Oilman Magazine Jan/Feb 2017 : simplebooklet.com

During the oil and gas slowdown the last two years, employees across many sectors of the industry were laid off, wage increases were limited, and many were denied promotions. The brighter side to that unfortunate slowdown was many employees took that as an opportunity to improve their skills by attending seminars, streaming webinars, and brushing up on knowledge that would propel them for better opportunities as the industry turned around. A wise decision for those that are still employed, as well as for the unemployed seeking a marketing advantage over the next candidate. Our feature in this edition takes a look at education and training technology the oil and gas industry will need for the future. It’s difcult to know what specic niche skills will be in demand ten years from now; however, starting from the basics of what we know today, either through a bachelor’s degree, a trade program, such as welding technology, and even a graduate degree to learn advanced techniques, is the best approach for a successful career. Learning the latest skills and knowledge is often found in continuing education and advanced certication programs. It is proven that on-the-job training and real-world practice is the best way to learn a skill and gain knowledge. But once you’ve reached your profession’s standard body of knowledge through higher education or on-the-job training, over time standard practices change, ways of doing tasks become obsolete, and new techniques and knowledge are introduced to the eld, as the oil and gas industry advances. Some have even found that attending trade shows provide valuable knowledge they can use at work.There is no doubt that completing continuing education courses, learning an in-demand industry skill, earning a degree, or joining a professional organization, is the best investment you can make in yourself for an industry that is in constant change.MAGAZINE JANUARY — FEBRUARY 2017PUBLISHED BY Oilman Magazine, LLCP.O. Box 771872 Houston, TX 77215(800) 562-2340OilmanMagazine.comPUBLISHEREmmanuel Sullivanpublisher@OilmanMagazine.com(800) 562-2340 Ex. 5EDITORJennifer DelonyDIGITAL CONTENT MANAGERTim McNallyGRAPHIC DESIGNERKim FischerCONTRIBUTORSDon Briggs— LOGA President.......Mark Stansberry— Chairman of The GTD Group.......Joseph DeWoody— President of Clear Fork Royalty, an oil & gas royalty investment company located inFort Worth, Texas.......Steve Burnett— CrudeOilCalendars.com....Story Sloane III— The Sloane Gallery in Houston,Texas (281) 496-2212).......Paul Flessland— Photographic Artist, PaulFlesslandPhoto.com.......Jason SpiessJoshua RobbinsSUBSCRIPTIONSOilmanMagazine.com/subscribeADVERTISING(800) 562-2340 Ex. 1advertising@OilmanMagazine.comOilmanAdvertising.com© Copyright 2017 by Oilman Magazine, LLC. All rights reserved. Reproduction without permission is prohibited. All information inthis 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; 123rf.com..........LETTER FROM THE PUBLISHERCONTRIBUTORS — BiographiesDon BriggsDon 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. StansberryMark 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 SpiessJason Spiess is an award winning journalist, talk show host, publisher and executive producer. Spiess has worked in both the radio and print industry for over 20 years. All but three years of his professional experience, Spiess was involved in the overall operations of the business as a principal partner. Spiess is a North Dakota native, Fargo North Alumni and graduate of North Dakota State University. Spiess moved to the oil patch in 2012 living and operating a food truck in the parking lot of Macís Hardware. In addition to running a food truck, Spiess hosted a daily energy lifestyle radio show from the Rolling Stove food truck. The show was one-of-a-kind in the Bakken oil elds with diverse guest ranging from U.S. Senator Mike Enzi (WY) to the traveling roadside merchant selling ags to the local high school football coach talking about this week’s big game.Joshua RobbinsAt 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 FlesslandPaul 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 Bakken’s impact on North Dakota and the nation. Visit his website at paulesslandphoto.comJoseph DeWoodyJoseph 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 BurnettI 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 / January-February 2017 / OilmanMagazine.com2Emmanuel Sullivan, Publisher, OILMAN Magazine

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Oilman Magazine / January-February 2017 / OilmanMagazine.com10OILMAN COLUMNFuture generations are depending on us to keep the American dream alive. For too long we in America have been wasting time blaming the energy industry or the government for failure to adopt a national energy strategy when we each should be responsible for creating the plan.In order to create a plan, energy education should be at the forefront. Since I entered the energy business in 1977, going on 40 years, the industry has continually been forced to defend itself. For example, in 1985, I testied before the U.S. Senate and Natural Resources Committee, in a 43-page report, on the potentially devastating effects that proposed regulations would have on the oil and gas industry, in term of job loss, and reductions in drilling expenditures, at a time when the vital industry most needed support. Sound familiar?At a White House brieng I attended in September 2006, I asked U.S. Secretary of Energy Samuel Bodman about the status of pending national energy education initiatives. He did not have an answer, but promised he would have an aide contact me with answers. The aide did call, but provided me little information. Energy education was needed then, as it is now. On Dec. 4, 2013, at the South Texas Wildcatters Association in San Antonio, I launched the energy education campaign “It’s Time to Tell Our Story!” based upon my book “America Needs America’s Energy: Creating Together the People’s Energy Plan!” The message has been delivered through radio interviews in more than 30 states and 150 radio stations, a weekly radio show, weekly column/blog, speeches throughout the U.S., op-eds, newspaper interviews, and other media outlets. The following are among those who I personally am involved with to provide energy education:IEPC energy policy conference: In 1992, I founded and chaired the rst conference, which was held at the University of Oklahoma. Conferences have been held in Washington, D.C., Tulsa, Denver, Houston and Oklahoma City. In 2017, the 25th anniversary, events will be held throughout Oklahoma. Upcoming conferences/roundtables that are planned to be held include 2018- Detroit, 2019-Washington, D.C., and 2020-Houston.The Energy Advocates: Energy Advocates was founded in 1974. The primary mission of The Energy Advocates is to inform the general public about our vital energy industry and energy policy. Exploring Energy radio show and newspaper: On the rst Monday of each month, I am the guest on the award-winning radio show and have a monthly column in the newspaper. Through news and interviews, hosts Shawn Wilson and Nathan Brewer talk about all aspects of energy, from oil and gas to wind, solar, coal, nuclear, and geothermal, for one hour/ve days a week. Big Chief Plant Services Exploring Energy Show is the main sponsor and Paul Joseph is the producer. Exploring Energy newspaper distributes 20,000 copies per month.Oilman Magazine: I have a column in each issue of the magazine. The magazine is Houston based. In addition to the magazine, the website oilmanmagazine.com is a good source for energy education.GTR Newspapers: I have a monthly column in the Greater Tulsa Reporter newspapers – Union Boundary, Midtown Monitor, Jenks District Gazette, Broken Arrow Express, Owasso Rambler, and the Bixby Breeze. Thanks to Forrest Cameron, GTR editor and publisher, for providing the opportunity to provide energy education. University of Tulsa Master of Energy Business Industry Advisory Council: I serve as a member of the advisory council along with around 25 others from across the nation. The program is designed for working professionals who already have some experience in the energy industry. It has a broad-based energy business focus and is designed to train students on and managing organizations across the entire energy complex. The Master of Energy Business (MEB) is a 34-credit-hour graduate program offered in a technology-enriched online delivery format.The oil and gas industry touches our lives daily. Petroleum-based consumer products that Americans use daily include: antiseptics, asphalt, bottles, clothes, computers, contacts, deodorant, drinking cups, eyeglasses, plastics, shampoo, shoes, shaving cream, telephones, toothbrushes, trash bags, tires, vitamin capsules, and thousands of other products.There are men and women taking great care in making sure – 24/7 – that the consumer has the necessary energy to maintain a standard of life. From the drilling rig to pipeline to renery to oil truck to tanker, the energy industry is making a difference. We should not become complacent at any time when it comes to providing energy education. Energy is the future of America and America Needs America’s Energy! America Needs: Energy Education!By Mark A. StansberryMark A. Stansberry

