SHALE Magazine Sept/Oct 2019 by SHALE Oil & Gas Business Magazine

SHALE SEPTEMBER/OCTOBER 2019

GLOBAL DAY OF CARING WITH

NOBLE ENERGY TEXAS LIFESTYLE DESTINATIONS

MAGAZINE

TEXAS IS UNMISTAKABLY OIL AND GAS COUNTRY PIPELINE OPPOSITION TAKES A LOSS AGAINST TRUMP

IF YOU LIKE THE STATUS QUO,

RYAN ZINKE IS NOT YOUR MAN

AN INTERVIEW WITH THE FORMER SECRETARY OF THE INTERIOR

STRATEGIES AND TIPS TO PROTECT YOUR BUSINESS FROM DATA BREACHES

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

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SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

SEPTEMBER/OCTOBER 2019

CONTENTS SHALE UPDATE

Shale Play Short Takes

FEATURE

Global Day of Caring with Noble Energy

COVER STORY

COVER AND TABLE CONTENTS PHOTOS COURTESY OF MICHAEL GIORDANO

INDUSTRY 34 Preserve Texas Heritage by Preserving Oil and Gas Jobs 36 The Texas Miracle 38 Texas is Unmistakably Oil and Gas Country

POLICY 42 Broadband, Markets and the Great Divergence 44 In the Bakken, a Lawsuit on “Pore Space” Draws Attention

46 Pipeline Opposition Takes a Loss Against Trump

BUSINESS 50 Strategies and Tips to Protect Your Business from Data Breaches

20 LIFESTYLE

56 It’s Never Too Early to Get Toasted at This Texas-Based Eatery

58 Houston’s CRAVE

Serves Up Delectable Desserts

60 Lupe Tortilla: Serving

“Texas-Mex” Across the Lone Star State

SOCIAL 62 WEN South Texas

Growing and Hosting

Ryan Zinke’s career is as American as they come. A former Navy SEAL, state and U.S. Congressman, and Secretary of the Interior under President Donald Trump, Zinke has dedicated his professional life to serving Americans and protecting our wonderful nation. Being forthcoming and honest, Zinke shares with SHALE the triumphs and tribulations he experienced over his illustrious career in Washington, D.C.

INDUSTRY

The Port of Corpus Christi is a Beehive of Activity

POLICY

Bernie Sanders’ Shameful Attack on Oil and Gas in the Wake of Hurricane Dorian

BUSINESS

Workforce Challenges Face the Oil and Natural Gas Industry

LIFESTYLE

Wild Beasts Invade The Briscoe Western Art Museum

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

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

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

PUBLISHER’S NOTE

ANOTHER GREAT ISSUE OF SHALE, THE SEPTEMBER/OCTOBER ISSUE DIVES INTO ENERGY AND BUSINESS ON A RANGE OF TOPICS. Of special emphasis, this issue highlights Texas as an energy giant. As many of us know, Texas is a key producer of energy resources and is directly impacting our nation’s ability to be energy dominant. This also ties into our cover story this issue with former Secretary of the Interior Ryan Zinke.

As always we are proud and honored to share these stories of the positive impacts of energy in the United States and some of the people who make our energy industry strong. We would like to thank our readers for continuing to follow our stories and using SHALE and In the Oil Patch radio show as a news and information source. Speaking of In the Oil Patch, I am happy to announce more growth for our show. The show has been aired in San Antonio for quite some time on Freedom 1160 am. We have enjoyed working with this station greatly and have found it to be a wonderful home for our show in that area. However, we are also happy to have the opportunity to grow to new heights — and so we are. In the Oil Patch will now air on The Answer 930 am on Sundays from 2 to 3 pm. Onward and forward we go, SHALE and In the Oil Patch keep going. Again, thank you for your support of our publication and radio show. We hope you enjoy this latest issue of SHALE. We would love to get your feedback and tips on topics you want to read about in SHALE Magazine — if you would like to reach out to us, please send us an email at editor@shalemag.com.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

PHOTO BY MICHAEL GIORDANO

KYM BOLADO

CEO/Publisher of SHALE Magazine kym@shalemag.com

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SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

SHALE UPDATE

SHALE PLAY SHORT TAKES By: David Blackmon

Bakken Shale – North Dakota/Montana

The flaring of natural gas continues to be a lingering issue in the Bakken Shale, one that will place constraints on future production growth if it is not resolved. This is a finding in a report from Research and Markets titled "Bakken Shale in the US, 2019 — Oil and Gas Shale Market Analysis and Outlook to 2023.” The report states that about 19% of produced gas in the basin ends up being flared, well above the 12% limit prescribed by North Dakota regulators. Despite the new report’s findings, North Dakota’s industry achieved record levels of production for both oil and natural gas during the month of June. The nation’s secondlargest oil producing state — behind only Texas — produced 1,424,625 barrels a day, up 29,977 barrels a day from May. The state also produced 2,876,689 mcf of natural gas per day in June, an increase of about 57,000 mcf over May.

Denver/Julesberg (DJ) Basin - Colorado

Permian Basin – Texas/New Mexico

Concho Resources announced in early September that it would sell various non-core Permian Basin properties to Houston-based Spur Energy Partners for $925 million. Concho said the transaction was part of its ongoing plan to highgrade its asset base. The company plans to use the proceeds to pay down debt and initiate a stock buy-back program. In its annual revenue tracking report for the fiscal year ended June 30, the New Mexico legislature said that the state government took in a record $7.8 billion, thanks in large part to Permian-based activity. The state had already anticipated enjoying a record $1.3 billion budget surplus for the year, but this final report represents an increase of $273 million above that expected outcome. The final budget surplus represents about 25% of the entire state budget.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

Eagle Ford Shale – Texas

Japan’s largest oil producer, Tokyo-based Inpex, filed for 11 drilling permits with the Texas Railroad Commission in August, as it prepares to commence drilling operations on its Eagle Ford acreage before the end of the year. Inpex acquired leases and existing production in Karnes and LaSalle Counties in March from Gulftex Energy. Its permit filings include plans to test both the Eagle Ford Shale and Austin Chalk formations in its drilling efforts. Chesapeake Energy reported in August that it produced a record amount, 122,000 barrels of oil daily during the second quarter, which is a 36% increase compared to the same quarter in 2018. The company attributes much of its increase to additional Eagle Ford assets obtained earlier this year in its acquisition of WildHorse Resource Development Corp.

ARUNAS/BIGSTOCK.COM

Despite his signing of Senate Bill 19-181, a Democrat-passed bill clearly designed to restrict future oil and gas development in his state, Colorado Governor Jared Polis assured an oil and gas audience that his policies will have “nothing to do with” the industry’s future health. "As long as commodity prices are good, you're gonna have a good business," Polis told the crowd. "It has nothing to do with me, and nothing to do with our state politics, and less even to do with national politics; it really all comes down to supply and demand." Colorado Oil and Gas Association CEO Dan Haley disagreed: "With all due respect, what you do, what you say, does matter," Haley said. "And what happens in Colorado does matter. There is a lot of talk out there of people wanting to ban fossil fuels. It makes our folks nervous. I think you underestimate the impact that political rhetoric, political actions and regulatory actions have." PDC Energy announced on Aug. 26 that it would acquire SRC Energy in an all-stock transaction valued at just over $1.7 billion in assets and assumed debt. The two Denver-based companies will form the second-largest oil and gas producer in Colorado’s DJ Basin and adds to PDC’s position in the Permian Basin.

Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio

President Donald Trump visited Beaver County, Pennsylvania in August to help Royal Dutch Shell celebrate the opening of its new ethane cracker/petrochemical complex outside of Potter Township. The new plant, which represents the largest capital investment in Pennsylvania history, will take advantage of the high ethane content contained in Marcellus Shale natural gas. Ethane is one of the main feedstocks for the manufacturing of plastics. The Pennsylvania State PUC’s annual report projects that natural gas-fired electricity in the state will rise in the coming years as natural gas continues to displace coal and nuclear in the power generation sector. The report projects that gas-fired power generation will account for as much as 45% of the state’s installed capacity by the end of 2022, up from about 34% today.

Haynesville/Bossier Play – Louisiana/East Texas

With natural gas prices hovering in the $2.20 per mcf range, Chesapeake announced it would reduce its Haynesvillerelated capital budget in order to focus more money in oiler areas like the Eagle Ford Shale. The company said it plans to reduce its rig count in the Haynesville play from the one rig operating currently "to zero in the near future." On the positive side, Japanese company, Osaka Gas, announced that it would acquire Haynesville-focused Sabine Oil & Gas Corporation for $610 million. Osaka will assume operations of 175,000 net acres in East Texas with about 1,200 wells producing about 1.7 million tonnes of shale gas a year. Osaka is also a partner in the Freeport LNG liquefaction facility offshore of Freeport, Texas.

SCOOP/STACK Play – Oklahoma

The SCOOP/STACK continued to shed oil rigs in August according to both the Baker Hughes and Enverus rig count numbers, as operators continued to pare back drilling budgets for the second half of 2019. According to Enverus (formerly DrillingInfo), the count in the Anadarko Basin — which includes the SCOOP/STACK — fell by 55 rigs for the 12 months ended Aug. 31. The decline in the Anadarko Basin was the largest for any area in the country, as measured by Enverus. Continental Resources and Lagoon Water Resources, an Oklahoma-based midstream company, announced an $85 million deal for Lagoon to acquire Continental’s eastern STACK water recycling facility, gathering system and three related disposal wells in Blaine County. Lagoon also agreed to a long-term deal to gather and dispose of produced water and source recycled water for Continental.

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

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

 FEATURE

GLOBAL DAY OF CARING WITH NOBLE ENERGY Special to SHALE

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

PHOTOS COURTESY OF NOBLE ENERGY

n September, volunteers from Noble Energy gave their time to local organizations as part of the third annual Global Day of Caring, a day that began in 2017 in celebration of the company’s 85th anniversary. The South Texas Noble team donned their hand tools and hard hats to assist with constructing a Habitat for Humanity-Laredo home. They spent the day framing and placing exterior walls and installing windows and soffits. Two other teams of volunteers were also in the community lending helping hands. Volunteers were welcomed to the South Texas Food Bank to clean, sort and package multiple pallets of food for delivery to local charities and food bank distributors. A team in the Dilley office collected more than 70 pairs of shoes and more than 50 coats for Carrizo Springs ISD students in need. Noble Energy’s Vice President of Texas Operations David Burger describes what the day meant to him, “We take pride in the opportunity to

On Global Day of Caring and throughout the year, Noble Energy is committed to living their purpose of energizing the world and bettering people’s lives make a positive difference in the community. It’s energizing to see our teams come together to donate their time and talents where they live and work. It’s a day that I look forward to all year long.” In West Texas, employees supported the West Texas Food Bank in Balmorhea by assisting with the mobile food pantry and setting up first food distribution at the local school district. The Pecos office assembled 300 hygiene kits for public distribution through the local food pantry. On Global Day of Caring and throughout the year, Noble Energy is committed to living their purpose of energizing the world and bettering people’s lives. Noble Energy is an independent oil and natural gas exploration and production company committed to meeting the world’s growing energy needs and delivering leading returns to shareholders. The company operates a high-quality portfolio of assets onshore in the United States and offshore in the Eastern Mediterranean and off the west coast of Africa. Noble Energy has assets in the Permian Basin and the Eagle Ford Shale.

Learn more about Noble Energy by visiting www.nblenergy.com.

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

PHOTO BY MICHAEL GIORDANO

cover story

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

IF YOU LIKE THE STATUS QUO,

RYAN ZINKE

IS NOT YOUR MAN By: David Blackmon

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

the former Commander in the U.S. Navy SEALs who served as Secretary of the Interior throughout 2017 and 2018, is quite happy about being out of Washington, D.C. He made that clear when we opened our recent interview by asking, “How are you today?” “You know, outstanding! Free from the chains of office. There is light being out of D.C., and it’s good,” he said with a laugh. We were about to ask him to expand on that declarative statement of happiness, but there was no need — he beat us to the punch. “What an angry, hate-filled city,” he said. “I’ve never seen anything like it in my lifetime. I tried to do the right thing, listen to everybody, but the hatred of this president is driving everything there.” Mind you, Sec. Zinke has stared down a lot of hostiles in his life. While serving as a Navy SEAL during the early years of the 21st century, he spent time in both Afghanistan and Iraq during the most intense and violent years of the wars in those two Middle Eastern countries. Zinke’s political career also includes stints as both a U.S. congressman from his home state of Montana and a term as a state senator there. In the latter months of his term as Interior Secretary, Zinke was himself the target of one of the most vicious and sustained media attack campaigns ever to target a federal official. His family was not exempted. “My wife’s pretty tough. She’s a Gold Star spouse herself,” Zinke said, speaking of his wife, Lola, who’s previous husband died in an auto accident while on active duty. “She is on the VA advisory board. When I was overseas, my daughter was stationed in Kuwait; my son-in-law was in the Middle East, and I was in Baghdad or Rhamadi. All at the same time. So, Lola is proven in combat. “But we were both shocked at the level of viciousness directed at us. As a congressman, it was much more cordial. But serving in the Trump presidency has been different than previous experiences we’ve had. People would stalk our house; they would harass us at the house; they would put up signs in the neighborhood. We received death threats to Lola, even to my dog.” After a pause, he continued. “There were threats on the children as well. So, that’s the level of anger and hostility, and all these accusations had to be defended. The Department of Interior doesn’t defend against them — I had to defend them myself. All of a sudden here I am, a retired Navy Commander having to support a house in D.C., which comes out of my own pocket, and suddenly I’m paying $25,000 a month in legal fees? That’s more than I was making, to defend against what was frankly a lot of politically-generated BS.” The Sierra Club and so-called Western Values Project were principally behind the hit squads targeting Zinke, and both organizations turned endless and costly Freedom of Information Act requests into costly ideological weapons. “I went through so many attacks, and 15 different investigations,” he said, “All of which led, by the way, to the same conclusion: no wrongdoing. Everything was absolutely above-board. But I had been accused of so many things. After two years on the front lines, it was time. Because the accusations had formed a narrative that simply reduced my effectiveness. I ultimately decided that the mission of the Department of Interior was more important than any one person.”

