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Oilman Magazine Sept/Oct 2019

How Oil and Gas Employers
Can Navigate an Applicant’s
Economy
p. 36
Articial Intelligence Provides
New Layers of Renery Safety
in 21
st
Century
p. 8
5 Ways Articial Intelligence
and Machine Learning Benet
Crude Oil Marketers
p. 28
Oil and gas Industry Trends:
Safety and Technology
Improvements
p. 22
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September / October 2019
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Oilman Magazine / September-October 2019 / OilmanMagazine.com
1
IN THIS ISSUE
Feature
Emerging Technology: Looking Toward the Future
By Sarah Skinner - pages 24 & 25
In Every Issue
Letter from the Publisher – page 2
OILMAN Contributors – page 2
OILMAN Online // Retweets // Social Stream – page 3
Downhole Data – page 3
Top 10 Houston-Area Oil and Gas Equipment and Services Companies – page 19
OILMAN Columns
The National Energy Dialogue Continues: Mark A. Stansberry – page 23
Software and Technology’s Effect on Safety, Operations, and Modernization in the Oil and Gas Industry: Tonae’ Hamilton – page 32
Sixth Circuit Fans the Flames of Class Certication Against Operators: Thomas G. Ciarlone, Jr. – page 37
Interview: Bobby Martin, Founder, OmniShelf: Tonae’ Hamilton – page 38
Interview: Rachel Olney, Founder and CEO, Geosite: Sarah Skinner – page 44
Quick View of The Acquisition & Divestiture Market: Josh Robbins – page 49
Augmented Reality: More than a Game: Sarah Skinner – page 50
Colorado Governor Continues War on Oil and Gas: Jason Spiess – page 52
Guest Columns
Gas Detection and the Connected Worker: Rick Pedley – page 4
An Overview of Unconventional Reservoirs and Their Basic Classication: Ender Sánchez – page 6
Articial Intelligence Provides New Layers of Renery Safety in 21
st
Century: Lillian Espinoza-Gala – page 8
A Minute Saved, a Minute Gained? Why Analysis is Key for Your Next Drilling Project: Martin Harrop – page 10
Odor Control in Oilelds Now Has Greener Options: Tonya Chandler and John Richardson – page 12
Comparing Oil Superpowers: No Match? Eugene M. Khartukov – page 14
Maximizing Flame and Gas Detection Effectiveness: The Case for Optimizing Detection Coverage over
Device Availability: Julian Yeo – page 16
Pink Petro Founder & CEO Tells Congress the Future of Energy is All-Inclusive: Rebecca Ponton – page 18
Automated Pipe Welding Emerges from “Perfect Storm” of Technology Advances: Mitch Dupon – page 20
Oil and Gas Industry Trends: Safety and Technology Improvements: Ria Edens – page 22
Blockchain Early Adoption in Oil Industry - Risks and Rewards: Amandeep Kaur – page 26
5 Ways Articial Intelligence and Machine Learning Benet Crude Oil Marketers: Josh Gray – page 28
Why Not Graphene? Raul Palencia – page 30
How Oil and Gas Employers Can Navigate an Applicant’s Economy: Ron Hudik and John Romanow – page 36
The Trouble with Oil Price Predictions: Lakshman Achuthan and Anirvan Banerji – page 40
Oil From Garbage: Any Prospects? Eugene M.Khartukov – page 42
Enhance Security in Oil and gas Asset Integrity Management: The Latest Technologies and
Strategies to Protect Digital Data: Dave Maguire – page 48
Oilman Magazine / September-October 2019 / OilmanMagazine.com
2
Gifford Briggs
Gifford Briggs joined LOGA in 2007 working
closely with the Louisiana Legislature. After
nearly a decade serving as LOGAs 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. Stansberry
Mark 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 Spiess
Jason Spiess is an award winning journalist, talk
show host, publisher and executive producer.
Spiess has worked in both the radio and print
industry for over 20 years. All but three years of
his professional experience, Spiess was involved
in the overall operations of the business as a
principal partner. Spiess is a North Dakota native, Fargo North
Alumni and graduate of North Dakota State University. Spiess
moved to the oil patch in 2012 living and operating a food truck
in the parking lot of 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 Robbins
Josh 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 Burnett
Steve Burnett has been working in the oil
industry since the age of 16. He started out
working construction on a pipeline crew and
after retirement, 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.
The EIA (Energy Information Agency) at the Department of
Energy recently mentioned U.S. petroleum production increased 16
percent and natural gas 12 percent in 2018. The EIA said the increase
was the largest petroleum and natural gas production increase from a
single country in history. With that, the U.S. surpassed Saudi Arabia
as the largest petroleum producer with Russia in third place.
Fantastic news for our economy and energy independence. With
increased oil and natural gas, the need for infrastructure to push
production to market is so much greater. As we’ve reported over the
last year, several pipelines have come online, several are near completion and there are still more
to come in 2020. Liqueed natural gas exports increased this summer setting new records. A
couple of new LNG facilities are scheduled to start production later this year.
Still yet, great news, our industry is humming along, collecting modest gains. The Anadarko/
OXY merger was also exciting news for the industry. However, there is still caution coming from
major oil producers, even independents, to keep CAPEX under control. Every segment of the
industry is on watch to reduce spending, maintain a positive cashow and produce results. That’s
the right approach as we head into 2020, an election year, and faced with an uncertain trade war.
E&P bankruptcies are on the rise and there has been an increase in M&A activity in the services,
equipment and supplies side of the business. All signs that the industry has an increased appetite
for change and adjustment. So, the good news is we’re energy independent and producing more
oil and gas, the bad, well, I guess only 2020 will tell.
SEPTEMBER OCTOBER 2019
PUBLISHER
Emmanuel Sullivan
MANAGING EDITOR
Sarah Skinner
ASSOCIATE EDITOR
Tonae’ Hamilton
FEATURES EDITOR
Eric Eissler
GRAPHIC DESIGNER
Kim Fischer
CONTRIBUTING EDITORS
Gifford Briggs
Steve Burnett
Thomas Ciarlone, Jr.
Joshua Robbins
Jason Spiess
Mark Stansberry
SALES
Eric Freer
Diana George
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Magazine, LLC, with all rights restricted.
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All information in this publication is
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reserves the right to edit all contributed
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necessarily reflect the opinions of the
publisher. Any advice given in editorial
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considered information only.
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Original cover photo by
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LETTER FROM THE PUBLISHER
CONTRIBUTORS — Biographies
Emmanuel Sullivan, Publisher, OILMAN Magazine
Oilman Magazine / September-October 2019 / OilmanMagazine.com
3
Week Ending August 30, 2019
DIGITAL DOWNHOLE DATA
Gulf of Mexico: 26
Last month: 23
Last year: 16
New Mexico: 108
Last month: 109
Last year: 102
Texas: 440
Last month: 453
Last year: 526
Louisiana: 33
Last month: 40
Last year: 41
Oklahoma: 80
Last month: 93
Last year: 139
U.S. Total: 904
Last month: 946
Last year: 1,048
OIL RIG COUNTS
*Source: Baker Hughes
Brent Crude: $58.64
Last month: $62.29
Last year: $74.41
WTI: $53.54
Last month: $56.85
Last year: $69.97
CRUDE OIL PRICES
*Source: U.S. Energy Information Association (EIA)
Per Barrel
Gulf of Mexico: 59,018,000
Last month: 59,451,000
Last year: 47,628,000
New Mexico: 27,902,000
Last month: 26,019,000
Last year: 20,002,000
Texas: 154,145,000
Last month: 148,688,000
Last year: 130,717,000
Louisiana: 3,752,000
Last month: 3,622,000
Last year: 4,350,000
Oklahoma: 18,689,000
Last month: 18,456,000
Last year: 16,330,000
U.S. Total: 375,354,000
Last month: 364,021,000
Last year: 324,254,000
CRUDE OIL PRODUCTION
*Source: U.S. Energy Information Association (EIA) – May 2019
Barrels Per Month
Gulf of Mexico: 80,081
Last month: 85,627
Last year: 76,811
New Mexico: 146,084
Last month: 150,472
Last year: 120,082
Texas: 734,429
Last month: 753,832
Last year: 645,593
Louisiana: 256,327
Last month: 249,215
Last year: 231,937
Oklahoma: 260,442
Last month: 270,859
Last year: 241,563
U.S. Total: 2,942,788
Last month: 3,009,493
Last year: 2,641,008
NATURAL GAS
MARKETED PRODUCTION
*Source: U.S. Energy Information Association (EIA) – June 2019
Million Cubic Feet
Per Month
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Oilman Magazine / September-October 2019 / OilmanMagazine.com
4
OILMAN COLUMN
Gas Detection and the
Connected Worker
By Rick Pedley
In our increasingly connected world, portable
gas detectors have been slow to keep up with
the latest digital trends. In the age of IoT, you
can control your toaster and home thermostat
using an app on your smartphone, but what
about your portable gas detector?
When wearing a portable gas detector on the
job, whether it’s a single gas H2S monitor or
a ve-sensor multi-gas instrument, we really
don’t pay much attention until the alarm
sounds. This misses a trove of information
about your work environment and your safety
within it.
When a gas detector is paired wirelessly with a
smartphone, usually via Bluetooth technology,
you get access to so much more information.
And better yet, you can easily share these data
points with the rest of your team. Depending
on your preferences, this exchange can even
happen in real-time using a cloud-based
portal.
Consider the smart watch. Popular health
tracking apps allow you to review not only
things like pulse, respiration, steps, calories
burned, etc., but these activities are also
placed in context, helping you make the
most of this information. In addition to the
time of day, the GPS feature shows you your
location within a few meters, among a host of
other parameters.
These digital devices are “always on,” which
means they record information and observe
their surroundings 24/7. If we apply the
same approach to portable gas detection
equipment, we could mine more information
from our work environments. Whether at
a particular job site or within a large plant,
wouldnt it be helpful to have consistent
access to these data points? For example,
if we consistently get elevated ammable
gas readings near a building or piece of
equipment, we can take proactive steps to
improve worker safety.
When we add in the ‘connected’ gas detector,
we are providing an entirely new level of
context around the data provided by the
instrument sensors. In order to display the
insights available, gas detection equipment
manufacturers need to develop a simplied
user interface, while quickly disseminating
data to those that need it most.
Docking stations for gas detectors are a
common feature in industrial plants and
reneries. They allow users to download
data, charge the battery, and calibrate their
instruments. These are necessary tasks, made
easier by the semi-automatic nature of these
devices. Depending on the instrument design,
the docking station will be able to download
‘snapshots’ of the readings, alarms, bump
tests, and calibrations. These may be minute-
by-minute or at some other interval.
But what do we do with this information once
we’ve gathered it? Many, if not most, docking
stations are not integrated with a central
database, let alone one that’s easily accessible.
And while we dont want to dismiss data
security concerns, putting actionable data in
the hands of safety professionals should be
viewed as a priority.
Using a portable gas detector extends our
senses, alerting us to dangers when they are
present. As a tool, they are invaluable. The
extended functionality of a ‘connected’ gas
detector is right around the corner, with
many elements already available. Developing
a common platform for this data would be a
major step towards widespread availability.
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
and manufacturer of their own new FR
line Grit, 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/.
Photo courtesy of PK Safety
Oilman Magazine / January-February 2019 / OilmanMagazine.com
1
November 5-6, 2019
OILMAN CONNECT is a two-day
virtual trade show dedicated to
connecting businesses in the
Oil and Gas Industry.
Feature your products, services, and technologies
while you network with other industry experts,
attend educational seminars, and
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Oilman Magazine / September-October 2019 / OilmanMagazine.com
6
OILMAN COLUMN
An Overview of Unconventional Reservoirs
and Their Basic Classification
By Ender Sánchez
Today, there is much that is talked
about and discussed in the oil and
economic world of unconventional
reservoirs. But what are these
unconventional reservoirs? Giving
an overview of what unconventional
reservoirs are from the point of
view of operations, geology and
petroleum engineering, it leads us to
look for a denition about what these
are. One of the main parameters that
these type of reservoirs will dene
is their permeability, so we would
be referring to that: they are very
low permeability reservoirs, less
than one microdarcy (Figure 1),
but that they have the possibility
to produce hydrocarbons,
through the application of
different techniques related to
hydraulic fracturing. Much of the
unconventional resources are found
around the world, and have particular
characteristics such as their rapid
depletion (Figure 2).
The fact that they are geological
formations of low permeability
requires that drilling alternatives
based on the development of
horizontal wells with the generation
of hydraulic fracturing of multiples
stages be generated. It is also
important to know, among other
things, the physical and transport
properties of the type of rocks
that make up unconventional
reservoirs. Likewise, reservoirs
known as unconventional are of
great controversy worldwide for
environmental impacts that the
development of such reservoirs
could lead, as well as, the use of
induced seismicity, which is widely
used in the stimulations and studies
of such reservoirs.
Over the past 10 years, there
has been an increase in oil and
gas production, in this type of
unconventional reservoirs, making
countries such as the U.S. and
Canada exporters of this type of
hydrocarbons. Similarly, the oil
industry in general has beneted
from the set of technologies
implemented in the development of
this type of reserves.
The discovery of many of these
types of reserves could not be
possible in the world, without the
development of horizontal wells
with multiple fractures (Figure 3),
which allowed giving economic
interest to the geological formations
of low permeability. Since traditional
or conventional discoveries and
developments were intended for
rocks with other types of properties:
highlighting techniques, where
the so-called best petrophysical
properties were sought: high
porosities, high permeabilities, high
oil or gas saturations, low water
saturations.
Unconventional reservoirs are
located all over the world. Its large-
scale development begins in the U.S.
and Canada, as well as countries
such as China and Australia, have
pioneered the development of such
reservoirs. However, there are great
potentials around the world for the
development of unconventional
reservoirs, such as Mexico,
Venezuela, Brazil, Argentina, France,
Poland, Algeria, Ukraine, Iran,
Libya, Egypt, Qatar, Saudi Arabia,
Pakistan, United Arab Emirates and
South Africa. This, if we refer to
its horizontal spatial location; but if
we speak in their vertical location,
that is, in the geological column, we
will nd them embedded among the
so-called conventional reservoirs,
since many of them represent in the
conventional system of reservoir
distribution, characteristics of source
rock and rock seal, as well as could
have been limiting the permeability
of the source rock.
The importance of unconventional
reservoirs is that for the next 50
years and more, the planet will still
require energy from this type of
resource; and the global oil industry,
must ensure that the whole world is
provided with this type of energy
in an economically cost-effective
manner, which guarantees all the
national security principles of the
countries involved, generating the
least possible environmental impact
and in harmony with the living
conditions of society. In this sense,
one of the advantages of this type of
deposit is the production of natural
gas that is generated in the world,
in order to reduce CO2 emissions
into the atmosphere. Much of the
gas production can come from
unconventional deposits in the world.
In terms of its classication,
we can nd different types of
unconventional deposits, but there
is basically a classication in three
types:
1. Rich in Organic Matter- Source
Rock
2. Conventional Unconventional
3. Hybrid plays
Figure 1: Permeabilities to be considered in the difference between conventional and
unconventional deposits. Source: Geomechanical Course Applied to
Unconventional Sites Course - Stanford University.
Figure 2: Examples of monthly production and cumulative production in
unconventional reservoirs. Geomechanical Course Applied to
Unconventional Sites Course - Stanford University.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
7
OILMAN COLUMN
1. Rich in organic matter- Source
Rock: They are made up of those
rocks that in previous explorations,
or in the description of traditional oil
systems, constitute the Source Rock,
however, there are accumulations
of hydrocarbon in this type of
rocks, which turn them into storage
rock; and their accumulations are
considered unconventional.
2. Conventional Unconventional:
They represent the group of con-
ventional reservoirs in sandstone or
limestone, whose accumulations in
organic matter are not very signi-
cant, but whose low permeability re-
quires the design of horizontal wells
with multiple fractures to ensure the
hydrocarbon ow from formation
to wells. Given their treatment and
their very low permeability they are
considered unconventional.
3. Hybrid Plays: Represent the
combination of the two above types,
i.e., they have large organic content
and at the same time were considered
conventional resources.
Organic-rich deposits are generally
formed in platform environments
(Figure 6), where some organic
sediments are deposited in
combination with very ne
grain sediments, specically on
a continental margin, where in
geological eras, could coexist algae,
phytoplankton, and organic matter
die and fall to the sea oor in
relatively deep water, additionally
it is buried by clay in a reducing
environment (So the organic matter
doesn’t oxidize).
In a geological context we must say
that over time this accumulation of
organic matter has much to do with
the relative variation of sea level,
which will give the precise depths
for the deposit of ne sediments,
combined with the generation or
the number of living organisms,
which when they die, can settle in the
basins. This organic matter reaches
the maturation necessary to become
oil or gas.
Thanks to this combination of
ne sediments and organic matter,
today we can nd the reservoir of
shale, rich in organic matter. We can
nd deposits with great lithological
variation, where they are present:
Combination of shale sand,
carbonates and shale
Basal shale, which correspond to
areas of high clay content and high
organic content
Areas of high organic content with
presence of clays
When talking about hybrid play and
conventional unconventional depos-
its, it is necessary to refer to the terms
of production and drilling modes in
order to achieve the best results in
these types of reservoirs. They are
precisely called unconventional be-
cause their permeabilities are so low
that they require horizontal drilling
and multiple fracturing, as we have
already mentioned. Also, its rapid
depletion is a typical characteristic of
this type of reservoirs, even if we are
talking about sandstone or carbonate
type storage rock.
Observing the hybrids’ play and con-
ventional unconventional deposits,
the characteristic that differentiates
them is their organic content, since
hybrid plays, even though they are
made up of sandstone or limestone
source rock, are very related to the
processes that gave rise to the source
rock, or there is an important content
of organic accumulations, which
point to these types of formations
the character of hybrids.
As for their production characteristic,
let us remember that there are
deposits in which induced fractures
are generated, or what we know
as hydraulic fracturing, in order
to generate the channels that can
allow the communication of the
uid from the training to the well.
Accumulations that may be contained
in fractures are temporary and the
formation matrix must rell these
fractures. So, their production
behavior will be fast depletion
depending on the time, requiring
subsequent stimulations that could
reactivate the productive state of the
wells. Among the most well-known
types of stimulations is multi-stage
fracturing and induced seismicity.
Ender Sánchez
has almost
12 years of
experience in
the oil and gas
industry which
include reservoir management,
well productivity, petroleum
geology, geomechanics
characterization, stratigraphical
characterization, integrated studies,
new well location strategies,
and geomodeling. He holds a
bachelor’s degree in Geology
Engineering and a specialization
degree in Petroleum Geology.
Figure 3: Multi-fracturing horizontal well design scheme. Geomechanical Course
Applied to Unconventional Sites Course - Stanford University.
Figure 4: Distribution of the unconventional deposits known worldwide. Geomechanical
Course Applied to Unconventional Sites Course - Stanford University.
Figure 5: Global energy and environment Challenge. Source: Conoco Phillips 2017 Figure 6: Organic matter deposit scheme in basins. Source: Loucks and Rupple 2007
Oilman Magazine / September-October 2019 / OilmanMagazine.com
8
OILMAN COLUMN
Artificial Intelligence Provides New Layers
of Refinery Safety in 21
st
Century
By Lillian Espinoza-Gala
In the late 1990s the oil and gas industry worked
overtime against the fear of what would happen
when the clocks struck midnight in the year 1999
ushering in 2000. No one knew what would hap-
pen with computer clocks designed only through
years ending in 99. The news media covered the
new millennium like an approaching hurricane.
The Y2K fear and frenzy seems so distant in
light of the many global crises that our best and
brightest engineers have had to deal with in the last
two decades. From 9/11 and Hurricanes Katrina,
Rita, Ike, Sandy and Harvey to cyber threats, global
recessions and a change in demographics. In
2019 adapting a radically different approach with
AI (Articial Intelligence) and IoT (Internet of
Things) is not just a method of reducing down-
time, increasing prots, and creating security in the
midst of unexpected crises - it is being recognized
as mandatory. The major oil and gas operators
have accepted Oil and Gas 4.0 as the only accept-
able path forward for sustainable and high security
renery and plant operations.
Mark Anderson began his career with Shell Oil
in 1981 and has led robotics and automation in
drilling globally for Shell and with SPE (Society
of Petroleum Engineers). Cur-
rently Anderson, a consultant and
managing member of Anderson
& Spilman, LLC, says, “Managing
robotics and automation holds the
promise to take humans out of
harm’s way. The issue on uptake to
date in the oil eld is the variety of
tasks that humans are required to
do. There is not the high degree of
repetition like in a factory setting.
Automation is a bit of an ‘all or
nothing’ proposition in terms of
removing people from the worksite.
If you automate part of a position,
the individual, who is still required
to do those tasks not yet auto-
mated, will need to be present at the worksite.
Mr. Anderson has been working with universities
and young professionals in global competitions to
make the transition to robotics easier.
Once a disaster or crisis is elevated to BREAK-
ING NEWS, the response has usually been long
investigations and new procedures for safer
operations or new technologies. But in this age of
disruption the need for proactive and interactive
Process Safety Management and Quantitative Risk
Assessment and Mitigation in the design phase
has the ability to insure nancial stability for the
investors.
Perhaps what happened in the summer of 2019
illustrates to what extent breaking news can also
break an industry.
According to reporting by the Philadelphia
Inquirer on June 21, 2019, the night shift at the
PES Renery responded immediately to the
blast that shook communities several miles away.
This is one of the few renery disasters where
one woman at 4:00 a.m. working the boards did
everything correctly and, together with more than
100 workers, literally saved the city of Philadelphia.
During the rst 20 minutes, as renery employees
scrambled through reballs that lit
up the sky turning night into daylight
for miles around, many of the lead
workers wondered how many people
they would have to bury. Then word
arrived that every single worker had
been accounted for and they simply
had to ght the res and get control
of the ow of chemicals.
