ShaleMag Sept/Oct 2020 Issue with Jason Modglin by SHALE Oil & Gas Business Magazine

SHALE MAGAZINE

SEPTEMBER/OCTOBER 2020

CAMPAIGN POLITICS:

DUE TO COVID-19,

IN-PERSON SHOPPING WILL NEVER BE THE SAME

FEEDING THE CROCODILE, HOPING HE EATS YOU LAST

RENOWNED OIL PROFESSOR PROPOSES FRACKING ALTERNATIVE

JASON MODGLIN

ACTIVITY RAMPS UP REGARDING REGULATION OF METHANE VENTING & FLARING

JUMPING INTO LEADERSHIP AT THE TOUGHEST POSSIBLE TIME

TEXAS WOMEN FOR THE ARTS: PROMOTING HEALTH THROUGH ART DURING COVID-19

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SEPTEMBER/OCTOBER 2020

CONTENTS SHALE UPDATE

Shale Play Short Takes

FEATURE

Campaign Politics: Feeding the Crocodile, Hoping He Eats You Last

COVER STORY

COVER AND TABLE OF CONTENTS PHOTOGRAPHY BY: MICHAEL GIORDANO

COMPOSITE COVER: DFIKAR/STOCK.ADOBE.COM AND MICHAEL GIORDANO

INDUSTRY 36 Managing Solar and Storage Global Supply Chains in the Age of COVID-19

38 Pennsylvania Leverages Its Natural Gas

Advantage

40 OSHA’s Latest Guidance Serves As

Recommendations to Oil and Gas Businesses

20 BUSINESS

54 Finding a Career in Safety and a Calling in Life 56 Commodity Price, Shale Oil Asset Value and

Cancelation of Debt

58 Due to COVID-19, In-Person Shopping Will Never Be the Same

42 Making Strides in High-Efficiency Power

60 Can Hydrogen and Renewable Natural Gas Displace Shale?

44 Lithium Batteries Can Lead the Charge

LIFESTYLE

Generation With the STEP 10 MWe Pilot Project

Against Climate Change

POLICY 48 California’s Blackouts Are the Green New Deal in Action 50 Elections Have Consequences

66 Texas Women for the Arts: Promoting

Health Through Art During COVID-19

SOCIAL 68 SAPA Midstream Open

It is into this industry maelstrom that Jason Modglin voluntarily stepped, taking over the position as President of Texas’s largest oil and gas trade association, the Texas Alliance of Energy Producers in June of this year. The Alliance, which was created in 2000 via a merger of the West Central Texas Oil & Gas Association and the North Texas Oil & Gas Association, has existed in one form or another since 1930 and has thus persevered through the inevitable ups and downs of the oil business for 90 years. So, its members are experienced at weathering such storms.

INDUSTRY

Renowned Oil Professor Proposes Fracking Alternative

POLICY

Activity Ramps Up Regarding Regulation of Methane Venting & Flaring

BUSINESS

Checking in With the Permian Strategic Partnership

LIFESTYLE

The Art of Happiness SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

17-0663 SHALE ad-3Q_FINAL.pdf

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VOLUME 7 ISSUE 5 • SEPTEMBER/OCTOBER 2020

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

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

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For editorial comments and suggestions, please email editor@shalemag.com. SHALE MAGAZINE OFFICE: 5150 Broadway St., Suite 493, San Antonio, Texas 78209 For general inquiries, call 210.240.7188. Copyright © 2020 Shale Magazine. All rights reserved. Reproduction without the expressed written permission of the publisher is prohibited.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

LETTER FROM THE CEO

THE SEPTEMBER/OCTOBER ISSUE DIVES INTO ENERGY AND BUSINESS DURING THESE TIMES OF UNCERTAINTY. As the last issue before the November elections, this issue highlights the impact those elections will have on all areas of the energy industry. Energy policy is crucial to the health and growth of the industry. As an energy advocate, do your research. Pick candidates who believe in what you believe in and who do what they can to contribute to the energy industry’s health. As 2020 is now well past the halfway mark. We are making an effort to help you navigate the new trends and new opportunities, and the unique challenges, that remain as well as those that will come as we approach 2021. Just like individuals, companies are looking for what the new normal will be. It is hard to look long-range while our short-range sight is still so clouded. We are here to help. As always, we are proud and honored to share these stories and articles with you, those who make the energy industry strong. We would like to thank our readers for continuing to trust SHALE Magazine and In the Oil Patch Radio Show to be your news and information source for everything energy. For articles and stories as they happen, please follow us on Facebook, Twitter, LinkedIn, and now Parler.

CEO/Publisher of SHALE Magazine/Editor-in-Chief kym@shalemag.com

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

PHOTO BY MICHAEL GIORDANO

KYM BOLADO

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SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

SHALE UPDATE

SHALE PLAY SHORT TAKES By: David Blackmon

Bakken Shale – North Dakota/Montana The latest report from GlobalData, Bakken Shale in the U.S., 2020, reveals that the gross crude and condensate production from the Bakken Shale play is expected to be 1.1 million barrels per day (mbd) in 2020, an annual decline of 28% from 2019, due mainly to the negative impacts of the COVID-19 pandemic. Andrew Folse, Oil & Gas Analyst at GlobalData, comments: “Operators with higher lease operating expenditures have begun shutting in wells since March 2020 while waiting for the prices to recover. Operators have slashed the amount of capital they have planned to spend in 2020, subsequently slowing down the drilling activity with over an 80% decrease in rigs from the January count of 52 to the July count of just ten.”

Denver/Julesburg (DJ) Basin - Colorado Oxy executed a $1.33 billion sale of about 5.5 million acres of landholdings in Utah, Colorado and Wyoming in August to New York-based Orion Mine Finance. But Weld County’s largest energy producer is maintaining most of its mineral rights in the Denver-Julesburg Basin. The company said it retained about 2.5 million mineral acres in Colorado for its continued energy production. “We will retain our core oil and gas assets in the Rockies, including the prolific DJ Basin in Colorado and the highly prospective Powder River Basin in Wyoming,” CEO Vicki Hollub said. Eagle Ford Shale – Texas Permian Basin – Texas/New Mexico The Permian Basin led the way as the Baker Hughes Rig Count broke an 8-month losing streak, rising by ten active rigs during the week ended August 21. The number of active frac spreads also jumped up by ten during that same week, with the Permian again accounting for most of the rise. President Donald Trump visited Midland on July 29 in a campaign stop designed to remind West Texans about his efforts to spur domestic oil and gas business growth. Those efforts have been largely forgotten in the midst of the COVID-19 pandemic, which has led to the most severe industry bust since the early 1980s.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

Drilling levels have been moribund in the Eagle Ford in recent months, but Rio Grande Exploration & Production plans to drill for natural gas in the western end of the Eagle Ford Shale near the U.S./Mexico border. The privately held Houston company filed for a pair of permits for two horizontal wells on the company’s Nido Ranch lease in Webb County about 20 miles east of the Laredo-Colombia Solidarity International Bridge. The wells target the natural gas-rich Hawkville field of the Eagle Ford geological formation down to a total depth of 14,000 feet.

Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio Houston-based Southwestern Energy announced a $210 million stock exchange for the Marcellus assets of Montage Resources in August. Under the deal, Montage stockholders will receive 1.8656 shares of Southwestern stock for each Montage stock share. The deal will give Southwestern more than 786,000 acres of leases in the Marcellus Shale of Ohio, Pennsylvania and West Virginia. A new law put in place by Democrat Pennsylvania Governor Tom Wolf raises the drilling permit fee in that state by 150%, from $5,000 to $12,500. The cost of a permit to drill a well in Texas ranges from $200 to $300, depending on the well’s depth.

Haynesville/Bossier Play – Louisiana/East Texas Houston-based Castleton Resources entered into a $245 million deal in August to expand its presence in the natural-gas rich Haynesville Shale of East Texas and northern Louisiana. Castleton is buying leases belonging to Fort Worth oil company Range Resources in the Terryville area of the northern Louisiana shale play.

SCOOP/STACK Play – Oklahoma Despite all the difficulties some pipeline projects have had obtaining permits in recent months, about 5 bcf per day of natural gas pipeline capacity came online in the U.S. during the first half of 2020. Among the largest of those was Cheniere Energy’s 233-mile, 36-inch greenfield MIDSHIP Pipeline. The MIDSHIP line began operations in April 2020, bringing 1.1 Bcf/d of natural gas produced in the SCOOP-STACK Basin in western Oklahoma to the Bennington hub at the Oklahoma-Texas border. The Bennington hub will allow these natural gas supplies to serve growing southeastern demand markets, including liquefied natural gas (LNG) facilities owned by Cheniere.

Once completed, the deal will net Castleton 315,000 acres of oil and natural gas leases in East Texas and northern Louisiana that produce about 500 million cubic feet of natural gas per day. "The company is well-positioned to enhance the value of these assets through further operational enhancements, among other activities," Castleton Resources CEO Craig Jarchow said.

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 2020  SHALE MAGAZINE

Campaign Politics: Feeding the Crocodile, Hoping He Eats You Last By: Dan Kish, Senior Vice President of Policy, American Energy Alliance

n about two months, the election will be upon us. Television, radio, direct mail, and digital ads are in the air (or on your screen). Unfortunately, so is the aroma of political posturing. Pollsters and pundits would have you believe that there is no chance Joe Biden loses to our sitting president, Donald J. Trump, on November 3. The oil and gas industry found itself in a similar position four years ago when those same pundits were not only predicting Hilary Clinton as the winner of the White House but also speculating on her cabinet choices. In 2016, the choice between Clinton and Trump was sharp. Clinton, a lifetime politician with direct experience in the White House, cabinet and U.S. Senate, was up against Trump, a self-made billionaire businessman – who had never sought elected office (ever). The contrast today between Trump and Biden is even sharper. Biden has unveiled his climate plan; we only need to look back to 2009 and his failed “green jobs” policy to know what the future of energy will look like if he’s elected. Biden helped spin the Democrats’ $787 billion stimulus package as a transition to a greener future and a new job creator. Five million new green jobs were promised, and natural gas would serve as a bridge fuel and reign supreme until renewable energy could eventually take hold, many, many years into the future. Back then, it was all about a new clean-energy economy and successfully killing coal. Between January 2009 and January 2017, the coal-mining industry lost more than 40% of its jobs. Fast forward to today, and Biden and his team talk about the climate in terms of “climate catastrophe” and “environmental justice.”

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

Same plot. Same actors. New title. This time they are targeting all fossil fuels, including natural gas. They want to “keep it in the ground.” Biden and the green left have zero interest in using natural gas, or oil for that matter, in a transition. He wants to turn off the spigot entirely. This isn’t a threat – it’s a promise. There is no room for fossil fuels in Biden’s plan—anywhere. Never mind that 80% of America’s energy comes from oil, coal and natural gas. Though we can fully expect a BidenHarris administration to severely hurt the natural gas industry, no one should bet big on “environmental justice.” The green-jobs promise of 2009 was such a disaster, the Department of Labor classified many unrelated jobs as green just to juice the totals. It became comical. The largest green-jobs category back then was “janitors and cleaners, except maids and housekeeping cleaners.” The septic tank and portable toilet servicing industry had 33 times as many “green” jobs as did solar-electricity utilities under the Obama-Biden fiasco. This is actually serious stuff, as American taxpayers shouldn’t expect their government to “phony up” the data to make their political point. At a June 6, 2012 hearing of the House Oversight and Reform Committee, Chairman Darrell Issa forced the acting commissioner of the Bureau of Labor Statistics (BLS) to confirm the list of jobs with dubious greenness counted as green. If you don’t have time to YouTube it, here’s the gist: Issa confirmed, under BLS’ definition,

Biden has unveiled his climate plan; we only need to look back to 2009 and his failed “green jobs” policy to know what the future of energy will look like if he’s elected

someone who sweeps the floor at a solar panel facility has a green job. So does a bus driver, a college professor teaching environmental science and bicycleshop employees. Any job consisting of recycling and reusing anything counts as a green job, too, like antique dealers, thrift stores, rare manuscript/bookstores and even a teenager working at a used vinyl record shop—if you can find one. And oh, garbage men are considered employed in the green job industry, too. Like all jobs, they are honorable, but they’re not new nor do they rely on federal handouts and mandates as renewable energy always does. According to data from the Bureau of Labor Statistics for May 2019, the average annual pay for oil and gas extraction workers was $96,600—twice that for solar panel installers ($46,850) and almost 60% higher than the average salary for a wind turbine technician ($61,270). I’ll spare you the data for the others. How can we head off a similar fiasco today?

VCHALUP/STOCK.ADOBE.COM

 FEATURE

It starts with detailed, but explainable information for voters. In a comprehensive evaluation of the two candidates on energy, President Trump and the presumptive nominee, Joe Biden, the American Energy Alliance has concluded that Trump is not only the best choice but the only choice when it comes to a nominee who can continue the mission of advancing responsible American energy production and good-paying jobs while looking out for consumers and the environment. The potential for our country, and its oil and gas employees, is spectacular. However, a Biden-Harris administration threatens to squander it. Sadly, we have seen some of our own friends in the industry lining up to kiss Biden’s ring claiming they see “common ground.” After more than thirty years around Washington politics, I can assure you it is a strategy that doesn’t work. In fact, Winston Churchill called it “feeding the crocodile in the hope it eats you last.” The point is, you get eaten. Biden’s energy platform would put Washington masterminds in charge of doling out untold billions of your money to the powerful and politically connected proprietors of various

green-energy schemes. All this will do, besides rewarding cronies, is drive up energy costs for all Americans, and hand power back to hostile regimes abroad, after the U.S. finally achieved energy independence last year. Seventy percent of the world’s solar panels are made in China, and they are the number one manufacturer of wind parts and blades and solar panels. Just one percent of solar panels are made here. Batteries, plus wind and solar power, require rare-earth minerals and other minerals like cobalt which are not produced in significant quantity in the U.S. China has a record of using its dominance in rare-earths supply as a political weapon. In 2010, they cut off shipments to Japan in the middle of a political dispute. There are enough problems in our relationship with China already. We don’t need federal policies to deliberately make them worse. Having freed ourselves from dependency on the Middle East for energy, it would be foolhardy to addict ourselves to China for its rareearth minerals and the Democratic Republic of the Congo (DRC) for its cobalt. Both countries have miserable environmental and labor conditions—cobalt mining in the DRC is notorious for its abuse of children. In an ironic twist, China uses coal-generated power to build all these wind and solar parts. They remain the world’s largest consumer of coal, and not by just a little. China uses more than 50% of all the coal consumed in the world, and they’re developing coal plants equal to all those remaining in the U.S on top of that. In essence, America will pay China loads of money to burn coal so that we can convert our power over to “clean” wind and solar imported from them. That doesn’t make much sense to me. Especially after we spent decades becoming energy independent and finally, for the first time since 1957, we reached our goal last year. And that’s why the American Energy Alliance is proudly endorsing Donald J. Trump again for president. That’s right, we called it back in 2016, too. We know who will support American jobs and energy, and who won’t. A wealthier America will be a cleaner America and a stronger America. The stakes couldn’t be higher. I don’t have a crystal ball, but win or lose, at least I have the audacity, and history behind me, to stand up and fight for the people working in America’s prolific oil and gas industry and to take action to do what’s right, rather than just posturing to appease the political elite. Remember … these issues are never actually about energy; they’re about power. Putting our energy in the hands of politicians gives them power over your life and the lives of your children. You and they deserve better.

