SHALE Magazine September/October 2021 by SHALE Oil & Gas Business Magazine

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MAGAZINE

SEPTEMBER/OCTOBER 2021

YOUNG VOICES IN ENERGY: ESSAYS ON INNOVATION AND REGULATION IN ENERGY DIAMONDS DIRECT PROVIDES CLARITY ON WHAT YOU NEED TO KNOW BEFORE INVESTING IN FINE JEWELRY

EPIC’S

BRIAN FREED A LIFETIME OF WORK AND SERVICE IT ISN’T CALLED THE KEYSTONE STATE FOR NOTHING!

HOW TO BUILD ON TRADITIONAL LOYALTY

A NEW DIRECTION FOR DIRECTIONAL DRILLING

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SHALE MAGAZINE  SEPT/OCT 2021

SEPTEMBER/OCTOBER 2021

CONTENTS SHALE UPDATE

Shale Play Short Takes

I probably have had the furthest thing from a straight-line path to where I am now that you’ll ever find,” Freed told us when we sat down for our interview in September. “I started working when I was 12 with a paper route, and I haven’t stopped working since then.”

PHOTO BY MICHAEL GIORDANO

INDUSTRY

36 Addressing Efficiency Challenges Faced by the Oil and Gas Industry 38 Minimizing Manifested Hazardous Waste Through Beneficial Reuse 40 Tool Enables Safe Handling of Tubulars 42 U.S. Oil Demand May Fall by 24% in Nine Years Due to EVs 44 Taming Seismic Data with the Cloud 46 From Zero to Hero: How Automated Tag Management Helps Digitalisation to Deliver for the Oil and Gas Industry

48 Natural Gas Markets in the 21st Century

POLICY 52 The Newest Climate Change Narrative Is a Clear and Present Danger to Us All

54 How Viable is Africa’s Oil and Gas Industry in the Wake of a Global Energy Transition?

56 Energy Reality 101 58 Watermelons and Environmentalists 60 Young Voices in Energy: Essays on Innovation and Regulation

BUSINESS

64 How to Build on Traditional Loyalty

66 A Harsh Reality:

Addiction in the Workplace

LIFESTYLE 70 Diamonds Direct

Provides Clarity on What You Need to Know Before Investing in Fine Jewelry

SOCIAL 72 State of Energy Luncheon

FEATURE

It Isn’t Called the Keystone State For Nothing!

COVER STORY

Barely 50, Freed has already created a start-up company from scratch and helped to create and served as the CEO of three others. That all happened following a 5-year career in the U.S. Army as a field artillery Captain that was so distinguished that he became one of the inaugural inductees into the Army ROTC Hall of Fame. It takes a person with extraordinary energy and drive to achieve so much in so little time, and the energy became readily apparent just a few minutes into the interview.

INDUSTRY

A New Direction for Directional Drilling

POLICY

Trying Times

BUSINESS

The Digital Divide: Bridging the Gap, Starting with Grade School Education

LIFESTYLE

Overcoming Covid Woes: Don’t Be Afraid To Invest In Your Business

in Energy

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VOLUME 8 ISSUE 5 • SEPTEMBER/OCTOBER 2021

KYM BOLADO

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

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ASSOCIATE EDITOR David Porter DESIGN DIRECTOR Elisa Giordano PUBLICATION EDITOR Melissa Nichols COPY EDITOR Nick Vaccaro VICE PRESIDENT OF SALES & MARKETING Josie Cuellar ACCOUNT EXECUTIVES John Collins, Ashley Grimes, Doug Humphreys, Matt Reed VIDEO CONTENT EDITOR Aslan Sukolics SOCIAL MEDIA DIRECTOR Courtney Boedeker CORRESPONDENT WESTERN REGION Raymond Bolado CONTRIBUTING WRITERS Neil Bird, David Blackmon, Steven Bruce, David Clark, Maria Degaine, Peyton Jenkins, Bill Keffer, Russ Kennedy, Alex Kinnier, Andrew Law, Kendra Lee, Nelia Mazula, Kelly Warren Moore, Arun Mote, Ian Palmer, Robert Park, David Porter, Chandler Rebel, Tom Shepstone, Thomas Tunstall, Ph.D., Nick Vaccaro STAFF PHOTOGRAPHER Malcolm Perez CONTRIBUTING PHOTOGRAPHER Michael Giordano EDITORIAL INTERN LeAnna Castro

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

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LETTER FROM THE CEO

IT’S HARD TO BELIEVE THAT IT IS ALREADY THE FALL OF 2021. 2020 seemed endless, and now another year is close to passing. But, just like last year, the keyword for 2021 continues to be “Change.” That is why SHALE is dedicated to covering all forms of energy. We have many exciting announcements in the near future about changes as we continue to expand and grow our publication. Our sister media platform, In the Oil Patch, is now in national syndication. So, we are even more equipped to keep you informed about all aspects of the energy industry. In this issue of SHALE Magazine, you will meet Brian Freed. The story of how he became the CEO of EPIC will inspire you. And as always, we have the latest news about the energy industry, business, and policy. To keep up with the ever-changing landscape, don’t forget to follow SHALE on all our social media platforms and visit SHALEmag.com to sign up for our e-newsletter. Significant changes are coming in 2021, so be looking out for our press releases.

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SHALE MAGAZINE  SEPT/OCT 2021

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SHALE UPDATE

SHALE PLAY SHORT TAKES By: David Blackmon

Bakken Shale – North Dakota/Montana The Bakken region continues to struggle to recover from last year’s COVID pandemic, as June production dropped from May levels, according to data released by North Dakota. Lynn Helms, Director of the Department of Mineral Resources, said, “The Covid-19 pandemic sort of put the industry to sleep, and it is struggling somewhat to wake up.” In June, crude oil production was 33.8 million bbl (1.128 million b/d), down from 34.9 million bbl (1.128 million b/d) for May. Natural gas production declined to 89.4 Bcf (2.98 Bcf/d) from 92.4 Bcf (2.98 Bcf/d).

Denver/Julesberg (DJ) Basin - Colorado Oil and gas activity continues to struggle to recover in the DJ Basin from last year’s COVID pandemic. As of August 31, the basin had just 13 active drilling rigs operating within its boundaries. While that number is up year-over-year from just 7 in 2020, its current level of drilling activity ranks the DJ as the least active shale basin in the country.

Permian Basin – Texas/New Mexico A new report from analytics firm GlobalData indicates that oil and gas production in the Permian were expected to fully recover from the pandemic by next year. In total, the Basin was producing about 4.6 million barrels per day (bpd) as of Aug. 3, the report read, and was projected to eclipse 4.9 million bpd by the middle of 2022. That would surpass 4.8 million bpd produced in February 2020, a month before the COVID-19 health crisis struck the U.S. Svetlana Do, GlobalData oil and gas analyst, said Permian production peaked in December 2019 and continued to grow before early 2020 when the virus hit.

SHALE MAGAZINE  SEPT/OCT 2021

Eagle Ford Shale – Texas The prolific Austin Chalk play, which lies above the Eagle Ford Shale, continues to yield results almost half a century after the first drilling efforts in the 1970s. U.S. independent Murphy Oil Corp. plans to drill in the Austin Chalk formation in South Texas later this year to derisk about 100 more locations in the play. In August, CEO Roger Jenkins told investors that the company’s recent Austin Chalk wells have produced excellent results and that Murphy plans to drill four additional wells on its Eagle Ford Shale acreage during the 4th quarter.

Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio The U.S. EIA reports that the Appalachian Basin set new production records during the first half of 2021. Dry natural gas production from shale formations in the Appalachian Basin has been growing since 2008, and monthly production has recently set new record highs. Production in the region reached 32.5 billion cubic feet per day (Bcf/d) in December 2020. It averaged 31.9 Bcf/d during the first half of 2021, the highest average for a six-month period since production began in 2008. The Appalachian Basin contains two shale formations, Marcellus and Utica, which accounted for 34% of all U.S. dry natural gas production in the first half of 2021.

Haynesville/Bossier Play – Louisiana/East Texas SCOOP/STACK Play – Oklahoma With Democrats in Washington threatening to repeal percentage depletion and the deductibility of intangible drilling costs, a new study commissioned by the Oklahoma Alliance projects the following losses to the Oklahoma economy: 5,170 direct and indirect Oklahoma jobs lost annually; Oklahoma would lose 37,305 barrels of oil equivalent per day; $29 million in state revenue would be lost each year; and, $71 million in Oklahoma royalty payments each year would disappear.

Early Haynesville Shale pioneer Chesapeake Energy announced in August that it is getting back into the play with a $2.2 billion acquisition of Vine Energy. Chesapeake said the acquisition would make it the largest producer in the Haynesville Shale, with an average production of about 1.6 billion cubic feet of natural gas per day. The company added that Vine’s assets represent almost 370 drilling locations with a 50% rate of return at $2.50 NYMEX gas price.

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

 FEATURE

It Isn’t Called the Keystone State For Nothing! By: Tom Shepstone

ennsylvania is commonly called the Keystone State because of its geography, stretching from the Canadian border to the Atlantic seacoast and separating New Jersey, New York and New England from the rest of America. History played a role, too, of course, as it was the convenient place to launch a Declaration of Independence and craft a Constitution, but, today, the Keystone State represents so much more. It is reaching for top honors in natural gas production, inching ever closer to knocking Texas from the perch. Pennsylvania’s position as the Keystone State is also reflected in its differences from New Jersey, New York and New England (the “News”) who are all net energy importers, whereas the Commonwealth is a net energy exporter. Hence, the bizarreness of Governor Tom Wolf’s attempt to put Pennsylvania into the Regional Greenhouse Gas Initiative (RGGI) carbon taxing program spawned by the “News.” He’s unlikely to get away with it in the end, though, because a large bi-partisan majority of the Commonwealth’s legislature understands the difference between its energy system and that of the “News.” RGGI is, in fact, all about virtue-signaling. If you return to burning wood and call it renewable biomass, you stand a chance of getting plaudits in the “News,” in fact. Pennsylvania, by contrast, has made appreciable contributions to reducing greenhouse gases for those concerned about them and kept its electricity prices in the realm of reason while simultaneously ensuring the “News” have the energy they need. That’s because the Keystone State is producing natural gas at a record pace, despite COVID, depressed prices, and the Governor’s moves to indirectly squash the industry. We know this because the Pennsylvania Independent Fiscal Office just put out a report comparing natural gas production for the first half of 2021 with the previous two years looking at top-producing states. This was the result:

Yes, Pennsylvania is gaining on Texas. Not that there’s anything wrong with Texas, but Keystone State natural gas production grew by an annual rate of 4.9% during the first two quarters of 2021, and this was following 2020 when it grew by 5.7%. Texas natural gas production, in sharp relief from Pennsylvania, has declined at a rate of 6.1% per year during the first six months of 2021, and this follows a 0.6% decline for 2020. Pennsylvania has, in other words, dramatically narrowed the gap between the two states over the last 18 months. Granted, Keystone State production is still at 76% of that in Texas, but it was only 67% in 2019. That’s quite an accomplishment! Notice, too, that Pennsylvania accounts for 19% of all U.S. natural gas production, and Texas represents another 25%. Two states produce more than two-fifths of all the natural gas developed here in America. That is astounding in its own right. This Pennsylvania natural gas production shows why it is the Keystone State both economically and politically as well; because it is still capable of actually doing things, of building an economy with traditional enterprises. Natural gas has revitalized several long-ignored blue-collar rural areas of Pennsylvania; places such as Bradford, Greene, Lycoming, Susquehanna and Washington Counties. It is an urban state with the 5th and 61st largest cities in America (Philadelphia and Pittsburgh, respectively), but it has enough increasingly prosperous and relevant rural areas to balance out the urban areas and create opportunities in both regions. Thank natural gas for that. Compare this with adjoining New York and New Jersey, which lack such balance and, consequently, are a mess for the most part. They are not only dependent on the Commonwealth of Pennsylvania for their energy sustenance but are busily raising their electric rates by requiring utilities to use uneconomical solar and wind to make power that must be backed up with baseload generation via natural gas. They’ve chosen green political correctness over reality and are paying through the nose for it. And, there’s still more to the story. That’s because the Keystone State is bordered by two other shale gas-producing states, Ohio and West Virginia. Together the three states include the bulk of the Appalachian Basin, which incorporates both the Marcellus and Utica shale formations. The Energy Information Administration recently looked at what happened in the Appalachian Basin during the same first half of the year studied by Pennsylvania’s Independent Fiscal Office: Dry natural gas production from shale formations in the Appalachian Basin that spans Pennsylvania, West Virginia, and Ohio has been growing since 2008, and monthly production has recently set new record highs. Production in the region reached 32.5 billion cubic feet per day (Bcf/d) in December 2020, and it averaged 31.9 Bcf/d during the first half of 2021, the highest average for a six-month period

SHALE MAGAZINE  SEPT/OCT 2021

Pennsylvania, together with Texas and a handful of other oil and gas states, all shale states, have the economic future and the energy security of these United States in their hands. Thank fracking, thank these states and thank the freedom that has allowed us to do all this since production began in 2008. The Appalachian Basin contains two shale formations, Marcellus and Utica, which accounted for 34% of all U.S. dry natural gas production in the first half of 2021. On its own, the Appalachian Basin would have been the thirdlargest natural gas producer in the world by the first half of 2021, behind Russia and the rest of the United States.

Wyoming, Oklahoma, West Virginia, and North Dakota — accounted for 55 quadrillion British thermal units (quads), or 55% of all of the primary energy produced in the United States. In 2000, these six states had accounted for 39% of the nation’s primary energy production, indicating that primary energy production has become more concentrated to the top producing states.

Get that? Pennsylvania is not only the Keystone State for a nation but also the world. A big part of the reason for the growth is the traditional economy of the region, as opposed to that of the trendy “News” states, but there is, too, the political ability to build pipelines for takeaway capacity. This is precisely why anti-fossil fuel groups have focused their attention on opposing them, but it can still happen in Pennsylvania, whereas the “News” states are becoming impossible places to build them, even though those very pipelines are absolutely essential to their future energy security. This is one of the reasons the economy of the United States cannot grow with Pennsylvania, Texas, Oklahoma and other energy-exporting states. Again, from the Energy Information Administration:

Primary energy production in the United States grew 40% from 2009 to 2019, driven largely by increased crude oil and natural gas production in Texas, Pennsylvania, Oklahoma and North Dakota. During that period, advances in hydraulic fracturing and horizontal drilling made drilling for previously inaccessible crude oil and natural gas more economical in the United States. Between 2009 and 2019, production of primary energy more than doubled in Texas and Oklahoma, more than tripled in Pennsylvania, and more than quadrupled in North Dakota.

In 2019, the top six primary energy-producing states — Texas, Pennsylvania,

See what I mean? Pennsylvania, together with Texas and a handful of other oil and gas states, all shale states, have the economic future and the energy security of these United States in their hands. Thank fracking, thank these states and thank the freedom that has allowed us to do all this.

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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cover story

EPIC’S

BRIAN FREED: A LIFETIME OF WORK AND SERVICE

PHOTO BY MICHAEL GIORDANO

By: David Blackmon

SHALE MAGAZINE  SEPT/OCT 2021

“I probably have had the furthest thing from a straight-line path to where I am now that you’ll ever find,” Brian Freed, CEO of EPIC Midstream, told us when we sat down for our interview in September. “I started working when I was 12 with a paper route, and I haven’t stopped working since then.” Barely 50, Freed has already created a start-up company from scratch and helped to create and served as the CEO of three others. That all happened following a successful 5-year career in the U.S. Army as a field artillery Captain. Brian was commissioned through the Reserve Officer Training Corps (ROTC) and became one of the inaugural inductees into the Army ROTC Hall of Fame. It takes a person with extraordinary energy and drive to achieve so much in so little time, and the energy became readily apparent just a few minutes into the interview. Freed’s private industry career began as a business process consultant with Perot Systems, where the focus of his practice was on the energy sector. This provided him exposure to the business from a consulting perspective, experience that he would build on as his career entered its next phase as the creator and owner of his own business. Fatherhood and risk-taking played a big role in Freed’s decision to start his own company, a decision that kicked off an often frantic ride that ended with his involvement in the creation and ultimate selling of four different companies in the span of just three years. “When I was 30 years old and my wife was six months pregnant with our first son, I decided it was time to take a step out and form my own company,” he said. “So, I started a company called Entessa. Started that company from scratch and built it from two of us sitting across the kitchen table to more than 50 employees when we sold the company eight years later. “Entessa as a company has been merged into Emerson, but its flagship product created an order-to-cash logistics management tool called Synthesis. Synthesis manages the order-to-cash process for companies like Energy Transfer, Buckeye, Chevron, DCP, Crestwood, Shell, NuStar, Plains All-American — it’s really an industry standard. “When it came time to sell, we put the company on the market, and the company that bought us was called Energy Solutions, which was our biggest competitor, although more complementary than competitive. They had software products around leak detection and pipeline scheduling. They were about double our size, double the revenue, but about half the EBITDA. “We merged the companies together, and I took over as CEO of the combined company. Then three months later, we turned around and sold it to OakTree Capital.

SHALE MAGAZINE  JULY/AUG 2021

PHOTO BY MICHAEL GIORDANO

A LIFE OF WORK AND SERVICE

“At that point, I took half a step back for a short period of time and decided I wanted to go out of the software world and directly into the energy business. So, I went to work for a company called Rangeland Energy and headed up Business Development; 23 months later, we sold the asset to Inergy. By then, we had built the largest crude-by-rail terminal in North America up in North Dakota. “Inergy had never touched a barrel of crude oil, so I went over to Inergy. I was the only member of management that stayed with the asset to start its crude oil business. Inergy later sold to Crestwood about six months later. “So, as luck would have it, and as the timing worked out, I actually sold four companies to the day in three years. The first deal and last deal actually happened to close on the exact same date.” All this activity in the mergers and acquisitions space provided Freed with a rare level of experience in that key part of the business world, but he joked that it also created challenges in keeping his friends and associates advised on his current contact information. “My friends used to always joke with me about not knowing which email address I had because every couple of months, I would send them a new one.” After about four and a half years at Crestwood, an opportunity arose to join APA Corporation (formerly known as Apache Corporation), a big independent producer headquartered in Houston, with international operations and one of the largest producers in the Permian Basin. That was in early 2017, just around the time that the constrained situation with pipeline takeaway capacity was turning into a major issue. For APA Corporation, which was embarking on the development of the Alpine High, a huge asset expected to produce not just oil but also considerable volumes of natural gas rich in NGLs from multiple formations stacked one atop the other, the constrained situation was especially impactful. Despite these and other concerns, Freed, ever the optimist, saw the move to take over as APA Corporation’s Senior VP of Midstream and Marketing as a growth opportunity and seized it. Anyone familiar with his life’s story knows that has always been his outlook.

