf when the price is at $6.00 or above. The Democratic governor would assess the severance tax on top of the state’s “impact fee” that was enacted in 2012. Despite the efforts of Pennsylvania politicians to implement new taxes on the industry, Marcellus producer Cabot Oil & Gas announced record-setting profits and production levels in late February, a report that CEO Dan Dinges described as the best year in the company’s history. Included in the results were net profits of $557 million, $297 million of free cash flow, and overall natural gas production of 735 bcf equivalent, a 7 percent increase year-over-year.

Haynesville/Bossier Play – Louisiana/East Texas

A new report from Rystad Energy issued in January projects that the Haynesville Shale region is on a path to reach new all-time high production levels later this year. In an article published by the Oil & Gas Journal, Artem Abramov, Rystad Energy partner, was quoted as saying, “We conclude that Haynesville shale’s revival, for the second year in a row, looks sustainable. Supported by its proximity to a new LNG export terminal, gas production will continue to grow, and achieving new all-time high gas production levels should happen within a matter of months.” The ongoing growth in the Haynesville despite the chronic low price environment for natural gas is driven by the growing U.S. LNG exports business, and the play’s close proximity to Cheniere Energy’s Sabine Pass LNG exports facility in southern Louisiana. As LNG export facilities expand, Rystad is projecting that the country’s total exports for 2019 will surpass 40 million tons in 2019, 65 million by 2022, and 150 tons by 2030.

SCOOP/STACK Play – Oklahoma

Natural gas production in the SCOOP/STACK in central Oklahoma set new record highs in early February, coming in at 3.53 bcf/d on Feb. 4, according to S&P Global Platts Analytics. Platts Analytics determined that the SCOOP, located mainly in Grady County, was the main driver of the recent surge in gas production for the region, and forecasts that overall SCOOP/STACK gas production would grow by more than 300 mmcfd by the same time in 2020. One of the region’s most active drillers and producers, Continental Resources, reported that its fourth quarter 2018 production had grown by more than 13 percent when compared to its fourth quarter in 2017, while its full-year production for 2018 rose by 23 percent from 2017.

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

MARCH/APRIL 2019  SHALE MAGAZINE

 FEATURE

Energy at the Forefront of Federal Policy Agenda By: Jack Belcher and Brent Greenfield

ollowing a brief two-year hiatus that featured oneparty control in the House, Senate and White House, with January’s arrival of the 116th Congress, many are rightly focused on how the return of divided government will impact energy policy in the U.S. While the new Congress has been convened for barely over a month, elected officials have taken several early steps to highlight the fact that energy policy will be a major point of emphasis on Capitol Hill over the next two years. In its first weeks, members of the House and Senate have introduced bills to, among other things, address physical and cybersecurity concerns for pipelines and LNG facilities, reform and streamline federal permitting for onshore oil and gas projects, and allow states to conduct environmental reviews typically carried out by federal agencies. Recent comments by Senate Republicans suggest that certain areas may be ripe for pursuit and advancement. For example,

While the new Congress has been convened for barely over a month, elected officials have taken several early steps to highlight the fact that energy policy will be a major point of emphasis on Capitol Hill over the next two years

SHALE MAGAZINE  MARCH/APRIL 2019

in a December interview with E&E News, Senate Energy and Natural Resources Committee Chairman Lisa Murkowski (RAK) cited technology, cybersecurity, the Smart Grid and grid modernization as among the subjects on which Congress could reach an agreement. Senate Energy and Natural Resources Committee Ranking Member Joe Manchin (D-WV) subsequently underscored the potential for movement when he noted that technology research and development would be a major focus for the committee. In calling for the application of innovation rather than regulation to address climate issues, in a Dec. 2018 New York Times oped Senate Environment and Public Works Committee Chairman John Barrasso (R-WY) specifically discussed legislative opportunities to support technological advances that will reduce carbon emissions and encourage greater utilization of nuclear energy. Infrastructure is one high-profile topic that is certain to be front and center given that both Congress and the White House are seeking a legislative package. Recently, House Transportation & Infrastructure Committee Chairman Peter DeFazio (D-OR) conveyed a sense of urgency in announcing that he would convene a hearing in February to address infrastructure needs, saying, “I want people to emphasize how stupid we are and how unbelievably expensive it is if we don’t make these investments and we take the system to failure.” Previous legislative proposals provide a potential roadmap on how a broad infrastructure bill might address energy. For example, a 2017 energy bill introduced by Senators Murkowski and Maria Cantwell (D-WA) addressed areas including cyber-

Brent Greenfield serves as Vice President and Counsel at Cornerstone Energy Solutions. He provides clients with strategic policy and management guidance, research, analysis and communications support across the upstream, midstream, and downstream segments of the energy industry. In addition, Brent serves as executive director of the National Ocean Policy Coalition, an organization comprised of members representing sectors including energy, fishing, waterborne transportation, construction, agriculture, and critical infrastructure.

Jack Belcher joins Cornerstone in 2019 with over 25 years of experience in energy and energy policy. As senior vice president of Cornerstone Energy Solutions, he provides strategic and tactical advice to energy and transportation companies and financial institutions, focusing on government relations, regulatory affairs, public policy, strategical communications, situational risk management, and Environmental, Social, and Governance (ESG) performance. Jack also serves as managing director of the National Ocean Policy Coalition.

security, pipeline permitting, the processing of authorizations for liquefied natural gas facilities, electric grid storage and modernization, energy efficiency, and workforce development. In addition, in 2017, House Energy and Commerce Committee Chairman Frank Pallone, Jr. (D-NJ introduced an infrastructure bill to support grid modernization, energy efficiency, pipeline replacements and the deployment of renewable energy systems, among other things. While there are areas of potential agreement when it comes to energy policy, a divided Congress also presents the reality that certain efforts will likely result in stalemate and inaction. Several recent actions underscore that dynamic: • House leadership established a Select Committee on the climate crisis to investigate, study, make findings and develop recommendations on ways to “achieve substantial and permanent reductions in pollution and other activities that contribute to the climate crisis” • Initiation of efforts to pursue a “Green New Deal” agenda • Introduction of bills to enact carbon pricing, mandate a 100 percent renewable energybased retail electric market by 2035 and an 80 percent reduction in greenhouse gas emissions (compared to 1990 levels) by 2050, reestablish Obama-era hydraulic fracturing regulations, and prohibit drilling in federal waters in the Atlantic, Gulf of Mexico, Arctic, and Pacific • Unveiling of an aggressive climate oversight agenda, with hearings scheduled early on to address: “Climate Change: Impacts and the Need to Act” and “Time for Action: Addressing the Environmental and Economic Effects of Climate Change” While the election of a Democrat-held House has been the major driver for much of this activity, certain efforts have attracted the support of a few Republicans. However, any legislative proposals that could adversely impact the trajectory of U.S. energy security and economic prosperity will likely face long odds in the Senate and at the White House. Although recent changes on Capitol Hill will slow or preclude certain legislative opportuni-

ties for momentum in the energy space, federal agencies are poised to take action on a variety of fronts that will help shape the near-, mid- and long-term trajectory for U.S. energy policy, including the following:

WHAT’S YOUR NEXT MOVE?

• The Environmental Protection Agency (EPA) will complete a rulemaking on its proposal to revise New Source Performance Standards for the oil and natural gas industry • EPA will complete rulemakings proposing to repeal an Obama-era rule that established carbon dioxide emission limits for existing fossil fuel-fired power plants and replace the rule with revised emission guidelines • EPA will finalize a rule in which it proposes to revise greenhouse gas standards for new, modified, and reconstructed coal-fired power plants • EPA and the National Highway Traffic Safety Administration will complete a rulemaking that would revise fuel economy and carbon dioxide emission standards for model-years 20212026 passenger cars and light trucks • The Interior Department will determine the extent to which federal waters will be accessible for oil and natural gas leasing through 2024 Technological advances and human innovation have helped to unleash a historic energy renaissance that has catapulted the nation to lead the world in the production of natural gas and oil. The emergence of American energy leadership has also helped the United States lead the world in environmental progress, with the nation achieving the world’s biggest drop in carbon dioxide emissions in 2017 and emissions from the six common pollutants falling 73 percent between 1970 and 2017. As Congress and the administration move forward, it is imperative that all those involved in federal policymaking ensure that their decisions reflect the positive impacts that the U.S. energy revolution continues to bring to America’s economy, national security, environment, and society. Guided by smart and sensible energy policies, the nation can further expand on these gains and help ensure an even more prosperous and vibrant future in the years and decades ahead.

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cover story

THE BEST IS STILL TO COME The Evolution of American Natural Gas in the 21st Century

PHOTOWRZESIEN/BIGSTOCK.COM

BY: DAVID BLACKMON

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MARCH/APRIL 2019  SHALE MAGAZINE

In the summer of 2002, the National Petroleum Council (NPC) gathered together some of the smartest minds from the oil and gas industry, academia and in the environmental community to study the potential for natural gas in North America. The study lasted for the better part of a year, after which a report titled “Balancing Natural Gas Policy – Fueling the Demands of a Growing Economy” was released. As we sit here 16 years later, reviewing the findings of this study in light of the current situation where natural gas in North America and globally is concerned is a fascinating exercise — one that demonstrates the challenges presented to even the most informed and intelligent people when it comes to making accurate projections about how the oil and gas industry will evolve in years to come. I personally chaired one of several subcommittees that were established to conduct various aspects of this study, led by ExxonMobil and Burlington Resources, which was my employer at the time. When the study was issued, those of us who had worked on it were quite proud of it and were firm in our belief that it would stand the test of time, providing an accurate roadmap for the public and policymakers to use as a guidepost for years to come. Providing such guidance is, after all, the role of the NPC, a federal advisory committee that reports directly to the U.S. Secretary of Energy. The NPC’s own website describes its role, in part, as follows: The National Petroleum Council (NPC), a federally chartered and privately funded advisory committee, was established by the Secretary of the Interior in 1946 at the request of President Harry S Truman. In 1977, the U.S. Department of Energy was established and the NPC’s functions were transferred to the new Department. The purpose of the NPC is solely to advise, inform, and make recommendations to the Secretary of Energy with respect to any matter relating to oil and natural gas or to the oil and gas industries submitted to it or approved by the Secretary. The NPC does not concern itself with trade practices, nor does it engage in any of the usual trade association activities. Even though the NPC had conducted a natural gasrelated study in 1999, incoming Bush Administration Energy Secretary Spencer Abraham felt that the situation had shifted significantly enough by 2002 to warrant another look. It is important to keep in mind that, when the

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ZYBR/BIGSTOCK.COM

EVEN THE BEST AND BRIGHTEST MINDS CAN GET THINGS WRONG

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request came down from Secretary Abraham, natural gas was a commodity in short supply and subject to huge price swings. Because a large percentage of our country’s production came out of the Gulf of Mexico, it was also subject to being significantly interrupted by major hurricane events. In 2002, the Barnett Shale was the only major natural gas-bearing shale formation that had been discovered. The Barnett was in the early stages of its development, and the industry had little understanding of its ultimate potential. Nor did any of the experts assembled by the NPC for its new study have any inkling of the magnitude of domestic natural gas resource that would be discovered in massive reserves trapped inside formations with names like Marcellus, Haynesville, Bakken, Eagle Ford, Spraberry, Woodford and Wolfcamp. One of the most popular bits of conventional wisdom said about any economic study is “garbage in, garbage out.” Our base of information for the 2002 NPC study wasn’t “garbage” — the information we had was highquality, but it was also very limited. The study by its very nature had to be based on available data, and the data available at the time indicated that North American natural gas production through the year 2025 would be characterized by limited domestic output, rising imports of liquefied natural gas (LNG) coming into the country on huge tanker ships, and high commodity prices as a result. It should come as no surprise that the study’s findings, some of which we will review here as examples, reflected this general outlook. Every study based on economic analyses will include multiple cases that produce differing outcomes. Typically, these are described as a “base case” which assumes a status quo of outside-influencing factors going forward, an aggressive case that assumes some set of positive changes, and possibly even a non-aggressive case that assumes a set of negative changes. One of the big decisions the NPC study committee had to make revolved around how many cases to include and how to structure them. In the end, the decision was made to include: • “Balanced Future” case in which U.S. energy policy would evolve in ways that would encourage the development of new natural gas resources and the building-out of adequate midstream infrastructure and LNG import facilities; and • “Reactive Path” case in which energy policy evolves, but mainly in reaction to various negative events such as shortages of supply or crises caused by lack of adequate infrastructure. Given that background and knowledge about how the study was structured, the fact that most of the findings produced in our report have turned out be quite inaccurate should come as no surprise. Here are a few of them taken from the study’s Executive Summary: • From page 32-33: “Given the relatively low production rates from nonconventional wells, the analysis further suggests that even in a robust future price environment, industry will be challenged to maintain overall production at its current level. This conclusion is reached even though new discoveries in mature North American basins represent the largest contribution to future supplies of any component of this supply outlook.” • From page 33: “The NPC estimates that production from the lower 48 states and non-Arctic Canada can meet 75 percent of U.S. demand through 2025. However, these indigenous supplies will be unable to meet the projected natural gas demand.” • From page 52: Price Projections: The NPC “Balanced Future” case projected a 2019 average price of between $3.20 and $5.00 per mmbtu. Its

