September 2014 The Bakken magazine

SEPTEMBER 2014

The BAKKEN MAGAZINE SEPTEMBER 2014

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CONTENTS

SEPTEMBER 2014

VOLUME 2 ISSUE 9

pg 40

pg 46

pg 28

Pg 28

PRODUCTS & TECHNOLOGY

Bakken Service Trends Keeping operations moving in the Bakken creates a bottomless demand for services. Providers—from welders to petroleum engineers—reveal the evolution and trends for the Bakken’s many services.

BY THE BAKKEN MAGAZINE STAFF

Pg 40 EXPLORATION & PRODUCTION

Tribal-Based Exploration When Missouri River Resources produces its first drop of Bakken oil, it will officially be the only owned and operated tribal exploration and production company in the Bakken.

BY EMILY AASAND

Pg 46 PRODUCTS & TECHNOLOGY

The Bakken’s Airspace Unmanned aerial technology could alleviate the shortage of private and commercial aviation services, which are at an all-time high above the Williston Basin.

BY THE BAKKEN MAGAZINE STAFF

O THE COVER: Roughnecks ON oon a Bakken drilling rig pose ffor the camera.

PHOTO: GAYLON WAMPLER P

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The BAKKEN MAGAZINE SEPTEMBER 2014

CONTENTS

SEPTEMBER 2014

VOLUME 2 ISSUE 9

pg 70

DEPARTMENTS

IN PLAY

66 Understanding the State of Shale

From its WellIQ report to its outlook on the proppant supply industry, PacWest Consulting Partners has transformed into an oilfield barometer.

BY LUKE GEIVER

IN PLAY

72 Q&A with Brent Brannan

The director of the North Dakota Oil and Gas Research Program, talks about the past, present and future of the OGRP, an entity designed to link the state with private oil and gas research efforts.

BY LUKE GEIVER

pg 72

pg 74

8 Editor’s Note

How Bakken Services Evolve

BY LUKE GEIVER

10 ND Petroleum Council

Energy Outlook and Solving Challenges

BY TESSA SANDSTROM

12 Events Calendar 16 Bakken News

Bakken News and Trends

IN PLAY

70 Engineering the Future Workforce

Hess Corp. is the latest major Bakken operator to partner with the University of North Dakota’s College of Engineering & Mines, linking the E&P to an employee pipeline like no other.

BY EMILY AASAND

MAKING IT

74 Automating Crude Movement

JDP Automation has gained a Bakken foothold by automating the crude-by-pipeline process. Using advanced software and experience from other industries, it is looking to expand.

BY PATRICK C. MILLER

THEBAKKEN.COM

7

EDITOR'S NOTE

How Bakken Services Evolve The move to multiwell pads and full field development in the Bakken has created a trickledown effect for every service linked to oil and gas production. In a play that demands efficiency in every process Luke Geiver

Editor The Bakken magazine lgeiver@bbiinternational.com

today more than ever, service models acceptable five years ago have changed. In some cases, the change has come through the addition of new offerings or products and can best be described with the common industry term we all know as a one-stop shop. In other instances, businesses have reigned in their scope, and of course, some service providers have simply turned to innovative new products or approaches.

This month, our team covered the evolution and expansion of several services in the feature article Bakken Service Trends. With the understanding that writing about every Bakken staple service would require a book-length piece, we chose unique service providers who highlight the industry’s changing needs, demand for innovation and acceptance of anything that can be done cheaper, faster or safer.

From the companies mentioned in the proppant-in-a-box section of the story, to the welding gas supplier, world-renowned energy service provider or nationally known equipment and tool source, the piece created a difficult situation for our team during its creation. Before we started, we had to ask ourselves: how do you write about a welding gas supplier and a completion consultant in a single piece? Our answer came quickly: you don’t. Instead of weaving every service provider’s story into one long piece, we included only the main elements of each provider’s story and let the combination of all the ministories speak for themselves. The theme and connective thread between every story is easy to recognize.

In The Bakken’s Airspace, an article detailing the current demand and use of aviation services and the future of the Williston Basin region’s skies, we took a similar approach. Emily Aasand covered the present need for private flight services to move oil executives and well services teams into and out of the region. Patrick C. Miller tackled the future of the Bakken, writing about the not-so-far-off reality of unmanned aerial systems as a Bakken service used to monitor pipelines, infrastructure and road conditions at the push of a button.

In the near-term reality category, check out what Dave Williams is doing on the Fort Berthold Indian Reservation. Through the formation of Missouri River Resources, Williams and his team will soon become the first ever tribally owned and operated exploration and production company in the Bakken. Like the many unique services mentioned in this issue, the Missouri River Resources team is just one more reason for the Bakken’s many industry members to be proud about the evolution of the play. The unofficial theme of the Bakken continues to include a push for efficiency, innovation, safety and positive change. Why else would a proppant-in-a-box supplier, national equipment supplier focused on safety or a tribal-based exploration and production company exist in Western North Dakota?

For the Latest Industry News:

www.TheBakken.com Follow us: twitter.com/thebakkenmag facebook.com/TheBakkenMag 8

The BAKKEN MAGAZINE SEPTEMBER 2014

ADVERTISER INDEX

www.THEBAKKEN.com VOLUME 2 ISSUE 9

53

AE2S

32

Allied Oil & Gas Services, LLC

68

American Hospitality Management Inc.

20

Andrea Booher Photography

62

Appam Water Depot Inc.

78

Bakken Directory

33

Bartlett & West

EDITORIAL

42

Braun Intertec

Editor Luke Geiver lgeiver@bbiinternational.com

34

Brock White Company

79

Capital Lodge

44

CHS, Inc.

52

Convey-All USA

19

Dakota Fence

36

Eide Ford Diesel Services

Senior Editor Sue Retka-Schill sretkaschill@bbiinternational.com Staff Writer Emily Aasand eaasand@bbiinternational.com Staff Writer Patrick C. Miller pmiller@bbiinternational.com Copy Editor Jan Tellmann jtellmann@bbiinternational.com

14-15

Energy Efficient Group

PUBLISHING & SALES

50

Entech Industries

Chairman Mike Bryan mbryan@bbiinternational.com

18

Environmental Materials, Inc.

48

FMC Technologies Inc.

77

Gamajet Cleaning Systems, Inc.

President Tom Bryan tbryan@bbiinternational.com

38

Golight Inc.

Vice President of Operations Matthew Spoor mspoor@bbiinternational.com

59

Granite Seed Company

12

Hotsy Water Blast Manufacturing LP

CEO Joe Bryan jbryan@bbiinternational.com

Vice President of Content Tim Portz tportz@bbiinternational.com

37

International Road Dynamics

Business Development Manager Bob Brown bbrown@bbiinternational.com

60

J-W Energy Company

Account Manager Tami Pearson tpearson@bbiinternational.com Marketing Director John Nelson jnelson@bbiinternational.com

64

Mainstream Investors

3

MBI Energy Services

39

Circulation Manager Jessica Beaudry jbeaudry@bbiinternational.com

6

Miller Insulation National Oilwell Varco

Traffic & Marketing Coordinator Marla DeFoe mdefoe@bbiinternational.com

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NCS Energy Services, Inc.

51

New Prospect Company

ART

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Nordak Properties LLC

57

North Dakota Association of Counties

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Pentair Flow Technologies

Art Director Jaci Satterlund jsatterlund@bbiinternational.com

26 & 65 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.

COPYRIGHT © 2014

by BBI International

TM

Please recycle this magazine and remove inserts or samples before recycling

PretroSkills, LLC

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Port of Vancouver USA

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Presto Geosystems

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Protego USA, Inc.

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Pumpco Energy Services

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Quality Mat Company Rossco Crane

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Steffes Corporation

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Steptoe & Johnson

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Summit Casing

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Taylor Power Systems

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Tempus Aircraft Sales & Service

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Tyco Fire Protection Products

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Wells Concrete

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9

NORTH DAKOTA PETROLEUM COUNCIL

THE MESSAGE

Energy Outlook and Solving Challenges

By Tessa Sandstrom

To say this year has been a record-breaking year for the oil and gas industry is not news—in fact, it’s becoming rather clichéd as increasing production has reached record levels for the past 11 years and virtually skyrocketed since about 2011. This

PREVIOUS MEETING: The 2013 version of the NDPC's annual meeting took place in Grand Forks, N.D., at the Alerus Center.

10

The BAKKEN MAGAZINE SEPTEMBER 2014

year’s production, however, is markedly different as our state has surpassed the 1 million barrel daily production mark to become a top producer in not only the nation, but the world.

This is a significant milestone that I touched on in an earlier column, but the milestone and its significance in national and global production and politics will be a topic that will continue to be discussed at the North Dakota Petroleum Council’s 33rd Annual Meeting later this month. Adam Sieminski, administrator for the U.S. Energy Information Administration, will join other industry leaders and experts at

THE HEAD OF HALLIBURTON: Jeff Miller, president of Halliburton, will keynote the 2014 annual meeting.

PHOTO: HALLIBURTON

the meeting to share his views on the role North Dakota has played in the resurgence of U.S. oil and gas production and the EIA’s outlook for North Dakota’s future production.

As North Dakota’s oil production continues to grow, the state has seen many positive benefits, but it has also brought forth some challenges.

This year’s annual meeting will also look at how we can address these challenges and make the Bakken the most

NORTH DAKOTA PETROLEUM COUNCIL

Oil +27

Bakken Region Oil Production thousand barrels/day

thousand barrels/day month over month

1,200 1,000 800 600 400 200 0 2007

2008

2009

2010

2011

2012

2013

2014

SOURCE: U. S. ENERGY INFORMATION ADMINISTRATION | DRILLING PRODUCTIVITY REPORT

efficient, clean and modern oilfield in the world.

Jeff Miller, president of Halliburton, will be the keynote speaker. Halliburton is one of many companies operating in the Bakken that are focused on developing solutions and new technologies to increase efficiencies and enhance production. Other speakers will focus on other key issues, including the proper treatment and disposal of waste, building more infrastructure, and properly characterizing and handling Bakken crude.

Other challenges to be discussed at this year’s meeting are impacts to communities. A panel of industry experts will explore some of these issues, including impacts to roads

and infrastructure and the rapid growth of communities that has resulted in shortages of housing and services. The NDPC will specifically be looking at ways we can inform and activate members to support more oil tax revenues being returned to western communities to help them address some of these issues.

One of the biggest determining factors in being able to help communities with some of these challenges, however, will be a constitutional measure that seeks to divert more than $150 million per year (or nearly $3 million per week) to a special fund for conservation projects. A non-elected board would decide what projects would receive funding, and

75 percent of the fund would be required to be spent per year—whether or not there are worthy projects. With many unfunded roads, schools and services in western North Dakota, the measure, if passed, would introduce even more challenges for communities.

In addition to informing NDPC members and Annual Meeting on these and other issues, there will also be a free education session that will be open to the public. Ron Ness, president of the NDPC, Lynn Helms from the North Dakota Department of Mineral Resources, and Kathy Neset, president of Neset Consulting Service will provide insight into the oil and gas industry, hydraulic fracturing and horizon-

tal drilling, oil and gas regulations, and impacts. The session will be held from 3:30-5:00 p.m. MDT on Tuesday, Sept.

24 in the Stark Ballroom at the Astoria Event Center.

This year’s annual meeting promises to be another great opportunity for learning and networking and we hope you will join us in Dickinson this year.

ON THE WEB

Registration is open at

https://annualmeeting.risprojects.org/Default.aspx.

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

THEBAKKEN.COM

11

EVENTS CALENDAR

The Bakken magazine

will be distributed at the following events: NDPC Annual Meeting September 24-25, 2014 Dickinson, North Dakota Issue: September 2014 The Bakken magazine

Facilities Design Onshore Summit 2014

September 30-October 1, 2014 Houston, Texas Issue: September 2014 The Bakken magazine

Produced Water Reuse Initiative: Rocky Mountains Tight Oil & Shale Gas Plays

October 29-30, 2014 Denver, Colorado Issue: October 2014 The Bakken magazine

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Crude By Rail 2014

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

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15

BAKKEN NEWS

BAKKEN NEWS & TRENDS

Q2 2014 YIELDS IMPRESSIVE RESULTS

EMERALD OIL

MARATHON OIL OASIS PETROLEUM

2013 Q2 BOEPD

2014 Q2 BOEPD

2013 Q2 BOEPD

2014 Q2 BOEPD

1,410

3,781

39,062

50,000

+168% BOEPD

+28% BOEPD

WPX ENERGY

2013 Q2 BOEPD

2014 Q2 BOEPD

2013 Q2 BOEPD

2014 Q2 BOEPD

30,171

43,668

12.3

18.8

+45% BOEPD

+53% BOEPD

Record Q2 For E&Ps Oil production numbers and second quarter earnings totals have been released by most Bakken operators, with nearly all reporting production increases.

