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Oilman Magazine Nov/Dec 2018

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Fundamentals in the Oil Field Matter Even More with Big Data p. 28Safety Practices and Procedures in the Oil Industry and Technology’s Inuence p. 13U.S. Federal Regulatory Bodies in the Energy Sector p. 12How Oil and Gas Companies Can Use AI Technology When Disasters Occur p. 6THE MAGAZINE FOR LEADERS IN AMERICAN ENERGYNovember / December 2018OilmanMagazine.comBRIDGING THE GAP IN OIL AND GAS TRAINING

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ONE APP. ONE TABLET.The Spotter inspection app is equipped with every tool you need to record, capture, and report on the spot.With the Spotter inspection app you can trade in your pen, paper, and camera for one tablet. Spotter uses tablet functionalities to create fully-customizable, accurate, and thorough inspections whether you’re in the Gulf or at the top of a cracking tower. Upgrade your inspection process and increase safety and eciency at any facility with Spotter and intrinsically safe tablets. Work oine with no internet connection required Take photo, video, and audio directly in the reportAutomatically route workows for digital signaturesImplement high accountability by GPS location capture Create custom inspection forms with a powerful, user-friendly template builderIntegrate into any internal system, accounting or ERPStay safe with Class I, Div II Intrinsically Safe tablet devices and casesSTART YOUR FREE TRIALenvoc.com/energyANY INSPECTION. ANY LOCATION.Proudly developed in Louisiana by Louisiana natives at Envoc. Learn more about how we can help your business run more eciently with custom software solutions that work for you. envoc.com by

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IN THIS ISSUEFeatureThe Missing Piece: Educating the Oil and Gas Workforce to Bridge the Skills GapBy Sarah Skinner - pages 22 – 24In Every IssueLetter from the Publisher – page 2OILMAN Contributors – page 2OILMAN Online // Retweets // Social Stream – page 3Downhole Data – page 3State Oil & Gas Associations – page 8Product Showcase: Fox Thermal – page 11OILMAN ColumnsEric R. Eissler: U.S. Federal Regulatory Bodies in the Energy Sector – page 12Tonae’ Hamilton: Safety Practices and Procedures in the Oil Industry and Technology’s Inuence – page 13Eric R. Eissler: Blockchain in Oil and Gas is Not Hype – page 14Mark A. Stansberry: Forty-Five Years Later… – page 15Josh Robbins: Oil and Gas Acquisition Market 2019 Outlook – page 15Tonae’ Hamilton: Interview: Kent Bartley, President, Maviro – page 25 Jason Spiess: The 75K Well Drilling Prots in the Illinois Basin – page 36Guest ColumnsCorrosionpedia: How New Oil & Gas Extraction and Transportation Methods are Inuencing Pipeline Corrosion – page 4Tim Willis: How Oil and Gas Companies Can Use AI Technology When Disasters Occur – page 6Rick Pedley: Protective Clothing Buyer’s Guide for the Oil Industry – page 9Joe Dancy: Drones Making Headway in Advancing E&P – page 10Aaron Kline: Solving the Capacity Crunch in Today’s Petrochemical Supply Chain – page 16Joe Saunders: How Runtime Application Self-Protection (RASP) Can Prevent Cyberattacks in Oil & Gas Environments – page 18Merrick Alpert: Advanced Anti-Corrosion Coating Utilized on Two North Sea Offshore Platforms – page 20Kent Landrum: Preparing for Digital Downstream Supply Chain Capabilities – page 26Shiva Rajagopalan: Fundamentals in the Oil Field Matter Even More with Big Data – page 28Evan Cox: The ROI of Business Continuity Can Be Found in the Cloud – page 30Shane Randolph: Commodity Hedging: Lessons Learned by Early Adopters of New Hedge Accounting Rules – page 32Jeff Berkowitz: In The New Age Of Activism, Minimizing Political And Reputational Risk Is Key – page 34Oilman Magazine / November-December 2018 / OilmanMagazine.com1ONE APP. ONE TABLET.The Spotter inspection app is equipped with every tool you need to record, capture, and report on the spot.With the Spotter inspection app you can trade in your pen, paper, and camera for one tablet. Spotter uses tablet functionalities to create fully-customizable, accurate, and thorough inspections whether you’re in the Gulf or at the top of a cracking tower. Upgrade your inspection process and increase safety and eciency at any facility with Spotter and intrinsically safe tablets. Work oine with no internet connection required Take photo, video, and audio directly in the reportAutomatically route workows for digital signaturesImplement high accountability by GPS location capture Create custom inspection forms with a powerful, user-friendly template builderIntegrate into any internal system, accounting or ERPStay safe with Class I, Div II Intrinsically Safe tablet devices and casesSTART YOUR FREE TRIALenvoc.com/energyANY INSPECTION. ANY LOCATION.Proudly developed in Louisiana by Louisiana natives at Envoc. Learn more about how we can help your business run more eciently with custom software solutions that work for you. envoc.com by

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Gifford BriggsGifford Briggs joined LOGA in 2007 working closely with the Louisiana Legislature. After nearly a decade serving as LOGA’s Vice-President, Gifford was named President in 2018. Briggs rst joined LOGA (formerly LIOGA) in 1994 while attending college at LSU. He served as the Membership Coordinator and helped organize many rsts for LOGA, including the rst annual meeting, Gulf Coast Prospect & Shale Expo, and board meetings. He later moved to Atlanta to pursue a career in restaurant management. He returned to LOGA in 2007.Mark A. StansberryMark A. Stansberry, Chairman of The GTD Group, is an award-winning: author, columnist, lm and music producer, radio talk show host and 2009 Western Oklahoma Hall of Fame inductee. Stansberry has written ve energy-related books. He has been active in the oil and gas industry for over 41 years having served as CEO/President of Moore-Stansberry, Inc., and The Oklahoma Royalty Company. He is currently serving as Chairman of the Board of Regents of the Regional University System of Oklahoma, Chairman Emeritus of the Gaylord-(Boone) Pickens Museum/Oklahoma Hall of Fame Board of Directors, Lifetime Trustee of Oklahoma Christian University, and Board Emeritus of the Oklahoma Governor’s International Team. He has served on several private and public boards. He is currently Advisory Board Chairman of IngenuitE, Inc. and Advisor of Skyline Ink. Thomas G. Ciarlone, Jr.Tom is a litigation partner in the Houston ofce of Kane Russell Coleman Logan PC, where he serves as the head of the rm’s energy practice group. Tom is also the host of a weekly podcast on legal news and develop-ments in the oil-and-gas industry, available at www.energylawroundup.com, and a video series on effective legal writing, available at www.theartofthebrief.com.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 RobbinsJosh Robbins is currently the Chief Executive Ofcer 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 efciently.Steve BurnettSteve Burnett has been working in the oil industry since the age of 16. He started out working construction on a pipeline crew and after retirement, nishes his career as a Pipeline Safety Compliance Inspector. He has a degree in art and watched oil and art collide in his career to form the “Crude Oil Calendars.” He also taught in the same two elds and believes that while technology has advanced, the valuable people at the core of the industry and the attributes they encompass, remain the same. As we get closer to the end of the year and look back at the activity during the past several months, it’s easy to say that the industry can be termed as the bounce back year. Some may say it has been a steady year, with not much to discuss, and yet a few in the industry felt the pain of further cut backs. On the nancial side, the price per barrel has remained in a range comfortable for most producers to earn a prot. This in turn fuels a healthy market for companies to buy equipment, hire personnel and invest in expansion. Proof of this is clearly shown in the Permian and Eagle Ford Basin. Operators are doing so well there, they are producing record amounts of oil and gas, but getting it to the market has been painful. The pipeline bottleneck and shortage of truckers has slowed down ow for export to the Gulf of Mexico. However, it has been reported over the past year that several new pipelines will open in 2019 and in turn will improve the ow to export terminals. Product and service technology in the oil and gas market is growing and improving at every turn. The industry now has a taste for machine learning and what IoT can do and there is no turning back. Blockchain still in its infancy in the crude market, but it will be just as common in years to come. Innovation and technology are key to improving business efciency so that employees and processes perform better. If the correct technology is in place and employees are performing well with its use, the results in many companies are often improved market share and a business that is thriving. In this issue of OILMAN our feature article is about oil and gas training and continuing education. As I mentioned, deploying the best technology that is the right t for each employee’s role is key, but not training or hiring qualied employees ultimately weakens a company’s capital investment in the new technology. Knowledge transfer is crucial as well. When older employees are set to retire it’s in a company’s best interest to transfer long held knowledge to younger employees entering the eld. Recent graduates or entry level employees often come with fresh ideas. Companies benet the most when they merge time-tested knowledge from seasoned personnel with new processes from recent recruits, when that’s coupled with emerging technology, the end result is improvement in productivity. MAGAZINENOVEMBER — DECEMBER 2018PUBLISHER Emmanuel SullivanMANAGING EDITOR Sarah SkinnerASSOCIATE EDITOR Tonae’ HamiltonFEATURES EDITOR Eric EisslerGRAPHIC DESIGNER Kim FischerCONTRIBUTING EDITORS Gifford Briggs Steve Burnett Thomas Ciarlone, Jr. Joshua Robbins Jason Spiess Mark StansberrySALES Eric FreerTo 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.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) 562-2340Cover image courtesy of Orlando Rosu – www.123RF.comLETTER FROM THE PUBLISHERCONTRIBUTORS — BiographiesOilman Magazine / November-December 2018 / OilmanMagazine.com2Emmanuel Sullivan, Publisher, OILMAN Magazine

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Oilman Magazine / November-December 2018 / OilmanMagazine.com33For The Week Ending October 26, 2018DIGITAL DOWNHOLE DATAColorado: 32Last month: 33Last year: 33 North Dakota: 54Last month: 53Last year: 49 Texas: 537Last month: 529Last year: 441 Louisiana: 61Last month: 62Last year: 65 Oklahoma: 141Last month: 141Last year: 125 U.S. Total: 1,068Last month: 1,054Last year: 909OIL RIG COUNTS*Source: Baker HughesBrent Crude: $80.45Last month: $78.90Last year: $57.69 WTI: $69.25Last month: $70.80Last year: $50.61CRUDE OIL PRICES*Source: U.S. Energy Information Association (EIA)Per BarrelColorado: 13,741,000Last month: 12,736,000Last year: 10,902,000 North Dakota: 39,073,000Last month: 36,575,000Last year: 32,222,000 Texas: 138,548,000Last month: 132,698,000Last year: 106,687,000Louisiana: 3,959,000Last month: 3,879,000Last year: 4,353,000Oklahoma: 16,873,000Last month: 15,717,000Last year: 13,734,000 U.S. Total: 339,895,000Last month: 320,856,000Last year: 289,132,000CRUDE OIL PRODUCTION*Source: U.S. Energy Information Association (EIA) – July 2018 Barrels Per MonthColorado: 151,332Last month: 143,773Last year: 139,706 North Dakota: 63,825Last month: 59,474Last year: 51,351 Texas: 679,594Last month: 648,235Last year: 621,007Louisiana: 247,966Last month: 232,273Last year: 166,507 Oklahoma: 252,022Last month: 241,436Last year: 213,033 U.S. Total: 2,782,895Last month: 2,642,766Last year: 2,478,626NATURAL GASMARKETED PRODUCTION*Source: U.S. Energy Information Association (EIA) – July 2018Million Cubic Feet Per MonthConnect with OILMAN anytime at OILMANMAGAZINE.com and on social media RETWEETS@OilmanMagazine#OilmanNEWSStay updated between issues with weekly reports delivered online at OilmanMagazine.com SOCIAL STREAMfacebook.com/OilmanMagazine

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Oilman Magazine / November-December 2018 / OilmanMagazine.com4How New Oil & Gas Extraction and Transportation Methods are Influencing Pipeline Corrosion By CorrosionpediaOILMAN COLUMNThe oil and gas industry has been steadily increasing production rates to keep up with the rising global demand for energy. According to statistics from BP, global oil production has increased from 63 million barrels per day in 1980 to 92 million barrels per day in 2016. In addition, global natural gas production has risen from approximately 1,430 billion cubic meters to over 3,500 billion cubic meters during the same time period. New technologies have been introduced to meet the demand, but they create new challenges in terms of the impact they place on existing infrastructure. This makes the importance of protecting pipeline assets all the more important. Not only are companies less able to afford delays or mistakes, but more robust pipeline protection systems typically mean less scheduled maintenance.Here, we’ll take a look at some of the oil and gas extraction methods being used and their impact, as well as some possible solutions for reducing that impact.Enhanced Oil RecoveryTo meet rising demand, advanced oil and gas extraction techniques, called EOR (Enhanced Oil Recovery), are used to help increase the efciency of extraction and transportation of oil and gas from natural reserves. These increased production rates, combined with the aggressive environments produced by enhanced oil recovery techniques, have placed extra burdens on existing wells, pipelines and their associated components.Pipeline corrosion is a well-known issue in the oil and gas industry worldwide. In a study conducted by NACE, it is estimated that pipeline corrosion costs anywhere between $5.4 billion and $8.6 billion in the U.S. alone. (For more on this subject, see 21 Types of Pipe Corrosion & Failure.)Unfortunately, in the dynamic and fast-paced oil and gas industry, an increase in production is not always equally met with a bigger budget. Often, operators are pressured to ensure the optimum efciency of pipelines while keeping costs to a minimum. Furthermore, some critical components, such as anges, and by extension, ange isolation components (washers, bolts and gaskets) used in wells and pipelines have remained largely unchanged for the past 50 years. Industry sources estimate the global cost of corrosion in the oil and gas industry to be in excess of $1.3 billion. For offshore facilities, some operators estimate 60 to 70 percent of maintenance costs are directly related to corrosion issues.Pipeline corrosion in petrochemical plants and reneries typically come in the form of:• Internal corrosion, which is due to aggressive gases such as carbon dioxide (CO2) and hydrogen sulde (H2S).• Flow-induced corrosion or erosion corrosion, which are caused by high-velocity, high-pressure ow rates in the pipeline.Enhanced oil recovery techniques meant to increase the extraction volume and efciency can greatly increase the risk of the types of corrosion previously mentioned. The three main methods of EOR commonly used are thermal injection, gas injection and chemical injection. We’ll have a look at these in depth here. However, it has become apparent that new technologies are needed to match the increased production volumes and the aggressive physical and chemical properties of extracted oil and gas. Because, rest assured, enhanced oil recovery methods are not going away. In fact, the problem is likely to only become more prevalent as these methods persist and oil and gas becomes sourer over time.Gas InjectionGas injection, or miscible ooding, is currently the most common method of EOR. It is typically used after water ooding to help sweep the formation for remaining oil deposits that may have either been missed or trapped due to waning pressure. A gas, such as CO2, is injected into the well at its supercritical phase (temperature, 87.9°F (32°C); pressure, 1070 atm). During this phase, the CO2 adopts the properties of a liquid that, despite its low viscosity, is miscible with oil, and also expands to help boost declining pressure in the formation.However, when supercritical CO2 reacts with water in the oil reserve, carbonic acid (H2CO3) is produced. This acid lowers the pH in the reserve to create an environment that is highly corrosive for metallic components. In addition, hydrogen sulde gas (H2S) may also be mixed with CO2 before gas injection to improve miscibility between the petroleum and the injected CO2. H2S is, however, very toxic and also highly corrosive, which can further exacerbate the corrosion of piping and equipment.Thermal InjectionThermal injection involves raising the temperature in the reservoir to reduce the viscosity of the heavy crude and improve its mobility within the reservoir. Increasing the temperature in the formation is most commonly achieved by pumping steam into the well in a fashion similar to gas injection.When the steam moves away from the injection well and comes into contact with the oil, its temperature drops and the steam condenses to hot water. This hot water heats the oil, causing it to expand and become less viscous.Because some formations may contain acidic minerals, the steam may also dissolve some of these compounds, causing toxic gases to blow out at the surface. In addition, the intense heat generated by this process can cause excessive wear and degradation of pipeline components.Photo courtesy of Corrosionpedia

