TX Oilman Magazine Nov/Dec 2013 : simplebooklet.com

Column Louisiana s superior rock resource Politics Do Matter For the Oil and Gas Industry By Don Briggs President Louisiana Oil and Gas Association Famed Industrialist and oil and gas tycoon J Paul Getty once said If business is your profession then you should make politics your business On that note Louisiana voters are facing multiple elections over the next year The 5th U S congressional district is voting next month November 16th between two Republican candidates to see who will head to Washington D C to replace former Congressman Rodney Alexander Louisiana Supreme Court District 2 will be electing a new member to the state bench in the Fall of 2014 The mid term elections for U S congressional races will also take place next Fall of 2014 And finally the state of Louisiana will be electing a new U S senator within the next year What do these political races mean to our state and for the future of the Louisiana oil and gas industry In order for our state to become more business friendly than we currently are today state and federal officials must be elected that represent the entire business community An elected official is not pro business if he only supports the health care industry or just the auto manufacturing industry or even just the oil and gas industry A quality candidate supports the entire business community For example with the current congressional race that will occur in a few weeks voters must do his or her homework Watching a political ad or mimicking your friend s vote is not sufficient The voters must understand the platform in which the candidate is running and also what his or her track record displays 6 One congressional candidate from the 5th District is a nine year state senator and businessman Therefore he understands what it takes to operate a business and also how to bring home the bacon for his senate district The other candidate is a multi business owner and therefore understands what is required of a pro business official Again what does this have to do with the oil and gas industry Everything If we the people elect a candidate that does not understand oil and gas or does not have a favorable opinion or voting record for the oil and gas industry then we should not elect this person as our representative The same train of thought goes for a Supreme Court race here in Louisiana If this person has a record on the bench in his or her previous judicial district that is anti oil and gas or even more broadly anti business then it is on the backs of the voters to know these details Supreme Court races are not the only important races Localized races matter too due to the fact that local judges often become district judges and district judges often become Supreme Court judges It is prudent of the oil and gas industry the state and national associations and businessmen and women to educate his or her current officials and potential elected officials The industry needs pro business and pro oil and gas allies no matter the particular voting district Again Getty s quote can be applied to our daily lives If business is your profession then you should make politics your business Oilman Magazine NOVEMBER DECEMBER 2013 Winn Rock s local quarry produces crushed stone for all of your needs Our applied cost saves you both time and money with no compaction necessary Oil eld and natural gas sites Logging and forestry roads Parking and storage areas Mining operations Secondary public private and industrial haul roads www winnrock com 318 628 3523 10264 U S 84 Winnfield OILMANMAGAZINE COM Louisiana 71483 7

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Environmental Safety level paid by manufacturers in New Jersey one third of the cost faced by European manufacturers and a fourth of what Asian factories pay That s steering more manufacturing to Texas Four international steel firms have announced 3 3 billion in new plants two outside Corpus Christi one in Bay City and one in Bryan Environmental We ve EXPANDED our focus to meet our customers needs and OMIES now has one of the largest distribution warehouses 50 000 square feet in the Gulf Coast area with products YOU need Safety Tops Natural Gas Industry Concerns SOURCE GLOBE NEWSWIRE Press Release Black Veatch Holding Company Key findings from Black Veatch s 2013 Strategic Directions in the North American Natural Gas Industry report show an industry embarking on a period of sustained growth driven by low cost shale gas resources However for the economy to fully realize its benefits industry leaders will have to address the challenges of a rapidly evolving U S energy market The report s findings show that stakeholders across the value chain must work together and compromise on key issues said Peter Abt Managing Director of Black Veatch s Oil Gas strategy practice The general consensus is that more pipeline capacity is needed How this capacity is financed and who pays for it is the area of disconnect Without pipeline investment the natural gas industry s growth will slow and consumers could see dramatic price swings The good news for the industry however is that growth is expected to continue More than 95 percent of natural gas industry leaders stated they were optimistic or very optimistic in their general outlook towards future industry growth The prevailing optimism across the industry is largely driven by expected growth in the power generation LNG liquefied natural gas export and transportation markets said John Chevrette President of Black Veatch s Management Consulting Division Black Veatch s projections have demand for natural gas from the power generation market nearly doubling by 2020 Other key findings from this year s report include Gas prices expected to rise Participants and Black Veatch analysts largely believe gas prices will rise to between 4 50 to 5 99 per Million British thermal units MMBtu between now and 2020 Safety economic growth and regulation top concerns Participants from the Upstream Midstream and Commodity enhancement is a growing trend among natural gas producers There