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

PHOTO COURTESY OF RYAN ZINKE

RYAN ZINKE,

THE FORMER NAVY SEAL IS BACK IN HIS HOME STATE OF MONTANA, AND ENJOYING LIFE FREE FROM THE CHAINS OF THE FEDERAL GOVERNMENT

“OUR INDUSTRY NEEDS MORE INDEPENDENTS LIKE CRESSMAN WHICH IS A GREAT VETERAN-OWNED SMALL BUSINESS THAT HAS BEEN AN INDUSTRY LEADER FOR OVER 40 YEARS.” SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

the process. So, I’m having fun that way with really good people to work with, and we’ll see what happens in the future.” Zinke is also finding his way to Texas on a regular basis as he works with his long-time friend Art Cressman as an advisor to Cressman Tubular Products seeking to address the critical downhole tubular and pipeline infrastructure challenges our energy industry faces. “Art is a longtime friend; we both retired from the Navy from the same duty station overseas. Our sons were born in the same hospital, and Cressman Tubular Products plays an important role in the downhole tubular supply chain. “Most of our pipe and pipeline is foreign-sourced,” explained Zinke. “When we have companies like Cressman, veteran-owned, U.S. sourced working to meet the needs of our domestic producers, we can do better — so I’m working with Cressman to help meet the need. “Our industry needs more independents like Cressman which is a great veteran-owned small business that has been an industry leader for over 40 years. I am proud to serve on the Cressman Tubular board of directors and help promote America’s energy supply chain.” Drilling for crude oil in the Permian Basin and other shale plays has also produced record amounts of low-cost natural gas. Natural gas prices and a lack of pipelines to get it to market means that much of it gets burned away in an industry practice known as flaring. “I’m not an advocate for flaring,” said Zinke, “it’s wasteful, and we can find a beneficial use, especially if we expand capacity.”

PHOTO COURTESY OF RYAN ZINKE

Sec. Zinke resigned at the end of 2018, as so many other Trump officials have ended up doing, after coming under similar kinds of withering attacks from the national press and other opponents of the administration. Zinke reflected on that reality: “The tragedy is there are a lot of really good people who would serve, but when you look at what happened to me, to [Supreme Court nominee Brett] Kavanaugh, to a lot of really good people, and you just shake your head and say it’s not worth it. So, we lose an enormous amount of talent in this country from different walks of life, who otherwise would serve.” So, now the former Navy SEAL is back in his home state of Montana, and enjoying life free from the chains of the federal government. “I’m enjoying Montana right now, spending a little time catching up after 31 years of public service. Little things like repairing gutters, doing the maintenance on the cars, cutting weeds,” he said with a laugh. “All those things that have been deferred for 31 years. I plan to take a little time, spend some time with my family. My two boys are relatively young. They’re 23 and 22, not married yet. My daughter has two grandchildren. By the way, I told my daughter two things: Don’t join the Navy and don’t marry a Navy SEAL,” he said, laughing again. “So she did both.” “Right now, I’m being a grandpa and a dad for a little while. And I have a consulting company, Continental Divide International, that has a handful of clients I really like. A couple are emerging businesses that are trying to get big and need some advice on how to navigate through

“I have a multiple-use philosophy.”

ANOTHER REASON TO ALLOW FOR MINERAL PRODUCTION ON FEDERAL LANDS UNDER A MULTIPLE-USE PHILOSOPHY IS THE TREMENDOUS INCOME IT GENERATES NOT ONLY TO THE FEDERAL BUDGET, BUT ALSO TO THE STATE THAT IS HOME TO THE LAND ITSELF

Ryan Zinke has maintained an intense interest in the conservation and protection of U.S. natural resources throughout his adult life. His interest began when he was an undergraduate at the University of Oregon, where he also starred as an offensive lineman on the football team. “I have a multiple-use philosophy. One of my biggest influences was a gentleman named Bill Schustrom,” Zinke says. “He was an environmental studies professor, a great man who really was the one who introduced me to Teddy Roosevelt and Gifford Pinchot and the multiple-use concept of land management. And I carried that forward.” Generally regarded as the father of American conservation, Gifford Pinchot was appointed to be the fourth Chief of what was then called the Division of Forestry, which was, at that time, an agency of the Interior Department in 1898 by President William McKinley. After Theodore Roosevelt became president in the wake of McKinley’s assassination, Pinchot was instrumental in convincing his long-time friend to create a new National Forest Service and transfer it from Interior to the Department of Agriculture. Thus, Pinchot became the first Director of the U.S. Forest Service. Working together with Roosevelt and others, Pinchot successfully implemented the concept of the “multiple use” of federal lands, winning a longstanding battle with the Sierra Club and other environmental organizations that advocated for the simple preservation of those forests and other lands instead. The “multiple use” concept is pretty self-descriptive: It advocates the philosophy that federal forests and other lands can be properly conserved while allowing for them to be used for multiple purposes, such as hiking, biking, skiing, boating, timber harvesting and development of the nation’s incredible wealth of mineral resources. The National Forest Society, in its biographical sketch of Pinchot, has this to say about his philosophy and its implementation: Pinchot, with Roosevelt's willing approval, restructured and professionalized the management of the national forests, as well as greatly increased their area and number. He had a strong hand in guiding the fledgling organization toward the utilitarian philosophy of the "greatest good for the greatest number." Pinchot added the phrase "in the long run" to emphasize that forest management consists of long-term decisions. During his period in office, the Forest Service and the national forests grew spectacularly. In 1905 the forest reserves numbered 60 units covering 56 million acres; in 1910 there were 150 national forests covering 172 million acres. The pattern of effective organization and management was set during Pinchot's administration, and "conservation" (an idea he popularized) of natural resources in the broad sense of wise use became a widely known concept and an accepted national goal. Indeed, the multiple-use philosophy held sway in every subsequent presidential administration, regardless of party affiliation. In Zinke’s view, that all began to change on Jan. 20, 2009, when Barack Obama was sworn into office as the nation’s 44th president. “The Obama administration moved away from multiple-use to single-use, and that single-use excluded minerals, oil and gas, hunting; it excluded grazing in many cases,” Zinke said. “It resulted, out West, in control of land driven by Washington, D.C. rather than by people who live there. “One of my closest advisors was Simon Roosevelt, grandson of Teddy Roosevelt. Gifford Pinchot III was also a key advisor. We would sit down, and we would talk about Roosevelt and conservation. We would look at the multiple-use model and discuss why it was important and why it was successful. So, I think I was on pretty strong grounds with critical advisors.”

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

That belief that lands are better managed by people who live on or near them rather than by faceless bureaucrats in Washington, D.C. became one of the key drivers behind Zinke’s efforts to reorganize the Interior Department in general and the Bureau of Land Management (BLM) in particular. The BLM is responsible for managing the onshore federal lands that are not classified as national forests. The vast majority of those lands are located in the Intermountain West, and Zinke quickly

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

CHRISTOPHER BOSWELL/STOCK.ADOBE.COM

“If you don’t know where the Yellowstone River is, why do you think you’re in the best position to manage it?”

concluded that too much of the BLM’s decision-making authority had been concentrated in the District of Columbia. “When I served as a state senator, I just didn’t like the federal government carpet-bombing the states on issues they just didn’t know about. I mean, if you don’t know where the Yellowstone River is, why do you think you’re in the best position to manage it?” he said with a laugh. “Same thing with the Red River in Texas: If you’ve never been to the Red River, if you don’t even know where it is on a map, tell me why you’re in the best position to manage it.” As a proof-point of his perception that too much decision-making had been concentrated at the BLM headquarters in Washington, Zinke implemented a new process. “One thing we started to do was what I call pathfinding. We took a look at, on a specific action, how many levels of employees looked at that piece of paper, and how many people actually needed to in order to make the decision. The question we asked was, are you value-added, or are you just for information purposes? “We found that it had all become D.C.-centric. Overall, I wanted to

push more scientists out of the HQ and go back to the field. It wasn’t so much down-sizing. I think it was right-sizing in the right locations.” Another aspect of the DOI organization he inherited that bothered Zinke was the lack of scientific considerations governing how the various agencies were structured. “DOI is the fourth-oldest department, formed in 1849,” he told us. ”Over the course of time, the Park Service’s regions became different than the BLM’s, of the Bureau of Indian Affairs, of the Bureau of Ocean Energy Management, the U.S. Geological Survey — all of these agencies within DOI had different regional boundaries. “In many cases, on a piece of ground where you’re trying to manage and put together a sage grouse plan, you might have an office in Sacramento, and you might have one in Salt Lake City. And the offices are disjointed. “In many of these land decisions, the Park Service, the Fish & Wildlife Service and the BLM must work together. But often, different agencies work independently, and come to different conclusions. So, I said we all need to work together. So, I went all the way back to John

Wesley Powell and reorganized all the various agency regions into unified regions based on watersheds.” John Wesley Powell was the second Director of the U.S. Geological Survey (USGS), serving in that role from 1881 through 1894. Beginning in 1867, Powell led a series of expeditions to explore several of the basins of large Western rivers. Those expeditions led to his belief that the boundaries of Western states should be established based on the watersheds of those major rivers in order to avoid future conflicts over resources. He later organized the USGS based on the same philosophy. Zinke brought Powell’s philosophy into his job as Secretary of the Interior. “The fundamental science of watersheds and ecosystems should be the management standard rather than some state boundary line or a line that was formed in Washington,” he said. “I fundamentally changed the boundaries and reorganized the agencies to reflect this. Then I began to shift power on authority and decision-making to where it made the most sense. BLM primarily is out West, and to cover the issues of BLM, I think it is better to have the headquarters out West.”

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Competition for top employee talent and standards of living were other driving factors behind his effort to reorganize the Department. “The other driving factor is that D.C. is so prohibitively expensive that for DOI employees, it is very hard to compete with places like Albuquerque, Denver, Boise, Idaho — there are some really fine cities out West where the cost of living is affordable for a GS-8 or GS-9. DOI has to compete as a government entity for the very best graduate students. “BLM and Fish & Wildlife must often compete for people who love the outdoors — that’s a big draw. From a management point of view, I want to be very competitive and offer great standards of living, good schools, and a city where we can be competitive. “So, the reorganization was based on science, on the basis of realigning so we do environmental reviews together jointly, and it was in order to be more competitive for employees.”

One thing no one can say about Zinke’s time at DOI was that he was there as just a caretaker. As he told us at one point, “If you don’t like change, you probably won’t like Ryan Zinke.” One of the major drivers of his desire to affect change at the Interior and move it back to its science-based, multiple-use roots stemmed from his experience fighting overseas in the U.S. Navy. “My grandmother was a one-room schoolhouse teacher in Eastern Montana on an Indian reservation,” he told us when we asked what it was in his background that led to his driving personality. “This was at the age of 16. So, our family has always had strong personalities. With me, when I became a SEAL, I looked at why in the hell are we fighting overseas? I lost a lot of friends, and primarily we were in a battle over energy. We don’t need to be held hostage by foreign governments on our energy needs. “I’ve spent most of my adult life fighting overseas primarily to protect someone else’s energy supply. It’s immoral that we would send our troops overseas to fight for an energy source that we have here. I don’t want any kids to see what I’ve seen. I’ve seen a lot of battles and some horrific, horrific things that I don’t want my grandchildren or your grandchildren to ever have to see. “So, my experiences with the SEALs led me to very strong views on energy.” But it’s not just about oil and gas. “I’m an ‘all-of-the-above’ guy on energy. People like to say ‘Oh, Zinke’s just for oil and gas.’ But I also, as Secretary, had the largest offshore wind lease in this country’s history, something I supported. Off the east coast. I wish we had better battery technology, but until we do, natural gas is the best choice for producing electricity in this country.” Zinke is quite proud of what he and his team were able to achieve related to the environment at DOI. “We got a lot done in two years. But you know, the conservation side was as strong as the energy side, but people overlook that side of things. In Senator Orrin Hatch’s view, we did more for both energy and the environment than has been done by any administration during his 41 years in congress. “On the conservation side, the President’s first budget had the largest conservation investment in the history of this country for our national parks. That was in the budget, to rebuild our national parks, which everyone loves. But they’re aged; they need new infrastructure investments; they need to be caught up to date.

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“Our family has always had strong personalities.”

