SHALE Oil & Gas Business Magazine May/June 2014 by SHALE Oil & Gas Business Magazine

BAKER HUGHES: PUTTING VETERANS TO WORK // AFRICA ODYSSEY: SAFARI ADVENTURE

SHALE OIL & GAS BUSINESS MAGAZINE

M A Y. J U N E 2 0 1 4

SEN. CARLOS

URESTI:

COMMISSIONER

DAVID PORTER

Opportunities Abound in South Texas

A BRIGHT FUTURE WITH NATURAL GAS // PAGE 26

// PAGE 34

REGINA MELLINGER

OF PRIMARY SERVICES Staffing Solutions with Energy

WILDCATTER

GLENN McCARTHY

// PAGE 14

AN AMERICAN ORIGINAL // PAGE 62

A WORLD-CLASS LEADER

BHP BILLITON’S

ROD SKAUFEL // PAGE 18

// SHALE CELEBRATES ONE-YEAR ANNIVERSARY // SHALE OIL & GAS BUSINESS MAGAZINE

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CELEBRATING MAY/JUNE ISSUE

featuring

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CONTENTS

MAY/JUNE 2014

FEATURE

14 Words in Action 16 Rodeo, Ranching and OTG Services

COVER STORY ROD SKAUFEL

18 As president of the North America

Shale Production Division of BHP Billiton, Rod Skaufel brings excellent leadership to a world leader in the diversified resources industry.

INDUSTRY

24 Evolution of a Play 26 Adding Up to a Win 28 Inventing the Future

POLICY

32 Safeguarding the Shale 34 A World of Opportunity 36 Protect Your Relationships 38 The Hidden Consequences of Rapid Growth

40 Eyes Wide Open

BUSINESS

44 Smoothing the Transition 46 Leaders Open Doors, Part II 48 Higher Education is Attainable 50 A Prime Position 52 FYI on I/UPs 54 Higher Education and Safety Training

56 Hidden Risks 58 Live for Today and Plan for Tomorrow

LIFESTYLE

60 Everything - and More 62 ‘The Distilled Excellence of Swaggering Texas’

ROD SKAUFEL COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: MICHAEL GIORDANO

64 Searching for “Inner Peas” 66 Bringing the Best

NONPROFIT

78 Texas Treasure 80 Promoting Preservation

SCENE

82 A Warm Reception 84 Rolling Out the Red Carpet 88 Communication is Key 90 Fostering Leadership 92 Going Grand 94 Champions for Excellence 96 Fun and Philanthropy SHALE OIL & GAS BUSINESS MAGAZINE

ADVISORY BOARD

OIL & GAS BUSINESS MAGAZINE

OMAR GARCIA - SENIOR ADVISOR

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

DOUGLAS STERLING CAIN

Douglas Sterling Cain is the president of Lake Truck Lines, which has enjoyed a 300 percent growth over the past two years. Cain links the company’s recent success to a decision to move headquarters from Houston to San Antonio, believing it all happened by “grand design.” The company arrived in San Antonio with 12 trucks, and it is now operating close to 100, quickly becoming the solution for custom oilfield equipment and tank manufacturing, as well as oilfield transportation and logistics. Cain prides himself on being innovative and “staying ahead of the curve.” Out of his desire to make oilfield jobs safer and more effective, he launched subsidiary company Lake Oilfield Services, which already manufactures six different types of oilfield equipment. As Cain sums up in his own words, “honor and integrity are incredibly expensive on Monday, but the dividends show up on Friday.”

MARK PAYNE

Mark Payne is a partner at Burleson LLP, the largest law firm in the nation primarily focused on serving the oil and gas industry. As Payne is a former petroleum geologist and landman, his practice is dedicated to warranty issues, operating agreements, unitization and environmental, including water and air matters. He is on the board of the South Texas Wildcatters, and he is involved in the community with his participation in the San Antonio Chamber of Commerce, Energy and Water Sustainability Section.

JEFFREY A. WEBB

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

CONTINUED ON PAGE 11 SHALE OIL & GAS BUSINESS MAGAZINE

MAY/JUNE 2014

KYM BOLADO CEO / PUBLISHER

CO-PUBLISHER Jimmy Perkins

CHIEF FINANCIAL OFFICER Deana Acosta

ART DIRECTOR Elisa Giordano

EXECUTIVE EDITOR Rachel Hughes

OPERATIONS MANAGER/ EXECUTIVE ASSISTANT Shana Hamid

VPs OF SALES

Stephanie Hawley / Austin & Houston Liz Massey Kimmel / Corpus Christi, McAllen, Laredo & Alice Joyce Venema / San Antonio

ACCOUNT EXECUTIVES

Teri Almendariz, Natalie Avey, Julie Conaway, Christi Early, Shanae Haertig Escamilla, Christi Guillory, Iliana Hinojosa, Roslyn Parker, Crissy Ramirez, Dina Ybanez

CONTRIBUTING WRITERS

Marc Bridgen, Douglas S. Cain, Scott Courtney, Jim Crompton, Dr. Janet M. Cunningham, Melinda Eddleman, Omar Garcia, Amy Gilbert, Shana Hamid, Annie Harris, Dr. Dutch Holland, Elizabeth Massey Kimmel, George F. Long, Juan Carlos Luna, Sarah Park, Michael Parker, Rahul B. Patel, Rob Patterson, Jimmy Perkins, David Porter, Dawn Robinette, Dr. Thomas Tunstall, Joyce Venema

PHOTOGRAPHERS

Jose Alcala, Michael Giordano, Eric Kleiman, Julian Ledezma, Jeff Parker, Jimmy Perkins, Doug Smith, Liz Garza Williams

www.shalemag.com For advertising information, please call 210.240.7188 or email kym@shalemag.com. For editorial comments and suggestions, please call 830.377.8573 or email jimmy@shalemag.com. TO REACH US: 5600 Broadway Ave. San Antonio, Texas 78209 Phone: 210.240.7188 Copyright © Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.

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PUBLISHER’S NOTE

I’M THRILLED TO PRESENT OUR ONE-YEAR ANNIVERSARY ISSUE! As an important milestone, it symbolizes the hard work and dedication our SHALE team has made over the past year and the unique perspective we’ve gained in oil and gas. Building one of the most respected publications is no small feat, but we’ve embraced the dream wholeheartedly. Our journey has yielded some of the strongest relationships in the industry, and it’s been altogether inspirational, rewarding and enlightening. Our team has some of the most talented and dedicated individuals I’ve ever had the pleasure of working with. In addition, our advisory board continues to assist us immensely in our mission to create business opportunities and educate the public on how the energy industry contributes to the economic well-being of the state and the country. Entering into our second year, we remain steadfast to all of our partners in building awareness for their businesses and creating opportunities by bringing businesses together. Our cover story serves as a perfect example of how SHALE is capturing the stories behind some of the biggest names on the front lines of the energy industry. Our story on BHP Billiton’s Rod Skaufel reveals the man behind the global resource provider. He’s a builder, and he lives his life through outright dedication and hard work. The SHALE team and advisory board are committed to doing the same and continuing to showcase the culture behind the industry’s pioneers. I’m very grateful for the support and consult of industry and governmental leaders, and I’m honored by the sentiments many of them have shared with SHALE, particularly by the reception from Texas Gov. Rick Perry. “SHALE Oil & Gas Business magazine has raised the bar high.” – Nelda Martinez, mayor of Corpus Christi “I have spoken with many on the SHALE staff. You are truly lucky to have a team so dedicated to the mission of SHALE.” – David Porter, Texas railroad commissioner

“We need to support SHALE magazine, as they are educating the community on the oil and gas industry.” – Paul Sheppard, vice president of Halliburton South Eastern States

STATE OF TEXAS OFFICE OF THE GOVERNOR

Greetings: As Governor of Texas, it is my pleasure to extend greetings to the readers of Shale of South Texas Oil and Gas Business Magazine. Throughout our history, the health of the Lone Star State’s economy and the strength of the oil and gas industry have been inextricably linked. This fact remains true today with the boom Texas is experiencing in the Eagle Ford along with the growing list of impressive shale plays across our state. This publication aims to be an important resource to the industry and for those wanting to stay informed of all the important happenings in the Eagle Ford Shale. I am excited to introduce Shale magazine to Texas and all of those involved in the oil and gas business in South Texas.

We’re also proud to announce that SHALE has been selected to launch and First Lady Anita Perry joins me in wishing great success to Shale magazine. conduct a regional tour for the Economical Impact of the Eagle Ford Shale Report, a Sincerely, study conducted by the University of Texas at San Antonio and sponsored by STEER and Angus Energy. These red-carpet networking events will tour San Antonio, Corpus Rick Perry Christi, Laredo and Houston this September. We are excited to meet elected officials, Governor business leaders, residents and the oil and gas community in each market as we come together to discuss the demonstrated impact the Eagle Ford Shale has made on our great state. As we continue to grow and develop our partnerships, you can expect robust coverage and heightened portraits of industry and state leaders, as well as exclusive insight you won’t find anywhere else. And as the Eagle Ford continues to boom, SHALE will be shoulder-to-shoulder with its growth and the impact it makes in our communities and has on our future. Two things are certain: The Eagle Ford Shale will continue to grow our economy, and SHALE will cover it every step of the way.

KYM BOLADO

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

SHALE OIL & GAS BUSINESS MAGAZINE MISSION STATEMENT:

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

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PHOTO BY SARAH BROOKE LYONS

“STEER supports SHALE magazine because it continues to produce some of the best stories written on Eagle Ford Shale.” – Omar Garcia, president and CEO of STEER

ADVISORY BOARD JAMES M. SUMMERS

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

SCOTT COURTNEY

Scott Courtney, P.G., is the president of Premier Hydro, and he has more than 30 years of background, education and experience in oil and gas, water resources, environmental management and business development. He was raised in West Texas, but he has made South Texas his home since 1984 while working around the country in major programs for the Department of Energy, the Department of Defense and the oil and gas industry. Over the last four years, he has focused on the Marcellus, Permian Basin and Eagle Ford Shale plays. He is the 2013 South Texas Wildcatter Committee chairman, and he has made a career of sustainable development and production of natural resources.

KIMBERLY WEBB

Kimberly Webb is the business development manager for Chemoil Energy, an oilfield service company specializing in frac fuel operations. Webb is in charge of managing and marketing the Texas region, and she is committed to improving the efficiencies of the oil and gas service industry. Chemoil Energy is a division of Chemoil Corporation that sells and markets fiveplus billion gallons of commodities worldwide. It is the world’s leading integrated producer and marketer of commodities.

THOMAS TUNSTALL, PH.D.

Thomas Tunstall, Ph.D., is the research director for the Institute for Economic Development at the University of Texas at San Antonio. Previously, he was a management consultant for SMEs, and the former Component 1 Team Leader for the Azerbaijan Competitiveness and Trade project. He has also served as an advisor relations executive at ACS, and was the founding co-chair for the Texas chapter of the International Association of Outsourcing Professionals (IAOP). He has published a business book entitled “Outsourcing and Management” (Palgrave 2007) and was the technical editor for “Outsourcing for Dummies” (Wiley 2008). Tunstall has consulted in both the public and private sectors. In 2006, he taught Ph.D. candidates in a business and government seminar at the University of Texas at Dallas, and in 2005, he completed a long-term assignment in Afghanistan, where he was deputy chief of party for a central bank modernization project.

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FEATUR E

ignity. Integrity. Respect. Competence. Kindness. Caring. Values. Responsibilities. Duty. Listening. These are words that one hears often when speaking with Regina Mellinger, president and CEO of Primary Services. Yet these are so much more than just words; they are the tenets of Mellinger’s philosophy in business. She has built her company on the firm foundation of putting these words into everyday action. Primary Services has been providing staffing solutions for the oil and gas industry for more than 30 years. While the company is not limited to just oil and gas, that is clearly the cornerstone of Mellinger’s business. With offices in Houston, as well as Tulsa and Bartlesville, Okla., Primary Services employs a total of 45 professionals who spend their days matching job seekers and providing solutions to the industry in need of a skilled workforce throughout America. With more than 800 contractors in the field and over 160 clients, including four of the Top 11 Fortune Global 500 companies, Mellinger remains true to her philosophy, and it is a winning formula. Primary Services has seen a 30 percent growth in revenue over the past two years. And with the growth of shale production driving the energy industry, Primary Services can expect that upward trajectory to continue. According to Mellinger, “Client referral has been paramount to our success. It is vital for us to understand the companies we are working for. As well, we work diligently to ensure the people we staff are connected to the company cause. We work to create that connectedness – that interdependence – between contractor and company.” Cause. Connectedness. Interdependence. These are more words that carry a powerful significance to Mellinger, and they reveal her sense of mission and commitment to both client-companies and contractors. She sees the contractors as people in search of their future, and she relishes the opportunity to help them find their place. In her own words, “We have an obligation of seeing the people in front of us and contributing to where they are going, and the same with the client. Expanding these values changes the world for the better.” Anyone who meets Mellinger will instantly recognize that she is a woman with a purpose – highly motivated, energetic and deeply intellectual and philosophical. A native of Fair Lawn, N.J., she received her B.A. of Fine Arts from Kutztown University in Pennsylvania. She began her career as an artist and art teacher in New York City and then migrated into art advertising. In 1981, she moved to Houston and started her career in business and marketing at a local staffing company. She and her husband, Burt, have three children: Heather, 25; Colin, 21; and John, 15. Both Burt, a summa cum laude graduate of Duke, and Heather, a cum laude graduate of the University of Pennsylvania, work with Regina at Primary Services. In fact, Regina started her company while pregnant with Heather. At the time, the company Mellinger was working for was going through a merger, and she made the decision to open her own firm. Today, Primary Services provides a broad range of staffing from office support to the executive level. More important than what they do is how they do it. Mellinger has developed a philosophy through language and listening that permeates her company and its culture. “We feel an obligation to succeed for both parties,” she said. “People tend to forget that listening can solve problems, too.” Committed. Consistent. Trustworthy. These are more words you hear when listening to Mellinger, and they can be used to describe her and her company. These words represent what she aspires to, and they are key reasons she has such a high client and employee retention rate. For companies such as Shell, Chevron, BHP Billiton, ConocoPhillips, Hess, Reliant/NRG and more, Mellinger’s words in action matter every day. There are many words to choose from to describe Regina Mellinger, but if one had to choose one, it would be ennobling. That is what she does for the people she works with and the people and companies she works for. And that is a rare gift that does indeed change the world for the better.

WORDS IN ACTION

A WINNING FORMULA: Regina Mellinger and Primary Services BY: JIMMY PERKINS

For more information, visit www.primaryservices.com or email jimmy@ shalemag.com. SHALE OIL & GAS BUSINESS MAGAZINE

PHOTO COURTESY PRIMARY SERVICES

PRIMARY SERVICES HAS BEEN PROVIDING STAFFING SOLUTIONS FOR THE OIL AND GAS INDUSTRY FOR OVER 30 YEARS.

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FEATUR E

RODEO, RANCHING AND OTG SERVICES

Charlie Wheeler builds on the foundation his family gave him and makes a name for himself in the oil and gas industry with OTG Services, the one-stop oilfield shop.

he Wheeler family name is synonymous with ranching, rodeos and the oil and gas industry. They have been a leading South Texas family for generations. Charlie Wheeler, owner of OTG Services, has stepped outside the shadows of his family and made a name for himself all on his own. At the age of 18, while most of us were packing for our college adventures or figuring out what summer jobs we were going to apply for to occupy our time, Wheeler was taking his future head-on. He moved into the rodeo circuit, where he competed in team roping. Three years and thousands of miles later, he found himself back in Tilden helping his dad, Forrest, on the family ranch (one of Wheeler’s favorite places). With a prominent ranch that has hunting trips and oil leases (BHP and Comstock lease some of their land), the family business kept him looking ahead to his future. Several months of working the ranch helped Wheeler realize the time had come for him to start his own business. He began a gate guard company called On the Go (OTG) that served the Eagle Ford Shale area. After three successful and prosperous years, at age 24, he sold OTG, but was able to retain his name in the sale. Not one to stay stagnant for too long, he met Rob Rogers in 2012 and decided to start OTG Services, the one-stop oilfield shop. He started the company with his own savings and loans he was able to

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DAILY SALES AT OTG SERVICES HAVE GONE FROM $8,000 TO $130,000 IN LESS THAN 18 MONTHS. obtain through the bank, with the goal of building a company that would help him make his mark on the world. OTG Services has three locations: Fort Stockton, Shreveport and Tilden, which boast a combined 140 employees. Obtaining more than 30 MSAs at less than 18 months old is a huge accomplishment for OTG Services. To boot, their daily sales have gone from $8,000 to $130,000 in this short time. But Wheeler has his sights set even higher. He makes it very clear that “it’s a matter of not looking back and moving forward.” As for the future of this rapidly growing company, by the end of 2014, he wants daily sales over $200,000 and a combined 200 employees. He shows no signs of slowing down, and he has big plans for OTG Services. Wheeler is truly one of the most humble people I have met. “My dad always taught me to do the right thing,” he says of his dad, Forrest. His family gave him a great foundation and savvy business sense to prosper and grow in the industry. With his leadership and direction, OTG Services will be around for generations to come and, according to Wheeler, will “keep moving forward.” For more information on OTG Services, please visit www.otgservicestx.com.

