Bakken Oil Report Fall 2018 issue by DEL Communications Inc.

Fall

2018

Bakken: A great place to live and work The Davis Refinery: The cleanest on the planet Outdoor Heritage Fund funds Bakken Development and Working Lands Program

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CONTENTS

Message from the editor, Shayna Wiwierski – Message from Senator John Hoeven –

Message from Senator Heidi Heitkamp – Message from Senator Steve Daines –

Publisher Jason Stefanik

Managing Editor Shayna Wiwierski shayna@delcommunications.com

North Dakota – A great place to live and work. Now. –

Sales Manager Dayna Oulion Toll Free: 1.866.424.6398

Bakken communities adopting strategies to address workforce shortage –

Outdoor Heritage Fund funds Bakken Development and Working Lands Program –

In the Bakken, a big problem lurks below the surface –

Coloradans could face economy-killing anti-oil & gas setback measure in November –

The extensive review of the Davis Refinery: The cleanest on the planet –

Collaborating to improve understanding of methane emissions along the natural gas value chain – The Bakken is back: Help wanted! –

The value of voluntary benefits –

One pump serves multiple applications –

Sustainable waste management strategies can

increase shareholder value –

The silent killer in ESP economics: Penetrators and lower connector failures – An evolution in solids treatment and waste control management –

Seven things to consider when choosing a flare gas flow meter – The Reynolds French story –

Advertising Account Executives Corey Frazer | Brian Gerow Mic Paterson | Anthony Romeo Contributing Writers Ria Edens | Bette Grande | Paula Hickel P. Rodger Keller | Michelle Kommer Mike Mayerhofer | Matt Sullivan Leen Weijers Production services provided by: S.G. Bennett Marketing Services www.sgbennett.com Art Director Kathy Cable Layout / Design Dana Jensen Advertising Art Dave Bamburak

Physics-based multi-variate analysis helps completion optimization –

President & CEO David Langstaff

© Copyright 2018 DEL Communications Inc. All rights reserved.The contents of this publication may not be reproduced by any means, in whole or in part, without prior written consent of the publisher. While every effort has been made to ensure the accuracy of the information contained in and the reliability of the source, the publisherin no way guarantees nor warrants the information and is not responsible for errors, omissions or statements made by advertisers. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officersor employees.

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BAKKEN OIL REPORT – FALL 2018

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MESSAGE

Message from the editor Shayna Wiwierski Business is booming once again in the Bakken. In this issue of the Bakken Oil Report, you’ll notice an underlying theme – the need for workers in North Dakota’s labor force. As we explore in the report from the Greater North Dakota Chamber of Commerce, the state’s labor force was 407,825 in May 2018, with 398,828 residents currently employed. Doing the math on that means that there is a 70.4 percent participation rate, the highest in the country. Currently it is a job seeker market, with more job openings than job seekers. So, what can we do to alleviate this issue? Well, there are many resources available to those wanting to pursue a career in the Bakken oilfield. First place to look? Take a peek through these pages as we explore various agencies that are available to help those looking for work. We also explore a few projects currently taking place in the area, as well as legislative topics, and supplier features that showcase new products. I hope you enjoy this issue of the Bakken Oil Report magazine, and as always, if you have any questions, story ideas, or comments, please feel free to send them my way. Strike oil!

Shayna Wiwierski shayna@delcommunications.com @DELCommInc

BAKKEN OIL REPORT – FALL 2018

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Utilizing carbon capture & sequestration to produce more energy with better environmental stewardship By Senator John Hoeven

North Dakota is on the cutting-edge of new technologies to help us produce more energy with better environmental stewardship. As part of these efforts, I secured approval from the Environmental Protection Agency (EPA) earlier this year for North Dakota to serve as the primary regulator of Class VI injection wells, which are used for the long-term storage of carbon dioxide (CO2). This will provide certainty for our energy producers to utilize permanent carbon capture and sequestration (CCS), allowing this technology to become more economically feasible. This is our latest achievement in advancing the use of CCS, which will benefit both traditional and renewable energy sources, and we’ve reached this goal after a decade of effort. We began working on this priority during my time as governor, when we established the North Dakota CO2 Storage Workgroup in 2008. The group was tasked with developing a regulatory framework for the long-term storage of CO2. The very next year, the state legislature passed a bill to do just this, while also establishing trust funds to cover the state’s oversight of, and longterm liability for, CO2 storage. Following this, we worked throughout the past two administrations to advance the state’s application for regulatory primacy with the EPA.

BAKKEN OIL REPORT – FALL 2018

Now, with this framework in place, we are continuing to support research and legislative reforms that are needed to develop and implement this technology. This includes our work to ensure that when CCS technologies are used for oil and gas production, the project developers receive the tax credits they are due. Currently, the Internal Revenue Service (IRS) guidance for receiving the CCS tax credit, known as Section 45Q, does not reflect differences between the two existing sequestration methods, geological storage, and enhanced oil and gas recovery. The IRS requires enhanced oil and gas recovery applications to meet regulations meant for geological storage, contrary to EPA policy, making it difficult to access the tax credit. To correct this, I have introduced my CO2 Regulatory Certainty Act, which would align the IRS rules with existing EPA regulations, allowing project developers to be better able to use the Section 45Q tax credit. I am also working through my role on the Senate Energy and Water Appropriations Committee to maintain strong federal support for CCS research and development. In June, the full senate passed funding legislation for Fiscal Year 2019 that increases funding

for the carbon capture programs at the Department of Energy (DOE). The DOE is an important partner for local, North Dakota organizations that are helping us to make the best use of our energy resources. To this end, the legislation includes $30 million for a new competitive grant to support the development of commercialscale carbon capture technology to be retrofitted on an existing power plant. The next phase of Project Tundra, a project being developed by the Energy and Environmental Research Center (EERC) in Grand Forks, in partnership with Allete Clean Energy, Minnkota Power, and BNI Coal, would be eligible for this grant. The bill also provides $25 million to develop supercritical CO2 technologies for coal and natural gas plants, similar to the Allam Cycle, another project headed by EERC, in partnership with Basin Electric and Allete Inc. These efforts – North Dakota’s regulatory primacy, reforming the 45Q guidelines and helping further EERC’s research – allow us to set the stage for the development and implementation of CCS. Making these technologies commerciallyviable represents an opportunity for our state to maintain its vibrant and growing energy sector, while also reducing emissions. That is a win across the board. w

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MESSAGE

Message from Senator Heidi Heitkamp North Dakota’s all-of-the-above energy strategy has brought jobs and prosperity to our state, and our success has boosted energy and economic security for the entire nation. Our success is the result of hard work and innovation on the part of oil producers in our state – and some common-sense policy wins, including a fight I was proud to lead in congress to lift the decades-old ban on exporting the oil. The U.S. has recently been exporting oil at record or near-record levels – and North Dakota crude is a major contributor to those numbers. And, some reports say the United States could become the world’s largest crude oil and petroleum products exporter as early as next year – beating Saudi Arabia. The 40-year-old ban on exporting oil was a relic of the Nixon administration that no longer made sense. I worked for a year and a half on a bipartisan deal to lift it with Republican U.S. Senator Lisa Murkowski in 2015. As we worked to persuade other members of congress, the case was simple: lifting the ban on exporting U.S. oil would keep our country safer, create American jobs, enable us to gain ground on our foreign competitors, and help stabilize oil markets and energy prices. Now, we’re seeing those arguments prove true. We’ve become increasingly more effective and efficient at producing oil, and my bipartisan bill extending and expanding the 45Q tax could ramp-up production even further. Now signed into law, it is encouraging technological innovation 10

BAKKEN OIL REPORT – FALL 2018

in carbon capture utilization and storage (CCUS) technology, which could boost enhanced oil recovery efforts in the Bakken. For the Bakken to continue to be successful, it’s vitally important to have accurate information about what’s below our feet. That’s why I pushed the U.S. Geologic Survey to conduct an updated assessment of oil and gas resources in the Bakken Formation and Three Forks Formation. The next assessment wasn’t supposed to take place until 2020, but past assessments reinforced that dramatically more oil and natural gas were available due to technological innovation in the industry. The oil and gas industry now employs over 70,000 people in North Dakota, helping lift our entire economy. We know firsthand that harnessing our natural resources just makes sense. But many others in congress don’t always understand that – and you can’t force policy changes. To make them lasting, you have to work hard to find consensus – which is what I’ve worked so hard to do in congress. We have a thriving oil industry and are creating more American jobs, and our nation is more secure for it. The oil and gas industry has changed North Dakota by bringing good paying jobs, new companies, technological innovation and huge royalty and tax revenue streams to our state and local communities – and has made us a true energy powerhouse. That’s a North Dakota energy success story worth touting. w