“The President’s budget had $18 billion in it (for conservation), and we funded it with income from energy production. We funded it without raising royalty rates — we said we’re going to produce more on federal land, but at the same time, those who use federal land should have an obligation to take care of it, to be good stewards, and provide the funding for the infrastructure. For the first time ever, we established a program to identify and conserve wildlife corridors. These are mostly out West, mostly in Wyoming, Idaho, Montana, New Mexico and Colorado. To begin to look at these wildlife corridors and protect them into perpetuity was huge. “We also got after the wildfires. I issued numerous secretarial orders on making sure that on federal lands we moved to remove dead and dying timber [and] do prescribed burns in the late season to restore the health of our forests. These catastrophic burns cost us more than $4 billion per year. The amount of damage, human loss in the case of Paradise, CA — a lot of that could be mitigated by better management policies.” Sec. Zinke becomes positively animated when discussing the wildfires and the surrounding issues of forest management that have become so politicized in modern times. We asked him to talk about media reports during the time of the camp fire that destroyed much of the city of Paradise in Nov. 2018, that he and California Gov. Jerry Brown were at odds with one another on what should be done. “Despite the headlines at the time, Governor Brown of California and I toured Paradise together, and we agreed on a lot more than we disagreed on. We both agreed that we need better management techniques,” he said. “Paradise is an example. The only defendable area in that whole community was where a private logging company had thinned the trees out. There, the forest was absolutely healthy, and it slowed the speed of the fire down, which allowed the safe evacuations of hundreds, if not thousands of people.” Zinke felt like much of the media reporting was driven by false information coming from leftist, anti-development groups. “These environmental radicals are very hateful; they’re angry; they’re loud, and they’ve said they would rather burn the entire forest down than harvest a single tree. They jump up and down about science, but they pick and choose what science they want to look at.” He offered a famous example to emphasize that point. “Take the spotted owl — numerous studies show that it was a predation issue, not a logging issue. The barred owl is a vicious competitor and is reducing the numbers of the spotted owl. But these radical environmentalists would rather watch the entire forest burn down with all the destruction of habitat because they are fundamentally against the idea of logging.” He paused before concluding with, “It’s their ideology.”

“The morality behind not having to go to war for someone else’s energy is powerful.” Many of those same anti-development groups that Sec. Zinke refers to as environmental radicals also coordinate with sympathetic media outlets in their efforts to oppose the development of energy mineral resources on federal lands. It was a battle Zinke found himself constantly fighting throughout his term in the job, but one he feels is worth fighting.

“I’m a huge advocate of greatest good, best science, best practices, longest term,” he told us. “The fossil fuel industry is now the target of these radical environmentalists who don’t see the value of America producing its own energy. What they ignore is that, environmentally, it is much better to produce energy in this country under reasonable regulations than to have it produced overseas with none. “I was a Navy SEAL who fought overseas for 23 years. I’ve been to Afghanistan; I’ve been to Africa; if you want to look at ways not to produce energy, I’ll invite you to take a tour of the Middle East. Or Africa. Or China.” This philosophy of producing more of our own energy at home as a way to avoid the need to become involved in even more future conflicts in the Middle East and elsewhere around the globe, to protect another country’s oil and gas was one of the major elements of Donald Trump’s presidential campaign in 2016. It was also a centerpiece of the Trump administration’s agenda for “American Energy Dominance,” a phrase Zinke actually originated. “You’ve seen the President exercise great constraint with Iran,” in his efforts to avoid becoming ensnared in another armed conflict. “Frankly, I would have advised him to take a stronger hand,” Zinke said. “But the President has made his view very clear about Afghanistan; he has made his view very clear about not being the world’s policeman and not bearing all the costs of this. And the Energy Dominance was my term, accepted by the President, lauded by the President, and what it really means is not being held hostage by foreign enemies for foreign energy.” But it means more than that, and Zinke points to natural gas as a prime example. “It also means environmentally moving forward in a smart way. Natural gas can be this enormous bridge fuel for the next 50 years, but we have to have pipelines. We have to be able to move it. “The morality behind not having to go to war for someone else’s energy is powerful. Ask a Gold Star Mom what she thinks. Yet, the radical environmentalists who have drunk the Kool-Aid are so against something that is environmentally responsible. “Their views have become so radical that now they’re targeting cow flatulence,” he says, laughing. “You look at that and you think, when did cow flatulence become an issue? I’ve been on a lot of cattle ranches, and also on the historical records you can count a lot of buffalo — there used to be something like 60 to 100 million buffalo out on the great plains. Today’s there’s probably 10 million cows. Do the math.” Strong point.

“Interior does a lot of things right.” Another reason to allow for mineral production on federal lands under a multiple-use philosophy is the tremendous income it generates not only to the federal budget, but also to the state that is home to the land itself. The state of New Mexico, after several years of struggling with a chronic budget deficit situation, announced in August that its collections for the fiscal year ended on June 30 amounted to almost $8 billion, creating a revenue surplus of about 25% over its budget of $6.5 billion. That sudden influx of new funds comes mainly from the increased oil and gas drilling taking place in the Permian Basin, which extends into the southeastern corner of New Mexico. In Aug. 2018, Zinke’s BLM held a record lease sale there that generated almost $1 billion in lease bonus payments alone from the industry. The good news for New Mexico is that the state shares equally with the federal government in those lease bonuses and in the subsequent royalties that will be paid on all future oil and gas production from beneath those lands.

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

“We had a billion-dollar lease sale in New Mexico last year, which was staggering,” Zinke said. “The previous administration claimed there was ‘no interest’ in such a sale. There was supposedly no interest in federal lands, no interest in fossil fuels. Well, I got a billion reasons out of that one lease sale why they were wrong,” he said with a laugh. “Under the right set of conditions, everyone’s interested.” Before that New Mexico lease sale, the conventional wisdom about shale oil and gas was that very little of it was beneath federal lands. Zinke noted that that perception has now changed. However, the former Secretary does see some significant headwinds facing the U.S. industry. One of those headwinds has to do with the flaring of natural gas, a topic we have written about extensively in SHALE Magazine. “One problem is the gas flaring,” Zinke notes. “Shale just happens to produce an enormous amount of gas. But we are flaring far too much. It’s unsustainable; it’s unacceptable, and it’s just wasteful. “The boy scout in me (Zinke earned his Eagle Scout certification while growing up in Bozeman, Montana) doesn’t like flaring. But having said that, we also have to make sure that we clear the runway on permit processes for these pipelines that are being held up by the radical environmentalists who want to keep it all in the ground.” The other significant headwind Zinke sees the industry facing today is access to capital. “A lot of these pension funds have abandoned their energy portfolios,” he said. “But it’s more than pension funds; it’s the energy sector itself has been under-performing. “If you’re looking for growth stocks, it’s really hard today to justify having an oil and gas stock in your portfolio as opposed to technology. Tech has exploded in the last 10 years, and it’s really tough for oil and gas

stocks to compete with that growth, especially when gas and oil prices are relatively low. “So, access to capital is a big thing, and I think what we are going to see is more consolidation. Because the capital required to drill, expand, permit is just so high. Just getting some of these projects permitted can cost hundreds of millions of dollars, and you haven’t even done anything yet. You haven’t even turned your first shovel of dirt. The amount of capital now necessary for some of these projects is astonishing. “So, some of the smaller cap companies will end up being acquired because I don’t think there is enough capital being injected into the industry.” Looking back on his two years as Secretary, Zinke takes a lot of pride in what he was able to accomplish where energy is concerned. “Interior does a lot of things right. During my two years, Interior was changed significantly. Our energy portfolio went from $8.3 billion to $12.4 billion. Who could’ve even thought 10 years ago that we would be the largest oil and gas producer in the world? “The change has been a global shift. Look at these recent tanker attacks in the Middle East. Ten years ago, the oil price would have probably gone up over $100/bbl. Drones are getting shot out of the sky; tankers are getting seized, and today it had almost no effect on the price of oil. “That just shows you the power of American innovation, and it shows you the significance of the energy revolution on American geopolitics.” He pauses before continuing. “But I ruffled feathers. There is no doubt that if you like the status quo, you did not like Ryan Zinke. I was very aggressive in turning the ship to lead to a better direction. “I’m convinced that direction was right.”

DON’T EV ER WASTE A CHAN CE TO

WANDER.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

“There is an expectation in America that the SEALs don’t fail.” Ryan Zinke’s career in the Navy and as a Commander at SEAL Team Six is an amazing story of bravery and leadership that has been covered many times. But in researching this piece, we came across one aspect of that career that has received little notice but says a lot about the complexity and versatility of the man. In 2006, Zinke was chosen to establish the Naval Special Warfare Advanced Training Command, and served as its dean through 2008. By the time Zinke left, the NSWATC had become an international graduate school employing 250 educators, with a curriculum that offered more than 43 college level courses to over 2,500 students. We asked Zinke to talk about the reasons

why the Training Command was created. “On special ops missions, the skills required to complete a mission often became so complex that we really needed a structured curriculum,” he said. “We needed college-level courses designed to prepare the warriors for what they were going to see. “Let me give you an example: When you’re in Baghdad, and you’re doing urban, buildingto-building, and you come upon a Germanmade federal, level-one safe, how do you open that? How do you open it without destroying the contents? “So, we had to design courses on how to defeat very complex systems of that magnitude. And of course, when you train guys to basically rob banks, then you have to make sure you track them; they have to go through special security clearances, etc. We also had to devise courses on communications and UAVs and all these new technologies that Special Forces individuals will have to know. We needed a graduate-level school. I think a lot of the success the SEALs and Special Forces enjoy today is in the advanced training they go through. “There is an expectation in America that the

SEALs don’t fail, so the standards for being a SEAL are the highest in the world.” Just one more proof point of the fact that, if you like the status quo: Ryan Zinke is definitely not your man.

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SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

INDUSTRY

The Port of Corpus Christi is a Beehive of Activity

visited the Port of Corpus Christi in late August for the first time this year, and I was honestly stunned by the level of activity taking place there. From the dredging of the main channel to construction activities taking place in and around Portland and Ingleside and from the development of a deepwater port facility at Harbor Island to the building of Harbor Bridge replacing one built more than half a century ago, the area is just a beehive of activity. The various construction and expansion projects are all designed with a single goal in mind: To ensure the Port of Corpus Christi (PortCC) is ready and able to handle the influx of Permian crude oil headed its way as a collection of new, high-capacity crude pipeline projects go operational in the coming months. In fact, two of those projects — the EPIC and Cactus II systems — began shipping their initial volumes during August. When I caught up with PortCC CEO Sean Strawbridge earlier in the month, he was not happy about reports indicating that the area’s various expansion and improvement efforts are somehow lagging, and that the myriad facilities and projects he oversees will be caught unable to handle the new, bigger volumes. “Nothing could be further from the truth,” he told me. “We are not ‘leaning on the rake,’ if that’s what people are thinking. We’ve got dredgers in the water; they’ve been working pretty much all of this year to deepen and widen the ship channel. From a deepening standpoint, we will have the deepest port channel in the entire U.S. gulf.” That highly-publicized project to deepen and expand the PortCC main channel is the centerpiece project in Strawbridge’s world right now. But it is far from the only crucial piece of the complex puzzle of key projects that are proceeding simultaneously in this busy part of the world. “We have existing dock projects that are in various stages of expansion right now, and we

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also have new docks being built,” Strawbridge pointed out. “We are building-out to have nominal (peak) capacity of in excess of 5 million barrels per day (bpd). That would be the capacity for crude exports alone. “There is also a tremendous amount of new storage being built. Cushing, Oklahoma (America’s largest crude oil storage facility today) right now is around 75 million barrels of capacity — it would not surprise me if we end up approaching the 60-65 million barrel range, which would make us, as I like to call it, the ‘Cushing of the Coast.’” All of this new capacity to receive, store and export bigger volumes of crude is muchneeded. In a webinar conducted in June, industry advisory firm Wood Mackenzie estimated that demand for export capacity at PortCC alone will climb as high as 2.5 million bpd by mid-2021, and will remain at or above that level for years to come. The firm forecasts that “at peak production, the Corpus Christi region will account for 56% of total U.S. crude shipments abroad.” As a point of comparison, the U.S. Census Bureau estimated that America set a new record by averaging 3.16 million bpd of crude exports during the month of June. That’s for the entire country. Strawbridge told me he is confident that PortCC will be able to work through the byzantine federal budget processes to secure the remaining funding needed to ensure the main channel expansion project does not experience any work stoppages. The project consists of four separate contracts that must be bid out and obtain their own budget earmarks, and PortCC itself is paying for what Strawbridge estimates will ultimately be about 34% of the total $400 billion+ project budget. That self-funding piece gives PortCC the flexibility to accelerate its own funds into the process to keep work proceeding in the event of any federal budget delays.

