August 2014 The Bakken magazine

August g 2014

EXECUTING

THE

PLAN

Unprecedented New Policy Shifts Approach to Flaring Page 24

Plus

Saltwater Disposal Firms Busy But Look to Expand Page 36

AND

Oilfield Waste Changes Ahead Page 44

www.THEBAKKEN.com Printed in USA

COVERING THE ENTIRE BAKKEN AREA Full Drilling Rig Moves | Work-Over Rig Moves | Completions Heavy Equipment Hauling | 100% TERO Compliant

Locations in Minot and Watford City

Office: 701-837-0800 | Cranes: 307-231-6766 | Trucks: 701-818-0013

www.RosscoCrane.com

Well established, innovaƟon in safety and excellent customer service is what truly makes MBI Energy Services “The Oilfield Service Professionals.”

North Dakota | Wyoming | Texas | Pennsylvania | Colorado

(701) 575-8242 www.mbienergyservices.com

Mechanical Products

CONTENTS

AUGUST 2014

VOLUME 2 ISSUE 8

Pg 44 LOGISTICS

Nothing Left To Waste Scott Radig, Environmental Materials Inc. and Next Generations Solutions LLC have the pulse of the Bakken’s oilfield waste sector. They also have perspective on the future of how oilfield waste will be treated in North Dakota.

BY LUKE GEIVER CONTRIBUTIONS

56 BAKKEN BACKERS Effects of a Slowdown

BY ROB LINDBERG

Pg 24 INFRASTRUCTURE & CONSTRUCTION

Executing The Gas Capture Plan Flare reduction regulators officially have teeth with the advent of recently implemented policies. A midstream gathering firm and a technology analyst explain what to expect of the gas capture plan.

BY PATRICK C. MILLER

Pg 36 LOGISTICS

The Surge Of Saltwater Disposal Services Steady oil production has saltwater disposal well operators constantly looking for expansion opportunities.

BY EMILY AASAND

DEPARTMENTS

IN PLAY

58 Logical Data Essential To The Bakken

How can advanced real estate data be used in the oil and gas industry? This firm has shown exactly how the Bakken can benefit.

BY EMILY AASAND

INNOVATORS

60 Establishing A North American Headquarters

London-based RecartPS has plans to expand into the Bakken by treating water and managing resources. To do so, it has chosen a unique Grand Forks laboratory space.

BY EMILY AASAND

6 Editor’s Note

Industry’s Take on Flaring, Wastewater and Oilfield Waste Changes

BY LUKE GEIVER

8 ND Petroleum Council ON THE COVER: With communication between midstream gas gathers and operators at an all-time high, projects to install right-sized infrastructure from the well site to a gathering station are becoming even more common.

Real Stories From the Bakken

BY TESSA SANDSTROM

10 Events Calendar 14 Bakken News

Bakken News and Trends

PHOTO: CALIBER MIDSTREAM

THEBAKKEN.COM

5

EDITOR'S NOTE

Industry’s Take on Flaring, Wastewater and Oilfield Waste Changes Luke Geiver

Editor The Bakken magazine lgeiver@bbiinternational.com

Flaring is a topic that can launch a thousand conversations, each different in scope, length and proximity to the truth. The most basic conversations about flaring begin with the questions: Why does it occur and why is the valuable resource underutilized? Then comes the question of logistics and how can the oil and gas industry, in conjunction with North Dakota, efficiently and economically capture the flare? And finally, there’s the question of when—when will an acceptable level of gas be captured?

Answers to these questions are becoming clear, thanks to unprecedented regulatory action by the North Dakota Department of Mineral Resources and David Scobel’s team at Caliber Midstream. Staff Writer Patrick C. Miller writes about Scobel’s perspective on flaring in his timely story, “Executing The Gas Capture Plan,” in which Scobel recounts a lunch time conversation he held with a financial analyst. The conversation helped Scobel realize that midstream gas gathering in the Bakken is unpredictable and, in many cases, a task that requires reworking previous infrastructure build-outs that at one time seemed to be appropriate.

As chief financial officer of Caliber, a midstream gas gathering company heavily focused on the Williston Basin, Scobel’s overall commentary regarding the backstory of flaring, logistical challenges and the unpredictable nature of the Bakken seems to be as close to the truth about flaring as we could hope for.

Although we could have devoted an entire issue of the magazine to flaring, we chose to include updates on wastewater and oilfield waste in the Williston Basin instead. The easy summation of the Bakken’s wastewater handling and disposal industry can be described this way: growth. As the Bakken moves into full production mode and multi-well pads become the norm, water volumes of produced and flowback water could outpace the projected capacity and economic viability of the Bakken’s current saltwater disposal infrastructure. Consequently, water disposal firms, such as Citadel Energy and 1804 Operating, are planning future expansion while they enjoy current success.

In the oilfield waste handling and disposal sector of the Bakken, change is coming. A conversation with Scott Radig, the North Dakota Department of Health’s director of waste management, revealed that how oilfield waste is handled and where that waste can be disposed of in North Dakota will change—possibly in 2014. The state will implement new regulations aimed at tracking oilfield waste from the cradle to the grave, a situation that is not currently happening. More importantly, North Dakota could soon allow higher levels of naturally occurring radioactive material at special landfills within the state’s borders. Radig is awaiting the results of a study that could validate his belief that North Dakota can, and should be able to, dispose of its own oilfield waste. As the story reveals, the waste disposal industry is similar to the midstream companies of the Bakken––both sectors are not only in favor of a new regulatory landscape, they are already working to meet their industry’s challenges.

For the Latest Industry News:

www.TheBakken.com Follow us: twitter.com/thebakkenmag facebook.com/TheBakkenMag 6

The BAKKEN MAGAZINE AUGUST 2014

ADVERTISER INDEX www.THEBAKKEN.com VOLUME 2 ISSUE 8 EDITORIAL Editor Luke Geiver lgeiver@bbiinternational.com Senior Editor Sue Retka-Schill sretkaschill@bbiinternational.com

32

ABUTEC LLC

20

AE2S

28

Allied Oil & Gas Services, LLC

38

Bartlett & West

47

Capital Lodge

30

Capps Van & Truck Rental

11

Staff Writer Emily Aasand eaasand@bbiinternational.com Staff Writer Patrick C. Miller pmiller@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

CARBO Ceramics

54-55

Centek Group

22-23

Energy Efficient Group

35

Environmental Materials, Inc.

49

FMC Technologies Inc.

34

Gamajet Cleaning Systems, Inc.

29

Gibson Environmental Services

39

GTUIT

President Tom Bryan tbryan@bbiinternational.com

33

Hotsy Water Blast Manufacturing LP

Vice President of Operations Matthew Spoor mspoor@bbiinternational.com

52

International Road Dynamics

40

J-W Energy Company

21

Mattracks

PUBLISHING & SALES Chairman Mike Bryan mbryan@bbiinternational.com CEO Joe Bryan jbryan@bbiinternational.com

Vice President of Content Tim Portz tportz@bbiinternational.com Business Development Manager Bob Brown bbrown@bbiinternational.com

3

MBI Energy Services

Account Manager Tami Pearson tpearson@bbiinternational.com

12-13

Marketing Director John Nelson jnelson@bbiinternational.com

63

NCS Energy Services, Inc.

43

Peak Oilfield Service Company, LLC

Circulation Manager Jessica Beaudry jbeaudry@bbiinternational.com Traffic & Marketing Coordinator Marla DeFoe mdefoe@bbiinternational.com

ART

41

Presto Geosystems

18

Protego USA, Inc.

31

Quality Mat Company

2

Art Director Jaci Satterlund jsatterlund@bbiinternational.com

Subscriptions Subscriptions to The Bakken magazine are free of charge to everyone with the exception of a shipping and handling charge of $49.95 for any country outside the United States.

To subscribe, visit www.TheBakken.com or you can send your mailing address and payment (checks made out to BBI International) to: The Bakken magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. You can also fax a subscription form to 701-746-5367. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational. com. Advertising The Bakken magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about The Bakken magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to The Bakken magazine/Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to lgeiver@bbiinternational.com.

National Oilwell Varco

Rossco Crane

64

Summit Casing

62

2015 The Bakken | Three Forks Shale Oil Innovation Conference & Expo

46

Taylor Power Systems

53

Trelleborg

4 42

Tyco Fire Protection Products Watford City Homes Inc.

48

Wells Concrete

10

Westeel

19

Wingate By Wyndham

COPYRIGHT © 2014

by BBI International

TM

Please recycle this magazine and remove inserts or samples before recycling

THEBAKKEN.COM

7

NORTH DAKOTA PETROLEUM COUNCIL

Real Stories From The Bakken I have a confession to make.

I’m a pessimist. The glass is half empty, and that is simply the way it is for me. But, when it comes to oil development, I am optimistic. I am optimistic because at one time, I watched my state beg people to come here and its leaders consider legislation that would more or less pay people to stay through various incentives.

Today, however, it is very much the opposite, thanks to a growing energy sector. North Dakota is an economic powerhouse that has a tremendous business environment for entre8

preneurs looking to start their own businesses and great-paying careers for people in just about any field. North Dakota has gone from a state in decline to a state of growth and revival.

Yes, there are growing pains, and we are all aware of the impacts. Humans, by nature, seek improvement and when we see construction zones or traffic lines, we think we can do better.

But sometimes that improvement requires getting a little bit dirty first. For example, many of us have probably been in a position where we have remodeled a house, apartment, yard or maybe a business. Those improvement projects usually create a lot of

The BAKKEN MAGAZINE AUGUST 2014

THE MESSAGE

By Tessa Sandstrom

dust and require a lot of equipment, but in the end, that home, apartment, yard or business is better for it. Rebuilding our state is no different.

Yet, it is sometimes easy to get lost in that construction phase and lose sight of our end goals. We may become fatigued and begin to look at the glass half empty, and it’s for this reason the Oil Can! Program launched a series of testimonials that feature real people telling their real stories.

Those testimonials came from people like Tim Adair, who had to leave the state to find a job in his field, but was able to return as more and more job op-

portunities opened up at home.

Today, Tim is living in Bismarck and working for an engineering design firm. He is able to do the things he loves in his free time – hunting and fishing – with the people he loves like his nephews who were able to be with him when he was telling his story.

Also featured are stories from three business owners who have seen their businesses grow along with the oil activity. Their stories come as no surprise.

North Dakota has continually ranked as one of the best states for businesses and was recently ranked second in the nation for business survival rates.

This positive business

NORTH DAKOTA PETROLEUM COUNCIL

REAL PEOPLE: From left, Ward Koeser, Aaron and Angie Pelton, Luke Taylor, Tim Adair.

PHOTO: NORTH DAKOTA PETROLEUM COUNCIL

climate has allowed people like Aaron and Angie Pelton to pursue their dream of operating their own restaurant. They moved back to Aaron’s hometown of Watford City and opened Outlaws Bar & Grill, which serves up hand-cut steaks and is always busy. The restaurant has been so successful, they’ve been able to open up another location in Williston, ND. Another entrepreneur from Watford City is Luke Taylor. The 29-year old started his trucking business in 2008. Luke started with just two trucks, but the company quickly grew. Luke has seen his hometown benefit from development as new families move to the area and also rec-

ognizes the role his little town plays in providing a resource that is helping our nation improve its energy security.

Like Luke, former Mayor Ward Koeser of Williston has seen the tremendous opportunity that oil development has brought to his community. Ward served as mayor for 20 years, spending much of that time working to attract businesses to the community. Growth was slow. At the end of his term, however, his challenges were much different. Rather than trying to attract businesses to come to Williston, he was working to accommodate the growth as businesses and workers streamed into the community. The town

instead had to deal with challenges of growth as housing and infrastructure struggled to keep up. Like many community leaders who struggled with decline, Ward saw these as good challenges to have and kept his eyes on the future, knowing this growth would help make Williston an even greater community and a “Land of Opportunity” for many years to come.

These are just a few of the perspectives that have been highlighted by Oil Can! and we have plans to share even more in the future. Likely, we have all heard these stories and different variations of them, but they all serve as a reminder that, yes, in North Dakota the glass is full and

overflowing with opportunity for those willing to embrace it.

This isn’t meant to diminish or neglect the challenges communities in western North Dakota face, but as North Dakotans, we have always faced challenges. The difference is we now also have opportunities to complement our agriculture industry and create a stronger, more diversified economy for all of North Dakota.