is growing interest among producers for onsite LNG and or CNG compressed natural gas production This provides producers with new market opportunities as well as potential operational enhancements AbrAsives Industrial Absorbents spill Kits ContAinment boom Custom mAnufACturing U S LNG exports have cost benefits over global competitors In addition to lower pricing U S LNG export prospects benefit from the existence of eight brownfield LNG terminal projects These are facilities that were previously developed to import natural gas Much of the existing infrastructure can be used for export terminal purposes This speeds access to market for U S gas and supports their competitive advantage over most international projects Cutting tools Drums fire extinguishers first AiD proDuCts lighting eleCtriCAl mro plAnt mAintenAnCe proDuCts oil reCovery equipment sKimmers personAl proteCtion proDuCts ppe sAfety proDuCts Safety seConDAry ContAinment equipment signs tAgs storAge equipment Editors Notes Black Veatch conducted its second annual natural gas industry survey from 18 July 23 August 2013 receiving 336 qualified industry responses Statistical significance testing was conducted and represented results have a 95 percent confidence level Participants were asked to provide their view point on a range of industry issues including operational environmental and economic challenges The Black Veatch natural gas industry report is part of the company s Strategic Directions series that includes in depth analysis of the electric water natural gas and utility telecommunications industries The full Black Veatch report is available for download at no charge via www bv com reports Also on OilmanMagazine com PHMSA awards grants to oil and gas pipeline safety groups Trio of Texas universities win bid to launch offshore safety center 16 OMIES Enviro Industrial Safety Products currently represents hundreds of manufacturers and sells a wide variety of items such as Downstream sectors all rated the listed items within their respective list of Top 5 industry issues Cyber security tougher task for small utilities Only 42 percent of respondents from small utilities less than 100 000 customers have cyber security programs in place or in the planning stages Nearly 90 percent of large utilities more than 1 million customers state a similar level of preparedness For more than 40 years OMI Environmental Solutions OMIES has been a leading manufacturer of oil recovery equipment OMIES skimmers have become a large part of many industries from the oil field to food processing and can be found in diverse industries worldwide Oilman Magazine NOVEMBER DECEMBER 2013 tools AnD hArDwAre welDing proDuCts OUr cOMMItMENt IS tO ENSUrE OUr cUStOMErS NEEDS ArE MEt wIth qUAlItY PrODUctS AND OUtStANDINg SErvIcE At AN AffOrDAblE PrIcE cUStOMEr SErvIcE IS OUr MAIN fOcUS wE StrIvE tO hAvE EffIcIENt SOlUtIONS fOr PrODUctS OUr cUStOMErS NEED whEN thEY NEED thEM WWW OMIESP COM LAO 11 13 1 800 645 6671 ORDERS OMIES COM OILMANMAGAZINE COM 17

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Environmental Safety and it can help them too in the industry he said The nearmiss reporting system will help the agency learn what energy companies are really doing to improve safety as they work with increasingly advanced technologies hundreds of miles offshore and thousands of feet below the surface to extract hydrocarbons from high pressure high temperature wells Another process for building an effective safety culture in the offshore industry is the continuing auditing of safety plans being carried out by the companies Eventually those audits will be performed by independent rigorous third party evaluators We ve got to get it to that point Salerno said U S Offshore Oil Regulator Sees Growing Safety Culture SOURCE Reporting by Erwin Seba and Kristen Hays Editing by Terry Wade and Jim Marshall Reuters The new head regulator of the U S offshore oil patch says the effort to avert another disaster like 2010 s BP Plc BP L Macondo well blowout may never be finished and that experts at a national laboratory are helping it model deepwater risks I don t think there is a point when you are done Brian Salerno director of the U S Bureau of Safety and Environmental Enforcement BSEE told Reuters during the Reuters Global Commodities Summit in Houston Salerno took over as director of BSEE pronounced Bessie in late August BSEE is the enforcement side of the former U S Minerals Management Service and was created in 2011 after the BP well blowout to split safety and environmental enforcement from the management of offshore crude oil and natural gas resources Following the Macondo disaster the worst U S offshore spill ever which killed 11 men and released more than 4 million barrels of oil into the Gulf of Mexico stories emerged about MMS employees being too cozy with oil company officials which raised questions about the integrity of regulators Rules have since been tightened to redouble safety and disaster response standards What we mean when we talk about safety culture is that it really takes root and is built into the actual business processes of the companies Salerno said adding that BSEE is working to introduce an additional focus on how we manage risk collectively I ve got less than 2 1 2 months stick time Salerno said of his tenure at the helm of the agency which included the three week partial government shutdown that curtailed some of BSEE s work However Salerno is no newcomer to maritime safety regulation Prior to taking over BSEE he retired as a viceadmiral after a 36 year career in the U S Coast Guard during which he served as deputy commandant for operations While the general impression may be that the Macondo crisis is over some of the problems it revealed are only beginning to be understood he said LOOKING AT AVIATION SAFETY AS MODEL One thing we are missing is information on near misses Salerno said Near misses are breakdowns malfunctions and operational upsets that had they not been caught in time Research centers are also key contributors in developing the safest technologies