The American Energy Alliance has concluded that Trump is not only the best choice but the only choice when it comes to a nominee who can continue the mission of advancing responsible American energy production and good-paying jobs while looking out for consumers and the environment

About the author: Dan Kish is a senior vice president for policy at the American Energy Alliance (AEA). Kish has more than 30 years of experience on congressional committees focused principally upon natural resource and energy policies. His service includes the principal resource committees in the House and Senate, including six years as chief of staff for the Republicans on the House Resources Committee and four years on the Senate Energy & Natural Resources Committee staff. His primary focus has been access to resources on government lands and in the waters of the Outer Continental Shelf, and specifically, upon the enormous conventional and unconventional energy there that waits to be allowed to add value to our nation’s well-being. Kish is a graduate of Wabash College, Crawfordsville, Indiana.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

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COMPOSITE COVER: SCANDAMERICAN/STOCK.ADOBE.COM AND MICHAEL GIORDANO

cover story

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

JASON MODGLIN

JUMPING INTO LEADERSHIP AT THE TOUGHEST POSSIBLE TIME By: David Blackmon Photography by: Michael Giordano

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

2020 HAS BEEN A TOUGH YEAR FOR THE OIL AND GAS BUSINESS. MOST AGREE THAT IT IS THE WORST CLIMATE FOR THE INDUSTRY SINCE AT LEAST THE BUST OF THE MID-1980s, AND POSSIBLY THE WORST SINCE THE 1930s, ONCE ALL IS SAID AND DONE. We have chronicled it all here at SHALE Magazine and In The Oil Patch Radio Show: The Saudi/Russian price war that began on March 4, followed by the demand-destroying impacts of the COVID-19 pandemic that first saw the price for crude oil drop into the low-$40 range, then into the $30s, then the $20s, then to the low teens, and then, on one fateful day at the end of April, suddenly turning deeply negative before recovering into positive territory. The catastrophic drop in prices, in turn, produced the predictable response from the industry itself: A collapse in the rig count and active number of frac spreads; the cancellation of investments in major projects both in the U.S. and internationally; the shutting in of wells, falling most heavily in the big shale plays like the Eagle Ford and Permian Basin; and most unfortunate of all, the laying off of tens of thousands of workers both in the industry itself and the service industries that support it. These impacts have also already led to a series of bankruptcy filings, some from proud industry names like Weatherford and Chesapeake, with industry analysts predicting a coming wave of hundreds more to follow in the months to come. Thankfully, global economies have since begun to recover, and prices have as well, recently stabilizing at a level above the $40 per barrel mark here in the U.S. While the higher, more stable price is a positive sign, the prices are still too low to spark a full recovery and restore profitability across the industry, especially to shale producers who were already operating on extremely thin margins when West Texas Intermediate was priced at $55 per barrel and higher. The Texas oil and gas business is perched on thin ice, and a strong return of the coronavirus this fall, should it materialize, could produce disastrous effects on it. It is into this industry maelstrom that Jason Modglin voluntarily stepped, taking over the position as President of Texas’s largest oil and gas trade association, the Texas Alliance of Energy Producers in June of this year. The Alliance, which was created in 2000 via a merger of the West Central Texas Oil & Gas Association and the North Texas Oil & Gas Association, has existed in one form or another since 1930 and has thus persevered through the inevitable ups and downs of the oil business for 90 years. So, its members are experienced at weathering such storms. Still, one might think Modglin would have had second thoughts before taking the position. He was, after all, already gainfully employed as Chief of Staff for Railroad Commissioner Christi Craddick, and had established himself as a man with a bright future in Texas

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

OUR MODERN ECONOMY AND OUR WAY OF LIFE, AND EVERYTHING WE’RE DOING, EVEN TALKING TO EACH OTHER RIGHT NOW ARE AS A RESULT OF PLASTICS AND PETROCHEMICALS THAT MAKE OUR LIVES WHAT THEY ARE TODAY

government. But a conversation with him reveals a man who is forward-looking, strongly upbeat about the future of both the Alliance and the industry and has a tremendous amount of energy for the task at hand. We caught up with Jason in late August for a wide-ranging interview in which he talked about the factors that have shaped his outlook on life and helped him arrive at this point, and about his optimistic plans for the future. SHALE Magazine: You’ve picked a heck of a time to come into a new job. The worst downturn since certainly ’85 and maybe the worst since the 30s. So, first of all, talk about the factors that motivated you to seek the job in the first place? Jason Modglin: (Laughing) Well, I have worked with the Alliance for a long time, and always valued their level of expertise, but also their level of focus on independent operators, in particular, smaller, family-run businesses. We really keep small operators as kind of our North Star. We have a number of large publicly traded companies in the membership as well, but they value our perspective of maintaining a competitive economic environment for small operators because, really, that’s where we’ve seen innovation. Where we’ve seen the success of Texas wildcatters is with folks who don’t necessarily fit into a large corporate structure and need the freedom and the ability to try new things. The alliance has led here recently on produced water research, and with (Alliance Economist and Exec. Vice President) Karr Ingham, we’ve had the Texas Petro Index, which has really provided a new level of information both for operators, but also for policymakers to really track and see how the industry is really doing over time. SHALE Magazine: And that’s really one of any trade association’s main functions. You’re based in Austin, so can we assume you will be taking a hands-on approach to policymaker outreach? Jason Modglin: We’ve been in Austin for a while now. We certainly do still have a presence in Wichita Falls. That’s where we’ve had a focus for a long time. Our previous two presidents, Alex Mills and John Tintera, really elevated the level of regulatory expertise that the alliance brings to its members so that we can help smaller, family-run businesses that are focused on punching holes and producing oil and natural gas and don’t have a government relations team. We’ve really been able to augment the cost-saving programs to benefit our members while layering regulatory and legislative expertise for them that serves them so well. I saw at my previous roles in both the legislative level and the regulatory level that there’s not always a voice for the smaller independents, and the Alliance has really been a steadfast voice. SHALE Magazine: Coming into this position right in the middle of a pandemic has no doubt created some unique challenges for you. Do you have one right now you would consider especially impactful?

Jason Modglin: One of the big the challenges right now is in being able to get together, so we have layered in, as much as we can, a robust program of Zoom calls and webinars in order to serve our members with conversations, and with data and information about what is affecting them. You're absolutely right. It’s a challenge right now, particularly when so much of the association world was about conferences, expos and get-togethers and meetings. That’s been a challenge. There’s no question about that. SHALE Magazine: That also creates budget issues for you, doesn’t it? You had to cancel the Alliance’s big expo this year, and that has been a big fundraiser for the association in past years. Can you talk about the kinds of challenges that creates, just from an organizational budget perspective? Jason Modglin: Yeah. Thankfully, we didn’t lose a lot of money. We were able to make some quick decisions when we saw where it was going, and so didn’t lose any money. But, absolutely, conferences, expos are a revenue generator, and we’ve seen all the trade associations in the state be affected by that. I think that where we have a different model than those other trade associations is that we do bring those cost-saving programs to our members. So, there’s not a conference we’re raising money for: By being able to deliver services that help them save money and reduce costs, they're able to work with us and pursue those opportunities and not just come to a conference. SHALE Magazine: What about membership? In past busts, trade associations had always had a challenge of retaining membership and dues structure. But anecdotally, we’ve been hearing that there has not been such a big hit yet to most of the associations in terms of lost members. Is that true at The Alliance? Jason Modglin: We haven’t seen the bust cutting membership. We also haven’t seen it in the bigger companies who do have governmental affairs folks on staff. I think that’s in large part because it’s now abundantly clear how important associations are, and also how critical in-house governmental affairs people are to the operations of the companies that have them. I mean, the proration issue (recently considered by the Texas Railroad Commission) came down to one vote, and the ability to interact and work with commissioners and inform their thinking, but also be able to convey back to our member companies and governmental affairs folks in their own companies is critical and necessary. So, I don’t think that we have quite seen the impact that we’ve seen in previous downturns. But we’ve also seen some members exiting just because they're retiring. They're getting to retirement age, and they've sold off their assets. I have those conversations with existing members too: “We love being a member of the alliance, but now I’m ready to do a new thing and enter a new phase in my life.” It’s a challenge to everybody right now, and that’s not unique to associations or to the oil and gas industry. We’re all trying to get through this.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

Obviously, anyone’s professional development is impacted by a variety of factors, not least being their upbringing, their education and their family life. Jason Modglin is no exception, and we asked him about some of those factors and how they have influenced him in his chosen profession. SHALE Magazine: You grew up in Houston during the 1980s and ‘90s. Kind of a whole different world. How do you see Houston having changed since you were growing up there? Jason Modglin: Houston has expanded rapidly. I mean, it’s seen exponential growth since really a low point in the ‘80s when there was a significant amount of layoffs, the downturn in oil and gas, and from the savings and loan crisis. The city really ramped up from there, and it tracked with the rest of the state in diversifying the economy. So, Houston has really grown from that. It’s still the energy capital of the world. There’s no question about that. There are a number of headquarters there, and just the level of activity for oil and gas. But they’ve expanded into other industries. And that is kind of similar to my family story. Oil and gas brought my family to Texas. SHALE Magazine: How so? Jason Modglin: So, my parents both grew up in Kokomo, Indiana, a union town. And my Dad got out of high school and had some college and some military experience, but couldn’t get a robust job in Indiana. Thankfully, they had some family, my grandfather, who had moved to Houston, and my parents visited over a Christmas break in the late ‘70s. By the end of that week, my father had multiple offers from oil and gas service companies. So, by Christmas, it was “let’s pack our bags; we’re moving to Texas.” (Laughing) And he worked for Baker Hughes and had fantastic experiences there until the bottom fell out in the mid’80s. But he’s an electrical engineer, and he was able to move into the medical space. So, he’s been doing medical equipment work since the 80s. But really, oil and gas brought my family to Texas, and we have benefited significantly from that as opposed to growing up somewhere else. SHALE Magazine: What schools did you attend in Houston? What high school and what kind of extra-curricular activities were you engaged in? Jason Modglin: I went to Mayde Creek High School. It’s on the west side of town, Katy school district. We were the farthest east school at that time. Katy is now a sprawling community, but when I was in high school, there were four high schools. Now there are eight. It’s just unbelievable growth, similar to the rest of Houston. I was engaged in debate. I was also on the swim team. And then I got the political bug pretty early on. Congressman Bill Archer had a fantastic program for high school kids, and I was bound and determined to get into his program, and I didn’t make it. But, from there, I went to work for (future Congressman) John Culberson, who was then a state representative. Actually, I interned in his office in high school, then worked on his congressional campaign, and that really just sent me off going down that political path. I worked for a number of political operatives and political action committees in Houston in high school and through college. In college, I went to Southwestern University in Georgetown, just north of Austin. Got my political science degree from there. I also did swim team, college republicans and stayed active on the political side.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

SHALE Magazine: Ah, so you weren’t just an ordinary swimmer, you were an outstanding swimmer. Jason Modglin: (Laughs) No, I was an average swimmer blessed with height and reach, so that compensated for my lack of athletic talent. I could out-touch people just by stretching out. So, I swam for two years, and really enjoyed that. Southwestern is a Division III school, so student athletes there; it’s just for love of playing the game. They have fantastic baseball and lacrosse programs, and they recently added football here probably five years ago. They're a really great school. SHALE Magazine: No question about that. And then you ended up at the LBJ School for your Master’s degree. Jason Modglin: Yes. After my undergrad, I moved to Austin with my wife and worked at the Texas capital, and after that went to work for a law firm doing governmental affairs for them. But, I really wanted to go back to school, but wasn’t particularly interested in going into law school. I had a desire to get back into the policy world. So, I went to the LBJ School here at UT and made fantastic life-long friends and learned from a number of great professors there. It was a fantastic experience. SHALE Magazine: You mentioned your wife earlier. How long have you been married? Jason Modglin: My wife, Erin, and I have been married for 15 years. We’re both from Houston. Getting back to that bug, that political bug: I worked for John Culberson, and my wife’s mother actually ran in that same race for congress. It was a crowded field. So, I actually worked against my mother-in-law, unknown to me at the time. (laughing) Thankfully, they admitted me into the family despite that – my wife has a wonderful family that is in Houston. We have three kids, ages 12, 8 and 5: two boys and a girl. So, we’ve really been challenged this year, moving school online and trying to work through those challenges. So much of what we do with the kids is scouts. That’s been a challenge as well here in Austin, not being able to get together in groups larger than ten. That’s really limited the ability to go camping and to scout meetings, but I am a Boy Scout Assistant Scoutmaster, and this fall, I’ll be an Assistant Den Leader for my youngest in Cub Scouts. Then my daughter is in Girl Scouts, and Erin is the Troop Leader for her. We enjoy traveling when we can get away, and we go to Houston quite a bit to see family. Erin’s family is there, as well as mine. She comes from a large family, so it’s great to see cousins, aunts and uncles and kids, and my family as well. We’ve been in Austin for the last 15 years. We enjoy this city. We’re in southwest Austin, and have a great community of friends. Shale Magazine: What about hobbies? Sports? Jason Modglin: I enjoy grilling, cooking out. I do a lot of the cooking in our house. I've always loved cooking. Hopefully, I'm sitting in front of a grill on the weekends or smoking something – that’s really what I enjoy. Past that, it’s going camping and going on hikes, and really exploring the outdoors with my wife and kids. Since obtaining his master’s degree from the LBJ School, Modglin’s career has included a series of stops in Texas state government. Not surprisingly, he has assumed an increasing level of responsibility and visibility at each stop along the way.

FREE-FLOWING, ABUNDANT, AFFORDABLE NATURAL GAS HAS BEEN PHENOMENAL FOR OUR GULF COAST, BRINGING BACK MANUFACTURING AND REVITALIZING OUR PORTS. TO GO THE OTHER WAY AND TO WANT TO EXPORT THAT INDUSTRY AND BE DEPENDENT ON FOREIGN SOURCES OF OIL AND GAS IS REALLY DISAPPOINTING

In a bit of ironic twist, Jason’s first job out of graduate school was working in the offices of then-Texas Agriculture Commissioner Todd Staples. As luck would have it, Staples is now the CEO of another Texas trade association, the Texas Oil and Gas Association, and thus a bit of a competitor. SHALE Magazine: So, let’s talk about your career prior to the Alliance. Your first job was with a name that will be familiar to SHALE Magazine readers, Todd Staples. Jason Modglin: Yes. I had applied to a number of statewide offices, but Todd Staples took a chance on me in the Agriculture Department. So, I went to work for him, and really didn’t have a lot of Ag experience, but got to do a lot of work on issues related to biofuels. At that time, the Ag Commission had a very broad mandate from the legislature to look at bioenergy. Biofuels, grasses, all of these things that were part of the stimulus package in 2009 to really push out these new agriculture opportunities. He needed somebody to look into that and start doing some work on the capabilities of Texas on how to capture some of that. So, I went to work learning about biodiesel and ethanol and all those things and started with a number of other policy areas, and that really culminated in border security. Around that time, we were starting to see quite a bit of activity on our southern border, really harming landowners. So, we got to work learning about that and seeing how we at the Ag Commission could augment the law enforcement role that was occurring down there. We started working with farmers and ranchers to actually place cameras on their property to help law enforcement to track both drug and human trafficking. SHALE Magazine: Your next stop was back to the Texas Legislature, correct? Jason Modglin: Yes. I had made a lot of good friends at the Ag Department, but kind of had the call to get back to the legislature. Drew Darby, who is out of the San Angelo area, needed a Chief of Staff, and I went and met with him, and we really hit it off. This was in 2012. SHALE Magazine: So your first legislative session in that role would have been 2013. Jason Modglin: Yes. 2013 was a fun session because we had money again (following the 2009 and 2011 sessions when the Great Recession had thrown the budget into a deficit situation) and we were kind of working to undo the 2011 session. 2011 really stayed with me since in my next position with Commissioner Craddick. So many of the changes that occurred at the Railroad Commission in the 2011 session, they’ve been trying to figure out how to deal with them since then. Moving the agency into a cost-recovery model where their fees have to pay for the activity of the agency has made it very challenging, as we’ve seen drop-offs in fees, but also the increased efficiency in the industry. We used to drill a lot more wells. The structure and the fee schedule over there are the more holes you punch in the ground, the more fees you collect. But the industry has been phenomenal in minimizing their surface exposure and ramping up production exponentially, and that has resulted in lower fees to the Commission.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