Author: Tessa Sandstrom Communications Manager, North Dakota Petroleum Council tsandstrom@ndoil.org 701-557-7744

THEBAKKEN.COM

9

EVENTS CALENDAR

The Bakken magazine

will be distributed at the following events: Unconventional Resources Technology Conference August 25-27, 2014 Denver, Colorado Issue: August 2014 The Bakken magazine

NDPC Annual Meeting September 24-25, 2014 Dickinson, North Dakota Issue: September 2014 The Bakken magazine

The Bakken | Three Forks Shale Oil Innovation Conference & Expo July 27-29, 2015 Grand Forks, North Dakota Issue: July 2015 The Bakken magazine

Increase production in the Bakken with high quality ceramics that outperform inferior proppant.

CARBO enables operators to build durable fractures with higher long-term conductivity that are proven to deliver increased production, EUR and return on investment.

Our wide-ranging portfolio of high quality ceramic proppant enables operators to design and build fractures to address the unique characteristics of formations in the Bakken. Manufactured to have a low internal porosity, our proppant is strong and durable to withstand pressure cycling and avoid the creation of fines, maintaining more space to flow™ for the life of the well.

Choose CARBO proppant for increased conductivity in realistic downhole conditions and lower your finding and development cost per BOE. carboceramics.com/ceramic-proppant

Proudly made in the USA

EPA APPROVED

The Issue Are you in compliance with the new EPA regulations effective April 2014?

EPA’S AIR RULES FOR THE OIL & NATURAL GAS INDUSTRY Storage tanks used in oil or natural gas production are subject to EPA’s 2012 New Source Performance Standards (NSPS) for VOCs if they have the potential to emit six or more tons of VOCs a year. This legislation (40 CFR 60 Subpart 0000, “Quad 0”) also affects existing tank batteries built from August 2011 to present. Tanks that come online after the most recent proposal is published in the Federal Register will require controls (a combustor or vapor recovery unit), to reduce VOC emissions by 95 percent in place by April 15, 2014 or within 60 days after startup, whichever is later.

Get ready now and contact NOV today:

© 2013 National Oilwell Varco All rights reserved D392005589-MKT-006 Rev 01

Phone: 713 395 5000 | Email: mission@nov.com

12

The BAKKEN MAGAZINE AUGUST 2014

The Solution Enclosed Vapor Combustors: EVC NOV’s full line of reliable enclosed combustors are designed to address the ever changing requirements of today’s regulation filled oil and gas industry. The EVC incorporates years of tank vapor experience with a highly effective combustor design— tested and EPA approved “99% plus” for destruction of vent emissions from oil and condensate tank batteries, loading operations and storage facilities. NOV’s stainless steel enclosed flare design is capable of meeting strict environmental industry regulations while also offering significant cost savings. Scalable to customer applications, this combustor is field-proven throughout the world.

For more information visit: www.nov.com/tb/mission

THEBAKKEN.COM

13

BAKKEN NEWS

BAKKEN NEWS & TRENDS

NORTH DAKOTA COUNTY

+4,081

JOB OPENINGS Over-The-Year Numeric Change Divide +1

Renville +27

Burke -6

North Dakota Over-The-Year Numeric Change

Bottineau -11

Rolette +2

Williams +436

McLean +31 Dunn +16

Oliver +24 Stark +348

Hettinger +6

Bowman +8

Sheridan -5

Burleigh +378

Grand Forks +493

Nelson -1 Eddy +3

Wells +35

Stutsman +51

Kidder -12

Traill +2

Steele -1

Griggs +15

Foster +5

Cass +1,649

Barnes +77

Morton -31

Logan +8

Grant +3

Decreases

Ransom -24

LaMoure +36

Richland -84

Emmons +26 Sioux +188

Adams +6

COUNTY OVER-THE-YEAR NUMERIC CHANGE (JUNE 2014)

Pierce +8

Mercer -46

Billings +35

Slope +1

Walsh +27

Ramsey +153 Benson +44

McKenzie -205

Golden Valley +16

McHenry -9

Ward +192

Mountrail +94

Pembina +48

Cavalier +6

Towner -8

No Change

Sargent -15

Dickey +39

McIntosh +2

+20 - +49

+1 - +19

Increases > 99

SOURCE: LABOR MARKET INFORMATION CENTER, JOB SERVICE NORTH DAKOTA, ONLINE JOB OPENINGS REPORT

JOB OPENINGS 5-YEAR TREND

WAGE BY COUNTY 2013 AVERAGE

STATEWIDE AVERAGE 13. WARD COUNTY

ACTIVE RESUMES

NORTH DAKOTA

NORTH DAKOTA

1. WILLIAMS COUNTY 2. SLOPE COUNTY 3. MCKENZIE COUNTY 4. DUNN COUNTY 5. OLIVER COUNTY 6. MOUNTRAIL COUNTY 7. STARK COUNTY 8. MERCER COUNTY 9. BURKE COUNTY 10. DIVIDE COUNTY 11. MCLEAN COUTY

JOBS

$78,390 $72,622 $72,162 $70,942 $67,835 $64,895 $61,554 $60,341 $52,409 $51,613 $48,145

+67%

NORTH DAKOTA VS. OUT-OF-STATE

+72%

+64%

+48%

+21%

14. BURLEIGH COUNTY $44,635 16. CASS COUNTY $44,244 23. GRAND FORKS COUNTY $39,100

The BAKKEN MAGAZINE AUGUST 2014

2010 2011 2012 2013 2014

+0.3% -1%

-9% -27% -21% -30% -36% -43%

2010 2011 2012 2013 2014 SOURCE: JUNE 2014 ONLINE JOB OPENINGS REPORT-JOB SERVICE NORTH DAKOTA

14

5-YEAR TREND

-6% -10%

$47,779 $46,040

SOURCE: LABOR MARKET INFORMATION CENTER, JOB SERVICE NORTH DAKOTA, ONLINE JOB OPENINGS REPORT

ARE BEING FILLED

SOURCE: JUNE 2014 ONLINE JOB OPENINGS REPORT JOB SERVICE NORTH DAKOTA

BAKKEN NEWS

Jobs Across North Dakota Rise Job Service North Dakota released the June 2014 Online Job Openings showing more than 25,000 openings within the state.

Of the transportation and material moving, office and administrative support and construction and extraction occupational groups, the Bakken region saw an increase of 3,953 jobs to 4,289 jobs. The region also saw an increase of jobs in installation, maintenance and repair, shifting from 769 job openings in June 2013 to 1,179 this year.

North Dakota is divided into eight planning regions, four of which include the Bakken oil and gas play. In those regions, Williams County saw an increase of 436 jobs from 2013 to 2014, whereas McKenzie County saw a significant decrease, dropping from 550 job openings in 2013 to 345 openings in 2014.

Grand Forks County, located on the eastern border of the state, reported an increase of 493 jobs

this past year. While not home to hundreds of oil wells, the county offers development-ready properties, available buildings and office space, a skilled workforce, direct transportation infrastructure and qualifying business incentives.

Grand Forks city officials developed a campaign a few years ago called the Bakken Initiative to attract expanding companies from the west to the Grand Forks area.

Steffes Corp. took advantage of this two years ago when it purchased a building west of Grand Forks to increase manufacturing capacity.

The demand for jobs led Steffes to look into further expansion, and the company recently announced that it will be adding another facility in the Grand Forks area, which could add up to 30 new employees.

On a county basis, Cass and Burleigh showed the most job openings––their combined total was 5.6 percent lower than

the prior month but 19.0 percent higher than one year ago.

Of the 22 nonmilitary major occupational groups, transportation and material moving reported the largest number of job openings with 2,781, followed by office and administrative support with 2,508 and construction and extraction with 2,255.

According to the report, active resumes in the state, which include all online resumes that have been created or otherwise modified during the reference period, totaled 10,781 in June. There was a total of 8,578 in-state active resumes and 2,203 out-of-state active resumes.

Construction and extraction and transportation and material moving were two of the major occupational groups that saw large numbers of active resumes.

With 1,341 and 1,049 active resumes, respectively.

Overall, North Dakota’s job openings rate was 5.5 percent in

May 2014, which is up compared to last year’s rate of 4.6. However, although the job openings rate increased, North Dakota’s overall unemployed persons per job opening decreased within the past year dropping from 0.5 in 2013 to 0.4 in May 2014. Of North Dakota’s 53 counties, 33 of them have reported unemployment rates of less than 1.0.

According to the report, North Dakota had a significantly lower average than that of the nation in persons per job opening.

The April comparison showed North Dakota at 0.4 persons per job opening versus the U.S. rate of 1.8.

2012

$100,000 2010

NORTH DAKOTA

PER CAPITA PERSONAL INCOME

North Dakota Balance of Oil and Gas Counties Non Oil and Gas Counties Core Oil and Gas Counties

2008

ANNUAL DATA

2004

2002

2006

$40,000

$22,000 NORTH DAKOTA

UNEMPLOYMENT RATE ANNUAL DATA

North Dakota Balance of Oil and Gas Counties Non Oil and Gas Counties Core Oil and Gas Counties

2003

4.3%

2009

2011

2005 2007

2013

1.1%

THEBAKKEN.COM

15

BAKKEN NEWS

Enerplus Raises Estimates of Bakken Reserves Enerplus Corp., based in Calgary, Alberta, reports that the future outlook of its holdings in the Fort Berthold, Bakken, and Three Forks core area have significantly improved.

The company said that as a result of its operational performance and continued technical assessment—including a detailed analysis of well data within the region—the original estimate of 1 billion barrels of oil in place (OIP) has increased by 50 percent to 1.5 billion barrels. Enerplus also noted a 250 percent increase in its contingent resource, from 39 million barrels of oil equivalent (MMboe) to 136 MMboe.

“We’re pretty excited about where we are with this project right now and how it fits into the company,” said Ian Dundas, Enerplus president and CEO. “Generally, our belief is that this field has gotten consistently better over time. The resource keeps increasing, and we’ve made meaningful strides in enhancing the economics over the last several years through a combination of cost control and productivity enhancement.”

The increase in drilling inventory is a result of a revised contingent resource assessment and the company’s

16

250% Increase in Contingent Resource

Original Oil In Place per DSU* Bakken Three Forks 1 Three Forks 2 Total TOTAL WI OOIP 2P Reserves @ Dec. 31/13 Contingent Resource Utilization Assumptions: Bakken Three Forks 1 Three Forks 2

Original Assumption

2014 Evaluation

8 – 12 MMbbls 8 – 12 MMbbls n/a 16 – 22 MMbbls 1 billion bbls 105 MMboe 39 MMboe

8 – 16 MMbbls 10 – 16 MMbbls 2 – 20 MMbbls 20 – 42 MMbbls 1.5 billion bbls 105 MMboe 136 MMboe

100% 70% n/a

100% 100% 35%

Increase

4 – 20 MMbbls 500 MMbbls 97 MMboe

*Per 1,280 acre drilling spacing unit (DSU) SOURCE: ENERPLUS

estimate of future drilling locations. Enerplus estimates approximately 330 future net drilling locations, up from 145 previously, with long horizontal wells representing 60 percent of these locations.

This assumes an average well density of seven wells per drilling spacing unit. In addition, Enerplus continues to see further upside potential through additional downspacing, higher recovery rates and the continued evolution of its well completions.

Enerplus said that changes in its completion design over the past year have resulted in a 50 percent

The BAKKEN MAGAZINE AUGUST 2014

improvement in capital efficiencies within the Bakken play. With the increase in well productivity, the net present value and internal rates of return of this play have improved meaningfully.

“We continue to understand our reservoir. We continue to work on our reservoir modeling,” said Ray Daniels, Enerplus senior vice president of operations.

“We’re pointing to a recovery factor of 15 percent, which we’d be comfortable with.”

Dundas said the increased opportunity supports a greater growth potential in the Bakken field.

“When we originally got into the field, it wasn’t producing effectively, and we saw a potential upside of 20,000 to 25,000 BOE a day,” he explained. “Now we see a potential upside of 50,000 barrels of oil per day. The pace is going to depend on drilling rigs and well count.

“The potential for more than double from where we are now is quite meaningful.

It’s been a really significant win for us. It’s been a key driver of value with the company,” Dundas said.