for the industry Currently Argonne National Laboratory outside Chicago and OHMSETT the National Oil Spill Response Research Renewable Energy Test Facility in Leonardo New Jersey are working on new technologies BSEE is close to designating a location for the Ocean Energy Safety Institute which will work to identify the best available technologies for safety and environmental protection One focus of research at OHMSETT is finding technologies for use in the Arctic Ocean off the coast of Alaska The intensely cold region requires different systems than the balmy Gulf or the warm waters off the coast of California where BSEE also regulates drilling and production operations Royal Dutch Shell Plc RDSa L has submitted a plan to U S authorities for drilling off the shore of Alaska in 2014 From Alaska to the Gulf oil company plans for new wells mean higher demand for BSEE s services The U S Gulf is expected to see its biggest uptick in output ever in coming years as a string of deepwater platforms ramp up production through 2016 From an industry perspective business is booming That means from a BSEE perspective business is booming he said Salerno said another priority is the ability of producers to quickly respond to a blowout and cap a gushing leak within hours or days rather than the three months it took BP and other industry players to come up with the equipment that finally capped the Macondo well Those efforts include more research at OHMSETT on spill response technical capabilities and the use of dispersants to break up oil at the seabed in addition to sheens on the water s surface in both warm and cold environments He also said he is satisfied that the industry has met the post Macondo requirement that deepwater producers have capping mechanisms ready for dispatch to a leaking well Oil companies have formed consortiums that built multiple huge caps much like the one that capped Macondo and stationed them at various coastal sites for deployment if needed The technology was developed in the midst of a crisis You could probably have long discussions as to why nobody thought of it beforehand why we needed a crisis to stimulate that but sometimes that s where innovation comes from unfortunately The near miss reporting system will help the agency learn what energy companies are really doing to improve safety as they work with increasingly advanced technologies hundreds of miles offshore and thousands of feet below the surface to extract hydrocarbons from high pressure high temperature wells could result in disasters Most near misses do not release enough pollutants to require reporting to U S environmental agencies They are often unknown to regulators but after a disaster investigators see them as glaring warnings of impending tragedy By spring 2014 BSEE hopes to unveil a reporting system that will enable workers to report near misses to the agency through the U S Bureau of Transportation Statistics BTS Workers will be able to report problems anonymously as BTS has the legal authority to keep its information confidential Salerno said It s done in aviation Also on OilmanMagazine com Senate Passes Bill To Enact US Mexico Oil Treaty A Study About A Study Don Briggs Parish Trucks Proven Record of Commitment 18 Oilman Magazine NOVEMBER DECEMBER 2013 OILMANMAGAZINE COM 19

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Drilling Equipment Shale More Proof of U S Energy Independence SOURCE By Douglas A McIntyre Yahoo Finance The positive impact of shale on U S energy production has been forecast for years to the extent that many experts believe America could be energy independent soon and may become a net exporter of oil and gas The U S Energy Information Administration EIA produced a report that supports this point of view and the data in it may even give support to the case that energy independence is already in place or will be very shortly EIA s new Drilling Productivity Report DPR describes traditional drilling methods as obsolete These are the drilling methods that were considered and still are in many cases as the best in the world However the EIA reports that not only have the methods lost much of their usefulness the number of operating wells needed to increase product will begin to drop The authors of the DPR write With more than half of newly drilled wells now producing both oil and natural gas it is also no longer sufficient to categorize rigs as either oildirected or gas directed Like traditional measures the DPR makes use of recent rig activity data but also explicitly considers recent information on wells drilled per active rig rig productivity average oil and natural gas production rates from new wells during their first full month of operation and estimated changes in production from existing wells to develop estimates of overall changes in production for each region EIA s approach in the DPR does not distinguish between oil directed and gas directed rigs it counts all active rigs because once a well is completed it may produce both oil and gas Because production data reported by states can be significantly lagged DPR uses the rig count data along with trends in drilling productivity to make estimates of oil and gas production where data are not yet available The report will make the debate over fracking and the Keystone XL Pipeline more intense There are no longer any powerful arguments that production of shale oil and gas is not sufficient to justify blocking these methods of production and transportation The DPR authors report that among their most important findings Increases in drilling efficiency and new well productivity rather than an increase in the number of active rigs have been the main drivers of recent growth in domestic oil and natural gas production The Bakken and Eagle Ford regions together account for about 75 of current monthly oil production growth across the six regions tracked in the DPR Over the past year production in these two regions increased by nearly 700 000 barrels per day The Permian region which remains the biggest absolute oil producer grew by about 93 000 barrels per day from last year s production level Although natural gas production increased in four of the six DPR regions over the past year the Marcellus alone accounted for about 75 of natural gas production growth in the six regions The only things that can stop this movement toward U S energy independence are objections to fracking and the pipeline The case for supply has already been made and made forcefully OILMAN Interview YOUR VOICE Can the U S be selfsufficient Russ Rutledge Superod CEO and COB thinks so We ll be selfsufficient in 4 to 5 years See the entire interview at OilmanMagazine com Also on OilmanMagazine com U S Soon To Overtake Russia As Top Oil Producer South Central Texas Cashes In On Eagle Ford Shale Oil Nat Gas Reap Major Rewards For Localities 20 Oilman Magazine NOVEMBER DECEMBER 2013 OILMANMAGAZINE COM 21

