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VOLUME 2 NO. 4

APRIL 2014

www.PBEMag.com

FRACKING:

65 YEARS AND COUNTING 8

53-Story Energy Tower May Become 12

Two Smaller Towers

Oilfield Fatalities

Stress Importance of Life Insurance • U.S. RIG COUNT • TOP 35 Drillers & Operators

Industry Data

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News

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Events

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RESTAURANT BITES EL RANCHO

Auctions

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Calendar

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Travel

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Tips

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Energy

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Tech


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To Advertise call

(432) 559 - 5886 or email

sales@pbemag.com

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APRIL 2014

contents

Pbe Features 8

Fracking: 65 Years and Counting

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12 53-Story Energy Tower May Become Two Smaller Towers 28 Oilfield Fatalities Stress Importance of Life Insurance

Other Editorials

15 Calendar of Events 16 Nonmarketed Natural Gas in North Dakota Still Rising due to Higher Total Production 22 Conferences in April - May 23 Upcoming Auctions 24 Advice for Mineral Owners from Permian Basin Land Girl 27 Safety Tips - Why New Hire Orientation is Important 31 Put Cultural Bias Aside for Safety 32 Festivals and Events in Texas

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34 PBE Cares - Midland Children’s Rehabilitation Center 36 Tech Bites - Wind Industry’s New Technologies are Helping It Compete on Price 38 PBE News Briefs: Basin, Offshore, State, Nation, World, Shale & Government 42 Restaurant Bites - El Rancho 44 PBE Inspires - A Five Year Old Theologian & Feeling Stuck 46 By The Numbers: Texas Rig Count, Top Drillers, Top Operators 49 This Month in Petroleum

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LETTER FROM

THE EDITOR “…when someone has been given much, much will be required in return; and when someone has been entrusted with much, even more will be required.” - Luke 12:48 This issue of PBE carries a special meaning for those of us closely involved in producing this monthly magazine. April marks the one year anniversary since we took over this publication and hit the streets with our first issue. Our inaugural, April 2013 cover story featured the beginning discussions of the energy tower to be built in Midland with the very impressive, artistic rendering of the skyscraper gracing our cover. A year later, the project is still in the planning stages and rumors are now spreading of the once large tower being split into 2 smaller towers. A news reporter for the local CBS affiliate gives a complete update in this month’s issue, one year later. Another anniversary was celebrated in late March, marking 65 years since fracking technology changed the way we drill. You’ll read an in depth story in this issue about how the breakthrough revolutionized the oil and gas industry and continues to impact the Permian Basin today. Along with several other industry updates from around the basin, state, nation and world, you’ll also be introduced to an unforgettable and still fairly new locally owned and operated Midland restaurant that’s making a name for themselves among Mexican food buffs and oil and gas companies alike. Finally, you’re sure to be encouraged by our monthly submission from Pastor Daniel Stephens in PBE Inspires and we’ll give you a quick update on possible changes in store in the area of wind energy technology. Whether it’s a change in season, change in plans for the energy tower or the constant change in technology we face, change is inevitable in our lives. My wife and I are experiencing that reality first hand as we prepare to have twin girls, promising lots of change to come in our ever growing family. One constant we can always count on is the hope and promise that each day brings, if we are prepared for the challenge. As a strong believer in an all-powerful, all-knowing God, I’m constantly reminded that each day I’m given is another day for me to accomplish the great works He has laid out for me and my family. That faith combined with the unrelenting Texas spirit to always reach higher and push farther gives me an incredible hope for what’s to come with each beautiful West Texas sunrise.

Carlos Madrid Editor in Chief/Publisher sales@pbemag.com

/PBENERGYMAG @PBENERGY

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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EDITORIAL CONTRIBUTORS

PBE MAGAZINE CONTACTS VOLUME 2 NO. 4

EDITOR IN CHIEF/PUBLISHER Carlos Madrid sales@pbemag.com 432. 559. 5886

Taryn SnideR FREELANCE WRITER tarynsnider@gmail.com

ART DIRECTOR/LAYOUT & GRAPHICS Luke Pawliszyn Lukasz Design Studio West Hollywood, CA luke@lukaszdesign.com ADVERTISING For advertising info call 432. 559. 5886 or email sales@pbemag.com

DANIEL STEPHENS

ACCOUNT EXECUTIVE Tiffany Clemons tiffany@pbemag.com 432. 978. 2393

SENIOR PASTOR Mid-Cities Community Church Midland, TX daniel.stephens@midcities.org

SUBMISSIONS Submit story ideas & other news to haley@pbemag.com

Kimberly Harless - Smith CEO

PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886

Development Resources, Inc.

Tiffany Hokett Vice President American Safety Services, Inc.

www.PBEMag.com

/PBENERGYMAG

@PBENERGY

DeAnn Lopez Copyright © 2014 Permian Basin Energy, Inc. • Mad Ads Media All rights reserved. Reproduction in whole or in part without the written permission of PBE MAGAZINE, LLC is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at time of going to press, but we accept no responsibility for omissions or errors. PBE Magazine welcomes any comments, feedback, suggestions, and/or submissions for consideration for publication. These may be submitted to: sales@pbemag.com.

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CBS 7 News dlopez@cbs7.com

MAT T RIST CBS 7 News mrist@cbs7.com


APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Fracking: 65 years AND COUNTING by Taryn Snider

This year, hydraulic fracturing, or fracking proponents are celebrating 65 years of the process but not everyone is joining in on the celebration. Despite all the benefits of fracking we still find ourselves in the midst of a global anti-fracking movement. Although the process is nothing new, environmental and health concerns began to surface in the 1980s but the controversy really exploded in 2010. Since then, the oil and gas industry has faced heavy scrutiny from antifracking activists. With all the supposed awareness that is being raised on the issue, it’s become necessary for fracking advocates to spread some awareness of their own. The (literally) groundbreaking technology was born in 1949 when the very first commercially successful fracking operation was performed but closer examination reveals that fracking can be traced back to the 1860s when nitroglycerin was used to stimulate oil wells resulting in oil shooting. In the 1930’s, well acidizing was first explored as a technique to create fractures and increase productivity. These techniques were instrumental in the advancement of new technologies which lead to the very first attempt at fracking a well in the Hugoton Oilfield in Kansas using napalm and sand. Of course, it wasn’t until a few years later in March of 1949 that the hydraulic fracking technique lead to commercial success in Oklahoma and Texas. 8

It’s estimated that since the first successfully fracked well, over 2.5 million wells have been fracked worldwide. Approximately 60% of all wells today are fracked. Because fracking increases production and adds to reserves by making them economically feasible for development, it’s estimated that 45% of natural gas production and 17% of oil production would be lost within five years without fracking. Furthermore, the efforts of George P. Mitchell in the 1980s and 90s in improving fracking technology ultimately lead to the ability of natural gas extraction in the Barnett Shale. Due to his pioneering of shale rock extraction, he is credited with fathering the technology that launched the current oil and gas boom in North America.

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


There is no doubt that fracking has benefited our economic way of life. Nevertheless, even with all its advantages, fracking has been the pawn of great criticism, to put it lightly. Fracking has been blamed for the environmental and health effects of groundwater contamination, air contamination, surface contamination and the mishandling of waste. Fracking has even been accused of causing earthquakes. While sources of such allegations range from the Hollywood elite to the far left environmentalists, it basically boils down to a mess of misinformation caused by an ill-informed crusade against fracking. It should be noted that even the EPA uses hydraulic fracturing as a method for cleaning up pollution at Superfund sites. When you combine the heavy criticism and the fictitious allegations, you end up with what is known as the antifracking movement. The movement actually began, innocently enough, in 2008 when a young man from Pennsylvania happened to receive a letter from a natural gas company who was interested in leasing his family’s land to drill for gas.

to establish a link between fracking and earthquakes then that should be good enough for us as well. Going forward, it’s important that oil and gas industry continues to counter the anti-fracking crusaders by educating the community. With the facts on our side, it’s only a matter of time before the clouds of misinformation begin to clear and expose the fundamental ideas for what they are. In the meantime, the shale revolution continues to press ahead. It has gone from supplying only 1% the natural gas in the United States in 2001 to 25% today. That number is expected to increase to 46% in the next 20 years. As the access to reserves change, not only could we become less susceptible to the whims of OPEC but it could also mean a more level playing field among energy producers and equal opportunities for energy independence for those willing to get on board. The possibilities are long lasting if not endless and are certain to be exciting for us in the Permian Basin.

Perhaps this company would have thought twice about their interest in the land if they had known that this young man, Josh Fox, was a graduate of Columbia University and an environmental activist. Alas, the result – a reckless, inaccurate and irresponsible documentary titled Gasland. It’s hard to say how this documentary, the Duke University study which is best described as bogus science, and the movie Promised Land all came to be at around the same time but it was a perfect storm that birthed a crusade. The bad news is that these radicals can be rather loud. The good news is that we, the oil and gas industry, have science on our side. We’ve had sixty five years without a single instance of groundwater contamination, air contamination, or surface contamination caused by hydraulic fracturing. But if you really think about it, if it were so easy for the gases to just seep through the thousands and thousands of feet of shale rock then it wouldn’t be necessary to drill for it in the first place. Concerning the possibility of accidents that may have resulted by the mishandling of waste, oil and gas companies are more proactive now than ever and they are self motivated. The executives of these companies share the same water, air and land that we all do. As for the earthquakes, well, if the U.S. Geological Survey fails APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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53-Story Energy Tower May Become

Two Smaller Towers by DeAnn Lopez

??

Discussions are beginning to circulate that Energy Related Properties, the developers of the Energy Tower Project in Midland, may change their plan from constructing a 53-story tower downtown to building two separate 25-story towers instead. The potential change comes amidst concerns from many Midland residents about the towering size of a 53-story building downtown. Mayor Jerry Morales has yet to confirm with developers on whether or not the rumor is true, but he did tell us that he feels the community would be more welcoming to the idea of having two smaller towers built instead.