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MESSAGE

Message from Senator Steve Daines Montana is a net energy exporter. With the Bakken shale formation, the Powder River Basin coal reserves, and our abundance of natural gas, it is vitally important that states like Montana, the Dakotas, and Wyoming, have the ability to get these resources to market. Unfortunately, we have seen a rise in individual states who are inserting their political agenda into the permitting process and killing important energy infrastructure. This happened in Montana when Washington denied a permit to build an export terminal to deliver Montana and Wyoming coal to our allies in Asia Pacific. It is also happening in the northeast United States with New York denying natural gas pipelines which deliver reliable, affordable energy. It is only time until other states are using the law as a political weapon to deny oil pipelines or exports of agricultural products. That is why Senator Barrasso (WY) and I introduced the Water Quality Certification Improvement Act. This simple bill clarifies that Clean Water Act Section 401 Certificates, given by states for infrastructure projects, can only be denied for water quality reasons. States should not be able to deny important projects for political or unrelated issues. Clean Water certificates should be about one thing, clean water. If the United States is going to continue to grow to become a dominate player in global energy, then we need to be able to export and move around our products. This simple bill fixes that problem, and I look forward to working with my colleagues and the Trump Administration to continue to push the U.S. towards energy dominance. w

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2018

REPORT

North Dakota – A great place to live and work. Now. By Michelle Kommer In 2003, Peter Capelli, director of the

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Care Workers: Worse Than You Think”

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workforce shortage is a national issue affecting all industries. With 755,393 people living in North Dakota (2017), we would rank 18th on the list of largest cities in the U.S. But we are a state, not a city— a state that ranks 47th out of 50 in terms of population density, with 36 of 53 North Dakota counties considered “frontier counties” (2016), that is, a county with less than six people per each square mile. Our space and resources are vast, making North Dakota an attractive place to live and do business, which has gained national attention. In its annual report, U.S. News and World Report named North Dakota the fourth “best state” as measured by things like access to health care, education, and overall economic health. Travel and Leisure followed by naming North Dakota first for “quality of life”, drawing attention to our “social and natural environment.” North Dakota also received the attention of Newsweek, naming our state the “Best for Young Adults” largely due to abundant job opportunities. These are just a few of the many accolades of recent years that highlight what most of us already know about our great state. In May, North Dakota’s labor force was 407,825, with 398,828 North Dakotans participating in the workforce for a labor force participation rate of 70.4 percent—the highest in the nation. Our

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REPORT

continued

seasonally adjusted unemployment rate was 2.6 percent as of May, second only to Hawaii, and in tight proximity to the low unemployment rates in our neighboring states:

STATE

UNEMPLOYMENT RATE

Colorado

2.8%

Idaho

2.9%

Iowa

2.7%

Minnesota

3.1%

Montana

3.9%

Nebraska

2.8%

North Dakota

2.6%

Wisconsin

2.8%

Source: U.S. Department of Labor

The national unemployment rate of 3.8 percent is the lowest since 1969. In other words, unless you’ve been in the workforce for 50 years or more, this is the lowest unemployment rate seen during your career. This is good, right? Well…in many ways yes, but in North Dakota there are glaring indicators that our low unemployment has made it difficult for businesses to find the talent needed to operate and in particular, to grow. And of course, it is not just a matter of pure math (comparing the number of job seekers to jobs). North Dakota businesses seek qualified candidates— people with the skills, training, and talent necessary to perform specific jobs. But what if it were pure math? Are there enough North Dakotan’s to fill the jobs that are open today? Before we can answer that question, let’s look at how many open jobs there are in North Dakota. Job Service North Dakota (JSND) reports this number to be over 14,000. This number represents jobs posted by employers through JSND. However, because it is not mandatory for companies to use this free service, this number excludes job openings that are not

BAKKEN OIL REPORT – FALL 2018

posted at all, those posted by companies with less than 25 employees on company websites, and other jobs posted on sites like Indeed, CareerBuilder, Monster, etc. (with technology, JSND is able to “scrape” these job openings off job posting sites for companies with more than 25 employees). The 14,000 jobs currently listed also do not include instances where a company posts one job with more than one opening, such as a registered nurse. Informal and formal feedback from business owners, and industry and community groups support the premise that current job openings are understated, and the estimated number of actual job openings is much, much higher. In the near future, all employers’ quarterly reports to JSND will include a new field for the number of active job openings. While it will not be specific as to what type of job, at a minimum, we will understand the total number of actual job openings in North Dakota, which is essential for many reasons. Now back to the question: Are there enough North Dakotan’s to fill the jobs that are open today? We conducted a basic analysis to determine how many more North Dakotans would be working if all North Dakotans participated in the workforce at a rate of 70.5 percent (the labor market participation rate at the time of the analysis). This analysis did not consider barriers to employment, qualifications, geographic proximity to work, etc., all of which are crucial details. We merely wanted to know: Are there enough North Dakotans? Here is the answer: A quick evaluation of this chart tells us a few things, including the opportunity for greater youth engagement in the workforce, and possibly re-engaging our more senior residents, but most profoundly, it tells us that while our unemployment and labor market participation rates are positive markers, we need more qualified workers.

Upon taking office in late 2016, Governor Doug Burgum immediately acknowledged the pressing workforce challenges facing our state—now and in the future. With that acknowledgement was the need to create an actionable plan that is: a) Based on data and evidence; b) Led by private sector; and c) Emphasizes public/private partnerships to ensure maximization of resources with measurable outcomes. To assist with this effort, the Workforce Development Council’s (WDC) charter and membership were reinvigorated. Today, there are 32 council members, including private sector business leaders, representatives of organized labor, legislators, and city government officials united by a passion for North Dakota and a drive to create solutions—not “programs.” The WDC has been working since November 2017 to deeply understand the state’s workforce challenges, including stakeholder interviews, formal economic and labor availability studies, and most recently, the 2018 North Dakota Workforce Survey, jointly sponsored by Team ND and the Greater North Dakota Chamber of Commerce (GNDC), and assisted by NDSU’s Center for Private Enterprise and Public Choice. While analysis is still underway, not surprisingly, there are five primary themes emerging: 1) Nursing and health care tech shortage. The nursing shortage has existed for, arguably, 25 years. What makes today’s challenge different and unique? With the retirement of baby boomers and the associated increase in health care needs of our nation’s largest generation, the need for nurses and supporting health care workers is acute, particularly in our rural areas. 2) Middle skills gap. The “middle skills gap” is defined as a lack of workers with more than a high school diploma,

REPORT

continued

Source: Job Service North Dakota

but less than a four-year degree. Georgetown University Center on Education and the Workforce conducted a study, “Good Jobs That Pay without a BA: A State-by-State Analysis, 2017” which examines growth patterns of middle-skill jobs. The study indicates impressive growth in well-paying jobs for workers without a bachelor’s degree in North Dakota. 3) Cyber/tech education and jobs. The cyber security workforce gap is predicted to reach into the millions at a national level. As an emerging, but vital industry and skill set, North Dakota has an opportunity to become a leader in cyber security/information technology educational programs and jobs. 4) Populations with barriers to employment. As noted previously, North Dakota needs qualified workers. While our labor force participation is high, there are still North Dakotans not

at work. Target groups include people with disabilities, new Americans, Native Americans, and citizens currently or formerly incarcerated. 5) Coordination of resources. Putting the mirror on ourselves, we recognize opportunity to better coordinate resources managed by the State of North Dakota. Efforts are underway to organize our resources in a more cogent and cohesive manner, with a focus on service to our citizens. We await the results of the industry impact and labor market availability studies, as well as the workforce survey findings. Combining this insight with the discovery accomplished thus far, we will work to identify actionable recommendations to address North Dakota’s most pressing workforce challenges, considering economic impact, community health and vitality, and connection to the governor’s strategic

initiatives, in advance of the 2019-2021 legislative session. w Michelle Kommer was appointed to serve as the commissioner of labor upon Governor Burgum taking office. Her role was expanded in September 2017 to include leadership of Job Service North Dakota (JSND). The purpose for this consolidation of leadership was to increase efficiency, but more importantly, to identify one point of contact to coordinate the state’s workforce development efforts across agencies. To that end, her work transcends the Department of Labor and Job Service ND to include leadership of the Workforce Development Council and efforts to collaborate across several state agencies to ensure the coordination and maximization of resources. Previously published in the GNDC Report on Business. Reprinted with permission from the GNDC.

BAKKEN OIL REPORT – FALL 2018

REPORT

Bakken communities adopting strategies to address workforce shortage “It’s not capable of growing from where we are,” Helms said. “They can get people in here to run the rigs, but we’re still probably four to six frac crews short of where they would like to be. They’d love to hire another 500 to 600 people, but they’re not there.”

Geoff Simon, executive director of the Western Dakota Energy Association.

Companies in the oil business sometimes struggle for capital. Others have to contend with tough terrain or harsh weather. And some are forced to cope with environmental opposition. But in North Dakota these days, the biggest obstacle to success is finding enough workers to do the job. Bakken oil producers recently set a new daily average production record, but the numbers could be even better if more workers could be hired. The lack of available workers is the major constraint holding back the industry. Lynn Helms, director of the North Dakota Department of Mineral Resources, said the industry wants to grow and would add more drilling rigs in the Bakken, but the workforce just isn’t there.