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Oilman Magazine / January-February 2017 / OilmanMagazine.com12OILMAN COLUMNThe petroleum industry has made great strides in developing safety programs since the 1970s. One of the greatest improvements is the industry’s recognition of the eld employees as experts and realizing in order to develop a functional safety culture the company has to respectfully seek guidance from the eld specialist. In the 1970s, when companies were developing safety programs, they recruited degreed safety experts. These educated safety experts would come to the eld locations to train eld employees on safety procedures. Field employees found it difcult to develop any type of respect-based working relationships with these safety experts since they were not part of the eld employee’s culture and had no idea on how equipment or procedures worked. Without a mutual respect-based relationship, the culture of safety only existed within the connes of the priorities of the eld hands. Today petroleum companies are making great strides in developing a culture of safety through respect-based safety programs. However, even with these great strides in safety, the U.S. Bureau of Labor Statistics conrms that during the recent boom the rate of fatalities in the oil and gas industry increased signicantly along with the boom. A great safety program needs to be supported with a training program to decrease the high accident rates. History has demonstrated in both the boom of the 1970s and the recent boom that ended in 2014, that you cannot reduce fatality rates by relying on safety programs alone. Safety v. TrainingA safety program and a training program are not the same thing. Although they are both focused on the same goals, the training program enforces the safety program by developing skills and knowledge that allow the new employee, or career transitioning employee, to operate in a safety culture in the eld. A safety program will certify employees on the theories of working safely, the use of PPE and safety procedures with tools. A training program develops skills and knowledge with the use of tools, trouble shooting skills by hands-on focus on repairing equipment and develops the culture of safety by imparting knowledge and skills on how to operate safely around dangerous pressurized hydrocarbons. A safety program does not establish a culture of safety by developing a habit of safe procedures. Safety training programs do not address any operational procedures, equipment, or tools, which is basic knowledge and skills required of the eld level employee to work safely.The petroleum industry is facing a workforce crisis that will require a large inux of new employees just to keep production levels current to meet market demands. The “Great Crew Change” means the petroleum industry will lose close to 700,000 employees due to retirement over the next 5-7 years. “The current petroleum market downturn will have virtually no impact on the Great Crew Change, which is coming whether oil is booming at $100 a barrel or moving along at $45 a barrel.” (2015, Birenhaum, Kate)These are the eld level experts with an average of 20 years of hands-on eld experience. Just to keep production at its current level to meet market demands that means the industry will have to hire 100,000-140,000 employees a year to replace the Baby Boomers lost to retirement. It is more critical today than ever before that petroleum companies establish a training program, primarily due to the skills the new workforce brings to the career. Each generation brings a different set of skills to the job, simply due to the culture in which they were raised. Baby Boomers were raised using hand tools, and are much more procient at problem solving and repairing equipment. Gen Xers and Millennials are much more procient in high-tech applications, and have no experience in using tools or repairing equipment. And since most high schools do not offer workforce trade classes anymore, Gen Xers and Millennials do not have any opportunities to develop skills with tools.A good training program will include oileld equipment to utilize in hands-on training. New employees need to be skilled professionals with condence and skills in trouble shooting real oileld equipment, experience using tools, repairing and completing maintenance on real oileld equipment. I recommend a standard set of skills and knowledge that every oileld employee must acquire before they can work at Safety Programs vs. Training ProgramsDo not mistake a safety program for a training programBy Steve Burnett

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Oilman Magazine / January-February 2017 / OilmanMagazine.com13any level in the petroleum industry. For example, if your HR department has an understanding of hydrocarbon processing and how to repair and maintain equipment, they will have a much better understanding of the skills and knowledge needed for new employees. A few of the recommended skills would include: • Take for granted everything is pressurized and work accordingly (for example, never stand in front of any ange or opening while working on equipment, and never take all the bolts completely off before breaking a seal)• Never put a tool on anything pressurized• Always use two sources to bleed pressure off equipment• Use basic troubleshooting skills based on knowledge and hands-on experience repairing and maintaining process equipment, including all control and safety valves, separators, and pumps – verify possible solutions by eliminating easy solutions to hard solutions• Have the knowledge to know when you arrive on location, through visual observation of equipment, what the pressure rating of the processes are• Know how hydrocarbon process equipment works and have the skills to trace the ow to gain knowledge of how individual process equipment operates• Understand the importance of the history of equipment to apply trouble shooting theoriesThese are just a few of the basic knowledge and skills that all employees in all phases of the petroleum industry need to perform in a culture of safety. The required skill level should use other professional industries as a model of operations. For example, a professional welder requires a level of professional skills and must pass a hands-on certication test to demonstrate skills. The petroleum industry worker also needs a level of professional skills and should be required to demonstrate a standard level of skills through a hands-on certication test. Field level operations in the petroleum industry require employees that are condent, skilled, knowledgeable, and capable of using tools and equipment to solve problems on the location. Here are a few things to keep in mind while developing your training labs:• The training equipment needs to be real oileld equipment• The training equipment does not need to be operational nor pressurized• Skills are developed through troubleshooting scenarios on the equipmentTo add the danger of using operational equipment takes away the learning process of being able to make mistakes without consequences. It does not have to be all the equipment the employee will work around, but enough equipment to develop troubleshooting skills and practice with tools.A lot of training facilities use equipment models. These models seldom resemble the actual eld level equipment and add the task of the employee being trained to have to translate the training equipment to eld level equipment when they go to work in the eld. I would equate this to training the individuals in one language and expecting them to work in operations using a different language. It is simply adding an unnecessary burden on the new employee. I would also be very cautious utilizing online training. While online classes are efcient and cost-effective, they do not support the development of skills. There are a few subjects the new employee can learn online, but keep in mind the employee’s career will require them to work in hands-on operations in the eld. I equate it to teaching welding online. Companies would not hire a welder that only had online training.It is critical that the trainer has extensive eld experience. I would recommend use some of these retiring baby boomers that have 20 years of experience. In my previous training position, I worked with petroleum engineers that had no eld experience and educators that never worked in the oileld. They simply could not teach the hands-on portion of the training. Again I would refer to the welding example. Would you use a trainer who had never welded to instruct a welding class? The petroleum industry seems to believe that on-the-job training will upgrade the new employees’ skill sets adequately. However U.S. Bureau of Labor Statistics on the oil and gas industry do not support this theory. My experiences in the petroleum industry does not support this theory either. I have witnessed too many men die needlessly simply due to the fact they had no experience in what they were doing or their on-the-job training was inadequate. It is time for the petroleum industry to reconsider outdated theories on employee training and develop a model for improving efciency and reducing accidents.If anybody has any questions or comments, I would be glad to hear them. steveab62@yahoo.com OILMAN COLUMN

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Oilman Magazine / January-February 2017 / OilmanMagazine.com15As the calendar rolled into 4Q16, many companies decided it was nally time to put their non-core assets on the market. The result was a massive deal inux and actual transactional volume – which we had not seen in 2016. After the OPEC meeting, oil swung to the mid-$50 range and, at end of 2016, was continuing to trend upward.This increase in price will bring more deals to the market in 1Q17. However, we believe these deals will have a price at which buyers will not be able to transact. The increase in dollars per barrel will widen the buyer and seller gap to mid-2015 levels, and nearly all deal ow will stop in 2Q17. As deals slow, dollars will be reallocated to development projects. We expect the last three quarters of 2017 to see favorable oil and gas prices (est. $60+ oil and $4+ gas). If the trend continues upward, we expect to see projects that have been shelved to be started, and with favorable service costs, will be completed quickly. 2017 will be a positional build year. The acquisitions and divestitures market will be heavily focused on natural gas deals – especially if the trend toward $4 continues – and bolt on positional blocks. The majority of the large dollar deals will be spent on the midstream assets that help build on the long-term strategies of specic acreage positions.If oil continues to rise and is able to stabilize at plus $60, we expect companies currently working through restructuring to emerge fully restructured in late 1Q17 or early 2Q17. These companies will look to immediately clean their portfolio of assets not dened as core to the newly restructured entity. Expect 2Q17 and 3Q17 to be lled with a number of smaller deals that help core up these companies. The theme moving all the way through 2017 and into 2018 will be changing positions. Prior to the bust, companies were focused on diversied portfolios. Assets from the Bakken to the Gulf, with assets from one side of the spectrum to the other. We will see this position move from a diversication of assets to operational efciency. If a company cannot operate efciently, they will look to divest. If they can automate processes, they will. If employee costs continue to rise (insurance, etc.) look for companies to outsource for operational efciency. Many companies will have to replace the workforce that was lost during the bust, and to save time, they will outsource a signicant portion of their workforce to take advantage of the favorable oil/gas price.We expect 2017 to be a springboard into 2018. If the trend of increased barrel and MCF pricing continues upward, we expect some of the private equity positions to begin their marketing efforts in late 4Q17 and early 2018. Oil and Gas Acquisition Market 2017 OutlookBy Josh RobbinsOILMAN COLUMNPhoto Credit: George Tsartsianidis - www.123RF.comJosh Robbins, Beachwood Marketing Group. Credit: Edgar Lance Photography

