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LA Oilman Magazine June 2012

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JUNE 2012JUNE 2012Targeting the Oil and Gas IndustryNatural Gas: on the bubbleFOCUS: Wellhead Recovery Oilwoman: Jayne Carl

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Louisiana Oilman Magazine

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JUNE 20123JUNE 2012Publisher Editor in ChiefDiana GeorgeContributing WritersDon BriggsCongressman Jeff LandryPhotographyCory FontenotIstockphotoEDITORIAL Advertising Sales Diana George337.991.9622diana@louisianaoilman.comRyan Hebert337.298.0500ryan@louisianaoilman.comADVERTISING© Copyright 2012 by Acadiana Publishing, Inc. All rights reserved. Reproduction without permission is prohibited. Address: P.O. Box 51412 Lafayette, LA 70505. Phone: (337) 504-4459. EDITORIAL: We use free-lance writers throughout the state. Call us for information on submitting articles and photos.. All information in this publication is gathered from sources considered to be reliable, but the accuracy of the information cannot be guaranteed.CONTENTS22Jayne Carl, Wet Tech Energy30 OIL BRIEFS04GUEST EDCongressman Jeff Landry08BRIGGS10GAS BUBBLECheniere Energy ExpansionDon Briggs on excessive government regulations.is onlinelike us on facebook a n d g e t t h e on l i n e version right on your desktop.PROFILE

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Louisiana Oilman Magazine4GUSHERSOILMANOIL RIG COUNTSMAY 2012 LA 128 Texas 926MAY 2011 LA 213 Texas 656MAY 2002LA 166 Texas 323Source: BakerHughes.comOIL PRICES (BARREL)MAY 31, 2012$87.79 MAY 31, 2011$100.31MAY 31, 2002$25.37Source: EIALOUISIANA CRUDE OIL PRODUCTION (BARRELS)MAY 20125,700,500*MAY 20115,311,027MAY 20027,992,958Source: LA DNRLOUISIANA NATURAL GAS PRODUCTION (Thousand Cubic Feet)MAY 2012155,400,000*MAY,961MAY 2002126,099,212Source: LA DNR*Estimate based on # of wells reporting.DH DDon Briggs, LOGAExcessive Regulations Stifle Economic DevelopmentTravel to any region within the state of Louisiana and drilling rigs will most likely be visible. Due to the vast amount of natural gas within the Haynesville Shale, and large sections of crude oil beneath our land’s surface, Louisiana is THE energy state. The Tuscaloosa Marine Shale (TMS), the now accessible “wet” play in Central Louisiana oers both oil and gas resources. Unlike the low natural gas prices of the Haynesville Shale, the price of crude oil is sitting at around $93 a barrel. Therefore, this developing region of the TMS is experiencing an increase in permit applications and test exploration. With the increase in drilling in Central and South Louisiana due to the TMS, many parishes that have not experienced much drilling are now seeing action. As the rigs and the workers show up in the parishes, so do the parish ordinances. While the parishes typically have good intentions of protecting their water, roads and land by enacting new parish ordinances, in some cases, they are simply stiing economic development. With over 20 dierent shale plays in the United States, companies can be more selective as to which play ts their exact needs. The State of Louisiana, under the direction of the Louisiana Oce of Conservation, is tasked with the primary statutory responsibility for regulation and conservation of oil, gas, lignite, and other natural resources. Conservation’s objectives are: to conserve oil, gas, and lignite resources; to regulate the exploration and production of oil, gas and other hydrocarbons and lignite; to control and allocate energy supplies and distribution; and to protect public safety and the State’s environment from oileld waste, including regulation of underground injection and disposal practices. While the State of Louisiana assumes the overall responsibility for oil and gas regulation, the parishes do play a key role in the development and production process. For example, each parish regulates their own parish roads. Thus far in the Haynesville Shale region, the oil and gas companies have been able to agree to terms put forth by the parishes regarding how roads will be kept up, and who will ultimately hold responsibility. While each parish has conducted their process dierently, there has generally been a good working relationship in the Haynesville Shale between the oil & gas industry and the parish governments. Louisiana is the home to thousands of producing wells with 25% of the oil and natural gas that fuel the United States owing through the arteries of our state. 50% of the gasoline and diesel fuel that drives the engines of our country ows out of Louisiana as well. In order for our state to continue as a leader in oil and gas production, it will be vitally important for the oil and gas industry, the parish governments and the State of Louisiana to work together as we help move our country towards being less dependent on foreign resources.

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JUNE 20125Port Fourchon: Charting a Course for RecoveryCORRECTIONOn last month’s cover Moe Francis was incorrectly listed as Moe Williams. Louisiana Oilman regrets this errorCommanding a strategic location in South Louisiana near the mouth of Bayou Lafourche, Port Fourchon is a key Gulf of Mexico shore base providing services for more than 90 percent of U.S. deepwater production and approximately 50 percent of all drilling rigs in the U.S. Gulf. Port Fourchon also serves as a link for the country’s pipeline and rening network. It sits less than 20 miles away from the Louisiana Oshore Oil Port (LOOP), a key unloading and distribution hub for super-tankers that handles roughly 15 percent of U.S. oil imports. On a typical day, pipelines traversing Port Fourchon carry more than 1.5 million barrels of crude oil. These pipelines provide access to more than 50 percent of U.S. rening capacity. For thousands of men and women who work in the oshore industry, the port at the southern tip of Lafourche Parish, La., is an important gateway. During any given month, approximately 15,000 oshore personnel pass through Fourchon en route to their next hitch in the Gulf or on their way home for some well-deserved downtime. On the night of April 20, 2010, Port Fourchon took on another role. In a matter of hours, the port became the focal point for the response, recovery and clean-up eort for the worst oshore accident in U.S. history. Most of the 115 survivors of the Deepwater Horizon tragedy were transported from the blazing rig site via an oshore supply vessel. For them, arriving at Port Fourchon early on April 21 brought them one step closer to reuniting with their loved ones at a New Orleans hotel. As BP and others devised strategies to stop the ow of crude oil from the out-of-control Macondo well, tenants at the premier oileld supply and services base mobilized to fabricate various devices to contain the ow. Moreover, their expertise was critical in supporting eorts to kill and permanently cement the well. During the oil spill that aected much of the Gulf Coast, Port Fourchon became a hub for the response collaboration eorts among law enforcement, industry and various local, state and federal government agencies. It even served as a temporary address for oil spill response workers, who lived in oating hotel and tent lodging facilities. Although the well was nally shut in on July 15, 2010, the port and its tenants faced another challenge in the wake of the Macondo incident: the anticipated economic impact of the deepwater drilling and permitting moratoria enacted by the Obama Administration. The FROM RIGZONE