BAKKEN OIL REPORT – FALL 2018

North Dakota’s 2.6 percent unemployment rate is among the lowest in the nation. The problem is the unemployment rate is low in other parts of the country too. And in a state like North Dakota where winter weather can be less than ideal, it means employers and the communities where they operate need to try even harder to attract workers. So what can North Dakota offer that other states don’t have? The answer is quality of life. A study conducted by AE2S Nexus on behalf of the Western Dakota Energy Association and oil-impacted communities revealed quality-of-life issues that need to be addressed in order for the Bakken to successfully compete with other oil plays for workforce. “Workers are finding comparable jobs with comparable pay in other shale plays with a lower cost-of-living that may have more moderate climates,” said Shawn Gaddie, AE2S Nexus division manager. “In order to compete with national oil and gas plays, North Dakota communities must continue to improve tangible and measurable quality-of-life aspects for their workforce.” To address the need to compete, communities in western North Dakota

have changed the way they think about promoting economic growth. Shawn Wenko, economic development director for the City of Williston, says nowadays he spends most of his time working on “things that make a city a city.” According to Wenko, people considering a new job and a new community are looking for more than an affordable roof over their head. He says they want a decent retail shopping sector, good restaurants, opportunities for recreation, quality health care, and top-notch schools. Williston and other Bakken communities are focusing more attention on those quality-of-life issues to make themselves more attractive to prospective employees. Cities in North Dakota’s oil patch have added those amenities to help attract new workers and their families. Almost all have built new schools and community recreation facilities, and are working hard to expand their retail options. But it all comes at a cost, which only serves to emphasize the importance of state policies that continue to re-invest oil tax revenue in the communities that support the oil industry. North Dakota legislators have gotten the message. There is a promising plan in the works for draft legislation that will assure oil-impacted communities have a dependable revenue stream to continue making improvements in their communities to compete for the workforce so essential to keep the industry and the state on the move. Let’s hope they follow through in 2019. w

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REPORT

Outdoor Heritage Fund funds Bakken Development and Working Lands Program

Energy development sites before conservation efforts. North Dakota's Outdoor Heritage Fund was established in 2013 as a multi-million-dollar program to provide grants to state agencies, tribal governments, political subdivisions, and nonprofit organizations, with higher priority given to projects that enhance conservation practices in this state by: Providing access to private and public land for sportsmen; improving water quality, soil Projects that are currently and formerly in the development phase for grant money.

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2018

conditions, plant diversity, and animal systems; conserving and restoring wildlife and fish habitat; and conserving natural areas and creating other areas for recreation. Since its inception, the program has funded 130 projects totaling $37,022,250. One of the most recently funded projects, Bakken Development and Working Lands Program, received $2,170,000. This project

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evolved from a 2016 assessment that was completed by stakeholders in agriculture, energy, government, and conservation about oil development in the Badlands. A unique feature of this project is that it will partner with the Department of Mineral Resources (DMR) for a holistic approach to reclamation of abandoned well sites. DMR will continue to utilize the Abandoned Oil & Gas Well Plugging & Site Reclamation Fund to reclaim abandoned wells and well sites, but by partnering together, the entire surrounding area will be revitalized. This project will create habitat on irregular lands near development sites and enhance the grassland ecosystem and the agricultural economy in the entire region. The project will also create Urban Nature/Interpretive Sites (UNIS) near towns within the Bakken. Public and private partnerships will be created to restore, maintain, and enhance native prairie ecosystems that contribute to native species conservation, as well as conservation of the ranching culture.

Project area map.

There are diverse landowner benefits available through this program, such as assistance with prescribed grazing strategies, recommendations for cover crops that would be well-suited for grazing and soil rehabilitation, establishment of vegetation and habitat by energy development sites, and/or establishing vegetation and habitat around energy development sites. Going further, there may be cost-share available for grass seeding (which may include payment during the establishment phase), installation of range infrastructure, and implementation of restoration activities. An example of cost-share structure would be 60/40 on fencing and water to create a rotational grazing system, along with technical assistance in developing the grazing plan.

Partners for Fish & Wildlife Biologists, Ducks Unlimited Biologists,

Access to this program is available from a variety of resources. Supporting partners available through NRCS, local Soil Conservation District offices, ND Game & Fish Biologists, US and the ND Natural Resources Trust (NDNRT). If you have a piece of property that youâ&#x20AC;&#x2122;re interested in having assessed to see whether this program would be a good fit, contact any one of those resources and they can help make that determination. Visit the NDNRT website for the summary brochure for more information and resource contact details at www.ndnrt.com/ image/cache/BDWLP_Promo_Brochure_w-partners_list.pdf. You can also contact Jesse Beckers, conservation program coordinator with the ND Natural Resources Trust, at (701) 2238501, or Jesse@NaturalResourcesTrust.com. w

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2018

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In the Bakken, a big problem lurks below the surface By Bette Grande Spend any time in Williston, ND this summer and you will feel the energy. No, it is not 2014 again, but the activity and optimism is unmistakable. The Bakken has seen challenges over the past few years and the signs are that the oil and gas industry in North Dakota is alive and well. But, challenges remain. The August 2018 Director’s Cut released by the North Dakota Department of Mineral Resources showed that daily oil production dropped over 20,000 barrels in June from the record set in May. Issues with natural gas capture and processing were given as the primary cause of the production drop, but there is another issue affecting drilling activity around Lake Sakakawea, the battle over property rights. When I served in the ND Legislature, there was a saying “Whiskey is for drinking, but water is for fighting.” Battles over water rights were common and colorful. Today the fight is not about water itself, but what lies beneath that water. Specially, who owns the minerals lying under Lake Sakakawea. This battle has far reaching implications. Both sides in this legal battle agree with certain basic facts. It is understood that the federal government owned the rights to the Missouri River, including the river bed, from Ordinary High Water Marks (OHWM) on either side of the river. And, when North Dakota was granted statehood, that property became stateowned under the equal footing doctrine. The legal question centers on the definition of the OHWM.

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The Missouri River enters North Dakota about 20 miles west of Williston and runs diagonally through Bismarck and to the South Dakota border. In 1944, the U.S. Congress authorized several flood control projects along the Missouri River, one of those projects was the Garrison Dam. The U.S. Army Corps of Engineers (Corp) acquired surface rights to the lands that would be inundated by the reservoir created by the Garrison Dam, named Lake Sakakawea. Over a series of legal battles, the ownership of the minerals under Lake Sakakawea has been disputed. In 2017, the ND Legislature passed SB 2134 attempting to clarify the mineral ownership issue. The current lawsuit is an action challenging that statute. There is no question that the surface and mineral interests outside the traditional Missouri River channel have been held privately by families for generations. The issue stems from the government’s decision to dam the Missouri River near Garrison, ND, and the result was the reservoir known as Lake Sakakawea. Is Lake Sakakawea merely an extension of the Missouri River as some argue? If so, they argue that the minerals lying under the lake are now owned by the state of North Dakota. Private property owners argue that a man-made decision to dam the river did not convert the underlying minerals to state-owned property, but those minerals remain with the prior owners. This is an important property rights issue. Of course, the reason for these legal battles is money. The Bakken tight oil play and horizontal drilling make the oil and gas under Lake Sakakawea safely accessible, and quite valuable. Historically, U.S. Highway 85 that runs north and south through western North Dakota has been a dividing line between Lake Sakakawea and the Missouri River. Highway 85 crosses the Missouri River just a few miles west of Williston, ND and the water lying east of the Highway 85 bridge was considered Lake Sakakawea, while the water to the west was considered the Missouri River. For many years, state policy was to claim the historic riverbed east of Highway 85 and the current riverbed west of Highway 85. Leases were executed between mineral owners and oil companies, and hundreds of wells were drilled in reliance on that policy. The Bakken oil play is still in the early stages, just under 13,000 unconventional wells have been drilled to date, and it is

REPORT

estimated that another 47,000 wells are required to fully develop the Bakken resources. The royalties to the oil and gas located under Lake Sakakawea are significant and the North Dakota Department of Mineral Resources estimates that there are approximately 12,600 private royalty interest owners affected by the legal battles.

This dispute is having a significant impact in North Dakota, with

When horizontal drilling accessed the minerals under the lake, the state’s position on those minerals changed. In an earlier case the state argued “simply because the Corps dams up a river, and backs up water, and gives that water body a new name, it does not mean that the water body did not exist at statehood” (“Murky Waters: Industry, royalty owners question whether state is trying to claim minerals under Lake Sakakawea”, Dickinson Press, October 14, 2016).

depending on how this issue is resolved, the leases could be

The argument that the minerals lying under Lake Sakakawea are owned by the state was picked up in the current lawsuit. The plaintiff’s argue that the statute passed by the Legislature in 2017 attempting to clarify mineral ownership under the lake amounts to an unconstitutional giveaway of state-owned property. Not surprisingly, private mineral owners affected by the lake see things differently.

with this argument, the impact on private property rights will be

drilling programs covering affected areas being delayed. These delays impact the orderly and efficient development of the resources, increasing costs and ultimate recovery. For existing wells in affected areas, leases have been executed, lease bonuses royalties have been paid in reliance on prior state policy. But, invalid if the proper owner was not a party to the lease. Also, will parties receiving royalties under any invalid lease be responsible to refund those royalties? Who owns the minerals? In Wilkinson v. Board of University and School Lands, the state argued “[T]he [ordinary high water mark] must be determined as it exists today, including the effect of man-made features such as the Garrison Dam.” If the court agrees significant. w Bette Grande is a research fellow, energy policy at The Heartland Institute. Reach her at governmentrelations@heartland.org or 312377-4000. Grande represented the 41st District in the North Dakota Legislature from 1996 to 2014.