SHALE MAGAZINE  MARCH/APRIL 2019

“Reactive Path” case projected a price range of $5.00 to about $6.90. • From page 63: “To meet future demand, the NPC is projecting LNG imports will grow to become 14-17 percent of the U.S. natural gas supply by 2025. This will require the construction of seven to nine new regasification terminals and expansions of three of the four existing terminals.” Of course, with the benefit of 16 years of hindsight, we now know that none of these key projections have come to fruition. For example, where prices are concerned, today’s natural gas producers can only long for a price per mmbtu of even $3.20, much less long-forgotten levels of $5.00 or $6.90. Far from being challenged to maintain overall current production levels, today’s natural gas industry struggles with finding adequate areas of demand to which to move their product, even as the number of active drillings exploring for natural gas resources has fallen from 1,600 as recently as 2012 to around 130 at the first of 2019. In a way, producers are victims of their own expertise. Having become too adept at maximizing volumes from each new well, that threaten to oversupply the market―even with a dramatically-reduced rig count. The nature of the shale plays discovered since 2003 has also played a large role in creating this new reality for gas producers. It’s not just the massive resource containe in natural gas plays like the Haynesville and Marcellus keeping the gas rig count low — it’s also the amazing volumes of methane flowing out of what are classified as oil wells being drilled in the Bakken, Eagle Ford and the Permian Basin. A little-recognized fact of life in today’s U.S. oil patch is that the oil-heavy Permian Basin is now the second-largest producer of natural gas in North America, behind only the Marcellus/Utica Basin. Simply put: Today’s biggest problem for natural gas producers is not a lack of supply, but lack of demand. It’s important to recognize that this sea-change in the supply/demand equation for domestic natural gas has taken place during a period of time when demand for natural gas has increased significantly. In 2003, Americans and American businesses consumed about 22.7 trillion cubic feet (tcf) of natural gas, according to the U.S. Energy Information Administration (EIA). By 2017, overall U.S. consumption had grown to 27.1 tcf, an increase of 20 percent. More to the point, demand for natural gas over that period of time rose in all of its key demand sectors: It was up in power generation, up in home heating use, up in chemicals and plastics and all other key manufacturing uses. Indeed, the phenomenal new abundance of natural gas supply and the chronic low prices that abundance has produced has played a significant role in the ongoing renaissance of manufacturing in the U.S., making the country globally competitive in that space for the first time in several decades. This newly-found abundance may be a curse to natural gas producers and their bottom lines, but it has been a true blessing to the country.

THE SHORT-LIVED RACE TO IMPORT LNG All of that brings us to that fourth and final finding listed above:

The shale revolution has provided our country — and other countries around the world — with an amazing gift, a commodity that benefits our society, economy and environment in innumerable ways

“To meet future demand, the NPC is projecting LNG imports will grow to become 14-17 percent of the U.S. natural gas supply by 2025. This will require the construction of seven to nine new regasification terminals and expansions of three of the four existing terminals.” That one didn’t work out at all, although the issuance of the NPC report in 2003 created an initial flurry of new investments in new LNG regasification terminals in the U.S. and other projects designed to get major companies in the game of importing LNG into this country. ExxonMobil is a great example. The company had already been involved in the LNG business for decades prior to its leadership of the NPC study effort, and moved quickly to expand its involvement in the sector following the issuance of the report. Through a partnership with Qatar Petroleum, ExxonMobil developed two new classes of larger, more fuel-efficient LNG tankers by 2009―the Q-Flex and Q-Max ships. ExxonMobil also signed deals with Qatar to partner in the construction of two new LNG trains in 2002, and in 2003 entered into a partnership agreement to supply LNG to the U.S. market. Meanwhile, while other companies filed permit applications with the Federal Energy Regulatory Commission (FERC) to build new LNG regasification terminals in the U.S., operators of two preexisting facilities embarked on major expansions. Southern LNG began initial LNG imports in the early 1970s, but ceased import operations by mid-1980. Located just a few miles from Savannah, Georgia on Elba Island, Southern LNG was authorized by FERC to restart import operations in 2000. By mid-2003, the facility had applied for and received a FERC permit to conduct a significant expansion, “which included adding a second and third docking berth, a fourth cryogenic storage tank, and associated facilities.” In Feb. 2006, El Paso Corporation, which was then the owner of the facility, announced the startup of its expanded facility, Elba II, at a cost of $157 million. At the same time, El Paso announced it had applied to FERC for the permit necessary to build an Elba III facility that would double its ability to import LNG to the U.S. Dominion Energy’s Cove Point facility first began operations to import LNG into the United States in 1978. Located in Chesapeake Bay off the coast of Maryland, this offshore facility receives imports of LNG, regasifies the product offshore and then ships the gas onshore via pipeline. By 1994, changing market conditions led to the decision to cease imports of LNG and convert Cove Point into a storage facility for domestically-produced natural gas. But by 2001, the market had changed once again, and Dominion and various customers agreed to restart its import operations. With the construction and opening of a new LNG storage tank, Cove Point began to bring in new shipments of LNG by the end of 2003. FERC authorized further expansion of Cove Point’s import capacity in 2006, a little more than a year after a Texas company named Range Resources had announced its history-changing initial commercial well drilled in the Marcellus Shale. Several other companies made applications for FERC for permits to build new LNG import/regas facilities, but only a handful were able to get off the ground. Those operators, along with Dominion and El Paso couldn’t know it in early 2006, but Range Resources’ new discovery meant the market was about to shift again, and in a very dramatic fashion.

THE SHALE REVOLUTION KICKS INTO HIGH GEAR Throughout the decade of the 1990s, the big hope for onshore development of U.S. natural gas lay in coalbed methane formations like the Fruitland Coal in northwest New Mexico/southeast Colorado, the Powder River Basin in Wyoming and Alabama’s Black Warrior Basin. These “coal seams,” as those in the industry referred to them, were relatively shallow layers that were easy and inexpensive to drill and produce, so companies like Burlington Resources, Devon Energy, Amoco (before it was sold to BP), and others loved them. The methane in the typical coal seam is held in place by hydrologic pressure. Thus, to produce the gas, companies would drill vertically into the formation and perform a light hydraulic frac job to break up the rock and cause the water flow out from it. As the formation was de-watered, the methane would release and begin to flow. The process was non-complex, easily repeatable and produced

MARCH/APRIL 2019  SHALE MAGAZINE

SHALE MAGAZINE  MARCH/APRIL 2019

NPC received requests for natural gas-related studies from two different Energy Secretaries in a span of just four years, and why the 2003 study’s outlook was that the domestic industry would not be able to supply the country’s demand for natural gas without steadilyincreasing imports of LNG. That all began to change on Nov. 10, 2004, when Range Resources completed its initial commercial well into the Marcellus Shale formation. Range brought in the Renz 1 well in a rural area of Washington County, Pennsylvania by employing the same combination of horizontal drilling and hydraulic fracturing that had led to the successful development of the Barnett Shale in north central Texas over the prior half-decade. By early 2005, the race was on among a number of upstream companies to obtain leases and start drilling Marcellus wells of their own, and the entire outlook for natural gas in North America had forever changed. By 2007, the Marcellus was yielding more than a billion cubic feet (bcf) of natural gas each day. That rose to two bcf per day

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gas in significant quantities from the wells drilled in the “fairway” of the basin, i.e., the deepest parts of the seam. Wells outside of the fairway were less productive but still worth drilling. The biggest issue was where to properly dispose of the often-vast quantities of water produced by each well, but the water was so clean in most places that it was appropriate for agricultural use. Another big issue was the steep decline rates and relatively short life of each well. The “fairway” wells would come on like gangbusters for several months, but within a year’s time most had slowed dramatically. This meant that producers would have to drill additional wells at a rapid pace just to maintain current production levels. By the end of the decade, it had become apparent that the industry was beginning to run out of exploitable coal seams to produce in the U.S. This dynamic led to a great deal of concern among policymakers that natural gas was not a fuel the country could rely upon to carry a growing share of the country’s power-generation load into the future, which helps explain why the

by 2010, four bcf per day by 2012 and about 16 bcf per day by 2015. At the same time, per-well recoveries were rising dramatically to such an extent that overall Marcellus output kept growing at an increasingly-rapid pace even as the rig count crashed along with natural gas prices starting in early 2012. By 2014, a regional rig count that had once risen to more than 140 had dropped below 100. By 2019, that count sat at 60. In 2008, Chesapeake completed the first commercial well in the Haynesville Shale, and the next race to lease and drill for dry natural gas was on. In contrast to the Marcellus region, where production growth was slow for several years due to a lack of midstream infrastructure, the Haynesville is located in a region that had seen significant natural gas production for decades from the prolific Bossier and Cotton Valley formations. Because the Haynesville had a pre-existing pipeline infrastructure to tie each new well into, the formation added another six bcf of gas per day onto the mark by 2011.

Next up in the procession of major new natural gas shale formations to be discovered was the Eagle Ford Shale play, whose first commercial well came on-line later in 2008. Spanning a 23-county area of south and central Texas, the Eagle Ford is thought of mainly as an oil-producing formation today. But that is mainly due to the heavy focus on liquids production in recent years as the oil price has firmed up while the price for natural gas has largely stagnated at sub-$3.00 per mmbtu levels. That first producing well was in fact a gas well, and several months had gone by before producers discovered that the Eagle Ford would become one of the biggest oil plays in U.S. history. As most know by now, the Eagle Ford formation is divided into three distinct producing areas. The northwestern third, and shallowest part of the formation produces a beautiful grade of light, sweet crude oil with very little associated natural gas. The center third of the play area — the “wet gas” piece of the formation — has already produced great quantities of natural gas, along with its associated condensate and other natural gas liquids. Meanwhile, the deepest part of the formation, the southeastern third that produces only dry gas, has

MARCH/APRIL 2019  SHALE MAGAZINE

SHALE MAGAZINE  MARCH/APRIL 2019

most spectacular oil boom in the U.S. since the early 1980s, and the largest boom Texas has seen since the days of Spindletop and the East Texas field. Less reported and commented upon has been the fact that all of these “oil” wells also produce a remarkable amount of associated natural gas. As I mentioned earlier in this piece, the resulting production is so substantial that the oil-rich Permian Basin, far and away the largest oil field ever discovered in North America, also ranks today as the second-largest natural gas-producing basin in the U.S. Taken together, the advent of this shale revolution, combined with the ongoing process refinements and technological advances that enable producers to squeeze higher and higher volumes out of each additional well, has created a sea-change in the U.S. supply picture for natural gas. Where the 2003 NPC study correctly identified a situation characterized by increasing shortage of available supplies and rising

need to import LNG, today’s market is one of supply abundance for as many decades as any economic model could hope to calculate, and a new and growing bonanza in the business of exporting the commodity to countries all over the globe.