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“You know, to tell you the truth, I really don’t want to know the answer until they’re (Energy Related Properties) fully prepared. We want to make sure when they announce what they’re going to do that they’re going to be able to answer every question, so there won’t be any rumors,” said Mayor Morales.

CBS 7 reached out to Midlanders to see what they thought about the possible changes.

It’s been quite the talk of the town since the City of Midland and developers of the Energy Tower first announced their plans to construct the 53-story skyscraper. After hearing that the skyscraper may now instead consist of two smaller towers, CBS 7 attempted to look into the matter, but was unable to reach representatives for Energy Related Properties for a comment. However, officials with the Midland Chamber told us that Wendell Scooter Brown, one of the partners of the Energy Tower Project, was the one who said that developers were in the process of making the changes. “Personally I would be in favor of seeing two towers. I think it would have a nicer appeal to downtown, I bet they could probably construct it sooner,” said Mayor Morales.

“It creates new jobs, new opportunities, and I think they’re going to have apartment buildings, so it creates even more housing for people. I know that’s something Midland lacks, so I’m all for it,” said Midland resident Rania Khouri. “I’ve seen it over built here before and don’t like what’s left after the boom is over. I think that (the two smaller towers) will be a little easier to clean up,” said another Midland resident who wished to remain anonymous. Mayor Morales says that if two towers were to be built they would most likely replace the old Midland Court House and the Midland Center in Centennial Plaza. Whether or not the developers decide to build two smaller towers, they will have until September 30 to come up with a finalized plan to present to city council who will then determine the final outcome. DeAnn Lopez, CBS 7 News dlopez@cbs7.com

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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OBSERVANCES AND CELEBRATIONS

APRIL 2014 Birthstone: Diamond Flower: Sweet Pea, Daisy National: National Humor Month International Guitar Month Keep America Beautiful Month Lawn and Garden Month National Poetry Month National Pecan Month National Welding Month Stress Awareness Month

4-5 31st ANNUAL CELEBRATION OF THE ARTS

Are you Mad for the Arts? This event is set in Midland’s Downtown and Centennial Plaza. 65 Visual Artists in juried show indoors, outdoor entertainment, Pet Parade, interactive arts experiences, festival refreshments & more. For additional information: info@acmidland.org (432) 687-1149 or www.acmidland.org

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World Health Day

Sponsored by United Nation’s World Health Organization (WHO), World Health Day focuses upon a different health theme each year. It is an international event to emphasize and work on important health issues or problems. Many countries around the world participate.

14 PASSOVER

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15 Titanic Remembrance Day

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National Garlic Day

Titanic Remembrance Day is dedicated to the memory of the Titanic, and over 1500 people who died. On this day in 1912, the Titanic sank in the icy waters of the north Atlantic ocean.

Income taxes due

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EASTER

Earth Day Birthday

Learn how to make a difference with us! Children can plant seed bombs, form shaving cream planets, make litter bugs and learn how to filter water. There will also be demonstrations and activities available for adults. 6:30pm. Permian Basin Petroleum Museum. 432-683-4403

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National Prime Rib Day

MAY 2014 5

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Cinco de Mayo

8-10

5th ANNUAL CRUDEFEST TEXAS MUSIC FESTIVAL The biggest oil & gas celebration of its kind features over 20 bands. www.thecrudefest.com

Birthstone: Emerald Flower: Lily-of-the-Valley and Hawthorne

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Memorial Day

Mother’s Day APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Nonmarketed natural gas

in North Dakota

still rising due to higher total production Source: EIA, principal contributors: Michael Ford and Neal Davis

Natural gas production in North Dakota’s portion of the Bakken Shale formation has grown significantly, alongside the rapid rise in oil production in the state. Natural gas production has outpaced additions to the state’s gas pipeline capacity and processing facilities. As a result, the amount of nonmarketed natural gas output continued to grow in North Dakota through the end of 2013, rising to an average of 0.31 billion cubic feet per day (Bcf/d), almost double the 0.16 Bcf/d levels in 2011, according to the North Dakota Department of Mineral Resources. The temporary closure of a processing plant at the end of the year led to an increase in both the volume and the percentage of nonmarketed natural gas that continued into 2014. Most nonmarketed natural gas is flared into the atmosphere. Natural gas that is flared releases carbon dioxide as a byproduct of combustion. Carbon dioxide is a less powerful greenhouse gas than methane, the primary constituent of natural gas. From 2008 to 2012, North Dakota accounted for 0.5% of total gross natural gas withdrawals in the United States, but the amount of gas that producers flared in North Dakota accounted for 22% of all natural gas that was either flared or vented in the United States, according to U.S. Energy Information Administration data. While higher natural gas production has led to increased flaring in North Dakota, nonmarketed gas as a percentage of total production there decreased from 37% in 2011 to 33% in 2013, according to state data. Several projects have come online in the past two years to improve North Dakota’s ability to bring new production to market: •Completion in January 2012 of the 0.10 Bcf/d Garden 16

Creek processing plant in western North Dakota, near Williston. •The August 2012 completion of a pipeline connecting processing plants in northwestern North Dakota to the Northern Border Pipeline, and the 0.10 Bcf/d Stateline II natural gas processing plant that connected to this line in May 2013. •Authorization of the Tioga Lateral pipeline in June 2013 to transport 0.13 Bcf/d of natural gas from a processing plant in Tioga, North Dakota, to a connection with the Alliance Pipeline. Alliance can then flow this gas to Chicago, Illinois. Although the pipeline began operating in September 2013, its full effect won’t be felt until the Tioga processing plant completes its expansion by the end of March. The expansions required a temporary shutdown of the processing plant starting in November 2013, which contributed to an increase in nonmarketed

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


gas to 39% of total production through the end of 2013 and into 2014. •The application of General Electric’s CNG In A Box system. This system uses a compact compression-andcooling station to convert natural gas into compressed natural gas (CNG), which can serve as fuel for vehicles and equipment. General Electric is using this system in North Dakota together with Norwegian firm Statoil. Statoil transports the CNG on tube trailers to fuel its drilling equipment that is capable of using either diesel fuel or natural gas. The state of North Dakota currently plans to reduce its percentage of nonmarketed gas steadily until eventually reaching a goal of 10% by the fourth quarter of 2020 as processing plant and pipeline capacity expansions continue, according to a January 29 report from the North Dakota Petroleum Council. One critical project for continued reductions is a proposed 375mile, 0.4 Bcf/d-pipeline to transport gas from the Charbonneau Compressor Station in western North

Dakota to an interconnection with the Viking Gas Transmission pipeline in Moorhead, Minnesota. Open season for capacity commitments on construction of the pipeline began on January 30. Assuming that sufficient commitments are made, construction is estimated to begin in 2016 and to be completed in 2017. Additional important projects include: •Two large proposed fertilizer plants that would together use about half of the volume of natural gas flared. One of the plants will require 0.08 bcf/day of natural gas as feedstock to produce nitrogen. The other plant, which will produce different fertilizer, may use a similar amount of natural gas. •Three small (20,000 barrel per day) proposed refineries that would use a small amount of additional natural gas. Another way to reduce nonmarketed gas in North Dakota is to increase natural gas consumption in a range of residential, commercial, industrial, and transportation sector applications within the state.

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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UPCOMING AUCTION

MIDLAND-ODESSA, TEXAS

Thursday, April 24  9 AM Central Time

Auctioneer Joel W. Marreel License #: 14019

Hosted by: Warren Cat | 10325 Younger Rd | Midland, TX 79706 Ready to SELL EQUIPMENT? Get started today! Call Cat Auction Services at 866.779.2361 or contact your local representative:

Richard Nagy richard.nagy@catauctions.com · 817.217.6780 Glenn Lamza glenn.lamza@catauctions.com · 214.605.1147 Felix Rodriguez felix.rodriguez@catauctions.com · 214.701.0445 Mike Fargher mike.fargher@catauctions.com · 303.396.5117

2011 & 2012 LINK -BELT 218 HSL

HYDRAULIC EXCAVATORS

Equipment subject to change. Watch for more information, including the full equipment list, photos, and inspections at:

www.catauctions.com ©2014 Caterpillar. All Rights Reserved. CAT, CATERPILLAR, their respective logos and “Caterpillar Yellow,” as well as corporate and product identity used herein, are trademarks of Caterpillar and may not be used without permission.

Adding Auction Locations & Equipment Daily See our website: www.catauctions.com

CAT AUCTION SERVICES 860 Blue Gentian Road, Suite 100 Eagan, MN 55121 866.997.9467 info@catauctions.com

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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To Advertise call (432) 559 - 5886 or email

sales@pbemag.com

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Conferences in APRIL - MAY 2014 PESA Annual Meeting 04/02/2014 - 04/05/2014 Tucson AZ, USA http://www.pesa.org/index.php/page/c/upcoming-events/P4

Texas Alliance Expo and Annual Meeting 04/22/2014 - 04/23/2014 Wichita Falls TX, USA http://texasalliance.org/event/alliance-expo-annual-meeting/

AAPG Annual Convention and Exhibition 04/06/2014 - 04/09/2014 Houston TX, USA 1 918 584 2555 - 1 918 560 2665 www.aapg.org

AIPN Spring Conference 04/27/2014 - 04/29/2014 New York City NY, USA http://aipn.org/Events/SC2014.aspx

API Pipeline Conference and Cybernetics Symposium 04/08/2014 - 04/10/2014 San Antonio TX, USA http://www.api.org/events-and-training/calendar-of-events/2014/ pipeline NAPE East Regional Spring Expo 04/09/2014 - 04/11/2014 Pittsburgh PA, USA http://www.napeexpo.com/nape-shows/regional-nape-east SPE Improved Symposium Oil Recovery 04/12/2014 - 04/16/2014 Tulsa OK, USA www.spe.org/events GPA Annual Conventional 04/13/2014 - 04/16/2014 Dallas TX, USA 1 918 493 3872 - 1 918 493 3875 pmirkin@gpaglobal.org www.gpaglobal.org SPE Western North America and Rocky Mountain Joint Conference 04/17/2014 - 04/18/2014 Denver CO, USA www.spe.org/events/calendar Annual Utica & Marcellus Infrastructure Development Summit 04/22/2014 - 04/24/2014 Pittsburgh PA, USA http://infocastinc.com/events/utica/?gclid=CPjrzPWnnL0CFUVp7Aod wGsAzA

