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November / December 2016
Krewe Energy Acquires
Coquille Bay Field
p. 30
OPEC Announces Potential
Production Freeze
p. 24
Massive Find in Alaska Made
by Texas-based Firm
p. 28
Continental Resources Sells
Non-Strategic Assets
p. 26
EVERY WORKER. EVERY INDUSTRY. EVERY TIME. Because that’s how workers’ comp is supposed to work
with the strength and safety of Louisianas workforce at the center of everything we do.
Visit us online at or call 225-924-7788 to learn more.
Louisiana Oilman 8.75" x 11".indd 2 8/4/16 3:16 PM
A Moving Target
Finding the Right Safety Culture for Boom or Bust
By Jennifer Delony - pages 18 through 20
In Every Issue
Letter from the Publisher – page 2
OILMAN Contributors – page 2
OILMAN Online // Retweets // Social Stream – page 4
Downhole Data – page 4
Calendar of Events – page 33
Photos from Oil & Gas History – pages 7 and 8
Steve Burnett: Oilman Cartoon – page 3
Mark A. Stansberry: America Needs America’s Natural Gas! – page 10
Dr. Srikanta Mishra: Bringing ‘Big Data’ to the Oil Field – page 12
Josh Robbins: The Close: Focusing on Relationships – page 15
Richard Perkins: Who Are Your Safety Leaders? The Answer May Surprise You – page 17
Tim McNally: Ursa Space Systems is Changing How Companies Interact with Data – page 21
Alex Mills: Carbon Dioxide and Methane Emissions Decline Again – page 23
Q&A with Jason Spiess: An Interview with Ken Hall – page 32
News at a Glance – pages 24 and 25
Oklahoma News – pages 26 and 27
Texas News – pages 28 and 29
Louisiana News – pages 30 and 31
Oilman Magazine / November-December 2016 /
EVERY WORKER. EVERY INDUSTRY. EVERY TIME. Because that’s how workers’ comp is supposed to work
with the strength and safety of Louisiana’s workforce at the center of everything we do.
Visit us online at or call 225-924-7788 to learn more.
Louisiana Oilman 8.75" x 11".indd 2 8/4/16 3:16 PM
Safety is a key component to everything we do in the oil and gas industry,
whether it’s on-or-offshore. Most of the time safety measures are only
reviewed when we are faced with handling dangerous equipment that could
do us harm or damage equipment. However, as we know, health, safety,
and environmental concerns are all around us throughout the day. I’ve been
working in the industry for over 10 years, and during that time, I’ve been
constantly reminded to think about safety at work and home. In the ofce
setting, where a good portion of the oil and gas industry employees work,
our work desk, ofce space, and cubes can present health and safety hazards that we’re not aware
of. What I’ve encountered in my work setting is inadequate chairs that don’t support my back
or height requirements. Which leads to neck and back pain. Monitors that sit too low on my
desk. Overhead uorescent lights that are overwhelmingly bright, which over time leads to mild
headaches. My remedy to these problems were simple with a small investment. For my chair, I
bought a form tting cushion for back support and adjusted the height so that my arms rest evenly
on my desk. I use two monitors for the work I do and I bought stands to raise my monitors to just
about eye level. Ideally, I would prefer to turn off the lights and use my desk task light, but that’s
not possible in my ofce setting. The next best option for me was to have facility management
remove two of the four bulbs in the light xture directly above my desk. If you think about it,
there are always health and occupational hazards around us from the breakroom to the restroom.
Being aware and watching out for potential hazards will serve you well at home, on the road, and
even on a holiday break.
Oilman Magazine, LLC
P.O. Box 771872
Houston, TX 77215
(800) 562-2340
Emmanuel Sullivan
(800) 562-2340 Ex. 5
Jennifer Delony
Tim McNally
Kim Fischer
Don Briggs— LOGA President.......
Mark Stansberry Chairman of The GTD Group.......
Joseph DeWoody President of Clear Fork Royalty, an
oil & gas royalty investment company located in
Fort Worth, Texas.......
Steve Burnett—
Story Sloane III— The Sloane Gallery in Houston,
Texas (281) 496-2212).......
Paul Flessland— Photographic Artist,
Jason Spiess
Joshua Robbins
(800) 562-2340 Ex. 1
© Copyright 2016 by Oilman Magazine, LLC. All rights reserved.
Reproduction without permission is prohibited. All information in
this publication is gathered from sources considered to be reliable,
but the accuracy of the information cannot be guaranteed.
Image credits — The Sloane Gallery, Houston, TX;
CONTRIBUTORS — Biographies
Don Briggs
Don Briggs is the President of the Louisiana
Oil and Gas Association. The Louisiana Oil
& Gas Association (known before 2006 as
LIOGA) was organized in 1992 to represent the
Independent and service sectors of the oil and
gas industry in Louisiana; this representation
includes exploration, production and oileld services. Our
primary goal is to provide our industry with a working
environment that will enhance the industry. LOGA services
its membership by creating incentives for Louisiana’s oil &
gas industry, warding off tax increases, changing existing
burdensome regulations, and educating the public and
government of the importance of the oil and gas industry in
the state of Louisiana.
Mark A. Stansberry
Mark A. Stansberry, Chairman of The GTD
Group, is an award-winning author, columnist,
lm producer, radio talk show host and 2009
Western Oklahoma Hall of Fame inductee.
He has been involved in the oil and gas
industry for over 39 years. He is currently
serving as Chairman of the Board of the Gaylord-Pickens
Museum/Oklahoma Hall of Fame, Vice Chairman of the
Board of Regents of the Regional University System of
Oklahoma, Board of Directors of OKC Port Authority,
Board of Governors of the Recording Academy/Grammys
Texas Chapter, Lifetime Trustee of Oklahoma Christian
University and Board Emeritus of the Oklahoma Governor’s
International Team. He has served on several private and
public corporate boards.
Jason 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
At Beachwood Marketing Group, our mission is to
market oil and natural gas properties in the most
cost effective and efcient way. We strive to provide
excellent leadership and unparalleled service for
each of our clients. Josh has been instrumental in
dening Beachwood’s market leading solutions and
has overseen the company’s expediential growth. Josh is also an
accomplished writer on the acquisition and divestment market
and a speaker and presenter at conferences. He continues to keep
his focus on the strategic direction of Beachwood Marketing
Group and its expansion into new markets.
Paul Flessland
Paul Flessland is an editorial, event and portrait
photographer based in Fargo, North Dakota.
Featured in over fteen regional and national
publications, Flessland is passionate about visually
telling the story of the Bakkens impact on
North Dakota and the nation. Visit his website at
Joseph DeWoody
Joseph P. DeWoody (@jpdewoody) is the president
of Clear Fork Royalty, an oil and gas royalty
investment company located in Fort Worth, Texas.
Clear Fork Royalty works with accredited investors,
trusts and family ofces to provide portfolio access
to oil and gas mineral rights and royalties to hold
for long term investment through various direct investment
vehicles. Joseph was selected by Oil and Gas Investor Magazine
as a winner of the Top 20 under 40 Award, and by TIPRO and
Texas Monthly Magazine as a Texas Top Producer. Joseph is a
member of the Young Presidents’ Organization (YPO). He was
appointed by Texas Governor Rick Perry to a six year term on
the Texas Board of Professional Geoscientists. He serves on the
Board of Directors for the National Stripper Well Association
and the Texas Alliance of Energy Producers.
Steve Burnett
I was raised in a small West Texas town where
the school mascot is a roughneck. Growing up
with a roughneck as the town symbol, how could
I not spend most of my adult life working in
the petroleum industry? I started working in the
oilelds age 16. In Texas you had to be 17 with a
signed minors release from your parents, but my parents were
glad to keep me working. I had been working since my rst job
working on a commercial elephant garlic farm at age 12. By
the time I reached 16, I had enough work experience to prove
I knew how to hold my own on a work crew. Anybody whose
parents survived the great depression can attest to the fact that
their children learn the value of a solid work ethic.
Oilman Magazine / November-December 2016 /
Emmanuel Sullivan, Publisher, OILMAN Magazine
Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
FOR THE WEEK ENDING October 21, 2016
Connect with OILMAN anytime at and on social media
Stay updated between issues with weekly reports
delivered online at
Louisiana: 46
Last month: 40
Last year: 70
Oklahoma: 73
Last month: 67
Last year: 106
Texas: 254
Last month: 246
Last year: 346
U.S. Total: 553
Last month: 511
Last year: 787
*Source: Baker Hughes
Brent Crude: $51.78
Last month: $49.06
Last year: $37.28
WTI: $50.43
Last month: $48.24
Last year: $37.04
*Source: U.S. Energy Information Association (EIA)
Per Barrel
Louisiana: 4,752,000
Last month: 4,688,000
Last year: 5,009,000
Oklahoma: 12,717,000
Last month: 12,523,000
Last year: 12,282,000
Texas: 97,997,000
Last month: 95,163,000
Last year: 103,773,000
U.S. Total: 269,229,000
Last month: 261,155,000
Last year: 285,980,000
*Source: U.S. Energy Information Association (EIA)
Barrels per month
Louisiana: 161,271
Last month: 154,232
Last year: 143,661
Oklahoma: 210,663
Last month: 202,659
Last year: 207,703
Texas: 683,938
Last month: 674,771
Last year: 647,606
U.S. Total: 2,372,344
Last month: 2,635,301
Last year: 2,438,262
*Source: U.S. Energy Information Association (EIA)
Million Cubic Feet
Per Month
Our mission is to create a better
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Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
Photo courtesy of The Sloane Gallery – Houston, Texas.
