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The Shale Revolution Made in America p 12 AI Machine Learning The Next Transformation for Oil Gas p 16 Revolutionizing Pipeline Safety with Midstream Oil and Gas Inspections p 22 Interview Colin Westmoreland SVP General Manager Market Research Drillinginfo p 34 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY January February 2019 OilmanMagazine com DAVIS REFINERY BUILT GREEN

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IN THIS ISSUE Feature Going Green in the Bakken By Sarah Skinner pages 18 20 In Every Issue Letter from the Publisher page 2 OILMAN Contributors page 2 OILMAN Online Retweets Social Stream page 3 Downhole Data page 3 OILMAN Columns Eric R Eissler 2019 Market Outlook page 10 Mark A Stansberry America s 2019 Energy Watch List page 15 Tonae Hamilton The Effect of Accounting Software on Energy Operations and Profits page 24 Gifford Briggs 2019 Governor s Race And Then There Were Three page 25 Emmanuel Sullivan Optimal Physical and Cyber Security in the Oil Gas and Energy Industry page 26 Thomas G Ciarlone Jr Fifth Circuit Sets Dangerous Precedent for Oil and Gas Class Actions page 33 Tonae Hamilton Interview Colin Westmoreland SVP General Manager Market Research Drillinginfo page 34 Josh Robbins How to Get Deals Done in 2019 page 35 Jason Spiess After a Roller Coaster in 2018 the Future Looks Bright for Oil and Gas page 36 Guest Columns Dave McCarthy Three Predictive Capabilities That Really Move the Needle for Oil Refineries page 4 Richard Murphy Are You Ready for a Demand Driven Petrochemical Market page 6 Brooke Pearson How Lightning Can Damage Oil and Gas Industry Infrastructure page 7 Shiva Rajagopalan Achieving Last Mile Connectivity to Pump by Exception page 8 Vincent Lagarrigue Looking Back on 2018 in Oil Transfer page 11 Simon Lack The Shale Revolution Made in America page 12 William Hill Addressing the Paradigm Shift in the Oil Gas Industry page 14 Shane Randolph and Jim McBride AI Machine Learning The Next Transformation for Oil Gas page 16 Chris Knight and Dan Dirksen Revolutionizing Pipeline Safety with Midstream Oil and Gas Inspections page 22 Bradley Dillon Fall Protection and Training in the Oil and Gas Industry page 28 Paul Cones Constructing a More Efficient Research Model Through Electronic Courthouse Records page 30 Louis Krannich Key Focus Areas in Pipeline Safety page 32 Oilman Magazine January February 2019 OilmanMagazine com 1

LETTER FROM THE PUBLISHER Overall the oil and gas market improved and grew in 2018 with some price volatility in Q4 The price fluctuation is expected to continue in 2019 due to uncertainty with OPEC s latest mandate to cut production and a slowing global demand for crude products According to the Energy Information Agency the U S is now the largest crude oil producer in the world In February crude production exceeded that of Saudi Arabia for the first time in more than two decades In June and August the U S surpassed Russia for the first time since 1999 This past August the U S produced over 11 million barrels per day and we re expected to exceed Russia and Saudi Arabia through 2019 Shale plays around the country are driving crude oil production Much of the growth is from the Permian Basin in Texas and New Mexico and the Bakken in North Dakota and Montana There has been an increase in drilling activity in the deepwater Gulf of Mexico after declining significantly from the oil price drop in 2014 2015 Despite oil price fluctuations and geopolitical concerns the U S oil and gas industry is thriving Innovative technology and cutting edge software designed to help improve personnel production and product performance is a key factor for future growth At OILMAN we re also eager to see what s new in blockchain technology machine learning and artificial intelligence as they continue to open up new frontiers in the industry The resilience ingenuity and drive of all involved in the oil and gas value chain is remarkable and we look forward to sharing in every OILMAN issue what the industry has to offer in 2019 Emmanuel Sullivan Publisher OILMAN Magazine CONTRIBUTORS Biographies Gifford Briggs Gifford Briggs joined LOGA in 2007 working closely with the Louisiana Legislature After nearly a decade serving as LOGA s VicePresident Gifford was named President in 2018 Briggs first joined LOGA formerly LIOGA in 1994 while attending college at LSU He served as the Membership Coordinator and helped organize many firsts for LOGA including the first annual meeting Gulf Coast Prospect Shale Expo and board meetings He later moved to Atlanta to pursue a career in restaurant management He returned to LOGA in 2007 Mark A Stansberry Mark A Stansberry Chairman of The GTD Group is an award winning author columnist film and music producer radio talk show host and 2009 Western Oklahoma Hall of Fame inductee Stansberry has written five energy related books He has been active in the oil and gas industry for over 41 years having served as CEO President of Moore Stansberry Inc and The Oklahoma Royalty Company He is currently serving as Chairman of the Board of Regents of the Regional University System of Oklahoma Chairman Emeritus of the Gaylord Boone Pickens Museum Oklahoma Hall of Fame Board of Directors Lifetime Trustee of Oklahoma Christian University and Board Emeritus of the Oklahoma Governor s International Team He has served on several private and public boards He is currently Advisory Board Chairman of IngenuitE Inc and Advisor of Skyline Ink Thomas G Ciarlone Jr Tom is a litigation partner in the Houston office of Kane Russell Coleman Logan PC where he serves as the head of the firm s energy practice group Tom is also the host of a weekly podcast on legal news and developments in the oil and gas industry available at www energylawroundup com and a video series on effective legal writing available at www theartofthebrief com 2 Jason Spiess Jason Spiess is an award winning journalist talk show host publisher and executive producer Spiess has worked in both the radio and print industry for over 20 years All but three years of his professional experience Spiess was involved in the overall operations of the business as a principal partner Spiess is a North Dakota native Fargo North Alumni and graduate of North Dakota State University Spiess moved to the oil patch in 2012 living and operating a food truck in the parking lot of Mac s Hardware In addition to running a food truck Spiess hosted a daily energy lifestyle radio show from the Rolling Stove food truck The show was one of a kind in the Bakken oil fields with diverse guest ranging from U S Senator Mike Enzi WY to the traveling roadside merchant selling flags to the local high school football coach talking about this week s big game Joshua Robbins Josh Robbins is currently the Chief Executive Officer of Beachwood Marketing He has consulted and provided solutions for several industries however the majority of his consulting solutions have been in manufacturing energy and oil and gas Mr Robbins has over 15 years of excellent project leadership in business development and is experienced in all aspects of oil and gas acquisitions and divestitures He has extensive business relationships with a demonstrated ability to conduct executive level negotiations He has developed sustainable solutions successfully marketing oil and natural gas properties cost effectively and efficiently Steve Burnett Steve Burnett has been working in the oil industry since the age of 16 He started out working construction on a pipeline crew and after retirement finishes his career as a Pipeline Safety Compliance Inspector He has a degree in art and watched oil and art collide in his career to form the Crude Oil Calendars He also taught in the same two fields and believes that while technology has advanced the valuable people at the core of the industry and the attributes they encompass remain the same Oilman Magazine January February 2019 OilmanMagazine com JANUARY FEBRUARY 2019 PUBLISHER Emmanuel Sullivan MANAGING EDITOR Sarah Skinner ASSOCIATE EDITOR Tonae Hamilton FEATURES EDITOR Eric Eissler GRAPHIC DESIGNER Kim Fischer CONTRIBUTING EDITORS Gifford Briggs Steve Burnett Thomas Ciarlone Jr Joshua Robbins Jason Spiess Mark Stansberry SALES Eric Freer To subscribe to Oilman Magazine please visit our website www oilmanmagazine com subscribe The contents of this publication are copyright 2019 by Oilman Magazine LLC with all rights restricted Any reproduction or use of content without written consent of Oilman Magazine LLC is strictly prohibited All information in this publication is gathered from sources considered to be reliable but the accuracy of the information cannot be guaranteed Oilman Magazine reserves the right to edit all contributed articles Editorial content does not necessarily reflect the opinions of the publisher Any advice given in editorial content or advertisements should be considered information only CHANGE OF ADDRESS Please send address change to Oilman Magazine P O Box 771872 Houston TX 77215 800 562 2340 Cover illustration courtesy of sergeiminsk www 123RF com

DIGITAL DOWNHOLE DATA For The Week Ending December 28 2018 Connect with OILMAN anytime at OILMANMAGAZINE com and on social media OIL RIG COUNTS OilmanNEWS Source Baker Hughes Stay updated between issues with weekly reports delivered online at OilmanMagazine com Colorado 34 Last month 33 Last year 34 Louisiana 67 Last month 65 Last year 62 North Dakota 53 Last month 52 Last year 46 Oklahoma 140 Last month 145 Last year 120 Texas 532 Last month 531 Last year 453 U S Total 1 083 Last month 1 076 Last year 929 Per Barrel CRUDE OIL PRICES Source U S Energy Information Association EIA Brent Crude 51 49 Last month 58 29 Last year 66 80 WTI 44 48 Last month 51 46 Last year 59 84 Barrels Per Month SOCIAL STREAM CRUDE OIL PRODUCTION RETWEETS Source U S Energy Information Association EIA September 2018 Colorado 14 229 000 Last month 14 678 000 Last year 11 981 000 Louisiana 3 720 000 Last month 3 961 000 Last year 4 156 000 North Dakota 40 132 000 Oklahoma 17 143 000 Last month 39 506 000 Last month 14 463 000 Last year 32 892 000 Last year 14 067 000 Texas 140 766 000 U S Total 344 239 000 Last month 142 181 000 Last month 351 720 000 Last year 105 755 000 Last year 284 856 000 Million Cubic Feet Per Month NATURAL GAS MARKETED PRODUCTION Source U S Energy Information Association EIA September 2018 facebook com OilmanMagazine OilmanMagazine Colorado 152 897 Last month 155 101 Last year 139 869 Louisiana 236 601 Last month 250 398 Last year 188 756 North Dakota 64 738 Last month 64 635 Last year 48 483 Oklahoma 252 947 Last month 258 687 Last year 211 644 Texas 673 101 Last month 690 836 Last year 593 431 U S Total 2 789 288 Last month 2 847 088 Last year 2 434 077 Oilman Magazine January February 2019 OilmanMagazine com 3

OILMAN COLUMN Three Predictive Capabilities That Really Move the Needle for Oil Refineries By Dave McCarthy The ability to predict the future is a powerful form of knowledge for any business If you know of an event that could cause harm to your business lies ahead like equipment failure you can take steps to address it and avoid negative consequences like unnecessary costs or downtime If you know a beneficial event is ahead such as an increase in demand you can harness it to increase revenue customer satisfaction and more For these reasons cases like predictive failure predictive or forecasting demand and predictive maintenance are quickly gaining popularity in the oil and gas industry Individually these IoT enabled capabilities can pack a strong ROI punch by helping businesses anticipate future events and take appropriate preemptive measures using real time data When layered together their benefit potential grows exponentially Predicting Pump Failure Maximizing the uptime of revenue generating pumps is critical for oil refineries which has made predictive failure one of the more desirable predictive capabilities Failures can cost thousands of dollars or more in unplanned downtime and present the additional threat of expensive collateral damage Additionally false positive alerts from equipment sensors pose an altogether different problem by straining service resources and driving up expenses when technicians are deployed to a site to learn that no problem exists Fortunately sophisticated data analytics make it possible to predict and resolve these problems before they occur avoiding unplanned downtime and reducing false positives Typically there is no backup option when an oil pump fails at an oil refinery so the facility is forced into an unscheduled shutdown These sorts of environments are generally highly utilized often running nonstop 24 7 Such elevated levels of plant activity mean that any production time lost to down equipment is gone forever due to a shortage of extra capacity And that s in addition to the outsized costs associated with emergency repairs Failures of this nature can also introduce contaminants into the production pipeline which run the risk of corrupting product quality and damaging equipment downstream Furthermore these sorts of breakdowns come with the ever present danger of causing a line breach which can carry a steep cleanup price tag all on its own With data insights into the pump s health as well as like assets across a population the refinery could have caught the warning signs of the 4 upcoming failure Knowing an asset is headed for trouble management could have proactively scheduled a repair to minimize the impact on production and prevent unfavorable side effects such as unnecessary cleanup costs and equipment damages Forecasting Demand Predictive or forecasting demand is another capability that offers excellent benefit potential to the oil and gas industry IoT can help refineries better gauge demand in the oil supply chain Basic historical analysis has been used to forecast peak seasons for oil demand but without incorporating data from device sensors it s difficult to pinpoint the optimal oil production for any given amount of time This can lead to wasted excess and unnecessary costs Using the IoT to harness real time data from edge devices such as pumps enables oil companies to better calculate future demand That said the data needed to project demand extends beyond just the information coming from a device It s easy to focus on device data because that s the new variable but there are more pieces to the puzzle By incorporating as many data points that influence demand as possible such as enterprise systems and external variables companies can enhance prediction accuracy Anticipating Maintenance Needs Predictive maintenance is another IoT use case with exciting potential applications across the oil and gas sector Traditional methods of equipment maintenance are generally reactive servicing equipment once it fails or preventative based on static time intervals or amount of use Reactive maintenance is often expensive due to compounding costs associated with unplanned downtime and emergency repairs Preventative measures carry the risk of under or over servicing equipment which can inflate maintenance costs and reduce asset longevity Condition based maintenance CBM is an important step in the right direction as it uses real time operational data as well as environmental and historical information to identify when service is truly needed based on actual device performance While this does help oil and gas companies improve maintenance and repair processes across all of their connected equipment CBM is still reactive in that it s a response to current conditions Predictive maintenance takes CBM and makes it proactive by flagging service needs in advance so that companies can take action before those needs Oilman Magazine January February 2019 OilmanMagazine com arise In addition to significantly improving asset reliability and longevity this ability to better plan maintenance can significantly lower service costs and help defer capital expenditures Effective Predictive Analytics Begins with the Right Data Predictive analytics is transforming many of today s connected industrial organizations by proactively identifying asset efficiency performance issues and other key factors before they impact operations However even with the most advanced technology the ability to carry out any sort of predictive analysis hinges primarily on having the right dataset This is why it s critical to perform a thorough review of what data you have vs what s required before beginning any initiative And it s equally important to keep in mind that data important to a predictive project isn t limited to production information Companies experiencing the most predictive success incorporate additional variables such as enterprise system data and public data sources e g weather geospatial etc with device data This sort of supplementary information helps build context to create a more complete picture of what s actually happening with a device Whether it s a wet vs dry environment or a cold vs warm climate there are countless external factors that can affect different assets in a variety of ways with varying degrees of severity In fact this secondary information is significant enough on its own that in some cases it can provide a general sense of what s wrong with a device or when an error is likely to occur That said it takes an IoT solution that integrates real time device data with the relevant additional data sources to pinpoint root causes and predict failures with accuracy Finally remember that while all forms of predictive analytics offer great value to an oil and gas operation starting with the predictive capability that shows the most potential will lead to the greatest profitability or cost reduction Dave McCarthy is a leading authority on industrial IoT As vice president at Bsquare Corporation he advises Fortune 1000 customers on how to integrate device and sensor data with their enterprise systems to improve business outcomes Dave regularly speaks at technology conferences around the globe and recently delivered the keynote presentation at Internet of Things North America Dave earned an MBA with honors from Northeastern University