OUR LEGISLATIVE AND STATEWIDE LEADERS IN TEXAS HAVE DONE THE HARD WORK TO ENGAGE IN INFRASTRUCTURE EXPANSION IN THE STATE. THEY’VE SMARTLY USED OIL AND GAS SEVERANCE TAX DOLLARS TO INVEST IN TRANSPORTATION AND WATER INFRASTRUCTURE

Of course, the industry is generating far more tax revenue than it ever has during that time because of severance taxes, sales taxes, property taxes, but the commission doesn’t touch any of that. They only touch permit fees, so it’s made it very challenging over there to keep the doors open. SHALE Magazine: That brings us to something else about Commissioner Craddick and your time with her: She has been a real innovator in that role at the Commission. She’s taken on projects that she didn’t necessarily need to take on, and you worked on all of that with her. One of the current priorities is obviously trying to get the Commission’s antiquated systems updated. Talk about how critical that is to get done, not just for the Commission, but for its customers. Jason Modglin: Absolutely. First of all, I worked with her quite a bit when I worked at the legislature. She is a unique statewide official that knows how to work with the legislature. She goes in, frequently by herself, and talks with members, talks with staff, because she knows the issues, and she’s been a legislative staffer before. She knows how to walk those halls and really get policy solutions to really translate from legislature to action. I worked with her quite a bit during my time with Representative Darby. Largely on funding issues, but on a number of different policy items. And she’s done a phenomenal job of just kind of getting the IT unstuck over there. If you recall, prior to her coming on board, it was a dot matrix system. SHALE Magazine: Yes, she reminded us in a recent interview that it was so old that it was coded in Fortran language. Jason Modglin: (Laughs) It was the old flashing green screen. My favorite story is that there were designated hours of the day where it was commission time and then public time because otherwise, it would crash the system. I think she could tell this story better than I, but her exposure to the commission was in working in the industry and seeing how there was a real challenge at the commission to go to the legislature and tell them exactly what they needed. The commissioners before her had had difficulty doing that. She has been a voice for this industry and from the commission to say we need to modernize this agency, bring it into the 21st century, because so much of the oil and gas sector these days is about data and transparency, and really bringing that level of complex algorithms and big data from there to the global markets. The challenge is to bring more of the commission’s database and figure out ways to get that to work not only for companies but also to work for the public. SHALE Magazine: Let’s go back to your current job. You and your staff are in the process of gearing up for this next session of the legislature. It may be a little early, but we are just wondering what’s on your horizon in terms of the important issues you see coming up in the legislature in 2021? Jason Modglin: Well, I think the budget is going to be the main focus for this next legislative session. We’ve recently

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

seen some positive signs from the State Comptroller’s office that it may not be as big of a deficit situation as we’ve been led to believe, but we’re not out of the woods yet. And I think that level of uncertainty is going to continue framing the legislature’s mind, particularly if they don’t have the ability to get together easily. They're dealing with their own challenges: How do you get 150 people together in the House, 31 in the Senate? How do you get together and legislate? It’s going to be a real challenge, particularly if we have the same medical precautions in place. So, I think the budget is going to be a key part. Making sure the Railroad Commission and the Texas Commission of Environmental Quality have the resources that they need to continue to operate and be effective. As you know, last session we really got started down a path of doing the mainframe transformation project at the commission, and we don’t want to have to abandon that, or shelve it, or put it on hold for two years. They’ve really started in earnest to start to migrate parts of that mainframe onto the cloud so that it can be utilized better, and find efficiencies there. So it would be a major disappointment if that project is not able to be completed. Shale Magazine : What about other issues? Jason Modglin: Then there are some ongoing issues. For the past several sessions we have had this conversation over eminent domain, which has included oil and gas and landowner groups, as well as local governments. And not just oil and gas, but other businesses as well, like highway contractors and electric companies. We have been trying to address some concerns that landowner groups have about the process of eminent domain. Getting back to our earlier conversation about Houston, we’ve had exponential growth in this state, and with that, it brought challenges in building critical infrastructure. It’s not just highways and electric lines: It’s also pipelines. Getting that product from West Texas and South Texas to the Gulf Coast is challenging as the I-35 corridor becomes immensely more dense from San Antonio all the way to DFW. There used to be breaks in the amount of people and also the number of businesses along that corridor, and it used to be much larger landowners from the Permian Basin to the Gulf Coast, but that has changed now. Some of the landowner issues center around communications and transparency, but also in the format for how companies in need of rights of way engage with the landowner. One of the big sticking points, and it’s pretty recent, is for about the last 10 years, Texas has required the Landowner Bill of Rights to be presented to a landowner prior to any kind of conversation. That document is structured in a way that really puts the landowner on the defensive immediately. So, rather than it being a robust and productive conversation about compensation and access and what do you want the surface to look like after that pipeline company is done, it immediately becomes ‘let’s get the lawyers involved.’ You know, we have very sophisticated landowners, we have very sophisticated eminent domain attorneys in this state, but those conversations have broken down lately into just non-productive framing of the issue. Really if the legislature can make some headway into simplifying that process into providing clear rules and guidance to folks seeking that authority, then I think we’ll be better off.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

SHALE Magazine: Let’s talk about the November elections. This is obviously an important election, not just at the federal level, but at the state level as well. We have a Railroad Commission seat on the ballot; we have the whole House of Representatives one/third of the state Senate up. Then, of course, there are the national races. Talk about your outlook at the Alliance on what you expect to see from candidates in this election. Candidates who would like the support of your membership, and the kinds of things the smaller independents look for in a candidate. Jason Modglin: We continue to work at a local level with both state representatives and state senators to impress upon them that there are limits in some of the proposals they have to tax or over-regulate the industry. This golden goose that is so productive for the state can be shut down by some of the proposals out there that would over-tax or over-regulate operators. At the federal level, it’s hard to tell what you're going to get. We’ve seen so much of the Democratic Party be co-opted by the Green New Deal, and that’s become the majority there. You’ve seen polling here in the state. The majority of Democratic voters don’t want domestic drilling to occur; they want a complete phase-out of fossil fuels. That is incredibly short-sighted to export our industry to other countries. We’ve seen it in the steel industry on defense matters. It is good that we have a domestic oil and gas industry. It helps manufacturing. It helps the job base. It helps rural Texas. To see a major party completely object to such a critical component of not only Texas’ economy, but our nation’s economy is concerning and troubling. We hope that some of those efforts by folks in Pennsylvania and West Virginia and some of these Democratic strongholds that are still very prominent in oil and gas and coal will continue to push back against these efforts to completely export this industry and ship it overseas. And the reason I say that is that the demand for oil and gas isn’t going away. We’re not going to phase out the gasoline engine; we’re not going to phase out diesel engines, there’s not going to be an end to petrochemical demand or plastic demand. That’s just not occurring. Our modern economy and our way of life, and everything we’re doing, even talking to each other right now are as a result of plastics and petrochemicals that make our lives what they are today. In addition to the medical crisis we’ve got going on right now, personal protective equipment and modern medicine

are grounded in the advances that the petrochemical industry has been able to achieve over the past 50 years. To abandon that, and to send it overseas to where we would be dependent on oil and gas from the Middle East and from Russia and some of our less than favorable countries in South America, it’s just, I’m at a loss for words for why anyone would support that. It’s disturbing to see that there’s not a longer look, by both parties, into the fact that there is extreme value in having energy security in this country, particularly in Texas. Free-flowing, abundant, affordable natural gas has been phenomenal for our Gulf Coast, bringing back manufacturing and revitalizing our ports. To go the other way and to want to export that industry and be dependent on foreign sources of oil and gas is really disappointing. We saw in California recently 3.3 million homes and businesses potentially without power because they’ve engaged in this electrifying everything, and they’re going to phase out every natural gas plant we have there. They're reaping those consequences. It’s why manufacturers and businesses are looking elsewhere to move. Not only because it’s a high-tax and high-regulatory state, but also because they can’t depend upon investing in that state because they don’t know what it’s going to look like five and ten years down the road. SHALE Magazine: Right, and as of today, right now, Californians can’t even depend on having reliable electricity service, which is just insane in a civilized country. Jason Modglin: Our legislative and statewide leaders in Texas have done the hard work to engage in infrastructure expansion in the state. They’ve smartly used oil and gas severance tax dollars to invest in transportation and water infrastructure, because they're building for a 50-year period down the road that Texas will continue to be here, and there will be more people here, and we need to be ready for them. Whereas you see, unfortunately, in these states that have been co-opted by environmentalists and the Green New Deal that their sole focus is the level of carbon in the atmosphere and not on the quality of life and the ability to live, work and raise a family. That’s unfortunate That is undoubtedly true. But what’s not unfortunate for the members of the Texas Alliance is that the new leader they chose to jump into the middle of their industry’s trying times is a man who brings with him the stability, experience, relationships, and yes, the energy needed to get the job done. When the road ahead looks hard, it helps to have the right driver at the wheel.

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INDUSTRY

Renowned Oil Professor Proposes Fracking Alternative By: Tom Tamarkin

r. George Chilingar is findings in a book published in Russian truly the Renaissance titled “The Physical Basis of Vibrational man of the petroleum and Acoustic Influences upon the Oiland gas industry. As Gas Strata.” professor emeritus of the University The 2001 book outlined the physical of Southern California, he has over foundations of vibration and acoustic sixty years of research and teaching impact on the reservoir to enhance behind him. In the 1960s, Dr. Chilingar oil recovery and increase the rate of developed the first practical natural development of depleted and watergas plunger lift method responsible logged oil fields. It is shown that the for the deliquification of a natural gas area of the most effective application well based on his use of an à la-adiof these impacts are fields with low abatic process. His invention had an and medium viscosity oils and difextremely low energy cost as well as ficult development conditions, which low environmental impact and is in use are characterized by high water cut today throughout the world. and heterogeneity of formations, low In the late 1970s, Dr. Chilingar bepermeability, high clay content, etc. gan research with M. L. Surguchev, O. The developed technologies are enviPROFESSOR EMERITUS GEORGE V. CHILINGAR & TOM TAMARKIN L. Kuznetsov, and E.M. Simkin in Rusronmentally friendly and do not cause AT DR. CHILINGAR’S HOME IN LOS ANGELES, CALIFORNIA sia after it was noted that oil rate prodamage to well structure elements. duction increased noticeably several The vibro-seismic technology includdays after the occurrence of an earthquake when the epicenter of the ing the electronics and acoustic transducer assemblies is comparatively earthquake was located in the vicinity of the oil-producing field. This ininexpensive given the significant rate of return as manifested by long crease in oil flow remained higher for a considerable period of time. This term increased flow activity. led to a decade-long study in Russia which gradually focused on the use This became a popular book in Russia for students, researchers, engiof acoustic vibrational energy or vibro-energy for enhanced oil recovneering personnel and operators involved in geophysics and the develery after reservoirs flooded with water. In 1996 Chilingar, Kouznetsov, opment of oil and gas fields. Simikin and S.A. Katz wrote a well-received paper titled “Improved oil Now Dr. Chilingar is in the process of rewriting this important book in recovery by application of vibro-energy to water flooded sandstones,” English. The new book will incorporate the results of the vibro-seismic which was published in 1998. methodology used in Russia. Dr. Chilingar’s aim is to popularize this The key takeaway of the 1998 paper based on studies at the Abuzy oil recovery methodology as an environmentally friendly alternative to oilfield in Russia and Changirtash oilfield in Kirigzstan was that the rate of “fracking” in the United States. oil displacement increases and the percentage of residual oil decreases Dr. Chilingar is the author of 73 books and over 500 scientific papers. if vibro-energy is applied to the porous medium containing oil. FurtherHe is Professor Emeritus of Petroleum, Civil and Environmental Enmore, the rate of degassing increased due to the applied vibro-energy. gineering at the University of Southern California (USC), Los Angeles, Thus, the vibro-energy methodology was proposed to serve as an adCalifornia. He received his Bachelor’s and Master’s Degrees in Petroditional tool for increasing oil recovery; possibly in conjunction with Elecleum Engineering at USC in 1949 and 1950. While he was working on his trically Enhanced Oil Recovery (EEOR) techniques as well as chemical Ph.D. in Geology at USC, he spent four years in the U.S. Air Force, where floods and other related processes. he made a scientific breakthrough in jet fuel and was given the position Over the course of the next decade the team worked closely designof Chief of the Petroleum and Chemicals Laboratory at Wright Patterson ing and conducting lab experiments along with numerous oil field studies Air Force Base, Ohio. By 1956 he was awarded a Ph.D. in Geology with on various vibro-seismic methodologies. a minor in Petroleum Engineering. After his term serving in the U.S. Air In 2001, Dr. Chilingar, E. M. Simkin and O. L. Kuznetsov released their Force, he returned to USC as a member of the School of Engineering

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

faculty. For over 60 years, Professor Chilingar taught various courses in Petroleum Engineering, Petroleum Geology and Environmental Engineering at USC. In 2008, he was honored with the Lifetime Achievement Award from USC. As one of the most well-known petroleum geologists in the world and the founder of two prestigious journals in the oil and gas industry, he served as an advisor to many governmental organizations, dignitaries and lawmakers. For example, he served as Senior Adviser of Petroleum Engineering to the United Nations from 1967 to 1969 and then again from 1978 to 1987. One of his greatest contributions to the petroleum industry is the method of identification of oil-rich rocks by analyzing the ratio of calcium to magnesium contents in carbonate rocks (dolomitization). Through the use of this method, he discovered a large oilfield in Iran, which was named after him. He is the first American petroleum geologist ever elected to the Russian Academy of Sciences (RAN) and Russian Academy of Natural Sciences. He began popularizing Soviet petroleum geology and engineering literature in the western world during the 1950’s and 1960’s. During the last 15 years Professor Chilingar has been serving as President of the Russian Academy of Natural Sciences, U.S. Branch, which united over 100 famous U.S. scientists and engineers in their joint work. He is Professor Honoris Causa from the largest Petroleum University in the world, Gubkin Russian State University, Moscow, Russia. He is also Doctor Honoris Causa and Honorary Professor at Dubna International University, Moscow, Russia. The results of his investigations are presented in over 500 research articles and 73 books in the fields of Petroleum and Environmental Engineering and Petroleum Geology. Many of his books have been written in or translated to Russian, Chinese and Farsi. He has numerous patents in the field of his inventions; namely EEOR and Acoustic Vibrational Enhanced Oil Recovery. Dr. Chilingar is recipient of over 100 medals, awards and diplomas from various governments, universities and organizations, including the Lomonosov medal of the Russian Academy of Sciences, Order of Homayun Gold Medal from the Shah of Iran, and the White Elephant Medal from King of Thailand. In his research of the past 15 years, Dr. Chilingar, O. Sorokhtin and L. Khilyuk have been investigating the so-called greenhouse effect in the Earth’s atmosphere and the impact of anthropogenic carbon dioxide emission on global climate evolution. He has shown that the effect of anthropogenic carbon dioxide emission is negligible (if any) in comparison with the global

Dr. Chilingar began research with M. L. Surguchev, O. L. Kuznetsov and EM Simkin in Russia after it was noted that oil rate production increased noticeably several days after the occurrence of an earthquake when the epicenter of the earthquake was located in the vicinity of the oilproducing field forces of nature. He proved that an increase in CO2 concentration in the atmosphere results in cooling rather than warming based on the Earth’s natural à la-adiabatic processes and related synoptic activities. When asked about Dr. Chilingar’s lifelong field of study and service he said: “Energy is the life blood of human society. Transportation, basic human comforts and food production are dependent on fossil fuels. Except for hydroelectric power, renewable and green energy schemes are nothing more than political pipe dreams. The world depends on gas and oil. Early in my carrier, I discovered how a near adiabatic (a al-adiabatic) process could be used to lift oil from wells. Later in my career, this led me to investigate the Earth’s own natural al-adiabatic processes which categorically prevents any so called man-produced global warming or climate change from burning fossil fuels. The demonization of the petroleum industry must stop, and I hope my research paves the way.” Dr. Chilingar has written several papers scientifically proving that atmospheric CO2 does not contribute to increased temperatures on the Earth, and he is the principal author of the epic book “The Evolution of The Earth’s Climate” that is dedicated to President Donald J. Trump and other wise elected leaders. “The Evolution of the Earth’s Climate” is published by Wiley & Sons and available on Amazon.