These images and more are for sale and can be found
by visiting
or calling 281-496-2212.
Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
Photo courtesy of The Sloane Gallery – Houston, Texas.
These images and more are for sale and can be found
by visiting
or calling 281-496-2212.
Oilman Magazine / November-December 2016 /
The 26th Annual IEPC energy policy
conference is planned to be held in Detroit
in 2018. Recently, I visited there and the
“energy buzz” in Detroit seems to be
focusing a great deal on fuel cells, electric
vehicles, and natural gas vehicles.
When it comes to fuel cells, natural gas will
be a main source to obtain hydrogen, which
is used along with oxygen. Natural gas
will serve as one of the power generation
sources to provide electricity for electric
vehicle charging. There are over 130,000
natural gas vehicles (NGVs) on U.S. roads
As Boone Pickens states, “natural gas is a
fuel capable of offsetting imported diesel to
power heavy trucks—the 18-wheelers which
move goods around America.”
Items made from natural gas include
fertilizer, paint, carpet, furniture, detergent,
anti-freeze, lenses, footwear, signs, sweaters,
and electronics. About one-half of the 120
million U.S. households are direct customers
of natural gas. Natural gas is used for home
heating, cooking along with other purposes.
Since September 2015, associated-gas
production outside the Northeast, the
country’s fastest-growing gas-producing
region, has fallen by nearly 9 percent, or
about 2.5 billion cubic feet a day, according
to energy data rm Platts Analytics Bentek,
Wall Street Journal
That drop-off is enough fuel to power
roughly 13 million U.S. homes daily, and one
reason monthly heating costs are poised
to rise. Natural gas heats about half of all
U.S. homes while another one-third are
heated by electricity, which is increasingly
generated by burning gas, according to the
U.S. Energy Information Administration.
Natural gas for November delivery closed
at $3.3470 million British thermal units on
Oct. 11.
More and more power producers are
switching from coal to a cleaner-burning
natural gas. There were 94 rigs drilling gas
wells in the U.S. as of this writing.
Dr. Eric Claeys, professor at George Mason
University, in “The Case for Shale” states,
“…in a system of free enterprise, owners
use their land to make their own lives
better, and everyone benets when energy
companies increase the supply of energy
available for all. The shale revolution needs
more champions who can remind American
citizens why. And so does the American
system of free enterprise generally.”
Natural gas is the fuel which allows the
U.S. to “strive for energy efciency and
environmental preservation” as has been
the theme of the IEPC energy policy
conference, which I founded and have
chaired since 1992.
Robert Hefner III’s book
The Grand
Energy Transition
in the past few years has
brought national and international attention.
Ted Turner purchased several hundred
copies of Hefner’s book and had them
distributed to Congressmen and Fortune
500 executives. Turner stated about the
book “if you care about the future you
must read the book.
In 2012, Gray Frederickson, Academy
Award winning producer, MeiLi Hefner and
I were producers of
The GET, (The Grand
Energy Transition)
documentary based
upon Hefner’s book. We believe that it is
important that natural gas be a focus in the
national energy debate.
Having been in the natural gas industry
for close to 40 years, it is my strong belief
that America Needs Natural Gas! In Los
Angeles, I have seen how natural gas is
making an impact. I have seen up and down
the busy streets of Los Angeles the nation’s
largest eet of buses in the country running
on compressed natural gas. There are over
2800 NGV buses in operation within Los
The U.S. Energy Information
Administration forecasts natural gas
consumption will increase from 325 billion
cubic feet in 2015 to 390 Bcf/d by 2025 and
to more than 500 Bcf/d by 2040. Liqueed
natural gas is projected to account for a
larger share of the world’s natural gas trade.
We need to strengthen our support for the
Natural Gas Industry. We need to support
Advocacy/Education. America Needs
America’s Energy! And America Needs
America’s Natural Gas!
America Needs Americas Natural Gas!
By Mark A. Stansberry
Photo Credit: Jeffery Longa -
Does your company offer the service or
product that will create a competitive
advantage in the industry? Do you want
to let the rest of the industry know who
you are and what you have to offer?
SOUTH TEXAS – Corpus Christi, TX
July 20-21, 2016 | American Bank Center
HOUSTON – Houston, TX
Sept 13-14, 2016 | George R. Brown
WEST TEXAS – Midland, TX
October 18-19, 2016 | Horseshoe Arena
LAFAYETTE – Lafayette, LA
November 9-10, 2016 | Cajundome
EAST TEXAS – Longview, TX
March 5-6, 2017 | Maude Cobb
When looking at what shows you want to put on your schedule for next year,
companies must factor in material handling being that sometimes it costs more
than the actual booth. We want to take that stress off AND cost off your plate...
Oilman Magazine / November-December 2016 /
The oil and gas industry is drowning
in data. Oil & gas operators routinely
collect various kinds of data: ow rates,
temperature, pressure, drill speed, failure
rates, subsurface characteristics and
more. But how is the industry putting
this data to work? New analytical
techniques drawn from the elds of
statistics and computer science can help
oil & gas companies make sense of the
data deluge to make more efcient and
effective development and production
What’s the Big Deal with “Big
Data analytics is already transforming
elds from consumer marketing to
medicine to cybersecurity. It is now
poised to be a game changer for the oil
& gas industry as well. But what do we
really mean by “big data”?
The industry has always collected
and used data to make decisions
for exploration, development and
production. What is different now is the
volume, velocity
of the data
that we collect. Instead of collecting
tens or hundreds of data points for an
oil well over the course of a day, we now
routinely collect hundreds of thousands
of data points.
New sensor technologies, faster
computer processors and advances in
scientic understanding of subsurface
geology and uid dynamics (among
other elds) have vastly expanded the
types of data we are able to collect, the
rate at which we are able to collect it,
the precision and accuracy of the data,
and the conclusions that we are able to
draw from it.
Pulling actionable insights out of all
of that data requires sophisticated
data analytics. Analytics (also referred
to as data mining, statistical learning
or knowledge discovery) allows us to
analyze large volumes of data from
disparate sources in order to extract
meaningful information that can be
used to increase operational efciencies.
Analytics can identify the patterns and
relationships hidden in large, complex
datasets so operators can understand
what the data is telling them and predict
how different operational decisions may
impact outcomes.
Applications for Data Analytics in
the Oil & Gas Industry
Data analytics can be used across
all phases of oil & gas exploration,
production and operations. Some of the
most promising applications include:
• Exploration data mining: Analytics
can be used to nd hidden patterns
in large geologic datasets in order
Bringing ‘Big Data’ to the Oil Field
By Dr. Srikanta Mishra
Photo Credit: ymgerman -
Oilman Magazine / November-December 2016 /
to build better correlations, create
synthetic logs at unsampled locations,
identify sweet spots, etc.
• Reservoir management: Analyzing
eld data can help to identify factors
that impact reservoir performance
and predict the production potential
of oil and gas wells based on their
• Proxy modeling: Reservoir
modeling has long been used to
make performance predictions and
development decisions. However,
building a detailed model can take
months or years, and running a single
simulation may take days or weeks.
Data analytics can be used to build
“proxy models,” i.e., fast system
emulators that can run hundreds
of simulations per day to support
computation-intensive tasks, such
as optimization and uncertainty
• Performance forecasting: Analytics
allows for rapid prediction of
production in large oilelds. Statistical
models can also be used to identify
optimal scenarios for Enhanced Oil
Recovery (EOR) efforts.
• Predictive maintenance: By
combining real-time data with
past performance data, operators
can use data analytics to predict
potential failures before they occur
and make appropriate operating
and maintenance decisions to avoid
unscheduled delays. For example,
models can be built to estimate
wear on PDC bits and other types
of equipment or predict wellbore
Getting Started: Putting Data to Work
In order to put big data analytics into
practice, oil & gas companies need
to have appropriate infrastructure
and technology tools in place. It’s not
enough to just collect lots of data. You
need to have systems that are able to
collect, compile and organize the data in
centralized repository for analysis. You
also need sophisticated analytical tools
that are able to extract meaning from all
the data points.
Building a big data program requires
several layers of hardware and software.
Infrastructure: The foundation of a
data analytics program includes the
technology needed to collect and
store data, including servers, networks
and clustering software. All of the
data needs to be brought together in
one place for storage and analysis.