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Louisiana Oilman Magazine6

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JUNE 20127oshore industry is the lifeblood of Port Fourchon, and a protracted slowdown in oil and gas activity in the Gulf would create serious ramications for the complex. Port Fourchon Executive Director Chett Chiasson was one of many Gulf Coast residents who feared a crushing economic blow was in the ong. “This action brought our region, a region of constant growth and record low unemployment that was not seeing much negative impact from the struggling national economy, to a screeching halt,” Chiasson recalled in an October 2011 commentary in the Thibodaux (La.) Daily Comet newspaper. Statistics from the Greater Lafourche Port Commission (GLPC), a political unit of the State of Louisiana that owns and operates Port Fourchon, reveal that the 1,700-acre complex supports $8 million in household earnings and $27 million in business sales in a single day. The commission contends that suspending operations at the port for just three weeks would have signicant ripple eects nationwide: $9.9 billion in lost sales, a $2.9 billion dip in household earnings and the loss of 77,440 jobs. Seeking to inject some certainty into a tenuous situation, the GLPC decided to freeze its tenants’ escalation fees and reduce basic land rental rates by 30 percent for one year. Chiasson noted that the action meant millions in lost revenue for the GLPC but provided “a little breathing room” for tenants to adjust their nancial strategies to survive in this evolving regulatory environment. Although the moratoria are now ocially over, an exodus of deepwater rigs from the Gulf has occurred and should have lingering eects on Port Fourchon’s tenants. A prominent Louisiana economist says the loss of these rigs should become more evident to the economy of the Houma Metropolitan Statistical Area (MSA) in 2013. (The Louisiana parishes of Lafourche and Terrebonne are located in the Houma MSA. An MSA is a U.S. Government measure based on a geographic area’s population density.) Loren Scott, a retired economist with Louisiana State University who has tracked the ups and downs of the state’s energy industry for nearly four decades, noted the economic fallout for the Houma MSA has been mixed since Macondo. In an October 2011 report he co-authored with fellow LSU economist James Richardson, Scott observed the Houma MSA received roughly $233 million of approximately $1.4 billion in Macondo claims payments that BP had paid out as of August 2011. The $233 million in claims, equivalent to nearly 3 percent of the Houma MSA’s total personal income, largely provided a boost to the area’s services and retail sectors and oset lost business elsewhere, Scott explained. However, he said this proverbial silver cloud does have a dark lining. Given the Houma MSA’s strong ties to the oshore oil and gas industry, it is no surprise that related sectors including machinery, fabrication, shipbuilding and water-borne transportation are important to the region’s economy. In fact, Scott and Richardson point out that 6 percent of the Houma MSA’s employment directly corresponds to oil and gas extraction -- more than twice the statewide average. Scott observed that fabricators in the area have been busy building oshore platforms or platform components for discoveries made before the Macondo incident. However, with the drop in exploratory drilling since the spring of 2010, Scott expects that a decrease in platform orders will become evident beginning in mid-2013. The softening oshore fabrication market, coupled with the absence of future BP claim payments, creates an element of uncertainty for Port Fourchon and other key players in the Houma MSA. The GLPC, meanwhile, is moving forward with a 400-acre expansion of Port Fourchon. It is developing “Slip C,” which will be 7,000 linear feet long and 700 linear feet wide. “It will create over 14,000 linear feet of waterfront to meet the demands of the oil and gas industry,” Chiasson said. Chiasson said the pace of business at the port has improved but has not returned to pre-Macondo levels. He noted that increasing deepwater activity in the Gulf has driven much of the recovery. The rebound for shallow water has been considerably less robust. “Things in Port Fourchon are currently very busy,” Chiasson concluded. “We are at about 90 percent of the business that we were prior to the moratorium.”