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COVER STORY

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GOING THE

DISTANCE Energetic, confident, intelligent and approachable: Meet Rod Skaufel, a worldclass leader at one of the world’s largest and most successful companies. By: jimmy perkins photography: michael giordano

e are different, in essence, from other men. If you want to win something, run 100 meters. If you want to experience something, run a marathon.” Emil Zátopek Czechoslovakian Olympian, 1948 and 1952

Marathon, Greece, was the site of the Greek victory over the Persians in 490 B.C. Legend has it that news of this victory was carried to Athens by a runner known as Pheidippides. The distance between the two cities was approximately 26.2 miles, and this is the origin of the race known as the marathon. A marathon is also defined as an activity or event that is characterized by great length and/or concentrated effort and endurance. Life itself is a type of marathon. The long arc of history is, in essence, a marathon of time itself. In it, we exist, and we accomplish what we set ourselves to as individuals and collectively as societies, as cities and as nations. And within this arc, we as individuals also gather in SHALE OIL & GAS BUSINESS MAGAZINE

companies, and together, we invent, create, build, form, shape, construct, compose, write, etc., and leave our mark on history. It is important to recognize the contributions of the men and women who work in the energy industry. After all, the energy industry is literally

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the fuel that powers global economies. And as we gather to work side-by-side in companies, our collective efforts are marked by the company’s own arc through time. BHP Billiton is a company that has made its mark on history and continues to do so through the steward-

PHOTO COURTESY ROD SKAUFEL

[

SKAUFEL’S ACCOMPLISHMENTS AND SHARP INTELLECT REVEAL A MAN WHO SPECIALIZES IN REDUCING THE COMPLEX TO THE UNDERSTANDABLE.

ship of its board of directors, its global workforce and its executive leadership. Rod Skaufel is just one of the many dedicated leaders at this company, but he is one who stands out. BHP Billiton is a company with a deep and rich history. The company was formed from a 2001 merger between Australian Broken Hill Proprietary Company Limited and Billiton, PLC. Broken Hill Proprietary, nicknamed “the Big Australia,” was incorporated in 1885 and began its silver and lead mining operations in western New South Wales, Australia, that same year. Billiton traces its roots back even further, having incorporated in 1860. Within two months of formation, Billiton began its tin mining operations in the Dutch East Indies off the coast of Sumatra. BHP Billiton is the largest minerals company in the world based on its 2013 revenues in excess of $77.2 billion, and it is one of the world’s most successful and prestigious companies regardless of industry. Headquartered in Melbourne, Australia, BHP Billiton extracts, processes and markets metals, minerals, coal, iron ore and petroleum products worldwide. By every measure, BHP is the world leader in the diversified resources industry. Iron ore, copper, diamonds, silver, lead, zinc, aluminum, alumina, chrome, manganese ores, alloys, coal, nickel, titanium and, of course, oil and gas, are all parts of BHP Billiton’s history and current business. BHP has operations in Algeria, Angola, Australia, Brazil, Canada, Chile, Colombia, Guinea, Indonesia, Mozambique, Pakistan, Peru, South Africa, Suriname, Trinidad and Tobago, the United Kingdom and the United States. With nearly 50,000 fulltime employees worldwide, BHP Billiton is now so much more than just “the Big Australia.” On Feb. 22, 2011, BHP Billiton announced the $4.75 billion cash purchase of the entirety of Chesapeake Energy Corporation’s Fayetteville Shale assets. This purchase included 487,000 acres of mineral rights leases and 420 miles of pipeline located in north central Arkansas. Less than five months later, in July 2011, came the announcement of the impending acquisition of Petrohawk Energy for $15.5 billion in cash expanding its operations into the Haynesville, Permian Basin and Eagle Ford Shale regions. The leadership for BHP Billiton’s North American operations is headquartered in Houston, Texas. In 2007, Skaufel joined BHP after 22 years in the oil and gas industry. Skaufel is an energetic, confident, intellectual and approachable leader. The first three traits are common, but the last is what sets him apart. He is also an avid distance runner. Distance runners possess certain traits. They are quick thinkers, they crave challenges, they are resilient, they are competitive and they are adaptable. These are additional traits that apply to Skaufel. The qualities that make him accomplished in his professional life are the same as those that make him successful in his

PHOTO COURTESY ROD SKAUFEL

pursuit of distance running. The goal is always improvement. Born in Boise, Idaho, and raised near Denver, Skaufel graduated high school and attended the Colorado School of Mines, where he earned his Bachelor of Science in Petroleum Engineering. After graduation in 1985, Skaufel went to work for Mobil Corporation and was sent to Bakersfield, Calif., for what he thought was a two-year

tween 2002 and 2007 working on the development of three oilfields and 660 miles of pipeline in the Republic of Chad in Central Africa. It was in this remote place that he met his future wife, Pamela, who was a procurement officer from the Exxon side of the company. She continues her career at ExxonMobil as planning manager for global services. Pamela and Rod have two daughters: Mad-

stint that turned into 10. While at Mobil, he worked as a reservoir engineer, as an operations foreman and in various engineering supervisory roles. In 1995, he was transferred to New Orleans to work on Mobil’s Gulf of Mexico projects. Then came the merger in 1999 that resulted in ExxonMobil. In 2000, Skaufel was appointed as a member of the planning group formed to merge the operations of Exxon and Mobil, so he moved to Houston. In Skaufel’s words, “That was an incredible moment to be a part of – the merging of two great companies. It was the most rewarding job I’d had up to that point in my career. No doubt.” After the merger, Skaufel spent five years be-

eleine, age 7, and Darcey, age 3. In addition, Rod has two sons from a previous marriage. Taylor is 25 and a graduate of Stanford University, and Michael is 22 and currently attending Chapman University in Orange City, Calif. It was in 2007 that the opportunity arose to join BHP Billiton as vice president of engineering for petroleum. When asked what prompted the change, Skaufel replied, “There were two main reasons. First, BHP had two executives that were former ExxonMobil guys that I knew. Second, it was a VP of engineering job. And that meant it was just a great opportunity to be involved in all key aspects of this incredible company. BHP was building its Neptune and Shenzi deepwater projects at the time.” » SHALE OIL & GAS BUSINESS MAGAZINE

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SKAUFEL IS A SHINING EXAMPLE OF WHAT IT TAKES TO MAKE A DIFFERENCE IN THIS INDUSTRY.

ExxonMobil merger to the development of the oilfields and pipelines in the African bush of Chad, and then on to his work for BHP Billiton from offshore to the shale plays in North America, it becomes clear that Skaufel is a builder – a builder of projects, departments and ideas. He is also a highly motivated innovator who somehow manages to remain centered and accessible. Between the two of them, the Skaufels manage to balance a family life and two big oil and gas careers. Running is a key ingredient and a common bond. Pamela is also a dedicated runner who has completed 10 marathons, including the New York City Marathon at 3:45. Her dedication so inspired Rod that he will be running his first competitive marathon in late May from Ojai to Ventura, Calif. Rod Skaufel presents himself as a simple man, and this may be true on some level; however, his accomplishments and sharp intellect reveal a man who specializes in reducing

the complex to the understandable. He has committed his life’s work to an industry that requires the best out of its people, and his career is a testament to his success. The monumental global efforts of BHP Billiton are only made possible by those who commit themselves to going the distance. It is, after all, another type of marathon. Skaufel is a shining example of what it takes to make a difference in this industry. Whether it’s cost reduction, increased productivity or safety, the goal is always improvement. The results speak for themselves.

For more information, visit www.bhpbilliton.com or email jimmy@shalemag.com.

PHOTO COURTESY ROD SKAUFEL

In 2010, Skaufel was appointed vice president of development planning, and he led the technical evaluation of BHP Billiton’s acquisition of Chesapeake’s Fayetteville assets. In 2011, after the Fayetteville acquisition, Skaufel found himself on the 17th floor of BHP’s Houston office with a team of seven, including himself. His job was to oversee the development of the Fayetteville Shale and the management of its 40,000 royalty owners. Skaufel and his team managed to build out their department in short order, and today, there are 2,000 employees working on shale projects for BHP Billiton in North America. Let that sink in a moment: They went from seven employees to 2,000 employees in less than three years. By 2012, Skaufel was appointed president of the conventional production division overseeing BHP Billiton’s worldwide conventional producing petroleum operations. However, six months later, he was promoted to his current position as president of the North America Shale Production Division. He now oversees those 2,000 employees working in the shale division. BHP Billiton is investing $4 billion per year developing its shale portfolio. Twenty-two of its 25 rigs operating in Texas are in the Eagle Ford and Permian Basin fields. The other three are in East Texas in the Haynesville Shale. Like all operators, Skaufel’s goals for his department are about productivity, economy and, above all else, safety. Unlike all operators, Skaufel and BHP can point to specific metrics to mark that success. “We are a technical company,” Skaufel said. “Technology drives innovation, and innovation drives performance. As for examples, he can point to a 30 percent cost reduction in wells over the past year. We continue to get more productivity out of our wells. We are trialing new completion techniques that are showing impressive results – rates of 20 percent to 25 percent higher than offset wells.” As for safety, BHP Billiton’s commitment to its safety culture is no less innovative than any of its drilling and completion techniques. After a near-miss incident, Skaufel’s boss, Tim Cutt, had an idea to create interactive sessions to find out where improvements can be made. From this initial idea, the “safety standup” was created over a two-and-a-half-month period. Essentially, it is a program that engages both employees and contractors in interactive meetings to discuss ideas on how to improve safety practices, raising awareness of the safety culture at BHP and building alignment within the organization to improve the overall system. Recent “safety standup” sessions included a group of 500 employees and contractors in Victoria, 400 in Tilden and 300 in the Permian Basin. Additional sessions are planned for the Searcy and Fayetteville regions. From his early days at the Mobil Corporation to his work in the Gulf of Mexico, and from his time spent on the planning group for the

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INDUST RY

EVOLUTION OF A PLAY Embrace the change: understanding the transitional life cycle of the Eagle Ford Shale play BY: SCOTT COURTNEY WELCOME BACK TO SHALE PLAY! In this edition of Shale Play, we will take a look at the evolution of a play. Understanding the life cycle of a play is critical to making sense of what we are seeing in the marketplace. Once we have a true measure of where we are in the cycle, we can look forward with some confidence and make business decisions that make sense. In the beginning of a play, competition for resources is fierce. A play can run rampant across a region like a wildfire, consuming resources, goods and services. The competition drives prices through the rational roof, and soon, everyone is jumping on the bandwagon. If the play occurs in a region where there is not significant oilfield-related infrastructure, operators are forced to make do with what they can find. These two components drive operators to find and production costs to market limits, keeping margins slim, but hopes high. Typically, operators will stand these high

and fracking are all maturing to a point where we are seeing contraction due to oversupply. This is not due to a decrease in drilling activity, but simply a matter of evolution in a play. Take housing, for an example. Back in 2010, when the Eagle Ford really began to take off, man camps and travel trailer parks were the main source of housing for the workforce and their families. In 2014, we are seeing new hotels, apartments and housing subdivisions begin to absorb demand. In the midstream market, we are seeing many new pipelines and terminals coming online. This is having a significant effect on crude haulers who were the only means to get crude to the downstream refineries for much of the period between 2010 and 2013. In addition, significant rail development is providing additional competition to the trucking services market. As operators transition to more pad drilling (multiple wells on one location), less gravel and

IN THE BEGINNING OF A PLAY, COMPETITION FOR RESOURCES IS FIERCE. early costs because they know that in time, resources and infrastructure will outpace demand due to the race to riches. Once the balance is tipped the other way, the operators will begin to drive prices down and only the strong will survive. There is money to be made along the way, but if you enter the fray at the wrong time or with the wrong understanding of the marketplace, that future fortune can quickly turn into a current nightmare. Never fear – Shale Play is here! Shale Play is going to get you up to speed on the evolution of Eagle Ford play and let you know where we are on the curve. We saw this in the Marcellus Shale play, and now we are seeing it in the Eagle Ford. All three facets of the unconventional oil and gas market are currently undergoing an adjustment phase. Basic oilfield services in the upstream market such as housing, trucking, water management, site construction, transportation and logistics

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base material is needed, which impacts mining and transportation services. In essence, as the play matures, there are winners and losers in the marketplace. Success or failure is more about timing, location and planning. The Eagle Ford play is transitional in nature. Temporal and spatial migration occurs as a result of commodity prices, infrastructure and reservoir quality. In real estate, they say it’s all about “location, location, location.” The problem with a play is that what is a great location for a man camp today may not be a great location in a year from now. In the beginning of the Eagle Ford, operators expected to drill for natural gas as in the Barnett and the Marcellus Shale plays. The “dry gas window” is located in the southern-most part of the trend extending from Webb County to Lavaca County. Early activity in that part of the play quickly died out, as the price of natural gas plummeted to below $3, and operators began to realize the central and northern parts of

SHALE PLAY

the play were liquids rich and produced crude oil that offered a significantly better return on investment. Land owners, operators, service companies and associated development all took a hit when the dry gas market “dried up” in the southern part of the play. However, natural gas prices have seen a significant increase in the first part of 2014 due to the “polar vortex” and an unusually harsh winter across the nation. With futures prices now in the range of $4.5, operators are beginning to move back into the dry gas window. In addition, other shale gas plays such as the Haynesville are seeing an increase in activity, which will take up the slack in oilfield services, giving that sector a boost. We are beginning the see and hear of companies that are struggling in Eagle Ford and elsewhere contrary to continued growth. These struggles are a result of play maturity combined with the drive for efficiency. Supply chain economics and advances in technology are working in tandem to the benefit of the operators. Oilfield service margins are thin these days after several years of having the upper hand. This is the natural ebb and flow of a shale play and a moment in the evolution cycle. Opportunities abound in the Eagle Ford and other shale plays, but they are different now than they were in the beginning. As more infrastructure is established and the play continues to mature, the opportunities are more in tune with that of a teenager than a toddler. We still have a long way to go in the Eagle Ford, but the nature of the beast is changing. Embrace the change, and look to the future when planning for today. That’s all for now for shale play. We hope you enjoyed the article, and that you find it informative, as well as entertaining. Keep us informed, we will keep you informed and together, we will work toward the success of the shale play.

For more information, email scott@shalemag. com. Keep playing!

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Reliant is a registered servicemark of Reliant Energy Retail Holdings, LLC, a wholly owned subsidiary of NRG Energy, Inc. The plus signs and plus clusters are servicemarks of NRG Energy, Inc. © 2014 NRG Energy, Inc. All rights reserved. SHALE OIL & GAS BUSINESS MAGAZINE

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ADDING UP TO A WIN The many reasons using NATURAL GAS AS A TRANSPORTATION FUEL in Texas just makes sense

recently launched an initiative aimed at increasing the amount of natural gas being used as a transportation fuel in Texas. Natural gas vehicles are not necessarily a new concept, but the advantages are becoming increasingly palpable as our state continues to produce record-setting amounts of natural gas. In my opinion, using natural gas for vehicles make sense for three major reasons: 1/ It’s cheaper 2/ It’s cleaner 3/ It benefits our economy

Commissioner David Porter

One of the most obvious benefits of natural gas vehicles is the cost savings for consumers. Currently, the average price of a gallon of gasoline in Texas is about $1 more than the gasoline gallon equivalent of natural gas. Over the course of a year, that can add up to several hundred dollars in savings. Furthermore, companies that have converted their

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fleets to natural gas have reported cutting fuel costs by up to 40 percent. The City of Houston recently purchased 30 compressed natural gas (CNG) airport shuttle buses at an estimated savings of $200,000 in fuel costs per year. Not only do consumers save money at the pump, but using compressed natural gas results in a more efficient and longer-lasting engine. Natural gas is not only better for your wallet and your engine; it is also better for the environment. Transportation is the second largest source of CO2 emissions in the United States, accounting for nearly 30 percent of nationwide CO2 emissions. Natural gas vehicles run around 25 percent cleaner than traditional engines, in some cases more, and reduce smog-producing pollutants by up to 90 percent. Almost half of H-E-B’s truck fleet runs on natural gas, and the company’s combined initiatives have reduced their CO2 emissions by more than 30 percent. The financial and environmental numbers add up to a win, but the positive impact on our economy is even

NOSNIBOR137/BIGSTOCK.COM. DAVID PORTER PHOTO BY MICHAEL GIORDANO

BY: DAVID PORTER

more impressive. By next year, the annual contribution of unconventional gas activity to U.S. gross domestic product is projected to reach nearly $197 billion, and almost double to a whopping $332 billion by 2035. Statewide, the natural gas industry supports nearly 12 percent of total employment and contributes more than $100 billion to the Texas economy. The choice is clear. By using natural gas, we are promoting a clean, affordable and abundant domestic resource and strengthening our economy. There are currently about 4,000 natural gas vehicles on Texas roads, and approximately 43 public natural gas refueling stations. I want to see these numbers grow. As part of my initiative to promote the use of

USING COMPRESSED NATURAL GAS RESULTS IN A MORE EFFICIENT AND LONGER-LASTING ENGINE. natural gas in the transportation sector, I have hosted four workshops across the state designed to be working sessions where participants have the unique opportunity to engage experts in a dialogue regarding perceived barriers and opportunities associated with converting to natural gas vehicles. In addition to these workshops, I have been in communication with the Texas Department of Transportation to request that CNG and LNG refueling stations be included on highway information signs. Iâ&#x20AC;&#x2122;ve directed Railroad Commission staff to offer training on code compliance for CNG station installers, compile information on our website regarding other technical training available and establish a listserv to distribute updates and provide monthly statistics on natural gas motor-fuel tax collections. Collections through March 26 totaled $1.14 million, which equates to 7.6 million gallon equivalents sold. Commission staff has successfully worked with the State Comptrollerâ&#x20AC;&#x2122;s Office, the Houston-Galveston Area Council and the Buy Board to make it easy for public fleet managers to purchase natural gas vehicles. Their offerings are now published on our website. The Railroad Commission has already purchased 10 natural gas-fueled vehicles, and it is my goal to see more state agencies convert to this cost-cutting option. Nationwide, natural gas production is projected to grow steadily, increasing 56 percent from 2012 to 2040. With this increase in production, I hope to see a corresponding increase in the amount of natural gas used as a transportation fuel. I am confident that by bringing all stakeholders together to have a productive dialogue and by educating the public on the incredible advantages, Texas will be the leader not only in natural gas production, but in efficient and economical natural gas vehicles. For more information, visit www.rrc.state.tx.us/commissioners/porter. SHALE OIL & GAS BUSINESS MAGAZINE

INDUS T RY

INVENTING THE FUTURE The impact of emerging technology on the oil patch

BY: JIM CROMPTON AND DR. DUTCH HOLLAND A modern drill ship will have tens of thousands of sensors and instrumented equipment. When drilling, that drill ship can produce nearly 4 terabytes of data per day. Key drilling measurements, including the rate of penetration, the number of rotating hours for the drill bit, the weight on the bit, the mud weight, the fluid loss and the wellhead and down-hole pressure, are carefully monitored to ensure safe operations. The industry also has the capability to capture information from the drilling assembly, located just behind the drill bit, while the well is drilling. Measurements such as measurement while drilling (MWD) and logging while drilling (LWD) are taken to gain an up-to-date understanding of the bottom hole conditions, what rocks are being penetrated and what fluids exist in those formations.

