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Gas Oil Museums Midstream Expansion Crucial to Keeping the U S Economy Competitive Blockchain IoT and Wearables Enter the Digital Oilfield Interview Dr Lee Hunt Partner Hunt Petty LP p 8 p 9 p 12 p 18 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY March April 2018 OilmanMagazine com

Exhibit Booths and Sponsorships Still Available 2018 Expo Alliance Annual Meeting April 24 25 2018 Wichita Falls Texas Hall t i b i e cas Exh w n i o h s nt S ooth e B m will 0 ip Q u B q 35 B E tern eople side s t e u p W O y 2 000 r t n x o ou sium C d appr o p ym fee as S G tion ent il p m e O a c Re urn tail f To l k o c G h Co it Hall c t s a il P hib nitie u t r O ide Ex l o opp ssiona ins g n e i rof ork etw sual p N t ca in a ronmen i env Featuring Top Industry Professionals and Exhibiting Companies from across the U S Call Donna Brown or Jo Ann Baker at 800 299 2998 for exhibitor or sponsorship information

IN THIS ISSUE Feature Subsea Technology Artificial Intelligence and Robotics Pushing Boundaries in Offshore O G By Samuel Cook pages 20 and 21 In Every Issue Letter from the Publisher page 2 OILMAN Contributors page 2 OILMAN Crossword Puzzle page 3 OILMAN Online Retweets Social Stream page 4 Downhole Data page 4 Oil Gas Museums page 8 OILMAN Crossword Puzzle Answers page 17 OILMAN PRIDE First Offshore Drilling Platform by Thomas Rowland May 4 1869 page 5 Oil Rig on Barge Caddo Lake Louisiana 1911 page 6 OILMAN COLUMNS Steve Burnett Oilman Cartoon page 3 Thomas G Ciarlone Jr Oil and Gas Law 2018 Thus Far page 7 Eric R Eissler Midstream Expansion Crucial to Keeping the U S Economy Competitive page 9 Tata L N Murthy Legal Statutory Compliance for Commencing Oil Gas Production page 10 Eric R Eissler Blockchain IoT and Wearables Enter the Digital Oilfield page 12 Mark A Stansberry America s Energy Transformation page 14 Dave McCarthy Using IIoT to Improve O G Operations page 15 Jay Lehr Ph D Offshore Drilling Tread Carefully page 16 Tonae Hamilton Interview Dr Lee Hunt Partner Hunt Petty LP page 18 Josh Robbins Massive Opportunities page 19 Dusty Cooper Mobile Apps Boost Efficiency page 22 Dan Larson Interview Angie Binder Executive Director Colorado Petroleum Association page 23 Phil Neray Growing Cyber Threats to Oil Gas Facilities page 24 Eric R Eissler Interview with Stream Systems Executive Team page 27 Jason Spiess Tidwell Proves the American Dream Can Still Be Great Again page 28 Oilman Magazine March April 2018 OilmanMagazine com 1

LETTER FROM THE PUBLISHER The United States is the leading natural gas producer in the world Shale has virtually eliminated our need for gas imports and continues to produce well in fact very well in the Delaware and Eagle Ford Basin The Bakken is seeing improvement and the Niobrara region continues to perform well in the Denver Basin after two years of falling production In our last issue we profiled Louisiana s oil and gas market The Haynesville Basin in northwest Louisiana continues to outshine the southern inland water and offshore oil and gas market The feature in this issue dives into subsea technology and while onshore producers are doing well what about offshore E P and its long term future in the U S Deepwater GOM producers have more financial development and operating challenges to overcome than their onshore counterparts The capital involved to explore produce and operate an offshore well is significantly more than shale Over the last few years of lower crude prices offshore producers were forced to cancel projects and reduce their workforce to survive Now most offshore operators are minimizing their investment in new fields and instead investing in existing producing assets or brownfields They have determined that enhanced oil recovery technology is a better investment than risking large capital outlays into deepwater exploration that can take years to bring online and recoup investment As a result the Gulf of Mexico has seen a decline in new producing fields which in turn decreases growth for the entire oilfield equipment industry that relies on the GOM region for revenue For now oilfield service companies are relying on the scarce brownfield expansions to survive A bright spot for future offshore development is the announcement by President Trump to open up oil and gas exploration in the Atlantic and Pacific continental shelves If the plan proposed by the Trump administration survives court challenges which are expected we could see the first offshore lease go on sale in 2020 Emmanuel Sullivan Publisher OILMAN Magazine MAGAZINE MARCH APRIL 2018 PUBLISHER Emmanuel Sullivan MANAGING EDITOR Samuel Cook FEATURE WRITER Eric Eissler GRAPHIC DESIGNER Kim Fischer CONTRIBUTORS Dan Briggs Steve Burnett CONTRIBUTORS Biographies Don Briggs Don Briggs is the President of the Louisiana Oil and Gas Association The Louisiana Oil Gas Association known before 2006 as LIOGA was organized in 1992 to represent the Independent and service sectors of the oil and gas industry in Louisiana this representation includes exploration production and oilfield services Our primary goal is to provide our industry with a working environment that will enhance the industry LOGA services its membership by creating incentives for Louisiana s oil gas industry warding off tax increases changing existing burdensome regulations and educating the public and government of the importance of the oil and gas industry in the state of Louisiana Mark A Stansberry Mark A Stansberry Chairman of The GTD Group is an award winning author columnist film producer radio talk show host and 2009 Western Oklahoma Hall of Fame inductee He has been involved in the oil and gas industry for over 39 years He is currently serving as Chairman of the Board of the Gaylord Pickens Museum Oklahoma Hall of Fame Vice Chairman of the Board of Regents of the Regional University System of Oklahoma Board of Directors of OKC Port Authority Board of Governors of the Recording Academy Grammys Texas Chapter Lifetime Trustee of Oklahoma Christian University and Board Emeritus of the Oklahoma Governor s International Team He has served on several private and public corporate boards 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 Thomas Ciarlone Jr 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 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 Phil Graves Joshua Robbins Story Sloane III 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 2018 by Oilman Magazine LLC with all rights restricted Any reproduction or use of content without written consent of Oilman Magazine LLC is strictly prohibited Steve Burnett I was raised in a small West Texas town where the school mascot is a roughneck Growing up with a roughneck as the town symbol how could I not spend most of my adult life working in the petroleum industry I started working in the oilfields age 16 In Texas you had to be 17 with a signed minors release from your parents but my parents were glad to keep me working I had been working since my first job working on a commercial elephant garlic farm at age 12 By the time I reached 16 I had enough work experience to prove I knew how to hold my own on a work crew Anybody whose parents survived the great depression can attest to the fact that their children learn the value of a solid work ethic Phil Graves Phil Graves has spent nearly a decade working in the oil and gas industry He has served as Director of Sales and Director of Digital Development for a large national industry publication and has held various management positions with a completions company and was in charge of operations in the Permian Basin and Eagle Ford shale Phil now runs a marketing and photography company focused on providing vivid images of the industry at work in multifaceted disciplines and projects 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 Illustrations www 123RF com 2 Oilman Magazine March April 2018 OilmanMagazine com

OILMAN CARTOON OILMAN CROSSWORD PUZZLE Across 26 ____ flying lead 1 Umbilical ____ assembly 31 Government s energy org 7 Not operational 9 Texas Alliance of ___ Producers 32 Touch 33 ____ continental shelf 34 Material safety ____ sheet 10 Factory Acceptance____ Down 11 Foot digit 2 Coral structures 13 Type of braking system 3 Gold bar 14 Hydraulic ____ lead 4 Morning time 18 Dutch airline for short 5 The I in AI 20 Bureau of Safety ___ Environmental Enforcement 6 Votes against 21 Add with up 12 Relating to 22 Office for Health Management 15 Short for the internet of things 23 Drilling __ aka drilling fluid 24 Blowout ____ 1 Subsea ___ 8 Salt Lake city state abbr 19 Subsea control ____ 27 PC brain 20 Increase with up 28 Body mark 16 Florida s __ Bowl 23 Augusta s state for short 29 Route for short 17 Like a rig that is not in use 25 Oklahoma city 30 Fla neighbor 26 Very long time in geology See page 17 for answers Oilman Magazine March April 2018 OilmanMagazine com 3

DIGITAL DOWNHOLE DATA For The Week Ending March 23 2018 Connect with OILMAN anytime at OILMANMAGAZINE com and on social media OilmanNEWS Stay updated between issues with weekly reports delivered online at OilmanMagazine com OIL RIG COUNTS Source Baker Hughes Colorado 33 Last month 32 Last year 26 Louisiana 60 Last month 59 Last year 52 North Dakota 49 Last month 44 Last year 34 Oklahoma 121 Last month 117 Last year 101 Texas 482 Last month 466 Last year 386 U S Total 978 Last month 947 Last year 754 Per Barrel CRUDE OIL PRICES Source U S Energy Information Association EIA Brent Crude 64 68 Last month 69 81 Last year 56 34 WTI 61 91 Last month 64 45 Last year 54 02 Barrels Per Month SOCIAL STREAM RETWEETS CRUDE OIL PRODUCTION Source U S Energy Information Association EIA November 2017 Colorado 12 481 000 Last month 12 496 000 Last year 9 563 000 Louisiana 4 009 000 Last month 3 893 000 Last year 4 385 000 North Dakota 35 327 000 Oklahoma 14 914 000 Last month 36 085 000 Last month 15 281 000 Last year 30 793 000 Last year 12 229 000 Texas 116 716 000 U S Total 301 138 000 Last month 117 091 000 Last month 299 288 000 Last year 95 129 000 Last year 266 282 000 Million Cubic Feet Per Month NATURAL GAS MARKETED PRODUCTION Source U S Energy Information Association EIA November 2017 facebook com OilmanMagazine 4 OilmanMagazine Oilman Magazine March April 2018 OilmanMagazine com Colorado 141 971 Last month 145 750 Last year 141 394 Louisiana 204 636 Last month 200 265 Last year 137 719 North Dakota 62 799 Last month 63 633 Last year 52 872 Oklahoma 219 464 Last month 225 807 Last year 195 366 Texas 681 102 Last month 694 840 Last year 638 439 U S Total 2 873 415 Last month 2 886 113 Last year 2 672 624