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OILMAN COLUMN Are You Ready for a Demand Driven Petrochemical Market By Richard Murphy As in many other energy sectors the global demand for petrochemicals is increasing drastically This demand is due in large part to the growing need for everyday products such as plastics and petrochemical derived fibers A less publicized development in the petrochemical industry is the burgeoning use of abundant and currently very cheap natural gas in the production of everything from liquid fuels to fertilizers Multiply those widespread dependencies by the rapid rates of industrialization and middle class consumption of goods in third world countries and the need for sufficient petrochemical stockpiles becomes dramatically apparent That perhaps is a masterpiece of an understatement Because while the IEA International Energy Agency has reported that petrochemical feedstocks currently account for 12 percent of global oil demand the organization s Future of Petrochemicals report predicts that by 2030 petrochemicals will account for more than 30 percent of growth in world oil demand Our economies are heavily dependent on petrochemicals but the sector receives far less attention than it deserves said IEA Executive Director Dr Fatih Birol Petrochemicals are one of the key blind spots in the global energy debate especially given the influence they will exert on future energy trends In fact our analysis shows they will have a greater influence on the future of oil demand than cars trucks and aviation Need is One Challenge Nature is Another Alongside all of these demand challenges is the ever present unpredictable forces of Mother Nature and the impact her whims can have on satisfying market needs One of the biggest recent shocks to the petrochemical industry was Hurricane Harvey which blew through Houston in 2017 knocking out more than half of U S production capacity for ethylene a vital building block for basic plastics For months American chemical producers were unable to fulfill orders for PVC polyethylene and more not only driving up the price of basic plastic materials but also threatening the operation of companies that use polyethylene and other petrochemicals as feedstock Instances such as this raise a two part question for industry participants how much backup supply should one keep on hand to account for unforeseen disasters and how does one properly account for said supply When a business can answer these questions confidently they will be better prepared to protect margins when disaster strikes 6 Politics Also Plays a Part The ever evolving geopolitical landscape further fuels uncertainty Threats of trade wars around the globe are always looming The evolution and resolution of Brexit continues to impact world markets Increasing threats of military war in the Middle East could generate a number of scenarios The list goes on On the supply side the recent threat of sanctions against Saudi Arabia from global economic leaders could prompt the country to reduce supply exports substantially which could alter how the world receives and produces oil Conversely countries like Libya and Nigeria are planning on increasing their exports and the potential emergence of new players with conventional sources of feedstock such as Iraq and Iran could shift the balance substantially And while Venezuelan shale production continues to plummet the U S has stepped up as a dominant force in that segment of the industry Supply and demand disruptions can lead not only to greater price volatility but also the disruption of established value chains Preempting those risks in real time is crucial not only for producers but also for portfolio managers and the investors they represent Everything Has Its Price Petroleum based feedstock prices are the major cost component for finished products But another factor is also natural gas which is the primary choice to power petrochemical energy plants Ethane liquefied petroleum gases and naphtha pose a bigger threat to the refiners market share than electric vehicles and gas powered transportation combined IEA representatives stated estimating that refiners would see just 4 8 million bpd of the demand growth to 2023 On the flip side as the trend continues to convert more natural gas into liquefied natural gas LNG due to greater global demand the constraints on the supply of natural gas will increase petrochemical production costs Petrochemical feedstock managers will need to become more sophisticated feedstock buyers as they compete with LNG buyers for natural gas These combined forces in addition to the aforementioned growing global demand murky supply picture and the risk of unexpected natural disasters have exposed a fatal weakness in the petrochemical industry too many companies do not have the capabilities to manage their reserves Oilman Magazine January February 2019 OilmanMagazine com Richard Murphy in real time or respond quickly when the market changes One must be able to gauge how much stock of each product to keep on hand how to find alternate suppliers and transportation options and even alternatives to the product they can use in the interim when volatility spikes In order to respond to potential outages or supply demand imbalances while also meeting contractual commitments market participants including those on the financial side of the equation must have proper hedging and trading strategies to mitigate losses Offsetting Volatility with Visibility The pre 2014 stable price environment lulled many chemical company leaders into a false sense of security That year s dramatic drop in oil prices was a wake up call but still many companies continue to rely on dated manual process risk management systems However the problem is fixable While the market is complicated and everchanging what companies must do is control what they can and develop a strategy to cope with price fluctuations and the ups and downs connected to base products and feedstocks A petrochemical company with the right tools in place can expand margins in a falling oil price environment by identifying sourcing savings ahead of declines in product pricing When oil and or shale gas prices go back up margins can still be protected The key is to have risk and market condition visibility as well as the ability to react to those changes in order to stay not just one but several steps ahead To deal effectively with increasing volatility businesses require robust and flexible CTRM Commodity Trading and Risk Management software coupled with advanced analytics such as Allegro s cloud ready software Allegro Horizon This type of software provides petrochemical businesses with a flexible platform that enables real time portfolio and risk management Allegro s system is capable of handling the complex ever changing and increasingly volatile world that petrochemical companies face today In the spirit of restating the obvious there will always be volatility in the world s energy markets The question is as the energy landscape continues to evolve triggering market growth and as a result more risk are petrochemical companies prepared to make the right business decisions

OILMAN COLUMN How Lightning Can Damage Oil and Gas Industry Infrastructure By Brooke Pearson We ve all heard the old saying that lightning never strikes the same place twice But contrary to popular belief lightning can and often does strike the same place more than once In fact it is estimated that about 100 cloudto ground lightning strokes reach Earth s surface every second In the U S alone about 70 million cloud to ground lightning flashes are recorded annually and that has the potential for trouble in the American oil and gas industry Throughout 2018 the U S rig count has slowly and steadily escalated with the reactivation of sanctions on Iran and its crude oil exports As a result America s oil and gas industry is strong and stable right now but when you look at the top states for oil production in the country half of them are coincidentally among the top 10 states that saw the most cloud toground flashes last year Lightning can strike anywhere at any time and when oil and gas industry infrastructure finds itself in the path of a storm there can be incredibly damaging consequences Just a single lightning strike can cause disastrous damage costing companies millions of dollars in downtime product loss and liability Lightnings s Impact As the climate continues to change and extreme weather events involving lightning happen more frequently the potential for damage to oil and gas industry infrastructure increases and as a result the likelihood of a safety hazard fire explosion chemical release and or oil spill grows as well Both up and downstream activities are vulnerable to the dangerous impact of lightning yet no oil rich states have rules in place requiring these sites to install lightning protection equipment In our experience however existing lightning protection measures such as grounding of equipment or the installation of lightning rods or circuit breakers may not be sufficient Lightning tends to strike the tallest infrastructure at a site be it a vent roof stack or tower but it can also strike oil storage facilities refineries oil tanks tank batteries and other oil and gas industry infrastructure And despite the widely held belief that they are grounded to the ocean offshore rigs and platforms are vulnerable to damage caused by lightning as well In fact the advanced electrical and electronic systems on offshore rigs can be particularly vulnerable to both direct strikes and secondary surges Even buried pipelines are at risk Earthing the pipeline by way of surge diverters protects personnel and equipment who may be in electrical contact with it but does nothing to protect the actual pipeline Underground steel pipelines are often covered with a protective coating such as a polyethylene sheath but when lightning strikes nearby the pipeline the protective sheath s insulation may be destroyed by the lightning surge Interference voltage resulting from a nearby lightning strike can cause wear and tear that results in corrosion damage Lightning produces stray currents and electromagnetic fields that are introduced to the pipeline through the ground changing its potential and as a result causing AC corrosion Corrosion leads to leaks which can cause severe damage to property and the environment Lightning actually exacerbates that damage and can eventually put a hole in a pipeline Most Damaging Strokes of Lightning Beyond risks associated with fires explosions and the release of hazardous materials lightning can also cause the complex and interlinked infrastructure that composes the oil and gas industry to see power surges process upsets and power failures And the culprit of the most damaging destruction are cloud to ground lightning strokes that contain continuing current These strokes can last up to 1 000 times as long as a typical lighting stroke and are more likely to cause fire or other extreme heat related damage Identifying lightning strokes with continuing current is crucial to determining total charge transfer a parameter highly valued by the oil and gas sector as well as companies impacted by the transfer of electric charge While continuing current strokes account for just less than 10 percent of all cloud to ground lighting strokes the sheer number of storms with lightning makes even this small percentage significant Identifying how lightning including continuing current strokes will impact the oil and gas industry is vital to the long term security and reliability of the industry With hundreds of millions of dollars in assets at risk the ability to detect the location of the most destructive lightning helps crews prioritize where their lightning inspections should happen first making the time it takes to discover and then fix the damage much more efficient which ultimately saves oil and gas companies money No matter the number of strokes coming in contact with important infrastructure managing the damage caused by lightning costs time money and resources to repair While the industry continues to evolve in the area of infrastructure protection finding ways to track lightning to ensure both safety of personnel and to keep infrastructure operational is essential to the industry as a whole operations Brooke Pearson is the Lightning Global Solutions Manager at Vaisala He works with organizations to help them better manage the threat of lightning on their Oilman Magazine January February 2019 OilmanMagazine com 7

OILMAN COLUMN Achieving Last Mile Connectivity to Pump by Exception By Shiva Rajagopalan The oil and gas sector has begun its journey to digitization A growing number of firms have started making investments in automation technologies like SCADA systems but too few are truly capitalizing on those investments Now is the time to put technology to work to achieve last mile connectivity and gain productivity advantage The first step is to move past the antiquated paperbased manual processes that hinder mobility in the field That time consuming communication loop which means lease operators have to maneuver several apps and hardware devices for each kind of activity Be it production data entry inputs emergencies SCADA automation alerts flow techs work orders plunger lift or other tasks the relentless back and forth equates to less time for the field workers to do work that we need them to do pump oil Effective digitization can streamline all these processes The second step involves arming field personnel the production company s first line of operational defense with the right tools In most oilfields field personnel cannot fully benefit from their proximity to operational challenges due to a lack of up to date information If they are supplied with intuitive realtime data on production volumes compliance issues and a rundown of all the costs of doing business they gain the power to make the right decisions for their assets and the company as a whole By giving operators the information they need when they need it producers can enable last mile connectivity and pump by exception with the data they need to accomplish the highest priority tasks 3 Complex Back Office Systems and Unfriendly Interfaces However there are a variety of reasons that investments in automation have failed to deliver Complexity over engineering and poor usability form roadblocks on the path to efficiency But if companies can overcome these barriers it will enable workers to pump by exception To understand how this really works the following is how technology can help EAMS Enterprise asset management systems ERP Enterprise Resource Planning production accounting and many other systems each with a different access and interface spread out in multiple touch points suffocate productivity Each system operates in a silo with a maze of paperwork to go through in order to facilitate follow ups or communication between one another These inefficiencies can take up two hours of a field worker s day every day 1 Established Route Management Decades of centralized route management has created entrenched rituals in the oilfield the same set routes the drive around and the strenuous stocktaking back at the station day after day month after month Those companies that have invested in mobile technologies have succeeded in making field data capture more intuitive But this is only one part of the bigger problem Operators are still chasing job orders coming from different systems filling out forms looking at different apps for SCADA alerts and updating excel sheets all of which is time consuming and unnecessary Last mile connectivity requires solution to this productivity void in the oilfield It calls for synthesizing disparate data streams from multiple systems into one platform with mobile connectivity It requires dismantling silos and reduction in complexity by offering feedback and resolution through real time communication between the back office and the field 4 Internal IT Build It Yourself Approach This modern approach to oilfield management does not require expensive in house IT teams that all too often fail to deliver There is no need to go at it alone and try to reinvent the wheel Expert production and capital planning solution providers have learned from experience and offer tailor made proven scalable products that can revolutionize oilfield productivity They offer quick installation and integration with current systems thereby improving return on investment for the digital transformation The more systems and back office personnel the field has to comply with the less time the field gets to actually pump by exception Mobile and cloud technologies can liberate them from routine stonechiseled routes and chasing multiple systems by making workflows simpler with seamless integration Utilizing technology investments fully to do away with traditional route management companies can do Breaking Down Roadblocks to the Productive more with less and therefore scale growth better Falling In the Last Mile Oilfield 2 Overengineered Central Dispatch Centers Last mile delivery is a critical part of oil and gas Intelligent connected technology is revolutionizing production but it hasn t innovated in recent decades Whether you call it a back office field office or every other industry It promises to sense any Similarly outdated processes throughout the oilfield an operations control center the role of a central environment learn from the data to propose action have created negative effects on the efficiency of dispatch is fundamental to oilfield operations and communicate results to all stakeholders in real last mile delivery Holistic intelligent connectivity Central dispatch centers maneuver every field activity time In the oilfield that means gauging the health strategies however solve problems on both sides of remotely directing the next stop for each worker of all wells identifying those where worker attention the equation as they go about their activities They hold the key would garner the greatest benefit and dynamically to defining the priorities that will control efficiency coordinating field workers to be where they are Too often when a major oil and gas company takes across the oilfield However given the complex web needed most This technology represents the future the step to invest in large instrumentation it does of information they must navigate their ability to get of the oilfield and here are four ways oil and gas not see its production cycle speed up as anticipated the right resources to address the most critical tasks companies can use it Some elements however have a greater impact on with speed is limited production than others Artificial intelligence can 1 Resource To Task Matching identify the highest priorities unify them by purpose By better utilizing artificial intelligence in central and increase the speed of operations by cutting down dispatch centers oil and gas companies can maneuver This is the same technology that created Uber It helps connect people to information that will get inconsequential actions better Artificial intelligence continually learns from them to where they want or need to be with visibility all the data it is provided to develop a picture of the This wasn t possible decades ago because complex and simplicity It draws information from every oilfield simultaneously seeing the health of all wells web interface architectures increased labor and source to identify the ideal solution for each situation and the status of every worker This level of visibility operational costs stood in the way of exponential which a human dispatcher could never achieve allows and the overall objectives of the stakeholders Be it growth and productivity However technology that Uber or an oilfield artificial intelligence engines assess the system to dynamically and intelligently match enables pump by exception allows oilfields to break work record job success location at the time of an every task to the right resource this cycle Technology can equip each field worker event and other information then match resources 8 Oilman Magazine January February 2019 OilmanMagazine com