Data organization and management:
In order to be able to utilize data
from a variety of sources—which
may include both structured and
unstructured data—the data must rst
be extracted, cleansed, tagged and
Analytics and discovery: Once data
has been tagged and organized, it
can be analyzed. This layer includes
software programs for data discovery
as well as sophisticated programs for
deep analysis and automated, rules-
based transactional decision making.
Decision support and automation
interface: This is the layer that
supports the humans in the equation
with tools to enable risk management,
scenario evaluation, collaboration and
decision capture and retention.
The Future of Data Analytics in Oil
& Gas
The age of “big data” in oil & gas is just
dawning. Over the next few years, the
industry can expect to see many more
applications of statistical and machine
learning methods, including tools for
digital oil eld management, real-time
analytics and predictive maintenance.
Using data-driven insights will be
increasingly important as the industry
continues to search for ways to squeeze
more production out of existing wells
and improve operational efciencies.
Putting the infrastructure in place to
support data mining and analytics may
look daunting. However, technology
and software advances have increasingly
made advanced data analytics accessible
for even small and mid-range producers.
These statistical methods are a practical
alternative for day-to-day decision
making when advanced computer
modeling is not practical or feasible.
Now is the perfect time for companies
of all sizes to explore the power and
potential applications of big data in the
oil eld.
Dr. Srikanta Mishra is a Senior
Research Leader at Battelle. He joined
independent research-and-development
organization in 2010 after a distinguished
career in environmental consulting,
including an appointment as Adjunct
Professor of Petroleum Engineering
at University of Texas. He is nationally
and internationally recognized for
his expertise in subsurface resource
management, and regularly presents
lectures, workshops and short courses
on hydraulic fracturing related
environmental impacts. He holds a PhD
in Petroleum Engineering from Stanford
Dr. Srikanta Mishra
Oilman Magazine / November-December 2016 /
From Oilfield Experts
Future Trends
and Cutting Edge
January 25-26
Renaissance Tulsa
Hotel & Conference
From Oilfield Experts
Future Trends
and Cutting Edge
January 25-26
Renaissance Tulsa
Hotel & Conference
Oilman Magazine / November-December 2016 /
My last article
The Art of Business
has garnered a lot of attention
in the oil and gas acquisition and divestiture
community for the past two months. And
it wasn’t because my views on business
development are groundbreaking or new.
It actually caught re because of what
Beachwood does, day in and day out: we
develop relationships and close deals.
And in this current market of oil and gas
A & D, that is something worth talking
If you are currently in the market for oil and
gas assets, and you have a budget under $400
million, closing isnt an everyday occurrence.
But with the price of oil (and gas) where it is,
you should be. The value of the assets (for
the past year) has been relatively unchanged
because of the stagnant oil and gas prices.
Surprisingly enough, we have found that it’s
not the oil and gas price that inks the deal at
the closing table. It’s the relationships, and
the ability to nd deals actually worth inking.
There will be more deals in Q4 than the
collective total of deals available in all of
2015. The focus will continue to be on the
hottest areas (Permian, STACK), but you
will also see deal ow from all different
locations in the country. As gas continues its
trend upward, there will be more targeted
acquisitions in the Barnett, Haynesville and
These deals will not be highly publicized
and in many cases will not appear on the
sites many of you frequent to nd the
newest opportunities. What you will nd,
and what is highly publicized, are the “lower
20 percent” deals. The lower 20 percent
are the wells that are uneconomic, that pull
budgetary numbers down, and that require
signicant additional investment. These deals
are highly discounted and readily available.
There are companies that can make huge
prots on the lower 20 percent wells, but
most cannot.
What many of you have told me in the past
few months is that you are tired of looking
at these deals; that you don’t have the time
to burn away on a deal that looks great on
paper, and ght with 30 other oil and gas
rms trying to get the highest bid. Because
your time is valuable. Because you have no
desire to bid on anything.
You want to close.
Beachwood primarily focuses on the
development of our client’s market share.
We build targeted acquisition plans based
on economic validity, potential growth area,
type of asset and current area of operation.
We contact nearly 1,600 oil and gas rms
per month, uncovering deals not available
on the open market. Our relationships allow
us to open doors and close deals. I didn’t
write this article, the last article or the nine
articles before them as a boast or as an
advertisement, I just wrote how we develop
This industry has never been on the
shoulders of men and women not
interested in working hard. Finding deals
is no different. If you want to do things
no one else can do, you have to build
something no one else has. At Beachwood
that meant building an organization in
the deepest oileld downturn in recent
memory, and lling it with highly talented
and driven individuals. It’s not an easy feat
to continuously reach out to oil company
after oil company. It’s hard work, and we
take pride in what we’ve built, and the
relationships we have.
You can close. Whether you are looking for
deals, a lower LOE, a service contract or
getting that very sought after position at an
oil and gas rm. Closing is no more than
effort, time and talent all meeting together at
the right moment with the right person.
End 2016 with a great close, and your 2017
will look that much brighter.
The Close: Focusing on Relationships
By Josh Robbins
Josh Robbins, Beachwood Marketing Group. Credit: Edgar Lance Photography Photo Credit: rawpixel -
Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
Effective leadership in business is a critical
element in achieving and maintaining
success. Smart businesses constantly work
on improving and developing leadership
skills within their organizations to maintain a
position of strength in the industry.
One area we sometimes neglect identifying
leaders in is the area of safety. When
we think of safety leadership within an
organization, we assume top management
is leading the charge. The reason we make
this assumption is because they develop
the corporate vision, dene the strategic
direction and provide the resources to
support corporate safety initiatives.
To fully understand safety leadership, we
need to look beyond top management.
There are three types of safety leaders in
every organization – the unidentied leaders,
the inuencers, and the real safety leaders
within the organization. These employees
have great inuence on production and
safety efforts in positive and negative ways.
Here is an example a consultant shared with
me several years ago. He was working with
a manufacturing plant where employees
were not wearing safety glasses and steel toe
The plant had a number of accidents
and injuries, and in every case affected
personnel refused to wear their safety gear.
Management could not get full compliance
no matter how hard they tried to inuence
their employees. After meeting with
management to discuss their frustration, he
decided to meet with employees to gain a
better understanding of why they would not
comply with the safety rules.
During his meetings with employees, he
discovered their refusal to comply was
because their coworker Mary (unidentied
leader) did not wear her safety glasses or
steel toe boots.
When he met with Mary and asked her why
she refused to comply with the safety rules,
she responded that management always
communicates to the employees the benets
of compliance with safety rules. She said
if management would communicate the
benets of wearing safety gear to employees
and show sincere concern for employee
welfare she would gladly follow the safety
The consultant convinced management to
do just that. Within a month there was full
safety gear compliance throughout the plant.
Safety leaders known as inuencers can
be management or non-management
personnel. Inuencers are people who
others follow because they are inspired by
them. They have great energy, are engaging
and have a sincere concern for the well-
being of the people they work with. These
leaders help the people who follow them to
see the value of doing the job correctly and
Finally, there are true safety leaders in the
organization. True safety leaders set the
pace and drive the safety process. They lead
by example and provide great direction for
all personnel to follow. True safety leaders
also have a great concern for their fellow
employees and work hard to keep everyone
safe on the job.
Contrarily, ineffective safety leaders in the
organization can adversely affect not only
safe production, but the performance of the
entire organization.
Ineffective safety leaders promote unsafe
behaviors which can result in more
incidents/accidents, lost work days due to
injuries, and the potential for an increase in
insurance and production cost. Ineffective
safety leaders can also be a catalyst for
negativity in both production and employee
morale. These increases in negative effects
can hinder an organization’s ability to stay
competitive in the market place.
To have an effective safety initiative for
the long term, we need to identify our
unidentied leaders, inuencers, and true
safety leaders in the organization. Top
management cannot simply mandate safety
performance and expect the safety initiative
to succeed. Every organization needs
employees and leaders engaging and buying
into the safety program for it to be effective
long term.
We need to understand what motivates
each of these leaders to move in a positive
direction. Once we understand their
motivation, we can cultivate their leadership
to assist the organization in creating a safer
and more productive work environment. We
need to ensure our employees and leaders
feel we truly value their work, we value their
ideas and we genuinely care about them.
If we can achieve this, we will be more
successful as an organization and more
successful at providing a safer workplace for
Dwight D. Eisenhower once said,
“Motivation is the art of getting people
to do what you want them to do because
they want to do it.” Safety leaders are the
cornerstone for motivating, not only safe
behaviors, but setting the standard of why
every employee matters and how they drive
success of the organization.
Richard Perkins has worked in safety and
risk management for 22 years and has a
long tenure with LWCC’s loss prevention
department, working as a loss prevention
representative and most recently as the loss
prevention outreach coordinator. LWCC,
headquartered in Baton Rouge, Louisiana,
is a private, nonprot mutual insurance
company that is rated “A” (Excellent) by
A.M. Best Company.
Who Are Your Safety Leaders?