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Louisiana Oilman Magazine8EDITORIALGUESTAmerica Deserves Responsible Energy PlanCongressman Jeff Landry (R, LA-03)In January 2009, when President Obama took oce – the price of regular, un-leaded gasoline averaged $1.79 per gal-lon nationwide. Today, American families and small businesses are paying $3.92 per gallon, and the costs are continuing to rise. While Americans struggle to pay the price of higher energy costs, more tax dol-lars get wasted on failed energy policies, and more real energy jobs are lost – the President continues to mislead Americans about his energy policy. Last week, the President took his “Blame Everyone but Me Tour” to a familiar tune: citing Wall Street as the culprit and blaming speculators for the rising costs of gas and electricity. The President’s blame game is a tired act. Americans deserve better and deserve it now. We deserve better than a failed, taxpay-er-funded “green” energy plan. We deserve better than an energy plan that relies on the whims of some of the most volatile countries in the world. And we deserve better than an energy plan that delays and restricts domestic production. In the trillion-dollar stimulus deal, the President directed our taxes to create alternative energy jobs. Promising to cre-ate ve million green jobs over 10 years, he funneled our hard-earned tax dollars to now-bankrupt companies like Solyndra, Solar Trust of America, and Beacon Power. Obviously, that plan did not work. The President’s decision to tap the Stra-tegic Petroleum Reserve was another di-saster that did not alleviate the pain at the pump. So was sending money to Brazil for oshore production. And so was pressur-ing OPEC countries to increase production. In order to truly reduce energy costs, we must establish a responsible plan – one that encourages more domestic exploration and extraction and gets our neighbors working again. By increasing American production, we can create good-paying jobs, help our economy recover, and increase government revenue. If the President truly wanted to end speculation in the market and lower energy costs, he would do a number of things immediately. First, end the de facto moratorium in the Gulf of Mexico and expedite the permitting process on the OCS and in deepwater. Second, open new areas of federal land for exploration and stop cancelling, delaying, and withdrawing lease sales. Third, approve the Keystone XL Pipeline. Fourth, halt the threats of tax increases on oil and gas companies. And fth, end the unnecessary and overly bur-densome regulations on energy produc-ers. I did not come to Congress to get a job; I came to Congress to help create jobs. As such, I am committed to advancing these real solutions to our energy crisis. I hope the President joins me by ending the manipulation, regulation, and restriction and allowing us to utilize America’s natural resources for increased domestic produc-tion.

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Louisiana Oilman Magazine10Balancing on the (natural) Gas BubbleLA OILMAN STAFFIN 2010, CHENIERE ENERGY made a presentation about an addition to its natural gas facility at Sabine Pass, on the Texas/Louisiana border. In it, the com-pany proposed that by 2015 the Cameron Parish facility could be producing and exporting 2 billion cubic feet of the super-cooled, condensed natural gas a day for export to an eager world market.The Cheniere project is but one of several eorts, from the Gulf of Mexico to the Northwest Pacic Coast, designed to ex-ploit the country’s newfound natural gas riches. It is also the rst facility approved to export liqueed natural gas from the U.S. In a report released earlier this year, the U.S. Energy Information Administration noted that additional natural gas exports would lead to higher natural gas prices in the U.S., a reduced demand for natural gas, imports from Canada to slake some de-mand and an increase in electricity prices. Additionally, the process of liquefying natural gas is tailor-made for massive exportation of the fuel and this has politi-cians, regulators and other interested parties wondering whether selling LNG to other nations helps or hinders the U.S. drive toward energy independence? At least one Democratic senator, Ron Wyden of Oregon, has called for a timeout to evaluate the eect of the imports on the cost of energy in the United States. A Canadian company, Veresen, has teamed with British company Energy Product Development to build an LNG terminal in his district. However, before we are too quick to write o Wyden’s senate calls as those of a “not-in-my back-yard” liberal, it is important to note he is in line to become chairman of the Senate Energy and Natural Resources Committee if the Democrats retain control of the Senate in November. Countering Wyden’s position are industry observers who attacked the EIA report, claiming the predictions of higher energy prices resulting from the export of what is now surplus natural gas is overly critical, even if the projections do taper o in the long run. And, here begins the latest debate on the natural gas bubble.

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JUNE 201211Balancing on the (natural) Gas BubbleBecause crude oil has dictated the direc-tion of pipeline development in the U.S., natural gas elds are usually underserved and, as such, have problems getting the product to market. In March, natural gas cost $2.25 per thousand cubic feet. Lique-ed natural gas for export, however, was selling for $10.67 per thousand cubic feet. That low wellhead price for natural gas is what makes the processing and export of LNG attractive. But, over the last decade, that price point has varied greatly, peak-ing at over $10 per thousand cubic feet in 2008. The more traditional and far lower current price is a new development after much uctuation in recent years. When the price of natural gas is low, the expense involved in producing and trans-porting liqueed natural gas makes sense. It allows companies to prot – hand-somely – from a resource that was taking up storage space in the past. It also takes some of the pressure o of oil producers ghting to keep up with mushrooming global energy demands. The other side of the argument involves the carbon footprint of the liquefaction process, the eect of tapping existing natural gas stockpiles for use overseas and the possible consequence of a process that works only too well in reducing the nation’s natural gas supply chain bottle-necks. Industry supporters are quick to point out that those concerns have already been addressed in current energy legislation, to include the environmental concerns. “The U.S. already has a well-dened natural gas export policy in place,” Center for Liqueed Natural Gas (CLNG) President Bill Cooper said. “Under that policy, the Department of Energy (DOE) regulates exports of natural gas, and the Federal Energy Regulatory Commission (FERC) regulates the design, construction, and operation of the proposed facility and its impact on the environment. The Senator’s concerns are well taken, and thoroughly addressed by the existing regulatory framework: DOE considers U.S. energy security, adequacy of domestic supply, consumers, impact on the U.S. economy, as well as any other issue relevant to its determination. FERC examines the safety