BAKKEN NEWS

EIA Report Shows US Refinery Capacity Increase For 2014 Even though the number of U.S. refineries is down from a year ago, refining capacity took a slight upturn in 2014.

An annual survey of refinery ownership and capacity by the U.S. Energy Information Administration showed that the U.S. had 142 refineries at the beginning of this year with a total refining capacity of 17.9 million barrels per day. That’s one fewer refinery compared to the start of 2013, but a capacity increase of 101,000 barrels per day.

Increased crude production in the Bakken formation in North Dakota and the Eagle Ford in South Texas has spurred the construction of two new refineries expected to come on line by the end of the year.

Dakota Prairie Refining LLC should begin operations at the 20,000-barrels-perstream-day (bbl/sd) refinery at Dickinson, N.D., in December. Kinder Morgan plans to start up a 50,000-bbl/sd initial phase of a condensate processing facility on the Houston Ship Channel in November.

These will be the first two new refineries built in the United States since 2008.

Tesoro, which operates a refinery at Mandan, N.D., bought a 251,0000-barrels per calendar day (bbl/cd) refinery in Carson, Calif., from BP and

Condensate & Light Processing Capacity Additions  Condensate Splitters  Light Crude Expansions

1000

750

500

250

0 2014

2015

2016

2017+

CONDENSATE AND LIGHT PROCESSING CAPACITY REFINERY ADDITIONS: According to Macquarie Research, new capacity additions will see little growth in 2014 due to the lead time required for expansion. In 2015, the U.S. will add 450,000 barrels per day of light crude capacity. Construction of additional capacity is possible though not material in the immediate term, according to the company.

SOURCE: MACQUARIE CAPITAL (USA), COMPANY DISCLOSURES, MAY 2014

sold its Ewa Beach, Hawaii, refinery (93,500 bbl/cd) to Par Petroleum Corp. Tesoro is now the seventh largest refiner in the United States, as measured by atmospheric crude oil distillation capacity (ACDU), and the largest refiner on the West Coast.

Valero Energy Corp. remains the largest U.S. refiner, with total ACDU capacity of more than 1.9 million bbl/cd.

Exxon Mobil Corp. is second at almost 1.9 million bbl/ cd. With the purchase of the Texas City refinery from BP, Marathon Petroleum Corp. be-

came the third-largest refiner, with a capacity of 1.7 million bbl/cd.

While crude distillation capacity is one of the most widely tracked indicators of refinery size, the EIA report also tracks the capacity of secondary units. Vacuum distillation, thermal cracking, catalytic hydrocracking, catalytic reforming, hydrotreating, and deasphalting capacity all increased slightly this year, while fluid catalytic cracking capacity decreased.

THEBAKKEN.COM

17

Tailored to Meet Market Demands

BAKKEN NEWS

PROTEGOŽ in-line Flame Arresters ‡ &RVW HI¿FLHQW IDVW GHOLYHU\ ‡ (FFHQWULF KRXVLQJ SUHYHQWV FRQGHQVDWH EXLOG XS DQG HDVHV LQVWDOODWLRQ

Pipeline Summit Addresses Safety Concerns

‡ +LJK ÀRZ FDSDFLW\ ‡ 0DLQWHQDQFH IULHQGO\ GHVLJQ

PROTEGOÂŽ (USA) Inc. -HVVHQ /DQH &KDUOHVWRQ 6& SKRQH ID[

HPDLO RIÂżFH#SURWHJR FRP ZHE ZZZ SURWHJR FRP

for safety and environment 18

The second North Dakota Governor’s Pipeline Summit featured a common trend among presenters and guests: pipeline safety.

Companies across the country want to lay miles of pipeline throughout Western North Dakota to transport Bakken crude oil to refineries. “Although rail has played a critical role, we know that over the long haul we’re looking for the safest and the most efficient way to haul oil and gas,� said N.D. Gov. Jack Dalrymple.�Pipelines are essential to the safe and efficient transportation of our oil production.�

According to Justin Kringstad, director of the North Dakota Pipeline Authority, there are three pipelines coming on this year. “The challenge becomes not only how do we handle today’s production, but how do we handle the future production?� said Kringstad.

The summit opened with comments from state representatives, an introduction by Dalrymple, followed by two panels. The first panel spoke about right-of-way, regulation, response and discussed issues among community members regarding pipeline safety, financial concerns, and reclamation of land for landowners. “We spend a lot of time figuring out who these people can talk to about these concerns—to help them with an end product of what their land is going to look like when everything is done,� said Gene Veeder, executive director of the McKenzie County Job Development Authority.

The second panel addressed industry perspectives. Current and potential pipeline companies showcased their company’s potential, services and Bakken expansion plans. Enterprise Products Partner discussed a proposed 1,200-mile pipeline that would span from Stanley, N.D., to Cushing, Okla., while Al-

The BAKKEN MAGAZINE AUGUST 2014

liance Pipeline discussed its accomplishments within the past couple of years.

All of the presenters stressed that pipeline safety was one of the, if not the most, important concerns with moving forward in their pipeline plans. “We are working hard to determine what technology belongs on these pipelines,� said Dalrymple. “We look forward to being leaders not only in production, but in good care and stewardship of our products.�

Along with Enterprise’s proposed pipeline, the North Dakota Public Service Commission issued a permit approving the North Dakota Pipeline Co. LLC’s Sandpiper pipeline project.

"It is a great milestone for the state of North Dakota as the Sandpiper pipeline will have the potential to move more than 20 percent of the Williston Basin's current production,� said Mark Maki, president of Enbridge Energy Partners.

The Sandpiper pipeline project is 616 miles of pipeline that will be able to transport up to 225,000 bopd from Beaver Lodge Station in western North Dakota to Clearbrook, Minn. It will then be transferred to an affiliated Enbridge terminal in Superior, Wisc., before transport to markets in North America.

In other pipeline news, Energy Transfer Partners LP has announced the board of director’s approval to build a crude oil pipeline.

The 1,100-mile pipeline will transport Bakken crude from the Williston Basin to Patoka, Ill., where the Bakken Pipeline will interconnect with Energy Transfer’s existing 30-inch diameter Trunkline Pipeline which is currently being converted from a natural gas to a crude transportation service. They expect to have the Bakken pipeline built and in service by the end of 2016.

BAKKEN NEWS

Legacy Fund Approaches $3 Billion In 2010, North Dakota created the Legacy Fund to utilize, as well as save a portion of, state revenue created from oil and gas production. Under state law, 30 percent of state revenue created by oil and gas extraction and gross production taxes are deposited into the Legacy Fund each month. In July, the state received a record high deposit of roughly $112 million. According to Kelly Schmidt, state treasurer, the July deposit puts the Legacy Fund total at $2.207 billion.

The Fund is run by the State Investment Board. The board invests a certain percentage of the fund into a broad range of assets, including stocks, bonds, real estate and infrastructure.

Neither the principal nor the

income of the Legacy Fund may be spent prior to July 1, 2017, according to the State Treasurers office. “The legislation establishing the fund requires that income earned after this date will be transferred to the state General Fund at the end of each two-year budget cycle,” she said. “To spend any principal of the fund will require a twothirds majority vote of both the House and Senate.”

According to Schmidt, at its current pace, the Legacy Fund will receive $3 billion by the end of the 2013-15 biennium.

BISMARCK, ND

API Community Standards Linked To ND The American Petroleum Institute has used information gathered through a series of North Dakota workshops to create an unprecedented community engagement blueprint for oil and natural gas communities. The standards were developed to help oil and gas companies interact with and help local leaders and residents in places where energy exploration is happening. A list of steps within the standards are aimed at helping companies communicate with local communities during five phases of energy development: entry, exploration, development, operations and exit.

“The energy revolution is now occurring in areas of the country where oil and natural gas exploration

doesn’t have the same history as Texas or Oklahoma,” said David Miller, API’s director of standards. According to Miller, in areas such as North Dakota, local operators are working to ensure newly-opened resources are developed in conjunction with community goals.

“Early in the drafting process, we held a series of workshops, including a 2012 meeting in Bismarck, N.D.,” Miller said. “During the event, local operators encouraged us to address truck traffic in the new standards based on their experience in coordinating shipments to avoid congestion on the roads.”

All this and more included at NO EXTRA COST: • Expanded Hot Breakfast Buffet with Made-To-Order Omelets • Cocktail Lounge • High-Speed Wired and Wireless Internet Access • 24-hour Business Center with Copy, Fax, and Print • 24-hour State of the Art Fitness Center • Heated Indoor Pool and Whirlpool • Refrigerator and Microwave in every room • Meeting Space Available • Corporate Rates and Group Rates • And Much More!

WINGATEBISMARCK.COM

For Volume Based Negotiated Rates, Please Contact the Sales Department Wingate by Wyndham® Bismarck, ND 1421 Skyline Blvd.

Bismarck, ND 58503 Phone 701.751.2373 Fax 701.751.2336 www.wingatebismarck.com

THEBAKKEN.COM

19

BAKKEN NEWS

EOR Options Explored By Montana Tech Engineers Members of the Montana Tech Petroleum Engineering Department are conducting a pilot project to assess enhanced oil recovery options for the Elm Coulee in eastern Montana.

Conventional horizontal drilling and production methods in Montana’s Bakken oil field extract 9 to 15 percent of available oil, while the remainder goes untouched. The research team, consisting of Leo Heath, John Evans, David Reichhardt and Burt Todd plan to find a method to access the remaining oil.

Funded by the Montana Department of Natural Resources and Conservation, through the Montana Board of Oil and Gas Conservation, the research team plans to restore underground pressure in and around depleted wells to the level that existed when the wells were first drilled.

The pilot project will inject either carbon dioxide or natural gas into

20

the shale surrounding the original wells to try to get the unrecovered oil to break free from the rock.

The team has a five-year contract and is two and a half years into the research efforts.

“There are some phases to this,” said Todd. “Until now, we’ve developed a data base that stores well information for all of Elm Coulee. We’ve built some reservoir simulation models to see what happens when you inject carbon dioxide and what happens when you inject produced natural gas. ” Todd hopes that fine-tuning enhanced oil recovery techniques will lead the Bakken to a more stable oil economy.

“My hope is that as we learn how to do these enhanced recovery techniques, that we’ll move out of the boom economy and into something more stable, more long-term, like the oil economy in Texas and Oklahoma, which

The BAKKEN MAGAZINE AUGUST 2014

has been going on for a hundred years,” says Todd.

The team is very optimistic that injection of CO2 or produced natural gas will be effective in increased recovery.

“In the Bakken, water flooding probably won’t work because the rock is too tight and the water viscosity is too high, so we’re injecting enhanced oil recovery fluids like carbon dioxide or natural gas,” said Todd. “This method acts a lot like water flooding except that we’re using a much lower viscosity fluid.”

The University of North Dakota’s Energy and Environmental Research Center has done similar work with enhanced oil recovery, but unlike UND, the Montana Tech Petroleum Engineering Department is solely focusing on the Bakken in eastern Montana.

“The Bakken behaves differently on the North Dakota side than it does on the Montana

side,” said Todd. “The general thinking is that the Bakken on the North Dakota side is more fractured. The Montana side is not very fractured. You have some good wells, but it tends to be a little thinner.”

According to Todd, the hope is that the less fractured, thinner Bakken might perform better under enhanced oil recovery, but that won’t be known for 20 to 30 years.

The team plans to propose a pilot project by the end of the year, which will get them out in the field.

“We have some good relationships with several of the operators out there who are really interested in our work,” said Todd. “We feel like people have been interested in our work and that there’s a lot of different people waiting to see how this comes out.”

BAKKEN NEWS

Is South Dakota Next Bakken Frack Sand Supplier?

A South Dakota mine could provide a cheaper, more convenient source of fracking sand to the Bakken oil patch within the next two years.

According to Patric Galvin, South Dakota Proppants, LLC president, Evergreen, Colo., his firm plans to open a mining operation in the Black Hills south of Hill City, S.D. The company has claim to 1,750 acres that contain more than 250 million tons of highgrade fracking sand, he says.

Much of the sand used as a fracking proppant now comes from mines in Wisconsin. What could make SDP’s sand more attractive to producers in the Bakken is Galvin’s plan to truck the sand directly from the mine to well sites in North Dakota.

“We can avoid putting it on a train, saving $30 to $50 a ton delivered cost,”

he explains. “Were it not for our geographical location, I wouldn’t do this, but it gives us a competitive advantage.”