ÒTHE BEST WAY TO PREDICT THE FUTURE IS TO INVENT IT.Ó 28

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THE DEVELOPMENT of even more advanced digital technologies seems inevitable, but the exploration and production industry needs to do more than wait for technology to be invented. The industry needs to take the initiative to design the future, driven by process transformation, enabled by technology advances and proven through real business value. As Alan Kay once said, “the best way to predict the future is to invent it.” In this article, we will cover inventing the future by: • Drilling smart wells • Using real-time surveillance • Deploying instrumentation and autonomous systems • Practicing management by exception • Inventing the future for drilling Most people would look at a modern drilling rig (or drill ship) and see the impressive derrick, the large pipe racks, the mud pumps and the related mechanical systems and come away with the impression of a massive mechanical (and probably dangerous) operation. All that is true, but there is a hidden digital personality to the modern marvel that interests today’s digital drilling engineer, as well.

Meeting production targets is a continuous challenge for all operators. However, many components of a field operation have the capacity to significantly impact the economic success of an asset. There is fast and easy access to reliable well information. Such information, whether real-time or historical, is critical for enabling engineers and management to make the right decisions at the right time to meet both operational and longer-term strategic objectives. This is the case whether onshore or offshore and in conventional or unconventional fields. One of the tough facts of the life cycle of an oil or gas field is that unless you add more capacity (by drilling more wells and adding more processing facilities), production tends to decline soon after initial production begins. With few exceptions, this battle of keeping production as high as possible under constraints of safety, environmental safeguards and costs lasts throughout the life of the field. The initial reservoir pressure that drives hydrocarbon flow declines with the production process. The rate at which this decline happens varies widely (from a few percent a year to rates in excess of 30 percent per year), but the actions of production and operation teams can slow that rate of decline significantly. Intelligent well completions can not only send back information from the reservoir at the bottom of the well, but take instructions from operations to change the pattern of water injection to bypass unproductive zones and lower the water production while increasing oil production.

CREATIVENATUREPHOTOGRAPHY/BIGSTOCK.COM

REAL-TIME SURVEILLANCE AND DATA ANALYSIS

Figure 1: Typical Life of a Field So basically, for the production and facilities engineers and the field operations staff, the challenge is to arrest the natural production decline and meet product plan targets by keeping production flowing and equipment running.

INVENT THE FUTURE WITH INSTRUMENTATION AND AUTONOMOUS SYSTEMS

Today, operators install sensors, gauges and meters on wellheads and selected equipment in order to collect measurements and test results to send back to a “control room” environment. In the future, companies can move beyond baseline surveillance to “control” and even toward advanced alarming/alerting and process automation. Further development of advanced sensors,

coupled with a plant automation network and a more integrated control room, will allow operators to move from “reacting to issues” (red lights) to “responding to potential issues” (yellow lights). By employing artificial intelligence to automate event detection and smart alerting, they can continuously visualize and analyze information to optimize a given asset development plan. Many new major capital projects have very sophisticated and highly instrumented facilities. Sensors are now often placed down-hole to collect pressure and temperature data near the reservoir. The next steps in field automation are moving toward the ability to control processes in near real time based on operations rules, forecasts and predictions. The “oilfield factory” is already moving into the oil patch to bring about more efficient, safe and effective production results.

ment breaks, water production rises or a well production rate falls. This is noticed by some level of surveillance, whether manual or automated, and it is investigated and fixed. In the future, the definition of an exception will be expanded to include instances when something is trending away from the prediction provided by a computer model, indicating that some level of analysis and correction may be required. The intent should be that if an exception arises, the right processes, skills and equipment are in place or can be rapidly deployed to deal with the situation. In summary, technologies emerging today are the keys to helping companies direct their resources to the highest-value activities and engage in better and faster decision-making. By simplifying how engineers access information, visualize the performance of their assets and manage data, the industry will be positioned to rapidly define and implement new ways of working in the oil patch.

The principle of “managing by exception” is to enable routine information collection and assessment and devote human time and attention to the areas that are trending toward performing outside expectations. Today, an “exception” is often a pending or actual failure of some kind: A piece of equip-

For a more complete picture of the digital oilfield, look for a copy of “The Future Belongs to the Digital Engineer,” written by Jim Crompton, M.S. GEOPH, MBA, and Dutch Holland, Ph.D., on Amazon.com. You may also contact the authors at dutch@hollandmanagementcoaching. com and jimc044@aol.com.

INVENT THE FUTURE WITH “MANAGEMENT BY EXCEPTION: FOCUS ON THE HIGHEST VALUE”

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Resirkulere has made a name for itself in the Bakken, recycling fresh water during plug drill-out operations. We successfully clean and recycle fresh water used during plug drill-outs for reuse, eliminating the need for the acquisition, transport and storage of fresh water by up to 90%. Using our patented MAGIC TANK速 system we have completed in excess of 1000 successful jobs in North Dakota and Texas with zero safety and or environmental issues to date.

A PROFITABLE SOLUTION FOR THE DISPOSAL INDUSTRY Following research in the disposal industry, we have modified the MAGIC TANK速 system to accept heavier solid content flow-back and disposal fluids. This makes it economical to separate a much higher level of solids typically seen during plug drill-outs, thus making it suitable for disposal site operators to accept fluids it would normally have turned away. Our modified disposal system is now being utilized successfully on oilfield waste water disposal locations throughout the Bakken. These are fluids that during disposal operations, would normally fluctuate from between 30-70% solids. As an added benefit, the system will also separate additional amounts of oil that might typically be lost in the disposal process. A prime example is a recent waste water load with a mixed bag of drilling and completion fluids. It entered the MAGIC TANK速 in excess of 300,000 mg/L suspended solids and exited at 30,000 mg/L and was further filtered to less than 3000 mg/L. If you own and operate an Oil & Gas Waste Water Disposal Site, you owe it to yourself to contact us and see how our patented system can assist you in streamlining your operations.

O I L F I E L D W AT E R F I LT R AT I O N 30

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Oil & Gas Waste Water Disposal Sites MAGIC TANK速 - A BETTER STRATEGY FOR FRAC WATER MANAGEMENT Incorporating the MAGIC TANK速 into your system will produce cleaner water and increase your profits through 10%+ more oil recovery. The MAGIC TANK速 will also help extend the life of your disposal equipment and disposal well through reduced wear and tear by not having to process heavy solids through your existing disposal system.

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SAFEGUARDING THE SHALE FLARING: what it is and why itÔs necessary

BY: OMAR GARCIA

THE EAGLE FORD SHALE has been an economic game changer for South Texas, and it has led to greater energy independence for our nation. The present oil and gas shale formations are developed with cutting-edge technology that not only sustains development, but also has led to safer and cleaner operations for our industry and the communities where we operate. This atmosphere thrives on creativity and innovative solutions, fostering many processes and programs that safeguard the air near oil and natural gas development areas. One of these safeguards is the use of flaring. Flaring is the necessary, controlled and safe burning of natural gas. And because natural gas is extremely valuable, natural gas is only flared when it is absolutely necessary. Most companies would rather capture gas and transport it to market through a pipeline or use the natural gas for operations instead of burning it. There are three reasons flaring is necessary. The first is for the testing of oil production. After drilling and hydraulic fracturing are complete, wells are tested to determine their flow rate. The results are essential in determining the equipment needed to move gas from the wellhead to the pipeline. While the smaller pipelines connected to individual wells are being constructed, the natural gas is burned to ensure emissions do not escape into the atmosphere. The process is classified by the EPA as an element of responsible “green completions,” and it is the preferred disposal method among regulators. Secondly, flaring is an important safety measure. When equipment or pipes become over-pressured, safety valves within the equipment automatically engage to send gas into flare stacks until pressures reach a safe level. And the third reason is the lack of pipeline infrastructure. Although pipe-

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line infrastructure is rapidly increasing throughout the Eagle Ford Shale region, there are still some areas that lack the necessary infrastructure to transport natural gas to market. According to the Texas Railroad Commission, more than 16,000 miles of pipeline were added across the state between 2010 and 2013, and our industry will continue to work with pipeline companies to further develop this important infrastructure, which will lead to a greater reduction in the number and duration of flaring. Flaring is regulated and permitted through the Railroad Commission of Texas. The commission’s Statewide Rule 32 allows an operator to flare gas while drilling a well and for up to 10 days after a well’s completion for operators to conduct well potential test-

ing. In some cases, flaring for extended periods of time may be necessary. As is often the case in new exploration areas, pipeline connections are not typically constructed until after a well is completed, tested and proved to be productive. The oil and gas industry continues to develop new techniques to reduce flaring and emissions within the Eagle Ford Shale, and in some cases, it has been able to completely eliminate the need to flare at the well site. STEER and its members are committed to protecting and preserving the health of the environment, communities and individuals in and around the Eagle Ford Shale region while producing the resources that make it possible to drive our children to soccer practice, heat and cool our homes and prepare dinner for our families. As president of the South Texas Energy & Economic Roundtable (STEER), Omar Garcia facilitates communication, education and public advocacy surrounding the production of energy resources in the Eagle Ford Shale region and all of South Texas.

FLARING IS REGULATED AND PERMITTED THROUGH THE RAILROAD COMMISSION OF TEXAS.

calling all shutterbugs! Weâ&#x20AC;&#x2122;re looking for the best pictures that exemplify the boom of the Eagle Ford Shale. The highly anticipated Economic Impact of the Eagle Ford Shale, produced by the Community of Business Research at the University of Texas San Antonio, will be released in September 2014. In a collaborative effort to capture the essence of prosperity the boom has created - Angus, UTSA, Steer and SHALE Magazine are looking to enhance the publication with your photos. The book will be presented at red carpet networking events throughout the state of Texas including Houston, San Antonio, Laredo and Corpus Christi. It will be used by media sources and presented as a statewide tour conducted by SHALE Oil and Gas Magazine.

Tour Dates: SAN ANTONIO, TX - September 23, 2014 LAREDO, TX - September 25, 2014 CORPUS CHRISTI, TX - September 26, 2014 HOUSTON, TX - September 30, 2014 Photographs must be digitally submitted in a high-resolution format. Selected candidates will be required to sign a photo release to UTSA for the use of the photo and photo credit. Sponsorships are available for the UTSA Economical Development Impact Study Tour. For more information please visit www.shalemag.com. SHALE OIL & GAS BUSINESS MAGAZINE 33

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A WORLD OF OPPORTUNITY SHALE catches up with SEN. CARLOS URESTI about the impact of the Eagle Ford Shale boom in the Lone Star State. BY: SHANA HAMID

SEN. CARLOS URESTI represents almost 800,000 people in District 19, one the largest geographical legislative districts in the nation. It contains all or part of 17 counties covering more than 35,000 square miles and spans about 400 miles of the U.S./Mexico border. The district contains 55 school districts, almost 23,000 oil and gas wells, 10 state parks, three national parks and more than 2,700 miles of highways and interstate transportation infrastructure. After graduating from McCollum High School, Uresti enlisted in the U.S. Marine Corps Reserves at the age of 18 as a private first class. He earned a bachelor’s degree in political science and a teaching certificate from St. Mary’s University, and was then commissioned as a second lieutenant. Uresti rose to the rank of captain and earned the Navy Achievement Medal during his four years of active duty as a combat engineer. Since graduating from St. Mary’s University School of Law in 1992, he has been in private practice in San Antonio, currently with the Uresti Law Firm, P.C. He has served the citizens of Texas in District 19, first as a state congressman from 1997 to 2006, and then as state senator from 2006 to the present. We recently asked the senator for his perspective on the impact of the Eagle Ford Shale boom.

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SHALE: CAN YOU DESCRIBE HOW THE GROWTH OF AND FROM THE EAGLE FORD SHALE IS ENHANCING THE COMMUNITY OF SAN ANTONIO AND ITS SURROUNDING COUNTIES? HOW DOES THIS TRANSLATE TO REVENUE, SPECIFICALLY? URESTI: The Eagle Ford Shale is putting people to work. For those with engineering and technical skills, the Eagle Ford is improving their earning power significantly. That’s the big news from the Eagle Ford for San Antonio and South Texas. A study released last year by the University of Texas at San Antonio showed that in 2012, the Eagle Ford Shale supported 116,000 jobs in the region and generated $61 billion in economic impact. Small businesses in support roles are thriving, and major companies not previously in the area are opening branches and facilities all over the region, including in San Antonio and Corpus Christi. Wages paid by these companies are raising the standard of living not only for these individuals, but for entire communities. Rising revenues from sales and property taxes are allowing local governments to build and improve facilities and programs that serve historically impoverished communities, further improving the lives of people in the shale play. School districts that just a few years ago were so poor they were drawing state aid are now sending money to the state to help other poor districts. The growth in revenues generated by sales taxes in some of these counties has been phenomenal. For example, in Dimmit County, annual sales tax revenues rose from $360,000 in 2009 to $8.7 million last year – a rise of 2,427 percent in four years. Now that’s amazing. In Atascosa County, just outside San Antonio, the numbers are up from $1.2 million in 2009 to $7.8 million last year – an increase of 647 percent. And this does not take into account the rise in property values.

SHALE: WHAT LEVELS AND TYPES OF JOB GROWTH ARE BEING YIELDED FROM THE SHALE DEVELOPMENT? URESTI: According to data released by Workforce Solutions Alamo earlier this year, oil-andgas industry jobs in the 30-county Eagle Ford region will grow by 53 percent from 2010 through this year. That’s 15,702 jobs just with oil and gas companies. And these are not minimum-wage jobs; the median pay is more than $17 an hour. Even people without a high school education are earning more than $1,000 a week as deck hands on oilrigs. Many of those oil company jobs that require a college degree, such as engineering, pay much more. Oilfield service companies Baker Hughes, Halliburton Co. and Schlumberger all have opened facilities in South Bexar County that employ hundreds of front-line workers and support personnel. And the production from the oil and gas fields has led to the construction or expansion of major pipelines, refineries and port docks in the fields and along the coast. Pipelines cannot be built fast enough to carry out all of the product being produced, so oil shipments by rail have skyrocketed. Looking to hire a driver with a commercial license? Good luck. Demand for truck drivers in the Eagle Ford has sparked a bidding war that has raised the wages of safe and reliable truck drivers substantially. While this has created a tough hiring environment for our school districts looking for bus drivers, help is on the way. The State of Texas is contributing grants through local community colleges to train commercial drivers and other in-demand skills to put even more Texans to work. SHALE: WHAT DO YOU FEEL HAS BEEN THE MOST SIGNIFICANT IMPACT OR GREATEST GOOD THAT HAS COME FROM THE EAGLE FORD SHALE? URESTI: The greatest good has been the financial resources this has brought to the state,

specifically the Rainy Day Fund. The severance tax collected from each barrel of oil and million cubic feet of gas is what has created a large surplus in the state coffers. It’s that surplus that has allowed us to get a jump on long-term solutions to problems that could harm our economic viability in the future. Last year, for instance, voters allocated $2 billion to water projects, and if the state ballot proposition passes in November, the Rainy Day Fund will yield approximately $1.4 billion in additional [transportation] funding next year. In the near term, Texas will no doubt face further obstacles in building and maintaining highways and roads, securing clean water for our homes and businesses and educating our children. With an estimated $8 billion expected to be in the Rainy Day Fund, next session, expect those dollars – and, therefore, the oil and gas boom – to play a large role in funding the solutions. SHALE: DO YOU HAVE ANY ADDITIONAL THOUGHTS YOU’D LIKE TO SHARE? URESTI: Development of the Eagle Ford Shale is showing a new generation a world of opportunity. Our political, educational and social leaders need to guide our youth and our communities to take advantage of the benefits this opportunity presents not only in the Eagle Ford Shale, but in the Permian Basin and other

ÒPRODUCTION FROM THE EAGLE FORD HAS HELPED BRING TEXAS AND U.S. OIL OUTPUT TO LEVELS NOT SEEN IN DECADES.Ó

energy-producing areas, as well. Production from the Eagle Ford, along with renewed production in the Permian Basin, has helped bring Texas and U.S. oil output to levels not seen in decades. By the end of this year, projections are that Texas will be the third largest producing entity in the world behind Russia and Saudi Arabia. In large part, oil and gas exploration is responsible for the “Texas miracle” and has made Texas an attractive location for so many businesses. But to help sustain this growth and to preserve and advance the quality of life in our communities, Texas has to maintain and improve our system of state and local roadways that are vital to developing these resources and getting them to market. Last session, I worked with leadership in both the House and the Senate to pass SB 1747, which set up the Transportation Infrastructure Fund to distribute grants to counties with roads hit hard by energy activity. Last session, we were able to allocate $225 million to the fund that will bring a small measure of relief to the 191 counties that applied for the grant. While the program was a historic first, much work remains. If our transportation infrastructure needs are not addressed fully, Texas risks slowing activity not only in the oil and gas sector, but in all facets of our economy. For more information, email senator@carlosuresti. com.

