The Bakken Oil Report

Page 1

Watford City: in the bullseye of the Bakken Bakken oil brings wealth of change to Sidney, Montana

Crude-by-rail services expedite takeaway capacity N.D. addresses infrastructure challenges in Bakken oil counties Potential impacts to the oil industry of proposed federal tax legislation



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2012 CONTENTS

An onramp to energy independence Watford City: in the bullseye of the Bakken Crude-by-rail services expedite takeaway capacity Whiting plants roots, flourishes in North Dakota Bakken oil brings wealth of change to Sidney, Mont. Billings is strategic to energy MDU Resources has deep roots in the Bakken N.D. addresses infrastructure challenges in Bakken oil counties Enbridge: 50 years of investing in North Dakota Frontier Energy builds new high-tech facility in N.D. API Williston Basin brings people and food together Potential impacts: proposed federal tax legislation and the 2012 Budget The truth about fracturing myths Bakken rocks this stock! Beds in the Bakken: PTI Group makes transition to life in the field seamless Beaver Creek Archaeology: a growing consulting company in the oilfield Controlled chaos? Petroleum Safety & Technology Center expands to meet oil industry needs Riding the M&A wave Plan to attend the 20th Annual Williston Basin Petroleum Council MCA offers oil industry workers benefits from membership Success by separation CanElson Drilling grows in oil with natural gas technology Kilo Technologies’ WTS measures oil content with precision The energy level is high at Bismarck State College Cessna: helping your exploration take flight MVTL provides analytical services for Bakken’s energy development Bismarck-Mandan: gateway to the North Dakota oilpatch ‘Bakken Central’ Cenex truck stop goes extra mile for oilfield workers Free people work XL pipeline important to U.S. economy, security North Dakota sets example in energy production for nation Energy and our future Candidates share more than a border Environmental compliance support for the oil industry Trust leading oilfield services provider Graco to deliver superior results Ziff Energy to conduct first Bakken oil shale drilling study Logan Completion Systems advances multi-stage fracturing technology ‘X-Tend’ your reach Rainbow Ceramics enhances production in Bakken resource play Quality Mat Company saves oil companies millions APEGS finalizes title changes Monson Corp. appreciates your business RAS International helps companies accommodate workforces Executive Services serves Bakken staffing needs TCA Marketing loves the Bakken’s fast pace, looks to expanding Oilfield Integrators: an industry leader Trilogy Oilfield aims to provide great value to the Bakken region TJT meets emergency workforce housing needs Petroleum Services offers many products and services to clients Index to advertisers

OIL REPORT 2012

ON THE COVER Bakken Pioneer Drilling rig 67 on the Locken 14-9XH in Mountrail County, North Dakota. Photo courtesy of Whiting Petroleum Corporation. Photography by Jim Blecha, www.oilandgasphotographers.com.

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Published by: DEL Communications Inc. Suite 300, 6 Roslyn Road Winnipeg, Manitoba Canada R3L 0G5 www.delcommunications.com President DAVID LANGSTAFF Associate Publisher JASON STEFANIK Managing Editor KATRINA A.T. SENYK katrina@delcommunications.com Toll Free: 1.866.403.5467 Advertising Sales GLADWYN NICKEL DAYNA OULION ANTHONY ROMEO COLIN JAMES TRAKALO __________________________ Production services provided by S.G. Bennett Marketing Services www.sgbennett.com Art Director KATHY CABLE Layout / Design DANA JENSEN Advertising Art DERYN BOTHE JULIE WEAVER ______________________ © Copyright 2012 DEL Communications Inc. All rights reserved. The contents of this publication may not be reproduced by any means, in whole or in part, without prior written consent of the publisher. While every effort has been made to ensure the accuracy of the information contained herein and the reliability of the source, the publisher in no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees.

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10 | BAKKEN OIL REPORT 2012



MESSAGE

An onramp to energy independence Montana Governor Brian Schweitzer.

W

hen I visit with Bakken oil producers, I ask them how things are going. “Great,” they say, except for one thing – the bottleneck. They don’t mention taxes, because they know Montana has one of the best tax climates in the nation, according to the conservative Tax Foundation. And they know taxes on oil and gas in Montana are a full 20 percent lower than our neighbors’. They don’t mention our regulatory environment, because our permitting, too, is done more efficiently than the competition’s; Brigham Energy recently praised Montana for its “good operating environment.” Additionally, we fixed our broken workers’ compensation system, reducing rates by 20 percent. Oil producers know these are just a few of the factors that make Montana one of the best places in the world to start a business, raise a family, and grow a community. What oil producers tell me about, over and over, is the oil transport bottleneck. There simply isn’t enough capacity to efficiently ship Bakken oil to market, which means producers sell their oil at discounted rates. From the outset of the dramatically increased oil production of the Bakken, producers have seen discounts as high as $20 a barrel. When success depends on the ability to maximize marginal returns, to reinvest and to create jobs, this discount is unacceptable. For several years, I worked to find a solution. Early on, I convened meetings with oil producers in Billings and then again in Bismarck. TransCanada had proposed the construction of a 36-inch pipeline called Keystone XL, running through Eastern Montana on its way to the Gulf Coast. I saw this proposal as an opportunity for an onramp that would allow better returns on domestically produced oil bottlenecked by lack of transport capacity. To convince TransCanada of the need for this onramp, Montana had something on its side: a common carrier pipeline law. So in 2010 I asked the Montana Public Service Commission to look into application of this law to the Keystone XL pipeline. Findings were positive. After initial resistance to the idea of an onramp, TransCanada declared they were open for business. At another meeting we convened in Billings with a number of oil-industry representatives, TransCanada announced an open season to seek firm commitments from interested parties for the Bakken Marketlink onramp. Bakken Marketlink will provide crude oil transport for 100,000 barrels of oil a day from Baker, Montana to Cushing, Oklahoma and to refineries on the Gulf Coast. It will result in the investment of an additional $140 million in the region, with feeder lines extending into Northeast Montana, North Dakota and Wyoming. The Bakken region has been the only area in the United States to significantly increase domestic oil production, yet it has been economically penalized due to

12 | BAKKEN OIL REPORT 2012

insufficient infrastructure. This onramp will alleviate that problem. That is why Montana permitted its portion of the pipeline construction last year. In addition, we required a $100-million safety bond to protect our citizens from an unforeseen disaster. When construction begins, a $1-billion investment will be made in Montana, helping to create 1,200 high-paying jobs along the way. It is unfortunate that Nebraska has unnecessarily delayed the project by failing to determine a workable pipeline route for approval by the U.S. State Department. It is time to put boots on the ground to get the

Keystone XL pipeline underway, not only for conflict-free energy from our friendly neighbors to the north, but for the single largest oil play in the United States – the Bakken. If you have ideas for good government, suggestions for business opportunities, or you’re just in the area, stop by; my door is always open. You can also send a note on our www.governor.mt.gov website, or give my office a call at 406-444-3111. n



Watford City: in the bullseye of the Bakken By Kylie Blanchard

Watford City’s Main Street.

North Dakotan oil rig.

PHOTOS COURTESY OF JESSIE VEEDER: WWW.VEEDERRANCH.COM

“W

atford City sits in the bullseye of the Bakken formation,” says Mayor Brent Sanford. “Every aspect of our town is getting bigger and everything has to grow.” The community, tucked in the northwest corner of North Dakota, has garnered national attention in recent years. Its population of just over 1,700 permanent residents reported in the 2010 Census has skyrocketed to an estimated 6,000 when combined with the population of temporarily housed oil workers living there. It’s a town living in a flurry of oil-driven activity. With recordsetting production out of the Bakken and an unprecedented influx of people arriving to take part in the action, the intense demand on businesses, infrastructure and housing is creating the need for expansion in almost every facet of the community. “We started a comprehensive plan two years ago and we are now seeing the fruits of those efforts,” says Sanford. “We’ve got sewer and water infrastructure plans underway that will serve a total population up to 7,500 people. We fully expect to get to that point in two to three years.” Sanford says the community has also taken additional measures to prepare for further infrastructure and housing expansion. “We have the framework for an infrastructure grid that covers five square miles, which could potentially provide the footprint for 30,000 people, but this additional expansion is dependent on investors wanting to invest in the community.” In 2010, the North Dakota Communities Acutely Impacted by Oil and Gas Development: Watford City Housing Demand Analysis was completed by the North Dakota firm Ondracek, Witwer, & Bertsch. This study helped to shine some light on what towns in the Bakken region could expect as their communities grew. “This is really the first report to look at oil- and gas-driven population in North Dakota, and it allowed an understanding of populations over decades,” says James Ondracek, Ph.D.

14 | BAKKEN OIL REPORT 2012

The Watford City analysis was part of a large-scale research project on the housing needs in northwest North Dakota over a 20year period, between 2010 and 2030, and covering the communities of Parshall, New Town, Stanley, Tioga, Watford City and Williston. The study, conducted between August and December 2010, reported that Watford City needed to develop plans to accommodate a sustainable population in permanent housing as well a peak population in temporary and semi-permanent housing. According to the findings, the community’s permanent population would reach approximately 2,300 people and require 1,150 total housing units by 2018, and remain at this level until 2030. But Ondracek notes since 2010, these projections have increased due to increasing oil production numbers. “Ondracek, Witwer, & Bertsch's proprietary model used to project temporary and permanent populations has changed since data inputs were collected in October 2010, due to revised oil and gas production estimates from industry and state officials,” he says. “Therefore, cities such as Watford City should look seriously at revising their population projections based on these new numbers to plan for a sustainable population and to avoid overbuilding.” The study also pointed to trends in the age of the community’s residents and the positive impact of the oil and gas activity on the community’s median household income. The median age of the community’s population declined to the 30-to-34-years age group by


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2015 and then raised slightly, to 35 to 39 years in 2030. This also produced an increase in the number of children from ages five to 19 years in the community, totaling a 56 percent jump in this population between 2000 and 2030. The median household income reported by the study reflected a marked increase, jumping from $48,100 in 2010 to approximately $61,060 in 2030. While these positive trends are currently taking shape in the community, says Sanford, one of the greatest challenges still facing Watford City is providing an adequate amount of permanent housing for its residents. This, in turn, has made new businesses and investors hesitant to come into the community. But this is likely to change with the new infrastructure expansion currently underway, he notes. “We will be seeing apartments and housing coming online in the near future and we will see retail following, because the retail isn’t going to occur until there are permanent rooftops.� Gene Veeder, executive director of the McKenzie County Job Development Authority, says the development of permanent housing has also been driven by funding from the state. “We received $12.5 million in oil impact money from the state legislature for waste-water distribution in the city,� he says. “This has since spurred a tremendous amount of interest in developing residential areas around the city.� He says an influx in development is going to be important to providing permanent housing for attracting workers needed to fill service-sector jobs. “Every service we have now is not meeting the demand of our community,� notes Veeder. “A lot of these jobs are

unfilled because of the housing crunch. We just don’t have a place to put these employees but we are working aggressively on that.� The community is also looking to expand its current businesses, and Veeder says there are plans in the works for new hotels and restaurants as well as expansions of existing hotel and grocery store businesses. “There is a lot of opportunity,� he says. “When you look at a community that has quadrupled in size, you know new jobs come with it.� The current increase in business activity has been a benefit to the city, adds Veeder, by creating additional sales tax revenue. “Five years ago the city sales tax totaled $65,000 to $75,000 each year, and it is now totaling approximately $1 million annually,� he says. “But the challenge remains getting enough goods to stock the shelves and bringing in enough employees to do the available work.� Veeder says additional projects that remain a priority for the community are an expansion of the city’s Main Street, the development of a truck bypass and improvements to the area’s highways, and an increase in the area’s water capacity. “In 12 months we’ve done a lot and we will do a lot over the next 12 month as well,� he says. “This is a great community, but we do have some growing pains.� “Our future is pretty bright,� he continues. “The attention of the United States, and the world, is on our area of the state. How we use that to attract positive investments will make all the difference.� Watford City was recently named the “Best Place to Raise Kids in North Dakota� in 2012 by the Bloomberg Businessweek. For additional information on the community and its opportunities visit http://watford.mckenziecounty.net. n

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Crude-by-rail services expedite takeaway capacity By Lisa Fattori

BNSF Railway unit train carries crude oil across the landscape. PHOTO COURTESY: BNSF RAILWAY.

R

ecord production in the Bakken oil play is spurring increased interest in rail services as a mid- to long-term solution in getting product to market. Crude-by-rail terminals close to Class 1 rail lines are being constructed in response to this demand and railway companies are ramping up service, including adding unit trains of 80 to 100 cars, which are dedicated trains for moving one product. Partnerships between oil producers, logistics companies and major – as well as shortline railway – companies are creating the critical mass necessary to align takeaway capacity with production levels, now and in the future. There are an estimated 4.3 billion recoverable barrels of oil in the Bakken, with approximately 380,000 barrels of oil a day currently being produced. According to the N.D. Pipeline Authority, rail as a percentage of overall takeaway capacity is increasing. Within North Dakota, alone, rail capacity in 2011 was 300,000 bpd. That figure is expected to climb to 550,000 bpd in 2012. The time delays in locating new pipeline and securing necessary approvals has producers turning to crude-by-rail transportation services. Railways are also handling the growing inbound delivery of frac sand and drilling pipe to support drilling activity in the Bakken. In 2009, BNSF Railway was a strategic partner in the Bakken’s first 100-car-unit train of crude oil that traveled from Stanley, N.D. to Stroud, Okla., where 70,000 barrels of oil were off-loaded into a 17mile pipeline to Cushing, Okla. BNSF touches 16 of the top 19 oilproducing counties in N.D. and, by 2013, nine unit train crude-loading facilities will be located on the company’s railway. The new facilities will enable BNSF to transport 730,000 barrels of crude per day. “We’ve hauled oil out of the Bakken for 60 years, but not to the extent that we are now,” says Denis Smith, VP of marketing and industrial products for BNSF Railway. “What’s new now is the building of terminals for handling crude oil. Rail is more affordable than waiting for a pipeline, because oil is coming out today. Railroads are hauling between 20 and 25 percent of that oil. We will have the

18 | BAKKEN OIL REPORT 2012

capacity to haul 75 percent, but the terminals aren’t built yet.” Canadian Pacific (CP) has similarly experienced exponential growth in the Bakken region. The railway shipped 500 cars of oil out of North Dakota in 2009, and 2,800 cars in 2010. That number jumped to over 13,000 cars of crude oil shipment in 2011. In the last two years, the company has invested $100 million in North Dakota to expand network capacity and enhance rail service to meet increased traffic demands. The North Dakota investment includes capacity expansion on the Newtown, Portal and Carrington subdivisions, with yard track extensions in Max and Flaxton and the installation of a new runaround track in Newtown. In addition, over 17 miles of rail replacement, upgrades to crossings and boosting CP’s North Dakota workforce by 18 per cent are enhancing rail service for Bakken oil producers. “The investment in CP’s U.S. mainline to North Dakota is important in ensuring that we have the capacity to meet demand,” says Ed Greenberg, spokesperson for CP. “Rail is an option for the energy industry that offers certain advantages; it is flexible, scalable and we can transport to anywhere in North America.” While railways and oil producers are investing in infrastructure throughout the Bakken, North Dakota is experiencing the greatest shortfall in takeaway capacity and, therefore, has a higher level of activity in the construction of intermodal transload facilities. Transporting crude by rail is not as cost-effective as pipelines, but producers can increase their netback by entering higher-paying markets that are accessible by rail. “Pipelines are very safe and the most efficient system, but with half a million barrels of oil produced a day and very little pipeline, North Dakota has a hard time moving its crude,” says Rene LaPrade, senior VP of operations for PetroBakken Energy Ltd. “In the shortterm, rail is not an option, but a necessity.” In response to the growing interest in crude-by-rail services, American Business Conferences organized a “Bakken Product


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Markets and Takeaway Capacity” conference from Jan. 31st to Feb. 1st, in Denver, Colorado. The two-day event drew approximately 300 people and presented a full line-up of guest speakers who offered immediate and long-term solutions for moving Bakken crude, NGLs and gas to market, at the highest possible netback. “Small and mid-size energy companies are not as aware of the potential of rail, and the conference gave them the information and contacts that can help them move their crude by rail,” says Emma Dinan, conference producer for American Business Conferences. “The overall consensus was that it’s not a matter of choosing pipeline or rail, but utilizing a combination of the two, and using rail to access those extra markets that pipelines may not reach.” n

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Whiting plants roots, flourishes in North Dakota By Aaron Orlowski

Mountrail County, North Dakota Bakken – Precision Drilling rig 520 on the Hagey 12-13H. PHOTOS COURTESY OF WHITING PETROLEUM CORPORATION. PHOTOGRAPHY BY JIM BLECHA: WWW.OILANDGASPHOTOGRAPHERS.COM.

W

hiting Petroleum, an oil and gas company with operations across the country, plans to invest $851 million in the

Williston Basin in 2012, or about half of the $1.6 billion it plans to spend company-wide, according to Jack Eckstrom, vice president of corporate and government relations. Over the course of the year, Whiting plans to drill 124 net wells. In January, the company had total proven reserves of 345 million barrels of oil; its land men are constantly scouting to add to Whiting’s current 680,000 mineral acreage. The projected growth in 2012 just about equals that in 2011, when Whiting had more than $800 million of capital expenditures in North Dakota, drilling about 112 net wells. “The growth has been in North Dakota,” says Eckstrom. That drilling will be focused on the Bakken and Three Forks play, out of which spout different amounts of oil. A typical Bakken well, says Eckstrom, yields between 450,000 and 950,000 barrels of oil; while a Three Forks well gives closer to 400,000. “The Three Forks is not as prolific as the Bakken,” Eckstrom states. Whiting has grown at a steady clip since its original public offering in 2003. At that time, the market capitalization was $400 million. Today, that figure is $6 billion, he said. Eckstrom predicts growth of 13 to 19 percent company-wide; the rate he also predicts for North Dakota. That growth is reflected in employee figures. In 2003, the company employed about 100 people, and now has a staff of 700. 22 | BAKKEN OIL REPORT 2012

Billings County, North Dakota Bakken – Nabors Drilling rig 686 on the BSMU 3602X and Pioneer Drilling rig 3 on the BSMU 3604. But Whiting still must fill 150 job openings in North Dakota. Finding workers challenges Whiting because so many other operators are all seeking to grow in North Dakota. “You’re not only competing with other businesses; you’re competing against other oil companies, even service industries,” Eckstrom explains. “Everyone is human capital-constrained.” “Part of the difficulty is you have challenges bringing people in from other states because housing is hard to find, because people who do this work want to live with their families,” he says.


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North Dakota Bakken – Halliburton frac on the Oppeboen 12-5H. Chris Mincoff on the gel pro blender.

North Dakota Bakken – Pioneer Drilling rig 56 on the Knife River 21-16H. In order to attract workers, Whiting is building a permanent housing facility just north of Stanley that will feature between 100 and 200 rooms. The company is examining similar options in Dickinson, where the company has a North Dakota field office. Even with labor concerns, Whiting is moving forward with new projects, including a large, recently-finished gas plant in Belfield. North Dakota lacks significant infrastructure, Eckstrom states, especially for processing gas which poses severe challenges. That infrastructure must then be built in order to not waste valuable resources. Several flagship programs help Whiting achieve maximum efficiency and make maximum profit. Before fracking a well, workers will drill microseismic geophone sensors to a depth of 200 feet, spread out in a grid. The sensors can read a frack job, giving information about its effectiveness at each fracture stage. The array of sensors, for instance, read how hard the rock is in a certain place, optimizing performance and helping workers determine what concoction of fracking fluids and sands would work best for a specific well. “You want to be as effective and efficient as you can. You don’t want to use 1.1 million pounds of sand if you only need 900,000 pounds,” Eckstrom explains. “What you can tell is, what the optimum frack recipe is for a certain area.” To improve efficiency, Whiting also does what it calls drilling wells on paper. Each rig competes against each other rig to drill most efficiently, he says, meticulously recording every detail of the job – including type of drill bit, the bit motor and other factors. “It gives each of the rig crews a target to shoot at, so that keeps your costs down,” Eckstrom says. The best, most efficient techniques are then applied across all of Whiting’s wells. 24 | BAKKEN OIL REPORT 2012

Mountrail County, North Dakota Bakken – Richardson Federal 11-9H. Eric Severance.

Because of the high stakes attached, the oil business necessitates precision science like this. “It is an incredibly complex scientific exercise that is done by the numbers because there is a lot of money at play. A well can cost as much as $6 to $10 million,” Eckstrom states. In the race for efficiency, Whiting has not lost sight of the safety of its workers or taking care of the local environment and economy. A strong local workforce contributes to that attention to detail. “Most of our people are North Dakota natives. They live there, they work there, they live close by to where they operate, so their interest is in their home state,” Eckstrom elaborates. “They take a great deal of pride in their state and they don’t want to move.” Whiting abides by extensive state rules governing safety and environmental compliance. Like at almost all other companies, employees watch contractor safety videos that every contractor must affirm they understand. Safety meetings also take place every morning at each location to make sure rules are followed. “The penalties for not adhering to those are quite onerous,” Eckstrom says. Whiting also understands the strains oil development puts on roads, schools, civil structures, water services, hospitals and other community services. The company seeks to integrate into the local communities, like it did by choosing to build its Dickinson offices inside city limits, where it contributes to the tax base, rather than outside. “We’re doing everything that we can,” Eckstrom affirms. “Our impacts in the communities where we operate are in our minds on a daily basis.” “That’s the way to succeed in this enterprise and that’s what we want to do…Companies consciously choose to become part of the fabric of the community in which you operate.” n


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Evolving landscape Bakken oil brings wealth of change By Melanie Franner

T

here’s no doubt that the Bakken oil boom has changed the economy of eastern Montana (and North Dakota, for that matter). For many residents, it’s a time of renewed growth and activity as the oilfields draw workers, investors and services to their towns and cities. Population numbers continue to rise. Sidney Mayor Bret Smelser predicts that his city will soon grow from its current 5,000 people to 7,500 in a mere couple of years. This is all well and good from an industry perspective; but this growth comes with its own set of challenges. “We’re pro-industry here,” states Smelser. “Liberals aren’t a bad word out here; they’re just an endangered species. The hard thing is that we don’t have the resources to support this kind of rapid growth.” Smelser is quick to cite the fact that the city’s volunteer firemen are already attending twice as many calls as they did a few years ago. The amount of garbage being hauled out of the city has also doubled. The city of Sidney experienced its first peak in the Bakken oil boom in 2008. Then the focus shifted over to North Dakota. But it’s now coming back, big time. “We’re gearing up to grow again,” notes Smelser. “We’ve got half-a-dozen housing developments set to take place in the next couple of years. We’ve got three new hotels set to open this summer. More growth is coming. The question is how we handle it. Getting from here to there is going to take all of us.” Smelser has been in local government service for 20 years, the last 10 of which he has been serving as mayor of Sidney. “As a city, we’re stressed,” he says. “We’re short in public works by about $1 million. We short in the police department. We’re short everywhere.” To help counteract the continued growth, Mayor Smelser and his counterparts are trying to get a larger percentage of the county’s oil revenues. It currently stands at only one-tenth of one percent. MORE PEOPLE, MORE CRIME Perhaps one of the more devastating indicators of change that has taken place in small towns and cities located within reach of the Bakken formation is the increased incidence of crime. Like other Sidney residents, Smelser is shocked and saddened by the recent death of Sidney mother-of-five Sherry Arnold. She disappeared on January 7th while out jogging. Police have detained two men in North Dakota, both of whom have connections to the oil boom, for questioning. “The city of Sidney probably won’t be able to continue to offer the same quality of life as we have in the past,” notes Mayor Smelser. 26 | BAKKEN OIL REPORT 2012

IMAGES COURTESY OF BARBARA WAGNER, SENIOR ECONOMIST – RESEARCH AND ANALYSIS BUREAU, MONTANA DEPARTMENT OF LABOR AND INDUSTRY.


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“The disappearance of Sherry has been a real shock to our community. We’ve never seen anything like this before. There has since been a real sale on handguns in the area. We can control the day but crime controls the night.”

formation will more than likely produce for at least another 10 years, with the potential for more. “This discovery is huge,” she says. “We’ve had some big ones before but this is right up there.”

A GUSHER OF A TALE The Bakken formation occupies approximately 200,000 square miles of the subsurface of the Williston Basin, which stretches to Montana, North Dakota, Manitoba and Saskatchewan. Oil was first discovered here in 1951 but it wasn’t until technical advances in oil recovery, specifically horizontal drilling and stage fracking, that the recovery became more financially viable. “The boom in Montana started in 2000,” explains Tom Richmond, division administrator and petroleum engineer with the Montana Board of Oil & Gas. “And production still remains high. The state is still producing about two million barrels a month, with half of that being Bakken oil.” Last year, the Montana Board of Oil & Gas granted 269 drilling permits. “This is certainly one of the more significant oil finds in the history of Montana,” continues Richmond. “It’s right up there with the Red River Basin boom that took place in the late 1970s.” According to Julie LeFever, geologist, North Dakota Geological Survey, the Bakken

HOW BIG IS BIG? The 2008 U.S. Geological Survey estimated that there were 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in the U.S. portion of the Bakken formation. This was a 25-fold increase over the agency’s 1995 estimate, due primarily to advances in drilling and production technologies, and additional oil discoveries. The U.S. Geological Survey has since announced that it will update its 2008 estimate of the Bakken formation, a process that began in October of last year and is expected to take approximately two years to complete. “I would suspect that the assessment would result in a larger find,” states LeFever. “It will certainly be as high, but I suspect it will be bigger. And the U.S. Geological Survey is known to be conservative.” To date, the Bakken formation has helped contribute positively to Montana’s state economy. “During 2011, the eastern part of the state had four per cent job growth,” states Barbara Wagner, senior economist, Research and Analysis Bureau, Montana

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28 | BAKKEN OIL REPORT 2012

Department of Labor and Industry. “That’s faster growth than any other portion of the state.” Overall, the state of Montana has faired better than many other states since the recession began in the U.S. in December 2007. “We had some job losses in Montana, but they weren’t as extreme as other states because of the energy economy,” explains Wagner. “We’ve since experienced private job growth in 2010 and 2011.” Wagner adds that the state of Montana is currently tied for 16th place out of 50 states as having the lowest unemployment figures. “During most of the recession, we were in eighth or 10th place,” she mentions, adding that current figures are swayed by large government cuts that have recently taken place. “Our world economy is dependent on energy to work and we are experiencing an ever-increasing demand for energy. I think this area of the country will continue to have an energy economy for at least the next 10 years.” TOWARD CHANGE The city of Billings is another area affected by the Bakken formation. Resident geologist Carter Stewart can speak firsthand of the changes. “The infrastructure in North Dakota and eastern Montana is stressed but they’re working on it,” he says. “I talked to the North Dakota Governor and he told me that they had committed $1 billion in infrastructure to counties in North Dakota. The city of Billings is located about 300 miles southwest of the action, so we don’t have the same infrastructure troubles. Billings has actually seen more business without the typical burdens associated with cities within the immediate vicinity.” Stewart predicts that the oil boom will continue to rise and fall for communities in eastern Montana, including Billings, for many more years yet to come. “Production is going to go up and then level off before starting to decline,” he suggests. “There is a lot of oil to be recovered and they will eventually figure out better ways to get at it and more efficient ways to produce it. But I think there’s enough oil there to last our lifetime and probably our children’s lifetime as well.” n


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BIG SKY

Billings is strategic to energy By Jeremy Vannatta, Big Sky Economic Development

O

ver 125 years ago, the railroad created a new spirit sweeping across the upper Midwest – giving birth to new towns along the way. Back in April of 1882, Herman Clark began planning the site for a new town named Billings. The town’s name was chosen to honor Frederick H. Billings, the former president of the Northern Pacific Railroad – a company completing the first rail line to connect the country from east to west. With only three buildings, town forefathers knew even then quick growth was imminent – with initial plans for 20,000 residents. And grow the city did. One year later, in 1883, the town already had 1,500 people and over 400 buildings. The rapid growth caused the city to be quickly dubbed the “Magic City”. During the early parts of the 1900s, Yellowstone County was even one of the fastest growing counties in the entire country. Fast forward to 2012: Billings now has over 105,000 residents and the city is again poised to see some dramatic growth. While the city has dropped the tagline “Magic City” and adopted a more current “Montana’s Trailhead”, new business growth and a great sense of optimism continue to fill the city. This time around, though, it isn’t so much based around the railroad as it is energy. Developments throughout Montana and surrounding states and provinces are at the center fueling that growth. Oil, natural gas, coal and wind each are positively impacting the city’s economy. “Energy-related companies bring good-paying jobs and great opportunity for small businesses to provides products and services to them,” says Steve Arveschoug, executive director for Big Sky Economic Development, Yellowstone County’s economic development arm.