1 OF 2 FIRST OFFSHORE DRILLING PLATFORM BY THOMAS ROWLAND MAY 4 1869 Pride Photo courtesy of American Oil Gas Historical Society Oilman Magazine March April 2018 OilmanMagazine com 5

2 OF 2 OIL RIG ON BARGE CADDO LAKE LOUISIANA 1911 Pride Photo courtesy of Louisiana Department of Natural Resources 6 Oilman Magazine March April 2018 OilmanMagazine com

OILMAN COLUMN Oil and Gas Law 2018 Thus Far By Thomas G Ciarlone Jr Although the New Year is still young there are already many legal developments to report in the oil and gas sector Some are of greater significance than others but each is important enough to merit our attention In no particular order this is what has emerged at the intersection of the law and the energy industry thus far in 2018 courts The new test articulated by the Fifth Circuit has two basic elements First the trial court must ask whether the subject agreement covers services aimed at the production of oil or gas in navigable waters Second the court must then ask whether the agreement states or the parties reasonably anticipate that a vessel will play an integral part in the delivery of the services Only if the court answers both questions in the affirmative will maritime law apply to the service contract The case is In the Matter of the Complaint of Larry Doiron Inc No 16 30217 in the United States Court of Appeals for the Fifth Circuit Wastewater Disposal Wells DoubleDipping by Uncle Sam In Parker County Texas the tax appraisal district continues to levy taxes separately on i underground wastewater disposal wells and ii the surface of the tracts on which the wells are situated The disposal well companies have complained that this constitutes Non Operator Can Challenge impermissible and perhaps even Operator s Assessment of unconstitutional double taxation In Gathering Fees in Texas Court the Second Court of Appeals however According to a non operator in a the well companies did not fare very BHP Billiton operated well BHP well the appellate panel there held was assessing excessive gathering fees that the appraisal district was within in violation of the applicable joint its rights to tax the wells in addition operating agreements Since BHP to the surface This had the effect was a part owner of the gathering of overturning the well companies company in question its interests were successful motions for summary alleged to be at odds with those of the judgment at the trial level where they non operators who themselves had had argued that the inherent value no stake in the gathering company of the subsurface for saltwater and After the non operators filed suit chemical storage purposes is already BHP argued that the district court in incorporated into the tax assessment Houston lacked jurisdiction because of the fair market value of the the Texas Railroad Commission overriding surface estate The Texas is statutorily vested with exclusive Supreme Court is scheduled to hear jurisdiction over the reasonableness oral arguments in this dispute at the of rates charged by gas utilities The end of February The case is Bosque Fourteenth Court of Appeals was Disposal Systems LLC v Parker unimpressed with BHP s argument on County Appraisal District No 17mandamus review In the opinion of 0146 in the Supreme Court of Texas the appellate court the non operators were not arguing that the gathering Maritime Law When Does It Apply fees charged by the BHP affiliate were to Offshore Service Contracts The unreasonable Rather the crux of the United States Court of Appeals for the petition was that while there may Fifth Circuit in January handed down a be a number of gathering companies decision that substantially streamlines with rates that are different but the analysis of this surprisingly still all reasonable under governing common question one which has utility regulations an operator may at times confused district judges and nevertheless violate its duties to nonyielded inconsistent results in the trial operators by retaining one of the more expensive gatherers in which it has an ownership interest The case is In re BHP Billiton Petroleum Properties N A LP No 14 1700436 CV in the Thomas G Ciarlone Jr Fourteenth Court of Appeals in Houston Mineral Owner Can t Sue Operator for Failure to Spud Well Under a purchase and sale agreement covering mineral rights owned by Pine Resources Statoil was contractually obligated to spud at least two gas wells by a specified deadline The parties agreement did not however include a companion provision expressly obligating Statoil to actually produce any gas from the wells In the absence of such a provision according to the trial judge Pine Resources has no damages case and thus its claim for breach of contract fails as a matter of law In other words although Statoil indisputably breached the spudding clause of the purchaseand sale agreement the lack of any explicit obligation to produce gas left the mineral owner with no remedy for the breach The case is Statoil USA Onshore Properties Inc v Pine Resources LLC No 2 14 cv 21169 in the United States District Court for the Southern District of West Virginia 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 Oilman Magazine March April 2018 OilmanMagazine com 7

Oil Gas Museums Titusville PA Smackover AR Oblong IL Bartlesville OK LOUISIANA STATE OIL GAS MUSEUM Oil City LA Ponca City OK Beaumont TX Museum Arkansas Museum of Natural Resources California Oil Museum Conoco Museum Drake Well Museum Fort Worth Museum of Science History Energy Blast Gaston Museum Healdton Oil Museum Illinois Oil Field Museum International Petroleum Museum Exposition Midland TX Galveston TX El Dorado KS Address City State 3853 Smackover Hwy Smackover AR 71762 870 725 2877 www amnr org P O Box 48 1001 E Main Street Santa Paula CA 93061 805 933 0076 www caoilmuseum org Ponca City OK 74601 580 767 2143 www conocomuseum com 202 Museum Lane Titusville PA 16354 814 827 2797 www drakewell org 1600 Gendy St Fort Worth TX 76107 817 255 9300 www fwmuseum org 501 W South Avenue Zip Phone Website Post Office Box 301 Joinerville TX 75658 903 722 9016 gastonmuseum org 315 East Main St Highway 76 Healdton OK 73438 405 229 0317 www blogoklahoma us 10570 North 150th Avenue Oblong IL 62449 618 562 4664 www theonlyoblong com oil_field P O Box 1988 Morgan City LA 70381 985 384 3744 www rigmuseum com Kansas Oil Museum 383 East Central Ave El Dorado KS 67042 316 321 9333 www kansasoilmuseum org Kern County Museum 3801 Chester Avenue Bakersfield CA 93301 661 437 3330 www kernpioneer org LA 71061 www sos la gov HistoricalResources VisitMu 318 995 6845 seums LouisianaStateOilAndGasMuseum Louisiana State Oil Gas Museum Luling Oil Museum Northwoods Petroleum Museum Ocean Star Offshore Drilling Rig Museum Oil Patch Museum Oklahoma Oil Museum Panhandle Plains Historical Museum P O Box 897 Oil City 421 E Davis St Luling TX 78648 830 875 1922 www lulingoilmuseum org Highway 45 32 Three Lakes WI 54562 715 617 0566 www northwoodspetroleummuseum org 2002 Wharf C Pier 19 20th St Harborside Drive Galveston TX 77550 409 766 7827 www oceanstaroec com P O Box 245 Russell 1800 Hwy 9 West Wrangler Blvd Seminole 2503 4th Ave Canyon KS 67665 785 483 3637 www russellkshistory com OK 74868 405 382 1500 www seminoleoklahoma com museum TX 79015 806 651 2235 www panhandleplains org Petroleum Museum 1500 W Interstate 20 West Midland TX 79701 432 683 4403 www petroleummuseum org Phillips 66 Museum 410 Keeler Bartlesville OK 74004 918 977 6166 www phillips66museum com 1570 South Dairy Ashford Suite 113 Houston TX 77077 281 496 2212 www sloanegallery com Sloane Gallery Texas Energy Museum 600 Main Street Beaumont TX 77701 409 833 5100 www texasenergymuseum org West Virginia University 401 Evansdale Drive Morgantown WV 26506 304 293 4609 wattsmuseum wvu edu West Kern Oil Museum P O Box 491 Taft CA 93268 661 765 6664 www westkern oilmuseum org Wood River Refinery History Museum P O Box 76 Roxana IL 62084 618 255 3718 www wrrhm org The Royce J Caroline B Watts Museum

OILMAN COLUMN Midstream Expansion Crucial to Keeping the U S Economy Competitive By Eric R Eissler Natural gas cheap abundant clean burning home heating and electricity producing It has numerous methods to power the U S economy Without energy and electricity from natural gas which power source can drive the nation A country s economy is only as good as the energy infrastructure that supports it the price skyrocketed 3 000 for New Jersey s natural gas market Pipelines and LNG in the West The Jordan Cove LNG terminal and Pacific connector gas pipeline are proposed projects in Oregon The 229 mile pipeline is designed to transport natural gas from Malin Oregon the site of a line junction to The natural gas pipeline network is receiving the LNG terminal in Coos Bay for export to heavy investment in the form of upgrades Asia and Pacific rim countries The project and new pipeline projects around the nation was originally planned to be an import Coupled with expansion the climbing natural facility before the shale revolution Now gas prices are a boon to producers and a the project has been reversed to allow for sign to continue investing in infrastructure export The LNG storage capacity is 320 000 Unconventional resources are driving natural cubic meters with two 160 000 cubic meter gas infrastructure development According containment tanks The liquefaction capacity to a report by Kevin Petak et al with the is 7 8 million metric tons per year aggressive development of unconventional Shale Gas Revolution Continues resources the industry invested 40 The outlook for the shale gas industry is billion 50 billion annually in infrastructure strong and will continue to grow at a quick projects between 2010 and 2015 pace According to Kevin Petak et Al Major Win for Pipelines in the Northeast Shale gas production growth is forecast to be On January 23rd 2018 Federal Energy robust motivating the development of new Regulatory Commission s FERC approved natural gas infrastructure In fact onshore the 1 13 billion 116 mile PennEast shale plays should account for two thirds Pipeline which will transport natural gas of all North American gas production by more efficiently and economically from the 2020 growing to nearly 75 percent by 2035 Marcellus Shale area to the residential and A substantial portion of that new natural business complexes of Pennsylvania and gas production will continue to contain New Jersey in the mid Atlantic region This relatively high liquids contents Associated pipeline project is a joint venture between gas production from oil wells could reach as Southern Company New Jersey Resources high as 19 billion cubic feet per day by 2035 Corp South Jersey Industries Spectra which would represent an increase of 2 6 Energy Partners and UGI Corp Each billion cubic feet per day company has a 20 stake in the project Once completed the pipeline is expected As indicated by the PennEast Pipeline the to transport 28 31 million cubic meters of East Coast is due for more investment in natural gas per day natural gas gathering and transmission lines New pipeline construction is vital for this region because the Marcellus shale can provide cheap gas to the region but there are not enough pipelines to transport it to market New Jersey s natural gas supply is especially vulnerable to cold snaps At the start of 2018 when the bomb cyclone hit the region natural gas prices spiked due to the high demand from consumers Not having the proper infrastructure to meet demand out of the Marcellus shale The Atlantic Sunrise pipeline which was given the green light by FERC in February 2017 is currently in the final phases of construction Full service is expected by mid year 2018 The preliminary project design included a total of 183 miles of new greenfield pipe two pipeline loops totaling about 12 miles 2 5 miles of existing pipeline replacement two new compressor facilities in Pennsylvania and other facility additions or modifications in five states Pennsylvania Maryland Virginia North Carolina South Carolina The pipeline cost around 3 billion to construct and once operational will transport 1 7 billion cubic feet of natural gas per day though the region Funding and Expenses Assets in the midstream sector are essentially divided into two national and local The local are the gas gathering systems and processing The national are distribution systems which send the product to market Funding the local and national segments according to a report by Deloitte midstream companies depend heavily on external capital as they distribute much of the cash flow they generate to investors Since 2008 more than 95 percent of the sector s capex and acquisitions have been funded through equity and debt Since most of the operating cash flow goes to payout dividends midstream companies must seek private funding and exploration and production build outs to kick start pipeline projects In the build out scenario once assets start to produce the owner company searches for a midstream buyer to take over Midstream 2020 and Beyond Midstream is poised to grow and mature over the next 20 years Midstream companies have the opportunity to play a larger role in managing production as production and transport processes start to become more automated and more accurate with the further implementation of digital oilfield technologies The midstream sector plays a crucial role in making the U S a major hydrocarbon exporting country as well as keeping associated production costs down Perhaps the most important job the midstream sector does is making the U S competitive by providing an expansive network of affordable clean power to the country Having a strong power grid in place with affordable prices is what is able to drive the U S economy forward and empower industrial competitiveness at a global level Oilman Magazine March April 2018 OilmanMagazine com 9