THE LNG EXPORT OPPORTUNITY As one would expect, the business of importing natural gas into the United States be-

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today gone largely unexplored because of low gas prices. In reality, this part of the Eagle Ford is a sort of insurance policy for the industry, an untapped natural gas reserve that will ultimately be produced as the country’s other huge formations begin to play out and prices improve. That may be decades in the future, but, for the time being, the Eagle Ford continues to add to the U.S. natural gas supply mainly from its “wet gas” region, and ranks as the third-largest natural gasproducing basin. The final piece of the current U.S. natural gas supply puzzle began its discovery process in late 2009/early 2010, as Permian Basin producers who owned pre-existing leasehold held by production from the region’s many previous oil booms began to testing the Spraberry, Wolfcamp and Wolfberry formations using the same drilling/fracking techniques previously applied in other shale regions. As has been wellreported by so many, the result has become the

came a growth industry in the wake of the NPC study. The business reached a zenith in April, 2007, when about 3 billion cubic feet of gas per day was brought into the U.S. through Cove Point, Southern LNG and a small number of other facilities that had gotten off the ground by that time. But the birth of the shale revolution and the new abundance of U.S. natural gas supply it created brought about a new opportunity to reverse the flow of LNG and ship it out to other markets. This shift did not come about easily or quickly, largely due to the intervention of politics and politicians, as so often happens when major market shifts take place. As one might imagine, industrial and manufacturing users of natural gas in their processes were not anxious to see U.S. producers endeavor to create stronger prices for their production by opening new markets. Political opposition came from some of the biggest companies in the chemicals, fertilizers and plastics industries, businesses with sophisticated lobbying arms that are able to apply heavy pressure on policymakers. Due largely to this political opposition, companies looking to convert their existing LNG import facilities into export facilities, and compa-

nies that, like Cheniere Energy, wanted to build entirely new LNG export infrastructure found the process of obtaining the necessary permits from the Department of Energy (DOE) and FERC to be painfully slow and costly. The reality that the Obama Administration had no particular interest in encouraging the growth of the U.S. oil and gas business sector also contributed to the slowness of the process. Also, as the Oil and Gas Journal noted in an article published in Dec. 2012, the permitting process included more than just DOE and FERC: “Cheniere Energy Inc. successfully completed approval processes for export capacity at its Sabine Pass plant in Louisiana. Approvals included a water quality certificate from Louisiana, a permit from the US Corps of Army Engineers for working in wetlands, state endangered species clearance from the Louisiana Department of Wildlife and Fisheries, an air emissions permit from the Louisiana Department of Environmental Quality, and a National Historic Preservation Act Clearance from the Louisiana Department of Culture.” The construction of these multi-billion-dollar facilities also takes time. It took four years for Cheniere Energy to go from getting its final

permit approval in place to being ready to ship out the historic first cargo from its Sabine Pass LNG facility in Feb. 2016. But from that point forward, the volumes of U.S. LNG exports have skyrocketed, going from 3.3 bcf of natural gas in Feb. 2016 to almost 108 bcf in Nov. 2018. Since opening its first export train at Sabine Pass, Cheniere has been in constant expansion mode at that location. The facility’s first three liquefaction trains are now fully on-line and the company’s development plan calls for a total of seven liquefaction trains to be operational by 2022. Cheniere also recently began operations at its new Corpus Christi Liquefaction facility, having shipped out its first cargo there in Dec. 2018. When fully operational, the Corpus Christi facility will boast three liquefaction trains, with as many as seven more on property adjacent to the main facility, which Cheniere refers to as its Corpus Christi Stage 3 project. Dominion’s reconfigured facility at Cove Point became the second major U.S. liquefaction plant to export shale gas when it commissioned its initial cargo bound for London in March 2018. The Cove Point facility has a storage capacity of 14.8 bcf of gas, and the ability to ship out as much as 1.8 bcf per day.

The birth of the shale revolution and the new abundance of U.S. natural gas supply it created brought about a new opportunity to reverse the flow of LNG and ship it out to other markets MARCH/APRIL 2019  SHALE MAGAZINE

The issuance of the NPC report in 2003 created an initial flurry of major new investments in new LNG regasification terminals in the U.S. and other projects by major companies designed to get them in the game of importing LNG into this country Once the permitting logjam at the federal level was broken in late 2012, the pace of awarding permits accelerated during the latter years of the Obama administration. U.S. capacity for LNG exports will only continue to expand in the coming years. Half a dozen major new facilities are in the final stages of planning or early construction stage in places like Freeport, Texas; Golden Pass, Texas; Cameron Parrish, Louisiana; Pascagoula, Mississippi; and at Southern LNG in Alabama, a facility now owned by Kinder Morgan. By April of 2018, U.S. facilities had sent shipments of LNG to no fewer than 27 different countries around the world, with the majority of the volumes headed for South Korea, Mexico, Japan or China. While U.S. exporters

face stiff competition from major exporting countries like Qatar and Australia, the potential for future growth is strong.

THE BEST IS STILL TO COME While the growth of natural gas exports has thus far failed to produce stronger commodity prices here at home, there is no doubt this

growing business benefits the U.S. economy. A study conducted by DOE released in June 2018 found that: • U.S. consumer well-being increases with rising LNG exports. • Total U.S. economic activity (gross domestic product) increases with rising LNG exports. • U.S. LNG exports are backed by increased natural gas production here at home. Todd Snitchler, Director of Market Development for API, summed up the study thusly: “This report further confirms that increasing

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SHALE MAGAZINE  MARCH/APRIL 2019

exports of American natural gas will benefit the U.S. economy and benefit consumers. U.S. LNG cargoes have already been delivered to more than 25 countries spanning every region of the world. Increasing the use of American energy throughout the world enhances our national security here at home and abroad by giving our allies a reliable source of natural gas. Further, the increased use of clean natural gas has lowered U.S. emissions to levels not seen in 25 years. With global emissions on the rise, increased use of U.S. natural gas around the world could help make the world’s air cleaner.” Nor will the availability of sufficient domestic natural gas resources serve as any sort of limiter on the growth of LNG exports in the coming decades. Fifteen years after the drilling of the first successful Marcellus Shale well, the industry is still in the early stages of determining the true scale of the available shale gas resource. As a part of conducting its major advertising campaign promoting natural gas a decade ago, America’s Natural Gas Alliance liked to say that “America has 100 years of natural gas supply” in its messaging. That is a severe understatement. The truth is that America has

several centuries of supply that the industry currently knows about, and more is being discovered with every passing day. When we conducted that NPC study on natural gas back in 2002-2003, one of the questions Secretary Abrahams wanted us to answer was whether our country’s available supply of natural gas would enable it to serve as a so-called “bridge fuel,” a fuel source that would help our electric power sector successfully transition from its then-extant fuel mix that was heavy on coal and nuclear to an envisioned new world dominated by renewable power sources. Today, the thought that this clean and amazingly abundant fuel source should be limited to a “bridge” role is arcane and outdated. Thanks to its displacement of more than 53 gigawatt hours of coal-fired generating capacity since 2012, natural gas now ranks as the leading coal-fired generating capacity since 2012, natural gas now ranks as the leading source of U.S. power generation, according to the EIA. That equation is not going to change anytime soon, nor should it. The shale revolution has provided our country — and other countries around the world — with an amazing gift,

a commodity that benefits our society, economy and environment in innumerable ways. Better yet, this revolution is just a little more than a decade old, and still in its early developmental stages. What has transpired so far has been amazing, but the good news is that the vast majority of the opportunity remains unfolding before us. Carpe Diem.

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MARCH/APRIL 2019  SHALE MAGAZINE

INDUSTRY

Media Hype Cannot Alter Immutable Facts About the Oil and Gas Industry By: David Blackmon

Here's another fun fact: In Sept. 2008, total U.S. oil production came in at 3.8 million barrels of oil per day (bpd). Again according to the EIA, the Permian Basin alone will produce that much oil this month. Think about that — it's almost unbelievable. A new report issued in Feb. 2019 by the Texas Independent Producers and Royalty Owners Association (TIPRO) contains a raft of additional facts about the Texas oil and gas industry. Here's a great example: In its 2019 State of Energy Report, TIPRO notes that "oil production in Texas totaled a record 1.54 billion barrels (bbl) in 2018, surpassing a previous record of 1.28 billion bbl set in 1973." Data from the Railroad Commission of Texas (RRC) goes back to 1935, a time in the midst of the oil boom created by the massive East Texas field. RRC data show that an overall production increase of more than 500 million barrels from 2017 to 2018 is the largest in the state's history. The largest previous year-over-year leap was one of 174 million total barrels from 1950 to 1951. In other words, the State of Texas is currently in the midst of the greatest oil boom it has ever seen. Oh, and the state also continues to produce more than 30 percent of all the natural gas produced in the U.S. Here are some more interesting facts from the TIPRO report: • In 2018, Texas led the country in oil and gas industry employment with a total of 352,371 jobs, an increase of 26,706 jobs from 2017 numbers. • Texas experienced the largest increase in industry jobs in 2018, followed by Oklahoma (5,266), New Mexico (3,626), North Dakota (2,808), and Colorado (2,282). • Between 2010 and 2018, total state taxes and state royalty payments paid by the oil and gas industry in Texas exceeded $100 billion. • Texas is home to approximately 2.5 million mineral owners, of the 12.5 million mineral owners in the U.S., with oil and gas royalties generating billions of dollars for Texas families last year.

SHALE MAGAZINE  MARCH/APRIL 2019

• From an environmental standpoint, the U.S. oil and gas industry continues to advance efforts to reduce energy emissions through innovation, best practices and voluntary industry programs. Even as production has continued to increase, CO2 emissions in the U.S. are at their lowest levels in 20 years. • The industry paid a national annual wage averaging $112,712 last year, more than double average private sector wages. The oil and gas industry is, without a doubt, the largest driver of the entire Texas economy. As Democrats in Washington, D.C., led by New York Rep. Alexandria Ocasio-Cortez, roll out their "Green New Deal" plan to ostensibly make fossil fuels "obsolete" within a dozen years, Texans of all political stripes should step back and think about what that would mean for the state's economy. This industry's economic contributions are simply irreplaceable―and that's a fact. The oil and gas industry's contributions to improving the environment and the human condition also cannot be overstated. Despite the fact that the U.S. is the only nation on Earth that does not participate in the Paris Climate Accord, our country has actually been one of the leading nations in reducing its carbon emissions in recent years. While most developed nations continue to see their own emissions rise, U.S. emissions of carbon and noxious elements have fallen to levels not seen since the early 1990s in recent years. That is mainly due to the retirement of older coal-fired power plants and replacing the great majority of them with clean-burning, combined-cycle natural gas plants. The continuing reduction of emissions from cars powered by gasoline and diesel is another big reason for this good environmental news. This is why, despite all the hype we keep seeing in the news media and in the hundreds of press releases Tesla puts out every week, electric vehicles (EVs) really do not represent any sort of existential threat to the internal combustion engine. The potential for EVs is wildly over-hyped in the media. The shift to EVs is far outpaced by the ongoing increases in demand for crude oil, not just in the U.S. but, even more so, globally. That is not going to change anytime soon. Why? Because the electricity to recharge them has to come from somewhere. Currently, it mainly comes from power generated by coal and natural gas in the U.S. That’s another stark reality that is not going to change any time in my lifetime, which I figure is another 25 years or so. (Every reli-

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ere's a fun fact: If Texas were an independent country, it would now stand as the fourth largest oil-producing nation on Earth, behind only the rest of the U.S., Russia, and Saudi Arabia.

able projection — even those by the U.N. — project that fossil fuels will still account for the vast majority of global power generation in 2050.) Here’s reality: The world has a choice where fossil fuels are concerned. First, we could burn more and more coal in power generation to recharge billions of new EVs, because it is not replaceable by intermittent power sources like wind and solar. Germany and Spain have clearly demonstrated this over the past decade, as they almost bankrupted their economies trying to do just that. The alternative is to burn more and more gasoline in automobiles. You cannot have a geometric leap in EVs without burning far more coal than we do today. The alternative to burn more gasoline is a much cleaner environmental solution. It is also a far more affordable solution for consumers. Thus, it is a virtual certainty that we will continue to burn more gasoline in internal combustion engines for the next half-century, and probably beyond. To expand on that a bit, here are a couple of other reasons why the world will continue to produce and consume increasing amounts of oil in the coming decades: First, you have the fact that thousands of other products that ordinary people rely on every day are produced either in whole or in part from petroleum. From plastics to chemicals to polyester to fertilizers to makeup to toothpaste, even to the computer on which I am typing this, people all

over the world are heavily reliant on a vast variety of products that use petroleum as a feedstock. Second, think about incredible recent data released from the World Bank: • According to the most recent estimates, in 2015, 10 percent of the world’s population lived on less than US$1.90 a day, compared to 11 percent in 2013. That’s down from nearly 36 percent in 1990. • Nearly 1.1 billion fewer people are living in extreme poverty than in 1990. In 2015, 736 million people lived on less than $1.90 a day, down from 1.85 billion in 1990. What amazing progress in just 25 years! Here’s the simple truth: None of that progress would have been possible without oil and natural gas. The developing nations of the world need access to plentiful, scalable and affordable sources of energy in order to join modern society and elevate their people out of squalor. This can only be achieved through the use of fossil fuels. Period. So, bottom line, our world currently has no means of replacing the immense contributions made to our economy, our environment and the human condition by oil and natural gas. That isn’t going to change anytime soon, regardless of the “Green New Deal” or any other foreseeable legislative effort.