PHOTO COURTESY: TIM MAZZAFERRO PHOTOGRAPHY.

30 | BAKKEN OIL REPORT 2012

“Those dollars multiply many times throughout our community, benefitting all areas of our economy.” NEW OPPORTUNITY FOR GROWTH Bay Limited trucking large tanks to a location in the Bakken.

Energy has always been a part of Billings’ economy with oil booms of the past and three major refineries within 15 miles. Many new companies moving in are finding Billings is strategic to energy – centrally located to many different plays. Manufacturing companies are setting up shop to produce and quickly transport goods to the Bakken, Alberta Tar Sands and Niobrara oil plays.


BIG SKY

Bay Limited Montana and Highlands Projects are just two companies who recently chose to locate facilities in Billings to manufacture tanks and refining equipment used in the oil industry. In late February, Bay Limited, headquartered in Corpus Christi, Texas, successfully trucked their first two large loads to Canada from Billings. The company secured a major contract with an energy company to produce refining modules used in the Alberta Tar Sands. Today the company has hired 75 crewmembers, with plans to hire Billings’ 500-mile play. 150 more this year and an additional 100 to 200 over the next couple of Coal, SM Energy, and Taisei all have found a home in Billings as years. well. “Billings has the regulatory framework and community infrastructure that is responsive to energy interests,” says James STABLE ECONOMY McCord with Bay Limited. “From the top down, the state and city Energy seems to be an economic propellant in a lot of have worked hard to address our unique challenges. And that’s economies these days, but it’s just one industry that’s thriving in important to us.” Billings. A growing healthcare community, one of the largest retail Highlands Projects expanded to Billings because of an extremely trade areas in the country and a strong transportation infrastructure tight workforce in Canada. Headquartered out of Sundre, Alberta, a propel Billings’ moderate, but consistent growth. Billings is home to community 80 miles north of Calgary, Highlands Projects Billings Clinic and St. Vincent Healthcare, together employing over manufactures tanks and other goods out of their Billings location. 6,000 people, and many other specialty health organizations and The company quickly discovered Billings worked well in terms of clinics. The area is also home to the largest shopping in a 500-mile proximity to market as well as offering a trained workforce. radius. Scheels Sporting Goods recently announced they will be Sanjel chose Billings to locate their U.S. maintenance and building the second-largest sporting goods store west of the training facility. The location will allow the company to trains Mississippi in Billings. At 220,000 square feet, the new store will hundreds of employees that will work in other areas in which Sanjel have a ferris wheel, shooting range, 16,000 gallon aquarium and operates. Other energy-related companies like ConocoPhillips, Arch

BAKKEN OIL REPORT 2012 | 31


BIG SKY

Billings street, circa 1882. PHOTO COURTESY WESTERN HERITAGE CENTER, BILLINGS.

Freighter’s outfit looking north. Coulson at right; east end of Billings on left. PHOTO COURTESY WESTERN HERITAGE CENTER, BILLINGS.

even a fudge shop. Billings sits at the crossroads of Interstates 90 and 94 and offers some of the best air service of any community similar in size. INVESTING IN THE FUTURE Billings has come a long way over the last 130 years. No one probably would have had any idea in 1882 that a new railroad town called Billings would grow to be such a regional hub in the upper Midwest. Today, city leaders continue to plan and invest in the future with a little more knowledge of what impacts the area. Recently, the community has added a new ballpark, dramatically expanding the trail system, and and will soon be breaking ground on a new $18 million library. Coupled with plentiful recreation activities, friendly people, and good schools – Billings is prepared for another 100 years. ABOUT THE AUTHOR Jeremy Vannatta is the director of recruitment and marketing for Big Sky Economic Development. Reach him via email at vannatta@bigskyeda.org or by phone at 406.869.8416. Find out more about Billings at www.thinkbillings.com. 32 | BAKKEN OIL REPORT 2012

n

About Billings Population: 104,170 (2010 Census) MSA Population: 158,050 Unemployment: 4.8% Average Household Income: $62,258 Average Age by Population: 38.0 Total Businesses with MSA: 9,859 Billings Block no. 111, looking northwest. PHOTO COURTESY WESTERN HERITAGE CENTER, BILLINGS.


Since 1977, family owned and operated QMC Hydraulic Cranes of Fountain Valley California has been custom building cranes for well servicing applications worldwide. Halliburton, Schlumberger and Weatherford are just some of the customers that have UHDSHG WKH EHQHŰWV RI JHWWLQJ WR KDYH D YRLFH LQ KRZ WKH\ ZDQWHG WKHLU 40& FUDQHV designed. Of special note is one of QMC’s own innovations; the fully integral trailercrane. Now a popular component in coiled tubing equipment “spreads”, this trailer not only supports a 100’ 4-piece boom, but enough deck space to carry the BOP, control cabin, lubricators, and hose reels. Another innovation driven by a customer’s unique requirements is the 7060R boom WUXFN GHVLJQHG VSHFLŰFDOO\ IRU SXPS MDFN VHUYLFLQJ 7KH ERRP LV RI FXVWRP GHVLJQ used for lifting gear boxes, concrete pads and other heavy job-site pieces. With its rear mount design, the crane can be positioned closer to the well than the competitor’s center-mount units. Of special note is its 9000 pound payload capacity that is often used for carrying options like custom built tool boxes, a hydraulic powered aircompressor, welder-generator, oxygen/acetylene bottles etc. Previously a separate service truck would be required to take this equipment to the job site. While considered to be a small manufacturer of cranes, QMC continues to play a big part in solving the never ending challenges of crane needs in the oil industry.

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MDU RESOURCES

Home sweet home MDU Resources’ family of companies has deep roots in the Bakken

A

fter reading the official history of MDU Resources Group, it becomes immediately apparent that the energy giant feels completely at home in the Bakken. This is because the corporation was essentially born in the region more than 85 years ago. “We are more than proud to say this is our home turf,” says Terry Hildestad, president and CEO of MDU Resources, who himself is from a small town in western N.D. “The strong work ethic established by the hardy pioneers who first settled this land lives in our employees and has helped to form the culture of determination and integrity at our company.” Hildestad works in the Bismarck headquarters and he joins approximately 8,000 others spread from Ohio to Hawaii and north to Alaska. Since its beginnings in the mid-1920s in western North Dakota and eastern Montana, the corporation has spread to 44 states. “All of our companies present a solid portfolio of valuable products and services that support energy and community infrastructure development,” says Bill Schneider, executive vice president of Bakken development. “From natural gas pipelining, transmission-line building, drilling wells and road construction, we can get it done. We want Bakken-area businesses and communities to think of MDU Resources as the first company to call for their infrastructure needs.” In the next five years, MDU Resources plans to invest $3.7 billion in growth and development projects through all of its operating units. The largest share of this

34 | BAKKEN OIL REPORT 2012

Company common stock began trading on the New York Stock Exchange in 1948. At yearend 2011, the company had assets of $6.6 billion and total revenues of $4.1 billion. Corporate headquarters (shown here) are located in Bismarck, N.D., and are only a 90minute car ride from the heart of the Bakken. five-year forecasted capital investment – $2.2 billion – will be allocated to Fidelity Exploration & Production, the corporation’s energy production unit. Fidelity works from a base of 95,000 net acres located mostly in Mountrail and Stark counties in North Dakota and Richland County in Montana. In 2012, Fidelity plans to invest approximately $160 million in the Bakken, an amount about $60 million higher than 2011. Currently, Fidelity has 58 operated wells in the Bakken and participates in over 180 non-operated wells. In 2012, Fidelity is targeting to drill approximately 30 more wells. The Bakken is a primary growth area for Fidelity, a company with operations focused throughout the Rocky Mountain Region with production coming from Montana, Wyoming, Utah, Colorado and Texas.

Natural gas transmission and gathering pipeline services, operated through Williston Basin Interstate Pipeline, also are an important part of the company’s portfolio. Strategically located in the heart of the play, the natural gas pipeline has been actively engaged in moving natural gas out of the Bakken to markets across the MidContinent region through four strategic connections with Northern Border Pipeline, a massive intercontinental line that runs to America’s urban heartland. Williston Basin has been expanding its pipeline capacity in order to move more Bakken-produced natural gas out of the region. In 2011, the company doubled its transmission capacity out of the Bakken and in 2012, will nearly double it again. Along with natural gas pipelining, the company offers a wide variety of related energy services, including cathodic


In 2011, MDU Resources’ pipeline unit doubled its natural gas pipeline capacity out of the Bakken and in 2012, will nearly double it again. The company’s dispatch center (shown here) manages flows for the 3,400-mile transmission pipeline system that spans four states.

protection, natural gas measurement, conditioning and processing along with compressor-station design and construction. The company also can provide facility inspections, pipeline leak detection, air/hydo excavation and solar power installations. Another important service provided by the corporation is electric and natural gas utility service. The tremendous growth of western North Dakota cities has enhanced the utility’s operations. Currently, the utility division serves more than 60,000 customers in western N.D., and this number keeps growing. Vital utility service provides energy to homes and businesses along with oil wells, pumping stations and industrial parks throughout the Bakken. In total, the utility division operates in eight states and serves nearly a million customers. Rounding out the portfolio of energy services is the construction services segment. MDU Construction Services Group has 17 operating companies working in 44 states. Three of its companies — Hamlin Electric, Rocky Mountain Contractors and Energy Electrical Distribution — are active in the Bakken. Services offered include electric power-line construction, substation construction, and wiring services for industrial and commercial facilities. Electrical supplies and power-line construction equipment also are available. But, the corporation provides more than energy services. Knife River Corp., the corporation’s aggregate and construction materials company, has been part of the business family since 1945. Starting as a lignite coal mining company near Beulah, Knife River is now a broadBAKKEN OIL REPORT 2012 | 35


MDU RESOURCES

Knife River has rapidly become the ready-mix concrete provider of choice in the Williston market and surrounding Bakken region, and has provided ready-mix for massive industrial pours totaling thousands of cubic yards but is also available for small residential and commercial deliveries. Terry D. Hildestad, president and chief executive officer at MDU Resources Group, is a featured keynote speaker at the Bakken Investor Conference April 2 to 4th 2012.

KATHLEEN K ATHLEEN N NESET ESET Geologist

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based aggregate and construction materials company working in 17 states. To respond to growing demand for aggregates for road-building, ready-mix concrete and asphalt in western North Dakota, Knife River opened operation centers in Williston, Minot, and Tioga. These locations compliment existing Knife River operations in Beulah, Washburn and Bismarck. The MDU Resources family of companies lives and works in the Bakken and its wide portfolio of services are valuable components to the development of the area. Sensible and responsible operations that value safety and environmental stewardship as an embedded part of the culture will help maintain the integrity and vitality of the area. n



North Dakota addressing infrastructure challenges in Bakken oil counties By Andrea Winkjer Collin

A

s the production of oil continues to escalate in the North Dakota Bakken, the challenges of meeting the infrastucture needs that come with it are being identified and addressed. In January, representatives from nine state agencies visited more than 600 local leaders and community representatives in 14 western North Dakota cities to learn how they are being impacted by oil and gas development. These visits follow the North Dakota Legislature’s appropriation of $1.2 billion in 2011 to address the infrastructure, housing and safety needs. A late February report released by Governor Jack Dalrymple summarized how the state will provide funding and resources to meet these needs. In addition to outlining how the housing, infrastructure upgrades and public-safety enhancements will be met,

the report identified other challenges and strategies that are being implemented to help meet the region’s needs. They include exploring adjustments to the oil tax distribution formula, sharing loadlimit fines generated on county highways with counties, designating the Commerce Department to serve as a conduit for state, federal and local governmnet responses to oil impacts, and exploring additional funding sources for school building construction. “Together, we can meet our challenges, and for the longer term, we have a unique opportunity to enhance our communities in oil country and build an even stronger North Dakota for generations to come,” Dalrymple said when he released the report. Among the transportation solutions are expedited truck reliever routes planned around the towns of Williston, New Town,

Watford City, Dickinson, Alexander and Killdeer. The Department of Transportation will also develop a plan to add turn-off lanes this year on U.S. Highway 2 from Stanley to Williston, along with other lanes on other highways throughout the region. The Highway Patrol will increase personnel and time allocated to load limit enforcement. Dust has been of particular concern in Dunn and McKenzie counties, and dust management strategies will be studied over the summer in those counties, working with the state’s departments of Transportation and Health, along with the Upper Great Plains Transportation Institute. The North Dakota Oil and Gas research program is providing a $440,000 matching grant for the studies. And, for long-term transportation solutions that will remove trucks from the

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roads, the North Dakota Pipeline Authority will continue to offer incentives to encourage and expedite the development of intrastate and gathering pipelines for water, oil and gas. To address critical housing shortages, the state has provided $135 million for grants to facilitate housing construction and to meet other energy development impacts. The grants will be used to extend city streets, expand sewer systems and landfills, and provide other public infrastructure upgrades. The Bank of North Dakota is adding more resources to its Flex PACE Program to provide low-interest loans to property

developers who construct multi-family housing projects. The interest rates on the program can go as low as one percent. Nine additional state Highway Patrol officers have been placed in western communities to support local law enforcement, and four more troopers will be deployed in July 2012. The Highway Patrol will also continue to partner with smaller communities that do not have their own law enforcement resources. Motorist safety issues, such as more turn-off lanes, better signage, more stoplights and reduced speed limits, along with stronger traffic

enforcement and increased fines, will also be implemented. The enforcement of truck sizes and weights are being increased on state and county highways, and $7 million in state energy infrastructure and impact grants will help communities address emergency services training, equipment and hiring needs for ambulance services, and fire department and emergency responders. WELCOME NEWS FOR COMMUNITY LEADERS Leaders in the communities most affected by North Dakota’s oil and gas development have welcomed the news of the more than billion-dollar investment by the state to address present challenges. Ward Koeser, who has been mayor of Williston for more than 17 years, is among them. Koeser has watched Williston, whose population hovered around 12,000 over the past three decades, double in size, and predicts a population of 30,000 to 35,000 in the next five years. “We have had our frustrations,” says Koeser of the development challenges the city has faced. “But I am feeling more optimistic now about the direction we are going.” Topping the list of the greatest current concerns Koeser sees in Williston are completing the truck reliever route, addressing pedestrian safety near the bypass, expanding the sewage treatment plant, continuing to add new housing, bringing in more retail stores and restaurants, and cleaning up the town. “I predict that within three years, most of these challenges will be met,” he says. “By

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then we also should have completed our new recreation center, approved by voters last year, and the expansion of medical facilities. Both will improve our quality of life.” In addition to highway transportation, Koeser says the city is addressing its air travel needs. The addition of flights to Minneapolis

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40 | BAKKEN OIL REPORT 2012


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ENBRIDGE

Enbridge: 50 years of investing in North Dakota

E

nbridge’s North Dakota system originated in the 1960s when

will provide an additional 120,000 barrels per day (bpd) of

the segment from Berthold, North Dakota to Clearbrook,

incremental pipeline capacity from North Dakota.

Minnesota was constructed by Portal Pipe Line. Portal Pipe Line

The proposed Sanish Project, a complimentary project to the

was owned by Hunt Oil and Burlington Northern Rail Road; which

Bakken Expansion Program, will be a new 36-mile, 12-inch crude oil

explains Enbridge’s now vast network of pipelines located within

pipeline capable of gathering up to 67,000 barrels per day (bpd)

close proximity to rail. This is the same rail that Enbridge, who

from Johnson’s Corner into Enbridge’s existing facilities at Beaver

purchased Portal Pipe Line in 1996 for $25 million, plans to utilize to

Lodge. In addition to providing pipeline transportation to customers

ship Bakken crude from Berthold, North Dakota to refineries across

located in McKenzie County and the growing production emerging

the United States.

from the Fort Berthold Reservation, the Sanish Project will help reduce the state’s congested roadways. This project will include a

INVESTING IN THE INDUSTRY As the Bakken and Three Forks formations catapult North

crossing approximately 2.4 miles in length under Lake Sakakawea. Enbridge understands that extra protection measures need to be

Dakota into a position of being one of the nation’s largest oil-

taken when crossing under such precious waterways. The

producing states, Enbridge is looking forward to ways they can

construction of this crossing will be done by a horizontal directional

provide safe and economical export options to the area. Con-

drill, pulling the pipe through a channel approximately 50 to 100 feet

struction of Enbridge’s Bakken Expansion Program began in mid-

beneath the lake bottom.

2011 and is expected to be completed and in service by the

Enbridge’s North Dakota system has been leading the way in

beginning of 2013. The Bakken Expansion Program includes

responsible energy delivery for the past 50 years. This year,

construction of a new 16-inch pipeline from Beaver Lodge, N.D. to

Enbridge plans to construct a rail facility adjacent to its existing

Berthold, N.D. and construction of an 11-mile segment near Lignite,

Berthold, North Dakota station that will provide an additional 80,000

N.D. as well as a new 75-mile pipeline from Steelman,

bpd of export capacity once complete in early 2013. This rail facility

Saskatchewan to Cromer, Manitoba. When completed, this program

will be capable of holding up to three 118-car unit trains at any time

Enbridge’s North Dakota system expansions will provide up to 475,000 bpd of incremental pipeline capacity by early 2013. 42 | BAKKEN OIL REPORT 2012


ENBRIDGE

and will be constructed and operated at the same high standards of safety and integrity to which our pipelines are held. According to the State’s Department of Mineral Resources, total North Dakota oil production averaged 534 thousand barrels per day (bbl/d) in December 2011, up 55 percent from December 2010. As production continues to increase in the state, Enbridge will continue to address the transportation needs of its shippers. By the beginning of 2013 with the in-service of the Bakken Expansion Program, Berthold Rail Project, and additional connections, Enbridge will have the capacity to transport 355,000 bpd via its pipeline system and 120,000 bpd by rail for a total of 475,000 bpd.

INVESTING IN COMMUNITIES The tanks located at the Stanley, North Dakota station remind all to Call Before You Dig in order to prevent incidents.

INVESTING IN SAFETY Enbridge supports its neighbors through its philanthropy and the active involvement of employees in those programs in our host communities that focus on lifelong learning, community leadership, arts and culture, building safe communities and leaving a natural legacy. Enbridge employees actively support United Way campaigns in many of the communities where we operate. In addition to their financial contributions, several employees participate in companysponsored volunteer activities for local charitable organizations. Enbridge also supports the American Red Cross and healthcare

Pipelines are monitored 24-7 from Enbridge’s control center located in Estevan, Saskatchewan. Enbridge has many practices and procedures in place to ensure safe transportation of crude oil, beginning with the materials and special coatings used to manufacture our pipelines, cathodic protection measures to prevent corrosion, 24-hour computerized pressure monitoring of the crude oil being transported, routine aerial and foot patrols, and internal pipeline inspection tools to periodically monitor integrity. We also provide on-going emergency response training for employees and local emergency responders in the unlikely event of a pipeline incident. Enbridge actively promotes public awareness of our pipeline system in the communities in which we operate. Safety and company contact information is provided to landowners and tenants, emergency preparedness information is shared with local officials and emergency responders, and excavators and residents along the route are provided with information about pipeline damage prevention through programs like Call Before You Dig and other public-service advertising. In addition to Enbridge’s public awareness efforts, all people who live and work in communities where pipelines are located should be aware of what to do in an emergency and know how to avoid damaging pipelines during excavation or construction activity.

LEADING THE WAY IN RESPONSIBLE ENERGY DELIVERY

COMMITTED TO SAFE OPERATIONS, OPERATIONS, ENVIRONMENTAL ENVIRONMENTAL STEW STEWARDSHIP, ARD A DSHIPP, SOCIAL RESPONSIBILITY AND MEETING THE RISING DEMAND FOR CRUDE OIL PIPELINE CAPACITY FROM THE WILLISTON BASIN Enbridge’ss Bakken Program will increase capacity from the Enbridge’ Williston Basin by a minimum of 145,000 barrels per day by 2013. W

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24-Hour Emergency Number Number:: 888-838-4545 Enbridge Pipelines (Nor (North th Dakota) LLC: 701-857-0800

BAKKEN OIL REPORT 2012 | 43


ENBRIDGE

Safe Community Grants One of our flagship community investment programs is our Safe Community Program, which provides monetary support to: • Fire-fighters, including volunteer fire departments • Emergency Medical Services (EMS) • Police departments • Other health providers who respond to emergency situations in the communities where we operate Approximately 30 organizations in North Dakota received assistance in 2011 including: • Stanley Volunteer Fire Department • New Town Ambulance Service The Stanley Volunteer Fire Department receives a Safe Community Grant to aid in purchasing fire rescue equipment. Enbridge has developed a number of partnerships with organizations that are focused on health and safety programs. Our support of these organizations helps to improve services, purchase equipment and provide research. organizations in several communities that host facilities operated by Enbridge or affiliates. Enbridge contributes to several colleges and universities to offer scholarships to students in applied science

• Devils Lake Rural Fire Department • Mountrail County Sherriff Department Grants given through this program allow organizations to acquire such support as new safety equipment, obtain professional training and deliver safety educational programs in their neighborhoods. For more information, please visit www.enbridgeUS.com/community. programs. We partner with environmental organizations to help to preserve important natural areas and serve as an active supporter of the arts. n

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FRONTIER ENERGY

Employees attend a safety meeting at Frontier Wellhead's shop in Watford City, N.D.

Frontier Energy celebrates 25th milestone, builds new high-tech facility in N.D.

I

n 2010, one of the leading wellhead providers in the Bakken region, Frontier Energy Group, LLC, underwent a significant evolution with its new name (formerly it was Frontier Wellhead & Supply) and a fresh, new logo. Now, plans are afoot to build a new, multi-milliondollar operations headquarters this spring on a 30-acre plot in Watford City, N.D., an undertaking company management says will help Frontier address the rapidly accelerating demand in the Bakken region. As well, the company moved its headquarters from Phoenix, Ariz. to Denver, Colo. as of March 1st. From the moment of its founding in 1986 in Watford City, Frontier has maintained a steady presence in the area. “Frontier is proud to call Watford City home. This site was chosen from among countless other locations considered due to its proximity to the activity of

46 | BAKKEN OIL REPORT 2012

By Katrina A.T. Senyk the rigs, and the positive and proactive business climate,” says Dan Eberhart, chief executive of Frontier, noting that the county’s “overall approach to transportation and infrastructure” was also appealing. Frontier’s capacity in the Bakken is expected to more than double as a result of the new operations headquarters – an increase that will make this site one of Frontier’s largest among its 16 U.S. locations. The new state-of-the-art facility on Highway 85 will host existing oilfield services including wellheads, hot oil, frac-tree rental, a new accumulator service, along with a few additional types of services to be introduced later in 2012. The new facility, which will eventually replace the company’s current location, “will increase our productivity and flexibility while complementing our other North Dakota and Montana operations,”

An employee in Grand Junction, Colo. equalizing a plug to kill a well.



FRONTIER ENERGY

Frontier employee working on a hot oil truck's heating unit. A 2012 slickline truck on site in Greeley, Colo.

INDUSTRIAL SITE DEVELOPMENT Mass Grading and Excavation | Soil Correction | Well Pad Construction Storm Water Retention/Settling Pond Construction and Underground Utilities Landfill Construction and Closure Sub-grade Prep for Rail Lines, Tanks, and Conveyance Systems Contaminated Soil Cleanup and Site Remediation Foundation Solutions including Piling, Drilled Piers, and Soil Retention

LOCATIONS Bismarck & Minot, North Dakota Minneapolis, Minnesota

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Eberhart explains. “We are experiencing strong growth and so we need to increase our capacity. This site will help us effectively respond to the cyclical demand in the industry and strengthen our overall position.” Now celebrating its 25th anniversary, the company can rightfully be proud of its rapid growth, having begun as one single location with one employee and developed into 16 locations with 125 employees. Though its new corporate headquarters is now in Denver, Colo., the company’s operations base will remain in Watford City, the origin city of Frontier. The brand has grown to provide a range of services to companies of all sizes through three main brands: N.D.-based Frontier (Frontier Wellhead & Amp, Frontier Slickline, Frontier Hot Oil, LLC); Colo.-based Cable (Cable, Inc., Cable Wellhead); and Luft Machine. Among the many products and services are a broad range of API 6A and API 6D Conventional Completion Systems (new and refurbished); installation and maintenance services; frac manifolds; equipment rentals; wireline and slickline services, including wellhead equipment sales and installation; frac equipment rental; wireline and slickline services; fishing and rental tools; and now includes oilfield fabrication. “Our business is focused on building from the great reputations of our subsidiaries while looking ahead at the company’s future,” says Eberhart. “And even though the company has grown leaps and bounds, we’re invested in the local communities in which our employees live and work.” To learn more about Frontier Energy Group, please visit www.feg.net. n

48 | BAKKEN OIL REPORT 2012


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NEWS

API Williston Basin: bringing people (and food) together By Jill Schettler

API

Williston corporate members, from the largest major oil company to the smallest of independents, come from all sectors of the industry. They are producers, refiners, suppliers, pipeline operators, service and supply companies, and… Chili chefs. The American Petroleum Institute Williston Basin Chapter rang in 2012 with a loud “Bon Appétit!” as the 29th Annual Chili Cook Off kicked off on February 11. Twenty-three teams, each with themedecorated booths, displayed their creation of the “good stuff,” and, as event coordinator Kelli Pflug confirms, the selection of hearty stews tickled the fancy (and taste buds) of both judges and spectators at the Airport International Inn. “The Chili Cook Off is, and always has been, known as a good time for all,” says Pflug, API event coordinator/G3 Operating LLC.