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REPORT

Coloradans could face economy-killing anti-oil & gas setback measure in November By Michael Sandoval Colorado voters could have the chance to vote on a proposed 2,500-foot setback for new oil and gas development on November’s ballot, as proponents of the measure, Initiative 97, delivered more than 170,000 signatures to the Colorado Secretary of State’s office on August 6.

the setback buffer would exclude more than 85 percent of Colorado’s non-federal lands from future oil and gas development, including more than 78 percent of the surface area in Weld County, the state’s topproducing county in both oil (90 percent) and natural gas (39 percent).

Colorado Rising, the group backing the statutory proposal, hopes to increase the 500 and 1,000-foot setbacks currently in place to a nearly half-mile buffer away from “occupied structures” and “vulnerable areas.”

Of the state’s top-five producing counties— Weld, Garfield, La Plata, Rio Blanco, and Las Animas counties—94 percent of nonfederal surface acreage would be off-limits, a staggering loss.

According to the Colorado Oil & Gas Conservation Commission, expanding

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With that much surface acreage off the table, a report commissioned by the Common Sense Policy Roundtable concluded that production values would decrease by 54 to 70 percent by 2030, a loss of between $110 and $141 billion. As many as 147,800 direct and indirect jobs spread across the state’s economy would disappear, along with state and local tax revenues from avoided severance, property, income, and other taxes of approximately $825 to $1.1 billion annually by 2030. Those losses would directly affect Colorado’s taxpayers and mineral rights owners, who could face as much as $26 billion in takings losses, according to the Colorado Alliance of Mineral and Royalty Owners. Faced with the prospect of losing their retirement holdings—a fact pointed out by Colorado’s Democratic Gov. John Hickenlooper—lawsuits for stranded assets would put taxpayers on the hook, while the overall loss of revenues to state and local coffers would jeopardize critical education, law enforcement, and other infrastructure dependent on oil and gas revenues.

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The issue is hardly partisan, as the only prominent backer of the measure, aside

from the anti-oil and gas activists, is the state’s Democratic Party. Former Obama Interior Secretary Ken Salazar called the initiative “unconstitutional” and “way off the map” in July. Every single Democrat and Republican running for the governor’s seat in 2018 has opposed the measure (Hickenlooper is term-limited), with U.S. Rep. Jared Polis, the Democratic candidate, expressing his opposition to the measure’s hardline position on setbacks, saying he would like to see “flexibility for landowners who want to permit oil and gas production closer than a rigid setback might allow.” Colorado has spent many years kicking the can down the road on the issue of oil and gas policy, from the measures backed by Polis in 2014 that were pulled at the 11th hour in favor of a blue-ribbon oil and gas commission, to the failure of 2016 when a similar setback effort, as a constitutional amendment, did not garner enough signatures to make the ballot. Colorado’s Secretary of State has 30 days until September 5 to validate the information submitted by petitioners to ensure the measure has the 98,492 signatures necessary for ballot eligibility. Even if successful in November, the measure would likely face an immediate cascade of legal challenges from the industry, business community, and mineral rights owners. However, after years of local battles, it’s looking like it is finally time to see how antioil and gas sentiments fare statewide. w Michael Sandoval is an associate energy policy analyst with the Independence Institute and a consultant who advises pro-business groups.

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The extensive review of the Davis Refinery

The cleanest on the planet With contributions from Meridian Energy Group Davis Refinery Engineering & Permitting Team

The Davis Refinery is now fully permitted. This achievement was the result of a long, arduous and intensive process, with numerous agencies and governing bodies participating or monitoring every step. Many doubted Meridian’s ability to accomplish this, but Meridian Energy Group and its engineering partners were confident in their vision, determination, and design capabilities to permit the Davis Refinery as the cleanest refinery on the planet. Nearly five years ago, Meridian had set out to do what no other organization had ever attempted – engineer and design the 26

BAKKEN OIL REPORT – FALL 2018

first full-conversion refinery in the U.S. to achieve Synthetic Minor Source status for air quality, and Meridian accomplished that task on June 13th, 2018. However, even before Meridian was able to apply for the Permit to Construct (PTC) application from the North Dakota Department of Health – Air Quality Division (NDDoH), Meridian had to apply for siting permissions in the form of a rezoning and conditional use permit (CUP) from Billings County. As part of the CUP process, the county was tasked with the comprehensive review of the location of the Davis Refinery and its impact on the local environment and surrounding areas. Billings County issued CUP in July of 2016 after a review so detailed it took approximately two-to-three-times longer than a typical review of similar magnitude. With the siting of the Davis Refinery fully approved by Billings County, Meridian completed additional site-specific engineering, and in November of 2016 submitted its application for the PTC to the NDDoH, beginning an 18-month review of the Davis Refinery engineering by NDDoH. The PTC application and supporting engineering represented a convergence and integration of the latest and best available control technology ever assembled in a modern refinery. The scrutiny and demands made by the NDDoH were intense, including the need for the Davis Refinery to achieve and maintain Class 1 Air Quality standards during full operation due to its proximity to the Theodore Roosevelt National Park. “The Meridian leadership team’s commitment to the lowest achievable emission rate technology was consistent throughout the process. The confirming review by the NDDoH was the most thorough review I’ve been involved with in my career,” said Dan Hedrington, senior project manager. This thorough review included advancements in testing methodologies

Nearly five years ago, Meridian had set out to do what no other organization had ever attempted – engineer and design the first full-conversion refinery in the U.S. to achieve Synthetic Minor Source status for air quality, and Meridian accomplished that task on June 13th, 2018.

We put a lot of work into that, and we're confident that our numbers are correct. It was a very extensive review, and we feel it does demonstrate that is was a minor source. – Terry O'Clair, director of the state Health Department's Air Quality Division, on an air quality permit issued for the Davis Refinery new Theodore Roosevelt National Park. Three groups have filed an appeal related to the permit.

and more extensive modeling and evaluation than had ever been required before. In fact, throughout this journey, Meridian consistently explored the possibilities of making Davis even cleaner than they had initially envisioned, and they succeeded. Meridian’s supplemental amendment to its initial submission significantly decreased the already compliant emissions that were previously attainable by Davis. On June 13th, 2018, Meridian was issued the PTC for the Davis Refinery. The NDDoH ensured that its extensive review and approval would be bulletproof and binding. The department even included and welcomed the perspectives of potential opponents, such as the EPA and the National Parks Service, throughout the review process to ensure the outcome was sound and could not be challenged. Their confidence in the review and the lengths they went to protect the decision and the air quality of Western North

Dakota was just as innovative as the project they were reviewing. “We put a lot of work into that, and we’re confident that our numbers are correct. It was a very extensive review, and we feel it does demonstrate that it was a minor source,” said Terry O’Clair, director of the State Health Department’s Air Quality Division, on the Davis Refinery air quality permit issued. The voices of the citizens of Belfield and the outlying communities were also heard, and the agencies took the time to review hundreds of public comments issued on the Davis Refinery, some that supported and others that challenged the science behind the decision to approve Davis for construction. And in the end, the department stood by its decision and joined the Billings County Zoning Commission as firm believers that the Davis Refinery was not only in the ideal location, but would set the standard for refining for years to come. w BAKKEN OIL REPORT – FALL 2018

COLLABORATORY TO ADVANCE METHANE SCIENCE

Collaborating to improve understanding of methane emissions along the natural gas value chain

Methane is the second most abundant greenhouse gas in the atmosphere and is an important target for emissions reductions to minimize environmental impacts.

step as we look for ways to encourage

“The use of natural gas is already reducing carbon dioxide and traditional air pollutants in the United States and around the world, but further reduction of methane emissions greater amplifies the positive impact of natural gas,” said Chris Smith, SVP for policy, government and public affairs at Cheniere, the largest U.S. exporter of LNG. “Supporting peerreviewed science is an important first

members of the Collaboratory for

the reduction of methane emissions throughout the domestic natural gas value chain.” This sentiment is echoed by the other Advancing Methane Science (CAMS), a new industry-led collaborative research consortium working to advance methane science to better understand global methane emissions and the need for additional solutions. Cheniere, Chevron, Equinor, ExxonMobil, and Pioneer Natural Resources initiated

the effort being managed by GTI, a leading research, development and training organization that has been addressing global energy and environmental challenges for 75+ years. These energy companies recognize the importance of collaboration and have been continually engaged in large research studies characterizing methane emissions from natural gas operations, as well as developing approaches to reduce environmental impacts from their operations. CAMS will build on these decades of prior collaborations that have resulted in an improved understanding of emissions. CAMS will address methane emissions from all sectors along the entire natural gas value chain, from production to end use. Working together with scientific experts and academic institutions, CAMS will develop rigorous technical information to identify opportunities for emissions reduction and to support the development of sound environmental policies and regulations.