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Oilman Magazine / November-December 2018 / OilmanMagazine.com5OILMAN COLUMNChemical InjectionChemical injection involves using specially formulated chemical solutions to improve the efciency of oil recovery from an oil formation. The chemicals achieve this by either increasing the viscosity of the injected water to improve the sweep efciency of water ooding or by acting as a soap-like substance, thereby reducing the surface tension between the oil and water in the reservoir.Chemical injection does not produce the same harsh environments as gas or thermal injection and is therefore not considered to be a major contributor to well and pipeline corrosion. However, due to relatively high costs, chemical injection methods make up less than 1% of all EOR conducted in the United States.Corrosion Prevention and MitigationThese new oil and gas extraction methods have created an increased demand in the corrosion industry for components - particularly anges - made of more corrosion resistant alloys and made with more robust designs to better resist the corrosive nature of gas injection procedures. The higher rates of pipeline pressure, as well as the addition of heat and more corrosive elements, puts additional pressure on pipeline components, increasing the rate of corrosion. To ensure the success of long-term planned operations, it is essential that all components of the well, from the wellbore to the completion equipment, be able to withstand the harsh corrosive environments produced by EOR methods.GasketsIn addition to metallic components, special attention must also be given to non-metallic elements such as ange gaskets. Gaskets and seals are essential for preventing direct contact between anges at connection points. This separation is a process known as ange isolation. Flange isolation is a crucial element of the overall corrosion protection system as they are necessary for:• Cathodic Protection – In well and piping networks with ICCP systems, ange isolation acts as a dielectric insulating barrier between connecting anges. This isolation limits the extent and cost of cathodic protection by electrically “splitting up” lengthy pipelines into distinctive cathodic protection regions. This ensures that the DC current generated by the rectier is contained within the section of pipe to be protected.• Galvanic Protection – Flange isolation is also required at connections between dissimilar metals. Under certain conditions, when metals of different compositions are in direct contact with each other, they can form a type of cell known as a bimetallic couple due to their difference in electrode potential. The potential difference between the two metals allows for the free ow of electrons between the anode and the cathode giving rise to an electric current. (For more on this topic, see ‘Why Do Two Dissimilar Metals Cause Corrosion?’) Flange isolation gaskets eliminate direct contact between the dissimilar ange materials by acting as an insulating barrier that prevents the formation of the bimetallic couple and thus galvanic corrosion.Commonly used glass reinforced epoxy (GRE) gaskets have been shown to be unsuitable for demanding EOR applications. GRE gasket construction consists of layers of resin-saturated woven berglass sheets. This laminated structure is prone to delamination under the high pressures imposed by enhanced oil and gas extractions.Furthermore, the operating temperatures for GRE gaskets typically range between 150°C to 200°C (302°F to 390°F); much lower than the temperatures found in thermal injection methods. Elevated temperatures combined with high pressures can compound gasket issues and accelerate deterioration of the laminated bers. GRE has also shown high susceptibility to chemical breakdown when exposed to sour gases.Compromised gaskets can result in direct ange to ange contact that can reduce or nullify the effectiveness of cathodic protection systems, encourage galvanic corrosion, and increase the risk of leaks and blowouts.New high-temperature, high-pressure and chemically resistant gaskets have been developed to replace GRE and other inadequate gasket materials. Fully coated and encapsulated gaskets move away from the traditional plastic and ber laminated gaskets that are susceptible to delamination. In addition, newly developed gasket coatings have been shown to possess high levels of abrasion, pressure, temperature and electrical resistance to safeguard against various types of corrosion.Pipeline RegulationsEvolving regulations regarding pipelines also drive the incentive for change. In the United States, the PHMSA (Pipeline and Hazardous Materials Safety Administration) is considering imposing regulations on locations previously dened as MCAs (Moderate Consequence Areas). This means that upstream equipment such as gathering lines, which were previously unregulated, are expected to be subject to stricter requirements, thus highlighting the need for more effective corrosion control and appropriate construction materials at these areas.ConclusionDue to the rising demands of the oil and gas industry and the increased rigors imposed on pipelines by regulations and EOR methods, it has become evident that standard extraction equipment must be upgraded to match these demands. The selective use of corrosion resistant materials for both metallic and non-metallic components is of the utmost importance to ensure the longevity of equipment and safety of on-site personnel. No w Av A i l A b l e : Th e C r u d e l i f e Cl o T h i N gw w w .s h i r T s i C l e .C o m /T h e C r u d e l i f e

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Oilman Magazine / November-December 2018 / OilmanMagazine.com6How Oil and Gas Companies Can Use AI Technology When Disasters Occur By Tim WillisOil and gas companies bear a unique responsibility in providing the raw power all other companies need to function. When a disaster occurs, there is an outward ripple effect that signicantly impacts numerous stakeholders. It is critical for oil and gas companies to maintain proper functioning even in the face of disastrous events and essential that they use every available technology to do so. The Rise of Public Information and Articial IntelligenceAs technology has advanced to include hand-held devices, easily accessible wi, and multiple social media platforms, large-scale, web-based, public sharing of information has grown exponentially. Datasets providing weather predictions, earthquake seismic activity or ight patterns are readily available at the tap of a screen and can potentially provide insights that inform mission-critical business and operational activities for oil and gas companies. But the volume of information can also present a challenge. If, in the face of an impending disaster, companies are unable to wade through the vast amount of reporting available in a timely manner, they run the risk of failing to identify the all-important rst indicators. That’s where AI (Articial Intelligence) technologies can have profound impact.Issue IdenticationEach oil and gas company has its own self-dened and layered security approach, utilizing different forms of information within its overall risk management process. In-house teams uniquely understand their own specic operating environments and plan accordingly for those disruptive events that are foreseeable based on local factors. For example, a company with operations in multiple countries may nd it necessary to be on heightened alert in locations where elections are underway. For companies with U.S. operations on the East and Gulf coasts, hurricane season brings the possibility for enormous business impact from storm-related events. In responding to scenarios like these, speed and quality of information gathering are the ultimate critical success factors. AI technology that delivers information in real time and provides important context in gaining a full understanding of a developing situation has signicant meaning for oil and gas companies. A service like Dataminr has the ability to unearth relevant signals from social media and publicly available information sources and alert its customers as an event is happening in real time. Moment-in-time specicity opens a virtual window, affording unmatched insight into events taking place on the ground – whether its commentary, pictures or video. All the pieces are evaluated in context with one another to provide corporate crisis management and security teams a more comprehensive view of events that can lead to better informed business decisions.Internal OrganizationOnce a disaster is identied, there are clearly dened escalation protocols to initiate and crisis management plans to implement. Senior management teams need to convene as quickly as possible to begin the carefully coordinated corporate response. Business leaders from every department – health and safety, legal, internal/external communications, operations and nance – combine their individual areas of expertise to collectively decide how to address the issue. How rapidly this happens correlates to the ultimate speed with which the company is able to respond. AI technology-backed, real-time alerts have the ability provide the rst indications of impending disasters relevant for oil and gas companies, giving an invaluable gift of time when marshalling internal resources.Response MobilizationWith the crisis identied, and a united senior team assembled, the company can initiate its response plan. Assets need to be quickly secured; whether its ground transportation to an airport, seats on the last commercial ight out of an area or resource procurement for sheltering in place, these actions need to be taken both swiftly and decisively, and backed by the best possible information. When the initial tumult of the disruption dies down, attention immediately turns to business continuity.Oil and gas companies are vulnerable to any number of disasters which have the potential to cripple fundamental operations. Response formulation is entirely dependent on the speed with which information can be gathered. AI technology can be used to deliver real-time alerts, ensuring companies get notied of major events as they happen, allowing for fast and effective response with as little business disruption as possible.Tim Willis is Director, EMEA Corporate Security Sales for Dataminr, a technology platform that creates real-time, actionable breaking news alerts from public social media activity. Dataminr’s powerful algorithms instantly transform all publicly available Twitter data and other public datasets into alerts that enable security, operations, nancial & communications professionals to be alerted to critical information as events unfold. Prior to joining Dataminr, Tim spent over ten years in a variety of corporate security roles across Europe, Africa and the Middle East. OILMAN COLUMNFor more information, callRob Newman, 334-315-4040rnewman@nationalland.com • www.nationalland.comFor Sale - 1,251 acres in Crenshaw County, AL located 30 miles south of Montgomery off I-65. This property is in the fertile Black Belt soil region best known for trophy bucks andabundant wildlife. A newly built cabin and pole barn with water and power. Established food plots with shooting houses. 1,251 acres - owner will divide.

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How Oil and Gas Companies Can Use AI Technology When Disasters Occur p 6 U S Federal Regulatory Bodies in the Energy Sector p 12 Safety Practices and Procedures in the Oil Industry and Technology s Influence p 13 Fundamentals in the Oil Field Matter Even More with Big Data p 28 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY November December 2018 OilmanMagazine com BRIDGING THE GAP IN OIL AND GAS TRAINING

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Oilman Magazine / November-December 2018 / OilmanMagazine.com9Protective Clothing Buyer’s Guide for the Oil Industry By Rick PedleyThe oil and gas industry is dangerous because of the hazardous activities that take place at the worksite. It’s the responsibility of employers in this industry to recognize and control the potential hazards as much as possible, which means creating a workplace safety culture and providing the right equipment for the job to ensure that the risk of injuries and fatalities are minimized as much as possible.Oil and Gas Risks Oil and gas workers are at an increased risk of exposure to struck-by and re hazards. Moving equipment and vehicles are common—being struck by falling, ying, swinging, or rolling objects causes three out of every ve fatalities in these industries. Heavy moving objects have the potential to strike workers and pedestrians alike and cause injury or death. Accidents can be minimized by workers who are aware of their surroundings. If they are working where they’re supposed to, and talking to equipment operators, they still need to wear personal protective equipment (PPE) that can protect them from impacts and other injuries on the job. They also need to be seen, which can be hard in an industry where dark environments aren’t uncommon. Oil and gas workers are exposed to re hazards as well. They are also exposed to explosive gases and particles, electrical hazards, sparks, and ames, and in the event of an accident, can suffer from severe burns, blindness, broken bones, and death. Flash res (which spread rapidly when vapors or particles ignite and explode) and electric arc ashes (which occur when electrical currents pass through ionized air from an electrical fault) are both risks in the oil and gas industry, which makes it one of the top markets for FR apparel. Most of the severe burn injuries and fatalities on a job site happen when non-FR clothing is worn in an accident and burns once ignited.You can minimize the chances of an accident occurring, but can’t take that likelihood away completely. PPE exists to decrease the chance of a tragic accident, but also to increase the survivability of any accidents that do happen. Given that the oil and gas sector is full of safety hazards—the ammable materials, work methods and processes, and environment all present a danger to workers—oil and gas workers need to wear FR clothing. OSHA released a memo in 2010 listing the activities where workers must wear FR clothing, but many employers are starting to require PPE to be worn at all times as a standard uniform.Hi-Vis and FR Clothing Recommendations High-visibility clothing, that is also re-resistant, can help protect employees from struck-by and re hazards and should be part of basic PPE. All hi-vis and FR clothing must be labeled appropriately and compliant to the job that you’re using them for—never assume that protection is a guarantee. Also, don’t assume that putting on hi-vis clothing over your FR clothing will protect you from ames unless the vest is also FR-rated because the materials need to be treated differently. The same goes for jobs where arc ashes are a hazard. While arc ash clothing is also re resistant, FR and AR (arc-rated) clothing is rated for different hazards and therefore more appropriate to certain jobs.The apparel you’ll need depends on the job that you’re doing—not all re hazards are the same, and not all clothing will meet all standards. If you’re in charge of acquiring PPE for your workers, make sure that what you buy complies with the standards and regulations appropriate for your line of work. Fire-retardant materials can be made into vests, shirts, jackets, pants, coveralls, hoods, and other clothing designed to self-extinguish or resist ignition, be visible even in dingy working conditions, and stay comfortable in any kind of weather or worksite.The proper care of your FR equipment is crucial, particularly for the oil and gas sector. Not only is this an industry focused on reducing costs and expenses, but it’s also a dangerous one, and only gear that’s properly maintained can retain maximum re hazard protection for a long time. Investing in high-quality garments that are resistant to abrasion and easy to clean means that you won’t have to replace your gear as often and it will remain safe for its life. There are commercial laundry programs available that can effectively remove ammable hydrocarbon contamination. Make sure that you don’t treat your gear with chlorine bleach or wash it with non-FR clothing. If you have FR-treated cotton fabrics, don’t wash them in hard water, as this can diminish their effectiveness.FR gear should be inspected on a regular basis to ensure that it’s still t to be worn. Garments that are thin or worn in some areas aren’t going to offer optimal thermal protection, and any cuts or holes will reduce the gear’s ability to protect the wearer. Either repair damaged gear with ame-resistant like materials or replace it completely to make sure that your workers are safer for longer.Take your time reviewing your oil and gas safety equipment options and use a trusted supplier to help you through the process and answer your job safety questions. Rick Pedley, PK Safety’s President and CEO, joined the family business in 1979. PK Safety, a supplier of occupational safety and personal protective equipment, has been operating since 1947 and takes OSHA, ANSI, PPE, and CSA work safety equipment seriously. PK Safety’s customer service can be reached at 800-829-9580 or online at https://www.pksafety.com/contact-us. OILMAN COLUMNPhotos courtesy of PK Safety

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Oilman Magazine / November-December 2018 / OilmanMagazine.com10Photos courtesy of Professor Kenton Brice and Joseph Dancy -OU College of LawSanta Rita #1 Well from OU drone view Mr. Dancy at the Santa Rita #1 WellProfessor Kenton Brice pilots the drone over the site, recording video data that was later edited for viewingSanta Rita #1 Well at ground levelDrones Making Headway in Advancing E&P By Joe DancyOILMAN COLUMNTechnological advances have been a theme in the energy sector through the decades, used by aggressive operators to make drilling or production activities more efcient and cost effective. Recently, many of these technological advances have involved horizontal drilling or completion techniques in unconventional reservoirs. One of the more intriguing and unconventional technological developments now being adopted is the use of drones, otherwise known as UAVs (unmanned aerial vehicles), to assist the operator in oil and gas drilling, development, and operational activities.Drones have been used in the industry for surveying, equipment inspection, spill documentation, emission monitoring, and to record surface damages caused by developmental activity. Several state regulatory agencies have used drones to inspect producing properties, to check on ice dams during the winter in streams near producing wells, and to try to locate abandoned wellheads.With the focus on oil and gas activity we decided to test out our newly acquired drone to analyze its capabilities. The number of oil and gas projects we could participate in were limited since we were not an oil and gas operator. We considered partnering with a state oil and gas regulator, but timing and personnel issues made such a test program unfeasible. As an alternate, to test our drone capability, we proposed to use a UAV to lm the Santa Rita #1 wellsite. This location is a historical site that has been preserved and is situated well away from civilization. Should we have operational issues, we reasoned, a problem experienced at the remote site would likely minimize the damage inicted, as compared to say, a test ight and video in the Barnett Shale over well to do residential neighborhoods in Fort Worth. Located in rural West Texas, an hour or so from Midland, the remote Santa Rita #1 well location is the discovery well of the Permian basin. Drilled in 1923 to a depth of 3,050 feet, the well “blew in” at 100 barrels per day. Unfortunately, due to its remote location, very few investors back in the day were interested in developing the eld even after the discovery well proved successful.The drone we purchased was one that is commonly used in the industry and sold commercially, costing around $1,500. It has a top speed of roughly 50 mph and can climb to roughly 20,000 feet, an altitude above which many smaller planes can safely attain.Used by hobbyists, no license is necessary to y a drone. But ours was an educational venture, not a hobbyist outing. We realized we would need a FAA drone operator’s license for the ight and lming. UAV licenses are awarded based on a knowledge based test administered by the FAA. The applicant has to be at least 16 years of age and uent in English. The license applicant must also pass a TSA screening test. We passed our FAA exam two weeks before lming.The Santa Rita #1 Well from the railroad tracks that brought the drilling rig to the remote location