Galvin estimates the mine could produce a million tons of fracking sand a year at $40 to $50 per ton. SDP will spend up to $6 million obtaining a mine permit and another $60 million to construct a processing facility.

Earlier this year, a South Dakota Department of Environment and Natural Resources study said that none of the 256 potential fracking sand samples from around the state it tested met the American Petroleum Institute specifications for natural proppants.

However, South Dakota State Geologist Derric Iles says an analysis of the sand from SDP’s proposed mining deposit by a reputable, inde-

SD Frack Sand Study Basics:  Primary

considerations in sand classification: size, sphericity, roundness, crush resistance acid solubility, turbidity, density and mineralogy.

 256

samples collected. 243 samples underwent testing to determine grain-size distribution

 According

to American Petroleum Institute, ideal natural proppant consists of greater than 99 percent sand-sized quartz grains

pendent lab confirmed that it met API standards for fracking sand. Iles notes that SDP has a long way to go before a mining permit is issued—including public hearings and a possible appeal process.

THEBAKKEN.COM

21

22

The BAKKEN MAGAZINE AUGUST 2014

THEBAKKEN.COM

23

INFRASTRUCTURE & CONSTRUCTION

24

The BAKKEN MAGAZINE AUGUST 2014

INFRASTRUCTURE & CONSTRUCTION

EXECUTING THE

GAS CAPTURE PLAN The impact of unprecedented flare regulations on midstream gas gatherers

By Patrick C. Miller Photos By Gaylon Wampler

A conversation over lunch with a financial analyst gave Dave Scobel, chief operating officer of Caliber Midstream, an idea of what the company was up against in transporting and processing natural gas produced in the Bakken.

“We were picking each other’s brains and I said, ‘Do you have any advice for us as a midstream group in the Bakken?’”

The answer surprised Scobel and his colleagues.

“The pipelines you’re putting in are too small,” the analyst replied.

“We laughed,” Scobel recalled. “You don’t know what size we’re putting in.

How can you say that?”

The analyst’s explanation was simple: “Whatever size you’re putting in, it’s too small.”

When it comes to the issue of flaring natural gas in the Bakken, Scobel’s lunchtime discussion fittingly summarizes the current problem for midstream gatherers: how to correctly scale the infrastructure required to handle the production output.

LAYING THE FUTURE: Caliber Midstream 16-inch crude oil pipe line awaits installation on a right-ofway leading off a drilling pad in McKenzie County, North Dakota.

THEBAKKEN.COM

25

GROUND PREPARATION: Construction equipment levels a Caliber Midstream right-of-way for high-diameter crude oil pipeline (left) and natural gas pipeline (right) in McKenzie County, North Dakota.

Understanding The Scale

FOR CRUDE: Caliber's Hay Butte crude oil processing facility. Caliber’s crude oil processing and stabilization system is designed to bypass tanks and recover 100% of crude oil vapor gas, while delivering 9.5 RVP crude oil to truck, pipeline and rail delivery points.

'We’ve constantly been surprised to the high side at how much is going to come out of the Bakken.'

Dave Scobel, chief operating officer, Caliber Midstream

26

The BAKKEN MAGAZINE AUGUST 2014

“We still don’t claim to have the knowledge of how many wells we can put on a section in any given location,” he says. “The producers went to the midstream providers and said, ‘Here’s what we think we’re going to have. We’re going to have four wells for every unit.’ The midstreams came in and built infrastructure to accommodate that.”

As the true production potential of the Bakken became apparent, four wells became eight, which were further downspaced to 12 and may someday grow to 24.

“Several rounds of pipe have gone in, and they’ve all been too small,” Scobel says.

“As an industry, we’ve been trying to get our arms around

the Bakken reservoir and understanding how much downspacing we can do. How big are these IPs going to be in any given area? Without that understanding, without that knowledge, it’s difficult.”

That’s been the hardest struggle, according to Scobel.

“If we, as a midstream group, knew a few years ago exactly how much gas was going to be coming from every township, it would have been easy to lay out a grid to accommodate that.

We’ve constantly been surprised to the high side at how much is going to come out of the Bakken.”

And that’s what made it a challenge early in the Bakken’s recent development for midstream companies such as Caliber to accurately predict

how much gas transport and gas processing infrastructure was needed.

“Nobody envisioned that it would be as successful as it’s become—not even close.

At the time, that would have been a big risk for a midstream company to build out to an unknown,” he says.

Enter The GCP On July 1 this year, the North Dakota Industrial Commission implemented regulations to significantly reduce the level of flaring in the Bakken and Three Forks Formations by using an approach Department of Mineral Resources Director Lynn Helms described as “a completely new way of controlling flaring.”

The commission’s goal is

to reduce flaring to 26 percent by fourth quarter this year; 23 percent by first quarter 2015; 15 percent by first quarter 2016 and 10 percent by the fourth quarter of 2020, with the potential for a reduction to five percent.

The policy—which gives the state regulatory teeth to limit gas flaring—establishes oil production limits that take effect if a producer fails to meet requirements to capture natural gas at the well site.

Gov. Jack Dalrymple called it “a dynamic shift in the way regulators approach reducing natural gas flaring.”

“The surge in shale gas production has required the commission to take an unconventional approach at regulations by getting operators to

PIPE READY: New pipeline sits stacked at the Caliber Midstream pipe yard in Hay Butte, North Dakota.

make plans to capture natural gas at day one,” he added.

Industry Reaction “Nobody wants to flare gas,” Scobel says. “Producers want to monetize it. We all want to get the flares out.”

He also doesn’t accept the idea that the oil and gas industry has been lax in addressing the flaring issue and needed regulatory persuasion from the

NDIC to get serious about reducing the amount of gas flaring in the state.

“There’s been 10,000 miles of natural gas pipe laid and $6 billion spent since 2006,” Scobel says. “It couldn’t be further from the truth to say that industry hasn’t been trying to tackle this issue.”

Brad Stevens, a research engineer at the University of North Dakota Energy & Envi-

THEBAKKEN.COM

27

INFRASTRUCTURE & CONSTRUCTION

LACT BUILT: Alexander, N.D.-Truck Lease Automatic Custody Transfer (LACT) units measure out exactly how much stabilized crude oil goes into trucks for delivery.

Depend on Us

ronmental Research Center, agrees that reducing the amount of flaring by a significant percentage has been easier said than done for a number of reasons.

“It’s easy to fall into that trap of vilifying the industry by saying that they’re just after oil and just flaring the gas because it’s easy and they can’t make any money at it,” he says. “Most companies don’t want to lose one dime anywhere, but they can’t undertake projects that are uneconomical.”

Gas flaring is exacerbated by the way the wells are developed, Stevens also says. “The initial flow-back of both oil and gas is very high, but it’s a very steep decline curve. It’s difficult to overbuild and sink all those dollars into infrastructure. If you build it to be peak capacity, it’s potentially oversized later on. You know you’re going to have that peak on the front end, but where do you build to, capacity-wise? It’s a challenge, especially as a midstream, when you’re not controlling where and how fast these wells come on.”

The EERC worked with the North Dakota Petroleum Council gas flaring task force to develop an online database of technologies and expertise to provide a “one-stop shop” for oil producers looking for alternatives to flaring gas. The database currently lists 50 different entities.

“Allied is committed to the Bakken. Over 47 years in business, we have developed a reputation of providing high quality people, innovative technology, and a personalized service every time.

When it comes to your cementing and acidizing needs, you can depend on Allied.”

www.AlliedServices.com | Contact us: 817-546-3358

28

The BAKKEN MAGAZINE AUGUST C e2014 menting & Acidizing Services

-David McLaurin, Chief Executive Officer

INFRASTRUCTURE & CONSTRUCTION

“It’s not as simple as just putting these technologies out there and saying you’ve got it licked,” Stevens believes. “We took a highlevel view of the different technologies and the impact they’d have on flaring. There isn’t a single technology you can deploy to wipe out the flaring to the extent that people would like. It’s going to be a basket of solutions.”

Starting Oct. 1, all Bakken and Three Forks wells will be subject to production restrictions if they are flaring more than the 74 percent gas capture goal.

According to the Department of Mineral Resources, if a gas capture percentage is not met, oil production at the well will be restricted to 200 barrels of oil per day, “if at least 60 percent of the monthly volume of associated gas produced from the well is captured, otherwise oil production from such wells shall not exceed 100 barrels of oil per day.”

In addition, gas flaring will not be permitted if the North Dakota Department of Health determines that the activity is violating the state’s air pollution control rules, which could trigger further production restrictions.

Oil producers will be required to have a gas capture plan (GCP). This plan details how much natural gas an operator an-

FINE-TUNING: A Caliber Midstream facilities engineer adjusts a patented crude oil pressure vessel that bypasses crude oil storage tanks and enables centralized crude oil processing on a well pad in McKenzie County, North Dakota.

Production Waste • Drilling Waste Crude Oil By-Products • Spill Waste

Our new Williston Basin full-service waste management facility will process production and drilling waste using innovative recycling technologies. In late spring 2014, we’ll debut a new state-of-the-art landfill.

We are your complete resource for process, recovery and disposal of all E&P waste.

It’s an exciting new day for WISCO – a name Williston Basin operators have trusted to provide safe, reliable production services for more than 50 years.

The Any and All Waste Management Solution for Williston Basin Operators WISCO is now a part of Gibson Energy, a North American leader in environmentally efficient waste management solutions.

Find out more about our turnkey drill cuttings capabilities:

visit: gibsons.com/esus or call (701) 572-2135 The new WISCO is now: Gibson Environmental Services Gibson Production Services gesinfo@gibsons.com 29 THEBAKKEN.COM

INFRASTRUCTURE & CONSTRUCTION

ticipates producing from a well, the method of delivering the natural gas to a processor, and where the natural gas will be processed.

Operators failing to comply with a GCP, as well as flaring reduction targets, may face the production restrictions.

“The overarching goal is to reduce the number of wells flared and the amount of gas flared,” Helms said earlier this year.

“With the help of the commission, we won’t just see percentage of gas flaring go down, but the volume go down as well.”

However, Scobel believes that production trends in the Bakken are already moving the oil and gas industry in the direction of flaring reductions.

Meeting The Flare Reduction Goal “I think the NDIC might get some undeserved credit,” Scobel says. “My take when I look at what’s going on up here is that it’s been difficult for the producers and

30

the midstreams to have long-term plans together and collaboration while everybody was HBP (held by production) drilling.”

Producers had a hard time scheduling their rigs and understanding what areas production was going to come from and they were scrambling just to hold leases, he explains.

The move away from HBP drilling to an overall field production mode has helped operators and midstreams unite. “The pad locations are more conducive to getting pipe to them, and producers can work with the midstreams to come up with a systematic approach. I think that’s happening, regardless of the changes that NDIC has come out with.”

Still, Stevens expects that the new regulations will help bring some clarity to the North Dakota’s flaring situation.

“All of the operators have unique scenarios where certain things fit and other

The BAKKEN MAGAZINE AUGUST 2014

things are not applicable technology-wise,” he explains. “It takes time to work through those details. Any given company might have certain wells where a different type of technology is a better fit. That’s the stage we’re in right now.”

Finding The Right Plan Economics greatly impact the options available to a producer developing a gas capture plan.

“The most important, efficient plan is to tie into a pipeline,” Scobel says.

EERC researchers are continuing to gather data in an effort to help government and industry understand flaring from a bigpicture perspective.

“As part of our Bakken optimization program, we’re doing data analysis to better capture what’s going on with flaring,” Stevens says. “Everybody heard the flaring percentage number, but there wasn’t a real

ALL-WEATHER LOCATION 24/7

Don’t be a stick-in-the-mud.

Increase production while providing a safe working environment and accessing in all weather conditions 24/7 365 days a year.

Quality Mat is the standard in the mat business.

Manufacturing and installing mats worldwide for 40 years!

World’s largest mat supplier.

Over 60,000 mats in stock in Bismarck, Dickinson, Tioga and Killdeer locations.

Minimize: · Environmental Impact · Road Congestion · Reclamation Cost · Accidents · Rock Cost · Dust

THEBAKKEN.COM

1 - 8 0 0 - 2 2 7- 8 1 5 9

\\

31

Q M A T. C O M

INFRASTRUCTURE & CONSTRUCTION

GET AHEAD OF NEW NORTH DAKOTA REGULATIONS ABUTEC is the industry standard in combustion solutions.