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“This year was our 29th Annual, a tradition that first began in the 1980s in celebration of our growing community.” The API would like to congratulate the Chili Champions of 2012: first-place winner, Scallon Auto Body, for their triumphant bowl of deliciousness; followed by second-place winner, NOV; and third-place winner, Bekks Hot Oil, both for their esteemed efforts. Fourth, fifth and sixth went to MRC, Nabors Well Service, and Brosheim Crane, respectively. Honorable mention goes to Nabors Drilling which won Best Decorated Booth, the People’s Choice Award and the Bakken Bread Winners traveling trophy – a new award recognizing the team with the highest proceeds raised during the night’s event. “On behalf of the API Williston Basin Chapter, I would like to say thank you to all who attended the 29th Annual Chili Cook Off,” says Pflug. “The event was a huge success and more fun than imagined. It

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the 29th Annual you to all who attended nk tha y sa to e lik uld support wo illiston Basin Chapter, I All proceeds are used to d. ine ag im n tha fun On behalf of the API W re t d mo a historically known even was a huge success an ch t su en in ev rt e pa Th e f. Of tak to ok r Co no Chili solute ho interaction. unding areas. It is an ab ether and celebrate our tog me co to e our community and surro nu nti co It is good to know we here in the Bakken area.

m Town! Good Work Boo

! S N O I T A L U CONGRAT API Annual Chili Cook-Off 2012 Winners: First Place: SCALLON AUTO BODY t OE 1MBDF NOV t SE 1MBDF BEKKS HOT OIL t UI 1MBDF MRC t UI 1MBDF NABORS WELL SERVICE t UI 1MBDF BORSHEIM CRANE t #FTU %FDPSBUFE #PPUI 1FPQMFT $IPJDF Bakken Bread Winners: NABORS DRILLING

Congratulations to the 2012 Raffle Winners: First Place $1,000 CASH: Katie Meade t OE 1MBDF #JH 4DSFFO 57 Devin Dorval t SE 1MBDF $"4) Greg Miller t UI 1MBDF $"4) Andrew Esterby t UI 1MBDF $"4) Ben Weltikol t UI 1MBDF $"4) Amber Carlisle t UI 1MBDF CASH Christina Finaas t UI 1MBDF $"4) Doug Graves t UI 1MBDF $"4) Mike Walter t UI 1MBDF $"4) Rodney L. Miller t UI 1MBDF $"4) Keith Jonmed t UI 1MBDF $"4) Steven Warmsbecker Thank you to: Mark and Cathy Kruse Ken and JoAnn Callahan Carson and Jean Kruse Brent Eslinger Connie Hval Don Hoffman Tim Muniz Renae Mitchell Jeff Zarling Dance Fever Booster Club Ladies Petroleum Club Captain Ladwig Williston Police Officers: Hall, Aide, Seim, and Carlson Ashley Buchart Band Crystal Raad Dolly Turcotte Tammy Fredrickson Mitzie Moe

2012 Sponsors: All Seasons Sport About American Casing & Equipment American Legion Club American State Bank Basin Brokers Basic Filtration Systems & Tubin Testing Basin Printers Bekks Hot Oilfield Services

Bob’s Oilfield Services Boone’sBit Service Carbo Ceramics CCS Midstream CESI Chemical Crowley & Fleck Dakota Diesel USA, Inc. DC&B Hot Shot Services Delaney Distribution Denbury Onshore, LLC Earl’s Electric Eide Baily LLP Electric & Magneto, Inc. Empire Oil Co. Everson Funeral Home First International Bank & Trust Found It Now Fulkerson Funeral Home GeoResources Inc. G3 Opening, LLC Go Wireline, LLC Halliburton Hickman Sales & Service Horizon Resources Hunting IHD Environmental Interstate Power Systems, Williston Industrial Equipment Sales & Service Industrial Pipe Source KDSR

Keitu Engineers & Consulting Kentucky Fried Chicken Kinks, Cuts & Curls Kirkland Inc KUMV-TV KXMD-TV Manger Insurance McDonald’s McJunkin Red Man Corporation Mercy Medical Foundation Message Center, Inc. Midwest Hose & Specialty Miller Insulation Co. MBI Energy Services Modern Machine Works Inc Montana Dakota Utilities Murex Murphy Motor Nabors Drilling Neset Consulting Noble Casing Norris Sucker Rod Northern Plains Radio Northwest Supply Co. (Gerald Fleck) Oilstates Energy Services OK Tire Petroleum Services Inc (Mike Palmer) Pizza Hut Restaurant Praxair

Pro Safe Pest Control Pronghorn Services, LLC Reliance Oilfield & Safety Sathe Analytical Lab, Inc Shirt worx Simonson’s Sinclair Well Products & Services Slaugh Finishing Services Stevens Oilfield Services Subway SunWell Services Taco Johns Teton Buildings Tioga Machine Shop Tractor & Equipment Co. Victaulic Weatherford Enteera Well Pro Inc Welter Consulting Western Co-op Credit Union Western Edge Oilfield Services Wickum Construction Williams County Abstract Williston Basin Inspection Williston Herald Windshield Doctor and Vinyl Graphics Wyoming Casing

Williston Basin Chapter XNLV20221


First place: Scallon Auto Body.

is an absolute honor to take part in such a historically known event here in the Bakken area. It is good to know we continue to come together and celebrate our interaction. Good work, Boom Town!” Indeed, the Williston chapter hones more than simply great culinary skills. The day-today activity for the nonprofit organization involves a deep commitment to the development and adherence of the highestlevel industry standards, as well as a focus on the environment and health and safety performance. Perhaps most evident is the organization’s drive toward education and community action. Events like the Annual Chili Cook Off raise funds for scholarships, promote education and make an impact in the community where Boom Towners live and work. “Two events are held each year to raise money that is used to support our community,” Pflug explains. “The proceeds of past years’ events were used to fund local scholarships and to provide hardship donations for individuals in need, as well as for groups and activities in the local surrounding communities – the battered children’s fund, The Leonard P. Nelson Cancer Center, Mentors and Friends, Williston Fire Department, The Archery Club 52 | BAKKEN OIL REPORT 2012

Third place: Bekks Hot Oil.

Honorable mention goes to Nabors Drilling, which won Best Decorated Booth, the People’s Choice Award and the Bakken Bread Winners traveling trophy. for Youth Programs, WSC addition, hockey club, swim team, boys’ basketball, Christmas Tree names for underprivileged children, and a number of school events in the community.” The aforementioned second event is the Annual API Golf Tournament. The tournament holds 72 six-man teams and is held on two courses, Eagle Ridge and The Links, over two days.

“The tournament offers a chance for the oil and gas industry to unite and connect in a more social manner,” concludes Pflug. “It is another celebration of our interaction.” The tentative 2012 tournament dates are June 15 and 16. For more information on the API Williston Basin Chapter, please visit the official website: http://willistonapi.com/. n


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EIDE BAILLY

Potential impacts on the U.S. oil and gas industry: Proposed federal tax legislation and the Fiscal Year 2012 Budget By Ronald J. Yates, Jr., CPA Ronald J. Yates, Jr., CPA, is a partner with Eide Bailly in Billings, Montana.

N

umerous federal income tax proposals have been drafted over the last few years that have had the potential to negatively impact the oil and gas and other extractive industries. To date, none of these tax provisions have been enacted into law and, to our knowledge, none have received significant bi-partisan support. However, large federal budget deficits and significant budgetary constraints continue to influence congressional actions and tax policy discussions. THE AMERICAN JOBS ACT OF 2011 & THE BUDGET FOR FISCAL YEAR 2012 In mid-September, the White House presented to Congress the American Jobs Act of 2011. In submitting this proposed legislation, President Obama stated, “this jobs bill will put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed.” The President added, “I am committed to paying for this jobs bill… For this reason, I am sending Congress this detailed plan to pay for this jobs bill and realize more than $3 trillion in net deficit reduction over the next 10 years… I also included specific tax loophole closers and measures to broaden the tax base… They include cutting tax preferences for high-income households, eliminating tax breaks for oil and gas companies, closing the carriedinterest loophole for investment fund managers, and eliminating benefits for those who use corporate jets.” The American Jobs Act proposals applicable to oil and gas companies have not yet been introduced in Congress in a specific bill or piece of legislation. However, the provisions impacting oil and gas and extractive industries found in the American Jobs Act mirror the provisions found in the President’s budget for Fiscal Year 2012, submitted to Congress in February 2011. The oil and gas industry is currently one of the nation’s fastestgrowing manufacturing sectors. As such, all extractive industries are

54 | BAKKEN OIL REPORT 2012

a popular target for eliminating tax deductions and increasing tax rates to pay for deficit reduction and tax incentives targeting specific industries and individuals. The oil industry continues to be a leader in investing in American jobs, technology and infrastructure. Nevertheless, in citing the need for comprehensive tax reform, the Jobs Act states that, “the tax code has become increasingly complicated and unfair… The (current) corporate tax system provides special incentives for some industries, like oil and gas producers, yet fails to provide sufficient incentives for companies to invest in America.” ELIMINATING TAX BREAKS FOR OIL & GAS PRODUCTION Like the fiscal year 2012 budget submitted by the White House to the United States Congress, the American Jobs Act of 2011 proposes to repeal a number of tax deductions currently available for oil and gas production for all taxpayers, not just large corporations, beginning in 2013, as follows: 1. Eliminates the percentage depletion deduction (15 percent of gross income) for oil and gas production; 2. Eliminates Section 199 domestic production activities deduction for oil and gas production (currently six percent of qualifying expenses for oil and gas production; nine percent for all other U.S. domestic producers); 3. Eliminates the current expensing of Intangible Drilling Costs (IDCs); 4. Eliminates the deduction for tertiary injectant costs used as part of a tertiary recovery method; 5. Eliminates the working interest exception to passive loss limitations for oil and gas production; and 6. Extends the tax amortization period of independent producers’ geological and geophysical (“G&G”) from 24 months to seven years. These tax changes are estimated to reduce the U.S. deficit by $41 billion over 10 years.


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EIDE BAILLY

CONCLUDING THOUGHTS The proposed legislation found in the American Jobs Act of 2011 is touted as “offering a detailed set of specific tax loophole closers” that includes “eliminating special tax breaks for oil and gas companies.” The elimination of the oil and gas industry tax breaks noted above would apply to not just companies, but also the extraction and production activity of all taxpayers regardless of size, profitability, sophistication or business structure. Not only would large corporations be detrimentally impacted by this legislation, but potentially, so would small and midsized independent producers, publiclytraded oil and gas partnerships, start-up exploration companies, royalty owners, land owners, retired individuals and outside investors. We understand that it is unlikely that any of the tax proposals pertaining to extractive industries contained in the 2011 American Jobs Act or the budget for fiscal year 2012

will receive majority support or be enacted by Congress in 2012. Nevertheless, it would be wise to take this legislation seriously. We urge you to closely monitor this proposed legislation, educate yourself on the details of any actual legislation introduced in Congress, and seek out opportunities for input and/or testimony – including

contacting your senator or representative stating your position on this (and similar) legislation – before a vote is ultimately taken. Please contact an Eide Bailly professional for additional information on this or any other income tax or financial statement audit consideration. n

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Mountainview Energy Ltd. is a Canadian public company traded on the TSX Venture Exchange with a wholly owned subsidiary, Mountain View Energy, Inc, headed by *OHPYTHU VM [OL )VHYK HUK 7YLZPKLU[ HUK *OPLM ,_LJ\[P]L 6MĂ„JLY Patrick M. Montalban.

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CALFRAC

The truth about fracturing myths By Dale Larsen

I

n August of 2008, one of our esteemed national political leaders commented that “I believe in natural gas as a clean, cheap alternative to fossil fuels.” Since natural gas has long been known to be one of our fossil fuels, along with coal and oil, it was a little disturbing to think that the people trying to regulate our industry didn’t even grasp some of the basic definitions surrounding our business. It’s obvious that the fracturing industry has a long way to go to get the truthful message out about the clean, abundant and beneficial practice that we have become. But we can only begin at the beginning, so let’s start by dispelling some common myths. MYTH NO. 1: FRACTURING IS NEW, UNTESTED TECHNOLOGY Hydraulic fracturing or “fracking” is the process of pumping fluid and sand down a

58 | BAKKEN OIL REPORT 2012

wellbore at high rates and pressures with the end effect of creating a fracture system in the hydrocarbon-bearing rock, and allowing a more conductive pathway for the oil and gas to the wellbore. The first time that a well was fractured for the specific purpose of increasing its production was in July of 1947. The process was used on the Klepper #1 in the southwest corner of Kansas, in what is now known as the Hugoton Field. It was offered as a commercial service line by one of the early service companies in 1949. Since then, over 1,000,000 frac jobs have been performed in the U.S.A. alone. Since that first experiment, hundreds of millions of dollars have been spent on research and development facilities and an inestimable number of hours have been utilized to improve our industry. Advances have been made in fluid technology; in

proppant types (from silica sand to bauxite); in equipment safety and efficiency; and in cleaner, greener, safer products and processes. MYTH NO. 2: FRACTURING IS A DRILLING PROCESS Even though fracturing is the next major process in the life of a new well and its expenses are often included in a “drilling AFE”, it is actually a very separate process from drilling the well. The drilling rig and all of its support equipment are usually long gone by the time the well is prepared for the “completion” phase, which includes fracturing. Though related, a whole different set of technologies and equipment from


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drilling is used to prepare the well for fracturing, performing the fracture job, and cleaning the well up after fracturing as it is prepared to be put on production. MYTH NO.3: FRACTURING EFFECTS EXTEND FOR THOUSANDS OF FEET Early modeling of the three dimensions of hydraulic fracturing – enhanced, perhaps, by overly-optimistic frac engineers – suggested that fractures may extend in a horizontal fashion for 1,000 feet or more. However, with the advent of direct fracture measurement through seismic technology, we have come to the realization that the range of fracture influences may be limited to several hundred feet, often times much less. This growing database of direct measurements of frac dimensions has substantiated the fact that fractures rarely, probably never, invade into drinkable water zones. These water zones usually reside on top of at least a mile of impermeable rock separated from the producing oil and gas shales. MYTH NO. 4: FRACTURING IS DONE INTO LARGE VOIDS, CAVERNS OR POOLS OF OIL AND NATURAL GAS If this were true, it would certainly make for extraction of hydrocarbons the easiest process in the world. However, oil and natural gas often reside in a sponge-like fashion in reservoirs that are only about 10 percent holes, or void space. Additionally, the holes are often not connected to allow any movement of said oil or natural gas. Combine that with the fact that the rock resembles our brittle sidewalks much more than a pliable sponge, and it’s no wonder that we have to artificially introduce avenues into these reservoirs by hydraulic fracturing. MYTH NO. 5: FRACTURING USES MORE WATER THAN FARMING Not only is this not true, it’s not even close to being true. A 2005 study showed that thermoelectric power is the biggest consumer of water in our country, at 41

percent of the supply, followed by irrigation at 31 percent and public supplies of water at 12 percent. Mining and oil and gas operations combined use up a mere one percent. Even though fracturing has boomed since 2005, it is still unlikely that it drinks much more than one percent – and that would include its energy sisters of mining and drilling.

MYTH NO. 6: FRACTURING UTILIZES LARGE PERCENTAGES OF TOXIC CHEMICALS Again, this is patently false since frac water is about 90 percent fresh water; nine percent sand, and the remainder is usually composed of chemicals of a variety that can be purchased at your local homeimprovement store under well-known trade

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names. Chemicals that could be harmful to our environment and our water supply have been identified long ago and are systematically being removed from use in the oil and gas industry. Check it out yourself by going to energyindepth.org and do an internal search for guar gum or ice cream. MYTH NO. 7: FRACTURING IS UNDER-REGULATED If you consider oversight from EPA, DOT, OSHA, BLM and the DOW as well as the various state oil and gas agencies as being

“under-regulated”; then I guess that we plead “guilty” to this claim. Add to that our own voluntary steps that we take to build noise and visual barriers while we are fracturing; avoid congestion with local traffic; and work around the night-time schedules of our communities, and I think that you can see that we are one of the most watched and most respectful industries around. Hopefully, we will see more fact than fiction surface in the future as the fracturing industry attempts to be the best neighbor possible while securing our nation’s energy security. n

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Bakken rocks this stock! Propelled by its energy and resource focus on the region, Integrity stock fund aims to deliver results to investors By Katrina A.T. Senyk

Robert Walstad tours a drilling site in northwest North Dakota.

N

orth Dakota is currently fourth in U.S. oil production – behind only Texas, Alaska and California – with 6,500 wells producing roughly the same output as California’s 100,000 wells. And analysts predict North Dakota could soon surpass 1.2 million barrels per day, meaning the state could approach top oil-producer status. In May 2011, Secretary of the Interior Ken Salazar announced that the U.S. Geological Survey would be updating its 2008 estimate of undiscovered, technically recoverable oil and gas in the U.S. portion of the Bakken formation, a valuable domestic petroleum- and natural gas-rich area that

62 | BAKKEN OIL REPORT 2012

covers 200,000 square miles in sections of North Dakota, Montana, Saskatchewan and Manitoba. Add to this the fact that more and more companies are entering the basin as time goes on, making for competitive lease ground and drilling pricing and housing shortages among other things, and you have the recipe for major oil industry intrigue. Enter Robert Walstad, co-lead portfolio manager of Integrity Viking's Williston Basin/Mid-North America Stock Fund, which invests in companies that are participating in, or benefitting from,

resource development in the Williston Basin and Mid-North America regions. Walstad evinces a fervent conviction that the area stretching from his home state of North Dakota down to Texas will in future generate additional new discoveries of oil and natural gas as a result of new drilling techniques and technologies, which have allowed companies to unlock more of the resources from the Williston Basin. Many companies operating there “are realizing that they are sitting on tons and tons of oil – more than they had expected,” he explains. “Naturally, we are delighted to take advantage of this opportunity."


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WILLISTON BASIN/MID-NORTH AMERICA STOCK FUND (ICPAX) - TOP 25 HOLDINGS AS OF DECEMBER 31, 2011 Kodiak Oil & Gas Corp. 6.19% National Oilwell Varco Inc. 5.58% 4.79% Oasis Petroleum Hess Corp. 4.61% CARBO Ceramics Inc. 3.93% Baker Hughes Inc. 3.93% Halliburton Company 3.66% Cameron Intl Corp. 3.52% Whiting Petroleum Corp. 3.41% Lufkin Industries Inc. 3.26% Continental Resources Inc. 3.26% Basic Energy Services Inc. 2.63% C&J Energy Services Inc. 2.53% Oil States Intl Inc. 2.25% Dresser-Rand Group Inc. 1.99% Patterson-Uti Energy Inc. 1.96% MDU Resources Group Inc. 1.86% RPC Inc. 1.79% GeoResources Inc. 1.75% Newfield Exploration 1.62% Tesoro Corp. 1.62% Canadian Pacific Railway 1.62% Enbridge Inc. 1.60% Kinder Morgan Inc. 1.59% Weatherford Intl Ltd. 1.57%

“I was in Houston just last week for the NAPE Expo, and I had the opportunity to visit with CEOs of several of our portfolio companies – one of whom indicated that they’d be moving an additional 19 drilling rigs into the Bakken region in 2012,” Walstad said, during an exclusive interview with the Bakken Oil Report. “This speaks well for future development in the area.” "I am excited that this unique fund, and its special focus, is doing so well,” Walstad enthuses. “The Williston Basin/Mid-North America fund is an unusual opportunity for investors who may have previously overlooked this tremendously resource-rich area.” Big movers and shakers in the Bakken region are Continental Resources, Inc., Whiting Petroleum Corp., MDU Resources Group, Hess Corp. and Brigham Exploration Company (the latter of which Walstad uses as an example of a company that will “bring a lot more oil out of the ground than most people now expect” – and receive good prices for the oil, too), among other notables. What do these firms all have in common? Integrity Viking’s fund invests in each of these companies – as well as in scores of others involved with the oil and gas, minerals, agriculture and related businesses in this happening region. It’s no wonder why in 2011, the Williston Basin/Mid-North America fund was the top 12-month performer (for the second time in a row, no less) in The Wall Street Journal’s quarterly Winners' Circle survey of diversified U.S.-stock mutual funds. This fund is definitely one to watch! Disclaimer The Williston Basin/Mid-North America Stock Fund is sold by prospectus only. Investors should carefully consider the investment objectives, risks, and charges and expenses of the investment company before investing. The prospectus contains this and other information about the investment company. You may obtain a prospectus at no cost from your financial adviser or at www.integrityvikingfunds.com. Please read the prospectus carefully before investing. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Diversification does

t ROUSTABOUTS t CHEMICAL SALES t RENTALS t WELDERS t CONSTRUCTION

not assure a profit nor protect against loss in a declining market. Because the Williston Basin/Mid-North America Stock Fund normally invests in common stocks of companies engaged in

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natural resources-related activities in a limited geographical sector, the Fund’s performance largely depends on the overall economic condition of that industry and geographical sector.

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PTI GROUP

Beds in the Bakken PTI Group USA makes transition from home to life in the field seamless

One of PTI’s lodges in North Dakota.

A

PHOTO CREDIT: CRAIG SCHMIDT.

s drilling activity continues to increase in North Dakota’s Bakken play, so does the demand for workforce housing. With virtually zero percent vacancy rates and communities already bursting at the seams, housing concerns, along with labor shortages, are jumping to the top as major issues facing companies working in the region. One of the companies that oil and gas producers rely on to house and feed their employees while working in the field is Denver-based PTI Group USA. PTI has been resolving their customers’ logistical challenges in remote regions of the world for almost 35 years. It has become one of North America’s largest and most respected suppliers of workforce accommodations. With its integrated service model, PTI has a number of divisions that collectively provide facility design, engineering, modular manufacturing, site construction, and site operations including facility management, catering, housekeeping, power generation, and wastewater treatment. Camp life has certainly evolved over the years and PTI has led the drive to change the negative stereotypes that are traditionally associated with the business of housing people working in the field.

66 | BAKKEN OIL REPORT 2012

With a hotelier mindset, PTI elevated industry standards in its new generation of facilities by adding a variety of amenities and services focused on contributing to quality of life. PTI’s commitment goes beyond offering just a bed in which to sleep – they strive to make the transition from home to work as seamless as possible. Guests can stay in private rooms and make the space their own. Free in-room Internet access and satellite TV allow guests to connect with loved ones and stay up-to-date on current events, sports, and favorite television programs. Game rooms provide outlets for guests to socialize and unwind at the end of their day. PTI also supports those who seek healthier lifestyles, with catered dining rooms that always have nutritious options available. Additionally, guests can continue their workout routines in wellappointed fitness rooms. “We believe we can be our customer’s competitive advantage when it comes to recruitment and retention in a tight labour market,” says Ken MacLean, director of marketing and communications at PTI. “Quality of life means different things to different people, but if we can provide the comforts and conveniences that give them peace of mind while they are on



PTI GROUP

rotation in remote areas and away from family and friends, then we are serving our customers well.” One of the many facilities that PTI operates is PTI Stanley House, located just south of Stanley, North Dakota on 61st Street, with 199 single-occupancy rooms. Stanley House is an open lodge, meaning that the lodge is not reserved for a specific company’s employees but any company or an individual can book rooms at the property. The catered dining room offers three daily meals including bagged lunches, and snacks are also available throughout the day. Guests also have access to laundry, a fitness room, and a games room. With the increased demand for workforce accommodations in the Bakken, some communities have been hesitant to allow camps within their boundaries. With concerns that have been generated on the negative stereotypes associated with the traditional “man camp”, people have raised concerns about crime and a transient workforce. PTI is sympathetic to these concerns and hopes to change public opinion with its community-friendly lodge properties. “Our guests are hardworking people who have traveled from all parts of the United States to find work and provide for themselves and their families. Working in the field for extended periods can be a challenging lifestyle, so we’re dedicated to making sure they have a safe, secure, and comfortable stay,” says Lou Doiron, PTI’s vice president of sales. Doiron continues, “We welcome the consultation and partnering with community leaders in the development of accommodations that result in a win-win situation for the workers and the communities over the long term.” In addition to open lodges, PTI also offers a large selection of rental equipment and manufactures custom-built solutions for clients’ unique needs. PTI is a subsidiary of Houston-based Oil States International, Inc., a diversified oilfield services company publicly traded on the New York Stock Exchange under the symbol OIS. n 68 | BAKKEN OIL REPORT 2012

Fitness room at a PTI lodge.

PHOTO CREDIT: DARREN JACKNISKY.

Recreation room at one of PTI’s newest lodges.

PHOTO CREDIT: DARREN JACKNISKY.

PTI Stanley House has 199 single-occupancy rooms.

PHOTO CREDIT: CRAIG SCHMIDT.



BEAVER CREEK

Beaver Creek Archaeology: a growing consulting company in the oilfield Field crew poses for the camera in front of a picturesque view.

Mary working on GIS mapping.