Oasis Petroleum had another record-breaking quarter, producing 43,668 barrels of oil equivalent per day, a 45 percent increase over Q2 2013. MDU Resources announced its strongest first half since 2008 for its construction division, with its oil exploration and production sector, Fidelity Exploration & Production, reporting a 14 percent oil production growth.

Whiting Petroleum Corp. increased its overall 2014 production guidance after releasing its Q2 results, showing a record 109,760 barrels of oil equivalent

16

per day, from a combination of all its plays, led by production in the Williston Basin, however.

For several operators, who reported increases in oil production in Q2, tweaks to completion designs were typically cited. QEP’s second-quarter net income loss, however, also shows that strong production doesn’t necessarily correlate to reported net income.

tweaks that Oasis implemented, tested, and proved in time for its Q2 production updates.

“Early production results from our first Three Forks slickwater well in Red Band and a slickwater Bakken well in Montana are expanding the completion technique’s applicability across more of our inventory,” said Thomas Nusz, chairman and CEO of Oasis.

“Both of these Oasis wells are producing 35 percent or more Oasis Petroleum over comparable wells comLike most exploration pleted with our base completion and production companies in design.”

Western North Dakota, Oasis Oasis had 16 rigs running saw a successful second quarter, recording 43,668 barrels of oil during the Q2 and as of the end of June, had 35 wells west equivalent per day, a 6 percent of Williston, N.D., and 32 in increase over the first quarter of 2014. The increased produc- East Nesson awaiting completion services. The company tion is a result of completion

The BAKKEN MAGAZINE SEPTEMBER 2014

found success with increasing frack spreads from three to six, making frack jobs planned for their overall production more effective.

“We have increased both frack spreads and cleanout crews, which will support the additional work we are doing in the second half of the year,” said Nusz.

Nusz added that some completions for the second quarter were pushed back, which resulted in Oasis completing six fewer wells than planned, causing third-quarter oil production projections to range between 47,000 and 49,000 barrels of oil equivalent per day.

BAKKEN NEWS

PRODUCTION AND COMPLETION TWEAKS EMERALD OIL

EOG RESOURCES

FIDELITY E&P

MARATHON OIL

OASIS PETROLEUM

QEP RESOURCES

WHITING PETROLEUM

WPX ENERGY

INCREASED PROPPANT LARGER FRACKS WELL DENSITY INCREASED FRACK JOBS INCREASED MAN POWER DRILLING TIME LAND ACQUISITION COMPLETION DESIGN

WPX Energy Well-density testing and analysis efforts have paid off for WPX Energy. The company has increased its well inventory in Western North Dakota by roughly 200 locations and announced it would start developing multiwell pads with an 11-well design.

WPX Energy has 83 11well pads that will target the Middle Bakken with another 198 seven-well patterns targeting the same formation. In the Three Forks, the company has planned for 116 11-well pads in the first bench and another 203 seven-well pads in the same formation.

In its Q2 earnings report, WPX Energy disclosed its plans to increase proppant

use in the Middle Bakken and Three Forks.

“A completion using 6 million pounds of sand on the Ruby multiwell pad was finished at the end of July,” the company reported. “This is twice the size of WPX’s historical Williston completions and is expected to become its new standard in the basin.”

EOG Resources EOG Resources reported a year-over-year 33 percent U.S. oil growth increase and saw a company income of $706.4 million in the second quarter, compared to a $659.7 million for the same time last year in both its on- and offshore plays. In the first half of the year, EOG shifted to

multi-pad drilling in the Bakken.

EOG 75 reported production results for three wells brought online in Q2. The total initial production rate from the three wells equaled 6,605 bopd.

According to Billy Helms, EOG’s executive vice president of exploration and production, the wells were completed with larger fracks that took longer to flow back. But, due to the extended flowback period, results from the wells were not yet ready.

“EOG’s assets in the Eagle Ford and Bakken continue to meet or, in most cases, exceed our high expectations,” said Bill Thomas, CEO of EOG. “Although we’ve been in

the Bakken since 2006, we are steadily improving individual well results through continuing advancements in completion designs.”

In the Q2 earnings report, EOG disclosed its plans to test various benches of the Three Forks wells on both its core and Antelope Extension acreage during the remainder of the year.

QEP Resources QEP Resources’ Williston Basin’s daily total oil production reached 35,600 barrels of oil equivalent during the second quarter, a 75 percent increase over the second quarter of 2013. The Denver-based company specifically highlighted its new record drilling time

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of 14.9 days from the start of drilling to total depth in the Williston Basin during its Q2 update.

Although QEP Resources saw an increase in oil production, it reported a net loss of $92.3 million in Q2 compared to the net income of $178.4 million in Q2 2013. Net income includes noncash gains and losses associated with the change in the fair value of derivative instruments, gains and losses from asset sales, costs associated with the early extinguishment of debt and non-cash price-related impairment charges.

“We are pursuing multiple avenues to achieve the midstream separation, ranging from an outright sale of the business to a straight spin-off of the business to QEP shareholders,” said Chuck Stanley, chairman, president and CEO of QEP Resources. “Our ultimate objective is the maximization of shareholder value and the continuation of profitable midstream operations as part of a viable, competitive midstream entity.”

The company produced 31 gross operated wells, including 25 wells in South Antelope field and four wells in the Fort Berthold Reservations. The company reported a 15 percent increase in oil production in the Williston Basin over 2014 Q1.

Emerald Oil Emerald Oil posted the strongest quarter in the company’s history with revenues from sales of oil and natural gas of $31.3 million compared to $10.6 million for the same period last year. The company’s acquisition of additional holdings in the Williston Basin makes it one of the play’s largest operators.

Emerald and Liberty Resources II LLC announced, in August, the signing of a definitive agreement to exchange a portion of Liberty’s holdings in the Williston Basin for additional Emerald acre-

Proven Performance On Call 24/7 18

The BAKKEN MAGAZINE SEPTEMBER 2014

age in the basin and $78.4 million in cash.

“The transaction with Liberty Resources II further solidifies our strategic position in both our Low Rider and Lewis & Clark focus areas, bringing our net acreage position in this core operating area to more than 108,000 net acres,” said McAndrew Rudisill, Emerald CEO. The company reported second-quarter production of 340,320 boe—an average of approximately 3,781 boepd—an increase of 51 percent over Q1 2014 and 168 percent increase over Q2 2013.

Marathon Oil During the second quarter of 2014, Marathon Oil saw its three high-quality U.S. resource plays average a net production of 170,000 barrels of oil equivalent per day. Marathon’s Bakken wells-to-sales are up 73 percent quarter-on-quarter, with 19 gross operated wells-to-sales.

The company reached total depth on 19-gross company-operated wells and brought 19-gross operated wells to sales during the second quarter. Marathon plans on shifting its focus to more aggressive completion designs in the Bakken.

“In the Bakken, there are two things going on: downspacing and enhanced completion designs,” said Lee Tillman, president and CEO of Marathon Oil. “Results continue to be very positive in the Bakken.”

Marathon plans to move from fourby-four well pads to six-by-six well pads in the Middle Bakken and Three Forks first during the second half of 2014. The company spud its first 12-well spacing pilot in July.

BAKKEN NEWS

SM Energy Three Forks Increased Sand Loading Results SOURCE: SM ENERGY

500

Increased sand loading on a per lateral foot basis by ~40%

450

Daily Production (BOEPD)

400 350

33% Increase in peak

300 250 200

BOE/d rate

150 100

Improved Completion Old Completion

50 0

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Cumulative Production (BOE)

SM Energy Makes Historic $330M Purchase SM Energy Co. made a $330 million purchase of 61,000 net acres in the Bakken and Three Forks shale play located in Divide County, N.D., the largest monetary acquisition in company history.

The acquisition from Baytex Energy Corp. includes acreage adjacent to SM Energy’s currently operated block known as the Gooseneck and brings SM Energy’s exploration and production acreage total to 97,000 acres in the area. With this purchase, SM Energy received 126 drilling spacing units, 81 of which will be operated by the company.

The deal was completed through cash on hand and borrowings from its current revolving credit facility, and according to CEO Tony Best, the need for an asset divestiture is not necessary. And according to Jay Ottoson, president and chief operating officer the company, only needs to drill one good well per spacing unit to pay for the transaction.

In SM Energy’s second-quarter conference call, Ottoson said that SM’s wells in the Three Forks are getting even better over time. Current wells in that area average 10,000-foot laterals and are decreasing drilling time by close to 30 percent. By increasing the amount of frack sand used in drilling by 40 percent, SM Energy has seen a 25 percent increase in the rate of return for its wells in the area.

“We don’t think we’ve reached the limit on operational improvements,” said Ottoson. “Given these results, it is easy to see why we are excited about the acquisition. We think there is significant opportunity in the Bakken where we are drilling.”

“If you look at our results, we stick out as an outstanding operator,” said Ottoson. He also added that SM Energy hasn’t had any issues in dealing with excessive produced water or in accessing water for completion. SM Energy has found it feasible to use surface water in the region for well completions due to high water cuts incurred at well sites.

Many wells in the area use sliding sleeves on a 26 to 30 discrete fracture stage process and can be found using artificial lift systems with long stroke lifts, a method SM believes is aggressive.

“We are drilling four Three Forks wells in our current acreage and we haven’t even gotten to the Bakken yet,” said Ottoson. The success SM Energy has in increased sand loads in the Gooseneck may alter its plans for downspacing, potentially adding more wells onto the pad.

Most of the oil produced on the purchased acreage is moved via truck, but SM Energy thinks there could be an opportunity to move the oil via pipe. The company will also look into investing in water disposal for the newly acquired property.

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19

BAKKEN NEWS

Proposed DOT Rail Regulations To Hike Transport Costs The cost of shipping Bakken crude by rail will increase the price per barrel between 26 and 31 cents if regulations proposed by the U.S. Department of Transportation are implemented, according to a study by Cost & Capital Partners.

DOT published the proposed regulations for transporting volatile crude by rail on July 23. They will reduce the speed limit for unit trains carrying crude, particularly from the Bakken region. The regulation also calls for upgraded tank cars to better withstand damage from derailment.

Reduced speed limits for trains carrying Bakken crude will increase the time to reach destinations, which the report

said will reduce the Change in Rail Cost Per Barrel Based on number of tanker Implementation of Both Safety Recommendations cars and locomotives available while increasing the amount of oil inventory in transit.

“What it means from a strategy perspective is that if you can take the Bakken crude via pipeline, you’re obviously not going to have the same impact,” said Tom Bokowy, Cost for major destinations from more of your rail origina& Capital senior the Bakken, the impact of tions in North Dakota being partner. “It will give a slight complying with the regulaoffloaded at barge terminals additional advantage to the tions will be a 2 to 4 percent and places like that because pipelines and it will make increase per barrel over the that way, you can turn those shorter routes more economicurrent cost of shipping oil assets more quickly and you’re cally viable.” by train. less impacted by the cost of The report said that “You’re going to have the tank car,” Bokoway said.

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P H O T O G R A P H E R

Contact: Andrea @ AndreaBooher.com The BAKKEN MAGAZINE SEPTEMBER 2014 970-948-1177 www.AndreaBooher.com

&

F I L M M A K E R

BAKKEN NEWS

Regulation Impact on Price $0.31

Houston, TX

$0.30

Bakersfield, CA

Yorktown, VA

$0.32

Philadelphia, PA

$0.31 $0.32

Albany, NY

$15.00

$5.00

$-

According to the report: “Producers, carriers and refineries will need to incor-

$10.00

$0.26

Anacortes, WA

porate the impact of these changes when calculating the netbacks for transport-

ing crude from the Bakken to major consumption areas.

These changes will affect the decisions for both where and how to transport crude from the Bakken to major consumption areas.�

The DOT proposal to upgrade the current tank car fleet to meet new safety standards also increases costs.

The report notes that there are four major companies capable of producing these tanks cars, which will create a bottleneck.