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Oilman Magazine / January-February 2017 / OilmanMagazine.com17CALENDAR OF EVENTS is Partnering With The Following Events Well Site AutomationThe Westin Galleria Houston5060 W Alabama St, Houston, TXJanuary 28-29, 2017http://www.wellsite-automation.com/Permian Production Optimization Strategies Norris Conference Center816 Town and Country Blvd #210, Houston, TXJanuary 31 – February 1, 2017http://www.permian-basin-optimization-strategies-2017.com/Mid-Continent Digital Oileld ConferenceRenaissance Tulsa Hotel and Convention Center6808 S 107th E AveTulsa, OKJanuary 25-26, 2017http://digitaloilconference.comNAPE SummitGeorge R. Brown Convention Center1001 Avenida De Las AmericasHouston, TX February 15-17, 2017http://napeexpo.com1 Society of ___ Engineers5 It could be rened or crude7 Oklahoma show that focuses on technological advances10 Launching ___11 ___ water, water a long way from the clay surface12 Pittsburg's state13 Fifth zodiac sign14 Where Deals Happen16 Pours out fast, like oil from a well19 American petroelum group, abbr.22 A large inlet23 What is the Corrosion Conference & Expo?24 Length x width25 __ the people27 Open up29 American "Uncle"31 Cadillac __ Ville32 Happens every two years in Lafayette, Louisiana34 The T in ILTA36 Vehicle used for transport37 Innovative39 Overhead railway40 Short subassembly used to enable two components with different thread types to become connected, goes with 33 down41 ____ wave, in geophysicsDown1 Part of the Texas A&M Turbomachinery Symposia2 Really small amount3 Oklahoma Oil & Gas ____4 Drilling uids term for any particle in the size range 74 to 250 microns5 ___ Technology Conference6 Paper size, for short8 Jiffy container9 We want a ____ Gulf15 Geology term for the deepest part of the ocean basins17 There's been a huge discovery of this type of oil in Texas recently18 Measure of weight, for short20 Hinged catchAcross21 Frozen liquid26 Time lapse27 What is fueled by SPE - AAPG - SEG28 Hydrochloric and others29 It involves a transfer of assets30 Event controller (abbr.)31 The end of a negotiation32 Rose___ Oil & Gas33 See 40 across35 Brazilian city that hosted the 2016 Olympics38 Apple stateOILMAN CROSSWORD PUZZLE - ANSWERS

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Oilman Magazine / January-February 2017 / OilmanMagazine.com19Oilman Magazine / January-February 2017 / OilmanMagazine.com19FEATUREAs oil and gas companies in 2017 face unique challenges in workforce development, education and training providers will be working diligently to continue shaping options for workers that tap into a vast range of technologies designed to accommodate the way people want to learn today.Compounding a reality oil and gas companies have been facing for many years — the retirement of a large percentage of experienced workers and the need to transfer their knowledge to the next generation — is the new reality that the downturn has forced younger workers out of the industry into other stable job environments. An uptick in oil prices that is forecast to continue to grow gradually throughout the year isn’t going to bring those workers back. But as the industry grows, it will need to rell lost jobs. In this current environment, industry is asking, “where are we going to get the individuals that we need to be in this industry, and how can we make sure they have the basic competencies required?”That’s the view according to Coy Wilcox, director for the Petroleum Extension (PETEX), a part of the Texas Extended Campus at The University of Texas at Austin. He told Oilman that PETEX is trying to put in place training and education programs that use technologies available today — such as drilling simulators or hands on training simulator tools that are an actual set of tongs, or an actual measurement ow, so workers can learn to properly calibrate and measure systems — and then run those workers through programs that combine theory- and competency-based models with hands on experience. “Those are going to be key things that we see over the next several years,” Wilcox said. “It’s about combining e-learning tools, putting them in a classroom, and being able to use simulations, then getting workers outside to perform those same tasks to at least an entry level competency.”Wilcox calls it the “technology-enhanced learning platform.”He said that PETEX is focusing on using technology to provide people with the most realistic training that they can possibly get without actually having to be on the job.“We’re taking the e-learning format, we’re putting in what was once a traditional publication, now more of an e-book, and then bringing that into the classroom so that, with the environment that people see sitting in front of a computer, now they get that same look, the same feel, with all the simulations, the graphics, the ability to see things that they may not be able to see, but now they have an instructor in the classroom facilitating this learning at the same time,” he said.PETEX has been providing training courses and content for the oil and gas industry for decades. It is headquartered at the J.J. Pickle Research Campus in North Austin, and it offers technical and nontechnical training courses, publications, and e-solutions for employees in various sectors of the industry, with instructor-led courses located at the Bammel Business Park in Houston as well as client locations around the world.Wilcox says that companies account for about 70 percent of the total usage of the PETEX instructor-led platform, while individuals account for about 65 percent of the usage of the PETEX publications and e-learning platforms.Technology also provides the foundation for training platforms offered by Louisiana Workers’ Compensation Corporation (LWCC) for its policyholders at no charge. Among LWCC’s offerings are streaming videos, webinars, online courses, a mobile training center, and a virtual driver simulator.LWCC’s oil and gas customers are largely made up of service providers that work contracts for larger multinational petrochemical companies. They utilize LWCC’s training programs to ensure they are qualied for ISNetWorld, according to Richard Perkins, safety and loss prevention manager for LWCC. “A lot of companies use our online course for ISNetWorld to meet general awareness criteria to work for larger clients, whether it’s petrochemical plants or oileld related accounts,” he told Oilman. “They use these services because they get a certicate for each person that takes the test.”Companies also use LWCC’s streaming video in a safety-meeting capacity to keep training costs down.LWCC takes training to customer work sites with its mobile training center. With this option, “most of the crew can still work, while some of the crew takes online courses, and then they can rotate them out,” Perkins said.Coy Wilcox, Director, Petroleum Extension, University of Texas at Austin Richard Perkins, Safety and Loss Prevention Manager, Louisiana Workers’ Compensation Corporation

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FEATUREOilman Magazine / January-February 2017 / OilmanMagazine.com20The benet, he said, “is they don’t have to leave the work site. If they have to go deal with an issue, they can do that. It helps contain costs.”The mobile training center is equipped with laptops and satellite internet so online courses or streaming video are available to the classroom. Perkins said that the mobile training center is out in the eld about two weeks per month, and while in the eld, the mobile unit supports the completion of between 200 to 400 courses per week.He said that LWCC sees an average of between 8,000 to 10,000 courses completed by policyholders per year, and it has about 500 streaming video checkouts per year. Policyholders can access ve streaming video titles per month, and have unlimited streaming of those titles during the 30 days.Outlook for New TechPerkins said LWCC is always trying to stay abreast of what’s new and current in education and training solutions. “We try to see if something new is coming on the training side,” he said. “If we come across new technologies, we’re surely going to try to implement those.”He added that LWCC, for example, is looking into podcasts, and options for recording them and emailing them out to key people across LWCC’s policyholder base.At PETX, the future of the technology-enhanced learning platform is wide open.“Augmented reality (AR), virtual reality (VR), simulation in general – it’s the way to immerse people,” Wilcox said. “It’s the Xbox generation. People entering the market today learn differently than they did 20 years ago. They are still tactile, and that could be a joystick, a game pad, a tablet; but it still needs to be that visual encompassing world.”He added that learning outcomes with AR and VR are “incredible.”“If you put people in scenario-based learning situations, where they are sitting in front of the simulator or they have VR goggles on, and they are walking through or interacting with avatars, for example, they will forget they are in a game environment, as long as it’s done properly,” he said.Wilcox noted that the combination of these technologies reinforces learning. An idea is introduced in the classroom; then students are immersed in the concept with AR, VR or simulation, before they go outside for a hands-on experience in real time. This process ensures that they experience the concept in a number of situations before they get to an actual work site. Wilcox said that PETEX has plans in place to bring VR into the learning environment, but they are still investigating the technology to make sure that it works seamlessly. “We are targeting full on VR as soon as possible,” he said. “Within the next three years, you’ll see VR implemented across the board. Combined with current simulation technology, you have a really powerful tool.” Photo Credit: Sitthinan Saengsanga - www.123RF.com

