SHALE Magazine March/April 2021 by SHALE Oil & Gas Business Magazine

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MAGAZINE

MARCH/APRIL 2021

MANMADE GLOBAL WARMING: THE STORY & THE REALITY COVID-19 VACCINE POLICIES FOR OIL AND GAS EMPLOYERS

ENERGY DOMINANCE DUMBINANCE

U.S. SHALE 2021: SHOW ME THE MONEY

BIDEN’S ENERGY POLICY :

A POTENTIALLY TRAGIC CONSEQUENCE OF THE 2020 ELECTION SHALEMAG.COM

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MARCH/APRIL 2021

CONTENTS

SHALE UPDATE

Shale Play Short Takes

FEATURE

Energy Dominance Dumbinance

COVER STORY

BECAUSE IF A MAJOR PROJECT LIKE KEYSTONE XL CAN BE CANCELED BY THE STROKE OF A PRESIDENT’S PEN, THERE WILL NOW BE LITTLE PREVENTING SOME FUTURE PRESIDENT FROM USING SIMILARLY SUSPECT REASONING TO CANCEL MAJOR INVESTMENTS MADE BY OTHER COMPANIES AT THE BEHEST OF HIS OR HER OWN SUPPORTERS AND DONORS.

Critics of President Donald Trump argued that he was moving too slowly on climate change-related issues, implementing policies designed to spur America’s own oil and natural gas production in a largely-successful effort to create a higher degree of energy security. Yet, during his term, America’s carbon dioxide emissions declined further and at a more rapid pace than any other developed nation on earth on both an absolute and per capita basis.

INDUSTRY

$60 Oil is Great, But it Can’t Save Nigeria

INDUSTRY

BUSINESS

32 National Innovation Day: PG&E Is Partnering

52 Making the Grade: Navigating

in Three New and State-of-the-Art Clean Air Technologies

34 The Oilfield Needs To Buy Value, Not Widgets 36 U.S. Shale 2021: Show Me the Money

POLICY

Academic Challenges in Trying Times

The Policy Goal of Energy

LIFESTYLE 60 Equest’s 40th Anniversary Gala:

Celebrating 40 Years of Horse Power

62 Briscoe Western Art Museum

42 Rocky Times Continue, but Brighter Days Ahead 44 Texans Must Demand Real Action in the Wake of

“Night of Artists”

46 Manmade Global Warming: The Story &

SOCIAL

64 Fogo Lamb Chops Recipe

February’s Epic Electric Grid Failure the Reality

POLICY

66 Houston Mixer / Fogo de Chao 66 Jim Wright Cover Party

BUSINESS

COVID-19 Vaccine Policies for Oil and Gas Employers

LIFESTYLE

Four Seasons Hotel New Orleans

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VOLUME 8 ISSUE 2 • MARCH/APRIL 2021

KYM BOLADO

CEO/EDITOR-IN-CHIEF CHIEF FINANCIAL OFFICER Deana Andrews EDITOR David Blackmon

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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ASSOCIATE EDITOR David Porter DESIGN DIRECTOR Elisa Giordano PUBLICATION EDITOR Melissa Nichols COPY EDITOR Nick Vaccaro VICE PRESIDENT OF SALES & MARKETING Josie Cuellar ACCOUNT EXECUTIVES John Collins, Ashley Grimes, Doug Humphreys, Matt Reed VIDEO CONTENT EDITOR Aslan Sukolics SOCIAL MEDIA DIRECTOR Courtney Boedeker CORRESPONDENT WESTERN REGION Raymond Bolado CONTRIBUTING WRITERS Alexandre Andlauer, David Blackmon, Valerie Grant, Annette A. Idalski, Bill Keffer, Jason King, Dr. David W. Kreutzer, Paul Looney, Ankur Prakash, Ryan Ray, Dawn Robinette, Brian Smith, Melissa Subbotin, Tom Tamarkin STAFF PHOTOGRAPHER Malcolm Perez EDITORIAL INTERN LeAnna Castro

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For editorial comments and suggestions, please email editor@shalemag.com. SHALE MAGAZINE OFFICE: 5150 Broadway St., Suite 493, San Antonio, Texas 78209 For general inquiries, call 210.240.7188. Copyright © 2021 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.

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LETTER FROM THE CEO

AS WE BOLDLY JOURNEY FURTHER INTO A NEW YEAR AND A NEW ADMINISTRATION, it is more important than ever to reiterate the importance of fossil fuels in our daily lives. And not only that, if that were not important enough, but its importance to our national security, economy and the environment. The continued increase in natural gas use has dramatically reduced the levels of greenhouse gases in our nation. In this issue, we will take a closer look at the Biden administration, the future of fossil fuels in America and the lessons we hope were learned during the freeze in Texas. As always, I would like to thank our readers and supporters for joining us for another great issue. We look forward to continuing to share information on critical topics. Make sure to stay on top of current energy news by visiting SHALEMag.com and signing up for our e-newsletter.

KYM BOLADO

HEADSHOT BY MICHAEL GIORDANO

CEO/Editor-in-Chief kym@shalemag.com

SHALE MAGAZINE  MARCH/APRIL 2021

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SHALE MAGAZINE  MARCH/APRIL 2021

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SHALE UPDATE

SHALE PLAY SHORT TAKES By: David Blackmon

Bakken Shale – North Dakota/Montana The Biden administration will get more time to decide the fate of the Dakota Access Pipeline. In a February filing before the D.C. Circuit Court of Appeals, the government asked for a postponement of a conference on the status of the pipeline for 58 days while it gets new officials up to speed on the case. “Department of Justice personnel require time to brief the new administration officials, and those officials will need sufficient time to learn the background of and familiarize themselves with this lengthy and detailed litigation,” the government said. The docket shows the Feb. 10 conference for that case has been moved to April 9. The Dakota Access Pipeline transports upwards of half a million barrels of Bakken oil per day to various markets.

Denver/Julesburg (DJ) Basin - Colorado Chevron will acquire Noble Midstream Partners in an all-stock deal worth $1.3 billion, less than half a year after taking over Houston-based Noble Energy. The company said on March 5 that it plans to buy out the remaining outstanding shares of the Houston pipeline company, which has assets in both the Permian Basin and the DJ Basin. The announced acquisition comes five months after Chevron closed on its $4.1 billion takeover of big independent producer Noble Energy, which also held producing assets in both shale basins. Permian Basin – Texas/New Mexico Scott Sheffield, CEO of Pioneer Natural Resources, told the CERAWeek conference in early March that the future of the growth of the Permian Basin is largely in the hands of major oil producers like Chevron and ExxonMobil. Both companies have pulled back significantly from their plans to turn their Permian operations into essentially manufacturing operations consisting of hundreds of repeatable projects. ExxonMobil currently has eight rigs in the basin, versus 57 in first-quarter 2020, while Chevron is at five rigs, down from 17 in from Q1 2020. Sheffield said that Permian oil production is capable of growing at a pace of 5% per year, but that “a big factor is what majors like ExxonMobil and Chevron do.”

SHALE MAGAZINE  MARCH/APRIL 2021

Eagle Ford Shale – Texas Drilling, fracking and permitting activities almost came to a complete halt in mid-February due to the devastating impacts of Winter Storm Uri that resulted in widespread power blackouts across the state of Texas. But things quickly recovered in the weeks that followed. During the final week of February, sixteen companies filed to drill for oil and gas in the region encompassing the Eagle Ford Shale and other nearby oil fields, according to Railroad Commission of Texas records. Of those, a subsidiary of Houston-based Marathon Oil Corp. was most active, filing for 11 permits in Karnes and Atascosa counties.

Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio The four state members of the Delaware River Basin Commission approved a final rule prohibiting high volume hydraulic fracturing (HVHF) in the Basin. The new rule effectively prohibits gas drilling in northeastern PA and southern New York state. According to the Delaware River Basin Commission, Resolution No. 2021-01 amends the Commission’s Comprehensive Plan and Water Code to prohibit HVHF in the Delaware River Basin in order to control future pollution, protect public health, and preserve the waters of the Basin for uses in accordance with the Comprehensive Plan.

Haynesville/Bossier Play – Louisiana/East Texas

SCOOP/STACK Play – Oklahoma Overall production in the Scoop/Stack play continues to decline and was forecasted to hit 342,000 barrels of oil per day and 5.8 billion cubic feet per day during February, according to GlobalData. Those figures would mark a 43% decline in oil and a 27% dip in natural gas from the play’s peak in September 2019, which saw highs of 604,000 barrels of oil per day and 7.9 billion cubic feet of gas per day.

In its year-end earnings report, Tellurian Inc. said that it intends to “pursue potential acquisitions” of properties or companies that own Haynesville assets in the coming months as it works towards a final investment decision on its planned Driftwood LNG terminal. Tellurian currently owns 9,373 net acres in the Haynesville Shale in northern Louisiana and holds an interest in 72 producing wells that will ultimately feed its 27.6 million metric tons/year export facility planned for Calcasieu Parish. Those assets produced 16.9 Bcf of natural gas last year, up from 13.9 Bcf in 2019. The company plans to make its final investment decision later this year.

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 editor@shalemag.com. SHALEMAG.COM

 FEATURE

Energy Dominance Dumbinance By: Dr. David W. Kreutzer

oe Biden may have campaigned on eliminating the death penalty, but now as president, he appears to be ushering in the death penalty for reliable, affordable energy. In one fell swoop, Biden may go down as the one who replaced America’s energy dominance with dumbinance. His preferred tool of death: the executive order. On his first day in office, President Biden unleashed an avalanche of executive orders that made it very clear that he and his administration were anti-coal, anti-oil, and anti-natural gas. Of course, this means consumers, businesses, and good jobs will be collateral damage from the firing squad. The two most damaging parts of his Day One executive orders were rejoining the Paris Agreement and canceling the permit for the Keystone Pipeline (KXL). The Paris Agreement is problematic for at least three reasons. First, it will have a trivial impact (0.05° C) on any warming we could expect, even if all the member countries fully achieve their targets and if we can even attribute the temperature change to these actions. Second, China, the largest emitter of CO2, makes no commitment to do anything about its emissions before 2030 and commits to only weak, unenforceable efforts afterward. Third, despite the green-jobs rhetoric, meeting the Paris targets will strangle energy production, increase energy costs, be a big drag on the economy and kill jobs. During the debates over leaving the Paris Agreement in 2017, colleagues and I used a clone of the Department of Energy’s NEMS model (including the associated economy-wide macro model) to estimate the economic impact of remaining in the Paris Agreement. We projected employment would fall nearly 400,000 jobs below that of an economy without the Paris Agreement. More than 200,000 of those lost jobs would be in manufacturing. The aggregate GDP loss would be more than $2.5 trillion. That is bad enough, but Biden’s climate envoy, John Kerry, acknowledges that the Paris Agreement would have insufficient impact on climate change and argues that much more needs to be done. If so, then we should expect much higher costs than those noted above. This runs contrary to the Trump administration that implemented policies to strengthen the energy renaissance unfolding in the U.S. over the past two decades. Proof of this renaissance came in the form of energy independence. The

SHALE MAGAZINE  MARCH/APRIL 2021

year 2019 was the first since 1957 that the U.S. was energy independent. Among the policies pushing for greater energy dominance was the approval of the KXL Pipeline. This addition to our petroleum transportation network would bring more oil to our world-leading Gulf-Coast refineries. President Biden canceled this nearly completed pipeline and more than ten years of work on it — literally. The damage from this cancelation goes beyond creating energy bottlenecks and forcing oil to use travel via less safe and less efficient ground transportation. Canceling the permit nixed thousands of well-paid construction jobs with the stroke of a pen and sent shock waves throughout the energy industry. What shall these newly unemployed workers do? The same John Kerry who said private jet travel was the “only choice for somebody like me” displayed the same let-them-eat-cake attitude towards those who lost good jobs. He told them to make solar panels. To do so, they might have to move to China, where 70% of solar panels are made. Though the immediate effects of stopping the KXL project are bad enough, looking down the road, energy investors would have to be skittish about any project that could run afoul of the Biden administration’s CO2 program and get canceled at any stage of completion. And not running afoul can only get trickier. Executive Order 13990, another death tool of the Biden administration, authorizes agencies to undo all Trump-era deregulation as they see fit. It also explicitly directs the EPA to consider new comprehensive emissions-regulations of methane and volatile compounds at every stage of oil and gas production and distribution. It is almost like the president is embarrassed our energy industry is so strong. With gasoline prices near $4.00 per gallon in 2011, President Obama declared, “We can’t just drill our way out of the problem.” In case it was not clear what he meant by “problem,” in 2012, he stated, “You know we can’t just drill our way to lower gas prices.” Few statements have been proven more wrong, more quickly than those two. The oil and gas industry drilled our way to being the world’s largest energy producer, and, indeed, prices fell dramatically. His former vice president is putting a new twist on Obama’s old assertion. Instead of saying, “We can’t just drill our way of the problem,” President Biden seems to be saying, “You just can’t drill,” and that’s the problem.

Though the immediate effects of stopping the KXL project are bad enough, looking down the road, energy investors would have to be skittish about any project that could run afoul of the Biden administration’s CO2 program and get canceled at any stage of completion

About the author: Dr. David Kreutzer is a senior economist at the Institute for Energy Research. A native of Fairfax County, Virginia, Kreutzer earned his undergraduate and master’s degrees from Virginia Tech and received the first Ph.D. in economics from George Mason University. He taught economics for 23 years at James Madison University and for three years before that at Ohio University. He has published in peer-reviewed journals such as The Journal of Political Economy, Climate Change Economics, The National Tax Journal, Economic Inquiry, and Applied Economics.

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cover story

BIDEN’S ENERGY POLICY:

A POTENTIALLY TRAGIC CONSEQUENCE OF THE 2020 ELECTION

By: David Blackmon

SHALE MAGAZINE  MARCH/APRIL 2021

MOST AMERICANS SUPPORT THE CONCEPTUAL NOTION OF MOVING AWAY FROM FOSSIL FUELS TOWARD A SOCIETY THAT RUNS ON 100% “CLEAN” ENERGY. EVERYONE WANTS TO LEAVE A LEGACY OF CLEAN AIR, CLEAN WATER AND AN OTHERWISE IDYLLIC SOCIETY TO THE GENERATIONS THAT COME AFTER US. THAT IMPULSE SEEMS TO BE PROGRAMMED INTO OUR GENES. Once that notion is accepted, though, the question then becomes how is it possible to make this energy “transition” that has so permeated our news media over the last few years? It is one thing to do what Al Gore and others do, preaching on the evils of climate change and glories of renewables in religious terms designed to frighten the masses into accepting their apocalyptic predictions. And whose timelines always seem to shift farther out into the future every time one of those deadlines has come and gone and we are all somehow still alive and well. It is another thing to roll out massive policy proposals backed by political neophytes like Alexandria Ocasio Cortez and cynical veterans like Massachusetts Sen. Edward Markey who propose economy-killing mass changes to our ways of life with price tags of $90 trillion that we do not and never will have. But it is another thing still to try to plan for and deal with this “transition” in ways that are possible in the real world and that actually make logical and economic sense. Move too slowly, and CO2 levels in the atmosphere rise to higher-than-necessary levels; move too quickly before truly scalable, cleaner energy alternatives really exist, and risk economic calamity with massive negative consequences for every member of society. Critics of President Donald Trump argued that he was moving too slowly on climate change-related issues, implementing policies designed to spur America’s own oil and natural gas production in a largely-successful effort to create a higher degree of energy security. Yet, during his term, America’s carbon dioxide emissions declined further and at a more rapid pace than any other developed nation on earth on both an absolute and per capita basis.