The Answer May Surprise You
By Richard Perkins
Richard Perkins, LWCC
Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
A Moving Target
Finding the Right Safety
Culture for Boom or Bust
By Jennifer Delony
Photo Credit: Jakub Jirsak -
Oilman Magazine / November-December 2016 /
Oilman Magazine / November-December 2016 /
Work hazards in oil and gas abound — re
and explosions, falls, chemicals, machinery,
and remote work sites come together
to make the industry one of the most
dangerous in the U.S. In 2014, the year for
which the most recent compiled safety data
is available, the Bureau of Labor Statistics’
(BLS) fatality rate for oil and gas extraction
was about 16 per 100,000 workers — 10%
higher than the fatality rate for all mining
In its April 2016 report on worker safety and
health in the U.S., the national federation
of unions AFL-CIO called for “intensive
and comprehensive intervention” in
setting standards for health, safety and
the environment (HSE) for oil and gas
workers. The report said that rapid growth
in the sector since the early 2000s brought
a signicant increase in fatal injuries. BLS
statistics from 2003 to 2014 show that about
1,300 workers were killed on the job, with
the number of fatalities reaching the highest
ever in 2014.
These statistics stand despite the rigorous
efforts of oil and gas companies to promote
safety culture at every level of their
organizations. And yet, it is important to
recognize that data available to date reect
an industry still in its state of growth. Data
for 2015, due at the end of this year, and
subsequent gures
for 2016, will speak
to how the industry
has fared in terms
of safety since oil
prices dropped at
the end of 2014.
For insight into
how the industry
has reacted in the
downturn and what
that reaction has
meant for HES,
with Jim Spigener,
executive vice
president at safety
services provider
DEKRA Insight.
Spigener has been working with major oil and
gas rms for many years – on both short-
and long-term safety projects and programs.
For example, he has spent 25 years working
with Shell in the offshore market, from
helping the company institute an employee-
driven behavioral process to supporting the
company during serious incidents in terms of
investigation and understanding of workplace
processes that led to the incidents.
DEKRA provides similar services to
other rms – he
said that about 70%
of DEKRAs work
in the oil patch is
with ExxonMobil
and Shell, and the
remaining 30 percent
is with ConocoPhillips,
Chevron and BP.
DEKRA has a wide
range of services that
it offers companies to
support safety culture.
That support can start
with identifying what
kind of culture the
company wants to have,
Spigener said, and then
they use validated tools
to determine what the current culture is.
“Once we have determined what that
culture is, we collaborate with them to
do intervention at various levels of the
organization,” he said. “At the most senior
level, we have leadership diagnostics that
get at the place where leadership needs to
strengthen their approach, and we have
various training and intervention modules for
the middle of the organization.”
At the “shop level,” Spigener said that
DEKRA helps companies develop a
behavioral approach – showing workers
how to get peers to understand what the
exposures are that are causing injuries, how to
measure them, and see how they contribute
to them.
DEKRA also offers coaching for leaders
using a neuroscience approach.
“We help people understand how to look at
safety from the perspective of understanding
that mistakes are going to happen – the way
our brains are set up, as humans, we are most
likely going to make mistakes,” Spigener said.
And what we want organizations to begin
to recognize is, how do we anticipate the fact
that mistakes are going to be made and how
do we change the system so that when the
mistake is made, the consequence is not dire.
Additionally, DEKRA works with companies
on fatality prevention.
Photo Credit: Dzmitri Mikhaltsow -
Jim Spigener, Executive Vice President, DEKRA Insight
Oilman Magazine / November-December 2016 /
“We’ve done a tremendous amount of
research, and we’ve come to the nding that
fatalities and very serious incidents do not
come from the same causes as normal OSHA
recordable-type injuries,” Spigener said.
“Unless you understand what the precursors
to those kinds of events are, and you begin
to put in some sort of mitigation for those,
you could actually have a very low OSHA
recordable rate and still have a fatal incident.”
HES and the Downturn
With his extensive experience providing a
wide range of safety services to major players
in the oil and gas industry, Spigener has been
in a unique position to observe the industry’s
response to the downturn – in terms of HES
– since 2014.
“With the companies that I spend the most
time with, one of the things that became of
great concern during this downturn was the
fact that people, as human beings, tend to
want to do what’s necessary to preserve and
protect themselves,” he said. “In a downturn
like this, the risk of getting hurt seems minor
compared with the risk of losing your job.”
He explained that he has worked extensively
with clients to help them send the message to
employees that what the organization is really
paying attention to, when it comes to who
will be laid off, is who recognizes that safety
during a downturn is as or more important
than it was during the boom.
DEKRAs clients have sought support in
identifying whether a culture of fear over
safety has set into their organizations.
“How do you get your frontline supervisors
to not just to talk about this issue and get
people to understand it, but how do you
reinforce the right behaviors, and how do you
get connected to people so you can see if this
is happening or not happening,” Spigener
said. “And then we want to identify what kind
of diagnostics are available to take samples
and understand whether in fact people are
beginning to up their pace or the desire to
take shortcuts.”
During a downturn, Spigener said, it’s
important to “cut in the right way.”
Organizations faced with dwindling oil prices
have to nd ways to make their organizations
run efciently, but, Spigener warned, if they
dont cut in the right way, the culture in an
organization will respond.
“If you do the wrong things, culture is not
something that’s going to be static,” he said.
“Culture is always assessing what it sees, and
without people even realizing, it’s gradually
moving back and forth.”
When companies start to adapt to the market
environment, Spigener explained, their
leaders begin, often unconsciously, to ask
their teams “to work harder, smarter and
“What happens rst is, without even realizing
it, what gets rewarded, what gets recognized,
what gets expected, starts to shift,” he
said. “And if that shift stays in place long
enough, then you affect culture. It goes
from me recognizing that my boss really is
more interested in productivity right now,
to me taking a few little shortcuts, to those
shortcuts becoming institutionalized and
nobody even realizes it.
He said that, during the downturn, it has
become critical for companies to examine
how they are making cuts, how those cuts are
being communicated and understanding how
the cuts are taken by the workforce, while
always reinforcing safe behaviors.
Upswing Culture
The reality of safety culture is that it must
endure whether the industry is in a boom or
Spigener said that in a downturn, the
workforce evolves, and when the market
starts to improve, workers must adjust to new
job dynamics.
Workers are asked to adapt and learn new
jobs quickly, and inexperienced workers end
up outside of their comfort zones. These
workforce changes present a whole different
level of risk than what companies faced in
the downturn.
As consultants, we play a very large role
as a sanity check and safety valve for [these
companies] and helping them understand
from a human behavior performance
perspective how to get the best from their
workers,” Spigener said.
He said that it’s easy to point to human error
when safety fails and incidents occur.
“It looks like it’s the nal thing that caused an
accident, but what we’ve come to recognize is
that in most cases, we’ve set that up prior to
it occurring,” he said.
Companies, he added, are more often in a
learning mode these days, rather than looking
to blame workers for accidents.
He concluded: “Really, for the most part, the
big oil companies have moved past that way
of thinking.
Photo Credit: Pornsngar Potibut -
Oilman Magazine / November-December 2016 /
Information is the most valuable
commodity. The accuracy and speed with
which information can be assimilated will
determine which companies succeed and
which companies fail. Ursa Space Systems
Inc is a blossoming company which has
developed an algorithmic technology that
can derive valuable information from
images taken by satellite radar.
The Ithaca, New York-based rm was
founded in 2014 with a vision of building
“a small constellation of radar satellites,
said Julie Baker, a co-founder and data
platform lead at Ursa. However, the rm
soon realized that it could satisfy customer
needs now by using radar imagery from
existing satellites, while building its own
By using satellites equipped with synthetic
aperture radar (SAR), Ursa is able to
penetrate clouds or the night sky to obtain
high-resolution, information-lled images.
SAR is an alternative to optical imaging
technology, which, like a camera, can
only take images in prime conditions, not
when it is cloudy or when there are other
unfavorable conditions. Ursa then processes
the radar images using its data platform to
produce useful information.
Currently, Ursa tracks oil tank
measurements to identify changes in oil
reserve levels, the number of cars in a
parking lot and, the change in that number
over time, and ship monitoring, which is
able to identify any ships in a particular area
even if the vessel is not broadcasting an AIS
signal. Alec Mitchell, the lead for market
analysis at Ursa, said that these applications
were the rst to be developed because
customer outreach programs indicated a
great desire for them.
Mitchell stated that the concept of oil-
storage monitoring, in particular, garnered
a “tremendous amount of interest” because
of the value of the accurate, real-time
information which Ursa could provide.
This is especially pertinent today because
of the oil supply glut that has been plaguing
the global markets since 2014. “Trying to
predict the shift in the current crude market
is extremely difcult,” said Mitchell. “What
we’ve developed here is an ability to image
any location in the world to measure crude
oil storage tanks with up to 98% accuracy.”
Ursa now creates weekly reports showing
the change in crude oil volumes at currently
untracked storage locations around the
world, including China.