On June 26th while these same
employees scrambled cleaning up
the site to get the operation back on
line they were even more stunned
to learn on breaking news that PES
would close the renery. No one
could have imagined that with only
ve minor injuries and no harm to the community
the renery workers would be faced with being out
of work.
What AI solutions, IoT and companies like
SparkCognition potentially can offer will not only
save the environment, the lives of workers and
surrounding communities, but the actual renery
itself. In this season when the oil and gas industry
has lost the public trust, innovative software and
IoT technology are the key to renery survival.
The road map to weaving advanced software and
AI technology into reneries and chemical plants
might have seemed expensive and extremely
complex for everyone from the C-Suite (the blunt
end of the safety spear) on down through the VP
and middle management in 2010. But, in light of
more than 35 major renery and chemical plant
disasters in the United States since 2015, keeping
those who work onsite and the surrounding
communities safe is tied directly with keeping
the license to operate from all stakeholders:
investors, partners, employees, the community
and local, state and federal governments. Oil and
gas companies recognize the social license to
operate (SLO) is just as vital as any permit from a
governing authority.
Making the Energy Transition from Disaster
to High Tech Solutions - Like a Moon Shot
for The Oil and Gas Industry
Implementing innovative change is never easy in
any industry but in 2019 capturing multiple data
streams of information from specic vessels,
pumps and compressors allows for keeping on top
of
preventative
and
corrective
maintenance, as well
as real time hazard analysis and risk assessment in
rapidly changing weather conditions and corporate
changes. The benets of digital solutions reduce
downtime and prevents equipment surprises.
The energy industry is undergoing a state of
disruption. Historically, energy companies
who survived the booms and busts and major
transitions survived or failed based on whether
they looked at disruption as a
threat
or an
opportunity.
Shell, BP and ENI are leading the way
by using analytics and advanced machine learning
to capture huge streams of data, much of which
has gone unused. The organizations who jump on
Oil and Gas 4.0 and surf the waves of change with
the latest AI and IoT software solutions will offer
just in time decision making and add new layers of
safety protection not humanly possible otherwise.
By streaming information in real time to the key
decision makers, front line workers have a second
Social License
to Operate
“You don’t get your
social license by going
to a government
ministry and making an
application for one, or
simply paying a fee. ...
It requires far more than
money to truly become
part of the communities
in which you operate.”
– Pierre Lassonde,
President of Newmont
Mining Corp., 2003
Image courtesy of SparkCognition
Oilman Magazine / September-October 2019 / OilmanMagazine.com
9
OILMAN COLUMN
set of eyes to alert them to a critical action before
a combination of small events balloons into a
crisis. It has taken decades for accurate tornado
alerts to send messages to homes, business and
governments so that all stakeholders can respond
proactively. Introducing AI and advanced machine
learning and software solutions promises nancial
savings as well as salvation for the USAs aging
reneries and chemical plants.
Phillipe Herve, Vice President, SparkCognition,
says the money and time invested in AI and
machine learning in 2019 is a drop in the bucket
when compared to how much money can be saved
by preventing unnecessary downtime and lower
insurance premiums. The technology can also help
engineers in the design phase make more informed
decisions to create and operate facilities that will be
far more productive in the entire lifecycle of the
facility and increase production.
Herve, an engineer, says he was skeptical at rst.
But upon further investigation and experience with
different sectors of the oil and gas industry, he has
invested his future professional life in helping the
energy industry move toward the most advanced
levels of digital and software solutions. He notes
that AI and machine learning have already been
proven on offshore drilling rigs and production
platforms, but now solutions such as those offered
by his company SparkCognition are already being
tested in reneries and chemical plants in 2019.
Change is always difcult at any point in history.
Herve says the three main challenges to fully
implementing AI technology and software include
radical change in:
1. Technology – new and different. Oil and
gas reneries and chemical plants generate
enormous amounts of data, but until recently
it has been difcult to use it quickly due to the
amount of time required for data scientists to
clean it up and nd only the information that
is relevant to solving a particular problem for
a specic piece of equipment. This is where
solutions like Darwin come in to help make
the transition almost seamless for both the
engineers and data scientists and those in
management and at the worksite.
2. Change in Process – Without big data and
AI, reneries and plants have traditionally had
to react after disasters to create innovative
solutions. Herve says, “With AI we may be able
to detect a slight change faster than a human
but this is probably not where the full power
resides. AI is capable of detecting combina-
tions of sensors which are abnormal to a
particular asset. Every single sensor provides a
reading which is within range and not alarming
by itself. The combination of value reported by
multiple sensors is abnormal which is some-
thing humans have great difculty in detecting.
Some rule-based algorithms have been written
for some assets to catch these combinations
but the rule-based approach only works for
abnormalities which are “planned.” The true
power of AI comes when the system is auto-
matically and intelligently capable of detecting
an anomaly even if the anomaly has not been
considered as a possibility. Expanding the con-
cept, with Automated Machine Learning, you
can detect any anomaly, regardless of whether
it was considered a possibility or not without
having to write hundreds or thousands of rules
to consider each possible use case.” In 2019,
the software solutions proven with a client in a
few months go beyond what a team of human
engineers could have accomplished in a few
years in the past.
3. Organizational Culture – The interface
between different ladders in an organizational
chain of command have always proven most
challenging. Organizational culture is dened
as “how people work” with many people
explaining “this is not how we do things around
here.” Resolving the fragile interface between
the seasoned workforce and the vision of the
data science engineers will require a space for
dialogue and candor in the feedback loops. The
words “Safety in the Work Place” have been
chanted like a mantra to the point where many
of those on the sharp end of the safety spear
have come to feel that those in the C-Suite are
not providing a safe space for them to voice
their fears and concerns. Investigations by the
U.S. Chemical Safety Board have consistently
uncovered failure in organizational system
risk assessment after a disaster. There is a lack
of feedback loops for workers to send bad
news up the chain of command in real time.
Machine learning and addition of new software
solutions will require listening protocols for
sharing concerns of the workforce.
Case studies from companies that have introduced
AI prove that with buy in from the top to the bot-
tom of the organization, operations can demon-
strate that the introduction of advanced software
can be streamlined to make life easier for everyone.
Once engineers and plant managers give various
software suites a test drive in a plant, the front-
line employees see how the algorithms help them
reduce the amount of time spent on troubleshoot-
ing and repairs and allow a proactive response to
daily operations. The software sends out alerts
when preventive or predictive maintenance needs
to be addressed sooner. Just a couple of years ago
Herve says the rst editions of AI allowed plant
operators to see AFTER a breakdown what should
have been done six months or six weeks before the
event. This latest edition of algorithm prevents the
breakdowns BEFORE they happen.
Texmark Chemicals put SparkCognition sensors
on one of their pumps in 2019. The onsite
workforce found their ability to operate between
the sensors and the actual equipment enhanced
their ability to maintain their equipment while
providing a new understanding of it. The transition
was easier than anyone expected. Doug Smith,
CEO, Texmark Chemicals, Inc. is more than simply
a satised customer. Smith says, “SparkCognitions
ability to deliver reliable, AI-based predictive
analytics helps the people working with and on the
equipment not only know what is happening but,
more importantly, what is going to happen and
when. This is a game changer. Not only does this
improve plant safety, but it increases productivity
by reducing unplanned downtime.”
Smith is encouraging his competitors and industry
colleagues to become early adopters of AI and
Machine Learning.
As our oil and gas industry enters the next decade,
sustaining the license to operate
and keeping
the public trust will depend on investing in the
innovations and technology that keep reneries
and plants from becoming the latest story on
breaking news.
Lillian Espinoza-Gala, owner LEG Exploration
Education, served on the steering committee
for National Academy of Science Offshore
Worker Empowerment workshop held in
Houston in January 2018 and a section of her
Macondo Research is published in Chapter
2 of the proceedings. She currently serves as
a Membership Chair on SPE International
Human Factors Technical Section Board.
A massive re burns at Philadelphia Energy Solutions Inc’s oil renery in this still image from video in
Philadelphia, Pennsylvania, June 21, 2019. WCAU-TV/NBC via REUTERS
Oilman Magazine / September-October 2019 / OilmanMagazine.com
10
OILMAN COLUMN
A Minute Saved, a Minute Gained? Why Analysis
is Key for Your Next Drilling Project
By Martin Harrop
It’s mid-January, 150 miles from land with the
temperature around zero degrees Celsius. The
waves are 50 feet high, with many large vessels
having chosen to shelter closer towards the
coast. It’s not worth the risk.
Such conditions are not uncommon in the
North Sea and strong winds and currents along
with large waves can occur in many areas of
the world. At all locations, long-term offshore
oil and gas installations must remain intact and
in position. Their critical infrastructure must
withstand the most extreme conditions Mother
Nature can throw at them, or an environmental
disaster could be around the corner.
The design, maintenance and monitoring of
key components such as risers and conductors
has developed signicantly as the industry has
matured. Today, highly developed technology
has to be carefully balanced against efciency
and cost, and advanced analysis is playing a huge
part in striking the right balance between safety,
efciency, capability and cost.
The Analysis Model
Riser and conductor analysis, often used
to validate a proposed riser or conductor
design before it is installed, has evolved into a
specialism in its own right. Making sure these
components are t for standard, in whatever
conditions they are operating in, is fundamental
to the success of any offshore installation.
A typical platform conductor used on a
production well will be supported by guides
spaced carefully to ensure the conductor remains
stable. The conductor must support the surface
wellhead equipment and internal casing weights
of the well while withstanding all environmental
loads for the planned production life.
A typical high-pressure drilling riser
conguration consists of the subsea wellhead
connector assembly, tapered stress joint, high-
pressure drilling riser, tensioning joint, riser
landing joint, hydraulic tensioning system and
a surface blow-out preventer. Similar to the
conductor, the drilling riser must withstand all
potential environmental conditions, but will also
need to be designed to contain the maximum
pressure expected during drilling. As shown by
this example, the design of conductor and risers
can vary signicantly from one eld to the next.
Analysts can now utilize advanced computer
software to build model representations of these
systems and predict the forces and stresses that
they face whilst offshore. The obvious, but huge,
benet being that it can be simulated safely and
quickly onshore rather than trying it out in the
North Sea, waiting, and dealing with disaster.
Almost any conductor and riser system can be
modeled in the virtual world, with nobody in
harm’s way.
Put simply, this means that operators can choose
the right specication of equipment for each
situation. For example, making an educated
choice between high quality but expensive
equipment and a much cheaper model that can
still perform the required role effectively.
Although this kind of data modeling has been
used before, its advances in the software and
processing power have allowed a huge leap
in its capabilities of late. Tens of thousands
of numbers can be input, and millions of
calculations can be conducted, varying loads,
conditions, materials and so on, producing far
more accurate and less conservative results than
ever before.
This process, once seen as more of a last-
minute tick box exercise to satisfy health and
safety requirements, is now being harnessed to
inuence a project early in the FEED (Front
End Engineering Design) stage in order to
reduce costs and streamline the design, years
before drilling starts.
Understanding, Planning and Practice
Although it can have a positive inuence on
project’s CAPEX as close as two weeks before
operations commence, the earlier this analysis is
completed the more impactful the optimization
and the bigger the savings can be. By the
time key decisions have been made regarding
equipment like risers and conductors, its impact
can still be important but limited.
Companies like Aquaterra Energy are at the
forefront of utilizing this new digital technology.
In one recent platform and conductor design
example in Vietnam, their in-house team of
riser analysis experts conducted a series of
sensitivity modeling, which looked at maximizing
drilling uptime on a new platform. The results
successfully increased the rig operation window
from less than the one-year storm up to a 50-
year storm with only minor modications to the
platform design. A small number of tweaks to
the pre-build design prevented huge headaches
during drilling and when the installation entered
production.
Proper Planning Prevents…Future Issues
With the analysis conceivable now, it would
be possible to plan all equipment so that it is
designed for at least a 30 or 40 year lifespan.
This makes maintenance and upgrades far more
straightforward in decades to come, getting the
most out of the expensive wells.
The pioneering wells of the North Sea, some
drilled in the 1980s or even the 1970s, are
one such example. When initiated, most,
if not all, were thought to be destined for
decommissioning in around 20 years. Today,
some are still operating, with operators trying
to extend the life of these unexpectedly active
assets.
MP Riser Nipple Up - Well C2 - Maersk Highlander
Oilman Magazine / September-October 2019 / OilmanMagazine.com
11
OILMAN COLUMN
In these instances, there is likely to be a need to
re-enter these conductors, the problem being
that, due to its age, the original drilling records
have been lost and little information is known
about the well. This makes an already difcult
task signicantly more challenging. In the same
situation today, the analysis would be done,
stored and be a valuable tool throughout the life
of eld operations.
Millions in Savings
Riser analysis in practice has achieved some
staggering results in recent times. A recent
collaboration with Aquaterra Energy and a
Norwegian operator is notable in its results.
The operator was looking to drill a further two
wells in the nal slots of an existing platform.
However, unlike the other wells, these two
slots did not have all conductor guide supports
installed. The initial plan was to retrot a further
guide to support the two new conductors, a
complex operation with many safety concerns.
Using the data modeling, a thicker-walled
conductor was found to work without the need
for a retrot guide. The result? Less complex
and signicantly safer operations and a saving of
around US$4 million on project CAPEX, with
future savings likely throughout the life of the
well.
Condence in Safety
The full potential of riser analysis is beginning
to be understood by the industry. All solutions,
of course, must make sense from a feasibility
and engineering point of view, and that is what
this process, conducted well, will do.
It has the potential to offer signicant cost
savings that far outweigh the investment
of the work itself, sometimes hundreds of
times. Validating systems for use in specic
locations is now not just best practice, but an
obvious element to include at an early design
stage. Condence in safety and efciencies
doesn’t always come easy, but analysis makes it
achievable for all, even when the next North Sea
storm hits.
Graduating with a First
Class Master’s Degree in
Mathematics from Durham
University, Martin has
almost 10 years’ experience
in the oil and gas sector at
Aquaterra Energy. During this time, Martin
has worked on a wide variety of riser analysis
projects while being based in Norwich and
Cambridge. As riser analysis manager, Martin
is responsible for the management and
technical development of all riser analysis at
Aquaterra Energy.
AE - Aquadop Install - WAD
Oilman Magazine / September-October 2019 / OilmanMagazine.com
12
OILMAN COLUMN
Odor Control in Oilfields Now
Has Greener Options
By Tonya Chandler and John Richardson
Every year, oil companies receive hundreds of
complaints about nuisance odors emanating
from oilelds. For residents living in these
areas, “rotten egg” smells and “dead sh”
odors are a fact of life. Companies search
to nd the causes and solutions for these
nuisance odors without breaking the bank.
Companies are looking at new technologies
and new applications of existing chemicals to
battle this problem in a “greener,” more cost-
effective way.
Odors in the oil and gas industry typically
result from the presence of volatile organic
and inorganic compounds such as hydrogen
sulde and ammonia. Hydrogen Sulde (H2S)
can be a component of formation gases
dissolved in water and hydrocarbons during
oil and gas operations. It is toxic, corrosive
and, at high concentrations, can be extremely
hazardous and lethal. Organic compounds that
lead to odor problems include mercaptans,
amines, methane or BETX Benzene, Ethylene,
Toluene and Xylene. These odors can be
reduced or eliminated
by using operational,
mechanical, or chemical
treatment technologies,
but reducing severe
odors often requires a
combination of several
technologies.
Advancements in
GeoMembranes offer a new
perspective on odor control. New
Products like Anue’s GeoMem-
brane Covers (or Pi2 PODZ
Horizon covers) offer a breathable
design for tanks and other applications where
it is important to remove odors but allow
water and air to pass through. The applications
for this technology are stretching far beyond
tank farms. Companies are now building 3-D
structures to cover odorous areas, protecting
both personnel and neighboring areas from
dangerous odors. Olfactometric testing shows
these membranes can reduce H2S and other
VOC odors by over 90 percent when installed
correctly.
Chemicals are getting a makeover as well.
Recently, new non-triazine chemistries have
been developed that increase the efciency
and speed of removing hydrogen sulde from
crude oil, eld condensate, atmospheric gas
oil and produced natural gas. The removal of
nitrogen species can lead
to enhanced safety and
reduced exposure to odor
and hazardous substances
while allowing producers
to meet oil and gas sales
specications. Unlike
triazines where removal
efciency deteriorates at
higher temperatures, new
scavenger chemistries can
maintain performance
efciencies at temperatures
greater than 1000C. These
scavengers offer a less
offensive odor than the
“rotting sh” smell of
traditional scavengers.
Anue Water Technologies and its partners
are actively engaged in the development of
oxidative coupling technologies for treatment
of sulfur, containing waters and waste streams
as a new sustainable approach to odor control.
Work with Ozone, Hydrogen
Peroxide and other oxygen de-
rivatives are advancing every day.
Improvements over conventional
peroxide and permanganate
technologies have been
proposed which utilize
a concept called
oxidative coupling.
In this process,
a proprietary
catalytic
surface
is used
to bring sulfur containing molecules close
enough together such that the peroxide forms
a bridged disulde compound. This disulde
is then further oxidized to produce a water-
soluble sulfoxide.
Adsorbed (HSR + HSR) + H2O2 = RS-SR
(Disulde) + H2O2 = RS-S=OR (Sulfoxide)
Bioaugmentation is another sustainable
approach to odor control. In this process,
macronutrients and in some cases competitive
microorganisms are introduced into a
system which promotes the growth of
non-odor producing species. These species
effectively compete with the anaerobic sulfur
metabolizing organisms reducing or eliminating
the production of hydrogen sulde and
mercaptans. A common example of this is
the use of nitrate addition to organic waste
streams. Nitrate functions in two distinct ways,
through direct chemical oxidation of Hydrogen
Sulde and through a metabolic process via
sulphur-oxidizing denitrifying bacteria such as
Thiobacillus denitricans and Thiomicrospira
denitricans. While commonly used for odor
control in municipal sewers, the petroleum
industry is now beginning to implement
nitrate-based microbial treatment technology
for both the prevention and removal of
sulde from reservoirs, produced water,
pipelines and gas storage reservoirs, as well
as to help with increasing oil recovery. Anue
Water Technologies is developing enhanced
bioaugmentation technologies as part of its
focus on sustainable odor control. These
enhanced technologies overcome some of the
limitations of current augmentation methods
and promote the further use of sustainable
chemistries.
The need for “environmentally friendly”
methods is being recognized as not only good
but necessary for safety, security and health.
The trend to nd sustainable technologies
in odor control continues to grow with old
technologies nding new applications and new
technologies emerging. To meet the needs of
regulatory requirements into the future, greener
solutions offer a more cost-conscious, long-
term path to success.
Tonya Chandler is the VP
of Sales and Marketing for
Anue Water Technologies.
John Richardson is a
consultant working with
Anue Water in the Oil and
Gas industry.
Anue Geo-Membrane systems eliminate odors in all shapes and sized applications
Call 1.800.988.8033 and mention OILMAN for special event pricing.
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your brand’s sales-enablement curve – a critical driver to growth and revenue success!
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Oilman Magazine / September-October 2019 / OilmanMagazine.com
14
OILMAN COLUMN
Comparing Oil Superpowers: No Match?
By Eugene M. Khartukov
Last year, Russia and the USA produced
respectively some 11.16 and 10.96 million b/d
of crude oil and lease condensate or more
than any other nation across the world (even
more than the traditional but now decrepit oil
heavyweighter Saudi Arabia (10.425 million
b/d in 2018). Actually, this seems to be the
only practical coincidence as all other patterns
of these two countries’ oil business are quite
different.
First, let’s compare their available oil statistics
in detail. For this purpose, we take 2018 data
for not only the whole national oil industries,
but also for the largest and one of the smallest
integrated public oil companies in these
countries
(Table 1).
Just to compare, historians say that the rst oil
was produced through a borehole in the USA
in 1859 while in the Russian Empire – back in
1846 at the shallow Bibi-Heybat Bay northeast
of Baku (Azerbaijan) and within boundaries of
the modern Russia – in 1864 in Kuban’, near the
village of Kievskoye, on a shore of the Kudako
River.
Annual oil (crude oil + lease condensate)
production in the USA experienced a decrease
from some 9.6 million b/d in 1970 down to 5
million b/d in 2008 and since then was rising
thanks to tight-oil (shale oil) developments
and has neared 11 mb/d in 2018. Likewise, in
Russia annual oil output was historically also
far from stable: it reached over 11.5 million
b/d in 1987 and dropped down to 6.1-6.3
million b/d in 1995-1998 (mainly due to the
total disorganization of the national petroleum
industry after the breakup of the USSR). Since
then it fairly steadily rose and has reached 11.16
million b/d in 2018. Below we present a picture
with monthly oil production in Russia and the
USA as well as in Saudi Arabia (for comparison)
in the period of 1998-2018
(Chart X).
At any rate, the oil industry plays a much more
important role in Russia than in the USA:
according to the CIAs Directorate of Analysis
(DA), oil contributes over 15 percent of
Russia’s 2018 GDP and only less than 1 percent
of the U.S. In turn, according to Raiffeisen
Bank’s estimates, in 2018 payments of mineral
extraction tax (MET) on crude oil and gas
condensate amounted to 2.8 trillion Rubles
(over US$45.4 billion) and accounted for nearly
20 percent of total receipts of Russia’s federal
budget.