API International Oil Spill Conference 05/05/2014 - 05/08/2014 Savannah GA, USA www.api.org/events-and-training/calendar-of-events/2014/iosc2014 OTC Offshore Technology Conference 05/05/2014 - 05/08/2014 Houston TX, USA www.otcnet.org Annual East Texas Energy Symposium 05/06/2014 - 05/06/2014 Kilgore TX, USA www.easttexasoilmuseum.com PSIG Annual Meeting 05/06/2014 - 05/09/2014 Baltimore MD, USA http://www.psig.org Four Corners Oil & Gas Conference 05/07/2014 - 05/08/2014 Farmington NM, USA http://www.fourcornersoilandgas.com/registration.html GPA MidContinent Annual Meeting 05/08/2014 - 05/08/2014 Midwest City OK, USA www.gpaglobal.org Eastern Oil & Gas Conference & Trade Show 05/13/2014 - 05/14/2014 Pittsburgh PA, USA http://www.pioga.org/event/2014-eastern-oil-gas-conference-andtrade-show International School of Hydrocarbon Measurements 05/13/2014 - 05/15/2014 Oklahoma City OK, USA http://www.ishm.info Deloitte Energy Conference 05/13/2014 - 05/14/2014 National Harbor MD, USA https://www.deloitte.com/view/en_US/us/Events-Deloitte/9de451a76 d364410VgnVCM3000003456f70aRCRD.htm?oper=REG AFPM National Occupational and Process Safety Conference and Exhibition 05/14/2014 - 05/15/2014 San Antonio TX, USA 1 202 457 0480 - 1 202 457 0486 meetings@afpm.org www.afpm.org/Conferences

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Leading Auctions in the Oilfield Industry. Upcoming Auctions and Auction Equipment listings from Tradequip International’s online and site-held auction companies. Saurce: Tradequip International

Drilling Rigs

Prod. Equip.

Drilling Equip.

Tubular Goods

Oilfield Trucks

Oilfield Trailers

Parts & Tools

www.tradequip.com

Support Equip.

SOUTHCENTRAL AUCTIONS

COMPANY

DATES

LOCATION

INVENTORY

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

April 02, 2014 April 03, 2014

Odessa, TX

BIG TRUCKS, TRAILERS, CONSTRUCTION MACHINERY & MORE

Machinery Auctioneers of Texas

April 09, 2014

Alice, TX

Oilfield & Construction Equipment Auction

CAT Auction Services

April 24, 2014

Midland, TX

FISHING & RENTAL TOOLS - WELL SERVICE RIGS RELATED EQUIPMENT

Kruse Energy & Equipment LLC

April 30, 2014 May 01, 2014

Odessa, TX

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

Jun 11, 2014 Jun 12, 2014

Oklahoma City, OK

No Lots are Currently Posted for this Auction

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

Jun 18, 2014 Jun 19, 2014

Odessa, TX

No Lots are Currently Posted for this Auction

INTERNET AUCTIONS

COMPANY

DATES

LOCATION

PIPE & EQUIPMENT AUCTION

Network International Inc

April 09, 2014

Internet

PIPE & EQUIPMENT AUCTION

Network International Inc

April 24, 2014

Internet

INVENTORY

No Lots are Currently Posted for this Auction

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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ADVICE for Mineral Owners

from a Permian Basin Land Girl Quick tip to have a “Better Mineral Experience ™ ” Mineral help is now just a phone call away (432) 620-8700 each Saturday from 1 to 1:30 PM Development Resources, Inc. will be providing help to mineral owners on a local radio show “Ask the Permianlandgirl™” Our show has been on the air since March 1st. Our lineup continues to inform and educate mineral and surface owners! • April 5, 2014 Stephen McClain, Consultant, Petroleum Engineer, T. Scott Hickman, the process of valuation of a mineral property. • April 12, 2014 Mary Lou Cassidy, Attorney, Stubbeman, McRae, Sealy, Laughlin & Browder, Inc. What every mineral owner needs to know about Mineral estates and estate planning issues. • April 19, 2014 Dr. Richard Erdlac, Erdlac Energy, Geologist, Geothermal expert. Informing mineral owners of various depths and geological terms. Other guests will include Midland author, Johnnye Montgomery, author of Oil Patch Stories and Other Lies, Clay Pollard, Professional Landman.

When I asked various experts to be a guest on “Ask the Permianlandgirl™” and discuss these issues, they were all enthusiastic to bring their knowledge and information to the show. We are honored to have them as guests and share with the Permian Basin mineral community. Talk to you soon on KWEL.com Truly yours, Kimberly Smith, CEO Development Resources, Inc. Development Resources, Inc. likes to provide solid advice about mineral management. Visit us at www.permianlandgirl.org for answers to your questions, mineral inventory or on twitter @permianlandgirl Stay tuned for more tips in upcoming issues of PBE Magazine! Refer to the PBE magazine and we will answer your questions without a fee.

Additionally, call on TUESDAY mornings from 8 a.m. to 9 a.m. for “Oil Patch Info” with host Morris Burns on KWEL.com Both Morris & I look forward to meeting you on the air! Call in & say that you are a PBE Mag. reader, then email me permianlandgirl@gmail.com and get a cupcake from Orchard Sweets at Farmer’s Market. Tune into KWEL AM 1070, AM 107.1 or livestream at KWEL.com

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SAFETY TIPS Why New Hire Orientation is Important... Is your new employee fully trained, certified and compliant in primary safety topics such as H2S Exposure, Fall Protection, Personal Protective Equipment, Hazardous Communication and First Aid Procedures? Do you have current documentation of the training or are you simply taking their word for it? With the enumerable changes to OSHA regulations and customer specific requirements regarding safety in the oil and gas industry, not having an up to date training record for each employee may be putting your employee and company at risk. New Hire Orientation is an effective method to welcome the new employee to the organization as well as ensure that all of the training required for the industry, company and customer specific requirements has been met. Since, many safety certifications expire after a year, its important maintain and update employee training records often. Rather than rely on an employee to check their certification card(s) and try to remember when they need to be recertified in any one area, New Hire Orientation is a great avenue with which to update training in a multitude of areas as well as recertify personnel that may have outdated or expiring certifications. Most companies prefer New Hire Orientation be performed within the first few days of hiring. Additionally, most employees will not be assigned to jobs or worksites without first completing all of their necessary training. Due to the changes in rules and regulations as well as the somewhat daunting task of recordkeeping, many companies are outsourcing the New Hire Orientation task. The third party training company can often design programs that ensure that all company requirements are met as well as any industry specific certification requirements or special training topics. With the job market norm moving towards changing jobs or employers frequently, it’s in the best interest of each company to fully train every employee to maintain safety compliance at all levels. One can never receive too much training in any safety topic. If you need help in this area or would like more information on training, New Hire Orientation or special compliance programs, please contact our offices. We would be happy to help fulfill all of your safety needs. Tiffany Hokett Vice President, American Safety Services, Inc.

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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by Matt Rist

Oilfield Fatalities

Stress Importance of Life Insurance Oilfield fatalities in Texas are on the rise and while we may not think to prepare for the worst, insurance companies say many in the basin are going without life insurance policies. It could leave families in a dire situation in the event of a death. For some it’s just too expensive, others are superstitious, but after 65 deaths in Texas in 2012 alone, it may be time to prepare. It’s a dangerous job and for many reasons, some people right here in the basin choose not to purchase life insurance policies. “It’s too expensive,” said one oilfield services worker in Odessa. “Sometimes it just costs more and people just have different priorities,” said another man, who works for a pipeline service company. The Garriga Law Firm has worked hundreds of oilfield accidents and fatalities. They say victims who don’t have life insurance are often left with nothing. “The reality of the world, particularly in the oilfield is that you can get involved with accidents that cause death,” said Attorney Jose Garriga. “The wives and children are 28

left with all the things this worker was paying for with no way to pay it. I know some people are superstitious and they think it might jinx them, but really, if you have a family it’s well worth the investment.” Life insurance can cost as little as $10 to 15 a month and comes in term and whole life insurance plans. Some people say it is well worth it - People like Jason, who got a policy to payout for his wife and kids. “More than any other industry it’s dangerous out here, so you need life insurance, said Oilfield Worker Jason Valliant. “If you have a family, without a doubt get it.” Insurance agents we spoke with say if your company will sponsor your policy, go for it. They also recommend as a baseline that your policy is worth eight to 10 times your annual salary.

Here are a few companies to choose from: - Tara Simmons Insurance (432) 580-7979 - Art Leal, Primerica, (432) 349-1280 Matt Rist, CBS 7 News • mrist@cbs7.com

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


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Put Cultural Bias Aside

for Safety In February 2011, the company I work for, Seattle-based DeaMor, experienced the first serious accident in its 27-year history.