The oil and gas industry is, without a doubt, the largest driver of the entire Texas economy

MARCH/APRIL 2019  SHALE MAGAZINE

INDUSTRY

Betting on Bakken Innovation By: Bette Grande

SHALE MAGAZINE  MARCH/APRIL 2019

The million-dollar question (inflation adjusted) in the Bakken is — what to do with all this gas? During the initial rush to hold leases by production the amount of natural gas flared in the Bakken hit 36 percent in Sept. 2011 and again in Dec. 2013. Significant investment in natural gas pipelines and gas processing plants over the ensuing seven years has significantly increased the amount of natural gas captured and processed. In an effort to increase the rate of gas capture, the North Dakota Industrial Commission established graduated gas capture goals, the current goal is 88 percent (Nov. 2018 through Oct. 2020). In the last half of 2018, the percentage of gas captured started to drop to the point that in November the statewide gas capture percentage was 79 percent, well below the current capture target. According to a presentation from the North Dakota Pipeline Authority, of the roughly 20 percent of produced gas that is currently being flared, 4 percent is due to lack of pipelines and 16 percent is due to challenges in existing infrastructure. The buildup of natural gas processing facilities over the past seven years currently provides the capacity to process roughly 2,200 mmcfd. Planned plant expansion and new facilities are expected to come on-line in the next three years to increase processing capacity to over 3,300 mmcfd. But, based on projections from the DMR, associated natural gas production will exceed that increased capacity soon after the new and expanded facilities are up and running. In fact, the DMR projects that daily production of natural gas in the Bakken will double over the next 15 to 20 years.

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ssociated natural gas continues to be an issue for producers in North Dakota. While the Bakken’s rich natural gas is a valuable commodity, even at current prices, the geography and logistics in western North Dakota make gas capture and processing complicated and expensive. Direct costs related to natural gas capture are one thing, but recent estimates are that 50,000 to 80,000 barrels per day is being voluntarily held back as operators work to meet the state’s gas capture target. That is enough to get everyone’s attention. North Dakota oil production for Nov. 2018 was 1,375,803 bpd, according to the North Dakota Department of Mineral Resources (DMR). The November number was 16,500 bpd below the state’s all-time high from the previous month. If the ‘hold back’ estimates are correct, daily production could have been well north of 1.4 million bpd. In addition to voluntary production restraint, the gas capture issue affects the ability of producers to efficiently carry out their in-fill development plans. Given the location of the Bakken, operators face infrastructure challenges and higher transportation costs to deliver their oil and natural gas to markets, affecting the net-back on their production. Additional constraints from associated natural gas is another, unwanted, factor impacting capital investment decisions. The associated natural gas issue in the Bakken has everyone’s attention. Currently, operators, the mid-stream sector and state regulators are working together to identify and implement solutions. Stakeholders in the Bakken, and other domestic tight-oil plays, have a strong track record of innovation and research to increase recovery rates for oil and reduce costs. The natural gas issue in North Dakota will require a similar effort.

Time to Get Creative One intriguing option being studied by the North Dakota Industrial Commission is the underground storage of produced natural gas. The Energy & Environmental Research Center (EERC) in Grand Forks, North Dakota has completed an initial study on the feasibility of produced gas injection and storage into various geological formations. A primary goal of this study is to provide a workable solution to the handling of produced gas so that operators will no longer be constrained by the increased gas capture target and the gas will be available to benefit future gathering and processing capacity. While this is a new concept in North Dakota, the initial findings are positive. DMR Director Lynn Helms stated, “This innovative concept is the first idea in a long time that could seriously move the needle on associated gas flaring.” Based on the study, the estimated benefit of the underground storage of produced natural gas could be as high as $200 million on a single multi-well pad with the flaring constraint on production and well development removed. In addition, the use of potential gas storage target zones in the Williston Basin may provide Enhanced Oil Recovery (EOR) benefits. This will require further study, but the initial work done by the EERC identifies an exciting development. In drill spacing units where the parent well has been in production for several years and infill work is planned to fully develop the resource, the injection and storage of produced gas into the parent well may provide “multifaceted benefits,” according to the study. The EERC was well suited for this study because it has been looking at the feasibility of injecting CO2 from North Dakota’s coal-fired power plants into oil-producing formations in the Williston Basin for EOR and into other geologic formations for storage. The geological data and modeling from that effort helped in the study of underground storage of produced natural gas. While the underground storage of produced gas may just work from a technological angle, there are some important issues that require further consideration. Lease and contract terms will need to be addressed as the recovery rate of stored gas is tested. Of course, any recovery of stored natural gas is a positive when compared to flaring, but how the economics are distributed between producers, mineral owners and the mid-stream sector will need to be worked out. Given the economics, most expect these remaining issues to be resolved. Stakeholders in the Bakken are taking an “all-of-the-above” approach to solve the flaring challenge. The work done to evaluate the underground storage of produced gas demonstrates the creativity that has been around since the start of the shale revolution. Based on past successes, a solution to the Bakken’s gas problem seems a sure bet.

About the author: Bette Grande is a Research Fellow for energy and environment issues at The Heartland Institute. She served as a North Dakota state Representative from 1996–2014. Grande was a member of the House Appropriations Committee, Education and Environment Division. She was born and raised in Williston, North Dakota.

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INDUSTRY

A Natural Gas Primer By: David Porter

Natural gas is a fantastic bargain and an energy source that should be utilized to a much fuller extent for electrical generation, transportation, and chemical feedstocks as well as other current usages for the next 30-some years

SHALE MAGAZINE  MARCH/APRIL 2019

About the author: David Porter has served as a Railroad Commissioner (2011–17) and Chairman (2015–16), as well as Vice Chairman of the Interstate Oil and Gas Compact Commission (2016). Prior to service on the Commission, Porter spent 30 years in Midland, Texas, as a CPA working with oil and gas producers, service companies and royalty owners. Since leaving the Commission, Porter works as a consultant for oil and gas companies. He also serves as Chairman of the 98th Meridian Foundation, a nonprofit concerned with water, energy and land issues.

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e are going to learn some definitions and terms to help professionals from industries other than those in the energy sector better understand the natural gas side of the petroleum business. When a company goes out to drill a well, they are generally looking for either oil or gas. If they drill a gas well, they principally get natural gas. Natural gas consists primarily of methane but can also have higher alkanes. Sometimes they may also get NGLs (defined later) as well as some impurities that will need to be purged. If you drill an oil well, you will get primarily oil, but you may also get natural gas and various NGLs. This is called associated gas — that is gas produced in association with oil. Associated gas was a major problem for early oil men. They had no market for the gas (or no way to get the gas to market), so they ended up flaring the gas. This wasted a valuable resource and caused oil and gas regulators to issue rules discouraging flaring. This problem has been with us since the beginning of petroleum production, but it has intensified over the last few years with the increase in associated gas production. In May of 2010, approximately 7 percent of U.S. gas production was associated gas. This figure has increased to about 20 percent by May of 2018. The increase is primarily due to nonconventional oil production particularly in the Bakken, Eagle Ford and Permian Basin. Since most of the net present value of the cash flow from these wells comes from oil production, the value of the gas is generally not given much consideration when drilling and production decisions are made. In my opinion, this has been one of the primary reasons natural gas production has grown and prices have remained low the last few years — and likely will remain that way for the foreseeable future. The EIA just released a forecast predicting prices in the range of $5 or less per mcf until 2050. That makes natural gas a fantastic bargain and an energy source that should be utilized to a much fuller extent for electrical generation, transportation, and chemical feedstocks as well as other current uses for the next 30-some years. Remember, 10 to 15 years ago everyone thought we were running out of natural gas. Now, we know that we have a plentiful supply and prices are lower than they were a few years ago. Here are some other definitions that can be useful in understanding the gas business. NGLs, or Natural Gas Liquids, are ethane, propane, butane, iso-butane and natural gasoline. Condensate is a liquid hydrocarbon with an API gravity between 50 to 120 degrees, according to the Schlumberger oilfield glossary. Some other definitions have a lower upper limit. Lease condensate is a light liquid hydrocarbon recovered from lease separators or field facilities from both associated gas and gas well gas. Lease condensate is included as part of the crude oil stream. Plant condensate are liquid hydrocarbons recovered at separators or scrubbers in natural gas processing plants. Lease condensate are considered NGLs. The lease and plant condensate definitions are a proposed definition from the U.S. energy information administration. We often talk about the oil industry like its mainly two products, oil and natural gas. However, when you produce hydrocarbons, you are dealing with a whole compendium of products from asphalt to oil to condensate to natural gas. Which product you produce depends on the temperature and pressure both in the reservoir and at the surface. If we continue on this line of discussion, we will soon be talking about natural gas plant processing and oil refining, but that’s a subject for an entirely other column.

MARCH/APRIL 2019  SHALE MAGAZINE

INDUSTRY

A Star is Born I

t seems that, from the very beginning, oil has always gotten all of the attention. Striking oil was the goal — hitting a gusher; dancing and getting covered in a fountain of black was a symbol of sudden and unknown wealth; black gold; Texas tea. Floating to victory in world wars on an ocean of oil. But with the highly sought-after oil there always seemed to be what was considered a nuisance, if not a hazard, that came up the wellbore — natural gas. Drillers had to get through the gas to get to the oil. Sometimes the gas created hazardous conditions that caused kicks and blowouts, damaging the well and injuring, even killing, personnel. If the dangers caused by high-pressure gas weren’t enough to make you wary, there were also the lethal consequences of drilling into sour gas — even minimal levels of hydrogen sulfide could kill you instantaneously. Simply put, natural gas was viewed as a headache, or a hazard, or both. Over time, however, that has changed in a big way. Now, natural gas is playing an increasingly important role in generating electricity, providing fuel and serving as the feedstock for the manufacture of an endless list of technological, industrial, commercial, and consumer products. “Ol’ King Coal” is fading into the sunset, and natural gas is replacing it as the preferred energy source for power plants. Renewables, like wind and solar, get the media coverage, but which energy source will be the one that everyone depends on when the wind isn’t blowing and the sun isn’t shining? Natural gas. According to the Energy Information Administration (EIA), in 2017, 62 percent of the electricity generated in the U.S. was by power plants run on fossil fuels; 32 percent was natural gas, and only 29 percent was coal. Natural gas has also made its mark in the fuel sector. Companies like UPS, AT&T, Waste Management, and Frito-Lay, as well as state and local governments, are converting their fleet vehicles from diesel to compressed natural gas. Of course, consumers are most familiar with using natural gas to heat their homes and power their home appliances. Natural gas also provides us with propane, used for fuel and outdoor cooking; and butane, used in lighters, aerosols, and as a source for petrochemicals. It is likely that the most anonymous, but extremely significant, role that natural gas has played in our modern economy is in providing the essential feedstock for plastics, in the form of ethane, which is

SHALE MAGAZINE  MARCH/APRIL 2019

Now, natural gas is playing an increasingly important role in generating electricity, providing fuel and serving as the feedstock for the manufacture of an endless list of technological, industrial, commercial, and consumer products

turned into ethylene, then polyethylene, and then into countless forms of packaging and products. Ethane is the feedstock for almost one-half of all plastics production in the U.S. In addition to the ever-increasing market for plastics domestically and exporting polyethylene pellets around the world, there is also now a significant increase in exporting liquefied natural gas (LNG) from the U.S. to the world market. Only 15 years ago, the Texas Legislature was planning to permit import facilities for LNG along our Gulf Coast because the conventional wisdom was that the U.S. was running out of natural gas. Then the shale revolution happened. Now, LNG export facilities can’t be built fast enough. The U.S. first started exporting LNG in 2016, when the first facility was opened in Louisiana. Since then, the rush has been on, with seven more facilities in Texas, 24 in all in the U.S., and more to come. In fact, it’s now predicted that, by the end of 2019, the U.S. will be the third-largest LNG exporter, behind only Australia and Qatar. Of course, contributing to this enormous new market is Texas, which produces nearly 30 percent of all natural gas in the U.S. If Texas were its own country (it’s always fun to write that), we would be the third-largest natural-gas producing country in the world. Geopolitically, it’s no small thing that the U.S. can now be the source of natural gas to countries like Poland and Germany, displacing Russia from that perilous position of leverage over our allies. Our LNG exports to China and India are also rapidly increasing, which helps us politically but also is playing a significant role in reducing the CO2 emissions in those countries by replacing their coal-fired power plants. The increased use of natural gas over coal is the primary reason that the U.S. has seen it’s CO2 emissions decline every year over the past decade to 1992 levels, while CO2 emissions globally increased 50 percent during the same period. With significant growth in any industry comes the challenge of being able to provide the supporting pieces of the infrastructure puzzle. Here, it’s the need for pipelines to transport the natural gas from production sites to refineries and LNG-export facilities. In Texas, the current challenge is building those pipelines to carry natural gas (and crude oil) from the Permian Basin to the Gulf Coast. Fortunately, the industry has been in rapid-response mode, and new pipelines are scheduled to start operating later