U.S. oil companies are given the ability to defer
tax payments to the U.S. Federal government
– it is estimated by American economists that
the 20 largest oil and gas companies may defer
payments on up to half of their federal income
taxes. These companies end up paying less than
12 percent of their pre-tax income, which is 23.3
percentage points lower than what is required
of most other corporations. The bulk is borne
by the four largest companies – ExxonMobil,
ConocoPhillips, Occidental and Chevron. These
Indicator USA ExxonMobil
Hess/Amerada
Petroleum
Russia Rosneft Russneft
Start of Oil Production
Year
1859
1870
(Standard Oil)
1919 1864 1993 2002
Market Capitalization,
in US$ billion
345 (4/18/2019)
14.17
(04/25/2019)
66
(12/31/2018)
2.47
(12/29/2018)
Operating Revenues,
in US$ billion
279.3 6.47 151.9 2.8
Number of employees, in
‘000; annual average
71.0 2.075 295.8 10
Oil Production (incl. lease
condensate), in mln b/d
10.96 1.65
0.245 (excl/Libya;
oil + gas; boe/d)
11.16 4.67 0.15
Finding & Development
Costs (FDC), in US$/boe
3.6E
(1)
8.2 $0.3E (in $/Mcfe) 10-16E 2.2-2.7E (2) 12-16 (2)
Net Production Cost, in
US$/boe
40E (1) 11E (3) 13E
15-20
(4)
3.1 15-20 (4)
Renery Thruput, in
mln b/d
17.28 4.3E – (5) 5.74 2.3 0.1E
State Control of Oil
Production, in wt.%%
0 0 0 34.73 75.16 0
Degree of Oil Taxation,
in % of sales oil price or
revenues
45E 40.3 1.62 70E 4.2 0.34
Direct Taxes Paid to
Own Country’s Federal
Budget, in US$ billion (6)
0.095
45.4E
(7)
0.4E 0.1E
Net protability (8), in
%%
10.28
(9)
9.2
15.73 (average for
2014-18)
20E 14 21
Table 1. Indicators of USA and Russia’s Oil Industries in 2018
(1) Average for all oil/gas-producing companies in the USA. (2) In Russia, for crude oil only, in US$/b. (3) In the USA. (4) Average for
Russia (and all oil-producing companies), for crude oil only, in US$/b. (5) In January 2012 the 350-650 kb/d HOVENSA renery, located
at: St. Croix in the United States Virgin Islands and 50% owned by Hess Corp. thru its joint-venture with Petroleos de Venezuela, S.A.
(PDVSA), was closed down (for environmental reasons) but may restart in 2019. (6) For crude oil; paid in early 2019 for 2018; excluding ad
valorem taxes and export duties; income and production taxes on oil companies in the USA. (7) Payments of MET on oil in 2018. (8) ROE
(return of net income on equity – in line with the GAAP). (9) For integrated petroleum operations.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
15
OILMAN COLUMN
companies paid 85 percent of the group’s income
tax, while smaller companies paid a much smaller
percentage – less than 4 percent of their total
incomes in taxes. Energy major Chevron, having
earned more than $4 billion in 2018, absolutely
legally paid last year zero federal income tax, and,
according to the Washington-based Institute on
Taxation and Economic Policy (ITEP), generally
enjoyed an effective tax rate of minus 4 percent.
EOG Resources, Occidental Petroleum and
Kinder Morgan also paid no federal taxes and,
according to ITEP, could boast effective tax rates
for 2018 respectively of -7, -1 and -1 percent.
Generally, as it is well known, the IRS current
system is designed in such a way that the more a
taxpaying business entity annually earns the less
of income taxes it relatively pays – consequently,
the U.S. Big Oil gains prot even here.
Large U.S. oil companies also receive
subsidies
in the form of tax credits and exemptions. Oil
companies have been able to avoid paying taxes
on expenditures associated with the nebulous
term “intangible drilling costs” since 1916.
Intangible drilling costs can encompass fruitless
efforts to drill in new locations, as well as costs
associated with new equipment or drilling
infrastructure. These are huge sources of E&P
capital expenditures.
Also, oil production from certied deep wells
and horizontal wells in the States is now exempt
from severance tax for a period of two years or
until payout of well costs, whichever occurs rst.
Likewise, Russian oil companies have a lot of
economic privileges. Russia’s oil taxes are among
the highest in the world. They mainly consist of
a mineral extraction tax (MET) and an oil export
duty, in addition to the corporate income tax
(20 percent), a value-added tax (20 percent), and
tax on subsoil use required from oil companies.
While, on the average, a current taxation of the
Russian oil is estimated at around 70 percent
of sales oil price, Rosneft, the country’s largest
oil producer, which exploits major and highly
productive oil elds and has earned nearly
US$134 billion in 2018, has paid for 2018 only
estimated US$ 0.4 billion in direct taxes or less
than 3 percent of its earnings, and Russneft,
Russia’s smallest integrated oil company, has
recorded for 2018 US$2.8 billion in revenues and
only US$0.1 billion in taxes (paid in early 2019).
And this is not surprisingly, as only in 2018 the
company has obtained from the government
more than 10 billion Rubles (over US$160
million) in the form of MET breaks.
Whereas the oil industry in the States is fully pri-
vate and free of governmental regulations, except
for those concerning conservation of nature
and natural resources, health safety and technical
standards (like bans on drilling and laying pipe-
lines, MAOPs, tanker double-hulls and the like),
the Russian oil business – even after its massive
and all-out privatization back in the 1990s – is
still under considerable control of the State. In
particular, the Russian government or the Re-
public’s authorities now control 24.2 percent of
Slavneft, almost 30.45 percent of Tatneft, 47.85
percent of Gazprom Neft (former Sibneft),
75.16 percent of Rosneft (the nations leading oil
producer), and over 82.66 percent of Bashneft.
This means inter alia that over 34.7 percent of
national oil production (including lease conden-
sate) in 2018 (or more than 193.03 million tonnes
out of nearly 555.84 mmt) was controlled by
Russia’s State. And here we have not mentioned
the country’s oil export, which is completely con-
trolled by the government as Transneft, which
handles these exports, fully (100 percent) belongs
to the former as far as Transneft’s voting shares
and privileged ones are concerned.
Finally, unlike their American colleagues, Russian
oil companies are really “fat cats,” enjoying, on
the average, around 20 percent of net ROE as
compared to a negative one-digit net protability
of the U.S. oil business in the relatively-low-oil-
price 2018 or as modestly as -3.52 percent of the
average net ROE for 2018 – at least, statistically.
All in all, common people in both the USA and
Russia are proud of their national oil industries,
but hate the latter for the huge untaxed prots.
This is, perhaps, another similarity but no
more…
Eugene Khartukov is a
Professor at Moscow State
University for International
Relations (MGIMO), Head
of Center for Petroleum
Business Studies (CPBS)
and World Energy Analyses
& Forecasting Group (GAPMER) and
Vice President (for the FSU) of Geneva-
based Petro-Logistics S.A. Khartukov has
authored and co authored over 320 articles,
brochures and books on petroleum and
energy economics, politics, management, and
oil and gas in the FSU, Russia’s Far East, the
Caspians, Europe, the OPEC, ME and Africa.
Participated as a speaker and/or a session
chairman in more than 170 international
energy, oil and gas and economic fora.
Chart X. Monthly Production of Crude Oil and Lease Condensate in Russia, the USA,
and Saudi Arabia in 1998-2018, in million b/d – Source: U.S. Embassy Iran
Oilman Magazine / September-October 2019 / OilmanMagazine.com
16
OILMAN COLUMN
Maximizing Flame and Gas Detection
Effectiveness: The Case for Optimizing
Detection Coverage over Device Availability
By Julian Yeo
FGS (Flame and gas detection systems) are
increasingly critical to the protection of
people, the environment, and, ultimately, the
protability of oil and gas operations. But
despite the application of seemingly best
implementation practices, many leaks go
undetected for unnecessarily long periods of
time. Part of the problem relates to judging
mitigation effectiveness based primarily on
device availability without adequate factoring
of coverage density. Effective detection is not
possible, however, unless both device availability
and coverage density are taken fully into account.
FGS Basics
An FGS typically consists of at least four main
components: a ame detector, a gas detector,
a communications interface and a control
component such as a PLC. In the classical
bowtie model of safety protection (Figure 1)
ame and gas systems are traditionally classied
to the right, with other measures implemented
to mitigate damage after a toxic or combustible
substance leak has occurred. This contrasts with
SISs (Safety Instrumented Shutdown systems),
which are classied to the left side, with other
measures companies take to prevent accidents.
Prevention vs. Mitigation
A common method for assessing effectiveness
is to identify the causes of accidents and isolate
them into protective layers guided by what
is known as a LOPA (Layers of Protection
Analysis), which is commonly used in the design
of SIS (Safety Instrumented Systems). A LOPA
study, for example, might reveal the need to shut
down a feed pump so that an overpressure will
not cause leakage of a toxic or combustible gas
downstream in the process.
While this type of analysis
applies well to prevention
techniques on the left side
of the bowtie, it may not
be as helpful for mitigation
if the problem spreads past
any safety barriers that are
typically represented on the
right side of the bowtie.
“Fire and gas-related
failures do not necessarily
map to a historical linear
model in which one
barrier eld kicks over to
the next barrier eld and
so on. Instead, incidents
occur when several latent lagging barriers
converge with a set of process conditions at
one time,” said James McNay, a lead consultant
for MICROPACK, a provider of re and gas
mapping solutions.
As the ISA (International Society of
Automation) describes the difference in
its “Guidance on the Evaluation of Fire,
Combustible Gas and Toxic Gas System
Effectiveness,” LOPA typically considers only
two possible states for a candidate protection
layer: success or failure. If the protection layer
fails, a hazard could occur. If the protection
layer succeeds, the propagation of the hazardous
event is halted and no hazard results. While
this is an appropriate assumption for many
independent protection layers, it is not suitable
for FGSs since they are not intended to stop the
hazardous event from occurring. Instead, the
objective of an FGS is to prevent an already bad
situation from getting worse (i.e., mitigation).
Mitigation effectiveness, then, is mostly about
detection. If the gas leaks slowly over time,
for example, and doesnt reach the detector’s
alarm threshold, it doesn’t matter how reliable
the component itself is; if the detector doesn’t
sense the leak at all, device location becomes
the critical issue, not performance. The denser
the coverage, the greater are the chances of the
detector sensing a leak.
Effectiveness of an FGS is a function of the
percentage of the potentially hazardous areas
they cover and their performance in detecting
anomalies in those areas, as represented by the
following formula:
Effectiveness = Coverage x Availability
Where: Effectiveness refers to the ability of
the detector to mitigate a problem, coverage
is the range of the area in which the detector
can sense gas or ames, and availability is the
performance of the detector measured in
response time and availability
While this equation shows that coverage is
as important as availability, FGS systems are
too often solely judged on availability without
considering coverage as an equal contributor.
Cost aside, it is easier to increase coverage
density by adding more devices than increase
device availability, which is inherent to the
product design. Investing in the coverage side of
the equation can thus have a signicantly greater
impact on effectiveness than overspending on
Photo courtesy of PICHIT BOONHUAD – www.123RF.com
Oilman Magazine / September-October 2019 / OilmanMagazine.com
17
OILMAN COLUMN
the system availability side of the equation.
Real-world Data
Results of a study presented at the Ninth
International Seminar on Fire and Explosion
Hazards help illustrate this. The researchers set
out to understand why 60 percent of gas leaks
on offshore platforms went undetected while
many platforms reported they were applying
best practice performance coverage of 80 to 95
percent.
Analysis of 18 offshore platforms, however,
showed an average coverage of only 57 percent.
1
Although the researchers did not provide
availability data for the actuators, if we
hypothetically max out the availability
to 100 percent, we still end up with an
effectiveness number of only 57 percent.
However, if we increased coverage
to 80 percent (the low end of
the stated performance targets), it would not be
difcult to achieve a much higher effectiveness
of 80 percent.
This shows that, if maximizing effectiveness
is the goal, increasing the coverage density has
more impact than increasing device availability. A
detection device with SIL 2 level availability and
a coverage factor less than 100 percent is not a
system with SIL 2 effectiveness.
The sooner the detection system detects a loss
of containment, the more effective it will be
in mitigating the problem. And how fast a leak
is detected depends more on coverage than its
response time.
FGS Role in Accident Prevention
Thinking of an FGS system as for mitigation
only also overlooks the potential role that the
system can play in prevention. Leak detection,
for example, can identify small but credible leaks
that could indicate mechanical integrity failures
such as corrosion, leaks which are typically below
the threshold that instrumented systems might
discover. Users with a low tolerance for risk
might seek to guard against all possible major
accident scenarios by maximizing coverage
of gas detectors, alarm and site emergency
planning. Users with a higher tolerance for
risk, on the other hand, might limit the gas
detector placement to locations where the gas
from processes would exceed a predictable
concentration level. The choice is between
putting your plant and environs in jeopardy and
spending heavily for protection you may or may
not need.
Resolving the Dilemma with Wireless
Today, advanced density mapping combined
with advancements in wireless communications
and battery life make such tradeoffs less severe.
When faced with costs of up $50,000 to wire
up a leak detection solution on an offshore
platform, for example, risk tolerance is a major
factor in accident mitigation. But now that it is
economically possible to implement up to ve
wireless gas detectors (i.e., increased coverage
density) for the total installation cost of one
wired detector (i.e., better device availability),
safety no longer needs to be compromised in the
name of cost.
1
Hilditch R., McNay J., “Addressing the Problem of Poor
Gas Leak Detection Rates on UK Offshore Platforms.”
Proceedings of the Ninth International Seminar on Fire and
Explosion Hazards. (ISFEH9), pp. 1198-1209. Saint-Petersburg
Polytechnic University Press. ISBN:978 5-7422-6498-9
WirelessHART gas detectors, such
as this Vanguard detector from
United Electric Controls, improve
safety for oil and gas operations by
eliminating the need for wiring, making
it signicantly less expensive to increase
coverage density. Up to ve Vanguard wireless
detectors can be implemented for the total cost of
one wired detector.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
18
OILMAN COLUMN
Pink Petro Founder & CEO Tells Congress
the Future of Energy is All-Inclusive
By Rebecca Ponton
Five short years after its founding, the origins
of Pink Petro have become part of oil and gas
folklore. At the time, then 40-year-old founder
& CEO Katie Mehnert was working in HSE at
BP. While ying back to her home in Houston
from a business trip to London, she and the
older gentleman seated next to her struck up a
conversation which culminated in him asking
the Million Dollar Question, “What’s a pretty
young lady like you doing in a dark dangerous
business like oil?”
Mehnert recalls feeling “unhinged,” her mind
racing.
“I thought, ‘You’re in the business and you’re
saying ‘dark and dangerous.’ Stop. You’re
making it worse.’”
Her next thought was: “I’m going to x this.”
She jotted some ideas on a cocktail napkin
and by the time she disembarked, her mission
for Pink Petro, the focus of which is to close
the gender gap in energy, had already started
taking shape. The choice to use the color pink
was intentional, although the organization has
never been exclusionary and counts men among
its membership. (She later created Experience
Energy, a job-sharing platform.)
Mehnert says, “We’re not a womens network,
but I felt like the womens niche was important
because there are so few of us. Everyone can be
a valuable part of this conversation.
The entrepreneurial journey isn’t for the faint-
hearted. After investing her own savings in
the start-up, there has been the quest to nd
sponsors – and over the years, she has amassed
some of the biggest names in industry. There
has been personal loss: her home and ofce
were ravaged by Hurricane Harvey. And there’s
always the struggle to nd balance as a working
wife and mother of an eight-year old daughter,
who is Mehnert’s inspiration to keep ghting
when things get tough.
Then came the call that she hopes will change
everything. One Friday in late February, her
phone rang and a Congressional staffer asked
if she would be willing to testify that coming
Tuesday before the House Energy Sub-
committee at a hearing entitled “Clean Energy
Infrastructure and the Workforce to Build It.
Mehnert said her rst thought was, “Is this for
real?” Her second thought was, “No.
As an entrepreneur of a growing start-up, you
have to say ‘yes’ to the right things and ‘no’ to
everything else, and I was in ‘no’ mode,” she
says. After consulting Susan Hodge, a former
executive at Shell, someone Mehnert admires
and considers a mentor, as well as Melody
Meyer, who is a board member of BP and
NOV, she changed her mind.
With her husband, an attorney for a major oil
company, preparing for an out of town business
trip at the same time, Mehnert seized upon the
opportunity for her daughter to see her mom
in action and witness the democratic process at
work. (Incredibly, a “eld trip” to the nations
capital for a real-life civics lesson was counted
as an unexcused absence from school!)
“I felt like my job was to represent the energy
industry, the private sector opinion – that
business opinion, that constituent opinion – so
that legislators would consider the fossil fuel
industry to be part of the conversation.
“I’m a big believer in E3 – equality + environ-
ment (let’s face it, energy and environment are
interchangeable; one is a meta fact of the other)
= the new economy. My belief is we need all
people and all forms of energy at the table
when it comes to this energy transition.
Mehnert admits going to Washington was
somewhat nerve-wracking because of the nega-
tive perception often associated with the fossil
fuel industry.
“We havent done enough to communicate and
own our story. We’ve done too much to accept
the narrative and not proactively speak about
what we do. The oil and gas industry is why
we have these alternative forms of energy; it
powers everything we do. It’s going to take all
forms of energy to lower emissions and drive
a low-carbon future to nd what works best
for America, and we need to do this in a way
that involves women and underrepresented
populations in the workforce.
She wanted Congress to understand that
diversity in the industry includes not just gender
or race or ethnicity, but also skill sets and job
opportunities that don’t always necessitate a
four-year college degree.
All forms of energy need to come together to
look at the workforce challenge. There are new
ways of working – AI and big data and robotics
– all of which are going to play a role in the
future. If we’re not reaching my eight-year old,
who understands the cell phone, but doesnt
understand how it’s powered, we’re going to
have a problem. If were worried about meeting
the world’s demand for energy while lowering
our carbon footprint, that’s meaningful and
exciting work,” she says, and it is incumbent on
industry to attract diverse, post-Boomer talent.
Mehnert stresses that energy and equality are
not – should not – be partisan issues. “I would
love to meet AOC (Andrea Ocasio-Cortez, Rep.
D-NY); I’d love to meet with Ivanka Trump.
I think there are women on both sides of the
aisle that have interesting ideas I would like to
explore. I like to say I bleed purple. I’m willing
to meet with anyone who wants to talk about
how we can bring people more toward the
middle, so we can get closer to nding answers
to solve these challenges.
She believes her testimony was well-received
and, in fact, Rep. Joe Kennedy, III (D-MA), sent
follow-up questions which Mehnert pitched
to the Pink Petro and Experience Energy
communities. “I wanted them to feel like they
were part of the process.” She says she has no
interest in politics at this time, but has no doubt
she will return to Capitol Hill and wants to take
more diverse voices with her.
While Mehnert says men started Energy 1.0, she
believes women and minorities have increasing
opportunities in 2.0. Knowing that greater di-
versity will bring positive change to the industry
is part of what drives her. “We’ve got to make
the industry a more highly sought-after choice.
This is personal for me. I want my daughter to
know this is a meaningful place to work.
Rebecca Ponton has been a journalist
for 25+ years and is also a petroleum
landman. Her book, Breaking the GAS
Ceiling: Women in the Offshore Oil and
Gas Industry (Modern History Press), was
released in May 2019. For more info, go
to www.breakingthegasceiling.com.
Mehnert’s testimony can be read in its entirety here:
https://energycommerce.house.gov/sites/demo-
crats.energycommerce.house.gov/les/documents/
Mehnert%20TESTIMONY.pdf
Katie Mehnert, center, and her daughter pose with members
of the Energy Subcommittee of the House Committee on
Energy and Commerce. Photo courtesy of Katie Mehnert
Oilman Magazine / May-June 2016 / OilmanMagazine.com
2
Top 10 Houston-Area
Oil and Gas Equipment and
Services Companies
2018 Companywide Revenue: $32.81 Billion
Total Companywide Employment: 100,000
5599 San Felipe St., 17th Floor,
Houston, TX 77056
SLB.COM • 713-513-2000
2018 Companywide Revenue: $4.91 Billion
Total Companywide Employment: 25,000
601 Jefferson St., Houston, TX 77002
KBR.COM • 713-753-3800
2018 Companywide Revenue: $24 Billion
Total Companywide Employment: 60,000
3000 N. Sam Houston Pkwy. E.,
Houston, TX 77032
HALLIBURTON.COM • 281-871-4000
2018 Companywide Revenue: $2.2 Billion
Total Companywide Employment: 6,399
3990 Rogerdale Rd., Houston, TX 77042
CJENERGY.COM • 713-325-6000
2018 Companywide Revenue: $8.45 Billion
Total Companywide Employment: 35,063
10000 Richmond Ave., Houston, TX 77042
NOV.COM • 713-346-7500
2018 Companywide Revenue: $1.91 Billion
Total Companywide Employment: 8,600
11911 FM 529, Houston, TX 77041
OCEANEERING.COM • 713-329-4500
2018 Companywide Revenue: $6.7 Billion
Total Companywide Employment: 31,900
757 N. Eldridge Pkwy., Houston, TX 77079
MCDERMOTT.COM • 281-870-5000
2018 Companywide Revenue: $1.36 Billion
Total Companywide Employment: 4,300
4444 Brittmore Rd., Houston, TX 77042
EXTERRAN.COM • 281-836-7000
2018 Companywide Revenue: $22.88 Billion
Total Companywide Employment: 66,000
9110 Grogans Mills Rd., Houston, TX 77380
BAKERHUGHES.COM • 281-363-6000
2018 Companywide Revenue: $2.13 Billion
Total Companywide Employment: 6,600
1001 Louisiana St., #2900, Houston, TX 77002
SUPERIORENERGY.COM • 713-654-2200
Source: Houston Business Journal - June 2019 - Ranked by 2018 Companywide Revenue
Oilman Magazine / May-June 2016 / OilmanMagazine.com
2
Top 10 Houston-Area
Oil and Gas Equipment and
Services Companies
2018 Companywide Revenue: $32.81 Billion
Total Companywide Employment: 100,000
5599 San Felipe St., 17th Floor,
Houston, TX 77056
SLB.COM • 713-513-2000
2018 Companywide Revenue: $4.91 Billion
Total Companywide Employment: 25,000
601 Jefferson St., Houston, TX 77002
KBR.COM • 713-753-3800
2018 Companywide Revenue: $24 Billion
Total Companywide Employment: 60,000
3000 N. Sam Houston Pkwy. E.,
Houston, TX 77032
HALLIBURTON.COM • 281-871-4000
2018 Companywide Revenue: $2.2 Billion
Total Companywide Employment: 6,399
3990 Rogerdale Rd., Houston, TX 77042
CJENERGY.COM • 713-325-6000
2018 Companywide Revenue: $8.45 Billion
Total Companywide Employment: 35,063
10000 Richmond Ave., Houston, TX 77042
NOV.COM • 713-346-7500
2018 Companywide Revenue: $1.91 Billion
Total Companywide Employment: 8,600
11911 FM 529, Houston, TX 77041
OCEANEERING.COM • 713-329-4500
2018 Companywide Revenue: $6.7 Billion
Total Companywide Employment: 31,900
757 N. Eldridge Pkwy., Houston, TX 77079
MCDERMOTT.COM • 281-870-5000
2018 Companywide Revenue: $1.36 Billion
Total Companywide Employment: 4,300
4444 Brittmore Rd., Houston, TX 77042
EXTERRAN.COM • 281-836-7000
2018 Companywide Revenue: $22.88 Billion
Total Companywide Employment: 66,000
9110 Grogans Mills Rd., Houston, TX 77380
BAKERHUGHES.COM • 281-363-6000
2018 Companywide Revenue: $2.13 Billion
Total Companywide Employment: 6,600
1001 Louisiana St., #2900, Houston, TX 77002
SUPERIORENERGY.COM • 713-654-2200
Source: Houston Business Journal - June 2019 - Ranked by 2018 Companywide Revenue
Oilman Magazine / September-October 2019 / OilmanMagazine.com
20
OILMAN COLUMN
Automated Pipe Welding Emerges from
“Perfect Storm” of Technology Advances
By Mitch Dupon
Automated pipe welding has been
little more than a pipe dream for
decades. But advances in several
critical technologies, including
sensors, AI (Articial Intelligence),
and collaborative robotics, have
converged to create a perfect storm
of opportunity—and it’s happening
just in time.
