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Changing the Status Quo in the Oil and Gas Industry p. 40Diversity and Inclusion is No Longer a Nicety; It’s a Necessity p. 16Macondo Tragedy: Lessons Learned at the Edge of Technological Envelope in Deepwater GoM p. 32Reections from NAPE Summit 2020: Interviews with LongPoint Minerals, Quorum Software and Opportune p. 26THE MAGAZINE FOR LEADERS IN AMERICAN ENERGYMarch / April 2020OilmanMagazine.comWOMEN IN ENERGY TECHNOLOGY
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Oilman Magazine / March-April 2020 / OilmanMagazine.com1IN THIS ISSUEFeatureWomen in Tech Female CIOs on the RiseBy Rebecca Ponton - pages 28–30In Every IssueLetter from the Publisher – page 2OILMAN Contributors – page 2OILMAN Online // Retweets // Social Stream – page 3Downhole Data – page 3OILMAN ColumnsDeal Flow of Q2: Josh Robbins – page 17Interview: Cody Nath, President and CEO, Rened Technologies, Inc.: Tonae’ Hamilton – page 18Women in Energy: Mark A. Stansberry – page 23A New Way to Train: Digital Training in the Oileld and Its Impact on the Workforce: Tonae’ Hamilton – page 35Europe Builds Cloud-based, Automated Supply System: Eric R. Eissler – page 39The Crude Life Conversation on The Cult of Environmentalism: Jason Spiess – page 54Guest Columns3D Printing to Open New Opportunities and Cut Down Manufacturing Costs in Oil and Gas Market: Swamini Kulkarni – page 4Advanced Technology Improves Worker Safety: Iain Cracknell – page 62020 Oil and Gas Impairments: What’s Behind the Numbers? Amy Stutzman and Lynn Loden – page 8A Look into Avoiding Costly Pitfalls – Software Evaluations and Implementations: Elizabeth Gerbel – page 10When Workers Leave: How to Keep Their Knowledge from Walking Out the Door with Them: Rick Cruz – page 12Frac Hit Crisis – Producer Solutions: Barry Barksdale – page 14Diversity and Inclusion is No Longer a Nicety; It’s a Necessity: Stephanie Hertzog – page 16How Augmented Reality Glasses Can Solve Current Challenges in the Oil and Gas Industry: Carly Kroll – page 20Here’s How the Oil Industry Can Take Advantage of the IIoT: Megan Nichols – page 22How Young Students Entering the Field Can Gain Leadership Skills: Raul Palencia – page 24Reections from NAPE Summit 2020: Interviews with LongPoint Minerals, Quorum Software and Opportune: Alan Alexeyev – page 26Macondo Tragedy: Lessons Learned at the Edge of Technological Envelope in Deepwater GoM: Lillian Espinoza-Gala – page 32Potential Failure Modes and Considerations for Reel-Lay Method of Installation: Eng-Bin Ng – page 36Changing the Status Quo in the Oil and Gas Industry: NJ Ayuk – page 40Interview: Brad Boksteyn, Inventor, Guardian CSE: Eric Eissler – page 41Why Is An E&P Recovery Slow to Materialize? Glenn Sniezek – page 43Use of Clean Energy as an Alternative for Supplying the Oil Industry’s Production Chain: Juan Zambrano – page 44The Cyber Security Problem for Oil and Gas Reneries: Damon J. Small – page 48Use of Natural Gas Production for a Thermoelectric Power Generation Plant: Andres Ocando – page 50Real-time Communication Using CAN Devices Helps Advance Solutions in Directional Drilling: Jesse Paliotto – page 53
Oilman Magazine / March-April 2020 / OilmanMagazine.com2Gifford BriggsGifford Briggs joined LOGA in 2007 working closely with the Louisiana Legislature. After nearly a decade serving as LOGA’s Vice-President, Gifford was named President in 2018. Briggs rst joined LOGA (formerly LIOGA) in 1994 while attending college at LSU. He served as the Membership Coordinator and helped organize many rsts for LOGA, including the rst annual meeting, Gulf Coast Prospect & Shale Expo, and board meetings. He later moved to Atlanta to pursue a career in restaurant management. He returned to LOGA in 2007.Mark A. StansberryMark A. Stansberry, Chairman of The GTD Group, is an award-winning: author, columnist, lm and music producer, radio talk show host and 2009 Western Oklahoma Hall of Fame inductee. Stansberry has written ve energy-related books. He has been active in the oil and gas industry for over 41 years having served as CEO/President of Moore-Stansberry, Inc., and The Oklahoma Royalty Company. He is currently serving as Chairman of the Board of Regents of the Regional University System of Oklahoma, Chairman Emeritus of the Gaylord-(Boone) Pickens Museum/Oklahoma Hall of Fame Board of Directors, Lifetime Trustee of Oklahoma Christian University, and Board Emeritus of the Oklahoma Governor’s International Team. He has served on several private and public boards. He is currently Advisory Board Chairman of IngenuitE, Inc. and Advisor of Skyline Ink. Thomas G. Ciarlone, Jr.Tom is a litigation partner in the Houston ofce of Kane Russell Coleman Logan PC, where he serves as the head of the rm’s energy practice group. Tom is also the host of a weekly podcast on legal news and develop-ments in the oil-and-gas industry, available at www.energylawroundup.com, and a video series on effective legal writing, available at www.theartofthebrief.com.Jason 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 RobbinsJosh Robbins is currently the Chief Executive Ofcer of Beachwood Marketing. He has consulted and provided solutions for several industries, however the majority of his consulting solutions have been in manufacturing, energy and oil and gas. Mr. Robbins has over 15 years of excellent project leadership in business development and is experienced in all aspects of oil and gas acquisitions and divestitures. He has extensive business relationships with a demonstrated ability to conduct executive level negotiations. He has developed sustainable solutions, successfully marketing oil and natural gas properties cost effectively and efciently.Steve BurnettSteve Burnett has been working in the oil industry since the age of 16. He started out working construction on a pipeline crew and after retirement, nishes his career as a Pipeline Safety Compliance Inspector. He has a degree in art and watched oil and art collide in his career to form the “Crude Oil Calendars.” He also taught in the same two elds and believes that while technology has advanced, the valuable people at the core of the industry and the attributes they encompass, remain the same. Innovators in the oil and gas industry are consistently pushing out technology that improves production and helps thousands of employees perform better at work, whether it’s in accounting, engineering, oileld production or at the executive level. NAPE Summit in February had several technology companies exhibiting what they do best and showcasing new features of their software lineup. It was exciting to see technology platforms embracing machine learning, data analytics and integrating IoT in many applications. OILMAN was on the ground interviewing several companies. Olivier “OT” Thierry with Quorum Software had an interesting perspective on what college graduates and employees entering the industry should focus on in the near future. He mentioned since we’re in a technology push, employees need to understand data science and analytics. You can listen to his interview and interviews with Opportune and LongPoint Minerals in this issue.Not only is the industry cyclical, as we know, it’s also diverse. Around the world, many cultures, back-grounds, women and men, share the same market dynamics that play out in the United States. Some locations better off and some more difcult than others, but as a whole, the industry embraces diversity of ideas, people, culture and gender. Our feature in this issue dives into women in energy technology written by Rebecca Ponton, author of Breaking the Gas Ceiling. It’s a great read lled with mini proles of women doing fantastic things in the industry. There are several articles with the same theme, one from Mark Stansberry, our founding contributor, NJ Ayuk, CEO of Centurion Law Group and Stephanie Hertzog, CEO of Sodexo Energy & Resources in North America. For the 10th anniversary of the Deepwater Horizon disaster, OILMAN published an article on page 32 from Lillian Espinoza-Gala remembering the 11 victims, survivors and lessons learned. Also, if you’re in Houston, the Ocean Energy Safety Institute will hold a one-day forum, tentatively titled, “Deepwater Horizon, 10 Years Later, a Stakeholder Perspective,” April 14, 2020, at the Student Center on the University of Houston main campus.MARCH — APRIL 2020PUBLISHER Emmanuel SullivanMANAGING EDITOR Sarah SkinnerASSOCIATE EDITOR Tonae’ HamiltonFEATURES EDITOR Eric EisslerGRAPHIC DESIGNER Kim FischerCONTRIBUTING EDITORS Gifford Briggs Steve Burnett Thomas Ciarlone, Jr. Joshua Robbins Jason Spiess Mark StansberrySALES Diana GeorgeTo subscribe to Oilman Magazine, please visit our website, www.oilmanmagazine.com/subscribe. The contents of this publication are copyright 2020 by Oilman Magazine, LLC, with all rights restricted. Any reproduction or use of content without written consent of Oilman Magazine, LLC is strictly prohibited.All information in this publication is gathered from sources considered to be reliable, but the accuracy of the information cannot be guaranteed. Oilman Magazine reserves the right to edit all contributed articles. Editorial content does not necessarily reflect the opinions of the publisher. Any advice given in editorial content or advertisements should be considered information only.CHANGE OF ADDRESS Please send address change to Oilman Magazine P.O. Box 42511 Houston, TX 77242 (800) 562-2340Original cover photo by Daniil Peshkov – www.123RF.comLETTER FROM THE PUBLISHERCONTRIBUTORS — BiographiesEmmanuel Sullivan, Publisher, OILMAN Magazine
Oilman Magazine / March-April 2020 / OilmanMagazine.com3Week Ending February 28, 2020DIGITAL DOWNHOLE DATAGulf of Mexico: 21Last month: 21Last year: 19 New Mexico: 115Last month: 109Last year: 108 Texas: 400Last month: 395Last year: 508 Louisiana: 50Last month: 52Last year: 64 Oklahoma: 48Last month: 53Last year: 117 U.S. Total: 790Last month: 790Last year: 1,047OIL RIG COUNTS*Source: Baker HughesBrent Crude: $56.04Last month: $57.77Last year: $65.03 WTI: $51.36Last month: $51.58Last year: $57.21CRUDE OIL PRICES*Source: U.S. Energy Information Association (EIA)Per BarrelGulf of Mexico: 60,176,000Last month: 56,636,000Last year: 59,101,000 New Mexico: 32,835,000Last month: 31,777,000Last year: 25,704,000 Texas: 165,835,000Last month: 159,536,000Last year: 151,761,000Louisiana: 3,702,000Last month: 3,648,000Last year: 3,995,000Oklahoma: 17,672,000Last month: 17,577,000Last year: 18,113,000 U.S. Total: 396,156,000Last month: 385,884,000Last year: 373,164,000CRUDE OIL PRODUCTION*Source: U.S. Energy Information Association (EIA) – December 2019 Barrels Per MonthGulf of Mexico: 85,847Last month: 81,701Last year: 88,532 New Mexico: 168,889Last month: 158,701Last year: 137,103 Texas: 801,783Last month: 771,271Last year: 694,061Louisiana: 285,343Last month: 277,082Last year: 249,249 Oklahoma: 271,479Last month: 265,731Last year: 266,174 U.S. Total: 3,198,744Last month: 3,107,342Last year: 2,951,941NATURAL GASMARKETED PRODUCTION*Source: U.S. Energy Information Association (EIA) – December 2019Million Cubic Feet Per MonthConnect with OILMAN anytime at OILMANMAGAZINE.com and on social media RETWEETS@OilmanMagazine#OilmanNEWSStay updated between issues with weekly reports delivered online at OilmanMagazine.com SOCIAL STREAMfacebook.com/OilmanMagazine
Oilman Magazine / March-April 2020 / OilmanMagazine.com4OILMAN COLUMNAre we completely and unequivocally dependent on the oil and gas industry? Yes. In fact, the global demand for crude oil observed was more than 99 million barrels per day in 2018 and the demand is increasing every year. While many countries want to end their addiction to oil, the shale gas revolution compels countries to look for more basins to boost production. Over the last few years, technology has become an inseparable part of every industry and major market players, such as Shell and BP, are relying on it more and more. The advent of 3D printing in the oil and gas industry is one such example. The introduction of 3D printing in the industry turned into a blessing for product development. With the increasing demand for prototyping, companies expect faster production of their designs and an accelerated design process. Fast prototyping holds the highest importance in the oil and gas industry and 3D printing helps speed up the process. According to Allied Market Research, the global 3D printing in the oil and gas market is expected to gain more traction in the coming years. The fast prototyping, reduction in down-time, and reduction in delivery lead times are the major drivers for the increased popularity of 3D printing in the oil and gas market.What are the Prime Challenges?Although the innovations in 3D printing technology could make a profound effect on the oil and gas industry, there are many challenges that we need to overcome. For the successful incorporation of 3D printing, input from the eld workers is vital. Furthermore, the initial stage involves the identication of those parts that could benet from 3D printing. On the other hand, there is a question of legal and regulations as 3D printing injects efciencies into parts acquisition and distribution. Thus, it could be challenging to complete the transition from using 3D printing for prototyping to using it in the actual production of industrial parts. Moreover, the end product must meet the safety standards and robust performance similar to conventional parts. What are the Major Opportunities?1. Fast ProductionThe most obvious benet of additive manufacturing is its ability to give mo-mentum to the product development process. Using additive manufacturing, engineers and product designers can visualize, validate, and develop their designs and cost-effectively. Moreover, in the oil and gas industry, it can be leveraged to unlock new opportunities and forecast any potential risks at the design stage itself before production. There is already precedent in the market. Last year, Siemens launched its Additive Manufacturing Network, which is a cloud-based solution that enables collaboration between suppliers and engineers for the creation of 3D printed parts. Siemens’ oil and gas division and ASME (American Society of Mechanical Engineers) together developed additive manufacturing training services that could be provided through Material Solutions. 2. Economical Low-volume ProductionCompared to other industries such as health-care, the oil and gas market has been a bit slow to adopt additive manufacturing. However, the technology holds great potential. It is evident that conventional manufacturing is unsuit-able for low-volume production, due to high tooling costs and the need for long lead times. On the contrary, 3D technology could help to cut down lead times by delivering parts in days instead of weeks and lowing production costs. Moreover, 3D printing could be used to manu-facture complex and specially-designed parts in small quantities while using materials efciently. Most of the companies have realized this potential of 3D printing technology and have been using it to manufacture valves, pumps, turbomachinery, and gas turbine nozzles. 3. Simplifying Supply Chain3D printing could show a protable impact on supply chain management as well. The increase in a shift toward on-demand production of spare parts. This is benecial for the offshore regions where the supply of replacement parts is limited and logistical issues cause delays. 3D printing to produce parts at request could help reduce the time and expense related to the replacement of spare parts. On the other hand, the oil and gas operators require to maintain large inventories of spare parts to deal with unpredicted downtime. Using 3D printing technology, most of the spare parts can be reverse engineered to create on-demand digital inventory. This reduces both storage costs and warehouse stock. That being said, 3D printing could help the market players in the oil and gas industry to streamline the operational process and cut down manufacturing costs signicantly. Moreover, it could help new, more efcient ways to manufacture and maintain equipment. In a matter of years, 3D printing in the oil and gas market would be the norm, dominating the production as well as the supply chain. In fact, over the coming years, several applications and opportunities would create themselves with the use of 3D printing technology. Moreover, the oil and gas industry would be more open to 3D printing technology than ever. Swamini Kulkarni holds a bachelor’s degree in Instrumentation and control engineering from Pune University, and works as a content writer. She is deeply fascinated by the impact of technology on human life, and loves to talk about science and mythology. When she is not glued to the computer, she loves to read, travel, and spend time thinking how she could read and travel more often. 3D Printing to Open New Opportunities and Cut Down Manufacturing Costs in Oil and Gas Market By Swamini KulkarniPhoto courtesy Allied Market Research
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Oilman Magazine / March-April 2020 / OilmanMagazine.com6OILMAN COLUMNOILMAN COLUMNAdvanced Technology Improves Worker Safety By Iain CracknellImproving worker safety on offshore assets has long been a challenge for the oil and gas industry. Statistics on injuries from the U.K. Offshore Sta-tistics & Regulatory Activity Report 2018 indicate there were 106 reported injuries. The U.S. BSEE (Bureau of Safety and Environmental Enforce-ment) reported a similar number of injuries in its most recent annual report for 2016, listing 151 recorded injuries and two fatalities. Although the number of injuries is trending downward – with recent incidents totaling less than half those re-ported in 2007 – there still are far too many. Ac-cidents continue to happen, particularly in the red zone on the drill oor, where there is a greater likelihood of personnel and machine interaction.The BSEE report states that because workers on the U.S. Outer Continental Shelf continue to interact with powerful equipment capable of ex-treme force as drilling extends into deeper water and farther offshore, the risk of injury “remains a constant concern” in a work environment where “dangerous activities are commonplace.”‘Intelligence’ Mitigates HazardsDespite the inherent challenges of offshore operations, the BSEE report notes that progress is being made and points to technology as the primary driver for safety improvements. Greater precision and predictability and real-time moni-toring are changing the face of working condi-tions offshore. The offshore oil and gas industry is in the throes of a digital revolution. Everyone and everything is becoming connected. It is apparent that capital-izing on advances in digital technology and data analytics is leading to improvements, and that includes systems used to manage worker safety.Tackling Red Zone ChallengesSpecic safety improvements initiated by Seadrill, together with the Marsden Group, a Houston-based data science company, are targeting red zone management. Light Detection and Ranging (LiDar), advanced vision processing and inte-grated high-powered edge computing have come together in a system called Vision IQ, which improves visualization and personnel manage-ment on the drill oor. The LiDar system provides up to 360-degree coverage on an area by emitting light and measur-ing the reection to calculate distances accurate to a few millimeters. This generates sensor read-ings that are analyzed in real time, with algo-rithms identifying and tracking the location and movement of people and equipment.Implementing the SystemWork in a lab at The Marsden Group allowed sys-tem developers to gure out how to use machine learning to track people in the red zone and to reliably distinguish between a person and some-thing else, like equipment, which predominantly moves on xed axes. When the Vison IQ system is deployed on the rig, it learns more about environment in which it is installed and becomes increasingly more adept at identifying potentially unsafe activity.Vision IQ was installed for the rst time on Seadrill’s West Neptune 6th generation drillship in 2018. The rst step in the process took the form of a “site survey” carried out by experts from The Marsden Group, who physically as-sessed the drill oor on the West Neptune to determine the best placement for the heads – the housings for the LiDar and cameras. Once they identied the areas that would provide the best visualization, they marked the places where brackets would be used to hold the equipment in place and entrusted the drillship crew with running the necessary power cables to those locations.While the engineers returned to shore to put together a materials list and a plan for installing the heads, the crew ran the cables in preparation for the installation. In all, three heads would be installed, one above the driller cabin and one at each end of the drill oor. Each one contained three cameras and one live LiDar output.At the time of the installation, a crew of two installers and a programmer from The Marsden Group and a supervisor from Seadrill ew to the rig with the equipment. Once onboard, they immediately set to work, completing the physical installation in less than four hours thanks to the prework carried out by the onboard crew.Because this was the rst installation, the system was set to monitor red zone activity for 90 days. Data were collected and stored on the rig, then downloaded every 20-30 days. The data under-went analysis for continuing model development with the goal of executing a full-scale “go live” in March 2020, when the driller will begin using the system to its full capacity for real-time safety monitoring.At that time, the driller, familiar with the user interface, will be able to set red zone parameters for different drilling activities so surveillance can be customized to offer the highest level of safety monitoring. The ‘West Neptune’ 6th generation drillship was the first Seadrill asset to be outfitted with the Vision IQ safety system. Photos courtesy of Seadrill
Oilman Magazine / March-April 2020 / OilmanMagazine.com7OILMAN COLUMNOILMAN COLUMNLONG-TIMERELIABLE A-T CONTROLSTRUNNIONMOUNTEDBALL VALVES9955 International Blvd. Cincinnati, OH 45246 (513) 247-5465 www.atcontrols.comin stockWith Vision IQ, the driller has a clear picture of workers on the drill floor and is alerted immediately when anyone enters the red zone.Because the Seadrill vessels have very similar designs, this process will be the foundation for standardizing subsequent Vision IQ system setups on additional assets and establishing associated policies and procedures that will establish a common operating philosophy. An identical process will be followed for the rst three installations.In all, Seadrill plans to install this system on 12 drillships, semisubmersibles and jackups over the next year. Delivering Improvements in Safety MonitoringWith the introduction of Vision IQ, the industry now has a safety system that uses advanced technology and engineering for the rst time for red zone monitoring. A function that previously relied on procedures, processes and personnel for safety management can now be performed with state-of-the-art technology to create a safer work environment.Through its partnership with The Marsden Group, Seadrill is pioneering technology development to address a serious issue and has committed to voluntarily sharing the technology behind Vision IQ with its peers to improve worker safety across the industry.Iain Cracknell is the Director of Communications for Seadrill Limited. He is an Oil and Gas veteran with over 20 years’ experience in the industry having previously worked for TOTAL and Fina Inc.