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Oilman Magazine / January-February 2017 / OilmanMagazine.com21Hydraulic fracturing, commonly known as fracking, has been a double-edged sword for the U.S. This method of hydrocarbon recovery has allowed the country to become one of the world’s largest oil and gas producers, after decades of dependence on foreign oil. The advent of this recovery technique has been a boon to the industry and for consumers at the gas pumps. However, the downside is that the fracking process requires vast amounts of water; around 1 million gallons of fresh water per well per day and produces some 100,000 gallons of wastewater per well per day. The ow-back wastewater is dangerous to the environment because it comes loaded with bacteria, minerals, radioactive materials, and oil and gas particulate. To mitigate the use of fresh water for fracking, some solutions have been purposed to either dispose of or reuse wastewater. As the fracking method of hydrocarbon extraction has grown since the late 1990s, more and more government regulations have entered into force to curb harmful practices. This has led industry leaders to reconsider the fracking lifecycle and how to reuse wastewater to their advantage. Old Storage Methods Proven Destructive Previously, deep-well injection was one of the main disposal methods for produced water. This method injects the wastewater deep underground for storage. However, this has been made illegal in many states because it has been known to seep into groundwater and contaminate drinking water supplies. Another costlier method is to lter the wastewater and return it to nature, however, a regular municipal wastewater treatment plant cannot be used to remove such things as radioactive materials. Thus, the water needs to be transported via truck to special treatment facilities. However, this wastewater disposal process carries high costs: between $3 and $7 per barrel of produced water, which can add up to some $20,000 per day per newly drilled well. New Technologies, New Methods, New Opportunities A promising, sustainable method of treating wastewater that is emerging is known as centralized treatment. In this method, efuent pipelines are connected to the wellheads to transport the wastewater to treatment plants within a 40- to 50-mile radius. In addition, each well is specically monitored to best treat that particular well’s wastewater. Once the water is treated it is essentially sent back to the well to be reused in the fracking process, which in turn cuts costs, reduces work performed, and leaves a smaller environmental footprint. Recycling and purication treatment options that are now gaining traction within the oil and gas industry range from the following processes: • Primary three-phase separation to remove dissolved natural gas, oating gel, oil, sand, and suspended solids, followed by storage for equalization of chemical composition and ow• Secondary separation using dissolved air or gas otation for removal of a wide variety of contaminants, including polymers, oils, and suspended solids; bactericide is added to reduce bacterial growth• Removal of metals by precipitation, and removal of salts by reverse osmosis• Sludge management for dewatering collected solids• Purication through chemically induced occulation and coagulation to remove iron and suspended solids, and bio-contamination particles• Electrocoagulation uses electrodes to add ions to induce coagulation• Chemical oxidation produces natural coagulation; this approach is good for use in working tanks, or for high loads, coupled with solids separation and dewatering equipment• Bubble-enhanced oatation is used to suspend oils and solids and lift them to the surface, where they are then skimmed awayAs these processes become more promi-nent and more government regulation enters into force, more companies will adopt these methods. Additionally, many oileld services companies are offering newer wastewater management options. Over time, these improved practices will save time, money, and will help the industry become greener. Innovative Wastewater Management Processes Gain Traction By Eric R. Eissler OILMAN COLUMNInnovative wastewater management processes gain tractionBy: Eric R. EisslerThe Fracking ProcessA drill is used to create an opening to pump uid into the well.The drill is usually then turned hori- zontal while underground to crack rocks that contain hydrocarbons.After drilling, a high-powered mixture of water, sand, and fracking uids are injected to the rock causing it to fracture.Gas or oil is then released into the main well and pushed up for collection.1234

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Oilman Magazine / January-February 2017 / OilmanMagazine.com23Even though natural gas prices at the wellhead remain at, production continues at a record pace, resulting in record high storage and record high exports.Natural gas prices peaked at a little above $3 earlier in 2016, but they have not changed much since the crash of 2008 when they were above $10. Natural gas closed at $2.76 on the New York Mercantile Exchange on Nov. 16.The economic theory of supply and demand states that when prices are low, production should decline, too. However, that has not happened with natural gas. Just the opposite has happened: produc-tion has increased 25 percent since 2008. Natural gas production set a record in 2015, and production from January to August 2016 is slightly ahead of last year’s pace.Working natural gas in storage reached a record high of 4,017 billion cubic feet (Bcf) as of Nov. 4, 2016, according to EIA’s Weekly Natural Gas Storage Report released on Nov. 16, 2016.“Inventories have been relatively high throughout the year, surpassing previous ve-year highs in 48 of the past 52 weeks,” the report stated. “Declining natural gas production and strong demand from the power sector were offset by a warmer-than-usual winter, which left natural gas inventories in April (the beginning of the 2016 injection season) above the previous ve-year maximum.”The injection season for natural gas storage typically runs from April through October, although net natural gas injections sometimes continue for several weeks during November. In fact, the previous record for natural gas storage was set at 4,009 Bcf for the week ending Nov. 20, 2015. This year, natural gas inventories have been relatively high in almost every natural gas storage region in EIA’s survey.From October 2016 to November 2016, the Midwest and Mountain regions exceeded and remained above the previous ve-year maximum inventory levels. In the two weeks between October 21 and November 4, the South Central region added 59 Bcf to its inventories, but still remains slightly below its one-year maximum of 1,352 Bcf. Additionally, the East region remains 14 Bcf below its ve-year maximum capacity of 960 Bcf. With the other regions at near or at full capacity, any injections at the end of 2016 were expected to occur in the South Central and East regions.Based on the National Oceanic and Atmospheric Administration’s (NOAA) winter forecast, EIA expects U.S. average household natural gas consumption to increase 8% this winter, with the largest increases in the Northeast and Midwest census regions. Under this scenario, EIA expects inventories to end the winter at slightly below 1,900 Bcf. However, temperatures so far this winter have consistently been at or above weekly average normal levels, and NOAA’s latest three-month temperature outlook forecasts that December–February temperatures will be higher than normal.In a scenario with temperatures 10% warmer than forecast, U.S. average household natural gas consumption would be 1% lower this winter compared to last winter, with inventories at winter’s end near 2,300 Bcf.Bloomberg news agency reported that the exports follow a massive shale boom in the U.S. that’s unleashed a ood of gas supplies from the Marcellus and Utica in the east to the Eagle Ford in Texas.The country is on course to become a net exporter of natural gas next year, a stark turnaround from just a decade ago, when it was facing a shortage. “The continental U.S. becoming a net natural gas exporter is a milestone of the U.S. energy revolution and transition to ‘energy independence,’” Citigroup Inc. analysts wrote in a note to clients on Nov. 16, Bloomberg reported.The Sabine Pass complex in Louisiana has exported 40 cargoes totaling about 6.5 mil-lion cubic meters of LNG since February, Zach Allen, president of Pan Eurasian Enterprises, said in a research note.Cheniere, which became the nation’s rst and only exporter of shale gas in February, was cleared by U.S. regulators to start loading tankers from a second plant at Sabine Pass.Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author. Natural Gas Production, Storage, Exports On Record PaceBy Alex MillsOILMAN COLUMNPhoto Credit: macgyverhh - www.123RF.com