OILMAN COLUMN to the most critical task based on priority skills and proximity competing alarms followed by central dispatch phone calls adoption drops and changes in behavior plateau New technology in the oilfield or elsewhere needs to 2 Integrate Intelligent Task Workflows and Work prioritize simplicity and usability in order to encourage Orders adoption and garner benefits This is the same technology that defines Amazon a In the oilfield an important simplification comes system where activities are tracked completed and from synthesizing data from all SCADA and other communicated seamlessly and in a fraction of the IoT systems in one platform An artificial Intelligence time that manual dispatching would take Whether engine is able to prioritize alerts and intelligently delivering consumer products or managing an oilfield navigates workers in the field by maintaining visibility automated workflows streamline each activity by of all systems In addition triggered alerts based breaking it down to executable tasks putting them all on predefined risk matrices or specific geofencing in one place and connecting everyone in the field and further enhance safety in instances of hazardous spills the office or leaks This means field workers can access every task in one place on a mobile device without interrupting the task at hand They are also able to update their status instantly or create a follow up task to ensure the loop is closed but without losing precious time An intelligent workflow speeds up the process connects everyone and takes away the back and forth of manual dispatching Furthermore as machine learning continuously refines the workflow it leads to more intelligence and greater efficiency 3 Synthesize SCADA Data on One Platform More technology does not always mean more productivity In fact where technology adds complexity it can often slow down processes When field workers juggle different systems chase several 4 Scale with a Cloud Based Platform These modern production planning solutions feed on data to improve processes But as the data grows storage can become a problem For those firms with internal storage this means regularly buying new hardware and dedicating physical space for it but for those utilizing cloud storage space will automatically scale with data as it grows Oilfields need a cloud based platform with inbuilt scalability to manage thousands of terabytes of data every second Synthesized and harmonized data irrespective of volume and velocity translates to clear insights for informed action in real time Cloud based platforms also allow easy access to insights on a device of choice whenever and wherever it is needed The best cloud solutions ensure that oilfields own their data and have unhindered access to it to improve the accuracy of their decisions Varied Capabilities One Platform While oilfields may be attempting to get these capabilities in bits and pieces or scattered across systems it is the ability to bring them all together in one platform that makes pump by exception a reality The strength of artificial intelligence and the precision of machine learning makes the terabytes of data reveal the secrets of an intelligent oilfield working almost on auto pilot with minimal manual intervention Thus freeing up resources to do what they must pump more oil Shiva Rajagopalan is the Founder and CEO of Seven Lakes Technologies a leading SaaS based production and capital planning software provider for the Upstream Oil and Gas Industry Rajagopalan is a technology enthusiast passionate about the power of disruptive technologies such as mobility cloud big data and AI to create the oilfield of the future An alumnus of Indian Institute of Technology Bombay he is the recipient of four Chevron Contractor Recognition Awards for professional and technical excellence The summit is created and designed by 19 February 2019 Hyatt Regency Houston Intercontinental Airport Houston Texas Safe and efficient midstream operations through automation and technology We will unite over 120 automation specialists from leading operators service companies and technology providers to Gain an industry forecast of the midstream automation market innovation occurring in the sector and how it is expected to evolve over the next 12 months to ensure your strategy is aligned to future possibilities Work through unique challenges by networking sharing discussing and collaborating with automation specialists from across leading operators solution providers start ups and consultants that have successfully solved your problems Enhance operational efficiency across the entire organization through automation technology and process optimization that will reduce risk improve safety and reduce costs Leverage company data that will improve speed and accuracy of decision making and optimize production Ensure new and existing technology selection is fully aligned to unique business objectives and designed specifically to solve pipeline and storage problems and enhance efficiency Reduce risk and maintain all health safety and environmental regulations and standards Cutting edge insight delivered by industry leaders including Cesar A Filizzola Automation Manager DCP Midstream Andrew Aberg Director Asset Optimization Enlink Midstream Chance Kirby Manager Instrumentation Electrical Controls ONEOK Jon Huckels Controls Supervisor Facility Operations Control Systems Enbridge Inc Brian Sloan Manager of Engineering Automation Controls East TransCanada Rodney Suter Director of Automation Flint Hills Resources Proudly Sponsored By www futuremidstream com info amg world co uk 44 0 20 3950 0651 Oilman Magazine January February 2019 OilmanMagazine com 9

OILMAN COLUMN 2019 Market Outlook By Eric R Eissler Another historic year has passed for the United States as it has entered one of the strongest and longest growth phases since 1900 It has been an exciting time for the economy which has been supported by lower energy costs In the last month of 2018 crude prices fell substantially to around 52 for a barrel of WTI Crude The lower prices at the end of the year have been a boon to the holiday shoppers leaving them with some extra spending power While the economy remains strong oil and gas has seen its ups and downs throughout 2018 However at the time of writing oil prices are seeing some support from the proposed OPEC production cuts and colder weather than normal in the U S and China Wider Profit Margins Thanks to major cost cutting by shale operators production is still profitable at 50 per barrel According to the EIA the following are the breakeven points for shale oil production Eagle Ford Bakken Permian Midland Permian Delaware Niobara 47 58 44 13 42 76 37 94 32 22 Looking back to the time of the 2014 oil crash which shook up the industry these price points for profitability were unfathomable However the industry has streamlined operations despite the cost of many jobs and has been able to get back to being profitable Waiting for ANWR In 2017 to much fanfare from the oil and gas industry congress passed legislation to permit drilling in ANWR Alaska a wildlife refuge that has been under a drilling ban for three decades A year later and not much has changed except that there are more stats on the area According to a report from the EIA The US Geological Service assigned a five percent chance of the ANWR resource being less than 5 7 billion barrels and a five percent chance of being as high as 16 0 billion barrels with a 90 percent chance of a massive amount of oil either way However there will not be any drilling in the area until 2031 so don t expect to hear much more on this area for some time The EIA report goes on to explain that production from ANWR does not start until 2031 because of the time needed to acquire leases explore and develop the required production infrastructure Fields are assumed to take three to four years to reach peak oil production to maintain peak production for three to four years and then to decline until they are no longer profitable and are abandoned 10 Turn of the Tide or Drop in the Bucket As we close out 2018 one can only think on how 2019 is going to shape up for the oil and gas industry Lower prices have been around for some years now but profit margins have grown over the past year putting companies back in the black and on stronger higher ground With demand growing in China and India and the U S sending more and more exports to these nations this will drive up demand The Middle East essentially OPEC not to be outdone by the U S will cut supply in an effort to drive prices up However in an unusual turn of events Qatar said that it will leave the 15 member OPEC organization While some are saying that other countries will follow and that Qatar is the first domino to fall have forgotten that this is not the first time a country has left only to return Ecuador left in 1992 only to return in 2007 as did Gabon leaving in 1995 returning in 2016 Indonesia also left in 2008 returning in 2016 and then lapsing on renewal There is always strength in numbers of which OPEC members have 82 percent of the worlds proven oil reserves and 46 percent of the production Moreover Qatar is major natural gas exporter unlike its neighbor Saudi Arabia which mainly runs the show over in OPEC Demand From a Relative Perspective Following the oil and gas industry you are certain to hear that demand is up or demand is down But what is this demand Most of the time it is a relative demand of a single market or a general global demand that is rather a nebulous concept While there have been reports saying Oilman Magazine January February 2019 OilmanMagazine com Photo courtesy of bluebay www 123RF com that demand is down when you look at the overall growth of human population and the fact more people require more energy you will plainly see that demand is outpacing supply but that the supply keeps up with demand over the long haul However at one point global demand will outstrip supply in the long term As a best practice remember that demand is a relative term that is usually used in a much smaller regional national level rather than at the global level hydrocarbons will run out one day Market Prices Volatile markets continue to drive growth and the oil and gas industry has been just that With super politically charged times that the United States is witnessing it can be for certain like the wave of a wand that prices are subject to change drastically Much of this depends on the general response of the economy on certain factors such as trade issues diplomacy consumer spending and so forth The Forecast In general over the course of 2019 the industry will continue to strengthen prices should average higher than in 2018 and more technology will come into play as a mechanism to keep profits up by improving on efficiency Despite the calls for tech in big oil pipeline infrastructure will continue to hamper stall and frustrate the oil and gas industry As production continues its upward trajectory the pipeline network will be unable to keep up with expansion holding back many producers in shale

OILMAN COLUMN Looking back on 2018 in Oil Transfer Vincent Lagarrigue Looking back over 2018 the tale of the oil and gas sector is very much a case of journey over destination Adapting rapidly to challenges of a landscape in flux with responding regulatory reform has necessitated innovative solutions across the supply chain Change is always challenging but despite this the outlook is one of cautious optimism for many stakeholders with the market appearing ever more buoyant as we enter 2019 For Trelleborg this year has been about maintaining a close working relationship with our partners in order to harness this momentum for measurable results We have committed to long term solutions challenging conventional wisdoms and providing bespoke transfer solutions that are built to last echoing the strengthening market This growing confidence has led some companies to ramp up capital expenditure setting the precedent for future spending plans The U S Russia and Canada are expected to be the top spenders in terms of capex for planned and announced projects throughout the oil and gas value chain by 2025 China is also predicted to increase spending particularly on the regasification front with 23 4 billion to be spent on 22 upcoming regasification terminals The need for more stringent operability standards in oil and gas transfer is evident throughout the industry Over the past 12 months we ve seen a rise in the number of operators upgrading their installations in accordance with API 17K specification the highest standard applicable to a bonded marine hose particularly in Europe and the U S To capitalize on this we have positioned ourselves at the forefront of the rapidly evolving ship to ship STS transfer market having launched our unique KLELINE STS solution earlier in the year There s a real need for greater safety and operability standards when it comes to this type of transfer as highlighted in a recent investigation report by the U K P I Club and we truly believe that our solution which is qualified to GMPHOM 2009 standard will set a new industry benchmark LNG both small scale and as a marine fuel has garnered significant attention in a year filled with landmarks standing it in good stead as we enter the new year We ve seen growing demand for LNG bunkering infrastructure projects precipitated in part by a rising demand for both low carbon and low sulphur fuel in the face of the impeding 2020 sulphur cap The cruise sector has perhaps experienced some of the most publicized and pronounced developments Excessive sulfur levels in fuel burnt by a U S cruise ship captain at Marseille Fos port had some expensive and public repercussions to the tune of 100 000 It is perhaps indicative of the reactive nature of the industry that the very same port has also announced its intentions to ramp up bunkering services from the middle of next year an announcement that will have almost certainly attracted the attention of major cruise lines KLELINE Ship to Ship Solution Photos courtesy of Trelleborg In further developments this summer the first ever fully LNG powered cruise liner made its debut setting the tone for cleaner travel Capable of bunkering large cruise ships with the 3 600 cubic meters of LNG they need to operate for 14 days without refuelling Trelleborg Cryoline hoses are part of the solution toolkit which will enable LNG fuelling without exorbitant costs for infrastructure Japan and Singapore have emerged as major players in LNG bunkering offerings while Europe has maintained its reputation as the center of sophisticated port infrastructure As a recent article in LNG World Shipping argued what European LNG terminals lack in volume throughputs they more than make up for in cargo handling sophistication As for next year we will be keeping a keen eye on the UAE Recent agreements for an LNG bunkering partnership struck between ADNOC Logistics Services and INPEX is arguably prophetic of ground work for future projects in the area likely to expand into the southeast Asia region as well Not to be outdone on the energy front the small scale LNG market is once again experiencing growth In Europe particularly in the Baltic region the adoption of LNG as a marine and road transport fuel has received significant support from local governments To meet this growing demand Russia s largest non state natural gas producer Novatek will start producing LNG on the shore of the Baltic Sea in February next year Underpinning overall LNG growth is the fact that demand in existing conventional markets especially in Asia and particularly China has exceeded expectations The recent delivery of a new small scale FSRU to Indonesia s Jaya Samudra Karunia JSK Shipping marks a significant step towards the nation s goal of establishing an LNG supply network The number of FSRUs globally is expected to rise over the next few years with multiple projects already planned in places such as Lebanon and Africa At Trelleborg we continue to provide the largest selection of floating oil and gas hoses on the market today with a broad range of specialization available We work from the beginning of each project to ensure that we understand the environment in which a product will function that we select the right tool for the job and work to maximize performance and lifecycle throughout the product s working life All of our learnings over this year of profound change have led to a positive outlook for 2019 However there is little time to relax We must continue to innovate and be flexible when it comes to transfer zones in order to avoid a bottleneck Maintaining momentum needs to be a priority for the industry in order to drive optimism forward into another year of proven successes Oilman Magazine January February 2019 OilmanMagazine com 11