The shortage of pipe welders in
the U.S. has become a chokepoint
for the oil and gas industry.
Aging generations of experienced
welders are retiring twice as fast as
companies can nd replacements,
younger welders arent entering
the eld, and a steady cadence of
layoffs has driven many experienced
workers to leave the industry for
more dependable career paths.
The impact extends beyond the
oilelds, however, with the shortage
of trained welders also impacting
the cost and availability of new
equipment. The shortage of pipe
welders leads to higher salaries
and overtime, and suppliers are
struggling to meet demand without
enough skilled workers. Oil and gas
companies have few options: buying
equipment from overseas vendors
adds costs and lead time that urgent
projects can’t absorb.
In the U.S., the situation is being
addressed by moving fabrication to
specialized pipe shops to increase
efciency and output over sending
workers into the eld, and taking
advantage of robotic automation
for processes that are difcult to
ll with human workers. But pipe
welding is one of the last tasks to
be automated. The dimensional
variation of standard V butt weld
joints requiring full penetration,
single-sided welding necessitates
intelligent sensing and adaptive
control to ensure the long-term
strength and viability of welds in
the eld, reneries, or factories.
Until now, the technologies to
accomplish that werent viable.
Sensors, Articial Intelligence,
and Collaborative Robots
Converge
The convergence of several critical
technologies has changed that.
Today’s laser sensors are small,
portable, precise, and affordable
enough to be used for challenging
tasks such as scanning a pipe’s
root opening for a weld. Powerful
articial intelligence software is
now accessible to quickly process
the sensor data and generate an
automated welding program. The
nal piece of the puzzle is a small,
exible, and safe collaborative robot
(“cobot”) that can work alongside
a human worker and perform
consistent, high-quality welds.
ARC Specialties, a Houston-based
developer of welding solutions,
debuted the rst Articial
Intelligence Pipe Welding (AIPW)
system at the Offshore Technology
Conference in May 2019. The
AIPW pre-scans the root opening
using a Micro-Epsilon 2D laser,
then the software uses the data
to generate the robot path and
welding parameters. The system
automatically compensates for gap
variations the same way a human
welder would, by making changes
in oscillation, torch position, travel
speed, and welding conditions.
A Universal Robots 6-axis UR5
robot positions the torch over a
tack weld to start the arc to ensure
100 percent root weld acceptance.
Fill and cap pass programs are
optimized to ll the groove using
user-selectable weave or stringer-
bead welding techniques. The UR5
is small enough to be portable
yet still allows full freedom of
motion for both the laser scanner
and welding torch. The AIPW
uses the Miller Auto Continuum
welding power supply to weld
the root with regulated metal
deposition (RMD), then switches
to pulsed spray for the ll and
cap passes. This combination of
gas metal arc welding techniques
maximizes welding productivity
while producing X-ray quality, full-
penetration pipe welds.
Historically, ARC Specialties
declined these tough jobs because
joint t-up was never repeatable.
President Dan Allford remarks
that in the past, “Only human
welders with a ‘golden arm’ able
to compensate for variation in
root openings, weld center lines,
and groove volumes could handle
this challenge.” But with new
technologies available and no labor-
shortage solution in sight, ARC
Specialties developed an intelligent
machine that incorporates the
extensive pipe-welding knowledge
of the company’s team of certied
welders, along with full robotic
motion and welding control.
The collaborative aspect of the
industrial cobot allows a human
with varying levels of experience to
work alongside the welding system,
establishing the initial weld position
and assuring quality throughout the
process.
Welding in the shop allows the pipe
to be rotated for easier and more
consistent access to the weld, and
the robot can work continuously,
producing much higher duty
The SnapWeld Collaborative Robot Welding package a UR cobot-assisted, interactive welding
system that can be deployed easily and exibly in existing welding booths.
The UR5 robot becomes the “golden arm” for pipe welding and is safe for collaborative work
alongside human workers.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
21
OILMAN COLUMN
cycles than human workers, as
well as greater repeatability and
precision. Moving pipe welding
out of the eld and automating
the process in a shop environment
allows manufacturers to optimize
both the robot and employees:
The AIPW system becomes a
force multiplier of the skill and
production capability of the welder.
Experienced welders can apply
their knowledge by overseeing
automated welding processes
without the physical demands of
manual welding. And new welders
can be trained on the system as well,
with the opportunity to observe
the robot’s consistent, perfect
technique to learn the process. This
is a key advantage of collaborative
robots: multiplying the productivity
of employees by moving them to
higher-value tasks while the robot
improves output, quality, and
consistency on processes that are
difcult to ll with human workers.
The portability and safety of the
cobot means the AIPW can easily
be skid-mounted and moved
as needed, providing valuable
exibility. When the robot is
freed from the constraints of one
location in the shop and can work
in any booth beside a welder, it
becomes a tool rather than a xed
system. The tool is not the axis
around which production orbits,
which is the case in traditional
automation.
The Rise of Cobots In Welding
Applications
The AIPW is the latest in ARC
Specialties’ collaborative welding
systems, following the success of
its SnapWeld collaborative MIG
welding system that takes full
advantage of cobot features.
Collaborative welding solutions
remove typical automation barriers
to entry, such as cost, complexity,
and space. In exchange for lower
payload capacities compared to
traditional robots, cobots offer
several benets that support
their increasing use in welding
applications. Cobots, which make
up the fastest-growing segment
of robotics today, are
much smaller, lighter,
and less expensive
than traditional robots,
and have built-in
safety mechanisms
that allow them to
be used alongside human workers
without safety fencing (after a
risk assessment). Lightweight
cobot welders can be mounted on
tabletops, carts, or skids, can be
hung from ceilings, or installed into
existing manual welding booths,
eliminating the need for costly new
robotic cells. This offers far greater
exibility than manual welders
or traditional xed robots. Many
designs can be deployed 50 percent
faster than traditional robots and
often cost less than an annual
employee wage.
Unlike traditional robots that
require engineer-level programming,
cobots are designed for simple
programming with a touchscreen-
based interface. Welding tasks can
be programmed in as little as half
an hour by workers who have no
previous experience, and programs
can be saved and reused, eliminating
the expense of ongoing integration
support. In many cases, a worker
can reprogram a cobot simply by
moving the robot arm through
the desired motions; the cobot
remembers the instruction and
repeats it independently, without
the need for new code. That
allows manufacturers to easily and
inexpensively adapt to temporary
jobs or burst production during
busy seasons. The exibility and
ease-of-programming of cobot-
based welding systems make them
especially well-suited for low-
volume/high-mix environments,
as well as custom or small-
template welding processes. While
collaborative robots are designed for
easy programming, they also have
full capabilities for sophisticated
integrations, and with high accuracy
and repeatability, these systems
can also handle long runs with
consistent quality.
While traditional robot work
cells often require considerable
customization, the exibility of
a cobot translates to signicantly
faster return on investment that is
often measured in weeks or months.
This fast ROI is a function of
the technology’s lower capital and
minimal disruption to a factory
layout, and by multiplying the value
of human assets, freeing workers to
tackle higher-productivity processes
and acquire new skills.
The Time for Automated Pipe
Welding Has Come
Automated welding solutions
result in higher duty cycles and
much more consistent repeatability
than manual welding. This
increases output and quality and
can signicantly decrease post-
weld clean-up, as well as control
the usage and costs of welding
consumables. While pipe welding
has been elusive until now, the
convergence of key technologies
means the industry nally has a
viable, safe, and cost-effective
approach to addressing the welding
labor shortage, both in the eld and
in the shop.
Mitch Dupon is
an application
development
engineer at
Universal
Robots,
with a degree in graduated
welding engineering from
Conestoga College in Canada.
His automation experience
spans roles at Panasonic
Factory Automation, KUKA
Robotics, and Universal Robots.
During that time, he has
traveled the world installing
and implementing welding
automation.
The Articial Intelligence Pipe Welding (AIPW) system from ARC Specialties combines a Micro-Epsilon laser scanner, articial intelligence
software and a Universal Robots six-axis UR5 robot arm.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
22
OILMAN COLUMN
Oil and Gas Industry Trends: Safety and
Technology Improvements
By Ria Edens
The landscape of players in the oil and gas
industry has changed over the last two decades
along with some technology, processes, and
sources. Fracking in shale plays and exploration
in oil sands have moved oil and gas jobs into new
areas and uncovered new safety risks. Meanwhile,
downstream facilities have been tasked with
increasing safety and efciency while rening
from these new sources.
When the industry began to experience the
production slump from conventional sources,
peak oil predictions drove the move to horizontal
drilling in existing wells and exploration into shale
plays like the Permian Basin, Marcellus, and the
Bakken along with Canadian oil sands. The idea
was to have these unconventional sources ll the
gap without leading to serious impacts on the
economy.
The advent of horizontal drilling and fracking
did boost production, and the opening of access
to new source areas both on and offshore led
to a huge boom in U.S. oil and gas production.
Fears about the damage recurring oil panics
would cause to the economy drove the U.S. to
assert control over the production of oil and
gas. Keeping control over production allows the
U.S. to have greater condence that declining oil
production in OPEC countries would not lead to
resource scarcity and price uctuations.
The effects of the dramatic rise in U.S.
production were not lost on traditional oil and
gas producing nations. To remain competitive,
these countries are innovating their systems
and processes from upstream to downstream
to regain their market share. Such innovations
involve updating old equipment to newer, more
efcient and advanced technology to improve
safety, increase revenue streams, advance
monitoring and measurement performance,
reduce inefciencies, and cut waste.
Upstream Improvements
Methane is an abundant greenhouse gas
whose upstream presence is ubiquitous.
Conventional well completions may involve
the venting (releasing) or aring (burning) the
gas. Of the two, aring is preferable, since it
converts methane, a very powerful greenhouse
gas to carbon dioxide, a less powerful one.
Environmental regulations - such as 40 CFR Part
98, Order 5, the Kyoto Protocol, ERCB Directive
017 - have long required the monitoring and
reporting of vented and ared gases to assess the
impact of drilling on the environment.
Newer initiatives such
as the Paris Agreement
aim to bring the world
into a sustainable low
carbon future - which
would require the
reduction of ared
gases as well as vented
gases. Some innovative
upstream processes, such
as Reduced Emissions
Completions (RECs) or
“green completions,” have
become ideal methods of
reducing most emissions
resulting from drilling.
Flowback from fracking is under pressure and
can result in a high-rate owback that had been
directed to open pits or large tanks in older
processes. A signicant amount of gas was
lost to the atmosphere from the pits and less
from enclosed tanks. Green completions allow
the owback – with the associated gases - to
remain enclosed within the system to contain or
capture the emissions. The captured emissions
can be processed and used as fuel gas on-site or
made ready for the pipeline. In this way, green
completions lead to higher protability at the well
site by using captured emissions as a secondary
revenue stream.
Flaring is still necessary when green completion
systems get overwhelmed by high pressured
owback and equipment failures. As a safety
precaution, the operators must be ready to are
gases to avoid catastrophic explosions.
In these instances, without the option to are
(the limited, safe, controlled burning of natural
gas at the well site), an oil well would have to
shut down. Shutting a well down is expensive and
time-consuming. It reduces the supply of oil and
raises production costs, which leads to higher
overall costs.
But gas ares are still wasteful and
environmentally harmful. Although aring had
generally been on the decline since 2002, ared
gas numbers were on the rise again in 2018,
according to World Bank’s Global Gas Flaring
Reduction Partnership.
It’s also important to note that Rystad Energy
estimates aring in the Permian and the
Bakken wastes more than 1.15 billion cubic
feet of natural gas. That exceeds the yearly gas
demand of nations such as Israel, Colombia,
and Romania. Imagine the revenue lost due
to wasteful aring if all shale plays were to be
combined into the estimates!
Midstream Improvements
Initiatives such as the World Bank’s Global
Gas Flaring Reduction Partnership works to
address the problem of wasteful aring. Their
focus is on supporting the development of
better infrastructure, technology, market, and
governance approaches to aring. Finding ways
for oil companies to capture and monetize the
gas is particularly promising.
To combat wasteful aring, thousands of miles
of new pipelines are being planned or built in
the U.S. alone. Even with pipelines, some drilling
rms still prefer to burn off the gas rather than
pay any pipeline fees. This is where state or fed-
eral regulations may play a role to reduce wasteful
aring. If the regulators deny aring requests,
create incentives to capture gases, or impose pen-
alties on non-safety related ared gases, a marked
reduction in ared gases will be seen.
Downstream Improvements
Demand at the gas pump and on the store shelf
for products made from crude oil, such as tires,
sunglasses and trash bags doesnt seem to be
going down. The world still needs these products,
even while fears persist about peak oil. Therefore,
producers in the Middle East - and other
downstream producers - are forced to increase
efciencies to make more out of (potentially) less.
Replacing antiquated equipment and
instrumentation in favor of more advanced
technologies and products has helped reduce
waste. When used in conjunction with system
updates, modern technology helps identify
Photo courtesy of Warawoot Nanta – www.123RF.com
Oilman Magazine / September-October 2019 / OilmanMagazine.com
23
OILMAN COLUMN
The rst International Energy Policy
Conference was held in 1992. One of the
speakers of the conference stated, “I think
most Americans would welcome messages
from an industry expressly committed to the
importance of what it does, condent in its
ability to manage risks, and willing to defend
its important work against extremist assault.
Most Americans understand the need for
secure supplies of affordable energy. And they
always embrace conviction.” This quote best
summarizes the importance of the conference,
and especially dialogue. The conference
theme and dialogue has been and continues
to be “striving for energy efciency and
environmental preservation.”
Since the inception of the conference, it has
hosted dignitaries, Fortune 500 companies,
industry experts, ambassadors, and delegations
to discuss energy efciency, environmental
preservation, and the whys, hows and solutions
of a national energy plan. The conference,
which launched in the Oklahoma City area,
has hosted events in Tulsa, Washington, D.C.,
Houston, Denver, and Dallas as well as other
cities throughout the U.S.
National Energy Talk: Present and Future
We found, for example, that our Facebook
page “America Needs America’s Energy” has a
following of over 22,000 people across the U.S.
Therefore, this is an example of an area where
National Energy Talk can complement the
industry and be an active voice on social media.
With the launch of National Energy Talk
(NET), what once was an annual conference
has expanded into a media-driven platform with
year-round engagement. Today, NET is helping
lead a national dialogue on energy issues, views,
and solutions through events, publications,
video, audio and online content. NET believes
in the power of people: “Nothing moves
without energy.
NET is National
National Energy Talk is a platform engaging
a national dialogue on energy issues, views
and solutions. We address the needs, plans
and issues that all types of energy face today.
Through discussion, we can create a national
energy vision.
Join the Talk
The founding principle of NET remains
steadfast: the availability of reasonably priced
energy is paramount to the economic and
business development both in the United States
and in other countries around the world. Your
involvement can help continue to bring about
this change.
A National Energy Conversation in the
Heartland
National Energy Talk ofcially launched on May
1st, 2017. Many thanks to Exploring Energy
Radio Show for airing the announcement and to
OILMAN Magazine and GTR Newspapers for
their great support through our columns!
The 2019 and 2020 plans are underway. Keep
up with the activities of NET (National Energy
Talk) by visiting the National Energy Talk page
on Facebook.
Future Goals
It is important that the message is national in
scope. Therefore, future goals include visits
in Washington, D.C., Houston and other U.S.
cities. As consumers and stakeholders of energy,
we must drive the process, evaluating how we
can best leverage our natural resources here at
home to ensure long-term energy independence
and security.
Future generations are depending on us.
America needs America’s energy!
The National Energy Dialogue Continues
By Mark A. Stansberry
Mark A. Stansberry
inefciencies or areas where processes can
be improved. However, no system can see
improvement without the right measurement
performance and high accuracy standards.
A system is only as good as the data it is
receiving from the ow, level, and temperature
measurement devices operating within it.
These systems can also improve safety at the
renery. A safe facility is paramount for worker
retention, lowering maintenance, and keeping
residents in surrounding communities happy.
Summary of downstream efciency or safety
issues:
The majority of materials on-site are ammable
materials that pose re or explosive dangers
Gas leaks also pose safety risks for both on-site
personnel and surrounding communities
Environmental problems caused from leaks,
ares, and vented gases
Lost revenue from leaks and inefcient systems
Key Take-aways
The oil and gas industry has seen a lot of changes
since horizontal hydraulic fracturing changed the
landscape of oil and gas production in recent
years. It has set the industry on a trajectory to
advance systems, improve efciencies, reduce
waste, and increase safety. The smoother the
process runs, the more prot there is to be had.
Manufacturers catering to the industry have
been along for the ride and have listened to what
operators need.
Manufacturers of devices used to measure or
monitor the ow and level of oil, gases, and
water have stepped up to improve features and
gain product approvals to increase condence in
overall system function once implemented.
Product approvals such as Class I, Div 1, ATEX,
and IECEx are essential to operator condence.
Likewise, approvals or certications of
manufacturers’ quality systems, such as ISO 9001,
let operators know that the manufacturer has
systems in place to continually improve practices
resulting in better functionality, less maintenance,
higher performance, and condence in the safety
of the overall system.
The implementation of modern devices and
equipment into oil and gas systems leads to
higher protability and a safer industry overall.
From upstream to downstream, the advances
are sending shockwaves of improvements that
benet the workers, the public, and the ones
looking to prot from it.
Ria Edens, Marketing
Communications Manager at
Fox Thermal, has a decade of
experience in technical writing,
marketing strategy, and market
development of industrial
mass ow measurement instrumentation.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
24
FEATURE
Emerging Technology:
Looking Toward the Future
By Sarah Skinner
Articial Intelligence, Machine Learning and
IoT are all tools that are barreling through the
oil and gas industry right now with a vengeance.
This industry is an unassuming recipient of such
advances, however they are not only embracing,
but growing exponentially due to the safety,
convenience and cost driven benets they offer.
Originally a world of pen and paper, rough
necks, drafters, engineers, geologists, you name
it. They are all being positively affected by the
emergence of such technology and it’s taking
the oil and gas industry by storm. So get your
umbrella, there are many options out there, lots
of terminology and some common goals – to
drive down costs, improve safety and project
forward into the future.
Terminology
The most important factor in purchasing
software is to be educated about it. Some of the
technological terms can run together and cross
wires occasionally, so it’s vital to know their
function and the benets they offer. Clarication
is necessary, because the terms are many times
used interchangeably and can create confusion.
Articial Intelligence (AI): the theory and
development of computer systems able to
perform tasks that normally require human
intelligence, such as visual perception, speech
recognition, decision-making, and translation
between languages.
Machine Learning (ML): the scientic study
of algorithms and statistical models that
computer systems use to perform a specic
task without using explicit instructions, relying
on patterns and inference instead. It is seen as
a subset of articial intelligence.
IoT: a system of interrelated computing
devices, mechanical and digital machines,
objects, animals or people that are provided
with unique identiers (UIDs) and the ability
to transfer data over a network without
requiring human-to-human or human-to-
computer interaction
Knowledge is power and time is money. They
are age old sayings, but they’re inevitably true.
The human brain can only understand so much.
AI and ML can bring unimaginable speed to
processing, streaming, analyzing and reading
of big data that is produced by the oil and gas
industry. Problems can be solved by experts
in remote locations and sometimes, future
problems can be predicted and prepared for
before they ever happen – so they never happen.
It’s called predictive analysis and it’s incredible.
It gives companies an advantage like no other.
Knowing what is coming and having the ability
to prepare for it so there is no lost time.
2Predict
2Predict is one of the data science services
companies out there that specializes in these
exact technologies. Headquartered out of
California, they provide custom predictive
models that deliver advanced insights and data
gap analysis commanding highly valued, data
driven decisions. They have a team of experts
in ML, Deep Learning and AI algorithmic and
model development. This also includes the use
of Python open source libraries and creating
custom algorithms to address specic needs.