This report calculates the change in costs for common destinations for Bakken crude. It includes cost models for tank car leasing, rail freight and a lane-by-lane analysis of the impact of the changes.

Producers, carriers and

refiners will all be affected by the changes over the coming years. As these changes increase the cost, this will affect netbacks that producers are currently able to achieve for Bakken crude.

Cost & Capital Partners is a management consulting firm with offices in Boston, Sandpoint, Idaho, and partners in Shanghai, China.

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BAKKEN NEWS

Questions Raised on Stabilizing Bakken Crude For Rail Transport

AHEAD OF THE CURVE: The call to stabilize Bakken crude prior to transport could be answered before the end of the year.

PHOTO: EMILY AASAND, BBI INTERNATIONAL

22

The BAKKEN MAGAZINE SEPTEMBER 2014

Stabilizing Bakken crude for rail shipment might not be necessary, cost-effective or result in greater safety, according to a consultant with Turner, Mason & Co. After the U.S. Department of Transportation in July released proposed regulations to change safety requirements for trains and tank cars hauling Bakken crude, U.S. Rep. Ron Kind, D-Wisc., sent a letter to Transportation Secretary Anthony Foxx asking the agency to consider a requirement to stabilize the oil before shipment.

Kind said that “Bakken oil is much more volatile than most other types of heavier crude oil� and poses a significant risk of fire.

BAKKEN NEWS

He referred to a company in south Texas that is stabilizing crude to make it safer for transport. News reports quoted Kind as saying the process was “cheap” and “easy to do.”

However, Ryan Couture, a chemical engineer and senior consultant with Turner, Mason & Co., said there’s a great deal of difference between light sweet crude from Bakken and condensates from the Eagle Ford play in Texas.

“The condensates in Texas are substantially lighter and more volatile than Bakken crude,” he explained. “Their vapor pressure is high enough in Eagle Ford condensate that it cannot be shipped via pipeline, and stabilization is required in order to meet the specifications for transport.”

Based in Dallas, Turner, Mason & Co.

monitors all aspects of the crude and refined product markets, and how regulatory developments impact the industry. The firm was recently engaged by the North Dakota Petroleum Council to conduct a comprehensive study on Bakken crude, which was issued by the NDPC in early August.

Couture also questions the economic feasibility of stabilizing Bakken crude for rail transport and whether it would result in improved safety.

“One challenge to stabilizing Bakken crude in North Dakota before shipment is that you then end up with stabilized crude and LPGs (ethane/propane/butane),” he said. “There is no substantial market for LPGs in North Dakota, which means they would have to then be shipped. The

hazards with shipping LPGs are greater than shipping Bakken crude if an accident were to occur.”

The American Petroleum Institute criticized DOT’s rationale for the proposed rail transport regulations.

“The best science and data do not support recent speculation that crude oil from the Bakken presents greater than normal transportation risks,” said API President and CEO Jack Gerard. “Multiple studies have shown that Bakken crude is similar to other crudes.”

API plans to submit comments to DOT about the regulations before the Sept. 30 deadline of the public comment period.

THEBAKKEN.COM

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BAKKEN NEWS

Researchers Say More Scientific Study Needed On Fracking

Scientists studying fracking compounds say their research raises concerns about several commonly used ingredients.

According to results released in August during the 248th National Meeting & Exposition of the American Chemical Society (ACS), little is known about the potential health risks on one-third of the compounds used for fracking.

“It should be a priority to try to close that data gap,” said William Stringfellow, a member of the research team from Lawrence Berkeley National Laboratory and the University of the Pacific. He said the study was conducted to help resolve the public debate on fracking.

Researchers found only eight substances that raised concern, not thousands as suggested by some fracking critics. The substances identified as “red flags” included biocides and others considered “particularly toxic to mammals.”

“The industrial side was saying, ‘We’re just using food additives, basically making ice cream here,’” Stringfellow said. “On the other side, there’s talk about the injection of thousands of toxic chemicals. As scientists, we looked at the debate and asked, ‘What’s the real story?’”

The researchers examined databases and reports to compile a list of substances commonly used in fracking. They include gelling agents to thicken the fluids, biocides

to prevent microbes from growing, proppant sand and compounds to prevent pipe corrosion.

Although fracking fluids contain many nontoxic and PROVEN MIX: Bakken operators have already proven food-grade materiand provided the main fracturing chemicals used to a als, Stringfellow said national website known as FracFocus. being edible or biodegradable doesn’t them down rather than releasing necessarily mean disposing of them them directly into the environis a simple matter. ment.”

“You can’t take a truckload of The study was funded by the ice cream and dump it down the University of the Pacific, the U.S. storm drain,” he noted. “Even ice Bureau of Land Management and cream manufacturers have to treat the state of California. dairy wastes, which are natural and biodegradable. They must break

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BAKKEN NEWS

Federal Energy Strategists Hold Review in Bismarck, ND Federal and White House leaders visited North Dakota in early August as part of a national review of the country’s energy strategy.

The meeting, held on the Bismarck State College campus, was led by the U.S. Department of Energy. DOE Secretary Ernest Moniz and U.S. Department of Transportation Secretary Anthony Foxx, along with U.S. Sens. Heidi Heitkamp, who proposed the meeting to be held in North Dakota, and John Hoeven, who also proposed a quadrennial energy review, spoke during the meeting.

“To truly talk about our

nation’s energy strategy, it has to include North Dakota.

That’s why I pushed for Secretary Moniz to hold one of the Department of Energy’s national energy policy meetings in our state,” said Heitkamp.

“North Dakota is on the forefront of energy development and we’re doing it all—oil, gas, coal, wind, and biofuels. We have a great deal of insight to offer as the administration seeks input from communities across the country about energy transportation, infrastructure, and development.”

The review, which includes a series of meetings across the nation to examine

critical energy issues, was formed to help the administration develop a national policy for energy infrastructure as part of President Obama’s Quadrennial Energy Review.

The goal of the QER is to help the federal government provide affordable, clean, and secure energy services to Americans. The meeting focused on infrastructure constraints, with a specific focus on Western North Dakota.

“Secretary Moniz heard firsthand about the vital role North Dakota’s energy resources and infrastructure play in our national energy strategy, and I greatly appreciate that

he agreed to visit our state as part of his meetings across the U.S.,” said Heitkamp.

Heitkamp called on the DOE to more quickly improve drilling permits on federal and Indian lands, address energy development issues facing MHA Nation, and build out roads and bridges to make them safer and accommodate the increased number of vehicles around the Bakken.

“Secretary Moniz has shown an openness to making sure the U.S. is using a diverse array of energy sources,” said Heitkamp.

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PRODUCTS & TECHNOLOGY

THE NEW

SERVICE MODEL By adapting to the Bakken, these businesses, consultants and services are thriving

By The Bakken Magazine Staff

There is no single service mantra applicable to every Bakken business.

Some providers have adopted the one-stop-shop approach.

Others believe the best business model is providing only a single service. In today’s Bakken business climate—from petroleum engineering firms to welding gas suppliers—there is one common thread that links nearly every service provider in every segment of the Bakken shale play: evolution. For some firms, that means simplifying the service packages offered to clients, but for most, it means adapting best-practices taken from other geographic regions or industries to fit the fast-paced, demanding nature of the Williston Basin. To highlight the theme of change, we covered a wide swath of the businesses responsible for keeping the Bakken running. Each business has unique demands and challenges, and each has learned the merits of adopting a new service model for a unique situation.

-Luke Geiver

A COMPLEX JOB: As the Bakken evolves, service providers at every level of oil production are looking for new, more efficient means of service.

SOURCE: GAYLON WAMPLER

28

The BAKKEN MAGAZINE SEPTEMBER 2014

PRODUCTS & TECHNOLOGY

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PRODUCTS & TECHNOLOGY

Completion Commitment

Sigma3 Incremental Production Vaule:

$3.4M Per Well

Not all Bakken services roughly 20 to 30 minutes to peryield immediate results. Ty- form. “They are an industry stan-

30

dard but not everyone does them.

A lot of operators push by gathering data and running the tests.”

To perform the tests, a pressure pump operator pressurizes the pumps to 50 barrels per minute, injects a small volume of fluid into the well and slowly decreases the pressure from 50 bpm to 40 and repeats the step-down until there is no pressure. The fluid pumped into the well works against the pressure of the pump and the operators can determine two things, Micheli says: perforation friction and how well the fluid moves through the wellbore.

Understanding the complexity of the perforation path allowed Micheli to optimize the fracture network. “With too many cracks and corners you don’t get a real good connection for drainage,” he says. If that is the case, Micheli can deploy proppant slugs—high packs of proppant in the 500- to 1,000-pound range that are injected with the purpose of breaking open certain sections of rock.

In addition to step-rate tests before the completion is performed, Micheli and his team also verified the value of reducing the use of well flushing—a process that involves flushing water through the wellbore postcompletion and preproduction.

“Some overflush, which pushes the proppant away from the heel of the well. We concluded that keeping proppant near the wellbore is absolutely critical,” he says. “This was a big operational

The BAKKEN MAGAZINE SEPTEMBER 2014

7,500,000

5,000,000

2,500,000 Dollar Value of Oil ($90 per bbl)

ler Micheli, petroleum engineer and team lead for the production enhancement division of Denver-based Sigma3 Integrated Reservoir Solutions, had to endure roughly two years before witnessing the benefits of a detailed completion approach put to use in the Bakken. Micheli was employed by Helis Oil & Gas to produce more hydrocarbons in the South Antelope field. “We made changes and two years later independently verified results showed an increase in well productivity and performance,” Micheli says. “We determined that an engineering workflow needs to look at every facet of the well’s life from before it is even drilled.”

Micheli says that his success reveals the importance of patience and on taking a long-term view towards a client’s success.

Micheli’s team began working with Helis at a time when operators were just starting to drill 2-mile laterals and use complex completion methods designed on a one-off basis. After reviewing the approach the team took to justify the longer laterals and the complex completion designs, Helis points to several elements crucial to success.

Fracturing diagnostics precompletion are important, he says. “We would do step-rate tests and calculate near wellbore frictions and really understand what would happen to the frack when it goes into the formation.” According to Micheli, the tests take

0

NO

YES

Well Stimulated by Sigma3

change to make sure we didn’t overflush.”

During its time working in the South Antelope field, the Sigma team also learned the value of onsite engineers. There were engineers onsite every hour of every day that the Helis wells were being completed.

Since reviewing their work, Micheli’s team has since written a

paper on its time in south Antelope, and according to Micheli, their time revealed something every Bakken operator should know about individual wells.

“If you have a weak link in any part of the [well] chain, then it won’t perform as well as it otherwise could.”

-Luke Geiver

PRODUCTS & TECHNOLOGY

Meeting the Safety Demand The rapidly growing Bakken play is putting a strain on the existing inventory and personal protective equipment (PPE) supply chain, and customers are looking for more and more options to keep their businesses running safely. Grainger believes it has found the solution.

“Our presences are supported by the supply chain that helps get products to customers either same day or next day and allows us to provide critical product support and services that help keep their operations running and their people safe in two very important ways: making sure we have the right products and making sure we can get it to customers quickly,” says Marty Neus, district sales manager at Grainger’s Williston branch.

Grainger opened its Williston branch in 2013 and plans to open a branch in Dickinson by the end of the year.

The Williston branch is unique in that it’s open and accessible 24 hours, seven days a week and it has a customized inventory based on its market knowledge of other oil and gas plays in order to have the correct inventory to keep customers’ businesses running and to keep their employees safe.

“We will open up our branch after hours, which is a service that has been well-received by customers,” says Neus. “Having access to that inventory is critical and we’ve had multiple opportunities to open up our branch after

hours to help our customers.”

“Our new Dickinson branch, in addition to locations in Williston and Fargo, will help more customers get the products they need, when they need them, to keep their operations running efficiently and their people safe,” said Cassandra Dye, regional vice president of customer service for Grainger.

Providing tools and equipment for safety is where Neus and his team focus most of their efforts within the Williston Basin.

“We supply things such as personal productive equipment—specifically Lockout/Tagout, electrical safety equipment, medical first aid supplies, temperature stress tools and equipment for confined spaces,” says Neus.

“Some of those workers have to go inside tanks, go inside really small, cramped spaces so we make sure that they can enter and exit those spaces safely.”

Grainger also offers antislip products for oil rigs, fall protection equipment, signage, fire protection, and a handful of other service equipment that it says has been in high demand.