About the author: Tom Tamarkin formed Tamar Corporation which developed the nation’s first “Smart Meters.” The Tamar meters integrated its “Smart Meter” systems with its “Tamar 2000” in-home display. The Tamar meters introduced the concept of “Time of Use” rates and “Peak Demand” rates for residential utility customers and gas and water meters. In 1997, Tom formed USCL Corporation, later to be merged into EnergyCite, leading the development of the modern electrical utility “smart meter,” which Tom is generally credited with inventing. Tom Tamarkin is the organizer and manager of the Fusion4Freedom website, which serves as a significant educational resource for atomic fusion energy, and is the Fusion Energy Consortium founder. In 2019 Tom formed ClimateCite, Corp., a U.S. IRS 501(c)(3) compliant not for profit company to further his efforts in defeating the climate hoax worldwide. For information concerning commercial and research opportunities for the acoustic seismic methodology as a less expensive environmentally friendly alternative to fracking contact Tom Tamarkin, author at tomer@ climatecite.com.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

INDUSTRY

Managing Solar and Storage Global Supply Chains in the Age of COVID-19 By: Andy Klump

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Diversification remains critical Traditionally buyers have been advised to dual-source, depending on volumes and pricing. As the pandemic ebbs and flows across different geographies and different economies open and closed, the decision to diversify to not just two, but three or more suppliers across a diversity of projects, rather than single-sourcing your entire portfolio may be the right choice. There are different ways to slice and dice risk. While Asia broadly continues to see a modest pickup in manufacturing activity through July

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ustomers for solar panels and battery systems will be navigating various supply chain delays and disruptions from the pandemic for some time. Supply chain validation has become more critical than ever before as buyers of equipment with overseas supply chains must assess and manage their risk so as not to get caught short due to supply chain, logistics or trade case challenges. Much of the equipment or subcomponents for racks, inverters, transformers and batteries required originate in China. There are still many solar modules and inverters manufactured in Southeast Asia, South Asia and Korea, as the cost advantage is needed to achieve slim project IRRs, even with the existing trade case in place. Solar, wind and storage developers can survive and thrive both during and after the COVID-19 outbreak with lessons from international sourcing experiences that have come before, including the SARS and H1N1 viruses, the solar tariffs and trade wars. While CEA is a U.S.-based entity, our Asian supply chain headquarters in Shanghai saw firsthand the most significant supply chain disruptions back in January, around the time of the Chinese new year. But as of today, most of the supply chain in China is up and running and has recovered substantially since February and March. Reuters reported on May 15 that factory output there rebounded in April to 3.9% above a year ago, over twice what had been expected after a 1.1% fall in March. The China National Bureau of Statistics reported even higher production numbers and a 3% uptick in exports in April. Our 85 engineers worldwide have been back in the factories since late February in China, and agree that overall manufacturing in the solar sector has returned to above 90% of factory capacity in almost all Southeast Asian manufacturing facilities. Despite a first quarter that was quiet in terms of cell capacity expansions, CEA estimates nearly 180 GW of module capacity will be online by the end of this year in China alone, accompanying almost 185 GW of cell capacity thanks to a combined 66 GW of new cell expansions announced by Aiko and Tongwei. Among suppliers continuing multi-GW expansions are Jinko Solar and LONGi, with Risen and Trina Solar also moving ahead. In the long term, our current crisis will require that companies all over the world, in virtually every sector, constantly assess their supply chain risk amid global uncertaintiesâ&#x20AC;&#x201D;whether a trade war or a pandemic. The good news is that even while some projects have been delayed as a result of the pandemic, the demand for renewable energy has never been stronger. A few key tips to keep in mind as your company navigates the everevolving supply chain today and going forward:

alongside China’s continued uptick, rising infection rates in key export destinations are still being monitored carefully. Decisions to increase overseas sources require extensive due diligence and cost research, and a more streamlined approach to subcomponent manufacturer partnerships. They may require more risk, and aggressive pricing by emerging suppliers. Using these new suppliers may require extra time to convince banks of their bankability credentials or more extensive upstream QA/QC measures if previous financing requirements were dependent on one stable supplier. Even so, the case for supplier diversification just became stronger.

Exercise caution and plan for uncertainty For months now, the upstream impact of the COVID-19 pandemic has been limited to delays generally measured in weeks. However, the market may experience extended shutdowns of individual factories that lead to suppliers exercising other factory locations or rushing new OEM relationships with more thorough due diligence

or qualification. Consequently, caution is due. Selecting a supplier based on their designation as a Bloomberg New Energy Finance Tier One supplier, for instance, misses out on too many of the elements that any good financier or developer should find important, including module quality. Future COVID-19 restrictions are unpredictable. While many remain hopeful of avoiding a new outbreak in China, and that most nations will implement strategies to contain the spread of the disease, there will still be substantial noise in the system As the industry innovates, there is no shortcut to quality In the midst of these earth-shaking events, downstream buyers of equipment are simultaneously witnessing an unprecedented degree of innovation across the solar and storage industry, from wafer size to cell process to cell-to-cell interconnection and more. The speed of change combined with unpredictable pandemic-related disruptions have increased pressures to ramp up production to meet demand, in case of a stoppage in some area of critically needed supply. Due diligence can build trust, so the old adage of “trust but verify” necessitates that a robust QA program of daily in-line production monitoring is a requirement. As any buyer implements a qualify verification program, there is no substitution for experienced third-party inspectors who follow internationally accepted practices and are independent of manufacturing facilities. Inspectors can screen out defects that can threaten performance or safety. A thorough Quality Assurance program includes daily inspections, stringent AQL guidelines and internationally recognized manufacturing standards which are documented in the contract in advance. Furthermore, all parties involved must comply with the U.S. Foreign Corrupt Practices Act and be able to delineate a comprehensive corporate ethics policy over multiple years to avoid any conflict in interest. A natural consequence of the shifting landscape from COVID-19, as during previous disruptions, will be a flight to quality suppliers at scale with localized supply chains. When there aren’t enough such suppliers to go around, however, working with emerging suppliers may be possible if buyers are prepared with contingency planning to navigate an ever-expanding global supply chain. These supply constraints will hopefully end soon, but tariffs, pricing and other challenges will always affect quality and supply. As new constraints emerge, a diverse supply chain composed of high-quality suppliers reduces risk and increases an investor’s confidence in a profitable project.

In the long term, our current crisis will require that companies all over the world, in virtually every sector, constantly assess their supply chain risk amid global uncertainties

About the author: Andy Klump is the CEO and Founder of Clean Energy Associates, based in Shanghai. He has 17+ years of supply chain experience in China and is an expert on sourcing solar modules, racks, inverters, transformers, and energy storage batteries from China and elsewhere in Asia without sacrificing quality.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

INDUSTRY

Pennsylvania Leverages Its Natural Gas Advantage By: Thomas Shepstone

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

The fact the Keystone State can still produce legislation such as this demonstrates it is thoroughly deserving of that logo (continued on page 39)

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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ennsylvania just enacted legislation that will leverage its natural gas advantage to stimulate the development of petrochemical and other businesses that use natural gas. That, itself, is a significant achievement that sets the Commonwealth apart from neighboring states such as Maryland and New York who have the same resources and refuse to use them. There is more to the story, though, and it may be the best part. The story is about a bill introduced in early 2019 and numbered HB 1100, “An Act…providing for energy and fertilizer manufacturing tax credit(s).” Specifically, the bill offered a tax credit of up to 20% against tax liabilities to businesses that purchase and use Pennsylvania natural gas to manufacture petrochemicals or fertilizers in the Commonwealth. The businesses were required to: (a) make capital investments of at least $450,000,000 to construct their facilities and place them into service in this Commonwealth and (b) have created at least 800 full-time equivalent jobs. Two things were unique about the bill. First, the tax credit was directly linked to the amount of natural gas used: 47 cents per thousand cubic feet of gas. Secondly, it required the payment of “prevailing” or union wage rates by individuals, contractors and sub-contractors doing the construction. This means both industry and labor had strong reasons to back the bill. The bill was authored by a young Republican representative from labor-friendly Northeastern Pennsylvania named Aaron Kaufer. It soon had support from the Speaker of the House and several other state reps, including my Representative, Jonathan Fritz, whose district includes much of Susquehanna County, one of the largest producers of shale gas in the United States. Labor-friendly bills don’t typically get initiated on the Republican side of the aisle, but this one did, and it made all the difference. Importantly, it also got strong support from a Democrat State Senator by the name of John Yudichak, who is as strong a labor ally as any in the Senate. Yudichak, in fact, got so disgusted with the direction of his party on is-

sues of importance to trade unions that he became an Independent not long after the bill was introduced. HB 1100 initially got vetoed by Governor Tom Wolf. He was under pressure from the usual suspect shills for his gentry-class friends. They fund most of the anti-gas activity in Pennsylvania, and Wolf was reluctant to offend them. The governor protested that, while he supported the general idea, he thought each project should be judged on its merits (political speak for “I want the leverage for myself”). The size of the economic development project required wasn’t enough, and there was no guarantee for those prevailing wages. But, there was also counter-pressure from that extremely important constituency for any Democrat governor—labor—and, as explained above, labor solidly supported the bill. And, as also noted, there were several Democrats from gas-drilling regions of the state who were behind it as well. Indeed, it was mostly just the urban left in the party that opposed it. Thus it was that the bill was legitimately tagged as both bi-partisan and pro-labor and to such extent that Wolf’s veto could, arguably, have been overridden. That was how things stood in March of this year when the governor counted the votes and realized he had better negotiate the best deal he could or lose. He chose wisely, and in July signed a revised version of the bill under the number of HB 732, the “LOCAL RESOURCE MANUFACTURING TAX CREDIT.” If you thought the governor truly got a different deal, though, you were mistaken. The amount of capital investment required was, in fact, reduced slightly, to $400,000,000, the 20% maximum stayed and so did the 800 jobs requirement as well as the 47 cents per thousand cubic feet of gas and the prevailing wage demand. The governor did get a limit on the number of projects and some wiggle room to potentially leverage some of the money for his own purposes. The revised and enacted bill provides that no more than $26,666,668 would be made available to as many as four businesses for up to $6,666,667, with the governor’s administration having the authority to reallocate any unused tax credits. The program was modified, in other words, to become a test case and possibly

give Tom Wolf some political bones to throw around, but to similarly qualified taxpayers, which means everything essential to the bill from a natural gas perspective stayed. Assuming it works, it most likely will be made available in the future to additional projects. That is just fine and a profoundly small price to pay to get the governor’s signature. Try to imagine this happening in Maryland or New York, where all common sense, reason and even self-interest have been thrown to the wind in an ongoing potlatch ceremony where green virtue signaling is the only thing that matters. Not that Tom Wolf isn’t as committed to that sort of political correctness; he most definitely is. Pennsylvania, though, is still a relatively balanced state in terms of rural versus urban, where one must strike compromises and respect each other. Maryland and New York have legislatures who now treat their food and energy-producing regions with utter condescension. That isn’t possible in Pennsylvania if you’re the governor and hope to accomplish anything. This is why, despite all the issues Tom Wolf has created for the gas industry, and there are many to be sure, he was forced into compromise in this instance, and that’s a good thing. Tom Wolf has already gotten credit and goodwill out of this legislation, including from now Independent Senator Yudichak. And, that’s also a good thing, even if it is not deserved, because we need to move things ahead and if it must be incremental progress and we have to drag along others for the ride, so be it. This is how and why Pennsylvania works, as opposed to some other states on the east coast. The fact the Keystone State can still produce legislation such as this demonstrates it is thoroughly deserving of that logo. It is a place where things can still get done in the spirit of compromise and shallow green politics based on ideology over science do not rule the day, not yet anyway. But, there’s another compromise involved: the one between labor and Republicans in Pennsylvania, with the latter getting on board with prevailing wages, and look how much good was accomplished. It’s a powerful lesson for both industry and labor. It is crucial we all join hands in the battle against green extremism. May it take hold elsewhere as well.

SHALE Mobile App Free to Download on iPhone and Android GPS-Enabled Directory Oil and Gas Survival Kit and More!

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

INDUSTRY

OSHA’s Latest Guidance Serves As Recommendations to Oil and Gas Businesses By: Annette Idalski, Kaitlin Lammers and Ray Abilmouna

tasks and job duties. The risk exposure levels delineated by OSHA are lower (caution), medium, high and very high. OSHA classifies most oil and gas work tasks as either lower or medium risk, and notes that high and very high risk levels are “not applicable for most anticipated work tasks” in the oil and gas industry. The key factor in determining whether an oil and gas worker’s position should fall into the “lower” or “medium” hazard category is the level of their contact with others. OSHA’s guidance classifies “tasks that do not require frequent close contact with other coworkers, contractors, customers or the public” as having a lower risk of exposure. By contrast, tasks that require frequent contact within six feet of others, including work performed in control rooms, trailers and dog houses, are classified as medium risk. Based on the hazard assessment results, OSHA next advises employers to select, implement, and ensure that workers use an appropriate hierarchy of engineering and administrative controls outlined in the guidance to prevent COVID-19 exposure.

About the authors: Annette Idalski chairs the Labor and Employment Practice at Chamberlain Hrdlicka. Kaitlin Lammers and Ray Abilmouna are attorneys in the practice, a group that counsels companies in the oil and gas sector. They may be reached at annette.idalski@chamberlainlaw. com, kaitlin.lammers@ chamberlainlaw.com and ray. abilmouna@chamberlainlaw.com. (continued on page 41)

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s part of its continuing series of industry-specific alerts issued in light of the pandemic, the United States Department of Labor’s Occupational Safety and Health Administration (OSHA) recently published new COVID-19 control and prevention guidance specific to the oil and gas industry. It should be noted that OSHA considers the guidance to be a “recommendation” that is “advisory in nature.” In other words, the guidance does not create any binding new legal obligations for employers, and instead offers advice on best practices. In its guidance, OSHA advises that employers should assess the hazards to which workers are exposed in different positions, and based upon those hazards, evaluate the risk of exposure for each subsect of workers. Second, they should establish and ensure the use of a series of controls to prevent exposure within each risk group. First, OSHA recommends that employers conduct a hazard assessment to determine each job classification’s COVID-19 risk exposure level, based on the classification’s work

The key factor in determining whether an oil and gas worker’s position should fall into the “lower” or “medium” hazard category is the level of their contact with others The suggested control measures include: • Configuring communal work environments so that workers are spaced at least six feet apart, and encouraging single-file movement in congested areas of a job site; • Using markings and signs to remind workers of the need to maintain social distancing; • Staggering arrival, break and departure times to avoid congregation of workers; • Ensuring adequate ventilation in enclosed work areas to help minimize potential exposures, including opening windows and turning off fans when possible; • Cleaning and disinfecting commonly touched surfaces and equipment; • Limiting the number of personnel present in enclosed areas, such as control rooms and dog houses, and considering openair or larger enclosed spaces for personnel meetings; • Where carpooling or use of company shuttle vehicles is essential, limiting the number of workers per vehicle, opening windows when possible, encouraging workers to wear face coverings and regularly sanitizing the vehicles between use; • Considering the use of “cohorting”—maintaining the same group of workers on each shift in order to limit exposure; • Implementing workplace policies and programs to promote personal hygiene, including hand hygiene; • Requiring additional personal protective equipment (PPE) (the guidance notes that most oil and gas workers are unlikely to need PPE beyond that which they use to protect themselves during routine job tasks, but discourages continued sharing of any standard PPE), and cloth face coverings; and • Establishing plans and policies for reporting COVID-19 cases and symptoms, back-up staffing contingencies and revised sick leave. While the guidance is not binding, the implementation of appropriate controls (including some not mentioned by OSHA’s guidance, such as screening measures and temperature checks) may limit an employer’s potential liability for injury or death resulting from a worker’s exposure to COVID-19. Accordingly, employers should be well-versed in the guidance and implement appropriate controls as detailed therein, or as they separately see fit, based upon the unique characteristics of their job sites and work functions.

