Oilman Magazine Nov/Dec 2016 : simplebooklet.com

Safety is a key component to everything we do in the oil and gas industry, whether it’s on-or-offshore. Most of the time safety measures are only reviewed when we are faced with handling dangerous equipment that could do us harm or damage equipment. However, as we know, health, safety, and environmental concerns are all around us throughout the day. I’ve been working in the industry for over 10 years, and during that time, I’ve been constantly reminded to think about safety at work and home. In the ofce setting, where a good portion of the oil and gas industry employees work, our work desk, ofce space, and cubes can present health and safety hazards that we’re not aware of. What I’ve encountered in my work setting is inadequate chairs that don’t support my back or height requirements. Which leads to neck and back pain. Monitors that sit too low on my desk. Overhead uorescent lights that are overwhelmingly bright, which over time leads to mild headaches. My remedy to these problems were simple with a small investment. For my chair, I bought a form tting cushion for back support and adjusted the height so that my arms rest evenly on my desk. I use two monitors for the work I do and I bought stands to raise my monitors to just about eye level. Ideally, I would prefer to turn off the lights and use my desk task light, but that’s not possible in my ofce setting. The next best option for me was to have facility management remove two of the four bulbs in the light xture directly above my desk. If you think about it, there are always health and occupational hazards around us from the breakroom to the restroom. Being aware and watching out for potential hazards will serve you well at home, on the road, and even on a holiday break. MAGAZINE NOVEMBER — DECEMBER 2016PUBLISHED BY Oilman Magazine, LLCP.O. Box 771872 Houston, TX 77215(800) 562-2340OilmanMagazine.comPUBLISHEREmmanuel Sullivanpublisher@OilmanMagazine.com(800) 562-2340 Ex. 5EDITORJennifer DelonyDIGITAL CONTENT MANAGERTim McNallyGRAPHIC DESIGNERKim FischerCONTRIBUTORSDon Briggs— LOGA President.......Mark Stansberry— Chairman of The GTD Group.......Joseph DeWoody— President of Clear Fork Royalty, an oil & gas royalty investment company located inFort Worth, Texas.......Steve Burnett— CrudeOilCalendars.com....Story Sloane III— The Sloane Gallery in Houston,Texas (281) 496-2212).......Paul Flessland— Photographic Artist, PaulFlesslandPhoto.com.......Jason SpiessJoshua RobbinsSUBSCRIPTIONSOilmanMagazine.com/subscribeADVERTISING(800) 562-2340 Ex. 1advertising@OilmanMagazine.comOilmanAdvertising.com© Copyright 2016 by Oilman Magazine, LLC. All rights reserved. Reproduction without permission is prohibited. All information inthis publication is gathered from sources considered to be reliable,but the accuracy of the information cannot be guaranteed.Image credits — The Sloane Gallery, Houston, TX; 123rf.com..........LETTER FROM THE PUBLISHERCONTRIBUTORS — BiographiesDon BriggsDon 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 oileld 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. StansberryMark A. Stansberry, Chairman of The GTD Group, is an award-winning author, columnist, lm 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 SpiessJason 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 Macís 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 elds with diverse guest ranging from U.S. Senator Mike Enzi (WY) to the traveling roadside merchant selling ags to the local high school football coach talking about this week’s big game.Joshua RobbinsAt Beachwood Marketing Group, our mission is to market oil and natural gas properties in the most cost effective and efcient way. We strive to provide excellent leadership and unparalleled service for each of our clients. Josh has been instrumental in dening Beachwood’s market leading solutions and has overseen the company’s expediential growth. Josh is also an accomplished writer on the acquisition and divestment market and a speaker and presenter at conferences. He continues to keep his focus on the strategic direction of Beachwood Marketing Group and its expansion into new markets. Paul FlesslandPaul Flessland is an editorial, event and portrait photographer based in Fargo, North Dakota. Featured in over fteen regional and national publications, Flessland is passionate about visually telling the story of the Bakken’s impact on North Dakota and the nation. Visit his website at paulesslandphoto.comJoseph DeWoodyJoseph P. DeWoody (@jpdewoody) is the president of Clear Fork Royalty, an oil and gas royalty investment company located in Fort Worth, Texas. Clear Fork Royalty works with accredited investors, trusts and family ofces to provide portfolio access to oil and gas mineral rights and royalties to hold for long term investment through various direct investment vehicles. Joseph was selected by Oil and Gas Investor Magazine as a winner of the Top 20 under 40 Award, and by TIPRO and Texas Monthly Magazine as a Texas Top Producer. Joseph is a member of the Young Presidents’ Organization (YPO). He was appointed by Texas Governor Rick Perry to a six year term on the Texas Board of Professional Geoscientists. He serves on the Board of Directors for the National Stripper Well Association and the Texas Alliance of Energy Producers.Steve BurnettI 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 oilelds 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 rst 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.Oilman Magazine / November-December 2016 / OilmanMagazine.com2Emmanuel Sullivan, Publisher, OILMAN Magazine