The company helps its customers manage inventory in two different ways. The Grainger manage solution—KeepStock— allows its employees to go out to sites and manage the inventory for customers. According to Neus, this puts time back into the customer’s day because Grainger is providing an onsite labor source.

Grainger also offers a customermanager inventory solution, by

ON-SITE EXPERIENCE: With storefronts in two major Bakken hub cities, the Grainger team makes supply decisions based on the region's needs.

PHOTO: GRAINGER

which the customer can track and order as they please.

“In the Bakken, managing inventory, especially safety inventory, is one of the best ways a company can remove costs,” Dye adds. “Grainger’s KeepStock inventory management solutions help customers save money and space, while increasing productivity and freeing up time to do more important things on the job.”

According to Neus, the oil and gas services companies have been some of Grainger’s predominant customers. “For the fracking and wireline companies, it’s really critical to have PPE available 24 hours, seven days a week. We’ve seen a positive response from our availability and with how we provide inventory management solutions to those customers.”

Grainger offers more than 135,000 safety products, almost always having the products customers are looking for, but they also partner with their strategic

vendors to perform audits and other safety services.

“One of the services we partner up to provide is hand protection audits,” says Neus. “We’ll partner with one of our strategic suppliers and look at what the customer is doing, look at areas for improvement or point out areas where injury could occur, and then come back and provide solution samples. This helps customers really stay on the cutting edge of their safety program.”

With the maturation of the Bakken, Grainger’s role in Western North Dakota is more important than ever.

“Customer safety, especially to keep people safe in being more productive all while reducing expenses, is becoming more and more of a focus for our customers. Grainger can provide solutions to help customers manage their inventory, to keep their facilities up and running, and to help them save time and money.”

-Emily Aasand

THEBAKKEN.COM

31

PRODUCTS & TECHNOLOGY

Long Lateral Answers Extended reach laterals—those drilled past the 2-mile mark—come with a price. In some cases, coiled tubing cannot reach the end of the well to mill out wellbore plugs inserted during the pressure pumping process, leaving hydrocarbons freed near the toe area of the well unrecoverable. Renee Supplee, sales engineer for Baker Hughes, has a solution: the SHADOW series frack plug.

The plug was designed to provide a larger inner diameter than other composite plugs and to stay in place for the

life of the well as opposed to composite plugs that must be drilled out before production can commence. “For longer laterals, this plug offers a huge advantage,” Supplee says. In an extended reach lateral, an operator can place the SHADOW plugs near the toe of the well and use composite plugs at depths reachable by coiled tubing.

Although most composite plugs are not strong enough to feature an internal diameter (ID) of more than an 1.5 inches, the SHADOW series plug is made of steel. The ID of

Depend on Us

the SHADOW series can go as wide or wider than 2 inches because of the stronger material, Supplee says, a feature that doesn’t require operators to drill out the plugs in order to bring them on production.

The steel design, along with a dissolvable ball, makes the whole system work. After the plug is set via wireline, dissolvable balls are dropped to portion off a given section of well. Eventually, the balls dissolve, allowing the well to start flowing.

“The purpose of the plug is not new to people. What

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is intriguing to people is its potential of what it could do to avoid drill out and still have a nice ID,” she says. The SHADOW plug has been in testing and use phase for more than six months. The main hesitancy from potential clients has to do with time and efficiency in the event the balls do not dissolve properly, Supplee says. “If you are going to have to drill something out, you wouldn’t prefer to drill out steel.”

To date, Baker Hughes has already created a Williston Basin case study for the

The BAKKEN MAGAZINE SEPTEMBER C e m2014 enting & Acidizing Services

-David McLaurin, Chief Executive Officer

PRODUCTS & TECHNOLOGY

technology using the SHADOW series frack plug and intallic dissolvable balls. In a well drilled to a total depth of 25,400 feet and a kick-off point at 10,589 feet, the use of Baker Hughes SHADOW plugs eliminated milling, saved two days of drillout-related time and roughly $50,000 for the operator. Without the use of the Baker Hughes plugs, the use of coiled tubing to mill out composite plugs inserted near the toe of the well would not have been possible.

-Luke Geiver

SHADOW SECRET: The pipe ID allows for hydrocarbons to flow through the frack plug at an acceptable rate after the ball disappears.

SOURCE: BAKER HUGHES

THEBAKKEN.COM

33

PRODUCTS & TECHNOLOGY

Praxair Gets Quicker Praxair Inc. offers unique gases and field services for customers in the Bakken. The company is one of many that has performed equipment upgrades for faster in-and-out service times.

The global company recently opened a new packaged gas fill plant in Bismarck, N.D., which will significantly increase the cylinder gases capacity in the Bakken oil play. The automatic facility has been designed to quickly and efficiently fill packaged gases from single cylinders and packs to liquid vessels and tube trailers.

According to Robert Crew, general manager of the U.S. central region of Praxair, the biggest benefit of this plant and the services it provides is the ability to turn products around quickly for customers.

“We’re at approximately double the capacity that we had before and that’s just on the filling side,” says Crew.

“We built a plant that was designed to be loaded and unloaded quickly.”

Praxair has been present in the Williston Basin since the late '70s and the com-

pany has been expanding in the region ever since to keep up with the demands of their customers.

“We’ve managed to expand our route sales coverage out there and our staffing levels to accommodate the increased demand of all the customers moving into the area,” says Crew. “The guys who are out working in the field in the Bakken need to be able to get in and out quickly, so we’ve remodeled all of our locations to fit that need,” says Crew.

Praxair’s newest facility

is responsible for filling argon and argon carbon dioxide mixes that are used for welding applications. Those welding applications—welding rods, welding wires and safety products— are out in the field for repair and maintenance on rigs, but they’re also used in the construction products, pipelines, gas plant construction and for refineries, which help accommodate the rapid Bakken expansion.

-Emily Aasand

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PRODUCTS & TECHNOLOGY

Proppant-In-A-Box The proppant supply industry is approaching unchartered territory, which in the Bakken, is both good and bad. As operators move to

ton-based proppant distributor, has earned respect, and Logistics By The Numbers: business, for its innovative tweak to the proppant supSuper Sacks 1 Ton longer laterals, increased fracture stages ply business. The company— per well and deploy nearly double the formed by several logistics Pneumatic Tanker Trucks 25 tons amount of sand used over base com- veterans—has designed a pletion designs established only four cube-shaped shipping and Railroad Hopper Cars 100 tons years ago, demand for proppant has storage container that can been pushed to an all-time high. But, hold the amount of sand typiRiver Barges 1000 tons transportation issues related to rail bot- cally delivered by truck trailer. tlenecks and rail network congestion Sandbox has already received as sand movers, silos, pneumatic trucks have made proppant buyers and sup- three orders from RockPile Energy Services and more from Liberty and some conveying equipment while pliers rethink their distribution models in order to seize the Bakken’s unprec- Oilfield Services to use the patent-pro- improving the economics of logistics. tected system. The design of the cube Because the boxes are equipped edented thirst for proppant.

Sandbox Logistics LLC, a Hous- is meant to eliminate equipment such with pneumatics, the need for powered blowers on the well site to remove the sand from the truck hopper is gone.

The units can be prepackaged with various proppant types or sizes, allowing completion companies the assurance that when they show up to a well site, the sand will be there.

According to Peter Glynn, senior vice president of strategy and commercial development, the boxes can be stacked and unloaded in any order.

“We have filed a substantial amount of intellectual property around the system to address the entire logistics chain,” he says. “The system is a true process innovation.”

The main draw of Sandbox’s system to its Bakken clients is the assurance that the proppant will be onsite. “It alleviates a lot of scheduling problems,” Glynn says. The boxes can be predelivered to a site via rail or specifically designed truck trailers.

The stackable nature of the boxes requires roughly one-third less space on the well pad as pneumatic truck trailContact: Jackie Bius ers would need.

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PRODUCTS & TECHNOLOGY

PROPPANT BOX: Both Sandbox Logistics and Portare have commercialized storage and dispersal systems that offer alternatives to truck-based transport and storage.

insured the product was well-suited for harsh weather conditions, Glynn adds. Although the goal of Sandbox is to develop regional distribution hubs, it currently works on a one-off basis with its clients.

Portare, like Sandbox, also offers a shippable containerized option to move frack sand and ceramics. The system benefits the user by eliminating transload handling damages and railroad wait time, according to the company. Current rail wait times can range from six to 18 months. The units can be filled with sand at the frack sand site and be shipped via truck directly to the well site. Portare offers a 700-cubic-foot and 1,400-cubic-foot box. When shipped via rail the boxes can sit two units high. On a shipping vessel, the boxes can be stacked as many as eight units high. A truck trailer can carry roughly 23 tons of material over the road.

-Luke Geiver

THEBAKKEN.COM

37

PRODUCTS & TECHNOLOGY

Walking Rig Designers Entro Industries specializes in figuring out how to move large, heavy equipment that people never intended to be mobile, says Shawn Smith, president of the Oregonbased engineering and design firm.

PROVEN WORK: Western Fabrication has gone through an American Petroleum Institute certification process to ensure its work on walking rigs is done safely.

PHOTO: ENTRO INDUSTRIES

Entro has serviced the heavy haul, aircraft and drilling industry since ’94, led

by Smith’s father Harlan, founder of the firm. Shawn joined his father in 2010.

“We decided to change the focus of the business. We decided to take the lead position on contracts.” With the help of Western Fabrication, a custom welding and machine shop, the Smith’s applied their new ideas to the drilling rig industry. The team now designs and fabri-

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The BAKKEN MAGAZINE SEPTEMBER 2014

cates custom and bolt-on systems capable of changing a stationary drilling rig into a walking unit. Since 2010, Smith estimates the team has been directly involved with 180 to 200 rigs, performing either a retrofit of an existing unit or the design of a newly built rig. “We’ve been at it one a week for at least the last year,” Smith says.

In addition to the drilling firms heavily leveraged in the Bakken, such as Nabors Drilling and Precision Drilling, Entro has also provided its services for rig operators working in Alaska, Canada, South America, the Middle East and the entire Lower 48.

“When you install one of our units, it isn’t just about designing and installing equipment,” Smith says. “It is about taking an existing asset, like a 30-year old drilling rig and figuring out how to safely mobilize that rig and give it additional service life,” adding that, “it is the combination of the machine design and the structural analysis that is our specialty. We kind of do the things that other people don’t know how to do.”

Entro's main product is called the Kingpin system. The Kingpin combines a high-capacity jack and a walking foot into a singular space. The equipment package can be installed directly onto a rig. Using a ratchet or a remote control, an operator can move an entire drilling rig in any direction once the Kingpin system is installed. “We have actually removed other walking systems from rigs and replaced them with ours,” Smith says.

The system is a walk-and-roll setup, utilizing a large stomper foot directly under a hydraulic jack. Because the stomper foot can shift positions, by roughly 2 feet, in any direction from where the base of the hydraulic jack is attatched to the top of the stomper,

PRODUCTS & TECHNOLOGY

TEAM OPERATIONS: Entro has designed a bolt-on equipment package that allows a user to move a rig via hand lever or remote control.

PHOTO: ENTRO INDUSTRIES

the system can move a rig. The jack deploys, lifting the entire rig off the surface, a rolling mechanism rolls the rig to follow the placement of the stomper while the rig is still in the air and then the jack lowers the rig directly above the position of the stomper. The process is repeated until the destination has been reached. “You can actually spin it in a circle,” Smith says. The beauty of the system is often seen in difficult well-site layouts or when settling under a rig mat occurs, he says.

Entro’s success with the walking systems has required Western Fabrication to update its abilities and its approach towards safety and quality. The company recently completed the American Petroleum Institute’s 4F Monogram certification program.

The certification is the result of a yearlong audit to ensure the facility and its employees—from designers to fabricators—meet the stringent requirements of the API. In 2014, Entro's sales will increase by 75 percent over the previous year.

-Luke Geiver

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EXPLORATION & PRODUCTION

40

The BAKKEN MAGAZINE SEPTEMBER 2014

EXPLORATION & PRODUCTION

TRIBAL-BASED EXPLORATION Missouri River Resources looks to become the first tribal-owned and operated Bakken E&P company

By Emily Aasand

Missouri River Resources, the only Indian reservation oil exploration and production company in North Dakota, is taking full advantage of the Bakken oil play.

David Williams, a member of the Three Affiliated Tribes located in Western North Dakota, has 20 years of experience in the oil field and is heading the production and exploration efforts. Williams began working for Gulf Oil in the early 1980s and split 12 years working for Gulf Oil and Chevron, before moving back to North Dakota to work in education.