SHALE MAGAZINE  MARCH/APRIL 2021

At the same time, U.S. levels of air pollution also declined, and America’s waterways became cleaner as Trump’s Environmental Protection Agency focused on reducing actual pollution sources instead of obsessing over carbon dioxide. That all happened despite the fact that Trump pulled the United States out of participation in the Paris Climate Accords and canceled a wide array of heavy-handed, command-and-control regulatory actions by the EPA and other federal agencies.

Despite these clear positive results, the new administration of Joe Biden and Kamala Harris contends that the Trump approach was all wrong and began to take action to return the country to the centralized regulatory approach that characterized the Obama/ Biden administration’s years in office. Not content to rely on Congress and the regulatory processes to undo the free market, light-handed strategy of the Trump years, the new president issued two major executive orders during his first 24 hours in office: • One repealing the cross-border permit for the Keystone XL pipeline project; and • Another implementing a moratorium on new oil and gas-related leasing on federal lands and waters President Biden also moved quickly to reverse Trump’s removal of the United States from participation in the Paris Climate Accords and re-started negotiations of another deal with Iran. Both moves will have major implications related to U.S. energy policy and security. These initial moves are just the beginning. Once the administration is fully staffed by its political appointees, we can expect renewed efforts to revive Obama/Biden-era policies like new federal regulations governing methane emissions, efforts to restrict hydraulic fracturing, and another attempt to vastly expand the EPA’s regulatory authority over the Waters of the United States. If you are thinking that each and every one of these policy choices will have the impact of increasing the cost of energy in the United States and slowing economic growth, you are correct. But what you have to understand is that the Biden people consider those outcomes to be features of their plan, not glitches. The climate alarmist community has long considered economic growth and the prosperity it creates to be enemies of nature. These quotes from a recent speech by Jon Erickson help to illustrate this mindset: "The Intergovernmental Panel on Climate Change in their Fifth Assessment, have 116 mitigation scenarios with a chance of staying below the 2 degree Celsius threshold. All of those scenarios assume 2-3% GDP growth rates," says Jon Erickson, an ecological economist at the Gund Institute for Environment in Vermont, adding that this implies doubling the global economy by somewhere around 2050. These scenarios rely not just on switching to renewables but also on the large-scale extraction of massive volumes of carbon from the atmosphere using as-yet unproven technology, which Erickson describes as "wildly unrealistic."

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"None of those models and the IPCC community even bother simulating a scenario where the global economy contracts, stabilizes and maybe even degrows," Erickson says. "Yet that's probably the one realistic scenario that would significantly affect greenhouse gas emissions." Now, never mind that lack of economic growth inevitably leads to higher rates of unemployment, poverty and human deprivation, most severely impacting the poorest among us. To the climate activist community, that’s all fine because it means that human emissions of carbon dioxide also go down. Or at least, that’s the theory that their climate models promote. Once you understand this central aspect of the climate alarmist mindset, their policy choices begin to make sense when considered within that context. As well, once you realize that basically 100% of Biden’s political appointees share this mindset, the policy choices already made and the even more draconian choices to come will also begin to make perfect sense when considered through the lens of that defining worldview. This central anti-economic growth belief – which also happens to be the defining belief of the “Green New Deal” – forms the very foundation of the Biden/Harris energy agenda.

KEYSTONE XL PIPELINE – THE ENERGY POLITICAL FOOTBALL OF THE 21ST CENTURY One of the Democratic Party’s long-running criticisms of President Donald Trump over the past four years has centered on allegations that his conduct of foreign policy often had the impact of alienating America’s allies. On his first day in office, new President Joe Biden risked doing exactly that with his executive order canceling the crossborder permit for the northern expansion of the Keystone XL Pipeline upon assuming office. Keystone XL has presented politicians in Washington, D.C. with a plum opportunity to play political football since the early days of the Obama/Biden administration. It is, in fact, the energy political football of the 21st century. Former President Barack Obama and his officials spent the better part of eight years currying favor with the leftwing anti-fossil fuels lobby by going to extraordinary lengths to constantly delay the project under specious reasoning that it would harm the environment. Meanwhile, President Donald Trump was able to gain support with oil and gas industry interests by taking immediate action upon assuming office four years ago to do what he could to remove roadblocks to the project’s completion. But despite the best efforts of Trump and his administration, the project remained incomplete as he left the office to Mr. Biden at noon on January 20. The incoming

SHALE MAGAZINE  MARCH/APRIL 2021

president no doubt thought that a quick cancellation of Keystone’s permit would be a low-hanging fruit means of pleasing one of his party’s most powerful constituencies, and so did most observers. But that thought process was interrupted just prior to Biden placing his signature on the dotted line when Reuters reported that the Canadian province of Alberta said it would seek damages from the U.S. should Biden follow through on his promise. If ultimately completed, Keystone XL would benefit Alberta and its oil industry by transporting huge volumes of the heavy crude produced in the Province’s oil sands to U.S. refineries located along the Texas and Louisiana gulf coasts. Alternative means of transportation, such as moving the crude to the Pacific Coast via the TransMountain Pipeline, which the Canadian government took over in 2018 at a cost of $4.5 billion, are less efficient and more costly, as well as more impacting on the environment. Obviously, the completion of Keystone XL would benefit Alberta’s economy and create additional jobs for the Province. Faced with Keystone XL’s cancellation, Alberta Premier Jason Kenney reached out to Canadian Prime Minister Justin Trudeau to urge him to appeal to Biden immediately. “This is the 11th hour, and if this really is the top priority, as it should be, then we need the government of Canada to stand up for Canadian workers, for Canadian jobs, for the Canadian-U.S. relationship, right now,” Kenney told a news conference. Kenney also stated that his government has retained legal counsel and believes it would have a strong case under various international trade agreements, such as the USMCA, to seek damages should Biden effectively kill Keystone XL by canceling its federal permit. In what was a futile effort to head off Biden’s decision, Keystone XL owner TC Energy said that it would go to extraordinary efforts to reduce the pipeline’s emissions footprint. As reported by the National Review, the company promised to make efforts to ensure the entire project is powered through “renewable” energy by 2030, saying it would take steps to acquire renewable power for its entire network. TC Energy also promised to use union labor, pointing to the fact that it reached a deal with four labor unions last August to construct the northern expansion of the system into Canada. “Not only has the project itself changed significantly since it was first proposed, but Canada’s oil sands production has also changed significantly,” Canada’s ambassador to the U.S., Kirsten Hillman, said in a statement. “Innovation will continue to drive progress.” But, the pushback from Canada fell on deaf ears for the incoming new administration, and President Biden issued his executive order within 24 hours after taking office. The question that too few in the news media have asked the new president is, why? Why would a president who likes to portray himself as a champion of the environment move to cancel a pipeline that has pledged to turn itself into America’s first all-renewable energy interstate/international pipeline system? Other than a simple raw exercise in political power designed to impress one of the Democratic Party’s most loyal and powerful inter-

est groups, the move makes little sense. It also shows how dominant the anti-fossil fuel lobby has become in recent years over one of that Party’s formerly powerful interest groups, organized labor. Reacting to President Biden’s decision, Thomas Pyle, President of the American Energy Alliance, put it this way, “The Keystone pipeline is nearly completely built and an important link for North America’s economic security. The decision today to rescind the permit makes it crystal clear that Mr. Biden stands with the extreme green lobby and not average Americans.” In a press release issued the following day, TC Energy, the owner and operator of the Keystone XL System reiterated a series of strong environmental and labor-related pledges in a last-ditch attempt to head off the looming presidential order to cancel its permit. Among those commitments were the following: • The Keystone XL System would achieve net-zero emissions in its operations by the year 2023; • While the net-zero goal would be achieved largely through trading in renewable energy credits, the system would become fully powered by new investments in renewable energy capacity by 2030; • A promise to “spur an investment of over $1.7 billion in communities along the Keystone XL footprint creating approximately 1.6 gigawatts of renewable electric capacity, and thousands of construction jobs in rural and Indigenous communities;” • The company also committed to “working with union labor in the U.S. and Canada,” pointed to the fact that “Keystone XL has also signed a Memorandum of Understanding (MOU) with North America’s Building Trades Unions (NABTU) to work together on the construction of TC Energy owned or sourced renewable energy projects.” “Since it was initially proposed more than 10 years ago, the Keystone XL project has evolved with the needs of North America, our communities and the environment,” said Richard Prior, President of Keystone XL. “We are confident that Keystone XL is not only the safest and most reliable method to transport oil to markets, but the initiatives announced today also ensures it will have the lowest environmental impact of an oil pipeline in terms

of greenhouse gas emissions. Canada and the United States are among the most environmentally responsible countries in the world with some of the strictest standards for fossil fuel production.” So, you might ask, why would a Democratic Party President move on his very first day in office to cancel such an environmentally responsible project committed to investing $1.7 billion in new energy capacity projects, one that would employ as many as 10,000 union workers to boot? It’s a valid question, but the answer is pretty obvious: Opposition to Keystone XL has been one of the main goals of the anti-fossil fuel lobby for a decade, and no promises made now will change that fact. Yes, TC Energy has been able to build out the vast majority of the overall Keystone XL System and place it into service in the U.S., but the northern extension into Canada facilitating movement of oil sands crude into the U.S. is, for the environmental left, a bridge too far (even though, in a bit of irony, the crossborder portion of the line is already constructed and in place).

MAYBE THE WORKERS SHOULD LEARN TO CODE In a statement reminiscent of Barack Obama’s famous admonition that West Virginia coal miners losing their jobs should “learn to code,” Transportation Secretary nominee Pete Buttigieg stated during his confirmation hearing the following week that union workers who have been or expected to be employed on the Keystone XL Pipeline project should simply get other jobs, saying “…we’re very eager to see those workers continue to be employed in good-paying union jobs, even if they might be different ones.” Thus does the future cabinet member reflect the Biden/Harris administration’s indifferent attitude toward the domestic oil and gas industry in general and this key $8 billion energy infrastructure project specifically. News of the cancellation of this cross-border permit was by and large treated as sort of a business-as-usual matter, but it is, in fact, an extraordinary act of executive fiat that has few peacetime precedents in American history.

The Keystone XL project represents an overall $8 billion investment by TC Energy, the company which owns and operates the Keystone Pipeline System that moves large volumes of crude oil throughout the middle section of the United States and southern Canada. Several hundred miles of the planned 1,200 mile Keystone XL expansion have already been constructed and placed into the ground, including, ironically, the section of the line that crosses the U.S./Canadian border. Upwards of $3 billion of that overall $8 billion investment have already been committed and now represents a sunk cost at the behest of a new president, a significant precedent for any administration to set. President Biden’s decision also placed thousands of union jobs at risk, representing $2.2 billion in lost wages. Keystone XL already employs about 2,000 workers, including members of the International Brotherhood of Electrical Workers, the United Association of Journeymen and Apprentices, the Teamsters and other major unions. All told, the plan for full construction of Keystone XL would employ as many as 10,000 union workers through its completion. Gone in addition to those jobs will be the $1.7 billion TC Energy planned to invest in real, actual new clean energy capacity between now and 2030 to provide all of the power the Keystone XL would consume, along with the thousands of direct jobs that investment would produce. According to a fact sheet from TC Energy, which sponsored the project, indigenous communities along the pipeline’s corridor will also be hard hit, “Indigenous communities lose hundreds of millions of dollars, including more than $1 billion in intergenerational opportunities for equity ownership in KXL that will help them fight poverty and build schools, hospitals, and other essential services.”

A NEW STATUS QUO FOR THE PIPELINE INDUSTRY Some, like Anthony Shaw, CEO and founder of Progeneration Energy, view the Biden decision as part of a new status quo in the U.S. In an email sent to me, Mr. Shaw said, “The Keystone project highlights a major change in the way we assess the viability of energy projects and final investment decisions. We used to operate under the guise that if nails had made it into the ground, a project was likely to be finished. That is simply not the case anymore, and no project is ‘too far along’ to be at risk of cancellation. Energy companies are going to have to take a deeper look at the viability of projects moving forward.” Among those who are no doubt pleased with Biden’s decision to cancel a pipeline that would bring hundreds of thousands of barrels of heavy Canadian crude into the

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United States to be refined would be nations in the Middle East, along with Venezuela and Mexico, whose own heavy oil production will be purchased by U.S. refiners to fill the void. Canadian Prime Minister Justin Trudeau, however, was not pleased at all, raising the matter in a call he conducted with President Biden. The White House statement about the call said Biden acknowledged “Trudeau’s disappointment regarding the decision to rescind the permit for the Keystone XL pipeline, and reaffirmed his commitment to maintain an active bilateral dialogue and to further deepen cooperation with Canada.” That, plus $2.15 will get PM Trudeau a cup of coffee at Starbucks. If Mr. Shaw’s vision for the future is correct, it is indeed a troubling one for the pipeline business. Certainty and consistency in the legal and regulatory arenas rank among the key factors that have made the United States such a comparatively attractive province to attract major energy investments. Biden’s fiat decision to simply strand billions of dollars of already-deployed investments in Keystone XL erodes that certainty. Green energy advocates who are celebrating this decision related to Keystone XL would be well-advised to consider that the precedent it sets could easily be applied to major solar and wind investments by future presidents. Just as President Donald Trump focused on keeping the promises he made during his 2016 campaign, Joe Biden will go about keeping some of his own. Elections have consequences, and the cancellation of a key piece of America’s first truly all-renewable oil pipeline system will become one of the consequences of the 2020 presidential election.

BIDEN’S LEASING MORATORIUM – A SURPRISE TO NEW MEXICO PUBLIC OFFICIALS? REALLY? Officials in the state of New Mexico professed to be taken aback by President Joe Biden’s day-one decision to impose a 60-day moratorium on all oil and gas-related leasing and permitting actions on federal lands. It is a decision that will have major ramifications on the state budgets of New Mexico and other Western states, especially given that it was almost immediately extended by the Department of Interior to last for 12 months. In September 2018, I wrote about the half-billion-dollar windfall New Mexico had just received during the course of a single sale of oil and gas leases on federal lands in

the state. Those federal leases lie in the segment of the Permian Basin that spills over from Texas into the southeastern portion of New Mexico, part of the Delaware Basin play area that has become the hottest oil play in North America since 2016. Like other oil and gas-producing western states, vast swaths of lands in New Mexico are owned by the federal government, including heavy concentrations of the lands in the southeastern part of the state and in the northwestern corner that is home to a great deal of natural gas production. Although the state cannot collect its severance tax on production from those lands, it does enjoy a 50% share of the royalties that the federal government assesses on that production, ranging from 12.5% to 16.667% of the gross value of the oil or gas. New Mexico’s collections of that share of federal royalties and proceeds from lease sales annually outpace all the other Western states.