Oilman Magazine / March-April 2020 / OilmanMagazine.com8OILMAN COLUMN2020 Oil and Gas Impairments: What’s Behind the Numbers? By Amy Stutzman and Lynn LodenFind out why some energy companies are con-sidering potential oil and gas impairments amid low oil and gas pricing, and what key consider-ations go into conducting these impairments in order to comply with debt covenants and inves-tor reporting requirements. Public companies are busy preparing their year-end SEC lings and there is no doubt that executives are discussing potential impairments of oil and gas assets due to the current climate in the energy market. Chevron, Shell and Range Re-sources, among others, have already announced impairments expected in the fourth quarter of 2019. Similarly, privately held companies are facing the same issue in preparing nancial statements to comply with debt covenants and investor reporting requirements. One factor inuencing impairments are crude oil and natural gas prices. According to the U.S. Energy Information Administration, WTI (West Texas Intermediate) crude spot prices averaged $56.98/bbl (per barrel) in 2019, down $7.95/bbl, or 12 percent, from 2018’s average spot price of $64.94/bbl. Henry Hub natural gas spot prices averaged $2.57/MMBtu (million British thermal units) in 2019, down $0.59/MMBtu from 2018 levels. Oil futures indicate more price declines are likely. As shown below, NYMEX WTI crude futures are in an expected decline through 2023 from $58.83/bbl to $52.84/bbl. Meanwhile, NYMEX Henry Hub natural gas futures indicate prices in the range of $2.29/MMBtu to $2.60/MMBtu. Due to these price declines, some oil and gas reserves are no longer economically viable. Capital to support a drilling program is difcult to come by as investor sentiment for oil and gas continues to wane in both the public and private sectors. Further, many companies are operating with reduced borrowing capacity under their reserve-based bank loans following the fall redeterminations. As a result, companies have shifted their focus to capital discipline and improved returns, changed their development plans to align with investor demands and eliminated drilling locations and their associated future cash ows from their reserve reports. Key Considerations in Understanding Oil and Gas ImpairmentsThe media has recently reported that oil and gas impairments are expected. For examples, see these articles from the WSJ, Reuters and Yahoo! Finance. A theme that often gets overlooked driving impairments, however, is the accounting methodology, because, let’s face it, who wants to read about accounting?! Even so, nancial statement users should understand the basics of the impairment calculation because the method-ology used impacts the results and timing of the impairment. The WSJ article states: “Signicant volatility in the oil price could open a path for producers to argue that big impairments aren’t required this year, but this would be a mistake.” In reality, there are specic requirements regarding when and how to calculate an impairment, so avoiding or postponing impairments is difcult. Attempt-ing to do so would likely result in questions from the SEC for public companies.It’s important to understand how underlying causes of the impairment will impact a com-pany’s future performance. Impairments are non-cash expenses, but that doesn’t mean they should be dismissed. In fact, the cash was already spent previously when investments in oil and gas properties were made and the related expense is recognized over time as depreciation, deple-tion and amortization (DD&A). An impairment causes that DD&A expense to be recognized immediately. Oil and gas companies use either SE (Successful Efforts) or FC (Full Cost) methodologies to ac-count for oil and gas properties. The chart below summarizes key differences in impairment under the two methodologies. Even variables such as the price, discount rate and the type of reserves that may be included in assessing impairment are different under each methodology. Income Tax ConsiderationsIn most cases, income tax law doesn’t follow U.S. GAAP in allowing a current year tax deduction for property impairments due to the presence of more stringent tax rules for recording losses. This results in higher taxable income than pre-tax book income for the period. The cor-responding change in the deferred tax liability (or increase in deferred tax asset) from this differ-ence in tax and book income should be recorded using the marginal tax rate and not the estimated annual effective tax rate. While this in and of itself doesn’t have a direct impact on an entity’s effective tax rate (because the difference is deemed temporary), preparers of nancial statements must consider the need to adjust or record a valuation allowance at that time if the impairment causes the (impaired) book carrying value of the properties to exceed their (unimpaired) adjusted tax bases. The SEC staff tend to interpret U.S. GAAP rules rather Photo courtesy of welcomia – www.123RF.comSource: Bloomberg, 12/31/2019
Oilman Magazine / March-April 2020 / OilmanMagazine.com9OILMAN COLUMNconservatively in this area, from our experience. The presence of a valuation allowance would reduce the expected tax benet to record at the time of the impairment.The main distinction to keep in mind is that FC and SE entities have a different mechanism for recording the gross impairment to properties. SE entities reect changes in deferred taxes as a part of a U.S. GAAP income tax provision, which is based on changes in carrying value without regard to the effect on income taxes (which is computed separately). FC entities look to SEC guidance to determine if a gross up to the property impairment is required. This latter point is often overlooked by entities and we are aware of cases where the SEC has required restatements of periods with such impairments for this misreporting of pre-tax and tax expense line items. For a deep dive into the tax effects of oil and gas impairments, please read “Revisiting the Tax Effects of Oil and Gas Property Impairments.” Amy Stutzman is a Managing Director in Opportune’s Complex Financial Reporting group with nearly 20 years of experience in technical accounting and SEC reporting. Amy leads teams that support executive management in understanding the structure and implications of complex transactions such as nancings and acquisitions. She has strong technical skills and analytical ability and is the rm leader on all U.S. GAAP advisory matters. Prior to joining Opportune, Amy managed the nancial reporting group for Apache Corporation in Buenos Aires, Argentina, and was an audit manager in PricewaterhouseCoopers’ energy practice. Outside of Opportune, Amy is an active member of the Tulsa Energy Council and the Women’s Energy Network. She is a speaker for industry groups such as the AICPA, OSCPA, Women’s Energy Network and University of Tulsa’s Master of Energy Business Program. She serves as Past-Chair of Board of Directors for Street School, Inc., a high school for at-risk youth. She is also uent in Spanish.Lynn Loden is a Managing Director in charge of Transaction Services and Tax Advisory for Opportune. He has over 30 years of corporate tax and accounting experience with Big Five public accounting and similar professional services rms. Prior to joining Opportune, Lynn served clients in both relationship and specialty roles ultimately as a partner at Arthur Andersen and Deloitte, and as a Managing Director at Alvarez & Marsal. He has advised both public and private companies in the oil and gas, oileld service, public utility and service industries. Lynn has signicant experience in mergers and acquisitions, roll-ups, spin-offs, IPOs, lease and project nance, and troubled debt restructurings and bankruptcies. His assignments include engagement and transactional responsibility for tax planning and compliance matters, accounting for income taxes, leases, transactional due diligence, representation before the Internal Revenue Service national ofce for ruling requests, valuation engagements and expert testimony before bankruptcy and other courts. He received his BBA in Accountancy from the University of Mississippi and became a CPA in 1979. Lynn is a member of the American Institute of Certied Public Accountants and holds active CPA licenses in the states of Mississippi and Texas. He is also a FINRA Registered Investment Banking Representative and a holder of Series 79 and 63 licenses. Key Differences in Determining Oil & Gas ImpairmentsSuccessful Efforts Full CostHow are properties grouped for the impairment calculation?Usually by Field By CountryHow often is impairment assessed? Only when impairment indicators (i.e., price declines, changes in drilling plans) exist QuarterlyWhat book value is assessed for impairment?Net book value of individual elds Net full cost pool book value less deferred income taxWhat reserve value is used to assess whether or not book values are impaired?Undiscounted pretax net projected future cash ows from proved reserves.Risk-adjusted probable and possible reserves may be included in certain situations. Estimates and development plans utilized should be reasonable in relation to the assumptions used by the entity for other purposes (e.g., internal budgets, projections regarding the realization of deferred tax assets, and information communicated to the company’s board of directors).A formulaic limitation on the net book value of capitalized costs prescribed by the SEC commonly known as the “Ceiling.”The Ceiling is equal to: 1) present value of proved reserves’ estimated future net revenues; plus2) lower of cost or estimated fair value of unproven properties included in the costs being amortized; and cost of properties not being amortized; less3) the book-tax differences related to, and any NOL’s generated by, oil and gas properties currently included in the company’s depletion calculation.What price and discount rate are used to determine reserve estimates?Forward market strip price curve and the company’s credit-adjusted market discount rate as of the measurement date (e.g., quarter- or year-end). Hedge-adjusted prices are not considered.Arithmetic average of the trailing 12 months’ rst-of-month pricing (“SEC Pricing”). Cash ows must be discounted at 10% (“PV10”). Hedge-adjusted pricing is only available if the derivatives were formally designated as cash ow hedges for accounting purposes.How is impairment measured?Book value less discounted pretax value of net projected future cash ows (“fair value”)Excess of “Full Cost Pool” book value over the CeilingWhat about unevaluated/un-proved properties?Unevaluated properties are assessed on a property-by-property basis, and if not practical, companies should assess in the aggregate or by groups.Unevaluated properties are assessed on a property-by-property basis, and if not practical, companies should assess in the aggregate or by groups.
Oilman Magazine / March-April 2020 / OilmanMagazine.com10OILMAN COLUMNWith the sheer number of competing software in the industry, on top of new software being developed rapidly, it’s quite challenging for companies to determine the right solution for their business. Because of the competition, dur-ing the sales process, vendors tend to showcase the software’s latest and greatest features as the key differentiating factor and value add. Although at face value, considering the software’s advanced features is a positive implication of the vendor’s capabilities, it is not a true indicator of whether the software will solve the company’s unique and complex problems. Rather, having the right approach, tools and engaging the right people can minimize the inevitable nancial risk companies meet when selecting/implementing new software and provide a greater ROI as a result.The Right ApproachBefore considering a new software, companies must identify and dene their problems by taking inventory of their current business processes, detecting gaps/pain points, and locating their data. In conjunction, they should assess their software integrations, evaluate current costs, user count, and create a projected budget to cover implementation and maintenance fees.After gathering information, the company must map the project scope and distinguish between the most critical items to x vs. the “nice-to-haves.” This will help drive conversations with vendors and enforce tight controls around overspending. To set a strong project foundation, the company should also outline their intended success factors and expected outcomes once the software is fully integrated. The Right ToolsAs a result of understanding the project scope, success factors, and key problems, companies should create a list of detailed business requirements that will be treated as the agenda and scoring document during software demonstrations. These tailored questions ensure the right issues are being addressed so that companies aren’t being sold on certain features they ultimately will not use. Companies should also create a list of questions to touch on during reference calls to properly evaluate other people’s experience with the software. Getting real, peer-to-peer insight, coupled with quantitative scores of how each software measures up to the business requirements will truly illustrate whether the software is the right t.The Right People It is imperative that the leadership team includes key stakeholders and users during every phase of the software evaluation process. These team members understand the business from a granular level and can therefore raise additional items to consider. However, to avoid overspending, leaders must always reinforce the agreed upon project scope and success factors when the desire for additional enhancements or features arise. To ensure the company optimizes the use of the new software upon implementation, users must go through a robust testing and training phase. Testing the software validates the functionality works as expected and ensures the data converted correctly. The users also need to be fully trained based on their learning style in order to perform their jobs at GO-LIVE. Using the software to its maximum potential with accurate data will reduce the amount of post-implementation support and ultimately control costs.Ultimately, the software companies use to run their business will frame how the com-pany operates and contribute to their success. Overspending during the software selection and implementation phase is easier than people think, and when a methodological / robust approach is not considered, seemingly small costs and fees end up accumulating and can set the business back. Avoid costly pitfalls by strategically outlining your business require-ments, engaging the right people, and sticking to the project scope. As a result, your business will reap the benets of the software and use its resources to continue moving forward.Elizabeth A. Gerbel founded EAG Services in 2003 with a vision to establish a unique consulting organization, one with deep industry knowledge to effectively partner with oil and gas clients and provide superior and cost-effective services. Elizabeth currently serves as the Founder and Chief Executive Ofcer of EAG Services and EAG 1Source (a full-service IT and Business Process Outsourcing rm). She is responsible not only for the company’s strategic leadership and vision, but also for providing guidance, direction and expertise to clients and team members. Elizabeth has over twenty years of ERP, Land Management, Production Management and custom IT solution design experience working with Fortune 500 and Mid-Size E&P Independents. She often acts as a thought leader on EAG’s engagements assisting with innovation strategy, delivering presentations on technology trends and keeping abreast of innovations to support client initiatives. Under Elizabeth’s direction, EAG has grown to become the trusted, independent business and technology solutions source for the energy industry. A Look into Avoiding Costly Pitfalls – Software Evaluations and Implementations By Elizabeth GerbelPhoto courtesy of rawpixel – www.123RF.com
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Oilman Magazine / March-April 2020 / OilmanMagazine.com12Like many others, the oil and gas industry is likely to be impacted by the impending departure of an aging workforce over the next few years. While there are ample warm bodies to replace them – Millennials are now the single largest generation in the workforce – it isn’t just what they do that will be missed. It’s what they know. When long-time employees walk out the door for the nal time, many will take decades of institutional knowledge with them. That’s because much of the knowledge they have accumulated (and their organizations take for granted) is unstructured, which means it is not readily available to others across the organization. This becomes quickly apparent when a question comes up and the statement, “We used to ask Bob, but he retired last month” becomes a familiar refrain. The good news is that companies can hold onto Bob’s – or Jane’s or Alan’s – deep understanding of operations through a strategic approach known as EIM (Enterprise Information Management). By applying EIM to process and data management, organizations can retain hard-earned institutional knowledge while creating a foundation to deploy scalable solutions, such as work automation and business intelligence, that deliver a competitive advantage. How to Replace a Seemingly Irreplaceable Worker?Spending decades on a job would give any worker a hard-to-top knowledge set. Consider a longtime operations manager. Monitoring a facility’s assets has been this person’s life 12 hours a day for 30 years. They are charged with the care and feeding of this unit. They understand how it needs to run, and how even a small change could have an impact. Now imagine trying to insert someone new in their place. Without somehow capturing their thought process and experiences, getting new workers up to speed as they assume their predecessor’s responsibilities will inevitably be painfully disruptive for the organization, and discouraging to the new employee. Capturing and sharing knowledge within the workforce through EIM begins with creating a clear denition of the objectives, associated processes and information needed to get the work done (i.e., process mapping). Now new workers know where to go, where to look and what to look for—even in the absence of “Bob.” Secondly, data must be recognized as an inherently valuable asset that, just like other assets, requires a business owner and maintenance or stewardship. Data, used as inputs and outputs to processes, is the supporting basis for communicating in a common language and capturing knowledge. It should be a primary responsibility for any data steward to apply standardization to this language. From there, the organization can better execute data mapping and lineage: determining what information is needed to perform different work processes, the current sources of this information, and number of steps it requires to get it. This distills data to the most accurate needed to perform the job right in the right amount of time.Starting the (Incremental) JourneyTransforming into an EIM-driven organization, which demands trusted data and accurate information, is a marathon, not a sprint. The prospect is often overwhelming at rst, as many leaders believe it will simply cost too much, take too long or add even more responsibilities to their already busy staff. A simple exercise to discover where a company should begin the EIM journey is to examine what is involved in getting certain projects off the ground—such as putting together a work package. If planners must go to ve different places for data, data management must rst be improved. In another test, ask operators how they ascertain the health of certain equipment, such as a pump. When Workers Leave: How to Keep Their Knowledge from Walking Out the Door with ThemAn information management approach to data can help companies capture and structure institutional expertise By Rick CruzOILMAN COLUMNPhoto courtesy of Elnur Amikishiyev – www.123RF.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com13OILMAN COLUMNWill they all supply the same answer? Will they all go to the same source to get the answer? Any variation in the answers is a tell-tale sign of poor knowledge management (not to mention the operational risks it poses). If answers and data sources are uniform, then measure how efcient the process of measuring the health of an asset is. This will identify if an issue exists in the processing of the data. If there are issues, the organization can begin dening and visualizing process and success metrics. No matter size or type of an EIM initiative, the following best practices will help organizations realize the benets of this approach sooner: Engage stakeholders and identify sponsors. Build awareness and management support for structuring information as it relates to work or operating priorities.Assess the current state. It’s imperative to know where you are, before you can gure out where you need to go and how to get there.Set a roadmap. Sometimes the journey is a straight shot, and other times not so much. In either case, having a plan helps to get everyone there together. Scope for success. Keep work deliverables and schedules manageable, so that you don’t have to sacrice quality.Deploy with rigor. Nothing can derail an EIM movement or Digital Transformation project like veering from the design, which causes undesirable delays, and re-work down the road.Design for measures and feedback. Be able to produce reports and measures that allow you to see where improvement areas exist and when success has been achieved. Don’t forget to allow for feedback, a.k.a. contextual knowledge, as part of the processBeyond knowledge transfer: automation and innovationOnce companies have a clear understanding of the work required, and data/information is structured to support completing that work, now attention can be turned to analyzing which processes are candidates for automation. Even areas that are consistently well-executed should be assessed to see if manual steps can be automated for increased efciency and quality. Essentially, the goal is to apply a digital solution to old problems. EIM is the structure that enables that solution—because when data is well ordered, structured and trusted, companies can blueprint how they work. Of course, there will always be an impact when great workers leave an environment. But with EIM foundational principles in place, companies can maintain much of their institutional knowledge to both mitigate risk and maximize the opportunity for improvement. Rick Cruz is Managing Director, Global Solutions at CTG. During his over two decades as an oil and gas industry and software solution expert, Cruz has spearheaded design and delivery for a broad range of projects to help energy companies increase innovation and market position through technology-based strategic platforms. SUBSCRIBE TODAY!Get the Oil & Gas news and data you need in a magazine you’ll be proud to read. To subscribe, complete a quick form online:OilmanMagazine.com/subscribe Editor@OilmanMagazine.com (800) 562-2340 Ex. 5
Oilman Magazine / March-April 2020 / OilmanMagazine.com14OILMAN COLUMNFrac Hit Crisis – Producer Solutions By Barry BarksdaleBlow outs are typically associated with the perils of drilling, but these days there is a looming threat to existing production. Decades of downspacing in many U.S. basins have resulted in a large-scale problem for the industry where blow outs, water outs, and other adverse, sometimes catastrophic events can and do happen to offset wells during hydraulic fracturing. The extreme pressure generated from pumping thousands of gallons of uid into a wellbore can have unintended consequences in the form of a fracture hit, or frac hit, that forces uids, gas, and water upward in wells thousands of feet away. Frac hits are a double-edged sword. Operators sometimes report improved production after a hit. Either way, a frac hit is an uncontrolled well event that the North American oil and gas industry increasingly struggles with.From drilling and completion to production and eld operations, the oil and gas business is laser focused on controlling equipment and processes in order to protect people, the environment, and capital investments, which is why the uncontrolled and unpredictable nature of frac hits is so problematic. The role and importance of hydraulic fracturing is indisputable, perhaps the single most critical process that triggered the Shale Revolution and emergence of U.S. energy dominance. At the same time, fracking injects unwanted uncertainty and interference with neighboring wells.It’s all about location, location, location as realtors often say. The frac hit crisis has its epicenter in the Permian Basin with the problem spreading to the Eagle Ford and beyond. The shale reservoirs of these regions that make fracking so effective also make frac hits more likely to occur. Spacing in the Delaware Basin or Lower Eagle Ford has become increasingly tight, with some laterals packed within the length of a football eld. These tightly spaced laterals that make fracking so effective can stack or horizontally position wellbores very close together. This combination of geology, spacing, and stacking are a perfect recipe for well interference.On the production side, frac hits can at worst blow out and wreck long-term production efcacy, and at best stimulate and increase production in rare cases. It’s a gamble as to what will happen, which is why operators often choose to shut-in their wells to avoid damage from a frac hit. Frac hits also pose similar risks during other phases of the well life cycle, including drilling, completion, drill-out, and owback.In the U.S. shale plays, where close well spacing and stacking are common, there is a very real crisis brewing. With ever decreasing surface spacing and increasing lateral lengths, the situation is starting to resemble a pressure cooker. At a macro level, though, the threat of frac hits is partly a function of state and local regulation. Texas tends to be very exible with surface permitting, allowing for the closely packed wells that simultaneously make the state the dominant North American producer while creating massive potential for well interference. In contrast, Colorado’s DJ and Niobrara Basins are relatively unaffected by frac hits due to the strict regulations imposed on well spacing. However, the pervasive frac hit crisis is already spreading beyond Texas with North Dakota’s Bakken joining the Permian and Eagle Ford as frac hit hot spots. The economic impact of frac hits is twofold. First, operators impacted by a frac hit must contend with damage to wellhead, wellbore, and pay zones. In severe cases, that might require a complete workover or recompletion, costing an operator millions. Secondly, mitigating the impact of frac hits by shutting-in a well has an immediate impact on a producer’s bottom line. Today’s multi-stage frac jobs can take days or longer to complete, in which time production and sales are shut in. Given the continued momentum of drilling, the cumulative economic impact of frac hit damage and shut-in production is staggering.If shutting in a well is the solution to protect producing offsets during a frac job, knowing Photo courtesy of PDS Energy InformationMap-based dashboard showing potential well interference from nearby completion operations.