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Oilman Magazine / November-December 2016 / OilmanMagazine.com10OILMAN COLUMNThe 26th Annual IEPC energy policy conference is planned to be held in Detroit in 2018. Recently, I visited there and the “energy buzz” in Detroit seems to be focusing a great deal on fuel cells, electric vehicles, and natural gas vehicles. When it comes to fuel cells, natural gas will be a main source to obtain hydrogen, which is used along with oxygen. Natural gas will serve as one of the power generation sources to provide electricity for electric vehicle charging. There are over 130,000 natural gas vehicles (NGVs) on U.S. roads today.As Boone Pickens states, “natural gas is a fuel capable of offsetting imported diesel to power heavy trucks—the 18-wheelers which move goods around America.” Items made from natural gas include fertilizer, paint, carpet, furniture, detergent, anti-freeze, lenses, footwear, signs, sweaters, and electronics. About one-half of the 120 million U.S. households are direct customers of natural gas. Natural gas is used for home heating, cooking along with other purposes. Since September 2015, associated-gas production outside the Northeast, the country’s fastest-growing gas-producing region, has fallen by nearly 9 percent, or about 2.5 billion cubic feet a day, according to energy data rm Platts Analytics Bentek, (Wall Street Journal 10/12/16).That drop-off is enough fuel to power roughly 13 million U.S. homes daily, and one reason monthly heating costs are poised to rise. Natural gas heats about half of all U.S. homes while another one-third are heated by electricity, which is increasingly generated by burning gas, according to the U.S. Energy Information Administration. Natural gas for November delivery closed at $3.3470 million British thermal units on Oct. 11.More and more power producers are switching from coal to a cleaner-burning natural gas. There were 94 rigs drilling gas wells in the U.S. as of this writing. Dr. Eric Claeys, professor at George Mason University, in “The Case for Shale” states, “…in a system of free enterprise, owners use their land to make their own lives better, and everyone benets when energy companies increase the supply of energy available for all. The shale revolution needs more champions who can remind American citizens why. And so does the American system of free enterprise generally.”Natural gas is the fuel which allows the U.S. to “strive for energy efciency and environmental preservation” as has been the theme of the IEPC energy policy conference, which I founded and have chaired since 1992. Robert Hefner III’s book The Grand Energy Transition in the past few years has brought national and international attention. Ted Turner purchased several hundred copies of Hefner’s book and had them distributed to Congressmen and Fortune 500 executives. Turner stated about the book “if you care about the future you must read the book.” In 2012, Gray Frederickson, Academy Award winning producer, MeiLi Hefner and I were producers of The GET, (The Grand Energy Transition) documentary based upon Hefner’s book. We believe that it is important that natural gas be a focus in the national energy debate. Having been in the natural gas industry for close to 40 years, it is my strong belief that America Needs Natural Gas! In Los Angeles, I have seen how natural gas is making an impact. I have seen up and down the busy streets of Los Angeles the nation’s largest eet of buses in the country running on compressed natural gas. There are over 2800 NGV buses in operation within Los Angeles.The U.S. Energy Information Administration forecasts natural gas consumption will increase from 325 billion cubic feet in 2015 to 390 Bcf/d by 2025 and to more than 500 Bcf/d by 2040. Liqueed natural gas is projected to account for a larger share of the world’s natural gas trade. We need to strengthen our support for the Natural Gas Industry. We need to support Advocacy/Education. America Needs America’s Energy! And America Needs America’s Natural Gas! America Needs America’s Natural Gas!By Mark A. StansberryPhoto Credit: Jeffery Longa - www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com12OILMAN COLUMNThe oil and gas industry is drowning in data. Oil & gas operators routinely collect various kinds of data: ow rates, temperature, pressure, drill speed, failure rates, subsurface characteristics and more. But how is the industry putting this data to work? New analytical techniques drawn from the elds of statistics and computer science can help oil & gas companies make sense of the data deluge to make more efcient and effective development and production decisions. What’s the Big Deal with “Big Data”? Data analytics is already transforming elds from consumer marketing to medicine to cybersecurity. It is now poised to be a game changer for the oil & gas industry as well. But what do we really mean by “big data”? The industry has always collected and used data to make decisions for exploration, development and production. What is different now is the volume, velocity and variety of the data that we collect. Instead of collecting tens or hundreds of data points for an oil well over the course of a day, we now routinely collect hundreds of thousands of data points. New sensor technologies, faster computer processors and advances in scientic understanding of subsurface geology and uid dynamics (among other elds) have vastly expanded the types of data we are able to collect, the rate at which we are able to collect it, the precision and accuracy of the data, and the conclusions that we are able to draw from it. Pulling actionable insights out of all of that data requires sophisticated data analytics. Analytics (also referred to as data mining, statistical learning or knowledge discovery) allows us to analyze large volumes of data from disparate sources in order to extract meaningful information that can be used to increase operational efciencies. Analytics can identify the patterns and relationships hidden in large, complex datasets so operators can understand what the data is telling them and predict how different operational decisions may impact outcomes.Applications for Data Analytics in the Oil & Gas IndustryData analytics can be used across all phases of oil & gas exploration, production and operations. Some of the most promising applications include: • Exploration data mining: Analytics can be used to nd hidden patterns in large geologic datasets in order Bringing ‘Big Data’ to the Oil Field By Dr. Srikanta Mishra Photo Credit: ymgerman - www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com13OILMAN COLUMNto build better correlations, create synthetic logs at unsampled locations, identify sweet spots, etc. • Reservoir management: Analyzing eld data can help to identify factors that impact reservoir performance and predict the production potential of oil and gas wells based on their characteristics. • Proxy modeling: Reservoir modeling has long been used to make performance predictions and development decisions. However, building a detailed model can take months or years, and running a single simulation may take days or weeks. Data analytics can be used to build “proxy models,” i.e., fast system emulators that can run hundreds of simulations per day to support computation-intensive tasks, such as optimization and uncertainty quantication. • Performance forecasting: Analytics allows for rapid prediction of production in large oilelds. Statistical models can also be used to identify optimal scenarios for Enhanced Oil Recovery (EOR) efforts. • Predictive maintenance: By combining real-time data with past performance data, operators can use data analytics to predict potential failures before they occur and make appropriate operating and maintenance decisions to avoid unscheduled delays. For example, models can be built to estimate wear on PDC bits and other types of equipment or predict wellbore integrity. Getting Started: Putting Data to WorkIn order to put big data analytics into practice, oil & gas companies need to have appropriate infrastructure and technology tools in place. It’s not enough to just collect lots of data. You need to have systems that are able to collect, compile and organize the data in centralized repository for analysis. You also need sophisticated analytical tools that are able to extract meaning from all the data points. Building a big data program requires several layers of hardware and software. • Infrastructure: The foundation of a data analytics program includes the technology needed to collect and store data, including servers, networks and clustering software. All of the data needs to be brought together in one place for storage and analysis. • Data organization and management: In order to be able to utilize data from a variety of sources—which may include both structured and unstructured data—the data must rst be extracted, cleansed, tagged and integrated. • Analytics and discovery: Once data has been tagged and organized, it can be analyzed. This layer includes software programs for data discovery as well as sophisticated programs for deep analysis and automated, rules-based transactional decision making. • Decision support and automation interface: This is the layer that supports the humans in the equation with tools to enable risk management, scenario evaluation, collaboration and decision capture and retention. The Future of Data Analytics in Oil & GasThe age of “big data” in oil & gas is just dawning. Over the next few years, the industry can expect to see many more applications of statistical and machine learning methods, including tools for digital oil eld management, real-time analytics and predictive maintenance. Using data-driven insights will be increasingly important as the industry continues to search for ways to squeeze more production out of existing wells and improve operational efciencies. Putting the infrastructure in place to support data mining and analytics may look daunting. However, technology and software advances have increasingly made advanced data analytics accessible for even small and mid-range producers. These statistical methods are a practical alternative for day-to-day decision making when advanced computer modeling is not practical or feasible. Now is the perfect time for companies of all sizes to explore the power and potential applications of big data in the oil eld. Dr. Srikanta Mishra is a Senior Research Leader at Battelle. He joined independent research-and-development organization in 2010 after a distinguished career in environmental consulting, including an appointment as Adjunct Professor of Petroleum Engineering at University of Texas. He is nationally and internationally recognized for his expertise in subsurface resource management, and regularly presents lectures, workshops and short courses on hydraulic fracturing related environmental impacts. He holds a PhD in Petroleum Engineering from Stanford University. Dr. Srikanta Mishra