A graduate of New Town High School, was teaching and coaching in New Town, N.D., just before the Bakken came to flourish. With his experience working on oil rigs, he knew he needed to take advantage of the opportunity to start an oil and gas production company on the Berthold Reservation.

“I thought it’d be more valuable to help our people with this oil and gas issue and see what I could do,” says Williams, president and CEO of Missouri River Resources. “I started looking for experts and I actually went down to Colorado to visit the Red Willow Production Company—a very successful oil and gas company on an Indian reservation—and asked for their business plan of how they created their company and they gave me it.”

Williams used that business plan as a model for his own but he knew it’d be a challenge without having easy access to petroleum engineers or tenured geologists.

“First you need resources, but you also need expertise,” says Williams. “That’s been my primary objective—to hire as many experts as I can find from attorneys and petroleum engineers to geologists and landmen. Five years ago there wasn’t a petroleum engineer line. Opportunity only comes where you look, and I actually went to Calgary for a petro-

leum conference and found my first board member and expert in Regina in 2009.”

After adding another expert from Calgary to the team, the three of them created a business plan in 2010 and Missouri River Resources was officially formed in 2011.

“We have four petroleum engineers that are working for us,” says Williams. “Three in the midstream, and then one in exploration and production. We have our COO Bill McCabe, and we have John Kingsley who is our lead petroleum engineer in the midstream and one of the original founding guys.”

“We’re spending $10 million a well, so we’re very frugal and we want to make sure we do this right,” says Williams.

“We want to be quick here, but we’re not going to hurry. We want to make sure that we do this right so that we have the ability to show the people—the industry—that the Three Affiliated Tribes can operate its own wells.”

Overcomers Two of the hardest obstacles for the company to overcome were finding land to drill on and getting capital. Missouri River Resources has about 30 wells they have working interest on, but are getting ready to drill their first wells as an operator.

“Finding land that wasn’t leased out in 2007 has been difficult, but we do have a 300 acre parcel and we’re working on drilling our first four wells,” says Williams. “We’re working with service company Baker Hughes out of Texas.”

With a limited supply of unclaimed land, Missouri River Resources is focusing on looking for ‘flips’ in the area. Flips are when oil companies look to sell the land that they’re producing on.

“We’re looking for someone reselling their land so that we can buy it and drill our own wells,” says Williams. “The greatest value of this oil is at the wellhead and, sure, working

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41

EXPLORATION & PRODUCTION

WELCOME RETURN: Dave Williams came to the Fort Berthold Indian Reservation with an education and industry experience in the petroleum business.

42

value is nice, but it’s nice to get 100 percent of the profits too.”

The other issue Missouri River Resources has faced is acquiring enough capital, but they do have the tribe’s support behind them.

“We had to overcome a huge credibility hurdle and prove that we could do this first and foremost, so we went to our investors and with the tribe, and they had faith in us to help us move forward,” says Williams.

All of Western North Dakota ––including Missouri River Resources–– has faced a battle with having enough infrastructure to keep up with the increased traffic that comes with oil production.

“We’re working on a truck route around New Town,” says Williams. “There’s been a lot of good work as far as roads, but we’re battling housing and traffic, so it’s a process, but it takes leadership from our side to initiate stuff. Our leadership is doing a good job and we just have to keep it up.”

The BAKKEN MAGAZINE SEPTEMBER 2014

Flaring The North Dakota Department of Mineral Resources recently issued restrictions regarding flaring and the tribe has to have a gas and oil take-away plan before they can start drilling.

“We’re working on creating more pipeline on the reservation with a group called Paradigm Midstream Partners,” says Williams.

“We’re focused on pipeline and eventually getting that oil to a refinery.”

Impacting the future Having worked on wells for 15 years, Williams decided to start teaching classes on oil and gas at the Fort Berthold Community College to help educate people about the oil and gas industry.

“For the last three years, I’ve been teaching there and we’ve incorporated a workforce development program within our company,” says Williams. “We want to be an overall com-

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.

EXPLORATION & PRODUCTION

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The BAKKEN MAGAZINE SEPTEMBER 2014

Fort Berthold Indian Reservation Production Numbers Oil Production (bopd)

Driling Rigs

Active Wells

May-14

300,874

22

1,220

Apr-14

300,770

20

1,174

Mar-14

300,770

24

1,174

Feb-14

271,121

24

1,163

Jan-14

289,041

27

1,139

Dec-13

294,269

23

1,129

Nov-13

295,587

22

1,099

Oct-13

309,707

20

1,076

Sep-13

289,330

24

1,055

Aug-13

299,705

23

1,035

Jul-13

291,726

22

1,004

Jun-13

256,726

22

979

May-13

155,332

21

935

Apr-13

148,259

25

916

Mar-13

150,959

26

875

Feb-13

127,183

27

857

Jan-13

129,460

28

830

Dec-12

140,869

28

805

Nov-12

135,380

28

793

Oct-12

136,096

25

772

Sep-12

122,369

26

741

Aug-12

119,644

27

706

Jul-12

113,200

29

691

Jun-12

109,500

30

680

pany for our people and we’re looking to get that program off the ground.”

There has been an increased interest in the oil field, and Missouri River Resources wants to properly train those interested.

“We’re taking the TrainND program the state colleges have created and tweaking it to be the TrainIndian program,” says Williams.

“There’s a lot of interest and people really want to know what’s going on. The next step, the huge step, people have to take is getting out there. I think we have a responsibility to our own people to train them. We want to make sure that we start this workforce training development from square one and we want to include, not just our tribe, but all of the reservations.”

Williams and his team wants to create a place where people can come and have the ability to make a great living for themselves and their families.

“We want all of the tribal members to come and have a place to stay and to make a good living so they can go back to their families and take care of them,” says Williams. “I’ve been in the business for 20 years and it’s a great, honest living, but it is hard work.”

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

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PRODUCTS & TECHNOLOGY

46

The BAKKEN MAGAZINE SEPTEMBER 2014

PRODUCTS & TECHNOLOGY

THE BAKKEN'S

AIRSPACE The view from above reveals the role of private jet services and Unmanned Aerial Systems

By The Bakken Magazine Staff

The skies over the Bakken are busy. Newly created direct flights link the play’s hub cities to industry mainstays such as Houston and Denver, private jets shuttle oilfield personnel in and out of the region, and even local commercial and private flight services are thriving. Yet, the growing need for air-based services could be at the beginning of a new era.

In 2013, enough gathering lines were laid to stretch from Seattle to Orlando, according to the North Dakota Department of Mineral Resources––and, for the foreseeable future, roughly 2,000 miles of gathering lines will be laid every year. New rules requiring geographical information pertaining to all lines has made pipeline gathering infrastructure the most likely growth sector for the Bakken’s air industry.

Although it may appear as a futuristic notion today, the use of unmanned aerial systems (UAS) in the Bakken could be the next type of air service adopted in the play.

THEBAKKEN.COM

47

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48

The BAKKEN MAGAZINE SEPTEMBER 2014

PRODUCTS & TECHNOLOGY

OPPORTUNITIES ABOVE For energy firms under the clock, flight services can cut travel time for executives, geologists and oilfiled crews. By Emily Aasand To accomplish more on land, some Bakken firms are taking to the air. Flight services are in high demand currently, experiencing an increase in sales, rentals and chartering services created for companies doing business in the Williston Basin.

Company executives, geologists and work crews in need of quick and effective access to the Bakken are relying on service jet companies such as Solaeris Aviation and Tempus Aircraft.

Solaeris began chartering flights to the Bakken in 2006.

The Houston-based company originated as a small provider for an energy company and has since continued and grown with the energy market.

“We’ve only flown energy companies,” says Richard Ziskind, vice president of Solaeris Aviation. “We know their needs, we know their concerns, we know they’re very focused on safety and we know that they

need flexibility and to be able to save time.”

Companies are taking advantage of jet services up the Bakken to fly executives for meetings, to fly geologists to their well sites and to deliver workers in to service wells. In the energy business, the biggest component is time, according to Solaeris. The company has designed its services to accommodate time management issues by offering flights to western North Dakota at any time of day.

“A lot of the companies like our flexibility, to be able to put their executives on a flight, or their geologists on, and sometimes they even need us to help switch teams out between different oil plays,” says Ziskind.

Tempus, another flight services firm, is experiencing similar demands from clients working in the Bakken.

“We do trips of engineers and geologists. We also swap out crews—which is probably more

THEBAKKEN.COM

49

PRODUCTS & TECHNOLOGY

//////////////////////////////////////////////////////////////////////////////

CIRRUS HELPS INVESTORS

Cirrus Aircraft entered the airplane industry, in the early 1980s, as a kit manufacturer, and it has kept its business strategy in that area. While the company does not provide charter services to customers, it builds airplanes that oil companies and others can lease for their personal use. According to the company, a Cirrus SR22 can transport four adults to over 90 airports in North Dakota at 180 miles per hour.

“We save them time, stress and money and greatly increase their productivity and time on station,” said Todd Simmonds, executive vice president and chief customer officer of Cirrus. “Cirrus Aircraft can service a business with a new or preowned aircraft, with full or part-time pilots and also direct them to charter services on a four seat SR22.”

According to the company, chartered services are available with a Cirrus aircraft out of Minneapolis, Minnesota, and will soon be out of Tioga, N.D., with Twin Cities Aviation.

The first aircraft sold directly tied to the Bakken area was for the transportation of a geologist and her company.

“One Cirrus owner is a geologist who needs to travel frequently to talk to investors who want her analysis of well potential,” said Simmonds. “Having the Cirrus with a corporate pilot allows her more time in front of the customers and with family instead of behind semi-trucks.”

//////////////////////////////////////////////////////////////////////////////

50

The BAKKEN MAGAZINE SEPTEMBER 2014

of the contract stuff that we do,” said Phil Jordan, managing director of Tempus Aircraft Sales and Service. “You’ll have a crew that’s up in the Bakken that doesn’t live there.

We’ll bring those six guys home and we’ll take six guys back up.”

Unique Service Options Solaeris and Tempus both provide airplanes to companies under charter. Solaeris provides fractional ownership. Under the system, based on a company’s needs, a client can invest in a fraction of an airplane instead of buying the whole airplane.

According to Ziskind, they also sell jet cards for companies that can’t afford to buy an airplane or do fractional ownership, in which they are able to buy a block of hours to use the aircraft.

“Fractional ownership is almost like a timeshare,” says Ziskind. “We

PRODUCTS & TECHNOLOGY

guarantee them the use of a certain tail number whenever they need it based on the ownership they have of that airplane and they also get the advantage of the tax write-off of the airplane along with all of the other advantages of airplane ownership.”

With fractional ownership, companies can buy a quarter of an airplane or half of an airplane, and if they wish, they can eventually move up into owning their own airplane.

“What we usually see happen is one company will take it and another service provider splits it with them,” says Ziskind. “That's what we’re finding with the Bakken. A lot of the folks work handin-hand together so word about our services gets out.”

According to Jordan, when it

comes to chartering flights, Tempus has a pretty standard service.

“We’re with the 24 hours, 7 days a week operation and we have crews standing by all the time,” said Jordan. “When we talk to an oil company or an oil services company, we try to look at their entire operation and determine what kind of airplane would be best that would suit 75 percent of their missions and recommend charter, fractional, any of those things that would complement what they need to do.”

For Jordan and his team, energy firms or others from the Bakken have a general set of questions that all start with how one should get into commercial aviation use.

The team goes beyond helping them determine the best airplane.

“We help them make those deci-

EXPERIENCE MAKES THE DIFFERENCE

‘The energy business is very, very competitive, and everything has to be kept confidential so we try to maintain a high level of security and confidentiality with all the energy companies. If customers go with a larger jet service provider, other people [competitors] notice them more.’

Richard Ziskind, vice president of Solaeris Aviation

sions based not only what the airplane costs,” he says. The team also looks at passenger type and potential changes to the airplane that could make the flight experience better, “for their people who are on the road all the time.”

Designated Crews Unlike Tempus, Solaeris is a one of the smaller-sized jet companies that charters to the Bakken.

Running a smaller company creates the ability to focus on detail such as assigning specific crews to fly energy executives.