Oilman Magazine / March-April 2020 / OilmanMagazine.com15OILMAN COLUMNwhen to shut in is critical. Even 5 years ago, there was little warning for producers. Even staying diligent about consistently monitoring permits and publicly reported completion dates, pumpers who spot a rig going up near your property may have been your only defense. Even with public data at your ngertips, permits and completion dates are always subject to constant change. The situation was reactive, requiring producers to pick up a phone and reach out to their peers in order to coordinate shut-ins around a frac schedule.Transitioning to a more proactive approach, a small number of Permian operators created an informal coalition with the goal of sharing their frac schedules and mitigating the eco-nomic impact of interwell pressure communi-cation. Members of the coalition approached the problem in different ways, with many in the Delaware sub-basin relying on e-mail to exchange spreadsheets containing location and dates of planned hydraulic fracturing. This in-formation was manually collated and loaded into GIS applications to determine whether or not a frac job would impact a producer’s acreage. This decentralized approach was time-consuming, lacked standards, and was prone to human error.In contrast, Permian frac hit coalition members in the Midland sub-basin and took a more cen-tralized approach by setting up a dedicated FTP server. Completion schedules were uploaded to this server where spreadsheets could be bulk downloaded. However, the Midland group encountered many of the same challenges as the Delaware group, including lack of consis-tency, multiple document versions, and limited governance. Location of the FTP server also switched from one producer to another, making it uncertain as to who would own and operate the required infrastructure in the long-term.Recognizing the need for a more structured, transparent, and scalable solution to sharing frac schedules, one of the largest operators in the Permian Basin set out to develop an internal software application to enable coalition partici-pants to key in their planned completion activi-ties rather than relying on spreadsheets. The application would provide a number of benets, including the ability to store frac schedule data in a database for rapid reporting. It would also allow participating operators to access frac schedules remotely with a web browser.As the well interference problem spread across the Permian Basin, more and more operators needed to coordinate hydraulic fracturing operations. The problem was too big for the operator developing the well interference application, who realized the company would face mounting complexities for administration and upkeep of software that would potentially serve hundreds of producers. Questions about the sustainability and stewardship of the envisioned well interference application led the coalition to nd a permanent solution that would open up the benets to the entire Permian Basin. The answer to a long-term solution for mitigating the impact of Permian frac hits would leverage a reciprocal well data sharing service already used by many of the coalition producers. Operated by PDS Energy Information, the Well Data Exchange is widely used across the oil and gas industry to seamlessly share structured and unstructured drilling, completion and production information between operators and their partners. Recognizing that the PDS Well Data Exchange offered the reach, security, and commercial-grade infrastructure needed to manage the large-scale frac hit problem, the coalition approached PDS who took over operation and development of the well interference application. PDS deployed the application on its existing Well Data Exchange network and continued to develop enhancements and functionality. Called the FracX (Frac Interference Exchange), the new data exchange is provided as a no-cost service to the oil and gas industry by PDS. Building on the initial vision of the Permian coalition, FracX includes granular access control and new automation features that enable completion data to be seamlessly exchanged between participating operators. Importantly, frac schedules that are manually loaded or automatically imported into FracX are normalized, providing a standard dataset that accelerates the sharing and coordination of completion activities between companies.Today, the PDS operated Frac Interference Exchange is used by every major Permian producer. The explosive growth in operator adoption reects the urgency in the region to proactively track potential frac hits with similar adoption being seen in the Eagle Ford/Austin Chalk along with interest in the Bakken and Haynesville.FracX users can contribute their completion schedules to the exchange either by uploading a spreadsheet using a web browser or by auto-matically exporting planned well locations and completion dates from their GIS system. This data is then automatically synchronized with the exchange by FTP or API data transfer. On the receiving side, producers can view completion information in a web browser, which provides a map-based interface for quick look analysis. This information can also be automatically downloaded and imported into an operator’s GIS system where potential well interference can be visualized and precisely tracked.By accelerating collaboration and elevating condence in data, FracX helps oil and gas companies in a number of important ways that minimize the impact of frac hits. Operators who submit their completion schedules contribute to the common benet of all producers and can proactively work with nearby offset producers even if those producers are not yet on the exchange or have not yet contacted them for a variety of reasons, including change of ownership. FracX helps producers better understand whether or not a shut-in is required. If a shut-in is required, the system facilitates coordination between the producer planning a frac operation and all nearby producers so that the window of time when production is ofine is kept to a minimum.Collaboration is the ultimate answer to the pervasive frac hit crisis, which may just be getting started. The initial instinct of the Permian frac hit coalition to pick up a phone and work through a solution was the right one. Innovation has been the game-changing component that accelerates that collaboration so producers can nally get ahead of the frac hit problem on a large scale.Barry Barksdale founded PDS in 1990 and continues to serve as President. From 1996 to 2008, Mr. Barksdale served as a consultant and expert on numerous royalty cases where the PDS Posted Price Database was the de facto standard database for such litigation. Prior to founding PDS, Mr. Barksdale had a variety of roles around crude gathering and gas gathering systems. He attended the University of Texas at Austin and continues to hold out hope for the return of their football program. FracX enables producers to easily share completion schedules and monitor planned hydraulic fracturing activity.
Oilman Magazine / March-April 2020 / OilmanMagazine.com16OILMAN COLUMNDiversity and Inclusion is No Longer a Nicety; It’s a Necessity By Stephanie Hertzog A few years ago, a step toward diversity and inclusion in the oil and gas industry meant a young, female crew member on a frac pad received her own portable toilet while the other 100+ male crew members shared three or four. The animosity among the men was palpable. The oil and gas industry has long endured a reputation as a good ol’ boy network dominated by white men. Those not in the industry see it as suspicious of youth, change, and innovation. Insiders know differently. Production engineers in their 20’s have responsibility for entire basins, major advancements have been made in keeping employees safe, and technological innovations have signicantly reduced costs allowing the industry to survive downturns that would have crippled the less adaptable. Why then has diversity and inclusion not experienced the same progress? There are fewer women in oil and gas than almost any other major industry, and gender diversity decreases with seniority. Women account for 27 percent of entry-level positions and only 17 percent of executive-level roles.The short answer is it hasn’t had to. In past years, the industry prioritized making workplaces safer and making drilling, completion, and production processes more efcient to survive. But, times are changing, and there is a full-on war for technical talent. The industry can no longer limit itself to half the population, nor can it let the women that have been recruited exit. Without an employee base of women, the industry will not have enough talent to continue making the innovations required to survive the next cycle.According to research conducted by McKinsey & Company, the problem is in the pipeline. Only a third of entry-level employees in the oil and gas industry are female, which puts the industry last in female participation at entry-level when compared to other sectors. Savvy, forward-looking companies are identifying the degrees and skills needed, then aggressively recruiting new and recent female graduates in these elds. Once hired, entry-level young women look for role models in positions to which they aspire, but participation of women in those positions is limited. It’s an indirect message that those positions are not for them. In addition, senior leaders tend to mentor those that remind them of themselves. Young women have a harder time nding mentors and champions at higher levels in their organizations, which leads to them being passed over for those critical moves into roles of greater responsibility. Ironically, this drain is referred to as the “leaky pipeline.”When women hit mid-career, they face entirely different roadblocks. Career paths are rigid and relatively predetermined, with milestones measured by a specic sequence of professional experience and skill development. In working to break through the mid-career barrier, some executive positions are simply not presented to women because men assume they lack the required exibility due to presumed family demands – yet they’re often not asked. Women who push through are tasked with broadening the mindset and challenging the assumptions of male colleagues making hiring and promotion decisions.It’s not just about women. Change being inevitable, an estimated 71 percent of the oil and gas workforce is 50 years old or older, and they are aging out. Dubbed the “Great Crew Change,” oil and gas companies face disruption in the workforce and have the choice of creating environments that attract young, skilled, and diverse talent else lose them to tech giants like Amazon, Apple, and Google. Going beyond gender parity, savvy companies are focusing on developing a culture that attracts and inspires all cultural, ethnic, health, and gender sectors. Whether overtly or unconsciously, people are discriminated against because of race, sexual orientation, religion, and other reasons. A 2017 U.S. Labor Department analysis revealed that African-American workers held just nine percent of the jobs in oil and gas extraction, and, despite the boom in the industry over the past decade, African-Americans never comprised more than one-tenth of the nation’s oil and gas workforce. The report noted similar statistics for Latinos.Millennials account for over a third of the U.S. labor force, soon to be the largest living generation in this country’s labor force, and Generation Z is already ve percent of the labor force. By 2025, the workforce will be millennial and Gen Z and these generations are the epitome of diversity and inclusion - everything from race, gender, sexual orientation, and different thoughts and perspectives. Unless changes are made, the oil and gas industry will not be considered an attractive career option Photo courtesy of Sodexo
Oilman Magazine / March-April 2020 / OilmanMagazine.com17OILMAN COLUMNamong that demographic, leading to further workforce “leakage.”While there is not a silver bullet to address the D&I issues in oil and gas, there are some easily implemented initiatives that can help attract and retain talent. To help address these issues, Sodexo, the global food services and facilities management company, recently relocated its E&R (Energy & Resources) headquarters to Houston, commonly referred to as “The Energy Capital of the World.”Sodexo E&R provides quality-of-life services that make work environments pleasant.For millennials, a big paycheck is not enough. They place high regard on social impact, the en-vironment, diversity and equality, and corporate social responsibility. They also value individual-ity, so they have an appreciation for companies that take the extra effort to accommodate their unique needs. In ofce environments, Sodexo is implementing concierge services that provide car detailing, dry cleaning, haircuts, and other personal services. In man camps, Sodexo is im-plementing amenities such as 24-hour cafeterias that serve gourmet / healthy meals, entertain-ment rooms, tness centers, recreation, retail, and on-site Wi-Fi. Some of the changes that seem minor can be momentous, like uniforms designed to t women.Putting its money where its mouth is, Sodexo E&R heavily promotes diversity and inclu-sion through events and its own best practices. Sodexo (global) is the world’s 19th largest private employer and has committed to having 40 percent women among Senior Leaders by 2025. While considered controversial, manager compensation is directly tied to achieving D&I goals. Today, Sodexo’s Board of Directors is 58 percent women, and Senior Leaders globally stand at 33 percent women. Overall, women make up 55 percent of Sodexo’s 460,000 em-ployees.Sodexo has been recognized for the 11th consecutive year as a top company for diversity and inclusion by DiversityInc and is one of the rst inductees into DiversityInc’s Top 50 Hall of Fame. Sodexo ranks rst place / best in class in its industry by Dow Jones Sustainability Indices 15 years running, with leading scores in labor practices, climate strategy, and stakeholder engagement. In 2018, Sodexo received the “Woman Chair Prize” on the European Gender Diversity Index, which recognizes a company with a woman Chair and the best female representation on the Board among the 200 largest companies of the Stoxx Europe 600, and last year was selected by Bloomberg Gender-Equality Index, an honor that distinguishes companies committed to transparency in gender reporting and advancing women’s equality.D&I is no longer a nicety; it’s a necessity. By creating an inclusive workplace, the oil and gas industry will have access to a larger talent pool and higher retention rates of key talent, leading to increased protability and better performances.Stephanie Hertzog is Sodexo’s CEO of Energy & Resources – North America. She has over 20 years of experience in the energy industry and has spent most of her career in services business, focusing on general management, strategy, and sales and marketing. Stephanie started her career as a Process Engineer at Celanese. She spent several years as an Engagement Manager with McKinsey & Co, a global consulting rm. After McKinsey, she joined PSC, an environmental services rm in need of a turnaround following the company’s second bankruptcy ling, as Senior Vice President of Strategy. After PSC became protable, she joined Exterran, a publicly held oileld services company. She held several roles at Exterran as Vice President Sales and Marketing, Vice President Strategy, and Vice President Product Lines. After Exterran, Stephanie was Senior Vice President at Tally Energy Services, a private equity backed oileld services start-up. Stephanie earned her Bachelor of Science degree in Chemical Engineering from Texas A&M and a Master of Business Administration from Harvard Business School. Deal Flow of Q2 By Josh RobbinsAfter NAPE, everyone gets together, they decide collectively to put their assets on the market. Everyone gets excited that deals are being marketed and put together engineering runs on anything and everything that appears even close to decent. Offers are made, and then…nothing. The seller expectations are not met, and buyers are once again wondering why they put all of this time and effort into getting a potential deal, that was never really “for sale.”It is a consistent cycle that we’ve seen for a number of years now. Sellers looking at a maximum dollar amount and buyers looking at a minimum, and no one is willing to meet in the middle. As we turned into 2020, there was hope that oil would rise, and we would see some transactions happen that should have happened half a decade ago. Sellers have to realize that their numbers have to make sense. If you wouldn’t buy at that sales number, why would anyone else? Real data, showing asset value in today’s market is what people are using. So selling based off of theory or an increased “potential” will never transact.I talk a bunch about off-market deals because I live in that part of the A & D market every day. I see when sellers come together with buyers and talk through the reasons behind the numbers. I see buy groups actively try to meet and understand seller’s gures and communicate continuously when things don’t add up. This continuous interaction is the only way deals are getting done. With an openness and willingness to transact at numbers that can be managed, understood and valued. Until that is the norm, the industry is going to continue to cycle out deals that aren’t transacted on. Josh Robbins
Oilman Magazine / March-April 2020 / OilmanMagazine.com18Interview: Cody Nath, President and CEO, Refined Technologies, Inc. By Tonae’ HamiltonTonae’ Hamilton: Can you share how RTI was established? What is RTI’s purpose in the oil and gas industry?Cody Nath: Rened Technologies was founded and established in 2001 by my father, Bill Nath. It began as part of a sister company targeted to become the industry leader for chemical cleaning. Today, our company delivers value to process facilities through expert-level renery professionals skilled in operations, engineering, and process supervision. At RTI, our cause is to help those who fuel the world, produce energy more effectively by delivering safe, fast and predictable shutdowns at reneries and petrochemical facilities through our innovative operations teams and revolutionary cleaning technologies. We provide reneries with the fastest, most predictable shutdowns. TH: What is the importance of chemical cleaning? Why is it important for oil and gas operators to have clearing and cleaning plans as a part of their process?CN: Reneries are set up to run and rene crude oil and nish products like diesel and jet fuel. They are not necessarily designed to shut down and perform maintenance activities which are routinely required. RTI comes in with our unique, environmentally responsible chemical formulation to remove all hydrocarbon from the inside of vessels which prepares the unit for safe entry and allows the renery to begin maintenance in a timely manner. Turnarounds are frequent and when plants are not operating, they are not making any money. We are there to help them complete the turnaround process safely and quickly but also predictably so they can get back up and running again. TH: What products/services do you offer to oil and gas clients, if you can name a few? How have your products affected the processes of oil and gas operators?CN: Most of our chemistry and processes are targeted on the shutdown space. Whether a rener or operator is shutting down for maintenance or just to remove fouling and improve process efciencies, we come in and partner with those operations groups to streamline those steps. From the time that they take feed out of their processing unit to the time that maintenance begins on that unit, we eliminate steps by using a patented cleaning technique to do that process quickly and efciently. We have different types of chemicals that are used to target different types of foulant and different types of processes and applications depending on what the inside of the vessels look like, the expected fouling, if there is packed media, and other process variables. We don’t rely on our clients to necessarily specify which types of chemicals we are using. We provide those chemicals as part of the service; we determine the right t and the right application. We then come in with our team of experienced people who have 15 – 20 years of renery experience each to work directly with their peers to design the shutdown process and put them in place. Our offerings include a eld walkdown of the unit for detailed planning, safe action work plan, P&ID overlays, and a detailed nal cleaning plan. TH: Since 2005, RTI has secured three patents pertaining to the cleaning of oil reneries. Are there any other patents RTI is seeking to obtain? CN: We are getting new patents all the time, but we only patent processes we believe will directly add value to the industry. We had two patents awarded in 2012, another couple around 2015, and another earlier this year for a new type of chemistry process used for cleaning heat exchangers and removing of fouling with a chemical we call UpperCut. We are going to continue to innovate on not just the chemistry side but also the temporary facilities services side where we have applied for patents on a stainless-steel hose design as well a certain type of blow down vessel. Our innovation is focused on adding value to our clients by focusing on improving efciencies, faster turnaround time, and safer work environments. All our patents target at least one if not more of those objectives. TH: Aside from chemical cleaning and developing better oil practices, RTI maintains a partnership with World Vision to bring clean water to Honduras. What inspired RTI to be a part of such a program? In addition, what impact has RTI’s efforts had for the Honduran community?CN: Our partnership with World Vision is a super unique part of our culture. It goes back to our mission of inspiring people to serve others to achieve eternal impact. We believe having a higher purpose inspires excellence and drives performance. What we do when we go out and serve our clients totally matters - that work is invaluable; it helps our clients get home safely and helps them to be more protable which in turn allows them to serve others. What we do with our prot is turn around and serve people who have needs. It’s the reason I come to work. My kids know that when I come to work, I help provide clean water for people in Honduras and I think that resonates with everyone on our team also. We were inspired to help once we really understood the need and gured out that within a 2½ hour ight from our headquarters in the Houston area, we can be just outside of Tegucigalpa or San Pedro Sula, Honduras where millions of people are living without access to clean drinking water on a daily basis. Once we understood that need, we realized there is something we can do on our side and that is WHY we do what we do. Largely what we do is just provide the resources, World Vision and the local communities do the hard work. Giving through RTI brings even greater meaning to the work we do every day. Each successful project completed means we can donate more nancial resources to end the water-crisis in Honduras. In the last four years, we have provided clean water to 143,932 Hondurans through the RTI, World Vision and local community partnership. We are excited to share that impact with others. I think it’s a great program and RTI certainly is not a hero in this sense, the local communities are. They are empowered, they are the ones who dig multiple kilometers of trenches to bring clean water to their communities. We honestly just feel blessed to be able to participate in this work. TH: Not only is RTI a part of humanitarian efforts, you are a member of the Board at Crosswalk Center. Can you provide some more information on this program and what you hope to accomplish being a member of the board?CN: I was part of the early development of the CrossWalk Center, and it brings me great joy to serve on the board. CrossWalk Center is a 501(c)3 that helps people create a transition plan from when they leave incarceration and