Some New Mexico officials who supported the Biden presidential bid jumped to try to defend themselves by saying they didn’t anticipate the new president would issue such a ban. Such protests ring rather hollow given that these officials most assuredly did understand that Biden plans to eventually move ahead with his promised

fracking ban on federal lands, which would, for all intents and purposes, have the same effect. After all, virtually 100% of the drilling activity in southeast New Mexico targets the various shale formations in the Delaware Basin, and all shale wells require a frac job in order to be productive. Thus, a ban on fracking is the same thing as a ban on leasing and drilling. New Mexico’s Democratic Governor, Michelle Lujan Grisham, said through a spokeswoman, “Certainly we all understand the critical importance of this industry to New Mexico’s bottom line and of the imperative to diversify our state economy and energy portfolio.” And that’s all fine. But the reality is that she and her administration can strive to “diversify” the state’s energy portfolio all they want, but the state will still lose hundreds of millions of dollars every year should the Biden administration succeed in shutting down her state’s oil and gas business. To be clear: Neither the state nor the federal government collects any royalties on solar installations or wind farms. There is no severance tax to be collected from those alternative forms of energy with which to fund the state’s schools or hospitals or to sustain the free in-state college tuition program that Gov. Grisham herself established in 2019 thanks to New Mexico’s new Permian/Delaware Basin windfall. Moreover, many states actually subsidize wind and solar through tax abatements and credit programs, making them a net-negative to the state budget. Diversifying the portfolio is a noble goal, but Gov. Grisham and the New Mexico legislature will still have to find other ways to try to balance the state’s budget as required by state law. These are just some of the actual potential costs of the Biden assault on the New Mexico oil industry. They are the things that happen in the real world, as opposed to the fantasies pushed by many politicians. Steve Pearce, the former New Mexico congressman who now serves as Chairman of the state’s Republican Party, pointed to another certain cost of this Biden policy action. “I think we’re going to see companies choosing not to invest in New Mexico and take their jobs and drilling to Texas just three miles away,” Pearce said. "They can just scoot across the border where they don't have federal lands.” Pearce is absolutely correct. Big Permian drillers like Diamondback EnergyFANG, ChevronCVX, Oxy, ExxonMobilXOM and many others have lease holdings in both the New Mexico and Texas sides of the greater Permian region. It will be a fairly simple thing for them to focus most of their coming drilling programs onto the Texas side for the next four years should Biden follow through with his fracking ban or continue to further extend his leasing/permitting ban on federal lands. With his state facing a budget crunch of its own, thanks to the impacts of the COVID-19 pandemic, Texas Governor Gregg Abbott will no doubt be only too happy to welcome the increased oil and gas activity to his state and the higher revenues it will produce. Meanwhile, the people of New Mexico, who gave President Biden a 55% margin in the 2020 election, are no doubt confused about what it was they actually voted for.

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Again, elections have consequences. For New Mexico and other oil and gas producing states in the Intermountain West, the consequences of the 2020 election are only now starting to be understood.

POLICIES DRIVEN BY A MYOPIC, PURELY IDEOLOGICAL MINDSET Now, let’s go back and re-visit President Biden’s decision to cancel the cross-border permit for the Keystone XL Pipeline one more time, and examine the potentially enormous, broad ramifications not just for pipeline operator TC Energy, but for the economy as a whole and of the industry in general in the United States. Virtually lost in the media discussion about the decision is the fact that the president took his action to cancel this $8 billion project despite the fact that he made no finding that TC Energy was in violation of any regulation, permit or law of the United States of America. Instead, the order revokes the permit because it, in the opinion of the Biden administration, “disserves the U.S. national interest” of dealing with climate change, as laid out in the first paragraph of the order, which states, in part: “It is, therefore, the policy of my administration to listen to the science; to improve public health and protect our environment; to ensure access to clean air and water; to limit exposure to dangerous chemicals and pesticides; to hold polluters accountable, including those who disproportionately harm communities of color and low-income communities; to reduce greenhouse gas emissions; to bolster resilience to the impacts of climate change; to restore and expand our national treasures and monuments; and to prioritize both environmental justice and the creation of the well-paying union jobs necessary to deliver on these goals.” Thus, the president cancels an $8 billion major infrastructure project based solely on claims that Keystone XL would be bad for the environment and thus inhibit the nation’s ability to fight climate change. But such claims are, at best, misleading: • As I detailed earlier, Keystone XL, as planned, would be the safest and most environmentally responsible interstate pipeline ever constructed in the United States. TC Energy had pledged to invest $1.7 billion in the development of major new renewable energy capacity that not only would be used by 2030 to fully power the pipeline itself but also could have been shared by communities all along the pipeline’s route. Thus, the cancellation of the permit is a net negative for the environment. • The heavy Canadian crude that would come into America on Keystone for refining will instead be transported on rail or in trucks, both far more polluting and dangerous methods of transporting petroleum products. Without any question, a big net negative for the environment and safety.

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• Because Canada lacks the necessary refining capacity and is a net exporter of crude oil, the heavy Canadian crude that won’t be coming into America by any means will instead be transported on Canada’s Trans-Mountain pipeline system. There it will move across the Rocky Mountains to the West Coast, where it will be put on ships bound mainly for China and other Asian nations whose emissions regulations over their refining industry pale in comparison to those in the U.S. Another big net negative for the environment and safety. • The transportation of Canadian crude into the U.S. by rail lines skyrocketed by 192% between 2015 – when Barack Obama first denied TC Energy its cross-border permit – and 2019. The president’s cancellation of the cross-border permit will only make that number continue to rise. In the short run, President Biden’s decision produces very negative consequences for TC Energy and for the environment. In the longer run, it has potentially enormous negative consequences for the entire economy. From the initial planning phase to installing the final link of pipe, pipelines like Keystone XL represent decade-long, multi-billion dollar infrastructure projects. In order for a company and its investors to justify funding final investment decisions for long-term projects such as this one, they must place a high premium on confidence that they understand

the regulatory and legal requirements they will have to meet over the full course of the project term, which in the U.S. system could span three separate presidential administrations. If Biden’s order stands, it has the effect of damaging any such level of confidence. TC Energy had already spent more than $3 billion of its planned $8 billion investment in Keystone before Biden’s order. The company had already constructed several hundred miles of the pipeline based on its faith that the federal government of the United States of America would not renege on its word. But on his first day in office, Joe Biden did renege without making any finding of illegality or permit violation. There is, in fact, a strong case to be made that the president canceled this major infrastructure project simply because key donors to his campaign and political party did not want it to be built. That’s a dangerous thing in this country, even for those who today are celebrating Keystone XL’s apparent demise. Because if a major project like Keystone XL can be canceled by the stroke of a president’s pen, there will now be little preventing some future president to use similarly suspect reasoning to cancel major investments made by other companies at the behest of his or her own supporters and donors. Historically, American businesses have been able to get the big things done in large part because the U.S. legal system was stable and predictable over long periods of time and across presidential administrations. A business could fund multi-billion dollar investment decisions based on the faith that the federal government would honor permits that have been issued, even in previous administrations. President Biden’s decision on Keystone XL does that longstanding reality great harm. But to the climate alarmist community, whose anti-economic growth mindset dominates the political appointee class of the Biden/Harris administration, this is all fine because it helps to limit the amount of carbon dioxide going into the air, at least if their faulty reasoning is to be accepted as legitimate. This is the myopic, purely ideological mindset that produced these two executive orders and their massive implications, and it is the mindset that now stands to drive U.S. energy policy for the next four years. The consequences for the average American and the overall economy will be enormous and potentially tragic. 2024 cannot get here soon enough.

IF YOU ARE THINKING THAT EACH AND EVERY ONE OF THESE POLICY CHOICES WILL HAVE THE IMPACT OF INCREASING THE COST OF ENERGY IN THE UNITED STATES AND SLOWING ECONOMIC GROWTH, YOU ARE CORRECT. BUT WHAT YOU HAVE TO UNDERSTAND IS THAT THE BIDEN PEOPLE CONSIDER THOSE OUTCOMES TO BE FEATURES OF THEIR PLAN, NOT GLITCHES

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INDUSTRY

60 Oil is Great, But it Can’t Save Nigeria $

By: Ryan Ray

f $60 oil can not save you, then you are in bad shape. No, I am not talking about some of the U.S. shale producers, but Nigeria and its struggling oil industry. Depending on who you ask, Nigeria needs prices somewhere between $130 and $140 to balance its fiscal budget. The path to those prices in 2021 seems unlikely, but after seeing prices go negative last year, let us not shut the door on anything just yet. Unless Nigeria is banking on a long-term price above their breakeven, they need to implement systemic changes to lower their costs. Not only could this allow the country to balance its budget at a lower price point, but it would also give Nigeria the ability to invest more money back into their country, which is desperately needed. Who is in control? Like most nations, the government in Nigeria has a large amount of control over the oil and gas industry. It is beyond the scope of this piece to break down where the lines are drawn, but in countries where the government wants to keep its hand in the cookie jar, the government should also receive a slap on the wrist when things go awry. This is not to say that the private sector companies have no responsibility; rather, it is to point out that if the government has the political resolve and uses its political capital properly, it could clean up much of the mess. A seat at the table, but... Before discussing how Nigeria can reduce its cost, it is important to understand its place in the market and OPEC. If the United States, Saudi Arabia or Russia want to drive the price of oil up or down, these countries have the ability to do just that. Nigeria’s 2 million barrels per day (bpd) is something the country should be proud of. Still, to put that in perspective, the Saudis voluntarily cut 1 million bpd to balance the markets earlier this year. They will likely put it back on the market sooner rather than later. Two million bpd is not an irrelevant amount, but it is not significant enough to influence OPEC’s decisions. A cautionary tale for Nigeria is Venezuela. Their oil industry has crumbled over the past few years, and the market has picked up the barrels that Venezuela has shed without having a price shock. Nigerian oil has been an important part of the oil industry, but without the ability to influence the market, it needs to focus on maximizing every barrel of oil it produces. Plug the holes If Nigeria hopes to lower its cost, it has to find a way to stop crude oil theft. According to one report, the country lost an estimated $41.9 billion in revenue between 2009 and 2018. This works out to about 150,000250,000 bpd or $11 million a day in losses. Nigeria’s budget for 2021 is $35.6 billion, and according to the most recent data, they are losing

SHALE MAGAZINE  MARCH/APRIL 2021

200,000 bpd to theft. If the current prices hold, that would be $4.5 - $5 billion in losses or almost 15% of their budget in 2021. Both the private sector and the government have tried to protect their assets in the country. In 2019, Royal Dutch Shell subsidiary Shell Petroleum Development Company announced it would use specialized cameras attached to helicopters on its daily patrol flights to identify where theft was occurring. Earlier this week, Nigeria announced it would use its military resources to protect its most valuable commodity. These are just two recent examples. There are many more that could be cited. Despite myriad efforts to ensure the pipelines flow unhampered, it seems that the country still loses 200,000 bpd. Stopping the theft is one issue. There is also the toll of perpetually fixing the infrastructure from the illegal taps. When the initial infrastructure is put in place, it is done so with the presumption that it will function for many years. Each time the pipelines, wellheads, etc., are repaired, it creates stress on the surrounding parts of the infrastructure and will ultimately shorten their life expectancies. This, of course, results in higher costs across the board. Who is responsible for the theft? There are multiple parties to blame for this issue, and we have to start with the government. They are in control of the oil industry, its security and the assurance that the profits are spent wisely. Good government policy should maximize profits from the industry and use said profits to spur on job growth when it invests back into the economy. With an unemployment rate of 27%, which has more than doubled since 2016, many Nigerians are left to fend for themselves. Putting the ethics aside for a moment, when people need to feed their families, they will do what it takes to get that done. It is unlikely that average citizens are figuring out how to illegally tap a pipeline and get it to market without government or industry officials’ help. The United States stands apart from the rest of the world by allowing its citizens to own the subsurface minerals. Practically speaking, this creates wealth for the owners of said minerals and ownership of the oil and gas industry. Juxtapose this with Nigeria, where the only people in the industry making real wealth have minimal ties to those impacted the most by the theft. While oil loss causes budgetary problems for the country, it also impacts local farmers who have to deal with damages caused by oil spills. Rightfully looking for compensation, these farmers are left with little recourse if the government does not compensate them. In January, a Dutch court sided with the farmers in a suit against Shell Nigeria. Shell argued that sabotage, not negligence, was the cause. “We continue to believe that the spills in Oruma and Goi were the result of sabotage. We are therefore disappointed that this court has made a different finding on the cause of these spills and in its finding that’’ Shell’s

Nigeria unit is liable, Shell said in a statement. “Sabotage, crude oil theft and illegal refining are a major challenge in the Niger Delta.” The Shell issue raises several questions. If Shell knows its pipelines will be sabotaged, what level of protection is the company expected to install and prevent it from happening? Should the government regularly provide additional security? How do you ensure that the farmers are properly compensated for the damages to their property? Unweaving a web The issues highlighted today are macro. Even when pointing to a specific example, the points highlighted lack the nuance to solve all of the problems involved. The key takeaway is that Nigeria’s oil and gas industry is a reflection of its economy. The government has to root out corruption in its ranks to begin tackling these issues. Corruption has been a staple of Nigerian politics for years. The large multinational companies doing work in Nigeria are not without their own faults as well. Sadly, the ones who suffer from all of this are the people in Nigeria. If Nigeria is going to lower its costs, then it has to partner with its citizens. The government needs to be able to generate wealth, not just jobs, from this lucrative industry. Job growth will spur on innovation and will cut down on oil theft as the citizens will have more ownership of the industry, not just a mere part of it. If Nigeria or its oil industry wants to thrive, it has to take this challenge seriously. Just like lower break-even prices result in better returns for private companies, in Nigeria, they could lead to lower unemployment, a more stable economy, and a future where oil theft is mitigated by the stakeholders, namely Nigerian citizens.

Nigeria’s oil and gas industry is a reflection of its economy

About the author: Ryan Ray is the CEO of War Room Media and a proud member of the Board of Advisors for the George H.W. Bush Foundation for U.S. China Relations.