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SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

INDUSTRY

Making Strides in High-Efficiency Power Generation With the STEP 10 MWe Pilot Project

onstruction has been completed on the building where breakthrough supercritical carbon dioxide (sCO2) technology for clean, compact, and high-efficiency power generation will be demonstrated. The transformational technology dramatically improves environmental performance, economics, and operational flexibility, and it is much more compact than conventional steam power cycle technology. Located on Southwest Research Institute’s (SwRI’s) campus in San Antonio, TX, the 10-megawatt (MWe) pilot-scale plant will be among the largest facilities for sCO2 technology in the world. With Department of Energy/National Energy Technology Laboratory (DOE/NETL) support, GTI is leading the Supercritical Transformational Electric Power (STEP) development team together with SwRI and GE Research (GE). The aim of the STEP project is to advance high-temperature sCO2 cycle performance and promote the commercialization of more efficient and more flexible power plants. The team has designed the plant and finalized construction of the building that will be home to the facility. Equipment manufacturing and installation are progressing, followed by commissioning and start-up slated for early next year. After commissioning, comprehensive testing will mitigate risks in the advancement of sCO2 technology components and illustrate the operability and performance of this high-efficiency power cycle. During the 22-month test phase, a versatile and reconfigurable fully-functional power plant employing sCO2 as the working fluid will be tested. Simple recuperated cycle testing will be performed first, followed by extended performance and long-term testing for the Recompression Closed Brayton Cycle (RCBC).

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What is a supercritical carbon dioxide (sCO2 ) power cycle? The sCO2 Brayton power cycle uses CO2 under high-pressure and hightemperature—supercritical—conditions as a working fluid instead of steam. The heated working fluid is circulated and compressed, which spins a generator to create electricity. The unique properties of sCO2 offer intrinsic benefits in closed cycles to absorb thermal energy, to be compressed, and to impart momentum to a turbine. Using sCO2 as a working fluid for power cycles, instead of steam/water, offers the advantage of highly compact turbomachinery that will decrease capital costs, as well as reduce plant size and footprint. Its rapid response to load transients that can occur when integrated with wind or solar power generation positions sCO2 as a highly responsive and complementary technology for renewables. Advanced configurations can enable near-zero emission power generation, adding to its strong environmental performance. In addition to using less fuel and consuming less water, sCO2 technology offers flexibility and versatility in many applications. It operates using a wide range of heat sources, including fossil fuel (natural gas and coal), renewables (concentrated solar, biomass, geothermal), next-generation nuclear, industrial waste heat recovery, and shipboard propulsion. The STEP Project The STEP project has the potential to revolutionize future power generation. The STEP facility is different from other sCO2-based power cycle project efforts due to its scale—it will be the only operating grid-connected power plant of this kind at a commercially relevant size. Developing and maturing the technology at pilot scale will spur the development of necessary designs, materials, components, op-

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Special to SHALE

eration and control systems, sensors, and understanding and characterization needed for larger-scale sCO2 power conversion systems. Improvements in high-strength alloy materials and advancements in numerical modeling add value to the technology. The project will advance the sCO2 Brayton power cycle and demonstrate performance over a range of operating conditions. The project will address a number of technical risks and challenges associated with key components of the technology, particularly materials and durability of equipment such as turbomachinery and recuperators. Information about system integration, operability, performance, and scale-up will move the technology toward commercialization. Initially, the indirect sCO2 power cycle will be demonstrated to show the potential for achieving a lower cost of electricity and assess the ability to achieve thermodynamic cycle efficiency greater than 50% at commercial scales. It will be followed by extended performance and long-term testing for a higher-temperature RCBC configuration that demonstrates system and component design and performance, including generating at least 10 MWe. The effort is a significant step in moving the technology from the lab to the field. The STEP Pilot is being built as a multi-use facility to expand beyond current team members. After this program is complete, the reconfigurable facility could remain a testbed for future sCO2 technology advancements. Due to its flexible design, the STEP facility would be well-suited for many years as a proving ground that could offer technology developers and potential users access to commercial-scale testing for materials, components, and process technologies. Worldwide Impact With an increasing global demand for energy, electricity production is expected to grow faster than any other use of energy, employing diverse resources with regional variations. The next generation of transformational power processes will utilize technologies that enable clean, lowcarbon power production that offers versatility, scalability, responsiveness, and lower costs. In Europe and the U.S., electricity generated from gas is complementary to the increasing share of electricity generated from renewables, and will continue to play an important role in the transition to carbon neutrality. International collaboration is critically important to successfully demonstrate new power cycle technology in projects that tend to be capital intensive. Numerous industry partners from around the world are supporting the STEP project, and discussions are continuing for others to join. ENGIE, a French multinational electric and

gas company, recently joined American Electric Power (AEP), Korea Electric Power Company (KEPCO), Natural Resources Canada (NRCan), Southern Company, University of Houston, University of Wisconsin, and Texas Commission on Environmental Quality (TCEQ) to help guide the test activities and gain access to test data and intellectual property. Original equipment manufacturers, engineering companies, and power plant owners/operators from around the world are invited to join this open Joint Industry Program to gain a better understanding of how transformational sCO2based power cycles offer dramatically improved efficiencies, economics, and environmental performance. The STEP project is bringing the transition to low-carbon, low-cost energy with a smaller footprint a step closer to fruition.

Its rapid response to load transients that can occur when integrated with wind or solar power generation positions sCO2 as a highly responsive and complementary technology for renewables

SEPTEMBER/OCTOBER 2020 ď &#x201C; SHALE MAGAZINE

INDUSTRY

Lithium Batteries Can Lead the Charge Against Climate Change By: Teague Egan

Extraction Impacts To cope with this demand level, lithium extraction from current mining operations will need to increase, and new mines will need to be opened, exacerbating current environmental impacts caused by the lithium mining industry. Existing operations and large lithium reserves have firmly placed Latin America as the go-to region for future mining projects. Yet, the issues associated with lithium extraction have had lasting environmental impacts. From drying out aquifers and destroying pastoral lands to polluting waterways and killing wildlife, the impacts of both forms of mining are noticeable, leading many to question lithium’s place in a world increasingly concerned with climate change and sustainable development. The damage created by lithium extraction has altered the landscapes of the Lithium Triangle in South America. It could spread to different regions as mining companies seek new deposits to exploit. The destruction of agricultural land and the infiltration of chemicals into groundwater are issues that not only affect local communities but reduce the effectiveness of the sustainable development efforts being promoted globally. However, despite the extraction impacts that lithium mining causes, the environmental cost of discarding lithium-ion batteries as an option for sustainable growth is much higher than adopting them. Lithium is an imperfect solution for a complicated problem—but it can be improved upon. Battery Revolution With the recent collapse of COP25 talks in Spain and the higher frequency of environmental disasters happening on a global scale, it has become clear that a solution is needed sooner rath-

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

er than later. Mitigating climate change through carbon emission reduction is still the best way forward to safeguard future generations, and lithium-ion batteries have shown the potential to help spur a transition away from fossil fuels by finally giving renewable energy a reliable storage medium. Additionally, lithium-ion batteries’ use provides renewable energy with a solution against intermittency issues through its efficient high-capacity storage. An electric vehicle charged on a fossil-fuelpowered grid will still outperform and produce less pollution over its lifespan than a traditional internal combustion engine vehicle. Renewable energy produces close to no carbon emissions. It has been shown to be more reliable and costefficient when coupled with lithium-ion batteries than coal or natural gas-powered power plants. With no alternate method of large-scale power storage and ever-growing renewable energy and electric vehicle industries, lithium-ion batteries provide a high-capacity, less carbon-intensive and cheaper option than fossil fuels. Lithium is inevitable in the current transition away from fossil fuels. Technological advances are needed to ensure that lithium batteries’ production drives sustainable development without creating more environmental issues. Innovation in the field of lithium mining has also led to breakthroughs that can revolutionize the industry. EnergyX’s LiTAS technology, which extracts lithium from brine pools, uses little-tono water or chemicals, yields a higher amount of lithium, and is a lot faster than conventional methods while emitting low carbon emissions. These types of advances in technology will not only make lithium mining a more efficient process but further reduce the environmental impact of its extraction. Despite the environmental impact lithium produces through its extraction, it is set to be one of the most important components in the transition to a low-carbon, sustainable world. Investing in innovation and new technologies will only improve and refine how lithium-ion batteries perform. Large scale lithium-ion batteries are already beginning to be established as the new status quo in auto manufacturing and the energy sectors. The time for action is now ‒ as is the time to embrace a lithium-driven transition.

Despite the environmental impact lithium produces through its extraction, it is set to be one of the most important components in the transition to a low-carbon, sustainable world

About the author: Teague Egan is the Founder and CEO of EnergyX. He is responsible for all aspects of building the company into the world leader in renewable energy technologies. His focus is on all aspects of commercializing the LiTAS™ tech for lithium extraction and solid-state battery electrolytes. Teague’s background is one of serial entrepreneurship, investing and philanthropy. He has been investing in public sector energy assets and sustainable technologies since 2013.

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ften referred to as “white petroleum,” lithium is an integral part of the lithium-ion battery that you will find in your phone or laptop, as well as powering EVs and providing energy storage for major electrical grids. However, lithium is proving to be a double-edged sword. The global demand for lithium is set to expand along with the rising popularity of EVs, which, according to Bloomberg predictions, could number over 500 million on the road by 2040.

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Activity Ramps up Regarding Regulation of Methane Venting & Flaring By: Jack Belcher and Brent Greenfield

ttention over methane leaks, venting and flaring has undoubtedly increased in recent weeks as a number of actions have taken place at the federal and state levels that have significant longer-term implications. Texas and New Mexico In August, the Texas Railroad Commission (RRC) took steps moving it closer to reducing flaring and improving the reporting requirements for any releases by approving for public comment proposed changes to the Application for Exception to Statewide Rule 32. Specifically, the rule changes would: • Reduce the amount of time an operator can obtain an administrative exception to the flaring rule. • Provide incentives for the deployment of technologies that reduce gas flaring. • Require operators to provide more information outlining how their specific situation justifies a need to flare. • Tag flares to the specific production property where they take place. The RRC noted that between June 2019 and May 2020, the amount of produced gas that was flared in Texas was reduced by 79% while, at the same time, gas production rose 13%. Flaring from casinghead gas, which is produced from oil wells, decreased by 82%. “The sharp decline in the flaring rate suggests that decreased flaring volume was caused by more than simply a decrease in production,” said Paul Dubois, RRC Assistant Director for Technical Planning. “We will continue analyz-

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ing the monthly data that comes in. That information, along with the Statewide Rule 32 applications, will help us continue a comprehensive approach to regulating flaring.” Reportedly, commissioners are also considering using a matrix developed by the Texas Methane and Flaring Coalition as a tool to reduce the number of days an operator can continue to flare in the absence of Commission approval following a hearing. The RRC action followed the June release of a report that found operators in the Permian Basin burned a record $750 million worth of natural gas in 2018. The Institute for Energy Economics and Financial Analysis report calculated 238.1 billion cubic feet of gas was either flared or vented, roughly double the value amount wasted in 2017. Elsewhere in the states, New Mexico regulators in late July released two draft rules aimed at reducing methane venting and flaring. The draft rule issued by the New Mexico Energy, Minerals and Natural Resources Department requires oil and gas operators to achieve a 98% gas capture rate by the end of 2026. According to Sarah Cotrell Propst, Energy, Minerals and Natural Resources Department Secretary, the rule incorporates the “best ideas” from methane rules in other states such as Texas, North Dakota and Colorado. The agency estimates that the rule will reduce volatile organic compounds by 77,000 tones and oxides of nitrogen (NOx) by 21,000 tons. Environmental groups have lauded the draft rules, stating that they are more forceful than rules in other states. Other groups have expressed concerns about the rules’ treatment of marginal wells, which will not be required to meet yearly gas capture targets but will receive credit for monitoring and mitigating leaks. They argue that the cumulative effects of marginal wells emissions amount to unacceptable levels. “NMOGA and our members are committed to reducing methane emissions while providing a sustainable source of energy,” said Ryan Flynn, Executive Director, New Mexico Oil and Gas Association. “As the state’s rulemakings move ahead, we will continue to collaborate with both agencies by sharing our technical and scientific expertise. These rules should build upon the innovative solutions that make New Mexico

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POLICY

and the United States the global leader in safe and environmentally responsible energy production. New Mexico relies heavily upon the oil and gas industry for our state budget and funding for public schools, and it is critical that these rules allow our industry to continue to create jobs and revenue amid unprecedented economic challenges.” The issue of methane leaks has also been highlighted in recent weeks following an Environmental Defense Fund (EDF) study released in April that suggests Permian Basin producers are releasing methane at three times the national average, according to Environmental Protection Agency nationwide statistics. The study claimed Permian producers to have a 3.5% loss rate, a rate that is 15% higher than the reduction targets set by industry leaders. EDF called on the industry to address the situation. In the meantime, they are embarking on a data collection campaign using tower-based monitors, ground-based mobile sensors, fixed-wing aircraft and helicopters. The data collected will be periodically shared over time and will eventually be matched with actual producers.

The draft rule issued by the New Mexico Energy, Minerals and Natural Resources Department requires oil and gas operators to achieve a 98% gas capture rate by the end of 2026

Federal Action At the federal level, the U.S. Environmental Protection Agency (EPA) finalized its rescinded regulations for methane emissions for the oil and gas industry, releasing two final rules in August that repeal the earlier OOOOa rules regulating emissions from oil and gas industry production, processing, transmission and storage. The EPA justified its move by stating that the Obama administration did not define what constitutes a “significant” contributor to climate change under the Clean Air Act when it offered its rules. The EPA also said that the standards were redundant to other regulations that regulate volatile organic compounds. The industry has been divided over the methane rule, which has been a major source of contention. Smaller producers have opposed the rule, arguing that it is an expensive way to reduce very little greenhouse gas emissions. Many larger producers have supported the rule as a way to create finality and certainty over the issue and reduce industry’s overall vulnerability to methane emissions’ impacts on climate change. EPA’s latest action will undoubtedly end up back in the courts, where the issue has been litigated for years. As the issue of climate change heats up as an electionyear issue, there will be increased attention focused on methane emissions from oil and gas activities, and the Permian Basin will be the location where much of that attention is focused. While the courts and the outcome of the 2020 presidential and congressional elections will ultimately decide the role the federal government plays in regulating methane emissions, state regulatory bodies in oil-producing states, working with industry, will be the driving force on how methane emissions and flaring are ultimately addressed.