Oilman Magazine / March-April 2020 / OilmanMagazine.com19return to citizenship in the free world and then helps them execute that plan through coordinated housing, employment, coaching, and community. One way RTI supports the work of CrossWalk Center is by offering fair chance employment opportunities for these guys by hiring them as Shop Technicians in our Houston Distribution Center, which is where we do a lot of maintenance and work on our pipes, valves, hoses and temporary facility equipment. We have been able to give them a second chance by hiring 15 CrossWalk Center graduates on both a temporary and full-time basis and we are hoping to grow that number. Not only have we been able to impact them, but they have been a huge blessing to our business – we could not do the work we perform without them. One of the things we really love doing is sharing the stories of these guys, sharing the value and the gratitude they have for a second chance. I sincerely encourage other businesses to consider partnering with organizations like CrossWalk Center and hire ex-offenders. It has been a very rewarding experience. TH: In addition, what impact has your work with Crosswalk Center had on returning families and individuals? What future goals do you have as a member of Crosswalk Center? CN: Since beginning this redemptive partnership with CrossWalk Center, we have seen many of the guys open a bank account, purchase a vehicle, go to college, move out and sustain their own homes, receive medical procedures and we even have some who have either gotten married or are getting married soon. It’s been amazing to see how they continue to develop professionally and personally. Some have even gone on to pursue employment beyond RTI and others have been promoted to higher levels within RTI. We hope they establish independent and contributing lives and that they feel connected to both the purpose and meaning of work. We also hope they feel respected and loved by being a part of the Rened Technologies community. It is extremely rewarding to meet these guys and see the contributions they have made to building such an awesome team, delivering great results for our business. Reaching out to a part of the community that has been sidelined by most of society has made a signicant impact on our business. TH: Because of all your efforts, you were nominated for the 2020 YPO Global Impact award. Can you provide more details on this award, share what it means to you, and explain why more oil and gas leaders should strive to achieve a global impact?CN: YPO has been a great organization to be a part of. I have learned a lot from many peers that are leading other organizations. YPO is an awesome organization both from a professional development standpoint and from a social aspect for my family. I am honored that I was chosen to receive the YPO Western Region Honoree for the Global Impact Award which celebrates the amazing journeys of members who have made a difference in the world. One member from each of the 14 regions will be recognized for driving signicant, sustainable and scalable impact through a business or initiative they lead. For me, this is extremely exciting because it tells the story and recognizes the work that our whole team has been doing by embracing the concept of impact. It was the theme of our company event in 2019 and as a leader I feel it is my role to give our team the opportunity to make an impact anywhere and everywhere that we can. Our team certainly has made a signicant impact through our work with World Vision, Crosswalk Center and many others. Impact comes through our culture of servant leadership all the way through the organization and it is exciting to work in a culture where your primary goal is to serve others rst. YPO’s recognition of that culture and recognition of the entire team I hope at least inspires others to ask what is going on there and why do they do what they do so we can respond that we do it out of faith and commitment to our Christian principles and obedience to our personal faith as well. TH: Lastly, what goals do you have for RTI in 2020? Do you plan to engage your coworkers/employees more in humanitarian efforts as a part of RTI? CN: The main goal is to serve our customers with increasing excellence. We want to be our customer’s primary choice for a provider for any type of plant shutdown. We want to continue to innovate what that means by concentrating on adding new services and value to our customers and we are focused on that every single day across the organization from chemical technology innovation to temporary facilities to additional digital strategy all wrapped up into what we are doing in 2020 and beyond. If we serve our customers well, we know they will help us continue to grow. Humanitarian efforts, or what we call missions, are a part of the RTI DNA, it’s not necessarily something that we have to do additionally, it is just a part of who we are - I hope it is as natural to us as breathing. Whether we are doing “missions” at a customer facility by talking to someone who may be having a bad day or whether it is external missions like continuing to invest prots into Honduras, we want to nd new and innovative ways to make an impact and we are certainly going to do that by learning from others who are on this journey as well. SUBSCRIBE TODAY!Get the Oil & Gas news and data you need in a magazine you’ll be proud to read. To subscribe, complete a quick form online:OilmanMagazine.com/subscribe Questions? Call or email anytime.Editor@OilmanMagazine.com • (800) 562-2340 Ex. 5
Oilman Magazine / March-April 2020 / OilmanMagazine.com20OILMAN COLUMNOILMAN COLUMNFluctuating oil and gas prices result in an associ-ated pressure to permanently reduce develop-ment expenses and ongoing production costs. Digitalization is not only promoted as a solution to this problem but also able to simultaneously make production workows more efcient. This provides a strong motivation for the oil and gas industry to drive digital working environments forward. After all, an increasing number of com-panies believe that consistent digitalization is the only way to guarantee their survival. According to a Gartner study, technological transformation and the associated workows are among the ten trends that are highly relevant for the oil and gas industry in 2019. Another motivator promoting digitalization is the pressure to ensure employ-ees and processes work as safely as possible in order to both prevent accidents and avoid costs and negative media reports when mistakes do actually happen. The introduction of innovative, technological solutions such as AR and wearables has been proven to be suitable for the oil and gas industry. They help resolving many challenges such as guaranteeing personal and process safety, ensuring compliance with standards, and prepar-ing legal maintenance logs.Benets of AR Glasses for Oil and Gas CompaniesSafetyWith regard to safety, using smart glasses is espe-cially benecial for companies in the oil and gas industry. Employee safety can be improved, and accidents prevented, and at the same time process accuracy can be ensured and regulations can be complied with more easily. Smart glasses can help improve personal safety and process safety in companies in the oil and gas industry. By seeing displayed safety information and recommendations, employees obtain the ap-propriate information just when they need it. For example, warnings are shown when they carry out work that involves potential risks of injury. AR smart glasses can also be used for tasks that require a high level of concentration as the infor-mation enhances reality. As a result, the employ-ees’ attention is not split, as it would be the case when using notebooks or tablets. A combination of smart and safety glasses is also possible, which is essential for protection from hazards. Since both hands remain free when using smart glasses instead of stationary PCs or tablets, employees can safely carry out tasks such as climbing up and down ladders or inspecting machines with both hands. Furthermore, operational safety checks can be carried out with the help of smart glasses where employees are guided step-by-step. This ensures all items on the checklist are observed. In addition, more detailed information and as-sistance can be displayed for employees. Maintenance and LoggingThe usage of AR smart glasses reduces maintenance and logging efforts and ensures quality standards especially in the oil and gas industry. The glasses assist employees during maintenance work by displaying information that is appropriate for the respective situation and task. Work processes are then shown step-by-step as they are required and information is displayed exactly when it is needed during the work process. This increases process speeds while also reducing error rates. The support is particularly important during maintenance carried out in difcult environments, such as offshore drilling rigs or maintenance that is not regularly required and is therefore not part of the employee’s routine work. This guarantees a high-quality standard is met. The glasses also help to execute or initiate maintenance tasks for equipment and vehicles, for example, after a specied number of hours in service. For this purpose, data can be pulled from the equipment and be transferred to the glasses through a web interface IoT.Simple logging of maintenance work and checks through voice commands, photos and videos as well as their reliable storing also helps to improve efciency. No more paper-based lists are needed and logs are immediately created and saved in a legally compliant manner. Training and Expert AssistanceWhen collaborating across production sites and countries, modern AR technologies show another advantage. If a problem cannot be resolved on-site, an expert from anywhere in the world can be called at all times using smart glasses. Through a remote support video call, experts can see on their computer screens what the wearer of the glasses has in his or her eld of vision and can give instructions to help solve the problem. While doing this, the expert can mark specic details in How Augmented Reality Glasses Can Solve Current Challenges in the Oil and Gas Industry By Carly KrollPhotos courtesy of Ubmimax Frontline
Oilman Magazine / March-April 2020 / OilmanMagazine.com21OILMAN COLUMNOILMAN COLUMNthe employee’s eld of vision in order to facili-tate the work. Additionally, technical drawings and instructions can be sent to the smart glasses. All these features can also be used during confer-ence calls with several participants improving re-mote teamwork for example when coordinating international projects or collaboratively solving tricky repairs.Reducing Travel Expenses and Ecological FootprintAnother advantage of AR smart glasses for the oil and gas industry is reducing travel expenses, since many workplaces in the industry are very remote. Using smart glasses with a call func-tion makes it much easi-er to resolve problems on-site by contacting experts remotely. The experts do not have to travel to the location of the problem, which would involve delays and expenses. Instead, they can solve the problem by means of a video call and the smart glasses’ inherent “I see what you see” functionality. The expert can give precise instructions so the problem can be solved quickly and accurately. They can mark specic items in the employee’s eld of vision or provide him or her with more detailed materials. This reduces plant shutdown times. Thanks to the reduction of business trips, oil and gas compa-nies not only save costs, they also reduce their ecological footprint by saving CO2 emissions. Increasing EfciencyThanks to faster training, standardized mainte-nance lists, and remote support calls, AR smart glasses help oil and gas companies to improve efciency and, as a result, save money. Compared with the rugged notebooks that are often used these days, modern and robust AR smart glasses are less expensive and have a fast payback period. An additional factor when it comes to easy integration and a quick payback, are integrated complete solution from providers like Ubimax. They offer end-to-end solutions including use case-specic AR smart glasses and the associ-ated software as a service, so the devices pay off immediately. Use Case: AR Glasses for Maintenance of Drilling Rigs and Fracking Equipment A leading international company in the area of oil exploration and oileld services, Schlum-berger Oil and Gas, has been using AR smart glasses in combina-tion with the Ubimax Frontline software for over a year. Schlumberger primarily uses AR smart glasses for maintenance of mo-bile fracking equipment before or after it is used. Employees maintain the vehicles according to a predened log. One by one, they see each of the steps to be carried out on the glasses. This helps employees to comply with Schlumberger’s quality and safety standards. It also improves efciency and makes work easier for employees as the maintenance logs are gener-ated in real time using the smart glasses, which reduces the amount of paperwork. Schlumberger has calculated that following instructions on paper lists is 88 percent slower than using a tablet (base scenario). Now, with smart glasses they are not only 15 percent faster than working with a tablet, but also tablets do not allow for hands-free work which is a real problem when employ-ees have to climb onto vehicles or equipment.SummaryFor companies in the oil and gas industry, there are many potential use cases for smart glasses with augmented reality support, which several rms have already discovered for themselves. The benets include:• Hands-free work with smart glasses that are controlled via voice commands or gestures• Increased safety for people as well as processes• Reduced error rates due to step-by-step instructions, e.g., during maintenance and inspection work• Support for training and remote expert calls possible at all times • Simpler automated or semiautomated logging of tasks in real time• Reduced travel expenses and times as well as a smaller ecological footprint• Avoidance or reduction of downtime and standstills• Improved efciency in work processes• Support in multinational research projectsThanks to new pay-as-you-go models, companies no longer have to buy their own smart glasses. Instead, they can lease them along with the nec-essary software and services, which has a positive effect on the cost-benet ratio.Carly Kroll is the Public Relations and Marketing Manager for the Americas at Ubimax Inc. an augmented reality software company specializing in industrial solutions. She can be reached at carly.kroll@ubimax.com or 404-566-2921. Augmented reality is an enhanced version of reality. Specically, this means that additional, relevant information and input are blended into the wearer’s eld of vision through wearables (portable, mobile computers) such as smart glasses. Users see the additional content on a display in front of their eyes but are still able to perceive their environments. The complementary information meshes with the reality that smart glasses wearers see in front of them and helps them carry out their tasks.
Oilman Magazine / March-April 2020 / OilmanMagazine.com22OILMAN COLUMNThe advent of industry 4.0 has made data more valuable than ever before for industry. With the right technology, it’s possible to collect, store and analyze information about nearly every aspect of any industry process.Fleets of IIoT devices — which connect to internet or local networks to send or transmit data — have become key pieces of technology in the fourth industrial revolution, where they’re being used to provide companies with real-time data and streamline business processes.Here is how the oil and gas industry is being revolutionized by IIoT — and how any oil and gas company can incorporate these IIoT devices.What is the Internet of Things?IoT is a catch-all term for the growing network of devices and sensors which connect to the internet to remotely send and receive data in real time.While IoT has often been associated with consumer goods — as in “smart” security systems or home assistants, which wirelessly communicate with other devices and company servers to secure a home or connect a customer with information — a new category of IoT, industrial IoT (or IIoT), is applying this technology to heavy industry.IIoT devices collect and transmit data in real time for variety of purposes. Wherever data can be leveraged to reduce costs or provide more accurate information, IoT eets can be installed to collect real-time data that will be usable by on-site supervisors and workers, as well as business analysts. This data is often analyzed with the help of advanced AI-backed analytics tools that are capable of sifting through the huge amounts of data these systems produce and detecting subtle patterns, which can be used to reduce costs or create more accurate forecasts.How the Oil and Gas Industry Can Leverage IIoTThere are a number of different advantages the technology can offer.For example, a eet of IIoT devices can be used for remote site monitoring and inspection. With the right combination of IIoT and monitoring technology in place, it’s possible for workers and site supervisors to keep tabs on equipment and site systems without needing to be on site at all.Workers can respond to changing needs and emergency conditions by remotely deactivating equipment or managing operating variables — adjusting temperature or ow — from remote operating sites. Some advanced systems that integrate IIoT can even automatically respond to emergencies, preventing disaster even if there is no worker present to ip the right swtich.Reducing the number of workers on-site could, as a result, improve safety and also provide an answer to oil and gas’ growing talent crisis created by an aging workforce and the industry’s difculty in nding younger workers to replace them.Oil and gas work environments are often naturally dangerous, with certain types of industry work sites, like offshore oil rigs, being some of the most stressful environments for any American worker. Remote monitoring with IIoT can help pull back non-essential staff of those platforms, reducing operating costs and ensuring that the fewest number of workers possible are exposed to dangerous conditions.Other applications of IIoT can help keep equipment working for as long as possible. With PdM (Predictive Maintenance) and system health analytics, IIoT sensors can be installed in high-value oil and gas equipment or machinery. These sensors can then record and transfer that equipment’s telemetry, the constant stream of measurement’s emitted by that machine over time. With the real-time information provided by this telemetry, an AI-powered predictive model can pick up on subtle variations in instrument timing, pressure, vibrations or temperature — to predict when a piece of equipment needs repairs or is about to fail.A predictive maintenance strategy can save oil and gas companies both on maintenance costs — as problems caught earlier can typically be resolved with cheaper preventative maintenance — and on downtime, which costs offshore oil and gas companies $38 million on average every year.Some advanced predictive maintenance systems can even shut off equipment before it fails — reducing the risk that the equipment runs to the point of damaging itself and potentially injuring nearby workers.IIoT can also provide oil and gas companies with advanced process optimization. With enough data, analytics tools can uncover subtle correlations between machine performance and operating conditions to provide analysts with the information needed to make tweaks to site equipment and processes or optimize for lowest possible spending and the highest possible revenue.Photo courtesy of artinspiring – www.123RF.comHere’s How the Oil Industry Can Take Advantage of the IIoT By Megan Nichols
Oilman Magazine / March-April 2020 / OilmanMagazine.com23OILMAN COLUMNIIoT data can also help analysts manage assets and discover where resources aren’t being used efciently, letting them know where business processes can be further streamlined. Efciently Incorporating IIoT TechnologyBusinesses that integrate an IIoT eet should prepare for a phase-in period where baselines are established and stores of historical data — which will allow the system to detect patterns and derive insights — are built up. When implementing IIoT technology, identify a specic goal — like reducing operating costs at a given site or for a specic piece of machinery — and use that goal to structure your implementation strategy. Avoid vague or overly-broad goals that can’t be easily measured. These can make it difcult to evaluate the success of an IIoT implementation.Workers will need to be trained to use the new features provided by an IIoT eet, like remote access to equipment, as well as the new information and predictive analytics available to them. Businesses that plan to use IIoT will need to be prepared to handle signicant amounts of data. This will require a robust network infrastructure and the adoption of new technologies, like 5G. Large-scale collection and storage of valuable information will also mean the data security may need to become a higher priority.How Oil and Gas Can Leverage IIoTData is more important than ever for oil and gas. New technology, like IIoT devices, can provide oil and gas companies with real-time data that can be leveraged for a variety of purposes — including predictive maintenance, improved forecasting and process optimization. Oil and gas companies wanting to incorporate IIoT will, however, need to be careful in implementing this new technology if they want to use it successfully. IIoT eets should be incorporated with a specic goal in mind, and businesses should expect a phase-in period where workers are trained in the use of new IIoT technology and data baselines are established.Megan R. Nichols is a technical writer who regularly contributes to sites like American Machinist and Manufacturing tomorrow. She also publishes easy to understand manufacturing and engineering articles on her blog, Schooled By Science. Keep up with Megan by subscribing to her blog or following her on Twitter. Mark A. StansberryWomen in Energy By Mark A. StansberryIn 2007 I chaired four energy events for the centennial celebration of Oklahoma’s statehood. The events were a salute to the past, present, future, and women in energy. In the early days, it was known as a men’s energy industry. Over the years, especially in most recent years, women have played an important role in the success of a vital energy industry. At the Salute to Women in Energy in 2007, which was held in Tulsa, Oklahoma, we had a room full of women who had made a major impact on our American energy industry. Those honored at the 2007 event included June Brooks, Christine Hansen, Liz Fagen, and Denise Bode. At the event, Christine Hansen, Executive Director of the IOGCC (Interstate Oil and Gas Compact Commission), served as the luncheon keynote speaker. Prior to becoming Executive Director of the IOGCC, Hansen was in private law practice and had been a senior executive ofcer with two large utility companies. The salute honored many other women in the elds of landmen, geologists, engineers, geophysicists, oil and gas attorneys, accountants, and other areas. In this column, I highlight three women, for example, out of so many that are currently involved in the energy industry:Linda Nichols currently serves as the Genave King Rogers Dean of the Collins College of Business at the University of Tulsa. Prior to becoming Dean, Linda served as Director of the School of Energy Economics, Policy and Commerce as well as the A.Charles Funai Chaired Professor in Business. Linda is recognized as a worldwide expert in the eld of nancial accounting and reporting for the oil and gas industry. Linda continues to be heavily involved with the oil industry through consulting and providing training for oil companies across the globe as well as serving as an expert witness in some energy-related disputes.Jennifer M. Grigsby joined Ascent in 2015 as Executive Vice President – Chief Financial Ofcer. She previously worked at Chesapeake Energy Corporation for 19 years in management roles including her most recent positions as Senior Vice President, Corporate and Strategic Planning and Senior Vice President, Treasurer and Corporate Secretary. She earned a Bachelor of Science in Accounting from Oklahoma State University and a Masters of Business Administration with an emphasis in nance from Oklahoma City University. Jennifer is a Certied Public Accountant and Chartered Global Management Accountant.Patrice Douglas counsels banks, energy companies and utilities on legal, regulatory and compliance matters. Patrice has extensive experience in both community banking and energy industry. As a former Oklahoma corporation commissioner, she gained expertise in the industries of energy, public utilities and telecommunications because the Oklahoma Corporation Commission is the chief regulatory body for these industries. She has served on both public and private corporate boards. Patrice was presented the 2013 Energy Visionary Award in Tulsa for her outstanding service to the energy industry.Women continue to play such an important role in the energy industry. We salute all the contributions of those past and present who have made an impact on the energy industry. America needs America’s energy, and America needs women in energy!