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Oilman Magazine / November-December 2016 / OilmanMagazine.com15My last article The Art of Business Development has garnered a lot of attention in the oil and gas acquisition and divestiture community for the past two months. And it wasn’t because my views on business development are groundbreaking or new. It actually caught re because of what Beachwood does, day in and day out: we develop relationships and close deals.And in this current market of oil and gas A & D, that is something worth talking about. If you are currently in the market for oil and gas assets, and you have a budget under $400 million, closing isn’t an everyday occurrence. But with the price of oil (and gas) where it is, you should be. The value of the assets (for the past year) has been relatively unchanged because of the stagnant oil and gas prices. Surprisingly enough, we have found that it’s not the oil and gas price that inks the deal at the closing table. It’s the relationships, and the ability to nd deals actually worth inking.There will be more deals in Q4 than the collective total of deals available in all of 2015. The focus will continue to be on the hottest areas (Permian, STACK), but you will also see deal ow from all different locations in the country. As gas continues its trend upward, there will be more targeted acquisitions in the Barnett, Haynesville and Marcellus. These deals will not be highly publicized and in many cases will not appear on the sites many of you frequent to nd the newest opportunities. What you will nd, and what is highly publicized, are the “lower 20 percent” deals. The lower 20 percent are the wells that are uneconomic, that pull budgetary numbers down, and that require signicant additional investment. These deals are highly discounted and readily available. There are companies that can make huge prots on the lower 20 percent wells, but most cannot.What many of you have told me in the past few months is that you are tired of looking at these deals; that you don’t have the time to burn away on a deal that looks great on paper, and ght with 30 other oil and gas rms trying to get the highest bid. Because your time is valuable. Because you have no desire to bid on anything. You want to close. Beachwood primarily focuses on the development of our client’s market share. We build targeted acquisition plans based on economic validity, potential growth area, type of asset and current area of operation. We contact nearly 1,600 oil and gas rms per month, uncovering deals not available on the open market. Our relationships allow us to open doors and close deals. I didn’t write this article, the last article or the nine articles before them as a boast or as an advertisement, I just wrote how we develop business. This industry has never been on the shoulders of men and women not interested in working hard. Finding deals is no different. If you want to do things no one else can do, you have to build something no one else has. At Beachwood that meant building an organization in the deepest oileld downturn in recent memory, and lling it with highly talented and driven individuals. It’s not an easy feat to continuously reach out to oil company after oil company. It’s hard work, and we take pride in what we’ve built, and the relationships we have.You can close. Whether you are looking for deals, a lower LOE, a service contract or getting that very sought after position at an oil and gas rm. Closing is no more than effort, time and talent all meeting together at the right moment with the right person.End 2016 with a great close, and your 2017 will look that much brighter. The Close: Focusing on RelationshipsBy Josh RobbinsOILMAN COLUMNJosh Robbins, Beachwood Marketing Group. Credit: Edgar Lance Photography Photo Credit: rawpixel - www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com17OILMAN COLUMNEffective leadership in business is a critical element in achieving and maintaining success. Smart businesses constantly work on improving and developing leadership skills within their organizations to maintain a position of strength in the industry.One area we sometimes neglect identifying leaders in is the area of safety. When we think of safety leadership within an organization, we assume top management is leading the charge. The reason we make this assumption is because they develop the corporate vision, dene the strategic direction and provide the resources to support corporate safety initiatives.To fully understand safety leadership, we need to look beyond top management. There are three types of safety leaders in every organization – the unidentied leaders, the inuencers, and the real safety leaders within the organization. These employees have great inuence on production and safety efforts in positive and negative ways.Here is an example a consultant shared with me several years ago. He was working with a manufacturing plant where employees were not wearing safety glasses and steel toe boots. The plant had a number of accidents and injuries, and in every case affected personnel refused to wear their safety gear. Management could not get full compliance no matter how hard they tried to inuence their employees. After meeting with management to discuss their frustration, he decided to meet with employees to gain a better understanding of why they would not comply with the safety rules.During his meetings with employees, he discovered their refusal to comply was because their coworker Mary (unidentied leader) did not wear her safety glasses or steel toe boots. When he met with Mary and asked her why she refused to comply with the safety rules, she responded that management always communicates to the employees the benets of compliance with safety rules. She said if management would communicate the benets of wearing safety gear to employees and show sincere concern for employee welfare she would gladly follow the safety rules.The consultant convinced management to do just that. Within a month there was full safety gear compliance throughout the plant.Safety leaders known as inuencers can be management or non-management personnel. Inuencers are people who others follow because they are inspired by them. They have great energy, are engaging and have a sincere concern for the well-being of the people they work with. These leaders help the people who follow them to see the value of doing the job correctly and safely. Finally, there are true safety leaders in the organization. True safety leaders set the pace and drive the safety process. They lead by example and provide great direction for all personnel to follow. True safety leaders also have a great concern for their fellow employees and work hard to keep everyone safe on the job.Contrarily, ineffective safety leaders in the organization can adversely affect not only safe production, but the performance of the entire organization.Ineffective safety leaders promote unsafe behaviors which can result in more incidents/accidents, lost work days due to injuries, and the potential for an increase in insurance and production cost. Ineffective safety leaders can also be a catalyst for negativity in both production and employee morale. These increases in negative effects can hinder an organization’s ability to stay competitive in the market place.To have an effective safety initiative for the long term, we need to identify our unidentied leaders, inuencers, and true safety leaders in the organization. Top management cannot simply mandate safety performance and expect the safety initiative to succeed. Every organization needs employees and leaders engaging and buying into the safety program for it to be effective long term. We need to understand what motivates each of these leaders to move in a positive direction. Once we understand their motivation, we can cultivate their leadership to assist the organization in creating a safer and more productive work environment. We need to ensure our employees and leaders feel we truly value their work, we value their ideas and we genuinely care about them. If we can achieve this, we will be more successful as an organization and more successful at providing a safer workplace for everyone.Dwight D. Eisenhower once said, “Motivation is the art of getting people to do what you want them to do because they want to do it.” Safety leaders are the cornerstone for motivating, not only safe behaviors, but setting the standard of why every employee matters and how they drive success of the organization.Richard Perkins has worked in safety and risk management for 22 years and has a long tenure with LWCC’s loss prevention department, working as a loss prevention representative and most recently as the loss prevention outreach coordinator. LWCC, headquartered in Baton Rouge, Louisiana, is a private, nonprot mutual insurance company that is rated “A” (Excellent) by A.M. Best Company. Who Are Your Safety Leaders? The Answer May Surprise YouBy Richard PerkinsRichard Perkins, LWCC

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Oilman Magazine / November-December 2016 / OilmanMagazine.com19Oilman Magazine / November-December 2016 / OilmanMagazine.com19FEATUREWork hazards in oil and gas abound — re and explosions, falls, chemicals, machinery, and remote work sites come together to make the industry one of the most dangerous in the U.S. In 2014, the year for which the most recent compiled safety data is available, the Bureau of Labor Statistics’ (BLS) fatality rate for oil and gas extraction was about 16 per 100,000 workers — 10% higher than the fatality rate for all mining categories.In its April 2016 report on worker safety and health in the U.S., the national federation of unions AFL-CIO called for “intensive and comprehensive intervention” in setting standards for health, safety and the environment (HSE) for oil and gas workers. The report said that rapid growth in the sector since the early 2000s brought a signicant increase in fatal injuries. BLS statistics from 2003 to 2014 show that about 1,300 workers were killed on the job, with the number of fatalities reaching the highest ever in 2014. These statistics stand despite the rigorous efforts of oil and gas companies to promote safety culture at every level of their organizations. And yet, it is important to recognize that data available to date reect an industry still in its state of growth. Data for 2015, due at the end of this year, and subsequent gures for 2016, will speak to how the industry has fared in terms of safety since oil prices dropped at the end of 2014.For insight into how the industry has reacted in the downturn and what that reaction has meant for HES, Oilman spoke with Jim Spigener, executive vice president at safety services provider DEKRA Insight.Spigener has been working with major oil and gas rms for many years – on both short- and long-term safety projects and programs. For example, he has spent 25 years working with Shell in the offshore market, from helping the company institute an employee-driven behavioral process to supporting the company during serious incidents in terms of investigation and understanding of workplace processes that led to the incidents.DEKRA provides similar services to other rms – he said that about 70% of DEKRA’s work in the oil patch is with ExxonMobil and Shell, and the remaining 30 percent is with ConocoPhillips, Chevron and BP.DEKRA has a wide range of services that it offers companies to support safety culture.That support can start with identifying what kind of culture the company wants to have, Spigener said, and then they use validated tools to determine what the current culture is. “Once we have determined what that culture is, we collaborate with them to do intervention at various levels of the organization,” he said. “At the most senior level, we have leadership diagnostics that get at the place where leadership needs to strengthen their approach, and we have various training and intervention modules for the middle of the organization.”At the “shop level,” Spigener said that DEKRA helps companies develop a behavioral approach – showing workers how to get peers to understand what the exposures are that are causing injuries, how to measure them, and see how they contribute to them.DEKRA also offers coaching for leaders using a neuroscience approach.“We help people understand how to look at safety from the perspective of understanding that mistakes are going to happen – the way our brains are set up, as humans, we are most likely going to make mistakes,” Spigener said. “And what we want organizations to begin to recognize is, how do we anticipate the fact that mistakes are going to be made and how do we change the system so that when the mistake is made, the consequence is not dire.”Additionally, DEKRA works with companies on fatality prevention. Photo Credit: Dzmitri Mikhaltsow - www.123RF.comJim Spigener, Executive Vice President, DEKRA Insight