OILMAN COLUMN The Shale Revolution Made in America By Simon Lack Back in 2014 they were unlikely adversaries Saudi Energy Minister Ali Al Naimi and Pioneer Natural Resources PXD CEO Scott Sheffield had both made their careers in the oil business They had each spent formative years abroad with Al Naimi attending Lehigh University and Sheffield going to high school in Iran his father worked for Atlantic Richfield Both were dedicated to maximizing the value of the fossil fuels they controlled and had hunted together a common pastime for oilmen But the success of horizontal drilling and hydraulic fracturing fracking in the U S was releasing increasing amounts of crude oil from hitherto impenetrable porous rock A consequence was that from 2011 2014 fully all of the increase in global demand for crude oil had been met by North American production This was hurting prices and reducing OPEC s market share Al Naimi concluded that the interlopers were vulnerable to a drop in prices that would expose their high cost structure Pioneer was one of the biggest producers of shale oil They had been deemed The Motherfracker by hedge fund manager David Einhorn who likened their low return on capital to using 50 bills to counterfeit 20s Scott Sheffield s business and others like it were increasingly at odds with OPEC and Al Naimi decided they needed to be stopped So it was that in late 2014 the Saudis shocked the oil market by promising to increase production into an already oversupplied market rather than adopt their familiar role of swing producer modifying their own output to smooth price swings They calculated that lower prices would bankrupt large swathes of the U S shale oil industry eventually cutting production and allowing prices to return to the 100 levels necessary to support Saudi Arabia s budget We are going to continue to produce what we are 12 producing we are going to continue to welcome additional production if customers come and ask for it al Naimi said What followed is one of the most extraordinary stories of private sector innovation in the biggest most dynamic economy the world has ever seen Crude prices plummeted falling as low as 26 a barrel on February 11 2016 Facing an existential threat to their businesses Pioneer and many companies like it drove production costs down relentlessly bringing break evens down to levels few had thought possible U S production dipped but didn t collapse OPEC expected a quick victory with widespread bankruptcies among shale producers leading to production cuts and higher prices It didn t happen and the damage to member budgets mounted Illustration and graphs courtesy of Catalyst Funds dominant position reflects many inherent free market advantages in the world s biggest economy which are not sufficiently present elsewhere It was a significant far reaching victory for America s shale producers Start with a large energy sector already adept at exploiting conventional resources with a deep pool of skilled labor and long history of technological improvement Add to this access to capital from the world s biggest capital market a strong entrepreneurial culture existing energy infrastructure that can be modified and enhanced to service these new regions of output ample water and specific grade sand supplies needed for fracking often conveniently located mineral rights that belong to property owners unknown in other countries but taken for granted in the U S which builds community acceptance of drilling activity that creates local wealth U S shale oil and gas production are upending the energy markets The U S is not just the leader in this new technology it s virtually the only game in town Oil natural gas liquids and natural gas are known to exist in porous rock all over the world notably in China and Argentina America s Only the U S combines all these advantages The result is that cheap natural gas now produces more electricity than coal and we re a net exporter We ve even shipped it to the United Arab Emirates because it s cheap enough to cover the transportation costs In late 2016 OPEC relented concluding low prices were damaging their members more than the shale upstarts U S production began rising again Earlier this year we took the world s top producer spot well ahead of many forecasts Oilman Magazine January February 2019 OilmanMagazine com

OILMAN COLUMN Natural gas from U S shale was developed under a much higher price regime which allowed time for scale that could lower costs as global Liquified Natural Gas supplies weighed on prices Similarly the development of crude oil sourced from shale started when prices were higher so the industry was subsequently mature enough to adapt to falling prices Horizontal drilling and hydraulic fracturing of rock could not have developed as they did under today s hydrocarbon price regime OPEC s strategy was correct but several years too late There is no going back significant cost of completing a drilled well in response to lower prices resulting in an inventory of DUCs Drilled UnCompleted wells awaiting higher prices Capital is recycled faster The short cycle nature of shale provides a significant lower risk profile for producers Earlier this year when Exxon Mobil XOM announced plans to invest 50 billion in the U S over the next five years CEO Darren Woods singled out the Permian Basin in West Texas and New Mexico as an important target for some of this capital investment It s evidence that the world s biggest energy companies recognize the value in the Shale Revolution Unconventional tight oil and gas formations offer rapid payback for a small initial investment Capital invested is often returned within two years allowing price risk to be hedged in the futures market Moreover in crude oil the U S is now the global swing producer To see why consider the thinking behind the 1 trillion in cuts to exploration budgets Conventional oil projects involve a large up front capital commitment with a long payback period during which the overall profitability will be exposed to oil prices Since the futures market only offers liquidity out to 2 3 years oil drillers are As a result earlier this year the U S became the world s biggest crude oil producer basically long the oil market across geopolitics trade and the environment America s improved energy security is underwriting a more robust approach to Iran In the 1970s support for Israel in its wars against Arab states led to gas lines as OPEC flexed its muscle and imposed an oil embargo American exports of Liquified Natural Gas LNG are creating new trade opportunities with Asia where South Korea China and Japan are among our biggest buyers In spite of the escalating tariffs with China they recently exempted U S crude oil imports from a list of items subject to new tariffs Germany s plan to buy more natural gas from Russia via Nord Stream 2 is more easily criticized when U S LNG is available Trump s tweet What good is NATO if Germany is paying Russia billions of dollars for gas and energy is hard to fault American Shale gas has also contributed to the world s biggest reduction in CO2 emissions It s made possible the shift from coal to natural gas This represents a milestone in the path towards Assessing this risk now includes the 2014 16 oil in electricity generation The Shale revolution has American Energy Independence Only seven years been positive in so many ways price collapse which damaged the IRR on many ago U S output was less than six million Barrels prior investments A previously uncontemplated per Day MMB D and was in decline Horizontal All this means that the Shale Revolution was oil price is preventing many new projects from not luck The world s biggest and most dynamic being funded because it might repeat Yet the U S drilling and hydraulic fracturing unlocked the huge reserves in shale formations and the decline economy made it possible If it was going to shale producer ostensibly the instigator of the was arrested The EIA is now forecasting 2019 happen anywhere it was going to be in America excess supply pursues many small projects with production of 11 8 MMB D minor upfront expense a horizontal well now Simon Lack is Portfolio Manager at Catalyst costs on average less than 5 million mitigating It s an epic story with significant consequences MLP and Infrastructure Fund individual risk U S frackers may forego the Oilman Magazine January February 2019 OilmanMagazine com 13

OILMAN COLUMN Addressing the Paradigm Shift in the Oil Gas Industry By William Hill William Hill The oil and gas industry operates in some of the most physically and politically challenging environments imaginable Volatile market prices fluctuating demand stringent compliance and regulatory regimes and depleting resources are all heaping pressure on operators as they strive to succeed and thrive There are reasons to be optimistic however The industry is now a far cry from 2015 s precipitous drop in oil prices that bought decommissioning and lay offs But more still needs to be done by cost conscious operators to drive a major paradigm shift Recent news from oil and gas companies of steady growth and stability reflect market recovery in the sector This is further reflected in a KPMG report which noted that 85 percent of oil and gas CEOs had confidence in the industry s growth This looks set to be the biggest shift for operators Moody s 2018 outlook for the sector sounds a in the coming years According to the BP Energy similarly optimistic note reporting that upstream Outlook 2040 natural gas currently accounts for operators are starting to increase production in approximately 25 percent of the world s energy turn helping midstream businesses and service consumption and demand is predicted to grow providers Overall Moody predicts relative stability annually at a rate of one percent globally until for the integrated oil and gas business over the 2050 In China alone natural gas consumption next 12 18 months Further research by Wood surged 19 percent year on year in the first 11 Mackenzie shows that investment in the sector is months of 2017 this was further driven by expected to rise environmental policies introduced by the Chinese Government to encourage the switch from coal State of the Market to gas All of this is happening against a backdrop of Growing demand for natural gas is driving change in the global energy mix Demand from China and emerging markets is driving a persistent companies to explore and extract in ever harsher and deeper environments where even the simplest increased need for natural gas Compared with other fossil fuels natural gas is largely regarded as of logistical tasks can be difficult and costly cleaner in relative terms to coal as it emits half as increasing the complexity of operations much carbon dioxide when burnt Conversely in a move seen by some as hedging 14 Oilman Magazine January February 2019 OilmanMagazine com Photos courtesy of GAC Group their bets major oil companies are beginning to diversify their portfolios and shift their focus towards the renewables sector and green technologies in response to continued uncertainty in oil and gas According to the BP Energy Outlook 2018 renewables are predicted to grow five fold over the next two decades jumping from a four percent share of the energy mix in 2016 to 14 percent in 2040 This is evident in the oil and gas sector where companies are stepping up their renewable energy commitments through acquisitions and investments in clean energy companies Cost Conscious Nonetheless the fact remains that the sector is more price driven than ever before exerting pressure on offshore service providers who form

OILMAN COLUMN the backbone of the industry s operations But it also presents opportunities for example operators are increasingly outsourcing projects and tasks that historically were managed in house in a bid to reduce costs and refocus on their core competencies As a direct result operators now need service providers who can offer key value added services and support day to day operations More importantly they want service providers with indepth knowledge of the industry as well as their partners and clients businesses that they can trust with complex and time sensitive tasks Opportunity From Innovation Service providers must also recognize that innovation for the sector can be what sets them above the crowd as more tasks are outsourced Digitalization is now recognized as a force for business change According to the IDC FutureScape Worldwide Oil and Gas 2018 predictions published in December 2017 Seventy five percent of all oil and gas companies will at least have digital transformation initiatives in full operation deploying cloud big data and analytics process automation or IoT Internet of Things for the organization to advance their IT environment by the end of 2018 Technology coupled with the global environmental drive to reduce emissions is now fundamentally altering the sector The industry must understand that data is now both a commercial driver and a commodity in its own right Access to real time data and innovative technologies can help companies be more successful in exploration production and monitoring For example the ability to remotely monitor oil fields could help avoid costly downtime Operators expectations of their service partners level of technology adoption is higher than before With more than 300 offices in 50 countries GAC collates an immense amount of data every day It uses technology and tailor made systems to better manage that data and streamline day to day operations to optimize efficiency while ensuring cost savings for customers GAC is also exploring how to roll out IoT systems for its marine fleet which supports the offshore industry enabling the Group to commoditize data even further Future of Oil and Gas Service providers must change to keep in step with the transforming industry Digitalization and outsourcing present key challenges to the accepted operational norms of oil and gas With cost still the watchword for the sector service providers are now being expected to do more for less The sector is undergoing unprecedented change and a radical transformation of the industry has begun Proactively adapting to the changing landscape through a combination of local market knowledge digitalization and other services providers can deliver significant value adds for operators while differentiating themselves in a fiercely competitive market America s 2019 Energy Watch List By Mark A Stansberry The beginning of 2018 my column America s 2018 Energy Watch List presented the moving parts which I believed would be the main focus regarding energy issues and policies At that time among the moving parts were President Trump and the Republican led Congress OPEC and the supporting non OPEC countries jobs investments in the oil and gas sector IPOs mergers and acquisitions LNG natural gas and supply demand among other areas of my daily focus Here are important parts of my 2019 Energy Watch list President Trump a Republican led U S Senate and a Democrat led House of Representatives A lot has been implemented and eliminated over the past two years 2017 and 2018 President Trump s plans have included development of regulatory and legislative initiatives rescinding Obama s executive actions and regulations that were outdated and lifting moratoriums on energy production in federal areas In 2019 because of the divided federal government I don t envision any comprehensive energy legislation Oil Crude oil production in the U S reached record proportions in 2018 according to the EIA Energy Information Administration Production in October 2018 was 11 4 million barrels per day b d This is a substantial increase from the 9 4 million b d of 2017 EIA is projecting 12 1 million b d in 2019 LNG Natural Gas In 2019 investments will continue in the building of our nation s LNG infrastructure Natural gas is leading the transition for the U S as a net exporter primarily due to the LNG efforts in the Gulf Coast region The EIA forecasts a wide range in prices for natural gas of 2 06 MMBtu and 4 94 MMBtu in 2019 Cybersecurity and the Digital Transformation Cybersecurity efforts will continue in the energy industry Look for more private public partnering in cybersecurity initiatives It is projected that there will be a major increase in investments in the U S oil and gas industry in data management and analytics Infrastructure There is a great need for the nation s energy infrastructure Look for more investments and projects beginning in 2019 However it is projected that the U S House of Representatives will not make all the necessary efforts to address the environmental laws which are standing in the way of developmental progress Geopolitical Trade Again geopolitical tensions along with cooperation will be at the forefront Also OPEC Non OPEC countries Russia Mark A Stansberry PR China jobs IPOs M A offshore drilling energy education regulations taxes environmental transportation weather power generation coal nuclear wind solar media will continue to be of focus National Energy Talk NET National Energy Talk an Energy Advocate Initiative was launched July 31 2017 in Elk City Oklahoma and meetings have been held in Tulsa Edmond and Oklahoma City along with presentations in Houston Denver and other cities In 2019 NET will continue its efforts as a platform engaging a national energy dialogue Go to Facebook National Energy Talk to support learn more about NET Oilman Magazine January February 2019 OilmanMagazine com 15

OILMAN COLUMN AI Machine Learning The Next Transformation for Oil Gas By Shane Randolph and Jim McBride Since its inception technology has driven the development and transformation of the oil and gas industry Technologies to locate and extract oil and gas reserves enabled the shale revolution and a new revolution is around the corner for oil and gas exploration and production companies While it might sound like something from science fiction AI Artificial Intelligence and machine learning have the potential to reshape the oil and gas exploration and production landscape Once viewed as a novelty AI and machine learning are not far away from becoming mainstream for all exploration and production companies The following discusses what AI and machine learning are and discusses applications for the oil and gas industry steps to solve the specific problem The historical approach for computers to solve problems was more akin to a knowledge based approach which would be a rules based approach with millions of lines of code to solve the problem An approach utilizing AI could include discrete rules based frameworks but it also could include code giving the software the ability to learn and to assess circumstances in order to solve the problem Unique Opportunity for Oil Gas All problems are not created equal which provides a unique opportunity for the oil and gas industry Some business models have a dependency on human emotion meaning that solving problems must consider the potential paths of emotional What Exactly is Machine Learning AI reactions Human emotion remains the one variable Machine learning and AI allow computers to in modeling that is very difficult if not impossible assess large volumes of data and make decisions to accurately predict However outside of some to solve problems in a manner that is similar to aspects of trading activities oil and gas companies how the human brain does it However it is done have numerous other challenges and problems to more efficiently and without tiring Both AI and solve that are not as reliant on human emotion machine learning are designed in such a way that This is a driving factor behind why almost every they can learn and improve as new data is provided energy supermajor and large public exploration Therefore it continually gets better at forecasting and production company is making significant outcomes based on new data without new investments in AI Some estimate that the oil and programming gas investment for AI will reach 3 billion by 2022 A computer having the ability to assess and solve a problem may sound like something from a science fiction movie which is the case for general AI rather than applied AI General AI possesses the characteristics of human intelligence including natural language processing ability to plan recognize objects and reason While some are still trying to develop general AI most of the AI applications today focus on applied AI Applied AI is a form of AI that replicates some form s of human intelligence for a dedicated purpose and that dedicated purpose could be solving a specific problem for an oil and gas exploration and production company Some of these investments are focused on backoffice accounting and finance activities however the majority of the investment has been in operations since the return on investment potential is higher In the exploration and production space it can be challenging making sense of extensive amounts of data for valve positions pump speeds pressures at different places in the system temperatures and flow rates etc Decision makers reviewing the data might be using it in a simplified manner or not at all AI allows companies to review the data in a shorter amount of time discover patterns that likely were not previously observable and determine the best course of action One way to understand AI and machine learning is to break down the difference between intelligence learning and knowledge Learning and knowledge are both components of intelligence Let s assume that you had to solve a problem such as fixing a flat tire on your car In order to solve the problem you need intelligence which includes knowledge and the ability to learn Knowledge is having solved the problem before and knowing the discrete steps to solve the problem again However learning doesn t necessarily require that you have had solved the problem before If you can learn then you possess the ability to solve problems Learning is often considered a framework where you draw from similar experiences and then develop the discrete The potential applications for exploration and production companies seem limitless The International Energy Agency estimates widespread use of digital technologies could increase oil and gas reserves by about five percent and reduce production costs by 10 percent to 20 percent AI and machine learning can allow companies to optimize well design drilling and completion and even use machines to carry out dangerous tasks on an unmanned basis It can improve oil and gas production rates and lower lifting costs With advances in machine learning and AI tools can now be used to troubleshoot underperforming wells enhance reservoir modeling and carry out preventative maintenance before problems arise 16 Oilman Magazine January February 2019 OilmanMagazine com Illustration courtesy of Jrg Schiemann www 123RF com Shale resource development is an excellent laboratory for AI and machine learning given its high intensity of repeatable activities and its much shorter investment cycle The applications of AI and machine learning have the ability to further drive down shale resource finding and development costs allowing shale resources to remain highly competitive in the global energy market Some beta tests in drilling programs are noting better results with AI than with 40 year veteran geologist and petroleum engineers Making asset acquisitions can be a time consuming and challenging process Publicly available court records land data and production information can now be reviewed in a manner previously not considered possible Residential real estate companies are already utilizing AI in a similar manner to review vast amounts of court records and listing information to identify optimal acquisitions AI will soon be utilized by energy companies to identify optimal locations by considering interactions with existing nearby wells and other factors In conclusion early adopters of AI will likely develop a significant competitive advantage and the adoption rate of new technology is exponentially faster than it was a few decades ago Mainstream adoption of these new technologies is expected in the next three to five years Companies will soon experience significant efficiencies that will translate into competitive advantages It is likely time to consider how your company could begin to harness these technologies to remain competitive Jim McBride Founder McBride Company a privately owned company based in Houston that advises and invests in the energy industry He currently serves as a Board Member of the Independent Petroleum Association of America IPAA and on the Loyola University of New Orleans Board of Trustees