Oilman Magazine / March-April 2020 / OilmanMagazine.com24OILMAN COLUMNOILMAN COLUMNLeadership is one of the most sought-after qualities in a professional of the oil eld, some of them have this innate ability, but for many others a training process is necessary to be able to manage a group of specialists in different skills.Nowadays, the time frame for a recent engineering graduate to take control of technical activities or entire groups is decreasing. The constant advances of the industry absorb the most experienced personnel of the eld, commonly leaders, to sites of greater scientic use, such as deposits’ management or integrated studies; leaving positions of greater responsibility in abandonment. At this point in history, rapid training of “new” personnel is needed to take on more important responsibilities.The world of oil and gas has different tasks, such as exploration, drilling, production or eld management. In any of these cases, the gure of the leader is present. And despite the fact that it is a team work performed by different professionals in various disciplines, the nal decision is made by the person in charge: the leader.But given the subtraction or lack of experienced personnel today and the short time new professionals have to adapt to these responsibilities, the following question arises: “How young students entering the eld can gain leadership skills?”In order to develop this aptitude, it is fundamental to know what a leader is and which qualities he must possess:1. A leader must have the ability to set goals and expectations. It is essential for teams to work together towards a common goal. 2. You must know when and how to invest in people. Human talent is the most important and valuable factor of any organization. Therefore, if you want qualied people, you must invest in their training and education.3. The leader must have the ability to enhance the talent. It is important to create career plans for each of the people who work for the company and, at the same time, it is a form of motivation.4. Communication and active listening are keys for effective leadership.5. The enthusiasm and the spirit of overcoming difculties are essential values in any leader who seeks to be a person of reference within his team.6. Preach by example. Albert Einstein said: “The example is not the best way to teach, it is the only one.” This phrase makes special sense when talking about the relationship between a leader and his team.7. A leader must have the ability to respect the opinion of those who surround him and, where necessary, have the rmness to make his decision noticed.With the knowledge of this description, it can be deciphered that a leader is an absolute indispensable gure for the effective functioning of an activity. He is responsible for magnicent efforts in a pleasant and motivating way for the professionals in the oil and gas eld, making the most of them and encouraging them to continue doing a good job in time.For this reason, a leader is the guide of a group of people during the performance of an activity. He must have the ability to get each of the people on the team to work together and dedicate their efforts in unison.Understanding the leader as a fundamental gure, a preparation process for the formation of this person becomes crucial.Although there is no step-by-step guide to creating a leader, there are three main theories of leadership, and if we apply reengineering to them, they could help a person become an effective leader:• Path-Goal Theory• Contingency Theory• Transformational-Transactional TheoryHow Young Students Entering the Field Can Gain Leadership Skills By Raul PalenciaPhoto courtesy of Unsplash.comPhoto courtesy of Unsplash.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com25OILMAN COLUMNOILMAN COLUMNPath-Goal TheoryThe Path-Goal Theory, created by Robert House in 1971, indicates that the best way to achieve a commitment and the full motivation of employees towards the company is that the leader rewards the worker when he achieves a goal. It is the responsibility of the leader to measure the degree of the reward adjusting it to the degree of achievement the team member possesses.According to House, the key to this method is focused on the complete knowledge that the leader has of the goals that are to be achieved, so that he can perform better the activities that are to be carried out and bring the message more clearly to the worker. Knowing the goals and tasks, the leader can deduce the size of the reward to be obtained by the person performing the activity, in this case the worker. Applying reengineering to this principle, we get that the team must be kept focused on the goals that in turn, with the reach of each one of them, will show the path to the goal.Directing this theory to the leader and not to the team, it is established that the leader must know in concrete terms the direction and objectives that the company wishes to achieve. Then, to use the theory about the leader, it would be necessary to assign short activities with precise delivery times, to test the quality of the decision-making and the knowledge that is acquired about the processes. In this way, you can calculate what kind of incentive you can set for the team. This is the best way for students to get to know the processes and tasks to achieve goals when doing team work, all from the different courses or subjects they can take.In the case of the oil industry, this kind of recognition is very much seen in the reward for optimally managing the execution times, since time is money (and even more so in this industry). If the leader knows the task to be accomplished, he assigns it to his work team and it is accomplished in good time, it would be primarily due to a correct approach of tasks and strategies to achieve the goal. Contingency TheoryThe contingency theory, developed by Fiedler and associates in 1950, explains that there is no generic way to manage an organization, since each case is unique and proposals can change depending on internal or external situations. In this way, the commitment assumed by a leader in managing a company is directly related to these contingent variables, to which the organization can relate.By using reengineering to analyze the second theory of leadership, it results that there is no written manual for all the contingencies that could present, this applies fundamentally to the oil eld, as it works with a natural resource and situations do not always follow the same pattern.At the academic level, this law is often constantly applied by teachers who make students face different challenges while progressing in their careers. The best way to apply this law as a method of preparation for a future leader who is already in the eld is to avoid the comfort zone, prompting this person to face challenges that are outside his main area of expertise. In this way, when facing a contingency, the leader will have more than one idea to solve the problem, and will have knowledge of different tools that he can count on. Transformational/Transactional TheoryTransactional leadership is based on meeting goals and expected performance, rewarding if the goals are achieved and punishing or reprimand if not. It is called “transactional” because the “transaction” would be what the organization pays the team members in exchange for their effort and compliance. The basis of transactional leadership is a transaction or process of exchange between leaders and their followers.The transactional leader recognizes the needs and desires of his team and then explains clearly how they will be able to meet those needs and aspirations in exchange for fullling the specied objectives and performing certain tasks. Transformational leadership is dened as the set of capacities that allow the leader to recognize the need for change, design the direction for change and execute it effectively. A leader can transform the members of his group through the following actions:• Making his team feel condence, admiration and loyalty toward the leader.• Making them aware of the importance and value of the tasks’ results.• Prompting them to transcend their own interests in the best interests of the organization or the team.• Activating their higher needs. This latter theory, broken down and directed towards the leader to be trained, either as a student or a new graduate entering the oil eld, ensures that the prospect needs to learn when to apply a transaction or a transformation, with the personnel of the work team. Not all people in a group work the same way, so it is of the utmost importance for a student to learn about the different types of workers and work.Therefore, the ability to identify which of the two modalities of this law can be used to motivate the member of the team can be perfected by the student or professional in the eld with the use of fraternity. In this way, you can know rst-hand the person you are working with, know what their needs and aspirations are. Thus, it will be known how they can be addressed so that they can become a member of the teams and motivate them effectively. Finally, it is important to understand that there is no way to form a leader in a perfect way. It is a process that requires time and dedication. In some cases, skills are needed; the person must possess them intrinsically or learn them over time. But there is no doubt about one thing: the best way to teach is by example (Albert Einstein) and to have good leaders in the future, good leaders are needed in the present.Raul Palencia is an engineer and researcher with more than 10 years of experience as a Geologist. He graduated from the prestigious University of Andes (ULA), later he received a Master’s degree in Reservoir Engineering at the Venezuela Hydrocarbons University. During his career development, he worked for oil companies in positions such as: eld geologist, reservoir engineer and reservoir simulation. He has worked in Argentina, Ecuador, Mexico and Venezuela. He currently resides in Texas. Fred Friedler Photo courtesy of ToolsHero.comSir. Albert Einstein Photo courtesy of NBC NewsPhoto courtesy of LeadershipGeeks.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com26OILMAN COLUMNThere were a lot of companies at NAPE Summit, and as my 1st visit to the conference, I could say that it’s indeed where the deals happen! We happened to interview three prominent companies. The rst company was LongPoint Minerals, a Denver based company focused on the acquisition of mineral rights. Will Cullen, the VP of the company in Business Development, spoke with us. Tell us, how long you’ve been in the industry and what’s your background?I’ve personally been in the industry since 2002, I did mineral royalties from 2006 to 08, then worked at Shell for nine years, and then came back to minerals again. I went to school for ne arts, did graphic design, then business school with nance degree, had some work with an E&P company, and then stayed in oil ever since. When you come to conferences like that, what are you trying to achieve?This year is very different for us, this our rst NAPE having the booth. We’ve been coming here for years, but this is a new experience for us, trying to expand our networks and gain a brand awareness, and for those who have a mineral deal, we could look at that. We look at mineral portfolio mainly. NAPE really is just a start of the conversation, then it continues afterwards with exchange of data and other information. Were you affected by downturn?I think everyone was affected by downturn; but because we are so focused on mineral royalties acquisitions, it takes a while for that to lter down to mineral owners, because their checks are delayed up to six months, they don’t see the downturn right away, and they’re also are quite far away from the industry. We’ve seen some prices to adjust especially in Oklahoma. It’ll hit them eventually, they’ll see it in terms of a fewer production revenue sharing, but it’s just delayed. Do you think the new low oil price environment is the new reality moving forward?Our industry had so many cycles, 80s-90s, I think the industry will come back but will we see $100 oil again? – probably not. The industry has advanced so much, we’re better at nding oil. Who are most of the people that work at your company?We have a sister company, Four Point Energy, and that’s a traditional E&P company, so there you’ll nd engineers, geologists, geophysicists – and just about anyone needed to run an exploration company. Where and how you nd the new people?A lot happens online, we have a rigorous process of hiring, trying to retain people so they don’t leave. We go through several interview processes. You have to sit down and the entire management asks you questions, we make sure the people are comfortable. We have an internship program, and we work with students. What skills do students need to have?We are looking for team players, who can do whatever to make sure the team can succeed. Not limited to your duties only, where he can jump to get it done. Communications and being able to relate to – are important qualities. We mostly use personal verbal communication, to make sure everyone knows what the other is doing, and our ofce is pretty open. Our next speaker was Olivier “OT” Thierry, Chief Marketing Ofcer at Quorum Software. Quorum had quite an impressive booth. So there it goes.OT, tell us something about you and your company?I’m a chief marketing ofcer. Our company specializes in accounting, nancial, transactional and operational sides of software. Anything of energy value chain – everything from exploration to gas processing – from upstream to downstream – from wellhead to the city gate. We have 10 major software products. Over 950 oil customers – from supermajors to small startups. 350 midstream and transportation customers. 700 employees. Majority of business is in North America, with ofces in Dallas, Denver, Calgary and Houston. I moved from Canada to the USA in 1989 and have been with startups even before that, I was glad to build a career here. Living in Quebec wouldn’t give me the same opportunities like here. I did Computer Science and Business in school. Back then, I wouldn’t know where I would end up had you asked me. CS and Data science are very important. If you think about reserves and declines, the number of datasets and sizes, data science, articial intelligence, data analytics, all these tools will be the future, you can’t do the job without software supporting you. What advice would you give to young students?We hire about 80 college grads per year. We put them into consulting organization to understand what oil and gas is, to go from theoretical education to practical application. While working they will see many different oil companies. As opposed to seeing just one company, they can see many companies, and they may even in the future decide that they want to work in that one particular oil company, or they can stay on the software side. I recommend trying to get as much as practical application as possible. I’d also get a masters in data science in addition to petroleum engineering. You could start in a software company and you get assigned to an E&P, so some of our employees end up working at those client E&P companies because they liked them.Majors include chemical, mechanical, petroleum engineering, computer science – at that stage it is not as much as a degree but the person, the ability, the DNA, their capabilities. A lot of students want to work at Quorum. We recruit from certain schools and get to pick the best. Reflections from NAPE Summit 2020: Interviews with LongPoint Minerals, Quorum Software and Opportune By Alan Alexeyev
Oilman Magazine / March-April 2020 / OilmanMagazine.com27OILMAN COLUMNHow do you spot greatness in students? I think it has to do with their intellectual curiosity. If they are curious about the next interesting question, which shows that they’re listening, paying attention, and searching for more knowledge. I like candidates who are looking to learn. It keeps you grounded and humble – you realize you don’t know everything. There should be a spark, chemistry, it’s immediate. I prefer to hire on DNA in most cases rather than a pure resume. If we bring the right person, they can learn anything. We also are starting to place our software to universities like Texas Tech, we want to expose them to the real world. In North America, there are 11-12 accredited AAPL programs, and we’re looking to work with all of them eventually in the future.Were you affected by downturn? Because we have products in mid and downstream, we were not affected so much. We do a lot of pipeline, local distribution, software for LNG terminals, etc. So it all balances out, when one sector is down the other is usually not. How do you want to advance in the future?We want more international presence. We will do some acquisitions, and then will expand internationally.The last company was Opportune, an energy focused consulting and accounting rm. Raza Rizvi – VP of Accounting, spoke with us. Tell us about your company? We’re energy focused consulting and back ofce accounting company – we don’t do audit, we do outsourcing for the clients. We help you from getting you ready for the transaction, do due diligence, set up software, the back ofce support. We’re based in Houston downtown, and we have ofces in Oklahoma, Denver, New York.Do you have any engineering services?We do, we have the reserve engineering rm, Ralph E. Davis, we do reserve studies for due diligence and other operations.Were you affected by slowdown?We’re like a one stop shop. When there’s a slowdown, a lot of people start reducing costs, but they still want accounting to be done, and our rm can offer the lower rate than the com-petitors. For the companies, instead of having their own employees, software, ofces dedi-cated to accounting – they are better off using a company like ours where we do all the back ofce accounting. Last year, most companies went through restructuring and bankruptcies so we helped companies with that. As a company, how do you navigate the cycle of ups and downs?There’s a potential, we tell our clients, we can help them with acquisitions. This year will be slow, we’ll see a lot of mergers.What if oil goes up?Then we’ll see a lot of companies emerging back, a lot more drilling will come back. What we see now is what we saw in 80s. But this market has always come back. What do you try to get out of NAPE?We’ll see a lot of 1st time buyers, to let them know that a company like ours exists and that we can offer a one-stop shop for their needs. A lot of companies struggle with acquiring funds, do you help with that?We have a restructuring group, and an evaluation group that clients can call upon. What type of people do you hire?We have about 300 full-time employees. Professionals from all over oil and gas. My background is 20 years as a public accountant. We have younger people straight out of college, they’re consultants and work on projects, work on evaluation and accounting. We hire also petroleum engineers. What do you do with younger generation of people?We saw that ve years ago we had a lot of experienced people, but we changed our model with hiring, now we do more of newer people who are out of school. We have a 2-year rotation program and rotate them through all the processes. Our focus has been going to the school and get people there.What characteristics do students need to have to succeed?They all come with degrees, right work ethics, hunger to learn – we can train you with anything but without desire to learn there’ll be nothing – you need to be open to new opportunities. We provide the right amount of training and hold hands until we see he’s ready. Our consultant travels all around, usually works in the corporate ofces of the client.Any last message to the NAPE attendees?My message would be to people is that we’re the only energy focused rm, we’re the one-stop shop. We have hedge evaluation shop, anything energy related we will have an answer for that. Advertise with us!Are you looking to expand your reach in the oil and gas marketplace? Do you have a product or service that would benefit the industry? If so, we would like to speak with you!We have a creative team that can design your ad! OilmanMagazine.com/advertise • Advertising@OilmanMagazine.com • (800) 562-2340 Ex. 1
Oilman Magazine / March-April 2020 / OilmanMagazine.com28FEATUREHouston, long known as the energy capital of the U.S., is now becoming recognized as a technology hub as well as a forward-thinking city for women in tech. While the oil and gas industry usually ranks near the bottom of male-dominat-ed industries in terms of numbers of women in its workforce at approximately 22%, there is a surprising number of female Chief Informa-tion Ofcers (CIOs) in the industry. According to a Korn Ferry analysis conducted in 2019, the energy industry has the second highest number of female CIOs at 21% behind nance at 25%.Four women helping guide their companies into the new technology frontier share their vision of the future. Women in Tech Female CIOs on the RiseBy Rebecca PontonPhoto courtesy of Sergey Nivens – www.123RF.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com29FEATUREContinued on next page...As an engineer, I like numbers, so let me share a shocking number: up to $100 billion are the estimated savings by our sector, according to Rys-tad Energy, with the ap-plication of digitalization and automation: 55% on CAPEX between facili-ties, wells and subsea, and 45% in OPEX.Let’s look at the trends and where our sector is investing:• Today we are investing about 36% in big data analytics, IoT about 44%, and mobile devices 37%.• In the next three to ve years, the focus will be robotics and drones, articial intelligence, and wearable tools. In addition, there are two areas that have been seen as enablers: Cloud and collaborative/ social tools.• Data Analytics: Affordable sensors that collect and transmit data in real-time and throughout the integration of large quantities of data from different sources and suppliers allow [us] to make technical decisions, trans-forming data into valuable information. o Example: The use of big data in uncon-ventional reservoirs allows more robust geology interpretation, proper well place-ment, and eld optimization. o Another example is the use of big data combined with AI to reduce the lifecycle of the assets. In deepwater, for example, reduce seven years to rst oil to 1000 days.• IoT: According to McKinsey, IoT has a potential economic impact of $930 billion from mining and oil and gas companies within the next 10 years. In oil and gas, IoT is being used to reduce NPT (non-productive time) by using near-real-time data to predict breakdowns and schedule preventive maintenance. Asset management is one of the core areas in the industry and proper asset tracking and integrity into a single platform are key to cost effectiveness. • Mobile Devices: Even though the oil and gas industry has been slow in the adoption of mobile devices, today reporting, calculating, and training apps have been created and several areas, such as Health and Safety, are beneting.With so many opportunities, what are the barriers to achieving these results?• Inability to experiment quickly: o One of the key principles of the digital transformation is the ability to actually fail “smartly,” i.e., fail fast, at low cost, and be able to learn with the failure. o The oil and gas industry is very conserva-tive, the cost of failure is very high, so not much risk is tolerated.• Legacy systems: o The oil and gas sector has robust systems and changes mean high cost, high risk; therefore, huge resistance to change.• Inability to work across silos: o Digital transformation happens when barriers are being removed [and there is] full cooperation among the different players in the ecosystem. Former competi-tors now work together; unconventional competition, multi-disciplinary and diverse teams are critical for the transformation to happen.• Inability to share: o In an industry where data is the biggest value and where the value of this informa-tion is what allows differentiation among competitors, how can you share data? How can you truly collaborate?I have no doubt that industry 4.0 is just at its start in the oil and gas sector and many positive changes are being driven by this revolution.*From Ana Zambelli’s January 2020 Deepwater South America presentation, edited for length and clarity.Ana Zambelli – Petrobras, Independent Board MemberShell Game-ChangerTM was the rst innova-tion vehicle started in Shell in 1996, helping to bridge the gap between technology developed in a lab and a commer-cially viable product. We work with startups and businesses on unproven technologies with the potential to impact the future of energy – a bit of a “disruptive ideas only” mindset. Ideas range from early stage concept, also known as technology readiness level two, through to proof of concept, technical readiness level ve or six. During the process we offer coaching, expertise and non-dilutive funding, while the company maintains the independence to make its own decisions. By seeing a company through to proof of concept, we aim to de-risk the startup and their technology enough to make them investible. We accept ideas in two ways – through a formal “call” for submission and through an external website where anyone can submit an idea at any time. Coming to this team, I assumed people had an idea and needed money. But startups don’t really come to us just for the funding; they come for the access to experts. That’s the priceless piece. We are their biggest supporters and their biggest critics – whatever each startup needs us to be in their journeys. GameChanger always looks for the same criteria: how novel is the technology? Is it different? Is it unproven? How valuable is your technology? Can it create new value if it works? A core idea of the program is to ensure we learn quickly by encouraging them to start off tackling the big problems or blockers that will result in the project not being ultimately successful. This type of framing arranges the project in terms of getting the highest risk factors out of the way rst. At the same time, we begin with the end in mind and are sure to clearly dene the post-GameChanger possibilities, forcing the companies to link the technical and commercial risks early on. This includes thinking about scaling up and what the implications are of large-scale deployment. Overall, our portfolio companies begin with an idea of hypothetical value and enormous technical and non-technical risk, and end with managed and mitigated risk and a technically and commercially viable business and product. One last thing to note is that we’re interested in solutions for the entire industry, not just solu-tions for Shell. The ultimate goal is co-creating a game-changing solution.Alicia (Lee) Williams, PhD – Shell, GameChangerTM
Diversity and Inclusion is No Longer a Nicety It s a Necessity p 16 Reflections from NAPE Summit 2020 Interviews with LongPoint Minerals Quorum Software and Opportune p 26 Macondo Tragedy Lessons Learned at the Edge of Technological Envelope in Deepwater GoM p 32 Changing the Status Quo in the Oil and Gas Industry p 40 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY March April 2020 OilmanMagazine com WOMEN IN ENERGY TECHNOLOGY
www.beachwoodmarketing.comBeachwood navigates teams to find deals that no one else can.2828 NW 57th Street, Suite 309 l Oklahoma City l (405) 463-3214We don’t market to test the waters, we hit the market to make waves.