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By: Bill Keffer

this year and over the next couple of years. In addition, new pipelines are being built to carry even more natural gas to Mexico. The shale revolution seemingly awakened a sleeping giant because, not only are we producing enough natural gas in the U.S. to now be a net exporter, but we have an incredible supply into the distant future. The Potential Gas Committee (an industry group that regularly assesses our domestic natural-gas supply) estimates that we have 2.817 quadrillion cubic feet of technically-recoverable natural-gas reserves — in laymen’s terms, that means “a helluva lot of gas.” Even so, it’s painful to realize that an awful lot of natural gas will never be put to good use because it has had to be flared into the sky. To produce oil, you have to take the gas, too. When you produce too much oil, you can store it in tanks until you can sell it. When you produce gas, you have to put it into a pipeline immediately — there’s no way to store it. Since we’re producing more gas than we have pipelines to take it, the only option is to dispose of it. In the Permian Basin alone, operators are having to flare about 320 mmcfd (enough to take care of the daily needs of Montana or New Hampshire) — roughly $1 million going up in smoke. Natural gas has become a star in its own right. It’s part of an all-star cast of abundant natural resources in the Lone Star State; those stars are big and bright — deep in the heart of Texas.

About the author: Bill Keffer is a contributing columnist to SHALE Oil & Gas Business Magazine. He teaches at the Texas Tech University School of Law and continues to consult. He also served in the Texas Legislature from 2003 to 2007.

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INDUSTRY

The Many Benefits of Natural Gas Special to SHALE

Natural Gas Benefits • Natural gas delivers energy savings directly to consumers. In Texas, consumers saved nearly $60 billion from 20062016 thanks to cheap and abundant natural gas. • Natural gas helps conserve water – natural gas power generation uses considerably less water than coal fired generation. Since 2014, water withdrawals from thermoelectric power plants have steadily decreased.

• Increased natural gas production leads to job creation. In 2018, natural gas extraction added 17,000 jobs to the U.S. economy, on top of the 6.7 million Americans that the energy sector already employees.

For more information: The South Texas Energy and Economic Roundtable (STEER) is the leading Eagle Ford Shale resource in the region and is the primary coordinator for communication and public advocacy surrounding the oil and natural gas industry in South Texas. STEER serves as the bridge connecting the industry and communities throughout South Texas to ensure positive collaboration and communication surrounding the activities associated with energy production in the Eagle Ford Shale. For more information, visit STEER.com.

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he South Texas Energy and Economic Roundtable (STEER) represents the largest operators in the Eagle Ford Shale region. STEER members recognize the multiple benefits of using natural gas in our homes and day to day lives. It’s important that we all look to recognize the multiple benefits of natural gas including economic and environmental benefits. The oil and gas industry in South Texas continues to implement new technology and programs to develop the needed energy resources for the world in a safe and responsible manner and we will continue to support the use of natural gas.

• Shale gas has lowered costs for the U.S. manufacturing industry, allowing companies to take on more projects and hire more workers. The American Chemistry Council identified 333 new projects (valued at $202.4 billion cumulatively) that were started or completed since 2010, which are directly connected to low-cost shale gas.

MARCH/APRIL 2019  SHALE MAGAZINE

POLICY

South Texans Visit the State Capitol to Address Regional Issues Special to SHALE

uture of the Region South Texas, a non-profit organization encompassing a 47-county in South Texas with a mission of promoting a robust economy with investment and consideration into critical areas such as infrastructure, education, healthcare, workforce, border security, energy, and more, and Texas Energy Advocates Coalition (TEAC), an advocacy group focused on the support and growth of the energy industry in Texas, visited the Texas State Capitol Feb. 11, 2019. Nearly 25 representatives of the organizations came together from around the state to share information gathered on initiatives, recommendations and goals with elected officials. Capitol Day attendees visited the office of Rep. Steve Allison, Sen. Dawn Buckingham, Sen. Donna Campbell, Rep. Alex Dominguez, Sen. Pete Flores, Rep. Bobby Guerra, Rep. Ryan Guillen, Rep. Roland Gutierrez, Sen. Juan “Chuy” Hinojosa, Rep. Abel Herrero, Rep. Todd Hunter, Rep. Phil King, Sen. Lois Kolkhorst, Rep. J.M. Lozano, Rep. Eddie Lucio, Jr., Rep. Armando Martinez, Sen. Jose Menendez, Rep. Chris Paddie, Sen. Judith Zaffirini, as well a David Zapata with the office of the Secretary of State. The event actually started months before the Capitol visit, when approximately 3,000 email surveys went out to community members, civic leaders, business owners, and various industry professionals on important areas of focus and concerns for the South Texas region. Using the results of the survey, a conference was held, featuring multiple speakers and experts. At the conference held on Jan. 10-11, 2019 at the Texas A&M International University in Laredo, Texas, attendees discussed the results of the survey, including the findings of what seemed to be of most importance to the survey participants. Going even further, conference attendees added further detail on the issues for consideration and helped to rank the issues in by level of importance. Using the information gathered from the surveys and the conference, Future of the Region South Texas created an executive summary and condensed one-pager to be given to elected officials on the Capitol Day visit. The group visited with congressmen and women from around the state to share the importance of the topics covered at the Future of the Region conference. TEAC attendees specifically focused on a proposed project with serious environmental, regulatory, and economic concerns. An application submitted by Texas Gulf Terminals (which is owned and managed by Swiss commodities trader Trafigura) to establish a deepwater port off the coast of Corpus Christi capable of loading Very Large Crude Carriers (VLCCs) was the specific topic TEAC members referenced when visiting the elected officials. Feedback from attendees was overwhelmingly positive. “This was the best year I’ve

SHALE MAGAZINE  MARCH/APRIL 2019

done this,” said Jane Gimler, President of the Ingleside Chamber of Commerce in the Coastal Bend region. “We met with the people representing my region and I was happy to find that the already were well-informed on the issues that were specifically important to me and my region.” “This was my very first time doing this. As you well know, I’m focused on energy, “ said Krystal White, Business Development Account Manager at United Safety. “Energy impacts the economic [development], the schools, the infrastructure, and this event today opened my eyes. I was honored to be a part of such a great organization of people from different backgrounds. It was a breath of fresh air to visit with our representatives and discuss the issues they are focused on in their districts and to know they do listen to what we have to say. They want to know what our report says and how it going to impacts their communities.” “I want to congratulate and thank you for coming out today,” said Robert Flores, a political consultant. “Any elected official will tell you they appreciate your presence because it shows your interest and your convictions for the issues that you’re there to speak on. It puts a face to the issues in their minds and hearts because all they see are these issues come across their desks on paper, but when you show to talk about X, Y and Z, it lays cover for them. That’s what they want — they want to make sure someone out there is for or against what they’re voting on.” About Future of the Region South Texas: Future of the Region South Texas (FORST) is an economic development think tank that has a proud and rich history in South Texas. It was founded by Senator Judith Zaffirini and former San Antonio Mayor Henry Cisneros to build a prosperous South Texas by addressing critical issues that cut across social, economic and political boundaries. Since its inception, the organization has held successful conferences, which formulated policy initiatives for the Texas Legislature to consider as the focus for the development of economic prosperity throughout South Texas. Visit futureregionstx.org for more information. About Texas Energy Advocates Coalition: Texas Energy Advocates Coalition (TEAC) is a group of energy advocates who strive to educate the community, network with likeminded individuals and promote the further advancement of our energy sector locally and nationally. Visit txenergyadvocates.com for more information.

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POLICY

How the Railroad Commission Regulates Natural Gas Pipeline Rates By: John Tintera

istory matters. On Dec. 19, 1890 Art. X, §2 of the Texas Constitution was amended to include a provision forming the Railroad Commission of Texas, stating the “Legislature … may provide and establish all requisite means and agencies invested with such powers as may be deemed adequate and advisable (to regulate Railroads).” This enshrined the Railroad Commission in the Texas Constitution to ensure fair transportation rates by railroads for farms and ranches needing to get their products to market. Today, after almost 130 years of regulatory evolution, the RRC no longer oversees railroad rates. However, the state regulator now has a similar responsibility to natural gas producers who need to get their product from the leases to the markets through pipelines. The analogy of railroads and pipelines may be obvious to some. But how, as natural gas begins to dominate the state, national, and global conversation regarding electrical generation, exports, and emissions, does this regulatory responsibility actually work? The process is called the “Informal Complaint Procedure.”

A look at an RRC organization chart will show the Oversight and Safety Division. Inside this division is the Gas Services Department. Formed almost 25 years ago, the agency presciently foresaw the increasing importance of natural gas in Texas and organized this department as a response. The Department has several responsibilities, including ensuring a continuous, safe supply of natural gas is available to Texas consumers at the lowest reasonable price. Another part of this oversight is the Informal Complaint Procedure. As stated by the RRC website, “The Informal Complaint Process is designed to address complaints about the transportation of natural gas through gathering systems and intrastate pipelines. These can include purchasing, selling, shipping, transportation or gathering practices, depending upon the agreement between shipper and transporter.” The agency authority comes from Texas Natural Resources Code, Chapters 81, 85, & 111, Statewide Rule 34, Texas Utilities Code, Chapter 104, and 16 Administrative Code § 7.7001, et seq. This statute authorizes the Commission to set just and reasonable rates when settling transportation disputes. The legislative mandate encourages affordable, expeditious and fair

About the author: John Tintera, the Executive Vice President of the Texas Alliance of Energy Producers, is a regulatory expert and licensed geologist (Texas #325) with a thorough knowledge of virtually all facets of upstream oil and gas exploration, production and transportation, including conventional and unconventional reservoirs. As a former Executive Director and 22-year veteran of the Railroad Commission of Texas, considered the premier oilfield regulator in the nation, Tintera oversaw the entire regulatory process, from drilling permits to compliance inspections, oil spill response, pollution remediation and pipeline transportation.

The state regulator has a responsibility to natural gas producers who need to get their product from the leases to the markets through pipelines 46

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settlement and resolution of disputes regarding natural gas purchasers, sellers, transporters and gatherers. As stated by the agency, “The Commission will not tolerate discrimination among similarly situated shippers and sellers.” An important and complex responsibility. Here is how they do it. It starts with filing a complaint with the Railroad Commission. A person may call the Commission’s Helpline, submit a complaint in writing, or file an informal complaint online at http:// www.rrc.texas.gov/gas-services/complaint-filing/informal-gas-transportation-purchase-complaint-preliminaryinformation-online-form/. An attorney is not required to participate in the informal complaint process. The complainant can then expect Commission Staff to contact them to confirm receipt of the complaint and obtain any additional information needed. Commission Staff will determine whether mediation is needed. The Gas Services Division Director shall appoint either a Commission or non-Commission employee mediator (through an agreement between the complainant and respondent). The mediator shall review the relevant information and provide both parties with a confidential written summary of the review. The Commission Staff will schedule a mediation meeting after the mediator provides a written summary. Following the mediation meeting, if no resolution has been reached, the mediator will send a confidential memorandum to all parties summarizing potential next steps, which may, or may not, include, moving to the formal complaint process. The formal process will involve a hearing. This includes evidence, testimony and an eventual ruling by the Railroad Commissioners in open conference. Opinions may differ on the efficacy and elegance of this procedural waltz between the complainant, the pipeline company and the agency. However, understanding the process is the first step in knowing if anyone needs to use it.