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Technology Cyber Risk Management Amont Top Six Oil and Gas Industry Trends for 2014 Today s oil and gas industry executives including control room operators monitoring use data chief information security officers analyzing the potential cyber security risks of a new IT system and oil rig managers discussing drilling sites with geologists are making business decisions in an interconnected landscape of risks and rewards Success demands balancing the dizzying array of new regulations cutting edge technology and emerging threats and opportunities that are ever present in this industry Partnering with our oil and gas clients we examine the near and long term trends for this industry and it is striking to see how regulation the cyber threat environment and internal challenges are converging to shape the path forward said Emile Trombetti senior vice president Booz Allen It is critical that industry leaders consider how these trends provide challenges and opportunities for their organizations that can ultimately help them better prioritize and meet their strategic and business goals Booz Allen Hamilton has identified the six key trends that are poised to greatly impact the oil and gas sector of tomorrow and that what every oil and gas executive needs to know today Top Six Energy Industry Trends for 2014 1 The technology supply chain will increase the need for cyber risk management Oil and gas companies recognize that embracing networked infrastructures allows them to more efficiently operate their business and in doing so they increasingly rely upon vendor materials products and services However the industry is only now coming to terms with the cyber risk management challenges created by a more open network and increased reliance on the technology supply chain 2 Cyber risk management will become more customized Every oil and gas company stands to be hacked and only so much can be done to thwart this threat Companies must create unique approaches to minimize the impact of an attempted attack and protect critical assets In particular oil and gas companies need to focus on developing comprehensive security risk management plans tailored to the circumstances when entering high risk environments such as ventures into new geographic locations markets and products 3 Future competitive advantages depend on technological innovation Until recently oil and gas companies did not innovate beyond what was required to pull resources out of the ground with a reasonable amount of success However there has been a noticeable shift as companies begin to view technology as a new frontier for competitive advantage Oil and gas companies are using the latest ideas such as mobility cloud computing and knowledge management and wrapping them around their current processes to make everything work better 4 Striking the right balance between strong cyber risk management and regulation will become more challenging Regulations help companies secure themselves from cyber threats However regulations apply a one size fits all method to security that does not take into account each company s attack surface the unique vulnerabilities that come with its specific business processes 5 An aging workforce is creating unique risk management infrastructure and HR challenges The oil and gas industry is facing a shrinking talent pool for those with specialized expertise Most individuals who have the institutional and technological know how about their organization s specific cyber risks and operations are looking toward retirement 6 Data will continue to create differentiators Oil and gas companies are facing an explosion in the amount and types of data that their assets generate yet they risk being less competitive if they do not make this data work for them Organizations must also understand that while their data presents business opportunities it also raises certain challenges Also on OilmanMagazine com Cyber attacks against oil and gas infrastructure will cost companies 1 87 billion by 2018 OILMAN Interview Diamond Hydraulics 24 Oilman Magazine NOVEMBER DECEMBER 2013 OILMANMAGAZINE COM 25

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Transportation Logistics Transportation Inc are among those to have experienced declines of between 2 and 3 as a result of the HOS rules according to J P Morgan Chase Co The biggest impact appears to be on carriers that haul full truckloads for a single customer as opposed to the less than truckload LTL operators that service multiple accounts The reason is supports and encourages the continued development of natural gas resources during times when domestic prices of natural gas are depressed and subsidizes the production of a quantity of natural gas that can be deployed on short notice when and if market prices induce the cancellation of the export of LNG cargoes thereby mitigating volatility that would otherwise arise and ensuring that domestic supplies will be available over the duration of commodity market cycles DOT s New Curb on Driver Hours Is Hurting Productivity Truckers Charge SOURCE Robert Bowman Forbes Rules limiting the number of hours that commercial drivers can be on the job are resulting in a marked drop in productivity trucking companies