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Oilman Magazine / November-December 2018 / OilmanMagazine.com11Mr. Dancy using the virtual reality equipment at The University of Oklahoma College of Law libraryPRODUCT SHOWCASEFOX THERMAL has launched a new product - the Model FT4X Thermal Mass Flow Meter - ideal for serving Oil & Gas and Industrial applications.The new FOX Model FT4X allows the user to enter a Custom Gas Composition to optimize the ow meters calibration and calculate Density and Gross Heating Value.The FT4X is a high-end ow meter, and it features a robust design. The notable new feature of the Model FT4X is the Data Logger. The FT4X Data Logger records ow rate, totals, and other events and alarms. The advanced features of the Model FT4X Data Logger include:• 40 daily totals• Settable Contract Time denes Contract Day• Time/date stamped alarm & event logs; 7 year history• Power off totalizer; power failure creates event log entry• View Density and Gross Heating Value of selected gasThe logs in the Model FT4X also display information about the meter’s setting and functionality:• Gas or gas mix composition• Flowmeter’s conguration settings• Calibration Validation historical test data• Logs of events and alarmsThe FT4X has a long list of other advanced features: • 2nd generation non- cantilevered DDC-Sensor™ - Advanced Direct Digitally Controlled sensor • Expanded Gas-SelectX® Menus – 3 onboard gas selection menus• CAL-V™ - In-situ Calibration Validation• RS485 Modbus RTU or HART - Communications options• Standard USB Port – Connect a PC• FT4X View™ - Software for conguring, graphing, and logsThe 2nd generation DDC-Sensor™ eliminates the sensor element vibration which can lead to metal fatigue and failure. Its unique design provides a technology platform for calculating accurate gas correlations for the Gas-SelectX® feature. The FT4X was designed to be used in Oil & Gas and Industrial applications. It is ideal for monitoring pure gases or even complex are gas compositions. Gas-SelectX® provides an expanded selection of gases from 3 menus: • Pure Gas Menu (11 common gases)• Mixed Gas Menu (11 common gases - mix in 0.1% increments)• O&G Gas Menu (C1 – C9+, Nitrogen, and CO2 gases - mix in 0.1% increments)The FT4X’s CAL-V™ feature allows users to conrm that the meter is functioning properly and accurately -- with just a simple push of a button. FT4X View™ software allows easy adjustments to the meter conguration, evaluation of alarm conditions, collection of process data, and measurement viewing from your PC or control station. Moreover, this software can be used to initiate CAL-V™ -- and it automatically logs the results of each CAL-V™ test. If any regulatory submission is required, the software will generate a certicate for easy recordkeeping. Greg Smith, Sales Support & Customer Service ManagerFOX THERMAL, Inc.399 Reservation Road, Marina, CA 93933(831) 384-4300 | www.foxthermal.comFox Thermal Precision Mass Flow MeasurementAn ONICON BrandOILMAN COLUMNUnder FAA regulations lming can only be done during the day. The drone is limited to a maximum height of 400 feet. Some areas have been designated as restricted airspace, limiting drone operations. The FAA can grant exceptions to these regulations, but we felt we could successfully record and lm under these conditions without requesting an exception.In addition to federal regulations, state regulations also apply. In Texas there is an exception allowing for lming if it is being done for educational purposes. We were also ying over public lands and a public right-of-way. So we were not, in this situation, restricted by State of Texas regulations in the lming process. If we were not an educational venture the ability to lm, and the required approvals, might have been more complicated. We shot our video using a Garmin 360 camera mounted on the bottom of our drone. Due to the brisk wind, and the weight of the camera, the drone was initially somewhat unstable and wobbled a bit, but we were able to control that problem.Once we had the lming complete, we took the video back to the University of Oklahoma, edited the two hours of lm, and prepared a 15 minute virtual reality tape that students can view in The University of Oklahoma College of Law library. A sixteen hour road round trip to the Santa Rita #1 is no longer necessary to explore the discovery well of one of the largest oilelds on earth – if not the largest. The student can experience the narrated Permian Basin expedition in a custom, air conditioned, seat in front of a computer screen 425 miles away from the well.Technology continues to create niches in the energy sector, both from an operational and educational standpoint. Over the longer term we are all better for it.

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Oilman Magazine / November-December 2018 / OilmanMagazine.com12OILMAN COLUMNU.S. Federal Regulatory Bodies in the Energy Sector By Eric R. EisslerAs one can imagine, there is more than just the DOE (Department of Energy) involved in the regulation of the U.S. Energy industry. The DOE is the all-encompassing branch of the government which is responsible for all types of energy regulatory matters. There are additional regulatory bodies that are responsible for more granular levels of the energy industry from the discovery and mining of natural resources to the distribution and transmission of fuels and electricity directly to consumers. This article will provide an introduction to the many agencies, branches of government and independent regulatory bodies that work within the U.S. oil and gas industry. This is not an exhaustive list of agencies. In the latter section of this article, there are notes on how even agencies such as the U.S. Forest Service is involved in the oil and gas industry. The RegulatorsThe FERC (Federal Energy Regulatory Commission), NRC (Nuclear Regulatory Commission), BOEM (Bureau of Ocean Energy Management), NIST (National Institute of Standards and Technology) and OSM (Ofce of Surface Mining Reclamation and Enforcement) provide varying degrees of regulation and oversight over energy for the U.S. While still important for energy regulation, the NRC will not be covered here, as it does not play a part in the regulation of the oil and gas industry. The Federal Energy Regulatory CommissionCreated in 1920 as part of the Federal Energy Act, this independent (from the government—it’s not an agency) provides oversight of the natural gas and oil industry as well as, the general electricity market, however, not at the retail level of power distribution. The Federal Energy Act of 2005, signed into law by President George W. Bush, expanded the powers of FERC and give it the ability to issue permits for interstate electricity transmissions. Bureau of Ocean Energy ManagementOffshore oil and gas producers deal directly with this government agency as it is the foremost powerful in issuing permits and allowing oil and gas exploration along the coastlines of the U.S., in particular the Gulf of Mexico, where a vast majority of the country’s subsea-based hydrocarbons are located. The BOEM is responsible for oil and natural gas leases, environmental reviews and renewable energy activities. BOEM has ofces in Louisiana, California, and Alaska.Ofce of Surface Mining Reclamation and EnforcementWhile not directly associated with the oil and gas industry, the OSMRE sometimes can be associated with it, due to its regulation of mining and natural resource extraction for resources such as coal and water-quality control. This ofce would be involved in the writing of regulations for produced water from hydraulic fracturing processes; ensuring that the local water is not being contaminated from fracking and mining processes. National Institute of Standards and TechnologyOne of the oldest ofces in the U.S., NIST was founded in 1901. It is an agency located within the Department of Commerce. It works with all businesses within the engineering world to promote scientic innovation—which trickles down into the oil and gas industry via new technologies for energy production among others. Even More Branches of Government There are a few more arms of the government, which regulate the oil and gas industry further, from the agencies written about above. The Department of the Interior regulates the extraction of oil and gas from federal lands.The Bureau of Land Management regulates oil development, exploration and production on federal onshore properties.The Ofce of Natural Resources Revenue collects royalties owed to the government for onshore and offshore production.Government Connections Run DeeperThe more one looks into oil and gas regulations, the more one will nd that there are less obvious arms of government and agencies that all work in the oil and gas industry. The BLM (Bureau of Land Management), works with other government agencies such as the BIA (Bureau of Indian Affairs), which regulates what can and cannot be done on Native American lands. The following passage provides deeper insight to how much the BLM actually regulates:The BLM manages the Federal government’s onshore subsurface mineral estate – about 700 million acres (30% of the U.S.) held by the BLM, U.S. Forest Service and other Federal agencies and other surface owners – for the benet of the American public. It also manages some aspects of the oil and gas development for Indian tribes.From the above passage from the BLM’s website, even the U.S. Forest Service is somewhat involved in the regulation of the oil and gas industry! As one can imagine, there are even more regulatory bodies at the state level, but those are not covered in this article. More Regulation Than Meets the EyeWhile there is much regulation in the oil and gas industry, until further inspection and a little research, it quickly spills out to many bodies that govern the oil and gas industry. From the highest level such as the DOE, which oversees all Energy matters in the country, to the individual states’ regulatory bodies such as the Texas Railroad Commission, down to the most granular level of local laws, for example, the La Salle County Clerk, it is clear that there is not just one or two government agencies regulating the oil and gas industry, but a majority of all government agencies on all levels: Federal, State, and Local. Photo courtesy of Phongphon Sutantayawalee – www.123RF.com

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Oilman Magazine / November-December 2018 / OilmanMagazine.com13Safety Practices and Procedures in the Oil Industry and Technology’s Influence By Tonae’ HamiltonAmong the industries at risk for health and safety hazards, the oil industry is one of the most susceptible. Oil and gas workers are consistently exposed to hazards such as conned spaces, motor vehicle accidents, slips, trips, and falls, and especially, res and explosions. When workers succumb to such hazards, it is not only detrimental to the worker, their health, and performance, but also to the performance and reputation of the company. Companies can face costly fees/lawsuits, penalties, and ultimately incur damage to their brand and image. With that said, it is important for all three segments of the oil and gas industry (upstream, midstream, and downstream) to ensure safe and healthy work sites through various measures. Isaac Dantin, Senior Safety Manager at Danos, understands the importance of HSE (Health, Safety and Environmental) practices in the workplace and describes how such practices are implemented at Danos. He talks about how his company and others in the oil industry are able to stay on top of safety practices and procedures through various methods, and even more so through the use of technology.When initially asked about the importance of HSE practices in the workplace and the industry, Dantin stated, “Workplace safety is not a priority, but a value. At Danos, it is the core of who we are. It is critical and essential. Safety is the lifeline of our success. The health and wellbeing of our employees come rst. Safety means that we also meet or exceed our customer’s expectations. We want to make sure our employees are managing every procedure properly, and we want them to go home the same way they came in that morning.” Dantin was also asked to discuss specic practices implemented at Danos. He described how Danos is a diverse service provider, mentioning that they have different product lines including production operations, construction, automation services, scaffolding, coatings and project management, and therefore, policies (including training details and behavioral-based safety programs) are made readily available on their internal company site. Dantin also credited how technology has had a hand in helping Danos commit to workplace safety. “We have an app that we created two years ago, which allows our employees to observe others perform tasks. It also allows management to give feedback. If an employee records a near miss in the eld, the app sends an email to the management team. From there, we are allowed to get “in the bucket” with them and can help them work through their job tasks and take advantage of learning opportunities. We encourage employees to use our system to record observations, and there are no repercussions,” said Dantin. Further describing the app that is simply called “Danos Watch Card,” Dantin said, “It is not only designed for our employees, but also for our customers and family members. They are also able to participate in our safety program. If a teenager notices something unsafe at home, they are able to enter an observation as a third party user. We will use the data they submit to help communicate with our broader organization. All you have to do is go to your app store on any smart device, search Danos, and register as a guest.” Dantin also discussed other technological developments that Danos uses to improve worker health and safety conditions. “With our internal program called EMS (Electronic Management System) employees can access all their personal training and track the participation of our different safe work practices. Our EMS program is where we document our safety action plan goals. Staff and personnel participate in our safe work initiatives including hand & JSEA audits, offshore visits, crew change meetings, and our Stop Work and BSS (Behavioral Based Safety Program),” said Dantin. When asked if he thought technology, overall, could help improve conditions in the oil industry, Dantin described how benecial technology has been for the industry and Danos, and how heavily sought after it is by both customers and competitors. “I recently attended an offshore meeting in Houston with some other suppliers, and technology is something that everyone is focusing on. At Danos, we are also seeking a technological answer to our current app. Our app is designated for BBS, but we hope to implement and capture audits in the eld through the app as well. With technology, we have been able to advance our data analytics. Just by entering safety information into our app, we can better gauge where we’re at in our learning opportunities and our successes,” said Dantin. Dantin also described some of the HSE safety practices he has seen from other companies in the oil and gas industry. He expressed how more companies are starting to have compassion for human performance and are becoming more xated on how to improve operations to better accommodate employees. “Everyone in the oil eld is doing a good job of looking beyond the human element and instead, focusing on process improvement. People will make mistakes, but instead of solely analyzing if that human’s mistake is acceptable, we are now thinking about what we can do to better improve operations to prevent or reduce mistakes. It’s a better way of thinking,” said Dantin. Dantin expressed what health and safety improvements, technological-based or otherwise, he’d like to see happen in the oil industry and for his company in the future. He emphasized how the industry should be measured more on the safeguards that are already in place. “Rather than looking at incidents for being the measuring stick of a safety culture, we should be looking at the positive, proactive things that a company does. I would also like to see more personal safety and care across the industry from the top down,” said Dantin. Dantin shared how Danos does a great job of focusing on a positive and a caring workplace, but that there is room for everyone to improve. “When I started with Danos in 1996 as a roustabout, it meant the world to me to shake the hand of an owner or executive. Our employees have that opportunity quite often. Our executive team doesn’t have shiny new steel toe boots, but rather scuffed and dirty ones. Their boots will tell you that they spend time in the eld face to face with the people we are working hard to protect. The industry needs to continue that push, the “We Care” push,” said Dantin. OILMAN COLUMNPhoto courtesy of Pornsngar Potibut – www.123RF.com

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Oilman Magazine / November-December 2018 / OilmanMagazine.com14Blockchain in Oil and Gas is Not Hype By Eric R. Eissler Blockchain, cryptocurrency, Bitcoin, these are all the words that have been buzzing around since this time last year. Bitcoin was on a meteoric rise unlike any investment ever seen before. Since this there have been more than 2,000 companies that have appeared and are riding the blockchain wave on the pretense of ICO (Initial Coin Offering) fame. Most of these companies have done well at raising money and attracting attention, but after the ICO comes the token crash and value disappears. While many companies follow this pattern, not all of them do, some offer actual blockchain-based solutions without all the hype, the ICOs and the let down when the token price inevitably crashes. OILMAN Magazine had the opportunity to speak with the President and CEO James Graham of GuildOne, a Calgary-based blockchain company working in the oil and gas industry to provide new, emerging technologies such as blockchain, machine learning, and articial intelligence. On top of developing blockchain-based solutions for the oil and gas industry, the company is working with First Nations to develop a more efcient royalty payment system, called Thunderbird Consensus. From the ground up, platforms matterIn the blockchain and crypto world, choosing the right platform is an important part of building a quality blockchain. Graham gave a detailed description of the platform and technologies that his company is using. We built our EBX blockchain business network on R3’s Corda blockchain platform using Amazon Web Services (AWS). Corda was designed for use in nance and banking and so meets the highest standards of one of the most complex and highly regulated industries in the world. Knowing the strict standards R3 used to build its platform was a key differentiator for us when we chose a platform upon which to build the Royalty Ledger. R3 and AWS have both since become valued partners as we move forward with our blockchain research and applications.Hydrocarbon measurements and calculationsCurrent projects include the Hydrocarbon Measurement Ledger, which is exploring the use of blockchain to exchange value at custody transfer points. The project includes committing the IoT (Internet of Things) device level measurements to a distributed ledger – and using these measurements to calculate the ow of hydrocarbon volumes through the system. As counterparties commit to shared contract terms and shared source data for measurement and ow calculation, new “frictionless” models of hydrocarbon accounting emerge. As stakeholders acquire and spend ledger positions the opportunity to transact the native asset value – i.e., settling accounts via exchanging ledger positions rather than at cash mechanisms.OILMAN COLUMNPhoto courtesy of Arrow – www.123RF.com Agreeing on and encoding appropriate smart contracts would require:1. Recognition of Indigenous title of traditional lands.2. Steps for consultation and accommodation for environmental considerations, cultural heritage sites, and remediation.3. Business opportunities and compensation by industry or government.James Graham