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INDUSTRY

National Innovation Day:

PG&E IS PARTNERING IN THREE NEW AND STATE-OF-THE-ART CLEAN AIR TECHNOLOGIES By: Melissa Subbotin and Jason King

Feb. 16 is Innovation Day, a chance to recognize new ideas, products and services that are changing the world. For PG&E’s award-winning Gas Operations Research and Development and Innovation team, every day is Innovation Day. This team is driving the development of technologies that could dramatically shift the paradigm on methane detection and the capture and repurpose of carbon dioxide. “We’re working collaboratively with our peers in the natural gas industry, the nation’s leading research institutions, and innovative startups to create new tools and methods to provide clean and safe energy to PG&E’s customers. Ultimately, this collaboration helps to accelerate developments by tapping the best resources. It also improves our overall industry practices in the United States and throughout the world,” said François Rongère, the team’s senior manager. Along with safety and operational excellence, reducing PG&E’s carbon footprint is one of the major focus areas of PG&E’s Gas Operations R&D and Innovation team. PG&E was an early supporter of California’s statewide emissions goals and remains committed to helping achieve a reduction of methane emissions to 40% below 2015 levels by 2030. Today, three projects are entering new phases in testing and, with these milestones, increased potential for new and exciting opportunities on the frontlines of climate change. State-of-the-art leak detection For more than six years, PG&E has collaborated with NASA’s Jet Propulsion Laboratory and other partners to adapt NASA’s Open Path Laser Spectrometer sensor on an unmanned aerial system or drone. The miniature methane sensor developed by the laboratory is derived from the technology developed by NASA to find life on Mars and is 1,000 times more sensitive than most commercially available technology. The drone-mounted leak-detection sensor can survey large stretches of infrastructure in

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a short amount of time, including areas that are more time-consuming to cover using traditional patrol methods to detect any leaks. Since leaks are identified and quantified faster, they can be prioritized for repair to reduce methane emissions. The technology assesses emissions levels by flying around a source where concentration enhancements measured downwind are combined with wind speed to estimate emissions. After several years of modifications and testing, the UAS leak-detection technology is likely in its final year of development. The goal is to bring the technology into operational use sometime in 2022. The ability to deploy an aerial methane-detection tool over long distances and in remote, hard-to-reach areas could signal a major turning point in future gas-leak detection capabilities for PG&E and the utility industry. Carbon capture and transformation PG&E’s service area covers most of Northern and Central California, which includes Silicon Valley, where some of the world’s leading innovators and research institutions are located. With such close proximity to some of the preeminent pioneers in climate change-fighting technology, PG&E has found collaboration opportunities, including with startup Opus 12 and the Alfred Spormann Laboratory at Stanford University. Opus 12 is a clean-energy startup that originated at Stanford University and the prestigious Cyclotron Road program at the Lawrence Berkeley National Lab. The Opus 12 team created a new proprietary system to convert water and carbon dioxide into renewable natural gas in one step. “We see CO2 electrolysis as an important future lever in the state’s carbon emissions reduction roadmap. Our technology transforms waste CO2 emissions and renewable electricity into

green natural gas, which can be used in existing pipelines, essentially turning California’s gas grid into an enormous battery. We partnered with PG&E to demonstrate a prototype of this process, and we look forward to future collaboration toward commercial-scale deployment of our technology across the state,” said Nicholas H. Flanders, Opus 12 co-founder and CEO. PG&E is investing in research and infrastructure to support the possibility of renew-

able natural gas that not only offers a carbonneutral source of energy to its customers but also helps California businesses such as dairies to reduce their greenhouse gas emissions by capturing methane and carbon dioxide otherwise released into the atmosphere. At nearly every biogas production facility, roughly 40% of the produced biogas is carbon dioxide by volume. And today, that carbon dioxide byproduct is typically vented. Opus 12 is focused on repurposing this excess carbon dioxide into additional methane

ane-producing PEM electrolyzer and the highest reported partial current density to methane in literature. Repurposing carbon dioxide As part of a consortium funded through NYSEARCH, PG&E is also involved in a project with the Laboratory of Professor Alfred Spormann at Stanford University, which is also looking at the possibilities of repurposing carbon dioxide into methane using a biological, rather than chemical, process.

highly promising technology platform for storing excess electricity as methane and for decarbonizing natural gas,” said Alfred Spormann, professor of Chemical Engineering and Civil and Environmental Engineering, Stanford University. While Stanford’s integrated microbial process is still in its early stages, it continues to show great promise as yet another possible technology in PG&E’s portfolio capable of helping the company achieve carbon-neutral renewable natural gas.

From drones equipped with sensors once used to potentially identify life on Mars to the possibilities of converting carbon dioxide emissions into pipeline quality fuels, PG&E is proud to support the development and future operational use of technologies that are making the way we deliver energy resources to our customers cleaner, safer and more innovative

through a single electrochemical step using excess renewable electricity and water. By converting carbon dioxide into a controlled form of methane, it can then be incorporated into the development of RNG. This would effectively increase the output capacity of the overall RNG production process. During the first phase of Opus 12’s project, the team demonstrated the world’s first meth-

PG&E initiated the partnership between Stanford and NYSEARCH, which is currently funding phase two in a 24-month long project to understand the effects of intermittent electricity on bacteria that use excess renewable electricity, water and carbon dioxide as food sources to produce methane and oxygen with zero byproducts. “Microbial electromethanogenesis is a

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INDUSTRY

The Oilfield Needs To Buy Value, Not Widgets By: Ankur Prakash

he oil and gas (O&G) industry is going through a rough patch, yet again. First, the supply versus demand game of cat and mouse in the open market pushed the industry through several up and down cycles. Then, as if it were not complicated enough, the coronavirus pandemic broke the industry’s back, bringing it to its knees in 2020. Who could have ever imagined a negative price of oil! When the aftermath of the 2014 oil price crash exposed glaring holes in the industry’s spending habits, every oil company raced to reduce their cost base by restructuring, reorganizing, prioritizing investments and squeezing contractors. At operators and oilfield services (OFS) companies, the conversations shifted from investing in new fields and the latest and greatest technologies to frugal cost discussions. But just as the industry was starting to get back on track, with plans to invest in future reserves, 2020 struck with full force. One thing that has become clear over the past few years is that the oil industry needs to reconsider its cost structure. More importantly, any reduction in cost structure needs to be sustainable.

Figure 1: Chart compares common stocks from the top four OFS companies, top six O&G companies, and Brent Crude price, all indexed to 100 on January 1, 2014.

Trying to squeeze discounts out of oilfield contractors and service providers to achieve reduction goals in capital expenditures (capex) is anything but sustainable. Figure 1 shows the impact that the slump in the oil industry has had on the stock prices of oilfield services companies and the major players in O&G. Compared to their value on January 1, 2014, while the O&G company stocks are down by about 40% in January 2021, the value of OFS company stocks has decreased by 80%. The OFS companies have lost twice as much shareholder value as the O&G majors. This begs the question: how can the oilfield ecosystem survive and deliver value to its shareholders on both sides of the spectrum? Consolidation is one obvious way, and we’ve started to see a wave of consolidations already happening across the world. Consolidation brings or-

SHALE MAGAZINE  MARCH/APRIL 2021

ganizational efficiency, reducing unit cost. Another sustainable solution is value generation through smart contracting models that encourage efficiency and performance, thereby reducing the unit cost to produce each barrel of oil. The old way The procurement philosophy of the oilfield has long been fragmented. Each individual service used to be tendered separately, leading to each individual contract being executed as a standalone, often resulting in the same service company providing several standalone services for the same project. Giddy with the oil wealth generated before the 2014 oil price crash, O&G company operations teams went on a purchasing spree, buying the latest technologies available in the market. The OFS industry also saw revenues ballooning, and investments in technology development became a necessity to continuously reinvent the narrative and avoid commoditization. When the crash of 2014 hit the industry, the procurement teams of the O&G companies were put in charge of delivering deep cuts in contractor spending. Nearly the entire industry went through a repricing exercise in which hefty direct discounts were sought from contractors in return for keeping their contracts active, but as the industry emerged from the aftermath of the 2014-2016 crash, further squeezes on contractors were no longer feasible. Many O&G companies tried divesting oil fields, restructuring, or reducing project capex to survive, and others explored different strategies. As a result, some O&G companies looked at consolidating their service contracts through an integrated approach, in which several services were tendered together, and more risks were passed on to contractors in return for a larger scope of work. While this helps reduce costs, this strategy is not sufficient to deliver sustained cost efficiency and improvement. The way out The best way to approach this issue is by changing the contractual models from paying for services to paying for value. When evaluating commercial proposals, the total cost of operations must be considered by accounting for the overall value a service can bring to the whole system instead of seeking the cheapest cost for an individual service or group of services. In other words, the oilfield needs to pay for value rather than widgets. Consider the following example: Imagine you run a delivery kitchen staffed by four chefs. Your kitchen delivers 100 dishes at $10 each in a day, and you pay each of your four chefs $100 daily. You could do more deliveries because your kitchen is popular, but the chefs protest that they can each make only 25 dishes a day. There is no incentive for the chefs to make more dishes a day because they get paid the same $100 per day, whether they make 20 dishes a day or 30. You want to grow your business, but your finances don’t allow you to add more chefs. But what happens if instead of paying the chefs $100 a day, you pay them $4 for each dish they make? Provided your food quality and Google ratings

don’t suffer, the chefs are free to make changes so that the kitchen becomes more efficient. You would be surprised to see that just by changing the chefs’ compensation model, your business starts to grow. Given the opportunity to earn more, the chefs would improve kitchen processes by reducing or streamlining tasks that don’t add value, allowing them to increase their production from 25 to 35 dishes a day. They are now incentivized to make the whole system work better, so their daily earnings grow from $100 to $140 per day, while your cost remains constant at $4 per dish.

Figure 2: Performance-based kitchen business model

Of course, drilling a well is a lot more complex than running a kitchen, but this very simple example illustrates the concept of buying value. A vast majority of the cost to drill a well today is still time-based, whether it be for compensation of the people involved or the day rate of contracts for services. As with the kitchen example, there is no incentive for the service contractors to be more efficient and improve performance, which would reduce the hours of their contract and thus their earning potential. In fact, depending on the contract scope and structure, they might be de-incentivized for being more efficient. For example, in a five-well drilling contract in which the rig contractor is paid on a per-diem basis, improving efficiency might enable the contractor to complete all five wells in less time, thus earning less money. If the same drilling rig contractor was compensated on a per well basis instead of per day, the contractor now has incentive to be more efficient. The sooner the five wells are drilled, the contractor can generate the same amount of revenue in a shorter duration. The cost of the rig for the O&G company is the same as it was in the case of the day rate contract, but since the wells finish sooner, the company saves money on other time-based costs, is able to get to oil production sooner, and can drill more wells in a year. Depending on the service, several forms of such performance-based contracts are possible, such as compensation based on footage drilled, wells drilled, length of well delivered within reservoir, uptime of pumps, or eventual rate of production. These performance-based contracts have one thing in common: instead of adherence to service-level agreements (how will the objective be delivered), they focus on performance and outcome (what has to be delivered), with the potential upside being proportional to the amount of value created. In these performance-based pricing models, the operator passes on additional risks to the service provider. For these contracts to be successful, the potential upside for the service provider should significantly outweigh the risk. If these contracts are implemented correctly, the interests of the service providers are aligned with the interests of the operator all along the value chain. When the entire value chain is aligned to the same objective, operators and service providers have better control over the eventual outcome. The need for sustainable reduction in the cost of producing each barrel of oil is more important now than ever before. Redirecting commercial and operating models so that all service providers are contractually working towards a common goal can help the industry get there. Many O&G companies have started moving towards such performance-based models, but aligning contractors and changing contracts takes time and effort, so the ones that get there sooner will be well-positioned to face the next oil-industry down cycle and be able to better ride the wave of the subsequent up cycle.

When evaluating commercial proposals, the total cost of operations must be considered by accounting for the overall value a service can bring to the whole system, instead of seeking the cheapest cost for an individual service or group of services. In other words, the oilfield needs to pay for value rather than widgets

About the author: Ankur Prakash manages global sales and commercial function for well construction at one of the world’s largest oilfield services companies. With nearly two decades of expertise, he specializes in operations management, maintaining synergy between service lines, developing and implementing new business ventures and performance models, and managing commercial responses for the global oil and gas industry.

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INDUSTRY

U.S. Shale 2021: Show Me the Money By: Alexandre Andlauer, Senior Commodity Analyst, Kpler

2020 has probably been an annus horribilis for shale oil since the industry first emerged in early 2008. Compared to the previous oil bust in 2015, the main difference in addition to negative WTI prices has been the lack of new capital supporting the sector. As a result, many players, when not acquired by a competitor, went into bankruptcy, especially on the services side, posing questions around the potential of the rebound in 2021. Oil bankruptcy filings climbed in 2020 to $53.9 billion, four times more than the previous year, according to law firm Haynes and Boone. Crude exports at their highest in early 2020 The year, however, started very well with stabilized oil prices at around $60 a barrel, with record production and, therefore, of U.S. oil exports. As highlighted in the chart, Q1 20 U.S. shale grade exports were strong, at 2.5 million barrels on average, but decreased to 1.8 million barrels at the lowest in November. For the full year, U.S. shale grade departures increased 11.9% compared to a year ago despite decreased global demand. As of December 2020, we have seen an increase in exports, with departures 7% higher than the November level but 27.5% lower than the December 2019 level, when shale grade exports hit an all-time high. Midland shipments increased by 6.2% m/m and 13.2% y/y to 1,367 kbd, while exports of WTI were down slightly to 464 kbd. Eagle Ford exports rebounded from the lowest level in 28 months of 72 kbd in November, standing at 105 kbd in December.

SHALE MAGAZINE  MARCH/APRIL 2021

The key question remains of what can happen in 2021 with oil prices rebounding in the first two months of the year? Cash is (still) king for investors With many players in the oil services sector now gone and with fewer fracking fleets, re-starting the industry could take much longer this time than during the last bust. Frac sand, a critical path component in fracking, could be a chokepoint for the industry’s rally in the first part of the year 2021, as fleets compete to stay sanded in a weakened supply chain. Many sand miners collapsed or were underinvested because of low prices. It looks as if supply-chain disruptions will be unavoidable. Caution is clearly the outcome for 2021 within oil company management. According to a poll of shale oil executives who were asked to provide the WTI price they used for planning their capital expenditures in 2021, the average response was $44 a barrel. But the correlation between investments/ production and oil prices could be a little bit different in 2021 due to capital discipline and restraint by oil services. Cash flow generation is needed to survive, and maybe even more importantly, is what investors are looking for. As a reminder, financial markets haven’t rewarded U.S. shale for its record production growth but rather punished the stocks as cash flows were missing. There are hopes that this time, shale firms will keep their promises to stay disciplined and, according to some oil companies during their Q4 20 earnings releases, they want to convince that they have finally learned their lesson and have a way to win investors back again. Even big players like Chevron mentioned that it could take until the second half of the year or even early 2022 before conditions are right to increase investments in new drilling. A first step was already made in 2020 in terms of capital discipline, with a reinvestment rate below 100 for the first time ever. Essentially, companies invested less than they generated from operating cash flow. Pioneer, one of the biggest pure shale players, expects $2 billion in free cash flow for 2021 and will, for the first time, start to pay a variable dividend in 2022 in addition to its regular dividend, while Devon Energy followed the same trend.

What we have learned in the past years in this industry is that it is already very difficult to predict what can happen in the next 12 months, so writing about two to four years’ prospects looks a bit like science fiction In terms of shale production, the year ended at 7.44 mbd, down nearly 20% compared to 2019. Going back to 2019 levels looks almost impossible in the next 18 months for the reasons mentioned above, even with oil at $70 a barrel. Stability on average in 2021 vs. 2020 is probably what to expect, but this would already be an increase of 0.5 mbd when comparing December 2021 to December 2020. Only oil prices above $80 a barrel for a couple of months could significantly change the outcome for 2021 as at that price cash flow generation starts to be massive. The other metrics that could determine the size of the ramp-up is natural-gas prices, as the production of dry gas and NGLs account for nearly half of the Texan shale production or nearly a quarter of its revenues. Texas’ deep freeze to decrease production potentially by 200 kbd Another uncertainty for 2021 is the recent deep freeze in Texas which has been heavily impacting oil and gas production for several days, with more than 70% of U.S. completion crews no longer active. Across the U.S., more than 4mbd of production have been lost. This comes as bad timing for the Permian Basin, not only because balance sheets look weak and cash flow is missing to survive, but also because many of those wells just fracked deliver much of their oil in the first days after completion. The key question lies in the impact on the infrastructure, wells and oil equipment for the restart. There is no recent precedent, so it is difficult to know when things will get back to normal and how much well work will be required. One of the examples mentioned by local players is frac sand plants. It could be a challenge to resume operations as rolling power blackouts and gas curtailments could have destroyed equipment as well as causing problems to restart engines. In the field, thawing won’t be easy either (frac iron and water transfer issues will be prevalent), and road conditions could be bad as well. All in all, with nearly a 4mb loss for a couple of days and a slow full restart (3-6 weeks), the winter episode could hit average production in 2021 by 200kbd. Most Pioneer Resources production is back online, and storm damage repairs are “minor in the grand scheme of things,” according to the CFO of the company. Lower potential in the medium term In the medium term, more concern arrives with the capacity to keep a sustainable high growth of production on reservoir quality. Even big players look to be playing down medium-term production targets. Exxon recently announced it expects to produce 700kbd in the Permian by 2025, nearly double vs. 2020 but much less than the 1mbd expected. What we have learned in the past years in this industry is that it is already very difficult to predict what can happen in the next 12 months, so writing about two to four years’ prospects looks a bit like science fiction.