I won’t recount the tragic details, but it prompted us to embark on a major overhaul of our entire safety program. Our investigation into the causes and circumstances around this accident produced several revelations about our approach to safety. One of these revelations was that our safety program functioned at a very high level when workers were exposed to what they perceived as a highrisk situation, yet it did not effectively handle activities perceived as lower risk. A revamped safety program was implemented with an emphasis on comprehensive planning for all tasks, not just high-risk elements. With the accident fresh in everyone’s mind, our new program was fully embraced by all employees. As time passed, however, it took more and more effort on the part of company ownership and few other highly committed individuals to sustain this level of detailed planning. I began to have concerns about the long-term viability of this approach. I had used the concepts of “creating a safety culture” as a model to develop our new safety program. We followed the recipe as we understood it, yet it wasn’t working as we had envisioned. Through research, I realized “cultural bias” was the root of the problem. I had heard the term cultural bias and had always associated the term with prejudicial views about

ethnicities, religious affiliations, sexual orientation and other views that are considered politically incorrect in today’s society. This is true, but I was surprised to learn that cultural bias goes much deeper than that. A person’s cultural bias dictates how everything heard and seen is subconsciously classified in the brain. There are many degrees of classification, but in general everything is given either a positive or negative classification. The natural tendency is to gravitate toward the positive. People can, and do, embrace negatively categorized concepts, but this requires a conscious override of natural tendencies. A crude example to illustrate this point might be to imagine a right-handed person forcing himself to write with his left hand; it can be done, but it requires a very deliberate effort. Eventually, the person will get tired and go back to what feels natural. One cultural bias that most Americans have in common is the American work ethic. It is a source of national pride. Productivity is king, and our cultural bias says that anything viewed as nonproductive is negative. We have names for things like this. Does the phrase “red tape” sound familiar? Safety program elements that people view as nonproductive will always require a conscious override in order to be done. We may or may not be able to change our cultural bias, but we can change our views on safety. If we can get people to view all safety program aspects as productive, we will overcome a huge barrier to making safety a natural part of everyday work activities. Source: Brian Butterfield, Dolan Media Newswires Brian Butterfield is the production manager at Seattle-based daylighting provider DeaMor and a member of SafeBuild Alliance, a nonprofit organization working to achieve incident-free construction projects.

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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APRIL & MAY

TOP

FESTIVALS AND EVENTS IN TEXAS All across Texas, a variety of festivals, events and attractions are a great way to have fun and to spend time with your family. April Story Time April 2 Ellen Noël Art Museum 4909 E. University - Odessa, TX 79762 10am. Preschoolers and their adult enjoy a story and an art activity in the ArtHaus. This program takes place at 10:00 am and 2:00 pm on the same day. Children must be accompanied by an adult. Free admission. 432-550-9696 Event Contact Email info@noelartmuseum.org 31st ANNUAL CELEBRATION OF THE ARTS April 4-5 Midland - Are you Mad for the Arts? This event is set in Midland’s Downtown and Centennial Plaza. 65 Visual Artists in juried show indoors, outdoor entertainment, Pet Parade, interactive arts experiences, festival refreshments & more. For additional information: (432) 687-1149 info@acmidland.org www.acmidland.org April Adventures in Art April 6 Ellen Noël Art Museum 4909 E. University - Odessa, TX 79762 2:30pm. Monthly art classes for children ages 6-12. Registration required. Fee applied. 432-550-9696 Event Contact Email info@noelartmuseum.org Arlen Edgar Distinguished Lecture Series Presents National Geographic Photographer, Carsten Peters April 8 Permian Basin Petroleum Museum 7pm. Free ticketed event. Refreshments provided. Sponsor: AbellHanger Foundation. Call 683-4403 for reservations. Girl Scout “Night Owl” Camp - In: Cadettes April 11-12 Permian Basin Petroleum Museum 7pm. Don’t let your girl scouts miss out on this fun-filled, all-nighter at the Petroleum Museum! Pre-registration required. Call the Education Department at 683-4403 Romeo & Juliet April 11-12 32

Globe Theater - 2508 Shakespeare Road - Odessa, Texas 79761 8pm. Discover the meaning of love, beauty, joy and death in the untimely tale of Romeo & Juliet. 432-335-6731 Event Contact Email amancha@globesw.org LUBBOCK ARTS FESTIVAL April 11-13 Lubbock Memorial Civic Center Lubbock - Enjoy the largest fine arts and crafts event in West Texas! Festival presents visual art, music, theater, dance, and children’s activities. (806) 744-2787 Permian Basin Porcelain Art Club April 12 Immanuel Baptist Church - Corner of Tanglewood & University - Sm. Fellowship Hall. 1pm. We will be painting Forget-me-nots with Artist Vera Hunter. If someone would like to attend, please call ahead and members will provide visitor with supplies. Kite Flying Contest April 20 1pm. VFW Post #4372 - 208 E. VFW Lane - Odessa, Texas 79762 432-366-5881 Easter Egg Hunt April 20 2pm VFW Post #4372 - 208 E. VFW Lane - Odessa, Texas 79762 432-366-5881 Earth Day Birthday April 22 Permian Basin Petroleum Museum 6:30pm. Learn how to make a difference with us! Children can plant seed bombs, form shaving cream planets, make litter bugs and learn how to filter water. There will also be demonstrations and activities available for adults. 432-683-4403 Event Contact Email mthompson@petroleummuseum.org BIG BEND OPEN ROAD RACE April 23-26 Fort Stockton - “The most challenging Open Road Race in the World” takes place as a round-trip from Fort Stockton to Sanderson and back,

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with top racers regularly breaking 200 mph. Enjoy public viewings, live entertainment, parade, car shows, awards banquet & start/finish line excitement. (877) 336-8525 www.bborr.com Brown Bag Lunch and Lecture Series Presents: Col. ( Ret.) Charles Buck Hamilton “Homeland Security” April 24 11:30am. Permian Basin Petroleum Museum. Free Admission. Bring your own lunch! Drinks and dessert provided. Sponsor: Hahl Proctor Charitable Trust 432-683-4403 Event contact email hcombs@petroleummuseum.org Taste of Home Cooking School April 24 The Midland Center - 105 N Main Street, Midland, TX 79706 6pm. The Taste of Home Cooking School Spring 2014 season is under way and is coming to Midland! Get your tickets at the Ivy Cottage. Doors will open at 4:00p.m. Come early to enjoy the vendor booths! There will be restaurants serving out samples of food. Tickets are on sale now for $15 in advance general admission, $18 at the door. $35 VIP which includes first two row seating at a table, free cookbook from Taste of Home, and a meet and greet with the famous Chef Jamie Dunn. All event attendees will receive a goodie bag stuffed with Taste of Home magazine, free subscription, coupons, and different products! (325) 650-1811 andi.markee@townsquaremedia.com 10th ANNUAL WINE & FOOD SUMMIT April 25-27 Buffalo Gap - Perini Ranch hosts a celebration of open-air barbecue and Malbec wines when it welcomes celebrity chef Stephan Pyles from Texas and Francis Mallmann of Argentina. For tickets and more info, call (800) 367-1721 www.buffalogapsummit.com

TEXAS STATE FESTIVAL OF ETHNIC CULTURES April 25-26 Ballinger - Join in this multicultural celebration with ethnic foods, arts and crafts, music, children’s events, bike festival and the Miss Ballinger pageant at the county courthouse grounds. (325) 365-2333 CHICKEN - FRIED STEAK FESTIVAL & CROSSROADS BALLOON RALLY April 25-27 Lamesa - Declared the “Legendary Home of the Chicken-Fried Steak” by the Texas Legislature, Lamesa celebrates in Forrest Park with a chicken-fried steak cook-off and dinner, wine-tasting, music, classic car show, team-roping competition, ranch rodeo, 5K Run, cowboy church, pony rides and games, and a hot air balloon rally. (806) 777-1171 www.ci.lamesa.tx.us

Les Misérables - MOSC & MCT Performance April 25-26 Wagner Noël Performing Arts Center 1310 N FM 1788, Midland, TX 79707 Join us in our ambitious endeavor to bring this heart-wrenching musical back to the Permian Basin. Explore the notions of justice, order, and personal integrity in way that is somehow both honest and ostentatious while witnessing the tenacity of the shows captivating characters through several decades of chaos and victory. Tickets on sale beginning January 13th. In-Person at the Wagner Noël Performing Arts Center Box Office M-F 12-5pm. Single tickets may be purchased by calling 1-800-514-3849 The Midland - Odessa Symphony & Chorale presents ‘Around The World in 80 Minutes’ April 27 First United Methodist Church 415 N. Lee Avenue - Odessa, TX 3pm. STUDENT TICKETS ARE FREE. Purchase tickets: In person at 3100 La Force Blvd. Midland, TX (The Midland-Odessa Symphony & Chorale office location) Phone orders: 432-563-0921 Voices of the Permian Basin April 27 3pm. Wagner Noël Performing Arts Center 1310 N FM 1788, Midland, TX 79707 MudBug 16 April 29 5:30pm. Benefiting Meals on Wheels Odessa, Cajun Boiled Shrimp, Crawfish, Catfish and all the trimmings. Ector County Coliseum, Barn G - 4201 Andrews Hwy - Odessa, TX. (432) 333-6451 jmeise@mowodessa.com “Creature Feature” Family Science Night May 1 6:30-8pm Permian Basin Petroleum Museum. Note Hop, slither, walk or crawl to the Petroleum Museum for “Creature Feature”! From reptiles, to birds, to insects, to mammals, join us as we learn all about these amazing animals. Free Admission. Refreshments provided. 432-683-4403 mthompson@petroleummuseum.org www.petroleummuseum.org Insane Inflatable 5K May 3 Scharbauer Sports Complex - 5514 Champions Dr. - Midland, TX 79706 Note The Insane Inflatable course is unlike any other experience! Made up solely of 14 - 17 inflatable obstacles, the 3.1 mile course will challenge you, surprise you, and leave you wanting more! The course isn’t just a couple of silly slides and bounce houses - it’s super-sized inflatables without rules. It’s imagination and creativity X10. It’s the start of something new and an event you’ll look forward to year after year. (325) 650 1811 andi.markee@townsquaremedia.com insaneinflatable5k.com SONORA CINCO DE MAYO FIESTA May 3 Sonora - Enjoy arts & crafts booths, dancing under the stars, children’s rides, food booths, and entertainment. 10am-5pm. Sponsored by Viva Sonora. For more info: 1-888-387-2880 or (325) 387-2880 www.sonoratexas.org

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Cares

One Spark Begins A Chain Reaction!