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51

PRODUCTS & TECHNOLOGY

“Our pilots know the customers, and vice versa,” says Ziskind. “Our pilots take note of customer’s preferences too. If they know they’re carrying a certain individual and they know he likes to have a bag of chips on the seatback, they’ll put them there for him. We keep profiles of all of our customers—we’re aware of where they like to sit and what their food preferences are and we give that information to our pilots.”

Paying attention to detail in the jet services industry is crucial, with that knowledge, Solaeris also provides a help desk that’s available 24 hours, seven days a week—a service that is provided free of charge.

If a company asks Tempus about purchasing an airplane, the company can help manage and coordinate its entire transportation. Tempus can also designate a specific crew to that client. For on-demand charters, companies fly with the crews that are on call.

Although each jet company offers a different service, they all have a common mission: offering the best customer service.

“We want to exceed their expectations,” says Ziskind. “We want to give them such good service that they won’t envision themselves doing business with anyone else.”

A Booming Business Solaeris is witnessing firsthand how the competitive energy market is impacting the aviation business.

“As a company, we try to look at what the other companies do not provide and then we work to provide those services,” says Ziskind. “A lot of times, our biggest hurdle has been acquiring aircraft fast enough to service these companies. It’s good in business to have more customers than product, but we need to catch up and grow a little bit more as a company.”

Tempus has also found itself

DOWN TO DETAIL: Private flight providers track which amenities frequent fliers enjoy and which seats they prefer as a way to keep customers returning.

PHOTO: SOLAERIS

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Drayton, ND Phone: 701-454-3875 Email: conveyall@conveyall.net

52

Sales, Service & Installation

The BAKKEN MAGAZINE SEPTEMBER 2014

For your proppant storage and handling needs

PRODUCTS & TECHNOLOGY

in higher demand within the past couple years.

“We’ve definitely seen an increase in the demand for trips into that area,” said Jordan. “The airports and the infrastructure in the area has really grown to try to help accommodate the growth.”

For Solaeris, growing its fleet to meet the needs of customers and having a larger presence with an office is in the future.

“A lot of companies in the Bakken area are coming to us to contract us to be their flight department,” says Ziskind. “We professionally manage their flight department from pilot training to dispatching the airplanes for them to handing all the FAA records and safety audits.”

“Most of the airplanes we use aren’t 100 percent owned by us, there are only a couple that are,” says Jordan. “Most of them are people who have bought airplanes and have access capacity on it. It’s kind of like a vacation home, you lend out extra time

when you’re not there. People do the exact same thing with airplanes. They’ll buy an airplane thinking they’ll need it 200 hours a year but an airplane, realistically, can fly 400 to 500 hours a year, so we’ll charter it when they’re not using it to people like oil companies and transportation companies.”

“Our customers really like not having branded planes because it’s private, you don’t know who’s coming in,” says Ziskind.

“The energy business is very, very competitive, and everything has to be kept confidential so we try to maintain a high level of security and confidentiality with all the energy companies. If customers go with a larger jet service provider, other people [competitors] notice them more.”

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

THEBAKKEN.COM

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THE FUTURE OF PIPELINE MONITORING Unmanned aerial systems could become a Bakken standard By Patrick C. Miller An early spring blizzard— proceeded by freezing rain that brought down trees and power poles—blasts through central and western North Dakota. The ice-covered roads drift shut and the wind chill falls below zero.

Somewhere on the barren prairie stands what resembles a large mail box on top of a high pole. As ground blizzard conditions begin to lessen, a door on the box pops open.

A multi-rotored, unmanned aerial vehicle (UAV) responds to orders given from hundreds of miles away. It launches and begins following a preprogrammed flight plan along the right-of-way of a pipeline carrying Bakken crude to the East.

A GPS transmitter feeding constant coordinates prevents the UAV from being blown off course. As it flies, onboard sen-

sors sniff the air for any telltale sign of leaking hydrocarbons.

A video camera streams images back to a computer which analyzes the data for any changes along the right of way.

Other sensors check for temperature variations and vegetation anomalies.

A large tree that fell during the storm catches the computer’s attention. It orders the UAV back to the precise GPS coor-

dinates to take high-resolution photos and additional video of the scene from different heights and angles.

In Denver, a pipeline company engineer answers his smartphone and receives GPS coordinates of a potential problem. He’s soon looking at the photos, video and data collected by the sensors. Nothing indicates damage to the pipeline, but he sends instructions

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PRODUCTS & TECHNOLOGY

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The BAKKEN MAGAZINE SEPTEMBER 2014

to have the problem investigated more closely as soon as the weather permits.

At the end of its 50-mile journey, the UAV guides itself to an empty hanger atop a pole. It lands, the door closes and the aircraft begins recharging its battery for tomorrow’s regularly scheduled inspection flight in the opposite direction.

If Zach Lamppa is correct, what might seem like a futuristic scenario isn’t far away from becoming standard operating procedure for the inspection of pipelines, transmission lines and other energy related infrastructure. Last spring, he received a $125,000 grant from the North Dakota Oil and Gas Research Council to study the feasibility of using unmanned aerial systems (UAS) for pipeline inspections.

“We are going to be collecting data for the protection of people and the environment, and to help our clients avoid potential catastrophes,” he says. “We’re detecting changes in vegetation and temperature to prevent leaks, not just to monitor the leaks that have already happened.”

PRODUCTS & TECHNOLOGY

Voting in ND? Have a valid ID? • Driver’s license • Non-driver’s ID card • Tribal ID card t • Student ID Certificate • Long-term Care Certificate Must include name ND residential address Date of birth

Lamppa, owner of WCE Oilfield Services, has been in the pipeline industry since 2008.

His company has more than 275 employees and offices in Fargo, Dickinson and Stanley. It lays pipeline, performs maintenance and site construction in North Dakota, Montana, Wyoming and Texas.

“This isn’t conceptual anymore,” Lamppa says of the UAS project he’s spearheading. “We actually have the technology to do the pipeline monitoring. We can bring something to a pipeline client or an energy customer who can use the proprietary information we collect for their benefit.”

It has taken three and a half years to raise funds, assemble a team of partners and get to the point where Lamppa’s ideas can be field tested. The project

received a boost last December when the Federal Aviation Administration (FAA) designated northeastern North Dakota as the Northern Plains UAS Test Site, making it one of six areas in the country where UAVs can be flown to research commercial applications.

“We have 18,000 miles of pipeline in the state of North Dakota,” Lamppa notes. “We’re in a perfect time, place and region for this to be happening.”

Early on, Lamppa took his idea for the project to the University of North Dakota School of Aerospace Sciences, which has a UAS technology program.

“I came to UND expecting to meet with one or two people,” Lamppa recalls. “When I showed up, there was a boardroom full of people. I figured that if I’m going to take this to

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EQUIPPED WITH EXPERIENCE: Lamppa has already gained an understanding of the Bakken through his work with his own energy services company.

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another level, having a boardroom full of people is a good start.”

He’s also working with North Dakota State University which is researching UAS technology for precision agriculture and operates a UAV test site near Carrington.

In the private sector, Lamppa teamed up with Jerry Johnson, CEO of Farm Intelligence in Mankato, Minnesota. His company not only has experience developing software for precision agriculture applications, but also manufactures UAVs and sensors.

“We’re interested in North Dakota because two of the bigger industries are oil and agriculture, and these small UAVs are going to have an impact on both,” Johnson says.

Lamppa and Johnson formed Energy Intelligence specifically to look at the application of UAS technology in the energy industry.

“We’ve got software that allows us to take imagery, automatically analyze it and send alerts out,” Johnson says. “Somebody doesn’t have to sit down and look at every picture. The software can actually do the analysis for us.”

Sensors—the devices that enable a UAV to see or detect a potential problem— are another area in which Johnson provides expertise.

“A lot of people don’t realize in the UAV world that the sensors are the key item,” he explains. “With pipeline inspections, we’re looking for things that cause problems, such as vegetation, farming that’s too close to the right of way and construction, traffic or heavy rain that exposes the pipeline. There are a whole series of manmade objects or acts of God or vandalism that we can detect with our sensors.”

Will Semke, associate professor in the UND School of Engineering, has been working with Lamppa from the project’s beginning and believes that pipeline monitoring is a natural fit for UAS technology.

“Pipelines have a right-of-way associated with them,” he explains. “Nothing

PRODUCTS & TECHNOLOGY

can be in those locations. Just like precision agriculture, it’s an application that puts you in a safer operating environment.”

Since coming to UND in 2000, Semke has been involved with developing sensor packages for aerospace applications. In recent years, he’s used his mechanical engineering background to focus UAS technology.

“On any aerospace application, size, weight and power are always your big enemies,” he explains. “You don’t have enough of any of it. We’re always looking for innovative materials, reduced power consumption and making the payloads as small and compact as we can.”

UND’s electrical engineering department also assists with the development of circuits, power systems and data communications links for UAVs. Although Lamppa is optimistic that flight tests might be conducted as early as this fall, there are other pieces of the puzzle that need to come together. One challenge is obtaining a certificate of authorization (COA) from the FAA to conduct test flights.

“The biggest hurdle to actually going out and initiating this work is the regulatory issue about where you can fly and under what conditions,” Semke explains.

“Only a public entity like UND can get a COA from the FAA that allows us to operate. The UND aerospace school is working with the FAA to establish the appropriate guidelines.”

In addition, Lamppa says, “We’re looking for an energy company that would like to step up and work directly with us on the R&D to find the exact airframe, sensors and software to perform these duties. That’s going to be crucial to the development.”

It could be a pipeline company, an oil or gas producer or a U.S. Department of Transportation-regulated transfer company.

“We’d be flying their assets and their right-of-way,” Lamppa says. “We definitely need their input on what they would like to see from us.”

Fortunately, Lamppa says the energy industry is beginning to understand the

potential of UAS technology and is asking more sophisticated questions about it.

“They want to know what other applications they can do with UAS flights,” he notes. “Can we do depth of cover? Can we do GIS data and a general DOT inspection with one flight? The answer is yes. Those are the types of things we need to get across to potential energy clients during the proof of concept when we’re testing during the next year or two.”

Semke believes that by getting into UAS technology now and working with a university on the research and development level, Lamppa has a significant advantage.

“The FAA regulations are going to come,” he stresses. “The companies getting involved now and doing technology

development will be the ones ahead of the game when the time comes to cash in on the commercialization component.”

Beyond that, Lamppa wants energy companies to ask: What is it worth to prevent a catastrophic spill?

“We want to improve asset monitoring. We want to increase pipeline safety. We want to become a key partner in identifying these risks,” he says. “If we can get one step ahead of some of the issues with older transmission or distribution lines, I think it will revolutionize the way pipelines are inspected.”

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

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PRODUCTS & TECHNOLOGY

LW SURVEY PLANS FOR UAS USE IN BAKKEN Canadian experience will translate south of the border

By Patrick C. Miller

PROVEN LAUNCH: UAVs are already launched and used in the Canadian oil and gas industry.

PHOTO: LW SURVEY

As with many businesses, LW Survey Co. has a website listing the services it provides potential customers in the oil and gas industry.

However, there’s one significant difference between its U.S. site and its Canadian counterpart: north of the border, LWS includes unmanned aerial system (UAS) among its services.

“The Canadian group is actually flying UAS up there,” says Eric Harnisch, vice president of corporate development for Pulsar International Boundary Inc. based in Duluth, Minnesota. Pulsar is the holding company for LWS and Spartan Engineering.

LWS, a 300-person, full-service surveying company, has an office in Minot to serve the Bakken. It specializes in oil and gas pipeline planning and route assessment. Spartan Engineering, Pulsar’s other branded entity, is its engineering arm.

In the U.S., the Federal Aviation Administration (FAA) won’t be approving regulations for the commercial use of UAS until next year at the earliest. The agency has also been reluctant to grant certificates of authorization (COA) for test flights. The Canadian government, however, has adopted a different approach.

“It is legal and a fairly straightforward process to get permission to fly,” Harnisch says. “You fill out the paperwork, and typically within a week and a half, we’re allowed to do it on behalf of a client.”

LWS currently operates the Trimble UX5 and the Trimble X100 unmanned aerial vehicles (UAV) on its Canadian oil and gas projects. Data collected from the flights is used for site assessment, 4-D construction monitoring, topographical surveying and volume calculations.

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PRODUCTS & TECHNOLOGY

‘In the five- to 10-year year range, you’ll start seeinggas-powered UAVs that can fly for eight hours to cover a significant pipeline in North Dakota.’

Eric Harnisch, vice president of corporate development for Pulsar International Boundary Inc.