The data platform, Ursa Maps, will one day
be used to “Create a living map of the earth
that shows data in a live form.” According
to Mitchell, “You’d be able to click on a
region or an area and determine how much
oil is in that whole area, how many cars are
in that area, how many boats are in that
area.” It is quite an undertaking, but with
the progress the company has already made
it seems quite possible.
In addition to the applications already
active, there are a number of services in
development, including, but not limited
to- the ability to track the change of
valuable commodity stockpiles, assist rst
responders during disasters by identifying
priorities for rescue crews, measuring
snowpack to forecast demand for water or
energy in an area, and the ability to monitor
oil spills and other marine pollution.
Another application in development would
track offshore weather conditions, which
could preemptively alert offshore oil rigs to
prepare for an incoming storm. Offshore
rigs are usually ill-informed about potential
weather conditions because most major
weather monitors do not focus on regions
with such few individuals.
Ursa’s vision of building an interactive, live
world-map could change the way companies
and markets respond to information
specic to a particular region of the
world. The potential elds in which this
technology could improve efciency seems
to be limitless.
Ursa Space Systems is Changing How
Companies Interact with Data
By Tim McNally
Photo Credit: rakchai -
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Oilman Magazine / November-December 2016 /
Energy-related carbon dioxide (CO2)
and methane emissions have declined
again, according to two new reports from
the Environmental Protection Agency
(EPA) and the Energy Information
Administration (EIA) at the Department
of Energy (DOE).
The EPA report issued on Oct. 7 stated
that methane released from the nations
petroleum and natural gas sector declined
3.8 percent in 2015, marking the fourth
consecutive year methane emissions have
The EIA released its “Short-Term
Energy Outlook” on Oct. 13, noting that
the energy industry had the lowest CO2
emissions during the rst six months of
2016 since 1991.
Ironically, even though declines in
emissions have been recorded without
federal regulations, the EPA has issued
massive, new air-emissions regulations
on the oil and gas industry, which have
prompted many states and industry
groups to le a lawsuit against EPA.
Texas, the largest producer of energy
(oil, natural gas, and wind), recorded
a reduction in methane emissions to a
combined 3.58 million metric tons of
CO2 equivalent between 2011 and 2015,
according to EPAs report.
The newest report from EIA said the
industry totaled 2,530 million metric
tons in the rst six months of 2016, the
lowest level in 25 years. EIA projects that
energy-associated CO2 emissions will fall
to 5,179 million metric tons in 2016, the
lowest annual level since 1992.
EIA attributed the decrease to a change
in electric generating fuels and the
EIA noted that natural gas consumption
has increased, as has renewable
consumption, but coal consumption has
In the rst six months of 2016, the U.S.
had the fewest heating degree days (an
indicator of heating demand) since at
least 1949, the earliest year for which EIA
has monthly data for all 50 states. Warmer
weather during winter months reduces
demand for heating fuels, such as natural
gas, distillate heating oil, and electricity.
Renewable energy consumption increased
9 percent during the rst six months of
2016 compared to the same period in
2015. Coal consumption fell 18 percent.
Overall, total primary energy
consumption was 2 percent lower
compared with the rst six months of
2015. The decrease was most notable in
the residential and electric power sectors,
where primary energy consumption
decreased 9 percent and 3 percent,
EIA expects the share of U.S. total
utility-scale electricity generation from
natural gas will average 35 percent this
year, and the share from coal will average
30 percent. Last year, both fuels supplied
about 33 percent of total U.S. electricity
generation. In 2017, natural gas and coal
are forecast to generate about 34 percent
and 31 percent of electricity, respectively,
as natural gas prices are forecast to
increase. Non-hydropower renewables
(wind and solar) are forecast to generate
8 percent of electricity generation in 2016
and 9 percent in 2017. Generation shares
of nuclear and hydropower are forecast
to be relatively unchanged from 2016 to
Natural gas marketed production fell
from 79.7 billion cubic feet per day
(Bcf/d) in September 2015 to 76.5 Bcf/d
in July 2016. EIA expects marketed
natural gas production to average 77.5
Bcf/d in 2016, a decrease of 1.6 percent
from the 2015 level, which would be the
rst annual decline since 2005. Forecast
production increases by 3.7 Bcf/d in
Henry Hub spot prices are forecast to
average $3.04/million British thermal
units (MMBtu) in the fourth quarter
of 2016 and $3.07/MMBtu in 2017.
Natural gas futures contracts for January
2017 delivery traded during the ve-day
period ending Oct. 6 averaged $3.34/
MMBtu. NYMEX contract values for
January 2017 delivery traded during the
ve-day period ending Oct. 6 suggest
a price range from $2.28/MMBtu to
$4.88/MMBtu encompasses the market
expectation of Henry Hub natural gas
prices in January 2017.
The legal action against EPA was
originally led by the state of North
Dakota and quickly joined by Texas and
other states. A group of some 18 oil and
gas associations also led suit in the U.S.
Court of Appeals for the District of
Columbia Circuit.
EPA adopted the methane emissions
regulations on June 3.
Alex Mills is President of the Texas
Alliance of Energy Producers. The
opinions expressed are solely of the
Carbon Dioxide and Methane
Emissions Decline Again
By Alex Mills
Photo Credit: Timur Arbaev -
Oilman Magazine / November-December 2016 /
OPEC Announces Potential
Production Freeze
By Tim McNally
OPEC has announced the formation of a
preliminary deal to cut the production of
oil, the rst agreement of its kind since
2008. The cartel revealed it intends to cut
production down to 32.5 million/bpd
from a previous high of 3.32 million/
bpd in August.
Some analysts are wondering whether the
deal will actually come through, as the
specics for limitations on production
per country were lacking. These details
will be decided at an upcoming meeting
in November. The rather ckle behavior
of the cartel leaves room for doubt as to
the success of the deal two months from
Dan Yergin, a Pulitzer-prize winning
author and analyst, spoke to CNBC’s
Squawk Box about the deal, stating “I
think what this really is, is an agreement
to agree at some point two months from
now, and there are big questions around
the allocations. Is this a freeze or a cut?
What’s the real deal with Iran going to
Saudi Arabia has previously stated that
any sort of production-freeze within
the cartel would have to include Iran as
well, a nation which has said it wants
to produce around 4 million/bpd after
sanctions were removed from the
country in January.
However, Reuters reported that Saudi
Energy Minister Khalid al-Falih stated
that certain countries, including Libya,
Iran, and Nigeria, would be allowed to
produce “at maximum levels that make
sense.” The words contrast starkly with
Saudi Arabia’s previous attitude towards
the matter, which is again why some
experts question the solidity of any
potential deal.
Saudi Arabia has been forced into a
budget decit and has had to recall some
of its the social programs for its citizens
that were previously abundant when oil
was ying high in the $100s.
No mention was made of any Russian
participation in a production cut, but the
country had previously been in talks with
Saudi Arabia to conduct a freeze.
SEC Investigating Exxon’s
Questionable Asset-Evaluation
By Tim McNally
Exxon is being investigated by the
Securities and Exchange Commission
(SEC) regarding whether the company
properly values its assets, the
Wall Street
reports. This is not the rst time
the company’s accounting practices have
come into question.
The New York Attorney General’s ofce
initiated an investigation into Exxon
last year, as the company allegedly
mislead the general public and investors
about the negative effects that certain
environmentally-charged regulations
could have on the company.
The SEC has since decided to
get involved as well, contacting
Exxons accounting auditors,
PricewaterhouseCoopers LLP, in August
for information and documents regarding
the issues at hand.
Due to the increasingly stringent climate-
change regulations for energy companies,
many oil and gas companies have been
forced to reevaluate or mark down their
asset values.
In addition, during an industry-wide
downturn, companies are expected to
write down the value of their assets,
which, in turn, offers a more accurate
picture of the company’s nancial
While other companies have been forced
to mark down asset values these past two
years due to the oil price decline, Exxon
remains the only major player in the eld
that has not altered its asset values or
taken an impairment.
The SEC is specically looking into
what gures Exxon used to estimate the
future costs that will be incurred from
environmental compliance. They will also
be scrutinizing the company’s practices
regarding the evaluation of its assets
during a period of a low commodity
An Exxon spokesperson told WSJ that
the company abides by all accounting and
reporting rules.
Photo Credit: gyddik -
Oilman Magazine / November-December 2016 /
EIA Predicts Deteriorating Oil Market
into 2017
By Tim McNally
The EIA recently released its adjusted
estimates of global demand and supply
for oil, and the adjustments were not for
the better. The EIA released its ndings in
the September version of its “Oil Market
Report.” The EIA expects that oil will see
a continuing slowdown in demand and an
increase in supply, which means that the
current market glut will continue well into
One of the issues detailed in the report is
that the growth of oil in Asia has dropped
greatly from its previous consumption.
China and India, both large international
consumers of oil, have reigned in their
insatiable need for the black gold, and the
corresponding countries which supplied
this oil are now seeing their oil stockpiles
building up.