OILMAN COLUMN Legal Statutory Compliance for Commencing Oil Gas Production By Tata L N Murthy Exploration Policy An operating company has to compete with all oil and gas companies including national oil companies for oil and gas blocks which are auctioned The operative company submits bids based on the available technical data from the relevant regulatory body responsible for hydrocarbon resources and any of its technical arms The operating company has to invest money with approval from the host government and explore the field for finding oil and gas This involves several stages like exploration drilling appraisal drilling and development drilling Moving on to subsequent stages is dependent on the economic and technical feasibility of a project Sometimes huge sums of money are invested to find a successful production well The success of operations depends on a company s asset management skills also Oil and Gas Fields Exclusive In some host countries there are petroleum acts petroleum rules and oilfield acts Petroleum and natural gas rules are in place to monitor the legislative and statutory requirement of operating companies Operators companies which own the field in competitive bidding and engage in exploration and production of oil and natural gas should strictly follow these acts and rules In cases when using foreign vessels drilling rigs barges platforms supply vessels etc for E P activities operators have to get security clearances from the concerned regulatory body of the host government may be applicable to some countries process facilities by pipelines the operator has to follow the host country s statutory approvals for design construction commissioning and the operation of pipelines In addition operators have to ensure the integrity of lines to prevent fluid leaks from the pipelines Such things may come under water land pollution acts and rules of the host country After field processing of crude oil and natural gas crude oil can be transported through ships pipelines or by road tankers Similarly natural gas can be transported by pipelines In all cases operators have to follow the transportation acts and rules of the host government As these petroleum products come under inflammable products motor vehicle rules and acts are to be complied with for vehicle license and transportation for road transport During shipping and transportation the entire path of travel concerned country or international laws are to be followed In the case of processed crude oil and natural gas transported by pipelines if the operator has ownership responsibility for custody transfer operators have to take the host country s statutory approvals for design construction commissioning and operation of pipelines In addition operators have to ensure the integrity of lines to prevent leak of fluid from the pipe lines Operators have to ensure the integrity of all facilities equipment pipelines piping integrity should prevent external and internal corrosion and should follow the concerned statutory acts and rules of the host country Oil and gas operating companies should produce the oil and gas quantity committed to the host government irrespective of reservoir complexity and uncertainty All the committed production is to be taken out by the operating company with its risk investments and the profits are to be shared with the host government The price of selling and distributing oil and gas is also fixed by the host government only irrespective of the supply and demand Sometimes prices may vary because of global causes Work Program Operators have to get approval from the technical arms of the concerned regulatory body of the host government for work programs and should follow the exploration policy of the host government Operators have to submit the work program with complete details and time schedules to the technical arm of the concerned regulatory body like exploration wells appraisal wells development wells subsurface facilities surface facilities details expenditures incurred for the construction of facilities and Transportation commencing the production Operators have to In case of wells located away from the processing start and complete as per the approval only and facilities where well fluid is being transported to should submit all the reports to the technical 10 Oilman Magazine March April 2018 OilmanMagazine com arm of concerned regulatory body of the host government Inspection Operators have to get approval permission from factory inspectors and boiler inspectors for some operating facilities Pressure vessels boilers high pressure systems pipelines safety devices cylinders etc may fall into this statutory requirement Operators have to follow the inspection schedule mentioned and should submit records as per the procedure during the audit In oil and gas production most of the equipment is in critical service and falls into the scope of this statutory body of the host government This statutory body representative may visit the facilities and may witness the inspection also Mines Act Some operator operations may come under a mines act depending on the location of facilities and the host government policy Operators have to fulfil all the statutory requirements of the mines acts of the host government Operators have to comply with the statutory requirement and should ensure their operations are safe as per the act and rules of statutory body Explosive License Some facilities like hydrocarbon storage may require explosive licenses from the statutory body of the host government Storage of diesel flammable gases hydrocarbon storage tanks compressed gases storage etc may fall into this category Operators have to take licenses initially and should follow the guidelines for inspection regularly Weights and Measures Operators have to certify flow meters from the weights and measures statutory body of the host government to export the quantity accurately Electrical Installations Electrical installations are to be certified by the concerned statutory body of the host government Operators have to get licenses Finance Oil and gas reserves are considered national resources the owning country has all rights on its reserves The oil and gas exploration business is

OILMAN COLUMN not like other businesses where the company has a hold on getting raw materials and fixing prices of its produced products The operating company should get approval from the oil and gas regulatory body s technical arm for all investments and what operators are spending on oil and gas exploration because only approved expenditures can be recovered from the sale of oil and gas Operators have to follow the foreign investment policy of the host government in case the operator is not from the host country Operators have to follow the finance statutory guidelines related to royalty income tax services charges custom duty VAT excise etc All of these documents are to be produced to the concerned party as and when required Operators have to maintain accounts and should get approval from the concerned statutory body of the host government related to the cost of recovery from production sales for investments put up by operators Operators have to sell the crude oil condensate and natural gas as per the pricing policy of the host country only irrespective of demand Safety Some safety statutes related to operator facilities are covered There are some statutory compliances related to working personnel and safe operations Operators have to fulfil all of these compliances Safety interlocks safety alarms work permits third party safety audits engineering safety controls personal protection systems mandatory trainings etc may fall in this category Similarly operators have to establish emergency and disaster management systems and should work to create awareness among working personnel and neighbouring residents Operators have to tie up with local regional administration in case of escalation of incident to uncontrollable level Human Resources Operators have to follow all the labor laws of the host country These laws cover the employment minimum wages provident fund professional tax workmen s compensation etc Operators have to ensure whether outsourced companies in their operations are following these laws Sometimes some services are to be given by expatriates In such a case operators Legal Statutory Compliance for Oil Gas Operating Company Figure 1 Statutory Legal Framework for Commencing Oil Gas Production should follow concerned statutory procedures and policies for using their services IT Communications Operators have to get the licenses for radio communications microwave communications wireless communications and telecommunications and should have approval for all the instruments Environment Oil and gas operators companies engaged in oil and gas exploration and production should submit an EIA Environmental Impact Assessment for the planned operations This consists of environmental impacts caused by the operations Operators have to mitigate the impacts and need to submit the environmental management program to the statutory environmental bodies of the host government The entire waste generating from operations should be disposed as per the guidelines of the concerned regulatory body s acts and rules Similarly emissions and discharges should be controlled by the operator as per the guidelines of the concerned regulatory body s statutory bodies acts and rules During the drilling and production operations operators have to ensure soil ground water and surface water are not contaminated from their operations Even for decommissioning they have to follow approved procedures for preventing the contamination Radioactive During drilling operators or operator service providers use radioactive isotopes for well logging In operations some radioactive isotopes may be used The concerned statutory body has to give licenses and permission for these activities In petroleum processing some radioactive isotopes come along with hydrocarbons from the wells These are called NORM naturally occurring radioactive materials Although the quantity is low over a period it accumulates in processing equipment There is a danger when equipment is descaled or machined contamination of other equipment and personnel may occur Some statutory bodies are now defining regulations for the monitoring and disposal of pipes and equipment containing NORM scale Operators have to comply with the statutory guidelines of the host country Facilities Operators have to get approval for Consent for Establishment CFE and Consent for Operations CFO from the statutory body of the concerned regulatory body of the host government Visit OilmanMagazine com to read the full article Oilman Magazine March April 2018 OilmanMagazine com 11