Oilman Magazine / March-April 2020 / OilmanMagazine.com32OILMAN COLUMNJust before 10:00 pm on the night of April 20, 2010, the Macondo well blew high pressure oil, gas and mud through the derrick of the Deepwater Horizon setting off two major explosions instantly killing eleven rig workers and physically injuring 63 of the 115 survivors. These eleven men have been silenced by death. Seven of the eleven men who died began expressing fears three months before about BP’s drive for speed and demanding changes to what they had been trained in Best oil eld practices. Three of these men asked their wives to remarry in the event they would die on the job. The eleven men who died and 63 who are still undergoing medical surgeries have been silenced. The creatures of the ocean like the dolphins, oysters, and the pelicans do not have a voice in our decisions to mine and produce hydrocarbons from the ocean. This article is dedicated to both the memory of the people and the ecosystem. We will look at the many miracles resulting from this tragedy.Unlike other high hazard industries, deepwater exploration drilling is dynamic and involves complex geological formations. In the event of loss of hydrocarbons, the system cannot be shut down, it fails dangerously. Macondo was the rst blowout to occur in 5,000 feet water. Shortly after the blowout, U.S. Navy ofcials met with offshore drilling engineers in Mississippi to offer a Navy submarine to help kill the well. The engineers had to explain that the military does not have any equipment that can operate at 5,000 feet of water. Only the offshore oil and gas industry has ROVs (Remotely Operated Vehicles) to operate in deep water. In the case of the Macondo blowout the well owed uncontrollably in the Gulf of Mexico for 87 days. During this time, the best oil and gas engineers and scientists on the planet worked together in BP’s Westlake ofce in Houston to gure out how to bring the well under control. Oil washed up on the beaches from Texas to Florida impacting estuaries, coastal and shing communities and resort areas.As investigations unfolded, it became obvious that it was not a hardware or software problem like Apollo 13. With the world watching, NASA was able to get the astronauts safely back to earth. Unlike Apollo 13, Macondo involved many failures to communicate built up over months.During the last decade offshore industry leaders have worked to integrate human factors, communication and leadership into engineering and design. In October 2010, Kevin Lacy, Senior VP global drilling and completions, Talisman Energy, in his presentation in Galveston titled Restoring Integrity to the GoM Deep Water, said “The elephant in the room is all the mixed or unintended messages we send the crews when we are behind schedule, over cost, or behind on production. If we don’t clearly keep personal and process safety as an unyielding value in our words and more importantly visible behaviors and decisions we ultimately will not withstand the risk or test of time and we will certainly suffer a fatality or major incident. Senior non-technical management cannot allow these barriers to be breached and I offer they hold the Macondo Tragedy: Lessons Learned at the Edge of Technological Envelope in Deepwater GoM By Lillian Espinoza-GalaPhotos courtesy of Deepwater Horizon Study Group - Center for Catastrophic Risk Management - UC Berkeley
Oilman Magazine / March-April 2020 / OilmanMagazine.com33OILMAN COLUMNultimate accountability if they are breached.”One of the reasons learning to create a high reliability organization in the offshore oil and gas industry is so difcult, is because the high-consequences of events that warrants months of daily headlines, and congressional investigations happen so rarely. Exxon discovered the entire company in the eye of a global storm when the tanker Exon Valdez ran aground in Alaska spilling eleven million gallons of oil into pristine shing waters in 1989. It takes a couple of decades to become a high reliability organization embracing the high-prole disasters and learning to grow throughout the entire company. The pain of failure provides inspiration and passion for creating a resilient system of process safety management that becomes embedded in every layer of the company.In November 2010 when Exxon CEO Rex Tillerson testied to the Oil Spill Commission, he was reviewing the lessons learned from the Exxon Valdez Spill in Alaska. In 2007 Exxon spent more than 500 days and more than 180 million dollars attempting to drill a well near Macondo – the deepest well ever drilled. But Tillerson shut it down because the drillers did not believe they had the right tools or the equipment to handle such high-pressure and temperature. For three years the WSJ and Financials Times made fun of Exxon for being “afraid of taking risks” and referred to the risk adverse company as a “dinosaur.” But in the wake of Macondo, Exxon’s aversion to risk made it look like the gold standard. So, it was under these circumstances in November 2010 Tillerson testied on why and how the industry could drill safely in deepwater: “Written rules, standards and procedures, while important and necessary, are not enough…A culture of safety starts with leadership, because leadership drives culture and culture drives behavior. Leaders inuence culture by setting expectations, building structure, teaching others and demonstrating stewardship…For a culture of safety to ourish, it must be embedded throughout the organization.”Watch Tillerson’s testimony here:https://www.c-span.org/video/?c4741361/user-clip-tillerson-testimonyDuring the last decade SPE (Society of Petroleum Engineering), IADC (International Association of Drilling Contractors), IOGP (International Association of Oil and Gas Producers) have worked to integrate humans factors, communication and non-technical skills and leadership coaching for everyone from the C-Suite (the decision makers on the blunt end of the sphere) all the way to those who live and sometime die on the sharp end of the sphere.Read the full Rule 26 Report on BP’s Deepwater Horizon Macondo Blowout by Robert Bea and William Gale, Jr. here: http://www.mdl2179trialdocs.com/releases/release201302261000002/TREX-20001- Pub.pdfA number of our great leaders have inspired the deepwater oil and gas industry to take a different approach to those who risk their lives everyday so that we can maintain our comfortable lives.Continued on next page...Images courtesy of Deepwater Horizon Study Group - Center for Catastrophic Risk Management - UC Berkeley
Diversity and Inclusion is No Longer a Nicety It s a Necessity p 16 Reflections from NAPE Summit 2020 Interviews with LongPoint Minerals Quorum Software and Opportune p 26 Macondo Tragedy Lessons Learned at the Edge of Technological Envelope in Deepwater GoM p 32 Changing the Status Quo in the Oil and Gas Industry p 40 THE MAGAZINE FOR LEADERS IN AMERICAN ENERGY March April 2020 OilmanMagazine com WOMEN IN ENERGY TECHNOLOGY
Oilman Magazine / March-April 2020 / OilmanMagazine.com35OILMAN COLUMNAs with any occupation, new employees nor-mally undergo some form of training and on-boarding to help them understand the functions of their job and to become productive faster. In most cases, training is an ongoing necessity within many industries. Consistent training and professional development can not only help individuals master their job roles, but help them take on leadership roles and improve business processes.While many industries encourage and even require individuals to develop and enhance their skill sets, the oil and gas industry—according to individuals within the industry—lacks in the area of professional development. The GETI (Global Energy Talent Index) conducted a study which revealed that “oil and gas professionals are concerned at a perceived lack of investment in their training and development.” GETI’s survey of 21,000 oil and gas professionals also revealed that half of the energy professionals believed their employer did not regularly invest in their training and development, one in three claimed not to have received any training in the past year, and out of those that did receive training, only a few said it related to skills beyond their current job (18 percent) or to further their career (14 percent), among other ndings. With oil and gas professionals demanding more training and professional development oppor-tunities to enhance their skill sets, improve job efciency, and progress in their careers, it is up to oil and gas companies to provide the train-ing and tools needed to satisfy such demands. LiquidFrameworks, a mobile eld operations management and software solutions company, is one company that is helping oil and gas busi-nesses meet the demands of their employees while also making training more efcient for business leaders. CEO of LiquidFrameworks, Travis Parigi, expressed how LiquidFrame-works’ standout product, FieldFX® was “de-veloped with [oil] eld personnel in mind.” “Its user-friendly features and easy-to-use structure accelerate the implementation and increase the long term success rate with eld techni-cians, explained Parigi.” Parigi expanded on the purpose of FieldFX—LiquidFrameworks’ solution to improving training and workforce development—and the impact of and potential for software and technology in the oileld.FieldFX has various capabilities, including the ability to connect individuals across loca-tions. According to Parigi, “FieldFX gives our customers the power to connect from the eld to the ofce from anywhere in the world, even when you don’t have a network connection.” Oil and gas companies could leverage such a feature to connect their workforce to various training opportunities and to receive feedback on performance. “FieldFX streamlines com-munication between accounting, eld opera-tions, and ofce management, all with the touch of a button,” Parigi further explained. With individuals having the ability to connect to oth-ers from virtually anywhere, eld professionals seeking additional training, to improve their performance, or assistance with job roles can seamlessly communicate with senior oil and gas professionals and leaders at any time.With oil and gas professionals often tasked with complex job roles, it is important to be productive as quickly as possible in an effort to avoid downtime, while also having profession-als perform their roles effortlessly. Liquid-Frameworks’ FieldFX streamlines the training process for eld engineers. Parigi expressed “Multiple complex price books are negotiated between operators and services providers and FieldFX can easily represent these as standard-ized pricing models. This allows eld engineers to produce timely and contract compliant eld tickets without having to be trained on the mechanics of each unique price book for their customers.” Through the use of a product like FieldFX, oil and gas professionals can not only do their jobs more efciently, but can also become experts within their job functions at a faster rate. “FieldFX reduces training time and automated much of the legacy paperwork into a digital process facilitated by the software instead of requiring manual steps that must be trained,” stated Parigi.Although software and products like FieldFX are simplifying training processes and helping professionals to become productive faster, such software also provides professionals with the capacity to learn more about their current job roles, develop other skill sets, and take on leadership roles at a quicker rate. Therefore, oil and gas professionals will likely expect their companies to develop training software and provide the tools necessary to grow in their career paths. According to Parigi, “Learning Management System (LMS) will grow to become an integral part of the onboarding process along with compliance management systems.” As companies begin to integrate LMS into their employee onboarding processes, oil and gas professionals will be able to get more out of their training and properly carry out their job functions. “When those [LMS and compliance management] systems are coupled with the scheduling and resourcing of jobs, oileld service providers mark a great achievement by linking and enforcing the training to execution process,” expressed Parigi.With the oil and gas industry rapidly changing and experiencing a digital shift, professionals in the oileld are also demanding for changes to occur in the way they are trained. Parigi shared that over the next ve years, he expects that “many forward-thinking operators will push change management down to the well level per-sonnel.” In response, LiquidFrameworks con-tinues to make enhancements to their product FieldFX, the tool made for oileld professionals and what could be considered a step in the right direction for improved training processes. Parigi expressed how LiquidFrameworks’ investment in FieldFX will bring more features to many of their modules including Asset Management, Schedule & Dispatch, Timecards and E-ticket-ing. “Our roadmap is always evolving and our customers provide great direction as to where we should take it,” said Parigi. A New Way to Train: Digital Training in the Oilfield and Its Impact on the Workforce By Tonae’ HamiltonPhoto courtesy of everythingpossible – www.123RF.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com36OILMAN COLUMNSeveral methods exist for the installation of rigid subsea pipelines. Some of the better-known ones include: S-Lay, J-Lay, Reel Lay, Surface Tow, Below Surface Tow, Bottom Tow, Bottom Pull, Control Depth Tow Method, Horizontal Direc-tional Drilling and Push-Pull Method. Of all the methods for pipeline installation, the Reel-Lay method is the one which subjects the pipeline to the most punishment before it is nally laid to rest on the seabed. The pipe is already plasticised during reeling before being sent to site for installation and then subjected to further plasticisation as it is uncoiled, straightened and then laid down to the seabed.This article provides an overview of the potential failure modes that may occur for the Reel-Lay method of subsea pipeline installation and pro-vides ideas and past learnings for considerations in order to overcome such potential failures. Reel-lay method of rigid pipeline installation refers to a method of pipeline installation where a rigid pipe is un-spooled from a drum, straight-ened, tension applied, and then laid over a ramp to the seabed. To do this, the pipe is rst fabri-cated onshore and spooled onto a large drum (usually located on the lay vessel). The lay vessel is then mobilized to location, where the pipe is unspooled, straightened, and then passed through a tensioner before leaving the vessel. The reel-lay method of pipeline installation is dif-ferent from the S-lay and J-lay methods of instal-lation as illustrated in Figure 1. Although the reel-lay method of installation appears similar to J-lay, the similarity is only in the sagbend. The J-lay method incurs the least strain during pipelaying as the overbend is eliminated. For reel-lay, the pipe is already bent beyond its elastic limit and then straightened before being subjected to further straining in the sagbend during pipelaying. On the other hand, although there is overbend strain on the pipeline during pipelaying, the residual strain left by the S-lay method of pipelaying is much less than by reel-lay. Therefore, in terms of residual strain, the reel-lay method of installation results in the greatest residual strain on the pipe-line and negatively impacts its fatigue life.Potential Failure Modes and Considerations for Reel-Lay Method of Installation By Eng-Bin NgPhoto courtesy of Apisiri Sooksaen – www.123RF.comFigure 1: Illustration of differences between S-Lay, J-Lay and Reel-Lay method of installation (Ref 1).Figure 2: Illustration of ovalised pipe as a result of being subjected to plasticisation during at shop-oor reeling and unreeling.
Oilman Magazine / March-April 2020 / OilmanMagazine.com37OILMAN COLUMNPotential Risks & Challenges Associated with Traditional Reel-Lay OperationSome of the key risks or challenges facing a reeling operation include:a. Increase in pipe ovality caused by reeling (atyard) and un-reeling (offshore). In return, thiscauses:• Hydrostatic pressure to be greater onatter sides of the pipe, leading to:* Potential hydrostatic collapse in deepwater.b. Reduced fatigue life of the pipeline. Aplasticised pipe has a lower fatigue life thanone installed by other methods that do notresult in such high residual strain.c. Mechanical properties of the pipeline aremodied, and these include the yield stress,hardening slope and isotropy.d. Critical path risks.Some of these critical path risks include:i. Weld repairs into storage, i.e., when spoolingon the critical path, contractors sometimeshave to accept a weld repair as it would bequicker than chopping it out completely. Ifspooling is off the critical path, a defectiveweld repair will just be cut off rather thanrepaired, ensuring that all welds are of highquality.ii. Coating damage during stalk handling and/orspooling causes delay in spooling time as therepairs need to be made on the critical path.iii. Damage to the eld joint coatings duringreeling also prolongs spooling time andaffects the critical path.iv. Risk of critical path welding failures associ-ated with welding one stalk to the precedingstalk which has already been spooled on tothe reel while on the critical path of the con-struction schedule.v. Reel walking, which refers to worker(s) walk-ing on top of the reel as the pipe is beingspooled. Working at height in this mannerexposes personnel to risks that need to becarefully managed; however, sometimesmanual intervention is required to pack outthe pipe.Design & Fabrication ConsiderationsA pipeline used for a reel lay project undergoes a few cycles of plastic deformation. The pipe is rst spooled onto a reel drum on a vessel for transportation. During offshore installation, the pipe is unspooled, straightened and laid down Figure 3: Locations where plastification takes place during spooling (Ref 1).Figure 4: Locations where plastication takes place during pipelaying (Ref 1).Continued on next page...
Oilman Magazine / March-April 2020 / OilmanMagazine.com38onto the seabed. During the process, the pipe is fully and cyclically plasticized. Figures 3 and 4 show the locations where deformations take place during spooling and laying, and Figure 5 shows the plastication cycles undergone by the pipe. The reeled installation process imposes signicant curvature and plastic strain on a pipeline during installation which introduces the requirement of a wall thickness that is sufcient to prevent buckling. The minimum wall thickness is usually in excess of the wall thickness to resist hydrostatic collapses and in-service loading and hence can be the limiting requirement that governs the design.1. When the pipe is reeled onto the reel (1 -> 2) it is largely plasticized, as the non-linearity of the curve shows.2. When the pipe is reeled off and pulled from the reel to the aligner (2 -> 3), its curvature is removed which implies reverse plastication.3. Going into the aligner, the pipe is bent again to a curvature close to the reel one (3 -> 4) leading to a second plastication cycle. 4. Finally, the pipe is reverse bent in the straightener (4 -> 5) in order to remove any residual curvature and moment after unloading (5 -> 1).Figure 5 does not represent the full loading ap-plied to the pipe. The full loading is the sum of a bending driven by the radii of the reel, aligner and straightener, an axial tension driven by the tensioner and contact loads. Plastication is an irreversible phenomenon that modies the pipe properties. In this case, it affects the pipeline properties in 3 ways:1. Geometrical shape – reeling and straightening induce some amount of residual ovalisation.2. Mechanical properties – yield stress, harden-ing slope and isotropy are modied.3. Fatigue properties. Plastication induces permanent deformation to the pipe in the form of residual ovalisation. Pipe ovalisation is a key parameter for deep water applications. It affects the ability of the pipe to resist collapse under external pressure. The pipe residual curvature is eliminated by accurate straightening. Plastication also modies the mechanical properties of the pipe. A pipe being plasticized hardens or softens depending on its constitutive materials, and its yield stress is modied. Plastication also modies the fatigue properties of the pipe.To account for the punishment received by reeled pipelines, line pipe used for reel lay are generally specied to much higher requirements than other methods, e.g., S-Lay, J-Lay or Tow methods because the pipeline laid via reel-lay is subjected to much more punishment than the other methods. Hence, manufacturing speci-cations are much more stringent, for example:• Low thickness fabrication tolerance (D/t ratio)• Low variation in yield stress• Low Yield Strength /Ultimate Tensile Strength ratio• Apply high and steady back tension during reelingTo avoid failure of welds during spooling, un-spooling and straightening where the pipeline undergoes plastic deformation, stringent weld requirements are also required to avoid prob-lems with girth welds. One of the measures typically adopted is:• Over match weld properties to avoid exces-sive strain in weldHandling of the pipe during spooling is not an easy operation and special handling care/pre-cautions need to be taken. These include:• Care should be taken to ensure that back tension is applied to the pipe when being reeled is not sufciently high as to crush the pipe layers beneath.• The reel must be held under tension throughout the reeling-on, transport to site and reeling-off process. This is because the amount of stored energy in the larger reels can be massive and failure of a section that maintains this tension can result in an uncontrolled release of this energy. When this occurs, the pipe will uncontrollably spool itself off the wheel.For successful reeling operation, the Contractor needs to accurately estimate the followings and ensure that the pipeline is sufciently strong to withstand these:• Cumulative strain build-up• Potential for local buckling• Resultant ovality • Crushing Dr. Eng-Bin Ng has over four decades of experience in subsea pipeline design and installation and is an experienced and well-regarded industry professional. He has worked for Consultants, Contractors and Operators, and has held design, eld, project and managerial appointments. He is a Chartered and Professional Engineer with qualications in Engineering, Business and Law. He is also the author of the book “Subsea Rigid Pipelines – Methods of Installation”. References 1 Ng, E.B. (2019) Subsea Rigid Pipelines – Methods of Installation. Singapore: Partridge. OILMAN COLUMNFigure 6: Illustration of reeling tension and resulting crushing load on the pipeline being spooled.Figure 5: Plastication cycles undergone by pipeline during reel-lay process (Ref 1).
Oilman Magazine / March-April 2020 / OilmanMagazine.com39OILMAN COLUMNPhoto courtesy of BrainumEurope Builds Cloud-based, Automated Supply System By Eric R. EisslerCompared to the United States, Europe’s oil and gas industry operates differently in many facets. OILMAN Magazine had the opportunity to speak with another European IT development and consulting company, Brainum. Based in the Netherlands, Brainum was recently acquired by Implico, an international software and consulting company with headquarters in Germany. Both Brainum and Implico focus on the oil and gas downstream sector. OILMAN spoke with Managing Director of Brainum, Martin Keulemans, about the recent acquisition, Brainum’s technology and some of the differences between the European and U.S. oil and gas industries. To provide some background, the Netherlands is one of the main hubs for the oil and gas industry in Europe given its proximity to the sea and its center point in the European gas-pipeline network. This plays well into the acquisition, as Implico will have better access to “the strategic location and tight infrastructure, where many of the industry’s biggest players have their headquarters or subsidiaries,” Keulemans said. Acquisition and BenetsImplico and Brainum found that they have a lot in common and that both companies complement each other very well. Keulemans went on to say that, “in the eld of terminal automation, each of the two companies has a strong track record and a loyal customer base as well as unique expertise and future-looking technology. Regarding the latter, we have QINO and Implico has OpenTAS. Yet, we also excel in different areas.” He continued that, “one project we are already collaborating on is the Supply Chain United – a broad network of web services and cloud solutions for all downstream supply chain processes with multiple participants.” Much of the work that the companies do, relates to the retail gasoline sector and automating supply chains to the downstream, therefore keeping retail pumps running without interruption. Cloud-based TechnologySome of the technology that Brainum has on offer is QINO Now. Keulemans goes on to explain what this technology is and what is planned for the future:With QINO Now we have a powerful terminal management system available that manages and streamlines all processes in a tank terminal – from contract to invoice. Later this year, we will launch its follow-up QINO vNext, the rst true cloud-based terminal management system for liquid bulk terminals. It will mark a vital part of the Supply Chain United and provide storage terminal operators with all-new levels of performance, reliability and exibility.As Europe has some of the highest retail gasoline prices in the world, there are some thoughts that a stable, regulated supply chain could bring some relief at the pumps, or at least keep prices stable in the event of a major price swing due to political unrest in the Middle East or a natural disaster occurring in an oil and gas producing country. In regards to this question, Keulemans stated, “our solutions and services help storage providers to render their operations more efcient, more secure, more transparent and more predictable – allowing them to make better decisions. And our soft-ware also enables them to lower their transac-tion costs. This results in higher margins that allow downstream oil and gas companies to re-main protable even if the oil price is volatile.” So, while it might not be able to prevent price uctuations, it still enables oil and gas compa-nies to react to these swiftly and accordingly.Technology Gap Over the Ocean When comparing the United States and Europe, there are many, many differences between the two. While America is a great innovator of technology, Europe is a greater implementer of said technology. Keulemans supported this by stating the following on the state of technology between the United States and Europe: Advanced and integrated terminal management systems like QINO and OpenTAS are less common in the United States than they are in Europe. The use of automation usually implies rationalized processes and streamlined ways of working in elds like customer service, planning, dispatching, operations and customs. It seems that many U.S.-based terminals are not yet willing or ready to make this leap. So, they stick with manual or semi-automated methods that have always worked for them – even though these methods are less efcient than fully automated modes of operation. Recently, however, we have seen an increasing interest in digitalization in the U.S., too.While there has been much advancement in terms of technology adoption in the United States since the 2015 downturn, as supported by Keulemans, it is still apparent the U.S. oil and gas industry is lagging behind compared to Europe in terms of automation in the oileld and in downstream services. Automated Cloud-based Technologies Provide Stable SupplyIn conclusion, Europe is leading the way in automation technologies which should hopefully catch on soon around the rest of the world. One of the reasons behind this is the fact that networks have been in place a lot longer and close proximity. Furthermore, a dependence of imported hydrocarbons from Russia, the Middle East, and the United States make it a priority that supply networks are advanced and capable of providing the much-needed supply.