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Louisiana Oilman Magazine12of the facility and its potential environ-mental impacts.” “As for the Senator’s suggested ‘timeout’, the DOE has already declared one. Until the DOE’s macro-economic study is com-pleted, consideration of all applications are on hold. The ‘timeout’ started when DOE requested a cost impact study from EIA last August and will continue until the macro-economic study is publicly released.” According to supporters, selling LNG overseas actually helps to stabilize price and production for the U.S. as a whole. In fact, the current drop in the price of natu-ral gas domestically makes selling excess overseas a positive rather than a negative for the country. “Natural gas prices are going in the tank,” said Louisiana Oil and Gas Associa-tion President Don Briggs in February. “We had a good run, but that’s the nature of the beast. Even though the rigs are moving out, and they need to be, even-tually that glut will be swallowed.” The export of natural gas has a two-fold eect on the U.S. energy position. Aside from moving the gas to markets where it can be sold, it also takes the place of some other fuel – like oil – in the market-place. Since the natural gas is indexed to the crude price at the hub where it is delivered, the Cameron Parish location has a distinct advantage in that it can accept gas indexed at the Henry Hub for liquefaction. Producing LNG and inject-ing it into the world market, especially in areas of growing demand like the Far East, trickles down to a positive for the U.S. in the form of a lowered global demand for oil. There is also some stability to be seen in the LNG market. Because LNG orders are primarily value chain based, the long-term contract pricing makes wholesale dips and rises in the market less jarring. Additionally, an S-curve is included in many pricing formulas, allowing for a dampened eect on the market when prices do uctuate.supply of natural gas and more sup-plies being dis-covered in new resource areas, the United States is well positioned to meet both the do-mestic needs of our country and to pro-vide clean burning natural gas to new 

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Louisiana Oilman Magazine14 Cooper also pointed to overall eects helping oset the price gains indicated in the EIA report, even if they are inated. Ac-cording to a CLNG report, the EIA study’s predicted natural gas price increases do not account for increased economic activity, a decrease in the U.S. trade decit and increased job creation. GDP growth, job creation and osetting the U.S. trade decit help neutralize price eects, as would the creation of jobs in the natural gas sector and related industries as a result of the new projects. “With a 100 year supply of natural gas and more supplies being discovered in new resource areas, the United States is well positioned to meet both the domes-tic needs of our country and to provide clean burning natural gas to new markets,” Cooper said. “As the EIA study noted, the vast percentage of exports would be supplied by additional natural gas produc-tion. As history has taught us, the natural gas industry overwhelmingly responds to meet new markets, far beyond current-day predictions.” Briggs said the larger problems facing the industry are both foreign and domestic. Increasing tension between the United States, Israel and Iran have raised the specter of skyrocketing oil prices. Briggs said military or political action could limit oil ow through the Strait of Hormuz, through which 35 percent of the world’s sea-born oil ows and which Iran has threatened to shut down. “If that happens, we’ll see the price of oil go absolutely through the roof,” Briggs said. Oil industry supporters are not the only ones in favor of LNG exports. In Louisiana, the political experience has been far dier-ent than that in the Pacic Northwest. “Cheniere Energy’s plan to transform its existing terminal into a facility that can both import and export liqueed natural gas is a precedent-setting breakthrough that will bring substantial economic bene-ts to southwest Louisiana,” Sen. Mary Lan-drieu, D-La., said when the federal permits for the Cheniere facility were approved in May. “It will help the region round out its recovery from Hurricanes Rita and Ike and move on to a bright economic future.” There still are many challenges. Legacy lawsuits from past environmental indiscre-tions – though they may have been legal or unregulated at the time – continue to move their way through the courts. Additionally, ongoing actions against the fracking (hydraulic fracturing) process that has made much of the natural gas boon possible are still threatening to derail the progress the industry has made. “We are today truly in a new era for our in-dustry,” Briggs said. “Technology is chang-ing everything, and we’re going to be part of it in a big way, especially in northwest Louisiana.” And in that era, it looks like much of the world could be cooking in their kitchens with American gas.

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JUNE 201215 For decades, natural gas has had a prob-lem. Although it burns cleaner and is more plentiful than other energy sources, it has been expensive to transport. The liquefaction process solves this issue, but at a hefty cost. An entry level natural gas liquefaction plant costs around $1.5 billion per train, or production line. There are also costs involved in re-gasification on the other end of the export line. Additionally, specialized tankers to trans-port the gas by sea cost between $100 mil-lion and $150 million each. Chartering one of these tankers can cost between $55,000 and $65,000 per day. The plus side is that as long as natural gas prices stay low, the liquid natural gas export business model works. More natural gas can be transported in liquid state using the same volume of tanker space and return almost 5 times in profits. And, although natural gas wellhead prices spiked north of $10 per thousand cubic feet in July 2008, the prices have dropped to the cus-tomary $2 to $3 per thousand cubic feet level.The concern is that making the current glut of natural gas available to a greedy - and the prices higher. If some of the U.S. Energy Information service models are correct, then a quadrupling of natural gas price is pos-sible. But, this makes the liquefaction pro-cess far less profitable, even if the enormous startup costs are covered.According to source data provided from the United States Energy Information Administration. -kets, as requested by NATURAL GAS EXPENSE TO GOING GLOBAL

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Louisiana Oilman Magazine16TVTVWednesdays at 8:30 PMSundays at 4:00 PMReplays online at cajunoutdoor.comMondays at 5:30 PM*Starting July 2012 on the Pursuit Channel - DirecTV Channel 608.like our page on facebook for updates and free give aways.

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JUNE 201217TVTVMondays at 5:30 PM*Starting July 2012 on the Pursuit Channel - DirecTV Channel 608.