OILMAN COLUMN Blockchain IoT and Wearables Enter the Digital Oilfield By Eric R Eissler The world is abuzz with Bitcoin blockchain technology and the Internet of Things IoT with many oil and gas executives asking Where do these new technologies fit into our company How can we implement them to make our business better more profitable While Bitcoin might not be the answer these companies are looking for Venezuela s petro cryptocurrency might not be either Let s drill down and see what is going on with the latest and greatest technology offerings in the oil and gas industry Blockchain Incorruptible Decentralized Power Ledger Technology Here is a crash course in Blockchain technology as defined by Investopedia A blockchain is a digitized decentralized public ledger of all cryptocurrency transactions Constantly growing as completed blocks the most recent transactions are recorded and added to it in chronological order it allows market participants to keep track of digital currency transactions without central recordkeeping Each node a computer connected to the network gets a copy of the blockchain which is downloaded automatically Did that sink in Blockchain can be used for more than just cryptocurrency it can be used to solve issues in the supply chain Canadian Petroteq Energy has teamed up with First Bitcoin Capital Group to launch the first innovative blockchain technology solution for the oil and gas industry called Petrobloq While this solution is still under development Petrobloq asserts that it will be able to provide An intelligent supply chain that learns market conditions to help companies adapt An Ancillary relationship supply chain management to be implemented with material and service providers A supply chain system that aims to help producers meet the concerns of HSE programs by way of prevention 12 Summed up blockchain will help reduce intermediaries in the supply chain and thus reduce costs and make transactions more transparent by employing smart contracts to reduce fraud and corruption Furthermore IoT and the Big Data that comes with it can improve the bottom line Just how blockchain technology removes intermediaries IoT can save on a lot of manpower First Bitcoin Capital CEO Greg Rubin said in an interview with PR NewsWire Oil and gas companies could benefit from blockchain technology for a range of applications from optimizing efficiency to transparency in business transactions to securely storing inventory data on the blockchain In the last few years the industry has struggled with price volatility and production levels which has led to cost cutting efforts reduced outputs and layoffs He continued As such blockchain is gaining traction and broader acceptance by the oil and gas industry for its potential to fundamentally change the way certain transactions are conducted Operators who once had to drive around the field all day collecting data from wells by hand can now sit in the comfort of the office while all that well operations data is transmitted to their computer They can monitor wells in real time and spot problems in real time This kind of advantage translates into operational cost savings and it saves companies large sums of money Adoption of IoT Grows in Oil and Gas Industry IoT systems have the capability to bring in data from every important performanceaffecting area in the oilfield This data has the potential to improve efficiency protect workers monitor assets and allow for a better assessment of environmental impacts Oilman Magazine March April 2018 OilmanMagazine com The Internet of Things in oil and gas fields comes down to three things optimization optimization optimization When all components have sensors and an operator can literally see what processes are going on inside a well or a pipeline it becomes easier to tweak settings and maximize flow In a poll conducted by Upstream Intelligence 77 percent of respondents said that predictive analytics were their top investment priority in terms of the digital oilfield 23 percent said drilling automation Almost half want to minimize downtime and improve decision

OILMAN COLUMN making by using data analytics and digital technologies According to a report by Accenture companies are attaching greater importance to the inward flow of information to data driven enterprise systems such as enterprise resource planning enterprise asset management supervisory control and data acquisition and supply chain management The oil and gas industry was quick to adopt IoT because it was a solution to a major problem the industry faced in 2014 and still faces today low oil prices When companies were riding high on the tidal wave of 100 per barrel priced oil expenditures were not a concern The only concern was getting it out fast enough and shipping it to market If a compressor failed or an engine broke down there was no time to fix it The motto was get a new one in and keep that pump jack pumping don t bother to fix it Now investment in IoT and advanced sensory arrays are the way forward The idea is to optimize and try to prevent problems before they happen IoT hit the market at just the right time Wearable Technology in Oil and Gas Is It Strong Enough to Last While the consumer world is quick to adopt the latest technology the oil and gas industry has a hindrance Namely rugged terrain Many operators in the field work in very dangerous environments such as Kazakhstan s icy frozen Kashagan field in the northern Caspian Sea or the hot deserts of Texas Wearable technology must endure extreme temperatures and runs the risk of getting hit dropped and slammed A smartphone is not going to last long in that environment Furthermore technology deployed to the field must be spark proof There are many safety requirements for smart technology to be allowed to enter into the field That being said there have only been a handful of smartphones trickling into the field that have been safety rated While this has been helpful these are not handsfree devices Ideally there would be heads up displays and sensors and devices such as GPS trackers sewn into clothing to deal with the harsh environment While on the topic of safety wearables first priority is to keep workers safe In an interview with Accenture Luca Corradi said safety is always a good place to start Wearables with sensors can monitor the overall health and fatigue of a worker which can prevent incidents and monitor the location of personnel in the facility so you know where everyone is at all times The managing director for Accenture in Aberdeen Scotland continued this realtime information can be crucial in case of an emergency or evacuation Oil Gas 2 0 Loading The industry is ready to embrace new things however a major setback is making devices safe for use in the field a process that takes a long time and costs more money than normal consumer goods For example a radio is about 1 000 and a new safe smartphone is close to 5 000 While it may take longer and cost more to implement this technology the costs will be well worth it Companies will be able to optimize their assets and rejuvenate their workforce What is a blockchain A blockchain is a decentralized and distributed digital ledger like an accounting spreadsheet that is used to record transactions across a network of computers Blocks are produced with a list of transactions of record that cannot be changed without the alteration of previous blocks and collusion of the network This prevents fraud and is an incorruptible process It makes it easy to go back and audit transactions with ease 3 Technologies Comprise Blockchain 1 Cryptography For transparency 3 Game Theory The network 20 million digital wallets globally validates transactions via Proof or Work PoW or Proof of 20 Billion by 2024 estimated value of global blockchain technology Stake PoS for incentives 90 of large North American and European banks are exploring blockchain usually monetary 1 3 of C level executives are thinking about incorporating blockchain into their business and incorruptibility Source Forbes com 2 P2P Networks Each node of the network is a client and a server which retain identical records across the network BY THE NUMBERS 0 5 of world s population uses Blockchain currently Oilman Magazine March April 2018 OilmanMagazine com 13

OILMAN COLUMN America s Energy Transformation By Mark A Stansberry The elements of our strengths are many They include our democratic government our economic system our great natural resources stated Ambassador Jeane Kirkpatrick in the 80s about the United States The business page headline in the November 3rd 2001 Oklahoman read Terrorist attacks spur need for national energy policy The day before energy experts and government officials had attended the 2001 International Energy Policy Conference now National Energy Talk which I founded in 1992 more oil than it produced The needed U S entrepreneurship came along through the efforts of research and development along with technological advances Twelve years ago the U S was importing 12 9 million barrels a day of crude petroleum products As of the fall 2017 the number of barrels a day was at 2 5 million a day In 2008 when I published The Braking Point America s Energy Dreams and Global Economic Realities I expressed my view that America and the world were facing an energy crisis The good news was that America s energy problems could be solved The bad news was that our country s energy The message was clear as then Lt Governor crisis did not exist in a vacuum was not Mary Fallin said September 11 has temporary and would not fix itself At that helped us come face to face with the issue time I stressed that failure to effectively of our energy policy The conference deal with this problem would threaten included speakers attendees from as far our nation s economic prosperity and away as Venezuela Japan and Korea It was compromise our national security and could interesting that one of the speakers Mexico s radically alter our way of life The book s Consul General Ezequiel Padilla projected title The Braking Point said it all America today s U S energy outcome He said we needed to put on the brakes stop and assess need your U S entrepreneurship the entire energy picture to see where the The U S Energy Information Administration country was headed EIA reported recently that the U S crude The oil and gas industry reassessed and oil production exceeded 10 million barrels a stepped up to the energy challenge Through day for the first time since 1970 During the innovation grit determination and 1970s U S consumption began to outstrip ingenuity energy solutions were found production and America started importing 14 Oilman Magazine March April 2018 OilmanMagazine com Energy education is more important than ever as we envision America s energy transformation National Energy Talk is a platform engaging a national dialogue on energy issues views and solutions We address Mark A Stansberry the needs plans and issues that all types of energy face today Through discussion we can create a national energy vision The American energy industry is up to the energy challenges ahead U S President Washington stated A people who are possessed of the spirit of commerce who see and who will pursue their advantages may achieve almost anything Future generations are depending on us to keep the American dream alive It is time to take a stand evaluate your own energy impact on our nation and play your part in preserving our country Energy is the future of America and America Needs America s Energy What do you think It is time for National Energy Talk www nationalenergytalk com