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Oilman Magazine / November-December 2018 / OilmanMagazine.com15Forty-ve years ago, October 17, 1973, the Arab oil embargo began as agreed to by the OPEC oil ministers. Since that time, beginning with the embargo, U.S. energy and economic direction has been impacted due to that decision. (The members of the Organization of Arab Petroleum Exporting Countries “OAPEC” initiated the oil embargo.)A few months later, (1974), The International Society of The Energy Advocates, now known as The Energy Advocates, was founded in Tulsa, Oklahoma. The mission of The Energy Advocates was to educate the public about energy issues and policies, therefore, combating the OPEC stronghold. This would be the rst time the Arab (OPEC) nations would wield the oil. At a time when America was experiencing upheaval and uncertainty on nearly all socio-economic fronts, the energy crisis threatened the very fabric of the American way of life. (It was an honor for me to serve as president of The Energy Advocates from 2003 to 2009.)Prices reacted almost instantly, and the effects of the Arab oil weapon were felt by citizens across America. Fuel shortages were commonplace during the period of the fall of 1973 to the summer of 1974. This was the rst time since World War II that U.S. citizens experienced lines at the pump. This cut in the global supply of oil was devastating to the U.S. economy and soon other western nations experienced high ination and economic recession.Now 45 years later, America has turned the corner. The U.S. today has been proven to possess an abundance of both oil and natural gas. There is the rallying cry for American energy. However, despite this move in the right energy direction, we cannot afford to let up. Our energy security depends on the development of a comprehensive domestic energy policy. Energy education is more important than ever as we envision America’s energy transformation. National Energy Talk, an Energy Advocate initiative, is a platform of engaging a national dialogue on energy issues, views and solutions. We address the needs, plans and issues. Through discussion, we can create a national energy plan. National Energy Talk, www.nationalenergytalk.com, is helping lead a dialogue on energy issues, views and solutions through events, publications, videos, audio and online content.As advisory board chairman of IngenuitE, an Oklahoma City based IT company, I am fully aware that “to maximize potential and attract a new and needed younger workforce, companies of all sizes are going to have to focus on content, analytics, and digital transformation. Large amounts of data from many sources can be collected and analyzed quickly, which leads to being more informed and making better decisions.” U.S. technology, research and workforce will lead the way. The founders of The Energy Advocates would be proud to know that America is becoming less dependent on OPEC. We are faced with America’s energy dreams and global economic realities. America needs America’s energy and the world needs the U.S. energy industry! Go to FACEBOOK: National Energy Talk with over 23,000 supporters and growing. Forty-Five Years Later… By Mark A. StansberryOILMAN COLUMNThe solution offers a more transparent and shareable view of the assets currently residing within and through a production system. This offers great improvement to processes involved in the nancial valuation and potential performance yield(s) of the system.First NationsIn Canada, the First Nations People receive royalties paid by oil and gas companies operating on their lands. However, ensuring that these royalty payments are transparent and honored has been a sore point in the relationships between the Government of Canada, oil and gas operators, and the Indigenous peoples. Graham stated that “Using blockchain technologies, funds due to Indigenous groups can be distributed immediately upon the production of resources or the use of infrastructure. Distribution would be tightly documented and veried to the satisfaction of all parties.” This would be a major benet to the First Nations to ensure that they are paid the correct amount on time. “Further,” continued Graham, “Varying and changing interpretations of contracts between Indigenous groups and governments has been a source of difculty over our history. But blockchain and smart contracts require very precise language and interpretations.”Placing agreements like this on the blockchain would be benecial to both parties and it would help to close the wound of mistrust. Breaking out of the “Crypto Mold”As a nal and most telling question OILMAN had for GuildOne about how it sees itself and wants others to see it during these times of the “Wild West” in the crypto sphere. OILMAN asked if GuildOne conciders itself a “crypto company” or a company more geared towards ntech and securities in a traditional sense, but implementing new digital platforms.Graham answered, “At this point, we consider ourselves more the latter, in that we are applying blockchain technologies – distributed ledgers, smart contracts, articial intelligence and machine learning – through our Royalty Ledger application to conventional processes in an established sector, oil and gas. We believe that applying these new technologies has the potential to radically transform these processes.” Here he has dispelled the idea that his company is another y-by-night crypto company that so much of the cryptoshpere has become over the past year. He continued on about the benets that blockchain brings to the oil and gas industry: “This will be done specically by automating value exchange over our EBX business network through smart contracts, so that payment is triggered nearly instantaneously upon fulllment of contractually-agreed upon terms. It will also be done through distributed ledgers (specically, Royalty Ledger), which have the potential to eliminate traditional causes of frequent and costly delays due to a) disputes over data and b) differing interpretations of contractual terms.”GuildOne is a pioneering technology company that has for more than twenty years provided advanced data solutions and business intelligence to oil and gas companies, so they can better understand and use data to enhance business performance. Mark A. Stansberry

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Oilman Magazine / November-December 2018 / OilmanMagazine.com16Solving the Capacity Crunch in Today’s Petrochemical Supply Chain By Aaron KlineOILMAN COLUMNIt has become extremely difcult to optimize product movements across an increasingly complex petrochemical supply chain. Chokepoints at shale oil elds are complicated by capacity problems further down the logistical stream that are stimulating the construction and expansion of oil export terminals. Today’s challenges are slowing down product transports, increasing costs, and threatening to prevent oil companies from realizing the full benets of increased capacity. To solve these challenges, companies are turning to Industry 4.0 solutions for liquid storage terminals that aggregate sensor and planning/forecasting data into a single shared view while also delivering valuable analytics and real-time alerting capabilities. These tools enable operators to squeeze the highest possible product volumes through their supply chain and transportation infrastructure. A Tough Problem Gets More ChallengingA 2017 report by the ACC (American Chemistry Council) and PwC (PricewaterhouseCoopers) predicted that, in the larger U.S. chemical industry, excess inventories could soon cost $22 billion in working capital, and capital expenditures (CAPEX) could increase by $23 billion for the equipment and infrastructure required to handle increased congestion and delays. The report also predicted that logistical inefciencies could result in up to $29 billion in increased operating costs over a ten-year period.Today’s terminal optimization tools offer a solution, delivering accurate real-time data so operators can make the best possible decisions at all stages of the supply chain – from upstream exploration and petroleum production through midstream transportation to reneries for conversion and storage, and on through downstream processing and the transportation, marketing, and distribution of rened products by pipeline, vessels, rail, and trucks. Terminal optimization platforms have already played a key role in helping liquid storage terminals absorb massive growth in crude oil transportation trafc from onshore shale nds, over the past few years. Initially deployed at the dock, these web-based and collaborative process optimization tools have enabled users to reduce dock delay times an average of 35 percent within the rst few months of their adoption, and to complete approximately 15 percent more vessel calls within the rst year. More recently, these tools have evolved to provide planning, reporting, forecasting, analytics, and alerting capabilities across all terminal logistics operations, thus setting the stage for new ways to manage multi-modal product movements.A New ApproachAt the core of today’s terminal-optimization platforms is a combination of real-time and historical AIS (Automatic Identication System) data that enables users to improve visibility into vessel operations and to cut liquid-cargo transportation costs while enhancing safety and security. This enhanced visibility vastly improves processes like demurrage calculation, ensuring that all parties have the same information about demurrage costs and who is responsible for penalties. Everyone can discuss and dispute issues by using the same information about real-time and historical vessel movements, and can collaborate to identify and correct root causes of delays.In addition to improving visibility, today’s tools also facilitate collaborative real-time operational planning and reporting across all terminal product movements from the dock to tanks, trucks, rail, and pipelines. Stakeholders can work together on an extensive range of logistics operations – from pipeline transfer scheduling, tasking, and line management functions to historical reporting for performance tracking, optimization, and trending analysis. They can also troubleshoot together, solving scheduling and other problems while understanding how actions in one part of the operation affect what is going on elsewhere.Another benet of today’s tools is more consistent asset allocation, along with asset-utilization reporting. The most common problem that operators report is when multiple products must go through the same pump and there is an incoming product that requires special handling or that needs more time to transport than other products. Planners can now preempt these problems, oversights, and associated scheduling conicts by giving teams the necessary logistics information about delays and other issues in order to collectively make complex asset-utilization decisions (Figure 1).Figure 1: One of the purposes of delay dashboards and reports is to correlate information about inbound pipeline moves and the availability of docks. Dock delay reports improve how users schedule vessel arrival times and manage through any disruptions, while also enabling them to assess how delays impact productivity and demurrage expenses.All event logging activities are automated, and diverse stakeholders can collaborate anywhere, anytime. Users can build tank-to-tank lineups on the y and keep them for future use, and do this in a consistent fashion to ensure that everyone can understand throughput for every line and route, identify bottlenecks, and build business cases for additional infrastructure. They can also implement proactive alerting to prevent overll and underll situations and other scheduling conicts.Additionally, today’s tools deliver valuable forecasting and planning capabilities across all transportation modes and serve as the most consistently accurate source of information – thus

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Oilman Magazine / November-December 2018 / OilmanMagazine.com17OILMAN COLUMNenabling all available information to be obtained from a single shared source. Operators can validate capital and outsourcing investments, while also comparing the effectiveness of third-party resources, analyzing investments in additional owned assets, and evaluating a combination of both approaches. Leveraging Key Performance IndicatorsOne of the most transformational capabilities of today’s terminal-optimization tools is that they deliver the real-time and historical operational data that operators need to set and manage measurable KPIs (Key Performance Indicators). This capability enables operators to improve and standardize productivity, alert users when corrective actions are needed, and keep operations within desired efciency envelopes. KPIs help mitigate supply chain risks by enabling all stakeholders to understand root causes of delays, and they facilitate the creation of benchmarks for improving and standardizing best practices (see Fig. 2). KPIs can also be used to trigger alerts before deviations from the target KPI benchmarks exceed accepted thresholds, so users can collaborate on the best courses of action.Figure 2: Users can also create delay dashboards that drill deeper into the root causes of delays, which facilitates the development and tracking of KPIs for improving and standardizing best practices.KPIs have traditionally been used to plan capital expenditures on maritime dock expansion projects, and to validate that existing dock capacities were being fully utilized. Now, operators are also using these tools to more effectively plan investments in new tanks and in other storage and transportation infrastructure. With these tools, operators can generate reports on a variety of terminal-wide task metrics and track measurable KPIs ranging from how long it takes to complete one task and launch another, to compliance reports on emissions regulations. Today’s collaborative terminal process optimization tools are quickly becoming logistics hubs for all product movements – whether they are tank-to-tank transfers or a variety of inbound and outbound pipeline, railcar, and truck movements. These tools are changing how terminals operate by automating signicantly more of the supply chain management process. They are also introducing real-time KPIs and trending analytics into capital investment decision making and into the increasingly critical process of improving and standardizing efciency best practices and benchmarking.Aaron has over 15 years of business development and project management experience and has interfaced with several ports and terminals along the Gulf Coast to optimize delivery of project cargo and facilitate marine logistics projects. After serving in the U.S. Navy as a submarine ofcer, Aaron began his career at FMC Technologies and then joined Chevron as an Operational Excellence Engineer working with the onshore drilling and completions team. He then joined FTO Services as a business development manager for a subsea riserless light well intervention service, before joining Signet Maritime, a marine logistics company specializing in tug and barge operations in the Gulf of Mexico. Aaron has also completed over 20 years in the U.S. Navy Reserves as a submarine ofcer. He graduated from the United States Naval Academy and is also a distinguished graduate of the University of Houston with an Executive Masters of Business Administration degree.

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Oilman Magazine / November-December 2018 / OilmanMagazine.com18How Runtime Application Self-Protection (RASP) Can Prevent Cyberattacks in Oil & Gas Environments By Joe SaundersOILMAN COLUMNLike all sectors of critical infrastructure, the oil and gas industry has emerged as a top target for cyberattack, yet most companies are not doing nearly enough to mitigate the risks. Demand for business insight and device monitoring has led many oil and gas companies to merge OT (Operational Technology), such as their control systems, with enterprise IT systems. While the digitization of operational processes offers cost savings and improved productivity, the convergence of these two disparate business units has opened the door to a variety of risks upstream, downstream, across pipelines and throughout the supply chain. Traditionally, oil and gas companies have implemented cybersecurity measures that focus on detecting symptoms of attacks. They use external network and perimeter technologies such as gateways, rewalls, intrusion prevention and anti-virus agents, as well as static and dynamic analysis to try to detect vulnerabilities. But as threats evolve in frequency and sophistication, a more proactive set of defenses, along with an elevated sense of urgency, must prevail.Legacy Equipment and Systems Vulnerable to AttackMany oil and gas companies still operate with legacy equipment and systems that were never designed for connectivity, nor to withstand today’s attacks. While components that manage processes like extraction controls, blowout prevention, and metering systems have been retrotted with internet-connected features, most retain vulnerabilities and lack effective security controls. Furthermore, because eld-level personnel often make decisions about industrial control systems (ICS) software, many oil and gas companies have multiple solutions, all with varying levels of security. To make matters worse, many facilities operate on outdated networks. like Windows XP, or even OS systems from the ‘90s. Additionally, as oil and gas networks become more dependent on sensor data, they also become more vulnerable to spoong attacks, denial of service, or social engineering. This can lead to production shutdown if the signal or energy source to an actuator is interrupted during a cyberattack. Attackers can also breach a critical access point to gain control of operations and weaken machinery or cause overheating. Malware attacks can not only result in a loss of data, but also interfere with control system operability, such as interrupting air conditioning or heat, which could put renery operations out of commission.The risks are already well-known. The Ponemon Institute surveyed 377 U.S. oil and gas cybersecurity risk managers in 2017, and nearly 70 percent said their operations have had at least one security compromise in the past year.New Technologies Needed to Protect Against New ThreatsSome oil and gas companies are trying to meet the threats, but their efforts aren’t enough. Roughly 60 percent of those surveyed by Ponemon said they have difculty managing risks across the supply chain. While there are effective security technologies available, such as user behavior analytics, hardened endpoints and encryption of data in motion, less than half said they would deploy any of these technologies in the next twelve months.Most importantly, traditional cybersecurity measures aren’t built to prevent malware from propagating because they mainly rely on network and perimeter solutions. In other words, these tools focus on identifying underlying symptoms rather than causes. Detection offers no protection in cases where the supply chain itself is compromised, such as in le-less attacks like memory corruption exploits, stack and heap attacks, zero-day attacks or ROP (Return Oriented Programming) chain attacks.While detection monitoring is important, it isn’t an end-all solution, and it also requires time, investment and expertise to implement. Re-engineering code can also help enhance security, but to do so requires signicant resources, and can trigger compliance risks, especially when the software stack can be hundreds of thousands or millions of lines long. Hardening Systems with Runtime Application Self-Protection One of the latest and most effective means to reduce risk is to cyberharden systems using RASP (Runtime Application Self-Protection) technology, which reduces risk by preventing exploits from spreading across multiple devices and networks. RASP hardens software binaries by using techniques such as binary stirring, control ow integrity and a priori optimization. RASP techniques harden software binaries so that attackers can’t calculate in advance how to successfully execute their code. This can Photo courtesy of RunSafe