A MATCH MADE IN HIGH SCHOOL That focus on seizing opportunities when they present themselves extends to his marriage and family life. “I married my high school sweetheart,” he told us. “My wife, Oya, is actually from Turkey originally. We met in Central Pennsylvania, in a small town called Huntington, PA. We went to school together — I was a year older than she was.

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“She convinced me not to go to West Point on a military academy appointment and to go to college at West Virginia instead. And, I convinced her not to go to George Washington and come to West Virginia, too. We dated off and on all through college, and I married my high school sweetheart a year after graduating. We’ve been married for about 27 years now. “We have two kids: Our oldest son is a 19-year-old freshman at Clemson now. He’s in the business school there, and he’s loving life. It’s hard not to like Clemson with the sports these days — it’s a good place to be. “Our youngest is a 17-year-old here in Houston at Memorial High School. He plays football, and he’s having the time of his life riding my Harley to school every morning. They’re both living their best lives, and they’re great, awesome kids. I can’t say enough good things about my kids, and they’re great kids because my wife did the hard work and gets the credit for taking the time to raise them as I traveled way too much as I was growing up in my career. “Memorial’s a great school. I’m a product of public education, so for us, it was very important that the kids attend public school. We just think it’s an important way to experience more diversity in life.” Exposing the kids to the diversity of life has been a priority for Brian and Oya Freed. One of the ways they’ve accomplished that has been through extensive travel together. “We love to travel. Both of our kids had been to all seven continents before they graduated high school. I like to travel — I’ve been to 57 countries so far — and the kids like it, too. It’s fun to see the world through that perspective. So, I love showing my kids things that are completely different than what they’re going to get in school and try to give them a different perspective on the world.” The Freeds are also owners of their own startup businesses, Brian with a winery in Argentina and Oya engaging in an olive oil business in her birth country of Turkey. Not surprisingly, Freed’s story on the startup of his winery involves seizing an opportunity that unexpectedly presented itself while on a vacation to South America. “I went with Oya to Argentina on vacation in 2010 with no plans made whatsoever,” he said. “We went down there with nothing but a plane ticket and the first two days scheduled to be in Buenos Aires. We were in a little place called Mendoza, trying to figure out where were the great wineries to visit, and by accident ended up at this place called The Vines of Mendoza. “So, I go there with my t-shirt on, my hat on backwards, ordering a nice flight of wine and trying to taste some really good wine and get organized for the next day. They’ve got a PowerPoint presentation running in the background, and before you know it, I’m headed there for lunch. Next thing I know, they’ve put gloves on me and put me on the sorting line because it’s harvest season. So, I didn’t really like that. I was like, what the heck? I came here for the wine, maybe a barrel tasting

SHALE MAGAZINE  SEPT/OCT 2021

… but 30 seconds into it, I was in love. I just loved it. I was making wine, and I wanted everything to be perfect. It was just about making great wine, and I really enjoyed it. “So, I came home, ended up doing a little more due diligence and ended up buying three acres down in Argentina. I planted an acre of Malbec, an acre of Cabernet Sauvignon, an acre of Cabernet Franc, and I make a wine called Liberado. Liberado is Spanish for freed.” Today, the winery produces about 2,000 bottles of wine each year that Freed shares mainly with family and friends and also sells to a handful of local restaurants he frequents in Houston. “It’s a money pit,” he says, “But it’s a fun hobby.”

THE EVOLUTION OF A PIPELINE CAPACITY SHORTAGE At the corner of MLK Boulevard and Trinity Street in Austin, on the University of Texas campus just a few blocks South of Darrell K. Royal Texas Memorial Stadium, sits an old black wooden oil derrick. Students at UT Austin often attend school there for four full years without ever knowing what that thing actually is, even though many football fans use it on six or seven Saturdays every fall as a meet-up point before and after Texas Longhorn home football games. That’s a shame because that old wooden thing is, in fact, a monument to the tens of billions of dollars in funding provided to the University of Texas System and the Texas A&M University System over the last 100 years thanks to the production of oil and natural gas on University Lands in the Permian Basin. Although the first productive oil well in the Permian Basin was drilled and completed in 1921, the historical marker adjacent to this old rig correctly identifies the Santa Rita No.1 well, completed in 1923, as the first “gusher” well drilled in the basin, as well as the first successful well drilled on University Lands. The early leaders of the state of Texas considered the establishment of a system of higher education to be so important that they included the establishment of the Permanent University Fund and deeding of one million acres of West Texas land to it in the state’s constitution that was ratified in 1876. Even before that, in 1839, the government of the thenRepublic of Texas (it became a state in 1845) had already deeded 220,000 acres “for the establishment and endowment of a university,” although no such university was created at that time. Later, in 1883, the Texas Legislature provided for the deeding of an additional one million acres of land in the Permian region to the fund. That was the same year in which the University of Texas was formally established, and literally every student who has ever attended that university, Texas A&M University, or any of the other schools that are a part of those two university systems around the state has had their tuition heavily subsidized and attended class and sporting events in part funded by the Permanent University Fund. All of that and so much more exists in Texas today, thanks to 100 years of production of oil and natural gas from the Permian Basin. It is truly something that every Texan should celebrate despite all the anti-industry propaganda we hear from our news media every day of the week. Since shortly after its initial discovery a century ago, the Permian Basin has consistently served as the largest and most prolific oil field in the lower 48 states. But as recently as 12 years ago, many considered it to be a “dead” basin, an area in which all the significant oil-bearing formations had

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BARELY 50, FREED HAS ALREADY CREATED A START-UP COMPANY FROM SCRATCH AND HELPED TO CREATE AND SERVED AS THE CEO OF THREE OTHERS. THAT ALL HAPPENED FOLLOWING A SUCCESSFUL 5-YEAR CAREER IN THE U.S. ARMY AS A FIELD ARTILLERY CAPTAIN. BRIAN WAS COMMISSIONED THROUGH THE RESERVE OFFICER TRAINING CORPS (ROTC) AND BECAME ONE OF THE INAUGURAL INDUCTEES INTO THE ARMY ROTC HALL OF FAME

SHALE MAGAZINE  SEPT/OCT 2021

been tapped, drilled and depleted, with no prospects for big new discoveries looming on the horizon. Indeed, in 2008 the main business happening in the Permian was a cottage industry of small producers that had sprung up to recomplete marginal wells and stimulate them in order to wring the last few thousand barrels of oil out of them. That all started to change in 2010, as drillers began taking the techniques and learnings from the early successful production of oil from the Eagle Ford Shale in South Texas and applying them to the wealth of shale formations throughout the vast Permian region. Within a year, the Basin was suddenly bustling with activity, including frac crews and drilling rigs again. Within two, it had moved into a full-fledged boom time. Of course, booms in this industry are always inevitably followed by busts, and this would be no exception. The first bust hit in late 2014 as Saudi Arabia, worried about America’s growing ability to produce its own oil from shale, flooded the global market with its own crude in an effort to kill the U.S. shale industry and recapture market share. That strategy did do significant damage to the U.S. industry, resulting in several hundred bankruptcy filings in 2015 and 2016, but what it mainly did was depress the price of crude oil, forcing the Saudi Royal Family to run through sev-

eral hundred billion dollars of its own Sovereign Wealth Fund to support funding of that country’s social welfare state. Seeing that its strategy had been mostly a failure, the Saudi Kingdom quickly abandoned the effort. In late 2016, it reduced its own exports and negotiated with Russia and other non-OPEC nations to form the OPEC+ cartel. By the end of 2016, it was becoming readily apparent to everyone that the Permian was becoming constrained by a shortage of adequate pipeline takeaway capacity needed to move all this new production. Significantly, this lack of capacity was true not just for oil but also for natural gas and its associated stream of natural gas liquids (NGLs). By early 2017, the U.S. industry was starting to boom again, and this boom was heavily focused on the Permian and its superior well economics when compared to other shale basins. From 2017 through the end of 2019, the active rig count in the Permian alone hovered well above 400, often topping 500 and accounting for half of all active rigs in the U.S. As a result, the production volumes from the region skyrocketed. The Permian has always been identified as an oil field, but the volumes of crude produced from the Basin’s various shale formations also bring with them prodigious volumes of associated natural gas, and that

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gas is often quite rich in NGLs. The volumes of natural gas production in the Permian were so significant that the Basin quickly surpassed the Eagle Ford and the Haynesville Shale to trail only the Marcellus Shale as America’s second-largest natural gas basin. With the big markets for the refining of oil, the processing and fractionation of gas, and the exports of all of these products situated along the Texas and Louisiana Gulf Coast, and the pre-existing pipeline capacity to move the product quickly filling up, the biggest pipeline infrastructure build-out in Texas history got underway in earnest in 2017. Supported by a state government that understands the critical importance of this great industry to its economy and people, the permitting, construction and activation of an array of new oil, natural gas and NGL pipelines came about so rapidly that by the end of 2019, when the second, COVID-related bust started to hit the industry, it had become apparent that the Permian had transformed from a critically-constrained takeaway capacity situation to an abundance of capacity. EPIC Midstream is one of the companies that played a major role in making that rapid transformation possible.

BACK TO APA CORPORATION “APA Corporation was amazing because it gave me an opportunity to see a different perspective,” Freed told us. “I had seen the world from the software side; I’d seen the business process part of the business; I’d run a midstream business; I’d started a crude marketing business from scratch over at Crestwood and Inergy.” At APA Corporation, he had responsibility for global marketing. That involved the marketing of all three product streams on three different continents. He also had responsibility for the company’s midstream operations, which includes the transportation, processing, fractionation and export for all three product streams in the company’s domestic and international operations. He quickly realized that if the company’s plan to monetize the Alpine High asset was to succeed, APA Corporation would have to play a dominant leadership role in ensuring that the needed pipeline capacity was built and timely. And the problem was even more complex than the transportation of the product: The domestic refining industry was also becoming overwhelmed by all the additional volumes of light, sweet crude oil being produced in the Eagle Ford, Permian Basin, DJ Basin and Bakken Shale region. That issue was driven by the fact that major refineries along the Gulf Coast have traditionally been built mainly to handle heavier grades of crude oil coming into the U.S. from exporting countries like Canada, Brazil and Mexico. Thus, a shortage of refining capac-

SHALE MAGAZINE  SEPT/OCT 2021

ity quickly developed as these new volumes of light, sweet grade domestic crude started coming to market out of these domestic shale basins. Fortunately for the industry, it was able to convince Congress in 2015 to repeal the 1970s-era ban on the export of U.S. crude, a critical action that has enabled these shale crude volumes with no domestic refining home to be exported. That’s key for everyone who produces in the Permian and Eagle Ford, because as Freed puts it, “Every incremental molecule of either oil or gas has to end up on the water.” By the time Freed came on board, APA Corporation had already created Altus Midstream, its midstream affiliate that served as the intermediate gathering and processing company for the Alpine High investment and other Permian assets. But it quickly became apparent to Freed that if the company was to be able to fully monetize those assets, it would need to invest in ownership positions in some of

the biggest and newest pipelines designed to move the production out of the basin down to the coast. To raise capital to enable those investments, one of Freed’s first decisions was to take Altus public. The big question at that point then became which major Texas port to point the production towards. Freed said that that was no easy decision to make when he arrived at APA Corporation in 2017. “We know now that the best place to get on the water is the Port of Corpus Christi,” he told us. “Back in 2017-19 when we were making some of these decisions, Corpus being the best market wasn’t a settled issue. So, there was a lot of work that went into figuring out where do you want to point barrels of crude or whichever molecule you’re talking about. “On the crude side, it’s a settled issue that those barrels need to go to Corpus. There’s no debate about Corpus being the best port. But at the

time we were making the decisions, there was a lot of pressure from the other locations talking their own book up saying ‘We’re best, too.’ Our challenge of figuring out where we were going to go took some foresight, although in hindsight, it looks pretty simple. “A lot of people don’t realize that EPIC stands for ‘Eagle Ford, Permian, Ingleside, Corpus.’ The best producing basin in the United States is the Permian. Period. That’s settled. You can argue for the Eagle Ford as the second-best basin. So, you go from the best producing basin, through the second-best producing basin, to the best port, to put molecules on the water. “That seems like a no-brainer in retrospect, but in the 2017-19 time frame when we were putting chips on the table, it wasn’t all a settled issue. It took a lot of foresight; it took a lot of convincing.”

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One of the decisions made after taking Altus public was to invest in a 15% ownership in the EPIC crude pipeline, a massive 30-inch pipeline system being developed to transport crude from West Texas down to Corpus Christi. It was as a part of that investment decision that Freed took over as CEO at EPIC. “I came to EPIC in June 2019, and I already knew everybody over here,” Freed said. “The intent all along was that, as part of the succession planning, I would take over as CEO here. I will tell you candidly that we thought I’d be taking over in more of a success scenario, not taking into consideration everything that has happened with COVID and things that would change in the industry due to demand destruction. So, we had thought I’d spend a couple of years as president and then take over as CEO as a part of a sale process. “But as it turned out, we needed to operate the company for the long term, and we needed to focus on operational excellence and building a great company. So, since taking over, I’ve been building out the team and putting the building blocks in place for running a great company.” As part of that effort to create the best company possible, Freed brought in several new senior management personnel in 2021. “I’ve got a new CFO who started within the last month, new chief commercial officer who started about six months ago, new chief operating officer as well. It’s not the entire executive team, but we’ve got a new team in place here at EPIC. “We’re making a lot of changes in how we run the business. When I talk about operational excellence and those sorts of things, it’s getting the right people in to help us become a great company. We’re competing against the giants of the industry, and we’re competing very well. We’re punching way above our weight class. “Part of that is getting the right team together. I can’t say enough good things about the executives who were here, and the new executives who have joined the team will help us keep punching above our weight class.”

PUNCHING ABOVE THE WEIGHT CLASS Punching above that weight class is something that the EPIC team has no choice but to do, given that it must compete against some of the largest companies in the midstream business. As Freed described it, that is why, from day one, he felt it was important for the company to own its own crude oil loading terminal at the Port of Corpus Christi. “We compete with the biggest of the big,” he said. “Energy Transfer, Enterprise, Magellan, Plains All-American, P66, Targa, and now Enbridge has come in to buy Moda Midstream. So, we have to compete by doing other things differently than they do. That loading terminal enables that because we can be more flexible than our competitors can. “That’s always been part of the plan. If you think about the Corpus market, we are the only place where you can put a barrel in a pipeline and a terminal and contract with one party to make that movement happen. When you get down to nominations, and someone wants to adjust quickly to changing market conditions, they can make one phone call to our head of crude oil and say, ‘Can you load this vessel for me?’ “The answer’s not always yes. It just depends on how full we are and other contracts, but we can be a one-stop-shop for our people. That gives us a tremendous amount of flexibility that is a material competitive advantage.” He pauses before adding, “We’re still a young upstart. Deploying $5 billion worth of new pipeline projects by a private equity backed company has never been done before.” Freed said that one of the things EPIC has achieved and is most proud of is the role it has played in diversifying the optionality for not just APA Corporation but for all other Permian and Eagle Ford producers for the ultimate destination

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of their production. While crude oil producers have always enjoyed some interconnectivity between the Port of Houston and its associated refinery/export operations and those at the Port of Corpus Christi, EPIC and its Y-Grade system has played a big role in creating a similar level of optionality for producers of natural gas liquids. That liquids market has traditionally been dominated by the fractionating facilities at Mont Belvieu, a massive complex that lies along Interstate-10 between Houston and Beaumont. What the industry calls a Y-Grade stream consists of five liquid components: Ethane (C2), Propane (C3), Normal Butane (NC4), ISO-Butane (iC4) and Natural Gasoline (C5). Each product has its own specific applications and uses throughout the economy and must be transported to separate and distinct destinations once it has been fractionated from the Y-Grade stream. Until recently, Mont Belvieu has almost completely dominated that fractionation service and distribution market. That domination by a single location has, in turn, resulted in very limited optionality for producers. That has all begun to change significantly in recent years. “I think from a Y-Grade perspective, the connectivity we have built has been impactful,” Freed said. “Belvieu has always been Belvieu, and I’ve heard great and amazing things about Belvieu. But there is a need and a reason to diversify away from there, and Corpus Christi and Sweeny are really the two best locations for that. “When you think about our system, we actually start-up in New Mexico, and that system runs all the way down to Robstown, where we fractionate,” he continued. “We also have a lateral that comes from Pettus, which is very near Hobson, that comes off DCP Sand Hills’ line. Then we built a lateral line that goes from our facility in Robstown over to Sweeny, where we connect into Phillips 66 and CP Chem. “So, we have a tremendous amount of connectivity throughout the Y-Grade system. We just needed to put a lot of steel in the ground

SHALE MAGAZINE  SEPT/OCT 2021

to have a lot of geographic diversity, and that gives us flow assurance, and it also gives us the ability to access the premium markets locally. “But we also connect into Ethane lines that connect all the way up to Belvieu. This ability to connect into the entire Gulf Coast is something we’ve worked very hard on. It gives us the reliability that we need to make sure our customers feel comfortable. Most of the large customers are going to diversify away from Belvieu, and they need to know that we’re going to keep their volumes flowing.” “Belvieu is an amazing place, but this is a great diversification play. We’re transporting a tremendous amount of hydrocarbons, and we need to be able to go to multiple marketplaces. We had the same view when I was at APA Corporation: You cannot put 100% of your hydrocarbons into a single place. Because, when something goes bump in the night — which will happen — doesn’t matter whether it’s a hurricane or a freeze or mechanical problem or you name it, something will go bump in the night. “So that diversification is absolutely a key for all the producers who are going to make decisions out there.”