Expansion projects are also proceeding rapidly in various satellite locations in the surrounding area. At Ingleside, which lies across Corpus Christi Bay from the main PortCC facilities, Moda Midstream is rapidly expanding its already-existing facility where the Cactus II pipeline terminates. Residing on what once was Naval Station Ingleside, Moda Midstream is expanding the loading facility to make it capable of fully loading so-called VLCCs, the largest class of crude oil tankers. When fully-loaded, VLCCs are capable of carrying up to 2.1 million barrels of oil. That facility will also ultimately have about 12 million barrels of associated storage capacity. The expanded facility will be fully operational by the end of this year. Ingleside will also be home to the South Texas Gateway Terminal managed by Buckeye Partners LP, a joint venture between Marathon, Phillips 66 and Buckeye. That project, with an estimated daily export capacity of 800,000 bpd, will be partially operational by the end of this year and fully operational by mid-year 2020. The Gray Oak Pipeline system, scheduled to be in service by the end of 2019, will bring Permian Basin crude to this terminal for export. PortCC itself is partnering with the Carlyle

TRONGNGUYEN/STOCK.ADOBE.COM

By: David Blackmon

Group and Lone Star Ports in another VLCC-capable project at Harbor Island, which lies across the Intracoastal Waterway from Port Aransas. Plans are for the channel to be dredged to a depth of 75 feet up to Harbor Island, which will enable the facility there to fully load VLCCs without any offshore lightering operations. PortCC also announced in July that it will partner with Phillips 66 on its Bluewater Texas Terminal, a planned VLCC-capable offshore loading terminal to be located northeast of Corpus Christi about 21 miles out into the Gulf of Mexico. “I think we’re the only port authority in the state that’s partnering with one of these buoy operators,” Strawbridge told me. “We like Phillips 66

The scope and scale of it all is frankly breathtaking, and remember: All of this activity, and much more, is taking place in and around PortCC. It does not account for the growing number of additional expansion and new-build projects also proceeding at or near the Texas ports of Brownsville, Freeport, Port Arthur and Houston. Strawbridge explains his sense of urgency since coming to PortCC a few years ago as a response to market realities: “What has happened over the last few years is that we’ve had this growing recognition that the next bottleneck, if we don’t do something about it, could be the coastal infrastructure. So, as the pipelines have been getting permitted and installed, we want to

as an operator. They are experienced in running single-point mooring facilities — they’ve run one off of the east coast of the UK in a place called Hull, where they have a refinery, since 1971.” Once completed in mid-2022, assuming all goes to plan, the Bluewater Texas Terminal would have the capacity to export about 1.56 million bpd. But that is far from all, as Strawbridge told me: “Plains All American has a dock that is being commissioned. It’s a brand-new dock that will have 1.6 million barrels of storage capacity behind it. That dock hasn’t moved a barrel yet. “Right across from that, we’re about to break ground on a new dock for Mercuria, which already has an existing dock that also has not been used yet. That dock is ready to go — it’s for the Pin Oak pipeline which is a joint venture between Mercuria and Dauphine. So, they’re breaking ground on a second dock in addition to that one, and it’s already permitted and ready to proceed. “Nustar added some capacity — they just put a new 30-inch line across the Nueces Bay. That connects into the Cactus II line that will carry 300,000 bpd of new volume.”

make sure we don’t become the next bottleneck. “That’s why all these offshore buoy projects have been coming about, because there has been a lack of certainty about when these harbor channels can be dredged. But If you have a choice between an offshore buoy and an onshore terminal, you’re going to pick the onshore terminal every time if you can get the same draft. “It’s safer; it’s lower risk; it’s higher availability, better utilization, better efficiency, better productivity, better security, all of that.” The bottom line in the Corpus Christi area is obvious: As recently as early 2019, it was reasonable to be concerned about a potential looming export bottleneck developing as all the new Permian takeaway pipelines begin to come online. But today, thanks in large part to the efforts taking place in and around PortCC, Permian and Eagle Ford Shale oil producers can now feel certain their rising production volumes will continue to have access to international markets. So, if you have visited Corpus Christi in recent months, marveled at all the construction and expansion activity taking place there, and wondered what the hubbub was all about, now you know.

Thanks in large part to the efforts taking place in and around Port Corpus Christi, Permian and Eagle Ford Shale, oil producers can now feel certain their rising production volumes will continue to have access to international markets

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

INDUSTRY

Preserve Texas Heritage by Preserving Oil and Gas Jobs By: David Porter

80% urban. Texas has changed dramatically over the past few years and is in grave danger of losing its identity of being a distinct culture and community. More and more the I-35 corridor and Houston are coming to dominate the political, economic, and cultural life of the state. This is changing Texas almost to a point of being unrecognizable. If you don’t want Texas to become indistinguishable from suburban/urban masses in places such as California, Chicago, Atlanta, and New York City, then the state needs to rediscover its traditions. Yes, there are lots of good folks in Houston, San Antonio, Dallas and Fort Worth — Austin, I am not so sure about. The independence and self-reliance that is so much a part of the Texas mindset comes in large part not from the big cities, but from the land and small-town Texas. If we want to preserve the true cultural heritage of Texas, then we need to preserve the viability of rural, small towns. Many of the best and highest-paying jobs that float the economies of rural Texas come from oil and gas production, as well as related industries. During the past few decades, the economy of rural Texas has been at risk because of government regulations that hindered the production of hydrocarbons. That no longer seems to be a major problem, but remember, eternal vigilance is the price of freedom. In fact, all commodity producers seem

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

to have a tendency to overproduce; oil, and especially gas producers, are overproducing as the price action of those two commodities indicates. However, there is still a large threat to the Texas economy due to government regulations that will take away markets from oil and gas. That threat is government actions mandating a certain percentage of the vehicle market be reserved for electric or hydrogen vehicles, and mandating that a certain percentage of electricity be generated by renewable sources. Also, governments are starting to deny natural gas distribution systems and permissions to build pipelines in order to limit natural gas markets. That is not free-market economics; that is government hostility to hydrocarbons that will hurt the economy of Texas, as well as the entire nation, and indeed, the world. By harming the industry that is the backbone of Texas, the damage will not be limited to economic damage but will also include community and cultural damage. This fall, as you eat some BBQ or Tex-Mex, watch a little football and maybe even go dove hunting, take a little time out to reflect on the importance of the oil and gas industry in Texas, and how you can help keep the industry strong. That keeps the economy strong, and that provides the fuel for Texas to remain a unique place in our world.

Texas’ economic success is due in large part to the success of the oil and gas industry

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

PICHITSTOCKER/STOCK.ADOBE.COM

exas — the first two images that spring to my mind are cattle and oil wells. Thinking a little deeper, I see wide-open spaces, small country churches, good people, BBQ, Tex-Mex and even football. Yes, these are stereotypes of Texas, but usually, stereotypes don’t become stereotypes unless there is at least a small element of truth contained within. Ever since the Spindletop Field blew during 1901, oil and gas production has been synonymous with Texas in myth and culture as well as in economic reality. The cattleman and the oil man are the two iconic personalities that personify Texas and have made it what it has become today. Currently (2017 figures), 14% of Texas gross product comes directly from the oil and gas industry. Add the indirect contribution and 29% of Texas gross product comes from the oil and gas industry. Texas’ economic success is due in large part to the success of the oil and gas industry. The culture and legends that have made Texas what it is today come mainly from the rural areas and the small- and medium-sized towns that form the core backbone of this state. Since I moved to Texas in 1981, the population of Texas has increased by about 90%. It was just over 15 million then, compared to over 29 million now. The population of the state is now approximately

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

INDUSTRY

The Texas Miracle

exas has defied her critics since the first days of the Republic. Few expected the Texian rebels to route the Mexican army and defeat General Santa Anna at the Battle of San Jacinto, and few believed that the fledgling country would survive and ultimately join the Union. However, Texas proved its doubters wrong. Twenty years ago, Permian Basin oil and gas production slowed to a trickle, and few analysts believed that investment in the area would ever pay off. But investments in fracking technology, horizontal drilling advancement and innovations of the oilfield services and equipment sector have led the way for an energy renaissance. In 2018, oil and gas production allowed the United States, primarily through the Permian Basin, to surpass Russia and Saudi Arabia in becoming the world’s leading producer of oil and natural gas. This seismic shift reshaped the global economy, created thousands of jobs and allowed Americans to become less dependent on foreign energy sources. The power of the energy industry in Texas helped pull the country out of a recession in 2008. Energy prices buffered economic fallout in the state, and the Texas economy declined slower than the national average and bounced back faster. Permian production has grown steadily since 2010, and the state is by far the most important energy-producing area

in the U.S. Texas now produces so much crude oil that its daily production (more than 3 million barrels) represents more than 37% of the nation’s crude oil output. If Texas was once again its own country, it would rank as the world’s sixth-largest oil producer. Simultaneously, Texas is creating jobs — specifically 1.44 million new jobs in the state since 2007. That is more new jobs than people living in San Diego, a Texas miracle that is truly amazing. By becoming a net exporter of oil, the U.S. has fortified its relationships with allies and reduced dependence on Moscow and the Middle East. As we quadrupled our LNG exports and dominated both crude and refined product exports, America secured its foothold as a diverse energy producer and international industry leader. Pipelines from all over the country bring LNG and crude to the Texas coast for refinement and processing into other products. The state’s refineries processed more than 5.7 million barrels of crude oil per day, as of January 2018, and accounted for 31% of the nation’s refining capacity. This production then flows down to the Texas Gulf Coast ports, which account for 80% of the nation’s crude oil exports. Capacities here are growing with expansion projects and updates to infrastructure in order to accommodate the evergrowing volume. In order to continue providing the nation with the energy needed to fuel economic

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

growth, Texas is focused on energy transition and renewables. Texas will lead our country in an energy transition, as it dominates wind energy production and generates more wind power than all but five countries in the world. Innovations in wind technology have allowed production to increase and provides an increasingly-greater share of the state’s electricity. The diversification of Texas’ energy production portfolio incorporates the need for long-term sustainability while satisfying the growing need for energy. It’s worth noting that all of this has been accomplished while maintaining clean air and water along the Texas Gulf Coast. In fact, the ozone attainment in the Houston area is four times better now than in 1997 to 1999, and updated regulations and restructuring within the Department of the Interior have provided improved safety offshore. The world, and the rest of the country, should look to the Texas Miracle as a model for how responsible energy production can fuel economic growth and bring much-needed power to the world.

The world, and the rest of the country, should look to the Texas Miracle as a model for how responsible energy production can fuel economic growth and bring much-needed power to the world For more information about PESA, please visit pesa.org.

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INDUSTRY

Texas is Unmistakably Oil and Gas Country By: Bill Keffer

more than an impossible wish. The whiz kids of that day simply would have shaken their heads, smiled, and told their kids to keep playing with their vintage toy pump jack. But then the shale revolution made a surprise entrance, and technology and human ingenuity figured out how to access previously inaccessible and uneconomic formations. Now, we have so much crude oil that we’ve become the top producer, and we have so much natural gas that we can’t build new pipelines or LNG-export facilities fast enough to sell it all. Not only is the U.S. number one in the world — but within the U.S., Texas is by

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

far the number one producer of both crude oil and natural gas. Texas’ daily production of crude oil represents approximately 40% of the total U.S. daily production. Moreover, the Permian Basin is the number one producing area in the state and makes up the largest part of that percentage. In fact, the Permian Basin has just surpassed the famous Ghawar oil field in Saudi Arabia as the number one crude-oil producer in the world. Not only that, but the Permian Basin is number one even after having been such a prolific producer since its discovery well in 1923. Those are impressive statistics. Not only does the Permian

When it comes to oil and gas, there is no single state that is more important than Texas

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

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n 1956, Hollywood released the classic film “Giant.” It was an adaptation of a novel by Edna Ferber, telling the story of “big oil” in Texas. It was loosely based on Ferber’s impressions of the iconic King Ranch (a ranch in Texas that is larger than the entire state of Rhode Island) and the flamboyant Texas wildcatter Glenn McCarthy, who built the iconic Shamrock Hotel in Houston. It starred the high-profile, boxoffice stars of that day — Rock Hudson, Elizabeth Taylor and James Dean. It was an appropriately “big” production, being shot in Marfa in the Big Bend area of West Texas. “Giant” is a fitting title for Texas in many ways, but most especially when it comes to oil. America, in general, is blessed with all kinds of natural resources. But when it comes to oil and gas, there is no single state that is more important than Texas. The incredible part of the story, however, is that Texas abruptly became the most important state way back in 1901, when the Spindletop well in East Texas was first drilled — and yet, 118 years later, Texas is still the most important state. The U.S. is now the number one producer in the world of both crude oil and natural gas. Just a few years ago, such a prediction would have been borderline crazy and certainly dismissed by all of the smart people in the room as nothing

Basin continue to dominate in oil and gas production, but it also is becoming home to more and more wind farms and solar farms. Texas already leads the U.S. in installed capacity of wind energy with 24.2 gigawatts and more than 13,000 wind turbines. Oklahoma and Iowa are next in line, but in distant second and third places with a little over 8 gigawatts. With all of its chest-thumping and virtue-signaling about climate change and renewables, California only has 6 gigawatts — how about a little less talking and a little more action? When it comes to solar energy, Texas has about 3,000 megawatts in installed capacity, with almost one-third of that added in 2018. Another 8,000 megawatts is planned over the next five years. Interestingly, McCamey in Upton County was founded as an oil boom town in 1925 and then briefly became the “wind capital of Texas” in the 1990s with its wind farm on top of nearby King Mountain. Now, solar farms are being built all over Upton County, including Vistra Energy subsidiary Luminant claiming the largest solar farm in Texas, covering 1,900 acres with 718,000 solar panels — that’s a lot of window washing to keep the dust off. In short, the Permian Basin has become a triple threat in energy — oil and gas, wind, and solar. Wind and solar have become, and will likely continue to be, important contributors of supplemental energy to the electricity grid in Texas. But oil and gas are still the primary energy sources, and there simply is no alternative energy source that is as abundant, cheap and powerful. Not only is the Permian Basin the world’s top producing oilfield, but the Eagle Ford in South Texas is the second-highest producer. Texas produced 1.58 billion barrels of oil in 2018, which blew past the previous record set in 1973 with 300 million barrels. Together, the Permian Basin and the Eagle Ford are producing almost onehalf of U.S. daily oil production. Of the 254 counties in Texas, 216 had some level of oil or gas production in 2018. Texas is unmistakably oil and gas country. It has been a hot summer, and the Texas population continues to grow rapidly, so there’s increasing demand on the electricity grid for dependable, continuous and affordable energy. ERCOT reminded us that energy doesn’t just happen — it requires long-term planning and an acknowledgement of reality, rather than placing faith in green new deals. Natural gas is a dependable, cheap baseload energy source for power plants — wind and solar cannot play a similar role. If you want to see what it might look like to move too far away from natural gas and become too dogmatically dependent on renewables, see New York. The state has banned hydraulic fracturing, rendering their share of the natural gas-rich Marcellus shale off limits and uneconomic. Area environmental protesters, with the blessing of New York’s state government, have effectively blocked construction of new natural gas pipelines. Not only does New York not want to produce its own gas, but it wants to keep gas coming from elsewhere from entering the state. The result: In 2018, New York had to buy natural gas from Russia to meet demand. New York’s major utility, Consolidated Edison, has had to impose a moratorium on accepting any new gas customers because they don’t have access to enough supply. That announcement has already resulted in planned real estate developments being postponed or canceled. Is anyone paying attention? Over its history, the U.S. has been an incredible success story on energy, and Texas is the centerpiece of that story; and the Permian Basin is the crown jewel in that centerpiece. For most rational thinkers, having to buy gas from Russia in order to save the world from climate change is not utopian — it’s “udopian.”