When parents arrive at Midland Children’s Rehabilitation Center (MCRC) for the first time all they want to know is “can you help”, and “will my child be able to do all of the things I dreamed for him?” These answers are not always simple. Yes, we can help and the sooner we get to work the better. At MCRC we are able to provide the medical services children need through occupational, physical and speech therapy! How? Through the support of this community! MCRC is a non-profit organization which does not receive state or federal funding, nor do we bill insurance. In fact, we have never billed for therapy. Children receive the medical services they need regardless of their ability to pay or the limitations of insurance. In this day of escalating medical costs MCRC is truly an “oasis” in the desert. This year we anticipate serving 450 children equaling over 11,500 treatment sessions. These sessions provide the spark that can begin a chain reaction in the lives of the children and their families. Hippotherapy is using a horse as a tool in a therapy session. Every year we have a Children’s Play Day where kids who are in the hippotherapy program get to show off their skills for family and friends. 34

When you work with children each stage of development lays down a foundation of smaller skills that lead to larger skills such as:

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• Learning to walk begins with rolling and sitting up • Speech begins with small sounds that build upon one another • The ability to color and paste begin with grasping a toy

Start small, finish big it’s what we’re all about. MCRC has been helping children since 1956 beginning as a small clinic next to the hospital in a borrowed building. MCRC was started by Children’s Service League and it was known as Midland Cerebral Palsy Center. However, very quickly after it opened children with other disabilities began seeking therapy services. In 2001 the name was changed to better reflect the many children we serve. When you change a child’s life you change the whole family, and when you care enough to make sure these little ones get the care they need you can’t help but be changed too! Cindy, a parent, shared her story. “When I first contacted the Center to set up an appointment for an evaluation I worried, how much is it going to cost and will they accept my insurance? When I was told this was free and you were going to help my baby I cried. I just can’t say enough good things about Midland Children’s Rehab. It has been life changing!” We are grateful to this community for changing the lives of the children and our world for the better! Midland Children’s Rehabilitation Center 802 Ventura • Midland, TX 79705 (432) 498-2053 To find out more, become a volunteer or to donate, visit www.mcrc1.org Find us on Facebook: /midlandchildrens

A child during a physical therapy session working on standing, balance and taking steps.

A child in the pool during a physical therapy session. She is working on walking skills in the water where she does not have to fight gravity while practicing walking.

This is a child in speech therapy. The therapist is using a small vibrator to wake up the muscles in his mouth just before a session. MCRC PROVIDES: Occupational Therapy Physical Therapy Speech Therapy PROGRAMS: Aquatics Feeding Dyslexia Tutoring Equine Therapy Sensory Integration Program Open Gym Power – Pediatric Outpatient Weight Loss & Education Resource Therapeutic Dance

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Tech

Bites

Source: www.nytimes.com

Win d I ndus t ry ’ s Ne w Techn ologi es

A r e He l ping It Compete on Pr i c e The wind industry has gone to great lengths over the years to snap up the best properties for its farms, often looking to remote swaths of prairie or distant mountain ridges to maximize energy production and minimize community opposition. Now, it is reaching for the sky. With new technology allowing developers to build taller machines spinning longer blades, the industry has been able to produce more power at lower cost by capturing the faster winds that blow at higher elevations. This has opened up new territories, in places like Michigan, Ohio and Indiana, where the price of power from turbines built 300 feet to 400 feet above the ground can now compete with conventional sources like coal.

Prices have fallen so low — in some cases to about 4 cents per kilowatt-hour — that utilities have been increasing the amount of wind energy they want to buy through long-term contracts, with regulators saying it is their cheapest option. At the same time, though, the push has spurred some opposition in these new areas from residents who object to the tall, industrial wind turbines.

And efforts to capture the wind could go even higher. In perhaps the most extreme example, a start-up called Altaeros Energies is preparing to introduce its first commercial pilot of an airborne wind turbine in Alaska. But the skyward expansion has already taken flight throughout the wind industry, transforming parts of the Midwest once shunned into wind powerhouses. Six years ago there, the wind speeds at 200 feet were not strong enough to make wind development make sense, said Elizabeth Salerno, chief economist and director of industry data and analysis at the American Wind Energy Association, the industry’s main trade group. But as turbine hubs — which sit atop the towers — have risen above 200 feet and included longer blades, that has changed. In Michigan, for example, there were no utility-scale wind farms operating in 2008, Ms. Salerno said. Now, there are enough to produce 1,000 megawatts of electricity, which could power hundreds of thousands of homes. 36

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“It’s not just more wind in the windy places that we already know about,” Ms. Salerno said. “It’s opening up, potentially, regions like the Southeast or others where maybe it’s not quite economic today but it could be in the future. That’s where we’re headed.”

business at the Sloan School of Management. Mr. Glass, whose father had been a pilot in the Israeli Air Force, planned to pursue rocket science but strayed from that career path after an internship at SpaceX, Elon Musk’s rocket company, the summer before his senior year.

Airborne wind takes that dynamic even further, though for now it can compete only in places where the price of other options, like diesel, is much higher.

“I realized that to be a rocket scientist you kind of had to be a billionaire and have a rocket company or you were just going to be designing some little widget part of the rocket,” he said.

With an interest in clean energy, “... the machine to produce anywhere from he turned toward wind and ended up two to three times as much electricity ...” designing an array of turbines for his senior For example, Makani Power is working on a winged turbine project and putting his engineering skills to use on the that, according to its website, flies in circles. It was acquired airborne machine. by Google last year, but the technology has yet to be perfected. Borrowing from the technology of blimps used to hoist In Alaska, though — as in other remote regions, representing communications, surveillance and weather monitoring a multibillion-dollar market Altaeros hopes to tap — energy equipment high above the earth, the Altaeros system is able costs run so high that even a promising but largely unproven to adjust the turbine’s height and alignment in response to changing winds to maximize power production. That technology is cost-effective, officials say. allows the machine to produce anywhere from two to three “Particularly for Alaska, eliminating the costs that are times as much electricity as its conventional tower-mounted associated with power installation,” said Alan Baldivieso, counterparts, Mr. Glass said. program manager for hydrokinetics, geothermal and emerging energy at the Alaska Energy Authority, “makes this type of The company has raised more than $1 million in the last two years from angel investors and some state governments as deployment very attractive.” well as the federal government, including the Energy and The authority awarded Altaeros a $1.3 million grant from Agriculture departments. The technology could help provide its Emerging Energy Technology Fund to support testing the power after natural disasters. equipment over 18 months with the idea of expanding its use. In the long term, executives say they hope to expand into “Our biggest focus is on cost just because it’s so, so expensive the offshore market, particularly places like the Pacific Coast, in parts of Alaska,” said Sean Skaling, deputy director of where officials recently approved plans to test floating alternative energy at the authority. “A nice byproduct is that it’s turbine platforms because the waters are too deep to sink conventional foundations and towers into the seabed. also typically greener and cleaner if it’s less expensive.”

Other companies besides Altaeros have tried to develop airborne wind systems.

Ben Glass, chief executive of Altaeros, said he expected the company to be able to offer power at about 18 cents per kilowatt-hour, far too high for most conventional markets but still well below the 35 cents a kilowatt-hour often paid in remote areas of Alaska. In parts of Alaska, prices can reach about $1 per kilowatt-hour, roughly 10 times the national average. Serving markets like that could help the company establish its business and lower costs to eventually compete for larger-scale projects. Mr. Glass started the company in 2010 along with Adam Rein (and another partner who has since left) as the two were completing graduate programs at M.I.T., Mr. Glass in aeronautical and astronautical engineering and Mr. Rein in

But that is years away. For now, the team is focused on flying as many balloons as it can in areas that lack electricity or are dependent on expensive diesel fuel. As far-fetched as a field of wind turbines swaying as high as 2,000 feet in the air may seem, the partners say the technology is relatively tried and true. Rather than inventing a whole new approach, said Mr. Rein, a former Bain consultant who dabbled in energy before meeting Mr. Glass through an entrepreneurship class at M.I.T., the partners looked to the most proven, least risky equipment to make a product as quickly and cheaply as possible. Rather than going for, “a moon shot,” he said, “what we really tried was the safe shot.”

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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PBE NEWS BRIEFS Watching the basin

RPT-Vitol teams with Sunoco on Permian Basin pipeline build-out Swiss oil trader Vitol is working with Sunoco Logistics Partners to expand pipeline capacity for shipping booming Permian Basin crude output to the Gulf Coast, growing its foothold in the West Texas supply chain. The two companies formed a 50-50 venture called SunVit Pipelines in the third quarter last year to build a new crude oil pipeline from the Permian oil storage hub in Midland to Garden City, Texas, about 40 miles east, where it will connect into Sunoco’s Permian Express 2 line, it said in an SEC filing. The venture had not previously been widely reported. Sunoco also confirmed that it had successfully completed an open season in the fourth quarter for the Permian Express 2, which will carry some 200,000 barrels per day (bpd) from multiple areas in the Permian some 300 miles to the coast. Permian Express 2 is due to begin operating in the second quarter of next year, Sunoco said. It said the SunVit line should

begin running next year, without providing a date. They are part of a flush of investment in new oil pipelines and other infrastructure necessary to carry the unexpected boom in shale and unconventional oil production from places like North Dakota’s Bakken and the Permian Basin. The Permian may be a particularly attractive place to invest for traders, since Midland is already an established storage hub, though smaller than Cushing, Oklahoma, and pipelines offer the flexibility of shipping northeast to Cushing or south to the Gulf Coast refinery row. Vitol’s direct involvement also shows how privately owned foreign trading companies like Trafigura and Mercuria are racing to secure strategic assets in the U.S. oil supply chain, hoping they can take advantage of the dramatic volatility that has seized U.S. crude markets.