AN INCREDIBLY HUMBLING EXPERIENCE Any life and career as accomplished as Freed’s are going to attract attention and result in honors and awards. We mentioned Freed’s induction into the Army ROTC Hall of Fame earlier, an honor that grew out of his ROTC service in both high school and college. We asked him to talk about it in our interview since no story on his life and career would be complete without noting such a significant

PUNCHING ABOVE THAT WEIGHT CLASS IS SOMETHING THAT THE EPIC TEAM HAS NO CHOICE BUT TO DO, GIVEN THAT IT MUST COMPETE AGAINST SOME OF THE GIANTS IN THE MIDSTREAM BUSINESS

HE QUICKLY REALIZED THAT IF THE COMPANY’S PLAN TO MONETIZE THE ALPINE HIGH ASSET WAS TO SUCCEED, APACHE WOULD HAVE TO PLAY AN AGGRESSIVE LEADERSHIP ROLE IN ENSURING THAT THE NEEDED PIPELINE CAPACITY WAS BUILT AND QUICKLY

part of his life. Freed obliged, but it quickly became obvious that talking about this part of his life is an emotionally charged and difficult thing for him to do. “Quite frankly, it’s one of the most humbling things that’s ever happened to me in my life. I had a distinguished service career in the Army. ROTC also has a specific view of the military world because it’s the Reserve Officer Training Corps and produces active duty and reserve officers. Some of the inductees are there because they’re generals; some are there due to different things they’ve done in their military career; some are there because they’ve become CEOs or for other things they’ve done in their civilian career. “I think the blend of me having a successful military and civilian career was probably what got folks’ attention. But to be candid, I went there a couple of years ago, and two people down from me (his voice cracks at this point) was a fallen soldier who I didn’t know, but the medal was being given to his wife and son. And the son was roughly the same age as my kids. “And my kids were there, and it really hit home for them. This guy won the Congressional Medal of Honor, and it was being awarded to his family posthumously. For my kids to see that and see some of the military traditions there — and it’s not just the 21-gun salute — it’s going to have

a meal, and we leave a seat for our fallen brethren that are not going to be able to join us. That’s impactful for my kids to see my foundations forged in that way of life.” Freed pauses before continuing. “I grew up in the Cold War. It was a different kind of enemy then than what we face now in terrorism vs. the Soviet Union. The military is not always emphasized as it should be in our industry and across the country, but that was just an incredibly humbling experience for me to be able to show my children that and to be a part of such a tremendous group of people. “I had a distinguished military career, and the army put a few medals on my chest here and there. But at the end of the day, I’m humbled just to be thought of as a part of that group. The people that are there have, in my opinion, given sacrifices to their country that far exceed what I have done. It was an incredibly humbling experience to be included in.” The oil and gas business is led by a wealth of extraordinary men and women. The opportunity to interview so many over the last five years has revealed that they all share some combination of certain traits: Honesty, drive, ambition, personal integrity, keen insight, a creative mind, a bias towards personal service and humility. Few exemplify each one of those traits as fully and clearly as Brian Freed.

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INDUSTRY

A New Direction for Directional Drilling By: Andrew Law and Neil Bird

t’s been a quarter of a century since Rotary Steerable Systems (RSS) displaced mud motors as the energy industry’s premium directional drilling tool of choice, and the basic design has incrementally been improved upon over the years. But the fundamental approach has remained unchanged. The technical and commercial realities of today’s broad energy landscape — and specific directional drilling market — demand that an alternative be added to the RSS roster. Let’s explore why that need exists and how it can be met. Different demands The energy industry of 2021 looks very different from anything that’s come before. With the energy transition as a backdrop, a lower-for-longer oil price environment has forced both operators and service companies to squeeze their operations for every ounce of efficiency they can. The geography of the industry is changing, too. The Middle East remains a juggernaut. The U.S. shale strength continues, but around the world, operators are looking again at previously unattractive or uneconomic plays and re-evaluating their feasibility. To make these plays economic means keeping an iron grip on the cost per barrel. In that respect, traditional pad-and-piston RSS designs can be frustrating. By the nature of their design, they are prone to excessive wear, which inevitably entails downtime. In a competitive industry with downtime as a major performance metric, that’s not just frustrating — it’s damaging, both to reputation and the bottom line. However, there is no avoiding it. Any system that steers by pushing a pad against the borehole wall is going to be subject to powerful forces, and if it’s not direct wear of the pads that causes the problem, it’s the torsional vibration of the drill bit. Over the years, resourceful engineers have fine-tuned designs to reinforce the technology or reduce the effect of those forces, but it’s an unavoidable drawback of existing RSS systems. This is a potential cause of failure that can result in downtime at any moment, eroding already thin margins. At the same time, just as oil producers are keeping an eye on production cost per barrel, gas-focused producers are trying to manage cost per cubic foot. Touted as a ‘bridging fuel’ between the hydrocarbonbased old world and the renewable new one, demand for gas has seen sustained increases worldwide. Abundant supplies and the emergence of the U.S. as an LNG super-exporter mean this has not translated into high prices, however. And margins for gas production remain thin. In certain basins, such as Hainesville, gas producers must similarly look for a more reliable RSS option with the added difficulty that these are often in high-temperature environments, and traditional RSS designs aren’t necessarily designed to perform well in these circumstances. Built differently What can be done, though, if this is an unavoidable facet of RSS design? The answer is to take a new direction for directional drilling,

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omitting pads and pistons in favor of a simple, stronger collar and decoupling the steering mechanism from damaging torsional vibration. This is achieved by using internal hydraulic pressure differentials to create side-force at the bit for geo-steering, rather than pushing against the borehole wall to change direction. The approach uses Bernoulli’s principle of fluid dynamics, which can commonly be observed in the generation of

lift force on hydrofoil, but which has not previously been applied to downhole applications. The advantage of this approach is that, by internalizing the steering mechanism, a completely plain collar design is possible while achieving true at-bit steering, decoupling the mechanism from torsional vibration, and removing any pads or external profusions that might be subject to excessive wear. Most of all, though, the design is mechanically simpler — elegant, even — compared to anything possible with traditional RSS design, which increases reliability and therefore reduces downtime. A different market landscape It isn’t just the technology that has been overdue a shake-up when it comes to the RSS market though; the market itself has become (conversely) over-commoditized and under-competitive. Taking the U.S. as an example, there are a number of engineering firms offering RSS tools to the market, with high-quality engineering honed over many years. The country’s backbone of independent service companies buy or lease RSS tools as necessary from these companies. However, the market lacks enough independent alternatives. To support a healthy ecosystem of independent service companies with genuine options to choose from, that must be rectified. And that imperative is extending into new markets, too. In the Middle East, National Oil Corporations (NOCs) are looking to bolster local content and in-country manufacturing. Unlike traditional RSS tools, the independent status and simple engineering of an internally pressure-steered RSS allow for the majority of manufacture and repairs to be conducted incountry, in line with national strategies. Around the world, independent service companies are underserved by independent RSS options. Giving them that independent alternative — an alternative that offers greater reliability and cost-efficiency — could be genuinely transformative for many: an internal pressure differential steered RSS could elevate many into a new league of contracts. As lateral lengths increase across the industry, there is going to be demand for RSS tools that can achieve smoother bores with lower tortuosity. In other words, there is ample room for an alternative to traditional RSS tools without having to rip up the rulebook and start again — the market functions best when it can choose from a range of technologies, from a range of suppliers to best suit the job at hand. And that’s the new direction for directional drilling that needs to be taken.

As lateral lengths increase across the industry, there is going to be demand for RSS tools that can achieve smoother bores with lower tortuosity About the authors: Andrew Law has a background in the energy sector through Field Engineering at Schlumberger and General Management within Weatherford. Andrew has worked in corporate finance at KPMG and is a Sloan Fellow from London Business School. Neil Bird is a Senior Level Manager with 28 years of technical experience across Directional Drilling / Rotary Steerables / MWD / Survey disciplines. Worked in multiple locations (Europe, Middle East and USA) within District, Regional and Global structures. Excellent personnel, team building, communication and problem-solving skills developed across multiple management and technical positions.

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INDUSTRY

Addressing Efficiency Challenges Faced by the Oil and Gas Industry By: Arun Mote

he global oil and gas industry is facing challenges due to modern energy processes. This is leading the industry to scout for technologies that maximize the energy efficiency of the production process. This drastically helps petroleum refineries and chemical and petrochemical plants to reduce their carbon footprint and operating costs. In order to be competitive and constantly evolving, end-users want to achieve plant efficiency enhancement through energy-recovery technologies to reduce energy waste. In this context, steam turbines play a vital role in achieving that goal, from driving powergeneration turbines in an old generation refinery to driving almost all rotating equipment starting from 10 kW in a modern-day refinery. Triveni’s pre-qualification with OEMs, EPCs and consultants augmented its capabilities, starting from pre-order feed engineering to one-time supply and installation of API steam turbines. Through its innovative product portfolio and aftermarket services, it has been helping companies manage their power and drive solutions in various areas, such as petroleum refineries, petrochemicals, chemicals, fertilizers, steel, cement, process co-generation and many more, globally. With the introduction of modular design concepts and implementation of its steam turbines, Triveni Turbines is fully equipped to meet the multiple operating scenarios of its customers and to address the challenges and ever-changing needs of tomorrow: • Flexibility in terms of design and engineering and special capability for “made to order” turbines • Capability to comply with stringent design codes • All steam turbines manufactured by Triveni Turbines are subjected to live steam trials • A large network of technical field advisors supervise the installation and commissioning of steam turbines anywhere in the world

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• Faster delivery period of steam turbines owing to high throughput from two world-class manufacturing facilities • Benchmark after sales and post warranty support for annual maintenance, operation and maintenance, lifetime support for spares. Requirements of Steam and Usage of Steam Turbine in the Oil and Gas Industry As the world is moving toward more energyefficient ways of operation, most licensors and designers of modern petroleum refineries and chemical and petrochemical plants are having to keep this in mind. As a result, steam balancing and extreme utilisation of steam becomes a key design factor. This has put pressure on existing plants to look at their steam headers for available steam and increase utilization by replacing pressurereducing stations and dump condensers with steam turbines to save their electrical power and reduce their carbon footprint. In the past few decades, this pushed steam turbine manufacturers to adapt to various levels of steam conditions ranging from very lowpressure steam inlets (4 Bar) to supercritical steam (140 Bar) and power ranging from 10 kW and up to 30 MW or more according to the plant size. Triveni’s expertise in handling high-pressure and low-pressure steam helps the end-users recover energy from various steam headers by completely eliminating the pressure-reducing stations and dump condensers. Challenges Faced by the Oil and Gas Industry Challenge 1: High cyclic loads and the utilization of multiple pressure steam into a single steam turbine Many chemical plants have cyclic loads by virtue of the processes involved in manufacturing the end product. Certain exothermic reactions occur in the course of chemical manufacturing that can generate steam at a lower pressure and temperature than is normally vented or dumped in a condenser since they are not generated continuously.

Triveni offers injection – condensing/injection – back-pressure steam turbines where the intermittent generation of steam can be injected into the turbine to add more flow to the low pressure (LP) section of the turbine generating more power at the terminal. Triveni’s steam turbines are equipped with new generation speed – load – extraction control electronic governing systems that can provide a seamless operation to benefit the user. Challenge 2: Utilizing unconventional header pressures (VHP to HP and LP to Condensing) Triveni Turbines provided one of its customers (a mid-scale petroleum refinery overseas) with energy savings by offering very high pressure (VHP) to high pressure (HP) turbine drive solutions. This saved them almost 17 MW of electrical power, an enormous power cost savings. With these design capabilities, a steam turbine manufacturer can increase the extent of variable adaptation. By doing so, all sizes of critical equipment like process pumps, water pumps, small lube pumps, fans, blowers, air compressors and process compressors, etc. can be driven by steam, thus enhancing the saving of energy (by reducing losses during generation, transmission and utilization) and steam utilization. Case Study 1: Turbine Details: 4 X 1.5MWe & 4 X 2.7MWe steam turbines as per API 612 + Shell DEP (Design Engineering Practices) + AMEC FW project variations

2.7MW Steam Turbine

1.5MW Steam Turbine Project Highlights • Steam turbines, designed, manufactured and tested as per API 612 6th edition + Shell DEP + AMEC FW Project Variations • 4 X 1.5MWe & 4 X 2.7MWe steam turbines drive 4 No’s each combustion air blower and flue gas fans for the world’s largest reformer package • Project executed with approved deviations to complete project specifications • Turbines designed for outdoor installation with MDMT suitable for -3℃ • Steam turbine constructed in full compliance with Shell DEP / AMEC PV requirements for human factor engineering • Steam turbines constructed for a long service life of 30 years and six years of uninterrupted operation • Electrical hazard area zone 1,II C,T3 • Steam turbines, gear units, lube oil units, unit control panels and gland steam condensers in Triveni’s scope of supply To complement the above new product portfolio, Triveni’s refurbishment arm Triveni REFURB steps up to provide an aftermarket solution for the complete range of rotating machinery across the globe. From steam turbines and compressors to the gas turbine range, we have adapted ourselves to ensure that customers find a onestop solution. We have noticed a trend toward refurbishing turbines to meet varied parameters. They may have grown in size and scale, necessitating a change in process parameters, or it could be due to the age of the turbines. This change in operating parameters has led to increased specific steam consumption, leading to increased cost. Triveni REFURB has positioned itself as a niche, working with customers to improve the efficiency of operations of their existing turbines without replacing the entire turbine.

With rising costs, operating turbines efficiently is necessary for cost-saving and creating a smaller carbon footprint. With age, the turbine becomes inefficient, increasing the cost of producing power. Our team works with customers to understand their current needs. We will redesign the existing turbine across all brands to meet the new parameters ensuring the customer savings by making the turbine efficient. Our engineers study the process change requirements of the customer and redesign the existing turbine by modifying the steam flow path to the new parameters. This re-engineering process is carefully done to ensure the existing system (i.e., casing, civil foundation, lube oil system, etc.) is retained. The only modification will be the turbine internals (i.e., new rotor, diaphragms and bearings subject to design requirements) to suit the upgraded blade path. The re-engineering will ensure the old rotor and stator can be reused within the existing casing once the price of power improves, thereby giving the customer flexibility to choose an option based on the fluctuation of power pricing and enhancing the efficiency in either scenario. Case Study 2: Triveni REFURB — Aftermarket A Fortune 500 petrochemical company had been operating its 17-stage direct-drive condensing steam turbine for over 40 years. They envisaged change in their process requirements which could be met by converting their existing “double extraction condensing” to “single extraction back pressure.” Triveni REFURB offered a cost-effective solution by modifying the existing steam flow path and replacing only the turbine internals (rotor, diaphragms and bearings).

The existing casing and base frame were retained to ensure no modification in the foundation.

The existing mechanical governing system had to be adjusted at regular intervals to avoid risk to the turbine. This was upgraded to an electronic type governing, which was much simpler and reliable.

About the author: Arun graduated from the Indian Institute of Technology Bombay with a Master’s degree in Technology in Mechanical Engineering, and he also secured his Master Degree in Business Administration from Jamnalal Bajaj Institute of Management Studies, Bombay University. He joined Larsen & Toubro Limited as a Management Trainee looking after the Caterpillar product line. Subsequently, he changed over to SKF Bearings Limited and was looking after automation and electrical segments. He rejoined the Caterpillar Joint Venture associate company to establish an engine business in India. Subsequent to that, he worked with a Central Air Conditioning Company called Blue Star Limited. For the last 20 years, he has been with Triveni Turbines looking after the turbine business. Under his leadership, the turbine business has turned around and has grown many times and established leadership in Industrial Turbines in domestic and also in overseas markets.

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INDUSTRY

Minimizing Manifested Hazardous Waste Through Beneficial Reuse By: Kendra Lee

or very valid reasons, oil companies have turned a corner and are more concerned than ever before with their public images, especially pertaining to their environmental impact. They are held to the most stringent environmental standards and are mandated to provide guarantees of transparency in the environmental management of their activities. To compound their issues, the “Great Crew Change” is another major factor in the industry’s transformation. It is estimated 71% of the oil and gas workforce is 50 years old or older. The first logical choice to replace this aging workforce are millennials, but millennials place high regard on social impact, the environment and corporate social responsibility. Oil and gas production, processing, refining and petrochemical plants are the largest sources of industrial greenhouse gases in the United States. In the U.S., the industry pollutes the air with almost eight million metric tons of methane annually, according to the Environmental Protection Agency’s most recent inventory. Consisting of one carbon atom and four hydrogen atoms, methane, the simplest hydrocarbon, is a flammable and potent greenhouse gas and a principal component of natural gas. Its global warming potential is more than 25 times that of carbon dioxide. The oil and gas industry is also the largest industrial source of emissions of volatile organic compounds (VOCs) that includes air toxins such as benzene, ethylbenzene and n-hexane. This group of chemicals contributes to the formation of ground-level ozone, aka smog, and exposure is linked to a wide range of health effects, including aggravated asthma, cancer and premature death. The atmospheric concentrations of carbon dioxide, methane, and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. Carbon dioxide concentrations have increased by 40 percent since pre-industrial times, primarily from fossil fuel emissions. The Environmental Integrity Project (EIJ), a non-profit watchdog organization, found that the release of toxic air and water pollution, and greenhouse gas emissions from

SHALE MAGAZINE  SEPT/OCT 2021

the oil and gas industry, are notoriously undercounted and underreported. The oil and gas industry widely uses sodium hydroxide, also known as caustic, to remove impurities from various liquid streams. Once the caustic is exhausted and no longer suitable for use, it is identified as spent caustics. These solutions, which generally include sodium or potassium hydroxide, water and contaminants that consume sodium and potassium hydroxide, require safe removal and disposal. A common way to dispose of spent caustic is to manifest it as hazardous waste. However, that does not have to be the only choice. Spent caustics can be beneficially reused, without reclamation, as ingredients for new products or as substitutes for commercial products. This is far more environmentally friendly than disposing of the materials as waste and, as such, the materials are no longer a part of the oil and gas companies’ waste generation statistics or reporting. Adhering to the Environmental Protection Agency’s (EPA) guidance on beneficial reuse, waste becomes valuable commodities exempt from solid waste definitions. Merichem Company provides beneficial reuse services to refineries, chemical plants and midstream processing across the globe. As a long-time advocate of recycling and sustainability, Merichem Company develops, produces and sells full-service sulfur removal, caustic treating, and spent caustic treatment technologies, and caustic services for sulfidics, naphthenics, spent potassium hydroxide (KOH), disulfide oils (DSO), off-spec hydrocarbons and off-spec sodium hydroxide. Beneficial reuse, a term coined by the Environmental Protection Agency, fits within the Guiding Principles of the American Chemistry Council’s Responsible Care® initiative, of which Merichem is a long-standing member. Merichem shares a common commitment to the continuous improvement in environmental, health, safety, and security performance with respect to chemical products and processes. Beneficial reuse of caustic wastes is but one piece of the environmental pie, but it is a substantial one that can be addressed immediately with great impact.