claim The latest Hours of Service HOS rules were put into place on July 1 2013 by the Federal Motor Carrier Safety Administration part of the U S Department of Transportation They state that drivers of commercial motor vehicles can be on the road for a maximum of 11 hours in a 14 hour workday following 10 consecutive hours off duty They must take a minimum 30 minute break during the first eight hours of a shift Their maximum average work week is capped at 70 hours down from the previous limit of 82 hours An earlier less restrictive stage of the HOS rule took effect in February of 2012 FMCSA imposed the rules to ensure that truck drivers have enough rest Safety is our highest priority U S Transportation Secretary Ray Lahood said at the time These rules make common sense data driven changes to reduce driver fatigue and improve safety for every traveler on our highways and roads The trucking industry fiercely opposed the tighter rules during public hearings but to no avail Today a trucking company whose driver exceeds the limit by more than three hours can be fined 11 000 per offense and the individual driver faces civil penalties of up to 2 750 During the public comment period truckers warned that the rules would cut deeply into their productivity Now they say that is truckload s longer average length of haul resulting in a 6 to 7 drag on productivity in its longest haul lanes and a 3 drag overall according to Stifel Nicolaus Co Said Armutcuoglu managing director of investment banker Loeb Partners Corp said it s too early to tell whether the HOS rules will have a lasting depressive effect on trucking operations It s unclear how or even whether carriers are monitoring drivers compliance with the law he said My guess is it will take a while until this settles in Some carriers are even taking advantage of the stricter environment according to Armutcuoglu He cited P A M Transportation Services Inc a smaller trucker that reported strong utilization gains in the third quarter It appears to be picking up some business from rivals that are less well equipped to withstand the tighter restrictions Armutcuoglu believes the new HOS rules coupled with the chronic driver shortage and a still weak economy will drive many smaller carriers out of business The majority of trucking companies own fewer than five vehicles he said and cannot survive a 3 to 5 drop in utilization FMCSA is defending the stricter rules In a statement it said they are intended to reduce fatigue related truck crashes following years of scientific research safety studies and consideration of public comments The changes will prevent 1 400 crashes and 560 injuries and save 19 lives per year while only impacting the most extreme schedules where drivers are working more than 70 hours per week the agency added In the long term they will also generate 280 million in savings from fewer crashes and 470 million in savings from improved driver health precisely what has happened Schneider National Inc one of the nation s largest truckload carriers predicted back in February of 2011 a productivity drop of between 3 and 4 Four months after implementation of the HOS rules Schneider is reporting declines of 3 1 on solo shipments and 4 3 on team shipments The Hours of Service changes could not have come at a worse time said Dave Geyer senior vice president and general manager of Schneider s Van Truckload division He said the rules make it tougher to recruit new drivers in a industry that has been suffering from a labor shortage for years The HOS rules are exacerbating the situation critics say In 2012 the industry was short about 113 000 drivers That number is expected to climb to 323 000 by 2015 according to the latest forecast by FTR Associates Geyer added that there s no evidence that the new rules have made the roads any safer Ongoing feedback from our drivers is consistent he said They do not feel better rested as a result of the rules change just less productive Reports by industry analysts indicate similar third quarter drops in productivity among other major carriers although not as dramatic as that of Schneider J B Hunt Transport Inc Werner Enterprises Inc Swift Transportation Co and Knight Also on OilmanMagazine com Dupr Logistics Presents Unique Safety Perspective at Commercial Vehicle Outlook Conference CNG Automotive Fuel of the Future 26 Oilman Magazine NOVEMBER DECEMBER 2013 OILMANMAGAZINE COM 27

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Oil Briefs Drilling rig in Gulf of Mexico no longer on fire no oil spotted in water From the Associated Press A drilling rig that caught fire after a natural gas blowout in the Gulf of Mexico appears stable now that the fire is out and there was no sign of any oil sheen on a fly over Thursday morning a rig company executive said The well essentially snuffed itself out said Jim Noe a vice president with the rig owner Hercules Offshore Inc speaking in a telephone interview Earlier Thursday federal authorities overseeing the rig fire had said it was nearly out The well had blown wild Tuesday forcing the evacuation of 44 workers The rig caught fire Tuesday night and part of it collapsed The federal Bureau of Safety and Environmental Enforcement announced Thursday morning that the well had clogged with sand and sediment a process called bridging over that Noe said can commonly happen with shallow water wells Now officials are focusing efforts on permanently plugging the well and finding out why it blew wild There were no injuries when the blowout occurred about 55 miles off the Louisiana coast at a well operated by Walter Oil Gas When the fire was raging officials said they were preparing to drill a relief well nearby to divert the gas and end the blowout and fire Such a step is probably not necessary now that the fire is out and the well has bridged over said Adam Bourgoyne an industry consultant and a former dean of Louisiana State University s petroleum engineering department He said finding some way to seal or cap the well permanently will be much easier now Well control experts should now be able to get close