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PROTECT YOUR RELATIONSHIPS Recharacterization of debt to equity: what you need to know OIL AND GAS ARE FLOWING IN TEXAS,

fueling an economic boom and frenetic business activity. In 2012, the economic impact was tallied at $61 billion and 116,000 new jobs were credited to the Eagle Ford Shale. The scale and speed of the robust development and the number entrants into the market is fueling even more growth. With the hectic pace of the boom, business is moving faster than ever. All businesses are built on relationships, and the most basic of business relationships involve money: the lending of money to, or borrowing of money by, a business, which is separate and distinct from the investment of money into, or the pursuit of equity investors by, a business. Agreements help define relationships: They tell the parties to the relationship what each can and cannot expect, and they often also define what those outside the relationship may be able to anticipate from the relationship. No one would argue that agreements by themselves are sufficient to define a business relationship, but in a court of law, agreements provide the starting point for relationship analysis. Included in its power to restructure a debtor’s obligations is the bankruptcy court’s power to redefine, or recharacterize, business relationships.

What does that mean, and why should you care?

A bankruptcy court has the power to weigh the factors of a relationship and ultimately ignore labels placed on an agreement, recharacterizing as equity what the parties to a relationship may have labeled debt. That concept should give private debt providers, corporate insiders who advance money to their businesses and lenders taking an equity stake in a borrower some pause for concern because should a bankruptcy situation arise, it could cost you a lot of money.

If you lend money to companies, your ability to obtain both a return on investment and a return of your principal from a bankrupt company is often dependent on whether your relationship with the company is characterized as debt or equity. If the debt you thought you created is secured by collateral, a recharacterization of such debt to equity could eliminate your ability to collect against the “collateral.” And if your claim against a debtor is recharacterized as equity, prior repayments made by the debtor may be subject to avoidance (i.e. you may have to return those payments to the bankruptcy company). The recharacterization power is important because in bankruptcy, equity (shareholders) cannot be paid until debt is paid in full, and in a distressed situation, there is generally not enough money to pay debt in full. While recharacterization of debt to equity is not new (federal tax courts and state courts have dealt with the issue for decades), the power of a bankruptcy court to recharacterize debt as equity has more recent origins. Until 2011, courts struggled to find a statutory basis to authorize such recharacterization and debated whether it was allowable at all.

So what happened in 2011? Grossman v. Lothian Oil Inc.

The case: Israel Grossman and Lothian Oil Inc. signed a handwritten agreement acknowledging that Grossman had loaned Lothian $200,000. The parties titled the transaction a loan, but Lothian agreed to pay Grossman a 1 percent royalty on the production of certain oil properties, rather than pay a stated interest rate and Lothian agreed to repay the principal from the proceeds of any equity placements made in the company. Subsequently, Grossman loaned Lothian another $150,000 in exchange for the same terms as the original

IN A COURT OF LAW, AGREEMENTS PROVIDE THE STARTING POINT FOR RELATIONSHIP ANALYSIS. 36

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BY: MICHAEL PARKER

agreement and an additional 1 percent royalty. Neither of the loans contained any security agreement or collateral. When Lothian subsequently filed for bankruptcy protection, it asked the bankruptcy court to “recharacterize” Grossman’s loans as equity investments, and the bankruptcy court obliged. Because Lothian’s plan of reorganization called for creditors to be paid in full and equity not to be paid at all, this became an all or nothing proposition for Grossman, who got nothing. In Lothian Oil, the Fifth Circuit Court of Appeals asserted new grounds for authorizing recharacterization claims, finding the bankruptcy court’s recharacterization power rooted in its ability to “determine” or allow/disallow claims. This determination appears to have settled any dispute regarding a bankruptcy court’s ability to recharacterize claims, since no one disputes the bankruptcy court has the power to determine the validity of claims.

What matters in recharacterization?

To distinguish between debt and equity, Texas courts have imported a multi-factor test from federal tax law, while state courts that have permitted recharacterization have also borrowed tests from federal tax cases that have similar factors. The Lothian Oil case outlined 16 various factors for a court to consider and weigh to determine the characterization of a loan as debt or equity. The factors are not of equal significance, and no one factor is controlling; therefore, the court must look at the whole picture. The court must examine the extent to which a transaction is truly an arms-length transaction between independent actors, and most of the factors help answer that question. For instance, the court examines the intent of the parties: What the parties intend and say about the transaction has some weight on whether the transaction actually is meant to be a debt or equity transaction. The identity between creditors and shareholders and the extent of participation in management by the holder of the instrument is also weighed – the closer the relationship between the parties, the less likely the transaction is an arms-length one, and the more likely an advance is to be treated as an equity investment. The credit worthiness of a company also comes into play: The court looks at its ability to

similarly situated creditors. Often, a debtor will prefer one creditor over another; for example, a debtor will repay the loan from his mother before the loan from the local bank. To achieve equitable recovery, the bankruptcy court has an independent obligation to look behind labels that a debtor may place on a transaction and determine the true nature of the transaction. Moreover, in bankruptcy, a trustee often replaces the debtor, and the trustee has an independent duty to achieve an equitable recovery for all similarly situated creditors.

What should I do if my loan document fails to satisfy some of the identified factors?

The Fifth Circuit has made it clear that it will balance all the factors, and some factors may be more important than others. The fact that some factors may make your debt look like equity does not necessarily mean you need to modify the loan document. However, some factors, such as method of repayment, interest rate, repayment terms and maturity date, may carry more weight. A lender should probably

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A BANKRUPTCY COURT HAS THE POWER TO WEIGH THE FACTORS OF A RELATIONSHIP AND ULTIMATELY IGNORE LABELS PLACED ON AN AGREEMENT. obtain funds from outside sources, suggesting that if it can obtain such loans, a loan from an insider on similar terms should be treated similarly. Along the same lines, an entity with little capital and lots of debt is less likely to be able to obtain another loan from an armslength lender, so one of the factors reviewed examines the “thinness” of the capital structure in relation to debt. Recognizing that early money and seed money are typically equity necessary to capitalize a business in anticipation of acquiring debt (as lenders don’t typically lend to undercapitalized businesses), the timing of the advance with reference to the organization of the corporation is also considered. The court will also review how the parties’ actions complied with the agreement, as well as examine how the “debtholder” is treated relative to other creditors regarding the payment of interest and principal. The provision of a fixed rate of interest and whether there’s a contingency on the obligation to repay is also considered, recognizing that a fixed interest rate and unconditional payment is typically associated with loans, as opposed to equity investments. The source of the interest payments is also weighed, suggesting the importance of general operating funds typically covering loan repayments, but not equity distributions. And since

loans typically have fixed maturity dates, the presence or absence of a fixed maturity date bears weight.

Are some factors more important than others?

In the Lothian Oil case, four factors were more important than others: 1. The source of the repayment 2. The lack of an interest rate 3. The lack of repayment terms 4. The lack of a maturity date The fact that Grossman would be paid from royalties and “equity placements,” and that the agreement lacked an interest rate, repayment terms or a maturity date, appeared sufficient enough to recharacterize Grossman’s claim as an equity investment rather than a loan. Of these four, the court noted that the main factor behind the recharacterization was the inclusion of a royalty payment instead of a prescribed interest rate.

If the debtor agrees it owes the debt, why should the bankruptcy court care? One of the bankruptcy court’s two primary goals is to achieve equitable recovery for

do an objective assessment of its loan documents, focusing on these terms to determine if its loan is at risk of recharacterization. A lender could consider clarifying or modifying documentation of the loan. Generally, the business relationship still exists and provides the lender some leverage to obtain the debtor’s consent to clarifying the documents. But beware: “Clarifying documents” that transfer valuable rights may be avoidable, causing the clarifying documents to have no effect, which would place the parties in the same position as before the clarification. Finally, consider restructuring the entire loan transaction: An exchange of new promises and value through a new loan transaction might well wash away inconsistencies or problems in prior loan documentation. Taking the right steps to protect yourself will help you avoid recharacterization. Norton Rose Fulbright is a global legal practice providing the world’s preeminent corporations and financial institutions with a full business law service. Recognized for its industry focus, Norton Rose Fulbright is strong across all of the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and health care. SHALE OIL & GAS BUSINESS MAGAZINE

PO LICY your business – it brings up potential issues for you, the provider, as well. Thus, as your agents and employees sell products and services in the field, it is ever more vital to ensure that the material, information and promises they make do not violate the DTPA. Proper training, guidance and review of your print material and contracts is increasingly important as your business grows. In addition, if a jury finds that a provider did, in fact, commit an infraction of the DTPA, the questions of whether or not the defendant committed this violation knowingly comes to the surface of the claim. That is why it is ever more important to “know” what your employees and agents are saying and that what you have authorized them to say does not violate the DTPA. If it is found that a provider deliberately committed a DTPA violation, a victim could be rewarded up to three times the economic

THE HIDDEN CONSEQUENCES OF RAPID GROWTH THE OIL AND GAS INDUSTRY has provided pleasing economic relief to many areas across South Texas; however, with the growth and demand, certain unintended consequences are also becoming more prevalent. As business and demand in South Texas grows, the potential for you or your business to get hit with a lawsuit or fall prey to predatory practices has also increased. Since the oil and gas industry’s enterprises are rooted in the goods and services industry, understanding the protections afforded by the Texas Deceptive Trade Practices Act (DTPA) is paramount in understanding the both the protections and the pitfalls your business faces as it grows. To provide some brief history, the Texas legislature passed the DTPA in 1973. The DTPA was passed as a consumer protection law cre-

ated to protect consumers from receiving (and businesses from providing) negligent or deceitful products or services such as breach of warranty, unconscionability and misrepresentation. This law soon became known as one of the leading consumer protection laws in the United States, and as a benchmark of justice. So how does this law work, and how does it affect your business? The intent of this law is to allow the consumer to recuperate any damage and attorneys fees if a provider of goods or services commits an infraction of the DTPA. A violation of DTPA applies to false, misleading and deceptive trade practices in association with the transaction of a good or service. Thus, it is not only an important tool that protects you and your business as you engage with contractors, agents and service providers for

WHEN PROPERLY USED, THE DTPA SERVES AS A SYSTEM OF CHECKS AND BALANCES AGAINST ABUSIVE AND DECEITFUL TRADE PRACTICES. 38

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damages (also known as treble damages). At times, mental anguish fees may be compensated to the consumer if he or she provides physical manifestations. The DTPA also allows the award of attorney fees in all cases where the plaintiff is victorious or visa versa in cases where a consumer files a false or unfounded claim against you, the service provider. When properly used, the DTPA serves as a system of checks and balances against abusive, misleading and deceitful trade practices. It is important to be aware of this law and the way it works in order to avoid any risks that could potentially affect you or your business. As a business owner, always remember to be vigilant about creating, implementing and enforcing good, sound business practices to avoid the business pitfalls. Rahul B. Patel is the managing partner of Patel Gaines Attorneys at Law. This article is not intended to provide legal advice, and it does not establish attorney-client privilege. For more information about the author, call Patel Gaines at 210-460-7787 or visit www.patelgaines.com.

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The DECEPTIVE TRADE PRACTICES ACT is a valuable tool afforded by the Texas legislature. However, as your small business grows, you need to put protocols in place to protect your business. BY: RAHUL B. PATEL

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EYES WIDE OPEN Risk, compliance and anti-corruption challenges in the Mexican energy industry

ON DEC. 21, 2013, Mexico’s energy reform became law, representing the most significant overhaul of Mexico’s oil, gas and electric industries of the last seven decades. These reforms across Mexico’s oil, gas and electric markets promise huge opportunities for the private sector and increased investment from international firms. However, U.S. companies looking to enter this market need to stay vigilant of anti-corruption risks and plan ahead to ensure they have adequate governance, risk and compliance structures in place to address these scenarios.

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Being aware not only of the local, but the trans-boundary and international rules is a key requirement to ensure business is conducted in a way where risks are properly managed and violations of laws are avoided. The contractual framework for such opportunities will be subject to a higher degree of scrutiny, not only because the new regulations to be enacted for such purpose, but because they will also be closely monitored based on both national and international standards. Given the heightened enforcement of the U.S. Foreign Corrupt Practices Act (FCPA),

particularly in the energy industry, international energy firms need to pay particular attention to their anti-bribery risks when contemplating potential transactions in Mexico’s newly privatized energy markets. They will also need to be aware of the local rules in this area – specifically Mexico’s 2012 anti-corruption law, which has important considerations for all parties involved.

APPLICABLE RULES

Mexico has already adopted various legal tools that would potentially be applicable to

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BY: JUAN CARLOS LUNA

to fight corruption, Mexico still struggles with a negative track record where lack of transparency, undue political influence and fraud have unfortunately created a negative perception. There are significant rule of law issues and gaps not because there is an inappropriate legal framework, but because the state energy monopoly that existed until very recently came from decades of inefficient operation, lack of transparency, corruption and fraud. Some of these realities are changing by transforming negative elements into what could represent a more controlled business, political and legal environment. An example is the recent decision to centralize PEMEX procurement activities into a single, more

controls intended to prevent bribes from being paid. The anti-bribery provisions of the FCPA define a “foreign governmental official” as any officer or employee of a foreign government (or any department, agency or instrumentality or state-owned entity thereof), foreign political party or a public international organization or any person acting in an official capacity for or on behalf of any such government or public international organization. In the context of the Mexican oil and gas and electricity markets, past FCPA prosecutions in the United States involving bribes paid in Mexico have found that corrupt payments to employees of Mexican state-owned companies such as PEMEX and CFE constitute prohibited payments to foreign governmental officials under the FCPA. Penalties for violations of the FCPA can be very significant. A U.S. company (or a foreign company acting in the United States) may be fined up to $2 million per violation of the FCPA and also be subject to a civil penalty of up to $10,000 per act in violation of the statute. Any officer, director, employee or agent of a U.S. company (or foreign national acting in the United States) may be fined up to $100,000 and/or imprisoned for not more than five years, plus be subject to a civil penalty of not more than $10,000 per act in violation of the FCPA.

PENALTIES FOR VIOLATIONS OF THE FCPA CAN BE VERY SIGNIFICANT. transparent and better-coordinated area. Other examples are the audited methods under which the new energy contracts will be implemented based on the rules that will apply, and the overall expectation for a better legal scenario that the execution and implementation of the energy reform should create. Final determination and judgments on recent corruption scandals such as the one being investigated for the procurement contracts of PEMEX with the company, Oceanografia, will be crucial to validate the political will to apply the law with zero tolerance to corruption, as has been expressed and assured by governmental authorities. Turning to the specific analysis of the two key legal bodies we have selected for this discussion based on their influence and potential impact, we will focus on these:

FCPA

fight and prevent corruption and abuse of power. Among the most important are the constitutional lawsuit framework, the criminal code and its specific provisions regarding fraud and the federal law of administrative accountability of public officers. Other related legal frameworks that will play a pivotal role as the energy sector opens are those related to class actions, money laundering, tax regimes and labor rules, among others that have recently been amended. Despite the existence of a solid and modern framework of laws and regulations designed

As international energy companies move into the Mexican market, they must be proactive with regards to the FCPA risks that these opportunities bring. The FCPA bars U.S. companies – and their officers, directors, employees and agents – from acting with corrupt intent in furtherance of any offer, payment, promise of payment or authorization of payment, money, gifts or anything else of value to any “foreign government official” for the purposes of influencing the official. Additionally, U.S. companies (including their foreign subsidiaries) and foreign companies whose shares are publicly traded in the United States are also subject to the FCPA’s accounting and bookkeeping provisions, which require accurate recording of expenses and internal

THE FEDERAL ANTI-CORRUPTION LAW FOR GOVERNMENT PROCUREMENT

Mexico enacted the new Federal AntiCorruption Law for Government Procurement in 2012 as part of its efforts to comply with its obligations under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions; the Inter-American Convention Against Corruption; and the United Nations Convention Against Corruption. Mexican laws have traditionally punished authorities charged with corruption, but with the enactment of the anti-corruption law, Mexico is also focusing on punishing the businesses that motivate such illegal behaviors. This prohibition applies to everyone engaged in federal government contracting in Mexico – Mexican and non-Mexican individuals and companies alike – and includes bidders, participants in tenders, recipients of RFPs, suppliers, contractors, licensees, concessionaires and their shareholders, partners, associates, representatives, principals, agents, attorneys-in-fact, brokers, managers, advisers, consultants, subcontractors and employees. In addition, the law prohibits Mexican individuals SHALE OIL & GAS BUSINESS MAGAZINE

COMPANIES SHOULD EMPHASIZE ANTICORRUPTION TRAINING FOR ANY EMPLOYEES WHO WILL INTERACT WITH FOREIGN GOVERNMENT OFFICIALS. and companies from bribing foreign (i.e., nonMexican) government officials, following the same principle as the FCPA. The Mexican anti-corruption law results from the ongoing need to fight corruption in the country and clearly reacts to recent global trends in this area. It is an important step toward better controls and prevention of this type of illegal activity. The law provides two types of administrative sanctions: (1) financial and (2) temporary exclusion from future biddings. Sanctions for Individuals could range from approximately U.S. $5,000 to approximately U.S. $240,000, and disqualification from participating in federal government procurement processes for a term of not less than three months and not more than eight years. Sanctions for companies range from approximately U.S. $50,000 to U.S. $10 million, and companies may be excluded from public projects for up to 10 years.