About the author: Alexandre is Senior Commodity Analyst at Kpler, the leading provider of data and analytics in commodity markets. He joined Kpler’s Research Team in 2018, which brings insights to the commodity community by harnessing Kpler’s considerable array of proprietary data. Alexandre leads on crafting research and analysis regarding industry equities as well as shale oil, given his extensive knowledge of the sector. In addition, Alexandre provides industry insight to media outlets like Bloomberg and Forbes and is also a published author of an award-winning book on the shale industry.

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POLICY

THE POLICY GOAL OF ENERGY By: Bill Keffer

he tale is told of my Keffer ancestors moving the family from Greene County, Pennsylvania in 1910 to Lipscomb County in the Texas Panhandle. They gave away all their winter clothing and bedding because they were leaving the frozen North for the sunny South. And then came the “Great Blue Norther” of 1911, with its sub-freezing temperatures and blizzards, which covered Lipscomb County and much of Texas. It can get cold – very cold – in Texas. The official lowest temperature ever recorded in Texas was in Tulia (Swisher County), 23 degrees below zero - in 1933. Here are other record lows in various Texas cities: Amarillo (-16 in 1899); Austin (-2 in 1949); Dallas (-8 in 1899); El Paso (-8 in 1962); Houston (5 in 1930); Lubbock (-17 in 1933); Midland (-11 in 1985); San Antonio (0 in 1949). February 2021 is sure to go down in the record books as another winter storm to remember, not only because it was extreme in its intensity and coverage but even more so because it revealed weaknesses in our electrical grid. One sure way to get someone’s attention is to abruptly take away his access to electricity. Not surprisingly, because we have become increasingly more dependent on having immediate and continuous electricity, the more significant the consequences are when service is interrupted. And the longer the interruption, the more severe the consequences. Unfortunately, our growing dependence on, and automatic expectation in, having electricity all around us is matched by our pervasive ignorance in what it is, how we generate it, and what all it takes to have a dependable electrical grid. The failure of the Texas electrical grid during the February winter storm has been dissected by countless pundits – both informed and some who are perhaps more inflamed than informed. Unquestionably, weaknesses in the system were exposed, and there are lessons to be learned and corrective actions to be taken. But, as with most significant events, useful analysis rarely occurs in the heat of the moment. To start with, the weather event was extreme in terms of sustained sub-freezing temperatures and the extent to which those temperatures covered the state. But, as stated above, Texas has had many such events in its history. Perhaps one significant difference is the degree to which so much of our population is now dependent on electricity every minute of every day. In other words, when we depend on electricity for heating, cooking, water, communications (mobile phones), computers, lights, kitchen appliances – to name just a few essential services, it becomes abundantly clear just how stranded and helpless we are without it. For many years now, we have been warned how vulnerable we are to terrorist attacks on our electrical grids throughout the U.S. This brief weather event in Texas is certainly an eye-opening demonstration of the reality of such a warning. Many Texans were without electricity for a few days; can we imagine going without electricity for weeks or months? Our growing dependence exposes our growing vulnerability. How will Texas respond? Certainly, there are substantive steps that can and should be taken to improve our electrical grid and minimize, if not eliminate, similar consequences during future extremeweather events. One critical ingredient in any effective, long-term response is having a more informed population. Success in our modern economy has led to comfort; comfort has led to complacency, and complacency has led to a lack of interest in knowing how or why we are able to enjoy the comforts and conveniences of a modern economy. Such disregard for understanding something as fundamentally important as energy can only lead to disaster. Well-reasoned, sound policy decisions are more likely to be made by those in positions of authority when the people they represent understand the issues and choices that are being considered. To understand, they must be provided all the relevant information, not just the information that has been carefully curated to promote a particular agenda. To put a finer point on it – perhaps people should consider the merits of pursuing an energy policy premised on averting the theoretical consequences of climate catastrophe in the distant future versus

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one based on averting the real consequences of energy failure, inadequacy, and poverty being experienced by people all over the world right now – even by the millions of Texans for those few days in February. For Texans and others to be in a better position to make that kind of determination, the first step must be to decide what the goal of any energy policy should be. Alex Epstein, author of “The Moral Case for Fossil Fuels,” proposes that the goal should be the promotion of human flourishing, rather than the irrational preference for protecting nature over man held by the climate-change crowd. At their core, most people support the principle of self-preservation and recognize the ingenuity of man to be able to adapt to whatever conditions are presented by nature – man-made or otherwise. Anoth-

Real events can often have the effect of jolting our society and government from the slumber of sloppy thinking into a renewed discipline of common sense. Let us hope we are about to be jolted er ugly, but ever-present, the reality is that those in power who preach deprivation or sacrifice for others usually, conveniently, exempt themselves. If the goal is human flourishing, then any rational energy policy should be founded on developing and providing energy sources that are abundant, affordable, dispatchable, dependable, and dense. To the extent decisions regarding energy policy are not made based on these criteria, then it can be said that those decisions are less rational. If the decisions are less rational, then it should be asked on what basis and to achieve what goal have less-rational decisions been made. The stark reality that came from the news stories reporting on the consequences of having no electricity, even for only a few days, should have the clarifying effect of making us better understand the importance of recog-

nizing the primary goal of striving to have dependable and continuous electricity – and energy, in general. Whether it is the family with no heat in their apartment, struggling to keep their children warm; the elderly woman in her home without access to lights or heat; the injured or infirm in the hospital desperately in need of surgery, where access to continuous electricity is uncertain; or the woman living alone needing to place an emergency call over her mobile phone that has lost its charge – what policymaker could ever rationally make decisions based on the theoretical and unknown of the distant future over the real and known of right now? Real events can often have the effect of jolting our society and government from the slumber of sloppy thinking into a renewed discipline of common sense. Let us hope we are about to be jolted.

About the author: Bill Keffer is a contributing columnist to SHALE Oil &amp; 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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POLICY

ROCKY TIMES CONTINUE, BUT BRIGHTER DAYS AHEAD By: Paul Looney, Cornerstone Government Affairs

s expected, the first few months of 2021 have ushered in a period of continued volatility and uncertainty for America’s oil and natural gas sector. Beyond the pandemic and questions about whether OPEC+ will maintain production quotas that help balance out supply with demand, the inauguration of President Biden and ensuing executive actions taken in the early days of his administration underscore the ever-shifting landscape for the industry, particularly for companies operating on federal lands. High-profile Day 1 moves included temporarily suspending delegated authorities at the Interior Department from taking actions on oil and gas projects, revoking the Keystone XL Pipeline permit, rejoining the Paris Agreement, and restricting access to onshore and offshore areas in the Arctic. In an executive order issued just one week later, the president instituted a “pause” on all new federal oil and gas lease sales and directed the administration to begin work toward conserving at least 30% of U.S. lands and 30% of U.S. waters by 2030. Then, in late February, as an interim measure pending a revised estimate due by January 2022, an interagency working group established on Inauguration Day raised the social cost of carbon upward to $51/ton. Amid all the activity, federal agencies have also been directed to immediately review all actions taken in the previous four years deemed to conflict with new national objectives related to areas including public health and environmental protection, greenhouse gas emissions, climate change, and clean air and water. Specific items under review include previous actions to regulate hydraulic fracturing and eliminate methane regulations. With all the executive actions taken, industry is rightly concerned about how federal policy could impact existing and future operations. At

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the same time, comments by senior administration officials and nominees also suggest a pragmatic recognition of the reality that oil and gas is here to stay well into the future. For example, in an opening statement at her confirmation hearing, Interior Secretary nominee Debra Haaland said that “there’s no question that fossil energy does and will continue to play a major role in America for years to come,” and that she knows “how important oil and gas revenues are to fund critical services.” Similarly, prior to her confirmation, thenEnergy Secretary nominee Jennifer Granholm said that U.S. LNG exports “can have an important role to play in reducing international consumption of fuels that have greater contribution to greenhouse gas emissions.” She also committed to supporting pipeline projects and acknowledged the importance of pipeline infrastructure, including their contributions to carbon reduction efforts. Notably, President Biden also reportedly told a group of labor leaders in February that “I’m all for natural gas.” That is not to say that there is an easy road ahead. There most certainly is not. In addition to uncertainty associated with the actions already taken, including ongoing litigation, the regulatory landscape is likely to look much different once all the dust settles and the pause on federal leasing is lifted. In addition to more stringent regulation of activities, including methane emissions and hydraulic fracturing and reduced access to federal acreage, federal permitting and approval processes are likely to be more time-intensive and cumbersome as requests are weighed against the administration’s climate objectives. For those leases that are issued, lessees should not be surprised to find lease terms and conditions that are less favorable, including through higher royalty rates.

The likelihood of such an outcome is underscored by the president’s direction that in conducting the review of the leasing program to be carried out during the pause, the Interior Secretary “shall consider whether to adjust royalties associated with coal, oil and gas resources extracted from public lands and offshore waters or take other appropriate action, to account for corresponding climate costs.” To be sure, pressures are not only emanating from the White House. A Democratcontrolled Congress is set on advancing the ball on climate policy as quickly and as far as possible, and spurred by the party’s progressive base, oil and gas is clearly in the crosshairs. Even in the oil and gas bastion of Texas, regulators are tightening the screws by applying greater scrutiny in reviewing natural gas flaring requests, and industry itself is making commitments to end routine flaring. Importantly, all of these developments are taking place amid a boom in environmental, social, and governance (ESG) and sustainability trends, with investors, shareholders, and financial institutions joining

With ingenuity and agility that is second to none, despite whatever bleakness may seem apparent at the moment, better days for the industry are indeed ahead other voices in demanding greater transparency and accountability from industry regarding environmental footprints and the steps being taken to mitigate them. While it may seem like a bleak moment for the industry — and immense challenges most certainly do exist — it is far from the end of its storied history. First, a lower-carbon future will necessarily require the use of oil and gas. Petroleum will be a critical feedstock for everyday goods as varied as clothing, ink, and paint and a backbone for transportation around the world. At the same time, natural gas will be pivotal to ensuring a stable electricity supply as more intermittent energy is integrated into the grid, meeting the electricity demand that will come with the increased use of electric vehicles, and providing allies and people around the world with abundant, reliable and cleaner energy. Moreover, technology and innovation continue

to flourish, and coupled with continued cost efficiencies achieved during the pandemic, solutions exist to ensure a strong position for oil and gas in the energy transition and journey toward a lower-carbon future. Investments and R&D in areas such as carbon capture and storage, production of certified “green” natural gas, renewable natural gas, equipment electrification, and hydrogen are just a few of the areas of opportunity for oil and gas companies to help ensure their resilience and maintain a leadership position amid the decarbonization movement. The last year has been a time of unprecedented turmoil for the U.S. oil and gas sector, and many companies have sadly not survived intact. However, with ingenuity and agility that is second to none, despite whatever bleakness may seem apparent at the moment, better days for the industry are indeed ahead.

About the author: Paul Looney is a principal, advisory services, Cornerstone Government Affairs, where he advises energy industry clients on government, regulatory, ESG, and strategic business matters. In his past, Paul was principal and co-founder of the Washington, D.C. lobbying firm, The Washington Capitol Group, served as government affairs director at the American Institute of Aeronautics and Astronautics and served in Congressional affairs at the U.S. Department of Interior’s Bureau of Land Management.

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POLICY

TEXANS MUST DEMAND REAL ACTION IN THE WAKE OF FEBRUARY’S EPIC ELECTRIC GRID FAILURE By: David Blackmon

s we finalized this issue of SHALE Magazine early in March, the midFebruary arctic blast and power blackouts that hit Texas were at the top of everyone’s minds, ours included. The Texas legislature had just concluded two full days of hearings on the matter on February 2526, and the chair of the Public Utility Commission, DeAnn Walker, resigned on March 1, after Lt. Governor Dan Patrick had called on her and Bill Magness, the CEO of the Electric Reliability Council of Texas (ERCOT) to do so. As of this writing, Magness remained gainfully employed – very gainfully, actually, given his impressive salary of $876,334 per year – but how much longer that can last is anyone’s guess. To be sure, it seems likely that, although half of its board of directors have already voluntarily resigned, more heads will roll within that organization after its miserable failure to ensure the Texas power grid was adequately prepared to withstand the state’s latest winter blast. The politicians are all still scrambling around to find ways to avoid taking the blame for the blackouts – which denied power at one point to 4.5 million citizens and resulted in the deaths of more than 30 Texans – and will be looking for more lambs to sacrifice. But if this effort to look for solutions to the grid’s vulnerabilities devolves into nothing more than the ritual sacrificing of scapegoats, then nothing will have been solved at all. In her resignation statement, Ms. Walker repeated what we at SHALE Magazine have