to the rig and examine it You never know anything for certain but usually if it bridges it doesn t re start Bourgoyne said The rig is in 154 feet of water relatively shallow in terms of offshore drilling The Hercules 265 was built in 1982 It was certified by the American Bureau of Shipping until September 2017 and by the Coast Guard through July 4 2017 according to federal records It also had a blowout preventer control system approved in November of 2010 In May Hercules told its investors that Walter Oil Gas was paying between 101 000 and 103 000 a day to rent the Hercules 265 for a 60 day period that was supposed to end July 25 After that Arena Energy was supposed to rent the rig for 90 days paying 102 000 to 104 000 a day Why the blowout prevention system did not prevent the blowout is part of the investigation Neither Noe nor anyone else connected with the investigation would say anything about the probe so far Our efforts will now turn to first confirming the conditions at the well site and then to 30 assisting in Walter s effort to permanently secure and seal the well We will then focus on a precise analysis of the facts that led to this incident Noe said The rig is called a jackup rig because it has four legs extending to the ocean floor to hold it up Parts of the rig had collapsed as it burned Wednesday but the structure remained intact Experts had said the environmental effect of the blowout was expected to be limited even before the well was blocked and all 44 workers were safely evacuated Because the well involved is a natural gas well not an oil well experts said the pollution threats were far less than those posed by some previous accidents Federal inspectors said a light sheen was spotted around the rig Wednesday evening But like one spotted shortly after the blowout began Tuesday the sheen quickly dissipated Officials and scientists agree the latest accident should not be nearly as damaging as the BP oil spill also in the Gulf of Mexico that sent crude oil oozing ashore in 2010 Tuesday s blowout occurred at a drilling rig next to a natural gas platform that wasn t producing gas at the time The rig was completing a sidetrack well which drills into the same well hole under the platform Such wells are used to access a different part of the gas reserve Oil Traders Misread Tweet Spike In Oil Prices Follow From CarConnection com Look before you leap our grandmothers used to say That calm orderly sage advice could ve come in handy yesterday when traders panicked about the price of oil after misreading a tweet Yes a tweet The tweet in question came from the Israeli Defense Forces Oct 10 YomKippur73 Israel Air Force bombards airports in Syria to prevent Soviet weapons reaching the Syrian Army http t co tKnMzYjgFF IDF IDFSpokesperson October 10 2013 At first glance that might seem alarming After all Syria has been engaged in a bloody civil war for two and a half years which has escalated tensions with Israel And Russia has been a key supporter of Syria s AlAssad regime Bottom line the possibility of a Syrian Israeli war looms large That said knee jerk traders should ve been tipped off by at least two things 1 Yom Kippur was weeks ago 2 The Soviet Union is ancient history Combine those two and it becomes pretty clear that the IDF s tweet is intended to commemorate something that happened in the past In this case that something is the Yom Kippur war which took place in 1973 Thus the hashtag Unfortunately in the fastpaced world of investing cooler heads didn t prevail Investors saw the tweet and rumors quickly began to spread that the Syrian Israeli conflict had finally bubbled over Traders assumed that oil production would be compromised which pushed the price of oil higher Within an hour it had jumped more than 1 from 110 40 to 111 50 What s interesting is that even after investors realized their mistake oil prices remained high According to Reuters Although traders quickly realized the historical nature of the Tweet oil prices maintained their gains supported in large part by hopes of a breakthrough in U S debt discussions and earlier anxiety over political stability in Libya Looks like traders got tweet drunk and wanted any excuse to keep the party going Within three hours of the IDF s tweet oil prices hit 111 74 per barrel the highest price seen in a month Yesterday wasn t the first time something like this has happened And you can bet a sizable chunk of change that it s going to happen again This is why we can t have nice things Electric Car Rentals Stalled In U S by Range Anxiety From Reed Landberg Bloomberg Rental car drivers just aren t plugging into electric vehicles largely because of fears the batteries will die In fact people who drive off in electric vehicles from Enterprise Holdings Inc the biggest U S auto renter often bring them back to trade for a car that runs on gasoline People are very keen to try it but they will switch out of the contract part way through Lee Broughton head of sustainability at Enterprise said in an interview Range anxiety makes them think they can t get to a charging station Limited range is holding up demand for electric vehicles nationwide both in rentals and sales About 140 000 plug in EVs are on U S roads short of President Barack Obama s goal for 1 million of the cars by 2015 data from the Electric Drive Transportation Association shows That may slow efforts to cut pollution from transport which is responsible for a third of U S carbon dioxide emissions At Enterprise customers rent the electric cars for about 1 6 days on average compared to six days to seven days for conventional vehicles Slow demand is the main reason the St Louisbased company has 300 electric cars in its fleet 40 percent below a target it set in 2010 when it ordered 500 of Nissan Motor Co s plug in electric Leafs Broughton said Hertz Global Holdings Inc HTZ said in 2010 Oilman Magazine NOVEMBER DECEMBER 2013 it would have 500 to 1 000 electric vehicles in its fleet by 2011 including Leafs and General Motors Co GM s Chevrolet Volt It s fallen short of that goal because of lowerthan expected