E

arly morning in the Badlands, Beaver Creek Archaeology is hard at work hiking through draws and across ridges, ensuring no cultural resources are in the way of the project on which they are working. Frequently, no cultural resources are present, but occasionally one is found. On these occasions, alternate routes are explored; phone calls and emails are made to clients and federal agencies to find solutions everyone can agree on to move the project forward. This is the daily routine of Beaver Creek Archaeology, a cultural resource firm providing archaeological services in the oilfield. Wade Burns, founder of Beaver Creek Archaeology says: “As a cultural resource consulting firm, we are morally, ethically and professionally bound to protect significant archaeological and historic sites. We are hired for our expertise in cultural resources and we owe it to our clients to best advise them on how to handle potential archaeological and historic sites.” The archaeologist’s job is to provide the client and agency with recommendations based on the findings during what is called a “Cultural Resource Inventory”. Based on these recommendations, the overseeing agency will provide a final determination on the status of the project. When founded in 2004, the oil boom had not yet started and Beaver Creek Archaeology was primarily working in the transportation industry. Pretty soon, though, the petroleum-related jobs became more and more frequent, with an exponential increase within the last three years. “We have dedicated some of our staff to

70 | BAKKEN OIL REPORT 2012

each oversee a client. The demand for a fast turnaround is extremely high, so we are continuously looking for more employees,” says Burns. The company was created to fill what Burns describes as a “void” in the archaeological portion of the permitting process. “There are many archaeological companies out there,” Burns says, “but few that focus on client relations.” Burns worked for a few companies before founding his own, and noted that efficiency, communication, and technology was lacking within the companies for which he worked. The process, from receiving project information to delivering the final product, seemed to be a much more cumbersome process that what it needed to be. “We do a lot of fieldwork, but the bottleneck is usually found within the office before and after the fieldwork is done,” Burns says. “Before we go in the field, maps have to be created, searches for known archaeological and historic sites need to be done, authorization from federal agencies need to be obtained before we step foot in the field. When field work is done, a lot of field data such as GPS points, photos, and field notes are processed at the office before we can even start writing a report.” Burns streamlined the process by continuously updating both software and hardware. “It is amazing how much more efficient it is when everyone in the company is able to access pertinent information about a project, and share that information with each other!” he says.


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Early morning field work.

Wade recording oil well locations.

At the moment, Beaver Creek Archaeology is in the process of moving into other states to expand their business. “Clients have asked us to provide them with services in other states, and due to increased workloads in both Montana and Colorado, we are currently looking into opening offices in both locations,� Burns says. Bismarck/Mandan is a fairly centralized place for Beaver Creek Archaeology to be located, since the company also does a lot of work in the eastern part of North Dakota not related to the oil industry. “But with the increased work-load in the western part of North Dakota and eastern part of Montana, opening a field office in that area is inevitable, granted we can find available space.� n

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BRADY MARTZ

Controlled chaos? By Nathan Sorenson

A

s exploration and production in the Bakken has continued to expand at an almost frantic pace, we have seen a number of issues continue to pop up with regularity amongst our clients. I will cover some of the more common issues that businesses have, along with possible solutions, so that you can concentrate on managing your business. One of the biggest issues we assist our clients with is the bookkeeping changes that are necessary to address as the business expands. Hand ledgers and Excel spreadsheets that used to work a few years ago simply are not capable of keeping up with the huge expansions we have seen. The sheer volume increases demand which a more sophisticated software system can handle by being able to issue invoices, print checks and track receivables and payables. Whether you expand to a general software, such as QuickBooks, or perhaps select an industry-specific software, it is a critical part of an expanding business. With the expansion of the business comes additional employees and/or independent contractors. While it is tempting to classify your workers as “independent contractors” due to the simplicity of paying them a flat rate, and thereby not having to pay the additional payroll taxes or cover them through workers’ compensation and unemployment insurance, it does not come without high risk. Both the Department of Labor (DOL) and the State of North Dakota are concentrating a lot of effort on the independent contractor/employee status. The tests they use to classify the workers are very subjective and no one test is conclusive. We at Brady Martz can assist you with the determination of classification and work you through the tests that the

74 | BAKKEN OIL REPORT 2012

DOL and State will apply in attempting to classify workers as employees. If the worker is truly an independent contractor, then the issues of overtime, pay rates, unemployment insurance and workers’ compensation can be ignored. However, if you exert too much control over the worker and they are classified as employees, then they will be eligible for overtime pay; their payments will be considered wages and are subject to payroll tax liabilities; and they will also be required to be covered under workers’ compensation and unemployment insurance. If you misclassify employees as independent contractors and do not do the proper withholding, you as the employer can be held liable for all of the required taxes; penalties and interest on the taxes and coverages now due can be significant. Due to the dramatic increase in the number of employees and the type of work involved, employers in the construction and oilfield services industries will be seeing an increase in contact with agencies such as Workforce Safety and Insurance to once or twice a year to do premium audits, in order to make sure that all of their employees have the necessary coverage and to calculate premium adjustments. This may mean additional premium expenses being calculated in the middle of the premium billing cycle; however, this can save your business a very large premium adjustment at the end of the billing cycle, which falls at the same time that the new billing cycle premium is due – though, Workforce Safety does have premium reduction options available for businesses; therefore, it may be worth inquiring about these programs to save some dollars in premiums each year.

If you are in the transportation industry and subject to DOL and DOT, then a whole new set of rules applies. Hazmat certifications and crossing state lines with your rigs can have a huge impact on how you pay your drivers. With the influx of companies coming from outside the state as well as local businesses becoming suppliers all across the country, sales and use tax issues also arise with regularity. North Dakota sales taxes apply to almost all purchases that occur in North Dakota. The North Dakota use tax can be a quiet tax that may catch you off-guard, as well. If you buy products outside of the state and bring them into North Dakota to use, you will be subject to the use tax which is applied at the same rate as the sales tax. The state of North Dakota is aggressively pursuing the collection of those dollars and if you are selected, they will audit all of your purchases over an extended period of time. If you are unfamiliar with the rules for sales and use tax collections and how they could possible affect your business, please contact one of our offices. With locations in Dickinson, Minot, Williston and Bismarck, we at Brady Martz are centralized deep in the Bakken play and have the resources available to assist you through these issues so that you can concentrate on operating your business. Please contact one of our offices if you have any questions or needs and we will be happy to assist you. ABOUT THE AUTHOR: Nathan Sorenson is a shareholder with Brady, Martz & Associates, P.C., in Dickinson, North Dakota.n


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TRAINING

Petroleum Safety & Technology Center expands to meet needs of Williston Basin oil industry By Mary A. Stenberg, Williston State College

W

illiston State College, a two-year college located in the far northwest corner of North Dakota, has been profoundly affected the past few years by the oil boom brought about by the drilling for oil in the Bakken formation. Wanting to be part of the solution, the college and its partner, TrainND, went to the State of North Dakota in 2006 and received funding to build The Petroleum Safety and Technology Center of Excellence, thus filling the need for qualified, trained workers in the oilfield. The center, which was dedicated in 2009 and is located off-campus in the East Industrial Park, provides classroom and hands-on training for oil and gas classes in its three classrooms and a high-bay area for large equipment training. In 2010, the center offered a total of Jeremy Mohl, trainer with TrainND, works with a new full-size drilling-well control 432 training sessions in 15 areas, including simulator that The Petroleum Safety and Technology Center of Excellence purchased in November 2011. This simulator enables the centre to offer more realistic training for the Commercial Drivers License Training Well Control Training program. program, Floorhand Training for Service Rigs, Incipient Fire Training, Lease Operator TrainND has done what it can to accommodate the increase in Training, and Aerial Lift Training and more. In those sessions, 4,874 participants. people were trained. “Last year we turned the high-bay space into a classroom, and However, the center has run into a snag which has become we turned a maintenance room into an office,” Piesik explains. “I common for companies in the Williston area: they have outgrown thought when we were planning and doing the construction that the building. this building was pretty big – but obviously it’s not. I did not “Last year, we saw a 20 percent increase in the number of anticipate this type of growth.” participants we trained,” says TrainND CEO Deanette Piesik. “This So it was back to the State of North Dakota. year we’ve already seen a 35 percent increase – and we’re not “We received $500,000 in funding, which will allow us to add even half-way through the year. Before this, our numbers two classrooms and four offices to the building,” she says. increased; but the last two years have just been crazy. The 2010But this would be like putting the proverbial band-aid on a 2011 numbers were insane, and I know that 2011-2012 will be even compound fracture. Piesik has a bigger vision for TrainND. higher.” “We are looking at adding another building, moving us (TrainND) Piesik said that easily the center has seen 15,000 people go off campus, and putting us in one place,” she states. “We would be through training since it opened in 2009.

76 | BAKKEN OIL REPORT 2012


able to use all the hands-on equipment that the companies

R

have donated,” she says, talking about the $2 million in donated equipment from various companies who use the facility. “We’re planning better for what we need for space this time, and to take care of our needs, that building will cost over $5 million,” Piesik says. “Our future lies in all being located out there (in the industrial park). Hopefully by 2014 we can see that happen, but I don’t know if that is realistic or not. I sure hope so.” Having all the offices and classrooms for TrainND in one location would make it easier for the customers who use their facilities, she explains. “Sometimes they have to come here [to their current location in the Crighton Building on the WSC campus] and sometimes they go there [to the industrial park location]. Having everyone together would work so well and we’d be better able to use our trainer resources.” She attributes the growth mostly to the training they do for the oilfield industry. “We keep track of all the training we do and while we don’t like to keep all our eggs in one basket, at least 77 percent of our businesses and training come from the oil industry, including trucking, etc.” One of the newest programs offered is well control. “We do well-control training for drillers and workover rigs. Supervisors on drilling and workover rigs must be certified in well control, and they must renew their certification every two years,” she states. The program got up and running with the use of a laptop computer more than a year ago, but last November a grant from the Labor Department allowed them to buy a $200,000 drilling-rig simulator. “While we have done this training for the past year, it really has taken off since we got the full-size simulator. The participants are more excited about it as it’s more realistic for them,” Piesik explains. “Classes are limited to 15 people, and they fill up fast. At this point, we’re full through April.” With oil exploration and drilling going full-steam ahead, and no end in sight, The Petroleum Safety and Technology Center of Excellence is able to fill the need for trained, qualified workers in the oilfield. And with the planned expansion that is coming, the center is prepared to continue to meet the needs of the companies that are “Rockin’ the Bakken.” More information about The Petroleum Safety and Technology Center of Excellence and any of the programs offered there may be obtained by contacting Piesik at 701-774-4246, by email at deanette.piesik@willistonstate.edu; or contacting Petroleum Safety and Technology Center director Dennis Knudson at 701-572-2835 or by email at Dennis.Knudson@willistonstate.edu. Information can also be found at the WSC website. n

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Riding the M&A wave By Chris Frevert

A

nyone who’s been in the oilpatch for more than thirty minutes has heard the stories of the ups and downs that come with the boom-and-bust cycles of our industry. As the price of the commodity goes, so goes the strength of the merger and acquisition (M&A) market for companies involved in producing that commodity. While most consider that correlation to be common sense, what is not as widely known is that the “wave” occurs on a basin-by-basin level as well, moving the value of service companies in a particular basin up and down right along with it. There’s no secret here; one doesn’t have to look any further than the rise and fall of the Piceance or Haynesville basins to understand this concept. So, how does this cycle play out in a basin like the Bakken? It’s important to remember that money follows opportunity for the return on investment. As E&Ps find greater returns in their production rates, more capital comes in to continue drilling programs, creating the idea of a “sexy” basin. As a service company, the first guys in the basin will win the initial business and will continue to grow as long as they can keep the service level up and can access the capital necessary to maintain that growth. What strangles many service companies is their inability to acquire the necessary equipment and people to keep up with the demands of their customers. Shortly thereafter, larger service companies from outside the basin begin to fill in where the first responders began to falter. These companies may have the financial and relationship capital to enter the market at will, but they lack the local knowledge and people that can make or break the investment.

78 | BAKKEN OIL REPORT 2012

Enter the acquisition strategy. Buy a local company for its relationships, people and equipment as a platform into the basin from which to grow the business through additional equipment or add-on acquisitions. As a basin becomes “sexier”, additional money enters from strategic acquirers and financial buyers begin to take notice. Most people reading this article probably know of companies in the area that have been acquired recently. Many have been newsworthy, such as the investment by Minneapolis-based Mill City Capital into Missouri Basin Well Services, now MBI Energy Services, and the add-on acquisition of Ward Williston. These are prime examples of the infusion of growth capital into one of the early players in the Bakken. I asked Mike Israel of Mill City to comment on why they chose the Bakken as an investment. “The combination of horizontal drilling and multi-stage hydraulic fracturing has been a proverbial gamechanger for the Williston Basin, which has moved to the forefront of North American liquids-oriented resource plays,” Israel said. “The service intensity of these unconventional reservoirs is creating tremendous opportunities for high-quality service companies across a whole range of service lines. We believe that this is an investment story which is likely to play out over many years, and we are delighted to be investors in what we believe to be the largest native service company in the region.” Of course, some out-of-basin companies have chosen to enter the market hoping their reputation in other basins would be enough to start the engines. This approach has worked for some of the larger multi-basin companies but many smaller players, especially those moving in from

less-favorable gas basins, have had to rethink the strategy. Right now, the Bakken M&A cycle is moving at a fast pace and the wave is cresting. Many of the larger deals with higher valuations have been completed and outside service companies have established a foothold. The current wave is largely propelled by financial acquirers who are looking to enter the industry or strategic acquirers who are looking for market share. This phase of the cycle should continue for the next 12 to 24 months, as deals work their way through the process. The next phase, which could last for several years beyond, will see sporadic deals with lower valuations, mostly consisting of smaller companies that can be added to a platform company. At some point, the industry will cycle and repeat in the next “sexy” basin. What does this mean to the owners of service companies in today’s Bakken? Now is the time to evaluate your company and make sure it’s up to the task of competing with the influx of new companies and longtime competitors who’ve already found growth partners. Grow, but grow smart; more companies have died from unbridled growth, than not enough. The Bakken is expected to continue its impressive growth and remain a key supplier of American energy into the foreseeable future. If, or when, the cycle turns, the Bakken is surely poised to be the first “sexy” basin of the next rebound. ABOUT THE AUTHOR Chris Frevert, managing director of Citadel Advisory Group, has 15 years of experience in mergers and acquisitions, corporate finance, investment banking and client advisory services. He is widely known as an industry expert in oilfield-related


CITADEL ADVISORY GROUP

Chris Frevert, managing director at Citadel Advisory Group. mergers and acquisitions with a particular emphasis on energy service companies. Chris is also the president of Caroden Energy, an independent O&G company with operations in Central Kansas, and he holds the Series 7, 66, and 79 licenses. Citadel Advisory Group is an investment banking firm specializing in oil and gas service companies. With over 100 completed transactions, more than 50 of those in O&G Services, and numerous advisory engagements, Citadel’s team is focused on the energy services sector. Over the past decade, the principals of Citadel, Chris Frevert and Brad Hubbell, have completed more small and mid-market service transactions in the Rockies than any other recognized firm. n

U.S. regions with the greatest increase in spending for 2012.

Maximizing Returns for Energy Service Companies Oil and Gas Service Company Specialists Q Q Q

Over 100 Completed Transactions Over 50 Energy Services Transactions Nearly 30 Additional Advisory Engagements Chris Frevert, Partner—Fort Collins Office: 970.267.0802 Brad Hubbell, Partner—Denver Office: 303.459.6040 Call for a complimentary market evaluation. All inquiries confidential. 2120 Milestone Dr. Ste. 103 Fort Collins, CO 80525 8158 E 5th Ave. #240, Denver, CO 80230 Toll Free: 877.267.0802

www.CitadelAdvisory.com BAKKEN OIL REPORT 2012 | 79


EVENTS

Plan to attend the 20th Annual Williston Basin Petroleum Conference! By Ron Ness, president, North Dakota Petroleum Council

I

t’s a time of great excitement in the Williston Basin as the Bakken and Three Forks resource plays continue to produce growing results and garner national and global attention. For those of you interested in learning more about this valuable resource – from geology and productionenhancing technology to development impacts, transportation, supply and business development opportunities – you won’t want to miss the 20th Annual Williston Basin Petroleum Conference. Slated for May 22 to 24, 2012, this international conference is expected to attract more than 3,500 individuals to the Bismarck (N.D.) Civic Center. Every year, this conference brings together a wide array of industry representatives, regulators and political leaders from across the United States and Canada, all with a vested interest in the Williston Basin. As always, technical presentations will be the highlight of the conference as industry experts from across North America share information on all the hot topics surrounding the Williston Basin. Created in 1992, this international partnership between the North Dakota Petroleum Council, North Dakota Department of Mineral Resources and the

More than 300 expo booths and outdoor exhibit spaces will be part of the 2012 Williston Basin Petroleum Conference. 80 | BAKKEN OIL REPORT 2012


Typical outdoor exhibits include pumpjacks, workover rigs, portable housing units, and other large equipment.

Registration and additional conference details are available online at www.wbpcnd.org. We hope to see you there! Saskatchewan Ministry of Energy and Resources alternates locations between North Dakota and Regina, Saskatchewan. The conference goal is to provide an outstanding line-up of presenters at a great venue for local, regional, national and international industry leaders to gather and exchange new ideas and technology. In recent years, these information exchanges have lead to more efficient drilling and completion methods being implemented in the Bakken and Three Forks formations. The event will include more than 70 presenters discussing a wide array of topics. A Bakken/Three Forks/Tyler Core workshop will also be offered by the North Dakota Geological Survey on three occasions during the conference. Some of the 2012 keynote speakers include Jack Gerard, American Petroleum Institute president and CEO; Greg Hill, Hess Corporation executive vice president and president, Worldwide Exploration & Production; and David Hobbs, IHS CERA chief energy strategist. The conference will also feature a CEO panel with participants Harold Hamm, Continental Resources chairman and CEO; David Roberts, Marathon Oil executive vice president and COO; and Jim Volker, Whiting Petroleum chairman and CEO. The conference will feature an indoor and outdoor expo comprised of more than 300 exhibits, large demonstrations and equipment. n

SERVING THE OIL AND GAS INDUSTRY SINCE THE DISCOVERY OF ELK BASIN ATTORNEYS KIMBERLY BACKMAN BRIAN R. BJELLA COLBY L. BRANCH GARY G. BROEDER CRAIG B. BURNS JOSHUA COOK JON DYRE CHRISTOPHER D. FRIEZ JOHN L. GALLINGER SHANE A. HANSON RACHEL HASSELLE KEN HEDGE BRIAN HOLLAND KRISTIN BJELLA HOW

BLAINE JOHNSON ARTHUR F. LAMEY, JR. JOHN R. LEE TIMOTHY LERVICK DENISE D. LINFORD MOLLY A. LITZEN CHRISTOPHER LUEHR CHRIS MANGEN, JR. WADE C. MANN JILL MCKIERNAN LORI MCMULLEN LOUIS R. MOORE JOHN W. MORRISON JENNIFER M. NASNER

ADAM OLSCHLAGER JEFFREY OVEN URIAH PRICE FRED C. RATHERT STEPHANIE REGENOLD P. JAYE RIPPLEY STEVEN RUFFATTO CRAIG C. SMITH GARTH SJUE KIRSTEN SJUE MARK STERMITZ CHRISTOPHER C. STONEBACK

NEIL WESTESEN

BILLINGS 490 North 31st Street Suite 500 Billings, MT 59101 Phone: (406) 252-3441

BUTTE 65 East Broadway Suite 503 Butte, MT 59701 Phone: (406) 533-6892

MISSOULA 305 South 4th Street E. Suite 100 Missoula, MT 59801-2701 Phone: (406) 523-3600

BISMARCK 400 East Broadway Suite 600 Bismarck, ND 58502 Phone: (701) 223-6585

CASPER 152 North Durbin Street Suite 220 Casper, WY 82601 Phone: (307) 265-2279

SHERIDAN 101 West Brundage Street Sheridan, WY 82801 Phone: (307) 673-3000

BOZEMAN 45 Discovery Drive Bozeman, MT 59718 Phone: (406) 556-1430

WILLISTON 111 East Broadway Williston, ND 58801 Phone: (701) 572-2200

CROWLEYFLECK.COM BAKKEN OIL REPORT 2012 | 81


MCA promotes energy development, offers oil industry workers benefits from membership By Laura Tode

A

re you looking to gain exposure for your business, influence change in the construction industry or find training and other resources for your employees? Consider joining the Montana Contractors’ Association (MCA). The MCA is a non-profit, member-driven organization that promotes economic viability for the construction industry. It serves general contractors, specialty contractors and companies that supply the construction industry. The organization works in the political arena to support industry-friendly policy, provides training, and offers health and retirement benefits. “We’re the eyes, ears and voice of the construction industry in Montana,” says executive director Cary Hegreberg. Established in 1935 by a few forward-thinking contractors, the MCA has always been involved in the regulatory arena at both the state and federal levels. As regulations and policies change, the MCA is at the table, protecting and fostering the interests of the construction industry. When changes happen, the MCA helps educate its members and gives them the support they need to comply with changes. “We’re constantly interfacing with government agencies,” Hegreberg says. During the legislative session, Hegreberg goes into high gear, lobbying for the interests of members and the construction industry as a whole. The MCA has been involved in the legislative process, helping with workers’ compensation reform, statewide infrastructure growth, contract law and permitting among many other issues. “Even when the legislature is not in session, we’re very involved in working with the various agencies and the administration to get things done,” Hegreberg states.

SPONSORS MONTANA ENERGY CONFERENCE The MCA supports its membership by helping to generate construction industry jobs in Montana; and it is one of the primary sponsors of the Montana Energy Conference and Tradeshow in Billings in early April. The two-day event will bring industry leaders together to discuss energy development in Montana. “Our board of directors recognized that energy development represents the single greatest opportunity for growth in the construction industry,” Hegreberg states. One of the most overlooked benefits of MCA membership is the networking opportunities that we offer, says member services director Maryann Seilstad. Throughout the year, there are several events for members to meet and develop working relationships. “It doesn’t matter if you’re a supplier, a general contractor or a specialty contractor; it’s a great way to connect,” Seilstad says. Large and small companies take advantage of the MCA’s selffunded, self-administered health benefits and retirement plans. Through the affiliated Montana Contractors’ Compensation Fund, the MCA offers a workers’ compensation program that is an alternative to the State Fund workers’ compensation program. Because the workcomp program is self-funded, companies who participate can receive dividends at the end of the year if overall claims are low, Seilstad explains. “It’s an incentive to keep safety records up,” she adds. Training opportunities include project management, estimating, Building Information Modeling (BIM), ACI-certified concrete technology, and storm-water pollution prevention as well as numerous online distance learning courses. The courses are affordable and change as members’ needs change, says Seilstad. More than 350 Montana companies, representing thousands of

PO Box 685 Sheridan, WY 82801 Office: (307) 673-9709 Fax: (307) 673-6773

employees, are members of the MCA. The organization is growing and gaining attention among industry investors, who recognize members’ quality work. “If you’re looking for top-notch contractors, we’ve got the cream of the crop,” Seilstad enthuses. “If you look around and see who is

Website: http://tomahawkpipeline.com/

doing a lot of the work across the state, you’ll find they’re MCA members.”

tomahawk@vcn.com

Membership opportunities vary. For more information, please visit the MCA website at www.mtagc.org or call 406-442-4162. n

82 | BAKKEN OIL REPORT 2012


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DON-NAN

Success by separation By James F. Lea, PL Tech LLC

I

rrespective of drilling zone, the combat zone down-hole is the most crucial. It is the difference between profitable producing and pump impotence. Most wells in the Bakken shale play are suffocated with gas, which leads to gas interference hindering maximum production and increasing the likelihood of down-hole equipment failures and the ensuing financial loss. The patented-design “Don-Nan Gas Separator,� developed by Don-Nan Pump & Supply, does simply what its namesake claims to do. And, with varying and unique well conditions to combat, it is manufactured in a variety of lengths, tubing sizes, and metallurgies.

84 | BAKKEN OIL REPORT 2012

The packer-type gas separator is positioned within the tubing string directly above the T.A.C. and rotational packer. The presence of the packer ensures that all of the formation fluid from the well bore passes through the gas separator before entering the pump intake. The gas separator is designed to break the gas out of the fluid and allow it to travel upward at a velocity faster than the velocity of the liquids being drawn into the pump. It prevents the free gas from reaching the pump intake, reduces the occurrence of gas interference and gas lock and improves the pump efficiency. The gas separator favorably creates a lower fluid level in the casing


at a faster rate, while providing an environment that is conducive to continuous chemical treatment for maintaining a corrosion-free well. Formation fluid from the well bore travels through the tubing string and reaches the ported coupling of the separator. The fluid passes through the ported coupling and enters the annulus space between the inner flow tube and the outer tube. Once the annulus space between the outer tube and the inner flow tube is filled with fluid, it passes through the four slots of the outer tube and falls back in to the annulus space between the casing and the outer tube, settling on the packer. During this flow path, the fluid experiences low pressure and undergoes turbulence, resulting in the gas to break out from its solution form. This free gas travels upward through the tubing/casing annulus space, diverting most of the gas away from entering the pump intake. Problems such as gas interference, gas lock, and gas pound can be greatly reduced, improving the efficiency and life of the pump. Manufactured in the Midland facilities, the patented-design Don-Nan Gas Separator is assembled entirely with machined components, eliminating the problem of breakage commonly associated with welded connections. Industry leaders from West

Texas, Southeast New Mexico, and stretching north to the Canadian Rockies will testify to the effectiveness of the Don-Nan Gas Separator with regard to increased production in their wells. Hard work is nothing to frown upon, but smart work trumps hard work any day. Visit don-nan.com to watch how the Don-Nan Gas Separator works. ABOUT THE AUTHOR Dr. James F. Lea, JR. is an instructor of industry courses and is involved in industry production and artificial lift-related projects. He was a professor and chairman of Petroleum Engineering at Texas Tech University for six years, until 2005. He is on the API and SPE committees for electrical submersible pumps, gas lift, and artificial lift systems, and is a member of the panel for the ESP roundtable. He has been an SPE Distinguished Lecturer two times and has presented and organized numerous conferences for artificial lift. He received the SPE Production Engineering Award in 1996, and recipient of the 1990 J. C. Slonneger Award from SWPSC, Lubbock, Texas, given to individuals who have made outstanding contributions to the field of petroleum engineering. n BAKKEN OIL REPORT 2012 | 85


CANELSON DRILLING

All natural: CanElson Drilling growing in oil with natural gas technology By Daniella Ponticelli

I

t started with four partners and a love of oil. Four years later, CanElson Drilling is one of the largest manufacturers and operators of rigs in the Bakken oil play. CanElson CEO Randy Hawkings, who’s been in the oil business for more than 32 years, is one of the company’s founders along with Elson McDougald, and Don and Daryl “Doc” Seaman. They’re all Canadian boys, with strong roots in oil. The Seaman brothers were pioneers in the Alberta oil industry, and some may remember ‘Doc’ Seaman as a partowner of the Calgary Flames. Hawkings recalls it was Elson who called him up with the idea to get into the Bakken oil play. “He said ‘we should do one more drilling company,’ ” says Hawkings. “It was always our dream to be in the Bakken oil play.” And while it would be Doc’s last venture, the founders’ combined excitement about oil has made it a success. When the company launched in August 2008, it was privately traded; and by December of that same year, it went public and things moved quickly. “Rig one went into the field in 2008 and we had 35 rigs in by the end of December 2011,” states Hawkings. “We had 35 rigs in 36 months.” CanElson now has 36 rigs – soon to be 37. And the company continues to expand: as a drilling contractor, CanElson has 21 drilling rigs in the Western Canadian Sedimentary Basin (WCSB); seven drilling rigs in Texas (soon to be eight); four drilling rigs in North Dakota; and 86 | BAKKEN OIL REPORT 2012


Experience, leadership, performance.