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Oilman Magazine / November-December 2018 / OilmanMagazine.com19OILMAN COLUMNprevent an entire class of malware attacks related to buffer overows. There have already been several high-prole incidents in the oil and gas industry where RASP and randomization could have prevented the attack. In August 2017, Schneider Electric’s Triconex SIS (Safety Instrumented Systems) controllers were infected with Triton malware at a Saudi Aramco facility in the Middle East. Attackers gained access to the SIS engineering workstation to plant rst stage malware, then downloaded new malicious code. Some controllers entered a failsafe state which automatically shut down the industrial process and prompted the owner to begin an investigation. In a case like this, cyberhardened SIS controllers could have completely prevented the attack, because the malware would not have been able to replicate.RASP is easy to implement and requires no new additional investments, software, services or hardware and only a one-time transformation with limited overhead. No access to source code complier, or operating systems is needed. Finally, RASP doesn’t require alerts to monitor, and it is remotely deployable, as binary code can be cyberhardened via API. Because of all the benets, RASP adoption is increasing. According to a report by MarketsandMarkets, the RASP market is expected to grow at a compound annual growth rate of 33 percent to $1.24 billion by 2022. The cyberthreats against the oil and gas industry are more complex than ever before. Moving from traditional security defenses to cyberhardening binaries can reduce risk by stopping attacks before they can execute. Joe Saunders is the founder and CEO of RunSafe Security, a pioneer of cyberhardening technology for embedded systems and devices and industrial control systems. Joe is on a personal mission to transform cybersecurity by challenging outdated assumptions and disrupting the economics that motivate hackers to attack again, and again and again. The last few years I have written about the Market Outlook in the acquisition market for the coming year. For the most part, these outlooks are nothing more than reporting back to the reader the information I hear every single day. I don’t deal in global politics or billion dollar deals, so I have no input on any of those ideals/transactions and never factor them in to the bottom line of transactional expectations. With that being said, there is a strong indication that the price of oil will continue to rise throughout 2019. And should oil continue to rise, the exits of private equity backed or 3rd / 4th generation family owned rms may take the opportunity to materialize. We expect February NAPE to be extremely busy. Deals on top of deals busy. Even prior to NAPE, the deals will be publicized on a greater scale in 2019. With social media being such a large part of everyone’s life, information travels much quicker than in years past. Reporting sources (like OILMAN Magazine) have access to better, more accurate information, and are able to inform their readers of transactions in nearly real-time.We expect a signicant amount of deals that are under $100 million to close in Q1. Blocked positional pieces that have been the focus of ineld drilling will start to work up exit strategies in Q2 and Q3 (but the exits will be driven by oil price). Targeted acquisitions will still be the most prevalent change in the acquisitions market. Big data will play a signicant role in acquisitions in 2019 (and through 2020). The Permian market will have dynamic changes as midstream companies continue to build and fund the growth. The differentials will only last for so long before competition within the midstream sector eliminates that differential entirely. It will take time, but being in the eld we have seen a culture shift, and being in the ofce, we have seen a view change of investment dollars into a differential driven world. As those investment dollars are eliminated, so does that differential.Gas continues to rise, and as I’ve previously written about, that was where the largest acquisitions and opportunities were in 2018. The 10-year state land that New Mexico sold may have made the largest newspaper headlines, but the biggest splash were the companies that bought when gas was trading at just over a dollar. I’m seeing a number of deals come through our ofce (about six per day) and that tells me that 2019 is going to be a very busy year. Oil and gas companies that are considering an acquisition strategy are using the days strip price, rounded to the nearest dollar. Whereas the average seller’s baseline barrel price is, on average 26 percent higher than strip pricing. Unless you are equipped with a target marketing strategy, you won’t be able to transact in 2019 using the same economic projections that everyone else is using. You have to visit directly with the sellers to understand this price difference.Beachwood Marketing, the trusted leader in target acquisition marketing, is focused on helping clients acquire off-market oil and gas assets. Visit www.beachwoodmarketing.com for more information. Connect with Beachwood Marketing on Twitter @beachwoodmg or with Josh Robbins on LinkedIn www.linkedin.com/in/joshatbmg. Oil and Gas Acquisition Market 2019 Outlook By Josh RobbinsJosh Robbins

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Oilman Magazine / November-December 2018 / OilmanMagazine.com20OILMAN COLUMNAdvanced Anti-Corrosion Coating Utilized on Two North Sea Offshore Platforms By Merrick AlpertIn a collaborative effort designed to improve vital protection of offshore assets, the OGTC (Oil & Gas Technology Centre) is successfully conducting trials of an advanced anti-corrosion coating on two North Sea offshore platforms.The mission of the OGTC, which is jointly funded by the government, is to establish a culture of innovation and position as a global hub for oil and gas technology and innovation.The challenge, however, is that the North Sea is one of the most brutal climates in the world. Often ice cold and windswept, the rigs in the North Sea face a constant corrosive onslaught of waves and salt spray. Traditional coatings simply cannot withstand the environment. The cost of maintenance on a rig can be up to 100 times as expensive as land based maintenance because crews and supplies often have to be helicoptered out to the site. When coatings fail, it costs the asset owner enormous amounts of money.After extensive research, OGTC identied a spray-applied inorganic coating as a method of delivering long term protection for the offshore assets. The anti-corrosive coating represents a new category of tough, CBPC (Chemically Bonded Phosphate Ceramics) that can stop corrosion, ease application, and reduce offshore platform production downtime even in humid, storm or monsoon susceptible conditions.OGTC worked with SPi Performance Coatings to implement two trial programs. With OGTC’s vision and sponsorship, SPi applied the coating to a Total E&P platform and a Nexen platform, each of which is located in the North Sea. Total is a global integrated energy producer and provider, and a leading international oil and gas company, with operations in more than 130 countries.Nexen, a wholly-owned subsidiary of CNOOC Limited, is an upstream oil and gas company responsibly developing energy resources in the North Sea, offshore West Africa, the United States and Western Canada. Total E&P TrialSPi applicators were helicoptered to Total’s Elgin ‘A’ Wellhead platform on December 17, 2017. The coating was applied to areas of the platform’s lower deck that were suffering from severe corrosion, and a topcoat was added for aesthetics. Surface preparation for the trial was carried out by Muehlhan, a global provider of surface protection and industrial services with operations in shipping, oil and gas, renewables, and industry/infrastructure segments.In the trial area, the existing coating system was completely removed from structural steel tubulars and at plate. The structure was power washed and degreased to remove contaminants. All tubulars were blasted to SA2.5, and at plate mechanically prepped to ST3. While rust rashing was visible on areas prior to spray application of the anti-corrosion coating, this was deemed acceptable due to its unique properties. It can be applied to a damp substrate with rust rashing/ash rusting, and high salt levels do not degrade the coating, which reduces surface preparation requirements. The coating can cure in a single coat 15 minutes after application, depending on climatic conditions, which expedites completion, compared to traditional coatings, which require extensive drying time between coats.In contrast to traditional coatings, which only form a physical barrier to corrosion until breached, the new coating chemically bonds with bare substrate surfaces, providing an iron magnesium phosphate layer that prevents steel corrosion. This process provides a very thin layer (about 2 microns) of permanent protection. The corrosion resistant CBPC coating bonds through a chemical reaction with the substrate, and slight surface oxidation actually improves the reaction. The surface of steel is passivated as an alloy layer is formed. This makes it impossible for corrosion promoters like oxygen and humidity to get behind the coating the way they can with ordinary paints. Although traditional polymer coatings mechanically bond to substrates that have been extensively prepared, if gouged, moisture and oxygen will migrate under the coating’s lm from all sides of the gouge. By contrast, the same damage to the ceramic coated substrate will not spread corrosion because the carbon steel’s surface has been chemically transformed into an alloy of stable oxides. Once the steel’s surface is stable (the way noble metals like gold and silver are stable) it will no longer react with the environment and therefore cannot corrode.Visible in scanning electron microscope photography, the coating does not leave a gap between the steel and the coating because the bond is chemical rather than mechanical. Since there is no gap, even if moisture was to get through to the steel due to a gouge, there is nowhere for the moisture to travel. This effectively stops atmospheric corrosion and CUI (Corrosion Under Insulation) on carbon steel assets.A second layer – a tough ceramic outer shell – provides further protection, and also acts as a reservoir to re-phosphate the steel if needed. This ensures the alloy layer remains intact, and allows it to “self heal” if it is ever breached by mechanical damage.During this ongoing trial, testing has been done via cross cuts of about 6-8 inches in length down to the substrate to provide evidence of the coating’s self-healing properties.Nexen TrialAfter the early success of the Total E&P trial, a second offshore trial is now being conducted. SPi applicators were helicoptered to Nexen’s ‘Buzzard’ platform on June 18, 2018. After Stork (a Fluor company and global provid-er of integrated operations, maintenance, modi-cation and asset integrity solutions) assisted with fabric maintenance and surface preparation, SPi applied the anti-corrosion coating to platform areas suffering from severe corrosion. While results from this second trial are still under consideration, they look extremely promising. As oil and gas E&P companies look to combat offshore asset corrosion, extend safe produc-tion and reduce the need for costly maintenance and downtime, this inorganic coating holds great promise in the ght against corrosion for OGTC, Total, Nexen, Muehlhan, Stork and other platform owner/operators in the North Sea.Merrick Alpert is President of EonCoat, LLC., a coatings company that developed a chemically bonded phosphate ceramic which provides two layers of protection to permanently prevent carbon steel from corroding. Alpert has decades of experience in the energy industry for such companies as Pacic Gas & Electric.

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How Oil and Gas Companies Can Use AI Technology When Disasters Occur p 6 U S Federal Regulatory Bodies in the Energy Sector p 12 Safety Practices and Procedures in the Oil Industry and Technology s Influence p 13 Fundamentals in the Oil Field Matter Even More with Big Data p 28 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY November December 2018 OilmanMagazine com BRIDGING THE GAP IN OIL AND GAS TRAINING

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Oilman Magazine / November-December 2018 / OilmanMagazine.com22FEATUREThe Missing Piece: Educating the Oil and Gas Workforce to Bridge the Skills GapBy Sarah SkinnerPhoto courtesy of Iqoncept – www.123RF.comThere is a missing piece in the oil and gas industry, a hole, if you will. We’ve all, as a collective group, come to an impasse in this industry. We knew it was coming, but as it sneaks up on us, in whatever group we belong, we are affected by it in some way. The missing piece is knowledge. Knowledge that is lost in the abyss called the skills gap. On the job, hands-on skills and more importantly, experience. People are the tool that make this industry turn. People furiously working in ofces across the country and world, to produce things on paper that will turn into a successful, thriving product. In turn, it’s the other half furiously working to literally and physically bring to life what is on that paper and make it happen. In oil and gas, it’s the team of people on both sides that makes the outcome prosperous. What happens when the knowledge, the critical piece to this puzzle, threatens to break apart this perfectly orchestrated team?The slowly forming hole in this puzzle is the wealth of knowledge that the baby boomers possess that they will be taking with them when they retire. Some of them have already made the transition and the rest are inevitably on their heels. The Millennials have the degrees and the jobs, but not the experience. The other component to this hole is the fact that the baby boomers that are still working and Generation X behind them, are somewhat reluctant to adapt to the new software and IoT (Internet of Things) that is becoming the norm in the workplace. These are all generalizations, of course, but in talking to upper management in various companies across the industry, this concern seems to be a trend that is becoming more commonplace. Bridging the GapEKT InteractiveThe situation may seem dire, but there is a way to bridge the gap. Training and continuing education are crucial to an ever evolving oil market. From classes you can physically attend to learning essentially on demand, there are countless options. Companies like EKT Interactive are crossing the intersection where oil and gas meet e-learning. When asked, Marty Stetzer, EKT President, how he got his start, he said, “I had 30 years in the upstream and downstream, always a part of the startup or turnaround where training was important. In the down turn of 2014, I realized that I had 30 years of training materials and could reach those who needed this information.” This concept allows industry workers to learn around the way they live and in their own time with audio, video, e-books or podcasts. EKT stands for Energy Knowledge Transfer. Ironically, exactly what we’re visiting here now. When EKT got their start, their goal was to make e-learning three things: interesting, memorable and relevant. It also needed to meet objectives, the main one being knowledge. One of the obstacles EKT faces, which differs from other training courses, is that if someone is not interested, they can click out, as opposed to a classroom where they’d be much more reluctant to leave. “Because of this, EKT is constantly striving to engage their students and eliminate the SOP (Same old Powerpoint),” says Stetzer. For instance, one of their packages “Oil 201” is a deep dive into the knowledge portion of the industry. It is laid out in e-book format in 10-15 minute increments with a concept they call “micro learning.” There are many people out there that work in the oil and gas industry, but are not necessarily a direct instrument that produces the nal product. They are the oil and gas support, while not directly

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Oilman Magazine / November-December 2018 / OilmanMagazine.com23FEATUREinvolved, still have the desire and need to be educated about the industry in which they work. So while it may not be required for them to necessarily get a certication, they can still be informed. EKT has many packages to t the individual client, whether the focus is awareness or knowledge. To start, they even have a “three for free” package that is an introduction to the upstream, downstream and midstream.It’s exciting to think of oil and gas education becoming so progressive. There are many companies dedicated to this cause and because of that, some of their methods differ, but the end goal remains the same.Technical ToolboxesTechnical Toolboxes is a company that specializes in software and on-the-job training, primarily covering the midstream. When asked about their training classes, Paul Schumann, Technical Toolboxes’ Training Product Line Manager stated, “We offer in excess of 20 unique specialized classes that cover all phases of the pipeline lifecycle from design, construction, and operations through integrity. RSTRENG is our most popular class in terms of classes held per year and it specically addresses key areas in the integrity phase of the pipeline lifecycle.”I sat in on one of these training classes to get a feel for how they are conducted and who constitutes their primary audience. The class was “RSTRENG & Defect Assessment,” given in Houston. RSTRENG is a Technical Toolboxes copyrighted software that they offer and it is called by name in 192 and 195 Code of Federal Regulations. When asked what “RSTRENG” stands for, Schumann stated, “RSTRENG is indeed an acronym for ‘Remaining Strength.’ It is based on research from PRCI (Pipeline and Research Council International) in order for pipeline operators to effectively assess the safe operating pressures in aging pipelines due to metal loss damage (corrosion) and remaining life. The class is more centered on RESTRENG+ which includes additional analysis that Technical Toolboxes includes in software packages.”Technical Toolboxes’ training and instructors are highly specialized. A gentleman by the name of Joe Pikas instructed the RSTRENG class. Mr. Pikas has more than 50 years’ experience in cathodic protection, above and underground coatings and corrosion control design and implementation which includes project engineering management. He is an expert in pipeline integrity management, risk management, coating materials selection, cathodic protection design and testing, and pipeline internal and external corrosion control. He has been the recipient of several awards and has contributed many papers for industry trade magazines, NACE and SSPC publications and conferences. To say that he is an expert in this eld, is a vast understatement. “Joe Pikas brings a unique background that has provided him the opportunity to participate in the research of RSTRENG, among other products, and has subsequently had the opportunity to apply these learnings in the eld. As a result of his highly specialized training and practical experiences, he is able to add training value to the novice through the experienced pipeline engineers and technicians,” says Martin Fingerhut, Technical Toolboxes’ Chief Executive Ofcer.Technical Toolboxes takes their task of educating the industry very seriously. “Historically, there was a focus on associating the Technical Toolboxes’ brand with high quality non-sales oriented technical training. Today, we continue with the same level of high quality technical training, largely related to theory and background knowledge required to operate a growing inventory of specialized software products properly,” says Drew Laeur, Technical Toolboxes’ Chief Operating Ofcer. The RSTRENG training was over a span of a day and a half. It was for the certication, training and testing of individuals seeking technical certication for Continued on next page...Turn YOUR IRON Into GOT EQUIPMENT TO SELL?CASH!CONSIGN TODAY!We Do Appraisals Specializing in Bank & Bankruptcy Valuation. www.beazleyauction.comODESSA,TX AUCTION WEDNESDAY,NOVEMBER 28 | 10:00 AM REAL AUCTIONS. REALRESULTS. TX 16818 and BP 10% / 5% Rigs, Nitrogen Air & Mist Units, Pumps, Traveling -Rotating & Well Control Equipment, Trucks, TrailersCONTACT RON MEISSNER: (903) 235-7805 EveryLotMatters. It's that Simple. Continued on next page...