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Louisiana Oilman Magazine18FOCUSHURRICANES2012 Hurricane Season Predicted to Breeze ByThree major hurricane forecasting teams have predicted a below-average to average hurricane season, which starts Friday, June 1 and runs through November 30. However, Tropical Storm Alberto made an early appearance o the coast of Florida, Georgia and South Carolina on May 19--the earliest tropical storm since 2003. The storm never made landfall, but coastal residents experienced heavy rain and dangerous surf with maximum sustained winds of 50 miles per hour (mph). Soon thereafter on May 28, Tropical Storm Beryl dumped rain and blew up heavy surf from northeastern Florida to the Savannah River, which divides Georgia and South Carolina. Needless to say, Gulf coast and East coast residents should prepare for an active Atlantic hurricane season, regardless of predictions. According to the Weather Channel team, the U.S. Atlantic and Gulf coast will experi-ence 11 named storms, of which six will become hurricanes and two will transition into major hurricanes (Category 3 or high-er). However, AccuWeather forecast diers slightly with 12 named tropical storms, of which ve will strengthen to hurricane sta-tus and two will become major hurricanes. And the Colorado State University team is predicting 10 named storms, four of which are expected to become hurricanes and two of those to become major hurricanes. The above predictions fall near or below the long-term average (1950-2011) of 12 named storms, seven hurricanes, and three major hurricanes and far below the current active era (1995-2011) of 15 named storms, eight hurricanes and four major hurricanes, the Weather Channel reported. Forecasters attribute the reduction in activity to the strong possibility of El Nino developing this summer. “Typically, El Nino is associated with stron-ger vertical shear across the tropical Atlan-tic, creating conditions less conducive for storm formation,” said Phil Klotzbach of the CSU Tropical Meteorology Project. AccuWeather.com Expert Senior Meteo-rologist Dan Kottlowski said, “a shift into an El Niño pattern is expected by the peak of the Atlantic Hurricane Season, which oc-curs around Sept. 11. A change to El Niño forces the westerlies to migrate farther south, causing increased [wind] shear that will diminish or perhaps shut down further development beyond September.” Though Weather Channel Senior Meteo-rologist Stu Ostro points out that his team “cannot accurately predict critical details such as where or how many landfalls will occur,” the Accuweather and CSU teams have published their predictions. According to Accuweather.com long-range forecaster Paul Pastelok, “Fronts coming down during June and July could cause energy to break o and develop tropically.” “Another big storm is possible for the East Coast with heavy, ooding rain,” Pastelok added. According to a release from Colorado State University’s forecast team, the probability for a major hurricane making landfall in the United States is: 42 percent chance that at least one major hurricane will make landfall on the U.S. coastline.24 percent chance that a major hurricane will make landfall on the U.S. East Coast, including the Florida Peninsula24 percent chance that a major hurricane will make landfall on the Gulf Coast from the Florida Panhandle west to Brownsville34 percent chance of a major hurricane tracking into the CaribbeanIn harm’s wayFROM RIGZONE

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JUNE 2012192012 Hurricane Season Predicted to Breeze ByHurricane forecasters are quick to point out that they only predict the number of named storms, not the path of the storm or where it will make landfall. Depending on the hurricanes paths, 116 rigs will be in the Gulf of Mexico at some point during the June 1 to Nov. 30, 2012 hurricane season. Not all of them are currently in the Gulf and not all of them will be staying.JACKUPS LEAD THE MARKET with 70 dierent rigs in the GOM during hurricane season. Hercules Oshore will lead the pack with 34 jackups in the GOM within the June 1 through Nov. 30, 2012 timeframe. Ensco will follow with 11 and Rowan has 9. Other rig managers with contracts include Diamond (5), Nabors (5), Noble (2), Spartan (3), and Perforadora Central (1). A SIGNIFICANT NUMBER OF SEMI-SUBMERSIBLES will be in the GOM throughout hurricane season as well. Noble will lead the pack with seven semisubs in the GOM from June 1 to Nov. 30, 2012. Ensco will trail closely behind with six rigs, and Diamond and Transocean will each have ve rigs scheduled to work within this timeframe. Other rig managers in the GOM during hurricane season include Atwood (1), Merlin Energy (1), Maersk (1), Seadrill (2), and Viking (1).  during hurricane season. Transocean will have 10 drillships in the GOM from June 1 through Nov 30, while Ensco will have two, and Noble, Pacic Drilling, Stena and Vantage will each have one. The rig managers and operators working in the Gulf this hurricane season have many years of experience under the unstable weather conditions in the GOM from June through November. Stronger mooring lines, GPS systems, and increased design and safety measures implemented over the last several years have added another level of security to their operations. In addition, the crews are well trained to secure wells far in advance of advancing hurricanes, move rigs out of the way until storms pass, and evacu-ate if necessary.

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Louisiana Oilman Magazine20ZONESAFETYHOW TO SUBMIT INFORMATION FOR SAFETY ZONE:SAFETY ZONE focuses on highlight-ing safety achievements of com-panies in the Oil & Gas sector. For more information or to submit items contact editor@louisianaoilman.comThe National Tank Truck Carriers (NTTC) Association recently awarded Dupré Logistics with the Grand Award in the 21 – 35 million mile class in Person-nel Safety. Dupré has a long history of carrying hazard-ous materials via tank truck and has been a NTTC member since 1984. Currently, as a full service logistics provider, Dupré drivers drove over 42.7 million miles logging 2.1 million man hours in 2011 alone. “It is truly an honor for Dupré to receive such awards from the Tanker Transportation industry. Each employee is a true steward of the safety programs here at Dupré which is overseen from the top down but works daily from the bottom up by job experts completing each task safely one at a time,” stated Al LaCombe, Dupré Logistics Director of Safety and Security. Dupré will ocially be recognized at the upcoming NTTC Annual Nation-al Safety conference in New Orleans. Additionally, they will be recognized with an improvement award for the 3rd consecutive year. The Personnel Safety Award, which spotlights Dupré Logistics’ outstanding safety record and commitment to personal injury reduction, represents the top honor for carriers in their class. Founded in 1945, the NTTC is a trade association comprised of approximately 200 trucking companies specializing in the nationwide distribution of bulk liquids, industrial gases and dry products in cargo tank motor vehicles. Carrier members and more than 250 associate members — including suppliers of goods and services to the tank truck industry — back the organization.