Their experience is energy specic that spans
digital security, high performance computing,
Photo courtesy of Sompong Rattanakunchon – www.123RF.com
Oilman Magazine / September-October 2019 / OilmanMagazine.com
25
FEATURE
networking, supply chain, marketing, oil and gas,
and transportation.
I spoke with 2Predict’s Lead Data Scientist,
Cedric Fraces, about the integration of AI and
ML in the oil and gas industry. “Today AI is
gaining traction in a wide range of applications –
helping companies streamline processes, improve
operations, better serve customers and save
money. While traditional Machine Learning still
heavily relies on feature engineering, the promise
of Deep Learning is to remove human bias from
decision making. This dichotomy between big
data and expert judgement is a central element
of our mission. The reach of AI solutions is still
very dependent on industries. Some are ready for
advanced deployments while others still struggle
with automation and digitization. We help
professionals navigate that transition while adding
value,” Fraces says.
AI, ML and IoT cannot be set up instantly.
Companies have to provide data, implement
processes, rene algorithms, etc. The tools have
the capability to be smart, but they must go
through a certain progression to get to that point.
Think of it as an engineer. An engineer starts
off as an 18 year old kid going to college for the
rst time, four years later (possibly much more
depending on how advanced the sought after
degree) they are equipped with the knowledge
to perform engineering functions. That is the
process of the human brain. Machines can think
and be equipped with so much more knowledge
and it can be done much more quickly.
Using 2Predict as an example, there are ve
phases of their processes:
Requirements Gathering: Collect requirements
and gain understanding of the data landscape,
then agree on a statement of work.
Consultation and Planning: Dene the
implementation and data scrubbing needs, as
well as the algorithms in need of renement.
Implementation and Development: Design,
architect and deliver the data analytics
infrastructure along with any necessary tools,
technologies and algorithms to provide the
desired outcomes.
Model Renement: Customize and rene the
infrastructure leveraging ML, deep learning
and NLP techniques, and modify the data and
processing models until new and unexpected
outcomes are achieved.
Knowledge Handoff & Education: Setup
the development environment, walk through
some of the algorithms and models and teach
how to play with the inputs and observe the
outcomes. This level of knowledge handoff
may require special skills, but it can be
customized based on the skills available to the
specic team.
Although there is some leg work involved, it’s
only in place that way to optimize performance
and maximize the potential of every aspect
involved from EPC (engineering, procurement,
construction) to exploration and production.
FutureOn
There is another smart technology company
that has been in the spotlight recently (no
pun intended) as OTC’s recipient of the 2019
“Spotlight on Technology Award.” FutureOn
was the only digital solutions provider to win
this award for their cloud-based, collaboration
application, “FieldAP.”
FieldAP was developed by FutureOn and it
is hosted by their own cloud-based data and
application platform, FieldTwin. Field Twin is
essentially like the app store for iPhone. Major
EPC and oil companies are creating applications
that will either plug into FieldTwin or be hosted
by FieldTwin. Almost like a kind of app store
within oil and gas, especially subsea.
“We didn’t want to reinvent the wheel by
creating a new engineering software. We didn’t
want to reinvent the wheel by creating a new
planning tool. What we wanted was to create a
wheel hub and spoke model where we were the
hub that created the diversity and the technical
capability to integrate with a lot of preexisting
products or create opportunities for companies
to develop new applications that met growing
demands or unique needs. What we have created
is essentially that. It combines data visualization
and integration collaboration, because it’s a
cloud based platform, it allows for multiple
simultaneous users, as well as global users,” says
Thornton Brewer, FutureOn Marking Manager.
The information is a seamless transfer because
all of it stays in the cloud-based platform. There
are clients with teams in the UK that can work on
things and hand off the project to the Houston
team as they’re going into work the next morning.
FutureOn shifted from a data rendering company
to being a data visualization and collaboration
company. A lot of engineering data languishes
in silos. It’s not easy to get to and difcult to
interpret unless you’re an expert. You might
have a really crucial well path technology, but
if you can’t move that data into a more general
population standard format, that data will be
pretty much useless to anyone but the well
engineer who understands that information. They
may not be able to put it in a product or some
kind of template that is relatable to all personnel
that are working from the seabed up. It’s crucial
that all of that information be more readily
accessible.
Many times handoff is a major issue. Big
companies would (and still do) send large
physical boxes of completed documentation in
engineering and their clients would have to try
to gure out how to integrate that with their
ling systems. Down the road, once the eld is
in operation, the client may go back in search of
information, but they wouldn’t be able to go back
and necessarily nd that document specically
and if they do, they wouldn’t know if it was the
most recent.
This is not the case with FieldAP. With minimal
training and downtime only being a couple of
hours, massive amounts of IoT tech data can
be recorded and it becomes usable information
in real time, which can create trends and
troubleshoot, all at the same time. Companies
can make more informed decisions with the right
data in a much more comprehensive and time
appreciative manner. “We are envisioning this
whole life cycle as being fully digitized where no
data is ever lost and everyone from operators
or decommissioners can see the history of the
eld. The same way medical records travel with
you, they dont stay at the hospital, they go with
the patient. We want this data repository and
collaborative eco system to follow the eld so
that the eld has all of this information and
operators can use it to create imitative design,
Brewer says.
IoT
In the case of the Internet of Things, the
“things” that make it up can be any smart
device or machine that uses sensors to collect
data from the environment that can measure
observable occurrences or changes. The data
must be communicated to a base system, such as
a computer or another device and it must have
its own IP address creating a unique identiable
presence on the internet. Most of these items
are capable of functioning without physical user
interaction.
In the world of oil, it is absolutely vital for
equipment and activities to be monitored in every
way and for the resulting data, obtained by IoT
devices, to communicate with parent companies.
The resulting data integrating with AI and ML,
can create, document and predict results that the
human brain could not. This equips companies
with all the possible information that they
could conceivably need and provides them with
the utmost advantage in a highly competitive
industry.
Future
There have been books written about it and
movies made about it – it’s the superpower
that everyone would love to have: the ability to
predict the future. Ironically, those are two of the
words contained in the names of the companies
featured in this very article. It’s a well-played
choice of words, but it is so much more than
that. The historical and transactional data that
can be used to capture relationships and identify
risks and opportunities for the future is a game
changer. The technology of AI, ML, and IoT
is incredible and until recently, thought to be a
purely ctional concept. It is real and the oil and
gas industry is not only adopting it, but reaping
the benets. Let me be the rst to welcome you
to the future!
Oilman Magazine / September-October 2019 / OilmanMagazine.com
26
OILMAN COLUMN
Blockchain Early Adoption in Oil Industry -
Risks and Rewards
By Amandeep Kaur
Following the nancial crisis of 2008, Satoshi
Nakamoto came up with a revolutionary concept
of decentralized money or cryptocurrency,
bitcoin with the underlying technology
of Blockchain. Since then, Blockchain is
continuously improving and is striving to nd a
better application experience.
Blockchain, the foundation of cryptocurrency
Bitcoin, is a distributed network where records
are secured by encryption algorithms and the
consensus protocols while enabling full end
to end visibility in the systems. When this
technology emerged over a decade ago, the
leaders across the industry were uncertain about
if it’s practical to use. Now in 2019, executives
across the board agree that “Blockchain is in
the disruptive stage of growth potential and will
create new markets or upend existing markets for
poised growth.”
With an overall market size of around US$2.3
billion by 2021, Blockchain is gaining traction
and nding more use cases in the oil and gas
industry. Several blockchain pilot projects are
analyzing congurations and assessing value
across the energy enterprise, from gas eld to
end customer.
Considering the complexity and risks of oil and
gas operations, along with the scale of invest-
ment, capitalizing on cost takeout and associated
transformation opportunities are the key to prof-
itability. Besides connecting through M&A, re-
structuring, restructuring initiatives, mergers, and
acquisitions regulatory actions, the oil companies
collaborate across broader business networks to
achieve global standards of success.
The oil and gas supply chain network is
extensive, as it includes participants from
different global locations and under different
jurisdictions. As multiple parties participate in
a complex supply chain, various linkages in the
supply chain become a source of risks.
Due to multiple suppliers in the oil and gas in-
dustry, each supplier maintains its ledger in com-
pliance with their policies and procedures leading
to duplication of the contracts, which slows
down the recording and reconciliation of the
transactions. As a result, capital ow and revenue
recognition slow down throughout the supply
chain. The duplication of effort and third-party
validation amplify the administration cost of
doing business. The intermediaries deployed
to resolve disputed transactions also drive the
transaction cost high, delaying the reconciliation
process with other participants in the network.
In such an entwined supply chain network, the
risk of a security compromise is inevitable and
can lead to a buttery effect sending shockwaves
throughout the supply chain. Incidents can
stem from simple mistakes and may trigger
cyberattacks or fraud. As a result, trust declines
and deals are often delayed or lost.
In the emerging “trust economy” in which
companies’ assets and reputation are vulnerable,
Blockchain based solutions ensure efcient,
immutable, transparent, and secured transactions.
Blockchain is becoming the revolutionary
technology assuring a high level of efciency,
privacy, and security.
Blockchains fall under two categories:
Permissionless and permissioned chains.
Permissionless blockchains allow any party
without screening to participate in the
network, while permissioned blockchains
require consortiums or an administrator to
evaluate the participation of an entity on the
blockchain framework. Regardless of the type
of Blockchain, business logic is encoded using
smart contracts. Smart contracts are an encoded
agreement on the blockchain framework and
are self-executed, which means that no human
intervention is required to execute transactions.
Smart contracts enable accurate, cost-
effective and fast transactions, with enhanced
transparency and security.
The following use cases illustrate Blockchain’s
potential to disrupt the oil and gas industry and
meet the industry’s regulatory, operational and
market needs.
Photo courtesy of Elnur Amikishiyev – www.123RF.com
Land Record Management
Record Sale and transfer of ownership
Create immutable audit trail of land movement, ownership
and value
Alleviate ownership disputes and title mismatches
Provide tax authorities with accurate ownership
Land Rights stored on blockchain can be traded and sold
as commodities
Equipment History Record Management
Equipment record stored on Distributed ledger rather on
central server
Changes to Equipment are conrmed by all nodes of the
network, eliminating the needs of Central Authority
Upstream Activities
Can be used in Design and Construction of wells and
Facilities, tracking Equipment history
Reduces errors, increases efciency in nding metadata,
enhances transparency
Replaces spreadsheet data storage
Midstream Activities
Smart Contracts in Trading and Risk Management
Joint Ventures and Revenue Accounting
Quote to cash and reduces daily sales outstanding
HSE - Safety Inspection and Maintenance Activities,
Identity and Certications
Managing Pipelines’ Inspections
Downstream Activities
Terminal Automation, Smart Contracts, Demurrage and
Claim Management, Quality Control of Petroleum products
Payment Reconciliation, Compliance and Regulations
Oilman Magazine / September-October 2019 / OilmanMagazine.com
27
OILMAN COLUMN
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Several blockchain projects have started and
are building momentum in the oil and gas
sector. Natixis and Tragura have developed the
rst blockchain solution in commodity trade
nance to digitize U.S. crude oil transactions.
The distributed ledger platform, backed by
Hyperledger Fabric hosted by Linux Foundation,
let digitization of major steps in a crude
oil transaction on the Blockchain, enabling
improved transparency, enhanced security, and
optimized efciency.
Blockchain with IBM and SAP can streamline
joint billing operations, Authority for
Expenditure (AFE) approval tracking, and other
oil and gas processes. AFE operators can now
extend existing joint venture accounting and
AFE tracking communications with Blockchain
to create a single shared truth distributed
ledger that secure immutability and provides
permission-based visibility to operators and non-
operators ensuring compliance, avoiding delays
as well as the tedious and time-consuming prior
period adjustments.
Backed by Quorum, Vaqt a trading platform is
being used by Shell, BP, Norwegian Equinor,
Mercuria Energy Group, Koch Supply and
Trading, and Gunvor. The largest shareholders
of VAKT Global are such banks as ABN Amro,
ING, and Societe Generale. Other companies are
expected to join in 2019. VAKT has the potential
to provide a cost reduction of 40 percent by
getting rid of paper documents and replacing
them with smart contracts. In May 2019, over 20
European energy trading rms announced peer-
to-peer Blockchain based trading framework.
While Blockchain has the potential to bring
the biggest impact on the oil and gas industry,
the technology is in its nascent phase, leaving
enormous opportunities for investment and
growth. As the oil and gas transactions involve
multiple intermediaries, the early adoption
of Blockchain provides an incentive for the
company’s protability and performance. The
early adopters are capitalizing on this innovative
technology and saving time, but the blockchain
adoption by oil and gas companies is not ahead
of the curve. The biggest barrier impeding
blockchain adoption is the trust issues. According
to Pricewater Survey, the barriers to blockchain
adoption are regulatory uncertainty, lack of trust
among users, ability to bring networks together,
separate blockchains not working together,
inability to scale, intellectual property concerns
and audit/compliance concerns.
The current operating system has many
drawbacks that may pose risks such as data
and identity theft, high costs of transactions in
public Blockchain, lack of recipients and users,
technical problems due to initial applications
and lack of standardized mode of operation.
Implementing and standardizing Blockchain
requires signicant investment, including legacy
system integration as well as reskilling and
retraining of the workforce. Cyberattacks may
ensue from insufcient security design aws
and deciency management systems. Due to
data inputs at various nodes, there is a risk of
tampering at each node. Jurisdictional problems
may arise as decentralized ledger span multiple
locations, and blockchain companies are unclear
about the jurisdictions, and regulatory regimes
to which their products and services are being
subjected. Regulatory and legal environments
for Blockchain are still under development.
The users must understand the evolution of
regulatory guidelines and its ramications.
Blockchain technology brings many opportuni-
ties, application to business processes, but is not
free of challenges and risks. It is imperative that
the users mitigate the risks and deploy safeguard
measures to harness maximum benets of this
technology.
Artificial Intelligence Provides New Layers of Refinery Safety in 21st Century p. 8  Oil and gas Industry Trends  Safety a...
Oilman Magazine / September-October 2019 / OilmanMagazine.com
29
OILMAN COLUMN
Use No. 4: Regulatory Compliance and
Data Integrity
AI and ML have the ability to boost back-ofce
efforts to ensure regulatory compliance by recog-
nizing fraud, abuse, and mistakes. In the case of
potential fraud or abuse, ML can perform ongoing
checks for intentional interference with data in-
tegrity. This enables organizations to protect their
assets by keeping up with potential market abuse
pattern identication. Today, large banking institu-
tions rely on self-teaching AI to monitor and
process billions of transactions while searching for
patterns indicative of fraud and abuse like insider
trading, stock manipulation, or other unauthorized
actions. Similar functions in commodity marketing
allow AI to detect abuse in crude oil marketing or
trading.
Even in the case of unintentional errors, the
back ofce can employ ML to track and validate
numbers for data integrity and regression testing.
When employees make changes to code or algo-
rithms, programmers are able to make sure the
changes are not deviating against known values.
AI also has the capability to reduce human error
by aggregating data on its own without human
interference.
Use No. 5: Data Protection
Like in the nancial sector, AI and ML also
have the capability to enhance an organization’s
processes and protect its data at a higher level. As
organizations grow and become more digitally
focused, the sheer amount of data, both public
and private, can become overwhelming. AI and
ML can offer new, effective forms of security
to prevent this data from potential risks. By
continuously analyzing large quantities of data for
anomalies, AI can identify threats, alert relevant
parties, and provide actionable intelligence.
In the same vein, AI’s ability to continuously
monitor, collect, and analyze data allows
for algorithms that can identify structural
inefciencies that could lead to system failures
before they happen — reducing system blackouts
and safeguarding customer trust.
Challenges to Industry-Wide Adoption of
AI and ML
While AI and ML present numerous opportunities
to advance efciency in oil marketing, the
commodity management industry is still in the
beginning stages of adopting these technologies,
and signicant challenges and roadblocks remain
before the industry will see widespread adoption.
The rst and perhaps most challenging obstacle
is that the value of articial intelligence
compounds over time, which is a luxury only
early adopters, visionaries, and innovators are
typically comfortable with. Before the mainstream
commodity industry adopts AI, there are still
many simple calculations and algorithms to be
tested and tuned over time.
Many organizations talk about the possibilities,
but the industry needs visionary leaders willing
to invest time into perfecting calculations to
run front ofce activities like oil marketing
successfully.
Skepticism is another challenge organizations
looking to adopt AI and ML must overcome.
Ultimately, embracing AI and ML will be a
transformational, paradigm-shifting move that will
require substantial organizational buy-in following
extensive proof of concept. Even then, the mere
existence of such technology does not mean it will
conclusively be adopted.
To counteract naysayers with a measured
approach, industry leaders can take incremental
steps to lay a foundation of trust by incorporating
simple machine learning into everyday processes.
By proving value and accuracy over time, the
necessary comfort and trust of these new
technologies and their possibilities will grow.
Another signicant challenge AI and ML
innovators face is resistance to automation.
Understandably, some marketers are nervous
about what automation means for their jobs. The
truth is, when applied correctly, AI and ML should
complement and amplify the skills of industry
workers and empower them to add greater
strategic value throughout their organization.
Incorporating AI and ML Into Your Crude Oil
Business
Commodity organizations are just now beginning
to explore the possibilities AI and ML offer their
businesses. Alone, this can be a daunting task, but
the value of AI and ML compounds over time,
driving tremendous growth for organizations with
each instance. That’s why industry visionaries are
turning to the leaders in advanced commodity
analytics to lay a technological foundation that
embraces ML today to support more signicant
AI initiatives in the future. Those with the
headstart will have the competitive advantage over
the mainstream laggards.
That’s why ION FEA and ION Commodities are
at the forefront of advanced commodity analytics.
We’re dedicated to solving these problems for
commodity organizations and laying the necessary
framework by building analytics capable of
powering AI and ML initiatives, so that forward-
looking organizations can learn from their data,
identify patterns, and make decisions with minimal
intervention.
Technology cycles and opportunities like this don’t
come around every day. The question is: Which
side of the AI and ML adoption chasm will you
nd yourself on?
Josh Gray is the Chief
Scientist for ION FEA at
ION Commodities. At ION
Commodities, Gray manages
the ION FEA research
teams, who control a broad
range of analytic and risk management tools.
With more than 15 years of energy trading
and quantitative risk management experience,
one of Gray’s chief initiatives is recognizing
new market trends and identifying needs for
the development of new ION FEA software
features, models, and/or contract specications.
Gray received a Doctorate in Theoretical
Physics from the University of California, Santa
Cruz in 2001.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
30
OILMAN COLUMN
Why Not Graphene?
By Raul Palencia
Graphene is a sub-derivative
material of the most abundant
element on our planet: carbon.
Known by scientists as the
miraculous material, graphene is
positioned as the biggest dream of
manufacturers of materials such as
spaceships, pipes protective covers,
computer parts, auto parts for both
bodywork and engines. It has also
become the perfect compound
for batteries and phone screens,
computers or submarines. This is
just a small list of all the utilities
this material has.
The rst quality of graphene
is that it is extremely light, but
tremendously strong at the same
time: a 1 m2 layer weighs only 0.77
grams. It is transparent, exible,
waterproof, does not pollute and
it’s harder than a diamond, 200
times stronger than steel and more
exible than carbon ber. It is also
a super conductive: 100 times faster
than the silicon used on chips.
It conducts heat, generates
electricity when it receives light,
and changes its properties when
combined with other materials. For
example, it can repel water or be
more conductive.
Initially discovered in the 1930s,
graphene did not acquire any
importance, because in order to
produce a small piece of it, high
pressures and temperatures had
to be used, but not until 2010
when two Russians, Andre Geim
and Konstantin Novoselov, won
the Nobel Prize in Physics for
discovering a new method for a
more stable graphene production.
Quoting the article written by
these scientists about graphene,
this material “is a form of carbon.
As a material it is completely new
- not only the thinnest ever but
also the strongest. As a conductor
of electricity it performs as well
as copper. As a conductor of heat
it outperforms all other known
materials. It is almost completely
transparent, yet so dense that not
even helium, the smallest gas atom,
can pass through it. Carbon, the
basis of all known life on earth, has
surprised us once again.
When we turn to the oil and gas
industry, we need a material that can
be resistant to pressure, compres-
sion, abrasion, and at the same time,
that has a signicant exibility or
hardness to be capable of conduct-
ing electricity in voltages equal to
or greater than 480 Volts. Also,
we need it not to be destroyed or
weakened in approximately 15 years,
which is the average usage time that
an electro submersible pump is kept
on the ground before it is necessary
to apply corrective maintenance.
With such a bold material it is
necessary to go through each sector
of the industry to see in which
applications it could improve the oil
and gas eld.
Subsoil
Every day that goes by, there are
fewer conventional reservoirs and it
is necessary to use more resources
to access unconventional ones. The
rst difculties when facing these
deposits, are the adverse conditions
that the operator faces.
A reservoir placed in the Triassic
age, can face pressures above 12k
psi, or temperatures greater than
400 ° C. To these conditions is
usually added the existence of
contaminating uids, so that a
metal pipe with tungsten carbide
alloys works, but after a period of
time, it jeopardizes the well, whose
investment tends to exceed an
amount of 7 digits.
The graphene, even when it’s 200
times thinner than a sheet of paper,
is capable of coating the casing and
production pipe to shield subsoil
equipment that was compromised
in the past, because it is so slim
that the commonly used diameters
would not be affected.
In addition to this, it is advisable
to use the lifting method known
as BES (Electro Submersible
Pumping), when it comes to ultra-
deep wells, since this technique has
the highest volume of production,
but it also tends to be the most
expensive one. One of the main
expenses of this type of pumps
is the power cable, which is
responsible for carrying energy
from the surface to the bottom.
The ability to conduct 200 times
more electricity than silicon, offers
us a much thinner power cable than
commonly used, which is also more
reliable in terms of power. On the
other hand, we have its resistance
to the different pollutants that are
exposed and a power cable designed
to resist much more than the one
factories tend to use.