Spent caustics can be beneficially reused, without reclamation, as ingredients for new products or as substitutes for commercial products

About the author: Kendra Lee has served as Chairman of the Board for Merichem Company since 2012 and CEO since 2014. She has worked for Merichem Company for over 20 years, beginning her career in the research laboratories. Ms. Lee continued her progression in Merichem Company in chemical sales management and the corporate functions of Treasurer and Corporate Secretary before being appointed to serve on the Board of Directors of Merichem Company on April 29, 2010. Ms. Lee received her Bachelor’s of Science degree from Texas A&M University and her Master’s of Business Administration from the University of Houston.

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INDUSTRY

Tool Enables Safe Handling of Tubulars By: Nick Vaccaro

hile the oil and gas industry has long harbored innovative thinking and technological advancements, many of the improvements have been birthed in response to incidents and injuries. Responding to crush and pinch points, among other hazards, Tubular Rollers LLC exercised its version of innovation in 2014 when it introduced the Tubular Roller. The Tubular Roller provides a more bang for the buck scenario, allowing workers to handle casing more safely. Additionally, it increases efficiency and can even eliminate the number of personnel needed to perform the work. The Tubular Roller provides users the opportunity to roll casing down a rack without ever having to lay hands on it. This serves as a considerable advancement as handling casing historically has brought crushed hands and lacerations. How Does It Work? Tubular Rollers are available in most common sizes of casing, drill pipe, and tubing. After receiving the required Tubular Roller, it is inserted into the pin end of the casing. The user should face the Tubular Roller and place both hands in the designated areas of the shaft. Walking forward, the Tubular Roller moves the casing forward and away from the user’s body. When reaching the desired destination, the user should stop. Halting the forward motions stops the Tubular Roller, and as a result, the casing ceases rolling. After the casing comes to a complete stop, the user should remove the Tubular Roller. When the situation requires the casing to be dropped to a lower level, the user should slowly roll the casing to the drop point and when it approaches the ledge, let the casing fall with the tool still inside the tubular. The user should be sure to stand clear when dropping casing to lower levels. According to Chuck Henkes of Tubular Rollers LLC, the tool’s design is crucial for practical use in the field. The wheel design allows for insertion into the casing without compromising or damaging internal threads. The material utilized in its design enables durability. “The materials used to create the Tubular Roller have seen improvements over the years,” said Henkes. “Each of its improvements have led to its longevity and safe use in the field for our customers.” Customers who rent the Tubular Roller receive additional tools to ensure a successful outcome. A Job Safety Analysis drafted by Tubular Rollers LLC professionals is available for download on the company’s website. Following the JSA steps serves as a well-paved path to a positive outcome. Tubular Rollers LLC also provides customers an instructional video on their website. Correct and safe use cannot be denied with such a process. With each item accounted for and every possible safety factor applied, the Tubular Roller can be identified as an ally to those who rent it. Implementation Challenges Introducing something new into an industry that subscribes to a repeat successful process strategy is not met with immediate support. Se-

SHALE MAGAZINE  SEPT/OCT 2021

curing an audience to witness the tool’s performance can be challenging. “Introducing the Tubular Roller, in the beginning, was challenging,” said Henkes. “There was nothing to compare it to. Nothing else could be found on the market that rolled casing on elevated pipe racks. Now the majority of our business is repetitive by nature.” The Tubular Roller began receiving notice because it eliminates the need for workers to touch the casing. They say that seeing is believing, so Tubular Rollers LLC offers the free demonstration in keeping with that mantra. “We believe that if a customer sees the Tubular Roller in action, they will come to appreciate its value,” said Henkes. “We offer a one-time free use on a casing run.” The tool features a specific characteristic that assists in wading through the challenge. It is the first tool developed that handles the casing from the inside of the casing. Validating the significance of this factor, Henkes said, “The only other item used to move casing from its interior diameter was a 2x4.” Tool Benefits The Tubular Roller provides excellent value in comparison to its rental cost. While not available for purchase, the tool’s rental fee fades in contrast to the benefits it offers. “The tool reduces downtime,” said Henkes. The Tubular Roller converts a two-person job into a one-person application. That second person is now free to perform tasks that would typically have to wait. “With the Tubular Roller eliminating that additional person, he is now available to change liners, clean pits and perform other important tasks,” said Henkes. The Tubular Roller’s most significant benefit is its ability to enable a safe work outcome. Eliminating the need for that additional employee drastically reduces the chance of injury from being crushed between the pipe rack and rig. Additionally, pinch point injuries and laceration potential see a significant reduction of occurrence. The tool’s superior engineering and construction serve as significant

players in safety assurance. While other tools were not necessarily designed for the same use, employees have attempted to use them as a Tubular Roller substitute. The result manifested as a broken tool laying on the ground while employees engaged in the historically tricky process of rolling pipes. The Tubular Roller’s design and build using aircraft-grade aluminum and other superior materials provides for efficient and longstanding use without breaks. It was specifically designed for this purpose, which leads to a more positive outcome where safety excellence can be achieved. “The tool has been out for six years,” said Henkes. “It has easily run over 300 million feet of casing without injury.” In addition to its safety enhancements and financial savings, the Tubular Roller identifies as a morale booster. It demonstrates the ability to make a job task more manageable and make for a productive day without consequence. The men and women who utilize this tool participate in grueling work, often in harsh climates. With the tool making their job easier, individuals are far more likely to use it repeatedly in the future. An increase in use correlates with an increase in safety awareness and positive outcomes. “With our tool, rolling casing went from the job that no one wanted to the one everyone wants,” said Henkes. Availability Tubular Rollers LLC conducts business as a rental service only for the overwhelming purpose of quality control. Concerned for the safety and wellbeing of its customers, Tubular Rollers LLC can exercise complete control of the product. This provides the company the ability to maintain a high standard of quality and make improvements when necessary. “We want to ensure the tool is of the highest quality continually,” said Henkes. “It is a device that promotes safety. If we can maintain its lifetime and design, we can ensure it meets the highest standard of safety and quality.” With the tool being a rental only, Tubular Rollers LLC still exhibits a far reach and provides availability where needed. Currently, Tubular Rollers LLC finds its corporate office in Mustang, Oklahoma. They also conduct business through a satellite office in San Angelo, Texas. Although they are not currently conducting business in California or the offshore market, they are continually developing a stake in all areas where they can assist. Their current reach can be found within nine states and services all domestic plays from as far west as the Permian Basin to as far east as the Marcellus and Utica Shales. No matter the location of the demand, Tubular Rollers LLC

pledges to serve the market. The belief lies entrenched in the notion that a Tubular Roller is a tool that promotes efficiency and safety simultaneously, which applies to any worker in any market. Future Goals While every business conducts operations to earn profits, Tubular Rollers LLC is no different. They, however, feel a deep-rooted sense of responsibility for the men and women who work in the field and can benefit from using its product. Recognizing its value and what it brings to ensuring safety, Henkes indicated the firm’s current trajectory is to be seen as a constant in a market that experiences ups and downs, and ever-changing regulations. Instead of directing attention to additional products, they adhere to continually researching and improving the Tubular Roller. They have accomplished this by steering flat rates that have remained a constant and allows for a continual contribution to the oil and gas industry. “We want to be a lasting partner to our customers and ensure a safe working experience for the men and women that work in the field every day,” said Henkes.

The Tubular Roller provides users the opportunity to roll casing down a rack without ever having to lay hands on it.

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.

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INDUSTRY

U.S. Oil Demand May Fall by 24% in Nine Years Due to EVs By: Ian Palmer

he renewable energy snowball has begun to roll, and power sources like wind and solar are increasing rapidly. It’s hard not to notice if you have to pass one of those giant wind turbine blades being trucked along the highway. In President Biden’s proposed budget, he has inserted a big chunk of money aimed at arresting climate change and including spurs for renewable energy. For example, the Energy Department would increase by about 10% overall, with $8 billion (an increase of 27%) directed at a new generation of electric vehicles, nuclear reactors and other alternatives to burning fossil fuels. The cost of solar and wind generators has come down to 33% and 50% respectively since 2015, and the price of batteries for storing electricity has been halved in the past few years. The case for using renewables to reduce greenhouse gases (GHG) in the atmosphere has received a lot of attention, with a goal to avoid the worst effects of global warming. It’s not hard to see that renewables will increase over time and that fossil energies will decrease. The coal industry has been forced to accept this. But the oil and gas industry in the U.S., which has been particularly successful in their shale revolution the last 20 years, is reluctant. And understandably so, because they see profits falling and jobs going away. This decline in oil and gas production — will it be slow or rapid? A gradual adjustment or a painful disruption? Some answers come by putting numbers on the U.S. greening of electricity and transportation, two of the largest users of oil and gas. The analysis is simplified but insightful. Let’s begin with fossil fuel consumption in the U.S. in the year 2018. Figure 1 compares this against renewables and nuclear. The approach is to look at goals for renewable increases (called greening) and convert these to fossil fuel decreases based on a zero-sum replacement in Figure 1.

Greening of transport The transport sector works primarily off oil, which refineries convert into gasoline. Cars and trucks are going green at a rapid rate in some countries. Norway leads the pack with 60% of electric vehicles in new car sales (Figure 2). The US lags seriously. Volkswagen recently announced its dive into electrified vehicles (EV). The basic SRV, called ID.4, will be priced at $40,000 and have a range of 250 miles. Volkswagen’s target is a million EV sales in 2021. Apparently, they even plan to build their own charging stations across the U.S.

Figure 2. Projected uptake of electric vehicles as a percentage of sales by country. Source: AUSTRALIAN GOVERNMENT, DEPARTMENT OF INFRASTRUCTURE, TRANSPORT, REGIONAL DEVELOPMENT AND COMMUNICATIONS.

Figure 1. US energy consumption by source and sector. Source: IEA.

SHALE MAGAZINE  SEPT/OCT 2021

In the U.S., cars have started going electrical, but plug-ins are less than 2% of all U.S. cars on the road, and widespread adoption will be dubious if charging stations are not built quickly enough. Figure 1 shows that oil usage in U.S. transportation was 26 quads in 2018. Biden’s goal is that new sales of EVs will be 50% of all sales by 2030. If this means about a third of all vehicles on the road are electric by 2040, then 26 quads of transportation petroleum (oil) will have declined by close to 9 quads. Since total petroleum usage is 37 quads in Figure 1, this 9-quad decline implies a 24% decline in consumption of oil in the U.S. by 2030. But if industrial usage of petroleum also falls, as expected, the number would be greater than 24%.

If supply follows demand, then a 24% decline in oil production would be expected by 2030 — a quarter of oil production decline in only nine years. If industrial consumption (8 quads) in Figure 1 also fell due to the transition to renewables, then total oil production could fall by more than 24%. Renewables other than nuclear would have to increase by nine quads to replace this petroleum decline by 2030. Since from Figure 1, the base-case is 12 quads of renewables, a 9-quads increase to 21 quads represents a 75% increase. This may be feasible. A similar analysis can be done for the greening of electricity, based on conversion of coal and gasfired power plants to renewable sources of wind and solar. The goal is Biden’s changeover to 100% renewable electricity by 2035, which implies replacing 23 quads of coal and gas energy that results in a 32% drop in natural gas consumption by 2035 (Figure 1). If supply follows demand, then gas production could drop a third by 2035. Caution: the total amount of new renewables would need to be 32 quads to replace the fossil energy reductions in these two sectors. Renewables would have to increase from eight quads in the base case (Figure 1) to 40 quads by 2035. This would be an increase by five times which is such a massive number that it adds doubt to the goal of replacing all power plants with renewable electricity by 2035. Consumer action will decide the transition timeline For the U.S., this simple supply and demand picture suggests that if demand falls in electrical and transport sectors, then supply is likely to follow in the form of serious cuts to oil and gas production within 10-15 years. Government policies can be federal or state regulations, as well as President Biden’s overarching goals. They can include price discounts or tax subsidies to lower the price of EVs enough that people have the means to purchase. Norway has succeeded in this — 60% of new cars are now EVs. Proactive industries willing to take a chance on a new future will respond to government policy, such as GM and Volkswagen promising to manufacture only electric cars by a date soon after 2030. Individual stakeholders can vote during annual conferences of energy companies, or they can initiate motions on the agenda to promote actions on climate change. This recently occurred in ExxonMobil. Consumers can spread their individual influence in several ways: • Buy an electric car, initially for city driving where home-charging is available. Or an electric truck such as the Tesla Electric Pickup Truck due in 2022 (and pre-orders have flown).

To achieve the government goals discussed above will likely require a carbonpricing mechanism

• Buy a rooftop solar system, with or without a large storage battery in case of external power failure. There are more rooftop solar systems in Australia (population 25 million) than in the USA (population 325 million). • Conserve power usage in cars, homes and workplaces. Convoy to work, buy a smaller home, turn the thermostat down, don’t leave lights on. • Minimize plastic usage, as plastics come from ethane and propane that are produced by shale wells. All of the above initiatives will need to be adopted. They have all begun, and the transition snowball is rolling. The fourth initiative, consumer action, will decide how quickly and how deeply the changes will occur. The oil company, BP, in its “Energy Outlook 2020,” has included a scenario for when the most rapid changes occur — and it’s based on a large fraction of consumers across the world actively adopting changes such as mentioned above. There are caveats. First, the growth of world population and need for extra energy is not considered, even though this could be substantial through 2035, the timeline considered here. Second, the federal government goals may not be met by the ordained dates. But support is growing when the federal government raises climate change to a “crisis” stature in the cabinet, and a new groundswell for climate action is expanding amongst the U.S. population. Still, to achieve the government goals discussed above will likely require a carbon-pricing mechanism. It might be wise for oil and gas companies to adopt a proactive stance and see what changes could be made in their business, as uncomfortable as that might be. The way forward might be for oil and gas companies to diversify into renewable energies. It seems a straightforward way to gain — instead of eventually losing — many customers.

About the author: A petroleum engineer and consultant, Ian Palmer, PhD has worked at Los Alamos, The Department of Energy, BP, and Higgs-Palmer Technologies. He is a contributor at Forbes. com and the author of The Shale Controversy.

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INDUSTRY

Taming Seismic Data with the Cloud By: Russ Kennedy, Chief Product Officer, Nasuni

il and gas operators are drowning in seismic data, and their ability to manage, access and collaborate on that data is of huge strategic importance. This is because improving those data metrics directly impacts reducing their “time-to-oil” — the time it takes to identify oil assets and extract in the most efficient way. It’s no exaggeration to say that having the wrong platform can cost millions of dollars a day if data is unavailable or accessible to a global resource pool. And, the faster they can interpret the data, the bigger their competitive advantage. But, these data sets — often collected in extreme, remote environments — are enormous. As technology continues to provide ever more detailed information on geologic structures, these files are growing exponentially in both size and number. Many operators have petabytes of data, and individual file volumes can be hundreds of terabytes in size. Unfortunately, oil and gas companies often rely on an infrastructure that was not designed to cope with this gargantuan amount of data. Transmitting this data can be slow, and it can often be subject to frequent interruptions due to expensive and constricted wide-area network (WAN) lines. The local collection site is often remote and hazardous, so it’s not conducive to storing data there. The slow rate of transfer combined with the scale of seismic data also make collaborating on these data sets difficult. Often, the operators send the field data to a regional office equipped with powerful workstations that can run the seismic interpretation software geoscientists use in their analyses. The process of moving data from collection to the point at which the information can be acted upon can often take many more weeks. And once analysis

SHALE MAGAZINE  SEPT/OCT 2021

is finally complete, there’s the problem of sharing the results. It’s common for companies to ship multi-terabyte hard drives around the world because the networks are far too slow. Antiquated infrastructure Because it’s so slow to share and collaborate on these very large data sets, it’s difficult for multiple geoscientists to review the data and results, opening up more potential for error. And when it comes to choosing a drill site, these errors can be extremely costly. There are additional challenges beyond transmission and collaboration. The sheer size and exponential growth of seismic data make it very challenging to manage, protect and connect to analytics. The lengthy seismic interpretation lifecycle slows down timeto-oil because the laborious task of collecting, storing, copying, sharing, analyzing and managing seismic data can take up to 18 months or more. And that’s assuming these antiquated systems — engineered for an era that enterprises in other industries have long since left behind — are running perfectly. Traditional, file-storage systems keep information in discrete, local silos, making it costly and cumbersome to consolidate the data and extract its full value. This siloed approach also opens up huge risks from ransomware and cyberthreats as companies struggle to implement robust recovery practices on tens or hundreds of global locations where the infrastructure and local support vary considerably. Much of this time can be chalked up to the inefficiencies of the process. Any improvement in the efficiency of seismic interpretation activities could significantly reduce time-to-oil, which realizes profits faster and reduces costs. In these uncertain times, that’s a huge competitive advantage.