Source: Reuters

Watching Offshore

Ophir Energy says Tanzania LNG project could be expanded Tanzania’s first planned liquefied natural gas (LNG) export terminal could be expanded after the project partners discovered more gas than expected, shareholder Ophir Energy said. East Africa, tipped to become one of the next big gasproducing regions after huge discoveries in recent years, is in a race with the likes of Russia, Australia and Canada to feed an expected supply gap around the turn of the decade. Tanzania’s LNG export terminal, backed by Britain’s BG Group and Norway’s Statoil, is expected to start shipping gas to customers from around 2020, with a final investment decision expected in 2016. U.S. oil major Exxon Mobil is also a shareholder. Project partner Ophir Energy said on Thursday that a third train, the facility where gas is turned into liquid 38

for transportation, could be added after its joint venture with BG Group upgraded offshore discoveries to 15.7 trillion cubic feet. This volume will underpin development of a minimum of two 5 million tonne per annum LNG trains “and provides encouragement for a potential third” the company said in its 2013 results statement in March. The London-listed oil and gas explorer reported a net loss of $245.8 million for 2013 after impairments on some of its African exploration sites. “We have entered 2014 well financed to deliver the most extensive exploration programme in Ophir’s history, targeting wells in Tanzania, Gabon and Equatorial Guinea,” Chief Executive Nick Cooper said. Source: Reuters

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


Watching the STATE

New study notes Texas city as fasting growing in US According to a new study by economic research company NerdWallet, The Woodlands is the fastest growing city in Texas.

big boost from ExxonMobil’s decision to build a new complex that will house 10,000 employees when it opens in 2015.

The company analyzed the working-age population, employment and income growth of 126 cities from 2009 to 2012 in order to find out which cities experienced the most significant job and population growth during that time.

“ExxonMobil’s arrival will not only create jobs in the energy industry but also support fields such as retail, restaurants and construction. Infrastructure in the area is also getting an upgrade: a new section of Houston’s Grand Parkway will open in 2015 to ferry thousands more workers to The Woodlands each day. Schools in The Woodlands, served by the Conroe Independent School District, are adding more than 1,500 new students each year and two new elementary schools will open in the 2014-2015 school year. Already, the area hosts 60 companies with more than 27,466 employees”, according to Gil Staley, CEO of the Woodlands Area Economic Development Partnership. Staley recently touted the growth in high-paying energy jobs during The Woodlands Chamber of Commerce 28th Economic Outlook Conference. Source: Elizabeth Rhodes, Houston Culture Map

The Woodlands came out on top with an incredible 60 percent increase in the working-age population over four years. According to the Houston Business Journal, recent census estimates have ranked the Woodlands’ Montgomery County as one of the 30 fastest growing counties in the nation. In spite of the area’s huge population increase, the growth of employment (3.6 percent) and median income (9 percent) placed the master-planned community closer to the middle of the list. But the area has gotten a

Watching the Nation

Increase in wood as main source of household heating Wood as a main heating source in homes has gained popularity in many areas of the country in recent years, but the increase is most notable in the Northeast. All nine states in the New England and the Middle Atlantic Census divisions saw at least a 50% jump from 2005 to 2012 in the number of households that rely on wood as the main heating source. As the use of fuel oil and kerosene in this region has declined in recent years, many households have turned to lower-cost alternatives, including wood. In total, about 2.5 million households (2.1%) across the country use wood as the main fuel for home heating, up from 1.9 million households (1.7%) in 2005. An additional 9 million households (7.7%) use wood as a secondary heating fuel. This combination of main and secondary heating accounts for about 500 trillion British thermal units (Btu) of wood consumption per year in the residential sector, or about the same as propane

consumption and slightly less than fuel oil consumption. Heating stoves are the most common equipment used by households that rely on wood as the main source of heat, and fireplaces are the most common choice for secondary wood heating. Most households still burn split logs, although wood pellet use has risen in recent years. And while households in higher income brackets are more likely to use wood, those at lower income levels who burn wood consume more on average. The Environment Protection Agency (EPA) recently proposed updated emissions standards for new woodburning stoves and other biomass heating equipment. Although these proposed rules address health concerns associated with the release of fine particulates from burning wood, the standards would also result in increased efficiency levels of new wood-burning equipment. Source: EIA

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Watching the WORLD

16% of natural gas consumed in Europe flows through Ukraine Europe, including all EU members plus Turkey, Norway, Switzerland, and the non-EU Balkan states, consumed 18.7 trillion cubic feet (Tcf) of natural gas in 2013. Russia supplied 30% (5.7 Tcf) of this volume, with a significant amount flowing through Ukraine. EIA estimates that 16% (3.0 Tcf) of the total natural gas consumed in Europe passed through Ukraine’s pipeline network, based on data reported by Gazprom and Eastern Bloc Energy.

Ukraine (Trans-Balkan) delivers Russian natural gas to the Balkan countries and Turkey.

Two major pipeline systems carry Russian gas through Ukraine to Western Europe—the Bratstvo (Brotherhood) and Soyuz (Union) pipelines. The Bratstvo pipeline is Russia’s largest pipeline to Europe. It crosses from Ukraine to Slovakia and splits in two to supply northern and southern European countries. The Soyuz pipeline links Russian pipelines to natural gas networks in Central Asia and supplies additional volumes to central and northern Europe. A third major pipeline through

Natural gas flows through Ukraine vary by season, ranging from almost 12 billion cubic feet (Bcf) of natural gas per day in the winter to only 6 Bcf per day in the summer. An unusually mild winter in 2013 meant reduced natural gas flows through Ukraine and contributed to higher levels of natural gas storage in Europe (natural gas storage levels were 46% full as of March 13, compared to 23% full in the United States.

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In the past, as much as 80% of Russian natural gas exports to Europe transited Ukraine. This number has fallen to 50%-60% since the Nord Stream pipeline, a direct link between Russia and Germany under the Baltic Sea, came online in 2011.

Source: EIA

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Watching THE SHALE

Growth in U.S. hydrocarbon production from shale resources driven by drilling efficiency The productivity of oil and natural gas wells is steadily increasing in many basins across the United States because of the increasing precision and efficiency of horizontal drilling and hydraulic fracturing in oil and natural gas extraction. Many resource-producing basins are experiencing an increasing yield over time in either oil (Bakken, Eagle Ford, Niobrara) or natural gas (Marcellus, Haynesville). The geology of each oil and natural gas resource play is diverse, and individual rig or well performance can vary dramatically. However, drilling activity in U.S. shale plays is now generally producing greater quantities of oil and/or natural gas than in the past. As noted in March’s productivity report, five of the six U.S. shale plays tracked by the DPR have seen increases in oil and natural gas production per rig over the past few years. According to EIA’s March DPR, the Eagle Ford Shale is leading

in increased production of oil per rig, and the Marcellus Shale is leading in increased production of natural gas per rig. DPR data show that each drilling rig in the Eagle Ford Shale will contribute over 400 barrels of oil per day (bbl/d) more in April 2014 than it would have in the same formation in January 2007. At the same time, the DPR also shows that a Marcellus Shale well completed by a rig in April 2014 can be expected to yield over 6 million cubic feet of natural gas per day (Mcf/d) more than a well completed by that rig in that formation in 2007. This trend of increasing rig productivity is one factor helping to increase the nation’s oil and natural gas production. The latest Annual Energy Outlook forecasts that U.S. oil production will reach 9.6 million barrels per day in 2019, and natural gas production will increase by 56% through 2040. Source: EIA

Watching the GOVERNMENT

Putin’s alleged connection to oil wealth The most startling part of Washington’s sanctions on Russian businessmen loyal to President Vladimir Putin may be a single sentence that contains an explosive allegation: that Putin himself profits from the world’s No. 4 oil trading company, Gunvor. Among the people the United States sanctioned in late March as part of its drive to put pressure on Russia for its intervention in Ukraine was businessman Gennady Timchenko, a long-time acquaintance of Putin and, until March, co-owner of Geneva-based Gunvor, which trades nearly 3 percent of the world’s oil. In announcing the sanctions, the Treasury Department went a step further, adding a single sentence that hits squarely at one of the most controversial topics that Putin has faced in 13 years as the Kremlin ruler and head of the government.

and how exactly he could have access to Gunvor’s funds. It provoked a quick and furious response. Gunvor said the statement was “outrageous” and “blatantly false.” Timchenko has repeatedly denied that Putin helped him create his vast business empire, yet because of his long and close relationship with Putin speculation has persisted. Putin’s spokesman Dmitry Peskov called the sanctions “unacceptable” and said the Kremlin was studying the impact of the inclusion of Timchenko on the list. At the same time, Gunvor announced that Timchenko had sold his share to Tornqvist in March, a day earlier. Tornqvist now owns 87 percent, while 13 percent belongs to the employees.

“Timchenko activities in the energy sector have been directly linked to Putin. Putin has investments in Gunvor and may have access to Gunvor funds,” the statement said.

Still, the growing concern among analysts is that the accusation, and the direct blow at Putin’s closest allies, may provoke an even more dramatic response from Moscow - potentially even using its vast energy supplies as a weapon against the West.

The U.S. Treasury Department declined further comment on what information it has about Putin’s investments in Gunvor

Source: Rueters, Reporting by Dmitry Zhdannikov; Editing by Jonathan Leff and Lisa Shumaker

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

41


RESTAURANT

BITES

by Marcy Madrid

El Rancho Mexican Restaurant Many kids grow up with the dream of one day being able to repay their parents for all that they’ve done for them. For 3 Midland sisters, that dream became a reality in June of 2011. That’s when El Rancho opened its doors and began serving customers for the first time. Coming from very diverse and established career paths, Brenda Lujan, Marisela Acosta and Jessica Acosta decided to leave their comfortable and predictable jobs, to help their mom fulfill her longtime dream of owning her own restaurant. Brenda describes the experience as both exiting and overwhelming as none of the sisters had any previous restaurant experience. She notes that many jokes were made in the beginning as the rookie waitresses had to carry one plate at a time to the tables, afraid that they would drop something. A few years and lots of practice later, the sisters can now be found serving the large parties that frequent the popular breakfast and lunch spot, during the work week. The unique Mexican restaurant has this family’s personal stamp all of over it, from the name that honors the grandma, whose favorite song was called El Ranchito, to the rustic décor personally purchased and hung by the sisters themselves. Everything about this quaint and friendly restaurant makes you feel like you’ve landed in the dining room of a close friend’s house, whose mother happens to be an incredible cook. 42

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


Brenda says that she helped develop the menu, made up almost completely of her mother’s most popular family recipes. She says mom was there in the very beginning to help train all the cooks on how to make her dishes just right, but now she mostly gets to sit back and enjoy her dream come true. Like most new businesses, Brenda noted that things were painstakingly slow at first, but thanks to her mom’s delicious and memorable meals, word of mouth has spread like wildfire and now they have the regular business of several local oilfield companies and lots of return customers. If you’re interested in trying out this locally owned and loving operated restaurant for yourself, Brenda says the most popular breakfast meal is the huevos rancheros, and for lunch it’s their plato mexicano and the jalapeno fajitas. Pride of ownership definitely shines through in the customer service provided at El Rancho, whether you’re being waited on by one of their long-term employees or Marisela herself. Brenda says their fun, friendly and happy atmosphere has always been what sets them apart as confirmed by the many regular customers who keep coming back for more.