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FEATUREOilman Magazine / November-December 2016 / OilmanMagazine.com20“We’ve done a tremendous amount of research, and we’ve come to the nding that fatalities and very serious incidents do not come from the same causes as normal OSHA recordable-type injuries,” Spigener said. “Unless you understand what the precursors to those kinds of events are, and you begin to put in some sort of mitigation for those, you could actually have a very low OSHA recordable rate and still have a fatal incident.”HES and the DownturnWith his extensive experience providing a wide range of safety services to major players in the oil and gas industry, Spigener has been in a unique position to observe the industry’s response to the downturn – in terms of HES – since 2014. “With the companies that I spend the most time with, one of the things that became of great concern during this downturn was the fact that people, as human beings, tend to want to do what’s necessary to preserve and protect themselves,” he said. “In a downturn like this, the risk of getting hurt seems minor compared with the risk of losing your job.”He explained that he has worked extensively with clients to help them send the message to employees that what the organization is really paying attention to, when it comes to who will be laid off, is who recognizes that safety during a downturn is as or more important than it was during the boom.DEKRA’s clients have sought support in identifying whether a culture of fear over safety has set into their organizations. “How do you get your frontline supervisors to not just to talk about this issue and get people to understand it, but how do you reinforce the right behaviors, and how do you get connected to people so you can see if this is happening or not happening,” Spigener said. “And then we want to identify what kind of diagnostics are available to take samples and understand whether in fact people are beginning to up their pace or the desire to take shortcuts.”During a downturn, Spigener said, it’s important to “cut in the right way.”Organizations faced with dwindling oil prices have to nd ways to make their organizations run efciently, but, Spigener warned, if they don’t cut in the right way, the culture in an organization will respond. “If you do the wrong things, culture is not something that’s going to be static,” he said. “Culture is always assessing what it sees, and without people even realizing, it’s gradually moving back and forth.”When companies start to adapt to the market environment, Spigener explained, their leaders begin, often unconsciously, to ask their teams “to work harder, smarter and faster.”“What happens rst is, without even realizing it, what gets rewarded, what gets recognized, what gets expected, starts to shift,” he said. “And if that shift stays in place long enough, then you affect culture. It goes from me recognizing that my boss really is more interested in productivity right now, to me taking a few little shortcuts, to those shortcuts becoming institutionalized and nobody even realizes it.”He said that, during the downturn, it has become critical for companies to examine how they are making cuts, how those cuts are being communicated and understanding how the cuts are taken by the workforce, while always reinforcing safe behaviors.Upswing CultureThe reality of safety culture is that it must endure whether the industry is in a boom or bust.Spigener said that in a downturn, the workforce evolves, and when the market starts to improve, workers must adjust to new job dynamics.Workers are asked to adapt and learn new jobs quickly, and inexperienced workers end up outside of their comfort zones. These workforce changes present a whole different level of risk than what companies faced in the downturn.“As consultants, we play a very large role as a sanity check and safety valve for [these companies] and helping them understand from a human behavior performance perspective how to get the best from their workers,” Spigener said. He said that it’s easy to point to human error when safety fails and incidents occur. “It looks like it’s the nal thing that caused an accident, but what we’ve come to recognize is that in most cases, we’ve set that up prior to it occurring,” he said. Companies, he added, are more often in a learning mode these days, rather than looking to blame workers for accidents.He concluded: “Really, for the most part, the big oil companies have moved past that way of thinking.” Photo Credit: Pornsngar Potibut - www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com21Information is the most valuable commodity. The accuracy and speed with which information can be assimilated will determine which companies succeed and which companies fail. Ursa Space Systems Inc is a blossoming company which has developed an algorithmic technology that can derive valuable information from images taken by satellite radar.The Ithaca, New York-based rm was founded in 2014 with a vision of building “a small constellation of radar satellites,” said Julie Baker, a co-founder and data platform lead at Ursa. However, the rm soon realized that it could satisfy customer needs now by using radar imagery from existing satellites, while building its own satellites. By using satellites equipped with synthetic aperture radar (SAR), Ursa is able to penetrate clouds or the night sky to obtain high-resolution, information-lled images. SAR is an alternative to optical imaging technology, which, like a camera, can only take images in prime conditions, not when it is cloudy or when there are other unfavorable conditions. Ursa then processes the radar images using its data platform to produce useful information. Currently, Ursa tracks oil tank measurements to identify changes in oil reserve levels, the number of cars in a parking lot and, the change in that number over time, and ship monitoring, which is able to identify any ships in a particular area even if the vessel is not broadcasting an AIS signal. Alec Mitchell, the lead for market analysis at Ursa, said that these applications were the rst to be developed because customer outreach programs indicated a great desire for them.Mitchell stated that the concept of oil-storage monitoring, in particular, garnered a “tremendous amount of interest” because of the value of the accurate, real-time information which Ursa could provide. This is especially pertinent today because of the oil supply glut that has been plaguing the global markets since 2014. “Trying to predict the shift in the current crude market is extremely difcult,” said Mitchell. “What we’ve developed here is an ability to image any location in the world to measure crude oil storage tanks with up to 98% accuracy.” Ursa now creates weekly reports showing the change in crude oil volumes at currently untracked storage locations around the world, including China. The data platform, Ursa Maps, will one day be used to “Create a living map of the earth that shows data in a live form.” According to Mitchell, “You’d be able to click on a region or an area and determine how much oil is in that whole area, how many cars are in that area, how many boats are in that area.” It is quite an undertaking, but with the progress the company has already made it seems quite possible. In addition to the applications already active, there are a number of services in development, including, but not limited to- the ability to track the change of valuable commodity stockpiles, assist rst responders during disasters by identifying priorities for rescue crews, measuring snowpack to forecast demand for water or energy in an area, and the ability to monitor oil spills and other marine pollution. Another application in development would track offshore weather conditions, which could preemptively alert offshore oil rigs to prepare for an incoming storm. Offshore rigs are usually ill-informed about potential weather conditions because most major weather monitors do not focus on regions with such few individuals. Ursa’s vision of building an interactive, live world-map could change the way companies and markets respond to information specic to a particular region of the world. The potential elds in which this technology could improve efciency seems to be limitless. Ursa Space Systems is Changing How Companies Interact with DataBy Tim McNallyOILMAN COLUMNPhoto Credit: rakchai - www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com23Energy-related carbon dioxide (CO2) and methane emissions have declined again, according to two new reports from the Environmental Protection Agency (EPA) and the Energy Information Administration (EIA) at the Department of Energy (DOE).The EPA report issued on Oct. 7 stated that methane released from the nation’s petroleum and natural gas sector declined 3.8 percent in 2015, marking the fourth consecutive year methane emissions have dropped.The EIA released its “Short-Term Energy Outlook” on Oct. 13, noting that the energy industry had the lowest CO2 emissions during the rst six months of 2016 since 1991.Ironically, even though declines in emissions have been recorded without federal regulations, the EPA has issued massive, new air-emissions regulations on the oil and gas industry, which have prompted many states and industry groups to le a lawsuit against EPA.Texas, the largest producer of energy (oil, natural gas, and wind), recorded a reduction in methane emissions to a combined 3.58 million metric tons of CO2 equivalent between 2011 and 2015, according to EPA’s report.The newest report from EIA said the industry totaled 2,530 million metric tons in the rst six months of 2016, the lowest level in 25 years. EIA projects that energy-associated CO2 emissions will fall to 5,179 million metric tons in 2016, the lowest annual level since 1992.EIA attributed the decrease to a change in electric generating fuels and the weather.EIA noted that natural gas consumption has increased, as has renewable consumption, but coal consumption has declined. In the rst six months of 2016, the U.S. had the fewest heating degree days (an indicator of heating demand) since at least 1949, the earliest year for which EIA has monthly data for all 50 states. Warmer weather during winter months reduces demand for heating fuels, such as natural gas, distillate heating oil, and electricity.Renewable energy consumption increased 9 percent during the rst six months of 2016 compared to the same period in 2015. Coal consumption fell 18 percent.Overall, total primary energy consumption was 2 percent lower compared with the rst six months of 2015. The decrease was most notable in the residential and electric power sectors, where primary energy consumption decreased 9 percent and 3 percent, respectively.EIA expects the share of U.S. total utility-scale electricity generation from natural gas will average 35 percent this year, and the share from coal will average 30 percent. Last year, both fuels supplied about 33 percent of total U.S. electricity generation. In 2017, natural gas and coal are forecast to generate about 34 percent and 31 percent of electricity, respectively, as natural gas prices are forecast to increase. Non-hydropower renewables (wind and solar) are forecast to generate 8 percent of electricity generation in 2016 and 9 percent in 2017. Generation shares of nuclear and hydropower are forecast to be relatively unchanged from 2016 to 2017.Natural gas marketed production fell from 79.7 billion cubic feet per day (Bcf/d) in September 2015 to 76.5 Bcf/d in July 2016. EIA expects marketed natural gas production to average 77.5 Bcf/d in 2016, a decrease of 1.6 percent from the 2015 level, which would be the rst annual decline since 2005. Forecast production increases by 3.7 Bcf/d in 2017.Henry Hub spot prices are forecast to average $3.04/million British thermal units (MMBtu) in the fourth quarter of 2016 and $3.07/MMBtu in 2017. Natural gas futures contracts for January 2017 delivery traded during the ve-day period ending Oct. 6 averaged $3.34/MMBtu. NYMEX contract values for January 2017 delivery traded during the ve-day period ending Oct. 6 suggest a price range from $2.28/MMBtu to $4.88/MMBtu encompasses the market expectation of Henry Hub natural gas prices in January 2017.The legal action against EPA was originally led by the state of North Dakota and quickly joined by Texas and other states. A group of some 18 oil and gas associations also led suit in the U.S. Court of Appeals for the District of Columbia Circuit.EPA adopted the methane emissions regulations on June 3. Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author. Carbon Dioxide and Methane Emissions Decline AgainBy Alex MillsPhoto Credit: Timur Arbaev - www.123RF.comOILMAN COLUMN