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JUNE 201221

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Louisiana Oilman Magazine22Next-Generation Pacific Santa Ana Arrives in GOM for Chevron Drilling Chevron Corporation announced that the Pacic Santa Ana, a deepwater drillship built to Chevron’s specications, has arrived in the Gulf of Mexico to work for Chevron under a ve-year contract with a subsidiary of Pacic Drilling S.A. Pacic Santa Ana is the rst drillship designed with the capacity to perform dual gradient drilling (DGD). “Pacic Santa Ana will enable us to demonstrate dual gradient drilling, which has the potential to change the way deepwater wells are drilled,” said George Kirkland, vice chairman, Chevron Corporation. “is new process builds on our record of technology leadership in deepwater.” “e addition of Pacic Santa Ana as Chevron’s h drillship in the deepwater Gulf of Mexico demonstrates our long-term commitment to developing America’s energy resources,” said Gary Luquee, president of Chevron North America Exploration and Production Company. “We are bullish on the Gulf, where robust energy exploration and development is vital to our nation’s economy and energy security.” Unlike conventional deepwater drilling, which uses a single drilling uid weight in the borehole, dual gradient drilling employs two weights of drilling uid – one above the seabed, another below. is allows drillers to more closely match the pressures presented by nature and eectively eliminates water depth as a consideration in well design. DGD also allows drillers to more quickly detect and appropriately react to downhole pressure changes, which can enhance the safety and eciency of deepwater drilling operations. Pacic Santa Ana is equipped with a DGD riser, a mud li pump handling system, six mud pumps – three for drilling uid and three for seawater – extensive uid management system enhancements and more than 72,000 feet of DGD-related cables. Aer additional equipment is installed and tested, Pacic Santa Ana will be used for exploratory and development drilling in the deepwater Gulf of Mexico.BRIEFSUÊÊ*ÕÀV>ÃiÊÀÊÀiw>ViÊ>`UÊÊ*ÕÀV>ÃiÊÀÊÀiw>ViÊÌLiÀÊÌÀ>VÌÃUÊÊÕÌ}ÊÀÊÀiVÀi>Ì>Ê«À«iÀÌÞUÊ>`Ê«ÀÛiiÌÃUÊÊÃÌÀÕVÌÊvÊ«`Ã]Ê>iÃ]ÊL>ÀÃÊ>`ÊVÕÌÀÞÊV>LÃUÊ>`ÊÛiÃÌiÌFwfszpof!esfbnt!pg!pxojoh!uifjs!pxo!qjfdf!pg!mboe/!B!qmbdf!gps!fyqmpsjoh! sfdsfbujpobm! qbttjpot! mjlf! ivoujoh! boe! ßtijoh! Ñ! ps!tjnqmz!sfmbyjoh!xjui!gbnjmz!boe!gsjfoet/!:PVDBOCVZUIFMBOEZPVXBOU8FDBOIFMQIvoujoh!Dbnq!!!!Gjtijoh!Ipmf!!!!Mboe!Jowftunfou!!!Ipccz!GbsnXf!Gjobodf!uif!Mboe/Êzpv!cvjme!uif!nfnpsjft/GjstuTpvuiMboe/dpn

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JUNE 201223Stone Energy Acquires Pompano Field Stone Energy Corporation announced the signing of a denitive agreement with Anadarko Petroleum Corporation, which provides for the acquisition by Stone of Anadarko’s 25% working interest in the ve block deep water Pompano eld in Mississippi Canyon, a 22% working interest in Mississippi Canyon Block 29, and a 10% working interest in portions of MC 72. e purchase price under the agreement is $67 million in cash plus the assumption of asset retirement obligations, subject to customary closing adjustments. Current net production from the Pompano eld aributable to this acquisition is approximately 1,000 barrels of oil per day and 3 million cubic feet of natural gas per day. Stone’s estimate of proved reserves aributable to this acquisition is approximately 5.9 million barrels of oil equivalent at December 31, 2011. Stone’s reserves estimate is based on Netherland Sewell & Associates year-end reserve estimate for Stone’s portion of the Pompano eld, proportionately reduced for the dierent working interest. e acquisition is subject to preferential rights (MC 29 and MC 72 only), due diligence, and other customary closing conditions, and is expected to close by late second quarter of 2012. ClampOn has secured the order with Weatherford to supply multiple subsea acoustic sand vibration detectors and PIG detector for the Hess Tubular Bells project. e project is in 4,400 feet (1,341 meters) of water and is approximately 135 miles southeast of New Orleans in Mississippi Canyon Block 725. e expected start-up for Tubular Bells is the fourth quarter of 2014. e ClampOn Subsea sensors provided are the only acoustic sensors with atmospheric and high pressure chambers, pipe contact verication, electronic beam welding and dual independent electronics. ese qualities make ClampOn the preferred supplier of non-intrusive sensors for applications worldwide. ClampOn is the leading supplier of sand, pig and corrosion-erosion monitoring equipment, operating globally, providing around the clock services with oces in Bergen, Norway and Houston, Texas.in GOM Unsuccessful An exploration well drilled at Anadarko Petroleum Corp.’s Spartacus prospect in the Gulf of Mexico has failed to produced oil and gas.