OILMAN COLUMN Using IIoT to Improve O G Operations By Dave McCarthy Dave McCarthy Digital innovation strategies incorporating the Industrial Internet of Things IIoT are top of mind for oil and gas operators working to achieve greater productivity and lower costs even in the face of escalating prices While the use of connected equipment to help improve operational visibility and control isn t new advances in software and analytics capacity give operators an entirely new asset for business improvement data The enormous amounts of data generated by connected equipment can provide incredible insight and awareness into a machine s health operating condition and performance By using detailed asset specifications real time data and contextual information such as environmental conditions a well designed IIoT system creates a digital model of each piece of equipment and then uses powerful analytics machine learning and rules based automation to enable a variety of beneficial operational capabilities Examples include predicting potential equipment failures or safety hazards diagnosing problems and prescribing required repair steps for service technicians and comparing and optimizing equipment performance and efficiency across an entire population of assets These functionalities lead to increased output lower repair costs and optimized productivity and safety across an entire O G business from upstream to downstream Yet this same treasure trove of data often proves overwhelming when companies attempt to make sense out of it As more equipment comes outfitted with sensors and contributes more data to the deluge how can O G companies extract the business value buried in the data IIoT A Maturity Progression Adopting IIoT is not a one time effort It is a progressive process that starts with connected equipment and can evolve to the point of nearly autonomous machinery able to perform sophisticated analytics and take action even in the absence of network connectivity Here s what you need to know about getting started First identify the business objectives you wish to achieve such as predictive maintenance to help anticipate failures and pinpoint the root cause Second identify the team required to realize your objective All IIoT initiatives demand cooperation throughout multiple departments While details can vary key stakeholders generally range from IT and trusted business partners to subject matter experts and operations personnel such as engineers technicians and reliability professionals that work with the equipment on a regular basis analytics can also help extend the useful life of expensive assets by establishing preventative maintenance plans based on when service is actually needed rather than based on fixed time or use intervals Finally review the following stages of IIoT maturity as well as internal operational and technology capabilities with your team to determine the current state of your organization and what steps are necessary to progress to the level needed to achieve your desired business goals Stage 4 Automation Creating rules with the help of subject matter experts and applying automation enables the orchestration of complex actions such as placing work and parts orders scheduling the closest qualified technician and estimating time to repair Rules can be modified to respond to a machine s health for example if everything is running smoothly less data is collected and transmitted but if the system detects a change in the machine s state it can increase collection rates to provide more detail Rules can also be created to monitor real time operating parameter status and automatically optimize equipment performance or shut it down in the event of a threat to safety Over time as more data is collected and rules are applied and refined the system becomes increasingly intelligent and is able to perform a greater scope of automation Stage 1 Device Connectivity and Data Forwarding Nowadays more and more machinery comes equipped with sensors to help operators gain insight into the equipment s operation and health And while it is a foundational first step simply connecting equipment and collecting data doesn t produce real organizational benefit until that data is monitored and analyzed Stage 2 Real Time Monitoring Equipment data can be used to populate real time dashboards that allow personnel to view asset telemetry and provide alerts when conditions meet predetermined benchmarks that can indicate a possible failure or trouble on the horizon This provides greater visibility from a centralized location and some level of condition based insight However relying heavily on a human element to analyze and interpret mountains of operational data can invite unacceptably high levels of false positives Likewise the system s capacity to scale is severely limited because as more connected equipment comes on line large amounts of useful data is often discarded to make it possible for human operators to evaluate results Stage 3 Data Analytics Analytics provide the power to look deeply into intricate machinery that can have complex problems A successful data analytics system requires several components data discovery machine learning cluster analysis and digital modeling With these elements in place powerful analytics can examine much larger and more complete data sets in conjunction with external data sources such as environmental conditions The result is a more accurate evaluation of a machine s state and probability of failure These insights enable a more effective use of technician time and make it possible to identify the exact parts expertise and steps needed to perform repairs to deliver high first time fix rates Predictive Stage 5 Enhancing On Board Intelligence The final stage of IIoT maturity is to perform the bulk of data collection and analytics on or near the asset Today s connected equipment often already has computing capabilities that can be tapped for this purpose By employing this type of edge or distributed computing companies save on network transmission and data storage costs and automated actions take place even in the absence of network connectivity for example stopping a machine if it poses a safety hazard Without network and storage considerations 100 of the data can be analyzed and applied to yield faster and more accurate results Putting IIoT to Work for You Depending on where your organization falls along the maturity progression IIoT can extract business value from your existing operational data whether providing insight into the health of a handful of machines or optimizing the performance of your entire asset population Advances in IIoT software make it possible to achieve what was previously an expensive and manpower intensive endeavor By identifying your goals ensuring management support and cross team collaboration and progressing through the stages of IIoT maturity your organization can expect to see measurable benefits Oilman Magazine March April 2018 OilmanMagazine com 15

OILMAN COLUMN Offshore Drilling Tread Carefully By Jay Lehr Ph D In early February the Trump Administration ended the ban on offshore drilling implemented by Barack Obama late in his term It was intended to cement his legacy in the protection of the nation s environment He had little opposition in the face of the Deepwater Horizon disaster which killed eleven workers on the offshore rig and spewed oil all along the coast of the Gulf of Mexico A complete investigation of the incident showed that it was less an accident than malfeasance where red flags were evident of an impending problem Appropriate action could and should have been taken to successfully avoid a disaster but in the minds of the public offshore drilling was simply too dangerous Under the new proposal most areas of the Arctic Ocean Pacific Ocean Gulf of Mexico and the Atlantic Ocean would be available for oil and gas exploration Secretary of Interior Ryan Zinke made it clear however that the proposal is just a draft that will be debated with input from states local communities and congressional delegations before it becomes final many months from now Interior has identified 47 potential areas where companies can buy leases during a five year period beginning in 2019 and ending in 2024 This was established in the Draft Five Year Outer Continental Shelf Oil and Gas Leasing Program Nineteen areas are off the coast of Alaska twelve in the Gulf of Mexico and seven off the Drilling out of sight of land only began in coast of California where drilling has been 1947 when Kerr McGee Oil Industries drilled banned since the 1969 oil spill near Santa Barbara The remaining nine are along the a productive well on a platform 10 5 miles Atlantic Coast where the Governors of New off the Louisiana coast In the following Jersey Delaware Maryland Virginia North years legal battles took center stage as to whether the states or federal governments Carolina South Carolina and Florida have own and control subsea oil Congress settled voiced strong opposition to any offshore the issue in 1953 when President Eisenhower drilling signed the Submerged Lands Act which President Trump signed an executive order reserved to all states only land within three in April of 2017 requiring the Interior nautical miles of their shoreline Texas and Department to reconsider Obama s five the West Coast of Florida later proved valid historical claims to 10 4 miles on their coasts year offshore drilling ban Trump said at the time that the ban deprives our country of potentially thousands and thousands of jobs The coastlines of the United States are no and billions of dollars of wealth longer the actual borders of our country The U S border became 200 miles away from Secretary Zinke has said the new plan is the coastline when President Ronald Reagan part of our nations efforts to be energy declared it an Exclusive Economic Zone dominant in America Obviously the energy EEZ In 1994 all countries were granted industry has cheered this reversal on the an EEZ of 200 miles from their coastlines Obama ban Zinke plans to talk with all the under the International Law of The Sea governors involved There is no question that paramount in developing offshore oil will be The ocean floor extends from the coast into the ocean on a shelf that can be between 10 total protection of our environment be it contaminating ocean water coastlines or sea to 250 miles wide with water depth rarely life There is no question that we have the exceeding more than 200 meters Then a steep slope begins which reaches 2 to 3 miles technology to do exactly that Past problems are in no way indicative of our future efforts in depth The U S Department of Interior s Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement manage the development of offshore energy resources by private companies that lease areas from the federal government They pay royalties to the government on all the oil and gas they produce in these offshore fields 16 What is being missed in all this rising feud is the complexity and cost of developing oil and gas in any deep waters off our coasts The lower return on low cost oil and gas appears to be with us for the long term while the increasing cost of ocean drilling make all projects extremely risky from an economic standpoint But wait there are Oilman Magazine March April 2018 OilmanMagazine com more problems We have little knowledge of the geology in these areas or the undersea aquifers releasing water from the continents that can complicate drilling Jay Lehr Ph D There is clearly a knee jerk reaction from coastal communities fearful of an unknown where only negative voices are heard There is no question in my mind that opening up our oceans to exploration out to the limits of our 200 mile Exclusive Economic Zone makes very good sense The jobs and wealth that may accrue to both the public and the government could be extraordinary but that MAY is a strong and valid concern American oil and gas development is a private endeavor unlike many other countries The investment is made by private money that is not likely to go hell bent into projects with either little chance of a good financial return or on the flip side with serious possibilities of creating environmental liabilities We are talking about regulations that will take at least a year to flesh out and investigations that will take many more years There is plenty of time to end the volatile controversy and move forward with patient and thorough conversations with certainty that all sides of the controversy will have their opportunity to get all the facts out and the fear eliminated Jay Lehr Ph D is the science director at The Heartland Institute an independent nonprofit organization based in Chicago He is an internationally renowned speaker scientist and author who has testified before Congress on dozens of occasions on environmental issues and consulted with nearly every agency of the national government as well as many foreign countries Lehr is a leading authority on groundwater hydrology After graduating from Princeton University at the age of 20 with a degree in Geological Engineering he went on to receive the nation s first Ph D in Groundwater Hydrology from the University of Arizona He later became executive director of the National Association of Groundwater Scientists and Engineers

OILMAN CROSSWORD PUZZLE ANSWERS Across 24 Blowout ____ 1 Umbilical ____ assembly 26 ____ flying lead 7 Not operational 9 Texas Alliance of ___ Producers 31 Government s energy org 32 Touch 33 ____ continental shelf 10 Factory Acceptance____ 34 Material safety ____ sheet 11 Foot digit 1 Subsea ___ 13 Type of braking system 2 Coral structures 14 Hydraulic ____ lead 3 Gold bar 18 Dutch airline for short 4 Morning time 20 Bureau of Safety ___ Environmental Enforcement 5 The I in AI 21 Add with up 8 Salt Lake city state abbr 22 Office for Health Management 12 Relating to 23 Drilling __ aka drilling fluid Down 6 Votes against 15 Short for the internet of things 16 Florida s __ Bowl 17 Like a rig that is not in use 19 Subsea control ____ 20 Increase with up 23 Augusta s state for short 25 Oklahoma city 26 Very long time in geology 27 PC brain 28 Body mark 29 Route for short 30 Fla neighbor V I S I T U S AT O T C B O O T H 1 3 1 5 QUALITY PRODUCTS FOR OVER 60 YEARS Environmentally Friendly Products Thread Compounds Pipe Coatings Cleaners Degreasers Valve Lubricants Sealants Wireline Products w w w o i l c e n t e r c o m 3 3 7 2 3 2 2 4 9 6 8 0 0 2 5 6 8 9 7 7 Oilman Magazine March April 2018 OilmanMagazine com 17