El Rancho 2716 Cottonflat Rd. Midland, TX 79706 (432) 687-5499 elrancho.restaurant@yahoo.com

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

43


A Five Year Old Theologian & Feeling Stuck by Daniel Stephens

Daniel Stephens is the Senior Pastor of Mid-Cities Community Church, since 2006. He is the honored husband to Kayla Stephens, a proud father of twin sons Jonah & Jude, daughter Kampbell, and a precious adopted daughter.

My five year old is a theologian. I always thought she was advanced, but a moment I had with her the other day confirmed my suspicions. Don’t be jealous, your kid will achieve greatness one day as well. While parents older and wiser have told me that I am supposed to enjoy every stage of my kids development, some stages are just down right more enjoyable than others. Don’t get me wrong, I love changing poopy diapers just as much as the next dad, but it sure is nice when they can pull up to the porcelain throne themselves.

inside and leave you stuck to that chair”. Then she did it. She hit me with her theological prowess. She looked up at me with a confident smile and said with the most mature five-year-old voice she could muster, “ You’re my daddy, you love me, you would never leave me stuck”. Yup, I know…ahhhhhhh. She had a belief, a confidence, that her daddy was not going to leave her stuck. That if I was present and I could hear her cry for help, that I would help her. She didn’t question my willingness to help her, nor did she question

I think the 4-6 year range is my favorite. It seems like this is when their personality and vocabulary blossom into daily surprises. I walked outside our front door a few days ago to join my girls as they were playing. My beautiful and yet verbal five-year old was sitting at a yellow bistro table on our front porch. She was vacillating between a Crayola masterpiece and randomly singing songs from her latest obsession, Frozen, when I heard a calm and undeniably fake scream. You know what I’m talking about. It’s the kind of scream you walk to, not run to. “What’s wrong?”, I asked. “I’m stuck”, she said with a grunt while half-heartedly trying to get the decorative button on her pant legs loose from the chair that held her captive. With a smile, I teasingly said, “I think I’ll go 44

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


my response to her cry (even though it was clearly a fake cry). It made me think of how we relate to God. The Bible describes him as a Father. In Matthew 6, Jesus describes God the Father as one who feeds the birds of the air and clothes the flowers of the field. Then Jesus asks how much more will our Heavenly Father feed and clothe you who are of more value than birds and flowers. And yet, scripture is also filled with examples where Father God allows his children to walk through difficulty, pain, even suffering. In that way, it almost seems as if my daughter was wrong. Maybe she isn’t a theologian or possibly she’s just a bad one! God, our heavenly father would leave us stuck? Stuck in circumstances that are less than ideal? Stuck in a job we dislike? Stuck in a family that doesn’t appreciate us? In this sense my daughter was wrong. It seems there are definitely times in our lives when our Father will let us stay stuck. He won’t undo the button we got stuck to the chair. He allows us to stay stuck for the same reason our parents let us serve ISS when we got in trouble at school. There was a lesson in it. There was something we needed to learn about Him, about ourselves, about the world around us.

But my daughter’s theological brilliance came in understanding the nature of my relationship with her. She knew I would never “leave her” stuck. This is true. I may let HER get herself out, even talk her through how to get loose from the chair, but I would never leave her. She is my daughter, and I am her dad. The same is true of our Heavenly Father. The writer of Hebrews quotes Joshua when God tells Joshua that “He will never leave him nor will he forsake him”. Jesus promised his disciples that he would not leave them as orphans but would give them his Holy Spirit. As Jesus ascended into heaven after his resurrection he said he would be with his followers “always, to the very end of the age”. Many people have a hard time understanding God in those terms. A loving Father who would never leave. A dad who loves you so much, he may let you remain stuck so you can learn what your supposed to learn, but He would never forsake you. Neither will God leave or forsake those who cry out to him. Maybe you’re stuck. Crying out to God may or may not get you unstuck at that moment, but at least you won’t be stuck alone. Follow Daniel on Twitter: @DanielBstephens

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

45


U.S. RIG COUNT - TEXAS States &

through March 28, 2014

BAKER HUGHES RIG COUNT

RIGDATA RIG COUNT

Four Week Average 2012

Four Week Average 2013

Last Week

This Week

Four Week Average 2012

Four Week Average 2013

Last Week

This Week

Waiting to Spud

Texas RRC District 1

140

129

129

126

130

131

133

132

7

Texas RRC District 2

76

80

81

81

81

86

88

81

10

Texas RRC District 3

40

52

54

50

43

61

64

60

4

Texas RRC District 4

35

36

36

36

33

36

38

33

2

Texas RRC District 5

17

9

10

9

18

9

8

7

0

Texas RRC District 6

26

33

34

32

25

34

32

36

2

Texas RRC District 7B

13

11

10

10

21

17

14

17

2

Texas RRC District 7C

82

87

85

85

82

87

87

88

6

Texas RRC District 8

279

303

307

309

258

311

310

313

6

Texas RRC District 8A

40

31

34

31

39

41

43

48

1

Texas RRC District 9

22

19

19

18

32

30

31

28

2

Texas RRC District 10

65

65

65

67

64

70

71

69

0

Texas Total

835

855

864

854

826

913

919

912

42

U.S. Totals

1,761

1,795

1,907

2,047

2,055

2,043

105

Districts

1,809 1,803

COPYRIGHT Š 2014 RIGDATA P.O. Box 820547 Fort Worth Texas 76182-0547 1-800-627-9785 | www.rigdata.com This report is protected under United States and international copyright laws and is intended for the exclusive use of the subscriber. Any unauthorized reproduction, retransmission, distribution, publication, broadcast or circulation of this report to anyone, directly or indirectly, without the express prior written consent of RIGDATA is prohibited. To order additional report copies at a reduced rate or for a corporate site license, please contact: 1-800-627-9785 46

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


Top 35 Drillers Rankings Each month we track the activity of all the drillers and compile the results into a report that identifies the top 35 out of 100 drillers based on their footage drilled. Updated monthly, these reports also detail the number of well starts and the number of directional wells drilled by each of the top 35 out of 100. through March 31 2014 Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Helmerich & Payne, Inc.

8,739,598

17.4%

10,355

844

13.3%

742

2

Patterson-UTI Drilling Company, LLC

5,009,295

10.0%

10,244

489

7.7%

436

3

Nabors Industries, Ltd.

4,036,634

8.0%

7,170

563

8.9%

519

4

Precision Drilling Trust

2,274,172

4.5%

8,486

268

4.2%

242

5

Nomac Drilling, LLC

2,234,950

4.4%

9,675

231

3.6%

231

6

Ensign Energy Services, Inc.

2,063,033

4.1%

5,997

344

5.4%

203

7

Unit Drilling Company

1,400,401

2.8%

9,274

151

2.4%

143

8

Trinidad Drilling, Ltd.

1,378,580

2.7%

10,212

135

2.1%

110

9

Pioneer Energy Services Corp.

1,316,353

2.6%

9,972

132

2.1%

104

10

Cactus Drilling Company, LLC

1,150,892

2.3%

10,656

108

1.7%

104

11

Capstar Drilling, LP

1,115,776

2.2%

6,602

169

2.7%

47

12

Savanna Energy Services Corp.

780,202

1.6%

8,968

87

1.4%

26

13

Xtreme Drilling and Coil Services Corp.

728,381

1.4%

10,711

68

1.1%

65

14

Sidewinder Drilling, Inc.

620,614

1.2%

8,166

76

1.2%

72

15

Complete Production Services, Inc.

567,092

1.1%

10,311

55

0.9%

25

16

Desoto Drilling, Inc.

518,163

1.0%

4,429

117

1.8%

117

17

Pinnergy, Ltd.

506,360

1.0%

9,042

56

0.9%

56

18

Sendero Drilling Company, LLC

474,526

0.9%

11,298

42

0.7%

0

19

Latshaw Drilling & Exploration Company

454,005

0.9%

8,566

53

0.8%

53

20

Scandrill, Inc.

429,715

0.9%

12,278

35

0.6%

32

21

Robinson Drilling of Texas, Ltd.

416,714

0.8%

11,263

37

0.6%

1

22

CanElson Drilling, Inc.

410,300

0.8%

8,548

48

0.8%

19

23

Lariat Services, Inc.

406,744

0.8%

6,560

62

1.0%

22

24

Orion Drilling Company, LLC

397,109

0.8%

11,680

34

0.5%

32

25

Frontier Drilling, LLC

390,424

0.8%

8,873

44

0.7%

41

26

SST Energy Corporation

345,681

0.7%

10,167

34

0.5%

33

27

Pro Oilfield Services, LLC

310,170

0.6%

10,339

30

0.5%

21

28

Cade Drilling, LLC

302,377

0.6%

11,199

27

0.4%

27

29

Cyclone Drilling, Inc.

298,050

0.6%

4,083

73

1.2%

68

30

Big Dog Drilling Company

296,300

0.6%

11,852

25

0.4%

2

31

Basic Energy Services, Inc.

295,279

0.6%

7,202

41

0.6%

11

32

Lewis Petro Properties, Inc.