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POLICY

Future of the Region Conference By: Thomas Tunstall, Ph.D.

his past Jan. 10-11, the Future of the Region Conference took place at Texas A&M International University (TAMU) in Laredo. The conference has been held every two years since 1993 as a way for stakeholders in South Texas to meet and discuss issues and concerns that cut across the 47-county region. Previous conferences addressed a wide range of issues such as workforce development, investment, economic development, healthcare, education and infrastructure services. TAMU President Dr. Pablo Arenaz, Laredo Mayor Pete Saenz and Future of the Region South Texas President Kym Bolado kicked things off with opening remarks. Other speakers included Live Oak County Judge Jim Huff, Dr. Federico Schaffler Gonzales with the TAMU Texas Center, and John LaRue, recently retired executive director of the Port of Corpus Christi. Conference keynote speaker was Julian Alvarez III, the commissioner representing labor on the Texas Workforce Commission. As the South Texas region continues to develop, initiatives to support long-term planning and coalition building will remain essential. Activity in the Eagle Ford Shale, for example, challenges communities to address traffic safe-

As the South Texas region continues to develop, initiatives to support long-term planning and coalition building will remain essential

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ty, infrastructure upgrades, housing, workforce development, healthcare, education and attraction of new investment. The energy industry continues to play an important role in the region, even as the boom-bust cycle forced companies to readjust to fluctuating oil prices. Dr. Schaffler explored border issues based on a recent survey administered by the TAMU Texas Center. In contrast with the recent focus on a border wall, survey responses indicated that policymakers should perhaps instead focus on bi-national collaboration, quality of life, and institutional capabilities, as well as recognizing the critical interdependency with Mexican counterparts. Such an approach will require individual cities, counties and councils of governments to work across regions in order to gain traction along the nearly 2,000-mile border with Mexico. Other key issues included discussions surrounding the urban-rural divide. Until the last few decades, Texas was a largely rural state. However, with the mechanization of agriculture, most of the population growth now occurs in the large metro areas: Dallas-Fort Worth, Houston, San Antonio and Austin. By contrast, most rural communities have either experienced modest population growth or outright decreases. This trend affects representation and, correspondingly, political clout in the state Legislature. As urban populations increase, so does their share of both state Senate and House seats. Rural communities in Texas will be challenged to find ways to make their voices heard as this imbalance likely grows in coming years. In a recent white paper, a group of local academics and other area stakeholders examined educational inequality in Texas. Currently, new or expanding businesses in the state enjoy the ability to import talent from other regions or countries. Long-term, however, this will not be a viable strategy for Texas. Public policy should ensure that all children in Texas receive a quality education, regardless of where they live. Finally, with the recent government shutdown, South Texas now figures prominently in the public spotlight. Coincidentally, the Future of the Region Conference unexpectedly occurred at the same time as the president’s recent impromptu visit to McAllen. With any luck, policymakers will also consider approaches such as those proposed in Laredo to support sound community and economic development along the southern border of Texas.

About the author: Thomas Tunstall, Ph.D., is the Senior Research Director at the University of Texas at San Antonio’s Institute for Economic Development, and was a 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 doctorate degree in political economy, a master’s in business administration from The University of Texas at Dallas, and a bachelor of business administration from The University of Texas at Austin.

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MARCH/APRIL 2019  SHALE MAGAZINE

POLICY

Colorado Lawmakers to Tackle Oil and Gas Rules Again By: Matt Dempsey

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try, has been clear about his outright opposition to the oil and gas development in the state saying that not doing something about oil and gas “would be something that would relegate me to the depths of hell.” Most recently, Colorado Rising shut down a town hall hosted by a leading State Senate Democrat talking about oil and gas. National groups like 350.org recently revealed that 2018s Proposition 112, the setback proposal handily defeated at the ballot box last fall, was designed to “fundamentally break” the oil and gas industry. This same group has trumpeted health and safety issues as well, fully backing a lawsuit brought by a young activist named Xiuhtezcatl Martinez. The Colorado Supreme Court ruled in a unanimous opinion that the COGCC did have a proper role in “fostering” the industry while considering impacts, and also the cost and feasibility: “[T]he provisions make clear that the Commission is required (1) to foster the development of oil and gas resources, protecting and enforcing the rights of owners and producers, and (2) in doing so, to prevent and mitigate significant adverse environmental impacts to the extent necessary to protect public health, safety, and welfare, but only after taking into consideration cost-effectiveness and technical feasibility.” Of note, the state of Colorado has made health and safety a

Those following the industry in Colorado know that the state has been at the forefront nationwide in tackling oil and gas issues

About the author: Matt Dempsey is the opinion editor for Western Wire, a new news reporting project of the Western Energy Alliance. Established in 2017, Western Wire is the go-to source for news, commentary and analysis on pro-growth, prodevelopment policies across the West. Western Wire covers the news and viewpoints frequently overlooked when regulations and legislation are debated in Washington, D.C. and across the region. Additionally, Matt, who is based in Denver, Colorado and is with FTI Consulting, works with companies and industry groups in the energy and natural resources sector to secure positive media coverage in local, state and national media markets. He also advises on how to use this media coverage to secure the best possible government-relations outcomes.

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olorado lawmakers are expected to once again take up revising oil and gas rules in the state, the latest such effort in a long line of activity over the past fifteen years. This time, action under the dome follows an election in which the public overwhelmingly voted down Proposition 112 and rejected efforts to shut down the state’s energy industry by imposing unreasonable setbacks while also witnessing a blue wave as Democrats swept races across the state. Look for Democratic House Speaker K.C. Becker (D-Boulder) and Senate Majority Leader Steve Fenberg (D-Boulder) to lead the latest endeavor. Becker, who supported Proposition 112, said on election night she wants to “put oil and gas wars to bed.” Media reports show that Becker and Fenberg are focused on local control and health and safety issues. Setbacks, which were resoundingly defeated in November, do not appear to be under consideration this time around. Those following the industry in Colorado know that the state has been at the forefront nationwide in tackling oil and gas issues. For example, former Democratic Gov. Bill Ritter overhauled the Colorado Oil and Gas Conservation Commission (COGCC) in 2009. In 2014, under Gov. John Hickenlooper, agreements were reached with stakeholders on methane emissions. As late as this past December, environmental groups, school boards and the industry reached agreement on increasing school setbacks. There are of course some voices in Colorado that are hostile to what Becker called after the November election a “collaborative” approach. Colorado Rising objected to the school setbacks, arguing it wasn’t enough. The Executive Director for Colorado Rising, a former state representative who has been a top critic of the indus-

priority for years, including ensuring a robust collection of information and response to citizens’ health concerns, including numerous oil and gas community investigations conducted by the Colorado Department of Public Health and Environment’s Oil and Gas Health Information and Response (OGHIR) Program. Colorado’s health department and the state’s top medical officials released a key health assessment report in 2017 that included analysis of more than 10,000 air samples in areas with “substantial” oil and gas operations and found emission levels “safe,” even for sensitive populations. The OGHIR report themselves, dated through December 2018, have repeatedly found measurements of air concentrations, as the report dated April 11, 2018, for “60 substances analyzed… were below short- and long-term health based reference values and approximately the same as the average air concentrations along the Front Range.” “Based on the results from this preliminary air sampling investigation,” the OGHIR authors continued, “there appears to be a low risk for harmful health effects due to exposures from VOCs.” Another report, dated Dec. 13, 2018, says, “All air concentrations of the individual and combined six priority VOC’s were below short- and longterm health guideline values and are, therefore, unlikely to cause non-cancer health effects.” These numbers compiled by Colorado’s health department over the past few years came via an agreement by the Hickenlooper “blue ribbon” task force started in 2014, after the governor struck an 11th hour deal with thenCongressman Jared Polis, now the state’s governor, to study the state’s oil and gas industry and find areas of common concern and produce constructive policy recommendations. Anyone that will take a close look at Colorado’s history on oil and gas will find a willingness by the state’s wide and various stakeholders — from industry to legislators to state regulators and the environmental community — willing to engage with one another and come together to find a practical path forward. It’s a path that continues to evolve day by day and year by year, as the state’s recent history has shown. No doubt that’s what will happen again in 2019.

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MARCH/APRIL 2019  SHALE MAGAZINE

POLICY

PESA Offers Insight Into Next 2 Years of Congress By: Tim Tarpley, VP Government Affairs, PESA

he oil and gas industry should expect a different legislative landscape over the next two years, as a change in leadership in the House of Representatives heralds the possibility of more oversight and a changed approach to the industry’s issues. After last November’s election, in which House Democrats won an additional 39 seats, Democrats own a voting majority in the House for the first time since 2010. What does this mean for the oil and gas industry specifically? The government affairs team at PESA has been closely following the 116th Congress and will shed some light into what we know so far and what could occur over the next two years. Democrats are now in charge as House committee chairs and are guaranteed a majority of votes in every single committee. This is an important power to wield, as each committee chair has the authority to hold hearings on topics of their choosing, as well as the power to issue subpoenas to executive branch officials. The new Chairman of the powerful Energy and Commerce Committee is Rep. Frank Pallone, a Democrat from New Jersey. With the committee holding oversight on important issues like the telecommunications industry and healthcare, it will be interesting to see how much attention the chairman gives to the oil and gas industry. The committee has already released the topics for its first three committee hearings, none of which directly relate to the industry. However, the committee will likely use the first hearing – which is on the topic of climate change – to bring the oil and gas industry into

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the discussion. As the 116th Congress continues to unfold, we will have a better understanding of how Pallone intends to use the committee, but it would be fair to expect at least an occasional oil and gas industry targeted hearing. Similarly, the Democrats have created a new committee called the House Select Committee on the Climate Crisis. This committee will be chaired by Rep. Kathy Castor, a Democrat from Florida, and its stated goal is to examine the science behind climate change and make recommendations to other standing committees in the House to prepare legislation to address climate change. Like other House committees, this committee will also have subpoena power, but it is not expected to create legislation, just offer recommendations. Republican Rep. Francis Rooney of Florida, a member of the Climate Solutions Caucus, and Republican Rep. Jim Sensenbrenner of Wisconsin are openly campaigning to be ranking member of the Select Committee. The appointment will be made by House GOP leadership, which now faces the challenge of deciding whether to help the Democrats shape climate policy or try to stop it altogether. Contentious hearings and investigations should be expected out of this body as well. While significant change will not happen overnight, industry executives should keep a close eye on the 116th Congress. With the rise of the outspoken freshman Democrat from New York, Rep. Alexandria Ocasio-Cortez, the push by her colleagues to pass her “Green New Deal,” and a Democratic majority looking to completely overhaul past committee policies and focal points, we should expect the oil and gas industry to be a main target in the House at some point over the next two years.

While significant change will not happen overnight, industry executives should keep a close eye on the 116th Congress

For more information regarding PESA, please visit pesa.org. About the Author: Tim Tarpley, Vice President Government Affairs, oversees PESA’s Public Policy committees and programs. Tarpley most recently served as Chief of Staff to Congressman Ted Poe (R-TX) and began his legislative career as an aide to Congressman Thornberry (R-TX). Tarpley holds a juris doctor from Creighton University School of Law and a master of laws from American University Washington College of Law.

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BUSINESS

AI & Machine Learning: The Next Transformation for Oil & Gas By: Shane Randolph and Jim McBride

What Exactly is Machine Learning & AI? Machine learning and AI allow computers to assess large volumes of data and make decisions to solve problems in a manner that is similar to how the human brain does it. However, it is done more efficiently and without tiring. Both AI and machine learning are designed in such a way that they can learn and improve as new data is provided. Therefore, it continually gets better at forecasting outcomes based on new data, without new programming. A computer having the ability to assess and solve a problem may sound like something from a science fiction movie, which is the case for general AI rather than applied AI. General AI possesses the characteristics of human intelligence, including natural language processing, ability to

Both AI and machine learning are designed in such a way that they can learn and improve as new data is provided

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ince its inception, technology has driven the development and transformation of the oil and gas industry. Technologies to locate and extract oil and gas reserves enabled the shale revolution, and a new revolution is around the corner for oil and gas exploration and production companies. While it might sound like something from science fiction, artificial intelligence (AI) and machine learning have the potential to reshape the oil and gas exploration and production landscape. Once viewed as a novelty, AI and machine learning are not far away from becoming mainstream for all exploration and production companies. The following discusses what AI and machine learning are and discusses applications for the oil and gas industry.