OILMAN COLUMN Interview Dr Lee Hunt Partner Hunt Petty LP By Tonae Hamilton The following is an interview with Dr Lee Hunt a partner with Hunt Petty LP Dr Hunt holds advanced degrees in political science and jurisprudence He is also a member of the State Bar of Texas Tonae Hamilton How did the Hunt Petty partnership come about Lee Hunt Brian Petty and I were both senior executives for the International Association of Drilling Contractors I was president and Brian was vice president for Global Government and Regulatory Affairs We both held our positions for over 30 years During that time it included several trips to Cuba for evaluations of their regulatory systems and capabilities When we both retired we wanted to continue working on the issue between U S and Cuba relations for further response in capping and containment of oil TH What is the goal of the conference LH The goal of the conference is to bring together a group of researchers from the academia involved with specific scientific matters and that have been studying oil and the transportation of oil in the ocean We want to bring together those researchers and further study capping and containment and other systems that have since been completed by industry since the Macondo event The second purpose is to promote the continuation of a relationship between the U S and Cuba with environmental protection on the Florida Straits from offshore drilling in both countries TH What environmental relationship do we have with Cuba LH Since 2015 the U S and Cuba have executed approximately 23 memorandums of understanding on environmental cooperation and protection All these MOUs continue to be supported and worked on among the current administration More importantly to our interest in January 2017 U S and Cuba signed a bilateral oil spill agreement promoting both countries to work together to plan responses against incidences and for 18 spill prevention The MEXUS agreement that for preparedness exists between Mexico and U S is similar to However there has this agreement been progress made with the Department TH How well does the oil and gas industry of Commerce policies respond to spills and seeps that encourage approval of licenses to LH There are greater efforts to create export U S equipment baseline data on natural oil occurrences so they can more accurately measure spills from to Cuba which Dr Lee Hunt contributes to the vessels drilling and production activities prevention of pollution of the land air and There is better monitoring now than there sea in both nations has been in the last seven years There has been improved technology and a greater loss of source control response with the current capping systems in place The capacity has been improved for containing and preventing problems The level of preparedness for oil spills has certainly improved since April 2010 TH What environmental concerns should the U S consider before opening up coastal offshore drilling announced by President Trump LH The concern should be for operational safety and acquiring the best and most advanced technology for containment There should also be concerns for well drilling and preparations with emergency response capability should be in place in case of an accidental release of hydrocarbons There are fairly robust regulations in place in both U S and Cuba for both oil plants The major problem to resolve is the fact that the U S embargo against Cuba prohibits facilitation of using U S grade technology in Cuba to respond to emergencies The embargo imposes a direct liability to the ecology and economy of Florida as well as anything that happens in the Florida Straits TH Have GOM regulations by the BSEE hindered the potential for new drilling permits and exploration LH I don t believe the BSEE has had a hindrance on any entry and exploration BSEE have channeled their efforts to acquire the highest level of response preparedness Again the problem is the embargo against Cuba which inhibits Cuba from having the same level of technology as the U S Oilman Magazine March April 2018 OilmanMagazine com TH Can you elaborate more on some of the technological advances being made regarding spill response and how it may affect current Sub seas LH A significant feature of the latest technology has to do with reducing the size of capping related equipment which enables easier and faster transport to the site and quicker response to spilling loss and storage problems The redesigning and rethinking of the current technologies enables the equipment to be delivered to the site at a quicker response time than previously available TH Due to the current strides being made for better spill prevention how will the U S relationship with Mexico and Cuba be impacted LH The new systems that have been implemented called the RAPID and the GRIP systems allow for the delivery of capping containment equipment onsite and anywhere in the Gulf of Mexico and the Florida Straits in a matter of 72 hours in contrast to previous response times There is a greater quicker response time in preventing loss and enabling more spill control TH Are any other governmental agreements regarding the oil industry being worked on between the U S Mexico and Cuba LH At the moment the bilateral agreement between the U S and Cuba is the only offshore drilling safety agreement in addition to MEXUS which also focuses on drilling and oil safety

OILMAN COLUMN Massive Opportunities By Josh Robbins As Q1 ends the industry analysts are predicting upwards of 80 oil prices and a reentry back into the high price environment we saw back in 2013 Operators on the other hand are hedging every barrel possible Their consensus is the price will fall instead of rise pushing the boom bust cycle into a much smaller correctional circle moving the price from 65 to 45 then back to 65 As expected acquisitions have stalled with the increase of dollars per barrel The buy sell gap is moving toward what we saw in 2015 where the numbers were nearly 30 a barrel difference between seller target price and buyer offer Infield development has continued although at a much slower rate than I originally thought I thought that the price of oilfield services would continue to be depressed based on commodity prices and increased competition That did not happen As a collective group the oilfield services increased significantly especially on the completions side The net result is fewer wells being drilled completed and brought online This environment has effectively extended the timeframe of many of the private equity backed oil and gas firms Less infield developments a full stop in many cases on acquiring any assets and you have a much longer flip timeframe If analysts are correct and prices do elevate beyond 70 we expect most of these PE backed firms will exit positions focusing in the Delaware the Permian and the STACK With everyone running on a treadmill just waiting and hoping on a price increase the market now has a massive opportunity Stepping away from the current mix of infield development and focusing only on PDP assets the market is full of potential acquisitions At Beachwood we have seen a significant increase in calls coming in to monetize assets in areas all over the map Nothing is being actively marketed as seen at this year s NAPE Most companies are using an internal process to find a way to divest non core assets or using an outside firm like Beachwood Josh Robbins Deal flow for us has continued to tick upwards finding more and more smaller opportunities under 25 million Large deals appear to be non existent going into the second quarter We expect a lot more of the same continuing through this year with price drops correcting service costs increased completions and infield development We expect smaller deals to dominate the Spring and Summer of 2018 unless the price per barrel continues to escalate Then both large and small deals will be on the market Either way the opportunities right now are everywhere on the map and more and more companies are taking advantage of them Oilman Magazine March April 2018 OilmanMagazine com 19

FEATURE Photo Credit Artem Egorov www 123RF com Subsea Technology Artificial Intelligence and Robotics Pushing Boundaries in Offshore O G By Samuel Cook To say times were different when the first Gulf oil well went into service is a bit of an understatement The year was 1938 and the Superior Pure State No 1 well was the first of its kind if not extremely risky One mile offshore the Creole Louisiana well used very little metal to drill into the sandy depths nor did it have much to support itself against rough weather at sea Instead 300 treated yellow pine pilings were bored 14 feet below into the Gulf floor while most of the well s 320 foot by 180 foot deck was also made of wood Predictably the structure didn t last long Two years later it was wiped from existence by a rather minimal Cat 2 hurricane that bumbled across the Gulf causing more flood damage than anything else Still while the the SuperiorPure State No 1 well never found any oil in its short existence it was a stunning proof of concept Drilling in the Gulf was no longer just a fanciful idea It could be done with the right tools engineering and technology But even as subsea oil and gas mining tech has improved dramatically over the intervening decades drilling in the Gulf remains an engineering challenge as well as an extremely expensive and dangerous venture Beyond outer space few environments are 20 more inhospitable and more unpredictable to mankind than the the deep sea As such finding ways to minimize direct human involvement and reduce risks is an ongoing battle Although we re unlikely to completely remove the human element in the foreseeable future both artificial intelligence and robotics are advancing to such a degree that fullyautomated drilling and exploration in the Gulf are closer than ever Realizing AI And Dispelling the Hype The oil industry often gets prodded for being slow to change and adopt new technologies When it comes to artificial intelligence or AI no fault should or could be given The mysticism currently surrounding AI often presents a false image perhaps drummed up by countless science fiction movies like Stanley Kubrick s 2001 A Space Odyssey or more recently HBO s WestWorld Invariably our fascination with AI stems from the idea that we can use it to surpass human limitations and completely divest ourselves from certain tasks This is also ignoring the fact that AI almost always ends badly for humans in popular media but I digress As it stands artificial intelligence is not what many people believe it is Far from human like machines with a human level of reasoning Oilman Magazine March April 2018 OilmanMagazine com current AI applications are mostly complex algorithms that are designed to help reduce errors that often occur when a human element is involved as well as create more efficient data collection and decision making processes This is indeed the case when it comes to AI applications in the oil and gas industry and especially in subsea drilling Take Quantico Energy Solutions in Houston Texas for example This 5 year old artificial intelligence company is on the forefront of applying new machine learning techniques to the oilfield We focus a lot on characterizing the properties of the rock explained Quantico CEO Barry Zhang As Zhang informed us the chief focus for their company is on big data collection However their method of data collection analysis and use is where the artificial intelligence applications really begin to shine for subsea drilling And for the subsea data collection is exponentially more difficult than it is on the surface The accuracy for subsea is a substantial requirement of entry Zhang said Instead of a 6 to 10 million well we re talking a 100 million well The unique challenge to subsurface is that there s not much data