The deadly enemies of bombs
are abrasion and corrosion. While
having a minimum of revolutions
of 3500 rpm, there is no time
to lter the uids or to make a
separation of them while facing the
pollutants, so the use of graphene
becomes an important option.
The BES system consists of a
centrifugal pump that drives the
uid to the surface. In these cases
the passage of liquid uid is the
pump’s cooling agent, so when
there is gas, the pump suffers
severe damage, since it tends to
overheat. If we use graphene to
build the pump, we avoid damage
and corrosion by abrasion and
pollutants in the rst instance.
Thanks to its ability to be combined
with other elements, we can make a
graphene alloy for heat dissipation
and thus we’ll have a BES system
capable of working with larger
amounts of gas, besides being much
stronger over time.
Exploration
In addition to metal-like capabilities,
graphene is the best sound
conductor that exists, capable of
moving waves or receiving them
with a precision that’s never seen
before. Sound companies with
IHiber or Beats use graphene for
their special equipment.
In the exploration sector, one of
the most important studies ever
made is the seismic research. It’s
Graphene – Photo courtesy of Digital Trends
Andre Geim and Konstantin Novoselov - Nobel Prize in Physics 2010
Image courtesy of IITB-Monash Research Academy
Oilman Magazine / September-October 2019 / OilmanMagazine.com
31
OILMAN COLUMN
carried out with the emission of
sound waves that travel through the
subsoil, returning to the surface and
being captured by receivers. Using
graphene would highly improve
the emitted and received signals,
and this way the sharpness of the
subsoil images would be optimal
for geophysicists, substantially
supporting exploration work.
Not very different but just as
important are the sonic records
offered by many service companies.
These records allow to recreate
an image of the formations that
are being traversed during drilling
and are using the principle of
bats. They allow to see the micro
fractures, fractures and, in the best
cases, to recreate a 3D view of the
formation. Likewise, when having
a better sound emitter and receiver
with graphene, the quality and
certainty of the results would be
neat and fully functional.
At the same time, it provides the
opportunity to be used in cases such
as the Pearl Deposits in Venezuela,
gas elds located in the northwest
of the country. This deposit pres-
ents one of the largest gas reserves
in South America close to 15 trillion
cubic feet of gas, but with the dif-
culty that in its generating rock
is born, besides gas, the mercury
metal, that makes sustained produc-
tion impossible, (mercury is a highly
toxic and corrosive liquid metal).
One of the few metals capable of
tolerating mercury at high pressures
is graphene. Using a thin layer
of coating, so thin that it would
practically not affect the diameters
of the pipes, good oil extraction can
be achieved with few durable wells
over time.
Surface
The surface equipment has a double
degradation: inside pipes, heads,
separators and valves passes the
uid produced that sometimes
contains highly corrosive pollutants.
To this we add environmental
conditions such as the arid areas of
Africa, the strong sea waves from
the north, the abrasion of the sands
in the area of Arabia among other
things. The use of graphene as
protector of these equipment would
be the best option.
Surface separators fulll a crucial
task: when the uid is produced
and arrives to surface, its pressure
changes, so it releases aggregate
uids that come as solution such
as gases or water. And since water
is a natural oxidant, any gas that
travels in the triple solution of oil,
gas and water can become a lethal
acid, for this reason the three-phase
separators are responsible for
preventing the trip of these three
uids in a ow line that could later
reach storage tanks.
Separators tend to be large, robust
and heavy tanks and need an impor-
tant maintenance to avoid deteriora-
tion. When using graphene to cover
the tank, we reduce the impact of
corrosion by contaminants. On the
other hand, graphene can be used
on the internal shock plate that has
the separator, because in addition
to being resistant, the vibration
thrown by the plate would provide
a better detachment of the gas and
water atoms that joins the oil. This
way, a cleaner oil will travel in the
ow line.
Given So Many Uses and
Solutions, Why Not Graphene?
Despite the discovery of a more
stable method of producing
graphene, it still has a very high
cost. Besides this, the oil and gas
industry is one of the world’s
commercial activities that generates
the highest amount of money, so
it can easily makes sense to ask
why grapheme isn’t being used
industrially today.
Raul Palencia
is an engineer
and researcher
with more than
10 years of
experience as a
Geologist. He graduated from
the prestigious University of
Andes (ULA), later he received
a Master’s degree in Reservoir
Engineering at the Venezuela Hy-
drocarbons University. During his
career development, he worked
for oil companies in positions
such as: eld geologist, reservoir
engineer and reservoir simula-
tion. He has worked in Argentina,
Ecuador, Mexico and Venezuela.
He currently resides in Texas.
Electric Resistance Welding Drill Pipe
Photo courtesy of Tallys
Seismic – Image courtesy of GeoExPro Sonic Logs – Image courtesy of Emerson Paradigm
Triphase Separator
Photo courtesy of China Oil HBP Group
Perla Field, Venezuela
Image courtesy of Offshore Technology
Electro Sumergible Pumping
Image courtesy of Framo
Oilman Magazine / September-October 2019 / OilmanMagazine.com
32
OILMAN COLUMN
Software and Technologys Effect on
Safety, Operations, and Modernization in
the Oil and Gas Industry
By Tonae’ Hamilton
In today’s society, technology has become the
new norm, with many businesses integrating
technological software into their operations,
regardless of the industry. Technology has
proved benecial to business in terms of
improved operations and cost. The oil and
gas industry has also been able to improve
operations and reduce costs as a result of
technological software.
As of recent, technology has been making
waves in the areas of pipeline safety and
oil and risk management in the oil and gas
industry. Businesses are investing in advanced
software, such as robotics and automation, to
increase pipeline and worker safety and the
efciency of operations.
SolSpec, a software company that
specializes in the processing and analysis of
photogrammetry and LiDAR data, develops
oil and gas software to improve pipeline
construction and oil operations. Bryan Crowe,
Chief Operating Ofcer of SolSpec, provided
his perspective on how technology is shaping
safety and oil management in the oil and gas
industry, how modernized the industry has
become as a result of technological software,
and what SolSpec is doing to impact the
industry.
With technology playing a larger role in
the oil and gas industry, there has been
an increased demand for technological
software. As such, more oil and gas solutions
companies have been established with
many focusing on pipeline safety and risk
prevention. SolSpec, founded in 2016, was
created with the goal of empowering more
efcient and effective use of drone imagery
and analysis to improve the safety, protability
and environmental stewardship of pipeline
construction, operations, and other large-scale
land use projects. Crowe expressed that after
initially collecting data for a year, they realized
the need — and opportunity, to improve the
speed of processing, storage and analysis
of data. “Today, SolSpec specializes in the
processing and analysis of photogrammetry
and LiDAR data from Unmanned Aerial
Vehicles, Manned Aircraft, and Satellite
systems. We’ve developed a secure cloud-
based geoprocessing platform and propriety
analytics models based on analysis of over
2 million acres of pipeline right-of-way
projects to create high-resolution 2D and
3D models for comprehensively visualizing
and quantifying risk to pipeline safety by
measuring changing conditions, hydrology,
erosion control, and slip potential,” Crowe
explained.
One of the biggest threats to operational
safety in the oil and gas industry is pipeline
construction and stability. As Crowe stated
from a report, “Between 1999 to 2018,
PHMSA reported a total of 11,991 incidents
of compromised pipeline integrity, resulting
in 318 deaths and 1,304 injuries, with over
$8 billion USD in total cost.” From the past
up until recently, traditional methods of
operation and poor construction of pipelines
has led to fatal incidents. Crowe expressed
how operators need a more comprehensive,
data-driven method to evaluate risk that
goes beyond the physical pipe and includes
its environmental context. “Identifying
environmental conditions on and off the
ROW that may threaten the integrity of
pipeline infrastructure is crucial for timely
mitigation and adequate preparation for
future challenges,” Crowe explained.
With that said, advancements in technology
and software, along with the ability to utilize
data to mitigate risks, has persuaded many oil
and gas operators to integrate technological
solutions into their processes and modernize
operations. Oil and gas businesses have
begun to see the positive effects technological
software can have on pipeline safety and
operations. As Crowe stated, “Just as ILI
technology is changing the way operators
conduct internal pipe inspections, aerial
analytics technology will transform external
pipeline risk assessments and environmental
Photo courtesy of Sitthinan Saengsanga – www.123RF.com
Continued on page 34...
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Oilman Magazine / September-October 2019 / OilmanMagazine.com
34
OILMAN COLUMN
inspections through Right of Way Integrity
Management (RIM).”
With an increase of emerging technologies,
the oil and gas industry is undergoing
a rapid digital transformation. “Digital
transformation is sweeping the oil and
gas industry as more companies embrace
technology to drive vast improvements in
productivity, better system efciency, savings
from reduced resource usage, and fewer
spills and emissions,” Crowe expressed.
As for pipeline improvements and risk
reduction, aerial technologies such as drones
and UAVs are what oil and gas operators
are increasingly investing in and utilizing to
collect data and improve worker safety and
training. Crowe described how innovation
through cloud platforms, ultra-high spatial
resolution aerial imagery, AI and machine
learning, predictive analytics and big data are
opening up new opportunities to transform
pipeline integrity management, help reduce
risks, and accelerate time to value. “Data is
available to provide operators with fast and
accurate analytics for them to make timely
decisions to protect the safety of their
employees and the public, the environment,
and to maximize operational efciencies,
Crowe further explained.
Even with more oil and gas operators
integrating advanced technologies, including
aerial analytics into their operations, the oil
and gas industry, as a whole, has not fully
embraced drone technology. As Crowe
mentioned, “Aerial analytics are instrumental
to ROW Integrity Management. I think
there’s a general misconception about ROI
of Aerial Analytics that has been carried
over from when drones rst hit the market
for commercial use.” “Drones improve
employee efciencies and create a safer work
environment by removing employees from
hazardous environments. If armed with
a drone, a typical pipeline technician can
easily cover 10 miles of inspections,” Crowe
explained.
With that said, SolSpec is continuing
its focus on expanding the use of aerial
technology and analytics in the oil and gas
industry. “We continue to optimize our
ROW Integrity Management solution with
region-specic environmental and geological
conditions. Our models and analysis consider
factors as specic regional population
density, product type, class location, potential
impact radius, and environmentally sensitive
areas and summarize this into simple,
actionable intelligence,” Crowe explained.
Crowe also stated how SolSpec is expanding
into construction monitoring, vegetation
analysis, change detection, and optimized
LiDAR processing. “We are rolling out our
new data viewing platform later this year that
will greatly improve aerial analytic processing
for our customers,” said Crowe.
SolSpec, along with other oil and gas
solution companies, are taking the initiative
to improve and modernize the management
of oil and gas and the industry as a whole.
Nevertheless, there are still many ways the
industry can improve and further modernize
operations. Crowe shared how the transition
from reactive disaster management to
proactive disaster risk reduction is where
the industry can make huge advances. “A
RIM program informed by aerial analytics
increases the efciency of pipeline
technicians, facilitates emergency response,
and identies key areas for focused resources
and efforts in hazard mitigation. Armed with
these insights, operators can prioritize risk
mitigation and monitoring to take proactive
actions where they are needed most,” Crowe
explained further.
With emerging technologies still on the
horizon, there are plenty of opportunities of
modernization for the oil and gas industry.
As for the use of drones in oil and pipeline
management, Crowe expressed how BVLOS
or beyond visual line of sight restrictions
prohibit drones to be utilized for large scale
data acquisition. “By removing visual line
of site restrictions drone operators will be
able to more quickly analyze their pipelines
and other assets to provide supplemental
emergency response, predictive maintenance,
and ongoing integrity verications,” said
Crowe.
With technology’s breakthrough in the
oil and gas industry, the industry has
seen improvements in capturing data, oil
management, revenue and risk prevention.
The industry’s processes today are more
modernized than in the past, but still have
a long way to go. According to Crowe,
“Greater acceptance of new technologies
by regulatory bodies would also help in
modernizing oil and gas operations.
Crowe emphasized that modernization is
extremely important for the oil and gas
industry. With the rapid development of
technological software, the industry is sure
to see more progression in the near future.
“Technology is impacting every aspect of the
oil and gas industry. Operators that harness
the power of technology are seeing real
benets to their safety numbers and their
bottom line. Those who are late to the game
are operating at a disadvantage. Real time
and near real time analysis of operations are
making the oil and gas industry a safer and
much more efcient industry,” said Crowe.
No w Av A i l A b l e : T h e C r u d e li f e Cl o T h i N g
w w w
.
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.
C o m
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36
OILMAN COLUMN
How Oil and Gas Employers Can Navigate
an Applicants Economy
By Ron Hudik and John Romanow
Few industries understand supply and demand
dynamics as well as oil and gas—and few places
in the world are seeing those dynamics play out
as dramatically as in the Permian Basin, where a
crippling talent shortage looms large. Midland’s July
unemployment rate sat at a razor-thin 2.1 percent,
and 15,000 jobs are open on any given day. At the
same time, takeaway capacity in Permian pipelines
is expected to surge in the second half of 2019 and
into 2020,
1
and IHS Markit forecasts oil production
in the West Texas eld to reach 5.4 million barrels
per day by 2023, accelerating an already dire
dynamic.
It’s a shortage that’s being felt across Texas—and
across oil and gas globally—as Boomers retire,
younger workers shun the industry, and technology
redenes roles at a rapid clip. Nearly half of
respondents in the latest Global Energy Talent
Index are worried about an impending talent
crisis; 40 percent say the oil and gas skills crisis is
already here. After drastic cuts to stafng levels
and apprenticeship programs in the last oil and gas
downturn, companies now struggle to win back
talent that has moved on to other industries.
High pay isn’t enough to change the equation.
Oileld salaries in the Permian start near $100,000,
while experienced truck drivers can make $300,000
with overtime—and still, the talent shortage rages
on. Downstream, skilled trades shortages in the
Gulf Coast are leaving oil and gas companies
struggling to nd craft labor. Oileld services
struggle to staff for drilling and production, and
all sectors are competing for engineers and IT
talent. The impending “great crew change” further
complicates the picture. Although Houston is
home to one of the youngest workforces in the
country with a median age of 34, more than half
of oil and gas workers are over 45.
Technology may offer long-term relief, but it
presents short-term challenges. Digital oileld
spending is expected to reach $17.8 billion by 2022,
and 40 percent of eld operations jobs could be
eliminated by technology. Yet in order to reap the
improved efciency and cost savings of digitized
rigs, companies must rst have a workforce capable
of designing, building, and working those rigs.
The same holds true of AI, machine learning,
and RPA advances throughout the industry
that rely on an inux of elusive STEM talent.
Competition for that talent is especially erce in
Southeast Texas, where oil and gas companies nd
themselves recruiting against each other, Silicon
Valley, and a new surge of start-ups in their own
backyard. Boasting a 2.7 percent unemployment
rate, Austin has earned the nickname Silicon Hills
for its saturation of high-tech companies that
offer a “cool factor” unmatched by oil and gas.
When STEM talent does opt into oil and gas,
they’re increasingly doing so via a burgeoning
start-up scene, where small rms are tackling big
challenges for the industry—leveraging AI and new
technologies to evaluate well locations, improve
production forecasting, and predict equipment
failures. Houston alone is home to more than
500 technology start-ups and ranks ninth on Inc.
magazine’s new list of hottest start-up cities, as well
as being home to large oil and gas incubators that
attract local entrepreneurs.
Amidst all the chaos, it’s clear the talent shortage is
too big for HR departments to solve alone: a cross-
discipline approach is needed. One deceptively
simple task to support more effective recruiting
is ensuring that job descriptions and postings
are up-to-date and accurate. As technology
transforms how work is done, HR will need to
partner more closely with operations and IT to
keep abreast of how roles are changing, map out
new job descriptions, and craft job postings that
use relevant keywords and target in-demand talent.
It’s an ongoing effort as technology continues
to dene new ways of working—from truck
drivers receiving training in high-tech simulators,
to nance teams using RPA to deliver real-time
analyses, to data scientists applying AI to predict
output and loads. But job accuracy is just a baseline.
Making oil and gas jobs
attractive
may prove an
even larger challenge.
In a recent survey, more than 70 percent of U.S.
respondents said they were more likely to choose
to work at a company with a strong environmental
agenda—dampening Texas oil and gas company’s
ability to source talent from across the country.
Millennials in particular are linking ethics and
environmentalism, with three out of four saying
they would accept a smaller salary to work for an
“environmentally responsible” company, and 40
percent reporting they have chosen one company
over another because of its sustainability record.
Again, oil and gas companies can benet from
a multi-pronged approach, with HR, PR, and
marketing banding together to craft an employer
brand that resonates with younger workers. Some
oil and gas players have taken the innovative step
of moving technology pros out of IT and into
talent acquisition roles, enabling them to connect
with younger prospects and share rst-hand
experiences of a fullling high-tech career in oil
and gas. Alumni pools can also be effective at
closing specic skill gaps; bringing back older
workers as consultants on special projects can help
meet short-term needs with proven (albeit pricey)
skill sets.
New partnerships outside of the oil and gas
industry appear to hold real promise as well.
Community colleges and trade schools in Houston
are working with oil and gas leaders to design
specialized training that reskills workers and
equips new talent to succeed in the eld. Lone
Star College’s oorhand/roustabout certicate
program—which uses a life-size drilling rig as the
students’ learning environment—is so popular
that Houstons oil and gas employers often offer
students jobs before they’ve completed the IADC-
accredited program. Taking a faster-track approach,
a new breed of education rms is offering “boot
Data are three-month annual percent changes. Shaded area is U.S. recession. Rig counts include rigs operating in New Mexico
and Texas – Source: Bureau of Labor Statistics; Baker Hughes; seasonal and other adjustments by the Dallas Fed.
Oilman Magazine / September-October 2019 / OilmanMagazine.com
37
OILMAN COLUMN
Class certication in the oil patch frequently
revolves around whether the putative class can
satisfy Rule 23’s commonality and predominance
requirements. The recent trend has been toward
increasingly troubling developments for opera-
tors, including courts that focus on ostensibly
“common” facts that are irrelevant to the claims
asserted or, worse yet, courts that have more or
less marginalized material differences in lease
forms that should have represented a barrier
to class treatment. In August, the United States
Court of Appeals for the Sixth Circuit entered
the fray, issuing another decision that is by no
means friendly to the industry.
The opinion,
Zehentbauer Family Land LP
v. Chesapeake Exploration LLC
, is notable
because it stands at the intersection of motions
to dismiss and motions for class certication.
Dismissal motions often receive special scrutiny
in the class context, and surviving dismissal is
of course a necessary prerequisite to ling a
class certication motion. By the time litigation
reaches the certication stage, the exposure for
defendants can be so great that settlements are
not uncommon even when the plaintiffs’ merits
case is weak. After all, the prospect of facing off
against thousands of plaintiffs – rather than just
a handful of individual ones – can transform
the defense against even marginal claims into an
exercise fraught with risk and uncertainty.
Crediting the arguments advanced by the
defendant operators in Zehentbauer, the
representative plaintiffs engaged in a bait-and-
switch. In particular, at the motion-to-dismiss
stage, the plaintiffs placed primary emphasis
on the theory that Chesapeake and Total had
“breached the leases by selling oil and gas to the
defendants’ midstream afliates at below-market
prices” (although the complaint did contain
cursory, passing references to the improper
deduction of post-production expenses). Under
the afliate-sales theory, the plaintiffs would
have to “show that the defendants’ royalty
payments were based on sale prices that fell
below what an unafliated company would
have paid for the oil and gas at the wellhead,
and, critically, “the inquiry to determine these
market prices is highly individualized because the
market prices depend on the quality of the oil
and gas sold at each well, the quantity of the oil
and gas so sold, and the proximity of the well to
processing facilities and downstream markets.
The Sixth Circuit agreed that the plaintiffs could
not carry their Rule 23 burden on the claim
that the afliate sales were made at below-
market prices. But the undivided appellate panel
determined that this did not preclude class
certication since the plaintiffs withdrew the
afliate-sales claim on appeal, arguing that they
would instead proceed solely on their allegations
of the improper deduction of post-production
expenses. From the operators’ perspective, this
was a kind of gamesmanship: “present[ing] a
plausible breach-of-contract theory that would
survive an initial motion to dismiss,” and then
changing course by “advanc[ing] a different,
implausible theory of breach that would propel a
motion for class certication.
Regardless of whether the operators are correct
in this particular case, there is a lesson to be
learned. When defending against lease claims
in a putative class action, operators must
be sensitive to every factual wrinkle in the
complaint. No allegation should be dismissed
as window dressing or mere boilerplate.
What might initially seem like an insignicant
allegation, in other words, could later become
the crux of the plaintiffs’ case. Realizing this
too late in the proceedings could amount to
a lost opportunity to target those allegations
– early on, before the plaintiffs can seek class
certication – by way of a motion to dismiss.
Tom is a litigation partner
in the Houston ofce of
Kane Russell Coleman
Logan PC, where he leads
the rm’s energy practice
group. Tom is also the
host of a weekly podcast on legal news and
developments in the oil-and-gas industry,
available at www.energylawroundup.com,
and a video series on effective legal writing,
available at www.theartofthebrief.com.
Sixth Circuit Fans the Flames of Class
Certification Against Operators
By Thomas G. Ciarlone, Jr.
camps” to upskill oil and gas workers: daytum
recently hosted workshops at the University of
Houston to teach oil and gas technicians and
engineers how to use simple coding packages so
they can better analyze and visualize data they work
with in the eld. Given the worsening talent crisis,
investments in the future workforce are equally
critical. Some companies are thinking beyond
typical high school curriculum to reach kids in
Texas middle schools and drum up interest in the
skilled trades, planting the seeds for well-paying oil
and gas careers that dont require a four-year degree
or student debt burden.