FEATURE Illustration and photos courtesy of Merdian Energy Group Going Green in the Bakken By Sarah Skinner For years the Bakken has been known to be a major oil and gas hub and it is the third largest U S shale oil field behind the Permian Basin and Eagle Ford in Texas Primarily located in North Dakota it also runs through Montana and two Canadian provinces Manitoba and Saskatchewan Because of the oil play there McDonalds workers have been known to make upwards of 20 per hour to accommodate the high numbers of clientele You can also buy shirts there that say Rockin the Bakken It s a hot place to be not really it s actually fairly cold but with 3 65 billion barrels of recoverable crude oil under its surface it is definitely a hot spot for companies wanting to conduct business there 18 Location The advantageous Bakken location was not lost on Meridian Energy Group Inc a leading developer of innovative advanced technology and environmentally compliant oil refining facilities as they are currently in the process of building a state of the art crude oil refinery on over 700 acres of land actual refinery footprint is about 150 acres near Belfield North Dakota the heart of the Bakken The Davis Refinery will be located close to oil and gas pipelines and major transportation highways The Burlington Northern Santa Fe rail line runs directly through the refinery site facilitating the construction of a crude oil feedstock offloading Oilman Magazine January February 2019 OilmanMagazine com and refined fuels uploading terminal Its location is strategic placing it with direct access to major transportation infrastructure While the location of the refinery seems ideal in most respects it was the location that stirred up controversy among the surrounding community because of its proximity to Theodore Roosevelt National Park The Park is the state s top tourist attraction and it brings in more than 700 000 people each year Pollution from the refinery which needed to meet Class 1 air quality regulations was a major concern among several environmental groups and they made sure their opposition was clearly stated

FEATURE Advantages The Davis Refinery will be the first full conversion greenfield refinery constructed in the U S since 1976 As a new modern plant the refinery will have all new equipment configured in the most efficient manner Currently more than 1 2 million barrels of oil are being produced in the Bakken every day Over 95 percent of it is being shipped at great expense to refineries hundreds of miles away on the east west and gulf coasts The current refining capacity in North Dakota is 94 000 barrels per day Locating the Davis Refinery in the heart of the Bakken will ensure a steady supply of below market crude oil feedstock from production companies seeking transportation savings and a local market for refined fuels Davis Refinery site with design schematic Permitting In July of 2016 Meridian was granted the Conditional Use Permit for the refinery it took them just under a year to have it approved and the approval was done so under much scrutiny After the permit was granted Meridian could begin the engineering and modeling necessary for the Air Quality Permit which they filed to the North Dakota Department of Health Air Quality Division in October of 2016 We then entered into probably one of the most intensive permitting efforts that the state of North Dakota has ever seen It was our contention that the Davis Refinery could achieve emissions levels so low that would allow it to be permitted as a Synthetic Minor Source even though the thought of doing it that way was considered heresy since all of the full conversion refineries were supposed to be Major Sources said William Prentice CEO of Meridian Energy Group It took many months to get the Air Quality Division to see what Meridian was trying to achieve and how all of it worked technically It was vital that they proved that they weren t just fantasizing about the emissions levels that could be obtained Our emissions coming out of this plant were tremendously low There was no expectation that we could actually achieve that said Prentice After the initial effort of showing the state what they could do on the permit for the air quality Meridian realized that they could do better than what was previously proposed in October 2016 Certain areas of the project were re engineered and another design concept came about that was even cleaner The modified application was resubmitted in April 2017 The state went through the process of reviewing it and met with EPA regularly throughout the review to make sure they were complying with all of their guidelines and proposed regulations The Department of Health even met with the National Parks Service regularly as well The draft Permit to Construct was received in fall of 2017 showing that the Davis Refinery would be permitted as a Synthetic Minor Source This was the first time in history that a full conversion refinery has been able to receive its Permit to Construct under classification as a Synthetic Minor Source for air contaminants This was definitely a historic event and an incredible achievement for Meridian As part of the Permit to Construct process in December of 2017 Meridian went through a public comment period with a public hearing As part of the public review process the Department of Health received nearly 11 000 public comments and each and every one was answered by Meridian and the Department of Health After 20 months and probably the most lawyered permit application in the history of the state the Permit to Construct was issued by the North Dakota Department of Health Air Quality Division in June 2018 The co production of a significant amount of natural gas has been the byproduct of the tremendous growth of the Bakken oil play About one third of this gas is currently being flared vented or is no bid and is available to Meridian at a cost well below hub prices paid by competing refineries The use of gas to operate the plant will allow 100 percent of the crude intake to be processed without a parasitic effect The plant will have emissions so low that it will not require an EPA permit In addition to environmental advantages there are many advantages that the community will see as well because of this project Over 2 000 local jobs will be created in the community and Meridian has asked for no tax breaks and according to Prentice We would not take them even if they were offered to us They want to be good corporate neighbors and an asset to Billings County Meridian s presence is an integral part of the state s plan to solve three major issues it faces the creation of permanent jobs the shortage of diesel fuel and the environmental crisis of the flaring of natural gas Starting Construction Meridian recently entered into an agreement with CIBC World Markets Corp CIBC and they will act as Meridian s financial advisor for the refinery along with another major investment banking firm CIBC will assist in structuring and arranging for both debt and equity transactions for the full project CIBC is a market leader in providing corporate finance and advisory services and has decades of experience in major energy project financing in general across the oil and gas value chain with unique market insights and creative solutions for all downstream capital needs Meridian has raised a significant portion of project financing to this point and will continue to raise development financing for completion of pre EPC work Continued on next page Oilman Magazine January February 2019 OilmanMagazine com 19

FEATURE In addition on December 5 2018 Meridian signed an agreement with McDermott International to be the Front End Engineering Design FEED contractor on the refinery In our initial work after the McDermott signing we really lucked out We have a great partner and their enthusiasm for the project is phenomenal and all the people assigned to it are first rate says Prentice Following the completion of the FEED effort the Parties will be prepared to enter into a comprehensive turnkey Engineering Procurement and Construction EPC agreement to build the refinery McDermott is a premier fully integrated provider of technology engineering and construction solutions to the energy industry Meridian has initiated site preparation and grading at the Davis site and is proceeding with final design and equipment fabrication and procurement with full construction activities and foundation work resuming in Spring 2019 Looking to the Future According to Prentice 2019 is a very critical and formative portion of this project With the McDermott team they are looking to get a fast start in the beginning of the new year In the next four or five months Meridian will be wrapping up engineering and getting the full EPC finalized Closing on the financing will take place toward the end of the second quarter The rest of 2019 will be spent in fabrication and construction getting as much steel up in the air as we can before we have to button it up for winter conditions says Prentice As materials equipment and modules are finished they will pull them up to North Dakota even over the winter and have them collected there and ready for when warmer conditions return In North Dakota right now all of Meridian s supporters are unable to see the team of people Davis Refinery site 700 acres North Dakota working feverishly in offices behind the scenes to get this project kicked off So much activity is taking place in Meridian s Houston and California offices and McDermott s Houston office it s just not physically visible on site yet The exciting thing is when this all starts to take shape on the ground and people get to see pipe racks and modules being set says Prentice The plan for all of 2020 will be finishing construction and getting mechanical completion startup and completion Full commercial operation of the refinery is expected in late 2020 or early 2021 Making History Meridian Energy Group is indeed making history as nothing like this refinery has ever come before it It has been a bit of a long road SUBSCRIBE TODAY Get the Oil Gas news and data you need in a magazine you ll be proud to read To subscribe complete a quick form online OilmanMagazine com subscribe Questions Call or email anytime Editor OilmanMagazine com 800 562 2340 Ex 5 20 Oilman Magazine January February 2019 OilmanMagazine com and was met with opposition in the beginning but ultimately the verdict was handed down and the Davis Refinery is a positive thing for this community It is a win for both the state of North Dakota and Meridian Energy Group Inc Rest assured that even though the Davis Refinery is the first of its kind it definitely will not be the last When you build something that has a near zero environmental impact and it can be qualified as the first synthetic minor source in history for a refinery of its size you have no choice but to replicate it and that is exactly what Meridian intends to do They have permitting currently taking place in a location that has yet to be disclosed but anticipate it all being released in the near future Meridian has truly raised the proverbial bar and hopefully set the new standard for not only oil refining but the entire oil and gas industry as a whole

Are Proud To Host April 2 3 2019 Irving Convention Center Irving Texas Showcase Your Company at the Alliance Expo 10 x 10 10 x 10 1 595 For Alliance Members Early Registration Discount Payment rec d by Jan 31 2019 1 995 For Non Members Early Registration Discount Payment rec d by Jan 31 2019 10 x 20 10 x 20 2 425 For Alliance Members Early Registration Discount Payment rec d by Jan 31 2019 3 100 For Non Members Early Registration Discount Payment rec d by Jan 31 2019 20 x 20 20 x 20 4 575 For Alliance Members Early Registration Discount Payment rec d by Jan 31 2019 5 295 For Non Members Early Registration Discount Payment rec d by Jan 31 2019 Additional exhibit booth sizes are also available Call for details Benefits Include Booth cost includes booth drape I D sign one 6 ft skirted table two chairs wastebasket and two 2 tickets to the Country Western Barbecue for each 10 x10 booth that is paid in full Exhibitors receive discounted ticket cost for the Breakfast Luncheon Non member cost also includes 1 year Basic individual membership to the Texas Alliance 240 Value for a 10 x10 booth that is paid in full Larger booths will receive higher level membership Opportunity to meet one on one with top industry professionals No extra cost for booth personnel name badges if ordered in advance of event Opportunity to provide marketing materials for attendee bags For more information contact Donna Brown at donnab texasalliance org Jo Ann Baker at joannb texasalliance org www texasalliance org

OILMAN COLUMN AviSight C3UBE Photos courtesy of AviSight Revolutionizing Pipeline Safety with Midstream Oil and Gas Inspections By Chris Knight and Dan Dirksen It seems that initial impressions and preliminary promises of the efficiency gains from utilizing UAS Unmanned Aircraft Systems has lost its luster in recent years due to bureaucratic bottlenecks and increased safety concerns The promises from the UAS industry about taking over every use case they could think of from commercial package delivery to industrial inspections has faded as these intentional roadblocks have been put in place or has it The rapid expansion of these technologies on the frontlines of the industry have been prolific the increasing availability of UAS solutions are becoming even more readily available We are seeing technologies that were previously only available to industrial applications becoming more available in the consumer space The companies in the oil and gas industry are openly embracing these rapid advances in UAS technology are beginning to enjoying the benefits The reality of all of this is that UAS technology is here to stay and specialized companies are cropping up all over offering industry specific expertise and guidance that are readily providing safer and more efficient solutions and workflows that offer massive efficiencies and gains over age old techniques based infrastructure inspections to many versions of advanced sensors The capabilities of these advanced sensor packages range from complex solutions such as LiDAR with 2 3 centimeter of absolute accuracy to 30 times zoom electrooptical cameras that can see even the smallest of incursions for right of way inspections Traditionally right of way inspections are performed either by a crew walking or driving trucks and ATVs All Terrain Vehicles through the corridors another option to complete these is by flying the pipeline with a manned helicopter or fixed wing aircraft Typically visual inspections are sufficient in identifying standard anomalies any suspected issues can then be further investigated using more sophisticated sensor packages when needed If an anomaly is detected during these inspections as much observational data as possible is collected in the field to determine that the inspection team has the proper data set to make an informed decision This is usually based on the experience of the inspector or the direction of What does this mean for the oil and gas industry today It s really quite simple this means midstream pipeline inspections are becoming cheaper safer and more reliant as robust fused sensor data solutions are coupled with advanced data analysis to generate reports that are beyond what was thought even possible in the recent past This is attained through the utilization of several technologies that are emerging at the forefront of all technology based companies From the utilization of AI Artificial Intelligence data analysis real time data video processing and aerial 22 Oilman Magazine January February 2019 OilmanMagazine com the pipeline operator who is at a remote location After the analysis is performed a report from these inspections is distributed that details any anomalies found At this point the data is then sent to the pipeline operator for decision making authority and corrective action generation This end report typically includes the Pipeline Name Date Time of anomaly Location a description of each observation and any previously reported observations as well as a photo of the observation Advancing on this dynamic slightly is the typical commercial UAS based inspection operation which takes place with a laptop on a field table This type of agile small footprint setup is great for capturing small area inspections It s also a great fit when most UAS systems have a maximum endurance of about 45 minutes of total operating time The actual on target inspection time is much smaller than that due to safety limitations of battery life and other environmental impacts It also makes swapping delicate sensors charging batteries protecting equipment from field environmental