Furthermore, OPEC, failing to reach any
sort of production-freeze agreement,
produced a record-teasing 33.47 mb/d in
August. Output reached the highest level
ever for Kuwait and UAE, and Iraq and
Iran both saw increases in production.
OPEC and other oil-producing nations
that are maximizing production are,
perhaps purposefully, underestimating
the effect they are having on the global
economy. Pushing production to new
heights may seem benecial in the short
term, but it will take a longer time for the
market to rebalance and reach equilibrium,
which will cause more strain on countries
that heavily rely on oil. It is rather ironic,
then, that the countries that are the most
dependent on oil are the ones boosting
output, essentially causing the low oil
All of this simply adds to the already-
saturated oil market, which is why even if
a production freeze could be negotiated
between countries like Saudi Arabia and
Russia, there would be a minimal change
in the global oil supply. A freeze is a
temporary x to a long-term problem.
What is happening in the market is defying
basic economics. A normal market will
follow the rule that a decrease in the
price of a product will be accompanied
by both a decrease in supply and a surge
in demand. “However,” the EIA noted,
“the opposite now seems to be happening.
Demand growth is slowing and supply is
Russia and Saudi Arabia Join Forces to
Stabilize Oil Market
By Tim McNally
Energy Ministers from Russia and Saudi
Arabia agreed in September to work
together in a commitment to stabilize the
oil market. The talks occurred in tandem
with the G-20 Summit hosted in China.
The Associated Press reported that
Minister Alexander Novak and Minister
Khalid al-Falih agreed in a joint statement
that something needs to be done to
correct the volatility of the oil price, and
the two ministers laid out a general plan
for moving forward.
The countries stated that they would set
up a group to monitor market activity and
propose various solutions for stabilizing
the market. The Russian minister
mentioned the possibility of a production
freeze but did not say that a halt in
production would be a certainty.
“We believe that the market right now is
taking too long to balance out, it’s been
two years, and joint steps which were
considered earlier this year including a
production freeze could be a great help
in helping to balance the markets as soon
as possible,” Novak told Russian news
Many are skeptical of a production
freeze because, although the freeze will
successfully rid the market of any surplus
oil, it will not be a sustainable market
environment. A production freeze would
temporarily balance the market, but if
Russia and Saudi Arabia immediately
revert to their high levels of production
after the freeze, there will be a continual
Talks of a production freeze within OPEC
have circulated the past two years, but
the cartel has not managed to come to a
unanimous decision regarding when or
how to act. Russia is not a member of
OPEC, but the nation was advocating
for a production freeze earlier in the year
before Iran made it clear it would not
abide by such a freeze.
Photo Credit: Thomas LENNE -
Oilman Magazine / November-December 2016 /
GE’s First Industry-focused R&D
Center Unveiled in Oklahoma City
By Tim McNally
GE recently unveiled its Oil and Gas
R&D Center in Oklahoma City, Okla.
The 125,000 square foot facility will be
used for creating new technologies for
the oil and gas industry.
The center is GE’s rst sector-specic
global research facility, a place where
scientists and engineers will collaborate
with the O&G industry to create
innovative solutions.
Lorenzo Simonelli, CEO of GE Oil
& Gas, said in a statement that GE
believes “a strong commitment to R&D
will help our oil and gas customers
nd new efciencies to work through
tough market conditions and lead to
transformational opportunities for the
industry to thrive long-term. The new
technology center in Oklahoma City will
accelerate innovation; it’s where we can
bring the full power of digital solutions
and technology from across GE’s
industrial businesses to advance the Oil
& Gas industry.
In an interview featured on the
company’s website, Michael Ming, general
manager of the GE O&G technology
center, stated: “We’ll address the
industry’s most pressing problems...that
could be from how you drill or complete
a well, to how you produce a well.
The unveiling comes at a crucial time for
many energy companies as they continue
to search for new measures to streamline
operations. Efciency is now the top
priority for most energy companies,
and innovations such as GE’s emission-
detecting drone, known as “Raven,
which was revealed at the opening of the
center, will hopefully yield positive results
for rms operating in the oil industry.
Continental Resources Sells
Non-Strategic Assets
By Tim McNally
Many oil-related companies have been
in the process of selling off certain
assets to stay solvent in the current
economic environment. One such
company, Continental Resources, based
in Oklahoma City, recently agreed to sell
$222 million worth of land in Montana
and North Dakota, assets which the
company considered not to be strategic.
The total amount of acreage for sale
in the deal comes to 80,000, which is
broken down into 68,000 acres of land in
North Dakota and 12,000 in Montana.
The deal follows a May sale of 132,000
acres of land in Wyoming and a smaller
sale of 29,500 acres of land in Oklahoma
on Aug. 3.
Chairman and CEO Harold Hamm in an
Aug. 18 statement said: “This is our third
sale of non-strategic assets this year, with
total expected proceeds of more than
$600 million. We plan to apply proceeds
to reduce debt and strengthen our
balance sheet.” The company reported a
net loss of $119 million for the second
quarter of 2016.
As the assets were not critical to current
or future operations, the rm will
maintain the course that it has set for
this year. Hamm said that the company’s
guidance for the year has not changed.
“The combination of Continental’s high-
quality drilling inventory, strong balance
sheet and $560 million investment in
drilled but uncompleted wells (DUCs)
provides the Company with a robust
platform for high-value future growth,
he said.
Harold Hamm is well-respected in the oil
industry, and Reuters reported in July that
Donald Trump was considering the CEO
of Continental Resources as a potential
pick for energy secretary. Hamm would
be the rst U.S. energy secretary to be
plucked directly from the energy sector
and thrust into politics.
Oklahoma Governor Receives
Criticism for Day of Prayer
By Tim McNally
Oklahoma is one of many states that
rely on the oil industry to support their
economy. The continuing downturn
prompted Governor Mary Fallin to
announce last month that October 13
would now be known as “Oileld Prayer
In her proclamation, Fallin called upon
Christians to thank God and look to
him for wisdom. The proclamation has
faced some backlash as many nd that
Photo Credit: Jeffery Longa -
Photo Credit: Huiping Zhu -
Oilman Magazine / November-December 2016 /
the proclamation did not reach out to all
The proclamation states how fortunate
and blessed Oklahomans are to have such
a valuable, bountiful resource located
within their borders. It goes on to say,
“Whereas, Christians are invited to thank
God for the blessings created by the oil
and natural gas industry and to seek His
wisdom and ask for protection,” a phrase
that upset certain individuals who believed
it should be a call to all faiths.
Fallin has since revised the statement,
which now reads “Whereas, people of all
faiths are invited to thank God for the
blessings created by the oil and natural gas
industry and to seek His wisdom and ask
for protection.
The proclamation comes at a time when
many oil companies continue to struggle
with the fallen oil price. Despite the states
efforts to incentivize production, including
a tax break for oil companies, the state
economy is still in a state of disarray.
Praying seems to be the governor’s last
hope to stimulate the energy industry.
Rise More Before Production Increase
By Tim McNally
Lee Boothby, CEO of Neweld
Exploration Co., thinks that oil prices
need to be higher for production levels to
increase signicantly.
“People that are following the play, the
investors, are going to have to be a little bit
patient,” Boothby told Bloomberg on Oct.
13. “It’s such a huge and valuable resource,
you want to get it right.”
This “valuable resource” of which
Boothby speaks is the “multi-billion
barrel” oil resource that is part of the $470
million investment Neweld has made
this year in the Scoop and Stack region in
Oklahoma. The rm already has ve wells
operating in the area and could potentially
double that number, but caution seems
to be the new
modus operandi
for the
company during these times. Until the oil
price starts to make a consistent upward
movement, resource-bountiful regions will
remain relatively undeveloped.
Even in the Scoop and Stack area, where it
is actually protable to produce oil at these
lower prices, Boothby is doubtful that any
real increase in oil production will happen
with the oil price at $50.
“You’ll see an acceleration of drilling as
people’s cash ow grows in response to
higher prices; we know we can go faster,
Boothby said. “But we dont feel in a 50-
ish environment that that makes sense.
Because cash has been tight for companies
operating in the energy industry, the
Texas-based rm has considered selling
off assets in the Bakken Shale region in
order to nance development in the Scoop
and Stack shale region of Oklahoma.
Boothby calls the sale of assets a matter of
“when, not if,” according to Bloomberg.
Oilman Magazine / November-December 2016 /
Massive Find in Alaska Made by
Texas-based Firm
By Tim McNally
A large concentration of light-oil has been
discovered in the North Slope region of
Alaska by privately owned exploration
and oil production company Caelus
Energy LLC. The Dallas-based company
announced its ndings on Oct. 4, saying
that the discovery will be a stronghold for
the oil industry in Alaska.