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Oilman Magazine / November-December 2018 / OilmanMagazine.com24FEATUREcorrosion assessment. In addition, dents, gouges, weld anomalies and related pipe and vessel defects were covered for assessment and analysis. It also covered the following: understanding and recognizing pipe defects, aw detection, measurement corrosion features/defects, analysis of corrosion features and feature identication, and data features for post processing and reporting. After the course, students had to pass a written examination and a practical examination, where two types of defects were to be analyzed. Upon successful completion, students received a trial of RSTRENG software, course notes on paper and in a ash drive and a certicate of completion awarding 12 PDHs. The atmosphere of the class was extremely informative and engaging. When I walked in to observe, what I witnessed was the exact solution that we are exploring here. A man with an incredible wealth of subject matter knowledge collected over many years, is passing that along to mostly people between the ages of 30-40 years old. The students were captivated and full of questions. Questions that Mr. Pikas did not hesitate for a second to answer. “We recognize a generation gap exists in the workforce and that knowledge is leaving organizations as the experienced engineers and technicians are retiring. Our direction in the training space is to better engage millennials and encourage further knowledge transfer within industry and organizations,” says Laeur. Technical Toolboxes is doing their part to educate the industry, they have done so for many years and they are not stopping any time soon. Fingerhut stated, “Technical Toolboxes specializes in midstream pipeline solutions in both the software and training spaces. After 20 years of supporting the pipeline industry, Technical Toolboxes continues to advance from calculation to simulation type products for pipeline operators and engineers alike, and recognizes that advancements in software require training methods to address a diverse workforce.”NExT – A Schlumberger CompanyNExT is another training and education organization doing their part in the industry to bridge the skills gap. Eighteen years ago, Schlumberger and three universities that offer petroleum studies programs, Texas A&M, University of Oklahoma and Heriot-Watt University, created a program called NExT (Network for Excellence in Training). Schlumberger acquired the commercial rights of NExT and retained the program’s original instructors, however, they added petrochemical experts and industry-recognized consultants to the NExT staff. Today, NExT has more than 3,000 expert instructors who train more than 15,000 technical professionals each year in 11 core disciplines – from characterization and exploration through development and production – and in industry-spanning domains. NExT offers a full suite of training courses in upstream oil and gas industry disciplines as well as surface facility and midstream training for operators and technicians. Their training programs consist of classroom, workshop and eld exposure and on-the-job mentoring. The training they offer is not exclusive to Schlumberger employees, the classes they offer are both private and open to the public. NExT designs their training programs using a blended learning approach that encompasses the following: • Mentoring• Operations Assignment• Expert-led Training• Self-Learning• Research and Technology Center Tours• On-the-job Projects• Field Course• Software Tools and Workows“In essence, NExT is the largest Petro Technical Training and Competency Development provider in the world, helping organizations, teams and professionals build their technical skills for the E&P challenges that they face,” Peadar McKkvitt, NExT Schlumberger Global Resource Manager, stated. “We are now grafting onto our industry key Digital Technology capabilities so that E&P PetroTechnical experts can optimize the discovery, development and management of their assets. Connecting people and technology (PetroTechnical and Digital) we are building a Digital Learning Ecosystem for the future. Working with our clients and extended resource network, we are now actively creating that future together!”NExT has access to well-equipped, global Schlumberger training centers and technical facilities, where participants gain practical, hands-on experience. The training centers are located in the following places: Tulsa, OK – Rio de Janeiro, Brazil – Melun, France – Abu Dhabi, UAE – Tyumen, Russia. This also goes hand-in-hand with the geology eld trips that they offer, which are also global. The whole concept of being able to learn in such a hands-on environment is exciting and engaging. Geology can be better studied in the eld and learning by doing puts things into their proper scale, context, and perspective. With a carefully selected portfolio of practical, high-quality eld trips covering relevant depositional and tectonic environments, NExT meets the needs of working geologists and petroleum engineers and the companies that rely on them to meet their goals. The eld trips build expertise and develop practical interpretation skills by improving the understanding of geological complexities, strengthening technical knowledge through exposure to new and diverse geological environ-ments, delivering broader perspectives and new insights through hands-on eld experiences. The experiences include trips to road cuts, ancient outcrops, modern sedimentary environments, core analysis laboratories, and research facilities. The eld trips broaden understanding with rst-hand experiences in eld formation evaluation, log and core analysis, and 3D reservoir model-ing. Course topics include the following: faults and fractures, carbonate platforms and reefs, shallow carbonates and evaporates, uvial-deltaic and deep-marine clastics, rift zones, turbidites, and deltaic fan systems. They truly cover all the bases and provide invaluable knowledge to their students. Optimistic OutlookThere is no doubt that the skills gap is a real, valid issue in the oil and gas industry. However, there is hope – not all will be lost with the retirement of the baby boomers. Because of companies such as EKT, Technical Toolboxes and NExT, there are options out there to educate the workforce. Not only educate, but truly inspire and pass down this extremely valuable knowledge in the most innovative and engaging way possible. These companies and many like them are not stopping here. They are going further out of the box to keep the wheels turning. Knowledge is power and when you have power to offer, it’s a good business to be in. RSTRENG Training – Photos courtesy of Technical ToolboxesKnowledge Transfer

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Oilman Magazine / November-December 2018 / OilmanMagazine.com25Interview: Kent Bartley, President, Maviro By Tonae’ HamiltonThe following is an interview with Kent Bartley, President, Maviro. The interview text has been left in tact, with only minor grammatical adjustments.Tonae’ Hamilton: Can you discuss the rebranding of Mattawa Industrial Services and Envirosystems USA as Maviro? What benets will your customers see with this unication?Kent Bartley: Both Mattawa and Envirosystems have a long history of providing clients both in Canada and the USA with quality specialty services. We have great people, equipment, and strong safety records, just to name a few of the areas driving our success. Unifying these specialty businesses under one Maviro brand will make it easier for customers to realize they have an opportunity to bundle the service offerings. Of course, by combining some of the overlapping roles and positions we are becoming more efcient and can pass those savings on to our clients. TH: What is the future for Maviro in North America?KB: We have very good North American coverage right now with locations in both the U.S. and Canada. This allows us to utilize our resources and expertise to the greatest benet of our clients. We plan to continue growing in our existing markets, including the expanding Gulf Coast rening & petrochemical market, as well focus as strategic expansion to new markets, both in the US and Canada, where our unique technologies and solutions make us the natural choice for the client. We’ll have more information about our plans across North America next year. For the moment, we’ll just say those plans are both ambitious and achievable.TH: What are you most excited to share with your customers about the new Maviro?KB: We’ve got a huge reveal coming down the pipelines involving a proven technology we plan to introduce into the North American market, not just our decoking service line, so keep an eye out for that! A signicant investment in equipment and technol-ogy, strategic alliances with other service providers, pulling together the team of motivated people who are experts in their elds who want to be the best in business…. That aside, is there anything we’re not excited to share about Maviro with our customers? If so, we can’t think of it. Our splash into the great-er North American market has been one of the most challenging and rewarding things we’ve ever done. It allows us to provide our brand of service, safety, and passion to a new segment of customers. It doesn’t get much more exciting than that. TH: As technology evolves and disrupts the industrial services space, how is Maviro positioning itself to capitalize on new methods and tech?KB: We’re not a huge entity bogged down by bureaucracy and red tape. We are passionate about our service lines and are constantly looking into other business sectors and even other countries for technology that could have industrial applications. We pride ourselves on taking a fresh look at the challenges faced by our customers and coming up with solutions that are faster, safer and more efcient. This approach is already bearing fruit. For instance, we’ve seen signicant improvements by pairing our eld teams with advanced new technologies to decrease shutdown timelines and improve safety performance.We’ve always been early adopters of new technologies, so it’s not something we fear. We look at every piece of new technology from the standpoint of improving outcomes for our customers. If there’s a chance a new piece of equipment will help do that, then you can bet we’re looking into it. TH: Maviro offers a wide variety of industrial services, petro/chemical cleaning, and renery services. What segment, if any, are you most focused on? Do you see any segments of your services shifting in the near future?KB: All of them. We want to incorporate our full family of services together under one brand. But as we move forward, we’ll put signicant energy into bundling our specialty industrial services like catalyst services (particularly for the growing tubular market), pigging & decoking, and commissioning services.TH: How does Maviro separate itself from the competition?KB: Maviro links specialized services with proprietary technology together in a way that nobody else has managed to accomplish. This unique fusion of talent and technology lets us deliver superior turnarounds at a faster, more consistent pace than our competition. We’re far from being the largest provider out there, which is just ne with us. We’re big enough to offer signicant convenience to our customers no matter where they are in the U.S. or Canada. Yet we’re still small enough to adapt to changes in the industry and pivot to new technologies and emerging sectors if the need arises. Our solid safety record combined with our unique technologies and our expert experience keep clients coming back and new ones looking to try us out. With our 15 locations we cover all of North America.TH: How does Maviro make safety a priority?KB: We reinforce a culture that places the safety of our staff and our customer’s people over any task, no matter how important it may be. We will turn down jobs or walk away from projects if we cannot staff it with our A team or if the job compromises any of our safe work practices. In addition to that, we provide robust training programs, continuing education seminars, a comprehensive benets package with retirement plans, a hands-on at management style, and a regular adoption of advanced technologies and equipment which make all of our lives a whole lot easier. We’re condent that we have one of the highest employee retention rates in the industrial sector, which is notorious for its transient workforce.TH: What led to your position at Maviro?KB: I saw a void in the industry that needed to be lled. Large public companies are more focused on P&L’s than safety, pride in equipment, and quality of work. They’re not customer centric – they don’t value their people as their single biggest asset. You can stock your warehouses full of the best and newest gear in the business, but if you don’t have qualied motivated folks to run it – you have nothing.TH: What are the most important decisions you make as a leader of your organization?KB: There is never a safety decision taken lightly in the organization. We thoroughly analyze every factor going into any decision that impacts the safety of our people on the job. As an executive, it’s important to also ensure Maviro is providing the most value to our customers that we can provide. Equally important, we simply don’t take every job that falls into our laps. Some projects are simply too unsafe to take on or may compromise the company’s reputation or harm employee morale. Some of the most important decisions we’ve made involved ring clients who didn’t share in our commitment to safety and aboveboard practices.TH: What does success look like for you?KB: Success to us means having the highest employee retention rate in the industry, being known as the best value service provider – Equally important is a best-in-class safety record. That speaks volumes about who we are and how committed we are to our employees and our customers. Lastly, we want to become the rst call supplier for more of the industry’s leading oil, gas, and petrochemical facilities. OILMAN COLUMNKent Bartley

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Oilman Magazine / November-December 2018 / OilmanMagazine.com26Preparing for Digital Downstream Supply Chain Capabilities By Kent LandrumOILMAN COLUMNSeveral major downstream companies have recently embarked upon large-scale digital transformations with anticipated capital spend tallying in the tens to hundreds of millions of dollars. While these initiatives promise signicant returns, not all small to midsize rening organizations are prepared to double down on digital and make investments of this magnitude. On the other hand, there are numerous “no regrets” moves that can be made to start down a path to increased effectiveness and efciency in key commercial and logistics process areas. Relatively low-risk steps such as these will also lay a foundation in core capability and technology areas that can be leveraged when the time is right to make some bigger, bolder bets.The following ve examples of quick-hit process and technology investments are concentrated in the value-creating commercial and logistics functions that aim to:1. Streamline deal entry for high-volume, low-complexity physical trades.2. Integrate derivatives transaction processing from order, to conrmation, ll, through allocation and broker reconciliation.3. Maximize utilization of electronic trade conrmation services.4. Automate market data acquisition.5. Enhance integration with logistics partners.In each case, we’ll explore the short-term benets that a small, focused, rst step can deliver, as well as get a glimpse of how the initial investment sets the stage for more transformational projects in the future.Streamline Deal Entry for High-Volume, Low-Complexity TradesAsk almost any trader that has to input their own deals into an ETRM (Energy Trading and Risk Management) application and they’ll probably tell you exactly how long it takes to record their deals in the trading system. Some types of deals, such as international crude cargoes, are complex and key terms can vary widely from one trade to the next making trade capture inherently more arduous. However, there are many types of trades that are prime targets for use case optimization that can pay big dividends by way of improved productivity and accuracy.Domestic rened products pipeline trades around systems such as Colonial, Explorer and Magellan are great candidates for streamlining. These kinds of trades benet from standardized grades, as well as common schedules/cycles, locations, more straightforward terms and relatively common pricing so many of the trade attributes can be pre-populated omitting them from the user entry screen and ensuring valid data entry from the outset. Moreover, these types of transactions work very well as a stepping stone to wider use of electronic conrmations and for tighter logistics integration.Pre-Digital Opportunity: Assess your most common trading scenarios and determine which can be simplied the most. Develop a simple trade blotter front end for web or mobile devices that allow your traders to rapidly enter 5, 10, or more trades in a grid and save once. Expose trade entry as a reusable API (Application Programming Interface) or web service (if your ETRM doesn’t already) preparing the architecture to support even more expedient methods for trade capture.Digital Extension: Voice (e.g., digital assistant) and message scraping from Skype or ICE (Intercontinental Exchange) Chat become viable alternatives with this API-based infrastructure already in place.Integrate Derivatives Transaction ProcessingThe previous section explored the opportunities for efciency and data delity gains surrounding uniform physical trade scenarios. Exchange-traded derivatives offer even more in the way of instrument and transaction standardization upon which to build integration and automation. The contract specications are published and the exchanges (e.g., ICE/CME) offer a multitude of foundational APIs that can be used to perform all manner of tasks along the transaction lifecycle from placing orders, to receiving conrmations, and acquiring ll data. In addition, many rms already use trade execution platforms such as those from Trading Technologies or Fidessa that offer their own suite of APIs and web services customers can use to build, automate and integrate.Pre-Digital Opportunity: Don’t settle for manually entering futures or receiving a single at le from your broker after the market closes. Utilize the API or web service exposed to your ETRM system as outlined in the section above to capture trades along with the ones offered by the major exchanges, the trade execution platforms or your broker to process lls directly as available. Often, there is a requirement to aggregate lls or preassign certain trade attributes (e.g., strategy) to make managing the transactions more straightforward once they are in the ETRM, and the latest generations of these systems and APIs make this easier than ever. Over time the exchanges and major brokers Photo courtesy of Opportune LLP