TAKE PROACTIVE STEPS TO ADDRESS RISK AND COMPLIANCE ISSUES UPFRONT

Any company regularly involved in government contracting processes at the federal level or in international commercial transactions where foreign public officials are involved should implement strict compliance policies or revise the existing ones to include clear rules for contracting with governmental entities in Mexico and abroad. Likewise, it is highly advisable to conduct training sessions for those employees within the company who deal with the Mexican federal government or other foreign governments. It is also recommended that companies carry out due diligence on all third parties who may participate as intermediaries in business relationships with the federal government or foreign governments. Given the expedited implementation of the energy reforms and the increased likelihood of anti-bribery scrutiny by both Mexican and U.S. authorities, it is important for energy firms or any other company doing business in Mexico to take a number of steps to reduce their FCPA and anti-bribery risk before the contracting process begins:

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• Companies should undertake comprehensive risk assessments before entering the market: Who will be your business partners in Mexico? What third parties will you need to engage? And for what functions? With what regulators will the company be interacting, and who on the ground will have contact with government officials or state-owned entities? Do adequate due diligence on any potential local hires, business partners, agents and third parties before engaging them. Don’t wait until after contracts are won and operations have begun before thinking of potential FCPA/antibribery concerns and undertaking the recommended due diligence. • Companies should emphasize anti-corruption training for any personnel who will interact with foreign government officials. • All red flags should be promptly investigated and remediated. Look for excessive payments or unusual payment terms for consultants or other third parties, or the engagement of a third party that is not well-known in the industry or lacks the capacity to do the work for which it is hired. Other basic risk mitigation factors considered in a company’s anti-corruption and compliance program should include, at a minimum: • Top-level commitment: Management should foster a culture within the organization in which such conduct is never acceptable. • Risk assessment: The company should assess the nature and extent of its exposure to potential internal and external risks of corruption on its behalf by associated person. Such assessments should be periodic, informed and documented. • Due diligence: The company should apply due diligence procedures, taking a risk-based approach, with respect to persons who perform or will perform services for it or on its behalf in order to mitigate identified corruption risks. This step is critical in a country such as Mexico, where the use of third-party intermediaries in business dealings with the government is a prevalent practice. • Communications: The company should seek to ensure that its anti-corruption policies and procedures are embedded in and under-

stood throughout the organization via internal and external communications. • Monitoring and review: The company should monitor and review its corruption prevention policies and procedures and make modifications and improvements where necessary. In revising policies and practices to reflect the changing global anti-corruption landscape, an area to which close attention should be paid is a company’s relationships with third parties. This is a particular challenge for corruption risks associated with doing business in Latin America, where such third parties are used extensively to navigate opaque bureaucracies and to process day-to-day regulatory paperwork. Establishing an effective third-party ethics and compliance program is strongly advised. Such a program should, at a minimum: • Survey these third parties as to their ethics and compliance efforts. • Set standards in a code of conduct for third parties so they understand that integrity is a prerequisite for doing business with your company. • Closely monitor all payments to and from third parties such as commercial representatives, agents and consultants – particularly in high-risk countries. • Ensure that contracts with third parties include provisions addressing the issue of bribery such as warranties that no secret commissions have been paid, no competition rules have been violated, no bid rigging or price fixing has been engaged in, etc. (Contracts should have provisions for immediate termination if any of the standards are not adhered to.) Every potential investor will want to see best practices implemented and legal certainty before they are willing to make their investments in developing Mexico’s shale resources, its deep-water resources or any other directly or indirectly related business opportunity. Considering that this is a heavily regulated sector, with new regulatory frameworks being developed and various still fresh legal, political and economic conditions and expectations on the table, this becomes even more important. Companies looking to enter this attractive market need to stay vigilant and understand all of the moving parts, as well as plan ahead to ensure they have adequate tools to take advantage of the opportunities while controlling and managing risks. Juan Carlos Luna is the managing director of Lawgistic. Practicing in the firm’s Houston and Mexico City offices, he assists on transactional projects throughout Latin America and advises clients on governance, risk and compliance issues and strategic legal management consulting. For more information, visit www.lawgistic. com.

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SMOOTHING THE TRANSITION

While many companies say they are pro-veteran, few go to the lengths of Baker Hughes, which is uniquely committed to helping our veterans find work and make the transition back into civilian life. BY: JOYCE VENEMA

Mike Nasche and Congressman Bill Flores of Texas after Nasche’s testimony in the Congressional Subcommittee on Veterans in Energy

Mike Nasche

BAKER HUGHES IS COMMITTED TO HIRING ONE VETERAN PER DAY.

erving the United States as a military member is one of the best things any American can achieve. Transitioning back into the civilian world after separating or retiring from military service can be challenging for America’s veterans seeking civilian employment. However, there are companies such as Baker Hughes that are focused on putting former military members to work at their organization and giving them the tools they need to thrive. Mike Nasche is the program manager of veteran outreach and engagement at Baker Hughes. As part of the military himself, he understands the value of America’s soldiers, airmen, sailors and marines in the civilian world. Nasche is dubbed the “special liaison to military talent,” and he works closely with Baker Hughes’ military recruiting team to bring veterans to the company. While we may not understand the qualifications of a tank operator in the civilian world, Nasche translates the military jargon into corporate applications. While many companies say they are pro-veteran, most don’t go to the lengths of Baker Hughes, which is committed to hiring one veteran per day. Baker Hughes has implemented this process throughout offices worldwide, giving veterans excellent opportunities to be part of a company that believes in them. They don’t just hire U.S. veterans and give them employment; they also give them support to transition into civilian life through the Veterans Resource Group (VRG). VRG has more than 10 chapters throughout the world, and it continues to grow every year as Baker Hughes hires more veterans. They provide military-to-civilian transition, mentoring and networking opportunities, as well as outreach programs, to their communities and veterans. Each new employee is paired with a seasoned Baker Hughes veteran, who helps the newest member of VRG transition smoothly into their new position at the company. VRG partakes in various charity and fundraising events throughout the year; each chapter helps out in the community in which it is associated. This builds the bonds not only for the veterans with one anther, but also for the communities that receive the help of Baker Hughes and VRG. From bike rides and clothing drives to building homes for those less fortunate, these veterans continue to give back. Baker Hughes has implemented this program so well that they recently testified to the U.S. Congress about VRG and their recruitment of veterans. Military veterans bring a vast amount of knowledge and experience to any team. Baker Hughes recognizes the value of these veterans and how well they will contribute to the company and the community in which they work and live. For more information on Baker Hughes, please visit www. bakerhughes.com.

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LEADERS OPEN DOORS, PART II Elevating and transforming the team, the company and the culture

BY: DOUGLAS S. CAIN

Always look for the outsiders in your organization. Those outsiders just might be the ones who make the difference and who, in most cases, give you your greatest satisfaction as a leader. Of course, the ultimate outsider is the leader. I’m not looking for sympathy, but I can tell you the old adage, “It’s lonely at the top,” is the truest statement ever written. There is no one to keep you to the schedule you hold as the standard, and you look at your own work and constantly go back to it and modify it. It’s tough, but if you go through a personal transformation like I did, ask for help. Holding others accountable for holding you accountable makes it easier. Bill Treasurer, author of “Leaders Open Doors,” listed a number of steps to take to get to your own personal transformation:

ÒIF YOUR ACTIONS INSPIRE OTHERS TO DREAM MORE, LEARN MORE, DO MORE AND BECOME MORE, YOU ARE A LEADER.Ó - JOHN QUINCY ADAMS

 Get a mentor inside the company and a coach outside the company.  Get a brutally honest 360-degree feedback process.  Do regular service work.  Take a yearly retreat.

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leaders. I am known for taking all employees, from drivers and office staff to the highest levels of management, for a long walk on the property. This is when I give them “the talk.” It allows me to share not only the vision and mission of Lake Truck Lines and Lake Oilfield Services, but also how the five corporate core values fit. But in the end, this talk allows me to better understand my employees, with the goal of making them the next generation of leaders in the company. I have spent the last year learning the “Rockefeller habits” and incorporating them in our daily business model. One of the things I have enjoyed most is getting the “right people on the right seats on the bus.” Sometimes you have an employee whom you seem to fail to lead in the direction the company is going no matter what you do. That was the case with one of our employees. For the past two years, she was a “C” player, and we questioned many times whether we could find the right seat for her. She was, as could be described, an outsider. But we continued to move her around the company. When we finally got her just the manager she could admire and respect, she became the “A” player I always thought she was. She is, in fact, the best student at Lake University and I predict great things for her.

The point is: If you want to be a leader to everyone at the office, you need to be a leader to yourself outside of the office first. I will close this column with a very poignant thought. When you decide to hire someone, you are doing significantly more than just trading time for money with that person. You are, in essence, taking responsibility for the care and growth of that person, much like the father of the bride symbolically hands over the responsibility of her care to the groom. Simon Sinek, author of “Leaders Eat Last,” put it so succinctly: “Every single employee is someone’s son or someone’s daughter. Like a parent, a leader of a company is responsible for their precious lives.” Wow. If that does not shift your paradigm as to your responsibility in your company, I don’t know what will. My final article on leadership will address the concept, “Why can’t everyone be a leader?” Until next time … Douglas Sterling Cain is the president and CEO of Lake Truck Lines and Lake Oilfield Services. For more information, visit www.laketrucklines. com.

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AS MENTIONED IN MY ARTICLE in the last issue, open-door leaders uplift us. But what does that mean to an organization? Can you measure it? How do you spot it? I look to see if I am transforming the company, the divisions (or teams, as I like to call them) and each person in the company. I feel you can measure it. You may not be able to measure it by the inch or pound, but it is a transformation you can sense, just like you can measure the power of the wind without actually seeing it. No matter how you can measure it, however, you are responsible for transforming the team, the company and the culture. And unlike transforming oneself (like my own Damascus Road experience … that’s another story!), transforming an organization is something that comes by the inch, day by day, by repeating one good behavior after another. Sometimes it takes the repetition of an event to keep you on track. I have found with our corporate staff development program, Lake University, that my own transformation is reinforced with each class I have to prepare for. Each presentation and each reading makes me more dedicated not only to the success of the program, but to each employee’s enrichment. All of this is to provide Lake Truck Lines and Lake Oilfield Services with their next group of

 Change yourself (get a personal trainer, buy new clothes, get a new hairstyle, etc.).

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BUSINE S S

HIGHER EDUCATION IS ATTAINABLE

DEL MAR COLLEGE builds partnerships to expand career opportunities for South Texans. BY: MELINDA EDDLEMAN

On Feb. 28, 2013, Del Mar College unveiled its newest aviation maintenance technology training facility, a renovated Corpus Christi International Airport (CCIA) hangar, to prepare 60 more students each year for the workforce. DMC President Dr. Mark Escamilla spins the propeller as student John Moczygemba (left), Laura Berry with Berry Industries and Fred Segundo, CCIA director, assist with the “official” opening.

Local businessman and philanthropist Eugene Bouligny (seated) tries out one of the college’s new truck driving simulators as John Rojas, director of transportation training services, gives instructions and DMC President Dr. Mark Escamilla provides encouragement. Six simulators and two trailers allow the program to provide mobile training thanks to a $750,000 Type A Board grant.

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el Mar College (DMC) President Dr. Mark Escamilla is on a mission to increase higher education attainment throughout the region. Partnerships among South Texas education, community and industry leaders make all the difference. Escamilla took a “listening tour” and met with North Bay area superintendents and other independent school district representatives to discuss their communities’ needs and opportunities that impact high school students preparing for the workforce. “I envision more students earning college credits, if not a certificate or associate’s degree, before they finish high school,” Escamilla says. “Building these partnerships and delivering our dual credit program can move students toward higher education, getting better-paying jobs and contributing to economic growth in their communities.” Recently, the college lowered tuition for dual credit from $179 to $99 per three-hour credit course no matter where students live within or outside DMC’s district. The program is specifically designed to provide a cost-effective option for Coastal Bend secondary school partners and serve as a catalyst and academic resource to build our region’s workforce. Partnership with the Corpus Christi Independent School District (CCISD) is one example, including the collegiate high school on the college’s East Campus and career and technical training for students attending CCISD’s Harold T. Branch Academy. “The ‘Del Mar College Dual Credit Promise’ ensures that students, administrators and school districts are afforded access to the educational value that we have offered for over 75 years,” Escamilla adds. The college continues to build partnerships with community and industry leaders, too. The Corpus Christi Business & Job Development Corp., known as the Type A Board, has supported several DMC initiatives expanding training opportunities. The board advises the Corpus Christi City Council in how to spend city sales tax revenue to foster job growth and economic development.

“Type A Board funds give us the ability to work with partners to target high-demand jobs needed in the region,” says Debbie LindseyOpel, board secretary and president of Three Dimensional Development, LLC. “Corpus Christi residents are smart to allow the Type A Board to provide a small portion of sales tax dollars that, when approved by the city council and combined with other community partner resources, make a big impact on economic development.” Over the past five years, board and city support included $979,000 to retrofit, equip and furnish a former Corpus Christi Medical Center facility to become DMC’s Northwest Center. The project expanded instructional space serving Northwest Nueces County, Calallen and Tuloso-Midway residents and offering courses addressing health science and emergency first responder professions and general education development completion. Another $1,166,000 expanded the aviation maintenance technology program through renovation of a Corpus Christi International Airport hangar, providing space for 60 more students. The program enrolls over 200 students and graduates about 50 each year. Transportation Training Services also received $750,000 to purchase six training simulators and two trailers to take the program’s truck driving training on the road. The University of Texas-San Antonio Institute for Economic Development reported that more than 100,000 fulltime jobs are coming to South Texas thanks to the Eagle Ford Shale petroleum boom. This boom is expected to generate payroll over $6.5 billion in the 20-county area by 2022. The college serves several of those counties and plans to build a process technology pilot plant for student training – another project backed by the Type A board. “The process technology pilot plant will integrate multiple career tracks and crossover skills so that students can transition into numerous areas within industry,” says Lenora Keas, DMC executive director of strategic planning and workforce initiatives. The Type A Board approved $1.39 million toward the project. Final approval is anticipated by the Corpus Christi City Council based on the college gaining industry support to offset part of their financial commitment and assurance of industry involvement. “Already, Del Mar College has garnered overwhelming support from industry partners with a commitment letter of funding $250,000 by Cheniere Energy to reinforce funding from the Type A Board and City of Corpus Christi,” Keas says. “Port Industries of Corpus Christi have also voiced their strong support and acknowledgement of the great need to build a fully developed workforce.” Keas notes area school boards and independent school districts have issued resolutions supporting dual-credit students obtaining hands-on experience in such a learning lab when the pilot plant is built. “Industry representatives have expressed the need for students in technical programs such as process technology to have applicable experiences,” she notes. Lindsey-Opel adds, “Del Mar College is positioned through its strong leadership and strong presence in the community for this initiative, along with the ability to address workforce demands by providing training programs targeting economic development in our area.” For more information, visit www.delmar.edu.

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A PRIME POSITION

Analyzing the economic impact of the EAGLE FORD SHALE in Mexico

THE UNITED STATES NOW PRODUCES MORE OIL THAN IT IMPORTS FOR THE FIRST TIME IN NEARLY 25 YEARS. 50

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SOUTH TEXAS has seen extraordinary economic activity as a result of the Eagle Ford Shale. Yet it is interesting to note that the Eagle Ford formation continues well into Mexico near Monterrey and over to the Gulf Coast. Many people have seen the NASA night photograph of the Eagle Ford Shale from space. Underneath San Antonio is an arc of lights, with each dot representing a well site. The oil and gas rigs operate around the clock, and because there is not yet enough pipeline capacity built out, some of the rigs are flaring gas. But what is perhaps most interesting is the way the production activity literally stops at the border at the Rio Grande. In the Eagle Ford, nearly 9,000 wells have been completed to date. In Mexico, there have been only a handful of test wells.