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NEWS AT A GLANCE...Oilman Magazine / January-February 2017 / OilmanMagazine.com24GE-Baker Hughes Merger to Create Second Largest Oileld Services ProviderBy Tim McNallyGeneral Electric Co. is positioning itself to be one of the largest oileld services providers in the industry. GE on Oct. 31 said it plans to merge its O&G business segment with Baker Hughes. The plan to acquire 62.5% of Baker Hughes will give the newly merged company a combined revenue of $32 billion, an amount which will place it right behind Schlumberger in terms of total revenue. The combination of GE’s technological prowess with Baker Hughes oileld services experience should produce the much needed innovative solutions that clients require in order to navigate the rough economic terrain currently plaguing the energy industry. “This transaction creates an industry leader, one that is ideally positioned to grow in any market,” GE Chairman and CEO Jeff Immelt said in a statement. “Oil & gas customers demand more productive solutions. This can only be achieved through technical innovation and service execution, the hallmarks of GE and Baker Hughes.” Martin Craighead, chairman and CEO at Baker Hughes, agreed, saying, “with employees of Baker Hughes and GE Oil & Gas coming together, the new company will be an industry leader, well-positioned to compete in the oil and gas industry, while pushing the boundaries of innovation for our customers.”Baker Hughes shareholders will retain 37.5% of ownership, with GE owning the rest. GE also plans to give a one-time dividend payment of $17.50 per share to all Baker Hughes shareholders, which amounts to a total of $7.4 billion.Halliburton made a similar attempt to merge with Baker Hughes earlier in the year, but the deal failed to receive approval from multiple international anti-trust agencies. It remains to be seen whether or not this merger between GE and Baker Hughes will face similar issues, but Craighead seems to think that regulatory authorities will look more favorably upon this merger with GE. “We don’t anticipate anything like what we’ve encountered before happening again,” Craighead told Reuters. Trump Selects Exxon CEO for Secretary of StateBy Tim McNallyPresident-Elect Donald Trump’s decision to nominate an oil and gas CEO to the Secretary of State position has been met with criticism from both the Democratic and Republican parties. Rex Tillerson, CEO of Exxon-Mobil, has nearly a decade of experience as chief of the huge multinational oil rm, a role which concerns many politicians and agencies pushing for environmental regulatory reform in the industry. Environmental agencies have had an eye on Trump because of his talk of deregulation in the energy industry, among other things. They worry that the desires of oil and gas companies will trump the concerns of environmental groups. The appointment of Tillerson to the position of Secretary of State surely only exacerbated such worries.Another issue critics bring to light is Tillerson’s involvement in Russia. Tillerson’s relationship with Putin, in particular, has stirred concern among certain individuals who are wary of Russian involvement in U.S. politics. The nature of the relationship is nearly entirely professional due to Exxon’s operations within Russia, but recent speculations regarding Russian involvement in the U.S. election, combined with the communist nation’s support of Assad’s vicious regime in Syria, understandably creates a sense of unease. However, a company’s role in a country is to succeed and create the appropriate relationships to enable that success. As Pavel Molchanov, an oil analyst at investment rm Raymond James, told the Washington Post, “They’re there to invest in resources. Saying that he personally has some special feelings toward Russia just because Exxon has invested there is probably overstating the case.”No one can know how Tillerson’s appointment will affect U.S. policy towards Russia until he actually has the opportunity to act in the capacity as Secretary of State. One can only hope that it will be in the best interest of the American people. Rex Tillerson will be replaced by Darren Woods as CEO of Exxon Mobil. ExxonMobil Reexamines Value of its Oil ReservesBy Tim McNallyExxonMobil expects that the downturn could affect the value of roughly 4.6 billion barrels of oil reserves.With the oil price hovering around $45, many companies have found that it is not protable to produce certain types of oil, which cost more to extract from the ground. As such, certain oil and gas reserves that are relatively expensive to extract must be reevaluated to establish a more accurate value. Despite the widespread reduction of asset values in the oil industry, ExxonMobil resisted writing down their assets, insisting that the value of its oil and gas reserves were accurate. However, New York attorney general Eric Schneiderman was not swayed, and he launched a probe to determine whether Exxon was appropriately accounting for its assets in a market downturn. The probe was also intended to nd out if Exxon misled investors about the effect that climate change regulations will have on future operations. A few days after the attorney general’s announcement in September, the Securities and Exchange Commission decided to get involved, announcing that it was also investigating Exxon’s asset valuation practices. It seems that the combination of pressure

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NEWS AT A GLANCE...25Oilman Magazine / January-February 2017 / OilmanMagazine.com25exerted upon Exxon by these authorities convinced the rm that it may need to reevaluate its oil and gas reserves. “Certain quantities of oil, such as those associated with the Kearl oil sands operations in Canada, will not qualify as proved reserves at year-end 2016,” the company stated in its third-quarter earnings press release. The company stressed that if the oil price continued to stay at its reduced level for a prolonged period of time, more North American assets would have to be written down. Exxon reported third quarter earnings of $2.7 billion, a 38% decrease from the previous year’s earnings during the same period. Oil Recession Wipes Out Billions in WagesBy Emmanuel SullivanThe U.S. Bureau of Labor Statistics reported that the prolonged oil recession has wiped out billions in potential wages from oil and gas employees who work in the extraction side of the business. The latest data indicates that from 1Q16, wages were more than a billion dollars less than in 1Q15. The industry generated more than $31 billion in wages last year, with oil and gas construction and extraction representing the largest group of employees. One of the hardest hit states OILMAN covers is Oklahoma, where oil and gas jobs represent 10 times the national average on a per-capita basis – the Sooner state wages fell by nearly $1 billion on an annualized basis. Wages evaporated in Texas and Louisiana as well, where in Harris County, Texas, home to the energy capital Houston, wages fell by $1 billion on an annualized basis in 1Q16. Between 2010 and 2013, employment in the oil and gas industry surged by 30 percent. During the same period the average annual wage increased by 6 %, with engineering making up the largest wage group. However, the oil and gas slowdown beginning in 2014 brought a tidal wave of layoffs – Louisiana lost 6,000 jobs just over the past 12 months – along with pay cuts that have eaten away at the buying power of oil and gas employees. The crash in oil prices from $110 a barrel in July 2014 to $50 today introduced a painful economic drought throughout the oil patch. Rigs in operation fell with the price of oil from a high of 2,000 in 2014 to 593 as of November 23. OPEC Agrees to First Oil Production Cut in Eight YearsBy Tim McNallyIn September, OPEC announced that it would nalize an oil production cut by the end of November. The announcement was met with much doubt and skepticism, as the cartel seemed anything but a cohesive group capable of rallying around such a decision. However, for the rst time in eight years, the coalition of nations has agreed to have certain members cut their oil production.OPEC has been toying with the idea of a production cut as global oil inventories have mounted, but the talks appeared inconsistent and rather halfhearted, prompting many to believe it was merely optimistic rhetoric. The most recent announcement offers a solid structure as to what specic member-nations will cut production. The plan is to reduce output by 1.2 million bpd by January, the bulk of which will be shouldered by Saudi Arabia, Iraq, the UAE and Kuwait. Saudia Arabia, OPEC’s largest producer, will cut their output the most with a suggested 486,000 bpd reduction. OPEC also managed to convince Russia to cut its own output, which is an entirely unprecedented and astounding event in its own right. Russia will attempt to cut production by 300,000 bpd.It is unusual for a nation outside of OPEC to abide by a production cut agreement, especially given that just a few days before the announcement of the agreement Saudi Arabi walked out on talks with Russia and other non-OPEC members, according to Forbes. Disagreements frequently occur as to which nations should cut production, as no nation wants to reduce its income earning potential. Unfortunately, a production cut requires that some countries make a sacrice for the long-term benet of the industry. Agreeing to cut production is one matter, but actually following through on it is quite a different consideration. The ckle nature of such an agreement is founded upon the temperamental relationships between many nations with varying interests. The possibility of a swifter recovery of the oil price will hopefully motivate these nations to follow through on the production cuts. Photo Credit: gyddik - www.123RF.com