The UAVs can carry a modified camera capable of acquiring near-infrared imagery.

It’s combined with standard imagery and used for environmental assessment, spill delineation and vegetation health assessment.

According to LWS, UAS greatly reduces costs because it captures topographic data in a matter of hours compared to a matter of days for a survey crew. This not only decreases survey time, but also improves safety by eliminating the need for surveyors to operate in hazardous areas.

“Typically, our projects in Canada are in very remote areas where our clients want to look at the routing of a pipeline for a hundred miles,” Harnisch says. “It can get fairly expensive and difficult to get people out there.”

Using UAS to survey, LWS customers can find the best route for their pipelines by examining the topography and minimizing elevation

along the route. Harnisch sees many different possibilities for the future use of UAS in the Bakken.

“What I see happening in North Dakota is that when a pipeline goes across somebody’s land, there’s a lot of discussion about what it looked like before and what it looked like after,” he says.

“Did the contractors put it back to what was promised? Did they seed it properly? UAS serves to document the construction and the reclamation of the property,” he explains.

“We’re seeing a lot of interest for that in the construction side of the oil and gas.”

Harnisch also believes that UAS will become part of quality control in well pad construction. For example, “When you get done building, somebody has to go out there and make sure that the berms were built correctly.”

As for LWS, Harnisch says, “We will plan to use UASs commercially in the United States--specifically the Bakken with direct support from our Minot office—when the FAA approves and provides guidelines for their commercial use.”

Harnisch believes UAS technology will evolve in stages over the next 10 years. In the next three years, he expects the FAA to approve the use of small, lightweight UAVs, which have limited capabilities and must be operated within line of sight.

“What will probably happen within three to five years is that manufacturers will convince the FAA that they have good senseand-avoid systems, which means that they can actually see oncoming interference and make adjustments for it,” he says.

“In the five- to 10-year year range, you’ll start seeing gas-powered UAVs that can fly for eight hours to cover a significant pipeline in North Dakota,” Harnisch predicts.

Unresolved regulatory issues continue to create uncertainty about when and how UAS can be used for commercial purposes in the national airspace. Some question why the FAA can’t follow Canada’s example and make an exception for the oil and gas indus-

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AERIAL COMPILATION: UAVs used to capture aerial images is one of the most common requests by clients.

PHOTO: LW SURVEY

try to operate UAVs in remote, low-population areas.

“There is a frustration with trying to get the necessary approvals,” Harnisch notes. “I’ve heard comments from a lot of folks who feel that the UAS industry is wanting to move much faster than the FAA.” But Harnisch also says there’s a growing realization of the difficulty in developing regulations that safely incorporate the new technology into the airspace on a national level.

“There’s a little more empathy that the FAA has only so much staff to process this at the same time they’re trying to take care of the entire airspace,” he adds.

So when can the U.S. oil and gas industry expect to use UAS technology to its advantage?

“It’s not a question of the technology being there,” Harnisch says. “It’s actually a matter of when it will get approved.”

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The BAKKEN MAGAZINE SEPTEMBER 2014

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65

EXPLORATION & PRODUCTION North America Will Experience Robust D&C Growth Through 2016; HZ Wells Will Drive Activity Executive Summary: North America

Comments

Well Spuds, Wells Fracked, Frack Stages Forecast

Wells (‘000s)

35 30

35.5

36.3

40.7

38.3

35.8 35.

5.88 5.

30.4

600 500

20 15

400

10

The number of frack stages in North America will continue to grow, driven by: -More HZ wells -Increased lateral lengths, driving more stages/well -Decreasing stage widths, driving more stages/well

300

5 2011

2012

2013

2014

Values (‘000s) 2013 2014 2015 48.3 51.5 53.3 36.3 35.8 38.4

2015

2016

200

2012 49.2 35.5

2016 56.1 40.8

2013Δ -2% +2%

HZ Wells Fracked Frack Stages

18.9 21.7 23.7 27.0 30.0 395.2 473.1 541.9 634.7 726.3

+15% +20%

+9% +15%

+14% +17%

+11% +14%

HZ Frack Stages

325.5 412.7 492.7 587.8 680.7

+27%

+19%

+19%

+16%

Understanding the State of Shale Chris Robart’s link to the North American shale oil and gas industries didn’t begin in the Bakken, the Eagle Ford or the Marcellus. It started in Poland.

In 2010, Robart and the small team at PacWest Consulting Partners were contracted by a private equity firm interested in understanding the shale market in Poland. According to Robart, the client didn’t know enough about the oil production segment of the play to consider exploration and production. “They were interested in looking at opportunities in the services industry,” he says. “We high-

HZ Wells Fracked VT/DR Wells Fracked Spuds Frack Stages

Percent Change (%) 2014Δ 2015Δ 2016Δ +6% +4% +5% -1% +7% +6%

Metric Well Spuds Wells Fracked

66

Despite only moderate growth in total well spuds and wells fracked, HZ D&C activity growth is expected to be strong, driving well service intensity higher -HZ wells will increase from 48% of wells fracked in 2011 to 66% in 2014 to 73% in 2016

700

25

0

800

Frac Stages (‘000s)

45 40

SOURCES: PACWEST ANALYSIS; STATE REGULATORY AGENCIES; RIGDATA; GEOSCOUT

A Houston consulting team had developed a method to track shale activity in the U.S.

By Luke Geiver

lighted some of the industries they could get into.”

The team’s work in Poland led to a company-wide epiphany: service company data for the shale industry was inadequate. “We were shocked about the lack of good data on the hydraulic fracturing market,” he says.

That was 2010, when the Houstonbased firm had roughly 10 employees.

Today, the firm has tripled in size and is now considered one of the leading shale play data providers. The company provides quarterly updates on the following industry service segments: pres-

The BAKKEN MAGAZINE SEPTEMBER 2014

sure pumping, frack activity, well activity, proppants, chemicals, suppliers and several shale plays. To create its reports, the company collects a significant amount of state and federal data along with company specific insight from the companies in the industry. “We spend a lot of time and money on tools that help us understand that data,” he says. The reports are used from business types ranging from private equity firms to small-time service providers.

Of all the reports issued by the team, Robart believes its WellIQ data highlights the most accurate state of North Amer-

EXPLORATION & PRODUCTION

Frack Cost Breakdowns for a “Typical� Well Frack Cost Breakdown 12% 12%

Permian

14%

Marcellus

15%

31%

23%

16%

12%

Comments 14%

To ensure valid comparisons, we assume in every play, the typical wells analyzed include 300,000 lbs of sand/stage

15%

16%

Fuel represents 20% of Marcellus well costs, where the slickwater fracks require greater pumping horsepower Proppant comprises a larger portion of Permian and Bakken frac costs where other costs per stage are, lower

20%

These figures should be viewed as illustrative, as actual costs can vary significantly

13%

Eagle Ford

Bakken

14%

12% 8%

25%

13%

33%

17%

17%

Play Bakken Eagle Ford Marcellus Permian

18%

18%

12%

Frack Type XL/SW XL/SW SW XL/SW

Labor Proppant Logistics 0%

20%

40%

60%

80%

U.S. Land Average Drilling Days Per Horizontal Well

100%

2013

Equipment Chemicals

Stages 30 24 18 30 Proppant Sourcing Fuel

Notes: Labor and equipment are typically billed as one collective day rate SOURCE: PACWEST ANALYSIS, PACWEST FRACDB / FRACFOCUS.ORG

14H1

% Change -14%

A. Woodford/SCOOP Bakken

-25%

Barnett

-13%

California

-24%

DJ Basin

-7%

Eagle Ford

-24%

Fayetteville

-26%

Green River

-52%

Haynesville

-16%

Marcellus

-14%

MidCon Sands

-10%

Mississippian

-4%

Permian

-24%

Uinta

+6%

Utica

-22%

US Land

-23% 0

5

10

15

20

25

30

Notes: Analysis includes the entire population of horizontal wells from each time period. Drilling days was calculated based upon the reported well spud and reported rig release dates. Haynesville and Eagle Ford figures include Brown Dense and Woodbine, respectively, using a weighted average based on wells drilled.

35

40

45 SOURCE: PACWEST ANALYSIS, RIG DATA

THEBAKKEN.COM

67

EXPLORATION & PRODUCTION

ica’s shale plays. The report includes rig counts, well spuds, wells fracked, frack stages, drilling days per well and multi-well pad adoption by play. The current report shows that both the drilling and completion markets will experience robust activity through 2016. Wells drilled this year will rise by 6 percent more than the previous year, and, horizontally fractured wells will increase by 9 percent. Frack stages per well will also show

a 20 percent increase this year more than the previous year.

The number of horizontally fracked wells and horizontal frack stages per well is a crucial indicator for the activity level of a given shale play, Robart believes. “Looking at rig count in real-time allows you to get a snapshot of what the market is doing but it doesn’t really give you a lot of actual guidance of where the market is heading,” he

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PARTNER: Alex Robart

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68

The BAKKEN MAGAZINE SEPTEMBER 2014

EXPLORATION & PRODUCTION

says. The Bakken’s fluctuating rig count offers a perfect example of his point.

Although the rig count has not been near the all-time high of 223 for several months, activity in the play is as strong as ever, he says. “There is still an incredible amount of activity going on despite what rig count shows.”

To truly understand a play’s activity level, Robart has learned to look at frack stages. “More stages equals more demand for hydraulic services and more pumping time needed per well.” Although several U.S. shale plays are experiencing growth, Robart believes the companies that can find success in the supply chain will fully capitalize on any investment in those plays.

“The next several years are forecast to be strong for most all oilfield services and equipment players, however, the challenge will be within the supply chain.

The winners will be the companies that can manage the logistics and risks around having the right personnel, services, materials and equipment at the right place, when it is needed on-site by their exploration and production customers.”

As the shale industry continues to grow, Robart will have a familiar team to expand with at his Houston office. Alex Robart, brother to Chris, and Nilesh Daval, managing partner (and PacWest founder) are on the team. For 2014, the team predicts that four main shale plays will account for 77 percent of all horizontal frack stage growth: the Bakken, D.J. Basin, Eagle Ford and Permian. For the full year, the Bakken will experience an increase of nearly 10,000 horizontal frack stages compared to the previous year. “The operators have hit their stride and are focused on efficiency,” Robart says of the play.

The Permian Basin is growing incredibly fast, he adds. “It is a unique place. There is an exceptional diversity of operators and service providers there.”

PacWest will continue its focus on North America, but it has also added offices in China. Prior to the team’s commitment to the shale energy industries of the U.S., Robart says the company was in the general strategy consultant business. Now, the company has learned that is can grow with the shale industry by providing detailed reports that dig deep into the market. For Robart and Daval, that should bode well for the fu-

ture. “One of the main mantras we’ve had since forming,” Robart says, “is that we are only as good as we are deep.”

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

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INNOVATORS

UND’s Collaborative Energy Complex Receives $5 Million from Hess

By Emily Aasand

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The BAKKEN MAGAZINE SEPTEMBER 2014

Hess Corp. announced a $5 million gift to the University of North Dakota’s College of Engineering & Mines. With an additional $2.5 million match from the North Dakota Higher Education Challenge Fund, the total impact of the Hess gift will equal $7.5 million to help fund UND’s Collaborative Energy Complex.

“This grant will help grow an already strong and innovative program that will continue to train the workforce to meet the demands of the growing diverse energy sector in this state,” said Steve McNally, general manager of Hess Corp. in North Dakota. “We think that education is the backbone of North Dakota’s future and we all win when that backbone is strengthened by collaboration of the public and private sector.”

INNOVATORS

The $5 million gift will be used to advance UND’s Petroleum Engineering program and to create several important features in the new building including a Hess Innovation Lab, Hess 3-D Visualization and Reservoir Simulation Lab, Hess Drilling Simulation Lab, and a history of oil and gas atrium display.

“More than just the buildings to house programs, the Collaborative Energy Complex is about people, about collaboration, about innovation, about building bridges between industries,” said Hesham ElRewini, dean of the UND College of Engineering & Mines.

“Thanks to the generosity of our partners, we will be able to better educate and produce generations of engineers who will contribute to the economic growth and prosperity of North Dakota, the region and the nation.”

In the four years of its existence, UND’s College of Engineering and Mines Department of Petroleum Engineering has seen a huge increase in enrollment, growing from just four students to more than 200.

Hess has been operating in North Dakota for more than 60 years. The commitment to UND is the company’s latest citizenship effort in the state.