• Capture and burn >98% of associated well gas • Beat the Oct. 1 deadline • Avoid production curtailments

Contact a representative for more information or a custom quote.

Bob Huprich • 770.283.7997 bob.huprich@abutec.com

32

Doug Virnig • 701.818.0660 doug.virnig@abutec.com

The BAKKEN MAGAZINE AUGUST 2014

LISTMAKERS: Chad Wocken, senior research manager, and Brad Stevens, research engineer, of the University of North Dakota's Energy & Environmental Research Center are the developers of the online database for flaring technology and expertise.

PHOTO: PATRICK C. MILLER, BBI INTERNATIONAL

good understanding of what that meant—where it was coming from or what types of wells.”

Stevens believes that there’s still much to learn to develop an accurate big-picture understanding of flaring.

“It’s nuanced because you’ve got issues related to flaring on the (Fort Berthold) reservation that are different from off the reservation, and the numbers come out differently,” he says. “It’s one thing to say that the flaring is a certain percentage, but it’s another thing to understand where that number comes from and why it’s happening.”

To emphasize how the industry has adapted and responded to flaring concerns, Scobel points to Caliber’s accomplishment of developing zero emissions pads from which there’s no flaring of produced gas or tank gas—the “little flare” to burn off volatile organic compounds from atmospheric tanks.

“You can truly have a zero-emissions pad, and that’s a win in anyone’s book,” he says. “Our goal is to have as small of a footprint as we can on these pads. By not flowing through the atmospheric tanks, producers need fewer tanks on location so we have a smaller footprint when we’re out there. We’re turning those flares off on location, which is more environmentally friendly.”

Helms has said there are already examples of companies beginning to work together to improve the efficiency of capturing and moving gas to processing sites. He is hopeful that the new flaring regulations will help create industry partnerships that reduce flaring.

“The message to me from the commission on the first was very clear and that is that this policy is only going to make a difference if we are very, very strict about granting exemptions to

GATHERING EXPERIENCE: Before joining Caliber, Dave Scobel was vice president of operations at Meritage Midstream where he served on the management team that built the Eagle Ford Escondido and Cuervo Creek gathering systems in Texas.

it,� Helms said. “There is, I think, enough time between now and Oct. 1 and now and Dec. 1—when that October data comes in—for companies to form those alliances and make those cooperative agreements.�

Scobel and Stevens agree that collaboration and cooperation are playing a key role in getting flaring under control. “Collaborating with our competitors and our peer group in the Bakken, I’d just point out that none of this was done through regulation,� Scobel says. “This was operators getting together and seeing how we can meet best practices as an industry prior to any discussion from governing bodies.�

In hindsight, it might look like all this collaboration came out because of the new gas capture plans, “but really, industry was starting to do this already. There’s much more collaboration going on because it’s just easier to forecast what’s happening with the leases being held.�

The EERC’s online database of organizations with gas flaring technology and expertise has had the unforeseen benefit of encouraging collaborations between different entities.

# $ %&

%

%

$% )% (%(

%( $

! ! !" ./00 !! !!

" # $ % & % ! ' " ./00

' ( ) # ! *+ ,- . / ( 0 ! ' ' "" ./00 '

) ( $ +

5" ! !' "!! ./00 '"

(## ) 1 2 !3 & 4 ! ' ' '' ./00 ' ' ''

$ & #

* + *,

(* %#,

-( (*

' # 2 &

2 & % " ! % !'" " ./00 !'" "

$

$6 $( #7( ! $6 ' ' " ./00 !! ' "

" $

&

8 1/ #" ! 1/ """ ' ./00 " "

(# !

5 1/ # ! 1/ ! ./00 ' ' '

THEBAKKEN.COM

33

INFRASTRUCTURE & CONSTRUCTION

THE RIGHT APPROACH: For nonremote wellpads, pipelines are the best option, Scobel says. The industry is just now learning which pipeline sizes are adequate.

“Where there are opportunities to pair up a natural gas liquids company with some other company in CNG (compressed natural gas), they don’t choose to go down that path,” Stevens says. “It probably doesn’t make a lot of sense for them to create their own CNG platform, but they can partner with somebody who already has a system and strike an arrangement. They’ve got a broader package to offer than if they’re just NGLs (natural gas liquids) or just CNGs.” “We’re seeing more of that happening, and we’ve encouraged it to help these vendors and technology people to get in line with what we’re seeing E and P (exploration and production) companies looking for,” Stevens also said. “They’re looking for a turnkey solution. They want someone to bring in a solution that they’re looking for and operate it and prove economics.”

However, bringing a solution to a well site can come with complications.

“One of the most misunderstood 34

The BAKKEN MAGAZINE AUGUST 2014

terms in our business is ‘skid mounted,” Scobel believes. “When people hear that a process is skid mounted, it implies that you pull it up with your pickup, plug it into the wall and away you go.”

“Even skid-mounted equipment needs quite a bit of connection and construction to get it all bolted together on location,” Scobel explains.

It’s not so much that there isn’t a solution to gas flaring, but the amount of time needed and the number of obstacles that must be overcome to implement them.

“The areas that you see the most flaring are the areas furthest from processing and that don’t have enough pipe infrastructure,” Scobel says. “The low-pressure gathering that’s required to get this gas to a processing point is intensive. It takes large pipe. It takes dollars to do this. It takes time to acquire right of ways and get this stuff built and designed and installed and to work out deals with the operators.”

In addition, Scobel noted that other

INFRASTRUCTURE & CONSTRUCTION

factors impacting the construction of infrastructure includes the cost of acreage, rugged topography, traversing U.S. Forest Service land and dealing with Lake Sakakawea and wetlands.

“On our side, when we’re evaluating the economics, it can make deploying those assets more complicated or more expensive,” he says.

Significantly reducing flaring isn’t the only area in which Caliber Midstream is working to improve the quality of life in the Bakken. Scobel said the company provides a full suite of services to its operators aimed at improving safety, reducing truck traffic, creating better relations with landowners and minimizing environmental impact.

For example he noted that: “We’re putting in four or five lines in a right of way. The landowner benefits from dealing with one company instead of four or five.

We can also bring our safety program into a right of way and have a corridor where all

Need Help Managing O & G Waste and Operations?

the construction is controlled by one company. It’s safer and more friendly to landowners as well.”

Caliber delivers freshwater to well sites by pipeline and transports produced water, crude and gas away from the site by pipe.

“As an industry, we’re seeing a reduction in truck traffic as a result of being connected by pipe,” Scobel says. “We’re trying to get all the trucks off the road. It’s a lofty goal, but that’s where we’re headed.”

Besides eliminating gas flares, Scobel sees visible differences on well sites serviced by Caliber.

“You see a much smaller footprint, fewer tanks on location and less capital deployed by our partners,” he said. “That’s certainly a success story.”

Author: Patrick C. Miller Staff Writer, The Bakken magazine pmiller@bbiinternational.com 701-738-4923

• Solids Control Equipment, Services, & Chemicals • Solidification Products: ENVIRO DRY, ECONO DRY, Fiber Based Materials, & Fly Ash • Shaker Screens • Down Hole Lubricants • Solid Waste Disposal Facilities • Fluid Waste Management Services • Full Logistical Trucking Services

Complete Backyard Services Packages Available

1-855-814-8833

www.emi-ash.com Proven Performance On Call 24/7

THEBAKKEN.COM

35

LOGISTICS

POPULAR SIGHT: In western North Dakota, disposal sights and fresh water depots are popping up almost every two miles.

PHOTO: CITADEL ENERGY

36

The BAKKEN MAGAZINE AUGUST 2014

LOGISTICS

THE SURGE OF

SALTWATER DISPOSAL SERVICE As operators move to full production, saltwater disposal providers are in expansion mode

By Emily Aasand

The business of saltwater disposal has never been more important to the development of the Bakken. With the industry moving into full production mode—a process that puts more oil wells on a single pad—oil production has reached record levels. As oil production rises, so too does the production of flowback and produced water created during the oil retrieval process.

The constant increase in new wells coming online and the advent of slickwater fracking—a method that relies on high volumes of water during the fracturing process—has created an unprecedented demand for saltwater disposal service providers.

Citadel Energy and 1804 Operating are just two of many companies working to provide a safe and dutiful resolution to take care of the saltwater and waste management issue found in the Bakken.

Although each firm offers a different backstory, both have experienced quick growth and provide insight into the current state and future of the saltwater disposal business.

Citadel Energy Citadel, which began as a freshwater provisioning company, recognized the demand for an effective way to dispose of saltwater. The Citadel team laid out a plan to expand its services and brought on key members to help execute its expansion plans.

THEBAKKEN.COM

37

LOGISTICS

CHANGE IN FOCUS: The Citadel team began as a freshwater supplier before switching focus to the saltwater disposal business.

PHOTO: CITADEL ENERGY

38

The BAKKEN MAGAZINE AUGUST 2014

One of those new members is Bruce Langhus, the former state director for Class II Underground Injection Control for the Oklahoma Corporation Commission, an entity responsible for roughly 25,000 oil and gas saltwater disposal wells in the state. Langhus has been in the geology industry for the past 25 years.

“We brought Bruce Langhus, our chief geologist, on board so that we could take a different approach toward saltwater disposals and really try to make a real, scalable business in the Bakken and to build a sustainable, complete solution that could serve the exploration and production companies in the area,” says Stanton Dodson, founder and executive chairman of Citadel Energy.

The company currently operates three freshwater depots on the Fort Berthold Indian Reservation, but the main focus for Citadel is in the saltwater disposal business.

Citadel began drilling its first saltwater disposal well in December 2013 and was scheduled to open the July 1. Due to harsh winter conditions and a tornado that went through western North Dakota earlier this summer, Citadel’s construction was delayed by a few weeks, pushing back the opening of the disposal well by roughly one month.

The fluid services management provider’s facility has been permitted to dispose of 15,000 barrels of saltwater per day and features state-

EXPLORATION & PRODUCTION

35,000+

barrels of NGLs Captured ...AND WE’RE JUST GETTING STARTED

THE LEADERS IN ASSOCIATED GAS CAPTURE TECHNOLOGY

GAS CAPTURE PLAN COMPLIANCE COMPREHENSIVE SERVICE MODEL PERMANENT LOCAL FIELD STAFF IN PLACE MAXIMUM NGL PRODUCTION & EMISSIONS REDUCTION GAS CONDITIONING FOR ADDITIONAL VALUE-ADDED PROCESSES TECHNOLOGY DESIGNED SPECIFICALLY FOR HIGHER BTU ASSOCIATED GAS FROM THE TREATER TO THE FLARE

GTUIT

TM

GTUIT & CORVAL GROUP – Providing Complete Solutions & Comprehensive Services for your Associated Gas Capture Needs TM

CALL

(406) 867-6700 OR

TM

VISIT

GTUIT.COM & CORVALGROUP.COM

LOGISTICS

'We’ve looked into expanding beyond North Dakota and we have a couple areas that we’re considering. We haven’t had to look too much further to keep ourselves occupied. We’ve been very busy and very thankful.'

Fred Kershisnik, president, 1804 Operating

of-the-art monitoring technology that assesses the well facility 24 hours per day, seven days a week. Permanent surface tanks store the oil and gas waste and saltwater. The saltwater is eventually injected through a high-pressure pump into a permitted injection zone.

The process to drill a saltwater disposal well is similar to that of a vertical oil well. The state does require each disposal well to run a mechanical packer on the top of the disposal well. Mechanical packers are components in

40

The BAKKEN MAGAZINE JULY 2014

the well used to seal the outside production tubing from the inside of the casing or liner.

The packer provides for the presence of a monitoring annulus between the casing and the tubing so that personnel monitoring the well can detect if a leak occurs in the casing or tubing.

1804 Operating 1804 Operating, a North Dakota-based company founded a little over three years

ago, began as an idea from a small company that had working interests in a few Bakken wells. It was then that the founders, Patrick Walker and Robert Rubey, noticed a shortage of disposal wells and timely wait periods for disposal access.

Walker and Rubey developed a fluid services plan. Fred Kershisnik helped the duo form the company and was appointed president. Prior to joining 1804, Kershisnik was field superintendent for Tracker Resource Development II from 2008 through its sale to Hess in 2011.

After forming the executive trio, the team began to design facilities that would withstand the weather extremes in North Dakota. After research and planning, 1804 developed their first disposal well only months after forming.