customer interest according to Paula Rivera a spokeswoman for the company based in Park Ridge New Jersey Definite Interest When we first launched in 2010 there was definite interest but we fleeted according to demand Rivera said Hybrids have been easier to promote because they re similar to conventional cars Rivera said She wouldn t say how many EVs or hybrids Hertz owns Enterprise has 11 000 hybrids The pick UNNp was a bit quicker because hybrids are bit easier for people to understand and range anxiety didn t exist Rivera said Hertz added Tesla Motors Inc TSLA cars at two sites in Los Angeles and San Francisco last month part of its Dream Cars program that also includes Ferrari and Viper sports cars The Teslas rent for about 500 a day Enterprise offers Tesla Model S cars in its Exotic Car Collection fleet for about 300 to 500 a day That s about 10 times the price of renting a Leaf which Enterprise offers in Orlando Florida for about 55 a day the same price as other compact or standard vehicles Prices are higher in other cities including Los Angeles where they are listed on the company s online reservation system at 140 a day Unique Experience The price for Teslas indicates that electric cars are often viewed as a unique experience rather than a vehicle suitable for everyday use said Christopher Agnew an analyst at MKM Holdings LLC in Stamford Connecticut said in an interview Longer range would help especially since customers are typically renting in unfamiliar places Agnew said Rental companies are offering a small number of electric vehicles now to keep an eye on things Agnew said in an interview It s a very small part of their business Consumers are unlikely to show more interest in renting electric cars until they can go farther before topping up the battery especially given the lack of public charging stations said Enterprise s Broughton Apart from Tesla s Model S which has a maximum range of about 300 miles 483 kilometers most electric vehicles run out of juice in less than 100 miles The Leaf models in Enterprise s fleet are rated for about 75 miles Bigger Battery It s fairly clear that we are going to need a bigger range battery at an affordable price at some point for EVs to take off he said That s what any battery maker or manufacturer of EVs would say Some companies are capitalizing on increasing interest in electric vehicles like MPG Car Rental which provides only hybrid and electric vehicles at its Venice California site near Los Angeles International Airport The company offers plug in hybrids like the Prius Plug In for 99 a day and the Tesla Model S for 500 a day Despite slower than expected growth rental companies are moving forward with plans to buy more electric vehicles all three rental companies said Our electric vehicle fleet is definitely expanding over the next 12 months and we will place them where demand is said Joy Lehman Hertz s global sustainability manager Consumer interest in electric cars will increase as more people have opportunities to test them said Sam Ori executive vice president at the Electrification Coalition an EV trade group Orlando Program The coalition part of a group including Walt Disney World Travelocity Enterprise Nissan and others that are building an electric car rental program in Orlando Florida the largest car rental market in the world fueled by 56 million visitors last year Enterprise has provided Nissan Leafs at Orlando International Airport and area hotels and attractions including Disney World and Universal Studios are offering charging stations Other car models are expected to soon join the Leaf Until you get people comfortable with this technology it won t really take off said Ori Washington s Antics Keep Lid On Oil Prices To From CNBC Sri Jegarajah Follow him on Twitter cnbcsri Benchmark oil prices are likely to flat line this week until investors get more details and certainty on a deal to raise the U S debt ceiling before an October 17 deadline according to CNBC s latest market survey of traders analysts and strategists Nearly 38 percent of the respondents in CNBC s latest poll of oil market sentiment 9 out of 24 believe prices will be little changed this week a third 8 out 24 expect prices to fall while around 29 percent 7 out of 24 say prices may gain Investors should wait for clarity or a sell off in commodities before taking on long positions said UBS commodity strategists Dominic Schnider and Giovanni Staunovo The risk reward is simply not attractive at present especially with most commodity markets being well supplied The government has been partially shuttered since October 1 The shutdown has lasted longer than many expected and while proposals from both President Barack Obama and congressional Republicans have been viewed as signs of progress a final agreement remains elusive Reuters reported If the 16 7 billion federal borrowing limit is not increased by October 17 it could lead to a U S debt default I believe they are moving toward a deal and will get to an agreement but probably not before some significant volatility this week said Kirk Howell portfolio manager at Allston Holdings LLC who expects to see a test of 100 a barrel for U S crude futures this week Although the Department of Energy supply data last week showed a very bearish build in crude stockpiles Howell noted that mostly took a back seat to the antics in D C but if we see inventory builds continue we ll see another drive lower Supply tensions affecting oil exports and production in Libya and diplomatic thaw in relations between Iran and the West will also be oil market drivers this week though they are likely to be overshadowed by the debt drama in Washington World powers hope to persuade Iran at talks in Geneva on October 15 16 to scale back its uranium enrichment Reuters reported The sanctions are taking a heavy toll on Iran s economy its daily earnings from oil sales have tumbled 60 percent since 2011 to 100 million but they have not stopped its nuclear push Gas Prices Could Dip Below 3 by Year End From Yahoo Finance Jack Macke According to David Lutz of Stifel Nicolaus