OILMAN COLUMN conditions difficult and sometimes impossible And as far as reporting goes you can expect the same subjective data to be provided through the traditional methods The efficiency gains are obvious but this clearly still has its limitations self contained climate controlled environment with a separate room for UAS storage and maintenance along with redundant self sufficient power that ensures that the crew doesn t lose an inspection due to a power outage The UAS would collect data while flying for up to five hours and deliver realUnfortunately with the midstream oil and gas time video with AI object detection The AI would industry having millions of miles of pipeline be capable of autonomously identifying pipeline requiring inspection this approach isn t capable of right of way incursions for erosion encroachment creating the efficiency gains needed to truly advance leaks and damaged or missing pipeline markers and revolutionize the industry To the contrary it s All of this data can be consumed in real time with creating more data to analyze and more questions the option of the pipeline operator giving real time regarding how much further investigation needs guidance to ensure critical data is collected the first to take place before the Pipeline Operator feels time every time The solution provides video snips confident making a decision The economics and still images with embedded GIS files that will of midstream oil and gas make it necessary that be delivered in a report detailing the anomalies companies pay just enough to ensure there aren t identified What was just described is AviSight s failure conditions and not a penny more This Live Look Fault Vision operating out of the drives for inspection with purpose that creates C3UBE mobile command center actionable data not a reason to schedule another inspection This industrial inspection revolution isn t just about teleporting the expertise to the field without Imagine having a mobile command center to fly ever leaving the office but it is also about providing these UAS s that is capable of supporting a pilot more actionable data to the data analysis experts and sensor operator for hours of operation in a on a more efficient timeline For example imagine a right of way inspection that identifies a tractor nearby the corridor Does this mean there exists the potential for corridor incursion With only a single still photograph along with the same object identified in a previous inspection being the only information that the Pipeline Operator has to act on it s only reasonable to further investigate It is also fair to assume that tractor was somehow missed in the last inspection But when you add AI software that can look back at every snapshot ever taken and tell you that with 99 9 percent certainty that what you see is a tractor near the corridor and the software has determined that there is a 0 01 percent chance of creating a corridor incursion because it s been there for the last ten years You are now making decisions on actionable data and not reviewing inspections that create more questions The inspection revolution has begun and the midstream pipeline companies that are embracing this new technology are making more informed decisions and creating the best results by utilizing these advanced technologies that take advantage of all of the information available to the enterprise Now AvAil Able The Crude life CloThiNg www shirTsiCle Com TheCrudelife Oilman Magazine January February 2019 OilmanMagazine com 23

OILMAN COLUMN Photo courtesy of Leo Wolfert www 123RF com The Effect of Accounting Software on Energy Operations and Profits By Tonae Hamilton The oil and gas industry has seen an influx of technological developments in recent years which have significantly impacted the way oil companies operate and how the industry is viewed as a whole Once looked upon as traditional and stagnant the oil and gas industry is increasingly taking more modern approaches to how processes are performed From revamping how oil is excavated to implementing smart safety practices the oil industry has seen many positive changes Nowadays energy companies are integrating accounting and financial software into their initiatives to better manage their profitability and better understand the value of their assets Waterfield Energy is a prime example of a company integrating a financial software platform into their operations This Houstonbased energy company is a leading provider of advanced oil and gas software and is among one of the first to utilize a financial accounting module to further achieve their goal of acquiring upstream assets Pete Waldroop the Chief Executive Officer CEO of Waterfield Energy provided his insight on accounting and financial software and what it means for his company and for the oil and gas industry overall 24 Having over 27 years of experience in software consulting and the energy business Waldroop was asked why accounting and financial software is important to have and what is its significance to the energy industry Waldroop expressed how the industry is a highly complex business that involves thousands of owners within a single well and that because of it there is great potential for errors and significant financial penalties Energy accounting software should do a few key things empower users alleviate risk and strengthen the bottom line That hasn t happened in the industry for a while and improvements were and are needed said Waldroop When asked what made Waterfield Energy decide to invest in energy software Waldroop said There was an opportunity in the space to create new software and technology to tackle complex problems in the industry The other companies in this space weren t doing it Just because something has always been done a certain way doesn t mean it should be done that way Waldroop also expressed how much technology has evolved across the energy industry but not in the area of energy accounting software until now We saw how Oilman Magazine January February 2019 OilmanMagazine com slow processing speeds still are 30 years after most of our competitors delivered first versions of their software and said there s room for improvement said Waldroop Waldroop was also asked to share the types of software and technological innovations Waterfield Energy has created to improve energy operations and how it has benefited or will benefit clients and consumers He stated A common complaint in our industry is that it s very difficult to access the data that led to certain calculations To combat this we created WE Calculation Trace WE Calculation trace walks you through how the system derived settlement values eliminating the need to spend a lot of cycles researching how the value was derived Waldroop went on to express how other solutions often depend on teams of people to support royalty calls He explained how the number of individuals needed are drastically reduced with their solution Waldroop also shared details on another innovation Waterfield Energy has established We re really excited about our WE Asset builder which is a graphical representation of product movement from the wellhead to the delivery point s i e processing plant or into a transmission line The oos and ahs

OILMAN COLUMN heard when industry professionals get to see these technology advancements just show how starved the industry was for software to catch up to today s standards said Waldroop He described how their users run processes 150 times faster than the next leading energy software competitor and how traditionally a user would start a process to run for eight hours overnight Now they can run that same process in about three minutes said Waldroop When asked to describe any improvements he s witnessed in the oil industry over the past decade since the integration of accounting and financial software Waldroop stated Energy accounting software has been around for decades but because it hadn t evolved during that time the younger software workforce developers engineers implementers etc were seeking careers in other industries Thankfully at Waterfield we ve had a different experience because we re saying to the younger workforce If you want a chance to innovate and create the latest and greatest in software we want you on our team Waldroop went on to state how empowering the workforce has given them Waterfield Energy the opportunity to create better software As a result we ve created a modern software product with a user interface that s comparable to the technologies we use in our everyday lives said Waldroop When asked to share what software he s most excited for consumers to use Waldroop stated we are really excited about our fully integrated Upstream ERP solution We ve built this package completely from scratch including new solutions for financial accounting revenue accounting cost accounting land management and GIS We partnered with leading energy companies to create the next generation product and it is amazing Waterfield Energy like other energy companies is continuously innovating but as Waldroop expressed they are just getting started on bringing the best in energy accounting software to the market When asked what other developments he d like to see happen in the oil and gas industry Waldroop said It would be great to see the industry be less reactive to price sensitivity and more proactive to price planning A lot happens in this industry that s out of our control and it s that reason that the industry needs to keep producing technology that minimizes the impact of those external factors 2019 Governor s Race And Then There Were Three By Gifford Briggs Louisiana is a unique state notable among the others in the nation We are known for our exquisite Cajun cuisine a football coach with an often indiscernible southern dialect and a colorful political climate with seemingly endless elections Governor in that it did not take long for a flurry of names to arise Currently there are two announced challengers to Governor Edwards Eddie Rispone and Dr Ralph Abraham and a few that have not settled on whether they are running or not It can be hard to get excited about these elections considering we seem to go to the polls every few months We just completed a statewide election December 8th and not even three months from now people will be headed back to the polls to fill seven open positions for State Representative However Louisiana cannot afford to take their eyes off the ball or fall asleep at the wheel because the main event is here The first individual to announce his candidacy was the founder and chairman of ISC Constructors in Baton Rouge Eddie Rispone Mr Rispone brings a fresh and business minded perspective to governing the state of Louisiana Starting his career by wiring air condition units in high school he has since gone on to build ISC Construction which is a very successful business that employs thousands Mr Rispone has been heavily involved in education reform throughout Louisiana When asked why he has decided to run Mr Rispone responded I think we can do better I know we can do better For months now everyone just knew that the 2019 Governor s election was going to be a John Kennedy vs John Bel Edwards matchup Polls were being run plans being laid out and checks being cashed in anticipation of this heavy weight matchup with historical last names As is often the case with Louisiana politics Kennedy pulled a December shocker and announced that he was going to stay in the U S Senate and forgo the chance to take the helm at the State Capitol The immediate responses varied from frustration to excitement but quickly began to shift to the other challengers to Governor John Bel Edwards if not Kennedy then who It was good news for those that wish to see a challenger to the The second candidate to announce also has an impressive resume and currently represents Louisiana s 5th Congressional District in the Northeast corner of the state Dr Ralph Abraham Not only is he a Congressman he is a doctor a veteran a veterinarian a farmer in Richland parish and a pilot who still runs occasional missions for the U S Coast Guard Dr Abraham has a proven track record and brings real world application to the policies and laws brought forth in D C Governor Edwards will be campaigning on his record as Governor this time around and will be a much different candidate than he was in 2015 The Governor has been touring the state touting Gifford Briggs economic indicators that support his re election Medicaid expansion and prison reform efforts in Louisiana as key reasons the people should support him for a second term What this all means for the oil and gas industry remains to be seen The industry is the backbone of Louisiana and arguably the industry that most represents the Spirit of Louisiana Candidates will surely make their pitch for support from one of the largest industries in the state All three of the announced candidates know the biggest issue facing the industry in Louisiana are Coastal and Legacy lawsuits They also know that Louisiana has the highest oil severance tax rate in the country The candidate s that bring solutions to these challenges solutions that can bring investment back from Texas and Mississippi into Louisiana have an opportunity to win the support of the industry Oilman Magazine January February 2019 OilmanMagazine com 25

OILMAN COLUMN Optimal Physical and Cyber Security in the Oil Gas and Energy Industry By Emmanuel Sullivan Both cyber and physical security are among the top priorities for every organization in the oil gas and energy sector especially due to the year on year rises of cybercrime Technology has a huge role to play here as all of these organizations are seeing adapting to automation and Information and Communication Technologies ICT Not only do these changes make their processes leaner and faster but also make their industrial and physical assets susceptible to cyber attacks The cybersecurity being employed in the oil gas and energy industry has seen a wide range of sophisticated attacks quite recently Attacks of the sort which are not only a breach of public infrastructure and corporate assets but also effectively disrupt safety As a result these breaches can cause these organizations loss of both reputation and life Another snowball effect of the very same breaches is an increase in the cost of oil gas and energy prices Complex Environments As we all know the oil gas and energy industry is quite reliant on a complex structure of refineries power grids power stations and pipelines All of these are inclusive of a wide array of valuable assets which could be very dangerous if they were ever to fall in the wrong hands If we were to think of all of these valuable assets and add on the Information Technology Infrastructure as well we might say that the complexity only seems to exponentially increase This is not the case however When operations and networks are driven with ADVERTISE WITH US Are you looking to expand your reach in the oil and gas marketplace Do you have a product or service that would benefit the industry If so we would like to speak with you We have a creative team that can design your ad Call us 800 562 2340 Ex 1 OilmanMagazine com advertise Advertising OilmanMagazine com 26 Oilman Magazine January February 2019 OilmanMagazine com the help of ICT procedures workflows and processes these industries can be seen operating and functioning in the most optimal manner That said securing this sensitive data alongside physical infrastructure is vital Simply because of the reason that these environments are so complex their security is usually broken down to two main components These include traditional forms of security which is then made to overlap with cyber security for industrial data Why though This is because industrial data is highly confidential and quite sensitive which is why it should be protected no matter what the cost The Threats The oil and gas industry are up against a wide

OILMAN COLUMN array of threats first of which is because their operations usually rely on third parties for large portions of their work This is because these companies quite commonly operate offshore by attaching activities with non state actors In these environments these operations tend to entice terrorists or similar kinds of factions who for their own cause will destroy deplete or disrupt these critical resources Once this has occurred critical infrastructural functions that rely on these resources are simultaneously sabotaged These infrastructures include smart cities plants airports and railways among many others In order to save themselves from these huge risks these industries employ fully electronic and digital environments in their processes These technologies can be seen ranging from pipeline shutdowns and shaft lifts all the way to ventilation systems and main access controls One can even say that virtually everything here is automated If these systems are attacked terrible disasters can occur which could include gas explosions trapped miners or the loss of oxygen all of which but lives and the business to risk Cyber security therefore becomes an essential part of the integrity of every organization in the industry a central point these organizations tend to transition easily Cyber Security Organizations in these industries have also formed consortiums of sorts for their cyber security needs An example of this is the 2004 forum called LOGIC Linking Oil and Gas Industry to Improve Cyber Security This forum was undertaken by Chevron Total Shell and British Petroleum BP for cyber security R D purposes We have already established that as an organization becomes smarter with technology their security needs tend to become heightened as well Security measures being used in these industries range from perimeter security all the way up to advanced threat protection systems These advanced systems include technologies that protect these organizations with the help of SCADA Supervisory Control and Data Acquisition IoT and Security Intelligence Monitoring Technologies among others All of these advanced and traditional security measures are implemented by these organizations from central point so as to address better management in regulatory requirements and address compliance This is because the risks associated to these security measures are endless They protect everything from hazardous material handling and health and safety practices to delivery and transport compliances and employee access rights That said when these measures are handled from Quite similarly some other energy companies have also come up with a forum called FIRST Forum for Incident Response and Security Team which is a cyber attack response team This coordination body was formed for the sake of any potential incident response from Private and Government sectors that belonged to somewhere around 61 countries With the help of such forums oil gas and energy companies now have the ability to leverage expertise and insights from security provider services while also remaining in the loop of all current happenings As a result these companies are technologically equipped by having a 360 degree view of security needs whether common or new FEBRUARY 27 28 2019 CALGARY North America s First Only Well Site Facilities Onshore Congress Comes To Canada s Energy Engineering Capital Calgary Design Build New Projects And Expand Existing Facilities Quickly Effectively Without Increasing Costs AN OILM E READERS Cutting Edge Technologies That Are Proving To Make A Difference To Bottom Lines Emission Reduction Systems Pipeline Leak Detection Separators Multiple Registration Options Make Sure You Don t Miss Out Subsidized E P Registration Rates Group Discounts For E Ps Vendors Sponsorship Exhibition Options MAGAZIN SAUseVDisE cou15nt Code OIL15 Fully Interactive Live Stream Option SOLUTIONS FOR THE REGION S FACILITIES DESIGN ENGINEERING CHALLENGES Every Dollar Is Important Learn new ways to design construct and make facilities perform better without increasing costs Get caught up on the latest construction processes and new technologies before you move ahead with design Build Facilities Better Cheaper Quicker Learn how to Simplify Your Designs To Improve Cost And Execution Schedules Find out how companies are integrating new process technology developments into their operational routines to Achieve Close To Zero Emissions And Lower Environmental Footprint www wellsite facilities canada shale com Oilman Magazine January February 2019 OilmanMagazine com 27