“The greatest need we’ve seen from our customers is being able to unload water

LOGISTICS

quickly and efficiently, without a long wait, and a place that can handle more than two trucks at once,” says Kershisnik. “We’ve kind of designed our facility to deal with those demands, plus we’re trying to make long-term commitments with our customers to provide it to them at a lower cost with better efficiency.”

1804 only has facilities in the Williston Basin.

“We’ve looked into expanding beyond North Dakota and we have a couple areas that we’re considering,” says Kershisnik. “We haven’t had to look too much further to keep ourselves occupied. We’ve been very busy and very thankful.”

The saltwater disposal company has slowly begun to add pipelines to their credentials.

“Our goal is to set up a disposal well where it’s needed, create a long-term relation-

NO REST FOR THE WEARY: Saltwater disposal service providers are in high demand to safely and efficiently treat flowback and produced water at well sites.

PHOTO: 1804 OPERATING

WET SOILS? No Problem.

Strong, Safe, Fast-to-Deploy Portable Mats

SAVE up to 50% over Timber Mats FAST: Quick to Deploy and Install SAFE: Installs without Heavy Equipment STRONG: Five times H-20 loading VË# Ê ?ÄË8j Ë WWjÄÄË- ?aÄ VË0Á?W ~Ë? aË Á Ë+?aÄ

IS AD MENTION THL PRICING! FOR SPECIA

GEOTERRA® Mats — A good earth solution.

Call 800-548-3424 for Pricing

PRESTO www.GeoTerraMats.com

AP-7599

THEBAKKEN.COM

41

LOGISTICS

ship with the local producers in that area and facilitate to their water needs,” says Kershisnik. “And part of that is to get it [saltwater] in a pipeline system and bring it in automatically.”

According to Kershisnik, one concern he hears from those in the field has to do with the recycling of water produced at the well site. In his opinion, the industry is taking care of that issue the best it can.

“I think we’re doing a good job with all of our disposal wells and all of our operations,” says Kershisnik. “We have a good facility design that can take care of the water and any other byproducts in a very safe and careful manner.”

A Surge In Competition Both companies have found successful ways to handle saltwater being produced at

well sites, but that hasn’t come without challenges.

“The weather has always been a tough situation,” says Kershisnik. “Trying to keep the truckers happy and finding good, reliable construction crews is difficult. We feel that we have a really good staff of pumpers and people working for 1804 to keep our facilities running.”

“More than anything, the biggest challenge has been the weather and the usual challenges of competition” says Dodson.

“Other than that, the state has been great, the permitting process we have to go through is relatively straight forward.”

Both can attest that the competition for saltwater disposal facilities has been on the rise in the past few year “The competition is there because the demand is there,” says Dodson. “Everyone

EMPLOYEE HOUSING NEEDS 4 & 5 BEDROOMS AVAILABLE

Housing Sales Man Camp Property Management Housing Logistics Project Management Repairs, Parts and Service

out there wants to be mindful and careful. Everyone’s out there trying to do business so we want to strategically put these wells in places where everybody can get along, yet still make money.”

“When we first started there wasn’t a lot of competition,” says Kershisnik. “Now, there are some places with public disposal wells every two miles. There are a lot of saltwater disposal companies who make deals and get worked in with oil companies and only work for them, so there’s quite a bit of positioning going on out there too.”

An Increase In Demand According to Dodson, Citadel has more disposal sites coming within the next 12 months to support the overwhelming demands.

“There are more disposals coming because there are more wells coming,” says Dodson. “Depending on what part of the Bakken your production is in, you’re going to get different levels of produced water. If you multiply the barrels of water produced each day at a well by the number of wells, we’re going to have to be strategically locating saltwater disposals.”

1804 Operating currently has six disposals running and has three more in the construction process.

“We have a system that works well that provides a good service for the industry,” says Kershisnik. “We’re working with our customers—the oil companies—to try to help them get rid of their water as quickly and efficiently as they can. That’s what we strive for.”

Author: Emily Aasand Staff Writer, The Bakken magazine eaasand@bbiinternational.com 701-738-4976

$46,900 Delivered 42

TOLL FREE: (877)-839-3949

4 BEDROOM WWW.WATFORDCITY HOMES.INFO 1504 4TH AVENUE N.E., WATFORD CITY, ND 58854

The BAKKEN MAGAZINE AUGUST 2014

5 BEDROOM

NOTHING

LOGISTICS

Best practices and the future of oilfield waste management

By Luke Geiver

Scott Radig isn’t responsible for tracking oil production, power consumption or water use in North Dakota, but as the director of the state’s division of waste management, he still has some impressive numbers to share. Radig and his team track and regulate three main programs: solid waste, hazardous waste and tank storage. In 2001, Radig says the division of waste management was responsible for regulating roughly 9,000 tons of oilfield waste generated in the state. In 2013, the team monitored 1.78 million tons of oilfield waste. “In relation to the oil and gas industry,” he says, “our jobs have changed dramatically.”

Around 2005, only three very small, very specialized waste landfills capable of handling oilfield waste existed, according to Radig. Today, there are 14 large-volume special waste landfills.

“We have one under public comment for a new permit and several more coming. I see the number doubling in the next five years,” he says. Prior to the Bakken-related oilfield activity there has been only one new landfill permitted in North Dakota in the past 20 years, he says. In addition

FULL SERVICE: Next Generation Solutions is certified to perform remediation at well sites including the removal of spilled material or damaged infrastructure.

PHOTO: NEXT GENERATION SOLUTIONS

44

The BAKKEN MAGAZINE AUGUST 2014

LEFT TO WASTE

LOGISTICS

THEBAKKEN.COM

45

LOGISTICS

DETAILED METERING: Radioactive material detection and monitoring is a major service for firms like Next Generation Solutions that are certified to handle naturally occurring radioactive material.

PHOTO: NEXT GENERATION SOLUTIONS

46

The BAKKEN MAGAZINE AUGUST 2014

to new landfills, existing landfills are looking to expand and if they aren’t, Radig says, “They are anticipating it.”

Since taking over the waste management division in 2005, Radig has seen constant change in his regulatory reach over oilfield waste generated in North Dakota. This year has been no exception. The state is currently awaiting results of a U.S. Argonne National Laboratory study aimed at determining the impact of technologically enhanced naturally occurring radioactive material (TENORM)—naturally occurring radioactive material that has been altered by a man-made process like oil retrieval. The results could drastically change the state’s stance toward oilfield waste and its allowance, by gram, of waste containing NORM. Currently, the state does not allow in-state oilfield waste disposal of anything with more than five picocuries per gram. The curie is a standard measure for the intensity of radioactivity contained in a sample of radioactive material. A picocurie is about one-trillionth of a curie, some six times smaller than the thickness of a human hair. Montana allows up to 30 picocuries per gram. Other oil producing states, such as Texas or Colorado, also accept much higher levels of oilfield waste for disposal.

LOGISTICS

METER SERVICE: Next Generation Solutions started in Colorado providing services like those pictured here that involve radioactive level monitoring.

PHOTO: NEXT GENERATION SOLUTIONS

As Radig waits for, and anticipates, the test results, he has been working to enhance the level of monitoring and safety linked to oilfield waste. New regulations put forth by his team will require waste producers to better track and record oil generated in North Dakota. Some oilfield waste management firms have already established operations based on sound science, traceable services and safety protocols that could someday be the norm

48

for all Bakken-based oilfield waste operations. The combination of Radig’s work to better regulate an oil production byproduct that is growing as rampantly as the state’s monthly oil output, with firms that have proven how to responsibly manage oilfield waste reveals a clear path on which the industry is headed.

Follow These Examples

The BAKKEN MAGAZINE AUGUST 2014

Kurt Rhea lives and works out of

Colorado. After forming Next Generation Solutions LLC, a radioactive material handling and treatment firm in 2010, he’s become very familiar with the North Dakota Bakken hubs of Williston, Minot, Dickinson and Bismarck. He first started working in North Dakota in 2011, and only three years later, he sold his firm to Secure Energy Services.

Rhea still runs the company under the same name and offers the same ser-

Total skid packages from start to finish

FMC Technologies, your measurement solutions provider, now offers complete fabricated skids for the upstream and downstream markets. The same experienced engineers that design the world-renowned Smith Meter® equipment can design and build skids to your specifications. Our direct offices provide immediate support, and inventory close to your operation to maximize your operations efficiency. For more information on how FMC Technologies has you covered from start to finish, visit www.fmctechnologies.com Copyright © FMC Technologies, Inc. All Rights Reserved.

www.fmctechnologies.com

THEBAKKEN.COM

49

LOGISTICS

AFTER THE STORM: Disasters can ruin tanks and other infrastructure at a well site or processing facility. In such an event, certified firms need to remove the material due to the presence of NORM. PHOTO: NEXT GENERATION SOLUTIONS

vices that his team became recognized for as one of the leading waste management providers in North Dakota. When an abandoned gas station was found in Noonan, N.D., filled with used filter socks earlier this year, Radig brought in Rhea and his team to clean up the filter socks. The North Dakota Petroleum Council and other regulators have also turned to Rhea for guidance dealing with oilfield waste in the Bakken, he says.

Rhea’s credibility among the industry started in 2011 when several operators realized that their oilfield waste limit was ranging higher than the 5 picocuries per gram limit that the state allows for in-state disposal. According to Rhea, it led to the rejection of loads at Williston’s landfill and another large landfill in McKenzie County.

“At the time, we had the knowledge of

50

how to properly handle it and we understood the science behind it. We were in the right place at the right time with the right resources to meet a need,” he says.

With five radiation officers in the company with experience writing regulations for Canada and the U.S., the team was able to bring an element of credibility to treating oilfield waste that its clients were looking for, Rhea says. Secure Energy Services was working to dispose of, or recycle other materials and saw an opportunity to add the expertise of Rhea and his team.

Current services offered by Next Generation Solutions include handling TENORM and transporting it to Colorado or Idaho where landfills permitted for higher levels exist. The team will also remove damaged tanks or equipment after a fire or lightning strike. Filter sock

The BAKKEN MAGAZINE AUGUST 2014

handling is a major service as well. The company provides filter tank disposal containers placed at the client's drilling site.

“When our clients have full containers, we send out trained personnel to pick them up, transport and dispose of the material and then provide fresh containers onsite.”

Contaminated soil and other geological areas in need of remediation can also be tested, treated and monitored by Rhea.

Environmental Materials Inc., a Montana-based company that operates under Weave Management, has also created a positive reputation and successful Bakken –based waste handling business. According to Terry Cook, general manager of EMI, the company started out as a fly ash company. After creating a product designed to stabilize drill cuttings created in the oil and gas industry, the business took off.

LOGISTICS

In 2011, when open pits were allowed for drill cutting disposal, EMI was selling 20 truckloads per day, Cook says. Today, EMI provides cutting solidification services on 83 drilling rigs in the Bakken for some of the play’s most well-known operators and drilling rigs. The success with drill cuttings opened the company’s perception of the oilfield waste business. But, the opportunity to make a profit didn’t push EMI to increase its service offerings without increasing its internal knowledge and capabilities.

In 2012, the company purchased a solid control company that had a piece of equipment designed to process drill cuttings. In 2013, the company also acquired a consulting firm that allows EMI to remain in compliance and provide a high level of certainty to its clients that all of the work related to oilfield waste handling

'We see ourselves in a really cool role where we understand the science and we can help the public understand it. We can also help the industry. By virtue of helping the industry do the right thing by the public, we are making the regulators, job easier.'

Kurt Rhea, president, Next Generation Solutions LLC

and disposal is being carried out properly. In March 2013, EMI was officially running its first oilfield disposal site near Chimney Butte on U.S. Highway 85. The company recently opened its second facility in Divide County, also on U.S. 85. Warren Transport, a sister company to EMI, provides waste transport for clients close to either disposal site.

“We are a relatively small company,” Cook says. The size of EMI hasn’t impacted its ability to form lasting relationships with Bakken operators, however. As waste comes off the drilling rigs, the EMI team can handle the waste, return the fluids back to the rig and then take the waste for treatment before it goes to the landfill.

“We could be a lot bigger than we are, but

THEBAKKEN.COM

51

LOGISTICS

our goal is to provide high quality and good customer service,” Cook says. “We want to be there with the operators in 20 to 30 years. We really pay attention to detail, that is why we aren’t serving 20 customers. We service five rigs. We could be at 20 rigs if we wanted too.”