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

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

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

POLICY

By: David Blackmon

n mid-August, much of California suffered rolling blackouts that had as many as 10 million Californians going without power for days at a time. The excuse used by officials was a series of forest fires that hit vast swaths of the state’s rural areas, but this is nonsense. These blackouts were purely related to lack of electrical capacity, and that lack falls directly at the feet of the state’s Democratic Party-dominated government. The rolling blackouts were, in fact, implemented during a “heatwave” that saw Southern California temperatures ranging all the way up into the mid-90s. Horrors. As demand ramped up from folks still locked-down by the orders of more Democrat officials wanting to keep their homes cooled, California’s power grid became overloaded for the simple fact that the state no longer possesses enough baseload power plants to generate the necessary level of power. Meanwhile, in Texas, the folks at ERCOT and at city-run utilities in San Antonio and Austin manage to provide adequate electricity 24 hours per day, 365 days a year, even when temperatures in the state soar above 100 degrees for weeks on end during July through September. In fact, the last time Texas suffered significant blackouts was not even during the summertime, but during the winter of 2010-11 due to a massive freeze event. As the Gavin Newsom-led state government flailed about trying to shift blame, their friends in the national news media rushed in to try to help. Here is an example from an August 18 piece at Politico: The exact root of California’s rolling blackouts is still unclear as more power outages loom, and that's allowed everyone to point fingers.

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Note how the liberal Politico writers managed to insert a reference to Enron, a company that did indeed manipulate markets in California and other parts of the country in the late 1990s, but which hasn’t even existed for almost 20 years. Note also, however, the key admission that Democrat governors Jerry Brown and Gavin Newsom have both used rolling blackouts intentionally as alleged “fire prevention measures”, an effort designed to condition residents of the Golden State to accept such systemic losses of power as just another part of the “new normal” that is being intentionally created by Democrat party policies. Understand what this means, folks: To California Democrats, rolling blackouts are not an inconvenience to be avoided, but a public conditioning tool to be intentionally deployed during major emergencies. The next three paragraphs of this lede-burying Politico story reveal the real nature of the issue: Earlier Monday, the California Independent System Operator blamed Friday's outages on "high heat and increased electricity demand." Yet some energy experts noted that demand

wasn't particularly higher than normal, as is typical for weekends, and CAISO had predicted it would have adequate reserves on hand for the 80 percent of California's grid that it manages. "What's weird about what happened is they were adequate until they weren't," said Michael Wara, director of Stanford University's climate and energy program and a member of the state's Catastrophic Wildfire Cost and Recovery Commission. "It seems as if certain power plants for some reason were not able to deliver on the commitments to supply reserves and also supply energy." Why yes, there are “problems with gas plants” in California: There aren’t enough of them. That’s because Sacramento’s Democrat-controlled government has spent the last 20-plus years making them increasingly costly to permit and build. In addition, the absurdly impractical emissions goals adopted by a string of left-wing governors have given public utilities like CAISO no choice but to resort to a massive over-reliance of intermittent sources like wind and solar while at the same time under-building new base-load capacity fired by natural gas plants. Indeed, it is not even possible at this point to build any form of true baseload power plants in California other than combined-cycle natural gas, as coal and nuclear have been basically outlawed by the Democrats in the state. But the ability of utilities to build more gas plants has also been restricted by lack of supply as Democrat politicians have also adopted

To California Democrats, rolling blackouts are not an inconvenience to be avoided, but a public conditioning tool to be intentionally deployed during major emergencies

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California’s Blackouts Are the Green New Deal in Action

Energy experts Monday cited a litany of potential causes for the rotating outages that affected hundreds of thousands of California residents Friday and Saturday nights: ballooning demand, inadequate transmission, an overreliance on renewable energy and natural gas plant challenges during hot weather. While California braced for another round of rolling blackouts Monday night, the state's grid operator held off for a second straight night, citing cooler than expected weather and widespread conservation. It also came as Gov. Gavin Newsom questioned all of the state's electricity players about why the outages occurred and faced blowback from frustrated residents. Still, the state says more blackouts affecting millions of residents could occur this week as a historic heat wave endures. California has endured planned blackouts in recent years as a wildfire prevention measure. But it was the Golden State's first round of rolling blackouts related to supply since 2001, when Enron and other energy traders manipulated California's market.

In Texas, natural gas has been the fuel of choice for new capacity for the last 20 years. It should be noted that, during those same 20 years, Texas has also led the nation in the reduction of greenhouse gas emissions even as its population has mushroomed by over 50% policies that make it almost impossible to build new pipelines in the state. And so, we have the rolling blackouts day after day during a summer that is not particularly hot by California standards and which is positively mild by standards seen in other southwestern states. Back to Texas: The Lone Star State far and away leads all other states—and all but a handful of countries—in total wind power capacity. Texas also has a strong and rapidly expanding solar industry. Both of these renewable sources of electricity play a significant role in the Texas power grid. So, why does Texas manage to keep the lights on like any true first-world society should be capable of doing? Because ERCOT and state-elected officials have put policies in place that ensure that utility companies are able to build out the necessary baseload capacity the state’s growing population requires. By their very intermittent nature, neither wind nor solar are capable of providing that baseload capacity: That must be accomplished by plants pow-

ered by natural gas, coal or nuclear. In Texas, natural gas has been the fuel of choice for new capacity for the last 20 years. It should be noted that, during those same 20 years, Texas has also led the nation in the reduction of greenhouse gas emissions even as its population has mushroomed by over 50%. Funny how that works, huh? By their irrational pursuit of renewable goals that are fundamentally impossible to meet, California’s Democrats have ensured that blackouts have become a fact of life for their state’s citizens. In fact, what we are seeing take place in California this week is nothing more or less than a preview of the kinds of summer days filled with rolling blackouts that the energy/environment policies endorsed by Joe Biden and Kamala Harris would produce for the entire nation. California is, in fact, the “Green New Deal” in action. If you like your air conditioning and want to keep it, you should vote for Donald Trump in November. It really is that simple.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

POLICY

Elections Have Consequences By: Bill Keffer

ndoubtedly, the year 2020 will be remembered for many reasons. Another one of those reasons is upon us as we near Election Day on November 3. It is a presidential-election year, and it seems we are told every four years that it is the “most important election” in a generation, our lifetime, American history, etc. At that moment, it often feels as if it might be true. But can there be any debate that, given the economic gut punches that have been delivered to the oil-and-gas industry this year, this election will be the most important for energy policy since Jimmy Carter wore his cardigan sweater and admonished us to adjust our thermostats because we were running out of oil? Nothing quite as inspiring as being told by your leader to accept defeat and retreat. Instead, of course, the oil-and-gas industry decided to do what it does best, and it proceeded to embark on the shale revolution and prove the doomsayers wrong again. How could an industry that has been producing a “finite” resource for over one hundred years discover

a way to find even more reserves that are yet to be produced? We no longer were depleting an ever-diminishing resource; we have now actually replenished the resource with more reserves than have ever been known. That counterintuitive reality never ceases to amaze me. We are at heart, of course, economic creatures – especially Americans, where the unalienable rights of life, liberty and the pursuit of happiness make up our DNA. Left to our own devices, we ultimately make decisions that are in our economic self-interest. When it comes to energy sources, as an economic proposition, it is incontrovertible that oil and natural gas are the most abundant, affordable, and powerful options available today. It is also beyond debate that the U.S. continues to be blessed with massive domestic reserves of both oil and natural gas. You would think that the previous paragraph would be cause for great and constant celebration—that we live in a country where the best energy options exist in abundance and our economic system encourages the exploration, (continued on page 51)

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About the author: Bill Keffer is a contributing columnist to SHALE Oil and 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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On November 3, at least with respect to our energy future, the question is – will voters act in their economic self-interest?

production, and development of those natural resources. But, as we know all too well, there is a large and growing movement to turn away from the energy sources that have fueled the countless economic and technological advances over the past century in the U.S. and around the world. That movement has found a home in the Democratic Party and its presidential nominee Joe Biden. In July, Biden released a $2 trillion plan, charting a markedly different energy path with the goal of achieving net-zero greenhouse-gas emissions by 2050. Even more ambitious, Biden is also calling for the nation’s electricity grids to rely entirely on “clean” energy sources by 2035. To accomplish this, the plan states: “We will dramatically expand solar and wind energy deployment through community-based and utility-scale systems. Within five years, we will install 500 million solar panels, including eight million solar roofs and community solar energy systems, and 60,000 made-inAmerica wind turbines.” Apart from the fundamental disconnection that even that many solar panels and wind turbines could effectively replace what oil and natural gas can deliver, the other unavoidable, yet typically unaddressed, reality is that there isn’t enough available land in the right locations for such a massive plan to be executed. One significant reason is that there is also a large and growing resistance by landowners and local communities to prohibit the installation of these solar and wind farms—and in the most ironic places. While California never shies away from lecturing the rest of the country on the need to stop the use of all fossil fuels and replace them with renewable sources, they seem to have trouble practicing what they preach. As energy analyst and author Robert Bryce reported in a Forbes article after Biden released his plan: “In 2015, the Los Angeles County Board of Supervisors voted unanimously in favor of an ordinance banning large wind turbines in the county’s unincorporated areas. Last year, San Bernadino County, the largest county in the country, passed an ordinance that prohibits large renewable-energy projects in much of the county. As Sammy Roth of the Los Angeles Times explained it, county officials were ‘bending to the will of residents who say they don’t want renewable energy projects industrializing their rural desert communities.’” The same results

were in Humboldt County (Northern California) and Santa Barbara County; in fact, since 2013, California has added only 200 megawatts of new wind energy. California currently is ranked fifth in total wind-energy capacity in the U.S. (6,000 megawatts) —way behind Texas, which is first (30,000 megawatts). Maybe Texas should be lecturing California. Of course, the continued forced, taxpayer-subsidized march to electric vehicles would continue in a Biden administration, whose proposal states: “Reduce harmful air pollution and protect our children’s health by transitioning the entire fleet of 500,000 school buses to American-made, zero-emission alternatives within five years. Lead by example in the public sector by transitioning the 3 million vehicles in the federal, state and local fleets to zero-emission vehicles. Support private adoption of affordable low-pollution and zero-emission vehicles by partnering with state and local governments to install at least 500,000 public charging stations from coast to coast. Make charging infrastructure accessible, with strong labor, training, and installation standards, through federal grants to states and localities.” Biden and the Democrats have made their proposed energy policies abundantly clear, and the oil-and-gas industry should be concerned. Some are already waving the white flag. BP recently announced that they plan to reduce their oil-and-gas production by 40% by 2030 and replace it with renewables. In response to the Biden plan, others in the industry are trying to put lipstick on the pig by stating that it was not as bad as they had feared. “‘At first blush, the plan is a masterpiece because he gives something to everybody,’ said Charif Souki, Executive Chairman of Tellurian, a gas producer that is planning a major export terminal in Louisiana.” Spoken like someone who fears that he sees the handwriting on the wall and is desperate to salvage something ‒ if there is to be a changing of the guard. But will there be such a change? Economically, implementing the Biden plan makes little or no sense. Government, however, is perfectly capable of acting illogically and snatching defeat from the jaws of victory. On November 3, at least with respect to our energy future, the question is—will voters act in their economic selfinterest? If not, how soon will they realize their mistake?

LIKE. FOLLOW. CONNECT.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

BUSINESS

Checking in With the Permian Strategic Partnership By: Melissa Nichols

recently had the opportunity of catching up with Tracee Bently, CEO of the Permian Strategic Partnership (PSP). If you will recall, Tracee was on the cover of the March/April issue of SHALE Magazine. (The issue is still available on our website.) In it, David Blackmon did an excellent job of producing a clear picture of who Ms. Bentley is and why the PSP was lucky to find such a passionate leader. In my conversation with her, I was happy to discover that in a time when nothing seems to be as it once was, not everything has changed. Tracee and the PSP members are as enthusiastic and passionate about helping the Permian Basin communities as ever. The Permian Strategic Partnership is a coalition of 20 energy companies with the goal of creating in the Permian Basin a great place to live, work, and raise a family. The PSP has five main focus areas for accomplishing this: public education, safer roads, healthcare, affordable housing, and workforce development. It is a relatively young organization, but, thankfully, it is already established enough to withstand this COVID-19 storm. The pandemic changed the priorities of many in the United States and around the world. The PSP is no different. Having worked hand in hand with the community, the PSP recognized the importance of stepping up efforts in two of their five key focus areas: healthcare and education. Tracee calls them “critical needs areas.” Many rural hospitals in the Permian were caught amid a pandemic without enough of the proper equipment. The member companies of the PSP helped secure the needed PPE and sanitizers that were required. Even before COVID-19, the PSP realized there were more people in need of medical care than doctors available to treat them. They contributed $5.9 million to the Texas Tech Health Science Center to expand the rural health residency program to bring more doctors and medical resources to the Permian area. Now, with COVID, the need

is even more acute, but with the Texas Tech partnership in place since before the pandemic, the response is already in the works. The need for medical resources in the Permian goes beyond COVID-19. Because of the pandemic, many residents fear seeing a doctor or going to the hospital for general illnesses and accidents. The PSP is working to spread the word that refraining from visiting a doctor because of COVID fears is most likely more dangerous than waiting the illness out at home. Tracee expressed concern that a spreadable virus might not cause the next pandemic. “The next one could have to do with mental health,” she said. And it does seem to be happening already. Right along with the rising number of positive COVID-19 cases, there are rising numbers in cases of depression, suicide, and alcoholism. In answer, while working to bring in more medical doctors, the PSP is also working on getting more mental health resources into the communities. The second area of critical need is public education. The PSP companies donated $16.5 million, making sure the IDEA schools of the Permian Basin would have everything they needed to open this year, and Tracee is happy to report the schools are preparing to open on time this year. IDEA stands for Individuals Dedicated to Excellence and Achievement, and they are living up to their motto, “No Excuses!” (For more information on their opening plans, please see our July/ Aug issue.) Earlier this year, when schools closed in Texas and around the country, it became apparent the schools were providing children with so much more than education. For many, it was where they got their main, and sometimes only, meal. Almost immediately, food banks were overwhelmed. Board members of PSP were ready to volunteer, but they were prevented from doing so in person because of the pandemic’s nature. Instead, they made sure the community was cared for by providing for the Boys and Girls Clubs, the local food banks, MAHA HEANG 245789/STOCK.ADOBE.COM

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the United Way, and other community organizations. The West Texas Food Bank, in particular, went above and beyond to help the Midland and Odessa area, and they are continuing to do so as the uncertainty of the pandemic lingers. To donate, please visit https://wtxfoodbank.org/give. The other three areas of focus for the Partnership—road improvements, workforce development, and affordable housing—are not left wanting. There are still plans that were put into place well before the pandemic. Because of this, they are going to be front and center once things get back to normal. Among those in the works is the Teacher Housing Initiative. Its goal is to encourage teachers to stay by providing a 20% subsidy for rent. Roads are an essential area of everyone’s lives. The PSP is also working with the Road Safety Committee to identify solutions for priority transportation routes. And this summer, work is to begin on increasing traffic capacity along 22 miles of US 285 from the Texas state line to Loving, NM. Plus, to make sure all Permian areas get what they need, the PSP has launched a program

titled, The Permian Counts. The message is vitally important—everyone needs to be counted in the 2020 census. This number is the base upon which federal funding is decided. Tracee and the Permian Strategic Partnership are here to stay; COVID-19 and oil prices cannot change that. “PSP’s vital work to improve the quality of life for the Permian Basin families continues. Companies and corporations, including our 20 member companies, are in the Permian Basin for the long term. A growing world needs energy, and the long-term demand for oil and gas produced in the Permian Basin remains strong. While the current global market disruption means challenging times for our industry and our communities, it doesn’t change PSP’s fundamental mission or commitment. We are hard at work with local partners to advance initiatives across our focus areas,” Tracee said. Tracee ended our time with a few words we should all remember during this particular time, “Community coming together is more important now than ever.”