It has been 75 years since Mexico nationalized its oil industry. In the intervening years, the state-owned oil company monopoly, PEMEX, has had exclusive rights to explore and produce oil in the country. Unfortunately, around 2004, oil production in Mexico peaked at around 3.4 million barrels per day, and it has been declining steadily since then. In fact, if current trends continue unabated, Mexico will likely become a net importer of oil in a few years. Mexico already imports refined products and natural gas from the United States. In 2012, for example, Mexico imported more than 600 billion cubic feet of natural gas from the United States, up from 333 billion cubic feet just two years earlier. All of this while Mexico sits on top of huge untapped reserves of oil and natural gas. There are some encouraging signs on

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BY: DR. THOMAS TUNSTALL

BE RESOURCEFUL the horizon, however. Last year, the Mexican government amended its constitution with the hope of reforming its energy sector to allow companies other than PEMEX greater access to the country’s oil and gas. PEMEX recently submitted its list of priority projects, and the process to write the secondary laws (essentially the rulemaking process) should be completed any time. The Eagle Ford production activity is well-established, with annual well completions now averaging about 3,000 per year. The question on the table has become whether Mexico can replicate that activity on its side of the border. Several issues must be addressed first. It is almost certainly the case that various types of infrastructure in Mexico are not as well developed as in Texas. Pipelines, roads and rail have facilitated the production process by enabling raw materials and capital equipment to be brought into South Texas, as well as to ensure storage, transportation and refining activities (midstream and downstream). Further, due to the ongoing drug violence, particularly in the border areas, security remains a key concern, as well. It is worthwhile to note that while there are shale oil and gas deposits located all over the world, the only country in which significant production is taking place whatsoever is the United States, much of it in South and West Texas. While other countries are looking at tapping into their own shale oil and gas reserves the way Mexico is, the bulk of the expertise required to do so will almost certainly have to come from the United States. So the prospect for shale oil and gas exploration and production in Mexico (and other countries) represents an export opportunity for U.S. companies that pioneered the unconventional techniques in use now. In the near term, there may be a shortage of suitably skilled engineers, geologists and other experts because the high level of activity in the United States currently limits supply.

And finally, a big wild card continues to center on the rules of engagement with PEMEX, and the degree to which the company may be involved with private domestic and foreign operators. This will depend in large measure on the stance taken by independent regulators in Mexico such as the National Hydrocarbons Commission, which will regulate upstream activities and determine the winners of upstream bids once energy market liberalization is fully underway. Clearly there is a lot of interest in Mexico regarding the economic prospect for energy reforms. Recently, the University of Texas at San Antonio (UTSA) Institute for Economic Development was invited by the Chamber of the Transformation Industry of Nuevo León (CAINTRA) to present on the economic impact of the Eagle Ford Shale in February 2014, and then in April to the Mexican Institute of Chemical Engineers. As Mexico reforms its energy sector policies, there is a great deal of interest from industry to learn about the shale development experience in Texas. UTSA serves as a leader on the economic impact of the Eagle Ford Shale, and it has conducted annual studies to measure growth. Some highlights of UTSA’s most recent Eagle Ford Shale economic impact study concluded that shale development: • Generated $61 billion and 116,000 jobs for the 20-county region in 2012 • Will generate $89 billion and 127,000 jobs for the 20-county region in 2022 • Added more than $1 billion in total local government revenue in 2012 • Provided $1.2 billion in estimated state revenue in 2012 Beyond the United States and Mexico, unconventional shale oil and gas exploration is having a significant impact on global markets. The United States now produces more oil than it imports for the first time in nearly 25 years. Texas has produced more crude oil recently than it has in 30 years, which is largely the result of increased production coming from South and West Texas in the Eagle Ford Shale and the Permian Basin. Businesses and producers in the Eagle Ford Shale are in a prime position to take advantage of the shale boom in Mexico. It is expected that there will be opportunities for stakeholders on both sides of the border to benefit. Energy reform in Mexico has the potential to transform domestic oil and gas production by liberalizing the rules for foreign investment and enabling the deployment of new technologies. For more information, contact Dr. Thomas Tunstall at thomas.tunstall@utsa.edu.

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FYI ON I/UPS Technology is the key. BY: ELIZABETH MASSEY KIMMEL PHOTOGRAPHY: DOUG SMITH

he Eagle Ford Center for Research, Education and Outreach (EFCREO) was established in August 2013 by the Frank H. Dotterweich College of Engineering at Texas A&M University-Kingsville (TAMUK). The EFCREO is a multidisciplinary center that brings together faculty members from TAMUK who are dedicated to research in areas directly related to the sustainable development of the Eagle Ford Shale region. EFCREO research is organized into six

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primary areas: 1. Oil/gas exploration and production enhancement 2. Condensate refining process improvement 3. Environmental technology and impacts analysis 4. Sustainable transportation control and development 5. Sustainable community development and planning 6. Public health monitoring

The EFCREO has launched its Industry/ University Cooperative Research Partnership (I/UP), which serves to develop partnerships among industry, academia and government. Investing in the EFCREO’s I/UP is crucial to promoting research programs of mutual interest, increasing contributions to the center’s research base and enhancing the intellectual capacity of the engineering workforce. Industry and community leaders are now working together to identify technical challeng-

es and seek innovative solutions. “We can get things done efficiently, creating more production and developing a cleaner environment,” explains Interim Associate Dean Jianhong Jennifer Ren, Ph.D. “Technology is the key and can be shared globally.” The EFCREO hosts focused workshops to foster collaboration among academia, community organizations, industry and government on Eagle Ford Shale development-related technical issues. Recently, #TeamSHALE covered a workshop on pipeline safety. The workshop was held in the Alexander Convention Center and Nature Center in Cotulla, Texas, and it was the third organized by the EFCREO. Industry and university leaders communicated on technical issues and formed partnerships to share information. A physical location for the EFCREO is currently being pursued. “The EFCREO plans to build a sustainable energy technology hub at this location to foster sustainable energy development in South Texas,” Ren says. “We have identified three visions for this hub, including a place where innovative technologies will be generated, prototyped and demonstrated to

potential end users; a focal point for regional workforce training on high-level skill sets and the latest technologies; and a ‘business café’ that will foster the interaction of EFCREO researchers with regional stakeholders.” The technologies currently focused on by the EFCREO include unmanned aerial vehicle (UAV) technology applications and operations, innovative road, environmental (air, water and oilfield waste), pipeline monitoring and sustainable community technologies, technologies for oil/gas recovery enhancement, gas storage and flared gas capturing and effective workforce training via 3-D virtual training. Contributions to the EFCREO are very important to helping these visions become realities. Please consider giving a tax-deductible donation in support of the EFCREO’s mission: partnering with local/regional industries, academia and government agencies to provide a wide range of technical support for the sustainable development of the Eagle Ford Shale region. For more information and details, visit www. tamuk.edu/eagleford.

CLARISSA M. TORRES

Engineering Liaison Officer | Phone: 361-593-2798 | Fax: 361-593-2106 Email: clarissa.torres@tamuk.edu

DR. JIANHONG-JENNIFER REN

Interim Associate Dean | Phone: 361-593-2290 Email: jianhong.ren@tamuk.edu

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BUSINE S S

HIGHER EDUCATION AND SAFETY TRAINING

A number of academic institutions in the Coastal Bend work to lessen the number of work-related accidents by offering training courses in specific areas of safety.

he oil and gas industry has brought great opportunities to the workers of South Texas. Thousands are flocking to the oilfields to earn a good living, and companies continue to hire new workers to meet the demands of the growing petroleum industry. Unfortunately, what also has increased is the number of work-related accidents. Coastal Bend higher education institutions are responding by providing programs that will ensure the workforce is trained in safety procedures. Coastal Bend College (CBC), Del Mar College (DMC), Texas A&M University-Corpus Christi and Texas A&M University-Kingsville (TAMUK) all have short-term adult education workshops, and most have certification or degree programs that provide training in specific areas of safety to ensure that workers remain safe on the job site.Â Most companies require workers to attend safety training, and some require employees to have a Petroleum Education Council (PEC) card. To obtain a PEC card, employees must attend a PEC Basic Orientation course, which is eight hours in length and covers the minimal standard for awareness level

training that employees should have before entering the job site and while working. The course includes both SafeGulf and SafeLandUSA components to give participants an understanding of safety issues in the oil and gas industry, upstream, downstream, onshore and offshore. Some of the topics covered in the course include introductory modules in rigging, fall protection, HAZMAT, personal protective equipment, emergency response, fire protection and electrical safety. The course stresses the importance of individual responsibility and playing an active role in the safety program at their company. A more advanced course is PEC Core Compliance, which requires 24 hours of instruction. The course is SafeLandUSA and SafeGulf accredited, and it provides a deeper level of instruction on more than 30 topics required for entry-level operators. Participants must pass an assessment at the end of the course and take a refresher course each year to remain certified.Â Since many companies require a PEC card, individuals who have the card have greater chances of getting hired and the training stays with

SAFETY IS PARAMOUNT BOTH ON AND OFF THE JOB SITE.

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BY: DR. JANET M. CUNNINGHAM

them even if they move to another area. At the end of the training, students are given a picture identification card with a unique barcode, and the information is stored in an online database. The PEC card is recognized by leading oil and gas companies both nationally and internationally. CBC in Beeville provides a number of safety courses both on its main campus and site locations in Alice, Pleasanton and Kingsville. For companies that want to train a group of employees, CBC provides onsite and customized training. For most courses, participants earn a certificate and continuing education units (CEUs). Not only does the college provide PEC Basic and PEC Compliance workshops, but also a number of other safety courses: • First Aid/CPR (eight hours): first aid for the injured and ill taught by a certified Medic First Aid trainer • H2S (four to eight hours): intensive training by an OSHA-certified instructor on the hazards associated with hydrogen sulfide • HAZWOPER (eight hours or 40-hour): designed to satisfy regulatory requirements for workers and emergency responders at hazardous waste/hazardous material sites • Respirator Fit-Testing: quantitative fit testing of all types of respirators, gas masks, SCBAs and disposable respirators by PortaCount Pro • OSHA 10 or OSHA 30: provides an introduction to OSHA, basic safety orientation and topics of interest to those in construction or general industry CBC trainings are scheduled throughout the year, and the college is always looking for additional instructors for the growing number of classes. For more information about CBC programs, contact Katie Sherman, continuing education coordinator for general industry, at 830-569-4222 or ksherman@coastalbend.edu. DMC in Corpus Christi is also a source for a wide range of courses from OSHA regulations and safety management to inspections and hazardous waste operations. Specific shortterm classes include training on the following: - Confined space - Rescue and confined space - Fire extinguisher - Forklift - Certified rigger - Excavation - HAZWOPER - Scaffolding - Accident investigation - H2S - Respiratory protection Glen Ellis, at 361-698-1714 or gellis@delmar. edu, can provide more information on specific oilfield safety training or designing a training

program to meet a company’s needs. The National Spill Control School (NSCS), located on the island campus of Texas A&M University-Corpus Christi, is nationally recognized for its comprehensive oil spill response and hazardous materials training, as well as spill research and planning. NSCS programs meet the more specific training requirements of OSHA for emergency and hazardous materials responders, oil spill responders and hazardous waste workers. The NSCS has been conducting courses at TAMUCC and throughout both the nation and the world since 1977. NSCS courses include: HAZWOPER, Hazardous Materials Transportation, HAZMAT Chemistry, Oil Spill Response, Oil Spill Strategies & Tactics, Shoreline Cleanup Assessment Technique (SCAT) and supervisor and team leader courses for these same topics. Many of the classes are taught in Spanish. NSCS also provides onsite drills and exercises and has developed a special course: Oil Industry in Developing Countries. NSCS instructors provide customized programs nationally and internationally, and you may schedule workshops by contacting Tony Wood at 361-825-3333 or tony.wood@tamucc. edu. TAMUK recently became an authorized PEC training provider for Coastal Bend industries. The Center for Continuing Education began offering the basic orientation this past spring, and additional courses are planned for fall 2014. The TAMUK program offers employers a way to ensure their workers have the safety training, and it saves time and money. In the past, many companies had to send employees to other areas of the state or even outside the state so they could receive the training. TAMUK’s program is customizable so employers can focus on those areas that are most critical to their situations. In addition to the PEC workshops, TAMUK offers Global Harmonized System (GHS), which provides participants information about the labeling of hazardous chemicals and the criteria for classifying health, physical and environmental hazards. Other workshops include Job Safety Analysis (JSA), Process Hazards Analysis (PHA) and Hazard and Operability (HAZOP). For more information about TAMUK’s safety courses, contact Program Specialist Shreesh Kulkarni at 361-593-2020 or shreesh.kulkarni@ tamuk.edu. Safety is paramount on and off the job site, and the Coastal Bend is fortunate to have higher education institutions that are ensuring petroleum industry employees are able to return home safely to their families at the end of the day. For more information, contact Dr. Janet M. Cunningham at 361-813-9946 or jcunningham@ edexcellence.org.

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BUSINE S S a 1099 contractor and a W-2 employee. Many employers seek contract workers as a way to get the same amount of work done without the cost of employee benefits or longerterm commitment. However, it is not that simple. The IRS has very specific guidelines about what type of employee is an independent contractor. It is actually the relationship itself – not the duration of the work – that must be examined. According to the IRS, “The general rule is that an individual is an independent contractor if you, the person for whom the services are being performed, have the right to control or direct only the result of the work and not the means and methods of accomplishing the result.” In other words, are you hiring this person to accomplish a specific project or task, and it is up to that person to determine how, when, where and by what means the project is completed. Essentially, compensating the person for the end result, rather than their time, means or methods, makes them an independent contractor. However, if you control the worker’s schedule, what will be done and how, they should be classified as an employee. Even boiling it down that far can still leave managers unsure about some gray areas. What about employees who are largely self-managed? What if I allow flex time? How does compensation impact the scenario? Examine the following factors, and determine the level of control held by the employer versus the worker.

Understanding the difference between independent contractors and employees BY: SARAH PARK IF YOU ARE LIKE MANY BUSINESS OWNERS, you occasionally hire contract workers in addition to your regular staff resources. This can seem like the perfect solution when you have a temporary or specialized need or desire a low-commitment solution during uncertain times. As convenient as it may seem, making one mistake – classifying the worker as an independent contractor when they should actually be an employee – can lead to costly consequences. To proceed properly, you must understand the difference between an independent contractor and an employee and why the distinction is so crucial.

WHY DOES IT MATTER?

As an employer, you have extensive wage and payroll tax reporting responsibilities related to your employees – those to whom you issue a W-2. These same responsibilities do not apply to your relationship with workers classified as independent contractors – those to whom you issue a 1099. For your W-2 employees, you administer the withholding and payment of taxes on employee wages. Contractors, on the other hand, are responsible for calculating and paying their own payroll taxes. As such, if you hire a worker as an independent contractor when that worker should be a regular employee, you are essentially failing to properly report and pay taxes on that employee. This can result in significant fines and interest payments.

WHAT’S THE DIFFERENCE?

Due to possible consequences, you must understand the true difference between

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2. Financial: Who controls the business aspects of the worker’s job? How is the worker paid – by the job or by the hour? Are expenses reimbursed? Who provides the resources, tools and supplies to get the job done? 3. Type of relationship: Are there written contracts or employee-type benefits (i.e., insurance, paid time off, pension plans, etc.)? Will the relationship continue, and is the work performed a key aspect of the business? Look at the entire relationship, and consider the degree of control or right to direct held by the worker. While the answers in all three categories may not be in agreement, they should provide initial guidance as you make your decision. If you are still unclear, you can request that the IRS make a determination by filing a Form SS-8, (although this can take at least six months). Carefully document each of the factors used in your decision, and keep that information on file for reference, should you be audited. Always consult with an HR professional or legal counsel for guidance on hiring practices and payroll and employer tax administration. Every employer assumes a great deal of risk and responsibility in the employment relationship. Therefore, it is imperative that you have a highly educated team of professionals to guide you through the maze of employment regulations and requirements. For more information, contact Andy Cullen at 830-331-0940 or acullen@drctinc.com.

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HIDDEN RISKS

1. Behavioral: What level of control or influence do you hold? Do you or the company control or have the right to control what the worker does or how the worker does the job? As a manager, what degree of influence do you have on that individual’s performance? Does the business set the work hours and schedule?

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LIVE FOR TODAY AND PLAN FOR TOMORROW

How you can protect yourself during the “boom” times and prepare for the “bust” times - and why you should BY: GEORGE F. LONG

George F. Long Financial Services Professional MassMutual South Texas 10101 Reunion Place, Ste. 300 San Antonio, Texas 78216 Office: 210-384-5314 Cell: 210-823-5291 Email: gflong@financialguide.com Website: www.financialguide.com/george-long

Prepare for tomorrow’s possibilities Historically, people have depended on three primary sources for their retirement income: 1. Pensions 2. Personal savings 3. Social Security Over the past several decades, however, the picture has changed. Traditional pension plan coverage has decreased, and retirement funding has gradually moved from an emphasis on employer-paid to employee-contribution pension plans, which often limit the amount employees can contribute on an annual basis. Individuals like you are now increasingly responsible for funding their own plans, making their own investment choices and taking on the risk that those assets could decline in value during times of market volatility. And remember that the more you earn, the lower the percentage of your pre-retirement income that is replaced by Social Security.

here’s an old joke about a client meeting with his banker to review his finances. “Mr. Smith, I’m afraid your account is overdrawn,” the banker says. “That’s impossible!” the man replies. “I still have checks left!” Unfortunately, “spend until it’s gone” has become the only financial strategy for many people. As a result, these people may be facing a bleak financial future. How will they achieve any financial goals, such as having cash on-hand for emergencies, preparing for retirement or leaving something for the next generation?

Prepare for today’s challenges It’s easy to get used to a high-income lifestyle. You deserve to treat yourself and your family to all the rewards your hard work brings. However, we all know that good times can’t last forever, especially in today’s challenging economic environment. That’s why it’s critical to your financial security to learn how to manage your income and assets properly to protect yourself during the “boom” times and prepare for the “bust” times. Paying yourself first with a savings plan is the best method you can find for starting your own nest egg. It’s best to start as early as you can, making good use of time and compound interest for maximum growth. Keeping track of your spending and minimizing debt is also important; remember that when you charge a purchase, you are committing yourself to pay for it with money you haven’t earned yet. Making regular contributions to a savings plan and having a diversified portfolio can help you grow your assets and build wealth. You’ll have cash on-hand for any emergencies, as well as a plan for income during your retirement that can give you liquidity for changing needs, along with potential for growth.