OILMAN COLUMN Fall Protection and Training in the Oil and Gas Industry By Bradley Dillon Protecting workers from falls is an important aspect in the extraction transportation and fixed facility refining of oil and gas The hierarchy of fall protection specifies that hazards should be eliminated or protected by passive systems such as guardrails when that isn t possible Fall Restraint and Fall Arrest systems help keep workers safe Arrest systems typically include an anchor body harness connector and a means for rescue in the event of a fall Systems for Fall Arrest should be simple to use and straight forward to maintain Ensuring proper training and selection of equipment is critical Fall Protection Hierarchy Each workplace application should be rigorously evaluated with the hierarchy of fall protection that is set forth by the ANSI American National Standard Institute Z359 2 Minimum Requirements for a Comprehensive Managed Fall Protection Program The essence of the hierarchy is to start at the top and only move further down the list of possible options if no other feasible means exist Here is an overview 1 Eliminate Complete removal of the fall hazard via design or process 2 Barrier Prevention of access to the fall hazard 3 Fall Restraint System that is properly configured to keep a worker s center of mass at least 1 5 feet away from a fall hazard 4 Fall Arrest System that is set up to safely stop a worker if a fall occurs The majority of a safety professional s time should be invested in eliminating hazards because it requires no effort for workers to be safe at all times An example of eliminating a hazard would be performing a routine visual inspection with a drone rather than by a worker on a ladder The second priority for a safety professional is to provide barriers which require minimal training and don t necessitate rescue plans Examples of barriers are erecting a guardrail around a platform edge or taking work that is being performed by a ladder and performing it in a guarded lift Fall Restraint systems have one huge advantage over Fall Arrest systems it is not possible for 28 a worker to fall if it is set up correctly Not having the risk of a fall means that a rescue plan isn t required One example of converting a system from Fall Arrest to Fall Restraint would be protecting a worker accessing a fivefoot wide walkway abutting a wall with fixed anchor points on one side and an unprotected edge on the other side If access to the walkway is performed with a six foot dual leg lanyard jumping from anchor to anchor then the worker is in Fall Arrest because there is a risk that they can access the unprotected edge To convert this application to Fall Restraint the worker needs to be positioned at all times so that they can t access the unprotected edge This can be accomplished by installing a continuous rigid rail system with travelling trolley and providing the worker with a threefoot non shock lanyard As the worker moves along the platform the trolley follows along and the lanyard keeps them safely positioned a couple of feet back from the unprotected edge Fall Arrest quite frankly is a last resort By allowing fall events to occur during the normal course of work a significant amount of preparation and training is required Starting with preparation care needs to be made to ensure that adequate fall clearances exist swing fall risks are considered and proper connecting equipment is selected As an example consider preparing to service light fixtures on a 20 foot by 20 foot square shaped unprotected platform that is accessed by climbing a ladder 50 feet and entering via a hatch with an anchor point in the center of the platform Now visualize looking at the top view of the platform and seeing that it is supported by four HSS columns that are located at the four tips of an imaginary plus sign and with four light fixtures located at the tips of an imaginary X Continuing to imagine the platform from the top view consider if the worker connects a rope between their harness and the center of platform anchor point so that they can access the four light fixtures What are the considerations of this Fall Arrest application 1 Fall clearances at 50 feet they should be more than adequate 2 Swing Fall in the event of a fall the worker is at risk from swinging the 10 feet from a corner X location and into one of the HSS beams location The impact from the swing fall could cause serious harm Oilman Magazine January February 2019 OilmanMagazine com 3 Connector in the event of a fall the rope may shear when it comes into contact with the unprotected edge An overhead davit could be installed to reduce the risk of the connector coming in contact with the edge It is critical that all instructions and labels from the manufacturer of fall protection connectors are evaluated to ensure that they are the proper product for a given application 4 Rescue after a fall event where the worker is arrested they will be suspended from the platform and will need to be rescued promptly A designated aerial lift that workers have been trained on specifically to rescue fallen workers from the unprotected platform is an example of an adequate rescue method that can be completed quickly Another means of rescue may include pre designated personnel utilizing descending equipment to perform an assisted rescue a method that requires extensive hands on training Training Training should focus on hands on product selection eliminating misuse understanding regulations identifying hazards and practicing rescue An intensive two or three day course commonly called Competent Person Training is the recommended starting point for training employees on fall protection systems Hands on training should include addressing applications that arise in the field by having it either performed on site or in mock facilities Examples of applications are ladder climbing confined space access and derrick maintenance Trainers should simulate these real world scenarios and break them into manageable steps that can be methodically managed This application specific process should start with working through the hierarchy of fall protection With all hazards identified they can be carefully considered and planned for Bradley Dillon is Vice President of Product Development at Pure Safety Group the largest independent provider of height safety products and services and parent company of Guardian Fall Protection Checkmate and Ty Flot

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OILMAN COLUMN Constructing a More Efficient Research Model Through Electronic Courthouse Records By Paul Cones The oil and gas industry has evolved tremendously over the years and so too has the landman profession Yet until recently landmen remained bound to their local courthouses for their research needs The title research process may have been effective but it was decidedly inefficient Today we ve reimagined the way landmen carry out their day to day jobs through the implementation of online document repositories Landmen can move beyond in person visits to their local County Clerk or Recorder offices to access a county s property records via a single internet search From Walk in Courthouse Visits For decades real property documents were stored at individual county courthouses first in deed mortgage and contract books and later via microfilm and microfiche As a result much of the title research process revolved around in person visits to individual County Clerk and Recorder offices Landmen were limited by their courthouses hours of operation as well as time spent traveling between courthouses and waiting for documents and indexes in essence their productivity was contingent on the availability of the documents they needed To Online Record Access In recent years several County Clerks and Recorders have begun to embrace electronic imaging over microfilm archiving However many counties have been reluctant to lose the income they d enjoyed from charging access to hard copy documents and thus slow to incorporate an online model of access Today there are over 3 000 County Recorder and Clerk offices throughout the country yet only a small percentage provide online image access But local courthouses aren t the only providers of online document access A number of private companies including CourthouseDirect com now offer online access to grantor grantee indexes and real property images from multiple counties in one centralized location In fact as one of the nation s largest courthouse document repositories CourthouseDirect com provides real property records for over 1 600 U S counties and counting In addition to standard county clerk documents like leases liens judgments and mortgages CourthouseDirect com also offers access to a wide variety of documents that landmen can use 30 to supplement their title chain research including Assumed Name records Birth and Death records Marriage and Divorce records Probate records Tax Assessor s and Appraisal District records Tax Utility and Subdivision Maps Electronic courthouse documents don t just give landmen instant access to property records from all over the country they also allow them to save the copies to their computers to refer back to as needed It s a far more efficient and costeffective solution than making multiple trips to individual county courthouses to perform ad hoc research Still some oil and gas professionals are hesitant to embrace digital records Here are three common concerns we ve heard from landmen in our industry along with three ways to address their needs through electronic courthouse records Online Record Concerns and Solutions 1 Online records aren t as accurate as physical records Despite the trend toward online public records some clients still harbor doubts over the quality of the data they contain However we ve found that online repositories like CourthouseDirect com can make the research process far more efficient and accurate than traditional books and microfiche alone It is not the practice of a data provider to alter records it obtains from counties but rather to enhance the records and make them easier to search In fact CourthouseDirect com works in concert with clerks and notifies them when errors such as a misspelling occurs In addition CourthouseDirect com builds title plants for title insurance companies who require a high degree of accuracy and up to date records 2 My client requires me to search records at the county courthouse Some clients mandate that title research be done in person at the courthouse Yet online document repositories need not be a replacement for in person title research rather they can be a powerful supplement to traditional research methods streamlining the process for clients and landmen alike At CourthouseDirect com we actively encourage Oilman Magazine January February 2019 OilmanMagazine com our clients to build out their initial run sheets using our online documents before confirming their results at a physical courthouse This approach allows them to meet client requirements to perform searches at the courthouse while saving considerable time and expense in the initial research stage savings they can pass on to their client The landman is able to save time while fulfilling the client s requirements and delivering a high quality research product 3 Online document costs are too expensive to reimburse Most landmen are reimbursed by their clients for the cost of travel to and from local courthouses but few have broached the subject of reimbursement for online document access In our experience producers are typically happy to replace the expense of mileage reimbursement for the cost of quality online records Not only do online documents tend to cost less than gas and overnight expenses but they allow the landman to spend less time in transit and more time researching What s more fewer travel expenses mean less administrative and accounting time for both the landman and the client allowing both parties to improve their productivity The Bottom Line Electronic data delivery has streamlined the research process for countless landmen while saving time and reimbursement expenses for their clients as well Research that once took days or even weeks to complete can now be done with online searches and without time spent traveling to the courthouse or waiting for indexes and documents Though some in the industry are still acclimating to the availability of digital records we believe their value can t be overstated Indeed online courthouse records are no longer the future of title research they re a very real requirement for constructing efficient and accurate chains of title Paul Cones is the President of CourthouseDirect com Mr Cones has been instrumental in implementing technology solutions for the title surveying and oil and gas industries by creating databases and document delivery systems used by most real estate professionals in Texas

We don t market to test the waters we hit the market to make waves Beachwood navigates teams to find deals that no one else can www beachwoodmarketing com 2828 NW 57th Street Suite 309 l Oklahoma City l 405 463 3214

OILMAN COLUMN Key Focus Areas in Pipeline Safety By Louis Krannich The pipeline industry continues to advance its processes to address the ever changing risks to pipeline infrastructure and when it comes to pipeline safety the work is never done By growing and maintaining a skilled workforce increasing process safety maturing risk management programs increasing operational efficiencies and searching for innovative ways to obtain and use pipeline data pipeline operators can raise the bar on pipeline safety year after year Hiring Training and Retaining Talent It takes an army of specialized workers to build and maintain America s pipeline infrastructure and these operators and technicians are at the heart of pipeline safety For years the industry has faced a shortage of skilled employees to meet the demand of pipeline growth and increasing maintenance requirements This dynamic has been exacerbated by intense competition in regional markets and a large number of experienced employees that are retiring As a result operators can find themselves in painful pricing wars with neighboring competitors over talent or investing time and money into training new employees only to have these employees leave before full productivity is reached The go to answer for this issue has been to develop an effective workforce strategy that lays the foundation for long term actions to attract talent and weather business cycles However this is sometimes easier said than done and it often requires years for the strategy to take shape and deliver results Operators can add a twist to the conventional workforce strategy by focusing not only on hiring more people but also on how work can be performed differently to free up capacity for existing resources As an example operators are starting to look for outsourced solutions for workstreams that have traditionally been performed in house such as the pipeline control room function Control room employees are vital to pipeline safety and efficiency Without controllers rapid recognition of safety issues and the ability to meet scheduled customer commitments is not possible Outsourcing the control room offers numerous benefits including immediate access to skilled resources low turnover and significant cost savings Establishing and Adhering to Operational Processes With so many unknown variables involved in pipeline operations robust operational 32 processes are a critical element for safe pipeline operations The pipeline community overall is committed to a goal of zero safety incidents which means the industry and public rely on each operator s safety processes Establishing comprehensive processes across an organization can be a Herculean effort but it is only half the battle Once processes are developed an operator must develop a mechanism to track adherence take corrective actions and adjust methods as conditions change Ultimately processes create a common understanding of expectations consistency in performing tasks and higher predictability of outcomes Process management can be a substantial operational and administrative challenge but the benefits to pipeline safety far outweigh the costs Organizations can t develop a mature process safety culture overnight but a little goes a long way and operators can recognize immediate benefits just by starting the conversation Operators looking to improve processes or interested in learning more about process safety management can utilize industry standards such as OSHA 1910 119 as a starting place Understanding Operational Risks to Prioritize Investments into Assets The inverse correlation between risk and safety is undeniable Organizations that are laser focused on understanding threats and risks prioritizing those risks and then investing in mitigations will significantly increase Oilman Magazine January February 2019 OilmanMagazine com Photo courtesy of Remote Operations Center operational safety Every year pipeline operators spend billions of dollars building new pipelines On top of these investments in new facilities operators are investing the same amount maintaining repairing and replacing existing pipelines From a financial perspective protecting those investments is important but protecting people that work or live near pipelines is paramount Any time a pipe loses containment of the product it is transporting there is a risk to human life Informal risk management is inherent in pipeline operations but most operators are doing much more to formalize their risk management processes and align risk management with company strategy and field execution The industry has taken a significant step forward in combining operational data with asset data and periodic inspection records to analyze risks by individual pipeline segment This information can directly inform the allocation of capital across assets to address the highest risks Threats and risks can change every day due to new data obtained from improved technologies external forces such as seismic activities increased populations near pipelines and timedependent threats such as corrosion As a result risk management is a continuous process that demands constant attention Increasing Operational Efficiency Often the term efficiencies relates to reducing budgets and cutting costs However being more