Since it was established in late 2008, CanElson Drilling Inc. has grown quickly to become one of Canada’s premier drilling contractors. In addition to building its own drilling rigs, the company is expanding its fleet of drilling and service rigs through acquisition. CanElson now operates a fleet of 36 rigs (33 net). With operations in Western Canada, West Texas, North Dakota and Mexico, CanElson Drilling Inc. is setting new standards for rig utilization. With right-sized, purpose-built rigs built for horizontal and resource play drilling and experienced, well-trained crews, the company is achieving new records for cost-effective, efficient drilling operations.

CanElson Drilling Inc. Suite 700, 808 - 4th Avenue SW, Calgary, AB, Canada T2P 3E8 Phone 403.266.3922 Fax 403.266.3968 www.CanElsonDrilling.com TSX: CDI


CANELSON DRILLING

two drilling rigs and two service rigs in the Misantla-Tampico Basin of Mexico. CanElson’s work in Mexico is based on a partnership with Diavaz CanElson de Mexico, S.A. de C.V. ("DCM" or the "Joint Venture"), in which the company holds 50 percent ownership interest. CanElson is focused on the Permian Basin and Bakken plays in the U.S., and the

WCSB in Canada. The expansion means the management team, Hawkings in particular, has the chance to travel – and it’s to see the clients and the field guys. “One of the mandates internally is that we get out and see the men,” states Hawkings, who admires the tenacity of his employees, as he was once a drilling engineer out in the field.

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“Drilling people are very adaptable; the challenge is there’s always things you can do better and that’s what drives people,” says Hawkings, who along with his team is trying to do just that – make things better in the oil industry. In Canada, CanElson’s rigs are ‘telescopic doubles’: smaller rigs with the power to drill horizontal and resource wells – anywhere from 1,500 to 5,500 meters. “It’s the ‘Swiss army knife’ of rigs; it leaves a small footprint but it’s ultra heavyduty and can drill almost any well,” explains Hawkings, adding that most of the new rigs are outfitted with the telescopic double drill. “It is quite simply the most efficient package for what we do.” CanElson is also leading the way with environmental changes: the company has a patent pending on the use of stranded or flared natural gas, instead of diesel, for its rigs to help offset the carbon footprint. “It helps the environment, and helps the community,” states Hawkings, adding the plan is a win-win for everyone. In a recent news release, the company says it has “decided to test and evaluate technology to use trucked compressed natural gas (CNG) on its mechanical drilling rigs.” So far, the results have been positive, and CanElson is implementing the use of this technology on four of their drilling rigs in Saskatchewan. Pending the success of those four, the technology may then be moved further – to rigs in North Dakota. And for this CEO, seeing the rapid growth taking place in the Bakken oil play in North Dakota is very exciting. The northern state is making so much progress; Hawkings believes it is “well on its way” to being number two in the oil industry in the United States. “Just to be a part of the excitement, of what’s going on for North Dakota – that’s what keeps me getting up in the morning,” enthuses Hawkings. For more information about CanElson Drilling Inc. please visit www. canelsondrilling.com n


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KILO TECHNOLOGIES

Kilo Technologies’ WTS measures oil content with precision ‘If there is no wind, row.’ ~ Latin proverb

W

hen a new concept or idea is introduced, marketing people love to use words like “revolutionary”. But if a technology is worthy of adoption, it quickly becomes evolutionary while adapting to take on new challenges. In the 2011 edition of the Saskatchewan Oil Report, Kilo Technologies Ltd. introduced the Kilo Well Production Monitor (WPM), which uses new patent-pending technology to measure specific gravity, and translates this into oil and water percentages. With a low capital cost, and a better than plus or minus one percent accuracy, Kilo started to attract some attention in the oil industry. It was not long, however, before one potential customer came along and threw down the gauntlet: “…Well, plus or minus one percent is great; but my problem is, I have a mature field where I am getting less than one percent oil!” Always up for a challenge, Kilo offered to do a test. The latest well-test information arrived and the answer was: less than one-half of one percent oil. Ouch! As the saying goes, adapt or die. Or in kinder terms: if there is no wind, row. Enter the Kilo Well Test System (WTS) for determining the percentage of oil in high water-cut oil wells. By combining Kilo’s patent-pending technology with a slanted weir constrained vessel, Kilo has been able to measure oil content as low as .1 percent. “This new slant tank vessel design definitely changes the rules when it comes to real-time measurement of marginal production oil wells,” states Philip Moore, CEO of Kilo 90 | BAKKEN OIL REPORT 2012


KILO TECHNOLOGIES

Technologies. “Just imagine being able to find two barrels of oil in 1,000 barrels of well fluid!” To increase the return on investment for what may appear to be marginal wells, the entire system can be housed in a robust, enclosed trailer unit. The trailer mounted system can be easily drained, disconnected, transported and re-connected to another oil well for the next round of continuous fluid measurements. For facilities with test headers, the WTS can be installed in place of a test separator; changing from well to well then only requires the opening and closing of valves. In less than ten months, the WTS was designed and manufactured and the testing began. Kilo’s precise software control system allows the operator to simply input a water-to-emulsion ratio on a single input screen, and the system’s control system takes over. So a ratio of nine (9:1) allows 90 percent of the well fluids to flow through the water dump, and 10 percent of the fluid to flow through Kilo’s SG measurement loop. Having allowed for enough retention time for the oily emulsion to have separated from the pure water, the oil content to be measured has been concentrated by a factor of ten. After a fail-safe bypass manifold was added, Kilo’s WTS was ready for field trials. To allow for a range of wells and flow rates to be tested, the WTS was installed at a satellite facility in the middle of an oilfield. Not only were a number of wells available to be tested at this location, but conventional test separators were also available for testing in line with the WTS as a comparison. The WTS, although small in size compared to the test separator, provided a large amount of nearinstantaneous information. Continuous flow-through testing over a number of days highlighted the sensitivity of the WTS and the adaptations that could be made to cover a large range of flow rates, from 200 barrels a day to over 6,000 barrels a day. Field hook-up to the multi-

well test header was easily achieved via conventional two-inch hoses. A daily production summary screen makes it easier for the operator to review and report 24hour test results. “Kilo’s Well Test System is the third adaptation of our measurement technology,” states company CEO Philip Moore, a professional geophysicist and new-age entrepreneur. “We look forward to working

closely with our clients, both existing and new, to help them meet the many challenges of improved oil well measurement.” n

BAKKEN OIL REPORT 2012 | 91


TRAINING

The energy level is high at Bismarck State College

National Energy Center of Excellence on the Bismarck State College campus.

L

ike North Dakota, the growth in energy at Bismarck State College (BSC) also has boomed in the last five years.

In 2007 BSC was designated the National Power Plant Operations Technology and Educational Center. Accompanied by a state-of-the-art facility to house energy programs, that designation

BSC’s industry reputation goes back to the establishment of the line worker and power-plant technology programs in the 1970s and the generation of industry leaders who graduated from those programs. These industry veterans are nearing retirement now but, because

has helped attract the students, industry and federal funding

they saw both the turnover and the boom coming, they have been

necessary to meet the increasing demand in the industry. Today,

proactive in preparing the next generation of workers.

energy students make up 25 percent of BSC’s student population. When an industry booms, the first need is for workers. While a

“BSC would not be able to do what we do without industry support. They are hands-on with us, offering money, equipment,

warm body might help short term, the best long-term approach is

internships and time. We have advisory boards for each program –

top-notch workforce training and education – both for the young

professionals who take time to review our curriculum and really show

people coming into the industry, as well as for those already

their support. Their engagement is the proof that what we do here is

employed.

second to none,” says Ron Baranko, assistant professor, NECE.

That range is why BSC offers such a wide array of programs and program delivery systems. With a diverse availability of one and twoyear degrees, certificates, workforce training and a bachelor’s degree, students who enroll can take classes on campus and online.

And companies not only take part in building the programs, they also hire the graduates. “Companies come to us looking for students. They tell us that our students come in ready to work, which is a tremendous resource

The ability to bring education into the field is vital as the new

savings to the energy industry especially right now. They tell us that

energy boom matures, according to N.D. Petroleum Council executive

hiring BSC graduates saves them time, training and money,” Baranko

director Ron Ness.

says.

“The array of jobs is really broadening as the oil boom enters the

Students find that the energy education they receive at BSC both

second phase. Now we’re focused on efficiencies and areas of

opens the door, but also paves the way to advance and grow in the

success. At this time education systems and places like BSC are

industry.

really core to the long-term offerings for work out in the patch. And BSC always looks at what the industry needs,” Ness says. 92 | BAKKEN OIL REPORT 2012

Nathan Blankenship grew up in North Dakota and was surrounded by the energy industry as a youth. A graduate of the


TRAINING

ENERGY AND ENERGY-RELATED PROGRAMS OFFERED AT BISMARCK STATE COLLEGE • Electric Power • Electrical Transmission Systems • BAS in Energy Management • Instrumentation & Control • Lineworker • Mechanical Maintenance • Nuclear Power • Petroleum Production • Power Plant • Process Plant (PTEC) • Renewable Generation • Water & Wastewater • Electronics Technology • Electronics/Telecommunications • Engineering • Engineering Technology • Geographic Information Systems • Technical Studies • Welding versatile Instrumentation and Control program, he had multiple job offers prior to graduation and every interview became a job offer. "I would say the best thing about the Instrumentation and Control (I&C) program is the vast variety of equipment we were trained on. If there is equipment being used in an automated process anywhere in the world, we were at least exposed to it during college. In addition, the caliber of the instructors was outstanding. They brought first-hand knowledge and experience to the classroom, which helped us prepare for the real-life scenarios we would be facing in the field," he says. One of the college’s newer offerings is the online-only Petroleum Production Technology (PROD) program. According to Baranko, one of the program’s strengths is its flexibility. “It ties in really well to other programs in place at BSC, like process plant technology, I&C and mechanical maintenance. It doesn’t have a job-specific focus. Instead, it gives students a strong, general overview of the petroleum production industry.” In its first year, the majority of PROD students work in the industry. Baranko says that some are involved with leasing, others do well servicing and instrumentation and control roles. “A program like ours is beneficial to industry because it gives those in petroleum production an overview of the whole field. They get hired for a specific job, but they have no idea what takes place

For Nathan Blankenship, a recent graduate of Bismarck State College’s I&C program, every job interview turned into a job offer. prior or after the job they do. If they are drilling, don’t have a lot of knowledge of what comes next. The same is true with leasing. When students learn more about the industry, it helps them down the road,” he says. One of BSC’s advantages is the ability to leverage strong core offerings and industry relationships to create new programs in response to specific industry needs. Petroleum Engineering Technology (PET), for instance, is based in the college’s ABETaccredited engineering tech program. An advisory team worked closely to review the curriculum and ensure that graduates will have the skills needed once they are hired. Ness notes that many of BSC’s more traditional offerings are vital to the infrastructure of the Bakken and other energy development areas. From engineering technology grads working to build roads to electronics technology graduates providing electricity, the workforce pipeline is filled by BSC. “The industry doesn’t always associate the traditional programs offered by BSC with the energy industry, but the reality is that so many of those also are in high demand out there,” he says. For more information about Bismarck State College’s energy offerings, visit bismarckstate.edu/energy. n BAKKEN OIL REPORT 2012 | 93


CESSNA

Cessna: helping your exploration take flight

C

essna is the world’s leading general aviation company headquartered in Wichita, Kan., in the heartland of the United States, but like the oil industry has farreaching business operations to all parts of the world. Similarly to the oil industry, aviation market conditions have certainly been difficult during these past few years; though Cessna, like the oil industry, has not lost their spirit of exploration. “We view this period as an ideal time to reinvest in our products, develop new ones, and expand our aftermarket services,” says Scott Ernest, Cessna president and CEO. “So, we’re going to continue providing innovative technology to keep our products fresh, including more functional and comfortable ‘smart’ cabins and upgraded cockpit technology.” Cessna’s current Citation business jet range, a total of nine jet models, extends from the five-passenger Citation Mustang to the nine-passenger Citation Ten. In keeping

94 | BAKKEN OIL REPORT 2012

with the spirit of exploration and innovation, Cessna announced two new products in 2011 — the Citation M2 and the Citation Latitude. These new aircraft complement and strengthen Cessna’s product line, while directly taking on the competition in key market segments. “Citations have a reputation for efficiency, reliability and delivering on performance expectations, which puts us in a very strong competitive position,” Ernest says. The M2, Cessna’s new light business jet, has room for two crew members and up to six passengers. It has a maximum cruise speed of 400 knots true airspeed (741 kilometers per hour) and a range of 1,300 nautical miles (2,408 kilometers). The M2 can take you to check on your oil rigs and do business in Texas and North Dakota in one day. And, because the M2 can operate at airports with runways as short as 3,250 feet (991 meters), it can even get to the remote areas of Montana and Oklahoma.

The M2 is $4.195 million in 2012 USD and is expected to begin deliveries to customers in the second half of 2013. Cessna’s Citation Latitude is the first of its kind in the Cessna family. The Latitude features a main passenger cabin of 77 inches (1.95 meters) wide — the widest in Cessna’s history — and a height of six feet or 72 inches (1.83 meters). With space for a crew of two plus up to eight passengers, the Latitude has a maximum cruise speed of 442 knots true airspeed (819 kilometers per hour) and a range of 2,300 nautical miles (4,259.6 kilometers). The Latitude can take you from the eastern U.S. to the U.K. to promote your business to all parts of the world. The aircraft is priced at $14.9 million in 2012 USD and it is expected to enter into service in 2015. “We’ve created what I think is our most productive cabin environment ever in the Latitude,” says Ernest. “It features our own proprietary technology that uses a fiberoptic backbone with wireless connectivity.


THEY’RE DEPENDING ON ME.

Cessna representatives will be on site in Bismarck, ND May 22nd – May 23rd at the Williston Basin Petroleum Conference and at Executive Air, Bismarck Regional Airport Cessna Caravan and other Propeller models, CJ2+ and Mustang aircraft on display Demos available by appointment

Ces Cessna sna and Cit CitationAir ationAir off offer er a complete complete suite suite of aircraft aircraft and aviation solutions travel ffor or yyour our tr avel needs. For For information information contact: contact: Anthony Kunde, Busines Businesss De Development velopment Repr Representative esentative 612-916-7813 | akunde@c akunde@cessna.textron.com essna.textron.com

CARAVAN CAR AVAN


CESSNA

The Latitude’s passengers can access an interactive moving map on their personal devices; enjoy Internet browsing to do business while in the air and never miss a deal; and lots of other forms of entertainment.” Cessna has a long-standing history, now in their 85th year, with a strong product line to show for it: everything from a twoseater single-engine piston to a 14-seat turboprop, up through the Citation Ten business jet. Through the years Cessna has continued to explore, innovate and give customers the aircraft they need to do their job right. Just like the oil industry, customer satisfaction and development is critical to the aviation business. “The world is becoming more financially and economically connected and business aircraft are a competitive advantage for companies,” Ernest states. “It is a productivity tool to expand markets and to rapidly respond to customer needs around the world.” Cessna’s focus is to continue their spirit of exploration through product innovation, growing their service center network to serve their global customer base, listening to customers, and creating and building quality products their customers want to buy. For more information about Cessna, go to cessna.com, facebook.com/cessnaaircraftcompany or twitter.com/fly_cessna. n

Environmentally Friendly, No Gas Burnt, No Electricity, Utilizes Waste Heat Our Patented Heat Trace System Captures Waste Exhaust Heat and Channels Hot Glycol To Where You Need It.

(306) 463-5677 Fax: (306) 967-2605 www.heathawg.com info@heathawg.com 96 | BAKKEN OIL REPORT 2012



MVTL

MVTL: providing analytical services for energy development and the environment in the Bakken

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stablished in 1951, MVTL’s mission is to provide value to its customers through on-time, quality testing with professional and friendly service. Our clients’ needs have led to MVTL’s diversification and growth over the past six decades. Throughout the years, MVTL’s expertise has evolved from microbiology testing to becoming one of the largest independent food-testing laboratories in the Midwest. Our roots in the farming community allowed us to work with global

chemical companies and established MVTL as a full-service agribusiness partner. Stewardship of the land exposed MVTL to the needs of a growing environmentally conscious planet. Concern for the environment created yet another unmet analytical need for monitoring, sampling and low-level detection of organic and inorganic constituents. Demand for reliable analytical services continued throughout the ‘60s and ‘70s, which led to the growth and expansion of

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our company. MVTL’s first branch was located in Nevada, Iowa. The investment in this facility was the result of the increasing demand of the agri-business industry for soil, fertilizer, crop residue, feed and water-quality testing. The need for locally available laboratory services in North Dakota, during the growth and development of the lignite and electrical-generating industries, led to the opening of the Bismarck, N.D. operation in 1977. The collaboration between the North Dakota coal mining companies and MVTL resulted in a mutually beneficial relationship. The cooperative attitude and trust that manifested during the course of thirty-five years resulted in the development of many new analytical services and test methods. The investment in equipment and people, determination to succeed and the commitment to meet customer expectations are all reasons MVTL has become the “go-to” lab in North Dakota. In addition to the North Dakota lignite industry and associated coal-fired electrical power generating companies, we also serve municipal and industrial accounts, landfill and waste-disposal sites and provide engineering and consulting organizations with independent, certified and confidential analytical services. Today, the oil exploration and production activity in the Bakken play is exceeding the expectations of many and moving at lightning speed. The anticipation of future growth and the vision of MVTL ownership stepped up to the plate and made an additional investment in


MVTL

Bismarck. In June of 2011, MVTL moved its operation into a new, state-of-the-art commercial laboratory facility. Once again, we are poised to meet the growing needs of our clients and to expand services that will in turn assist industry with the development of the Bakken. With our eyes turned westward, we are prepared for new partnerships in a surging state industry. MVTL is an experienced entity in successfully working with diversified clientele to help them meet their testing needs. Having a reputation for delivering quality analytical services and meeting customer expectations, our goal is to preserve our reputation as being the goto lab in the Bakken region. The services MVTL offers to our clients are many and diverse, with the primary focus in North Dakota being energy- and environmental-related. We perform a vast array of physical, chemical, inorganic and organic analyses in the lab and offer field services to support the environmental arena. Our energy laboratory’s main function is to perform routine fuel quality analysis on coal, pellet fuels, biomass and liquid fuels. Examples of a few analyses are heat energy, moisture and non-combustible contamination, emission by-products, mineral and trace element composition. We also provide a used-oil/wear-metals analysis program, which has been a gold standard preventative maintenance program for the fleet and equipment managers. With the large number of both mobile and stationary diesel equipment operating in the Bakken, this service lends itself to economically minimize downtime and enhance productivity. MVTL’s environmental division addresses the monitoring needs of the property owner, user, and regulator. Preserving our environment on the surface, in the water and underground is a primary concern of everyone living and working in the Bakken. Our activities in the environmental laboratory include the

The services MVTL offers to our clients are many and diverse, with the primary focus in North Dakota being energy- and environmental-related. physical, inorganic and organic analysis of soils, sub-soils, overburden, surface water, groundwater and disposal site leachate. We maintain the highest level of QA/QC possible, as evidenced by our laboratory certifications for drinking water, water pollution and solid-waste characterization. Our analytical services reach outside the limits of fuel, water and soil. Recently, we have been involved in characterizing drill cuttings and determining the safety of utilizing the abundant fly-ash resource of North Dakota for the stabilization of drilling pits. MVTL is a multi-disciplined commercial testing laboratory with a regional presence

and a North-American reach. We have been in the analytical services industry for more than half a century and continue to advance our technology to keep pace with our clients’ needs. We see a promising future in the Bakken and in North Dakota. We also recognize the need to preserve and protect the delicate natural resources here in the upper Great Plains. Our pledge to industry is to assist you with analytical support to safely and efficiently develop the natural resources that grace this great state. We welcome the opportunity to work with you so that we can demonstrate why we are the go-to lab in North Dakota. n

BAKKEN OIL REPORT 2012 | 99


Bismarck-Mandan: gateway to the North Dakota oilpatch

D

o you need an entry point into the North Dakota oilpatch? One with commercial and charter air service? You need look no further. The Bismarck Airport offers daily service to Minneapolis-St. Paul, Denver and Chicago. In addition, charter air service directly to the oilpatch is available, whether you need to make a short roundtrip in a day, multiples trips around the oilpatch or service on a regular basis. Do you need to deal with the various regulatory agencies and organizations supporting our state’s oil and gas industry? The State Capitol in Bismarck is home to the North Dakota Department of Transportation and the Department of Mineral Resources. Statewide industry organizations, such as the North Dakota Petroleum Council and the Lignite Energy Council, also base their operations from Bismarck-Mandan. Have a need for professional services from attorneys, engineers, geologists, consultants or others? They’re all here, too, along with the ability to train more at one of our four institutions of higher education: the University of Mary, Bismarck State College, United Tribes Technical College and Rasmussen College. Need a place to deliver freight to the oilpatch via rail and truck? Bismarck-Mandan offers easy access to I-94 and U.S. Highway

100 | BAKKEN OIL REPORT 2012

83, taking you north and west to the heart of the Bakken oilpatch. Rail service is also readily available in and out of the community with a variety of carriers. Or do you want to move your family to North Dakota and take advantage of the many oil and gas-related opportunities, but don’t want to live on-site? Consider this about Bismarck-Mandan . . . . • State-of-the-art health care system employing over 7,000 medical professionals who can care for your every medical need. This includes two first-class hospitals and a variety of medical clinics, along with a long list of private specialists and practices. • An exceptional K through 12 school system, offering both public and private options. Post-secondary options range from one-year degrees to Ph.D.s. • The Bismarck MSA represents one of the safest communities in the nation by the ranking of the U.S. Justice Department, with both property and violent crimes rates well below the national average. • There is a continuing supply of homes in most price ranges and contractors are building new homes on a continuous basis. • Recreation of all types abound with numerous golf courses, tennis courts,

miles of bike paths and walking paths. If you like fishing and hunting or you want to check out a museum, theatre production or symphony concert, we have all those things as well. • The community offers an excellent and ever-expanding choice of retail, restaurant and other amenities such as you’re used to in larger cities. If this all sounds a little bit too good to be true, you are in for a truly great surprise. This is not a fairy tale; it is real and we invite you to call us at the Bismarck-Mandan Development Association to learn more. We want you here whether you’re looking for a place for your family or you need to find a place to expand your company in a location that will give you back door access to the activities in the oilpatch. Talk to us, we do have the answers you need to hear. Best regards, Russell Staiger, President/CEO Bismarck-Mandan Development Association Call us at 701-222-5530, visit us online at www.bmda.org, or email me at rstaiger@bmda.org. n


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FARMER’S UNION OIL

‘Bakken Central’ Cenex truck stop goes extra mile for oilfield workers

The new 3,000-square-foot-plus clothing store (with dressing room) addition makes Bakken Central a great place to find the right FR clothing.

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small-town farmer’s co-op goes bigtime to meet trucker and oilfield needs. When Gary Koschmeder arrived at Farmers Union Oil Company of Stanley as general manager in 2009, the small convenience store that farmers and locals had built and patronized for twenty years was starting to come alive in a different way. Two cash registers were swamped with long lines at peak meal and fueling hours, as the oilfield culture began to call the Stanley Cenex “home.” Three years later, store manager Dean Dvorak’s small-town hospitality and leadership has made the store “Bakken Central.” With five registers and ninety employees bending over backwards to provide a friendly reception to truckers and

102 | BAKKEN OIL REPORT 2012

oilfield workers, the store is often their only real opportunity to see a friendly face, get some needed supplies and food, grab a shower, and perhaps find some new FR clothing to stave off some of the most bitter cold North Dakota has to offer. Dvorak’s belief is that if he and his crew can get their customers to smile during their visit, that they have somehow provided a very important break in the challenging days of their oilfield friends. Working long shifts day after day is a stressful duty that Dvorak and his staff recognize, and they have learned that their customers appreciate it if they can find what they need at “Bakken Central” on their daily visits. Many of these men and women don’t have time for chasing around northwestern

Bakken Central clothing manager Roger Zalaznik can take care of all the big, big, big boy's FR clothing needs... and the regular-size guys and gals, too!


FARMER’S UNION OIL

Bakken Central store manager Dean Dvorak greets – and tries to keep happy – hundreds of tired and hungry oilfield workers (every day!).

Bakken Central’s parking lot is like a carnival at meal times – but there’s still plenty of space to go around.