Outsourcing providers are evolving along with
oil and gas and playing an increasingly vital role
in addressing workforce challenges. Workforce
solutions partners like KellyOCG are helping
oil and gas companies—from global industry
leaders to local Houston rms—with everything
from payroll services to HR consulting to total
talent supply chain programs. Solutions are as
robust and diverse as the challenges they address.
For example, the right outsourcing partner can
help determine the optimal mix of talent (full-
time, contract, etc.) and technology, an area of
tremendous opportunity in oil and gas, where
digital solutions have the potential to cut upstream
production costs by as much as 20 percent.
Attracting talent in an environment where talent
clearly has the upper hand also requires looking
beyond typical demographics and traditional talent
pools. Progressive companies are creating bespoke
talent agendas that incorporate best practices
traditionally reserved for customers, including
segmenting candidates based on internal attitudes
and motivations in order to map out more effective
recruiting and retention strategies.
Supply and demand will always be a deciding factor
in the oil and gas industry’s success. Companies
that embrace innovative partnerships can build
talent pipelines that yield a competitive edge today
and in the years ahead.
Ron Hudik, Vice President, Global Solutions
with KellyOCG, has been providing strategic
guidance and recommendations around custom-
designed, client-specic workforce solutions to
companies in all sectors of the energy industry
for more than two decades. He specializes in the
design and implementation of solutions related
to Managed Service Provider (MSP) programs,
Recruitment Process Outsourcing (RPO)
solutions, and many others.
John Romanow, Vice President - South Central
region at Kelly Services, has been connecting
talented people to companies for more than two
decades with a focus on oil and gas and several
other industries. An experienced workforce
solutions executive, John leads the stafng
and business solutions operations for Kelly
throughout Texas, and several other neighboring
states.
1
https://www.dallasfed.org/research/energy/indicators/2019/
en1907.aspx
Oilman Magazine / September-October 2019 / OilmanMagazine.com
38
Interview: Bobby Martin,
Founder, OmniShelf
By Tonae’ Hamilton
Tonae’ Hamilton: Can you expand on how
the idea of the OmniShelf came about?
Bobby Martin: As an oileld
service technician, I use a
laptop most of the time and
would constantly struggle due
to not having a workstation.
I had to hold my laptop with
one arm, while typing with
the other or set it in my lap while sitting on a
chair or on the oor. The only place I could set
it when not in use was on the oor. One day I
notice that a 3
rd
party company had a built-in
metal folding shelf mounted on the inside of
their control panel doors. This shelf was used
by their technicians to set their laptop on while
connecting to the PLCs. I thought this was a
great idea, but I needed something similar that
was mobile and could be used anywhere on the
rigs. I wanted to design a similar device with
magnets enabling me to use it anywhere since
just about everything on a rig is made of metal.
TH: What is your goal for the OmniShelf ?
In what ways do you feel it will benet oil
and gas industry professionals?
BM: Our ultimate goal is to get the OmniShelf
in every business that has any type of mainte-
nance and/or electrical department. We would
also like to get it into the military. We have cur-
rently sold to large companies such as Shermco
Industries, Siemens Industry, Michelin, Trans
Ocean, and many others. As far as retailers,
Dealer’s Electrical Supply in OKC has been
selling the OmniShelf for several months. We
recently were approved by the buyer for Home
Depot to place the OmniShelf on their website.
The OmniShelf would be a huge benet to
any worker who needs extra workspace and/or
needs a temporary desk. The OmniShelf can be
used in various ways.
TH: In addition, what would you say are
some of the biggest challenges oil and gas
professionals face in the workplace? Will the
OmniShelf resolve some, or any, of those
challenges?
BM: Whether is a controls technician, electri-
cian or a mechanic, they all face the problem
with no workbench or station near the piece of
equipment they are working on. The OmniShelf
solves this everyday problem, whether it’s to
hold a laptop, tools, power tools, meters or just a
writing surface.
The OmniShelf ergonomically provides a safer
way for eld workers to work, from holding
a laptop at the proper height to holding tools
while working in an electrical panel. It also helps
reduce the potential of neck and back pain by
being able to have your tools at arm’s reach
and not having to reach down to the oor or
ground.
TH: Can you expand on the design of the
OmniShelf ? For example, are there any sur-
faces that the OmniShelf won’t stick to?
BM: The OmniShelf is designed as a portable
briefcase/workbench/desk. It has 1.5 inches of
clearance on the inside when closed. This allows
most laptops and hand tools to be carried, inside
the OmniShelf, from one workspace to the next.
The OmniShelf has a “Y” design to allow the
magnets to be adjusted closer together. This
allows it to attach to narrow surfaces, such as a
narrow column or light pole.
We use 4 rare earth magnets to latch it closed.
These have 6-7 pounds of magnetic pull, which
is strong enough to hold most small hand tools.
This is a very convenient place to hold tools
between uses.
When the OmniShelf is attached to a wall
surface, there is a 1/4” clearance the shelf and
the wall surface. This allows room for papers or
folders to be stored while using the OmniShelf.
Last, but not least, we offer an option for four
(4) industrial strength suction cups. This allows
the OmniShelf to stick to any at, non-porous
surface. Between the use of magnets and suc-
tion cups, the OmniShelf can attach to most
surfaces.
TH: Will you ever consider making a second
OmniShelf (i.e., bigger, different design) or
making changes to the current product?
BM: Yes, we have many ideas such as, different
accessories, making one a little smaller and one
that is more water/weatherproof.
OILMAN COLUMN
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Do you have a product or service that would benefit the industry?
If so, we would like to speak with you!
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40
OILMAN COLUMN
The Trouble with Oil Price Predictions
By Lakshman Achuthan and Anirvan Banerji
Predicting oil prices is notoriously
difcult because oil prices reect
both supply and demand dynamics.
Of course, supply issues garner the
lions share of the media’s attention
– often around geopolitical shocks
and are inherently unpredictable.
Nevertheless, in reality, the demand
side of the equation dominates
sustained swings in oil price
ination. Having studied such
cyclical dynamics for decades,
we have a clear understanding of
the cyclical drivers of global oil
demand to help us distill whether
moves in oil prices are supported by
directional shifts in demand growth,
or are merely reective of supply-
driven gyrations. When global
economic growth slows, oil demand
growth follows suit. Such swings in
oil demand can also show up with
a lag in measures closely followed
by industry participants, including
growth in rig count.
Another key cyclical insight is that
the trajectory of oil price ination
the growth rate of oil price – tracks
broad industrial raw materials price
ination, where cyclical demand
is clearly the overwhelming driver
of price action (see chart). Today,
regardless of additional supply
disruptions, the cyclical demand
dynamics that underlie oil price
ination point to more near-term
weakness ahead.
No doubt, oil prices are swayed by
supply-related news on a day-to-
day basis. This is not only because
of very real, transitory supply
distortions, but also because oil is an
exchange-traded commodity subject
to speculation. To see through these
issues, our research group splits a
set of sensitive industrial materials
prices (that we have tracked on a
daily basis for over 30 years) into
two groups. One group consists
of exchange-traded commodities,
including oil, copper and nickel,
and the other is comprised of their
non-exchange-traded counterparts,
such as natural gas, hides and steel.
Most of the time, the prices of the
exchange-traded and non-exchange-
traded commodities move together,
but they can diverge sharply on
occasion. Because non-exchange-
traded raw material prices are
shielded from speculative forces,
their prices more accurately reect
the predictable uctuations in
demand that are driven by cycles in
global industrial growth.
For example, around the onset of
the Arab Spring, in early 2011, there
was a spike in oil price ination,
while non-exchange-traded com-
modity price ination continued
falling. These were in line with
a cyclical slowdown in industrial
growth. More recently, the behavior
of those prices has also been tell-
ing, with regard to those underly-
ing demand dynamics. While raw
material commodity price ination
has mostly been declining since
the start of 2017, oil price ina-
tion followed suit only through
mid-year, when OPEC supply cuts
took hold, boosting oil prices. This
divergence held through most of
2018 until, as worries about global
demand mounted late last year, oil
price ination tumbled back in line
with that in non-exchange-traded
commodities. Then, following the
Fed’s dovish pivot in January, oil
prices participated in the speculative
risk-on rally, only to reverse course
yet again.
Thus, despite its wild swings, oil
price ination is actually well-
anchored to the smoother and more
predictable cyclical swings in non-
exchange-traded commodity price
ination. It is almost as if those
non-exchange traded prices act as
a trend line from which oil price
ination may temporarily deviate.
Therefore, when there are sharp
directional divergences between the
two measures of commodity price
ination, supply-related or specula-
tive distortions are likely at play.
In other words, when oil price ina-
tion spikes or plunges again, in the
wake of speculation about supply
or risk-on sentiment, a dangerous
or fortuitous moment may be at
hand. To understand which one it
is, it pays to check what the non-
exchange-traded commodity prices
are signaling about where we are in
the industrial demand cycle.
Lakshman Achuthan is the
co-founder of the Economic
Cycle Research Institute (ECRI).
He also serves as the manag-
ing editor of ECRI-produced
forecasting publications. Over
nearly 30 years of analyzing
business cycles, he has been
featured in the Wall Street
Journal, FOX Business News,
the Washington Post, Forbes and
many other publications. He is
also a frequent guest on business
and nancial news programs on
CNBC, Bloomberg, Reuters and
MSNBC. Achuthan has been a
featured speaker at John Mauld-
ins Investor Conference and the
Levy Institute’s Minsky Confer-
ence. In 2004, he co-authored
Beating the Business Cycle: How
to Predict and Prot from Turn-
ing Points in the Economy.
Anirvan Banerji is the co-
founder of the Economic Cycle
Research Institute (ECRI).
Additionally, he is the editor-
in-chief of ECRI’s forecasting
publications and is the co-author
of Beating the Business Cycle:
How to Predict and Prot from
Turning Points in the Economy.
Banerji has been an invited
speaker at events ranging from
the Eurostat colloquium on
modern tools for business cycle
analysis to the Grant’s Interest
Rate Observer conference.
Photo courtesy of lightwise – www.123RF.com
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42
Oil From Garbage: Any Prospects?
By Eugene M.Khartukov
At the end of 2018 Wiederkehr
Recycling AG (Switzerland) suc-
cessfully held the second stage of
continuous pyrolysis plant TDP-2-
200 commissioning. The pilot run of
the plant was carried along with C65
(65 kW) Capstone microturbine. The
Thermal Decomposition Plant is
equipped with a generator operating
on produced pyrolysis gas presented
with the maximum declared capacity.
The rst stage of commissioning
was held in June 2018 – the
marketable products (pyrolysis
fuel, synthetic gas and dry residue)
obtained within sawdust processing
matched stated specications.
The TDP-2-200 plant, which is
designed for automotive shredder
residue (ASR) treatment, was mod-
ernized and supplemented by gas
cleaning system and complies with
European Environmental Directives.
What many energy investors are
hoping for will be the “Next Big
Thing” is a technology called the
thermal depolymerization process,
or TDP for short. The idea behind
TDP is not new – in fact, it’s millions
of years old. Take organic matter,
subject it to heat and pressure, and
eventually you get oil. Of course,
in nature, “eventually” is usually an
inconvenient number of millennia;
the TDP shortens that time to
“hours,” if you can believe that. The
very approach was developed by
Illinois microbiologist Paul Baskis
in the 1980s and rened over the
next 15 years. The technology was
nally developed and patented
for commercial use in 1996 by
Changing World Technologies
(CWT). Brian S. Ap-pel (CEO of
CWT) took the technology in 2001
and expanded and changed it into
what is now referred to as TCP
(Thermal Conversion Process), and
has applied for and obtained several
patents for commercial use in 1996
by Changing World Technologies
(CWT) of West Hempstead, New
York. The full-scale plant already
in operation in Carthage, Missouri,
since 1999.
CWT’s Thermal Conversion Process
purportedly reforms organic waste
into renewable fuel oil, without com-
bustion, incineration or toxic residue,
providing a solution for solid waste
management while creating a renew-
able domestic source of energy.
The TDP is a surprisingly
straightforward ve-step process.
First, raw materials are fed into
an industrial-grade grinder where
they’re chopped up into extremely
small bits and mixed with water.
The mixture is then subjected to
heat and pressure (around 250 °C
and subjected to 600 psi (4 MPa),
breaking molecular bonds and
reducing the material to simpler
components in as little as 15
minutes. The next step is reducing
the pressure dramatically to drive
off the water; in the process, some
useful minerals such as calcium and
magnesium settle out as a valuable
byproduct. The remaining so-called
“black slurry” is then sent to a
second-stage reactor where it is
heated to 500°C, further breaking
down the longer chains, and the
resulting petroleum is then distilled
in a manner similar to conventional
oil rening. The distillation step
divides the hydrocarbons into
vaporous gas (a mixture of methane,
propane and butane), liquid oil
(similar to a mixture of gasoline and
motor oil), and powdered carbon.
All that to say: garbage in, (black)
gold out. The process produces no
waste materials, unless you count
water, which can be recycled in
the system. The gas can be used
to produce heat for the machine
itself; oil can be sent to reneries
to be made into a variety of useful
products; carbon can be turned
into everything from water lters to
toner cartridges; and the remaining
minerals can be used as fertilizer.
Virtually any organic material can be
fed into a TDP apparatus. By making
adjustments to the combinations of
temperature, pressure, and cooking
times, various input products
(referred to as feedstock) can
produce a wide range of output
products; the proportions of, say, gas
to oil to carbon will depend on the
composition of the feedstock. The
rst fully operational TDP system
is being used to recycle the waste
at a turkey processing plant. All
the turkey parts that aren’t used as
meat – skin, bones, feathers, and so
on – are fed into the machine, thus
solving a serious waste problem (up
to 200 tons per day) while creating
commercially valuable products. But
TDP can also process discarded
computers, tires (even steel-belted
radials), plastic bottles, agricultural
waste, municipal garbage…you name
it. In fact, the city of Philadelphia is
hoping to use TDP to convert the
sludge that comes out of its sewage
treatment plants into oil, which will
later be used to generate electricity.
Nothing is too messy or too scary
for TDP to handle. It can make
clean, safe materials out of nearly
anything. Even medical wastes,
dioxins, and other biohazardous
materials. Even anthrax, for crying
out loud. Apparently, the only kind
of material this system cant handle
is nuclear waste.
The Carthage plant produces API
40+, a high value crude oil. It
contains light and heavy naphthas,
a kerosene, and a gasoil fraction,
with essentially no heavy fuel oils,
tars, asphaltenes or waxes. It can be
further rened to produce No. 2 and
No. 4 fuel oils.
In order to better the plant’s eco-
nomics if then consumed the full
waste output of the nearby turkey
OILMAN COLUMN
Oilman Magazine / September-October 2019 / OilmanMagazine.com
43
processing plant (270 tons of turkey
offal and 20 tons of egg production
waste daily). At the start of 2005,
the Carthage plant was producing
about 400 barrels per day (64 m3/d)
of crude oil but still was reported to
be running at a loss. Further 2005
reports summarized some economic
setbacks which the Carthage plant
encountered since its planning stages.
It was thought that concern over
mad cow disease would prevent the
use of turkey waste and other animal
products as cattle feed, and thus this
waste would be free. As it turned
out, turkey waste may still be used as
feed in the United States, so that the
facility must purchase that feed stock
at a cost of $30 to $40 per ton, add-
ing $15 to $20 per barrel to the cost
of the oil. Final cost, as of January
2005, was $80/barrel ($1.90/gal).
The above cost of production also
excludes the operating cost of the
thermal oxidizer and scrubber added
in May 2005 in response to odor
complaints (which, however, should
have been directed to the turkey, not
to the TDP oil plant).
A biofuel tax credit of roughly
$1 per U.S. gallon (26 ¢/L) on
production costs was not available
because the oil produced did not
meet the denition of “biodiesel”
according to the relevant American
tax legislation. The Energy Policy
Act of 2005 specically added
thermal depolymerization to a
$1 renewable diesel credit, which
became effective at the end of 2005,
allowing a prot of $4/barrel of
output oil.
It is noteworthy that the Energy-
Returned-on-Energy-Invested
(EROEI) ratio of the oil-produ-
cing TDP is quite high – it is
now estimated at 6.67, which
is comparable to other energy
harvesting processes. To be
considered viable as a prominent
fuel or energy source, a fuel or
energy must have an EROEI ratio
of at least three. By comparison,
the current processes used to
produce ethanol and biodiesel from
agricultural products have EROEI
in the 4.2 range, when the energy
used to produce the feedstocks is
accounted for (in this case, usually
sugar cane, corn, soybeans and the
like) (these EROEI values are not
directly comparable, because these
EROEI calculations include the
energy cost to produce the feed-
stock, whereas the above EROEI
calculation for TDP does not). For
conventional oil and gas produced in
the USA EROEI is now estimated at
around nine.
TDP pyrolysis plants have proven
themselves in Russia and the CIS
countries. In particular, the py-
rolysis technology offered by IPEC
(International Power and Ecology
Co.), a world leading producer of
waste processing (pyrolysis) equip-
ment, is a unique development in
the Russian market. IPEC’s Russian
customers include the leading oil
and gas companies of the Russian
Federation (Rjsneft/RN-Uvatneft-
egaz, Gazprom Neft, NOVATEK,
LUKOIL-Komi, etc.), industrial and
service companies ETK KazSlanec,
BT-PROMOTKHODY, Apatit,
etc.), as well as municipalities and the
private sector (like the Kaliningrad
Regions Unied Waste Management
System).
However, it should be noted that
these TDP pyrolysis plants do not
produce any oil, being designed
to utilize drilling waste or to burn
municipal garbage for electricity.
In 2016, an inter-national certicate
was issued for the entire range of
IPEC’s TDP-2 continuous pyrolysis
plants for compliance with the
European Directive ‘On the Safety
of Machines and Equipment’
(2006/42/ EC). Compliance with
international standards allowed
starting deliveries to the European
market. Currently, TDP-2-2000
projects are implemented for the
Estonian company Aktsiaselts
VKG Oil (Viru Keemia Grupp).
In Europe, however, no oil is now
usually produced from city garbage.
Instead, waste (used) cooking oil
from restaurants is widely utilized to
produce a quality diesel fuel across
Europe – in the UK it is being even
ofcially blessed and monitored by
the National Environment Agency.
The TDP technology is currently of
limited use in Asia. Still, at the end
of 2017 Thailand has bought a waste
plastic pyrolysis plant from Zheng-
zhou-based (China) Doing Company
to be installed in Bangkok. This
waste plastic pyrolysis plant has a
small capacity; it could process 1-ton
waste tires or waste plastic per day.
In Thailand, there is so much waste
plastic in the household garbage.
Prospects
Although it would be easier and
less expensive to simply burn the
municipal garbage, some U.S. cities
are planning or at least deliberating
to use the TDP to convert the sludge
that comes out of their sewage
treatment plants into oil, which will
later be used to generate electricity.
There are no published forecasts
of oil from garbage production
worldwide but, according to the
World Bank’s Urban Development
Department, by 2025 the amount of
global municipal waste will rise from
1.3 billion tonnes per year today
to 2.2 bln tonnes per annum, with
over 11.6 percent of the total being
accounted for by the USA.
We, in the CPBS, estimate that by
2030 only in the States there will
be at least ve oil-producing TDP
plants, located near or within the
territory of New York, Los Angeles,
Chicago, Houston, and Philadelphia,
with a combined capacity of around
3,000 b/d. Surely, not too much and
not very impressive but this is only
the beginning and, how it was wisely
noted on the matter by one U.S.
writer, “we won’t run out of oil as
long as we have garbage.
Eugene
Khartukov is
a Professor at
Moscow State
University for
International
Relations
(MGIMO), Head of Center
for Petroleum Business Studies
(CPBS) and World Energy
Analyses & Forecasting Group
(GAPMER) and Vice President
(for the FSU) of Geneva-based
Petro-Logistics S.A. Khartukov
has authored and co authored
over 320 articles, brochures and
books on petroleum and energy
economics, politics, management,
and oil and gas in the FSU,
Russia’s Far East, the Caspians,
Europe, the OPEC, ME and
Africa. Participated as a speaker
and/or a session chairman in
more than 170 international
energy, oil and gas and economic
fora.
OILMAN COLUMN
Oilman Magazine / September-October 2019 / OilmanMagazine.com
44
OILMAN COLUMN
Interview: Rachel Olney, Founder
and CEO, Geosite
By Sarah Skinner
Sarah Skinner: Can you tell me how Geosite
got its start?
Rachel Olney: The idea for
this company was many years
in the making. I was fortunate
enough to do a study for the
Air Force years ago that gave
me one of the best top level
views of what was happening
with commercial space and how it would impact
other non-space industries, despite my academic
focus in manufacturing. It ended up snowballing
into a deep involvement with US Special
Operations and an opportunity to help shape and
advance innovation efforts happening across the
Department of Defense. I got to spend a lot of
time in some really intense places with some of
the most capable people in our military. But deep
down, I have always had a love for efciency
that was cemented in my time with heavy
industry. When I heard that one of the teams
I was working with had multiple casualties due
to a process problem that could be solved with
technology - technology I understood - I knew I
needed to start Geosite.
SS: How would you describe Geosite’s
capabilities?
RO: Geosite is a project management software
for teams operating across the surface of the
earth. Our application leverages the proliferation
in satellite imagery sources and sensor systems
to let organizations with distributed operations
better coordinate and leverage assets (like people
and equipment). Most humans are visual and
Geosite is the platform that allows spatially
distributed teams to communicate visually
about their operations and to intuitively and
collaboratively map operations. Geosite enables
customers, from the U.S. Military to the energy
industry, to use spatial data for more rapid
and accurate planning and operations through
intuitive workows and collaboration tools.
SS: What led you to believe that there was
a market out there for a different kind of
geospatial software?
RO: There are two main compounding factors.