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Oilman Magazine / January-February 2017 / OilmanMagazine.com26OKLAHOMA NEWS AT A GLANCE...Oklahoma Ranks Top Among Regions for Oil and Gas Investment By Tim McNallyThe Fraser Institute, an independent, Vancouver-based think tank, on Dec. 6 released its 2016 Global Petroleum Survey. The survey is the institute’s 10th annual edition and “is designed to identify provinces, states, and countries, as well as offshore regions and other geographic areas, with the greatest barriers to investment in oil and gas exploration and production.”Criteria, such as high tax rates, costly regulatory demands, political stability, and uncertainty over potential environmental regulations, were considered when constructing the survey, which was sent out to executives within the upstream petroleum industry. According to the individuals surveyed, Oklahoma was the most attractive region for investment this year, followed by Texas, Kansas, Saskatchewan, Wyoming, North Dakota, the North Sea in Norway, Mississippi, Utah, and Montana. Oklahoma, Texas, North Dakota and Mississippi have been ranked in the top 10 list for the past ve editions of the survey. Texas also ranked rst, again, among jurisdictions with the largest petroleum reserves, followed by UAE, Qatar, Alberta, and China. Kenneth Green, senior Director of Natural Resource Studies at the Fraser Institute and co-author of the Global Petroleum Survey, said in a statement: “Most U.S. states are bucking the global trend of decreasing condence for investment, and Oklahoma’s top spot in this year’s ranking demonstrates how coherent environmental policy and sound regulation can improve investor perception.” Taylor Jackson, a senior policy analyst at the Fraser Institute and another co-author of the study, also noted, “With oil and gas sector condence declining around the world, it’s especially important for policy makers to pursue competitive tax and regulatory regimes, and to have stable environmental protections that attract, not deter, petroleum investments.” The 10 regions with the most barriers to investment included Venezuela, Quebec, Libya, Bolivia, New Brunswick, California, New South Wales, Ecuador, Ukraine, and Russia, with Russia being the least attractive for investment.The enduringly low oil price over the past two years has created a difcult international environment for oil-related companies, and it is, therefore, critical that all oil-interested regions enact economic and political policies which are conducive for investment in the oileld. After all, that is the intended purpose of the study – to reveal which regions could use improvements in their regulatory and economic policies regarding oil-driven activity. Oklahoma AG Nominated as Director of EPABy Alex MillsPresident-elect Trump’s nominee for Director of the Environmental Protection Agency, Oklahoma Attorney General Scott Pruitt, has been met with praise and criticism from members of the Senate, who will be voting to conrm him soon after Trump takes ofce on Jan. 20.Praise has come from both Senators from Oklahoma, Jim Inhofe and James Lankford, and numerous conservative organizations.Opposition has been expressed by Democratic members of the Senate, including Chuck Schumer of New York, who will become Senate Minority Leader when the new Congress convenes in January.Trump said Pruitt’s nomination is a sign that the EPA’s role will be recongured in his administration.“For too long, the Environmental Protection Agency has spent taxpayer dollars on an out-of-control anti-energy agenda that has destroyed millions of jobs, while also undermining our incredible farmers and many other businesses and industries at every turn,” Trump said.“As my EPA administrator, Scott Pruitt, the highly respected attorney general from the state of Oklahoma, will reverse this trend and restore the EPA’s essential Photo Credit: Frank Romeo - www.123RF.com

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Oklahoma Attorney Generation Scott Pruitt. Credit: Oklahoma Ofce of the Attorney General27Oilman Magazine / January-February 2017 / OilmanMagazine.com27OKLAHOMA NEWS AT A GLANCE...mission of keeping our air and our water clean and safe.”“I am deeply grateful and honored to serve as President-elect Trump’s EPA administrator,” Pruitt said. “The American people are tired of seeing billions of dollars drained from our economy due to unnecessary EPA regulations, and I intend to run this agency in a way that fosters both responsible protection of the environment and freedom for American businesses.”Pruitt has been a defender of common sense rules that protect the environment, and he has challenged the legality of overreaching regulations by federal agencies. He strongly supports states’ rights.Pruitt led the charge in 2014 against “an arrangement” between some environmental groups and bureaucrats within EPA and the Fish and Wildlife Service called “sue and settle.” Environmental groups would bring a number of petitions to FWS. The law required FWS to respond within 90 days or one year depending on the circumstances. It’s often impossible for FWS to respond adequately to the barrage of petitions before the deadline. The FWS would then go to the environmental groups with an offer to settle the case without any input for other affected groups. The environmental groups collected attorneys’ fees out of the federal Judgment Fund and agency budgets. In effect, the environmental groups would get what they wanted, and the federal government would pay their attorneys’ fees.If approved by the Senate, he will be a breath of fresh air at EPA.Alex Mills is President of the Texas Alliance of Energy Producers. The opinions expressed are solely of the author. Oklahoma Oil and Gas Industry Sees ‘Slow but Steady Improvement’Oklahoma State Treasurer Ken Miller in December said that the state’s oil and gas industry is making “slow but steady improvement.”Miller said that, for the second month, November tax collections from the production of oil and natural gas exceeded collections from the same month of the prior year.Prior to October, gross production tax collections had been lower than the prior year each month since December 2014. In November, gross production taxes generated $34.1 million, up by $3.9 million, or 12.9 percent, from November 2015.Miller also cautioned that the “spillover effect” of the energy price downturn on income and consumer spending is ongoing.“My hope is that we will begin to see overall improvement with renewed oil eld activity following OPEC’s plans to cut production levels and bring supply more in line with demand,” Miller said. —JDPanhandle Oil and Gas Sees 4Q16 Uptick After ‘Difcult Year’Oklahoma City-based Panhandle Oil and Gas Inc. in December 2016 reported a 4Q16 prot — a small gain in what President and CEO Michael Coffman called a “difcult year” for the company.Coffman said that product prices were “extremely low,” with an average per Mcfe sales price of $2.73 in 2016 compared to $3.97 in 2015 and $5.88 in 2014.Panhandle reported a 4Q16 income of about $737,000, and scal year 2016 net loss of $10.3 million, or $0.61 per share, compared to a net income of $9.3 million, or $0.56 per share, for 2015.In a company statement, Panhandle Senior Vice President and Chief Operating Ofcer Paul Blanchard said that the company decided not to participate in most of the wells that were proposed to Panhandle last year, and instead focused on leasing mineral acreage in what Blanchard described as higher risk areas compared to core resource plays.“As product prices climbed later in scal 2016 and into [1Q17], we have seen meaningful activity return to our core resource play holdings,” he said. Blanchard noted that drilling has started on an eight-well horizontal drilling program in which Panhandle has an average of 20% working interest and 27.4% net revenue interest. The program, which is operated by BP America in the Southeastern Oklahoma Woodford Shale gas play, should begin producing in 2Q17.He also said that Panhandle will participate with working interest and net revenue in its leasehold in six Woodford Shale wells that Cimarex Energy is drilling. The projects will begin producing in 3Q17. In addition, Blanchard said that pad drilling is scheduled to resume on Panhandle’s Eagle Ford leasehold in 2Q17.“The operator plans to move in one rig and drill a 10-well program,” he said. “The drilling…will be on some of the lowest risk acreage in the company’s portfolio, as it is in the cores of well-developed and under-stood resource plays. These investments should materially increase Panhandle’s daily oil, NGL and natural gas production when the wells come online.” —JD