284,000

0.6%

10,519

27

0.4%

27

33

ProPetro Services Incorporated

280,200

0.6%

11,208

25

0.4%

0

34

Bison Drilling and Field Services, LLC

245,325

0.5%

11,682

21

0.3%

9

35

Silver Oak Drilling, LLC

241,073

0.5%

9,643

25

0.4%

20

Total Top 100 for year 2014

50,307,475

100.0%

---

6,338

100.0%

---

RANK

APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

47


Top 35 Operators Rankings Updated every month, we track and rank the top

35 out of 100 operators based on their footage drilled.

Keep track of the most active operators with details on their number of well starts.

through March 31, 2014

RANK

Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Anadarko Petroleum Corporation

2,989,035

5.9%

10,525

284

4.5%

283

2

Chesapeake Energy Corporation

2,140,791

4.3%

10,146

211

3.3%

211

3

Pioneer Natural Resources Company

1,704,932

3.4%

13,115

130

2.1%

87

4

Occidental Petroleum Corporation

1,697,918

3.4%

6,265

271

4.3%

132

5

EOG Resources, Inc.

1,688,775

3.4%

10,235

165

2.6%

157

6

Apache Corporation

1,586,960

3.2%

8,916

178

2.8%

108

7

Devon Energy Corporation

1,279,657

2.5%

9,273

138

2.2%

121

8

Marathon Oil Corporation

1,127,367

2.2%

14,453

78

1.2%

78

9

BHP Billiton Limited

1,069,492

2.1%

13,711

78

1.2%

78

10

Chevron Corporation

1,014,680

2.0%

4,786

212

3.3%

102

11

ConocoPhillips Company

849,511

1.7%

7,866

108

1.7%

85

12

Noble Energy, Inc.

717,478

1.4%

9,318

77

1.2%

77

13

Oasis Petroleum North America, LLC

685,487

1.4%

9,935

69

1.1%

69

14

Encana Corporation

653,860

1.3%

12,574

52

0.8%

52

15

QEP Resources, Inc.

637,782

1.3%

11,189

57

0.9%

57

16

Whiting Petroleum Corporation

633,725

1.3%

9,319

68

1.1%

61

17

Exxon Mobil Corporation

617,755

1.2%

5,148

120

1.9%

47

18

Linn Energy, LLC

608,911

1.2%

5,638

108

1.7%

45

19

Concho Resources, Inc.

576,382

1.1%

10,875

53

0.8%

40

20

EP Energy E&P Company, LP

511,564

1.0%

10,031

51

0.8%

43

21

Newfield Exploration Company

468,491

0.9%

6,331

74

1.2%

71

22

SandRidge Energy, Inc.

467,741

0.9%

5,376

87

1.4%

58

23

Murphy Oil Corporation

461,248

0.9%

10,727

43

0.7%

43

24

Laredo Petroleum Holdings, Inc.

460,000

0.9%

11,220

41

0.6%

13

25

Southwestern Energy Company

438,500

0.9%

4,216

104

1.6%

103

26

Rosetta Resources, Inc.

409,600

0.8%

9,752

42

0.7%

38

27

CrownQuest Operating, LLC

396,000

0.8%

12,000

33

0.5%

0

28

Ultra Petroleum Corp.

391,668

0.8%

13,506

29

0.5%

29

29

Cimarex Energy Co.

385,865

0.8%

10,718

36

0.6%

36

30

Antero Resources Corporation

367,196

0.7%

11,127

33

0.5%

33

31

WPX Energy, Inc.

358,854

0.7%

6,525

55

0.9%

55

32

Continental Resources, Inc.

340,099

0.7%

3,270

104

1.6%

104

33

SM Energy Company

325,799

0.6%

9,582

34

0.5%

34

34

Windsor Energy, Inc.

321,900

0.6%

11,100

29

0.5%

21

35

Parsley Energy Operations, LLC

299,250

0.6%

11,970

25

0.4%

2

Total Top 100 for year 2014

50,307,475

100.0%

---

6,338

100.0%

---

48

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


Source: www.eia.gov

Crude oil inventories at Cushing down 29% over the past seven weeks Crude oil inventories at Cushing, Oklahoma, the primary crude oil storage location in the United States and the delivery location for the New York Mercantile Exchange (Nymex) West Texas Intermediate (WTI) crude oil futures contract, declined 12 million barrels (29%) over the past seven weeks. On March 14, 2014, Cushing inventories were 30 million barrels, 19 million barrels lower than a year ago and the lowest level since early 2012. The recent drawdown of stocks at Cushing resulted from (1) the startup of TransCanada’s Cushing Marketlink pipeline, which is now moving crude from Cushing to the U.S. Gulf Coast; (2) sustained high crude runs at refineries in Petroleum Administration for Defense Districts (PADD) 2 (Midwest) and 3 (Gulf Coast), which are partially supplied from Cushing; and (3) expanded pipeline infrastructure and railroad shipments that have made it possible for crude oil to bypass Cushing storage and move directly to refining centers in PADDs 1 (East Coast) and 5 (West Coast). In December 2013, TransCanada began injecting crude from Cushing to fill the Marketlink pipeline before its commercial startup. Marketlink linefill has been estimated at 3 million barrels. In late January, TransCanada completed the first delivery of crude oil via Marketlink to U.S. Gulf Coast refineries. Trade press has reported that crude oil deliveries via Marketlink are expected to average 525,000 barrels per day (bbl/d) in 2014.

Steep backwardation (when near-term prices are higher than longer-term prices) also incentivized selling crude out of inventory. Since early January, the WTI 1st-13th price spread increased from less than $6/bbl to $10/bbl on March 19. With Marketlink operational, more crude can flow out of inventory at Cushing to refineries in the Gulf Coast in response to market price signals. Marketlink is the most recent in a series of infrastructure developments that have either increased Cushing crude takeaway capacity or made it possible to bypass Cushing and move crude directly to refining centers. In January 2013, significant new takeaway capacity was added with the completion of Enbridge/Enterprise Seaway’s 250,000bbl/d pipeline expansion. With new infrastructure online, average crude movements from PADD 2 to PADD 3 rose to 470,000 bbl/d in 2013, 68% higher compared with 2012 (Figure 1). With these expansions, the current situation at Cushing is very different from that during the 2010-12 period when additions of roughly 815,000 bbl/d of pipeline capacity into Cushing far exceeded additions of 150,000 bbl/d in capacity out of Cushing.

PADD 2 refinery utilization averaged 92% in 2014 through March 14, up from 89% over the same period in 2013. Refinery utilization in PADD 3 was also higher, up 4%, even though PADD 3 refinery capacity increased. Refinery crude inputs in PADDs 2 and 3 for year-to-date 2014 through March 14 averaged 780,000 bbl/d higher than in 2013. APRIL 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

49


from a week ago, but 15 cents less than a year ago. Prices on the West Coast increased by six cents to $3.81 per gallon. Retail gasoline prices in the Midwest and Gulf Coast increased by four and three cents from last week respectively, to $3.57 and $3.28 per gallon. The East Coast price of $3.52 per gallon was up three cents from last week. The average U.S. on-highway diesel fuel price decreased to $4.00 per gallon as of March 17, 2014, down two cents from last week, and four cents less than the same time last year. New pipelines that bypass Cushing also came online in 2013. Sunoco’s Permian Express pipeline and Magellan’s Longhorn pipeline began delivering an additional combined 315,000 bbl/d of Permian Basin crude directly to the Gulf Coast, while rapid development of crude-byrail networks has made it possible to move Bakken crude to East Coast and West Coast refineries. With the completion of Marketlink and other infrastructure, flows from Cushing to the Gulf Coast are no longer constrained. EIA weekly crude oil inventory data for 2014 show PADD 3 stocks have built 28 million barrels (17%) over the past seven weeks as inventory flows south from Cushing. As a result, while Cushing inventories have broken out of the bottom of the 5-year range, Gulf Coast inventories broke out of the top of the 5-year range. Despite the considerable decline in Cushing inventories, stocks remain well above the top of the 2005-08 range (Figure 2). Over the past several years, much of the rapidly rising volume of crude oil produced from tight oil formations in the Midcontinent was delivered to Cushing storage. Because takeaway capacity from Cushing storage was insufficient, inventories there rose. Today, Cushing inventory levels have fallen to levels that reflect current market conditions and although reduced, remain consistent with crude supply requirements to meet regional refinery demand.

Gasoline price increases, diesel fuel sheds two cents The average U.S. price for regular gasoline was $3.55 per gallon as of March 17, 2014, an increase of four cents 50

The East Coast, Midwest, and West Coast had prices drop by two cents, to $4.14, $3.99, and $4.02 per gallon respectively. Rocky Mountain and Gulf Coast prices decreased by a penny from last week, to $3.99 and $3.80 per gallon respectively.

Residential heating oil propane prices decrease

and

Residential heating oil prices decreased 7 cents per gallon to reach a price of $4.12 per gallon during the period ending March 17, 2014. This is over 9 cents per gallon higher than last year’s price at this time. Wholesale heating oil prices fell by more than 12 cents per gallon last week to $3.19 per gallon. The average residential propane price decreased by nearly 9 cents per gallon last week to $3.08 per gallon, almost 77 cents per gallon higher than the same period last year. Wholesale propane prices decreased by nearly 6 cents per gallon to $1.37 per gallon as of March 17, 2014. This is the last data collection for the 2013-2014 SHOPP season. Data collection will resume on October 6, 2014 for publication on Wednesday, October 8, 2014.

Propane inventories gain U.S. propane stocks increased by 0.2 million barrels to end at 26.2 million barrels last week, 15.5 million barrels (37.2%) lower than a year ago. Gulf Coast stocks posted the only gain with 0.8 million barrels of new inventories. Midwest inventories decreased by 0.4 million barrels, East Coast stocks dropped 0.1 million barrels and Rocky Mountain/West Coast stocks were down slightly. Propylene non-fuel-use inventories represented 12.9% of total propane inventories.

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | APRIL 2014


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51


Permian Basin Energy April 2014 Issue  

Permian Basin's Leading Energy Magazine

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