Bakken Central’s mission is to be the best hospitality center in the Bakken. North Dakota in an eighteen-wheeler to find a rain coat, chains or required FR clothing. That’s where Dvorak knows he has a chance to put a smile on a trucker’s face when they ask for a 66 tall insulated FR Bulwark coverall and Dvorak’s clothing manager, Roger Zalaznik, replies to them: “Yes, we have it and a couple backups too.� The “Bakken Central� philosophy is to help make customers’ days a little brighter and as comfortable as possible, whether they are bedding down for the night in the 150 truck lot, or just stopped by for some comfort food and a top-off of fuel. FR clothing is not normal fare for what had been a small, sleepy convenience store, but Dvorak and his staff have a goal of being the store where the entire oilfield crew can find the clothing they need to meet the requirements of their job. Zalaznik is reaching out to safety directors of oilfield companies with ways they can suit up their entire staff in the comfort of Bakken Central’s new 3,000-square-foot-plus clothing store (with dressing room) with the help of trained staff to ensure proper fit and the right clothing for the job. Dvorak’s goal is to have the right size every time, even the super sizes, that are needed for some of their trucker customers. Dvorak plans to keep growing and changing to meet the needs of his customers. One thing that that will never change is Bakken Central’s mission to be the best hospitality center in the Bakken. Soon, Farmers Union Oil Company of Stanley will be spreading big hospitality in a mega-store at its Tioga cardtrol location on the south edge of Tioga. Bigger, better and more hospitality is coming to Tioga! n

FFarmer’s armer’s Union Oil

We offer a full line of Flame Resistant esista work apparel, including Bulwark, rk, Key Ke DQG 6XPPLW DQG ZRUN ERRWV E\ %D and Muck. In our electronics section \RX FDQ ÀQG *36 XQLWV FHOO SKRQH DFFHVVRULHV DQG KHDGVHWV DQWHQQDV VPDOO à DW VFUHHQ 79V ZLWK '9' FRPSXWHU QRWHERRNV DQG PXFK PRUH :H DUH WUXO\ \RXU RQH VWRS VKRS CLOTHING DEP DEPARTMENT PAR ARTMENT &HQH[ & 6WRUH RI 6WDQOH\ 1' &HQH[ & 6WRUH RI 6WDQOH\ 1' 701-628-2921 BAKKEN OIL REPORT 2012 | 103


MESSAGE

Free people work By Kevin Cramer, North Dakota Public Service Commissioner

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merica’s national security and America’s economic security are tied directly to America’s energy security. As a world leader in energy development and export, North Dakota is committed to this principle and our role in ensuring our nation’s security. Just as we use our rich land to grow food for a hungry world, we use our rich minerals to create energy for a productive society. In doing so, private industry creates good career jobs, entrepreneurial opportunities and real wealth. I believe it is our relationship to the land, our agrarian roots, which make us better than any other place on earth when it comes to energy production. We understand the economic benefits that come from the land, and we understand the importance of ensuring the land remains productive forever. That is why, while we lead the nation in lignite production with over 30 million tons mined per year, rank sixth in the nation in electricity exports, and are nearing the top in oil production with over 500,000 barrels per day, our land, water and air are among the cleanest in the nation. In fact, we are one of the few states that meet all ambient airquality standards as prescribed by the Environmental Protection Agency. Our citizens take stewardship of our natural resources seriously and insist we do not compromise quality of life for standard of living. When politicians ignore this principle, they do so at their peril, and so do energy producers. It is the relationships between the landowner and developer, the local citizen and the corporate citizen, which are important as we move forward in developing our resources.

104 | BAKKEN OIL REPORT 2012

As an energy regulator, my job is made easy when the landowner understands the job of the developer, and the developer respects the landowner. Trusting people means I don’t have to impose myself unnecessarily into the relationship unless some abuse is alleged. Energy producers in North Dakota enjoy a friendly regulatory and political climate, not because our politicians are so great, but because our citizens are. It takes constant diligence on the part of all stakeholders to ensure development is done responsibly. The problem with our federal government is they assume the natural order of things is flawed, requiring their superior intervention into every relationship, whether any abuse is alleged or not. In reality, it is the natural order of things that works, and government intervention the complicating factor. This attitude of superiority over the governed, including the states, is what allows the federal government to rationalize the choking regulations imposed on the development of our rich fossil fuels. And it is not just the regulations that are overreaching, but the regulators, whose zeal leads to abusive exercise of their authority in pursuit of extreme agendas. It is this constant attack on states’ rights and personal liberties I see every day from my office in the state capitol which compels me to run for North Dakota’s lone seat in the United States House of Representatives. Never has my country needed more what my state has to offer. In fact, it is my conviction our nation’s approach to energy development represents both our greatest problem and best opportunity. The Keystone XL pipeline debacle epitomizes this concept.

National security is the federal government’s top priority. Getting out of the way of responsible development of energy resources on our own continent will diminish our dependence on sources of energy from hostile regions of the world, helping keep our citizens safe and our military home. Job creation is the responsibility and privilege of private enterprise. Unnecessary regulations and over-taxation unilaterally disarm job creators and drive investment to other countries, many of which hate us. (See previous paragraph.) While producers of North America’s rich fossil fuels and developers of traditional forms of energy have the potential to create hundreds of thousands of new jobs, the uncertainty generated by our current administration provides more risk than most investors are comfortable with. In a climate of uncertainty, investors must assume the worst case. The problem with the current administration is, the certainty they aspire to for energy is the worst case. If anyone doubts responsible development of traditional forms of energy will lead to a strong economy, all they need to do is study North Dakota. We’ve proven it can be done. Once our economy is strong and America is working again, we can have a balanced federal budget and start paying off our debt instead of constantly increasing it. The beautiful thing about a strong economy is it requires less government. While the economy and private sector jobs grow, so too does revenue, and the need for government thus diminishes. Free people producing products other free people need and want – this really does work. n


MESSAGE

XL pipeline important to U.S. economy, security

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he State of Montana and the United States need to develop their natural resources; oil is one of them. Still, it is unlikely that the United States will ever produce all of its petroleum requirements. At the moment we import about half of the oil which the country uses, much of it from countries that are not our friends. This is a national security risk in a dangerous world. The XL pipeline, which would pass through the northeast corner of Montana, addresses all three of these issues in a positive manner by moving Canadian oil to states along the Gulf of Mexico for refining. The XL pipeline imports oil from a dependable source in a friendly country to the U.S., and provides a way to export some of Montana's oil from its share of the Bakken formation in eastern Montana. There are two reasons that the environmental community resists the pipeline. One is that it will move "unconventional oil" from the Canadian oil sands to American refineries in states along the Gulf of Mexico. Another environmental issue concerns possible pollution of the Oglala aquifer in Nebraska, were the pipeline to follow the original route. (The second issue is no longer a problem, the XL can be re-routed around the Oglala.) Extraction of oil from these huge deposits of oil sands does require more energy than more conventional methods of oil extraction; admittedly producing more carbon dioxide. However, moving oil by pipeline uses less energy than other methods. If this Canadian oil was shipped to China – and it would be – it would use more energy to move the oil to China than the pipeline would use moving the same oil to the Gulf states. The Canadian oil not piped

State senator Alan Olson (left), who works for Sanjel, shakes hands with Jim Shockley in an oilfield north of Roundup, Montana. to the refineries on the Gulf would have to be replaced with oil from overseas; places like Venezuela. Shipping oil to China and replacing that oil with oil brought by tanker to the States would waste a lot of energy, and produce a lot of carbon dioxide. As we all know, moving oil in a tanker has its own environmental hazards. Jobs are another factor; how many is not clear no matter who gives an employment figure. There will be many jobs created in constructing the pipeline, and some jobs created after the line is in place; permanent jobs to maintain the pipeline, and in the refining industry. No one can question the fact that there will be an increase in jobs at a time when that is particularly important to this state and nation. The Canadian oil is going to be produced in any case; the issue is where it will be refined. Oil production from the oil sands of northern Canada in 2011 was 1.5 million barrels per day and could double by

2020. If you accept the fact that the oil going to be produced, the pipeline makes environmental sense as long as we protect the Oglala aquifer. The XL pipeline will use less energy than shipping oil to China, and importing oil to the Gulf refineries to replace it. At the same time it will create jobs, shortand long-term, in Montana and the United States. As an added benefit, using Canadian oil to power our nation is safer than relying, as we do now, on such "friends" as Venezuela for our petroleum. It is a shame that the Obama Administration is more interested in placating the environmentalist lobby than in taking bold steps to create jobs and protect our long-term energy security. However, even from a reasonable environmental perspective, not approving the XL pipeline makes no sense. Jim Shockley Montana State Senate District 45 n BAKKEN OIL REPORT 2012 | 105


MESSAGE

North Dakota sets example in energy production for nation

N

orth Dakota has a long history of dedicated energy production. We’ve seen first-hand the economic growth that a thriving energy sector can bring. But the growth we’ve experienced would not be possible if our state hadn’t worked to create a pro-business environment that encourages economic growth and offers businesses long-term certainty. It also would not be possible without the Empower North Dakota Comprehensive State Energy Policy, a dedicated long-term energy plan that recognized the potential of North Dakota’s diverse energy resources and encouraged private-public partnerships to further our state’s energy production. In a time when our country faces historic economic challenges, our state has stood out as an example of economic success. Energy production across North Dakota has created thousands of jobs and boosted our local economy. Our state is also helping to make America an energy independent nation. North Dakota’s unemployment today is less than 3.5 percent [as of the time of publication printing]. Imagine the jobs that could be created if we encouraged energy production in all parts of the country. North Dakota shines as example of how businesses can grow and create good jobs when government steps back and encourages our job creators to innovate and invest in our local economies. Instead of forcing one-size-fits-all regulations and unnecessary costs on to energy producers, Washington should follow North Dakota’s lead and work to provide the long-term certainty that is needed for businesses to invest, grow and create jobs. New, senseless federal regulations have created a cloud of uncertainty that all too often prevents North Dakota’s business owners and energy producers from making long-term 106 | BAKKEN OIL REPORT 2012

Congressman Rick Berg (R-N.D.) and Williston Mayor Ward Koeser (right) discuss North Dakota’s growing energy sector and recent economic development in the Williston region at a public forum held in April 2011. business decisions. In turn, this uncertainly stifles job creation and hinders economic growth. To get our economy moving again and to free businesses to grow and create jobs, Washington should look to North Dakota and embrace common sense, pro-growth policies that encourage business growth and work toward a long-term energy plan, like Empower North Dakota. We need an “all of the above” comprehensive energy plan that helps create American jobs and leads us toward energy independence by encouraging energy production within our own borders. That’s why I’ve been a vocal advocate of the construction of the Keystone XL pipeline, which President Obama disapproved in January. By continuing to block the approval of the Keystone XL pipeline, President Obama has made it clear that he would rather put politics ahead of American jobs and sound energy policy. But even if the President continues to block common-sense energy solutions, like those that have worked in North Dakota, we

will not stop pursuing them. The House has taken another step to move forward the approval of the job-creating Keystone XL pipeline – a project that holds tremendous potential for North Dakota’s energy sector and will help move Bakken crude oil to U.S. refineries, provide relief to the strained infrastructure needs in western North Dakota, and create much-needed American jobs. I will continue to help lead efforts in the House of Representatives to move the Keystone XL approval forward, while North Dakota Senator John Hoeven is also working in the Senate on proposals to move forward the project. I’m confident that if the nation looks to North Dakota for solutions, we can have a robust national energy sector that helps create jobs, lower energy costs and breaks our national dependence on foreign oil. We’ve seen it work in North Dakota. I know we can do it for the nation. Congressman Rick Berg serves North Dakota in the U.S. House of Representatives. n


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MESSAGE

Energy and our future By Brad Johnson aving been raised by a father, who

H

coupled with politically driven and onerous

commercially viable "alternative" energy

worked forty-five years for one of the

over-regulation, have severely impacted the

sources. To the contrary, I believe that our

country’s major oil companies, has given

oil and gas industry's ability to meet

domestic energy portfolio should include

me a great appreciation for the importance

America's energy needs. None of us want

every viable energy source. But we can no

of this nation's petroleum industry. As a

to see policies which would result in short-

longer allow the as-yet-unfulfilled promise

result, I find today's emotionally driven

term energy gains in exchange for long-

of "affordable and abundant green energy"

opposition to development of America's

term environmental challenges. However,

to be used as an excuse to so severely

abundant oil and natural gas supplies to be

we cannot continue to embrace an energy

limit exploration and production of the

especially troublesome. Big wind, Solyndra

strategy which perpetuates our dependence

petroleum reserves in this country.

and the Chevy Volt notwithstanding, this

on foreign energy sources by arbitrarily

country simply cannot maintain its

preventing development of readily

projects like the XL pipeline, the moratorium

economic and military pre-eminence in the

accessible oil and gas deposits here at

on off-shore drilling and the closure of vast

world under our current energy policies.

home.

areas of public lands to energy production

Unreasonable aversion to reasonable risk in the course of responsible development,

Please don't misunderstand: I have no objection aggressive development of

Failure to approve construction of

by the creation of national monuments are all decisions driven by ideology and political

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www.essentialenergy.ca 108 | BAKKEN OIL REPORT 2012


MESSAGE

agendas. The fact of the matter is: public policy formulation based on emotion rather than science nearly always results in bad public policy. If this nation is to preserve its truly exceptional way of life, we must rekindle that can-do American attitude. We ought not to view the challenges presented by dramatically increasing domestic oil and gas production as insurmountable obstacles to energy independence and continued prosperity. Rather, they should be viewed as opportunities to, once again, demonstrate how our ingenuity, tenacity and indomitable spirit come together to enable us to "realize the triumph of high achievement". The energy produced by America's petroleum industry is the life-blood of our

economy and that fact cannot be changed by political fiat. Projects like construction of the XL pipeline and development of the Bakken should not be viewed as concessions or a necessary evil. Instead, they should be viewed as a cornerstone in the efforts to revitalize a critical part of this country's energy sector. They are not just good for Montana; they are good for the country as a whole and we should strive to choose leaders who recognize that fact. We stand at a crossroads in this country, poised to choose between two competing visions for the future. One vision is that of an America in decline, an America where we can no longer tell future generations that they have the

opportunity to be even better off than we were; the other vision is that of an exceptional America where our continued high achievement is limited only by our own commitment and hard work. To realize the latter, we must preserve this American miracle that is the most robust and resilient economy in history. It is not an overstatement to suggest that a strong and vibrant petroleum industry is essential to the success of that endeavor. Brad Johnson Montana Secretary of State (former) 3724B Old Highway 12 East East Helena, Montana 59635 Tel: (406) 422-5933 Cell: (406) 581-0294 n

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REPORT

Candidates share more than a border Gubernatorial candidates in North Dakota and Montana share a pro-oil campaign platform By Laura Tode

T

here is little doubt that the Bakken oil play has great implications for both North Dakota and Montana. With an estimated 3.7 billion barrels of recoverable crude oil, the Bakken boom has barely started, but as residents of western North Dakota and eastern Montana have discovered, infrastructure, regulations and permitting procedures haven’t kept up with the explosive growth. State governments are struggling to respond, while residents and industry professionals are looking to November, when both North Dakota and Montana will elect new governors. Although it’s early in the campaign, Republican candidate Ken Miller of Montana and Republican candidate Paul Sorum of North

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Dakota are getting a head start, addressing the needs of the oil industry and forging a working relationship they hope lasts throughout their respective terms. “We obviously have very similar goals,� Miller says. “We’re going to continue to communicate with each other throughout the campaign.� Paul Sorum is a conservative who believes the Bakken oil play presents an opportunity for the State of North Dakota to lead the nation in economic recovery, but current state administration has failed to address the infrastructure needs of western North Dakota communities. Sorum believes that through the North Dakota Legacy Fund, growing by more than $1 million a day in oil industry tax revenues, the state has the opportunity to invest in itself. The North Dakota legislature has responded by doling out one-time cash payments that only meet short-term infrastructure needs, Sorum says. If elected, he would quickly enact a strategic plan to finance long-term infrastructure projects in transportation, housing, utilities and schools. “There has to be vision and planning, and right now there is no vision and there is no plan,� Sorum states. Sorum, an architect and contractor, believes the Bakken oil play has to be managed for the benefit of the people of North Dakota, and under current leadership, it only benefits state government and a few special interest groups. The state’s tax structure needs reform so that it supports business growth, and infrastructure development, which will ease the burden on individual taxpayers, Sorum said. “There’s no reason, in prosperous times like these, that we can’t implement changes to the tax system to make North Dakota the most attractive place for business and industry,� he adds. Across the border, Miller shares the same whole-hearted support for the oil industry, and wants to change Montana’s environmental and permitting regulations to allow more development of natural resources. “It’s just always appeared to me that Montana is extremely blessed with a wealth of natural resources, and not just oil. We need to utilize those natural resources to create jobs and reduce the burden on individual taxpayers,� Miller says. “We also need to invest


Paul Sorum believes the Bakken oil play has to be managed for the benefit of the people of North Dakota.

AIR HEATERS HEA ATERS A TERS 2106 East Indiana Ave %LVPDUFN 1' 8 6 $ %LVPDUFN 1' 8 6 $ 1-800-272-4604 Ken Miller (left) and Bill Gallagher plan to establish an industryfriendly energy policy that appeals to investors, if they are elected. in the infrastructure of the communities that are most affected by the increased impacts of the activity.� Miller, a businessman with experience in state government, said he would establish an industry-friendly energy policy that appeals to investors. He’s enlisted the help of Bill Gallagher, his choice for lieutenant governor. Gallagher, an attorney who sits on Montana’s Public Service Commission, has been involved in the mining and timber industries. “I want him to play a critical role in drafting our energy policy – a big part of which will be to develop the Bakken,� Miller states. In addition to regulation reform and streamlining permitting policies, Miller said he’d like to totally reform Montana’s workers’ compensation program, which has some of the highest rates in the nation, and may be a factor influencing job seekers to go out of state to find work. Both Miller and Sorum are strong supporters of the Keystone Pipeline project, and plan to work to get it approved and constructed. “We need it as an on-ramp to ship out Montana and North Dakota oil,� Miller affirms. Miller also supports the construction of additional oil refineries along the Montana-North Dakota border to create even more oil industry jobs. “I think we can work together to see the oil industry not just sustained, but fortified,� Sorum concludes. n The opinions expressed in this magazine section are those of respective message contributors and not necessarily those of DEL Communications Inc., its directors, officers, employees or any of its affiliates. While every effort has been made to ensure the accuracy of the information contained herein and the reliability of the sources, the publisher in no way guarantees nor warrants the information and DEL Communications is not responsible for errors, omissions or statements made by contributors.

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RigManager provides the foundation of drilling information management with our next generation Electronic Drilling Recorder (EDR) and top-notch drilling instrumentation for drilling rigs. Coupled with our superior service, RigManager provides state-of-the-art computer hardware and proprietary software that is very flexible, customizable and accurate, along with the most reliable sensors available.

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HYDROSOLUTIONS

Water management and environmental compliance support for the oil industry

S

ince 1999, many oil and gas companies have relied on HydroSolutions Inc. to address water and environmental issues such as managing and permitting for produced water; NEPA compliance; finding water sources and water rights permitting for exploration and development; environmental due diligence as specialized for oil and gas fields; and injection well permitting. HydroSolutions is an independent consulting source of highquality expertise, addressing the most demanding environmental, energy, and natural resource issues facing our clients throughout the western United States. We emphasize quality, integrity, safety, and responsiveness. We employ highly experienced professional staff with an intimate knowledge of the natural resources and regulatory framework of this region. Most of our mid-level to senior scientists have 20 to 30 years of professional experience in services such as civil and environmental engineering, exploration geology, geographic information systems (GIS), and environmental database management service areas, which solidify our base in hydrology, geology, and environmental management services. We are frequently retained as “experts� in our fields to address complex technical issues or to provide expert testimony in legal proceedings. HydroSolutions has characterization, remediation, restoration, and reclamation experience related to crude oil, oil products, solvents, mine waste, and metals contamination. Our remediation

114 | BAKKEN OIL REPORT 2012

and reclamation experience has been applied to industrial, municipal, and commercial settings. Our team has experience in conventional oil and gas operations and has performed site reconnaissance on over 4,000 oil and gas facilities in the last four years. HydroSolutions has been involved with eight pre-acquisition as well as post acquisition assessments of oil and gas properties in the northwest, ranging between $40 million and $150 million. We have projects in Montana, North Dakota, Wyoming, Colorado, Utah and Nevada. AIR QUALITY Our assessments include evaluation of the Clean Air Act, Clean Water Act, Safe Drinking Water Act, RCRA, CERCLA, SARA, TSCA, and SPCC plans. As a result of these site assessments, we have assisted oil and gas companies in preparing air quality permits for compressors, IC engines, glycol dehydrators, hydrogen-sulfide treatment ponds and condensate tanks, and have performed the associated dispersion modeling for VOCs and hydrogen sulfide. NEPA COMPLIANCE Since 2009, HydroSolutions has been assisting oil companies with National Environmental Policy Act (NEPA) and agency compliance of exploration wells and development leases on the


HYDROSOLUTIONS

Blackfeet Indian Reservation as they explore the Bakken formation. Categorical exclusions (CatEX) and environmental assessments (EA) have been completed while working with the Bureau of Indian Affairs at local and regional offices, as well as with the Bureau of Land Management. Tribal permits from the Blackfeet Environmental Office and the Tribal Historical Preservation Office are part of the package that we pull together for the companies, along with the surface use plan and the APD. WATER MANAGEMENT Our team has completed red-flag analysis for well and facility locations using GIS techniques to overlay sensitive areas of concern related to wildlife, wetlands, navigable waters, drinking water aquifers, and archeologically sensitive areas. Using similar techniques, HydroSolutions has prepared vulnerability maps to aid in produced water pit locations with regards to shallow groundwater, high domestic/stock water well density, and proximity to surface water. Produced water and waste water from drilling and hydraulic fracturing are integral components of drilling programs. HydroSolutions has worked with companies to locate existing permitted injection facilities and permit new UIC wells. We have completed permits for Class 1, Class 2, and Class 5 wells in Wyoming and Montana and understand the process and complexities associated with State or Federal EPA permitting. We have completed water quality discharge permits and provided alternative disposal options for produced water through land application or irrigation. Water rights also play an integral part in where and how drilling and development water are obtained. HydroSolutions is identified as an expert in the water rights field. We have completed simple to extremely complex water right application projects for industry and landowners in Montana and Wyoming. We understand the laws pertaining to water rights in the region and can readily apply our knowledge base to the task at hand. SAFETY When it comes to all phases of permitting and compliance needs, HydroSolutions has the full-scale experience needed to make your projects easier and more cost-effective. HydroSolutions has an unblemished safety record working for the oil and gas industry. We maintain and enforce a corporate health and safety program that meets the high standards of the petroleum industry.

chemical/environmental engineer (shaneb@hydrosi.com) in Billings, Montana at (406) 655-9555, or Dave Donohue, senior hydrogeologist (davidd@hydrosi.com) in Helena, Montana at (406) 443-6169. n

Considering a building project, call the Miller team. Commercial, Healthcare, Worship, Senior Healthcare, Funeral Homes

Make HydroSolutions a strategic partner in your exploration and development program by contacting Shane A. Bofto, senior

BAKKEN OIL REPORT 2012 | 115


GRACO OILFIELD

Trust leading oilfield services provider Graco to deliver superior results

G

raco Oilfield Services is a privately owned and operated fishing, rental tool and service company with ten locations in the United States. We are strategically positioned in most major oil- and gas-producing regions, with the ability to serve operators in North Dakota, Montana, Wyoming, Utah, Colorado, New Mexico, Texas, Oklahoma and Arkansas. Graco’s corporate headquarter are located in Vernal, Utah.

Graco brings over 35 years of problem-solving experience to your wellsite. 116 | BAKKEN OIL REPORT 2012


trusted to deli deliver ver INTEGRITY, INTEGRIT Y, KNOWLEDGE KNOWLEDGE & S STRENGTH TRENGTH BACKED B ACKED B BY YO OVER VER 30 YEARS OF WELLSITE EXPERIENCE. Fishing | Rentall Tools Tools | Packers | Foam Air Units | Reverse Units | Power Swivels | Completion Services

Graco delivers the Service and Equipment that customers need in or order der to maintain pr productivity. oductivity. W We e of offer fer a nationwide network of service points to support all major basins. Graco defines, establishes and incorporates orporates cor core re e values in every service we pr ovide. Moving forwar rd, d wher d, re e people make the t differrence. provide. forward, where difference. e, visit us at: TTo o lear learn n mor more,

www.gracooilfieldservices.com

GLENDIVE P.O. P .O. Box 323 | 301 State St. Glendive, MT | 59330 | P: 406.365.5373 WILLISTON Duane Ashley | W Williston, illiston, ND P: 701.572.4500 | P: 701.770.0088


GRACO OILFIELD

In additional to traditional fishing and rental tools, Graco’s service and equipment offering to the oil and gas industry includes foam air units, nitrogen units, reverse units, pressure pumping, production workover and completion services, packers and power swivels. The company is well poised to serve operators with both rotary- and production-related services and equipment. Graco’s core values are integrity, knowledge and strength. These traits have been developed with over 30 years of wellsite experience and represent the foundation of the company business philosophy. Graco was founded as a wellbore fishing service and tool company. We are still recognized nationwide as a leader in fishing expertise. Drillers and completion supervisors alike call on Graco in time of need‌ when no other option seems available. Each Graco store at its core is a fishing store with experienced and mature fishermen who can handle any problem your well presents. Rental tools are a natural fit to the fishing-service industry and all Graco installations have a complete range of rental tools available for your wellsite needs.