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NEWS AT A GLANCE...Oilman Magazine / November-December 2016 / OilmanMagazine.com24OPEC Announces Potential Production FreezeBy Tim McNallyOPEC has announced the formation of a preliminary deal to cut the production of oil, the rst agreement of its kind since 2008. The cartel revealed it intends to cut production down to 32.5 million/bpd from a previous high of 3.32 million/bpd in August.Some analysts are wondering whether the deal will actually come through, as the specics for limitations on production per country were lacking. These details will be decided at an upcoming meeting in November. The rather ckle behavior of the cartel leaves room for doubt as to the success of the deal two months from now. Dan Yergin, a Pulitzer-prize winning author and analyst, spoke to CNBC’s Squawk Box about the deal, stating “I think what this really is, is an agreement to agree at some point two months from now, and there are big questions around the allocations. Is this a freeze or a cut? What’s the real deal with Iran going to be?” Saudi Arabia has previously stated that any sort of production-freeze within the cartel would have to include Iran as well, a nation which has said it wants to produce around 4 million/bpd after sanctions were removed from the country in January. However, Reuters reported that Saudi Energy Minister Khalid al-Falih stated that certain countries, including Libya, Iran, and Nigeria, would be allowed to produce “at maximum levels that make sense.” The words contrast starkly with Saudi Arabia’s previous attitude towards the matter, which is again why some experts question the solidity of any potential deal. Saudi Arabia has been forced into a budget decit and has had to recall some of its the social programs for its citizens that were previously abundant when oil was ying high in the $100s. No mention was made of any Russian participation in a production cut, but the country had previously been in talks with Saudi Arabia to conduct a freeze. SEC Investigating Exxon’s Questionable Asset-Evaluation PracticesBy Tim McNallyExxon is being investigated by the Securities and Exchange Commission (SEC) regarding whether the company properly values its assets, the Wall Street Journal reports. This is not the rst time the company’s accounting practices have come into question.The New York Attorney General’s ofce initiated an investigation into Exxon last year, as the company allegedly mislead the general public and investors about the negative effects that certain environmentally-charged regulations could have on the company. The SEC has since decided to get involved as well, contacting Exxon’s accounting auditors, PricewaterhouseCoopers LLP, in August for information and documents regarding the issues at hand. Due to the increasingly stringent climate-change regulations for energy companies, many oil and gas companies have been forced to reevaluate or mark down their asset values. In addition, during an industry-wide downturn, companies are expected to write down the value of their assets, which, in turn, offers a more accurate picture of the company’s nancial position. While other companies have been forced to mark down asset values these past two years due to the oil price decline, Exxon remains the only major player in the eld that has not altered its asset values or taken an impairment. The SEC is specically looking into what gures Exxon used to estimate the future costs that will be incurred from environmental compliance. They will also be scrutinizing the company’s practices regarding the evaluation of its assets during a period of a low commodity price. An Exxon spokesperson told WSJ that the company abides by all accounting and reporting rules. Photo Credit: gyddik - www.123RF.com

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NEWS AT A GLANCE...25Oilman Magazine / November-December 2016 / OilmanMagazine.com25EIA Predicts Deteriorating Oil Market into 2017By Tim McNallyThe EIA recently released its adjusted estimates of global demand and supply for oil, and the adjustments were not for the better. The EIA released its ndings in the September version of its “Oil Market Report.” The EIA expects that oil will see a continuing slowdown in demand and an increase in supply, which means that the current market glut will continue well into 2017.One of the issues detailed in the report is that the growth of oil in Asia has dropped greatly from its previous consumption. China and India, both large international consumers of oil, have reigned in their insatiable need for the black gold, and the corresponding countries which supplied this oil are now seeing their oil stockpiles building up. Furthermore, OPEC, failing to reach any sort of production-freeze agreement, produced a record-teasing 33.47 mb/d in August. Output reached the highest level ever for Kuwait and UAE, and Iraq and Iran both saw increases in production. OPEC and other oil-producing nations that are maximizing production are, perhaps purposefully, underestimating the effect they are having on the global economy. Pushing production to new heights may seem benecial in the short term, but it will take a longer time for the market to rebalance and reach equilibrium, which will cause more strain on countries that heavily rely on oil. It is rather ironic, then, that the countries that are the most dependent on oil are the ones boosting output, essentially causing the low oil price. All of this simply adds to the already-saturated oil market, which is why even if a production freeze could be negotiated between countries like Saudi Arabia and Russia, there would be a minimal change in the global oil supply. A freeze is a temporary x to a long-term problem. What is happening in the market is defying basic economics. A normal market will follow the rule that a decrease in the price of a product will be accompanied by both a decrease in supply and a surge in demand. “However,” the EIA noted, “the opposite now seems to be happening. Demand growth is slowing and supply is rising.” Russia and Saudi Arabia Join Forces to Stabilize Oil MarketBy Tim McNallyEnergy Ministers from Russia and Saudi Arabia agreed in September to work together in a commitment to stabilize the oil market. The talks occurred in tandem with the G-20 Summit hosted in China.The Associated Press reported that Minister Alexander Novak and Minister Khalid al-Falih agreed in a joint statement that something needs to be done to correct the volatility of the oil price, and the two ministers laid out a general plan for moving forward.The countries stated that they would set up a group to monitor market activity and propose various solutions for stabilizing the market. The Russian minister mentioned the possibility of a production freeze but did not say that a halt in production would be a certainty. “We believe that the market right now is taking too long to balance out, it’s been two years, and joint steps which were considered earlier this year including a production freeze could be a great help in helping to balance the markets as soon as possible,” Novak told Russian news agencies. Many are skeptical of a production freeze because, although the freeze will successfully rid the market of any surplus oil, it will not be a sustainable market environment. A production freeze would temporarily balance the market, but if Russia and Saudi Arabia immediately revert to their high levels of production after the freeze, there will be a continual imbalance. Talks of a production freeze within OPEC have circulated the past two years, but the cartel has not managed to come to a unanimous decision regarding when or how to act. Russia is not a member of OPEC, but the nation was advocating for a production freeze earlier in the year before Iran made it clear it would not abide by such a freeze. Photo Credit: Thomas LENNE - www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com26OKLAHOMA NEWS AT A GLANCE...GE’s First Industry-focused R&D Center Unveiled in Oklahoma CityBy Tim McNallyGE recently unveiled its Oil and Gas R&D Center in Oklahoma City, Okla. The 125,000 square foot facility will be used for creating new technologies for the oil and gas industry.The center is GE’s rst sector-specic global research facility, a place where scientists and engineers will collaborate with the O&G industry to create innovative solutions. Lorenzo Simonelli, CEO of GE Oil & Gas, said in a statement that GE believes “a strong commitment to R&D will help our oil and gas customers nd new efciencies to work through tough market conditions and lead to transformational opportunities for the industry to thrive long-term. The new technology center in Oklahoma City will accelerate innovation; it’s where we can bring the full power of digital solutions and technology from across GE’s industrial businesses to advance the Oil & Gas industry.”In an interview featured on the company’s website, Michael Ming, general manager of the GE O&G technology center, stated: “We’ll address the industry’s most pressing problems...that could be from how you drill or complete a well, to how you produce a well.”The unveiling comes at a crucial time for many energy companies as they continue to search for new measures to streamline operations. Efciency is now the top priority for most energy companies, and innovations such as GE’s emission-detecting drone, known as “Raven,” which was revealed at the opening of the center, will hopefully yield positive results for rms operating in the oil industry. Continental Resources Sells Non-Strategic AssetsBy Tim McNallyMany oil-related companies have been in the process of selling off certain assets to stay solvent in the current economic environment. One such company, Continental Resources, based in Oklahoma City, recently agreed to sell $222 million worth of land in Montana and North Dakota, assets which the company considered not to be strategic. The total amount of acreage for sale in the deal comes to 80,000, which is broken down into 68,000 acres of land in North Dakota and 12,000 in Montana.The deal follows a May sale of 132,000 acres of land in Wyoming and a smaller sale of 29,500 acres of land in Oklahoma on Aug. 3. Chairman and CEO Harold Hamm in an Aug. 18 statement said: “This is our third sale of non-strategic assets this year, with total expected proceeds of more than $600 million. We plan to apply proceeds to reduce debt and strengthen our balance sheet.” The company reported a net loss of $119 million for the second quarter of 2016.As the assets were not critical to current or future operations, the rm will maintain the course that it has set for this year. Hamm said that the company’s guidance for the year has not changed. “The combination of Continental’s high-quality drilling inventory, strong balance sheet and $560 million investment in drilled but uncompleted wells (DUCs) provides the Company with a robust platform for high-value future growth,” he said. Harold Hamm is well-respected in the oil industry, and Reuters reported in July that Donald Trump was considering the CEO of Continental Resources as a potential pick for energy secretary. Hamm would be the rst U.S. energy secretary to be plucked directly from the energy sector and thrust into politics. Oklahoma Governor Receives Criticism for Day of PrayerBy Tim McNallyOklahoma is one of many states that rely on the oil industry to support their economy. The continuing downturn prompted Governor Mary Fallin to announce last month that October 13 would now be known as “Oileld Prayer Day.”In her proclamation, Fallin called upon Christians to thank God and look to him for wisdom. The proclamation has faced some backlash as many nd that Photo Credit: Jeffery Longa - www.123RF.com