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Louisiana Oilman Magazine24BRIEFS“We were just nishing up on our Spartacus exploration well, unfortunately we were unsuccessful,” Ernie Leyendecker, Anadarko vice president, exploration, told analysts in an energy conference webcast Wednesday. “e good thing about Spartacus was that our net cost was only about $20 million...so our exposure was relatively small.” e well was targeting subsalt layers in the vicinity of Anadarko’s Lucius project, which is currently under development and is expected to be a key driver of the company’s future growth. Houston-based Anadarko said the dry well was a small set back amid a string of major discoveries in the Gulf of Mexico, an area where the company see a huge potential. e Gulf “is one of the most, if not the most, prolic deepwater basins in the world,” Leyendecker said. “e Gulf is still alive and well. It’s the basin that keeps on giving.” Anadarko said its plans to drill six to eight exploration and appraisal wells in the Gulf this year. Separately, Anadarko said it has been in talks with Italy’s Eni SpA about the possibility of jointly developing part of the Prosperidade and Mamba natural gas discoveries oshore Mozambique. “What you will unitize is only the common reservoirs,” an Anadarko executive said.OTC Poll: O&G Professionals Unsure if GOM Activity Has StalledOil and gas professionals have displayed uncertainty over the state of U.S. deep water R&D activity since the Macondo incident in the Gulf of Mexico two years ago. According to a poll conducted at the Oshore Technology Conference (OTC) in Houston, 52 percent of participants thought that US deep water R&D activity has stalled since 2010, while 48 percent said that innovation has continued in this eld. e Industry Snapshot Poll was conducted by global independent technical advisor GL Noble Denton on the third day of OTC. It was also completed online by senior players from across the industry. Pekka Paasivaara, Member of the GL Group Executive Board, said: “Condence in the future of deep water exploration and production has increased signicantly over the past six months, as drilling returns to the Gulf of Mexico aer the Macondo incident. e result of this poll shows that the United States needs to display a similar level of condence in its development of new deep water technologies if the sector is to grow at the pace it deserves. “e US is widely recognised as a pioneer of deep water innovation, and an industry thought leader in this eld. ere’s no doubt that, with the right level of investment, the country can continue to hold this reputation.” GL Noble Denton has conducted three Industry Snapshot Polls this week, one for each full day of OTC. Delegates were also asked to vote at GL Noble Denton’s booth (2241-K) on whether gas will replace oil as America’s primary energy source by 2030, and if oil and gas operators should always be liable for exploration and production risks. All participants have been entered into a prize draw to win a new iPad aer the show. Independents Critical to Maximizing GOM, Global Offshore ProductionIndependent oil and gas producers remain critical to the Gulf of Mexico and other oshore oil and gas provinces worldwide in order to maximize production of resources, said John D. Schiller, Jr., founder and CEO of XXI Energy at the Oshore Technology Conference in Houston on Wednesday. e dierent economics of dierent plays means that a range of companies should be pursuing oshore oil and gas, from majors to independents to small companies, Schiller said during a panel discussion of the role of independents in the U.S. oshore oil and gas industry. Rising insurance and other costs due to increased regulations as well as regulatory uncertainty still pose challenges for independents in the deepwater Gulf. e industry is also frustrated with a sense of regulations being created on the y and government agencies constantly watching operations, one panel member noted. “We want to operate safely and we want government involved as a partner,” said Ron Neal, co-founder and partner of Houston Energy. Neal added that the workers from Bureau of Ocean Energy Management (BOEM) and Bureau of Safety and Environmental Enforcement (BSEE) with whom he has dealt with are good people who are trying to do a good job; diculty seems to come from higher levels. Activity in the Gulf of Mexico is recovering from the moratorium imposed aer the Deepwater Horizon incident in 2010 but has not reached levels previously seen. John Larson, vice president of HIS Global Insight, raised the issue of whether permiing activity was an imperfect measure of activity, and if other data such as wells spudded and drilled were more accurate ways to measure activity. Slower GOM Permitting Yields Reduced Production Common sense would suggest that curtailing an activity would yield a lower output; assuming the absence of eciency gains that would otherwise mitigate the diminished activity levels. Based on observations provided by the Energy Information Administration and

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JUNE 201225BriefsOIL

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Louisiana Oilman Magazine26BRIEFSthe Bureau of Safety and Environmental Enforcement, drilling activities in the Federal Oshore Gulf of Mexico (GOM) waters are following this paradigm; culminating in decreased production. Or in other words, the changed GOM regulatory environment is having an adverse impact on oil production in federal waters. Federal Oshore GOM eld production averaged 1.3 million barrels per day (MMbopd) during calendar year 2011, a decline of 15 percent compared to 2010 levels. A reporting lag exists in providing federal production data. us, the most recent monthly data available is January 2012. In this most recent month, eld production improved 1 percent to 1,326,000 barrels per day (bpd) versus 2011’s average. However, current production levels are well below recent peak levels of 1.7 million bpd set in February 2010. Subsequent to the April 2010 Macondo oil spill, a six-month moratorium was placed on deepwater drilling and the Mineral Management Service (MMS) was reorganized into three entities: the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), the Bureau of Safety and Environmental Enforcement Call to book your next outdoor adventure!WWW.CAJUNOUTDOORADVENTURES.COMDu c k & Go o s e Hu n t ssp e c k l e D tr o u tof f s H o r e tr i p ssa c au la i t tr i p sGa t o r Hu n t s337-298-0500

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JUNE 201227(BSEE), and e Oce of Natural Resource Revenue. BSEE is responsible for tracking permits. During 2011, the BSEE database indicated there were 109 permits for “New Wells” approved. While this is not much change from 2010, when 104 permits for “New Wells” were approved, one must remember that 69 percent of the 2010 “New Well” approvals were processed prior to the reorganization of the MMS and the oil spill. A beer gauge would be noting that during 2009 171 “New Well” permit approvals were granted. Another way of viewing the permiing process is by looking at the number of days between request and approval of “New Well” permits. Prior to the Macondo spill, the MMS was averaging 26 days to approve a “New Well” permit when drilling was conducted in shallow waters. For deepwater projects, the span was 16 days. Today, BSEE takes 67 days to approve a shallow water well and 70 days for a deepwater well. us, common sense would suggest that crude production in federal oshore waters is on a very slow trajectory toward returning to Pre-Macondo levels.WWW.CAJUNOUTDOORADVENTURES.COM