Graco offers the rental equipment your operation needs. Additionally, our machine shops and repair centers are capable and ready to support rental tool repairs and deployment so that your downtime is minimized. Packer services have emerged as a key complimentary business to the fishing and rental tools offering. All Graco stores stand ready to respond to your packer needs. We offer experienced supervisors who understand how to effectively and efficiently address you wellbore packer challenges. Graco utilizes only the most reliable packer brands and has a deep bench of experience in running and retrieving most packer styles. Circulation and pumping equipment services are currently provided at several Graco locations. We have the ability to move pumping and circulation equipment

Get Your Well On Line Quickly & Efficiently

We have well-maintained trucks equipped with the right tools for every job. Call us today for an experienced crew! Killdeerr, ND – 701-226-6226 Killdeer, 701-226-622 00ÜDF ÜDF

118 | BAKKEN OIL REPORT 2012

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Rental Services Available

K & R Roustabout KKilldeer, illdeerr, ND 701-764-6430


GRACO OILFIELD

Fishing service and tools are at the core of Graco's expertise. and expertise into an area for any client if desired. From foam air and nitrogen units to high-horsepower 15,000 psi pumps, Graco can cover the full pressure range of the industry. No mater the well conditions or job requirements, Graco has the equipment and experience necessary to meet the required application. Graco operations are enveloped and guided by a robust safety attitude. Adherence to industry and company prescribed safety standards are a key component of Graco’s success. Continual

GeoResources, Inc., through its wholly owned subsidiary G3 Operating, LLC, conducts exploration and production operations primarily in the Williston Basin.

investment in personnel, training, equipment and process improvement ensures that safety remains a constant priority and condition of business for all employees. Independence to respond quickly to customer needs and market conditions is

The Company also operates core properties in the southwest Gulf Coast through its wholly owned subsidiary Southern Bay Operating, LLC. GeoResources, Inc. is traded on the Nasdaq.

another one of Graco’s unique characteristics. Unhindered by large corporate layers, the company has a lean, yet effective, management structure that

1407 West West Dakota Parkway | Suite 1B | PO Box 1505 | Williston, ND 58802

701.572.2020

gives appropriate guidance and support to field operations yet provides workers with the autonomy and empowerment to react quickly and decisively to an ever-changing oil and gas service market. Graco continues to grow through key acquisitions and organic expansion. Focusing on the core business product and service offerings, while always maintaining a strong spirit of excellent service delivery, will ensure the company continues to create value or its customers, employees and ownership. n BAKKEN OIL REPORT 2012 | 119


ZIFF ENERGY

Ziff Energy to conduct first Bakken oil shale drilling and completions benchmarking study By Richard M. Tucker, VP, Marketing & Client Relations

T

he Bakken formation covers about 200,000 square miles (520,000 km2) in the central and deeper portion of the Williston Basin, covering parts of Montana, North Dakota, and Saskatchewan, Canada. The Bakken is the largest U.S. oil discovery next to the oilfields of Alaska. A U.S. Geological Survey assessment, released April 10, 2008, contained a 25-fold increase in the amount of oil that could be recovered compared to the agency's 1995 estimate of 151 million barrels of oil. Bakken reserves are in the same league as the Arctic National Wildlife Refuge (ANWAR) oilfield in Alaska but, unlike ANWAR, there is no drilling ban! Thanks to technological advances, and high oil relative to gas prices, Bakken production reached 445,000 Bbl/d by yearend 2011. The president of Continental Resources, Jeff Hume, believes production could reach 1,000,000 Bbl/d by 2020 – this is a higher production rate than the Permian Basin currently has (850,000 Bbl/d) and almost the current production rate of the Deepwater Gulf of Mexico! Drilling represents the largest cost component of finding and development expenditures, over $7/Bbl. Minimizing drilling costs and maximizing the effectiveness of completions are critical to profitability for E&P companies investing in oil shale production; so is finding qualified workers and arranging for crude transportation. The Ziff Energy Bakken study will measure, at a well-level, each participant’s drilling and completion costs and drilling

120 | BAKKEN OIL REPORT 2012

IMAGE SOURCE: NORTH DAKOTA OIL AND GAS DIVISION.

performance metrics relative to other operators in the study. The benchmarking will pinpoint areas of high cost and drilling performance ‘gaps’ compared to similar wells, and will therefore focus efforts to assist in reducing the cost and improving the technical performance of drilling future wells. Ziff Energy will also benchmark production reliability (uptime) and production operating cost, including key financial and nonfinancial performance metrics; however, the main focus will be on drilling and completions. Drilling cost data will be segregated into 14 main standard classifications, with over more sub-categories of drilling costs. Completion cost data will be grouped into 12 main standard classifications. Drilling time

data will be segregated into five standard classifications, and completion time data will have three categories. Additional detail will provide further insight into drilling activities. Ziff Energy’s methodology for drilling methodology is to: • analyze industry performance by area/geology, depth range, type of wells (e.g. Bakken and Three Fork formation wells could be analyzed within separate peer groups); • include multiple performance metrics, including cost per foot, ROP, NPT, completion time, and others; • analyze cost drivers such as well depth, well profile (vertical, horizontal, multilateral), geology, surface location, hydrogen sulfide, and completion design;


ZIFF ENERGY

• identify and quantify performance gaps and improvement opportunities. PRODUCTION UPTIME AND RELIABILITY Ziff Energy’s production reliability metrics are based upon an analysis of daily production data to identify downtime incidents (unplanned and planned), and lost production. Because Ziff Energy applies the methodology consistently across operators, our approach removes the subjectivity and uniqueness of each operator’s unique internal reliability metrics. Ziff Energy’s reliability metrics, including mean time between incidents (MTBI) and mean time to recover (MTTR), are used to benchmark frequency and duration of downtime events, and overall operating efficiency performance is based upon production losses during downtime. Our data gathering approach is now based on leveraging clients’ own well data

systems (e.g. Well View) and accounting systems, so data retrieval is more automated, easier, and fast! Study deliverables include a comprehensive report containing the in-depth well-level drilling and completion cost analysis organized by peer group (groupings of similar wells based on technical and operational characteristics). Ziff Energy’s analysis will highlight performance gaps and quantify the savings from improvement opportunities (i.e., eliminating gaps). The report will identify and review best practices associated with drilling and completions in the Bakken, and will also include an analysis of uptime reliability and operating cost performance relative to peer operators, identifying potential cost savings by cost category. After each participant has had time to digest their study results, Ziff Energy will

conduct a private debriefing to help focus the client on immediate opportunities and potential solutions. We will identify tendencies toward high- or low-cost bias for each cost category within their organization, and provide strong insights into their company’s drilling and completion performance. Companies interested in exploring participation in the Ziff Energy study should contact Richard M. Tucker at (713) 985-5183 or by email at richard.tucker@ziffenergy.com. The study is expected to commence during Q2 2012. n

Improve Your Drilling & &RPSOHWLRQ 2SHUDWLRQV (IğFLHQF\ & Reliability s $ETAILED 4IME #OST OR /PERATIONAL "ENCHMARKING !LLOWS 0ARTICIPANTS TO 2EDUCE THEIR $RILLING #OMPLETION #OSTS 4HROUGH &OCUSED !PPLICATION OF 3UCCESSFUL 0RACTICES s "EST 0RACTICES AND %MERGING 4ECHNOLOGIES

Ziff Energy Group, Calgary Suite 180, 6025 - 11th Street SE Calgary, Alberta, T2H 2Z2 Ph: (403) 265-0600 Fax: (403) 261-4631 Toll Free: 1-800-853-6252 e-mail: info@ziffenergy.com

Ziff Energy Group, Houston 4295 San Felipe, Suite 350 Houston, Texas, 77027 Ph: (713) 627-8282 Fax: (713) 627-9034 Toll Free: 1-888-736-5780 e-mail: info@ziffenergy.com

BAKKEN OIL REPORT 2012 | 121


LOGAN INTERNATIONAL

Logan Completion Systems advances multi-stage fracturing technology Reduce well costs, improve production and maximize profits

L

ogan Completion Systems, Inc., an innovative oil and gas service company active in the United States and Canada, provides highquality equipment and remedial and stimulation services to the unconventional oil and gas fracturing markets, along with a comprehensive line of completion products, including conventional completion, thermal, well construction, and other multi-zone products. What sets Logan apart, in addition to its superior equipment, is its focus on ensuring 100 percent customer satisfaction through the integrity and reliability of its people. Headquartered in Calgary, Alberta, Canada, Logan Completion Systems complements the other companies — Logan Oil Tools, Dennis 122 | BAKKEN OIL REPORT 2012

Tool Company, Kline Tools, Logan Scope, and Logan Xtend — in Logan International’s downhole tool segment, and enhances offerings to Logan International customers by combining its products and services to the Canadian and U.S. markets. MULTISTIM FRACTURE ISOLATION SYSTEM According to Logan Completion Systems’ MultiStim business manager Steve Kilshaw, the MultiStim Fracture Isolation System (Logan Completion Systems’ proprietary multi-stage fracturing technology used in horizontal wells in oil and gas plays) is unique in the marketplace. Logan’s fracture isolation technology facilitates the


MultiStim

Multi-Sta Multi-Stage ge Fracturing F racturing

with Removable Ball Seats and Shiftable Sleeves is an innovativve completion technology from Logan Completion Systems that is especially designed for producers who are tackling multi-stage fracs. One-trip installation for faster completion times and frac valves with fully removable ball seats post-fracturing — without milling or drilling — reduces well costs, improves production, and maximizes your profits. The key feature of the MultiStim System is the use of the full-bore inner diameter which allows conventional tools to be run after the seats are removed. Cementing, or plugging and perforating operations are not required. MultiStim is suited to e extended reach horizontal wells. Sleeves can be selectively opened and closed post-fracturing to allow customized stimulation, testing or production management of the entire wellbor wellbore for the life of the well. The MultiStim Fracture Isolation Liner System and MultiStim Cup Frac Tool oo System (a straddle cup system) are suitable for acid, proppant or energized fracturing operations in all types of formations. Contact us for complete details. www.logancompletionsystems.com

Ball seats successfully retrieved from a recent nine-stage frac 635 8th A Avvenue Southwest, Suite 850 Calgary, Canada T2P 3M3 403.930.6810 | Fax 403.930.6811


LOGAN INTERNATIONAL

removal of the balls and seats post-fracturing, and leaves an open wellbore that increases production flow capacity and allows easier downhole intervention without the need for costly and debris-creating milling or drilling of seats. Most of Logan’s competitors leave the seats in the well and produce the well with these restrictions remaining in place. “The problem is that these ball seats limit the full production potential of the reservoir,� Kilshaw notes. “Our competitors recommend to their clients that they destroy the ball seats by drilling them up or alternatively, to simply leave them in place. But the problem with the drilling process is that all of those ball seats are converted into debris that contaminates the wellbore and, in some cases, reduces production rates achieved from the well.� Logan’s Fracture Isolation Systems have been particularly designed for multi-stage fracs. They feature valves with fully removable seats post-fracturing via threaded tubing without milling or drilling. Rather than destroying the balls and ball seats, MultiStim removes the ball seats from the sleeve, and can either bring them back to the surface or leave them at the bottom of the wellbore. The advantages, Kilshaw says, are time savings

and the reduction of debris created from the drilling process. “With our system, a client has the option of removing the seats with fewer problems and quite a bit less debris. It gives our customers more options in how they want to produce their well,� he says. The technology, which has been used throughout Western Canada, has been wellreceived since it was introduced to the market one-and-a-half years ago. GROWTH IN THE BAKKEN Logan has been heavily involved in Western Canada for years and operates eight service locations in high-growth oil and gas resource play areas throughout Western Canada, including Grande Prairie, Edmonton, Lloydminster, Bonnyville, Brooks, Red Deer, Kindersley, and Estevan. Logan continues to grow and develop these stations in order to find new applications and markets for its products in these locations. While the majority of Logan Completion Systems’ downhole completion-tool product line has been utilized in key unconventional oil and natural gas resource plays (target markets that include the Williston Basin, the Bakken, Kindersley, Lloydminster, and others)

5201 N. Washington Street, Grand Forks, ND 58203 5FM t 5PMM 'SFF 1-800-872-5975 t 'BY 6HH RXU ZHEVLWH IRU PRUH LQIRUPDWLRQ DQG DGGLWLRQDO ORFDWLRQV

www.rrcontracting.net 124 | BAKKEN OIL REPORT 2012

in the Western Canada Sedimentary Basin (WCSB), “The Bakken is a key part of our growth strategy,� Kilshaw says. “Our product development group in the U.S. and our engineering group in Canada continue to develop new products for these reservoirs, particularly for those in the Bakken.� Logan plans to introduce its proprietary MultiStim technology and other multi-zone completion products and services into the U.S. market with the initial focus on the Bakken light oil play in North Dakota later this year. “We have a very aggressive growth strategy for the company for the next two years and the Bakken will play a key role in that,� Kilshaw states. Part of Logan’s growth strategy also involves attracting and retaining new talent. “We're getting more involved with the communities where we have a presence so people understand that we are here to stay,� Kilshaw notes. “We’re also working very closely with educational institutions to develop career models for students and industry professionals, so they know we’re not just one stop along their career path; but that they can come here and make it their home.� Logan is currently looking for good people of all skill sets. The biggest challenge, according to Kilshaw, is field staff. The company is seeking workers with experience with subsurface equipment and downhole tools. Logan focuses on being an innovative organization, not only in its equipment design, but also in how it does business. The Company focuses on its core values — safety, quality, innovation, integrity, and reliability — to drive its growth strategy. By following its core values and focusing on 100 percent customer satisfaction, Logan believes it will achieve profitable growth well into the future. For more information about Logan Completion Systems Inc., contact Steve Kilshaw, MultiStim business manager, at 780.784.0168 or by email at: skilshaw@logancompletionsystems.com. n


THRU TUBING SOLUTIONS

‘X-Tend’ your reach It is no secret that new wells in today’s industry have trended heavily toward horizontal drilling. The number of horizontal wells in the U.S. has more than tripled over the last five years. There are numerous reasons for deviating from vertical wells; from overcoming obstacles to getting more exposure to resources. To add more complexity, the length of the lateral sections being drilled is increasing just as rapidly. With this new custom arises a demand for tools that can deliver results. Rugged BHA components that can withstand extreme sideloading as well as long durations in the well, several days in some cases, are no longer an option but a requirement. In many cases, the extremely long laterals would not be feasible without extended-reach tools. These innovative tools allow reaching further in horizontal lengths, both in openhole drilling and cased completions. By creating an oscillating back pressure, the tools cause repeated extension and contraction of the work string thus reducing dragging friction. There are several types of extended reach tools, sometimes referred to as friction reduction tools (FRT): • Rotary Valve Pulse tools utilize a rotor and stator to intermittently open and close a valve element momentarily disrupting flow thus creating and releasing backpressure above the tool. Reliable under non-extreme conditions, these tools have proven to be effective for sliding and increased rate of penetration (ROP). Some disadvantages include limited compatibility with high temperatures and chemicals, overall length, and tool failure often requires a trip out of hole. The repair or replacement charges for these tools are generally expensive. • Poppet/Spring-Mass tools also interrupt flow as a valve is pumped open and then overcome by spring force to close again. This hammering effect both helps with

movement down-hole and damages the tool itself. Pieces can easily break and cause detrimental failures in the BHA requiring a trip out of hole. These tools have been known to cause high frequency “chatter” or background noise which can interfere with MWD equipment. • Fluidic Flow-Modulating tools have a specialized fluid path which creates varying flow resistance much like an opening and closing valve. These are very compact and rugged and have no moving parts, making them highly reliable. The absence of elastomers allows for operation in virtually any temperature and eliminates issues with fluids or chemicals. These tools also operate in a wide range of flow rates making them ideal for numerous scenarios. These tools have helped several companies set new records for various operations throughout the industry. In one such case, an operator in the Bakken shale play in North Dakota was able to set a personal best in the area utilizing an XRV (Xtended Reach Vibratory tool), a product of Thru Tubing Solutions (TTS). The objective

was to mill through twenty-nine composite plugs set in four and a half inch 11.6# casing. The vertical depth of the well was approximately 11,000 feet with a horizontal leg in excess of 9,000 feet. Utilizing a BHA furnished by TTS, all 29 plugs were milled successfully with an average mill time of 35 minutes per plug. A 10 bbl. gel sweep was pumped after milling through each plug to aide in the removal of cuttings. After every three plugs milled, a short trip was performed to ensure debris would not settle ahead of the BHA and cause the string to become stuck. Taking into account these practices after milling and the trip in and out of the well, the equipment was operating down-hole without fail for roughly 52 hours and the job was completed in one trip. As visions and demands of the industry grow more and more elaborate, the equipment designed for these operations must continue to advance and evolve. Any given company must always ask, “How can we do better?” if they are to be a prominent fixture in future ventures. n

Jim Reining 3069 Cty Rd 8 SE - St. Cloud, MN 56304 Ph: 320.240.7983 Cel: 763.360.0215 Fax: 320.230.4969

Call Eagle Welding for: • • • • •

Horizontal, Vertical, Double Wall, and Single Wall Fuel Tanks Dikes and Liners of all Kinds and Sizes Parts and Equipment Used or New New Installation of LP Plants Vessels of all Kinds

• • • • • • • •

Pump Repairs Updates and Repairs to Existing Plants Blackmere Pumps and Parts Corken Pumps, Parts and Accessories GPI Pumps, Parts and Accessories Gorman Rupp Pumps, Parts and Accessories Tokhiem Gauges Meters

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BAKKEN OIL REPORT 2012 | 125


RAINBOW CERAMICS

Rainbow Ceramics enhances production in Bakken resource play

Rainbow’s patent-pending ReaLite® product.

B

ased in Houston, Texas, Rainbow Ceramics is a fast-growing

in Montana and North Dakota for the ceramic proppant demands in

manufacturer and supplier of ultra-lightweight, lightweight,

the Bakken region. In these transloading facilities, Rainbow stocks

intermediate- and high-strength ceramic proppants. Rainbow is

millions of pounds of ceramic proppant to meet customers’

dedicated to developing, manufacturing, and supplying superior

immediate demands. “Rainbow is well-positioned to provide superior ceramic

quality and cost-competitive proppants that are utilized in the fracturing process to enhance production from oil and gas wells in

proppants to the Bakken oil industry,” says company vice president

both vertical and horizontal completions.

Kyle Hu. “We’re looking forward to a lot of growth in this rapidly

Rainbow, which operates more than a dozen production lines in China, is expanding its global distribution network, the

expanding area. Our goal in 2012 is to increase the supply of our

distribution center in Houston, and transloading facilities across

proppants by adding transloading facilities and warehouses in the

major shale plays including the Bakken, Eagle Ford, Haynesville,

Bakken region, in order to meet both the immediate and future

and Green River Basin in order to provide a smoother and more

demands of our customers.” Rainbow has four distinct proppant products – namely

reliable delivery from the manufacturing plants in China to the wellsite. Especially, Rainbow set up several transloading facilities

ReaLite®, PropLight®, PropMaster® and PropRaider®. ReaLite® is

Lignite, ND

|

Tioga, ND

PortalServiceCompany.com

HG Pumping Unit Sales Oilfield Services & Pipeline Construction Manlift & Light Plant Rentals 126 | BAKKEN OIL REPORT 2012

Doug Johnson 701.570.1566


RAINBOW CERAMICS

Rainbow Ceramics warehouse in Houston.

Transloading in Houston.

Rainbow’s patent-pending ultra-lightweight ceramic proppant, and the most cost-effective. ReaLiteŽ provides 50 percent higher strength, improved conductivity and thermal stability compared to resin-coated sand. The lower specific weight and bulk density make it a desirable solution for slick water fracturing. ReaLiteŽ is available in three standard sizes: 20/40, 30/50 and 40/70. “Our proppants have been widely utilized by major operators via oilfield services companies,� Hu states. PropLightŽ is Rainbow’s lightweight ceramic proppant, also cost-effective and of high-quality performance. It provides high fracture conductivity for wells with moderate depths and is available in three standard sizes: 20/40, 30/50 and 40/70. PropMasterŽ is intermediate-strength sintered bauxite with superior conductivity in moderate- to high-stress down-hole environments. Designed for high performance in tough conditions with closure stresses up to 14,000 psi, it is available in four

standard sizes: 16/30, 20/40, 30/50 and 40/70. PropRaiderŽ is Rainbow’s highest strength proppant for applications in environments with highest closure stresses and temperatures frequently encountered in the deepest wells. It provides maximum conductivity, high crush resistance and excellent thermal stability practically possible in the hostile downhole conditions, and is available in three standard sizes: 16/30, 20/40 and 30/50. Rainbow’s ceramic proppants have been pumped by many operators via oilfield service companies. All of Rainbow’s Ceramic proppants have exceptional sphericity and roundness, resulting in decreased pumping costs and reduced wear-and-tear. For further information, please visit http://www.rainbowproppants.com. n

Rainbow Ceramics - Your Production “Pot of Gold�! Rainbow manufactures a full range of proppants from ultra-lightweight RTaP\XR _a^__P]c c^ WXVW bcaT]VcW bX]cTaTS QPdgXcT _a^__P]c >da T[S proven proppants exceed API and ISO quality standards and are utilized by ^X[ T[S bTaeXRTb R^\_P]XTb PRa^bb \PY^a aTb^daRT _[Phb X] =^acW 0\TaXRP X]R[dSX]V 1PZZT] 4PV[T 5^aS 7Ph]TbeX[[T P]S 6aTPcTa 6aTT] AXeTa 1PbX]

www.rainbowproppants.com 1.281.822.7700 (USA) 3401 Navigation Blvd., Houston, Texas 77003

BAKKEN OIL REPORT 2012 | 127


QUALITY MAT COMPANY

Quality Mat Company saves oil companies millions of dollars Simultaneously saves landowners land, protects the environment

Q

uality Mat Company is the largest supplier of heavy equipment mats. With 39 years of manufacturing experience, Quality Mat Company has built and installed millions of mats world-wide in some of the harshest conditions on earth, while at the same time helping to protect the environment. Quality Mat Company is committed to protecting the environment in the Bakken by using its patented interlocking matting system. Quality Mat Company has developed an innovative yet simple process to access environmentally sensitive areas. The mats are made from two-inch oak boards in three layers and are bolted

R D ER O B STEEL AND RECYCLING, INC 2703 West Towne St. Glendive, MT 59330 800-423-5219 406-377-4398 Fax 406-377-8635

13896 W. Front St. Williston, ND 58801 800-820-5493 701-572-5493 Fax 701-572-8487

4251 MT Hwy 16 Plentywood, MT 59254 800-423-5219 406-765-2624 Fax 406-765-2724

35002 County Rd 123 Sidney, MT 59270 855-810-2995 406-433-7737 Fax 406-433-7736

Customer Service is Our #1 Priority

128 | BAKKEN OIL REPORT 2012

together to ensure maximum strength. The mats are a 100 percent natural product. Safety is a huge priority to Quality Mat Company. The interlocking mats can provide a safe work surface to minimize accidents on the job. By using interlocking mats employees will be working on a smooth surface, so there is no need to work in the mud. The interlocking mats also provide a huge benefit to property owners. When the job is complete, they are removed. The ground beneath the mats does not change; the vegetation continues to grow as normal. As a result the landowner can continue to use his land for grazing with minimal downtime. On the other hand, if rock is used for the entire location, the landowner is left with several acres of rock that diminishes grazing areas. There are many benefits to oil companies as a result of using the interlocking mats. First, having a clean solid work surface minimizes accidents and facilitates easy access on and off the location. Second, by using the interlocking mats the location is complete within days and is ready for rig up. Third, there is no downtime due to weather. Vehicles and all equipment can easily access the location year-round by using interlocking mats. All of these factors help to bring production on line faster. The community can benefit the most from the use of Quality Mat Company interlocking mats by reducing the amount of rock trucks on the roads. When oil companies drill multiple wells on a property owner’s land, rock trucks must travel from the quarry to the location hundreds of times for each drill site; this creates thousands of unnecessary trucks on the roads. However, when using the interlocking mats, they enter the field one time and move from one pad to the next, following the oil rig as it moves. The mats do not leave until drilling is complete. This will limit thousands of rock trucks from damaging the roads and provide a safer environment for the local communities. Quality Mat Company saves oil companies millions of dollars, while saving the landowners precious land and protecting the environment at the same time. n



APEGS

The Association of Professional Engineers and Geoscientists of Saskatchewan (APEGS) finalizes title changes ‘Engineering Licensee’ and ‘Geoscience Licensee’

I

n October 2010, the Association of Professional Engineers and Geoscientists of Saskatchewan (APEGS) Council passed a motion endorsing title changes for Limited Members. The changes were ratified by the membership at the May 7, 2011 Annual Membership Meeting. The final step before implementing the new titles was publication of The Engineering and Geoscience Professions Act and Bylaw changes in The Saskatchewan Gazette on August 26, 2011. The new titles, “Engineering Licensee” and “Geoscience Licensee”, replace the titles “Limited Member (Engineering)” and “Limited Member (Geoscience)”.