Enter the cloud Cloud-based file storage offers a new model for managing, sharing and protecting seismic data sets. Like many large organizations, oil and gas companies are moving workloads to the cloud, but these are primarily computed workloads. File data has largely remained in traditional, on-premises networkattached storage (NAS) systems. But when cloud-based file storage is synchronized with a virtual desktop infrastructure (VDI), massive seismic data files are instantly accessible to an operator’s data scientists no matter where they are located. VDI isn’t the only option, however. If an operator would prefer to use high-powered, local workstations, the current dataset can be cached locally, and all changes can be sent to the cloud and then propagated back out to other users around the world. In both cases, the master copy of the seismic data set resides in the cloud. Of course, it’s not quite as simple as chucking file data into raw cloud storage and pointing workstations or desktop images to the cloud buckets. Data files need to be orchestrated across locations and made accessible in a user-friendly way. To avoid latency issues that would arise from accessing mas-

sive volumes of data across long distances, cloud storage should be placed in a hub with frequently accessed data near end-users in regional spokes. These regional caches — called edge appliances — enable users to access seismic data at fast, local area network (LAN) speeds. Using this architecture, a file-services platform can synchronize data across any num-

• Protection: Modern hyper-scale cloud providers have built an enormously redundant architecture, with multiple copies of all data in several locations. Additionally, object storage is extremely durable and can be used in a “write once read many” (WORM) mode. This means that the data itself is immutable and cannot be changed, rendering it im-

ber of locations while providing the proverbial “single pane of glass” for managing an otherwise unwieldy global file infrastructure.

pervious to ransomware attacks. However, since file data typically must change, cloud file storage providers use storage snapshots to capture changes to the data. As a result, if data is corrupted, all a provider needs to do is roll back to an earlier version, which could be as little as five minutes old.

Faster time-to-oil Having the master data set consolidated in the cloud makes a number of other functions far easier and less expensive: • Analytics: Seismic data can be easily connected to powerful analytics software, either run by the operator in a cloud instance or via the cloud provider’s own analytics services. • Accessibility and collaboration: The cloud is accessible from anywhere, and it makes collaboration simple, making it unnecessary to ship data or fly specialists from location to location.

As a result, operators get unlimited capacity at the touch of a button, global collaboration and automatic data protection, all without investing in or managing storage equipment. With seismic data flowing effortlessly and global specialists able to access it from anywhere, operators can extract the full value of their seismic data, which means they can move far more quickly to extracting valuable oil and gas.

Cloudbased file storage offers a new model for managing, sharing and protecting seismic data sets

About the author: Russ Kennedy is the chief product officer at Nasuni and has more than 25 years of experience developing software and hardware solutions to address exponential data growth. Before Nasuni, Russ directed product strategy at private cloud object storage pioneer Cleversafe through its $1.3 billion acquisition by IBM. An avid cyclist and hiker, Russ resides in Boulder, Colorado, with his family. He has a BS degree in Computer Science from Colorado State University and an MBA degree from the University of Colorado.

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INDUSTRY

From Zero to Hero: How Automated Tag Management Helps Digitalisation to Deliver for the Oil and Gas Industry By: Steven Bruce, Product Director at Idox

ometimes it’s the smallest thing that makes a difference. The “discovery” of the number zero transformed science and math and paved the way for our current technology-enabled world. Modern epidemiology and GIS (geographic information systems) have their roots in John Snow’s seemingly straightforward work in 1850s London to plot cholera cases on a map. Even today, when the impacts of those discoveries are all around us, the transformative effects of seemingly minor changes continue to be seen. Take digital twins as just one example: often cited as one of the “hero technologies” for the digital transformation of oil and gas, the often-overlooked areas — like automated engineering tag management — help them retain their value. Digitalization Dream This is something that engineering companies have been wrestling with for some time as they provide digital twins to their asset-owning clients at the point of project handover. With its advanced analytics, visualizations, and advanced communications technology, the digital twin is expected to provide seamless access to trusted, fail-safe data supported by relevant documentation to operations and maintenance teams throughout the oil and gas sector. In the best-case scenario, a digital twin significantly increases operational efficiency while reducing HSE and compliance risk — especially valuable in high-risk offshore environments. Operations teams spend less time searching for content and can instead focus on value-added engineering tasks. The prize is a great one: imagine the value of an offshore platform, fully mapped out in such a way, to both those conducting operations and maintenance tasks on-platform and for land-based engineers. And so, those engineering firms put in expensive and laborious processes for compiling a 3D digital model that incorporates varying degrees of design and operational data. But, if that is all it is, then what they hand over isn’t a digital twin. It’s an exercise in cartography. They’ve handed over a map different in form but not in content to the one that John Smith used as a starting point for his studies in the 19th Century. That can be useful in the right hands, as John Smith himself proved, but the point and potential of a digital twin are surely that the intelligence is built-in, not applied from the outside by a brilliant mind. Missed potential The map is a snapshot of a moment in time. It can be a useful navigational aid and yield plenty of valuable information about that moment to a well-trained eye. It is not a real-time representation of real-world topography. Such a map cannot drive greater efficiency and safety into the operation of the asset. This map cannot solve the same problems that arise in any scenario where data

SHALE MAGAZINE  SEPT/OCT 2021

and documents are out of date. It still takes too long to locate the correct documents or data needed for a routine task, and it risks using out-of-date information in an operational environment. The results can be catastrophic for critical oil and gas activity if, for example, a shut-off procedure has changed but not been updated in documentation. We got to this point because, for many, a digital twin is conceived of as a smart-looking replacement for the reams of pa-

perwork that previously accompanied a major asset handover, a technological upgrade rather than a truly digital transformation. Although digital documents and 3D visuals can be valuable and certainly an improvement on centrally located physical files, this approach really is just dipping a toe in the water of what can be achieved. A digital twin is supposed to be living and dynamic. It is updated in lock-step with its realworld counterpart and offers the user an everevolving array of related, updated data at the click of a mouse. It is, in fact, closer to a 4D model with time — and the changes it brings — being the crucial element that manual processes and basic automation cannot capture. An obvious question then is how the engineering company can offer an evolving digital record of the asset it has designed and delivered, as well as its ongoing operations, once its team has handed over the keys and stepped back from a completed project. This is where automated tag management comes in. Manual leftovers For a digital twin to be fully useful, it needs to be “tagged.” In other words, every little component or system needs to have a tag attached that associates it with the relevant technical documentation, operational history, maintenance information and all the rest. Traditionally, tagging has been done manually or subcontracted to a third party to do manually. It is an immense job, whoever does it, and it adds huge amounts of time and expense to a project. Consider a large asset such as a North Sea platform that will typically have somewhere between 100,000 and 200,000 documents attached to it, which may be associated with 50,000 to 100,000 tags. Even if each document requires only 20 minutes of work to extract and validate tags — 10 minutes from the document controller plus 10 minutes from an engineer — that comes to nearly 4,200 days. Even smaller semi-sub platforms or FPSO-based projects could produce months of delay and expensive labor. Having spent the equivalent of 11 man-years on tagging, those tags then need to be kept up to date if the digital twin is to remain a reflection of the live asset. It requires repeat tag-extraction and data-gathering projects, either at regular intervals of the asset’s life or during standard project execution. All of that is before we consider the need to prioritize tagging projects such that the most important information and facility-critical data

are handled first, or the errors that inevitably occur when manual processes are long, detailed and repetitive. Given the scale, time and expense of the task, it is perhaps clearer why digital twins are often not kept live and up to date. The sheer volume of asset documents and data to maintain can be overwhelming. And digital twins have been underachieving as a consequence. Automated tag management Very simply put, automated tag management replaces these severely sub-optimal manual processes and eliminates the problems associated with them. As the name suggests, it automatically scrapes all the relevant tags associated with the asset and then automatically assigns them to the right data and documentation. The key to success is making data gathering a seamless part of project execution. By using a centralized project collaboration and document control solution that the entire oil and gas supply chain is connected to, data is gathered automatically and on an ongoing basis. As a bonus, it considerably streamlines the task of creating the digital twin in the first place, providing the solid foundations on which the digital twin is built. Automatic tag management is beautifully simple and truly transformative at the same time. Asset owners have reported that the amount of time members of staff in operations and maintenance sides spend on locating necessary documents has been reduced by 50% because they are no longer chasing down missing or incorrect tag data. Those achievements are substantial in their own right. But if we pan out, we can see there is even more at stake here. There is now a record of failed initiatives and companies wasting millions on projects that have been underwhelming at best. If digital twins and related digitization projects continue to underdeliver, it becomes a barrier to further investment and risks stunting the progress of a very necessary digital transformation for the oil and gas industry, particularly when considering the digital needs of companies looking to demonstrate progress against the backdrop of the energy transition. The promise of digitalization was always a better use of resources, lower costs, greater safety, and even improved sustainability. All advances that cannot be ignored. A digital twin and smart project management solution helps realize that, and automated tag management is the unsung hero technology that brings these tools to life.

In the best-case scenario, a digital twin significantly increases operational efficiency while reducing HSE and compliance risk — especially valuable in high-risk offshore environments

About the author: Steve Bruce, Product Director at Idox, leads the product strategy and development on Idox’s wide-ranging assets portfolio which includes EIM. He has over 20 years of experience in the software business and has been instrumental in leading the development of Idox’s Cloud developments. Having joined Idox in 2006, Steve now leads a multi-national team of developers, engineers and product managers. A graduate of Strathclyde University, he has a BEng in Computer & Electronic Systems.

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INDUSTRY

Natural Gas Markets in the 21st Century By: Thomas Tunstall, Ph.D.

fter the introduction of unconventional extraction techniques in the 1990s with the Barnett Shale near Fort Worth, Texas, natural gas production began to rise significantly in the U.S. Prior to the widespread use of unconventional methods — specifically during the early period of deregulation from 1990 to 2010 — natural gas prices in the U.S. fluctuated widely from under $2 to nearly $14 per thousand cubic feet due to uncertain supply and demand patterns. This volatility — principally to the high side — elicited concern by groups opposing the export of natural gas from the U.S. because they believed that such activities would cause prices to rise significantly. However, our analysis — or alternative narrative — at UTSA’s Institute for Economic Development demonstrated significant flaws in the reasoning of such claims. During that period, European buyers were paying $12 per thousand cubic feet; those in Japan paid $16-17 per thousand cubic feet. As a result, both markets did and still do represent attractive prospects for the sale of U.S. natural gas. The process of cooling/liquefaction, transport, and re-gasifying natural gas from supplier to the customer adds approximately $5-7 per thousand cubic feet to the cost of the product (shipment to Europe is less expensive than Japan due to its proximity to the Gulf Coast ports). After subtracting this cost from the selling price in Europe and Japan, we demonstrated that the business case for export would cease to exist if natural gas prices in the U.S. reached $7-8 per thousand cubic feet, far below the peak of $13.42 hit in October 2005 — with the lower price range thus acting as a ceiling by dampening foreign demand at that level. Notably, around 2010, a now-bankrupt exploration and production company’s internal economists forecast that natural gas prices would soon return to $10-12 per thousand cubic feet or higher in the U.S. By employing backwardlooking forecasting methodologies based on the 1990-2010 data rather than recognizing the emergent properties of new natural gas market

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fundamentals (as elaborated in a 2013 TED Talk: www.youtube.com/watch?v=KsbNYbLBkhA), the exploration and production company in question bet big and lost. The publicly traded firm decided to invest heavily in new rig operations in the expectation of increased natural gas prices that never materialized and eventually forced the company into bankruptcy in 2020. Details regarding the UTSA analysis of natural gas markets were published as an op-ed in the Wall Street Journal on May 29, 2013, entitled “Exporting Natural Gas Will Stabilize U.S. Prices.” (www.wsj.com/articles/SB10001424127887 323611604578396441358002584) Despite concerns regarding severe price increases resulting from the export of natural gas — which began in 2016, with five terminals now operating along the Gulf Coast — natural gas prices in the U.S. have not exceeded $5 per thousand cubic feet since February 2010 with the recent and anomalous exception of the weeklong Winter Storm Uri spike from February 11-18, 2021. Even the Electric Reliability Council of Texas (ERCOT), the entity charged with managing the Texas electric grid, did not sufficiently understand its own supply chain. By shutting down natural gas transporting facilities to save power — among other missteps — ERCOT actually exacerbated power outages. Yet, though record cold temperatures drove near-unprecedented energy use, Henry Hub prices fluctuated only briefly. On February 11, they shot up to $6.50, eventually reaching $23.86 on February 17 for a single day, then dropped to $8.56 the next day, and finally fell back under the $5.00 per thousand cubic feet (tcf) ceiling (currently selling around $3-4 per tcf) where it remains once again. Winter Storm Uri notwithstanding, natural gas production in the U.S. continues at or near alltime highs, with records dating back to 1900, a far cry from the once-feared scenario of regular and frequent shortages translating into sustained high prices. As market environments and the behavior of their participants evolves, a relevant analysis must reflect the changes.

As market environments and the behavior of their participants evolves, a relevant analysis must reflect the changes

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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POLICY

Trying Times By: Kelly Warren Moore

uch has been written about how the COVID-19 pandemic and our response to it has changed our everyday lives. We could all name things that were either unheard of or perceived to be unnecessary services and technology before COVID that are now commonplace, and in some cases, indispensable parts of our daily routine. Zoom meetings were seen not so long ago as cutting-edge technology, and now they are part of everyone’s daily lives, from our youngest students to grandparents and everyone in between. In addition to countless Zoom meetings for work, I’ve attended family gatherings, meetings with friends, wine tastings, cooking classes and job interviews via Zoom in the past 18 months. While there remains no substitute for real-life, face-to-face human interaction, Zoom (or Hangouts or Facebook Live or whatever form virtual get-togethers may take) will now be a standard tool that has fundamentally changed business interactions, education, and social interactions forever. Attitudes about grocery shopping, as another example, seem to fall into two categories. There are those who dread grocery shopping and view it as a necessary evil to feed one’s family and those of us who actually enjoy the process of selecting produce, comparing different varieties of olives, pickles, salad dressings and the like, and picking what looks like the very best steak, chicken or shrimp available. Regardless of which outlook is yours, odds are that prior to the pandemic, very few of us utilized “order ahead” or “curbside” grocery delivery. In the early days of 2020, when so much uncertainty existed around the virus and its transmission and virulence, what may have once been a typical relaxed Saturday morning visit to the grocery store felt like a search and rescue exercise that needed to be executed with pinpoint accuracy and maximum speed, followed by a shower and dousing every inch of oneself in hand sanitizer. With so much stress in the experience, ordering online and selecting the time when one could pull up, open the trunk, and wait for the items we’d or-

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dered to be deposited into our car without any need for human contact felt like a relief. Some of this change is positive. More robust technology that makes everyday life easier is a wonderful thing. Personally, while I do miss meeting my colleagues and customers face to face and would prefer that to more impersonal virtual meetings, I don’t miss 4 a.m. wakeup calls to catch 6 a.m. flights or sleeping in so many different hotel rooms in a week that waking up and having to remember what city I was in was normal, as was trying to remember what kind of rental car I had been assigned the night before when I was trying to find it in the parking lot the next morning. My dry-cleaning bills have all but evaporated, and so have pet boarding costs. I definitely don’t miss complicated expense reports and travel planning challenges. By these measures, it seems like everyday life should be greatly improved. It’s easier! It’s less hassle! My dogs love having us home all day, every day! No doubt, those of us who have been able to remain employed, our incomes largely unchanged, and able to work remotely should consider ourselves extremely fortunate. I’m endlessly appreciative of those who have been deemed essential and the services they have provided to us without interruption since all of this started. Cable and utility technicians, grocery stockers and clerks, healthcare workers, and tradespeople of all kinds have continued providing their services to us, masked up and uncomfortable. They have brought light, heat, air conditioning and, more critical than ever, reliable internet and cable connectivity to the rest of us. They haven’t had the luxury of living in yoga pants for the past year and a half. They haven’t had the luxury of choosing which places were comfortable to work and which places to avoid. Knowing this, it’s been easy to be grateful for them and appreciative of the services they have provided, particularly when there have been others in their positions who no doubt have chosen to stay home and collect the benefits afforded them by the U.S. taxpayer

We can’t expect more of others if we don’t expect more of ourselves

rather than continuing to provide the services otherwise expected from them. In turn, their workload has been transferred to the folks who have chosen to show up. Most of the time, in these conditions, it’s been easy to be more forgiving, to try to extend grace or to choose not to be bothered by inconveniences or behavior that might have otherwise been seen as unacceptable or un-

in our country? Will supply chain disruptions and fewer choices of products because of those disruptions result in fewer choices and lower expectations overall? I sure hope not, but it’s hard to see how it turns around. The fact is, getting anyone to show up for a job interview, much less to then show up (almost) on time and ready to stand behind a cash register or stock shelves, is harder and

pleasant in the times before Covid-19. There are longer wait times, supply shortages, and service in restaurants or stores is harder or nonexistent because fewer people are working and more people are consuming all of it. Most of us have just been doing the best we can. At a certain point, though, is all of this going to result in lowering the overall bar for service

harder to do. Workers are scarce, wages for workers are rising, and anyone with even a rudimentary understanding of economics knows that this is not a situation that is going to result in better service or lower prices. It’s hard to focus on quality when what is most urgent is finding someone who is alive enough to fog a mirror being available to semi-reliably answer

the phone or help keep the doors to your business open. It’s a difficult place to be. It’s frustrating to be a business owner, and it’s frustrating to be a paying customer. We all know how things used to be, and we want to just go back. But, like anything in life, looking back longingly at anything doesn’t bring it back today. So, what to do? I’ve spent an inordinate amount of time on endless hold for various service providers, and I’ve lost my temper more than once at delivery times that have been pushed back multiple times. The ubiquitous excuse for everything these days is “covid, covid, covid.” Sometimes, I’m sure that’s valid. But more and more, I’m thinking it’s becoming just that — an excuse. Despite all of the challenges of the past year and a half, there are still people who are showing up, on time, with a smile on their faces and a determination to do their best every day. There are business owners who have worked tirelessly to create a welcoming and friendly environment for customers, even if it means that in addition to signing checks and managing staff, they find themselves cleaning bathrooms and sweeping floors rather than making excuses for why these things can’t be done. We can only look to those shining stars and try to be and follow similar good examples, not just for our own happiness but for the future of our young people — many of whom, let’s face it, have seen their parents at home in their workout clothes all day, taking advantage of a crisis. Whether it’s collecting enhanced unemployment benefits when they are perfectly able to work or, even more insidious, “working from home” without really giving things the same rigor and dignity of “normal times” that used to include daily showers, coiffed hair, clean collared shirts and pants that didn’t have elastic waistbands. At some point this “new” normal is going to be, simply, the normal. We live with and accept what we allow, and we will be treated as we allow ourselves to be treated. It’s time to stop making and accepting excuses for why things can’t and don’t need to be done better, and just do them. The ripple effect of that might not extend beyond our own family, community or team at work, but it needs to start with us. Praise those people who are showing up for you, support the businesses that you know are doing far more than just what’s necessary. Wake up 30 minutes earlier, get a workout in, and put on the “hard pants,” as one of my colleagues calls them. We can’t expect more of others if we don’t expect more of ourselves.