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Oilman Magazine / January-February 2017 / OilmanMagazine.com28Gulf Tech Receives Full Certication as a SEMS Audit Service ProviderBy Emmanuel SullivanGulf Tech, an auditing rm based in Plano, Texas, has been working on becoming a fully accredited Safety and Environmental Management System (SEMS) audit service provider for over a year, and is now one of several elite companies who can provide audits of offshore oil and gas producers. “Gulf Tech’s internal management systems are fully compliant with the [Center for Offshore Safety’s (COS)] requirements concerning the ISO 17021 standards for audit and certication of management systems. Gulf Tech fully meets all of the latest COS and [Bureau of Safety and Environmental Enforcement (BSEE)] requirements,” said auditor Jason Perrin.BSEE requires an audit of offshore oil and gas operators every three years. The SEMS 30 CFR § 250.1900 audit is a set of workplace safety regulations that have been enhanced as a result of the 2010 BP Deepwater Horizon disaster.“The purpose of SEMS is to enhance the safety and cleanliness of operations by reducing the frequency and severity of accidents,” the bureau explains on its website. The safety program was originally voluntary as established by the American Petroleum Institute’s Recommended Practice for Development of a Safety and Environmental Management Program for Offshore Operations and Facilities – API RP 75 – the institute has now adopted the SEMS audit as mandatory. To comply with BSEE’s requirements, the SEMS audit must be conducted by a COS-accredited audit service provider. The COS ensures that third-party auditors are evaluating an offshore operator’s SEMS program as intended by the BSEE.Many of Gulf Tech’s auditors have worked and managed large production operations and have over a hundred years of combined offshore experience. That much experience gives the rm a unique position in that they understand the challenges that face many offshore operators in a highly-regulated environment.Jay Bailey, Gulf Tech’s Auditor, stated, “SEMS isn’t what you audit every 3 years – it’s what you do 365 days a year.”There are several SEMS elements the BSEE requires of offshore operators, such as, to identify, address and manage safety and environmental hazards, and the impacts during design, construction, startup, operation, inspection, and maintenance of new and existing facilities (30 CFR § 250.1901). Outer continental shelf operators must implement a SEMS program that addresses 17 elements covered in an audit, ranging from written operating procedures and safety and environmental policies to developing safe work practices, analyzing facility and job-safety hazards, and implementing a training program. The BSEE also requires operators to conduct audits whenever there is a signicant change, such as change of operator control or large increases in the number of offshore leases.The deadline to submit SEMS audits to BSEE was Nov. 15, 2016. FMC Technologies and Technip Shareholders to Vote On Merger in DecemberBy Tim McNallyHouston-based FMC Technologies said this week that Technip and FMC’s respective shareholders will vote on Dec. 5 to approve or deny the companies’ plan to merge. Earlier in May both companies announced their intentions to combine into a new rm, TechnipFMC, which will be valued at about $13 billion. Despite the ongoing downturn, FMC Technologies has managed to improve protability by increasing efciency and reducing costs. FMC recorded $1.1 billion in revenue for the 3Q16 with an adjusted EPS of $0.35, beating the Zacks consensus estimate of $0.23 per share. “The strong performance resulted from solid project execution, combined with the benets of our cost reduction actions that continued in the quarter,” Doug Pferdehirt, President and CEO, said in a statement. “We have used this downturn as a catalyst to make fundamental changes to our business model that will continue to provide sustainable benets.”TEXAS NEWS AT A GLANCE...Photo Credit: hxdbzxy - www.123RF.com

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29Oilman Magazine / January-February 2017 / OilmanMagazine.com29TEXAS NEWS AT A GLANCE...Some of these cost reductions come from the continuing process of laying off employees. The company cut 1,000 jobs in the third quarter and made it clear that more were to come in the future. The elimination of jobs is unfortunate but effective, as evidenced by the company’s impressive protability. Various other methods to improve protability seem to have been effective as well, but, as FMC Technologies has learned, pushing employees to reach certain prot thresholds can lead to the company being implicated in undesirable issues.In a push to improve the nancial standing of the energy infrastructure business segment, controllers Jeffrey Favret and business unit controller Steven Croft enlisted unapproved accounting methods in order to produce a skewed nancial position. An SEC announcement made on Oct. 20 detailed that FMC Technologies would be ned $2.5 million for overstating the departments pre-tax operating prots by $800,000.The two controllers involved in the accounting mishap have since been let go, and FMC Technologies, without admitting or denying the claim, consented to pay the ne. US Geological Survey Discovers Largest US Continuous Oil and Gas Deposit in TexasBy Tim McNallyThe U.S. Geological Survey (USGS) estimates that it has discovered the largest continuous oil and gas deposit ever assessed in the U.S. The agency on Nov. 15 released an announcement detailing the discovery, noting that the region where the discovery was made, the Wolfcamp shale region located in the Midland basin section of the Texas Permian Basin, is estimated to hold “20 billion barrels of oil and 1.6 billion barrels of natural gas liquid.”Walter Guidroz, the program coordinator for the USGS Energy Resources Program, is quoted in the announcement as saying: “The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to nd billions more.” The ever-increasing capabilities which technology enables can make signicant productivity gains for companies and agencies operating in the oileld. The ability of the USGS to detect the aforementioned Wolfcamp deposit is, in part, due to advancements in technology.Guidroz noted that: “Changes in technology and industry practices can have signicant effects on what resources are technically recoverable, and that’s why we continue to perform resource assessments throughout the United States and the world.” The discovery of this deposit in the Wolfcamp shale highlights how critical technology is in the oileld. Continual advancements in oil-extraction and detection technologies allow for more accurate, efcient retrieval of the black gold. This should enliven the efforts of those companies involved in the extraction of oil and the development of technologies to accomplish such purposes. Companies that choose to revisit wells with previously unobtainable oil or gas might now nd a different result due to advancements in the eld. The continuous adaptation of technology to suit oil producers’ purposes can accomplish many feats that would be considered infeasible just a few years ago. Texas Railroad Commissioner Sitton Joins Research Consortium on SeismicityTexas Railroad Commissioner Ryan Sitton in November 2016 joined a research consortium that is working to understand both naturally occurring and potentially induced seismicity in the state and the associated risks. Sitton will collaborate with the Bureau of Economic Geology (BEG) Center for Integrated Seismicity Research (CISR), an industry-sponsored, multidisciplinary, trans-college research center. The research of CISR is designed to identify the subsur-face processes that may inuence seismicity, quantify and reduce risk to the citizens and infrastructure of Texas, and inform regula-tors and operators so that they can improve standards of practice to mitigate seismicity.In a statement, Commissioner Sitton said: “I take the issue of induced seismicity very seriously. The science is clear that it is physically possible for injection wells that dispose of uids deep underground to cause earthquakes in certain rare cases, given the right set of conditions. Unfortunately, this often is confused with hydraulic fracturing, which can cause micro earthquakes that are almost never felt.”Sitton noted that, after careful study of operations in Texas, he determined that the Texas Railroad Commission should look “more closely at oil and gas injection activities in specic areas.”He named Johnson County, Texas, as one area that has “elevated risks of seismicity related to disposal activities.”“The governor’s technical advisory committee to the Texas Seismometer Network, BEG, CISR and other reliable scientic groups are working on smart scientic approaches to comprehensively evaluate seismicity and the associated risks in our state,” he said. “I am working with those groups, and if research points to a causal link between oil and gas and seismicity in the state, the Railroad Commission will address those situations in an appropriate way.”—JDPhoto Credit: doodlebugs - www.123RF.com

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Oilman Magazine / January-February 2017 / OilmanMagazine.com3030LOUISIANA NEWS AT A GLANCE...Gulf Coast States May Receive Extra Offshore Oil and Gas RoyaltiesBy Emmanuel SullivanIf Sen. Bill Cassidy (R-LA) gets his way, Alabama, Louisiana, Mississippi, and Texas will receive extra offshore gas and drilling royalties from the American Energy and Conservation Act. Currently, the four states receive 37.5 percent of the offshore drilling revenue, which is capped at $500 million a year. Under Cassidy’s bill the cap would increase to $835 million by 2027.“I think Republicans are on board,” Cassidy said. “We put a lot of things in there that would be appealing to Democrats, and President Trump can do a lot of this by executive order.”To sweeten the deal for Democrats, Cassidy proposes more money channeled to the Land and Water Conservation Fund. He added offshore windfarms could be a potential revenue share as well.However, Sen. Bill Nelson (D-Fla.) believes the measure is a threat to Florida’s coastline and opposes the legislation. Florida has a ban on offshore drilling in the Gulf within 125 miles of its coastline that expires in 2022. Florida is not included in Cassidy’s legislation, but Nelson’s position is, if you increase royalties to neighboring states, that would give Florida’s congressional leaders an incentive to open up waters to drilling when the state revenue runs lean.“The pressure builds on Florida to get more revenue and therefore they don’t look at the tradeoffs of oil on our beaches and damage to our environment, etc.,” Nelson said.Nelson also mentioned the bill creates new revenue sharing opportunities for Georgia, North Carolina, South Carolina, and Virginia, which adds more pressure to open up drillings off Florida’s Atlantic coast.Cassidy is calling this an energy jobs bill, and he added revenue sharing allows Louisiana to rebuild and maintain a healthy coast and in turn support American energy security.Even though there are items in the bill that both sides of the political aisle nd attractive, there is strong concern and opposition from government watchdog groups who are concerned that the untapped shale, oil, and natural gas reserves means more offshore drilling. They would prefer that offshore drilling revenue go to reducing the national debt and to programs that benet taxpayers.Nelson is also concerned that more drilling would increase the chance of another 2010 Deepwater Horizon oil spill. He said the spill decimated Louisiana’s tourist-driven economy.Cassidy has support from GOP leaders and intends to introduce the stand-alone bill if he can get the votes. Nelson successfully thwarted a similar measure from an energy bill that was passed this spring, and he said he’ll invoke a libuster rule that will require approval from 60 of the Senate’s 100 members to get a oor vote. Swift Energy Sells Remaining Louisiana AssetsSwift Energy Company in December 2016 said it has sold its remaining 25% interest in the Burr Ferry and South Bearhead Creek Fields in central Louisiana. The company said that net proceeds of about $8 million from the sale will be used to reduce the amount of borrowings under the company’s credit facility, which was approximately $212 million prior to receipt of these funds. “We set out this year to redene the company and reposition our portfolio through a series of non-core divestitures,” Interim CEO Bob Banks said in a statement. “We achieved our objective, as this transaction effectively concludes our Louisiana divestiture process. These transactions to date have simplied our business model, as our cost structure is now more representative of our Eagle Ford development program. This will allow us to realize greater efciencies and scale within our operational footprint.” The company also said it has increased its gas hedge position for 2017 and initiated a hedging program for 2018. Specically for 2018, Swift completed approximately 4.4 Bcf of natural gas swaps at an average price of $3.47 for 1Q18. —JD Foothills Exploration, Magna Team Up on Labokay ProspectFoothills Exploration Inc. in December entered into a participation agreement with Magna Operating LLC for the Labokay prospect, which covers 240 acres in Calcasieu Parish, Louisiana. The company said that Labokay is an amplitude versus offset oil (AVO) play in southwestern Louisiana targeting the Frio Nododaria Blanpiedi Sand. The agreement between the companies established an area of mutual interest for ve years and provides Foothills with access to all of Magna’s 3D seismic data, including interpretations and AVO data relating to the lands within the area of mutual interest. Foothills said it will earn 100% working interest before payout for drilling the well, and Magna Operating will back in for a 20% working interest after payout. “We’re pleased to have reached an agreement with Magna Operating, which establishes a beachhead for the company in the Gulf Coast through development and operation of this asset,” Foothills CEO B.P. Allaire said in a statement.Foothills Petroleum Operating, an indirect wholly owned subsidiary of the company, will drill a test well to a total measured depth of 8,575 feet and true vertical depth of 8,190 feet and will also operate the project. Foothills said that three offset analogue wells nearby produced a total of 1.9 million barrels of oil from the same Frio trend 3D seismic data set that Devon Energy acquired in 2012, which was reprocessed in 2016. —JD