OILMAN COLUMN efficient should equate to doing more with existing resources getting more work done whether budgets go up stay the same or go down The need for more efficient operations has never been greater With increased competition in the pipeline and midstream space regulatory requirements continue to expand pipeline safety is a top priority for all operators and the public has aimed a spotlight on a once relatively hidden industry As organizations continue to seek innovative technologies and more efficient ways of getting work done savings can then be re invested in asset based opportunities or invest in growth opportunities The outcome is an industry that continues to grow while also increasing the safety of existing facilities The More You Know The More You Know is NBC Universal s long standing cross company public service initiative focused on education diversity health civic engagement and the environment Its title and concept ring especially true for pipeline operation The more quality information and data that s collected the better equipped pipeline operators are to understanding operating conditions and making informed decisions This is an exciting time for the industry when it comes to knowing more about pipeline assets and using that information to increase safety Advances in sensor technology networking and data aggregation allow a constant stream of diverse operational data to reach manned control rooms that monitor analyze and control pipeline safety 24 7 Aerial imagery coupled with sophisticated algorithms allow for the detection of safety issues on pipelines much faster than previously possible Every year inline and NDE inspection tools advance the ability to detect and size pipeline defects Ultimately we can t fix what we don t know and not knowing is not acceptable The industry should be very proud of the advances to date and continue to push to recognize more Louis Krannich CEO Remote Operations Center a leader in oil gas control room operations provides outsourced control room services to over 6 000 miles of pipelines spanning crude natural gas saltwater disposal and refined products With top talent rigorous process safety and robust infrastructure ROC delivers safe operations compliance with the latest control room regulations and operational cost savings To learn more visit www pipelineroc com or email info pipelineroc com Fifth Circuit Sets Dangerous Precedent for Oil and Gas Class Actions By Thomas G Ciarlone Jr In Seeligson v Devon Energy Production Co LP the Fifth Circuit reversed a Texas federal court s decision to certify a class of mineral lessors who had sued Devon Energy for the alleged underpayment of royalties While at first blush this may sound like a victory for the industry precisely the opposite is true of this appellate opinion that is by and large flying under the radar despite its unnerving potential to open the floodgates to a new wave of royalty class action litigation in the oil patch Devon had been selling production at the wellhead for a purchase price of 82 5 percent of the published industry index value of the residue gas and natural gas liquids to a related entity Devon Gas Services DGS The plaintiff lessors argued that this was a sham transaction that DGS was effectively being paid to process Devon s gas at a price a 17 5 percent share of production that was far above prevailing market rates According to the plaintiffs when an oil and gas lease is silent about the duty to market Texas law implies such a duty into the contract thereby requiring operators like Devon to act in good faith to secure the best price reasonably attainable In this author s view it is of no small moment that the mineral leases among the nine named plaintiffs were not nearly the same and indeed at least three of them explicitly addressed the operator s duty to market And this says nothing of the additional 4 143 leases that would be folded into the litigation upon the certification of the case as a class action One might have predicted therefore that the Fifth Circuit considered by many to be the single worst federal jurisdiction in which to file a class action would have fixated on Rule 23 s predominance and superiority requirements In other words because the gravamen of the complaint is the implied duty to market and since the thousands of lease forms across the class address the duty in a host of different ways the usually skeptical Fifth Circuit could have been expected to rule that certification is improper because common issues do not predominate over individual ones and thus that a class action would not vis a vis a series of smaller individual trials constitute a superior procedural mechanism for resolving the dispute Although the Fifth Circuit ultimately overturned the certification of the class for lack of predominance the basis for its ruling was surprisingly one dimensional In particular the appellate court s only criticism of the District Court s certification order was that it failed to take any cognizance of statuteof limitations defenses that would vary from one mineral lessor to the next By remanding to the trial court with only this narrow guidance the Fifth Circuit tacitly placed its imprimatur on the plaintiffs core theory that the proposed class survives Rule 23 scrutiny for implied duty claims notwithstanding the plethora of different lease forms in play notably including a variety of leases that explicitly treat the duty to market Although this was perhaps not what the Fifth Circuit intended the net effect will probably be to embolden the plaintiffs bar The Seeligson decision represents an unlikely result from a court that has historically been both antagonistic to the class device and sympathetic to the oil and gas industry Tom is a litigation partner in the Houston office of Kane Russell Coleman Logan PC where he leads the firm s energy practice group Tom is also the host of a weekly podcast on legal news and developments in the oil and gas industry available at www energylawroundup com and a video series on effective legal writing available at www theartofthebrief com Oilman Magazine January February 2019 OilmanMagazine com 33

OILMAN COLUMN Interview Colin Westmoreland SVP General Manager Market Research Drillinginfo By Tonae Hamilton Below is an interview with Colin Westmoreland The interview text has been left in tack with only minor grammatical adjustments Tonae Hamilton When and how did the idea of an Executive Deal Summary EDS platform come about Colin Westmoreland Following our acquisition of PLS and 1Derrick earlier this year we identified several opportunities to create new solutions that the marketplace does not offer and EDS is an excellent example The idea for EDS came out of several meetings I had with Drillinginfo PLS and 1Derrick customers who all provided the same feedback the culmination of their Drillinginfo PLS and 1Derrick workflows were very similar and that created extra work for them After generating reports in each platform they then had to spend hours merging them into one slide deck to present to their senior executives That manual time intensive process was unavoidable when they were working with three independent databases Integrating the Drillinginfo PLS and 1Derrick databases and analytics capabilities into one platform takes that workload off their shoulders and speeds the process for sourcing and analyzing the most critical factors that will inform decisions related to their own investments TH How does the merging of databases from Drillinginfo PLS and 1Derrick into one holistic database affect Drillinginfo s daily operations CW One of our top priorities immediately following the acquisitions was to begin the work on the back end to integrate the three platforms I m very proud of how the Drillinginfo PLS and 1Derrick teams have come together so quickly to build Executive Deal Summary and continue to collaborate 34 on the development of our new Drillinginfo M A Dealmaker Platform more on that later But from an operational standpoint the day to day work of collecting analyzing and reporting on the industry s M A activity continues across the Drillinginfo PLS and 1Derrick platforms EDS makes researching and using that information much easier for our customers TH How does Drillinginfo s EDS platform compare to other databases from energy companies CW We have combined historical experience in M A analysis and data with the strength of Drillinginfo production data into a single high value virtual vault of historical data that includes more than 2 5 million source slides Executive Deal Summary draws from it and from current market data such as production data and rigs and leases to create an easyto read publication No other company can build such an enormous library from scratch or match the speed at which we can now tap into our data stores to deliver an analysis of a significant new deal Combine that with the expertise of our team and you have something that was previously unavailable without first devoting a lot of manual effort to draw information and analysis from multiple sources TH In what ways does the EDS benefit investors and stakeholders CW Oil and gas industry investors and executives need the ability to quickly collect and analyze information relevant to a significant new transaction so they can make their decisions on their next steps before they lose the opportunity Deals can be won or lost in a matter of days But they typically must spend a week or longer researching analyzing and consolidating volumes of raw data from multiple sources As time ticks by the risk of a competitor snatching a new investment opportunity out of their hands increases The Executive Deal Summary platform eliminates that risk by delivering a concise yet detailed presentation less than 48 hours after the announcement of a significant investment transaction Oilman Magazine January February 2019 OilmanMagazine com TH Can you describe how the new EDS system contributes or might contribute to the advancement improvement of the energy industry CW We live in an age Colin Westmoreland where information is available in real time at our fingertips from breaking news to changing stock prices and sports scores The same should be true for O G company executives investors analysts and other industry players following pending or completed deals First mover access to information beating competitors to the data can be the difference in succeeding or missing out on a deal Yet too often conducting the most basic research requires spending days searching multiple sources and reading SEC filings financials market analyses and other data The data you need to evaluate deals is available but collecting it typically requires you or your research interns to spend days even weeks searching through multiple sources Drillinginfo is changing that by eliminating all that virtual legwork TH Is there anything else being developed to enhance the new EDS platform or is there something you d like to add on to it later CW We ll be adding new features and functionalities to Executive Deal Summary in the coming weeks and months It will also be a key feature of our new Drillinginfo M A Dealmaker Platform which is on schedule to launch early this year TH What are you most excited for subscribers to know about the EDS platform CW Just how comprehensive the publications that Executive Deal Summary produces are Each publication provides all relevant information such as total acreage drilling locations rig counts and net production impact It also places the new transaction in historical context by comparing it to relevant past deals Its unique capability to quickly compile such detailed reports will make it

OILMAN COLUMN invaluable to investors and senior executives not to mention their teams of researchers and analysts Also it s important to note that Executive Deal Summary is available at no additional cost to all subscribers of our M A database and it includes one click access to the additional data in the database itself TH Aside from the launching of the new EDS platform are there any other developments that will be launched in the near future that you can share CW I mentioned our new M A Dealmaker Platform earlier which will include Executive Deal Summary When it launches later this year it will represent the culmination of our efforts to integrate the Drillinginfo PLS and 1Derrick databases and technologies We re building a single pane of glass that will revolutionize how you research and evaluate potential and completed deals no matter what area of our industry you represent It will deliver a new depth of insight specific to the transactions that happen in the industry and delivered to a much broader audience including C level executives M A professionals and others who want more context around transactions With a couple clicks of your mouse or taps on your smartphone or tablet you will have all the data you need to make better informed decisions I have been chronicling our progress building the M A Dealmaker Platform in our blog and will continue posting updates to our dedicated landing page How to Get Deals Done in 2019 By Josh Robbins Between price volatility and the global economy most people are asking How do I get a deal done Because Beachwood is in the market all day every day I took some time to put together some quick guidelines to help you close in 2019 1 Use your company s costs in place of data you don t have access to Just because you don t know how much the seller spends on a pumper every month doesn t mean you can t make an aggressive offer Don t get caught up in the need for data and forget to make an offer 2 The person who says a number first doesn t lose This isn t 1973 Understand that in 2019 everyone has the same software and internal value propositions will have the biggest impact on the overall success of your offer Give a number Get Started 3 Be available and empathetic whether you are a buyer or a seller everyone has the same goal in mind dealing directly with the seller sending another bid after the auction closes only wastes your time energy and money 4 Don t get emotionally attached to an asset If the numbers work they work If they don t they don t Have the wherewithal to move forward whether that s with an offer or not 7 Stop bidding As a seller there are so many options to sell your assets that cost little to no money commission free alternatives like Beachwood As a buyer bidding on property is the quickest way not to close a deal in 2019 You must target market and contact sellers directly to make transactions happen 5 Strip pricing is a good guideline to build models with but don t pull an offer off the table based on a six percent change in price to try to renegotiate Pick a date to take over operations that everyone agrees on and pull the trigger quickly 8 Delegate the process Many hands make light work and that is very true in oil and gas acquisitions and divestitures Give your team specific tasks that are manageable and as the size of the deal grows so should the team 6 Sharpen your pencil on an offer never on a bid At the end of the day if you are not 9 There is no use entering talks of selling if you can t sell If there are aspects of Josh Robbins your company that are in a legal battle or a family discord etc just wait There will be a time to sell but it s not right now Work hard on finalizing the issues so that you can sell without worrying that the deal might fall through at any minute 10 There will be a significant amount of deals that will hit the market in 2019 Make sure you understand your operational expertise in an area and know with certainty that you need to be in or out of an area Operational efficiency can be the difference between making money and losing money I ll be looking for you at the closing table in 2019 Good luck Oilman Magazine January February 2019 OilmanMagazine com 35

OILMAN COLUMN After a Roller Coaster in 2018 the Future Looks Bright for Oil and Gas By Jason Spiess Stephen Robbins used only one word to describe his 2018 growth One word to describe our 2018 would be growth Stephen said We are extremely blessed to be having the year that we ve had period where the oil prices were growing steadily going up and steadily going up Then we hit this past month or so where the prices not only dropped they dropped a lot Royal Creek Consulting provides sales and business development services for service and supply companies in the oil and gas industry Scott is referring to the price drop of the lower 70 s to just under 50 in a 45 day period Stephen said their decision to focus on their customers and strengthening their relationship created a very positive environment for growth The focus to detail and service opened opportunities which lead to organically adding new customers I think the industry having to deal with this roller coaster of prices has really been difficult and has marked the year Scott said Stephen and wife April Robbins own Royal Creek Consulting and do the bulk of their work in the Permian Basin but are in a few other shale plays Overall 2018 was a year of redemption growth and an overall great year Stephen said Kevin Black co owner Creedence Energy Services saw similar success in the Bakken oil fields About a year ago we had just 16 employees and at the end of this year we will have about 45 employees Black said We ve more than doubled and almost tripled our workforce in the past year and we are really excited about the growth and opportunities Creedence Energy Services is an oil and gas acidizing and chemical service company based in Williston North Dakota Creedence has a full production chemical line ranging from H2S oil and gas scavenging to down hole chemistries Black said their focus is the Williston Basin Bakken but have recently been taking calls from the Permian Basin There s a demand for our services in the Permian Basin Black said That is an option that is on the table in 2019 Black added that they have already begun putting some of the preliminary wheels in motion for their transition into servicing multiple shale plays While some companies saw success in 2018 many did not and are ready for their turn in 2019 According to Dr Loren Scott last year was nothing short of a roller coaster ride however the next year looks promising for drillers I believe 2018 was the year of the roller coaster ride on prices Scott said We started out with a 36 Loren C Scott Scott is the founder of Loren C Scott Associates Inc which is a 35 year old firm that provides economic consulting and public speaking services for a wide range of clients Consulting activities include impact studies forecasting services analysis of policy proposals and general economic analyses Consulting clients include BP ExxonMobil Entergy Corporation J P Morgan Chase Capital One Financial Nucor Sasol and a diversity of others Scott also is Professor Emeritus of Economics at Louisiana State University Scott said another theme from 2018 was how the industry has increased their historic exporting of crude oil It has been interesting to watch how the market has started to figure out ways to get some of this crude oil into the international market Scott said First of all you have to get it from the Bakken or West Texas to the coast where it can be put on large tankers to be exported Scott added the exporting logistics become even more tricky The tricky thing once you get to the coast is how do you get it on large tankers because most of the ports in the United States with the exception of one that s the Louisiana Offshore Oil Port cannot handle very large crude carriers Scott said the big question for 2019 is where are prices going next I really think ultimately oil prices are going to go back up into the 70 s Scott said And the reason for that is because the Saudis and the Russians are just losing too much money at these prices Scott added the completion of processing plants and pipeline projects will dictate quite a bit for the Oilman Magazine January February 2019 OilmanMagazine com Photos courtesy of The Crude Life energy industry too Joe Dancy Oil Gas Natural Resources and Energy Center University of Oklahoma College of Law recently attended an executive energy panel of speakers to bring professionals up to speed on what is currently happening in energy and where it is heading He agrees with Scott on 2019 and sees more of a gradual increase for the energy economy over the next year The consensus from the panel of speakers was that the drilling activity wasn t going to be as robust as some people said or thought three or four months ago Dancy said Dancy has published more than seventy papers on the oil and gas industry written five textbooks on the energy or environmental sector and has been cited as legal authority in more than sixty articles institutes published case decisions and treatises He has also contributed dozens of columns to numerous newspapers and industry magazines and presented as a speaker at numerous academic and industry conferences According to Dancy the revised Raymond James Report has lowered their price forecast for the beginning of next year but ramped it up for the end of 2019 as well as 2020 The drilling activity will slow down and that will mean that supply growth is not going to be anywhere near as robust as they thought it would be Dancy said As you know it doesn t matter if you are in the Bakken the Permian or the Eagle Ford the decline rate on these wells are massive compared to a conventional well Dancy continued explaining that the drill speeds and quantities will balance out the market That s what Raymond James and Spears and Associates are saying Dancy said The market is going to balance and quite frankly from July on forward of next year you are going to see prices much healthier than what they had forecasted

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