The right place, right from the start It all started in the Williston Basin. When we launched Legacy Oil+Gas in 2009, this was our land of opportunity. The area has delivered on its promise ever since, helping Legacy evolve from an upstart junior to a premier intermediate producer. Today, we are a company of over 100 people, with a development drilling inventory in excess of 1,200 net locations and 2011 exit production of 16,250 Boe per day. Technology-driven light oil resource plays continue to steer our success, with the Williston Basin as a core operations region. Our Bakken, Three Forks and conventional assets have driven our strong growth and new plays like the Spearfish ensure this pace continues into the future. And with our dedicated people, high quality light oil assets and extensive development inventory, we know we are in the right place for a story that is just beginning.

www.legacyoilandgas.com

130 | BAKKEN OIL REPORT 2012

WHAT IS A RESTRICTED LICENCE? The restricted licence is an official authorization to engage in the practice of professional engineering or professional geoscience within a specific, strictly limited, field of practice. It is intended to give practice rights to individuals who do not have the academic qualification for registration as a professional engineer or professional geoscientist but who can carry out specific engineering or geoscience functions based on a combination of education and experience. Persons who are issued a restricted licence become members of APEGS and receive the rights and privileges of membership. They are entitled to engage in the practice of professional engineering or professional geoscience within an approved field of practice without being supervised by a professional engineer or professional geoscientist. Members with restricted licences may offer consulting engineering or geoscience services, provided the services offered fall within the field of the restricted licence. Those wishing to offer consulting engineering or geoscience services, must submit a Notice of Intent to Consult (see the APEGS website under Registration, Permission to Consult). WHAT ARE THE QUALIFICATIONS FOR A RESTRICTED LICENCE? There are varying categories for qualification, each requiring a combination of education and experience. At least five years of the required experience must be supervised by a professional engineer or professional geoscientist, and the professional member must endorse the experience reports submitted with the application. FOR FURTHER INFORMATION More detailed information is contained in the Guide to Engineering and Geoscience Licensee Applicants, found on the APEGS website under Registration, Licensee. Questions can be directed by email to either Patti Kindred, P.Eng., director of education and compliance, at: pkindred@apegs.sk.ca or Tina Maki, P.Eng., director of registration, at tmaki@apegs.sk.ca; or by phone at 525-9547, toll free 1-800-500-9547. n


ENG ENGINEERING INEERING LICENSEE LICENSEE G GEOSCIENCE EOSCIENCE LICENSEE LICENSEE You may You may already already q qualify ualify for for registration registra ation with with the the Association Association o off Professional Profess sional Engineers Engineers and and Geoscientists Geoscientists of Saskatchewan Saskatchewan ((APEGS) APEGS) A suitable sui table ccombination nd e xperience may may e nable yyou ou tto o ombina tion of e ducation a education and experience enable b ecome a nE eoscience Li censee w ith A PEGS. ngineering L icensee o become an Engineering Licensee orr a G Geoscience Licensee with APEGS. Licensees are members off AP APEGS and have Li censees a re ffull EGS an d ha ve tthe he rright igh t tto o iindependently ndependen tl y ul l m embers o practice engineering orr p professional geoscience within pr ac t i ce professional pro fessional engin rofessional g eoscience w i t h in a eering o specified scope off pr practice. speci f ied sco pe o act i ce. Contact APEGS Con tac t A PEGS for information in fo rma t ion on h how o w tto o register: regis ter:

1 1-800-500-9547 - 8 0 0 - 500 - 9 547 306 306-525-9547 - 5 25 - 9 5 47

www.apegs.sk.ca www.apegs.sk.ca


MONSON CORP

Monson Corp. appreciates your business – doesn’t expect it

M

onson Corporation, a growing company based out of Willmar, Minnesota, began in 1992 as a result of proprietor Chad Monson’s drive and hard work in the construction field. Monson began his excavating career when he was a teenager working for his father’s business, and since starting Monson Corp., the company has grown from 25 to 30 employees to between 90 to 100 employees. Monson Corp. has expanded its range of sales to include North Dakota and Montana in addition to Minnesota and over the years has expanded to do a variety of work. Monson employees pride

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themselves on many specialties of work tasks including aggregate, concrete, asphalt, demolitions, snow removal, road building, new building sites, and city water and sewer reconstruction. Monson staff work 24-7 with many different types of trucks, trailers, equipment and material; trailers include belly dumps, side dumps, and end dumps. Monson Corp. offers six different crushing spreads and cranes are also available. Monson also does site maintenance which includes equipment such as road graders and packers. With such a variety of equipment, Monson offers services in hauling material to locations, recycling concrete, as well as crushing the material that is available. All of Monson Corp.’s services are available in the North Dakota and Montana areas, as well. In fact, Monson Corp. has one of the biggest rock inventories in northwest North Dakota – the company has numerous pits in the North Dakota region for convenience and ease of getting material, for example the Alcabo and McGregor pits. The Alcabo pit is located close to Westby, Montana and has four to five pits in the surrounding area that are also available. Another location is on State Highway 85, north of Williston about 30 to 40 miles. Monson Corporation continues to grow with customer base in the booming oilfields. Some companies that Monson works with include Sundres Sand and Gravel, Farden Construction, Portal Services, Taqa Oil and, recently, Maverick, along with numerous others. Monson Corporation is in continuous growing mode and will continue to perform the hard work and high level of customer service that clients have come to know. Monson has based the company around the philosophy of: “We appreciate your business. We don’t expect it!” n


We Rock! COMMITMENTS ARE FILLING LLING F FAST! AST! AST Quality Gravel & Rock Hauled Seven Days A Week

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DISCOUNTS AVAILABLE ON PRE BUYS Call: Chad Monson

320-995-6703 orr 320-894-5070 320-89 Fortuna, ND and Stanley Stanley,, ND


RAS INTERNATIONAL

RAS International helps companies accommodate workforces large and small Manufactures a wide range of customizable building configurations

R

AS International, LLC, a Minnesotabased company, opened its doors with humble beginnings during the height of economically depressed times. Dick Smith, CEO, got his chance to shine from an established company in the Williston oil industry by having RAS International build one remote site structure for them. Against all odds and in difficult times, RAS International has proven that hard work, ingenuity, common sense and listening to the customers’ needs really pay off in the long run. As business progressed, site houses – which had grown to include man camps and modular houses – continued to be built by RAS International. With a continuous learning curve and the strict certification process through building remote site housing, RAS International decided to include the Canadian market by teaming up with another company that was already producing certified Canadian products. With these combined efforts, RAS expanded their

arsenal of structure building products to include residential and commercial structures and thus stretched their target market to include multiple states and Canada. With innovative ideas and a commonsense approach, RAS found that contracted trucking firms were unable to keep up with the high demand and need for specialized trailers to deliver the site homes safely and on time. Smith then decided to design and manufacture his own specialty-stretch trailers and other semi-trailers to haul the site housing units. This enabled RAS International to coordinate and schedule safe and timely delivery of their products. In addition to this division of manufacturing, RAS also manufactures a new side-dump trailer for the large market of side dump work both in construction and in the oilfield industry. Faced with sewer and water issues at remote sites, RAS International adapted to overcome that problem by bringing a staff

DIAMOND b OILFIELD TRUCKING, INC. Serving The Oilfield For All Your Transportaion Needs and Service Work • Hauling Crude Oil and Water TERMINALS | Plentywood • Westhope • Tioga • Williston 406.765.1376 • 24 Hours • Toll Free 1.800.376.1376 212 W. Cactus Street | Plentywood

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134 | BAKKEN OIL REPORT 2012

on board with over 30 years of experience dealing with sewer treatment and potable water cleanup. By becoming a dealer and installer for the most up-to-date Sequencing Batch Reactor systems (SBR), RAS International can now handle all your state-certified waste water and treatment facility needs. From individual projects to municipal and county projects, RAS utilizes SBR technology individually engineered for each specific project. In addition to being able to bring a solution to their customers’ needs regarding sewer and water treatment, RAS International decided to also expand with a full line of the latest technology in LED lighting for housing camps and oil rigs as well as all types of excavating and earthwork services. Starting from just one site house built and delivered not too long ago, to the ripple effects of the needs and wants from multiple customers, RAS International, LLC has launched itself into becoming a leading contender in the business of constructing remote site houses, man camps, modular housing, residential and commercial building structures, specialized stretch trailers, specialty trailers including side dump trailers, as well as state-certified waste water and treatment facilities, and LED lighting and excavating among other capabilities, for a one-stop shopping experience. RAS International can attend to all of their customers’ wants and needs, efficiently and effectively every time. n


Specialized Remote Site Structures for the Petroleum & Mining Industries Whether you need to accommodate a large or small workforce, RAS offers a wide variety of solutions to meet your demands. We manufacture a wide UDQJH RI EXLOGLQJ FRQÄşJXUDWLRQV and can customize buildings to \RXU H[DFW VSHFLÄşFDWLRQV 2XU FRPIRUWDEOH DQG HIÄşFLHQW GHVLJQV are built to meet the rigorous demands and harsh environments that can be encountered at remote site operations. Structures built in Minnesota with many years of experience in extreme weather. We have three plants to keep up with your demand. Skid houses: s &XVWRPL]HG FRORU DQG VSHFLÄşFDWLRQV SHU FXVWRPHU s 6SUD\ IRDP FHLOLQJ ÄťRRU DQG ZDOO insulation s 3OXPELQJ HQFORVHG LQ KHDWHG chase s GEO HQGHU LQ VQJ RU GEO kitchens s (OHFWULF 3URSDQH PRGHOV s 6HH RXU ZHEVLWH IRU IUDPH building specs

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RAS International, LLC. 615 Nokomis Street, Ste. 100 Alexandria, MN 56308 320-846-0800 / Fax: 320-762-8545

www.rasremotesitebuildings.com email: rasmit@gctel.net


EXECUTIVE SERVICES

Williston’s only locally owned employment agency serves Bakken staffing needs

E

xecutive Services Inc. is a staffing, temporary help and office services agency that provides employees and services to the Williston Basin and Bakken regions. Locally owned and operated since 2005, we were in Williston before the oil boom, we are here during the oil boom and we plan to still be here after the oil boom. Executive Services recruits employees from the Williston area, as well as from other states, to meet your managerial, administrative, construction, general labor, kitchen staffing, housekeeping, janitorial and factory personnel needs. We also have administrative personnel working in our office who are available for part-time or short-term projects. We keep our overhead low and pass the savings on to you. HOW IT WORKS A new recruit generally works as an employee of Executive Services for a three-month test period and thereafter, your company may hire them as part of your own staff, or continue to use Executive Services as best suits your needs. This gives your company the opportunity to work with the new employee to be sure they are a good fit for your position, without making any long-term commitment. You may then hire them as part of your own staff, have them continue to work though Executive Services for as long as you wish, or let them go for any reason if it isn’t going to work out. Your company may use Executive Services on a temporary “as needed” basis, or you may purchase our contract and hire the employee directly to your payroll if you wish.

Eliminate the hassle of recruiting, hiring, training and government reporting by using Executive Services. Executive Services: • Is the employer • Carries workers’ compensation • Carries unemployment insurance • Matches withholding taxes • Processes payroll • Processes payroll reports All you do is pay our low contracted rate of billing. We also provide general office services that are not otherwise available in the Williston area. Our temporary office solutions fill the needs of business and individuals in the community that don’t have their own office or who are new and don’t have their office space set up as yet. Some of the ancillary services we provide include: • Fax and mailing services; bulk mailing and mailing list maintenance. • Copy service by-the-page or bulk, including binding as needed. Let us eliminate the hassle of printing your safety and service manuals. • Word processing including resumes, correspondence and business forms. • Basic bookkeeping including accounts payable, billing and accounts receivable, checkbook management, and general business reports and graphs as needed by your company. We use QuickBooks accounting features to handle your bookkeeping requirements.

Oilfield Locations, Roads All Types of Dirt Work Snow Removal 24 Hour Service

Our office is located in the townhouse plaza building, downtown at 417 First Avenue, directly behind the Gate City Bank on Main Street; come visit us on the second floor of this large two-story white-brick building. Please give Executive Services a call today for a personalized assessment of your needs and how we may best serve them. Our office phone is (701) 774-8484 and our after-hours emergency line

Box 1046, Sidney, Montana Office (406) 482-4760

is (701) 570-0900. You can also reach us by fax at (701) 572-9189 or by email at integrated@nemont.net. We look forward to the opportunity to earn your business! n

136 | BAKKEN OIL REPORT 2012


An O An Oilfield ilfield Ser Service vice Company Company Serving Ser ving tthe he Bakk Bakken een with with locations in Watford W atfoord City & W Williston illiston

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TCA MARKETING

TCA Marketing loves the Bakken’s fast pace, looks forward to expanding into U.S.

T

CA Marketing Ltd., a leading supplier of secondary containment systems in the western Canadian oil and gas industry for the past ten years, is looking forward to expanding our sales into the U.S. Bakken market. All current work has been done thus far in the southeast Saskatchewan portion of the Bakken, and we feel the opportunity to expand our business has never been better than now. Our employees and clients are our number one assets. Without our skilled employees, we would not be growing as quickly as we have been. TCA, a family-owned and operated business with a home office in Taber, Alberta, has teamed with a southern Alberta manufacturing company to produce our own line of secondary containment products. All of TCA’s containment system components are made by skilled Canadians. Local manufacturing, combined with local design and engineering, has allowed us to answer clients’ ever-changing containment needs.

Our employees and clients are our number one assets.

Riley Bros. Construction began in 1974 with one simple goal:

containment walls; we tried a lot of scenarios but kept going back to bolts (a bolted connection has always been a reliable way of maintaining the integrity of the containment systems). We have changed from using 22 bolts in a standard 45” wall to using six bolts. The bolts are 5/8”, thereby allowing the installer to handle them easily and quickly. The initial response of the new design has been great; people love it. It allows the user to move the system more rapidly, without the concern of losing the smaller bolts that were previously used. We look forward to maintaining excellent relationships with existing customers, and developing long-term relationships with new clients, for years to come.

“To “TTo be committed to our customers” YYour our project is important to us. W Wee will work with you to understand your vision, goals, and objectives. Wee will partner with you to W provide a quality project on time and on budget. CORPORATE CORPORA ATE OFFICE Office 320-589-2500 Toll Toll FFree ree 800-568-6595 Main FFax ax 320-589-2545 Parts Parts FFax ax 320-589-8810 Accounting FFax ax 320-589-0355 PAVING P AVING Office 320-634-3535 Toll Toll FFree ree 800-422-0378 Main FFax ax 320-634-3838

138 | BAKKEN OIL REPORT 2012

TCA provides producers with containment solutions for everything from small pop tanks to large tank farm construction. Current projects include numerous multi-well tank farm containments in the southeast Saskatchewan oilfield. Our sitespecific designs, along with a wide range of liner products, help us to provide the solutions needed in today’s environmentally influenced oil industry. The help of local engineering and design has aided in some challenging sites. We are able to approach our clients with a design that is already approved, allowing them to focus on the site design. Additionally, TCA offers professional installation of all of our products. Our crews are experienced in everything from the assembly of the system to the construction of tank foundation rings. We also offer specialized liner installations and repairs, allowing the customer the option to repair or replace. TCA has had a longstanding relationship with Nilex Inc., which provides us with all of our liner and fabric products. We are stocking standard size containment systems in Carlyle, along with liners and geotextile fabrics. One of the challenges we have encountered in the industry is the demand for an easy-to-assemble and easy-to-move containment system. We spent a few months with our manufacturer and engineers in order to minimize the number of fasteners in our

www.RileyBros.com

For further information, please visit us online at http://www.tcamarketing.com. n


TCA provides engineered steel containment solutions for the Western Canadian Oil and Gas Industry

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OILFIELD INTEGRATORS

An industry leader

O

ilfield Integrators was formed in 2010. The mission of the company is to provide integrated solutions to address three concerns in the oil and gas industry: production, security and safety management. Oilfield Integrators offers oil companies numerous solutions including engineering and design, video surveillance, license-plate recognition software and full automation and control, as well as electrical contracting services. As an integrator, this company has a broad range of expertise to offer their customers and their staff understand the production, security and safety needs of the oil and gas industry. Oilfield Integrators is “construction-toproduction” capable; this means that the company has the products and ability to 140 | BAKKEN OIL REPORT 2012

provide the engineering and design, electricity, technologies, IT infrastructure, and the communications to deliver a turn-key solution. Being a part of their projects from the early stage of design is what helps distinguish the company from their competition; it also allows them to better understand their customers’ needs. Oilfield Integrators can provide design ideas to assist their customers in creating better solutions, around-the-clock efficiencies, and a safer, more secure work environment. Their staff take pride in their ability to not only work with solutions that have already been designed and implement them in their own way, but also to design new solutions that will benefit the customer. Oilfield Integrators solves problems in the oil and gas industry by using technology and providing oil and gas companies the information they need to increase revenues, decrease costs and also manage day-to-day risk. Recently, Oilfield Integrators was asked to design a ticketing system for one of their customers that operates salt-water disposal sites. Currently, there is no out-of-box solution that is offered on the market that provides enough information to accommodate the needs they had; Oilfield Integrators designed a solution that gives this customer exactly what they required. Oilfield Integrators hosts this application along with their WellHawk solution using video surveillance and a custom-designed solution. This solution will dramatically reduce the office workload by automating the invoicing for the client, thus providing them with accurate information and speeding up the process of invoicing. This will also hasten cash flow and increase profits for the client’s company.

The WellHawk solution, a product of Oilfield Integrators, is a software application that works with any SCADA system that a customer has or chooses to use. The server is hosted and managed at a secure data center so that the customer can concentrate on what they do best, saving them the startup cost as well as the maintenance cost on managing any IT infrastructure. WellHawk is not only a solution that can be deployed in North Dakota and Montana; it is also a solution that will work globally. Oilfield Integrators has built the software application this way because the energy industry is not a local industry; it is a global one. Once a connection to the Internet is established via a Smartphone, PC tablet, PC, etc., and a layout for the individual location is designed, the customer has the power to control and monitor each facility from anywhere in the world as if they were at the location. This helps to reduce operating costs as well as prevents events that could lead to equipment damage or spills that are costly to clean up. Oilfield Integrators is a very wellrounded, well-thought-out business that employs the right people to make sure their solutions work for their customers. They are not afraid to take on any challenge that their clients offer to them and are 100-percent dedicated to exceeding every customer’s expectations. The company prides itself on being a pioneer in technology specifically for the oil and gas industry and is constantly looking to improve processes that lead to fewer headaches and ultimately more profits for their clients. Solving problems, adding value and exceeding their customers’ expectations is the overall focus for Oilfield Integrators at the end of each and every day. n


TRILOGY OILFIELD

Trilogy Oilfield aims to provide great value to the Bakken region

O

riginally formed in 1994, Trilogy Oilfield Ltd. has grown from modest and humble beginnings to a boutique specialist in horizontal completion and work-over techniques. Expanding from the head office in Provost, Alberta, the company gathered vast experience completing single casing-size horizontals, where slotted liners were protected from long string cement operation with ECPs and the various stage tools involved in those operations. Following the drill outs involved with the completion process, Trilogy maintains an active position during the subsequent work-overs involved as the wells are produced. Operations from coiled tubing cleanouts with rotating jet nozzles, tubing bailing, pump to surface and remedial fishing are all part of the evergrowing Trilogy catalog of tools and services. The completion is just phase one; maintaining the horizontal legs’ ability to

produce and all the variables involved in

The tools are driven by the customer

horizontal work-overs can become quite the

needs; weight via drill collars for running

battle. Older wells don’t circulate in many

liners and custom drilling tools for drill outs.

areas thus cleanouts can become

“We aren’t trying to re-invent the wheel

somewhat complicated, especially when

but rather, are continuously seeking to

trying to establish where water flow is

develop tools that can save the oil

entering and scenarios of that sort. The

companies some cash and rig time and thus

continuous awareness of new technology

build trust and loyalty using old fashioned

and techniques being used all add to the

value as a guide,” says Kerry McGowan. “By

overall data available to the industry to

communicating with the field hands and

review and evaluate.

end-users, we gather lots of valuable intel

Trilogy entered the Bakken area in

that we use in this process.”

2004, from their acreage just north of

Trilogy is run by a simple set of guiding

Weyburn, Saskatchewan. Rental fleets and

principles: reputations are built over time yet

tool packages have been tailored to

destroyed in seconds.

customer needs, from multiple strings of

“When all decisions within a corporate

drill collars to subsequent specialty tools like

structure seek to honor the simplest of

custom mills for frac port drilling,

details having major ramifications, then

performance drilling motors that can deliver

accountability to customer’s needs is a

the torque needed or even cleanout

fundamental that rules the process,”

packages like power swivels, bits, RS heads

McGowan states. “It has worked for 20

and such for circulating.

years. Why change?” he asks. n

Contact us today! Alberta (403) 934-1222 Saskatchewan (306) 261-4609 steve@rockinghorseinc.com www.rockinghorseinc.com

Strathmore, AB | Lloydminster, AB | Saskatoon, SK | Virden, MB

SAFE S AFE TTO O THE CO CORE RE : :,5(/,1( &25,1* &219(17,21$/ &25,1* ',5(&7,21$/ &25,1* &25( +$8/,1* ,5(/,1( &25,1* &219(17,21$/ &25,1* ',5(&7,21$/ &25,1* &25( +$8/,1*

Over Ov ver e 20,000 metres co cored red at 98% reco recovery. verry. BAKKEN OIL REPORT 2012 | 141


TJT INC.

TJT meets emergency workforce housing demands

T

overloading local infrastructure, hundreds of folks are without basic

homes for a mobile-home park or a man camp operator that needs

services every night. TJT laundry service is a drop-off laundry

JT, Inc. is a provider of mobile and modular housing in the Bakken. Whether the client is a single developer of mobile

area’s residents. With housing needs exceeding current capacity and

large custom-designed and built facilities, TJT is positioned to

service that allows folks the highest and best use of their time. TJT

handle the job – large or small. TJT has been a leading supplier to

shower services allows (some) relief to the many truck drivers and

the manufactured housing industry for over 33 years and recently

transient population subject to living in their truck/car while locating

opened its Watford City, N.D. operation to serve the gas and oilfield

suitable accommodations.

industry. TJT’s CEO and president, Shawn CJ Kling, a North Dakota

TJT Field Services is your one-stop solution for housing needs. The warehouse is open and stocked to capacity to meet the ever-

native, has many friends and family in the Watford City area and

present demand of manufactured housing products used in

understands the needs of this once quiet community. Kling has

installation of homes being installed throughout the Bakken region.

readied TJT to respond to the various needs of the community with solutions from TJT’s various divisions including TJT Emergency Services and TJT Field Services. TJT launched its Emergency Services division in late 2011 by offering mobile RV parts and service from its Watford City location. TJT utilizes only RVIA-certified master technicians to respond to the

TJT Field Services offers housing and development services with our Systems Built Housing Experts. TJT Field Services can manage your project from concept to completion including designing, selecting manufacturers, transporting the units and providing installation and ongoing maintenance and support. TJT has quickly evolved into a national player in various

needs of the over 25,000 folks making campers and motorhomes

industries, with its parent company becoming a highly recognizable

their “home away from home” in the harsh North Dakota winters.

industry brand, driven by its reputation for integrity and

In April, TJT Emergency Services continued expansion with the opening of its shower and laundry services to meet the needs of the 142 | BAKKEN OIL REPORT 2012

professionalism. TJT Field Services is set to follow suit as we continue to satisfy and exceed the expectations of our customers. n


www.TJTUSA.com Main: 701.842.2676

____________________________________________

SHOWER H LAUNDRY H RV PARTS & SERVICE INSTALLATION MATERIALS For MOBILE & MANUFACTURED HOMES ____________________________________________

http://www.tjtusa.com MAIN: 701.842.2676 TJT FIELD SERVICES SERVIC 503 3rd Ave SW, Watford City, North Dakota, 58854


PETROLEUM SERVICES

Locally owned Petroleum Services offers many products and services to clients in the Bakken

“N

ever Quit!” It’s a motto that has described Mike Palmer Petroleum Services from the beginning, and it’s one that serves a business and an owner well. Petroleum Services, a locally owned oilfield service company established in 2003, is built on integrity, honesty and a strong work ethic.

144 | BAKKEN OIL REPORT 2012

Mike Palmer, company owner, has been in the oilfield since the late ‘70s. He well remembers the oilfield before the Bakken. Mike often quips, “I’m painting my picture,” meaning that he has a plan and a vision for how this company will look. We at Petroleum Services have built a team of employees who take pride in the work


PETROLEUM SERVICES

Service is what we are all about. Petroleum Services operates fairly, with the willingness to do what it takes to get the job done professionally. Service is in our name and we proudly earn our name every day. they do each day; we believe that how you work is a large part of who you are. Service is what we are all about. Petroleum Services operates fairly, with the willingness to do what it takes to get the job done professionally. Service is in our name and we proudly earn our name every day. Petroleum Services has much to offer clients in the oil industry. We provide safe and dependable hot-shot and trucking services throughout the United States and Canada. There are bed trucks and winch trucks for rig moving services, as well as vacuum trucks,

We are proud to bring Petroleum Services’ Mud Motors to the Williston Basin, which can cut many hours and costs off the average drilling time. The motors are adjustable and one motor can drill both the vertical and the curve sections of the hole. Petroleum Services is an agent for CaseTech float equipment as well as Downhole Stabilization. Our breakout machine can torque and breakdown connections up to 30,000 psi. Drilling pipe can be straightened at our shop or on location. We also supply rental equipment including pipe racks and other drilling rig necessities.

available. Our welding team has 50 years of combined experience, and

Please check us out on the web at

can fabricate to meet most clients’ needs. We offer a full line of new

www.PetroleumServicesAndTools.com. Thank you for the

drilling bits in addition to our retipping services.

opportunity to serve you! n

701-572-2487 01 2 2 8

° Hot Shot & Trucking ° ° ° Float Equipment ° Drill Bits ° ° Rental Equipment ° ° ° Stabilizers & Reamers ° Vac Truck ° ° Breakout Machine ° ° Pipe Straightening ° ° P.S. ° S Mud Motors M ° Welding & Fabrication °

www.PetroleumServicesAndTools.com www w.PetroleumServicesAndT .Pe rvicesAndTTools.com o BAKKEN OIL REPORT 2012 | 145


INDEX TO ADVERTISERS

AE2S American Steel Span Inc. APEGS Arctic Oilfield Services Badlands Integrity Group Beaver Creek Archaeology Bert Baxter Transport Ltd. Big Sky Economic Development Bismarck-Mandan Development Association Black Gold Energy Services BNSF Railway Border Steel and Recycling, Inc. Brady Martz & Associates Britton Transport Brock White Company Burke Construction Group, Inc. Calfrac Well Services Camex Equipment Sales & Rentals Inc. CanElson Drilling Inc. Cessna Aircraft Company Citadel Advisory Group Clariant Oil Services Continental Resources Crowley Fleck D & M Water Service, Inc. Dan’s Tire Service Derrick Equipment Company Diamond B Oilfield Trucking, Inc. Do All Metal Fabricating Don-Nan Pump & Supply Eagle Welding & Petroleum Equipment EideBailly LLP Enbridge Pipelines (North Dakota) LLC Environmental Materials Inc. Essential Coil & Stimulation Services Executive Services, Inc. Farmer’s Union Oil Ferguson Enterprises, Inc. Flexsteel Pipeline Technologies Franz Construction Inc. Frontier Energy Group GeoResources, Inc. Global Oilfield Services Gold Spur Trucking Graco Oilfield Services H. & L. Rentals and Well Service Heat Hawg Inc. Hydro Solutions Inc. Jasper Engineering & Equipment Company K & R Roustabout Legacy Oil + Gas Inc. Logan International Inc. Lower Yellowstone Rural Electric Assoc. Inc. MAC Heaters Manger Insurance 146 | BAKKEN OIL REPORT 2012

7 28 130 98 23 71 109 13 101 97 19 128 75 44 IBC 110 59 50 87 95 79 65 17 81 6 56 9 134 35 OBC 125 4 43 16 108 137 103 25 49 136 47 119 144 39 117 99 38 29 41 118 130 123 60 111 64

MDU Resources Group, Inc. Mid-Plains Distributing Inc. Miller Architects & Builders Miller Insulation Co. Inc. MJ Systems Monson Corporation Monster Energy Rentals Mountainview Energy Ltd. MTVL Laboratories, Inc. Nabors Well Services Co. Neset Consulting Service Oasis Petroleum Inc. Oilfield Integrators Pat’s Off-Road Petroleum Services Pierce RV Pifer’s Pioneer Drilling Pioneer Lodge Portal Service Company Power Fuels PTI Group Inc. QMC Hydraulic Cranes Quality Mat Company R & R Contracting, Inc. Rainbow Ceramics RAS International, LLC RigManager Riley Bros. Construction Ritter Brothers Rocking Horse Energy Services RockPile Energy Services Rocky Mountain Rod Steamboat Energy Consultants Steve's Sprayfoam Insulation LLC Target Logistics TCA Marketing Thru Tubing Solutions Titan Machinery TJT Field Services Tomahawk Pipeline Construction, Inc. Trilogy Oilfield Ltd. Upco Inc. Veit & Company Inc. Wanzek Construction Inc. Warren Transport Whiting Petroleum Corporation Xylem Inc. Ziff Energy Group

15 88 115 72 77 133 60 57 8 5 36 45 11 84 145 61 132 89 69 126 20 67 33 129 124 127 135 112 138 91 141 73 20 60 53 21 139 3 37 143 82 27 63 48 55 16 IFC 40 121


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Photos Courtesy of Summit Energy Services, ND

(C) 2010 Brock White. S150 is a registered trademark of North American Green.

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WORLD CLASS OIL AND GAS FINDERS IN NORTH DAKOTA AND ACROSS THE UNITED STATES.

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Across the U.S., from North Dakota, Colorado and the Rockies, Visit us at www.whiting.com and view our video tour of the depth and breadth of Whiting Petroleum operations.

to the Permian Basin and Mid Continent, Whiting Petroleum Teams are bringing record results. Our operational expertise extends from hydraulic fracturing innovations, to state-of-the-art natural gas plants, solving transportation bottlenecks to maximizing recovery at our CO2 floods and relentless striving for improvement. Whiting’s asset portfolio provides a singular growth platform in the Bakken for years to come.

700 BROADWAY 6 SUITE 2300 6 DENVER, COLORRAADO 80290-2300 6 303.837.16616 Fax 303.851.49236


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