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been writing since the blackouts started on the morning of Monday, February 15: That every power source and everyone involved in the system failed to some extent. “The gas companies, the Railroad Commission, the electric generators, the transmission and distribution utilities, the Electric Reliability Council of Texas, and finally the Legislature all had responsibility to foresee what could have happened and failed to take the necessary steps for the past ten years to address issues that each of them could have addressed,” Walker wrote, urging all involved to step up and acknowledge their own culpability in the disaster. Although the rest of her letter was somewhat petulant and unapologetic for her own failure to do her job of properly informing the legislature of the system’s lack of winterization and other vulnerabilities, she was correct on that point. Her choice to name “the gas companies” first on her list, though, is more than a little bit irritating to me given that, despite the freezeups that did occur among some gas pipelines and power plants, the natural gas system did the yeoman’s work in ensuring that the entire grid didn’t ultimately collapse, providing more than 70% of all electricity generated in the state during the depths of the freeze event from February 15 through 17. In a statement on February 16, ERCOT said that we came within a little more than 4 minutes of such a collapse taking place, noting that had that happened, millions of Texans would have been

without electricity for months. We also discovered shortly after the crisis had passed that a great deal of the freezing situation related to natural-gas pipelines and power plants happened because of actions taken by ERCOT itself. During a February 21 appearance on SHALE Magazine’s “In The Oil Patch Radio Show,” Texas Railroad Commission Chairwoman Christi Craddick noted that part of the issue that caused some natural-gas power plants to fall off the grid on February 14-15 was the fact that the rolling blackouts implemented by ERCOT ended up cutting off electricity to several large natural gas compressor stations in West Texas. Without proper compression, natural gas pipelines cannot maintain the pressure needed to move natural gas to the power plants, causing the plants to freeze up. This, frankly, stunned and amazed me since, after a very similar winter storm in 2011, the industry worked closely with ERCOT and the PUC to develop a plan that should have prevented this same tragic mistake from occurring again in the future. “Back in 2011,” I said, “rolling blackouts unintentionally shut down electricity needed to get gas to power stations. Are you telling me the same problem happened again this time, ten years later? How could this have happened again?” Craddick responded, “The biggest challenge we had this week was reminding people that we’re all very integrated. If you don’t have

power going into gas processing plants, you can’t move gas. Solar wasn’t working, and diesel freezes in certain temperatures, so finally, on Tuesday, we had a conversation about the need for power. They [ERCOT] finally seemed to understand that, and we sent specific coordinates to them so they would turn the power back on in those oil fields.” And it gets even worse than that. The postevent hearings by the house and senate revealed that ERCOT’s rolling blackouts also denied electricity to several natural gas-fired power plants, causing them to shut down as well. At the very least, these painful incidents point to the need for much better communication between ERCOT officials and the industries, so that these critical facilities aren’t cut off in the future. But much more than improvements to communication must be done in the wake of this latest failure of the Texas grid. It was painfully obvious following the major freeze and blackout event of 2011 that many crucial facilities had not been properly winterized, yet no one in a position of authority in the state was able to summon the political will to act to require that to happen. That is a failure of the political system – the legislature and the PUC – not of ERCOT management. Over the intervening decade, however, ERCOT must bear responsibility for failing to fulfill its duty to properly inform the PUC, the legislature and the public about the system’s ongoing vulnerabilities. What we have gotten from offi-

cials there instead has been a ton of boasting about how much wind and solar they’ve been adding to the grid, both of which utterly failed to perform during the arctic storm. ERCOT, the PUC and the legislature have also failed to work to ensure that the system maintains an adequate amount of reserve baseload-generating capacity that can be brought online to increase power generation during such emergencies. While we’ve been adding all of this wind and solar to our grid since 2011, the state has added less than 2mwh of natural-gas generating capacity and zero nuclear or coal capacity. During those same years, our state’s population has risen by 15%, and our economy has grown by more than 30%. Texas’s deregulated energy market relies on the market organically creating price signals that naturally incentivize the building of new power capacity as it is needed. Such signals ceased to exist long ago, yet no one in a position of authority has acted to address that glaring issue via legislation or regulatory actions. This second grid failure in just 11 years demands that this must now change, too. Demanding resignations and holding executives accountable in the wake of such disasters is to be expected to some extent. But no Texan should tolerate another failure by all involved to also enact real systemic reforms designed to prevent another disastrous grid failure the next time a major arctic storm moves across the Red River. Texans deserve better than that from their public officials.

But if this effort to look for solutions to the grid’s vulnerabilities devolves into nothing more than the ritual sacrificing of scapegoats, then nothing will have been solved at all

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POLICY

MANMADE GLOBAL WARMING: THE STORY & THE REALITY By: Tom Tamarkin

Introduction: One of the early purposes of climate alarmism was to stimulate the reduction of the worldwide population over an extended period, under the ultimate control of a single worldwide government. It is predicated on the fictitious notion of man-produced climate change. The plan was and perhaps still is to use climate change as a socially accepted reason to force the abandonment of the cheap, abundant energy produced by fossil fuel and nuclear generation. To maintain a population of over 7.5 billion human beings requires massive amounts of food and energy. Energy is the key. It takes energy to raise, harvest, produce and transport food. And it takes still more energy to provide for man’s comfort and mobility. Reducing the amount of available energy by a significant factor assures that sustainable conditions are only available for a similarly reduced population. Such conditions are ripe for tyrannical socialistic control through a unified worldwide government. History: The patently false notion of anthropogenic global warming (AGW) and climate change was first adopted by the Club of Rome in its efforts to promote the need for population reduction. Its inauguratory meeting was held in 1968 at David Rockefeller’s estate in Bellagio, Italy. The notion of AGW and climate change was based on inaccurate understandings of the 19th century works of John Tyndall, “Heat A Mode of Motion” and Svante Arrhenius, “Worlds in the Making.” The plan was to stress the need for restricted availability of energy under the guidance of a united worldwide government. Lower available energy would lead to much lower population levels over several hundred years. The term atmospheric greenhouse effect or “greenhouse gas” appears to have been first coined by Nils Ekholm in his paper published in 1901, “On the variations of the climate of the geological and historical past and their causes.” On October 10, 1972, J.S. Sawyer, the head of research at the UK Meteorological Office, wrote a four-page paper published in Nature summarizing what was known at the time about potential temperature changes, and predicting warming of about 0.6℃ by the end of the 20th century. The movement took root in October 1975 when Dr. Margaret Mead, president of AAAS, aided by associates Paul Ehrlich (the author of “The Population Bomb”), Stephen Schneider, John Holdren and George Woodwell, held the “Atmosphere: Endangered and Endangering” conference in North Carolina, where Mead used global warming caused by CO2 as the predicate for population reduction and eugenics. In response to a request from the Director of the Office of Science and Technology Policy, the President of the National Academy of Sciences convened a study group under the auspices of the Climate Research Board of the National Research Council to assess the scientific basis for projection of possible future climatic changes resulting from man-made

SHALE MAGAZINE  MARCH/APRIL 2021

releases of carbon dioxide into the atmosphere. The Study Group met at the NAS Summer Studies Center at Woods Hole, Massachusetts, on July 23-27, 1979. By the end of the year the group released what became known as the Charney Report. Also in 1979 the World Meteorological Organization hosted its first World Climate Conference which framed climate change as a global political issue, giving way to similar conferences in 1985, 1987 and 1988. In 1985, the Advisory Group on Greenhouse Gases (AGGG) was formed to offer international policy recommendations regarding climate change and global warming. At the Toronto Conference in 1988, climate change was suggested to be almost as serious as nuclear war, and early targets for CO2 emission reductions were discussed. As a result, later in 1988 the United Nations Environment Programme (UN Environment) and the World Meteorological Organization (WMO) created the Intergovernmental Panel on Climate Change (IPCC.) The IPCC has 195 member countries. In the same year, the UN General Assembly endorsed the formation action. In 1990, the IPCC released its working group First Assessment based on the Scientific Plan for the World Climate Research Program of 1984. A Second Assessment was released in 1995. A Third Assessment was released in 2001. A Fourth Assessment was released in 2007. The most recent Fifth Assessment was released in 2013. A sixth assessment report is scheduled to be released in 2022 and has been previewed. In general terms, each successive assessment report projects a higher degree of confidence in anthropogenic warming based mostly on the increased release of carbon dioxide in the atmosphere principally as a product of fossil fuel use.

It must be stressed that the IPCC and other groups within the UN have no practicing scientists, per se, on their staff. They rely entirely on the input from scientists in the 146 membership countries. Furthermore there is no empirical proof that the so-called infrared emitted greenhouse gas theory is true, and there have been no fundamental experiments designed to prove or falsify the theory. All IPCC predictions of warming are based on computer models programmed as if the theory acts as scientists have postulated it. Although water vapor is defined as a “greenhouse gas” in the first IPCC assessment, the quantity of water vapor and its ratio to other greenhouse gases such as carbon dioxide, methane and nitrous oxide is never stated. Water vapor accounts for over 95% of the greenhouse gases in the lower troposphere portion of the atmosphere at any time. Water vapor is the real, major greenhouse gas. At any given time there is over 37.5 quadrillion (million X billion) gallons of water in the atmosphere in the form of invisible water vapor referred to by weathermen as humidity.

The Kyoto Protocol was formalized in 1997 and operationalizes the United Nations Framework Convention on Climate Change by committing industrialized countries and economies in transition to limit and reduce greenhouse gas emissions in accordance with agreed individual targets. Currently, carbon-tax penalties have yet to be defined and agreed to. Subsequently, individuals in the United States fraudulently established and promulgated “carbon trading” institutions for purposes of levying taxes on those who purchase hydrocarbon-based fuels. As a component of this scheme to initiate, mandate and facilitate carbon taxes, the U.S. Environmental Protection Agency (EPA) was fraudulently induced to define carbon dioxide (CO2) as a “pollutant”; a ruling which was later upheld by the U.S. Supreme Court during litigation. The U.S. Congress attempted to hold hearings and issued subpoenas to the leaders of the EPA to investigate why CO2 was improperly defined as a pollutant. This resulted in outright lies, lack of responses and the resignation of the Director of the EPA.

The scientific community unknowingly and unwittingly aided and abetted the deceit, based on the computer generated hockey stick curve created by Dr. Michael Mann, et al. It was first publicly discredited by McKitrick and McIntyre in October 2004, in an article published in the “MIT Technology Review.“

It is conclusively demonstrated that only hydroelectric, hydrocarbon (fossil fuels) and nuclear generation can supply the vast amounts of energy a worldwide population of 7.8 billion people require (continued next page)

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Increased concentrations of CO in the atmosphere do not lead to global warming and climate change 2

Government published statistics show that $178 billion dollars of taxpayer funds have been spent on direct climate change related technology, science and funds given to other nations as a result of the climate change deception, from 1993 to 2017. The government has systematically enabled the continuation of this fraud through billions of dollars spent annually by funding university research and government labs doing “climate research.” The false notion of AGW and/or man induced climate change has spawned tens of thousands of new businesses worldwide. The total Climate-Industrial Complex is a $2-trillion-per-year business. These companies are virtually 100% dependent on the politically driven notion of “dangerous man made global warming and climate change.” The media, public and political establishment constantly recite the false assertion that 97% of scientists say the problem is real and man-made carbon dioxide (CO2) is the cause. However, increased concentrations of CO2 in the atmosphere do not lead to global warming and climate change. Carbon dioxide is a trace gas in the atmosphere. The major “greenhouse gas” is water vapor. An intricate feedback system regulates the Earth’s temperature, maintaining immunity from temperature increases and decreases due to such trace gases. The bogus global warming alarmism has taken root the world over. The United Nations’ IPCC along with the Club of Rome have become political bodies whose intentions are the restriction of energy availability, the (unstated) reduction of population, and the establishment of a one-world banking system and ultimately governmental institution. As a result of this reckless activity, millions of people’s lives worldwide will be negatively impacted, including a tremendous loss of life. It is no small coincidence that President Biden signed an executive order authorizing the United States to reenter the Paris Climate Accords on his first day of office. He further signed an executive order prohibiting the completion and operation of the XL Keystone Pipeline and other executive orders having the cumulative effect of destroying over 200,000 U.S. jobs. Summary of climate realities • There is no demonstrably measurable man-made warming or climate change on Earth • Carbon dioxide does not cause any measurable warming on Earth but rather adds a slight delay to nightly cooling. • The lack of correlation of the linear increase in the atmospheric concentration of carbon dioxide indicated by the Mauna Loa Keeling Curve and the increased use of fossil fuels worldwide over the last 40 years, proves that the increase in CO2 is not man made • The Earth’s climate has constantly changed over the course of its 4.6 billion year history • Variations in the solar system such as planetary motions, the Earth’s tilt or axis, solar and planetary gravitational fields, and the Sun’s radiative output have a profound effect on the Earth’s climate, and are periodic in nature • Climate change is used as an excuse worldwide by governments to tax carbon as a means of revenue generation • The cornerstone of the climate change fraud and deception is the incorrect notion that hydrocarbon fuels contribute to man made warming; and that nuclear power generation is inherently unsafe, and its use is irresponsible • It is conclusively demonstrated that only hydroelectric, hydrocarbon (fossil fuels) and nuclear generation can supply the vast amounts of energy a worldwide population of 7.8 billion people require

SHALE MAGAZINE  MARCH/APRIL 2021

About the author: In 1971 Tom received the nation’s highest honor for high school students in the field of physics for his work in nuclear magnetic resonance. He did his undergraduate studies in physics, with a dual minor in math and chemistry, at N A U in the 1971-75 timeframe. He has been in the energy generation and utility industry since 1985. Tom was the inventor of electric utility energy conservation instrumentation and measurement devices. He has been granted seven patents in the U.S., Israel, Europe, & China. In the U.S. alone his patents are practiced by the nation’s largest utility companies on over 90 million installed devices. Tom spends roughly 1/2 of his “working time” lecturing, writing articles, and working with prominent Ph.D. level scientists on what he calls the greatest deception and fraud ever created by man against mankind: AGW climate change. In 2019 Tom formed ClimateCite, Corp., a U.S. IRS 501(c)(3) compliant not for profit company to further his efforts in defeating the climate hoax worldwide. Tom married his wife, Emily J. Tamarkin in 1982 and the two of them live together in Carmichael, California. They have one son, Jeremy A. Tamarkin.

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BUSINESS

COVID-19 Vaccine Policies For Oil and Gas Employers By: Annette A. Idalski and Brian Smith

he COVID-19 pandemic of 2020 and 2021 has presented numerous challenges for employers attempting to balance employee and customer safety and business operations. With the introduction of three vaccines that could greatly reduce or halt COVID-19 cases, the light at the end of the tunnel seems to be approaching. As employers contemplate reopening at full capacity and re-hiring employees, many must ask the question – “may we require employees to be vaccinated?” This is of particular importance in the oilfield, where many duties cannot be performed remotely. The short answer is yes. Employers can mandate their employees be vaccinated as a requirement to return to work but must be mindful of various legal issues which may arise. On December 16, 2020, the U.S. Equal Employment Opportunity Commission (EEOC) issued “Technical Assistance” addressing questions regarding the administration of COVID-19 vaccines to workers. The “Technical Assistance” provides several key takeaways of use to employers: 1) “the vaccine itself is not a medical examination” for purposes of the Americans with Disabilities Act; 2) some “pre-screening questions may implicate the ADA’s provision on disability-related inquiries”; 3) employers can “request proof of receipt of a COVID-19 vaccine; and 4) employers must be prepared to engage in an individualized assessment of any employee’s disability-related concerns or sincerely held religious beliefs, and if necessary, offer a reasonable accommodation. In other words, employers may mandate the COVID-19 vaccination but must be careful with respect to any medical questions asked and be prepared to explore whether reasonable accommodations might be necessary for employees covered by Title VII and the ADA who refuse the vaccine. What is reasonable accommodation? An accommodation is reasonable so long as it does not cause undue hardship for the employer. In the oilfield, reasonable accommodations may be challenging because “fieldwork” cannot be performed remotely in many instances, and safety concerns may prevent the constant use of face coverings or respirators. Thus, employers may

SHALE MAGAZINE  MARCH/APRIL 2021

Ultimately, just because available guidance indicates employers may mandate COVID-19 vaccination, employers should consider carefully if the needs of the business justify the risks associated with such a policy encounter a situation in which a large number of employees refuse to be vaccinated, and no reasonable accommodation exists, which does not present an undue burden to the employer, leading to turnover. In addition, mandatory vaccination policies may lead to increased litigation and potential morale issues. Recently, in Horvath v. City of Leander, the Fifth Circuit considered a case involving an employee who refused a mandatory tetanus and TDAP vaccine. In Horvath, the employee refused the vaccine mandate based on a religious objection, and following his refusal of several accommodations proposed by his employer, was discharged. The accommodations proposed included (1) reassignment to a position not requiring a vaccine or (2) the ability to remain in the employee’s current position but wear a respirator daily. The district court granted summary judgment to the employer, which was affirmed by the Fifth Circuit. In its ruling, the Fifth Circuit specifically noted that an accommodation need not be an employee’s preferred accommodation to be reasonable, and the employer did not violate the law for discharging an employee who refused a reasonable accommodation. While Horvath demonstrates the risk associated with mandatory vaccination policies, it also provides a preview of practices endorsed by the Fifth Circuit in the event an employee refuses vaccination. Ultimately, just because available guidance indicates employers may mandate COVID-19 vaccination, employers should consider carefully if the needs of the business justify the risks associated with such a policy. Alternatives, such as voluntary vaccination or encouragement of vaccination, are also available to employers and should be strongly considered.