In addition, Hess is providing

BIG MONEY: The donations from Hess Corp. and the state of North Dakota brought $7.5 million to the University of North Dakota in one afternoon.

PHOTO: THE UNIVERSITY OF NORTH DAKOTA

$25 million through Succeed 2020, a multi-stakeholder initiative to improve the transition to higher education and careers for North Dakota students.

“Investing in our students means investing in our future, and it’s one of the best decisions one could possibly make,” said El-Rewini.

This gift is among the largest from a corporation to UND. The university currently has pledges and commitments of $11.8 million toward the $15.5 million needed for the new complex.

“The partnership being demonstrated–between the Hess Corporation, the state of North Dakota through Gov. Dalrymple and the Higher Education Challenge Fund, the UND Alumni Association and Foundation, and the UND Col-

lege of Engineering & Mines– is exactly the kind of privatepublic collaboration which will help us advance the University and achieve our goals related to serving North Dakota,” said UND President Robert Kelley.

Along with donating money to UND, Hess Corp., a leading global independent energy company engaged in the exploration and production of crude oil and natural gas, has also been on the radar for its recently completed expansion of its Tioga Gas Plant, which more than doubles the capacity of the facility.

According to Hess, the facility has significantly increased production of propane, methane, butane and natural gasoline, and of ethane. The expansion reduces the amount of natural gas flared at Hess’s op-

erations, which has been a huge issue in North Dakota.

“Hess has a long history in North Dakota, and it’s great news the company is continuing to invest in our state and build on its current facilities,” said U.S. Sen. Heidi Heitkamp.

“With natural gas, North Dakota has an excellent opportunity to greatly expand its already incredible energy production and move toward fully using our vast natural resources. To make this a reality, we need to make significant infrastructure investments, which is why the Tioga Gas Plant expansion is so important.”

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Q&A with Brent Brannan

Questions By Luke Giver

10 Questions with

Brent Brannan , director of North Dakota Oil and Gas Research Program

1. To start, what is the North Dakota oil and gas research program?

North Dakota's OGRP was established by the Legislature in 2003. It's a program designed to demonstrate and promote environmentally sounds exploration and production methods and technologies. It encourages wise and efficient use of energy by developing the state's oil and gas resources in partnership with the private sector through research and educational activities concerning the oil and natural gas exploration and production industry.

The program is funded from the state's share of the oil and gas production tax and extraction tax revenues with up to $10 million available to the OGRP each biennium.

2. As director, what is your primary role?

I'm the liaison between the applicant, the Oil and Gas Research Council, and the North Dakota Industrial Commission. I assist the applicant through the proposal process, advising on how they might bring the best possible application to the council. I help screen the applications through a series of minimum requirements such as: does the application propose education, research, development or marketing of oil and gas natural resources? Is the project research related to issues affecting exploration, production, transportation, processing or refining? Does the project have matching funds, industry partners?

3. The OGRP has provided more than $20 million in funding to roughly 60 projects since 2003. How does the grant application and project approval process work?

Once the application is received and the minimum requirements have been met, I identify independent experts to assist in reviewing and rating the application. The technical reviewer assesses the technical and fiscal merits of the application. Upon completion of its review, the technical reviewers (there are usually three) make their recommendation to me, the council, and the commission.

If the scores and recommendations are favorable, within approximately 60 days, the applicant formally presents the application to the Oil 72

The BAKKEN MAGAZINE SEPTEMBER 2014

Q&A: Brent Brannan

and Gas Research Council. The council then considers the scores, my recommendation, and votes whether to approve. If the majority of the council votes to fund the application, it is forwarded to the N.D. Industrial Commission whose members are the governor, the attorney general, and the agriculture commissioner, for their consideration.

4. You recently started a quarterly newsletter detailing some of the work of OGRP. Why? Part of the program's intent is designed to demonstrate to the general public the importance of the state oil and gas exploration and production industry and the newsletter helps tell the story of the program. This story has likely been under-told. What has the state done to inform students of career opportunities? How is the Energy Curriculum Program being developed enabling students to learn about the industry? What progress has been made to capture natural gas in remote areas? How has the industry improved in its drilling and completion techniques, cost efficiencies, infrastructure, and safety? The goal of the newsletter is to shed some light on how the state strives to take a proactive approach to oil and gas development, stimulating innovation and partnerships, and making researchers aware of this funding opportunity.

5. OGRP has funded a wide range of projects from fire safety to directional drilling technology. Can you talk about some ongoing projects that the OGRP has funded?

The OGRP is currently involved in a project to understand the effects of oil and gas development on the mule deer population and identifying measures to mitigate these effects. Another study tested various products that could be used to reduce dust in western North Dakota on roads. The program, along with its industry partners, helped establish UND's Geological Petroleum Engineering Program. The Energy and Environmental Research Center was recently awarded a grant toward its Bakken Production Optimization Program. This program is investigating new technologies and approaches to increase potential petroleum reserves in the Bakken - Three Forks while decreasing recovery costs in an environmentally sound manner. The anticipated results will include: less truck traffic, resulting in decreased diesel emissions, road dust, and spills; reduced road maintenance costs, wastewater production, disposal costs, and freshwater use; reduced land use impacts; and increased revenue for the state, royalty owners, and operators from added product streams, captured earlier in the well life cycle. It's an exciting time in the program's history and we're looking forward to providing information to the industry and the public on best practices to be used in developing oil and gas in North Dakota.

6. What are the characteristics you and the OGRP team look for in a potential project?

The mission of the OGRP is to promote the growth of the oil and gas industry through research and education. The oil and gas industry presents a number of opportunities and complex challenges.

The program recognizes these challenges, and harnesses relationships with the likes of Energy and Environmental Research Center in Grand Forks, North Dakota universities and colleges, exploration companies, service companies, and others. We look for projects that have reputable industry partnerships, and the ability to provide innovative solutions to complex challenges.

7. The Bakken seems to be constantly evolving. How have the projects—both submitted and approved—evolved in the past five years?

The OGRP has become increasingly competitive over the past five years and the quality of applications is improving, becoming more diverse, and specifically addressing key challenges and issues in the development phase.

8. Take us behind the scenes of the OGRP's work. What can you share about the status of its current group of projects?

Behind the scenes you'll find applications attempting to recycle drill cuttings into fertilizers, or examining additional uses or disposals for waste/byproducts. You'll find waste management and integrated waste screening demonstrations. You'll find a competitive market of natural gas projects testing commercial viability while utilizing the entire gas stream to capture natural gas in remote areas, not currently tied into pipelines. You'll find remote pipeline monitoring projects using unmanned aircrafts. The competitive market forces the applicant to improve its proposal, and oftentimes, adjust its funding request due to the variety of excellent proposals.

9. How will the next biennium impact OGRP's future success and role in the state's oil and gas industry?

Each biennium there is a constant effort to promote safety intiatives, education, and technological innovations and efficiencies. The state emphasizes the importance of research by assisting with developing the technology to more effectively produce North Dakota's oil and gas resources by tackling the key challenges facing production growth.

10. Every entity in the Bakken has a story. From your perspective, what is the story of the OGRP? The OGRP is led by an educated and engaged council and industrial commission. The public-private partnership integrated through this program helps define the past and future success of the state.

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MAKING IT

FINGERTIP SUCCESS: Josh Brown, JDP Automation project development engineer, checks the rail car unloading system touch screen controls developed for Nu-Tek Food Science in Fargo.

Automating Crude Movement

By Patrick C. Miller

Whether it’s pumping Bakken crude through a pipeline, sending farm machinery down an assembly line or filling single-serving food containers, JDP Automation‘s focus is on quality, safety and efficiency.

“We make stuff move,” says Glenn Mitzel, JDPA systems engineer. “What makes us different is the fact that we have the software skills to get data on how well it’s moving. People call us because they know we’ll come up with good solutions.”

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JDPA, based in Moorhead, Minnesota, was formed in 2010 by combining Midstates Engineering Corp. and Invie Consulting Inc., a merger that consolidated more than 30 years of industry knowledge under one roof. JDPA is a recognized systems integrator in the Rockwell Automation Partner Network Program.

In the Bakken, JDPA is proving its mettle in automated control systems by working in partnership with Enbridge, a major midstream company. The firm has provided Enbridge with controls for both its pipeline and transloading rail operations.

The BAKKEN MAGAZINE SEPTEMBER 2014

It’s currently developing a control system for Enbridge’s proposed Sandpiper Pipeline.

Josh Brown, product development engineer, says the pipeline pressure control system JDPA developed for Enbridge is a good example of what the company can do for the oil and gas industry.

“It’s probably the coolest system we’ve created so far,” he notes. “It’s a proactive leak detection system. A lot of pipeline companies put in systems that tell you there’s been a leak.”

In contrast, JDPA’s system is based

MAKING IT

Tailored to Meet Market Demands

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DELICATE WORK: Controls engineer Brett Ehresmann tightens wires into the terminal blocks for the circuit breaker of a PLC panel.

on how the pipeline is mechanically engineered and designed to operate. It spots problems before they become bigger problems. “We program to those standards so it will shut the system down before a failure occurs,� Brown explains. “When we see pressures or flows creeping outside anticipated ranges, we bring the system back down to a safe operating condition.

We do that continually. It’s built into the pumping routines.�

It’s like the difference between firefighting and fire prevention. “We’re working with Enbridge to do everything we can to mitigate the potential for leaks and spills,� Mitzel says. “Rather than saying, ‘Oops! It broke,’

you can see that it might be breaking and head off the problem by being smart and using the technology in your favor.�

The key is communicating in real time with the programmable logic controllers (PLC) JDPA programs to tell the system what to do and when to do it.

Remote control of the PLCs not only enables adjustments on the fly, but also provides JDPA’s customers a wealth of information on where changes can be made to improve productivity and efficiency. “If they really want to know why something is happening, we can give them the data they need,� says Jennifer Steiner, JDPA project manager. “Our inhouse software team can provide them

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for safety and environment

THEBAKKEN.COM

75

MAKING IT

CONTROL WORK: Kalvin Hoff, a controls engineer at JDP Automation, develops the human machine interface for the company’s automated control systems.

LUBE OIL SKID: The operating state of the lube oil system controls for an Enbridge pipeline pump, showing the ability to change from summer cooling mode to winter heating mode. The system also monitors total running hours of the pump.

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The BAKKEN MAGAZINE SEPTEMBER 2014

with those reports. We’re also able to create dashboards for them.”

It’s an approach that gives JDPA’s partners the ability to see what their systems are doing anywhere they have a wireless connection. It also enables JDPA to troubleshoot customers’ problems, no matter when they occur.

Ryan Bacon, project development engineer, remembers getting a call from an equipment manufacturer while driving down the Interstate. He used his smartphone to view their system and solve the problem within 10 minutes.

“We can get into all systems remotely,” he says. “There’s been a large push from companies in the oil fields for this type of access to multiple systems. You get the high-level overview of how the system’s working and can interact with it.”

As Mitzel notes, “Nine times out of ten when we get a service call, we solve it

MAKING IT

PUMP CONTROL: This screen shows the detailed operating state of an Enbridge pipeline pump. Pressures, temperatures, vibration, current, valve positions, and motor speeds are all monitored.

from the office. Very rarely do we hop in a car for a service call.”

JDPA started working in North Dakota’s energy industry in the coal mines where it developed controls to remotely monitor the draglines used to remove overburden above lignite seams. A former mining company electrical engineer who went to work for Enbridge recognized the need for the midstream to standardize its systems.

“He told them to call JDP Automation, and that’s how we got in the door,” Brown says.

JDP’s work with Enbridge has it looking to expand into other areas. For example, Mitzel says there’s more manufacturing being done in the region to support industry in the Bakken. Those businesses could benefit from controls technology that improve efficiency, productivity and safety.

In addition, Mitzel believes JDP’s

automated controls can benefit upstream producers.

“We’re trying to get closer to the wellhead. We’re exploring relationships with other partners to do the controls for oil, oil-water separation and the natural gas liquids—the hot topic these days,” he says.

JDPA’s automated remote-control systems also can help producers deal with North Dakota’s harsh climate, too.

“There are companies that have guys who do nothing every day but hop in a truck with a clipboard, drive to wellheads and sites to write down what’s on meters—all day, every day. It doesn’t matter if it’s 110 above or 40 below,” he says. “When they realize what we can do for them, they get very interested.”

THEBAKKEN.COM

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