FEATURE As Zhang pointed out part of the problem isn t just the difficulties working in the harsh environments that exist so far below the ocean s depths There s also a decreasing number of oil wells being constructed Fewer wells means less data Less data means an increase in inaccuracies regarding important decision making such as where to keep drilling Oil companies will run tools that are about 100 feet in length Zhang explained They re a collection of electrical acoustics and nuclear sensors They emit signals that traverse the nearby rock and measure what comes back Based on time volume and frequencies of measurements they can infer the density of the rock These tools are very expensive For Quantico the solution to data collection involves adding no extra tools or sensors to mining equipment We re using the drill bit as a sensor that s an interface with the rock We re using AI to tease out the properties of the rock but without washout intervals he said That means big savings for clients and importantly more accurate data collection Instead of using it real time I ll go back on a well where I didn t run these tools and use Quantico data to complete the logs Once you know what the rock property is that data is valuable he said Then of course there s the safety aspect It takes that sonic tool hours or in some cases days for that sonic tool to reach where the drill bit is drilled Even if you re running that tool the AI can give you the sonic properties much closer to the time You get that hours ahead of time Zhang said Faster comprehension of the rock s properties means a far reduced risk of hitting a cataclysmic blowout or ruining a drill bit by hitting an unexpected snag in the rock The last big application is that if you know what the rock properties are you can adjust how you drill that rock to be more efficient and in less time Zhang added Right now when they drill they can see the energy going into the drill rig But when the energy going into the rig shoots up but they re not seeing any performance in drilling speed that could be caused by multiple things That s where Quantico s artificial intelligence solutions come into play Those are the things that we do Zhang said For Quantico what the AI does is give you data where you did not have a direct measurement You didn t run a tool or a sensor but you find that insight valuable Before it was do I want to pay all this money to run a tool Quantico s AI has more extensive applications as well Yet for Zhang and others the mediacreated hype over AI has muddied the waters a bit while a realistic understanding of what AI can actually do are still impressive and valuable And as Zhang adds AI is not a replacement for current data collection methods It can serve as a complement But ultimately AI is a tool the industry needs in order to more effectively move forward ROVs help solve the physical limitations presented by human operators particularly at the depths now common with subsea oil operations However the precision typically available to human divers was a bit out ofreach for ROVs for some time And with many operations now working in 2 500 or more feet of water human involvement in the subsea is effectively impossible Said Zhang Embedding the geoscience as a constraint to the AI is a way that overcomes some of the challenges in places like subsea where running any measurement is expensive The push toward more advanced ROVs is not simply a desire it s a need Although ROVs have allowed oil companies to dig deeper and work more effectively under increasingly harsh underwater conditions for the past few decades the machines were for some time still limited by their lack human qualities Quantico s use of AI is of course not the only available option Zhang explained that their company specifically focuses on geoscience and geophysics because it s their competitive advantage But in their niche application of AI they ve excelled primarily because of the value add that s been seen by their clients which include Shell Statoil and Nabors Other AI applications exist Some are even incorporated into the other major technological leap for subsea mining operations remotely operated vehicles or ROVs ROVs Create a Safer Subsea Operation Subsea technologies have come a long way in reducing the number of worker safety concerns alongside bringing down costs and improving mining operations ROVs in particular allow companies to operate in depths simply untenable by human divers and even difficult for human operated vehicles HOVs And as new technologies emerge the industry is witnessing an even larger cross section between computing and robotics driving a new wave of ROVs that can surpass even the most skilled human divers Before the industry started using remotely operated vehicles in subsea mining the only options available were human divers and human operated vehicles Both however presented unique challenges Humans divers have a limited amount of time they can safely operate under water And due to the ambient pressure humans can only dive a few hundred feet Even then resurfacing is slow and decompression can be both timely and costly Thankfully an explosion of new technologies are now merging with ROVs allowing them to better mimic the human counterparts they replace in the deep sea operations Additionally improving data technologies are allowing for an advanced level of control unseen in previous decades ROV companies are focusing on providing better imaging and vision technologies to help increase precision operations advanced software that allows for more vehicle autonomy and attempts at better incorporating machine learning and artificial intelligence The latter may one day let ROVs learn how to solve the unique challenges with subsea drilling with less input from human operators For now however both work class and inspection class ROVs can operate with extreme precision while under human control and oversight Both types can utilize the nimble millimeter movements often necessary for tool placement and other functions And the introduction of new communications technologies such as 4G and in the near future 5G means ROVs can not only communicate without lengthy fiber optic cables but can communicate with each other using various radio frequencies Additionally speedier data connections mean incorporating complex programs into the vehicles much easier as huge amounts of data and stable data connections are required to operate such vehicles Commercial diving is an extremely dangerous occupation OSHA estimates that the commercial diving industry has a death rate of up to 50 deaths per thousand divers over the course of a worker s career ROVs are still not an end all be all for subsea drilling applications But emerging technology that allows for more nimble movements and more accurate tool usage makes them far better than their human counterparts Meanwhile HOVs offer some protection but still maintain many of the same limitations due to physiological restrictions on diving depths Additionally the machinery required to keep the human occupants alive reduces the overall functionality of the operating vehicle The science fiction stylized vision of both AI and robotics may never come to fruition in our lifetimes But with greater necessity comes more innovation As long as the industry continues to explore such options it s only a matter of time before science fiction becomes science fact Oilman Magazine March April 2018 OilmanMagazine com 21

OILMAN COLUMN Mobile Apps Boost Efficiency By Dusty Cooper Technology is outpacing oil and gas in growth but that s good for the industries In addition to the fact that processors screens casings and many other digital product elements rely on the oil and gas for manufacturing software and mobile devices have the potential to innovate operations boost efficiency and increase job safety Most companies utilize desktop software for bookkeeping payroll and inventory but some of the most useful yet overlooked software are applications for mobile devices App stores don t just have games and dating apps There are hundreds of powerful apps for running businesses that can revolutionize oil and gas production and distribution The bulk of operation costs come from out in the field processes Leveraging mobile applications to track production worker efficacy and equipment integrity will positively boost efficiency and lower overhead Companies have reported a 10 reduction in costs by implementing software into operations Everything from extraction to shipping can be managed from one device With software designed to keep everything organized and on track there s fewer opportunities for human error User experience optimization is at the forefront of software design so just about anyone can be trained to utilize the apps Nearly 80 of people in the U S own a smartphone and as the younger generations become employees they will have more experience with digital processes than with pen and paper The handwritten processes take time and more training than an app that can walk the user through stepby step For example inspections can be completed in half the time and requests for work orders can be processed immediately Apps can calculate complex equations with just a touch of a button providing managers with real time analytics Additionally everything can be stored on the device Even if an inspector or manager is on a rig in the middle of the Gulf any information collected can be locally stored and automatically transmitted once a network connection is made The 22 combination of decreasing human error while improving operations and production analysis times creates a smoother more efficient revenue stream lives or equipment on the line Virtual training and simulations will translate to onthe job safety detering equipment damage and preventing in training injuries As technology expands many people are leery of innovation due to a fear of robotics and AI taking their hard earned jobs mobile software is not a step in that direction In fact implementation of mobile apps secures jobs while cutting costs at the same time Most importantly the use of software can make high risk operations safer Before someone begins operating heavy equipment or processing machines they can be trained in a virtual world much like those popular games available in apps stores Training workers is costly as are on the job accidents While any process error or out of order maneuver could have tragic effects in the real world virtual training programs allow for mistakes Trainees can experiment and take risks which provides the opportunity to see and live through failures without putting Mobile software is a tool that should be embraced by the oil and gas industry not feared and postponed Whether using outof the box or fully customized software mobile applications support processes in dynamic ways in the office and out in the field Oilman Magazine March April 2018 OilmanMagazine com Dusty Cooper is a writer and photographer from Louisiana who utilizes his decades of experience as a content creator for Envoc in Baton Rouge Envoc is a software application development company specializing in custom and mobile software with an in house digital marketing team We work with companies all around the U S from start up pre funding stages to Fortune 500 in a variety of industries such as energy industrial state local government manufacturing healthcare education and retail

OILMAN COLUMN Interview Angie Binder Executive Director Colorado Petroleum Association By Dan Larson We sat down with Angie Binder executive director of the Colorado Petroleum Association at her downtown Denver office to discuss her first year in a new role and some of the key issues facing the oil and natural gas industry in Colorado The following are excerpts from that discussion Dan Larson What issues are you watching at this year s state legislative session Angie Binder Well local control seems to be the biggest issue right now Even before the session started one state senator had a local control bill ready But with our split legislature I don t see any big changes to the industry passing this year DL What are the other issues you are following at the Capitol AB At CPA we take the lead on air emissions fuels policy taxes and transportation And of course there s always a fight over where the money comes from and where it goes AB We see all the time how industry works with local government with neighbors to try and work things out There are many examples of companies spending months to work out Memorandums of Understanding with local government before they proceed with development Sometimes the MOUs even include comprehensive development plans that look years down the road Local governments are required to have a local government designee on staff whose job is to connect the Colorado Oil and Gas Conservation Commission with town and county governments and with communities A big part of that role is passing along what the commission is doing so there are no surprises DL Why is it that programs like the local government designee and the others that protect communities get overlooked by opponents to oil and gas AB The volume is up on all political rhetoric A lot of it is NIMBYism people just don t want a gravel pit or liquor store or a When you look back none of these issues are WalMart in their community It s a part of our new to Colorado Oil and gas drilling here goes democracy The problem is when the discourse back decades and Colorado has a long history gets so loud it becomes difficult to have any of managing the conflicts between operations public policy discussion and communities Colorado s oil and gas What s different today is everything is louder industry has a history of safe operations Yes and amplified through social media For the there have been incidents they are rare and past 10 years Colorado has produced the very unfortunate but they do happen toughest oil and gas rules in the country This DL It seems like opponents support for local state is constantly updating its rules to keep up control has grown lately What s behind that with advances in technology and operations movement Whether it is the oil and gas commission air regulators tax policy labor issues or at the AB Local control is not a new issue What is federal level there s always something going on different is the rapid growth we are seeing in in this industry Colorado and where the cities are growing it is often right on top of the resources People DL There are four trade associations that want to feel like they have some control over serve the oil and gas industry in Colorado what happens in their communities They What differentiates CPA from the others go to their town council and want them to AB There are plenty of issues facing this do something And when they can t there s industry and we think there is space for all frustration four In addition to E P and pipeline issues We have statewide policies because some CPA s focus is on air issues for our refiners rights have to be protected on that level State and the fuels they produce We represent rules protecting the property rights of mineral all segments of the industry on tax issues owners should not be subject to local political and transportation and even lend a hand whims State agencies also have the technical on retail when called on This year we see staff with the education and experience to our membership growing and that s not just understand these very technical operations because prices have improved There are so many issues that require attention an operator DL Can these conflicts ever be resolved Angie Binder Dan Larson may want a bigger voice that comes from membership in a smaller trade group Our members come from all of Colorado and many are from out of state Colorado is a bellwether for policies and regulations so it is important to keep up with issues here We also have the contacts at all levels of government all the way up to the federal level DL As the industry emerges from the downturn what should we watch for AB We have seen a tremendous change in the oil and gas industry in the past three years The industry is in flux and companies are still adjusting to a new business model It s all about efficiency We can drill a well in a fraction of the time with automated rigs but that also means there are fewer people working on the rig We can drill more wells faster but the neighbors still don t want to see a 20 well pad down the block For an industry this highly regulated there are more than enough issues to keep our trade organizations busy Angie Binder was named executive director of the association one of the oldest in the state in February 2017 A native of Lamar CO Binder earned an undergraduate degree at Metro State University in Denver and a master s certificate at the University of Denver She has served in town county and state governments and was Senior Director of Government Affairs at Encana Corp in Denver for more than eight years More recently Binder served as Public Information and Legislative Coordinator at the Colorado Community College System Binder reports that over her career she has traveled to all parts of Colorado and been in all but three of Colorado s 64 counties Oilman Magazine March April 2018 OilmanMagazine com 23