Oilman Magazine / March-April 2020 / OilmanMagazine.com40OILMAN COLUMNChanging the Status Quo in the Oil and Gas Industry By NJ AyukAfrica is changing and so is its oil and gas sector. Despite this, women remain largely underrepresented in the sector, with men and oil companies being the biggest roadblocks.In executive roles and key industry appoint-ments from governments, women are often not given the tools to succeed. African women in the sector are often promoted when the company or department is struggling and/or the results are poor. They are less often afforded the opportunity to implement changes and, most of the time, there is an expectation that there has to be a swift turnaround and results have to come in before the job moves back onto men.This affects a lot of women in the energy sector. In a report released in 2017, the World Petroleum Council and the Boston Consulting Group found that women represented just 22 percent of the global oil industry - much below the average of any other sector. We need to encourage industry decisionmakers - which are predominantly male – to play a role in ensuring that women succeed at the top. Most men do not understand that when women are hired, they are always in the unfavorable position as a result of the unwritten obligation to enhance or change the narrative around gender in the energy sector. I am conscious of the fact that the more I talk about gender issues in the oil sector, women feel even more worried and isolated as they do not want to be singled out. But, if we do not discuss it, many who do not have access to opportunities and will never get into Africa’s most lucrative sector. We need to make the oil industry more attractive and more accessible.We need to create more opportunities for African women in the oil and gas industry. It’s a win-win: Women have a great deal to offer, and good jobs for women contribute to a more stable, more economically vital Africa. The oil and gas industry’s failure to create more opportunities for women is a travesty. Women have a mighty role to play in this sector, particularly as leaders. In fact, those who have achieved executive status have been hugely successful and impactful. You would think that the industry would learn a thing or two from the positive examples that female oil and gas leaders are setting. Their achievements should be generating excitement and inspiring more companies to look to female talent to ll managerial and executive roles.Let’s look at Catherine Uju Ifejika, chairperson and CEO of Nigeria-based Britannia-U Group.When Uju Ifejika was working as a junior counsel at Texaco Petroleum in the 1980s, the young attorney would have been shocked if someone told her she’d later be described as “Africa’s most successful female oil tycoon.” Or as one of the richest women on the continent. Or as the founder of the rst indigenous petroleum industry E&P company in Nigeria to be headed by a Nigerian woman. In the early days of her career, Uju Ifejika was simply trying to build a successful legal career in a fast-paced, high-pressure setting. She never set out to break new ground for women or shift from practicing law to running a major oil and gas company. But today, as president and CEO of Brittania-U, Uju Ifejika is an important role model for women. She credits her rise to power, to some degree, to sheer determination.“I’m not a geologist and I have never worked in exploration and production,” she said during an interview with Fascinating Nigeria. “The only thing I know is how to take something that is nothing and create something out of it that you can see and appreciate… Not being an engineer or a geologist was immaterial. Today I speak the language of the geologist, I can interpret the maps, and when they bring in technical things we look at them together—because I was able to rise above my fear level.” Her company, which is involved in E&P, petro-leum engineering, data consulting, importation of rened products, shipping, vessel operation, and subsurface engineering activities, regularly partners with other indigenous businesses, contributing to economic stability. It also has trained more than 25 people from its host com-munities to be certied marine engineers, and it provides full-time employment for more than 20 community residents, along with nine others as contract staff.While Uju Ifejika’s drive and accomplishments are inspiring—in part, because examples of women holding executive leadership roles in the oil and gas industry are rare—women suc-ceeding in it should not be a rarity. Indeed, there are concrete steps the indus-try and African countries can take to ensure women have an active stake in this industry. I’m convinced that empowering women through the oil and gas industry would have far-reaching socioeconomic benets.“Women are often the linchpins of their communities, playing key roles in ensuring the health, nutrition, education and security of those around them,” stated “Oil and Gas Extraction Industry in East Africa: An African Feminist Perspective.” The 2014 paper was released by Akina Mama wa Afrika (AMwA), a regional Pan-African women’s organization based in Kampala, Uganda. I couldn’t agree with them more.NJ Ayuk is founder and CEO of Pan-African corporate law conglomerate, Centurion Law Group; Founder and Executive Chairman of the African Energy Chamber; and author of Billions at Play: The Future of African Energy and Doing Deals and co-author of Big Barrels: African Oil and Gas and the Quest for Prosperity.He is recognized as one of the foremost gures in African business today. A Global Shaper with the World Economic Forum, one of Forbes’ Top 10 Most Inuential Men in Africa in 2015, and a well-known dealmaker in the petroleum and power sectors, NJ is dedicating his career to helping entrepreneurs nd success and to building the careers of young African lawyers. NJ strives through his work to ensure that business, and especially oil and gas, impacts African societies in a positive way and drives local content development.NJ graduated from the University of Mary-land College Park and earned a Juris Doctor from William Mitchell College of Law and an MBA from the New York Institute of Technology. Photo courtesy of Vichien Petchmai – www.123RF.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com41OILMAN COLUMNInterview: Brad Boksteyn, Inventor, Guardian CSE By Eric Eissler Eric Eissler: What inspired you to create this unique product?Brad Boksteyn: Having been involved in the Industrial Fire and Safety industry for the past 30 plus years, I have always tried my best to make the work space or project I was involved with be the absolute safest working environment possible for everyone on site. NOTHING was more important to me than ensuring that my professional training was adequate and enabled me to provide accurate and comprehensive safety advice. My goal was to make certain that the crews I worked with went home safely to their families at the end of the work day. This device came to mind while I was working as a contract safety advisor on the SUNCOR Fort Hill Project in Northern Alberta. Once per week, all the safety advisors would pick a section of the project and do a section walk around talking with different trades about their experiences, safety concerns, just getting to meet people.What I noticed was red agging tape all over the place, in garbage barrels, hanging off scaffolding, a bit blowing around on the ground. But seeing it stretched out from ange hole to ange hole not being able to read any danger warning. It just seemed inefcient to me. As a safety advisor, the idea instantly came to my mind and I knew exactly what needed to happen. I’ve been driven to update this way of thinking ever since.With the new nets manufactured by Guardian CSE, it is my goal that all safety professionals will utilize this new conned space/entry protection to continue ensuring the safety of workers and all conned space entry crews associated with an entry project.When on-site, my number one pet peeve was red agging tape ALWAYS blowing around creating a tripping hazard, an environmental contaminant or just fading and becoming illegible. In order to solve this issue, I invented this new conned space entry protection device that can be securely fastened and re-used on almost any opening complete with interchangeable signage. This device effectively eliminates the need for red agging tape and haphazard signs hung by tie wire over man-way entry points. Not only does this save the environment from unneeded plastic waste, but it also provides the most innovative, effective industry warning protection available today. EE: What is your primary selling point when pitching to large companies, that continue to pay for rolls and rolls of danger tape?BB: To be quite honest selling wasn’t my major thought, it was more this net needs to be in the industry. It’s always really been about safety for me. Of course, I knew it could be a great business venture so between the two points it was just the right thing to do. So, to answer your question, I think this CSE Net will sell itself. Cost saving, environment saving, Interchangeable signage any wording any language any design and priced right. EE: How much can these signs save a large company over time?BB: To give a cost saving on vessel or tank entry projects over the span of one year will all be based on the companies policies and procedures on entries but it is safe to say they will save their money on many many rolls of red or even yellow agging tape that would just be wasted. One lead safety manager I did talk with in Canada mentioned the amount of money they spent on agging tape over the course of the turnaround season and it was an astronomical amount.EE: Do you have any safety certications?BB: Talking with many of the certifying bodies, because this is a new product on the market there isn’t really a standard to compare it with. But having said that OH&S in Alberta Canada has checked it out with a positive reply thinking this CSE net could possibly be an industry standard. I’ll also mention it’s been tested by oil companies and has been approved for use in their facilities.EE: Are the bungees able to be locked into an opening to prevent someone from removing it?BB: Yes, there is a way to lock this product in place if you required this.EE: Are there specic sizes you can purchase?Guardian currently has three sizes of nets, small round, large round, and a rectangle net. Guard-ian will build any shape and size clients require. EE: Can they be purchased from any country?BB: Yes, Guardian products can be purchased from any country and the CSE signs can be written in any language and wording that is needed, simply by contacting us through the website – www.guardiancse.com or email – contact.guardiancse@gmail.com.
Are you looking to expand your reach in the oil and gas marketplace? Do you have a product or service that would benefit the industry? If so, we would like to speak with you!We have a creative team that can design your ad! OilmanMagazine.com/advertise • Advertising@OilmanMagazine.com • (800) 562-2340 Ex. 1 ADVERTISE WITH US!Are you looking to expand your reach in the oil and gas marketplace? Do you have a product or service that would benefit the industry? If so, we would like to speak with you!We have a creative team that can design your ad! OilmanMagazine.com/advertise • Advertising@OilmanMagazine.com • (800) 562-2340 Ex. 1 ADVERTISE WITH US!
Oilman Magazine / March-April 2020 / OilmanMagazine.com43OILMAN COLUMNWhy Is An E&P Recovery Slow to Materialize? By Glenn SniezekThe U.S. economy is booming, but why is the E&P industry lagging? While the rest of the U.S. economy is enjoying one of its longest bull runs in modern history, the same, unfortunately, cannot be said for the E&P industry where the road to recovery continues to be challenged, especially for middle-market companies. Pricing for oil, natural gas and NGLs have remained depressed. The sector has squeezed as much out of costs to maintain and develop shale plays as they could over the past few years to the point where the focus has shifted to capital discipline and shareholder returns rather than growth at all costs.In addition, slumping oil prices have pummeled shares of energy companies in recent years – the S&P 500’s energy sector has been the worst-performing group in the broad index over the past two years and recently notched its worst January on record.Deleveraging transactions, whether in- or out-of-court, were not sufcient during the rst round of restructurings in the mid-2010s to sustain businesses as they still maintained too much debt. This has caused many E&P companies to le for bankruptcy protection in 2019 and the beginning of 2020, with many of them going into bankruptcy for a second time. According to Reuters, U.S. and Canadian oil and natural gas exploration and production company bankruptcies totaled 42 in 2019, up from 28 in 2018, citing data tracked by law rm Haynes and Boone, and the trend is likely to continue in 2020. Multiple Dynamics at PlayWith poor shale economics and depressed pricing seeming to be the new normal, E&P asset valuations have cratered. A few years ago, E&P assets were being priced at the PDP PV 10 range for deals. Now, we’re seeing pricing in the PDP PV 12-15 range as the new norm. This has created a new dynamic for asset-based lenders in recent bankruptcies and out-of-court debt restructurings where they’re now having to start taking equity in companies as part of the restructuring process. This is in stark contrast to the restructurings that occurred in the mid-2010s where asset-based lenders were able to come out relatively intact and subordinated debt was converted to equity or wiped-out.This dynamic is also forcing many E&P companies to pursue the Section 363 sale route in bankruptcy as they cannot restructure around their existing assets given the current market conditions or their lenders/creditors aren’t seeing enough value in the assets to convert their debt to equity ownership. A primary method to accomplish a “clean” asset sale under Chapter 11, this route references Section 363 of the U.S. bankruptcy code, 11 U.S.C.§ 363, which allows the bankruptcy trustee, or debtor-in-possession (DIP) with bankruptcy court approval, to sell some or all of the company’s assets free and clear of liens, claims and interests. This process generally maximizes sales prices as prospective buyers can:1. Gain the benet of being able to purchase assets on a free-and-clear basis and limit the potential liabilities assumed with the purchase; and 2. An auction of the assets is held to promote competitive bidding for the assets subject to court-approved bidding procedures. This was evident in the bankruptcy lings of Alta Mesa/Kingsher, Approach Resources, EdgeMarc Energy, White Star Petroleum and Southland Royalty Co., to name a few.Unless there’s a fundamental change in commodity pricing, it appears that E&P companies will continue to struggle and the parade of companies heading into bankruptcy will not slow down in 2020.Glenn Sniezek is a Director in Dacarba’s Restructuring practice. He has over 20 years of public accounting, corporate nance and restructuring experience and has provided interim management and advisory services to both public and private companies in the energy, oileld services, retail, manufacturing and transportation industries. Glenn has signicant experience in cash management, preparation and review of nancial forecasts, budgets and long-term business plans, integration and transition for mergers and acquisitions, troubled debt restructurings and bankruptcies. Mr. Sniezek earned B.S. degree in Accounting from Rutgers University. Photo courtesy of Chattrawutt Hanjukkam – www.123RF.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com44OILMAN COLUMNThe use of clean energy is increasingly more important for the future of humanity as we know it. To be able to understand the research topic in greater depth, it is necessary to answer the following question:What is Clean Energy?Clean energies, also called green energies, are those that when obtained or used do not emit any polluting substances or do not involve any processes that have a negative impact on the environment. But not all of them are renewable, as in the case of natural gas which virtually does not generate waste, but it is nonetheless a limited resource.In view of the climatic changes and global warming that have been evolving since the beginning of the Industrial Revolution, there is an urgent need to have an efcient energy production system, but sustainable and environment-friendly.Among the types of clean energy, we nd the following:• Wind energy: it is generated by the action of the wind force on the blades of special mills, which activated in this way make gears and a dynamo spin, thus generating electric current.• Solar energy: it is a renewable energy. This energy is obtained from the use of electromagnetic radiation issued from the sun. This has two types of uses: photovoltaic and thermal.• Hydroelectric energy: it is based on the conversion of gravitational potential energy of large bodies of moving water, such as rivers or natural falls (waterfalls), through a system of turbines moved by the force of the liquid in its path. It is one of the least environment-friendly since marine fauna is affected by the start-up of these large facilities and continuous water discharges.• Marine energy: it is obtained either from the force of the marine tides (tidal wave) or from the force of the waves (wave).Now that we know what clean energy is and what types of renewable clean energy exist, we can continue with the research.Harmony or War? (Clean Energy vs. Non-Renewable (Fossil Fuels))Currently, there is a taboo that these two types of energy are in a kind of moral war to see who stays at the forefront of the energy world. For a start, we have the “friends of the Earth,” who say that the energy that comes from fossil’s elements is highly polluting and has irreversible effects on our ecosystem. While it is true that although some things they argue may be true, it is necessary to understand that not everything Use of Clean Energy as an Alternative for Supplying the Oil Industry’s Production Chain By Juan ZambranoClean energy types. Photo courtesy of Alberto MasnovoRenewable Energy vs Fossil Fuels. Photo courtesy of Renergy.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com45OILMAN COLUMNis bad and that this energy can be optimally achieved in favor of the ecosystem.It is necessary to leave these stigmas behind and think about the future, to work in complete harmony. The oil industry is generally considered highly polluting; however, throughout most of the twentieth century and what goes of the twenty-rst century, it remains as the fundamental engine that energizes the world. In recent years, considerable efforts have been made to incorporate clean energy for oil developments. That is why the issue arises concerning the use of clean energies within the hydrocarbon production chain.Why should we have a balance? Simply because the use of non-renewable energy is the one with the highest demand worldwide and the one with the greatest supply, but since it is non-renewable, we know that at some point it will come to an end, therefore it is imperative to lengthen as much as possible its use. This is being achieved progressively with the increase of clean energy power generation facilities such as solar cells, hydroelectric facilities among others.Possible Uses of Clean Energy within the Hydrocarbon Production ChainThe use of these types of energies in the eld of hydrocarbons can be very useful either from small uses like powering the engines of the following: articial lifting, water injection, power pumps, or compressors for the transport of the hydrocarbons in the oil or gas pipelines to their discharge zone through the use of photovoltaic solar cells (the use of heating for the separation of water, oil and gas by using the other factor of solar energy: thermal energy). Hydrocarbons can be useful at large-scale such as, hydroelectric power plants or a wind turbine park to power drills, operating bases or a renery for energy autonomy.Advantages and Disadvantages The application of this type of energy will bring more advantages than disadvantages. Both are described below:Advantages:• They do not pollute: this indicates that they do not contribute to effects such as climate change or global warming, some of the main environmental problems we are facing today.• They do not produce waste: for example, solar or wind energy, it is clear that they do not produce any type of waste.• They do not cause a chemical reaction: that is to say, clean energies are called so because no chemical reaction is involved for their production.• They are renewable: most of the clean energies are also renewable energies. This is to say, inexhaustible resources that will always be present.• They are safe: clean energies are safer for our health.Disadvantages:• Rare implementation: the main difculty that clean energy has to overcome is its own implementation, and the development of sufcient infrastructure.• Changes in animal behavior: some facilities such as wind turbines or hydroelectric plants may cause changes in the migratory behavior of birds and sh.• Irregular obtaining: by depending on natural elements, one can think that when the optimal conditions are not met, energy is no longer obtained.You may think that these cases have never been applied in the industry because of the supposed war, but it is quite the opposite. More and more cases of the application of clean energy in the hydrocarbon industry are being developed. Among the real cases that are being developed are solar energy, wind energy and wave energy.Application CasesBelow are some real cases of the application of these types of energies within the hydrocarbon production chain.The rst case is published on the PV Magazine web page in the article “Solar PV and batteries to provide 24-hour power for Santos oil pumps” where they describe the use of photovoltaic energy for the operation of well pumps to extract oil 24 hours a day Extracting oil in the Cooper Basin using solar PV and battery storage to power the beam pump. Photo courtesy of Santos - PV MagazineGlassPoint’s enclosed trough technology. Photo courtesy of GlassPointContinued on next page...