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POLICY

The Newest Climate Change Narrative Is a Clear and Present Danger to Us All By: David Blackmon

ever has America witnessed a more narrative-driven phenomenon than the so-called “Energy Transition,” the popular term used to describe what Green New Deal Democrats and the climate alarmist lobby hope will become a mass move to renewables in power generation and electric vehicles (EVs) in transportation in the coming years. These narratives are often at direct odds with the reality in which we all live, but when has that ever had any impact on the narratives pushed by those on the radical political left? Working arm-in-arm, the Democrats and the climate alarmists have managed to lard up both the $1.7 trillion “infrastructure” bill and the $3.5 trillion budget reconciliation act with hundreds of billions of dollars in new subsidies, mandates and transfer payments to the wind, solar and EV industries that fund the Democrats’ political campaigns. Those same pieces of awful legislation also feature an array of new taxes and fees on the socalled “fossil fuel” industries that generate about 85% of America’s total energy mix and power its economy. This is what the Biden administration and its Democrat comrades in congress refer to as “progress” and something they like to call “environmental justice.” But the newest narrative related to climate change and the energy transition demands that these policymakers do more than just try to artificially pick winners and losers in the energy sector of the economy. Much more, and it is all targeted at you. Indeed, this latest narrative demands that they actively work to not just end economic growth altogether but actually try to implement policies that will create economic regression, at least in the Western world. Again, this is what the Democrats and their alarmist supporters refer to as “environmental justice.” You don’t have to believe me — you can just review a new study released by climate alarmist researchers at England’s University of Leeds. Led by sustainability researcher Jefim Vogel, this new study, titled “Socio-economic conditions for satisfying human needs at low energy use: An international analysis of social provisioning,” posits that climate targets being laid out by the IPCC, the Paris Accords and other international bodies cannot be met by mere expansion of renewables and EVs alone. The authors find that meeting those goals will further require severe “social provisioning,” which is just a softer-language term for “forced government rationing.” So, what do they propose to be rationed by your friendly government bureaucrats? • Start with your living space, where they propose that a family of 4 should have no more than 640 square feet. That should be no problem, right? • Or how about your daily energy usage? These Leeds people propose that you be forced to limit your annual energy use to no more than the average Bolivian currently uses, or 7,500 kWh per person. That’s less than 20% of what the average Texan currently uses.

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• Then there’s transportation. They propose transportation miles for each person should be limited to no more than 3,000 to 10,000 miles per year, which is sure going to put a major crimp into the private jet usage of all those attendees of the various global “climate” conferences each year. But of course, the elites among us would surely find a way to exempt themselves from any such restrictions since their needs are … well, more important than yours. If you want to know how many proponents of the energy transition narrative want your real world to work, this study provides fascinating insight. Interestingly, the authors do not appear to have addressed how governments in the developed world should deal with the massive social unrest that will inevitably take place when they attempt to force such limitations on their citizens. Because that is what would happen in the real world if the U.S. or any other western government attempted to implement such draconian restrictions. Despite these realities, no one should think these Leeds researchers are somehow alone in pushing this new narrative. The editors at OilPrice.com recently published a piece advocating similar restrictions by Osama Rizvi, who describes himself as “an economic and global oil market analyst who brings in a holistic point of view connecting geopolitics, economy and politics.”

this journey. Today, not only have the detrimental effects of this growth been skewed towards the global South, but the discrepancy between per capita energy consumption is still shocking. Jason Hickel, in his book, The Divide, highlights that 83 percent of deaths due to climate change occurred in the lowest carbon-emitting countries, and of 588 billion tons of carbon emissions (figures until 2017) 70 percent came from industrial economies. Another very interesting measure used is Global Footprint Network’s per capita ecological footprint where a negative number shows that they are in an ecological deficit (biocapacity is less than what is being consumed).

Here is an excerpt from his piece, titled “The One And Only Way To Avoid A Climate Crisis:” It is a dangerous idea to use a ‘technological will fix all’ approach to justify the pursuit of continuous growth. Instead, we need to start to wrestle with the idea of Degrowth. According to The Absolute Impact 2021 report by Carbon Tracker Initiative, at the current rate of emission, i.e., 41.5GtCO2 per year, we only have 22 years before we see global temperatures rise by 1.75 degrees. That gives an idea as to how quickly the world needs to deal with its emissions problem. It means there isn’t enough time for the world to wait for new technology to solve the problem. It is at this point that Degrowth becomes a very appealing idea that policymakers should pursue. To begin with, this involves rejecting the link between growth and improvement in the standard of living. This has to be countered, of course, by the fact that as the population grows, more energy will be consumed. Importantly, however, “high energy civilizations” may face the risk of decline due to limitless consumption of energy. This is a good point to segue into the argument that Degrowth should begin in developed countries in order to allow the developing world to catch up. Why? It is well known that developed countries have used fossil fuels for centuries to fuel industrialization and pave the way to where they are right now. Coal and then hydrocarbons played a momentous role in

You get all that? This guy is all for western governments continuing to dole out hundreds of billions of dollars in annual subsidies on wind, solar and EVs, despite all the evidence that they will never be able to replace the energy-generating benefits of fossil fuels. But, like the Leeds researchers, he recognizes those very real inabilities by wind, solar and EVs to “solve” the climate change problems and thus advocates for severe restrictions on everyone’s lives. Well, presumably everyone’s but his own. Not only that but this guy, in the name of “environmental justice,” advocates that Western nations be forced to implement these restrictions first, in order to make our lives equally as primitive and energy-deprived as those in “developing nations.” Note that he includes China — the country with the world’s second-largest economy — and India — the country with the world’s 5-largest economy — on the roster of “developing nations.” Now, it is a well-established fact that those two countries accounted for more than 80% of all new carbon emissions created since 2010 and will continue to account for the overwhelming majority of such emissions going forward. But to people like Mr. Rizvi and his fellow ideologically leftist “researchers” at Leeds University, those countries should continue to get a free pass until your standard of living has been diminished to theirs in the name of “environmental justice.” That, my friends, is the climate change movement’s latest narrative, and if you think these people will just come to their senses and leave you alone, well, you will soon have another think coming.

This latest narrative demands that they actively work to not just end economic growth altogether but actually try to implement policies that will create economic regression, at least in the Western world. Again, this is what the Democrats and their alarmist supporters refer to as “environmental justice”

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POLICY

How Viable is Africa’s Oil and Gas Industry in the Wake of a Global Energy Transition? By: David Clark

he 26th UN COP26 conference in Glasgow in November 2021 will look to accelerate a global drive towards a net-zero economy. To reach targets of reducing emissions, and keep global warming below two degrees Celsius, industries like oil and gas will have to adapt, and as the recently published IPCC report highlights, global action is required now to stay within this target. However, global climate policies typically have little relevance to the people of Africa, where the current energy mix is dominated by biomass and fossil fuels. David Clark, CEO of Vysus Group, explores the viability of Africa’s oil and gas industry in the wake of a global energy transition, identifying the challenges facing the industry, future prospects and steps companies can take to remain competitive during this transition. Environmental challenges Concerns around climate change are becoming increasingly important to African companies, as reflected in environmental, social and corporate governance (ESG) commitments, as well as the wider populous as the effects of climate change impact on weather and rain patterns become increasingly evident. The continent has already seen the deployment of renewables in small quantities at the Noor Solar Power Complex in Morocco; however, fossil fuels and wood burning are still primary fuel sources. In a more eco-conscious world, the viability of oil and gas is impeded by the industry’s environmental impacts and consequently hesitance to invest in this. Geopolitical challenges Africa’s geographical and political landscapes create challenges for potential investment because of its sometimes unpredictable nature. For example, in Uganda, remote inland wells produce heavy oil that must be transported through long pipeline systems to distant refineries across difficult terrain. The vastness of the continent and the dispersion of industry assets means it isn’t always cost-effective to exploit potential sources. Furthermore, there are numerous challenges with regards to the somewhat chequered history of transparent governance across both government and corporate stakeholders across the continent and which impact investor sentiment, particularly given the long-term, multi-billion dollar nature of these types of energy developments. Disparity in regulations across borders also means that oil and gas companies are hampered by bureaucracy and uncertainty with their future operations. The future energy mix The energy transition will drastically alter the continent’s energy mix to heavily feature renewable sources in the years ahead. However, hydrocarbons will still be needed for many decades. The term ‘transition’ itself suggests a period of change, and in this case, a

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Fossil fuels are essential commodities omnipresent in aspects of everyday life, including, ironically, in the creation of renewable energy sources long-term process. We are not at the stage where we can simply ‘switch off’ fossil fuels, and it is too soon to see a rapid decline of oil and gas, particularly in a continent of rapidly expanding population and growing middle classes. There is still value in extracting these fuels, and although forecasts suggest they will lose their prominence, they will remain an integral feedstock in delivering an effective transition. Fossil fuels are essential commodities omnipresent in aspects of everyday life, including, ironically, in the creation of renewable energy sources. Currently, 8% of global crude oil is used to make plastics, which will increase with the demand for lightweight materials to support electrical components vital to wind turbines, electronic vehicles and batteries. Hydrocarbons can also be exported, when combined with carbon capture technology, as alternative fuel

typically associated with an onboard workforce for the project’s duration. The African continent can benefit from remote technological capabilities eliminating unnecessary costs and emissions. Healthier margins and environmental mitigation make investment more viable, given its important role in the energy transition. However, the intrinsic factors mentioned earlier could hinder further investment and success. That said, the demand for oil, gas, and its bi-products will still be here for many decades to come. With the right focus and determination, governments, stakeholders, energy asset operators and the whole project and services supply chain can, and must, bring innovative technical and commercial solutions which leverage the significant natural resources available across the continent, whilst delivering low carbon energy to fuel the expanding African population, as well as the wider global market.

sources with both blue hydrogen and ammonia seen as potential low carbon, transportable fuel solutions for the global transportation and industrial sectors. As Africa has already proven with the deployment of mobile telecoms networks and mobile trading systems, the continent has the opportunity to jump the development curve witnessed in the developed countries, deploying a broad range of localized renewables/low carbon generation, storage and distribution solutions to help drive domestic demand and economic development. Here, traditional oil, and particular gas, production will likely be a valuable feedstock. Steps businesses must take The world must, therefore, now look to bring innovative, creative ideas not only in the design of new energy infrastructure but also in how these can be designed, built, commissioned, operated and ultimately decommissioned. Vysus Group has adapted by innovating on how we can deliver our expertise and capability to our clients remotely. In Ghana, we were able to remotely connect to a rig to provide critical rig positioning quality control expertise on deepwater rig operations. Without mobilizing personnel to the rig, we were able to provide to accuracy of better than ±5m in water depths in excess of 1,500m. This reduced costs and risks associated with ‘in-person’ consultancy, protected workforces from COVID-19, reduced the carbon footprint of the operation through less travel and fewer energy costs

About Vysus Group Following a strategic carve-out from Lloyd’s Register (LR), LR’s Energy business is now Vysus Group, a standalone engineering and technical consultancy, offering specialist asset performance, risk management and project management expertise across complex industrial assets, energy assets (oil and gas, nuclear, renewables), the energy transition and rail infrastructure. Vysus Group retains LR Energy’s entire capability and continues to offer its full suite of technical, regulatory, and operational expertise globally, with all 650+ of our global experts transitioning to the new company. Driven by its purpose to help clients manage risk and maximize performance, Vysus Group blends deep technical knowledge and data-driven insights with hands-on expertise. Working on complex and large-scale energy projects around the world, Vysus Group is one of the leading engineering consultancy partners of choice. Vysus Group launched its new brand in April 2021, with a new logo, brand identity and website reflecting our evolution, value proposition and full spectrum of capabilities. For more information, visit www.vysusgroup.com.

About the author: David Clark began his career as a Wireline Field Engineer with Schlumberger. There he enjoyed a lengthy service of 18 years in a variety of line management and staff roles across Europe and on assignments in Asia, Australia, the Middle East and India. He then developed his career in upstream oil and gas services and contractor segments with leadership roles in Technip UK and Wood, in the Middle East, Europe and Africa. He returned to Schlumberger in 2013 as global Vice President for the newly created Production Facilities Management business unit. David joined Aker Solutions at the end of 2015 as President for UK & Africa and latterly held the position of Executive Vice President, overseeing its entire global services portfolio, which extends into renewables and decommissioning. In January 2019, David moved to Lloyd’s Register (LR) as Group Energy Director, responsible for leveraging the company’s technical and engineering expertise across energy production and infrastructure segments. In November 2020, following a strategic carve-out, LR’s Energy division became Vysus Group, a standalone, independent engineering and technical consultancy. As CEO, David is responsible for leading and growing the organization, which retains LR Energy’s entire capability and continues to offer its full suite of technical, regulatory, and operational expertise globally.

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POLICY

Energy Reality 101 By: Bill Keffer

nother school year has begun, and there is a new appreciation among teachers and students for the (once taken for granted) simple opportunity of being able to meet in person in a classroom. I can detect a palpable level of enthusiasm among my law-school students that comes from a realization that it was different last year. Already in my eighth year as a law-school professor, I have taught enough students over that time to be able to observe that students in my Oil and Gas Law I course are typically uninformed, not only about the role and importance of oil and gas in our past and present economy but about energy in general; an unfortunate condition I describe as energy illiteracy. Even students who better understand the subject are often surprised at some of the information I provide regarding the seemingly countless benefits we enjoy — and rely on — because of oil and gas. To be honest, were it not for my current position as a professor, it is quite likely that I would not even be aware of some of what I now intentionally make sure my students hear. So, I suppose it should not be surprising that most Americans are likely in the same condition of energy illiteracy. It is the natural consequence of a wealthy nation. We enjoy the end product of someone else’s labor and pay little to no attention to how it came to be. Unless it is something in which we are actively involved that gives us a reason to be more informed, the product or service we enjoy (or, more likely, demand) is simply one more thing that comes from the “magic store.” We pay little mind to the many steps of creation, production, and manufacturing that made it available and affordable to us. Before we dive into principles of oil-and-gas law, I spend the first couple of classes providing some background, history and orientation regarding the significant role that oil and gas have played, and continue to play, in our modern-day economy. Because my students have heard nothing but the negatives of oil and gas and the positives of other energy sources throughout their academic lives, it is hard for them not to be conditioned to believe that further dependence on oil and gas is an albatross to be shed of immediately, if not sooner. But then, I tell them what they have never heard before. The U.S. currently gets 80% of its energy (electricity, fuel, etc.) from fossil fuels — oil, gas, and coal.

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That figure has remained the same for years, if not decades. As coal has diminished, natural gas has increased, resulting in the same 80% figure. The remaining 20% comes from nuclear and renewables. Only 3.8% actually comes from wind and solar. So, when someone demands that we immediately replace oil and gas with wind and solar, you have to conclude that he is unaware of even this most fundamental reality. As I tell my students — it is perfectly fine to desire a particular energy policy or strive for a certain energy policy or pursue technological advancement or innovation to achieve a certain energy policy; but it is dangerous to do any of that without a basic grasp of our current energy reality. Not only does the U.S. get 80% of our energy from fossil fuels, but so does the rest of the world. It is almost uncanny how every region of the world breaks down in this very same way. Some countries depend more on coal than natural gas, but the overall percentage for fossil fuels nevertheless comes out the same. That energy reality raises an even larger question, with the constant drumbeat regarding the need to eliminate all oil and gas and replace them with wind and solar — how? And why would any country ever want to do that? Indeed, China and India continue to build coal-fired power plants as well as gas-fired power plants. In other words, they do not seem to be ignoring reality and the immediate needs of their populations. They might pay lip-service to the concerns of climate change, but they are not allowing those concerns to interfere with what they consider to be in the best interests of their domestic economies. Conversely, the U.S. is now embarked on domestic policies that are consciously and intentionally designed to accelerate the elimination of oil and gas as energy sources for our economy. The Biden administration has ceased leasing any federal lands for oil-and-gas development. The federal government owns about 25% of all onshore lands throughout the fifty states — a pretty staggering percentage that my students typically have never heard or known. So, when the federal government no longer wants to allow new oil-and-gas leasing on 25% of our land, that is a significant policy change. In addition, the federal government owns 87% of all offshore areas. Although the Trump administration had started taking steps to open up more areas for oil-and-gas development, that is clearly no longer the case with the new administration. Again, declaring 87% of our offshore area off limits is significant. There are many other, curious initiatives in progress across the U.S. designed to artificially, involuntarily push oil and gas off the en-

ergy stage. Some 76 cities, mostly in California and the Northeast, have enacted ordinances prohibiting natural gas in new commercial and residential construction. Environmental organizations have taken to pressuring banks, investment firms, pension funds and other companies to stop doing business with oil-and-gas companies. Some advertising agencies have formed a coalition to refuse doing any further work for oiland-gas companies. Some Democrat elected officials now characterize the oil-and-gas industry as a criminal enterprise that should be forced to pay massive penalties for causing climate change. In the 2020 campaign, many of them refused contributions from those affiliated with oil-and-gas companies. Even a group of Yale law students handed out failing grades to toptier law firms that do work for oil-and-gas companies and encouraged their peers to boycott working for those firms. The head of the Rockefeller Family Fund (as in John D. Rockefeller of Standard Oil Company fame) chastised the U.S. in a 2019 op-ed by asking — why are we still looking for oil? There is a disconnection in all of this that is hard to miss. Why should we continue looking for and using oil and gas? Because we get 67% of our energy and thousands of important manufactured products from them (80% with coal), because we need it to continue having a modern economy, and because none of that is going away.