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Member companies will prioritize and fund research with the assistance of an independent scientific advisory board (SAB), comprised of independent leaders in relevant research fields. The SAB will provide input to identify priority areas of research and provide feedback on plans to help ensure high-quality research projects. Once the factual data is developed, effectively communicating findings to program stakeholders and the general public is a primary focus. Results will be independently published by the research project team in peer-reviewed journals to provide scientifically rigorous information

CAMS participants. to operators, government agencies, academia, industry organizations, and other stakeholders to advance methane emissions research. These research efforts will complement recent methane emissions studies sponsored by government agencies and academia, and build on lessons learned from that body of work. New tools and technologies to better detect leaks and characterize emissions will be evaluated, and practical solutions for emissions reduction will be identified. Individual research projects, managed by GTI, will focus on detection, measurement, and quantification of methane emissions with the goal of finding opportunities for reduction. The first two topics on the docket are aerialdirected LDAR and harmonization of past top-down studies.

A two-phase study on aerial-directed LDAR will identify technology solutions that potentially are more cost effective than current EPA and other government-approved ground-based optical gas imaging (OGI) technologies for LDAR application. Phase 1 will review the objectives, findings, and recommendations of studies from other research organizations evaluating new methane detection technologies for LDAR to identify scientific gaps. If it is determined certain parameters were not considered in the evaluations, additional field testing will be performed. The second phase would be a field study at operational oil and gas facilities and analysis of the collected data to compare to approved OGI techniques.

analysis of past top-down studies based

The objective of the harmonization study is to carry out a comprehensive re-

advancing methane science and would

on recent findings from a RPSEA methane reconciliation study that highlights the importance of temporal and spatial variabilities of methane emissions in active basins. Other research area topics can be found on the CAMS website at methanecollaboratory.com. “The natural gas and oil industry has a long-standing commitment to understanding and continuously improving its environmental performance based upon scientific knowledge, and this is an exciting extension of those efforts,” notes Kristine Wiley, the R&D director at GTI who is managing the program. “We are always looking for additional companies who share a commitment to like to join us.” w

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The Bakken is back:

Help wanted! By Paula Hickel

The Bakken is back! With the increase in oil prices this year, the Bakken job market has continued to make an upward swing. Overall, it is currently a “job seeker” market in the Bakken, with far more job openings than job seekers. Job openings in the Bakken The number of job openings in the Bakken region has steadily remained around 3,000 to 3,500 in the past couple of months. That’s about one-third higher than last year at this time, when there were about 2,000 job openings.

The Job Service Workforce Center in Williston offers free use of computers and printers to any job seeker.

Class A CDL drivers, oilfield, and construction occupations continue to have the most job openings, accounting for over one-third of the available jobs. In these areas, the job openings to job seeker ratio is about two to one, with a continued shortage of job seekers. Job seekers with a Class A CDL, clean motor vehicle record and a few good references are almost guaranteed a job in the Bakken’s current job market. Job openings for installation, maintenance, and repair workers also remain high. Sales occupations, including oil-related sales, are also significantly high in demand. Health care practitioners and teachers continue to be in high need as well. In the health care industry, there are at least five positions available for every qualified job seeker. Office and administrative support is another area where there has been a notable number of job openings. However, there are twice as many job seekers than job openings for these office positions. Highly-skilled, experienced workers are landing these jobs. Job seekers utilize the Job Service Workforce Center

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The Job Service Workforce Center in Williston offers free use of computers and printers to any job seeker. Many people typically use their phone as a their “computer,” but job seekers often find it cumbersome to complete online applications or create resumes on their phones. Job seekers utilize the Job Service Workforce Center computers to search and apply for jobs through the www. jobsnd.com, directly through company websites, and/or other job banks. There are various staff-assisted services

job seekers utilize at the Job Service Workforce Center, free of charge, as well. Job seekers readily seek Job Service staff assistance to create or enhance their resume to highlight their skills and experience that align with the job descriptions. Hiring employers tend to be very skill-oriented in the Bakken. Many job seekers are unfamiliar with how to market their job skills within their resume. Job Service staff find that once a job seeker’s resume is enhanced to better highlight his/her skills, the job interview offers come rolling in. Job Service staff also help prepare job seekers to nail their interview. In the Bakken, once resumes are submitted and interviews are completed, job seekers are being hired on to companies fairly quickly. Employee seeking in the Bakken Unemployment claimants are few. Core oil counties in North Dakota hover at a 2.2 percent unemployment rate. The rate is nearly half of the national unemployment rate, and nearly one-third less than non-oil counties in North Dakota. How are companies dealing with the shortage of workers? Housing allowances, per diem, and sign-on incentives are making their way back into the Bakken. Companies are beginning to increase salaries as well.

Many employers are marketing themselves to job seekers as being “family friendly,” emphasizing the importance of a work/ family balance. Investing in employee retention, companies are offering various work shifts to meet the unique needs of job seekers. There continues to be a steady influx of workers from out of state coming to the Bakken to achieve their goals of financial freedom. Although many of these job seekers come with no oilfield experience, they often have transferrable skills that help them get started in an entry-level oilfield position. The entry-level oilfield positions are generally higher paying than what they were able to make with their job skills “back home.” Most excitingly, there is always room for advancement once they have “oilfield experience” to add to their resumes! The Bakken is back! Well, the Bakken job market is back, that is, as there are plenty of jobs to go around. Now, if we could just get about 3,000 more skilled workers to fill them, that would be fantastic! w *Sources: Region 1 Online Job Openings Report; North Dakota’s Oil and Gas Economy; United States Department of Labor: Bureau of Labor Statistics; Job Service North Dakota - Williston Monthly Workforce Center Report Paula Hickel is the Williston Workforce Center manager at Job Service North Dakota.

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Liberty Oilfield Services

Physics-based multi-variate analysis helps completion optimization An example for the Central Basin Middle Bakken By Leen Weijers and Mike Mayerhofer, Liberty Oilfield Services

Completion strategies have differed depending on the area in the Williston basin. What works best to lower dollars per barrel of oil? In this article, a new statistical analysis methodology based on completion and production data available in the public domain will be described (NDIC, 2017) and applied to middle Bakken wells in the Central Basin (T148-159N, R97-104W).

completion parameters to improve the “dumb” MVA and make it

In general, two general types of analysis are used to determine what makes a better well. On one hand, “dumb” statistical analysis methods, such as multi-variate analysis (MVA) can help us find “accidental” relationships between well production, completion, and petrophysical parameters. Despite the complexities in the model workflows, they uncover independent relationships between parameters without providing a physical reason regarding why there might be a relationship. On the other hand, “smart” physical models such as calibrated frac and reservoir models can be used to determine theoretical production sensitivities.

for your completion buck.”

The advantage of the statistical method is that information for thousands of wells are readily available, whereas calibrated modeling is generally only done on a few wells. In the new method, the strengths of both methods are combined by including well-understood physical relationships for common

Stage spacing sensitivities are weaker and exhibit a minimum

more realistic at predicting well performance. Once a MVA production model has been created, a frac and completions pricing model can be applied to determine how production changes as a function of completion parameters and determine which completion parameter provides the “best bang An evaluation of the impact of three physics-based completion parameters: proppant mass, stage intensity, and pump rate show that a dollars per barrel of oil optimum is not reached by increasing the proppant mass indefinitely. The hybrid physicsbased MVA model predicts a production increase that at some point stops offsetting the increase in cost, thus leading to higher dollars per barrel of oil. Using a representative Williston cost model, the minimum one-year dollars per barrel of oil is indicated at about 750 pounds per foot treatment size. around 200-feet stage length (50 stages for a 10,000-foot lateral). However, the sensitivity to pump rate is quite strong and indicates continuous decrease of dollars per barrel of oil up to a maximum pump rate (analysis was limited to 100 barrels per minute). The minimum dollars per barrel of oil shifts towards larger proppant mass or treatment sizes as a larger time frame is considered. The shift to larger optimum treatment sizes for a longer producing period occurs because the well cost remains fixed while the production benefit with increased treatment sizes becomes larger in the long term. This would imply that pumping

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at least 1,000 pounds per foot of proppant mass with 20 barrels per foot of clean fluid would still result in improved economics for short-term five-year production metrics in the Williston Central Basin, provided there are no other limitations such as tighter well spacing and associated inter-well communication.

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completion parameters. The MVA model indicates that for both Middle Bakken and Three Forks, the most significant completion parameters in order of importance are proppant mass per foot of lateral, pump rate, average pumped proppant concentration (fluid system) and stage spacing. The economic optimization based on one-year dollars per barrel of oil in the Middle Bakken indicates an optimum proppant mass of 750 pounds per foot, a stage spacing of 200 feet (or 50 stages for a 10,000-foot lateral), and pump rate approaching 100 barrels per minute. And lastly, optimization with longer-term three- to five-year dollars per barrel of oil as metric, suggests larger treatment sizes of 1,140 pounds per foot as the economic optimum. References are available upon request. Liberty customers can request free access to our Frac Trends Viewers in various U.S. basins. Request access or more information at www.libertyfrac.com/trends/. Conclusions A hybrid MVA model with “transformed” completion parameters based on physical relationships results in more realistic predictions of well performance as a function of these

Acknowledgements To Karn Agarwal, Oladapo Oduba, Ely Lolon, Howard Melcher and Jenn Bartell for help with the preparation of this paper. w

BAKKEN OIL REPORT – FALL 2018

Noridian Insurance Services, Inc.