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POLICY

Bernie Sanders’ Shameful Attack on Oil and Gas in the Wake of Hurricane Dorian By: David Blackmon

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est hurricane in American history slammed into Galveston Island with winds in excess of 140 mph — which would make it a Category 4 hurricane — and a storm surge that inundated the entire island. Those interested in the story of the Galveston Storm of 1900 should read a wonderful book by author Erik Larson titled “Isaac’s Storm.” Larson reports that captains and sailors from ships coming into Galveston’s port had been warning islanders for days in advance of a large storm lurking in the Gulf, and a prominent local weatherman, Isaac Cline, also tried to warn locals that a big storm was coming. But government officials, using the primitive projection tools of the time, assured residents that a major hit on the island was virtually impossible due to the shallow waters of the Gulf of Mexico and other factors, and predicted that any storm in the Gulf would most likely make landfall in Florida. Thus, few people evacuated Galveston

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n Tuesday, Sept. 3, Vermont Senator Bernie Sanders, a leading contender for the 2020 Democratic Party’s presidential nomination, issued a tweet containing the following text: “The fossil fuel industry is now the equivalent of the tobacco industry. It creates death and destruction, then spends billions denying its responsibility. Let us be clear: Hurricane Dorian has everything to do with climate change, which is the existential crisis of our time.” The tweet, of course, was designed to take political advantage of the devastation of Grand Bahama Island by Hurricane Dorian airing on television screens all across the United States. As a political tactic in a Democratic Party presidential primary, it is clever. As a history lesson, it is far less so. Grand Bahama, on the morning of Sept. 4, looked a lot like Galveston Island in Texas did on Sept. 9, 1900. On Sept. 8 of that year, the deadli-

Grand Bahama, on the morning of Sept. 4, looked a lot like Galveston Island in Texas did on Sept. 9, 1900

in advance of the storm, and without air travel or gasoline-powered automobiles, evacuation for most residents would have been difficult if not impossible in any event. Thus, it was that more than 8,000 Galvestonians died in the resultant inundation. Cline himself lived in a two-story home near the downtown area, and was only able to survive the rising floodwaters by climbing onto the roof of his house along with his family. The destruction of all but the sturdiest of buildings on the island, like the famous Moody Mansion and many of the downtown business establishments, was utter and complete. For many months afterward, the waste and debris from those buildings that had been carried out to sea was washed back up onto the island’s shores, along with the rotting carcasses of human beings, farm animals and pets who had perished in the storm. The cleanup operations were grim and seemingly unending; the stench was horrible and reportedly lingered for years afterward. The story we saw coming out of Grand Bahama on the morning of Sept. 4 was similarly tragic. The island was largely inundated by the storm surge, and thousands of houses and non-sturdy buildings had been destroyed. The debris that was carried out to sea will wash back up onto shore in the months to come. But that debris and refuse will not be accompanied by the rotting corpses of thousands of dead human beings. Many of the island’s pets and other animals were also taken to safety and even evacuated off the island, thanks to volunteer animal rescue operations. That happy result is largely due to modern means of predicting days in advance the path these storms will take. But it is also due to the existence of modern means of travel that allowed so many of the residents there to evacuate the island. Virtually all of those means of travel, whether by boat, by plane or by automobile, as in the case of mainland U.S. residents in several states who are evacuating their own homes in advance of the storm’s path, are powered by gasoline or diesel fuel: almost 100% of them. Even the growing number of electric vehicles on the roads now obtain their charge from power stations whose electricity is generated by a U.S. energy grid that is more than 80% powered by fossil fuels, including coal. These modern, fossil-fueled means of transportation are why — when the ultimate death toll from this very strong hurricane is totaled up — the number most likely will consist of two digits, instead of four or five digits. As of two weeks after the devastating storm, the Grand Bahama death toll is at eight. So, when you read and hear messages from politicians like Sen. Sanders, demonizing the tens of thousands of fossil fuel industry workers for somehow creating major hurricane events similar to those which have occurred for millions of years in the Atlantic Basin, remember that the deadliest hurricane recorded in American history occurred in 1900, when Americans were traveling using horses and buggies, almost a full century before the term “climate change” came into vogue. Sanders’ message dehumanizing everyone who works in America’s oil and gas industry is shameful, and has no place in civil discourse. Unfortunately, folks in the business have had to get used to being the targets of this sort of slanderous attack. Here’s a thought: Next time you run into someone who works in America’s oil and gas industry, thank them for producing the fuels that help save so many human lives in advance of these terrible storms. I guarantee you they will appreciate the gesture.

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POLICY

Broadband, Markets and the Great Divergence By: Thomas Tunstall, Ph.D.

ffordable broadband continues to bubble up as an issue, too long unresolved, for underserved rural areas in Texas and other states. Because sparsely populated regions are not attractive for private-sector carriers, limited or expensive service constitutes the only option. Though satellite broadband internet is certainly available anywhere in the state, prohibitive expense — particularly in terms of equipment and installation costs — essentially rules out that alternative for most households. Part of this public policy problem stems from the long-held belief that access to the internet was considered a luxury. We now understand the fallacy of such a notion. Internet access is a necessity for participation in the 21st century economy. Similarly, while the prospect of a deficiency in broadband internet access is nearly inconceivable to urban and suburban dwellers, for many rural communities it is an unpleasant fact. As broadband applications continue to grow, they encompass more and more of daily life. Examples include the operation of critical infrastructure, emergency services, workforce development or distance learning, access to finance, small business development, social interaction, e-commerce, telecommuting and telemedicine. In addition, local government services often improve by becoming more transparent, costeffective and responsive. At present, approximately 25% of rural Texans lack access to affordable broadband connections, compared with about two percent of urban residents. A somewhat chilling fact is, according to research, communities that have less than two types of broadband attract fewer newcomers than those that do not. The implications of life without broadband are real. Further, lack of internet access affects the poor most significantly. According to the Federal Reserve Bank of Dallas, one-third of households with incomes below $50,000 and that have school-age children do not have home internet. Looking at the situation another way, both income and unemployment statistics improve as the de-

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gree of rural broadband penetration increases. Precedents between the internet today and electrification in the 1930s can prove instructive. Urban communities saw the introduction of electricity in the 1880s, but as late as 1932, only about ten percent of small-town America had electricity. Then as now, with relatively few people per square mile, a viable business case for investors remained elusive. The absence of electric power created a huge gap in standards of living compared to urban counterparts until that finally began to change with the Rural Electrification Administration in 1935. Similarly, with telephones, the Universal Service Fund established in 1934 ensured that homes in the country could obtain affordable landlines. As was the case with rural electrification and basic telephone service, competition may not offer the best remedy. Rather, cooperative approaches spurred by government grant and loan programs tend to prove a far more effective means of serving sparsely populated areas where market failure occurs. It is a myth that markets, competition and privatization always achieve optimal results. In general, the attendant polarization implicit in the Great Divergence threatens the very fabric of society. Economist Thomas Piketty’s research demonstrates that returns to capital have far outpaced returns to labor since the 1970s. This is one reason political pressure mounts to increase the minimum wage, and why workingclass wages stay largely stagnant even as the stock market dashes to record highs. The growing chasm between the wealthy and poor is greater than at any time in the country’s history — including the Gilded Age. The gap between urban and rural grows as well. The ability of equitably priced broadband for remote locales to facilitate important services that cities take for granted should become an immediate priority for both the Texas Legislature and policymakers in Washington. If, in fact, the current presidential administration gets serious about rebuilding the nation’s infrastructure, rural broadband would be a great place to start.

Approximately 25% of rural Texans lack access to affordable broadband connections, compared with about two percent of urban residents

About the author: Thomas Tunstall, Ph.D. is the senior research director at the Institute for Economic Development at the University of Texas at San Antonio. He is the principal investigator for numerous economic and community development studies and has published extensively. Dr. Tunstall recently completed a novel entitled “The Entropy Model”.

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

POLICY

In the Bakken, a Lawsuit on “Pore Space” Draws Attention By: Bette Grande

been protected and entitled to reasonable compensation for the use of their property in oil and gas development since a law was passed in 1979 for that purpose. Even before oil was discovered in North Dakota in the early 1950s, the severance of mineral rights from the surface rights resulted in split estates to the point that many of the current surface owners do not own the mineral rights under their

Background But first, some history — you have probably heard that whiskey is for drinking, water is for fighting. Well, pore space is water’s little brother, and he’s growing up. It is settled law in North Dakota, and a majority of states, that subsurface pore space is owned by the surface estate owner. And, surface owners in North Dakota have

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

property. This has caused tension and worsened from time to time as mineral development has ramped up. Further, the mineral estate is dominant to the surface, meaning that it carries certain rights to the use of the surface as reasonably required to access the underground minerals. The importance of pore space has been known for some time, and a statute passed by the North Dakota

it is unlikely that the uncertainties and questions over pore space can be addressed through litigation

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

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he Bakken formation in North Dakota has been a laboratory of sorts as drilling techniques, materials and equipment have been developed and refined to efficiently develop the oil and gas resource. The next “discovery” in the Bakken may be related to property rights and something called “pore space,” subsurface voids or cavities. Specifically, how can pore space be used, and is the owner of the pore space entitled to compensation? Northwest Landowners Association has filed a civil lawsuit against the state of North Dakota, the governor and attorney general, challenging legislation that was passed during the 2019 legislative session and signed by the governor. The Complaint alleges the statute is an unlawful taking of property, and the issues raised both by the statute and the lawsuit will have far-reaching implications.

Legislature in 2009 reiterated that title to pore space is vested in the owner of the surface estate. And, perhaps sensing where this was going, the statute banned the ability to sever the pore space estate from the surface. Senate Bill 2344 And we are not just talking about saltwater disposal. The legislation being challenged, Senate Bill 2344, is intended to encourage the use of CO2 for enhanced oil recovery (EOR) efforts. The law provides that those using CO2 for EOR are authorized to use subsurface geologic formations (pore space), and precludes the owners of the pore space from limiting those efforts and from compensation. The legislation was introduced in an attempt to resolve uncertainty over pore space from a 2017 state Supreme Court decision. In that case, the Court interpreted the statute that provides surface owners reasonable compensation for damage, disruption and loss of use of their property, and finding that a surface owner may be entitled to compensation from a mineral developer’s use of the subsurface pore space for the disposal of saltwater. The ruling raises uncertainty for industry and property owners alike. The Opinion raises questions of how to prove whether migration has occurred and the evidence of the scope and extent of that migration to support an adjacent surface owner’s claim for compensation. The probability of lawsuits stemming from the 2017 decision is high. Senate Bill 2344 was an attempt to remove that uncertainty. The Bill passed both chambers of the North Dakota Legislature and was signed by the governor with an Aug. 1, 2019 effective date. The lawsuit challenging this statute was filed July 29, 2019. The Complaint filed by the Northwest Landowners Association seeks a ruling that Senate Bill 2344 is unconstitutional and asks for an injunction from enforcing the statute. The Plaintiff’s primary argument, based on the Complaint, is that the legislation amounts to an unconstitutional taking of certain property rights from surface owners. Further, it violates the North Dakota Constitution by taking property for the use of private individuals or entities. Pore space has long been used for the disposal of produced water, but the issues are evolving and expanding in the era of horizontal drilling. Long gone are the quaint 160-acre spacing units. There are questions over the limits the dominant mineral estate has to the use of the surface estate, and also over what is reasonable compensation for the use of surface property, and to whom is that compensation due? There are issues related to the possible migration of produced water injected into pore spaces, such as how is it tracked? Can it be tracked reasonably? The case will be closely followed in North Dakota and other oil and gas producing states, but it is unlikely that the uncertainties and questions over pore space can be addressed through litigation. It is clear from the discussions and negotiations during the past legislative session that all parties understand that the issues related to pore space must be resolved. Now comes the hard part. Stakeholders, regulators and policymakers will need to identify a solution that respects property rights and also acknowledges the limitations and challenges of migration and pore space utilization thousands of feet underground.

