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

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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Oilman Magazine / September-October 2019 / OilmanMagazine.com

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

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

Gifford Briggs

Gifford Briggs joined LOGA in 2007 working

closely with the Louisiana Legislature. After

nearly a decade serving as LOGA’s Vice-

President, Gifford was named President in

2018. Briggs rst joined LOGA (formerly

LIOGA) in 1994 while attending college at

LSU. He served as the Membership Coordinator and helped

organize many rsts for LOGA, including the rst annual

meeting, Gulf Coast Prospect & Shale Expo, and board

meetings. He later moved to Atlanta to pursue a career in

restaurant management. He returned to LOGA in 2007.

Mark A. 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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LETTER FROM THE PUBLISHER

CONTRIBUTORS — Biographies

Emmanuel Sullivan, Publisher, OILMAN Magazine

Oilman Magazine / September-October 2019 / OilmanMagazine.com

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

Connect with OILMAN anytime at

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Oilman Magazine / September-October 2019 / OilmanMagazine.com

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,

wouldn’t 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 don’t 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

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

track all your leads and data.

Visit www.OilmanConnect.com for more information

800-562-2340 Ext 4 • info@OilmanConnect.com

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Virtual Booth

Today

Oilman Magazine / September-October 2019 / OilmanMagazine.com

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

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

OILMAN COLUMN

Artificial Intelligence Provides New Layers

of Refinery Safety in 21

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

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

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 USA’s 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, “SparkCognition’s

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

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

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

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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Oilman Magazine / September-October 2019 / OilmanMagazine.com

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 CIA’s 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)

…

(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

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 nation’s 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

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 doesn’t 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

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.

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.

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

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 women’s network,

but I felt like the women’s 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 nation’s

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 haven’t 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 doesn’t

understand how it’s powered, we’re going to

have a problem. If we’re 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

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

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

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 aren’t 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 weren’t 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

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

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 doesn’t 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

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

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

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 don’t 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

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

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.

#bookletDiv.pf5 { display: block !important; }

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

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

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

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

OILMAN COLUMN

Software and Technology’s 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

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.

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Oilman Magazine / September-October 2019 / OilmanMagazine.com

OILMAN COLUMN

How Oil and Gas Employers Can Navigate

an Applicant’s 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,

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 Houston’s 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

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 don’t 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.

https://www.dallasfed.org/research/energy/indicators/2019/

en1907.aspx

Oilman Magazine / September-October 2019 / OilmanMagazine.com

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

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

Are you looking to expand your reach in the oil and gas marketplace?

Do you have a product or service that would beneﬁt the industry?

If so, we would like to speak with you!

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Oilman Magazine / September-October 2019 / OilmanMagazine.com

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

lion’s 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-

in’s 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.

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Oilman Magazine / September-October 2019 / OilmanMagazine.com

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 can’t 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

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

Region’s 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

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 didn’t 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 can’t

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

Continued on page 46...

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Oilman Magazine / September-October 2019 / OilmanMagazine.com

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 didn’t have access to. However, this

turned out to be a false assumption. In hind-

sight, it makes sense that they wouldn’t 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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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

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

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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be THERE

THE ORIGINAL BREAKBULK EVENT

For everyone involved in procurement,

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October 8-10, 2019

George R. Brown Convention Center

Houston, Texas, USA

Oilman Magazine / September-October 2019 / OilmanMagazine.com

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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