The West Texas Food Bank, in particular, went above and beyond to help the Midland and Odessa area

About the author: Melissa Nichols is the Publication Editor for SHALE Magazine. She is also the author of “Don’t Be Afraid of Climate Change” a picture book to help children and parents cope with climate-change anxiety. It is available on Amazon.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

BUSINESS

Finding a Career in Safety and a Calling in Life By: Nick Vaccaro

or many, selecting the right career path can be a daunting task with happiness and self-contentment being difficult to obtain. Some are never fortunate enough to achieve this feat, and others seem to encounter this revelation when and where they least expect it. This would be the route Jenny Ward of Repsol Energy would take to find herself as an accomplished safety professional known for her compassion and dedication. Time management and living by a hard-kept schedule are autonomous for Ward. In the world of COVID-19, we scheduled a telephone conversation to discuss her illustrious career. We were scheduled for 11 am, and for the sake of managing her schedule of multiple moving parts, she ended a call with her previous appointment to keep her established time with me. Schedule disruptions are not acceptable. When conversing with Ward, one does not just dive straight into an interview. A conversation is had on a personal level first. She is interested in your family and how you are doing. Nothing more could trump your individual well-being, and as a result, that is the first order of business. Just as important to her is the love and admiration she has for her own family. I enjoyed hearing how well her husband, three daughters and five grandchildren were doing. There is no doubt Ward holds them close in her heart. We started our conversation on her education and how she found herself entrenched in a safety career. She laughed that her career path was nothing close to what she had planned. Having earned her associate degree in Finance and Accounting from the University of Texas in Austin, Ward’s career trail began as an International Sales Analyst with an electronics distributor. She never expected to find herself currently serving Repsol’s Eagle Ford office as the S&E Field Supervisor. Ward expressed great pride in discussing how she found herself working in the oil and gas industry. She credited meeting good people and taking advantage of quality mentoring that was provided to her. After 11 years of em-

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

ployment with the electronics distributor, Ward leaped into oil and gas. She interviewed with Quicksilver Resources for a Junior Buyer position with the company’s purchasing department. The interview went so well that she had not exited the parking lot after her interview when she received a call with the job offer. Ward related how shocked she was and joked at her streak of luck. Taking advantage of a unique situation provided by her purchasing position, Ward was exposed to various disciplines within the industry. She expressed pride in learning a great deal and being recruited by Quicksilver’s Director of Environmental Compliance into an Environmental Technician position. Here, her safety career would begin to cultivate as she was closely mentored. Recognizing Ward’s work ethic, a colleague recommended her for a position at Encana Corporation. She was recruited for a Safety Professional position in the office, where she would work for two years. The turning point presented itself, and she was promoted to a

leadership position as the Strategic Safety Coordinator and covered three branch offices. Ward furthered her career later with Crestwood Midstream as an HSE Analyst. Here she began working in management system development, a skill that would serve her career well. Her husband was later offered a job in South Texas, so they relocated to the surrounding area of San Antonio. Ward was again recommended for a position and went to work for Devon Energy as an Eagle Ford Safety Professional. She worked on various special projects and was responsible for Devon’s field development aspect of their Verification and Validation pilot program. After four years, Ward joined Equinor’s Eagle Ford office as a Safety and Sustainability Leader. She recalled her interview and how nervous she was as she entered the conference room to begin the process. Making an uncomfortable moment even more unbearable, she remembers dropping her purse and allowing its contents to scatter across the floor. She had a revelation at that moment and drew on her tenure and abilities, released the nervousness and attacked the interview process as only Ward could do. She was honest, pulled no punches and expressed her opinions when they were requested. History would repeat itself, and Ward received a phone call before turning out of the parking lot. She had interviewed well and was offered the job, which she accepted. We joked how parking lots seemed to bring her good news and happiness. That laughing revealed just how down to earth Ward is. She has accomplished much, but she does not appear to take herself so seriously. This is truly the mark of someone who loves what she does but recognizes there is much more in life of greater importance. Equinor recently sold their Eagle Ford assets to Repsol, and Ward has remained. This certainly highlights her value. Just as unexpected as a career in safety was the notion of working in the oil and gas industry. Typically, field-level oil and gas positions are thought to be occupied by men and not women, but that has never been the case for Ward.

“I never really experienced being treated differently as a woman,” said Ward. “I just try and befriend people and win them over. I ask questions if I don’t understand something, and I hope that vulnerability shows people I’m genuine.” Although she experienced no pushback for being a woman, Ward did indicate that some departments in the past had proven to be more challenging than others. As a safety professional, interaction sometimes occurs with those same departments. She indicated that some of the challenges could be attributed to her lack of experience in that area. “Drilling and completions were sometimes difficult,” said Ward. “They don’t typically like interference, but some of the challenge was also due to my lack of knowledge with that area.” She cleared those hurdles, though, using her same tactics applied in everything she does. She continually asks questions and shows that she is genuinely interested in learning what she does not know. According to Ward, the ability to ask questions is a major component in the blueprint of a successful safety professional. Additionally, she feels mentoring and training are crucial, a great deal of which can be accumulated directly in the field. “I did it backwards,” said Ward. “I started my safety career in the office setting writing procedures and working with data. Then I went to the field. It would have served me better to understand how things worked in the field and then use that knowledge when writing those procedures.” Ward acknowledges that all of these success factors are equally important, but if it were referred to as a hierarchy, then there is one requirement that outweighs all in determining if an individual is effective in their safety role. “How we treat others is the most important,” said Ward. “As a safety professional, you are responsible for an injured party that is potentially experiencing a life-changing event, in addition to pain and fear. We are their advocates.” Scott Poe, Assistant Construction Foreman with Devon Energy, worked with Ward in Devon’s Eagle Ford safety department. He said Ward had started working there prior to his arrival, and she went out of her way to show him around and make him feel at home. “Jenny is amazing,” said Poe. “She made sure I was comfortable, and it showed that she really cared and was genuine.” Poe related the story of an injured person being treated at the hospital. The injury was not major, but Ward remained steadfast in her commitment regarding this person’s wellbeing. “Jenny did not leave the hospital right away,” said Poe. “She wanted to make sure the guy was ok. There was no way she was going to leave

this guy without being assured he was comfortable and safe.” Ward credits her success with being surrounded by talented individuals she has known in the past and currently seeks information and uses as a knowledge base. In her current position as Repsol’s Eagle Ford S&E Field Supervisor, Ward leads a team of field safety personnel who cover Repsol’s Eagle Ford Shale assets. “My team is so incredible,” said Ward. “I am so fortunate to have them. Each one of them comes from a different background and has something unique to offer. They make me successful.” Ward’s admiration for her team is equally reciprocated. As they are all men, they appreciate and recognize her as their equal in knowledge and supervisor by title. “Jenny is fantastic at what she does,” said John Lane, Senior Safety Analyst with Respol’s Eagle Ford office and Ward’s team member. “She takes caring about people to another level, and that is what makes her so good at her job.” Lane stated it was one thing to care about people, but Ward exemplifies the notion. As the industry comprises direct hire and contract workers, the distinction makes no difference to Ward. Everyone is treated equally. Rotational workers have even been known to receive home-cooked meals from Ward in an attempt to make being away from their families a little more bearable. “Jenny not only cares about the people she works with, but she cares about their families too,” said Ward. “Jenny knows the names of these guys’ wives and kids.” Caring about the well being of others seems to be the main ingredient to a successful safety recipe. However, Ward’s colleagues recognize her many other attributes that contribute to her success. “Jenny is really smart,” said Lane, “She asks questions and listens to the answers. She doesn’t care who you are. She will listen to what others have to say. She listens to all of us on her team and what we have to say.” A career in oil and gas safety is matched with both good and bad moments. The industry includes its share of dangers, and an acceptable risk tolerance level must be established. Sometimes this leads to displeasing and agonizing events, but as in other careers, good moments or wins aid in measuring success. Ward reflected that her greatest career moments have been the ability to see projects through from start to finish and experiencing that feeling of accomplishment and how she has handled cases involving injured personnel. “I never had the stomach to be a nurse,” said Ward. “I did know that I wanted to do something where I could help people. I’m able to do that while working in safety.”

With every career reflection, moments of glory can be equally matched with regret. Ward admitted that she did have some regrets in her career. “I felt that I was extremely effective at Devon because of the relationships I formed,” said Ward. “I miss that.” When tallying up wins and losses regarding Ward’s career so far, the win column far surpasses the latter. Having a positive effect on others is not easily accomplished by all. “Jenny is very determined and extremely organized,” said Lane. “She gives 150% all the time. She makes me want to be better at my job, and she does.” Ward has climbed an impressive career ladder, and each step has provided her with learning experiences that have formulated who she is as a person and safety professional today. She has formulated personal and professional relationships that are clearly the pillars of her work history. No other measurement of success can be better applied than influencing lives for the better. Ward recognizes her mid-level management effectiveness and said her five-year plan is to remain where she is and continue working with her current team. Our interview closed, and in true Jenny Ward fashion, she made sure to have me give her best to my family and enjoy the upcoming weekend. The schedule was tight, and she would settle for nothing less than giving her full attention to her next appointment.

About the author: Nick Vaccaro is a freelance writer and photographer. Besides providing technical writing services, he is an HSE consultant in the oil and gas industry with eight years of experience. He also contributes to Louisiana Sportsman Magazine and follows and photographs American Kennel Club field and herding trials. Nick has a BA in Photojournalism from Loyola University and resides in the New Orleans area. 210-240-7188 nick@shalemag.com.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

BUSINESS

Commodity Price, Shale Oil Asset Value and Cancelation of Debt By: Bryan Benoit, Tracy Hennesy and Calvin Nguyen

hale oil is tight oil from deposits that were unworkable just a few decades ago. Recent technology introduced new costs to the oil extraction process. Thus, shale oil costs more than conventional oil to extract and is a higher risk investment. In comparison to conventional wells, shale oil production costs are more front-end loaded. Further, production life is shorter in comparison to conventional wells. Consequently, the shale oil industry is more vulnerable to volatility in prices, operating on a rollercoaster of shut down and ramp up when prices drop or surge. That means there may be challenges for companies with shale oil assets to realize cash flow from idle shale-oil deposits when crude oil prices are hovering around $50 a barrel. • Shale Oil—From a full production life perspective, some shale oil wells may have a break-even point of $40 a barrel. However, the conventional wisdom for a fracked horizontal well may be about $55 a barrel. Higher-cost wells may come in closer to $85 a barrel on the upper end of the range.

It is key to understand the tax implications of debt reorganizations and modifications 56

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

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• Conventional Oil—By way of comparison, the cost-per-barrel of conventional deposits varies, with Saudi Arabia able to produce oil the most cheaply, sometimes under $10 a barrel.

The economic impact of COVID-19 may result in a prolonged period of financial hardship for businesses. Oil prices have visited negative territory. In the face of such difficulty, many debtors may seek to negotiate with lenders to modify the terms of an existing debt instrument. However, while debt modifications may be beneficial for liquidity reasons, they may yield surprising and costly tax results. As businesses weigh their options, it is important for them to consider the tax impact of debt modification prior to finalizing a workout. A long history in our economy Borrowing money and surviving downturns have always been part of the U.S. economy. The difference today is the Tax Cuts and Jobs Act (TCJA), the most significant tax change in the United States in 30 years. Modeling based on a company’s specific situation has become critical. For income tax purposes, a debt modification is a “significant modification” if the legal rights or obligations are altered to a degree determined to be economically significant by the tax law. Common debt modifications include: • • • • •

Extending maturity Obtaining payment holidays Changing interest rates Conversion to pay-in-kind interest Changing principal payments from fixed to contingent • Exercising conversion features The consequences of a significant modification result in the deemed exchange of the old debt for new debt, which has the potential to trigger cancellation of debt (COD) income, accrual of debt discount and possible interest deduction limitations. It is key to understand the tax implications of debt reorganizations and modifications. An unanticipated cash payment for taxes could be a very undesirable outcome, which is not uncommon for companies that must recognize phantom income. The tax implications can be further complicated if the debts are publicly traded for tax purposes, or if debts are issued with warrants, conversion rights or other complex features. The tax law provides a COD income exclusion for companies in bankruptcy or that are insolvent; however, tax attributes like NOLs and basis in property are generally reduced by the COD income excluded from taxable income. Therefore, any tax relief today comes typically at the cost of decreased deductions in the future, which makes planning around these issues very important. Questions that come out of a debt modification, especially out-of-court debt modifications, may include:

1. What is Fair Market Value and is there a gain? This typically isn’t a straight-forward answer. There may be a gain for financial purposes for GAAP reporting, but there may or may not be a gain or COD income for tax purposes. Valuation of debt can help a company understand the amount of gain that may need to be recognized for GAAP purposes. This is often a starting point for determining the tax consequences. 2. What is the business worth, and how insolvent is the company? The level of insolvency can impact COD income. For companies not in bankruptcy, the COD income exclusion is generally limited to the amount of insolvency. A valuation of the company can help determine its insolvency level and help support the calculation of excludable COD income for tax purposes. 3. Is debt value one size fits all? No. Any debt instruments valuation must first consider what type of debt it is—and the types of debt range broadly. To name a few —straight debt, debt with an equity redemption option, convertible debt, redeemable preferred debt or a kind of debt in default. Features include public versus private debt; secured or unsecured debt; senior, subordinated or fixed- or variable-rate debt; amortizing or non-amortizing debt; interest paid in cash or paid in kind; convertible or nonconvertible; and enhancements or no enhancements. When we look at key drivers of debt value, we get into company-specific factors, instrumentspecific factors and market factors. Companyspecific factors might be the credit risk, default risk or nonperformance risk. It might include the risk of loss resulting from a borrower’s inability to fulfill a contractual obligation. There are a number of different credit loss possibilities. Valuations can also help support Section 382 limitations that companies face after experiencing a change in control. Section 382 places limitations on a company’s tax attributes such as NOLs. A company with a low 382 limitation risks not having attributes available to offset taxable income in future periods. Having a valuation performed may support a higher 382 limitation, which can help a company unlock its tax attributes and create real tax value. Planning around the complicated tax impacts of debt reorganizations and modifications can leave a company in a much better position financially as they focus on a bright future ahead. Valuations go hand-in-hand with the tax planning that is often required by providing documentation necessary to support tax positions and helping companies arrive at more favorable tax results.

As businesses weigh their options, it is important for them to consider the tax impact of debt modification prior to finalizing a workout About the authors: Bryan Benoit is a partner in the Houston office of the Grant Thornton LLP and a principal in Grant Thornton Financial Advisors LLC. Tracy Hennesy is a Partner in the Grant Thornton Mergers & Acquisitions Tax Services practice, focusing on transaction-related tax matters. Calvin Nguyen is a Director in the Grant Thornton Mergers & Acquisitions Tax Services practice.