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POLICY

Pipeline Opposition Takes a Loss Against Trump By: Tom Shepstone

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

withdraw and resubmit applications as a delaying tactic. Although it didn’t involve gas, it established two things now being addressed by Trump as well. First, it made clear a year is a year and not something else. Blackmail schemes forcing applicants to withdraw and resubmit the same request over more than a year don’t cut it. FERC can decide “time’s up” and declare such states have waived their review rights. Moreover, the court said that “while a full year is the absolute maximum, it does not preclude a finding of waiver prior to the passage of a full year.” That’s huge. It demands reasonableness. FERC quickly picked up the court’s direction and has stopped enabling state delays, which is critical in itself, giving new hope to developers of projects such as the Constitution, which was forced into years of negotiation with New York only to be denied in the end. The major impact of Hoopa, though, was that it offered the Trump administration a rationale to issue an executive order telling federal agencies to develop new guidance on water quality certification with a view toward ending the state abuse. Astoundingly, the previous EPA manual encouraged states to use withdraw-resubmission processes as alternatives to denial. That didn’t work out so well. So, now the Trump folks are busy de-

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t’s no secret: activists, motivated by hard-core anti-fossil fuels ideology, have manipulated the law to slow down pipeline development. They’ve gotten to the governors of some states and pushed them to use certain powers granted to the latter under Section 401 of the Clean Water Act as a weapon against natural gas pipelines. The water quality certification requirement contained in Section 401 was intended to give the states a role in ensuring pipeline development meets state standards while the Federal Energy Regulatory Commission (FERC) managed the process. It’s being abused badly, but help is on the way. Pipeline opposition is about to lose its most powerful weapon. This is because the Trump administration, following up on signals from the courts, has moved rapidly to end the abuse of Section 401. That abuse has included the blackmailing of applicants desiring water quality certifications and applying to the states for them. The law has always said states have a year to act. They’ve extended that to several years by claiming pipeline companies haven’t supplied enough information, forcing them to refile applications to have any hope of securing the certifications. Some states have also taken to inserting issues other than water quality matters into their reviews, including air quality and greenhouse gas emissions, which have zero to do with the Clean Water Act. They’ve attempted to turn Section 401 into a state pipeline veto process with no authority or standards. Anti-gas states have dwelled on penny-ante issues that stretch water quality certification far beyond its original intent when written several decades ago. They’ve turned the process into a political one, delaying decisions until the last moment. The intent has been to allow pipeline opposition as much organizing opportunity as possible and to create public demand for denials. The examples of this abuse abound, especially in New York and New England, where so much natural gas is demanded and pipeline infrastructure is so inadequate. No less than four major pipeline projects in the Empire State have been denied water quality certification, the most recent being the Northern Access Pipeline, for the second time. One of these pipelines, a Millennium Pipeline extension, which had FERC approval, got built under court order. This was despite state objection because the company was aggressive in challenging the state. It didn’t play along, which had been the failing strategy de jour for pipeline developers not accustomed to the ways of a state where Tammany Hall reigned. The Northern Access Pipeline, for similar reasons, is likely to get built as well. The future of the other two has also brightened a great deal due to court actions and the Trump administration’s plan to build on them. The tide began turning with a federal court decision. The case, Hoopa Valley Tribe v. FERC, was only decided on January 25 and also involved a state effectively forcing an applicant for water quality certification to

veloping much more rational advice. The EPA has just come out with new guidance in a draft document. It does many commonsense things, including a reinforcement of Hoopa principles; that is to say, a year means the time needed, which can be no more than 12 months. The draft guidance also defines application receipt for the first time, much needed to avoid game-playing by states looking for loopholes to lengthen review periods. It tightens other procedures to ensure there are no unreasonable delays. It eliminates the consideration of issues extraneous to water quality certification; there will be no more inhaling of greenhouse gases. The EPA proposes to treat water quality certification as a matter of addressing discharges directly associated with a pipeline rather than allowing states to cast votes on the projects themselves. It specifically provides that broader, non-water quality impacts are to be reviewed by FERC under the National Environmental Policy Act and other federal law. All of this is good, but will it work? Yes, if the letter and spirit of the law, combined with common sense, are to mean anything. The states don’t like it, of course, and there will be legal challenges, but the odds are with the Trump people, given the Hoopa decision and the fact the EPA is simply following the court’s direction and effectively implementing it. Recalcitrant states will be issuing more denials and doing it more quickly, but that’s not so bad. It simply moves things to a less political venue and does that more quickly as well. The plain meaning of the Clean Water Act is clear to courts. Hoopa demonstrated that. Therefore, there is every reason to hope it will prevail in those courts. Naturally, there are no guarantees. Courts are fickle and not altogether free of political pressure themselves. Yet, they are not as likely as our worst governors to pander to pipeline opposition groups either. There is, at least, some reasonable expectations the law will matter. That should preserve most of what Trump’s EPA has proposed and deny pipeline opposition the weapon it has been using to thwart critical infrastructure projects in those areas of the country needing the shale gas we are so darned good at producing but often can’t get to market. It’s long past time we ended the abuse, and it looks like a very bright light at the end of the pipe.

They’ve attempted to turn Section 401 into a state pipeline veto process with no authority or standards

About the author: Tom Shepstone is the owner of Shepstone Management Company Inc., a planning and research consulting firm located in northeastern Pennsylvania. He has advised many counties in both New York state and Pennsylvania, as well as other states, on economic development strategies, especially as they relate to rural and agricultural areas. He is also the publisher of NaturalGasNOW.org, a blog focused on the same objective.

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SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

BUSINESS

Workforce Challenges Face the Oil and Natural Gas Industry By: Ron Hudik, Vice President, Global Solutions – Energy Vertical , KellyOCG

It’s a daunting time for talent management in O&G, but there is opportunity amidst the chaos

tion and forcing leaders to reimagine the role of human workers. It’s an uneasy balance. Onshore oil fields are increasingly digitized; AI is already transforming geologic assessments and well inspections; and 40% of field operations jobs could be eliminated by technology. Yet at the same time, the talent shortage in O&G — highlighted by massive shortfalls in the Permian Basin — has never been more dire. Nearly half of respondents in the latest Global Energy Talent Index are worried about an impending talent crisis, and 40% say the O&G skills crisis is already here. As technology transforms the nature of jobs, it also requires constant reskilling of the human workforce that must learn to work effectively with techenabled processes and tools. That workforce, in turn, is

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

increasingly pursuing an independent workstyle that upends traditional recruiting and retention practices. More than 30% of the world’s labor force works independently rather than in full-time employment, and 75% actively choose the independent workstyle. Even “traditional” employees are transforming their approach to work, changing jobs at a record-setting pace, “ghosting” employers across all skill levels and industries, and demanding more flexibility in their careers because they know they have the upper hand in the new supply/demand equation. It is within this challenging, churning labor market that companies involved in shale must compete for talent. Moreover, their challenges are compounded by a unique set of barriers — environmental concerns often top the list.

About the author: Ron Hudik has been providing strategic guidance and recommendations around custom designed, client specific workforce solutions to companies in all sectors of the Energy industry for more than two decades. He specializes in the design and implementation of solutions related to Managed Service Provider (MSP) programs, Recruitment Process Outsourcing (RPO) solutions, Contractor Safety Management programs, Workforce Diversity programs, Talent Supply Chain Management (TSCM) design, Business Process Services outsourcing (BPS), Project Services (PS), Statement of Work (SOW) management and Workforce Analytics. He holds a B.S. in Industrial Engineering and an MBA from the University of Toledo. Mr. Hudik has also earned his Lifetime C.P.M. and CPSM designations from the Institute for Supply Management (ISM).

KOVALENKO I/STOCK.ADOBE.COM

he oil and gas industry’s talent pipeline is in dire need of repair. Skill shortages are damaging productivity, gaps are widening in every sector of the industry and ad-hoc attempts to source qualified workers are akin to wildcat drilling, rarely yielding the results businesses need to execute their plans. O&G companies — particularly those involved in shale, which faces its own set of recruiting obstacles — must shift to a more intentional, innovative approach to talent or risk the well running dry. The talent dilemma in O&G is symptomatic of broader demographic and digital disruptions that are reshaping the workforce — and the nature of work itself — across all industries. Global employers are facing the most acute recruiting challenge since 2006. With 45% of companies struggling to fill current openings, anxious executives now rank the talent shortage as the number one emerging risk for their organizations. Supply/demand projections are equally grim: By 2030, the world will face a skills gap of 85 million people. The result is fierce competition for talent across all levels and all industries. Blue-collar wages are rising faster than white-collar pay across the U.S., and O&G faces a “great crew change” that will leave too few workers to fill retirees’ shoes. As demographics drive underlying shortages, technology continues to further disrupt, opening the door for automa-

In a recent survey, more than 70% of U.S. respondents said they were more likely to choose to work at a company with a strong environmental agenda — a trend that doesn’t bode well, given shale’s association with climate change and environmental damage. Younger workers, in particular, are prioritizing the planet over their paychecks, with three-quarters of millennials saying they would accept a smaller salary to work for a company that is environmentally responsible, and 40% saying they have chosen one job over another because of the company’s sustainability record. The study echoes similar research in the UK, where the number of graduates going into O&G exploration has dropped 60% in the last five years due to environmental and ethical concerns. For shale, the work environment itself poses another set of recruiting challenges. Shale basins are in remote rural locations, and workers must be willing to live in mobile housing away from family for weeks at a time, juggling ever-changing and non-standard shifts and schedules. Lucrative pay is no panacea. By relying on high wages to attract talent, companies create pools of moneymotivated workers willing to switch jobs frequently in pursuit of higher pay, making retention an ongoing challenge. Skilled workers present a different story: They favor career progression over salary hikes, and 92% of them are willing to relocate in search of better long-term opportunities. Hiring managers find themselves competing for professional talent against industries with reputations for high-tech innovation, dynamic career opportunities, and flexible work arrangements, all of which are perceived as lacking within O&G. It’s a daunting time for talent management in O&G, but there is opportunity amidst the chaos. A handful of progressive industry leaders are rethinking their approach and finding innovative ways to acquire and retain the talent they need. While companies have long relied on a mix of full-time workers, technology, and outside partners to execute their business plans, these leaders are pursuing a more holistic talent approach that pushes outsourcing to new limits. The right outsourcing partner can help determine the optimal mix of talent (i.e., full-time, contingent, etc.) and technology — an area of tremendous opportunity in O&G, where automation requires redefining the work that humans do and unlocking new possibilities for how that work is done. In addition to expanding access to qualified talent, forwardthinking providers like KellyOCG offer collaborative service delivery models that range from automation and digital transformation to global business services and shared services to transform each stage of the talent life cycle. Attracting and retaining talent — in an environment where talent clearly has the upper hand — also requires looking beyond typical demographics and shaping an employer brand that speaks to workers’ underlying motivations. Progressive companies are creating talent agendas that incorporate best practices traditionally reserved for customers. For example, KellyOCG’s talent segmentation approach defines distinct talent “tribes,” each with its own set of attitudes and motivations that inform more effective recruiting and retention strategies for various roles. As business needs change, talent segmentation can also help leaders better understand whom they want to keep, how best to upskill or reskill workers, and how to best engage (or re-engage) talent in the future. Supply and demand dynamics have always driven the O&G industry. When it comes to creating a sustainable workforce, the companies that understand those dynamics and embrace innovative ways to tilt the talent equation in their favor will gain a competitive edge for years to come.

Delivering insight into the development of the U.S. oil and natural gas industry and the businesses affected

SHALE SHALE SHALE MAGAZINE

MAY/JUNE 2018

THE NORTH AMERICAN FREE TRADE AGREEMENT – GOOD FOR AMERICAN ENERGY

US TRAVEL DESTINATIONS FOR EVERY PERSON DESK & DERRICK CLUB OF MIDLAND HOSTS 67TH ANNUAL INDUSTRY APPRECIATION DINNER

MAGAZINE

JAN/FEB 2019

UT AUSTIN STUDY

THE OILFIELD HOUSING DILEMMA AND AN IDEAL SOLUTION

SUGGESTS NEW SHALE GAS DRILLING METHODS BOOST PRODUCTION POTENTIAL RAPIDLY ADVANCING TECHNOLOGIES ARE TRANSFORMING THE OIL INDUSTRY

5 ENERGY ISSUES TO WATCH DURING THE 86TH TEXAS LEGISLATIVE SESSION

CONOCOPHILLIPS’ EAGLE FORD RELAY FOR LIFE COMMITTEE HOSTS 4TH ANNUAL REDFISH ROUND-UP

AND SUN COAST RESOURCES A BUSINESS WORLD EXAMPLE OF THE BUTTERFLY EFFECT

COMBILIFT: INNOVATION IN THE FORKLIFT INDUSTRY

WOMEN’S EDITION

WOMEN IN LEADERSHIP

MAGAZINE

NOV/DEC 2018

FAMILY MATTERS: EXAMINING EYE HEALTH AT EVERY AGE

PERMIAN OIL & GAS PRODUCTION:

OVERCOMING BARRIERS TO DIGITAL

WHAT TO MAKE OF WTI MIDLAND BASIS?