OILMAN COLUMN Growing Cyber Threats to Oil Gas Facilities By Phil Neray A few months ago the world learned of a targeted cyberattack on a petrochemical facility in Saudi Arabia Now known as TRITON the Stuxnet like attack shut down the facility and allowed the attackers to gain control of a critical safety system that provides emergency shutdown of plant processes These Safety Instrumented Systems SIS are designed to avoid catastrophic safety and environmental damage when certain thresholds are reached such as an oil storage tank that reaches dangerous temperature or pressure levels testing buggy malware code in a production environment This caused a fair amount of disruption to the asset owner by shutting down the production facility but did not cause any further damage Sophisticated Multi Stage Attack The attack appears to have been carefully planned and occurred in a number of stages In the first phase the attackers gained access to the industrial control system ICS network in order to perform cyber reconnaissance of the environment We Although TRITON was a targeted attack don t know exactly how this occurred specifically designed to compromise a particular model and firmware revision level but a common approach is to use an email phishing attack to compromise the of Triconex SIS devices manufactured by credentials of a control engineer who has Schneider Electric the tradecraft exhibited remote access to the ICS network such by the attackers is now available to other adversaries who can quickly learn from it to as a 3rd party contractor or industrial automation vendor that performs remote design similar malware attacking a broader range of environments controller types and management and maintenance of the equipment industrial automation manufacturers We speculate that the purpose of the attack was to disable the safety system in order to lay the groundwork for a 2nd cyberattack that would cause catastrophic damage to the facility itself potentially causing large scale environmental damage and loss of human life We re fortunate that the attack failed because the attackers made the mistake of 24 The next step was to compromise a Windows based engineering workstation in the environment Again we don t know precisely how this occurred but we can surmise that the attackers may have exploited an unpatched Windows vulnerability to gain control of the workstation Windows based systems are Oilman Magazine March April 2018 OilmanMagazine com rarely patched in many ICS environments to make matters worse many are still running older versions of Windows for which security patches are no longer available In fact in our Global ICS IIoT Risk Report which analyzed real world network traffic from 375 production ICS networks worldwide we found that 3 out of 4 industrial sites are still running older versions of Windows such as Windows XP and Windows 2000 It s also possible the attackers exploited a zero day Windows vulnerability for which a patch has not yet been released We surmise that the attackers then used the engineering workstation as a launching point for cyber reconnaissance operations in order to determine the exact

OILMAN COLUMN manufacturer model numbers and firmware revision levels of the safety controllers Of course this could also have been achieved using a compromised insider The final step was compromising the safety controller itself Anatomy of the TRITON Malware The attackers developed custom modules to communicate with the controller using the same protocol the TriStation TS311 software itself uses to communicate with the Triconex controllers from the engineering workstation Their principal achievement was to exploit a zero day in the controller firmware in order to inject a Remote Access Trojan RAT into the firmware memory region of the controller without interrupting its normal operation and without being detected We believe the purpose of the RAT was to enable persistent access to the controller even when the physical key was turned to RUN mode which is designed to prevent unauthorized updates to the PLC code rather than PROGRAM mode This is why we believe that this attack was merely the first phase of a much larger planned attack In order to test the backdoor and the functionality of the injection which required precise knowledge of the memory offsets in the firmware the attackers must have had the exact same hardware and firmware with the right revision level available in their physical lab environment to test it This also demonstrates once again that extensive preparation was required at a level which we ve only previously seen associated with nation state attacks such as Stuxnet and Industroyer the targeted ICS malware used in the Ukrainian grid attack of 2016 How to Defend Against Similar Attacks in the Future There are a number of best practices that oil and gas organizations can implement to protect themselves from similar attacks in the future including Deploy safety controllers on isolated networks that can t be reached from the production network However this isn t always feasible due to practical considerations Implement physical controls such as locked cabinets to prevent unauthorized personnel from having physical access to the controllers Only switch the physical key to PROGRAM when necessary such as during scheduled programming events Scan all laptops and removable devices USB drives etc for malware before connecting them to the production or safety network Identify the most likely attack paths to your most critical assets and mitigate vulnerabilities enabling attackers to exploit them Some vendors offer automated threat modeling to accomplish this Implement continuous monitoring with behavioral anomaly detection to immediately alert on unusual activities such as Unauthorized scanning of the network which can indicate cyber reconnaissance operations Unauthorized changes to controllers such as uploading new firmware or ladder logic code Protocol violations indicating malicious attempts to compromise devices for example by causing a buffer overflow condition using unpermitted packet structures or field values Known malware behaviors TRITON WannaCry NotPetya Havex Industroyer Conficker etc Fortunately modern ICS cybersecurity systems have evolved to the point where we can now use passive network monitoring which has zero impact on the ICS network and detailed packet dissection of ICS protocols combined with advanced selflearning algorithms to detect this type of anomalous activity in real time without relying on rules specialized skills or prior knowledge of the environment Phil Neray is VP of Industrial Cybersecurity for CyberX a Boston based ICS cybersecurity company founded by military cyber experts with nation state expertise defending critical national infrastructure Prior to CyberX Phil held executive roles at enterprise security leaders including IBM Security Q1 Labs Guardium Veracode and Symantec Phil began his career as a Schlumberger engineer on oil rigs in South America and as an engineer with HydroQuebec He has a BSEE from McGill University is certified in cloud security CCSK and has a 1st Degree Black Belt in American Jiu Jitsu Oilman Magazine March April 2018 OilmanMagazine com 25

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Gas Oil Museums Midstream Expansion Crucial to Keeping the U S Economy Competitive Blockchain IoT and Wearables Enter the Digital Oilfield Interview Dr Lee Hunt Partner Hunt Petty LP p 8 p 9 p 12 p 18 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY March April 2018 OilmanMagazine com

OILMAN COLUMN Tidwell Proves the American Dream Can Still Be Great Again By Jason Spiess A little over 15 years ago Steven Tidwell who then was a farmer just trying to make ends meet met an entrepreneur who developed an innovative product with a wood burning stove and insulation This little design became the simple baseline for a product that could trap hydrocarbons and revolutionize the oil and gas industry Tidwell s father who had just retired from Schlumberger immediately saw the benefits of this product in the oil and gas industry The two decided to put on another hat and became a father and son duo in the oilfield service industry Their story is just another example of how agriculture and energy continue to work hand inhand with farmers ranchers and landowners The Tidwells are still helping oil and gas companies across the Southern U S fifteen years later even with the ups and downs of oil prices We built our company off hard work and reputation Tidwell said We first started this company out to be successful on a local level Tidwell added that the fact that his father built a strong local company with a good reputation was not lost on him either especially when the thoughts and conversations of growth and expansion came about Being the son I had bigger aspirations and more time to work with so we looked at doing bigger and better things with the product Tidwell said Fifteen years later Tidwell has been working for some of the biggest names in energy midstream upstream and downstream Tidwell s recent growth seems to focus around a couple of main areas within the industry stemming from oldfield and hydrocarbon remediation But one of the recent catalysts for his growth has been cost As most people would know if you have been in the industry and you work in the industry then you know the number one is the cost Tidwell said Not only the cost to remove it but there is also a big problem with overpricing certain materials on the job Tidwell continues and clarifies his comments further regarding how there are certain hard costs that are relatively known industry wide like remediation However the devil can always be in the details like labor and equipment use The traditional method of actually remediating a job site would be to dig and haul and that brings in a great deal of men labor hours heavy 28 equipment and materials You can see where over billing or rounding up can occur Tidwell said And this was before we started looking at contaminated materials and transportation cost savings According to Tidwell once you leave a site with contaminated material you have to keep a paper trail for regulators This can often increase more labor hours and transportation costs too Labor costs have been a big problem when dealing with remediation and we feel like we spearhead some of the savings in the cost of remediation with our innovation and proprietary product Tidwell said After talking turkey with Tidwell the conversation became directed to on site remediation or In Situ Remediation According to Tidwell turning a contaminated spill into a non hazardous material that is approved by the EPA would be a basic goal with In Situ Remediation One of the more common types of In Situ remediation is a microbial Tidwell said This is a bug that is instituted into a liquid which is then dispersed over an area of contaminated soils or materials After discussing the cool factor behind man discovering the ability to use a living organism to clean up a contaminated area Tidwell began explaining why that living technology has been surpassed by a new environmental innovation One of the issues with microbials is that it is a living organism so you have to keep that living organism alive Tidwell said If the pH level in the soil is really high you are going to kill the bugs and you ve just wasted a lot of money with the microbial and labor And on the flip side when it does work it has maintenance Tidwell offered several other costs and logistical examples indicating more signs of the energy evolution powered by innovation He also noted one of their biggest challenges over the past several years is educating the industry on a new way to clean up spills If you are trying to bring in a new product to the industry and such a large industry like oil and gas it strings and takes a lot of knowledge and experience to get to the point where you can talk to the environmental people he said That way they have the knowledge they need because they Oilman Magazine March April 2018 OilmanMagazine com Photo courtesy of Steven Tidwell Tidwell Industries have certain regulations and stipulations they have to go by After 15 years of educating the industry and having their product tested over and over Tidwell is enjoying some beyond local growth He thinks some of that credit should go to his company s ability to communicate and work with regulators Coming from an agriculture background I understand the need for regulations and believe in environmental quality Tidwell said In fact for one of our customers we did a job in a national forest which you can imagine how much tighter the regulations are there But in one day we re able to take a large amount of black oily dirt turn it back to its original color and put it back in the hole by the end of one day Tidwell was quick to point out that many stars were aligned on that particular day in order to get an entire job done in one day citing an average job time would be three days Still even at three days it is much faster than the old technology that takes several weeks We are taking contaminated hydrocarbonated soil and our product actually attached itself to the hydrocarbons and binds to it Tidwell said Once our product attached itself to the hydrocarbon it won t release it even in water So we have actually even done jobs on water Citing that every job is a little different and some of the techniques can sound technical Tidwell accepts the fact that any job in today s everchanging oil industry may still become a little bit of Environmental University However it s that slow and steady wins the race approach that America was built on When we first started out 15 years ago we were a small local company that was fortunate enough to be working for some of the top companies in the industry Tidwell said Here we are 15 years later and they still use us

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