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Photo Credit: Huiping Zhu - www.123RF.com27Oilman Magazine / November-December 2016 / OilmanMagazine.com27OKLAHOMA NEWS AT A GLANCE...the proclamation did not reach out to all faiths.The proclamation states how fortunate and blessed Oklahomans are to have such a valuable, bountiful resource located within their borders. It goes on to say, “Whereas, Christians are invited to thank God for the blessings created by the oil and natural gas industry and to seek His wisdom and ask for protection,” a phrase that upset certain individuals who believed it should be a call to all faiths. Fallin has since revised the statement, which now reads “Whereas, people of all faiths are invited to thank God for the blessings created by the oil and natural gas industry and to seek His wisdom and ask for protection.”The proclamation comes at a time when many oil companies continue to struggle with the fallen oil price. Despite the state’s efforts to incentivize production, including a tax break for oil companies, the state economy is still in a state of disarray. Praying seems to be the governor’s last hope to stimulate the energy industry. NeweldCEOSaysOilPriceNeedstoRise More Before Production IncreaseBy Tim McNallyLee Boothby, CEO of Neweld Exploration Co., thinks that oil prices need to be higher for production levels to increase signicantly.“People that are following the play, the investors, are going to have to be a little bit patient,” Boothby told Bloomberg on Oct. 13. “It’s such a huge and valuable resource, you want to get it right.”This “valuable resource” of which Boothby speaks is the “multi-billion barrel” oil resource that is part of the $470 million investment Neweld has made this year in the Scoop and Stack region in Oklahoma. The rm already has ve wells operating in the area and could potentially double that number, but caution seems to be the new modus operandi for the company during these times. Until the oil price starts to make a consistent upward movement, resource-bountiful regions will remain relatively undeveloped.Even in the Scoop and Stack area, where it is actually protable to produce oil at these lower prices, Boothby is doubtful that any real increase in oil production will happen with the oil price at $50. “You’ll see an acceleration of drilling as people’s cash ow grows in response to higher prices; we know we can go faster,” Boothby said. “But we don’t feel in a 50-ish environment that that makes sense.” Because cash has been tight for companies operating in the energy industry, the Texas-based rm has considered selling off assets in the Bakken Shale region in order to nance development in the Scoop and Stack shale region of Oklahoma. Boothby calls the sale of assets a matter of “when, not if,” according to Bloomberg.

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Oilman Magazine / November-December 2016 / OilmanMagazine.com28Massive Find in Alaska Made by Texas-based FirmBy Tim McNallyA large concentration of light-oil has been discovered in the North Slope region of Alaska by privately owned exploration and oil production company Caelus Energy LLC. The Dallas-based company announced its ndings on Oct. 4, saying that the discovery will be a stronghold for the oil industry in Alaska.The discovery was made in the Smith Bay via Caelus’ subsidiary. The company said in a statement that the total amount of oil discovered will amount to 6 billion barrels, with a possible total of 10 billion barrels of oil being located within the Smith Bay complex. The company believes it will be able to extract 30-40% of the trapped resource.This nding in the Smith Bay is expected to produce around 200,000 barrels per day – a fortunate resource for the economy of Alaska, which has been in a lull due to the oil crisis. More than half of the state’s revenue comes from the oil industry, so this discovery by Caelus could turn things around for the state whenever the extraction and transportation of the oil begins. “This discovery could be really exciting for the State of Alaska. It has the size and scale to play a meaningful role in sustaining the Alaskan oil business over the next three or four decades,” Caelus CEO Jim Musselman said.The state has been pushing for exploration by offering incentives, such as tax credits, to companies interested in exploring Alaskan territory. Musselman claimed that the company’s success is due to these programs. “Without the state tax credit programs, none of this would’ve happened, and I’m not sure Caelus would’ve come to explore in Alaska,” he said. “We’re proof that the credit programs work.” RRC Helps Create Natural Preserve from Abandoned Oil FieldThe Texas Railroad Commission’s (RRC) Site Remediation section helped turn a historic, abandoned oil eld site into part of one of the state’s newest natural habitats—the Turtle Bayou Nature Preserve. The 511-acre preserve, which celebrated its grand opening in October, is located between Houston and Beaumont in Chambers County and borders Lake Anahuac and Turtle Creek Bayou. The RRC said that the preserve is part of the Turtle Bayou Oil Field discovered in 1952, which had legacy abandoned oil wells and former oileld waste pits. The abandoned oil wells were plugged using $487,000 from the RRC’s Oil & Gas Regulation & Cleanup Fund (OGRCF), which is nanced by industry fees for plugging abandoned wells and remediating abandoned oileld sites. An additional $49,793 from the OGRCF and a $176,300 federal Browneld grant also was used by RRC Site Remediation to assess the site and ensure it was cleaned up to standards necessary for wetland habitat. The preserve is owned by the Chambers-Liberty Counties Navigation District, for preserving coastal habitat and protecting water quality. Galveston Bay Foundation holds a conservation easement on the property to permanently protect the land, which provides opportunities for hiking, birding and kayaking. –JDEPA Commends Texas Environmental ProgramBy Alex MillsNewspapers across Texas ran a story on Aug. 24 proclaiming that the Environmental Protection Agency (EPA) issued a report on Aug. 15 that “there is a signicant possibility” oil and gas activity caused earthquakes in North Texas.The story, written by Texas Tribune reporter Jim Malewitz, took EPA’s statement even further by stating that “state regulators won’t say so,” indicating there is some sort of controversy between EPA and the Texas Railroad Commission (RRC), the agency that regulates oil and gas.Malewitz even nds a source, an attorney in Fort Worth, who will support his notion that EPA is troubled by the “reality” that the RRC has failed to recognize some possible connection.The “reality” is that the EPA’s 61-page review of the RRC’s Underground Injection Control (UIC) program devoted only one page to induced seismicity in TEXAS NEWS AT A GLANCE...Photo Credit: porbital - www.123RF.com