First, before Geosite, software for spatial data
was built solely for geospatial scientists. However,
more than just engineers or scientists need to
leverage this data to make smarter decisions to
drive safety and efciency. Because we select the
best commercial and government data for our
customers and have built a system that can ingest
and translate data into an intuitive and visual
tool, it takes out much of the learning curve
and allows professionals with many different
backgrounds and types of expertise to leverage
technology. Second, there is simply more and
more spatially referenced data - everything from
updated imagery of the oil elds, to ood data
and terrain. Organizations also want to see the
data their own systems are producing, from
production numbers to GPS trackers. I see E&P
companies looking at 12 different pieces of
software just to stitch together a cohesive picture
of what is happening in the eld rather than
seeing a holistic picture, which leads to extremely
costly and dangerous mistakes.
SS: How can access to this kind of data
benet companies?
RO: With the digitization of the oil eld, E&P
companies have more data from tracking and
monitoring systems than they can intelligently
incorporate into their operations. Geosite
visualizes this data, allowing organizations
to decrease time and labor effort in the eld
and increase safety through management by
exception. Additionally, the project-based
communications on Geosite’s platform allow
your team to connect with services companies
and contractors on specic projects - especially
because our pricing is not per-seat. Lastly,
Geosite gives E&P companies a collaborative,
easy to use mapping environment. The ability to
visually communicate decreases logistics delays
and access to daily and high resolution satellite
imagery that lets your team see what is happening
in the eld. Geosite’s data library also serves
ood and environmental data - the ability to
easily incorporate this information into planning
helps increase safety and decrease risk.
SS: Have you seen much of a demand for
your product in the oil and gas industry?
RO: The response has been incredible because
many of our customers didnt even know what
we had built was possible - or even that the
technology and data exists, especially on the
space side. Many oil and gas companies have
trouble knowing the conditions in the eld
without physically sending someone out to
check. This is costly in many ways, including time
and personnel, and it also generates more risk.
Geosite provides the most up-to-date and highest
resolution satellite imagery available, which
allows operators to conduct desktop recon.
Even more importantly, many oil companies
have started investing in collecting more and
better data, but few have seen this affect their
bottom line because the software to integrate this
information into their daily processes did not
exist. Geosite answers this problem by linking
this data into the right software to leverage the
information across the enterprise.
SS: How can it be benecial to oil and gas
E&P companies?
RO: Few companies can realize gains from
satellite and sensor data because they cant
integrate data and analytics into their business
operations. In fact, creating a simple map of
company assets usually requires advanced
training and creates a bottleneck in the decision-
making process. Geosite solves this problem by
connecting executive, project management, and
workforce teams to world-class satellite imagery
and real-time sensor data in automatically
updated maps. While projects are completed,
users can view and edit project maps and data in
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Oilman Magazine / September-October 2019 / OilmanMagazine.com
46
real time. Teams with different roles can view
or add comments to make it easier and faster
to communicate. Executives can easily review
project summaries and maps; project managers
can track project status in real time and create
work orders; and workers can use spatial data
and tags for daily tasks.
SS: How can you get your name out to these
companies and let them know that there is
satellite data out there other than Google?
RO: When I rst started talking to people in the
oil and gas industry about Geosite, I assumed
that they knew there was data they could lever-
age but just didnt have access to. However, this
turned out to be a false assumption. In hind-
sight, it makes sense that they wouldnt know
what is available - I had the “curse of knowl-
edge” and assumed people knew what I knew.
Yet, I spent years learning about the space and
geospatial industries. We actually ended up shift-
ing some of the features of Geosite to ensure
our customers would not need to come up the
steep learning curve of the geospatial industry.
Ultimately, the major focus for any company is
the needs of its customers. When we commu-
nicate how we solve real problems facing the oil
and gas industry, our customers understand how
they can leverage our technology. It’s never just
about the technology itself.
SS: You’ve spoken about Geosite being
more simplied and user friendly. What
kind of in-depth training would a company
be looking at for their personnel once they
purchase the software?
RO: We built our platform so that anyone,
regardless of background, could use it - not just
GIS experts. It should not take more than 10
minutes to explain the full functionality of our
platform, which is very different than geospatial
software from the past decade. So there is no
training required. We pride ourselves on this
point because training and onboarding often
become large barriers that keep businesses
from using new software. However, unlike most
software marketed towards enterprises, and
more like the types of applications consumers
are used to, Geosite is extremely intuitive, and as
we get feedback for certain tools to incorporate
more depth and complexity, we will make sure
those tools remain self-explanatory.
SS: What is Geosite looking toward for the
future?
RO: Geosite is currently working towards the
integration of more sensor data (GPS and
SCADA) so that users can track asset locations
and status anywhere in the world. With the
digitization of the oil eld, we are working
closely with sensor companies that are creating
exquisite sensors, data, and analytics to help
increase efciency, accuracy, and safety. For
instance, Reservoir Data Systems is doing some
incredible things creating and analyzing data
during completion. Because my background isn’t
in oil and gas I love connecting with these kinds
of experts that are truly pushing the envelope
and deeply understand the industry. Moreover, it
is the creation of all of this incredible data that
drives Geosite’s thesis for project management
software that lets diverse teams leverage better
data. In the short term, we are also excited to
work really closely with our rst major oil and
gas customers and adapting Geosite to meet all
of their needs.
Rachel Olney is the Founder and CEO
of Geosite Inc. Her academic research at
Stanford focused on innovation in bureau-
cratic and hierarchical organizations as well
as mechanical and systems engineering and
design. Rachel also informed future plan-
ning for the military’s actions to leverage
commercial imagery and communications
platforms to create improved intelligence
products and resilient planning and opera-
tions systems. Her company, Geosite, is
backed by the top Venture rms in Silicon
Valley, including YCombinator.
OILMAN COLUMN
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48
OILMAN COLUMN
Enhance Security in Oil and gas Asset
Integrity Management: The Latest
Technologies and Strategies to Protect
Digital Data
By Dave Maguire
The IIoT has transformed the landscape of
Asset Integrity Management for the oil and
gas industry. By empowering owner-operators
with the ability to interconnect a vast array of
physical assets on one digital platform, IIoT
facilitates improved productivity, protability,
inspection scheduling, and corrosion
mitigation – all while signicantly reducing
the likelihood of asset failure. These benets
have been driving the increased adoption
of digitalization in oil and gas AIM (Asset
Integrity Management).
The new benets of digitalization also
come with new challenges. In the case of
operational AI, that challenge is the security
of inspection data. In order to protect the
integrity of asset and inspection data, it is
imperative that oil and gas operators take into
consideration the potential vulnerabilities
and weaknesses inherent within their
AIM software and processes – and utilize
the right tools to ensure that necessary
countermeasures and safeguards are in place.
The Challenge
There are two facets to security in this
industry: OT (Operational Technology),
which refers to software (or hardware) that
directly monitors and controls physical assets
in the enterprise, and IT (Informational
Technology) which deals more with overall
information processing. For the purposes of
this article we will focus on the OT aspect of
oil and gas operations.
In the old technological climate, owner-
operators would manually manage operational
maintenance and equipment integrity using
paper-based processes, Excel spreadsheets
or monthly reporting cycles. In today’s
era of digitalization, operators can deploy
AIM software platforms that aggregate,
centralize, store and analyze all data from
disparate sources into one database. They
can utilize intelligent data analytics such
as RBI (Risk Based Inspection) and IOW
(Integrity Operating Windows) to garner
actionable intelligence from their data
in real time, making it possible to stay
on top of asset performance and adopt
predictive maintenance before costly loss of
containment or unplanned shutdowns occur.
The data from this software is stored digitally
either in the cloud or in an on-premise
database using the company’s own servers.
Thus, the challenge becomes protecting the
security and integrity of the data where it’s
stored – ensuring no third parties can access
or manipulate the information and protecting
it from attack.
For oil and gas owner-operators, that risk can
manifest in a multitude of ways. Incorrect
data entry, access to and manipulation of
data by an unauthorized user, storage of data
on unprotected servers or databases or weak
security processes that create vulnerabilities
for the data to be altered or exposed to threat.
Any of these can compromise the efcacy
of the AIM program. The key to achieving
the benets of IIoT – optimized inspection
scheduling, prolonged equipment life and
fewer shutdowns – relies on the protection
and security of the AIM data.
The Solution
The best way to leverage technology is to
seek out an AIM software that utilizes secure
encryption, robust databases, and the option
to host data either on-premises or in the
cloud. While security experts had concerns
about cloud hosting when the technology
was in its infancy, these days it has become
exponentially more secure – arguably
even more so than on-premise servers.
With automatic security controls in place,
companies don’t have to invest the time and
effort in protecting their on-premise data.
There are fewer vulnerabilities to third-party
access, no risks of physical access and better
overall resiliency to threats such as natural
disasters or re. Additionally, the technology
behind the cloud is always current and
Image courtesy of Metegrity
Oilman Magazine / September-October 2019 / OilmanMagazine.com
49
OILMAN COLUMN
evolving automatically – unlike the manual
process of updating and maintaining an array
of physical hardware.
Advancements in AIM technology for oil and
gas operations have led to the availability of
software that offers securely encrypted cloud-
based hosting. In fact, there are now eld-
based software tools that make it possible to
conduct and manage asset inspections directly
from the eld via mobile tablet.
To ensure that your asset data is protected,
seek out a software that provides:
Robust database with secure encryption.
This can be on-premises or in the cloud.
Ideally, this should be an industry-standard
database such as Oracle that professional
DBAs can be hired to manage, audit and
secure if on-site, rather than a proprietary
system created by the AIM software
developers.
A designated security feature designed
to control access to data, establish a
hierarchy of user access designations and
automate security countermeasures within
the software. This feature should be fully
customizable, allowing the operators to
adjust security functions, user levels, etc.,
according to their unique needs and goals.
Seamless regulatory compliance to all major
regulatory industry codes (including ASME,
API, OSHA, etc.). The software should
be able to generate a customized report
tailored to the specic industry standard
with the click of a button – and securely
retain all relevant data in a clear and
transparent audit trail.
Integration with Microsoft Excel. As the
industry catches up with digitalization,
there is still heavy existing use of Microsoft
Excel by engineers in the eld. However,
leaving critical asset data in Excel leaves it
vulnerable to access and manipulation. An
AIM software with Excel integration can
extract all of that data and lock it securely
into the AIM database where it is protected
from alteration.
The ability to support Transport Layer
Security (TLS) 1.2, the current industry
standard for secure connections which
provides defense against exploits like
BEAST, POODLE and DROWN.
Mobile application with integration. The
app should complement, connect to and
seamlessly integrate with the larger AIM
software – this helps mitigate data entry and
human errors.
A quarantine feature for mobile asset inspec-
tion tools – one that places a hold on all
inspection data received from the eld so it can
be thoroughly checked for quality assurance.
Operators should also ensure that the AIM
software selected comes with comprehensive
support – this should include professional con-
sultation and assistance with implementation,
to ensure that the legacy data is properly sorted
and populated; comprehensive training services
to ensure that operators are aware of the most
effective and secure methods for utilizing the
software; and ongoing technical support to
assist with, prevent and/or rectify any breaches
or threats.
If you are interested in selling your deal in this
current market, you won’t be alone in Q4. The
market shift from hold to sell is happening,
and it’s happening in a big way. The marketed
deals will be done on a much larger scale, the
smaller deals are being transacted off-market,
because the value-add from mass marketing a
smaller (sub $15MM deal) isn’t there.
The buyers in this market are looking at
cashow, and are buying on current cashow.
Little to no upside value is being attributed
for PUD or acreage, even in the Permian
and Delaware. The PV values being offered
on operated deals are anywhere between
PV15 and PV25 – which in honest terms are
“cashow.”
What we’ve been seeing is a much larger
buying base than any other time in the last
decade. However, the sellers are, for the most
part, interested in selling out for better PV
numbers than any of the buyers are willing
to give. That will push a huge wedge between
the buyers and sellers, causing a gap in pricing
consistent with the 2015 gap.
The larger, WSJ reported
deals of the hundreds
of millions will still be
accomplished by the
end of Q4, because the
brokers will pitch to the
publicly traded companies
that they can cover the
difference of an elevated
sales price with the
increase in stock value.
The smaller deals,
however, will be
reevaluated to reect the
market. And sellers will either admit the value
or continue to hold (if they can). You may not
like that the KBB value of your car is what
it is (trust me, I put 120,000 miles on my car
last year), but that’s the value. The sooner the
sellers understand that the cashow multiple
is the deciding factor, the better. Keep the
PUD’s, the acreage, the “upside” and have
the wells sold hold it. Work out different ways
to capitalize on the upside. Because in the
foreseeable market, if you want to get paid
for upside, you are going to have to drill it
yourself.
There will be a signicant number of sellers
in Q4 and Q1 – selling at cashow multiples
(especially as the Presidential race gets more
prevalent towards mid-2020). Take advantage
of the buyer networks available to transact
now.
Quick View of The Acquisition
& Divestiture Market
By Josh Robbins
Oilman Magazine / September-October 2019 / OilmanMagazine.com
50
Oilman Magazine / September-October 2019 / OilmanMagazine.com
50
OILMAN COLUMN
Augmented Reality: More than a Game
By Sarah Skinner
There are all kinds of new technologies and
up and coming software out there that are
capturing our attention daily. It’s exciting to
wait in anticipation for what is around the
corner, metaphorically and literally, as you
watch newscasters video the masses camping
out waiting for the newest iPhone to arrive
in stores. When you think “new and exciting
technology” it’s possible that the energy
industry sector is not the rst one to come to
mind as a beneciary of such progress, but this
industry has been a grateful recipient of many
of these advancements and really, they’re just
getting started.
The most exciting at the moment is not just a
software though, it’s an entire experience. It’s
the experience of Augmented Reality (AR). The
most familiar and recognizable AR experience
is probably Pokémon Go. Pokémon Go uses
a real world environment where computer
generated objects are placed within a game for
people to play. While enhancing the perception
of what is in front of them, it gives consumers
a computer generated immersion into a real
environment, which results in a fun and
exciting altering of the normal world in which
we live, so it easily explains its appeal.
Now imagine a far more advanced version
of AR and what its emergence into the
energy industry could lead to. The solutions
it could provide are countless. One of the
leading augmented reality multi-source
knowledge platforms for enterprises is
called Fieldbit. Fieldbit got its start in 2014
and is headquartered out of California. The
augmented reality platform offers eld service
technicians rich, real-time information and
guidance through interactive collaboration
with experts and digital resources, enabling
them to solve critical problems effectively and
efciently, thereby reducing the need for costly
technician visits.
Previously, solutions were made on paper
or on computers, which is still 2D. But with
AR, there is a different kind of knowledge
out there. Technicians in the eld can interact
with an expert located at headquarters for
troubleshooting, which saves a company
from a costly site visit. Everyone within an
organization can look in on the environment
at hand in real time through devices like
phones, tablets or through smart glasses. With
smart glasses, the experience is much more
natural and efcient since people need their
hands to work. Any way you choose, all of the
information is presented in front of you and
the ability to show and interact with digital
information that is superimposed with physical
objects is literally at your ngertips.
Evyatar Meiron, CEO of Fieldbit says “If you
look at what an oil rig actually looks like – it is a
very complex site with pipes, tanks, etc. Fieldbit
aims to smooth the process of xing an oil
rig by creating a map that highlights where
everything is located and ag exactly where a
malfunction is so that the technician can easily
locate the issue and x it in real-time.
With a technology as advanced as this one, it
would seem that a large amount of time for
training would go into learning about it. It’s
actually such a small amount of training that
it’s similar to applications on mobile phones.
The application is started and the consumer
just browses through it to see how it functions.
In addition, there is not much training on the
workforce side of things either. The knowledge
sources for the technician is between the
technician on site and the expert in the service
center. There are three knowledge assets here:
collaboration, visualization and the ease of
integration of other enterprise software.
“The idea is to create an easier process for the
technician and cost savings for the enterprise.
So Fieldbit created a technology that is user
friendly, informative, and does not require a lot
of training for the technicians to get on board.
Ease of use and simplication is our goal,” says
Meiron.
Safety is another crucial benet that AR offers.
Many companies must monitor and obtain
equipment in hostile environments. Having
the ability to access the most up-to-date and
compliant safety procedures in their eld of
view is an advantage that is hard to pass up.
EMR rates can make or break a company and
safety should be at the forefront of everyone
in this industry. AR being able to take a step
by step approach with an employee to ensure
tasks are done safely and correctly is a huge
advantage.
AR spans many industries, but it is not a stretch
to say that the energy industry will thrive from
this revolutionary technology. The ability to be
the eyes, ears and hands on ground, no matter
the location, is invaluable. The possibilities are
endless when experts, owners, subcontractors,
technicians, etc., can be on site and fully
engaged, without physically being present. It is
amazing and inconceivable to think that we’ve
reached a time where this technology actually
exists. It’s exciting to watch the merging of this
kind of technology with the energy industry
and we eagerly anticipate what is to come!
Photo courtesy of nicoelnino – www.123RF.com
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THROUGHOUT THE US, CANADA AND
LATIN AMERICA
be THERE
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THE ORIGINAL BREAKBULK EVENT
For everyone involved in procurement,
transport and logistics of oversized cargoes
October 8-10, 2019
George R. Brown Convention Center
Houston, Texas, USA
Oilman Magazine / September-October 2019 / OilmanMagazine.com
52
OILMAN COLUMN
Colorado Governor Continues War
on Oil and Gas
By Jason Spiess
Shortly after Jared Pollis was sworn in as the
43rd governor of Colorado he issued a declara-
tion of war against oil and gas in the state of
Colorado. Since then there has been a political
battle between the people and politicians from
cafes to town halls to the state capital steps.
Last April, the Governor signed a “local
control” which calmed some of the political
waters from the appointed industry leaders and
politicians. However, small businesses and grass
roots industry leaders still had questions and
were not completely convinced the Governor’s
war on oil and gas was over.
Last month, Whiting Petroleum Corp.
eliminated 254 positions or a third of its
workforce, including 94 executive and corporate
positions at its Denver headquarters. While
there are a myriad of reasons for these
layoffs, the ongoing uncertainty permeating
in Colorado’s oil and gas sector cannot be
discounted or ignored.
Heath Holloway, CEO and managing member,
Titan Solutions, lives in Denver and has an
ofce in Greeley, which is located in Weld
County, the state’s top oil and gas
county. Holloway is also a third-
generation oil and gas professional,
following his father and
grandfather.
“It’s pretty interesting right now
with Governor Pollis and his
war on oil and gas,” Holloway
said. “In the past a lot more
people were quiet or hid the
fact they worked in oil and gas,
but today, more and more are stepping up and
courageously standing up for the industry.”
Perception plays a role in the future of oil and
gas. The blueprint of the Extreme Environ-
mentalists is akin to a cult or some religions,
giving the environment an intense emotional
attachment. Colorado’s pristine rivers and Rocky
Mountain highs became the perfect backdrop
for a smoke and mirrors eco-opportunity.
This is the angle of the debate Holloway
knows very well since Titan Solutions provides
containment solutions to prevent spills and
enable companies to maintain consistent
operations. Their containment solutions range
from whole site containment to creative custom
designs that addresses unique site issues.
A lot of people do not even know that
Colorado has oil and gas activity,” Holloway
said. “When I go to conferences or on vacation
with my family people are surprised when I tell
them not only is there oil and gas in Colorado,
Weld County is one of the top counties in the
nation.
Over the past decade, Weld County has been
one of the top oil and gas producing counties
in the United States. Yet, there are still people
in Colorado who are unaware of the industry’s
economic impact and community development
opportunities.
“It’s about educating people right now.
We bring people in all the time to
talk to our employees and family
members about what is going
on in their slice of industry,”
Holloway said. “This way our
people know what is going on,
how it affects us, how it affects
everybody.”
Holloway continued saying there
are still meetings and town halls happening
every day in the state in an attempt to scale back
some of the perception and regulation against
the oil and gas industry.
“There’s a good group out there called Energy
Strong (Colorado) that is working for all of us
putting in the time and effort at town halls when
many of us cannot be there,” Holloway said.
“This has enabled and created a new network of
shared information that never existed before.
Energy Strong Colorado is a result of Senate
Bill 181, which created major restrictions and
changes to how oil and gas development is
regulated in Colorado. But worse, it created
more uncertainty for the industry.
According to Energy Strong Colorado’s website,
their mission is to unify the blue and white-
collar professionals of Oil and Gas, while
fostering community among the Oil and Gas
workforce, the supporting industry workers, and
industry supporters.
Their website also states the advocacy group
educates others about the benets of promoting
the advancement of natural resource exploration
and extraction in Colorado.
“Through education and empowerment, we
ardently defend any and all attacks against the
professionals of the Oil and Gas industry, its
workers, and their families”. Energy Strong
Colorado’s site states.
Jack Hamlin, president of Summit Engineering
and vice president of Energy Strong Colorado
says it was quite an undertaking in the beginning
due to a learning curve in the new age of
politics, logistics and technology. But after a
crash course in reality, Energy Strong Colorado
mobilized the troops.
“We had to get people mobilized, that’s the
essence of what this is about,” Hamlin said.
“Basic things like educating our industry on
what was going on, live streaming the meetings
so our colleagues could see the narrative the
opposition was trying to push.”
Hamlin said it was “alarming” to hear what
many had thought about the oil and gas industry.
“It’s turned into a (political) partition issue and
it really is not,” Hamlin said. “It’s about energy
independence, about how we get better and how
safe it is.”
At the end of the day, however, Holloway
believes education and engagement will be the
solution to Colorado’s energy issues.
“I think it is getting back to the basics about
what oil and gas is. From plastics to cars to jobs
to really almost everything.” Holloway said.
“There needs to be an understanding of what oil
and gas is. What it means to communities.
Titan Solutions began as a small supplier of LED light plants. Today they have grown to offer numerous business lines
to a multitude of companies.
www.beachwoodmarketing.com
Beachwood navigates teams
to find deals that no one else can.
2828 NW 57th Street, Suite 309 l Oklahoma City l (405) 463-3214
We don’t market to test the waters, we hit the market to make waves.
800-208-7918 nyb.com
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