The U.S. currently gets 80% of its energy (electricity, fuel, etc.) from fossil fuels — oil, gas, and coal

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

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POLICY

Watermelons and Environmentalists By: David Porter

hat is green on the outside and red on the inside? Two things immediately spring to mind — watermelons and environmentalists. I have nothing against watermelons. In fact, there are few things that taste better on a hot summer day than a cold watermelon. As for the environmentalists, I want to clarify who I am talking about. I am not talking about the tens of millions of Americans who want clean water, clean air and less polluted land. Almost all Americans want this whether or not they consider themselves environmentalists or not. I am talking about those people who are always using the perfect as the enemy of changing things for the better. A big example is how environmentalists tried to fight replacing coal with natural gas because waiting for renewables will theoretically be better for the earth’s ecology. This type of environmental extremist certainly could be called a watermelon since they are green on the outside and red (Marxist-Leninist or communist) on the inside. These people are environmentalists not because of their concern about the land, air and water but because they see environmentalism as a tool to fundamentally alter the nature of life on this planet. Their primary target for the last 15 or so years has been the oil and natural gas industry. However, as we will discuss later, the rural economy has other facets the watermelon-enviros have also been trying to destroy. The oil and gas industry was targeted for many different reasons. The primary one being the size and importance of the industry to our economy. Secondary reasons, in my opinion, include the oil industry being a large funding source for conservative and nationalist causes opposed to the globalist leftist and a large contributor to the rural economy. These watermelon environmentalists hate those gun-toting, Christian, Republican folks that make up the majority of rural America. They would prefer people to live in the major metropolitan areas where it is easier for the establishment to keep tabs on and control what they are doing. Of course, these watermelon-enviros are intent on keeping their rural retreats to enjoy while us plebs are stuck in cities. I grew up in the Pacific Northwest during the late 60s to mid-’70s before heading off to college. During that time, I had a front-row seat to

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watch the environmentalist’s destruction of the timber industry — particularly in the foothills of the Cascades where I lived. This economic devastation forced upon the rural communities in Oregon and Washington is a major reason I never seriously considered moving back and looking for a job after college graduation. Now I see this jihad of environmentalist extremism aimed towards another industry, the farm and ranch community, specifically the cattle ranching industry. Cattle are causing global warming; we all must become vegetarian if not vegan to save the planet. Where is this push for plant-based meats coming from, or why don’t they just call them artificial meat? It is coming from the same place that wants to see oil and natural gas replaced by renewable energy. It’s coming from the enviros’ lust for control over the common man, not from any real concern for the environment. There are millions and millions of acres in the western United States as well as other semi-arid environs where cattle and other animal grazing is the highest and best use of the land. Sustainable grazing can and will provide animal protein as well as take care of the land. If these environmentalists were really concerned about the land and the overuse of water and fertilizer, why aren’t they doing something about all the land that has been converted to growing corn for ethanol rather than food for people. Ethanol is one of the biggest environmental problems in this country, yet many people consider it green. Oilmen and ranchers have not always been the best of friends but going forward they must find ways to become allies. They have a common enemy who is targeting them for extinction. In fact, it seems to me that any industry that provides a primarily rural/small town economic base is under attack from the so-called environmental movement. I certainly wish I had more space in this column to develop this subject, but I wish to leave you with this one overwhelming thought. Any time you hear someone talking about environmental causes and saving the planet, look hard and examine their motives. Are they really trying to clean up the land, air and water or is it all a smokescreen to extend their control (typically using government power, but more and more commonly by using corporate or other societal pressure) over all of society?

Any time you hear someone talking about environmental causes and saving the planet, look hard and examine their motives. Are they really trying to clean up the land, air and water, or is it all a smokescreen to extend their control (typically using government power, but more and more commonly by using corporate or other societal pressure) over all of society

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

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POLICY

Young Voices in Energy: Essays on Innovation and Regulation in Energy innovation and energy By: Peyton Jenkins

n the wake of the announcement by the Biden campaign of their goal of a 100% carbon-free country by the year 2050, many states are scrambling to come up with the best, and in some unfortunate cases, most expensive and least affordable new energy plans. States (including Texas) are working on multi-billion-dollar projects focused on renewable energy sources such as wind and solar. Some localities are taking it one step further with a ban on natural gas in all new buildings. This might be a step in the right direction, or it might not. But one thing is for sure. A gross misunderstanding of the oil and natural gas business is pervasive throughout the country as some try to find new energies instead of improving the affordable, reliable and plentiful sources that we already have. Oil, natural gas and coal are the backbone of the modern world. The world we have created came from creativity and innovation primarily (although not entirely) in the energy sector, not from government mandates. The world as we know it is brought to us by oil and natural gas — the two primary sources for energy that are commonly thought of as “old” and not susceptible to improvement. People have it in their minds that we use oil, natural gas and coal the same way we used it 100 years ago with absolutely no innovation. While climate change is a real concern for some, the notion that we are running out of oil and natural gas is just propaganda. For years, students have been taught that the U.S. is running out of oil and using it for another few years would surely make the whole world melt. However, with new technologies came more ways to find and produce energy. That has resulted in the oil and gas industries being the most productive they have ever been.

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At the same time, branding is a problem. It does not help that this type of energy is referred to as “traditional” energy and “fossil” fuels rather than organic energy. With respect to the environment, companies transforming the oil and natural gas industries are also working to minimize their environmental footprint. One example of this can be found in Texas. There, oil and natural gas companies are improving processes to have fewer methane emissions and use carbon capture to help the environment. Companies have spent billions to reduce emissions. Although sometimes met with criticism from the left, oil and natural gas industries are doing their part to make their industry better and safer while maintaining production, efficiency and affordability. One concrete example of these industries doing their part is the Texas Methane and Flaring Coalition. This coalition consists of 40 Texas operators who plan to reduce methane emissions during production. These companies are not afraid to spend money to improve their environmental performance. In recent years, global oil and gas industries and producers have invested more than $300 billion toward greenhouse gas mitigation technology. ExxonMobil alone has invested $3 billion in the last five years in carbon capture projects intended to address climate change. Nationally, methane emissions from U.S. energy production have declined by 17%. These improvements should be recognized but instead are criticized by supporters of the new plans for “green” energy. In the past, companies and nations have lowered emissions through technology and innovation, not federal mandates. The air quality in the U.S. has improved dramatically over the last 40 years because of greater efficiency. In the last 25 years, greenhouse gas emissions in the U.S. have been flat or falling. This is a direct consequence of the creation and implementation of better technologies. Simply put, the ability of American citizens

and companies to imagine, create and innovate means the best thing we can do right now for the environment is to continue to grow our knowledge and look for ways to improve. We need to avoid expensive “solutions” that potentially compromise environmental gains. For renewable energy to equal the energy from oil and gas industries, solar panels and wind turbines would need to take up one-third of the land in the United States. This means that protected lands, thousands of trees and environmentally protected/endangered species would need to be destroyed to make room for giant panels and turbines. An example of a renewable project gone awry is the Battle Born Solar Project in Mormon Mesa, Nevada. This project would cover 14 square miles, or 7,000 football fields, with solar panels. Not surprisingly, neighbors and environmental groups are united over their opposition to the plan, saying it would destroy their views and protected land. As a reminder, these billion-dollar solar and wind projects, as well as electric vehicle production, are all subsidized by the taxpayers in the government’s attempt to have a “green” country. In short, taxpayers are paying to cover onethird of the country with panels and wind turbines and the rest with electric vehicles. How does such a thing happen? The tactic that the Biden administration has adopted is to set an environmental goal so far in the future so that they will not be around when it is not achieved. They have created arbitrary dates and benchmarks that are vague enough that no one understands the actual costs needed for implementation, but the idea is solid enough to discuss as if it is real. The best anyone can tell, President Biden’s energy plan would cost about $180 billion each year. That means each American household, on average, will have to pay about $1400 a year to address climate change. Interestingly, when opinion researchers ask voters how much they are willing to spend on climate change, the

median answer hovers around $20 a year. Most voters are unwilling to pay for or consider anything that looks like what the Biden administration has in mind. Rather, voters think that innovation and consumer demand will drive whatever change may be necessary. A survey done by MWR Strategies in February 2021 found that more than half of voters believe innovators, entrepreneurs or consumer demand are more likely to solve the problem of climate change rather than government action. Three in five Americans said that solutions to climate change will involve technological breakthroughs that will help the economy and create new economic opportunities. Interestingly, when voters were asked whether the federal government should mandate the kind of car they buy, 80% said no. The issue facing energy and climate change is that lawmakers are quick to impose regulations without allowing people the chance to reflect on how important reliable and affordable energy is to them, especially relative to the importance they place on climate change. People do not want the government to tell them what to do, whether we are talking about choice of car or choice of energy resource.

regulation and energy By: Chandler Rebel

ith a new administration that leans very much against the organic fuel industry, one might think that major corporations such as Exxon, Texaco and BP would be prepared to aggressively advocate for themselves and their products in Congress and elsewhere. One might think that slashing restrictions and advocating for the free market would be at the top of the agenda. Surprisingly, this is and has not been the case. Unfortunately, many of these large corporations are involved in misguided proposals for things like carbon taxes and have spent millions of dollars in lobbying without directing their efforts at the actions of the Biden Administration. Whether this is their way of appeasing climate change activists or whether the companies truly care about their emissions profiles is uncertain. It seems unlikely, however, that such actions are

the product of completely pure motivations. While taxes and regulations affect every entity differently, one common factor is that the more money and the more lawyers one has (or can afford), the better chance they have of surviving under any regulatory regime. Mid-sized and smaller operations are not so lucky. They are compelled to play by the same rules and regulations but rarely have the same capital or the same number of lawyers needed to compete and, in some instances, stay afloat. In a sense, a modern-day oil oligarchy has formed and is trying to take advantage of the different classes, sizes, and wealth of natural gas and drilling operations. When lobbyists for the integrated majors set the rules and regulations, the smaller players in the industry face the risks. In such an environment, capitalism cannot function properly. These major players take advantage of their assets to sometimes impoverish their competitors. In circumstances where competition is essential to creativity and innovation, this approach is a problem. In many instances, increased regulation makes it a challenge to find ways to explore for and produce more oil and natural gas and to find ways that make such production sustainable and environmentally advantageous. Existing regulations limit innovation and help preserve the status quo. Powerful, well-capitalized companies own much of the supply chain. It is difficult to oppose their preferences. Smaller, less well-capitalized companies are under constant stress as they try to live within the constraints set by the government or the marketplace, oftentimes with substantial input from their larger competitors. In 2020 alone, over 100 oil and gas companies declared bankruptcy, and more are unfortunately poised to join them. Though much of this can be attributed to various factors, including COVID-19, this is not a new phenomenon. Hobbling competition and one’s competitors will always end poorly, and the inability of some to think even a few years into the future almost guarantees sub-optimal outcomes for everyone. Slowing innovation for the sake of profit is a selfish tactic that damages the entire industry and nation. It should surprise no one that these companies that seek to exploit regulatory processes are hedging their bets by investing some of their resources into alternative energy. It is as if they have already decided and prepared for an inevitable collapse of the oil and gas market.

In the wake of the announcement by the Biden campaign of their goal of a 100% carbon-free country by the year 2050, many states are scrambling to come up with the best, and in some unfortunate cases, most expensive and least affordable new energy plans

About the author: Peyton Jenkins is a rising senior at the University of Georgia and has just completed an internship at the American Energy Alliance.

About the author: Chandler Rebel is a rising senior at the University of Georgia and has just completed an internship at the American Energy Alliance.

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BUSINESS

The Digital Divide: Bridging the Gap, Starting with Grade School Education By: Nelia Mazula

s remote working and online learning became the norm, the coronavirus pandemic exposed a growing gap in our nation’s digital divide, the gulf between those who have ready access to computers and the internet and those who do not. Without access to computers or reliable Wi-Fi, students in low-income communities struggled through online learning, falling further behind. To help bridge this gap, it is imperative to get STEM programs and resources into more schools. Many students from low-income families are not aware of all the ever-changing STEM industry has to offer. The evolving technology can help them learn, advance their studies, and provide broader options for their future careers. One area of technology that continues to evolve is 3D printing. More and more schools are integrating 3D printing as an important part of their curriculum from elementary to higher education. However, when you think of new technology, you don’t necessarily think about low-income schools. If the low-income schools do not receive the proper resources, they will continue to fall behind, further increasing the digital divide.

proficient with spreadsheets. Similarly, students in the engineering industry are expected to be proficient in 3D CAD software. The earlier these common workplace tools are taught in schools, and the more ready and proficient our future workforce will be. This leads us to the second reason kids from lowincome households should learn 3D CAD. 2.

3D CAD is relatively easy for young students to start learning. Although it may not seem like 3D CAD is easy to learn, I have been involved in STEM programs that teach grade school students from a low-income community in Houston, Texas, how to design in 3D CAD. Through this work, it has become apparent that children can learn these technologies similar to the way children have learned to animate videos for Youtube or make their own music for Soundcloud.

3D CAD is practical. Any company that makes anything needs a design, and they will have to hire a drafter to develop this design.

It is well paid. 3D CAD drafting is a high-paid and growing discipline of STEM that does not require a college degree. You can search the web for the latest salaries, but it is not uncommon for drafters to have a salary similar to that of a nurse, even without a bachelor’s degree.

Why is it important for kids from low-income households to learn 3D CAD? 1.

It is the future. 3D CAD is quickly becoming part of the toolkit that professionals use in a range of fields. 3D CAD is a technology long used by engineers and architects to design everything from watches to buildings and chemical plants. Engineers hire drafters knowledgeable in 3D CAD to draft the designs. With the development of 3D printing, 3D CAD will increase in demand. Augmented reality and virtual reality also depend on 3D CAD. Many futurists envision a world where 3D printers will be like microwaves, and people will simply load a CAD to print everyday supplies at home. Although this may seem far-fetched, 3D CAD is currently used to develop the models for 3D printing everything from shoes to organs. As these technologies get cheaper, they will be more accessible to the average person. Workplace tools are taught in schools. For example, in the accounting field, students are expected to be

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It is entrepreneurial. CAD drafters are like contractors; they can work on a project basis. This kind of job is great for people who want to open their own small businesses and consulting firms to support engineering firms worldwide. Plus, you do not need a lot of overhead, and you can work from home.

3D CAD technology also teaches children how to build things and turn their thoughts into tangible objects. While the STEM industries continue to evolve, it is important to consider the digital divide. Help bridge the gap in knowledge, opportunity and accessibility by supporting programs that teach STEM curriculum to lowincome communities and expose children to new technology, ultimately providing them with broader career options for their futures.

Help bridge the gap in knowledge, opportunity and accessibility by supporting programs that teach STEM curriculum to low-income communities and expose children to new technology, ultimately providing them with broader career options for their futures

About the author: Nelia Mazula has 20 years of experience in the industrial digital transformation space, specifically in oil and gas working with large Fortune 500 companies. She is an expert in 3D, 3D printing, AI and IIoT, and a recent recipient of five patent recognition awards by the Society of Women Engineers.

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BUSINESS

How to Build on Traditional Loyalty By: Alex Kinnier

ho are today’s most “competitive” fuel retailers? The obvious answer is: the ones that get the most customers. What makes a customer choose them? That answer is less obvious. Selling more gallons and c-store items in today’s market environment is only becoming more difficult. The typical U.S. fuel retailer has at least one competitive site only 0.016 miles away, and at least one and a half sites within a half-mile radius.1 Not only do customers have a lot of choices when it is time to fill up or stop for snacks, but new COVID-19 variants have made the demand for fuel more fickle than usual in most metropolitan areas. The Energy Information Administration estimates it will take years2 for fuel sales to return to 2019 levels, if ever. The retailers that are winning the market today have become laserfocused on the factors that drive a customer to choose them. They also accept that those factors are different from what they once were, and that they need to go beyond the “traditional” in oil and gas to outmatch their competition. Getting the customer’s attention Price is the number one factor that influences a customer’s buying decision.3 Retailers use a number of variables to inform their public sign price, like fuel production costs, fees and taxes, the perceived value of the fuel brand, the store location and the services offered. But most importantly, they base their pricing on their nearby competitors’ sign price — dropping, raising or matching their own price while sacrificing margin. Consumers in 2021 are more price-aware than ever, with mobile apps on their cellphones that show them real-time pricing and influence their purchasing decisions by routing them right to the lowest price. Competitive retailers have embraced this behavior shift and have moved beyond the physically limited reach of their public sign price. By taking advantage of any of the various online marketplaces that connect consumers and merchants, fuel retailers are putting their sites right in the palms of customers’ hands and winning those customers where they are — online and driving in their cars. This is different from branded apps that reach a retailer’s existing customer base. By participating in a larger “marketplace,” retailers are listing their business in a place that customers already use to decide where to buy, which introduces their business to people they’ve never seen before and dramatically increases their exposure. Getting the customer to choose you With this increased exposure, retailers have to find a way to differentiate their price in the most profitable way possible. Instead of relying on margin-sacrificing sign pricing strategies, today’s most successful retailers use digital tools to competitively price for every customer. They offer personalized, margin-bound incentives on each gallon — delivered through something as simple as a mobile app — to change customer behavior and encourage them to choose their site over

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the competition. This kind of personalization protects a retailer’s margin as they grow. While some of the most sophisticated retailers do this on their own, using the data they already have, most retailers spend so much time on providing an exceptional customer experience that they outsource this process. It helps get new customers to choose them, regular customers to buy from them more often, and customers on-site to go to higher profit centers inside their convenience store. Keeping the customer for the long term The next challenge is to bring customers on-site as often as possible. Loyalty programs are the most commonly used tool for retaining customers and increasing their overall spend. In the past, loyalty programs focused on a standard cents-per-gallon discount every time a customer fills up at their station. Over time, these programs have advanced to offer more personalized discounts and offers, including discounts on food purchases or different grades of fuel.