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In this challenging environment, it’s up to you to take control of your plans for retirement. And if you’re like most people, just the thought of it is overwhelming. The good news is that you don’t have to develop financial protection and growth strategies on your own. You can benefit from working with a financial services professional who has knowledge, experience, insight and an active interest in your financial success. A skilled financial services professional can coordinate your financial strategies with your attorney, your accountant and any other professional advisors with whom you work to help you achieve what is most important to you. Your financial services professional can help you live better today and be prepared for whatever tomorrow may bring. George F. Long is a registered representative of MML Investors Services LLC, and he offers securities through the company, which is located at 10101 Reunion Place, Ste. 300, in San Antonio, Texas. For more information, call 210-342-4141.

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News where you get to participate. SHALE OIL & GAS BUSINESS MAGAZINE

L IFESTY LE

EVERYTHING – AND MORE

“DADDY, DIDN’T YOU SAY that we were never to trust a man with a beard?” Our 8-yearold daughter is looking up at her father with a challenging expression. She is leading the way, small canvas bag slung over her green dress, camouflage cap pulled down over her cropped, dark hair. This latest provocative demand is directly linked to the fact that yesterday, daddy and I were voted “most boring adults” and the bearded man in front of us was resoundingly the “most interesting guy ever!” In fact, all of us have been eagerly trailing the bearded man for three days now, and he has achieved a near god-like status with our children, for whom every single experience of

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BY: ANNIE HARRIS

the African bush has been utterly thrilling. We have returned to Africa to appreciate the smaller nuances of the bush, finding porcupine quills and aardvark trails and trailing a mob of meerkats. Riding through herds of sable and stalking giraffe on foot have got us all in thrall. A safari is unlike any other holiday experience, as it is always an adventure and a chance to discover something new and wonderful in the natural world. On this trip to Africa, we looked south, beyond our favored East and Southern African haunts, down to South Africa, to the Cape of Good Hope and beyond. We, the boring parents, love safaris and look forward to many more African adventures with our children.

My preconceptions about stocked South African game parks and “big five” focus worried me. We did not want to spoil the kids with too much too soon, so we aimed to start slowly, on foot, learning to track. We needed a camp that welcomed, rather than simply tolerated, the children, and having considered a number of worthy options, we chose the area of Tswalu, 100,000 hectares of glorious African landscape with one tiny luxury camp at its center. We were assigned a (quite bearded) safari guide and a brilliant tracker for the duration of our stay, as well as a family suite with two wonderful bedrooms separated by a huge and civilized living area, with wonderful windows

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Reflections of a family safari in South Africa

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A SAFARI IS ALWAYS AN ADVENTURE, AS WELL AS A CHANCE TO DISCOVER SOMETHING NEW AND WONDERFUL IN THE NATURAL WORLD.

overlooking the waterhole, almost negating the need to ever leave the lodge. With Relais & Chateaux recognition for its glorious menus and an inspired conservation story behind it, we couldn’t go wrong. This slice of land south of Botswana, west of the hook of lower Namibia, is an extension of the Kalahari Desert once inhabited by the San people and then plundered by hopeful farmers and miners. Now, with huge philanthropic investment and inspired passion, it is restored to a natural wilderness state. Much of the focus is on conservation and management of the land, preservation and education, rehabilitation and documentation.

For a family holiday to treasure, it provided everything we could have hoped for and more. The children were thrilled to “drive” the vehicles and threw themselves into earning their Junior Ranger badges. They made plaster casts of spores and filled their safari bags with newfound treasures. We were just as happy to discover that they would be whisked off in the afternoons to learn archery skills and ancient tracking techniques, leaving us to remember the real meaning of peace over ice-cold gin and tonics. When we sat down to our last meal in the bush, I asked the kids, “Next year, Disney World?” They screwed up their faces and rolled their eyes like I had just asked the dumbest

question ever. My 8-year-old daughter summed it up best: “Mom, why would I want to see fake animals when I can see real live giraffes outside our window?”

Annie Harris and her family traveled with Africa Odyssey. For more information, please see the extensive Africa Odyssey website at www. africaodyssey.com, which includes full write-ups on all of the lodges, parks and areas, slideshows, videos and reviews. You may also call 1-866356-4691 (toll free) or email info@africaodyssey. com. SHALE OIL & GAS BUSINESS MAGAZINE

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‘THE DISTILLED EXCELLENCE OF SWAGGERING TEXAS’ Remembering legendary wildcatter GLENN MCCARTHY and his contribution to the early days of the Texas oil boom

exas boasts numerous legendary oil wildcatters with personalities as big and vivid as the Lone Star State itself. But the giant among them all and the primary wellhead for the mythology is Glenn McCarthy, who inspired novelist Edna Ferber's character, Jett Rink, in her 1952 novel, “Giant,” and the 1956 movie of the same name, starring James Dean. Known as “Diamond Glenn” and “King of the Wildcatters,” he rose from dirt poor to beyond filthy rich and was a bold, flamboyant, volatile, hard-drinking and occasionally brawling, yet charming character who landed on the cover of Time magazine in 1950 – the pinnacle of American celebrity in that day. Born in Beaumont on Christmas Day in 1907, McCarthy started working in the oil fields at age 8 earning 50 cents a day as a water boy. By 1950, he was worth an estimated $60 million, which is around $1.5 billion in today’s dollars. Along the way, he opened more than 50 new oilfields and served as president of the United States Petroleum Association, which were but a few of his many and myriad ventures that included aeronautics, a steel mill and chemical plant, a Hollywood film production company, Houston’s largest radio station and much more. At the height of his wealth, McCarthy lived in a 7,000-square-foot Houston mansion and owned a 50,000acre-ranch near Uvalde.

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BY: ROB PATTERSON

ÒOPPORTUNITY BECKONS INDIVIDUALS WHO ARE INDIVIDUALS; THE CRY IS FOR MEN WHO ARE MEN.Ó

- GLENN MCCARTHY

The Corpus Christi Town Club membership Fine Dining / catering A TRADITION OF EXCELLENCE SINCE 1952

Described as “the distilled essence of swaggering Texas” by author Bryan Burroughs in his book, “The Big Rich: The Rise and Fall of the Greatest Texas Oil Fortunes,” McCarthy was never one for half-measures. In 1930, the 22-year-old was working as a pump jockey in a Houston gas station when he met 16-year-old Faustine Lee, daughter of Houston oil magnate Thomas Lee, who pulled in for a fill-up. After a few dates, they eloped and married. It’s said McCarthy had $1.50 on him at the time – which didn’t please her father. McCarthy assured his new in-law that he’d never take even a penny of Lee family money, and that he would make his own fortune. Within three years, McCarthy owned two profitable gas stations; soon after, he started drilling wells that three times struck nothing more than brackish groundwater. So he turned to drilling for others with equipment he borrowed or appropriated without asking and earned a reputation as the fastest and cheapest driller in the Houston region patch. In 1935, McCarthy finally hit his own first gusher near Beaumont. He became the focus of national attention in the late ‘40s when he built the gaudily elegant $21 million Shamrock Hotel in Houston, the largest building in the nation outside of New York and Los Angeles with a swimming pool so big that one could water ski behind a motorboat in it. For its 1949 grand opening, he rented a 14-car train to bring in celebrities from Hollywood, including his pals Errol Flynn (who some said McCarthy resembled) and Howard Hughes (to whose family home the young McCarthy delivered daily newspapers). NBC Radio broadcasted the ceremonies live across the nation, although it was marred by technical glitches. McCarthy’s reign as an oil baron ended not soon after when creditors called in the notes on his overextended empire and ousted him from

control of the oil company he built. He continued to be a fixture on the glamorous Houston social scene as the proprietor of the Cork Club, a private bottle bar in then dry Harris County that started in the Shamrock and later moved to the top floor of the Central National Bank building in the 1960s. The once successful oilman with a nose for prosperous wells continued to try wildcatting in the Middle East and South America, but never again hit black gold. By 1987, the Shamrock, which had been taken over by the Hilton hotel chain, was a rundown shadow of its former ritzy stature, and was demolished to make way for the Houston Medical Center. In his later years, McCarthy lived in a modest home in the suburbs of La Porte with Faustine, who had stuck by his side despite his voraciously womanizing ways. He died in a nursing home the day after his 81st birthday. McCarthy once said of his rise to fortune in the early wild and wooly days of the Texas oil boom, “Opportunity beckons individuals who are individuals; the cry is for men who are men.” His daring independent spirit still lives on in today’s Texas shale patch within the legend of the wildcatters he was instrumental in creating.

The club for all seasons and occasions 800 North Shoreline, 6th Floor Corpus Christi, TX (361) 880-5777 www.cctownclub.com

Rob Patterson is an Austin-based writer and editor whose work has appeared in numerous consumer and trade magazines, daily and weekly newspapers and a number of Web publications. He writes about news, personalities, politics, film, music, food, buildings, education, books, energy, culture, travel and much more that catches his diverse interests; he also pens and edits marketing communications copy for corporations, businesses and individuals. For more information, you may contact him at robpattersonwrites@att.net. SHALE OIL & GAS BUSINESS MAGAZINE

L IFESTY LE

SEARCHING FOR “INNER PEAS ” Hill Country CHEF AARON J. STAUDENMAIER shares the first of his Boot Ranch recipes for spring. SPECIAL TO SHALE

WHEN CHEF AARON J. STAUDENMAIER moved to Fredericksburg to become the Boot Ranch executive chef in October 2012, he came with a vision to showcase the best of the Texas Hill Country farms and vineyards in five-star style. With several seasons of exploring the best farmers and vendors in the area under his belt and refining his creative ideas with their ingredients, Staudenmaier is ready to share some of his introspection and findings. His quest continues and the bounty begins: “Some of the first spring crops to hit kitchens in the Hill Country are beans and peas. Nothing quite announces the changing farm season and the beginning of warmer weather as that first delivery of creamy, nutty English peas just waiting to be cooked up. Gundermann Acres in Wharton County does a great job of keeping us in peas almost all year, but when it comes to the first harvests, we look to our local farmers: the Engels, Fikes and Jenschkes. “If you’re not quite sure how to give peas a chance, I’ve included a couple of ideas of what to do with these beauties once they show up. The most important thing is this: Don’t overcook them. Grey and squishy is for canned peas only. You are looking for bright colors, clean flavors and a bite similar to that of al dente pasta. It only takes minutes to cook them through. “Keep your eyes peeled for all the little roadside markets that are going to be popping up. After that, keep those fingers shucking peas because come fall, you’re going to miss ‘em.”

ÒTHE MOST IMPORTANT THING WHEN WORKING WITH PEAS IS THIS: DON’T OVERCOOK THEM.”

About Boot Ranch Boot Ranch is the Texas Hill Country’s finest private golf and family community nestled on more than 2,000 picturesque rolling acres. The master-planned retreat offers a variety of living options, and the clubhouse features expansive vistas, a spa and casual fine dining. Featuring a Hal Sutton-designed championship course, Boot Ranch has been rated one of the top 10 golf communities in America by Golf Digest, and it has been ranked among the top 10 in Texas five times by the Dallas Morning News. For more information, visit www. bootranch.com or call 830-997-6200.

About Aaron J. Staudenmaier Boot Ranch Executive Chef Aaron J. Staudenmaier began working the graveyard shift at a truck stop at age 14 and eventually made it to The Mansion in Dallas, working under Chef Dean Fearing. For the 13 years prior to Boot Ranch, he worked under Chef Kent Rathbun at Abacus, at Jasper’s and at the farm-to-table concept, Rathbun’s Blue Plate Kitchen. He brought pieces of all this when he joined Boot Ranch in late 2012.

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BLACK-EYED PEAS WITH ANDOUILLE SAUSAGE

MADLEN/BIGSTOCK.COM, ROBYN MACKENZIE/BIGSTOCK.COM, CANARYLUC/BIGSTOCK.COM, INERIKA/BIGSTOCK.COM

ENGLISH PEA BUTTER SAUCE

Recipe by: Aaron J. Staudenmaier Serving size: 8 INGREDIENTS: 2 ounces bacon fat 4 cloves garlic, minced 1 each large onion, diced 2 bay leaves 1 tablespoon Creole seasoning, salt-free 2 cups fresh black-eyed peas 1 bottle Shiner Bock 1 quart chicken stock 1 pound andouille sausage, sliced 1 each red bell pepper, diced 1 each green bell pepper, diced 1 each yellow bell pepper, diced 2 teaspoons kosher salt 1 tablespoon thyme, chopped 1 tablespoon Tabasco sauce 1 bunch scallions, chopped DIRECTIONS: 1/ In a medium stockpot over medium heat, add bacon fat or canola oil and garlic, and cook until toasted. 2/ Add onions, and cook until translucent. 3/ Add bay leaf and Creole seasoning, and lightly toast.

Recipe by: Aaron J. Staudenmaier 4/ Add black-eyed peas, and continue stirring. Serving size: 8 5/ Deglaze with beer, and reduce by two thirds. 6/ Cover with chicken stock, and bring to a simmer. INGREDIENTS: 1 ounce canola oil 7/ Cook for about 1 hour or until beans are tender. 2 shallot, chopped 8/ Add andouille sausage and red, green and yellow bell peppers, and 2 cloves garlic, chopped continue cooking until peppers soften. 1/4 cup white wine 1/2 bunch parsley 9/ Season with kosher salt, thyme and Tabasco, and garnish with scallions. 1/2 cup heavy cream 3/4 pound butter Note: This is a natural pairing for fried catfish and hushpuppies. 2 lemons, juiced 4 ounces English peas, blanched Salt to taste DIRECTIONS: 1/ In a medium saucepot, add canola oil and sauté shallots and garlic until translucent. 2/ Deglaze with white wine, and reduce by half. 3/ Add heavy cream, and reduce to half. 4/ Reduce heat, and whip in butter a little at a time until incorporated. 5/ Add parsley and English peas and puree. 6/ Strain through a chinois. 7/ Immediately before serving, add English peas. Note: Serve with seafood dishes. If the color is not vibrant after step 5, add a small amount of spinach leaves while pureeing.

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L IFESTY LE

ome CEOs may start at the bottom rung of a company, working their way up the ladder to the corner office, but how many can say they worked their first event at the age of 11, and by 13, were cooking food over a brazier? That’s how Brian Strange, president and CEO of Don Strange of Texas Inc., got his start in the family business. That same year, he graduated to hauling equipment, driving a truck full of catering equipment home from an event when his father, Don, was too tired to drive. Strange is now steering Don Strange of Texas, the event and catering company that will do whatever it takes to deliver perfect events for its clients – including employing any and all family members to make it happen. A Texas legend 60 years in the making, the company has grown from humble beginnings as a family grocery store, then a restaurant and San Antonio legend, The Party House Inc., to a nationally acclaimed, award-winning catering and event powerhouse. Three generations of the Strange family have seamlessly fused the mystique of Texas history

ÒTHIS COMPANY IS NOT WHAT WE DO ITÕS WHO WE ARE.Ó

BRINGING THE BEST Brian Strange steers Don Strange of Texas into the future.

BY: DAWN ROBINETTE / PHOTOGRAPHY: LIZ GARZA WILLIAMS

SHALE OIL & GAS BUSINESS MAGAZINE

and culture with world-class cuisine and unsurpassed style to create unforgettable celebrations and flawless events. Thanks to its anything-butboring approach, the reputation of the company is so far-reaching that it counts U.S. presidents, movie and music stars, professional athletes, corporations and brides throughout the world as clients. Brian, Don’s eldest son, is leading the company to new heights while ensuring the quality and consistency that has made Don Strange of Texas one of the most sought-after catering and event companies in the nation. “Don Strange of Texas was never just a man – my dad led the way, but we’ve always had an amazing team,” Strange says. “The team that is Don Strange of Texas is what makes this all possible. Everyone has their heart in the game and is fully behind making every aspect of Don Strange of Texas as amazing as it can be.” The company includes 50 fulltime employees and hires additional staff as needed, so on any one day, the full team delivering everything from private executive dinners to over-the-top corporate events may be as large as 30,000. “When you step back and remember that this

all started with my grandparents offering meat and barbecue meals to families headed out to Medina Lake, it’s humbling,” Strange says. “This company is not what we do – it’s who we are. We’re a family business. This is part of our DNA, and we only know one way to do it: the best way, every time. We evaluate ourselves constantly, always looking to do it better, to top what we’ve done in the past and deliver an experience that goes beyond anyone’s expectations.” Another of the company’s philosophies is to stay innovative. Don Strange of Texas invests in its team and stays on top of trends, technology and equipment that can help them create perfect events. “We train and educate our team, keeping up with the latest in food technology, cutting-edge processes and products we can incorporate into our business,” Strange says. “Our leadership team is involved in various trade organizations where we learn and we teach. Being active in the industry keeps us on top of our game.” Strange, a past president of the Rotary Club of San Antonio, also works to ensure that his own skills and leadership are up to the task of growing the company, working with a peer advisory group to sharpen his skills and gain a different perspective on the Don Strange of Texas business. “I learned so much from my father, but I think anyone who runs a business benefits

ÒWEÕVE ALWAYS HAD AN AMAZING TEAM.Ó from working with other leaders, sharing challenges and ideas,” Strange says. “Sometimes looking at things from the outside creates opportunities and ideas. The Don Strange of Texas experience is intangible. We help you celebrate, and that means something different for everyone, but we’re in this together, with every single customer, to make that celebration incredible.” For more information on Don Strange of Texas, visit www.donstrange.com.