The Future of Oilfield Disposal The main factor driving the business of oilfield waste disposal is location. According to Cook, operators will always work to place waste suitable for a North Dakota facility in the closest landfill. In addition to its two current facilities, EMI is currently undergoing the permitting process for a new landfill in North Dakota.

Radig believes the push to move oilfield waste out of small, operator owned

52

pits to landfills like EMI’s is simple: liability. “That is a huge reason for the increase in volume going to landfills,” Radig says.

“Waste generators are looking for facilities with better liners, leaching collection and long-term ground water monitoring.”

Rhea can cite examples of large oil producers that were fined for more than $1 billion for failing to keep track of and monitor oilfield waste. According to Rhea, the fines could’ve been avoided by a few thousand dollars’ worth of investment.

In the Bakken, waste generators will have to invest in record keeping and waste containers for filter socks or a service that can provide them. There will be requirements for containers, record keeping and manifesting cradle to grave, Radig says, “so we know exactly where waste is generated,

The BAKKEN MAGAZINE AUGUST 2014

who transports it and where it ends up for final disposal.”

Companies will be required to keep records on hand for three to five years and also submit periodic summary reports to the department of health.

There are no current requirements for record keeping or reporting.

The biggest change for the business of oilfield waste will be in the state’s stance on TENORM. “I think we will be moving forward with changing our landfill rules to potentially raise that limit,” Radig says. The Argonne study will help provide the state with science to justify a different stance. From an engineering standpoint, the design of special waste landfills is no different in North Dakota than other states that accept higher levels, including Montana.

“There isn’t a lot of documentation of how those other states came up with their accepted levels,” Radig says. “That is why we commissioned this study. Any changes we do make we want to be based on science and not because someone else has a higher number.”

Existing facilities in North Dakota would not have to perform retrofits, and, if North Dakota does raise its acceptable NORM limits it would most likely match that of Montana. “Once our study is done, we will probably try and have matching limits with Montana so that there isn’t a temptation to cross the border and get the advantage one way or another,” Radig says. “I think that if waste is being generated in North Dakota, we should have the option to dispose of it here.”

While Radig continues his quest to create a more robust tracking and long-term monitoring process for oilfield waste (and awaits evidence that will aid in a NORM decision), the EMI and Next Generation Solutions teams both are pursuing a constant goal. Providing oilfield waste services, they both say, is about educating.

VAPOR SUPPRESSION SPHERES

Suppress Hydrocarbon / Chemical Vapors

WASTE SPECIFIC: According to North Dakota regulators, the mismanagement and incorrect sorting of oilfield waste like filter socks from regular garbage was a problem.

PHOTO: NEXT GENERATION SOLUTIONS

“We are open and we are honest,” says Jon Kees, EMI manager.

“There have been a lot of people who think they know what they are doing out there, they just see it as another business opportunity,” Rhea says. “I think the biggest challenge for the industry is to try and help people understand what the relative risk is. It is about educating,” adding that, “when we say this word, ‘radioactive,’ there is this fear factor.” According to Rhea, a granite countertop has roughly 25 pecocuries per gram, a much higher level than the state allows in landfills.

Both Rhea and Kees also shared perspective on their respective roles in the industry that Rhea tried to summarize.

“We see ourselves in a really cool role where we understand the science and we can help the public understand it. We can also help the industry. By virtue of helping the industry do the right thing by the

public, we are making the regulators job easier.”

Radig does believe most waste handling firms are responsible like EMI or Rhea’s team. But, the few that aren’t shed a very negative light on a situation that can be handled properly. Until then, Radig has a request in to the state for more employees and he awaits the Argonne study expected to arrive this fall. He is also taking action now. “We are changing the rules so that there is a more comprehensive way to regulate the waste that is created here.”

New technology employs advanced composite beads that float on oil continuously to simply and effectively:

Reduce flaring Increase safety by added fire protection Reduce liquid content in flare gas Applications

Storage tanks as floating roof Column or rim seal void fill Sunken roofs or re-float pontoons

Benefits

Significant reduction in vapors and product loss Reduced environmental impact Instantly conforms to irregular shapes

Author: Luke Geiver Managing Editor, The Bakken magazine lgeiver@bbiinternational.com 701-738-4944

CONTACT: BOB KELLY +1.774.719.1400 | bob.kelly@trelleborg.com www.trelleborg.com/vapor-suppression

THEBAKKEN.COM

53

EXPLORATION & PRODUCTION

REGISTRATION No. 1774 54

The BAKKEN MAGAZINE AUGUST 2014

EXPLORATION & PRODUCTION

NO FISHING. NO FAILURES. NO B.S. Our centralizers are made to withstand even the most brutal conditions.

Using a laser-cut, special steel alloy, Centek’s innovative single piece design creates optimum stand-off, cementation and flexibility.

INTERNATIONAL SYMBOL OF QUALITY

From lateral shale operations on land to ultra deep water, Centek centralizers provide superior torque and drag reduction. And we’ve got customizable simulations to prove it.

Buy it once and count on it.

GREATER THROUGHPUT. NO DOWNTIME. MADE IN BOTH THE U.K. AND U.S.A. Centekgroup.com

TOLL-FREE

844-219-3200 THEBAKKEN.COM

55

BAKKEN BACKERS: CONTRIBUTION

By Rob Lindberg

DEVELOPMENT AS IT HAPPENS: A multi-well pad, including pumpjacks, a drilling rig, storage tanks and gas gathering infrastructure, still in development near Tioga, N.D.

Effects of a Slowdown For years, the word “slowdown” has been thrown around. It might

come from media outlets opposed to flaring, an environmentalist concerned about impacts, or, more understandably so, a western resident longing for times before the Bakken.

What makes the idea of a slowdown so concerning? Unlike previous drilling and exploration in the Williston Basin, the exploration of the Bakken impacts our state to a far greater extent. The oil and gas industry is now one of the state’s largest industries and its success affects each of our communities. Nearly every type of business and worker in North Dakota is tied to the Bakken, while every taxpayer has seen a substantial reduction of income and property taxes. Most notably, the state now relies on the Bakken for more than 50 percent of its total tax revenue.

This last point should be 56

concern us all. A well’s production does not remain steady over time.

In fact, it declines very quickly (insert m-dash no space at either end) 65 percent in year one, 35 percent in year two, 15 percent in year three and 10 percent every year thereafter. While high initial production is advantageous for a return on capital, this characteristic matched with a regulatorydriven slowdown leaves the state with a dangerous reliance on what would be a rapidly declining tax base. The total amount of lost tax revenue would be immense.

Drilling at a pace of 2,000 wells per year, a total shutdown of the industry (which happened in the Gulf) for five years would cost the state $43 billion dollars of lost revenue over the life of the wells. A more plausible scenario of a 20 percent slowdown would be still an enormous $8.6 billion, which represents over $1 billion less returned to build infrastructure in oil producing counties and

The BAKKEN MAGAZINE AUGUST 2014

similarly more than $1 billion of lost investment in North Dakota’s Legacy Fund.

If these two losses are of little impact to you, surely part of the other $6 billion will touch your life. The impact on education would be devastating with significantly less ability to fund our local schools, colleges, and universities.

Flood control across the state would be a tough battle for funding in a government of limited financial strength. Almost certainly, the groundbreaking on June 12th of the new $124 million medical school at the University of North Dakota would have not have happened if we set a slowdown for the Bakken five years ago.

However, the greatest impact of a slowdown would be on the pace of development in western North Dakota, our state’s small businesses and the careers of young adults.

Talk of development in western North Dakota usually

gives an impression that public investments in roads and other infrastructure comprise the bulk of the region’s investment. Despite the impression, private investment in the region has accounted for hundreds of millions, if not several billions of dollars in the past five years. Any sign of slowdown would stop overnight the commitments made by entrepreneurs and investors in western North Dakota, meaning the region loses out on expanded housing, as well as the abundances of new options for shopping and dining. These investments have bettered western communities and will continue to do so.

A slowdown would have an impact on all of the communities in North Dakota, particularly from a decrease in drilling and the subsequent flight of investment.

A reduction in drilling is a direct reduction in well pad tanks produced in Fargo and other well pad equipment produced in Grand

CONTRIBUTION

BEFORE AND AFTER: Storage tanks (right) lined up at a remote site in North Dakota before installation.

Forks. Slower drilling activity means fewer jobs for the software engineers on the east side of the state who design and deploy systems that monitor tanks and truck deliveries within the Bakken. Lowered demand for housing, commercial and industrial construction would take a big bite out of the success eastern and central engineering, construction, and electrical firms have found in the western side of our state.

These types of firms in Grand Forks alone generate hundreds of millions of dollars annually for the community. These are real jobs and businesses that will lose in the midst of a slowdown.

Most disturbingly, a slowdown affects the ability to start a career in North Dakota. For far too many years, our state struggled to create rewarding opportunities that would allow our youth to build a career and start a family. The normal path for a North Dakota native was to

graduate high school, attend college near the Red River, and head to the Cities after graduation where the jobs were plentiful and the pay was significantly higher.

Today, because of the Bakken, we’ve reversed the trend with an economy that grew and astounding 9.7 and 13.4 percent in 2013 and 2012, respectively. Our state has become the youngest in the nation, the fastest growing economy and population, and a topfive state for personal income.

The cost of a slowdown is truly unbearable and most often based on facts of limited scope.

For instance, due to the efficiencies of horizontal drilling and multi-well pads, oil and gas development will cover only 1 percent of the rural landscape. Similarly, the gas flared in North Dakota represents less than 3 percent of the total value of production. Suggesting a slowdown to reduce flaring is the equivalent to the average person choosing un-

employment because driving to and from work would cost $100 per month in fuel. We have to remember that western North Dakota is a work in progress and the region has made tremendous improvements in the past two years.

The region’s new roads, housing, shopping, and even opinion polls (as discussed in my June column) clearly show it.

Finally, there is a national and international component to the importance of the Bakken.

American oil and gas production is at the highest rates in 25 years or more and we have become the world’s largest oil and gas producer, topping both Saudi Arabia and Russia, respectively, for the honors. Our nation’s ability to take these honors rests heavily on oil production from the Bakken and has minimized the impact of the recent international crisis in Iraq, Syria and the Ukraine.

North Dakota’s production, projected to grow from 1 million

barrels of oil per day (bopd) to 1.4 to 1.7 million bopd will further bolster our ability to weather world threats to security, energy and industry while creating jobs across the country.

So be careful suggesting a slowdown for the industry. The effects impact much more than the state’s oil producers.

ON THE WEB

Join Bakken Backers at BacktheBakken.org or find us at Facebook.com/BakkenBackers

Author: Rob Lindberg Director, Bakken Backers 701-989-5432 rl@backthebakken.org The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of The Bakken magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

THEBAKKEN.COM

57

IN PLAY

THE NEED FOR MORE DATA: Operators are looking to companies like CoreLogic for a more robust understanding of right-of-ways and installed infrastructure.

Logical Data Essential To The Bakken

By Emily Aasand

CoreLogic provides data and analytics to the real estate industry.

While the company has a long history in collecting, normalizing and providing residential and commercial property information to clients, it also provides valuable information to clients in the oil and gas sector.

Having one of the leading databases in property information has allowed CoreLogic to help clients in the oil and gas industry, specifically in the Bakken, plan the next route of a 58

pipeline, explore the underground features of the earth or manage compliance processes.

The company combines granular property insight with geo-spatial tools to pinpoint where a current or future asset is in relation to a client’s asset. CoreLogic can also provide information on the assets themselves.

One way oil and gas clients use the information is to help maintain compliance requirements. Maintaining those requirements is a challenge because of constantly changing

The BAKKEN MAGAZINE AUGUST 2014

ownership and land use around every parcel of property ranging from a wellhead to gas gathering transmission lines. Although right-of-way issues may get the attention for most clients, the CoreLogic service can also help a client identify where there are any critical changes in property information in relation to that company’s assets.

“CoreLogic is built upon the foundation of our property level insight and our geospatial tools and what value we can deliver to oil and gas clients,” says Jay

Kingsley, senior vice president for CoreLogic Spatial Solutions.

“We have a core competence in collecting, maintaining and delivering property information across the United States, which our oil and gas clients need, whether it’s for understanding ownership information, exploration or laying transmission lines.”