HOW THE OIL & GAS INDUSTRY IS SAVING AMERICA’S NATIONAL PARKS

THE BAKKEN HAS A GAS PROBLEM

SARA ORTWEIN: APACHE AND THE ALPINE HIGH:

ATTRACTING MORE WOMEN AS THE INDUSTRY POWERS PAST IMPOSSIBLE

CHANGING THE WAY THE OIL FIELD WORKS

XTO ENERGY INC. WRINGING THE MOST OUT OF LIFE’S EVERY HOUR

SHALE SHALE JULY/AUGUST 2018

THE NOVEMBER ELECTIONS IN TEXAS PROMISE SOME FIREWORKS STEER AND TXOGA HOST SAN ANTONIO ENERGY SUMMIT

MAGAZINE

PERMIAN PIPELINE SET TO BE FUTURE BOTTLENECK FOR PRODUCTION GROWTH TAX REFORM: MAKING THE R&D TAX CREDIT RELEVANT AGAIN FOR NATURAL RESOURCES

TOMMY NUSZ

AND OASIS PETROLEUM: DOING WHAT’S IN THE DNA

A NEW GULF COAST?

MAGAZINE

JANUARY/FEBRUARY 2018

LIFESTYLE GUIDE: RESTAURANTS AND FOOD

OIL AND GAS OUTLOOK IN 2018

LEADING GROWTH AT THE PORT OF CORPUS CHRISTI

SOCIAL: STEER EAGLE FORD EXCELLENCE AWARDS

SEAN STRAWBRIDGE

NEW OPPORTUNITIES IN THE NEW YEAR

LIFESTYLE: BARS AND COCKTAILS STEADY DEVELOPMENT SPURS APPALACHIA REBRANDING

APPALACHIAN BASIN SEES GROWTH IN NATURAL GAS PRODUCTION

THE FDA APPROVES THE FIRST DIGITAL PILL

CYBERSECURITY IS IMPORTANT FOR ENERGY INDUSTRY INFRASTRUCTURE

FOR ADVERTISING INFORMATION PLEASE CONTACT:

KYM BOLADO / kym@shalemag.com / 210.240.7188 www.shalemag.com @shalemagazinetexas Shale Oil & Gas Business Magazine @shalemag

OTHER SERVICES OFFERED BY SHALE MAGAZINE Branding / Web Production / Search Engine Optimization / Ad Design / Social Media Video Production / Public Relations / Email Marketing / Campaign Strategy / Direct Mail

SHALE Magazine is a statewide industry publication that showcases the significance of the South Texas petroleum and energy market. SHALE’s mission is to promote economic growth and business opportunities that connect regional businesses with oil and gas companies. The publication supports market growth through promoting industry education and policy, and its content includes particular insight into the development of the Eagle Ford Shale and Permian Basin plays and the businesses affected. SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

BUSINESS

Strategies and Tips to Protect Your Business from Data Breaches By: Troy Hawes and Jon King, Moss Adams

Attack Methods Cybercriminals have several attack methods at their disposal: • Cryptojacking. This is the secret use of your computing device to mine cryptocurrency.

ata breaches put not only your company and employees at risk but also your customers. Depending on the scale of a breach, your reputation could become significantly damaged, driving down profits and jeopardizing relationships and business with customers and clients. According to the Ponemon Institute’s 2018 Cost of a Data Breach study, the average cost of a breach for a company in the United States is $7.91 million, so it’s more important than ever that companies invest in cybersecurity. It’s no longer a question of if your network will be compromised, but rather when your network will be compromised. Below, we explore the strategies business owners should adopt to protect their assets from cyberattacks.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

Types of Data Breaches and Cybercriminals Cybersecurity focuses on protecting your organization’s valuable customer, employee, and internal data including the following: • • • • •

Customer personal and payment card information Trade secrets Business partner or supply chain information Plant operational data Financial data

These assets are usually attacked by four types of cyber adversaries, including the following: • Nation states seeking an economic, political, or military advantage • Organized crime networks motived by financial gains • Hacktivists hoping to influence political or social change or put pressure on a business to alter its practices • Insiders motivated by personal advantage, monetary gain, or professional revenge

• Fileless Attacks. These attacks, also known as a non malware, zero-footprint, or macro attacks, don’t need to install software to infect a machine. Instead, a machine’s existing vulnerabilities and common system tools are exploited to add malicious code into normally safe processes. • Spear Phishing and CEO Fraud. A hacker emails employees posing as a trustworthy source—often C-level executives—asking for information in hopes of the recipient innocently providing details that allow them to access a network. • Internet of Things (IoT) Attacks. Devices such as smartwatches, video conferencing systems, or heating and ventilation systems are targeted because they often connect to a company’s network.

WRIGHTSTUDIO/STOCK.ADOBE.COM, BITS AND SPLITS/STOCK.ADOBE.COM

• Ransomware. Hackers can gain access to a company’s system using malicious software, commonly known as malware. Once inside, hackers can encrypt and hold sensitive data hostage for payment.

Protection Strategies Even simple actions can help, such as changing the default username and password on network and IoT devices, including firewalls, routers, and wireless access points. Ensure that industrial control systems are segmented or airgapped from corporate networks. It’s also important to back up critical data, make sure that offline copies exist, and that the backups can be used to restore systems. To help prevent attacks, keep your antivirus and system software updated through frequent patching. Identify Assets The first step to protecting data is to identify the type of data your company touches by taking inventory and categorizing data. Determine how that data is stored and moves through your network. Next, identify those who have access to sensitive data. After data is identified, perform a risk assessment to identify threats and vulnerabilities to the assets. Protect Assets Once you’ve identified assets, protect data by using logical and physical access controls. Logical access controls validate that personnel have been assigned access to systems and data based on job responsibilities. Additional protection methods include the following: • Encrypting data at rest and in transit • Establishing controls around data lifecycle management • Employing change management controls for software and hardware • Determining systems are fully patched and default usernames and passwords have been changed You’ll also want to provide security awareness training to employees. Those with access or privileged rights to sensitive information should be trained to spot and appropriately question or respond to suspicious requests, even if they appear to come from legitimate sources. You should also continually monitor the activities of third-party service providers, such as cloud and software-as-a-service (SaaS) operators, who come into contact with your sensitive data. Detect Attacks Even if you feel data is protected, methods should be put in place to identify malicious ac-

tivity on your network. Detection controls are critical because they can provide real-time alerts once exceptions are noted. Security information and event management (SIEM) products will centralize the logs from all devices on the network, provide intelligence and correlation of events, and alert you when a malicious event is triggered. Other methods of detection controls include the following: • User access reviews to detect issues related to segregation of duties • Vulnerability management program such as vulnerability scanning and penetration testing to identify vulnerabilities and system weaknesses Swift Reactions to a Breach In the event of a breach, it’s important to have respective response and disaster recovery plans ready so you can react as quickly as possible. A response plan helps contain and mitigate incidents, while a disaster recovery plan helps restore operations in a timely manner. As part of these plans, you’ll want to identify roles and responsibilities for various personnel. Both plans should be updated and tested at least annually. Third-Party Advisors Protecting your data requires constant vigilance. Seeking the support of a trusted professional advisor who specializes in cybersecurity can help you set up protective systems and continuously monitor and protect your most valuable information

Troy Hawes has been providing IT consulting services since 2001. At Moss Adams, Troy serves clients in a variety of industries including communications and media, utilities and critical infrastructure, health care, and higher education. He can be reached at (206) 302-6529 or troy.hawes@mossadams.com.

Jon King is a manager for Moss Adams IT Consulting Services. He has more than 12 years of experience managing technical infrastructure systems and advising senior leadership on security policy and practices. He can be reached at (949) 221-4062 or jon.king@mossadams.com. Assurance, tax and consulting offered through Moss Adams LLP. Investment advisory services offered through Moss Adams Wealth Advisors LLC. Investment banking offered through Moss Adams Capital LLC.

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

TEAC is an advocacy group that supports the oil and gas industry. Make your voice be heard loud and clear by lawmakers by being an energy advocate. Our energy chamber is the on only group in Texas with a focus on uniting the energy and business communities in Texas!

Get involved. Get engaged. Sign up with TEAC for FREE today:

TXenergyadvocates.com 52

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

STEER will work to ensure that all stakeholders throughout the Eagle Ford Shale region are able to effectively maximize opportunities in a responsible and collaborative way.

Learn more at steer.com Follow us: facebook.com/STEEROUNDTABLE

@STEEROUNDTABLE SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

LIFESTYLE

Wild Beasts Invade The Briscoe Western Art Museum Art and the Animal Exhibition Showcases Animals and Their Natural Beauty Special to SHALE

among others. Special events kicking off the exhibition include:

Be among the first to see the Briscoe’s new exhibit while you mingle with artists, enjoy beer, wine, light bites and a Blue Buffalo or a Foxy Fizz, specialty cocktails created to celebrate Art and the Animal during an exclusive preview reception featuring remarks by Wes Siegrist, artist and Executive Director of SAA, at the Jack Guenther Pavilion. Free for Briscoe members, $30 for nonmembers. Complimentary valet parking included. Please call (210) 507-4864 or visit Briscoemuseum.org for information and tickets.

he Briscoe Western Art Museum invites everyone to get wild during Art and the Animal, an exhibition featuring more than 100 paintings and sculptures reflecting the beauty of animals from around the world. The Society of Animal Artists’ 59th Annual Exhibition and Tour, Art and the Animal opens at the Briscoe with a weekend of special events Sept. 19 - 22, and will be open to the public Sept. 20, 2019, through Jan. 5, 2020. The Society of Animal Artists (SAA) is devoted to promoting excellence in the artistic portrayal of the creatures sharing our planet. SAA’s membership represents a veritable who’s who of artists from around the world, and the Society’s work has been on display at more than 100 institutions across North America. Art and the Animal is SAA’s

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

first San Antonio exhibit. Art and the Animal is free with museum admission and will be on display during regular museum hours. “Western Art celebrates the American West, including the wildlife and animals that graced the land. We’re pleased to partner with this renowned society as we share a common viewpoint on the preservation of our country’s art, culture and wildlife,” said Michael Duchemin, President and CEO of the Briscoe Western Art Museum. “The works featured include animal species from around the world, created by renowned international artists. Art and the Animal is something every animal lover old and young will enjoy.” Noteworthy artists whose works are featured in the exhibit include Mick Doellinger, Carrie Cook, Greg Beecham, Paul Rhymer, Kathleen Dunphy,

Wild West, Wildlife! Community Day Saturday, Sept. 21, 12 to 4 p.m. Walk on the wild side of the West and enjoy Art and the Animal as it comes to life with a free community day. Meet some real wildlife with animals from San Antonio Zoo, make memorable wildlife crafts, experience hands-on demonstrations, enjoy special animalthemed storytimes and leave your mark on a special mural created by Wes Siegrist, Executive Director of SAA. Siegrist has created a 5’ x 10’ mural of bison in the west for visi-

PHOTOS COURTESY OF THE BRISCOE WESTERN ART MUSEUM

Sneak Peek: Art and the Animal Preview Party Thursday, Sept. 19, 6 to 8 p.m.

tors to help complete. The piece will then be displayed at the Briscoe during Art and the Animal. Admission to Wild West, Wildlife! is free for the entire family and includes access to the museum. Wildlife of West Texas Film Screening Sunday, Sept. 22, 1 p.m. The Briscoe has partnered with Wild Texas Film Tour to share a collection of short films that showcase wildlife, adventure and conservation stories from West Texas. Featured films include “Lions of West Texas,” “Pronghorn Revival” and “Return of the Desert Bighorn.” The screening is included with museum admission. Presenting sponsorship of Art and the Animal is generously provided by Wyatt Ranches. Supporting sponsorships provided by Bekki and Greg Kowalski, the Williams-Chadwick Family Charitable Fund of the San Antonio Area Foundation and the Host Committee chaired by Kim and Richard Nunley.

Open daily, admission to The Briscoe Western Art Museum is free for children 12 and under, as well as active duty members of the military and up to four members of their family. Regular museum admission is $10 for adults, $8 for seniors and students, and $5 for retired military, first responders, educators, firemen and police officers. The Briscoe Western Art Museum offers extended hours and free admission every Tuesday from 4 to 9 p.m.