Oilman Magazine / March-April 2020 / OilmanMagazine.com46and in this way replacing the use of diesel engines that emit many pollutants into the atmosphere.The second case, also of solar energy but in this case thermal energy, occurs with the GlassPoint company that uses a technology based on the absorption of solar rays by using mirrors that obtain the position of the sun at any time to reect these in a pipe with water to generate steam by heating for its different uses in the oil industry such as steam injection, use of steam for the separation and rening of hydrocarbons and all this process is protected by a greenhouse.Finally, I want to highlight a case that caught my attention, as the SENER company publishes on its website, it is developing a technology that could be a hybrid of three types of clean energy and that can be implemented as needed, these are: solar, wind and wave energy. This project is called “Wave Energy Collector,” which is a marine infrastructure for shallow and deep water, this one is based on the principle of OWC (Oscillating Water Column) and, in addition, it has its own maintenance and cost analysis software (SENERWave) for WEC. This project, being located in the maritime area, could be very useful and benecial for all oil projects that are carried out offshore and require the use of energy for proper operation, but it can also be useful for any on land operation.To conclude the investigation, it is important to see the progress to present day, in which different types of energies are combined and that also the taboo of the moral war that exists between both types of energies (those of renewable sources and non-renewable sources) is being left behind. On the other hand, there are oil companies that are also dedicating lately to the development of clean energy for various domestic and industrial uses without leaving behind their role in the area of hydrocarbons. So a future of prosperity and balance between clean energy and fossil energy is expected.Juan Zambrano has around 3 years of experience in the oil industry, working in the following areas; reservoir engineering, support engineer for a petrophysical environmental corrections in a petrophysics program and geomechanic engineering. Working in several projects, such as, developing a 1D geomechanical model, a Phase 1 reservoir model and serving as a consultant in a petrophysical app development. Holding a Bachelor’s Degree in Petroleum Engineering and currently coursing a Masters in Petroleum Engineering. OILMAN COLUMNHow the enclosed trough technology works. Image courtesy of GlassPoint
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Oilman Magazine / March-April 2020 / OilmanMagazine.com48OILMAN COLUMNRenery operators running ICS (Industrial Controls Systems) have many concerns, such as keeping the plant running smoothly. In this universe, information technology isn’t necessarily a high priority. However, information assets play an increasingly important role in the rening process, which means that understanding cyber security threats is vital, perhaps even a competitive advantage. Failing to understand that could be a potential disaster. Technology security professionals protecting information assets should keep one acronym in mind: CIA. No, that’s not the intelligence agency—it refers to: Condentiality, Integrity, and Availability. If this triad is adequately maintained, information assets have a good security posture. If any single aspect is compromised, a resulting breach can be very costly for the business, and dangerous to employees.Before getting into potential threats, let’s understand why reneries are more vulnerable now than before. Most importantly, OT (Operational Technology) networks that support production facilities are no longer segregated from their IT counterparts—and that changes everything.Advancements in information technology and the drive toward data-based decision-making have led to the bridging of these two environments, and production data is now widely shared and analyzed. The ‘air-gap’ that once separated OT from IT no longer exists, and attacks that previously required physical access can now come from anywhere on the planet.Further exasperating the problem is the fact that COTS (Commercial off-the-Shelf) products are much more common now than before. These devices require maintenance and software updates more frequently than purpose-built and proprietary equipment. For example, components of OT networks may include Windows-based computing devices. Microsoft releases updates every month, including ’patches’ for security vulnerabilities. However, these systems must stay up when the renery is running – even a short outage is unacceptable. As a result, many devices have out-of-date and vulnerable software.Over time, the problem gets worse. Once installed, OT components can remain in production for decades – far longer than the lifespan of computing resources in business networks. This leads to operating systems or other software remaining in use without manufacturer support. The more critical these devices are, the more problems they can cause. Cyber criminals will attack whichever systems are available, without regard for function. Attacks can be launched from remote locations and include DoS (Denial-of-Service), the introduction of malicious software (malware) such as viruses or worms, or ransomware. That last one is particularly problematic because it holds computing resources hostage; paying the price is often cheaper than restoring the affected systems. That makes for a very protable criminal business. Any of these attacks can disrupt the condentiality, integrity or availability of information assets. At best, it’s a nuisance; at worst, it can crash the entire facility.So why don’t reneries simply patch their ICS computers more frequently? Downtime in a renery is very costly, and maintenance windows don’t open as often as in business networks. According to the U.S. EIA (Energy Information Administration), renery capacity utilization averaged 90.5 percent over the rst 48 weeks of 2019.1 There’s very little time to make software updates. Now for the bright side: Operators can and should be proactive in determining potential weaknesses. First, every organization needs an asset management program. This should include a list of every device on the network, its OS (Operating System), and what function it provides.According to the OTSCA (OT Cyber Security Alliance),2 asset management includes an inventory of “…resources (hardware, software, documents, services, people, facilities, etc.) that are of value to an organization and need to be protected from potential risks.”3 To be thorough, the OTCSA recommends gathering the following for all components in the renery: 4 • System information – Asset name, vendor, type (PLC, RTU, HMI, SCADA server, remote I/O), model, serial number, OS or rmware, domain or workgroup.• Network information – IP addresses, Mac address, domain, protocols used, open ports, gateway.• Asset state information – Running, stop, program, test, decommissioned.• Contextual information – Geographic, plant, and process location, CPE (Common Platform Enumeration), and other contextual aspects relevant for mapping vulnerabilities.Gathering this information can be difcult in an OT environment. Many tools used in IT actively scan assets or require additional software to be installed; devices used in a renery control system may not support such software, while the overhead of active scanning can disrupt service. The IT world is more mature in these practices, but they don’t have the same challenges as ICS operators.There are other ways to create an asset inventory. For example, some available products passively monitor network trafc and dynamically build a database of devices on the ICS network. The Cyber Security Problem for Oil and Gas Refineries By Damon J. SmallPhoto courtesy of davidoff205020 – www.123RF.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com49OILMAN COLUMNThis technique is useful because it can quickly detect new or previously unknown devices. It’s crucial not only to ensure that runtime is not uninterrupted but also to detect unauthorized or malicious activity. Monitoring, whether active or passive, is also a key component of the organization’s IR (Incident Response) program. In sum, you can’t defend what you can’t see, and a holistic asset management program is the perfect remedy. Asset management is also a key capability for broader OT and IT teams, and necessary for the next recommendation: architecture review. This involves understanding which devices communicate with one another, where security boundaries exist, and how they support the logical ow of information required to operate the plant and manage the business. Specic goals include ensuring that only those devices that need to communicate with one another can do that, and the rest have appropriate security boundaries. This can be a time-consuming and complex undertaking, and might require bringing in a third-party rm with the right expertise.While the output of the asset management process is a database of computing resources, architecture review typically serves up topology maps. This diagram shows the logical and physical relationships of devices to one another, how they are interconnected, and what security boundaries exist between them. The inventory leads to the architecture, and that in turn leads to a threat model.Threat modeling considers the network architecture and its potential weaknesses. Once understood, mitigating controls can be implemented to reduce the likelihood of a cyber-attack. There are many ways to approach this task. You can use the topology maps to identify each subsystem necessary for running your plant. Now, consider what would happen if any component within each subsystem became unavailable or was otherwise compromised. Remember, it’s not only the availability of your assets that can be disruptive – it’s also the integrity of the information they manage. What would happen if the data was no longer trustworthy? And it’s the condentiality: What would happen if ICS data fell into the wrong hands? If losing any of these characteristics in any subsystem leads to production disruption that causes revenue loss or safety issues, then they should be considered worthy of greater protection. The operator can now prioritize those subsystems relative to the others, and determine where technical controls and security boundaries are needed.The next step in the threat modeling exercise is to consider which factors can disrupt the plant’s control systems, and from where these disruptions might come. Again, remember that most ICS or Process Control Networks (PCN) are no longer ‘air-gapped’ from their IT counterparts. Therefore, the cyber security perimeter is not at the outer edge of the OT network, but at the edge of the broader enterprise. If OT and IT are interconnected, can malicious software or unauthorized users pivot from the business network to the plant?This is a high-level, if simplied, description of threat modeling, but it should help frame the process in the reader’s mind and provide a starting point for discussion.Protecting information assets is an iterative process that requires ongoing efforts. If an operator invests the time required to develop an asset management program and study its systems architecture and threat model, then it is better prepared to prevent, detect and respond to information security-related incidents. Look at it this way: The cost of routine maintenance on physical assets within a renery is far lower than the cost of replacing them. Investing in your information security program is also cheaper than recovering from a hacker’s attack.Damon J. Small, MSc.IA, CISSP, is Technical Direc-tor at NCC Group North America, a security consul-tancy with 35 global ofces, 2,000 employees and 15,000 clients, where he consults with global leaders in critical infrastructure defense with specialty in oil and gas, aerospace and healthcare. You can reach him at nccgroup@cdc.agency. 1 https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WPULEUS3&f=W, accessed December 9, 20192 The author’s employer, NCC Group, is a founding member of the OTCSA. https://otcsalliance.org/members/3 OTCSA, “Vulnerability Management for Operational Technology,” (October 2019), page 4, https://otcsalliance.org/vulnerability-management/ 4 ibid., pages 5-6ADVERTISE WITH US!Are you looking to expand your reach in the oil and gas marketplace? Do you have a product or service that would benefit the industry? If so, we would like to speak with you! We have a creative team that can design your ad! Call us (800) 562-2340 Ex. 1 OilmanMagazine.com/advertise Advertising@OilmanMagazine.com
Oilman Magazine / March-April 2020 / OilmanMagazine.com50OILMAN COLUMNNatural gas is a mixture of hydrocarbons that contains methane (CH4) at an amount greater than 80 percent, volumes of alkanes and, in some cases, small traces of pollutants like nitrogen, sulfhydric acid, helium, or carbon dioxide. Gas comes from chemical interaction processes, among plants or decomposition of animal materials exposed to high pressures and temperatures in the subsoil.Gas as well as oil comes from deposits, but unlike crude, gas is easier to extract, due to its low density and gaseous condition it moves more uently through the channels of a deposit. There are two types of deposits: associated gas deposits or non-associated gas deposits.During the 19th century, gas started to be used as a power source in American households as a fuel for lighting. With the birth of electricity, gas was shifted to the uses of heating, but in the last quarter of the 20th century and today, it has become the hydrocarbon generator of electric power par excellence, because the CO2 emissions are low.After the process of gas production, the cleaning process is next. This is due to the amount of pollutants that gas can contract from the deposit and that they can destroy the transportation facilities.On the other hand, we have the enrichment process. This is the process whereby the gas quality is improved, extracting helium and nitrogen to leave the most energetically attractive components in function, such as methane (CH4) or propane and ethane.The EIA (U.S. Energy Information Administration) explains that thanks to the implementation of new technologies, the amount of hydrocarbon-producing wells grew from 729,000 wells in 2000, to more than 982,000 wells by the end of 2019 in the United States, producing 12.04 million oil barrels per day (b/d), and a gas production of 97.59 million cubic feet per day (bcf/d), it should be noted that gas production is present in more than 70 percent of the wells developed for 2019.Although the well has the duality of producing gas and oil at the same time, it is absolutely necessary to know which wells are oil-producing and which are gas-producing, the best way to do this is taking at a look at the annual close of the well production. The term gas/oil ratio (GOR) is dened as the number of cubic feet of gas per oil barrel produced. If at the close of a year, the well is above the 6,000 cubic feet per barrel it is considered to be a gas well, if it is below it is considered an oil well.The image below, provided by EIA, shows the growth of gas production in time, from 2000 to the close of 2018.For the conversion of gas into domestic energy, there are thermoelectric power plants that operate with natural gas, unlike other electric production plants, these have the advantage of being smaller and easier to maintain, compared to a nuclear plant that is the only one that surpasses the power supply by a gas-type one. The operation of a thermoelectric power plant with natural gas can be dened basically in three steps, like those mentioned by Bethel Afework and collaborators, in the article published in 2019 and which is named Natural Gas Power Plant, written for website www.energyeducation.ca.It indicates that natural gas turbines are theoretically simple and have three main parts: Compressor: Takes in air from outside of the turbine and increases its pressure.Combustor: Burns the fuel and produces high pressure and high-velocity gas.Turbine: Extracts the energy from the gas coming from the combustor.Use of Natural Gas Production for a Thermoelectric Power Generation Plant By Andres OcandoThermoelectric plant. Photo courtesy of SiemensGas production in the United States, from 2000 to 2018. Source: EIA
Oilman Magazine / March-April 2020 / OilmanMagazine.com51OILMAN COLUMNA diagram of a gas turbine engine. Image courtesy of Energy Education.U.S. energy power. Image courtesy of Visual CapitalistThermoelectric gas power plant combined cycle process. Image courtesy of Science DirectTaking this into account, there are two types of thermoelectric power plants that operate with natural gas, simple cycle plants and combined cycle plants.In simple cycle plants the operation is like that of a car, that is to say by combustion, the gas enters followed by an air column to the chamber, where the combustion process happens, and these multiple explosions generate the movement of the turbine (The larger the turbine is, the greater the generation will be), the movement is catalogued as work and is in accordance with the law of thermodynamics W=E.In combined cycle plants two thermodynamic processes occur in the same system, one comes with the other. This method of energy production uses the same law of the simple cycle including the energy generation by combustion, but in turn, it uses the heat eld resulting from the combustion to heat the water. Later, this water becomes pressurized steam that inuences the movement of smaller turbines, which work in parallel with the main turbine.In this way, we benet 60 percent more from the generation process, compared to the simple cycle plants. Because the process of combined cycle plants is higher, the cost of manufacture and maintenance of the plant is also greater, and this increases the cost of energy. According to the EIA, the price for combined cycle plants is $500-550/KW, unlike simple cycle plants, which is $389/KW.In either case, the axis of the turbine works as an alternator, alternators are known for producing energy from magnets. By exerting movement on the magnets, an energetic eld is created; the electric receivers take advantage of this eld to be converted into electric power.In the United States, an average of 4,000 million MWh of electricity is generated for internal con-sumption, of which 32.1 percent comes from electric production by plants using natural gas.For the rest of the world, a 22.9 percent trend was recorded until 2015, becoming the second-most important source of energy in the world.In the past, gas was vented or burned. Nowadays, gas is a resource that can be found in the stock market and its price is measured by the amount of energy that this can produce (heat capacity), therefore it is measured in millions of BTU. Since March 2019, the price scale is taken in a range from $3.36/ MMBTU to $4.02/MMBTU.The energy produced in electric power plants with the use of gas that comes from production brings a number of advantages and disadvantages:As advantages we have:• Thanks to the mobility of gas in hydrocarbon deposits, when the well is opened it is virtually the rst available element, it is easily transported and it occupies little space. All this is reected in the cost, making it cheaper than other elements used to produce energy.• Any place with clean water supply, it can Continued on next page...
Oilman Magazine / March-April 2020 / OilmanMagazine.com52OILMAN COLUMNbe a good option for installation of a thermoelectric natural gas power plant. In addition to occupying little space, the operation is simple and maintenance as well.• Compared to other types of power plants, the cost/production balance is greater in any case.• Because it works as an engine, it can be started or stopped much faster than other plants; therefore, it works properly as a support team if some other method fails.Some of the disadvantages of this method state that:• It is a problem for global warming; because it works as a large engine, it generates large amounts of CO2 to the atmosphere.• The biggest cost of this method is the constant use of lubricating oil for proper and optimal operation.• Despite having the facility to be installed anywhere with a clean water source, it has the problem of gas supply, which causes gas plants to cease to be reliable for non-hydrocarbon producing countries, unless their border limits with some producing country.The fusion of the oil and gas markets and the energy sector of domestic or industrial consumption was born in the rst quarter of the 20th century with the use of carbon, as the necessities grew, the methods changed. Nowadays, gas is a strategic product, thanks to different technologies and the birth of new elements like graphene, the size of the electric power plants has been reduced managing to create naval thermoelectric power plants that can provide electric power for months to states and cities, as the case may be.Andres Ocando is a petroleum engineer who graduated from Santiago Mariño University in Venezuela. His geomechanical-oriented thesis received an honorable academic mention. He currently has 4 years of experience working as a geomechanical and reservoir engineer at PDVSA. World energy balances. Image courtesy of Energy EducationMobil Thermoelectric Gas Plant. Image courtesy of Siemens
Oilman Magazine / March-April 2020 / OilmanMagazine.com53Photos courtesy of KvaserOILMAN COLUMNReal-time Communication Using CAN Devices Helps Advance Solutions in Directional Drilling By Jesse PaliottoHouston-based engineering rm Erdos Miller develops down-hole devices used in the drilling of advanced horizontal oil wells. Their rm develops down-hole devices used in drilling ad-vanced horizontal wells, and their tools provide critical drilling and operational data, directly from the drill tools. Most signicant is that these devices operate in extreme environments and are subject to high temperatures, vibration, and intensely high pressure. Each component of this system must withstand intense conditions and include rugged and reliable hardware, while also utilizing a exible and customizable protocol. Such precision systems that measure while drilling call for an advanced set of tools and communication capabilities to both operate and troubleshoot simultaneously. This article will introduce the CAN (Controller Area Network) bus in general as a solution in advanced drilling. It will also explore briey how Erdos Miller uses CAN devices to transfer in real-time the mission-critical data needed to command the location of a drill head to within centimeters of its intended target.Why Directional DrillingDirectional drilling is ideal for a multitude of reasons: it is cost-effective, it improves produc-tion, it allows for multiple target zones with one wellbore, and, perhaps most importantly, it allows for the entry of previously inaccessible locations. Among many examples, directional drilling allows for pipeline construction beneath riverbeds and a variety of other obstructions. Ultimately, it greatly reduces environmental impact, particularly in the Arctic and in other offshore locations. But this application relies on integrated tools and communications to both ensure precision and to troubleshoot unexpect-ed issues in real-time. While advances in drill sensors and other global positioning technology have aided in ensuring precision and accuracy, real-time communication is the cornerstone to successful direct drilling. CAN devices have the advanced communication capabilities that can help provide reliable solu-tions to these complex needs.Introduction to CAN Bus & CapabilitiesA Controller Area Network (CAN) is a serial communication bus that was rst invented by Bosch to reduce cable wiring, and then was developed further and codied by ISO11898-1 standards. In short, the CAN bus refers to a multi-master data bus that is immune to noise and has framing and error detection built in. It is a message-based protocol and is designed to allow micro-controllers to communicate across applications and platforms. CAN bus is utilized by a variety of industrial and automotive applications that require rugged and exible performance, particularly in harsh environments. It allows for ne-tuning in real-time and integrates seamlessly into other ongoing operations. It is a powerful protocol, largely because it is so exible and customizable.Erdos Miller’s Usage of CAN’s Flexible and Customizable ProtocolWhen Ken Miller rst began his work in the oil and gas sector, the majority of the hardware being used in these applications utilized a serial protocol.“Based on my experience with CAN at Texas Instruments, we began designing systems that used the CAN bus protocol instead,” said Miller.Erdos Miller chose Kvaser’s rugged CAN devices to facilitate the real-time transfer of their mission-critical data in the midst of down-hole drilling. Their CAN integration assists in remotely determining and adjusting drill-head locations down to the centimeter, while using a proprietary higher-layer software that they’ve built to work atop the Kvaser API. Managing to nd the right measurement-while-drilling system for Erdos Miller engineers was no easy task. The balance of rugged, reliable hardware and a exible, customizable protocol is necessary for their business, and Erdos Miller needed something that was both affordable and rugged enough to be used out in the eld. Not only that, but their CAN bus must be reliable night and day and their engineers needed to have a PC interface to go along with it. Ultimately, CAN applications have a massive part to play in advanced drilling techniques such as directional drilling. CAN represents an effective solution for measuring-while-drilling as it allows for both precision-based operation and simultaneous troubleshooting. Choosing the right CAN bus for a down-hole operation is of the utmost importance for long-term success, particularly as the oil and gas industry continues to develop in complexity and in the need to handle environmental obstructions.Jesse Paliotto is the Marketing Director at Kvaser AB, a Swedish electronics company specializing in advanced Controller Area Network (CAN) solutions. He has worked in media technology, communications, and sales, with an educational background in marketing strategy. Jesse resides in Los Angeles, California.
Oilman Magazine / March-April 2020 / OilmanMagazine.com54OILMAN COLUMNOILMAN COLUMNThe Crude Life engages with industry experts and energy enthusiasts every day with inter-views, radio programs and podcasts. These conversations range from CEOs to truck drivers to authors to engineers to cafe owners. Just like our diverse experts and interviews, the conver-sations have depth and worldly experience. Over the past decade there has been an increase in the herd mentality towards climate change and against fossil fuels. The Crude Life has been tracking the rise in the cult-like behavior behind the environmental push.Here are some of the best quotes from The Crude Life regarding The Cult of Environmen-talism and The Rise of Regulations. “I believe you are correct in your observation that the activists are using a public health debate template. That template is coming, and has been coming for some time now. That is the issue ultimately New York used to ban fracking and may permanently ban it at this point and from what we are hearing, they may just do that.”Tom Shepstone, NaturalGasNow and Shepstone Management Company, Inc.“So, Democrats on that night of the election in November of 2018, when Coloradoans defeated Proposition 112, the anti-oil and gas initiative, they also elected democrats across the state at a level that hasn’t been seen since the 1930’s here in Colorado. So in February of 2019, a month after Governor Jared Polis took ofce and the democrats took over the state house, we saw Senate Bill 181, which was a sweeping oil and gas regulatory overhaul which included unprecedented levels of local control which the governor talked about in his campaign over oil and gas regulations.”Dan Haley, President & CEO, Colorado Oil & Gas Association“There is always going to be those people who just do not understand it and just believe everything they see on the news or believe everything they hear. They look at these oil spills and just assume that’s how the industry operates. But when you look at it, the industry is very environmentally conscious and we do a lot of things to make sure that we keep our state that we live in clean.”Patrick Hartford, R.P. Oileld Services“I think as an industry we have been complacent and now the narrative is being controlled. Look at the Oscars awards show, it took less than a minute and a half for them to call us ‘climate deniers.’ It just irks me. But there is no response. There wasn’t one energy company who pushed back after that and said ‘oh by the way they are incorrect.’ The activists continue to control the narrative.” Joseph JB Bendik, The Navitas Organization“The opposition’s playbook has become fascinating to me. As we have noticed they have now brought in young people. So, they are inltrating our school system with the knowledge and message they want to spread. The Greta Thunbergs of the world. There was a protest here in Colorado not too long ago where they let kids get out of school to protest climate change at the capitol.”Colorado State Senator Ray Scott, District 7“I come from an oil background, my family has been in the oil and gas industry for 60 years here in Gillette (WY), and it’s a way of life for us. It’s hard to have someone from outside the area come in and say we are destroying everything. Well my family has also had a ranch in Campbell County for 100-plus years now. You can’t be a crude oil man and destroy the environment when you are running a ranch because it goes hand in hand. Aaron Jordan, Black Water Environmental“The environmentalists do not attempt to contextualize it properly, they just use these messages that sound simplistic and make easy soundbites and they are provided by the so-called environmental movement, which is really the climate change that’s doing it. And you are right that they are so far ahead of industry with their message and connecting with the average person. They are smearing with their messaging and have an army of people doing this. If you go to any climate activist website, and there are dozens of them here in Canada, and look at the army of people they have working there. I don’t even know where all the money comes from but it is a lot of money to fund those activists.”Terry Etam, author of “The End of the Fossil Fuel Insanity”“It’s just dangerous what they are saying about banning fracking and climate change. Some of the claims they are stating are just wrong. Some of the things that they are stating they want to do as part of their agenda, you can’t take those things back. They’ve publicly said it. It’s there, on record.”Bailey Midkiff, WIC“Colorado is denitely facing a real challenge. Just with all the regulations that are coming down the pipeline. More restrictions on the industry which is making it harder for companies to operate in that state. We’ve actually been experiencing a lot of client companies that have looked at pulling their resources out of Colorado and into other basins. Other companies are just going to hit it as hard as they can until the end of the year and get as many permits in place as they can before some of the regulations come down on them.”Kirsten Jesperson, Mile High Employment Solutions The Crude Life Podcast can be heard Monday through Thursday with a Week in Review every Friday.Jason Spiess is a multi-award-winning journalist, entrepre-neur and content consultant. Spiess has over 30 years of media experience in broadcast-ing, journalism, reporting and principal ownership in media companies. Spiess has also worked as a guest correspon-dent for a number of local and global news organizations from 660 KEYZ-AM Williston to CNBC to the BBC World. Spiess is a full-time father, cancer survivor, environmental-ist, author, North Dakota nomad and gradu-ate of North Dakota State University. The Crude Life Conversation on The Cult of Environmentalism By Jason SpiessNEPA protest outside of the regional EPA headquarters in Denver. Photo courtesy of Jason Spiess
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