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plan, recognize objects and reason. While some are still trying to develop general AI, most of the AI applications today focus on applied AI. Applied AI is a form of AI that replicates some form(s) of human intelligence for a dedicated purpose, and that dedicated purpose could be solving a specific problem for an oil and gas exploration and production company. One way to understand AI and machine learning is to break down the difference between intelligence, learning and knowledge. Learning and knowledge are both components of intelligence. Let’s assume that you had to solve a problem, such as fixing a flat tire on your car. In order to solve the problem, you need intelligence, which includes knowledge and the ability to learn. Knowledge is having solved the problem before and knowing the discrete steps to solve the problem again. However, learning doesn’t necessarily require that you have had solved the problem before. If you can learn, then you possess the ability to solve problems. Learning is often considered a framework where you draw from similar experiences and then develop the discrete steps to solve the specific problem. The historical approach for computers to solve problems

About the Authors:

As a Managing Director at Opportune LLP, Shane Randolph assists companies and financial institutions throughout North America, South America, Europe and Asia-Pacific in their understanding of what is possible as they deal with the challenges of implementing risk management programs and highly technical accounting pronouncements. He assists clients with the entire risk management life cycle, including strategy, execution, compliance, valuation and hedge accounting. He has undergraduate and graduate degrees in accounting from Oklahoma State University. He is also a member of the American Institute of Certified Public Accountants and holds a Series 3 License with the National Futures Association.

Jim McBride is an experienced energy executive with over 35 years of business origination, merger and acquisition, capital markets, restructuring and petroleum engineering experience. Jim has led the upstream and midstream energy banking practices for a number of firms, including Capital One Bank, Royal Bank of Scotland, Bank of America and Texas Commerce Bank (now JPMorgan). In 2014, Jim founded JR McBride & Company, a privately-owned company based in Houston that advises and invests in the energy industry. He currently serves as a Board Member of the Independent Petroleum Association of America (IPAA) and on the Loyola University of New Orleans Board of Trustees.

was more akin to a knowledge-based approach, which would be a rulesbased approach with millions of lines of code to solve the problem. An approach utilizing AI could include discrete rules-based frameworks, but it also could include code giving the software the ability to learn and to assess circumstances in order to solve the problem. Unique Opportunity for Oil & Gas All problems are not created equal, which provides a unique opportunity for the oil and gas industry. Some business models have a dependency on human emotion, meaning that solving problems must consider the potential paths of emotional reactions. Human emotion remains the one variable in modeling that is very difficult, if not impossible, to accurately predict. However, outside of some aspects of trading activities, oil and gas companies have numerous other challenges and problems to solve that are not as reliant on human emotion. This is a driving factor behind why almost every energy supermajor and large public exploration and production companies are making significant investments in AI. Some estimate that the oil and gas investment for AI will reach $3 billion by 2022. Some of these investments are focused on back-office accounting and finance activities; however, the majority of the investment has been in operations, since the return on investment potential is higher. In the exploration and production space, it can be challenging making sense of extensive amounts of data for valve positions, pump speeds, pressures at different places in the system, temperatures and flow rates, etc. Decision-makers reviewing the data might be using it in a simplified manner or not at all. AI allows companies to review the data in a shorter amount of time, discover patterns that likely were not previously observable and determine the best course of action. The potential applications for exploration and production companies seem limitless. The International Energy Agency (IEA) estimates widespread use of digital technologies

could increase oil and gas reserves by about 5 percent and reduce production costs by 10 to 20 percent. AI and machine learning can allow companies to optimize well design, drilling and completion, and even use machines to carry out dangerous tasks on an unmanned basis. It can improve oil and gas production rates and lower lifting costs. With advances in machine learning and AI, tools can now be used to troubleshoot underperforming wells, enhance reservoir modeling and carry out preventative maintenance before problems arise. Shale resource development is an excellent laboratory for AI and machine learning given its high intensity of repeatable activities and its much shorter investment cycle. The applications of AI and machine learning have the ability to further drive down shale resource finding and development costs allowing shale resources to remain highly competitive in the global energy market. Some beta tests in drilling programs are noting better results with AI than with 40-year veteran geologist and petroleum engineers. Making asset acquisitions can be a time-consuming and challenging process. Publicly available court records, land data and production information can now be reviewed in a manner previously not considered possible. Residential real estate companies are already utilizing AI in a similar manner to review vast amounts of court records and listing information to identify optimal acquisitions. AI will soon be utilized by energy companies to identify optimal locations by considering interactions with existing nearby wells and other factors. In conclusion, early adopters of AI will likely develop a significant competitive advantage, and the adoption rate of new technology is exponentially faster than it was a few decades ago. Mainstream adoption of these new technologies is expected in the next three to five years. Companies will soon experience significant efficiencies that will translate into competitive advantages. It is likely time to consider how your company could begin to harness these technologies to remain competitive.

MARCH/APRIL 2019  SHALE MAGAZINE

BUSINESS

The Oil and Gas Industry Take a New Approach to Alleviate Truck Order Backlog in 2019

ruck attainment has been a key challenge for private fleets, forhire carriers, and organizations that rely on trucking across many industries, including manufacturing, construction and oil and gas. This challenge has been accentuated by the backlog of orders for Class-8 heavyduty trucks, largely stemming from an American economy that has been booming ever since the Great Recession ended in 2010, and a decrepit industry philosophy toward truck procurement which is now shifting. Class-8 truck orders and sales continued at a steady pace through much of 2018, as many companies saw the need to upgrade into newer equipment or add to their equipment to handle the increased demand in shipping goods. According to ACT Research, Class-8 net orders equaled 506,300 units at the end of November 2018 — the second-strongest 12-month order period in history, trailing only the 12-month period ending October. In November, class-8 monthly orders totaling 28,082 still outpaced the 27,973 trucks that were constructed. While this gap is narrowing, it continues to show extraordinary demand for new trucks.

Particularly for oil, gas and energy brands, organizations will continue to feel the negative effects of an order backlog in 2019 if they continue their asset acquisition strategy based on functional obsolescence as opposed to economic obsolescence. Businesses that shorten their asset management lifecycles based on a flexible lease model will be able to plan their replacements better and thus avoid the discomfort associated with the current backlog. The vibrant economy means that more companies are shipping materials to job sites or goods across the country. More businesses are in need of restocking shelves and inventory; meanwhile, more consumers are in need of goods ordered online and thus the transport of those shipments. The result — trucks are working overtime. Trucks and transportation have been the essence of this economic machine. Replacement and truck attainment strategies that help the economy stay active need to be carefully considered, especially when companies take a closer look at their bottom line. The long-standing business philosophy was for companies to make massive purchase orders of trucks and drive them for anywhere between five and ten years of service, or even longer, as a way to squeeze

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every nickel and dime out of the truck’s usage. However, data and analytics are proving this model to be expensive and ineffective. Instead, private fleets and for-hire carriers are realizing they can achieve more savings on the truck’s overall impact to the bottom line, as well as maintenance & repair (M&R) — the highest variable and volatile cost of a fleet operation, by moving to a shorter lifecycle. When oil and gas companies drive their trucks as long as possible, they run on functional obsolescence — making deci-

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By: Brian Holland

sions based on the truck’s ability to stay on the road. In most cases, when firms let the truck command the timetable for replacement, firms are left clambering to order a new truck based on limited planning cycles. Today’s backlog of truck orders is a result of this, as the multiplier effect of many transportation firms and this philosophy have caught up to them. Instead, today’s leading companies are taking a new approach. Organizations are now focusing on a truck’s individual TIPPINGPOINT, the point at which it costs more to operate a truck than it does to replace it with a newer model. Features such as the cost of fuel, utilization, finance costs, and M&R, are all factored into arriving at each truck’s unique TIPPINGPOINT, giving fleet operations employees and finance departments a closer look based on data and analytics into determining and predicting the optimum time to replace an aging truck. As an example, a recent analysis of long-term ownership versus shorter lifecycle management illustrates significant cost savings over time. A fleet that opted for a four-year lease model on a truck would save roughly $27,893 per truck in comparison to a sevenyear ownership model because of the aforementioned factors such as fuel, utilization, financing and M&R. The shorter lease model is also cost-effective when compared to just a four-year ownership model, showing average savings of $12,710. This approach offers flexibility to adapt to changing markets, ultimately driving down operational costs while strengthening the corporate image and driver recruitment and retention efforts by continuously upgrading to newer trucks. Companies are leveraging data analytics and wide-ranging fleet studies that produce a fleet modernization and utilization plan, projecting when aging equipment will need to be replaced. This is especially applicable with today’s fluctuating demand and the current booming economy as companies trying to acquire equipment solely based on demand are faced with equipment shortages and long lead times. Additionally, recent changes to the corporate tax rate, as well as new accounting standards, have made it more appealing to lease equipment. With these changes, at least in the case of truck acquisition, the cost of purchasing of equipment remains higher compared to shorter-term leasing of the equipment. What’s more, leasing remains the preferred method for companies regardless if they have a stronger or weaker balance sheet. In addition, leasing also allows companies to evade the risk of residual value and the expense of remarketing. By adopting this new outlook of shorter truck lifecycles, industry organizations and transportation companies will become better equipped at swapping out their aging truck fleets in a more costefficient manner as we progress in 2019.

connect. share ideas. discuss. 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.

About the author: Brian Holland is President and Chief Financial Officer at Fleet Advantage, a leading innovator in truck fleet business analytics, equipment financing and lifecycle cost management. For more information visit www.FleetAdvantage.com.

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LIFESTYLE

How a Patient Advocate Can Work With You and Your Dentist By: Teri Dreher, RN, iRNPA

field can also signal someone who is more knowledgeable about advocating for patients. About 20 U.S. universities offer graduate certificate programs in private-patient advocacy. National certification became available this year via the Patient Advocate Certification Board, which conducts a rigorous exam spanning a broad spectrum of patient advocacy areas. Those who pass earn the credentials “BCPA” — Board Certified Patient Advocate. Rather than a hindrance to dentists, patient advocates are often seen as a time-saver. A dentist can communicate information to a patient advocate in five minutes — information that might take him or her 20 minutes to communicate to a patient. That’s a plus for both sides. It saves time for the dentist and leaves the patient more time to understand what is going on and get a clear understanding of their options from an unbiased source. A patient advocate will give a patient the whole picture, not just the one that is the most financially beneficial to an insurance company or will put the most money in a dentist’s pocket. A patient advocate can also provide follow-up to help with a patient’s care. Anyone who has ever listened to a dentist’s instructions in their office only to forget the details of those in-

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A good patient advocate can empower individuals or families to make informed choices by educating them about the patient’s medical conditions, asking dentists and physicians questions the patient wouldn’t know to ask and researching a patient’s full range of treatment options structions when they get home or who is trying to manage a family member’s care from out-of-state understands the importance of this. The patient advocate can provide instruction when necessary, monitor compliance and watch for side effects of medications. And when they are monitoring patients in their homes, they can often catch the early signs of trouble and get them medical help before the health issue escalates to a health crisis. Ever wonder whether a toothache or pain you’re having is a normal side effect of a procedure but decided to take a “wait and see” approach because you “didn’t want to bother” a busy dentist, only to have the problem get worse and be scolded for not calling sooner? A good patient advocate would know what’s normal and what’s not and make that call to your dentist when necessary. One of the many challenges facing dentists today is how to

About the author: Teri Dreher, RN, iRNPA, is an award-winning RN patient advocate and a pioneer in the growing field of private patient advocacy. A critical care nurse for more than 30 years, today she is owner/founder of NShore Patient Advocates, the largest advocacy company in the Chicago area. She was awarded her industry’s highest honor, The APHA H. Kenneth Schueler Patient Advocacy Compass Award and was recently among the first to be awarded professional certification by the Patient Advocate Certification Board. Her book, “Patient Advocacy Matters,” is now in its second printing.