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29Oilman Magazine / November-December 2016 / OilmanMagazine.com29TEXAS NEWS AT A GLANCE...North Texas. In that lone page, EPA did not offer any scientic evidence pointing to the causation of earthquakes by injected uids, but states that it believes there is a “signicant possibility that North Texas earthquake activity is associated with disposal wells.” EPA commended the RRC for its involvement in assessing the problems and implementing proven solutions. “RRC was one of the state agencies that participated in this effort (assessment of potential induced seismicity) and is commended for its inuential involvement,” EPA’s report stated. “RRC is also commended for establishing new regulations specic to seismicity, including solidifying RRC authority to take appropriate action related to injection well operations.”What EPA referred to is a letter from David Hill, RRC manager of injection-storage permits and support, to EPA pointing out that the RRC added new requirements for applications for injection wells where “conditions, such as complex geology, proximity of the injection interval to the basement rock, and/or transmissive faults, exist that may increase the risk that uids will not be conned to the injection interval.” Hill’s letter was a portion of EPA’s report.He also noted that the RRC has hired a seismologist.The RRC conducted a formal hearing shortly after several seismic events near Azle, and found no scientic evidence that the wells in question caused the activity.“The Commission will continue to monitor seismic activity in Texas, and will require daily recording of accurate pressures and volumes for appropriate wells,” Hill stated. The UIC program involves much more than oversight of earthquakes, and the EPA stated that the RRC’s programs “reect an outstanding enforcement monitoring program.” Specically, EPA stated that the RRC mechanical integrity testing (MIT) “program exceeds the testing requirements for the MIT ve-year performance mea-sure.”The Tribune story did not mention that the review of the UIC program included anything other than earthquakes.EPA’s review contradicts the story’s premise that the RRC is ignoring its duty to protect the environment and safety of the public, and that the EPA and RRC are at odds over these issues. As a matter of fact, the review gives the RRC’s UIC program accolades.Alex Mills is President of the Texas Alli-ance of Energy Producers. The opinions expressed are solely of the author. Oceaneering Acquires Blue Ocean Technologies for $30 MillionBy Tim McNallyHouston-based Oceaneering International on Oct. 17 said that it has acquired the assets of privately owned Blue Ocean Technologies, LLC. The purchase price of $30 million includes three riserless light well intervention (RWLI) systems. Only one system is functional at this time, but the two systems under construction are expected to be completed halfway through 2017.“We are pleased to complete the acquisition of Blue Ocean, which we believe will enable us to further penetrate the subsea well intervention market and support existing and new customers with additional safe, cost effective subsea solutions,” Kevin McEvoy, CEO of Oceaneering, said in a statement.He added that “the services offered by Blue Ocean are complementary to our subsea products operations, and Blue Ocean will add talent and expertise that reects our commitment to provide quality results with an integrated and expanded platform to drive growth.”Blue Ocean Technologies, headquartered in Conroe, Texas, emerged in 2008 as one of the rst companies to provide RWLI systems as a cost-effective alternative to traditional solutions. RWLI systems are subsea solutions designed to increase the oil and gas recovery rate from a well. The acquisition is a smart move on the part of Oceaneering, because assets are usually sold at a considerable discount during an industry-specic downturn. It also diversies the company’s number of offerings, thereby increasing potential sources of revenue. “This acquisition ts our strategy on increasing our services and products offerings focus related to the production phase of the offshore eld life cycle,” McEvoy said. Photo Credit: planctonvideo- www.123RF.com

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Oilman Magazine / November-December 2016 / OilmanMagazine.com3030LOUISIANA NEWS AT A GLANCE...Oil Companies Assist with Relief Efforts in a Recovering LouisianaBy Tim McNallyAmerican Red Cross and various other relief groups operating in Louisiana to assist with ood-ravaged communities have received aid from an unlikely source. Exxon Mobil Corp., Shell Oil Co., and Motiva Enterprises LLC. have all pledged a total of $1 million of support for the regions. Exxon has donated $500,000 to Greater Baton Rouge Food Bank and American Red Cross, while Shell and Motiva will donate a combined $500,000 to the Capital Area United Way and other organizations. Shell and Motiva are also matching their employee’s contributions to relief efforts. Rhoman Hardy, General Manager of Shell’s Geismar Chemical Plant said in an Aug. 19 statement: “These oods have devastated thousands of people in our community, including many Shell employees. Our hearts go out to everyone touched by this tragedy.” Louisiana Governor John Bel Edwards enacted a state of emergency earlier in August as parts of the state were ravaged by severe ooding and the accompanying damage. Tens of thousands have lost their homes and 13 people have died.“We hope that this donation will help provide some relief to Louisianans as recovery efforts begin,” Exxon CEO Rex Tillerson said in an Aug. 19 statement. “Our thoughts and prayers are with our friends and neighbors in Louisiana who have been impacted by storms and severe ooding in the region.” Krewe Energy Acquires Coquille Bay Field Covington, La.-based Krewe Energy recently completed the acquisition of a private owner’s interest in and operatorship of the Coquille Bay Field located in Plaquemines Parish, La. The Coquille Bay Field is a vintage South Louisiana property, which has been actively producing since the 1950s. The eld is now being operated by Krewe Photo Credit: Paul Wolf - www.123RF.com

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Pre-Order Today!Only $9.99Read how the Bakken is generating an energy economy and creating opportunity across the United States.Included in Volume One:John GibsonRob RyanMark EatonLorin BakkenBrian LashLynn HelmsU.S. Senator John HoevenJim Volker and more!Building the Bakken e BookAvailable Aug 1jason@buildingthebakken.comAvailable Aug 1Only $9.99Building the Bakken e BookOilman Magazine / November-December 2016 / OilmanMagazine.com3131LOUISIANA NEWS AT A GLANCE...Energy’s operating subsidiary, S2 Energy Operating, and efforts are currently underway to further optimize and increase production rates in the eld. Krewe Energy said that it is focusing on the growth and further development of its existing asset base while also seeking additional acquisitions of mature assets within its core operating area of the Gulf Coast — South Louisiana oil and gas trend. –JDShell Begins Production at Stones in Gulf of Mexico Royal Dutch Shell in September said that it started production from the Stones development in the Gulf of Mexico. Stones is expected to produce around 50,000 barrels of oil equivalent per day when fully ramped up at the end of 2017.The project is located about 200 miles southwest of New Orleans at a water depth of 9,500 feet.“Stones is the latest example of our leadership, capability, and knowledge which are key to protably developing our global deep-water resources,” Andy Brown, upstream director, Royal Dutch Shell, said in a statement. “Our growing expertise in using such technologies in innovative ways will help us unlock more deep-water resources around the world.”Stones, which is 100% owned and operated by Shell, is the company’s second producing eld from the Lower Tertiary geologic frontier in the Gulf of Mexico, following the start-up of Perdido in 2010. –JDLouisiana Parishes Resist Governor’s Push to Sue O&G IndustryBy Tim McNallyLouisiana Governor John Bel Edwards is persisting in his attempt to convince parishes throughout Louisiana to join a suit against the oil and gas industry for what he claims is their role in damaging the state’s wetlands. The push to unify Louisiana parishes in their suit against the oil and gas industry has been met with some resistance, both because of the lawsuit’s legitimacy and the motives driving it. The governor has faced criticism for his choice of attorneys – private lawyers who are set to receive a huge payday if they win the case against the oil and gas industry. These lawyers will receive a percentage of any winnings, whereas state lawyers on the case are only being paid for the hours they work. Many critics of the lawsuit point to this huge payday as the sole reason for the lawsuit’s existence. Edwards has also been under re for over-zealously calling on parishes to join the mounting lawsuits against the oil industry. Edwards sent a letter to parish presidents asking them to hire private lawyers and join the crusade to sue big oil. He also stated that the state would take legal action on the behalf of parishes who choose not to participate in the suit. However, not all parishes were open to the idea. An article from The Daily Iberian praises the Iberia Parish Council for unanimously voting not to be included in the suit. A resolution from the council requests that the state government not intervene and pursue a legal case on behalf on the Iberia Parish. Iberia, however, was not the only parish to mount such a request.Parish presidents from Lafourche and Terrebonne met with the governor to share their concerns regarding the suit and their lack of a desire to join it, the Louisiana Record reports. A letter co-authored by the parish presidents states: “I kindly ask you to please realize the effect a lawsuit such as this will have on our local economy. A suit such as this at this time will jeopardize hundreds of new jobs.” Perhaps after hearing these parishes’ legitimate concerns the governor will reexamine his decision to automatically include all parishes in the suit.