The Society of Animal Artists (SAA) is devoted to promoting excellence in the artistic portrayal of the creatures sharing our planet

About The Briscoe Western Art Museum: The Briscoe Western Art Museum, named in honor of the late Texas Gov. Dolph Briscoe Jr. and his wife, Janey Slaughter Briscoe, preserves and presents the art, history and culture of the American West through engaging exhibitions, educational programs and public events reflective of the region’s rich traditions and shared heritage. Located at 210 W. Market Street along the San Antonio River Walk, the Museum’s campus includes the restored 1930s former San Antonio Public Library building, which now serves as the museum space with nine galleries on three levels; the threestory Jack Guenther Pavilion, used for event rentals and programs; and the outdoor McNutt Sculpture Garden. For more information about the Briscoe Western Art Museum, visit BriscoeMuseum.org, or follow us on Facebook/ Twitter/Instagram @ BriscoeMuseum. SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

LIFESTYLE

IT’S NEVER TOO EARLY TO GET TOASTED AT THIS TEXAS-BASED EATERY

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What’s so great about dinner?” This is a question I’ve asked myself time and time again. The foods I enjoy most arrive before 3 p.m. — perfectly poached eggs, strips of crunchy bacon and layer upon layer of thin-sliced turkey and pastrami. These are the foods I dream about at night and want to bite into right when I wake up. For several years, my friend and business partner, Mathew DeMott, and I struggled to find a restaurant that served quality and consistent breakfast and lunch food options in an atmosphere that didn’t put us right back to sleep. After many pancakes and plenty of research, we realized there was a gap in the marketplace that we wanted to fill. In 2010, we opened the first location of The Toasted Yolk in Conroe, 40 miles north of Houston, with the goal of creating a full-service breakfast and lunch destination that was better than anything else people had experienced. Fast-forward to today, and The Toasted Yolk has now expanded to ten locations in just under a decade. Focusing solely on daytime service, we strive to provide diners with chefinspired breakfast and lunch menus full of fresh, mouth-watering takes on favorite foods and signature drinks. We take pride in sourcing top-notch ingredients and buying locally at every opportunity to deliver farm-to-table fresh dishes. We truly believe our unwavering

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

PHOTOS COURTESY OF BUBBLEUP

By: Chris Milton, CEO

commitment to service and high-quality food has allowed us to grow and stay consistent. We’ve never been willing to compromise on the quality of our ingredients, which is why we’re able to provide a unique breakfast and lunch experience that you can’t find anywhere else. Each restaurant offers a full menu and full bar, with boozy brunch cocktails, served in a vibrant and dynamic atmosphere. At the heart of each experience is the innovation of familiar American favorites, remixed and remastered for cultured and contemporary tastes. Every dish is carefully made from scratch, including sauces, dressings and soups of the day. Some of our most popular breakfast options include an array of egg specialties, such as the West Coast Arnold, with two English muffin halves topped with Cajun turkey, bacon, tomato, guacamole and two poached eggs topped with Cholula ranch, and our signature dish, The Toasted Yolk, with two slices of sourdough bread grilled with an egg in the middle of each, cooked to order and served with your choice of bacon, sausage or turkey sausage. Sweets such as our “churro style” donuts are served with a warm caramel dipping sauce, and our seasonal mapleglazed and bacon-topped donuts are available as well to satisfy any diner’s cravings. While breakfast is viewed as the most important meal of the day, lunch is definitely not an after-thought at The Toasted Yolk. Diners can start with an appetizer like our Junkyard fries, covered in homemade chili, queso and jalapeños. Our classic sandwiches like the California Club piled high with Cajun turkey, layered with thick-cut bacon, sliced avocado, lettuce, tomato, honey mustard and Swiss cheese, or the Reuben, made with thinly-sliced pastrami, sauerkraut, thousand island dressing and Swiss cheese, are all served with a unique twist. If you’re in need of something a little lighter but still filling, our salads do not disappoint. Our popular Strawberry Field Salad is made with mixed greens, grilled chicken, strawberries, feta, candied pecans and served with a blackberry vinaigrette. Whether you prefer to sip on juices, coffee confections or something a little stronger, we pour up delicious refreshments that complement any dish. Our specialty cocktail menu is crafted to pair well with our breakfast and lunch menu. The Morning Mule, our take on a classic Moscow mule, comes with a splash of orange juice, and is the perfect drink to accompany

your meal, whether it’s 10 a.m. or 3 p.m. We realize we are not alone in sharing The Toasted Yolk philosophy. The appreciation for great food in a lively atmosphere is spreading fast, and we invite you to “Get Toasted” with us in the morning for breakfast, brunch or late lunch. Over the past ten years, we have opened ten locations throughout the Greater Houston area, with franchise opportunities on the horizon. We are looking forward to expanding our eatery and bringing our unique offerings to new communities across Texas. With our growth, we are determined to continue delivering and providing our customers with the highest level of satisfaction — that’s what The Toasted Yolk is all about.

We strive to provide diners with chef-inspired breakfast and lunch menus full of fresh, mouthwatering takes on favorite foods and signature drinks

For more information, visit www. thetoastedyolk.com, call 832-791-4600, or email thetoastedyolk@yahoo.com. Follow us on Facebook, Instagram and Twitter (@TheToastedYolk).

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

LIFESTYLE

HOUSTON’S CRAVE SERVES UP DELECTABLE DESSERTS

had always dreamed of owning a bakery one day. I moved to L.A. straight out of college to begin a career in the film industry as a writer, producer and director. While in L.A., I met my husband, Peter, a New York-based film producer and writer, when he was in town for business. Soon after meeting him, we married and teamed up together to produce the feature motion picture, Love and Mary, a film that revolved around a woman who owned a gourmet bakery. Building from this idea, the two of us, along with restaurateur Brad Dorsey, came up with the concept for CRAVE in 2008. The idea was to create and sell cupcakes made from scratch with the finest and all-natural ingredients. As a child, some of my most precious memories were of baking with my mother and grandmother. Inspired by my childhood, as well as my passion for baking desserts and eye for creative design, we opened CRAVE with an open concept and visible kitchen to allow customers to enjoy the sounds, smells and laughter involved with baking. While CRAVE began with a focus on cupcakes, drawing inspiration from family recipes, we have expanded the menu to serve bakeshop items such as cookies, brownies, bars and small-batch craft coffee. Across all menu items, we utilize only the finest ingredients such as Belgium chocolate, seasonal fresh fruits and made-in-house vanilla extract. Since its inception, we have been committed to quality. We truly care and want everyone to have the same

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

quality experience whether it’s gluten-free, sugar-free or vegan options. Growing the bakeshop has been a natural progression for us. We listen to the feedback from our customers, which has not only guided our evolving menu, but also our locations. Our first shop opened in Uptown Park, followed by West University and our third and largest location in The Woodlands, which functions as a dine-in bakery-coffee shop and now offers customers the opportunity to participate in a D-I-Y decorating program, Create by CRAVE. We have developed a culture and a following over the past eleven years. We wouldn’t be here today if it weren’t for our customers. Our menu rotates daily, with a different variety of cupcakes available each day. In addition to our classic flavors such as red velvet, vanilla, dark chocolate and strawberry, some of our most popular cupcake flavors include salted caramel, carrot cake, old fashioned birthday cake, and cookies and cream. In addition to our original size, select flavors are available in mini and giant size. We also have a variety of handcrafted cupcake toppers that are available for pre-orders and are perfect for any occasion.

PHOTOS COURTESY OF AILEE PETROVIC

By: Elizabeth Harrison Cooper, co-owner of CRAVE

As we head into the holidays, we will be offering an assortment of seasonal options. Beginning October 1, we will have pumpkin loaf slices, pumpkin cupcakes and pumpkin lattes to celebrate the fall season. Dark chocolate raspberry cupcakes will be available in-store and online through October 13, followed by caramel apple cupcakes through the end of the month. Our Halloween lineup will include Krispy pops with Halloween colored sprinkles, spooky

confetti cupcakes, and cupcakes and sugar cookies adorned with handcrafted Halloween themed toppers such as a mummy, Dracula and Frankenstein. For the first time ever, we are thrilled to share that anyone, located anywhere, can enjoy our bakeshop treats. CRAVE now ships nationally with Goldbelly; boxes of a dozen original size cupcakes ship overnight, Monday through Thursday, for $89 total including shipping.

WE UTILIZE ONLY THE FINEST INGREDIENTS SUCH AS BELGIUM CHOCOLATE, SEASONAL FRESH FRUITS AND MADE-INHOUSE VANILLA EXTRACT

For more information, visit www.cravecupcakes. com, call 713-6227283 or email westuorders@ cravecupcakes. com. Follow us on Facebook (@ cravecupcakeshtx), Instagram (@ cravecupcakeshtx) and Twitter (@ CRAVEhouston).

SEPTEMBER/OCTOBER 2019 ď &#x201C; SHALE MAGAZINE

LIFESTYLE

LUPE TORTILLA: SERVING “TEXAS-MEX” ACROSS THE LONE STAR STATE

he original Lupe Tortilla first opened its doors in 1983, nestled in a 1940s frame house on the outskirts of Houston, and quickly received a dedicated following. After growing up watching our parents successfully nurture the first location, my brother, Peter Holt, and I took over the family business in 1997 after graduating from the Culinary Institute of America. From the very beginning, we’ve had an unwavering focus on high-quality food and giving customers the best experience possible — from the fresh ingredients we choose to the atmosphere and service at each restaurant. While we’ve grown to over 20 locations across Texas, we still take the time to make our recipes from scratch, multiple times a day. We hope to offer customers a genuine Tex-Mex experience for breakfast, lunch or dinner and have something

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

PHOTOS COURTESY OF LUPE TORTILLA

By: Judson Holt, CEO and President of Lupe Tortilla

for everyone with over 60 menu items, each made with top-notch ingredients. Breakfast is something we more recently introduced to customers, and we’ve really enjoyed offering creative, fun takes on breakfast classics. The menu features everything from omelets and huevos rancheros to barbacoa benedict, chilaquiles, churros and breakfast cocktails — all with the same quality ingredients we’re known for. We also offer our take on biscuits, frittatas and 12-inch pancakes and waffles with a variety of toppings available that truly take them to the next level. Guests can wash down their morning Tex-Mex fix with specialty drinks like our Breakfast Rita made with 100% Agave Tequila, Triple Sec, lime, fresh-squeezed orange juice and whipped cream or the Fuertaccino made with shaved ice, espresso, milk, chocolate, Sauza Conmemorativo, Cointreau and whipped cream. For lunch and dinner, customer favorites include our famous sizzling, lime-pepper marinated beef and chicken fajitas served with all the trimmings and our soft, warm hand-rolled flour and hand-pressed corn tortillas that are made in-house to order. We also offer our carefullycrafted appetizers like house-made salsa, tableside guacamole made fresh by our servers and queso, as well as flavorful margaritas like our Lupe’s Original Margarita served frozen or on the rocks and made with freshly-squeezed lime juice, Lupe’s 100% Exotico Reposado and Triple Sec. We do some really tasty seasonal margaritas as well; right now we have our Chile Mango Rita with fresh jalapeno-infused Sauza Silver Tequila, Triple Sec orange liqueur, mango puree, fresh-squeezed lime juice, sweetened with natural cane sugar. With each dish, we’ve conducted meticulous product research to ensure customers are consuming the highest possible quality product for the price point. We take the time to craft each of our recipes and source ingredients. We truly strive to set the standard in casual dining by using only high-quality cuts of meat, cooking all items in small batches to ensure freshness and more. We really love what we do — my brother and I personally taste-test every new dish and product, and we’re really passionate about creating the best possible experience for our customers. With locations all over the great state of Texas, it’s been really important for us to develop unique systems to help our staff replicate our hand-crafted dishes so that we can consistently deliver the same service and product across all locations. We really focus on setting up our teams to win, and we’re proud that we’ve maintained top-tier employees and have a very low turnover rate.

We try to give our teams every single tool possible to help them thrive and grow. They are part of what helps drive so much of our success, so we’re constantly challenging ourselves to be the best employer we can be. We really enjoy being part of each local community we’re in, and are happy to bring jobs and growth. Our current locations span Austin, Houston and San Antonio, and we most recently made our debut in Dallas, with plans to open more. We’re dedicated to always staying true to our roots at each restaurant and offer a fun, comfortable atmosphere to match the authenticity of our dishes. We hope that every customer that joins us feels like family when they take a seat at one of our tables.

To learn more about Lupe Tortilla, visit tex-mex.com.

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

SOCIAL

WEN - South Texas, situated in San Antonio, is growing to reach new areas. For the first time in chapter history, it attracted a Supporting Sponsor from 145 miles away. That sponsorship is a result of an effort to increase chapter activities in the Corpus Christi area which is covered in the South Texas charter. Port Corpus Christi, in full support of the WEN mission, has joined WEN South Texas as an Executive Sponsor of the chapter. The sponsorship was started following a successful networking mixer, attracting professionals from a range of industries and companies. “With such a large oil, gas, and wind industry presence, we knew we had to reach out to all the energy players in Corpus, and we’re so excited to have been well received,” said Jan Lee, President, WEN-ST. The first event took place on April 17 at the Omni Hotel, attracting about 40 people. Thanks to the planning efforts of Lauren Guerra, PresidentElect, and Kym Bolado, Director of Coastal Bend Program Development, attendance at other events has increased rapidly. A crowd of 120 energy professionals attended the latest program in Corpus Christi on August 6. Guests were delighted to hear WEN-ST member Rebecca Ponton discuss her book, Breaking the GAS Ceiling: Women in the Offshore Oil & Gas Industry, which chronicles the contributions of 23 women in the oil and gas industry. An impressive panel of female energy professions closed out the event. The panel included Trina Martinez, Vice President and General Manager, CITGO Corpus Christi Refineries; Alicia Matus, Site Manager, LyondellBasell; and Valerie Pompa, Owner and CEO, VAP Business Solutions, LLC gave insight into their professional careers and backgrounds. Going into topics related to leadership, teamwork, work-life balance and more, this panel gave attendees perspective on the opportunities and challenges for female energy professionals today. The panel was moderated by Kym Bolado, CEO of SHALE Magazine and Host of In the Oil Patch radio show. This event gained local media attention, including features on KiiiTV and KrisTV. A couple more events are planned in Corpus Christi this year. The chapter hopes to continue this trend of growth in 2020, attracting new members and proving quality, unique programs to the area

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

PHOTOS COURTESY OF WEN

WEN South Texas Growing and Hosting

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SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019

SEPTEMBER/OCTOBER 2019  SHALE MAGAZINE

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2019