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Oilman Magazine / November-December 2018 / OilmanMagazine.com27OILMAN COLUMNare making available ever more value-added services addressing needs in the areas of credit, risk management and regulatory reporting/compliance. Consider exploring these libraries of functions to optimize mid- and back-ofce processes for even more near-term benet.Digital Extension: Enable digital assistant placement of derivative orders. Provide a key building block for algorithmic trading.Utilize Electronic Trade Conrmation ServicesBlockchain is all the rage and offers a number of signicant long-term benets, especially as adoption increases among major market players. Meanwhile, there are already more than 1,000 market participants that have been using eConrm for as long as 15 years to electronically process millions of trades. The previous two quick hit opportunities seek to simplify exchange-traded transaction processing, as well as a portion of the lifecycle for high-volume, low-complexity physical trades. eConrm represents a logical, incremental step in physical trade automation that can bring a level of efciency paralleling that which is more commonly available for derivatives.Counterparts and brokers that elect to submit and match trade conrmations using eConrm can take advantage of clear status tracking, eliminate paper/fax/email and minimize user error, thus reducing operating costs. eConrm can be most expeditiously deployed in instances where grades, schedules, pricing, counterparties and other primary economic terms are highly standardized (sound familiar?). Often, one of the most signicant obstacles to adoption of eConrm is centered around master agreements, but getting this work out of the way can accelerate the adoption of this, as well as other enabling technologies, later.Pre-Digital Opportunity: Step 1 was to develop and deploy APIs or web services for trade entry. Step 2 capitalized on that foundation and inte-gration with the exchange to optimize derivative transaction processes. In this instance, the op-portunity is to pass your trade data in conrma-tion form directly from your trading system to eConrm to allow for automated matching with your business associate. Human interven-tion will only be required on an exception basis when terms don’t match. Blockchain may be coming, but it will be difcult and expensive to capture the benets promised without agreed upon contract terms and a standardized transac-tion data model combined with an API/web service infrastructure for third- party transac-tion processing.Digital Extension: Blockchain to enable efcient, transparent, and secure digital transaction ledgers between participants across the transaction lifecycle. To read more about how this technology is being applied in the energy industry read “As Energy Markets Evolve, Blockchain Powers Up” by Shane Randolph of Opportune LLP.Automate Market Data FeedsMany reners already have quite nely tuned systems for processing a rack BOL (Bill of Lading), applying a price, generating an invoice, distributing it to the customer and collecting funds. The combination of people, process and technology is all geared to produce an accurate invoice and collect cash, but there are many processes well up stream of ticketing or lifting that could benet greatly from more timely and reliable availability of market data. Pre-trade analytics and risk management both require access to signicant amounts of price data, but in many cases rely heavily on spreadsheets, downloads and manual entry to meet daily objectives. As a result, valuable quantitative analyst time is spent performing data cleansing and entry tasks rather than on assessing market risk and market opportunity.Most commercial organizations already license at least one technology and subscribe to some source for market data whether that means using GlobalView, Thomson Reuters or sourcing directly from publishers like Platts. The major vendors offer desktop (often Excel), API, historical and streaming data solution options that can be integrated into existing Enterprise Resource Planning (“ERP”) and ETRM systems directly to enable efcient end-of-day processing, mark-to-market, VaR (i.e., value at risk) and many other valuable risk analyses.Pre-Digital Opportunity: Create an inventory of the tools and publishers your organization employs to gather and process market data. There are likely opportunities to rationalize and standardize to reduce cost without adversely affecting the availability of valuable price series data to the enterprise. Once some consolidation of source and solution has been performed, create integration to directly deliver prices and corrections to the data warehouses, ETRM and ERP systems that use this information to support analytics and transaction processing. Don’t forget about the need to include broker and trader assessments in these technical and process solutions. For instances where prices must be entered manually the same type of UI (User Interface) and API solution framework used for trade entry can be applied.Digital Extension: Machine learning to identify market opportunities and enable algorithmic trading.Enhance Integration with Logistics PartnersSeemingly innumerable processes are dependent on timely and accurate information concerning the movements of products through the logistics systems exercised by downstream companies. They run the gamut from risk control reports, to inventory rundowns, to month-end accruals and more. All of these require the best available information on pump dates, load dates, actual quantities, qualities, etc. Often, the best available information exists in the systems of your logistics partners or service providers, and the best solution is to interface that data into the IT environments used for scheduling and ticketing. This type of integration can also facilitate rapid ticketing through invoice processing for other MOTs (Modes of Transport) such as pipeline and rail.Pre-Digital Opportunity: Explore the opportunity to integrate your ERP or ETRM system with applications like Transport4 to make available near real-time information about your company’s nominations, tickets and inventory moving on the pipeline systems of afliated carriers. This integration has the potential to reduce duplicate nomination entry for schedulers and eliminate manual entry of pipeline tickets for the back ofce. For rail movements, Bourque Logistics offers similar capability through its RAILTRAC solution. Solutions for cargoes are available from providers such as Navarik and their TICithub. Integrating these systems can reduce manual and duplicate effort for schedulers, loss control and accounting functions.Digital Extension: Combine predictive analytics and Robotic Process Automation (RPA) to identify and execute on opportunities for supply chain system optimization. For more on predictive analytics take a look at “Optimizing Your Logistics Network Through Model-Driven prescriptive Analytics” by Chris Hedge of Opportune LLP.Kent Landrum is a Director with the Process & Technology group at Opportune LLP. He has more than 17 years of diversied information technology experience with an emphasis on solution delivery for the energy industry. Kent has a proven track record of managing full life cycle software implementation projects for downstream and utilities companies, including ETRM, ERP, BI, MDM and CRM. Prior to joining Opportune, he served as a Vice President and Chief Information Ofcer at CPS Energy. Kent holds a B.S. degree in Computer Science and Economics from Trinity University and a Master’s degree in Organizational Development from the University of the Incarnate Word.

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Oilman Magazine / November-December 2018 / OilmanMagazine.com28OILMAN COLUMNFundamentals in the Oil Field Matter Even More with Big Data By Shiva RajagopalanToday, everyone talks about data like it is a new idea that has emerged within the digital age, and that it has come to save time and money in the oil elds. The fact that we now use “data” to refer to information in a digital format changes very little about the fundamentals of data pattern seeking and trends associated to prioritize high-value problems for production efciency in the eld. With the proliferation of SCADA (Supervisory Control and Data Acquisition) systems and eld automation, what highly skilled lease operators already do efciently is now even more plausible for all eld personnel. Data becomes valuable when it leads to intelligent, repeatable patterns that allow the eld to make better decisions. When eld personnel examine the vastness of their area, they can look past an existing route, and can now follow a more useful task pattern that compares and lines up large volumes of data to navigate to the most production-efcient next task based on complex variables like high-volume wells, upcoming well inspections, categories of issues, and more. The objective for success is straightforward for the oil and gas operations: bring the usefulness of data out of the ofce and make it all about the eld. Harness data quality, dene clear objectives and make data actionable for the personnel who operate the core of the business.Data QualityOne of the rst objectives to tackle is the quality of data. To gain the acceptance of the eld, lease operators must trust what is in front of them. Historically, patterns are considered intuitive and something lease operators pick up over years of experience. Data is worthless unless it drives intelligent patterns that they trust from the beginning. Otherwise, all the automation and data in the world will not result in action in the eld. On the ip side, using bad data to drive intelligence can create more churn in operations and be counterproductive. It only takes a series of inaccurate GPS navigations, miscalculated lease operator priorities, or misinformed dynamic pumper routes for the eld to return to paper and pen. This means that conclusions must go through thorough investigation, and eld issues with data must be treated with immediate responsiveness, especially during implementation. Think of quality data as the compass guiding oil and gas rms. Considering the margins for error in the oil and gas sector, poor data quality is an expensive oversight. Oil and gas rms need to ensure their data is trustworthy. To ensure this, data becomes the ownership of the eld, as they are in the best position to make data more usable, trusted, and actionable.Often, incorrect data is fed from SCADA systems to the eld. Stuck, missing records and out of range records often rapidly lose the trust of lease operators. Capturing and limiting these issues is critical if we want the eld to not undermine investments made on the IoT (Internet of Things).Dene Clear Objectives to Truly Leverage DataUsing big data generated throughout operations is the cornerstone of digital improvements seen in oil and gas, as with other industries. The ubiquity of mobile and IoT devices across departments means that we are now generating data on everything, which poses a new problem: clearly dening what we want to achieve with all that information.Only by clearly dening objectives can we utilize big data. In the same way that Uber and Lyft do not have scheduled routes, but instead, react to where they’re needed, oil and gas companies can use trustworthy data to dene where their crews are most needed. This means lease operators can see a not-so-distant future without dened route maps, just data made available to them through a mobile device highlighting where they’re needed next based on clearly dened objectives. In the route-less oil eld, the sequence doesn’t matter. Work is no longer linear. Crews go where and when they’re needed based purely on automated data analysis.For example, oileld managers need to reduce well downtime. By drawing real-time, trustworthy data on all wells, they can prioritize the wells that need the most attention. Then, by integrating data on lease operators and foremen, they can adjust their schedules to reach the priority wells in the most efcient way possible.By using data in this holistic way, other benets also arise, such as minimizing unnecessary maintenance worker visits by integrating lease operator route data into maintenance schedules. This is just one of many data-driven efciency scenarios for oil and gas operations.Making Data ActionableTo enable ROI for IoT investments, oil and gas rms must rst make sure that the data is pulling from trustworthy machines. Only when trust is in place can data be used to create actionable intelligence, the true purpose for collecting data in the rst place. Thanks to mobility technology, this real-time data can feed into eld operation systems in an intelligent way, giving alerts, reports, calling out exceptions, and provide operators with the information they need to make better decisions.Big data solutions are increasingly being used in the oil and gas sector because they support improvements in all areas of the oil and gas lifecycle, thereby maximizing production and reducing operating costs. Market research has identied the growing need to improve productivity; in fact, it has consistently been listed as one of the primary growth drivers for the global big data market in the oil and gas sector until 2022.The future of the oil and gas industry is intelligent, dynamic production efciency patterns readily available in the hands of the eld. To get there, companies must understand that the fundamentals matter now more than ever — they must create trust in the data quality, dene clear business objectives, and make that data actionable. Oil and gas producers must demand more from their technology vendors to instill trust in their eld teams, streamline operations, and gain the efciency needed to succeed in the rapidly emerging data age.Shiva Rajagopalan is the President and CEO of Seven Lakes Technologies, a niche analytics and technology solutions rm, driven to improve business drivers and enhance execution of customer business strategies for the Upstream Oil and Gas Sector. Rajagopalan founded Seven Lakes Technologies in 2009 and has overseen the development of numerous innovative products. Previously, as a Data Architect at Chevron Corporation, Rajagopalan created solutions used to solve a broad range of oileld challenges, resulting in multi-million dollar cost savings. Rajagopalan holds a bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He received four Chevron Contractor Recognition Awards for professional and technical excellence.

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Oilman Magazine / November-December 2018 / OilmanMagazine.com30OILMAN COLUMNThe ROI of Business Continuity Can Be Found in the Cloud By Evan CoxHurricane Harvey was a sobering reminder that producers in Texas, Louisiana and Oklahoma – no strangers to catastrophic and costly storms – frequently face the potential for signicant impacts to their business from weather-related disasters. Beyond the immediate disruption to communication infrastructure, roads, and buildings, producers must brace themselves for revenue losses due to operational interruptions, as well as commodity price uctuations.Next to Hurricane Katrina, Harvey was the costliest hurricane on record, making up $125 billion of the estimated $306 billion in disaster-related costs for all of 2017, and its impact is still being felt in the Houston area.With reneries along the Texas coast shuttered for several days during the storm and its aftermath, crude oil prices climbed to their highest levels recorded by the Lundberg Survey since 2011. Alongside it, a consumer-led panic across Texas and parts of Louisiana was sparked by social media rumors of fuel shortages. This led to long lines at the pump, higher prices and price-gouging. While these price impacts were short-term, they serve as a reminder that long-term impacts to capacity can have a signicant impact on consumers and businesses alike.Producers have contended with natural disasters for a long time, and while the intensity of the impact of a storm, earthquake or re is unpredictable, there is some sense of what to expect. What can be incalculable are the impacts of manmade threats. The rate at which technology advancements are entering the market is increasing rapidly, introducing new growth opportunities, but also new potential risks. In April, a data network attack on gas-pipeline operators hit close to home for an industry where digital capabilities – especially wireless connectivity – is constantly evolving. Cybersecurity isn’t just a priority for big retailers and other consumer brands – producers are vulnerable to impacts on infrastructure as well as the risk of exposure of sensitive competitive data, such as trading strategies.Continuity is critical to long-term successBeyond the immediate impacts of such disasters is long-term recovery, which hinges on a solid, state-of-the-art business continuity plan. According to FEMA (Federal Emergency Management Agency), roughly 40 percent of businesses do not reopen following a major disaster, and 25 percent of all businesses will fail within one year. FEMA also reports that large businesses spend on average 10 days per month on their continuity plans, which helps shield them from large-scale impacts in a disaster. While important to a business’s long-term survival, it comes at a high opportunity cost by taking staff time away from day-to-day operations.The question then becomes, “Do we stay with an old-school DR (Disaster Recovery) plan in a physical backup facility, or do we move to the cloud?” The cloud offers cost efciency and speedMany businesses still own or contract out completely separate, fully redundant physical data centers that have the capacity to operate business-as-usual in case of an emergency. While these options have proven effective for disaster recovery and backup, they can be very expensive.To keep a “hot” secondary DR environment ready at all times in case of an emergency, a business must consider the cost of maintaining the facility, paying for the power, and purchasing any number of additional assets. That doesn’t include recovery time – which, in the energy world, can mean either saving or losing large sums of money in a matter of minutes. Cost and the need for speed in recovery are therefore leading businesses to the conclusion that a cloud-based DR system is the most cost-effective and efcient way to minimize the impacts of a disaster.The cloud is the future of full business redundancy Gartner recently published survey results reporting that cloud-based recovery is the preferred choice in recovery location for critical IT infrastructure services. Additionally, Gartner reports that database replication and storage-based replication are the most prevalent data protection methods.Today’s need for data and analytics means energy businesses must have cloud-enabled trading and risk management software for full business redundancy. Then, the question becomes, “How do I choose the right software for my business?” Of course, businesses need a solution that targets every major IT system within the organization and provides the ability to perform necessary backups for possible backtracking. Additionally, businesses should check the following boxes when choosing a cloud-based DR solution:• Protects and natively supports different systems within the same service, with multi-site availability of traditional, private cloud, and public cloud capabilities.• Automates recovery plans within a matter of hours or minutes after a disaster.• Provides services that cover the conguration of products installed on servers.• Optimizes and improves productivity levels of demand in the cloud environment.• Offers the ability to scale and speed to scale.The takeaway: the highest DR ROI can be found in the cloudEnergy companies seeking the highest preparedness for unexpected disasters must look to the cloud for their DR plan. This will ensure complete visibility into what’s happening in their organization – from front to back ofces – to not only be prepared to recover business operations quickly, but also maximize value. Many leading oil and gas businesses – including a large number of Allegro’s energy customers – are utilizing the cloud for total backup and recovery. Obviously, they have saved costs by eliminating physical backup facilities. But what’s great about the cloud is that it doesn’t have to be an emergency-only tool. With cloud-enabled commodity trading and risk management capabilities, businesses are also reaping the daily rewards of greater portfolio visibility, risk management capabilities, and growth enablement.Other benets of the cloud include reduced time and cost of implementation, faster time to success through cloud development, and lower cost of ownership through product families, agile infrastructure and the smaller teams that will be required for product support.Allegro has heavily invested in the cloud capabilities of our next-generation commodity management software, Allegro Horizon, to ensure that when customers are ready to use the cloud, they can. Many of our customers have moved pieces of their portfolio management to the cloud in phases; and most have started with using it for disaster recovery and backup to ensure full business redundancy. If your business hasn’t taken this rst step in DR and cloud usage, now is the time to do it.Mr. Cox has spent more than 20 years in the energy industry delivering product innovation with agility and quality. He has been responsible for guiding the development of Allegro’s industry-leading products for the past 15 years. Most recently, he led an energy technology startup to successfully launch an enterprise mobile commodity analytics product that provides cloud computing and web technology solutions for the commodity industry.