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

BUSINESS

Due to COVID-19, In-Person Shopping Will Never be the Same

OVID-19 represents a sea change for retail services that will alter the customer experience for years, perhaps decades to come. What at first appeared to be a temporary aberration is taking on a measure of permanence. Some have even resorted to reframing the popular aphorism as the new “abnormal.” Key to the impending transformation is the concept of space and its relationship to traditional business models. For example, developers will opt for more open areas and install antibacterial ventilation ductwork within buildings, among other things—all of which will push up their costs. It’s very possible that prices will rise or profit margins shrink—probably both, and on a secular basis faster than increases in productivity. Rate-of-return expectations by investors may temper when greater space requirements and wages for front-line workers—long-overdue—increase. Since the 1970s, most of the benefits of rising productivity went to investors and senior management, while employees got short shrift. Growing unrest appears primed to boost compensation for workers most at risk. With so many emerging trends, it’s hard to know where to begin. Restaurant and public space design will become more, well, spacious. Take-out, drive-thrus and drive-in movies will win big. In some ways, fifties’ lifestyles will make a comeback. Large venues and modes of transport will no longer pack patrons in like sardines to maximize revenue. Drive-up appeal will factor more prominently as a way to draw customers to the curb, while parking lots convert to pick-up points. Guests will insist on more sanitary hotel rooms and Airbnb properties. Additional bankruptcies await retailers than cannot adapt. The reworking of the retail industry is taking place in earnest, as stores convert to warehouses, and logistics networks morph to accommodate residential delivery. If brick-and-mortar locations can shift to online-only presence, they will close or convert to stockroom and shipping hubs. Wholesale purveyors of commodities such as milk, toilet paper, institutional food services and other items designed around bulky or high-volume distribution to restaurants or office buildings will adjust to accommodate household and indi-

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

vidual-purchase quantities, or else significantly reduce their scale of operations. Supply chains will become more local to avoid disruption and decrease vulnerability of viral spreads from this and future pandemics. Supply chain theory taught in business schools and practiced by consulting firms will shift its emphasis from near-obsessive focus on cost and efficiency – no matter how geographically far-flung—to resilience and reliability. They will advise organizations to retain larger buffer stock quantities, particularly essential dry goods, non-perishable food, hand sanitizer and surgical masks. The government will step in for more expensive items where the private sector has little incentive to maintain substantial inventories such as ventilators. Welcoming concierges will instruct and direct at store entrances, subjecting visitors to scans or sterilization. Motion and voice-activated sensors will provide guidance and dispense information from product shelves. Smartphones will further integrate with the retail experience. Plexiglass shields will abound, and sanitary supervisors will make regular rounds. Fewer displays will reduce clutter on showroom floors. Hard hit venues will continue to struggle, such as nail and beauty salons, bars and other closequarter businesses. As socializing and exchanging gossip in the twenty-first century moves from the physical to virtual realms, things may never be the same again. Avoidance of close contact by non-family members will establish new social norms, new etiquettes. Crowded locales of humans in proximity with animals sparked previous pandemics—the threat of more in the future seems destined to alter buyer behavior for the long haul. If the joy of the retail experience diminishes, more circumspect behavior by consumers will result, implying a completely different meaning for the shop-til-youdrop culture. Physical distancing—once thought of as the refuge of the aloof, detached or unsociable—is now positively fashionable. Every economic upheaval leaves its mark. In this instance, COVID-19 will overhaul supply chains and buying patterns— and even the nature of human interaction—much farther into the future than anyone ever imagined.

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."

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By: Thomas Tunstall, Ph.D

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BUSINESS

Can Hydrogen and Renewable Natural Gas Displace Shale? By: Alex Klaessig

oday, corporate and state decarbonization announcements are progressing into actual strategic plans, often calling for increased production of hydrogen and renewable natural gas (RNG—cleaned methane from a landfill or anaerobic digester). These gases can use existing infrastructure while producing low-to-negative carbon emissions, making them an attractive lever for decarbonization. As a result, government incentives are pushing low-carbon gases into the market and other fuels out. Current policies direct those “clean” gases to the transportation market, where they displace gasoline and diesel. But on the horizon are state and corporate targets for blending RNG into pipelines, indicating that shale could be the next fuel to be displaced. The falling production cost of “green hydrogen” drives much of today’s interest. In this instance, “green” means hydrogen produced by electrolyzing water into hydrogen and oxygen, powered by a zero-carbon electricity generation source. Previously, electrolyzers were expensive, and renewable electricity was expensive, making green hydrogen expensive. Improving technology and mass production are changing this paradigm. After significant declines over the last decade, IHS Markit anticipates the levelized solar and wind level cost could fall a further 50% and 25% by 2050 in our planning scenario. Combined with improved electrolyzer technology, green hydrogen looks set to be competitive with fossil fuel-derived hydrogen by the 2040s. In the meantime, subsidies and tax credits up and down the value chain incentivize production not only of hydrogen, but also cars, trucks, furnaces, and fuel cells that will enable society to use hydrogen in the energy transition.

Policy support also buoys renewable natural gas production. By capturing methane that would otherwise contribute to global warming, (at least 20 times more so than carbon dioxide), facilities like landfill recovery and agricultural digesters can produce natural gas with low or even negative carbon intensity. Incentives from the Federal Renewable Fuel Standard and state Low-carbon Fuel Standards (continued on page 61)

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on the horizon are state and corporate targets for blending RNG into pipelines, indicating that shale could be the next fuel to be displaced

About the author: Alex Klaessig is a research director on the IHSMarkit hydrogen and renewable gases team. Mr. Klaessig specializes in understanding how environmental regulation, technology, and innovation drive change in North American transportation and electricity markets. In addition to co-chairing the IHS Markit Energy Innovation Pioneers program, Mr. Klaessig has been instrumental in several IHS Markit studies, including "Hydrogen in the Golden State." He has authored numerous reports on research into air quality regulations and retrofit/retirement decisions on coal-fired generation and trends in technologies like cogeneration.

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make RNG production one of the U.S.’s hottest energy markets. New production facilities are sprouting across California’s Central Valley to capture what had formerly been a waste management burden. While production is booming, the bonanza doesn’t impact shale today as those subsidies direct RNG into automotive fuel markets, where they displace diesel and gasoline.

Depending on how you view the matter, mandates to blend increasing quantities of low-carbon fuels could displace shale in two ways. First is the physical displacement of shale gas by other molecules. With companies like SoCalGas and Dominion targeting upwards of 20% and 12% of total gas deliveries as RNG, the quantities are significant. Oregon is the leading state in RNG ambitions with voluntary RNG targets of 5% now and upwards of 30% by 2040. Second is economic displacement. Ratebasing development of RNG supplies will increase final consumer prices, making electrification and alternative technologies more attractive. In turn, that could displace additional shale gas. But another view is that hydrogen and low-carbon gas enables shale. SoCalGas estimates that, because of the negative emissions effect of methane recovery, a 20% RNG blend could offset the CO2 emissions of the remaining 80% of fossil-derived gas. Green hydrogen contributes too. Oregon’s targets explicitly define hydrogen from renewable sources as a “renewable natural gas.” In states with netzero emissions targets, utilities can continue to invest in and maintain infrastructure. Development of RNG resources also offers new revenue streams to dairy farms, landfills, sewage plants, and other sources of biomethane. While the concept is rife with controversy, the challenge of deep decarbonization makes hydrogen and low-carbon gases low hanging fruit.

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MENTAL HEALTH CAN AFFECT PHYSICAL HEALTH. DON'T FORGET TO TAKE CARE OF BOTH.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

"TO PRACTICE ANY ART, NO MATTER HOW WELL OR BADLY, IS A WAY TO MAKE YOUR SOUL GROW. SO DO IT." - Kurt Vonnegut

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

LIFESTYLE

By: Jackson Kerchis

“WHO HERE CONSIDERS THEMSELVES AN ARTIST?” When a researcher asks a room of elementary schoolers, she’ll likely see over three-quarters of the room raise their hands. When she asks the same question of a high schooler room, she’ll see just a few raised hands. Ask this question at your next meeting, and I’d wager you’ll get even less than a few. In today’s world, creativity has largely been cast aside. It’s reserved for kids, artists and mad scientists. It’s considered a hobby. It’s seen as innovation’s sillier, less sexy counterpart. But creativity is serious business. It brings with it a host of mental and physical health benefits. Creativity – Good and Good for You There are a handful of ways in which creativity boosts health. While reading this, it’s important to note the distinction between mental and physical health is mostly a human invention. Changes in our brains affect our immune and central nervous systems. Likewise, our physiology often determines what’s going on upstairs. In this case, we’ll start with how creativity brings about physical changes in our biochemistry and immune systems. We’ll also examine the mental benefits—mindfulness and flow.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

Creativity has the power to change our biochemistry. Studies have linked oxytocin to creative activity. Oxytocin is a hormone secreted by the pituitary gland. Chances are you’ve enjoyed your encounters with it. It has been labeled as "the moral molecule," "the love hormone," "the cuddle chemical" and the like. That's because it plays an essential role in things like intimacy, cooperation, and trust. Researchers hypothesize that oxytocin enables cognitive flexibility pathways (i.e., creative thinking) more than information processing. It stands to reason that when the creative activity is something we enjoy, this effect is further amplified. Creativity offers us a biochemical, feel-good boost. Flexing our creative muscles may also strengthen the immune system. One trial looked at participants undergoing HIV treatment. Researchers had half the participants do expressive writing with a focus on their emotions and experience. After several months, the expressive writing group showed a decrease in HIV viral load. They also saw a marked increase in CD4+ lymphocyte—a key player in the immune system. Researchers are unsure of the exact physiological pathways at work; nonetheless, it’s clear that creativity affects more than just our mind. It can boost physical and immunological health too. Creativity is commonly a form of mindfulness practice. Mindfulness has taken the western world by storm. But it’s not another fad. It is widely credited in both research and clinical applications. The essence of mindfulness is awareness of the present moment. To demystify that, think of your mind as having many muscles. There’s the analysis muscle, planning muscle, communication muscle, etc. Mindfulness training (e.g., meditation) is exercise for your focus and awareness muscle. Every time your mind wanders, and you bring it back to your object of focus, that’s a repetition. Creative work is this type of exercise. It helps to get us out of our habitual analysis and planning modes. It brings us to the work going on right now. And it requires our full attention. Many activities—driving, meetings, eating—can be done mindlessly. Creativity isn’t so. When was the last time you designed a model, wrote an article or built something while you weren’t paying

About the author: Jackson Kerchis designs happiness programs for business and higher education. He also teaches a “Happiness 101” course at the Univ. of Alabama and is a member of the International Positive Psychology Association. For more information, visit www.happinessmajor.com.

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THE ART OF HAPPINESS

attention? Creativity is much more demanding of our full attention than most other forms of work. For this reason, it bolsters mindfulness and mental health. Creative activity is a common shortcut to flow. In Martin Seligman’s PERMA model of happiness and well-being, the E stands for engagement. He explains that people who spend a lot of time fully engaged in their work tend to be quite happy. Engagement, as he uses it, is synonymous with flow. Mihaly Csikszentmihalyi first articulated flow. He described it as the optimal state of experience. He investigated elite athletes, top businesspersons and famous artists. He found that when performing at their best, they all reported a similar state—a sensation of selfless immersion in an activity. That’s flow. It’s being “in the zone.” Like Seligman, Csikszentmihalyi noted that frequent experience of flow was associated with happiness and success. The good news—creativity induces flow. How closely related are they? Csikszentmihalyi’s book is titled “Creativity: Flow and the Psychology of Discovery and Invention.” Getting into a creative space gets us into flow. This provides a boost to our mental health. I want to leave you with a challenge. There is a common fallacy that “knowing is half the battle.” Research by Laurie Santos at Yale has shown it’s not. Just knowing something isn’t enough, because knowing isn’t doing. You now know that creativity brings a host of health benefits. It improves our immune system and elevates our biochemistry. It encourages mindfulness and flow. Now comes the doing. I challenge you to take creativity seriously. Look for a creative outlet, whether it be work or play. Consider yourself an artist. Get creative. It’s good, and good for you.

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LIFESTYLE

TEXAS WOMEN FOR THE ARTS: PROMOTING HEALTH THROUGH ART DURING COVID-19 Special to SHALE

family days, and readers’ theater, among many other opportunities. This year, despite the cancellation of recruitment events and TWA’s annual meeting, Texas Women for the Arts funded $369,542 in grants making it possible for arts organizations to sustain their programs and operations in the face of numerous challenges and provide children with vital arts engagement during quarantine provisions. Over the years, TWA has granted more than $160,000 to more than 20 different art programs in San Antonio. Only current Texas Women for the Arts members may nominate an organization to be considered to receive a grant. Similar to Maya Angelou’s mission in life, TWA members are passionate philanthropists with compassion and style! In addition to making an impact on the lives of children, members value their friendships with other members, enjoy gathering for TWA’s annual meeting, which visits a different Texas city every year, and have the opportunity to experience exclusive and uniquely curated art and culture travel twice a year to destinations across the country, Mexico and Canada. A trip to enjoy the vibrant art scene of New York City scheduled for the spring of 2020 was

hile a growing number of arts organizations are on the brink of collapse due to the pandemic, the value of art is becoming more apparent than ever before, providing essential relief, engagement, and a method of communication for people across the world. The Texas Cultural Trust, a statewide non-profit, is the leading voice for art and culture in Texas, offering support and promoting awareness about the important impact the arts have on Texas’s economy, culture, and health and well-being. This work has never been more critical than it is now. The creative sector was the first to close at the onset of the COVID-19 pandemic, and it will be one of the last to re-open. However, during this time, we have seen artists engage the public through online dance, art, and music lessons, concerts, readings and every creative engagement you can think of.

SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

These types of virtual activities are helping to keep our mental health in check. During social distancing and isolation, art can respond by providing comfort, interaction and a way to express feelings. Since 2005, Texas Women for the Arts (TWA), a membership program of the Texas Cultural Trust, has helped to “awaken and nurture the artist in every Texas child.” Texas Women for the Arts has provided more than $2.9 million in grants to support arts education programs, ensuring that all Texas children have access to art and cultural experiences regardless of their socioeconomic background, geography or race. These funds have been used to provide dance lessons for children in low-income communities, keeping kids engaged in the summer through virtual art challenges, providing instruments and lessons for children in foster care, using arts education as therapy for children overcoming health issues, art

canceled due to COVID-19, but there is the hope of rescheduling in 2021. The Texas Cultural Trust is creatively working on virtually engaging membership during this pandemic. On average, TWA boasts 250 members from across the state. The membership year is September 1 through August 31; though you may join anytime. There are two levels of membership, both of which are fully tax-deductible. If you are interested in supporting the arts in Texas and want to join this group of influential women, visit txculturaltrust.org/twa for more information. The arts will be essential to the healing, recovery, and rebuilding of our communities from the spread of COVID-19. Join us in our work!

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THE CREATIVE SECTOR WAS THE FIRST TO CLOSE AT THE ONSET OF THE COVID-19 PANDEMIC, AND IT WILL BE ONE OF THE LAST TO RE-OPEN. HOWEVER, DURING THIS TIME, WE HAVE SEEN ARTISTS ENGAGE THE PUBLIC THROUGH ONLINE DANCE, ART, AND MUSIC LESSONS, CONCERTS, READINGS AND EVERY CREATIVE ENGAGEMENT YOU CAN THINK OF

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It was a beautiful day for golf. We would like to thank the San Antonio Pipeliners Association for putting on a great event. Make sure to join and be a part of the great work they do.

SHALE MAGAZINE ď &#x201C; SEPTEMBER/OCTOBER 2020

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

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SHALE MAGAZINE  SEPTEMBER/OCTOBER 2020

SEPTEMBER/OCTOBER 2020  SHALE MAGAZINE

2020 STATE OF ENERGY LUNCHEON

PURCHASE TICKETS NOW September 22, 2020 10am - 1pm Omni Corpus Christi Hotel 900 N. Shoreline Blvd. Corpus Christi, TX 78401 Join SHALE Magazine and In the Oil Patch radio show in partnership with the Port of Corpus Christi, to get an update on the state of the energy industry.

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