NEW HEIGHTS

The third generation of the Strange family leads the charge at Don Strange of Texas.

1 2

Going global: Through Don Strange Marketplace and new product offerings, Don Strange of Texas is reaching new customers across Texas and beyond. The company has gained 2,000 new customers since Brian Strange took the reins, and the number does not include local customers.

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High tech: Placing more emphasis on social media, online efforts and a video library, Don Strange of Texas has expanded its customer base and grown business through specialized divisions like Don Strange Weddings. The company also developed internal software to better track expenses and watch profit margins in real time. “You can’t buy our system in a box,” Strange explains. “It takes years of experience and hands-on development to make all of the pieces of a strong company work effectively.”

3 4 5

Growth: Over the past four years, Don Strange has experienced a 20 percent growth in corporate, convention and private party event sales and a 60 percent increase in wedding bookings. Leadership: The business is tailored to the values and priorities that have made Don Strange of Texas a leader in the catering and event business. The company is results-driven and sales-focused, and the proof is in its improved performance. Community commitment: Don Strange of Texas has helped raise or donated in-kind contributions of $10 million over the last 60 years, making a difference in the community, supporting education initiatives and promoting the city of San Antonio through its sales outreach.

Artie Quirk

210.861.9486

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xperience a customized itinerary and the “Best Quail Hunting in Texas” just 40 minutes northwest of San Antonio in the beautiful Texas Hill Country along the pristine Guadalupe River. Walk up hunts behind world-class pointing and flushing dogs with professional guides assure you of an exceptional day in the field. Also enjoy fast action European-style driven pheasant shoots or Continental shoots - Fly fishing for trout and gunning on three different automatic clay target shooting scenarios.

Hunt free-roaming whitetail deer and Rio Grande turkey in season and world-class, free-range axis deer year-round. Gourmet dining and lodging with spectacular views top off the ultimate outdoor experience. “This is the best day of quail hunting I’ve ever had in my life.” Chuck Wechsler, Publisher, Sporting Classics Magazine

Joshua Creek Ranch is celebrating 24 years of outstanding client satisfaction and earning the designation as a Beretta Two Trident Lodge for Excellence in Upland Bird Hunting.

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Beach. Bay. Golf. H AV E I T A L L I N P O R T A R A N S A S , T E X A S Palmilla Beach Resort & Golf Club is the only development on the Texas Coast to offer golf course living with both beach and bay marina access. The master-plan centers around our award winning Arnold Palmer signature golf course, and includes luxury homes and condominiums, private beach access, boat slips, and much more.

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We are in compliance with the Title VII of the Civil Rights Act of 1968. We have not, and will not, either directly or indirectly, discriminate against you or any other prospective purchase on the basis of race, color, religion, sex or national origin. This is not an offer to sell or solicitation of offers to buy in states where such offer of solicitation cannot be made. Select images have been created from photographs artistically assembled and retouched in order to approximate an impression of what the human eye will perceive at different heights. Palmilla Beach Resort & Golf Club is not responsible for any error or omission in this interpretation effort.

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TEXAS TREASURE QUINTA MAZATLAN: one of McAllenÕs greatest gems

BY: JOYCE VENEMA

TODAY, QUINTA MAZATLAN IS 20 ACRES WITH BEAUTIFUL GARDENS AND WILDLIFE FOR ALL VISITORS TO ENJOY.

uinta Mazatlan is a treasure that belongs to the City of McAllen, Texas. It has a story that has continued to fascinate generations of visitors since its construction. It all began with a dream of Jason and Marcia Matthews back in the 1930s. Jason Matthews was a veteran of World War I who fought alongside Lawrence of Arabia against the Axis Powers. During his time in service, he traveled to more than 10 countries, where he immersed himself in the various cultures, collecting history as he went. In 1935, Jason and his bride, Marcia, traveled to McAllen and built their dream home on the highest knoll they could find, naming it Quinta Mazatlan. In Spanish, “Quinta” means “country house” or “estate,” and “Mazatlan, in Indian, means “the land of deer.” Jason Matthews had his doors commissioned to look like those at the Spanish Governor’s Palace in San Antonio. They were intricately hand-carved intricately by Peter Mansbendel, a renowned Swiss wood carver. This is just one of the many details placed throughout the Quinta Mazatlan that make it such a marvel. When the Matthews couple passed away in the 1960s, the home was up for sale for several years. When Hurricane Beulah made its way through McAllen in 1964, the home’s splendor was devastated. In 1968, Frank and Marilyn Schulz purchased this once sought-after estate that consisted of 8 acres and a combined building space of 10,000 square feet for $24,000. They were able to restore Quinta Mazatlan to its previous glory, and they even expanded the patios and added new plant life to make the property even more beautiful. The Schulz family raised their family at Quinta Mazatlan for 30 years. During this time, the Texas Historical Commission dedicated a historical marker. This helped recognize the estate as a treasure for the state of Texas. In the late 1990s, the Schulz family put Quinta Mazatlan up for auction. McAllen had grown exponentially by this time, and the prime location of the estate made it a spot sought after by developers. The City of McAllen, however, knew of the home’s beauty and expansive history. They realized Quinta Mazatlan would be a wonderful place for the town to gather, as a tourist destination and as a place where wildlife and history could be preserved. The City of McAllen won the auction and put into motion a plan that would ensure the estate’s future. Quinta Mazatlan opened to the public in 2006, and it is a wonderful place for locals and tourists to visit. Today, Quinta Mazatlan is 20 acres with beautiful gardens and wildlife for all visitors to enjoy. It is now under the care of the McAllen Parks and Recreation Department. They have a staff that specializes in the estate’s needs and keeps a watchful eye on one of the city’s greatest gems. For more information on Quinta Mazatlan, visit www.quintamazatlan.com.

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2014 SAN ANTONIO PIPELINERS ASSOCIATION Annual Midstream Classic Sporting Clays Tournament & Scholarship Fundraiser

at the

NATIONAL SHOOTING COMPLEX-SAN ANTONIO Friday, June 20, 2014 - Starts Promptly at 9:00 a.m. TOURNAMENT - 100 Birds 5 Person Teams Entry Fee for Five Person Team is $1000 / $200 Per Person

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APPLICATIONS MUST BE RECEIVED BY June 6, 2014 REGISTER TODAY ONLINE AT http://sapipeliners.org/event LIMITED TO FIRST 200 PAID SHOOTERS

Above information subject to change, check the SAPA website for updates. THE San Antonio Pipeliners Association AND THE NATIONAL SHOOTING COMPLEX ASSUME NO LIABILITY FOR INJURIES OR LOSS TO PERSONS OR PROPERTY.

Your participation in SAPA provides venues for business networking and charitable fundraising opportunities that generate educational scholarships for Science, Technology, Engineering, and Math (STEM) students. SHALE OIL & GAS BUSINESS MAGAZINE

/ / N ONPR O F I T

PROMOTING PRESERVATION With its Kritters 4 Kids initiative, nonprofit Wildlife in Focus teaches kids about the importance of preserving wildlife and nature in South Texas. BY: AMY GILBERT / PHOTOGRAPHY: JEFF PARKER

DID YOU KNOW that alligators thrive more than 100 miles from the Texas coast? That fact is one of the many surprises that the Kritters 4 Kids program delivers to children in South Texas. Designed to raise awareness of the importance of wildlife habitat preservation, Kritters 4 Kids is a key initiative of Texas-based, not-for-profit organization, Wildlife in Focus. “There is a lot of demand for large landowners in Texas to develop their land; wildlife habitat is shrinking,” says Jack Showers, senior stakeholder relations adviser for Talisman Energy’s Eagle Ford operations. “The goal of Kritters 4 Kids is to make children, at a young age, aware that there is a diverse amount of wildlife in Texas and a need to protect it.” In addition to his role at Talisman, Showers is a volunteer board member for Wildlife in Focus. His participation on the board is building awareness that wildlife habitat can coexist with oil and gas development. Through his involvement, he has helped deliver the Kritters 4 Kids program to fifth- and eighth-graders attending schools in areas where Talisman operates. Key to the program is the Wildlife in Focus book, which features color photos of the broad diversity of wildlife in Texas. The book was created using shots from a biennial photo contest in which landowners partner with photographers to capture images of Texas wildlife. During the Kritters 4 Kids program, children are presented with the hardcover book, in addition to learning about wildlife. “The kids will look at a picture of a bobcat and ask, ‘Is this in Africa?’” says Bruce Hoffman, chairman of the

ÒWE ARE PROMOTING THE FACT THAT WILDLIFE IS A VITAL PART OF THE ECOLOGY OF THIS WORLD.Ó

Wildlife in Focus Board of Directors. “We are promoting the fact that wildlife is a vital part of the ecology of this world. If you don’t know anything about it, you won’t care about preserving it.” Hoffman is a first vice president and investment officer with Wells Fargo Advisors, LLC, in Corpus Christi whose family has owned a ranch in Texas since the 1870s. When he heard about Wildlife in Focus and their Kritters 4 Kids program, he wanted to be part of it. “I’m involved because the mission is to raise public awareness,” he says. “I love nature and wildlife, and I love to see what we have in the bush.” Hoffman feels that having the support of Showers and Talisman is important. “We put Jack on the board because of his enthusiasm,” he says. “He’s doing a wonderful job promoting our organization. With his involvement, I’m hoping we can bring more corporate sponsors together and really develop it. There is no reason it can’t be a national or international effort.” As part of Talisman’s long-standing commitment to supporting local initiatives where we operate and live, the company supports the time Showers spends with Wildlife in Focus, and has also donated $5,000 to the Kritters 4 Kids program this year. “Talisman’s $5,000 annual donation will allow the Kritters 4 Kids program to run in Tilden, Three Rivers and Cotulla,” Showers says. “Plus, it will buy an additional 90 books for these schools.” Showers feels that this emphasis on wildlife preservation is evidence of Talisman’s commitment to responsible development. According to him, “Our landowners will attest that we work hard at making sure our activities can coexist with wildlife protection.” Jack Showers is a senior stakeholder relations advisor for Talisman Energy USA Inc., located at 126 FM 1545 in Three Rivers, Texas. For more information, call Patti Young at 361-881-9316, or go to www.wildlifeinfocus.org.

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$12 per employee. Protect their financial freedom. HALO-Flight is a 501(c)3 Not for Profit Air Ambulance Service

Business Agreements now available: HALOFlight would like to extend coverage to your employees for an annual rate of $12 per employee household. Whatâ&#x20AC;&#x2122;s the bottom line? An average emergency helicopter transport exceeds $15,000. As a Guardian Member, if you or a member of your household require our service, your insurance (if any) would be billed and HALO-Flight would accept that as payment in full. Itâ&#x20AC;&#x2122;s that simple! Contact Stephanie Knox, Marketing Director stephaniek@haloflight.org 361.265.0509

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A Warm Reception

SHALE hosts the Corpus Christi Educational Networking Meeting featuring STEER and the UTSA Institute of Economic Development. PHOTOGRAPHY: JOSE ALCALA

ON MARCH 6, SHALE

hosted an educational networking meeting at the Corpus Christi Town Club headlined by keynote speakers Omar Garcia, president and CEO of STEER, and Dr. Thomas Tunstall, research director at the UTSA Institute of Economic Development. The event aimed to educate the public on the Eagle Ford Shale development and bring industry professionals together to create business opportunities. The event was sponsored by Texas A&M-Kingsville and the Port of Corpus Christi, and proceeds from the evening were donated to HALO-Flight, an air medical transport provider that provides medical transport for critically ill and injured persons requiring medical facilities across 26 Texas counties. SHALE experienced an exceptionally warm reception from the sparkling city and its leadership, as the event drew more than 150 attendees and a particular endorsement from Mayor Nelda Martinez, who remarked, “I’m a SHALE advocate now!” SHALE extends a special thank you to STEER, UTSA and Martinez.

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Rolling Out the Red Carpet

SHALE honors Halliburton’s Southeast Area Vice President Paul Sheppard at the March/April cover party at the Palm Restaurant in Houston. PHOTOGRAPHY: ERIC KLEIMAN

LEGISLATIVE AND ENERGY DIGNITARIES again graced the The Palm Restaurant on April 10 as SHALE Oil & Gas Business magazine honored Halliburton and Paul Sheppard for the networking affair. Texas Railroad Commissioner David Porter and STEER President Omar Garcia spoke at the 200-plus industry-business, star-studded event. Thanks to loyal sponsors Texas Energy Advantage, The Palm, Boot Ranch and STEER, the event again sustained a red carpet feel. Renowned safari specialist African Odyssey gave away a safari package, while dozens of industry heavyweights were represented at the party, including Flack & Company, Bradley Motors, Lake Truck Lines, Oil Field Experts, Reliance Energy, the Reserves at St. Charles, Petroleum Connections and Sun Coast Resources. Special guest Pierce Bush also attended the event.

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CONTINUED ON PAGE 86

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Communication is Key ONE OF THE largest energy industry conferences in the state, the third annual Eagle Ford Shale Consortium, was held in San Antonio from April 21 to 23 at the Henry B. Gonzalez Convention Center. Aimed at developing and fostering effective lines of communication with the oil and gas industry and local communities, the conference featured both legislative and industry keynote speakers, including the mayor of San Antonio, the chairman of the Texas Commission on Environmental Quality and the Vice President of BHP Billiton. SHALE was recognized as one of the conference’s leading sponsors and served as an exhibitor, meeting with hundreds of industry business representatives throughout the shale play and the state.

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PHOTOS BY JULIAN LEDEZMA

Eagle Ford Shale Consortium brings together legislative and industry representatives to discuss effective communication with the oil and gas industry. PHOTOGRAPHY: JOSE ALCALA AND JULIAN LEDEZMA

PHOTOS BY JOSE ALCALA

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Fostering Leadership

The Women’s Energy Network of South Texas celebrates Women’s History Month with a networking happy hour in San Antonio. PHOTOGRAPHY: JULIAN LEDEZMA AS PART OF celebrating pioneering women in energy during Women’s History Month, the Women’s Energy Network (WEN) of South Texas hosted a networking happy hour in San Antonio for women to meet other women in the energy industry in a continued effort to foster women leadership in the field. Held at the picturesque Paloma Blanca restaurant, the event befell just before the newest chapter of the international association for women professionals in energy marked its one-year anniversary of serving South Texas.

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going grand

The new Alamo Junction Rail Park celebrates its grand opening. PHOTOGRAPHY: JIMMY PERKINS

ALAMO JUNCTION RAIL PARK held its grand opening on April 2, unveiling the newest master-planned rail-served industrial park in the Eagle Ford and San Antonio region. The 400-acre park situated in Elmendorf, Texas, was developed by National Property Holdings and Rail Logix, premier developers of rail-served industrial parks.

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Champions for Excellence The 2014 Southwest Oil & Gas Awards is now open for entries.

BY: MARC BRIDGEN

ow in its third year, the 2014 Southwest Oil & Gas Awards is the only industry initiative that champions excellence and recognizes organizations that are developing operational best practices while also focusing on the industry core values of health and safety, environmental stewardship and corporate social responsibility. The 2014 Southwest Oil & Gas Awards is now open for entries, and organizations are invited to submit their entries and nominate worthy organizations and individuals for the 25 award categories. The awards are free to enter, and this year, organizations that submit an entry will receive two complimentary delegate passes to the Conference for Excellence, which has been introduced to provide a platform to deliver detailed content and extended networking during the day immediately preceding the awards gala dinner. The Southwest Oil & Gas Awards region covers Texas and New Mexico, incorpo-

SHALE OIL & GAS BUSINESS MAGAZINE

rating (but not limited to) the following key plays: Permian, Barnett, Avalon Bone Spring, Fort Worth Basin, Barnett Woodford and Marfa Basin. Organizations that operate in this region are invited to enter the awards in categories that are appropriate to their business. Award entries must be submitted before the entry deadline on Thursday, June 26, 2014, and full details on the categories and how to enter can be found at www. oilandgasawards.com/southwest-2014. The judges will cast their votes, and the finalists will be announced in late July 2014. The 2014 Southwest Oil & Gas Awards gala dinner and presentation of winners will be held in Dallas, Texas, in October 2014. Last year’s Southwest Oil & Gas Awards, held in October 2013 in Fort Worth, was a fantastic night of celebration for the industry. The list of award winners, photos and videos can be viewed at www. oilandgasawards.com/southwest-2013.

Awards featuring the TEEMCO E&P Company of the Year Award presented to Anadarko Petroleum Corporation

PHOTOS COURTESY OF OIL & GAS AWARDS

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Fun and Philanthropy The South Texas Sporting Clay Classic supports the welfare of oilfield families.

PHOTOS COURTESY OF SHALE

IT WAS WILD AND FUN out at the South Texas Sporting Clay Classic, presented by RigData on April 18 at the National Shooting Complex in San Antonio. About 500 shooters and another 100 attendees from oil and gas operators, drillers and service companies came out to participate in shooting games that included the Flurry, Top Shot, Long Bird, Paintball Challenge and Wind Chime. Each registered period wrapped up with a 100-clay tournament, and eight hunting and fishing trips were auctioned off. Sponsors included H&N Media Group and the Worldwide Adventure Network. The event served as a fundraiser for Oilfield Appreciation, a charitable group that hosts Oilfield Appreciation Days throughout the year in areas with high concentrations of oilfield families. Proceeds from the event supported the health, education and welfare efforts for oilfield workers and their families throughout the South Texas region.

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