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“E

veryone today needs a patient advocate,” the American Medical Association recently said. Indeed, with our increasingly complicated healthcare system, more and more dental patients are finding that what the AMA said is true, and they are increasingly turning to patient advocates to manage their dental and health care or the care of their loved ones. A good patient advocate can empower individuals or families to make informed choices by educating them about the patient’s medical conditions, asking dentists and physicians questions the patient wouldn’t know to ask and researching a patient’s full range of treatment options. They also act as a liaison between patients and providers, look out for a patient while they are receiving treatment and ensure that insurance claims get paid. It’s important to remember, though, that not all patient advocates are created equal. Some may not have any handson healthcare experience beyond their advocacy training. To find someone with more expertise, it’s best to look for an RN patient advocate. These advocates are often veteran Registered Nurses with experience in patient care. National certification and graduate training in the

help patients who can’t manage their own dental care. Some are “senior orphans” — elderly and alone. Others are reeling from a dental crisis or diagnosis that’s beyond what they can handle. Many have families who are too far away or too busy to handle complex dental caregiving needs. Sometimes, if a practice incorporates regular travel to nursing or senior residences to see patients who often are unable to advocate for themselves, the dentist may feel helpless and frustrated. Either way, there is a straightforward solution: Connect them to a local RN patient advocate. These experienced nurse advocates are trained to guide patients through the dental healthcare maze, coordinating with their dentists and doctors to ensure they receive proper care. Patient advocates collaborate with dental patients, families and the dentist. Best of all, they are paid solely by the patient/family — there is no cost to the practice. When a patient/client retains an advocate to help manage their dental healthcare, they can: • Follow up and reinforce to make sure they follow through on doctor’s orders • Accompany them on dental visits and during procedures • Serve as liaison between patients and dentists, answering questions, explaining terms and generally improving communication and patient satisfaction, while saving the dentist’s time, money and frustration • Identify other qualified care providers and coordinate care if the need arises • Handle insurance and/or Medicare/ Medicaid issues So can a patient act as their own advocate? Absolutely! But trained patient advocates bring to the table medical expertise that can help them spot problems early and communicate these concerns to medical personnel in a way that they will clearly understand. They also can handle the timeconsuming but necessary tasks of making sense of insurance statements and ensuring that their client’s needs are being met while they’re at their most fragile. Think of a patient advocate as a dental healthcare partner — someone who focuses on navigating treatment so their clients can solely focus on getting better.

MARCH/APRIL 2019  SHALE MAGAZINE

LIFESTYLE

Oral Health is Crucial to Healthy Living Special to SHALE

ral health and hygiene play a vital role in the overall health of children and adults. According to the Center for Disease Control (CDC), oral health has been linked with chronic diseases, like diabetes and heart disease. It is also linked with risk behaviors like using tobacco and eating and drinking foods and beverages high in sugar. Children’s Oral Health Cavities (also known as caries or tooth decay) are one of the most common chronic diseases of childhood in the United States. Untreated cavities can cause pain and infections that may lead to problems with eating, speaking, playing, and learning. Children who have poor oral health often miss more school and receive lower grades than children who don’t. According to a study by the National Center for Health Statistics:

• 1 of 7 (13 percent) adolescents aged 12 to 19 years has at least one untreated decayed tooth. • Children aged 5 to 19 years from low-income families are twice as likely (25 percent) to have cavities, compared with children from higherincome households (11 percent). The good news is that cavities are preventable. The Cochrane Database of Systematic Reviews states that fluoride varnish can prevent about one-third (33 percent) of cavities in the primary (baby) teeth. Therefore, children who brush daily with fluoride toothpaste will have fewer cavities. Dental sealants can also prevent cavities for many years. The Cochrane Review also showed applying dental sealants to the chewing surfaces

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of the back teeth prevent 80 percent of cavities. Lastly, children living in communities with fluoridated tap water have fewer cavities than children whose water is not fluoridated as discovered by the Community Preventive Services Task Force (CPSTF). Dental hygiene tips for babies: • Wipe gums twice a day with a soft, clean cloth in the morning after the first feeding and right before bed to wipe away bacteria and sugars that can cause cavities.

Children who have poor oral health often miss more school and receive lower grades than children who don’t.

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• About 1 of 5 (20 percent) children aged 5 to 11 years have at least one untreated decayed tooth.

• When teeth come in, start brushing twice a day with a soft, small‑bristled toothbrush and plain water. • Visit the dentist by your baby’s first birthday to spot signs of problems early. • Talk to your dentist or doctor about putting fluoride varnish on your child’s teeth as soon as the first tooth appears.

complete tooth loss among adults aged 65-74 years has steadily declined over time, but disparities exist among some population groups. If left untreated, cavities (tooth decay) and periodontal (gum) disease lead to tooth loss.

Dental hygiene tips for children over two years:

- People treated for cancer who have chemotherapy may suffer from oral problems such as painful mouth ulcers, impaired taste, and dry mouth.

• Brush their teeth twice a day with fluoride toothpaste. • Drink tap water that contains fluoride. • Ask your child’s dentist to apply dental sealants when appropriate. Adult’s Oral Health According to the CDC, the baby boomer generation is the first where the majority of people will keep their natural teeth over their entire lifetime. This is largely because of the benefits of water fluoridation and fluoride toothpaste. However, threats to oral health, including tooth loss, continue throughout life. The major risks for tooth loss are tooth decay and gum disease that may increase with age because of problems with saliva production; receding gums that expose “softer” root surfaces to decay-causing bacteria; or difficulties flossing and brushing because of poor vision, cognitive problems, chronic disease, and physical limitations. Oral health problems in adults include the following: • Untreated tooth decay. According to the National Center for Health Statistics, more than 1 in 4 (27 percent) adults in the United States have untreated tooth decay. • Gum disease. According to the Journal of Periodontology, nearly half (46 percent) of all adults aged 30 years or older show signs of gum disease; severe gum disease affects about 9 percent of adults. • Tooth loss. The Vital Health Statistics showed

• Oral cancer. Oral cancers are most common in older adults, particularly in people older than 55 years who smoke and are heavy drinkers according to the National Cancer Institute.

• Chronic diseases. The Journal of America Dental Association explains having a chronic disease, such as arthritis, heart disease or stroke, diabetes, emphysema, hepatitis C, a liver condition, or being obese may increase an individual’s risk of having missing teeth and poor oral health. According to the U.S. Department of Health and Human Services: - Patients with weakened immune systems, such as those infected with HIV and other medical conditions (organ transplants) and who use some medications (e.g., steroids) are at higher risk for some oral problems. - Chronic disabling diseases such as jaw joint diseases (TMD), autoimmune conditions such as Sjögren’s Syndrome, and osteoporosis affect millions of Americans and compromise oral health and functioning, more often among women.

• Do not use any tobacco products. If you smoke, quit. • Limit alcoholic drinks. • If you have diabetes, work to maintain control of the disease. This will decrease risk for other complications, including gum disease. • If your medication causes dry mouth, ask your doctor for a different medication that may not cause this condition. If dry mouth cannot be avoided, drink plenty of water, chew sugarless gum, and avoid tobacco products and alcohol. • See your doctor or a dentist if you have sudden changes in taste and smell. • When acting as a caregiver, help older individuals brush and floss their teeth if they are not able to perform these activities independently.

According to the CDC, the baby boomer generation is the first where the majority of people will keep their natural teeth over their entire lifetime

Dental hygiene tips for adults: You can keep your teeth for your lifetime. Here are some things you can do to maintain a healthy mouth and strong teeth. • Drink fluoridated water and brush with fluoride toothpaste. • Practice good oral hygiene. Brush teeth thoroughly and floss between the teeth to remove dental plaque. • Visit your dentist on a regular basis, even if you have no natural teeth or have dentures.

For more information: Visit the CDC website for more information and resources at www.cdc.gov/oralhealth/basics/

MARCH/APRIL 2019  SHALE MAGAZINE

SHALE MAGAZINE  MARCH/APRIL 2019

MARCH/APRIL 2019  SHALE MAGAZINE

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Future of the Region South Texas and Texas Energy Advocates Coalition Visit Texas Capitol

PHOTOS COURTESY OF SHALE

Future of the Region South Texas and Texas Energy Advocates Coalition (TEAC) visited the Texas Capitol Feb. 11, 2019. Nearly 25 representatives of the organizations came together from around the state to share information gathered on initiatives, recommendations and goals with elected officials. Capitol Day attendees visited the office of Rep. Steve Allison, Sen. Dawn Buckingham, Sen. Donna Campbell, Rep. Alex Dominguez, Sen. Pete Flores, Rep. Bobby Guerra, Rep. Ryan Guillen, Rep. Roland Gutierrez, Sen. Juan "Chuy" Hinojosa, Rep. Abel Herrero, Rep. Todd Hunter, Rep. Phil King, Sen. Lois Kolkhorst, Rep. J.M. Lozano, Rep. Eddie Lucio, Jr., Rep. Armando Martinez, Sen. Jose Menendez, Rep. Chris Paddie, Sen. Judith Zaffirini, as well a David Zapata with the office of the Secretary of State.

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South Texas Women's Energy Network 2019 Mentorship Kickoff Luncheon PHOTOS COURTESY OF SHALE

Women’s Energy Network (WEN) hosted the 2019 mentorship kickoff luncheon on Feb. 19 at Silo in San Antonio. The event featured Barbara Greene, Founder and CEO of Greene & Associates, Inc., as speaker. The mentorship program endeavors to build meaningful relationships among Women's Energy Network - South Texas members and to provide an avenue for networking and career development of women in energy.

Looking for a great way to promote your brand? Look no further than BIC Media Solutions. Let BIC Media Solutions turn your idea into a reality. We offer custom book writing, editing, printing and distribution services to help tell your story. We also provide film production and distribution of faith/family-friendly films, industry TV shows, TV series, podcasts and corporate sizzle reels. second line supervisors and managers. We had little that compared at the time. The story telling style of the book makes for easy reading and quick absorption of the lessons. This would have greatly benefited me as a new Process Supervisor, as well as benefited the numerous new foremen and supervisors that were moved into their positions during my time in the chemical process industry. Thanks Barry for a great job filling this need. “

BARRY D. HARDY Barry D. Hardy, President & CEO of Training & Development Systems, Inc. (TDS), has been recognized as one of the most experienced and knowledgeable professionals in the field of training and development on the U.S. Gulf Coast. He has guided diverse teams of petroleum industry companies to decisions on issues such as operational excellence, performance improvement, organizational re-engineering, workforce development and corporate training strategies. Barry launched TDS in 1993 to provide comprehensive workforce development and management solutions to the petroleum industry. In the early days of process technology education, Barry managed the design and development of curriculum for the two-year Applied Associate of Science degree in Process Technology. The program received exemplary status from the Texas Higher Education Board. Barry’s vision then, and still today, is to provide training and tools for TDS customers to maximize safety, efficiency and effectiveness. TDS enables companies in achieving Operations Excellence by focusing on workforce development including technical competency management, front line supervisor development, process safety management, asset reliability programs and business process training.

By Bar r y D. Har dy wi th Ted Moo n

“As a former Process Supervisor and Operations Manager I can say that The Journey would have been a great asset for new first line supervisors, as well as

A P R AC T I C A L G U I D E TO B E CO M I N G A N E XC E P T I O N A L S U P E R V I S O R

WHAT DOES IT TAKE TO BECOME EXCEPTIONAL? In refineries and petrochemical plants, exceptional supervisors manage their processes and people with a continuous commitment to excellence in safety, operations, plant profitability and efficiency. But the journey to becoming truly exceptional doesn't happen overnight. It requires dedication, targeted focus and a willingness to learn from more experienced managers who exemplify exceptional behaviors in their daily work.

— DAVE MULLEN, SAP PROCESS DESIGN PLANT MAINTENANCE CONSULTANT, PROFESSIONAL ENGINEER (RETIRED)

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Document your company’s story, growth or history Capture your personal history and family milestones Foster relationships with both current and new customers

The Journey – A Practical Guide to Becoming an Exceptional Supervisor presents a number of insightful tips and strategies on exceptional supervision collected by Barry D. Hardy, President and CEO of Training & Development Systems, Inc. (TDS). Barry wrote this book to give new supervisors a head start to becoming exceptional, with practical lessons that can be readily implemented in the plant rather than just collect dust on a bookshelf.

essence in The Journey. The insight and practical suggestions presented here will benefit supervisors of all backgrounds and experience levels—whether they have two weeks or twenty years on the job. This book is also a must-read for managers, operators and technicians—truly, anyone who wants to reach new levels of professional and personal growth." — EARL HEARD, FOUNDER AND CEO, THE BIC ALLIANCE AND BIC MEDIA SOLUTIONS

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Written in a compelling and straightforward manner, The Journey tells the story of an experienced manager who shares his insight with a new shift supervisor through a series of lessons. With each new lesson, the manager takes the supervisor, and you the reader, further down the path to becoming an exceptional shift supervisor. People of all ages and experience levels will learn something along this “journey,” and can start cultivating exceptional behaviors that pay rich rewards in the workplace and in other aspects of their lives.

Bar r y D. Har d y with Te d M oon

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