The discovery was made in the Smith Bay
via Caelus’ subsidiary. The company said
in a statement that the total amount of oil
discovered will amount to 6 billion barrels,
with a possible total of 10 billion barrels
of oil being located within the Smith Bay
complex. The company believes it will
be able to extract 30-40% of the trapped
This nding in the Smith Bay is expected
to produce around 200,000 barrels per day
– a fortunate resource for the economy
of Alaska, which has been in a lull due to
the oil crisis. More than half of the state’s
revenue comes from the oil industry,
so this discovery by Caelus could turn
things around for the state whenever the
extraction and transportation of the oil
“This discovery could be really exciting
for the State of Alaska. It has the size
and scale to play a meaningful role in
sustaining the Alaskan oil business over
the next three or four decades,” Caelus
CEO Jim Musselman said.
The state has been pushing for
exploration by offering incentives, such
as tax credits, to companies interested in
exploring Alaskan territory. Musselman
claimed that the company’s success is due
to these programs.
“Without the state tax credit programs,
none of this would’ve happened, and I’m
not sure Caelus would’ve come to explore
in Alaska,” he said. “We’re proof that the
credit programs work.
RRC Helps Create Natural Preserve
from Abandoned Oil Field
The Texas Railroad Commission’s (RRC)
Site Remediation section helped turn
a historic, abandoned oil eld site into
part of one of the state’s newest natural
habitats—the Turtle Bayou Nature
Preserve. The 511-acre preserve, which
celebrated its grand opening in October, is
located between Houston and Beaumont
in Chambers County and borders Lake
Anahuac and Turtle Creek Bayou.
The RRC said that the preserve is part
of the Turtle Bayou Oil Field discovered
in 1952, which had legacy abandoned oil
wells and former oileld waste pits. The
abandoned oil wells were plugged using
$487,000 from the RRC’s Oil & Gas
Regulation & Cleanup Fund (OGRCF),
which is nanced by industry fees for
plugging abandoned wells and remediating
abandoned oileld sites. An additional
$49,793 from the OGRCF and a $176,300
federal Browneld grant also was used by
RRC Site Remediation to assess the site
and ensure it was cleaned up to standards
necessary for wetland habitat.
The preserve is owned by the Chambers-
Liberty Counties Navigation District, for
preserving coastal habitat and protecting
water quality. Galveston Bay Foundation
holds a conservation easement on the
property to permanently protect the land,
which provides opportunities for hiking,
birding and kayaking.
EPA Commends Texas Environmental
By Alex Mills
Newspapers across Texas ran a story
on Aug. 24 proclaiming that the
Environmental Protection Agency (EPA)
issued a report on Aug. 15 that “there is a
signicant possibility” oil and gas activity
caused earthquakes in North Texas.
The story, written by
Texas Tribune
reporter Jim Malewitz, took EPAs
statement even further by stating that
“state regulators wont say so,” indicating
there is some sort of controversy between
EPA and the Texas Railroad Commission
(RRC), the agency that regulates oil and
Malewitz even nds a source, an attorney
in Fort Worth, who will support his notion
that EPA is troubled by the “reality” that
the RRC has failed to recognize some
possible connection.
The “reality” is that the EPAs 61-page
review of the RRC’s Underground
Injection Control (UIC) program devoted
only one page to induced seismicity in
Photo Credit: porbital -
Oilman Magazine / November-December 2016 /
North Texas. In that lone page, EPA did
not offer any scientic evidence pointing
to the causation of earthquakes by injected
uids, but states that it believes there is a
“signicant possibility that North Texas
earthquake activity is associated with
disposal wells.
EPA commended the RRC for its
involvement in assessing the problems and
implementing proven solutions.
“RRC was one of the state agencies that
participated in this effort (assessment
of potential induced seismicity) and
is commended for its inuential
involvement,” EPAs report stated. “RRC
is also commended for establishing
new regulations specic to seismicity,
including solidifying RRC authority to take
appropriate action related to injection well
What EPA referred to is a letter from
David Hill, RRC manager of injection-
storage permits and support, to EPA
pointing out that the RRC added new
requirements for applications for injection
wells where “conditions, such as complex
geology, proximity of the injection interval
to the basement rock, and/or transmissive
faults, exist that may increase the risk that
uids will not be conned to the injection
interval.” Hill’s letter was a portion of
EPAs report.
He also noted that the RRC has hired a
The RRC conducted a formal hearing
shortly after several seismic events near
Azle, and found no scientic evidence that
the wells in question caused the activity.
“The Commission will continue to monitor
seismic activity in Texas, and will require
daily recording of accurate pressures and
volumes for appropriate wells,” Hill stated.
The UIC program involves much more
than oversight of earthquakes, and the EPA
stated that the RRC’s programs “reect
an outstanding enforcement monitoring
program.” Specically, EPA stated that the
RRC mechanical integrity testing (MIT)
“program exceeds the testing requirements
for the MIT ve-year performance mea-
The Tribune story did not mention that
the review of the UIC program included
anything other than earthquakes.
EPAs review contradicts the story’s premise
that the RRC is ignoring its duty to protect
the environment and safety of the public,
and that the EPA and RRC are at odds over
these issues. As a matter of fact, the review
gives the RRC’s UIC program accolades.
Alex Mills is President of the Texas Alli-
ance of Energy Producers. The opinions
expressed are solely of the author.
Oceaneering Acquires Blue Ocean
Technologies for $30 Million
By Tim McNally
Houston-based Oceaneering International
on Oct. 17 said that it has acquired the
assets of privately owned Blue Ocean
Technologies, LLC. The purchase price of
$30 million includes three riserless light well
intervention (RWLI) systems. Only one
system is functional at this time, but the two
systems under construction are expected to
be completed halfway through 2017.
“We are pleased to complete the acquisition
of Blue Ocean, which we believe will
enable us to further penetrate the subsea
well intervention market and support
existing and new customers with additional
safe, cost effective subsea solutions,” Kevin
McEvoy, CEO of Oceaneering, said in a
He added that “the services offered by Blue
Ocean are complementary to our subsea
products operations, and Blue Ocean will
add talent and expertise that reects our
commitment to provide quality results with
an integrated and expanded platform to
drive growth.”
Blue Ocean Technologies, headquartered
in Conroe, Texas, emerged in 2008 as one
of the rst companies to provide RWLI
systems as a cost-effective alternative to
traditional solutions. RWLI systems are
subsea solutions designed to increase the oil
and gas recovery rate from a well.
The acquisition is a smart move on the
part of Oceaneering, because assets are
usually sold at a considerable discount
during an industry-specic downturn. It
also diversies the company’s number
of offerings, thereby increasing potential
sources of revenue.
“This acquisition ts our strategy on
increasing our services and products
offerings focus related to the production
phase of the offshore eld life cycle,
McEvoy said.
Photo Credit: planctonvideo-
Oilman Magazine / November-December 2016 /
Oil Companies Assist with Relief
Efforts in a Recovering Louisiana
By Tim McNally
American Red Cross and various other
relief groups operating in Louisiana to
assist with ood-ravaged communities
have received aid from an unlikely source.
Exxon Mobil Corp., Shell Oil Co., and
Motiva Enterprises LLC. have all pledged
a total of $1 million of support for the
Exxon has donated $500,000 to Greater
Baton Rouge Food Bank and American
Red Cross, while Shell and Motiva will
donate a combined $500,000 to the
Capital Area United Way and other
organizations. Shell and Motiva are also
matching their employee’s contributions
to relief efforts.
Rhoman Hardy, General Manager of
Shell’s Geismar Chemical Plant said in
an Aug. 19 statement: “These oods
have devastated thousands of people
in our community, including many
Shell employees. Our hearts go out to
everyone touched by this tragedy.”
Louisiana Governor John Bel Edwards
enacted a state of emergency earlier in
August as parts of the state were ravaged
by severe ooding and the accompanying
damage. Tens of thousands have lost
their homes and 13 people have died.
“We hope that this donation will help
provide some relief to Louisianans as
recovery efforts begin,” Exxon CEO Rex
Tillerson said in an Aug. 19 statement.
“Our thoughts and prayers are with our
friends and neighbors in Louisiana who
have been impacted by storms and severe
ooding in the region.
Krewe Energy Acquires Coquille Bay
Covington, La.-based Krewe Energy
recently completed the acquisition
of a private owner’s interest in and
operatorship of the Coquille Bay Field
located in Plaquemines Parish, La.
The Coquille Bay Field is a vintage South
Louisiana property, which has been
actively producing since the 1950s. The
eld is now being operated by Krewe
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Oilman Magazine / November-December 2016 /
Energy’s operating subsidiary, S2 Energy
Operating, and efforts are currently
underway to further optimize and increase
production rates in the eld.
Krewe Energy said that it is focusing on
the growth and further development of
its existing asset base while also seeking
additional acquisitions of mature assets
within its core operating area of the Gulf
Coast — South Louisiana oil and gas
Shell Begins Production at Stones in
Gulf of Mexico
Royal Dutch Shell in September said that
it started production from the Stones
development in the Gulf of Mexico.
Stones is expected to produce around
50,000 barrels of oil equivalent per day
when fully ramped up at the end of 2017.
The project is located about 200 miles
southwest of New Orleans at a water
depth of 9,500 feet.