Companies in the Bakken taking advantage of CoreLogic’s ParcelPoint database range from exploration and production companies to midstream pipeline providers, Kingsley

IN PLAY

says. ParcelPoint allows oil and gas managers to quickly determine parcel boundaries and access ownership information to shorten cycle time-to-market, enhance business processes, improve decision making and streamline asset management.

“Oftentimes we provide more information to the transmission and midstream providers to help them maintain compliance, but in new areas where there’s more exploration happening, they use our service as well. It really depends on the area and where more maturity in the oil field is happening,” said Kingsley.

According to the company, ParcelPoint enables users to access the highest level of positional accuracy for developing location-based solutions and to better manage assets.

The database CoreLogic provides is so granular that it can provide customers with ev-

erything from the first and last name of the owners of a residence or occupied building, to the number of air conditioning units a property has. Clients also have access to parcel boundaries, parcel latitude and longitude coordinates, tax ID numbers, property addresses and parcel ownership data.

Although such data may be available through other means, CoreLogic believes it has found an edge by focusing on two important aspects in its data collection: the accuracy and currency of the data, and the speed in which they can deliver the data.

“It’s part of our business model that we’re collecting data every day, so as soon as clients need it, we can deliver it to them

immediately versus a client having to embark upon a new project to go and collect that data,” says Kingsley. “As soon as they have a new area they’re looking to explore, they can check with us to see if we’ve already done the heavy lifting to acquire that data and to continually get updates because that’s part of our process.”

For clients interested, CoreLogic has a database that can be licensed. Once licensed, they provide a database for the client to install in their GIF system where they are able to manage and receive updates to the database.

“We’re working on a set of API so on a transactional basis if a client wants to provide ei-

ther an area of interest or specific addresses that we would return information on, we can do that as well,” says Kingsley.

“Today, the primary use with our client is sending a database that they can render into their GIF systems.”

There’s a fee associated with licensing an area of interest depending on the number of parcels that lie within a particular area of interest and oil industry clients are taking advantage of the service.

“In the oil and gas industry, we’re developing deeper and better relationships with our clients,” says Kingsley. “It’s definitely an area of interest and an area of growth for us.”

THEBAKKEN.COM

59

INNOVATORS

A NEW NEIGHBOR: RecartPS signed a lease to house their North American Headquarters in UND's REAC facility, allowing for feasible partnerships with university programs.

PHOTO: THE UNIVERSITY OF NORTH DAKOTA

RecartPS Energy Calls UND’s REAC Its North American Headquarters

By Emily Aasand

60

The BAKKEN MAGAZINE AUGUST 2014

In February, Kevin Wiles flew from London, to explore options for expanding his engineering and technology company, RecartPS, into Western North Dakota. With the help of the University of North Dakota’s research enterprise and commercialization (REAC) facility and UND’s engineering departments, he found the exact location for his company to successfully service the needs of the Bakken.

RecartPS is an energy industry-focused resource, engineering and technology com-

pany that services resource management and the supply of project teams on a global basis.

Wiles, the operations and development director of RecartPS, believes that locating outside of the actual oil play can greatly benefit his company.

With the resources available at UND and with UND’s REAC facility, Recart will be able to service three major issues the team believes exists in the Bakken: including resource (lack of manpower), water and flaring.

“Within our group of companies, we had various elements that could tackle those particular areas, and it made sense for us to do that through the University

INNOVATORS

of North Dakota,” says Wiles.

“One of the projects we’re looking at is a produced water separation unit which is a five phase unit. Another is bringing the resources and expertise here, and the final project we’re looking into is assisting UND with the personalization of their intellectual property through our global network.”

Kevan Rusk, the director of REAC 1, the University of North Dakota’s Technology Accelerator, began conversing with Wiles in November 2013 about potential for company growth within REAC and with UND. The REAC facility is part of UND’s campus, and offers office and laboratory space to privatesector companies that are looking to partner with the University for a variety of research and commercialization purposes.

Recart’s internationally experienced company has taken the steps to establish linkage to UND with the Petroleum Engineering department and has begun to work on highly technical conversations and equipment, processes and projects with them, says Rusk.

Rusk and Wiles met when Rusk spent two years in Denmark working with his previous company and has remained in contact with him over the years.

Wiles flew to North Dakota in February to attend the Bakken - Three Forks Shale Oil Innovation Conference & Expo and he knew he had found where he wanted to establish his company’s North American headquarters.

“It’s been quite strategic,” says Wiles. “Looking at REAC

and the way Kevan has integrated and given us the support needed to come here has been valuable.”

“When we began looking to expand our company to North Dakota, we saw the benefits to us and the benefits that would come to REAC—it has ties to UND and we offer various engineering design and construction capabilities,” says Wiles. “For us, it makes sense for UND to be more involved in the Bakken—when you look at the core sample library it has and the importance of that along with its premier petroleum engineering department.”

Recart has worked with every level of leadership at UND— personnel met with local, state specific leaders and government to really understand if the move to Grand Forks would makes sense. The company also took a very strategic approach to understanding the feasibility of the business, says Rusk.

Recart has invested time, money and energy into doing thorough research and has committed to a lease in REAC on the campus of UND, which, according to Wiles, is exactly where they need to be.

“Everybody is working toward the same goal,” says Wiles.

“A lot of what we’re trying to do will involve more of a link between the university, research, and international focus and how that can ultimately help the state of North Dakota, which is our primary concern and goal.”

agement, manpower supply, operations, maintenance and training, and commissioning.

Recart is able to put a 20man team together to facilitate projects for companies, it can help companies relocate facilities, and can conduct consulting on project controls development, project reporting and cost and planning.

The projects Recart plans to facilitate are relatively midterm.

The team is currently working to provide equipment suited to address water use in the Bakken.

The equipment was introduced at the Offshore Technology Conference in Houston in May and can concentrate the harmful water produced at well sites and process the water so it can be reused for the next drill on the same pad.

“Specifically, one of Recart’s partner companies has a specific piece of equipment that is designed from produced water separation,” says Rusk. “That specific piece of equipment is something that we’re hoping that Recart can partner with UND to refine and develop and ultimately operate either that service or equipment to operators and disposal sites in Western North Dakota with all the benefits people know about.”

Future Growth

Although Recart has just announced the location of its North American headquarters, it has big plans for the future.

“When we look at the technology in the REAC building Service Recart offers a few different and the space Kevan has as far services including resource man- as the administration and pos-

CALLING UND HOME: Kevin Wiles is in the process of relocating to Grand Forks where he'll direct Recart's new facility.

PHOTO: RECARTPS ENERGY LTD

sibly manpower recruitment sources go, there are a few lines of expansion to investigate,” says Wiles. “This building is absolutely perfect for us and Kevan has done a great job.”

“We’re in such early stages, but there’s absolutely room for future growth,” says Lee Bown, director of RecartPS Energy.

“Because of the nature of what we’re doing, this could get really big really quick.”

According to Rusk, there are a lot of good opportunities that will be coming out of REAC within the upcoming months, not only as an entity, but as partnerships and with different projects that Recart can bring light to.

“We’re really looking forward to building relationships with companies in the Bakken, to understand their needs and focus on those and hopefully offer some worth and serious solutions to the problems” says Wiles. “We’re very excited to start engaging with people.”

THEBAKKEN.COM

61

The BAKKEN Magazine Marketplace OUR ENERGY WORKING TO CONSERVE YOURS ™

Fuel For Thought

The Samuel Pressure Vessel Group – Light, Medium, & Heavy Duty Towing and Recovery – Local Home Town business with our local home town rates – No inflated Oil Boom Rates here!

– Set up an account or call us for all your needs.

We manufacture: Industrial ɻ ɻ ɻ ɻ ɻ

Oil & Gas

Commercial

Residential

INSULATION & SPECIALTY BUILDING PRODUCTS CARBOLINE® INDUSTRIAL COATINGS 3M™ TAPE, FIRESTOP & SAFETY PRODUCTS METAL & PVC JACKETING SPRAY FOAM

APIDISTRIBUTION.COM Bismarck, ND Watford City, ND

10%

701.258.9905 701.842.8150

OFF YOUR ORDER WHEN YOU MENTION THIS AD* *ONE TIME ONLY - OTHER RESTRICTIONS MAY APPLY

Surface Equipment API Tanks Filter Tanks Mole Sieves sĞƌƟĐĂů ͬ ,ŽƌŝnjŽŶƚĂů

Separators

^D WƌĞƐƐƵƌĞ ͬ sĂĐƵƵŵ

Vessels

Wastewater Treatment Tanks

and many other pressure vessels

Excellence Under Pressure www.SamuelPressureVesselGroup.com (800) 247-8265 Ext. 30418 spvg@samuel.com

Shale Oil Innovation CONFERENCE & EXPO Produced by The Bakken magazine

July 27-29, 2015

Alerus Center | Grand Forks, ND www.BakkenOilConference.com The Bakken/Three Forks Shale Oil Innovation Conference & Expo is the nation’s premier event featuring innovations that are driving new efficiencies and the profitability of oil recovered from shale formations.

62

The BAKKEN MAGAZINE AUGUST 2014

The moment of truth:

Where do your fracs (and your well investment) go?

WůƵŐ ĂŶĚ ƉĞƌĨ

PLANNED

REAL WORLD (unpredictable)

KƉĞŶͲŚŽůĞ ƉĂĐŬĞƌƐ ĂŶĚ ƐůĞĞǀĞƐ

PLANNED

REAL WORLD (unpredictable)

DƵůƟƐƚĂŐĞ hŶůŝŵŝƚĞĚ ĐĞŵĞŶƚĞĚ ĐĂƐŝŶŐ ƐůĞĞǀĞƐ

REAL WORLD (predictable)

PLANNED

Plug-and-perf simply cannot deliver predictable frac results, and neither can open-hole packers ĂŶĚ ďĂůůͲĚƌŽƉ ƐůĞĞǀĞƐ͘ Ƶƚ͕ DƵůƟƐƚĂŐĞ hŶůŝŵŝƚĞĚ ƐŝŶŐůĞͲƉŽŝŶƚ ŝŶũĞĐƟŽŶ ĞŶƐƵƌĞƐ ƚŚĂƚ ĨƌĂĐƐ ŝŶŝƟĂƚĞ right where you plan them and proppant volume in every frac is exactly what you want. Cemented, ĨƵůůͲĚƌŝŌ ĐĂƐŝŶŐ ƐůĞĞǀĞƐ ĚĞůŝǀĞƌ ƉƌĞĐŝƐĞ ĨƌĂĐ ůŽĐĂƟŽŶ͕ ĂŶĚ ĨƌĂĐ ŝƐŽůĂƟŽŶ ŽŶ ĐŽŝůĞĚ ƚƵďŝŶŐ ƉƌŽǀŝĚĞƐ ƌĞĂůͲƟŵĞ ĨƌĂĐͲnjŽŶĞ ƉƌĞƐƐƵƌĞ ƚŽ ŚĞůƉ LJŽƵ ĐŽŶƚƌŽů ƉƌŽƉƉĂŶƚ ƉůĂĐĞŵĞŶƚ ĂŶĚ ĨƌĂĐ ŐƌŽǁƚŚ ŽŶ ĞǀĞƌLJ ƐƚĂŐĞ͘ >ĞĂƌŶ ŵŽƌĞ ĂďŽƵƚ ĂĐŚŝĞǀŝŶŐ ƚŚĞ ŵŽƐƚ ĞĸĐŝĞŶƚ ĮĞůĚ ĨƌĂĐ ŶĞƚǁŽƌŬ Ăƚ ŶĐƐĨƌĂĐ͘ĐŽŵ͘

ƌŝůůŝŶŐͲĨƌŝĞŶĚůLJ ͮ ŽŵƉůĞƟŽŶͲĨƌŝĞŶĚůLJ ͮ WƌŽĚƵĐƟŽŶͲĨƌŝĞŶĚůLJ ͮ ZĞŵĞĚŝĂƟŽŶͲĨƌŝĞŶĚůLJ ͮ ,^ ͲĨƌŝĞŶĚůLJ ncsfrac.com +1 281.453.2222 info@ncsfrac.com Leave nothing behind. ©2014, NCS Energy Services, LLC. All rights reserved. Multistage Unlimited and “Leave nothing behind.” are trademarks of NCS Energy Services, LLC. Patents pending.