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Louisiana Oilman Magazine28DC International, Inc. announced that Beverly Hodgson-Thoman has been named as the Director of Marketing. According to Russell Earles, President of DC International, “Beverly has a proven track record for moving companies forward in record time. She comes to us with over 20 years of experience in diverse industries, most recently from oil and gas service companies.” Beverly retired from the hospitality industry where she received several awards. She then began working as a national sales and marketing consultant for various industries. Her keen business mind is what helped drive her clients to the next level. Linda Earles, CEO of DC International, pointed out that “Bev is a proven professional, who places high value on ethics and integrity. She wants us to succeed and has the ability to provide a clear view of how to make this happen. DCI is happy to have someone with her experience on our team.”TRANSITIONSBeverly hodgson-thomanDC INTERNATIONALHOW TO SUBMIT INFORMATION FOR TRANSITIONSTRANSITIONS focuses on executive hirings and promotions for compa-nies in the Oil & Gas sector. For more information or to submit items con-tact editor@louisianaoilman.com

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JUNE 2012291021 Albertson ParkwayBroussard, LA70518(337) 837-0044WhereFishingBegins!1021 Albertson ParkwayBroussard, LA70518(337) 837-0044WhereFishingBegins!1021 Albertson ParkwayBroussard, LA70518(337) 837-0044WhereFishingBegins!1021 Albertson ParkwayBroussard, LA70518(337) 837-0044WhereFishingBegins!

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Louisiana Oilman Magazine30OIL IN THE GULF OF MEXICO, the odds are that a South Central Louisiana company named Wet Tech Energy probably fabricated it and most likely the company that installed it oshore. With over 200 buoys in the Gulf of Mexico and over 100 systems internationally performing many assorted functions. From marking hazards, mooring barges and vessels, marking sub-sea wells and general navigation, Wet Tech Energy not only fabricates these custom buoys in their state of the art facility, but also has the experienced oshore anchor crews, the oshore vessel and the project managers to see to it that these wide ranging types of buoys and their respective sets of anchors from 5000lbs to the 20Ton high-holding power anchors are installed properly and most importantly safely. In addition, Wet Tech also has experienced technicians that maintain, inspect and install oshore navigational aids for over 500 oshore platforms in the Gulf of Mexico. Throughout the years, as more growth has occurred, Wet Tech has started a fabrication division, a sandblasting / specialty coatings division and a special equipment rental department to meet the needs of their customers. We had an opportunity to meet with the President/ CEO of Wet Tech Energy, Jayne Carl and discuss with her where the company started and where they are going in the cyclical industries in which they serve. “When we started this company back in 1999, we had just a small shop and a handful of employees; mostly family I might add, serving just a few oshore operators with navigational aids and service. Our rst buoys went oshore after Hurricane Lili in 2002 and from that point onward; we have been the company of choice for most of the oshore operators not only in the Gulf of Mexico, but now internationally with our expansion into the Global marketplace.” She adds, “Our growth record has been in a nutshell, remarkable, and I owe it not only to my family who has made every sacrice to build this company from the ground up, but also to my all of our loyal employees who together have become like a family who give their unequaled service to our company and provide us with the highest level of capabilities that I could ever have dreamed or imagined.” With this same sediment coming from our interview with Jayne about her employees and this family-oriented approach, we spoke a bit about what the sacrice has been like for her own family. “Operating a family owned and operated business is one thing, but a 24/7 oshore oil eld service company is entirely another animal! My husband, Don who is the General Manager has been in the oileld now for over 40 years and still is the rst one there and usually the last one to leave. My son, Todd who is the Operations Manager also has the same drive as Don and has given most of his free time to the company over the years. My daughter Tonya and her husband Paul have also given tirelessly to the company’s success as Treasurer and Vice President respectively and aside from their time, even their 3 children are up at the shop more so than some part time employees.” She adds by saying, “The family sacrice to this company has been a lot of time and energy, of lot of late nights and a lot of stress; but in the end, we wouldn’t trade it for the world.” So what’s in store for Wet Tech and what are they aiming their sites on? Having the opportunity to walk with Jayne at their beautiful campus-like facility in Vermillion Parish among the shing pond and 100 year old Oaks, she was able to expound the company’s growth oriented targets for the years ahead. With a recent North American distributorship with one of the largest Fender manufacturers in the world, Hi-Tech Elastomers; she is excited about growing their fender business with this exciting alliance. In addition the sub-sea market place is another arena where Wet Tech Energy ts the segment with their products and services already working with many of the largest players such as Oceaneering International, Boa Oshore, Cal Dive International and many more. With their own 180’ customized oshore vessel always mobilized and ready for immediate response, Wet Tech has performed many roles in rapid emergency responses concerning hazards to navigations, USCG compliance issues and also recovery of lost chain and anchor sets from the largest of ships; aside from their on-going oshore operations of installing, maintaining and relocating preset anchor systems, single point mooring systems and buoys all over the Gulf of Mexico. “Our preset anchor systems allow the largest construction barges to work in deeper and more congested oshore areas than ever before” she proudly states. “With the stricter governmental regulations also in eect, the mid-line anchor wire buoy suspension systems that we have available also have become more of a standard item than in years past; so with greater regulatory pressure, our company has simply taken our client’s changing needs and once again made them a part of our own evolution to ensure that our number one goal of client satisfaction and service is always the driving priority.” It’s amazing to see that this little family owned and operated company based in South Central Louisiana has expanded its reach to not only include all parts of the Gulf of Mexico, but now to almost every corner of the Globe. The continued quest is the journey to which this Oil Woman, Jayne Carl will enjoy watching as her family and her ‘company family’ progress into new segments of the industries that have evolved from her clients needs allowing Wet Tech Energy to continue onward, providing a wave of solutions. Jayne Carl

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JUNE 2012Jayne Carl

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Louisiana Oilman Magazine