“Stones is the latest example of our
leadership, capability, and knowledge
which are key to protably developing
our global deep-water resources,” Andy
Brown, upstream director, Royal Dutch
Shell, said in a statement. “Our growing
expertise in using such technologies in
innovative ways will help us unlock more
deep-water resources around the world.
Stones, which is 100% owned and operated
by Shell, is the company’s second producing
eld from the Lower Tertiary geologic
frontier in the Gulf of Mexico, following
the start-up of Perdido in 2010.
Louisiana Parishes Resist Governor’s
Push to Sue O&G Industry
By Tim McNally
Louisiana Governor John Bel Edwards
is persisting in his attempt to convince
parishes throughout Louisiana to join a
suit against the oil and gas industry for
what he claims is their role in damaging
the state’s wetlands. The push to unify
Louisiana parishes in their suit against the
oil and gas industry has been met with
some resistance, both because of the
lawsuit’s legitimacy and the motives driving
The governor has faced criticism for his
choice of attorneys – private lawyers who
are set to receive a huge payday if they win
the case against the oil and gas industry.
These lawyers will receive a percentage of
any winnings, whereas state lawyers on the
case are only being paid for the hours they
work. Many critics of the lawsuit point to
this huge payday as the sole reason for the
lawsuit’s existence.
Edwards has also been under re for over-
zealously calling on parishes to join the
mounting lawsuits against the oil industry.
Edwards sent a letter to parish presidents
asking them to hire private lawyers and
join the crusade to sue big oil. He also
stated that the state would take legal action
on the behalf of parishes who choose not
to participate in the suit. However, not all
parishes were open to the idea.
An article from The Daily Iberian praises
the Iberia Parish Council for unanimously
voting not to be included in the suit. A
resolution from the council requests that
the state government not intervene and
pursue a legal case on behalf on the Iberia
Parish. Iberia, however, was not the only
parish to mount such a request.
Parish presidents from Lafourche and
Terrebonne met with the governor to
share their concerns regarding the suit
and their lack of a desire to join it, the
Louisiana Record reports. A letter co-
authored by the parish presidents states:
“I kindly ask you to please realize the
effect a lawsuit such as this will have on
our local economy. A suit such as this at
this time will jeopardize hundreds of new
jobs.” Perhaps after hearing these parishes’
legitimate concerns the governor will
reexamine his decision to automatically
include all parishes in the suit.
Oilman Magazine / November-December 2016 /
Jason Spiess: Let’s start out by having you
tell us about Missouri River Resources and the
Three Afliated Tribes.
Ken Hall: Dave Williams is our CEO and
we both are enrolled members of the Three
Afliated Tribes; a few years ago it was just
an idea and concept on paper. Fast forward
to last year where they drilled their rst four
wells. Very historic event.
The tribe has been involved with oil and
gas since the 1950’s, but we’ve never drilled
our own wells until last year. That was very
monumental and exciting. Now they are
also engaging in midstream activities and
workforce development as well. It’s been a
really good start to a viable company that
could become a big player someday.
JS: When I interviewed David Williams last
year he mentioned how the goal was to have
an all Native American company – from the
drillers to the scientists to the administration.
Is that still the goal, and what does that mean
to you?
KH: Yes, that means everything. We are
a sovereign nation; we believe in our own
people. We believe it is a new day. When you
talk about oil and gas in the tribal nation
there are sovereignty models out there. And
we are trying to become another one of
those models. We use our own people when
you talk about workforce development and
oil eld services. From top to bottom – our
environmental science folks, our drillers, our
pumpers, our administrative folks. We believe
we can do quality work and these people are
just as capable as the next person.
JS: Where are they getting their education?
Are they using traditional universities or is
there a Native American education system?
Talk to me about the education process.
KH: We know there are vocational,
educational institutions in our state (North
Dakota), United Tribes comes to mind,
a technical college. And then we have a
community college in our backyard, the Nueta
Hidatsa Sahnish College, formerly known as
Fort Berthold Community College. They are a
four-year accredited college now.
We have a partnership with San Juan College
in New Mexico, they just sent a few students
down there for training. And then you have
the universities in the state of North Dakota
as well. It’s a good set up for us; a good
model. We believe we are going to have
COOs, CEOs, geologists, drillers and all of
that will be Native American.
JS: About a year ago I did a story for the
Bismarck Tribune about what you had going
on there with the MHA Nation. I argued it
was empowering the people, empowering the
tribe. What do you make of that statement?
KH: Empowering is a good choice of words
because when you empower someone, you
build condence in them. You let them know
they can do it, and then they start to ourish.
Once they are given that opportunity they
start to believe in themselves. Once we can get
them to that place now they are off getting
their education.
They are off becoming a professional or a
businessperson or having a specialty that they
can offer and come back and really help their
nation to become prosperous again. Which we
once were before.
It’s all because of legislation. People talk
about all the statistics; we want to focus on
the positive. We are headed toward being a
healthy and prosperous nation. We have a
God given resource that we sit upon and we
believe we can maximize that resource. The
potential is unlimited.
JS: Are the people within the tribe accepting
this or is there some resistance?
You are always going to have a few that resist.
We are in a day now as everyone understands
we are in the era of technology. Technology
was the game changer for the Bakken; I think
everyone understands that. I think the word
for the day is becoming more ‘efcient.’ With
this downturn it gives everyone a chance to
become more efcient at what we do.
But getting back to your question, I think
there will always be some resistance. But if
they could see the big picture, and look at
the economics of it, I think they would buy
more into it. If they knew the technology is
probably the safest it has ever been, I think
they can buy into what we are doing here.
JS: How about the regulation side. When I
spoke with your CEO, David Williams, he
indicated a permit took months and months
and months, whereas a private landowner in
North Dakota could get a permit in 2-3 days.
Talk to me about the working relationship
with permits and regulations.
KH: I am glad you brought this up. Early on
when the leasing happened, 2006 and 2007,
if you were off the reservation and you were
a private owner, it took you four steps from
signing a lease to getting your rst royalty
check. Now you step on the reservation, all
the federal regulations that are in place are a
49 step process.
It is a cumbersome process — all these federal
agencies that have to be a part of that process.
Three different routing numbers (laughs),
its very complicated and not everybody
understood that.
And therefore a doughnut hole was created.
When you would drive at night and you
could oversee the landscape, there was all
these ares outside the reservation. It was
completely dark on the reservation. There was
Q&A with Jason Spiess
An Interview with Ken Hall
Missouri River Resources, the tribally owned oil and gas company.
a doughnut hole. All the activity was around,
but nothing going on the reservation because
of the regulations and the cumbersome
process. Nobody actually knew what the
process entailed and yet we had to streamline
that process from a land and mineral owners’
We had an association early on where we
lobbied and were also advocates on behalf of
the land and mineral owners. We tried to create
a one-stop shop, and it is still being developed
to this day — a one-stop shop service center,
which we believe could be in Denver. All tribes
could utilize when it comes to leasing and
right-of-ways in order to streamline the whole
So that’s still in the works. But we got a little
better at it, as far as timelines and trying to
become more efcient. There we come back to
that word again. (chuckles)
JS: How about opportunity. You mentioned
that word earlier. Have you seen any spin
off or service businesses start up in the
reservation? Whether it is a long haul trucker
or maybe just a guy with a pizza shop. Are
you seeing any sort of entrepreneurship
KH: Oh yes, the opportunities are
tremendous. I think before the boom we had
a handful of Native American businesses.
Today, I want to say, there is well over 250 that
have their own business. It’s oileld services,
roustabouts, trucking, you name it. It’s been a
tremendous opportunity for those folks.
When I got an ofce three-and-a-half years
ago we created what they call a Community
Development Corporation. They have their
own charter, mandate from the Tribal Business
Council, own bylaws, and appointed board.
They work on housing projects and businesses
on Main Street — like a coffee shop, which
is opening, a hair salon, a ower shop. Those
businesses are opening on Main Street as we
The spin offs have been tremendous. It’s
been a real opportune time if you are an
entrepreneur and wanting to get into business.
JS: Final thoughts. What do you want people
to know about the Three Afliated Tribes and
what you guys are trying to accomplish?
KH: I think for starters, the state of North
Dakota and the industry have to realize we
are big players in the Bakken. There was a
recent article that pointed out that two-thirds
of the Bakken is in western North Dakota.
That’s us. When you talk about the core area,
that’s us again. Going forward we are very
optimistic because of the core area we are in,
the opportunities that are presented to us and
being able to capitalize on this opportunity.
We want to go forward with a great amount
of optimism because we are only probably 25
percent into the development as a nation.
If you look at dollar amount, before the
Bakken we were $110-$120 million dollars in
debt as a tribe. Fast forward to today and we
are debt free, we have a number of multi-
million dollar projects that are happening, and
we have trust funds established. We have a
number of things to get excited about.
JS: That’s empowerment.
KH: You are absolutely right. That is
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Oilman Magazine / November-December 2016 /