The value of voluntary benefits By Matt Sullivan, director, Noridian Insurance Services, Inc. It’s no secret that North Dakota is an employees’ market. For several years running, North Dakota has enjoyed one of the lowest unemployment levels in the nation, which means that in many fields, employees can pick and choose where they want to work. This is especially true in western North Dakota.

differentiator that can aid their retention

Attracting and retaining staff in this type of environment can be difficult. Of course, cash is always king, but assuming you’ve successfully attracted talent with competitive wages, how can you help ensure they will resist the temptation to try a new workplace that offers comparable pay in a year or two (or less)?

In addition to these more traditional

Supplemental insurance packages that offer programs such as life insurance, dental coverage, vision coverage, and short- and long-term disability are often highly regarded by employees and offer businesses the opportunity to add a

for care, in-home nursing services, and

strategies. In the era of high health insurance premiums, products such as HSAs (health savings accounts) and GAP plans help employees offset higher deductibles and can be used for services ranging from routine office exams to hospitalizations. supplemental plans, we’re seeing increasing popularity of programs that provide coverage for more specific medical circumstances. Supplemental cancer coverage, for example, works in conjunction with medical insurance and covers services including travel chemotherapy. Accident coverage provides a lump-sum payment to the employee to help pay for expenses including emergency room visits, transportation and lodging, and physical

Empire Oil Company offers a comprehensive package of oil and gas land services. Located in the heart of the Williston Basin, the Bakken Shale and Three Forks formations, we are in the midst of the largest on-going energy play in the United States. Our clientele come from a wide spectrum of industries, from closely held corporations to larger publicly traded companies. We currently provide services in the states of North Dakota and Montana.

• Mineral and leasehold ownership • Title research and examination • Lease acquisition • Abstracting land, mineral and royalty title • Title curative • Due diligence • Seismic permits • Site and surface evaluation • Land use permits • Pipeline/ROW agreements • Appraisal of mineral acres Empire Oil Company 510 2nd Street W. Williston, ND 58801

BAKKEN OIL REPORT – FALL 2018

701-774-2824 www.empireoil.net

therapy. An added benefit to employees is that many of these types of programs also offer cash incentives for annual well checks. In addition to the benefits provided to employees, supplemental programs also benefit employers by reducing your overall premium costs and providing you an option to help employees mitigate the impact of higher deductible costs. There are many programs and variations available, however, and we understand that not all employees need or want the same types of supplemental coverage. That’s why we take a consultative approach in working with employees to help them determine which programs are the most appropriate for them. Someone with a family history of cancer may want to explore cancer coverage options, whereas a young parent with children who are active in sports may find accident coverage to be a welcome supplement. In a competitive job market like North Dakota’s, any unique offering can make the difference between retaining a quality employee or having to re-invest in hiring and training replacements. We’ve found that many of our state’s small employers are not yet taking advantage of the voluntary offerings that are available to them and their staff. Any company with two or more employees can provide these benefits, and plans can be up and running in as little as 60 days. Getting started is as easy as visiting our website – mynisi. com – and choosing an agent to learn more about the programs available and how your business can get a leg up on offering benefits that employees want and appreciate. w

Dixon

One pump serves multiple applications

Introducing a frac pump that's maintenance friendly and can move low-to-high-viscosity products at variable flow rates.

During the fracking process, there is a variety of equipment that is used. In this article, we will focus on positive displacement pumps and reviewing the Dixon JRZL Series Frac Pump. A truck will blend chemicals to send to the missile on the low-pressure side that will eventually be pumped into the well. A positive displacement (PD) pump is used for this process, as the mixture can range from water-like viscosity to the thickness of toothpaste. There are many types of PD pumps to choose from, and a lot of variables go into choosing the right one. Size, cost, range of pumping products, shear characteristics, weight, ease of maintenance, and durability are all factors to be considered. Dixon Frac Pump as a solution Typically, on a blender, there are six-toeight PD pumps installed on a truck. Because product mixture flows variably, often a blender uses three different sized pumps on one truck. With the Dixon JRZL

Series Frac Pump, one size can deliver any of the flow rates needed by adjusting the speed of the pump. On low-viscosity products, the JRZL can supply a flow rate as low as 0.5 GPM up to 18 GPM. The flow is measured by high-end flow meters and corresponds to the data that is entered in the PLC at the command center. The flow rates are the critical element required by frac pumps. With the Dixon JRZL, one pump can be adjusted to meet the various flow requirements. It is not a case of one size fits all, but rather one size pump can be adapted to fit many applications. With the ranges in viscosity of the product mixtures different companies use, variable flow rates are common. The trucks may all look the same, but the mixtures are different, and pump performance is critical. Design simplicity equals less inventory and maintenance What are the advantages of using one size pump versus three? One pump saves the

customer from stocking multiple sizes of repair and replacements parts. The Dixon JRZL Series Frac Pump allows you to use the same spare parts and repair kits for all pumps, instead of requiring parts that are specific to each pump. Front-loaded tungsten carbide by tungsten carbide mechanical seals are standard on the JRZL. They do not require removal of the pump from the truck to perform maintenance. Simply remove the front cover of the pump, and the customer has access to all wetted parts. The hydraulic motor adapter can be re-used, as it is not an integral part of the stainless-steel gear box. Dixon can create special adapter plates to match an existing bolt pattern so no re-drilling of an existing base plate is needed. The Dixon JRZL Series Frac Pump can satisfy most of your blending PD pump needs. Contact Dixon at 800.789.1718 or visit dixonvalve.com/pdpump to learn more, or schedule a free demonstration. w BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2018

Scott Energy Technologies LLC

Sustainable waste management strategies can increase shareholder value By P. Rodger Keller, Scott Energy Technologies LLC Shareholders and lenders are increasingly requiring oil and gas companies to incorporate sustainable practices into their core business. Investors and lenders are taking note. Companies that embrace financially, environmentally, and socially sustainable waste management practices tend to outperform their peers. With this in mind, oil and gas companies can strengthen their bottom line, reduce their environmental footprint, and enhance their social license to operate (SLO) by employing sustainable drilling waste management strategies. Drilling waste is a high-volume waste stream, with hundreds of millions of barrels produced each year in the onshore U.S. market alone. Drill cuttings and its associated fluids are conventionally viewed as a financial liability requiring disposal. Consequently, drilling waste management is traditionally approached by getting the waste “out of sight and out of mind” through practices that include landfilling, landfarming, and on-site burial.

However, each of these methods has sustainability issues and risks that can adversely impact a company’s bottom line. Landfilling and landfarming consume large areas of land and their residual impacts include leaching, runoff, air emissions, vegetation damage, toxicity to animals, and uptake by humans. Social impacts of disposal facilities may consist of increased truck traffic, decreased property values, odors, noise, unsightliness, and increased demands on community health services. During the recent oil and gas downturn, numerous drilling waste management companies went into bankruptcy and left behind waste processing and disposal sites that taxpayers and waste generators (oil and gas operators) are left to clean up. This can result in a polluted parcel of land unsuitable for redevelopment for a viable tax-generating use until properly remediated. Poor practices can negatively affect operators Conventional drilling waste management practices create liability

with material implications on an oil and gas company’s bottom line. If waste is not effectively contained or sequestered, contaminants can migrate and impact land, water, vegetation, wildlife, cattle, and humans, leaving oil and gas companies on the hook for remediation. When waste from various generators is commingled at a facility, each generator has essentially assumed the liability of all the waste generators for that facility. When a disposal facility operator goes bankrupt and abandons a facility, the waste generators are on the hook for remediation and closure of the site. Drilling waste remains a liability for the oil and gas company, even after disposal. Waste management costs and environmental liabilities are not the only factors with material implications. Social license issues are inevitably tied to poor waste management practices, which can increase expenditures and negatively affect shareholder value. Social issues are often triggered by environmental issues, leading to material repercussions for an oil and gas company. Permitting delays mean lost revenue, delayed

During the recent oil and gas downturn, numerous drilling waste management companies went into bankruptcy and left behind waste processing and disposal sites that taxpayers and waste generators (oil and gas operators) are left to clean up. 36

BAKKEN OIL REPORT – FALL 2018

Scott Energy Technologies LLC

point-of-first sale (POFS) time, and lost opportunity costs. Lawsuits result in costly legal fees. Negative publicity, a high-profile company-community conflict, and other social factors can impact shareholder confidence, resulting in lower stock prices. Committing to sustainable practices is key

Sustainable waste management practices are not only environmentally advantageous, but also socially and financially beneficial. By recycling drilling waste in a responsible and strategic manner, oil and gas companies have a tremendous opportunity to improve shareholder value, while enhancing their community reputation. w

P. Rodger Keller is a design engineer at Scott Energy Technologies LCC in Longview, Texas. He currently specializes in environmental and geotechnical engineering.