About the authors: Annette A. Idalski is a shareholder and the National Chair of Chamberlain Hrdlicka’s Labor & Employment Practice. She may be reached at annette.idalski@ chamberlainlaw.com. Brian Smith is an associate in the practice.

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BUSINESS

Making the Grade

NAVIGATING ACADEMIC CHALLENGES IN TRYING TIMES By: Valerie Grant

or parents and caregivers striving for children to get a great education, these are challenging times. Continuously weighing the health risks of in-person learning against the balancing act of distance learning is a daunting task. Throw in the likelihood of learning loss from COVID slide and queue the pounding migraine setting in. Many families have transferred students to new campuses or sought different school models altogether to find the best fit for each child’s individual academic needs in the current COVID-19 climate. Navigating these uncharted waters of pandemic parenting and schooling calls for community support from fellow parents and education experts in the know. The education-based nonprofit San Antonio Charter Moms has answered the call with various online communities designed to offer real-time guidance, resources and advice to help families make informed decisions about their child’s education. Thankfully, Texans are no strangers to banding together during times of crisis, whether coming to the aid of a distressed neighbor during Winter Storm Uri or offering remedies to the many academic challenges and disruptions brought on by the pandemic. There is nothing more comforting than consulting with others who have been there, done that and gone on to parent another day. Families can find solace in the nonprofit’s online community, which allows parents to help parents. The San Antonio Charter Moms Facebook discussion group serves as a sounding board for more than 7,000 engaged members seeking support on topics such as school choice, distance learning, homeschooling, micro schooling, traditional on-campus matters, virtual schooling, tutoring resources and much more. Charter Moms Chats includes live conversations on Facebook several times a week at 4 p.m., where Founder Inga Cotton and guests cover hot-button topics, answer viewer questions and share additional learning resources. Additionally, Charter Moms Chats recently launched in podcast form through Spotify and Apple Podcasts, making it easier than ever for multi-tasking moms and dads to tune in while struggling to juggle all the things.

Perhaps the greatest silver lining behind pandemic parenting is gaining a clearer understanding of our children’s academic strengths and weaknesses

San Antonio Charter Moms Podcasts Not to Miss • Fighting Cyberbullying in the Age of Distance Learning. Cyberbullying is at an all-time high due to increased screen time and heightened strain on social and emotional wellness brought on by the pandemic. According to L1ght, an organization that monitors online harassment and hate speech, there was a 70% increase in cyberbullying, a 40% increase in toxicity on online gaming platforms, and a 200% increase in traffic to hate sites within just two months of the start of the pandemic. In this podcast, Cotton speaks with Maurine Molak of David’s Legacy Foundation to offer resources for detecting and battling cyberbullying and ways to advocate for stricter laws against it. • Expert Resources Help Combat COVID Slide. Hear expert advice from teachers, school leaders, parents and community leaders about keeping students engaged, learning and in a good mental state for growth. Covering a wide range of learning levels, this show focuses on the importance of teaching early learners to read, staying on track with math through the ages and preparing soon-to-be grads for college readiness. • Using Insights from Previous Standardized Testing Results. In this podcast, Cotton and Dr. Nathan Balasubramanian, an expert on school improvement and accountability, offer listeners (continued next page)

SHALE MAGAZINE  MARCH/APRIL 2021

About the author: An awardwinning communications expert, Valerie Grant is a regular contributor and trusted source to many regional media outlets. As Founder and CEO of Grant House Communications, she works with a wide range of industries within San Antonio and the surrounding Hill Country.

insight into using STAAR test results as a resource to improve students’ learning experience. Standardized testing can be a cause of stress, but once fears are set aside, the report cards that come with STAAR test results can provide useful information. Knowing where students stand academically is more important than ever with the school year being disrupted by the pandemic. Few parents and caregivers know how to decipher and access test result data properly. Cotton and Balasubramanian offer tips to unlock the personalized learning resources given through standardized test results. • School Leaders Dish on Area Schools. The pandemic has forced parents to be more engaged in their children’s education than ever before, causing many families to reevaluate school choice. Furthermore, the pandemic has caused an uncharacteristically higher number of openings in area charter and choice schools, leading to higher acceptance rates and shorter waitlist times. Exercising school choice requires an entrepreneurial spirit and an attitude and approach to thinking that actively seeks out change. Charter and choice school leaders and families embrace critical questioning, innovation, service and continuous improvement. These families take calculated risks in the hopes that the right school fit will reap academic rewards. San Antonio Charter Moms empowers parents to make informed decisions when searching for individualized educational needs. An often-overwhelming process, the nonprofit tracks and summarizes important dates like open houses (in-person and virtual), open enrollment periods, and deadlines and lotteries within the organization’s school enrollment guides. The in-depth podcast interviews with school leaders offer an inside glimpse of each school’s unique features. • What I Wish I Knew: Insider Tips for Applying for Charter and Choice Schools. Cotton guides parents and caregivers through the charter school application process. The podcast serves as an introduction to soothe fears and offer insider tips to increase listener’s chances for successful enrollment. Along the way, Cotton shares some of her own mistakes, so listeners can avoid making the same blunders. The overriding goal is for children to receive enrollment offers from at least one school of choice so that they can look forward to a future full of opportunities. This segment allows listeners to soak up the sage advice from those who have navigated the tricky process for themselves and helped hundreds of others do the same. Perhaps the greatest silver lining behind pandemic parenting is gaining a clearer understanding of our children’s academic strengths and weaknesses. How we use that insight can have a direct impact on whether our children succeed or fall short. Having the right resources at our fingertips is half the battle. In addition to the recently launched podcast, San Antonio Charter Moms produces the Owl’s Education Express e-newsletter with weekly updates on recent posts on the San Antonio Charter Moms blog, a list of upcoming events and important dates, and links to education headline news. SACM developed San Antonio’s first free school finder app in 2019 called “San Antonio Charter Schools” and now includes the finder function through the nonprofit’s website for easy browsing.

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IN-PERSON SHOPPING WILL NEVER BE THE SAME

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SEPTEMBER/OCTOBER 2020

HOW WILL RETIREMENT CHANGE NOW THAT WOMEN ARE TAKING CHARGE?

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TEXAS RRC ESCHEWS STATEMANDATED PRODUCTION CUTS

THE BEGINNING OF THE END?

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MUCH IS AT STAKE IN THE UPCOMING NATIONAL ELECTIONS

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ANOTHER OIL BOOM REACHES A SUDDEN END

GLOBAL INVESTMENT SLOWDOWN SET TO HIKE OIL PRICES AND CAUSE UNDERSUPPLY OF 5 MILLION BPD IN 2025

NEPA REFORMS AND THEIR IMPACT ON SHALE

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SHALE Magazine is a statewide industry publication that showcases the significance of the South Texas petroleum and energy market. SHALE’s mission is to promote economic growth and business opportunities that connect regional businesses with oil and gas companies. The publication supports market growth through promoting industry education SHALE MAGAZINE MARCH/APRIL 2021 includes particular insight into the development of the Eagle Ford Shale and Permian Basin plays and the businesses affected. and policy,and its content

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LIFESTYLE

FOUR SEASONS HOTEL NEW ORLEANS Special to SHALE pening in mid-2021, Four Seasons Hotel New Orleans is an icon of the city set along the Mississippi River. Designed by legendary modernist architect Edward Durell Stone (Radio City Music Hall, Museum of Modern Art, Kennedy Center for the Performing Arts), The International House and International Trade Mart was completed in 1967 and formally dedicated in 1968 to celebrate the 250th anniversary of New Orleans’ founding. Its name was changed to the World Trade Center in 1968 – becoming the first World Trade Center organization in the world. Since then, this iconic building has towered above the Mississippi River, next to the Ernest N. Morial Convention Center, Financial District, French Quarter, and Warehouse District. At 33-stories, the World Trade Center was the tallest building in New Orleans from 1967 to 1969. Set at the base of Canal Street and the Mississippi River, the location was the heart of the commercial district and headquarters of the Port of New Orleans. In fact, the four sections of the compass-shaped tower align with the cardinal points of North, South, East, and West – an ode to navigating the Mighty Mississippi and the importance of New Orleans in global commerce. Recognized on the National Register of Historic Places since 2014, the landmark tower has been raised an additional level to include a spectacular open-air observation deck, with 360-degree views of the river and New Orleans, aptly celebrating the city’s spirit of survival and rebirth. New Orleans is a city that embraces a multicultural heritage and celebrates life, alluring gardens, art, music and cuisine. The 341 guest rooms and suites at Four Seasons Hotel New Orleans are where these elements come together as a place of zen within the buzz of the city. Set on two riverfront acres that will be flanked by lush gardens, the design of Four Seasons Hotel New Orleans is inspired by the sanctuary and allure of this botanic backdrop. It is this restful setting that the interiors become a foundation to celebrate the multicultural heritage of the city through art, food and threads of historic influence. It is from this

SHALE MAGAZINE  MARCH/APRIL 2021

idea that the guest room is formed through references found in nature. The room design is uniquely influenced by the biophilic and patterns of a discrete New Orleans garden with hints of local culture. With views of the city and river, the fresh, bright white palette is layered carefully with materials, art and curiosities that remind us of place. This is ultimately expressed through a large plaster wall relief of regional planting that anchors the bed. The plaster relief is complemented by accent lighting and a regional materiality that is articulated with white shiplap walls, soft-washed white oak accents, Carrara stone, Wilton weave carpet patterned after the building plan, and modern-furniture forms derived from the modern 20th-century spirit of the existing architecture. The palette is supported by a plan that offers open access to the bathroom from two sides, achieving a flexible layout that is both expansive and filled with light. The room components, balanced with subtle reference to regional elements, blend to make a uniquely modern experience in one of America's most historic cities. Two signature restaurants by James Beard Award-winning chefs Alon Shaya and Donald Link delight the senses, while the vibrant lobby-level bar and lounge is the energy center and gathering point of the hotel. The fullservice spa, fitness center and outdoor 75-foot crescent-shaped rooftop pool are highlighted by panoramic views of the Mississippi River. An indoor/outdoor observation deck and exhibit features the only 360-degree panoramic riverfront views of New Orleans. For events, the hotel offers 30,000 square feet of flexible space, while an extensive art collection featuring local and international artists is displayed throughout the building. Four Seasons Resort Bora Bora Four Seasons Resort Bora Bora is a cultural paradise, a resort that blends the romance, relaxation and tranquility of the South Pacific with the invigorating Polynesian arts of dance, song, cuisine, textiles, seafaring and sport. The Resort combines the highest standards of service with the natural ease and gracious hospitality of Polynesian culture. Guests can

lose themselves in the deep serenity of the location, immerse themselves in the customs and traditions of local culture, or set off on one of the island’s many adventures, from outrigger canoeing to SCUBA and snorkel excursions among rays and reef sharks, to deep-sea fishing and inland safaris — creating truly unforgettable experiences. Four Seasons Resort Bora Bora opened its doors for guests in September 2008, and completed a property-wide enhancement in 2020. Set upon Bora Bora’s surrounding coral atoll, away from the bustle of its mainland, the resort is a vast tropical grove, replete with coconut palms and pandanus trees. Meandering channels of pure turquoise lead to the property’s main beach or to smaller lagoons, creating secluded private beaches waiting to be discovered. Every vista is breathtaking, and all have been incorporated into the design of the resort: views of the open water and its vast sky contrast with the lush green of the island’s mainland, capped by the towering monolithic peak of Mount Otemanu and the domed summit of Mount Pahia. The resort offers 100 spacious overwater bungalow suites and seven sprawling beachfront villa estates, all designed with thatched roofs and decorated with indigenous artwork. Four distinct restaurants offer a vast selection of creative culinary experiences, from Polynesian to French to traditional favorites, complemented by special open-air dining, from private oceanside dinners to Tahitian beach parties with musicians and fire dancers. An infinity-edged pool with private cabanas faces the white sand beach, as the lagoon sets the perfect backdrop for a leisurely afternoon under the tropical sun. A full-service spa, perfectly balanced by the powerful rhythms of the Pacific Ocean and the secluded tranquility of the island’s lagoon — and featuring open-air treatment decks amid the kahaia trees — offers a combination of relaxation and exhilaration that only Bora Bora’s unique location can provide. The piece de resistance here is the overwater couples’ spa suite, where local ingredients such as monoi oil, vanilla and black pearl powder are highlighted in pampering and therapeutic treatments.

Set upon a sprawling 22 hectares (54 acres), the resort meets a vast array of needs and accommodates a wide variety of guest experiences. Known as the most romantic destination in the world, weddings, honeymoons, anniversaries and vow renewals are perfectly suited to take place at the resort. Facilities for families are unrivaled in the region: a Kids for All Seasons clubhouse with a splash pad for children ages 5 - 12, cultural activities, volleyball and watersports. The connection Four Seasons has with the island community provides a truly authentic Polynesian experience. Local guides are available for many excursions, as are the resort’s own marine biologist and black pearl expert, providing a wealth of learning opportunities, whether scientific or cultural. Guests can enjoy learning of local culture through specially arranged cooking and local craft-making classes. Nestled within the grounds of the resort is an inner lagoon, teeming with exotic marine life. The Ruahatu (God of the Ocean) Lagoon Sanctuary at Four Seasons Resort Bora Bora is more than just a spectacular snorkeling location, but also a research facility and a place where the marine environment not only thrives but grows, furthering the delicate and wondrous ecosystem.