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Oilman Magazine / January-February 2017 / OilmanMagazine.com3131LOUISIANA NEWS AT A GLANCE...Louisiana Oil and Gas Companies Optimistic about Trump PoliciesBy Tim McNallyAs it currently stands, many oil and gas companies are required to provide capital up front to fund the removal of their offshore equipment in case of bankruptcy. For larger oil and gas rms, this isn’t much of an issue, but it can be a struggle for smaller companies. Many expect that President-elect Trump’s energy reforms will be a reversal of the policies and regulations instituted during the Obama administration. Trump’s appointments of Rick Perry, the former governor of Texas, as the Secretary for the Department of Energy, and Rex Tillerson, former CEO of ExxonMobil, as the Secretary of State are seen as a step in the right direction by those hoping for less-stringent regulatory policies within the oil and gas industry. This has environmentalists highly concerned, but oil and gas companies are viewing Trump’s appointments and proposed elimination of regulations as a blessing. According to wwl.com, Louisiana Oil and Gas Association acting president Gifford Briggs stated that “there’s hope that this next administration is going to look at what are some of the roadblocks that are keeping companies from investing and drilling and producing here in the U.S. and start removing some of those barriers.”Louisiana-based oil and gas rms will most likely nd the new administration enabling for business purposes, but experts believe that only an upward oil price movement will give a boost to the energy industry in the state. Of course, the oil price is controlled by external factors that will be out of Trump’s control for the most part. For this reason, Briggs advises a stance of cautious optimism. He notes, “It’s certainly a measurable amount of excitement, but it’s also reserved in that a lot of these things are one, going to take time and two, they are unpredictable.” Only time will tell how benecial Trump’s policies will be for businesses operating in the oil and gas industry. Many experts acknowledge the dual-nature of this situation – relieving companies of some of the capital-intensive regulatory requirements would certainly liven business and hopefully accelerate growth. However, removing too many regulations could lead to another environmental disaster, such as the 2010 BP oil spill. President Trump and his team must carefully examine the repercussions of removing certain regulations to identify safety or environmental issues which could arise.

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Oilman Magazine / January-February 2017 / OilmanMagazine.com3232EVERY WORKER. EVERY INDUSTRY. EVERY TIME. Because that’s how workers’ comp is supposed to work – with the future of Louisiana’s working men and women at the center of everything we do.Visit us online at lwcc.com or call 225-924-7788 to learn more.Louisiana Oilman 8.75" x 11".indd 1 7/13/16 1:55 PMOILMAN COLUMNJason Spiess: Since you are the founder, let’s start with the genesis of your company and then transition into what it is that you are doing today.Nick Candito: What we are with Progressly is a way for companies to digitize their internal procedures in a way where we can make it so communication is tied to the processes that they are actually running on a day to day basis. We make it so the people who are actually executing those processes can be more efcient in how they do their jobs. And ultimately what we get to is data-driven insights around inefciencies tied to those processes and where you can optimize through Progressly on an end-to-end platform.JS: When you say digitize, are you talking about an App procedure to a software procedure?NC: Specically, with oil and gas, there are a lot of procedures that are paper right now, in like a true paper format – meaning they are hung up somewhere or you have a binder that you need to carry around. So the rst thing we want to do is take their same procedures and move them to a digital format so it is easier to access it wherever you are. And then we can do a lot of things to how you need to communicate with teams that are in remote locations, in different time zones and tying to end-to-end stakeholders, i.e. move a process from start to nish. It is bringing the paper format to an electronic format where the power of software can start to help these companies with efciency. JS: Do you only work in oil and gas or do you venture into other industries?NC: We denitely have clients outside of oil and gas. The industry that we rst started with is energy and utilities. What we are really excited about is that there are a bunch of traditional industries where there are a few factors coming into play. This is tied to the fact that there is an aging workforce with a bunch of industry knowledge within these companies. They need to think about the next evolution and how they are going to stay relevant and productive. Our technology has had a wide application across industries like that. Transportation is a good example. JS: Let’s go back to oil and gas and their push for remote monitoring. Whether it is an App or some software with drop down menus or in some cases, especially in pipelines, it’s becoming just automated. Are you involved in any of those examples or what niche within the energy industry are you nding success?NC: It really touches on all three of your examples. And a good example is with Shell Oil, who is one of our biggest supporters. We focus on processes tied to management of change, stakeholder management and risk management; so things that touch the corporate ofce where there is a huge amount of transparency that is needed where you need to execute those processes effectively, and where it is very easy to hit a blocking point if you do not have something in place like a Progressly that enables you to move that process forward. So not only do we prevent the other when you are executing a manager of change process one time, we are able to do some of the automation for them around where there might be a block. We are recognizing there is the same problem time and time again. You can use Progressly as a platform to make a change to that process and then automate the way it is going to move forward across all those stakeholders who are involved. JS: What kind of learning curve are you experiencing? NC: I think it helps to be mindful of the fact that the big crew change is something that is coming to an industry like oil and gas. Fifty percent of the workforce is going to retire in the next 10 years. They are already thinking through what the next generation of work is going to do? We align nicely with the workers that are already in the company today. We fundamentally do not want to change the way their employees are doing their job at all. We give you a tool that helps you become more productive with the job they are doing. So really we t into their existing workow, then using the tool, which is designed to be as simple as possible, only then can you augment the way you are working.JS: What are your biggest hurdles or barriers to entry with your technology?NC: We took the time to really get to know our customers in oil and gas. We emerged ourselves in the industry. Shell Oil and Valero came to us with some problems, and we wanted to make sure we listened thoroughly before suggesting any solutions our software could solve. Solving problems at an early stage they’ve essentially helped us create the story around what it impacts and what it means to the industry. Now that we’ve followed it more as a similar technology within our team, that was the biggest barrier to entry up until this point. Now I think we are at a really good point to accelerate our growth across the industry. Energy Scene with Jason SpiessAn Interview with Nick Candito, CEO and Co-founder, ProgresslyNick Candito

Oilman Magazine Jan/Feb 2017

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