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Oklahoma ShaleOklahoma ShalePre-Conference Seminar – December 11 Two-Day Conference – December 12 & 13Conference Venue: Skirvin Hilton, Oklahoma City www.scoop-stack-water-management.comPre-Conference Seminar December 11Conference Day 1December 12Conference Day 2December 13Providing Clarity On Public Policy And Outlining Steps For Working Within The Confines Of The Newly Imposed Water Transfer BanFocusing On Key Cost Drivers, Including Water Reuse, Treatment, Cost-Effective Disposal And Strategies & Directives For Curbing Induced SeismicityFocusing On Water Transfer, Right of Way, Pipeline & Infrastructure Designs, Sourcing, Storage & Economic Alternatives To InjectionAmerican Business Conferences announces the latest event in its long-running, dedicated water management series, with a focus on the high growth plays of Oklahoma.Oklahoma Shale Cost-Effective Water Management Congress SCOOP & STACK 2018 is the region’s first conference dedicated to delivering practical solutions for keeping costs as economical as possible, covering the complete spectrum of water management challenges specific to the region.Industry’s 1st Kingfisher County Information-Sharing Seminar Developing Solutions For Proactively Managing The Impact Of The Newly Imposed Water Transfer BanAlso On The 2018 Agenda: E&P-Led Discussions Focusing On:› Seismicity: Reducing The Risk Of SeismicActivity› Water Transfer: Permanent & Temporary Infrastructure Designs› Right Of Way Issues: Focusing On Legalities & Ownership Rights› Water Storage Systems: Impoundments&Third Party Options› Completions: Assessing Frac Designs&Different Fluid TypesAssessing Cost-Effective Strategies For Water Sourcing, Treatment, Recycling & Reuse And DisposalOperator-Driven Conference & Exhibition Focusing On Driving Water Management Efficiencies At The Lowest Cost Possible$100 OffDISCOUNT FOR OILMAN READERS:SS18OIL - EXTRALBCG329_SS18_Advert_FULL_v5.indd 1 09/10/2018 16:00

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Oilman Magazine / November-December 2018 / OilmanMagazine.com32Commodity Hedging: Lessons Learned by Early Adopters of New Hedge Accounting Rules By Shane RandolphOILMAN COLUMNFor public companies with a December 31, 2018 scal year-end, new hedge accounting rules will become effective on January 1, 2019. The FASB (Financial Accounting Standards Board) issued the new hedge accounting guidance on August 28, 2017, through ASU (Accounting Standards Update) No. 2017-12. The ASU provided the election to early adopt the new guidance and some companies made the early election to take advantage of favorable provisions. The following is a discussion of lessons learned by commodity hedgers that early adopted the new guidance. It has been interesting to note that relatively few companies early adopted the new hedge account-ing guidance. Entities maintaining derivatives can be divided into two groups: those applying hedge accounting and those that do not apply hedge accounting. For companies that do not apply hedge accounting, the new guidance has not prompted companies to start electing hedge ac-counting. Those companies have become comfort-able addressing the earnings volatility associated with derivative instruments utilizing non-GAAP measures. For companies applying hedge account-ing, early adopters mostly included companies that were starting new hedging programs or companies that desired to remove ineffectiveness from their nancial statements. While companies viewed the new hedge accounting rules favorably, many companies shied away from early adoption. This was largely because accounting resources have been strained adopting other new accounting standards for revenue recognition and leases. For commodity hedgers, the largest changes to the hedge accounting rules under the new guidance include the following three items: • Ability to perform qualitative effectiveness assessment testing following designation inception.• Ability to designate a contractually specied component.• Elimination of the requirement to separately measure and report hedge ineffectiveness.One of the largest struggles for commodity hedgers to achieve hedge accounting under the existing guidance was the effort associated with the ongoing effectiveness assessment tests. Under the current accounting guidance, a commodity hedger typically performed effectiveness assessment testing by performing regression analysis. The challenge was largely the lack of available market data representing the hedged item required to perform the on-going regression analysis. This analysis was required at inception and at least quarterly thereafter. Under the new hedge accounting guidance, a company may perform an inception quantitative effectiveness assessment test utilizing regression and then perform ongoing effectiveness testing qualitatively. When an entity performs qualitative assessments of hedge effectiveness, it must verify and document that the facts and circumstances related to the hedging relationship have not changed such that it can assert qualitatively that the hedging relationship was and continues to be highly effective. Early adopters hedging commodity price risk have noted limited benets with qualitative testing as they execute hedges on a continuous basis requiring inception regression testing on an ongoing basis. In addition, even though the accounting standard provides for qualitative updates, many auditors are continuing to request ongoing quantitative support unless the hedging relationship is highly correlated, such as instances where the hedging instrument mirrors a designated contractually specied component. Under the current hedge accounting guidance, a commodity hedger is required to hedge the cashow risk associated with the entire contractual cash ow. This was counter to how many companies utilized derivative instruments to manage their price risk. The new guidance gives companies the ability to designate a contractually specied component, which is a signicant benet to many commodity hedgers. However, there have been some challenges for some companies to meet the criteria of a contractually specied component. Early adopters have noted three areas of concern when electing to designate a contractually specied component: • Finding documents to support the contractually specied component.• Ability to designate spot purchases.• The interplay with the normal purchases and normal sales scope exemption.Finding documents to support the existence of a contractually specied component can be challenging for companies in some industries. Some industries have industry standards that incorporate contractually specied pricing component language into the boilerplate purchase and sale agreements. Agricultural, livestock and many metals are purchased and sold under market mechanisms that already include the contractually specied language required to meet the contractually specied component designation. Common Commodity Industry Groups• Power• Oil, Natural Gas, NGLs• Rened Products (Diesel, Gasoline, Chemicals, etc.)• Precious Metals• Industrial Metals• Agricultural (Dairy, Grains, Fiber, etc.) and LivestockCompanies that operate in power, crude oil, natural gas, NGLs, and rened products have mixed results when seeking to designate a contractually specied component. The ability to designate a contractually specied component is relatively limited for manufacturing or rening companies where the input into a nished good can have a contractually specied component; however, once processed or combined with other items, the ultimate product sold does not contain a contractually specied component. For example, crude oil might be a signicant input for jet fuel, but a sales contract for the ultimate sale of jet fuel often will not reference a crude oil index.

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Oilman Magazine / November-December 2018 / OilmanMagazine.com33OILMAN COLUMNMany companies purchase and sell product in a spot market. This can be particularly true for larger oil and natural gas producers that market their own production and for trading organizations. These companies have found signicant limitations in designating a contractually specied component under the new hedge accounting guidance. When a company knows that they will be buying or selling product at a future date, they often execute a derivative to hedge future price variability. However, a contract does not exist specifying the pricing at delivery of the physical product. The company will buy or sell the product at a negotiated price a few weeks prior to delivery or at delivery. The market convention to negotiate the ultimate spot price will reference industry benchmarks, but nothing will be included in the contract noting the pricing components. For example, a trucking company operating in New York and Pennsylvania knows that they will be purchasing diesel in 12 months and executes New York Harbor ULSD (Ultralow Sulfur Diesel) futures contracts to hedge the purchases. The eet will be purchasing the diesel at the pump under spot pricing, but this spot price will not meet the contractually specied component requirements.In order for a company to qualify for a contractually specied component designation, the new accounting guidance requires the company to designate the hedged item under the normal purchase and normal sale exemption. This election often does not create issues for most companies. However, for companies that are engaged in trading activities where physical xed price positions are recorded at fair value to offset nancial positions, this can be problematic. A company may enter into a physical agreement that has an index price and the xed price will be determined at a later date. The normal purchase and normal sale exemption is an irrevocable election, so once the election is made for the physical agreement before the xed price is determined, the company cannot record the xed price agreement at fair value later. In addition, the normal purchase and normal sale exemption contains a prohibition against net settlement. This can be problematic for companies that have physical purchase and sales with the same counterparty. Rather than physically deliver all the purchases and separately deliver all the sales, they will only deliver the net position, which is not allowed under the normal purchase and normal sales exemption. Companies engaged in these activities are limited in their ability to receive the benets of a contractually specied component designation.While there have been challenges encountered by early adopters, the FASB (Financial Accounting Standards Board) changes to the hedge accounting rules have been largely favorably received by users. Companies should carefully consider the changes under the new hedge accounting guidance and take steps to properly implement any changes. As a Managing Director at Opportune, Shane assists companies and nancial institutions throughout North America, South America, Europe and Asia-Pacic in their understanding of what is possible as they deal with the challenges of implementing risk management programs and highly technical accounting pronouncements. Shane oversees the risk management, derivatives, stock-based compensation and complex securities service offerings of Opportune. He assists clients with the entire risk management life cycle, including strategy, execution, compliance, valuation and hedge accounting. He has undergraduate and graduate degrees in accounting from Oklahoma State University. He is also a member of the American Institute of Certied Public Accountants. ONE APP. ONE TABLET.The Spotter inspection app is equipped with every tool you need to record, capture, and report on the spot.ANY INSPECTION. ANY LOCATION.START YOUR FREE TRIALenvoc.com/energy byProudly developed in Louisiana by Louisiana natives at Envoc. Learn more about how we can help your business run more eciently with custom software solutions that work for you. envoc.comWork oine with no internet connection required Take photo, video, and audio directly in the reportAutomatically route workows for digital signaturesImplement high accountability by GPS location capture Create custom inspection forms with a powerful, user-friendly template builderIntegrate into any internal system, accounting or ERPStay safe with Class I, Div II Intrinsically Safe tablet devices and cases

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Oilman Magazine / November-December 2018 / OilmanMagazine.com34OILMAN COLUMNIn The New Age Of Activism, Minimizing Political And Reputational Risk Is Key By Jeff BerkowitzIn surpassing Russia to become the largest crude oil producer in the world, the United States is poised to make the most of an energy revolution that would have seemed unlikely only a decade ago. The ramications of this revolution could be profound for American consumers, economy, and our allies and partners around the world. However, although there have been many noteworthy achievements in 2018 suggesting a strong tailwind into the coming year for the oil and gas industry, the trend of increasing energy activism on multiple fronts portends an operating environment fraught with political and reputational risk for the foreseeable future that will hinder the industry if it does not adapt. Certainly, the industry is no stranger to criticism and scrutiny, yet where most opposition was once a result of localized NIMBY-ism, today’s opposition has given way to NIABY-ism – not in anyone’s backyard. This has served as a demarcation into a new age of activism that is increasingly digitized, professionalized, and globalized. The risks from such activism are not simply cosmetic. Energy activism has been effective in delaying and disrupting industry projects and interests across North America over the past few years, with the consequences being lasting reputational damage resulting in greater operating costs. There is no better illustration of the changing nature of energy activism than the developments in the midstream space. Pipeline projects used to be non-controversial but are now at the forefront of anti-fossil fuel efforts, as exhibited by Keystone XL, Dakota Access, and Trans Mountain. Energy activists have used increasingly savvy tactics that focus on strategic chokepoints, including local regulatory meetings and once-staid bureaucratic processes, in an effort to stop infrastructure projects that are critical in ensuring adequate takeaway capacity to get fossil fuels out of the ground and brought to market. If pipelines are not built to alleviate bottlenecks in production regions central to America’s shale boom such as the Permian Basin in Texas and New Mexico, let alone ensure access to safe, dependable energy to families during New England’s harshest winters, then energy activists will get closer to succeeding in their desire to eradicate fossil fuel use entirely.That is why places not traditionally considered ripe for energy activism are facing new challenges in today’s environment, including Texas. Because of its integral role in America’s energy revolution, the Permian Basin is seeing an increase in anti-fossil fuel efforts that are being strategically coordinated and directed to where they can make the biggest impact against the oil and gas industry. As the Permian continues to grow as a hotspot for oil producers and midstream operators, activists too are likely to see it as a battleground to disrupt the growing U.S. pipeline market. With the energy of the Dakota Access protests still owing, future pipelines in the Permian could become a magnet for activism.In addition, recent trends in the nancial sector that serves the oil and gas industry demonstrate the concrete consequences of political and reputational risk. Under pressure from environmentalists, nancial institutions have divested over $6 trillion in funds, and divestment commitments could top $10 trillion by 2020. The insurance industry appears poised to be the next sector to face pressure over its ties to oil and gas, with climate groups having already called on it to ditch fossil fuels. As tensions rise between insurers and energy companies due to the damage caused by earthquakes that some allege could be a result of fracking, activists could exacerbate the situation to further undermine fossil fuel production.To successfully navigate today’s age of activism, companies need to be proactive in anticipating and understanding this new level of political and reputational risk. Even companies that are not consumer-facing, such as midstream rms, need to think about how their brand is perceived in the public arena, because if they do not dene their brand with members of the communities impacted by their work, they are allowing activists to dene it on their terms and timeline. This means being more effective at engaging community stakeholders in order to make the case for fossil fuels early and often. If not, activists will control the narrative in the public arena and paint the industry as being comprised of nefarious actors. Deliberate engagement through the lens of heightened activism can go a long way towards protecting a company’s reputation and gaining the public support required to build projects and avoid delays and disruptions.Companies should also be proactive in understanding the risks from energy activism threatening their projects and interests before they nd themselves reacting in a public affairs crisis. Now more than ever, companies and their projects are being put on trial – in front of regulatory and permitting bodies, in the court of law, and especially in the court of public opinion – and having their businesses impacted by energy activists that cannot be swayed, satiated, or appeased for long. An understanding of the landscape surrounding a particular project or company allows a company to make more informed business decisions and mitigate the costs of heightened political and reputational risks.America’s energy revolution has thus far been a boon for consumers, the economy, and allies and partners looking for a more stable, secure source of oil and gas. To build on this success, not to mention continue to advance technologies that allow for more efcient and effective production of fossil fuels, the oil and gas industry must adapt to an operating environment where scrutiny is higher than ever before, and political and reputational risks are only one viral narrative away from becoming a full-blown crisis. Jeff Berkowitz is founder and CEO of Delve, a Washington-based competitive intelligence rm that has worked on a number of energy projects. He previously managed research and messaging operations for The White House, several major presidential campaigns, and the U.S. Department of State.

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Oilman Magazine / November-December 2018 / OilmanMagazine.com36Recently the Bakken recorded record crude oil and natural gas output numbers. The Permian is red hot too. These shale plays have crews setting up and tearing down well sites. In the Bakken, for example, well costs are in the $7-8M range, quite a reduction from $12M in 2014. But there are a few oil elds not receiving headlines or attention that are making investors very happy. Magna Bures Oil has been nding success in the Illinois Basin with a $75K well.The Illinois Basin is a Paleozoic depositional and structural basin in the United States, centered in and underlying most of the state of Illinois, and extending into southwestern Indiana and western Kentucky.Magna Bures Oil now has over 2,500 acres of land for oil well developments. Founder, Nicolas Bures believes the Illinois Basin has big potential for the land owners and investors. “We are drilling oil wells and having success at it,” Nicolas Bures said. “For example, there are three wells in the Hardcastle 2 Well Program we recently drilled and completed. All pumps are on time and currently producing crude oil.”Magna Bures Oil moved into the Illinois Basin when oil prices dropped several years ago. “We came down here when the oil prices dropped because the cost of drilling wasn’t matching up well with oil prices. Recovery wasn’t as easy as the old days,” Bures said. “In the old days we used to drill one well and if we missed, we just drilled another one because it was $100 oil and it was easy to make your money back.”Bures added that even at $75 oil, prots can still be difcult in many of the shale plays. “It’s not as easy to make money at $75 than you think it is,” Bures said. “So we are going to stay in the Illinois Basin for a while. I just don’t see any reason to leave here and take on the risk of other shale plays.” Keeping the well cost at $75K is a major element in Bures’ prot strategy. Besides the obvious low cost of the well, it creates a system where resources are being leveraged in order to keep costs down and prots owing. “We believe the more we drill the better off we will be in the long run. We are doing our best to establish things,” Bures said. “A network of oil wells throughout the Illinois Basin re-entry wells and drilling wells.”Bures said they are able to keep the costs down due to the geology of the Illinois Basin. Unlike the Bakken and Permian with horizontal drilling, Bures is able to drill straight down to nd oil in the Illinois Basin.“It’s a simple drill with an air rig and an acid stimulation,” Bures said. “There’s no platforms to put up, road structures great so there’s no building of roads, it runs smooth.”But the Illinois Basin does have its own idiosyncrasies. “Down here there’s a lot of red clay which doesn’t allow oil to go from formation to formation,” Bures said. “These are fault traps so the red clay doesn’t allow the crude oil to migrate to other traps so you don’t need to frac.”Bures has been in communications with the Geology Department at the University of Kentucky regarding the potential of the Illinois Basin and the ceiling appears to be pretty high.“They said there was about a million barrels maximum in each hole that we drop,” Bures said. “Now we are not expecting to get anywhere near that, but these wells do last between 20-23 years. The longevity of the wells is one of the main attractions for investors.”Bures says these wells are not “get rich quick” wells or a “J.R. Ewing thing”, rather slow and steady returns over decades. In addition, the current tax breaks for energy investors are making the Illinois Basin even more advantageous. “People have a hard time grasping that there could be oil up in and around the Kentucky Indiana area,” Bures said. “Well there is oil up here, it’s just not a get-rich-quick thing, it’s a longevity thing.” OILMAN COLUMNThe 75K Well Drilling Profits in the Illinois Basin By Jason SpiessMagna Bures Oil is nding success in the Illinois Basin. Photos courtesy of Magna Bures Oil

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