Sustainable drilling waste management strategies mitigate environmental, social, and financial issues that arise from conventional waste management practices. The keys to success are source reduction and an assessment of how waste can be converted into a valueadded asset, rather than a liability. An example of source reduction includes maximizing the efficiency of the mud system, which results in reduced waste volumes while lowering waste management costs. Using sound science and proven technologies to recycle drill cuttings into engineered drilling pads, production pads, and lease roads perfectly exemplifies the value of turning waste into an asset. Committing to sustainable practices will quickly pay environmental, social, and financial dividends to oil and gas operators, as well as the community. Waste constituents are immobilized, protecting the soil, water, air, vegetation, wildlife, and human health. Truck traffic will be reduced, a lower volume of waste will be generated, and better compliance with regulatory agencies will all translate into social benefits and more positive publicity. Financial benefits include reduced costs of disposal, trucking, construction and maintenance, as well as reduced liability. Best practices can also lead to a reduction of non-productive time (NPT), which can result from poorly constructed roads and pads. BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2018

QCI

The silent killer in ESP economics: Penetrators and lower connector failures Sand... salt... corrosion... deviations... deep KOP’s... hot-bottom hole

integrity that is spliced onto the cable string, as these areas are

temperatures… production declines. Electrical submersible pumps

prone to failure. Loss of production, NPT (non-productive time), and

(ESP) have enough issues to deal with in this dynamic and harsh

all associated downtime will negatively affect your lift operating

environment known as the “Bakken”. Premature failures due to

expense (LOE) and can cause you to miss desired production

electrical integrity is one operators should not have to be concerned

volumes. This has become the norm when dealing with ESP’s in the

about when running an ESP. For decades, there have been many ESP

Bakken until recently when QCI opened their new facility in Williston

providers to choose from, but only one ESP penetrator company in

in October of 2017.

the Bakken… until now.

For over 25 years, QCI has been providing operators with a

One of the main ESP failure modes, regardless of the company, is

penetrator solution that doesn’t have connections or splices in the

the lower connector spliced onto the ESP cable string right below

well. The P3000-2 penetrator system is a continuous feed-through

the wellhead. When a failure occurs, operators must mobilize a rig,

design passing the ESP cable through the wellhead with just a

nipple up BOP’s, fift the tubing string, and check the lower pigtail

simple cable seal, no splices and no connections to fail. This simple

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306-421-4641 38

info@ijack.ca

BAKKEN OIL REPORT – FALL 2018

www.ijack.ca

• Hand Protection • Gas Detection

• Fall Protection

•

• Safety & PPE Supplies Provide custom website creation for easy ordering

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LYLE LORDEMANN

O: 307.472.5519 C: 701.580.4252

llordemann@rmiwyoming.com

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patented design delivers the same rating as the ESP cable and is certified to 5,000 PSI working pressures at 350° F. The system has other benefits as follows:

QCI

In nine short months in the Bakken, QCI has disrupted and captured the ESP penetrator market with the majority of ESP operators due to their reliability, cost-savings, and ease of installation.

• Over 45,000 installations worldwide in harshest environments with 99.95 percent reliability. QCI penetrators do not fail. • Installation time takes less than 30 minutes. Traditional field splices take at least 1.5 hours. • No workover rig needed to check downhole electrical integrity. You can check at surface in QCI’s conduit box before mobilizing a rig. • Vent at wellhead per API 6A’s recommended best practices. Eliminates need for J-Box.

• Entirely new QCI cable seal penetrator each workover and reuse of all surface equipment. Currently, competitors redress existing penetrator.

due to their reliability, cost-savings, and ease of installation. Since QCI’s penetrator is smaller in diameter than the competition, they have been able to retrofit operators’ current wellhead inventory to a QCI system with a dummy mandrel, saving the customer thousands of dollars by repurposing the hangers, adapters, cover plate systems, and surface cable. Utilizing customer-owned ESP wellhead equipment and surface cables have been a major factor in customers making the quick switch to QCI. They have seen the value that QCI brings to the market that was once not there nine short months ago.

In nine short months in the Bakken, QCI has disrupted and captured the ESP penetrator market with the majority of ESP operators

We invite you to join the success and reliability others are enjoying with QCI as their ESP penetrator and wellhead supplier. w

• QCI supplies wellhead solutions for ESP installations that can land in all tubing spools eliminating the use of unsafe recompletion spools, DSA’s, MLE, and GT-6 adapters that leave you open hole. • Flexibility to use customer-owned property and retrofit dummy mandrel system for minimal cost exposure.

BAKKEN OIL REPORT – FALL 2018

E2TERRA

An evolution in solids treatment and waste control management material is what helps make it cost effective for our customers. Terra Waste was developed by E2TERRA’s patent holder and inventor as an organically-based, environmentally clean, cost-effective solidification product that effectively will pose as a worthy alternate to traditional and currently-held methods.

Utilizing E2TERRA’s novel approach, clients can reduce the cost of solids waste control while ensuring a more eco-friendly natural end-product.

Terra Waste is a competitively priced product and represents clearly the most sound solution to solids treatment and non-biodegradable waste control management products developed in the past 50 years.

Due to environmental concerns and

of solids waste control while ensuring a

regulations, the need to process,

more eco-friendly natural end-product.

transport, and dispose of drill cuttings

Relying upon our vast knowledge of the

of direct and indirect exploration waste

drilling and geological applied sciences

in an eco-friendly manner has become

industry, E2TERRA developed E-Series

an important and expensive aspect

Terra Waste, a unique product to stabilize

of oil and gas extraction. The goal of

exploration generated waste. Terra Waste

E2TERRA was to successfully provide a

is readily adaptable to solidify flow-

cost-effective product for the oil and

back waste in its many forms generated

gas and industrial waste industries

during stimulation operations.

that have no long-range effects to the environment. That innovative idea has now become a successful reality.

Terra Waste stands out from our competitors. Our product contains no fly ash, and instead it is derived from

Utilizing E2TERRA’s novel approach, our

a by-product of a consumable food

clients can (and have) reduced the cost

source. This natural makeup of our

BAKKEN OIL REPORT – FALL 2018

Terra Waste’s patented process has been field tested and used over the last eight years in the Williston, Niobrara, and Haynesville basins with effective results. Our customer base has been pleased with its time elapsed in stabilization, as well as an improved performance window in that it does not fall prey to shelf life perishability which is common with most oxide-based solidification products. In most cases, the volumes of treated areas surpass common oxides, in addition to its costeffectiveness. With E2TERRA being based out of Williston, North Dakota, we originate all of our core ingredients in manufacturing within a favorable radius of our location. This allows us to be readily available for our customers. Helping to stabilize drilling waste in a safe manner is a vital concern. E2TERRA believes our material and methods are not only a cost-effective approach, but also a safe and reliable alternative. w

A REVOLUTION IN SOLIDS TREATMENT AND CONTROL Due to environmental concerns and regulations, the need for you to process, transport, and manage your exploration related waste is of the utmost importance. Our geo-synthetic material solidifies drilling waste efficiently and is cost effective. We pride ourselves in the manufacture and sale of our materials using regional sources from the Dakotas.

Innovation at Work for You Our material has a core based organic make up. E2TERRA sources and ships all material locally, taking great pride in this concept. Call or email for a custom tailored solution.

701-577-5349 natalie.elmore@e2terra.com 701-934-1882 chris.calva@e2terra.com

BAKKEN OIL REPORT â&#x20AC;&#x201C; FALL 2018

Fox Thermal

Seven things to consider when choosing a flare gas flow meter By Ria Edens, project manager, Fox Thermal Researching technologies can be a timeconsuming challenge to any engineer, especially when dealing with the oil and gas industry. Finding the right flow meter technology to monitor the flow of flare gas is no exception to that rule. There are several functions, limitations, and agency requirements that often lead a research path back to the drawing board when the technology can’t meet the requirements. We will review some of the drawbacks, limitations, and benefits of common flow meter

technologies offered to the oil and gas industry today:

1. Reporting requirements

• Differential Pressure (Head) Type • Orifice Plate

standards set by emissions-reporting

• Mass Type – measures the mass flow rate directly • Coriolis • Thermal Mass

For instance, the EPA has generally set

• Velocity Type • Ultrasonic • Turbine • Vortex

Call us for all of your travel needs, 701-258-5024.

It’s

YOUR flight on

Reporting requirements and the accuracy agencies like the EPA must be considered. the accuracy requirement at less than five percent. Accuracy can range amongst both technologies and manufacturers, so always check with the manufacturer for accuracy specs of their flow meters. Other agencies, like the BLM (§ 3175), have additional requirements

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800-932-8924 • 701-258-5024 • Fax 701-258-2693

marketing@executive-air.com 42

BAKKEN OIL REPORT – FALL 2018

www.executive-air.com

511 2nd Street West, Williston, ND 58801 701-572-3786 | mangerins.com

Fox Thermal

on measurement and reporting of uncertainty of bias, gross heating values, gas density, and more.

that verify the meter’s calibration with printable certificates to avoid unnecessary downtime.

In addition to the flow of the gas to the flare, the limitations of certain technologies will require additional equipment to measure temperature, pressure, and moisture content to use in the calculation of the flow of gas to the re.

3. Turndown

customer service record will tell you a lot about what you can expect if there is a problem with the flow meter out of the box.

Turndown, sometimes referred to as “rangeability,” indicates the range in which a flow meter can accurately measure gas. It compares the high to the low end of measurement. A 10:1 ratio indicates the flow meter can measure a tenth of the maximum flow.