In an analysis of 1.7 billion fuel and c-store transactions nationwide, we see that customers use fuel loyalty programs for only 9% of all their purchases.4 For these transactions, loyalty programs do great work to encourage customers to increase their spend. In fact, an analysis of 30,000 loyalty program customers nationwide found they do spend 25% more after they join a loyalty program.5 However, it is unclear whether this is profitable for retailers — meaning that this increased loyalty spend may still be less than what retailers are spending on the loyalty program itself. The other 91% of transactions nationwide that are not attributable to a loyalty program represent a tremendous opportunity for retailers. Going back to our discussion on “Getting the customer to choose you,” using complementary tools that bring more customers into the fold allows retailers to close in on the 91% and convert them to loyal customers. By this logic, there should be as much investment in reaching new customers as there already is with retaining existing ones. Overall, today’s market challenges present an opportunity to think differently about business. Customer buying decisions are most heavily influenced by price, and the tools retailers have used to win customers to date have gotten them far. Providing new and existing customers with a personalized experience is the best way to earn proven profit and outmatch the competition.

Providing new and existing customers with a personalized experience is the best way to earn proven profit and outmatch the competition

About the author: Alex is an ardent technologist, product developer, entrepreneur, and investor who has spent 18 years developing products that have transformed industries. As co-founder and CEO of GetUpside, Alex is working to personalize brick-and-mortar commerce to help communities thrive. The GetUpside team has helped earn hundreds of millions of dollars in profit for merchants and cashback for users. Prior to GetUpside, Alex served on Opower’s executive team as the Senior VP of Product & Engineering. There he led the company’s product development teams, including engineering, product management, user experience, services, and analytics. As an investor, Alex has served as a Partner at Khosla Ventures, NEA, and now at Builders VC. Some of his investments include Climate Corporation (acquired by Monsanto) and Skybox (acquired by Google).

GetUpside analysis comparing the 26,000 stations on GetUpside with stations nearby 1

“Annual Energy Outlook 2021,” U.S. Energy Information Administration, Feb 3 2021. https://www.eia.gov/outlooks/ aeo/pdf/01%20AEO2021%20 Market%20overview%20and%20 Critical%20drivers.pdf 2

GetUpside survey, April 2021. (N=1,300 users at sixteen highperforming GetUpside stations across the U.S.; high-performing defined as stations with high number of unique visitors, number of repeat visits, and profit). 3

GetUpside analysis of 1.7 billion transactions from January 2020 to March 2021. 4

GetUpside analysis of 30,000 customers before and after they joined a loyalty program. 5

As a product manager, Alex began his career making big impacts at Google, and before that, at Procter & Gamble. At Google, Alex built the agency display advertising team, created Google’s next-generation third-party serving and targeting system, and also led Google’s acquisition of DoubleClick. At Procter & Gamble, Alex worked in brand management and product development roles, leading the development and launch of three never-before-seen products. Alex holds an M.B.A. with distinction from Harvard Business School and a B.S. in Chemical Engineering with honors from Lehigh University.

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BUSINESS

A Harsh Reality: Addiction in the Workplace HOW TO HELP AND RECOGNIZE THE SIGNS By: Robert Park

ow that many Americans are beginning to return to their offices after working from home during the pandemic, it’s important to acknowledge the public health crisis surrounding addiction and substance abuse. Drug and alcohol misuse rose across the country during the pandemic, and now many are left dealing with the consequences as they return to their workplace and a more normal daily routine. The impact of COVID-19 on psychological symptoms and disorders, addiction and health behavior has been substantial. This ongoing effect will negatively impact people’s mental health and put them at greater risk for chronic illness and drug addiction. Contrary to popular belief, most Americans struggling with a substance use disorder continue to hold a job. According to the National Council on Alcoholism and Drug Dependence (NCADD), more than 70% of those abusing illicit drugs in America are employed. Some people who can maintain personal and professional success despite substance abuse or alcohol addiction may be considered “high-functioning.” Functioning, however, does not mean healthy, and it is imperative that companies do not ignore the realities and repercussions of alcohol and other drugs in the workplace. When unaddressed, alcohol and substance use disorders in the workplace are costly and dangerous for organizations, as well as individuals, as it can lead to lowered productivity, physical injuries and even fatalities. While employers’ number one concern should be for their employees’ health and well-being, it is also important for them to consider how addiction impacts the organization financially. The U.S. Drug Test Centers, which is supported by SAMHSA, report that drug abuse and addiction cost American companies $81 billion every year. Researchers estimate that the money is spent on absenteeism, health care costs and reduced productivity. In addition to the negative impacts on the health

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of individual employees and the organization’s financial costs, substance abuse can affect the company culture, lower morale and decrease motivation, engagement and trust. So, how can employers take care of employees with substance use disorders and create a safe, drug-free environment? Reduce the stigma: Employers and employees should take the time to properly educate themselves about these illnesses to reduce the stigma and prompt societal change. Introduce an awareness program focused on substance use that includes education on appropriate and recommended ways to work with employees and family members who may be struggling with a substance use disorder. Additionally, to increase awareness in the workplace, employers should set clear drug-free policies as well as educate all employees on identifying the signs and symptoms of alcohol and drug use and the necessary steps to take when one suspects that a coworker may need help. Know the signs: Most people suffering from addiction will hide their drug use from employers and coworkers, making it difficult to identify the problem — especially while working from home. However, for those returning to the office, there are some signs that you can look out for. A few indicators of someone abusing drugs in the workplace may include: avoiding coworkers or irrationally blaming them for a mistake he or she made, openly talking about money problems, a decline in personal appearance or hygiene, complaints of failing relationships at home and taking time off for vague illnesses or family problems. Screening: Develop an employee drug testing program. Many organizations require pre-employment drug screenings for all new hires, especially in

Employers and employees should take the time to properly educate themselves about these illnesses to reduce the stigma and prompt societal change.

high-risk industries such as mining, construction and public safety. Many businesses also enroll in the Employee Assistance Program (EAP), a national initiative of the NCADD. The EAP can point addiction sufferers and their loved ones toward community resources for emotional support and treatment. It is important to note that organizational involvement should not be about punishing employee misconduct; rather, it should focus more on finding effective ways to provide education and resources for employees and supporting them in seeking recovery. Accessible treatment: While some may require inpatient treatment, there are many options for employed adults who are battling a drug or alcohol addiction. Many facilities offer various treatment programs and can provide each patient with an assessment outlining their best options. For example, Luna Recovery Services, a premier addiction treatment center located in Houston, offers a few different programs, including intensive outpatient programs which can help professionals recover without taking time off from work and a residential treatment program located in a comfortable home, not a hospital, for those who need more than an outpatient setting. They also offer a partial hospitalization program for those who need a high level of accountability and assistance, as well as recovery coaching, which keeps individuals connected to the recovery community through continuous support and accountability. Additional options include twelve-step groups like Alcoholics Anonymous and Narcotics Anonymous, which can also provide accountability during recovery, encouraging former users to stay clean. No matter which treatment method you choose, getting well again is possible with proper assistance. As more people continue to battle addiction and substance use disorders, it is more important than ever for employers to focus on increasing awareness and education in the workplace as well as supporting employees throughout their recovery journeys.

As more people continue to battle addiction and substance use disorders, it is more important than ever for employers to focus on increasing awareness and education in the workplace as well as supporting employees throughout their recovery journeys

About the author: Robert Park is the Founder and CEO of Luna Recovery Services as well as a Licensed Chemical Dependency Counselor. He has over 20 years of experience in the recovery treatment industry.

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LIFESTYLE

OVERCOMING COVID WOES:

DON’T BE AFRAID TO INVEST IN YOUR BUSINESS By: Maria Degaine

usiness owners across the globe were undoubtedly shaken when the world seemed to stop due to the COVID-19 pandemic. Though they have seemingly made it through the initial blow from the first wave of the COVID-19 pandemic, most business owners are still feeling the lasting effects. This has caused them to be hesitant in taking the next steps. They’d rather cautiously stick to the status quo rather than take any conceived risks by investing in themselves. In reality, now is the perfect time to invest in your business. Cerboni Financial Services offers an array of consulting solutions to empower business owners to take control of their financial and operational systems. When consulting with our clients during the pandemic, we have found that — despite initial hesitation — the ones who have taken the proper steps to strategically invest in the success of their business are the ones that have not only survived but have also been able to grow and expand. Understand the details of your business’s financials One of the most valuable pieces of advice we can offer owners is to develop a deep understanding of their business’s numbers. This is something a financial services business like Cerboni can help with, but business owners can also regain control on their own during unpredictable times through analyzing cash flow projections and budgets. Utilizing these tools can help business owners or management see the company and its potential opportunities from a new, different perspective. It’s extremely important to utilize projections, such as a 12-week cash flow forecast, hourly labor cost projection, profits and losses, gross profit contribution and break-even. Analyzing sales and guest or client counts on a weekly basis also plays a huge part in budgeting, and investing in a solid POS system can track sales and offer real-time numbers, which helps with projections. Just as important as examining what’s coming in, useful projections also include knowing what payouts you can anticipate, such as expenses and payroll, allowing you to pivot as needed. Maintaining flexibility is vital when owning a business in any industry, but when you’re intimately familiar with your financial situation, you’ll notice

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NOW IS THE PERFECT TIME TO INVEST IN YOUR BUSINESS when things aren’t working, and you will have the opportunity to make a change. Don’t stop at surviving; take strategic steps to thrive Those that mastered these skills and survived during the pandemic are in an even better position for growth. We’ve found that as people feel more comfortable and look forward to going out back into the world and utilizing all sorts of services, it is the perfect time for business owners to analyze and manage costs and investments while we head into an upswing in business. We advise our clients on how to cut costs, but we also take things a step further by strategizing how to increase sales and ultimately grow. For example, many of our clients have found that this situation has allowed them to negotiate better lease terms and lower interest rates, giving them a unique opportunity to expand their market presence. Don’t be afraid to invest in your business, whether financially through a better POS system or through the investment of your time in understanding your numbers. Of course, if you don’t know where to begin, investing in finan-

cial services is a great first step. Understanding all of these financial nuances can seem daunting, so financial services companies like ours offer assistance in understanding how to make the right investments – whether that’s through marketing and advertising, switching vendors to reduce unnecessary costs or managing operating costs – and allows you to get back to building your dream.

About the author: Maria Degaine, Co-Founder and Partner at Cerboni, has been in the hospitality industry for over 15 years. Her experience began at the well-known Sun Valley Resort in Idaho, and she later went on to open a Swiss boutique hotel in Brazil and four restaurant concepts. Degaine later moved to Houston and began investing in and opening restaurants with her husband.

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KNOW HOW TO FEED

Reaping the earth’s bounty is what we do best. That’s why you should plan your next offsite onsite by catering with Freebirds. From custom-rolled burritos to an entire burrito bar, your folks will attend this meeting and even look forward to the next. Place your order now.

KING REALTORS is dedicated to helping San Antonio and the oil industry with their real estate needs. If you are looking to buy or sell a property, call us and say you saw it in SHALE Magazine!

Freebirds World Burrito San Antonio & South Texas Catering Sales Manager Josie Nieves P: 210-560-5002 F: 866-421-0876 jnieves@freebirds.com

TABITHA KING 210.414.4255

5600 Broadway Avenue • San Antonio, TX 78209 KingRealtors.com tabitha@kingrealtors.com SHALEMAG.COM

LIFESTYLE

DIAMONDS DIRECT PROVIDES CLARITY ON WHAT YOU NEED TO KNOW BEFORE INVESTING IN FINE JEWELRY Special to SHALE

hey say diamonds are forever, so if you’re investing in a special piece of jewelry, it’s crucial to have education on the product. Whether you’re looking to get engaged, find the perfect anniversary gift or push present or simply want to expand your collection, Diamonds Direct is sharing the inside scoop on all things fine jewelry. As a worldwide leader in diamond sourcing and consumer education, the brand knows a thing or two about what to keep in mind when you’re in the market for some new bling. Know your budget First things first, take a look at your funds and determine a realistic budget for your special piece. For engagement rings, the age-old rule of having to spend three months’ worth of your salary has become outdated. The good news is that there are beautiful pieces out there for every budget, and you can even utilize options like financing. Based on your finances, the diamond expert you work with will be able to assist you in finding the perfect piece that fits within your desired price range. Find a reputable jeweler that you trust Finding a company that has a proven track record of happy customers, transparency, and a good reputation is crucial. Purchasing fine jewelry is an important decision, and knowing that you are receiving the highest quality product for the best possible price can give you peace of mind. Founded in 1995, Diamonds Direct is part of a generationsold tradition of eliminating the middlemen and sourcing directly from the world’s best mines and most reputable diamond cutters. By maintaining involvement in the entire lifecycle of a diamond, the company ensures quality diamonds are handpicked for their retail locations across the United States at the very best prices.

Learn about the “4Cs” You’ve heard about the 4Cs, but what do they mean and which of them is really the most important? The 4Cs are carat, cut, clarity and color. Carat measures the weight of a diamond, cut measures how well a diamond’s facets interact with light, clarity refers to the absence of inclusions and blemishes, and a diamond’s color is actually graded based on the absence of color. Each of these factors is used in the process of determining the value of a diamond. Diamonds Direct places a major focus on cut, which can completely impact the visual appeal of the diamond. Each diamond is handpicked based on visual beauty — so you can feel confident knowing you’re truly getting the best-looking diamonds for the best value. Check out merchandise options Having expansive merchandise options when choosing your piece can mean not having to settle or compromise and will ensure you find exactly what you want. As you browse jewelers, look for a company that has a range of pieces to choose from, including loose and mounted diamonds, a wide range of carat sizes and a multitude of designs. Diamonds Direct holds an impressive inventory equivalent to 30 traditional jewelry stores. That assortment comes from over 50 of the nation’s top designers and their own in-house brand and includes engagement ring mountings by America’s top designers, wedding bands, pendants, earrings, bracelets, pearls, colored gemstones and fine fashion jewelry. Learn about available warranties and guarantees As with any major purchase, it’s important to learn about the options available to you through financing, warranties and guarantees. In addition to the vast inventory housed at each Diamonds Direct location, every purchase is backed by industry-leading guarantees and warranties. The brand focuses on unrivaled customer service and complimentary services, including jewelry maintenance, cleaning, sizing and complimentary lifetime upgrade on engagement rings. This allows customers to trade their diamond for a different size, quality or shape — and receive 110% of the original purchase towards a new purchase. Buying a piece of jewelry, regardless of size, budget or preference is a memorable experience, and the team at Diamonds Direct takes their role in that special process very seriously. Regardless of your knowledge level, Diamonds Direct is there to educate you throughout the entire process, making it a seamless and easy experience from start to finish. With the quality of Diamonds Direct’s selection, the designers they partner with, and the certifications they back their diamonds with will always ensure that the piece you walk away with is the very best for your budget. For more information about Diamonds Direct, please visit www.diamondsdirect.com.

FOR ENGAGEMENT RINGS, THE AGE-OLD RULE OF HAVING TO SPEND THREE MONTHS’ WORTH OF YOUR SALARY HAS BECOME OUTDATED 70

SHALE MAGAZINE  SEPT/OCT 2021

Holiday Inn

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UNMATCHED TEXAS HUNTING RETREAT After hunting several ranches throughout South Texas over the last 15 years, I have finally found one that has it all. Fantastic accommodations, food and overall comfort are second to none. The number of quality animals is simply unbelievable. - Bobby Phillips

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SOCIAL

STATE ENERGY of

L U N C H EON I N C O R P U S C H R IS T I

The State of Energy luncheon in Corpus Christi was held at the Omni Hotel on August 25, 2021. Thank you very much to our speakers, everyone who attended, the Omni Hotel and SHALE Magazine. All of you contributed to the success of the event. SHALE was proud to host such a diverse group of speakers regarding the essence of oil and gas not only here in Texas, but all over the world. Those in attendance were excited and pleased with the information they received, and they assured us they look forward to our next one. A special thank you to all the speakers and everyone for your continued support of SHALE Magazine.

SHALE MAGAZINE  SEPT/OCT 2021

SHALEMAG.COM

River City Dental Solutions

General, Cosmetic & Implant Dentistry Trusted, Comfortable & Affordable Family Dental Care The Latest Procedures, Instruments & Techniques Always Welcoming New Patients Most Dental Insurance Accepted Dr. Thomas C. Shields would like to welcome Dr. Joseph Perry to the practice. 7300 Blanco Road, Suite 203, San Antonio, TX 78216 210-349-3745 74

SHALE MAGAZINE  SEPT/OCT 2021

SHALEMAG.COM

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Renowned for its wingshooting since 1990, Joshua Creek Ranch is located just 45 minutes northwest of San Antonio along the pristine banks of the Guadalupe River. With plenty of sunshine and pleasant temperatures during wingshooting season, hunters enjoy spending most of their time outdoors when visiting this Texas Hill Country paradise. Open daily to the public, with Memberships available, JCR offers custom itineraries and exceptional outdoor sporting experiences complemented by luxury resort amenities and warm Texas hospitality. Enjoy... • Migratory Dove Hunting • Upland Bird Hunting for Quail, Pheasant & Chukar • European-Style Driven Pheasant Shoots • Decoyed Mallard Duck Hunting • Trophy Axis Deer Hunting • Fly-Fishing for Rainbow Trout, Bluegill & Bass • Whitetail Deer & Turkey Hunting • Sporting Clays (20 Stations) • Simulated Driven Pheasant & Grouse Clays Shooting • Handgun & Long Range Rifle Shooting

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SHALE MAGAZINE  SEPT/OCT 2021

SHALE Magazine September/October 2021

Articles inside

Diamonds Direct Provides Clarity on What You Need to Know Before Investing in Fine Jewelry

A Harsh Reality Addiction in the Workplace

Young Voices in Energy: Essays on Innovation and Regulation in Energy

Watermelons and Environmentalists

How to Build on Traditional Loyalty

Energy Reality 101

How Viable is Africa’s Oil and Gas Industry in the Wake of a Global Energy Transition?

Natural Gas Markets in the 21st Century

Tool Enables Safe Handling of Tubulars

The Newest Climate Change Narrative Is a Clear and Present Danger to Us All

From Zero to Hero: How Automated Tag Management Helps Digitalisation to Deliver for the Oil and Gas Industry

U.S. Oil Demand May Fall by 24% in Nine Years Due to EVs

Minimizing Manifested Hazardous Waste Through Beneficial Reuse

Taming Seismic Data with the Cloud

Addressing Efficiency Challenges Faced by the Oil and Gas Industry