NEW ORLEANS IS A CITY THAT EMBRACES A MULTICULTURAL HERITAGE AND CELEBRATES LIFE, ALLURING GARDENS, ART, MUSIC AND CUISINE. THE 341 GUEST ROOMS AND SUITES AT FOUR SEASONS HOTEL NEW ORLEANS ARE WHERE THESE ELEMENTS COME TOGETHER AS A PLACE OF ZEN WITHIN THE BUZZ OF THE CITY. The Lagoon Sanctuary, home to over 100 colorful species of marine life, offers activities for guests of all ages, including snorkeling, coral grafting discovery, discussions on Polynesian ecology, fish and octopus feeding and more. The architecture of Four Seasons Resort Bora Bora is the fruit of a unique collaboration that brings together the cosmopolitan flair of Paris-based architect Didier Lefort and the modern elegance of San Francisco design firm BAMO, with the Polynesian authenticity of renowned South Pacific architect Pierre-Jean Picart. Accommodations are designed to capture the gentle breeze in order to minimize the need for air conditioning while taking care to conserve the beautiful natural landscape of the Island. No matter the occasion, Four Seasons Resort Bora Bora provides the ultimate South Pacific experience, all complemented by the warm smiles of the locals and the renowned Four Seasons experience. SHALEMAG.COM

LIFESTYLE

EQUEST’S 40TH ANNIVERSARY GALA:

CELEBRATING 40 YEARS OF HORSE POWER Special to SHALE DALLAS, TEXAS – 2021 commemorates Equest’s 40th year of providing life-changing achievements for children and adults with special needs through the human-horse connection. Equest’s 40th Anniversary Gala: Celebrating 40 Years of Horse Power will not only pay tribute to the past and present but will look towards the future of Equest. This year, the anniversary gala will be combined with the annual Boots & Salutes fundraiser for one smashing evening on Saturday, June 5, 2021, 6:00 to 11:00 p.m., at its newest facility, the Al Hill, Jr. Arena, at Equest at Texas Horse Park. Led by Co-Chairs Lisa and Kendall Laughlin and Katherine and Austin Wyker, the powerfully passionate and vibrant committee will infuse the next level of Southern charm, food, style and entertainment to the gala. Lisa has been a member of the Equest Women’s Auxiliary since 2014 and is a proud grandmother to Elizabeth Laughlin, one of Equest’s clients. Katherine joined the Equest family in 2019, and her family foundation is a therapy-horse sponsor and contributor to the capital campaign for the new Al Hill, Jr. Arena. Both of these dedicated women serve on the Equest Board of Directors, and with their husbands, are devoted champions to Equest’s mission. Equestrian couture will replace tuxedos and gowns, and magnolias will adorn the transformed arena for this stellar Southern soiree. The evening will feature a welcoming cocktail reception, seated dinner, live and silent auctions and a performance by the energetic 11-piece Walton Stout Band of the Jordan Kahn Group. All of Equest’s precious partners, clients, friends and Hoofed Health Care Heroes – the beloved therapy horses – will unite to celebrate the achievements of Equest’s 40-year history and raise muchneeded funds to allow Equest to continue its life-changing impact. Equest’s 40th Anniversary Gala will also recognize and pay tribute to visionaries of the past, present and future. These Honorary Chairs have demonstrated boundless commitment, advocacy, and heart for Equest’s mission.

SHALE MAGAZINE  MARCH/APRIL 2021

Honorary Chairs: 1980-1990 – Susan Schwartz and Louise and Guy Griffeth 1990-2000 – Steve Barnett and Dr. Candice Chandler 2000-2010 – Pamela and Michael Petty 2010-2020 – Carol and William Huckin and The Huckin/Lupton Family 2020 to the future – Julia and Blake Schwarz and Caitlin and Thomas Laughlin “Humans. Horses. Hope. This has been our mantra since 1981 when Equest opened as the first therapeutic horsemanship center in Texas,” says Equest CEO Lili Kellogg. “It makes my heart full to be celebrating this mantra 40 years later with the ones whose hard work and dedication have made Equest what it is today, an internationally-recognized industry leader.” About Equest Founded in 1981, Equest provides equineassisted learning, therapies and counseling to children and adults with physical, cognitive, sensory, coping and learning disabilities, as well as veterans and their dependents who receive all of Equest’s services at no charge. The services provided include physical and occupational therapy, equine facilitated counseling and equine-assisted learning, therapeutic carriage driving, therapeutic horsemanship and competition. With the help of 30 therapy horses, eight instructors, four therapists, three counselors, and 700 volunteers, lives are changed for the more than 2,000 served annually. Equest was the first PATH International Premier Accredited Center in Texas and remains one of the largest in the country. Equest offers an engaging volunteer program that provides 30,000 hours of direct program service opportunities each year. www.equest.org. About Equest 40th Anniversary The 40-year history of Equest is how legends are made. Founded in 1981 by Evelyn Zembrod and Susan Schwartz under the name Freedom Ride Foundation, the organization began with just one instructor, one horse, two riders, and four volunteers. Over the next four decades, Equest evolved into a world-

class therapeutic equestrian center, the first in Texas. It expanded its therapeutic programs, received premier accreditation by industry association, and began entering prominent riding competitions, including World Championships and Paralympics, on behalf of Team U.S. Of the twenty-four PATH Intl. Certified Master Instructors across the world, Equest is home to three. Equest’s international reputation even initiated a visit from Princess Anne and, most recently, members of the World Affairs Council Visiting Leadership Program representing seven countries. For a detailed timeline of Equest’s history, please click here. 2021 will be celebrating Equest’s landmark 40th anniversary all year with a series of events, including the launch of a new monthly giving campaign, the opening of a new arena, an emotionally- powerful gala that will pay tribute to Equest’s past, present, and future, and a special veterans initiative produced by Equest’s Hooves for Heroes. To mark its 40th year, Equest designated the Magnolia, a symbol of longevity, nobility, perseverance, and purity, as its signature flower and recurring theme throughout the year. For more information about Equest and its landmark 40th Anniversary, please visit www.Equest.org. Equest’s 40th Anniversary Gala: Celebrating 40 Years of Horse Power will be held on Saturday, June 5, 2021, 6:00 to 11:00 p.m., at its newest facility, the Al Hill, Jr. Arena, at Equest at Texas Horse Park (811 Pemberton Hill Road, Dallas, TX 75217). Underwriting opportunities are available at various levels. Tables for 10 are available to purchase starting at $5,000 at www.equest.org/gala. For more information, please visit www.equest.org or call 972.412.1099. Equest is committed to making the safety of its employees, members, and guests an utmost priority. The organization will be following and adhering to the Center for Disease Control’s coronavirus guidelines regarding the safety of hosting gatherings, as well as state regulations and recommendations. Safety measure requirements and protocols will be addressed at www.equest.org/gala closer to the date.

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LIFESTYLE

THE POWER OF ART:

HOW A ONE NIGHT EVENT GREW TO A LASTING LEGACY

hen a group of art collectors and enthusiasts decided to host an art auction to celebrate the genre they loved, no one could have guessed that it would spark the founding of a museum. But what began 20 years ago as a single evening for collectors and enthusiasts to revel in the beauty of Western Art did just that. The Briscoe Western Art Museum’s “Night of Artists 20th Anniversary Exhibition and Sale,” on display through May 9, traces its roots to a single evening that not only planted the seeds for the museum itself but also blossomed into the museum’s signature event and fundraiser. The exhibition features the beauty and spirit of the West as captured by the leading contemporary artists in the wide-ranging and often misunderstood genre. If the name “Western Art” calls to mind cowboys, you’re on the right path. But alongside classic cowboys and even cowgirls, the genre also features scenic landscapes, inspired Native Americans, stunning wildlife and detailed portraiture. And “Night of Artists” deftly showcases it all thanks to a stellar line-up of today’s top Western artists. The invitation-only show features artists including Martin Grelle, a Texas artist routinely listed as one of the best contemporary artists in the genre, alongside top Western artists such as Billy Schenck, Mark Maggiori, Kim Wiggins, George Hallmark, Michael Ome Untiedt, Teresa Elliott, Paul Rhymer, Stefan Savides and Mary Ross Buchholz. Logan Maxwell Hagege, C. Michael Dudash, Tom Browning and Howard Post are among favorite artists returning to the exhibition this year. More than 75 artists are featured overall, with almost 250 artworks included in the exhibition. But “Night of Artists” is more than just an exhibition. It’s also an auction and sale, and it’s more than just a single night. The seemingly misnomer title stems from those roots as a single evening spotlighting Western Art. The event itself pre-dates the Briscoe, and that’s what makes it so special. In 2001, a group of Western art enthusiasts created “Night of Artists” to showcase the genre they loved. That single evening sparked

SHALE MAGAZINE  MARCH/APRIL 2021

the support and funding that ultimately grew to be the Briscoe Western Art Museum. Support from “Night of Artists” helped found the museum, which opened its doors in San Antonio in 2013. “Night of Artists” is now an essential component of the Briscoe’s annual programming and its largest annual fundraising event. The exhibition, which kicks off with a sale and auction, benefits the Briscoe’s full array of exhibitions, public engagement and educational programs throughout the year, allowing the museum to nurture the understanding and appreciation of Western Art year-round. The West Starts in San Antonio The Briscoe celebrates the art, heritage, and diverse history of the American West through its collections, exhibitions and programs. Showcasing the rugged beauty of the West alongside the people and wildlife who call it home, the museum is nestled on the banks of the San Antonio River in the heart of San Antonio’s historic River Walk. The location is fitting: cattle from across Southern Texas once moved through San Antonio, crossing the San Antonio River not far from where the Briscoe now stands. That history and San Antonio’s location on the 98th meridian fuels the Briscoe’s claim of “The West Starts Here” in San Antonio. “Western historians generally identify the 98th meridian as the demarcation of the West. And, of course, the movement of cattle and cattle drives helped shape the West. Many cities claim to be the birthplace of the West, but without San Antonio and South Texas, the West as we know it wouldn’t exist,” explains Michael Duchemin, Ph. D., President and CEO of the Briscoe Western Art Museum. A repository for art and artifacts related to a broad concept of the American West, including paintings, sculpture, Native American art, Spanish and Mexican colonial-era art, Western folk art, artifacts and photography, the Briscoe is named for former Texas. Gov. Dolph Briscoe and his wife, Janey Slaughter Briscoe, who envisioned a museum that would share the story of Western heritage and the people behind that story.

That’s exactly what the Briscoe strives to do. From works by renowned Western artists including Charles Marion Russell and Frederic Remington to contemporary works by Martin Grelle, Allan Houser and John Coleman, whose 2012 “Visions of Change” graces the lobby, the Briscoe spotlights the American West. Favorite artifacts include General Santa Anna’s sword, saddles that belonged to Western icons Roy Rogers and “Buffalo Bill” Cody, as well as Pancho Villa’s last-known saddle and a sixteenthcentury silk embroidered Spanish saddle and a Comanchero jacket. The museum’s collection spotlights the unique genre of Western Art in four pillars, each broadly defining the subjects depicted within the art: wildlife, Native American heritage, cowboys, and thanks to its undeniable influence across Texas and beyond, Spanish and Mexican heritage. Each of the pillars are vividly illustrated by the Briscoe’s interwoven collection of art and artifacts and are on full display in the “Night of Artists” exhibition, where vivid depictions bring wildlife to life inside the museum, while the stories of cowboys and Native Americans are artistically recreated through the skills of the talented artists participating in the exhibit. Duchemin notes that while “Night of Artists” is a key event for the Briscoe, it also serves to further Western Art as a whole. “The continued support of sponsors, art collectors and enthusiasts is key to growing and preserving the unique genre of Western Art,” he explains. “Helping share these works with broader audiences and spotlighting the vibrancy of the genre overall is an important step in supporting these talented artists and ensuring the genre continues to flourish through their skilled interpretations of the West.” The success of “Night of Artists” and the Briscoe itself is due to the dedicated support of fans of the genre and generous donors who share the Briscoes’ vision, following their lead in supporting the museum. “When COVID forced the 2020 in-person event to be canceled, in less than two weeks, the Briscoe successfully shifted the Night of Artists sale online, thanks to the support of

PHOTOS COURTESY OF VISITSANANTONIO.COM

By: Dawn Robinette

amazing sponsors, artists, and collectors we were so fortunate to work with,” explained Duchemin. “We’re honored to have their continued support, making this 20th anniversary even more special.” From the creation of “Night of Artists” to sponsoring the exhibition’s celebration events and purchasing art through the exhibition, an array of Western art enthusiasts help ensure the future of the genre. Additionally, a number of dedicated supporters lend their time and talent to help better the museum through service on the museum’s board of directors. Many of the perennial supporters have ties to Texas’ oil and gas industry, including William “Bill” and Margie Klesse, who through the Klesse Foundation support “Night of Artists” as the Western Art Title sponsor alongside Debbie and John T. Montford and the Plum Foundation. John T. Montford serves as the chair of the board, while Debbie Montford and Bill Klesse both serve as directors. Love of the West runs deep for Jessica Erin

Middleton, secretary of the board, who once volunteered as the museum’s executive director as the Briscoe sought permanent staff. Along with her mother, Jan McCaleb Elliott and their family, Middleton and the Elliotts have supported the Briscoe, purchasing art through “Night of Artists” and naming the museum administrative offices “El Bigote Ranch Headquarters” and the museum’s A-Bar Gallery. Fellow board member Richard Nunley, with his wife, Kim, is another “Night of Artists” sponsor, as is McLean Bowman. Through the Ruth McLean Bowers Foundation, the Briscoe’s Ruth McLean Bowman Bowers Woman of the West Gallery shines a light on women’s stories in the West. The “Night of Artists” public exhibition includes a fixed-price sale featuring works not previously sold. The full catalog may be viewed through the museum’s website, and works may be purchased online or by enjoying the works in person by visiting the Briscoe.

THE “NIGHT OF ARTISTS” PUBLIC EXHIBITION INCLUDES A FIXED-PRICE SALE FEATURING WORKS NOT PREVIOUSLY SOLD. THE FULL CATALOG MAY BE VIEWED THROUGH THE MUSEUM’S WEBSITE, AND WORKS MAY BE PURCHASED ONLINE OR BY ENJOYING THE WORKS IN PERSON BY VISITING THE BRISCOE About the author: An award-winning writer and communications expert who runs Tale to Tell Communications, Dawn Robinette loves to tell stories about her adopted hometown of San Antonio. You can read more of her work at Alamo City Moms, San Antonio Woman and Rio Magazine.

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LIFESTYLE

FOGO LAMB CHOPS RECIPE Special to SHALE

Serves 2

Preparation:

Ingredients:

1. Trim lamb of excess fat. Blend all other ingredients in a blender to make marinade, including mint leaves, and marinate lamb chops for 5-10 minutes.

•

8 rib lamb chops (12-16oz total weight)

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2 cups white wine (Chardonnay or Chablis)

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2 tablespoons lemon pepper

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Juice of one lemon

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1/2 cup of extra virgin olive oil

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1 tablespoon salt, or to taste

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1 cup mint leaves

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Vegetable oil spray

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Mint jelly and mint leaves for garnish

SHALE MAGAZINE  MARCH/APRIL 2021

2. Spray grill with vegetable oil. Remove lamb chops from marinade and place on a preheated grill. Grill chops without moving them for 4 minutes for medium rare. 3. Baste chops with marinade and turn over to grill for another 4 minutes on the other side. Remove and allow to rest for 5 minutes before serving. 4. Garnish with additional mint leaves and mint jelly.

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Jim Wright Cover Party A great time was had at the Jim Wright Cover Party that was held at the Omni Hotel on February 3, 2021, to honor the New Texas Railroad Commissioner.

Friends and family gathered for an exciting and informative evening with great food, drinks and great topics of conversation. We’d like to especially thank Judge Barbara Canales, New Corpus Christi Mayor Paulette

Guajardo, CEO Sean Strawbridge and Chief External Affairs Officer Omar Garcia with the Port of Corpus Christi and all who attended to make this evening a great success.

Houston Mixer / Fogo de Chao of the Texas Alliance of Energy Producers Jason Modglin, as our guest speakers as they discussed the New Legislative Session for 2021. Thank you all who came out to support TEAC and SHALE Magazine as the turnout of

people was pleasantly surprising, yet welcoming considering all things due to COVID and the reopening of the city. Your support was exactly what we needed for a successful event.

PHOTOS COURTESY OF SHALE

In spite of all things COVID, our first mixer of the year was held on January 25, 2021, at Fogo de Chao, in the Woodlands outside Houston, Texas. We were honored to have President of Halliburton Paul Sheppard and President

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SHALE MAGAZINE  MARCH/APRIL 2021

SHALE Magazine March/April 2021

Articles inside

Briscoe Western Art Museum

Jim Wright Cover Party

Fogo Lamb Chops Recipe

Equest’s 40th Anniversary Gala