2. Installation and maintenance requirements

6. Approvals You’ll want to be sure that your new flow meter is a rugged instrument that has all the necessary approvals to ensure the integrity of its design. 7. Flow velocity and changing conditions

4. Straight run requirements

Not every flow meter is easy to install. Some flow meters are more complicated than others to install and need highly skilled technicians or even manufacturer assistance for installation on site. Moving parts can lead to part failures that interrupt flow or cause damage to a system. Other devices are more sensitive to outside vibrations that will affect accuracy or the long-term integrity of the flow meter. Periodic recalibration of flow meters adds padding to maintenance schedules, increases downtime, and leads to decreased production. Some manufacturers offer diagnostics

Flares are known to be particularly

In order for most technologies to read correctly, there are specified lengths of straight pipe that must be before and after the placement of the meter’s measurement elements in the pipe. This length must be kept in mind for sites that have limited straight pipe distances before the flare. Follow manufacturer’s guidelines.

challenging because the flow to the

5. Price, manufacturers’ warranty, and service record

time. Some manufacturers offer the

A low sticker price is always better for the bottom line, but check the manufacturer’s warranty to be sure that it will cover defects. A quick Internet search for reviews of the manufacturers’

flare may be minimal for long periods with brief instances of high-velocity flows during a burn-off of waste gas. A flow meter that works well at both very high and very low flow velocities is ideal. Gas compositions at well sites can be complex mixes and can change over ability to change the gas composition data in the flow meter electronics in the field. This feature can reduce the risk of a shutdown to recalibrate the flow meter. w Abbreviations: BLM - US Bureau of Land Management

Technology

Thermal Mass

Vortex

Turbine

Ultrasonic

Coriolis

Pressure & Temperature Compensation required

Yes

Installation*

Inline

Insertion

Inline

Moving Parts

Yes

Turndown

Between 3:1 & 6:1

100:1+

10:1

20:1

10:1

Pressure Loss

Medium

Low

Medium

Low

Medium to High

Price

Medium

Low

Medium

High

*Inline meters require removal of pipe section. BAKKEN OIL REPORT – FALL 2018

Reynolds French

The Reynolds French story To best understand a company like Reynolds French, one should take a look at its 75-year history and philosophy. In the mid-1940s, Earl Reynolds and Don French began the company making repairs to cast iron equipment by a nonwelding method called “metal locking” or “metal stitching.” In fact, they began in Tulsa, Oklahoma as a franchise of the Metal Lock Corporation, doing nothing except making crack repairs. This was done in the field, as well as in their shop. When the franchise broke apart in the ‘50s, the pair of men were free to start doing their repairs as Reynolds French. Most importantly, this meant they could explore and implement new methods of repair well beyond simple metal stitching, such as strength reinforcement in the casting, taking them from a crack patching business to a casting repair business. Thus, they were able to achieve a better job for their customers by finding new and innovative methods. And it separated Reynolds French from the other metallockers. That philosophy of discovering newer and better ways, and a willingness to diversify, is what allowed Reynolds French to grow. This has been the hallmark of the company ever since. They found their niche in the energy sector, mainly for engines, compressors, steam turbines, pumps, and associated cast iron parts. During the 1960s, Reynolds French (R-F) tripled its shop size and began doing in-house machining and fabricating. In the 1970s, they diversified once more by becoming a full-service field machining company, using specially designed portable boring equipment, flange facing equipment, and portable milling 44

BAKKEN OIL REPORT – FALL 2018

Machining flange in field. machines. As a part of this expansion of machine services, mainframe and crankshaft alignment was developed. As its reputation for alignment expertise grew and became widespread knowledge, Reynolds French was approached by a major manufacturer of epoxy grouting and chocking products to be a stocking territorial distributor. The products were being presented as maintenance of alignment. This happened in 1980 and represented a diversification in two important ways. First, they now sold something by another company, not 100 percent of their own. And second, they now ventured into products, which the

company had not done before in its history. For the first few years, Reynolds French was given a two-state territory. Then in 1984, their distributorship was expanded to 17 states. Reynolds French in this same approximate time frame also expanded its field machining to include crankshaft pin turning and polishing with specially designed machine equipment. Many other machining and casting repair services were innovated as well. In the late 1990s, having worked with so many pipeline companies, they began making pipe supports in their shop from the epoxy materials they stocked and sold, plus making the steel

Reynolds French

clamps and base plates in their own fabrication section of their shop. This was accomplished under the brand name Tulsa Pipe Supports (TPS). Again, the philosophical willingness to make a significant addition, going against the grain of its past, was developed into a major segment of its business. And it has grown almost every year since. Another product, literally invented, designed and manufactured solely by R-F personnel, was their patented Flywheel Lock. The idea was originally problemdriven in 2007 by a customer who said, “You guys can do anything, and nobody has come up with a good way to hold the flywheel and crankshaft safely in place, exactly where we need to have it in its turning radius. Can’t you come up with a solution?” So, Reynolds French did. And once more, this was out of their comfort

zone, but it was done successfully and it has helped many customers. Last year they embarked on a new venture, Reynolds French Lubrication Systems. Targeted mainly at the compressor market, they brought in a team with over 50 years of experience and expertise in obtaining the most superior components for optimum lubrication. Inspection, engineering, installation, and training separates them from most other lube parts companies. The story of Reynolds French, as told above, is an abbreviated account of a few of the highlights of this unique company. The enduring philosophy of aggressive diversity, plus the can-do attitude of their highly capable personnel, make Reynolds French a most-likely continuing success story into the future. w

Chockfast red grout under skid.

TPS pipe support, clamp & base plate.

Family • Safety • Integrity Accountability • Social Responsibility

Our mission is to safely provide quality, dependable maintenance, and construction services to the energy industry. While working alongside our customers, we strive to meet and exceed expectations through consistently aligning ourselves with our company core values. Our Services:

www.emservicesus.com 701-842-6309 “Providing Services to the Oil and Gas Industry”

• Hot-shot

• Welding & Fabrication

• Insulation

• Well Testing

• Roustabout Services

• Gauging & Pumping

• Hydro-Excavation

• Painting & Sandblasting

• Pipeline & Civil Services • Developmental Construction • Facility Maintenance & Management • FLIR Optical Gas Imaging (OGI)

BAKKEN OIL REPORT – FALL 2018

OL H O C L A DRUG & TING TESe 24 hours

availabl SICALS ES mENT pHy y O L p STIONNAIR m E E U q / G IN • DOT/ TEST ATOR fIT pRECHECk , IC w T • RESpIR , E ES - Hm A SERvIC

Our services include:

S • TS G COURSE IN IN A R T y RAINING • SAfET SpICION T U S E L b A REEN EASON Ox & ESC f m • DER/R R O f / ’S ONIC CCf • ELECTR y & Trust!”

• Filter Sales • Filter Disposal “

, Integrit ATfORD CITy y t li a u Q , s t w It all coun ILLISTON & SERvING S

IDNEy, w

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3 Reasonable Suspicions 3 Return to Duty/Follow-ups 3 All Checkers employees are

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DOT qualified with certifications

3 3 Staffed Locations to Serve Your Needs Sidney • Williston • Watford City

Visit Our Website: www.drugcheckers.com TOLL FREE: 1-877-488-5901 SIDNEY: 406-488-5900 WILLISTON: 701-572-5900 WATFORD CITY: 701-842-3900

INDEX TO ADVERTISERS Api Distribution................................................................................................37

Ijack Technologies........................................................................................38

Basin Transload..............................................................................................22

Keller Consulting..........................................................................................29

Bismarck mandan Development Association...........................28

Liberty Oilfield Services............................................................................33

Blue Cross Blue Shield Of North Dakota....................................... 7

Manger Insurance.........................................................................................42

Borsheim Crane Service............................................................................... 3 Checkers................................................................................................................46 Dixon......................................................................................................................IFC E And M Services...............................................................................................45 E2terra....................................................................................................................41 Eldred environmental...............................................................................39 Empire Oil Company.......................................................................................34 Executive Air Taxi Corporation............................................................42 Fox Thermal Instruments.......................................................................... 5 Graham.............................................................................................................. OBC

Minnesota Limited..........................................................................................41 North Dakota Recorders Information Network..................29 Oilfield Waste Logistics............................................................................46 Pec Safety.............................................................................................................31 Polyguard Products.................................................................................IBC Precision Equipment.....................................................................................11 Quick Connectors............................................................................................ 9 Reynolds French & Company.................................................................25 Riverbend Oil & Gas........................................................................................15

Graybar..................................................................................................................32

Rocky Mountain Industrial Supply..................................................38

Grit Energy Services.....................................................................................13

Taylor Machine Works................................................................................14

Heal Systems.......................................................................................................19

Thermon Heating Systems........................................................................24

Herc Rentals.......................................................................................................30

Txam Pumps.........................................................................................................23

BAKKEN OIL REPORT – FALL 2018

Need a superior coating for above ground pipelines? Talk to one of

our owners

Above ground pipelines suffer their own stress â&#x20AC;&#x201C; especially degradation under harmful sun rays. We now have a unique RD-6ÂŽ UVO Overcoat to protect pipes from blistering UV Rays and employee owners to demonstrate its stability. Working with an owner gets you more.

Innovation based. Employee owned. Expect more.

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