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Oilman Magazine / November-December 2016 / OilmanMagazine.com3232Jason Spiess: Let’s start out by having you tell us about Missouri River Resources and the Three Afliated Tribes.Ken Hall: Dave Williams is our CEO and we both are enrolled members of the Three Afliated Tribes; a few years ago it was just an idea and concept on paper. Fast forward to last year where they drilled their rst four wells. Very historic event. The tribe has been involved with oil and gas since the 1950’s, but we’ve never drilled our own wells until last year. That was very monumental and exciting. Now they are also engaging in midstream activities and workforce development as well. It’s been a really good start to a viable company that could become a big player someday.JS: When I interviewed David Williams last year he mentioned how the goal was to have an all Native American company – from the drillers to the scientists to the administration. Is that still the goal, and what does that mean to you?KH: Yes, that means everything. We are a sovereign nation; we believe in our own people. We believe it is a new day. When you talk about oil and gas in the tribal nation there are sovereignty models out there. And we are trying to become another one of those models. We use our own people when you talk about workforce development and oil eld services. From top to bottom – our environmental science folks, our drillers, our pumpers, our administrative folks. We believe we can do quality work and these people are just as capable as the next person. JS: Where are they getting their education? Are they using traditional universities or is there a Native American education system? Talk to me about the education process. KH: We know there are vocational, educational institutions in our state (North Dakota), United Tribes comes to mind, a technical college. And then we have a community college in our backyard, the Nueta Hidatsa Sahnish College, formerly known as Fort Berthold Community College. They are a four-year accredited college now. We have a partnership with San Juan College in New Mexico, they just sent a few students down there for training. And then you have the universities in the state of North Dakota as well. It’s a good set up for us; a good model. We believe we are going to have COOs, CEOs, geologists, drillers and all of that will be Native American.JS: About a year ago I did a story for the Bismarck Tribune about what you had going on there with the MHA Nation. I argued it was empowering the people, empowering the tribe. What do you make of that statement?KH: Empowering is a good choice of words because when you empower someone, you build condence in them. You let them know they can do it, and then they start to ourish. Once they are given that opportunity they start to believe in themselves. Once we can get them to that place now they are off getting their education.They are off becoming a professional or a businessperson or having a specialty that they can offer and come back and really help their nation to become prosperous again. Which we once were before. It’s all because of legislation. People talk about all the statistics; we want to focus on the positive. We are headed toward being a healthy and prosperous nation. We have a God given resource that we sit upon and we believe we can maximize that resource. The potential is unlimited. JS: Are the people within the tribe accepting this or is there some resistance? You are always going to have a few that resist. We are in a day now as everyone understands we are in the era of technology. Technology was the game changer for the Bakken; I think everyone understands that. I think the word for the day is becoming more ‘efcient.’ With this downturn it gives everyone a chance to become more efcient at what we do. But getting back to your question, I think there will always be some resistance. But if they could see the big picture, and look at the economics of it, I think they would buy more into it. If they knew the technology is probably the safest it has ever been, I think they can buy into what we are doing here.JS: How about the regulation side. When I spoke with your CEO, David Williams, he indicated a permit took months and months and months, whereas a private landowner in North Dakota could get a permit in 2-3 days. Talk to me about the working relationship with permits and regulations. KH: I am glad you brought this up. Early on when the leasing happened, 2006 and 2007, if you were off the reservation and you were a private owner, it took you four steps from signing a lease to getting your rst royalty check. Now you step on the reservation, all the federal regulations that are in place are a 49 step process.It is a cumbersome process — all these federal agencies that have to be a part of that process. Three different routing numbers (laughs), its very complicated and not everybody understood that. And therefore a doughnut hole was created. When you would drive at night and you could oversee the landscape, there was all these ares outside the reservation. It was completely dark on the reservation. There was OILMAN COLUMNQ&A with Jason SpiessAn Interview with Ken Hall KenHall,executivesecretary,ThreeAfliatedTribes,andchairman,Missouri River Resources, the tribally owned oil and gas company.

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OILMAN COLUMNa doughnut hole. All the activity was around, but nothing going on the reservation because of the regulations and the cumbersome process. Nobody actually knew what the process entailed and yet we had to streamline that process from a land and mineral owners’ perspective.We had an association early on where we lobbied and were also advocates on behalf of the land and mineral owners. We tried to create a one-stop shop, and it is still being developed to this day — a one-stop shop service center, which we believe could be in Denver. All tribes could utilize when it comes to leasing and right-of-ways in order to streamline the whole process. So that’s still in the works. But we got a little better at it, as far as timelines and trying to become more efcient. There we come back to that word again. (chuckles)JS: How about opportunity. You mentioned that word earlier. Have you seen any spin off or service businesses start up in the reservation? Whether it is a long haul trucker or maybe just a guy with a pizza shop. Are you seeing any sort of entrepreneurship happening?KH: Oh yes, the opportunities are tremendous. I think before the boom we had a handful of Native American businesses. Today, I want to say, there is well over 250 that have their own business. It’s oileld services, roustabouts, trucking, you name it. It’s been a tremendous opportunity for those folks. When I got an ofce three-and-a-half years ago we created what they call a Community Development Corporation. They have their own charter, mandate from the Tribal Business Council, own bylaws, and appointed board. They work on housing projects and businesses on Main Street — like a coffee shop, which is opening, a hair salon, a ower shop. Those businesses are opening on Main Street as we speak. The spin offs have been tremendous. It’s been a real opportune time if you are an entrepreneur and wanting to get into business.JS: Final thoughts. What do you want people to know about the Three Afliated Tribes and what you guys are trying to accomplish?KH: I think for starters, the state of North Dakota and the industry have to realize we are big players in the Bakken. There was a recent article that pointed out that two-thirds of the Bakken is in western North Dakota. That’s us. When you talk about the core area, that’s us again. Going forward we are very optimistic because of the core area we are in, the opportunities that are presented to us and being able to capitalize on this opportunity. We want to go forward with a great amount of optimism because we are only probably 25 percent into the development as a nation. If you look at dollar amount, before the Bakken we were $110-$120 million dollars in debt as a tribe. Fast forward to today and we are debt free, we have a number of multi-million dollar projects that are happening, and we have trust funds established. We have a number of things to get excited about.JS: That’s empowerment.KH: You are absolutely right. That is empowerment CALENDAR OF EVENTS is Partnering With The Following Events Lafayette Oil and Gas ConventionCajundome444 Cajundome BoulevardLafayette, LANovember 9-10, 2016http://roselandoilandgas.comMid-Continent Digital OileldConferenceRenaissance Tulsa Hotel and Convention Center6808 S 107th E AveTulsa, OKJanuary 25-26, 2017http://digitaloilconference.com2nd Annual Oil and Gas Supply Chain & Procurement SummitOmni Houston Hotel at Westside13210 Katy FreewayHouston, TXDecember 6-7, 2016https://energyconferencenetwork.comNAPE SummitGeorge R. Brown Convention Center1001 Avenida De Las AmericasHouston, TXFebruary 15-17, 2017http://napeexpo.comOilman Magazine / November-December 2016 / OilmanMagazine.com3333

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