Company consumers are going to get a big boost to their wallets before the end of the year and the source could surprise you According to Lutz the Environmental Protection Agency EPA is about to make some long overdue adjustments to the federal ethanol mandate that s been acting as a stealth tax on American drivers for years The result could push the national average price for a gallon of gas lower than anything we ve seen since the depths of the Great Recession First a word on how we got here As Lutz explained last summer the 2005 Clean Air Act mandated that refiners blend ever rising amounts of ethanol into gasoline As long as U S gas consumption was rising meeting the ethanol blend requirement was arguably misguided but no more so than other economic policies with unintended consequences What neither the EPA nor anyone else saw coming was the drop in demand for gas Were the U S Energy Information Administration s website not down as part of the government shutdown this link would show that gas demand hasn t been this low in over a decade The vast majority around 90 of American cars don t work with an ethanol OILMANMAGAZINE COM 31

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Oil Briefs blend over 10 When the ethanol requirements continued to rise while demand for end product fell the refiners were reduced to buying and selling RINs or Renewable Identification Numbers which are in effect credits that allow refiners to meet the terms of the 2005 Clean Air Act without producing fuel that is unsuitable for most cars So as demand for gas falls refiners need to buy more RINs From just pennies pergallon in January RINs had soared over 1 40 by last summer Lutz says as much as 75 of the additional cost was passed along to the consumer Therefore in an attempt to force cleaner burning fuels into the marketplace the EPA created a policy that ended up artificially inflating the cost of refining gas when demand fell So the refiners and consumers got gouged for not burning enough fossil fuels Only the government could make refinery companies look sympathetic Here s the good part Lutz sees the price of RINs falling a sign that the EPA is finally getting around to modifying their absurd policy Once RINs are out of the equation Lutz says the price per gallon is going to fall lower I m not going to be stunned if we see gas prices going below 3 by the end of the year Lutz says That s going to be a heck of a tailwind going into the holiday shopping season Gulf Coast Gasoline Rises to 6 Week High on Seasonal Work From Bloomberg Christine Harvey Spot gasoline on the U S Gulf Coast strengthened to a six week high as refiners carried out seasonal maintenance lowering production in the region Conventional 87 octane gasoline climbed 2 5 cents to 8 25 cents a gallon below futures on the New York Mercantile Exchange at 3 45 p m the strongest since Sept 3 according to data compiled by Bloomberg Conventional CBOB gasoline gained 2 25 cents to 9 cents below futures Differentials narrowed as refiners including Marathon Petroleum Corp MPC s Garyville Louisiana site and Delek US Holdings Inc DK s Tyler Texas plant planned to shut units for work this month Valero Energy Corp VLO s Port Arthur refinery also in Texas is operating at reduced rates during repairs at a wet gas compressor a person familiar with operations said Refineries in the area known as PADD 3 processed almost 8 million barrels a day of crude oil and other feedstocks in the week ended Oct 4 the lowest level since April 26 according to U S FOR MORE OILMAN NEWS BRIEFS AND NEWS 24 7 VISITOILMANMAGAZINE COM 32 Oilman Magazine NOVEMBER DECEMBER 2013 Transitions Fire Safety Specialists is pleased to announce the recent hiring of 4 key Team Members to the Land and Commodity Division Gerald Faulk Operations Manager Land Division Gerald comes to FSS with a vast array of knowledge and experience and this experience coupled with his involvement in numerous professional organizations will help ensure that we are successful at increasing commodity sales and land based accounts Gerald will oversee the company s land services helping clients with their fixed fire suppression detection and alarm systems along with portable fire extinguishers gas detection meters and safety product requirements Gerald is a 1973 graduate of Nicholls State University with a bachelor s degree in Business Management Prior to joining Fire Safety Specialists Faulk was Co Owner of C S Safety Systems of Louisiana L L C Chad Quibodeaux Business Development Chad Quibodeaux has joined the company as an Outside Business Development Representative Chad will work to ensure that we maintain current business relationships that he brings to the table while also helping to grow new accounts that are assigned to him Chad s extensive product knowledge service oriented attitude technical background and 10 plus years in this industry help make him a successful business development representative and overall positive asset to the organization Angie Robicheaux Inside Sales Angie Robicheaux joins TeamFSS as our second Inside Sales Representative Angie brings 10 years of industry experience to FSS and in conjunction with our new team members also brings a new mix of customers This new mix of customers coupled with Angie s working knowledge of the business and her positive attitude are a great asset to our team Angie is a mother of 3 step mother of 2 and grandmother of 2 Robbie Britton Technical Sales Representative Land Division Robbie comes on board as Technical Sales Representative for Land Projects Robbie will assist engineering and architectural firms general contractors and electrical contractors with fire and gas detection and fire suppression needs Robbie comes to FSS with 10 years of industry knowledge and experience Robbie currently holds NICET III Certification in Alarms and NICET II Certification in Special Hazards with his level III being achieved in May 2014 Robbie is a 1995 graduate of LSU with a bachelor s degree in Wildlife and Fisheries OILMANMAGAZINE COM 33

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